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By Vijay Kumar

Central Excise

Good reason for revenue to smile – Lager Bench resolves an important Central Excise valuation issue in Department's favour

The question is while arriving at the cost of the goods manufactured by the job worker, whether the first 10% notional profit added by the principal manufacturer has to be added to the cost of the intermediate goods or only the actual cost the material has to be taken without adding the 10% notional profit.

Service Tax

Getting Airborne - Jet Airways is not a Cargo Handler so as to pay Service Tax for period 18.8.02 to 31.8.2004: Tribunal

Appellant is admittedly an Airline engaged in the business of transportation of passenger and Cargo. The appellant takes booking of the cargo which is to be transported either by himself at its booking office or through IATA agents appointed at various locations all over the country.

Revenue alleges that the service provided by the Appellant is a Cargo Handling Service and raised a demand of Rs.96.86 lakhs - appellant neither collects the cargo from the consignor premises nor delivers the same to the consignee of the cargo - From the definition of Cargo Handling Services, it becomes clear that services to be taxed under the said heading are to be provided by cargo handling agency and the same must be in relation to cargo handling services - The appellants are admittedly not providing any cargo handling services to the public at large and as such, are not perceived to the trade or public as a cargo handling agent.

Income Tax

Reimbursement of expenses to be incurred by contractee is not taxable under section 44BB - interest on delayed issue of refunds could be taxed only under Article 12.2 of DTAA - Assessee is not in a business of obtaining income-tax refunds and earning interest thereon: ITAT

No doubt that section 44BB is a code in itself and it starts with non obstantive clause which excludes application of sections 28 to 41 and sections 43 and 43A of the Act but at the same time, to assess any sum under that section, the activity must fall within the activity described in sub-section (2) of section 44BB of the Act. Supply of Dry Fruits and recovery of communication expenses specifically do not find mentioned in sub-section (2) of section 44BB as these activities have nothing to do with the activity of prospecting for or extraction or production of, mineral oils in India or outside India. So as it relates to reimbursement of cost of equipment, the same also does not fall within the ambit of sub-section (2) of section 44BB as the same apply on supply of plant and machinery on hire and the equipment, 75 per cent cost of which is reimbursed, was not machinery on hire being used in such activity.

See our columns Monday for the judgements