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2006 (12) TMI 522 - CESTAT BANGALORE
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... ... ..... of OIO. 2. Heard learned DR. Respondents were not present despite notice. 3. On a careful consideration, I notice that the penal provisions in terms of Section 76 of the Finance Act proposing to levy penalty of ₹ 100/- per day for failure to pay duty came into effect only on 10.9.04. The period in question pertains to an earlier period. Therefore the Commissioner (Appeals) is right in not imposing levy of penalty in terms of amended provisions of Finance Act. There is no merit in this appeal and the same is rejected.
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2006 (12) TMI 521 - SUPREME COURT
Advertisement issued inviting 'Expression of Interest for development of C&EC' - highest bidder - validity of clause 2.4 of the Request for Proposal in which the Authority reserved the right to reject at any stage all or any of the bids without assigning any reason - Power of the Authority to cancel or reject the bids - whether the project would be financially viable if the method of calculation is changed - HELD THAT:- A power to deal with a contractual matter and a power of a statutory authority to exercise its statutory power in determining the rights and liabilities of the parties are distinct and different. Whereas reasons are required to be assigned in a case where civil or evil consequences may ensue, the same may not be necessary where it is contractual in nature, save and except in some cases, e.g., Star Enterprises [1990 (4) TMI 231 - SUPREME COURT].
We have noticed that power has not been exercised by the Executive Committee in rejecting the tender. The power has been exercised by the Authority in cancelling the tenders so as to enable it to have a re-look of the entire project. Some reasons may be required to be assigned for rejecting the bid, but in the instant case, in our opinion, no reason was required to be assigned as there has been a change in the policy decision. The news item appearing in the Economic Times is not of much significance. No affidavit has been affirmed as regards the correctness or otherwise of the said news item.
may be true that the Authorities at one point of time, as was disclosed in the Counter Affidavit, had thought of setting up a Convention center of their own and without any private participation, but only because there has been a deviation from the said stand would not, in our considered opinion, render the entire policy decision vitiated in law. It had set up its Evaluation Committee. The decision presumably has been reached by experts. The reasons as regards purported unsatisfactory performance of Appellants, take a back seat once having a re-look to the entire situation was thought of.
It is not a case where the Court is called upon to exercise its equity jurisdiction. It is also not a case where ex facie the policy decision can be held to be contrary to any statute or against a public policy. A policy decision may be subjected to change from time to time. Only because a change is effected, the same by itself does not render a policy decision to be illegal or otherwise vitiated in law.
However, if the Court in a given situation is not in a position to allow a bid to take place before, it may not still venture to strike down an Act in the name of public interest, although, no such public interest exists. Appellant stated before us that he is ready and willing to take a part of the contract, viz., construction of the C&EC and pay the same amount as has been done by Reliance Industries Ltd. and in addition it would pay 2.5% of its annual turnover from the Convention center from the 21st year, as was initially offered.
Appellant did not participate in the second bid. The tender process is complete. Before us only a higher bid has been given. We do not intend to enter into the intricacies of the question. Appellants could have submitted its bids pursuant to the new tender and new conditions, even without prejudice to its rights and contentions in this appeal. The stipulations made in 2002 tender could have been repeated by it so as to demonstrate before the experts comprising members of the Executive Committee that its bid was the highest. If, in view of the change in the policy decision, the Authority does not intend to become a partner in the profit making and opt for having the entire bid amount at one go instead of waiting for 20 years, we do not find any fault therewith.
We, therefore, are of the opinion that it is not a case where we should interfere with the judgment of the High Court. It, however, would not mean that the Authority or the Executive Committee would not be entitled to take note of the offer of Appellant. It may do so. It would not further mean that if the terms of new tender are violative of the provisions of the master plan, the same would not be suitably dealt with. We merely place on record that we have not gone into the said questions, although raised before us by the learned Counsel for the appellant, simply on the ground that no such plea had been taken before the High Court. In the absence of any plea that the policy decision adopted by the Authority would be violative of the provisions of the Act or any master plan, the same cannot be entertained The question, however, is left open.
Thus, there is no merit in these appeals, which are accordingly dismissed.
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2006 (12) TMI 520 - CESTAT BANGALORE
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... ... ..... enerated and use of the same in production of final goods in another factory also satisfies the requirement of Rule 2(g) of Cenvat Credit rules. The same view has been expressed in the case of Diamond cements. He submits that the issue is covered in their favour. Therefore, they should be given benefit of credit. 2. Learned DR distinguishes the judgments. 3. On a careful consideration, I notice that the issue is no longer resintegra. The Apex Court in the case of Vikram Cements cites supra has upheld the grant of credit in respect of inputs and capital goods used outside the factory in respect power project located outside the factory and the power totally consumed and transferred to the assessee's factory. The same situation was discussed in the SRF case and in Diamond Cements case. Respectively, following the ratio of the above noted judgements, I set aside the impugned order and allow the appeal with consequential relief if any. (Pronounced and dictated in open Court)
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2006 (12) TMI 519 - SUPREME COURT
Appointment on a contractual basis - Applicability of a policy decision of the State - Scheme of regularization of services of the employees - legal right - policy decision adopted in terms of Article 162 of the Constitution of India - irregular and illegal appointments - HELD THAT:- In the instant case, the High Court did not issue a writ of mandamus on arriving at a finding that the respondents had a legal right in relation to their claim for regularization, which it was obligated to do. It proceeded to issue the directions only on the basis of the purported policy decision adopted by the State. It failed to notice that a policy decision cannot be adopted by means of a circular letter and, as noticed hereinbefore, even a policy decision adopted in terms of Article 162 of the Constitution of India in that behalf would be void. Any departmental letter or executive instruction cannot prevail over statutory rule and constitutional provisions. Any appointment, thus, made without following the procedure would be ultra vires.
This Court, recently in Indian Drugs & Pharmaceuticals Ltd. v. Workman, Indian Drugs & Pharmaceuticals Ltd.[2006 (11) TMI 655 - SUPREME COURT], opined that rules of recruitment cannot be relaxed and the Courts/Tribunals cannot direct regularization of temporary appointees de hors the rules, nor can it direct continuation of service of a temporary employee (whether called a casual, ad hoc or daily rate employee) or payment of regular salaries to them.
It was faintly suggested that as the respondents are qualified to hold the posts and they had been continuously working for a long time, this Court may not interfere with the impugned judgment. On the face of a catena of decisions of this Court, we cannot accept the said submission.
An endeavor was made also to submit that the respondents were employed on daily rated basis and their services were transferred to the Corporation. No such case was made out and in any event, as and when the respondents themselves agreed to be appointed on a contractual basis by the appellant-Board, at this juncture they cannot be heard to say that the purported transfer of their services by the State of Punjab to the appellant- Board was illegal. Even no such case has been made out in the special leave petition.
Thus, the impugned judgment cannot be sustained. They are set aside accordingly. Appeals are allowed.
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2006 (12) TMI 518 - CESTAT, KOLKATA
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... ... ..... he Assistant Commissioner dated 25-6-2004 on the ground that the penalty imposed is only ₹ 10,000 (Rupees ten thousand), and it should be equal to the service tax effected. Consequently, he has imposed a penalty of ₹ 21,16,226 (Rupees twenty-one lakh sixteen thousand two hundred and twenty-six) as per the provisions of section 78 of the Finance Act, 1994 in the impugned order. Learned Counsel for the applicant/appellant company stated that the Tribunal has already stated the pre-deposit of service-tax in question and the penalty of ₹ 10,000 (Rupees ten thousand) in the earlier Stay Order cited. In these circumstances, he said that it would be in the fitness of things to take up the entire matter together. Therefore, he prayed for stay of pre-deposit of the penalty amount demanded in the impugned order. 2. On careful consideration of the entire matter, we feel that the pre-deposit of penalty in the impugned order should be waived till disposal of the appeal.
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2006 (12) TMI 517 - CESTAT NEW DELHI
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... ... ..... rior to the Extraordinary Tax Payer Friendly Scheme and not registered this immunity scheme. Therefore, are liable to penal action. I find that the service provider who registered and paid service tax during Extra Ordinary Tax Payer Friendly Scheme up to 30-10-04, not liable to any penalty. Therefore, I find no infirmity in the finding of the Commissioner (Appeals) that the respondents to pay service tax along with the interest prior to 30-10-04 are also not liable for penalty. In view of these circumstances, I find no merit in the appeals. Therefore, all the appeals are dismissed. 6. It can be noticed that the issue in this case is squarely covered in favour of the appellants. Accordingly, respectfully following both the decisions of the Tribunal, the impugned order to the extent it imposes penalty is liable to be set aside and I do so. The appeal is allowed in above terms with consequential relief, if any. (Order dictated and pronounced in the open Court on 5-12-2006)
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2006 (12) TMI 516 - SUPREME COURT
Supply of coal to coke ovens - Import of coal and opening of private coal mines and to provide pragmatic and transparent system of distribution of coal - Validity and/or legality of a scheme framed by the Coal India Limited for sale of coal by Electronic Auction (E-Auction) - ultra vires Article 14 of the Constitution of India - HELD THAT:- Only MSTC and MJCPL and the companies who are conducting the E-Auction, would have access to the details of the bids submitted by the bidders. No eligibility criteria having been fixed, any person including traders can participate and bid in the E- Auction. Highest price and highest quantity are the only factors for sale/allocation of coal to a bidder in terms of the said scheme; as E-Auction results in traders buying large quantities of coal. Consequently, the manufacturers of hard coke and smokeless coal as also other small units have to buy coal at prohibitive rates from traders . The methodology for allocation of coal to a bidder of E-Auction is, thus, inequitable, irrational and fortuitous.
We have noticed that having regard to the intervention of the Central Government, the coal companies deviated from the said scheme and considered even the non-core sector consumers to be a separate class; as they not only became entitled to take part in the E- Auction along with traders but also were sought to be assured of supply of coal having regard to their own requirements as regard both quality and quantity subject, of course, to their paying the price at the average weighted price. The stand taken by the coal companies before the Calcutta High Court as also before this Court assumes significance only in that context. However, now it appears that the coal companies have given a complete go- bye to the original scheme of E-Auction inasmuch as not only the traders or the non-core sector consumers but also core sector consumers had also been allowed to participate therein. A consumer of coal falling in any category as also a person who intends to purchase coal for his personal use would, therefore, be entitled to take part in E-Auction.
Whereas the consumers in the core sector would not only be entitled to allotment of coal at a price fixed by the coal companies but also would be entitled to take part in E-auction. The non-core sector consumers although as linked consumers form a separate and distinct class vis-à-vis the traders, they would not be entitled to the benefit of obtaining coal at a fixed price. The question as regards the discrimination between two categories of consumer assumes some importance.
The effect is that today, while the core sector (92%) on its own and non-core non-linked SSI/Tiny units (through the NCCF/other agencies) (1%) are being supplied coal at a fixed price, on the other hand, the non-core linked SSI/Tiny units (4%) are being subjected to differential treatment without any rational classification by supplying the coal to the latter on the price to be ascertained by the trader-controlled process of E-Auction and thereby putting the petitioner-units at par with the trader. The scheme of E- Auction is, therefore, ultra vires Article 14 of the Constitution of India.
Conclusion - With a view to evolve a viable policy, a committee should be constituted by the Union of India with the Secretary of Coal being the Chairman. In such a committee, a technical expert in coal should also be associated as most of the projects involve consumers of coal, particularly manufacturers of hard coke and smokeless fuel. In our opinion, it may not be difficult to find out, having regard to the technologies used therein as regards the ratio of the input vis-à-vis the output, with a balance and 10% margin. On the basis of such finding alone, apart from the requirements of five years, supply should form the basis of MPQ. We may, however, hasten to add that the Central Government in collaboration with the coal companies would be at liberty to evolve a policy which would meet the requirements of public interest vis-à-vis the interest of consumers of coal. They would be entitled to lay down such norms as may be found fit and proper. They would be entitled to fix appropriate norms therefore. In the event, any industrial unit is found to violate the norms, it should be stringently dealt with.
Hard coke plants are also coal mines within the meaning of Colliery Control Order, 2000. Hard coke is coal within the meaning of the provisions thereof. The Central Government, therefore, may think it fit to widen the definition of coal so as to include the smokeless coal in exercise of its power under the Essential Commodities Act. We may notice in ONGC (supra), this Court has held that slurries are a part of coal and is governed by the provisions of the Mines and Minerals (Regulation and Development) Act. Such being the wider definition of coal, we fail to see any reason as to why proper measure cannot be taken by the Union of India to have a complete control there over. Any strict mechanism to find out the genuine consumers would go a long way in taking preventive measures and dealing with coal by unscrupulous persons for unauthorized purposes. Those who do so, should be dealt with stringently but the same would not mean that the genuine consumers should suffer for want of coal.
We are of the opinion that it may not be difficult to find out as to who the genuine consumers are. So far as owners of the hard coke ovens are concerned, they are members of the association and their identity can easily be verified. However, discussions made hereinbefore should not be taken to lay down a law that the Central Government and for that matter the coal companies cannot change their policy decision. They evidently can; but therefore there should be a public interest as contra distinguished from a mere profit motive. Any change in the policy decision for cogent and valid reasons is acceptable in law; but such a change must take place only when it is necessary, and upon undertaking of an exercise of separating the genuine consumers of coal from the rest. If the coal companies intend to take any measure they may be free to do so. But the same must satisfy the requirements of constitutional as also the statutory schemes; even in relation to an existing scheme e.g. Open Sales Schemes, indisputably the coal companies would be at liberty to formulate the new policy which would meet the changed situation. E-advertisement or E-tender would be welcome but then therefore a greater transparency should be maintained.
Thus, Civil Appeal being devoid of any merits are dismissed. Civil Appeal arising out of S.L.P. (Civil) is allowed and the impugned judgment of the Madhya Pradesh High Court is set aside. No separate order is required to be passed on Civil Appeal arising out of the judgment and order of the Calcutta High Court as the said case would also be governed by this judgment. All other appeals, writ petition and transferred cases are disposed of with the aforementioned observations and directions.
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2006 (12) TMI 515 - SUPREME COURT
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... ... ..... hose are aspects that will have to be tackled at the appropriate time, if the need or occasion for it arises. 34. Since, this matter has been pending for years and what is involved is exploitation of a precious mineral, we direct the State Government and the Central Government to comply with the directions we have made expeditiously. The State Government should send its request within a period of four months from today with all relevant details and the Central Government should take its decision on the recommendation within a period of four months from the date of receipt of the recommendation, if necessary, after calling for any further detail that it may consider relevant. 35. Thus, the appeals of the State of Orissa and OMC are allowed, that of I.C.C.L. and GMR are allowed to the extent of setting aside the grant of lease to Nava Bharat and the Transferred Cases are disposed of in the light of the above decision. The parties are directed to bear their costs in this Court.
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2006 (12) TMI 514 - SUPREME COURT
Disqualification from being members of the Assembly - Challenge the legality of orders passed by the Speaker of Haryana Legislative Assembly ('the Assembly') - sole member constituting the legislature party of a political party - personal malafides - disqualification as provided in paragraph 2(2) of the Tenth Schedule of the Constitution of India - deprive from right to vote - violation of principles of natural justice - HELD THAT:- We are of the view that to determine whether an independent member has joined a political party the test is not whether he has fulfilled the formalities for joining a political party. The test is whether he has given up his independent character on which he was elected by the electorate. A mere expression of outside support would not lead to an implication of a member joining a political party. At the same time, non- fulfillment of formalities with a view to defeat the intent of paragraph 2(2) is also of no consequence. The question of fact that a member has given up his independent character and joined, for all intent and purposes, a political party though not formally so as to incur disqualification provided in paragraph 2(2) is to be determined on appreciation of the material on record.
Applying this test here, it cannot be held that the Speaker committed any illegality in coming to the conclusion that the petitioners had joined the Indian National Congress. The conclusions reached by the Speaker cannot be held to be unreasonable, assuming that two views were possible.
On the facts of the present case, the Speaker was justified in coming to the conclusion that there was no split in the original political party of the petitioner Jagjit Singh. Likewise, in Writ Petition 292/2004, the Speaker on consideration of relevant material placed before him came to the conclusion that there was no split as contemplated by paragraph 3 of the Tenth Schedule. The finding of the Speaker cannot be faulted. In fact, letter of the petitioner dated 17th June sent to the Speaker itself shows that what was claimed was that the Haryana unit of the Republican Party of India effected a split in the original party on 21st December, 2003. The finding that the claim of split was made as an afterthought to escape disqualification under paragraph 2(1)(a) of the Tenth Schedule cannot be held to be unreasonable or perverse. The Speaker was justified in coming to the conclusion that despite various opportunities, no valid proof or evidence was placed on record by the petitioner to show that indeed a split had taken place in the original political party, i.e., Republican Party of India on 21st December, 2003.
It is a matter of great anguish that the mode of substituted service had to be resorted to, to serve elected members of a Legislative Assembly.
The object of the Tenth Schedule is to discourage defection. Paragraph 3 intended to protect a larger group which, as a result of split in a political party which had set up the candidates, walks off from that party and does not treat it as defection for the purposes of paragraph 2 of the Tenth Schedule. The intention of the Parliament was to curb defection by a small number of members. That intention is clear from paragraph 3 which does not protect a single member legislature party. It may be noted that by Constitution (Ninty-first Amendment) Act, 2003, paragraph 3 has been omitted from the Tenth Schedule.
The Speaker has not filed any reply. It is true that the aforesaid averments have remained unrebutted. The contention is that adverse inference should be drawn against the Speaker and the impugned orders set aside on the ground of malafides of the Speaker.
Ordinarily, the adverse inference can be drawn in respect of allegations not traversed, but there is no general rule that adverse inference must always be drawn, whatever the facts and circumstances may be. The facts and circumstances of the present case have already been noticed as to how the petitioners have been avoiding to appear before the Speaker; how the proceedings were being delayed and long adjournments sought on ground such as non-availability of senior advocates because of court vacations. In the light of these peculiar facts and circumstances, a telephone call like the one alleged can mean that further adjournment as sought for by the petitioners is possible if they do not vote in the Rajya Sabha election on 28th June, 2004. On facts, we are unable to draw adverse inference and accept the plea of malafides.
Undoubtedly, in our constitutional scheme, the Speaker enjoys a pivotal position. The position of the Speaker is and has been held by people of outstanding ability and impartiality. Without meaning any disrespect for any particular Speaker in the country, but only going by some of events of the recent past, certain questions have been raised about the confidence in the matter of impartiality on some issues having political overtones which are decided by the Speaker in his capacity as a Tribunal. It has been urged that if not checked, it may ultimately affect the high office of the Speaker. Our attention has been drawn to the recommendations made by the National Commission to review the working of the Constitution recommending that the power to decide on the question as to disqualification on ground of defection should vest in the Election Commission instead of the Speaker of the House concerned.
Whether to vest such power in the Speaker or Election Commission or any other institution is not for us to decide. It is only for the Parliament to decide. We have noted this aspect so that the Parliament, if deemed appropriate, may examine it, bestow its wise consideration to the aforesaid views expressed also having regard to the experience of last number of years and thereafter take such recourse as it may deem necessary under the circumstances.
As a result of the aforesaid discussions, we find no merit in the writ petitions. Writ Petition are, accordingly, dismissed.
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2006 (12) TMI 513 - SUPREME COURT
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... ... ..... er illegal and non est. o p /o p We also hold that the appellant-Corporation is an industrial establishment within the definition of Section 25L of Chapter V-B of the Industrial Disputes Act. o p /o p We, therefore, allow the civil appeal Nos. 5730, 5740, 5741, 5742, 5744, 5745, 5746, 5749, 5750, 5752, 5754, 5755, 5756, 5758, 5759, 5760, 5761, 5757 of 2006 arising out of SLP (C) Nos. 3399/2004, 8552/2004, 8553/2004, 10712/2004, 13425/2004, 13446/2004, 13813/2004, 14327/2004, 15498/2004, 21790/2004, 21791/2004, 5297/2005, 24706/2005, 25258/2005, 25001/2005, 25075/2005, 26042/2005, 25203/2005, and dismiss the civil appeal Nos. 5728, 5729, 5731, 5732, 5733, 5734, 5735, 5736, 5737, 5738, 5739, 5747, 5748, 5751 of 2006 filed by the appellant Corporation arising out of Special Leave Petition (Civil) Nos. 24584/2003, 3189/2003, 3553/2004, 3738/2004, 3740/2004, 3793/2004, 3795/2004, 4361/2004, 4386/2004, 4391/2004, 7548/2004, 15433/2004, 15434/2004 and 21789/2004. No costs. o p /o p
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2006 (12) TMI 512 - CESTAT BANGALORE
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... ... ..... imports. It was found that the Board Circular dated 31.1.2005 was issued prior to the provisions of Finance (No.2) Act, 2004 read with the Notification No. 40/2002 Cus. Dated 22.4.2002. He submitted that the issue has already been dealt with by the Mumbai Bench in great detail pertaining to the non-levy of the Education Cess in respect of free imports under DEPB Scheme and appeal is required to be allowed. 3. The learned JDR reiterated the departmental view. 4. On a careful consideration, we notice that this very issue was taken up for detailed consideration by the Mumbai Bench in the case of CCE vs. Reliance Industries Ltd. (supra) . After due consideration of all the provisions of the Finance Act, 2004 and the relevant Ministry's clarification, the Tribunal has held that Education Cess is not leviable in respect of exempted DEPB imports. Respectfully following the ratio of this order, the impugned order is set aside and the appeal is allowed with consequential relief.
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2006 (12) TMI 511 - SUPREME COURT
Abkari Act ('the Act') - Manufacture or sale of liquor - including country liquor - Validity or otherwise of Rule 9(2) of the Rules and/or applicability of Section 57(a) of the Act - sample of toddy found to be exceeded 8.1% - renewal of his licnece in terms of Section 57 - HELD THAT:- Rule 9(2) of the said Rules, in our opinion, should be given a plain meaning. It should be read in its entirety. It is in two parts. The intention of the legislature must be gathered having regard to the expressions used therein. Rule 9(2) read in its entirety, states the context that thereby what is essentially sought to be prevented is adulteration of toddy. It is aimed at prevention of adulteration. The penal provision contained in first part not only directs that all toddy kept or offered for sale should be of good quality and unadulterated but also provides that nothing shall be added to it to increase its intoxicating power or for any other purpose. If the second part prescribing the contents of the ethyl alcohol in toddy is read in the context of the first part vis-`-vis Section 57(a) of the Act, it would be evident that prohibition is aimed at adulteration by addition of any foreign substance to increase its intoxicating power or for any other purpose.
Validity of Rule 9(2), therefore, can be saved if the said provision is read in its entirety and rule of harmonious construction is resorted to. If, however, Rule 9(2) is sought to be invoked even for the purpose of initiating a prosecution as against a licensee even he does not add any foreign substance to it, the same, in our opinion, would render the same ultra vires, as would appear from the discussions made hereinafter.
It is not in dispute that there does not exist any mechanical devise to measure the contents of ethyl alcohol present in toddy. It also stands admitted that contents of ethyl alcohol in toddy would depend upon various factors including weather, season or pot in which it is kept etc. Judicial notice can be taken of the fact that each village would not have a chemical laboratory where the process of analysis of ethyl alcohol can be carried out. For example, if a sample is taken in a village, by the time sample is sent for and is analyzed, the volume of ethyl alcohol may increase. Although we are informed that some chemical is mixed when a sample is taken, no material has been placed in that behalf.
The validity or otherwise of Rule 9.2 must be considered from this point of view.
Toddy ferments automatically after sun rise. If it is permitted to be sold within a timeframe after toddy is tapped, reasonableness can be inferred; but at what point of time precisely ethyl alcohol content would exceed 8.1% in a toddy is not known. It will bear repetition to state that the same would depend upon several factors including the climate. It is reasonable to expect that the State would frame rules in consonance with equity and good conscience. A rule may not be worked out if it imposes a condition which, unless some other guidelines are issued, would become impossible to be performed. We must remind ourselves that the consequences of a single violation may be disastrous. If the contention of the State is correct, it would not only result in penal consequences, but would also lead to non-renewal of the licence. The licensee, thus, for all intent and purport looses his right to carry on business. Carrying on trade of liquor may not be a fundamental right, but it is a contractual right given to him in terms of the provisions of a statute. The terms and conditions are governed by statute. The violation thereof would lead to penal consequences. Interpretation of statute in the aforementioned situation rests on the principle of reasonableness, equity as well as good conscience.
A person may be held to be guilty even if the contents of ethyl alcohol exceed 8.1% marginally. He must, therefore, be in a position to know as to what extent he can go and to what extent he cannot. The matter cannot, thus, be left to an act of nature. A penal provision must be definite. Unless the statutory intention otherwise provides, existence of mens rea must be read into a penal statute. It must be a deliberate act and not an unintentional one, unless the statute says so explicitly or by necessary implication. The Act or the Rules do not say either. It is in that sense vague or unreasonable.
Once, thus, it is found to be ex facie unreasonable and unworkable, the court would not hesitate to strike down the said rule. We do so.
Hence, we hold that Rule 9(2) to be unworkable being vague in nature, unless read in the manner as suggested supra.
It is not in dispute that whereas if an offence is committed u/s 56 of the Act, renewal of licence is permissible; but in a case where a licensee faces a prosecution u/s 57, renewal of licence would be denied to him. Consequences of attracting the provisions of Section 57, thus, must also be judged from the said angle.
Thus, Civil Appeals arising out of Special Leave Petition (Civil) filed by the State of Kerala are dismissed and Civil Appeals arising out of Special Leave Petition (Civil) are allowed.
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2006 (12) TMI 509 - CESTAT BANGALORE
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... ... ..... s placed on the Delhi Bench’s decision rendered in the case of Jubilant Organosys Ltd. v. CCE 2005 2 STT 256 (New Delhi - CESTAT) wherein also similar activity was held to be not covered within the category of ‘Consulting Engineer Service’. 3. The learned JDR reiterated the departmental views. 4. On a careful consideration, I notice that the receipt of technical know-how services become liable for Service Tax only from 16-8-2002. In this case, the services rendered were for the period earlier to 16-8-2002. On this ground alone, the appeal is required to be allowed. Even otherwise, the appellants are not liable to pay Service Tax as they do not come within the category of ‘Consulting Engineer’ or ‘Scientific and Technical Consultancy Services’, as held in the citations referred to supra. Respectfully following the ratio of the noted judgments, the impugned order is set aside and the appeal is allowed with consequential relief, if any.
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2006 (12) TMI 508 - ITAT BANGALORE
Tax liability arising out of the investments in Zero Coupon Bonds - scheme of deemed income - Book profit u/s 115JA - inadequacy of total income computed - difference between book value and acquisition price - HELD THAT:- The CBDT by its circular opined that interest on zero coupon bonds is not an interest in strict sense as it encompasses over certain period of time. The circular issued by CBDT are binding upon the authorities working under it. Similar view has been adopted by Hon’ble Supreme Court in the case of UCO Bank v. CIT [1999 (5) TMI 3 - SUPREME COURT], in the case of CCE v. Dhiren Chemical Industries [2001 (12) TMI 3 - SUPREME COURT] and in the case of Commissioner of Customs v. Indian Oil Corpn. Ltd.[2004 (2) TMI 66 - SUPREME COURT]. The entry by way of crediting the profit and loss account in respect of interest on zero coupon bonds is of notional credit and not in respect of interest accruing during the year. The bonds are maturing over long period of time and the entire income by way of difference between acquisition price and redemption price do not accrue to the assessee during the financial year.
Thus, though the assessee has credited the income, the same is not strictly in accordance with Part II and Part III of Schedule VI to the Companies Act, 1956. Hon’ble Supreme Court in the case of Apollo Tyres Ltd. v. CIT[2002 (5) TMI 5 - SUPREME COURT] held that the Assessing Officer has no power to rework the book profit if the profits are computed in accordance with Part II and Part III of Schedule VI to the Companies Act, 1956. In the case of CIT v. Veekaylal Investment Co. (P.) Ltd. [2001 (2) TMI 117 - BOMBAY HIGH COURT] held that if the profit is not computed in accordance with Part II and Part III of Schedule VI to the Companies Act, 1956, the Assessing Officer has power to recompute such book profits. Thus, it can be held that if the Assessing Officer can amend the book profit if it is not in accordance with Part II and Part III of Schedule VI to the Companies Act, 1956, likewise, the assessee also can recompute the book profit for the purpose of section 115JA.
Since in the present case, the entire income by way of interest on zero coupon bond has not accrued during the year, the same cannot be considered as "to disclose the result of working of the company during the financial year" as provided under Part II and Part III of Schedule VI to the Companies Act, 1956. We accordingly hold that the notional income by way of interest on zero coupon bonds has to be excluded while computing book profits as per section115JA of the Act.
In the result, the appeal is partly allowed.
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2006 (12) TMI 507 - ITAT BANGALORE
TDS u/s 195 - consideration received on sale of computer software programme - Commercial income under Article 7 Or Royalty under Article 12 of the Treaty - No Permanent establishment in India - DTAA between India and US - HELD THAT:- According to learned counsel for assessee, Reference was drawn to the commentary on Article 12 (royalties) of model treaties issued by OECD with regard to payments for computer programmes. By reading that, It can therefore be noted that under the OECD model commentary also, payments for acquiring a copy of a computer programme will not be treated as payments for rights to use the copyright in the computer programmes. Accordingly, such payments are to be considered as commercial income under Article 7 and not as royalty under Article 12 of the Treaty.
Further, it is to be noted that computer programme may be copy-rightable as intellectual property does not alter the fact that once in the form of a floppy disc or other medium, the programme is tangible, movable and available in the market place. The fact that some programmes may be tailored for specific purposes need not alter their status as 'goods' because the code definition included 'specially manufactured goods'. In yet another decision in the case of Tata Consultancy Services v. State of Andhra Pradesh [2004 (11) TMI 11 - SUPREME COURT] held that the purchaser of a computer programme does not receive mere knowledge but receives an arrangement of matter which makes his computer perform a desired function. This arrangement of matter recorded on a tangible medium constitutes a corporeal body. A software recorded in physical form becomes inextricably inter-wined with or part and parcel of the corporeal object upon which it is recorded, be that a disc, tape or hard drive or other device.
Apex Court has also noted its earlier decision in the case of Associated Cement Co. Ltd. [2001 (1) TMI 248 - SUPREME COURT] and held that once a computer programme embodied in a medium, it takes the character of goods even under the narrow definition of the said term under the Customs Act. The Apex Court further held that a software programme, which is put in a medium like a disc or floppy, takes the character of goods. The medium and the programme become inseparable and cannot be split up. The Apex Court had relied on the definition of the term 'goods' as used in Article 366(2) of the Constitution of India and held that the term is very wide and covers all types of movable properties. The Apex Court further held that acquisition of a copy of such computer programme, which is a copyrighted article, amounts to sale of such article.
Therefore, considering all the judicial pronouncements and relevant provisions of law we find much force in the stand taken by the assessee. Therefore, the payments are not in the nature of royalty but are subject-matter of Article 7 of the India-USA Tax Treaty. Further it is an admitted fact that Hewlett Packard Co., USA does not have any permanent establishment in India. Therefore, the assessee had no obligation to deduct tax at source on such payments made to Hewlett Packard Co., USA. Therefore, the claim of the assessee has to be accepted and it is ordered accordingly.
In the result, the appeals filed by the assessee are allowed.
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2006 (12) TMI 506 - DELHI HIGH COURT
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... ... ..... ainst the proposed extension of time. 4. Notice has been issued in the present case. However, it is the Petitioner's contention that adequate time was not granted. That is a debatable question. However, in this very judgment it has been observed by Their Lordships that a party who has not been afforded an opportunity of being heard can be given a post- decisional hearing. On this basis, learned counsel for the Petitioner prays that a post-decisional hearing should be granted. 5. In the circumstances of the case this Writ Petition is disposed of with the direction to Respondent No.2, Commissioner of Customs to grant a post- decisional hearing to the Petitioner on the question of extension of time under Section 110(2) on 3rd January, 2007 at 11.00 AM. The Commissioner of Customs shall thereafter pass a reasoned order consequent upon such post-decisional hearing. 6. The Writ Petition stands disposed of accordingly. 7. Copy of Order be given Dasti to counsel for the parties.
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2006 (12) TMI 505 - PUNJAB AND HARYANA HIGH COURT
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... ... ..... tances. The order may be hypothetically a nullity, but the court may refuse to quash it because of the plaintiff' s lack of standing, because he does not deserve a discretionary remedy, because he has waived his rights, or for some other legal reason. In any such case the " void" order remains effective and is, in reality, valid. It follows that an order may be void for one purpose and valid for another, and that it may be void against one person but valid against another' ." 21. The assessee having not raised objection as to the jurisdiction before the Assessing Officer, was debarred from raising the same before the appellate authority and the appeal filed by the assessee on the question of jurisdiction was not maintainable. 22. Question No. (i) is, thus, answered in favour of the Revenue and against the assessee. 23. In view of the above, question No. (ii) has been rendered academic and need not be gone into. 24. Reference is disposed of accordingly.
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2006 (12) TMI 504 - CESTAT CHENNAI
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... ... ..... appeal is allowed. 7. In the Revenue’s appeal, the respondents have filed “cross-objections”, wherein there is a prayer for refund of the service tax and interest paid by them. Learned counsel has reiterated this prayer today. This prayer cannot be acceded to for two reasons. Firstly, no such prayer was made before the lower appellate authority by the party. Secondly, the payment of tax with interest thereon was voluntary and not under protest and no claim for refund thereof was ever filed. Amounts so paid by the assessees are not refundable as held in Final Order No. 825/2006 dated 30-8-2006 by the Tribunal in Appeal No. S/6/2006 Commissioner of Central Excise v. EID Parry India Ltd. - 2006 (4) S.T.R. 585 (T) . In the case of M/s. Jayalakshmi Exports, appellants in Appeal No. S/186/2006, there is no claim for refund. In the circumstances, the decision in the two appeals would not entitle the assessees to refund. (Dictated and pronounced in open court)
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2006 (12) TMI 503 - CESTAT NEW DELHI
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... ... ..... is imposable, where service tax liability and interest leviable thereon paid before issuance of show cause notice. Show Cause Notice is not required to be issued in terms of Section 73 (2A) of Finance Act, 1994, when the tax has been paid by the assessee on his own ascertainment and, therefore, no penalty can be imposed in such cases. 5. The learned Departmental Representative reiterates the finding of the Commissioner (Appeals). 6. After hearing both the sides and on perusal of the records, I find that the appellant deposited service tax on 5-10-05 on goods transport service before issue of show cause notice. Thus, it is squarely covered by the Board’s Circular dated 17-12-04 as referred to by the learned advocate. I also find that the present case is covered by the decision of the Tribunal in the case of Auto Transport Services (supra). Accordingly, I set aside the impugned order and allow the appeal with consequential relief. (Pronounced in the open Court)
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2006 (12) TMI 502 - GAUHATI HIGH COURT
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... ... ..... the interest of justice or would it be its negation? In our respectful opinion, it would be the latter. Justice means justice between both the parties. The interests of justice equally demand that the guilty should be punished and that technicalities and irregularities, which do not occasion failure of justice are not allowed to defeat the ends of justice. Principles of natural justice are but the means to achieve the ends of justice. They cannot be perverted to achieve the very opposite end. That would be counterproductive exercise. 35. In view of the entire facts and circumstances of the case discussed above, the plea of violation of principles of natural justice is not available to the petitioner. Thus, both on merit of the contentions raised in the writ petition as well as on ground of there being alternative remedy by way of preferring appeal against the impugned order, the writ petition fail. 36. Writ petition is dismissed, leaving the parties to bear their own costs.
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