Xerox's sales tax plea dismissed

LEGAL DIGEST

The Supreme Court has dismissed the appeal of Xerox Modicorp Ltd against the judgment of the Karnataka High Court holding that the materials used in the "full service maintenance agreement" and the "spares and service maintenance agreement" were liable for sales tax.

In the first type of agreement, the company took the responsibility for maintaining the machine, including replacement of parts during service.

In the second agreement, the company supplied materials like toners and developers and charged for it. The revenue authorities contended that the spare parts and goods supplied under the service agreements amounted to sale. The company argued that the transfer of goods was an inseverable part of the agreement.

The Supreme Court held that there was transfer of property in tangible goods and duty was payable.

Changes in rules of registration overruled

The Supreme Court last week struck down the amendments made by the Rajasthan government to the Registration Act in the case, State of Rajasthan vs Basant Nahata.

According to the amendment in Section 22-A, the government or its authorities like the registrar could refuse to register a document if they think it is opposed to "public policy".

The judgment asserted that it was not for the executive to decide what is public policy. Even the power of the judiciary in this field is very limited, the court said.

Court upholds UP vehicles' clause

The Supreme Court has upheld a provision in the UP Motor Vehicles Taxation Act by which vehicles from other states found plying in the state without paying additional tax under the Act would be charged a penalty ten times the tax due.

Earlier, the Allahabad High Court had struck down the rule as violative of the Constitution.

On the state's appeal, the Supreme Court quashed the high court ruling. The state argued that the tough action had to be taken in view of the huge evasion of tax by the vehicle owners. The state has a vast boundary.

The drivers carried drafts in their pockets and they paid the tax only when apprehended on the excuse that there was a shortage of collection centres. The Supreme Court found substance in this argument and allowed the appeal.

Plea against power board turned down

The Supreme Court last week dismissed the appeal of Amit Products (India) Ltd against the Bombay High Court judgment which had held that the company was seeking a new electricity connection under a new name without clearing the arrears under the old name.

The Maharashtra State Electricity Board had rejected the application of the company for electricity connection on the ground that its earlier version, Amar Amit Jalna Alloys Ltd, had not cleared its arrears.

The company contended that the directors were different and the shareholding had changed.

Upholding the high court judgment, the Supreme Court said that by changing the members of the board of directors or by changing the shareholding pattern, the new company could not avoid its liability. They are not really different entities, the Supreme Court ruled.

Disciplinary body's decision upheld

The Supreme Court observed last week in the case, V Ramana vs Andhra Pradesh State Road Transport Corporation, that courts should not interfere in the finding of the disciplinary authority in an establishment unless the decision was "illogical or suffers from procedural impropriety or was shocking to the conscience of the court, in the sense that it was in defiance of logic or moral standards".

In this case, an employee of the transport corporation was dismissed for misconduct after an enquiry by the concerned officer.

The employee challenged his dismissal in the high court, without success. The Supreme Court also dismissed his appeal, clarifying the role of the disciplinary authorities.