Plastic name plates not products:SC

LEGAL DIGEST

The Supreme Court held last week that plastic name plates are "parts and accessories" of motor vehicles, overruling the view of the Customs & Excise Appellate Tribunal that they are "plastic products" for the purpose of levying the duty.

The argument of the revenue authorities, accepted by the Tribunal, was that a motor vehicle was complete without the affixation of name plates.

Therefore, they could not be treated as a part without which the vehicle was not complete. The Supreme Court ruled that an accessory by its very definition was something supplementary or subordinate in nature and need not be essential for the actual functioning of the product.

Name plates serve a very useful purpose as they identify the brand and model of different vehicles. The judgment was delivered on the appeal of M/s Pragati Silicons Ltd.

Tax reassessment needs rationale: SC

The Supreme Court has emphasised that a sales tax assessment could not be reopened just because the assessing officer has changed his opinion and interpretation of the department's circular. This was stressed in a batch of appeals, Binani Industries Ltd vs Assistant Commissioner.

The companies involved in this case were in the business of leasing machinery, equipment and motor vehicles. Section 5-C of the Karnataka Sales Tax Act dealt with tax on the right to use the goods which was treated as a transfer for the purposes of tax.

There were several circulars and clarificatory notes on this point. The authorities, according to their interpretation of these, reopened the assessment of the companies. They challenged it in the high court, without success.

However, the Supreme Court accepted their contention rejecting the argument of the state government that the authorities could correct their own mistaken impression about the interpretation of the circulars and explanations.

Matsushita's appeal dismissed

The Supreme Court has dismissed an appeal of Matsushita Television & Audio Ltd against the order of the Customs and Excise Tribunal which had ruled that the assessable value of the components of the television were required to be loaded with the cost of royalty payment as, under the agreement, the company had agreed to pay a royalty at 3 per cent on the net ex-factory sale price of the colour receiver manufactured by it and for technical assistance rendered by the Japanese firm, Matsushita Electric Industrial Co.

Karnataka I-T's appeal dismissed

The Supreme Court has dismissed an appeal of the Commissioner of Income Tax against the ruling of the Karnataka high court in the case involving Distilleries Co Ltd. The company was producing industrial alcohol and it had to be matured within 15 days. If it was not possible due to circumstances beyond one's control, special permission had to be obtained.

The company did so and then it claimed deduction for the amount from his gross income. The authorities denied this deduction, contending that it was a penalty. The tax appellate authority held that the amount claimed was neither excise duty nor penalty but additional levy. The High Court and the Supreme Court upheld this view