Jharkhand asked to refund Rs 54.5 cr

LEGAL DIGEST

The Supreme Court last week upheld the the Jharkhand High Court order asking the state government to refund Rs 54.5 crore to Tata Cummins Ltd collected from the company by way of sales tax. The high court had also ruled that the company was entitled to the benefit of the Industrial Policy 1995 and the notifications issued under it.

The Bihar government, in that year, had announced incentive schemes for new industries. New units were allowed the facility of either set-off or exemption at their choice, of sales tax on purchase of raw materials.

The company applied to the new Jharkhand government claiming the benefits under the notifications. It was rejected. The company moved the high court, which allowed its petition, stating among other things that it had invested Rs 302 crore in its project and paid Rs 600 crore in taxes.

Upholding this ruling, the Supreme Court asked the state government to adjust the refundable amount towards the sales tax liability.

Central excise asked to show restraint

The Supreme Court last week asked the central excise authorities not to send show cause notices to assessees indiscriminately.

In this case, Hindustan Poles Corporation vs Commissioner of Central Excise, the question was whether the process undertaken by the company for bringing into existence "stepped transmission poles" amounted to manufacture under the Central Excise Act.

The Kolkata authorities maintained that it was a process of manufacture and issued show cause notices. The company moved the Supreme Court. It allowed the appeal and remarked: "The revenue authorities must make serious endeavour to ensure that all those who ought to pay excise duty pay, but in the process they must refrain from sending indiscriminate show cause notices without proper application of mind. This is absolutely imperative to curb unnecessary and avoidable litigation in courts leading to unnecessary harassment and waste of time of all concerned including tribunals and courts."

Maruti Udyog wins case

Maruti Udyog Ltd won its appeal in the Supreme Court against the ruling of the Jammu and Kashmir High Court directing it to replace a defective car.

In Maruti Udyog Ltd vs Susheel Kumar, the buyer found several defects and wanted replacement of the car. The company maintained that according to the warranty, it was bound only to repair the defects. But the high court ordered the company to replace the car and repay the amount received by it as sale price with interest at the rate of 18 per cent with effect from 1996.

The Supreme Court held that since the warranty was clear that the company was liable only to remove the defects, the high court was wrong. But the apex court directed the company to pay the buyer Rs 50,000 for directing him to take the car for repair to a wrong place, thus causing loss of time and money to the buyer.

Re-employment of daily wagers

The Supreme Court last week declared that daily wage employees had no right to be re-employed or to claim benefits on par with regular employees.

But in this case, Avas Vikas Sansthan vs AVS Engineers Association, the court asked the government to "sympathetically consider" absorption of the daily wage earners in future vacancies. They shall not claim past wages or pay protection after re-employment.

In this case, the corporation ran into losses and reduced the staff, leading to litigation. The apex court stated that such measures of economy and streamlining to make establishments efficient were justified.

In such cases, the court cannot direct the employer to continue employing those who have been dislodged.