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Commercial coal mining: The way forward

Despite huge reserves, India ends up importing almost 25 percent of its coal requirement. Some of it is unavoidable because of the quality of coal but more than 100 million tonnes of coal imported can and should be mined within the country.

Anil Swarup

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One of the many announcements made by the Finance Minister, as a part of the Rs 20 lakh crore package announced by the Prime Minister, related to “opening” up of coal mining for commercial purpose by private entities. A leading English daily ran a headline, “Government Ends Monopoly in Coal”. This was a trifle misleading. Yes, commercial mining is the need of the hour and a great decision but the decision relating to commercial mining was taken more than a year ago.

In fact, government “monopoly” in coal mining had ended long ago. Private sector had been mining coal for quite a while but the enduse of coal that they mined was restricted. These mines were for captive use only. Accordingly, they were not entitled to sell coal in the market. The decision to allow sale of mined coal by private sector in the open market was taken last year.

The announcement made by the Finance Minister a few days ago thus was a reiteration of the decision taken earlier. India sits on an estimated reserve of more than 300 billion tonnes of coal. The requirement of coal within the country is only around 850 million tonnes per annum. Despite such huge reserves, India ends up importing almost 25 percent of its requirement.

Some of it is unavoidable because of the quality of coal, especially coking coal, but more than 100 million tonnes of coal that is imported can and should be mined within the country. In fact, the country was facing a huge crisis in terms of shortage of coal in 2014 when the National Democratic Alliance came to power. A number of thermal power plants were “critical” for want of coal.

This crisis was overcome through some committed and laudable initiatives by Coal India under the inspired leadership of its Chairman Sutirtha Bhattacharya. Coal production by Coal India increased by 34 million tonnes in 2014- 15 which was more than the cumulative increase during the previous four year. In 2015-16, it went up by another 44 million tonnes. Now that the commitment to go ahead with commercial mining has been reiterated, let us try and understand the factors that will determine its success.

The first and the foremost factor would be the quality of the coal blocks that are earmarked for the purpose of coal mining. The best of coal blocks (in terms of stripping ratio and the quality of coal) are with Coal India. Most of the coal blocks that are left have problems relating to stripping ratio (the depth at which coal becomes available), accessibility and quality of coal. Thus, the geo-technical feature of the coal blocks will be an important factor that will determine the viability of the block.

The size of the block will also be a factor as commercial miners would prefer large blocks The next step would not be that difficult. The protocol for auction of coal blocks is already there and was hailed as transparent and objective when coal block auctions (non-commercial) were held in 2014. No one raised any doubt about the process and the same process can be used now. The real problem in mining coal centres around the following factors: 1. Land acquisition 2.

Environment and Forest clearance 3. Evacuation of coal During the period 2014- 16 when coal production reached unprecedented levels, the first two elements were tackled by engaging intensively with the state governments because these problems relate primarily to the states. The clearances were fast tracked through the instrumentality of the Project Monitoring Group (PMG) as were the coal evacuation projects As coal is embedded in inaccessible area, evacuation was always a key concern.

Additional investment is welcome. Evacuation will be a major issue even for commercial coal block allottees. It is not clear from the announcement where the money evacuation for projects for evacuation will come from. However, even if such funds become available, new projects will take a long time to fruition. For the immediate future, what needs to be done is to fast track the existing evacuation projects that are languishing on account of variety of reasons but primarily on account of delays in clearances. Yet again, activating the PMG would help as would an intensive engagement with state government.

Fortunately, the states have now come to understand the value of such projects in terms of additional revenue to them as well as the employment opportunities that such projects create. All the factors mentioned above will determine the viability of commercial mining projects. This viability will also be dependent upon the capability of the end-user of coal to pay up.

The situation at present appears to be very grim in this regard. Most of the power generating companies (GENCOs) are in serious trouble because the distribution companies (DISCOMs) to whom they supply power are not in a position to pay up. These GENCOs owe Coal India Limited more than Rs 15,000 crore and DISCOMs in turn owe GENCOs more than Rs 30,000 crore. Ujjwal DISCOM Assurance Yojana (UDAY) was put in place to improve the health of DISCOMs but it didn’t travel much distance. Most of the DISCOMs are in a bad shape.

Apart from other announcements as a part of the package mentioned in the first paragraph, the Finance Minister also declared that Rs 90,000 crore would be made available to improve the finances of DISCOMS. However, this alone will not help. UDAY (or its new version) will have to be implemented in letter and spirit. The government will have to get down to business immediately if commercial mining has to make headway.

The bidders will have to be assured that the government or its agencies will not sit on clearances as has been the case in the context of coal mines that were auctioned earlier. The previous auctions were quite smooth but the processes thereafter were debilitating. Consequently, mining could not commence expeditiously in most of the blocks that were auctioned. This will need to be taken care of while auctioning blocks for commercial mining.

Government will have to act as a facilitator, hand hold those that win the bids. A clear cut action plan will have to be worked out outlining what needs to be done, how will it be done, who will do it and by when will it be done? The decision to go ahead with commercial mining is a sound one but if it has to happen on the ground, lessons have to be learnt from the success achieved in coal production during 2014-16. The approach needs to be understood and replicated. It can be done because it has been done in past. It happened for Coal India then. It can happen for commercial mining now.

Anil Swarup has served as Secretary, Ministry of Coal.

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Legally Speaking

Electricity connection cannot be denied only because dispute regarding ownership of land is pending: Gujarat High Court

The bench of Justice Supehia noted that the Petitioners were owners of the concerned agricultural land for which electricity was sought. However, it was observed that the electricity was denied on the ground that the Petitioners were illegally occupying Government land.

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The Gujarat High Court in the case Yogesh Lakhmanbhai Chovatiya v/s PGVCL Through the Deputy Manager observed and has clarified that occupiers of a land cannot be denied electricity connection only because a dispute regarding ownership of the land is pending.

The bench comprising of Justice AS Supehia observed and referred to a division bench judgment stating that right and title and ownership or right of occupancy has no nexus with grant of electrical connection to a consumer.

In the present case, the petitioner current occupiers of the land and submitted that they were denied an electricity connection only because the land that they were occupying was in the name of the Government. However, the proceedings were initiated by the Mamlatdar against them u/s 61 of the Gujarat Land Revenue Code for removal of encroachment. Further, to bolster their contention, it was relied by the petitioner on an order of the High Court and Sec 43 of the Electricity Act, 2003 which mandates the supply of electricity to any occupier or owner of premises.

The Petitioners could be said to be ‘occupier’ of the land in question and the connection could not be denied by the Respondent.

The bench of Justice Supehia noted that the Petitioners were owners of the concerned agricultural land for which electricity was sought. However, it was observed that the electricity was denied on the ground that the Petitioners were illegally occupying Government land.

Further, the bench of Justice Supehia concluded while perusing Sec 43 that the provision stipulated that the licensee shall supply electricity to those premises where the application had been filed by the owner or the occupier. Consequently, a reference was made to the order of the Division Bench of the High Court in LPA No. 91/2010 wherein it was observed:

The Court stated that such power being not vested under the law with the company and as the company cannot decide the disputed question of right and title and this court is of the view that ownership or right of occupancy has no nexus with grant of electrical connection to a consumer.

While keeping in view of the aforesaid provisions, it was directed by Justice Supehia that the Respondent-Company to supply electricity connection to the Petitioners in the premises of the property at the earliest in accordance with the list maintained by the name containing the names of the Petitioners in the list.

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ANALYSIANG SECTION 194R OF THE INCOME TAX ACT

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Recently, Section 194 R was inserted by the Finance Act 2022, which came into effect on July 1st, 2022. CBDT made certain recommendations via Circular 12 from the day of the addition of this section, it has become highly debatable. Before touching the issues of this section, we need to understand the legal provision of section 194 R.

In simple terms, the new section mandates a person who is responsible for providing any benefit or perquisite to a resident to deduct tax at source at 10% of the value or aggregate value of such benefit or perquisite before providing such benefit or perquisite. The benefit or perquisite may or may not be convertible into money, but it must result from such resident’s business or professional activities. As per this section, tax will be deducted by business or profession on any benefits or perquisites of a person who is residing in India. The benefit or perquisite can be in the form of cash or kind, or partially in cash and partially in kind. Tax deduction will be 10 percent if the aggregate value doesn’t exceed INR 20,000. In such a case, tax will not be deducted. Such conditions will not be applicable in If the turnover of business doesn’t exceed INR One Crore, If the turnover of the profession doesn’t exceed INR fifty lakhs, For instance, if a person is a sales agent and he exceeds the target allotted by the company and receives a new car worth INR 5, 00,000/-the value of INR 5,00,000 will be taxed under the head of Profit.

The intention of this section is to expand the scope of deducting tax on benefits or perquisites and to increase transparency in the reporting of benefits and perquisites received by an individual. Because this particular incentive is in kind rather than cash, recipients of such kinds of transactions do not include it in their income tax return. As a result, inaccurate income information is provided. Such an incentive or bonus in kind ought to ideally be reported as income under the 1961 Income-tax Act (ITA). Also, according to Section 28(iv) of the ITA, any benefit or perk received from a business or profession, whether convertible into money or not, must be reported as business income in the hands of the receiver. Now Section 194(R) gives the right to the payee to deduct the amount, whether in cash or kind, arising out of business promotion.

The terms “benefits and perquisites” are not defined under the IT act. If they receive any such perquisites or incentives, whether in cash or in kind, they must deduct TDS. In cases where the benefit is wholly in kind, the person providing such a benefit or perquisite is required to pay TDS on the value of such benefit or perquisite out of his own pocket. In this case, benefits and perquisites are determined as per the value of the purchased price and manufactured price. However, no taxes to be deducted u/s 194R on sales discount, cash discount, or rebate are allowed to customers.

In the matter of ACIT Vs Solvay Pharma India Ltd, the court held that free samples provided by the pharmaceutical company for promotion purposes would be taxable income. As such, free samples cannot be treated as a freebie. The complimentary sample of medication serves solely to demonstrate its effectiveness and to win the doctors’ confidence in the high quality of the pharmaceuticals. Again, this cannot be regarded as gifts given to doctors as they are intended to promote the company’s goods. The pharmaceutical corporation, which manufactures and markets pharmaceutical products, can only increase sales and brand recognition by hosting seminars and conferences and educating medical professionals about recent advances in therapeutics and other medical fields. Since there are daily advancements in the fields of medicine and therapy taking place throughout the globe, it is crucial for doctors to stay current in order to give accurate patient diagnosis and treatment. The main goal of these conferences and seminars is to keep doctors up to date on the most recent advancements in medicine, which is advantageous for both the pharmaceutical industry and the doctors treating patients. Free medication samples provided to doctors by pharmaceutical corporations cannot be considered freebies in light of the aforementioned value.

Hence, under such circumstances, for such a sales effort, the pharmaceutical company may deduct its expenses. The promotion would, however, be taxable income in the hands of the receiver, and the pharmaceutical company would need to deduct TDS on it.

Another question that pops up is that in the case of gifts and perks received on special occasions like birthdays, marriages, and festivals, under such circumstances, Section 194R will only be applied if they arise out of business or profession.

As we know, we are heading towards digitalisation. There are many social media influencers who are playing a crucial role in marketing strategy. Income received by an influencer is calculated by deducting expenditure incurred on their business. Filming costs, such as cameras, microphones, and other equipment; subscription and software licencing fees; internet and communication costs; home office costs, such as rent and utilities; office supplies; business costs, such as travel or transportation costs; and others are examples of what can be written off as a social media influencer. To illustrate how Section 194 R will be applicable in such a situation, let’s consider Nandini is a social media influencer. She received an offer from a company for product promotion in another city. She charged her fee of Rs 88,000 and the travel expense incurred by her was Rs 25,000. Here, the company will reimburse her travel expenses. So, the travel expenditure incurred by the company is covered under the benefits and perquisites provided to Nandini. Hence, TDS is to be deducted under section 194R at the rate of 10%, i.e., Rs 2500 is deductible from the fees payable to Nandini.

There is no further requirement to check whether the amount is taxable in the hands of the recipient or under which section it is taxable. The Supreme Court took the same view in the case of PILCOM vs. CIT in reference to the deduction of tax under Section 194E. It was held by the Hon’ble Supreme Court that tax is to be deducted under section 194E at a specific rate indicated therein, and there is no need to see the taxability under DTAA or the rate of taxability in the hands of the non-resident.

In the matter of ACIT Vs Solvay Pharma India Ltd, the court held that free samples provided by the pharmaceutical company for promotion purposes would be taxable income. As such, free samples cannot be treated as a freebie. The complimentary sample of medication serves solely to demonstrate its effectiveness and to win the doctors’ confidence in the high quality of the pharmaceuticals. Again, this cannot be regarded as gifts given to doctors as they are intended to promote the company’s goods. The pharmaceutical corporation, which manufactures and markets pharmaceutical products, can only increase sales and brand recognition by hosting seminars and conferences and educating medical professionals about recent advances in therapeutics and other medical fields. Since there are daily advancements in the fields of medicine and therapy taking place throughout the globe, it is crucial for doctors to stay current in order to give accurate patient diagnosis and treatment.

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GUJARAT HIGH COURT: WRIT PETITION FILED AGAINST PRIVATE UNIVERSITY NOT MAINTAINABLE, REMEDY FOR ALLEGED ARBITRARY TERMINATION LIES UNDER CIVIL LAW.

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The Gujarat High Court in the case Shambhavi Kumari v/s Sabarmati University & 3 other(s) observed and has declined to intervene in a writ petition seeking reinstatement with full back wages and benefits filed by an Assistant Professor against a private university, Sabarmati University.

The bench comprising of Justice Bhargav Karia observed and has clarified that the dispute regarding termination was ‘in the realm of a private contract’ and therefore, held that if on the part of the respondent, there is an alleged arbitrary action, the same would give cause to the petitioner to initiate civil action before the Civil Court but in the facts of the present case, the writ petition would not be maintainable against the private educational institution governed by the Gujarat Private Universities Act, 2009.

In the present case, the petitioner was given a three months’ notice starting August 2013, allegedly without any reason. Consequently. Earlier, an application was filled by the petitioner before the Gujarat Affiliated Colleges Service Tribunal and thereafter, withdrew the application to file the writ before the High Court.

It was contested by the respondents that the petition was not maintainable on the ground that the University was a private University and did not fall within the term ‘State’ under Article 12 of the Constitution of India. Therefore, the employment conditions of the Petitioner would not bring her services within the realm of ‘duty or public function.’

It was observed that the petitioner, per contra, insisted that the University was established under the Gujarat Private Universities Act, 2009. However, Universities were established to provide quality and industry relevant higher education and for related matters and hence, it could not be said that the Universities were not performing public duty. It was directed by the State Government and pervasive control over the functioning of it as was mentioned in Sec 31-35 of Chapter VI of the Act. Reliance was placed on Janet Jeyapaul vs. SRM University and ors. where the Top Court had held that the writ petition was maintainable against the deemed university and whose functions were governed by the UGC Act, 1956.

The bench of Justice Karia, while taking stock of the contentions referred to Mukesh Bhavarlal Bhandari and ors vs. Dr. Nagesh Bhandari and ors where the Coordinate Bench of the High Court in similar circumstances had reiterated that merely because the activity of the said research institute ensures to the benefit of the Indian public, it cannot be a guiding factor to determine the character of the Institute and bring the same within the sweep of ‘public duty or public function.

It was observed that the High Court also rejected the reference to Janet Jeyapaul since in the instant case and held that in the realm of a private contract, the Petitioner termination was to be decided.

Further, it was observed that it is not necessary to go into the merits of the case with regard to the issue of show-cause notice for providing an opportunity of hearing resulting into breach of principle of natural justice and weather the action of the respondent University is unfair or not because all such disputes essentially are in the realm of private contract.

Accordingly, the bench dismissed the petition.

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Gujarat HC Quashes Reinstatement Order: Industrial Dispute Act| Person Working In The Capacity Of ‘Consultant’ Cannot Be Deemed ‘Workman’

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The Gujarat High Court In the case Santram Spinners Limited v/s Babubhai Magandas Patel observed and has struck down the order of the Labour Court which had held that the Respondent-workman was entitled to reinstatement along with 20% back wages in the Petitioner-institute. Thus, the High Court, after perusing, Form No. 16A which pertains to Tax Deducted at Source, concluded that the Respondent was being paid consultant fees and not a salary and the same had been ignored by the Labour Court.

The bench comprising of Justice Sandeep Bhatt noted that the Respondent had raised an industrial dispute, inter alia, claiming that he was working in the company of the Petitioner as a Technical Maintenance In-Charge while the respondent earning a salary of INR 9,000 per month. Thereafter, it was alleged by him that he was terminated orally in 1997. Consequently, the Labour Court ruled in his favour and ordered reinstatement and back wages.

It was submitted by the petitioner that the Respondent did not fall within the definition of the term ‘workman’ in Sec 2(s) since he was employed as a Maintenance Consultant, receiving consultant fees and not a salary and the respondent had failed to produce any documentary evidence such as TDS statement, appointment letter, bills to bolster his contention.

Further, it was also averred by the petitioner that the relevant documentary evidence was absent. It was stated that Form 16A was produced to show that if the Respondent was a consultant, then there was no need to deduct TDS. It was observed that the Form No. 26K was disagreed by the Labour Court, which was produced by the Company to show that the tax was deducted from fees for technical or professional services.

The bench comprising of Justice Bhatt firstly observed that the Respondent had admitted that he had no evidence with him to prove that he was working as a ‘workman’ in the Company of the Petitioner that his salary was fixed at INR 9,000 per month. It was stated by the Manager of the Company that the Respondent was rendering services as a consultant raising his Vouchers/bills regularly and being paid through cheque. As per the Bench, there was ‘ample evidence’ to prove that that the Respondent was employed as a technical consultant.

Justice Bhatt stated that it is pertinent to note that the learned Labour Court has committed gross error in holding that those documents are complicated and thus, the learned Labour Court has also erred in giving findings that since TDS is deducted by the petitioner company and therefore, the respondent is workman, who is serving in the petitioner institute and in my opinion, this finding of the learned Labour Court is against the settled proposition of law and is highly erroneous.

Therefore, the High Court affirmed that there was no evidence that the Respondent had been working for more than 240 days during the year preceding termination.

Accordingly, the High Court struck down the award of the Labour Court.

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GUJARAT HIGH COURT QUASHES REINSTATEMENT ORDER: PERSON WORKING IN SUPERVISORY CAPACITY CANNOT RISE “INDUSTRAIL DISPUTE”

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The Gujarat High Court in the case Gujarat Insecticides Ltd. & 1 other(s) v/s Presiding Officer & 2 others observed and has reiterated that a person working in “supervisory” capacity cannot raise an industrial dispute under the Industrial Disputes Act, 1947.

The bench comprising of Justice AY Kogje observed and further made it clear that while deciding whether such person is a workman or not, the Labour Court ought to carefully consider the evidence placed on record and there is no exhaustive list of work to differentiate between the management employee and the Workman.

In the present case, the Petitioner Company averred that the Respondent was working in the non-workman category and engaged in the ‘supervisory category’ and was drawing salary of more than INR 1600. Therefore, the dispute was not an industrial dispute within Section 2(s) of the Act, 1947.

It was insisted by the Respondent that he had worked with the company as a Maintenance Engineer and the duties assigned to him were of the nature of a workman’s duties as per the ID Act. The respondent was wrongly terminated by way of termination and without any procedure established by law and as such, was entitled back wages.

It was observed that the high court took into consideration the Respondent’s appointment letter and witness depositions regarding the nature of work performed by him to conclude that the Respondent in Grade-9 was indeed discharging duty of Maintenance Engineer. It was also specified by the depositions that the hierarchical grading in the petitioner-company as per which, the employees above Grade-7 were of the Management Cadre.

The High Court observed that the Labour Court has completely disregarded this evidence, which according to this Court is most relevant for the purpose of deciding the status of workman and the Labour Court has proceeded that the petitioner-company ought to have produced evidence in the nature of whether the respondent-workman has sanctioned any leave, sanctioned any overtime or prepared any gate passes for employees to go home or has made any ordered or Appointment dismissal. Thus, when the Labour Court, instead of referring to this evidence already on record to establish the nature of work of the respondent and has decided to chase the evidence which is not on record and then on the basis that such evidence not being on record, it was concluded that in the definition of workman, the workman will be covered, this is where, in the opinion of the Court, perversity has crept in.

Accordingly, the bench quashed the impugned order. Therefore, seeing the passage of time, it was held by the High Court that the allowances paid u/s 17B of the Act should not be recovered by the Petitioner company.

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COURT CALLS FOR SENSITIZATION OF POLICE: DELHI RIOTS SITE PLANS PREPARED CASUALLY, S.65B CERTIFICATE NOT FILLED FOR DIGITALLY SOURCED EVIDENCE

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The Court while dealing with a case related to 2020 Delhi riots, a city Court has called for sensitisation of investigating officers (IOs) on making the photos obtained from digital sources as admissible in evidence by filing a certificate under section 65B of Indian Evidence Act, 1872.

The bench comprising of Additional Sessions Judge Pulastya Pramachala observed and thus ordered that whenever, photographs are filed from digital sources it is needless to say that a certificate under Section 65-B of I.E. Act, is must to make those photographs admissible for the purpose of evidence. However, all the IOs are required to be sensitized this respect as well and it is high time to control the casual and callous approach of any IO.

It was also observed that court expressed displeasure over “casually prepared site plans” by stating that preparation of the same were not even expected in cases triable by the Metropolitan Magistrates.

Adding to it, the Judge stated that unfortunately this kind of site plan has been filed in such a serious case involving session triable case. Moreover, from the documents filed on the record, the court find that certain photographs have been placed, but without any certificate under Section 65-B of Indian Evidence Act.

In the present case, the court was dealing with an FIR registered on the complaint of one Salim Khan wherein it was stated by him that his spare parts and barber shop shop was looted and was put on fire during riots.

It was admitted by one of the accused Dharmender that his involvement in the matter and he, with other co-accused was seen carrying the carton of Rooh Afzah from the warehouse of a complainant in another FIR.

The Court stated that a serious re-look over the quality of evidence/documents place on the record in the case, is required by senior officer with all serious attention.

Further, the court added that in this case the ld. DCP (North East) is requested to go through the records and to submit his report, if the prosecution is to be carried on, on the basis of other materials and same site plan as placed on the record.

As in future, the Special Public Prosecutor undertook to be much careful.

Accordingly, the Court listed the matter for further hearing on August 17.

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