Jurisprudentiol-Wednesday's cases

By Vijay Kumar

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

ST - Levy of Development fee has been struck down by apex court as not being service - no service tax payable - from May, 2012 what has been collected as ST has been paid - prima facie case - stay granted: CESTAT

THE applicants are responsible for managing the entire operations of CSI Airport at Mumbai. Apart from other charges the applicant charges development fee @ Rs.100/- from the departing domestic passenger and Rs.600/- from the passenger travelling abroad. The fee charged by the applicants is for the development of the airport in future. As the development fee charged by the applicants is in nature of service to be provided, therefore, the Revenue was of the view that on these development fees, the applicant is required to pay service tax under the category of “Airport services”.

Various SCNs were issued for the period April 2009 to February 2013 to the applicant demanding service tax and they were all confirmed along with interest and penalties by the CST, Mumbai.

Income Tax

Whether compensation received from insurance company on account of destruction of a capital asset can be taxed u/s 50 - NO, says High Court

THE assessee company is engaged in the business of manufacturing of petrochemicals and job work. The assessee had filed its return disclosing total income at Rs. 1,95,54,060/-. Subsequently, it had filed revised return and disclosed revised income at Rs. 2,23,68,340/-. The AO however, assessed the total income of the assessee at Rs. 5,69,39,830/-. On appeal, the CIT(A) partly allowed the appeal of assessee but sustained the addition made by the AO though on different ground. On further appeal, the Tribunal confirmed the addition made by the CIT(A). On appeal before the High Court, the counsel for assessee submitted that the Tribunal had erred in law in holding that the compensation received by the assessee on account of depreciation of Wind Mill from the Insurance Company was fully taxable u/s 50.

The issue before the Bench is - Whether compensation received from an insurance company on account of destruction of a capital asset can be taxed u/s 50. NO is the answer.

Central Excise

There was no need to pay any duty when the goods were being returned to the original supplier - By the above process, accumulated CENVAT credit got shifted from the applicant to the supplier's unit - Pre-deposit ordered of 7.5% of duty in cash: CESTAT

THE applicant is a 100% EOU. For manufacturing their final products, they are procuring certain inputs from the domestic manufacturers free of excise duty. After receiving the said inputs, they are testing and at times such consignments are rejected and returned to the supplier. However, while returning the goods to the supplier, they were paying excise duty by debiting the duty amount in the accumulated CENVAT credit available with them.

Revenue smelt a rat in this uncanny procedure adopted by the applicant. An objection was raised that under Rule 3(4) of the CCR, 2004, CENVAT credit can be utilized for payment of duty in the specified circumstances.

See our Columns Tomorrow for the judgements