Jurisprudentiol-Thursday's cases

By Vijay Kumar

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

Appellant manufacturing liquid gases - as customers do not have cryogenic tanks for storage, appellant leases same and charges rent - appellant also maintains such tanks - no ST payable under category of Storage & Warehousing services as appellant has no control on goods in storage tank - Appeal allowed: CESTAT

THE appellant is engaged in the manufacture and sale of liquid oxygen, nitrogen, argon etc. which is to be stored at a temperature of Minus (-) 269 0 C. As the customers who are using these gases are not having the storage facilities, the appellant is providing such storage tanks.

The appellant is charging rent for usage of the storage tank & is also maintaining these storage tanks i.e. wear and tear of these tanks is monitored by the appellant. The appellant is paying Central Excise duty as well as VAT on the rent portion charged from the customers.

Revenue is of the view that the rent charged by the appellant for leasing out the storage tanks to their customers fell under the category of ‘Storage and Warehousing Services' as per Section 65(102) of the FA, 1994.

Income Tax

Whether even if there is no transfer of property rights to power agent, capital gains can be taxed in his hand - NO: HC

THE assessee is an individual. He is a power agent of one Mr.M. Viswanathan, who is the actual owner and vendor of the property. The said Viswanathan entered into a registered power of attorney on in favour of the assessee without any consideration. After the execution of power of attorney, the property was registered in the name of the assessee's wife Dr. Meera Bai for a sum of Rs.25.00 lakhs by a sale deed. The AO took the view that it is the assessee who sold the plot to his wife Dr. Meera Bai for a sum of Rs.25.00 lakhs, whereas, the guideline value of the property was Rs.60.00 lakhs at that point of time by adopting the fair market value of the property at Rs.60.00 lakhs based on index cost at Rs.11.00 lakhs.

The issue before the Bench is - Whether even if there is no transfer of property rights to power agent, capital gains can be taxed in his hand. NO is the answer.

Central Excise

Banding of soap cakes with tapes pre-printed with brand name and MRP of combo pack amounts to manufacture u/s 2(f)(iii) of CEA, 1944 - appellant, however, treating activity as service and discharging service tax - non-filing of declaration is curable defect as appellant acted bonafide - matter remanded for scrutiny by adjudicating authority: CESTAT

HUL was sending goods under Notification No.214/86-CE, dated 25.03.1986 to the appellant to provide service of banding the goods by a strip. Incidentally, the benefit of exemption Notification No.50/2003-CE dated 10.06.2003 (area based exemption) was being claimed & allowed to the principal manufacturer HUL& importantly the appellant was carrying out the activity for the said principal manufacturer in the same campus.

Appellant bona fide believed that the activity carried out by them was labour oriented and no manufacturing process was being carried out. Such labour work was supply of manpower and was governed by the taxing entry of Finance Act, 1994 "manpower recruitment agency service" and not a manufacturing activity. Under such belief, they obtained service tax registration & paid service tax on the labour charges received from HUL. The Department never disputed about the liability of the appellants under service tax law and they were collecting such tax without any objection from the appellant.

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