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1973 (2) TMI 123
Issues:
- Interpretation of a notification under the Kerala General Sales Tax Act of 1963 regarding the reduction of tax rate for oil-millers.
- Whether the expression "assessed to tax or is liable to tax at his hands" refers only to assessment under the Kerala General Sales Tax Act of 1963.
- Comparison of the impugned notification with other notifications under different Acts.
- Application of the principle of strict interpretation in taxing statutes.
- Alleged violation of Article 301 of the Constitution due to the notification's impact on inter-State trade.
Analysis:
The judgment concerns the challenge by oil-millers against a notification issued under the Kerala General Sales Tax Act of 1963, reducing the tax rate on sales of groundnut oil and cake. The key issue revolves around the interpretation of the expression "assessed to tax or is liable to tax at his hands." The appellants argue that this refers to assessment under any sales tax law, not specifically the Kerala General Sales Tax Act of 1963. However, the court rejects this argument, emphasizing that the notification's terms must align with the Act under which it is issued, unless context dictates otherwise. The court cites legal provisions to support this position, clarifying that the assessment and liability to tax mentioned in the notification must be under the Kerala General Sales Tax Act of 1963.
The appellants attempt to draw comparisons with other notifications under the same Act and notifications related to coconut oil. However, the court dismisses these comparisons, explaining that the absence of specific references in those notifications does not alter the requirement for assessment and liability under the relevant Act. The court also addresses the principle of strict interpretation in taxing statutes, noting that ambiguity is absent in the impugned notification, hence the principle does not apply. Furthermore, the court rejects the argument of Article 301 violation, highlighting that the notification does not directly impede inter-State trade and aims to provide relief to millers who comply with State sales tax requirements.
In conclusion, the court dismisses all appeals without costs, upholding the validity of the notification and emphasizing the necessity for assessment and liability under the Kerala General Sales Tax Act of 1963. The judgment clarifies the specific legal interpretations and principles applied in determining the scope and applicability of the notification in question, ensuring consistency with the relevant statutory provisions and constitutional provisions related to trade and commerce.
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1973 (2) TMI 122
Issues:
Interpretation of the term "paper" under the U.P. Sales Tax Act for taxation purposes.
Analysis:
The case involved a reference under section 11(1) of the U.P. Sales Tax Act regarding the classification of ammonia paper and ferro paper under the category of "paper." The assessee contended that these items were unclassified goods and should be taxed at the general rate of 2%, while the tax authorities argued that they fell under the category of paper and should be taxed at 6%. The key issue was whether these chemically coated papers could be considered as paper for tax purposes.
The notification in question prescribed a 6% tax rate on "paper other than hand-made paper." The court emphasized that the term "paper" must be understood in its ordinary sense and not merely based on the name. The Supreme Court's decision in Sales Tax Commissioner, U.P. v. S.N. Bros. was cited, highlighting the importance of interpreting terms based on their popular understanding in trade. Additionally, a previous case involving carbon paper was referenced to illustrate that the chemical coating on the paper was the crucial element, not the paper itself.
The court analyzed the manufacturing process of ammonia paper and ferro paper, noting that they were chemically coated papers used for specific purposes like obtaining prints and sketches. The judgment emphasized that these items did not serve the general functions of paper used for writing, printing, or wrapping. Drawing parallels with a Kerala High Court decision regarding cellophane, the court concluded that these chemically coated papers did not fall under the category of paper as commonly understood.
In light of the above analysis, the court answered the reference question in the negative, favoring the assessee and rejecting the department's classification of ammonia paper and ferro paper as paper for taxation purposes. The assessee was awarded costs, and the reference was answered in favor of the assessee.
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1973 (2) TMI 121
Issues Involved:
1. Taxability of sales of rationed foodgrains.
2. Applicability of Notification S.R.O. No. 602/63 to sales of wheat.
3. Classification of coriander and methi as oil-seeds under section 14(vi) of the Central Sales Tax Act.
4. Taxability of containers.
Detailed Analysis:
1. Taxability of Sales of Rationed Foodgrains:
The main question was whether the sales of rationed articles by the assessee to retailers were sales under the General Sales Tax Act. The Tribunal had previously ruled in favor of the assessee, influenced by the Supreme Court's decision in Chittar Mal Narain Das v. Commissioner of Sales Tax, U.P. However, the court clarified that the Supreme Court's decision pertained to compulsory acquisitions by the State, which are not sales. The court emphasized that sales of rationed articles by retailers to card-holders are considered sales under the Sales Tax Act, as indicated by the Supreme Court in Salar Jung Sugar Mills Ltd. v. State of Mysore. Consequently, the court held that the sales of rationed articles by the assessee to retailers are taxable sales.
2. Applicability of Notification S.R.O. No. 602/63 to Sales of Wheat:
The Tribunal had erroneously applied Notification S.R.O. No. 602/63 to the sales of wheat by the assessee. Both the Government Pleader and the counsel for the assessee agreed that this notification was not applicable. The court directed the Tribunal to reconsider whether the sales of wheat were indeed first sales within the State, as this aspect was not previously addressed.
3. Classification of Coriander and Methi as Oil-Seeds:
The Tribunal had accepted the assessee's contention that coriander and methi were oil-seeds under section 14(vi) of the Central Sales Tax Act, based on a Division Bench ruling of the Orissa High Court. However, the court referred to a recent Division Bench ruling in State of Kerala v. Moidoo, which held that clause (vi) of section 14 does not define "oil-seeds" but merely explains the term. The court concluded that coriander and methi are not considered oil-seeds in common parlance or by dealers. Therefore, the assessee is not entitled to any tax exemption on the sales of these articles.
4. Taxability of Containers:
The Tribunal did not initially consider the taxability of containers, as it deemed it unnecessary based on its conclusions on other issues. With the court's different view on the primary question, it directed the Tribunal to also address whether the containers are liable to tax.
Conclusion:
The court allowed the revision cases, ruling that the assessee is not entitled to any exemption on the sales of rationed articles. The Tribunal was instructed to reconsider the taxability of wheat sales as first sales within the State and the taxability of containers. The Tribunal was also directed to modify its decision based on these considerations. The petitions were allowed without any order regarding costs.
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1973 (2) TMI 120
Issues:
- Whether certain documents produced by the sales tax department can be marked as evidence in court proceedings under the Madras General Sales Tax Act, 1959.
Analysis:
The petitioner, the defendant in this case, challenged the order of the lower court directing the reception of certain documents produced by the sales tax department as evidence. The defendant argued that these documents are privileged under section 57 of the Madras General Sales Tax Act, 1959, and should not be marked as evidence. Section 57(1) of the Act mandates that all particulars contained in statements, returns, accounts, records, or documents produced under the Act shall be treated as confidential and not disclosed. The defendant contended that this prohibition applies to the officer producing the documents and also restricts the court from directing the production of such documents. The court held that the prohibition against disclosure extends to both the officer and the court, and documents covered under section 57(1) should be treated as confidential. The court cannot direct the officer to produce documents prohibited under section 57(1) unless it relates to a civil suit involving the Government.
The court rejected the argument that there is no restriction on the court to summon and admit documents prohibited under section 57(1). A previous decision cited by the defendant was distinguished, emphasizing that the statutory prohibition against disclosure by the officer applies. The court clarified that neither the officer nor the court can disclose or summon documents covered under section 57 of the Act. In the present case, items 1 to 5 were deemed admissible as they did not fall under section 57(1), while item 6, containing assessment files, could potentially include prohibited documents and hence cannot be admitted. The court stated that if the respondent wishes to summon specific documents, the court will assess whether they are prohibited under section 57(1) before deciding on admissibility.
Consequently, the petition was partly allowed, permitting the admission of items 1 to 5 but disallowing item 6 from being marked as evidence. The court made no order as to costs in this matter.
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1973 (2) TMI 119
Issues Involved:
1. Legality of the penalty notices (Exhibits PI and P2).
2. Consideration of delays caused by factors beyond the company's control.
3. Nature of the penalty under Section 23(3) of the Kerala General Sales Tax Act, 1963.
4. Discretion in imposing penalties and the requirement of natural justice.
5. Applicability of mens rea to the penalty under Section 23(3).
Detailed Analysis:
1. Legality of the Penalty Notices (Exhibits PI and P2):
The petitioner, Burmah Shell Oil Storage and Distributing Co. of India Limited, received penalty notices demanding payment of Rs. 18,211.84 and Rs. 43,790 for defaults in tax payments. The company contested these notices through revisions, which were rejected by the Deputy Commissioner and the Board of Revenue. The court examined the relevant provisions, particularly Section 23(3) of the Kerala General Sales Tax Act, 1963, and Rule 31 of the Kerala General Sales Tax Rules, 1963. The court found that the language of Form 11 required payments "before the 10th day of the succeeding month," thereby confirming the delays.
2. Consideration of Delays Caused by Factors Beyond the Company's Control:
The petitioner argued that the delays were due to uncontrollable factors such as holidays and telegraphic transfer delays. The court noted that the company had chosen to make payments into the Government treasury despite having the option to pay by crossed cheque or demand draft. The court held that the delays, even if caused by uncontrollable factors, did not exempt the company from the penalty, as the payments were required before the 10th day of the succeeding month.
3. Nature of the Penalty under Section 23(3):
The petitioner contended that the penalty was an additional tax rather than penal interest. The court referred to precedents, including Commissioner of Income-tax, Andhra Pradesh v. Bhikaji Dadabhai & Co., where penalties under taxing statutes were considered additional taxes. However, the court accepted the State's argument that the penalty under Section 23(3) was in the nature of interest by way of damages for delayed payments, not an additional tax. The court also dismissed the petitioner's claim of discrimination under Article 14 of the Constitution, as the choice of payment mode was voluntary.
4. Discretion in Imposing Penalties and the Requirement of Natural Justice:
The petitioner argued that imposing penalties involved discretion and required a quasi-judicial process, including an opportunity to be heard. The court reviewed several decisions, including M/s. Hindustan Steel Ltd. v. The State of Orissa and Commissioner of Income-tax, West Bengal v. Anwar Ali, which emphasized the need for discretion and natural justice in penalty impositions. However, the court found that Section 23(3) imposed an absolute liability on the assessee, with no discretion vested in the taxing authority. The penalty was automatic upon failure to pay within the specified time, excluding the application of natural justice principles.
5. Applicability of Mens Rea to the Penalty under Section 23(3):
The petitioner attempted to equate the penalty to a criminal liability, requiring mens rea. The court referred to cases like Sweet v. Parsley and State of Gujarat v. Acharya Shri Devendraprasadji Pande, which held that mens rea is essential for criminal offenses unless explicitly excluded by statute. The court concluded that Section 23(3) imposed an absolute liability without any requirement of mens rea, as the legislative intent was clear in making the penalty automatic for delayed payments. The court also noted that even if the penalty were considered a criminal imposition, it would fall within exceptions where mens rea is not required.
Conclusion:
The court dismissed the writ petition, upholding the legality of the penalty notices and the orders passed by the Deputy Commissioner and the Board of Revenue. The court found no merit in the petitioner's arguments regarding delays, the nature of the penalty, discretion in imposing penalties, and the requirement of mens rea. The statutory provisions under Section 23(3) were clear in imposing an absolute liability for delayed tax payments, excluding the application of natural justice and mens rea principles.
Petition dismissed without costs.
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1973 (2) TMI 118
The High Court of Punjab and Haryana ruled that sales made to registered dealers could not be disallowed without complying with Rule 26 of the Punjab Sales Tax Rules, 1949. The court found that the documents were required to be produced only when demanded by the Assessing Authority, and as no demand was made in this case, the deduction disallowance was not justified. The question was answered in the negative.
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1973 (2) TMI 117
Whether the High Court was not justified in interfering with a proceeding that was pending before the tax department, by exercising its extra- ordinary jurisdiction under article 226 of the Constitution?
Whether the High Court erred in holding that the transfer of timber from Madhya Pradesh to Uttar Pradesh did not amount to sale?
Whether the High Court further erred in holding that sales effected by the assessee in Madhya Pradesh were not first sales?
Held that:- Appeal dismissed.The power of the Government was merely to exempt one or more dealers from paying tax. That power cannot be used directly or indirectly to retrospectively levy tax on someone else. Hence, we see no substance in any of the contentions advanced on behalf of the appellant.
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1973 (2) TMI 116
Whether the Appellate Assistant Commissioner had powers to enhance the tax levied on the assessee-respondent by the Sales Tax Officer?
Held that:- Appeal allowed. The enhancement made by the Appellate Assistant Commissioner was well within his powers.
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1973 (2) TMI 115
The Supreme Court of India decided that groundnut is considered an oil-seed in commercial circles. The court dismissed the appeal, upholding that groundnut is indeed an oil-seed and is mostly used for the manufacture of oil. The decision of the Madhya Pradesh High Court and Punjab and Haryana High Court on this matter was deemed incorrect. The appeal was dismissed with costs.
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1973 (2) TMI 114
Issues:
1. Interpretation of section 34(1) of the Madras General Sales Tax Act, 1959 regarding the jurisdiction of the Board of Revenue to entertain revision petitions.
2. Whether an appeal dismissed as time-barred can be considered as an appeal that has been made the subject of an appeal.
3. The authority of the Board of Revenue to exercise its revisional power and the right of the assessee to invoke the jurisdiction of the Board.
Detailed Analysis:
1. The Supreme Court was tasked with determining the true scope of section 34(1) of the Madras General Sales Tax Act, 1959, which grants the Board of Revenue the power to call for and examine orders passed by appropriate authorities. The Court considered the language of section 34(2) which outlines conditions under which the Board cannot pass an order, including situations where the order has been made the subject of an appeal. The key issue was to interpret whether the Board's jurisdiction is ousted if an appeal was dismissed as time-barred.
2. The Court referred to a previous decision of the Madras High Court in Erode Yarn Stores v. State of Madras, where it was held that for an appeal to preclude the Board's revisional power, it must be an effective appeal. The High Court concluded that an appeal dismissed on grounds of limitation is not an effective appeal. The Court also cited the decision in Mela Ram & Sons v. Commissioner of Income-tax, where it was established that an appeal filed out of time is still considered an appeal. Despite the difficulty in interpreting this aspect, the Court deferred to the consistent interpretation upheld since 1963, emphasizing the importance of not disturbing settled legal positions without legislative intervention.
3. Additionally, the Court addressed the contention that the assessee had no right to invoke the Board's revisional power. It clarified that the power is intended to rectify any injustices and errors made by subordinate authorities, and it is within the Board's discretion to decide whether to exercise its revisional jurisdiction. In this case, the Board erred in refusing to entertain the revision petitions based on an incorrect understanding of its jurisdiction. The Court affirmed that the Board's decision was flawed, justifying the High Court's intervention. The Court highlighted that the Board must independently assess whether a case warrants revision, and interference by the High Court is only warranted in cases of legal error.
In conclusion, the Supreme Court dismissed the appeals, emphasizing that the interpretation of section 34 had been consistent since 1963 and that any changes to the law should be pursued through legislative amendments. The Court upheld the right of the assessee to bring errors to the Board's attention and reiterated the Board's discretion in deciding whether to exercise its revisional power based on the merits of each case.
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1973 (2) TMI 86
Issues Involved:
1. Constitutionality of Section 294(5) of the Companies Act, 1956, under Article 14 of the Constitution.
2. Nature of the order passed by the Company Law Board: Administrative or quasi-judicial.
3. Requirement for the order to be a speaking order with reasons.
4. Observance of principles of natural justice in the proceedings.
5. Scope of the Company Law Board's power under Section 294(5) to vary the terms of appointment of the sole selling agent.
Detailed Analysis:
1. Constitutionality of Section 294(5) under Article 14:
The appellant-company argued that Section 294(5) of the Companies Act, 1956, is discriminatory and violates Article 14 of the Constitution. They contended that the section vests arbitrary and uncanalised powers in the Central Government to vary the terms of a contract approved by the shareholders, without any guidelines or norms. The court, however, found that the provisions of Section 294(5) are not violative of Article 14. It held that the section aims to prevent contracts that are prejudicial to the interests of the company, particularly in situations where the market conditions make the appointment of a sole selling agent unnecessary or overly generous. The classification of companies with sole selling agents whose terms are prejudicial to the company's interests was deemed rational and justified.
2. Nature of the Order: Administrative or Quasi-Judicial:
The court examined whether the order passed by the Company Law Board under Section 294(5) is administrative or quasi-judicial. It concluded that the power exercised by the Company Law Board is administrative. The court noted that the process involves collecting information, forming an opinion based on that information, and making necessary variations to the terms of the sole selling agent's appointment. The nature of the power, the framework of the law, and the consequences of the exercise of that power led the court to determine that the function is administrative, not quasi-judicial.
3. Requirement for a Speaking Order:
The appellant-company argued that if the order is quasi-judicial, it must be a speaking order with reasons. The court, however, found that since the order is administrative, there is no requirement for it to be a speaking order. The court referenced various judgments, including Travancore Rayons Ltd. v. Union of India, which emphasized the necessity of reasons in quasi-judicial orders for the purpose of appeals and revisions. However, this requirement does not extend to administrative orders.
4. Observance of Principles of Natural Justice:
The appellant-company contended that the principles of natural justice were not observed, as they were not given access to all relevant material and were not properly heard. The court found that although the Company Law Board did not directly communicate with the appellant-company, the appellant had access to the material through the respondent No. 5-company and was given a personal hearing. However, the court noted that some important documents were not made available to the appellant and that the Company Law Board's attitude suggested that they did not consider the appellant to have a locus standi. The court concluded that there was a failure to observe the principles of natural justice, as the appellant was not fully informed of the material against them and was not given an adequate opportunity to respond.
5. Scope of the Company Law Board's Power:
The appellant-company argued that the Company Law Board acted beyond its powers by reducing the sole selling agent to the position of an ordinary agent. The court agreed, stating that the term "vary" includes "abrogate," but the power to vary terms and conditions does not extend to fundamentally altering the nature of the sole selling agent's appointment. The court held that the Company Law Board's order, particularly the new clause (12), which allowed the manufacturer to sell directly without reference to the sole distributor, effectively changed the character of the agency and was beyond the scope of Section 294(5).
Conclusion:
The court allowed the appeal, quashing the impugned order dated April 20, 1965, as amended on May 13, 1965. The appellant-company was awarded costs throughout from respondents Nos. 1 to 4, with no order as to costs in respect of respondent No. 5-company. The court emphasized the need for proper observance of natural justice and the limitations on the Company Law Board's power under Section 294(5) of the Companies Act, 1956.
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1973 (2) TMI 77
Issues:
1. Whether the petition under sections 397 and 398 of the Companies Act, 1956, abated at the death of the original petitioner?
2. Whether the order of transposition could be passed in relation to those proceedings?
Analysis:
The judgment pertains to a case where the original petitioner, Sri Kishan Talwar, had initiated proceedings under sections 397 and 398 of the Companies Act, 1956. Following his demise, his widow, Shrimati Sharda Talwar, sought to be transposed as the petitioner. The company contended that the petition abated with the petitioner's death and only the legal representatives could continue the proceedings. The company also argued that Shrimati Sharda Talwar did not have the requisite shareholder consent as per section 399 of the Act. The court examined whether the petition abated upon the petitioner's death and if the transposition of Shrimati Sharda Talwar was valid.
The court analyzed the provisions of sections 397, 398, and 399 of the Companies Act, 1956. It was highlighted that even a single member, with consent from others holding one-tenth of the share capital, could make an application under section 399. The court considered the concept of constructive petitioners and the representation of consenting shareholders in such petitions. It drew parallels from cases related to representative suits under the Code of Civil Procedure to determine the applicability of the principle in the present case.
The court referred to various legal precedents to establish that proceedings in representative suits do not abate upon the death of the original petitioner. It emphasized that the proceedings under sections 397 and 398 of the Companies Act were brought for the benefit of all consenting members, not solely for the individual petitioner. Therefore, the court held that Shrimati Sharda Talwar was constructively a petitioner and entitled to continue the proceedings without the need to bring on record the ordinary legal representatives of the deceased petitioner.
Regarding the company's contention that the transposed petitioner must fulfill the requirements of section 399, the court relied on a Supreme Court decision to assert that the petition's validity is judged based on the facts at the time of its presentation. The court concluded that since Shrimati Sharda Talwar was constructively a petitioner from the beginning, she was not required to meet the same conditions as a new petitioner. Therefore, the court affirmed the single judge's decision, dismissing the company's appeal and leaving the parties to bear their own costs.
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1973 (2) TMI 67
Issues:
- Application for winding up of a company under section 439 of the Companies Act, 1956
- Allegations of fraudulent accounts, mismanagement, and suspension of business
- Dispute regarding notice of the meeting for winding up resolution
- Circumstances under which a company may be wound up
- Appointment of official liquidator and further proceedings
Analysis:
The judgment pertains to an application for winding up a company under section 439 of the Companies Act, 1956. The petitioner, a company established for manufacturing trunks, suitcases, and enamel products, alleged fraudulent activities by the ex-managing director, including furnishing fictitious accounts and not handing over company records. The company suspended business in November 1964 and, subsequently, passed a special resolution for winding up in June 1971. The ex-managing director denied the allegations, claiming official interference and mismanagement by other directors. The petitioner refuted these claims, stating the company lacked assets, funds, and goodwill due to misappropriation and mismanagement. The court considered the circumstances for winding up as per section 433 of the Act, including suspension of business for over a year and just and equitable grounds. It found mismanagement and lack of practical remedies, leading to the decision to wind up the company, supported by a special resolution. The court ordered the appointment of the official liquidator to take charge of company assets, serve notice, and advertise the winding up order in local dailies. Costs were to be paid from the company's assets, concluding the judgment.
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1973 (2) TMI 57
Issues Involved:
1. Definition of the term 'hank' in relation to cotton yarn.
2. Whether notification dated 16th February 1963 (Annexure 'B') is a clarification or an amendment with retrospective effect.
Detailed Analysis:
Issue 1: Definition of the term 'hank' in relation to cotton yarn
The petitioners argued that the term 'hank' was understood to mean yarn irrespective of its length on a particular hank or the type of reel. They contended that prior to the notification dated 16th February 1963 (Annexure 'B'), there was no specific length assigned to the term 'hank' in any notification, and thus, yarn in hanks was cleared without imposition of excise duty if it was less than 17 counts. The petitioners further argued that the term 'hank' did not embrace any measure of length, and the executive instructions issued in October 1962, which assigned a length of 768 meters to the term 'hank', were unjust.
The department countered this by stating that the term 'hank' in relation to cotton yarn has always meant a reeled length of 840 yards (768 meters). They supported their argument by citing various dictionaries and technical manuals which defined 'hank' as a coil or skein of 840 yards. The department maintained that this definition was well understood in the textile industry and had attained the significance of a term of art due to long usage.
The court found considerable force in the department's contention, noting that the petitioners themselves had admitted in their gate passes that the normal length of a hank was 840 yards. The court referred to various dictionaries and technical manuals which consistently defined 'hank' as a reeled length of 840 yards. Thus, the court concluded that the term 'hank' as understood in the textile trade and industry, as well as in ordinary parlance, means a hank which does not contain more than 768 meters or 840 yards.
Issue 2: Whether notification dated 16th February 1963 (Annexure 'B') is a clarification or an amendment with retrospective effect
The petitioners contended that the notification dated 16th February 1963 (Annexure 'B') was an amendment to the earlier notification dated 15th September 1962 (Annexure 'A') and could not be given retrospective effect. They argued that since the term 'hank' was not defined in the earlier notification, the subsequent notification which defined 'hank' as not containing more than 768 meters of yarn was an amendment and not a clarification.
The department argued that the notification dated 16th February 1963 (Annexure 'B') was merely a clarification to make explicit the meaning commonly assigned to the term 'hank' in the textile industry. They asserted that the term 'hank' had always been understood to mean a reeled length of 768 meters, and the notification did not impose any new duty but simply clarified the existing understanding.
The court agreed with the department's argument, stating that the term 'hank' was fairly understood in the commercial community and the textile industry to mean a reeled length of 768 meters. The court noted that the petitioners themselves had represented to the Central Board of Excise and Customs that the term 'hank' was never defined in any of the notifications. The court concluded that the notification dated 16th February 1963 (Annexure 'B') was issued to remove any doubt about the meaning of the term 'hank' and did not purport to impose any duty with retrospective effect. Therefore, the court held that the notification was a clarification and not an amendment.
Conclusion:
The court dismissed the writ petition with costs, holding that the term 'hank' means a reeled length of 768 meters (840 yards) and that the notification dated 16th February 1963 (Annexure 'B') was a clarification and not an amendment with retrospective effect.
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1973 (2) TMI 56
Issues Involved:
1. Applicability of Section 178A of the Sea Customs Act.
2. Contravention of principles of natural justice.
Detailed Analysis:
1. Applicability of Section 178A of the Sea Customs Act:
The petitioner challenged the applicability of Section 178A of the Sea Customs Act, arguing that the statutory presumption under this section could not be drawn against him. Section 178A places the burden of proof on the person from whose possession the goods were seized to prove that they are not smuggled goods. The court clarified that the reasonable belief of the Customs Officer must be entertained either before or at the time of seizure. It was held that the circumstances leading to the seizure, including the secret information about Sohan Lal's activities and his suspicious behavior, provided adequate grounds for the customs authorities to entertain a reasonable belief that the gold was smuggled. The court found that the customs authorities had a reasonable belief at the time of the seizure, which was confirmed by Sohan Lal's statement. The court rejected the petitioner's contention that the presumption under Section 178A could only be raised against Sohan Lal and not against the petitioner, citing the Supreme Court's observation in Babulal Amthalal Mehta v. Collector of Customs, Calcutta, which allows the presumption to be applied to all persons connected with the smuggled goods. Therefore, the court held that the presumption under Section 178A was rightly applied, and the petitioner failed to discharge the onus placed on him.
2. Contravention of Principles of Natural Justice:
The petitioner contended that the customs authorities collected evidence behind his back, violating the principles of natural justice. However, the court found no merit in this contention. The main grievance was against the admissibility of Sohan Lal's statement, which was repelled by both the Collector and the Board of Revenue. The petitioner did not raise any other grievance about evidence being collected behind his back before the customs authorities or in the writ petition. The court noted that the petitioner had not made any grievance about this issue before the Board of Revenue in appeal, nor was it discussed in the Board's order or the Central Government's impugned order. The court rejected the petitioner's contention, finding it vague and misconceived, and noted that the Collector of Customs denied on oath that any material was gathered behind the petitioner's back. The court concluded that there was no substance in this contention and rejected it.
Conclusion:
The writ petition was dismissed, with the court holding that the presumption under Section 178A of the Sea Customs Act was rightly applied, and the petitioner failed to discharge the onus placed on him. The court also found no contravention of the principles of natural justice in the customs authorities' proceedings. The parties were left to bear their respective costs.
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1973 (2) TMI 55
Issues Involved:
1. Taxability of the yarn as "Cotton Twist."
2. Whether the suit is barred by limitation under Section 40(2) of the Central Excises and Salt Act, 1944.
3. Entitlement to interest pendente lite and future interest.
Detailed Analysis:
1. Taxability of the Yarn as "Cotton Twist":
The appellant argued that the multiple fold yarn should be classified as "Cotton Twist" and thus subject to excise duty. The court examined the definitions provided in the "Mercury" Dictionary of Textile Terms and other relevant literature. The court noted that a multiple fold yarn remains a yarn and does not transform into "Cotton Twist" merely because it is twisted. The court emphasized that "Cotton Twist" is not a recognized term in textile terminology and that the multiple fold yarn is still considered yarn. The court also relied on the testimony of P.W. 2 Bhawani Shanker, a textile expert, who confirmed that multiple fold yarn is still yarn and not "Cotton Twist." The court concluded that the multiple fold yarn falls under the category of yarn and not "Cotton Twist," thus supporting the plaintiff's claim for exemption from excise duty.
2. Limitation under Section 40(2) of the Central Excises and Salt Act, 1944:
The appellant contended that the suit was barred by limitation under Section 40(2) of the Central Excises and Salt Act, 1944, which prescribes a six-month limitation period for suits related to actions done under the Act. The court examined the interpretation of the phrase "anything done or ordered to be done under this Act." The court referred to various precedents, including ILR (1964) 14 Raj. 847, AIR 1958 Pat. 439, and AIR 1967 A.P. 338, which held that actions taken without jurisdiction or illegally cannot be considered as done under the Act. The court concluded that the illegal recovery of tax does not fall under the ambit of Section 40(2) and thus, the suit was not barred by limitation.
3. Entitlement to Interest Pendente Lite and Future Interest:
The respondent filed a cross-objection seeking interest pendente lite and future interest. The court noted that the trial court had not provided any reasons for denying interest from the date of the suit to the date of realization. The court held that the plaintiff was entitled to interest pendente lite at the rate of 6% per annum from 20-9-1963 to 27-1-1966, as the amount was illegally recovered and the plaintiff was deprived of its use during the pendency of the suit. However, the court did not see any ground for awarding interest after the date of the decree since the decretal amount had been realized in full and no obstruction was placed by the defendant in the execution of the decree.
Conclusion:
The appeal was dismissed with costs, and the cross-objection was partly allowed to the extent of awarding interest pendente lite at the rate of 6% per annum from 20-9-1963 to 27-1-1966.
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1973 (2) TMI 54
Issues Involved:
1. Definition of "Factory" under Section 2(e) of the Central Excises and Salt Act, 1944.
2. Interpretation of "Worker" under the Notification dated April 18, 1955, read with the Trade Notice dated May 2, 1958.
3. Applicability of Excise Duty on electric batteries manufactured by the petitioner company.
4. Validity of the order dated April 3, 1965, and the demand notice dated July 2, 1965.
Detailed Analysis:
1. Definition of "Factory" under Section 2(e) of the Central Excises and Salt Act, 1944:
The trial court held that the term "Factory" as defined under Section 2(e) of the Act includes the whole of the ground floor of Shree Pant Bhavan. However, the appellate court found it unnecessary to decide on this finding, noting that the petitioner company did not accept the correctness of this view. The court proceeded on the assumption that the entire ground floor constituted a factory within the meaning of the Act.
2. Interpretation of "Worker" under the Notification dated April 18, 1955, read with the Trade Notice dated May 2, 1958:
The Notification dated April 18, 1955, exempted electric batteries produced in any factory employing not more than five workers from excise duty. The Trade Notice dated May 2, 1958, clarified that the term "worker" should be interpreted as per Section 2(1) of the Factories Act, 1948. The trial court ruled that "workers" should refer only to those employed in the manufacturing process of excisable goods, i.e., batteries. The appellate court agreed with this interpretation, rejecting the broader definition argued by the Excise Authorities that included all workers engaged in any manufacturing process within the premises.
3. Applicability of Excise Duty on electric batteries manufactured by the petitioner company:
The Excise Authorities contended that all workers employed in any manufacturing process within the premises should be counted to determine the applicability of the exemption. They argued that the petitioner company was liable for excise duty as the total number of workers exceeded five when including those involved in motor car repairs and recharging batteries. The appellate court disagreed, stating that only workers involved in the manufacturing process of excisable goods (batteries) should be considered. Since no more than four workers were employed in the battery assembling section, the company was entitled to the exemption.
4. Validity of the order dated April 3, 1965, and the demand notice dated July 2, 1965:
The trial court set aside the order dated April 3, 1965, and the demand notice dated July 2, 1965, and issued a Writ of Mandamus directing the return of the seized batteries without demanding excise duty. The appellate court upheld this decision, concluding that the Excise Authorities erred in their interpretation of the Notification and Trade Notice. Consequently, the batteries manufactured in the assembling section were exempt from excise duty, and the impugned order and demand notice were invalid.
Conclusion:
The appeal was dismissed with costs, affirming the trial court's decision that the petitioner company was entitled to exemption from excise duty under the Notification dated April 18, 1955, read with the Trade Notice dated May 2, 1958. The court emphasized the importance of interpreting "worker" and "manufacturing process" in the context of excisable goods, thereby limiting the scope to workers directly involved in the production of such goods.
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1973 (2) TMI 53
Issues Involved:
1. Whether printing and lacquering of extruded shapes and sections or tubes and pipes of aluminium is liable to payment of duty under the Central Excises and Salt Act, 1944.
Issue-wise Detailed Analysis:
1. Whether printing and lacquering of extruded shapes and sections or tubes and pipes of aluminium is liable to payment of duty under the Central Excises and Salt Act, 1944:
The petitioner, a company incorporated under the Companies Act, 1956, had been manufacturing extruded aluminium collapsible tubes and held a license for manufacturing extruded shapes and sections. After surrendering its license in April 1970, the petitioner began purchasing plain tubes and containers from the market and engaged in printing and lacquering them. The Central Excise authorities questioned whether the petitioner had ceased all manufacturing operations, including incidental processes like printing and lacquering. The petitioner contended that no Central Excise duty was applicable on such processes and requested a hearing if the authorities disagreed. Subsequently, the Superintendent of Central Excise issued a notice requiring the petitioner to obtain a Central Excise L-4 license, asserting that printing and lacquering were incidental to the manufacturing process of extruded tubes and pipes. The Assistant Collector of Central Excise dismissed the petitioner's appeal against this notice.
The court examined Section 3 of the Central Excises and Salt Act, 1944, which is the charging section for excise duty on excisable goods, defined in Section 2(d) of the Act. Item 27 in the First Schedule specifies aluminium and sub-item (e) includes "extruded shapes and sections including extruded pipes and tubes." The respondents argued that printing and lacquering of duty-paid plain extruded tubes were covered by sub-item (e) of Item 27. However, the petitioner contended that this sub-item did not apply to the printing and lacquering of duty-paid extruded tubes.
The court noted that the petitioners were purchasing duty-paid plain extruded tubes and only printing and lacquering them, which did not involve any further process of extrusion. The court emphasized that extrusion refers to the process of forming a tube from a metal slug or dump, which had already been applied by the original manufacturers. Therefore, printing and lacquering did not constitute a manufacturing process under sub-item (e) of Item 27.
The court also analyzed the definition of "manufacture" in Section 2(f) of the Act, which includes any process incidental or ancillary to the completion of a manufactured product. The court concluded that printing and lacquering were not incidental or ancillary to the completion of the manufacture of plain extruded tubes, as these tubes were already marketable commodities. The processes of printing and lacquering were independent of the manufacturing process and were aimed at enhancing the salability of the tubes, not completing their manufacture.
The court referred to several Supreme Court decisions to support its conclusion. In South Bihar Sugar Mills v. Union of India, the Supreme Court held that "manufacture" implies a change that results in a new and different article with a distinctive name, character, or use. Applying this test, the court found that printed and lacquered extruded tubes did not have a distinctive name, character, or use compared to plain extruded tubes. Both types of tubes served the same purpose and had the same characteristics, thus not constituting a new substance.
In Allenbury Engineers Pvt. Ltd. v. Ramkrishana Dalmia, the Supreme Court reiterated that "manufacture" requires a transformation resulting in a new and different article. The court found that printing and lacquering did not bring about such a transformation in the extruded tubes.
In Union of India v. Delhi Cloth and General Mills and Co. Ltd., the Supreme Court emphasized that manufacturing involves creating a new substance, not merely producing a change in an existing substance. The court found that printing and lacquering did not create a new substance but merely changed the form of the extruded tubes.
In Union of India v. Hindu Undivided Family Business known as Ramlal Mansukhrai Rewari, the Supreme Court held that excise duty could be levied at different stages of manufacturing if specified by the legislature. However, the court found no such intention in Item 27 to levy duty on both plain extruded tubes and printed and lacquered tubes.
Based on these analyses, the court concluded that the petitioner was not liable to obtain a license under Section 6 of the Act for printing and lacquering plain extruded tubes of aluminium. The impugned notice and order were deemed void and ultra vires, and a writ of Certiorari was issued to quash them, along with a writ of Mandamus directing the respondents to desist from enforcing them against the petitioner. The petition was allowed with costs.
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1973 (2) TMI 52
Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the house property in Avanashi Road ,Coimbatore, is not liable to estate duty as property deemed to pass on the death of the deceased under section 10 of the Estate Duty Act, 1953 ?
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Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the sum of ₹ 1 lakh gifted by the decreased to his sons in 1953, is not liable to estate duty as property deemed to pass on the death of the deceased under section 10 of the Estate Duty Act, 1953 ?
Held that:- Neither the property gifted to the donees, nor the amount of Rs. one lakh gifted to the five sons, could be included in the estate of the deceased. The appeal is accordingly dismissed
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1973 (2) TMI 51
Issues Involved:
1. Discretionary power of the Commissioner under section 18(2A) of the Wealth-tax Act.
2. Timing and validity of notices issued under section 17 of the Wealth-tax Act.
3. Interpretation of the term "issue" in section 18(2A) of the Wealth-tax Act.
4. Requirement of notice under section 14(2) of the Wealth-tax Act.
5. Administrative vs. quasi-judicial nature of the Commissioner's order under section 18(2A).
Comprehensive, Issue-wise Detailed Analysis:
1. Discretionary Power of the Commissioner under Section 18(2A) of the Wealth-tax Act:
The petitioner argued that the Commissioner's power under section 18(2A) is discretionary but must be exercised if the conditions for its exercise exist, as the power is coupled with a duty. The court agreed, stating that the power conferred under section 18(2A) is for the benefit of the assessee, and if the circumstances calling for its exercise exist, the Commissioner cannot refuse to exercise it on the ground that it is discretionary. The court cited several precedents, including Goverdhan Lal Jagadish Kumar v. Commissioner of Income-tax and L. Hirday Narain v. Income-tax Officer, to support this view.
2. Timing and Validity of Notices Issued under Section 17 of the Wealth-tax Act:
The petitioner contended that the notices under section 17 were issued after he had filed his returns and were ante-dated. The court found no material evidence to support this claim and dismissed it. The court emphasized that mere declaration of intention to file returns does not amount to full disclosure of net wealth as required by section 18(2A).
3. Interpretation of the Term "Issue" in Section 18(2A) of the Wealth-tax Act:
The petitioner argued that the term "issue" in section 18(2A) should be interpreted to mean "serve." The court agreed, citing judicial interpretations where "issue" has been held to mean "serve," including Sri Nivas v. Income-tax Officer and Banarsi Debi v. Income-tax Officer. The court reasoned that Parliament must have been aware of these interpretations and used the term in that sense. Consequently, the court concluded that a notice cannot be said to have been issued unless it is served, and if an assessee makes a disclosure before a notice is served, he is entitled to the benefit under section 18(2A).
4. Requirement of Notice under Section 14(2) of the Wealth-tax Act:
The petitioner claimed that no notices under section 14(2) were issued to him. The court found no material difference between a notice under section 17 and a notice under section 14(2), as both require an assessee to file a return. Therefore, this contention was dismissed.
5. Administrative vs. Quasi-judicial Nature of the Commissioner's Order under Section 18(2A):
The department argued that the order under section 18(2A) is administrative and not subject to writ jurisdiction. The court found this contention without merit, stating that even administrative orders are amenable to writ jurisdiction if they are contrary to law. The court noted that the impugned order was passed after an oral hearing, making the distinction between administrative and quasi-judicial orders less relevant in this case.
Conclusion:
The court allowed the writ petition, quashed the Commissioner's order dated September 7, 1972, and directed the Commissioner to restore the petitioner's application under section 18(2A) and decide it afresh in accordance with the law and the court's observations. The petitioner was awarded costs.
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