UP rebate for cement units illegal: SC

The Supreme Court has held that a "rebate of tax" granted by the Uttar Pradesh (UP) government only to cement manufacturing firms functioning within the state was discriminatory and violated the Constitution. To encourage manufacturers using environmentally toxic fly ash, the government had issued a notification granting rebate to dealers in UP excluding all other dealers manufacturing cement outside the state using fly ash purchased in the state. A number of cement manufacturers outside the state, like Jaiprakash Associates, Century Textiles and Birla Corporation, challenged this rule as discriminatory and violative of Articles 301 and 304(a) of the Constitution, which ensure freedom of trade between states. They manufactured cement in Madhya Pradesh or neighbouring states outside UP after procuring fly ash from the thermal power stations in UP and then sold cement in UP. They moved the Allahabad high court which ruled that the rebate was discriminatory in favour of units within the state. The Supreme Court dismissed the UP government's appeal.

'Govt can't act like private employer'

The Supreme Court has indicted the Maharashtra government for terminating its employees in the Irrigation Development Corporation after transferring irrigation schemes to a sugar factory. Though the employees were working for the corporation for 10 years, it maintained that they were casual workers. They moved the labour court and the Bombay High Court and won benefits under the Industrial Disputes Act. The government appealed to the Supreme Court, which asked the government to give them 25 per cent back wages and continuity of service, though they would not be reinstated. The court remarked that a government corporation should not imitate the attitude of private sector employers.

"Termination should be the last resort; in this case the government did not appear to make any effort to absorb them in other activities of the department or insist on the sugar factory to absorb them," the court said in the judgment on, State vs Sarva Shramik.

Liquor licencee must fulfil terms

A liquor contractor cannot seek to revoke her obligations under a licence though she could not conduct business because of public protest, the Supreme Court stated while dismissing an appeal case, Mary vs State of Kerala. Mary was a successful bidder for country liquor shops and she deposited 30 per cent as security. However, the residents of the area, Kalady, renowned as the birthplace of Shankaracharya, would not allow her to set up liquor shops. She informed the board of revenue that she was not able to run shops and, therefore, the licence should be revoked and her money should be returned.

The excise authorities rejected her plea and demanded the balance of the dues under the contract. She moved the high court, without success. Her appeal was dismissed with the Supreme Court observing that "in a contract under the Abkari Act the licencee undertakes to abide by the terms and conditions of the Act which are statutory and the licencee cannot invoke the doctrine of fairness."

'Surrender is not voluntary disclosure'

Surrender of income after its detection in a search by tax authorities could not be called 'voluntary disclosure', the Supreme Court stated while dismissing the appeal case, MAK Data Ltd vs Commissioner of IT. After a show cause notice was issued by the authorities, the assessee company made an offer to surrender a sum "by way of voluntary disclosure without admitting any concealment" and to avoid litigation and buy peace and to make an amicable settlement of the dispute. The court stated that such sentiments should not carry away the authorities.

The question is whether the firm had offered any explanation for the concealment. Section 271 raised a presumption of concealment and it was for the assessee to rebut it by cogent evidence, the court said.