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1963 (5) TMI 59
Issues Involved:
1. Applicability of Section 53 of the Madras District Police Act, 1859
2. Legality of Investigation Process
3. Evidentiary Analysis and Guilt Determination
4. Sentencing
Issue-Wise Detailed Analysis:
1. Applicability of Section 53 of the Madras District Police Act, 1859
The High Court held that the prosecution was barred by Section 53 of the Madras District Police Act, 1859, which prescribes a three-month limitation period for actions and prosecutions against police officers for acts done in the discharge of their official duties. The Supreme Court disagreed, stating that Section 53 applies only if the act complained of was done or intended to be done under the provisions of the Police Act or any other law conferring powers on the police. The Court emphasized that there must be a reasonable relationship between the act and the provision of law under which it was done. The acts of beating and confining Arige Ramanna had no relation to any provision of the Police Act or the Code of Criminal Procedure, thus Section 53 did not apply.
2. Legality of Investigation Process
The respondents contended that the investigation was illegal as it was conducted by an Inspector of Police, violating the Madras Police Standing Orders which require such investigations to be conducted by a higher-ranking officer. The Supreme Court found this argument without merit, stating that the Standing Orders are administrative instructions without the force of law. Furthermore, the Court held that even if the Standing Orders were mandatory, non-compliance would not invalidate the trial unless it caused a miscarriage of justice. No prejudice to the respondents was demonstrated due to the investigation being completed by an Inspector of Police.
3. Evidentiary Analysis and Guilt Determination
The Supreme Court found that the High Court's examination of the evidence was cursory and casual. Upon reassessing the evidence, the Court concluded that the prosecution had proved beyond reasonable doubt that the respondents voluntarily caused hurt to Arige Ramanna to extort information about stolen property. The Court noted that the injuries on Arige Ramanna's body, the sequence of events, and the direct testimony of witnesses supported the prosecution's case. The Court rejected the respondents' defense that Arige Ramanna and another individual were allowed to leave the police station, finding it inconsistent with human conduct and the established facts.
4. Sentencing
The Supreme Court altered the conviction from Section 331 to Section 330 of the Indian Penal Code, as the intention to cause grievous hurt was not conclusively proved. However, the Court upheld the sentence of five years' rigorous imprisonment, emphasizing the need for deterrent punishment for such barbarous methods of dealing with suspects.
Conclusion
The Supreme Court set aside the High Court's acquittal of the respondents for causing injuries to Arige Ramanna and convicted them under Section 330 of the Indian Penal Code, sentencing each to five years' rigorous imprisonment. The appeal was allowed in part, with the acquittal on other charges being upheld. The accused were ordered to surrender to their bail.
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1963 (5) TMI 58
Issues Involved:
1. Indefiniteness or vagueness of the purpose mentioned in the notification under Section 4 of the Land Acquisition Act, 1894.
2. Allegation of collusion and mala fide intentions in the acquisition proceedings.
3. Whether the State Transport Corporation is a local authority or a company, and compliance with Part VII of the Land Acquisition Act.
Issue-Wise Detailed Analysis:
1. Indefiniteness or Vagueness of the Purpose:
The appellants argued that the notification under Section 4 of the Land Acquisition Act, 1894, was indefinite or vague, making it invalid. The Court noted that the notification explicitly stated that the acquisition was for a public purpose, namely, for "State Transport." The notification under Section 6 reiterated this purpose and specified that the land was needed for the purposes of and at the expense of the State Transport Corporation. The Court held that the declaration of public purpose by the Government is final unless it is a colorable exercise of power. Since the appellants failed to prove collusion, the notification was deemed conclusive on the question of public purpose.
2. Allegation of Collusion and Mala Fide Intentions:
The appellants contended that the acquisition proceedings were collusive and initiated for the benefit of the landowner, the second respondent. The Court emphasized that the question of whether the acquisition was collusive or mala fide is a factual matter. The High Court and the lower courts had found no evidence to substantiate the appellants' claims of collusion or mala fide intentions. The Supreme Court, adhering to the principle of not reviewing concurrent findings of fact without exceptional reasons, upheld the lower courts' conclusions. Consequently, the notifications under Sections 4 and 6 were held conclusive on the requirement for a public purpose.
3. Status of the State Transport Corporation and Compliance with Part VII:
The appellants argued that the State Transport Corporation was not a local authority but a company, and the provisions of Part VII of the Land Acquisition Act were not complied with, rendering the acquisition invalid. The respondents contended that the Corporation was a local authority. The Court examined the definition of "company" under Section 3(e) of the Land Acquisition Act and concluded that the State Transport Corporation, incorporated under an Indian law, qualified as a company. Since the compensation was to be paid solely by the Corporation, the terms of the proviso to Section 6(1) were satisfied. However, the acquisition was deemed invalid due to non-compliance with Part VII of the Act.
The Court also analyzed whether the State Transport Corporation could be considered a local authority. The definition of "local authority" in Section 3(31) of the General Clauses Act, 1897, requires control or management of a local fund. The Court found no material to suggest that the Corporation's funds could be regarded as local funds. The definition in the Bombay State Road Transport Act, 1950, which deemed the Corporation a local authority, could not override the General Clauses Act's definition applicable to the Land Acquisition Act. The Court concluded that the Corporation was not a local authority.
Conclusion:
The Supreme Court held that the acquisition, though for a public purpose, was invalid due to non-compliance with Part VII of the Land Acquisition Act. The appeals were allowed, and the suits of the appellants were decreed with costs in all courts.
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1963 (5) TMI 57
Whether when Art. 289 provides for the exemption of State property from Union taxation, it only provides for exemption from that kind of Union taxation which is a tax directly on property?
Whether the proposed extension of customs and excise duties to all goods belonging to the State Governments, imported or exported in the one case and manufactured or produced in the other, would not offend Art. 289?
If the expression 'taxes' in relation to the exemption of property from tax were confined to direct taxes on property the exemption would be unmeaning, as such taxes could not be imposed by the Union?
Held that:- It would not be proper to read the scope of the saving in favour of the Union in clause (2) as reflecting on the scope of Art. 289(1). A tax on the use of property or on the property itself which is occupied for the purpose of trade would obviously be a direct tax on property which ex-concessis the Central legislature under the Government of India Act and Parliament under the Constitution are incompetent to impose. It is not the contention of the States that the center has such a power to levy a tax on occupation or use of property where it is in connection with a trade or business. This would at least show that it is not justifiable to imply from clause (2) to the construction of clause (1) of Art. 289 that but for that provision Parliament would be entitled to impose such a tax. The other points urged have been dealt with in the opinion of my Lord the Chief Justice and I do not propose to cover the same ground.
The questions referred to this Court for its opinion should be answered as they have been by the Chief Justice i.e. in the negative.
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1963 (5) TMI 56
Issues Involved
1. Legal effect of the direction given by the State Government to the Commissioner, Sales Tax.
2. Whether the sale of phosphor bronze ingots is exempt from sales tax under the relevant notification.
3. Whether the direction regarding impurities up to 1% has legal force.
4. Whether lead and phosphorus in the ingots are impurities.
Detailed Analysis
1. Legal Effect of the Direction Given by the State Government to the Commissioner, Sales Tax
The primary issue revolves around the legal effect of the direction given by the State Government to the Commissioner, Sales Tax, regarding the exemption of sales tax for certain metals and alloys. The notification dated 3rd August 1949, exempted the sales of copper, tin, nickel, and zinc or any alloy containing only these metals from sales tax. However, an additional direction was given to the Commissioner that small impurities up to 1% in metals or alloys thereof should be ignored for the purposes of granting exemption. The Court held that this direction is not part of the official notification and is merely an administrative instruction. Since the exemption can only be granted through a notification in the official Gazette, the direction does not entitle any assessee to claim an exemption. The assessee can only claim an exemption under the notification itself, not under the direction. Therefore, the direction must be ignored, and the assessee cannot claim the exemption under it.
2. Whether the Sale of Phosphor Bronze Ingots is Exempt from Sales Tax
The notification exempted only the sales of copper, tin, nickel, and zinc or any alloy containing only these metals. The ingots sold by the assessee contained lead and phosphorus in addition to copper and tin. The Court held that since the ingots contained lead and phosphorus, they cannot be considered alloys of only the four metals mentioned in the notification. Therefore, the sale of these ingots is not exempt from sales tax under the notification.
3. Whether the Direction Regarding Impurities Up to 1% Has Legal Force
The Court examined whether the direction regarding impurities up to 1% has any legal force. It was argued that the direction was treated as an explanation to the exemption clause of the notification by the tax authorities. However, the Court held that the direction does not have legal force because it was not published in the official Gazette. The exemption can only be granted through a notification in the official Gazette, and any direction not published in the Gazette does not have the force of law.
4. Whether Lead and Phosphorus in the Ingots are Impurities
The Court analyzed whether lead and phosphorus in the ingots can be considered impurities. The term "impurity" was defined as "foreign matter which detracts from the purity of any substance." The Court held that whether a substance is an impurity depends on what the article purports to be. If the article purports to be an alloy containing copper, tin, lead, and phosphorus, then lead and phosphorus cannot be considered impurities because they are essential ingredients of the alloy. Therefore, the ingots sold by the assessee, which contained lead and phosphorus as required by the contract with the railways, do not contain any impurities. As such, the ingots cannot be exempted from sales tax under the notification, which only exempts alloys containing only copper, tin, nickel, and zinc.
Separate Judgments
Judgment by Desai, C.J.
Desai, C.J., held that the direction given by the State Government to the Commissioner, Sales Tax, does not have legal force and must be ignored. The sale of phosphor bronze ingots, which contain lead and phosphorus, is not exempt from sales tax under the notification.
Judgment by Asthana, J.
Asthana, J., disagreed with Desai, C.J., and held that the direction regarding impurities up to 1% should be treated as an explanation to the exemption clause of the notification. He opined that lead and phosphorus in the ingots, being far below 1%, should be ignored, and the sale of phosphor bronze ingots should be exempt from tax.
Judgment by Dwivedi, J.
Dwivedi, J., was called to resolve the difference of opinion between Desai, C.J., and Asthana, J. He agreed with Desai, C.J., that the direction does not have the force of law and that the sale of phosphor bronze ingots is taxable. He emphasized that lead and phosphorus, being deliberately added to the ingots, cannot be considered impurities.
Final Order
In view of the opinion of the third Judge, the Court answered the question in the affirmative, holding that the sale of phosphor bronze ingots is taxable. The assessee was directed to pay the cost of the reference, assessed at Rs. 100, to the Commissioner, Sales Tax, U.P.
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1963 (5) TMI 55
Issues Involved:
1. Jurisdiction to entertain the writ petition despite the existence of an alternative remedy.
2. Whether the petitioner is a "dealer" under section 2(f) of the Rajasthan Sales Tax Act.
3. Whether the sale took place in the course of import into the territory of India under Article 286(1)(b) of the Constitution.
Detailed Analysis:
1. Jurisdiction to Entertain the Writ Petition:
The court first addressed whether the writ petition should be dismissed due to the petitioner not availing the alternative remedy of an appeal under section 13(1) of the Rajasthan Sales Tax Act. Citing the Supreme Court's ruling in A. V. Venkateswaran v. Ramchand Sobhraj, the court noted that the existence of an alternative remedy does not bar the writ petition if there is a complete lack of jurisdiction or a violation of natural justice. The court found the petitioner's contention under Article 286(1)(b) sound and decided not to dismiss the writ petition in limine, thus overruling the respondents' contention.
2. Definition of "Dealer" under Section 2(f) of the Act:
The assessment order relied on the terms of the petitioner's appointment (exhibit 4) to classify the petitioner as a dealer. The petitioner argued that it acted merely as a del credere agent for the State Trading Corporation and should not be considered a dealer. The court examined the definition of "dealer" under section 2(f) and the Explanation, which includes agents of non-resident dealers. The court distinguished the present case from the Supreme Court case of State of Bombay v. Ratilal Vadilal and Bros., noting that the petitioner was involved in selling cement, maintaining accounts, and receiving payments. Thus, the court concluded that the petitioner must be deemed a dealer under section 2(f).
3. Sale in the Course of Import under Article 286(1)(b):
The petitioner contended that the sale of cement occurred in the course of import, exempting it from sales tax under Article 286(1)(b). The court reviewed the relevant Supreme Court cases, including State of Travancore-Cochin v. Bombay Co. Ltd., and J.V. Gokal and Co. (Private) Ltd. v. Assistant Collector of Sales Tax. The court found that the subsequent sales by the State Trading Corporation through its agent did not occasion the import of goods. However, the court noted that the property in the goods passed to the ultimate buyers in Rajasthan before the goods reached India, based on the terms of the agreement and the actions taken by the petitioner. The court concluded that the sales took place in the course of import and were exempt from sales tax under Article 286(1)(b).
Conclusion:
The court quashed the assessment order (exhibit 2) regarding the levy of sales tax on the transactions of cement imported from Pakistan by the State Trading Corporation. The respondents were directed not to collect any sales tax on such transactions. The writ petition was allowed with costs.
Petition allowed.
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1963 (5) TMI 54
Issues Involved:
1. Jurisdiction under Section 11 of the Punjab General Sales Tax Act, 1948.
2. Limitation period for assessment completion.
3. Interpretation of "proceed to assess" vs. "assess".
4. Validity of assessment orders passed beyond the prescribed period.
5. Adequacy of alternative remedies.
Detailed Analysis:
1. Jurisdiction under Section 11 of the Punjab General Sales Tax Act, 1948:
The principal question in these petitions was whether the assessment of sales tax, except under section 11(1), must be completed within three years from the last date on which the return had to be filed. The petitioners contended that the period of three years had elapsed, and thus, the authorities had no jurisdiction to assess them to sales tax.
2. Limitation period for assessment completion:
The petitioners argued that the assessment must be completed within three years, as provided in sub-sections (4), (5), and (6) of section 11. They contended that even if section 11(3) does not explicitly prescribe a limitation, the three-year period should be imported into it. The State, however, argued that the assessments were not best judgment assessments and fell under section 11(3), which does not provide a limitation period.
3. Interpretation of "proceed to assess" vs. "assess":
The term "proceed to assess" in sub-sections (4), (5), and (6) was debated. The petitioners argued that it implied the assessment must be completed within three years. The State contended that "proceed to assess" merely required initiating a step towards assessment within three years, not completing it. The Supreme Court's decision in Madan Lal Arora's case was pivotal, indicating that the assessment must be completed within three years.
4. Validity of assessment orders passed beyond the prescribed period:
The assessment orders in question were passed beyond the three-year period. The court held that the assessments must be completed within three years from the last date on which the return could be filed. The Supreme Court's decision in Madan Lal Arora's case and the Full Bench decision of the Bombay High Court in Bisesar House supported this view. The court quashed the assessment orders as they were passed beyond the period of limitation.
5. Adequacy of alternative remedies:
The State argued that the petitions should be dismissed as the petitioners had not exhausted their remedies by way of appeal under the Act. However, it was conceded that if the assessment had to be completed within three years, the argument of alternative remedy would be moot. The Supreme Court in Ujjam Bai's case and The State Trading Corporation of India Limited's case established that the existence of an alternative remedy is no bar to the exercise of power under Article 226 if the action is without jurisdiction.
Conclusion:
The court concluded that the assessments must be completed within three years from the last date on which the return could be filed. The assessment orders in both cases were quashed as they were passed beyond the period of limitation. The petitions were allowed, and the parties were left to bear their own costs.
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1963 (5) TMI 53
Issues Involved:
1. Jurisdiction of the Board of Revenue under Section 34 of the Madras General Sales Tax Act, 1959.
2. Taxability of inter-State sales under the Madras General Sales Tax Act.
Issue-Wise Detailed Analysis:
1. Jurisdiction of the Board of Revenue under Section 34 of the Madras General Sales Tax Act, 1959:
The core issue here is whether the Board of Revenue acted within its jurisdiction when it revised the order of the Deputy Commercial Tax Officer (DCTO) beyond the four-year limitation period specified in Section 34 of the Madras General Sales Tax Act, 1959. The relevant provision, Section 34(2), states: "The Board of Revenue shall not pass any order under sub-section (1) if...........(c) more than four years have expired after the passing of the order."
The Board contended that the four-year period should be computed from the date of the Commercial Tax Officer's (CTO) appellate order, not from the DCTO's original order. However, the Court clarified that the period of limitation should be computed from the date of the DCTO's order, which was 31st August 1957. Since the Board's notice was issued on 10th March 1962, it was beyond the four-year limitation period that ended on 30th August 1961.
The Court heavily relied on a precedent that established the principle that the period of limitation should be computed from the date of the original order if the appellate authority did not modify or interfere with the order of the assessing authority. The Court concluded that the Board's action was beyond the period of limitation and thus, the exercise of its powers was "wholly incompetent."
2. Taxability of inter-State sales under the Madras General Sales Tax Act:
The second issue involved the taxability of inter-State sales of snuff by the assessee. The Board of Revenue had canceled the exemption granted to the assessee on the grounds that the inter-State sales were taxable under the Madras General Sales Tax Act, relying on the Supreme Court decision in Ashok Leyland v. State of Madras.
The Court examined the manner in which the sales were conducted, noting that goods were dispatched by post (V.P.P.) or rail, with the payment being made upon delivery. The Court referred to the Supreme Court decision in Commissioner of Income-tax v. P. M. Rathod & Co., which established that the property in the goods passes to the buyer only upon payment, meaning the sales took place outside the Madras State.
Moreover, the Court analyzed the impact of the Sales Tax Laws Validation Act, 1956, and the constitutional provisions under Article 286. The Court noted that the Validation Act lifted the ban under Article 286(2) only to the extent that it allowed the delivery-cum-consumption State to tax the inter-State sale, not the State from which the goods originated.
The Court reviewed several Supreme Court decisions, including the Bengal Immunity case and William Jacks and Company v. State of Bihar, which clarified that the removal of the ban under Article 286(2) did not affect the ban under Article 286(1)(a), which prohibited a State from taxing a sale that took place outside its jurisdiction.
The Court concluded that the sales in question were indeed inter-State sales and took place outside the Madras State. Therefore, the Madras State was not competent to tax these sales, and the Board of Revenue's order was based on an incorrect appreciation of the legal position.
Conclusion:
The appeal was allowed on both grounds. The Board of Revenue's exercise of revisional powers was beyond the statutory period of limitation, rendering it incompetent. Additionally, the inter-State sales were not taxable under the Madras General Sales Tax Act, as they were conducted outside the Madras State. Consequently, the order of the Board of Revenue was set aside, and no costs were awarded.
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1963 (5) TMI 52
Issues:
1. Validity of notice issued under section 18(6) of the M. P. General Sales Tax Act, 1958.
2. Barred by limitation under section 11(5) of the Central Provinces and Berar Sales Tax Act, 1947.
3. Proper consideration of objections raised by the petitioner by the Sales Tax Officer.
Analysis:
1. The petitioner filed an application under Articles 226 and 227 of the Constitution seeking a writ of certiorari to quash a notice issued under section 18(6) of the M. P. General Sales Tax Act, 1958. The petitioner contended that the notice was invalid due to alleged failure to apply for registration. The Sales Tax Officer's order on 13th December, 1962, did not adequately address the petitioner's objection regarding the limitation period, as it merely stated that the case was not barred by limitation without a proper judicial decision. The court held that the Sales Tax Officer must judicially decide the objection raised by the petitioner and provide a reasoned order, as the current order was insufficient to determine the validity of the notice.
2. The petitioner argued that the proceedings initiated under section 18(6) of the Act were time-barred under section 11(5) of the repealed Central Provinces and Berar Sales Tax Act, 1947. The respondent contended that the notice issued was within the limitation period as per section 52 of the Act, which allows for a six-year limitation for commencing proceedings. The court did not delve into the merits of these contentions due to the Sales Tax Officer's failure to provide a proper decision on the objection raised by the petitioner. The court emphasized the importance of a judicial determination on such objections and directed the Sales Tax Officer to reconsider the objections raised by the petitioner.
3. The court criticized the practice of Sales Tax Authorities in delaying the decision on preliminary objections raised by taxpayers or deciding them hastily without proper consideration. The court emphasized the need for a thorough and judicial consideration of objections raised by taxpayers and highlighted the importance of recording reasoned decisions. The Sales Tax Officer was directed to reconsider the objections raised by the petitioner in a proper and judicial manner, ensuring a fair process for the petitioner. The court remanded the case back to the Sales Tax Officer for a proper adjudication of the objections and ordered the refund of the outstanding security deposit to the petitioner.
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1963 (5) TMI 51
Issues Involved:
1. Jurisdiction of the Deputy Commissioner under Section 32 of the Madras General Sales Tax Act, 1959.
2. Validity of the collection and use of fresh material in the revision process.
3. Applicability of the saving provisions under Section 61 of the 1959 Act.
4. Procedural fairness and the right to a proper opportunity for the assessee.
Issue-wise Detailed Analysis:
1. Jurisdiction of the Deputy Commissioner under Section 32 of the Madras General Sales Tax Act, 1959:
The primary issue was whether the Deputy Commissioner had the jurisdiction to revise the assessment order under Section 32 of the 1959 Act, given that the original assessment was made under the 1939 Act. The Tribunal held that the Deputy Commissioner had jurisdiction under Section 32 of the 1959 Act, and Section 61 did not bar the exercise of these powers. The Tribunal's view was that the Deputy Commissioner could invoke the provisions of the 1959 Act for revision.
2. Validity of the collection and use of fresh material in the revision process:
The assessees contended that the Deputy Commissioner's action was based on suspicion and not on the records, and that fresh material collected behind their back was used. The Tribunal rejected this contention, stating that Section 32 allowed the Deputy Commissioner to make further inquiries and was not restricted to the material already on record. However, the High Court noted that several decisions, including "State of Madras v. Louis Dreyfus and Company Limited" and "State of Kerala v. Cheria Abdulla and Company," held that revisional authorities could not collect fresh material outside the existing record. The High Court concluded that the revisional jurisdiction under the 1939 Act did not permit the collection of additional material, and thus, the Deputy Commissioner's order was vitiated by an assumption of jurisdiction that did not exist.
3. Applicability of the saving provisions under Section 61 of the 1959 Act:
The High Court examined whether the revisional power under the 1959 Act could be exercised in the context of an assessment made under the 1939 Act. Section 61(1) of the 1959 Act saved any right, title, obligation, or liability acquired under the 1939 Act. The Court reasoned that the assessee had a right to have the assessment revised only within the scope of the 1939 Act's revisional power. The saving provisions would be meaningless if they allowed for greater prejudice to the assessee than under the 1939 Act. Consequently, the revisional power under the 1959 Act had to be exercised within the limits of the 1939 Act's revisional jurisdiction.
4. Procedural fairness and the right to a proper opportunity for the assessee:
The High Court emphasized that the Deputy Commissioner relied on evidence collected in the absence of the assessees, which they had no opportunity to challenge. The Deputy Commercial Tax Officer had verified the records and found them satisfactory, but the Deputy Commissioner doubted the genuineness of some vouchers without disclosing the specific material relied upon. The Court held that such material could not be used to the assessees' detriment without giving them a proper opportunity to contest it. This procedural unfairness further invalidated the Deputy Commissioner's order.
Conclusion:
The High Court allowed the revision petition, set aside the Deputy Commissioner's order, and awarded costs to the petitioner, emphasizing that the revisional jurisdiction under the 1959 Act, in the context of an assessment made under the 1939 Act, must adhere to the limitations of the 1939 Act's revisional power. The Court highlighted the importance of procedural fairness and the assessees' right to challenge any adverse material.
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1963 (5) TMI 50
Issues Involved:
1. Claim of exemption on turnover for sales in the course of import.
2. Inclusion of customs duty in the sale consideration.
3. Transfer of property and appropriation of goods to the contract.
Issue-wise Detailed Analysis:
1. Claim of exemption on turnover for sales in the course of import:
The assessees, dealers in arecanuts, claimed exemption on a turnover of Rs. 76,521, asserting that the sales were in the course of import, which is constitutionally exempt from taxation. The appellate authority initially agreed, finding that the transfer of documents of title to the buyer made the transaction a sale in the course of import. However, the Board disagreed, concluding that the sales were not in the course of import because the goods were cleared by the assessees, and all documents, including customs duty payments, were in their name. The High Court upheld the Board's view, emphasizing that the property in the goods did not pass to the ultimate buyer until after customs clearance, thus making the sale a local transaction.
2. Inclusion of customs duty in the sale consideration:
The assessing authority included the amounts paid towards customs duty as part of the sale consideration, recomputing the turnover to Rs. 1,32,905. This inclusion was contested by the assessees, but the High Court supported the assessing authority's decision. The court noted that since the goods were cleared and the customs duty paid in the name of the assessees, these amounts were rightly included in the sale consideration.
3. Transfer of property and appropriation of goods to the contract:
The assessees argued that the property in the goods passed to the buyer at Penang, citing the "sovereign" mark on the packages and the buyer's payment to the bank for the documents. The High Court rejected this argument, stating that mere affixing of the "sovereign" mark had no legal significance in transferring property. The court clarified that appropriation of goods to a contract requires the seller's intent to transfer property, which was not evident here. The property in the goods remained with the assessees until customs clearance, as all relevant documents were in their name. The court further dismissed the notion that the buyer's payment to the bank and subsequent clearance arrangements transferred property, reiterating that these actions were performed on behalf of the assessees.
Conclusion:
The High Court concluded that the property in the goods did not pass to the ultimate buyer until after customs clearance, and all actions taken by the buyer were on behalf of the assessees. Consequently, the sales were not in the course of import, and the inclusion of customs duty in the sale consideration was appropriate. The appeal was dismissed, affirming the Board's order and the recomputed turnover. The judgment underscores the importance of documentary evidence and the legal principles governing the transfer of property in goods.
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1963 (5) TMI 49
Issues Involved:
1. Whether there was any evidence to support the finding that the assessee was carrying on business as a dealer and not as a commission agent.
2. Whether obtaining a licence under section 6 on 26th November 1949 exempted the assessee from liability to sales tax for the entire assessment year 1949-50.
3. Whether the assessee was liable to pay a licence fee only or sales tax on his turnover as an assessee, considering the provisions of section 21 as it stood on the date of assessment.
Issue-wise Detailed Analysis:
1. Evidence Supporting Assessee as Dealer:
The assessee, a commission agent (kachcha arhatia), was assessed as a pakka arhatia. The court examined whether there was evidence to support this classification. It was found that the assessee recorded transactions as if it purchased goods from sellers and sold them to buyers, paying sellers and receiving payments from buyers. The transactions were not simultaneous, indicating that the assessee bought and sold goods rather than merely arranging transactions. This evidence legally supported the finding that the assessee acted as a pakka arhatia. The court clarified that the presence of material supporting the finding was sufficient, even if there was contrary evidence. Therefore, the answer to the first question was "Yes."
2. Licence Exemption under Section 6:
Section 6 allows the Provincial Government to grant a licence to a commission agent and exempt transactions carried out in accordance with the licence terms from tax. The court noted that exemption applies only to transactions conducted after the licence is granted. Since the assessee obtained the licence on 26th November 1949, transactions before this date could not be exempted. The court emphasized that a licence is granted upon application and fee payment, and exemption cannot be retroactive. Consequently, the court answered the second question as "No," indicating that the assessee was exempted from tax liability only for transactions conducted after 26th November 1949.
3. Liability for Licence Fee or Sales Tax:
Section 21 addresses the procedure for recovering licence fees if they have escaped levy. The court explained that the licence fee is based on the net turnover of the entire assessment year, regardless of the licence's effective date. The assessee's contention that the Sales Tax Officer should recover the licence fee for the period before 26th November 1949 was dismissed. The court clarified that the licence fee is calculated on the net turnover of the whole year, and the date of the licence is relevant only for determining tax exemption under section 6. Therefore, the assessee was liable to pay sales tax on transactions before 26th November 1949, and there was no question of additional licence fee recovery. The court answered the third question by stating that the assessee was liable to pay sales tax on the turnover, not just the licence fee.
Conclusion:
The court concluded that the assessee was a dealer liable to pay sales tax under section 3, except for transactions exempted under section 6 after obtaining the licence on 26th November 1949. The court directed copies of the judgment to be sent to relevant authorities and assessed costs and counsel's fees.
Reference Answered Accordingly.
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1963 (5) TMI 48
Issues: Validity of sales tax order on disputed turnover for assessment year 1959-60. Interpretation of the term "bullion" for tax liability.
The High Court of Madras considered the validity of a sales tax order directing a firm to pay 2% sales tax on a disputed turnover for the assessment year 1959-60. The firm, dealing in gold, silver, and jewels, claimed exemption on a portion of their turnover. The assessing authority concluded that the firm's sale of a mixture of gold and copper did not qualify as "bullion," making them liable to pay tax at 2% on the turnover. The Appellate Assistant Commissioner and the Sales Tax Appellate Tribunal upheld this decision, citing precedents. The Tribunal defined bullion as only pure gold or silver for tax liability at a concessional rate. However, the Court analyzed various definitions and standards of bullion from sources like the Commercial Taxes Manual, legal dictionaries, and industry practices. The Court emphasized that bullion includes gold or silver mixed with other metals, not just pure forms. Referring to a Mysore High Court decision, the Court held that bullion encompasses various grades of gold alloys suitable for making jewelry, differing from the Andhra Pradesh High Court's interpretation. Consequently, the Court allowed the revision, supporting the firm's position and awarding costs.
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1963 (5) TMI 47
Issues:
1. Liability to pay sales tax on disputed turnover of cloth and tailoring charges.
2. Determination of turnover by Deputy Commercial Tax Officer.
3. Appeal to Appellate Assistant Commissioner of Commercial Taxes.
4. Appeal to Sales Tax Appellate Tribunal.
5. Interpretation of transaction as sale of garments or separate sale of cloth and tailoring charges.
6. Application of tests from previous case law to ascertain nature of transaction.
7. Analysis of separate bills for cloth sale and work charges.
8. Comparison with precedent case regarding sales tax liability on labor charges.
The High Court of Madras considered the issue of the assessee's liability to pay sales tax on a disputed turnover of cloth and tailoring charges. The Deputy Commercial Tax Officer determined the net turnover to be Rs. 2,10,979.59, subjecting it to tax at 1%. The Appellate Assistant Commissioner of Commercial Taxes adjusted the turnover to Rs. 77,685.08, including hosiery goods and tailoring charges. The Sales Tax Appellate Tribunal found the transaction to be the sale of ready-made garments and directed tax payment. However, the Court disagreed, stating that the transaction involved separate sale of cloth and work labor. Referring to a previous case, the Court applied tests to determine the nature of the transaction, concluding it fell under a category where the customer purchases material and orders tailoring. The Court noted the issuance of separate bills for cloth sale and work charges, exempted from sales tax, leading to the assessee not being liable for tax on the disputed turnover. The Court set aside the Tribunal's order, allowing the revision with costs.
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1963 (5) TMI 46
Issues Involved:
1. Whether the contract of fitting and building bodies on chassis supplied by the customer constitutes a "sale" under the Punjab General Sales Tax Act, 1948.
2. Whether it was necessary to separately mention the items for the material used and the labor involved to be entitled to the exemption.
Detailed Analysis:
Issue 1: Contract of Fitting and Building Bodies as a "Sale"
The primary contention was whether the contract for fitting and building bodies on chassis supplied by the customer could be regarded as a contract for the sale of goods or an indivisible contract for work and labor. The petitioner-firm argued that the contract was for work and labor, emphasizing that the chassis was supplied by the customer, and the body was built according to specific requirements, making each contract unique. Conversely, the respondents argued that the sale was of goods (the bodies) manufactured on a large scale according to standard sizes and specifications, and the price was agreed upon for the sale of the body, which was then fitted on the chassis.
The court referred to precedents such as Gannon Dunkerley and Co. (Madras) Ltd. v. State of Madras and Jubilee Engineering Co. Ltd. v. Sales Tax Officer, which discussed the nature of building contracts and whether they involved an element of sale of materials. These cases concluded that building contracts did not involve the sale of materials as such but were contracts for work and labor.
However, the court distinguished the current case by noting that the respondents were taxing the sale of the body fitted onto a chassis as goods, not merely the supply of materials in a works contract. The court examined whether the agreement and the sale related to the same subject matter, concluding that if the agreement was for the sale of the body when ready and complete, then the property passed in those very goods, making it a transaction of sale.
The court also considered Mckenzies Limited v. State of Bombay and Commissioner of Sales Tax v. Haji Abdul Majid and Sons, which supported the view that contracts for constructing and delivering motor bodies fitted on chassis supplied by the customer were contracts of sale. The court adopted the observations from these cases, concluding that the transactions entered into by the petitioner-firm were sales within the meaning of the Act.
Issue 2: Necessity of Separately Mentioning Items for Material and Labor
The second issue was whether it was necessary to separately mention the items for the material used and the labor involved to be entitled to the exemption. The petitioner-firm conceded that this question did not arise in light of the definition of "contract" in section 2(c) of the Act, which did not apply to the present cases. Therefore, the court did not delve deeply into this issue, as it was rendered moot by the definition provided in the Act.
Conclusion:
The court concluded that the transactions entered into by the petitioner-firm were sales within the meaning of the Punjab General Sales Tax Act, 1948. The first question was answered affirmatively, indicating that the contract for fitting and building bodies on chassis supplied by the customer constituted a "sale." The second question was deemed not applicable due to the definition of "contract" in the Act. No order as to costs was made.
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1963 (5) TMI 45
The respondent company, which was incorporated in New York and carried on business in spices, brought a suit in the original side of the Bombay High Court against the appellant for recovery of a sum of Rs. 92,884-4-10 on the basis of a judgment of the Supreme Court of the State of New York affirming two awards obtained by it and also on the awards in the alternative. - The appellant failed to supply turmeric in terms of the two contracts it entered into with the respondent. The respondent put the matter into arbitration in pursuance of the arbitration clause. The appellant took no part in it. The arbitrators gave the two awards in favour of the respondent for damages. The appellant did not pay. The respondent then took appropriate proceedings and got the awards confirmed by the judgment of the Supreme Court of the State of New York. The single judge of the Bombay High Court who tried the suit held that it was not maintainable either on the foreign judgment or on the awards and (dismissed the suit. The Division Bench on appeal held that the suit was maintainable on the awards, though not on the judgment, as part of the cause of action had arisen in Bombay and the relevant facts had been proved by the Public documents produced by the respondent and the admissions made by the appellant and decreed the suit. Held, (per Dayal and Mudholkar JJ.) The decision of the Single judge of the High Court that the suit was not maintainable on the foreign judgment must be affirmed but on other grounds.
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1963 (5) TMI 44
Issues Involved:
1. Jurisdiction to validate disposition of property under section 227 of the Companies Act, 1948.
2. Beneficial nature of the transaction for creditors.
3. Timing of the court's intervention in pending winding-up proceedings.
Detailed Analysis:
1. Jurisdiction to Validate Disposition of Property Under Section 227 of the Companies Act, 1948:
The primary issue was whether the court had the jurisdiction to make an order validating the disposition of leasehold premises by the company, A.I. Levy (Holdings) Ltd., before a winding-up order had been made. Section 227 of the Companies Act, 1948, states that any disposition of property made after the commencement of winding up shall be void unless the court orders otherwise. The court examined various precedents, including *International Life Assurance Society, Gibbs and West's case* [1870] L.R 10 Eq. 312, which suggested a broad jurisdiction to preserve the value of the company's assets for the benefit of interested parties. The court also considered *Carden v. The Albert Palace Association* [1887] 56 L.J. Ch. 166, where an order was made under similar circumstances before a winding-up order was issued. However, *Miles Aircraft Ltd. In re* [1948] Ch. 188 presented a conflicting view, indicating that the court lacked jurisdiction before a winding-up order was made. Ultimately, the court in the present case found that it had the jurisdiction to make such an order, differing from Vaisey J.'s restrictive interpretation in *Miles Aircraft*.
2. Beneficial Nature of the Transaction for Creditors:
The court evaluated whether the proposed sale of the leasehold premises was beneficial to the creditors. The company had negotiated a sale of the lease for lb3,000, which would satisfy the landlord's claim for arrears of rent and costs, reduce the total of unsecured creditors, and benefit other unsecured creditors by providing a net balance after satisfying secured creditors and possibly solicitors' costs. The court concluded that the transaction was clearly beneficial to the creditors, as it would prevent the company's assets from becoming valueless in the event of winding up.
3. Timing of the Court's Intervention in Pending Winding-Up Proceedings:
The court considered whether it was appropriate to make an order validating the transaction before a winding-up order had been made. The landlords insisted on a present order validating the payment to them to avoid future complications. The court reviewed past cases, noting that in *Douglas Griggs Engineering Ltd. In re* [1963] Ch. 19, an order was made under section 227 before a winding-up order was issued. The court reasoned that the section's purpose was to protect creditors' interests during the period while the petition was pending, not just after a winding-up order was made. Therefore, the court decided to exercise its jurisdiction immediately, ensuring the transaction's validity and benefiting the unsecured creditors.
Conclusion:
The court held that it had the jurisdiction to validate the disposition of the leasehold premises under section 227 of the Companies Act, 1948, even before a winding-up order was made. The transaction was deemed beneficial to the creditors, and the court ordered that the company be at liberty to sell the leasehold premises and pay the landlords the necessary sums to discharge their claims. The costs of the company and the petitioning creditor were to be paid out of the sale proceeds, with the balance paid into court. The solicitor's claim for a lien for costs was acknowledged, with the court authorizing payment of the solicitor's costs from the fund, without prejudice to any lien.
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1963 (5) TMI 43
Issues:
1. Failure to hold annual general meetings as per Companies Act, 1956.
2. Non-compliance with laying balance-sheet and profit and loss account before the annual general meeting.
3. Conviction and sentence under section 168 of the Companies Act.
4. Conviction and sentence under sub-section (5) of section 210 of the Companies Act.
5. Legal argument regarding the distinct nature of offences under section 168 and section 210(5) of the Companies Act.
6. Application of the principle of not benefiting from one's own wrong in the case.
Analysis:
The judgment addresses four petitions concerning the Sambalpur Transport and Trading Company (Private) Ltd., highlighting the failure to hold annual general meetings and not presenting the balance-sheet and profit and loss account before the meetings, contravening sections 166 and 210(1) of the Companies Act, 1956. The company and its directors, including the managing director, were fined for these offences under section 168 and section 210(5) of the Act. The fines were upheld on appeal, leading to the filing of criminal revisions against the sentence.
Regarding the convictions under section 168, the fines imposed on the company and its directors were deemed appropriate, with no interference warranted. However, for the convictions under section 210(5), the trial court convicted the managing director and two other directors, but the appellate court overturned the conviction of the two directors, holding only the managing director responsible for the non-compliance. This led to criminal revisions filed by the managing director challenging the conviction under section 210(5).
The legal argument presented by the managing director's counsel contended that the offence under section 210(5) is encompassed within the offence under section 168, hence precluding separate convictions. However, the court rejected this argument, emphasizing the distinct nature of the offences. It clarified that the failure to call an annual general meeting under section 168 differs from the omission to lay the balance-sheet and profit and loss account under section 210(5). The court cited relevant legal principles and precedents to support this interpretation.
Moreover, the court applied the principle that a person should not benefit from their own wrong. As the managing director was primarily responsible for convening the general meeting, his failure to do so cannot excuse the non-compliance with laying the required financial documents. The court referenced legal cases to reinforce this principle and ultimately upheld the managing director's conviction under section 210(5) as justified in law, deeming the sentence appropriate.
In conclusion, all revision petitions were dismissed, affirming the convictions and sentences under sections 168 and 210(5) of the Companies Act, 1956.
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1963 (5) TMI 42
Issues Involved:
1. Misappropriation and falsification of accounts.
2. Reckless advances without security.
3. Payment of dividends out of capital.
4. Liability of various respondents, including directors and officers, under Section 235 of the Companies Act, 1913.
Detailed Analysis:
Misappropriation and Falsification of Accounts:
The judgment details various instances of misappropriation and falsification of accounts by the managing director and other officers of Hanuman Bank Ltd. For instance, the managing director, along with respondents Nos. 11, 12, and 13, embezzled Rs. 13,796 by manipulating the bank's accounts. The managing director's current and savings accounts, as well as his son's account, were fraudulently credited with this amount. The court found that respondents Nos. 11, 12, and 13 facilitated this embezzlement and held them jointly liable for Rs. 3,450. Another instance involved the misappropriation of Rs. 25,000, where false entries were made to cover up the misappropriation. Respondent No. 11 was held liable for Rs. 6,250. Similarly, item 13 of the B-1 Schedule involved the managing director purchasing estates in Coorg using bank funds, resulting in a liability of Rs. 5,000 for the 12th respondent.
Reckless Advances Without Security:
The court examined various instances where advances were made without adequate security, leading to significant losses for the bank. For example, respondent No. 11 was held liable for Rs. 5,000 for adjusting secured loans by issuing open loans without proper authorization, leading to a loss of Rs. 1,53,199. Similarly, the 29th respondent was held liable for Rs. 1,000 for unauthorized advances made at the Kumbakonam branch. The court also found respondents Nos. 11 and 29 liable for other advances without adequate security, resulting in irrecoverable losses.
Payment of Dividends Out of Capital:
The court found that dividends were paid out of capital, which was unjustified as there were no profits to support such declarations. The directors were held responsible for this misfeasance. For instance, respondents Nos. 5, 7, and 8 were jointly and severally liable for Rs. 22,000 for the payment of dividends out of capital.
Liability of Various Respondents:
The court analyzed the liability of various respondents under Section 235 of the Companies Act, 1913. It concluded that respondents Nos. 11, 12, and 13 were officers of the bank and were liable for the misfeasance and breaches of trust. The court dismissed the appeals of respondents Nos. 11, 12, and 13, holding them liable for the misappropriations and losses caused to the bank. The 29th respondent's appeal was also dismissed, affirming his liability for unauthorized advances.
Specific Judgments:
- Respondent No. 11: Held liable for various misappropriations and reckless advances, totaling significant sums. The court dismissed his appeal and upheld his liability.
- Respondent No. 12: Similarly held liable for his role in facilitating misappropriations and falsifying accounts. His appeal was dismissed.
- Respondent No. 13: Found liable for his involvement in the fraudulent activities and misappropriations. His appeal was dismissed.
- Respondent No. 29: Held liable for unauthorized advances made at the Kumbakonam branch. His appeal was dismissed.
- Respondents Nos. 5, 7, and 8: The court increased their liability for the period after March 7, 1947, and apportioned the compensation among them. The 5th respondent was also held liable for the period prior to March 7, 1947, due to his involvement in unauthorized transactions.
Conclusion:
The court meticulously analyzed the roles and responsibilities of various respondents in the misfeasance and breaches of trust that led to the collapse of Hanuman Bank Ltd. It upheld the liabilities of the respondents, dismissing their appeals and cross-objections, and apportioned the compensation accordingly. The judgment serves as a detailed exposition of the application of Section 235 of the Companies Act, 1913, in holding directors and officers accountable for their actions.
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1963 (5) TMI 31
Issues Involved:
1. Confirmation of special resolution under Section 17 of the Companies Act, 1956.
2. Legality of the cold storage business under the existing memorandum of association.
3. Scope of powers of the court under Section 17 of the Companies Act, 1956.
Issue-wise Detailed Analysis:
1. Confirmation of special resolution under Section 17 of the Companies Act, 1956:
The Ambala Electric Supply Company Limited ("Company") petitioned under Section 17 of the Companies Act, 1956, seeking confirmation of a special resolution passed on October 10, 1962, to amend its memorandum of association. The resolution was advertised in the Tribune, Ambala, and a notice was issued to the Registrar of Companies. The Registrar opposed the petition, but there was no other opposition.
2. Legality of the cold storage business under the existing memorandum of association:
The Company, incorporated in 1931, initially engaged in the generation and distribution of electricity. Post-1956, it sourced bulk power from the Bhakra Nangal Hydro Electric Grid, ceasing its generation activities but continuing distribution. To utilize its surplus infrastructure, the Company started a cold storage business on April 1, 1956, following a resolution passed on November 30, 1955. The Registrar of Companies was notified, and no objections were raised at that time. The Company's balance sheets from 1957 to 1962 reflected profitable operations in the cold storage business. The Company sought to expand its activities by adding new objects to its memorandum, including cold storage, farming, engineering projects, hire-purchase financing, cardboard manufacturing, and rice-husking.
The Registrar argued that the Company's primary business of electricity generation had ceased, thus its substratum no longer existed. However, the court noted that the cold storage business had been profitable since 1957, thereby constituting an existing business. The Registrar's attempt to restrict the Company's objects to sub-clauses (1) and (2) of its memorandum was rejected, as the memorandum's multifarious objects were designed to prevent any specified object from being read as ancillary to another.
3. Scope of powers of the court under Section 17 of the Companies Act, 1956:
The court examined precedents such as Stephens v. Mysore Reefs (Kangundy) Mining Company Limited and Cotman v. Brougham to understand the scope of altering a company's objects. It was established that the statement of a company's objects serves to protect subscribers and those dealing with the company, ensuring clarity on the extent of the company's powers. The court also referenced Bhutoria Brothers (Private) Ltd., which clarified that under Section 17(1)(d), the addition of new business must be one that can be conveniently or advantageously combined with the existing business under current circumstances. The proposed new businesses were not found to be inconsistent with or destructive of the Company's existing business.
The court concluded that the opposition by the Registrar of Companies was unfounded. The special resolution passed on October 10, 1962, was confirmed, allowing the Company to amend its memorandum of association to include the new objects.
Conclusion:
The petition was allowed, confirming the special resolution to amend the memorandum of association. There was no order as to costs.
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1963 (5) TMI 30
What is the meaning to be ascribed to the word " allotment" occurring in section 75(1) of the Companies Act, 1956 ?
Held that:- The word "allotment" in section 75(1) must be understood without reference to sub-section (5) in the same way as that word in section 104(1) had to be understood without reference to sub-section (4) of that section. It is safer to read sub-section (5) of section 75 as having been enacted ex abundant cautela, that is to say, to prevent any argument being raised that a return has to be filed of the reissued shares forfeited for non-payment of calls. We also agree with the view expressed in the High Court that the reason why only forfeiture for non-payment of calls was mentioned in section 104(4) of the Act of 1913 and section 75(5) of the present Act is, that there has always been a great deal of doubt, as will appear from the difference of opinion in the Calcutta High Court to which we have earlier referred, as to whether there can be any forfeiture of shares except for non-payment of calls which latter case had been expressly provided for by the statute. Appeal dismissed.
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