|
Advanced Search Options
Case Laws
Showing 41 to 60 of 217 Records
-
1993 (11) TMI 212
Issues Involved:
1. Whether deduction of packing charges from the total turnover, for the purpose of determining the taxable turnover was erroneous.
2. If so, whether it can be said to be a mistake apparent from the record, inviting rectification u/s 25-A.
Judgment Summary:
Preliminary Objection:
The respondent raised a preliminary objection that the petitioner had filed appeals regarding some rectification orders and hence the writ petitions should not be entertained due to the availability of an alternative remedy. However, the court noted that where an authority acts without jurisdiction or in excess of jurisdiction, it is proper to exercise writ jurisdiction.
Re: Point (i):
The petitioner contended that the deduction of packing charges from the total turnover was justified u/r 6(4)(ff) of the Karnataka Sales Tax Rules, 1957, and that the question of whether packing charges should be included in the taxable turnover is a factual issue requiring investigation. The petitioner argued that the assessing authority had initially allowed the deduction of packing charges, and this decision could not be rectified merely on the basis of a subsequent Supreme Court decision.
The court referred to the Supreme Court decision in *Ramco Cement Distribution Co. Pvt. Ltd. v. State of Tamil Nadu* [1993] 88 STC 151, which held that packing charges form part of the "sale price" and thus should be included in the taxable turnover. The court also cited the Division Bench ruling in *Visvesvaraya Iron & Steel Ltd. v. Deputy Commissioner of Commercial Taxes* [1991] 83 STC 305, which held that the cost of packing material should be included in the taxable turnover for cement sales covered by the Cement Control Order, 1967.
Re: Point (ii):
The court examined whether the deduction of packing charges constituted a "mistake apparent from the record" u/s 25-A. The court noted that the assessment orders did not provide any reasons for deducting packing charges and were non-speaking orders in this regard. The court held that overlooking the binding decision in *Visvesvaraya's case* [1991] 83 STC 305 constituted a mistake apparent from the record. Furthermore, the court stated that a subsequent decision of the Supreme Court, such as in *Ramco's case* [1993] 88 STC 151, which clarified the law, rendered the previous assessment orders erroneous and amenable to rectification.
Conclusion:
The court held that the orders of rectification, which included packing charges in the taxable turnover, were valid and justified. The court dismissed the writ petitions but allowed the petitioner to address any other grievances related to the rectification orders in the appeals filed or to be filed. The court also directed that if appeals for the assessment years 1983-84 and 1984-85 were filed, the appellate authority should condone the delay due to the pendency of these writ petitions.
Disposition:
Writ petitions dismissed.
-
1993 (11) TMI 211
Issues:
1. Interpretation of tax rate on raajma under the Rajasthan Sales Tax Act, 1954 based on different notifications.
2. Determination of whether raajma falls under the category of pulses as per relevant notifications.
3. Analysis of the notifications dated May 19, 1972, and September 8, 1976, and their implications on the tax rate applicable to raajma.
Analysis:
The revision under section 15 of the Rajasthan Sales Tax Act, 1954 was filed challenging the order of the Rajasthan Sales Tax Tribunal, which held that raajma is taxable at 2 per cent as per the notification dated May 19, 1972. The assessing authority initially levied tax at 8 per cent on raajma, considering it not falling under the category of pulses. However, the Sales Tax Tribunal concluded that raajma is indeed a pulse in common and commercial parlance, and therefore, taxable at 2 per cent as per the May 19, 1972 notification.
The notification dated May 19, 1972, prescribed a tax rate of 2 per cent on pulses, including various forms like "dal", "besan", and "bran". The Tribunal found raajma to be commonly understood as a pulse and held that the notification of May 19, 1972, still applies to raajma, despite the subsequent notification of September 8, 1976. The Court emphasized that the meaning of a commodity in common and commercial parlance is crucial for taxation purposes, and in this case, raajma qualifies as a pulse.
Regarding the notifications, the Court highlighted that the September 8, 1976 notification specified certain goods at a tax rate of 4 per cent, excluding raajma. The Court clarified that the supersession in the September 8, 1976 notification pertains to specific items mentioned therein, and since raajma was not listed, it remains taxable at 2 per cent as a pulse under the May 19, 1972 notification. The Court also noted the amendment in the Central Sales Tax Act, 1956, specifying pulses as goods of special importance, aligning with the treatment of pulses under the Rajasthan Sales Tax Act.
In conclusion, the Court upheld the Tribunal's decision, affirming that raajma is taxable at 2 per cent as a pulse under the notification dated May 19, 1972. The revision petition challenging this decision was dismissed, emphasizing the correct interpretation of the notifications and the classification of raajma as a pulse for taxation purposes.
-
1993 (11) TMI 210
Issues Involved:
1. Interpretation of Explanation VIII in the Second Schedule to the Karnataka Sales Tax Act, 1957.
2. Applicability of turnover tax under Section 6-B of the Act.
3. Legislative history and its impact on the interpretation of Explanation VIII.
4. Validity of the Commissioner's clarification dated November 5, 1990.
Detailed Analysis:
Interpretation of Explanation VIII in the Second Schedule to the Karnataka Sales Tax Act, 1957:
The primary issue revolves around the interpretation of Explanation VIII in the Second Schedule to the Karnataka Sales Tax Act, 1957. The explanation states: "Where tax has been levied under this Act, in respect of raw silk referred to in SI. No. 7 of the Third Schedule, and out of such raw silk, silk yarn is manufactured, no tax shall be levied on such silk yarn to the extent it is manufactured out of such raw silk." The petitioners argue that the term "tax" in the explanation is comprehensive and includes all types of taxes levied under the Act. Conversely, the Revenue contends that the term "tax" refers only to the tax levied under the Second Schedule, read with Section 5(3)(a) of the Act. The court concluded that the explanation should be read as: "no tax leviable under the provisions of this Act shall be levied on such silk yarn to the extent it is manufactured out of such raw silk."
Applicability of Turnover Tax under Section 6-B of the Act:
Section 6-B of the Act provides for the levy of "turnover tax" based on the total turnover of a dealer, irrespective of whether the turnover is liable to tax under other provisions of the Act. The court noted that "tax under the Act" includes the tax levied under Section 6-B. The legislative history and the comprehensive language of Explanation VIII suggest that the exemption from tax provided by the explanation also covers the turnover tax under Section 6-B. The court ruled that the explanation envisages exemption from the levy of turnover tax under Section 6-B, apart from other levies under the Act.
Legislative History and its Impact on the Interpretation of Explanation VIII:
The court examined the legislative history and noted that prior to April 1, 1990, raw silk was exempt from tax under the Act. From April 1, 1990, to March 31, 1991, twisted silk was subject to tax, but subsequent notifications again exempted it from tax. The court emphasized that the language of Explanation VIII does not restrict the exemption to any particular section or item, thereby supporting the petitioners' claim that the exemption from tax provided by the explanation is comprehensive and not limited to the tax under Section 5.
Validity of the Commissioner's Clarification Dated November 5, 1990:
The court addressed the petitioner's challenge to the Commissioner's clarification, which stated that the purchase value of raw silk and the sales turnover of twisted silk should be included for the purpose of turnover tax, regardless of whether the twisted silk is manufactured from tax-suffered raw silk. The court declared that the clarification, to the extent it is opposed to the scope of Explanation VIII, is illegal and ultra vires, and therefore unenforceable.
Conclusion:
The court concluded that Explanation VIII to the Second Schedule should be interpreted to mean that no tax of any kind leviable under the Act shall be levied on silk yarn manufactured from raw silk that has already been taxed. Consequently, the impugned notices and orders were quashed, and the petitions were allowed. The court made the rule absolute and did not award costs.
-
1993 (11) TMI 209
Issues Involved:
1. Levy of entry tax on goods used as inputs by the petitioner.
2. Definition and scope of the term "dealer" under the Act.
3. Adequacy of opportunity to show cause against the proposition notice.
4. Allegation of antedating the assessment order.
Detailed Analysis:
1. Levy of Entry Tax on Goods Used as Inputs by the Petitioner:
The petitioners sought to quash the proposition notice dated March 1, 1988, which proposed to levy entry tax for the year 1982-83 under the Karnataka Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1979. The goods in question were aluminum ingots, industrial gases, iron and steel, petroleum products, coal, and coke, used as inputs in the manufacture of electrical goods by the first petitioner-company. Petitioners contended that entry tax should not be levied on these goods as they were not dealers in those goods but used them as inputs in manufacturing.
2. Definition and Scope of the Term "Dealer" Under the Act:
The primary question was whether the first petitioner was a "dealer" in the goods referred to in the impugned show cause notice. The petitioners argued that the term "dealer" should be understood as someone regularly engaged in buying and selling the goods, not someone who brings in goods for use in manufacturing other goods. The court referred to sections 3 and 4 of the Act, which levy tax on the entry of scheduled goods and require every dealer in scheduled goods to get registered. The court concluded that a manufacturer who buys goods as inputs for manufacturing is also considered a dealer in those goods under the Act, as per the definitions in the Karnataka Sales Tax Act incorporated into the Act.
3. Adequacy of Opportunity to Show Cause Against the Proposition Notice:
The petitioners argued that they were not given adequate time to respond to the proposition notice, which was issued nearly five years after the relevant period. They sought four weeks to gather necessary information but were not granted this time. The court found that the second respondent should have provided reasonable time for the petitioners to show cause, especially given the complexity and the time elapsed since the transactions.
4. Allegation of Antedating the Assessment Order:
Petitioners alleged that the assessment order dated March 14, 1988, was antedated to circumvent the interim stay order issued by the court on March 22, 1988. The demand notice was issued on March 26, 1988. The court found it unnecessary to probe this allegation but noted that the issuance of the demand notice was unjustified given the interim stay order.
Conclusion:
The court allowed the writ petition, setting aside the assessment order and the demand notice (annexures "J" and "H") due to the violation of principles of natural justice. The petitioners were granted four weeks from the receipt of the court's order to show cause against the proposition notice, which the second respondent must consider and pass appropriate orders according to law after hearing the petitioners. The rule was made absolute, and no costs were awarded.
-
1993 (11) TMI 208
Issues:
Jurisdiction of assessing authority under the Rajasthan Sales Tax Act, 1954 regarding turnover limit for assessment.
Analysis:
The revision petition was filed against the order of the Rajasthan Sales Tax Tribunal regarding the jurisdiction of the Commercial Taxes Officer in passing the assessment order for a dealer with a turnover less than Rs. 7 lakhs. The Tribunal held that the Assistant Commercial Taxes Officer had no jurisdiction to pass the assessment order in this case.
The assessment was framed by the Commercial Taxes Officer, A Circle, Jaipur, for the assessment year 1974-75. An appeal was filed against this assessment order, claiming that the Assistant Commercial Taxes Officer did not have jurisdiction at the time of issuing the notice for assessment. The Tribunal accepted the revision based on a previous apex court decision.
The court analyzed the relevant provisions of the Rajasthan Sales Tax Act and Rules to determine the assessing authority for a dealer. It was established that the Commercial Taxes Officer was the assessing authority in this case as returns were submitted to him, and he issued the notice for assessment before the Assistant Commercial Taxes Officer gained jurisdiction.
The notification dated June 24, 1977, which vested the Assistant Commercial Taxes Officer with jurisdiction up to Rs. 7 lakhs, was found not to divest the Commercial Taxes Officer of his jurisdiction, as he had already assumed authority by issuing the assessment notice. The court emphasized that specific notifications are required to confer jurisdiction on assessing authorities other than the one before whom returns were submitted or who issued the notice.
Referring to a previous apex court decision, the court clarified that jurisdiction is allocated based on specific areas or limits, and in this case, the Commercial Taxes Officer retained jurisdiction over the assessment. The Tribunal's order was set aside, and the case was remanded for a fresh decision after hearing both parties.
The judgment highlighted the importance of jurisdiction and the process of assessment under the Sales Tax Act, emphasizing that once an assessing authority assumes jurisdiction, no other authority can proceed with the assessment without proper transfer orders.
In conclusion, the revision petition was allowed, the Tribunal's order was set aside, and the case was remanded for a fresh decision in accordance with the law after hearing both parties.
-
1993 (11) TMI 207
Issues:
Challenge to the order passed by Sales Tax Tribunal, Haryana; Imposition of penalty under section 48 of the Act; Validity of returns filed by the petitioner; Jurisdiction of the Tribunal under section 39 of the Act.
Analysis:
The petitioner, a company registered under the Haryana General Sales Tax Act, challenged the penalty imposed by the Sales Tax Tribunal. The petitioner's factory building was under construction until January 1986, when production began. Initially, returns showing "nil" turnover were filed, but later revised returns were submitted with taxes paid. The Assessing Authority imposed penalties, which were partly set aside by the Joint Excise and Taxation Commissioner. The Tribunal upheld the penalties, leading to the petitioner's appeal to the High Court through writ petitions. The petitioner argued that the penalties were unjustified and that the lawyer who filed the returns was not authorized. The respondents contended that the penalties were justified. The Court focused on the Tribunal's order and the jurisdiction under section 39 of the Act.
The Court noted that the Tribunal's authority was limited to the points raised in the appeal before it. As the Assessing Authority did not challenge the appellate decision, the Tribunal could not consider unchallenged facts. The respondents argued that the Tribunal had the power to pass a just and proper order under section 39(6) of the Act. However, the Court clarified that this power was confined to the claims made in the appeal and did not extend to suo motu actions. As the Tribunal failed to decide based on the appeal's content, its order was set aside, and the case was remanded for a fresh decision after hearing both parties.
Regarding another writ petition, the Court decided to remand the case to the Tribunal for a fresh decision on merits to avoid contradictory findings. Both writ petitions were allowed, and the cases were remanded to the Tribunal. The parties agreed that the sales tax cases had become infructuous, leading to the dismissal of the cases without costs. The writ petitions were allowed, and the sales tax cases were dismissed as infructuous due to the remand for fresh decisions.
-
1993 (11) TMI 206
The High Court of Kerala upheld the decision of the Sales Tax Appellate Tribunal in a case involving an assessee under the Kerala General Sales Tax Act for the assessment year 1987-88. The Tribunal found the estimate of 1½ times the suppressed turnover and exempting 80% of the same to be minimal and no error in law was committed. The tax revision case was dismissed.
-
1993 (11) TMI 205
Issues:
1. Interpretation of registration certificate and applicability to purchase of goods.
2. Allegations of false representation by the dealer.
3. Application of penalty under section 10A of the Central Sales Tax Act.
4. Consideration of mens rea in cases of tax delinquency.
Interpretation of registration certificate and applicability to purchase of goods:
The case involved a revision preferred under section 38 of the Tamil Nadu General Sales Tax Act, 1959, against an order passed by the Sales Tax Appellate Tribunal. The issue revolved around whether the dealer was entitled to include an air-conditioner in the "C" form to avail of a concessional rate of sales tax. The authorities found that the air-conditioner was not connected to the printing press mentioned in the registration certificate, thus not eligible for the concessional rate. The certificate only covered specific machinery and materials required for the printing press, excluding air-conditioners. The inclusion of the air-conditioner in the "C" form was deemed a violation of the Central Sales Tax Act.
Allegations of false representation by the dealer:
The Commercial Tax Officer and appellate authorities found that the dealer falsely represented that the purchased goods were covered by the registration certificate. The Tribunal confirmed this finding, leading to a conclusion that the dealer misrepresented the goods' inclusion in the certificate of registration, specifically mentioning the purchase of film. The Tribunal upheld the finding of false representation, which was crucial in determining the applicability of penalty under section 10A of the Central Sales Tax Act.
Application of penalty under section 10A of the Central Sales Tax Act:
The Tribunal confirmed the levy of penalty under section 10A due to the dealer's false representation regarding the inclusion of goods in the registration certificate. The penalty was reduced by the Appellate Assistant Commissioner, but the Court upheld the decision, emphasizing that the dealer's conduct amounted to a violation of the Act. The judgment highlighted the importance of establishing blameworthy conduct rather than mens rea in cases of tax delinquency, underscoring that a false representation alone could warrant penalty under section 10A.
Consideration of mens rea in cases of tax delinquency:
The Court discussed the necessity of proving mens rea in tax delinquency cases, citing relevant case law. It emphasized that the blameworthy conduct of the assessee, such as making a false representation, was sufficient to attract penalty under the Act. The judgment rejected the argument that mens rea must be separately established, asserting that the existence of blameworthy conduct inherently included the element of mens rea. The decision clarified that in cases of tax delinquency, establishing blameworthy conduct through actions like false representation was essential for invoking penalty provisions.
In conclusion, the Court dismissed the petition, affirming the decision to reject the tax case based on the findings related to false representation and the violation of the registration certificate's terms.
-
1993 (11) TMI 204
Issues Involved:
1. Whether trade discount forms part of the sale price under Section 2(h) of the Central Sales Tax Act, 1956.
2. Distinction between trade discount and cash discount for the purpose of tax deduction.
Issue-wise Detailed Analysis:
1. Whether trade discount forms part of the sale price under Section 2(h) of the Central Sales Tax Act, 1956:
The central question referred to the court was whether the Board of Revenue was justified in holding that trade discount does not form part of the sale price, while under Section 2(h) of the Central Sales Tax Act, 1956, only cash discount has to be excluded from the sale price.
The court examined the definition of "sale price" under Section 2(h) which states: "'sale price' means the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed as cash discount according to the practice normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof other than the cost of freight or delivery or the cost of installation in cases where such cost is separately charged."
The court also reviewed the definition of "turnover" under Section 2(j), which means the aggregate of the sale prices received and receivable by a dealer in respect of sales of any goods in the course of inter-State trade or commerce made during any prescribed period and determined in accordance with the provisions of this Act and the rules made thereunder.
The court considered various precedents, including the decision of the Andhra Pradesh High Court in Sirpur Paper Mills Limited v. State of Andhra Pradesh [1979] 43 STC 126, where it was held that the "balance discount" formed part of the sale price of goods. Similarly, in India Pistons Limited v. State of Tamil Nadu [1974] 33 STC 472, it was held that the expression "other discount" under the Act included bonus discount but did not attract the applicability of Section 2(h) of the Central Sales Tax Act, which excludes only "cash discount."
2. Distinction between trade discount and cash discount for the purpose of tax deduction:
The court analyzed the distinction between trade discount and cash discount. Trade discount, as defined in commercial parlance, is an allowance made by wholesale dealers to retailers off the catalogue or invoice price to enable the latter to sell goods at the catalogue price. This discount is deducted from the outward invoice sent to the retailer, and the entry in the sales book is made of the net amount. Trade discount does not appear in the books of either the seller or the purchaser.
Cash discount, on the other hand, is an allowance in addition to the trade discount made by the seller to the purchaser, provided the latter settles his account promptly or within a specified time known as the 'period of credit.' This discount is receivable by the trader when he pays his account promptly and is allowed by him to his customers for the prompt settlement of amounts due.
The court considered various judgments, including Orient Paper Mills Ltd. v. State of Orissa [1975] 35 STC 84, where it was held that trade discount was not part of the sale price. Similarly, in Deputy Commissioner of Sales Tax v. Advani Oerlikon (Private) Limited [1976] 37 STC 1, it was held that trade commission is not a part of the sale price.
The court also referred to the apex court's decision in Deputy Commissioner of Sales Tax v. Advani Oerlikon (P.) Ltd. [1980] 45 STC 32, which held that cash discount and trade discount are two separate and distinct concepts. Under the Central Sales Tax Act, cash discount is allowed when the purchaser makes the payment promptly or within the period of credit allowed. Trade discount, on the other hand, is a deduction from the catalogue price of goods allowed by wholesalers to retailers and does not enter into the composition of the sale price.
The court concluded that the Board of Revenue was justified in holding that trade discount does not form part of the sale price under Section 2(h) of the Central Sales Tax Act. The revision petition was accordingly dismissed.
Petition dismissed
-
1993 (11) TMI 203
Issues:
- Appeal against the order dismissing writ petitions seeking mandamus to restrain show cause notices for assessment years 1990-91 and 1991-92.
Detailed Analysis:
The writ appeals were filed against the order of a learned single Judge dismissing the writ petitions seeking mandamus to restrain show cause notices for the assessment years 1990-91 and 1991-92. The appellant/petitioner contended that the show cause notices issued were contrary to a decision of the Supreme Court. The assessing authority had proposed to assess turnover related to glass cloth or glass fabric, which the appellant/petitioner argued was beyond the authority of law. However, the Court emphasized that the jurisdiction under Article 226 cannot be exercised to bypass statutory remedies unless the notices are clearly without jurisdiction. The authority has the right to decide whether glass fabric or glass cloth falls under the relevant provision of the Sales Tax Act. The Court highlighted that if the assessing authority errs in its decision, the appellant/petitioner has the right to appeal to higher authorities. Therefore, the Court concluded that the appellant/petitioner had prematurely approached the Court without waiting for the assessing authority's decision. The Court upheld the decision of the learned single Judge, stating that it was not the appropriate stage for interference and dismissed the writ appeals.
Furthermore, the Court noted that the deadline for filing objections was approaching. Even though the writ appeals were dismissed, the Court deemed it just and necessary to grant the appellant/petitioner more time to file objections. The Court directed that if the objections were filed by a specified date, they would be considered, heard, and decided in accordance with the law. Until then, the assessing authority was instructed not to proceed with the show cause notices. No costs were awarded in this matter. The writ appeals were ultimately dismissed by the Court.
-
1993 (11) TMI 202
Issues Involved:
1. Accrual of Income for Retention Money
2. Disallowance of Interest on Loan to Director
Summary:
1. Accrual of Income for Retention Money:
The primary issue was whether the sum of Rs. 52,80,660, retained as retention money, accrued as income to the assessee during the relevant accounting year. The assessee, a manufacturer of instrumentation cables, argued that 10% of the payment withheld by customers as retention money did not represent income as its receipt was conditional upon the fulfillment of warranty obligations. The Assessing Officer and the Commissioner of Income-tax (Appeals) disagreed, asserting that the right to receive the payment accrued when the goods were supplied and the retention money was merely a postponed receipt.
The Tribunal examined the terms of the contract, noting that the 10% retention was contingent upon the completion of certain conditions, such as the submission of a performance guarantee. The Tribunal found that the assessee's obligation to rectify defects did not create an enforceable debt until the warranty period ended. The Tribunal referred to the case of CIT v. Simplex Concrete Piles (I.) P. Ltd. [1989] 179 ITR 8 (Cal), where retention money was not considered accrued income until the completion of contractual obligations. The Tribunal concluded that the retention money did not accrue as income in the relevant year.
2. Disallowance of Interest on Loan to Director:
The second issue was the disallowance of Rs. 8,400 out of the interest paid by the assessee to various banks, related to an advance of Rs. 56,000 given to a whole-time director, Sri S. G. Hoskote. The Assessing Officer disallowed the interest, asserting that the advance was not related to the assessee's business.
The Tribunal found that the director was a technocrat associated with the company since 1987 and did not hold any shares, thus not being substantially interested in the company. The Tribunal held that in the absence of any direct nexus between the loan and the interest paid on borrowings, the disallowance was not justified. The Tribunal referenced CIT v. Kishinchand Chellaram [1977] 109 ITR 569 (Bom) and concluded that the lending of a small sum to a director free of interest should be considered an act of commercial expediency. The disallowance was deleted.
Separate Judgment by Third Member:
There was a difference of opinion between the Judicial Member and the Accountant Member regarding the first issue. The Judicial Member held that the retention money accrued as income, while the Accountant Member disagreed. The matter was referred to a Third Member, who agreed with the Accountant Member, concluding that the retention money should be excluded from the total income until the guarantee period was over.
Final Decision:
The appeal was partly allowed, with the disallowance of interest being deleted and the retention money not being considered accrued income for the relevant year.
-
1993 (11) TMI 201
Issues Involved:
1. Applicability of Notification No. 179/77 and No. 118/75 to 'Thermit Portion', 'Ferro Alloys', and 'Togo Tenex'.
2. Determination of whether the use of power in the manufacturing process disqualifies the goods from the benefit of the notifications.
Issue-wise Detailed Analysis:
1. Applicability of Notification No. 179/77 and No. 118/75 to 'Thermit Portion':
The assessees claimed that 'Thermit Portion' was manufactured manually without using power, thus qualifying for the exemption under Notification No. 179/77. The ingredients of 'Thermit Portion' included Aluminium Granules, Mill Scale, Ferro Manganese, and Nail Chippings. The Aluminium Granules were manufactured using power, but the assessees contended that no new product came into existence under Section 2(f) of the Central Excises & Salt Act, 1944. Mill Scale was heated to remove impurities, and Ferro Manganese, purchased from the market, was also used. The Collector (Appeals) held that the mixing of these items was done manually without power, and the manufacturing processes of the raw materials were distinct and commercially identifiable. Therefore, the benefit of Notification No. 179/77 was correctly extended to 'Thermit Portion'.
2. Applicability of Notification No. 179/77 and No. 118/75 to 'Ferro Alloys':
The assessees argued that 'Ferro Alloys' were manufactured by manually mixing Aluminium powder with other raw materials purchased from the market. Although Aluminium powder was manufactured using power, it was a duty-paid, marketable commodity. The Collector (Appeals) agreed that the manual mixing of these ingredients without power qualified for the exemption under Notification No. 179/77. Additionally, the benefit of Notification No. 118/75 was extended to Roasted and Sieved Mill Scale and Aluminium powder used in 'Ferro Alloys' as they were separate and distinct commercial commodities liable for duty when cleared as such.
3. Applicability of Notification No. 179/77 to 'Togo Tenex':
'Togo Tenex' was manufactured using an oil furnace with an electrically operated blower for quick burning. The Collector (Appeals) did not provide a specific finding for 'Togo Tenex'. However, the Tribunal held that the use of an electric blower for quick burning constituted a process incidental and ancillary to the completion of the manufacture. Therefore, 'Togo Tenex' was not entitled to the benefit of Notification No. 179/77.
4. Determination of whether the use of power in the manufacturing process disqualifies the goods from the benefit of the notifications:
The Revenue contended that the use of power in the initial stages of manufacturing Aluminium Granules and Mill Scale should disqualify the final products from the exemption. However, the Tribunal held that since the ingredients were independent, duty-paid, marketable commodities, the manual mixing process without power for the final products 'Thermit Portion' and 'Ferro Alloys' qualified for the exemption. The Tribunal relied on the Supreme Court's interpretation in the case of Rajasthan State Chemical Works, which clarified that the use of power in any process integrally connected to the manufacture disqualifies the exemption. However, in this case, the final mixing process was manual, and the ingredients were already duty-paid.
Conclusion:
The appeal was partly allowed. 'Thermit Portion' and 'Ferro Alloys' were entitled to the benefit of Notification No. 179/77, while 'Togo Tenex' was not. The benefit of Notification No. 118/75 was also extended to the Roasted and Sieved Mill Scale and Aluminium powder used in 'Ferro Alloys'.
-
1993 (11) TMI 200
Issues Involved:
1. Eligibility for Small Scale Industries Exemption under Notification 175/86.
2. Ownership and use of the brand name "Kwality".
3. Admissibility of additional evidence.
4. Interpretation of para 7 and Explanation VIII of Notification 175/86.
Detailed Analysis:
1. Eligibility for Small Scale Industries Exemption under Notification 175/86:
The appellants, engaged in the manufacture of ice cream under the brand name "Kwality," claimed an exemption under Small Scale Industries Exemption Notification 175/86. The jurisdictional Assistant Collector denied this exemption, stating that the brand name "Kwality" was owned by M/s. K.I.C. Food Products, New Delhi, who were not eligible for the exemption. This decision was based on para 7 of the Notification, which precludes the exemption if the specified goods are affixed with a brand name of another person not eligible for the exemption. The Assistant Collector's order was upheld by the Collector (Appeals), leading to the present appeals.
2. Ownership and Use of the Brand Name "Kwality":
The core issue revolved around whether the appellants could use the brand name "Kwality" for claiming the exemption. The appellants argued that the expression "Kwality" was not an invented word and was used by multiple manufacturers. They provided evidence from the Trade Marks Registry showing various entities using the "Kwality" brand, including pending applications and registrations by different manufacturers. The department, however, maintained that K.I.C. Foods, New Delhi, were the owners of the brand name "Kwality," and a disclaimer did not negate their ownership.
3. Admissibility of Additional Evidence:
The appellants sought to introduce additional evidence, including labels of competing manufacturers and letters from the Trade Marks Registry, to establish that multiple entities used the "Kwality" brand. The Tribunal found that not all documents were fresh and that some were relevant for a proper disposal of the appeal. It was deemed necessary to consider this evidence to meet the ends of justice. The Tribunal allowed the additional evidence to be taken on record and remanded the case to the jurisdictional Assistant Collector for evaluation.
4. Interpretation of para 7 and Explanation VIII of Notification 175/86:
The Tribunal focused on the interpretation of para 7 and Explanation VIII of Notification 175/86, which define "brand name" or "trade name" and the conditions under which the exemption does not apply. The evidence provided by the appellants aimed to demonstrate that the "Kwality" brand was used by multiple manufacturers, thereby challenging the department's assertion of exclusive ownership by K.I.C. Foods. The Tribunal emphasized the need for a thorough evaluation of this evidence to determine the appellants' eligibility for the exemption.
Conclusion:
The Tribunal allowed the additional evidence to be taken on record and remanded the case to the jurisdictional Assistant Collector for a fresh decision. The Assistant Collector was directed to evaluate the new evidence and decide on the appellants' eligibility for the exemption under Notification 175/86, in accordance with the law, after providing an opportunity for a hearing. The appeals were disposed of by remand to ensure a just resolution of the issues involved.
-
1993 (11) TMI 199
Issues Involved:
1. Authority to institute the suit.
2. Validity of the board meeting and appointment of additional directors.
3. Alleged corporate injury and fairness of share valuation.
4. Compliance with the Companies Act and Articles of Association.
Issue-wise Detailed Analysis:
1. Authority to institute the suit:
The plaintiff, Mr. Ferruccio Sias, filed a suit for damages, declaration, and injunction, asserting his position as a whole-time director of SAE (India) Limited. The court emphasized the necessity for proper authorization to institute a suit on behalf of a corporation. According to Order 29 of the Code of Civil Procedure, 1908, a suit must be signed and verified by an authorized person. The court referenced previous judgments, including Oberoi Hotels (India) Pvt. Ltd. v. Observer Publications (P) Ltd. and Nibro Limited v. National Insurance Co. Ltd., which necessitated proper authorization by resolution or power of attorney for instituting a suit. Mr. Sias's power of attorney, dated May 28, 1993, only allowed him to sue jointly with others, not independently. Therefore, the court concluded that Mr. Sias lacked the authority to institute the suit on behalf of SAE (India) Limited.
2. Validity of the board meeting and appointment of additional directors:
The plaintiff contested the legality and mala fide nature of the board meeting held on September 15, 1993, during which four additional directors were appointed. The court noted that the notice for the meeting was sent by facsimile to all directors, including those abroad. The quorum for the meeting, as per the company's Articles of Association, was met. The court referenced Abnash Kaur v. Lord Krishna Sugar Mills, which held that only a notice of the meeting is required, not an agenda. The court found that the notice was adequate and the meeting was validly convened. The appointment of additional directors was within the board's powers under Article 88 of the Articles of Association and section 260 of the Companies Act.
3. Alleged corporate injury and fairness of share valuation:
The plaintiff alleged that the appointment of additional directors caused corporate injury to SAE (India) Limited. The court found no evidence of corporate injury. The disputes arose from the economic liberalization policies and the valuation of shares for the proposed amalgamation with Asea Brown Boveri (India) Limited. The court emphasized that the directors of SAE (India) Limited were duty-bound to protect the interests of the company and its shareholders. The valuation of shares was to be determined by a known expert, Mr. Malegam of S.B. Billimoria and Co., and approved by ICICI Securities and Finance Company Limited. The court concluded that the valuation process was fair and just.
4. Compliance with the Companies Act and Articles of Association:
The court examined the compliance with the Companies Act and the Articles of Association of SAE (India) Limited. The Articles vested control of the company in the board of directors, who were authorized to act on behalf of the company. The board's decision to issue additional shares to Elettrofin Societa Anonima Finanziaria and the proposed amalgamation with Asea Brown Boveri (India) Limited were within their powers. The court reiterated that the directors must act in the best interest of the company and its shareholders, not under the influence of any holding company. The court found no violation of the Companies Act or the Articles of Association.
Conclusion:
The court held that Mr. Sias lacked the authority to institute the suit on behalf of SAE (India) Limited. The board meeting on September 15, 1993, and the appointment of additional directors were valid. There was no corporate injury to SAE (India) Limited, and the share valuation process was fair. The suit was dismissed following the principles laid down in previous judgments.
-
1993 (11) TMI 198
Issues involved: Winding up petition based on outstanding dues from respondent-company and maintainability of the petition due to reliance on running account.
Judgment Summary:
Issue 1: Outstanding Dues and Winding Up Petition
The petitioner sought winding up of the respondent-company due to outstanding dues of Rs. 7,19,546.12, with a pending larger amount suit. Despite statutory notices and acknowledgments of liability, the respondent failed to pay. Ex parte proceedings were conducted, and evidence was presented, including the respondent's admission of the due amount. However, the court noted that reliance solely on a running account for a winding up petition was not appropriate, as per Section 34 of the Evidence Act and the decision in Chandradhar Goswami v. Gauhati Bank Ltd. The court emphasized that a winding up petition based on a running account is not suitable and that liability must be proven for each entry in the books of account.
Issue 2: Maintainability of Winding Up Petition
The court highlighted that the basis of the current petition, the running account, was not the subject of previous court decisions. It was noted that the Division Bench decision did not address the specific issue of the running account's suitability for a winding up petition. Referring to the Supreme Court's stance in Chandradhar Goswami case, it was concluded that proving each entry in the books of account is not feasible in a summary procedure under section 433 of the Companies Act. The court ruled that a civil suit, not a winding up petition, was the appropriate remedy for the petitioner in this case.
In conclusion, the court found the winding up petition not maintainable due to the reliance on a running account and directed the petitioner to pursue the appropriate remedy through a civil suit if deemed necessary.
-
1993 (11) TMI 187
Issues:
1. Whether the amount along with interest claimed in the petition is due from the respondent?
2. Whether the present petition is within limitation?
3. Relief sought.
Analysis:
Issue 1:
The claim petition was filed under section 446(2) of the Companies Act, 1956, by the official liquidator of a company in liquidation to recover the unpaid called amount with interest from the respondent. The company was engaged in the business of purchasing, selling, and hiring out various items. The respondent denied liability, claiming no supporting documents were attached to the petition. Evidence presented, including accounts and witness testimonies, established that the respondent had taken a loan of Rs. 20,400 from the company, with Rs. 16,245 still outstanding. The respondent's defense of only participating in a "committee" was refuted, and it was concluded that the amount was due, and the company had proven its case.
Issue 2:
The respondent argued that the petition was time-barred, as it was filed in 1992, beyond the limitation period. However, the court analyzed the provisions of section 458A of the Companies Act, which excludes certain time periods in computing limitation for suits related to winding up proceedings. Relying on precedents from Unico Trading and Chit Funds (India) P. Ltd. v. S.H. Lohati and New Kerala Roadways P. Ltd. v. K.K. Nanu, the court held that the petition was within limitation. The exclusion of time under section 458A, along with the three-year period under article 137 of the Limitation Act, rendered the petition timely.
Relief:
The court ordered the respondent to pay the outstanding amount of Rs. 16,245 along with interest at a rate of 12% per annum from the last transaction date. No evidence was presented regarding the agreed rate of interest, so the court determined the rate based on the prevailing circumstances in 1983. Additionally, no costs were awarded in the case.
This judgment highlights the importance of maintaining accurate records and adhering to statutory limitations in company liquidation proceedings.
-
1993 (11) TMI 182
Issues Involved:
1. Maintainability of the suit in the trial court.
2. Whether the trial court's order was a speaking order.
Issue-wise Detailed Analysis:
Re. Contention No. 1:
The defendants contended that the trial court's order was not a speaking order, asserting that no detailed order was made on September 29, 1993, except the one in the order sheet. The trial court's order sheet stated, "Order on I. A. Nos. 1 to 3: Pronounced in open court," and mentioned a detailed order allowing I. A. Nos. 1 and 2 and rejecting I. A. No. 3. The defendants argued that they were not provided with a certified copy of the detailed order. However, the plaintiff's counsel produced a certified copy of the detailed order during the appeals. The court noted that the defendants did not specifically challenge the trial court's statement about a detailed order in their grounds of appeal. The court emphasized the presumption that statements of fact in judgments and orders are correctly recorded and that the legal requirements have been complied with by those discharging public functions. The court concluded that the trial judge had indeed made a detailed speaking order on September 29, 1993.
Re. Contention No. 2:
The defendants argued that the suit was not maintainable in the trial court and that the plaintiff should have invoked the jurisdiction of the Company Law Board under sections 10 and 10E of the Companies Act. They contended that the plaintiff's grievances related to the removal and election of directors, which are matters specifically provided for under the Act and should be addressed through the forum created by the Act. The court examined whether the right to elect or remove directors is a special right created by the statute or an inherent right of shareholders. It concluded that the right to participate in the election or removal of directors is an inherent right of shareholders and not a special right created by the statute. The court noted that sections 257 and 284 of the Act regulate the exercise of this right but do not provide an exclusive jurisdiction for its enforcement. The court referred to various precedents, including the Supreme Court's decision in Life Insurance Corporation of India v. Escorts Ltd., which affirmed that every shareholder has the right to call an extraordinary general meeting and move resolutions for the removal or appointment of directors. The court concluded that the civil suit filed by the plaintiff to enforce his individual right as a shareholder was maintainable and that the jurisdiction of civil courts was not excluded by the Companies Act.
Conclusion:
The court affirmed the trial court's order, holding that the trial court had made a detailed speaking order and that the civil suit filed by the plaintiff was maintainable. The civil revision petition was dismissed.
-
1993 (11) TMI 172
Dismissal of frivolous complaints - Appellants claimed relief and compensation for delay in issuing unit certificates of Master-gain-1992 Scheme purchased from UTI - District Forum allowed interest for a specified period - Whether appellants' appeal seeking further raise in quantum of relief had any merit or adequate foundation in absence of meaningful evidence led by them to establish precise quantum of their claim - Held, no
-
1993 (11) TMI 166
Issues:
1. Interpretation of Rule 57F(4)(c) regarding remission of duty on waste arising from processing of inputs.
2. Determination of whether batteries becoming unusable due to long storage qualify as waste under Rule 57F(4)(c).
3. Consideration of whether batteries used in the manufacturing process are eligible for remission of duty.
4. Analysis of whether batteries, once deemed unusable, can be classified as waste under the MODVAT Scheme.
5. Evaluation of the lower appellate authority's decision and the need for further evidence regarding the usage of batteries in the manufacturing process.
Analysis:
The appeal before the Appellate Tribunal CEGAT, Madras involved a dispute regarding the remission of duty on batteries used in the manufacture of motor vehicles. The Revenue challenged the Collector of Central Excise (Appeals), Madras' decision to allow remission of duty under Rule 57F(4)(c) based on the batteries becoming unusable due to long storage. The Collector (Appeal) held that the batteries qualified as waste arising during the manufacturing process and were eligible for duty remission. The appellant-Collector argued that the batteries were the inputs themselves and not waste arising from processing, thus not covered under Rule 57F(4). The Tribunal noted the precedent set by the Supreme Court and previous cases regarding the eligibility of certain components as inputs. The Tribunal observed that the lower authority failed to provide evidence of the batteries' actual usage in the manufacturing process. Consequently, the Tribunal set aside the lower authority's decision and remanded the matter for further adjudication.
The Tribunal analyzed the provisions of Rule 57F(4) which govern the disposal of waste arising from processed inputs. It highlighted the requirement for waste to be a byproduct of the processing of inputs for duty remission under the rule. The Tribunal scrutinized the nature of batteries as inputs in the manufacturing process and the MODVAT Scheme's applicability to components like batteries. It emphasized the need for a harmonious interpretation of the MODVAT Scheme to cover all inputs, including components used in the final product. The Tribunal concluded that if an input becomes defective or unusable due to its use in the final product, it should be considered waste. However, the Tribunal found a lack of evidence supporting the actual usage of batteries in the manufacturing process, leading to the decision to remand the case for further examination.
In summary, the Tribunal's decision focused on the interpretation of Rule 57F(4)(c) regarding duty remission on waste arising from processed inputs, specifically batteries in this case. The Tribunal emphasized the necessity of demonstrating the actual usage of batteries in the manufacturing process to determine their eligibility for duty remission as waste. The decision highlighted the importance of providing evidence to support claims of waste arising from the manufacturing process and underscored the need for a comprehensive evaluation before granting duty remission based on such claims.
-
1993 (11) TMI 165
Issues:
1. Whether the appellant contravened Rule 57G of the Central Excise Rules by utilizing Modvat credit for payment of duty without declaring certain cables as finished goods.
2. Whether the demand for payment of duty in cash through PLA for cables complete cleared as spare parts is justified.
3. Whether the recovery of Modvat credit wrongly taken is time-barred.
Detailed Analysis:
Issue 1:
The case involved the appellant, a manufacturer of Miner's cap lamps, who used cables as inputs and sent them to job workers to be cut and fixed with connectors. These cables, known as 'cables complete,' were consumed in manufacturing final products and sold as spares. The lower authority alleged that the appellant contravened Rule 57G by not declaring these cables complete as finished goods for input cables. The Collector (Appeals) noted that while the appellant had not declared the cables complete as final products under Modvat Rules, they had filed classification lists and price lists for the item, clearing them on duty payment through RG 23A Part II. The lower authority's demand for duty payment through PLA instead of RG 23A Part II was challenged, arguing that the duty payment through Modvat credit was valid and legal. The order emphasized that there was no suppression or mis-declaration by the appellant, and the authorities were aware of the duty payment method. The Tribunal found no merit in the appellant's contravention of Rule 57G and dismissed the appeal by the Revenue.
Issue 2:
Regarding the demand for payment of duty in cash through PLA for cables complete cleared as spare parts, the appellant had paid duty using Modvat credit through RG 23A Part II. The lower authority contended that since the cables complete were not declared as finished products under Rule 57G, duty payment should have been in cash or through PLA. The Tribunal noted that the authorities were aware of the appellant's clearance of cables complete and their duty payment method. It was concluded that there was no suppression of facts by the appellant, and hence, the extended period of limitation under Section 11A could not be applied for duty recovery. Consequently, the Tribunal found no merit in the Revenue's appeal on this issue and dismissed it.
Issue 3:
The question of the recovery of Modvat credit wrongly taken was raised, with the appellant arguing that there was no limitation provided under Rule 57-I for such recovery. The Tribunal referred to precedents, including a Supreme Court case and a High Court decision, to establish that a reasonable period of limitation should apply in the absence of specific provisions. It was held that recovery of Modvat credit wrongly taken was maintainable within a reasonable period. Therefore, the Tribunal upheld the lower authority's order in this regard.
In conclusion, the Tribunal dismissed the Revenue's appeal on all issues, finding no merit in the contentions raised and ruling in favor of the appellant in each instance.
........
|
9911796707
