For starters, here is an explanation of how the decoders strengthen the collected signals, before feeding the same to the customers’ television.

“Normally, the signals so collected by the feed-horn are weak and, therefore, a device called ‘low noise block down converter’ is used for the amplification of those signals,” educates the text of the verdict dated September 26.

“The decoder also converts the signals received from the satellite by way of dish antenna into useable signals. In short, the signals are modulated into proper frequency and with the help of channel combiners, distribution amplifiers, channel converters and top off boxes, the signals are distributed to the subscribers for viewing the programs.

“This apparatus is useful in case of some of the broadcasters transmitting the pay channels and for that purpose the cable operator connects the decoder after the satellite receiver and the decoders perform the de-coding function only after the reception of signals by satellite receiver and then feed into the frequency level which the decoder can withstand.”

The argument put forward by the respondent would have been a sound one, observed the court, had the Entry 8528 been restricted to ‘television receivers’. However, now the Entry is not restricted to ‘television receivers’ but widened into ‘reception apparatus for television’.

The thrust is on the word ‘reception apparatus’, as against the thrust on the word ‘receiver’ in the un-amended Entry, said the court.

“In our opinion, the word ‘apparatus’ would certainly mean the compound instrument or chain of series of instruments designed to carry out specific function or for a particular use…”

A case to connect with, unless you are too busy watching T-20 replays!

* * *

When delivering the judgment in Jay Mahakali Rolling Mills vs Union of India, the Supreme Court had occasion to distinguish between ‘retrospective’ and ‘retroactive’, as reports the latest issue of Supreme Court Revenue Cases ( www.cliofindia.com ).

“Retrospective means looking backward, contemplating what is past, having reference to a statue or things existing before the statute in question,” observed the court. “One, which is made to affect acts or facts occurring, or rights occurring, before it comes into force.”

In contrast, ‘retroactive’ statute creates “a new obligation on transactions or considerations or destroys or impairs vested rights.”

In focus before the court was this line in a Customs circular: “…products like bars and rods made from such ship breaking scrap would ‘now’ be exempt from excise duty.” The effect of the word ‘now’ is that it is to operate henceforth, explains the text. “If the intention was to give retrospective effect, it would have been stated to be so specifically.”

Elementary, you may say, but lessons such as this are what can at times elude the understanding of parties to litigation.

* * *

These are heady times for retail. Which, perhaps, was why a wholesaler decided to file his tax return under Section 44AF of the Income-Tax Act, 1961, applicable to retailers. The Assessing Officer (AO) apparently accepted the return “without even examining the books of account,” as Consolidated Commercial Digest reports in its September 15 issue. It seems the Commissioner (Appeals) also “failed to appreciate that the provisions of Section 44AF apply only to retail business.” It was therefore left to the Tribunal to point out to the litigants in Sri Balaji Agencies vs ITO that the section was not applicable to the case on hand.

“It is neither open for the assessee nor the Revenue to opt for a particular section of their choice for taxation of a particular item irrespective of its applicability to the facts of the case. Since that aspect had not been gone into by the lower authorities, in the interest of justice, the issue has to be remitted to the files of the AO…”

How nice to imagine the existence of such a choice!

* * *

People’s Choice of Bangalore provides security services to its clients. It also provides other service personnel such as drivers, nurses, loaders, office assistants, receptionists, and so on. When the Revenue brought the supply of these persons for employment under the category ‘business auxiliary services’, the company argued that “providing of employees cannot be considered as promotion or marketing or sale of goods as defined under the term business auxiliary services,” as Service Tax Journal (STJ) from www.manupatra.com reports in Volume 10 Part 6. To the chagrin of the Department, the Bangalore Tribunal agreed with the company’s stand.

* * *

Another case in STJ is about Centre for Management Development, Thiruvananthapuram, an institution sponsored by the Government of Kerala providing “services to improve and develop suitable systems of management for different types of enterprises in the public, joint, cooperative, and private sectors.”

What was the problem? “The Department discovered on investigation that they were providing taxable services of ‘management consultant’ and as ‘commercial training or coaching centre’ and as ‘mandap keepers’. They have not been paying service tax in terms of the audited statement of accounts for the years 2000-01 to 2004-05…”

The Mumbai Tribunal had to recently study whether ‘imparting education of vocational training in the field of marketing skills’ as what Swadeshi Opportunity Pvt Ltd was doing came under ‘convention service’ as contended by the taxman. The Tribunal found it expedient to remand the matter back to the Commissioner (Appeals) “to examine and verify the actual activity being carried out by the appellants and find out as to what type of service they are rendering…”

If you are a company paying royalty charges towards the transfer of technical know-how, and the taxman wants to treat you as ‘consulting engineer’, a case that should help is that of Siemens Ltd, decided not long ago by the Bangalore Tribunal. Siemens, in turn, relied on a different decision: Rubco Huat Woods Pvt Ltd vs Commissioner of Central Excise, Calicut.

“I could get myself a lot of peace…”

“By switching off the mobile phone?”

“No, by changing the ring-tone to a gruff ‘pay your taxes’ chime!”

D. MURALI

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