Jurisprudentiol- Tomorrow's cases

By Vijay Kumar

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

Even when freight actually paid was less than amount collected by way of freight and difference is retained it would still not form part of assessable value : Tribunal by Majority

TIOL toils and brings you the latest. No, we are not blowing our trumpets. Just that we had told you on the 7th November that the issue was referred to the Third Member as there was a difference of opinion on the issue & today, we carry the Majority decision thanks to the Bench which has disposed of the Revenue's appeal filed in the year 2001 after the matter was referred to the Third Member on 12th October 2007.

A small recap:

The issue involved in this case is regarding the demand of differential duty from the respondent on the ground that they have claimed deductions in respect of freight charges without any documentary evidence. Show cause notices were issued proposing to disallow the deduction claimed in respect of freight charges on the ground that the respondents are unable to produce any documentary evidence that they have actually incurred the same. The adjudicating authority after considering the documents and certificate given by the Chartered Accountant came to the conclusion that the respondents are eligible for deductions of actual average freight charges & not average equalized freight charges.

Aggrieved by this order, the appellant preferred an appeal to the Commissioner(A) who held that additional freight charges collected in excess of equalized freight cannot be considered as assessable value and is a profit on activity of transport of goods and, hence set aside the order-in-original.

Not happy, Revenue went in appeal before the Tribunal.

Service Tax

Execution of work is not included under words, 'advice', 'consultancy' or 'technical assistance' in definition of Consulting Engineer – whether amounts realized towards execution of work will be covered under Service Tax – Difference of opinion - Matter referred to Third Member

AN order in Revision was passed by the Commissioner against the Order-in-original passed by Dy. Commissioner (Service Tax) Vadodara.

The relevant facts are as follows:

a) The appellant company is engaged in the manufacture of mechanical, engineering and electrical goods falling under Chapters 84 and 85 of Central Excise Tariff Act, 1985.

b) In respect of certain buyers, the appellant merely sold their products. In respect of certain buyers, at their request, the appellant has undertaken, at the customer's site, certain activities like construction, civil works including installation, erection and commissioning of machinery to the specific requirements of the customers. In such cases, they collected amounts billed variedly as charges towards erection, testing and calibrations, installation and commissioning, construction activities etc. In respect of some other buyers, they procured some accessories and miscellaneous goods from other manufacturers or open market and in such cases collected the price from their customers for supply of the said bought out items.

c) They have, thus, collected a sum of Rs.36,95,14,983/-towards post clearing activities relating to the period July 97 to December 2000.

d) A show cause notice was issued demanding Service Tax of Rs.1,84,75,749/- and proposing imposition of penalty under various sections on appellant company and others. The charge – that they are rendering services as Consulting Engineers.

Income Tax

Landlord takes refundable interest-free deposit from tenant - Income Tax wants to tax notional interest - Sec 23(1)(a) does not permit taxing more than rent : Delhi HC

TAXING rent from house property has always been a taxing issue for the Income Tax Department. In the latest case the Revenue wanted to tax notional interest income on refundable interest-free deposit made by the tenant with the landlord u/s 28(iv) but the High Court has dismissed the same as the relevant Section 23(1)(a) does not contemplate taxing such income. The HC also observed that in a taxing statute it would be unsafe for the Court to go beyond the letter of the law and try to read into the provision more than what is already provided for.

See our columns tomorrow for the judgements