The Chartered Accountant

order shall consider whether the direction for deposit
as pre-deposit condition would cause undue hardship
to the person against whom such direction is issued.
Such a finding is not available in the impugned order
of the respondent, nor did the respondent decide
DECEMBER 2008 1002 THE CHARTERED ACCOUNTANT
LEGAL UPDATE
the prima facie issue. It is not proper on the part of
the respondent to come to the prima facie conclusion
that the petitioner is liable to pay tax for all the works
as assessed by the original authority.
The petition was disposed of.
Sales Tax / VAT
Rule 31B of the Bombay Sales Tax Rules, 1959 — Incentives — Entitlement
An existing unit is entitled to the incentives under the 1993 scheme irrespective of the increase in the
production capacity
Commissioner of Sales Tax, Mumbai v. Pec Vee Textile Limited, Wardha (BOM), 13 October 2008
The issue under consideration is whether the Deputy
Commissioner of Sales Tax could impose conditions
to the effect that the incentives can be availed proportionately
to the production of the finished products
attributable to the newly acquired fixed assets?
The High Court held that the 1993 scheme as amended
in 1994 makes a specific departure from the earlier
schemes and provides for availing the incentives not
on the proportionate basis but on the total production
of the Existing Unit. In these circumstances, imposing
conditions for availing the incentives on prorata basis
would be contrary to the 1993 scheme of incentives.
Therefore, additional investment made by the assessee
for modernisation and upgradation of the existing
plant did not result in increase in the production
capacity of the plant. Merely because an existing unit
is entitled to the incentives on acquisition of requisite
new fixed assets and merely because the incentives are
to be availed on the finished products, it cannot be
presumed that the incentives under the 1993 scheme
are to be availed on the finished products attributable
to the fixed assets newly acquired by the existing unit.
Since increase in the production capacity of the existing
unit acquiring new fixed assets, is not the criteria
for entitlement of incentives under the 1993 scheme,
availing the incentives under the 1993 scheme proportionate
to the production attributable to the newly acquired
fixed assets does not arise at all. Rule 31B does
not provide for availing the incentives under the 1993
scheme in proportion to the production attributable
to the newly acquired fixed assets. An existing unit is
entitled to the incentives under the 1993 scheme irrespective
of the increase in the production capacity.
The applications were disposed of.
Other Acts
Arbitration Act
Section 11 of the Arbitration and Conciliation Act, 1996 — Appointment of Arbitrator
Where conditions indicate to existence of an arbitration agreement, matter should be referred to an Arbitrator
M/s. Unissi (India) Pvt. Ltd. v. Post Graduate Institute of Medical Education & Research (Supreme Court), 1 Octo-
ber, 2008
Tender floated by the Respondent/PGI contained
an arbitration clause. The appellant gave an offer
for the tender which was accepted by the Respondent.
Purchase orders were placed and in compliance
with the said order, the appellant had supplied
equipments. The delivery of equipments was also accepted
by the Respondent and the machineries were
installed however, no payment was made to the appellant.
The Respondent demanded the execution
of an agreement containing an arbitration clause on
a non-judicial stamp paper duly signed. The appellant
signed the agreement and sent it to the Respondent.
The Respondent though admittedly received the
same, did not send back the agreement to the appellant.
It was alleged by the Respondent that no arbitration
agreement was executed between the parties
and, therefore, question of appointing an Arbitrator
could not arise. The Additional District Judge held
that it could not be held that the appellant was entitled
to ask for appointment of an Arbitrator under
Section 11.
The High Court held that the tender documents itself
contain an arbitration clause and by reason of acceptance
of the tender of the appellant by PGI, it must
be held that there was a valid arbitration agreement between
the parties.
Further, although no formal agreement was executed,
the tender documents indicating certain conditions of
contract contained an arbitration clause. Since, an arbitration
agreement did exist in the instant case, the
matter should be referred to an Arbitrator for decision.
Accordingly order passed by the Learned District
Judge was set aside.
The appeal was allowed.