Ravinder Raj vs Maruti Udyog Limited and M/s Competent Motors Co. Pvt. Ltd

Case: Ravinder Raj vs Maruti Udyog Limited and M/s Competent Motors Co. Pvt. Ltd

Case Facts:

Ravinder Raj is the petitioner and Maruti Udjoy limited is the respondent 1 and M/s Competent Motors
Co. Pvt Ltd being the respondent 2. In the year 1985 Mr. Ravinder Raj booked  a cream colour Maruti 800 car by paying Rs. 10,000. On 15^th July 1988 the petitioner was informed that his Maruti Car allotment has matured for delivery. The next day i.e on 16^th July 1988 the petitioner paid  Rs. 78351.05 towards the total cost  of the car. On 1^st March 1989 there was an increase in the excise duty payable , causing a price hike of Rs. 6710.61. The petitioner thus received a letter from the respondent 2 to deposit the excess amount payable which the petitioner denied to pay .

Judgment:

The court did not accept the petitioners claim

Comments:  

According to us the court took the right decision. As according to the Sales of Goods Act 1930 Section 64A (2) any contract for the sale or purchase of goods without the stipulations about the payment of tax where the tax was not charged at the time of making the contact, or for the sale or purchase of such good any increase in the tax or any part of tax is payable, the seller may add the amount equivalent  to the increase in tax to the contact price and he shall be entitled to be paid and to sue for the recovery of the additional amount. These provisions are applicable to the following taxes

1.      any duty of customs or excise on goods

2.      any tax on the sale or purchase of goods.

Under section 46A(1) of the Sales of goods Act the respondent has the rights of an unpaid seller. The claims of the petitioner failed and the case was given the right judgment. Any increase in the future tax rate is not in the hands of the producer and thus he should not bear the extra cost.

Law included: Sales of Goods Act 1930 

Vodafone International Holding vs Union of India

Case Facts:

Vodafone International Holding and Hutchison telecommunication international limited or are two non-resident companies. These companies entered into a transaction by which Hutchison telecommunication international limited transferred the share capital of its subsidiary company based in Cayman Island i.e. CGP international to Vodafone International Holding.

Vodafone acquired 67% of controlling interest in Hutch. The Indian Revenue authorities issued a show cause notice to Vodafone as to why it should not be considered as “assesse in default” and thereby sought an explanation as to why the tax was not deducted on the sale consideration of this transaction.

The Indian revenue authorities thereby through this sought to tax capital gain arising from sale of share capital of CGP on the ground that CGP had Indian Assets (Joint venture between Hutch and Essar).

Vodafone filed a writ petition in the High Court challenging the jurisdiction of Indian revenue authorities. This writ petition was dismissed by the High Court and Vodafone appealed to the Supreme Court which sent the matter to Revenue. The revenue authorities decided that it had the jurisdiction over the matter and then matter was sent to the High Court which was also decided in favour of Revenue Authorities and then finally a “Special Leave” petition was filed in the Supreme Court.

Judgment:

The High Court held that the Indian revenue authorities do not have jurisdiction to impose tax on an offshore transaction between two non-residents companies where in controlling interest in a (Indian) resident company is acquired by the non-resident company in the transaction.

Comments:

After reading the case facts and other news related to the case we feel that the Supreme Court ruled the correct judgment. We say that on the basis of the following :

·   1. Section 2 (14) of the Income Tax Act defines what a “capital asset” means. According to that definition transfer of shares does not fall under Section 2(14).

·   2. The judgment also benefitted the overall economic confidence of other multi-national companies operating in India. It made them have faith in the Indian judicial system.

Cases covered: Companies Act 1956 (Amended in 2013) and Income Tax Act 1961