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Maharashtra contract labour issue goes to SC bench

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M J Antony
Last Updated : Jan 20 2013 | 8:04 PM IST

The status of labourers employed by contractors in industries in Maharashtra has again become a point of deep differences among various benches of the Bombay high court and therefore the Supreme Court (SC) last week referred three questions to a larger bench of the apex court for an authoritative decision. The case involved workers of Raymond Ltd in Mumbai. When one of them moved the industrial court under the Maharashtra Recognition of Trade Union and Prevention of Unfair Labour Practices Act, the company denied any relationship with the labourer. Various benches of the high court have taken different stands on the issue of relationship between the employer and such workers. Therefore, the SC framed three questions for the larger bench. The first and main one is “whether a person who is employed by a contractor who undertakes contracts for the execution of any of the whole of the work or any part of the work which is ordinarily work of the undertaking is an employee under the Act?”

Assessee’s contention against sales tax dismissed
The SC last week dismissed the appeal of Hyderabad Engineering Industries against the judgment of the Andhra Pradesh high court ruling that the transactions between several cities constituted inter-state sales, as contemplated under Section 3(a) of the Central Sales Tax Act. The company was part of Jay Engineering Works with head office in Delhi. It has other related companies with different names in different states. The company claimed exemption on a turnover of Rs 8,87,75,643 towards goods transported to out-of-state depots otherwise than as a result of direct sale which would attract tax under Section 6 of the Central Act. It argued, the transactions on which exemptions claimed cannot be regarded as sales in the course of inter-state trade, chargeable to tax under the Central Act. This contention of the assessee was rejected by the high court and the SC.

Appeal against excise appellate tribunal dismissed
The SC last week dismissed the appeal of Hans Steel Rolling Mill against the ruling of the excise appellate tribunal and stated that “importing of elements of one scheme of tax administration to a different scheme of tax administration would be wholly inappropriate as it would disturb the smooth functioning of that unique scheme. The time limit prescribed for one scheme could be completely unwarranted for another scheme and time limit prescribed under Section 11A of the Central Excise Act is no exception.” The court pointed out that the mill availed of the facilities under the Compound Levy Scheme, which they themselves opted for and filed declarations furnishing details about annual capacity of production and duty payable on such capacity of production. The compounded levy scheme for collection of duty based on annual capacity of production under Section 3 of the Act and Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997 is a separate scheme from the normal scheme for collection of central excise duty on goods manufactured in the country, the judgment clarified.

Policy circular of DGFT on textile exports quashed
The Bombay high court last week quashed the office memorandum / press release dated November 11 and policy circular dated December 22 last year as they were not issued under the provisions of the Foreign Trade (Development and Regulation) Act, and, therefore, the restrictions contained in them were contrary to law. The policy circular was issued by the Director General of Foreign Trade. The Central Government for the first time imposed restriction on export of cotton yarn by directing that the contracts for export of cotton yarn shall be registered with the Textile Commissioner prior to shipment and clearance for export of cotton yarn consignments shall be given by customs authorities after verifying that the contracts have been registered. Several textile exporters challenged the restrictions in the case, Eurotex Industries and Exporters Ltd vs Textile Commissioner. The high court ordered that those companies to whom Export Authorisation and Restriction Certificate have not been granted are entitled to seek licence for export of cotton yarn in respect of their contract with the foreign customers.

Clause forfeiting bid security illegal
The Delhi high court last week held that the clause in a tender document for building contract permitting 5 per cent bid security amount to be forfeited in case of a non-responsive bid is “clearly penal in nature and thus provisions of Section 74 of the Contract Act would apply.” It cannot be categorized as a reasonable pre-estimate of damages for a non-responsive bid and thus the bank guarantee for 5 per cent of the bid amount cannot be encashed in such an eventuality. The high court ruled this in the case of IVRCL Infrastructure and Projects Ltd vs National Highway Authority of India. The “request for proposal” submitted by the firm for a road project in Tamil Nadu being responsive, the forfeiture was illegal the firm was entitled to refund of the amount from NHAI, the judgment said.

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First Published: Mar 14 2011 | 12:37 AM IST

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