DIRECTORS NOT RESPONSIBLE FOR DISHONOURED CHEQUE
Recent Supreme Court Judgment has brought cheers on director’s faces of the companies. The Supreme Court ruled last week that prosecution for issuing a cheque which was dishonoured for want of credit in the bank can be initiated only against the person who issued the cheque and not against the company or directors who were not aware of it. It quashed the Madras High Court order to try the company, the chairman and the managing director in judgment, PJ Agro Tech Ltd. Vs Water Base Ltd. The two companies have entered into an agreement for distribution of prawn feed in Andhra Pradesh. However, it did not succeed and PJ Agro authorized the other company to collect its due from customers who has not paid for the goods. It appointed a coordinator for the purpose. He issued a cheque to Water Base which bounced, leading to the filing of charges under The Negotiable Instrument Act. The Supreme Court explained that the coordinator might have issued the cheque for the benefit of PJ Agro, but the directors of the latter company were not responsible for the default.
THE COMPANIES BILL, 2008 ON ITS WAY
On Thursday, 23rd Oct. 2008 The Company Bill, 2008 was tabled on the Parliament. If the bill gets enacted then new Company Act 2008 will supersede the current Act. According to Corporate Affairs Minister Mr. Prem chand Gupta the new act would make things simpler. In the year 1956 their were 36,000 companies whereas in 2007 their were 7.5 lacs.
HISTORY
In India Ist Companies Act was passed in 1850. There after Company Act, 1866 was enacted & then followed by the Company Act 1913 which was replaced by the present The Company Act 1956. The Company Act 1999, 2000, 2002 had amended the Company Act, 1956.
WHAT’S NEW?
The Company Bill, 2008 paves way to:
- One Person Company (OPC).
- Limited Liability Partnership (LLP).
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Appointment of 33% independent directors on board.
- Many more……..
THE TOP 10 STUPID TAXES – III
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7. 1689: Tax incentives for gin production
Anyone familiar with Hogarth’s engraving, Gin Lane, will understand the implications of this tax blunder. William and Mary, the protestant monarchs who ruled between 1689 and 1702, discouraged the importation of brandy from the Catholic French and instead promoted the local production of gin by abolishing taxes and licensing fees.
Unfortunately, the affordability of gin made it a favourite drink of the poor, and soon lead to mass drunkenness, vice and poverty. Government attempts to reintroduce the tax only lead to a proliferation in the making of illegal – cheap and poor quality – gin. Finally, in 1751, the Tippling Act allowed for reasonable prices, taxes and regulation of production.
8. 1700s: Scottish whiskey tax
The Scottish government applied ever increasing rates of taxation on malt and whiskey in the early eighteenth century. Distillers were driven underground, making smuggling a standard practice for 150 years.
By 1777 only eight licensed distilleries were paying taxes, while 400 unregistered stills were thought to operate within Edinburgh alone. By the 1820′s around 14,000 illicit stills were being confiscated every year – suggesting more than half the whisky consumed in Scotland was “illegal”. Finally, in 1823 the Excise Act was passed, which sanctioned the distilling of whisky in return for a license fee of £10. Smuggling died out almost completely over the next 100 years.
9. 1990: Poll tax
This hated tax, set by local authorities, ended up being much more expensive than first thought – and eventually up to 30 per cent of people in some areas refused to pay. This culminated in the poll tax riots – 200,000 protestors attended Trafalgar Square on March 31 1990 – and ultimately to the downfall of Margaret Thatcher. It was replaced by council tax in 1993.
10. 1783: Hat tax
Prime Minister William Pitt added an excise duty to hats in 1783, costing retailers £2 a year in London and 5 shillings in the country. Duty was collected by means of a stamped ticket fixed to the lining of the hat.
A national debate ensued about what forms of headgear were classed as a “hat” – so in 1804 the statutory definitions were recast to include every description of hat by whatever name it was known, and almost every material from which it could be made. It wasn’t until 1811 that the tax was repealed.
THE TOP 10 STUPID TAXES-II
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4. 1995: Illegal drug tax (USA)
On January 1 2005, Tennessee joined 23 other states in imposing a tax for possession of illegal drugs. People who bought drugs had 48 hours to approach the Department of Revenue and pay tax. It was levied per gram – $3.50 for marijuana, $50 for cocaine, and $200 for meth and crack cocaine.
Drug buyers did not need to provide identification to pay the tax and it was illegal for revenue employees to report them. In just 18 months, Tennessee has collected nearly $2.7 million in revenue – although it is thought this came mainly from drug users who were arrested and found not to have paid the tax.
In July 2006, a judge decided the tax was unconstitutional and it was scrapped.
5. 1988: Removal of Mortgage Interest Relief
This was partly precipitated by a blunder by the then Chancellor, Nigel Lawson. In his budget, he announced that in less than five months time, he was ending double mortgage interest tax relief, which was a major subsidy to mortgage borrowers at the time.
This led to a surge of people buying a home to take advantage of the tax relief. One year later and interest rates had almost doubled to 15 per cent, crippling homeowners and leaving many facing repossession.
6. Late 1970s: The 98 per cent tax rate
During this period there was a 60 per cent top rate income tax and then an “investment income surcharge” of a further 15 per cent. There was no incentive to increase profits because virtually everything was taxed. It led to high levels of non-compliance and lots of avoidance, and was abolished by Nigel Lawson in 1984.
(…cont.)