The Supreme Court in the matter of Mansukh Dyeing and Printing Mills[1] has upheld the judgment of Bombay High Court in the AN Naik Associates & Others[2], which has interpreted the term ‘otherwise’ appearing in Section 45(4) of ITA[3] to include the instances of retirement of partners.

Before getting into the facts in the matter of Mansukh Dyeing and Printing Mills (supra), let us set us the context. The provisions of Section 45(4) were introduced through Finance Act, 1987. The said section stipulates that profits or gains arising from transfer of capital asset by way of distribution of capital assets on the dissolution of a firm or otherwise, shall be chargeable to tax as income of the firm of the previous year in which such transfer took place and for the purposes of Section 48, the fair market value of the asset as on the date of such transfer shall be the deemed to be full value of consideration.

Read more: Revaluation of Assets of Partnership Firm – ‘Transfer’ under Section 45(4) – SC upholds Bombay HC...

The Supreme Court in the M/s Sansera Engineering Limited[1] has concluded the long outstanding issue of distinction between the refund and rebate under the erstwhile indirect taxation laws. The assessee tried to distinguish rebate from refund, since there was no specific time limit mentioned for rebate. Before dealing with the said judgment and its implications under the GST laws, a brief background on the thin line of distinction between refund and rebate is sina qua non.

Read more: SC in Sansera Engineering Limited – Rebate vs Refund – Implications under GST Laws

In this 102^nd edition, we bring you articles dealing with certain landmark judgments. The article on the judgment of Supreme Court in Mansukh Dyeing and Printing Mills, upholding the decision of Bombay High Court in AN Naik Associates & Others is a must read. The Supreme Court held that the expression ‘otherwise’ which appears in Section 45(4) [old] covers the instance of ‘retirement’ also and not to be restricted only to instances of dissolution. This puts a lot of cases under stress, who took the stand that old section covers only instances of dissolutions.

The next article is on the judgment of Supreme Court in Sansera Engineering Limited, wherein it was held that time limit that was applicable for refund under Section 11B is equally applicable to rebate filed under Rule 18 of Central Excise Rules. This also puts an end to a long outstanding issue of different treatment to rebate. Now, under GST laws, though expression ‘rebate’ is not used, the methodology is still being used, so, we tried to apply the rationale of Sansera to the current law.

Read more: SBS Wiki E Journal January 2023

1. Supreme Court in Pawan Kumar Goel[1] - No Vicarious Liability on Director of Company in Cheque Bounce issue, if the Company is not arraigned as accused:

The Supreme Court in the case of Pawan Kumar Goel has reiterated that the director of a company is not vicarious labile, if the company is not arraigned as accused. The facts of the case are that Pawan Kumar Goel has supplied certain products to M/s Ravi Organics Limited. For settling the payment, Ravi Organics Limited has given a cheque, which when presented, got dishonored. Pawan Kumar Goel has filed a criminal complaint under Section 138 of Negotiable Instruments Act, 1881 (‘NI Act’) against the director of the Ravi Organics Limited. The Magistrate Court and Sessions Courts have upheld the complaints. The Director has approached the High Court against the orders of lower courts and High Court cancelled all the previous orders stating that the complaint was lodged against the director of the company instead on the company by placing reliance on Aneeta Hada vs Godfather Travels & Tours Private Limited[2] and SMS Pharmaceuticals Limited vs Neeta Bhalla & Another[3].

Read more: Summary of Misc Judgments