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Showing 21 to 40 of 189 Records
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1989 (10) TMI 221
Issues:
1. Inclusion of consignment sales turnover in total turnover for levy of surcharge.
2. Whether commission received by the assessee from non-resident principals forms part of purchase turnover for assessment purposes.
Analysis:
1. The High Court addressed the issue of including consignment sales turnover in the total turnover for the levy of surcharge under the Kerala General Sales Tax Act. The Revenue contended that consignment sales should be considered in the total turnover as per section 2(xxvi) of the Act. However, the Court disagreed, emphasizing that total turnover encompasses the aggregate turnover of a dealer at all places of business in the State, including inter-State trade, export, and import transactions. Since consignment sales are not within the State or inter-State trade, they fall outside the purview of total turnover for surcharge calculation under the Kerala Surcharge on Taxes Act, 1957. The Court upheld the decision of the Sales Tax Appellate Tribunal in excluding consignment sales from the total turnover calculation, thereby dismissing the Revenue's revisions.
2. The Court also examined whether the commission received by the assessee from non-resident principals should be considered part of the purchase turnover for assessment purposes. The assessee purchased goods taxable in the State and sent them to non-resident principals, completing the purchase transaction. The Court agreed with the Appellate Tribunal's finding that any commission received after the purchase transaction was concluded cannot be included in the purchase turnover of the assessee. Therefore, the commission from non-resident principals does not form part of the purchase turnover for assessment. The Court upheld the Tribunal's decision, stating that the appellate order was legally sound and free from errors.
In conclusion, the High Court dismissed all four revisions brought by the Revenue, as they lacked merit based on the interpretation of relevant provisions of the Kerala General Sales Tax Act and the Kerala Surcharge on Taxes Act, 1957. The Court affirmed the Tribunal's decisions regarding the exclusion of consignment sales turnover from total turnover calculation for surcharge levy and the non-inclusion of commission from non-resident principals in the purchase turnover for assessment purposes.
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1989 (10) TMI 220
Issues:
Interpretation of the Madhya Pradesh General Sales Tax Act, 1958 regarding the classification of glass sheets for taxation under specific entries in Schedule II.
Analysis:
The judgment pertains to references under section 44 of the Madhya Pradesh General Sales Tax Act, 1958, concerning the assessment of glass sheets for taxation. The primary question raised across multiple cases was whether glass sheets should be assessed under entry No. 1 of Part VI of Schedule II or under entry No. 26 of Part II of Schedule II of the Act. The assessing authority initially rejected the contention that assessment should be under the residuary entry, leading to appeals and subsequent reference to the High Court by the Board of Revenue.
During the hearing, the Division Bench noted conflicting decisions of the Court on the matter, prompting a reference to a Full Bench. The crux of the issue revolved around whether glass sheets should be considered as "goods made of glass and glassware" under entry No. 26 of Schedule II. The Court analyzed the scope of the expression "goods made of glass and glassware," emphasizing that it encompasses all goods and articles made of glass, not just traditional glassware items.
The Court delved into the distinction between "glass" and "goods made of glass," highlighting that a glass sheet, in its raw form, is considered "glass simpliciter" and serves as a primary product for manufacturing goods made of glass. The legislative intent, as interpreted by the Court, did not include sheets of a primary product along with goods made from that product under entry No. 26 of Schedule II. Drawing parallels with other entries in the Act, the Court concluded that glass sheets should not be equated with goods or articles made of glass.
Based on the analysis, the Court answered the reference in favor of the assessee, determining that glass sheets fall under entry No. 1 of Part VI of Schedule II, not under entry No. 26 of Part II. The judgment clarified the classification of glass sheets for taxation purposes under the Madhya Pradesh General Sales Tax Act, 1958, providing a detailed interpretation of the relevant provisions and legislative intent.
This comprehensive analysis of the judgment showcases the meticulous examination of legal principles and precedents to arrive at a definitive conclusion regarding the classification of glass sheets under the specified entries of the Sales Tax Act, thereby resolving the contentious issue raised in the references before the High Court.
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1989 (10) TMI 219
Issues Involved:
1. Constitutionality of the amendment to Section 22 of the Karnataka Sales Tax Act.
2. Discriminatory nature of the amendment.
3. Violation of Article 19(1)(g) of the Constitution.
4. Powers of the Appellate Tribunal to grant stay orders.
5. Financial hardship and procedural fairness.
Issue-wise Detailed Analysis:
1. Constitutionality of the Amendment to Section 22 of the Karnataka Sales Tax Act:
The petitioners, who are dealers registered under the Karnataka Sales Tax Act, 1957, and the Central Sales Tax Act, 1956, challenged the amendment to Section 22 by Karnataka Act No. 15 of 1988. The amendment removed the power of the Appellate Tribunal to grant stay of payment of tax or penalty during the pendency of appeals against orders passed by the Assistant Commissioner or Deputy Commissioner under Section 20. The petitioners argued that this amendment is unconstitutional, arbitrary, and unreasonable, thus liable to be struck down. The court held that the right of appeal is a substantive right and a vested right governed by the existing law before the amendment. It was concluded that the impugned amendment taking away the power to grant stay in fit cases is opposed to the very concept of vesting appellate powers in an authority.
2. Discriminatory Nature of the Amendment:
The petitioners contended that there is no rationale in taking away the power to grant stay in appeals filed against orders made under Section 20, while retaining such power in appeals against orders under Section 21. This was argued to be discriminatory. The court found that the distinction made under sub-section (3A) of Section 22 by the Amendment Act created discrimination between two sets of appeals filed by the assessees under the Act. The court held that the amendment was arbitrary, irrational, and unconstitutional, as it failed to appreciate the implications of such an amendment.
3. Violation of Article 19(1)(g) of the Constitution:
The petitioners argued that the amendment is violative of Article 19(1)(g) of the Constitution, which guarantees the right to practice any profession or to carry on any occupation, trade, or business. The court, considering the principles laid down by the Supreme Court, held that the amendment, by taking away the power to grant stay, imposed unreasonable restrictions on the right of appeal, thereby violating Article 19(1)(g).
4. Powers of the Appellate Tribunal to Grant Stay Orders:
The petitioners argued that the Appellate Tribunal had the power to grant stay orders even before the amendment, and this power should not be taken away. The court referred to several Supreme Court decisions, including Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh, Garikapati Veeraya v. N. Subbiah Choudhry, and Collector of Customs and Excise v. A.S. Bava, which emphasized that the right of appeal includes the right to obtain an order of stay. The court concluded that the Appellate Tribunal's power to grant stay orders is inherent and necessary to make the exercise of its appellate jurisdiction fully effective.
5. Financial Hardship and Procedural Fairness:
The petitioners highlighted the financial hardship they would face due to the amendment, as they would have to deposit the disputed tax during the pendency of the appeals. The court noted that the amendment exposed the assessees to risks of recovery such as prosecution, recovery from creditors and bankers, and sale of movables and immovables. The court observed that the amendment disregarded the consequences and prejudice it would cause to the valuable rights of the dealers under the Act and interfered with the discretionary powers vested in the Appellate Tribunal.
Conclusion:
The court allowed the writ petitions and struck down sub-section (3A) of Section 22, as inserted by Section 11 of the amending Act 15 of 1988, as unconstitutional and ultra vires. Consequently, the amendment to sub-section (5) of Section 22 by Section 11(3) of the amending Act was also struck down. The Appellate Tribunal was directed to entertain stay applications filed by the assessees-appellants against orders passed under Section 20 of the Karnataka Sales Tax Act and to continue exercising its powers under Section 22(5) as it existed before the amendment.
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1989 (10) TMI 218
Issues:
1. Prosecution under Gujarat Sales Tax Act, 1969 against a textile company for non-payment of sales tax.
2. Challenge to the prosecution based on Sick Industrial Companies (Special Provisions) Act, 1985.
3. Interpretation of Section 22 of the Sick Industrial Companies Act and its applicability to criminal prosecution.
4. Sanctioning of prosecution under rule 79 of the Rules and its validity against the company and Managing Directors.
5. Reference to a previous court decision regarding winding up proceedings and its relevance to the current case.
Analysis:
1. The case involves a textile company facing prosecution for non-payment of sales tax under the Gujarat Sales Tax Act, 1969. The company had a sales tax liability of Rs. 1,84,220 for the period from December 1986 to June 1987, which remained unpaid despite filing quarterly returns.
2. The petitioners sought to challenge the prosecution order citing Section 22 of the Sick Industrial Companies Act, 1985, which provides for suspension of legal proceedings in certain cases. However, the court noted that the section does not cover criminal prosecution for non-payment of sales tax as the amount is held in trust by the dealer for the government.
3. The court interpreted Section 22 of the Act, emphasizing that it does not bar criminal prosecution against a company but rather prohibits proceedings for winding up or execution against the company's properties. The court clarified that the section does not prevent the initiation of criminal proceedings for non-payment of sales tax.
4. The validity of sanctioning the prosecution under rule 79 of the Rules was discussed, with the court concluding that the sanction against the company was appropriate. The court did not delve into the validity of prosecution against the Managing Directors, stating it as a matter to be raised during the criminal prosecution proceedings.
5. A previous court decision regarding winding up proceedings was referenced, highlighting that it did not pertain to criminal proceedings. The court dismissed the petitioner's reliance on the decision, emphasizing the distinction between winding up proceedings and criminal prosecution.
In conclusion, the court rejected the petition, stating that there was no substance in the challenge against the prosecution. The court discharged the notice and rejected the request to continue interim relief, ultimately dismissing the petition.
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1989 (10) TMI 217
Issues:
Challenge to refusal of exemption certificate or deferment certificate under Sales Tax Incentive Schemes for Industries, 1987 and 1989 in Rajasthan.
Analysis:
The petitioner challenged the non-petitioners' action of refusing to grant an exemption certificate or deferment certificate under the Sales Tax Incentive Schemes for Industries, 1987 and 1989 in Rajasthan. The Government of Rajasthan issued notifications for these schemes in exercise of powers conferred by the Rajasthan Sales Tax Act, 1954. The petitioner applied for deferment of sales tax and eligibility certificate under the schemes but faced rejections based on reasons like total investment not exceeding Rs. 10 lacs and application submitted beyond the prescribed period of 150 days. The petitioner filed a writ petition before the High Court, arguing that the schemes should be liberally construed in favor of the assessees to encourage industries in Rajasthan. The petitioner relied on the case law of Fertilizer Corporation of India Ltd. v. State of Bihar [1988] 68 STC 158 (SC); [1988] Supp SCC 73 to support the argument.
The High Court noted the intention of the State Government to encourage industries in Rajasthan through the incentive schemes. It highlighted that a new scheme in 1989 allowed applications to be entertained even after the prescribed period of limitation. Citing the Supreme Court's observations in Fertilizer Corporation of India Ltd.'s case, the High Court decided to allow the writ petition. The court directed the non-petitioners to consider the petitioner's application for the eligibility certificate or deferment certificate under the sales tax incentive schemes on merits. The parties were left to bear their own costs.
In conclusion, the High Court partially allowed the writ petition, emphasizing the need to interpret the incentive schemes liberally to promote industrial growth in Rajasthan. The judgment underscored the importance of considering applications on their merits and in line with the objective of encouraging industries in the state.
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1989 (10) TMI 216
Issues involved:
Interpretation of entry (10) of a notification under the Punjab General Sales Tax Act regarding tax liability on leather sheets; determination of whether the manufactured commodity qualifies as dressed hides and skins.
Detailed Analysis:
The judgment by the High Court of Punjab and Haryana concerns a series of General Sales Tax References and Civil Writ Petitions related to the tax assessments of a company engaged in the manufacture and sale of leather board. The Assessing Authority revised the tax rates applied by the company, leading to additional demands and penalties for various assessment years. The company's appeals and revision petitions were consistently dismissed by the authorities and the Sales Tax Tribunal, prompting the company to seek a reference to the High Court for two key questions of law.
The primary issue revolved around the interpretation of entry (10) of a notification issued under the Punjab General Sales Tax Act, which specified the tax rate for hides and skins in raw or dressed state. The company argued that the manufactured commodity, leather sheets, did not fall under the category of dressed hides and skins as per the notification. The court examined the detailed manufacturing process provided by the company, which involved crushing waste leather cuttings, refining the powder, and forming sheets through a series of processes involving latex and drying.
The court analyzed expert opinions and definitions related to hides, skins, and leather to determine the essential characteristics of dressed hides and skins. It was established that dressed hides and leather retain their fibrous structure and undergo tanning and curing processes to maintain specific properties. The court compared the manufacturing process of the company to established definitions and expert opinions to ascertain whether the resulting commodity qualified as dressed hides and skins.
The court rejected the company's argument that the manufactured commodity should be considered leather sheets and not dressed hides and skins based on common parlance understanding. Despite evidence provided by registered dealers and descriptions in bill books, the court held that the manufacturing process altered the fundamental characteristics of hides and skins, leading to a conclusion that the commodity produced did not qualify as dressed hides and skins as per the notification.
Consequently, the court answered the first question in the affirmative, ruling in favor of the tax department. As a result, the Civil Writ Petitions filed by the company were dismissed, and the reference was answered in the affirmative. The judgment highlighted the importance of the manufacturing process and the essential characteristics of dressed hides and skins in determining tax liability under the Punjab General Sales Tax Act.
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1989 (10) TMI 215
Issues Involved:
1. Constitutional validity of entry 2-B of Schedule D and section 17 of the Haryana General Sales Tax Act, 1973.
2. Validity of the instructions dated May 15, 1985, issued by the Commissioner, Excise and Taxation, Haryana.
3. Legality of the orders/notices passed/issued by the authorities based on the instructions.
Issue-Wise Detailed Analysis:
1. Constitutional Validity of Entry 2-B of Schedule D and Section 17 of the Haryana General Sales Tax Act, 1973:
The petitioners challenged the constitutional validity of entry 2-B of Schedule D and section 17 of the Haryana General Sales Tax Act, 1973, arguing that these provisions were vague and violated Articles 14 and 286 of the Constitution. They contended that the provisions did not clearly specify the taxing event and the person liable to pay the tax. The Court, however, found that the requirements of a valid charging section were incorporated in the impugned provisions. The commodity to be taxed, the circumstances under which tax is to be levied, the stage of levy, and the person liable to pay tax were all clearly defined. The Court referenced the Apex Court's decision in Bhawani Cotton Mills Ltd. v. State of Punjab, where similar provisions were upheld as constitutional after amendments. Thus, the Court held that the impugned provisions were legal, valid, and constitutional, and did not violate Articles 14 or 286 of the Constitution or section 15 of the Central Sales Tax Act.
2. Validity of the Instructions Dated May 15, 1985, Issued by the Commissioner, Excise and Taxation, Haryana:
The petitioners argued that the instructions dated May 15, 1985, influenced the authorities under the Act and precluded them from making independent decisions. The Court examined the instructions and found that they were merely an elucidation of entry 2-B of Schedule D to the Haryana Act. The instructions emphasized thorough scrutiny of sales transactions to exempted units and allowed the authorities to draw conclusions based on merits. The Court concluded that the instructions did not hinder or restrict the discretion vested in the authorities under the Act and did not encroach upon their jurisdiction or influence their decisions. Therefore, the instructions were deemed legal in every respect.
3. Legality of the Orders/Notices Passed/Issued by the Authorities Based on the Instructions:
The petitioners contended that the orders/notices issued by the authorities were based on the instructions and, therefore, invalid. The respondents argued that the petitioner had shown sales of paddy to an exempted unit, which was found to be engaged in only paper transactions. The Court noted that the authorities were not debarred from examining whether the sales to exempted dealers were genuine and bona fide. If the sales were found to be paper transactions, the authorities could ignore them and hold the selling dealer liable to pay tax. The Court found that a finding had been recorded by the Assessing Authority that the sales to the exempted units were not genuine and were only paper transactions. Consequently, the petitioners were given an opportunity to file appeals within one month, and the respondents were instructed not to raise the question of limitation.
Conclusion:
The Court partly allowed the writ petitions, holding that dealers exempted from payment of tax under section 13 still remain dealers liable to pay tax under the Act. However, since the transactions of sales to such dealers were found to be paper transactions, the petitioners were afforded an opportunity to file appeals within one month. The respondents were instructed not to raise the question of limitation, and the petitioners were allowed to raise all available defenses before the Assessing Authorities.
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1989 (10) TMI 214
Right of the States to levy vend fee or duties in respect of industrial alcohol under different legislations in different States
Held that:- So far as the present case is concerned the State in exercise of powers under entry 8 of List II and by appropriate law regulate and that regulation could be to prevent the conversion of alcoholic liquors for industrial use into one for human consumption and for purpose of regulation, the regulatory fees only could be justified. In fact, the regulation should be the main purpose, the fee or earning out of it has to be incidental and that is why the learned counsel appearing for the State attempted to use this terminology by saying that the purpose is regulation, the earnings are incidental but frankly conceded that in fact the earnings are substantial. In fact in some of the excise laws in the States they have even used terminology relying on the doctrine of privilege and parting with privilege but it is not necessary for us to go into those questions in greater detail as we are not here concerned with the trade in alcoholic liquors meant for human consumption and, therefore, in view of clear demarcation of authority under various items in the three Lists, entry 8 of List II could not be invoked to justify the levies which have been imposed by the States in respect of alcoholic liquors which are not meant for human consumption.
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1989 (10) TMI 208
Issues:
- Dispute over unclaimed dividend amount of Rs. 2 lakhs held by Registrar of Joint Stock Companies.
- Claim by former management of deliquidated company for refund of unclaimed dividend.
- Legal entitlement to unclaimed dividend under section 555 of the Companies Act, 1956.
- Interpretation of whether unclaimed dividend belongs to creditors or former company management.
- Application for refund of unclaimed dividend by former management contested by official liquidator and Central Government.
Analysis:
The judgment concerns a dispute regarding an unclaimed dividend amount of Rs. 2 lakhs held by the Registrar of Joint Stock Companies. The company in question was ordered to be wound up, and the official liquidator paid the dividends into the Companies Liquidation Account as per the Companies Act, 1956. A Company Petition was filed by the former management seeking a refund of the unclaimed dividend after the company was deliquidated and possession of assets handed over. The applicants claimed entitlement to the amount based on the deliquidation order. However, the official liquidator and Central Government contended that the unclaimed dividend belongs to the creditors as per the Act, and the company's status as in liquidation was relevant. The Act stipulates that unpaid dividends paid into the Companies Liquidation Account are for creditors' benefit, and any claimant must follow the prescribed procedure under section 555.
The court analyzed the provisions of section 555 of the Act, emphasizing that unclaimed dividends cannot be returned to the company even after deliquidation. The amount is deemed payable to the creditors, and only they have the right to claim it. The Act allows any person entitled to money in the Companies Liquidation Account to apply for payment, subject to court approval. Additionally, unclaimed amounts after fifteen years are transferred to the Central Government's revenue account. The court cited a previous case to clarify that the term "any person" in the Act includes the company itself but does not grant entitlement to the unclaimed dividend. The court concluded that the former management lacked the legal right to claim the refund under the Act, dismissing their application.
In summary, the judgment highlights the strict legal framework governing unclaimed dividends under the Companies Act, emphasizing the rights of creditors over such amounts. The court's decision underscores the importance of following statutory procedures and upholding the rights of stakeholders as defined by the law.
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1989 (10) TMI 198
Issues:
Classification of Block Board under Heading No. 4410.90 or 4408.90 of the Central Excise Tariff Act, 1985.
Analysis:
The case involved the classification of Block Board manufactured by the appellants under Heading No. 4410.90 or 4408.90 of the Central Excise Tariff Act, 1985. The Collector (Appeals) had classified it under Heading No. 4408.90 based on the explanatory notes under Heading No. 44.12 of the H.S.N. The appellants contended that Block Board should be classified under the residual Heading "Other" 4410.90 as it is not similar to laminated wood. The absence of a specific definition of Block Board or Laminated Wood in the tariff led to the need to interpret the terms in their popular sense as understood in the industry, as established in various Supreme Court judgments.
The appellants submitted certificates from dealers in plywood to demonstrate the commercial understanding of Block Board. However, these documents were not presented before the Collector (Appeals), and no steps were taken to seek permission to admit them as additional evidence. The Tribunal then referred to the Indian Standards Institute publications for guidance. The Glossary of Terms published by the ISI provided definitions of Laminated Wood and Block Board, highlighting the differences between the two products.
The definitions revealed that Laminated Wood consists of layers of wood and adhesive with parallel grains, while Block Board has a core made of strips of wood laid separately and joined to form a slab. The core blocks' grain direction differs from that of the outer veneers, distinguishing Block Board from Plywood. The appellants argued that Block Board is not similar to plywood or laminated wood, emphasizing the term "similar" in Heading No. 44.08.
The Department contended that Block Board falls under the phrase "similar laminated wood" in Heading No. 44.08, supported by the explanatory notes to the H.S.N. The Tribunal noted the similarity between Heading 44.08 of the Indian Tariff Schedule and Heading 44.12 of the H.S.N., which included Block Board under "similar laminated wood." However, the Tribunal emphasized interpreting the tariff entries based on the words used, statutory notes, and relevant rules of interpretation.
Considering the definitions, industry standards, and the absence of evidence showing Block Board as known in trade as laminated wood, the Tribunal held that Block Board should be classified under Heading 44.10, sub-heading 4410.90. The Department failed to prove Block Board's classification under Heading No. 44.08, sub-heading 4408.90, leading to the success of the appeals and their allowance.
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1989 (10) TMI 189
Issues:
- Claim for duty-free assessment under Notification No. 227/79-Cus.
- Interpretation of the term "Fixtures" under the notification.
- Whether the imported PVC tiles qualify for duty exemption under the notification.
- Compliance with conditions for duty exemption.
- Justification of the Collector (Appeals) decision.
Analysis:
1. The case involved the import of PVC tiles by the respondents for use in their unit in the SEEPZ Export Processing Zone, claiming duty-free assessment under Notification No. 227/79-Cus. The Deputy Collector disallowed the exemption, stating the tiles did not qualify as being imported in connection with manufacturing or promotional activity.
2. The Advocate for the respondents argued that the tiles were necessary for creating a dust-free atmosphere for video cassette recording, thus meeting the conditions of the notification. He referenced a letter from the Assistant Development Commissioner allowing the import of "Vinyl Rubberised Floor Sheets" under certain conditions. The dispute centered on whether the tiles fell under the category of "Fixtures" in the notification.
3. Serial number 6 of the notification listed permissible items as "Tools, Jigs, Gauges, Fixtures, Moulds, Dies, Instruments, and Accessories" for duty-free import within the SEEPZ. The Collector (Appeals) accepted the claim that the tiles improved acoustic qualities and maintained a dust-free atmosphere, crucial for the high-fidelity video cassette manufacturing process, thus granting duty exemption.
4. The Advocate contended that the tiles qualified as fixtures based on the definition from the Concise Oxford Dictionary. The Assistant Development Commissioner's permission and a letter highlighting the need for a dust-free environment in the electronics industry supported the respondents' claim. The Tribunal found no reason to overturn the Collector (Appeals) decision due to the lack of a clear definition of "fixture" in the notification.
5. Ultimately, the Tribunal upheld the Collector (Appeals) decision, dismissing the Revenue's appeal. The judgment favored the respondents' interpretation of the notification, considering the necessity of a dust-free environment for their manufacturing process.
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1989 (10) TMI 180
Whether the Corporation was liable to refund that part of the amount of octroi duty paid by the petitioners on the quantity of the Horlicks powder imported into the city of Bangalore on the petitioners’ informing the Corporation that they had despatched that part of the same from time to time by filling the same in bottles to places outside the city of Bangalore even though petitioners had not followed the procedure prescribed in Rules 24 and 25 of Bye-law No. 45 framed by the Corporation and even though they had not even informed of such despatches as and when these were made?
Held that:- Amounts have been realised as octroi on the entry of the goods on which octroi was not leviable because these were not for use or consumption within the municipal limits. Mere, physical entry into the city limits would not attract the levy of octroi unless goods were brought in for use or consumption or sale. In this case, putting the powder from the drums to the bottles for the purpose of exporting or taking these out of the city is neither use nor consumption of the Horlicks powder attracting the levy of octroi. Such amounts, therefore, cannot be retained by the respondent-Corporation. There is no dispute as to the quantum in view of the fact that the amount has now been found to be certified to be credited pursuant to the direction of the learned single Judge of the High Court. We see no ground as to why amount should not be refunded. Realisation of tax or money without the authority of law is bad under Article 265 of the Constitution. Octroi cannot be levied or collected in respect of goods which are not used or consumed or sold within the municipal limits. So these amounts become collection without the authority of law. The respondent is a statutory authority in the present case. It has no right to retain the amount, so far and so much. These are refundable within the period of limitation. There is no question of limitation. There is no dispute as to the amount. There is no scope of any possible dispute on the plea of undue enrichment of the petitioners. We are, therefore, of the opinion that the Division Bench was in error in the view it took. Where there is no question of undue enrichment, in respect of money collected or retained, refund, to which a citizen is entitled, must be made in a situation like this. Appeal allowed & amounts should be refunded.
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1989 (10) TMI 179
Issues involved: Importation of goods with forged license, undervaluation of goods, imposition of redemption fine and penalty, refund of demurrage, refund of freight, imposition of interest.
Importation of goods with forged license: The appellant imported items for industrial activities against bills of entry, some goods required specific import license. Customs authorities found the license endorsement to be forged, leading to a show cause notice alleging undervaluation. The appellant claimed innocence, stating the license was purchased in good faith, but the adjudicating authority held the goods were imported without a license. The goods were confiscated under Section III(d) of the Customs Act, 1962, with an option for re-export within one month with a redemption fine and a personal penalty imposed under Section 112(a) of the Act.
Imposition of redemption fine and penalty: The appellant exercised the option for re-export and sought refunds of demurrage and freight. The Tribunal found the adjudicating authority's refusal to consider a valid license for clearance incorrect. It clarified that when goods are confiscated with an option for redemption, the importer can consume them upon payment of the fine, making the simultaneous imposition of re-export and fine invalid. The Tribunal ordered a refund of the redemption fine and set aside the penalty imposed on the appellant.
Refund of demurrage and freight: The Tribunal acknowledged the appellant's plea for demurrage refund due to peculiar circumstances but stated it lacked the authority to order such a refund. The plea for interest on amounts paid was rejected as there is no provision for it in the Customs Act. No relief was granted for the refund of to and fro freight, as the appellant had the option to stay the impugned order.
Conclusion: The Tribunal disposed of the appeal by ordering a refund of the redemption fine, setting aside the penalty, and addressing the pleas for demurrage, interest, and freight refund based on the legal provisions and circumstances of the case.
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1989 (10) TMI 178
Issues:
1. Setting aside an ex parte order in a ROM application.
2. Applicability of judgments from Calcutta and Kerala High Courts.
3. Power of the Tribunal to set aside an ex parte order.
4. Distinction between an appeal and an application in ex parte orders.
5. Consideration of a ROM application after an ex parte order.
Analysis:
1. The applicant's ROM application was dismissed by the Tribunal in an ex parte order due to non-appearance. The applicant filed a Misc. Application seeking to set aside the ex parte order and be granted an opportunity to present the case before the Tribunal.
2. The applicant's advocate argued that based on judgments from Calcutta and Kerala High Courts, the Tribunal has the power to recall an ex parte order and rehear the appeal if a party was unable to avail the opportunity properly. However, the Tribunal noted that the judgments cited were related to ex parte decisions in appeals, not applications for rectification of mistakes like the present case.
3. The Tribunal examined the records and found that the ROM application was dismissed after giving the applicant a personal hearing, but the applicant could not avail the opportunity due to a car accident. The Tribunal cited a Supreme Court judgment stating that the ROM application effectively acted as a review petition, and the Customs Act does not grant the Tribunal the power to review its orders.
4. One member of the Tribunal disagreed with the view that the judgments from the High Courts were not applicable and emphasized that an ex parte order, whether in an appeal or an application, can be set aside by the Tribunal to provide a reasonable opportunity for the party to be heard.
5. Ultimately, the Tribunal, by majority decision, allowed the Misc. Application to set aside the ex parte order, recalling the previous order and directing the ROM application to be listed for hearing on merits. The decision was made to comply with the principles of natural justice and provide the appellant with an opportunity to present their case.
This detailed analysis covers the issues raised in the judgment, including the arguments presented, the legal principles applied, and the final decision reached by the Tribunal.
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1989 (10) TMI 177
Issues:
1. Whether cut tyres and tubes are considered waste or manufactured products for the purpose of claiming modvat credit?
2. Whether the respondents are entitled to claim modvat credit on inputs used in the manufacture of cut tyres and tubes?
Analysis:
Issue 1:
The case involved two appeals concerning the classification of cut tyres and tubes as waste or manufactured products for modvat credit. The respondents, manufacturers of rubber products, cleared cut tyres and tubes under an exemption notification. The revenue argued that these products were not waste but manufactured goods falling under sub-heading 4004.00 CET, thus disallowing modvat credit. The respondents contended that the products should be classified as waste based on legal precedents. The Tribunal agreed with the respondents, citing judgments that supported the classification of cut tyres and tubes as waste. Consequently, Rule 57D applied, allowing the respondents to claim modvat credit on inputs used in manufacturing these products.
Issue 2:
The second appeal involved a dispute over the recovery of set-off availed on duty-paid inputs. The Assistant Collector initially dropped the proceedings, but upon direction from the Collector of Central Excise, filed an application before the Collector (Appeals) who dismissed the appeal. The revenue appealed this decision. The Tribunal heard arguments from both parties and upheld the Collector (Appeals) order, confirming the dismissal of the appeal and providing consequential relief to the respondents.
In conclusion, the Tribunal affirmed that cut tyres and tubes should be considered waste, not manufactured products, allowing the respondents to claim modvat credit on inputs. The second appeal's decision to dismiss the revenue's claim for recovery of set-off was upheld, providing relief to the respondents. The impugned orders were confirmed, and both appeals were dismissed with consequential relief to the respondents.
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1989 (10) TMI 176
Issues:
1. Whether CMO is a related person or a favoured buyer.
2. Whether the discount allowed by the respondent company to CMO is permissible.
3. Whether the demand is time-barred.
Analysis:
The case involved two appeals filed by the Revenue, interlinked and connected, regarding the respondents, a manufacturer of Prepared and Preserved Foods falling under Tariff Item Nos. 1A and 1B of Central Excise Tariff. The issue revolved around the trade discount alleged to be retained by the Central Marketing Organisation (CMO), approved by the Department, leading to a show cause notice for non-passage of full discount to wholesale dealers. The Assistant Collector confirmed the demands under Section 11A, citing lack of invoices from CMO and alleged suppression of facts. The Collector of Central Excise (Appeals) held that CMO was not a related person, and no suppression of facts occurred, leading to the Revenue's appeal.
The Revenue contended that CMO was a related person due to majority partners being close relatives of the respondent's directors, invoking the Bombay Tyres International case. They argued that the agreement between the respondent and CMO indicated a lack of arm's length transaction, justifying the demand disallowing the discount. On the other hand, the respondent argued that the entities were separate legal entities, citing legal precedents and asserting that CMO was not a favoured buyer, as prices were similar to other distributors. They emphasized the fair pricing and normal trade practices, challenging the invocation of a larger period under Section 11A.
The Tribunal considered the issues of CMO's status and the discount's permissibility, citing a previous appeal where CMO was not deemed a related person or favoured buyer. Upholding the previous view, the Tribunal concluded that the discount was just and reasonable, deducting it from the assessable value. As the issues and facts were similar in both appeals, the Tribunal dismissed the Revenue's appeals, ruling in favor of the respondents. The consequential relief of refund claimed by the respondents in one appeal was also allowed, aligning with the upheld impugned order. Consequently, both impugned orders were upheld, and the Revenue's appeals were dismissed.
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1989 (10) TMI 175
Issues: Excisability of 'waste'
In this case, the main issue revolves around the excisability of 'waste' generated during the manufacturing process. The appeals were filed against the order of the Collector of Central Excise confiscating HDPE bags/sacks and imposing penalties on the appellants for alleged contravention of Central Excise Rules. The central question is whether the waste material generated by the appellants is dutiable and should be accounted for in the Central Excise records.
Detailed Analysis:
The case involves two units, Unit-I and Unit-II, where waste was generated during the manufacturing of HDPE tapes, sacks, bags, fabrics, and laminated fabrics. The appellants transferred some quantity of waste from Unit-I to Unit-II. The show cause notice alleged contravention of various Central Excise Rules and penalized the appellants for removing HDPE bags/sacks without proper accounting, procedures, and payment of duty. The Collector of Central Excise found the seized goods fit for export and held them to be dutiable, imposing penalties on both units.
Upon hearing arguments from both parties, it was noted that the goods in question were waste material, specifically HDPE circular bag waste and laminated fabric waste. The Collector concluded that the appellants failed to disclose information about the waste material generated and disposed of, only revealing it after the department initiated action. The appellants claimed to maintain a waste register, recording all waste generated, and explained that the waste bags were used as liners for an export order to the United Kingdom.
The Tribunal considered previous decisions on the excisability of waste material and held that unless waste is specifically provided for in the Tariff, it is not excisable. Citing precedents from the Delhi High Court and the Tribunal, it was established that waste material not listed in the tariff is not subject to excise duty. Therefore, the Tribunal set aside the Collector's order and allowed the appeals, determining that the waste material in question was not excisable goods.
In conclusion, the judgment focused on the excisability of waste material generated during the manufacturing process. By analyzing previous decisions and legal principles, the Tribunal ruled that the waste material, not specifically listed in the tariff, was not subject to excise duty. This decision overturned the Collector's order and provided relief to the appellants, emphasizing the importance of proper classification and excisability of goods under the Central Excise Rules.
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1989 (10) TMI 174
Issues Involved:
1. Whether the confiscation of the seized goods is in accordance with law.
2. If the confiscation is not lawful and the goods are sold, whether the appellant is entitled to the seizure value of the goods.
3. Whether the imposition of penalty on the appellants is in accordance with law.
Detailed Analysis:
Issue 1: Whether the confiscation of the seized goods is in accordance with law.
The core issue revolves around the legality of confiscating goods seized from Smt. Shyam Lata Sharma's possession. The appellants contended that the confiscation was illegal as the Show Cause Notice was issued after the statutory period of six months prescribed under Section 110 of the Customs Act, 1962. The learned SDR argued that since the goods were available for confiscation at the time of adjudication, the adjudicating officer could order their confiscation, emphasizing that Section 110 and Section 124 are independent and there is no time limit for initiating adjudication proceedings.
The Tribunal noted that Section 110(2) mandates that if a show cause notice is not issued within six months of seizure, the goods "shall be returned" to the person from whom they were seized, unless the period is extended by the Collector of Customs. The Tribunal referenced the Supreme Court judgment in Charandas Malhotra's case, which underscored that the right to restoration of seized goods is a civil right accruing after six months unless extended. The Tribunal held that the failure to return the goods after six months without a valid extension renders any subsequent confiscation illegal. Therefore, the confiscation of the goods in this case was not in accordance with law, and the goods should be returned to Smt. Shyam Lata Sharma.
Issue 2: If the confiscation is not lawful and the goods are sold, whether the appellant is entitled to the seizure value of the goods.
The appellants sought the seizure value of the goods if they had been sold by the department. The learned SDR contended there was no provision in the Act for payment of sale proceeds or seizure value. The Tribunal, however, held that if the goods were sold by the department, the appellant should not suffer due to the department's actions. Justice and good conscience required that the respondent pay the seizure value of Rs. 2,87,341.00 to the appellant if the goods were sold.
Issue 3: Whether the imposition of penalty on the appellants is in accordance with law.
The Tribunal affirmed that the imposition of penalties under Section 112 of the Customs Act was valid, even though the show cause notice was issued after six months. The goods were seized from Smt. Shyam Lata Sharma's possession, and they were notified goods under Section 123 of the Customs Act, shifting the burden of proof to the appellants to demonstrate that the goods were legally imported, which they failed to do. The Tribunal noted that the penalties imposed were influenced by the fact that the goods were confiscated, and if the goods were to be returned, the appellants would benefit from a lighter penalty. However, the department had not filed any cross-objection for enhancement of the penalty, and thus, the penalties imposed were upheld.
Conclusion:
The appeal filed by Smt. Shyam Lata Sharma was partly allowed, directing the return of the seized goods or payment of their seizure value if sold. The appeals regarding the imposition of penalties on Narayan Sharma and M.M. Shastri were dismissed.
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1989 (10) TMI 173
Issues Involved:
1. Legality and validity of Rule 57-I of the Central Excise Rules, 1944 before and after the amendment.
2. Whether the amendment to Rule 57-I grants amnesty to manufacturers who wrongfully availed MODVAT credit.
3. Applicability of principles of natural justice to Rule 57-I.
4. Whether Rule 57-I should be read in conjunction with Section 11A of the Central Excises & Salt Act, 1944.
5. Effect of amendment on ongoing proceedings initiated under the unamended Rule 57-I.
Summary:
1. Legality and Validity of Rule 57-I:
The petitioners challenged the vires of Rule 57-I as it stood prior to the amendment effective from October 6, 1988, arguing it was ultra vires Articles 14 and 19(1)(g) of the Constitution of India due to the absence of a limitation period and lack of provision for issuing show cause notices and affording an opportunity of being heard. The court, referring to the Supreme Court decision in Government of India v. Citadel Fine Pharmaceuticals, held that the absence of a specific limitation period does not render the rule ultra vires, as a reasonable period of limitation should be read into it. Similarly, the principles of natural justice are implicit in the rule, and the absence of explicit provisions does not exclude their observance.
2. Effect of Amendment on Rule 57-I:
The petitioners contended that the amendment to Rule 57-I implied a grant of amnesty to those who had wrongfully availed MODVAT credit. The court rejected this contention, stating that the amendment merely made explicit what was already implicit in the rule, such as the period of limitation and the requirement for show cause notices. The amendment did not indicate any legislative intention to grant amnesty or destroy actions taken under the unamended rule.
3. Applicability of Principles of Natural Justice:
The court emphasized that the principles of natural justice, which include fair play in action, are inherent in any discretionary power conferred upon an executive or judicial officer. Therefore, the absence of explicit provisions for issuing show cause notices and affording an opportunity of being heard in Rule 57-I does not mean these principles are excluded.
4. Rule 57-I and Section 11A of the Act:
The petitioners argued that Rule 57-I should be read in conjunction with Section 11A of the Act, which provides for the recovery of duties not levied or short-paid, and includes a limitation period. The court disagreed, stating that Rule 57-I, dealing specifically with wrongful availment of MODVAT credit, is a special provision enacted under Section 37 of the Act, whereas Section 11A is a general provision. The special provisions of Rule 57-I prevail over the general provisions of Section 11A.
5. Effect of Amendment on Ongoing Proceedings:
The court held that the amendment to Rule 57-I does not affect the validity of actions initiated under the unamended rule. The amendment did not manifest any legislative intention to grant amnesty or invalidate ongoing proceedings. Therefore, proceedings initiated under the unamended rule continue to be valid.
Conclusion:
The court rejected the petitions, upheld the validity of Rule 57-I both before and after the amendment, and directed the petitioners to pursue their remedies through the appropriate departmental authorities. The interim relief granted earlier was extended until March 22, 1990, to allow the petitioners to file replies or appeals as necessary.
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1989 (10) TMI 172
Issues:
1. Suit maintainability and jurisdiction.
2. Legality of notice under Sec. 80, C.P.C.
3. Violation of provisions of Gold Control Act.
4. Ownership of seized gold.
5. Adjudication of confiscation without notice.
6. Sec. 108 of the Gold Control Act.
Analysis:
The plaintiff, in this case, failed to secure the return of gold seized by the defendants under the Gold (Control) Act, 1968. The dispute arose when defendant No. 2 searched the plaintiff's house and demanded the gold bangles for seizure. The plaintiff, claiming the bangles as her Stridhan properties, threw them into a well to avoid seizure. The defendants recovered the gold and seized it, leading to the plaintiff filing a suit alleging illegal seizure.
The trial court examined various issues, including the maintainability of the suit, jurisdiction, legality of the notice, violation of Gold Control Act provisions, ownership of the seized gold, and relief entitled to the plaintiff. It held that the gold bangles seized did not belong to the plaintiff, were not ornaments under the Act, and the suit was maintainable.
The appellant argued that the confiscation of gold was contrary to the Act and should be returned to the plaintiff. The respondents contended that the suit was not maintainable under Sec. 84 of the Act, which provides finality to decisions and bars challenges.
The High Court emphasized that the Act is exhaustive, providing for confiscation procedures, appeals, and challenges up to the Supreme Court. It noted that the Civil Court's jurisdiction is impliedly barred, except for cases where Act provisions are not followed or fundamental judicial principles are violated.
The Court highlighted Sec. 79 of the Act, requiring notice and opportunity for the owner before confiscation. It ruled that confiscation without notice to the concerned person violates natural justice principles. The plaintiff, claiming ownership of the gold, should have been given an opportunity before confiscation.
The Court rejected the defense's reliance on Sec. 108 of the Act, which protects actions done in good faith. It stated that actions contravening Sec. 79 cannot be considered in good faith, and violators cannot be shielded.
Consequently, the Court decreed that the gold seized cannot be confiscated without giving the plaintiff an opportunity under Sec. 79. It directed the defendants to proceed with confiscation after providing notice to the plaintiff and ordered the return of the seized gold to the plaintiff. The appeal was allowed, and costs were not awarded.
In conclusion, the judgment emphasized procedural fairness, adherence to statutory provisions, and the importance of providing opportunities for affected parties in confiscation proceedings under the Gold Control Act.
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