Arbitrartor's award upheld

LEGAL DIGEST

The Supreme Court last week upheld the award of an arbitrator on the claim of Rajasthan State Road Transport Corporation against Indag Rubber Ltd.

The corporation said the retreaded tyres on its buses were not giving the guaranteed kilometerage resulting in losses to the tune of over Rs 1 crore. The company denied its liability, leading to arbitration.

The company challenged the award in the high court, which allowed it. However, the Supreme Court set aside the high court judgment.

Mumbai Customs appeal dismissed

The Supreme Court has dismissed an appeal of the Mumbai Customs and granted the benefit of project import to Toyo Engineering India Ltd.

Indian Farmers Fertilisers Cooperative Ltd entered into a tie-up with the parent company of Toyo, which is a Japanese corporation, for fabricating an ammonia storage package unit on a turnkey basis.

It imported several hi-tech equipment. The Indian company filed an application for project import benefit, which was rejected on the ground that the equipment belonged to the Japanese corporation and its ownership could not be passed on to IFFCL.

They would be used for other projects. This interpretation of the tariff rule was rejected by the appellate tribunal as well as by the Supreme Court.

Refund no excuse for charging tax

In a significant observation, the Supreme Court has said in the judgment, Rapti Commission Agency versus State of UP, that a large number of  unnecessary litigation could be avoided if the authorities did not collect tax on the basis that it would be refunded if the assessee was found not liable to pay it.

Though this case referred to the validity of trade tax charged from agents of principals who were outside UP, the remark was made by the court to remind the legislatures that "it is no solace to say that such person can get refund after completion of the assessment."

Penalty on Duncan set aside

The Supreme Court has set aside a penalty of Rs 1 crore on Duncan Industries Ltd, Kolkata, imposed by the excise authorities, which alleged clandestine removal of goods without assessment.

The court also dismissed the appeal of the revenue authorities against the order of CEGAT which favoured the cigarette manufacturer in a long-drawn-out legal battle lasting over two decades.