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• 1981 (5) TMI 135
  
  Issues:
  1. Delay in trials and administration of justice in the State of Bihar.
  2. Fundamental right to speedy trial.
  3. Need for additional courts and judges in Bihar.
  4. Release on bail for under-trial prisoners.
  
  Analysis:
  
  Issue 1: Delay in trials and administration of justice in the State of Bihar
  The Supreme Court addressed the issue of significant delays in trials and the administration of justice in Bihar. The Court highlighted the distressing situation where a large number of prisoners were languishing in jail without their trials commencing. The Court directed the sessions courts to expedite the trials of prisoners whose cases had been pending for an extended period, ensuring completion within six months. The Court emphasized the importance of providing legal aid to unrepresented prisoners and instructed the State to fund their legal representation.
  
  Issue 2: Fundamental right to speedy trial
  Building on a previous judgment, the Court reiterated that a speedy trial is a fundamental right implicit in the guarantee of life and personal liberty under Article 21 of the Constitution. The Court emphasized that any accused denied this right could approach the Court for enforcement. The Court sought information from the High Court regarding the number of judges in each district, pending cases, disposal norms, and the need for additional courts to ensure timely trials.
  
  Issue 3: Need for additional courts and judges in Bihar
  The Court requested the High Court to provide details on the number of judges in each district, pending cases, disposal norms, and the need for additional courts. The High Court was directed to communicate with the State Government to establish additional courts if required, ensuring timely disposal of cases and appointment of judges. The Court stressed the importance of taking necessary steps before the next hearing to address the backlog of cases.
  
  Issue 4: Release on bail for under-trial prisoners
  The Court directed the Magistrates to consider releasing under-trial prisoners on bail, especially those awaiting commitment since before December 31, 1976. Magistrates were instructed to assess eligibility for bail based on principles laid down by the Court. The Court emphasized the need for strict adherence to the directions provided in previous judgments related to the release of under-trial prisoners on bail, ensuring that the principles are followed by Magistrates and Sessions Judges in Bihar.
  
  In conclusion, the Supreme Court's judgment focused on addressing the delays in trials and administration of justice in Bihar, emphasizing the fundamental right to a speedy trial, the need for additional courts and judges, and the release on bail for under-trial prisoners to alleviate the burden on the justice system. The Court's directives aimed to expedite trials, provide legal aid, and ensure the timely release of eligible under-trial prisoners on bail.

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• 1981 (5) TMI 134
  
  Issues Involved:
  1. Competence of the Reference Order under Section 4-K of the U.P. Industrial Disputes Act, 1947.
  2. Validity of the Settlement Agreement and its Binding Nature.
  3. Application of Principles of Natural Justice and Legitimate Expectations.
  4. Existence of an Industrial Dispute.
  
  Detailed Analysis:
  
  1. Competence of the Reference Order under Section 4-K of the U.P. Industrial Disputes Act, 1947:
  The petitioner challenged the Reference Order made by the State of Uttar Pradesh on 6th September 1977, and the subsequent order of the Industrial Tribunal dated 18th December 1978, arguing that the reference was invalid. The court held that the government retains the power to make a reference under Section 4-K of the Act even after initially refusing to do so. The court cited Supreme Court decisions (Western India Match Co. Ltd. v. Workers Union, Binny Ltd. v. Their Workmen, and Avon Services Production Agencies v. Industrial Tribunal) to support that the government can reconsider its decision based on new facts or other relevant considerations. The court concluded that the government acted within its jurisdiction in making the reference, and the employer's expectation of a final decision after the initial refusal was not justified.
  
  2. Validity of the Settlement Agreement and its Binding Nature:
  The petitioner argued that the settlement agreement dated 16th July 1973, which referred the dispute to Sri B. B. Lal, was binding and resolved the dispute. The court rejected this argument, stating that the so-called settlement was merely an agreement to arbitrate and did not constitute a settlement under Section 6-B of the Act. The agreement did not meet the statutory requirements for a settlement and was not enforceable under the Act. The court held that the dispute continued to exist despite the agreement and the review by Sri B. B. Lal.
  
  3. Application of Principles of Natural Justice and Legitimate Expectations:
  The petitioner contended that the government should have heard the management before making the reference, invoking principles of natural justice and legitimate expectations. The court held that the principles of natural justice do not apply to administrative decisions like making a reference under Section 4-K, as it does not directly affect substantive rights but merely initiates adjudication. The court referred to the decisions in A.K. Kraipak v. Union of India, Smt. Meneka Gandhi v. Union of India, and Mohinder Singh Gill v. Chief Election Commissioner, emphasizing that natural justice principles are not universally applicable to all administrative actions. The court concluded that the petitioner had no right to a hearing before the reference was made and that the government's decision did not violate any legitimate expectations.
  
  4. Existence of an Industrial Dispute:
  The petitioner claimed that the dispute was resolved by the settlement and the review by Sri B. B. Lal, and no industrial dispute existed at the time of the reference. The court found that the dispute continued to exist as the workmen remained dissatisfied and consistently agitated their grievances. The court noted that the government's initial refusal to make a reference did not resolve the dispute, and the continued existence of the dispute justified the subsequent reference. The court held that the government had sufficient material to conclude that an industrial dispute existed and had applied its mind appropriately before making the reference.
  
  Conclusion:
  The court dismissed the petition, upholding the competence of the Reference Order under Section 4-K of the Act, rejecting the binding nature of the settlement agreement, and affirming that the principles of natural justice did not require a hearing before making the reference. The court also confirmed that an industrial dispute existed, justifying the government's decision to make the reference. The petitioner's contentions were found to be without merit, and the interim orders were vacated. The court acknowledged the commendable ability of the counsel in presenting their arguments.

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• 1981 (5) TMI 133
  
  Issues Involved:
  1. Whether a public servant charged with having disproportionate assets for which he cannot satisfactorily account can be convicted under s. 5(2) read with s. 5(1)(e) of the Prevention of Corruption Act, 1947.
  2. Whether the burden of disproving the charge shifts to the accused once the prosecution establishes possession of disproportionate assets.
  3. Whether the properties found in the respondent's possession could belong to his father-in-law, Hanumanthu.
  
  Summary:
  
  Issue 1: Conviction under s. 5(2) read with s. 5(1)(e) of the Act
  The Supreme Court held that the High Court erred in its interpretation of s. 5(1)(e) of the Prevention of Corruption Act, 1947. The High Court wrongly concluded that the prosecution must disprove all possible sources of income to convict a public servant for possession of disproportionate assets. The Court clarified that the burden is on the accused to satisfactorily account for the disproportionate assets once the prosecution establishes possession of such assets.
  
  Issue 2: Burden of Proof
  The Court explained that the burden of proof in criminal trials generally lies on the prosecution. However, in cases under s. 5(1)(e), once the prosecution proves the possession of disproportionate assets, the burden shifts to the accused to account for the acquisition of such assets. This burden is not as onerous as proving innocence beyond reasonable doubt but is discharged by establishing a preponderance of probability.
  
  Issue 3: Ownership of Properties
  The Supreme Court reviewed the evidence and found that the High Court's conclusion'that it was not improbable that the properties found in the respondent's possession belonged to his father-in-law, Hanumanthu'was not manifestly wrong or perverse. The evidence presented by the respondent, including testimonies and documents, supported the claim that Hanumanthu was a man of substantial means and had left significant property to his children, which included the respondent's wife.
  
  Conclusion:
  The appeal was dismissed, and the acquittal of the respondent by the High Court was upheld. The Supreme Court found no compelling reasons to interfere with the High Court's order, given the overwhelming evidence suggesting that the properties could belong to the respondent's father-in-law, Hanumanthu.

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• 1981 (5) TMI 132
  
  Issues:
  - Delay in payment of taxes deducted at source
  - Levy of penalties under section 221(1)
  - Interpretation of the law regarding tax deduction at source
  - Application of circulars issued by the Board
  
  Analysis:
  The judgment by the Appellate Tribunal ITAT Mumbai involved a group of appeals and cross-objections related to the delay in payment of taxes deducted at source, specifically focusing on penalties levied under section 221(1) and the interpretation of tax deduction laws. The assessee, a private limited company, had made payments by way of salary and commission to directors and salesmen during various assessment years. The Income Tax Officer (ITO) found a delay in the payment of taxes deducted at source and levied penalties for the delay, along with interest. The Commissioner (Appeals) canceled the penalties based on a Board circular issued in 1963, stating that no penalty was leviable if the tax had been paid before the penalty was levied.
  
  The department appealed the cancellation of penalties, arguing that an Explanation inserted in section 221 effective from 1-12-1975 allowed for penalty even if the tax had been paid before the penalty was levied. The assessee contended that the amendment came into effect only from 1-10-1975, and the penalties should be canceled based on the law before that date. The assessee argued that there was no default as the commission payments were made after auditing the accounts, and taxes were immediately deducted and paid to the Government. They also highlighted the application of circulars issued in 1963 and 1975 regarding penalty provisions.
  
  The Tribunal, after considering the merits of the case, concluded that no penalty should have been levied. They noted that the commission payments could only be ascertained after the accounts were completed, leading to a necessary delay in payments. The Tribunal agreed with the assessee's interpretation of section 192, stating that tax deduction is required only when actual payment is made, not just when amounts are credited to accounts. Therefore, they upheld the cancellation of penalties for the relevant years.
  
  In the appeal for the year 1976-77, the Tribunal applied the same reasoning as the earlier years, leading to the dismissal of departmental appeals and the allowance of the assessee's appeal and cross-objections. The judgment emphasized the importance of considering the specific provisions of tax deduction laws and circulars issued by the Board while determining the applicability of penalties for delayed tax payments.

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• 1981 (5) TMI 131
  
  Issues Involved:
  1. Quashing of the High Court's order.
  2. Application of the Ninth Exception to Section 499 of the Indian Penal Code.
  3. Determination of 'Good Faith' and 'Public Good' in the context of defamation.
  4. Procedural propriety in handling the Enquiry Report and its evidentiary value.
  
  Detailed Analysis:
  
  1. Quashing of the High Court's Order:
  The Supreme Court set aside the High Court's order which had quashed the prosecution of the respondent under Section 500 of the Indian Penal Code. The High Court had pre-judged the issue without a trial, which was deemed a miscarriage of justice. The Supreme Court emphasized that the matter was at the stage of recording the plea of the accused under Section 251 of the Criminal Procedure Code, and the trial should proceed according to law.
  
  2. Application of the Ninth Exception to Section 499 of the Indian Penal Code:
  The High Court had quashed the complaint on the basis that the publication fell within the Ninth Exception to Section 499 IPC, which protects imputations made in good faith for the public good. However, the Supreme Court held that the determination of whether the Ninth Exception applies is a matter for trial. The burden of proving that the imputation was made in good faith and for the public good lies on the accused.
  
  3. Determination of 'Good Faith' and 'Public Good':
  The Supreme Court reiterated that 'Good Faith' and 'Public Good' are questions of fact that require evidence. The standard of care and attention must depend on the circumstances of the individual case, the nature of the imputation, the need and opportunity for verification, and the position of the person making the imputation. The Court cited previous judgments, including Harbhajan Singh v. State of Punjab and Chaman Lal v. The State of Punjab, to emphasize that good faith involves due care, caution, and prudence.
  
  4. Procedural Propriety in Handling the Enquiry Report:
  The High Court had made use of the Enquiry Report, which was claimed to be privileged by the State Government. The Supreme Court noted that the High Court had erred in using the report without it being properly admitted as evidence. The Enquiry Report, being a confidential document, should not have been made public or used to quash the proceedings without proper consideration of its evidentiary value.
  
  Conclusion:
  The Supreme Court directed the Magistrate to proceed with the trial by recording the plea of the accused under Section 251 of the Criminal Procedure Code and then continue according to law. The determination of whether the publication falls within the Ninth Exception to Section 499 IPC, involving 'Good Faith' and 'Public Good', must be made based on evidence during the trial. The appeal was allowed, and the High Court's order was set aside.

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• 1981 (5) TMI 130
  
  Issues Involved:
  1. Exemption under Section 3-D(1) of the U.P. Sales Tax Act for purchases of foodgrains.
  2. Tax rate applicable to certain purchases.
  3. Classification and taxability of Mahuwa sales.
  
  Issue-wise Detailed Analysis:
  
  1. Exemption under Section 3-D(1) of the U.P. Sales Tax Act for Purchases of Foodgrains
  
  The main contention was whether the exemption under Section 3-D(1) could be allowed without the necessary Form III-C. The assessing authority and the appellate authorities did not accept the exemption claim of Rs. 52,585/- for foodgrains purchases due to the non-production of Form III-C. The Additional Judge (Revisions) accepted a certificate from the Sales Tax Officer indicating that the business of Rs. 47,820/- had already suffered tax, and thus held that the assessee was not liable to tax at one percent.
  
  The court examined the relevant provisions of the Act, particularly sub-sections (1) and (7) of Section 3-D, which outline the conditions under which tax is levied and the manner of proving a purchase is not the first purchase. The court emphasized that the provision under sub-section (7) is mandatory, requiring specific forms and certificates to rebut the presumption that a purchase is the first purchase. The court concluded that the provision is mandatory and that the onus lies on the assessee to furnish the required proof in the prescribed manner.
  
  The court cited several precedents, including the Full Bench decision in M/s. J. K. Manufacturers Ltd. v. Sales Tax Officer and the Supreme Court decision in Kedarnath Jute Manufacturing Co. Ltd. v. Commercial Tax Officer, to support its interpretation that the furnishing of the prescribed form is a condition for claiming exemption. The court held that the assessee failed to discharge this onus, and therefore, the entire disputed purchases of Rs. 52,585/- were liable to be taxed under Section 3-D(1).
  
  2. Tax Rate Applicable to Certain Purchases
  
  The Department contended that the liability to tax in respect of the amount of Rs. 4,765/- was at four percent and not at one percent. Given that the court found the entire amount of Rs. 52,585/- taxable under Section 3-D(1), it deemed it unnecessary to delve into the specific tax rate applicable to the Rs. 4,765/- amount.
  
  3. Classification and Taxability of Mahuwa Sales
  
  The court noted that the Additional Judge (Revisions) did not make a clear finding on whether the assessee had sold Mahuwa flowers, Mahuwa nuts, or Mahuwa seeds. This distinction is crucial because Mahuwa flowers became taxable at multiple points at the rate of 3.5% from 1-12-1973, whereas the tax rates for Mahuwa nuts or seeds could differ.
  
  The court referred to "A Dictionary of Urdu, Classical Hindi, and English" to explain the different uses and tax implications of Mahuwa flowers, nuts, and seeds. The court directed the Sales Tax Tribunal to re-examine the classification and taxability of Mahuwa sales, keeping in view the specific observations made in the judgment.
  
  Conclusion
  
  The revision was allowed. The court held that the purchase turnover of Rs. 52,585/- in respect of foodgrains would be taxed under Section 3-D(1). It remanded the issue of Mahuwa sales back to the Sales Tax Tribunal for re-examination. The Commissioner was awarded costs assessed at Rs. 200/-.

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• 1981 (5) TMI 129
  
  Issues Involved:
  The issues involved in this case include the application u/s 20 of the Arbitration Act for reference to arbitration of a dispute regarding an agreement of sale, denial of the existence of the agreement by one party, contention of misjoinder of parties, and the grant of interim injunction u/r 39, rules 1 and 2 read with section 151, Civil Procedure Code.
  
  Application u/s 20 of the Arbitration Act:
  - Narain Dass and Sm. Jassi Devi sought reference to arbitration of a dispute with Khushal Chand Chandana regarding an agreement of sale.
  - Allegations were made that Khushal Chand executed a sale-deed with another party despite agreeing to sell the property to the petitioners.
  - The application was moved for reference of disputes under the agreement of sale to arbitration, which contained an arbitration clause for resolving such disputes.
  
  Denial of Agreement and Misjoinder of Parties:
  - Khushal Chand denied the existence of the agreement of sale and the arbitration agreement with the petitioners.
  - He contended that the petition was not maintainable as the petitioners were not agreeable or available at the time of drafting the agreement.
  - Khushal Chand also argued that the other respondents were not parties to the transactions, making the petition against them not maintainable.
  
  Grant of Interim Injunction:
  - The petitioners sought an interim injunction to prevent the mutation of the property in favor of another party until the main petition was disposed of.
  - The interim injunction was granted by the Additional District Judge based on a prima facie case and the balance of convenience in favor of the petitioners.
  - The respondent, Jiwan Dass Rawal, appealed against this order, leading to the current legal proceedings.
  
  Legal Position and Decision:
  - The court discussed the legal position that a contract for sale in India does not create an equitable estate in the purchaser, unlike in England.
  - It was emphasized that until a decree for specific performance is obtained, no interest in the property passes to the purchaser.
  - As a sale-deed had already been executed in favor of Jiwan Dass Rawal, the court concluded that Narain Dass and Sm. Jassi Devi could not prevent him from enjoying the fruits of the sale or taking possession of the property.
  - The revision was allowed based on the legal rights of the parties under the agreement of sale, highlighting that no title or interest had passed to the petitioners until specific performance was obtained.

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• 1981 (5) TMI 128
  
  Issues:
  Whether the provisions of the East Punjab Urban Rent Restriction Act, 1949, impliedly bar the trying of an issue as a preliminary one by the Rent Controller.
  
  Analysis:
  The case involved a dispute between a landlord and a tenant under the East Punjab Urban Rent Restriction Act, 1949. The landlord filed an application for the ejectment of the tenant based on non-payment of rent and impairment of the leased premises. The court framed several issues, with issue No. 2 regarding the validity of the rent tender being treated as a preliminary issue. The tenant objected to this treatment, leading to a revision petition.
  
  The main argument raised was whether the Rent Controller had the authority to try any issue as a preliminary one under the Act. The petitioner contended that the Act did not explicitly grant such power to the Rent Controller, implying a complete bar to doing so. However, the court disagreed with this argument, citing sections 16 and 17 of the Act, which only apply the provisions of the Civil Procedure Code for specific purposes. The court emphasized that the Rent Controller has the freedom to devise their own procedure within the limits of the Act.
  
  Referring to previous judgments, the court reiterated that the Rent Controller is not bound by strict procedural rules and can adopt a summary and expeditious mode of disposal. The absence of detailed procedural provisions in the Act allows the Rent Controller to formulate their own procedure. Therefore, the court concluded that there was no implied bar against the Rent Controller trying an issue as a preliminary one.
  
  In analyzing a previous judgment cited by the petitioner, the court found no legal basis for the claim that there was a bar to trying an issue as a preliminary one. The judgment highlighted the Rent Controller's discretion in deciding whether to treat an issue as preliminary and emphasized that such decisions should not cause injustice or delay. Based on both legal principles and precedents, the court dismissed the revision petition, affirming the Rent Controller's decision to treat issue No. 2 as a preliminary one.
  
  In conclusion, the court found no infirmity in the Rent Controller's order and upheld the decision that trying issue No. 2 as a preliminary one was appropriate. The revision petition was dismissed, and no costs were awarded.

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• 1981 (5) TMI 127
  
  Issues:
  1. Determination of whether the assessee was an importer of goods within the Sales Tax Rules.
  2. Validity of the remand order issued by the appellate authority.
  3. Analysis of the relationship between the assessee and the company based on the agreement.
  4. Assessment of whether the assessee should be considered an importer for tax liability.
  5. Examination of whether the sale was taxable as an inter-State sale.
  
  Analysis:
  1. The assessing authority initially rejected the assessee's claim of purchasing goods from the company's depots and deemed the assessee as the importer of goods. The appellate authority set aside the orders and directed a fresh decision, considering affidavits indicating the goods were imported by local depots. The revising authority found sufficient material to decide the controversy and held that the assessee was not liable to pay tax on goods purchased from the company's depot.
  
  2. The revising authority concluded that the appellate authority was not justified in remanding the cases for fresh enquiry as all necessary facts were already on record, and the controversy could have been decided without remand. The revising authority upheld the claim that the assessee was not liable to pay tax on the goods in question.
  
  3. The revising authority analyzed the clauses of the agreement between the assessee and the company, emphasizing that the relationship evolved into that of a buyer and seller rather than principal and agent. The revising authority found that the assessee purchased goods from the company and sold them as a principal, not as an importer, based on the terms of the agreement.
  
  4. The revising authority dismissed the argument that the assessee should be considered an importer due to making the first sale after the goods were imported, as it was established that the company brought the goods to their depots and sold them to the assessee. The revising authority held that the company, not the assessee, became the importer and was assessed accordingly.
  
  5. The argument that the sale was taxable as an inter-State sale was raised, citing clauses of the agreement. However, the revising authority found that the movement of goods did not qualify as an inter-State sale, as the goods were brought by the company to their depots in the state and the sale occurred entirely within the state. The revising authority dismissed this argument and upheld the decision that the revisions fail, with costs awarded to the respondent.

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• 1981 (5) TMI 126
  
  Issues Involved:
  1. Taxability rate of batteries under different notifications.
  2. Proper procedure for referring cases to larger benches.
  3. Interpretation of various notifications regarding tax rates on batteries.
  4. Classification of batteries as electrical goods or components of motor vehicles.
  
  Detailed Analysis:
  
  1. Taxability Rate of Batteries:
  The primary issue was whether the turnover of batteries was taxable at 7% under Notification No. ST-7096/X-1012-1965 or at 3% under Notification No. ST-3503/X dated 10th May, 1966. The assessing authority initially held that batteries were taxable as electrical goods at 10%, but this was set aside on appeal, with the court holding that batteries were taxable at 3%. The Commissioner later claimed they were taxable at 7% as electrical equipment.
  
  2. Proper Procedure for Referring Cases to Larger Benches:
  The Division Bench, instead of deciding the reference, sent the case back for framing an 'appropriate question.' The judgment clarified that a single judge referring a case exercises his power as the High Court, and his direction under the rules cannot be challenged. The Division Bench or a larger bench under the rules of the court could not refuse to decide the case. The direction issued by the Division Bench to send the case back was contrary to the rules and not proper.
  
  3. Interpretation of Various Notifications:
  The court examined various notifications to ascertain the legislative intention and objective. The notifications issued on 1st July, 1978, under Section 3-A of the Act, levied tax on motor vehicles and their components, including batteries. The court noted that the 1956 notification continued to be in operation and that motor batteries were taxable under it. The court also considered the 1958 and 1960 notifications, which indicated that motor vehicles, their chassis, tyres, tubes, and spare parts became taxable at different rates over time. The court concluded that the 1956 notification was not obliterated by the 1958 notification, and motor batteries remained taxable under the 1956 notification.
  
  4. Classification of Batteries:
  The court discussed whether batteries could be considered electrical goods or components of motor vehicles. It was held that a battery is a component part of a motor vehicle, as a vehicle is not complete without it and cannot operate without a battery. Therefore, motor batteries were not taxable under Notification 7996 of 1965 as electrical goods but were taxable under the 1956 notification as components of motor vehicles.
  
  Conclusion:
  The revision was dismissed, and it was decided that motor vehicle batteries were taxable at 3% under Notification No. 3503 of 1956, substituted by Notification No. 3478 of 1956, for the assessment year 1966-67. The assessee was entitled to costs assessed at Rs. 200.

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• 1981 (5) TMI 125
  
  The High Court of Allahabad dismissed the revision filed by the Commissioner of Sales Tax, who claimed that the revising authority erred in excluding sales tax from the turnover. The revising authority found that the sales tax amount could be separated from the composite price charged by the assessee and excluded it. The court upheld this decision, stating that there was no error in excluding the sales tax amount. The revision was dismissed with costs assessed at Rs. 200.

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• 1981 (5) TMI 124
  
  Issues Involved:
  
  1. Whether the appellant, a member of the Indian Administrative Service, was a public servant u/s 21 of the Indian Penal Code for purposes of s. 197 of the Code of Criminal Procedure.
  2. Whether the Cooperative Store Limited, under which the appellant was employed, qualifies as a corporation established by or under a Central, Provincial, or State Act.
  3. Whether the appellant was employed in connection with the affairs of the Union.
  
  Summary:
  
  Issue 1: Public Servant Status u/s 21 IPC for s. 197 CrPC
  
  The appellant, a member of the Indian Administrative Service, was placed at the disposal of the Cooperative Store Ltd., a society registered under the Bombay Cooperative Societies Act, 1925. The Supreme Court had to determine if the appellant was a public servant within the meaning of cl. Twelfth of s. 21 of the Indian Penal Code for the purposes of s. 197 of the Code of Criminal Procedure, 1973. The Court concluded that the appellant did not meet the description of a public servant as he was not in the service or pay of the Government nor in the service of a local authority, a corporation established by or under an Act, or a Government company.
  
  Issue 2: Qualification of Cooperative Store Limited as a Corporation
  
  The appellant argued that the Cooperative Store Limited, being registered under the Bombay Cooperative Societies Act, 1925, was a body corporate and thus a corporation under cl. Twelfth of s. 21 IPC. The Court rejected this argument, stating that the term "corporation" in this context refers to a body created by the Legislature, not merely incorporated under an Act. The Cooperative Store Limited was not a statutory body but a society created by individuals under the provisions of a statute.
  
  Issue 3: Employment in Connection with the Affairs of the Union
  
  The appellant contended that the Super Bazaar, managed by the Cooperative Store Limited, was a commercial activity of the Central Government, thus making him employed in connection with the affairs of the Union. The Court disagreed, noting that the Super Bazaars were owned and managed by the Cooperative Store Limited, not the Central Government. The appellant was not employed in connection with the affairs of the Union within the meaning of s. 197 CrPC, despite the Central Government's significant financial involvement and control over key appointments.
  
  Additional Observation:
  
  The Court noted that the honey in question was sold in a sealed container with the manufacturer's warranty as required under r. 12-A of the Prevention of Adulteration Rules, 1955. The learned Magistrate was directed to first determine whether the appellant was protected under s. 19 (2) of the Prevention of Food Adulteration Act, 1954.
  
  Conclusion:
  
  The appeal was dismissed, and it was held that the appellant was not a public servant within the meaning of cl. Twelfth of s. 21 IPC for the purposes of s. 197 CrPC. The Cooperative Store Limited did not qualify as a corporation established by or under an Act, and the appellant was not employed in connection with the affairs of the Union.

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• 1981 (5) TMI 123
  
  Issues:
  Jurisdiction of the Commissioner to adjudicate the dispute on assumed facts under Section 35 (1) of the U. P. Sales Tax Act.
  
  Detailed Analysis:
  
  Issue 1: Jurisdiction of the Commissioner to adjudicate the dispute on assumed facts
  The case involved a partnership firm seeking determination on whether they were liable to pay tax for purchases made on behalf of ex-U. P. principals. The firm argued that since they purchased goods on behalf of principals from outside the state, they should be exempt from tax under the Central Sales Tax Act. However, the Commissioner rejected the application, stating that the question raised was academic and did not fall under the purview of Section 35 which deals with specific sales or purchases. The firm contended that they received clear orders from dealers of different states, purchased goods, and dispatched them outside U. P. The Court noted that the firm failed to provide specific instances of orders, purchases, and dispatches, and emphasized the need to present facts related to particular sales or purchases for the Commissioner to decide. The Court analyzed Section 35(1) and (2) which outline the process for raising questions for the Commissioner's determination. The jurisdiction of the Commissioner is limited to deciding questions that have arisen, and the phrase 'question arises' restricts the Commissioner's power to adjudicate only on matters enumerated in Section 35(1). The Court rejected the argument that the Commissioner could decide on assumed future facts, emphasizing that decisions must be based on existing facts. The Court highlighted that accepting such a broad interpretation would lead to frivolous applications for adjudication on assumed facts.
  
  Conclusion:
  The Court upheld the Commissioner's decision, stating that the firm failed to provide sufficient evidence of specific sales or purchases, and thus, the appeal was dismissed in favor of the revenue with costs.

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• 1981 (5) TMI 122
  
  Issues Involved:
  1. Jurisdiction of High Court under Article 226 for enforcing contractual obligations.
  2. Interpretation of Clause 2, Part IV of the lease deed.
  3. Entitlement to remove timber without payment of royalty.
  
  Summary:
  
  Jurisdiction of High Court under Article 226 for enforcing contractual obligations:
  The appellant raised a preliminary objection that the respondent's claim flowed from a contract of lease, which should be enforced in a civil court, not under the High Court's extraordinary jurisdiction u/Art. 226. The High Court overruled this objection, stating it was interpreting a statutory rule, not merely a contract term. However, the Supreme Court held that the High Court erred in entertaining the writ petition as it was essentially enforcing a contractual obligation, which is not appropriate for writ jurisdiction. The Supreme Court emphasized that a writ petition is not suitable for enforcing contractual obligations or for specific performance of a contract.
  
  Interpretation of Clause 2, Part IV of the lease deed:
  The respondent claimed the right to remove timber without paying royalty based on Clause 2, Part IV of the lease deed, which allowed timber removal for purposes connected with the exploitation of the grant. The High Court interpreted this clause to mean the company could use timber from the leased area for any of its tea gardens. The Supreme Court disagreed, stating that the clause only exempted royalty if the timber was used for purposes directly connected with the exploitation of the specific grant area.
  
  Entitlement to remove timber without payment of royalty:
  The High Court found that the respondent was entitled to remove timber without paying royalty for use in other tea gardens owned by the company. The Supreme Court, however, held that the High Court's interpretation was flawed. It clarified that the exemption from royalty applied only if the timber was used within the specific grant area for purposes connected with its exploitation. Since the timber was intended for use in tea gardens outside the grant area, the respondent was not entitled to the exemption.
  
  Conclusion:
  The Supreme Court allowed the appeal, quashed the High Court's judgment, and dismissed the writ petition filed by the respondent. The Court held that the High Court should not have entertained the writ petition for enforcing a contractual obligation and that the respondent was not entitled to remove timber without paying royalty as per the lease terms. The appeal was allowed with costs throughout.

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• 1981 (5) TMI 121
  
  Issues: Appeal against demand of duty on cotton fabrics exceeding 15 CMs in width without payment of Central Excise duty and imposition of penalty under Rule 173Q of the Central Excise Rules, 1944.
  
  In this case, Howrah Enterprises filed an appeal against an order demanding duty on cotton fabrics exceeding 15 CMs in width without following Central Excise formalities and without paying Central Excise duty. The Collector imposed a penalty of Rs. 1.5 lakhs on the appellants under Rule 173Q of the Central Excise Rules, 1944. The appellants were granted a personal hearing by the Board where their Advocate submitted that the details of clearance of 'cotton beltings' were not provided as the allegations were that they had removed cotton beltings misdeclaring them as processed 'hair beltings'. The Advocate argued that the Collector presumed the beltings to be cotton beltings without conclusive evidence. The Advocate also contended that the test results of a sample drawn on 7-6-80 could not be retrospectively applied to past clearances of hair beltings. The Board noted that the appellants had furnished figures of clearances of 'hair beltings' and 'goods' but did not accept them as processed cotton beltings. The Board observed that the test results could only apply to the same lot from which the sample was drawn and there was no practice of prospective application until the next sample was drawn. The Board found that after 7-6-80, there were no clearances of 'hair beltings' exceeding 15 CMs in width, which could be considered as 'cotton beltings'. Consequently, the Board allowed the appeal, giving the appellants the benefit of the doubt and setting aside the original order.

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• 1981 (5) TMI 120
  
  Issues: Alleged clandestine manufacture and removal of acrylic yarn, improper maintenance of raw material account in Form IV, applicability of Rule 9 of Central Excise Rules, documentary evidence authenticity
  
  Analysis:
  1. The case involved an appeal remanded by the Government of India to investigate the alleged clandestine manufacture of acrylic yarn by the appellants. The directive was to determine if the petitioners could have spun yarn wholly made of acrylic fiber based on documentary evidence.
  
  2. The appellants were represented during the appeal hearing where discrepancies in the raw material account were highlighted. The appellants had initially shown the receipt of 4500 Kg of "Acrylic Fibre" but later could not produce the goods or related accounts during inspection.
  
  3. The appellants presented "Acrylic Fibre Waste" during the investigation, which raised suspicions of illicit activities. The Managing Director confirmed purchasing the waste but failed to produce purchase vouchers. The appellants' inability to provide supporting documents was a recurring issue throughout the proceedings.
  
  4. The Assistant Collector's report indicated the presence of sister concerns with different spinning systems, casting doubt on the appellants' claims. The appellants' submission of documentary evidence at the appeal stage was questioned for its authenticity and timing.
  
  5. The Board scrutinized the evidence presented by the appellants, noting discrepancies in weight, sales records, and storage locations. The Board raised concerns about the conversion of "Acrylic Fibre" into yarn and the presence of goods in unapproved premises.
  
  6. The appellants argued against the application of Rule 9 of the Central Excise Rules, claiming they lacked the machinery to manufacture acrylic yarn. They contended that the entry of "Acrylic Fibre" in the raw material account was inadvertent and not subject to penal action.
  
  7. The Board reviewed previous judgments cited by the appellants but ultimately focused on the lack of concrete evidence supporting the allegations of clandestine manufacture and removal of acrylic yarn. The Collector's inability to establish these claims led the Board to dismiss the charges.
  
  8. The Board concluded that the appellants could only be penalized for improper maintenance of the raw material account under Rule 226 of the Central Excise Rules. However, since this rule was not invoked by the Collector, the Board allowed the appeal in full, emphasizing the lack of evidence supporting the allegations.
  
  This detailed analysis outlines the key issues, evidence presented, legal arguments, and the Board's decision in the case involving alleged clandestine activities related to acrylic yarn production.

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• 1981 (5) TMI 119
  
  Issues:
  1. Appeal against penalty imposed by Collector of Customs & Central Excise.
  2. Interpretation of whether destroyed cigarettes were excisable goods.
  3. Liability for excise duty on destroyed cigarettes.
  4. Liability for penalty on appellants.
  
  Analysis:
  The judgment pertains to an appeal by India Tobacco Ltd. against a penalty imposed by the Collector of Customs & Central Excise, Bangalore. The advocates for the appellant argued that the entire proceedings leading to a judgment by the Karnataka High Court had become non-est due to a subsequent Supreme Court judgment. The Board examined the case history where the company destroyed cigarettes without prior intimation to Central Excise authorities. The company contended that the destroyed cigarettes were not excisable goods and hence not liable for excise duty or penalty. The respondents argued that even spoiled cigarettes are liable for duty and destruction should be supervised. The Board reviewed the Supreme Court's definition of 'manufacture' and concluded that contaminated cigarettes not fit for sale are not excisable goods. The Board also assessed the liability for excise duty and penalty based on the circumstances of the case.
  
  The Board found that the destroyed cigarettes were indeed oily and unfit for consumption, thus not liable for excise duty. The Board highlighted that the Collector's attempt to reopen the issue was self-defeating as prior proceedings had treated the cigarettes as excisable goods. The Board emphasized that the Department's stance on the matter must be consistent and supported by evidence. Regarding the liability for penalty, the Board noted the lack of evidence showing intent to evade duty. The Board highlighted doubts about the disposal of the cigarettes and the possibility of pilferage, leading to the conclusion that the appellants did not willfully evade duty. The Board criticized the Department for not presenting sufficient evidence to support the penalty imposition, ultimately ruling in favor of the appellants and allowing the appeal against the penalty.
  
  In conclusion, the judgment addressed the issues of excisability of destroyed cigarettes, liability for excise duty, and penalty imposition. The Board's analysis focused on the definitions of excisable goods, the company's actions, and the Department's evidence. The decision highlighted the importance of consistent application of rules and the burden of proof in establishing liability for duty and penalties. The ruling favored the appellants, emphasizing the lack of evidence supporting the massive penalty imposed by the Collector.

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• 1981 (5) TMI 118
  
  Issues Involved:
  1. Validity of the demand notice under Section 28 of the Customs Act, 1962.
  2. Timeliness of the demand notice.
  3. Retrospective application of the Tariff Advice/Ruling.
  4. Provisional vs. final assessment of customs duty.
  5. Legality of subsequent orders by the Assistant Collector, Appellate Collector, and Central Government.
  6. Refund of the amount paid under protest.
  
  Detailed Analysis:
  
  1. Validity of the Demand Notice under Section 28 of the Customs Act, 1962:
  
  The demand notice dated December 5, 1972, was issued under Section 28 of the Customs Act, 1962, for the payment of Rs. 3,74,144.18 towards customs duty. The court noted that Section 28 requires a show cause notice to be served before any demand for payment is made. The petitioners contended that no such show cause notice was served, making the demand invalid. The respondents argued that a communication dated April 28, 1972, served as the show cause notice. However, the court found that this communication did not meet the statutory requirements of a show cause notice under Section 28, as it was not issued under this section and had prospective operation. Therefore, the demand notice was quashed on this ground alone.
  
  2. Timeliness of the Demand Notice:
  
  The court examined whether the demand notice was issued within the statutory time limit. Section 28 stipulates a six-month period for issuing a show cause notice from the "relevant date." The court determined that the clearances made between February and April 1972 were not provisionally assessed, as there was no evidence of any conditions under Section 18 being fulfilled. Since the demand notice was issued more than six months after the clearances, it was deemed time-barred and thus invalid.
  
  3. Retrospective Application of the Tariff Advice/Ruling:
  
  The petitioners argued that the Tariff Advice/Ruling issued on February 22, 1972, could not be applied retrospectively to goods already cleared. The court agreed, stating that tariff classifications fixed at the time of warehousing and clearance could not be retrospectively altered. The demand notice, based on the revised classification, was therefore invalid.
  
  4. Provisional vs. Final Assessment of Customs Duty:
  
  The court analyzed whether the clearances were provisionally assessed. It found no evidence that the conditions for provisional assessment under Section 18 were met. The clearances were made after filing proper Bills of Entry and paying the assessed duty, indicating final assessment. The court rejected the respondents' claim of provisional assessment as an afterthought to fit within the statutory time limit.
  
  5. Legality of Subsequent Orders by the Assistant Collector, Appellate Collector, and Central Government:
  
  The court reviewed the subsequent orders upholding the demand notice. The Assistant Collector's order was based on the incorrect assumption of provisional assessment. The Appellate Collector's order incorrectly interpreted the applicable duty rate. The Central Government's order assumed provisional assessment without evidence. Since the demand notice itself was invalid, these subsequent orders were also quashed.
  
  6. Refund of the Amount Paid Under Protest:
  
  The court held that the payment of Rs. 3,74,144.18 was made under protest and was illegally recovered. It directed that this amount be adjusted against future customs duty claims. If any amount remained unadjusted, it was to be refunded to the petitioners. The court awarded costs to the petitioners, with counsel fees set at Rs. 350.
  
  Conclusion:
  
  The court made the Rule absolute, quashing the demand notice dated December 5, 1972, and the subsequent orders by the Assistant Collector, Appellate Collector, and Central Government. It directed the adjustment or refund of the amount paid under protest and awarded costs to the petitioners.

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• 1981 (5) TMI 117
  
  Issues:
  1. Interpretation of Notification No. 49-Cus., dated 1st March 1969 regarding duty exemption for jute specialities.
  2. Calculation error in determining the value of exported goods under Section 14(1)(a) of the Customs Act, 1962.
  3. Failure to verify the identity of goods prior to shipment and potential misclassification as ordinary Hessian products.
  4. Application of correct valuation method under Section 14(1)(b) of the Customs Act, 1962 for jute specialities.
  5. Consideration of international price as the basis of valuation.
  6. Lack of evidence to prove fraudulent or incorrect declared value.
  
  Analysis:
  
  The case involves a dispute regarding the classification and valuation of exported goods as jute specialities eligible for duty exemption under Notification No. 49-Cus. The appellant argued that the exported goods qualified as jute specialities based on the price differential criteria specified in the notification. The appellate collector noted errors in the original order, including the unnecessary application of a formula and the incorrect deduction of duty from the value of goods declared as duty-free. The appellant provided evidence, including worksheets and a similar order-in-appeal from a previous case, supporting their claim that the goods were indeed jute specialities.
  
  Furthermore, the appellate collector highlighted the importance of verifying the identity of goods prior to shipment to avoid misclassification. The judgment emphasized the superior quality and distinct characteristics of jute specialities compared to standard Hessian products, such as dyeing, bleaching, and special finishing. The valuation method under Section 14(1)(b) of the Customs Act was questioned, with the collector suggesting that the international price obtained by the exporter should be a crucial factor in determining the value of jute specialities.
  
  The collector criticized the Customs House for not taking precautionary steps to confirm the identity of the goods, which could have prevented the dispute. It was also noted that the lack of evidence proving fraudulent or incorrect declared value favored the appellants. Ultimately, the appeal was allowed, granting consequential relief to the appellants based on the lack of conclusive evidence against the declared F.A.S. value.

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• 1981 (5) TMI 116
  
  Issues:
  1. Alleged contravention of Central Excise law regarding the manufacturing and removal of goods.
  2. Exemption eligibility based on the value of goods cleared during specific periods.
  3. Claim of operating circle making and utensil making sections as one unit.
  4. Inclusion of certain values in the computation of excisable goods cleared.
  5. Application of penalties and justification for the same.
  
  Analysis:
  
  Issue 1:
  The appellants were alleged to have contravened Central Excise law by manufacturing and removing goods exceeding the exemption limit without paying the appropriate Central Excise duty. The Collector imposed penalties along with the demand of duty under Rule 9A(5) and Rule 173-Q of Central Excise Rules, 1944.
  
  Issue 2:
  The appellants argued for exemption from duty based on the value of goods cleared during specific periods, contending that certain values should be excluded to fall below the exemption limit prescribed in the relevant Notification.
  
  Issue 3:
  The appellants claimed that their circle making and utensil making sections operated as one unit, supported by documentation such as a certificate from the Labour Inspector and a certificate from the Punjab State Electricity Board regarding a single electric connection feeding both sections.
  
  Issue 4:
  There was a dispute regarding the inclusion of certain values in the computation of excisable goods cleared, with the appellants asserting that the inclusion of specific values led to duplication in accounting, which the Board acknowledged and granted benefit to the appellants accordingly.
  
  Issue 5:
  The imposition of penalties by the Collector was contested by the appellants, arguing that they had not attempted to evade Central Excise duty and had acted bona fide. The Board agreed with the appellants' contentions, setting aside the imposition of penalties under Rule 173Q of Central Excise Rules, 1944.
  
  In the final judgment, the Board considered various aspects of the case, including the value of goods cleared, the operation of sections as one unit, the computation of excisable goods, and the imposition of penalties. The Board sided with the appellants on several issues, granting them exemption and setting aside the penalties imposed by the Collector. Both appeals were disposed of accordingly, providing relief to the appellants on the contested matters.

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