Taxmen chase dead man's family, estate

Stating that "to tax the dead is a contradiction in terms," the Supreme Court, last week, set aside a judgment of the Kerala High Court involving the demand of the revenue authorities for excise duty from the successors of a failed single proprietary firm. "Tax laws are made by the living to tax the living. What survives the dead person is what is left behind in the form of such person's property," the judgment said. The appeal raised the question as to whether the dead person's property, in the form of his or her estate, can be taxed without the necessary machinery provisions in a tax statute. In other words, whether an assessment proceeding under the Central Excises and Salt Act can continue against the legal representatives/estate of a sole proprietor/manufacturer after he is dead. The court answered the question with a resounding 'no' in this 25-year-old case, Shabina Abraham vs Commissioner of Central Excise. In this appeal referring to the assessment of 1983, the owner of Kerala Tyre and Rubber Ltd died in 1989. Then the revenue authorities issued showcause notices to the owner's wife and four daughters. They argued that they had nothing to do with the late owner's business. That plea was not acceptable to the high court judges. Therefore, the women moved the Supreme Court, which quashed the high court judgment.

Teeth whitener is not toothpaste
The Supreme Court, last seek, dismissed the appeal of the Commissioner of Central Excise and accepted the stand of Global Health Care Ltd that its dental care product 'Closeup Whitening' is not a toothpaste and, therefore, liable to lesser duty. Global manufactures toothpastes with brand names Closeup Red and Closeup Blue. Lately it also produced Closeup Whitening. It paid a lesser duty which was not acceptable to the revenue authorities who maintained that it was toothpaste. When that was challenged before the tribunal, it ruled that the product was not toothpaste. The authorities appealed in the Supreme Court. It decided in favour of the company stating that the ingredients and ratio of all the input which went into the manufacturing of a toothpaste and dental cleaner are different. The dental cleaner, in addition, has two more ingredients, namely, Silicon Agglomerate and Bluer Agglomerates, which play an active role as abrasive. Even the manufacturing process is different. While the stages of manufacturing Closeup toothpaste were nine, the number of stages for manufacture of Closeup Whitening is 11. It took 120 minutes to manufacture a toothpaste tube, while it took 155 minutes to manufacture Closeup Whitening, the court explained.

Excise on water purification system

In another excise case, M/s Poonam Spark Ltd vs CCE, the question of law was whether the activity of mounting of water purification and filtration system on a base frame carried out by the firm amounted to manufacture or not. According to the revenue authorities this work involving assembling of components resulted in the coming into existence of a new product having a different name and character and it amounted to "manufacture" according to the Central Excise Act. The firm's defence was that it was only carrying out job which did not bring out a new product. Supreme Court dismissed the appeal, upholding the view of the concurrent view of three courts below that a new product came into existence by the process adopted by the firm.

Pernod wine: Food safety men snubbed
The Bombay High Court last week ordered the release of wine products carrying the brand name of Jacob's Creek, owned by Pernod Ricard SA of France, which was withheld by the customs authorities at Nhava Sheva Port, Mumbai, on the ground that the Food Safety and Standards Authority of India (FSSAI) had refused to issue a No Objection Certificate (NOC) to 38 consignments worth Rs 2.5 crore. NOC has been refused as the sample allegedly contained prohibited contents. The wine company argued that tartaric acid as well as ascorbic acid are ingredients that are permitted under the FSSR. Allowing the petition, the court admonished the food safety authorities: "Being the watchdog for the consumer as well as a regulator of the food industry, they ought not to take an adversarial approach. In this matter, we find that despite tartaric acid and ascorbic acid being clearly included in the Regulations, and the fact that the alcoholic wines have been imported for over a decade without any complaint or untoward incident, they ought to have looked at the Regulations framed by them a little more carefully before refusing to give the NOC. The only reason we say this is because in today's global reality India's borders have opened to international business. It is therefore important that the statutory authorities act in a manner that is fair, transparent and with a proper application of mind, so that it encourages foreign investment which ultimately leads to the economic growth of the country."

Damages for violating software copyright
The Delhi High Court last week imposed punitive damages of Rs 3 lakh on an Indian firm for violation of the copyright of a German company in its computer software dealing with finance & control, production planning, human resource and material management. The court had earlier passed an injunction against the Indian company in this case, Sap Aktiengesellschaft vs Appsone Consulting India Ltd. It was alleged that the Mumbai company was offering training on the German company's software programmes without authority and charging students around Rs 35,000 each. It has resulted in loss of revenue and goodwill. The court found that the allegations during a criminal investigation were found to be largely true. Therefore, it used its power under the Copyright Act to pass the order.

Cease & desist against car manufacturers
The Competition Commission of India last week imposed a penalty of Rs 420.2605 crore on Hyundai calculated at the rate of two per cent of the average income of the car manufacturer for three financial years. The order was passed in a complaint moved by Shamsher Kataria originally against Honda Siel Cars, Volkswagen and Fiat India alleging anti-competitive practices on the part of these three car manufacturers, whereby the genuine spare parts of automobiles manufactured by them were not made freely available in the open market. The investigation by the Director General was later expanded to 17 other original equipment manufacturers and passed orders against them. In the latest order, the commission found Reva and Premier indulged in abuse of their dominant position and passed cease and desist order against them. The commission further directed that each of the top manufacturers shall file individual undertakings about compliance of its detailed orders.