Jurisprudentiol– Tomorrow's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Service Tax

Technical collaboration fee for transfer of technical know how– Classifiable under Intellectual property service– Not leviable to service tax under Consulting Engineer's service at the relevant time: CESTAT

ORIGINAL authorities dropping proceedings at their level has become a thing of past. But in the instant case, the original authority without being cowed down by the shadow of superior officers dropped proceedings against the assessee. Unfortunately, there is a strange provision in the form of Section 84 of the Finance Act, 1994 which empowers the Commissioner to pass revisionary orders after calling for record of the proceedings before his subordinates, within two years of the date of passing the original order. In spite of a safety provision in clause 4 of Section 84 which bars a Commissioner from taking up a revision of an issue if an appeal is pending before the Commissioner (Appeals), Commissioners frequently resort to this because the safety valve is only for appeal in an issue pending before Commissioner (Appeals). What would happen if the appeal process has passed the stage of Commissioner (Appeals) and the matter is pending before the Tribunal? There are instances where Commissioners have waited for this stage of the appeal process, to take up revision and pass adverse orders against the hapless assessees. We can deal with this subject another time.

Customs

Customs Commissioner (P) Mumbai has no jurisdiction over EEZ- Neither practice nor would consent confer jurisdiction– District of Raigad does not include EEZ.- High Court

Considering Article 297 and Article 1 of the Constitution, it will be clear that the territorial waters, Contiguous Zone, Continental Shelf and EEZ are not part of the territory of India but India exercises sovereign rights in respect of the territorial waters, on the continental shelf and also certain sovereign rights within the EEZ. The contention, therefore, urged on behalf of the Revenue that the Collector (Preventive) having been notified as the proper officer for the District of Raigad would have jurisdiction over the notified areas in the EEZ is rejected. Once the power has been exercised under Section 4, then it is only the proper officer who can only exercise the powers in respect of the areas in respect of which the jurisdiction has been conferred on them. Neither practice would confer jurisdiction nor would consent confer jurisdiction.

Income Tax

JV partners have ‘associated' themselves with a ‘common design' to provide consultancy services- to be considered as "Association of Persons– taxable in India- AAR

A non-resident company forming a J.V. with two Indian companies to provide technical services to an Indian client engaged in developing infrastructure has a P.E. in India and is taxable in India in terms of IT Act and Indo-Austrian DTAA- J.V. partners have ‘associated' themselves with a ‘common design' to provide consultancy services to the client - Common purpose and common action pursued towards the ultimate end of earning income/profits is evident in the agreements- J.V. partners are to be considered as "Association of Persons" in terms of s.2 (31)(v) of I.T. Act and hence taxable in India.

See our columns Tomorrow for the judgements