J.G. Engineers Pvt. Ltd. Vs. Union of India & ANR. – The Supreme Court has set aside the judgment of the Gauhati high court and upheld the award of the arbitrator in the dispute over delay in the construction of the extension of the Guwahati airport terminal. The contracted period for completion of the project was 21 months, but it was extended twice. The contractor and the government blamed each other for the delay, and ultimately the government cancelled the contract. The dispute was referred to arbitration and the award was in favour of the construction firm. However, the high court set aside the award, leading to the appeal in the Supreme Court (J G Engineers Ltd vs Union of India). The court held that the contractor was entitled to extension of the period for completion of the work, as the delay was caused by the government. The firm was also entitled to escalation costs for the work done during the extended period. It cannot be imposed penalty for the delay. Moreover, since the delay was caused by the government, it cannot make counter-claims against the firm, the judgment said.
M/s. Bansal Wire Industries Ltd. & ANR Vs. State of U.P. & Ors (Supreme Court) – UP Trade Tax – stainless steel wire is not covered within entry (ix) of clause (iv) of Section 14 of Central Sales Tax Act: the language used in entry no. (ix) is plain and unambiguous and that the items which are mentioned there are “tools, alloy and special steel”. By using the words “of any of the above categories” in entry Nos. (ix) would refer to entries (i) to (viii) and it cannot and does not refer to entry no (xv).
As per the clarification issued by the Commissioner of Commercial Taxes, in exercise of the power conferred on him under Section 28A of the TNGST Act, the benefit of sales tax deferral scheme would be available to a dealer from the date of reaching of BPV or BSV, whichever is earlier. It is trite law that circulars issued by the revenue are binding on the departmental authorities and they cannot be permitted to repudiate the same on the plea that it is inconsistent with the statutory provisions or it mitigates the rigour of the law.
State of Tamil Nadu & ANR. Vs. India Cements Ltd. & ANR. -The Supreme Court last week dismissed the appeal of the Tamil Nadu government which denied sales tax benefits to India Cements Ltd. The high court had held that the cement firm was entitled to the benefit of deferral of sales tax as claimed by it under the interest free sales tax deferral scheme.
The Supreme Court last week ruled that an arbitration clause in a contract would not exclude the power of the high courts or the Supreme Court to decide disputes between the parties. The court thus dismissed the appeal of East Central Railway in the case, Union of India vs Tantia Construction Ltd. In this case, the railway awarded a project to the construction firm. Later, additional work had to be done and the firm was asked to undertake that too, at the cost dictated by the railway. This was resisted by the firm which moved the Patna high court. It stated that the entire work could not be thrust on the firm at its risk and cost. The government appealed to the Supreme Court, arguing that it could vary the nature of the work according to the terms of the contract. The government also argued that the courts could not interfere in the dispute as there was an arbitration clause.
Rallis India Ltd. Vs. Poduru Vidya Bhusan & Ors. (Supreme Court) – When partners of a firm issue cheques which are dishonoured, it is presumed that they were responsible for issuing them unless they prove that they were not in charge of the daily affairs of the firm. They have to discharge the burden during the trial under the Negotiable Instruments Act, the Supreme Court stated in the case, Rallis India Ltd vs Poduru Vidya. In this case, the company filed criminal complaints against three partners. They denied responsibility arguing that they had resigned before the date of the cheques. The Andhra Pradesh accepted their plea and quashed the criminal cases against them. Rallis appealed to the Supreme Court. It set aside the high court judgement and stated that the partners’ denial of responsibility and their status at the time of the issuance of cheques must be tested during the trial. The complaint against them could not be quashed by the high court using its discretionary power.
Citation – REVANASIDDAPPA & ANOTHER VERSUS MALLIKARJUN & OTHERS (SC) – Section 16(3) of the Hindu Marriage Act as amended, does not impose any restriction on the property right of Illegitimate Child except limiting it to the property of their parents. Therefore, such children will have a right to whatever becomes the property of their parents whether self acquired or ancestral.
Glass bottles used by a soft drink company are “fixed capital investment” and are exempted from trade tax, the Supreme Court ruled in the case, Commissioner of Trade Tax, Uttar Pradesh vs Varun Beverages Ltd. However, crates used to carry the bottles are not fixed capital investment, the court added. The argument of the soft drink company was that it was entitled to exemption for all fixed capital investment including land, building, apparatus, components and equipment which are necessary for the establishment and running of the factory. The Allahabad high court agreed with the contention, stating that for the manufacture of soft drinks, bottles and crates are essential equipment, especially in a captive industry where the liquid is prepared and collected by way of a continuous process in bottles and thereafter kept in crates. But the revenue authorities appealed to the Supreme Court. It held that bottles were exempted, but not the crates.
The Supreme Court last week ruled that Industrial Finance Corporation of India is a ‘public financial institution’ under Section 4A of the Companies Act and it was entitled to invoke the Securitisation Act to enforce a “security interest”. Upholding the view of the Delhi high court in the appeal case, Bharat Steel Tubles Ltd vs IFCI, the apex court stated that the conversion of the IFCI into a company did not alter its position and status as a financial institution in view of Section 5 of the Industrial Finance Corporation (Transfer of Undertaking and Repeal) Act. All matters, including all benefits, relating to the corporation, stood wholly transferred in favour of the new company.
Sales Tax – Indirect Tax – U.P. Trade Tax Act, 1948 – Central Sales Tax Act, 1956 – Exemption – Notification No. 1166 dt. 10.4.2000 – Assessee, engaged in the manufacture and sales of various ‘scientific and biological equipments/instruments’, claimed goods sold by it were exempted from tax in view of the notification no. 1166 – Assessing Authority (AO) held that the assessee was not entitled to get exemption under the aforesaid notification and the impugned goods of the assessee were liable to be taxed at the rate of 10% as unclassified goods
