MJ Antony: SC revises tribunal's tyre ruling

LEGAL DIGEST

MRF Ltd, Dunlop India Ltd and CEAT Ltd have to prove afresh to the excise commissioner that the 'dipped tyre cord fabric' is not an independent product in terms of manufacture and marketability, according to three separate judgments delivered by the Supreme Court last month.

The tyre companies say, they did not "manufacture" dipped tyre cord fabric which attracts additional excise duty. In the course of manufacturing tyres, a certain process is used to rubberise the grey tyre cord fabric, they argued.

The commissioner did not accept this explanation and insisted that it was a new product. On appeal, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT, formerly known as CEGAT) upheld the stand of the companies.

The commissioner appealed to the Supreme Court. It ruled that the rubber content is the crucial factor to decide the issue and, therefore, asked the commissioner (Adjudication) to determine the issue on facts.

Convene a GBM, court tells firm

The Supreme Court has directed that an extraordinary general meeting of the shareholders of Baroda Rayon Corporation Ltd be convened on February 26 at Baroda for appointment of directors of the company on the basis of the shares respectively held by them as also the articles of association.

The meeting shall be conducted under the chairmanship of a nominee of the Registrar of Companies. No adjournment motion may be entertained.

The Supreme Court, while dealing with the intricate disputes among the Gaekwad family members regarding the holding of shares in three companies, set aside an earlier judgment of the Gujarat High Court and issued nine directions to sort out the issues.

HC ruling on sales tax forms upheld

The Supreme Court has confirmed the ruling of the Delhi High Court upholding the validity of Rule 8(4)(c) of the Delhi Sales Tax Rules in Commissioner of Sales Tax vs Shri Krishna Engg and other purchasing dealers.

The dealers had argued that the Sales Tax Department had no authority to refuse to issue forms. They had sold goods to registered dealers, who are not being issued the declaration form on the ground that they were in arrears.

Therefore, the purchasing dealers could not claim certain benefits under the Sales Tax Act.

The Supreme Court remarked: "The dealer who has chosen to trust the other dealer must suffer for his mercantile recklessness. This is the risk they run and if for any reason, including a subsequent decision of the Sales Tax Department to withhold the supply of ST-1 forms to a purchasing dealer they are put in an uncomfortable position of having to pay the tax. The state is entitled to its tax where the requisite form is unavailable for any reason."

After deciding the legal issues, the court noted the assurance of the department for the future that if a purchasing dealer applied for Form ST-1 in advance, he would be supplied the form within one week.

'Labour court has limited jurisdiction'

The Supreme Court last week overruled the view of the Andhra Pradesh High Court that the labour court has "unlimited jurisdiction" under Section 11-A of the Industrial Disputes Act.

In this case (Bharat Heavy Electricals Ltd vs M Chandrasekhar Reddy), an employee borrowed house building advance by depositing the deeds of his properties, but later tried to sell it surreptitiously. He was dismissed.

However, after an enquiry confirming the misdeed, the labour court and the high court ordered his reinstatement as it was his first misconduct and he was active "culturally".

The Supreme Court ruled that these were not sufficient grounds for reinstating him when the employer has lost confidence in the worker and the power under the Act was limited.

The power cannot be used arbitrarily, the judgment said.