Page 25 - Banking Finance September 2019

LEGAL UPDATE

Amalgamated company Consumer Court can't examine Exim policy
cannot be taxed A person who has a claim under a replenishment (REP) licence issued in terms
of the import and export policy is not a 'consumer' and
The Supreme Court has upheld the providing benefits under the terms of the Exim policy is
judgment of not 'service' as defined in the Consumer Protection Act,
the Delhi High
the Supreme Court has stated in its judgment in Minis-
Court in the
try of Commerce vs Vinod & Co. According to the Exim
case, CIT vs policy existing at the relevant time, exporters were en-
Maruti Suzuki titled to a 20 per cent premium on the exports. Later, the scheme was discon-
India. The high court had agreed tinued. The exporter, in this case, requested revenue authorities to pay the
with the decision of the Income Tax premium, which was refused as the scheme was discontinued.
Appellate Tribunal. The tribunal had
held that the assessment made in The exporter moved the Delhi consumer forum, which ordered the government
the name of Suzuki Powertrain India to pay the premium plus compensation for causing mental agony and legal ex-
was a nullity since it had been amal- penses. The authorities moved the state commission and the National Consumer
gamated Into Maruti Suzuki India Commission without success. But in the final appeal, the Supreme Court agreed
and was not in existence. with the authorities and asserted that the exporter could not move the con-
sumer fora. He was not a consumer rite first place and the benefit given to
The Supreme Court dismissed the ap- exporters is not a Service. The government was implementing a policy to pro-
peal of the Commissioner of Income
mote exports and regulate imports. On both counts, the fora were wrong, the
Tax, its judgment asserted that the Supreme Court ruled.
legal question raised in this case had
already been settled. It observed: Electricity theft trial in the fast lane
"Despite the fact that the assessing
A serious offence is normally referred to a sessions court for trial by a magis-
officer was informed of the amal-
gamating company having ceased to trate. But this procedure prescribed in the Criminal Proce-
exist as a result of the approved dure Code need not be followed in, the case of theft or
other offences under the Electricity Act. It has a provision
scheme of amalgamation, the notice
was issued only in its name. The ba- which enables the power authority to move the special
sis on which jurisdiction was invoked court straightaway. In the case of AMCS Swamy vs Mehdi
Agah, a consumer was found tampering with the electricity meter two times
was fundamentally at odds with the
and his power line was, cut off and prosecution initiated against him. He moved
legal principle that the amalgamat-
ing entity ceases to exist upon the the Telangana High Court against the prosecution. The high court quashed the
action, taking the view that the power authority cannot move the special court
approved scheme of amalgamation."
without the case being committed to if for trial by a magistrate. The authority
The judgment stressed that there appealed to the Supreme Court. It set aside the high court judgment; which
should be certainty in matters of tax. means that the consumer will stand trial in the special court set up to deal with
Otherwise, "it will only result in un- power thefts.
certainty and displacement of
settled expectations. There is a sig- Charity dries up after change in IT Act
nificant value which must attach to
Donations to charitable trusts to claim deductions from total income dry up when
observing the requirement consis- the government changes rules. Trusts cannot challenge the new rule; it is the
tency and certainty. Individual affairs donors who have the locus to oppose the withdrawal of the tax benefit, the
are conducted and business decisions Supreme Court stated in its judgment, Prashanti Medical Services & Research
are made in the expectation of con- Foundation vs Union of India. Prashanti charitable trust received donations for
sistency, uniformity and certainty. To three years to build a hospital. Though if received a substantial amount in the
detract from those principles is nei- first two years, a change in rule in the last year almost dried up donations. The
ther expedient nor desirable," the trust challenged the changed rule under Section 35AC of the income Tax Act in
judgment emphasised. the Gujarat High court It dismissed the petition.

BANKING FINANCE | SEPTEMBER | 2019 | 25