• Educational Institutions Under the Scanner
Educational Institutions have been engaged in the practice of printing and selling prospectus and application forms. They generate a considerable amount of revenue from the same. They take cover and evade taxes under the pretense of conducting such activities incidental or ancillary to imparting education In the long heated case of Manipal University vs. State of Karnataka  45 taxmann.com 6(Karnataka), High Court of Karnataka has finally deliberated a decision in favour of the State where sale of prospectus and application forms would be leviable to tax as per the Karnataka VAT Act 2003 (hereinafter referred to as ‘the Act’). This decision may play a defining role in determining the taxability of activities carried out by educational institutions.
Background and Facts:
- Manipal University is a deemed university running medical colleges and hospitals attached thereto.
- It was a registered dealer under the Act. It was engaged in the business of supplying medicines and related materials to the patients.
- During the assessment years 2005-06 to 2009-10, it collected sizeable amounts from sale of prospectus and application forms and earned substantial profits from the same. However, during the impugned period, it paid tax only on the sale of medicines in the hospitals and medical shops maintained by it.
- The Assessing Authority levied tax on the sale of prospectus and application forms under the Act. Both the First Appellate Authority and the Tribunal upheld the order of the Assessing Authority.
• Clarity on CENVAT Credit of Capital Goods
Manufacturers purchase plant and machinery for manufacture of final goods. They also purchase various other assets to support the main activity like processing, quality control, testing, material handling or any other purpose. Till date, numerous instances have arisen where credit on such goods have been denied by the Assessing Authority. Aggrieved manufacturers have sought relief from various Statutory Bodies as held in the cases of Ghatampur Sugar v. CCE 1998 (104) ELT 415 (CEGAT), Bhushan Steel Strips v. CCE (2008) 223 ELT 517 (CESTAT) and CCE v. Kanoria Sugar General Mfg Co. (20100 256 ELT 594 (CESTAT). Recently, High Court of Madras has deliberated a decision in the favour of manufacturer affirming the decisions of the lower benches and providing relief to manufacturer.
In the case of Commissioner of Central Excise v. India Cements Ltd. 2014 (299) E.L.T. 176 (Mad.), the Honorable High Court of Madras has delivered that underground telephone cables being used in the factory of the manufacturer, the assessee would be entitled to CENVAT credit on the cables.
Brief Facts and Background:-
- India Cements Ltd. are manufacturers of cement. The assessee availed CENVAT Credit on capital goods under Section 57AA of the erstwhile Central Excise Rules 1944 in respect of underground telephone Cable falling under Sub heading No.8544.90 of the Central Excise Tariff Act.
- The telephone cables were being used for communication within the factory between different locations.
- The Assessing Authorities denied the claim of credit on such goods reasoning that the capital goods should have a nexus to the final product. It was contended that unless the goods in question were used in or in relation to manufacture of the final product, the assessee was not entitled to the benefit of CENVAT credit.
• Critical Analysis of Section 263 of the Income-tax Act, 1961
Section 263: Revision of orders prejudicial to Revenue.
(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.
(2) No order shall be made under sub-section (1) after the expiry of two years from the end of
the financial year in which the order sought to be revised was passed.
Conditions precedent to the exercise of jurisdiction
Section 263 of the Act confers powers on the Commissioner to revise an order passed by an
Assessing Officer. Two pre-requisites must be present before the Commissioner can exercise the revisional jurisdiction conferred on him.
If both these conditions are satisfied, the Commissioner may pass an order, modifying the assessment made, as may be found justified, including enhancement of income-tax or directing a fresh assessment to be made. Such an order has to be passed after giving a reasonable opportunity of being heard to the assessee. If the order is erroneous but it is not prejudicial to the interests of the Revenue, the Commissioner cannot exercise the revisional jurisdiction u/s 263 [H. H. Maharaja Raja Pawar Dewas v. CIT  138 ITR 518(MP)]. Conversely, if the order is not erroneous but is prejudicial to the Revenue, the Commissioner cannot take action u/s 263 [Malabar Industrial Co. Ltd. v. CIT  243 ITR 83 (SC)].
- The order passed by the Assessing Officer must be erroneous.
- The error must be such that it is prejudicial to the interests of the revenue.
• INTEGRATED SCHEME FOR
AGRICULTURAL MARKETING (ISAM)
- To develop agricultural marketing infrastructure for effectively managing marketable surplus of agriculture including horticulture and of allied sectors including dairy, poultry, fishery, livestock and minor forest produce.
- To promote innovative and latest technologies in agricultural marketing infrastructure.
- To promote competitive alternative agricultural marketing infrastructure by encouraging private & cooperative sector investments.
- To promote direct marketing so as to increase market efficiency through reduction in intermediaries and handling channels thus enhancing farmers’ income.
- To promote creation of scientific storage capacity for storing farm produce, processed farm produce and agricultural inputs etc. to reduce post-harvest and handling losses.
- To provide infrastructure facilities for grading, standardization and quality certification of agricultural produce with the objective of ensuring a price to the farmers commensurate with the quality of the produce and promoting pledge financing and marketing credit, negotiable warehousing receipt system, and promotion of forward and future markets to increase famers’ income.
- To promote Integrated Value Chain (confined up to primary processing stage only) to provide vertical integration of farmers with primary processors. Primary processing means adding value to the produce without change in its form and may include washing, sorting, cleaning, grading, waxing, ripening, packaging, labeling, etc.