The Supreme Court last week ruled that land belonging to scheduled castes (SCs) or tribes (STs) cannot be bought by companies and non-Dalits and such transactions are illegal. The Rajasthan High Court had held all along that such sale to a company or body corporate was legal as they were not humans but ‘juristic persons’. On the appeal of the state government, the Supreme Court reversed that view and held that the purchase of SC land by a company, Aanjaney Organic Herbal Pvt Ltd, was not valid. It upheld the refusal by the state authorities to recognise or grant mutation to the purchase of a plot by the company from a person belonging to SC. Section 42 (b) of the Rajasthan Tenancy Act barring such transactions is a “beneficial legislation which takes special care to protect the interest of the members of SC/ST,” the judgment said and explained that the provision is a safeguard against the exploitation of the SC/ST.
Contingency deposit taxable
The Supreme Court has dismissed a tax appeal of Sundaram Finance Ltd, a non-banking finance company engaged in the business of hire, purchase, equipment leasing and allied activities. It has been collecting certain sums as ‘contingency deposit’ from leasing/hire purchase customers to protect itself from sales tax liability. These amounts were collected on ad hoc basis. It did not pay tax on it on the ground that such sums were collected as contingent deposits. It argued that the collection was in anticipation of sales tax liability, which was disputed. The tribunal held it was income. On appeal, the Supreme Court affirmed the decision, and said that the amount collected was part of the turnover and tax should be paid.
Interest on delayed tax refund
A bench headed by the Chief Justice of India has referred an important question in income tax law to a larger bench as an earlier judgment was felt to be incorrect. The question, formulated in the case, CIT vs Gujarat Flouro Chemicals, is whether interest is payable by the revenue department to the assessee if the aggregate of instalments of Advance Tax/TDS paid exceeds the assessed tax. This controversy arises in a number of cases pending before the court, the order said. The company relied on a 2006 case called Sandvik Asia Ltd vs CIT in which interest was ordered to be paid for 17 years’ delay. The present order cast doubts on the correctness of that decision. It maintains that “Section 214 of the Act does not provide for payment of compensation by the Revenue to the assessee in whose favour a refund order has been passed.”
Principal employer to pay PF
The Delhi High Court last week dismissed the appeal of MMTC Ltd and accepted the view of the Regional Provident Fund Commissioner that the employees of the transporter were those of MMTC for purposes of provident fund. MMTC had contended that its transporter was carrying his own business and without the transporter being held a contractor, persons engaged by him will not fall within the definition of the employee in the PF Act. It was a business deal and an agreement which has been entered into between them and followed by other persons from time to time and the workers of the third party could not be held to be the workers of MMTC, it was argued. The high court stated that there was ample evidence to show that the same employees continued with different handling agents/contractors. Therefore the authorities rightly held that MMTC was the principal employer and it was bound to deposit PF contributions in respect of the workers of the contractors.
Honchos saved by unsigned cheque
The Madras High Court last week acquitted the managing director and joint director of a company accused of sending a bouncer cheque because it did not carry the signatures of both the authorised persons. On a complaint under Sections 138 and 141 of the Negotiable Instruments Act, the trial court had sentenced both of them to jail for one year. Their wives and brothers who were directors of the company were also sentenced the same way. On appeal, the sessions court limited the conviction to the company and the top two executives. On further appeal, the high court acquitted all of them because of the defect in the cheque, which was not noticed by the courts below. The judgment in the case, Kavikumar Spinning Mills vs Saravana Traders, said that the cheque was signed only by one of the authorised persons, and therefore it was neither a bill of exchange nor a valid cheque.
Injunction on use of trade name
A division bench of the Delhi High Court last week dismissed the appeal filed by the Morgardshammar India Ltd (MIL) challenging a decree passed by a single judge permanently restraining MIL from using the trade mark, trade name and corporate name ‘Morgardshammar’. The suit was filed by Morgardshammar AB, a subsidiary of the Danieli Group of Italy in 2010 after it learnt of changes in the shareholding pattern in MIL.
