BIC to be revived by March 2005

LEGAL DIGEST

The central government told the Supreme Court last week that the revival scheme sanctioned by the BIFR for public sector British India Corporation would be complete by March 2005 and talks regarding fixation of pay to the employees would be held thereafter. The corporation has two units, Cawnpore Woolen Mills in Kanpur and New Egerton Woolen Mills in Dhariwal.

The employees had moved the Supreme Court through the National Confederation of Officers' Association of Central Public Sector Undertakings for parity in dearness allowance with sick units of the National Textile Corporation. The government had denied this benefit to these employees.

Meanwhile, the case of the BIC was referred to BIFR for revival. The government has now given approval to the revival proposal. The Supreme Court observed that in view of these developments, the employees of the two units would be entitled to the benefits given to the NTC employees. It directed the government to implement the revival scheme as far as the employees are concerned.

Gem Granites' appeal dismissed

The Supreme Court dismissed the appeals of Gem Granites against the Madras High Court judgment, and Mithy Granites against the Karnataka High Court judgment, alleging denial of benefits under the Income Tax Act for export of minerals.

Under Section 80HHC, deductions are given in respect of profits from exports. But it is not applicable to minerals. The exporters in this case contended that though granite was a mineral, they were not exporting it in the raw form but after processing it.

After cutting and polishing, granite ceased to be a mineral. Therefore, they should be given the tax benefit. They referred to certain circulars of the Central Board of Direct Taxes to support their claim.

The Supreme Court rejected their contentions. It conceded that the Customs Tariff Act and the Central Excise Tariff Act drew a distinction between minerals and processed minerals.

However, a classification, which is relevant for determining the rate of duty, could not be imported into the Income Tax Act, which made no such distinction.

SC strikes down Polymat India's plea

The Supreme Court last week dismissed the appeal of Polymat India Ltd against the rejection of its claim from National Insurance Company by the National Consumer Disputes Redressal Commission.

The company had invoked two policies following a fire in which lubricating oil and refined oil kept in the factory premises were destroyed. The insurance company repudiated the claim stating that the goods kept outside the factory, though in the premises, were not covered by the policy. The company moved the commission in vain.

On appeal, the Supreme Court ruled that the definition of factory in the Factories Act did not cover the outside area of the plant. The terms of the policy should be construed strictly.

In the cross-appeal filed by the National Insurance, the Supreme Court ruled that the commission's order to pay the company 75 per cent of the cost of the goods was wrong. It also struck down the order to pay interest and cost of litigation to the company.

UP State Road Transport Corporation wins case

The UP State Road Transport Corporation has won its long-standing dispute with hundreds of bus operators when the Supreme Court upheld the government scheme covering 40 important routes.

The Allahabad High Court had earlier quashed the scheme. The Supreme Court held that the scheme declared under the old Motor Vehicles Act (1939) was valid. The judgment noted the statement of the corporation that it was not able to put in many buses on the routes because of illegal running of buses by private operators.

The latter had alleged that the corporation had not enough buses to ply and the public would suffer. The corporation said that it was now making profit and once the illegal operators are out, they can press in more buses.