The Supreme Court has ruled that a port trust can demand demurrage and other charges from the importer even if the entity was unable to clear goods for no fault or negligence on its part. Even if the Customs authorities had detained the goods, which action was later found to be illegal, the charge must be paid
. The court stated so while setting aside the judgment of the Bombay High Court
in the case, Mumbai Port Trust
vs Shri Lakshmi Steels. The court said neither can any shipping line involved in such an instance be burdened with the detention charge, nor the Customs department.
The judgment explained: “The Customs authorities can be directed to pay the demurrage/detention charges only when it has proved that their action is absolutely mala fide or is such a gross abuse of power that the officials should be asked to compensate the importer for the extra burden which he has to bear. Even if an importer feels that it has been unjustly dealt with, it must clear the goods by paying the charges due and then claim reimbursement from the Customs authority
.” In this case, the high court had stated that the action of two officials was “not bona fide, if not strictly mala fide
.” But the remark did not go beyond that. The high court was held to be wrong in directing the Customs authorities to pay detention charges to the shipping lines.
Maruti R&D centre to get tax benefit
The Delhi High Court
has ruled that Maruti
Suzuki India Ltd was entitled to deduction of expenses for its research & development (R&D) centre at Rohtak. Section 35 (2AB) of the income tax
Act provides for deduction of a sum equal to two times the expenditure incurred for scientific research on in-house R&D facilities as approved by the prescribed authority, which in this case was the Department of Scientific & Industrial Research. The rule is to encourage the establishment of R&D facilities in the country and also to encourage investment in innovation. The company invested Rs 395 crore in the Rohtak project but as it was progressing by stages since 2011 till 2014, the department did not grant the necessary approval for claiming deduction, leading to the petition in the high court. Analysing the facts in the case, the high court directed the department to issue a fresh certification in respect of the expenditure on R&D. It also directed the tax department to give consequential deductions according to Section 35 (2AB).
Even if a motor vehicle
involved in an accident has been transferred to another person, the insurance
company is liable to pay compensation to third parties under the Motor Vehicles Act
and the Workmen’s Compensation Act.
In this case, Firdaus
vs Oriental Insurance
Company, Parvez Khan — who was driving a vehicle — was killed when a truck hit him. The commissioner under the Workmen’s Compensation Act
found that the deceased person was employed by the owner, and he was entitled to compensation. The insurance
company appealed to the Allahabad High Court, arguing that the vehicle had been transferred to another person and therefore it was not liable to pay compensation. The high court accepted the insurance
company’s contention. On appeal by the widow, the Supreme Court
emphasised that “even if it is assumed for the sake of argument that vehicle was transferred to another person there will be no consequence with regard to liability of Oriental Insurance
to pay compensation”. The court further explained it did not matter who owned the vehicle at the time of the accident. Section 157 of the Motor Vehicles Act
was clear on the liability of the insurer, the judgment said, while setting aside the high court judgment.
LIC not liable to pay licence fee
Filling LPG cylinder is ‘manufacture’
The Supreme Court
has dismissed a large set of appeals moved by the Commissioner of Income Tax, Mumbai, ruling that filling LPG
cylinders was an activity in the nature of manufacture or production and therefore was entitled to benefits under Section 80HH and other provisions of the income tax
Act. The revenue authorities had disallowed the deduction claimed by the assesse firms, holding that they did not engage in production or manufacture activity because the gas was produced and manufactured in refineries and thereafter there was no change in the chemical composition or other properties of the gas while filling the cylinder. The dispute went up to the Income Tax
Appellate Tribunal (ITAT), which ruled that LPG
produced in the refineries cannot be directly supplied to households without bottling of the LPG
into the cylinders and it was a complex activity which can only be carried out by experts. The Supreme Court
upheld the view of the ITAT.
Sending ‘free samples’ is part of trade
A firm which engages an agent to carry samples of its products to potential foreign clients, without intention to sell the samples, is outside the purview of the consumer law.
This is so because the samples are sent to promote business and is part of its commercial activity. The Consumer Protection Act
debars individuals who are engaged in commercial activities from moving consumer forums. The National Consumer Commission
stated so in the judgment, TNT India
Ltd vs Lochan Tea Ltd. In this case, the tea company engaged the other firm to carry samples of it tea bags to the US, China and other countries. Some of them were not delivered on time, leading to the tea company moving the consumer forum in Siliguri.
It directed the agent to pay compensation. The West Bengal commission upheld the direction in a terse order. On appeal, the national commission stated that the forums below had not discussed the aspect of commercial activity adequately. It said that though the tea bags were “free trade samples of no commercial value”, they were being sent to expand and promote their sale.