Jurisprudentiol-Wednesday's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Service Tax

Contract for collection of proceeds from foreign buyer is between appellant and Bombay branch of Standard Chartered Bank - Thus, both service provider and service recipient are situated in India and, therefore, there is no import of service involved - Stay granted: CESTAT

THE appellant has a manufacturing unit of textile products and exported goods to the foreign buyer. The bills for collection of the export proceeds were handed over to Standard Chartered Bank at Fort, Mumbai. Standard Chartered Bank undertook collection of the export proceeds through their office in UK who retained a part of the amount towards collection charges.

The department is asking the appellant to pay service tax on the amount retained by the UK branch of the Standard Chartered Bank on reverse charge basis under Section 66A of the Finance Act, 1994.

Income Tax

Sec 54EC - Whether even if investment falls under two financial years, benefit claimed by assessee cannot be denied, although it crosses limit of Rs 50 lakhs - YES: HC

THE assessee sold a property at Palavakkam for a sale consideration of Rs.3,46,50,000/- vide agreement of sale entered into with the Ceebros Property Developments. The assesssee invested Rs.1,00,00,000/- out of the sale proceeds in certain bonds in two financial years, namely, Rs.50,00,000/- in Rural Electrification Corporation Bonds and Rs.50,00,000/- in National Highways HAI Bond. The AO held that the assessee can take the benefit of investment in specified bonds to a maximum of Rs.50,00,000/- only under Section 54EC(1) of the Act and accordingly, held that the other sum Rs.50,00,000/- invested over and above the ceiling prescribed does not qualify for exemption in terms of the Act.

The issues before the Bench are - Whether under the existing Section 54EC(1) and the first proviso, investment made within the time limit of six months from the date of transfer should be computed financial year wise and not transaction wise; Whether even if such investment falls under two financial years, the benefit claimed by the assessee cannot be denied, although it crosses the limit of Rs 50 lakhs and Whether by virtue of Finance Act, 2014 w.e.f April 1, 2015 all investments u/s 54EC shall be limited to a total of Rs 50 lakhs including the financial year in which the original asset or assets are transferred and for all subsequent financial years. And the verdict goes in favour of the assessee.

Customs

Import of passenger car radial tyres requiring BIS Certification - Revenue appeal against allowing clearance of goods on payment of redemption fine instead of re-export - Matter remanded to Commissioner (Appeals) for proper appreciation of provisions of Section 125 of the Customs Act, 1962: HC

THE assessee had imported 'New passenger car radial tyres of mixed sizes'. The original authority found that a certificate of the Bureau of Indian Standards was available only in respect of a consignment of Nexon brand tyres but that was valid only until 30 December 2012. No BIS certificate was available in respect of the tyres of other brands also no invoice of the manufacturer or evidence for the purchase of tyres from Nexon or from any other manufacturing company had been submitted. The Additional Commissioner ordered confiscation of the goods under Section 111 (d) of the Customs Act, 1962. However, an option was furnished under Section 125(1) of the Customs Act for the payment of a redemption fine of Rs. 8 lacs in lieu of confiscation and for the re-export of the goods. A penalty of Rs.5lacs was also imposed.

Tomorrow is a holiday - Muharram

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