Of bottles and crates
The Supreme Court has held that glass bottles used by soft drink companies are ?fixed capital investment,? and thus exempt from trade tax. However, it added that the manufacturers will have to pay tax on crates, used to carry such bottles, as they are not fixed capital investment. It partly set aside the Allahabad High Court?s order of January last year that gave relief to Varun Beverages Ltd by holding that values of such bottles and crates are to be treated as part of ?fixed capital investment? as both are essential apparatus for the manufacture of soft drinks. In the case of Commissioner of Trade Tax vs Varun Beverages Ltd, the assessee was granted an eligibility certificate that allowed it to claim tax exemptions for 10 years from 1999 to 2009 or to the extent of 200% of the fixed capital investment of around R54 crore, whichever was earlier. Subsequently, the Divisional Level Committee in 2001 had allowed the beverage firm?s plea seeking exemptions even on glass bottles and crates. This was challenged by the department before the UP Tribunal, which held that the bottles and crates were neither directly nor indirectly used in the manufacture of beverages and, therefore, the same cannot be treated as ?apparatus.? Being aggrieved by the tribunal?s order, the assessee moved the high court, stating that the manufacture of soft drink would be incomplete without these glass bottles and crates.
Right to property
Reiterating that the right to property is a constitutional right, the Supreme Court has held that the government cannot deprive a person of his land in an arbitrary manner. It asked the courts to view the action of the government in acquiring land for private parties in the name of urgency with ?suspicion?. It quashed the acquisition of 205 hectares of agricultural land acquired by the Greater NOIDA Industrial Development Authority in Uttar Pradesh?s Gautam Budh Nagar for business entrepreneurs in March 2008. The SC said: ?(the) court should not adopt a pedantic approach, as has been done in the present case, and decide the matter keeping in view the constitutional goals of social and economic justice and the fact that even though the right to property is no longer a fundamental right, the same continues to be an important constitutional right and in terms of Article 300-A, no person can be deprived of his property except by authority of law.? The land owners led by Radhy Shyam had challenged the acquisition on the grounds that the government invoked Section 17(1) and 17(4) of the Land Acquisition Act empowering it to dispense with the process of inviting objections from the victims as mandated under Section 5A of the legislation.
Recruitment rules
The Supreme Court has ruled that the government has absolute constitutional power to amend recruitment rules, including the age of superannuation, retrospectively. Stating that ?the court cannot ordinarily interfere with policy decisions,? it said that any undertaking given by the government to the employees was not binding as recruitment rules? powers emanating from Article 309 of the Constitution were absolute and can be changed at any time. Giving an instance, it said that ?if the retirement age is fixed by rules framed under Article 309, that can be changed subsequently by an amendment even in respect of employees appointed before the amendment.? The SC has set aside an Allahabad High Court judgment that held contrary to its view that public sector firm BSNL cannot change such rules retrospectively.
indu.bhan@expressindia.com