TaxTMI Updates e-Newsletter
Jan 13,2021

Supply (as charging event under GST) - Place of supply and inter state supply under IGST - Import of goods and levy of IGST at the time of importation - Export of goods (place of supply test) - Schedule III Entry No.7 - supply from non taxable territory to non taxable territory without goods entering India - Application of Customs Tariff Act (collection of IGST on imported goods at customs clearance)

Schedule III Entry No.7 - supply from non taxable territory to non taxable territory without goods entering India - Supply (as charging event under GST) - Activity of applicant where goods move directly from a vendor outside India to a customer outside India without entering India is covered by Entry No.7 of Schedule III of the CGST Act, 2017. - HELD THAT: - The Authority examined whether the applicant's triangular transactions (Poland Bangladesh, invoices issued by the Indian applicant) constitute 'supply' liable to GST. While the applicant acts as supplier under the statutory definition (agent/principal issuing invoice), Schedule III was amended effective 01.02.2019 to insert Entry No.7 which treats supply of goods from a place in the non taxable territory to another place in the non taxable territory without such goods entering into India as neither a supply of goods nor a supply of services. The transactions in the instant case involve goods shipped directly from Poland to Bangladesh without crossing Indian frontiers and therefore fall within Entry No.7. Consequently, such transactions are not treated as supply for GST purposes with effect from 01.02.2019 and are not exigible to GST from that date. [Paras 32]

The activity is covered by Entry No.7 of Schedule III for transactions effected from 01.02.2019 onwards and thus not taxable under GST from that date.

Import of goods and levy of IGST at the time of importation - Customs Tariff Act - collection point for IGST on imported goods - Place of supply and inter state supply under IGST - Whether IGST is payable on out and out transactions (goods shipped from a foreign vendor directly to a foreign customer) for periods prior to the Schedule III amendment. - HELD THAT: - The Authority analysed IGST levy provisions and the amended Customs Tariff Act which envisage collection of IGST on goods imported into India at the point when customs duties are levied (import declarations/bill of entry). Where goods do not enter India and no import declarations are filed, IGST tied to importation is not collectible at customs. However, treating the applicant as supplier located in India with place of supply outside India, such transactions prior to the Schedule III amendment would qualify as inter state supplies under IGST and would be exigible to IGST unless they qualify as export (which requires goods to be taken out of India). Since the goods were not in India and not exported from India, the Authority concluded that IGST is payable on such transactions effected up to 31.01.2019. The circular on high sea sales and earlier AARs were considered but binding effect of other AARs is limited to their applicants. [Paras 23, 29, 34]

Applicable IGST is payable on such out and out transactions effected upto 31.01.2019; no IGST is payable on such transactions effected from 01.02.2019 onwards.

Final Conclusion: The Authority ruled that the applicant's transactions (goods shipped directly from a foreign vendor to a foreign buyer without entering India) are not taxable under GST with effect from 01.02.2019 by virtue of Entry No.7 of Schedule III; however, for transactions effected upto 31.01.2019 such out and out supplies are liable to IGST.

Taxable event of supply under GST - consideration and its proviso in relation to deposits - deposit: refundable versus non refundable test - time of supply when deposit is applied as consideration - business includes provision of facilities by a club/association/society - taxability of amounts collected by a cooperative society for maintenance

Taxable event of supply under GST - consideration and its proviso in relation to deposits - deposit: refundable versus non refundable test - taxability of amounts collected by a cooperative society for maintenance - Whether the common maintenance fund/deposit collected from members is liable to GST - HELD THAT: - The Authority examined whether the one time amounts collected as "Common Maintenance Fund (Deposit)" constitute "consideration" for a supply under the GST law. The definition of "consideration" is inclusive and includes payments made in respect of, in response to, or for the inducement of a supply, subject to the proviso that a deposit shall not be considered payment for a supply unless the supplier applies the deposit as consideration. The Authority applied the practical tests of whether the amount is refundable and whether it can be appropriated as consideration for an outstanding supply. The Society collected the fund under bye laws for future maintenance and characterised it in accounts as a deposit; however, the Authority found the fund to be in the nature of a non returnable common maintenance fund, intended to be utilized (with interest) for maintenance and repairs of common amenities. Further, although the applicant asserted that deposits may be transferred on change of membership, the Authority noted that such transfer is effected by accounting entries rather than an actual refund, and therefore the fund cannot be treated as refundable. On these findings the Authority concluded that the collected amount is capable of being considered as consideration for supply of maintenance services and thus is taxable under the GST law. [Paras 22, 23, 24, 25]

Answered in the affirmative - the common maintenance fund/deposit collected from members is liable to GST as it is a non returnable amount capable of being applied as consideration for supply of maintenance services.

Time of supply when deposit is applied as consideration - consideration and its proviso in relation to deposits - When the time of supply arises for the common maintenance fund/deposit - HELD THAT: - Relying on the proviso to the definition of "consideration", the Authority held that a deposit collected in respect of a future supply does not form part of consideration at the time of collection unless and until the supplier applies that deposit as consideration for the supply. In the instant case the common maintenance fund was collected for future maintenance services; therefore the amounts collected do not attract GST at the time of receipt. GST becomes payable when the deposit is utilized/appropriated and applied as consideration at the time of actual provision of the maintenance services. [Paras 26]

The amounts so utilized for provision of service are liable to tax at the time of actual supply of the service.

Final Conclusion: The Authority ruled that the one time common maintenance fund collected by the society is taxable as consideration for supply of maintenance services (answered in the affirmative), and that GST on such amounts is payable when the deposit is applied/appropriated as consideration - i.e., at the time of actual supply of the maintenance services.

Job work - Manufacturing services on physical inputs (goods) owned by others (SAC 9988) - Technical testing and analysis (SAC 9983) - Composite supply - Mixed supply - Principal supply - Determination of tax on mixed supply under Section 8(b) of CGST Act, 2017 - Registered person

Job work - Registered person - Manufacturing services on physical inputs (goods) owned by others (SAC 9988) - Whether refining of gold and conversion of old gold jewellery into coins/biscuits performed for a registered person amount to job work and the classification and GST rate applicable when provided to registered and unregistered persons. - HELD THAT: - The Authority applied the statutory definition of Job work and the procedural concept under Section 143, observing that job work requires (i) a treatment or process undertaken by a person, (ii) on goods, and (iii) the goods must belong to another registered person. The processes of refining and conversion are treatments/processes performed on movable goods supplied by the owner and thus satisfy the first two requirements; where the owner is a registered person the transaction meets the third requirement and qualifies as job work. Classification guidance (SAC explanatory notes and Annexure entries) places these activities under SAC 9988. Notification entries distinguish services to registered persons (job work covered by entry 26(i)(c)) attracting the concessional rate applicable thereunder and services on goods owned by unregistered persons covered by entry 26(iv). Applying the Notification, refining/conversion supplied to a registered person is a job work service under SAC 9988 and taxable at 5% (2.5% CGST + 2.5% SGST); the same services when provided for goods owned by an unregistered person fall under entry (iv) of SAC 9988 and attract 18% (9% + 9%). [Paras 18, 19, 20, 21, 35]

Refining and conversion constitute job work only when performed on goods belonging to a registered person; classification is under SAC 9988; rate is 5% for services to registered persons and 18% for services to unregistered persons.

Technical testing and analysis (SAC 9983) - Other professional, technical and business services - Classification and GST rate for testing of purity of gold. - HELD THAT: - The Authority examined the nature of the testing activity which involves physical/chemical analysis and issuance of a certificate of purity. Such services fall within the scope of technical testing and analysis and are classifiable under SAC 9983 (scientific and other technical services). Notification entry for Heading 9983 was applied to determine the applicable rate. The relevant entry prescribes the rate for other professional, technical and business services, resulting in a tax rate of 18% (9% CGST + 9% SGST) for the testing service. [Paras 23, 24, 25, 35]

Testing of purity of gold is classifiable under SAC 9983 and taxable at 18% (9% CGST + 9% SGST).

Composite supply - Mixed supply - Principal supply - Determination of tax on mixed supply under Section 8(b) of CGST Act, 2017 - Whether combined refining and testing form a composite supply; if not, whether they constitute a mixed supply and the applicable GST rate. - HELD THAT: - Applying the statutory tests, the Authority found that although both services may be supplied together, they are independent in nature and can be availed separately by customers; they are not "naturally bundled" nor is one service ancillary to the other. Consequently the supplies do not qualify as a composite supply. Having ruled out composite supply, the transaction fits the statutory definition of a mixed supply (multiple individual supplies made in conjunction for a single price). Under Section 8(b) the tax treatment of a mixed supply follows the rate of the component attracting the highest rate. The rates applicable to the individual components are 5% (job-work refining for registered owner) or 18% (refining for unregistered owner) and 18% for testing; the highest applicable rate is 18%. Therefore where refining and testing are supplied together as a mixed supply the GST rate is 18% (9% CGST + 9% SGST). [Paras 28, 29, 31, 32, 35]

Refining together with testing is not a composite supply but is a mixed supply; the applicable GST rate on the mixed supply is 18% (9% CGST + 9% SGST).

Advance ruling - hypothetical question - Consequences if the applicant charged more or less than the correct rate for refining services. - HELD THAT: - The Authority observed that the applicant's query on consequences is vague and hypothetical and no factual matrix was provided. In absence of concrete facts, the Authority declined to give a ruling on consequences of over- or under-charging and limited its response accordingly. [Paras 33, 34, 35]

No ruling on consequences of charging more or less than the applicable rate for refining services was given.

Final Conclusion: The Authority ruled that refining and conversion of old gold into pure gold qualify as job work only when performed on goods belonging to a registered person, and those services are classifiable under SAC 9988 with GST at 5% for registered owners and 18% for unregistered owners; testing of purity is classifiable under SAC 9983 with GST at 18%; combined refining and testing do not form a composite supply but constitute a mixed supply, taxable at the highest applicable rate of 18%; no ruling was given on hypothetical consequences of incorrect charging.

Classification under the First Schedule to the Customs Tariff Act - Rule 3 - the heading which provides the most specific description shall be preferred to headings providing a more general description - assistive devices, rehabilitation aids and other goods for disabled - heading 9018 - instruments and appliances used in medical, surgical, dental or veterinary sciences

Classification under the First Schedule to the Customs Tariff Act - Rule 3 - the heading which provides the most specific description shall be preferred to headings providing a more general description - assistive devices, rehabilitation aids and other goods for disabled - heading 9018 - instruments and appliances used in medical, surgical, dental or veterinary sciences - Whether 'Urine collection bags' supplied by the applicant are classifiable under Serial No. E(8) of List 3 of Entry 257 of Schedule I of Notification No.01/2017-Central Tax (Rate) (GST rate 5%) or under Entry No.218 of Schedule II (heading 9018) (GST rate 12%). - HELD THAT: - The Authority examined the product description, manufacturing process, catalogue, invoices and medical opinions and concluded that urine collection bags are devices used in medical practice and fall within the scope of Heading 9018 and, more precisely, within sub-heading 90189099. However, Notification No.01/2017-Central Tax (Rate) contains a specific concessional entry - Entry No.257 of Schedule I with List 3(E) which expressly mentions 'urine collection bags' at Item (8). Applying the General Rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975, in particular Rule 3(a), the heading which provides the most specific description is to be preferred over a more general heading. Since Entry No.257 (List 3(E)(8)) specifically lists 'urine collection bags', it is more specific than the general description in Entry No.218 (heading 9018). Therefore, despite classification under sub-heading 90189099, the product is entitled to classification under the specific Schedule-I entry attracting the concessional GST rate. [Paras 10, 11, 12]

The goods are classifiable under Serial No. E(8) of List 3 of Entry 257 of Schedule I of Notification No.01/2017-Central Tax (Rate) and attract GST at the rate specified therein (5%).

Final Conclusion: Advance ruling: 'Urine collection bags' supplied by the applicant are covered by Serial No. E(8) of List 3 to Entry 257 of Schedule I of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 and thereby attract the concessional GST rate provided in that entry.

Drugs or medicines including their salts and esters - bulk drug / Active Pharmaceutical Ingredient (API) - concessional rate of tax under Schedule I (5%) vis-a -vis general entry in Schedule III (18%) - interpretation of 'drug' by reference to the Drugs and Cosmetics Act, 1940 - specific tariff entry versus general tariff entry

Drugs or medicines including their salts and esters - bulk drug / Active Pharmaceutical Ingredient (API) - concessional rate of tax under Schedule I (5%) vis-a -vis general entry in Schedule III (18%) - interpretation of 'drug' by reference to the Drugs and Cosmetics Act, 1940 - Eligibility of the applicant's bulk drugs for the concessional GST rate of 5% under Sr. No. 180 of Schedule I to Notification No. 01/2017-CT (Rate) dated 28.06.2017. - HELD THAT: - The Authority examined Sr. No. 180 of Schedule I which grants 5% GST to "Drugs or medicines including their salts and esters specified in List I appended to this Schedule." As the terms are not defined in the GST enactment, the Authority adopted the definition of "drug" from the Drugs and Cosmetics Act, 1940, which embraces substances intended for use in the diagnosis, treatment, mitigation or prevention of disease in human beings or animals. Applying ordinary meaning and statutory interpretation principles, the Authority held that the concessional entry covers medicines/drugs that are usable for such diagnostic or therapeutic purposes (i.e., products ready for administration/use). The term "bulk drug" (API) - taken from the Drugs (Prices Control) Order, 1979 - denotes a substance used as an ingredient in formulations and thus constitutes a raw material rather than a finished medicine. Because the applicant supplies bulk drugs which cannot be directly administered and serve as inputs for manufacture of finished medicines, they do not fall within the scope of Sr. No. 180 which is confined to medicines/drugs as understood above. Consequently, the concessional 5% rate is not available for the applicant's supplies of the listed bulk drugs; such supplies are governed by the general entry in Schedule III (18%). [Paras 18, 23, 24, 25, 26]

Negative - the applicant's bulk drugs Danuorubicin, Epirubicin, Idarubicin and Zoledronic Acid are not eligible for the 5% concessional rate under Sr. No. 180 of Schedule I; the 5% rate applies only to medicines/drugs ready for use as defined.

Final Conclusion: The Authority rules that the applicant's supplies of the specified bulk drugs are not eligible for the concessional 5% GST under Sr. No. 180 of Schedule I and therefore the claim for the lower rate is rejected.

Health care services - clinical establishment - exemption under Notification No. 12/2017-CT (Rate) dated 28.06.2017 - taxability of supply of medical manpower and ambulance services

Health care services - clinical establishment - exemption under Notification No. 12/2017-CT (Rate) dated 28.06.2017 - Whether the applicant's services of supplying/appointing doctors, nursing staff, ambulances and related administrative services to corporate entities qualify as exempt health care services by a clinical establishment under the entry at Sr. No. 74 of Notification No. 12/2017-CT (Rate) dated 28.06.2017 or are taxable. - HELD THAT: - The Authority examined the exemption entry at Sr. No. 74 and the definitions therein: para (s) defining clinical establishment and para (zg) defining health care services. The exemption applies to services of diagnosis, treatment or care for illness, injury, deformity, abnormality or pregnancy provided by a hospital, nursing home, clinic, sanatorium or any other institution falling within the definition of a clinical establishment, and includes transportation of a patient to and from such an establishment. The applicant, however, supplies or appoints doctors, nurses, ambulances and administrative staff to corporate factories/plant premises and does not itself provide diagnosis, treatment or care as an entity that qualifies as a clinical establishment under the notification. The Authority also noted the applicant did not place before it the contract clarifying the nature of services, but did produce a purchase order indicating ambulances were charged at an 18% GST rate. Applying the definitions to the facts, the Authority found that the applicant's establishment is not within the scope of para (s) and the services rendered are not services of diagnosis, treatment or care falling within para (zg). Consequently, the exemption at Sr. No. 74 is not attracted. [Paras 9, 10, 11, 12]

Services supplied by the applicant do not qualify as exempt health care services by a clinical establishment under Sr. No. 74 of Notification No. 12/2017-CT (Rate) dated 28.06.2017 and are therefore taxable.

Final Conclusion: The Authority ruled that the applicant's supply/appointment of doctors, nursing staff, ambulances and related administrative services to corporate entities does not fall within the exemption for health care services by a clinical establishment under Notification No. 12/2017-CT (Rate) dated 28.06.2017 and are taxable under GST.

Reduced concessional rate for construction of low-cost houses in affordable housing projects - Affordable Housing given infrastructure status by Government of India - carpet area up to 60 square metres per house - composite supply of works contract - determination of project qualification by the builder/developer - effective applicability of amended rate prospectively from 25-01-2018

Reduced concessional rate for construction of low-cost houses in affordable housing projects - Affordable Housing given infrastructure status by Government of India - carpet area up to 60 square metres per house - composite supply of works contract - effective applicability of amended rate prospectively from 25-01-2018 - Construction services provided under the 'SAMANVAY RESIDENCY' project qualify for the concessional rate specified in item (v)(da) of Notification No. 1/2018-C.T. (Rate) dated 25-01-2018 for flats with carpet area up to 60 sq. m. in an affordable housing project given infrastructure status. - HELD THAT: - The Authority examined whether the applicant's project falls within the definition of 'Affordable Housing' as accorded infrastructure status by the Government of India (DEA notification F. No. 13/6/2009-INF dated 30-03-2017). That notification defines 'Affordable Housing' as a housing project using at least 50% of FAR/FSI for dwelling units with carpet area of not more than 60 sq. m., with 'carpet area' as defined in RERA. The applicant produced AUDA approval classifying the scheme as 'Residential Affordable Housing' and an architect's certificate showing that approximately 97% of the project's FSI is consumed by flats having carpet area below 60 sq. m. The GST rate notification (Notification No. 11/2017, as amended by Notification No. 1/2018) inserted item (da) at Sr. No. 3(v) to extend a concessional rate (12% before land value adjustment; resulting CGST 6% as part of that composition) to low-cost houses up to 60 sq. m. in affordable housing projects given infrastructure status. The TRU clarification dated 07-05-2018 confirms that qualification of a project as an affordable housing project is to be determined by the builder/developer as per the DEA definition and that no certificate is required. Applying these provisions and facts on record, the Authority concluded that the applicant's project meets the definition of Affordable Housing and that the concessional rate applies to supplies made on or after 25-01-2018 for those flats in the scheme with carpet area up to 60 sq. m.; supplies relating to flats exceeding 60 sq. m. remain taxable at the normal rate. [Paras 21, 22]

Affirmative - the concessional rate under item (v)(da) of Notification No. 1/2018-C.T. (Rate) dated 25-01-2018 applies to construction of flats up to 60 sq. m. in the SAMANVAY RESIDENCY project classified as Affordable Housing; applicability is limited to supplies effected after 25-01-2018 and to flats with carpet area up to 60 sq. m.

Final Conclusion: The Advance Ruling affirms that the applicant's 'SAMANVAY RESIDENCY' project qualifies as an Affordable Housing project for purposes of Notification No. 1/2018-C.T. (Rate) and that the concessional rate in item (v)(da) applies to construction of flats having carpet area up to 60 sq. m., for supplies made on or after 25-01-2018; other flats remain taxable at the normal rate.

Classification of parts under Note 2 of Section XVI of the Customs Tariff Act, 1975 - Parts suitable for use solely or principally with a particular kind or class of machine - Machines and mechanical appliances having individual functions (heading 84.79) - Parts not specified elsewhere to be classified in heading 84.87 or 85.48 - HSN Explanatory Notes as a guide to tariff classification - GST rate to be determined by Customs Tariff classification under Notification No. 1/2017-Central Tax (Rate)

Classification of parts under Note 2 of Section XVI of the Customs Tariff Act, 1975 - Parts suitable for use solely or principally with a particular kind or class of machine - Machines and mechanical appliances having individual functions (heading 84.79) - Parts not specified elsewhere to be classified in heading 84.87 or 85.48 - Classification of the product 'Hybrid Hydraulic Servo System'. - HELD THAT: - The Authority examined whether the assembled Hybrid Hydraulic Servo System is a machine with an "individual function" under heading 84.79 or whether it is to be treated as parts under Note 2 of Section XVI and the General Note of Parts to the HSN. The applicant's product is an assembled system used as a part of various machines and the catalogue and submissions did not establish that the product performs a distinct function independently of the host machines. Applying Note 2 of Section XVI and the General Note of Parts, parts suitable for use solely or principally with a particular kind or class of machine are to be classified with those machines; parts common to a number of machines falling in different headings are to be classified in heading 84.87 (non-electrical) or 85.48 (electrical) as appropriate. The Authority found that the Hybrid Hydraulic Servo System does not have the independent individual function necessary for classification under heading 84.79 and therefore merits classification in terms of Note 2 of Section XVI and the General Note of Parts of the HSN. [Paras 17, 20, 21]

Hybrid Hydraulic Servo System merits classification in terms of Note 2 of Section XVI of the Customs Tariff Act, 1975 and the General Note of Parts of the Harmonised System of Nomenclature.

GST rate to be determined by Customs Tariff classification under Notification No. 1/2017-Central Tax (Rate) - HSN Explanatory Notes as a guide to tariff classification - Basis for determining the applicable GST rate on the Hybrid Hydraulic Servo System. - HELD THAT: - The Authority noted that the rate of GST is governed by the classification of the goods under the First Schedule to the Customs Tariff Act and Notification No. 1/2017-Central Tax (Rate), and that the rules for interpretation of the First Schedule, including Section and Chapter Notes and HSN explanatory notes, apply to the Notification. Since the product's GST liability depends on its tariff classification determined under Note 2 of Section XVI and the HSN General Note of Parts, the applicable GST rate must be applied in accordance with the classification so arrived at under Notification No. 1/2017-Central Tax (Rate). [Paras 14, 21, 22]

The GST rate will be leviable on the basis of the product's classification under Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017.

Final Conclusion: The Authority ruled that the Hybrid Hydraulic Servo System should be classified pursuant to Note 2 of Section XVI of the Customs Tariff Act, 1975 and the General Note of Parts of the HSN; the GST rate will be determined according to that tariff classification under Notification No. 1/2017-Central Tax (Rate).

Supply under Section 7(1) of the CGST Act - Schedule III - sale of land not a supply - Schedule II, paragraph 5(e) - agreeing to the obligation to refrain from, tolerate or do an act - forfeiture of advance as consideration for tolerance/exit from contract - consideration in the course or furtherance of business

Supply under Section 7(1) of the CGST Act - Schedule II, paragraph 5(e) - agreeing to the obligation to refrain from, tolerate or do an act - forfeiture of advance as consideration for tolerance/exit from contract - Whether the amount forfeited by the applicant on account of breach of agreement of sale is liable to GST. - HELD THAT: - The Authority examined the contract terms and found the forfeited amount was not received as consideration for sale of land but as consideration consequent to the purchaser's failure to perform contractual obligations. Activities set out in Schedule II are included within the scope of "supply" under Section 7(1). Clause 5(e) of Schedule II expressly treats "agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act" as a supply of service. The forfeiture operates as consideration for the applicant's acceptance of the purchaser's exit (tolerance or refraining from taking further action) under the contract. Therefore the transaction falls within Clause 5(e) of Schedule II and is taxable as a supply of service. [Paras 10, 12, 13, 14, 15]

GST is leviable on the amount forfeited by the applicant.

Consideration in the course or furtherance of business - service provider and service receiver - Schedule II, paragraph 5(e) - Identification of the service provider and service receiver in respect of the forfeited amount. - HELD THAT: - Having held the forfeiture to be a supply of service under Clause 5(e) of Schedule II, the contractual parties occupy the usual roles: the applicant who receives the forfeited amount is the service provider (receiving consideration for tolerating or permitting exit), and the purchaser (Mr. B) who paid/forfeited the amount is the service receiver. [Paras 16]

The applicant is the service provider and Mr. B (the purchaser) is the service receiver.

Schedule III - sale of land not a supply - Schedule II, paragraph 5(e) - forfeiture of advance as consideration - Whether forfeiture of advance pertaining to a proposed sale of land (an activity excluded from supply by Schedule III) is itself outside the charge to GST. - HELD THAT: - Sale of land featured in Schedule III is not a supply; however, the Authority distinguished forfeiture of advance from the sale itself on the facts: the forfeited sum arises from a contractual clause effecting tolerance/exit on breach, not from the transfer of land. Clause 5(e) of Schedule II captures such obligations as a supply of service. Consequently, the fact that the underlying transaction contemplated the sale of land does not immunise the forfeiture from GST when the payment is for agreeing to refrain from or tolerate an act under the contract. [Paras 9, 10, 14, 15]

Forfeiture of advance relating to the proposed sale of land is a supply of service under Schedule II(5)(e) and is taxable despite sale of land being outside supply under Schedule III.

Final Conclusion: The Authority ruled that the forfeited advance received by the applicant constitutes a taxable supply of service under Clause 5(e) of Schedule II to the CGST Act (and hence attracts GST); the applicant is the service provider and the purchaser is the service receiver; the exclusion of sale of land under Schedule III does not extend to such forfeiture which is consideration for agreeing to refrain from or tolerate an act under the contract.

Classification of plastic grinding as primary forms of plastics - distinction between plastic scrap and primary forms - application of Note 6(b) to Chapter 39 of the HSN - HSN headings 3901 to 3914 - GST rate for polymers in primary forms under Notification No. 01/2017-CT (Rate) dated 28.06.2017

Classification of plastic grinding as primary forms of plastics - distinction between plastic scrap and primary forms - application of Note 6(b) to Chapter 39 of the HSN - HSN headings 3901 to 3914 - Whether plastic obtained by sorting and grinding plastic scrap into small pieces is to be classified as plastic scrap or as primary forms of plastic and, if primary, under which HSN headings it falls. - HELD THAT: - The Authority found that the process of sorting and grinding the purchased plastic scrap results in a new product - plastic grinding in small pieces - which loses the identity of scrap and takes the form of primary plastic. Reliance was placed on Note 6(b) to Chapter 39 of the HSN, which treats "blocks of irregular shape, lumps, powders, granules, flakes and similar bulk forms" as primary forms. The product produced (irregular lumps/flakes) therefore falls within the primary forms contemplated by Chapter 39. Classification at the tariff level will accordingly depend on the type of polymer involved; such primary forms are classifiable within the range of HSN headings 3901 to 3914 as appropriate to the polymer type. [Paras 6, 7, 8, 9]

Plastic grinding in small pieces is not scrap but is a primary form of plastic and is classifiable under the appropriate HSN heading within 3901 to 3914 depending on the polymer type.

GST rate for polymers in primary forms under Notification No. 01/2017-CT (Rate) dated 28.06.2017 - HSN headings 3901 to 3914 - What is the GST rate applicable to the plastic grinding in small pieces once classified under the appropriate HSN heading within 3901-3914. - HELD THAT: - Having held that the product is classifiable in primary forms under headings 3901 to 3914, the Authority referred to the notifications governing GST rates. The relevant entry in Notification No. 01/2017-CT (Rate) dated 28.06.2017 covers goods in chapters/headings 3901 to 3914 (primary forms of polymers) and prescribes the applicable rate. The Authority applied that notification to conclude the applicable tax treatment for the classified goods. [Paras 9, 10]

Goods classifiable under headings 3901 to 3914 (primary forms of polymers) attract GST at the rate applicable under Notification No. 01/2017-CT (Rate) dated 28.06.2017, namely 18% (9% CGST + 9% SGST) as per the entries relied upon by the Authority.

Final Conclusion: The Authority ruled that plastic produced by sorting and grinding scrap into small pieces constitutes primary forms of plastic and is classifiable under the appropriate HSN heading within 3901-3914 according to the polymer type, and that such goods attract GST at 18% (9% CGST + 9% SGST) as per Notification No. 01/2017-CT (Rate) dated 28.06.2017.

Classification under Tariff Heading 1905 versus Tariff Heading 2106 - Common parlance test for interpretation of taxing entries - Application of the First Schedule to the Customs Tariff Act, 1975 (rules for interpretation, Section and Chapter Notes) - Inclusive/omnibus scope of Heading 2106 (food preparations not elsewhere specified or included) - Liability under Schedule III of Notification No.1/2017-GST rate for goods under Heading 2106

Classification under Tariff Heading 1905 versus Tariff Heading 2106 - Common parlance test for interpretation of taxing entries - Inclusive/omnibus scope of Heading 2106 (food preparations not elsewhere specified or included) - Liability under Schedule III of Notification No.1/2017-GST rate for goods under Heading 2106 - Classification of the applicant's product (un fried products of various shapes and sizes sold as 'Fryums') and the applicable GST rate. - HELD THAT: - The Authority examined whether the goods sold by the applicant are classifiable as 'Papad' under Tariff Item 1905 90 40 or as edible preparations under Heading 2106. Noting that 'Papad' is not defined in the Customs Tariff or GST enactments, the Authority applied the common parlance test and the rules for interpretation of the First Schedule to the Customs Tariff Act as incorporated in the notifications. The material and judicial authorities show that products commonly known in trade as unfried 'Fryums' are distinct from traditional papad and are treated as namkeen/edible preparations requiring further processing before consumption. Chapter Notes to Heading 21 (including the inclusive scope in Note 5 and the illustrative examples in Note 6) establish that Heading 2106 covers preparations for use after processing and an omnibus category for edible preparations not elsewhere specified. Applying those principles, the Authority held that the applicant's un fried Fryums fall within Tariff Item 2106 90 99 rather than under 1905, and therefore are not eligible for exemption applicable to "Papad, by whatever name it is known, except when served for consumption". Consequently, the product is taxable under the GST notifications applicable to Heading 2106 and attracts the rate specified for that heading. [Paras 26, 31, 32, 33, 34]

The product manufactured and supplied by the applicant is classifiable under Tariff Item 2106 90 99 of the First Schedule to the Customs Tariff Act, 1975 and is taxable at GST rate of 18% (CGST 9% + GGST 9% or IGST 18%) under Sl. No. 23 of Schedule III to Notification No.1/2017 (as amended).

Final Conclusion: Advance ruling: the goods in question are 'un fried Fryums' classifiable under Tariff Item 2106 90 99 and liable to GST at 18% under the relevant Schedule III entry; they are not classifiable as 'Papad' under Tariff Heading 1905 for purposes of the exemption entry.

Provisional attachment under Section 83 - Proceedings under Section 71 - Power to attach bank accounts - Statutory precondition for exercise of attachment power - Strict compliance with the statutory scheme

Provisional attachment under Section 83 - Proceedings under Section 71 - Statutory precondition for exercise of attachment power - Validity of provisional attachment of the petitioner's bank account under Section 83 when proceedings were initiated only under Section 71 of the Act. - HELD THAT: - Section 83 authorises provisional attachment only where proceedings under any of Sections 62, 63, 64, 67, 73 or 74 are pending. The petitioner's bank account was attached by invoking Section 83 while the only proceedings actually initiated against the petitioner were under Section 71. The statutory text, read with Rule 159(1) and the prescribed form, requires a nexus between the specified proceedings and the provisional attachment. Precedents of High Courts (including the Division Bench of the Bombay High Court and decisions of the Punjab & Haryana and Gujarat High Courts) emphasise that the power to attach bank accounts is drastic and must be exercised strictly within the narrowly defined contingencies set out in Section 83. As no proceedings under the sections enumerated in Section 83 were pending against the petitioner, the attachment order was beyond the statutory power and therefore unsustainable. [Paras 8, 10, 11]

Impugned provisional attachment under Section 83 quashed as ultra vires where only Section 71 proceedings were initiated; petition allowed.

Final Conclusion: The provisional attachment of the petitioner's bank account is set aside because Section 83 can be invoked only during pendency of proceedings specifically under Sections 62, 63, 64, 67, 73 or 74; respondents remain free to take action in accordance with law and the statutory conditions for attachment.

Anticipatory bail - cancellation of bail - jurisdiction to cancel bail - violation of bail conditions - remedy before the court granting bail - offences under the GST Act - interference with trial court's order

Anticipatory bail - violation of bail conditions - jurisdiction to cancel bail - remedy before the court granting bail - Whether this High Court could cancel the anticipatory bail granted by the trial court or entertain the petition for cancellation in the absence of any recorded breach of bail conditions. - HELD THAT: - The Court noted that serious offences under the GST Act are alleged against the respondents and that anticipatory bail had been granted by the trial Court by order dated 21.09.2019. However, there was no material placed before this Court showing breach of the conditions imposed by the trial Court. The High Court held that cancellation of bail in the event of alleged violation of bail conditions is within the jurisdiction of the Court which granted bail and not a matter for this Court to decide in the present petition. Any grievance regarding breach of conditions or need for additional conditions for effective investigation must be brought before the trial Court which granted the bail so that it can pass appropriate orders in accordance with law. The High Court therefore declined to interfere with the anticipatory bail order and reserved the petitioner the liberty to approach the trial Court for cancellation or modification of bail conditions. [Paras 5, 6, 7]

Petition dismissed at the stage of admission; petitioner granted liberty to approach the trial Court which granted bail for cancellation or modification if justified.

Final Conclusion: The High Court dismissed the petition seeking cancellation of anticipatory bail for lack of jurisdiction to cancel an order of the trial Court in the absence of demonstrated breach of bail conditions, while leaving the petitioner free to seek cancellation or modification before the Court that granted bail.

Notice under Section 226(3) for recovery from third-party/assessee-in-default - treatment as assessee in default - assessment set aside by Tribunal and remittance for fresh determination - validity of recovery notices in light of annulled assessment - power to pursue recovery based on subsequent fresh assessment

Notice under Section 226(3) for recovery from third-party/assessee-in-default - validity of recovery notices in light of annulled assessment - Impugned recovery notices dated 26.06.2015, 07.09.2015 and 11.02.2016 issued pursuant to the assessment order against M/s. Stylog Infrastructure Private Limited - HELD THAT: - The impugned notices and the consequential treatment of the petitioners as assessees in default were founded on an assessment order against M/s. Stylog Infrastructure Private Limited. Subsequent to the filing of these writ petitions, that assessment was set aside by the Income Tax Tribunal and remitted for fresh determination; a fresh assessment order was thereafter passed and is the subject of appeal. In these circumstances the recovery notices issued earlier, which derived their validity from the set aside assessment, cannot subsist. The court therefore set aside the impugned notices which were predicated on the annulled assessment. The court nonetheless clarified that the tax authorities remain entitled to pursue recovery based on the fresh assessment order in accordance with law. [Paras 4, 5]

Impugned recovery orders set aside; petitions disposed subject to clarification that authorities may pursue recovery based on the fresh assessment in the manner recognised by law; connected miscellaneous petitions closed; no costs.

Final Conclusion: The writ petitions are disposed of by setting aside the recovery notices that were grounded on an assessment subsequently set aside by the Tribunal; the tax authority is permitted to pursue recovery based on the fresh assessment order in accordance with law.

Proportionate deduction under section 80IB(10) for residential units having built-up area of 1,500 sq.ft. or less - requirement of 'residential unit' under section 80IB(10) and principle of statutory interpretation regarding use/omission of the word 'each' - validity and finality of District Valuation Officer (DVO) report vis-a -vis physical measurement by Assessing Officer - distinction between developer and contractor for entitlement under section 80IB(10)

Proportionate deduction under section 80IB(10) for residential units having built-up area of 1,500 sq.ft. or less - requirement of 'residential unit' under section 80IB(10) and principle of statutory interpretation regarding use/omission of the word 'each' - Assessee entitled to deduction under section 80IB(10) on a proportionate basis in respect of individual residential units having built-up area of 1,500 sq.ft. or less. - HELD THAT: - The Tribunal upheld the Commissioner (Appeals) conclusion allowing deduction proportionately for those units within the project whose built-up area is 1,500 sq.ft. or below. The Tribunal relied on the Karnataka High Court's view that clause (c) of section 80IB(10) uses the expression 'residential unit' and omits the word 'each', so the statutory language does not preclude application of the principle of proportionality. Earlier decisions of the High Court and appellate authorities treating similar facts were held to have attained finality and support allowing deduction in respect of individual qualifying units within a project. Consequently, the Revenue's contention that the condition must be satisfied in respect of all units in a project was rejected. [Paras 10, 12]

Deduction under section 80IB(10) is allowable on a proportionate basis for individual residential units measuring 1,500 sq.ft. or less.

Validity and finality of District Valuation Officer (DVO) report vis-a -vis physical measurement by Assessing Officer - DVO report was not treated as conclusive for County I and the Assessing Officer was directed to take physical measurements and decide eligibility. - HELD THAT: - The Tribunal noted that the DVO's report did not consider the units in County I comprehensively and therefore could not be treated as final. The Tribunal observed that the Assessing Officer remains at liberty to carry out physical measurements in an appropriate manner and decide the allowability of deduction accordingly. The effect is to require fresh/appropriate measurement by the AO rather than to uphold the DVO figures as determinative. [Paras 5, 13]

DVO report not final for County I; AO to take physical measurements of individual residential units and determine claim of deduction.

Distinction between developer and contractor for entitlement under section 80IB(10) - CIT(A)'s finding that the assessee was a developer (and not merely a contractor) was accepted and was not challenged by the Revenue. - HELD THAT: - The Tribunal recorded that the Commissioner (Appeals) had found the assessee to be a developer who had taken the risks and rewards of developing and constructing the housing project. That finding stood unchallenged in the present appeal and was therefore treated as final for the purposes of entitlement under section 80IB(10). [Paras 9]

Assessee treated as developer for the project; Revenue did not contest that finding.

Final Conclusion: The Revenue's appeal is dismissed. The CIT(A)'s allowance of deduction on a proportionate basis for units measuring 1,500 sq.ft. or less is sustained; the DVO report is not treated as conclusive for County I and the Assessing Officer is directed to take physical measurements of individual units and decide the deduction claim; the CIT(A)'s finding that the assessee is a developer was accepted.

Exemption of long-term capital gains on sale of listed shares (claim under section 10(38) of the Act) - treatment of purported accommodation/boiler-room share transactions as bogus and addition as unexplained credit - onus of proof and preponderance of probabilities in share transaction genuineness - reliance on statements/Investigation Wing reports without opportunity of cross examination (principles of natural justice) - dematerialisation record, bank payment evidence and contract notes as corroborative documentary proof - use of coordinate-bench precedent and applicability of Tribunal decisions on identical facts

Exemption of long-term capital gains on sale of listed shares (claim under section 10(38) of the Act) - treatment of purported accommodation/boiler-room share transactions as bogus and addition as unexplained credit - dematerialisation record, bank payment evidence and contract notes as corroborative documentary proof - reliance on statements/Investigation Wing reports without opportunity of cross examination (principles of natural justice) - onus of proof and preponderance of probabilities in share transaction genuineness - Whether the long term capital gain claimed as exempt (sale of listed shares) could be held to be a bogus accommodation entry and added to income despite documentary and demat evidence produced by the assessee. - HELD THAT: - The Tribunal, after considering the material on record and the rival submissions, held that the assessee had produced contemporaneous documentary evidence - payment by account payee cheque, share certificates/demat records, dematerialisation of shares, broker contract notes and receipt of sale proceeds through the broker - which established the transactions. The Assessing Officer's conclusion rested largely on investigation wing reports and statements alleging a rigging/modus operandi but did not produce independent contradictory material directly controverting the documentary trail relied upon by the assessee. The Tribunal applied the principle that statements or investigation reports, when used as the sole basis for disallowing transactions, cannot supplant the assessee's documentary proofs unless corroborated; and that denial of an opportunity to cross examine persons whose statements form the basis of adverse findings is a breach of natural justice rendering such reliance infirm. Following coordinate bench decisions dealing with identical factual matrices, the Tribunal concluded that in absence of cogent contrary material and where the assessee has proved payment and demat holding, the transactions cannot be held bogus merely on suspicion or on uncorroborated investigative statements. The Tribunal therefore set aside the treatment of the LTCG as bogus and directed deletion of the addition. [Paras 15, 16]

Assessee's claim of exemption for long term capital gain was accepted; the addition treating the sale as accommodation/bogus entry was deleted and appeals allowed.

Final Conclusion: Appeals allowed: the Tribunal followed coordinate bench precedents and, on the facts and documentary/demat evidence produced by the assessees and in absence of contrary corroborative material from the Department (and having regard to natural justice concerns regarding reliance on investigation statements), held the LTCG to be genuine and deleted the additions; appeals for the stated assessment years are allowed.

Characterisation of unsold property as stock-in-trade - income from business or profession - income from house property - notional annual letting value / annual value - treatment of closing stock held by builders/developers

Characterisation of unsold property as stock-in-trade - income from business or profession - income from house property - notional annual letting value / annual value - treatment of closing stock held by builders/developers - Whether unsold shops held as closing stock by a builder-developer are assessable as business income or by notionally computing annual letting value as income from house property - HELD THAT: - The Tribunal accepted the assessee's submission that the properties in question were held as stock-in-trade in the course of the business of construction and development and that income arising from such stock is assessable as business income, not under the head income from house property. It relied on and followed Coordinate Bench decisions and higher court authority, including the reasoning in Neha Builders and the principle in Chennai Properties & Investments Ltd., to the effect that where property is used as stock-in-trade any income attributable to it partakes the character of business income; accordingly there is no justification for estimating notional annual letting value under Section 23 on unsold units which are stock-in-trade. Applying those precedents to the admitted facts of the case - that the unsold shops were reflected as stock-in-trade and similar issues had been decided in the assessee's own earlier appeal - the Tribunal held that the Assessing Officer was not justified in bringing a notional rent to tax under the head income from house property and upheld the order of the CIT(A) deleting the addition. [Paras 9, 10, 11]

The addition made by the AO by estimating notional annual letting value under Section 23 on unsold shops held as stock-in-trade is deleted and such income is to be assessed as business income when realised.

Final Conclusion: Appeal dismissed: the Tribunal upheld the CIT(A)'s deletion of the addition under income from house property for AY 2014-15, holding that unsold units held as stock-in-trade by a builder-developer are not liable to be assessed by notionally computing annual letting value but are assessable as business income.

Unexplained investment - cash flow statement as evidence of source - finality of entries accepted in earlier assessment - treatment of credits from third parties and family members - remand for verification of disputed receipts

Unexplained investment - cash flow statement as evidence of source - finality of entries accepted in earlier assessment - treatment of credits from third parties and family members - Deletion of addition made under section 69 in respect of payment for purchase of land in Shaikpet (AY 2009-10) by treating the cash flow statement and confirmed credits as satisfactory sources. - HELD THAT: - The assessee had explained the payment for the land by a cash flow statement showing a substantial opening cash balance and receipts during the year. In the earlier assessment year (AY 2008-09) the AO had accepted the cash flow statement and closing balance except for a specific item of Rs.5 lakhs which was added back; the remaining entries were not disturbed. The Tribunal held that once the cash flow statement and balances were furnished and largely accepted in the preceding scrutiny assessment, the AO could not reopen and disturb those entries in a subsequent year without having caused verification or obtained requisite approvals to convert the limited scrutiny into full scrutiny for the earlier year. The Tribunal further found that confirmations and statements under section 131 from two creditors established their payments, and available material (including legal notice from the third creditor and confirmation from the husband whose income is assessed) did not support treating those receipts as bogus. Where the genuineness of sources lay with the creditors, any doubt should be pursued against those creditors and not taxed in the hands of the assessee without contrary material. Applying these conclusions, the Tribunal accepted the opening cash balance and the loans/advances from the named persons as sources for the land payment and held there was no case for addition under section 69. [Paras 8]

Addition under section 69 in respect of the Shaikpet land payment is deleted; appeal for AY 2009-10 allowed.

Remand for verification of disputed receipts - rental deposit as unexplained credit - need for verification and enquiries - Remand of the issue of rental deposit of Rs.20 lakhs (AY 2010-11) to the AO for verification and fresh decision on merits. - HELD THAT: - The assessee produced a lease deed and asserted receipt of a refundable rental deposit which was later adjusted against rent in civil proceedings. However, particulars of date and mode of receipt were not furnished and the lessee did not respond to statutory enquiries. Given the existence of an ongoing civil dispute and the absence of conclusive material before the Tribunal, both parties agreed to remit the matter for the AO to verify the genuineness, dates and mode of payment and to make enquiries (including pursuing the lessee) rather than merely asking the assessee to produce the creditor. The Tribunal directed the AO to examine the claim afresh and the assessee to cooperate in furnishing information. [Paras 10, 11, 12, 13, 15]

Issue remitted to the file of the AO for fresh verification and decision; treated as allowed for statistical purposes.

Final Conclusion: The appeal for AY 2009-10 is allowed by deleting the addition under section 69 relating to the Shaikpet land payment; the appeal for AY 2010-11 is partly allowed for statistical purposes by remanding the disputed rental deposit of Rs.20 lakhs to the AO for verification and fresh decision.

Transfer Pricing - Arm's Length Price - Comparable Companies - TNMM - Profit Level Indicator (Operating profit/Operating cost) - Turnover Filter - Working Capital Adjustment - Remand for Re-computation

Comparable Companies - Turnover Filter - Exclusion of M/s. Acropetal Technologies Ltd. from the list of comparables - HELD THAT: - The Tribunal examined the segmental reporting and accepted the coordinate-bench conclusion that Acropetal's revenue from Information Technology services was less than 75% of total revenue and therefore it failed the software development services revenue filter applied by the TPO/DRP. Following the prior decision relied upon, the Tribunal directed exclusion of Acropetal as not being functionally comparable for the assessee's software development services segment. [Paras 9]

Acropetal Technologies Ltd. excluded from the comparable set

Comparable Companies - Functional Comparability - Exclusion of M/s. E-Infochips Ltd. from the list of comparables - HELD THAT: - The Tribunal accepted the reasoning in Saxo India P. Ltd. that E-Infochips had mixed streams (software services and products) without available segmental data to isolate software services margins. Because the assessee's transactions concerned pure software development services, and the impact of product revenues on overall margins could not be ascertained, the Tribunal directed exclusion of E-Infochips as not comparable. [Paras 9]

E-Infochips Ltd. excluded from the comparable set

Comparable Companies - Functional Comparability - Exclusion of Persistent Systems & Solutions Ltd. from the list of comparables - HELD THAT: - Relying on coordinate-bench authority, the Tribunal noted Persistent Systems & Solutions reported composite revenue from software services and products under a single segment, with no separate segmental profit data for software services. On that basis, it agreed with the DRP's exclusion of the company since composite data could not reliably serve as a comparator for the assessee's software development services. [Paras 9]

Persistent Systems & Solutions Ltd. excluded from the comparable set

Comparable Companies - Employee Cost Filter - Inclusion of M/s. CG VAK Software & Exports Ltd. as a comparable company - HELD THAT: - The Tribunal followed the Bangalore-bench decision holding that CG VAK is functionally comparable and, on available material, passes the employee-cost related filter because the major portion of 'cost of services' likely relates to employee cost and the ratio of cost of services to sales supported inclusion. The Tribunal found no basis for the DRP's inference of subcontracting where no such filter was applied, and directed inclusion of CG VAK in the final comparable list. [Paras 10]

CG VAK Software & Exports Ltd. included in the comparable set

Arm's Length Price - Remand for Re-computation - Re-determination of ALP of the software development services segment - HELD THAT: - In light of the directed exclusions and inclusion of specified comparables, the Tribunal held that the ALP for the assessee's software development services must be re-computed. The matter is restored to the file of the AO/TPO with directions to re-calculate the ALP applying the revised comparable set and relevant adjustments (including working capital adjustment previously applied), and to pass consequential assessment modifications. [Paras 11]

ALP to be re-computed by AO/TPO after applying the directed changes to the comparable set

Final Conclusion: The appeal is partly allowed for statistical purposes: three specified comparables are excluded, one comparable (CG VAK) is included, and the ALP for the software development services segment is remitted to the AO/TPO for re-computation in accordance with the Tribunal's directions.

Non-allowance of deduction for employer's payment in lieu of leave until actually paid (section 43B(f)) - constitutional validity of section 43B(f) - deduction for provision for bad and doubtful debts by a scheduled bank under section 36(1)(viia) - 10% of aggregate average advances of rural branches (computation under Rule 6ABA) - remand for production of prescribed particulars and verification by assessing officer under Rule 6ABA - disallowance under section 40(a)(ia) for failure to deduct tax at source and relevance of Form 15G/15H

Non-allowance of deduction for employer's payment in lieu of leave until actually paid (section 43B(f)) - constitutional validity of section 43B(f) - Deductibility of provision for privileged leave encashment claimed by the assessee. - HELD THAT: - The Tribunal noted that the Supreme Court has upheld the constitutional validity of section 43B(f). In consequence, sums payable by an employer in lieu of leave at the credit of an employee are not allowable as a deduction unless actually paid; deduction is confined to the previous year in which the payment is made. Applying this legal principle, the assessee's claim for deduction of the provision for leave encashment could not be sustained. [Paras 7, 8]

Assessee's claim for deduction of provision for leave encashment is rejected; order of CIT(A) upheld.

Deduction for provision for bad and doubtful debts by a scheduled bank under section 36(1)(viia) - 10% of aggregate average advances of rural branches (computation under Rule 6ABA) - remand for production of prescribed particulars and verification by assessing officer under Rule 6ABA - Claim for deduction under section 36(1)(viia) in respect of 10% of aggregate average advances made by rural branches and adequacy of evidence. - HELD THAT: - The Tribunal examined the statutory entitlement to two components of deduction under section 36(1)(viia): (i) 7.5% of total income and (ii) up to 10% of the aggregate average advances made by rural branches computed as per Rule 6ABA. The AO allowed the 7.5% component but, on the second component, disallowed the bulk of the claim because the assessee failed to produce the prescribed details and evidence required under Rule 6ABA. The Tribunal observed that in earlier assessment years the matter had been remanded for filing particulars and directed similarly here. Consequently the issue is restored to the AO for the assessee to file the necessary details in the prescribed form and for the AO to examine the claim afresh in accordance with the rules. [Paras 11, 12, 13]

Issue set aside and remanded to the AO with direction to the assessee to furnish the required particulars under Rule 6ABA and for the AO to verify and decide the claim afresh.

Disallowance under section 40(a)(ia) for failure to deduct tax at source and relevance of Form 15G/15H - Treatment of payments to contractors/professionals for applicability of section 40(a)(ia) and effect of Form 15G/15H or capitalisation on disallowance. - HELD THAT: - The AO treated payments as falling under sections 194C/194J and, on absence of TDS, invoked section 40(a)(ia) to disallow the deduction. The assessee contended that the amounts were either capitalised (and thus not claimed as revenue deduction) or covered by furnished Form 15G/15H. The CIT(A) directed verification. The Tribunal directed the AO to verify whether the expenditure was capitalised; if so, the addition should be deleted. If the expenditure is revenue in nature, the assessee should be permitted to file Form 15G/15H to show that TDS obligation did not arise. The matter was therefore treated as allowed for statistical purposes. [Paras 15, 16, 17, 18, 19]

Directed verification by the AO: delete addition if expenditure is capitalised; otherwise permit filing of Form 15G/15H and deal with TDS obligation accordingly. Ground treated as allowed for statistical purposes.

Final Conclusion: Appeal partly allowed: order confirming disallowance of provision for leave encashment upheld; claim for rural-branches bad-debt deduction remanded to AO for production of particulars and fresh consideration under Rule 6ABA; disallowance under section 40(a)(ia) directed to be examined by AO with liberty to the assessee to establish capitalization or file Form 15G/15H, and treated as allowed for statistical purposes.

Duty to decide appeal on merits - remand for fresh consideration - non-prosecution and dismissal of appeal - addition under section 68 of the Income-tax Act - final opportunity to the assessee

Duty to decide appeal on merits - non-prosecution and dismissal of appeal - remand for fresh consideration - addition under section 68 of the Income-tax Act - final opportunity to the assessee - Whether the CIT(A) could dismiss the assessee's appeal for non-appearance instead of adjudicating the merits of additions made under section 68, and the appropriate course of action. - HELD THAT: - The Tribunal found that the AO completed assessment for the stated year by invoking the provisions for non-appearance and made an addition under section 68. The CIT(A) dismissed the appeal on account of the assessee's non-appearance relying on earlier judicial decisions, but did not decide the appeal on its merits. Under the statutory scheme the appellate authority is required to decide appeals on merits and cannot simply dismiss an appeal for non-prosecution without affording a final opportunity to the appellant. In the interests of justice and considering the totality of facts, the matter relating to the addition under section 68 was restored to the file of the CIT(A) with a direction to grant one final opportunity to the assessee to appear and substantiate its case; if the assessee fails to do so the CIT(A) is at liberty to pass an appropriate order in accordance with law. The grounds raised by the assessee were therefore allowed for statistical purposes and the matter remanded for fresh adjudication on merits. [Paras 5]

The appeal is allowed for statistical purposes and the issue of the addition under section 68 is remanded to the CIT(A) for fresh decision after granting one final opportunity to the assessee to substantiate its case; failing which the CIT(A) may pass an appropriate order.

Final Conclusion: Tribunal allowed the appeal for statistical purposes and set aside the CIT(A)'s non-prosecution dismissal, restoring the matter to the CIT(A) to decide the addition under section 68 on merits after granting one final opportunity to the assessee to be heard; failure to appear would permit the CIT(A) to act as per law.

Disallowance under Section 40A(3) of the Income tax Act - Reimbursement of expenses - Treatment of land acquisition where land is not stock in trade - Acceptance of books of account as evidentiary basis

Disallowance under Section 40A(3) of the Income tax Act - Reimbursement of expenses - Treatment of land acquisition where land is not stock in trade - Acceptance of books of account as evidentiary basis - Whether the addition of Rs. 40,000 made by invoking Section 40A(3) is sustainable where the payment was reimbursed by the collaborator, not debited as an expense in the assessee's profit & loss account, and the land was not treated as stock in trade. - HELD THAT: - The Tribunal found as undisputed that the assessee purchased the land, that part payment was made in cash, that the assessee's books of account have been accepted by the revenue authorities, and that the property was not treated as stock in trade. The assessee produced the Collaboration Agreement (para 3(b)) which expressly provided for reimbursement by the collaborator of costs and expenses incurred for acquisition of the land; the amount was shown in the books as reimbursement and no deduction relating to the payment was claimed in the profit and loss account. On these facts the Tribunal held that the provisions of Section 40A(3) are not attracted because there were no expenses relatable to the addition in question and the payment was demonstrated to be a reimbursement. The Tribunal also followed the decision in the coordinate bench case of the assessee's group company (M/s. Westland Developers Pvt. Ltd.) where a similar issue was decided in favour of the assessee on the same legal and factual footing. Applying these principles, the Tribunal concluded that the AO/CIT(A) erred in invoking Section 40A(3) and making/confirming the disallowance. [Paras 9, 10, 11, 12]

The disallowance of Rs. 40,000 made under Section 40A(3) is deleted and the assessee's appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, deleting the impugned disallowance under Section 40A(3) because the payment was shown and established as a reimbursement in accepted books and no expense was claimed; the addition of Rs. 40,000 was therefore held to have been wrongly invoked and is deleted.

Disallowance of business expenditure under section 40A(3) read with Rule 6DD(e) - Exemption for payments relating to purchase of agricultural produce - Genuineness and identifiability of cash payments - Payment on behalf of third parties and adjustment from sale proceeds - Requirement of payment by crossed cheque or bank draft versus business expediency

Disallowance of business expenditure under section 40A(3) read with Rule 6DD(e) - Exemption for payments relating to purchase of agricultural produce - Genuineness and identifiability of cash payments - Deletion of addition made under section 40A(3) in respect of cash payments to transporters amounting to Rs. 5,52,455/- for the assessment year 2014-15. - HELD THAT: - The Tribunal held that the assessee had explained the circumstances under which cash payments were made to transporters and had produced vouchers, transporter bills and farmers' bills showing that the payments were made on behalf of farmers and adjusted from sale proceeds. The revenue did not dispute the payments or question the identifiability of the payees, nor did the Assessing Officer examine the farmers to test the assessee's contention. Applying the ratio of the Supreme Court in Attar Singh Gurmukh Singh and the guidance in rule 6DD(e), the requirement of payment by crossed cheque or bank draft is not absolute and bona fide cash transactions, where genuineness is not in doubt and business expediency is explained, are not liable to disallowance under section 40A(3). In these circumstances and on the material before it, the Tribunal found no justification for the disallowance and directed deletion of the addition. [Paras 6, 7]

Appeal allowed; AO directed to delete the addition made under section 40A(3).

Final Conclusion: The Tribunal allowed the assessee's appeal for AY 2014-15, holding that bona fide cash payments to transporters made on behalf of farmers and supported by documentary evidence fall within the exception contemplated by rule 6DD(e) and cannot be disallowed under section 40A(3) where genuineness is not disputed.

Opportunity of being heard - remand for fresh consideration by the appellate authority - imposition of costs for non-appearance and wasting revenue time - reassessment proceedings reopened under reassessment jurisdiction

Opportunity of being heard - remand for fresh consideration by the appellate authority - imposition of costs for non-appearance and wasting revenue time - Whether the appeal should be set aside to the file of the Ld. CIT(A) for fresh adjudication after affording the assessee an opportunity of being heard and whether costs should be imposed for the assessee's non-appearance before the lower authorities. - HELD THAT: - The Tribunal recorded that the assessee, an NRI, did not appear before either the assessing officer or the Ld. CIT(A) despite notices and thereby failed to avail the opportunity of being heard, resulting in inaction that wasted the Revenue's time. The Tribunal held that, in such circumstances, it would not be appropriate to set aside the proceedings to the lower authorities without imposing a cost. In the interest of justice and to ensure the assessee participates in the appellate process, the Tribunal directed deposit of a cost by the assessee as a precondition to remand. On production of the receipt evidencing deposit, the Ld. CIT(A) was directed to proceed with the appeal and decide the matter afresh in accordance with law after affording the assessee an opportunity of being heard. [Paras 7, 8]

Matter is set aside to the file of the Ld. CIT(A) for fresh decision after giving the assessee an opportunity of being heard; the assessee shall deposit Rs. 10,000/- as costs and produce the receipt before the department.

Statistical disposal of appeals - Whether the appeal is to be disposed of for statistical purposes. - HELD THAT: - After directing the remand and the deposit of costs, the Tribunal recorded the appellate outcome for administrative purposes. No adjudication on the merits of the additions or penalties was undertaken by the Tribunal in this order. [Paras 9]

Appeal filed by the assessee is allowed for statistical purposes.

Final Conclusion: The Tribunal set aside the matter to the Ld. CIT(A) for fresh adjudication after affording the assessee an opportunity of being heard, subject to deposit of costs of Rs. 10,000/-, and recorded the appeal as allowed for statistical purposes without deciding the merits.

Reopening of assessment and requirement to furnish reasons recorded for notice under section 148 - transfer within meaning of section 2(47)(v) and applicability of section 53A of the Transfer of Property Act - novation of contracts and effect of subsequent MOU on earlier JDA - computation of capital gains where no transfer is held to have occurred - consequentiality of interest claims where substantive issues are resolved

Reopening of assessment and requirement to furnish reasons recorded for notice under section 148 - Validity of reassessment framed by order dated 28/12/2012 (and related grounds) where reasons recorded for initiating proceedings under section 147/148 were not furnished to the assessee. - HELD THAT: - The Tribunal, following the majority view of the Third Member, held that the assessee is entitled to examine the reasons recorded for initiating reassessment proceedings when the assessee has filed a return in response to the notice under section 148. The Third Member observed that the sequence of making the request for reasons (whether before or after filing the return) does not defeat the right to obtain the reasons once the return is filed. Failure to furnish reasons when demanded renders the reassessment order void. Respectfully following the Third Member, the Tribunal allowed the grounds challenging the validity of the assessment dated 28/12/2012 for lack of furnishing reasons recorded and annulled the reassessment insofar as those grounds were raised by the assessee. [Paras 3]

Reassessment dated 28/12/2012 is void for non-furnishing of reasons recorded; Grounds 2, 3, 6 and 7 of ITA No. 1269/Bang/2016 allowed.

Reopening of assessment and requirement to furnish reasons recorded for notice under section 148 - Validity of reassessment founded on notice dated 28/02/2014 (second reopening) as challenged in ITA No. 1270/Bang/2016. - HELD THAT: - The Tribunal, following the view of the Judicial Member, held that a reopening done prior to completion of earlier proceedings is not per se impermissible so long as statutory requirements of sections 147 and 148 are complied with and reopening is within limitation. On the material (including correspondence from the developer indicating altered sale consideration), the Judicial Member found escapement of income and justified the second reopening. Accordingly, the challenge to the second reassessment was dismissed. [Paras 9]

Grounds challenging validity of reassessment dated 28/02/2014 dismissed; ITA No. 1270/Bang/2016 partly dismissed on these points.

Transfer within meaning of section 2(47)(v) and applicability of section 53A of the Transfer of Property Act - novation of contracts and effect of subsequent MOU on earlier JDA - Whether a transfer took place during the previous year relevant to AY 2006-07 within the meaning of section 2(47)(v) of the Income-tax Act. - HELD THAT: - The Third Member agreed with the Judicial Member that the original JDA dated 07/06/2005 stood extinguished by subsequent agreements (MOU dated 15/04/2006 and later MOU dated 07/03/2008) which involved different parties and different terms. The registered MOU of 07/03/2008 did not operate to revive or make the earlier unregistered JDA of 07/06/2005 a registered document for the purpose of application of section 47 of the Registration Act. Relying on principles of novation, and noting that no possession sufficient for invoking section 53A was given under the unregistered agreement, the Tribunal held there was no transfer in the year relevant to AY 2006-07. The authorities below were therefore in error in treating the 2005 agreement as giving rise to a transfer taxable as capital gains in AY 2006-07. [Paras 4]

No transfer took place in the year relevant to AY 2006-07; Grounds 4, 5, 10, 10.1, 14 and 15 of ITA No. 1269/Bang/2016 allowed.

Computation of capital gains where no transfer is held to have occurred - Legality and correctness of the capital gains computation and the enhancements to the alleged consideration/value made by the authorities. - HELD THAT: - Because the Tribunal held that no transfer occurred on 07/06/2005, there was no basis for the lower authorities to compute or enhance capital gains for the assessment year in question. The Judicial Member further observed that reliance on a later letter dated 17/01/2013 (which referenced the registered MOU of 07/03/2008) was misplaced for assessing AY 2006-07. Consequently, the additions and enhanced valuation made by the AO and sustained by the CIT(A) were quashed and the grounds relating to computation of capital gains were allowed. [Paras 5]

Computation and enhancement of capital gains in the hands of the assessee for AY 2006-07 set aside; Grounds 9, 9.1 and 13 of ITA No. 1269/Bang/2016 allowed.

Consequentiality of interest claims where substantive issues are resolved - Whether interest under sections 234A, 234B and 234C is chargeable in view of the Tribunal's substantive findings. - HELD THAT: - The Judicial Member treated the pleas on interest as consequential on the substantive findings. Having allowed the substantive grounds (no transfer/no capital gains or reassessment void in part), the Judicial Member held the interest grounds to be academic or consequential and did not adjudicate them on merits. The Tribunal respectfully followed that approach and held the interest grounds to be consequential. [Paras 7]

Interest grounds treated as consequential/academic; not adjudicated on merits.

Transaction resulting in an Association of Persons (AOP) - Whether the agreement produced an AOP and whether section 45(3) applied. - HELD THAT: - The Judicial Member regarded the question as academic in light of the primary findings on transfer and capital gains and did not decide the AOP contention on merits. The Tribunal adopted that approach and did not adjudicate the AOP ground substantively. [Paras 6]

Ground on AOP held to be academic and not adjudicated.

Final Conclusion: Appeal ITA No. 1269/Bang/2016 is allowed: reassessment dated 28/12/2012 is void for non-furnishing of reasons and no transfer (hence no capital gains) is held for AY 2006-07; consequential capital gains additions quashed. Appeal ITA No. 1270/Bang/2016 is partly allowed: challenges to the second reassessment dated 28/02/2014 are dismissed, but issues relating to absence of transfer and computation of capital gains are allowed to the extent reflected above; interest and AOP contentions treated as consequential/academic.

Charitable purpose - proviso to section 2(15) - advancement of any other object of general public utility - educational activities - benefit of sections 11 and 12 - pronouncement of orders under Rule 34(5) of the Appellate Tribunal Rules - exclusion of lockdown period while computing 90 day pronouncement limit

Educational activities - proviso to section 2(15) - charitable purpose - benefit of sections 11 and 12 - Providing hostel facilities to students is to be treated as educational activity and thus does not fall within the proviso to section 2(15) so as to deprive the trust of charitable status. - HELD THAT: - The Tribunal, relying on a Coordinate Bench decision dealing with identical facts, accepted the reasoning that hostel accommodation is an integral and essential component of education - a centre of learning and character formation that complements formal instruction - and cannot be artificially segregated from the educational activity of the trust. The authorities below were found to have erred in treating hostel receipts/surplus as commercial activity without considering that the primary object of the trust is to provide hostel facilities as an aid to education, as evidenced by long continuance of such activity and prior registrations. The Tribunal held that if the main activity falls under the central provision of section 2(15) as education, the proviso dealing with advancement of objects of general public utility in the nature of trade, commerce or business is not attracted; entitlement to exemption under sections 11 and 12 must be considered and the matter remitted to the AO for recomputation of taxable income and allowance of relevant benefits under sections 11 and 12 in accordance with law. [Paras 5, 6]

Assessee's activity of providing hostel facilities is educational in nature; proviso to section 2(15) does not apply and the assessee is entitled to relief, with the AO directed to re-determine income and apply sections 11 and 12.

Pronouncement of orders under Rule 34(5) of the Appellate Tribunal Rules - exclusion of lockdown period while computing 90 day pronouncement limit - Delay beyond 90 days in pronouncing the order was permissible by excluding the period of lockdown caused by the Covid 19 pandemic when computing the 90 day limit under Rule 34(5). - HELD THAT: - The Tribunal referred to and followed a Coordinate Bench's exposition that the term 'ordinarily' in Rule 34(5)(c) permits exception in extraordinary circumstances; the Covid 19 lockdown, declared a disaster and accompanied by governmental and judicial extensions of limitation, amounted to such extraordinary circumstances. Accordingly, the period of lockdown is to be excluded when computing the 90 day period for pronouncement of orders, and the pronounced order (though beyond 90 days from hearing) was held to be within permissible time limits. [Paras 8]

The period of lockdown is excluded for the purpose of Rule 34(5) time computation; pronouncement of the order after the lapse of 90 days (when lockdown is excluded) is held to be within permissible limits.

Final Conclusion: The Tribunal allowed the assessee's appeal: providing hostel facilities to students is an educational activity not covered by the proviso to section 2(15), entitling the trust to consideration under sections 11 and 12 (matter remitted to the AO for recomputation), and the delay in pronouncing the order was held permissible by excluding the Covid 19 lockdown period for the purpose of Rule 34(5).

Disqualification under Section 164(2)(a) for non-filing of annual returns for any continuous period of three financial years - Vacation of office under Section 167(1)(a) consequent to disqualification under Section 164 - Temporal scope and look-back of disqualification provisions: consideration of events antecedent to April 1, 2014 - Cancellation/deactivation of Director Identification Number (DIN) upon statutory disqualification - Proviso to Section 164(2) and to Section 167(1) (2018 amendment) as a remedial window for defaulting company - Applicability of principles of natural justice to administrative listing of disqualified directors

Disqualification under Section 164(2)(a) for non-filing of annual returns for any continuous period of three financial years - Temporal scope and look-back of disqualification provisions: consideration of events antecedent to April 1, 2014 - Events occurring prior to April 1, 2014 can be taken into account for determining disqualification under Sections 164 and 167 of the Companies Act, 2013. - HELD THAT: - The Court held that Section 164(2)(a) must be read to permit consideration of antecedent events so as to ensure a seamless transition from the Companies Act, 1956 to the Companies Act, 2013 and to avoid anomalous results that would allow directors to escape consequences for breaches of fiduciary duty. The statutory language-use of words such as "has been" and "any continuous period of three financial years"-permits looking to prior events; the Act recognises companies incorporated under previous company law and does not require a strict compartmentalisation that would render pre-2014 defaults immune. The look-back is, however, not unlimited: the historical limit is circumscribed by the earlier statutory provision (Section 274(1)(g) of the 1956 Act) and by limitation laws, so that the effective terminus for the enquiry is April 1, 1999 in practice. In the facts of this case the defaults were for the period April 1, 2014 to March 31, 2017 (i.e., subsequent to the coming into effect of Sections 164 and 167), and therefore the Registrar's treatment of the petitioner as disqualified could not be faulted on the temporal-scope ground. [Paras 55, 56, 58, 67, 69]

Events prior to April 1, 2014 may be considered for purposes of Sections 164 and 167; on the facts (defaults from April 1, 2014 to March 31, 2017) the petitioner's disqualification under Section 164(2)(a) was correctly treated by the Registrar.

Cancellation/deactivation of Director Identification Number (DIN) upon statutory disqualification - Disqualification under Section 164(2)(a) for non-filing of annual returns for any continuous period of three financial years - A director's DIN stands cancelled (ceases to be valid) by operation of statute upon that person suffering disqualification under Section 164 of the Companies Act, 2013. - HELD THAT: - The Rules (Companies (Appointment and Qualification of Directors) Rules, 2014) define DIN for individuals who intend to be, or are, directors. Once a person is statutorily disqualified under Section 164, he is neither an existing director nor a person entitled to intend appointment; the statutory condition for holding a DIN therefore ceases to exist. Silence or partial coverage in Rule 11 does not override the Act; Rules are subordinate and must be read in conjunction with the Act. Rule 14 contemplates filings (DIR-8, DIR-9, DIR-10) related to disqualification and removal thereof; but the Act itself effects the cancellation of the entitlement to hold DIN upon disqualification. [Paras 81, 82, 84, 85, 86]

On incurring disqualification under Section 164, a person's DIN stands cancelled by operation of the statute; the Registrar's action in treating the DIN as inoperative in consequence of disqualification is correct.

Applicability of principles of natural justice to administrative listing of disqualified directors - Disqualification under Section 164(2)(a) for non-filing of annual returns for any continuous period of three financial years - Placing the petitioner in the Registrar's list of disqualified directors did not vitiate the Registrar's action for breach of principles of natural justice. - HELD THAT: - Although ordinarily administrative action that causes civil consequences invites application of audi alteram partem, principles of natural justice are not to be applied mechanically. Where facts are admitted or only one inference is possible, an enquiry would be a formality and lack of prior hearing does not necessarily vitiate action absent prejudice. Here the defaulting company's non-filing for the continuous period April 1, 2014 to March 31, 2017 was admitted; the Registrar's decision in November 2017 followed the elapse of the three-year continuous period. The petitioner did not demonstrate any prejudice arising from the absence of a prior hearing, nor did he produce material showing an alternative view on the facts. [Paras 90, 91, 92, 93, 94]

The Registrar's inclusion of the petitioner in the list of disqualified directors was not rendered invalid for breach of natural justice.

Proviso to Section 164(2) and to Section 167(1) (2018 amendment) as a remedial window for defaulting company - Disqualification under Section 164(2)(a) for non-filing of annual returns for any continuous period of three financial years - The 2018 provisos to Section 164(2) and Section 167(1) create a limited remedial window (six months) and clarify the consequences of disqualification; they do not apply to negate disqualifications already properly attracted before their introduction in a manner that would benefit the petitioner on the present facts. - HELD THAT: - The Court observed that the provisos introduced on May 7, 2018 furnish a window for a defaulting company to cure defaults by permitting a newly appointed director a six-month immunity to enable remediation; the proviso to Section 167(1) clarifies vacancy consequences across companies. The provisos are remedial and not mere clarificatory devices that would retrospectively erase prior disqualifications. On the facts, the petitioner's name was published in November 2017 and the defaults under consideration related to April 1, 2014-March 31, 2017; the 2018 amendments therefore did not afford the petitioner relief. [Paras 28, 59, 60, 69, 96]

The 2018 provisos supply a curing opportunity but do not invalidate the petitioner's disqualification in the present factual matrix.

Conflict of High Court views and exercise of Rule 26 - Because of conflicting views in this High Court's earlier orders on the same subject-matter, the matter is referred to a Division Bench under Rule 26 of the High Court writ rules. - HELD THAT: - The Court noted that its conclusions are in conflict with some earlier Division Bench or Single Judge orders (specifically Chetan Chokhani and Subhas Kumar Biswas) while being in consonance with others (Mukul Somany and Sourajit Ghosh). Given these inconsistent precedents within the Court on the disqualification/DIN issues, it is appropriate to invoke Rule 26 and refer the petition to the Division Bench for authoritative determination. [Paras 95, 97, 98, 99]

The petition is referred to the Division Bench for consideration under Rule 26.

Final Conclusion: The writ petition is not allowed on merits: the Registrar of Companies was justified in treating the petitioner as disqualified under Section 164(2)(a) for defaults in filing annual returns for April 1, 2014-March 31, 2017; the petitioner's DIN stands cancelled by operation of statute; the Registrar's listing did not breach principles of natural justice; the 2018 provisos provide a remedial window but do not afford the petitioner relief on these facts. In view of conflicting earlier High Court decisions, the matter is referred to a Division Bench under Rule 26.

Scheme of Arrangement - Inbound merger - Amalgamation of wholly owned indirect subsidiary with parent - Dispensation of meetings under Sections 230 to 232 - Conduct of meetings through video conferencing and e voting - Deemed approval of Reserve Bank of India under inbound merger regulations - SEBI disclosure requirements for listed companies - Appointment and duties of Chairman and Scrutiniser for meeting

Dispensation of meetings under Sections 230 to 232 - Amalgamation of wholly owned indirect subsidiary with parent - Dispensation of meeting of Equity Shareholders and of Unsecured Creditors of the Transferee Company - HELD THAT: - The Tribunal considered the applicant's plea to dispense with meetings of equity shareholders and unsecured creditors on the basis that the Transferor is an indirect wholly owned subsidiary and no consideration or share issuance is proposed. After perusal of record and submissions, the Tribunal declined to grant dispensation for the meetings of Equity Shareholders and Unsecured Creditors and directed that those meetings be convened on the dates and times fixed by the order for considering the proposed Scheme. The Tribunal recorded the sole Secured Creditor's written consent and therefore dispensed with the meeting of the sole Secured Creditor. [Paras 13]

Meeting of Equity Shareholders and Unsecured Creditors shall be convened as directed; meeting of sole Secured Creditor is dispensed with.

Conduct of meetings through video conferencing and e voting - Appointment and duties of Chairman and Scrutiniser for meeting - Modalities for conducting the convened meetings and voting procedure - HELD THAT: - In view of the pandemic, the Tribunal permitted the convened meetings (Equity Shareholders and Unsecured Creditors) to be conducted through video conferencing or other audio-visual means. For the listed Transferee Company the Tribunal directed provision of remote e voting and e voting at the time of the meeting for all equity shareholders; e voting at the time of meeting was directed for unsecured creditors. The Tribunal appointed a Chairman (with an alternate) and a scrutiniser, fixed requirements for notices, advertisement, quorum, prohibition of proxy voting in virtual meetings (while permitting authorized representatives), and required the Chairman to file compliance and result affidavits in specified Forms within prescribed timeframes. [Paras 13]

Meetings to be held through video conferencing with remote e voting and in meeting e voting as directed; Chairman and Scrutiniser appointed; procedural directions issued for notices, quorum, advertising and filing of compliance and results.

Deemed approval of Reserve Bank of India under inbound merger regulations - Inbound merger - Compliance with RBI inbound merger conditions and effect of the certificate filed under Rule 9 - HELD THAT: - The applicant placed on record a certificate of the Whole Time Director and Company Secretary asserting compliance with Section 234 and conditions specified under the Foreign Exchange Management (Cross Border Merger) Regulations, 2018. The Tribunal noted that, under Rule 9 of the RBI Notification, the certificate amounts to deemed approval of the Reserve Bank of India for the inbound merger involving the UAE based Transferor into the Indian Transferee. The Tribunal recorded this compliance in the application. [Paras 5]

Certificate under RBI inbound merger regulations accepted as constituting deemed RBI approval for the proposed amalgamation.

SEBI disclosure requirements for listed companies - Scheme of Arrangement - Applicability of SEBI circular and valuation requirement - HELD THAT: - The Tribunal noted that the Transferee is a listed public company and that the Transferor is a wholly owned indirect subsidiary; consequently, no shares are to be issued and the scheme was submitted to stock exchanges only for disclosure. The Tribunal accepted the applicant's contention that the SEBI circular CFD/DIL3/CIR/2017/21 dated 10 March 2017 is not applicable to the scheme and that no valuation exercise by the listed parent was required in the circumstances of a merger of a wholly owned subsidiary into the parent. [Paras 7]

SEBI circular not applicable to the Scheme and no valuation by the Transferee is required.

Final Conclusion: The Company Application is disposed of by directing convening of the meetings of Equity Shareholders and Unsecured Creditors with specified virtual modalities, voting procedures, appointment of Chairman and scrutiniser, issuance of statutory notices to authorities and publication of advertisement; the meeting of the sole Secured Creditor is dispensed with, RBI compliance as represented is recorded as deemed approval and SEBI valuation requirement is held not to apply.

Scheme of Amalgamation - sanction under Sections 230-232 of the Companies Act, 2013 - Appointed Date - undertakings accepted - compliance with Indian Accounting Standard (Ind AS 103) - FEMA compliance on foreign/non resident shareholders - section 232(3)(i) fee set off on dissolution of transferor - scheme as a complete code for consequential corporate changes - binding effect on shareholders, creditors and employees - filing and consequential compliance directions

Scheme of Amalgamation - sanction under Sections 230-232 of the Companies Act, 2013 - binding effect on shareholders, creditors and employees - Sanction of the Scheme of Amalgamation of Fast Track Diagnostics Asia Private Limited with Siemens Healthcare Private Limited - HELD THAT: - The Tribunal, after hearing the petitioner and noting absence of any objector, found that the Scheme was filed in conformity with Sections 230-232 and the earlier interim order of the Tribunal. The material on record, including the report of the Regional Director and the 'No Objection' communication from the Income Tax Department, showed that the Scheme is fair, reasonable, does not violate law and is not contrary to public policy. On this basis the Tribunal sanctioned the Scheme and held that it shall be binding on the companies involved and their respective shareholders, secured and unsecured creditors and employees.

The Scheme is sanctioned and made absolute in terms of the petition.

Appointed Date - Determination of the Appointed Date for the Scheme - HELD THAT: - The Tribunal approved the Appointed Date as fixed in the Scheme. The Scheme as placed at the specified pages of the petition, with the Appointed Date fixed as 1st April, 2019, was sanctioned.

Appointed Date fixed as 1st April, 2019 is approved.

Undertakings accepted - compliance with Indian Accounting Standard (Ind AS 103) - section 232(3)(i) fee set off on dissolution of transferor - FEMA compliance on foreign/non resident shareholders - scheme as a complete code for consequential corporate changes - Acceptance of undertakings given in response to the Regional Director's observations and regulatory compliances required - HELD THAT: - The Regional Director's report raised specific observations concerning accounting treatment under Ind AS (including Ind AS 103), compliance with circulars of the Ministry of Corporate Affairs, set off of fees under section 232(3)(i), adherence to FEMA/RBI requirements for non resident shareholders and the effect of the scheme on alterations that would otherwise require separate procedures (such as amendments under section 13). The petitioner furnished undertakings and clarifications addressing these points, including an undertaking to account under applicable Ind AS provisions, to comply with FEMA/RBI requirements if applicable, to effect fee set off in accordance with section 232(3)(i), and to file necessary forms with the Registrar of Companies for amendments in the memorandum. The Tribunal accepted these undertakings.

Undertakings in response to the Regional Director's observations are accepted; petitioner directed to comply with those undertakings and applicable statutory/procedural requirements.

Filing and consequential compliance directions - stamp duty adjudication - publication requirement - Directions as to filing of the sanction order and other consequential statutory steps - HELD THAT: - The Tribunal directed the petitioner to obtain and file certified copies of the order and scheme with the Registrar of Companies electronically in the prescribed form within the specified time, to lodge authenticated copies with the Superintendent of Stamps for stamp duty adjudication, to publish notices in newspapers as previously published, and to take all consequential and statutory steps required under the Act in pursuance of the sanctioned Scheme. The Tribunal also permitted interested persons to apply for further directions if necessary.

Petitioner is directed to comply with filing, stamp duty, publication and all consequential statutory steps as specified by the Tribunal.

Final Conclusion: The National Company Law Tribunal, Mumbai Bench sanctioned the Scheme of Amalgamation between Fast Track Diagnostics Asia Private Limited and Siemens Healthcare Private Limited as fair and compliant with law, approved the Appointed Date of 1st April, 2019, accepted the undertakings given in response to the Regional Director's report, and directed the petitioner to comply with specified filing, stamp duty, publication and other consequential statutory formalities.

Restoration of company name - striking off and dissolution - power under Section 252(3) of the Companies Act, 2013 - burden of proof that company was carrying on business - reasonable cause to believe company not in operation

Power under Section 252(3) of the Companies Act, 2013 - burden of proof that company was carrying on business - Application under Section 252(3) for restoration of the company's name was dismissed for failure to demonstrate that the company was carrying on business at the time of striking off. - HELD THAT: - The Tribunal applied Section 252(3) which permits restoration of a struck-off company's name if the applicant proves that at the time of striking off the company was carrying on business or in operation. The applicant produced audited annual accounts for the defaulting years. Those financial statements showed nil revenue from operations and continuous losses; there were no indicators of business activity such as material consumption, work-in-progress, debtors, finance cost, employee benefit expenses or other transactional evidence. The applicant failed to produce bank account details, GST certificate, rent agreement, income-tax returns or sale/purchase invoices or evidence of a functioning registered office. The ROC had issued statutory notices (Form STK-1) and, on non-reply, proceeded with publication and striking off; the ROC's position that it had reasonable cause to believe the company was not in operation was supported by the documentary record. On these facts the Tribunal found that the applicant did not discharge the requisite burden of proof that the company was carrying on business when its name was struck off, and therefore restoration could not be ordered. [Paras 10, 11, 12, 13, 14]

Application under Section 252(3) dismissed for failure to establish that the company was carrying on business at the time of striking off; restoration refused.

Final Conclusion: The petition for restoration of M/s Bigrace Infracon Private Limited's name is dismissed: the material on record, including audited accounts and absence of corroborative business records, did not establish that the company was carrying on business when struck off, and restoration under Section 252(3) was therefore refused.

Restoration under Section 252(3) of the Companies Act, 2013 - Strike off under Section 248(5) and removal of name by ROC - Company carrying on business / going concern - Compliance of statutory filings and consequential conditions for revival

Restoration under Section 252(3) of the Companies Act, 2013 - Company carrying on business / going concern - Strike off under Section 248(5) and removal of name by ROC - Order for restoration of the company's name in the Register on the ground that the company was carrying on business when its name was struck off. - HELD THAT: - The Tribunal found from the material on record - audited financial statements for the defaulting years, revenue figures for the years ending 31 March 2016, 2017 and 2018, bank account transactions, GST registration and returns, income-tax return, employee expenditure and production/consumption of raw materials, and details of work orders - that the company was a going concern when its name was struck off. ROC did not object to restoration. Applying the statutory power conferred by Section 252(3) of the Companies Act, 2013, and on the facts and documents placed before it, the Tribunal accepted the appellant's contention that the company was carrying on business at the relevant time and was therefore entitled to restoration of its name. [Paras 8, 9, 11]

The Tribunal allowed restoration of the company's name in the Register and directed ROC to restore the company's status as if it had not been struck off.

Compliance of statutory filings and consequential conditions for revival - Conditions and procedural directions to be complied with for restoration and reactivation of the company on the Register. - HELD THAT: - While directing restoration, the Tribunal imposed specific conditions to regularise statutory defaults: filing of all pending statutory documents including annual accounts and annual returns from Financial Year 2016 onwards with prescribed fees/additional fees/fines as determined by ROC within thirty days of restoration; personal assurance by the company's representative to ensure compliance; payment of a cost fixed by the Tribunal; delivery of a certified copy of the order to ROC; and publication of the order in the Official Gazette by ROC after compliance. The Tribunal clarified that the order is confined to the violations which led to the striking off and does not preclude ROC from taking lawful action in respect of any other violations or offences by the company. [Paras 11]

Restoration ordered subject to filing of outstanding statutory documents within the specified time, payment of prescribed fees and the costs, delivery of certified copy of the order, and publication in the Official Gazette; ROC remains free to take action for other violations if any.

Final Conclusion: The Tribunal allowed the petition under Section 252(3), directed the Registrar of Companies, Odisha to restore M/s. Micro Telesoft Private Limited to the Register as if it had not been struck off, subject to specified compliance and payment conditions, and disposed of the appeal accordingly.

Restoration of company struck off under Section 248 of the Companies Act, 2013 - Companies Fresh Start Scheme, 2020 - restoration of DINs of directors - conditions precedent to restoration including filing of statutory documents and payment of costs - publication of restoration order in the Official Gazette

Restoration of company struck off under Section 248 of the Companies Act, 2013 - conditions precedent to restoration including filing of statutory documents and payment of costs - Companies Fresh Start Scheme, 2020 - restoration of DINs of directors - publication of restoration order in the Official Gazette - Petition for restoration of the name of M/s. RSRSR Techno Solutions Private Limited struck off the Register of Companies and related consequential reliefs was allowed subject to specified conditions. - HELD THAT: - The Tribunal found that the striking off order was made in accordance with law but that the petitioner presented bona fide grounds for restoration, there were no pending investigations or objections by the Registrar of Companies, and the respondents did not oppose restoration. Taking a lenient view in the interest of justice and ease of doing business, the Tribunal exercised its powers under Section 252 to restore the company on the Register. Restoration was made conditional to protect statutory compliance and public interest: the Company must file all outstanding statutory documents with prescribed fees/additional fees/fines within thirty days of restoration; the petitioner (company's representative) must ensure personal compliance; payment of prescribed cost to the Central Government within three weeks is required or the order will lapse; on compliance the ROC will publish the order in the Official Gazette; restoration will include revival of consequential actions such as restoration of directors' DINs; and the order is confined to the violations that led to striking off and does not preclude the ROC from taking action for any other violations or offences. [Paras 6, 7, 9]

The company's name is restored on the ROC register as if not struck off, subject to filing all statutory documents with prescribed fees, payment of costs within the stipulated time, compliance supervision by the petitioner's representative, Gazette publication by the ROC, and with liberty to the ROC to take action for any other violations.

Final Conclusion: C.P. No. 106/BB/2020 disposed of by restoring the company's name on the Register of Companies subject to the Tribunal's specified conditions including statutory filings, payment of cost, restoration of DINs, and Gazette publication; the ROC remains free to act on other violations in accordance with law.

Operational debt - default in payment - demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 - admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - existence of dispute - limitation - declaration of moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - public announcement and call for claims under Section 13 read with Section 15 - appointment of Interim Resolution Professional

Operational debt - default in payment - demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 - existence of dispute - limitation - Whether the application under Section 9 was complete and maintainable because an operational debt and default were established, the demand notice was served, no pre existing dispute barred admission, and the claim was within limitation. - HELD THAT: - The Tribunal examined the documents annexed to the petition and the reply and applied the tests in Mobilox Innovative Pvt. Ltd. The demand notice issued on 18.12.2019 was served (recorded at filing and notification), invoices supporting the claim were on record and not specifically denied by documentary evidence, and the corporate debtor's objections were found to be vague, unsupported and an after thought. The corporate debtor admitted the existence of some dues but failed to produce documents evidencing any adjustment or pre existing dispute. The petition was held to be within limitation. On the basis of the material, the Authority was satisfied that the applicant had established the existence of an operational debt and occurrence of default, and that no adjudicable dispute or bar to admission existed. [Paras 10, 11, 12, 13, 15]

Application under Section 9 admitted as the operational debt and default were established, no pre existing dispute was shown and the claim was within limitation.

Declaration of moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - public announcement and call for claims under Section 13 read with Section 15 - appointment of Interim Resolution Professional - Whether, upon admission of the Section 9 application, moratorium should be declared, public announcement made and an Interim Resolution Professional appointed. - HELD THAT: - Having admitted the application under Section 9(5)(i) on finding default, the Adjudicating Authority exercised its discretion under Section 13 to direct public announcement and calling for claims under Section 15, and declared the moratorium in terms of Section 14(1) to operate from the receipt of the authenticated copy of the order until completion of the CIRP or earlier orders under Sections 31/33. The Authority observed that supply of goods and essential services, if continuing, shall not be terminated during the moratorium subject to statutory exceptions. As the applicant had not proposed an IRP, the Authority appointed an Interim Resolution Professional by name to conduct the initial steps of the corporate insolvency resolution process and directed communication of the order to the parties and Registrar of Companies. [Paras 20, 21, 22, 23, 24]

Moratorium declared, public announcement and call for claims directed, Interim Resolution Professional appointed and the petition admitted.

Final Conclusion: The Tribunal admitted the Section 9 petition after finding debt and default, held there was no substantive pre existing dispute or limitation bar, declared the moratorium, directed public announcement and claim submission, appointed an Interim Resolution Professional and ordered communication of the decision to the parties and Registrar of Companies.

Corporate Insolvency Resolution Process - Operational Creditor - default - settlement and compromise - withdrawal of petition - liberty to revive claim - application under Section 9 of the Insolvency and Bankruptcy Code, 2016

Settlement and compromise - withdrawal of petition - liberty to revive claim - The Company Petition filed under Section 9 was disposed of as withdrawn on account of the parties' settlement, with the respondent directed to comply with the settlement terms and the petitioner granted liberty to file a fresh petition if the settlement is not honoured. - HELD THAT: - The parties informed the Tribunal that the dispute had been amicably settled and placed a signed Joint Memo recording the terms, including agreed payments in two instalments and an express undertaking by the applicant to withdraw the petition upon signing. The Tribunal noted that the petition had not been admitted and, in view of the compromise, permitted withdrawal of the petition while expressly recording the settlement and reserving liberty to the petitioner to revive its claims by filing a fresh company petition in accordance with law if the respondent failed to adhere to the settlement terms. The order therefore records the settlement, directs strict compliance by the respondent and leaves the petitioner free to seek appropriate remedy in future on default. [Paras 5, 6]

C.P.(IB) No.131/BB/2020 disposed of as withdrawn in terms of the settlement dated 08.09.2020; respondent directed to comply with settlement and petitioner granted liberty to file a fresh petition if settlement is not honoured.

Final Conclusion: The Tribunal disposed of the Section 9 petition as withdrawn pursuant to the parties' compromise, recorded the settlement terms and reserved the petitioner's right to revive the claim by filing a fresh company petition in the event of non-compliance by the respondent.

Extension of Corporate Insolvency Resolution Process - exclusion of lockdown period from CIRP timeline - second proviso to Section 12 of the Insolvency and Bankruptcy Code, 2016 (completion within 330 days) - Regulation 40C of the CIRP Regulations

Exclusion of lockdown period from CIRP timeline - Regulation 40C of the CIRP Regulations - Lockdown period due to COVID-19 is to be excluded from computation of the CIRP timeline. - HELD THAT: - The Tribunal accepted that the nationwide lockdown commencing 25.03.2020 and extended in Telangana up to 07.06.2020 interrupted the CIRP timeline. Relying on the principle embodied in Regulation 40C and the decisions permitting exclusion of the lockdown period from CIRP computation, the Tribunal treated the lockdown days as excluded for calculating the relevant CIRP period, thereby moving the effective expiry of the earlier 270-day period to 19.06.2020 after exclusion. [Paras 5, 7]

The lockdown period from 25.03.2020 to 07.06.2020 is excluded for computing the CIRP timeline.

Extension of Corporate Insolvency Resolution Process - second proviso to Section 12 of the Insolvency and Bankruptcy Code, 2016 (completion within 330 days) - Whether the CIRP should be extended and the period within which the Resolution Professional must complete the CIRP. - HELD THAT: - The Tribunal noted that although a prior 90-day extension had been granted, by excluding the lockdown period the earlier 270-day timeline would expire on 19.06.2020. The Tribunal further observed that the second proviso to Section 12 permits completion of CIRP within 330 days (including permitted extensions). Rather than grant a fresh open-ended extension, the Tribunal directed completion of the CIRP within the outer limit of 330 days counted from the insolvency commencement date after excluding the lockdown period. Applying that computation, the Tribunal fixed 19.08.2020 as the final date for completion of the CIRP and directed the Resolution Professional to complete all steps by that date. [Paras 7, 8]

The Resolution Professional is directed to complete the CIRP by 19.08.2020 (being the 330-day outer limit after excluding the lockdown period).

Final Conclusion: Application allowed in part: the lockdown period is excluded for computing CIRP timelines and the Resolution Professional is directed to complete the CIRP by 19.08.2020, relying on the second proviso to Section 12 of the Code.

Sale as a going concern - transfer of assets and liabilities - binding terms of e-auction / bidding document - conditional bid versus counter-offer - forfeiture of earnest money deposit (EMD) - force majeure (COVID-19) and its non-application

Sale as a going concern - transfer of assets and liabilities - Sale of the corporate debtor as a going concern entails transfer of the corporate debtor with its assets and liabilities. - HELD THAT: - A conjoint reading of Regulation 32-A of the IBBI (Liquidation Process) Regulations, 2016 and Regulation 39C of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 supports the conclusion that a sale as a going concern contemplates transfer of the corporate debtor along with the grouped assets and liabilities identified for such sale. The Tribunal also relied on the IBBI discussion paper explaining sale under Regulation 32(e) and on precedents which recognise that a going-concern sale transfers liabilities relevant to the business. The bidding documents and published terms expressly envisaged sale on a going-concern basis and contained clauses placing responsibility for statutory and non statutory dues on the successful bidder; a prudent bidder is expected to assess liabilities before participating in the e-auction. For these reasons the Tribunal held that the going-concern sale includes assets and liabilities. [Paras 21, 22, 23, 24]

Sale as a going concern includes transfer of the corporate debtor with its assets and liabilities.

Binding terms of e-auction / bidding document - conditional bid versus counter-offer - A bidder cannot unilaterally impose terms inconsistent with the published bidding document; a purported conditional offer which is inconsistent with the bid terms can be rejected and amounts to a counter-offer if not accepted. - HELD THAT: - The e-auction process document expressly required bidders to accept and be bound by its terms and conditions, contained caveat-emptor clauses and provisions allocating liabilities to the successful bidder, and prohibited conditional offers. The bidder's email of 4th September 2019 seeking extensive waivers and altered payment terms was met by a timely reply from the liquidator rejecting changes to the publicly notified terms. Having received that reply, the bidder deposited the EMD and signed an unconditional declaration accepting the bidding terms. Under established principles governing tenders and auctions, and on authorities cited by the Tribunal, the authority framing tender terms is the judge of those terms and bidders cannot unilaterally alter them; unilateral conditions not accepted by the liquidator do not survive and cannot be relied upon by the bidder. [Paras 27, 28, 29]

The bidder's attempt to impose unilateral conditional terms inconsistent with the bidding document was not legally effective; the conditional terms were rejected and the bid proceeded as unconditional.

Forfeiture of earnest money deposit (EMD) - force majeure (COVID-19) and its non-application - The successful bidder is not entitled to withdraw and claim refund of the EMD on the ground of force majeure (COVID-19); EMD is liable to be forfeited in accordance with the bidding terms if the bidder fails to pay the balance consideration. - HELD THAT: - The bidding documents and the declaration signed by the bidder provided for forfeiture of the EMD and other monies in specified circumstances of default. The Tribunal found that the purported conditional offer was rejected before the bidder deposited the EMD and that the bidder thereafter accepted the unqualified terms. There was no separate agreement incorporating a force majeure clause covering the pandemic; therefore the bidder cannot invoke force majeure to avoid contractual obligations under the bidding terms. The Tribunal also observed that forfeiture in this context is contractual and provided for by the terms of the auction rather than being an assessment of liquidated damages under general contract provisions. [Paras 30, 32, 33, 34]

The bidder is disentitled to withdraw and claim refund of the EMD; the interlocutory application by the bidder is dismissed and the liquidator is entitled to cancel the sale and forfeit the EMD and bid-document fee if the balance consideration is not paid.

Final Conclusion: The Tribunal held that a going-concern sale transfers the corporate debtor with its assets and liabilities; a bidder cannot unilaterally impose conditions contrary to the published bidding terms and a purported conditional offer was rejected; the bidder is not entitled to withdraw or claim refund of the EMD on grounds of COVID-19/force majeure. The bidder's interlocutory application is dismissed; the liquidator's application is allowed insofar as directions are given to invite payment of the balance sale consideration and to proceed in accordance with the sale terms, including forfeiture if payment is not made.

Compounded levy under section 3A - Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 - deemed production - number of operating packing machines - Rule 18(2) - deemed operation for unregistered units - Section 9D admissibility of statements - confiscation under Rule 18(1) - penalty under section 11AC - appropriation of deposits

Section 9D admissibility of statements - deemed production - Admissibility and evidentiary value of statements recorded during investigation after they were examined and cross examined under Section 9D and their effect on ascertaining date of receipt/operation of the seized PPM. - HELD THAT: - The Tribunal held that statements recorded by witnesses during investigation become relevant evidence in adjudication only after the witness is examined and cross examined in terms of Section 9D(1)(b). Depositons given before the Commissioner in cross examination under Section 9D are original evidences that cannot be treated merely as retractions or afterthoughts. Having examined the record, affidavits and depositions of supplier, transporter and other witnesses given in cross examination, the Tribunal accepted those depositions as reliable and concluded that the seized pouch packing machine was brought to the assessee's factory on 01 08 2014. The Tribunal rejected Revenue's contention that such depositions should be discarded on account of alleged infirmities, noting the heavy burden on Revenue in clandestine manufacture cases and absence of independent corroborative evidence that the machine was operative prior to August 2014.

Depositions under Section 9D recorded before the Commissioner are admissible and were relied upon to hold that the seized PPM was brought to the factory on 01 08 2014; thus statements so admitted negatived Revenue's case of operation w.e.f. 01 11 2013.

Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 - number of operating packing machines - Rule 18(2) - deemed operation for unregistered units - Whether Rule 18(2) (deeming provision treating machines as operating from 1st April unless contrary evidence provided) could be applied to the registered assessee and whether duty confirmed from 01 04 2014 was sustainable. - HELD THAT: - Rule 18(2) applies to unregistered units and deems machines to have been in operation from the first day of the financial year unless contrary evidence is provided to the satisfaction of the Central Excise Officer. The Tribunal held that the assessee is a registered unit and liabilities of a registered unit must be determined under Rules 6-9 (including Rule 7 calculation and Rule 9 payment provisions). Consequently Rule 18(2) could not be invoked to fasten duty on the registered assessee for the period from 01 04 2014. Further, because admissible evidence established receipt of the machine on 01 08 2014, charging duty from 01 04 2014 was without basis and set aside.

Rule 18(2) is not applicable to the registered assessee; duty demand from 01 04 2014 is not sustainable and is set aside.

Compounded levy under section 3A - number of operating packing machines - appropriation of deposits - Quantification and period of duty liability under the compounded levy scheme for the seized additional PPM once the date of its presence/installation is established. - HELD THAT: - Having accepted that the PPM was brought to the factory on 01 08 2014, the Tribunal held that duty for August 2014 was payable under the compounded levy scheme since the machine existed in the factory that month. Where exact date of installation within the month is not ascertainable, Rule 8 and the third proviso to Rule 9 apply and differential duty for the increase in machines is payable by the 5th day of the following month; accordingly the Tribunal confirmed duty for August 2014 of Rs. 29,56,000 and directed interest to be computed under Section 11AA. For September 2014 the Tribunal held that duty for two machines at RSP Rs.4 was deposited by the assessee in September 2014 (by 11 09 2014) and ordered appropriation of the deposited amount towards the dues and interest; only interest for the short period, if any, was to be calculated by the jurisdictional officer.

Confirmed duty for August 2014 (recoverable with interest) and recognised that duty for September 2014 had been deposited and is to be appropriated; remaining demands were set aside.

Confiscation under Rule 18(1) - Sustainability of confiscation of the seized PPM and the redemption fine imposed. - HELD THAT: - Rule 18(1) provides for confiscation of notified goods produced or removed in contravention of the Rules. The Tribunal found that the seized PPM was merely brought into the assessee's factory and was not manufactured by the assessee nor was any seized finished good produced and removed by the assessee. Consequently the confiscation order and the redemption fine imposed under Rule 25 CER 2002 (invoked by the adjudicating authority) were held not applicable and unsupported by the facts.

Confiscation of the seized PPM and the redemption fine are vacated and set aside.

Penalty under section 11AC - Compounded levy under section 3A - Whether penalty under Section 11AC and penalty under Rule 26 on the authorized signatory were justified and, if so, in what quantum. - HELD THAT: - The Tribunal observed that penalty under Section 11AC is attracted where violation is intentional; voluntary compliance by payment of duty and interest calls for leniency. Given that duty and interest were deposited and the circumstances, the Tribunal held the assessee was eligible for reduced penalty under Section 11AC(1)(a) at 10% of the duty confirmed for August 2014. The separate penalty under Rule 26 CER 2002 on the authorized signatory was not warranted because no evidence showed he derived personal benefit beyond acting for the firm.

Penalty on the assessee for August 2014 reduced to 10% of the confirmed duty; penalty on the authorized signatory under Rule 26 is set aside.

Final Conclusion: The Tribunal partially allowed the assessee's appeals: it set aside duty demand for periods earlier than August 2014 (including demand from 01 04 2014), accepted cross examined depositions under Section 9D as admissible evidence that the extra PPM arrived on 01 08 2014, confirmed duty for August 2014 with interest, directed appropriation of amounts paid for September 2014, vacated confiscation and redemption fine, reduced penalty to 10% of the August 2014 duty and set aside penalty on the authorized signatory; Revenue's appeal was dismissed.

Expert handwriting opinion - Best evidence rule - Admission by execution of agreement acknowledging liability - Proof of signature and amount in cheque - Trial court's discretion to refuse forensic examination to prevent needless delay

Expert handwriting opinion - Proof of signature and amount in cheque - Admission by execution of agreement acknowledging liability - Trial court's discretion to refuse forensic examination to prevent needless delay - Whether the Magistrate erred in refusing the petitioner's request to send the cheques for expert handwriting opinion. - HELD THAT: - The petitioner sought expert opinion because the complainant had stated that the amount in figures and the date on the cheques were written by the petitioner while other entries were in the complainant's handwriting. The trial court rejected the request on the basis that such an examination would not assist in arriving at a just decision. The High Court noted that the petitioner had executed an agreement (Exhibit P14) acknowledging the liability and entering particulars of the cheques, and the petitioner did not dispute his signature on that agreement. Further, the petitioner did not dispute his signature on the cheques or the amount as written in words. Given these admissions and the absence of any real contest to the signatures or the amount in words, the court held that obtaining an expert opinion on the date and the amount in figures would serve no useful purpose and would only cause unnecessary delay. The decision reflects the exercise of the trial court's discretion to refuse forensic examination where the material facts necessary to justify such an examination are not genuinely disputed.

The Magistrate did not err in refusing the request for expert opinion; the application was rightly dismissed as futile and likely to protract the trial.

Final Conclusion: The criminal miscellaneous petition is dismissed; the High Court upholds the trial court's rejection of the application for handwriting expert opinion because the petitioner had admitted liability and had not genuinely disputed the signatures or the amount in words on the cheques, and ordering an expert would only delay the trial.