Govt can modify sales tax concessions

LEGAL DIGEST

The Supreme Court last week set aside the Rajasthan High Court judgment, which had granted concessions in sales tax to two sick cement companies""JK Udaipur Udyog Ltd and JK Synthetics Ltd.

The state government had framed a scheme granting exemption to industrial units from payment of tax on intra-state and inter-state sale of goods and by-products manufactured within the state.

By a later notification, the extent of the percentage of the exemption available to sick units was sought to be corrected. After this correction, the eligibility of the two companies became lower.

They challenged the change in the high court arguing that they were entitled to higher benefits accorded to new units. The high court quashed the amendments and declared that the companies were entitled to the benefits claimed.

The government moved the Supreme Court successfully. The apex court held that the government was competent to modify or revoke grants given earlier, in public interest. The companies have no "indefeasible right to the continued grant of an exception," the judgment said.

Simplify policies, insurance firms told

The Supreme Court last week asked the insurance companies to amend their policies to make the terms simple and meaningful to the public. In the United India Insurance Co vs Harchand Rai case, a person had insured his goods against burglary.

The policy defined burglary as theft using forcible and violent means. When the goods were stolen, the insured sought compensation from the company. It resisted the claim citing the definition and asserting that the theft in question was not accompanied by violence.

The consumer forums did not accept this argument and awarded compensation to the insured. But the Supreme Court overruled them. Though the insurance company won, the court asked it to amend the terms of the policy.

"The present definition is so stringent that it gives rise to a difficult situation for the common man and to understand that to maintain his claim, he will have to show evidence of violence or force. The definition should be close to the realities of life," the judgment pointed out.

Entry tax notice to ACC quashed

The Supreme Court last week quashed notices to Associated Cement Companies (ACC) by the Bihar government for the entry tax on goods.

The government had offered incentives to new units and for additional production in its 1995 industrial policy. In terms of that policy, ACC invested money for additional or incremental production of cement in its Sindri unit, now in Jharkhand.

It claimed exemption for the production, according to the policy. The government denied the exemption. The company moved the Patna High Court, but its petition was dismissed. It moved the Supreme Court and won.

The apex court ruled that the company was entitled to reduction to the extent of tax paid under the Entry Tax Act while working out tax payable by it under the law.

Order on daily wage workers set aside

The Supreme Court last week set aside the Karnataka High Court order asking the state government to reinstate daily wagers employed under a scheme for providing water and building roads. They were engaged in 1993 and terminated in 1996. They argued that they had been working for a number of years and entitled to regularisation.

The labour court set aside the termination and ordered to be reinstated with 50 per cent back wages. The high court upheld it. On appeal (the Executive Engineer vs Digambara Rao case), the Supreme Court overruled the high court and observed: "Completion of 240 days of continuous service in a year may not by itself be a ground for directing an order of regularisation."