D. Murali

TAX journals usually gather dust in many a professional's office, and it is not uncommon to find many issues of these stacked up in a wrapped state, just the way they were delivered by the postman months ago. For the curious, however, there are many interesting cases such as the ones I found during a dull break this weekend.

Take the case of Ibex Gallagher that went to the Bangalore tribunal recently. The company manufactures `solar powered electric power fence system', using "energiser, neon tester, tool kit, battery charger" and so forth. As you know, such a fence "wards off animals and unwanted elements entering into the property." So, we'd cautiously stay away from the fence, but the taxman ventured to go a bit closer to ask Ibex, if the fence was movable or immovable.

Ibex said that the fence was not a movable property because it comes into existence only on its erection on the earth as fencing, or on the parapet wall where the thing is mounted and fixed.

Excise officials felt that the fence was a movable property, possibly after trying to move it when power was off, and so demanded a duty of Rs 3 lakh and a penalty of Rs 5 lakh. Ibex pleaded that it was a small-scale company and had made "a marginal profit of Rs 8 lakh" and so it was not possible to pay up the high sum asked for. Moreover, the company said that there was no intention to evade duty.

Even as the taxman insisted that the company markets the item as a movable fence, the tribunal perused the photographs and found that "the fence was totally fixed to the walls in some cases and in other cases it was fixed on strong poles which are embedded in earth."

Another case was of B.R. Traders that had to argue with excise officials in Meerut about carbon paper. While the company said its goods were interleaved carbon sets usable as computer stationery, the taxman was adamant that the item in question was a simple carbon paper and therefore classifiable accordingly.

Perhaps, one may have to carbon-date the taxman's knowledge, but let me move on to yet another case - a sensational one that the Chennai tribunal had to decide upon. Facts of the case read like a thriller: "On September 3, 1995, at 15:45 hours 18 baskets of live crabs... for export to Singapore by air were lying at Indian Airlines security clearance area." It seems that the airport officials noticed six brown paper packets among the live crabs in basket No. 7.

Thereafter, the remaining 17 baskets were opened and inspected; they contained `live mud crabs' as declared in the shipping bill. But the mysterious basket number seven had, in the paper packets, assorted foreign currencies and travellers' cheques equivalent to Rs 2.7 crore. "Handwritten slips all showing numbers 786 on the top and bearing names `Bulls' and `R.Boy' (written in Tamil) in tow of the slips and a sign `#' on the third slip were also recovered" from the packets...

"Have you ever watched a crab on the shore crawling backward in search of the Atlantic Ocean, and missing?" asks H.L. Mencken, and adds, "That's the way the mind of man operates." Well, that's how currency was supposed to have disappeared along with the crabs. But here is a caveat that Bill Meyer issues: "Every thought is a seed. If you plant crab apples, don't count on harvesting Golden Delicious."


(This article was published in the Business Line print edition dated June 26, 2005)
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