Abacus Distribution wins stay against Rs.8.81 Cr tax demand. Transfer pricing & depreciation issues contested. Next hearing on 8th July 2013.
From the impugned order, it does not come out clearly how the service tax liability has been computed. If the appellant has purchased from third parties and sold the same on payment of VAT and also supplied hardware on payment of VAT, the same would not be liable to service tax. The liability to service tax would arise only in respect of software which the appellant has developed as per customer’s specifications and supplied to their customers.
One important question survives for consideration and the same is whether the legal mistake committed by the Department can be corrected to ensure that the offender does not escape punishment under the Central Excise law. There is a clear distinction between a mistake of fact and a mistake of law. The former cannot be rectified at later stage but the latter is rectifiable subject, of course, to legal constraints. In the present case, the show-cause notice was issued to the appellant for the sole purpose of penalizing them for the offence alleged therein.
In this case Payment was made for reimbursement of the permission granted to the assessee for using trade mark ‘Wool, New Zealand’. Such payment cannot be said to be fee for technical services. Even otherwise also, in the light of the detailed discussions made in paragraph nos. 13, 14 and 15 of this order, such reimbursement of expenses are not subject to TDS. Accordingly, no disallowance is warranted. The addition of Rs. 2,88,135/- is deleted.
The search operation was carried out at the residence as well as business premises of Shri Yakub A. Colddrink where from the books of account of the firm as per Annexure A/11 & A/12 and loose paper as per Annexure-3 were found and seized. As per Section 153C, the books of account belonging to the other person is required to be found and seized at the premises of the search took place where assessment u/s. 153A has been made i.e. searched party.
Once the registration has been granted under section 12AA of the Act, the exemption under Section 11 cannot be withdrawn unless there is violation of provisions of Section 13 of the Act or the registration under Section 12AA(3) of the Act is cancelled. The Tribunal held that the decision of this Court in the matter of CIT v. Pruthivi Trust [1980] 124 ITR 488 is distinguishable on facts as the Trust in that case was carrying out profit making activity without any authorisation in the Trust Deed.
The Hon’ble Tribunal has held that Excise duty paid on Inputs and Service Tax paid on Input services used in the construction of immovable property can be taken and utilized for discharging ST liability on the renting of such immovable property and granted unconditional waiver from the pre-deposit of the dues adjudged against the Appellant and stay recovery thereof during the pendency of the Appeal on the basis of relying upon the following case laws:
The revenue have not placed any material suggesting that the assessee had any interest either as a lessee or sub-lessee or a tenant in any of the aforesaid 13 premises. The fact that the assessee was allowed use of premises by IISPL in terms of agreement dated 1-12-2008, cannot lead to the conclusion that the assessee had any interest as a lessee, sub-lessee or tenant over the various premises. The right to use any land or building necessarily implies that the assessee must have some interest in the immovable property as a tenant.
In this case Tribunal was wrong in holding that if one profit level indicator of a comparable, out of a set of comparables, is lower than the profit level indicator of the taxpayer, then the transaction reported by the taxpayer is at an arm’s length price. The proviso to section 92C(2) is explicit that where more than one price is determined by most appropriate method, the arm’s length price shall be taken to be the arithmetical mean of such prices. To this extent the appeal is allowed. However, as pointed out above, if this principle is applied to the comparables suggested by the assessee (which have not been rejected by the Transfer Pricing Officer), the arm’s length price suggested by the assessee would yet be acceptable in law. There shall be no orders as to costs.
Revenue agrees to grant an opportunity to the appellant to reduce the dispute at the grass root level. In view of the limited opportunity of rebuttals as above pleaded the matter is remanded to the learned Adjudicating Authority to re-examine the issue of input credit admissibility as stated above including the documents referred to in Para 5.2 of the first appellate order granting fair opportunity of defence to the appellant.
