Chhattisgarh appeal dismissed

LEGAL DIGEST

The Supreme Court last week dismissed the appeal of the Chhattisgarh government which had asserted its right to deduct, at source, the sales tax on work contracts.

It argued that several other states also have similar provisions in their Commercial Tax Acts and it was meant to collect the dues before the contractors disappeared after the work. However, the provision in the Act (Section 35) was struck down as unconstitutional by the high court as well as the Supreme Court.

SC: Criminal case of bounced cheque under NI Act can be compromised

Setting aside conflicting rulings among the high courts, the Supreme Court last week declared that a criminal case of bounced cheque under the Negotiable Instruments Act could normally be compromised and the accused person need not be punished.

In the judgment involving Ryot Seva Sahakari Bank of Karnataka, the accused was sentenced for issuing a cheque without balance in the bank. Later, the drawer and the bank entered into a compromise.

However, the high court did not accept it. On appeal, the Supreme Court stated that under the Act, "there is no reason to refuse compromise between the parties."

Hero Exports appeal allowed

The Supreme Court has allowed the appeal of Hero Exports, Ludhiana, and stated that the income tax department was wrong in disallowing its claim for adjustment of 10 per cent export incentive against indirect cost of trading goods.

The court stated that under Section 80HHC(3)(b) of the Income Tax Act, both direct and indirect costs attributable to such exports have to be deducted from the export turnover to arrive at export profits.

Duty on Fedders Lloyd upheld

The Supreme Court last week dismissed the appeal of Fedders Lloyd Corporation against the ruling of the excise tribunal which had held that the company had evaded excise duty on its split air-conditioners.

The company cleared condensing units from its unit in New Delhi to Mumbai, where it bought cooling units from local manufacturers fabricated on order with motors, etc, supplied by Fedders.

After carrying out quality tests and affixing the brand name 'Fedders Lloyd', the complete unit was sold to customers from their warehouse/godown at Mumbai. Rejecting the argument of the company that there was no 'manufacture' in the process, the court upheld the demand of duty.

Deva Metal's appeal allowed

The Supreme Court has allowed the appeal of Deva Metal Powders Ltd, setting aside the ruling of the Allahabad High Court in a dispute over trade tax on aluminium powder.

The company dealt with aluminium powder. In the original assessment under the Uttar Pradesh Sales Tax Act and the Central Trade Tax Act, it was treated as metal and accordingly charged at the rate of 2.2 per cent. Later, the revenue authorities took the view that the only primary metal could be charged the above rate.

Therefore, they rectified the 'mistake', imposing a higher rate. The Supreme Court stated that "a decision on a debatable point of law or fact or failure to apply the law to a set of facts which remains to be investigated cannot be corrected by way of rectification."

SC: Habitual absenteeism is gross violation of discipline

Habitual absenteeism from work is a gross violation of discipline justifying dismissal, the Supreme Court reiterated in the judgment L & T Komatsu Ltd vs N Udayakumar.

The employee had absented himself 15 times without permission. When he was dismissed after inquiry, he moved the labour court. It found the punishment too harsh and ordered his reinstatement with continuity in service.

On appeal, the Karnataka high court affirmed the labour court's order. The Supreme Court allowed the appeal of the company and upheld the order of dismissal.