Jurisprudentiol– Tomorrow's cases

By Vijay Kumar

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

Accepting the order-in-original passed by the Commissioner - Chief Commissioner committed mistake in taking decision at his own level for which the interest of the Revenue cannot suffer - conduct of the Chief Commissioner may warrant inquiry at the appropriate level – CESTAT

HERE is good News for Revenue – the acceptance by Chief Commissioners, of orders–in–original, prior to 11.5.2007 are declared to have no legal sanctity – so all of them can now be reviewed by the Committee of Chief Commissioners and appeals filed in the Tribunal – what more, delay will be condoned.

The major work done by the Chief Commissioners was reviewing the orders of the Commissioners and sending the appealable orders with “draft Review orders” to the Board. Now the Tribunal says that all the orders should have been sent to the Board and it was for the Board to accept or reject an order and not the Chief Commissioner.

Income Tax

Non-resident Co - organising golf tournament in India - India- UAE DTAA - Income generated from sponsorship and management fee not taxable in India as applicant has no PE in India; Key phrase in definition of PE in treaty is business 'carried on' which means continuity but same is missing in this case: Advance Ruling - AAR

THE latest Advance Ruling which was argued, elaborated, contested and commented upon eruditely on the sole point of PE (Permanent Establishment) in India- UAE DTAA , has finally gone against the Revenue. However, since the case was decided predominantly on the issue of facts, its outcome could be different in future when some of the factual variables may change if the non-resident company continues to do business in India. Another glaring flaw which has come out in the open in the DTAA is that our policy-makers while thrashing out the nitty-gritty of the treaty text, perhaps did not pay adequate attention to the need to tax fees for technical services (FTS). And thus, the receipt arising out of management fee which could have been taxed as FTS , escaped the levy.

Service Tax

Service Tax- Sale and Purchase of Mutual Fund Units – Units are goods – not liable for Service Tax – CESTAT

IT would appear that where a person is engaged in sale or purchase of, among other things, 'stock and shares' on behalf of another person for a consideration and, therefore, a commission agent, he would be entitled to the benefit of exemption under Notification No. 13/2003-ST. It is true that Section 2(7) of the Sale of Goods Act does not specifically refer to 'mutual fund units', but that is apparently because when the Act was enacted in 1930, the concept of mutual fund schemes was not known.

See our columns Tomorrow for the judgements