SC reprieve for Malviya Chemicals

LEGAL DIGEST

The Supreme Court has dismissed the appeal of the Commissioner of Trade Tax, Uttar Pradesh, and held that M/s Malviya Chemical & Pharmaceutical Ltd, manufacturer of bulk drugs, was entitled to exemption from the state trade tax in respect of the expansion undertaken by it.

The exemption was granted to the extent of 125 per cent of the fixed capital investment, invested by the firm in the extension on the turnover of the goods manufactured in excess of the base production in an assessment year.

The dispute was over whether the turnover has to be taken for the whole of the assessment year or after the date on which the base production was achieved. The authorities took the latter view, while the firm insisted that the whole-year formula was the correct one. The Supreme Court accepted the firm's stand.

SC: Insurance company is not liable more than the indemnity

The Supreme Court has stated that an insurance company should not be burdened with an award which was more than the indemnified amount and then ask it to recover the balance from the insured person.

Allowing the appeal of Oriental Insurance Company in a motor accident case, it reversed the order of the Punjab and Haryana High Court and directed that the insurer shall pay only the committed amount.

Bijli Cotton Mills sent to BIFR

The Supreme Court has asked Bijli Cotton Mills, a unit of the National Textile Corporation, and the UP Power Corporation Ltd to approach the Board for Industrial and Financial Reconstruction (BIFR) once again in their dispute over the demand for late payment surcharge from the sick company.

BIFR will decide whether the surcharge is included in the interest and damage according to the scheme. The mill argues that the late payment surcharge was against the scheme as it had provided for interest and damage.

The Supreme Court has directed that the BIFR order shall be placed before the Allahabad High Court where the mill had moved a petition against the recovery proceedings.

IDL Chemicals appeal dismissed

The Supreme Court has dismissed the appeal of IDL Chemicals Ltd, manufacturers of explosives, against the imposition of sales tax on goods manufactured in Orissa and sent to collieries of Coal India Ltd in different states through its consignment agents against indents placed by the collieries.

IDL contended that its dispatches to other states were stock transfers and not liable to central sales tax. The revenue authorities argued that supplies were made due to the orders placed by CIL and therefore they were inter-state sales from Orissa. The Orissa High Court and the Supreme Court upheld this latter view.

Somaiya Organics case sent to review

The Supreme Court has asked the Central Excise Tribunal to review the case of Somaiya Organics Ltd, which manufactures ethyl alcohol-denatured at its distillery in Captainganj and uses the entire quantity at its chemical factory in Baranbanki. The excise authorities demanded Rs 15 crore as differential duty.

The company argued that the show cause notice to fix the assessable value on the basis of the highest price at which one of the manufacturers sold the goods on a particular day was totally illegal. The Supreme Court found substance in this and asked the tribunal to find out the appropriate ascertainable price.

SEBI appeal admitted

The Supreme Court has admitted the appeal of SEBI challenging the order of the Securities Appellate Tribunal that exempted stock brokers from paying fresh registration fee following change in the brokerage's shareholding pattern.

In the case involving Canny Securities, the tribunal had held that a broker was not liable to pay fresh registration fee after change in its status and constitution.