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1989 (4) TMI 95
Issues: Detention based on single incident, non-application of mind by Detaining Authority, delayed disposal of representation
Issue 1: Detention based on a single incident
The detenu-petitioner, arrested for various charges, challenged his detention based on a solitary incident of 21-9-1988. The grounds of detention only attributed one transaction to him, which the petitioner argued was without basis. The Detaining Authority did not consider the relevant fact that the petitioner and his co-accused had been granted bail before the detention order was passed. The detention order was based on this single incident, raising concerns about the sufficiency of grounds for detention.
Issue 2: Non-application of mind by Detaining Authority
The reply filed by the Assistant Collector of the Central Excise Collectorate admitted that the detention order was based on a single transaction and that the representation by the detenu-petitioner was pending for a month before being rejected. The Detaining Authority did not consider crucial information, such as the bail granted to the co-accused, which could have influenced the decision. The Detaining Authority's failure to take into account all relevant facts indicated a lack of proper application of mind in passing the detention order.
Issue 3: Delayed disposal of representation
The detenu-petitioner's representation dated 23-10-1988 was rejected on 30-12-1988, resulting in an unexplained delay of 30 days. Precedents, such as Kamla Kanhaiyalal Khushlani v. State of Maharashtra, have established that unexplained delays in disposing of representations can render continued detention void. The delay in this case further raised concerns about the legality of the detention.
Judgment Analysis
The judgment highlighted the need for the Detaining Authority to consider all relevant facts before passing a detention order. Citing precedents like Sita Ram Somani v. State of Rajasthan, the court emphasized the importance of proper application of mind to avoid vitiating the detention order. The court also referred to cases like Dulal Chandra Majumdar v. State of West Bengal to underscore that detention based solely on a single incident could be deemed irrelevant to the satisfaction of the authority. Ultimately, the court quashed the detention order based on the grounds of non-application of mind and the delayed disposal of the detenu-petitioner's representation, ordering the immediate release of the petitioner.
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1989 (4) TMI 94
Issues Involved:
1. Determination of the manufacturer liable for excise duty.
2. Basis for determining assessable value for excise duty.
3. Claim for refund of excess excise duty paid.
Issue-wise Detailed Analysis:
1. Determination of the Manufacturer Liable for Excise Duty:
The main grievance of the writ petitioner is that the goods manufactured by Serampore Belting Works Limited (petitioner) at its own factory under an agreement with Messrs. Goodyear India Limited (respondent) cannot be considered as manufactured by Messrs. Goodyear, and thus, excise duty cannot be levied on the selling price of Messrs. Goodyear to their dealers and customers. The petitioner argued that it manufactures the goods with its own men and machinery and sells them to Goodyear, thus excise duty should be levied on the selling price by Serampore Belting Works Limited to Messrs. Goodyear.
The Court scrutinized the pleadings and materials on record and found that the goods are indeed manufactured by Serampore Belting Works Limited with its own men and materials. The goods are manufactured under the specification provided by Messrs. Goodyear and are inspected by Goodyear's representatives. However, there is no evidence that the goods are manufactured with the funds or materials provided by Goodyear. Therefore, the Court concluded that the goods manufactured by Serampore Belting Works Limited cannot be deemed as manufactured by Messrs. Goodyear India Limited.
2. Basis for Determining Assessable Value for Excise Duty:
The Court examined whether the excise duty should be levied on the sale price paid by Messrs. Goodyear India Limited to Serampore Belting Works Limited or on the sale price of the goods to Goodyear's dealers and customers. The Court referred to the case of Union of India & Ors. v. Cibatul Limited, which stated that excise duties are levied on goods manufactured in India and the value of the article is deemed to be the wholesale cash price at the time of removal from the factory.
The Court found that the wholesale price at which the goods with the trade marks affixed to them are sold by Serampore Belting Works Limited to Messrs. Goodyear India Limited should determine the value for the purpose of excise duty. This is supported by the decision in Joint Secretary to the Government of India & Ors. v. Messrs. Food Specialities Limited, which held that the wholesale price of goods, even when manufactured under another company's specifications and brand name, should be the value for excise duty purposes.
3. Claim for Refund of Excess Excise Duty Paid:
The petitioner claimed a refund for the excess excise duty collected based on the mistaken belief that duty was payable on Goodyear's selling price to their dealers/customers. The Court referred to the decision in Salona Tea Company Limited v. Superintendent of Taxes, which emphasized that taxes collected without the authority of law should be refunded. The Court noted that while the period of three years is normally taken as a limitation period, it is not inflexible, and the Court might consider delays reasonable based on circumstances.
The Court allowed the petitioner to make an independent application for a refund, which should be considered by the concerned authority without being influenced by the Court's observations, and disposed of within eight weeks from the date of filing the application.
Conclusion:
The writ petition is allowed in part. The Court issued a writ of certiorari quashing the order dated 9th September 1980 by the Assistant Collector of Central Excise, Calcutta-IV Division, and declared that the petitioner is the manufacturer liable for duty on its manufacturing profit and cost. The petitioner is granted leave to apply for a refund of excess duty collected, to be considered by the concerned authority in accordance with the law. There will be no order as to costs.
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1989 (4) TMI 93
Issues Involved:
1. Validity of demand for auxiliary duty.
2. Applicability of notifications No. 208/88 and 159/88.
3. Doctrine of promissory estoppel.
4. Alleged violation of constitutional provisions (Articles 14, 19(1)(g), and 265).
Detailed Analysis:
1. Validity of Demand for Auxiliary Duty:
The petitioner challenged the demand for auxiliary duty imposed by the second respondent, arguing it was arbitrary, illegal, and without jurisdiction. The petitioner contended that the goods were imported based on the promise of exemption from auxiliary duty as per Notifications No. 208/88 and 159/88, which were valid until 31-3-1989. The demand for auxiliary duty under Notification No. 110/89, effective from 1-3-1989, was deemed unjust as it contradicted the earlier promise.
2. Applicability of Notifications No. 208/88 and 159/88:
The petitioner relied on Notification No. 208/88, which exempted certain power generation equipment from basic customs duty above 35% ad valorem and wholly from additional duty, valid until 31-3-1989. Notification No. 159/88 further exempted goods from auxiliary duty if they were already exempt under other notifications, including No. 208/88. The petitioner argued that the conditions of Notification No. 208/88 were met, and thus, the goods should be exempt from auxiliary duty as per Notification No. 159/88.
3. Doctrine of Promissory Estoppel:
The petitioner invoked the doctrine of promissory estoppel, asserting that the government, having made a representation through the notifications, was estopped from rescinding or superseding them before their stated expiration date. The petitioner cited Supreme Court judgments (M.P. Sugar Mills and Godfrey Phillips India Limited) to support the argument that the government must honor its promises if acted upon by the petitioner. The petitioner argued that the sudden change in duty imposition was against the principles of equity, justice, and fair play.
4. Alleged Violation of Constitutional Provisions:
The petitioner claimed that the demand for auxiliary duty violated Articles 14, 19(1)(g), and 265 of the Constitution. Article 14 was invoked on grounds of discrimination, as different importers would be treated unequally based on the timing of their imports. Article 19(1)(g) was cited, arguing that the imposition of auxiliary duty restrained trade and affected the petitioner's competitiveness. Article 265 was mentioned, asserting that the demand lacked legal sanction as it did not conform to the valid notifications.
Judgment:
The court directed the release of the goods upon payment of 50% of the auxiliary duty in addition to the customs duty and furnishing either a bank guarantee or security for the remaining 50%, following a precedent set in a similar case. This interim order was passed without prejudice to the contentions of either party in the main writ petition.
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1989 (4) TMI 92
Issues Involved:
1. Legality of the bail order in Crl. M.P. No. 6945/88.
2. Legality of the arrest under Section 104 of the Customs Act.
3. Power of the Magistrate to remand a person arrested under the Customs Act.
Detailed Analysis:
1. Legality of the Bail Order in Crl. M.P. No. 6945/88:
Crl. M.P. No. 11117 of 1988 was filed under Section 482 Cr.P.C. by the Senior Intelligence Officer, Directorate of Revenue Intelligence, seeking to set aside the order of the Court of Sessions, Madras, which released the respondent on bail. The grounds for this petition included the Sessions Court's failure to consider the nature and gravity of the offence, the stage of investigation, and the interests of society. The petitioner argued that the respondent's release would hamper a free and fair investigation due to his influential status and prior involvement in smuggling activities. However, during the proceedings, the petition was dismissed as infructuous due to the respondent's detention under the COFEPOSA Act.
2. Legality of the Arrest Under Section 104 of the Customs Act:
Crl. M.P. No. 254 of 1989 was filed to call for records relating to the arrest and to quash the order of arrest made by the respondent. The petitioner contended that the arrest under Section 104 of the Customs Act, based on a statement obtained under Section 108 of the said Act, was illegal. The petitioner argued that such statements were inadmissible in proceedings under the Customs Act or the COFEPOSA Act. However, the court did not delve into the legality of the arrest in detail, as the issue was pending before a Division Bench in a related COFEPOSA detention case.
3. Power of the Magistrate to Remand a Person Arrested Under the Customs Act:
Crl. M.P. No. 407 of 1989 was filed to call for records relating to the medical treatment of the petitioner and two others to decide the legality of the arrest. The primary issue considered was whether a Magistrate has the power to remand a person arrested under Section 104 of the Customs Act. The court examined various judicial precedents and statutory provisions, including Section 104 of the Customs Act and Section 167 Cr.P.C.
The court observed that Section 104(1) and (2) of the Customs Act virtually take the place of Section 167(1) Cr.P.C., and the power of remand under Section 167(2) Cr.P.C. applies to persons arrested under the Customs Act. The court noted that the Customs Officer has the power to release an arrested person on bail, which implies the power to refuse bail as well. Therefore, when such a person is produced before a Magistrate, the Magistrate has the power to remand the person to custody if bail is refused.
The court referred to the Full Bench decision of the Delhi High Court in Union of India v. O.P. Gupta and Others, which overruled the earlier Division Bench decision in Dalam Chand Baid's case, and held that the Magistrate has the power to remand a person produced before him under Section 104 of the Customs Act by virtue of Section 167(2) and (3) Cr.P.C. The court also agreed with the views expressed by the High Courts of Kerala and Gujarat on this issue.
Conclusion:
Crl. M.P. No. 11117 of 1988 was dismissed as infructuous. Crl. M.P. No. 254 of 1989, challenging the legality of the arrest, was dismissed. The court held that the Magistrate has the power to remand a person arrested under the Customs Act, and Crl. M.P. No. 407 of 1989 was also dismissed.
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1989 (4) TMI 91
Issues Involved:
1. Legality of the interlocutory order passed by the learned Single Judge.
2. Requirement of further inquiry under Section 11A of the Central Excise Act for the execution of assessment orders passed under Rule 173-I.
3. Entitlement of the Union of India to encash bank guarantees pending adjudication under Section 11A.
Issue-wise Detailed Analysis:
1. Legality of the Interlocutory Order Passed by the Learned Single Judge:
The interlocutory order dated February 14, 1989, in Writ Petition No. 202 of 1989, was challenged by both Swan Mills Limited and the Union of India. Swan Mills Limited contended that further proceedings under Section 11A of the Central Excise Act were necessary for the execution of the assessment orders, whereas the Union of India was aggrieved by the injunction preventing the encashment of bank guarantees. The court examined the legality of this order and found that the learned Single Judge's order was not sustainable, as it misinterpreted the necessity of Section 11A proceedings for the execution of finalized assessment orders.
2. Requirement of Further Inquiry Under Section 11A of the Central Excise Act for the Execution of Assessment Orders Passed Under Rule 173-I:
The court held that the contention that assessment orders under Rule 173-I require further inquiry under Section 11A is "gravely misplaced." Section 11A is not intended for executing assessment orders but is applicable only in specific situations of duty assessment. Once assessment orders under Rule 173-I become final, they are to be executed under Section 11 of the Act, which contains provisions for recovery. The court found no merit in the argument that further proceedings under Section 11A were necessary for the execution of these orders.
3. Entitlement of the Union of India to Encash Bank Guarantees Pending Adjudication Under Section 11A:
The court noted that the Union of India became entitled to recover amounts due under the assessment orders and to seek enforcement of bank guarantees following the Supreme Court's dismissal of the petitioner's appeal on November 4, 1988. Despite the issuance of notices under Section 11A, the court held that the Revenue should not be prevented from encashing the bank guarantees for amounts due under finalized assessment orders. The court emphasized that the Revenue could proceed with encashment even if the Section 11A inquiry was pending, as the assessment orders had already become final.
Conclusion:
The court dismissed Appeal No. 227 of 1989 filed by Swan Mills Limited, upholding that no further proceedings under Section 11A were necessary for the execution of assessment orders. Conversely, the court allowed Appeal No. 285 of 1989 filed by the Union of India, setting aside the part of the interlocutory order that prevented the encashment of bank guarantees. The court directed the Prothonotary and Senior Master to take steps to encash the bank guarantees and pay the amount to the Union of India within two weeks, rejecting the application for stay by Swan Mills Limited. The court clarified that these views were prima facie and expressed solely for the disposal of the present appeals against the interlocutory order.
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1989 (4) TMI 90
Issues involved:
The issue in this case is whether the claim of refund of excise duty paid by the petitioner on certain goods, which were exempted under a notification, was made within the prescribed time limit.
Summary:
Issue 1: Refund of excise duty within time limit
The petitioner claimed a refund of excise duty paid on goods exempted under a notification issued in June 1977. The Central Excise Collectorate provided instructions for set-off of duty, which the petitioner sought approval for in March 1978. The Assistant Collector initially rejected the application, stating that the notification did not allow for cash refund but only set-off at the time of clearance. However, the appellate authority overturned this decision, noting that the petitioner had been seeking approval since March 1980 and had maintained proper accounts. The appellate authority directed the Assistant Collector to allow the credit or set-off, which was later confirmed by the Range Superintendent. Despite a show cause notice being issued for being time-barred, the petitioner's claim was rejected by the Assistant Collector and upheld in appeal.
Issue 1 Details:
The High Court found that the Assistant Collector and the appellate authority were not justified in refusing the petitioner's claim based on limitation. The Court emphasized that once an exemption is allowed, it operates fully, removing the power to levy any duty. The delay in processing the claim by the department could not erode the petitioner's legal entitlement to set-off or refund, as the claim was raised in March 1978. The Court held that the limitation provision under Section 11-B did not apply to goods entitled to exemption, and the Assistant Collector was obligated to refund the amount without the petitioner having to make a claim, as directed by the appellate authority. Therefore, the Court allowed the petition and directed the opposite parties to refund the duty amount determined by the Range Superintendent in accordance with the Assistant Collector's order dated October 7, 1986.
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1989 (4) TMI 89
Issues:
Prosecution of company directors under Central Excises and Salt Act, 1944 without specific allegations of overt acts against them.
Detailed Analysis:
Issue 1: Prosecution of Company Directors
The case involved the prosecution of the petitioners, who were directors of a company manufacturing excisable goods, for alleged violations under Sections 9(l)(b), 9(l)(bb), 9(l)(bbb), 9(l)(c), 9(l)(d), and Section 17 of the Central Excises and Salt Act, 1944. The complaint alleged that the accused had cleared excisable goods without paying the required Central Excise duty and without following the prescribed procedures. The petitioners contended that they could not be prosecuted without specific allegations of overt acts against them. The defense cited legal precedents to argue that directors could only be prosecuted if they were responsible for the conduct of the company's business. The court noted that the complaint contained allegations against all accused, stating that they were responsible for the company's acts and had removed goods without payment of duty. The court emphasized that the complainant needed to establish the case through evidence, leaving room for the accused to challenge liability if evidence did not support the allegations.
Issue 2: Lack of Mala Fide Intention
The defense argued that since the Collector of Central Excise and Customs found no mala fide intention to evade payment, there was no purpose in prosecuting the petitioners. However, the court examined the Collector's order and found no explicit finding that there was no intentional evasion of duty. The order indicated that even without mala fide intention, the petitioners had removed goods without paying duty, leading to evasion. Therefore, the argument that lack of mens rea should prevent prosecution was dismissed by the court.
Conclusion:
The court dismissed the petition, ruling that the prosecution of the company directors could proceed based on the allegations in the complaint. The lack of a clear finding of no mala fide intention by the Collector meant that the argument for non-prosecution based on lack of intent was not valid. The judgment highlighted the need for evidence to establish liability and allowed for challenges to prosecution if evidence did not support the allegations.
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1989 (4) TMI 88
The High Court of Bombay ruled that the dip solution used by the Respondent-Company in manufacturing tires does not attract excise duty under Tariff Item No. 15A(1) as it is not an artificial or synthetic resin and is not a marketable commodity. The court upheld the decision of the learned Single Judge, stating that the dip solution is not liable for excise duty. The appeal was dismissed.
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1989 (4) TMI 87
Issues Involved:
The judgment addresses the issues of erroneous excise duty collection, unauthorized retention of funds by public bodies, entitlement to interest on refunded amounts, and legal principles governing the repayment of unlawfully collected funds.
Erroneous Excise Duty Collection:
The applicant, a manufacturer of electrical appliances, faced demand notices for excise duty based on incorrect pricing determinations by the excise authorities. Despite contesting the demands, the appellate authority upheld the duty calculation method. However, a subsequent writ petition found the demands to be without jurisdiction, leading to a refund of the excess duty paid.
Entitlement to Interest on Refunded Amounts:
Following the refund, the applicant sought interest on the amount retained by the excise authorities without legal authority. The respondents initially denied liability for interest, citing the absence of provisions in the Central Excises and Salt Act, 1944. The applicant argued for interest at 12% per annum, supported by legal precedents directing payment of interest on unlawfully collected amounts.
Legal Principles Governing Repayment of Unlawfully Collected Funds:
The judgment emphasizes that excise duty liability rests with manufacturers, not buyers. Given the unauthorized collection and retention of funds by the excise authorities, the court deemed it unjust for the manufacturer to be deprived of interest on the wrongfully collected amount. Citing legal precedents, the court ordered the respondents to pay interest at a rate of 12% per annum from the date of collection until actual repayment, rejecting the respondents' stance against interest payment.
This comprehensive summary captures the key issues addressed in the judgment, detailing the circumstances, legal arguments, and final ruling regarding the erroneous excise duty collection, entitlement to interest on refunded amounts, and legal principles governing the repayment of unlawfully collected funds.
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1989 (4) TMI 86
Issues:
1. Authority of Assistant Collector to issue search warrants and competency of Deputy Collector to order confiscation and impose penalties.
Detailed Analysis:
1. The petitioner challenged the authority of the Assistant Collector to issue warrants for the search of their house and the competency of the Deputy Collector to order confiscation of gold ornaments and impose penalties under the Gold Control Act, 1968.
2. The search of the petitioner's premises led to the recovery of gold ornaments, and subsequently, the Deputy Collector issued a notice for confiscation and penalty. The petitioner claimed that some of the seized ornaments belonged to others and were not liable for seizure.
3. The Deputy Collector confiscated the gold ornaments and imposed a penalty, which was later reduced on revision. However, it was discovered that the Assistant Collector lacked the authority to issue the search warrant, and the Deputy Collector was not competent to pass the adjudication order.
4. The respondents argued that the Assistant Collector was empowered to issue search warrants under Section 58 of the Gold Control Act and that the Deputy Collector had the authority to confiscate gold valued under Rs. 1 lakh.
5. The court found that the Central Government could appoint Gold Control Officers, but not officers below the rank of Superintendent of Central Excise for search purposes, and the Assistant Collector lacked the necessary authority to issue the search warrant.
6. The value of the seized gold ornaments exceeded the jurisdiction of the Deputy Collector to order confiscation and penalties, as per relevant notifications and provisions of the Gold Control Act.
7. The court criticized the respondent department for failing to provide relevant notifications justifying the search, seizure, confiscation, and penalties imposed, leading to the quashing of the orders and directing the refund of charges and penalties to the petitioners.
8. The petition was accepted, and the orders for confiscation and penalties were quashed, with directions to refund the amounts imposed and to cancel the criminal proceedings against the petitioner.
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1989 (4) TMI 85
Issues:
1. Refusal to refund illegally realized sum on the ground of limitation.
2. Encashment of Bank Guarantee by the Respondent despite the court order.
3. Claim for refund barred by limitation.
4. Allegation of illegal and mala fide actions by the Respondent.
Analysis:
1. The Respondent refused to refund a sum of Rs. 2,63,967.75, claiming the Petitioners' application for refund was time-barred. The Petitioners had imported goods and filed a Writ Petition challenging the duty imposed. The Court granted interim relief allowing clearance of goods without additional duty on a bank guarantee. The Respondent encashed the bank guarantee against the court order, leading to protests from the Petitioners. Despite protests, the Respondent did not refund the amount, prompting the Petitioners to seek relief from the Court.
2. The Court found the Respondent's actions illegal and mala fide. The Respondent encashed the bank guarantee in violation of the court order and failed to refund the amount despite protests. The Court noted that the claim for refund was not time-barred as it was within six months of the encashment. The Court expressed surprise at the Respondent's actions and indicated a possible contempt of court if the officer responsible for encashment was identified.
3. The Court ruled in favor of the Petitioners, directing the Respondents to refund the amount of Rs. 2,63,967.75 with interest at 18% per annum from the date of encashment. The refund was ordered to be completed by a specified date. The Court held the Respondents liable for costs incurred in filing the Petition, emphasizing the need for expeditious refund.
This judgment highlights the importance of upholding court orders, the consequences of illegal actions by authorities, and the right of individuals to seek redress for wrongful conduct, even if authorities claim limitations.
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1989 (4) TMI 84
Issues:
Central Excise duty on U.F. and P.F. solution for plywood manufacturing.
Analysis:
The writ petitioner sought relief from the levy of Central Excise duty on U.F. and P.F. solution used in plywood manufacturing. The petitioner argued that these solutions are intermediate inputs, not final products, and are not marketable. The petitioner contended that excise duty can only be levied upon goods removed from the factory, and since the solutions are used in-house, they should not attract duty. The petitioner also challenged the legality of certain provisions and notifications related to excise duty.
During the proceedings, it was revealed that changes in tariff descriptions and notifications had brought the U.F. and P.F. solutions under the purview of Central Excise duty. The respondents argued that the solutions manufactured by the petitioner fell under the amended Tariff Item No. 15A(1) and were liable for duty as per the Finance Act, 1982. They supported their stance with a chemical test report from the National Test House.
The court referred to precedents to determine the classification of the solutions for excise duty. It cited a Delhi High Court decision stating that a solution of resin may not always be considered an artificial or synthetic resin in liquid form. The court also highlighted a Supreme Court decision emphasizing that excise duty is applicable only to goods capable of sale to consumers, not intermediate products.
Based on the arguments and legal principles, the court found that the U.F. and P.F. solutions were intermediate products used in plywood manufacturing and not subject to excise duty. The court allowed the writ petition, setting aside the orders and circulars related to excise duty on the solutions. It directed the annulment of assessment orders imposing duty on the solutions and ruled in favor of the petitioner.
In conclusion, the court granted relief to the petitioner by declaring the U.F. and P.F. solutions non-liable for Central Excise duty and quashing relevant orders and circulars. The judgment emphasized the marketability and nature of the products in determining excise duty applicability, aligning with legal precedents and statutory provisions.
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1989 (4) TMI 83
The High Court of Bombay held that the dip solution used by the Respondent-Company in manufacturing tires does not attract excise duty under Tariff Item No. 15A(1) as it is not an artificial or synthetic resin and is not a marketable commodity. The appeal was dismissed.
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1989 (4) TMI 82
The petitioner filed an appeal and a stay application against an order of adjudication. The court directed the first respondent to expeditiously consider and dispose of the stay application within two months, keeping recovery of the demanded amount on hold in the meantime. The original petition was disposed of with these directions.
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1989 (4) TMI 81
Whether the agreement dated 1st May, 1962 is an agreement for sale or is one for sole selling agency?
Held that:- Having regard however to the fact that we have come to the conclusion that the Tribunal was right in holding that the transaction with the Gillanders was not a transaction of sale but an agreement for agency, there was, therefore, no sale in favour of Gillanders as contended for by the appellants. If that is the position, then the first sale was by the Gillanders to the customers of the market. Then the price of that sale would be the assessable value under Section 4 in this case. The decision of the Tribunal is, therefore, right in any view of the matter, and this other aspect of the matter referred to by the Tribunal is not necessary for us to determine to dispose of this appeal. In that view of the matter, the decision of the Tribunal must be upheld. Appeal dismissed.
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1989 (4) TMI 80
Whether the appellant is entitled to refund of ₹ 22,43,002.09 paid as excise duty on the price of packing material used for packing of superfine cement which according to the appellant was paid under protest whereas according to the respondent, it was not paid under protest and therefore, the claim of refund is barred by time?
Held that:- A perusal of the letter dated June 11, 1974 clearly shows that all possible contentions which could be raised against the levy of duty on the value of packing material were raised. If this could not be said to be a protest one fails to understand what else it could be. It does not require much time to analyse the contents of the letter. An ordinary reading with common sense will reveal to anybody that the appellant was not accepting the liability without protest. We have no hesitation to hold that the letter was in the nature of protest. That being the position, the question of limitation does not arise for refund of the duty.
The Appellate Collector and the Tribunal clearly stated that the only question agitated before them was the question of limitation. The order does not indicate that the counsel for the Department or the departmental representative raised any other question on merits. Indeed no objection could have been raised on the merits of the matter. Appeal allowed & the appellant is entitled to refund of the amount..
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1989 (4) TMI 79
Whether Rule 10A of the Rules, as it stood at the relevant time, was valid or not?
Held that:- The validity of the delegated legislation is generally a question of vires, that is, whether or not the enabling power has been exceeded or otherwise wrongfully exercised. Scrutinising the provisions of Rule 10A in the light of the above principles and pronouncements of this Court, we have no doubt that Rule 10A of the Rules, as it existed at the relevant time, was valid and not ultra vires the rule making power. Demand notices lawfully issued under the rule by the competent authority could not, therefore, be challenged on the ground of the Rule 10A itself being ultra vires. Whether those could be challenged on any other ground must necessarily depend on the facts and circumstances of the case.
The High Court having proceeded on the basis that Rule 10A was not available to support the demand notice, we set aside the impugned order of the High Court, allow the appeal, and remand the case to the High Court for disposal in accordance with law.
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1989 (4) TMI 77
Issues Involved:
1. Legislative Competency of Sections 44AC and 206C of the Income-tax Act, 1961.
Summary:
Legislative Competency:
The writ appeals challenge the legislative competency of sections 44AC and 206C of the Income-tax Act, 1961, introduced by the Finance Act, 1988. Section 44AC, effective from April 1, 1989, deems a percentage of the purchase price of timber as profits and gains of business, while section 206C, effective from June 1, 1988, mandates tax collection at source on such transactions.
Section 44AC:
Section 44AC provides that in the case of a buyer obtaining timber through auction or other modes, 15% of the purchase price shall be deemed as profits and gains of business chargeable to tax. This section aims to compute income on a presumptive basis to address issues in assessing income and recovering tax from timber traders who often do not maintain proper books of account.
Section 206C:
Section 206C mandates that sellers collect 10% of the amount as income-tax at the time of debiting the buyer's account or upon receipt of payment. This provision ensures tax collection at the source, simplifying the recovery process.
Constitutional Entry:
The constitutional entry under scrutiny is entry 82 of List I to the Seventh Schedule, which pertains to "Taxes on income other than agricultural income." The court emphasized that legislative entries define the scope of legislative competence and should be interpreted broadly.
Judicial Precedents:
The court referenced several judicial precedents, including Bhagwan Dass Jain v. Union of India [1981] 128 ITR 315 (SC), to support the notion that income can be calculated as a percentage of gross receipts. It was noted that the legislative power to tax includes the authority to deem certain amounts as income for practical and administrative purposes.
Conclusion:
The court concluded that sections 44AC and 206C are within the legislative competence of the Union. The provisions are designed to address practical difficulties in tax assessment and collection from timber traders. The legislative fiction of deeming a percentage of the purchase price as income is justified and does not exceed the legislative field assigned by entry 82 of List I. Consequently, the writ appeals were dismissed.
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1989 (4) TMI 76
The High Court of Allahabad directed the Income-tax Appellate Tribunal to submit a statement of the case regarding the questions of law arising from the order passed by the Commissioner of Income-tax under section 263 of the Income-tax Act, 1961. The Tribunal's finding on the market value of plant and machinery was questioned for doubting without sufficient material.
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1989 (4) TMI 75
The High Court of Allahabad heard a case regarding the Income-tax Appellate Tribunal's decision to restore a matter to the Commissioner of Income-tax with a direction to ignore additional evidence. The court directed the Tribunal to submit a statement of the case to address the question of law raised in the order. (Case Citation: 1989 (4) TMI 75 - Allahabad High Court)
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9911796707
