SUPREME COURT

• SERVICE TAX LAWS

Idea Mobile Communication Ltd. Vs. C.C.E. and C., Cochin (Decided on 04.08.2011) MANU/SC/0898/2011

Levy of service tax on activation of SIM Cards - Section 65 (105) zzzx of the Finance Act, 1994 - Appellant SIM card sellers were paying sales tax for activation of SIM Cards but Department of Central Excise, (Service Tax Department) held that mere SIM card without activation is of no use and held Appellant liable to pay Service Tax on the value of SIM Card - Whether the value of SIM cards sold by the Appellant herein to their mobile subscribers is to be included in taxable service under Section 65(105) zzzx of the Finance Act, 1994, which provides for levy of service tax on telecommunication service or whether it is taxable as sale of goods under the Sales Tax Act

Held, service tax is payable inasmuch as SIM Card has no intrinsic sale value and it is supplied to the customers for providing mobile service to them. Sales tax authorities conceded before the High Court that no assessment of sales tax would be made on the sale value of the SIM Card supplied by the Appellant to their customers irrespective of the fact whether they have filed returns and remitted tax or not. Further, even if sales tax is wrongly remitted and paid that would not absolve them from the responsibility of payment of service tax, if otherwise there is a liability to pay the same. If the article is not susceptible to tax under the Sales Tax Act, the amount of tax paid by the Assessee could be refunded as the case may be or, the Assessee has to follow the law as may be applicable. Charges paid by the subscribers for procuring a SIM Card are generally processing charges for activating the cellular phone and consequently the same would necessarily be included in the value of the SIM Card. Hence, the amount received by the cellular telephone company from its subscribers towards SIM Card will form part of the taxable value for levy of service tax, for the SIM Cards are never sold as goods independent from services provided. They are considered part and parcel of the services provided and the dominant position of the transaction is to provide services and not to sell the material i.e. SIM Cards, which on its own but without the service would hardly have any, value at all. Thus, established that the value of SIM cards forms part of the activation charges as no activation is possible without a valid functioning of SIM card and the value of the taxable service is calculated on the gross total amount received by the operator from the subscribers. Appeal Dismissed

• EXCISE LAWS

Saraswati Sugar Mills Vs. Commissioner of Central Excise, Delhi-III (Decided on 02.08.2011) MANU/SC/0895/2011

Classification of Goods - Rule 57 Q of the Central Excise Rules, 1944 - Central Excise and Gold (Control) Appellate Tribunal confirmed the Order of levying duty and penalty under the Central Excise Act - Hence this appeal - Whether the Iron and Steel structures manufactured and used captively in the factory for installation of the Sugar manufacturing plant by the Assessee can be classified as capital goods under Rule 57Q of the Central Excise Rules, 1944

Held, meaning of the expression 'component parts' that the iron and steel structures are not essential requirements in the sugar manufacturing unit. Iron and Steel structures would not go into the composition of vacuum pans, crystallizers etc. If an article is an element in the composition of another article made out of it, such an article may be described as a component of another article. Thus, structures in question do not satisfy description of 'components'. Capital goods eligible for credit under Rule 57Q have been specified either by their classification or by their description. Clauses (a) to (c) of Explanation (1) of the said rule cover capital goods by their classification whereas Clause (d) covers goods by their description viz, components, spares and accessories of the said capital goods. Steel Plates and MS Channels are used in the fabrication of chimney, which is an integral part of the diesel generating set. Therefore, whether the items that was at issue were integral part of a machinery. If that test is satisfied, there will not be any difficulty to hold a particular item of the machinery is a component part and therefore, will fall within the ambit of the expression 'capital goods'. Appeal dismissed.

• CIVIL LAWS

Dharamshila Hospital and Research Centre Vs. Social Jurist and Ors. (Decided on 25.07.2011) MANU/SC/0867/2011

Treatment of Poor Patients in OPD/IPD - Proposal to create separate corpus fund for treatment of poor patients in OPD/IPD - Proposal pending consideration of State Government

Held, all hospitals has been directed to give their proposals within ten days to Directorate of Health Services, Delhi Government. Further, directed Directorate to hold meeting with representatives of hospitals to work out common workable Scheme and to place it before Court in the meanwhile hospitals, to accept patients referred by Government hospitals and extended necessary treatment to them. Hospitals to maintain a separate account in regard to their treatment expenditure at CGHS rates.

• SERVICE LAWS

Bhanu Pratap Vs. State of Haryana and Ors. (Decided on 02.08.2011) MANU/SC/0878/2011

Appointment - Rule 7(1), 7 (2) and 8(1) Haryana Civil Services (Judicial Branch) Rules - Appellant candidature to the post of Subordinate Judge was rejected as he failed to qualify in terms of Rule 8 of the Haryana Civil Services (Judicial Branch) in the interview - Appellant filed a petition challenging the rejection on ground that since he received total aggregate marks of 508 out of 1020 total marks, i.e., 49.8 per cent and since the marks obtained by him was short of 50 per cent by just two marks the same should be rounded off to the qualifying marks of 50 per cent in aggregate in terms of Rule 8 of the Rules which was dismissed - Subsequently, Division Bench affirmed the Order of the Single Bench - Hence this appeal

Held, bare reading of the rules makes it crystal clear that in order to qualify in the written examination a candidate has to obtain at least 33 per cent marks in each of the papers and at least 50; qualifying marks in the aggregate in all the written papers. The further mandate of the rules is that a candidate would not be considered as qualified in the examination unless he obtains at least 50 per cent marks in the aggregate including viva-voce test. When emphasis is given in the Rules itself to the minimum marks to be obtained making it clear that at least the said minimum marks have to be obtained by the concerned candidate there cannot be a question of relaxation or rounding off. There is no power provided in the statute nor any such stipulation was made in the advertisement and also in the statutory Rules permitting any such rounding off or giving grace marks so as to bring up a candidate to the minimum requirement. Hence, no rounding off or relaxation was permissible. The Rules are statutory in nature and no dilution or amendment to such Rules is permissible or possible by adding some words to the said statutory rules for providing or giving the benefit of rounding off or relaxation. Appeal Dismissed

HIGH COURTS

• LABOUR AND INDUSTRIAL LAWS

ALLAHABAD HIGH COURT

Divisional Logging Manager Vs. The Presiding Officer, Labour Court and Anr. (Decided on 02.08.2011) MANU/UP/1662/2011

Termination from Services - Respondent No. 2 appointed as daily labour chawkidar was terminated - Labour Court held that the letter of the Divisional Logging Manager, indicated that they had absorbed 9 workmen and it was not possible for them to absorb the other 11 workmen hence Respondent No. 2 was not permitted to join his services - Hence this appeal - Whether the action of Petitioners- employers terminating the services its workman Respondent No. 2 08th February, 1994 was justifiable

Held, due to reduction in work, several employees who were daily wage workers including Respondent No. 2 were retrenched. As per the Supreme Court, if the only defect in the termination order is non payment of retrenchment compensation as required by Section 25 F of Industrial Dispute Act then it is not always necessary to direct reinstatement with full back wages and that in such situation more often than not proper relief may be to award consolidated damages/compensation particularly when the employer is Government or Governmental agency and relevant rules have not been followed before appointment. Therefore, interest of law and justice will best be served by directing payment of an additional amount of Rs. 50,000/- apart from the amount which the workman has already received under interim order passed in this writ petition. Petition allowed in part.

• SERVICE LAWS

PATNA HIGH COURT

Shyam Narayan Singh, Son of Late Natun Singh Vs. The State of Bihar and Ors. (Decided on 01.08.2011) MANU/BH/0773/2011

Departmental enquiry - Withholding of Pension - Challenge against thereto - Rule 48 Bihar Pension Rules - Alleged that Petitioner/Retired Superintending Engineer was responsible for illegal and irregular appointment of 70 to 80 persons against sanctioned post - Disciplinary authority concluded that the Petitioner has made illegal appointments and allowed the appointees to continue for a period beyond three months and hence 50 percent of the Petitioners pension was withheld - Whether the punishment awarded to the Petitioner was in excess -whether the Petitioner alone could be held responsible for the appointments

Held, in the present case, the irregular appointments were made for a limited period which in themselves have not been held to be banned. The continuances of such appointees have been depreciated and the Petitioner along with others was booked for this offence. The inquiry report indicated that the continuance of such persons was not at the behest of the Petitioner and as such it cannot be held that he was responsible for continuance of those temporary appointees. Therefore, punishment was in excess to the offence alleged. Hence, punishment awarded to not be more than 20 per cent of the pension amount. Application disposed of

• LAND ACQUISITION LAWS

DELHI HIGH COURT

Union of India (UOI) Vs. Pratap Singh and Ors. (Decided on 05.08.2011) MANU/DE/2910/2011

Grant of Interest on Enhanced Amount of Compensation - Challenge against thereto - Section 54 of the Land Acquisition Act, 1894 - Reference Court set aside the Judgment of the Additional District Judge and awarded interest on the enhanced amount even for the period from the date of dismissal in default of the Reference case till the date of its restoration - Hence this appeal - Whether the Reference Court was justified in granting Interest for the said period

Held, The land owners cannot be deprived of the interest on the enhanced compensation if be awarded by the Reference Court even for the period from the date of dismissal of the reference in default till the date of its restoration. Appeal dismissed

• DIRECT TAXATION LAWS

BOMBAY HIGH COURT

Leela Bhagwansing Advani, Anil Bhagwansing Advani and Aruna Bhagwansing Advani Vs. Union of India (UOI) and The Government of India, (Ministry of Finance) (Decided on 01.08.2011) MANU/MH/0956/2011

Deduction at Source - Deduction at source while paying the compensation on acquisition of land - Petitioners aggrieved by the deduction at source had challenged the said Order alleging that the compensation has been paid belatedly

Held, in the present case, compensation was paid on 28th April 2010 and on that day, Section 194LA was on the statute book and, therefore, tax had to be deducted while making the payment of compensation. Regarding delay in payment of compensation, the Petitioners have been paid interest and, therefore, the fact that the compensation has been paid belatedly, cannot be a ground to hold that the compensation with interest has to be paid without deducting tax at source. Hence, the argument of the Petitioners that the Respondents ought not to have deducted tax at source while paying the compensation cannot be accepted.

• CONSTITUTION LAWS

Constitutional Validity of Section 194 LA of the Income Tax Act, 1961 - Petitioners contended that as per Section 194L, tax was to be deducted at source on the income component of the compensation whereas under Section 194LA, tax is required to be deducted at source on the entire amount of compensation which includes the cost of the land

Held, object of Section 194LA as per the CBDT Circular No.5 of 2005 dated 15th July 2005 was to curb the tendency of evading taxes by not reporting the income comprised in the compensation received on acquisition of immovable property. Section 194LA does not determine the tax liability of the person receiving the amount of compensation but it merely requires the person paying the compensation to deduct certain percentage of the sum payable as compensation towards the tax liability of the recipient that would be determined in the assessment proceedings. Hence, the contention that Section 194LA purports to impose tax on the cost of the land acquired under the Land Acquisition Act is without any merit. Petition Dismissed

TRIBUNALS

• DIRECT TAXATION LAWS

ITAT MUMBAI'J' BENCH

JSB Securities Ltd. Vs. DCIT (Decided on 05.08.2011) MANU/IU/0758/2011

Penalty - Section 271 (1) (C) of the Income Tax Act, 1961 - CIT (A) confirmed the penalty on sub-brokerage payment imposed by Assessing Officer - Hence this Appeal

Held, from assessment order it is clear that there is no enquiry made by the A.O. with reference to the sub-brokerage payments during this year. In fact, based on the findings in A.Y. 1995-96 where the Assessee could produce confirmations of 70 per cent of the sub brokerage payments, the A.O. allowed 85 per cent of the sub-brokerage receipts as genuine claim. Further, there was no discussion about Assessee's furnishing of information or furnishing of proof payment by way of cheque etc. The contentions made by the Assessee about the genuineness of the payment were examined or analysed. There were no disallowances of brokerage payment by way of examination or by proving that any amount was not genuine. When the disallowance was made on the findings in A.Y. 1995-96 and not based on any examination of the details for the assessment year under consideration, it is difficult to understand how the facts will lead to concealment of income or furnishing of inaccurate particulars. Therefore, penalty levied by the A.O. on disallowance of sub-brokerage payment canceled. Hence, Appeal of the Assessee is allowed.

• SERVICE LAWS

Central Administrative Tribunal

P. Hamzakoya S/o. Sayed Shaikoya Haji Cargo Supervisor LPWD Sub Division Vs. The Superintending Engineer Lakshadweep Public Works Department, The Executive Engineer Lakshadweep Public Works Department Division Office and The Administration Union Territory of Lakshadweep (Decided on 01.08.2011) MANU/CA/0375/2011

Promotion - Applicant's representation that he was eligible for second financial up-gradation under the ACP scheme with effect from 6th September, 2006 was rejected by the Respondent - Hence this application - Whether the Appellant was entitled to promotion

Held, it was admitted that the applicant is eligible for the second financial up-gradation under the ACP scheme and that the post of Cargo Supervisor Applicant was an isolated post. The Respondents were aware that in the absence of definite hierarchical grades financial up-gradation shall be given by the ministries/department concerned in the immediately next higher (standard/common) pay scales as indicated in Annexure-2 to the ACP scheme. As per paragraph 7 of the conditions for grant of benefits under ACP scheme, financial up-gradation shall be given in the immediately next higher (standard/common) pay scales indicated therein. There is no need to obtain the R Rs of Harbour Department to verify the possibility for giving the second financial up-gradation under ACP scheme to the applicant on the basis of any similar or identical cadres when the ACP scheme itself provides for a contingency of granting financial up-gradations to isolated posts. Hence the applicant is entitled to the pay scale listed at serial No. 8 in the standard pay scales. Application Allowed.