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SC: No re-opening of old cases on grounds of wrong circulars
February, 18th 2008

The Supreme Court has ruled that the revenue department cannot re-open old assessments on the ground that its own circulars were wrong and not therefore binding. In such cases, the government was free to withdraw the notifications.
While the circular is existing, the board of revenue cannot disclaim it and re-open the assessment, the Supreme Court said, adding that this attitude would lead to chaos and indiscipliine in the administration of tax laws.
The occasion to make these remarks came while dismissing the appeal of the Kerala Government in its dispute with M/s Kurian Abraham Ltd and other rubber firms.
They are engaged in rubber business. The firm in this case filed its return on the basis of the circular which treated raw rubber and latex as the same commodity. The board of revenue earlier accepted it. Later, it turned around and took the stand that they were different commodities and the circular was wrong, though it was still in force. The Supreme Court stated that this turnaround was not acceptable.
SC: Once cleared, goods cannot be subjected to later duty enhancements
Once an importer pays the full duty and the customs authorities clear the goods for home consumption, the goods cannot be subjected to later enhancement of duty.
The Supreme Court held so in Commissioner of Customs, Kolkata vs Biecco Lawrie Ltd. The assessee company imported superior kerosene oil and paid duties according to the prevailing rates.
As the oil was highly combustible, it was not taken out but kept in the warehouse. It was distributed according to the demand of the customers. In a later budget, the basic customs duty and special duty were increased.
Now the authorities demanded the higher duty for clearing the goods. The customs tribunal ruled that once full duty has been paid and clearance permitted, any subsequent enhancement of the rate would not be leviable on the goods which remained stored in the warehouse according to the Customs Act provisions. The appeal of the customs authorities to the Supreme Court was dismissed.
Intel Design Systems plea dismissed
The Supreme Court last week dismissed the appeal of Intel Design Systems (India) Ltd against the order passed by the excise tribunal, Mumbai.
The company manufactures parts of tanks and armoured vehicles and claimed exemptions under heading 8710 of the Tariff Act. It contended that it manufactured its goods solely for fitting into the fighting vehicles of the defence department. T
he commissioner of excise, however, classified them as electrical equipment under heading 8536.90. The tribunal accepted the department's stand. The Supreme Court dismissed the appeal stating that electrical equipment have been excluded from the benefit under chapter heading 85.36.
Gujarat HC view upheld
The Supreme Court has held that the interest paid on borrowings made for purchase of capital assets "not put to use" in the concerned financial year is eligible for income tax deductions. It said in the judgment, Deputy Commissioner of IT vs Core Health Care Ltd, that all that was required was that the capital borrowed must be for the purpose of business for which interest was also paid.
The court thus dismissed the appeal filed by the income tax department which appealed against the Gujarat High Court. Endorsing the view of the high court, the Supreme Court said that interest on money borrowed for the purposes of business is a necessary expenditure in a business, for which the assessee is entitled for deductions.
SC to deal on computing of workers during retrenchment later
The Supreme Court has declined to consider the question whether contract workers, mathadi workers and workers of other industrial units are liable to be included while computing the number of workmen during retrenchment under Section 25-K of the Industrial Disputes Act.
According to this provision the retrenchment regulations will apply if the unit had employed 100 workers. But it does not specify what kind of workers. In the appeal, Maharashtra General Kamgar Union vs Indian Gum Industries, this question was raised, but while it was pending, most of the workers had come to a settlement and taken their dues.
Therefore, the court decided to wait for another case to decide the issues raised in this case, while observing that the issue indeed was of general importance.

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