M J Antony: Law on liquor licence

Last Updated: Sun, Jan 13, 2013 19:41 hrs

The Supreme Court stated last week that rules regarding issue of liquor licences should be strictly applied. Since the trade is “inherently noxious and pernicious”, there should be no scope for relaxing the rules, the court said in the judgment, State of Bihar vs Nirmal Kumar, setting aside the ruling of the Patna High Court. In this case, a bidder was issued licence but he did not deposit one-fourth of the annual licence fee as advance security as prescribed under the rules. He paid it in three instalments. Alleging breach of the conditions of the licence, a demand was made for the fee for the delayed period. The excise commissioner rejected the objections of the licencee. However, the high court allowed his appeal. The government appealed to the Supreme Court. It said the concept of “condonation” cannot be imported into liquor trade. “Such a concept is alien to the present nature of the trade and licencee cannot claim any benefit under the same as the whole thing is governed by the command of the rules,” the judgment asserted.

Trust book of accounts
Accounts regularly maintained in the course of business are to be taken as correct unless there are strong reasons to indicate that they are unreliable, the Supreme Court stated last week while setting aside the judgment of the Punjab and Haryana High Court in the case, M/s. Gian Chand & Brothers vs Rattan Lal. The firm advances money to agriculturists and charges on the sale price of the agricultural produce sold as determined by the market committee. For the aforesaid purpose the firm was keeping regular accounts. Rattan Lal is alleged to have failed to return the money advance, starting the litigation. The borrower disputed the genuineness of the entries in the firm’s books on various grounds, including forgery. Though the civil courts upheld the claim of the firm, the high court allowed the appeal of the agriculturist. The Supreme Court stated that the high court applied wrong principles of procedure and was in error.

Donations for educational trust
The Supreme Court last week dismissed the appeal of the Director of Income Tax (Exemption) against the ruling of the Delhi High Court in the assessment of Raunaq Educational Foundation, a trust which received donations. In this case, the trust received two cheques, for Rs 40 lakh each from Apollo Tyres Ltd. The assessing officer felt there was an intention to do undue favour to the company as the post-dated cheques dated April 22 had been accepted by the trust and the receipt was issued before March 31 of the accounting year. It was also said many of the trustees were related to the directors of Apollo Tyres and so the post-dated cheques were accepted to give undue advantage under Section 80G of the Income Tax Act. The tribunal and the high court did not find any impropriety as the donation was accounted for in the correct accounting year. The Supreme Court upheld their findings and added that the firm did not claim benefit under Section 80G. It said the fact that most trustees were related to the directors of Apollo was “absolutely irrelevant”.

Excise duty on DVDs
A division bench of the Delhi High Court last week quashed the showcause notice issued by excise authorities to Siddharth Optical Disc Ltd. The case against the company was that during the process of manufacturing of pre-recorded audio compact discs, video compact discs and DVDs, “first blank CDs/DVDs are manufactured and thereafter, data are transferred and recorded on the said blank CDs/VCDs/DVDs”. It is also alleged that the manufacturer was availing of the benefit of exemption from payment of central excise duty. The company submitted that the showcause notices was by way of vendetta and a direct result of the company having made a complaint of bribery against the two excise officials. The high court, after examining the process, concluded that no new product came into existence and therefore there was no question of duty. “We must also not forget the circumstances in which the show cause notice was issued. By this, we mean the previous history of the company having got two officers of the revenue arrested on charges of bribery,” the court said.

New India to pay damages
Merely by participating in the survey of damage caused due to flood, the insured company does not acquiesce to the finding of the surveyor of the insurance company, the National Consumer Commission stated last week. In this case, R R International vs New India Assurance Co, there was damage to two buildings of the insured company. The latter immediately appointed a surveyor and claimed the amount from the New India. After two years, the insurance company appointed its own surveyor who reduced the damage to a fraction of the first surveyor’s assessment. This was challenged before the commission. It stated that the first survey report was supported by bills and vouchers of expenditure incurred on repairs whereas the second survey of New India was based only on estimates. “Merely by cooperating with the second surveyor in assessing loss the complainant cannot be deprived of loss estimated by the first surveyor,” the judgment said.

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