Tax exemption for chemical unit upheld

LEGAL DIGEST

The Supreme Court last week allowed the appeal of Vadilal Chemicals Ltd against the Andhra Pradesh government, which had denied benefits under an incentive scheme announced by it.

The government, in order to attract investment, offered investment subsidy, rebate on electricity charges and a five-year sales tax holiday. Vadilal Chemicals set up a small-scale unit of Rs 1 crore for the production of liquor ammonia and for refilling anhydrous ammonia and started production.

Though the department of industries and commerce had issued eligibility certificate to the unit, the sales tax department sent nine show cause notices after four years taking the stand that refilling did not amount to production.

The company moved the high court without success. On appeal, the Supreme Court ruled that since the department of industries and commerce had issued the unit the eligibility certificate earlier, the sales tax department could not cancel it.

Modvat credit for ropeway

The Supreme Court ruledlast week that Birla Corporation Ltd and other mining companies were entitled to Modvat credit for duty paid on spares of ropeway used for transporting crushed limestone from the mines to the factory.

The Cegat had disallowed Modvat credit on the ground that the ropeway transported raw material from the mines to the factory premises and was not a material handling equipment within the factory premises.

The court pointed out that in two earlier cases, involving JK Udaipur Udyog Ltd and Pepsico India Holdings, the commissioner of central excise had accepted Cegat rulings that the companies were entitled to Modvat credit.

Therefore, he could not turn around now and argue that the companies were disentitled to the benefit. "If we were to permit the authorities to do so, the law will be in a state of confusion and will place the authorities as well as the assessees in a quandary," the judgment said.

Delhi HC judgment overruled

"The employer is free to proceed against an employee in as many departmental proceedings as he considers desirable," the Supreme Court ruled last week in Indian Drugs & Pharmaceuticals Ltd vs R K Shewaramani.

In this case, the employee of the public sector undertaking was transferred, but he did not join the new post. A chargesheet was given for his absence.

While proceedings were pending on that, the board of directors changed the service rules and issued a termination notice. The Delhi high court found this illegal as the first proceeding was already pending. The Supreme Court overruled the high court view.

Excise exemption plea turned down

The Monopolies and Restrictive Trade Practices Commission has awarded compensation of $15,266 for unfair trade practice indulged in by American President Lines Ltd.

Nehas Creations had booked cargo on full-container-load basis for transporting 559 packages to New York.

However, the transporter stuffed the container with consignments of other exporters meant for destination other than New York. Nehas' goods were stuffed first with a view to off-load it last.

Therefore, there was delay in the delivery, payment of penalty, damage to goods and loss of business relationship. The commission allowed the compensation application.