SC dismisses DCM's appeal on inter-state sales

The Supreme Court last week dismissed the appeal of DCM Ltd and upheld the judgment of the Delhi high court in a case raising the question whether the delivery of chemicals to stockists and distributors made in Delhi was local or inter-state deal. The distributors/stockists of DCM had assigned territories outside Delhi. DCM maintained that they were local sales. 

However, the revenue authorities felt that they were inter-state sales under the Central Sales Tax Act. The Delhi high court held that the sales were inter-state sales and directed the company to show that the chemicals were locally sold by the purchasing dealers and that they were not transferred to branches outside Delhi. The company appealed to the Supreme Court, which dismissed its petition.

Excise on vitamin addition to infant food - Tribunal asked to decide issue

The process of manufacture of infant food by Nestle India has posed a legal question and the Supreme Court has asked the excise tribunal to decide on it. According to the Commissioner of Central Excise, the vitamins added to the infant food themselves are taxable. The activity of mixing the various bought-out vitamins and making the intermixture of vitamins constituted 'manufacture' and, therefore, excise duty was required to be paid on the said intermixture of vitamins. 

Nestle contends that individual vitamins do not undergo any change whatsoever in their chemical or physical properties after mixing. The Supreme Court asked the excise tribunal to sort out this issue before demanding duty from the company.

Insurance not part of value of goods

The Supreme Court held last week in the case, Commissioner of Central Excise vs Accurate Meters Ltd, that transportation charges and insurance could not be considered for determining the value of the goods supplied. The disputed question was whether 'freight' and 'insurance charges' constituted the value of the goods for the purpose of computation of excise duty in terms of the Central Excise Act and the Central Excise Valuation (Determination of Price of Excisable Goods) Rules.

The company is engaged in the manufacture of electric meters. Its customers are mainly state electricity boards. The excise authorities demanded duty on the ground that the sale took place at the buyers' premises and not at the factory gate. This view was held wrong by the tribunal. The authorities appealed to the Supreme Court. It upheld the stand of the tribunal.

Short service period for gratuity held unconstitutional

The Supreme Court last week dismissed the appeal of Grand Kakatiya Sheraton Hotel & Towers Employees against the judgment of the Andhra Pradesh high court which had struck down certain provisions of the state Shops and Establishment Act. The employees were working in the Srinivasa Resorts Ltd of ITC Hotels Ltd. The dispute was about gratuity for those who left employment. 

According to Section 47(3) of the Act, employees who had worked for one year were eligible for gratuity. Further, those who were eligible for gratuity shall be entitled to receive their wages from the date of leaving the job until gratuity is actually paid. These provisions were held unconstitutional by the high court. The employees appealed to the Supreme Court arguing that the provisions were legal. But the Supreme Court rejected their contention stating that one year was not a reasonable period for the entitlement to get the gratuity.

New circular cannot override old arbitration clause

The Supreme Court has set aside the Rajasthan high court order rejecting the request of a contractor, Deepak Bansal, to appoint an arbitrator in his dispute with the Union of India. His tender was accepted for railway work. Later, there was additional work, which was also done by him. However, when the bills were submitted, the government rejected them. 

Therefore he invoked the arbitration clause and moved the high court for appointment of an arbitrator. The government stated that arbitration could not be invoked as the government has issued a circular regarding such tenders. According to the circular, arbitration could be instituted only if the claim was over 20 per cent of the total cost of the work.