Page 23 - Banking Finance May 2019 N

LEGAL UPDATE

States cannot withdraw Looking for 'substantial question of law'
tax incentives The Supreme Court recently found fault with the Delhi High Court for dismissing
the appeal of the Income tax department at the
threshold itself, with the high court observing that
it did not raise "any substantial question of law".

According to Section 260-A of the Income Tax Act,
the high court can hear appeals against the ruling
of the tax tribunals if they raise important issues.
In this case of the assessment year 1999-2000, between CIT and Nokia India,
the telecom company objected to the notice issued to it by the assessing officer
Denial of fiscal incentives offered to arguing that it was based on "change of opinion". The appellate tribunal agreed
industries set up in certain states to with it, and the high court dismissed the appeal of the department in a short
encourage development and gener- order. The Supreme Court found that there were, in fact, four "substantial ques-
ate employment continues to be a tions" involved. It drafted them and returned the case to the high court for
matter of dispute reaching the Su- reconsideration.
preme Court. In the latest case, Bajaj
Auto Ltd vs Union of India, the two- Supreme Court ruling for Dharmada charity
wheeler manufacturer in If a manufacturer collects money for charitable purposes and the buyer pays it
Uttarakhand challenged the voluntarily, it would not be part of the transaction value
demand of three levies - the Cational of the sale of goods. The payment may have been shown
Calamity Contingency Duty, the Edu- in the invoice along with the price of goods, but the pay-
cation Cess and the Higher Exucation ment, usually called Dharmada, should not automatically
Cess. It cited the exemptions be added to the excise duty, the Supreme Court ruled
granted to special category states, recently in two judgments. There were differences among
including those in the northeast, to various adjudicating authorities down below and even among Supreme Court
claim that it was not liable to pay the judges. So the matter had been referred to a larger bench. The Dharmada charity
three levies. was collected by JSW Steel Ltd while selling pig iron. M/s D J Malpani collected
The high court rejected the claim. Dharmade in the sale of chewing tobacco. The companies have been fighting
On appeal, the Supreme Court their cases for more than a decade with varying results. In the JSW case, the
quashed the state government or- manufacturer lost its argument. The Supreme Court trawled various past judg-
ders, stating that when excise duty ments and gave a definitive answer in these two decisions.
is exempted, the three levies which
are of the same nature also must be Finance company to pay compensation
exempted. Exemption notifications The Supreme Court recently set aside a judgment of the National Consumer
must be given a liberal interpreta- Commission and asked a finance company to compensate
tion, though no violence should be a widow for "unnecessarily dragging her through legal
done to the language used in the law, proceedings on account of its deficiency of service." In
the judgment clarified. this case, Ashatal vs Shriram City Union Finance Ltd, a
The court has been passing such person took a loan from the finance company. the loan
judgments in favour of industries was secured through an insurance policy issued by a sister company of the fi-
which had established units in the nance company. After paying the first installment and insurance premium, the
person died. The company demanded further installments towards the loan. His
northeastern states. After the prom-
ise given to these states a decade wife asked the company to recover the loan through the insurance policy. The
ago, the authorities have been try- company refused to do so. Therefore, the woman moved the consumer court.
ing to withdraw excise benefits on Though the succeeded in the district and state consumer fora, the National
Commission rejected her plea. She moved the Supreme Court. It found fault with
one ground or another.
the National Commission.

BANKING FINANCE | MAY | 2019 | 23