Jurisprudentiol-Wednesday's cases

By Vijay Kumar

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

Adjudicating authority's observation that any physical change like change in brightness/whiteness will result in manufacture of "modified starch" covered under Ch. Heading 35.05 is devoid of any basis - conjectures cannot be basis for deciding classification - Order set aside & appeal allowed: CESTAT

THE issue involved is whether the impugned goods are maize starch classifiable under Tariff heading 11.03 or it is modified maize starch classifiable under Tariff heading 35.05. Maize starch classifiable under heading 11.03 was exempt from duty during the relevant period while modified maize starch classifiable under heading 35.05 was not. By classifying the impugned goods as modified maize starch, Heading 35.05, the CCE, Panchkula confirmed a duty demand of Rs.3.17crores along with interest and penalty.

Income Tax

Whether grant of gift coupons to employees in nature of mementos to commemorate receipt of safety awards can be said to be in nature of salary - NO: HC

THE assessee PSU is engaged in the business of polymers, synthetic fibres, solvents, surfactants, industrial chemicals and polyesters. Consequent to filing of its return, scrutiny assessment was undertaken and it was noticed that the assessee had distributed gift coupons to its employees, which was not disclosed in its return and therefore, there was short deduction of tax. The AO accordingly passed the order u/s 201(1). On appeal, the CIT(A) confirmed the order of AO, and in addition, levied penalty u/s 271C. On further appeal, the Tribunal reversed the order of AO and deleted the penalty.

THE issue before the Bench is - Whether grant of gift coupons to employees in nature of mementos to commemorate receipt of safety awards can be said to be in nature of salary. And the answer is NO.

Service Tax

For any service, there has to be service provider, service receiver and consideration - records show that no consideration has been paid by Govt. for undertaking work of Survey and Exploration & what is received is only reimbursement of actual expenses - it cannot be said that service has been provided to the Ministry of Mines: CESTAT

THE appellant is a PSU owned 100% by the Government of India. They undertake two kinds of activities. First, they provide exploration report based on survey and detailed expression of mineral deposit for which they get grant-in-aid from the Govt. of India. This is called preliminary exploration. The second activity is exploration work in respect of which they provide detailed survey and exploration reports on contractual basis to various clients. On the second activity, Service Tax is paid by them.

As regards the first activity, these reports are kept by them and may be sold to private users later, on payment of fees on which Service Tax is also being paid.

The demand of Service Tax of Rs.4,36,88,734/- has been confirmed only on the reports prepared by them on the basis of exploration work and the activity undertaken is classified by Revenue under Scientific and Technical Consultancy Services.

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