Vishal exports' case upheld

LEGAL DIGEST

The Supreme Court last week dismissed an appeal of the Commissioner of Customs, Mumbai, who had accused Vishal Exports Overseas Ltd of inflating the price of its export items to get more benefit from the Duty Entitlement Pass Book (DEPB) scheme. The firm exported 4.8 lakh pieces of coffee mugs for $3.40 each.

The commissioner accused the company of wrongly declaring the price and drastically reduced it. It confiscated the goods and initiated penalty proceedings. It also held that the firm was not entitled to any further benefit. The firm moved the Customs, Excise & Gold (Control) Tribunal, which gave a verdict in its favour.

The authorities moved the Supreme Court, without result. The court held that the contention of the authorities that the freight-on-board (FOB) value was 450 per cent more than the purchase value of the goods was unreasonable as there was no evidence on record to support it. The tribunal had also found the price as correctly shown, the court said.

Mounting of chassis to attract tax

The Supreme Court has ruled that mounting of body on chassis of auto-rickshaws amounts to 'manufacture' under the Uttar Pradesh Sales Tax Act. This principle was laid down in the judgment, M/s Kumar Motors versus Commissioner of Sales Tax, Lucknow.

The firm deals in manufacture and sale of auto-rickshaws. It bought bodies from Apollo Builders, a sister concern of Scooter India Ltd, and did not pay the purchase tax. The question involved was whether mounting of bodies of auto-rickshaws on chassis amounted to manufacture under Section 2(e-1) of the Act. The Supreme Court answered the question in the affirmative.

Cranes are not industrial inputs

The Supreme Court has stated that tower cranes used in construction cannot be considered industrial inputs for use either as a component or as a raw material. The court upheld the judgment of the Karnataka High Court in the case, M/s BG Shirke Construction Technologies (P) Ltd versus Additional Commissioner of Commercial Taxes.

The company builds houses, for which it bought tower cranes and availed concessional rate of tax. The assessing authorities decided that the cranes were nothing but machinery and the company's business was not manufacture. So it was not eligible for any benefit. The authorities initiated proceedings against the firm. The latter contended that it was an industrial unit and the machinery bought was used in the manufacture of goods for sale.

Therefore it was eligible for the benefits. The high court ruled that cranes could not be considered as industrial output. Taking the same view, the Supreme Court said: "There is no dispute that a crane is a hoisting machine used to lift and move heavy loads. There are different types of cranes and tower crane is one such which is mostly used to construct high rise buildings. It has been noted by the high court that most tower cranes, also called climbing cranes, have built-in jacks that raise the cranes through openings sin the floor as the building goes up. The cranes are taken apart and lowered after completion of the buildings. As rightly observed by the high court, the tower cranes cannot be considered as industrial inputs for use either as a component part or as a raw material of any other goods."

House deposits liable to interest

The Supreme Court has ruled that a person who booked a flat and withdrew from the housing scheme because of deficiency in service after a long wait was entitled to interest on the deposit.

In this case, Alok Shankar Pandey booked a flat in the central government's housing scheme in Indirapuram, near Delhi, in 1994. He also paid the required instalments. However, as the flat was not ready for five years, he withdrew from the scheme. The government returned only the original amount without interest. Pandey moved the Monopolies and Restrictive Trade Practices Commission alleging deficiency in service.

Dissatisfied with the ruling, the government moved an appeal in the Supreme Court, which stated that this was a clear case of deficiency in service as well as an unfair trade practice. Pandey did not get either the house or interest on the investments he had made. The Supreme Court awarded 12 per cent interest on the deposited amount as well as 12 per cent on the interest calculated.

UP film policy case in HC

The Supreme Court has remanded the case of a film producer who claimed tax benefits for his film under the Uttar Pradesh film policy to the Allahabad High Court.

Under the policy, declared in 2001, the state government had declared several benefits to producers like tax exemptions, tax incentives and subsidies. SK Theatre produced a film after an expert committee approved of the script. It then claimed subsidy.

A government order restricted the subsidy to 25 per cent of the processing charges and not 25 per cent of the total cost of the film. The high court allowed its writ petition. The state government appealed to the Supreme Court, which remanded the case and asked the high court to verify the claim of this producer that others in the same position had been granted 25 per cent of the entire cost of production.