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1997 (11) TMI 495
Issues Involved:
1. Refusal to issue Form I-D for tax exemption.
2. Interpretation of the term "set up" under the Orissa Sales Tax Act and Rules.
3. Applicability of S.R.O. No. 789 of 1990.
4. Scope of judicial interpretation and principles of statutory construction.
5. Availability of alternative remedies.
Detailed Analysis:
Issue 1: Refusal to issue Form I-D for tax exemption
The petitioner challenged the refusal by the Sales Tax Officer to issue Form I-D to avail of tax exemption benefits under the Orissa Sales Tax Act, 1947, and the Orissa Sales Tax Rules, 1947. The petitioner argued that its unit was set up during 1990-92 with the first fixed capital investment made in January 1992 and commercial production starting on May 18, 1995. The Sales Tax Officer rejected the application, stating that the unit did not start commercial production within the stipulated period (December 1, 1989 - November 30, 1994) as per S.R.O. No. 789 of 1990.
Issue 2: Interpretation of the term "set up"
The term "set up" was interpreted by the apex Court in Commissioner of Wealth-tax, Madras v. Ramaraju Surgical Cotton Mills Ltd., where it was held that a unit cannot be said to have been set up unless it is ready to commence business. The petitioner argued that the material date for determining when the unit was set up is the date of the first fixed capital investment. The Sales Tax Officer's interpretation that commercial production must start within the stipulated period was challenged as misconceived.
Issue 3: Applicability of S.R.O. No. 789 of 1990
S.R.O. No. 789 of 1990 stipulates that units starting commercial production between December 1, 1989, and November 30, 1994, are eligible for tax exemption. The petitioner argued that the unit was set up after December 1, 1989, and started commercial production thereafter, making it eligible for exemption. The court noted that the notification did not specify an outer limit for the commencement of commercial production, thus supporting the petitioner's claim.
Issue 4: Scope of judicial interpretation and principles of statutory construction
The court emphasized that exemptions should be construed strictly and against the subject in case of ambiguity. However, once it is established that the subject falls within the exemption, a liberal interpretation should be applied. The court referenced several judgments to support this principle, including Collector of Central Excise, Bombay-I v. Parle Exports (P) Ltd. and Union of India v. Wood Papers Ltd.
Issue 5: Availability of alternative remedies
The Revenue argued that the petitioner should have approached the revisional authority instead of filing a writ application. The court acknowledged that similar disputes were frequently arising and that its interpretation would reduce litigation. Thus, the existence of an alternative remedy was considered inconsequential.
Conclusion:
The court directed the Sales Tax Officer to issue Form I-D to the petitioner within two weeks, provided the application was otherwise in order. The writ application succeeded, and there was no order as to costs.
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1997 (11) TMI 494
Issues Involved:
1. Constitutionality of Entry 25 of the Sixth Schedule of the Karnataka Sales Tax Act, 1957.
2. Classification of the activities carried out by the petitioners as either a service contract or a works contract.
3. Applicability of tax under Section 5-B of the Act to the activities of the petitioners.
4. Petitioners' right to appeal against assessment orders and proposition notices.
Issue-wise Detailed Analysis:
1. Constitutionality of Entry 25 of the Sixth Schedule of the Karnataka Sales Tax Act, 1957:
The petitioners argued that Entry 25, which levies tax on processing and supplying photographs, photoprints, and photo negatives, is beyond the legislative competence of the State Legislature. They contended that their activities do not involve a transfer of property in goods but are purely service contracts. The court, however, held that Entry 25 is not unconstitutional. It reasoned that the entry must be read with Section 5-B of the Act, which allows for the levy of tax on the transfer of property in goods involved in the execution of works contracts. The court concluded that the entry does not permit the levy of tax on services rendered but only on the transfer of property in goods, which is permissible under Article 366(29A)(b) of the Constitution and Section 5-B of the Act.
2. Classification of the Activities Carried Out by the Petitioners:
The petitioners claimed that their activities, such as taking photographs and supplying prints, making enlargements from negatives, and preparing positive prints, are service contracts and do not involve the sale of goods. They relied on various judicial precedents to support their claim. The court, however, distinguished the activities into three categories: (1) taking photographs and supplying prints, (2) making enlargements from negatives, and (3) preparing positive prints from negatives. It held that the first category is a service contract, but the second and third categories involve processing and supplying goods, which can be classified as works contracts. The court emphasized that the determination of whether an activity involves a transfer of property in goods must be based on the facts of each case.
3. Applicability of Tax Under Section 5-B of the Act:
The petitioners argued that their activities do not involve the transfer of property in goods and, therefore, cannot be taxed under Section 5-B of the Act. The court rejected this argument, stating that Section 5-B allows for the levy of tax on the transfer of property in goods involved in the execution of works contracts. It further held that the petitioners' activities, particularly in the second and third categories, involve such a transfer and are therefore taxable. The court referred to the Kerala High Court's decision in Bavens v. Union of India, which supported the view that processing and supplying photographs, photoprints, and photo negatives can be classified as works contracts.
4. Petitioners' Right to Appeal Against Assessment Orders and Proposition Notices:
The petitioners did not appeal against the assessment orders or file objections to the proposition notices, as they were challenging the validity of Entry 25. The court granted the petitioners 30 days to file appeals or objections. It directed the appellate authority to consider the appeals on merits without raising any objection regarding the period of limitation. It also allowed the petitioners to urge their contentions on the merits of their claim before the assessing or appellate authority.
Conclusion:
The court dismissed the petitions challenging the constitutional validity of Entry 25 of the Sixth Schedule of the Karnataka Sales Tax Act, 1957. It held that the entry is not unconstitutional and that the petitioners' activities, particularly processing and supplying photographs, photoprints, and photo negatives, can be classified as works contracts and are therefore taxable under Section 5-B of the Act. The court granted the petitioners 30 days to file appeals or objections against the assessment orders and proposition notices.
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1997 (11) TMI 493
Issues Involved:
1. Liability for payment of turnover tax under Section 6-B of the Karnataka Sales Tax Act for the period from April 1, 1991 to August 27, 1991.
2. Validity of reassessment orders and proposition notices under Section 12-A of the Act.
3. Retrospective application of the exemption notification dated August 28, 1991.
4. Binding nature of the circular issued by the Commissioner under Section 3-A of the Act.
Issue-wise Detailed Analysis:
1. Liability for payment of turnover tax under Section 6-B of the Karnataka Sales Tax Act for the period from April 1, 1991 to August 27, 1991:
The petitioners, all dealers in raw silk and silk yarn, were initially exempted from turnover tax based on a circular dated October 1, 1991, issued by the Commissioner of Commercial Taxes. However, the assessing authorities later issued reassessment orders and proposition notices under Section 12-A of the Act, claiming that the tax liability for the period from April 1, 1991, to August 27, 1991, had been escaped. The petitioners challenged these reassessment orders and proposition notices.
2. Validity of reassessment orders and proposition notices under Section 12-A of the Act:
The reassessment orders and proposition notices were issued on the grounds that the petitioners' tax liability for the specified period had been escaped. The petitioners argued that the reassessments were not permissible as the original assessments were made in compliance with the Commissioner's circular, which was binding on the assessing authorities. The court agreed with the petitioners, stating that the reassessment orders and proposition notices were invalid as the original assessments were properly done following the circular instructions.
3. Retrospective application of the exemption notification dated August 28, 1991:
The petitioners contended that the exemption notification dated August 28, 1991, should be applied retrospectively from April 1, 1991, based on the background and circumstances, including the Chief Minister's budget speech and subsequent circulars by the Commissioner. The court, however, did not find it necessary to decide on the retrospective application of the notification, as it accepted the petitioners' second submission regarding the binding nature of the Commissioner's circular.
4. Binding nature of the circular issued by the Commissioner under Section 3-A of the Act:
The court emphasized that the circular issued by the Commissioner under Section 3-A of the Act was binding on all subordinate officers. The circular directed that turnover tax should not be collected from dealers in raw silk and silk yarn from April 1, 1991. The court held that the assessing authorities were bound by this circular and could not reopen the assessments under Section 12-A of the Act. The court cited several precedents, including decisions from the Supreme Court and other High Courts, to support the binding nature of such circulars.
Conclusion:
The court concluded that the reassessment orders and proposition notices issued under Section 12-A of the Act were invalid and quashed them. The original assessments made in compliance with the Commissioner's circular were upheld. The petitions were allowed, and the rule issued was made absolute, with no order as to costs.
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1997 (11) TMI 492
Issues:
Petition seeking refund of penalty with interest under articles 226 and 227 of the Constitution from the State of Punjab.
Analysis:
The petitioner, a private limited company, transported goods from Rajasthan to Ludhiana in 1994, detained by the Excise and Taxation Officer, and released on payment of Rs. 40,000 penalty. An appeal set aside the penalty, leading to a refund order of Rs. 40,000 on March 25, 1995, which the petitioner sought but was not provided. The respondents cited administrative changes for the delay in refund, arguing against interest payment. The Act provides for interest on delayed refunds under section 12(3), (4), and (5), entitling the dealer to interest if not refunded within 90 days, with rates specified. The court noted the delay was unexplained, not falling under the Act's exclusion provisions, and ordered interest payment on the refund amount as per section 12(3) rates. The petition was allowed, directing the respondents to pay interest to the petitioner as specified.
Conclusion:
The judgment addressed the petitioner's claim for refund of penalty with interest, highlighting the delay in refund and the legal provisions under the Act governing interest payments on delayed refunds. The court found the delay unjustified, rejecting the respondents' explanations related to administrative changes. By applying the provisions of section 12 of the Act, the court ordered the payment of interest on the refund amount, emphasizing the importance of timely refund and adherence to statutory requirements.
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1997 (11) TMI 491
Issues Involved:
1. Whether the lathe machines were brought within the local area.
2. Whether the grinding mills qualify as industrial machinery.
3. Whether electrically operated motors can be treated as industrial machinery for tax purposes.
Detailed Analysis:
1. Whether the lathe machines were brought within the local area:
The petitioner contested the assessment of entry tax on lathe machines, arguing they were not brought within the local area. The authorities, after examining the documents, concluded that the lathe machines were dispatched in the name of the petitioner-firm and entered the local areas of Hubli, Mysore, and Shimoga. The Tribunal observed that the petitioner procured orders from customers, placed orders with M/s. Batliboi Engineers Pvt. Ltd., which in turn ordered from M/s. Mysore Kirloskar Ltd. The goods were transported at the petitioner's risk, indicating that the petitioner caused the entry of the goods into the local area. The Tribunal also noted that the petitioner failed to discharge the burden of proof under section 28-A of the Act to show that the goods were not liable to tax. The Court upheld this finding, rejecting the petitioner's contention.
2. Whether the grinding mills qualify as industrial machinery:
The petitioner argued that grinding mills are not industrial machinery as they do not manufacture but only process raw materials like wheat or gram into products like suji, atta, and maida, typically used by housewives. The authorities, however, classified grinding mills as industrial machinery under item 7 of the Schedule to the Act. The Court referred to Explanation III of the Act, which defines industrial machinery as machinery used by an industrial unit for manufacturing or processing goods. The Court concluded that grinding mills, used for processing goods, qualify as industrial machinery. The petitioner failed to provide evidence to the contrary, and the Court upheld the authorities' classification.
3. Whether electrically operated motors can be treated as industrial machinery for tax purposes:
The petitioner contended that electrically operated motors should be classified as electrical goods, not industrial machinery, especially since the levy on electrical goods was removed after March 31, 1983. The authorities assessed the motors as industrial machinery based on their use and capacity. The Tribunal noted that while electrical motors are electrical goods, when sold to industrial units for use as part of industrial machines, they become parts of industrial machinery. The motors in question were of more than 15 h.p. and sold to industrial units. The petitioner did not provide evidence to contradict this classification. The Court upheld the authorities' finding, noting that the petitioner failed to discharge the burden of proof under section 28-A of the Act.
Conclusion:
The Court rejected all the contentions raised by the petitioner, upheld the assessments made by the authorities, and dismissed the petitions. The findings of the authorities were deemed to be questions of fact, not subject to reversal under the Court's jurisdiction. The petitions were dismissed with no costs.
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1997 (11) TMI 489
Whether the turn-over in respect of hides and skins which has once been subjected to tax under the Tamil Nadu General Sales Tax Act, on its purchase at the raw stage, could be taxed again on inter-state sales as tanned or dressed hides and skins?
Held that:- Appeal dismissed. Raw hides and skins and dressed hides and skins are two types of commodities, it must flow therefrom that when the appellants purchased raw hiides and skins on payment of tax they would be liable to pay sales tax in respect of dressed hides and skins and such levy will not fall foul of Section 15 as the two goods are different taxable commodities. In other words the same goods would not have been taxed more than once. In our opinion, therefore the High Court was right in coming to the conclusion which it did, namely, that the sales tax authorities could levy sales tax on the sale of dressed hides and skins and that the provisions of Section 3 of the Tamil Nadu General Sales Tax (3rd Amendment) Act, 1987 are not ultra vires.
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1997 (11) TMI 487
Issues:
1. Levy of interest under section 234A, 234B, and 234C.
2. Treatment of seized cash as advance tax for interest computation.
3. Deduction under Chapter VI-A for investments made.
Levy of Interest under Section 234A, 234B, and 234C:
The dispute centered around the assessment year 1989-90, involving the levy of interest under the mentioned sections. The Assessing Officer had assessed the appellant under section 143(3) and imposed interest. The appellant contended that a sum of Rs. 1,50,000, seized during a search, should be considered as tax paid in advance for interest calculation purposes. The appellant's argument was supported by citing a previous Tribunal decision. The Tribunal, after considering the facts and legal provisions, agreed with the appellant's contention. It held that the seized cash, adjusted against tax liability, should be treated as advance tax, potentially eliminating the interest chargeable under the mentioned sections. The matter was remitted back to the Assessing Officer for appropriate consideration.
Treatment of Seized Cash as Advance Tax for Interest Computation:
During a search and seizure action, Rs. 1,50,000 was seized, and the appellant requested its adjustment against tax liability. The Revenue retained the seized amount as the likely tax liability exceeded the seized cash. The appellant argued that the seized amount should be considered as advance tax payment for interest computation, relying on a Tribunal decision. The Tribunal agreed with the appellant, stating that the seized cash, when adjusted against taxes due, should be treated as advance tax. It directed the Assessing Officer to examine the appellant's claim of no interest under the mentioned sections if the seized amount is considered advance tax.
Deduction under Chapter VI-A for Investments Made:
The Revenue's appeal revolved around the denial of a deduction under Chapter VI-A for investments made by the appellant. The Assessing Officer rejected the deduction, claiming the investments were not from the current year's taxable income. However, the CIT(A) allowed the deduction, noting that the investments were made from earlier years' taxable income. The decision was supported by legal precedents. The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s finding and the legal references provided. Consequently, the appellant's appeal was allowed, and the Revenue's appeal was dismissed.
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1997 (11) TMI 486
Issues:
Demand of duty on Silver Oxide Zinc Batteries supplied to Defence at a lower price compared to another buyer, computation of assessable value based on transaction value, consideration of price of silver, limitation aspect regarding duty payment, suppression of facts, remand for further examination.
Analysis:
1. The appeal involved a dispute over the demand of duty on Silver Oxide Zinc Batteries supplied to the Defence at a lower price compared to another buyer. The appellants argued that the transaction value should be considered for assessing duty, citing Section 4 provisions. They contended that the price charged to the Defence was the correct duty paid as it satisfied all parameters of Section 4(1)(a).
2. The appellant's advocate emphasized that there was no additional consideration for the sale to the Defence, referring to relevant legal precedents to support their argument. They argued that Section 4 does not require computation of cost when the actual price is available, and the duty was correctly paid based on the transaction value.
3. The issue of adopting the price of silver at Rs. 2,500/- per kg was raised, with reference to a Supreme Court decision. The appellant argued that there was a two-way sale involving the life expired batteries, and the assessable value was determined based on the material's value.
4. Regarding the limitation aspect, the appellant claimed that they were clearing goods based on invoice value, and the non-supply of contracts specifying the silver value should not be considered as suppression of facts to evade duty payment.
5. The department argued that the lower price charged to the Defence was due to the supply of life expired batteries, impacting the true cost of the material. They contended that the price should reflect the actual value of the material and not a notional value based on a special arrangement.
6. The Tribunal observed that the price worked out by the appellants based on the lower silver price was not reflective of the true value, as it was a notional value determined by the Defence. The assessable value should be based on open market conditions, not on a special arrangement.
7. Considering the limitation aspect, the Tribunal found that further examination was needed to determine if there was suppression of facts with the intention to evade duty payment. The lower authority's order was remanded for a detailed consideration of all relevant factors and an opportunity for the appellants to be heard.
8. The appeal was decided in favor of remanding the matter for a deeper examination of the limitation aspect, ensuring a fair opportunity for the appellants to present their case and address all relevant issues comprehensively.
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1997 (11) TMI 484
Issues Involved:
1. Justification for the order of moratorium.
2. Whether the petitioner was granted an effective post-decisional hearing.
3. Legality of the respondents' rejection of the petitioner's request to function as a non-banking company.
Issue-Wise Detailed Analysis:
1. Justification for the Order of Moratorium:
The petitioner challenged the moratorium order dated 30-9-1996. The High Court of Delhi dismissed the writ petition, and the Letters Patent Appeal was also dismissed. The Supreme Court found no infirmity in the High Court's decision, which allowed post-decisional objections to the draft scheme under section 45(4) of the Banking Regulation Act, 1949. The findings included:
- The petitioner was a "family controlled" bank and was "hardly doing any banking business."
- The moratorium aimed to maintain status quo, and principles of natural justice could be relegated to a later stage.
- The Reserve Bank of India (RBI) provided ample details of the bank's financial position, suggesting a merger in the interest of the bank, its depositors, and RBI's policy.
- The reasons for the moratorium were relevant under sections 45(1) and 45(4) of the Act.
- The petitioner had the right to file objections to the reasons set out in the counter-affidavits.
The Supreme Court did not reverse these findings, indicating that there were valid reasons for the moratorium. The petitioner did not raise objections after the Supreme Court's decision, indicating no grounds existed to challenge the moratorium.
2. Effective Post-Decisional Hearing:
The petitioner was entitled to a post-decisional hearing to file objections against the draft scheme prepared by the RBI. Despite this opportunity, the petitioner did not file objections after the Supreme Court's order dated 31-3-1997. The petitioner's letters dated 17-3-1997, 18-3-1997, and 20-3-1997 were sent before the Supreme Court's decision and were considered by the competent authority before passing the impugned orders. The petitioner's failure to file objections post-Supreme Court decision rendered its grievance about the lack of an effective post-decisional hearing unwarranted and unjustified.
3. Rejection of the Request to Function as a Non-Banking Company:
The Central Government considered and declined the petitioner's request to convert into a non-banking financial company (NBFC) or a non-banking company, citing:
- The Reserve Bank of India Act, 1934, as amended in 1997, did not envisage the conversion of a banking company into an NBFC.
- The petitioner's management did not inspire enough confidence to authorize the setting up of an NBFC or a non-banking company.
- The petitioner had previously failed to convert into an NBFC despite being advised by the RBI.
The petitioner had initially resolved to convert into a non-banking company in 1984 but rescinded this resolution in 1992. The request for conversion was dismissed as a "last-ditch effort to hold on to the non-banking assets in the company." The provisions of section 45A of the 1949 Act, introduced by Act No. 23 of 1997, override section 36A, making the petitioner's request untenable.
Miscellaneous:
The court did not delve into the preliminary objection regarding the maintainability of the writ petition before this court, as it was not seriously pressed by the respondents. The court also addressed the depositors' and locker holders' rights, stating that they must satisfy the bank about their claims to operate accounts or lockers.
Conclusion:
The court found no grounds to interfere with the impugned orders and dismissed the writ petition without any order as to costs.
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1997 (11) TMI 480
Issues Involved:
1. Classification of imported goods under Customs Tariff.
2. Applicability of exemption notifications.
3. Distinction between basic customs duty and auxiliary duties of customs.
4. Judicial precedents and their relevance to the case.
Detailed Analysis:
1. Classification of Imported Goods under Customs Tariff:
The appellant imported a high-frequency induction melting furnace and claimed exemption under Notification No. 187/86-Cus., dated 1-3-1986, arguing that the goods should be classified under Chapter 84 or 85 of the Customs Tariff. However, the Assistant Collector classified the goods under Heading No. 98.01 of the Customs Tariff, which pertains to project imports. This classification was confirmed by the Collector of Customs on appeal. The Tribunal noted that Chapter 98 provides specific treatment for project imports, including machinery and equipment for initial setup or substantial expansion of units, and thus the goods were correctly classified under Heading No. 98.01.
2. Applicability of Exemption Notifications:
The appellant argued that they should be allowed to choose the more beneficial exemption notification. They cited the Madras High Court's decision in Tamil Nadu Newsprint Papers Ltd. v. Appraiser, Madras Customs, which was later overruled by the Division Bench. The Tribunal emphasized that Notification No. 132/85-Cus., dated 19-4-1985, provided a concessional rate of basic customs duty for goods under Heading No. 98.01 but did not extend to auxiliary duties. Notification No. 187/86-Cus., dated 1-3-1986, required goods to fall within Chapters 84 or 85, which was not applicable to goods classified under Chapter 98.
3. Distinction Between Basic Customs Duty and Auxiliary Duties of Customs:
The Tribunal highlighted that basic customs duty and auxiliary duties are distinct. Notification No. 132/85-Cus. only covered basic customs duty, not auxiliary duties. The Supreme Court's decision in C.C.E., Hyderabad v. Vazir Sultan Tobacco Co. Ltd. clarified that special excise duty is separate from duties under the Central Excise Act. Similarly, auxiliary duties of customs are independent and must be considered separately. The Tribunal concluded that once goods are classified under Heading No. 98.01, this classification applies for all purposes, including auxiliary duties.
4. Judicial Precedents and Their Relevance to the Case:
The appellant relied on the Tribunal's decision in Gujarat Steel Tubes Industries v. C.C., Bombay, which dealt with the classification of tools under Chapter 98.06 and their exclusion from certain notifications. However, the Tribunal found this precedent did not support the appellant's argument for dual classification for different duties. The Tribunal reiterated that the goods, once classified under Heading No. 98.01, could not be reclassified for auxiliary duties to benefit from Notification No. 187/86-Cus.
Conclusion:
The Tribunal concluded that the benefit of Notification No. 187/86-Cus. was rightly denied as the goods were classified under Chapter 98 and not Chapters 84 or 85. The appeal was rejected, affirming the classification and the non-applicability of the exemption for auxiliary duties.
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1997 (11) TMI 475
Whether the rearing of the chicks until they become marketable broilers is “manufacture” within the definition of that word in the said Act?
Held that:- Appeal allowed. Referring to the definition of word “rear” in Webster’s Dictionary it is defined to mean, “to breed and raise an animal for use or market”. The definition of “manufacture” under section 2(j) includes any manner of preparing goods. The preparing of any goods for the market is, therefore, for the purposes of this artificial definition, a process of manufacture. Therefore, the appellants are entitled to succeed having regard to the definition of the word “manufacture” in section 2(j) of the Act.
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1997 (11) TMI 468
Issues:
Petition for compulsorily winding up under sections 439(1)(b) and 433(e) read with section 434(1)(a) of the Companies Act, 1956. Determination of liability to pay interest on goods supplied and whether failure to pay interest warrants winding up.
Analysis:
The petitioner-company supplied goods on credit to the respondent-company between 1990 and 1993, amounting to Rs. 9,02,322. Despite notices and statutory demands, a balance of Rs. 7,02,322 remained unpaid. The respondent-company attributed non-payment to power supply restrictions and labor strikes but paid the outstanding amount during the proceedings. The main issue was whether the respondent was liable to pay interest on the debt owed to the petitioner.
The petitioner contended that interest at 21% per annum was due, relying on clauses in invoices. However, the respondent argued for interest at 18% per annum, citing financial difficulties and an agreement for installment payments. The court examined precedents like Stephen Chemical Ltd. v. Innosearch Ltd. and Rashid Leathers (P.) Ltd. v. Super Fine Shin Traders to determine the liability for interest. The court emphasized that winding up requires a definite, ascertained debt, with failure to pay, and not a bona fide dispute. It noted that interest claims in winding up proceedings are distinct from civil suits for recovery.
The court referenced Multimetals Ltd. v. Suryatronics Pvt. Ltd. and highlighted that interest can only be awarded by a civil court, not automatically in winding up proceedings. Without a written agreement for interest, the respondent's partial payment and installment plan indicated acknowledgment of the debt but not the interest claim. The court emphasized that the creditor cannot unilaterally claim interest without a court order, as it remains unascertained until determined by the court.
In conclusion, the court dismissed the petition for winding up, as the respondent's commercial insolvency was not proven. It reiterated that winding up requires a clear debt and failure to pay, not a disputed claim for interest. The court directed each party to bear their own costs, emphasizing the distinction between winding up proceedings and civil suits for interest claims.
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1997 (11) TMI 461
Where the State of Tamil Nadu has already recovered Central sales tax for the same transaction from assessee therefore they are not liable to pay the State sales tax to State of M.P. for the same transaction?
Held that:- It is obvious that if the appeal before the Appellate Commissioner gets decided against the appellants and if the appellants have to file a further appeal before the Board of Revenue, they will have to join all necessary parties for thrashing out this problem before the Board which will adjudicate the dispute between the two States, namely, State of M.P. on one hand and the State of Tamil Nadu on the other hand and under these circumstances, the procedure laid down by this Court in its decision reported in Ashok Leyland Ltd. v. Union of India [1997 (2) TMI 451 - SUPREME COURT OF INDIA] will have to be followed. If such an appeal gets filed before the Board of Revenue and all necessary parties are joined, then the present order of stay will continue on the same terms and conditions till that appeal also is decided by the Board of Revenue after hearing all the parties concerned.
Thus the appellate authority is directed to dispose of the pending appeal as expeditiously as possible.
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1997 (11) TMI 458
Whether the turnover in respect of hides and skins which has once been subjected to tax under the Tamil Nadu General Sales Tax Act, on its purchase at the raw stage, could be taxed again on inter-State sales as tanned or dressed hides and skins?
Held that:- Appeal dismissed. Having come to the conclusion that raw hides and skins and dressed hides and skins are two types of commodities, it must flow therefrom that when the appellants purchased raw hides and skins on payment of tax they would be liable to pay sales tax in respect of dressed hides and skins and such levy will not fall foul of section 15 as the two goods are different taxable commodities. In other words the same goods would not have been taxed more than once. In our opinion, therefore, the High Court was right in coming to the conclusion which it did, namely, that the sales tax authorities could levy sales tax on the sale of dressed hides and skins and that the provisions of section 3 of the Tamil Nadu General Sales Tax (Third Amendment) Act, 1987 are not ultra vires.
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1997 (11) TMI 453
Claim for exemption of purchase tax on wheat purchased from the open market rejected by the commercial tax authority on the ground that the exemption was available only if purchases of wheat were made from the FCI
Held that:- Appeal dismissed. The High Court rightly pointed out that the reliance on the notification dated January 29, 1985 on behalf of the assessee was misplaced because, it was issued under section 4-A of the Act. The Government could grant exemptions to the turnover of a dealer wholly or in part by a notification issued under section 4-A. That, however, did not have the effect of modifying the earlier notification dated July 18, 1979 issued under section 4-B. Therefore, the exemption from purchase tax under section 4-B could only be claimed if wheat was purchased from FCI and not from the open market.
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1997 (11) TMI 452
Whether food served by a hotelier to its boarder or by a restaurant to its customer could not be subjected to sales tax?
Held that:- Appeal dismissed. The Legislature has made a valid classification for the purpose of granting exemption to hotels and to restaurants
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1997 (11) TMI 446
Higher rate of tax payable on groundnut oil - Held that:- Appeal allowed. Clause (a) of entry 24 of the First Schedule to the Andhra Pradesh General Sales Tax Act is declared violative of the provisions of articles 301 to 304 in so far as it imposes a higher rate of tax on groundnut oil or refined oil which has been obtained from groundnuts that have not been taxed under the Andhra Pradesh Act. It is declared that the groundnut oil imported by the appellant from Karnataka for sale in Andhra Pradesh cannot be taxed at a rate higher than the rate prescribed in clause (b) of entry 24 of the First Schedule to the Andhra Pradesh Act.
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1997 (11) TMI 445
Issues:
1. Denial of benefit of Project Import under Tariff Heading 84.66.
2. Appeal before the Commissioner of Customs (Appeals), Calcutta.
3. Interpretation of Tariff Heading 84.66 regarding imported components and raw materials.
4. Verification of facts and evidence presented before the authorities.
Detailed Analysis:
1. The case involved the denial of the benefit of Project Import under Tariff Heading 84.66 to the respondents who imported equipment, machinery, components, and raw materials for manufacturing end-products. The Assistant Commissioner of Customs initially denied the benefit on the grounds that the industrial plant had already commenced production before the import of certain equipment. The respondents appealed this decision before the Commissioner of Customs (Appeals), Calcutta.
2. In their appeal, the respondents explained that they had only partially implemented the project, with trial production started for some varieties of hose assemblies. They highlighted that they had not yet produced high-pressure hose assemblies, which required imported components, including testing machinery. The Commissioner (Appeals) ruled in favor of the respondents, stating that the initial setting up of the project would be complete with the import of raw materials and capital goods as per the Import Licenses issued to them.
3. The Revenue appealed against the Commissioner (Appeals) judgment, arguing that the imported component parts of the end-product did not fall under Tariff Heading 84.66 as they were not for the manufacture of the items specified. The Tribunal noted the distinction between different clauses under the Tariff Heading and observed that if the imported components were necessary for the testing machinery, as claimed by the respondents, they could be considered permissible under the Tariff Heading, especially since the import was authorized by licenses.
4. The Revenue also raised concerns about the verification of facts presented by the respondents, suggesting that the matter should be remanded for further verification. However, the Tribunal found that the issue was too old for verification and that there was no rebuttal to the respondents' specific plea regarding the completion of the project. Additionally, the Tribunal noted that the evidence provided by the Director of Industries was not adequately rebutted by the Revenue, leading to the dismissal of the Revenue's appeal.
In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the decision in favor of the respondents regarding the benefit of Project Import under Tariff Heading 84.66 for the imported components and raw materials necessary for the completion of the industrial project.
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1997 (11) TMI 428
Anticipatory bail to the respondent granted - Held that:- Appeal allowed. No doubt that the Division Bench of the High Court has gone ostensibly wrong in passing the impugned order. When perusing the files concerning the allegations against the respondent (which the Directorate had made available to us) we strongly feel that any further loss of time would further impair the effectiveness of the inquiry and/ or investigation into those allegations. Considering the nature and seriousness of the allegations as well as the largeness of the amount involved no doubt that the order granted by the City Sessions Judge should not remain alive.
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1997 (11) TMI 427
Issues: Winding up of a company under sections 433(e) and 433(f) of the Companies Act, 1956 due to loss of substratum and inability to carry on business profitably.
Analysis:
The petitioner, a shareholder of the respondent-company, filed an application for winding up under sections 433(e) and 433(f) of the Companies Act, 1956, citing that the company had lost its substratum and could not operate profitably. The petitioner's husband and the managing director of the company provided evidence supporting the claim that the company ceased business since 1985, had significant liabilities exceeding assets, and was unable to pay debts or employee salaries. The absence of balance sheets since 1985 and the auditor resigning due to lack of remuneration further emphasized the company's dire financial situation. The company's legal counsel acknowledged the lack of grounds for the company's survival.
In determining the grounds for winding up, the court referred to legal precedents such as the case of D. Davis and Co. Ltd. v. Brunswick (Australia) Ltd. and Cine Industries and Recording Co. Ltd., emphasizing the importance of assessing whether there is a reasonable hope for the company to trade profitably. Citing Syndicate Bank v. Printers all (P.) Ltd., the court reiterated that when a company's substratum is lost or its business becomes impossible, winding up is considered just and equitable.
Based on the evidence presented and legal principles, the court concluded that the respondent-company's situation warranted winding up. The official liquidator was directed to take charge of the company's assets, recover debts, and serve the winding-up order on the company and its directors. The petitioner was instructed to advertise the winding-up order in a newspaper and provide a copy to the Registrar of Companies within specified timelines. Consequently, the company petition for winding up was allowed.
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