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| Uttar Pradesh told to reopen cases of units using high speed diesel |
| BS Reporter / Mar 08, 2010, 00:58 IST |
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The Supreme Court has asked the Uttar Pradesh trade tax authorities to reopen the cases of more than 130 industrial units in the state which had been issued show cause notices asking them to explain why concessional rates for high speed diesel (HSD) given to them should not be withdrawn. The Allahabad high court had quashed the show cause notices to Vam Organic Chemicals Ltd and a large number of other units which have been getting concessional rates from oil companies. The beneficial rates were given to them under the central sales tax law and the UP trade tax law. However, the state government took a decision later that those who have been using HSD for generating electricity should not be given the beneficial rates. When the high court set aside the show cause notices, the government appealed to the Supreme Court. It stated that the high court had not gone into certain aspects of the dispute, like the discretion granted on the assessing authority for bestowing concessions. Stressing the discretion of the assessing authority, it remitted the cases for fresh decision.
Bylaws of co-ops crucial in income tax liability
The answer to the question whether a member of a primary cooperative society will automatically become a member of the apex society will determine the income tax liability of the apex body, the Supreme Court stated in the case, Commissioner of Income Tax vs Rajasthan Rajya Bunker Samiti. In this case, Samiti, the apex body was the assessee. It provided raw materials like yarn to primary societies of weavers who manufactured cloth. The apex society claimed tax concessions under Section 80P(2) of the Income Tax Act on the ground that it was a cottage industry. It denied that it was engaged in the collective disposal of labour of its members under the provision. The revenue department contended that the weavers are not the members of the apex society. They are members of the primary societies. The Supreme Court stated that an answer to the problem lies in the bye-laws of the societies. These were not examined by the authorities. While rejecting the claim of the authorities for tax claims in the relevant years, the court asked them to examine, in future, the actual position according to the bye-laws of the cooperative societies.
Case of rollover premium charge
The Supreme Court set aside the judgement of the Gujarat high court in the case, Asst CIT vs Elecon Engineering Co Ltd, involving the nature of roll-over premium charge incurred by the company as also the scope and applicability of Section 43A of the Income Tax Act. The company procured foreign currency loan for expansion of its business. Repayment was in instalments. It took forward contract with a bank for the delivery of foreign currency on stipulated dates. The balance value of the contract, after deducting the amount withdrawn towards repayment, was rolled over for a further period up to the date of the next instalment. The autho-rities disallowed the roll over premium charges paid by the assessee in respect of foreign exchange forward contracts to the bank on the ground that the said charges were incurred in connection with the purchase of a capital asset, hence it was not admissible for deduction under Section 36(1)(iii). The high court took the view that the roll over premium charges were in the nature of interest or committal charges, hence, they were allowable. The Supreme Court rejected this view.
Central Warehousing Corporation pulled up
The Delhi high court and the Bombay high court have severely criticised the Central Warehousing Corporation (CWC) for the manner in dealing with a consignment of plant and machinery imported by Appollo Paper Mills Ltd for setting up an industry in Gujarat or Himachal Pradesh. The goods could not be released due to a strike by stevedores in Navi Mumbai. The mills protested against the exorbitant charges demanded by CWC as demurrage. Moreover, when the mills moved the Bombay high court, it did not file a reply for seven years. It provoked the high court to remark that the “total negligence of CWC officials and their conduct in taking the matter so casually is highly deplorable”. Further, CWC did not follow the method prescribed by the high court for calculating the demurrage. This led to an appeal to the Supreme Court and then to a writ petition in the Delhi high court. The latter indicted CWC for not following the Bombay high court orders and causing delays. Allowing the appeal of the mill, it remarked: “CWC’s inaction has resulted in severely prejudicing not only the mill but CWC itself. The adverse remarks of the Bombay high court obviously did not spur them to act any quicker.”
Where to file cheque bouncing case
The Delhi high court last week ruled in a cheque bouncing case that a complaint under the Negotiable Instruments Act should be filed in the court where the drawee bank is situated. In this case, Swastik Sales Corporation vs Advanced Medical Optics, the cheques were issued by Swastik in Mumbai on a bank there and was dishonoured there. The notice of demand was issued in Delhi. Following that the complaint was filed in Delhi. Swastik moved the high court for quashing the complaint arguing that the Delhi court had no jurisdiction to prosecute the case. The high court, relying on Supreme Court decisions, agreed with Swastik.
Pickets to check spurious liquor
To check manufacture of spurious liquor in parts of the city, the Delhi High Court has directed the police to set up special pickets to keep a watch on people indulging in its sale and distribution.
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