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In CWP-11921-2023-PUNJ HC- P&H HC declines to grant any interim relief which would scuttle project of development of Punjab Section of Delhi-Katra Expressway including green field connectivity to Amritsar
Justices Lisa Gill & Ritu Tagore [02-06-2023]

Read Order: DARSHAN SINGH AND OTHERS v. UNION OF INDIA AND OTHERS 


 

Tulip Kanth

 

Chandigarh, June 6, 2023: In a case of land acquisition where the petitioners were unaware of the fact that a supplementary award had already been passed, the Punjab and Haryana High Court has not found any ground to grant any interim relief to scuttle the project namely ‘Development of Punjab Section of Delhi-Katra Expressway including green field connectivity to Amritsar’.

 

The petitioners approached the Division Bench of Justice Lisa Gill & Justice Ritu Tagore contending that residential houses of the petitioners and certain other structures were being demolished without any supplementary award being passed for compensation qua the said structures.

 

NHAI’s Counsel informed that in so far as residential houses were concerned, there was only one residential house of Darshan Singh son of Baldev Singh and the main structure of the house was outside the alignment with only the boundary wall falling in the alignment. 

 

In respect to the boundary wall concerned, supplementary award had been passed by the competent authority and award for structures such as tube-well, bore-well etc.,  stood passed in June/August, 2022 but some of the petitioners had not even set up their claim qua the said structures.

 

The petitioners submitted before the Court that they weren't aware of any supplementary award, which had been passed and neither had they received the compensation thereof. However, they sought to raise other arguments and pleas challenging the very acquisition itself.

 

The Division Bench noted at the current stage, the arguments were addressed qua interim relief.

 

“We do not find any ground whatsoever to grant any interim relief at this stage to scuttle the project namely ‘Development of Punjab Section of Delhi-Katra Expressway including green field connectivity to Amritsar’”, the Bench said while adjourning the matter to July 10, 2023.

 

In W.P. (C) 3428/2023 - DEL HC - Delhi High Court sets aside attachment of Zhudao Infotech's bank accounts under Central Goods and Services Tax Act
Justice Vibhu Bakhru & Justice Amit Mahajan [22-05-2023]

Read Order: Zhudao Infotech Private Limited V. The Principal Additional Director General & Anr.

 

Chahat Varma

 

New Delhi, June 6, 2023: The High Court of Delhi has ruled in favor of Zhudao Infotech Private Limited (ZIPL-petitioner), setting aside the orders that had attached ZIPL's bank accounts under Section 83 of the Central Goods and Services Tax Act (CGST Act). The court held that ZIPL's bank accounts could not be attached for any amount due and payable to the merchants using ZIPL's platform.

 

In the present case, the petitioner operated a payment aggregator platform called 'Onion-Pay' and claimed that its role was limited to processing payments and it was not involved in the supply of any services by the merchants using its platform. The payments received by the petitioner were held in escrow/nodal accounts, and the petitioner was entitled to only a portion of the payments, with the remaining amounts to be paid to the merchants and suppliers. The petitioner argued that the attachment of its bank accounts would effectively shut down its business as it would be unable to operate the online platform.

 

On the other hand, the respondents alleged that the petitioner indulged in GST evasion and supported illegal gambling activities through its online payment gateway. They claimed that ZIPL was involved in supporting illegal gambling products such as ‘Teen Patti’, ‘Roulette’, ‘Ludo’, ‘Matrix 5’ and that the merchants associated with the payment gateway were suspected to be fake and shell companies. Additionally, they alleged that the petitioner had created a network of fake gaming merchant entities, which were operated and managed by the petitioner, with a Chinese national named Jian Li as the director and mastermind of the operation.

 

The bench of Justice Vibhu Bakhru and Justice Amit Mahajan observed that the provisions of Section 83 of the CGST Act can be invoked for attaching the assets and bank accounts of a taxable person or a person specified under Section 122(1A) of the CGST Act, if in the opinion of the Commissioner it was necessary to do so for the purpose of protecting the interest of government revenue.


The court held that a debt owed by an individual to a taxable person, whose assets or bank accounts are liable to be attached under Section 83 of the CGST Act, can indeed be attached as it is considered an asset of that person. However, the court ruled that the bank account of the individual who owes such a debt cannot be subjected to a provisional attachment order under Section 83 of the CGST Act.

 

The court directed that, “ZIPL shall make payments due to various merchants directly in their respective bank accounts as disclosed by ZIPL to the respondents and as recorded in the impugned order dated 01.02.2023. Insofar as the remaining amount of Rs. 69.92 crores is concerned, ZIPL shall transfer the same to its current account.”

In CS(COMM) 471 of 2022 -DEL HC- Delhi High Court refuses to injunct Dabur Hair Oil print advertisement, but restrains Dabur from circulating WhatsApp message or advertisement on Amla Hair Oil during pendency of suit
Justice Navin Chawla [02-06-2023]

Read Order: Marico Limited v Dabur India Limited

 

 

Simran Singh

 

 

New Delhi, June 6, 2023: The Delhi High Court restrained premier company Dabur, manufacturers of diverse range of wellness, healthcare and food products including Dabur Amla Hair Oil, from circulating its WhatsApp advertisement on ‘Dabur Amla Hair Oil’ featuring Bollywood actor Deepika Padukone, during the pendency of the suit.

 

 

The Single-Judge Bench of Justice Navin Chawla, while exercising its civil commercial jurisdiction observed: “Accordingly, the defendant, either directly or through its servants, agents, employees or any other persons working under it, is restrained from circulating the WhatsApp message/Advertisement, during the pendency of the Suit…It is made clear that any and all observations made herein above are only prima facie in nature and should not be considered as a final opinion of the Court or as binding at the time of final adjudication of the Suit.”

 

 

In the matter at hand, Marico Limited (petitioner) alleged disparagement of the goodwill and reputation of its product ‘Nihar Natural Shanti Badam Amla Hair Oil’ and its registered trade mark ‘Nihar’ and consequently preferred an application, praying for strict action against Dabur (respondent) for making a false statement and for revival of the ad-interim injunction to restrain Dabur from circulating or forwarding its WhatsAp Advertisement or Print Advertisement on Amla hair oil.

 

 

The Court observed  that In view of the above, I find that while the plaintiff has not been able to make out a prima facie case against the Print Advertisement. At the same time, the plaintiff has been able to make out a prima facie case as far as the WhatsApp message/Advertisement is concerned.”

 

 

It was the case of the petitioner that the Print Advertisement shows a bottle similar to that of the plaintiff’s product ‘Nihar Naturals Shanti Badam Amla Hair Oil’ with a big cross in a stark red colour upon it, thereby asking the consumers to reject the plaintiff’s product. Further, the WhatsApp message which was in circulation on 11-07-2022 depicted a boxing glove knocking down the plaintiff’s bottle with a caption ‘Ab Nihar Shanti amla se jung jeetenge hum’, and urged the shopkeepers to circulate the same by stating ‘WhatsApp par share kare' which shows that the intention of the advertiser was to target the plaintiff and its product. The Print Advertisement begins by alarming and threatening the consumers with statement ‘Yaad Rakhna, Sasta Aawla, balo ko mehenga padega' against all other cheaper in price Amla Hair Oils as being inferior and harmful. It was submitted that this amounted to generic disparagement.

 

 

The Bench observed that there was no apparent reference of Marico Limited in the impugned Print Advertisement and stated that The reference to the plaintiff, if any, can be drawn only by a leap of imagination, which in my prima facie opinion is not warranted. It is merely suggestive of the fact that there could be severe repercussions in using cheaper Amla Hair Oils-cheaper being in quality and price. The leap of imagination that the plaintiff wants this Court to take is too wide.”

 

 

It was further observed that “A consumer, while reading the Print Advertisement, would not be able to relate the term of sasta amla” to the plaintiff‟s product, because neither is the bottle in the advertisement referring to the plaintiff‟s product, nor is it directly or indirectly implying the plaintiff‟s product. It is also not a generic disparagement of all cheaper Amla Hair Oil.”

 

 

The Bench stated that the advertisement was to be judged from point of view of an ordinary consumer and his perception of the advertisement, which would be to see the advertisement as a puffery, rather than from a sensitive competitor like Marcio Limited.

 

 

The Bench was of the view that for the claim of the plaintiff to succeed, the consumer was also to be attributed with an imagination that the mere use of the word ‘sasta’, without there being any other indication to the plaintiff’s product could only be the product of the plaintiff, which in the Court’s opinion was not made out even considering the advertisement campaign of the plaintiff which highlighted plaintiff’s products being cheaper in price to that of the defendant nor was there a disparagement of the class of products in the impugned Print Advertisement.

 

 

“In my opinion, the advertisement merely suggests that buying Amla Hair Oil, which is cheaper in price or quality, might be harmful to the hair. This can be stated to be an opinion but not defamatory of all hair oils that are cheaper in price to that of the plaintiff.” observed the Court

 

 

Commenting on the circulation of impugned WhatsApp advertisement, the Bench stated that Though the WhatsApp message/Advertisement shows that the impugned Print Advertisement is aimed at the plaintiff, however, the ordinary consumer would not have the benefit of having the WhatsApp Advertisement/message along with the Print Advertisement before him/her. It would only be the persons who receive the WhatsApp Advertisement/message along with the Print Advertisement, who would be able to make the connection between the two. Even otherwise, the WhatsApp message/Advertisement merely reflects that the Print Advertisement is aimed against the plaintiff as it calls upon the shop employees to display Print Advertisement, therefore, the Print Advertisement has to be considered independent of the WhatsApp message/ Advertisement and the two cannot be read together, as has been prayed for by the plaintiff.”

 

In view thereof, while refusing to injunct the print advertisement on the hair oil, the Court restrained Dabur or any other person working under it from circulating the WhatsApp message or Advertisement on Amla hair oil, during the pendency of the Marico’s suit.

In CRM-M-28048-2023-PUNJ HC- Overall interest of society would prevail upon right of liberty of individual: P&H HC refuses to grant anticipatory bail to man allegedly involved in defrauding complainants of Rs 3 crore
Justice Rajesh Bhardwaj [31-05-2023]

Read Order: Karan Singh v. State of Haryana 

 

Tulip Kanth

Chandigarh, June 6, 2023: While observing that anticipatory bail is an extraordinary discretion which can be exercised in extraordinary circumstances, the Punjab and Haryana High Court has dismissed a petition filed u/s 438 CrPC seeking the benefit of anticipatory bail to the petitioner in a case registered under sections 120-B, 406, 420, 467, 468 and 471 I.P.C.

“The Hon’ble Apex Court in plethora of judicial precedents has time and again reiterated that while considering the anticipatory bail the Court is to take into consideration the factors like gravity of offence, chances of accused tampering with the evidence and probabilities of fleeing from justice etc. The Court should be circumspect about the impact of its decision on the society as well”, the Single-Judge Bench of Justice Rajesh Bhardwaj asserted.

The FIR in question was registered wherein it was alleged that complainant executed an agreement to sell with the accused persons of total land measuring 23 kanals 12 marlas for an amount of Rs 24,50,000 per acre vide an agreement and the earnest money of Rs 5 lakh was paid to the accused. Thereafter, a property dealer had to come to receive the amount. 

When the Complainant checked in the branch of I.D.F.C First Bank to know the information about the bank account in which they had deposited the amount in question, however, they came to know that they had been cheated by the dealers in connivance with other accused persons. A request was made to take legal action against the culprits.

After registration of the FIR, investigation commenced. Apprehending the arrest, petitioner approached the court of Sessions Judge, Fatehabad for grant of bail, however, the same was declined. Aggrieved by the same petitioner had approached the High Court for grant of bail.

It was noticed by the Bench that the investigation in this case was under progress and during investigation it was found that petitioner was the brother-in-law of the co-accused. 

He in conspiracy with the co-accused duped various persons. During investigation it had also been found that petitioner and other co-accused had defrauded complainants of Rs 3. 43 crore by making false and fabricated agreements to sell in their favour.During investigation bank account in which the transactions were made, were found to have been operated by the petitioner and the other accused persons. 

Reference was also made to the judgment of the Top Court in Gurbaksh Singh Sibbia Vs. State of Punjab wherein it has been held that the Court is to draw a balance between the right of liberty of the individual and overall interest of the society. “However, overall interest of the society would prevail upon the right of liberty of the individual”, the Bench added.

As a prima facie case was established against the petitioner and the investigation was at threshold, the Bench dismissed the petition.


 

In CONT.CAS (C) 198 of 2020 -DEL HC- It was necessary for authorities to ensure that disciplinary cases instituted against Government servant were not unduly prolonged and concluded expeditiously: Delhi High Court holds IGP and DIG guilty of Contempt for declining to grant notional promotions beyond the rank of Deputy Commandant
Justice Manmeet Pritam Singh Arora [02-06-2023]

Read Order: Prakash Kumar Dixit v Ajay Kumar Bhalla

 

 

Simran Singh

 

 

New Delhi, June 6, 2023: The Delhi High Court held that the petitioner could not be refused promotions because of the department’s failings, for the reason that for 26 years the petitioner was prevented from serving in active duty, solely on account of the acts and omissions of the respondent(s). The inability of the petitioner, therefore, to render mandatory field service or to complete residency period and pre-promotional courses was only on account of circumstances created by the respondent(s).

 

 

The Single-Judge Bench of Justice Manmeet Pritam Singh Arora stated that “The Petitioner has rightly contended that the Reinstatement order at paragraph 35 (v) expressly states that for the purpose of promotion the intervening period, i.e. 10.07.1995 to 23.12.2021, shall be treated as period ‘On Duty’. Thus, for the purposes of granting notional promotion to the Petitioner, the Respondent(s) were bound to consider the Petitioner ‘on duty’ for the said period and therefore, the reasons cited in the order dated 22.03.2023 for denying promotion is contrary to paragraph 35 (v) of the Reinstatement order and the unequivocal direction issued by the Division Bench vide judgment dated 24.12.2019.”

 

 

In the matter at hand, the petitioner was served with a charge sheet on 06.09.1989 and penalty of ‘removal from service’ was imposed on 10.07.1995. The said order imposing penalty of removal from service, after four (4) rounds of litigation was first set aside on 30.11.2012 by the Division Bench of Madhya Pradesh High Court and the petitioner was directed to be reinstated. The respondent(s) acted upon the said order dated 30.11.2012 belatedly on 12.08.2015 and while reinstating the petitioner, the respondent(s) immediately placed him under deemed suspension w.e.f. 10.07.1995, until further orders. Though the petitioner made representation against his deemed suspension on 05.10.2015, the respondent(s) failed to take any further steps in the disciplinary proceedings, which remained pending. It was during the pendency of a writ petition filed before this Court that the respondent(s) took the final decision on 16.10.2018 reiterating their decision of imposing penalty of ‘removal from service’ on the petitioner.

 

The petitioner by way of a writ petition had sought quashing of an order dated 16.10.2018 passed by the DIG (CR & Vig), Directorate General, Central Reserve Police Force (CRPF), whereby the penalty of ‘removal from service; was imposed on the petitioner.

 

 

The said order dated 16.10.2018 was set aside by the Division Bench by its judgment dated 24.12.2019 holding that the respondent(s) herein had fallen in serious error in the manner in which the petitioner’s case had been dealt with and directed his reinstatement from 10.07.1995 and further directed that the petitioner be ‘forthwith reinstated in service’. It had also issued unequivocal directions that for the purpose of pay fixation, seniority and all other consequential benefits including promotions, the date of his reinstatement will be 10.07.1995 (i.e., the date on which the petitioner was removed from service for the first time, after the charge sheet dated 06.09.1989 was issued to him).

 

 

Being aggrieved by the aforementioned order of the Division Bench, the respondents had appealed before the Supreme Court which was dismissed with the direction to the respondent to comply with the judgement of the Division Bench. The petitioner filed the present contempt petition due to wilful non-compliance of the unequivocal directions issued by a Division Bench of this Court vide judgment dated 24.12.2019.

 

 

Issues for consideration before the Bench

  1. Relevant date for imposition of the minor penalty determined by the Division Bench.
  2.  Petitioner’s entitlement, if any, to promotion to higher ranks.

 

 

The Court while navigating through the first issue noted that the respondents had submitted that the date of imposing minor penalty could never be retrospective and it had to be prospective. “There is no explanation offered by the Respondent(s) in the affidavit dated 13.03.2023 for imposing the minor penalty w.e.f. 16.10.2018 and not w.e.f. 10.07.1995, which is the date on which the penalty of “removal from service” was first imposed vide Presidential Order dated 10.07.1995.”

 

 

The Bench stated that it was a matter of record that the petitioner had been prevented from serving in CRPF since 10.07.1995 on account of the successive Presidential order(s) dated 10.07.1995, 12.08.2015 and 16.10.2018, which were all in furtherance of the Memorandum of Charges dated 06.09.1989.       The Division Bench in its judgment dated 24.12.2019 had unequivocally directed that the reinstatement of the petitioner had to take effect from 10.07.1995. Thus opined that the effect of the judgment of the Division Bench was to substitute the Presidential order dated 16.10.2018 and to set the clock back to 10.07.1995, so as to efface the smear of suspension and its consequences. Therefore, the stand of the respondent(s) that imposition of penalty had to be w.e.f. 16.10.2018 was expressly contrary to the directions issued by the Division Bench and contrary to the contents of the earlier Presidential Order(s) relied upon by the respondent(s), which consistently sought to impose penalty on the petitioner w.e.f., 10.07.1995 in one form or the other. It was thus held that the petitioner was correct in his contention that the minor penalty had to be imposed upon the petitioner, as directed by the Division Bench w.e.f. original date of removal, i.e., 10.07.1995 and not w.e.f. 16.10.2018.

 

 

The Court while dealing with the second issue with respect to the petitioner’s claim for promotion to the post of IG, CRPF, it was noted that it was a matter of record that the petitioner’s immediate junior held the post of IG, as on 14.09.2021 when the respondent(s) first considered the petitioner’s case for promotion in compliance with the judgment of the Division Bench.

 

 

The Bench noted the contentions of the petitioner that even if the respondent(s) had imposed the penalty, w.e.f. 16.10.2018, the petitioner was entitled to promotion till the rank of IG from 2021 till his date of retirement i.e., 31.03.2023. “In the facts of this case, the obstinate denial of the Respondent(s) to give effect to the judgment of the Division Bench in favour of the Petitioner is writ large.”

 

 

The Bench after perusing a catena of cases stated that the petitioner could not be refused promotions because of the respondents’ failings, for the reason that period from 10.07.1995 till 16.03.2021, wherein the petitioner was prevented from serving in active duty was solely on account of the acts and omissions of the respondent(s), as was evident from the judicial record. The inability of the petitioner, therefore, to render mandatory field service or to complete residency period and pre promotional courses was only on account of circumstances created by the respondent(s).

 

 

The Court disagreeing with the contention of the respondents that promotion was not a matter of right, opined that the promotion which was being offered to the petitioner was notional and not actual and thus, the respondent(s) in light of the judgment dated 24.12.2019, were obligated to grant notional promotion to the petitioner to the post held by his immediate junior.

 

 

The Bench noted that the record of this contempt petition would evidence that the respondent(s) had made piecemeal compliance of the Division Bench judgment dated 24.12.2019 and opined that neither the respondent(s) nor this Court in the exercise of its jurisdiction in the contempt petition could evaluate the right of the petitioner to be granted the notional promotion, which had already been directed to be granted by the Division Bench vide judgment dated 24.12.2019. “The Respondent(s) do not have any discretion in this matter and as directed by the Division Bench at paragraph 35 of the judgment dated 24.12.2019, the Respondent(s) only had to issue consequential directions to implement the judgment. Even, presently, since the Petitioner has superannuated on 31.03.2023, the grant of promotion to the Petitioner would only be notional and would have bearing on his rank, the pay fixation, seniority, subsistence allowance and the consequential benefits.”

 

 

The Bench stated that it was necessary for the authorities to ensure that the disciplinary case/criminal prosecution instituted against any Government servant was not unduly prolonged and that all efforts should be made to conclude the proceedings expeditiously so that the need for keeping the case of a Government servant in a sealed cover was limited. “However, in the facts of this case, it can be seen that the findings of the DPCs from 1995 have been kept in sealed cover and have not been acted upon due to the ongoing inquiry since the year 1995. The Respondent(s) action in this case plainly demonstrates non-compliance of the OM dated 14.09.1992 and the flagrant disregard for Division Bench’s judgment dated 24.12.2019.”

The Court thus opined that the respondent(s) order dated 22.03.2023 declining to grant further promotions to the petitioner beyond the rank of Deputy Commandant was in violation of the unequivocal directions issued by the Division Bench vide judgment dated 24.12.2019.

 

 

“The issuance of the Reinstatement order dated 08.03.2021 seeking to initially impose the minor penalty w.e.f., 08.03.2021; its modification on 10.03.2023 to impose the minor penalty w.e.f., 16.10.2018; the order dated 14.09.2021 declining to grant promotion to the Petitioner to the rank of Deputy Commandant; a fresh review on the issue of promotion and the grant to the rank of Deputy Commandant vide order dated 22.03.2023, all the aforesaid orders while evidencing a flip-flop on the stands taken by the Respondent(s) also evince the lack of willingness to comply with the judgment dated 24.12.2019 in its letter and spirit. The unwillingness of the Respondent(s) to grant the benefit of reliefs directed by the Division Bench vide judgment dated 24.12.2019 is writ large on the face of the record.”

 

 

The Court rejected the contention of the ASG that the petitioner must assail the order dated 22.03.2023 in an independent writ petition or seek clarification of the judgment dated 24.12.2019 in the disposed of writ petition, “The intent and directions issued by the Division Bench with respect to the promotion are clear and unambiguous. Further, directing the petitioner herein to start a fresh proceeding would be a travesty of justice and a mockery of the legal proceedings which culminated with the passing of the final judgment dated 24.12.2019 and which has been further upheld by the Supreme Court by its order dated 07.12.2020.”

 

 

The Court, therefore, opined that there was wilful disobedience by the respondent(s) of the directions issued by the Division Bench with respect to the implementation of the directions issued at paragraph 35 of the judgment dated 24.12.2019 with respect to pay fixation, seniority and all other consequential benefits including promotion. Accordingly held the Inspector General of Police (Pers.) and DIG (Pers), guilty of Contempt of Court under Section 2 (b) of the Contempt of Courts Act, 1971 for wilful disobedience of the directions issued by the Division Bench at paragraph 34 and 35 in judgment dated 24.12.2019.

 

 

“This Court, however, grants an opportunity of six (6) weeks to the aforesaid Contemnors to issue a fresh order granting promotion to the Petitioner to the rank of IG to bring him at par with his immediate junior as per the merit cum seniority list at the time of the appointment. In case, the Contemnors do not issue appropriate orders granting promotion to the Petitioner to the rank of IG within the time granted by this Court, the matter will be heard for sentencing on the next date of hearing.”  The matter had been adjourned for hearing on 31.08.2023.

In Civil Appeal No. 911 of 2022 - SC - Supreme Court rules amended Section 153C of the Income Tax Act shall apply to searches conducted under Section 132 of the Act prior to the date of the amendment
Justice M.R. Shah & Justice B.V. Nagarathna [06-04-2023]

Read Order: Income Tax Officer v. Vikram Sujitkumar Bhatia

 

Chahat Varma

 

New Delhi, June 6, 2023: The Supreme Court has quashed the order of the Gujarat High Court and decided that the amendment to Section 153C of the Income Tax Act, 1961, introduced by the Finance Act, 2015, will apply to searches conducted under Section 132 of the Act prior to 01.06.2015.

 

The Revenue had filed the present appeals against the judgment of the Gujarat High Court, which had quashed the notice under Section 153C of the Income Tax Act, 1961, issued to the respondent – assessee and had set aside the consequent Assessment Orders, by holding that the amendment to Section 153C, introduced by the Finance Act, 2015, would not apply to searches conducted under Section 132 before the date of amendment.

 

The division bench of M.R. Shah and Justice B.V. Nagarathna observed that the Delhi High Court's observation in the case of Pepsico India Holdings (P.) Ltd v. Assistant Commissioner of Income Tax [LQ/DelHC/2014/2434] led to a situation where the Revenue was unable to take action against third parties, even if incriminating material was found during search proceedings under Section 132. It was observed that the aforesaid decision was coming in the way of suppressing the very mischief which the legislature intended to suppress, which necessitated the amendment in Section 153C. Therefore, the amendment can be seen as a substitution of words to address this issue.

 

The court said, “As per the settled position of law, the Courts, while interpreting machinery provisions of a taxing statute, must give effect to its manifest purpose by construing it in such a manner so as to effectuate the object and purpose of the statute.”

 

The court said that if the submission on behalf of the respondents – assesses, that despite the fact that the incriminating materials have been found in the form of books of account or documents or assets relating to them from the premises of the searched person, still they may not be subjected to the proceedings under Section 153C solely on the ground that the search was conducted prior to the amendment was accepted, in that case, the very object and purpose of the amendment to Section 153C, shall be frustrated. The court held that the amendment aimed to substitute the words ‘belongs or belong to’ with ‘pertains or pertain to’ in order to ensure that incriminating materials found from the premises of the searched person can be used against other persons related to the searched person.

 

In ITA No.290/SRT/2022 -ITAT- ITAT (Surat) rejects Adarsh Sahakari Ghar Bandhnari Mandali’s claim for deductions on Internet and Airtel expenses under Section 57 of the Income Tax Act
Member Pawan Singh (Judicial) [05-06-2023]

Read Order: Adarsh Sahakari Ghar Bandhnari Mandali Ltd v. Assistant Commissioner of Income-tax, Circle1(1)(2), Surat

 

Chahat Varma

 

New Delhi, June 6, 2023: Dismissing the appeal filed by Adarsh Sahakari Ghar Bandhnari Mandali Ltd. (assessee), the Surat bench of the Income Tax Appellate Tribunal held that under Section 57 of the Income Tax Act, deductions can only be made for expenditures that are solely incurred for the purpose of earning income, provided that the expenses are not capital expenditures or personal in nature. Therefore, the Tribunal ruled that the assessee's claim for expenses related to internet subscription and Airtel subscription under Section 57 of the Act was not allowable.

 

Brief facts of the case were that the assessee was a co-operative housing and it filed its return of income, declaring nil income. The Assessing Officer (AO) noted that the assessee claimed expenses of Rs. 2,72,830/- on account of internet subscription and Rs. 6,43,998/- on account of Airtel subscription. The AO disallowed these expenses under section 57 of the Income Tax Act, stating that they were not eligible for deduction. In its submission, the assessee argued that the expenses incurred on internet subscription were for the benefit of its members, who were directly related to the objectives of the society. As a mutual benefit society, the assessee contended that these expenses should be allowed as they are for the benefit of its members. Similarly, the assessee claimed that the Airtel subscription expenses were also incurred for the benefit of its members, in line with the nature of a mutual benefit society.

 

The Tribunal held for a deduction to be allowed under Section 57 of the Income Tax Act, there must be a clear nexus between the expenditure incurred and the interest income earned, which was totally missing in the present case.

In W.P.(MD)No.9623 of 2012-MADR HC- Inspector of Factories not empowered to deal with matters when Contract Labour (Regulation & Abolition) Act is involved to determine rights of parties & case pertains to complicated questions of law & facts, holds Madras HC while allowing BPCL’s petition 
Justice S. Srimathy [02-06-2023]

Read Order: Bharat Petroleum Corporation Ltd v. The Deputy Chief Inspector of Factories And Ors 

 

Tulip Kanth

Madurai, June 6, 2023: While observing that the Inspector of Labour/ Factories is not having the jurisdiction to consider if there are complicated questions of law and if other Acts are involved, the Madurai Bench of the Madras High Court has allowed the petition filed by Bharat Petroleum Corporation Ltd. challenging the order of the Deputy Chief Inspector Of Factories.

“More so this Court has held that the Inspector of Labour (in the present case Inspector of Factories) is not having jurisdiction to consider if there is complicated questions of law and if there are other Acts are involved, because the Inspector of Labour (Inspector of Factories) is not having the power to adjudicate. Hence the petition filed before the Inspector of Labour (Inspector of Factories) cannot be entertain since he is not appropriate authority”, Justice S. Srimathy said.

The facts of this case were such that the LPG plant was commissioned in 1988. The petitioner corporation has been following a consistent policy by fixing permanent workmen for attending regular operations and the contract labours for attending sundry works. The LPG plant, registered as a “Principal Employer”, under the Contract Labour (Regulation and Abolition) Act has also been engaging Contractors who were deploying 20 workmen to be employed as “contract workmen” and the said Contractors have also taken out license under the provisions of the said Act. 

The respondents are the “Licensed Contractors” and “Contract Labourers”. The second respondent- Union had taken up the cause of the respondents and few other Contract Labourers to be absorbed in the regular employment of the petitioner’s corporation and moved the Authority under the said Act seeking abolition of contract labour and for their absorption by issue of notification under Section 10(1). The issue was considered by the Advisory Board and a report was submitted that the specific jobs attended to by the contractors need not be abolished. 

 

The Union had raised Industrial Dispute on the ground that the contract was sham and nominal and the same was under the consideration of the government whether to refer the case for adjudication. Moreover, the matter has been the subject matter of writ appeal. Even then another attempt was made by the Union to seek permanency under the Tamil Nadu Industrial Establishment (Conferment of Permanent Status of Workmen) Act 1981 but as the respondents came  under the category of “contract labourers”, they couldnot claim permanency.

 

At the outset, the Bench rejected the contention of the petitioner that it ought to be treated as Government concern and the Act was not applicable to the Government Departments and stated, “The said contention cannot be entertained, since Bharat Petroleum is registered under the Companies Act. Even though, it is coming under the direct control of the Ministry of Petroleum and Natural Gas, it is Government undertaking, but it cannot be treated as a Government Department.”

 

On the issue of granting regularization, absorption against unsanctioned post, the Bench referred to the judgment of the Top Court in Union of India & others Vs Ilmo Devi and another wherein it was held that the High Court has no power to direct the employer to grant regularization and absorption, if there is no sanctioned post. Placing reliance upon this precedent, the Bench held that  the respondents couldn’t seek permanency if there was no sanctioned post.

 

Considering the fact that  complicated questions of law and complicated questions of facts are involved, especially, when the Contract Labour (Regulation and Abolition) Act is involved to determine the rights of the parties, the Bench held that the Inspector of Labour was not empowered to deal with the case and was without any authority.

 

It was opined by the Bench that once the management is registered under the Contract Labour (Regulation and Abolition) Act and the Contractors have also taken license, then the submission of the respondents that the contract is sham and nominal couldn’t be entertained.

 

 The provisions of the Contract Labour (Regulation and Abolition) Act are only regulating such contract workers and while regulating the said contract workers, the Contract Labour (Regulation and Abolition) Act, states that the principal employer should register himself and he should declare the name of the Contractors and the principal employer should ensure that all the statutory benefits are being paid to the contract employees, by the Contractors. When such statutory liability is discharged then there is no ground to treat the contract as sham and nominal, the Bench stated while noting that the petitioner Corporation was in an advantageous position.

 

Observing that the petition filed before the Inspector of Labour (Inspector of Factories) cannot be entertained since he is not an appropriate authority, the Bench held that the respondents would be at liberty to agitate the issue which was already pending in writ appeal and before the authorities prescribed under Contract Labour (Regulation & Abolition) Act, 1970.Thus, allowing the Writ Petition, the Bench quashed the impugned Order passed by the  Deputy Chief Inspector Of Factories.

 

 

In W.P. (C) 11211 of 2017 -DEL HC- When an employee resigns, he takes a conscious and deliberate decision; seeking voluntary retirement and resigning operate differently: Delhi High Court while rejecting NABARD employee’s claim for pension after tendering ‘unconditional’ resignation letter from serving the government for 12+ years
Justice Sanjeev Sachdeva and Justice Manoj Jain [02-06-2023]

Read Order: Krishan Kumar Singh v Union of India

 

 

Simran Singh

 

 

New Delhi, June 6, 2023: The Delhi High Court dismissed the petition of an Indian Army Clerk and subsequently an employee of National Bank for the Agriculture and Rural Development (NABARD), who had sought directions to the Union of India to release pensionary benefits to the petitioner in accordance with Regulation 4 of NABARD Pension Regulations, 1993 [1] (Regulations)  after he had tendered his resignation from serving the government for more than 21 years (inclusive of his stint in Indian Army).

 

The Bench held that his ‘unconditional’ resignation letter tendered by the petitioner did not even remotely indicate that he had opted for voluntary retirement. “When any employee resigns, he takes a conscious and deliberate decision. Seeking voluntary retirement and resigning might be voluntary in nature but these operate differently.”

 

 

The issue for consideration was whether an employee who tendered an unconditional resignation was entitled to pension in view of Regulation 18 of the Regulations.

 

 

The Bench upon perusing the ‘unconditional’ resignation letter tendered by the petitioner stated there was nothing mentioned therein which may even remotely indicate that he had opted for voluntary retirement. It was the case of the petitioner that he had not resigned but voluntarily retired however, the Bench stated that such a contention could not hold any ground in view of the contents of his own letter.

 

 

The Court further rejected petitioner’s contentions that he had to resign on account of some harassment since no particulars in this regard had been submitted making such contentions unsubstantial and in the air. The Bench stated that the petitioner was not an illiterate man and had earlier served in Indian Army at clerical level and also had substantial service in NABARD. “It cannot be imagined that he did not know the difference between ‘resignation’ and ‘voluntary retirement’ which was as obvious as the difference between chalk and cheese. Even if the allegation of harassment from his seniors were to be accepted, nothing prevented him from seeking voluntary retirement.”

 

 

The Bench relied upon Union of India v. Abhiram Verma and stated that “when any employee resigns, he takes a conscious and deliberate decision. Seeking voluntary retirement and resigning might be voluntary in nature but these operate differently.”

 

 

The Bench noted that it was also not a case where the petitioner had sought voluntary retirement, which was denied. “Be that as it may, the question of qualifying service, evidently, pales into insignificance as consequent upon his voluntary resignation, his entire past service stood forfeited and, therefore, he was obviously not entitled to any pensionary benefit. The petitioner has also failed to bring on record any material which may indicate that the use of word resignation” in Regulation 18 is ultra vires or unreasonable.”

 

In Civil Appeal No. 5937 of 2011 - SC - Mixture of base paint with different colors not considered manufacturing under U.P. Trade Tax Act, affirms Supreme Court
Justice S. Ravindra Bhat & Justice Dipankar Datta [02-03-2023]

Read Order: Commissioner of Trade Tax V. M/S. Kumar Paints and Mill Stores Through Its Proprietor

 

Chahat Varma

 

New Delhi, June 6, 2023: The Supreme Court has affirmed the view that the mixture of base paint with different colors, does not give rise to a new product, and thus, does not qualify as manufacturing under Section 2(e)(i) of the Uttar Pradesh Trade Tax Act, 1948.

 

In the present case, the dispute revolved around whether the mixing of paints through a computerized process with a DTS machine amounted to manufacturing, thereby attracting a fresh incidence of taxation. The Revenue argued that the mixing resulted in a new product, while the assessee contended that no new recognizable product or article had emerged from the process.

 

In a previous instance, the High Court had agreed with the arguments put forth by the assessees and determined that the process did not constitute manufacturing. However, in certain cases where the Revenue appealed, the matter was sent back for reconsideration, after taking into account the opinion of the expert.

 

A report dated 20.01.2004 was issued by the Harcourt Butler Technical University, Kanpur, which stated that, “The base paint used in point of sale tinting systems itself, therefore, is a paint irrespective of colourant being added to get a desired shade or colour. It is in the form of paint and possession the basic ingredients and characteristics. The tinting does not bring new or different product into existence. The base paint can also be used as paint.”

 

The bench comprising of S. Ravindra Bhat and Justice Dipankar Datta referred to the case of Aspinwall & Co. Ltd. V. Commissioner of Income Tax, Ernakulam [LQ/SC/2001/1972], wherein it was held that if the change made in the article resulted in a new and different article, it would amount to manufacturing. The tipping point, or the determinative test, therefore was that the result of the process (amounting to manufacture) must be the emergence of a commercially recognizable new commodity, and not mere variation of an existing one.

 

The bench observed that the expert's evidence indicated that the base paint was mixed with colouring as an additive. Both of these had suffered tax. The resultant article i.e., the paint of a different shade, did not result in a new commercial product. In common parlance, the new product was nothing else but paint, and not a different article.

 

“In these circumstances, in the opinion of this Court, the High Court did not fall into error,” held the division bench. 

In WP (C) No. 1830/2020 - J&K HC - Jammu and Kashmir High Court denies interest claim to M/s VJ Jindal Cocoa Pvt. Ltd. under Budgetary Support Scheme, says amount under the Scheme was not arbitrarily withheld by the competent authority
Justice Sanjeev Kumar & Justice Puneet Gupta [26-05-2023]

Read Order: M/s VJ Jindal Cocoa Pvt. Ltd v. Union of India and others

 

Chahat Varma

 

New Delhi, June 6, 2023: The Jammu and Kashmir High Court has denied the claim of M/s VJ Jindal Cocoa Pvt. Ltd. (petitioner) for interest on the disbursed amount under the Budgetary Support Scheme. The court found it difficult to conclude that the amount payable to the petitioner under the Scheme was illegally, arbitrarily or without any reason withheld by the respondents.

 

Factual background of the case was that after the implementation of Goods and Services Tax Act, 2017, the petitioner, formerly known as M/s Jindal Drugs Private Ltd., (Cocoa Division) got itself registered under the new regime. Since the withdrawal of exemptions under the Central Excise Act caused financial hardship to the Industrial units availing such exemptions, the Government came up with Budgetary Support Scheme (Scheme). Since the unit of the petitioner fell under the category of eligible units, the petitioner filed its claim under the Scheme. The competent Authority sanctioned the claim and forwarded the same for disbursement as and when the funds were received from Department of Industrial Policy and Promotion (DIPP).

 

The petitioner's claim under the Scheme was sanctioned but could not be released in a timely manner due to the unavailability of funds from the DIPP. Feeling aggrieved by the delay, the petitioner filed the present petition seeking directions from the court to disburse the sanctioned amount with interest. It appeared that during the pendency of the petition, the sanctioned amount was released to the petitioner. However, the petitioner continued to pursue the petition to claim interest on the delayed payment.

 

The court observed that having regard to the nature of Scheme, the benefit under the Scheme was not claimable as a matter of right. The benefit envisaged was in the nature of concession/incentive extended by the Government of India to enable the industrial units to tide over the financial hardship to which they may have been exposed with the withdrawal of area-based exemptions under the Central Excise Act.

 

The court further observed that the Commissionerate was facing acute shortage of funds and the funds placed at its disposal by DIPP were not sufficient enough, however, the amount was disbursed immediately when the funds became available.

 

The court lastly observed that there was no provision in the Scheme which provided for payment of interest in case of any delay in actual release of the benefit envisaged under the Scheme.


The court stated that unless it was proven that the respondents withheld the amount payable under the Scheme without any valid reason, it would be inappropriate to impose a penalty on them by ordering the payment of interest.