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By Vijay Kumar

Central Excise

Tribunal imposes Rs 5000 as costs on applicant while condoning delay in filing appeal before Commissioner( A)

YOU may have heard of the Courts imposing or awarding costs, but Tribunal imposing any costs is virtually unheard of.

Long ago, the Calcutta High Court in the case of Debabrata Ghosh vs. Assistant Collector of Customs 2003-TIOL-182-HC- KOL - CUS while passing strictures against the department and awarding costs to the petitioner remarked - "The respondents have argued this case needlessly for 3 days. What is fun to the Department is death to an individual writ petitioner . Therefore, the respondents must pay costs... "

The closest the Tribunal came to awarding costs against the Revenue was in the case of CCE , Delhi vs. Superior Air Products Ltd. 2002-TIOL-386-CESTAT- DEL where the Tribunal held -

"Going by the contentions raised in the appeal, we feel that it is vexatious in nature. Revenue should not have filed such an appeal. The Tribunal will be compelled to award costs against the Revenue if such frivolous appeals are filed. With these observations, we dismiss the appeal."

Service Tax

Reimbursements of salaries and infrastructural expenses cannot be said to be amounts "charged" by service provider - not includible in value of taxable service : CESTAT

THE appellants were engaged by M/s ICICI Bank Ltd to market the bank's personal loan products, for which service the appellants employed marketing executives who took up the task of telemarketing, contacting prospective customers, process documentation etc. to market the personal loan products of the bank and evaluate the customers and forward the prospects to the bank. In terms of the agreement with the bank, the appellants raised invoices for service charges on a monthly basis and the bank paid the same. Apart from this, the appellants received reimbursement, from the bank, of the salaries paid to their personnel deputed to render the above service to the bank as also of infrastructural expenses such as rent, telephone charges, electricity, stationery charges, internet charges, travel expenses, courier charges, advertisement etc. All these payments received by the appellants from the bank under invoices or debit notes were credited directly into the appellant's bank account. But, in the service tax returns filed by them for the relevant periods, the service charges alone were declared to the department as the taxable value for the purpose of payment of service tax. The appellants voluntarily paid service tax on such value.

Income Tax

Indo-USA Tax Treaty - Tribunal upholds concept of computer PE and rules assessee generating income by marketing CRS services to travel agents in India has business connection - 15% of income attributable to PE in India - Distributor marketing CRS is dependent agent

IN a landmark decision the ITAT has upheld the concept of computer PE (Permanent Establishment) under the Indo-USA Tax Treaty and ruled that the assessee Galileo International had a business connection in India as per the I-T Act. Though there is a school of thought which feels that unlike the India-Australia DTAT where 'plant' and 'equipment' are deemed to be PE, such a provision is not there in the case of India-USA treaty and the Tribunal has read in the provsions what does not exist in the statute book.

However, a review exercise of all DTATs is going on in the Ministry of Finance which can take note of such grey areas identified and convassed by legal pundits and a clear-cut provision can be inserted to lend fresh legitimacy to such a concept. Given that a modern business draws huge support from IT-based infrastructure for its revenue generation like in the present case, no country or judiciary in the world can ignore the concept of computer PE which has come to be explained and upheld by the Tribunal.

See our columns tomorrow for the judgements