Preventing hope from ending in despair

Written by Indu Bhan | Indu Bhan | Updated: Dec 5 2012, 07:27am hrs
If it looks like ice cream, tastes like ice cream, it must be ice cream

Upholding the excise departments stand in the case of Commissioner vs Connaught Plaza Restaurant Ltd, the Supreme Court has ruled that the soft serve sold at McDonalds Indias outlets is in fact ice cream for the purpose of determining excise duty.

It said that the manner in which a product may be marketed by a manufacturer does not necessarily play a decisive role in affecting the commercial understanding of such a product. What matters is the way in which the consumer perceives the product at the end of the day.

A person who walks into the restaurant to buy ice cream is not likely to know the intricacies of the manufacture of the product and its difference from soft serve, the top court said, while rejecting the argument of the assessees counsel V Lakshmi Kumaran that it was liable to pay less duty since the product was marketed and sold around the world as soft serve.

According to the apex court, Mere semantics cannot change the nature of a product in terms of how it is perceived by persons in the market, when the issue at hand is one of excise classification.

While the department had issued three show-cause notices to the fast-food restaurant chain in April 1997-March 2000, saying soft serve would attract the 16% duty plus an additional duty levied on ice-cream, McDonalds India had opposed the classification. However, the sectoral tribunal had upheld McDonalds claim that soft serve could not be classified as ice-cream since ice-cream contains 10% milk fat whereas soft serve does not contain more than 5% milk fat.

Counsel Arijit Prasad, appearing for the revenue, submitted that in common trade parlance soft serve is known as ice-cream; all the ingredients used and the process of manufacture adopted for preparation of soft serve is essentially the same as is adopted for manufacture of an ice-cream; and therefore, the manufacture of soft serve was not distinct from the manufacture of ice-cream.

Even cheques bouncing due to signature mismatch is an offense

Be ready to face prosecution in a cheque bounce case even if the cheque was dishonoured due to signature variations.

The Supreme Court in the case of M/s Laxmi Dyechem vs State of Gujarat & Ors has overturned the Gujarat High Courts order that held that a person can be prosecuted only in two situationsif there was insufficient money in the account or the cheque amount exceeded the amount arranged to be paid from the account, but would not apply where the cheque bounced because of a signature mismatch with the specimen signatures available with the bank.

The apex court stated that as long as the change in the signature is brought about with a view to preventing the cheque being honoured, the dishonour would become an offence under Section 138 of the Negotiable Instruments Act 1881, subject to other conditions prescribed being satisfied. There may be a change in the directors of a company or other valid reasons for the mismatch between the signatories on the cheque.

Dishonour on account of such changes that may occur in the course of ordinary business of a company, partnership or an individual may not constitute an offence by itself because such a dishonour in order to qualify for prosecution under Section 138 shall have to be preceded by a statutory notice where the drawer has the opportunity to arrange the payment of the amount covered by the cheque, it said.

The government should act as a model employer

The Supreme Court has stated that the government should act as a model employer and generate confidence in its employees that they will be treated fairly in appointments and promotions.

The concept of good governance can be concretised only when government employees are sure that their trust will not be betrayed, it said, flaying the Assam government for not following proper rules in the appointment and promotion of its police officials in the case of Bhupendra Nath Hazarika vs State of Assam.

It should always be borne in mind that legitimate aspirations of the employees are not guillotined and a situation is not created where hopes end in despair. Hope for everyone is gloriously precious and a model employer should not convert it to be deceitful and treacherous by playing a game of chess with their seniority, the top court said.

The order came on a bunch of petitions of Assam police officials whose appointment was held to be illegal by the Gauhati High Court. The apex court said the state government had violated rules in the appointment under special batch recruits in which serving officers were illegally granted seniority over other police officials appointed in direct recruitment in Assam Police Service in 1993-94.

However, it refused to quash the appointments due to the long delay in challenging the selection process, during which some of the officials had retired.