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By Vijay Kumar

Service Tax

Money grows in ATMs – Revenue loses another high profile Service Tax case – Introduction of a new entry for purpose of levy of tax presupposes that it was not covered by any of pre-existing entries : Tribunal

THE assessee had executed contracts awarded by various banks for supply, installation and commissioning of Automated Teller Machines (ATMs) and, accordingly, received their charges from the banks. On 33% of the gross amounts so charged and collected by the assessee from the banks from July 2003 to April 2006, the department sought to levy service tax by treating the assessee as "commissioning and installation agency" and the work undertaken by them as "commissioning or installation" as defined under clause (28) of Section 65 of the Finance Act, 1994.

In adjudication, the Commissioner confirmed the demands running into crores of Service Tax. In cases were penalties were not imposed, Revenue filed appeals whereas in all the cases the assessee is in appeal before the Tribunal.

Final say

In the result, the assessee's appeals succeed on all counts and the same are allowed & the revenue appeals are dismissed.

So, Revenue - Do you want to make another transaction?

Income Tax

Assessee's profit-making capabilities dented - Receipt under non-compete agreement – Capital receipt: Delhi HC

A notice under Section 148 of the Act was issued to the Assessee and the re-assessment order was passed on 21st February, 2003. The reopening of the assessment proceedings has been upheld both by CIT (A) as well as by the Tribunal. Even we have not issued any notice on the grievance made by the Assessee in this regard. The reopening having been held to be valid, the question of consistency would not arise because if this argument were to be accepted, then it would mean that the reopening was erroneous. We cannot do something indirectly if it cannot be done directly. We are, therefore, not in agreement with learned counsel for the Assessee that the rule of consistency would be applicable to the facts of this case.

Central Excise

Clearance of capital goods as such – only 50% credit taken reversed - recipient eligible for only 50% : Madras HC

THE appellant purchased capital goods from one M/s.Vairava Textiles Limited, who had purchased the same from the manufacturer of machines. As per Rule 57AC(2) of the erstwhile Central Excise Rules, 1944, the credit of duty paid on capital goods could be availed only upto 50% of the duty paid on such capital goods in the financial year in which it was received and the balance credit may be taken in any subsequent financial year. M/s.Vairava Textiles Limited on purchase of the capital goods by them during the year 2000-01 availed 50 percent of the duty paid by the manufacturer. In the very same financial year, the said Vairava Textiles Limited sold the capital goods to the appellant and reversed the 50% of the credit availed by them and thus showing fifty percent of the reversed credit as duty paid. The appellant having purchased the capital goods availed 50 percent of the credit on the duty paid by the manufacturer during 2000-2001 and the balance 50 percent of the credit on the duty paid by the manufacturer during the year 2001-2002. On appeal, the Tribunal though confirmed the finding of the original authority as to the non-entitlement of 100% modvat credit on the duty paid by the manufacturer of the capital goods, however deleted the imposition of penalty on the ground that the appellant has availed the credit on a bona fide belief that it was entitled to such claim.

The correctness of the said order of the Tribunal is the issue in this appeal before the High Court.