The Supreme Court has set aside the judgment of the Allahabad high court on the question of trade tax on aluminium rods as the application of law by revenue authorities differed in the cases of JVM Udyog (P) Ltd and Hindalco, though the products assessed were identical. The court stated that the high court view distinguishing the Hindalco case could not be sustained, as both companies produced the same article. The dispute was whether the process adopted by the companies produced a different, marketable item or whether it was only a raw material for manufacturing other goods. The company in this appeal insisted that the rods had no use in the market except for use as raw material in the manufacture of wires of different sizes. It pointed out that in the Hindalco case, the Supreme Court had held that it was entitled to lower duty as it was not a manufactured product. Moreover, the issue has again come to the apex court for fresh decision under new circumstances. Accepting these contentions, the Supreme Court stated that “two different interpretations of a particular entry by the same authority on the same set of facts, cannot be immunised from the equality clause under Article 14 of the Constitution. It would be a case of operating law unequally.”
Delhi HC lays down rules for transfer pricing provisions
The Delhi High Court last week laid down 11 rules regarding ‘transfer pricing’ provisions for the guidance of income tax officers, as the principle was recently introduced in the statute and was a hot issue in several cases. The guidelines were laid down in the 110-page judgment in the case, Maruti Suzuki India Ltd vs Additional Commissioner of Income Tax Transfer Pricing Officer. The court held that the order of the officer was arbitrary and illegal. He was asked to re-determine the arm’s length price within three months in respect of the international transactions entered into by Maruti Suzuki India Ltd with Suzuki Motor Corporation, Japan, in terms of the provisions contained in Section 92C of the Income Tax Act and in the light of the standards set in the judgment.
Civil courts have no jurisdiction in debt recovery tribunal matters: Bombay HC
The Bombay High Court last week held that that civil courts could not assume jurisdiction in a matter which fell for decision by the debt recovery tribunal. The jurisdiction of the civil court has been expressly barred under Section 34 of the the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Act 2002, the high court emphasised in the judgment, Saraswat Cooperative Bank Ltd vs Madan Jha. In this case, one person took a housing loan from the bank but did not repay it. He also sold the house to another person. The buyer and the bank were caught in litigation in the civil court. The bank moved the high court arguing that the civil court’s role was barred by the Act. This contention was accepted by the high court.
Civil courts should stay away from arbitration: Delhi HC
Civil courts would be well advised to steer clear of the arbitral process, leaving their door ajar to the aggrieved party only for the limited purpose of passing interim orders, appeals and the like, the Delhi High Court stated in its judgment in the case of Handicrafts & Handloom Exports Corporation of India vs Ashok Metal Corporation. The intervention of the civil court under Section 9 of the Arbitration and Conciliation Act should be confined to the domain of interim orders alone, and that too, with a view to ensure preservation of property involved in the dispute. Otherwise, the jurisdiction of the civil court is barred under Section 5 of the Act. The judgment further stressed that “it is not open to the civil court to go into the question of non-existence of an arbitration agreement in a suit for declaration, both in view of the stringent provisions of Section 5 of the Arbitration Act and the power bestowed upon the arbitral tribunal to rule on its own jurisdiction… Any other view would throw open the flood gates of pre-arbitral litigation, and in each and every case the party interested in delaying the arbitration proceedings would effectively resort to a civil suit as an adjudicatory mechanism for adjudging the existence and validity of the arbitration agreement and the jurisdiction of the arbitral tribunal. Needless to say, appeals and counter-appeals would effectively ensure that the entire system of alternative dispute resolution is rendered ineffective, cumbersome, expensive and dilatory.”
