Jurisprudentiol-Thursday's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Central Excise

Premises obtained on lease from MIDC - Registration cannot be denied on ground that earlier occupant of premises had dues pending against them: CESTAT

THE appellant purchased the premises in question from M/s Akasha Syncotex Ltd. who initially was the lessee of the factory premises from MIDC. As M/s Akasha Syncotex Ltd. closed the business from the said premises and applied for cancellation of Central Excise registration, the appellant being interested party for taking the said premises had entered into an agreement with M/s. Akasha Syncotex Ltd. and with due permission from MIDC, the factory premises got leased out in the name of the appellant.

The appellant applied for registration under Central Excise Act for the product manufactured by them.

The Revenue was in no mood to grant the registration

Income Tax

Whether payment in consideration of transfer of shares and handing over of management & control of company including termination & modification in terms of management, is liable to be treated as 'such payment' u/s 28(ii)(a) - YES: HC

THE assessee an individual, was the Chairman-cum-Managing Director of M/s Central Distillery and Breweries Ltd. (CDBL), which was engaged in the business of manufacturing and sale of Indian Made Foreign Liquor (IMFL) and beer. The assessee along with his family members, held 1,86,019 shares, constituting 57.29% of the paid-up equity share capital of CDBL. One M/s Shaw Wallace Company Group (SWC Group), a giant in liquor business in comparison to CDBL, offered and purchased through their subsidiaries, 1,86,019 shares out of the total shares held by assessee and his family members at the rate of Rs.30/- per share for Rs.55,83,270/-, by a MOU. The assessee who individually held 12% of the paid-up equity share capital of CDBL also entered into a deed of covenant in his individual capacity with the SWC Group. The assessee as per the MOU received a non-compete fee of Rs.6.60crores out of which Rs.6crores were paid upfront and balance was to be paid at later date. Upon verification of returns, the entire non-compete fee of Rs.6.60crores was treated as a capital receipt and hence, not exigible to tax.

THE issue before the Bench is - Whether payment in consideration of transfer of shares and handing over of management & control of company including termination & modification in terms of management, is liable to be treated as 'such payment' u/s 28(ii)(a). And the answer is YES.

Service Tax

Only basis for denying credit has been that invoices are either in name of another unit of appellant or in name of their HO - doubt has never been raised regarding actual receipt of services, so credit admissible: CESTAT

A SCN was issued by the jurisdictional authorities seeking to deny the CENVAT credit on the ground that the invoices under which the credit was availed were either in the name of their head office or in the name of the appellants' other unit at Thane. The demand was confirmed by mentioning that the appellant should have been registered for ISD registration to enable distribution of credit to their respective units; that mere payment is not enough to claim the credit but material evidence should be brought on record that the said services are utilized in the Patalganga unit. The extended time period u/s 11A was invoked.

See our Columns Tomorrow for the judgements