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Showing 381 to 400 of 1893 Records
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1979 (10) TMI 204
Issues Involved:
1. Applicability of Section 4-B of the Punjab General Sales Tax Act, 1948, to declared goods.
2. Whether Section 5(3) of the Act excludes the applicability of Section 4-B or any other provision of the Act in the case of declared goods.
3. Whether Section 4-B is ultra vires Article 286 of the Constitution of India and contravenes Section 15 of the Central Sales Tax Act, 1956.
Issue-wise Detailed Analysis:
1. Applicability of Section 4-B to Declared Goods:
The court examined whether Section 4-B of the Punjab General Sales Tax Act, 1948, applies to declared goods such as cotton, oil-seeds, and pig-iron. The petitioners contended that Section 5(3) of the Act, which starts with a non obstante clause, should be the sole charging section for declared goods, thereby excluding Section 4-B. The court noted that Section 4-B was introduced to address situations where raw materials are consumed for manufacturing tax-free goods or sent out of the state without sale, thus ensuring that such transactions are taxed. The court concluded that Sections 4, 4-A, and 4-B of the Act continue to be the charging sections, with Section 5(3) fixing the stage of levy for declared goods. Therefore, Section 4-B is applicable to declared goods.
2. Exclusion of Section 4-B by Section 5(3):
The petitioners argued that under Section 5(3)(a), declared goods are exigible to sales tax only at the stage of sale by the last dealer liable to pay tax, and since they do not effect any sale, they should not be liable to pay tax. The court clarified that sales tax can be imposed on purchases of goods that are used contrary to the conditions in the registration certificate. The court cited precedents, including the Supreme Court's decision in Modi Spinning and Weaving Mills Co. Ltd. v. Commissioner of Sales Tax, Punjab, to support this view. The court held that Section 5(3) and Section 4-B can coexist harmoniously, with Section 4-B addressing specific scenarios where goods are used in a manner other than resale within the state or inter-state trade. Thus, Section 5(3) does not exclude the applicability of Section 4-B.
3. Ultra Vires and Contravention of Constitutional Provisions:
The petitioners contended that Section 4-B is ultra vires Article 286 of the Constitution and contravenes Section 15 of the Central Sales Tax Act, 1956. The court referred to the Supreme Court's judgment in State of Tamil Nadu v. M.K. Kandaswami, which upheld the validity of a similar provision in the Madras General Sales Tax Act, 1959. Additionally, the court noted that Section 4-B was enacted to align the Punjab General Sales Tax Act with the Supreme Court's observations in Punjab Khandsari Udyog v. State, ensuring compliance with Section 15 of the Central Sales Tax Act. The court concluded that Section 4-B is constitutionally valid and does not contravene any provisions of the Central Sales Tax Act.
Conclusion:
The court answered all three questions in favor of the revenue and against the petitioners. The General Sales Tax References Nos. 14 and 15 of 1977 were directed to be decided by the Tribunal in light of these answers. The Civil Writ Petitions were dismissed, with the petitioners given 15 days to comply with the orders passed by the authorities. The parties were left to bear their own costs.
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1979 (10) TMI 203
Issues:
1. Exemption claim based on acting as an agent.
2. Liability to sales tax on transactions.
3. Interpretation of the role of the assessee-association in the distribution of goods.
4. Application of legal precedents regarding dealer status and sales tax liability.
5. Consideration of C forms in determining dealer status.
Analysis:
1. The assessee claimed exemption from sales tax on its entire turnover for the year 1969-70, arguing that it acted solely as an agent in procuring goods for its members. The assessing officer rejected this claim, resulting in a determination of taxable turnover. The Appellate Assistant Commissioner initially accepted the assessee's contentions based on a previous court decision but was overruled by the Board of Revenue. The primary issue was whether the assessee's role as an intermediary qualified for exemption from sales tax.
2. To assess the liability to sales tax, the court examined the nature of the transactions between the assessee-association and its members. The court analyzed a specific instance where the assessee procured and distributed goods among its members, emphasizing the conditions and processes involved in the distribution. The court considered whether the assessee's activities constituted taxable sales under the relevant tax laws.
3. The court delved into the role of the assessee-association in the distribution of goods, highlighting its intermediary function between the handloom textile manufacturers and the relevant authorities. The court observed that the association acted as a facilitator in the distribution process without possessing ownership of the goods, thus raising questions about its liability for sales tax on these transactions.
4. Legal precedents, including the decision in "National Chamber of Commerce v. State of Madras," were crucial in determining the dealer status and sales tax liability of the assessee. The court compared the facts of the present case with the precedent, emphasizing the principle that an entity acting as an intermediary without transferring property in goods may not be considered a dealer for sales tax purposes. The application of legal principles from past judgments played a significant role in the court's decision.
5. The court also addressed the relevance of C forms in the context of dealer status. Referring to the ruling in "K. P. Sitaram & Co. v. State of Madras," the court noted that the provision of C forms did not necessarily preclude an entity from being classified as a mere intermediary or go-between in transactions. The consideration of C forms in determining the dealer status added another layer of complexity to the assessment of sales tax liability.
In conclusion, the court allowed the appeals, finding that the assessee-association was not a dealer and therefore not liable to sales tax based on the specific circumstances and legal principles discussed in the judgment.
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1979 (10) TMI 202
The High Court of Allahabad ruled that woollen jursi and hose topas containing 90% wool and 10% nylon were not taxable as woollen goods at 6%, but as unclassified items at 3% in the assessment year 1970-71. The revision filed by the Commissioner of Sales Tax was dismissed, and the assessee was awarded costs of Rs. 300. The standing counsel's fee was assessed at Rs. 100.
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1979 (10) TMI 201
Whether in respect of transactions of sale of cement effected by the appellant under the provisions of the Cement Control Order, the amount of freight formed part of the "sale price" within the meaning of the definition of that term in section 2(h) of the Central Sales Tax Act, 1956, and was includible in the taxable turnover of the appellant?
Held that:- Reject the appeal - question is no longer res integra as it stands concluded in Hindustan Sugar Mills v. State of Rajasthan [1978 (8) TMI 186 - SUPREME COURT OF INDIA] wherein held that the amount of freight formed part of the sale price and was rightly included in the taxable turnover of the appellant.
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1979 (10) TMI 200
The High Court of Madhya Pradesh held that an assessee cannot claim a concessional rate of tax based solely on the production of declarations in form XII-A if the goods are not specified in the registration certificate of the purchasing dealer. This decision was based on a previous Full Bench ruling.
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1979 (10) TMI 199
Issues:
- Assessment of taxable turnover
- Time limitation for reassessment under Section 16 of the Tamil Nadu General Sales Tax Act, 1959
- Power of assessing authority to pass orders beyond the prescribed time limit
- Interpretation of the term "determine" in relation to the time limit for assessment
Analysis:
The case involves an appeal under the Tamil Nadu General Sales Tax Act, 1959, against an order of the Board of Revenue regarding the assessment of taxable turnover for the year 1987. The assessing authority found discrepancies in the assessee's accounts, leading to suspicions of underreporting. Despite multiple notices to produce accounts, the assessee did not comply, prompting the assessing authority to propose an addition to the turnover and levy penalty. The order was passed beyond the 5-year time limit prescribed under Section 16(1)(a) of the Act.
The Appellate Assistant Commissioner initially held that the revision was time-barred due to the notice being served after the limitation period. However, the Board, in suo motu revision proceedings, invoked the interpretation of the term "determine" in line with the Supreme Court's decision in a similar case, emphasizing that the initiation of proceedings within the time limit is sufficient. The Board set aside the Assistant Commissioner's order, focusing solely on the issue of time limitation and not the merits of the addition or penalty.
The key question in the appeal was whether the assessing authority had the power to pass the order beyond the 5-year limit. The Court referenced the Supreme Court's ruling in a related case, which clarified that the term "determine" encompasses the entirety of assessment proceedings, not just the final order. This interpretation allowed for assessments completed beyond the prescribed period to be valid.
In a subsequent decision, the Court reiterated the application of the Supreme Court's ruling in similar reassessment cases. The judgment highlighted that the issuance of a pre-assessment notice within the time limit suffices for initiating proceedings, even if the assessment is completed later. The Court emphasized that the purpose of the statutory provisions would be defeated if strict adherence to the time limit was applied.
Ultimately, the Court allowed the appeal, directing the matter back to the Commissioner for a reconsideration of the reassessment proceedings on merits, including the addition to turnover and penalty levy. The decision underscored the need for a comprehensive review of the assessment and penalty aspects beyond the scope of the limitation issue, ensuring a fair assessment process.
Conclusion:
The judgment delves into the interpretation of time limitation provisions under the Tamil Nadu General Sales Tax Act, emphasizing the initiation of proceedings within the prescribed period. It underscores the need for a holistic assessment process, beyond the limitation aspect, to ensure fairness and accuracy in tax assessments.
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1979 (10) TMI 198
Issues:
1. Determination of taxable turnover for assessment years 1967-68 and 1969-70.
2. Whether sales of cuttings and scrap fall under item 4(c) of the Second Schedule to the Tamil Nadu General Sales Tax Act.
3. Application of Supreme Court judgments in similar cases to the present scenario.
4. Interpretation of the law regarding single point taxation and identity of goods in trade.
Analysis:
1. The appeals arose from the Board of Revenue's order concerning the taxable turnover for the assessment years 1967-68 and 1969-70. The assessing officer included sums related to sales of cuttings and scrap in the turnover. The Appellate Assistant Commissioner allowed exemptions, but the Board revised the assessments, leading to the appeals.
2. The main issue was whether the sales of cuttings and scrap would fall under item 4(c) of the Second Schedule to the Tamil Nadu General Sales Tax Act. The Commissioner held that the cuttings constituted steel scrap and were not covered under the said item, as they were considered separate commercial commodities incidental to the assessee's business.
3. The judgment referred to a Supreme Court decision in State of Tamil Nadu v. Pyare Lal Malhotra, emphasizing that different commercial commodities, even if derived from the same material, could be taxed separately. The application of this precedent was crucial in determining the taxability of the goods sold by the assessee.
4. The interpretation of the law regarding single point taxation and the identity of goods in trade was significant. The judgment highlighted that for the benefit of single point taxation, goods must retain their identity as a commercial commodity. The interchangeability of specifications within item 4(c) was also discussed, emphasizing that steel scrap and other steel products were distinct taxable entities.
5. The judgment rejected the assessee's claim for exemption, stating that the sales of scrap were commercially different from steel rods and thus subject to taxation. The decision also referenced previous case law and emphasized that the sales of empty tins and jars were also taxable. The principle of incidental sales in the course of business was applied, leading to the dismissal of the appeals.
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1979 (10) TMI 197
Issues:
Interpretation of penalty provision under section 27(2) of the M.P. General Sales Tax Act, 1958 regarding non-issuance of bills by a dealer.
Detailed Analysis:
The case involved a reference under section 44 of the M.P. General Sales Tax Act, 1958, regarding the interpretation of the penalty provision under section 27(2) of the Act. The question referred to the High Court was whether the maximum penalty of Rs. 50 prescribed in section 27(2) is applicable in relation to each bill or cash memorandum for which there was a contravention of section 27(1), or if it applies to all bills or cash memoranda with contraventions during one accounting period. The facts of the case revealed that the assessee, a dealer in cutlery, hosiery, and fancy goods, was penalized for non-issuance of bills during a specific period. The penalty imposed was reduced to Rs. 50 by the Board of Revenue based on their interpretation of the penalty provision.
The relevant provision, section 27 of the Act, mandates dealers with turnovers exceeding a specified amount to issue bills or cash memoranda for each sale exceeding a certain value and maintain records of such transactions. Sub-section (2) of section 27 provides for penalties in case of contravention of the issuance requirement. The Commissioner is authorized to impose a penalty not exceeding double the amount of the bill or cash memorandum or Rs. 50, whichever is less, for each contravention. The Court emphasized that each instance of non-issuance constitutes a distinct offense, and the penalty can be imposed for each default separately, up to the prescribed limit.
The Court held that the penalty prescribed in section 27(2) applies to each bill or cash memorandum for which there was a contravention of section 27(1). Therefore, the penalty can be imposed separately for each instance of non-compliance during an accounting period, subject to the maximum limit specified. The judgment clarified that the Board of Revenue erred in interpreting the penalty provision to limit the total penalty to Rs. 50 for all instances combined. Consequently, the Court answered the reference in the affirmative, affirming that the penalty limit applies to each contravention individually.
In conclusion, the High Court's judgment clarified the application of the penalty provision under section 27(2) of the M.P. General Sales Tax Act, emphasizing that the penalty for non-issuance of bills should be imposed separately for each instance of contravention, subject to the prescribed maximum limit. The decision provided clarity on the interpretation of the penalty provision and upheld the principle that each default constitutes a distinct offense warranting separate penalties.
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1979 (10) TMI 196
Issues:
1. Challenge to the rate of sales tax on country liquor
2. Levying sales tax on the first point of sale
3. Requirement of President's assent for amending Act removing exemption from sales tax on liquor
Analysis:
1. The petitioner challenged the rate of sales tax on country liquor, arguing that it should only be charged on the cost of liquor, not the license fee. The definition of "sale price" under the Act includes any sum charged for activities done by the dealer, which would cover the license fee. The petitioner admitted that the sales tax was based on the total price, including the license fee, adjusted towards excise duty. The court found that the license fee forms part of the consideration for the sale of liquor, making it part of the sale price and turnover. The court distinguished a previous case where excise duty was paid directly to authorities, unlike in this case where it was part of the sale consideration, leading to the dismissal of this ground.
2. The petitioner argued that sales tax should not be levied on the second point of sale, but the State had issued a notification directing tax payment from the warehouse to retail-sale licensees. The court found this ground devoid of merit, as the State had the authority to levy tax at the specified point of sale, leading to the rejection of this argument.
3. The petitioner raised an objection regarding the amending Act removing the exemption from sales tax on liquor, claiming it required the President's assent. However, this objection was not included in the original petition. The court noted that the tax in question fell under the State List of the Constitution, and the amending Act did not require the President's assent as it was assented to by the Governor. The court highlighted that no authority supported the petitioner's claim that an amendment must also receive the President's assent if the original Act did. Thus, this objection was deemed to lack substance, and the petition was dismissed.
In conclusion, the court dismissed the writ petition challenging the sales tax rate on country liquor, the point of levy, and the requirement of the President's assent for the amending Act. The court found no merit in the petitioner's arguments and ruled in favor of the State, leading to the dismissal of the petition without costs.
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1979 (10) TMI 195
Issues:
1. Whether the deposits collected by the assessee are liable to be considered as part of the assessable turnover for sales tax purposes.
Detailed Analysis:
The judgment pertains to two revision petitions filed against an order of the Sales Tax Appellate Tribunal, Madras, concerning the treatment of deposits collected by the assessee, a liquor distributor. The assessing authority and the Appellate Assistant Commissioner considered the deposits as part of the assessable turnover, while the Tribunal held that the deposits were not taxable as they were not sales proceeds. The issue revolved around whether the deposits represented sale prices or were merely refundable deposits. The Government Pleader argued that the deposits should be treated as sales, citing a decision involving Madura Coats Ltd. The Tribunal extensively analyzed the nature of the transactions between the parties before reaching its conclusion.
The contention raised on behalf of the State was that the deposits should be treated as sales, as they were reflected in the accounts as separate charges. The Government Pleader referred to a previous case involving Madura Coats Ltd. where similar transactions were deemed taxable. The Kerala High Court had previously ruled on a comparable matter involving deposits for containers, holding that they were not sales but charges received at the time of bailment and repaid upon return. The judgment highlighted the importance of examining the actual nature of the transactions rather than solely relying on accounting entries.
The judgment distinguished the present case from the Madura Coats Ltd. decision, emphasizing that the deposits in question retained the character of deposits and were not indicative of sale prices. The assessee collected deposits against the return of bottles, indicating a bailment arrangement rather than a sale of goods. The judgment drew parallels with the practice of collecting caution deposits for soft drink bottles, emphasizing that such deposits do not signify a sale of the bottles. Even in cases where bottles were not returned and deposits forfeited, the judgment reiterated that no sale occurred. Ultimately, the Tribunal's decision was upheld, concluding that the deposits could not be classified as sale prices and therefore were not subject to taxation.
In conclusion, both revision petitions were dismissed, and the deposits collected by the assessee were deemed non-taxable. The judgment underscored the distinction between deposits and sale prices, emphasizing the importance of analyzing the actual nature of transactions rather than relying solely on accounting entries.
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1979 (10) TMI 194
Whether for the purpose of computing the turnover assessed to sales tax under the Central Sales Tax Act. 1956 the sale price of goods is determined by including the amount paid by way of trade discount?
Held that:- Appeal dismissed. The sale price which enters into the computation of the assessee's turnover for the purpose of assessment under the Central Sales Tax Act is obtained after deducting the trade discount from the catalogue price. The trade discount allowed by the assessee cannot be included in the turnover.
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1979 (10) TMI 193
Whether certain ornaments and other articles of gold purchased by the assessee with a view to melting them and making new ornaments or other articles out of the melted gold fall within entry 56 in the First Schedule of the Kerala General Sales Tax Act, 1963 which reads "bullion and specie"?
whether G.I. pipes sold by the assessee fall within entry 26A in the First Schedule to the Act, which reads "water supply and sanitary fittings"?
Held that:- Allow the appeal, set aside the orders made by the High Court, the Tribunal and the Appellate Assistant Commissioner and hold that so far as the ornaments and other articles of gold purchased by the assessee are concerned, they were liable to be taxed at the general rate of 3 per cent under section 5A read with section 5(1)(ii) of the Act and so far as G.I. pipes sold by the assessee are concerned, we remand the case to the Appellate Assistant Commissioner for the purpose of deciding on the basis of the existing material as also such further material as may be adduced, whether G.I. pipes sold by the assessee fall within the description "water supply and sanitary fittings" so as to be exigible to sales tax at the higher rate of 7 per cent under entry 26A.
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1979 (10) TMI 190
Whether for the purpose of determining the taxable turnover for assessment under the Central Sales Tax Act, 1956, the sale price must be computed by including the amount allowed by way of trade discount?
Held that:- Appeal dismissed. The assessee effected sales of goods to its dealers and allowed a trade discount on the catalogue price to cover the expenses incurred by the dealers and permit a margin of profit to them. The dealers were required to sell the goods at the catalogue price. For the assessment years 1960-61 to 1963-64, the High Court of Kerala has held that the amount allowed as trade discount could not be included in the taxable turnover as relying on Orient Paper Mills v. State of Orissa [1974 (2) TMI 67 - ORISSA HIGH COURT] which is right.
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1979 (10) TMI 184
Whether the amount of freight which was included in the "free on rail destination railway station" price, but which was paid by the purchasers and hence deducted from the price shown in the invoices sent to the purchasers, formed part of the sale price so as to be liable to be included in the taxable turnover of the assessee?
Held that:- The assessee could not be said to have filed "false" returns when it did not include the amount of freight in the taxable turnover shown in the returns and the Assistant Commissioner of Sales Tax was not justified in imposing penalty on the assessee under section 43 of the Madhya Pradesh General Sales Tax Act, 1958, and section 9, sub-section (2), of the Central Sales Tax Act, 1956.
We accordingly reject the appeals in so far as they are directed against the inclusion of the amount of freight in the taxable turnover of the assessee, but allow the appeals in so far as they relate to imposition of penalty and set aside the orders passed by the Assistant Commissioner of Sales Tax imposing penalty on the assessee.
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1979 (10) TMI 182
Whether any of the provisions in sections 33(6) and 35 of the Bombay Sales Tax Act, 1959 which are in pari materia with sections 14(6) and 15, respectively, of the Bombay Sales Tax Act, 1953 offend article 14 of the Constitution and, as such, are void?
Held that:- Appeal allowed. Section 33(6) of the 1959 Act and section 14(6) of the 1953 Act do not violate article 14 of the Constitution and are valid as relying on State of Gujarat v. Patel Ramjibhai Danabhai [1979 (5) TMI 134 - SUPREME COURT OF INDIA]
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1979 (10) TMI 161
Issues Involved:
1. Maintainability of the application under sections 397 and 398 of the Companies Act, 1956.
2. Validity of the consent given by Southern Steel Ltd.
3. Allegations of oppression and mismanagement.
4. Conduct and legality of board meetings on May 14, 1976, and December 11, 1976.
5. Authority and actions of the company secretary.
6. Shifting of the registered office and removal of the company secretary.
7. Interim orders and their implications.
Detailed Analysis:
1. Maintainability of the Application under Sections 397 and 398 of the Companies Act, 1956:
The application was filed under sections 397 and 398 of the Companies Act, 1956, seeking the appointment of a special officer, injunctions against certain directors, and declarations that specific meetings were illegal. The maintainability of the application hinged on whether the petitioners had the requisite qualification under section 399 of the Companies Act, 1956. The court concluded that the application was not maintainable as the consent from Southern Steel Ltd. was deemed invalid, thus failing to meet the requirements of section 399.
2. Validity of the Consent Given by Southern Steel Ltd.:
The petitioners relied on the consent of Southern Steel Ltd., a company within the Mittal group, to meet the shareholding qualification under section 399. The consent letter was signed by the alleged secretary without proper authorization from the board of Southern Steel Ltd. The court held that such consent must be backed by a board resolution or subsequent ratification, which was not present in this case. Therefore, the consent was invalid, making the application unsustainable.
3. Allegations of Oppression and Mismanagement:
The petitioners alleged various acts of oppression and mismanagement, including the wrongful removal of the company secretary, illegal shifting of the registered office, and the conduct of board meetings. The court found no substantial evidence to support these allegations. The disputes appeared to stem from internal family conflicts within the Mittal group rather than genuine issues of corporate governance.
4. Conduct and Legality of Board Meetings on May 14, 1976, and December 11, 1976:
The petitioners claimed that the board meeting on May 14, 1976, was held illegally despite a postponement notice and that the minutes were false. They also alleged that the December 11, 1976, meeting was disrupted by respondents forcibly taking away company documents. The court noted that subsequent meetings and orders had regularized any irregularities, rendering these issues moot.
5. Authority and Actions of the Company Secretary:
The court examined the role and authority of the company secretary, emphasizing that the secretary's functions are ministerial and administrative. The secretary does not have the power to give consent for applications under sections 397 and 398 without board authorization. The court referenced various legal provisions and precedents to underline that the secretary cannot usurp the board's functions.
6. Shifting of the Registered Office and Removal of the Company Secretary:
The petitioners contended that the registered office was shifted illegally and the secretary was wrongfully removed. The court found that these actions were part of the broader family dispute and did not constitute legal grounds for the application under sections 397 and 398.
7. Interim Orders and Their Implications:
The court had issued several interim orders, including the appointment of a special officer to supervise board meetings. These orders aimed to ensure proper conduct of meetings and safeguard company documents. The court noted that these interim measures had addressed the immediate concerns, further diminishing the need for the application.
Conclusion:
The court dismissed the application under sections 397 and 398 of the Companies Act, 1956, due to the invalid consent from Southern Steel Ltd., lack of substantial evidence of oppression or mismanagement, and the regularization of alleged irregularities through interim orders. The application was deemed mala fide, vexatious, and harassing, and the special officer was discharged. The petitioners were ordered to bear the costs.
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1979 (10) TMI 154
Issues Involved:
1. Modification of the scheme sanctioned on December 15, 1975.
2. Payment of interest to creditors.
3. Validity of the compromise between the petitioners and the Income Tax Department (I.T. Dept.).
4. Role and authority of the official liquidator.
5. Provision of bank guarantee and its solvency.
6. Application of Section 392 of the Companies Act.
7. Inclusion of interest in costs, charges, and expenses.
Detailed Analysis:
1. Modification of the scheme sanctioned on December 15, 1975:
This application under Section 392 of the Companies Act seeks modifications to the scheme approved by the court on December 15, 1975. The company came under liquidation on May 10, 1968, and a scheme for payment of outstanding claims was approved. The scheme was modified by the court and became operative after the dismissal of an appeal on September 24, 1979. The present compromise between the petitioners and the I.T. Dept. only addresses the payment of income-tax dues and proposes changes to the mode of payment to the I.T. Dept. without affecting creditors' claims.
2. Payment of interest to creditors:
Creditors claimed interest from May 10, 1968, on their dues. The official liquidator opposed the modifications, arguing that creditors are entitled to 12% interest, which would amount to about 90 lakhs. The petitioners contended that the sanctioned scheme did not contemplate interest payments and that creditors, having consented to the scheme, cannot now claim interest. The court held that the scheme, having statutory force, does not provide for interest payments, and creditors cannot claim interest post-sanction.
3. Validity of the compromise between the petitioners and the I.T. Dept.:
The compromise between the petitioners and the I.T. Dept. was filed before the Division Bench and led to the withdrawal of the appeal. The court emphasized that the scheme dated December 15, 1975, remains intact for creditors, and the compromise only modifies the mode of payment to the I.T. Dept. The court found the compromise beneficial for all concerned parties, ensuring full payment to creditors and the I.T. Dept., and facilitating the company's exit from liquidation.
4. Role and authority of the official liquidator:
The official liquidator opposed the modifications, claiming that the court became functus officio after sanctioning the scheme and cannot entertain further modifications. The liquidator also raised concerns about the bank guarantee's solvency and the involvement of the Additional Registrar. The court clarified that under Section 392, it has ample powers to supervise and modify the scheme and that the official liquidator's objections were unfounded.
5. Provision of bank guarantee and its solvency:
The official liquidator objected to the bank guarantee being in favor of the Additional Registrar instead of himself. The court dismissed this objection, stating that it has the discretion to appoint any responsible officer to assist in supervising the scheme. The petitioners were ordered to furnish a bank guarantee of Rs. 61 lakhs within a week to ensure full payment to creditors.
6. Application of Section 392 of the Companies Act:
Section 392 empowers the court to supervise the carrying out of a sanctioned scheme and make necessary modifications. The court cited precedents affirming its jurisdiction to modify schemes post-sanction and emphasized that it is not functus officio. The court has continuing supervision over the implementation of the scheme and can make modifications to ensure its proper working.
7. Inclusion of interest in costs, charges, and expenses:
The official liquidator argued that interest should be included in costs, charges, and expenses. The court held that the sanctioned scheme did not provide for interest payments and that creditors are not entitled to interest. The expression "costs, charges, and expenses" includes various administrative expenses but not interest on creditors' dues.
Conclusion:
The court approved the present arrangement between the petitioners and the I.T. Dept., finding it beneficial for all parties. The scheme dated December 15, 1975, was modified to incorporate the new arrangement, ensuring full payment to creditors and the I.T. Dept. The petitioners were ordered to furnish a bank guarantee of Rs. 61 lakhs within a week, and the scheme was to be enforced forthwith. The court retained jurisdiction to resolve any inconsistencies or ambiguities in the scheme's implementation.
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1979 (10) TMI 145
Issues:
1. Petition to quash criminal proceedings under sections 58A(4) and 58A(5) of the Companies Act.
2. Interpretation of "renewal" of deposits as receiving fresh deposits.
3. Prosecution's contention on limitation period.
4. Exemption under section 58A(8) of the Act.
Analysis:
The judgment pertains to a petition seeking to quash criminal proceedings under sections 58A(4) and 58A(5) of the Companies Act. The petitioners argued that no fresh deposits were received, only old deposits were renewed, and the prosecution was time-barred. However, the court found that the renewal of deposits constituted receiving fresh deposits, making the petitioners guilty of an offence under section 58A(4) punishable under section 58A(5)(b) of the Act. The court also ruled that the prosecution was not barred by limitation, as the renewal of deposits constituted a fresh offence. The court emphasized the gravity of the offence and expressed hope for an adequate sentence upon conviction. The petitioners' attempt to seek exemption under section 58A(8) of the Act was rejected, with the court noting that the petition was filed solely to delay proceedings.
The court highlighted that the petition was frivolous and vexatious, aimed at protracting the trial. The court dismissed the petition, directing the trial court to expedite the proceedings and ordered the petitioners to pay the costs of the Government counsel. The judgment underscores the importance of deciding such matters on their merits and not allowing the legal system to be misused for dilatory tactics. The ruling serves as a reminder that courts will not tolerate attempts to delay justice through unfounded petitions and reiterated the obligation of companies and their officers to comply with the provisions of the Companies Act.
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1979 (10) TMI 144
Issues Involved:
1. Validity of the meeting held on May 16, 1976.
2. Allegations of oppression and mismanagement under Sections 397 and 398 of the Companies Act, 1956.
3. Transfer of the registered office from Calcutta to Hyderabad.
4. Alleged removal of documents and papers by Respondent No. 5, R.K. Mittal.
5. Transfer of the secretary and senior officers from Calcutta to Hyderabad.
6. Alleged irregularities in the preparation and publication of the balance-sheet.
Detailed Analysis:
1. Validity of the Meeting Held on May 16, 1976:
The petitioners challenged the legality of the meeting held on May 16, 1976, alleging that it was conducted without proper notice. However, the respondents argued that no fresh notice was required for the adjourned meeting as per the Companies Act and the articles of association of the company. The court found that Article 146 of the company's articles of association was applicable, which allows directors present at a meeting adjourned due to lack of quorum to fix the date, time, and place for the adjourned meeting. Therefore, the court held that the meeting on May 16, 1976, was legal, valid, and according to law, and the resolutions passed therein did not suffer from any illegality or infirmity.
2. Allegations of Oppression and Mismanagement under Sections 397 and 398 of the Companies Act, 1956:
The petitioners alleged oppression and mismanagement by the respondents. The court examined the allegations and found no substantiated grounds that could constitute oppression or mismanagement within the meaning of Sections 397 and 398. The court noted that the disputes were primarily family disputes within the Mittal family, and the actions taken by Respondent No. 5, R.K. Mittal, were in the best interests of the company and its shareholders. The court dismissed the allegations as mala fide and not amounting to oppression or mismanagement.
3. Transfer of the Registered Office from Calcutta to Hyderabad:
The petitioners argued that the transfer of the registered office from Calcutta to Hyderabad was against a court order from 1970. However, the court noted that the situation in 1979 was different from that in 1970. The company's factory and main business were in Andhra Pradesh, and the Andhra Pradesh State Financial Corporation, a significant financier, insisted on the transfer. The court found the transfer to be justified and in the best interests of the company.
4. Alleged Removal of Documents and Papers by Respondent No. 5, R.K. Mittal:
The petitioners alleged that Respondent No. 5, R.K. Mittal, forcibly took away various documents, papers, and books of the company. R.K. Mittal denied these allegations. The court did not find sufficient evidence to support the petitioners' claims and dismissed this allegation.
5. Transfer of the Secretary and Senior Officers from Calcutta to Hyderabad:
The petitioners contended that the transfer of the secretary and senior officers to Hyderabad was without lawful ground. The respondents argued that the transfer was necessary due to unjustified expenses and the need for better management. The court found that the transfer was conducive to the best interests of the company and did not constitute oppression or mismanagement.
6. Alleged Irregularities in the Preparation and Publication of the Balance-Sheet:
The petitioners alleged that the accounts of the Hyderabad factory were deliberately not sent, preventing the preparation and publication of the balance-sheet. The respondents denied these allegations and stated that the accounts at Calcutta were not ready. The court did not find any substantial evidence to support the petitioners' claims and dismissed this allegation.
Conclusion:
The court dismissed the application with costs, finding no merit or substance in the petitioners' allegations. The court held that the actions taken by Respondent No. 5, R.K. Mittal, were in the best interests of the company and its shareholders, and there was no evidence of oppression or mismanagement. The Special Officer, Mr. C.R. Dutt, was discharged, and any arrears of remuneration were to be paid from the company's funds.
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1979 (10) TMI 131
Issues:
1. Validity of re-opening assessment under section 147(b) of the Income Tax Act.
2. Allowability of relief under section 80J for a bakery unit.
3. Consideration of information for re-opening assessment.
4. Granting of provisional tax exemption certificate under section 80J.
Detailed Analysis:
1. Validity of re-opening assessment under section 147(b):
The case involved the re-opening of the assessment under section 147(b) of the Income Tax Act. The Assessing Officer withdrew the relief under section 80J for a bakery unit in the reassessment, which was initially allowed in the original assessment. The Appellate Assistant Commissioner (AAC) dismissed the appeal, stating that the re-assessment was not based on a mere change of opinion. However, the tribunal held that the re-assessment was invalid as there was no new information within the meaning of section 147(b) after the completion of the original assessment. The tribunal referred to various decisions and ultimately set aside the assessment made pursuant to the notice under section 148.
2. Allowability of relief under section 80J for a bakery unit:
The controversy arose regarding the allowability of relief under section 80J for a bakery unit. The tribunal noted that the relief claimed for the bakery unit was disallowed in the reassessment as there was a loss in that division. The tribunal cited relevant case laws to support its decision that the relief under section 80J is confined to the new industrial undertaking and does not extend to the profit of any other business activities, even if closely connected. The tribunal ordered that the relief amount would be carried forward under section 80J(3) to be deducted from the future profits of the bakery unit.
3. Consideration of information for re-opening assessment:
The tribunal analyzed whether the Audit Note constituted "information" within the meaning of section 147(b) for re-opening the assessment. It was argued that the assessment was reopened solely on a change of opinion, without any new information. The tribunal referred to relevant precedents and held that the assessment could not be maintained on this ground, as there was no valid information to justify the reassessment.
4. Granting of provisional tax exemption certificate under section 80J:
The tribunal examined the grant of a provisional tax exemption certificate under section 80J for the bakery unit. The assessee had requested the certificate based on the capital employed in the bakery unit. The tribunal reviewed the correspondence between the assessee and the Income Tax Officer (ITO) regarding the provisional certificate. It was noted that the assessment was reopened based on a change of opinion, as evidenced by the correspondence and notings in the assessment order. The tribunal concluded that the assessment order was invalid and set it aside, ultimately allowing the appeal.
In conclusion, the tribunal's decision focused on the validity of re-opening the assessment, the allowability of relief under section 80J, the consideration of information for reassessment, and the granting of a provisional tax exemption certificate under section 80J. The tribunal set aside the assessment made under section 148, emphasizing the importance of valid information and adherence to statutory provisions in the assessment process.
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