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By Vijay Kumar

Works Contract

Works contract tax - TDS - interstate sales - Section 35 of Chattisgarh Act allowing tax deduction at source is constitutionally invalid - Supreme Court

THE assessee is a proprietary concern of one Shri Krishana Mudliar and it has been executing works contracts for various Departments of the Chhattisgarh State Government and others and was holding sales-tax registration. During the assessment year 2001- 2002, it had executed works contracts awarded by Executive Engineer, P.W.D. (B&R), Division Khairagarh, for which it received payment of Rs.1,27,115/- on which sales tax of Rs.2,545/-, being 2% of sum of Rs 1,27,115/- was deducted at source towards the sales tax payable as provided under Section 35 of the State Act.

Service Tax

Port providing storage is not warehouse keeper - Storage being integral part of port service cannot be taxed separately - if a particular service is liable to tax w.e.f particular date, it cannot be held that newly-entered service was covered under any pre-existing service : CESTAT

THE appellant is registered as minor port and is rendering the port services. Some intelligence officers of Central Excise and Service Tax visited the premises of the appellant and after investigation came to the conclusion that during the period 16 th August 2002 to 30 th June 2003, appellant had rendered services falling under the category "Storage and Warehousing Services" and are liable to pay service tax on the said services. A show cause notice was issued to the appellant demanding the service tax and also proposing for imposition of penalty on them. Appellant contested the said show cause notice on the ground that they are registered as a minor port with the authorities and as such are providers of the port services and are not rendering any services of storage and warehouse. The said contentions were not accepted by the adjudicating authority and the demand of service tax was confirmed and penalties were imposed. On an appeal the Commissioner (Appeals) concurred with the findings of the adjudicating authority and the matter is before the Tribunal.

The Bench had a difference of opinion.

Income Tax

Broad understanding for transfer of business to a JV company - Non-resident company cancels decision - compensation paid - Since source of business was not adversely affected, it is compensation for loss of business - a revenue receipt : ITAT

IN an interesting ruling the ITAT has held that if a compensation is paid even before a contract is signed between the two parties which required transfer of assets and the existing business, such a lump sum payment is to be treated as a compensation for loss of business rather than the loss of source of business, and is at best a revenue receipt, exigible to income tax.

See our columns tomorrow for the judgements