Jurisprudentiol– Tomorrow's cases

By Vijay Kumar

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

Machinery given on lease - not liable for Service Tax under Banking and Financial service : CESTAT

The assessee, engaged in the manufacture of excisable goods, had given an extrusion machine on lease under an agreement. The assessee was paid monthly user charges for the machine. The Department considered this as Banking and Financial service and it culminated into usual confirmation of demand with interest and penalties under different sections. On appeal filed by the assessee, the Commissioner (Appeals) set aside the order and allowed the appeal. The order of the Commissioner (Appeals) is under challenge before the Tribunal.

Central Excise

Interest for delayed refund of CENVAT Credit - Provisions of Section 11BB are also applicable for delayed refund of CENVAT Credit under Rule 5 of CENVAT Credit Rules: CESTAT

REVENUE officials get jittery when it comes to sanctioning refunds. Even in eligible cases they come up with lame excuses to reject the claims. Of course, it's not an easy task to find lame excuses when the law is clearly laid down by the legislature. But officials have the knack of twisting the law and turning a blind eye to the prevailing provisions. The end result is delay in sanctioning the refund claims. When there is a delay interest provisions kick in automatically and if the officials have to sanction the refund with interest they know for sure that they are inviting trouble. Board or CERA will pounce on them for the lapses in not sanctioning the refunds in time and thereby draining the exchequer with interest payouts.

Income Tax

Payment to non-resident for software is deemed to accrue and arise in India and liable to deduction of tax at source: ITAT

TWO assessees approached the Tribunal aggrieved by the orders of the AO and CIT(A) for assessment years 2002-03 and 2003-04. The assessees paid certain sums to non residents in USA for acquiring the right to use equipment and acquiring the right to use software. These payments were regarded as royalties by the lower authorities and therefore by virtue of their deeming accrual in India, it was held that they are liable for TDS under the IT Act at the time of payments to the non-residents. Aggrieved by these orders, both the assessee's approached the Tribunal but with no success.

See our columns Tomorrow for the judgements

Today is Ganesh Chaturthi –

Vinayaka has Large Ears and a Small Mouth, which means, “you should listen more and talk less”