TaxTMI Updates e-Newsletter
Jan 14,2020

Provisional attachment under Section 83 of the Gujarat Goods and Services Tax Act, 2017 - interim relief subject to security/condition - balance of equities in exercise of writ jurisdiction - expiry of statutory life of provisional attachment

Provisional attachment under Section 83 of the Gujarat Goods and Services Tax Act, 2017 - expiry of statutory life of provisional attachment - Whether the provisional attachment orders over the petitioner's bank accounts required quashing or continuation in view of the elapsed statutory period and interim orders. - HELD THAT: - The Court observed that the provisional attachment orders made under Section 83 had a statutory life of one year which expired on 27.12.2019 and that an interim order of a Coordinate Bench dated 17.01.2019 had already directed release of the attachments subject to conditions. Given the expiry of the statutory period and the earlier interim direction, the Court found it unnecessary to adjudicate the validity of the provisional attachment orders on merits and recorded that it was not necessary to quash those orders as their validity period had already ended. [Paras 5, 7]

The Court concluded that it was unnecessary to quash the provisional attachment orders as their statutory life had expired and the interim relief of the Coordinate Bench had, in any event, resulted in removal of the provisional attachment of the two bank accounts.

Interim relief subject to security/condition - balance of equities in exercise of writ jurisdiction - What interim relief should be granted to protect both the petitioner's ability to continue business and the State's interest pending adjudication of the show-cause notices. - HELD THAT: - The Court, invoking a balancing of equities and noting the lapse of time since the attachment and the Coordinate Bench's interim order, declined to decide the writ on merits. Instead, it disposed of the petition by imposing an ongoing protective condition: the petitioner is directed to maintain at all times stock worth a minimum specified sum in a particular bank account until final disposal of the adjudication arising from the show-cause notices. All substantive defenses to the show-cause notices were expressly left open for adjudication by the competent authority. [Paras 6, 8]

Ad-interim relief granted on terms: petitioner to maintain the prescribed minimum stock value at all times until final adjudication; substantive defenses to the show-cause notices remain open.

Final Conclusion: Writ petition disposed of by releasing the provisional attachment of the two bank accounts (interim release already directed by the Coordinate Bench), without adjudication on merits; relief granted on the condition that the petitioner maintain the specified minimum stock value at all times until final disposal of the adjudication proceedings, while all defenses to the show-cause notices remain open.

Right to meaningful opportunity of hearing - natural justice - procedure under Section 129(4) of the CGST Act, 2017 - quashing for breach of audi alteram partem - remand for fresh adjudication

Right to meaningful opportunity of hearing - natural justice - procedure under Section 129(4) of the CGST Act, 2017 - quashing for breach of audi alteram partem - Impugned order dated 02.07.2019 determining tax and penalty is sustainable in law. - HELD THAT: - The Court found that the adjudicating authority concluded the proceedings on 02.07.2019 despite having fixed 08.07.2019 as the date for personal hearing and despite a written reply from the petitioner being filed and tendered for hearing. This procedure amounted to a denial of a meaningful opportunity of being heard as mandated by sub-clause (4) of Section 129 of the Act. The deposit of the summarily demanded amount at the time of detention did not obviate the statutory requirement of affording an opportunity of hearing before determining tax, interest or penalty. The concluded order therefore violated the principles of natural justice and the mandatory procedure under Section 129(4). [Paras 6, 8, 9]

Impugned order determining tax and penalty dated 02.07.2019 is quashed for breach of the requirement to afford a meaningful opportunity of hearing.

Remand for fresh adjudication - procedure under Section 129(4) of the CGST Act, 2017 - Appropriate remedy following quashing of the order. - HELD THAT: - Having quashed the impugned order for procedural infirmity, the Court remitted the matter to the adjudicating authority for fresh consideration in accordance with law. The authority is directed to issue a fresh notice for hearing, consider the petitioner's written and oral submissions, and pass an appropriate order after giving the petitioner a meaningful opportunity to be heard. The remand is for fresh adjudication and not for mere quantification; the authority must re-examine the case on merits after complying with statutory hearing requirements. [Paras 10, 11]

Matter remitted to respondent no.2 for fresh consideration after giving the petitioner an appropriate opportunity of hearing; fresh notice to be issued and fresh order to be passed in accordance with law.

Final Conclusion: Writ petition allowed: the order dated 02.07.2019 determining tax and penalty is quashed for failure to afford a meaningful opportunity of hearing under Section 129(4) of the CGST Act, 2017; matter remitted to the adjudicating authority for fresh adjudication after giving the petitioner an appropriate hearing.

Allowability of Foreign exchange fluctuation loss u/s 37 - difference between amount given by it as loan to its subsidiary in the USA and the amount realized due to fluctuation is claimed as ‘exchange loss’ - non conducting any enquiry

High Court [2019 (7) TMI 1158 - DELHI HIGH COURT] dismissed the Revenue's appeal, holding that the AO erred in disallowing the claimed foreign exchange fluctuation loss without proper inquiry and that the CIT(A) and ITAT were justified in allowing the loss for Assessment Year 2011-12 - HELD THAT:- SLP dismissed.

Strict compliance with remand order - assessing officer exceeding scope of remand - treatment of electronic/energy meters as energy saving devices for depreciation - treatment of bus bars as integral/inextricable part of meters - condonation of delay in re-filing - allowance of procedural exemptions

Strict compliance with remand order - assessing officer exceeding scope of remand - treatment of electronic/energy meters as energy saving devices for depreciation - treatment of bus bars as integral/inextricable part of meters - Whether the Tribunal should have directed the Assessing Officer to act strictly in terms of the earlier remand order dated 05.10.2015 and, if not, what relief should follow. - HELD THAT: - The Court found that although the Tribunal concluded that electronic/energy meters that are energy saving devices are entitled to depreciation @80% and that the Tribunal's earlier remand order had attained finality, the Tribunal failed to direct the Assessing Officer to determine the specific issues remanded on 05.10.2015. The Assessing Officer had gone beyond the scope of the remand by returning a finding that the meters were not energy saving devices and by not examining whether bus bars are an integral part of the meters. The High Court held that those outstanding issues must be determined in accordance with the Tribunal's remand and that the matter should be sent back to the Assessing Officer with a clear direction to limit his consideration strictly to the scope of the remand, particularly paragraphs 12 to 12.5 of the remand order which identify the features constituting energy saving meters and require verification of the claimed entitlement and the bus bar issue. The Court therefore remanded the matter to the Assessing Officer for compliance with that limited and specific remit. [Paras 11, 12]

Appeals remanded to the Assessing Officer with a direction to act strictly in terms of the remand order dated 05.10.2015 (paras.12-12.5) and to determine the remanded issues accordingly.

Condonation of delay in re-filing - Condonation of delay of 107 days in re-filing the applications. - HELD THAT: - Both applications seeking condonation of 107 days' delay in re-filing were considered on the basis of the reasons furnished in the applications. The Court examined the applications and, finding the explanations acceptable, exercised its discretion to condone the delay. [Paras 3, 4]

Delay of 107 days in re-filing is condoned and the applications are disposed of.

Allowance of procedural exemptions - Allowance of exemptions sought in interlocutory applications. - HELD THAT: - The interlocutory applications for exemptions were considered and allowed by the Court without prejudice, subject to just exceptions, thereby granting the procedural relief sought in those applications. [Paras 1, 2]

Exemptions allowed, subject to all just exceptions; the applications disposed of.

Final Conclusion: The High Court remanded the appeals to the Assessing Officer with a direction to comply strictly with the Tribunal's remand order dated 05.10.2015 (paras.12-12.5) to determine entitlement to higher depreciation on electronic/energy meters and the question of whether bus bars are integral to the meters; interlocutory exemptions were allowed and a 107 day delay in re-filing was condoned.

Deduction under section 80IA(4) for development of infrastructure facility - definition of "infrastructure facility" in the Explanation to section 80IA(4) - binding effect of coordinate-bench Tribunal precedents - disallowance under section 43B for unpaid liabilities - expenditure not debited to profit and loss and not claimed cannot be disallowed under section 43B

Deduction under section 80IA(4) for development of infrastructure facility - definition of "infrastructure facility" in the Explanation to section 80IA(4) - binding effect of coordinate-bench Tribunal precedents - Claim for deduction under section 80IA(4) in respect of construction of foot over bridges and installation of road signages was not allowable. - HELD THAT: - The Tribunal held that the assessee's activities - erection of foot over bridges and installation of road signages - do not fall within the ambit of "infrastructure facility" as defined in the Explanation to section 80IA(4). The Tribunal applied the reasoning of the co-ordinate-bench decisions in the assessee's earlier years, which found that installation of signages (and related ancillary structures) does not amount to development of a road (a defined infrastructural facility) because such additions do not convert pre-existing roads into infrastructure within the statutory definition and the principal requirement of construction/development of the infrastructural facility itself was not satisfied. No distinguishing facts were shown for the year under appeal and, accordingly, the Tribunal followed the co-ordinate-bench precedents and dismissed the claim for deduction. [Paras 9, 10]

Deduction under section 80IA(4) denied; grounds 1 to 5 dismissed.

Disallowance under section 43B for unpaid liabilities - expenditure not debited to profit and loss and not claimed cannot be disallowed under section 43B - Disallowance under section 43B in respect of unpaid advertisement tax that was not debited to the Profit and Loss Account and not claimed as deduction was not sustainable. - HELD THAT: - The Tribunal accepted the assessee's uncontradicted contention that the advertisement tax remained only as a balance-sheet liability and had not been debited to the Profit and Loss Account nor claimed as a deduction. Relying on the principle enunciated by the Hon'ble Delhi High Court in CIT v. Noble and Hewitt (I) (P) Ltd., the Tribunal held that section 43B cannot be invoked to disallow an amount which the assessee has neither debited as expenditure nor claimed as deduction. Revenue did not place any binding contrary authority or distinguish the precedent. Consequentially, the disallowance was deleted. [Paras 16]

Disallowance under section 43B deleted; grounds 6 and sub-grounds allowed.

Final Conclusion: Appeal partly allowed: deduction claimed under section 80IA(4) refused; disallowance under section 43B in respect of unpaid advertisement tax deleted.

Unexplained cash credits under section 68 - onus on assessee to prove identity, genuineness and creditworthiness - initial burden shifting doctrine in section 68 cases - admission of additional evidence under Rule 46A - application of section 41 versus section 68 in respect of unclaimed receipts

Application of section 41 versus section 68 in respect of unclaimed receipts - onus on assessee to prove identity, genuineness and creditworthiness - Addition of Rs. 15,50,000 shown as unclaimed receipts was sustained as unexplained credit and charged under section 68. - HELD THAT: - The Tribunal accepted the CIT(A)'s finding that the assessee failed to furnish names, addresses, PANs, IT returns, bank statements or other material to establish the identity, creditworthiness and genuineness of persons to whom the unclaimed receipts related. Although the assessee contended those receipts were reconciled in the subsequent year, it did not produce the documentary material necessary to meet the initial burden under section 68. The CIT(A) therefore upheld the addition, treating the amount under section 68 rather than section 41, on the ground that the three essential ingredients (identity, capacity/creditworthiness and genuineness) were not established by the assessee.

Addition of Rs. 15,50,000 is upheld and sustained as unexplained credit under section 68.

Unexplained cash credits under section 68 - initial burden shifting doctrine in section 68 cases - admission of additional evidence under Rule 46A - Addition of Rs. 2,44,40,054 as unexplained credit/deposits under section 68 in respect of security deposits from agents was confirmed. - HELD THAT: - The Tribunal noted that the CIT(A) admitted additional confirmations and PAN-related material under Rule 46A and conducted remand enquiries. On merits the CIT(A) found that, of 178 parties from whom deposits above Rs.1 lakh were claimed, confirmations (including subsequently filed ones) were scanty, sketchy and did not establish creditworthiness; many confirmations lacked legible PAN/address details, several deposits were in cash, and enquiries under section 133(6) elicited only one positive response and one denial. The CIT(A) applied settled law that the assessee bears the initial burden to prove identity and creditworthiness, and held that mere furnishing of confirmations and some bank/TDS documents without proof of the parties' ability to make such deposits did not discharge that burden. As the AO had material to doubt genuineness and the assessee failed to produce adequate corroborative evidence even at appellate/remand stage, the addition was sustained under section 68. The Tribunal declined to interfere with the reasoned, speaking order of the CIT(A).

Addition of Rs. 2,44,40,054 as unexplained credit under section 68 is confirmed.

Final Conclusion: The appeal is dismissed: the Tribunal declines to interfere with the CIT(A)'s admission of additional evidence under Rule 46A and its merits-based findings; additions of Rs. 15,50,000 (treated as unexplained under section 68) and Rs. 2,44,40,054 (unexplained credits under section 68) are sustained for AY 2008-09.

Validity of show cause notice and persona designata - withdrawal of approval under the thirteenth proviso to Section 10(23C)(vi) - genuineness of activities of an educational institution - distinction between statutory university and other educational institutions with regard to approval to run courses - effect of subsequent grant of registration under Section 12AA on genuineness - curative effect of Section 292BB/299BB where assessee has participated in proceedings - requirement (or otherwise) of prior approval/recognition for statutory universities under UGC/sectoral laws

Validity of show cause notice and persona designata - curative effect of Section 292BB/299BB where assessee has participated in proceedings - Whether the show cause notice dated 03.05.2016 was invalid for not being signed by the prescribed authority and whether that vitiated the consequential withdrawal order. - HELD THAT: - The Tribunal examined the language, drafts and order sheet notings and found that the show cause notice, though signed by ITO (Hqrs.), reflected the thought process, handwritten corrections and satisfaction of the Commissioner (Exemptions) who had perused, modified and approved the draft prior to issuance. The Tribunal held that where the prescribed authority's satisfaction and application of mind are evidenced in the record and the notice reflects such satisfaction (even if signed on behalf of the authority), the mandatory condition is satisfied. Accordingly, the plea that the notice was unsigned by the prescribed authority was rejected. The Tribunal also considered Revenue's reliance on curative provisions and participation by the assessee but rested its conclusion on the demonstrated satisfaction and application of mind by the CIT(E). [Paras 23]

Additional ground that the show cause notice was invalid for want of signature of the prescribed authority is dismissed.

Withdrawal of approval under the thirteenth proviso to Section 10(23C)(vi) - genuineness of activities of an educational institution - distinction between statutory university and other educational institutions with regard to approval to run courses - effect of subsequent grant of registration under Section 12AA on genuineness - Whether the Commissioner (Exemptions) was justified in withdrawing exemption under Section 10(23C)(vi) on the findings that the university ran courses beyond approved objects and its activities were not genuine. - HELD THAT: - The Tribunal analysed the limited grounds available under the thirteenth proviso to Section 10(23C)(vi) - i.e., failure to apply income as required, impermissible investments/deposits, or activities not being genuine or not carried out in accordance with conditions of approval. It held that running educational courses, even if not listed in the original schedule, are educational activities and their mere non conformity with an approved list does not ipso facto render them non genuine. The Tribunal observed that (i) degrees awarded by the university in the disputed courses had been held valid by the Rajasthan High Court, (ii) the Revenue subsequently granted registration under Section 12AA (effective 1.4.2016) accepting genuineness of activities, and (iii) there was no material to show the hospital was run for commercial purposes. The Tribunal concluded that the Commissioner had no valid basis in the record to treat the activities as non genuine or to apply the thirteenth proviso, and that the inconsistency of the Revenue withdrawing approval and shortly thereafter granting registration reinforced that withdrawal was unsustainable. Consequently, the Tribunal set aside the withdrawal and directed restoration of exemption. [Paras 64, 68, 75]

The withdrawal of exemption under Section 10(23C)(vi) is set aside; the Commissioner (Exemptions) is directed to restore the approval from the date it was withdrawn.

Requirement (or otherwise) of prior approval/recognition for statutory universities under UGC/sectoral laws - Whether a university established by State statute is required to obtain prior approval from UGC/State Government (or other regulatory bodies) before commencing courses so as to affect entitlement under Section 10(23C)(vi). - HELD THAT: - The Tribunal reiterated the settled proposition that a statutory university recognised under Section 2(f) of the UGC Act has the power under Section 22 to award degrees and is not subject to prior approval by the State Government or UGC for running courses within its competence; reliance on Maharshi Mahesh Yogi and subsequent authorities was noted. The Tribunal recorded that distinctions between statutory universities and deemed/other institutions are material and that the requirement of prior approval applicable to other classes does not automatically apply to a State statutory university in a manner that would justify withdrawal under Section 10(23C)(vi). [Paras 36, 37]

The university's statutory status and the legal principle that statutory universities need no prior State/UGC approval to run courses supports the conclusion that running the disputed educational courses did not, by itself, justify withdrawal of exemption.

Effect of subsequent grant of registration under Section 12AA on genuineness - Whether subsequent grant of registration under Section 12AA bearing retrospective effect affected the question of genuineness relied upon by the Commissioner to withdraw exemption. - HELD THAT: - The Tribunal observed that the Revenue itself, on consideration of substantially the same material, granted registration under Section 12AA with effect from 1.4.2016, thereby accepting the genuineness of the university's activities. The Tribunal found it incongruous to hold activities non genuine for purposes of withdrawing exemption and then treat them as genuine for registration; this inconsistency undermined the case for withdrawal. The Tribunal treated the Section 12AA grant as material corroboration of genuineness and used it to conclude withdrawal was unjustified. [Paras 64, 65, 66]

The subsequent registration under Section 12AA confirms genuineness of activities and weighs against the validity of the withdrawal order.

Final Conclusion: Appeal allowed. The Tribunal dismissed the challenge to the validity of the show cause notice but held that the Commissioner (Exemptions) had no sustainable basis to withdraw exemption under Section 10(23C)(vi); the withdrawal order is set aside and the exemption approval is to be restored from the date it was withdrawn.

Validity of reopening of assessment under section 147/148 - Application of mind and prohibition of borrowed satisfaction in recording reasons - Satisfaction/approval under section 151 by competent authority must be independent - Collateral challenge to reassessment in proceedings under section 263 - Examination of seized material from search and its relevance to reassessment

Validity of reopening of assessment under section 147/148 - Application of mind and prohibition of borrowed satisfaction in recording reasons - Reopening of assessment was invalid where reasons and approvals reproduced investigation report without independent application of mind. - HELD THAT: - The Tribunal examined the reasons recorded by the Assessing Officer and the form of approval given by the supervisory authorities. It held that where reasons merely reproduce the investigation-appraisal without demonstrating a link between tangible material and the formation of a subjective belief, the recording is based on borrowed satisfaction and lacks independent application of mind. The Tribunal relied on its review of the record and earlier decisions to hold that sanction in the proforma which merely states "Yes" or "I am satisfied" indicates ritualistic approval and is legally insufficient. On these grounds the reopening under sections 147/148 was held invalid and the reassessment proceedings founded on such reopening could not be sustained. [Paras 6]

Reopening under sections 147/148 quashed as invalid for lack of independent application of mind in reasons and for mechanical approvals.

Satisfaction/approval under section 151 by competent authority must be independent - Approval/satisfaction recorded by Addl. Commissioner/Pr. Commissioner in bare terms was not a valid sanction under section 151. - HELD THAT: - The Tribunal held that the statutory safeguard of prior approval cannot be a ritualistic formality. The approving authorities must apply their mind to the reasons and the material; mere entries such as "Yes" or "I am satisfied" without indication of independent consideration do not amount to lawful satisfaction. Where approval is thus mechanical, the consequential notice under section 148 and ensuing reassessment are vitiated. The Tribunal followed and applied precedents holding similar approvals invalid. [Paras 6]

Approvals under section 151 recorded mechanically were held invalid, rendering the reopening and consequent proceedings unsustainable.

Collateral challenge to reassessment in proceedings under section 263 - Examination of seized material from search and its relevance to reassessment - Where reassessment is invalid or non-est in law, the Pr. Commissioner cannot validly exercise revisionary power under section 263; but where reassessment is validly completed after proper inquiries, it is not amenable to revision on the same grounds. - HELD THAT: - The Tribunal reaffirmed that section 263 cannot be invoked to revise an assessment which is void or bad in law; accordingly, if the reassessment itself is quashed for want of valid reopening or sanction, revision under section 263 cannot stand. The Tribunal applied this principle to conclude that where the reopening (and/or sanction) was vitiated, the Pr. CIT's exercise under section 263 was invalid. Conversely, in cases where the Assessing Officer had in fact examined seized material, called for investor confirmations and accepted the explanations after inquiries, the Tribunal recorded that revision under section 263 was not justified and restored the assessing officer's order. [Paras 6, 7]

Pr. CIT's order under section 263 set aside where founded on an invalid reassessment; where AO had properly examined material and accepted explanations, the AO's reassessment order was restored and was not open to revision under section 263.

Final Conclusion: The Tribunal set aside the Pr. Commissioner's revisionary orders under section 263 because the reopening proforma and approvals for initiating reassessment were recorded and sanctioned without independent application of mind; mechanical/reproduced reasons and ritualistic approvals render reassessment non-est in law, and a void reassessment cannot be validly revised under section 263. Where, however, the Assessing Officer had properly examined seized material and conducted enquiries before accepting the return, the AO's reassessment was restored.

Application of Section 40A(2) - allowability of salary to relatives - director's remuneration-comparative treatment across assessment years - definition of "capital asset" under section 2(14) - relevance of CBDT Notification dated 06.01.1994 for measuring municipal limits - competent authority for land status - Tehsildar/Patwari certificates - profit on sale of agricultural land - capital gains versus business income/adventure in nature of trade - ROC fees for increase of authorised share capital-capital expenditure - inapplicability of Section 35D to ROC fees relating to increase of share capital - remand to Assessing Officer for verification of disputed factual matters (forfeiture of advance) - treatment of addition for TDS default-avoidance of double addition where expense not claimed - deduction under section 80G - requirement of monetary donation and authorised donee status

Application of Section 40A(2) - allowability of salary to relatives - Deletion of disallowance of salary paid to relatives of director - HELD THAT: - The Assessing Officer disallowed salaries paid to relatives alleging lack of business exigency and unverifiability but did not make any finding that the payments were excessive or unreasonable with reference to fair market value as required under Section 40A(2). The assessee produced attendance records, qualification details, bank payment evidence, TDS compliance and prior-year acceptance of similar payments. The CIT(A) accepted these facts and deleted the addition. The Tribunal found no infirmity in the appellate finding, noting that threshold requirement for applying Section 40A(2) is proof by the AO that the expenditure is excessive or unreasonable, which was not done here; payments through banking channels and inclusion of amounts in recipients' returns further support allowability. [Paras 6, 9]

Deletion of the addition for salaries paid to relatives upheld; departmental ground dismissed for both years.

Director's remuneration-comparative treatment across assessment years - Deletion of disallowance of excess director's remuneration - HELD THAT: - The AO disallowed a substantial portion of director's remuneration citing abnormal increase compared to a prior year. The assessee demonstrated that identical or similar remuneration had been allowed in the preceding year and that TDS was deducted and income offered. The CIT(A) accepted the continuity and reasonableness of the remuneration and deleted the disallowance. The Tribunal found no reason to interfere, observing that the prior-year acceptance and the director's tax disclosure supported allowability and that a modest increase was justified by contribution to business. [Paras 11, 13]

Deletion of additions relating to director's remuneration upheld; departmental grounds dismissed for both years.

Definition of "capital asset" under section 2(14) - relevance of CBDT Notification dated 06.01.1994 for measuring municipal limits - competent authority for land status - Tehsildar/Patwari certificates - profit on sale of agricultural land - capital gains versus business income/adventure in nature of trade - Deletion of addition treating profit on sale of Pooth Khurd village lands as taxable business income; held to be exempt agricultural land/capital receipt - HELD THAT: - The core question was whether the lands were agricultural lands falling outside the definition of 'capital asset' under section 2(14). The CIT(A) admitted and relied upon revenue certificates (Tehsildar/Patwari) showing that the lands, as at the relevant CBDT notification date 06.01.1994, lay beyond the specified distance (8 KM) from municipal limits and were agricultural with cultivation recorded. The AO had relied on information reflecting the later municipal configuration (North Delhi Municipal Corporation) and did not show that the lands fell within the ambit of section 2(14)(iii)(a) (population criterion) or rebut the relevance of the 1994 Notification. The Tribunal noted that the Notification directs use of municipal limits as they existed on 06.01.1994, that Tehsildar/Patwari certificates are competent evidence of that position, and that there was no material showing conversion of land use or systematic dealing in lands by the assessee. Short holding period alone did not convert the character into business income. On these grounds the appellate deletion was upheld. [Paras 15, 23, 24]

Addition treating profit as taxable business income deleted; profit held to be capital receipt as lands were agricultural outside notified municipal limits.

ROC fees for increase of authorised share capital-capital expenditure - inapplicability of Section 35D to ROC fees relating to increase of share capital - ROC fees paid for increase of authorised share capital are capital expenditure and not deductible under Section 35D - HELD THAT: - The assessee treated ROC fees for enhancement of authorised share capital as preliminary expense eligible for amortisation under Section 35D. The AO held, and the Supreme Court and Delhi High Court precedents establish, that fees paid to Registrar of Companies for enhancement of capital are capital in nature. The Tribunal set aside the CIT(A)'s direction to allow 1/5th and restored the AO's disallowance, holding Section 35D inapplicable to ROC fees incurred for capital base expansion. [Paras 28]

CIT(A) order set aside; ROC fees disallowed as revenue deduction and treated as capital expenditure.

Remand to Assessing Officer for verification of disputed factual matters (forfeiture of advance) - Forfeiture of advance-matter remanded to AO for fresh consideration - HELD THAT: - The assessee claimed loss on forfeiture of advance paid for acquisition of property; AO disallowed on procedural and evidentiary grounds and CIT(A) confirmed. Both parties suggested remand. Given the factual complexity, the nature of the transaction, the assessee's business profile and deficiencies in lower records/consideration, the Tribunal set aside the orders and remitted the issue to the AO for re-adjudication in accordance with law after affording the assessee adequate opportunity. [Paras 31]

Issue remanded to the Assessing Officer for fresh decision in accordance with law.

Treatment of addition for TDS default-avoidance of double addition where expense not claimed - Addition for TDS default set aside and remitted for verification whether expense was claimed - HELD THAT: - AO made an addition for short deduction of TDS; CIT(A) confirmed. The Tribunal observed that if the underlying expense was not claimed in the profit and loss account, addition would lead to double addition. It directed the AO to verify records and, if no expense was claimed, to refrain from making the addition; otherwise proceed after giving the assessee opportunity to be heard. The matter was restored to the AO for verification. [Paras 36]

Issue remitted to AO to verify whether the expense was claimed; direction given to avoid double addition.

Deduction under section 80G - requirement of monetary donation and authorised donee status - Disallowance of claimed deduction under section 80G (treated as business expense under section 37) upheld - HELD THAT: - Assessee claimed deduction for donation by procuring construction material and having it supplied to a temple; AO disallowed as no proof of the temple being an approved donee under section 80G and Explanation 5 to section 80G requires donations to be in money for that section. CIT(A) confirmed. The Tribunal found that the assessee had not produced evidence of the trust's approval under section 80G nor complied with the monetary requirement; consequently the claim could not be allowed as a section 80G deduction and the section 37 challenge failed. [Paras 41]

Claim dismissed; deduction under section 80G/section 37 not allowed in absence of statutory requirements.

Assessment year linkage of expenses-appropriateness of disallowance for expenses pertaining to another year - Disallowance of travel expense relating to subsequent assessment year upheld - HELD THAT: - Assessee challenged disallowance of tour and travel expenses on grounds they related to another assessment year. The Tribunal found the bills pertained to a date falling in the subsequent year and affirmed the CIT(A)'s dismissal of the claim as not pertaining to the assessment year in appeal. [Paras 44]

Disallowance upheld; expense pertains to a subsequent assessment year and cannot be allowed for the year under appeal.

Final Conclusion: The Tribunal dismissed the Departmental appeals largely and upheld the appellate deletions on salaries to relatives, director's remuneration and treatment of profits on sale of specified agricultural lands as capital receipts; it restored the AO on the ROC fees issue (holding ROC fees to be capital expenditure and not amortisable under Section 35D), remanded the forfeiture-of-advance and TDS-default issues to the AO for fresh verification, and dismissed various assessee grounds where statutory requirements were not met.

Diversion of income by overriding title - application of income - percentage of completion method - re-computation of project cost based on contract rate - admission of post assessment confirmations and vesting of jurisdiction in Assessing Officer for enquiry - treatment of interest on temporary deployment as business income - sham transaction

Admission of post assessment confirmations and vesting of jurisdiction in Assessing Officer for enquiry - Whether confirmations of purchases filed late should be admitted and the allowability of the related expenditure - HELD THAT: - The Tribunal recorded that several purchase confirmations were filed after the conclusion of assessment proceedings and the revenue had not had an opportunity to examine those documents. The Revenue sought examination of the belated confirmations; the assessee did not oppose referral. In the interests of justice the Tribunal directed that the matter be referred back to the Assessing Officer to conduct such enquiries and investigations as deemed fit under the Income tax Act and to decide the allowability of the expenditure in light of those enquiries. The Tribunal did not decide the substance of allowability on the record before it but mandated fresh verification by the AO. [Paras 14]

Referred to the Assessing Officer for enquiries and fresh decision on the allowability of the purchases based on the confirmations and investigation.

Percentage of completion method - re-computation of project cost based on contract rate - Validity of the Assessing Officer's reduction of the assessee's estimated project cost and consequent upward re computation of revenue under POCM - HELD THAT: - The AO relied principally on the Shunglu Committee report and the contract rate with the main contractor to substitute the assessee's budgeted construction cost and recompute the percentage of completion, resulting in an addition. The Tribunal examined the material, noted that the Shunglu Committee was not constituted to determine the assessee's project costs and that the assessee's books and accounting method (POCM) were not shown to be defective. The Tribunal also took into account facts such as increased scope/specifications, supply of owners' materials, exit of the contractor and subsequent additional expenditure. The Assessing Officer's unilateral replacement of the assessee's budgetary estimate by the contractor rate based figure, without tangible proof of inflated or bogus expenditure and without rejecting the books, was held legally untenable. Hence the recomputation and the addition based on reduced estimated cost were set aside. [Paras 20, 21, 34]

The Assessing Officer's re computation of project cost and the consequent addition are deleted.

Diversion of income by overriding title - application of income - sham transaction - Whether the 25% revenue share payable to the holding company under the collaboration agreement is diversion of income by overriding title or merely application of income (and whether the arrangement is sham) - HELD THAT: - The Tribunal analysed the collaboration agreement and the factual matrix of pre bid and post bid contributions by the holding company (capital/quasi capital, bid payments, bank guarantees, corporate guarantees and continuing financial support). Applying established tests (distinguishing diversion by creation of superior title before accrual from mere post receipt application), the Tribunal concluded that a lien/charge over 25% of sale proceeds was created by agreement before income accrued such that the assessee was obliged to part with that portion at source. On these facts the Tribunal held that the holding company obtained entitlement by overriding title and the 25% was not merely an application of income by the assessee. The Tribunal rejected the revenue's contention that the arrangement was a sham, observing that the holding company's contributions and guarantees were real and that amounts were offered to tax by the beneficiaries in their hands. [Paras 47, 51]

Held diversion of income by overriding title; the revenue's plea of sham transaction rejected and the assessee's ground on the revenue sharing arrangement allowed.

Treatment of interest on temporary deployment as business income - Whether interest earned on temporary deployment of project funds (FDRs/investments) should be treated as income from business or income from other sources - HELD THAT: - The Tribunal affirmed the reasoning of the CIT(A) that the assessee, an SPV with funds raised for the project, had a direct nexus between the project funds and temporary deployment; interest earned was inextricably linked to the business of the project. Having noted that assessment treatment would be revenue neutral in the circumstances, the Tribunal declined to interfere with the CIT(A)'s conclusion treating such interest as business income. [Paras 58]

Interest from temporary deployment of project funds upheld as part of business income; no interference with CIT(A).

Final Conclusion: The Tribunal set aside the Assessing Officer's recomputation of project cost and deleted the addition made under POCM, held that the 25% revenue sharing arrangement with the holding company amounted to diversion of income by overriding title (not a sham), upheld the classification of interest on temporary deployment as business income, and remanded the question of allowability of certain late filed purchase confirmations to the Assessing Officer for fresh enquiries. Overall, the assessee's appeals were allowed and the revenue's appeals dismissed.

Condonation of delay - revised return under section 153A - section 35D amortisation - extension of undertaking - section 80IA deduction - section 115JB MAT computation - generalia specialibus non-derogant - income from AOP / joint ventures exempt under section 86 - retention money not income for book profit

Condonation of delay - Admitted assessee's cross objection after condoning 1016 days' delay - HELD THAT: - Tribunal found assessee's explanation of insolvency proceedings, change of management and consequent disruption to be unrebutted and beyond assessee's control. Applying principles in Collector Land Acquisition v. Katiji and preferring substantial justice over technicality, the tribunal condoned the 1016 days' delay and admitted the cross objection for adjudication on merits. [Paras 3, 7]

Cross objection No.22/Kol/2019 admitted after condonation of 1016 days' delay.

Section 35D amortisation - extension of undertaking - Assessee's claim for amortisation under section 35D allowed in lead year (2010 11) - HELD THAT: - On facts the tribunal accepted that funds raised by the IPO were utilised for investment in capital equipment and expansion of the undertaking (increase in fixed assets and turnover), and that the claim fell within section 35D(2)(ii) as expenditure 'in connection with extension of its undertaking'. Reliance was placed on tribunal decisions allowing similar claims; revenue did not rebut factual matrix. CIT(A)'s deletion of AO's disallowance was upheld. [Paras 8, 9, 10, 14]

CIT(A)'s deletion of the section 35D disallowance is upheld for AY 2010 11 (lead year).

Revised return under section 153A - section 80IA deduction - Assessee entitled to raise and have adjudicated its section 80IA claim in proceedings under section 153A; revised claim admitted and allowed for AY 2010 11 on merits - HELD THAT: - Tribunal held that the search assessment scheme (sections 153A-153C) does not contain the bar on revising returns that applied under the earlier block assessment regime; a return under section 153A is to be treated as a return filed under section 139 and may be revised accordingly. The tribunal also found the assessee's section 80IA claim supported by project documents, prior assessments, and factual material showing deployment of fixed assets and retention clauses; CIT(A)'s acceptance of the revised claim was sustained. Relevant additional grounds were admitted pursuant to the tribunal's power to determine correct tax liability. [Paras 18, 19, 29, 30, 31]

Revised computation under section 153A treated as valid; CIT(A) rightly allowed section 80IA deduction of Rs. 23,90,63,499 for AY 2010 11; additional grounds admitted.

Section 115JB MAT computation - generalia specialibus non-derogant - Section 80IA deduction does not exempt the assessee from inclusion in book profit under section 115JB; MAT exemption claim rejected - HELD THAT: - Tribunal followed coordinate decisions and detailed statutory analysis: section 115JB contains a specific method for computing book profit and begins with a 'save as otherwise provided in this section' non obstante. Deductions under Chapter VI A (including section 80IA) are not among the specific reductions in section 115JB Explanation and therefore cannot be subtracted while computing book profit. The tribunal applied the principle that a special charging provision (section 115JB) prevails for its computation purpose and rejected the assessee's claim for MAT exemption on its section 80IA deduction. [Paras 31, 32, 33]

Assessee's claim to exclude section 80IA deduction from book profit computation under section 115JB is rejected.

Section 80IA deduction - Identical section 80IA claim in AY 2011 12 restored to Assessing Officer for verification - HELD THAT: - Tribunal noted that the claim in AY 2011 12 was not decided by the AO or raised in Form 35; given the factual materials already on record and the lead year findings, the matter was remitted to the AO to adjudicate in accordance with law. Tribunal clarified that the assessee would not be entitled to MAT exemption on that deduction. [Paras 34]

Assessee's section 80IA claim for AY 2011 12 restored to AO for factual verification; MAT exemption disallowed.

Income from AOP / joint ventures exempt under section 86 - CIT(A)'s direction to treat income from joint ventures (AOPs) as tax free in assessee's hands upheld and remitted for verification - HELD THAT: - AO disallowed income credited by assessee from several joint ventures for want of documentary proof. CIT(A) found documents filed in appellate proceedings demonstrated income was that of AOPs and not chargeable in assessee's hands under section 86; directed AO to verify particulars and treat AOP income as exempt, with any subsequent differences to be tax neutral. Tribunal upheld CIT(A)'s conclusion and directed AO to carry out factual verification. [Paras 35, 36, 37]

CIT(A)'s order allowing treatment of joint venture (AOP) income as exempt in assessee's hands is sustained; AO to verify and finalise.

Retention money not income for book profit - Retention money to be excluded while computing book profit under section 115JB - HELD THAT: - Relying on a coordinate bench decision (McNally Bharat), tribunal held retention money does not acquire the character of income for book profit computation until contractual obligations are fully performed. Accordingly, the AO was directed to grant section 115JB exemption in respect of retention money amounts in issue. [Paras 40, 41]

Retention money to be excluded from book profit; AO directed to allow MAT exemption for retention money.

Revised return under section 153A - Technical objections to validity of the post search/revised return and to allowing Chapter VI A deductions in section 153A proceedings rejected - HELD THAT: - Tribunal observed that the scheme of sections 153A-153C does not incorporate the earlier block assessment bar on revised returns, and a return under section 153A is to be treated as a return under section 139; hence revised returns and revised computations filed in response to a section 153A notice can be considered. The tribunal also noted the assessor himself accepted the post search return and made substantive determinations, negating Revenue's contention that the return was invalid or barred from claiming Chapter VI A deductions. [Paras 29, 30]

AO was not justified in rejecting revised computation/return filed in response to section 153A; revised claim admissible.

Section 115JB MAT computation - Education cess allowed as deductible for normal computation but not excluded from book profit under section 115JB - HELD THAT: - Tribunal, following coordinate bench and judicial pronouncements, directed AO to allow education cess as deductible expense for normal income tax computation. However, references to Explanation 2(iv)/(v) to section 115JB led tribunal to reject assessee's contention that such cess should be excluded while computing book profit for MAT purposes. [Paras 38, 39]

Education cess permitted as deduction for normal computation; no exclusion from book profit for MAT under section 115JB.

Section 153A proceedings - Validity of assessments under section 153A upheld where incriminating material was found during search - HELD THAT: - CIT(A) had recorded that various seized documents and explanations were considered by AO when framing assessment under section 153A. As those factual findings went unrebutted, tribunal rejected assessee's plea that section 153A proceedings were invalid for lack of incriminating material. [Paras 42, 43]

Assessee's challenge to validity of section 153A assessments dismissed where incriminating material was found and relied upon by AO.

Final Conclusion: Revenue appeals (ITA Nos.77 & 78/Kol/2016) dismissed; assessee's cross objection No.22/Kol/2019 and cross appeal ITA No.46/Kol/2016 partly allowed in the terms recorded: condonation granted; section 35D amortisation claim upheld for AY 2010 11; section 80IA deduction allowed for AY 2010 11 (additional grounds admitted) but not permitted to be excluded from book profit under section 115JB; corresponding issues in AY 2011 12 restored to Assessing Officer for factual verification; joint venture (AOP) income treatment and retention money MAT treatment directed to be finalised by AO; other consequential directions as set out in the order.

Extension of stay - Stay application - Interim relief by Tribunal - Delay not attributable to the assessee - Payment of part of disputed tax as factor for granting stay - Conditional continuation of stay (vacation on adjournment)

Extension of stay - Payment of part of disputed tax as factor for granting stay - Delay not attributable to the assessee - Extension of the interim stay previously granted in respect of the appeals for Assessment Years 2015-16 and 2016-17. - HELD THAT: - The Tribunal found that the delay in disposal of the appeals was not attributable to the assessee and that there was no change in facts since the earlier stay orders. The assessee had already paid approximately 50% of the disputed tax demand (excluding interest) for each of the two assessment years, which the Tribunal regarded as a material factor favouring continuation of the interim relief. On these considerations the Tribunal exercised its discretion to extend the stay previously granted and fixed a defined duration for the extension. [Paras 3]

Stay extended for a further period of four months from the date of the order or until disposal of the appeals, whichever is earlier.

Conditional continuation of stay (vacation on adjournment) - Interim relief by Tribunal - Conditions governing the continued operation of the extended stay. - HELD THAT: - The Tribunal imposed a condition that the assessee should not seek any adjournment of the hearing of the appeals without justifiable reasons. The Tribunal made clear that if the assessee sought an adjournment without such justification during the course of the hearing fixed before the Tribunal, the stay granted by the present order would stand vacated automatically. The appeals were noted as fixed for hearing on the specified date. [Paras 3, 4]

Stay is subject to the condition that no adjournment be sought without justifiable reasons; non-compliance will result in automatic vacation of the stay.

Final Conclusion: The Tribunal allowed the stay petitions and extended the interim stays in respect of Assessment Years 2015-16 and 2016-17 for four months or until disposal of the appeals, subject to the condition that the assessee shall not seek adjournment without justifiable reasons, failing which the stay will stand vacated.

Disallowance under Section 14A of the Income Tax Act - share premium and capital receipt versus income chargeable under Section 56(1) - revocable transfer and deeming provisions under Sections 61 to 63 - utilisation of securities premium account and obligations under the Companies Act (Section 78) - commercial expediency as a test for disallowance of interest under Section 36(1)(iii) - fair valuation and conversion of compulsorily convertible preference shares (CCPPS) - sham/colourable device doctrine in tax law

Disallowance under Section 14A of the Income Tax Act - Deletion of disallowance under Section 14A where no exempt income was earned by the assessee. - HELD THAT: - The Tribunal held that Section 14A cannot be invoked where the assessee has not earned any exempt income in the relevant year. The bench applied the Supreme Court precedent in Maxopp Investments to conclude that, in absence of exempt income, the statutory provisions for disallowance under Section 14A do not operate. On that basis the Revenue's ground challenging the CIT(A)'s deletion of the Section 14A disallowance was dismissed. [Paras 3]

Deletion of the disallowance under Section 14A upheld.

Share premium and capital receipt versus income chargeable under Section 56(1) - fair valuation and conversion of compulsorily convertible preference shares (CCPPS) - utilisation of securities premium account and obligations under the Companies Act (Section 78) - sham/colourable device doctrine in tax law - revocable transfer and deeming provisions under Sections 61 to 63 - Whether amounts credited as share premium (including premium arising on conversion of CCPPS and fresh issue of shares) could be treated as income of the assessee under Section 56(1) or as arising from revocable transfer under Sections 61-63, and whether the transactions were sham or non-genuine. - HELD THAT: - The Tribunal examined the facts: issue and earlier receipt of CCPPS in 2007-08, conversion in the relevant year, documentation including FIRCs, FCGPR filings, CA valuation done under applicable RBI/CCI methodology, FIPB approval and identity of foreign investors. The Tribunal held that (a) the conversion of CCPPS into equity at the agreed premium reflected earlier genuine investment and no fresh money was introduced at the conversion stage; (b) the fresh issue of equity shares at a stated premium was supported by inward remittances and compliance with statutory formalities; (c) the deeming provisions relating to revocable transfers (Sections 61-63) were inapplicable because there was no revocable transfer by which the transferor retained power to re-assume income or assets; and (d) absent a statutory provision taxing capital receipts from non-residents (the statutory amendment later introduced by Finance Act, 2012, was not applicable to the years under appeal), capital receipts on issue/conversion of shares cannot be equated to income under Section 56(1). The Tribunal also rejected the Assessing Officer's sham-transaction conclusion on the facts, noting that relevant approvals and documentary evidence were on record and that coordination bench and High Court precedents supported treatment of the share premium as capital. Applying these principles to the material, the Tribunal found no infirmity in the CIT(A)'s deletion of the addition under Section 56(1). [Paras 4]

Addition of share premium credited to books rejected; deletion under Section 56(1) upheld.

Commercial expediency as a test for disallowance of interest under Section 36(1)(iii) - Extent of disallowance of interest under Section 36(1)(iii) in respect of interest-free advances to subsidiaries and the effect of proven commercial expediency. - HELD THAT: - The Tribunal accepted that advances made interest-free to subsidiaries were for commercial expediency and, therefore, in principle no disallowance under Section 36(1)(iii) was warranted. However, the CIT(A) had limited the disallowance to a specific amount based on available own funds, a restriction which the assessee did not appeal. Given the absence of an appeal by the assessee against the limited disallowance, the Tribunal declined to interfere with the CIT(A)'s quantification while observing that no disallowance would have been required once commercial expediency was demonstrated. [Paras 7]

Revenue's challenge dismissed; CIT(A)'s restricted disallowance left undisturbed.

Final Conclusion: All appeals filed by the revenue for A.Y.2010-11, A.Y.2011-12 and A.Y.2012-13 were dismissed: deletion of the Section 14A disallowance sustained; deletion of the addition of share premium (treated as capital receipt, not income under Section 56(1) or Sections 61-63) sustained; and the CIT(A)'s treatment of interest disallowance under Section 36(1)(iii) left undisturbed.

Evidentiary value of statements recorded under Section 132(4) - requirement of independent corroboration for retracted confessional statements - scope and purpose of assessment under Section 153A - need for material seized or other cogent evidence to sustain additions in search assessments - estimation of undisclosed income in search assessments - weight of acceptance by commercial tax/VAT authorities in income-tax proceedings

Need for material seized or other cogent evidence to sustain additions in search assessments - estimation of undisclosed income in search assessments - Additions made by treating sales to M/s Teekay Rice Mill as concealed sales of finished wheat products and taxing resultant estimated profits - HELD THAT: - The Tribunal found that the Assessing Officer's conclusion-namely that raw wheat shown as sold to M/s Teekay Rice Mill was in fact milled by the assessee and sold as finished products-rested on sworn statements recorded during search and on certain seized loose sheets. Those sworn statements were retracted immediately thereafter and the Assessing Officer did not confront the assessee with the statements or address the retractions. No seized documents were produced at search establishing conversion of wheat into finished products (no invoices, gate passes, transport documents, production records, labour records or other administrative documentation). The VAT/Commercial Tax records and inspections (including MBs/Mahasars and VAT returns) accepted sales in the name of M/s Teekay Rice Mill without adverse findings. In absence of cogent material unearthed at search or other independent corroboration, the Tribunal held the assessments based on presumed conversion and resultant estimated profit were without sufficient evidentiary basis and therefore could not be sustained; accordingly the additions on account of alleged undisclosed sale of wheat products were deleted for all assessment years. [Paras 11, 15]

Additions made by treating sales to M/s Teekay Rice Mill as undisclosed sales of finished wheat products are deleted for AYs 2009-10 to 2014-15.

Evidentiary value of statements recorded under Section 132(4) - requirement of independent corroboration for retracted confessional statements - Whether statements recorded under Section 132(4) which were retracted can by themselves sustain additions - HELD THAT: - The Tribunal applied binding principles that a statement recorded under oath which is subsequently retracted cannot be the sole basis for making additions. Such statements must be substantially corroborated by independent and cogent material before they can be acted upon. The Tribunal relied on judicial authority and CBDT guidance emphasising that admissions obtained under coercion or without corroboration should not lead to unsustainable additions. In the present case the statements of P.K. Kunjumoideen, the manager and the accountant were retracted by affidavit dated 06/09/2013 and no independent corroborative material was placed on record to support the incriminatory content of those statements; the Assessing Officer also failed to deal with the retractions in the assessment order. Accordingly the Tribunal held that the retracted statements could not support additions. [Paras 12]

Sworn statements recorded under Section 132(4) and subsequently retracted cannot, without independent corroboration, constitute the basis for additions; the additions founded solely on such statements are unsustainable.

Estimation of undisclosed income in search assessments - need for material seized or other cogent evidence to sustain additions in search assessments - Validity of CIT(A)'s reduction of AO's estimated additions to 50% and whether that estimation process was lawful and supported by material - HELD THAT: - The Tribunal accepted the CIT(A)'s observation that the AO's computation of profit on presumed sale of finished products was an estimate not grounded in cogent material unearthed at search. However, the Tribunal held that neither the AO's estimation nor the CIT(A)'s arbitrary halving of the AO's estimate were based on adequate seized evidence or other credible material. Estimation in search assessments must have a rational basis linked to the material; where no such basis exists, both the original estimate and a mechanical reduction are unsustainable. Consequently, having found absence of requisite evidence, the Tribunal set aside both the AO's additions and the CIT(A)'s 50% sustained quantum. [Paras 6, 15]

Both the AO's estimated additions and the CIT(A)'s reduction to 50% are unsustainable for lack of cogent material; the additions are deleted.

Final Conclusion: The Tribunal allowed the assessee's appeals for assessment years 2009-10 to 2014-15, holding that additions based on presumed diversion of wheat into finished products and on retracted sworn statements lacked independent corroborative material seized at search or otherwise; consequently the impugned additions were deleted and the Revenue's cross-appeals were dismissed as infructuous.

Treatment of invoices as income versus bogus expenses - remand for verification of documentary evidence - reappraisal of evidence on record by appellate authority - requirement to obtain remand report before admitting documents produced at first appellate stage

Treatment of invoices as income versus bogus expenses - reappraisal of evidence on record by appellate authority - Whether the addition of Rs. 2,61,56,545/- could be sustained where the Assessing Officer treated amounts shown by invoices as bogus expenses but the receipts were recorded in the assessee's books and TDS was deducted by the payors - HELD THAT: - The Tribunal noted that the assessee admitted receipt of the amounts covered by the invoices, that the receipts were reflected in the assessee's books, and that the payors had deducted TDS as evidenced by Form AS-26. The Assessing Officer treated the entries as bogus and added the amount to income, yet the record showed no comment on the assessee's books and the Assessing Officer appeared uncertain whether he was disallowing expenses or adding income. The CIT(A) reappraised the materials, accepted the assessee's documentary evidence and deleted the addition. Given the factual record showing accounting entries and TDS deduction, the Tribunal found the Assessing Officer's addition was not sustainable without proper verification, and observed that the CIT(A)'s reappraisal concluded there was no justification for the addition. [Paras 3, 4, 6, 9]

The Tribunal held that on the materials before it the addition could not be sustained without verification and accepted that the receipts were reflected in the assessee's books and TDS had been deducted; the matter was not to be upheld as a finalized addition on the existing record.

Remand for verification of documentary evidence - requirement to obtain remand report before admitting documents produced at first appellate stage - Whether the matter should be remanded to the Assessing Officer for verification of the agreement and other documents produced before the CIT(A) - HELD THAT: - The Revenue contended that because the agreement relied upon before the CIT(A) was not considered at assessment stage, the CIT(A) should have obtained a remand report to enable verification. Both parties accepted that verification by the Assessing Officer was appropriate. The Tribunal observed that the veracity of the agreement between the assessee and M/s Vivek Pharmachem required verification and that the Assessing Officer's findings were inconclusive. In view of this need for factual verification, the Tribunal set aside the impugned order and remanded the issue to the Assessing Officer to verify the agreement and reach a proper conclusion. [Paras 7, 8, 10]

The Tribunal remanded the matter to the file of the Assessing Officer for verification of the agreement and related facts and set aside the impugned order for this limited purpose; the Revenue's grounds are allowed for statistical purpose.

Final Conclusion: The Tribunal set aside the CIT(A)'s order and remitted the issue to the Assessing Officer for verification of the agreement and related documentary evidence concerning the invoices; appeal allowed for statistical purposes and matter remanded for inquiry and appropriate conclusion.

Interest under section 201(1A) of the Income Tax Act - date of payment for remittance of tax deducted at source - OLTAS credit date versus actual date of online payment - date of payment by cheque relates back to date of presentation if honoured (CBDT Circular No.261/1979) - conflict between Central Government Account (Receipts and Payments) Rules and the Negotiable Instruments Act - precedential application of ITAT decision in P L Haulwel Trailers Ltd.

Interest under section 201(1A) of the Income Tax Act - date of payment for remittance of tax deducted at source - OLTAS credit date versus actual date of online payment - Levy of interest under section 201(1A) where TDS was deducted and remitted by the assessee on the prescribed due date but OLTAS showed credit on a later date. - HELD THAT: - The assessee deducted TDS and effected online payment on the 7th day of the succeeding month (the prescribed due date); bank challans, bank statements and TRACES records also show payment on the 7th, whereas OLTAS reflected credit on the 8th/9th. The Tribunal held that where payment is made online and credit to the Government account is effectively instant, the taxpayer's payment on the prescribed due date must be treated as payment for the purposes of section 201(1A). The decision in P L Haulwel Trailers Ltd. was applied: the CBDT circular (No.261/1979) and the Negotiable Instruments Act principles treat the date of presentation (or handover) of a cheque as the date of payment if ultimately honoured, and that principle prevails over contrary executive rules. The Central Government Account (Receipts and Payments) Rules, which address clearance/realisation dates for cheques, do not govern online payments; moreover, where a conflict exists between rules framed by executive authority and law enacted by Parliament (or binding administrative instructions under section 119), the latter prevails. Applying these principles, the Tribunal concluded that reliance on the OLTAS credit date alone to levy interest was not justified and directed cancellation of the interest under section 201(1A). [Paras 2, 6, 7]

Interest under section 201(1A) levied on account of OLTAS showing a later credit date is cancelled; the assessee's appeals are allowed.

Final Conclusion: The Tribunal allowed the appeals, holding that where TDS was deducted and remitted online on the prescribed due date (supported by challan, bank statement and TRACES), interest under section 201(1A) could not be levied merely because OLTAS reflected a later credit date; the interest was cancelled.

Computation under clause (f) of Explanation 1 to section 115JB - application of section 14A read with Rule 8D - revision under section 263 of the Act - precedential effect of Special Bench decision - following decisions favourable to the assessee

Computation under clause (f) of Explanation 1 to section 115JB - application of section 14A read with Rule 8D - revision under section 263 of the Act - Validity of CIT's order under section 263 setting aside the assessment for not adjusting the section 14A disallowance while computing book profit under clause (f) of Explanation 1 to section 115JB. - HELD THAT: - The Tribunal observed that when the CIT exercised revision under section 263 the Special Bench decision in ACIT v. Vireet Investments Pvt. Ltd. (holding that computation under clause (f) of Explanation 1 to section 115JB is to be made without resort to the computation under section 14A read with Rule 8D) was not yet available. Having regard to the subsequently available Special Bench view, the Tribunal held that the CIT's direction to the Assessing Officer to reconsider and include the section 14A disallowance in computation of book profit under section 115JB was contrary to the Special Bench's legal position. The Tribunal further relied on the principle, as applied in Vegetable Products Ltd., that a decision favourable to the assessee should be followed. In light of the binding persuasive effect of the Special Bench decision for the issue at hand, the Tribunal concluded that the CIT's order under section 263 was bad in law and could not be sustained.

Order passed by the CIT under section 263 quashed and set aside; appeal allowed.

Final Conclusion: Because the Special Bench's decision-that clause (f) of Explanation 1 to section 115JB is to be computed without applying section 14A read with Rule 8D-is available and favourable to the assessee, the CIT's revision under section 263 directing inclusion of the section 14A disallowance in book profit was held to be bad in law and was quashed.

Extraordinary writ jurisdiction under Article 226 - Jurisdiction of Customs versus DGFT in recovery of refund/Terminal Excise Duty - Advance Authorization validity and entitlement to exemption - Deemed export benefits under Foreign Trade Policy (para 8.3) - Confiscation power under Section 111(o) of the Customs Act - Recovery for erroneously refunded duty under Section 28(4) of the Customs Act - Alternative remedy doctrine and limits to writ intervention

Jurisdiction of Customs versus DGFT in recovery of refund/Terminal Excise Duty - Advance Authorization validity and entitlement to exemption - Deemed export benefits under Foreign Trade Policy (para 8.3) - Whether the Customs authority was entitled to recover TED/refund and to adjudicate confiscation/penalty when the petitioners held Advance Authorisations that had not been suspended or cancelled and the TED refund was sanctioned by DGFT. - HELD THAT: - The court accepted that the petitioners held Advance Authorisations which had not been suspended or cancelled and that the refund of Terminal Excise Duty was sanctioned by the DGFT. The Foreign Trade Policy and Handbook provisions (notably para 8.3 and related provisions governing Advance Authorisation and TED refund) afford deemed export benefits when conditions are met and competent authority for review/suspension/cancellation of licences and refunds is the DGFT under the Foreign Trade Act and Rules. The customs proceedings sought recovery of amounts refunded by DGFT and confiscation/penalty on the ground of alleged clandestine disposal. Given that the DGFT had granted the refund and the Advance Authorisations remained valid and unchallenged by the licensing authority, the Customs authority's initiation of recovery and confiscation amounted to exercise of powers in excess of its jurisdiction in the peculiar facts of this case. The court observed that if DGFT considered misuse, it was open to DGFT to take action, and that the DRI/Customs could inform DGFT but could not usurp the licensing authority's function where refund and licence validity were concerned. [Paras 34, 35, 36]

Impugned order confirming recovery of TED/refund and imposing confiscation/penalty was an exercise in excess of jurisdiction and was quashed.

Confiscation power under Section 111(o) of the Customs Act - Recovery for erroneously refunded duty under Section 28(4) of the Customs Act - Whether the Customs authority could sustain confiscation and demand under Sections 111(o) and 28(4) when the Central Excise department had not sanctioned any refund and physical verification issues related to excise officers' conduct. - HELD THAT: - The court examined the departmental correspondence and noted that the Central Excise Department had stated that it did not sanction any refund/rebate of duty paid on supplies to EOUs. However, the TED refund was sanctioned by DGFT. The court held that non-performance or failure of excise officers to physically verify goods cannot be converted into a ground to penalize a holder of a valid Advance Authorisation. While Sections 111(o) and 28(4) empower confiscation and recovery in specified circumstances, their exercise must respect the limits of jurisdiction and the roles of the respective authorities; where refund and licence validity rest with DGFT, Customs acting to recover amounts refunded by DGFT on the same facts was impermissible in the present circumstances. [Paras 31, 32, 33, 34]

Confiscation and recovery proceedings insofar as founded on the absence of physical verification by excise officers or on amounts refunded by DGFT could not be sustained; such exercise by Customs exceeded jurisdiction in the facts of the case.

Extraordinary writ jurisdiction under Article 226 - Alternative remedy doctrine and limits to writ intervention - Whether the High Court should entertain writ petitions despite existence of alternative appellate remedy before the CESTAT. - HELD THAT: - The court acknowledged that ordinarily an alternative efficacious remedy before appellate authorities would bar writ relief. However, it reiterated settled principles that writ jurisdiction may be exercised where the authority has acted without jurisdiction, in excess of jurisdiction, or in flagrant disregard of law or procedure. Applying those principles to the present facts - where Customs had purported to recover amounts refunded by DGFT and to exercise powers that the court considered for the peculiar facts to be beyond Customs' jurisdiction - the court found writ intervention was justified. The court relied on authorities stating the limited circumstances in which Article 226 may be invoked and concluded that those circumstances were present here. [Paras 28, 35]

Writ petitions were maintainable and industry of alternative remedy did not bar interference because Customs had acted in excess of jurisdiction; the petitions were allowed.

Final Conclusion: The writ petitions were allowed; the impugned order-in-original No.MUN-CUSM-000-COM-030-16-17 dated 31.03.2017 is quashed and set aside on the ground that, in the facts of the case, the Customs authority acted in excess of its jurisdiction by proceeding against amounts/refunds sanctioned by DGFT and against petitioners holding valid Advance Authorisations.

Power to draw samples under Section 144 of the Customs Act, 1962 - lapse of show cause notice for non-adjudication within prescribed period

Power to draw samples under Section 144 of the Customs Act, 1962 - Whether the DRI or Customs Authorities had power to draw fresh samples of imported goods from the petitioner's premises after the goods had been cleared from the customs area. - HELD THAT: - The Court held that once imported goods are cleared from the customs area, the authority to draw samples is restricted by the mandate of Section 144 of the Customs Act, 1962. The facts show that samples were drawn from the petitioner's factory premises on 28.01.2013 after clearance of the consignment which had earlier been provisionally assessed and cleared following a laboratory report. Relying on the legal position applied in CWP No. 23588 of 2016 (M/s. Raghav Woollen Mills Pvt. Ltd. v. Union of India and others), the Court found that the DRI/Customs lacked authority to draw such fresh samples post-clearance, and consequently the subsequent processes based on those samples were not permissible. [Paras 4]

Fresh sampling drawn from the petitioner's premises after clearance of the imported goods was not authorised and cannot sustain the proceedings.

Lapse of show cause notice for non-adjudication within prescribed period - Whether the show cause notice dated 07.02.2014 lapsed for want of adjudication within the period required by law. - HELD THAT: - The Court noted that no adjudication order has been passed on the Show Cause Notice dated 07.02.2014. Applying the principle laid down by this Court in M/s. Harkaran Dass Vedpal v. Union of India and others, it was observed that where a show cause notice was pending on 29.03.2018 the Proper Officer was bound, in view of the amended provisions, to conclude adjudication within one year (i.e. by 28.03.2019) unless the time was validly extended under the statutory provisions. Since no extension under Section 28(9) or Section 9-A of the Customs Act, 1962 was made, the Court held that the show cause notice has lapsed and cannot be adjudicated. [Paras 4]

The Show Cause Notice dated 07.02.2014 has lapsed for non-adjudication within the prescribed period and cannot be proceeded with.

Final Conclusion: The petition is allowed; the impugned Show Cause Notice dated 07.02.2014 is quashed on the dual grounds that post-clearance sampling from the petitioner's premises was unauthorised and that the show cause notice has lapsed for want of adjudication within the statutory period.

Registration under Rule 3 - Application under Rule 4 - directory versus mandatory nature of statutory rules - strict compliance with conditions for exemption - entitlement to exemption for imports made prior to registration - relevance of a certificate issued by Superintendent of Central Excise - maintainability of appeal under section 130

Registration under Rule 3 - Application under Rule 4 - directory versus mandatory nature of statutory rules - entitlement to exemption for imports made prior to registration - strict compliance with conditions for exemption - relevance of a certificate issued by Superintendent of Central Excise - Whether Rules 3 and 4 of the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 are merely procedural/directory so as to permit grant of exemption in respect of goods imported and cleared prior to registration under Rule 3. - HELD THAT: - The Court held that Rules 3 and 4 are not merely procedural or directory but impose mandatory pre-conditions for availing the exemption notification. The requirement of registration under Rule 3 and the application under Rule 4 cannot be treated as retrospective or dispensable; to permit exemption for imports made prior to registration would frustrate the scheme and purpose of the Rules and render the procedural requirements ineffective. The certificate relied upon by the Assessee, issued by the Superintendent of Central Excise stating non-availment of Cenvat credit in respect of that consignment, was not a certificate under the 1996 Rules and therefore was irrelevant to satisfy the statutory pre-conditions. Given that registration under the Rules was granted only on 14.7.2003, exemption could not be validly claimed for the import and clearance dated 28.6.2003/30.6.2003. The Tribunal's contrary conclusion that the Rules were directory and that exemption could be applied to earlier imports was therefore erroneous and could not be upheld. [Paras 7, 8, 9]

Rules 3 and 4 are mandatory and the Assessee was not entitled to the exemption for goods imported and cleared prior to registration; the Tribunal's order granting exemption is set aside.

Maintainability of appeal under section 130 - Whether the Revenue's appeal under section 130 was maintainable before the High Court. - HELD THAT: - The Court examined the scope of the present controversy and found it concerned the wrongful claim of exemption rather than issues of rate or valuation. Consequently, the objection that appeals on rate or valuation lie only before the Supreme Court was inapplicable. The Court concluded that the appeal by the Revenue under section 130 was maintainable before the High Court and overruled the Assessee's objection to maintainability. [Paras 10, 11]

The Revenue's appeal under section 130 is maintainable and the objection raised by the Assessee is overruled.

Final Conclusion: The Revenue's appeal is allowed; the Tribunal's order upholding the Assessee's claim to exemption for imports made prior to registration is set aside, and the connected miscellaneous petition is closed. No costs.

Provisional assessment - extra duty deposit and cess refund - finalisation of provisional assessments within four months - Board Circular No.11/2001-Cus - settled position on leviability of cess/additional duty on imported coal - interest under Section 27(a) of the Customs Act - inordinate delay and duty to finalize assessments

Provisional assessment - extra duty deposit and cess refund - Board Circular No.11/2001-Cus - finalisation of provisional assessments within four months - settled position on leviability of cess/additional duty on imported coal - Refund of Extra Duty Deposit (EDD) and cess withheld on account of prolonged provisional assessments - HELD THAT: - The Court found that the petitioner had cooperated and furnished requisite documents and repeatedly pursued finalisation and refund claims, yet provisional assessments remained unfinalised for nearly 15 years. The Revenue's contention that no time limit applies to finalisation of provisional assessments was held unacceptable in light of Board Circular No.11/2001-Cus, which contemplates completion of investigation and finalisation within four months and discontinues EDD where no decision is taken within that period. Further, the Board's communication of 16.07.2007 established that the issue of leviability of cess/additional duty on imported coal had been settled in favour of importers and called for finalisation of provisional assessments accordingly. In these circumstances there was no justification for prolonged withholding of refunds and the departmental inaction was held to be indefensible. [Paras 9, 10, 11]

Provisional assessments delayed without justification; petitioner entitled to refund of EDD and cess withheld.

Interest under Section 27(a) of the Customs Act - inordinate delay and duty to finalize assessments - Payment of interest on the refunded amounts - HELD THAT: - The Court directed that the refund be paid with interest under Section 27(a) of the Customs Act. The Court specified computation of interest from three months after the dates on which the respective refund applications were received by the Department, treating those points as the triggering dates for interest in view of the delay attributable to the Department's inaction. [Paras 12]

Refund to be paid with interest under Section 27(a) of the Customs Act, computed from the dates specified by the Court.

Final Conclusion: Writ petition allowed; respondents directed to pay the refund of EDD and cess to the petitioner with interest under Section 27(a) of the Customs Act within four weeks from receipt of the order; no costs.

Power to summon or procure evidence - co-extensive powers of the Tribunal and adjudicating authority - direction to obtain test report from government or accredited laboratory - right to fair opportunity to adduce and have evidence weighed - remand for fresh consideration after opportunity of hearing

Direction to obtain test report from government or accredited laboratory - power to summon or procure evidence - right to fair opportunity to adduce and have evidence weighed - Cryptic dismissal by the Tribunal of the assessee's application seeking a direction to obtain an independent test report was unjustified and required fresh consideration. - HELD THAT: - The Tribunal dismissed the miscellaneous application because counsel could not point to specific provisions empowering the Tribunal to direct testing. The High Court held that such a summary rejection was not justified. The Tribunal and the adjudicating authority possess co-extensive fact-finding powers, including the power to summon or procure evidence. Where an assessee places a test report on record and seeks independent verification by a Government or accredited laboratory so that competing evidence can be weighed, refusal to permit such a course merely for want of citation of a provision was improper. Consequently the Tribunal's cryptic order was set aside and the matter remitted for fresh disposal with opportunity to both parties to be heard. [Paras 4, 5]

Appeal allowed; Tribunal order dated 23.09.2019 in Misc.Application No.C/MISC/40222/2019 in Appeal No.C/40785/2019-DB set aside and matter remitted to the Tribunal to pass fresh orders on the miscellaneous application after hearing both parties.

Final Conclusion: The High Court allowed the appeal, set aside the Tribunal's summary dismissal of the application for an independent test report and remitted the matter to the Tribunal for fresh consideration after affording both parties an opportunity of hearing.

Customs valuation - Reassessment of declared value - Confiscation and redemption - Offer of redemption - Clearance for home consumption condition on redemption - Jurisdiction of Commissioner of Customs (Export) - Penalty under Section 112 of Customs Act, 1962 - Application of Rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - Discharge of duty by use of scrip under Vishesh Utpad Yojana

Jurisdiction of Commissioner of Customs (Export) - Discharge of duty by use of scrip under Vishesh Utpad Yojana - Validity of adjudicating authority's jurisdiction to initiate valuation and confiscation proceedings before Commissioner of Customs (Export), Nhava Sheva. - HELD THAT: - The Tribunal found no error in exercise of jurisdiction by the adjudicating authority. The assessing officers being officers of Nhava Sheva and duty having been discharged by furnishing of scrip under the Vishesh Utpad Yojana did not impair the jurisdiction of Commissioner of Customs (Export) to adjudicate the show cause notice. Notification No. 15/2002-Cus. (N.T.) furnished by the authorised representative was held to accord jurisdiction to the Commissioner of Customs (Export) and subordinate officers, and therefore the challenge to jurisdiction was rejected. [Paras 5]

Jurisdiction of the Commissioner of Customs (Export) to adjudicate sustained; no jurisdictional error found.

Application of Rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - Reassessment of declared value - Clearance for home consumption condition on redemption - Confiscation and redemption - Lawfulness of including goods that conformed to declaration (though lesser quantity) in value redetermination, and propriety of imposing a condition of clearance for home consumption when offering redemption. - HELD THAT: - The Tribunal observed that goods which conformed to the bill of entry declaration, albeit in lesser quantity, could not properly be treated as misdeclared so as to invoke the scope of Rule 12 of the Valuation Rules for those items. Separately, the Tribunal held that imposing a condition that goods offered for redemption must be cleared for home consumption is inappropriate: upon offer of redemption the goods cease to be vested in the Central Government and conditions that effectively preclude re export are not sanctioned by law. In view of these errors in the adjudicating order, the matter required fresh consideration. [Paras 6, 7]

Impugned order set aside insofar as it included properly declared goods in the redetermination and insofar as it imposed a home consumption clearance condition; matter remanded for fresh adjudication of the show cause notice in accordance with law.

Final Conclusion: The Tribunal upheld the jurisdiction of the Commissioner of Customs (Export) but set aside the impugned order on substantive grounds-finding incorrect inclusion of conforming goods in valuation reassessment and the impermissible condition that redemption be subject to clearance for home consumption-and remanded the show cause notice to the adjudicating authority for fresh decision in accordance with law.

Classification of imported goods - characterisation of scrap versus ingot - evidentiary weight of laboratory analysis - description in import documents - ISRI guidelines

Classification of imported goods - characterisation of scrap versus ingot - evidentiary weight of laboratory analysis - description in import documents - ISRI guidelines - Whether the imported consignment declared as "Aluminium Scrap 'Throb'" was correctly reclassified as "Aluminium Alloy Ingots" for demand, interest and penalties. - HELD THAT: - The adjudicating authorities based reclassification on physical examination and a laboratory report indicating high aluminium content, treating the samples as aluminium metallic ingots. The Tribunal observed that the goods were consistently described in the import documents and export invoice as "Aluminium Scrap 'Throb'" and that the ISRI-based description contemplates scrap that may be remelted for shipment convenience. A laboratory finding of dominant aluminium content does not, by itself, convert declared scrap into finished ingots absent evidence rebutting the exporter's description or demonstrating that the material had the characteristics of ingots rather than scrap. In the absence of such contrary evidence, the documentary description retained evidentiary value and the reclassification and consequent demand, interest and penalties were not sustainable. [Paras 4, 5]

Impugned order confirming demand, interest and penalties set aside; appeal allowed and appellant given consequential relief.

Final Conclusion: The Tribunal accepted the importer's documentary description of the goods as "Aluminium Scrap 'Throb'", held that laboratory reports showing high aluminium content were insufficient to reclassify the consignment as ingots without contrary evidence, set aside the duty demand and penalties and allowed the appeal.

Maintainability of appeal to Tribunal - appealable order - conversion/amendment of shipping bills - communication of Commissioner's decision by subordinate officer - Board Circular No. 36/2010-Cus., dated 23-9-2010

Maintainability of appeal to Tribunal - conversion/amendment of shipping bills - communication of Commissioner's decision by subordinate officer - appealable order - Whether the appeal is maintainable to the Tribunal against a letter of the Assistant Commissioner which communicates the Commissioner's decision rejecting the request for conversion/amendment of shipping bills, and whether such letter constitutes an appealable order. - HELD THAT: - The Tribunal examined the impugned letter and the Board Circular relied upon by the appellant. The record shows that the substantive decision on the request for conversion of shipping bills was taken by the Commissioner and that the decision was communicated to the appellant by the Assistant Commissioner. Where the Commissioner has decided the request and that decision is communicated by a subordinate officer, the communication operates to inform the assessee of a final decision on rights. A letter which finally decides the rights of the appellant is an appealable order. Applying these principles, the Tribunal concluded that the appeal against the letter is maintainable before the Tribunal and that the defect noted by the Registry should be vacated. [Paras 4]

The defect is vacated; the appeal is maintainable and the Registry is directed to admit and number the appeal.

Final Conclusion: The Tribunal held that a letter issued by an Assistant Commissioner communicating a decision taken by the Commissioner rejecting a request for conversion/amendment of shipping bills is a final, appealable order; the defect is vacated and the appeal is to be admitted and numbered.

Power to take samples on entry or clearance of goods - Provisional assessment and final assessment under Section 18 of the Customs Act, 1962 - Jurisdiction of the Directorate of Revenue Intelligence to draw samples post clearance - Return of bank guarantee and cancellation of bond upon final assessment - Illegality of seizure of goods after clearance

Power to take samples on entry or clearance of goods - Jurisdiction of the Directorate of Revenue Intelligence to draw samples post clearance - Whether samples could be lawfully drawn from imported goods at the petitioners' premises on 11.08.2016 after the goods had been provisionally and finally assessed and cleared from the customs area - HELD THAT: - The Court accepted the petitioners' contention that Section 144 permits the proper officer to take samples "on the entry or clearance of any goods or at any time while such goods are being passed through the customs area." Under the statutory scheme an importer may obtain clearance either by final assessment under Section 17 or by provisional assessment under Section 18 subject to conditions, and upon receipt of test reports the proper officer must frame final assessment, cancel the bond and return the bank guarantee if the declared description and valuation are vindicated. In the present case the imported consignments had been provisionally assessed, samples taken while still within the customs area, and thereafter final assessment was framed in conformity with the test reports, with bonds cancelled and bank guarantees returned. Once the goods stood cleared and removed from the customs area (the consignments having been cleared between January 2016 and April 2016), Section 144 did not authorise re drawing of fresh samples from the petitioners' factory months later. The Directorate of Revenue Intelligence therefore lacked jurisdiction to draw fresh samples on 11.08.2016 from the petitioners' premises. [Paras 9, 10, 11, 12]

DRI had no jurisdiction under Section 144 to draw fresh samples from the petitioners' premises after the imported goods had been finally assessed and cleared.

Illegality of seizure of goods after clearance - Return of bank guarantee and cancellation of bond upon final assessment - Validity of the panchnama(s) dated 11.08.2016 (and consequential panchnama dated 06.10.2016) effecting seizure of the petitioners' imported stock and records - HELD THAT: - The seizures recorded in the panchnama(s) of 11.08.2016 and 06.10.2016 were predicated on the premise that fresh samples could be lawfully taken from goods already cleared. Having held that no power existed to re draw samples after clearance and after final assessment had been framed (with bond cancellation and return of bank guarantee), the consequent seizure of the petitioners' goods and documents was without jurisdiction. In light of the absence of lawful authority to take fresh samples post clearance, the panchnama(s) effectuating seizure must be quashed and the seized material and resumed documents returned to the petitioners forthwith. [Paras 13]

The panchnama(s) dated 11.08.2016 and 06.10.2016 effecting seizure of the petitioners' imported stock and records are quashed; respondents directed to release the seized material and return documents forthwith.

Final Conclusion: Writ petitions allowed: panchnama(s) of 11.08.2016 and 06.10.2016 quashed; respondent DRI directed to release the seized goods and return the petitioners' documents within two weeks of certified copy of the order; failure to comply exposes the competent authority to contempt and exemplary costs; no order as to costs.

Conversion of companies - alteration of articles - registrar of companies' powers - requirement of Central Government approval - definition of private company - prescribed minimum paid-up share capital - repeal and savings - illegality of action - correction of judgment/typographical correction

Conversion of companies - alteration of articles - registrar of companies' powers - requirement of Central Government approval - definition of private company - prescribed minimum paid-up share capital - repeal and savings - illegality of action - Validity of the Registrar of Companies' action altering Tata Sons Limited from a public company to a private company - HELD THAT: - The Tribunal held that after enactment of the Companies Act, 2013 the statutory regime for conversion and alteration is governed by Section 14 (alteration of articles) and Section 18 (conversion of companies already registered), and that Section 43A(2A) of the Companies Act, 1956 (relied upon by the Registrar) stood replaced by the 2013 enactment. The amended definition of 'private company' in Section 2(68) (w.e.f. 29 May 2015) makes minimum paid-up share capital subject to rules 'as may be prescribed', and no rule has been framed under Section 2(66); in the absence of such prescription the Registrar had no power to effect changes in the register, certificate of incorporation or memorandum on that basis. Further, Section 43A(4) (as previously enacted) required approval of the Central Government before a company converted under the old provision could again become a private company; the Registrar's reliance on Section 43A(2A) without regard to sub-section (4) was unsustainable. The Tribunal therefore found the Registrar's action to be without jurisdiction and contrary to the statutory scheme under the Companies Act, 2013; no mala fides against the Registrar was found, but the action was declared illegal and set aside. The application to amend the earlier judgment was rejected insofar as it sought to alter these findings. [Paras 24, 26, 30, 31, 32]

The Registrar of Companies' alteration of Tata Sons Limited's status to a private company was unlawful and set aside; the Registrar had no jurisdiction to make the changes relied upon and the amendment prayer was rejected.

Definition of private company - correction of judgment/typographical correction - Correction of an erroneous quotation of the unamended definition of 'private company' in the earlier judgment - HELD THAT: - The Tribunal found that Paragraph 171 of the earlier judgment mistakenly quoted the pre-amendment wording of Section 2(68). Since the definition had been amended w.e.f. 29 May 2015, the Tribunal ordered Paragraph 171 to be read to quote the amended definition of 'private company' (i.e., a company having a minimum paid-up share capital 'as may be prescribed' together with the other constituent conditions). This correction was ordered as a typographical amendment and does not alter the substantive findings. [Paras 27]

Paragraph 171 shall be corrected to quote the amended Section 2(68) definition of 'private company'.

Final Conclusion: The interlocutory applications by the Registrar of Companies to amend the Tribunal's judgment are dismissed. The Tribunal affirms that the Registrar lacked jurisdiction to record Tata Sons Limited as a private company under the post-2013 statutory scheme and sets aside the change; a typographical correction to Paragraph 171 of the earlier judgment is ordered. No costs.

Claim of refund under Rule 5 of CCR, 2004 - registration of premises not a pre-requisite - limitation for filing refund claim - remand for fresh consideration by the Tribunal

Claim of refund under Rule 5 of CCR, 2004 - registration of premises not a pre-requisite - Validity of the Tribunal's conclusion that registration of the assessee's premises is not a pre-requisite for claiming refund under Rule 5 of CCR, 2004 - HELD THAT: - The Tribunal relied on binding decisions of the jurisdictional High Court, in particular BNP Paribas Sundaram Global Securities Operations Private Limited and earlier Madras High Court authorities, to hold that Rule 5 of CCR, 2004 does not require registration of premises as a condition precedent to a refund claim. The High Court recorded that the controversy is no longer res integra and is covered by those precedents, and dismissed the Revenue's challenge to the Tribunal's conclusion on this point. The Court therefore treated the Tribunal's reliance on the cited High Court decisions as determinative of the issue. [Paras 2, 3]

Tribunal's conclusion that registration of premises is not a prerequisite for claiming refund under Rule 5 of CCR, 2004 is sustained and the Revenue's appeal has no merit on this point.

Limitation for filing refund claim - remand for fresh consideration by the Tribunal - Whether the question of limitation for filing the refund claim was decided by the Tribunal - HELD THAT: - The High Court observed that although the Revenue had raised limitation as a ground before the Tribunal (and reiterates it in Ground 'H' of the present memorandum), the Tribunal's order is silent on the limitation issue and contains no discussion or findings thereon. The High Court found prima facie merit in the Revenue's contention that the limitation question was not addressed and therefore could not be treated as finally decided by the Tribunal. Consequently, the Court granted the Revenue liberty to raise the limitation issue before the Tribunal afresh. [Paras 3, 4]

Limitation issue was not decided by the Tribunal and is remitted for fresh consideration; Revenue given liberty to raise it before the Tribunal which is expected to pronounce on it after hearing both parties.

Final Conclusion: Appeal disposed: Tribunal's view that registration of premises is not a prerequisite for refund under Rule 5 CCR 2004 is upheld; the question of limitation was not addressed by the Tribunal and is remitted for fresh consideration with liberty to the Revenue to raise it before the Tribunal.

Refund of tax paid under mistake of law - applicability of limitation under Section 11B of the Central Excise Act - doctrine of unjust enrichment in refund claims - no taxation except by authority of law (Article 265) - follow jurisdictional High Court precedent

Refund of tax paid under mistake of law - applicability of limitation under Section 11B of the Central Excise Act - no taxation except by authority of law (Article 265) - Whether a claim for refund of service tax paid under a mistake of law is barred by the limitation period prescribed in Section 11B of the Central Excise Act, 1944. - HELD THAT: - The Tribunal held that where tax is paid under a mistake of law and the department lacked authority to levy or retain that tax, the payment is outside the statutory levy and Section 11B does not apply. Relying on the constitutional bench decision in Mafatlal Industries Ltd. and subsequent High Court decisions, the Tribunal accepted the principle that refunds of amounts paid without legal authority can be pursued outside the machinery provisions of the Central Excise Act and are governed by the general law (including the Limitation Act and principles when mistake is discovered). The Tribunal noted that retention of such amounts would conflict with Article 265 and that jurisdictional High Court precedents (including the Jharkhand decisions relied upon) support the view that limitation under Section 11B is not a bar to refund claims based on mistake of law. Applying those principles to the facts, the Tribunal found the appellant paid service tax on an outright transfer of immovable property which was not exigible to service tax, and therefore the refund claim could not be rejected as time barred under Section 11B.

Section 11B is not attracted to a refund claim where service tax was paid under a mistake of law; the claim is not time barred and must be allowed.

Doctrine of unjust enrichment in refund claims - Whether the appellant's refund claim is barred by the doctrine of unjust enrichment. - HELD THAT: - The Tribunal addressed the revenue's contention that the claim was hit by unjust enrichment but accepted the appellant's case that the incidence of the disputed tax was borne by the appellant and had not been passed on to the buyers; the appellant had also returned the portion said to have been collected. In the factual matrix and in view of the authorities requiring opportunity and evidence to be produced before holding unjust enrichment, the Tribunal found no sustainable basis to refuse the refund on that ground.

The claim is not barred by unjust enrichment and does not justify refusal of the refund.

Final Conclusion: The impugned orders rejecting the refund claim are set aside. The appeal is allowed and the appellant's claim for refund of service tax paid under a mistake of law is accepted; consequential relief was granted in favour of the appellant.

Information technology software - classification of transaction as sale or service - deemed sale under Article 366(29A)(d) of the Constitution - canned/pre packaged software as goods - end user licence agreement determining transfer of right to use - definition of service excluding transfer/delivery of goods deemed to be sale

Information technology software - classification of transaction as sale or service - Whether supply of Quick Heal antivirus software in packed CDs and provision of updates to end users constituted a provision of service as "information technology software" prior to 1 July 2012 and after 1 July 2012. - HELD THAT: - The Tribunal examined the statutory definitions of "information technology software" prior to and after 01.07.2012 and the inclusive description of taxable services in relation thereto. The Appellant's antivirus product was held to operate autonomously once installed and did not require the sort of regular bidirectional interaction with the user (input/output cycles) that characterises interactive software. The Adjudicating Authority's contrary conclusion that the product was interactive was rejected: the software initiates and continues virus detection without ongoing user commands and the mere presence of some user invoked features does not convert the product into interactive software for purposes of the statutory definition. Consequently the transactions did not fall within the "information technology software" service entry either before or after 01.07.2012, and service tax could not be sustained on that basis. [Paras 29, 30, 31]

Supply of the antivirus software in packed CDs and the electronic updates did not qualify as a taxable "information technology software" service; service tax is not leviable on that ground.

Canned/pre packaged software as goods - deemed sale under Article 366(29A)(d) of the Constitution - end user licence agreement determining transfer of right to use - definition of service excluding transfer/delivery of goods deemed to be sale - Whether the transaction amounted to a transfer of the right to use or sale (deemed sale) of canned/pre packaged software under Article 366(29A)(d) so as to exclude it from the definition of service. - HELD THAT: - The Tribunal applied the Supreme Court's reasoning in Tata Consultancy Services and the CBEC Education Guide: pre packaged (canned) software put on a media and marketed constitutes goods; whether a transfer is a deemed sale depends on the contractual terms and whether the license interferes with the free enjoyment of the software. On examining the End User Licence Agreement, the Tribunal found that the licensee was entitled to use the specific licensed copy during the license period and to receive updates; the contractual restrictions (retention of title, prohibition on copying, non transferability) did not negate the licensee's right to use or amount to restraints sufficient to defeat a transfer of the right to use. Authorities concerning test of effective control and contractual terms were applied to conclude that the transactions resulted in transfer of the right to use and therefore amounted to a deemed sale of goods. Accordingly such transactions fall outside the definition of "service" and are not chargeable to service tax. [Paras 38, 44, 45, 46, 51]

The supply of the canned antivirus software under the EULA amounted to a transfer of the right to use (deemed sale) and therefore constituted sale of goods; the transactions are excluded from service tax.

Classification of transaction as sale or service - extended period of limitation - Whether the adjudicating authority correctly invoked extended period of limitation and imposed interest/penalty in respect of the service tax demand founded on the above classification. - HELD THAT: - Because the Tribunal concluded that the transactions did not constitute a taxable service but were sales/deemed sales of canned software, the demand of service tax (including invocation of extended limitation, interest and penalty) could not be sustained. The Tribunal therefore set aside the entire impugned demand and consequential penalty/interest. [Paras 9, 51, 53]

The invocation of extended limitation and the demand of interest and penalty founded on the service tax demand cannot be sustained; the impugned order is set aside.

Final Conclusion: The appeal is allowed. The Tribunal held that Quick Heal's supply of pre packaged antivirus software in CDs (with accompanying license keys and updates) does not qualify as an "information technology software" service but amounts to sale/deemed sale of canned software; the service tax demand, interest and penalty under the impugned order are set aside.

Export of services - place of provision of services under the 2012 Rules - intermediary - CENVAT credit refund under Rule 5 of the CENVAT Credit Rules, 2004 - export of services under Rule 6A of the Service Tax Rules, 1994

Intermediary - place of provision of services under the 2012 Rules - Whether the respondent's supply of software/services is an "intermediary" service or a supply on its own account for determining place of provision. - HELD THAT: - The Tribunal accepted the Commissioner (Appeals) finding that the respondent purchased software from Microsoft and thereafter sold or supplied it (including in customized form) to customers on its own account, exercising discretion to set prices, bearing credit risk, and making payments to Microsoft independent of receipt from customers. The Microsoft Channel Agreement and the respondent's audited balance sheet evidence (showing purchases and sales) demonstrate that the respondent did not merely arrange or facilitate a supply on behalf of Microsoft but dealt as a reseller with autonomy over pricing and payment obligations. The agreement expressly disclaims agency and confirms independent contractor status. Applying the definition of "intermediary" in Rule 2(f) and the guiding factors (nature and value; separation of value; identity and title), the factual matrix shows absence of the indicia of an intermediary (no commission structure, no pass-through pricing or title/identity alignment with principal). Consequently the service is not an "intermediary" and Rule 9(c) (placing intermediary services at provider's location) is inapplicable. [Paras 22, 24, 25, 27, 29]

The respondent does not provide an "intermediary" service; it supplies on its own account and therefore is not covered by Rule 9(c).

Export of services - export of services under Rule 6A of the Service Tax Rules, 1994 - place of provision of services under the 2012 Rules - Whether the services supplied by the respondent qualify as "export of services" under Rule 6A(1) of the Service Tax Rules, 1994. - HELD THAT: - Rule 6A requires, inter alia, that the provider be located in taxable territory, the recipient be located outside India, the place of provision be outside India, and payment be received in convertible foreign exchange. Having held that the respondent supplies on its own account (and is not an intermediary), the place of provision falls to be determined under Rule 3 (location of recipient) rather than Rule 9(c). The material shows recipients located outside India and the requisite commercial features (payments in convertible foreign exchange and independent contractual dealings) are satisfied. The Revenue's contention that the transactions were to respondent's branch offices was unsupported: the Assistant Commissioner's general assertion was not substantiated by specific findings or evidence identifying branches, and the Commissioner (Appeals) recorded that the listed recipients are separate legal entities, not branch offices. On these findings, the conditions of Rule 6A are met and the services qualify as export of services. [Paras 21, 22, 25, 33, 34]

The services supplied by the respondent qualify as "export of services" under Rule 6A(1); the place of provision is outside India under Rule 3.

CENVAT credit refund under Rule 5 of the CENVAT Credit Rules, 2004 - export of services - Whether the respondent is entitled to refund of unutilized CENVAT credit claimed for the specified periods. - HELD THAT: - Entitlement to refund under Rule 5 is dependent on the service being an "export service" as defined by Rule 6A. Having concluded that the respondent's supplies qualify as export of services and that the respondent had paid service tax / claimed CENVAT credit on input services (notably purchase of software) which remained unutilized due to export turnover, the Commissioner (Appeals) correctly allowed the refund claims. The Tribunal noted that earlier administrative fragmentation of orders and appeals did not alter the substantive entitlement; the factual and contractual record supports refund allowance for the six periods claimed (as reflected in the six refund applications). The appeal by the Revenue was dismissed on merits. [Paras 11, 22, 34, 36]

The respondent is entitled to refund of the unutilized CENVAT credit for the refund periods claimed; the Revenue's appeal is dismissed.

Final Conclusion: On the facts and contractual documents, the respondent acted as a reseller providing services on its own account (not an "intermediary"); consequently the place of provision is outside India and the supplies constitute "export of services" under Rule 6A(1). The respondent is therefore entitled to refund of the unutilized CENVAT credit for the claimed periods; the Revenue's appeal is dismissed.

Reverse Charge Mechanism - abatement of 75% - goods transport agency - consignment note - penalty under Section 77 and 78 - reasonable cause under Section 80 - remand for verification of taxable consignments

Reverse Charge Mechanism - abatement of 75% - goods transport agency - consignment note - Entitlement to abatement and taxable status of payments made to individual truck owners who did not issue consignment notes while receiving transport services under reverse charge. - HELD THAT: - The Tribunal found that the appellant, being a service recipient discharging liability under the Reverse Charge Mechanism, is entitled to the 75% abatement under the Notification cited. The payment for carriage made to individual truck owners who did not issue consignment notes does not satisfy the definition of a goods transport agency; services received from such individual truck operators are not leviable as GTA services. The Tribunal relied on earlier decisions holding that where transportation is undertaken by individual truck operators (truck owners) and no consignment note is issued, no service tax liability arises on the recipient as a GTA transaction, and that the Finance Ministry clarified there was no intention to levy on truck owners. [Paras 5]

Appellant entitled to 75% abatement and payments to individual truck owners without consignment notes are not taxable as goods transport agency services.

Penalty under Section 77 and 78 - reasonable cause under Section 80 - Sustainability of penalties imposed under Sections 77 and 78 in view of the appellant's reasonable cause and precedents. - HELD THAT: - Applying the Tribunal's earlier reasoning, the present facts fell within a contentious area of law and the appellant had established reasonable cause for non-payment/ non-registration earlier. The Tribunal held that penalty under Sections 77 and 78 is not sustainable where reasonable cause is shown and there is no allegation of fraud or willful suppression. Therefore, invoking the protective provision embodied in Section 80, the Tribunal set aside the penalties while leaving the demand of service tax and interest intact. [Paras 6, 7]

Penalties under Sections 77 and 78 set aside on grounds of reasonable cause under Section 80.

Remand for verification of taxable consignments - Limited remand to adjudicating authority to compute service tax liability after excluding payments to truck owners who did not issue consignment notes. - HELD THAT: - The Tribunal remanded the matter for a limited purpose: to calculate the Service Tax liability taking into account that certain payments were made to new truck owners who did not issue consignment notes and hence do not attract service tax. The remand is confined to quantification/verification of which transactions are taxable in light of the finding that payments to such truck owners are not liable. [Paras 7]

Matter remanded for limited verification and computation of service tax excluding non-taxable transactions.

Final Conclusion: The appeal is partly allowed: the appellant is entitled to the 75% abatement under the Notification and payments to individual truck owners without consignment notes are not taxable as GTA services; penalties under Sections 77 and 78 are set aside under Section 80; the matter is remanded to the adjudicating authority for limited recomputation of service tax liability excluding non-taxable payments.

Business Auxiliary Service - Franchise Service - contract bottling arrangement - brand owner versus contract bottling unit - CBEC Circular No. 332/17/2009 clarifying taxability and valuation - surplus/profit not chargeable to service tax

Business Auxiliary Service - contract bottling arrangement - CBEC Circular No. 332/17/2009 clarifying taxability and valuation - surplus/profit not chargeable to service tax - Liability of the appellant (brand owner) to service tax on the surplus/profit retained by it under contract bottling arrangements classified as Business Auxiliary Service or Franchise Service. - HELD THAT: - The Tribunal examined the nature of the contract bottling arrangements between the brand owner and independent bottlers (CBUs) and the CBEC clarifications. Circular No. 332/17/2009 explains that under such arrangements service tax is payable on bottling/job charges, distribution costs and reimbursables charged by the CBU, and that statutory levies and the surplus/profit retained by the brand owner are not consideration for a taxable service. The Circular treats CBUs as service providers under Business Auxiliary Service; the surplus/profit earned by the brand owner is characterised as business profit (within direct tax domain) and thus not chargeable to service tax. Applying this clarification and earlier consistent decisions of the Tribunal, the impugned demand, which sought service tax on the appellant's retained surplus under a theory of Franchise Service or BAS, was held not sustainable. The Tribunal followed its earlier reasoning in the appellant's own earlier order and relevant precedents, and observed that CBUs were paying service tax as service providers, indicating the appellant was a service recipient rather than a provider for the surplus retained. [Paras 7, 8]

Demand of service tax confirmed on the appellant's retained surplus under the categories of Business Auxiliary Service/Franchise Service is set aside and the appellant is not liable to pay service tax on such surplus.

Final Conclusion: The appeal is allowed: the demand of service tax on the surplus/profit retained by the brand owner under the contract bottling arrangements is not legally sustainable in view of CBEC Circular No.332/17/2009 and related decisions; the impugned order is set aside with consequential relief.

Renting of Immovable Property Service - Notification No. 06/2005-S.T. dated 01.03.2005 - co-owner liability - aggregation of rent for service tax - payment before notice under Section 73(3)

Renting of Immovable Property Service - Notification No. 06/2005-S.T. dated 01.03.2005 - co-owner liability - aggregation of rent for service tax - payment before notice under Section 73(3) - Entitlement of a co-owner to exemption under Notification No. 06/2005-S.T. dated 01.03.2005 in respect of rent received from jointly owned rented premises - HELD THAT: - The Tribunal applied its earlier decision in Anil Saini (supra) and the reasoning in Deoram Vishrambhai Patel to hold that co-owners of jointly owned premises must be treated individually for determining service tax liability on renting of immovable property. The Revenue cannot club rents of all co-owners and treat them as a single service provider without legal basis identifying a common service provider or recipient. Where the rent share attributable to the appellant as co-owner falls below the exemption threshold under Notification No. 06/2005-S.T., the appellant is entitled to the exemption for those periods. For later periods where individual receipts exceeded the threshold, payment of tax with interest by the persons concerned before issuance of notice falls within the protective scope of payment before notice under Section 73(3), precluding imposition of penalty. Applying these principles to the material facts, the Tribunal found the appellant's individual receipts were within the exemption limit for the relevant years and accordingly no service tax was payable; the impugned order was therefore set aside. [Paras 4, 5]

The appellant, as co-owner, is entitled to exemption under Notification No. 06/2005-S.T. dated 01.03.2005 for the relevant periods and the impugned order is set aside.

Final Conclusion: Appeal allowed; impugned order set aside and consequential relief, if any, granted.

Exemption under Notification No.32/2010-ST dated 22/06/2010 - services in relation to distribution of electricity - agent entitled to exemption available to principal

Exemption under Notification No.32/2010-ST dated 22/06/2010 - agent entitled to exemption available to principal - services in relation to distribution of electricity - Appellant providing erection, commissioning and installation services on behalf of distribution licensees is entitled to the benefit of exemption under Notification No.32/2010-ST dated 22/06/2010. - HELD THAT: - The Tribunal found that the appellant rendered services in relation to distribution of electricity for DHBVN and UHBVN and did so on behalf of those distribution licensees. Applying its earlier reasoning in cases where an agent acting for a principal is treated as stepping into the shoes of the principal, the Tribunal observed that an exemption available to the principal is available to the agent by virtue of the agency relationship. Accordingly, since the principals (DHBVN and UHBVN) are distribution licensees entitled to exemption under Notification No.32/2010-ST dated 22/06/2010, the appellant performing services on their behalf cannot be denied the same exemption. The Tribunal therefore set aside the adjudicating authority's demand and allowed the appeal. [Paras 6, 7, 9]

Impugned order set aside; appellant entitled to benefit of Notification No.32/2010-ST dated 22/06/2010 and appeal allowed with consequential relief.

Final Conclusion: The appeal is allowed: the appellant, who provided distribution-related services on behalf of distribution licensees, is entitled to the exemption under Notification No.32/2010-ST dated 22/06/2010 for the period in dispute and the impugned demand is set aside.

Export of service - refund under Rule 5 of the Cenvat Credit Rules, 2004 - services provided in India on behalf of a foreign principal fall within Rule 3(3) of Export of Service Rules, 2005 - binding effect of tribunal's earlier decision on identical issue

Export of service - services provided in India on behalf of a foreign principal fall within Rule 3(3) of Export of Service Rules, 2005 - refund under Rule 5 of the Cenvat Credit Rules, 2004 - Refund claims for unutilised Cenvat credit on input services used in export of IT software services for the specified periods are allowable because the services qualify as export of service. - HELD THAT: - The Tribunal applied its earlier decision holding that where an Indian establishment provides services in India to customers of a foreign principal on behalf of that foreign principal, such services are covered by Rule 3(3) of the Export of Service Rules, 2005 and constitute export of service. The adjudicating and appellate authorities' conclusion that the service was provided for consumption in India was contrary to this ratio. The Tribunal found the present cases identical in legal character to its prior order and, following that ratio, held the refund claims under Rule 5 of the Cenvat Credit Rules, 2004 (read with the relevant notification) were rightly allowable for the periods in question; accordingly the impugned orders rejecting the refunds were set aside and the appeals allowed.

Impugned orders rejecting the refund claims for July-September 2015 and October-December 2015 are set aside and the appeals are allowed, the services being export of service and refunds thereby payable.

Final Conclusion: The Tribunal, following its earlier ratio that services provided in India on behalf of a foreign principal to that principal's customers abroad amount to export of service, allowed the refund claims for the stated periods and set aside the orders rejecting those claims.

Service tax on managerial remuneration - characterisation of commission as salary versus consideration for services - treatment of remuneration as salary for income tax purposes - remand for fresh consideration - opportunity of hearing on fresh adjudication

Service tax on managerial remuneration - characterisation of commission as salary versus consideration for services - treatment of remuneration as salary for income tax purposes - remand for fresh consideration - Whether the commission paid to the Managing Director, in addition to fixed salary, is to be treated as salary (and not a taxable service) and the matter required remand to the Original Adjudicating Authority for verification and fresh consideration. - HELD THAT: - The Tribunal observed that the Income Tax Authorities had ultimately assessed the entire remuneration as 'salary'. That factual/legal characterisation by the Income Tax Authorities is material to the question whether the payment constitutes a service liable to service tax. The Original Adjudicating Authority had not examined or recorded any finding on the documents and assessment by the Income Tax Authorities (the appellant conceded those documents were not before the Original Adjudicating Authority). In view of that omission and the potential bearing of the Income Tax assessment and the provisions of the Companies Act on the characterisation of the payment, the Tribunal set aside the impugned order and remanded the matter to the Original Adjudicating Authority for fresh consideration. The appellant is to be given an opportunity to place relevant documents and to invite attention to the Companies Act; the Original Adjudicating Authority must verify the Income Tax treatment and decide the service tax demand afresh. Other issues, including limitation, were left open for consideration by the Original Adjudicating Authority.

Impugned order set aside and matter remanded to the Original Adjudicating Authority for fresh consideration and verification of the Income Tax characterisation of the remuneration; appellant to be given opportunity to present relevant material; other issues, including limitation, kept open.

Final Conclusion: The Tribunal allowed the appeal to the extent of setting aside the adjudicating order and remanding the matter to the Original Adjudicating Authority for fresh consideration of whether the commission forms part of salary (in light of the Income Tax treatment and Companies Act), permitting the appellant to place relevant materials; all other issues remain open.

Rectification of orders - mistake apparent from record - power of the Appellate Tribunal under Section 35C(2) - remand for compliance with Section 9D - acceptance of Tribunal's recital of hearing proceedings - limitation for seeking rectification

Acceptance of Tribunal's recital of hearing proceedings - The High Court will accept the Tribunal's recording of events during hearing and will not re open or disbelieve those recital findings absent appropriate correction by the Tribunal itself. - HELD THAT: - The Tribunal recorded in its order that the appellant's counsel had suggested remand to the adjudicating authority (para 3). The High Court held that once the Tribunal has recorded the events that took place during its hearing-whether in docket proceedings or the body of the final order-that recording is to be accepted by this Court as reflective of fact and it is not open to the High Court to disbelieve what the Tribunal has stated as to happenings during the hearing (para 5). [Paras 3, 5]

The Court accepted the Tribunal's recital as reflecting the factual record and declined to disbelieve it.

Power of the Appellate Tribunal under Section 35C(2) - rectification of orders - limitation for seeking rectification - The appellant may seek rectification of the Tribunal's order under Section 35C(2) and the Tribunal has power to entertain such an application within the statutory time. - HELD THAT: - The Court observed that Section 35C(2) vests the Appellate Tribunal with power to rectify any mistake apparent from the record and to amend any order passed by it, subject to the statutory time limit for exercise of that power (para 6). The certified copy of the Tribunal's order was furnished on 19-3-2019; the six month period reckoned from that date expired on 18-9-2019, which was the date when this appeal was preferred (para 7). The Court therefore held that the Tribunal would be within its powers to entertain an application under Section 35C(2) for rectification if warranted on facts (para 8). [Paras 6, 7, 8]

Appellant is entitled to apply to the Tribunal for rectification under Section 35C(2); the Tribunal has jurisdiction to consider such an application.

Remand for compliance with Section 9D - rectification of orders - The matter as to whether the Tribunal should have remitted the matter to the adjudicating authority (to follow Section 9D) is left to be considered by the Tribunal if the appellant seeks rectification. - HELD THAT: - Although the Tribunal set aside the Order in Original and remanded the matter for compliance with Section 9D, the High Court noted the Tribunal's recording that the appellant's counsel had himself suggested remand (para 2 and 3). Because of that recorded statement, the Court permitted the appellant to apply to the Tribunal under Section 35C(2) to correct the record if warranted and directed the Tribunal to consider such plea on its merits and pass appropriate orders (para 9). This leaves the question of remand and its propriety to the Tribunal's reconsideration upon an application for rectification. [Paras 2, 3, 9]

The appellant is permitted to file an application under Section 35C(2); the Tribunal is to consider on merits whether the recorded suggestion of remand was correct and pass appropriate orders, effectively remanding the factual-verification issue to the Tribunal for fresh consideration.

Final Conclusion: The appeal is disposed of by permitting the appellant to file an application under Section 35C(2) of the Central Excise Act, 1944 within one week from receipt of this order to challenge the Tribunal's recorded statement that the appellant's counsel sought remand; the Tribunal shall consider that application on its merits and pass appropriate orders. Pending miscellaneous petitions are closed; no costs.

Cenvat credit on inputs used as packing material - Inputs becoming waste or scrap in the course of manufacture or use as packing material - Reversal of cenvat credit under Rule 3(5) of the CENVAT Credit Rules, 2004 - Use of packing materials incidental or ancillary to manufacture - Bursted or damaged packing bags destroyed in the course of packing

Cenvat credit on inputs used as packing material - Bursted or damaged packing bags destroyed in the course of packing - Inputs becoming waste or scrap in the course of manufacture or use as packing material - Reversal of cenvat credit under Rule 3(5) of the CENVAT Credit Rules, 2004 - Use of packing materials incidental or ancillary to manufacture - Validity of denial and demand of reversal of cenvat credit claimed on HDPE/PP packing bags which got torn/burst in the course of packing of cement. - HELD THAT: - The Tribunal found on facts that the appellant purchased HDPE/PP bags as inputs for packing cement and the records (RG-9) show receipt, consumption, bursting and accounting of damaged bags. The damage occurred routinely in the automatic high pressure rotary packing process (including high temperature of cement, compressed air pressure and mechanical factors) and the torn/burst bags became waste or scrap in the course of use as packing material. The Tribunal applied its earlier decision in Madras Cements Ltd. and held that Rule 3(5) of the CENVAT Credit Rules, 2004, which requires reversal of credit, applies to inputs or capital goods cleared as such and not to inputs that have become waste or scrap while being used in manufacture or as packing material. In the absence of any rule requiring reversal when inputs become waste or scrap during use, the appellants could not be directed to reverse the credit taken on inputs actually put to the intended use but rendered unusable in the course of packing. The Tribunal therefore allowed the appeal on that legal foundation and factual finding that bursting occurred during the packing process and was accounted for. [Paras 7, 8]

The impugned orders denying cenvat credit are set aside and the appeal is allowed; the demand and penalty sustained by the authorities are quashed with consequential benefits, if any, in accordance with law.

Final Conclusion: Appeal allowed; credit on HDPE/PP packing bags that got torn/burst in the course of packing is not required to be reversed under Rule 3(5) where such inputs became waste/scrap in the course of use, and impugned orders are set aside with consequential relief.

Whether blending of ethanol with motor spirit amounts to manufacture - applicability and legal effect of a draft circular vis-a -vis an issued circular - continuing validity of Circular No.83/83/94-CX dated 13.12.1994 - retrospective operation of an adverse administrative instruction - principle of natural justice and fresh adjudication on remand

Draft circular - continuing validity of earlier circular - The draft circular F. No.83/04/2007-CX, which was never issued, could not be relied upon and the earlier Circular No.83/83/94-CX dated 13.12.1994 remained effective. - HELD THAT: - The Tribunal found that the Adjudicating Authority had heavily relied upon a draft circular which was not issued as a final circular. Since a draft circular has no binding effect, no reference can be drawn from it. In consequence, the earlier issued Circular No.83/83/94-CX continued to operate and could not be treated as having been withdrawn by an unissued draft. The Tribunal therefore held that the impugned findings based on the draft circular were unsustainable and required reconsideration. [Paras 7]

The finding based on the draft circular is set aside and Circular No.83/83/94-CX is to be treated as continuing in force.

Whether blending of ethanol with motor spirit amounts to manufacture - exemption applicability to ethanol blended motor spirit - later the better principle in duty collection - principle of natural justice - The issue whether addition of ethanol to motor spirit amounted to manufacture and the related demand for duty could not be finally adjudicated in the impugned order and was remitted for fresh consideration after affording opportunity of hearing. - HELD THAT: - The Tribunal observed that, in view of the unsustainable reliance on the unissued draft circular, the matter required a re-examination of the various alternative submissions raised by the appellant - including contentions on non-manufacture, payment of duty at the last stage, and applicability of exemption notifications for the period in question. The Tribunal directed that the Adjudicating Authority should pass a fresh order after following the principles of natural justice, by considering submissions made or to be made by the appellant and by granting sufficient personal hearing. [Paras 7, 8]

The impugned order is set aside and the matter is remitted to the Adjudicating Authority for fresh adjudication in accordance with natural justice.

Final Conclusion: The appeal is allowed by setting aside the impugned adjudication; the unissued draft circular is ignored and Circular No.83/83/94-CX continues to be effective, and the matter is remanded to the Adjudicating Authority to decide afresh after affording the appellant adequate opportunity of personal hearing and considering all submissions.

Rectification of mistake - tampering of documents - fraud upon the court - summary dismissal for abuse of process - application of S.P. Chengalvaraya Naidu principle - imposition of costs under Rule 41 of the CESTAT Procedure Rules

Rectification of mistake - tampering of documents - fraud upon the court - application of S.P. Chengalvaraya Naidu principle - Rectification of mistake application filed by the appellant was rejected. - HELD THAT: - The Tribunal recorded that submissions by the Revenue alleging tampering of invoices and fraud were made during the hearing and the appellant did not respond when asked to meet those allegations. The Tribunal compared handwriting and signatures under the standard of Section 73 of the Indian Evidence Act, found the documents to be tampered with and concluded that fraud had been practised on the Court. Applying the principle in S.P. Chengalvaraya Naidu v. Jagannath that proceedings may be summarily disposed of where court process is abused by tax evaders, the Tribunal held that the appellant's case was not entitled to relief and that there was no merit in the rectification application which alleged lack of opportunity or conduct behind the appellant's back. [Paras 4, 5, 6]

ROM application rejected on merits for abuse of process and fraud on the Court.

Imposition of costs under Rule 41 of the CESTAT Procedure Rules - summary dismissal for abuse of process - Cost was imposed on the appellant and directions for recovery were given. - HELD THAT: - To deter frivolous petitions and false allegations against the Bench, and to prevent abuse of the Tribunal's process, the Tribunal invoked Rule 41 of its Procedure Rules and imposed an exemplary cost. The Tribunal directed payment to the Government Treasury within one month and authorised recovery as fine/default duty if not paid. [Paras 6, 7]

Cost of Rs. 10,000 imposed on the appellant, payable to the Government Treasury within one month; respondent directed to realise the same as fine/default duty if not paid.

Final Conclusion: The rectification application was dismissed as devoid of merit after findings of tampering and fraud on the Court; the appeal was not allowed and an exemplary cost under Rule 41 was imposed with directions for recovery.

Reliance on third party records - corroboration of third party evidence - clandestine removal - admissions as starting point of investigation - limitation under Section 11(4) of the Central Excise Act, 1944

Reliance on third party records - corroboration of third party evidence - clandestine removal - admissions as starting point of investigation - Demand of Central Excise Duty cannot be sustained solely on the basis of third party records and uncorroborated admissions in respect of alleged clandestine removal of goods. - HELD THAT: - The Adjudicating Authority based the demand primarily on records maintained by a third party which did not even bear the full name of the appellant and on an assumed identity from a short name. The Tribunal held that privately maintained third party records and tacit admissions of that third party could not, without independent corroborative evidence, conclusively establish that the appellant clandestinely removed finished products without payment of duty. The court referred to settled precedents which treat admissions and third party records as only a starting point for investigation and require corroboration by material evidence such as transport documentation, proof of receipt of raw materials, production records, or intercepted consignments. In the absence of any evidence substantiating transportation, payments to suppliers or transporters, or a single consignment caught en-route, the revenue failed to demonstrate production and clandestine removal with reasonable accuracy. Consequently the demand rested on presumption and assumption and could not be sustained. [Paras 3, 4, 6, 7, 8]

Demand of duty based solely on third party records and uncorroborated admissions is unsustainable; the demand is rejected.

Limitation under Section 11(4) of the Central Excise Act, 1944 - Show Cause Notice issued on 3-2-2016 is barred by limitation and therefore not maintainable. - HELD THAT: - The Tribunal observed that the revenue had knowledge of the matter from 19-9-2012 when the statement of the third party director was recorded and the relevant records were withdrawn by officers. A statement of the appellant's authorised signatory was recorded on 12-12-2013. Despite such knowledge, the revenue issued the Show Cause Notice only on 3-2-2016, after a lapse of over four years. The delay in initiating proceedings and the absence of any fresh evidence to justify the delayed action rendered the notice hopelessly time-barred under the limitation provision invoked by the revenue. [Paras 9]

Show Cause Notice dated 3-2-2016 is barred by limitation and is not sustainable.

Final Conclusion: The appeal is allowed; the demand of duty is set aside for want of corroborative evidence and the impugned Show Cause Notice is time-barred; consequently recovery of interest and imposition of penalty also do not survive.

Summary order. Special Leave Petition dismissed; delay condoned; pending application(s) disposed of.

Power of revision under Section 74A of the DVAT Act - requirement to communicate reasons for initiation of revision proceedings - duty to record good and sufficient reasons when initiating revision - right to obtain reasons recorded by the Commissioner - refund claim under Section 38 read with Rule 34 of the DVAT Rules, 2005 - prohibition on withholding refund due to pendency of revision proceedings - entitlement to interest on delayed refund

Power of revision under Section 74A of the DVAT Act - requirement to communicate reasons for initiation of revision proceedings - duty to record good and sufficient reasons when initiating revision - right to obtain reasons recorded by the Commissioner - Whether the notice under Section 74A(2) must itself contain the reasons for initiation of revision proceedings and whether the assessee is entitled to obtain the reasons recorded by the Commissioner. - HELD THAT: - The Court held that Section 74A does not per se mandate that the reasons for initiating revision proceedings be included within the notice under Section 74A(2). However, when the Commissioner exercises the discretionary power to initiate revision, he must record good and sufficient reasons germane to the issue at the time of invocation. An assessee may request copies of those reasons, and upon such request the authorities are obliged to furnish them because only from those reasons will the assessee know the grounds on which the revision jurisdiction is being invoked. In the present proceedings the respondent tendered the original file and the recorded reasons to the petitioner and to the Court; the petitioner was permitted to examine those reasons and to address further submissions on the next date.

It was held that reasons need not form part of the notice but must be recorded by the Commissioner and furnished to the assessee on request; the petitioner was given the reasons and liberty to make further submissions.

Refund claim under Section 38 read with Rule 34 of the DVAT Rules, 2005 - prohibition on withholding refund due to pendency of revision proceedings - entitlement to interest on delayed refund - Whether the respondent could withhold the refund claimed in Form DVAT-21 dated 28.03.2018 on the ground of pendency of revision proceedings, and the consequent relief. - HELD THAT: - The Court noted that the petitioner filed the refund claim in the prescribed form on 28.03.2018 and that under Section 38 read with Rule 34 the refund was liable to be granted within two months of the claim. The Court observed that mere pendency of revision proceedings is not a statutory ground under Sections 38 and 39 for withholding the refund. Accordingly, there was no justification for the respondent to delay or withhold payment. The Court directed immediate compliance with the statutory entitlement to refund and ordered payment with legally admissible interest.

The respondent was directed to refund the excess tax forthwith, crediting the petitioner's account within two weeks and paying interest as admissible by law.

Final Conclusion: The petition was disposed by (a) clarifying that while reasons need not be included in the Section 74A(2) notice, the Commissioner must record and furnish such reasons on request and the petitioner was given the recorded reasons and liberty to file further submissions; and (b) directing the respondent to refund the excess tax claimed on 28.03.2018 with interest, to be credited within two weeks.

Taxability of paper-based decorative laminated sheets - interpretation of an entry in the State sales tax statute vis-a -vis Central Excise Tariff - prospective effect of departmental clarifications in tax matters - benefit of ambiguity to assessees - reopening of assessments

Taxability of paper-based decorative laminated sheets - interpretation of an entry in the State sales tax statute vis-a -vis Central Excise Tariff - Whether the controversy over classification and taxability of paper-based decorative laminated sheets under the TNGST Act is to be resolved by reference to the interpretation adopted in Central Excise authorities or by the State enactment and prior decisions of the State tribunals/courts. - HELD THAT: - The Court treated the present controversy as covered by the earlier decision in The Commissioner of Commercial Taxes v. M/s. Sundek India Ltd., wherein it was held that an interpretation given under the Central Excise Tariff does not automatically govern the meaning of entries in a separate State sales tax enactment. The Sundek decision relied upon precedents which recognised that State entries must be construed in their own context and that prior tribunal or judicial interpretations of the State entry (including those accepting taxability at a particular rate) cannot be displaced retroactively by a departmental circular or by reliance on Central Excise classifications. Applying that principle, the Court concluded that the departmental contention could not prevail against the prior State authority interpretation covering the same subject-matter.

The appeal was dismissed and the Sundek India Ltd. decision was followed, leaving intact the previous treatment of paper-based decorative laminated sheets under the State enactment.

Prospective effect of departmental clarifications in tax matters - benefit of ambiguity to assessees - reopening of assessments - Whether departmental clarification or circular could be applied retrospectively to reopen completed assessments and deprive assessees of the earlier interpretation, given the existence of ambiguity. - HELD THAT: - Relying on the Sundek decision and Supreme Court authorities cited therein, the Court reiterated that clarifications in tax matters ordinarily operate prospectively and retrospective application causing hardship to assessees is impermissible. Where ambiguity existed in classification and earlier assessments were completed with tax collected in accordance with the State tribunal's view, the ambiguity must be resolved in favour of the assessee. Consequently, reopening assessments or imposing retrospective change by departmental circular was not sustained.

The attempt to reopen assessments or to apply departmental clarification retrospectively was rejected; the assessees retain the benefit of the earlier interpretation.

Final Conclusion: The Writ Appeal is dismissed following the co-ordinate Bench decision in The Commissioner of Commercial Taxes v. M/s. Sundek India Ltd.; the departmental circular/reopening could not displace the earlier State tribunal/court interpretation and ambiguities are resolved in favour of the assessees. No costs; connected petition dismissed.

Input Tax Credit available only to extent tax actually paid into Government Treasury - Bona fide purchaser not liable for seller's failure to deposit tax - Garnishee recovery to be refunded where recovery from bona fide purchaser is unwarranted - Availability of alternative remedy does not bar writ where action is unwarranted - Authority may recover tax from defaulting dealer

Input Tax Credit available only to extent tax actually paid into Government Treasury - Bona fide purchaser not liable for seller's failure to deposit tax - Denial of input tax credit (ITC) to the petitioner where the selling dealer had not deposited tax collected into the Government Treasury, despite the petitioner having paid VAT to the seller and possessing tax invoices. - HELD THAT: - The Court examined the claim of ITC made by the petitioner for purchases in Financial Year 2015-16 and the impugned order disallowing ITC on the ground that the selling dealer had not filed returns or deposited tax into the treasury. While noting that the statutory amendment contemplates that ITC cannot exceed tax actually paid into the treasury, the Court found on the facts that the petitioner had acted bona fide: it paid VAT to the seller, obtained tax invoices and filed its return claiming ITC. The failure was solely on the selling dealer's part, who admitted non-filing and stated inability to pay due to portal blockage but expressed willingness to pay if the portal was reopened. Given that the petitioner had discharged its obligations and there was no mechanism under the Act for the purchaser to compel the seller to deposit the tax, the Court held that punitive consequences could not be visited on a dealer acting in bona fide manner. The Court therefore declined to decide the broader vires or interpretation challenges to the amendment, and rested its decision on the facts and the principle that the Legislature's intent cannot be to punish a bona fide purchaser for the seller's default. [Paras 7, 8, 13, 14, 15]

Impugned order denying ITC was quashed insofar as it penalised the petitioner who had acted bona fide; petitioner entitled to relief despite seller's non-deposit of tax.

Garnishee recovery to be refunded where recovery from bona fide purchaser is unwarranted - Availability of alternative remedy does not bar writ where action is unwarranted - Authority may recover tax from defaulting dealer - Validity of garnishee recovery from the petitioner and whether the writ was maintainable despite alternative statutory remedies. - HELD THAT: - The Court recorded that the garnishee order had been executed and the amount realised from the petitioner's bank account had been deposited in the Government Treasury. On the facts, because the petitioner had acted in bona fide manner and the action against it was unwarranted, the Court held that alternative statutory remedies could not be permitted to operate as a bar to relief by writ. The Court directed refund of the amount realised by garnishee to the petitioner within three months, while expressly permitting the State to proceed to recover the tax, with admissible interest or penalty, from the selling dealer in view of the seller's admission and willingness to pay. The Court also declared W.P.(T) No. 5978 of 2018 infructuous insofar as the garnishee order had already been acted upon. [Paras 4, 14, 15, 16]

Garnishee realisation set aside as against the petitioner and directed to be refunded; writ maintainable despite availability of alternative remedies; State left free to recover from the defaulting seller.

Final Conclusion: W.P.(T) No. 773 of 2018 allowed: order denying ITC and demand notice quashed and amount realised by garnishee ordered refunded to the petitioner within three months; State permitted to recover tax with admissible interest/penalty from the defaulting seller. W.P.(T) No. 5978 of 2018 disposed of as infructuous.

Recovery of actual cost of excise staff - prohibition against charging more than actual expenses - apportionment of excise staff cost where staff is deployed at multiple premises - application of Rule 9 to distilleries licensed solely for denatured or commercial spirit - application of Rule 36A to compounding and blending plants of foreign liquor - right to hearing and re-determination of levied fees - refund/adjustment subject to non-pass-through to customers

Recovery of actual cost of excise staff - prohibition against charging more than actual expenses - State may recover only the actual expenses incurred for deployment of excise staff; it cannot levy amounts exceeding actual cost. - HELD THAT: - The Court accepted that the State is entitled to realise expenses incurred for deployment of excise staff, but held that Rules 9 and 36A permit recovery only of the actual cost of salary, allowances and related expenditure. Charging an amount in excess of the actual cost would amount to undue enrichment of the State and is not authorised by the Rules. Consequently, levies that exceed the actual expenditure are impermissible.

Only actual cost may be recovered; amounts in excess are not permissible.

Apportionment of excise staff cost where staff is deployed at multiple premises - Where one excise staff is deployed at more than one distillery/compounding and blending plant, the cost must be apportioned and recovered proportionately from each premise. - HELD THAT: - The Court rejected the practice of recovering the entire expense of a single excise staff separately from every premise where that staff is deployed. Such practice would result in multiple recoveries of the same cost and undue enrichment. The Rules envisage recovery of actual cost and, therefore, when an excise officer supervises more than one establishment, the expense attributable to that officer must be divided proportionately among the establishments served.

Cost must be apportioned proportionately when an excise staff serves multiple premises.

Application of Rule 9 to distilleries licensed solely for denatured or commercial spirit - The charges leviable under Rule 9 apply only to distilleries licensed solely for manufacture of denatured spirit or other commercial spirit unfit for human consumption, and do not extend to distilleries also licensed to manufacture potable liquor. - HELD THAT: - Following the guidance of earlier authority, the Court clarified the territorial application of Rule 9: it is confined to distilleries whose licence is exclusively for production of denatured or commercial spirit. Distilleries licensed to produce potable liquor in addition to spirits unfit for human consumption are outside the scope of Rule 9's exclusive application of costs contemplated for such solely licensed distilleries.

Rule 9 applies only to distilleries licensed solely for denatured/commercial spirit.

Application of Rule 36A to compounding and blending plants of foreign liquor - The fees leviable under Rule 36A are confined to compounding and blending plants of foreign liquor and apply accordingly. - HELD THAT: - The Court observed that Rule 36A relates to determination and recovery of fees as the actual cost of excise staff employed for supervision of compounding and blending operations of foreign liquor. Consistent with precedent, the scope of Rule 36A is limited to such compounding and blending plants and cannot be stretched beyond that context.

Rule 36A applies only to compounding and blending plants of foreign liquor.

Right to hearing and re-determination of levied fees - refund/adjustment subject to non-pass-through to customers - Demands held in abeyance and remitted to the Excise Commissioner for re-determination with notice and hearing; excess recoveries to be refunded or adjusted unless the cost was passed on to customers, in which case no refund/adjustment shall be ordered. - HELD THAT: - The Court directed remand to enable the Excise Commissioner to re-determine the fees/costs in light of the principles stated (recovery only of actual cost; proportionate apportionment; scope of Rules 9 and 36A). The Commissioner must give notice to and hear the affected companies during re-determination. If re-determination establishes that excess amounts were charged, the concerned company is entitled to refund or adjustment of the excess, provided the company has not passed the cost to its customers; where the cost has been passed through to customers, no refund/adjustment is to be made. Conversely, if undercharging is found, the actual cost may be recovered.

Matter remanded for re-determination with hearing; excess recoveries refundable/adjustable unless passed to customers; shortfall recoverable.

Final Conclusion: Writ petitions allowed; impugned demand notices stayed and matters remitted to the Excise Commissioner to re-determine fees/costs in accordance with the principles that only actual costs may be recovered, such costs must be proportionately apportioned where staff serves multiple premises, Rules 9 and 36A have the limited scope indicated, and re-determination must follow notice and hearing with refund/adjustment permitted only when the cost was not passed on to customers.

Criminal liability under Section 138 of the Negotiable Instruments Act - legally enforceable debt - dishonour of cheque as fresh cause of action - award of Lok Adalat as deemed decree and executable as civil decree - effect of compromise before Lok Adalat on maintainability of subsequent Section 138 complaint

Criminal liability under Section 138 of the Negotiable Instruments Act - legally enforceable debt - dishonour of cheque as fresh cause of action - award of Lok Adalat as deemed decree and executable as civil decree - Whether a cheque issued pursuant to a Lok Adalat compromise (recorded as an award) gives rise to a fresh maintainable complaint under Section 138 when it is dishonoured. - HELD THAT: - The Court held that the respondent had an adjudicated liability arising from earlier proceedings which culminated in conviction and that the parties, while the appeal was pending, entered into a compromise before the Lok Adalat acknowledging that liability. An award of the Lok Adalat is to be deemed a decree of a civil court and is executable as a legally enforceable debt. Consequently, the cheque issued pursuant to the Lok Adalat settlement was issued in discharge (in whole or in part) of a legally enforceable liability; its dishonour therefore generated a fresh cause of action under Section 138 of the Negotiable Instruments Act. The High Court's reliance on Lalit Kumar Sharma was misconceived because that decision was factually distinguishable where the cheque had not been issued in discharge of any debt or liability. The Court also relied on K.N. Govindan Kutty Menon to affirm that awards of Lok Adalat operate as decrees and can constitute the basis of legally enforceable debts.

The cheque issued pursuant to the Lok Adalat award, being in discharge of a legally enforceable liability, when dishonoured gave rise to a fresh maintainable complaint under Section 138; the High Court order quashing the complaint was set aside.

Final Conclusion: Appeal allowed; the High Court order quashing the Section 138 complaint was overturned and the complaint proceedings are held to be maintainable as the dishonour of the cheque issued pursuant to the Lok Adalat award constituted a fresh cause of action.