Rahejas lose turnover tax plea

LEGAL DIGEST

The Supreme Court last week dismissed the appeal of Raheja Development Corporation which had objected to the levy of turnover tax on the apartments and commercial complexes it built in Bangalore.

The Karnataka high court had upheld the levy against which it unsuccessfully appealed to the Supreme Court.

It had filed 'nil' liability on the footing that there was no transfer of property in goods, either by itself or by virtue of any works contract.

The authorities did not accept this argument and insisted that tax was payable under the state sales tax law as there was transfer of property in goods pursuant to a works contract. The Supreme Court upheld this view, after analysing the provisions of the state law.

SC ruling on bounced cheques

The Supreme Court held last week that a criminal complaint of issuing a cheque without adequate funds in the bank account should be filed within one month of failure to pay the amount.

If the payee presents the cheque again to the bank and it gets bounced, the period of one month would not get extended. The time limit should be strictly adhered to, according to the judgment in Prem Chand vs Yashpal Singh.

The cheque in this case bounced two times, but the payee counted the deadline from the last instance.

Discussing Sections 138 and 142 of the Negotiable Instruments Act, the Supreme Court stated that the period of one month for filing the complaint would be counted from the day immediately following the day on which the period of 15 days from the date of the receipt of the notice by the drawer expired.

Zarda's kimam is liable to excise

The Supreme Court has ruled that the compound 'kimam' used in the manufacture of chewing tobacco under the brand name Tulsi Zafrani Zarda is exciseable, while dismissing the appeal of Dharampal Satyapal against the Commissioner of Central Excise, New Delhi.

The firm was not registered with the excise department and was reportedly producing and clearing the compound without the knowledge of the department.

Therefore, a show cause notice was issued, leading to the appeal.

The Supreme Court stated that the process adopted by the manufacturers showed that the compound in question was a distinct, identifiable product in the market. Therefore, the authorities were right in issuing the show cause notice.

Bottler's ad spend not part of costs

The Supreme Court has ruled that the expenditure incurred on advertising of soft drinks by the bottlers could not be included in the costs of the base essence supplied to them for excise purpose.

In this case (Commissioner of Central Excise vs Parle International Ltd), the bottlers set up Soft Drinks & Advertising Marketing Services Ltd (SAMS) to advertise aerated products manufactured by Parle.

The authorities issued notice to Parle stating that the advertising expenses incurred by SAMS was includible in the assessable costs of the concentrate as it had arrangements with the bottlers to supply it to them.

The Supreme Court, following its 1996 judgment in the case of Pepsi, ruled that the advertising expenses incurred for soft drink products could not be included in the assessable value of the concentrates.