SC: Arbitration agreements must be adhered to by the parties

The Supreme Court ruled last week that if the parties to a contract agree on the arbitrator, the place of arbitration and the court for deciding disputed questions, these should be adhered to.

Dismissing the arbitration petition of Shivnath Rai Harnarain (India) Ltd for appointment of a mediator in terms of Section 11(6) of the Arbitration and Conciliation Act, the arbitration judge noted that the parties chose Samuel Marshal as the arbitrator and the venue as Singapore. His award in favour of the firm was set aside by a Singapore court.

The firm then moved the Supreme Court for appointment of an arbitrator. The court rejected this as the arbitration on agreed terms was held in Singapore and the court there passed the order. Therefore, it cannot turn around now and ask the Indian court to appoint an arbitrator.

Punjab Govt appeal dismissed

The Supreme Court last week dismissed the appeal of the Punjab government against the judgment of the high court allowing sales tax deduction for Perfect Synthetics, manufacturers of yarn.

The company’s stand was that it bought raw materials from tax-exempted units within the state and used them in the manufacture of yarn. A majority of the yarn was sold intra-state and tax on finished goods was paid.

However, the department did not allow deduction in the taxable turnover on the ground that the goods bought by the company are liable to tax at the first stage of sale.

Since no tax on purchase of raw materials from exempted units has been paid, the company was not entitled to the deduction under Rule 29. The high court rejected the department’s view and it has been upheld by the Supreme Court.

Tata Hospital not liable to pay sales tax

The Supreme Court has ruled that Tata Main Hospital in Jamshedpur, a division of Tata Steel, is not liable to pay sales tax on the amount charged for medicines administered during the course of treatment of non-employee patients.

The court dismissed the Jharkhand government’s petition challenging the Ranchi high court’s judgement that held the supply of medicines, surgical items, vaccines, x-ray films and plates by Tata Main Hospital to its non-employee indoor patients was part and parcel and incidental to the medical services rendered to these patients.

SC: Retirement wage is not the criterion

The Supreme Court has ruled that while computing the financial loss due to the death of a bread-winner in a motor vehicle accident, the tribunal should not consider his income at the time of his future retirement, but the income at the time of the mishap.

Though future prospects is one consideration for arriving at the compensation package, the retirement wage is not the criterion, the court said.

SC remits Hindustan Zinc dispute to the high court

The Supreme Court last week asked the Rajasthan High Court to reconsider the claims of persons whose lands were acquired at the instance of Hindustan Zinc Ltd two decades ago.

The land cultivators claimed that their family members were promised employment in the company but the promise was not kept. The company denied any commitment and alleged that certain forged documents were produced. The Supreme Court therefore remitted the dispute to the high court to examine the facts of the case and arrive at a decision.

SC: DTA will override the provisions of Income Tax Act

The Supreme Court has reiterated in its judgment, Dy Commissioner of Income Tax vs Torqouise Investment & Finance Ltd, the principle that Double Taxation Avoidance Agreement (DTAA) entered into by the Government of India with foreign governments would override the provisions of the Income Tax Act if they are at variance with the provisions of the Act.

It was held that from a plain reading of Article XI of the DTAA, it was clear that dividend income would be taxed only in the contracting states where such income accrued.

The court thus dismissed a large batch of appeals moved by the tax authorities before the Supreme Court against the orders of the tax appellate tribunals favouring assessee companies.
Business Standard; Tuesday, Mar 25, 2008
LEGAL DIGEST, BS Reporter / New Delhi March 17, 2008