Excise duty at point of sale: SC

A weekly selection of key court orders

Excise duty is normally charged at the factory gate when the goods are taken out. However, it need not always be so. The sale can take place at the buyer's premises. Therefore, the duty can be charged there. The test is the point where the sale takes place, the Supreme Court ruled in the case, Commissioner of Excise vs Roofit Industries Ltd. The revenue authorities alleged that the company was evading duty by not computing the value of finished goods and it was deducting the amount of freight, insurance and unloading charges from the price of excisable goods though the place of removal of finished goods was not factory gate but the buyer's premises. The firm challenged the demand of duty before the excise appellate tribunal. It allowed its petition which led to the appeal before Supreme Court. Allowing the appeal, Supreme Court stated that "it is to be seen at what point of time the sale is effected, namely whether it is at the factory gate or later, that is, when the delivery of goods is effected to the buyer at his premises. This aspect must be seen in the light of the provisions of the Sale of Goods Act."

Auction purchaser retains property
The Supreme Court, last week, came to the rescue of a purchaser of mortgaged property which was auctioned for recovery of debt and which he had held in possession for eight years while the disputes were going on. In this case, Central Bank of India vs C L Vimla, her sons took a loan from a bank to start business which failed. The bank started recovery proceedings and this started a series of litigation in the debt recovery tribunal, the Karnataka High Court and Lok Adalat. Meanwhile, the property was auctioned and the purchaser paid the value in full. However, litigation continued and the high court held the sale invalid stating that the purchaser was party to the negligence of the recovery officer. Setting aside the high court ruling, Supreme Court observed that since the purchaser paid the amount in full in a bona fide manner and suffered for a long time, "equity and good conscience" demanded that his possession should not be disturbed at this stage.

Rs 5.55 lakh fine for stop payment

Supreme Court, last week, set aside the judgment of the Karnataka High Court and imposed a fine of Rs 5.55 lakh on the drawer of a cheque for stopping payment in the case, T Vasanthakumar vs Vijayakumari. The magistrate had imposed the fine or in default five months imprisonment on the woman, who issued the cheque. She was a partner in a film distribution firm and the opposite party was a theatre owner. They had commercial transactions during which disputes arose. The question involved was who had the burden of proof to show that the cheque was issued in discharge of a debt or liability. The court ruled that the woman had the duty to prove that in this case, but as it was not done, she should suffer the punishment.

NHAI arbitration appeal dismissed
The interpretation of the terms of a contract is primarily for the arbitrator to decide. He is entitled to take the view which he holds to be the correct one. The court while considering a challenge to an arbitral award would not sit in appeal over the arbitrator's decision unless it is totally unreasonable, the Supreme Court has stated while dismissing a large batch of appeals by National Highways Authority of India (NHAI) against mining companies. The dispute related to the liability of NHAI when the royalty payable to the firms was revised upwards. NHAI maintained that the additional amount was not payable to the firms in view of certain terms in the contract. The dispute was decided by arbitration which went against NHAI. Its appeal was dismissed.

VRS signed on blank papers: trade union
The Supreme Court last week asked the Maharashtra government to make an industrial reference of a 10-year-old dispute in which the employees alleged that they were forced by fraud and misrepresentation to sign the Voluntary Retirement Scheme (VRS). The tribunal was asked to decide the issue within six months and imposed cost of Rs 1 lakh each on the appeals of the company for causing delays. The amount shall be distributed among the workers. The apex court upheld the judgment of the Bombay High Court and dismissed the appeal of the company in the case, Ariane Orgachem Ltd vs Wyeth Employees Union. The drug company took over Wyeth Ltd along with its employees promising continuity of terms and services. But later a VRS was introduced and most workers signed it. But after some months, they wanted reinstatement alleging that they were compelled to sign on blank papers, which later turned out to be VRS. The labour commissioner refused to refer the dispute to the industrial tribunal, starting prolonged litigation. The Supreme Court stated that the allegation of the union that they were forcibly terminated and paid arbitrary amounts required examination by the tribunal.

Stockpiling iron ore violating rules
A person who is delegated certain power cannot delegate it further, unless it is sanctioned by law, the Supreme Court stated while dealing with an offence under the Air Pollution Act, P Pramila vs state of Karnataka. The charge was stockpiling iron ore at various places without pollution measures. The regional officer (environment) filed a criminal complaint but the owner challenged it in the high court. It refused to quash the complaint. On further appeal, Supreme Court found that the complaint was filed by an officer who is not authorised to do so. The pollution control board or its chairman can file the complaint but they cannot delegate the power to another officer. On this ground the complaint was quashed, but the court asked the board to file a legally proper complaint within two months.

Lament of the judiciary
The Delhi high court reiterated its complaint last week that senior lawyers are wasting its time with "prolix and near interminable arguments", needlessly reading out pleadings, records et al. Despite entreaties to limit oral arguments, they continued reading laboriously. In this arbitration appeal, Puri Construction vs L &T, they argued facts already decided in the award. "One hopes there is some clarity within the legal system about the kind of time limit to arguments in such cases, to ensure timely disposal of appeals," the judgment said. Earlier, the court had described in another arbitration judgment how truth was tortured by lawyers.