Tuesday, 9 August 2016

UNDERSTANDING GST THROUGH FREQUENTLY ASKED QUESTIONS

AFTER READING THE BELOW 14 QUESTIONS I AM SURE THAT WE WILL DEFINITELY HAVE A GREAT UNDERSTANDING ABOUT MAJOR ASPECTS OF GST FROM THE BEGINNING

Following are the answers to the various frequently asked questions relating to GST:

QUESTION 1- WHAT IS GST? HOW DOES IT WORK?

Answer: GST is one indirect tax for the whole nation, which will make India one unified common market.

GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.

QUESTION 2- WHAT ARE THE BENEFITS OF GST?

Answer: The benefits of GST can be summarized as under:
Ø  For business and industry:-
·                Easy compliance: A robust and comprehensive IT system would be the foundation of the GST regime in India. Therefore, all tax payer services such as registrations, returns, payments, etc. would be available to the taxpayers online, which would make compliance easy and transparent.

·                Uniformity of tax rates and structures: GST will ensure that indirect tax rates and structures are common across the country, thereby increasing certainty and ease of doing business. In other words, GST would make doing business in the country tax neutral, irrespective of the choice of place of doing business.

·                Removal of cascading: A system of seamless tax-credits throughout the value-chain, and across boundaries of States, would ensure that there is minimal cascading of taxes. This would reduce hidden costs of doing business.

·                Improved competitiveness: Reduction in transaction costs of doing business would eventually lead to an improved competitiveness for the trade and industry.

·                Gain to manufacturers and exporters: The subsuming of major Central and State taxes in GST, complete and comprehensive set-off of input goods and services and phasing out of Central Sales Tax (CST) would reduce the cost of locally manufactured goods and services. This will increase the competitiveness of Indian goods and services in the international market and give boost to Indian exports. The uniformity in tax rates and procedures across the country will also go a long way in reducing the compliance cost.
Ø  For Central and State Governments
·                Simple and easy to administer: Multiple indirect taxes at the Central and State levels are being replaced by GST. Backed with a robust end-to-end IT system, GST would be simpler and easier to administer than all other indirect taxes of the Centre and State levied so far.

·                Better controls on leakage: GST will result in better tax compliance due to a robust IT infrastructure. Due to the seamless transfer of input tax credit from one stage to another in the chain of value addition, there is an in-built mechanism in the design of GST that would incentivize tax compliance by traders.

·                Higher revenue efficiency: GST is expected to decrease the cost of collection of tax revenues of the Government, and will therefore, lead to higher revenue efficiency.
Ø  For the consumer
·                Single and transparent tax proportionate to the value of goods and services: Due to multiple indirect taxes being levied by the Centre and State, with incomplete or no input tax credits available at progressive stages of value addition, the cost of most goods and services in the country today are laden with many hidden taxes. Under GST, there would be only one tax from the manufacturer to the consumer, leading to transparency of taxes paid to the final consumer.
·                Relief in overall tax burden: Because of efficiency gains and prevention of leakages, the overall tax burden on most commodities will come down, which will benefit consumers.
  
QUESTION 3- WHICH TAXES AT THE CENTRE AND STATE LEVEL ARE BEING SUBSUMED INTO GST?

Answer: At the Central level, the following taxes are being subsumed:

a)      Central Excise Duty,
b)      Additional Excise Duty,
c)      Service Tax,
d)      Additional Customs Duty commonly known as Countervailing Duty, and
e)      Special Additional Duty of Customs.

At the State level, the following taxes are being subsumed:

a)    Subsuming of State Value Added Tax/Sales Tax,
b)   Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States),
c)    Octroi and Entry tax,
d)   Purchase Tax,
e)    Luxury tax, and
f)     Taxes on lottery, betting and gambling.

QUESTION 4- WHAT ARE THE MAJOR CHRONOLOGICAL EVENTS THAT HAVE LED TO THE INTRODUCTION OF GST?

Answer: GST is being introduced in the country after a 13 year long journey since it was first discussed in the report of the Kelkar Task Force on indirect taxes. A brief chronology outlining the major milestones on the proposal for introduction of GST in India is as follows:

a)   In 2003, the Kelkar Task Force on indirect tax had suggested a comprehensive Goods and Services Tax (GST) based on VAT principle.

b)     A proposal to introduce a National level Goods and Services Tax (GST) by April 1, 2010 was first mooted in the Budget Speech for the financial year 2006-07.

c)      Since the proposal involved reform/ restructuring of not only indirect taxes levied by the Centre but also the States, the responsibility of preparing a Design and Road Map for the implementation of GST was assigned to the Empowered Committee of State Finance Ministers (EC).

d)    Based on inputs from Govt of India and States, the EC released its First Discussion Paper on Goods and Services Tax in India in November, 2009.

e)      In order to take the GST related work further, a Joint Working Group consisting of officers from Central as well as State Government was constituted in September, 2009.

f)    In order to amend the Constitution to enable introduction of GST, the Constitution (115th Amendment) Bill was introduced in the Lok Sabha in March 2011. As per the prescribed procedure, the Bill was referred to the Standing Committee on Finance of the Parliament for examination and report.

g)      Meanwhile, in pursuance of the decision taken in a meeting between the Union Finance Minister and the Empowered Committee of State Finance Ministers on 8th November, 2012, a ‘Committee on GST Design’, consisting of the officials of the Government of India, State Governments and the Empowered Committee was constituted.

h)   This Committee did a detailed discussion on GST design including the Constitution (115th) Amendment Bill and submitted its report in January, 2013. Based on this Report, the EC recommended certain changes in the Constitution Amendment Bill in their meeting at Bhubaneswar in January 2013.

i)   The Empowered Committee in the Bhubaneswar meeting also decided to constitute three committees of officers to discuss and report on various aspects of GST as follows:-

                                  i.                     Committee on Place of Supply Rules and Revenue Neutral Rates;
                                ii.                     Committee on dual control, threshold and exemptions;
                              iii.                     Committee on IGST and GST on imports.

j)      The Parliamentary Standing Committee submitted its Report in August, 2013 to the Lok Sabha. The recommendations of the Empowered Committee and the recommendations of the Parliamentary Standing Committee were examined in the Ministry in consultation with the Legislative Department. Most of the recommendations made by the Empowered Committee and the Parliamentary Standing Committee were accepted and the draft Amendment Bill was suitably revised.

k)      The final draft Constitutional Amendment Bill incorporating the above stated changes were sent to the Empowered Committee for consideration in September 2013.

l)     The EC once again made certain recommendations on the Bill after its meeting in Shillong in November 2013. Certain recommendations of the Empowered Committee were incorporated in the draft Constitution (115th Amendment) Bill. The revised draft was sent for consideration of the Empowered Committee in March, 2014.

m)    The 115th Constitutional (Amendment) Bill, 2011, for the introduction of GST introduced in the Lok Sabha in March 2011 lapsed with the dissolution of the 15th Lok Sabha.
 
n)    In June 2014, the draft Constitution Amendment Bill was sent to the Empowered Committee after approval of the new Government.

o)    Based on a broad consensus reached with the Empowered Committee on the contours of the Bill, the Cabinet on 17.12.2014 approved the proposal for introduction of a Bill in the Parliament for amending the Constitution of India to facilitate the introduction of Goods and Services Tax (GST) in the country.  The Bill was introduced in the Lok Sabha on 19.12.2014, and was passed by the Lok Sabha on 06.05.2015. It was then referred to the Select Committee of Rajya Sabha, which submitted its report on 22.07.2015.

QUESTION 5- HOW WOULD GST BE ADMINISTERED IN INDIA?

Answer: Keeping in mind the federal structure of India, there will be two components of GST – Central GST (CGST) and State GST (SGST). Both Centre and States will simultaneously levy GST across the value chain. Tax will be levied on every supply of goods and services. Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the State Goods and Services Tax (SGST) on all transactions within a State. The input tax credit of CGST would be available for discharging the CGST liability on the output at each stage. Similarly, the credit of SGST paid on inputs would be allowed for paying the SGST on output. No cross utilization of credit would be permitted.

QUESTION 6- HOW WOULD A PARTICULAR TRANSACTION OF GOODS AND SERVICES BE TAXED SIMULTANEOUSLY UNDER CENTRAL GST (CGST) AND STATE GST (SGST)?

Answer: The Central GST and the State GST would be levied simultaneously on every transaction of supply of goods and services except on exempted goods and services, goods which are outside the purview of GST and the transactions which are below the prescribed threshold limits. Further, both would be levied on the same price or value unlike State VAT which is levied on the value of the goods inclusive of Central Excise.
         
A DIAGRAMMATIC REPRESENTATION OF THE WORKING OF THE DUAL GST MODEL WITHIN A STATE IS SHOWN IN FIGURE 1 BELOW
  
Figure 1: GST within State



QUESTION 7- WILL CROSS UTILIZATION OF CREDITS BETWEEN GOODS AND SERVICES BE ALLOWED UNDER GST REGIME?

Answer: Cross utilization of credit of CGST between goods and services would be allowed. Similarly, the facility of cross utilization of credit will be available in case of SGST. However, the cross utilization of CGST and SGST would not be allowed except in the case of inter-State supply of goods and services under the IGST model which is explained in answer to the next question.

QUESTION 8.HOW WILL BE INTER-STATE TRANSACTIONS OF GOODS AND SERVICES BE TAXED UNDER GST IN TERMS OF IGST METHOD?

Answer: In case of inter-State transactions, the Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supplies of goods and services under Article 269A (1) of the Constitution. The IGST would roughly be equal to CGST plus SGST. The IGST mechanism has been designed to ensure seamless flow of input tax credit from one State to another. The inter-State seller would pay IGST on the sale of his goods to the Central Government after adjusting credit of IGST, CGST and SGST on his purchases (in that order). The exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The importing dealer will claim credit of IGST while discharging his output tax liability (both CGST and SGST) in his own State. The Centre will transfer to the importing State the credit of IGST used in payment of SGST.Since GST is a destination-based tax, all SGST on the final product will ordinarily accrue to the consuming State.

A diagrammatic representation of the working of the IGST model for inter-State transactions is shown in Figure 2 below

Figure 2:- IGST model






QUESTION 9- HOW WILL IT BE USED FOR THE IMPLEMENTATION OF GST?

Answer: For the implementation of GST in the country, the Central and State Governments have jointly registered Goods and Services Tax Network (GSTN) as a not-for-profit, non-Government Company to provide shared IT infrastructure and services to Central and State Governments, tax payers and other stakeholders. The key objectives of GSTN are to provide a standard and uniform interface to the taxpayers, and shared infrastructure and services to Central and State/UT governments.

GSTN is working on developing a state-of-the-art comprehensive IT infrastructure including the common GST portal providing frontend services of registration, returns and payments to all taxpayers, as well as the backend IT modules for certain States that include processing of returns, registrations, audits, assessments, appeals, etc. All States, accounting authorities, RBI and banks, are also preparing their IT infrastructure for the administration of GST.
                                
There would no manual filing of returns. All taxes can also be paid online. All mis-matched returns would be auto-generated, and there would be no need for manual interventions. Most returns would be self-assessed.

QUESTION 10- HOW WILL IMPORTS BE TAXED UNDER GST?

Answer: The Additional Duty of Excise or CVD and the Special Additional Duty or SAD presently being levied on imports will be subsumed under GST. As per explanation to clause (1) of article 269A of the Constitution, IGST will be levied on all imports into the territory of India. Unlike in the present regime, the States where imported goods are consumed will now gain their share from this IGST paid on imported goods.

QUESTION 11- WHAT ARE THE MAJOR FEATURES OF THE CONSTITUTION (122ND AMENDMENT) BILL, 2014?

Answer: The salient features of the Bill are as follows:

a)  Conferring simultaneous power upon Parliament and the State Legislatures to make laws governing goods and services tax;
b)    Subsuming of various Central indirect taxes and levies such as Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty commonly known as Countervailing Duty, and Special Additional Duty of Customs;
c)      Subsuming of State Value Added Tax/Sales Tax, Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States), Octroi and Entry tax, Purchase Tax, Luxury tax, and Taxes on lottery, betting and gambling;
d)      Dispensing with the concept of ‘declared goods of special importance’ under the Constitution;
e)      Levy of Integrated Goods and Services Tax on inter-State transactions of goods and services;
f)    GST to be levied on all goods and services, except alcoholic liquor for human consumption. Petroleum and petroleum products shall be subject to the levy of GST on a later date notified on the recommendation of the Goods and Services Tax Council;
g)   Compensation to the States for loss of revenue arising on account of implementation of the Goods and Services Tax for a period of five years;
h)      Creation of Goods and Services Tax Council to examine issues relating to goods and services tax and make recommendations to the Union and the States on parameters like rates, taxes, cesses and surcharges to be subsumed, exemption list and threshold limits, Model GST laws, etc. The Council shall function under the Chairmanship of the Union Finance Minister and will have all the State Governments as Members.

QUESTION 12- WHAT ARE THE MAJOR FEATURES OF THE PROPOSED REGISTRATION PROCEDURES UNDER GST?

Answer: The major features of the proposed registration procedures under GST are as follows:
        i.         Existing dealers: Existing VAT/Central excise/Service Tax payers will not have to apply afresh for registration under GST.
      ii.           New dealers: Single application to be filed online for registration under GST.
    iii.           The registration number will be PAN based and will serve the purpose for Centre and State.
    iv.           Unified application to both tax authorities.
      v.           Each dealer to be given unique ID GSTIN.
    vi.           Deemed approval within three days.
  vii.           Post registration verification in risk based cases only.
QUESTION 13- WHAT ARE THE MAJOR FEATURES OF THE PROPOSED RETURNS FILING PROCEDURES UNDER GST?

Answer: The major features of the proposed returns filing procedures under GST are as follows:

a)             Common return would serve the purpose of both Centre and State Government.
b)           There are eight forms provided for in the GST business processes for filing for returns. Most of the average tax payers would be using only four forms for filing their returns. These are return for supplies, return for purchases, monthly returns and annual return.
c)           Small taxpayers: Small taxpayers who have opted composition scheme shall have to file return on quarterly basis.
d)             Filing of returns shall be completely online. All taxes can also be paid online.

QUESTION 14- WHAT ARE THE MAJOR FEATURES OF THE PROPOSED PAYMENT PROCEDURES UNDER GST?

Answer: The major features of the proposed payments procedures under GST are as follows:

        i.            Electronic payment process- no generation of paper at any stage
      ii.            Single point interface for challan generation- GSTN
  iii.    Ease of payment – payment can be made through online banking, Credit Card/Debit Card, NEFT/RTGS and through cheque/cash at the bank
    iv.            Common challan form with auto-population features
      v.            Use of single challan and single payment instrument
    vi.            Common set of authorized banks
  vii.            Common Accounting Codes

*****

(SOURCE: PIB)




Monday, 25 July 2016

MCA NOTIFIED THE NCLT AND NCLAT RULES, 2016

CENTRAL GOVERNMENT NOTIFIED THE NCLT AND NCLAT RULES, 2016

The Ministry of Corporate Affairs (“MCA”), vide Notification dated. July 21, 2016, has notified the National Company Law Tribunal Rules, 2016/ NCLT Rules, 2016, which has replaced the Company Law Board. Further, the rules for the National Company Law Appellate Tribunal have also been notified by the Corporate Affairs Ministry. The Tribunal and its Appellate Authority are part of the Companies Act, 2013.

NCLT is initially located at ten places across India, equipped with requisite infrastructure and support staff, including Delhi, Mumbai, Kolkata, Hyderabad and Chennai. NCLT will prove out to be effective platform for adjudication of disputes on corporate law matters through disposal of such cases in a time bound and speedy manner.
NCLT and its Appellate Tribunal were constituted by the Ministry earlier to exercise and discharge the powers and functions as are, or may be, conferred on it by or under the Act with effect from the 1st day of June, 2016.
Criteria for matters before NCLT/NCLAT branch (Order No. 25/1/2016-NCLT dated June 29, 2016):-
S. No.
Bench
Matters pertaining to
1.
National Company Law Tribunal, Principal Branch
1)      Company having paid up share capital more than Rs. 50 lakhs and
2)      As per special order of the Hon’ble President, NCLT
2.
National Company Law Tribunal, New Delhi Branch
1)      Company having paid up capital upto Rs. 50 lakhs

Notifications regarding the NCLT/NCLAT Rules, 2016 can be downloaded from the below mentioned links for reference:


Thursday, 21 July 2016

A WEEKLY SELECTION OF KEY COURT ORDERS

CONTRACT HITS IMPOSSIBLE HURDLE

The law says that a contract to do an act, which turns out to be impossible of performance after the agreement, becomes void and the person who suffers must be compensated. If environment restrictions not contemplated in the contract frustrate a project and it becomes impossible or impracticable to implement it, the contractor deserves compensation, according to the Supreme Court. The contractor who could not undertake a housing project because of environment curbs not contemplated by the government at the time of signing the agreement was compensated in the judgment, Delhi Development Authority vs Kenneth Builders.

Brief facts

The development authority (“DDA”) gave to a contractor a housing project in the ridge area of the capital, which is an ecologically sensitive area. At the time of the contract, this fact was not taken into consideration by either party. Later, it was found that the project could not be undertaken because of various regulations to protect the area. Any development activity at the site required sanction from the Ridge Management Board and the Supreme Court itself, because of environment litigation. Though DDA granted the contract on the “as is where is” basis, the construction could not be undertaken which is prohibited by law and without permission. Invoking Section 56 of the Contract Act, the court asked DDA to refund the deposit made by the contractor with interest.

REVIVED UNIT MUST PAY TAX DUES

An industrial unit which was protected by the Sick Industries Act during revival plans could be asked to pay its tax dues when it is revived, the Supreme Court ruled in the case, Director General of Income Tax vs GTC Industries.

Brief facts

The firm was declared sick in 1997 and referred to BIFR. After a draft rehabilitation scheme was circulated, the revenue authorities demanded Rs. 366 crore in taxes. However, it was barred from recovering it due to the SICA provisions. In 2007, the net worth of the company became positive and it asked the board to deregister it and it was done. Income tax authorities now demanded Rs.761 crore outstanding. The company, which allegedly alienated some of its properties, moved the board for stay of any coercive steps. It was granted. After more appeals, the high court asked the company to approach the board. The authorities appealed to the Supreme Court. It allowed the appeal and stated that the high court had gone wrong as the company has been revived and the scheme had also expired in 2011. So, the tax authorities can go ahead and recover the arrears.

MINING AFTER EXPIRY OF LICENCE

The Supreme Court last week indicted the Ministry of Environment and Forests for allowing a mining firm to continue mining though the local residents complained that its licence had expired long ago.

In this case, Talaulicar & Sons vs Union of India, the licence was granted for two years. The regulations permitted five years, which ended in 2010. When the mining continued, some residents moved the Bombay High Court and the National Green Tribunal against the operations.

The high court found that operations in the Saniem Sacorda iron ore mine was without sanction. The firm appealed to the Supreme Court. It agreed with the high court and stated that regulations, including a public hearing, have not been followed. It asked the ministry to take a fresh look at the issue and take a decision after scrupulously following the regulations and all factors leading to the environment impact assessment including effective public hearing preceded by due publication in the media.

AUCTION OF PROPERTY CANCELLED

In a dispute over the sale of property of a liquidated company, the order of the company court is binding on the recovery officer under the Debt Recovery Act, the Supreme Court has held in its judgment, Anita International vs Tungabadra Sugar Works Mazdoor Sangh. The winding up proceedings of Deve Sugars Ltd of Karnataka gave rise to complex litigation in the Madras and Karnataka High Courts.

The Madras High Court appointed an official liquidator. State Bank of Mysore, which had extended loan to the firm, moved the debt recovery tribunal in Karnataka and got a recovery certificate. This was challenged in the Karnataka High Court by the workers. Ultimately, the recovery officer sold the property to Anita International for Rs. 10.25 crore, which was alleged to be far below the actual price. Ending the multifarious litigation, the Supreme Court cancelled the sale made by the recovery officer, holding that his sale was in utter violation of the company court order.

BANK MUST PROTECT CASH IN TRANSIT AND THE INSURER IS NOT LIABLE FOR THIS

If proper security is not provided by a bank for transiting huge cash and it is robbed on the way, the insurer would not be liable, the National Consumer Commission ruled last week, setting aside the order the Gujarat state commission ordering New India Assurance to recoup the loss to a cooperative bank in Ankhleswar.

Brief Facts

According to the indemnity policy, the bank was required to employ two guards with firearms when the amount is more than Rs. 10 lakh. However, the Navsarjan Industrial Bank sent two clerks and a guard with a wooden stick to State Bank of India to encash a cheque of Rs. 20 lakh. While returning with the cash, two men on bike fired the guard injuring him. They carried away the trunk with cash. The coop bank sued the insurance company. The state commission allowed the claim. New India appealed to the national commission. It set aside the state commission judgment and ruled that the coop bank had infringed the conditions in the policy regarding the number of guards with firearms. The commission rejected the contention of the coop bank that it was not told about those conditions. It also did not believe the coop bank which pleaded that Ankhleswar being a small city, it was difficult to find armed guards. 

(Source: Business Standard)

Sunday, 3 July 2016

WEEKLY CASE LAWS UNDER DIFFERENT STATUES

SICA PREVAILS OVER COMPANIES ACT

The Supreme Court (“SC”) stated last week that different situations might arise when a sick company is before both the company court for winding up and before the Board for Industrial and Financial Reconstruction (“BIFR”) for its revival, “but whatever be the situation, whenever a reference is made to the BIFR under the Sick Industries Act (“SICA”), the provisions of the latter would come into play and they would prevail over the provisions of the Companies Act and proceedings under the Companies Act must give way to proceedings under the Sick Industries Act.” The court reiterated this view after going through the case law on this issue in its judgment in the Case, Madura Coats Ltd vs Modi Rubber Ltd. Madura Coats moved the Allahabad High Court for winding up Modi Rubber as its dues were not paid.

The company court appointed an official liquidator, against which Modi appealed to the high court. Meanwhile, Modi also moved the BIFR and a rehabilitation package was approved. The high court stayed the company court proceedings. This situation raised the question which law would prevail and the Supreme Court upheld the high court view. The judgment noted that since Madura Coats has already participated in the BIFR proceedings, nothing survived in this case. “Strictly speaking, we have merely undertaken an academic exercise,” the three judges observed in this 14-year-old litigation which is still continuing.

INSURANCE CLAIM EVEN AFTER ASSIGNMENT

Even if a firm assigns its rights regarding insurance to another firm, it still retained its right to sue the insurer, unless it is specifically barred, the APEX Court declared last week its judgment, United India Insurance vs Leisure Wear Exports Ltd.

In this case, the Ludhiana garment factory exported INR 2 crore worth of goods in 320 cardboard boxes to Moscow firm Magna Overseas via Mumbai port. The consignment was transported from Odessa in Ukraine by road to Moscow. On arrival, several cartons were missing. Since the cargo was insured under the Open Marine Policy, the shortage was reported to United India. When the insurer rejected the claim, the Ludhiana firm moved the Punjab state consumer commission, which ordered the insurer to pay compensation.  On appeal, the National Commission upheld order.

In the appeal before the Supreme Court, the insurer argued that since the exporter had assigned his rights to the Moscow firm, the Ludhiana firm had no locus to move the consumer forums. The court rejected the argument citing Section 17 of the Marine Insurance Act. The judgment doubted any assignment at all. Even if there was an assignment, the exporter was “legally entitled to retain, enjoy and exercise all those rights, which are available to it under the contract of insurance, despite making assignment of their policy.” Section 17 of the Act in terms permitted the insured to make assignment of their insurance policy in favour of an assignee and at the same time allowed the insured even after making an assignment to retain all those rights which are available to them under the contract of insurance with the Insurer, the judgment explained while dismissing the appeal of United India.

TIME LIMIT STARTS FROM FIRST DEFAULT

The Supreme Court had last week dismissed the appeal of Sundaram Finance Ltd against the Kerala High Court judgment which stated that its suit against a defaulting borrower, Noorjehan Beevi, was beyond the time limit of three years.

In this case, a woman bought a vehicle on hire purchase from the financing firm in 1984 but defaulted after a year. The company took over the vehicle and sold it, though there was no term in the contract empowering the company to sell it. However, the amount recovered was not sufficient to clear the loan and the company sued the woman for the balance. She argued that the suit was filed beyond the limitation period. The company argued that the time started from the sale of the vehicle. The woman contended that the time should be counted from the first default. The trial court, the high court and now the Supreme Court agreed with her.

MD ABSOLVED FROM POLLUTION CHARGE

The Madhya Pradesh High Court has quashed proceedings initiated by the Bhind magistrate against the managing director of Cadbury India for exuding untreated effluents from its factory there. The high court ruled that Manu Anand, MD, was not in charge of the day to day affairs, as argued by the MP pollution control board. It was the factory manager who was in charge, and prosecuting the MD was unlawful. The judgment cited Section 47 of the Water Pollution Act which stated that the person who is in charge of and responsible to the company for the conduct of the business of the company, as well as company, shall be deemed to be guilty of the offence. Moreover, proceedings cannot be initiated against a person if he is able to establish that the offence was committed without his knowledge or that the same was committed despite the said person exercising due diligence to prevent the offence.

The judgment derived its reasons from decisions under the Negotiable Instruments Act dealing with bouncing cheques.