TaxTMI Updates e-Newsletter
Jan 16,2021

Value of supply - transaction value - consideration (including proviso that deposit is not consideration unless applied as such) - inclusion of taxes in value of supply - deduction of property tax from rental value - notional interest on security deposit as consideration - Section 15 valuation principle

Value of supply - transaction value - inclusion of taxes in value of supply - deduction of property tax from rental value - Section 15 valuation principle - Whether property tax and other statutory levies paid to the Municipal Authority can be deducted from the monthly rental income in arriving at the value of supply of renting of immovable property. - HELD THAT: - The value of supply is the transaction value, i.e., the price actually paid or payable for the supply where parties are unrelated and price is the sole consideration. Section 15(2) requires inclusion in value of all taxes levied under any law in force, except CGST, SGST, IGST, UTGST and Compensation Cess which may be excluded only if charged separately in the invoice. Unlike the erstwhile service tax regime where a specific notification allowed abatement for property tax, GST contains no such provision. Consequently statutory levies like property tax paid to the Municipal Authority cannot be deducted from the monthly rent for computing the value of supply, save for the specific exclusions permitted under the Act when charged separately. [Paras 10, 11, 12, 16]

Property tax and other statutory levies payable under any law cannot be deducted from the monthly rental income in computing the value of supply, except the specified GST/cess items when separately charged.

Consideration (including proviso that deposit is not consideration unless applied as such) - notional interest on security deposit as consideration - deposit not consideration unless applied as consideration - Section 2(31) definition of consideration - Whether notional interest earned on an interest-free security deposit is to be included in total rental income as consideration for the renting service. - HELD THAT: - The definition of consideration includes payments made in respect of or for the inducement of supply but contains a proviso that a deposit shall not be considered payment for the supply unless the supplier applies the deposit as consideration. A security deposit collected and refunded without interest, held to secure performance or cover damage, is not consideration for the renting service. Interest earned by the supplier from investing the deposit is paid by a third party and lacks direct link to the renting service; there is no evidence that the deposit or its notional interest influences the agreed rent. In the absence of any such connection or application of the deposit as consideration, notional interest on the security deposit is not includible in the consideration for the renting service. [Paras 13, 14, 15, 16]

Notional interest earned on the security deposit is not to be taken into consideration for arriving at total rental income.

Final Conclusion: The AAAR modified the AAR: (i) property tax and other statutory levies cannot be deducted from monthly rent for GST valuation (except specified GST/cess items when separately charged); and (ii) notional interest on an interest-free security deposit is not includible in rental consideration.

Summary order. The Special Leave Petition is dismissed on account of inordinate delay in filing (238 days) not satisfactorily explained, and additionally dismissed on merits.

Detention under Section 129 of the CGST Act - Detention permissible only where transportation or storage in transit contravenes the Act or Rules - Mere mis classification not a ground for detention unless it amounts to a glaring mis description - Provisional release on bond/bank guarantee and adjudication under Section 129(3) - Form GST MOV 6 is a non final detention order and Form GST MOV 9 is the adjudication/confirmation - Availability of appellate remedy against adjudication under Section 129(3) - No discretion to reduce statutory payment/penalty on detention; strict construction of machinery provisions - Detention for procedural non compliance with CGST Rules (including Rule 55) is permissible

Detention under Section 129 of the CGST Act - Mere mis classification not a ground for detention unless it amounts to a glaring mis description - Whether alleged mis classification or mis description of goods in transport documents can justify detention under Section 129. - HELD THAT: - Section 129 is a machinery provision to check tax evasion and applies where goods are transported or stored in transit in contravention of the Act or Rules. A mere suspicion of mis classification does not amount to such contravention. Detention may be justified only where the mis description is patent and glaring - such that the goods described evidently refer to an entirely different commodity (examples given: 'Apples' as 'Oranges'). Ordinary cases of classification disputes, or bona fide differences about HSN or tax rate, do not warrant detention under Section 129. The detaining authority must be satisfied on the material before it that a contravention of the transportation/storage provisions has occurred before issuing a detention order; absent such material, the goods must be released.

A detention based solely on ordinary or arguable mis classification is unlawful; detention can be quashed unless the mis description is glaring.

Form GST MOV 6 is a non final detention order and Form GST MOV 9 is the adjudication/confirmation - Provisional release on bond/bank guarantee and adjudication under Section 129(3) - Availability of appellate remedy against adjudication under Section 129(3) - No discretion to reduce statutory payment/penalty on detention; strict construction of machinery provisions - The procedural effect of Form GST MOV 6 and Form GST MOV 9, the scope for provisional release, and protection of bank guarantees pending adjudication and appeal. - HELD THAT: - The procedure prescribed by circulars (Forms GST MOV 1 to MOV 11) implements Section 129. An order in Form GST MOV 6 together with Form GST MOV 7 is a non final step to propose tax and penalty; the person served may either pay and obtain release or contest by filing objections. Provisional release on furnishing bond/bank guarantee is permissible under the statute and Rules. The proper officer must consider objections and pass a reasoned adjudication order in Form GST MOV 9 under Section 129(3). Because the statute prescribes fixed payments/penalties on a finding of contravention, the detaining authority has no power to unilaterally reduce those amounts. To make the appellate remedy effective, the court read a protective requirement that the bank guarantee should not be invoked for a short period to enable appeal; in these cases the court directed that bank guarantees not be invoked for specified periods.

Form GST MOV 6 is not a final adjudication; adjudication in Form GST MOV 9 must be speaking; provisional release is available on bond/guarantee; the appellate remedy against MOV 9 must be protected by refraining from invoking bank guarantees for a limited period.

Mere mis classification not a ground for detention unless it amounts to a glaring mis description - Detention for procedural non compliance with CGST Rules (including Rule 55) is permissible - Availability of appellate remedy against adjudication under Section 129(3) - Application of the above principles to the three writ petitions and the consequent reliefs. - HELD THAT: - W.P.(C) No.17379 of 2020: Detention and notice premised on alleged mis classification of 'fruit drinks' did not involve a glaring mis description; detention and notice were quashed and bank guarantee ordered to be returned within two weeks. W.P.(C) No.22608 of 2020: Detention could not be sustained on the ground of mis classification but was sustain able to the extent founded on the e way bill being invalid (missing Part B particulars); the adjudication in Form GST MOV 9 is not endorsed on merits and the petitioner is relegated to the statutory appellate remedy; the court directed that the bank guarantee not be invoked for two months to enable appeal. W.P.(C) No.22072 of 2020: Detention for procedural non compliance (defective delivery challans / non compliance with Rule 55) was within Section 129; the adjudication in Form GST MOV 9 is sustained and the petitioner is relegated to appeal; the court continued a stay on invocation of bank guarantee for two months to permit filing of appeal.

Quash detention in W.P.(C) No.17379; in W.P.(C) No.22608 quash detention insofar as based on mis classification but sustain it insofar as based on invalid e way bill and remit to appeal; in W.P.(C) No.22072 uphold adjudication for procedural non compliance and relegated petitioners to statutory appeals, with limited protection against invocation of bank guarantees.

Final Conclusion: The Court held that Section 129 detentions must be confined to cases where transportation or storage in transit contravenes the Act or Rules; ordinary classification disputes do not justify detention unless the mis description is glaring. Form GST MOV 6 is non final and adjudication must follow in Form GST MOV 9; provisional release on bond/bank guarantee is available and appellate remedies must be effective. Applying these principles, the court quashed the detention in one petition, sustained detention partly in another (on the e way bill ground) and upheld detention for procedural non compliance in the third, while protecting the petitioners from immediate invocation of bank guarantees for limited periods to enable appeals.

Classification of goods - Tariff heading 0402 - Tariff heading 1806 - rules for interpretation of the First Schedule to the Customs Tariff Act (Section and Chapter Notes) - WCO Explanatory Notes - food preparations containing cocoa - FSSAI and BIS compositional/colour standards

Classification of goods - Tariff heading 0402 - Tariff heading 1806 - WCO Explanatory Notes - FSSAI and BIS compositional/colour standards - Classification of the product 'Chocolate Milk Powder' as falling under tariff heading 0402 or 1806. - HELD THAT: - The Authority examined the product composition and standards. The applicant's admitted formulation (97.5% whole milk powder blended with 2.5% chocolate-flavoured powder) results in a product that does not meet the compositional and colour characteristics required for milk powder under FSSAI and BIS; accordingly it cannot be treated as whole/skimmed milk powder under the headings of Chapter 4. Applying the Notification's mandate that the rules for interpretation of the First Schedule (including Section and Chapter Notes) and the WCO Explanatory Notes guide classification, the Authority noted that heading 1806 covers chocolate and other food preparations containing cocoa and that WCO explanatory notes treat cocoa powder with added milk preparations as falling in heading 1806. On that basis the blended product, being a food preparation made by combining milk powder with cocoa-containing flavouring, is classifiable under heading 1806 rather than under heading 0402. [Paras 7]

The product 'Chocolate Milk Powder' is classifiable under Tariff heading 1806.

Final Conclusion: Advance ruling that 'Chocolate Milk Powder' supplied by the applicant is classifiable under Tariff heading 1806 (food preparations containing cocoa).

Classification of goods between Chapter 39 (plastics) and Chapter 63 (textiles) - meaning of "plastics" for tariff classification - textile materials versus articles of plastics - applicability of CBIC (TRU) clarification on classification and GST rates - interpretation of Tariff headings for determining GST rate

Classification of goods between Chapter 39 (plastics) and Chapter 63 (textiles) - meaning of "plastics" for tariff classification - textile materials versus articles of plastics - Non Woven Polypropylene Bags manufactured from fibre grade polypropylene granules are classifiable under Heading 3923 and not Heading 6305. - HELD THAT: - The Authority examined the chapter notes, tariff entries and HSN Explanatory Notes for Chapters 39 and 63 and applied the definitional distinction that Chapter 39 covers "plastics" as materials of headings 3901-3914 capable of being formed under external influence, whereas Chapter 63 covers textile sacks and bags of a kind normally used for packing goods. Reliance on case-law and statutory definitions led to the conclusion that intermediate fabrics made from fibre-grade polypropylene granules are plastic material and not "textile" within the scope of Chapter 63. The Authority also considered decisions treating HDPE/PP fabricated sacks as articles of plastics and found the applicant's contention that non woven PP fabric is a textile unsustainable. In consequence, the goods in question merit classification under Heading 3923 of the Customs Tariff Act, 1975. [Paras 23, 27]

Non Woven Polypropylene Bags manufactured from fibre grade polypropylene granules are classifiable under Heading 3923.

Applicability of CBIC (TRU) clarification on classification and GST rates - interpretation of Tariff headings for determining GST rate - The GST rate applicable on the product was determined according to its classification under Heading 3923 and as per amendments to Notification No.01/2017-C.T.(Rate) for the specified periods; the product is not eligible for exemption under the cited notification. - HELD THAT: - Having classified the goods under Heading 3923, the Authority applied the Notification No.01/2017 C.T.(Rate) as amended. For the period 01.07.2017 to 30.09.2019 goods of Chapter 3923 attracted 18% GST (9% CGST + 9% SGST). Amendments effective 01.10.2019 temporarily placed woven and non woven polyethylene/polypropylene bags in Schedule II at a 6% IGST rate (total GST 12%) for 01.10.2019 to 31.12.2019, after which, by amendment effective 01.01.2020, the entry was again placed in Schedule III restoring the 18% rate. The Authority noted the CBIC (TRU) Circular confirming classification of polypropylene woven and non woven bags under HS 3923 attracting 18% GST and, on the basis of the classification and the notification amendments, held that the product is not eligible for exemption under Notification No.01/2017 CT (Rate) as amended. [Paras 28, 29]

GST rates applied as per Heading 3923: 18% from 01.07.2017 to 30.09.2019, 12% from 01.10.2019 to 31.12.2019, and 18% from 01.01.2020 onwards; product not eligible for exemption under the cited notification.

Final Conclusion: Advance Ruling: Non woven polypropylene bags manufactured from fibre grade polypropylene granules are goods of plastics classifiable under Heading 3923; GST applicable accordingly - 18% (01.07.2017-30.09.2019), 12% (01.10.2019-31.12.2019), and 18% (from 01.01.2020 onwards) - and they are not eligible for exemption under Notification No.01/2017 CT (Rate).

Lease of land as supply of services - one-time upfront amount (premium / salami) vis-a -vis periodic lease rent - reverse charge liability under Section 9(3) as specified in Notification No. 13/2017 amended by Notification No. 05/2019 - exemption condition for upfront amount for long-term lease under Notification No. 12/2017 (Entry No. 41) - classification of leasing of non-residential property under HSN 9972 12

Lease of land as supply of services - one-time upfront amount (premium / salami) vis-a -vis periodic lease rent - Onetime long-term lease premium/salami and annual lease premium for leasing of the plot constitute a supply taxable under GST. - HELD THAT: - The Authority applied Section 7(1) read with clause 2 of Schedule II and held that any lease, tenancy or licence to occupy land is a supply of services. Reliance was placed on the definition of 'lease' in Section 105 of the Transfer of Property Act to observe that duration (including 99 years) does not convert a lease into a sale. The terms of the lease deed-restrictions on transfer/mortgage, sub-lease only with permission, sale only of built-up units with assignment of undivided leasehold rights for the residual period, and cancellation upon breach-distinguish the arrangement from an absolute sale. Concluding that both the one-time premium/salami and the annual lease premium are consideration for leasing services, the Authority ruled these payments are taxable supplies under the GST law and classifiable under rental/leasing services for non-residential property (HSN 9972 12). [Paras 31, 32, 37]

Affirmative - the onetime premium/salami and the annual lease premium are supplies of services taxable under GST.

Exemption condition for upfront amount for long-term lease under Notification No. 12/2017 (Entry No. 41) - The applicant cannot claim exemption under Entry No. 41 of Notification No. 12/2017 as amended, because the leased plot is not shown to be in an area declared as an industrial or financial business area by the State Government. - HELD THAT: - Entry No. 41 grants exemption for upfront amounts for long-term lease (30 years or more) of industrial plots or plots for infrastructure for financial business provided by specified government-owned entities, subject to conditions. The Authority extracted the criteria from the Notification and, noting the absence of any notification declaring the subject plot as an industrial/financial business area, concluded the applicant does not satisfy the third criterion of the entry. Consequently, the exemption is not available to the applicant. [Paras 33, 34]

The exemption under Entry No. 41 is not available to the applicant for the subject plot.

Reverse charge liability under Section 9(3) as specified in Notification No. 13/2017 amended by Notification No. 05/2019 - promoter definition under RERA (for applicability of Notification entry) - The applicant is liable to pay GST under the reverse charge mechanism on the onetime premium/salami and annual lease premium in terms of the relevant notification. - HELD THAT: - The Authority examined Section 9(3) and the amended Notification (entry 5C of Notification No. 05/2019) which specifies reverse charge for long-term lease of land (30 years or more) where upfront amount and/or periodic rent is paid for construction of a project by a promoter. The Authority reproduced the notification entry and the explanation defining 'promoter' (by reference to RERA). Applying the notification to the facts, it held that the onetime premium/salami and the annual lease premium fall within the category of supplies chargeable to tax on reverse charge basis, making the applicant (recipient/promoter) liable to discharge the tax. [Paras 38]

Affirmative - the applicant is required to pay GST on the onetime premium/salami and annual lease premium under the reverse charge mechanism as per the notification.

Classification of leasing of non-residential property under HSN 9972 12 - Leasing of the commercial plot is classifiable under HSN 9972 12 and attracts GST at the applicable rates under Notification No. 11/2017. - HELD THAT: - The Authority referred to the Annexure to Notification No. 11/2017 which classifies real estate services and confirms that rental or leasing services involving non-residential property fall under HSN 9972 12. Having held that the transaction is a supply of leasing services, the Authority concluded that the payments are taxable under the specified schedule and rate notifications. [Paras 36, 37]

The leasing services are classifiable under HSN 9972 12 and are taxable under the applicable GST notifications.

Final Conclusion: The Authority ruled that the onetime long term lease premium (salami) and the annual lease premium payable to AUDA for the 99 year commercial lease are taxable supplies of services under GST; the applicant cannot claim the Entry No. 41 exemption for the plot; the applicant is liable to discharge GST under the reverse charge mechanism as per the notification; and the leasing services are classifiable under HSN 9972 12 attracting GST as per the relevant notifications.

Classification of goods - common parlance test - noscitur a sociis - ejusdem generis - Tariff Item 1905 90 40 - Tariff Item 2106 90 99 - First Schedule to the Customs Tariff Act, 1975 - Goods and Services Tax rate 18%

Classification of goods - common parlance test - Tariff Item 1905 90 40 - Tariff Item 2106 90 99 - First Schedule to the Customs Tariff Act, 1975 - Goods and Services Tax rate 18% - Whether the applicant's product (un fried items of varying shapes and sizes described by the applicant as 'papad') is classifiable under Tariff Item 1905 90 40 or under Tariff Item 2106 90 99 and the applicable rate of GST. - HELD THAT: - The Authority examined the nature of the goods, the commercial parlance and relevant chapter notes of the First Schedule to the Customs Tariff Act, 1975. In the absence of a statutory definition of 'papad', the common parlance test applies and the term must be construed as understood in trade and popular usage. Precedents including CEGAT and the Supreme Court on interpretation were considered. The Authority rejected the applicant's contention that differently shaped, un fried items are 'papad' on the basis that in trade the goods in question are commonly known and marketed as 'fryums' (a namkeen/edible preparation) rather than as papad, and that their ingredients, manufacturing characteristics, market identity and use distinguish them from traditional papad. The Authority applied interpretative rules (including that a general descriptive phrase must be read with its specific context and the principle that a specific tariff heading governs where applicable) and concluded that the items fall within the inclusive omnibus scope of Heading 2106, particularly tariff item 2106 90 99 (food preparations not elsewhere specified or included). Having held classification under 2106 90 99, the Authority identified the corresponding GST notification entry and ruled that the products attract GST at 18% (9% CGST + 9% SGST or IGST 18%). [Paras 52, 53, 55]

The product described by the applicant is classifiable under Tariff Item 2106 90 99 of the First Schedule to the Customs Tariff Act, 1975 and is liable to GST at 18%.

Final Conclusion: The Advance Ruling holds that the applicant's un fried, variably shaped products (commonly known as 'fryums') are not classifiable as 'papad' under 1905 90 40 but fall under Tariff Item 2106 90 99 and attract GST at 18% (9% CGST + 9% SGST or IGST 18%).

Classification of goods under Customs Tariff headings - Common parlance test for taxing statutes - Ejusdem generis - Specific entry prevails over residuary/general entry - Application of First Schedule interpretation rules and Chapter Notes - Distinction between Tariff Heading 1905 and Heading 2106 - Goods and Services Tax rate applicability under Notification schedule

Classification of goods under Customs Tariff headings - Common parlance test for taxing statutes - Ejusdem generis - Distinction between Tariff Heading 1905 and Heading 2106 - Application of First Schedule interpretation rules and Chapter Notes - Whether the applicant's product (papad of different shapes and sizes sold as un fried Fryums) is classifiable as 'Papad' under Tariff Item 1905 90 40 or otherwise and the appropriate Tariff Item for the product. - HELD THAT: - The Authority applied the established principle that undefined taxing terms are to be construed in their popular or common parlance, relying on higher court authority that the common parlance test is the standard for interpreting terms in taxing statutes. Examination of precedent (including the CEGAT decision on Fryums and subsequent judicial treatment) and the market reality showed the product in question is known and traded as 'Fryums' (a namkeen-like snack) rather than as 'Papad'. The Authority rejected the applicant's emphasis on ingredients alone as determinative, noting that classification requires consideration of common parlance, use and market identity. The phrase 'by whatever name it is known' in the Papad entry was read with the rule of Ejusdem generis, limiting that phrase to names of the same kind as Papad; un fried Fryums are not of the same kind. Chapter Notes to Heading 21 (Notes 5 and 6) make Heading 2106 an omnibus/residuary provision covering edible preparations for use after processing and illustrative namkeen items; therefore products like un fried Fryums fall within Heading 2106. Applying these interpretive principles and earlier AAR decisions, the Authority held the product is not classifiable as Papad under 1905 but appropriately classifiable under Tariff Item 2106 90 99. [Paras 41, 42, 44, 52]

The product described as un fried Fryums (papad of different shapes and sizes as produced by the applicant) is not 'Papad' under Tariff Item 1905 90 40 and is classifiable under Tariff Item 2106 90 99 of the First Schedule to the Customs Tariff Act, 1975.

Goods and Services Tax rate applicability under Notification schedule - Specific entry prevails over residuary/general entry - Application of First Schedule interpretation rules and Chapter Notes - What GST rate and corresponding notification entry apply to the product once classified. - HELD THAT: - Having classified the product under Tariff Item 2106 90 99, the Authority referred to the rate notifications and Schedule entries applicable under the GST law. Sl. No. 23 of Schedule III to Notification No.1/2017 Central Tax (Rate) (as amended) covers 'Food preparations not elsewhere specified or included' falling under Heading 2106, attracting 18% GST. The Authority also relied on prior AAR rulings consistent with this position. Therefore, the product so classified falls within Sl. No. 23 and is taxable at the prescribed 18% rate (CGST + SGST or IGST as applicable). [Paras 52, 53, 54, 55]

The product is liable to GST at 18% (CGST 9% + SGST 9%, or IGST 18%) under Sl. No. 23 of Schedule III to Notification No.1/2017 Central Tax (Rate) (as amended).

Final Conclusion: The Authority ruled that the applicant's goods-marketed as un fried Fryums and described in the application as papad of different shapes and sizes-are not classifiable as 'Papad' under Tariff Heading 1905; they are classifiable under Tariff Item 2106 90 99 and attract GST at 18% under the relevant rate notifications.

Licensing services for the right to use minerals including its exploration and evaluation - Heading 9973 (Leasing or rental services, with or without operator) - supply (lease, licence or rental of land treated as service) - residual entry for Heading 9973 - rate not to be imported from supply of like goods involving transfer of title in goods - clarificatory notification retrospective effect

Licensing services for the right to use minerals including its exploration and evaluation - Heading 9973 (Leasing or rental services, with or without operator) - supply (lease, licence or rental of land treated as service) - Classification of the service provided by the State of Gujarat to the applicant. - HELD THAT: - The lease of government land to the applicant for quarrying and the assignment of rights to extract and use the mineral constitute a supply of service under the CGST Act read with Schedule II (lease/licence to occupy land treated as service). The Annexure to Notification No.11/2017-C.T. (Rate) contains Group 99733 and specifically includes licensing services for the right to use minerals including its exploration and evaluation. The Authority records that the service received by the applicant is appropriately classifiable under SAC 997337 (sub heading 997337) within Heading 9973 as licensing services for the right to use minerals including its exploration and evaluation. [Paras 17, 18, 26]

The activity is classifiable under Heading 9973, sub heading 997337 (Licensing services for the right to use minerals including its exploration and evaluation).

Residual entry for Heading 9973 - rate not to be imported from supply of like goods involving transfer of title in goods - clarificatory notification retrospective effect - Whether the service falls under entry (iii) or entry (viia) of Heading 9973 or under the residual entry. - HELD THAT: - The Authority examined entries (iii) and (viia) and the subsequent amendments to Serial No.17 of Notification No.11/2017-C.T. (Rate). It found that the impugned service is not a lease of goods under entries (iii) or (viia) but is a licensing service for the right to use minerals and therefore falls within the residuary description in Serial No.17. The deliberations and GST Council material show the residuary entry was clarified to address rights to use intellectual property and similar products other than IPR; by parity, the licensing service for minerals is not covered by (iii) or (viia) and is to be taken under the residual entry which was assigned the relevant rate by amendment. The Authority further held that the clarificatory amendment to the notification has retrospective operation to the extent explained by the Supreme Court principle on clarificatory notifications. [Paras 22, 23, 25, 26]

The service does not fall under item (iii) or item (viia) but is covered by the residual entry of Serial No.17 and consequent amendments; it is not classifiable as leasing or renting of goods under (iii) or (viia).

Rate not to be imported from supply of like goods involving transfer of title in goods - residual entry for Heading 9973 - clarificatory notification retrospective effect - Rate of GST applicable on the licensing service for the right to use minerals for which royalty is paid. - HELD THAT: - Having held that the transaction is a licensing service for the right to use minerals falling under SAC 997337 and that it is covered by the residual entry in Serial No.17 as clarified by subsequent amendments, the Authority applied the rate prescribed to that residual entry by Notification No.27/2018 (and the explanations of the GST Council). It rejected importation of the conditional rate tied to supply of like goods involving transfer of title because the lease of mining rights is not a lease of goods and there is no underlying goods to which that conditional rate can be applied. Relying on the clarificatory amendment and the principle that a clarificatory notification takes retrospective effect, the Authority concluded the applicable rate is 18% (9% CGST + 9% SGST) from July 2017 onwards. [Paras 22, 25, 26]

The activity attracts GST at 18% (9% CGST + 9% SGST), applicable from July, 2017 onwards.

Final Conclusion: The advance ruling concludes that the State's grant of rights to extract and use Black Trap is a supply of service classifiable under Heading 9973, sub heading 997337 (licensing services for the right to use minerals including its exploration and evaluation); it is not covered by items (iii) or (viia) but by the residual entry in Serial No.17 as clarified by amendments, and the service attracts GST at 18% (9% CGST + 9% SGST) with effect from July, 2017 onwards.

Health care services exemption - clinical establishment - definition of health care services - taxable supply - research purpose vs diagnosis for treatment - advance ruling

Health care services exemption - clinical establishment - research purpose vs diagnosis for treatment - definition of health care services - taxable supply - Liability to pay GST on pathology/diagnostic services supplied to a researcher - HELD THAT: - The Authority examined whether MRSA PCR testing carried out by the applicant for a researcher falls within the exemption at Sr. No. 74 of Notification No. 12/2017-CT (Rate) dated 28.06.2017 for health care services by a clinical establishment. The Notification defines "health care services" as services by way of diagnosis, treatment or care for illness, injury, deformity, abnormality or pregnancy and also requires relation to a recognised system of medicine in India. The MOU established that the tests were conducted for purely academic and research purposes, that reports and data would be used only for academic research and that the services were not for diagnosis or treatment of patients under a recognised system of medicine. The Authority therefore held that the conditions in the definition of "health care services" are not satisfied and that the services in question are not covered by the exemption, rendering them taxable supplies. [Paras 14, 15]

The applicant is liable to pay GST on pathology/diagnostic services supplied to the researcher.

Taxable supply - advance ruling - Whether any particular act by the applicant amounts to a taxable supply of services (general/vague query) - HELD THAT: - The question as framed was vague and lacked specific factual matrix. The Authority recorded that no concrete facts were placed on record which would enable application of the legal tests for taxable supply to any particular activity. Consequently, the Authority declined to pronounce a ruling on this hypothetical or indeterminate question. [Paras 16]

No Ruling given due to vagueness and absence of facts.

Taxable supply - research purpose vs diagnosis for treatment - advance ruling - Whether pathology/diagnostic services supplied to clinical research organisations or government bodies for their business activities amount to taxable supply - HELD THAT: - The applicant did not furnish particulars about the nature and type of services when posing this question; it was consequently hypothetical. The Authority accordingly refrained from adjudicating this question in the absence of factual details necessary to determine whether such services would fall within the exemption or constitute taxable supply. [Paras 17]

No Ruling given for want of factual material; question is hypothetical.

Final Conclusion: The Authority ruled that MRSA PCR testing performed by the applicant for a researcher for purely academic and research purposes does not qualify as exempt "health care services" under Sr. No. 74 of Notification No. 12/2017-CT (Rate) dated 28.06.2017, and is therefore taxable; two other queries which were vague or hypothetical were left unanswered (No Ruling).

Composite supply - recipient of supply - intermediary - export of services - place of supply - intermediary services (Section 13(8)) - ejusdem generis

Composite supply - Specified transactions are to be classified as composite supply or individual supplies. - HELD THAT: - The Authority examined whether the multiple services (installation/upgradation, training, travel hours, working hours, overtime) are naturally bundled and whether there is a principal supply. Applying the statutory definition of composite supply and the CBEC indicators of natural bundling, the Authority found the services are supplied together in the ordinary course of business, are naturally bundled (travel, working and overtime are ancillary to installation/training) and that the principal supply is the installation/upgradation & training. Accordingly the specified transactions constitute a composite supply. [Paras 70, 88]

The specified transaction is a composite supply of services.

Recipient of supply - Whether the recipient of the specified service is SPA (overseas principal) or the Indian customers of SPA. - HELD THAT: - The Authority interpreted the exhaustive definition of recipient in Section 2(93) of the CGST Act and observed that where consideration is payable the recipient means the person liable to pay and is inseparable from the person to whom supply is made. On the facts and contract terms, the Authority concluded that the supply is made to the person who receives the service in India (the Indian customer), since the person receiving the composite service in India is the effective recipient for the Applicant's supply. [Paras 72, 88]

The recipient of the specified transaction is the Indian customer to whom the service is supplied in India.

Intermediary - ejusdem generis - Whether the specified transaction falls within the definition of an intermediary under Section 2(13) of the IGST Act. - HELD THAT: - The Authority analysed the definition of intermediary, including the meaning and scope of 'broker', 'agent' and the phrase 'any other person, by whatever name called'. It rejected the Applicant's reliance on the rule of ejusdem generis to restrict 'any other person' to persons similar to agents or brokers, observing that the words do not form a single genus and the general phrase must be read to cover other facilitators. Examining the contract and conduct (services provided 'on behalf of and as per instruction of' SPA; coordination with SPA area coordinator; SPA supplying parts/setting prices; obligation to inform SPA; commission overview), the Authority found the Applicant arranges/facilitates the supply between SPA and its Indian customers and is not supplying the main service on its own account. The Authority noted that the form of consideration (hourly fee and commission) does not preclude characterisation as an intermediary. Pre GST decisions were considered but applied to the GST definition; relevant AAR/AAAR precedents were found supportive. [Paras 75, 76, 79, 81, 88]

The specified transaction is an intermediary service within Section 2(13) of the IGST Act, 2017.

Export of services - place of supply - intermediary services (Section 13(8)) - Whether the specified transaction qualifies as an export of services under Section 2(6) of the IGST Act. - HELD THAT: - Export of services requires five cumulative conditions under Section 2(6): supplier in India; recipient outside India; place of supply outside India; payment in convertible foreign exchange; supplier and recipient not establishments of a distinct person. While the supplier is located in India and payment is in convertible foreign exchange, the Authority concluded the recipient (per its earlier finding) is the Indian customer and, crucially, that the place of supply for intermediary services is the location of the supplier under Section 13(8)(b). Further, Stovec is not an establishment distinct from SPA. Given these lacunae, the specified transaction does not satisfy the conditions for export of services. [Paras 85, 86, 88]

The specified transaction does not qualify as export of services.

Final Conclusion: The Authority ruled that the Applicant's specified transactions are a composite supply of services, are supplied to the Indian customers (the recipients), amount to intermediary services under Section 2(13) of the IGST Act, and do not qualify as export of services under Section 2(6).

Tariff classification under the Customs Tariff / HSN - Distinction between animal/vegetable fertilisers and mineral/chemical fertilisers - Classification of cultures of micro-organisms - Application of Chapter and Chapter Notes of Chapter 31 (headings 3101, 3102, 3105) - Application of Notification No.1/2017-GST rate schedules (Schedule I and Schedule II)

Tariff classification under the Customs Tariff / HSN - Distinction between animal/vegetable fertilisers and mineral/chemical fertilisers - Application of Chapter and Chapter Notes of Chapter 31 (heading 3105) - Application of Notification No.1/2017-GST rate schedules (Schedule I, Sl. No.182D) - Classification of the product described as "Organic Manure" manufactured and supplied by the applicant. - HELD THAT: - The product labelled "Organic Manure" contains a mixture of animal/vegetable matter (e.g., poultry manure, compost, cow dung, bone meal) together with minerals and chemically derived constituents (e.g., sulphur, rock phosphate, bentonite, gypsum, potassium humate, bio-fulvic). Heading 3101 covers fertilisers produced by mixing or chemical treatment of animal or vegetable products and is confined to products derived from animal or vegetable matter. Because the applicant's product includes mineral and chemically synthesised components and contains identifiable nitrogen, phosphorus and potassium constituents, it does not fall within the exclusive scope of heading 3101. The product instead meets the description of "other" mineral or chemical fertilisers containing two or three fertilising elements and mixtures contemplated by heading 3105. Consequently, the product is classifiable under tariff item 31059090 and, if clearly used as fertiliser, is within Sl. No.182D of Schedule I to Notification No.1/2017 and taxable at the stated GST rate. [Paras 16, 17, 18, 25]

The "Organic Manure" is classifiable under sub-heading 31059090; if clearly used as fertiliser it falls under Sl. No.182D of Schedule I to Notification No.1/2017 and attracts the specified GST rate.

Classification of cultures of micro-organisms - Distinction between bio-fertilisers and animal/vegetable fertilisers - Application of Notification No.1/2017-GST rate schedules (Schedule II, Sl. No.61) - Classification of the product described as "Bio-fertilizers" manufactured and supplied by the applicant. - HELD THAT: - Bio-fertilisers consist of living microorganisms which, when cultured and packed with carrier material for agricultural application, are substantively "cultures of micro-organisms". Heading 3101 does not encompass such products because bio-fertilisers are distinct from animal or vegetable fertilisers and their critical component is the cultured microorganism. Sub-heading 3002 (specifically the item for cultures of micro-organisms (excluding yeasts)) covers such products. Accordingly, the applicant's bio-fertilisers are classifiable under tariff item 30029030 and are covered by Sl. No.61 of Schedule II to Notification No.1/2017, attracting the stated GST rate. [Paras 19, 20, 21, 22, 25]

The "Bio-fertilizers" are classifiable under tariff item 30029030 and fall under Sl. No.61 of Schedule II to Notification No.1/2017, attracting the specified GST rate.

Application of Chapter and Chapter Notes of Chapter 31 (heading 3102) - Tariff classification under the Customs Tariff / HSN - Application of Notification No.1/2017-GST rate schedules (Schedule I, Sl. No.182A) - Classification of the product described as "Nitrogenous Mixture Fertilizers" (Granulated Nutrient Mixture) manufactured and supplied by the applicant. - HELD THAT: - The product comprises ammonium sulphate and urea mixed with gypsum, bentonite and organic constituents. Chapter note 2 to Chapter 31 and heading 3102 apply to ammonium sulphate, urea and mixtures thereof (including fertilisers consisting of those goods mixed together or mixed with gypsum). The applicant's composition therefore fits within "other" entries of heading 3102 (31029090). If the products are clearly used as fertilisers, they fall within Sl. No.182A of Schedule I to Notification No.1/2017 and attract the GST rate provided therein. [Paras 23, 25]

The "Nitrogenous Mixture Fertilizers" are classifiable under tariff item 31029090 and, if clearly used as fertilisers, fall under Sl. No.182A of Schedule I to Notification No.1/2017, attracting the specified GST rate.

Application of Chapter and Chapter Notes of Chapter 31 (heading 3105) - Tariff classification under the Customs Tariff / HSN - Application of Notification No.1/2017-GST rate schedules (Schedule I, Sl. No.182D) - Classification of the product described as "Mixture of Fertilizer" (Mixture Fertilizers / Phosphatic Rich Fertilizers) manufactured and supplied by the applicant. - HELD THAT: - The product contains nitrogenous, phosphatic and potassic constituents (e.g., urea, DAP, MOP, ammonium sulphate, rock phosphate) together with organic matter and minerals. Heading 3105 covers composite/complex fertilisers and mixtures containing two or three of the fertilising elements N, P or K, and includes mixtures of animal or vegetable fertilisers with chemical or mineral fertilisers. The applicant's composition therefore falls within tariff item 31059090 (other). If clearly used as fertiliser, the product is covered by Sl. No.182D of Schedule I to Notification No.1/2017 and attracts the applicable GST rate. [Paras 24, 25]

The "Mixture of Fertilizer" is classifiable under tariff item 31059090 and, if clearly used as fertiliser, falls under Sl. No.182D of Schedule I to Notification No.1/2017, attracting the specified GST rate.

Final Conclusion: Advance ruling: Organic Manure and Mixture of Fertilizers are classifiable under sub-heading 31059090 (covered by Sl. No.182D of Schedule I if clearly used as fertilisers); Nitrogenous Mixture Fertilizers are classifiable under sub-heading 31029090 (covered by Sl. No.182A of Schedule I if clearly used as fertilisers); Bio-fertilizers are classifiable under sub-heading 30029030 (covered by Sl. No.61 of Schedule II).

Composite supply - Principal supply - Classification under HSN heading 8418 - General Rules for Interpretation (GIR) and Note 4 to Section XVI - classification by function - Applicability of Notification No.01/2017 - Schedule entries and GST rates - Interpretation of the expression "parts of goods" in Sr. No. 252 (Any Chapter) relating to HSN 8906

Composite supply - Principal supply - The supply of "Supply, Testing and Commissioning of 160 TR Chilled Water Plant" is a composite supply with the supply of goods being the principal supply. - HELD THAT: - The order finds that the contract comprises delivery of goods (compressor, condenser, evaporator, pump, electrical panel, hoses, mobile trolley) together with installation, testing and commissioning services. The supplies are naturally bundled, supplied in conjunction and in the ordinary course of business, and the goods are the predominant/essential element without which the services cannot be rendered. Applying the statutory definition, the combination therefore constitutes a composite supply and the principal supply is the chilled water plant (chiller). [Paras 15, 16, 17]

There is a composite supply and the principal supply is the Chilled Water Plant (goods).

Classification under HSN heading 8418 - General Rules for Interpretation (GIR) and Note 4 to Section XVI - classification by function - Applicability of Notification No.01/2017 - Schedule entries and GST rates - The Chilled Water Plant (chiller) is classifiable under tariff sub-heading 8418 10 10 and the GST applicable to the composite supply is 28% until 26.07.2018 and 18% from 27.07.2018. - HELD THAT: - Applying GIR 1 and the Section/Chapter notes (including Note 4 to Section XVI), a machine comprising interconnected components intended to contribute together to the defined function of chilling water falls within the functional unit classified as a refrigeration system. Explanatory notes recognise chillers as refrigeration units of heading 8418. The chiller therefore fits sub-heading 8418 10 10. As the principal supply is goods, the rate in Notification No.01/2017 applies to the whole composite supply: goods under Chapter 8418 attracted CGST+SGST @14%+14% (total 28%) under the original notification and, by amendment effective 27.07.2018, were reallocated to the schedule attracting CGST+SGST @9%+9% (total 18%). [Paras 18, 20, 21]

The chiller is classifiable under 8418 10 10; GST @28% applies up to 26.07.2018 and @18% applies from 27.07.2018 to the entire composite supply.

Interpretation of the expression "parts of goods" in Sr. No. 252 (Any Chapter) relating to HSN 8906 - The Trailer Mounted Chilled Water Plant installed at the Naval Dockyard is not a "part of goods" of HSN 8906 (vessels, including warships) and therefore does not attract the 5% rate under Sr. No. 252. - HELD THAT: - Entry 252 covers "parts of goods of headings 8901-8907." The authority notes the plant in question is positioned on the jetty at the Naval Dockyard (not installed on-board any vessel) and is used ashore to supply chilled water to ships under refit. Because the plant is not installed in the vessels and does not constitute parts of those vessels as classified under heading 8906, it falls outside the scope of Sr. No. 252. No GST exemption under GST notifications was found to cover the supply in the present facts. [Paras 22, 23]

The chilled water plant is not a "part of" vessels under HSN 8906 and the 5% rate under Sr. No. 252 is not applicable.

Final Conclusion: The Authority rules that the supply, testing and commissioning of the 160 TR Trailer Mounted Chilled Water Plant to the Naval Dockyard is a composite supply with the chiller as the principal supply classifiable under 8418 10 10; GST at 28% applies until 26.07.2018 and at 18% from 27.07.2018 to the complete supply, and the plant cannot be treated as "parts of" vessels under HSN 8906 for purposes of the 5% rate at Sr. No. 252.

Classification under HSN Heading 3923 vs 6305 - Textile character v. plastic character of non woven fabrics - Rules for interpretation of the Customs Tariff headings and HSN Explanatory Notes - Applicability of Notification No.01/2017 C.T.(Rate) for GST rates on goods - Binding effect of Advance Rulings

Classification under HSN Heading 3923 vs 6305 - Textile character v. plastic character of non woven fabrics - Rules for interpretation of the Customs Tariff headings and HSN Explanatory Notes - Non Woven Bags manufactured from fibre grade polypropylene by Spun Bond technology are classifiable under HS code 3923 and not under 6305. - HELD THAT: - The Authority examined the nature of the intermediate material and manufacturing process and applied the Chapter 39 Note which defines 'plastics' as materials capable of being formed under external influence (e.g. extrusion) and which excludes goods of Section XI (textiles). The Textiles Committee Act definitions do not include plastic within 'fibre' or 'textiles'. Reliance on the reasoning in Raj Packwell and related authority supports treating products manufactured from polypropylene granules and processed via extrusion/spun bonding as articles of plastics rather than textiles. The CBIC (TRU) Circular No.80/54/2018 GST, which classifies polypropylene woven and non woven bags as plastic articles under 3923, was noted and followed. The Authority also observed that an Advance Ruling is binding only on the applicant who sought it and therefore prior AAAR rulings cited by the applicant were not determinative here. Applying the HSN Explanatory Notes and Chapter/heading rules, the Authority concluded the goods fall within 3923 and not within the textile oriented heading 6305. [Paras 21, 24, 25]

Non Woven Bags manufactured from fibre grade polypropylene by Spun Bond technology merit classification under HS code 3923.

Applicability of Notification No.01/2017 C.T.(Rate) for GST rates on goods - The GST rate applicable to the product in question for the stated periods as per the Notification amendments. - HELD THAT: - Having classified the goods under CTH 3923, the Authority applied the relevant entries in Notification No.01/2017 C.T.(Rate) and its subsequent amendments. The Authority identified that goods under Chapter heading 3923 attracted 18% GST (9% CGST + 9% SGST) from 01.07.2017 to 30.09.2019; an amended entry (80AA) placed woven and non woven polyethylene/polypropylene bags in Schedule II attracting 12% total GST from 01.10.2019 to 30.12.2019; and a later amendment (entry 163B) restored classification under Schedule III so that from 01.01.2020 the applicable rate is again 18% (9% CGST + 9% SGST). The Authority therefore applied the Notifications and amendments to determine the tax rates for the exact periods specified. [Paras 26, 27]

Rates are: 18% (01.07.2017-30.09.2019), 12% (01.10.2019-30.12.2019), and 18% (from 01.01.2020 onwards).

Applicability of Notification No.01/2017 C.T.(Rate) for GST rates on goods - Whether the Non Woven Bags are eligible for exemption under Notification No.01/2017 C.T.(Rate) (as amended). - HELD THAT: - On classification under HS code 3923 and having applied the relevant entries and amendments in Notification No.01/2017 C.T.(Rate), the Authority found no provision entitling the applicant's product to exemption under the Notification. The temporal sequence of amendments and the placement of the goods within the schedules were considered and no exemption was available. [Paras 27]

Answered in the negative; the product is not eligible for exemption under the cited Notification.

Final Conclusion: The Authority ruled that the polypropylene non woven bags manufactured by the applicant are classifiable as plastic articles under HS code 3923; they attract GST at 18% for 01.07.2017-30.09.2019, 12% for 01.10.2019-30.12.2019, and 18% from 01.01.2020 onwards; and the product is not eligible for exemption under Notification No.01/2017 C.T.(Rate).

Classification under Serial No. 234 of Notification No. 1/2017 (as amended) - deemed allocation of 70% value to goods and 30% to services - services for setting up Solar Power Generating System taxable under Serial No. 38 of Notification No. 11/2017 (as amended) - Solar Power Generating System (SPGS) comprising PV modules, inverters and battery bank treated as goods - advance ruling under Section 97 of the CGST Act - applicable GST rates: concessional rate on specified goods and standard rate on taxable services

Classification under Serial No. 234 of Notification No. 1/2017 (as amended) - Solar Power Generating System (SPGS) comprising PV modules, inverters and battery bank treated as goods - Supply of SPGS along with other goods and services of designing, erection, commissioning and installation is classifiable under Serial No. 234 of Notification No. 1/2017 as amended and thus falls within the scope of the concessional entry for renewable energy devices. - HELD THAT: - The Authority examined the composition and functioning of the SPGS offered on a turnkey basis and accepted that the bundled supply principally comprises PV modules, inverter (PCU), battery bank and ancillary equipment which together constitute a solar power generating system. Relying on the amended entry and the accompanying explanation inserted by Notification No. 24/2018 (CT Rate) dated 31.12.2018, the Authority held that such bundled supplies qualify as goods covered by Serial No. 234. The Appellate Authority's earlier quashing of the prior ruling rendered the matter open to fresh consideration in light of the amendments; on fresh consideration this Authority concluded unanimously that the supply is covered by the Serial No. 234 entry. [Paras 7, 8]

Supply of SPGS with ancillary goods and installation services is classifiable under Serial No. 234 of Notification No. 1/2017 (as amended).

Deemed allocation of 70% value to goods and 30% to services - services for setting up SPGS taxable under Serial No. 38 of Notification No. 11/2017 (as amended) - applicable GST rates: concessional rate on specified goods and standard rate on taxable services - Where SPGS goods (Serial No. 234) are supplied together with construction/engineering/installation services (Serial No. 38), the value of supply shall be deemed as 70% for goods and 30% for the taxable service, with the respective concessional and standard rates applying. - HELD THAT: - The Authority applied the Explanation inserted into Serial No. 234 by Notification No. 24/2018 and the Serial No. 38 insertion by Notification No. 27/2018, which are to be read together. The Explanation prescribes that when the specified goods are supplied along with other goods and a taxable service falling under Serial No. 38, seventy percent of the gross consideration shall be deemed the value of goods and the remaining thirty percent deemed the value of the taxable service. Consequently, the Authority ruled that the deemed 70:30 allocation is applicable to the applicant's turnkey contracts for SPGS, such that the goods portion attracts the concessional rate under Serial No. 234 and the services portion is taxable under Serial No. 38 at the standard rate applicable to such services. [Paras 6, 8]

The 70% (goods) and 30% (services) deemed value allocation applies; goods attract the concessional rate under Serial No. 234 and the services are taxable under Serial No. 38 at the standard rate.

Final Conclusion: The Authority rules that the applicant's turnkey supply, erection and commissioning of Solar Power Generating Systems qualifies as supply of goods under Serial No. 234 (as amended) with the Explanation deeming 70% of the contract value as goods and 30% as the taxable service under Serial No. 38; the respective concessional and standard GST rates apply accordingly.

Transfer pricing comparability analysis - Arm's length price - Exclusion of comparables for absence of segmental information - Deemed international transaction under section 92B(2) - Disqualification of a comparable as an uncontrolled transaction under Rule 10B(1)(e)(ii) - No estoppel against statutory provisions in transfer pricing comparability - Remand is an exception and should be used sparingly; the Tribunal should decide issues where materials and binding authority are available

Transfer pricing comparability analysis - Exclusion of comparables for absence of segmental information - Arm's length price - Exclusion from the comparable set of companies whose annual reports do not provide segmental information distinguishing revenue and margins from software services versus software products. - HELD THAT: - The Court upheld the ITAT's factual finding that where a prospective comparable derives revenue from both software development services and sale/licensing of software products, but does not provide segmental disclosure separating product and services revenues and margins, such a company cannot be treated as functionally comparable for benchmarking a captive software development service provider. The absence of segmental information prevents reliable separation of profits attributable to services from profits attributable to products and therefore undermines comparability for determination of ALP. The Court observed that this is a finding of fact, not disputed by the Revenue, and endorsed the ITAT's approach of excluding such comparables (including Infosys Technologies Ltd., Persistent Systems Ltd. and Thirdware Solutions Ltd.) from the final list of comparables. [Paras 7, 8, 9, 33, 34]

The exclusion of the comparables for want of segmental information is sustained.

Deemed international transaction under section 92B(2) - Disqualification of a comparable as an uncontrolled transaction under Rule 10B(1)(e)(ii) - Transfer pricing comparability analysis - Disqualification of Wipro Technology Services Ltd. as a comparable on ground that its transactions were to be treated as international/related party transactions under section 92B(2) and therefore not uncontrolled transactions within the meaning of Rule 10B(1)(e)(ii). - HELD THAT: - The Court accepted the ITAT's finding that Wipro Technology Services Ltd. continued to provide services to Citigroup pursuant to a prior master agreement executed between Citigroup and Wipro Ltd., the associated enterprise. On that structure, section 92B(2) operates to deem the transaction with the third party as an international (associated enterprise) transaction, so it ceases to be an uncontrolled transaction for purposes of Rule 10B(1)(e)(ii). Consequently, the company fails the Related Party Transaction (RPT) filter and must be excluded as a comparable. The Court noted consistent precedents and affirmed the Tribunal's deletion on this ground. [Paras 6, 7, 8]

Wipro Technology Services Ltd. is excluded from the list of comparables as it is not an uncontrolled transaction under section 92B(2) and Rule 10B(1)(e)(ii).

No estoppel against statutory provisions in transfer pricing comparability - Transfer pricing comparability analysis - A taxpayer is not estopped from asking exclusion of a company it had earlier listed as a comparable if it can demonstrate that the company is in fact not comparable. - HELD THAT: - The Court rejected the Revenue's contention that an assessee who had included an entity as a comparable in its transfer pricing documentation is precluded from challenging that entity's inclusion on appeal. The Court explained that there can be no estoppel against the provisions of the Act and that if a company was erroneously reported as comparable, the assessee may contend before the Tribunal that it is not comparable. The Tribunal may exclude a company originally included by the assessee if the assessee proves it was wrongly included. [Paras 6, 8]

The plea of estoppel is unsustainable; an assessee may seek exclusion of a wrongly included comparable.

Remand is an exception and should be used sparingly; the Tribunal should decide issues where materials and binding authority are available - Remand versus final adjudication - Whether the ITAT erred in remanding corporate tax issues (characterisation of composite rental income and related matters) to the Assessing Officer instead of finally deciding them when materials and an intervening jurisdictional High Court decision were available. - HELD THAT: - The Court held that remand is a discretionary power to be exercised sparingly and is inappropriate where the Tribunal, as the last fact finding authority, has before it the requisite materials and a binding/intervening decision of the jurisdictional High Court bearing directly on the issue. In such circumstances the Tribunal should decide the question rather than restore it to the AO for reconsideration, so as to avoid unnecessary prolongation of litigation. Applying this principle, the Court found the ITAT ought to have decided the corporate tax questions concerning the head under which composite rental income is taxable and therefore partly allowed the assessee's appeals to the limited extent of directing the ITAT to decide those grounds for AY 2011 12 and AY 2012 13. [Paras 12, 13, 17]

ITAT's remand of the corporate tax issues was set aside to the limited extent that the matters are to be decided by the ITAT on the merits; the appeals are restored to the ITAT for that purpose.

Remand versus admission of additional evidence - Direction to the AO to decide certain issues afresh where the issue had not been raised before the AO/DRP and the assessee filed additional evidence (e.g., claim under section 10A and adjustments relating to foreign exchange and WDV). - HELD THAT: - The Court found that where issues were not previously raised before the AO or DRP and the assessee has placed additional evidence before the Tribunal (such as the claim for benefit under section 10A in respect of interest income), it was appropriate for the ITAT to direct the AO to decide those issues afresh after affording opportunity of hearing. The Court declined to interfere with the ITAT's directions in respect of such issues. [Paras 14]

The ITAT's directions to the AO to decide those issues afresh after hearing are appropriate and are not interfered with.

Final Conclusion: The High Court dismissed the Revenue's challenge to the ITAT's exclusion of specified comparables (upholding exclusions for lack of segmental information and on the application of section 92B(2)/Rule 10B(1)(e)(ii)), rejected the estoppel argument, declined to interfere with the ITAT's directions where additional evidence required fresh adjudication by the AO, and partially allowed the assessee's appeals by directing the ITAT to decide, on the merits, certain corporate tax questions previously remanded for AY 2011 12 and AY 2012 13.

Reopening of assessment under section 147 - reassessment to correct assessing officer's error - failure to fully and truly disclose material facts - change of opinion - disallowance under section 40(a)(ia)

Reopening of assessment under section 147 - failure to fully and truly disclose material facts - change of opinion - disallowance under section 40(a)(ia) - Validity of reopening assessment for AY 2008-09 to disallow interest claimed where the issue was considered in original assessment and no failure to disclose by the assessee was recorded - HELD THAT: - The Tribunal held that validity of reassessment must be judged from the reasons recorded. The reasons recited that the entire interest claim required disallowance and that the omission resulted from the Assessing Officer's failure to make the disallowance in the original assessment. The assessee had disclosed the interest claim in the return and the AO had examined the claim at the original assessment, disallowing a part of it. In these circumstances the Tribunal applied the settled principle that reopening after four years cannot be used to rectify an assessing officer's error or mere change of opinion; reassessment is permissible after four years only where there is a failure by the assessee to fully and truly disclose material facts. Reliance was placed on earlier authorities, including Titanor Components Ltd. , and the Delhi High Court decision in Techman Buildwell , to the effect that omission by the AO to make an addition is not a valid basis for reopening the assessment. Consequently, the reopening was held to be invalid and the consequent addition could not be sustained. [Paras 7, 9, 10]

Reopening of assessment quashed and the additions made pursuant to the reassessment deleted.

Final Conclusion: Reassessment proceedings initiated by the AO for AY 2008-09 were quashed because the interest claim had been disclosed and considered in the original assessment and the reopening amounted to correcting the AO's error/change of opinion; all additions arising from the reassessment are deleted and the appeal is allowed.

Deduction under section 36(1)(iii) for interest on capital borrowed for business - disallowance under section 37(1) as a general provision - mercantile system of accounting - genuineness and creditworthiness of loans - consistency and definiteness of approach - jurisdictional limits on appellate directions to reopen earlier years

Deduction under section 36(1)(iii) for interest on capital borrowed for business - mercantile system of accounting - genuineness and creditworthiness of loans - consistency and definiteness of approach - Whether interest on unsecured loans outstanding from earlier years could be disallowed in AY 2016-17 - HELD THAT: - The Tribunal found that the unsecured loans were taken in earlier years and interest on those amounts had been admitted/allowed in earlier years; the assessee follows the mercantile system of accounting and continued to carry the outstanding loans into AY 2016-17. Applying the principle of consistency and definiteness of approach, and relying on the reasoning in Sri Dev Enterprises , the Tribunal held that the revenue cannot, in the assessment for a subsequent year, treat an opening or carried-forward loan balance as not being a loan when that position was accepted in earlier years without reopening those earlier assessments. Accordingly, where the borrowings were antecedent to the year under appeal and interest was allowable under the specific rule for interest on capital borrowed for business, the authorities were not justified in disallowing the interest in AY 2016-17 by invoking the general disallowance provision; the assessee was not required to re-establish genuineness of the earlier-year loan in the current-year assessment. [Paras 9, 10]

Addition disallowing interest for AY 2016-17 was deleted and the interest claim under the specific provision was held allowable.

Jurisdictional limits on appellate directions to reopen earlier years - consistency and definiteness of approach - Whether the Commissioner (Appeals) exceeded jurisdiction by directing the Assessing Officer under section 150 to take remedial action for earlier years - HELD THAT: - The Tribunal examined the appellate direction given by the Commissioner (Appeals) to direct the Assessing Officer under section 150 to take remedial action in respect of earlier years. Finding that the underlying assessments for the earlier years had not been reopened and that the loan position for those years had been accepted, the Tribunal held that such a direction was beyond the proper scope of the appellate order in the appeal for AY 2016-17. The Tribunal therefore set aside the appellate direction to take remedial action for earlier years. [Paras 11]

Direction of the Commissioner (Appeals) to the AO under section 150 for earlier years was set aside.

Final Conclusion: The appeal is allowed: the addition of interest for AY 2016-17 is deleted and the appellate direction to the AO to take remedial action in earlier years is set aside.

Deductibility of business establishment expenses - allowability of expenses claimed in income-tax return - interest on income-tax refund - remand for fresh adjudication on evidentiary basis

Deductibility of business establishment expenses - allowability of expenses claimed in income-tax return - Whether the statutory establishment and allied expenses claimed by the assessee are allowable as deduction. - HELD THAT: - The Tribunal examined the particulars of the expenditure (telephone, conveyance, auditor's fees, taxation matters, legal and professional fees, filing fees, advertisement and publicity, bank charges and miscellaneous expenses) and found that these expenditures were incurred for business and not levied on house property income. The Assessing Officer's finding that the expenditure related to house property was factually incorrect. Applying the principle that business-incurred statutory expenses are deductible when properly incurred, the Tribunal held that the claim must be allowed and directed the Assessing Officer to permit the deduction. [Paras 3]

Deduction of the claimed establishment and allied expenses allowed and AO directed to allow the same.

Interest on income-tax refund - remand for fresh adjudication on evidentiary basis - Whether interest income on income-tax refund should be assessed as the assessee had not received such interest according to Form-26AS and the Department maintained it had paid such interest. - HELD THAT: - The assessee produced Form-26AS showing non-receipt of interest; the Department relied on its internal record but the departmental representative could not produce documentary evidence before the Tribunal. In view of the absence of documentary proof placed on record by the Department and the dispute of fact, the Tribunal remanded the issue to the Assessing Officer for fresh adjudication. The AO was directed to serve on the assessee the document(s) on which he relies to conclude that interest was paid; if such evidence is not furnished to the assessee, no addition can be made. [Paras 4, 5]

Issue remanded to the AO for fresh adjudication with direction to furnish the departmental evidence to the assessee; failing production of such evidence, no addition shall be made.

Final Conclusion: Appeal allowed in part: the claimed establishment expenses are allowed; the issue of interest on income-tax refund is remanded to the Assessing Officer for fresh adjudication with the directions given by the Tribunal.

Allowability of education cess as business expenditure - interpretation of Section 40(a)(ii) - distinction between tax and cess - application of CBDT Circular No. 91/58/66-ITJ(19) - Section 43B - deduction on actual payment of tax, cess or fee - Expressio unius est exclusio alterius

Allowability of education cess as business expenditure - interpretation of Section 40(a)(ii) - application of CBDT Circular No. 91/58/66-ITJ(19) - distinction between tax and cess - Expressio unius est exclusio alterius - Education cess paid by the assessee is not covered by Section 40(a)(ii) and is allowable as a deduction under Section 37 while computing total income. - HELD THAT: - The Tribunal examined the language of Section 40(a)(ii) and noted that Parliament deliberately omitted the word 'cess' from that provision; accordingly the provision disallows only rates or taxes levied on or assessed by reference to profits or gains. Education cess is levied on the amount of tax and is not levied on profits or gains nor assessed by reference thereto. The CBDT Circular No. 91/58/66-ITJ(19) (18.05.1967), which advised that the omission of 'cess' from the clause means cess is not covered by Section 40(a)(ii), is binding on the revenue and supports the assessee's claim. The statutory definition of 'tax' was also noted as not encompassing cess for the relevant periods. Applying the legal maxim Expressio unius est exclusio alterius, and having regard to judicial decisions adopting the CBDT circular (including the Rajasthan and Bombay High Courts and earlier Tribunal precedents), the Tribunal concluded that cess cannot be treated as 'tax' for the purposes of Section 40(a)(ii) and therefore the education cess paid by the assessee is deductible. The Tribunal directed the Assessing Officer to allow the claimed deduction while computing total income. [Paras 14, 15]

Appeal allowed; AO directed to allow deduction of the education cess paid by the assessee while computing total income.

Final Conclusion: The Tribunal allowed the appeal, holding that education cess is not covered by Section 40(a)(ii) and directing the Assessing Officer to permit the deduction of the education cess paid while computing the assessee's total income.

Defective show cause notice - Penalty under section 271AAA - Notice under section 274 read with section 271AAA - Void ab initio - Immunity under section 271AAA(2) - Surrender of undisclosed income during search under section 132(4)

Defective show cause notice - Notice under section 274 read with section 271AAA - Void ab initio - Validity of penalty proceedings initiated by notice under section 274 read with section 271AAA - HELD THAT: - The Tribunal examined the show cause notice issued to the assessee and found that the Assessing Officer had not specified the charge in conformity with the requirements for initiating proceedings under section 271AAA read with section 274. The body of the notice merely used wording corresponding to section 271(1)(c) rather than setting out the specific charge under section 271AAA, thereby rendering the notice defective. Reliance was placed on a coordinate bench decision holding that such defect in the notice vitiates the penalty proceedings, which are therefore void ab initio. Applying that reasoning to the present notices for the two assessment years, the Tribunal concluded that the penalty proceedings were invalid from inception and ordered deletion of the penalties on this legal ground. [Paras 6, 7, 8, 9]

Penalty proceedings under section 271AAA quashed as void ab initio for defective show cause notice; penalties deleted.

Immunity under section 271AAA(2) - Surrender of undisclosed income during search under section 132(4) - Penalty under section 271AAA - Whether, on merits, penalty under section 271AAA was leviable where excess depreciation was withdrawn after search and admissions were made during search proceedings - HELD THAT: - The Tribunal considered the merits although academic in view of the primary finding on notice defect. It found that the excess depreciation related to the specified previous year, that the assessee admitted the undisclosed amount during the course of search in a statement under section 132(4), and that the manner in which the amount arose was substantiated. Further, no tax was payable as surrender of the depreciation resulted in no tax liability due to losses. These facts satisfy the conditions for immunity under section 271AAA(2) - admission during search, substantiation of derivation, and tax/interest compliance where applicable. On that basis the Tribunal held that, on merits, the penalty was also not sustainable and allowed deletion of the penalty demands for both years. [Paras 10, 11, 12]

On merits, penalty under section 271AAA not sustainable as conditions for immunity under section 271AAA(2) were met; penalties deleted.

Final Conclusion: Both appeals for Assessment Years 2011-12 and 2012-13 are allowed; penalties levied under section 271AAA are deleted because the show cause notices were defective (proceedings void ab initio) and, on the merits, the conditions for immunity under section 271AAA(2) were satisfied.

Unexplained cash credit - onus on assessee to establish identity, creditworthiness and genuineness of creditor - validity of assessment for want of valid notice under section 143(2) - remand for verification of documentary evidence - opportunity of hearing before fresh adjudication

Unexplained cash credit - onus on assessee to establish identity, creditworthiness and genuineness of creditor - remand for verification of documentary evidence - Addition of Rs. 2,57,00,000/- made under the head of unexplained cash credit was remanded to the Assessing Officer for fresh verification. - HELD THAT: - The Tribunal noted that the Assessing Officer added the amount as unexplained cash credit for want of any explanation, while the assessee maintained that the amount represented earnest money received from contractors through banking channels, supported by agreements and bank statements, and that the amount was subsequently refunded. The assessee asserted that documentary evidence and an affidavit were placed on record, but the Assessing Officer did not consider those documents even during remand proceedings. Given that the claim involves receipts through banking channels and contractual security deposits which the assessee says were repaid, the Tribunal held that the documentary evidence must be properly verified before a conclusion under section 68 is reached. The Tribunal expressly refrained from expressing any opinion on the merits and directed that the Assessing Officer examine and consider the evidence afresh, allowing the assessee an appropriate opportunity of hearing. [Paras 6]

Addition of Rs. 2,57,00,000/- under section 68 is set aside and remanded to the Assessing Officer for verification and fresh adjudication after affording the assessee an opportunity of hearing.

Remand for verification of documentary evidence - opportunity of hearing before fresh adjudication - Addition of Rs. 2,22,735/- on account of alleged booking amount received in cash was remanded to the Assessing Officer. - HELD THAT: - Because the principal issue concerning the unexplained earnest money was remanded for verification and fresh examination of the assessee's documentary evidence, the Tribunal directed that the related addition in respect of alleged cash bookings also be remanded to the Assessing Officer with similar directions to verify the records and evidence and to decide afresh after giving the assessee an opportunity of hearing. [Paras 7]

The addition sustained by the CIT(A) towards alleged booking amount received in cash is remanded to the Assessing Officer for fresh consideration with similar directions.

Validity of assessment for want of valid notice under section 143(2) - remand for verification of documentary evidence - Question of validity of assessment proceedings for alleged non-service or invalid service of notice under section 143(2) was remanded to the Assessing Officer for determination. - HELD THAT: - The Assessing Officer's assessment order records that notice under section 143(2) was sent by speed post on 29.09.2011, but the record does not clearly disclose the date of the notice or dispatch. The assessee had sought certified copies of the assessment proceedings and note-sheet, which were not supplied. In the absence of the relevant record, the Tribunal found it impossible to decide conclusively whether the notice was issued and served within the period of limitation. Accordingly, the Tribunal set aside the issue to the Assessing Officer to determine the date of issue, dispatch and service of the notice and to consider the assessee's objections, after verification of the record and affording opportunity of hearing. [Paras 8]

Validity of the assessment with respect to service and timeliness of notice under section 143(2) is remanded to the Assessing Officer for verification of records and fresh decision after hearing the assessee.

Final Conclusion: The Tribunal set aside the impugned additions and the question of validity of the assessment to the file of the Assessing Officer for verification and fresh adjudication on the evidence produced by the assessee, directing that the assessee be afforded an appropriate opportunity of hearing; appeal disposed of for statistical purposes.

Disallowance of expenditure in relation to exempt income under section 14A read with Rule 8D - Allowability of Corporate Social Responsibility expenditure as business expenditure under section 37(1) - Rule of consistency in assessment and reliance on earlier years' treatment - Remand for verification to give effect to consistency where facts are not distinguishable

Disallowance of expenditure in relation to exempt income under section 14A read with Rule 8D - Deletion of disallowance under section 14A read with Rule 8D for AYs 2013-14 and 2014-15 was sustainable. - HELD THAT: - The Tribunal accepted that the assessee, a Government undertaking, held substantial investments in specified Government securities from earlier years and had declared dividend income in the relevant years. The AO proceeded to invoke section 14A read with Rule 8D(2)(iii) without recording any satisfaction or bringing evidence to show that expenditure was incurred to earn exempt dividend income; the AO's approach was mechanical. Where the assessee's books were accepted and investments originated in earlier years, the AO was required to record dissatisfaction before making an imputation under Rule 8D. Reliance was placed on coordinate and High Court decisions and on the assessee's own earlier tribunal orders; in these circumstances the CIT(A)'s deletion of the disallowance was held not to be illegal or perverse. [Paras 9, 10, 11, 12, 13]

Grounds of the Revenue challenging deletion under section 14A/Rule 8D are dismissed; deletion upheld for AYs 2013-14 and 2014-15.

Allowability of Corporate Social Responsibility expenditure as business expenditure under section 37(1) - Rule of consistency in assessment and reliance on earlier years' treatment - Deletion of addition on account of CSR expenditure for AYs 2013-14 and 2014-15 was sustainable and the disallowance by the AO was not justified. - HELD THAT: - The Tribunal noted that the assessee, a public sector undertaking, incurred CSR and sustainable development expenditures pursuant to governmental guidelines and as part of its business operations. The AO mechanically disallowed these claims without examining the nature of expenses or applying the rule of consistency where identical claims had been accepted in earlier years. Tribunal relied on precedents holding that CSR or similar expenditures incurred by government-controlled companies pursuant to government directions can be incidental to business and deductible under section 37(1). In view of those principles and the facts that the expenditures were directed by the Government and earlier years' treatment was favorable, the CIT(A)'s deletion of the CSR disallowance was upheld. [Paras 16, 17, 18, 19, 20]

Grounds of the Revenue challenging deletion of CSR-related additions are dismissed; CIT(A)'s deletion upheld for AYs 2013-14 and 2014-15.

Rule of consistency in assessment and reliance on earlier years' treatment - Remand for verification to give effect to consistency where facts are not distinguishable - Claim of sustainable development expenses (Rs. 77,18,481) for AY 2013-14 which was upheld as disallowance by CIT(A) is set aside and remanded to the AO to examine and apply earlier years' treatment if facts are not distinguishable. - HELD THAT: - Although the CIT(A) affirmed the disallowance by observing lack of cogent argument from the assessee, the Tribunal noted that the assessee's sustainable development expenses had been allowed in earlier years. The Tribunal held that revenue authorities must follow the rule of consistency and, where facts are not distinguishable, give effect to prior favorable treatment. Consequently the matter was not adjudicated finally on merits but was directed back to the AO for verification and deletion in accordance with earlier years' orders if the facts remain similar. [Paras 21, 22]

Cross-objection on sustainable development expenses is allowed for statistical purposes and the issue is remanded to the AO for reconsideration in light of earlier years' treatment.

Final Conclusion: Both appeals filed by the Revenue are dismissed: deletion of disallowance under section 14A/Rule 8D and deletion of additions on account of CSR expenditure for AYs 2013-14 and 2014-15 are sustained. The assessee's cross-objection on sustainable development expenses for AY 2013-14 is allowed for statistical purposes and remanded to the AO to apply earlier years' treatment if facts are not distinguishable.

Burden of proof to establish genuineness of purchases - estimation of unsubstantiated purchases by adopting a percentage of purchases as deemed profit - bogus accommodation entries and admissions recorded in search proceedings - effect of non-production of suppliers and non-service of summons under section 133(6) on evidentiary burden - assessment under section 143(3) and absence of reassessment proceedings

Assessment under section 143(3) and absence of reassessment proceedings - reopening of assessment - Validity of the contention that the assessing officer lacked jurisdiction to reopen proceedings for the year under consideration - HELD THAT: - The assessment was framed under section 143(3) only and no reassessment proceedings were initiated for the year in question. The appellate bench examined the assessment record and concluded that there were no reassessment proceedings to impugn. Consequently, the legal ground challenging jurisdiction/reopening was found to be without substance and dismissed. [Paras 1]

The plea challenging jurisdiction/reopening is dismissed; assessment under section 143(3) stands and no reassessment was found.

Burden of proof to establish genuineness of purchases - estimation of unsubstantiated purchases by adopting a percentage of purchases as deemed profit - bogus accommodation entries and admissions recorded in search proceedings - effect of non-production of suppliers and non-service of summons under section 133(6) on evidentiary burden - Sustenance of addition by estimating 12.5% of alleged purchases on account of unsubstantiated and suspicious purchases - HELD THAT: - The authorities relied on information from search proceedings and statements where accommodation entries were admitted; notices under section 133(6) sent to suppliers were returned unserved and the assessee failed to produce any supplier for confirmation or to furnish complete particulars sought by the assessing officer. In view of the assessee's failure to discharge the onus to prove genuineness of purchases and absence of any new material before the Tribunal, the estimation made by the assessing officer (confirmed by the CIT(A)) was held to be justified. The Tribunal accepted the lower authorities' reasoning that in such circumstances an addition by way of a percentage estimate of purchases is appropriate and that the plea regarding lack of opportunity to cross-examine suppliers was weakened by the initial onus resting on the assessee to produce them. [Paras 3, 4, 5]

The addition estimated at 12.5% of the alleged purchases is confirmed and the grounds challenging the estimation are dismissed.

Final Conclusion: The appeal is dismissed: the jurisdictional challenge to reopening is rejected (assessment under section 143(3) only) and the Tribunal affirms the addition made by estimating 12.5% of the suspicious, unsubstantiated purchases after noting failure of the assessee to discharge the evidentiary burden.

Penalty under section 271(1)(c) - Deduction under section 80P - Bonafide mistake and absence of concealment - Deletion of penalty on facts

Penalty under section 271(1)(c) - Bonafide mistake and absence of concealment - Whether the penalty imposed under section 271(1)(c) is sustainable where deductions under section 80P were disallowed but the claims arose from a bonafide mistaken belief with no intention to conceal income. - HELD THAT: - The Tribunal found that the assessee, a Co-operative Agriculture Multipurpose Society, claimed deductions under section 80P for interest and certain business receipts under a mistaken but bonafide belief of entitlement. The Assessing Officer disallowed deduction in respect of interest earned from commercial banks and made corresponding additions (after allowing related expenditure), and initiated penalty proceedings under section 271(1)(c). On review of the record and submissions, the Tribunal concluded there was no effort to conceal income or to furnish inaccurate particulars; the errors arose from a bona fide mistaken view of law/fact. The Tribunal noted reliance on earlier Tribunal authority in similar circumstances where a cooperative society had claimed deductions under a mistaken belief and there was no intention to evade tax. In these circumstances the imposition of penalty under section 271(1)(c) was not justified and required deletion.

Penalty under section 271(1)(c) deleted and the appeal allowed.

Final Conclusion: Penalty imposed under section 271(1)(c) in respect of disputed deductions under section 80P for assessment year 2010-2011 is deleted by the Tribunal on finding that the claims arose from a bonafide mistake with no concealment; appeal allowed.

Exemption under section 11 - proviso to section 2(15) - commercial activity affecting charitable purpose - principles of mutuality - registration under section 12A - conclusiveness of objects for exemption - incidental commercial activity and charitable purpose

Proviso to section 2(15) - commercial activity affecting charitable purpose - principles of mutuality - exemption under section 11 - Whether the finding of the Commissioner (Appeals) that the proviso to section 2(15) applies and denial of exemption under section 11 was sustainable; and the appropriate course of action. - HELD THAT: - The Tribunal observed that the Assessing Officer in the assessment order treated the assessee as a mutual concern and disallowed part of the claim on that basis, but did not apply the proviso to section 2(15). The Commissioner (Appeals) agreed on mutuality and additionally held that the proviso to section 2(15) applied, yet his own observations were internally inconsistent as he both doubted that the assessee's main object was advancement of an object of general public utility and simultaneously applied the proviso. The Tribunal noted the settled principle that income from commercial activity which is incidental to carrying out charitable objects does not convert the object into a non charitable one. Because the departmental authorities had not factually verified whether services are provided to others beyond members, and because the Commissioner (Appeals) proceeded inconsistently, the appellate order applying the proviso could not be sustained without fresh consideration of the relevant facts. The Tribunal therefore set aside the impugned order and restored the matter to the Assessing Officer for fresh adjudication with opportunity to the assessee to be heard. [Paras 6, 7, 8]

Impugned conclusion that the proviso to section 2(15) applies and denial of exemption under section 11 set aside; matter remitted to the Assessing Officer for fresh adjudication after hearing the assessee.

Registration under section 12A - conclusiveness of objects for exemption - exemption under section 11 - Whether prior registration under section 12A precludes reassessment of the assessee's objects for the purpose of denying exemption under section 11 in the absence of any change in objects. - HELD THAT: - The Tribunal recorded that the assessee had been registered under section 12A long ago and that the registration continues. Relying on the principle affirmed by the jurisdictional High Court, the Tribunal held that once registration under section 12A has been granted on the basis of objects being charitable, the Assessing Officer cannot revisit or reopen those objects for the purpose of denying exemption under section 11 unless there is a change in the objects or facts warranting such re examination. Since the departmental authorities did not verify whether the registered objects remained unchanged or whether services were extended beyond members, the Tribunal directed the Assessing Officer to examine these factual aspects afresh and proceed in accordance with law after giving the assessee a reasonable opportunity of being heard. [Paras 8]

Registration under section 12A must be respected unless objects have changed; matter remitted to the Assessing Officer to verify continuity of objects and facts and to decide afresh after hearing the assessee.

Final Conclusion: Appeal allowed for statistical purposes; the order of the Commissioner (Appeals) is set aside and the matter is remitted to the Assessing Officer for fresh adjudication on whether the assessee's objects (on the basis of its continuing registration) and activities permit exemption under section 11, after affording the assessee a reasonable opportunity of hearing.

Failure to provide adequate opportunity of hearing - principles of natural justice - dismissal of appeal without adjudication on merits - remand for fresh consideration - appellate adjudication on merits

Failure to provide adequate opportunity of hearing - principles of natural justice - dismissal of appeal without adjudication on merits - remand for fresh consideration - Whether the order of the CIT (Appeals) dismissing the assessee's appeal without giving a proper opportunity of hearing and without adjudicating the merits ought to be sustained. - HELD THAT: - The Tribunal found that the CIT (Appeals) did not record any categorical findings on the merits and failed to afford the assessee a sufficient opportunity to represent its case. In view of this procedural deficiency and the need to follow the principles of natural justice, the CIT (Appeals) was held not to be justified in dismissing the appeal without hearing and without deciding the substantive contentions. The matter was therefore remanded to the file of the CIT (Appeals) for fresh adjudication on merits, with a direction that the assessee be given an opportunity of hearing in accordance with natural justice. The Tribunal did not decide the substantive tax issues on merits and confined its decision to the procedural defect and the need for fresh consideration. [Paras 7]

The appeal is partly allowed to the extent that the matter is remitted to the CIT (Appeals) for fresh adjudication on merits after affording the assessee an opportunity of hearing.

Final Conclusion: The Tribunal remitted the appeal to the CIT (Appeals) for fresh consideration on merits, holding that the CIT (Appeals) had not given the assessee adequate opportunity of hearing; the assessee must be heard in accordance with the principles of natural justice.

Registration under section 12AA of the Income Tax Act - charitable objects - genuineness of activities - distinction between registration and assessment - proof of expenditure as matter of assessment

Registration under section 12AA of the Income Tax Act - genuineness of activities - proof of expenditure as matter of assessment - distinction between registration and assessment - Validity of denial of registration under section 12AA where the Commissioner called for evidence of expenditure incurred during financial year 2018-19 - HELD THAT: - The Tribunal held that the Commissioner of Income Tax, Exemption, Pune rejected registration exclusively because the trust allegedly failed to furnish evidence of expenditure of Rs. 6.57 lakhs for financial year 2018-19. The Commissioner made no finding that the trust's objects were not charitable or that the expenditure was for non-charitable purposes. The power under section 12AA is confined to satisfying whether the objects are charitable and the activities genuine. Requiring proof of expenditure and adjudicating its correctness goes beyond the limited enquiry for grant of registration and intrudes upon the assessment process, which is a distinct statutory exercise. The Tribunal relied on the principle that grant of registration and assessment/exemption proceedings under section 11 are separate, citing earlier authorities including Ananda Social and Educational Trust and other decisions , to hold that the Commissioner exceeded his jurisdiction by calling for and treating proof of expenditure as a precondition for registration. For these reasons the impugned order was set aside and the Commissioner directed to grant registration under section 12AA. [Paras 9, 10, 11]

The order denying registration under section 12AA dated 18.09.2020 is set aside and the Commissioner is directed to grant registration under section 12AA.

Final Conclusion: The appeal is allowed; the order refusing registration under section 12AA is quashed and the Commissioner is directed to grant registration, since the rejection for want of proof of expenditure exceeded the limited scope of enquiry under section 12AA and improperly encroached upon assessment matters.

Res judicata - maintainability of fresh writ after withdrawal - interest payable as directed by higher court - use of statutory recovery provisions for enforcement

Res judicata - maintainability of fresh writ after withdrawal - Whether the present writ petition challenging demand of interest and notices of attachment is maintainable after an earlier writ by the same petitioners was withdrawn. - HELD THAT: - The court observed that the petitioners had earlier filed and then withdrew a writ petition (DB CWP No.10398/2019) with liberty to seek clarification from the Supreme Court (order dated 17.07.2019). Having withdrawn the earlier petition when advised to seek clarification, the petitioners cannot maintain a fresh writ petition in respect of the same cause even if premised on different legal grounds. The court applied the principle of res judicata to hold that a fresh petition for the same cause is barred by the prior withdrawal and consequent dismissal as withdrawn. [Paras 6, 8]

The fresh writ petition is barred by res judicata and is not maintainable.

Interest payable as directed by higher court - use of statutory recovery provisions for enforcement - Whether the petitioners are liable to pay interest at the rate fixed by the Supreme Court and whether invocation of the Customs Act and Rules for recovery is permissible. - HELD THAT: - The court relied on the Supreme Court's operative direction dated 22.11.2017 which directed payment of the fine along with interest calculated at 10% per annum. The communication dated 16.05.2018 calling upon the petitioners to pay interest @10% referenced the Supreme Court order and did not invoke the Customs Act for determining rate of interest. The respondents subsequently invoked provisions of the Customs Act and Rules only as incidental powers to effect recovery after petitioners failed to pay. The court concluded that determination of interest was made in light of the Supreme Court's order and that using statutory provisions for the manner and mode of recovery is permissible; accordingly the challenge on the ground that Customs Act provisions cannot be invoked for interest calculation or recovery failed on the merits. [Paras 10, 11, 12, 13, 14]

The petitioners are liable to pay interest at 10% p.a. as directed by the Supreme Court, and the respondents' invocation of the Customs Act and Rules for recovery is permissible as incidental enforcement of that obligation.

Final Conclusion: The writ petition is dismissed: it is barred by res judicata arising from the earlier withdrawal and, on merits, the petitioners are bound to pay interest at 10% p.a. as directed by the Supreme Court and the respondents may invoke the Customs Act and Rules for recovery of the amount.

Power to make provisions relating to imports and export - amendment of foreign trade notification - trade notice as clarification versus amendment - statutory manner of exercise of delegated power - Foreign Trade Policy applicability to SEZs and EOUs

Amendment of foreign trade notification - trade notice as clarification versus amendment - statutory manner of exercise of delegated power - Foreign Trade Policy applicability to SEZs and EOUs - A Trade Notice cannot be used to amend or modify a Trade Notification issued under the FTDR Act; clarification which effects an amendment must be issued in the statutory manner. - HELD THAT: - The Court examined the scope of the powers under the FTDR Act and the Foreign Trade Policy and applied the settled principle that where a statute prescribes a particular manner for doing an act, that manner must be followed. Notification No.8/2015-20, dated 12.06.2019, was issued under Section 3 read with the Foreign Trade Policy and imposed Minimum Import Prices applicable to imports including SEZs and 100% EOUs. Trade Notice No.50/2019-20, dated 14.02.2020, which declared that the MIP was not applicable to EOUs and SEZs, had the effect of altering the import policy embodied in the earlier notification. The Court held that such a substantive clarification which changes the applicability of the notification is not a mere administrative elaboration but an amendment to the notification; therefore it could not be effected by a Trade Notice not issued in the manner mandated by the statute. Relying on the legal principle that statutory powers must be exercised in the prescribed manner, the Court concluded that the Trade Notice improperly amended the Notification and was susceptible to being set aside. The Court also noted the statutory purpose of Section 3 in enabling prohibitions or restrictions to protect domestic production and standards, including in relation to SEZs and EOUs, and that such policy changes require formal notification in the Official Gazette.

Trade Notice No.50/2019-20, dated 14.02.2020, insofar as it clarifies or excludes SEZs and 100% EOUs from the MIP imposed by Notification No.8/2015-20 dated 12.06.2019, constitutes an impermissible amendment by notice and is set aside.

Final Conclusion: Writ petition allowed; Trade Notice No.50/2019-20 dated 14.02.2020 is quashed. Respondents remain free to amend Notification No.8/2015-20 by following the statutory procedure.

Validity of town seizure and burden of proof in town seizures - Domestic trade, possession and captive breeding of exotic species not prohibited - Non-application of Section 123 and Chapter IV-A of the Customs Act to non-notified exotic species - Role of CITES and enforcement at point of import/export

Validity of town seizure and burden of proof in town seizures - Non-application of Section 123 of the Customs Act - Seizure and confiscation of the appellant's exotic birds and animals in a town seizure were not sustainable because Revenue failed to establish smuggling and the burden of proof lay on Revenue in the facts of the case. - HELD THAT: - The Tribunal found the case to be a town seizure (not interception at entry/exit point) and recorded that the appellant had purchased the animals domestically, corroborated by two local suppliers. Revenue produced no cogent evidence that the appellant or the immediate suppliers had smuggled the birds/animals into India; reliance on untested oral statements of third parties and suspicion was insufficient. Since the exotic species seized are not notified under the relevant provisions, the statutory presumptions and special obligations applicable to notified goods under the Customs Act do not arise. On these facts the onus rested on Revenue to prove smuggling, which it failed to discharge. [Paras 3, 5]

Seizure and confiscation set aside for want of proof of smuggling; appellant entitled to return of seized animals.

Domestic trade, possession and captive breeding of exotic species not prohibited - Role of CITES and enforcement at point of import/export - Domestic possession, trade and captive breeding of exotic (non-native) species within India are not, by themselves, prohibited under the Wildlife (Protection) Act or the Customs/Foreign Trade regime; enforcement of CITES and customs controls is directed at international trade at the point of import/export. - HELD THAT: - The Tribunal accepted and followed High Court decisions (including Allahabad, Bombay and Rajasthan benches) holding that CITES governs international trade and that exotic species not scheduled under the Wildlife (Protection) Act are not subject to domestic prohibition. The Customs Act and Foreign Trade law operate at the point of international movement; where goods are not notified under provisions that trigger presumptions or Chapter IV-A obligations, mere domestic acquisition or possession does not attract penal consequences under the Customs Act. Consequently, absent evidence of illegal importation at the frontier or violation of CITES/import conditions, domestic keepers are not automatically liable to confiscation under customs law. [Paras 6]

Domestic trade/possession/captive breeding of the seized exotic species does not, per the legal authorities relied upon, justify confiscation under the Customs Act in absence of proof of unlawful import; thus confiscation cannot be sustained.

Final Conclusion: The appeal is allowed: the Tribunal set aside the impugned orders of confiscation and directed immediate return of the seized exotic birds and animals, concluding that Revenue failed to prove smuggling in a town seizure and that domestic possession/trade of non-notified exotic species is not, by itself, covered by the Customs Act or Wildlife (Protection) Act for confiscatory action.

Disqualification of directors under Section 164(2) of the Companies Act, 2013 - deactivation and reactivation of Director Identification Number (DIN) - vacation of office under Section 167(1) of the Companies Act, 2013 - power of the Registrar of Companies to publish list of disqualified directors - invalidity of DIN deactivation under the Companies (Appointment and Qualifications of Directors) Rules, 2014 - enquiry to attribute default to specific directors

Deactivation and reactivation of Director Identification Number (DIN) - invalidity of DIN deactivation under the Companies (Appointment and Qualifications of Directors) Rules, 2014 - power of the Registrar of Companies to publish list of disqualified directors - Validity of the Registrar of Companies' publication of lists of disqualified directors and deactivation of DINs and the legal consequence thereof. - HELD THAT: - The Court followed the decision of the Division Bench in Meethelaveetil Kaitheri Muralidharan which examined the scope of Rules governing allotment, cancellation and deactivation of DIN and the interaction of Sections 164 and 167(1) of the Companies Act, 2013. The Division Bench held that Rules relating to allotment and deactivation do not empower the RoC to deactivate DINs upon disqualification under Section 164(2), and that deactivation would be contrary to the scheme of Section 164 read with Section 167(1) because a person who remains a director of a defaulting company must retain the DIN to file requisite documents. Applying that reasoning, the Court set aside the impugned publication and deactivation and directed reactivation of DINs in accordance with the Division Bench order.

The notifications publishing lists of disqualified directors and the deactivation of the DINs are quashed and the DINs shall be reactivated in the terms indicated by the Division Bench.

Enquiry to attribute default to specific directors - disqualification of directors under Section 164(2) of the Companies Act, 2013 - Whether the Registrar of Companies may proceed against directors for disqualification and the manner in which such action should be undertaken. - HELD THAT: - The Court, while quashing the deactivation and related publications, made clear that the RoC is not precluded from initiating action regarding disqualification. Any such action must, however, be preceded by an enquiry to determine attribution of default to specific directors, taking into account the observations and conclusions of the Division Bench. Thus the Court left open and authorised fresh proceedings by RoC subject to such enquiry and compliance with the legal parameters laid down.

RoC may initiate action on disqualification only after conducting an enquiry to attribute defaults to specific directors, in accordance with the guidance of the Division Bench.

Final Conclusion: Writ petitions allowed following the Division Bench decision in Meethelaveetil Kaitheri Muralidharan; the notifications publishing lists of disqualified directors and the deactivation of DINs are quashed and DINs shall be reactivated, while preserving the Registrar of Companies' right to initiate proceedings after an enquiry to attribute defaults to specific directors.

Sanction of Scheme of Amalgamation - Appointed Date and operative effect of a scheme - Dispensing with meetings of shareholders and creditors - Share exchange ratio and allotment in consideration for amalgamation - Transfer and vesting of assets, liabilities and employees on amalgamation - Alteration of authorised share capital and amendment of Memorandum of Association - Statutory compliance with Registrar of Companies including filing and fee payment - Adjudication of stamp duty on sanctioned scheme - Reliance on auditor's certificate and accounting treatment under statutory provisions - Consideration of Official Liquidator's observations on objects clause

Sanction of Scheme of Amalgamation - Appointed Date and operative effect of a scheme - Transfer and vesting of assets, liabilities and employees on amalgamation - The Scheme of Amalgamation between the Transferor Company and the Transferee Company is sanctioned and shall take effect from the Appointed Date of 01.04.2020. - HELD THAT: - The Tribunal, after hearing the parties and noting that the Scheme as filed remained unchanged, the approvals by the boards and shareholders, publication of statutory notice and absence of objections, concluded that the Scheme placed before the Bench can be sanctioned. The Scheme provides that, with effect from the appointed date, the assets, liabilities, rights, privileges, claims and employees of the Transferor Company shall stand transferred and vested in the Transferee Company without further act or deed, and the Transferor Company shall be dissolved without winding up. The Tribunal fixed the Appointed Date as the opening hours of 1st April 2020 and directed that the Scheme shall be deemed effective from that date and operative from the Effective Date, thereby giving effect to the transfer and vesting provisions contained in the Scheme. [Paras 3, 17]

The Scheme is sanctioned and the Appointed Date is fixed as 01.04.2020; assets, liabilities and employees of the Transferor Company shall stand transferred and vested in the Transferee Company and the Transferor Company shall be dissolved without winding up.

Dispensing with meetings of shareholders and creditors - The convening and holding of meetings of the secured and unsecured creditors and shareholders, where applicable, were dispensed with as provided in the record and relevant applications. - HELD THAT: - The Tribunal recorded that the applications for dispensing with meetings had been considered in the connected application and orders were previously passed. It noted that all secured creditors of the Transferee Company (and there being none for the Transferor Company) had given consent, and that more than ninety percent of unsecured creditors of the Transferee Company, and the sole unsecured creditor of the Transferor Company, had given their consent as required. In view of these consents and the statutory scheme, the Tribunal accepted the dispensation and proceeded to sanction the Scheme. [Paras 2, 9]

Meetings of the relevant classes of shareholders and creditors were dispensed with as recorded and accepted by the Tribunal.

Share exchange ratio and allotment in consideration for amalgamation - Alteration of authorised share capital and amendment of Memorandum of Association - The share exchange ratio as certified by the registered valuer is accepted and the Transferee Company shall issue shares accordingly; the authorised share capital and Clause V of the Memorandum of Association of the Transferee Company shall stand altered on the Scheme becoming effective. - HELD THAT: - The Scheme provides, and the Tribunal noted, that in consideration for vesting of assets and liabilities the Transferee Company shall issue eighty equity shares of Rs.100 each for every ten equity shares of the Transferor Company (subject to cancellation of any shares held by the Transferor Company in the Transferee Company). A registered valuer's certificate in support of the swap ratio was produced and accepted. The Scheme contemplates that upon sanction the authorised share capital of the Transferee Company shall automatically stand increased by merging the authorised capital of the Transferor Company and that Clause V of the Memorandum of Association shall be altered without further act; the Transferee Company is directed to take steps to give effect to such alterations and to file amended constitutional documents with the Registrar. [Paras 5, 6, 7]

The share exchange ratio is validated and the Transferee Company shall allot shares as per the Scheme; the authorised share capital and Memorandum shall be altered on the Scheme taking effect and requisite filings shall be made.

Statutory compliance with Registrar of Companies including filing and fee payment - Adjudication of stamp duty on sanctioned scheme - Reliance on auditor's certificate and accounting treatment under statutory provisions - The Tribunal directed specified statutory compliances including filing of the order and Scheme with the Registrar of Companies in Form INC-28, payment of balance fees, filing amended MOA/AoA, lodging certified order with the Superintendent of Stamps for stamp duty adjudication, and drawing of Form CAA-7 by the Registrar of the Tribunal. - HELD THAT: - While sanctioning the Scheme, the Tribunal issued mandatory directions to give effect to statutory formalities: (i) copy of the order and certified Scheme to be filed with concerned authorities; (ii) the Petitioners to file this order and the Scheme with the Registrar of Companies electronically in Form INC-28 and submit physical copies within thirty days; (iii) the Transferee Company to comply with the requirement to apply to the ROC for payment of any balance fee under the relevant statutory provisions; (iv) the companies to lodge a certified copy of the order with the Superintendent of Stamps within sixty days for adjudication of stamp duty; (v) the Transferee Company to file amended MOA and AoA; and (vi) Registrar of the Tribunal to draw up Form CAA-7 and obtain the schedule of properties from the Transferor Company. The Tribunal also noted that accounting treatment under the Scheme conforms with statutory accounting standards and is certified by the auditor, and that the Transferee Company undertakes to discharge outstanding tax demands once the Scheme attains finality. [Paras 11, 12, 16, 17]

Statutory filings, fee payment, stamp duty adjudication and amendment and filing of constitutional documents are directed to be complied with as conditions of sanction; Registrar to draw up Form CAA-7 and the schedule of properties.

Consideration of Official Liquidator's observations on objects clause - The Official Liquidator's observation regarding the Transferor Company's objects clause was noted but did not prevent sanction of the Scheme. - HELD THAT: - The Official Liquidator reported and the Chartered Accountant certified that the affairs of the Transferor Company were not conducted prejudicially to shareholders or public. The Official Liquidator raised an objection that the Memorandum of Association of the Transferor Company restricted amalgamation only with companies having objects altogether or in part similar to it. The Tribunal considered the report of the Official Liquidator along with other material, including auditor's certificate, ROC report (which recorded no objection save for compliance direction), statutory consents and absence of objections from stakeholders, and concluded that the Scheme could be sanctioned notwithstanding the Official Liquidator's observation. [Paras 14]

The Official Liquidator's observation was considered but did not preclude sanction; the Scheme is sanctioned subject to the directed compliances.

Final Conclusion: The Tribunal sanctioned the Scheme of Amalgamation between the Transferor and Transferee Companies with effect from the Appointed Date of 01.04.2020, subject to the mandatory filings, fee payment, stamp duty adjudication and other directions recorded in the order; the petition is disposed of accordingly.

Restoration of name of company struck off from the register - striking off and dissolution of company for non-compliance - application under section 252(3) of the Companies Act, 2013 read with Rule 87A - filing of pending financial statements and annual returns with Registrar of Companies - publication in the Official Gazette upon restoration

Restoration of name of company struck off from the register - striking off and dissolution of company for non-compliance - filing of pending financial statements and annual returns with Registrar of Companies - publication in the Official Gazette upon restoration - Whether the name of the company struck off from the Register of Companies should be restored and on what terms - HELD THAT: - The Tribunal, having considered the application under the statutory provision invoked and the evidence filed by the applicant, was satisfied that the company holds assets and liabilities and that restoration would be just and proper. The Tribunal observed that refusal to restore, in the facts presented, would amount to an excessive penalty for the oversight in compliance. In consequence, the Tribunal directed restoration of the company's name in the Register of Companies. The Tribunal further directed that the applicant must file all pending financial statements and annual returns and comply with the Companies Act and rules thereunder, and comply with procedural requirements including filing of Form INC-28. The Tribunal also directed payment of costs to the Registrar to meet expenses connected with publication in the Official Gazette and related formalities, and required the applicant to place the Tribunal's order before the Registrar within the stipulated period.

Application allowed; the Registrar of Companies directed to restore the company's name on the applicant fulfilling the conditions of filing pending statutory records, complying with procedural formalities (including Form INC-28), and paying costs to the Registrar for publication and related expenses.

Final Conclusion: The Tribunal allowed the application for restoration of the company's name, directed compliance with filing and procedural requirements and payment of costs for Gazette publication, and disposed of the Company Application accordingly.

Scheme of Amalgamation - convening of meeting of secured creditors - quorum for meeting of secured creditors - modification of tribunal order - power to modify orders under Sections 230-232 of the Companies Act, 2013 - compliance with Companies (CAA) Rules, 2016 timelines for notices

Convening of meeting of secured creditors - compliance with Companies (CAA) Rules, 2016 timelines for notices - Scheme of Amalgamation - Direction to convene the meeting of secured creditors of Applicant No.1/Transferor Company on 22nd February 2021 for considering the proposed Scheme of Amalgamation, with opportunity to comply with statutory notice timelines. - HELD THAT: - The Tribunal accepted the Applicants' explanation that the order dated 03.12.2020 was received in softcopy on 10.12.2020 and physically on 11.12.2020, which prevented compliance with the one month advance notice and publication timelines prescribed by the Companies (CAA) Rules, 2016. Having considered the pleadings and submissions, the Tribunal found the reasons for seeking modification to be satisfactory and directed that the meeting of secured creditors be convened and held on 22nd February 2021 to consider the proposed Scheme of Amalgamation, thereby providing the Applicants adequate opportunity to adhere to the statutory timelines for sending and advertising the notice of the meeting. [Paras 5, 6]

Meeting of secured creditors of Applicant No.1/Transferor Company shall be convened and held on 22nd February 2021 for considering the proposed Scheme of Amalgamation.

Quorum for meeting of secured creditors - modification of tribunal order - power to modify orders under Sections 230-232 of the Companies Act, 2013 - Quorum for the meeting of secured creditors of Applicant No.1/Transferor Company is fixed at one and the earlier order dated 03.12.2020 is modified to that extent. - HELD THAT: - The Tribunal noted the Applicants' submission that, contrary to the earlier order's recording, there is effectively one secured creditor (the two loans being from the same creditor). Accepting this factual position and the Applicants' request for modification, the Tribunal exercised its power to vary the earlier order under the Companies Act provisions relied upon and fixed the quorum at one secured creditor. The Tribunal clarified that other directions in the order dated 03.12.2020 remain unchanged and that the present order shall form part of that order. [Paras 6]

Quorum for the secured creditors' meeting shall be one; the order dated 03.12.2020 stands modified to that extent.

Final Conclusion: I.A. No.530 of 2020 in CA (CAA) No.44/BB/2020 is allowed: the meeting of secured creditors of Applicant No.1 is directed to be held on 22nd February 2021 and the quorum for that meeting is fixed at one; the order dated 03.12.2020 is modified to the extent indicated, with other directions in that order remaining unchanged.

Restoration of company name - striking off under Section 248 - discretion under Section 252 - proof of carrying on business - statutory compliance and filing of annual returns - undertaking regarding demonetization period - continuing power of Registrar to proceed for late filings and penalties - directors disqualification unaffected by restoration

Restoration of company name - discretion under Section 252 - proof of carrying on business - Restoration of the name of M/s RSN Infotech Pvt. Ltd. in the Register maintained by the Registrar of Companies was allowed. - HELD THAT: - The Tribunal exercised its discretionary power under Section 252 of the Companies Act, 2013 to restore the company's name. The Applicant placed financial statements and Income Tax returns (covering the immediately preceding two years to the striking off) to demonstrate that the company was active and carrying on business as on the date of striking off. The Registrar of Companies raised no significant objection to restoration and sought only proof of business and subsequent compliances. In these circumstances, and having regard to the interests of stakeholders, employees and revenue, restoration was found to be just and was ordered. [Paras 10, 11]

Name of the Company restored in the Register maintained by the RoC.

Statutory compliance and filing of annual returns - conditions on restoration - Restoration was made subject to specific compliance conditions including filing of outstanding annual returns and financial statements, deposit for fees/charges, and an affidavit of compliance. - HELD THAT: - The Tribunal directed that, within specified timeframes after restoration, the company must file all outstanding annual returns and balance sheets with requisite fees, additional fee/late charges; deposit a specified sum to defray fees and RoC expenses with provision for adjustment and return of any excess; refrain from alienating valuable assets until compliances are complete; and file an affidavit of compliance within two months. These directions aim to secure statutory compliance and protect stakeholders while restoring the company. [Paras 12]

Restoration granted subject to the enumerated compliance directions.

Undertaking regarding demonetization period - proof of carrying on business - Shareholders were directed to give an undertaking that the company's accounts were not used to transact tainted money during the period of demonetization. - HELD THAT: - As part of the conditions for restoration, the Tribunal required a joint undertaking from the shareholders to the Registrar that the company's accounts were not used for transacting tainted money during demonetization. This condition was imposed notwithstanding the acceptance of documents showing business activity, as a precautionary assurance to the Registrar and stakeholders. [Paras 6, 12]

Shareholders to submit the specified undertaking to the Registrar of Companies.

Directors disqualification unaffected by restoration - continuing power of Registrar to proceed for late filings and penalties - Restoration does not automatically reinstate directors disqualified under the Companies Act nor bar the Registrar from proceeding against the company or its directors for alleged late filings or other statutory defaults. - HELD THAT: - The Tribunal expressly observed that restoration of the company's name does not revive any disqualified directors automatically; restoration of directorships, if applicable, must follow the law. Further, the order permitting restoration does not circumscribe the Registrar's statutory powers to proceed against the company and its directors for alleged late filings, defaults or to levy applicable fees and penalties. These limitations preserve regulatory and enforcement rights of the RoC. [Paras 12]

Directors' disqualification remains unaffected; Registrar retains power to pursue statutory proceedings and penalties.

Final Conclusion: The Tribunal allowed the application to restore the company's name on the Register, finding sufficient evidence of a running business and no substantial objection from the RoC, but imposed specified compliance conditions, an undertaking regarding demonetization, and clarified that restoration does not revive disqualified directorships or prevent the RoC from pursuing statutory proceedings.

Reduction of share capital - Confirmation under section 66 - Special resolution - Reorganisation of share capital - FEMA compliance - RBI automatic route for cancellation of shares held by non-residents - Filing under section 61 - Payment of legal fees to Central Government - Registration and publication of order and minutes

Reduction of share capital - Confirmation under section 66 - Special resolution - Reorganisation of share capital - Confirmation of the petition for reduction of the company's issued, subscribed and paid-up share capital under section 66 as approved by the shareholders' special resolution. - HELD THAT: - The Tribunal recorded that the petitioner-company passed a unanimous special resolution at the extraordinary general meeting held on January 25, 2020, approving reduction of paid-up value of equity shares from Rs. 10 to Rs. 7 and returning Rs. 3 per share, thereby reducing the paid-up capital from Rs. 20,00,00,000 to Rs. 14,00,00,000 and reorganising shareholding through issuance of new shares as provided in the scheme. Notices were published and served and no objections from creditors or other parties were received; the Registrar of Companies' report recorded no pending inspection, investigation, inquiry, complaints or prosecution. On these findings and in view of the petition falling within the ambit of section 66(1)(ii) (payment of paid-up share capital in excess of the wants of the company), the Tribunal allowed the petition subject to the directions contained in the order. [Paras 4, 6, 7, 11, 17]

Petition for reduction of share capital allowed and confirmed; reduction to take effect as set out in the form of minutes and scheme, subject to directions in the order.

FEMA compliance - RBI automatic route for cancellation of shares held by non-residents - Filing under section 61 - Direction to ensure compliance with FEMA and RBI guidelines and to file the relevant e-form under section 61. - HELD THAT: - The Registrar of Companies and the Regional Director noted that foreign/NRI/foreign body corporate shareholders are present and advised compliance with FEMA and RBI guidelines. The petitioner submitted an undertaking and relied on the RBI circular (A.P. (DIR Series) Circular No.10 dated August 30, 2005) stating that cancellation by an Indian company of shares held by non-residents is covered under the automatic route, and undertook to comply with applicable FEMA/RBI provisions. The Tribunal took the Registrar's observations on record and directed the petitioner to ensure compliance with FEMA and RBI guidelines and to file the requisite e-form under section 61 on the MCA-21 portal. [Paras 8, 9, 10, 11]

Petitioner directed to comply with FEMA and RBI guidelines as applicable and to file the relevant e-form under section 61.

Payment of legal fees to Central Government - Requirement to pay legal fees/cost to the Central Government for the Regional Director's office representation. - HELD THAT: - The Regional Director requested that legal fees/expenses of the office be paid by the applicant-company for representing the Central Government. Having considered the request and the petitioner's submissions, the Tribunal directed payment of legal fees/cost to the Central Government in an amount determined by the Tribunal as appropriate. [Paras 10, 11]

Applicant-company directed to pay legal fees/cost to the Central Government in the sum specified by the Tribunal.

Registration and publication of order and minutes - Obligation to file certified copy of the Tribunal's order and minutes with the Registrar of Companies and to publish notices of registration in specified newspapers. - HELD THAT: - The Tribunal recorded the petitioner's undertaking to file a certified/authenticated copy of the order and form of minutes certified by the Deputy Registrar/Assistant Registrar with the Registrar of Companies within 30 days of receipt of the order. The Tribunal further directed publication of notices regarding registration of the order and minutes in two newspapers having circulation in Gujarat (one English and one Gujarati) within 30 days of registration, and ordered that regulatory authorities may act on production of a certified copy of the order. [Paras 14, 16, 17]

Petitioner directed to file certified copy of order and minutes with ROC within 30 days and to publish the prescribed notices; regulatory authorities to act on production of certified copy.

Final Conclusion: The Tribunal allowed and confirmed the company's reduction of paid-up share capital under section 66 as approved by the special resolution, subject to directions including compliance with FEMA/RBI as applicable, filing of the requisite e-form under section 61, payment of legal fees to the Central Government, and registration and publication of the order and minutes in accordance with the directions.

Restoration of company name to the Register of Companies - striking off of company name for non-compliance - power of Registrar to strike off for non-filing but obligation to ensure realization of liabilities - tribunal's jurisdiction under section 252(3) to restore struck off companies - principle of ease of doing business as a factor in equitable relief - conditional restoration subject to filing of statutory documents and payment of costs - restoration of DINs and consequential actions

Restoration of company name to the Register of Companies - tribunal's jurisdiction under section 252(3) to restore struck off companies - principle of ease of doing business as a factor in equitable relief - conditional restoration subject to filing of statutory documents and payment of costs - Application under section 252(3) to restore the name of the Company struck off by the Registrar was allowed subject to conditions. - HELD THAT: - The Tribunal noted that the Registrar had acted under statutory power to strike off the Company for failure to file statutory returns, and had followed the prescribed procedure. The Registrar did not oppose restoration and declared that there were no pending inquiries or investigations against the Company. Having regard to the bona fide explanation of inadvertent non-filing, the absence of contest by the Registrar and the broader consideration of facilitating ease of doing business, the Tribunal exercised its power under section 252(3) to direct restoration. The restoration was ordered on terms: filing of all pending statutory documents with prescribed fees/additional fees/fines within 30 days of restoration; personal assurance by the Company's representative to ensure compliance; payment of the cost directed to the Central Government within the specified period; delivery of a certified copy of the order to the Registrar; and publication by the Registrar in the Official Gazette. The Tribunal expressly confined the order to the violations that led to striking off and preserved the Registrar's power to take appropriate action for any other violations or offences prior to or during striking off. The Tribunal also directed restoration of consequential actions including restoration of DINs of directors, if any. The order required the Company to resume business expeditiously after restoration. [Paras 6, 7]

The petition is allowed; the Registrar is directed to restore the Company's name and consequential entries, subject to specified compliance and payment conditions, and the Registrar's rights to act on other violations are preserved.

Final Conclusion: The Tribunal allowed the petition to restore the Company's name to the Register as if it had not been struck off, conditioning restoration on filing all pending statutory returns and fees, payment of the directed cost, delivery of the order to the Registrar and publication in the Official Gazette, while preserving the Registrar's power to act on any other violations.

Striking off under the Section 248(5) and satisfaction requirement of Section 248(6) - restoration of name of company under Section 252(3) - exercise of discretionary relief in the interest of justice and ease of doing business - bona fide default and undertaking to regularise statutory filings - restoration subject to conditions, compliance and payment of costs

Striking off under the Section 248(5) and satisfaction requirement of Section 248(6) - restoration of name of company under Section 252(3) - bona fide default and undertaking to regularise statutory filings - Whether the Tribunal should restore the name of the Company struck off the Register for non-filing of financial statements and annual returns. - HELD THAT: - The Tribunal found that the Registrar of Companies had validly proceeded to strike off the Company in exercise of powers under the strike-off provisions, but also noted that there were no investigations or complaints pending against the Company and the ROC did not oppose restoration subject to terms. The Petition disclosed that the Company remained a going concern, the non-filing was inadvertent/negligent due to professional lapse, the members undertook to regularise past filings and the strike-off would cause hardship to chit subscribers. Applying a lenient, discretionary approach in the interest of justice and in consonance with the principle of ease of doing business, the Tribunal exercised its power under Section 252(3) to restore the name. The Tribunal emphasised that restoration is being granted confined to the violations that led to the strike-off and that it does not preclude the ROC from taking any other appropriate action for other violations if found. [Paras 6, 7, 8, 9]

Name of the Company is restored on the Register by exercise of power under Section 252(3), subject to conditions.

Restoration subject to conditions, compliance and payment of costs - bona fide default and undertaking to regularise statutory filings - publication of restoration order and restoration of consequential actions (including DINs) - The conditions and procedural consequences attached to restoration of the Company's name. - HELD THAT: - The Tribunal directed that restoration shall operate as if the name had not been struck off, including restoration of consequential actions such as DINs, but made restoration conditional. The Company must file the pending statutory documents (financial statements and annual returns) with prescribed/additional fees as determined by the ROC within 30 days of restoration; the petitioning representative must ensure personal compliance; a specified cost is payable online to the Central Government within three weeks or the order will lapse; the ROC is to publish the order in the Official Gazette after delivery of a certified copy and compliance. The order is limited to the violations that caused the strike-off and does not bar the ROC from proceeding for other violations. [Paras 9]

Restoration is conditional on filing of pending documents with fees, personal assurance of compliance, payment of costs, delivery of certified copy and publication by the ROC; otherwise the order shall lapse and ROC may pursue other actions as lawful.

Final Conclusion: The Tribunal allowed the petition and ordered restoration of the Company's name under its discretionary power, subject to specific conditions including filing of pending returns/statements with fees, payment of costs, delivery of the order to the ROC and publication; restoration is confined to the violations that led to strike-off and does not prevent the ROC from taking lawful action for any other contraventions.

Buyout/sellout by competitive bidding between rival shareholder groups - valuation report finality for want of objection - Special Officer's appointment of valuer and scope of his powers - use of valuer's price as reserve and sealed competitive offers - limitations on imposing ancillary transfer and trademark restrictions without proof - resolution of oppression and mismanagement by ordering exit of one shareholder group

Buyout/sellout by competitive bidding between rival shareholder groups - use of valuer's price as reserve and sealed competitive offers - Whether, in the peculiar facts of this family company dispute, the Tribunal may direct competitive bidding between the rival shareholder groups for buyout/sellout of shares and fix the procedure for same - HELD THAT: - The Tribunal held that, given the irretrievable breakdown of relations between the rival groups and the multiplicity of interlocutory applications aimed at delaying final disposal, conduct of competitive bidding between the groups is an appropriate means to achieve finality. Relying on precedent that a competitively quoted price (higher than an independent valuer's opinion) better compensates an outgoing group, the Tribunal fixed the valuer's per share figure as a reserve and directed each group to submit sealed offers higher than that reserve within a stipulated time. The group quoting the higher price shall have the first option to buy the shares of the other group and the lower-quoting group shall transfer its shares to the successful bidder. The order implements the bidding mechanism as the determinative method to resolve the oppression and mismanagement dispute by facilitating an exit or exclusive takeover. [Paras 22, 23, 24, 26, 27]

Competitive sealed bidding between the petitioners' group and the respondents' group is permitted; the valuer's price is fixed as reserve and the higher-quoting group shall have first option to buy and the lower-quoting group shall transfer its shares.

Valuation report finality for want of objection - Special Officer's appointment of valuer and scope of his powers - Whether the valuation report prepared by the valuer appointed by the Special Officer is binding despite respondents' objection that the Special Officer appointed the valuer without obtaining suggested names from the parties - HELD THAT: - The Tribunal found that the order dated 03.12.2019 appointing a valuer had become final. The valuation report produced by the Special Officer became final because respondents failed to file objections within the period granted. The respondents' contention that the Special Officer acted beyond authority by choosing the valuer without party concurrence was examined; the Tribunal observed the Special Officer had accommodated respondents by adjourning meetings and providing opportunities, and respondents did not challenge the valuation on merits or suggest alternate valuation figures. Consequently, the procedural objection was held to be devoid of merit and did not vitiate the valuation report's finality. [Paras 22, 23]

The valuation report is final and may be relied upon for purposes of the bidding process; the procedural objection to the Special Officer's manner of appointment is rejected for want of merit and absence of timely challenge.

Limitations on imposing ancillary transfer and trademark restrictions without proof - Whether the Tribunal should impose the ancillary restrictions sought by the petitioners (restrictions on future transfer to third parties, assignment of trademarks, change in composition of shareholders/management, and earnest deposit/protections against proxy bidding) - HELD THAT: - The Tribunal refused to grant the ancillary restrictions sought because the petitioners failed to furnish requisite proof to justify such specific restraints. While the Tribunal accepted that bidding must be restricted to existing shareholders and that the competitive process should yield the outcome, it held that additional bespoke restrictions on future transfers of shares, trademarks, composition of management, or particular deposit/anti-proxy measures were not supported by material evidence and therefore could not be allowed. [Paras 25]

Prayers for specific restrictions on future transfers, trademarks, composition of shareholders/management and similar ancillary conditions are disallowed for want of proof, although bidding is to be restricted to existing shareholders.

Dispose of oppression and mismanagement by exit/buyout - Whether pendency of multiple interlocutory applications filed by respondents prevents the Tribunal from proceeding with the competitive bidding process to resolve the company petition alleging oppression and mismanagement - HELD THAT: - The Tribunal held that the pendency of numerous interlocutory applications filed by respondents did not preclude proceeding with the bidding process. The bench observed that many applications appeared to be delay tactics and that allowing one group to legally exit the company by sale of shares would effectively bring finality to the oppression and mismanagement litigation. Therefore, the existence of pending IAs was not a bar to directing the bidding mechanism and fixing timelines for the same. [Paras 20, 21, 26]

Pending interlocutory applications do not prevent the Tribunal from directing competitive bidding to effectuate exit/buyout and conclude the oppression and mismanagement proceedings.

Final Conclusion: The application is allowed in part: the valuer's per-share figure is fixed as the reserve price and each rival shareholder group is directed to submit sealed competitive offers above that reserve within the stipulated time, the higher-quoting group having first option to buy and the lower-quoting group to transfer its shares; the valuation report is final for want of timely objection; ancillary restrictions sought by petitioners are refused for want of proof; pending interlocutory applications do not bar the bidding process.

Restoration of struck off company under section 252(3) - power to strike off for non carrying on business - obligation to ensure provision for realization of liabilities before striking off - ease of doing business and lenient exercise of discretion - restoration subject to compliance of statutory filings and payment of costs

Restoration of struck off company under section 252(3) - ease of doing business and lenient exercise of discretion - restoration subject to compliance of statutory filings and payment of costs - Restoration of the name of M/s. VR Eco Systems Pvt. Ltd. struck off by the Registrar of Companies. - HELD THAT: - The Tribunal found that the Registrar had validly invoked the power to strike off the Company for non filing of statutory returns, but that the Petitioner presented bona fide explanations, there were no pending inquiries or investigations against the Company, and the ROC did not oppose restoration. Applying the principle of ease of doing business and taking a lenient view, the Tribunal held that restoration was appropriate provided conditions essential to protect public and statutory interests were imposed. The Tribunal therefore directed restoration under its powers, subject to (a) filing all outstanding statutory documents with prescribed fees/additional fees/fines within thirty days of restoration, (b) payment of a cost to the Central Government within a specified period, (c) personal assurance by the Company's representative as to compliance, and (d) publication of the restoration order in the Official Gazette. The Tribunal also made clear that the order was confined to the violations that led to striking off and would not preclude the ROC from taking action for any other violations or offences in accordance with law. [Paras 6, 7]

The Company's name is restored on the ROC register, with restoration of consequential actions including DIN restoration, subject to the specified compliance conditions, payment of costs and Gazette publication.

Final Conclusion: The petition is allowed; the Tribunal restored the Company's name under its statutory power, imposing conditions to secure compliance and reserving the ROC's right to act on other violations.

Effect of pre-existing dispute on maintainability of Section 9 application - initiation of Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2016 - requirement of an undisputed operational debt for Section 9 relief - evidentiary value of contemporaneous communications and meetings in proving a pre-existing dispute

Effect of pre-existing dispute on maintainability of Section 9 application - requirement of an undisputed operational debt for Section 9 relief - evidentiary value of contemporaneous communications and meetings in proving a pre-existing dispute - Whether a pre-existing dispute regarding quality of supplied goods existed prior to issuance of the demand notice and whether such dispute rendered the Section 9 application not maintainable. - HELD THAT: - The Tribunal examined the contemporaneous documentary record and communications relied upon by the parties. Emails from the Corporate Debtor dated 02.06.2018 and 19.06.2018, meetings held at Banswara (18.05.2018) and Mumbai (28.05.2018) where complaints about quality were made, and WhatsApp communications of 31.07.2018 and 27.08.2018 recording an agreed arrangement for waiver/discount and future supply standards together demonstrate a pre-existing dispute about the quality of goods supplied. The parties had discussed and recorded a consensual settlement structure-waiver of a portion of the amount and modalities for adjusting the balance-before the demand notice was issued. On the basis of these contemporaneous documents and communications the Tribunal concluded that the debt claimed was disputed on substantial grounds prior to issuance of the demand notice, and therefore the requirement of an undisputed operational debt for initiation of CIRP under Section 9 was not satisfied. The documentary evidence was given determinative weight in establishing existence of the dispute and its timing relative to the demand notice.

The Section 9 application was held not maintainable due to the existence of a pre-existing dispute; the application is dismissed.

Final Conclusion: The Tribunal dismissed the Section 9 petition filed by the operational creditor on the ground that contemporaneous emails, meetings and WhatsApp communications established a pre-existing dispute over quality and a negotiated settlement prior to the demand notice, thereby defeating the maintainability of the CIRP initiation under Section 9.

Entries in audited Balance Sheet as acknowledgement of debt for the purpose of Section 18 of the Limitation Act - applicability of the Limitation Act (Article 137) to applications under Section 7 of the Insolvency and Bankruptcy Code - date of default for reckoning limitation under Section 7 is the date of classification of account as NPA - binding effect of a Larger Bench decision on Benches of lesser or co equal strength and judicial discipline in referring discordant precedents

Binding effect of a Larger Bench decision on Benches of lesser or co equal strength and judicial discipline in referring discordant precedents - Competence of the three Member Referral Bench to refer for reconsideration the five Member judgment in V. Padmakumar. - HELD THAT: - The Reference Bench was not competent to treat the five Member judgment in V. Padmakumar as open to reconsideration. The five Member decision (majority 4:1) was rendered to resolve conflicts between co equal Benches and relied upon authoritative Supreme Court precedent; it therefore occupies the field and binds Benches of lesser or co equal strength. A Bench disagreeing with a Larger Bench must follow established procedural routes (inviting Chief Justice/constituting a larger Bench) rather than act as an appellate forum over that Larger Bench. The Reference Order impermissibly evaluated the five Member judgment as if sitting in appeal and failed to respect judicial discipline, thereby creating uncertainty. For these reasons the reference was rejected as incompetent. [Paras 11, 15, 16]

Reference of V. Padmakumar by the three Member Bench is incompetent and is rejected; the underlying appeal is to proceed to regular hearing.

Entries in audited Balance Sheet as acknowledgement of debt for the purpose of Section 18 of the Limitation Act - applicability of the Limitation Act (Article 137) to applications under Section 7 of the Insolvency and Bankruptcy Code - date of default for reckoning limitation under Section 7 is the date of classification of account as NPA - Whether reflection of debt in the Balance Sheet / Annual Return of a corporate debtor amounts to an acknowledgement under Section 18 of the Limitation Act so as to extend limitation for filing an application under Section 7 of the I&B Code. - HELD THAT: - The five Member Bench in V. Padmakumar, after considering Supreme Court authority, held that applications under Section 7 are governed by the Limitation Act from the inception of the Code and Article 137 applies. The date of default for computing limitation under Section 7 is the date the account is classified as NPA. Balance Sheets / Annual Returns, which are mandatorily filed under Companies Act provisions and liable to penal consequences, cannot be treated as acknowledgements under Section 18 for the purpose of extending limitation in insolvency proceedings; treating them as such would render limitation otiose because filing is mandatory every year. This conclusion is consonant with Supreme Court decisions emphasising the distinct and time bound nature of the insolvency remedy and recognizing the limited scope of Section 18 in this context. [Paras 10, 12, 14]

Balance Sheet / Annual Return entries do not amount to an acknowledgment under Section 18 so as to extend limitation for Section 7 proceedings; limitation for Section 7 runs from the date of NPA and Article 137 of the Limitation Act applies.

Final Conclusion: The Reference Order is rejected as incompetent; the legal position as stated in the five Member judgment in V. Padmakumar is affirmed - Section 7 applications are governed by the Limitation Act (Article 137), the date of default is the date of classification as NPA, and entries in mandatory Balance Sheets/Annual Returns do not operate as acknowledgements under Section 18 to extend the limitation; the appeal is listed for regular hearing.

Liquidation on committee of creditors' approval - corporate insolvency resolution process (CIRP) - appointment of liquidator upon CoC resolution - liquidation process under Chapter III - requirement of valid Authorisation for Assignment for liquidator - public notice of liquidation - cessation of board and KMP powers and vesting in liquidator - liquidator's authority to institute proceedings subject to Adjudicating Authority - liquidation order as notice of discharge to employees

Liquidation on committee of creditors' approval - corporate insolvency resolution process (CIRP) - The corporate debtor is to be liquidated pursuant to the committee of creditors' resolution during CIRP. - HELD THAT: - The Adjudicating Authority applied the statutory mandate that where the resolution professional intimates a decision of the CoC to liquidate the corporate debtor approved by not less than sixty-six per cent. of the voting share, the Authority shall pass an order for liquidation. The CoC in this case resolved with 100% voting in favour of liquidation, and the applicant/RP placed that resolution on record. On that basis the Bench ordered liquidation of the corporate debtor in terms of the Code. [Paras 9, 12, 13]

The petition for liquidation is allowed and the corporate debtor is ordered to be liquidated under the Code.

Appointment of liquidator upon CoC resolution - requirement of valid Authorisation for Assignment for liquidator - The resolution professional is appointed as liquidator subject to possession of a valid Authorisation for Assignment (AFA). - HELD THAT: - The applicant, having earlier acted as IRP/RP and having given consent in the prescribed form to act as liquidator, was appointed as liquidator. The appointment is made under the statutory provision empowering the Adjudicating Authority to appoint a liquidator, but is made subject to the technical requirement that the appointee hold a valid Authorisation for Assignment issued by his Insolvency Professional Agency in terms of the applicable regulations. [Paras 10, 13]

Mr. Subodh Kumar Agrawal is appointed as liquidator subject to his possession of a valid AFA.

Liquidation process under Chapter III - The liquidator is directed to initiate the liquidation process in accordance with Chapter III of the Code and the Liquidation Process Regulations. - HELD THAT: - Following the order for liquidation and appointment of the liquidator, the Bench directed commencement of the statutory liquidation process and compliance with the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, thereby requiring the liquidator to follow the procedures and duties provided under Chapter III and the Regulations. [Paras 13]

The liquidator shall initiate the liquidation process as envisaged under Chapter III and the relevant Regulations.

Public notice of liquidation - A public notice of the corporate debtor's liquidation shall be issued in the same newspapers previously used during CIRP. - HELD THAT: - To notify stakeholders and as part of the liquidation process, the Bench ordered that a public notice be issued in the same newspapers in which advertisements were earlier published during the CIRP, thereby ensuring continuity of public communication about the corporate debtor's change in status. [Paras 4, 13]

Public notice shall be issued in the same newspapers previously used, stating that the corporate debtor is in liquidation.

Cessation of board and KMP powers and vesting in liquidator - All powers of the board of directors and key managerial personnel cease and vest in the liquidator. - HELD THAT: - Consistent with the statutory scheme governing liquidation, the Bench ordered that upon initiation of liquidation all managerial and board powers shall cease to exist and shall henceforth vest in the liquidator, who will exercise those powers in managing the liquidation. [Paras 13]

Powers of the board and key managerial personnel cease and vest in the liquidator.

Liquidator's authority to institute proceedings subject to Adjudicating Authority - No new suit or legal proceeding shall be instituted by or against the corporate debtor except as permitted, and the liquidator may institute proceedings on behalf of the corporate debtor with prior approval of the Adjudicating Authority. - HELD THAT: - The Bench applied the statutory bar on suits and proceedings following initiation of liquidation, while preserving the liquidator's liberty to initiate suits or other legal proceedings on behalf of the corporate debtor, provided prior approval of the Adjudicating Authority is obtained, thereby aligning procedural restraints and the liquidator's duties. [Paras 13]

Suits are barred except as permitted; the liquidator may institute proceedings on behalf of the corporate debtor with prior approval of the Adjudicating Authority.

Liquidation order as notice of discharge to employees - The liquidation order shall be deemed a notice of discharge to the officers, employees and workmen of the corporate debtor subject to specified continuance of business. - HELD THAT: - In accordance with the statutory provision cited, the Bench declared that the liquidation order will operate as a notice of discharge to employees, officers and workmen, except insofar as the liquidator continues any part of the corporate debtor's business during the liquidation process. [Paras 13]

The liquidation order shall be deemed a notice of discharge to officers, employees and workmen, except where business is continued by the liquidator.

Filing of liquidation order with Registrar of Companies - The liquidator shall file a copy of the liquidation order with the Registrar of Companies within whose jurisdiction the corporate debtor is registered. - HELD THAT: - The Bench mandated compliance with the statutory requirement to file the liquidation order with the Registrar of Companies having jurisdiction over the corporate debtor's registration, and directed the registry to forward a copy as required, ensuring statutory formalities are completed. [Paras 13]

The liquidator shall file a copy of this order with the Registrar of Companies, West Bengal, Kolkata, and the registry shall forward a copy to that Registrar.

Final Conclusion: The Adjudicating Authority allowed the application for liquidation of the corporate debtor pursuant to the CoC's unanimous resolution, appointed the resolution professional as liquidator subject to a valid AFA, and directed commencement of the statutory liquidation process including public notice, vesting of powers in the liquidator, restrictions and permissions regarding litigation, employee discharge by operation of the order, and filing of the order with the Registrar of Companies.

Corporate insolvency resolution process - default - appointment of interim resolution professional - moratorium - prohibition on institution or continuation of suits - supply of essential goods during moratorium - management vesting in IRP - public announcement of CIRP - registration update with Registrar of Companies

Corporate insolvency resolution process - default - The company petition under section 7 of the Insolvency and Bankruptcy Code, 2016 filed by the financial creditor is liable to be admitted on account of proved debt and default. - HELD THAT: - The Tribunal recorded that the corporate debtor repeatedly failed to file any reply despite numerous opportunities and effectively admitted the existence of debt and default. The financial creditor produced documents establishing debt and default and sought initiation of CIRP. Having considered the conduct of the corporate debtor and the materials on record, the Tribunal found that the legal ingredients for admission under section 7 were satisfied and admitted the company petition. [Paras 7]

Company Petition (IB)-297(MB) of 2019 is allowed and CIRP is ordered against M/s. Digicable Network (India) Ltd.

Appointment of interim resolution professional - management vesting in IRP - An interim resolution professional is to be appointed and the management of the corporate debtor shall vest in the IRP during the CIRP period. - HELD THAT: - On admitting the petition the Tribunal appointed the proposed insolvency professional as interim resolution professional based on the letter of consent and relevant undertaking. The order further provides that during the CIRP period the management of the corporate debtor will vest in the IRP/RP and that suspended directors and employees must furnish documents and information to the IRP/RP.

Mr. Sunil Kumar Choudhary is appointed as interim resolution professional and management of the corporate debtor vests in the IRP.

Moratorium - prohibition on institution or continuation of suits - supply of essential goods during moratorium - A moratorium is to be imposed with specified prohibitions and protections during the CIRP period, including prohibition on institution or continuation of suits and protection for supply of essential goods or services. - HELD THAT: - Pursuant to admission, the Tribunal imposed the moratorium effective from the date of pronouncement until completion of CIRP or until approval of a resolution plan or liquidation order. The moratorium prohibits institution or continuation of suits or proceedings against the corporate debtor, enforcement of security interests including actions under the SARFAESI Act, and transfer or disposal of assets by the corporate debtor. It also directs that ongoing supply of essential goods or services shall not be terminated, suspended or interrupted during the moratorium.

Moratorium is imposed with the stated prohibitions and safeguards for the duration of the CIRP.

Public announcement of CIRP - registration update with Registrar of Companies - The IRP is to make the public announcement and the registry is to notify the Registrar of Companies to update the corporate debtor's master data. - HELD THAT: - The Tribunal directed immediate public announcement of the CIRP as specified under the Code and ordered the registry to send a copy of the order to the Registrar of Companies, Mumbai, for updating the master data of the corporate debtor. The registry was also directed to communicate the order to the parties and to the IRP forthwith.

Public announcement of CIRP to be made immediately and Registrar of Companies to be intimated for updating records.

Final Conclusion: The Tribunal admitted the section 7 petition, ordered initiation of CIRP against the corporate debtor, appointed the interim resolution professional, imposed the statutory moratorium with its attendant prohibitions and protections, directed immediate public announcement of the CIRP, and instructed the registry to notify the Registrar of Companies and communicate the order to the parties and IRP.

Rejection of belated Expression of Interest - Time bound nature of Corporate Insolvency Resolution Process and adherence to timelines - Regulation 36(6) / Regulation 36A(6) of the IBBI Regulations - bar on EOIs/resolution plans received after the due date - Precedent that resolution plans received after due date cannot be placed before the Committee of Creditors - Maximisation of value of assets as the object of the Code

Rejection of belated Expression of Interest - Time bound nature of Corporate Insolvency Resolution Process and adherence to timelines - Regulation 36(6) / Regulation 36A(6) of the IBBI Regulations - bar on EOIs/resolution plans received after the due date - Precedent that resolution plans received after due date cannot be placed before the Committee of Creditors - Application by a prospective resolution applicant to be permitted to participate in the CIRP and to submit a resolution plan despite having submitted Expression of Interest after the prescribed cut off was dismissed. - HELD THAT: - The Tribunal found that the invitation for Expression of Interest (Form G) and the timelines for submission were duly published and the deadlines were extended on multiple occasions by the Resolution Professional to accommodate prospective applicants. Two prospective resolution applicants submitted plans within the finally extended timeline and the Committee of Creditors proceeded to evaluate those plans. The applicant in question did not submit either an EOI or a resolution plan within the extended windows and only sought to participate by email after the timelines had expired. Regulation 36(6) (and Regulation 36A(6) as relied upon) expressly mandates rejection of EOIs received after the specified time in the invitation. The Tribunal placed weight on the settled position that resolution plans or EOIs received after the due date cannot be placed before or considered by the Committee of Creditors, and that adherence to time bound procedures is central to the Code. On these grounds the Resolution Professional's rejection of the belated EOI was held to be permissible and the applicant's request to be admitted to the CIRP was refused.

Application dismissed; belated EOI not to be entertained and applicant not permitted to participate in the CIRP.

Final Conclusion: The Tribunal dismissed the interlocutory application and upheld the Resolution Professional's refusal to entertain an Expression of Interest submitted after the prescribed deadline, holding that timelines under the Code and Regulations must be respected and late EOIs/resolution plans cannot be admitted for consideration by the Committee of Creditors.

Duty of the Committee of Creditors to appoint Resolution Professional on resignation of Interim Resolution Professional - powers of Adjudicating Authority under Rule 11 of NCLT Rules, 2016 read with Section 60(5) of the I&B Code, 2016 to direct CoC - continuance of Interim Resolution Professional under Section 16(5) until appointment of Resolution Professional - obligation to pay fees due to the Interim Resolution Professional as agreed by the CoC - necessity of appointment of Resolution Professional for progression of corporate insolvency resolution process

Duty of the Committee of Creditors to appoint Resolution Professional on resignation of Interim Resolution Professional - necessity of appointment of Resolution Professional for progression of corporate insolvency resolution process - Whether the sole member of the Committee of Creditors, after accepting the resignation of the Interim Resolution Professional, was obliged to appoint a Resolution Professional or apply to the Adjudicating Authority for appointment of a proposed Resolution Professional. - HELD THAT: - The Tribunal found that the IRP's resignation was placed before and accepted by the first CoC meeting. Once resignation is accepted, it is the duty of the CoC to replace the IRP by filing an application before the Adjudicating Authority for appointment of the RP, in terms of the Code. The Tribunal observed that the CIRP cannot move forward unless the CoC takes that step, because the duties enumerated in section 25 of the Code are to be carried out by the RP. The CoC's inaction amounted to a failure to carry out its obligations under the I&B Code, 2016. [Paras 6]

The CoC must, within the time fixed by the Tribunal, convene a meeting and pass a resolution to appoint a Resolution Professional and file the application under section 22(3)(b) of the Code.

Powers of Adjudicating Authority under Rule 11 of NCLT Rules, 2016 read with Section 60(5) of the I&B Code, 2016 to direct CoC - Whether the Tribunal could exercise its powers to direct the CoC to convene a meeting and appoint a Resolution Professional. - HELD THAT: - Invoking Rule 11 of the NCLT Rules, 2016 read with Section 60(5) of the I&B Code, the Tribunal exercised its supervisory powers to remedy the CoC's inaction. The application under Rule 11 was entertained and disposed of by directing the CoC to convene a meeting within a specified period to appoint the RP and to file the requisite application before the Adjudicating Authority. [Paras 7]

The Tribunal directed the CoC to convene a meeting and, within 30 days, pass a resolution to appoint a Resolution Professional and file the application under section 22(3)(b).

Continuance of Interim Resolution Professional under Section 16(5) until appointment of Resolution Professional - Whether the Interim Resolution Professional would continue in office and discharge functions until the Resolution Professional is appointed. - HELD THAT: - The Tribunal held that until an RP is appointed, the term of the IRP continues by virtue of section 16(5) of the Code. Accordingly, the IRP shall continue to discharge functions as referred to in sections 17 and 18 of the Code and comply with relevant Rules, ensuring continuity of the CIRP during the interregnum. [Paras 7]

The IRP shall continue in office and discharge functions under sections 17 and 18 and the relevant Rules until the RP is appointed.

Obligation to pay fees due to the Interim Resolution Professional as agreed by the CoC - Whether the fees due to the Interim Resolution Professional, as agreed by the CoC, must be paid forthwith. - HELD THAT: - The Tribunal noted that the IRP's professional fees were only partially paid and directed that all fees due and payable to the IRP, as agreed in the CoC, shall be paid forthwith. This direction is to ensure compliance with the Code and to enable the IRP to continue performance of her statutory duties pending appointment of the RP. [Paras 7]

All fees due and payable to the IRP, as agreed by the CoC, shall be paid immediately.

Final Conclusion: Application I.A. No. 262 of 2020 disposed by directing the sole CoC member to convene a meeting within 30 days to appoint a Resolution Professional and file the application for appointment; IRP to continue in office under Section 16(5) until appointment and to be paid all fees agreed by the CoC; directions issued to the Corporate Debtor and associated persons to cooperate with the IRP.

Condonation of delay in submission of claim - admission of operational creditor's claim by Resolution Professional - public announcement and notice to creditors - directory versus mandatory nature of claim submission timeline - time bound insolvency resolution and primacy of financial creditors' claims

Condonation of delay in submission of claim - admission of operational creditor's claim by Resolution Professional - public announcement and notice to creditors - time bound insolvency resolution and primacy of financial creditors' claims - Application under section 60(5) read with Rule 11 seeking condonation of delay in filing proof of claim and direction to the Resolution Professional to admit the Applicant's operational creditor claim was dismissed. - HELD THAT: - The Tribunal found that the IRP/RP had published the public announcement in national and regional newspapers and posted it on the IBBI and corporate debtor websites; the list of creditors finalized pursuant to that announcement included numerous operational creditors and governmental authorities, which undermines the Applicant's contention of lack of notice. The Applicant's claim arose from assessments for the tax periods stated and was filed well after the timeline for submission; no sufficient or persuasive reasons were shown to justify condonation of delay. The Tribunal also noted the statutory scheme requires time bound conclusion of CIRP and that secured financial creditors enjoy primacy in settlement; admitting the delayed claim at this advanced stage, when the resolution process and a resolution plan were in the final stage, would unreasonably delay the process and prejudice the resolution. Reliance on decisions treating the claim submission timeline as directory was not found to outweigh the procedural and commercial considerations in this case. For these reasons the application lacked merit and was dismissed. [Paras 4, 5, 6, 7, 8]

I.A. No. 245/2020 is dismissed for want of merit and the claim is not directed to be admitted.

Final Conclusion: The application for condonation of delay and for directing admission of the Applicant's claim was dismissed as the public announcement and creditor list demonstrated adequate notice, the Applicant failed to justify the delay, and admission at the present advanced stage would impede the time bound CIRP process and prejudice the primacy of financial creditors.

Approval of resolution plan under section 31(1) of the Insolvency and Bankruptcy Code - Compliance of a resolution plan with the requirements of section 30(2) of the Code and mandatory contents under regulation 38 and regulation 39 of the CIRP Regulations - Eligibility of resolution applicant under section 29A - Priority of payment to operational creditors under a resolution plan - Committee of creditors' approval and submission of plan by the resolution professional - Obligation to forward CIRP records to the Board for recording on its database

Compliance of a resolution plan with the requirements of section 30(2) of the Code and mandatory contents under regulation 38 and regulation 39 of the CIRP Regulations - Approval of resolution plan under section 31(1) of the Insolvency and Bankruptcy Code - Priority of payment to operational creditors under a resolution plan - Whether the resolution plan approved by the committee of creditors meets the statutory and regulatory requirements and is approvable under section 31(1) of the Code. - HELD THAT: - The Adjudicating Authority examined the resolution plan for conformity with the conditions set out in section 30(2) - including provision for CIRP costs, repayment to operational creditors not less than liquidation under section 53, management and supervision arrangements - and the mandatory contents and tests in regulations 38 and 39 of the CIRP Regulations (feasibility, viability, implementation, statement addressing interests of all stakeholders and required affidavits/undertakings). The resolution applicant furnished an affidavit of eligibility under section 29A and Form H as required by regulation 39(4). The CoC approved the plan with 100% voting share, and the Bench found that the plan, as modified by the Tribunal, satisfies the statutory and regulatory requirements. Accordingly, the plan was approved under section 31(1). [Paras 15, 16, 21, 22, 27]

The resolution plan is held to conform to section 30(2) and regulations 38 and 39 and is approved under section 31(1), subject to the modifications noted by the Bench.

Eligibility of resolution applicant under section 29A - Committee of creditors' approval and submission of plan by the resolution professional - Whether the resolution applicant was eligible and whether procedural compliances by the resolution professional and CoC were in order for submission of the plan. - HELD THAT: - The resolution applicant submitted the requisite affidavit declaring eligibility under section 29A. The resolution professional presented the plan approved by the CoC (endorsed by 100% voting share) and annexed Form H certifying compliance with regulatory requirements. The Bench recorded these submissions and documents as satisfying the procedural prerequisites for submission and consideration of the plan. [Paras 13, 15, 16, 19, 21]

The resolution applicant is recorded as eligible under section 29A and the resolution professional's submission of the CoC approved plan with Form H is held to meet procedural requirements.

Approval of reliefs and concessions sought in a resolution plan - Obligation to comply with applicable laws on takeover - Whether the reliefs and concessions sought by the resolution applicant in the plan should be granted by the Adjudicating Authority and what obligations arise upon approval. - HELD THAT: - The Bench declined to grant the reliefs and concessions prayed for in the resolution plan, directing that the resolution applicant may approach the relevant regulatory authorities and such authorities may consider the requests under applicable law. The Bench further made clear that on taking control the resolution applicant must ensure compliance with all applicable laws and shall take over the corporate debtor with all assets and liabilities as per the approved plan. [Paras 23, 24, 25]

Reliefs and concessions sought are not allowed by the Tribunal; the resolution applicant must seek such reliefs from appropriate regulatory authorities and must ensure compliance with all applicable laws upon takeover.

Obligation to forward CIRP records to the Board for recording on its database - Whether the resolution professional must forward records relating to the CIRP and the approved resolution plan to the Board (IBBI) for recording. - HELD THAT: - Pursuant to section 31(3)(b) and regulation 39(4), the resolution professional is directed to forward all records relating to the conduct of the corporate insolvency resolution process and the resolution plan to the Board (IBBI) so they may be recorded on its database. The Bench recorded this as a mandatory post approval step. [Paras 21, 26]

The resolution professional shall forward all CIRP records and the resolution plan to the IBBI for recording on its database.

Final Conclusion: The application under section 30(6) is allowed: the CoC approved resolution plan (approved by 100% voting share and certified by Form H, with an affidavit of eligibility under section 29A) is held to satisfy the requirements of section 30(2) and regulations 38 and 39 and is approved under section 31(1) with the modifications directed by the Bench; the reliefs sought in the plan are not granted by the Tribunal; the resolution applicant must ensure statutory compliance on takeover and the resolution professional must forward CIRP records to the IBBI.

Summary order. Petition under Article 226 seeking quashing of show cause notice dated 27.05.2004, corrigendum dated 03.09.2019, and Order in Original dated 30.12.2019, and seeking stay of its operation - notice issued; notice as to interim relief returnable on 27.01.2021; service permitted by regular mode and by e mode.

Job worker as manufacturer - manufacturer liable to pay duty - aggregate value of clearances for SSI exemption - brand name not deeming goods to be manufactured by brand owner - Notification No. 8/2003-CE - SSI exemption

Job worker as manufacturer - manufacturer liable to pay duty - aggregate value of clearances for SSI exemption - Notification No. 8/2003-CE - SSI exemption - brand name not deeming goods to be manufactured by brand owner - Whether clearances effected from the job worker's premises by goods bearing the appellant's brand can be included in the appellant's aggregate clearances for computing benefit under Notification No. 8/2003-CE, and whether the appellant can be treated as the manufacturer for that purpose. - HELD THAT: - The Tribunal found on the facts that M/s Orion Wire Manufacturing Company, which manufactured welding electrodes on job work, is the manufacturer and that duty liability arises at the end of the job worker who undertakes the activity of manufacture, notwithstanding ownership of raw materials or brand name. The Tribunal relied on the principle that mere ownership of brand or supply of raw material does not render the principal the manufacturer for excise liability; the liability to pay duty rests with the ultimate manufacturer unless the principal expressly takes on that liability under the specific machinery (e.g., Notification No. 214/86-C.E.). Notification No. 8/2003-CE excludes from aggregate clearances those clearances bearing another person's brand name which are ineligible for the exemption, and also provides that goods bearing another's brand shall not merely by that fact be deemed to have been manufactured by such other person. Applying these provisions, and having found no facts of control or supervision akin to those in M/s Lamina International, the Tribunal held that none of the provisions of Notification No. 8/2003-CE permit revenue to include the clearances made by the job worker in the appellant's aggregate clearances. The decision distinguished the Lamina line of authority on the basis that Lamina involved full control and supervision by the principal over the alleged job-worker manufacturer, which is not the case here. The Tribunal therefore set aside the demand premised on including job-worker clearances in the appellant's aggregate clearances. [Paras 4]

Clearances effected by the job worker cannot be included in the appellant's aggregate clearances for SSI exemption; the job worker is the manufacturer and the demand is set aside.

Final Conclusion: The appeal is allowed: the Tribunal held that the job worker is the manufacturer, the clearances from the job worker's premises cannot be included in the appellant's aggregate clearances for claiming benefit under Notification No. 8/2003-CE, and the impugned demand is dismissed.

Rectification of mistake apparent on record - scope of Section 35C(2) of the Central Excise Act, 1944 - mistake apparent on record must be obvious and patent - reconsideration/reappreciation of evidence not permissible in rectification - review of own order not permissible

Rectification of mistake apparent on record - mistake apparent on record must be obvious and patent - reconsideration/reappreciation of evidence not permissible in rectification - Maintainability and merits of the Revenue's application for rectification under Section 35C(2) of the Central Excise Act, 1944 - HELD THAT: - The Tribunal considered the Revenue's application seeking rectification of an alleged mistake in its final order dated 26.11.2019 and examined whether any mistake apparent on the record existed. Reliance was placed on settled law that a mistake apparent on the record must be an obvious and patent error and not one which can be established only by a long-drawn process of reasoning. The Tribunal observed that the Revenue's plea amounted to an attempt to reopen and re-argue the merits of the earlier decision - including reliance on different precedents and a request to re-appreciate facts and evidence - which is not permissible in proceedings under Section 35C(2). The Tribunal followed its earlier exposition in J K Card Board Industries v. Commissioner (Misc. Order No. 60258-60263/2020 dated 24.11.2020) and the Supreme Court's guidance that rectification cannot be employed to correct an erroneous view of law, to reconsider evidence, or to effect a review of its own order. Having found no patent mistake on the face of the record, the Tribunal declined to entertain the rectification application.

Application for rectification dismissed for want of any mistake apparent on record; rectification cannot be used to review the merits or re-appreciate evidence of the earlier order.

Final Conclusion: The Revenue's rectification application under Section 35C(2) was dismissed: no patent mistake apparent on record was found and rectification cannot be used as a vehicle to review or reargue the merits of the Tribunal's earlier order.

Sale in the course of import - transfer of document of title / high seas sale - crossing the customs frontiers of India - importer as per bill of entry and Import General Manifest - inter-State sale under Section 3(a) of the Central Sales Tax Act - judicial review of assessment in writ jurisdiction - production of C-Forms for concessional rate

Sale in the course of import - transfer of document of title / high seas sale - Whether the transactions relied upon by the appellant qualified as sales "in the course of import" under Section 5(2) of the CST Act. - HELD THAT: - The Court examined whether (a) the sale either occasioned the import or (b) was effected by transfer of documents of title before the goods crossed the customs frontier. On the facts, the appellant alone filed bills of entry (for warehousing and for home consumption), the Import General Manifest (IGM) reflected the appellant as importer, and customs duty was assessed on the appellant. There was no official record showing that the IGM was amended or that the last high-seas purchaser was manifested as importer. Prior decisions (J.V. Gokal, Minerals & Metals, Embee, K. Gopinathan Nair) establish that transfer of bill of lading on high seas can effect a sale in the course of import where the transfer is real and the end-buyer takes delivery/clearance as importer; but where the importer manifests himself and clears goods for home consumption, the import stream ends and subsequent transfers are domestic. The Court found the claimed high-seas transfer to the end-buyers uncorroborated by the customs records and concluded the supposed second high-seas sales did not come into operation.

The claimed exemption under Section 5(2) was rightly denied; the transactions were not sales in the course of import.

Importer as per bill of entry and Import General Manifest - crossing the customs frontiers of India - Whether filing the bill of entry and being assessed to customs duty by the appellant established that the goods had crossed the customs frontiers and that the appellant was the importer, thereby precluding treatment as high-seas sale. - HELD THAT: - The Court held that the Customs Act and related regulations contemplate that the IGM and the bill of entry identify the importer/consignee for clearance; where the bill of entry shows the appellant as importer and customs has assessed duty on him, the appellant remains the importer for the period up to clearance for home consumption. The inclusive definition of "importer" cannot be used to usurp the identity of the person who filed the bill of entry. On the material before the authorities there was no amendment of IGM or manifest to show the end-buyers as importers, and the bills of entry recorded the appellant as importer; consequently the goods were treated as having crossed the customs frontiers when cleared for home consumption and entered the domestic stream.

The appellant was rightly treated as importer when it filed the bills of entry and was assessed to customs duty; that fact precluded the transactions being high-seas sales for the purpose of Section 5(2).

Sale occasioning import - inter-State sale under Section 3(a) of the Central Sales Tax Act - Whether the sales to the end-buyers occasioned the import (first limb of Section 5(2)) or, alternatively, whether the subsequent deliveries from Andhra Pradesh to buyers outside the State were inter-State sales under Section 3(a). - HELD THAT: - The Court noted the appellant's alternative plea that the integrated quadripartite arrangement occasioned the import. Applying principles from K. Gopinathan Nair and related precedents, the Court observed that import is occasioned by the sale to the importer/consignee and that where an importer (here the appellant) imports and then clears goods for home consumption before selling, the subsequent sale to out-of-State buyers is a domestic inter-State sale. The facts showed the appellant cleared goods for home consumption and thereafter raised debit notes and caused movement to buyers in other States; the import stream had ended on clearance and the movement thereafter was occasioned by sales by the appellant.

The sales did not occasion the import; the transactions were inter-State sales under Section 3(a) and taxable accordingly.

Judicial review of assessment in writ jurisdiction - relegation to statutory appeal - Whether the High Court erred in entertaining the writ petitions and whether the appellant should be relegated to the statutory appellate remedy. - HELD THAT: - The Court observed that the appellant had consciously invoked writ jurisdiction and contested the merits before the High Court. The High Court applied the correct limited principles of certiorari review and examined the material and findings. The Supreme Court found no error in the High Court's approach or in entertaining the matter on merits; the appellant could not now seek to re-open the matter by relegation to appeal where it had already elected writ proceedings and received full consideration.

No remand for the purpose of relegating to statutory appeal was warranted; High Court's disposal on merits stands.

Production of C-Forms for concessional rate - Whether the appellant should be afforded an opportunity to produce C-Forms to claim concessional rate of tax. - HELD THAT: - The High Court had granted the petitioner three months to produce prescribed C-Forms under the Central Sales Tax (Registration and Turnover) Rules, 1957, noting that if the out-of-State buyers existed and executed C-Forms the appellant could avail concessional rate to that extent. The Supreme Court found this relief appropriate and observed it was open to the assessing authority thereafter to proceed in law if C-Forms were not furnished.

The appellant was permitted the time- limited opportunity to produce C-Forms; that direction is affirmed.

Authority of assessing officer to pass assessment - Whether the Commercial Tax Officer had authority to pass the impugned assessment orders. - HELD THAT: - The High Court examined statutory scheme (State VAT Act/Rules and CST Act) and rejected the appellant's contention that the CTO lacked authority; the Supreme Court found no error in the High Court's conclusion that the CTO was empowered to make the assessments in question.

The CTO had authority to pass the assessment orders complained of.

Final Conclusion: The appeals are dismissed. The High Court rightly upheld the assessments treating the transactions as inter-State sales and denying exemption under Section 5(2) of the CST Act; the appellant remains eligible only to the limited relief of producing C-Forms within the time allowed, and the deposit made by the appellant may be adjusted against the dues.