Forbes Campbell case referred to a larger bench

LEGAL DIGEST

The question whether a steamer agent would be liable for payment of demurrage which are uncleared by the consignee to the port trust has been referred to a larger bench of the Supreme Court.

In Forbes Campbell & Co Ltd vs Board of Trustees, Port of Bombay, the former was a steamer agent of a vessel owned by a foreign company. Metal Fabs India Ltd was the consignee.

After the consignment reached Mumbai, it remained uncleared for several years. The port trust auctioned the goods and still there were outstanding dues. Therefore, it issued notice to the steamer agent who argued that the consignee was liable to pay the dues. The court found that there were two conflicting decisions on this issue.

SC allows Munjal Sales Corp appeal

The Supreme Court last week allowed the appeal of Munjal Sales Corporation against the ruling of the Punjab and Haryana High Courts and allowed deductions for the interest-free advances it had made to its sister concerns. The Income Tax Department had disallowed the deductions on the ground that the advances were not given from the firm's own funds, but from interest-bearing loans taken by the firm from third parties.

The IT tribunal had decided in the firm's favour, but the high court reversed it. The Supreme Court, while setting aside the high court ruling, explained that the deductions enumerated in Sections 30 to 38 of the Income Tax Act have been capped by a 1992 amendment which says that the deduction of interest payment should not be above 18 per cent. However, in this particular case, the firm was entitled to deduction, it said.

National Aluminium appeal allowed

The Supreme Court has allowed the appeal of National Aluminium Co Ltd against the Andhra Pradesh Sales Tax Tribunal which upheld the levy of Andhra sales tax on goods exported through the Visakhapatnam port. A substantial part of the commercial operations are carried out in Orissa. Only for the export, the company uses the Andhra port.

However, the tribunal ruled that though the sales took place in Orissa and not in Andhra Pradesh, it should be treated as intra-state sale within Orissa. The company argued that there was no sale at all to attract sales tax. Accepting the contention, the Supreme Court stated that the assessing authorities proceeded to levy tax on erroneous premises.