TaxTMI Updates e-Newsletter
Jan 18,2021

Classification under Heading 5903 (textile fabrics impregnated, coated, covered or laminated with plastics) - classification under Chapters 50-55 / Chapter 52 (woven cotton fabrics) - Chapter Note 2(a)(4) to Chapter 59 (exclusion of partially coated fabrics bearing designs) - Chapter Note 2(c) (historical insertion and deletion concerning fusible interlining) - Explanatory Notes to the HSN (interpretative aid) - CBEC Circular No.433/66/98-CX.6 dated 27.11.1998 (classification guidance) - classification by reference to the First Schedule to the Customs Tariff Act, 1975

Classification under Heading 5903 (textile fabrics impregnated, coated, covered or laminated with plastics) - Chapter Note 2(a)(4) to Chapter 59 (exclusion of partially coated fabrics bearing designs) - CBEC Circular No.433/66/98-CX.6 dated 27.11.1998 (classification guidance) - Explanatory Notes to the HSN (interpretative aid) - The correct classification of the applicant's product 'Fusible Interlining cloth for cotton fabrics'. - HELD THAT: - The Authority examined the tariff entries, Chapter Notes to Chapter 59 and the HSN Explanatory Notes, as well as CBEC circulars and relevant judicial decisions. Chapter 59 heading 5903 covers textile fabrics impregnated, coated, covered or laminated with plastics where the impregnation, coating or covering can be seen with the naked eye and the products meet the conditions in the Explanatory Notes (including being spattered by visible particles of thermoplastic material and capable of bonding on application of heat and pressure). Chapter Note 2(a)(4) excludes fabrics partially coated or bearing designs from heading 5903 and ordinarily places them in Chapters 50-55; however, the Explanatory Notes and CBEC Circular No.433/66/98-CX.6 treat fusible interlining fabrics-spattered or dot-printed with thermoplastic and capable of providing a bond on heat and pressure-as falling within heading 5903, as an exception to Note 2(a)(4). The applicant did not contest CBEC's characterisation in Circular No.433/66/98-CX.6 nor produce laboratory tests at hearing to show the product failed the characteristics identified in the Explanatory Notes and circular. The Authority further reviewed Chapter 52 headings and explanatory notes and found they do not cover laminated or plastic-coated fabrics. Applying the First Schedule, Explanatory Notes to the HSN and persuasive value of the CBEC circular, the Authority concluded that the applicant's fusible interlining cloth is classifiable under heading 5903 of Chapter 59. [Paras 20, 21, 23]

The product 'Fusible Interlining cloth for cotton fabrics' manufactured by the applicant is classifiable under Heading 5903 of Chapter 59 of the First Schedule to the Customs Tariff Act, 1975.

Final Conclusion: Advance Ruling: The applicant's fusible interlining cloth for cotton fabrics is correctly classifiable under Heading 5903 (Chapter 59) of the First Schedule to the Customs Tariff Act, 1975.

Parts of goods - integral part of warship - concessional rate of GST under Schedule-I - classification by use - end user certificate

Parts of goods - integral part of warship - concessional rate of GST under Schedule-I - end user certificate - Whether the marine pressure-tight and non-pressure-tight cables supplied to the Ministry of Defence qualify as parts of a warship and are eligible for the concessional GST rate of 5% under Entries 250 and 252 of Schedule I of Notification No.01/2017 Integrated Tax (Rate). - HELD THAT: - The Authority examined Entry No.252 of Schedule I which grants 5% GST to "Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907" and considered the ordinary meaning of "part/parts" in light of dictionary definitions and judicial precedents. Reliance was placed on the tests in earlier decisions that to be a component/part an article must be an integral constituent necessary to the constitution of the whole; the correct inquiry is the nature and primary use of the article and whether the completed article would be conceivable without it. The Authority distinguished items that are essential structural components of a vessel (for example hull, keel, engines, propeller, rudder etc.) from additional equipment or accessories which, though used on a ship, are not its essential parts. It found no definition in GST or the notification equating an End User Certificate alone to entitlement to concessional rate; the pre GST exemption scheme that accepted a certificate from a senior naval officer applied to construction of warships and was not replicated in the present notification. The applicant failed to furnish technical particulars or evidence demonstrating that the subject cables are integral components without which a warship would not come into existence or be complete (for example definition, precise ship location of use, exclusivity of use in warships, and functional indispensability). The End User Certificate produced did not specifically state that the cables are integral parts of the warship, and the purchase orders/contracts did not establish essentiality. On the available records and applying the component/part tests, the Authority concluded that the cables do not qualify as parts of a warship within Entry No.252 and therefore the concessional 5% GST is not available. [Paras 17, 18, 19, 20, 21]

The marine pressure-tight and non-pressure-tight cables supplied to the Ministry of Defence are not parts of a warship for the purposes of Entry No.252 of Schedule I of Notification No.01/2017 Integrated Tax (Rate), and the applicant is not eligible for the concessional GST rate of 5%.

Final Conclusion: The Advance Ruling holds that the applicant is not entitled to the reduced GST rate of 5% under Entries 250 and 252 of Schedule I of Notification No.01/2017 Integrated Tax (Rate) for the marine pressure tight and non pressure tight cables supplied to the Ministry of Defence, for the reasons stated above.

Pure service - Governmental Authority - Government Entity - exemption under Notification No.12/2017 - Central Tax (Rate) dated 28.06.2017 (Entry No.3) - works contract service / composite supplies involving supply of goods

Pure service - exemption under Notification No.12/2017 - Central Tax (Rate) dated 28.06.2017 (Entry No.3) - Governmental Authority - Government Entity - Whether the services provided by the applicant to Rajkot Urban Development Authority fall within Entry No.3 of Notification No.12/2017 and are exempt from GST (i.e., whether the recipient is a Governmental Authority or Government Entity and the services are pure services). - HELD THAT: - Entry No.3 of Notification No.12/2017 exempts pure services provided to the Central Government, State Government, Union territory, local authority, a Governmental Authority or a Government Entity in relation to functions entrusted to Panchayats under Article 243G or Municipalities under Article 243W. Three conditions must be satisfied: (1) the supply must be a pure service (not involving supply of goods or a works contract/composite supply involving goods); (2) the recipient must be a Governmental Authority or Government Entity as defined in the notification; and (3) the service must relate to functions entrusted to a Panchayat or Municipality under Articles 243G/243W. The Authority observed that classification of the applicant's services under Heading 9983 attracts GST unless Entry No.3 applies. The AAR placed primary emphasis on establishing the first condition - whether the services are pure - which requires examining the agreement and terms of engagement to determine whether any supply of goods or works contract/composite elements are involved. The applicant submitted a Letter of Acceptance but did not furnish the underlying agreement or other relevant documents evidencing the nature and terms of the supply. In the absence of the agreement and requisite documents, the Authority could not verify whether the services are pure and, consequently, could not proceed to determine whether RUDA qualifies as a Governmental Authority/Government Entity for the purpose of Entry No.3 or whether the exemption applies. For these reasons the question could not be decided on merits. [Paras 11, 12, 13]

Advance ruling declined: unable to decide whether the services are pure or whether the exemption under Notification No.12/2017 applies in absence of the agreement and other relevant documents; matter not adjudicated on merits.

Final Conclusion: The Authority declined to give a substantive advance ruling on whether the applicant's services to Rajkot Urban Development Authority are exempt under Entry No.3 of Notification No.12/2017 because the applicant failed to produce the agreement and necessary documents to establish that the services are "pure"; consequently the question remains undecided.

Value of supply under Section 15(2)(c) - transaction value - incidental expenses - amount recovered as a pure agent - Rule 33 of the CGST Rules, 2017 - scope of advance ruling under Section 97(2)

Value of supply under Section 15(2)(c) - transaction value - incidental expenses - Whether electricity or incidental charges recovered by the landlord are includible in the value of supply for GST under Section 15(2)(c) in the facts of the present lease agreement. - HELD THAT: - The lease expressly fixes a consolidated rent for the premises (clause 3) which includes internal infrastructure and thereby establishes the transaction value for renting. Clause 9 separately provides that the lessee shall pay charges in respect of electric power used. Because the agreement fixes rent as a distinct, all inclusive sum and separately casts the onus of payment of electricity to the lessee on actual usage, the electricity charges are not incidental expenses forming part of the taxable value under Section 15(2)(c). The Authority accordingly limits its conclusion to the specific contractual terms before it and states that includibility under Section 15(2)(c) depends on the particular agreement between parties. [Paras 15, 17]

On the facts of this agreement, electricity charges collected by the applicant are not includible in the value of supply under Section 15(2)(c) and therefore are not part of the taxable transaction value of rent.

Amount recovered as a pure agent - Rule 33 of the CGST Rules, 2017 - Whether electricity charges paid by the landlord to the electricity supplier and recovered from the lessee based on sub meters qualify as amounts recovered as a pure agent under Rule 33. - HELD THAT: - Although the electricity connection is in the landlord's name, the lease contemplates that the lessee bear actual electricity charges. Owing to absence of a separate main meter, the landlord installed sub meters, collects charges on the basis of actual sub meter readings and remits the exact amounts to the electricity company. This longstanding mutual arrangement reflects that the landlord merely reimburses the exact expenditure incurred on behalf of the lessee. The Authority finds that these facts satisfy the conditions of Rule 33 and, on the present record and agreement, the amounts so recovered constitute sums collected as a pure agent. [Paras 16, 17]

Electricity charges collected by the landlord at actuals based on sub meter readings constitute amounts recovered as a pure agent and fall within Rule 33 of the CGST Rules, 2017 for the parties and facts before the Authority.

Final Conclusion: The Authority rules that, under the specific lease before it, electricity charges are not includible in the value of rent under Section 15(2)(c), and that electricity charges collected at actuals by the landlord based on sub meter readings qualify as amounts recovered as a pure agent under Rule 33 of the CGST Rules, 2017; the conclusions are confined to the contractual facts of this case.

Exemption under Entry No. 66 of Notification No. 12/2017-Central Tax (Rate) - educational institution - education as a part of a curriculum for obtaining a qualification recognised by any law - GST liability on services provided by a private institute in affiliation with a university

Exemption under Entry No. 66 of Notification No. 12/2017-Central Tax (Rate) - educational institution - education as a part of a curriculum for obtaining a qualification recognised by any law - Services provided by the applicant in affiliation/partnership with Gujarat University for degree courses under University-prescribed curriculum are exempt from GST under Entry No. 66 of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017. - HELD THAT: - The Authority examined the definition of "educational institution" in the exemption notification and the NACEN clarification that the key criterion for exemption is that the education delivered must result in a legally recognised qualification being granted to the student. The Agreement and MOU show that Gujarat University grants the degree, prescribes examination pattern, conducts examinations and collects fees; the applicant designs courses, provides training, administers academic activities and receives a share of fees paid to the University. The Authority found that the applicant does not itself have a specific curriculum that leads to an award of a legally recognised qualification, nor does it award the qualification. Training provided by such private institutes which do not award the recognised qualification falls outside the scope of Entry No. 66. Consequently, amounts received by the applicant from the University for the services rendered attract GST at the applicable rate rather than being covered by the exemption. [Paras 20, 21, 22]

Services provided by the applicant are not covered by the exemption at Entry No. 66 and are taxable.

Final Conclusion: The Advance Ruling answers the question in the negative: the applicant's services in partnership with Gujarat University do not qualify for exemption under Entry No. 66 of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 and are taxable under GST.

Classification of goods under Customs Tariff - Common parlance test - Omnibus heading 2106 (food preparations not elsewhere specified) - Interpretation of the First Schedule and Chapter Notes - Residuary / not elsewhere specified principle - Advance ruling binding only on the applicant and the concerned officer

Classification of goods under Customs Tariff - Common parlance test - Interpretation of the First Schedule and Chapter Notes - Residuary / not elsewhere specified principle - Whether the product of different shapes and sizes manufactured and supplied by the applicant is classifiable as 'Papad' under Tariff Item 1905 90 40 or as 'un-fried Fryums' under Tariff Item 2106 90 99. - HELD THAT: - The Authority applied the common parlance test and the rules for interpretation of the First Schedule, noting that 'papad' is not statutorily defined and must be understood in popular/commercial parlance. Factual distinctions were noted between papad and fryums: differing principal ingredients in common market varieties, differing manufacturing processes (papad requires complete drying; fryums retain specific moisture and are processed differently), and distinct market identity and usage. Precedents and prior advance rulings were examined; the decision in Shivshakti (on papad of different shapes) did not address unfried fryums and therefore was inapplicable. Earlier tribunal and AAR decisions treating fryums as namkeen/other edible preparations under Chapter 21 were considered persuasive. Applying Chapter Notes 5 and 6, the Authority held that Heading 2106 is an omnibus heading covering preparations for use after processing and illustrative inclusions do not exclude fryums. On these grounds the Authority concluded that the applicant's product is 'un-fried Fryums' and not 'papad'. [Paras 21, 22]

The product is not classifiable as 'Papad' under 1905 90 40; it is classifiable as 'un-fried Fryums' under Tariff Item 2106 90 99 of the First Schedule to the Customs Tariff Act, 1975.

Omnibus heading 2106 (food preparations not elsewhere specified) - Residuary / not elsewhere specified principle - What is the applicable rate of tax on the product so classified? - HELD THAT: - Having held the product falls under Heading 2106 90 99, the Authority referred to the GST rate notifications which levy tax at 18% on 'Food preparations not elsewhere specified or included' falling under Heading 2106 (Schedule III, Sl. No. 23 of Notification No.1/2017-Central Tax (Rate) as amended). The Authority relied on that notification to determine the applicable GST rate for the product classified under 2106 90 99. [Paras 23]

The product attracts GST at 18% (CGST 9% + SGST 9% or IGST 18%).

Final Conclusion: The Authority ruled that the goods manufactured and supplied by the applicant are 'un-fried Fryums' classifiable under Tariff Item 2106 90 99 and are taxable at the rate of 18% (CGST 9% + SGST 9% or IGST 18%); the goods are not classifiable as 'Papad' under Tariff Item 1905 90 40.

Classification as 'Papad' v. 'Fryums' - Common parlance test - Interpretation of tariff headings and chapter notes - Application of Chapter Heading 2106 (omnibus edible preparations) - Applicability of Schedule III Sl. No. 23 and GST @ 18%

Classification as 'Papad' v. 'Fryums' - Common parlance test - Interpretation of tariff headings and chapter notes - Whether the product of different shapes and sizes manufactured and supplied by the applicant is classifiable as 'Papad' under Tariff Item 1905 90 40 or as 'Un fried Fryums' under Tariff Item 2106 90 99. - HELD THAT: - The Authority applied the established principle that where a term is not defined in the statute, it must be construed in its popular or commercial sense. Examining product characteristics, trade usage and marketability, the Authority found that the applicant's products are commonly known and marketed as 'Fryums' and differ from traditional papad in ingredients, processing (moisture control and drying) and market identity. Precedents dealing with similar products were considered: tribunal and Supreme Court decisions characterising fryums/semi cooked snack preparations as distinct from papad were noted. Chapter notes to Heading 2106 (inclusive coverage of preparations for use either directly or after processing and illustrative inclusions such as namkeens) support classification of the goods as edible preparations not elsewhere specified. Applying the rules for interpretation of the First Schedule and the common parlance/commercial parlance test, the Authority concluded that the product is not papad within Tariff Item 1905 90 40 but is appropriately classifiable under Tariff Item 2106 90 99. [Paras 21, 22, 26]

The product is 'un fried Fryums' and is classifiable under Tariff Item 2106 90 99 of the First Schedule to the Customs Tariff Act, 1975.

Application of Chapter Heading 2106 (omnibus edible preparations) - Applicability of Schedule III Sl. No. 23 and GST @ 18% - What GST rate applies to the product after classification. - HELD THAT: - Having classified the goods under Heading 2106 90 99, the Authority referred to Notification(s) under the CGST/GGST Acts. Schedule III, Sl. No. 23 of Notification No.1/2017 Central Tax (Rate), as amended, covers 'Food preparations not elsewhere specified or included' falling under Heading 2106 and attracts the 18% tax slab. The Authority relied on the inclusive nature of Heading 2106 and the specified entries in Schedule III to conclude the applicable rate. [Paras 23, 26]

Goods and Services Tax at the rate of 18% (CGST 9% + GGST 9% or IGST 18%) applies to the product classified as 'Un fried Fryums' under Tariff Item 2106 90 99.

Final Conclusion: The Authority ruled that the applicant's products of varied shapes and sizes are 'un fried Fryums' (not 'Papad'), classifiable under Tariff Item 2106 90 99, and subject to GST at 18% (CGST 9% + GGST 9% or IGST 18%).

Classification under Tariff Item 2106 90 99 - classification under Tariff Heading 1905 as "Papad" - common parlance test - interpretation of the First Schedule to the Customs Tariff Act, 1975 including Chapter and Section Notes - applicability of exemption notification for "Papad, by whatever name it is known" - GST rate 18% under Schedule III, Sl. No. 23 - binding effect of an advance ruling on the applicant and the jurisdictional officer (Section 103)

Classification under Tariff Heading 1905 as "Papad" - common parlance test - interpretation of the First Schedule to the Customs Tariff Act, 1975 including Chapter and Section Notes - Whether the product manufactured and supplied by the applicant (different shapes and sizes) is classifiable as "Papad" under Tariff Heading 1905 or is a different product - HELD THAT: - The Authority applied the common parlance test and the interpretative rules for the First Schedule. It examined market identity, composition and manufacturing differences and relevant precedents distinguishing papad from fryums. The Authority found that the applicant's product is commonly known in trade as un-fried FRYUMS, differs in ingredients and processing from traditional papad (which are dried batter of pulses), and that the precedent relied upon concerning papad of varying shapes did not consider un-fried fryums. On these grounds the Authority held that un-fried FRYUMS are not covered by the entry for papad in Chapter 19 and therefore are not classifiable under Tariff Heading 1905. [Paras 15, 16, 19, 20, 21]

The product of different shapes and sizes manufactured and supplied by the applicant is "un-fried FRYUMS" and not "Papad"; it is not classifiable under Tariff Item 1905 90 40.

Classification under Tariff Item 2106 90 99 - interpretation of Chapter Heading 21 and Chapter Notes (inclusive definitions) - GST rate 18% under Schedule III, Sl. No. 23 - If not classifiable as papad, under which tariff heading do the applicant's un-fried FRYUMS fall, and what GST rate applies - HELD THAT: - Applying the First Schedule and Chapter Notes to Chapter 21, the Authority observed that Heading 2106 is an omnibus heading for edible preparations for use either directly or after processing and that tariff item 2106 90 99 (other) includes namkeens and similar preparations irrespective of ingredients. The Authority concluded that un-fried FRYUMS are appropriately classifiable under Tariff Item 2106 90 99. It further noted that Sl. No. 23 of Schedule III to the Notification covering Heading 2106 subjects such goods to GST at 18%. The Authority relied on earlier AAR rulings and tribunal/Apex Court discussions distinguishing fryums from papad in reaching this classification and rate finding. [Paras 22, 23, 24, 25, 26]

Un-fried FRYUMS are classifiable under Tariff Item 2106 90 99 of the First Schedule to the Customs Tariff Act, 1975 and attract GST at 18% (CGST 9% + SGST 9% or IGST 18%).

Final Conclusion: Advance ruling: the applicant's products (different shapes and sizes) are held to be un-fried FRYUMS and not papad; they are classifiable under Tariff Item 2106 90 99 and attract GST at the rate of 18% (CGST 9% + SGST 9% or IGST 18%).

Classification as "other fertilizers" under Chapter 31 requires an essential constituent of nitrogen, phosphorus or potassium - micronutrients are distinct from plant growth regulators - separate chemically defined compound exclusion - classification under HSN 3824 99 90 for mixtures of micronutrients not having N/P/K as essential character - eligibility for Sl. No.56 of Schedule-II based on micronutrient status and manufacturer registration under Fertilizer Control Order, 1985 - end-use or recipient's registration under Fertilizer Control Order not being a condition in Schedule entries

Micronutrients are distinct from plant growth regulators - separate chemically defined compound exclusion - classification under HSN 3824 99 90 for mixtures of micronutrients not having N/P/K as essential character - Classification of the products 'Zn EDTA' and 'Fe EDTA'. - HELD THAT: - The Authority analysed the nature and composition of the products and the relevant classificatory rules. Micronutrients supply trace elements required in small quantities and are different in character from plant growth regulators. Chapter Note 6 to Chapter 31 requires that, for classification as "other fertilizers" under CTH 3105, the product must contain as an essential constituent at least one of nitrogen, phosphorus or potassium. Where the essential character of a product is predominately trace elements (micronutrients) and not N/P/K, and where the product is not a separate chemically defined compound falling under Chapter 28/29, it is to be classified as a chemical product not elsewhere specified, viz. HSN 3824 99 90. Applying these principles to the applicant's products (which contain micronutrient metals and minor nitrogen in the EDTA complex but do not have N/P/K as the essential constituent giving character), the Authority concluded they merit classification under HSN 3824 99 90. [Paras 27, 28]

The products 'Zn EDTA' and 'Fe EDTA' are classifiable under HSN 3824 99 90.

Eligibility for Sl. No.56 of Schedule-II based on micronutrient status and manufacturer registration under Fertilizer Control Order, 1985 - classification as "other fertilizers" under Chapter 31 requires an essential constituent of nitrogen, phosphorus or potassium - Whether the products fall within Sl. No.56 of Schedule-II of Notification No.1/2017-Central Tax (Rate). - HELD THAT: - Having classified the products under HSN 3824, the Authority examined the Notification entries. Sl. No.56 of Schedule-II covers micronutrients which are covered under serial number 1(g) of Schedule 1, Part (A) of the Fertilizer Control Order, 1985 and are manufactured by manufacturers registered under that Order. The applicant's products are acknowledged to be micronutrients listed under the Fertilizer Control Order and the applicant is a registered manufacturer. On that basis the products fall within Sl. No.56 of Schedule-II. Consequently the applicable GST rate follows the Schedule-II entry. [Paras 23, 29]

The products are covered by Sl. No.56 of Schedule-II and attract GST at the rate specified therein (total 12%).

End-use or recipient's registration under Fertilizer Control Order not being a condition in Schedule entries - eligibility for Sl. No.56 of Schedule-II based on micronutrient status and manufacturer registration under Fertilizer Control Order, 1985 - Whether supply to a recipient not registered under the Fertilizer Control Order affects applicability of the Schedule entry. - HELD THAT: - The Authority considered the wording of the Schedule entries and found no condition that the buyer/recipient must be registered under the Fertilizer Control Order. The entry at Sl. No.56 requires the product to be a micronutrient covered under the Fertilizer Control Order and to be manufactured by a registered manufacturer; it imposes no transaction-specific or end-use condition relating to the recipient's registration. Therefore supply to recipients who are not registered under the Fertilizer Control Order does not alter the applicability of the Schedule entry. [Paras 16, 31]

Supply to recipients not registered under the Fertilizer Control Order does not affect applicability of the determined Schedule entry.

Final Conclusion: The Authority ruled that the applicant's 'Zn EDTA' and 'Fe EDTA' are classifiable under HSN 3824 99 90, are covered by Sl. No.56 of Schedule-II of Notification No.1/2017-Central Tax (Rate) and attract GST at 12% (6% CGST + 6% SGST), and that supply to a purchaser not registered under the Fertilizer Control Order, 1985 does not affect this applicability.

Classification of goods under Customs Tariff headings - Medicament versus insecticide/mosquito repellent - Common parlance test / market identity - Rule 3(a) of the General Rules for Interpretation (specific entry preferred) - Specific heading prevails over residuary/other heading - Chapter Note 1(d) exclusion (Chapter 38 excludes medicaments of Chapter 30) - Application of tariff classification to GST rate notifications

Medicament versus insecticide/mosquito repellent - Common parlance test / market identity - Rule 3(a) of the General Rules for Interpretation (specific entry preferred) - Specific heading prevails over residuary/other heading - Classification of the product AAYUDH-MOSX under Heading 3004 90 11 or 3808 91 91 - HELD THAT: - The Authority examined the product composition, labelling, advertising, market identity and use. Although the applicant held an Ayurvedic licence and the ingredients are derived from authoritative Ayurvedic sources, the product is marketed, understood in common parlance and sold as a mosquito repellent for external application and is not ordinarily prescribed by physicians as a medicine. Applying the market-identity/common parlance test, the product's essential character is that of a mosquito repellent. Under the General Rules for Interpretation, particularly Rule 3(a), a more specific tariff description must be preferred to a more general or residual one. Heading 3808 91 91 ("Repellents for insects such as flies and mosquitoes") provides a specific description that fits the product and therefore prevails over the residuary sub-heading under Chapter 30. The Authority considered but rejected reliance on statutory definitions from the Drugs and Cosmetics Act being mechanically applied to tariff classification and found the applicant's case-law authorities distinguishable on facts. In consequence, on the combined application of the common parlance test, market usage and Rule 3(a), the product classifies as a mosquito repellent under Heading 3808 91 91 and not as a medicament under Chapter 30. [Paras 38, 51, 56, 57, 58]

AAYUDH-MOSX is a mosquito repellent classifiable under Chapter Heading 3808 91 91 and not under Heading 3004; it attracts GST at the rate applicable to goods under Heading 3808.

Final Conclusion: The Advance Ruling holds that the product AAYUDH-MOSX is a mosquito repellent and is classifiable under Customs Tariff heading 3808 91 91 (not under heading 3004), and thereby attracts the GST rate applicable to Heading 3808.

Classification of goods under Customs Tariff headings - Common parlance test for tax classification - Interpretation of inclusive tariff headings and Chapter Notes - Ejusdem generis rule in construing general words following specific terms - Residuary/omnibus heading (food preparations not elsewhere specified) - Application of prior rulings and precedents in classification - Advance Ruling applicability to applicant and jurisdictional officer

Classification of goods under Customs Tariff headings - Common parlance test for tax classification - Ejusdem generis rule in construing general words following specific terms - Residuary/omnibus heading (food preparations not elsewhere specified) - Whether the product 'Fried Fryums' manufactured and sold by the applicant is classifiable as 'papad' under Tariff Item 1905 90 40 and hence exempt, or is classifiable under Tariff Item 2106 90 99 and taxable. - HELD THAT: - The Authority applied the common parlance test to determine whether fried Fryums fall within the ordinary meaning of 'papad', noting that 'papad' is not defined in the relevant statutes or notifications and must be construed in popular/commercial understanding. It accepted that goods known and sold in the market as distinct commodities are to be classified according to that commercial identity. The Authority examined earlier decisions, including the CEGAT decision treating Fryums as a namkeen and the Supreme Court and High Court authorities relied upon, and found those precedents and other Advance Rulings supportive of treating fried Fryums as namkeen/other edible preparations. It considered the statutory text of the tariff, observing that Heading 1905 is specific to papad and the phrase "by whatever name it is known" must be read ejusdem generis with 'papad', thereby limiting that phrase to items of the same kind as papad. Chapter Notes to Chapter 21 and tariff Heading 2106 were held to be inclusive and to cover preparations for consumption either directly or after processing (including frying), and Chapter Note 6 expressly contemplates namkeens and similar products in 2106 90 99. Because fried Fryums are not similar in kind to papad in commercial identity, composition and presentation (sold ready-to-eat, different shapes and formulation, fried with masala), the Authority concluded they do not fall under Heading 1905. Consequently, resort to the residuary omnibus Heading 2106 was appropriate, and fried Fryums are classifiable under Tariff Item 2106 90 99 and taxable accordingly. The Authority also relied on prior Advance Rulings to the same effect as further support for this classification. [Paras 32, 35, 36, 38, 39]

Fried Fryums are not classifiable as 'papad' under Heading 1905 and are correctly classifiable under Tariff Item 2106 90 99; they attract GST at 18% (CGST 9% + SGST 9% or IGST 18%).

Final Conclusion: The Advance Ruling: the applicant's 'Fried Fryums' are classifiable under Tariff Item 2106 90 99 of the First Schedule to the Customs Tariff Act, 1975 and are taxable at GST rate of 18% (CGST 9% + SGST 9% or IGST 18%).

Mixed supply - composite supply - principal supply - treatment of mixed supply under Section 8(b) of the CGST Act - admissibility of input tax credit under Section 16(2) and restriction under Section 17(2) of the CGST Act - refund of unutilised input tax credit under Section 54(3) of the CGST Act - admissibility and scope of advance ruling under Section 97 of the CGST Act

Mixed supply - composite supply - principal supply - admissibility and scope of advance ruling under Section 97 of the CGST Act - Classification of the proposed single consolidated per-container package as mixed supply or composite supply - HELD THAT: - The applicant sought an advance ruling on whether a bundle of distinct services supplied for a single consolidated price would constitute a mixed supply or a composite supply. The Authority examined the statutory definitions and submissions but found that the contractual arrangement on which the question depends had not materialised and no agreement or other relevant documents were placed before the Authority. The Advance Ruling provisions under Section 97 are confined to activities and supplies actually undertaken by the applicant; the Authority held that a ruling cannot be given on hypothetical or speculative arrangements. For these reasons the question could not be finally adjudicated. [Paras 13, 14, 15]

No decision can be taken in view of non-submission of the agreement or other relevant documents.

Treatment of mixed supply under Section 8(b) of the CGST Act - classification and HSN for bundled services - admissibility and scope of advance ruling under Section 97 of the CGST Act - Applicable HSN code and GST rate for the proposed bundled supply - HELD THAT: - The applicant asked for the HSN and applicable GST rate for the proposed single-price bundle (highest constituent rate being 18%). The Authority noted that determination of HSN and rate requires examination of the actual contractual terms and the precise nature of supplies provided. As no agreement or documentary evidence was filed and the arrangement remained hypothetical, the Authority declined to determine classification, HSN or applicable rate. [Paras 13, 14, 15]

No decision can be taken in view of non-submission of the agreement or other relevant documents.

Admissibility of input tax credit under Section 16(2) and restriction under Section 17(2) of the CGST Act - treatment of ITC where supplies include exempt and taxable elements - admissibility and scope of advance ruling under Section 97 of the CGST Act - Eligibility of the applicant to avail input tax credit on inward supplies (including GST on commercial vehicles, repairs, and supplies from CFS/port/labour contractors) in relation to the packaged outward supply - HELD THAT: - The applicant sought a ruling on entitlement to input tax credit. While statutory conditions for ITC under Section 16(2) and restrictions under Section 17(2) were noted, the Authority observed that entitlement depends on the actual nature of the outward supplies and the contractual structure. Given absence of the executed agreement or other relevant documents and the hypothetical character of the proposed supplies, the Authority concluded it could not adjudicate the ITC questions at this stage. [Paras 13, 14, 15]

No decision can be taken in view of non-submission of the agreement or other relevant documents.

Refund of unutilised input tax credit under Section 54(3) of the CGST Act - zero-rated supply and refund entitlement - admissibility and scope of advance ruling under Section 97 of the CGST Act - Whether the exporter client (recipient) would be eligible to claim refund of GST paid on the applicant's outward supply invoices - HELD THAT: - The applicant inquired whether the exporter-recipient could claim refund of GST paid on invoices for the bundled services. The Authority recorded that refund entitlement under Section 54(3) depends on the actual tax character of the recipient's supplies (e.g., zero-rated exports) and on the precise nature of the supplier's invoices. As the underlying supply arrangement was not in existence and no contractual or documentary evidence was filed, the Authority could not rule on the recipient's refund entitlement. [Paras 13, 14, 15]

No decision can be taken in view of non-submission of the agreement or other relevant documents.

Final Conclusion: All questions raised were not decided: the Authority declined to rule on classification (mixed versus composite), HSN/rate, ITC eligibility and refund entitlement because the purported bundled supply arrangement was hypothetical and no agreement or relevant documents were submitted; accordingly no determination could be made.

Classification under Heading 3923 versus Heading 6305 - distinction between textile articles and plastics - interpretation of HSN/CTH headings and Explanatory Notes - applicability of CBIC (TRU) Circular No.80/54/2018-GST - applicability of Notification No.01/2017-Central Tax (Rate)

Classification under Heading 3923 versus Heading 6305 - distinction between textile articles and plastics - interpretation of HSN/CTH headings and Explanatory Notes - Non woven polypropylene bags manufactured from fibre grade polypropylene granules are classifiable under Heading 3923 and not under Heading 6305. - HELD THAT: - The Authority examined the manufacturing process (Spun Bond technology) and the relevant Chapter and Explanatory Notes for Chapters 39 and 63. Chapter 63 covers sacks and bags of textile materials; Chapter 39 covers plastics and articles thereof and, by its Chapter Note, defines "plastics" as materials of headings 3901-3914 capable of being formed under external influence. The Authority relied on precedent holding that articles made of plastic strips/tapes are articles of plastic and not textiles, and observed that the statutory/textiles definitions do not include plastic within the scope of "textile". In view of the material of manufacture (fibre grade polypropylene granules giving rise to plastic material) and the Chapter/Explanatory Notes, the Authority concluded that the non woven bags are articles of plastics falling under Heading 3923. The Authority also noted and applied the CBIC(TRU) clarification treating polypropylene woven and non woven bags as classifiable under 3923. [Paras 13, 18]

Non woven polypropylene bags merit classification under Heading 3923.

Applicability of Notification No.01/2017-Central Tax (Rate) - GST rate changes for Chapter 3923 - application of tariff interpretation rules to notification - The GST rate applicable to the bags follows their classification under Heading 3923 and is not exempt under Notification No.01/2017-Central Tax (Rate); the applicable rates for the specified periods are as determined. - HELD THAT: - Having classified the goods under Heading 3923, the Authority applied the Notification No.01/2017 CT (Rate) and its subsequent amendments. The Authority recited the notification framework and the specific amendments affecting Chapter 3923/related entries, and set out the rates applicable in the three expressly stated periods: 18% (01.07.2017-30.09.2019), 12% (01.10.2019-31.12.2019) following insertion of entry 80AA, and 18% (from 01.01.2020 onwards) after re insertion of the relevant description in Schedule III as entry 163B. On that basis, the Authority held that the product is not eligible for exemption under the cited notification. [Paras 20, 21]

GST is payable as per Heading 3923: 18% (01.07.2017-30.09.2019), 12% (01.10.2019-31.12.2019), and 18% (from 01.01.2020); exemption under Notification No.01/2017 CT (Rate) is negatived.

Final Conclusion: Advance ruling: Polypropylene non woven bags manufactured by the applicant are classifiable as articles of plastics under Heading 3923 (not Heading 6305) and attract GST in accordance with the rates applicable to Heading 3923 for the stated periods; they are not eligible for exemption under Notification No.01/2017 Central Tax (Rate).

Pure services - Exemption under Notification No.12/2017-Central Tax(Rate) - Composite supplies involving supply of goods - Classification under Heading 9994 - Sewage and waste collection, treatment and disposal - Activity entrusted to a Municipality under Article 243W of the Constitution - Local Authority / Governmental Authority

Pure services - Composite supplies involving supply of goods - Exemption under Notification No.12/2017-Central Tax(Rate) - Whether the solid waste management service supplied by the applicant to Notified Area Authority, Vapi is exempt under Notification No.12/2017-Central Tax(Rate) dated 28.06.2017. - HELD THAT: - Entry No.3 of Notification No.12/2017-Central Tax(Rate) provides exemption only for pure services (excluding works contract services or other composite supplies involving supply of any goods) provided to specified government/local bodies in relation to functions entrusted to Panchayats or Municipalities. The Authority examined the agreement and Scope of Work and identified contractual clauses which expressly include supply costs (collection vehicles with licensed drivers, fuel, tools, machinery, protective gear, etc.) within the quoted rates and state that rates are inclusive of all taxes. Those clauses demonstrate that the activity as contracted involves supply of goods/equipment along with services and therefore cannot be treated as a pure service. Because the applicant fails the primary condition of being a pure service supplier under the Notification, the Authority did not consider it necessary to decide the other conditions of the entry. The service is accordingly classifiable under Heading 9994 (sewage and waste collection, treatment and disposal) attracting GST, and the exemption claimed under Notification No.12/2017 is not available to the applicant. [Paras 11, 12, 13, 14]

The solid waste management service supplied to Notified Area Authority, Vapi is not exempt under Notification No.12/2017-Central Tax(Rate) because the contractual terms show inclusion of supply of goods/equipment and taxes, and thus the supply is not a pure service within the meaning of the exemption entry.

Final Conclusion: Advance Ruling: The applicant's solid waste management services to Notified Area Authority, Vapi are not covered by the exemption in Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 as the supply is not a pure service but includes supply of goods/equipment and quoted rates are inclusive of taxes.

Classification under Heading 5903 of Chapter 59 - Classification under Chapter 52 (woven cotton fabrics) - Application of Explanatory Notes to the HSN Code - Chapter Note 2(a)(4) to Chapter 59 (exclusion of partially coated fabrics) - CBEC Circular No.433/66/98-CX.6 dated 27.11.1998 (persuasive guidance) - Notification No.01/2017-Central Tax(Rate) - application of Customs Tariff First Schedule and interpretation rules - Reliance on technical test report (ATIRA) for satisfying HSN conditions

Classification under Heading 5903 of Chapter 59 - Chapter Note 2(a)(4) to Chapter 59 (exclusion of partially coated fabrics) - Application of Explanatory Notes to the HSN Code - CBEC Circular No.433/66/98-CX.6 dated 27.11.1998 (persuasive guidance) - Reliance on technical test report (ATIRA) - Interpretation rules under Notification No.01/2017 (explanations (iii) and (iv)) - The product 'Fusible Interlining Fabrics of Cotton' manufactured by the applicant is classifiable under Heading 5903 of Chapter 59 and not under Chapter 52. - HELD THAT: - The Authority examined the First Schedule to the Customs Tariff Act and the Explanatory Notes to HSN for Heading 5903 and applied the interpretation rules invoked by Notification No.01/2017 (explanations (iii) and (iv)). Chapter Note 2(a)(4) ordinarily excludes fabrics partially coated and bearing designs from Heading 5903, but the Explanatory Notes and CBEC Circular No.433/66/98-CX.6 recognise an exception for textile fabrics spattered or coated with visible particles of thermoplastic material that are capable of providing a bond on application of heat and pressure. The applicant's manufacturing process corresponds to the dot-matrix/dot-printing spattering described in the circular. The applicant produced an ATIRA test report which the Authority accepted as reliable. Comparing the three cumulative conditions set out in the Explanatory Notes for Heading 5903 with the ATIRA results, the Authority found: (i) the coating, although described as polymeric and not a continuous film visible to the naked eye, falls within the scope of coating contemplated by the Explanatory Notes; (ii) the fabric is not rigid and can be bent without fracturing as required; and (iii) the textile is not completely embedded in plastics and is coated on one side with a dot-matrix design. Having concluded that all three HSN conditions are fulfilled and noting that Chapter 52 does not cover fabrics laminated or coated with plastics, the Authority held that the applicant's fusible interlining fabrics are rightly classifiable under Heading 5903 of Chapter 59. The Authority also treated CBEC Circular No.433/66/98-CX.6 as having persuasive value and observed consistency with several advance rulings and orders of other authorities that reached the same classification. [Paras 21, 22, 23, 24, 26]

Product is classifiable under Heading 5903 of Chapter 59 of the First Schedule to the Customs Tariff Act, 1975.

Final Conclusion: Advance ruling: The applicant's 'Fusible Interlining Fabrics of Cotton' are classifiable under Heading 5903 (Chapter 59) of the First Schedule to the Customs Tariff Act, 1975.

Disallowance under section 14A - Application of Rule 8D - Disallowance cannot exceed the exempt income - Assessment on actual income not on notional or anticipated income - Validity of CBDT Circular No.5 of 2014 on triggering s.14A

Disallowance under section 14A - Application of Rule 8D - Disallowance cannot exceed the exempt income - Whether disallowance under section 14A read with Rule 8D can be sustained where no exempt income is earned and whether such disallowance can exceed the amount of exempt income. - HELD THAT: - The Court followed the coordinate decisions of this Court in Marg Ltd. and Tidel Park Ltd., and earlier Division Bench precedents, holding that section 14A was enacted to deny deduction of expenditure incurred in relation to income which is actually exempt. The statutory scheme contemplates computation based on real income; it does not permit assessment or imposition of a disallowance by reference to notional or anticipated exempt income. Application of Rule 8D to compute an apportionment against non-existent exempt income would amount to imposing an artificial method of computation on assumed income, which the Court rejected. Reliance on the CBDT Circular suggesting s.14A can be triggered by possible future exempt income was not accepted. Consequently, a disallowance under section 14A/read with Rule 8D cannot exceed the quantum of exempt income actually earned in the relevant year, and cannot be sustained where there is no exempt income. [Paras 5]

Appeal allowed; Tribunal's order upholding the disallowance under section 14A set aside and substantial questions answered in favour of the assessee.

Final Conclusion: Following earlier Division Bench precedents, the High Court allowed the revenue appeal, held that section 14A/read with Rule 8D applies to actual exempt income (not notional or anticipated income), and ruled that any disallowance under section 14A cannot exceed the exempt income; the Tribunal's order was set aside in favour of the assessee.

Reassessment pursuant to search - concluded assessment cannot be reopened in absence of incriminating material - use of material seized from a third party search - deletion of additions already subject to earlier assessment and pending appeal - disallowance under the provisions restricting cash payments

Reassessment pursuant to search - concluded assessment cannot be reopened in absence of incriminating material - deletion of additions already subject to earlier assessment and pending appeal - Validity of repeating an addition of interest on post dated cheques (already made in earlier assessment under Section 143(3)) in assessment under Section 153A - HELD THAT: - The Tribunal held that the addition of Rs. 1,68,63,358 on account of interest on PDCs, which had been made in the original assessment completed under Section 143(3) and was then subject to appeal, could not be reimposed in the assessment under Section 153A. A concluded assessment cannot be tinkered with in proceedings pursuant to search unless incriminating material discovered during the search justifies reopening; no such incriminating material pertaining to the assessee was found. The Assessing Officer had merely repeated an earlier addition because the CIT(A) had sustained it in the 143(3) proceedings, which is not a permissible basis for a fresh addition under Section 153A in the absence of new incriminating material. [Paras 6]

Addition of Rs. 1,68,63,358 on account of interest on PDCs deleted; Ground No. 2 allowed.

Disallowance under the provisions restricting cash payments - concluded assessment cannot be reopened in absence of incriminating material - application of precedents excluding disallowance where payments are reflected in books or are on behalf of third parties - Validity of disallowing 20% under the provision restricting cash payments in respect of payments made to farmers for acquisition of land - HELD THAT: - The Tribunal found that the cash payments in question were reflected in the assessee's books and related to acquisition of land on behalf of a third party who reimbursed the assessee. There was no reference to any incriminating material discovered during the search that would justify making the disallowance in the post search assessment. Following the decision of the Delhi High Court in CIT v. Kabul Chawla and co ordinate bench precedents (including the assessee's own coordinate bench decision for AY 2006 07), the disallowance under the cash payment provision was not sustainable. [Paras 7]

Disallowance of Rs. 1,20,312 under the restriction on cash payments deleted; Ground No. 3 allowed.

General grounds of appeal - Merits of the remaining general grounds challenging the assessment and appellate orders - HELD THAT: - The Tribunal treated Grounds Nos. 1, 4 and 5 as general in nature and not sustaining separate relief on those pleaded contentions. No specific additional legal or factual basis was accepted to disturb the assessment beyond the specific deletions ordered. [Paras 9]

Grounds Nos. 1, 4 and 5 dismissed.

Final Conclusion: The appeal is partly allowed: the Tribunal deleted the addition relating to interest on post dated cheques and the disallowance for cash payments, while dismissing the remaining general grounds; the assessment for AY 2007-08 is modified accordingly.

Revision of assessment under section 263 - Erroneous and prejudicial to the interest of revenue - Tax auditor's certificate under section 44AB - Indirect tax/VAT not routed through the profit and loss account - Non-application of mind - Duty to verify material before exercising revisionary powers

Revision of assessment under section 263 - Tax auditor's certificate under section 44AB - Indirect tax/VAT not routed through the profit and loss account - Duty to verify material before exercising revisionary powers - Non-application of mind - Validity of the order revising the assessment under section 263 for AY 2014-15 where the tax auditor certified that VAT was not routed through the profit and loss account. - HELD THAT: - The Appellate Tribunal found on the material on record - specifically the tax audit report furnished under section 44AB and the assessee's reply to the show-cause notice - that the tax auditor had expressly certified that indirect tax (VAT) was not routed through the profit and loss account. The Principal Commissioner of Income Tax invoked revisionary powers under section 263 without first making at least a prima facie verification of that certification. Since VAT was not debited to the profit and loss account, the assessee had not claimed it as a deduction in computing income; consequently there was no question of disallowance on that ground. The Tribunal held that the Pr. CIT's conclusion that the assessment was erroneous and prejudicial to the revenue proceeded without application of mind and without verifying the auditor's certificate and supporting evidence. For these reasons the exercise of power under section 263 was unsustainable.

The order passed under section 263 is quashed and the appeal is allowed.

Final Conclusion: The revisionary order under section 263 for Assessment Year 2014-15 was held invalid because the Pr. CIT failed to verify the tax auditor's certification that VAT was not routed through the profit and loss account; the order was passed without application of mind and is quashed, and the appeal is allowed.

Allowability of losses on foreign exchange forward contracts - mark-to-market loss - notional loss - application of Accounting Standard AS-11 - precedential effect of Supreme Court decisions over CBDT instructions

Mark-to-market loss - notional loss - allowability of losses on foreign exchange forward contracts - application of Accounting Standard AS-11 - Whether the mark-to-market loss on foreign exchange forward contracts booked by the assessee in compliance with AS-11 is a notional loss and therefore disallowable. - HELD THAT: - The Tribunal found that the assessee restated pending forward contracts on the basis of the foreign exchange rate as on the valuation date and had consistently followed Accounting Standard AS-11 from AY 2011-12 onwards, having admitted corresponding profits on revaluation in earlier years. The AO and the CIT(A) treated the MTM loss as a notional or contingent loss and disallowed it. Having regard to the consistent application of AS-11, the factual parity with the Delhi Bench decision in Emmsons International Ltd. and the principles in precedents relied upon by the assessee, the Tribunal held that the addition was unsustainable and directed deletion of the disallowance. The Tribunal also noted that the facts conceded by the assessee were not in dispute and that the loss was quantified in accordance with the prescribed accounting treatment.

The disallowance of the MTM loss on foreign exchange forward contracts is deleted and the claim of the assessee is allowed.

Final Conclusion: The appeal is allowed: the MTM loss on foreign exchange forward contracts, accounted for under AS-11 and comparable to earlier admitted revaluation gains, could not be treated as a notional loss; the Assessing Officer is directed to delete the addition.

TDS on lump-sum lease premium - capital nature of lease premium (not rent) - assessee deemed in default under section 201(1) for non-deduction of TDS - binding effect of CBDT Circular No. 35/2016 - precedential value of Coordinate Benches' decisions

TDS on lump-sum lease premium - capital nature of lease premium (not rent) - assessee deemed in default under section 201(1) for non-deduction of TDS - binding effect of CBDT Circular No. 35/2016 - precedential value of Coordinate Benches' decisions - Whether the assessee was required to deduct tax at source under section 194I on the lump-sum lease premium paid to MMRDA and, consequently, whether the assessee was an assessee-in-default under section 201(1) for non-deduction in A.Y. 2012-13. - HELD THAT: - The Tribunal observed that the impugned payment comprised a one-time lump-sum lease premium for long-term leasehold rights and that Coordinate Benches of the Tribunal in the assessee's own cases for earlier years had already held such payments to be capital in nature and not rent. The CIT(A) had applied CBDT Circular No. 35/2016, which takes cognisance of the Delhi High Court decision in the assessee's own case and clarifies that lump-sum lease premium not adjustable against periodic rent for acquisition of long-term leasehold rights is not within the scope of section 194I. Revenue failed to demonstrate any distinguishing facts for A.Y. 2012-13 vis-a -vis the earlier years decided in favour of the assessee. Following the earlier Tribunal orders and the binding, beneficial CBDT circular, the Tribunal accepted the view that the premium was capital in nature (not rent) and therefore not exigible to TDS; consequently the prerequisite for deeming the payer an assessee-in-default under section 201(1) was absent.

The assessee was not required to deduct TDS under section 194I on the lump-sum lease premium and therefore was not an assessee-in-default under section 201(1) for A.Y. 2012-13.

Final Conclusion: Following Coordinate Benches' precedents and CBDT Circular No. 35/2016, the Tribunal dismissed the Revenue's appeal and allowed the assessee's cross-objection, holding that the lump-sum lease premium was capital in nature and not liable to TDS under section 194I for A.Y. 2012-13.

Validity of search and seizure under Section 132(1) - Onus of assessee to prove purchases and deductions - Preponderance of probabilities test - Drawing adverse inference under Section 114(g) of the Indian Evidence Act, 1872 - Acceptance of books of account where proviso to Section 145(3) is not invoked - Remand for de novo adjudication for verification of purchase evidence

Validity of search and seizure under Section 132(1) - Challenge to legality and validity of search and seizure conducted on 27.08.2009 - HELD THAT: - Revenue produced warrants of authorization and panchanamas relating to search and seizure on 27.08.2009. The assessee's counsel, after perusal of those documents, conceded that the warrants and panchanamas were issued and that a search and seizure had been conducted. After hearing parties and examining the material placed on record, the Tribunal held that the search and seizure under Section 132(1) of the Income-tax Act, 1961, on 27.08.2009, were validly conducted and that the jurisdictional challenge raised by the assessee lacked merit. [Paras 4]

The challenge to the search and seizure is dismissed and the search of 27.08.2009 is held valid.

Preponderance of probabilities test - Acceptance of books of account where proviso to Section 145(3) is not invoked - Deletion of addition of Rs. 1,00,000 made on account of alleged undisclosed receipt (bank draft and related cash receipt issue) for AY 2007-08 - HELD THAT: - Seized document LP-19 referred to a bank draft of Rs. 1,00,000 and a separate cash receipt of Rs. 1,00,000. The assessee produced ledger entries, sale invoices and bank statement showing receipt by bank draft and explained that the cash receipt corresponded to an invoice raised to a related party (M/s Mukesh Kumar & Company) whose address matched that of M/s Sudama Singh & Sons. The Tribunal found that the assessee discharged the primary onus and that, on the touchstone of preponderance of probabilities, the bank draft and cash receipt were recorded in the assessee's books and offered to tax. The Tribunal observed that Revenue/authorities below could have made further enquiries under sections such as 131/133(6) but had not done so, and therefore accepted the assessee's case. [Paras 6, 7]

The addition of Rs. 1,00,000 is deleted and the assessee's appeal is allowed on this ground.

Preponderance of probabilities test - Deletion of addition of Rs. 25,750 made on account of alleged sales outside books (stock register error) for AY 2010-11 - HELD THAT: - A single posting error in the seized stock register showed 135 units instead of 125 units sold to a party. The assessee corrected the entry suo moto after search. The Tribunal examined the seized stock register and other records, noted the smallness of the discrepancy relative to the company's turnover, found no mala fide or intention to evade tax, and concluded that the discrepancy was a bona fide human error. Applying the preponderance of probabilities, the Tribunal held that the assessee should not be saddled with tax liability for the genuine posting mistake. [Paras 10]

The addition of Rs. 25,750 is deleted and the assessee's appeal is allowed on this ground.

Drawing adverse inference under Section 114(g) of the Indian Evidence Act, 1872 - Sustainment of additions amounting to Rs. 1,31,880 (loose cash receipts/payments from seized Annexure LP-6) for AY 2010-11 - HELD THAT: - Several loose papers (Annexure LP-6) contained 'kaccha' cash receipts/payments which were not reflected in the cash book or other regular books produced by the assessee. The Tribunal noted that the assessee did not produce the seized cash book or corresponding records and that, in such circumstances, an adverse inference under Section 114(g) of the Evidence Act may be drawn. The seized slips concerned items inconsistent with the assessee's normal business (e.g., supplies of materials which the assessee typically purchased), and the assessee failed to establish nexus between the entries and its recorded transactions. On that basis the Tribunal upheld the additions sustained by the authorities below in respect of these seized entries. [Paras 11]

Additions relating to the items in Annexure LP-6 (including the disputed amounts aggregated as Rs. 1,31,880) are sustained.

Onus of assessee to prove purchases and deductions - Remand for de novo adjudication for verification of purchase evidence - Challenge to massive additions on account of alleged unexplained purchases/purchase-value mismatch for AY 2009-10 (additions to the tune of Rs. 3,08,98,592 and related sums) - HELD THAT: - Authorities below compared quantitative details (weights) in an impounded document from the assessee's CA (Annexure P-6) with the tax-audit report and found values to differ, leading the AO to recast accounts and make large additions. The assessee explained that Annexure P-6 related only to pig iron and coal while its books included many other raw materials and consumables; the assessee produced various ledgers, invoices and other material and contended that purchases from certain suppliers (e.g., M/s Benaras Steel Traders) were supported by vouchers, transport bills and payments. The Tribunal found that the question whether claimed purchases and consumables were genuinely incurred and supported required detailed verification and evidence (invoices, transport records, confirmations, manufacturing process particulars) and that the onus to prove deductions lies on the assessee. In the interest of justice and fairness, and because the facts and records required further scrutiny, the Tribunal restored the matter to the AO for fresh adjudication and directed the AO to admit and verify the assessee's evidence after giving opportunity of hearing. The Tribunal expressly did not decide the merits. [Paras 19, 20]

The additions on account of alleged unexplained purchases are set aside for statistical purposes and remanded to the AO for de novo consideration and verification in accordance with law.

Onus of assessee to prove purchases and deductions - Remand for de novo adjudication for verification of purchase evidence - Verification of freight expenditure deletion (freight charges of Rs. 81,015) for AY 2009-10 - HELD THAT: - Assessee claimed freight payments and produced certain documents which the CIT(A) accepted as inadvertent mistake in date and noted presence of Form 16A. However, before the Tribunal no proof of TDS payment or Form 16A was placed on record. Given these lacunae, the Tribunal directed a limited remand to the AO for verification of date, actual payment of freight, TDS deduction/payment and production/verification of Form 16A, so that the factual position can be ascertained. [Paras 21]

The matter of freight expenditure is restored to the AO for limited verification and factual adjudication.

Final Conclusion: The Tribunal held the search and seizure of 27.08.2009 valid; allowed the assessee's appeal for AY 2007-08 by deleting the disputed Rs. 1,00,000 addition; allowed the appeal for AY 2010-11 in part by deleting the small stock-entry addition but sustained additions arising from unrecorded loose papers; and set aside the large purchase-related additions for AY 2009-10 for de novo adjudication by the AO (with limited remand on freight issue), while the assessee's cross-objection in respect of the remanded matter is dismissed as infructuous.

Agricultural land exemption from capital gains - distance test under section 2(14)(iii) - revenue records as primary evidence of land character - conversion after sale not altering seller's characterization - no estoppel against law

Agricultural land exemption from capital gains - distance test under section 2(14)(iii) - revenue records as primary evidence of land character - conversion after sale not altering seller's characterization - The land sold by the assessee is agricultural land and not a capital asset within the meaning of section 2(14) of the Act. - HELD THAT: - The Tribunal examined documentary evidence including the registered sale deed, revenue records classifying the property as 'Don' (wet land) and the Indian Village Directory showing the village's distance from the nearest municipality. The land measured 11.8 acres with a residential bungalow occupying much less than half an acre; the remaining area and revenue classification indicate agricultural use. The village is beyond the statutory 8 km limit from the nearest municipality, satisfying the distance test under section 2(14)(iii). No contrary evidence was produced by the Assessing Officer or the CIT(A) to rebut the revenue records. Reliance was placed on precedents holding that where land is recorded as agricultural and lies beyond the specified municipal distance, it retains its agricultural character even if not recently cultivated or if conversion by the purchaser occurs after sale. Applying these principles, the Tribunal found the asset to be agricultural land and thus not chargeable to capital gains tax. [Paras 5, 6, 10]

Capital gains tax imposed on the sale of the land deleted as the land is agricultural and not a capital asset.

No estoppel against law - admission in return not conclusive - The assessee's earlier computation or admission of capital gains does not estop him from claiming exemption where the transaction is not taxable in law. - HELD THAT: - The Tribunal reiterated the settled legal position that there can be no estoppel against statute and that an assessee's prior admission or incorrect offer in a return cannot convert a non-taxable transaction into a taxable one. Authority and circulars cited by the Tribunal support the proposition that revenue cannot rely on acquiescence or mistaken admissions to tax amounts not chargeable under the Act. Applying this principle, the assessee's initial computation admitting capital gains did not preclude the claim of exemption once documentary evidence established the land's agricultural character and statutory non-taxability. [Paras 6, 7]

Assessee's prior admission of taxability did not preclude deletion of the contested capital gains.

Final Conclusion: Appeal allowed: the Tribunal deleted the capital gains tax on the sale of the land for AY 2013-14, holding the property to be agricultural land beyond the statutory municipal distance and confirming that prior admission by the assessee does not preclude claiming exemption under law.

Revisionary jurisdiction under section 263 - order erroneous and prejudicial to the interests of the revenue - insufficiency of enquiry versus no enquiry - Commissioner must conduct or record independent enquiry/verification before invoking section 263 - mere change of opinion by Commissioner is impermissible - valuation under Rule 11UA and taxability under section 56(2)(viib)

Revisionary jurisdiction under section 263 - order erroneous and prejudicial to the interests of the revenue - insufficiency of enquiry versus no enquiry - mere change of opinion by Commissioner is impermissible - Whether the Principal Commissioner erred in invoking section 263 to set aside the assessment framed u/s 143(3) insofar as long term capital gains from sale of Kappac Pharma Ltd. shares were allowed by the Assessing Officer. - HELD THAT: - The Tribunal found that the Assessing Officer had raised specific queries, received detailed documentary replies (contract notes, broker ledger, share certificates, balance sheet entries), examined the records and recorded findings in the assessment order accepting the long term capital gains as exempt under section 10(38). The Principal Commissioner relied on general information from the Investigation Wing about fraudulent entries in other cases and concluded that inquiries that "should have been made" were not done, without conducting any independent enquiry or adducing specific material showing error in the assessee's case. Binding principles require that both error and resulting prejudice to revenue must be shown and that, where the AO has made enquiries and taken a permissible view after applying his mind, the Commissioner cannot substitute his opinion or remit the matter for fresh enquiry unless the Commissioner himself conducts verification and records clear, non debatable reasons why the AO's order is unsustainable in law. Mere reliance on general inputs or the possibility of fraud elsewhere, without specific rebuttal of the documentary evidence and findings recorded by the AO, does not satisfy the jurisdictional pre condition for exercise of section 263. Applying these principles to the facts, the Tribunal held that the AO's enquiries were adequate and the PCIT's action amounted to an impermissible change of opinion. [Paras 45]

Impugned orders passed by the Principal Commissioner u/s 263 setting aside the assessment dated 22.12.2016 are quashed and the assessment orders are restored for the four individual assessees; appeals allowed.

Revisionary jurisdiction under section 263 - Commissioner must conduct or record independent enquiry/verification before invoking section 263 - valuation under Rule 11UA and taxability under section 56(2)(viib) - mere change of opinion by Commissioner is impermissible - Whether the Principal Commissioner was justified in invoking section 263 to direct re examination of share valuation (Rule 11UA) and treatment under section 56(2)(viib) in the assessments of M/s Dhirendra International Pvt. Ltd. and M/s Charitra Gold Pvt. Ltd. - HELD THAT: - The Assessing Officer had specifically called for computation of fair market value under Rule 11UA, received detailed valuations and balance sheet information, examined and recorded the valuation exercise in the assessment order and, in one case, made an addition after taking a permissible view. The Principal Commissioner set aside the orders on the ground that audited/AGM approved financial statements were not before the AO, although audited statements (with figures identical to the unaudited submissions) were subsequently placed before the PCIT during the revision proceedings. The Tribunal applied the settled principle that section 263 cannot be used to reframe assessment merely because the Commissioner prefers a different view where the AO has carried out requisite enquiries and taken a view permissible in law. Further, where the Commissioner relies on alleged inadequacy of enquiry he must himself verify or conduct enquiries and record clear findings showing the AO's order to be unsustainable; that was not done. As the AO had examined the issue and no material placed before the Tribunal showed prejudice to revenue on the facts, the PCIT's assumption of jurisdiction was held to be unjustified. [Paras 63]

Impugned revisionary orders u/s 263 directing re examination of Rule 11UA valuation are quashed and the assessments dated 22.12.2016 are restored for both companies; appeals allowed.

Final Conclusion: On the facts of Assessment Year 2014-15 the Tribunal quashed the Principal Commissioner's orders under section 263 for all six appeals because the Assessing Officer had made specific enquiries, examined documentary evidence and taken permissible views on (a) long term capital gains from sale of Kappac Pharma Ltd. shares and (b) fair market valuation under Rule 11UA; the PCIT neither conducted independent verification nor recorded clear findings establishing that the AO's orders were erroneous and prejudicial to revenue. All six appeals are therefore allowed and the assessment orders dated 22.12.2016 are restored.

Taxation of Employee Stock Option (ESOP) as a perquisite - accrual or arising in India - timing of taxation under section 17(2)(vi) - nexus between remuneration and place where employment is exercised - treaty protection under Article 15 of India-UAE DTAA - employee stock option benefit relates back to grant and to services for which it was granted

Taxation of Employee Stock Option (ESOP) as a perquisite - accrual or arising in India - timing of taxation under section 17(2)(vi) - employee stock option benefit relates back to grant and to services for which it was granted - Whether the ESOP perquisite is taxable in India as income accruing or arising in India despite the assessee being non resident in the assessment year - HELD THAT: - The Tribunal applied the established distinction between 'accrues/arises' and 'is received', holding that accrual or arising denotes a state anterior to receipt and may be inchoate. On the facts the ESOP rights were granted in 2007 in consideration of services rendered in India and, although taxed in timing by operation of section 17(2)(vi) when exercised later, the benefit itself related back to the grant and thus accrued/arose in India. The Tribunal accepted the United Nations/OECD commentary reasoning that a stock option normally relates to services rendered prior to grant and that the exercise only determines timing of taxability; consequently the Assessing Officer was justified in bringing the ESOP perquisite to tax in India in the relevant assessment year even though the assessee was then a non resident. [Paras 7, 8]

ESOP perquisite accrued/arose in India at grant and is taxable in India; the authorities below were upheld.

Treaty protection under Article 15 of India-UAE DTAA - nexus between remuneration and place where employment is exercised - employee stock option benefit relates back to grant and to services for which it was granted - Whether Article 15 of the India-UAE DTAA precludes taxation in India of the ESOP benefit because the assessee was a UAE resident in the relevant year - HELD THAT: - Article 15 accords taxation to the State where the employment is exercised; the Tribunal held that the provision applies equally to 'other similar remuneration' such as ESOPs. Because the ESOP benefit derived from services that were rendered in India (the grant related to services in India), there is no treaty nexus to sustain exclusive taxation in the UAE. Reliance on precedents and model convention commentaries did not alter the outcome: treaty protection under Article 15(1) was unavailable to the assessee for the ESOP amount attributable to services rendered in India. [Paras 9]

Article 15 protection under the India-UAE DTAA does not apply; the claim for treaty relief is rejected.

Final Conclusion: Both appeals were dismissed: the Tribunal held that the ESOP benefit accrued/arose in India at the time of grant (and is therefore taxable in India despite the assessee's non resident status in the assessment years 2013 14 and 2014 15), and that Article 15 of the India-UAE DTAA did not prevent India from taxing the ESOP amount attributable to services rendered in India.

Jurisdiction under section 263 - prejudicial to the interests of revenue - minimal inquiry requirement - CBDT Circular No. 5 of 2012 - disallowance under section 14A - disallowance under section 43B - natural justice - notice requirement

Jurisdiction under section 263 - prejudicial to the interests of revenue - minimal inquiry requirement - CBDT Circular No. 5 of 2012 - Validity of the Principal Commissioner's exercise of jurisdiction under section 263 to quash the assessment on the ground that payments to doctors were prima facie freebees in contravention of CBDT Circular No. 5 of 2012. - HELD THAT: - The Tribunal held that the PCIT invoked section 263 on the premise that the AO had not examined whether large payments to medical professionals were in breach of Circular No. 5/2012 and were therefore disallowable. The PCIT, however, proceeded to annul the assessment without itself conducting the minimal inquiry required to form a prima facie view that the AO's order was both erroneous and prejudicial to revenue. The record showed that the assessee had furnished materials and explanations (contracts, brochures, agreements and earlier submissions) indicating the payments were for services rendered in the course of its diagnostics business. The PCIT merely relied on audit objections and the Circular without bringing cogent material on record to establish that the payments were freebees or otherwise disallowable under section 37. In absence of an independent prima facie finding that the AO's acceptance of the expenditure was incorrect and prejudicial to revenue, the exercise of jurisdiction was improper. The Tribunal therefore set aside the PCIT's order quashing the assessment on this ground and restored the matter to remain as concluded by the AO. [Paras 42, 43, 44, 45, 47]

PCIT's exercise of jurisdiction under section 263 on the ground of alleged contravention of Circular No.5/2012 was not validly exercised; the order under section 263 is set aside.

Jurisdiction under section 263 - prejudicial to the interests of revenue - disallowance under section 14A - minimal inquiry requirement - Whether the PCIT validly exercised section 263 to direct a fresh computation of disallowance under section 14A on the ground that the AO failed to examine/adjust investments and fictitious assets. - HELD THAT: - The Tribunal found that the AO had taken a view on computation of section 14A disallowance after considering submissions made by the assessee, and that the PCIT did not independently demonstrate that the AO's order was prima facie erroneous and prejudicial to revenue. The PCIT's allegation about use of 'net assets' and exclusion of 'fictitious assets' was vague and unsupported in the SCN and impugned order; PCIT did not carry out the requisite inquiry to establish prejudice. Where the PCIT sets aside an assessment for alleged failure to examine 14A issues, he must first form a prima facie view establishing error and prejudice; absent such inquiry the revision was unsustainable. Consequently the direction to recompute 14A disallowance was set aside along with the rest of the section 263 order. [Paras 6, 8, 46, 47]

PCIT's direction to reopen and recompute disallowance under section 14A was unsustainable because PCIT did not form the requisite prima facie view of error and prejudice; the section 263 order is set aside on this ground.

Natural justice - notice requirement - jurisdiction under section 263 - disallowance under section 43B - Legality of PCIT directing AO to examine disallowance under section 43B when that ground was not raised in the show cause notice; whether such direction violated natural justice. - HELD THAT: - The Tribunal noted that the SCN issued by the PCIT specified only two grounds (payments to doctors vis-a -vis Circular No.5/2012 and section 14A computation). The impugned order included a direction to examine section 43B disallowances though no such ground had been communicated in the SCN or during hearing, thereby raising natural justice concerns. The Tribunal observed that the PCIT must not decide matters beyond the scope of the notice given to the assessee, and, in any event, the PCIT had not satisfied himself on the twin conditions of error and prejudice before remitting. For these reasons the PCIT's instruction to re-examine section 43B (as part of the annulment) could not stand as part of an otherwise unsustainable exercise of revision. [Paras 8, 24, 46, 47]

PCIT's direction to reopen assessment on section 43B grounds (not foreshadowed in the SCN) was improper; coupled with failure to form a prima facie view of prejudice, the section 263 order is set aside.

Final Conclusion: The Tribunal allowed the assessee's appeal, set aside the Principal Commissioner's order passed under section 263 for AY 2013-14 and restored the assessment outcome because the PCIT failed to undertake the minimal independent inquiry required to form a prima facie view that the AO's order was erroneous and prejudicial to revenue; consequential directions to re-examine payments to doctors, recompute section 14A disallowance and to consider section 43B were held to be unsustainable.

Interpretation of an exemption notification granting relief on re-import after repairs - Scope of the expression "duty of customs" in a customs exemption notification - Distinction between duties leviable under the Customs Act and taxes leviable under the Integrated Goods and Services Tax legislation - Collection of integrated tax by customs authorities pursuant to the Customs Tariff Act versus levy under the Integrated Tax Act - Principle that different expressions used in the same notification carry different meanings

Interpretation of an exemption notification granting relief on re-import after repairs - Scope of the expression "duty of customs" in a customs exemption notification - Distinction between duties leviable under the Customs Act and taxes leviable under the Integrated Goods and Services Tax legislation - Collection of integrated tax by customs authorities pursuant to the Customs Tariff Act versus levy under the Integrated Tax Act - Whether re-imported aircraft and parts after repairs are exempt from integrated tax under serial no. 2 of General Exemption Notification No. 45/2017 (as amended) - HELD THAT: - The Tribunal examined the Exemption Notification against the statutory scheme. Section 2(15) of the Customs Act defines "duty" as a duty of customs leviable under that Act; section 12(1) and section 2 of the Tariff Act show that duties of customs refer to rates specified in the First and Second Schedules. Integrated tax is defined and levied under the Integrated Tax Act and, although its collection on imports is effected by customs authorities under the procedure in section 3 of the Tariff Act, it is not a duty leviable under the Customs Act. The Exemption Notification's main body separately refers to duty of customs, integrated tax and compensation cess, and column (3) for serial no. 2 specifies payment of the "duty of customs" on the fair cost of repairs. Applying the settled principle that different expressions used in the same instrument are to be given different meanings, and construing the phrase "duty of customs" in light of section 2(15) and attendant authorities, the Tribunal concluded that omission of the words "specified in the First Schedule" in column (3) does not expand "duty of customs" to include integrated tax or compensation cess. Prior decisions interpreting analogous expressions and the established rule that collection procedure does not change the character of a levy were applied. Consequently, only basic customs duty on the fair cost of repairs, freight and insurance is payable and integrated tax and compensation cess are fully exempted under serial no. 2 of the Exemption Notification on re-imports after repair for the period in question. [Paras 33, 34, 41, 44, 48]

Appellant entitled to exemption from payment of integrated tax and compensation cess under serial no. 2 of the Exemption Notification on re-import of repaired aircraft/parts; only basic customs duty on fair cost of repairs, freight and insurance is payable.

Final Conclusion: The Tribunal set aside the Commissioner (Appeals) order and allowed the 60 appeals, holding that re-imported aircraft and parts after repair during the period commencing August, 2017 to March, 2019 are exempt from integrated tax and compensation cess under the Exemption Notification, payment being limited to basic customs duty on the fair cost of repairs, freight and insurance.

Dispensing with meeting of unsecured creditors under Section 230(9) - convening meetings of equity shareholders by video conferencing - quorum and adjournment rules for shareholders' meeting - no meeting of secured creditors where 'Nil' secured creditor certificate is produced - service of notices to regulatory and statutory authorities under Section 230(5) - requirement to file Chairman's Report before the Tribunal - mode of voting and prohibition of proxy voting - publication and proof of service of notices

Dispensing with meeting of unsecured creditors under Section 230(9) - no meeting of secured creditors where 'Nil' secured creditor certificate is produced - Whether meetings of Unsecured Creditors (and Secured Creditors) of the three companies could be dispensed with as prayed. - HELD THAT: - The Tribunal examined the certificates and consent affidavits filed with the petition. For Aamir Exim Pvt. Ltd., consent affidavits of unsecured creditors constituting 97.29% in value were placed on record and a 'Nil' secured creditor certificate was produced; accordingly the meeting of unsecured creditors was dispensed with and no meeting of secured creditors was required. For Axis Cottex Pvt. Ltd., the sole unsecured creditor gave consent constituting 100% in value and a 'Nil' secured creditor certificate was produced; the meeting of unsecured creditors was dispensed with and no secured creditors' meeting was required. For Rajgarhia Leasing & Financial Services Pvt. Ltd., unsecured creditors constituting more than 99.26% in value gave consent and a 'Nil' secured creditor certificate was produced; the meeting of unsecured creditors was dispensed with and no secured creditors' meeting was required. The Tribunal therefore allowed dispensing with the holding of the meetings of unsecured creditors for each company and recorded that meetings of secured creditors were unnecessary on the basis of the 'Nil' certificates.

Meetings of unsecured creditors dispensed with for all three companies; no meetings of secured creditors required on the filed 'Nil' certificates.

Convening meetings of equity shareholders by video conferencing - quorum and adjournment rules for shareholders' meeting - mode of voting and prohibition of proxy voting - requirement to file Chairman's Report before the Tribunal - Directions for convening, conducting and voting at the meetings of equity shareholders of the three companies were appropriate and should be issued. - HELD THAT: - The Tribunal directed that meetings of equity shareholders of Rajgarhia Leasing (12:00 PM), Aamir Exim (1:00 PM) and Axis Cottex (2:00 PM) on 1 March 2021 be convened through video conferencing. It fixed notice publication in specified newspapers and service of notices by registered/speed post or email with at least 30 days' clear notice. It fixed the quorum at two shareholders with a 30 minute adjournment rule and deemed quorum provision for members present after adjournment. The Tribunal appointed the proposed chair and scrutinizer and mandated that voting be by in-person, postal ballot or electronic means as applicable, with no proxy voting allowed. It further directed that the Chairman's Report be filed with the Tribunal registry within seven days of the conclusion of each meeting.

Meetings of equity shareholders to be held by video conferencing with specified quorum, notice, voting modes and appointments; Chairman's Reports to be filed within seven days.

Service of notices to regulatory and statutory authorities under Section 230(5) - publication and proof of service of notices - Whether notices of the petition should be served on specified authorities and how objections are to be invited. - HELD THAT: - Pursuant to the applicants' prayer and Section 230(5), the Tribunal directed that the Applicant Companies individually serve notice of the petition on the Regional Director (Northern Region), Registrar of Companies (NCT of Delhi & Haryana), Official Liquidator (Delhi), the Income Tax Department and any other sectoral regulatory authorities governing the companies' activities, at least 40 days before the date fixed for hearing. The applicants were further directed to place the notice on their website and notice board, send private notices by speed post, and file proof of service along with paper publication affidavits before the next date of hearing. The authorities were given 30 days from receipt of notice to file objections or representations, failing which it would be presumed they had no objections and the scheme would be considered subject to other statutory conditions being satisfied.

Service and publication directions given; authorities allowed 30 days for objections; proof of service and publication to be filed.

Requirement to file Chairman's Report before the Tribunal - Timelines for presentation of the Company Petition after compliance with the Tribunal's directions. - HELD THAT: - The Tribunal directed that the Company Petition shall be presented within seven days from the date of filing all the Chairman's Reports with the Registry. This condition links presentation of the petition to the filing of the statutory Chairman's Reports evidencing compliance with the meeting directions.

Company Petition to be presented within seven days of filing all Chairman's Reports.

Final Conclusion: The application under Sections 230-232 was disposed of with directions to convene shareholders' meetings by video conferencing with specified notice, quorum, voting and reporting requirements; meetings of unsecured creditors were dispensed with for the three companies on the basis of filed consents; no meetings of secured creditors were required on production of 'Nil' certificates; statutory authorities were to be served and given 30 days for objections; and the Company Petition was ordered to be presented after filing of Chairman's Reports.

Restoration of name of company - just and equitable - striking off from Register of Companies - opportunity to be heard - compliance of outstanding statutory filings - consequential actions on restoration

Restoration of name of company - just and equitable - striking off from Register of Companies - Restoration of the appellant company's name struck off by the Registrar of Companies. - HELD THAT: - The Tribunal examined whether, in the facts and circumstances, it is just and equitable to restore the company's name under the statutory power exercisable under Section 252 of the Companies Act, 2013. The record shows the company was incorporated in 2008 and while it had defaulted in filing annual returns and balance sheets since 2013, audited balance sheets and ITRs placed on record demonstrate existence of assets and ongoing concern characteristics. The Tribunal observed that striking off is a stringent step and where the company has assets and the capacity to take remedial steps, refusal of restoration solely for failure to file returns would be excessive. Having regard to interests of the company, its shareholders and creditors, restoration was warranted and appropriate exercise of jurisdiction under Section 252. [Paras 8, 9, 10, 11]

Name of the company is ordered to be restored; restoration is just and equitable on the facts presented.

Opportunity to be heard - compliance of outstanding statutory filings - consequential actions on restoration - Terms and conditions to accompany restoration including verification, filing, fees, costs and publication. - HELD THAT: - The Tribunal directed specific procedural and compliance measures to give effect to restoration. The appellant is required, once its name is restored, to file all outstanding statutory documents (financial statements and annual returns) with prescribed fees/additional fee/fine within thirty days. Restoration is made subject to payment of a cost fixed by the Tribunal, and the appellant is permitted to deliver a certified copy of the order to the Registrar of Companies for publication in the Official Gazette. The appellant must publish a notice in a leading district newspaper after obtaining RoC approval of the draft notice. The RoC is directed to take consequential actions such as updating the company's status from 'Strike Off' to 'Active' and to publish the order in the Official Gazette at the appellant's expense. [Paras 12, 13, 14, 15, 16]

Restoration subject to filing of outstanding documents with prescribed fees/fine within thirty days, payment of the directed cost, and compliance with publication and RoC verification and consequential actions.

Final Conclusion: The appeal is allowed: the Tribunal orders restoration of the company's name as just and equitable, subject to filing the outstanding statutory documents with prescribed fees/fine within thirty days, payment of the cost directed by the Tribunal, and fulfillment of publication and RoC formalities; RoC shall take consequential steps to reflect the company's active status.

Reduction of share capital - Section 66 of the Companies Act, 2013 - Return of capital to shareholders - Negative net worth and book value per share - Interest of the company and its stakeholders

Reduction of share capital - Section 66 of the Companies Act, 2013 - Return of capital to shareholders - Negative net worth and book value per share - Interest of the company and its stakeholders - Whether the Tribunal should confirm the company's petition under section 66 for reduction of share capital by cancelling shares and returning capital to shareholders. - HELD THAT: - The petitioner-company sought confirmation under section 66 for cancellation of 69,75,000 equity shares and payment to the holder at an agreed amount. The Tribunal examined the company's accounts and balance-sheets filed on record and noted that as on August 24, 2020 the company showed negative net worth/shareholders' funds and a negative book value per share, together with substantial borrowings and inter-corporate loans. The accounting effect of the proposed reduction, as placed before the Tribunal, would further deepen negative shareholders' funds and worsen the book value per share. Given the company's negative net worth and high borrowings, the Tribunal concluded that returning capital to shareholders in the proposed manner would not be in the overall interest of the company and its stakeholders. Applying section 66 in that factual matrix, the Tribunal declined to confirm the reduction of share capital and dismissed the petition. The Tribunal's conclusion turns on the financial position of the company as reflected in the balance-sheets and the resultant adverse effect on stakeholders, rather than on procedural objections raised by the Regional Director which were addressed in the petitioner's replies. [Paras 19, 20, 21, 22]

The petition under section 66 for reduction of share capital is not allowed because, in light of the company's negative net worth, negative book value per share and high borrowings, the proposed return of capital is not in the overall interest of the company and its stakeholders.

Final Conclusion: The company petition for confirmation of reduction of share capital is dismissed; the Tribunal declined to confirm the proposed cancellation of shares and return of capital on the ground that the company's financial position renders the proposal contrary to the interests of the company and its stakeholders.

Sanction of scheme of amalgamation under the Companies Act, 2013 - Fairness and reasonableness of scheme; public policy - Commercial substance versus tax benefit; General Anti Avoidance Rule (GAAR) - Protection of revenue and undertakings/indemnity to Income-tax authorities - Statutory compliance and post-sanction directions (filing, publication, accounting treatment) - Dispensation of meetings of shareholders and creditors

Sanction of scheme of amalgamation under the Companies Act, 2013 - Fairness and reasonableness of scheme; public policy - Dispensation of meetings of shareholders and creditors - Sanction of the proposed scheme of amalgamation between the transferor companies and the transferee company with appointed date April 1, 2019. - HELD THAT: - The Tribunal examined the scheme, the documents on record, the auditor's certificate on accounting treatment and the undertakings filed by the petitioners, including replies to observations of the Official Liquidator and the Regional Director. Meetings of shareholders and creditors had earlier been dispensed with by the Tribunal. Having considered the commercial rationale offered by the petitioners (rationalisation, streamlining, economies of scale and uniform management), the certified accounting treatment, and the statutory compliance filings and undertakings, the Tribunal found the scheme to be fair and reasonable, not contrary to public policy and not violative of law. Consequently the scheme with the appointed date April 1, 2019 was sanctioned and declared binding on the companies, their shareholders, creditors and employees.

The scheme of amalgamation is sanctioned with appointed date April 1, 2019; it is binding on all concerned.

Commercial substance versus tax benefit; General Anti Avoidance Rule (GAAR) - Protection of revenue and undertakings/indemnity to Income-tax authorities - The Income-tax Department's objection that the scheme lacks commercial substance and is a device for obtaining tax benefit was considered and did not preclude sanction of the scheme. - HELD THAT: - The Tribunal recorded the Income-tax Department's contention that the scheme principally benefits a single foreign shareholder and may amount to tax avoidance invoking GAAR and other provisions. The petitioners responded by explaining the commercial objectives of the amalgamation, statutory provisions relevant to amalgamations that provide for tax neutrality where applicable, the prior taxation of share transfers, valuation and RBI compliance, and by furnishing an undertaking from the transferee to participate in and discharge any tax liabilities of the transferor companies and to indemnify the President of India against any loss to the revenue. The Tribunal noted these submissions and undertakings and observed that sanctioning the scheme does not confer immunity from tax liabilities; statutory and revenue consequences remain open for adjudication by the Income-tax authorities. On the basis of the record and the protective undertakings, the Tribunal did not accept the contention as a ground to refuse sanction.

The objection based on alleged tax avoidance/absence of commercial substance does not warrant rejection of the scheme; sanction is granted subject to existing tax laws and the undertakings given.

Statutory compliance and post-sanction directions (filing, publication, accounting treatment) - Protection of revenue and undertakings/indemnity to Income-tax authorities - Transfer of unspent CSR amounts - Directions and consequential statutory steps to be taken by the petitioners upon sanction were specified and ordered. - HELD THAT: - The Tribunal directed that the order shall not be construed as exempting the parties from stamp duty, taxes or other statutory permissions. The petitioner-companies were directed to file the certified scheme with the Registrar of Companies, publish the sanction in the newspapers used earlier, and take all consequential steps required under the Companies Act, 2013. The Tribunal further required compliance and undertakings in respect of objections raised by the Official Liquidator and the Regional Director, including the transfer of unspent CSR amounts by transferor company No.1 to the transferee within the period prescribed in the order, and to preserve books and records and complete prescribed filings. The accounting treatment certified by the auditors was accepted as conforming with applicable Accounting Standards and the Tribunal required submission of necessary compliance and undertakings for issues flagged during scrutiny.

Petitioner-companies to comply with the listed post-sanction directions: file the order and scheme with ROC, publish the sanction, implement the accounting treatment, preserve records, address Official Liquidator/Regional Director concerns and transfer unspent CSR within the specified time.

Final Conclusion: The Tribunal sanctioned the scheme of amalgamation with appointed date April 1, 2019, finding it fair, reasonable and not contrary to public policy, while expressly preserving the rights of revenue authorities to examine tax consequences and by imposing directions and undertakings to protect statutory and revenue interests.

Immunity for acts done in good faith under the Insolvency and Bankruptcy Code - Requirement to plead and prove absence of good faith to pierce statutory immunity - Non-availability of criminal liability where essential ingredients of criminal breach of trust and cheating are absent - Principles for quashing criminal proceedings under inherent jurisdiction (Bhajanlal categories) - Overriding effect of the Insolvency Code in case of inconsistency

Immunity for acts done in good faith under the Insolvency and Bankruptcy Code - Requirement to plead and prove absence of good faith to pierce statutory immunity - Whether the criminal proceeding could be sustained despite statutory immunity accorded to acts done under the Insolvency Code, without specific allegations to negate good faith. - HELD THAT: - The court examined Sections 217, 233, 236 and 238 of the Insolvency Code and the Regulation framework and observed that Section 233 confers immunity from suit, prosecution or other legal proceeding for anything done or intended to be done in good faith under the Code. While Section 236 restricts cognizance of offences punishable under the Code to specified fora, Section 233 is not limited only to offences under the Code and grants broader protection to officials and insolvency professionals acting under the Code. The court held that the protection cannot be lightly disregarded: where immunity is claimed, the complainant must allege relevant facts in the FIR or complaint that, if accepted, would impute motive or absence of good faith. Good faith or its absence is a question of fact, but to permit a criminal proceeding to proceed despite statutory immunity there must be material in the FIR enabling an inference of bad faith or mala fide conduct. Absent such allegations, immunity operates to bar the prosecution at the threshold. [Paras 12, 13, 18, 19, 20]

The court held that, on the record and allegations in the FIR, no sufficient material was pleaded to negate the statutory immunity for acts done in good faith under the Insolvency Code, and therefore the prosecution could not be sustained on that basis.

Non-availability of criminal liability where essential ingredients of criminal breach of trust and cheating are absent - Principles for quashing criminal proceedings under inherent jurisdiction (Bhajanlal categories) - Whether the allegations in the FIR prima facie disclose the ingredients of offences punishable under sections 406 and 420 IPC so as to justify investigation and prosecution. - HELD THAT: - The court applied the tests in Bhajanlal and examined the essential ingredients of criminal breach of trust (entrustment and dishonest misappropriation/conversion) and cheating (deception inducing delivery or retention of property). It noted that the petitioner was appointed and acted as a resolution professional under directions of the NCLT, that the decision to approve the resolution plan was taken by the committee of creditors and earlier approved by the NCLT (later set aside by another bench), and that the alleged revised offer of the complainant had been sent by e-mail to all members and was known to the committee. There was therefore no allegation of delivery of property, dishonest conversion by the petitioner, or any deception practised by him; the NCLT's observation that the revised offer ought to have been placed before the committee did not, by itself, impute fraud or dishonest motive. Considering the absence of the essential ingredients of sections 406 and 420 IPC and the surrounding facts, the court found the FIR to be prima facie lacking and attended with an ulterior motive, bringing the case within several Bhajanlal categories warranting exercise of inherent jurisdiction to prevent abuse of process. [Paras 23, 24, 25, 26, 27]

The court concluded that the allegations in the FIR do not prima facie disclose the offences under sections 406 and 420 IPC and that the criminal proceeding was liable to be quashed as an abuse of process.

Final Conclusion: Having regard to the statutory immunity for acts done in good faith under the Insolvency Code, the absence of pleaded facts to negate good faith, and the lack of prima facie ingredients of offences under sections 406 and 420 IPC, the FIR dated 27-10-2020 and the consequent proceedings in Paltan Bazar P.S. Case No. 825/2020 are quashed to secure the ends of justice.

Invalidity of instrument for use on expired/unallowed stamp - Application of Section 52B of the Maharashtra Stamp Act, 1958 - Admissibility of claim as financial creditor under the Insolvency and Bankruptcy Code, 2016 - Time-bar for submission of claims under Regulation 12(2) of the IBBI Regulations

Application of Section 52B of the Maharashtra Stamp Act, 1958 - Invalidity of instrument for use on expired/unallowed stamp - Admissibility of claim as financial creditor under the Insolvency and Bankruptcy Code, 2016 - The loan agreement executed on 25.01.2017 on non-judicial stamp paper issued in 2014 is invalid under Section 52B of the Maharashtra Stamp Act, 1958, and consequently the applicant's claim as a financial creditor is not admissible. - HELD THAT: - The Tribunal noted that the loan agreement relied upon by the applicant was executed on 25.01.2017 on non-judicial stamp paper that was purchased in 2014. Section 52B of the Maharashtra Stamp Act renders stamps which were neither used nor surrendered within six months of purchase invalid. Although a Supreme Court decision was cited to the effect that old stamp paper may be used, the Tribunal observed that Maharashtra law contains a specific provision treating stamps unused beyond six months as invalid. The agreement therefore suffered invalidity under Section 52B when used in 2017 on stamp paper purchased in 2014. In view of the invalidity of the primary document pleaded to establish the debt, and having regard to the absence of the loan in the Corporate Debtor's income-tax records (as noted by the Resolution Professional), the applicant's claim could not be admitted as a financial creditor. The Tribunal disposed of the application on that basis. [Paras 9, 10, 11, 12, 13]

The agreement is invalid under Section 52B of the Maharashtra Stamp Act and the applicant's claim as a financial creditor is not admissible; the application is dismissed.

Final Conclusion: The application under Section 60(5) of the IBC is dismissed because the loan agreement relied upon was executed on stamp paper rendered invalid under Section 52B of the Maharashtra Stamp Act, 1958, and therefore the applicant's claim as a financial creditor could not be admitted.

Non-cooperation with Resolution Professional - Powers under Section 19(2) of the I&B Code, 2016 - directing parties to hand over assets, documents and information - timelines under CIRP regulations - contempt for non-compliance - effect of PMLA attachment and interim orders by Enforcement Authorities - exclusion of lockdown period from CIRP timeline

Non-cooperation with Resolution Professional - Powers under Section 19(2) of the I&B Code, 2016 - directing parties to hand over assets, documents and information - timelines under CIRP regulations - Respondents' obligation to assist and cooperate with the Resolution Professional by providing documents, information and possession of assets necessary for completion of CIRP and the imposition of directions to that effect. - HELD THAT: - The Tribunal, on the material placed by the Resolution Professional, found that the directors of the suspended board and the auditor retained physical possession of immovable assets, vehicles, books of account and other records of the corporate debtor and did not furnish requisite information and documents, thereby impeding the CIRP. While recognising the disruption caused by the COVID-19 lockdown and that unused lockdown period may be excluded from the RP's statutory timeline, the Tribunal held that such disruption does not entitle the respondents to deliberate withholding of information and assets essential for the insolvency process. The Tribunal rejected respondents' contentions that the RP should have separately sought custody of assets affected by an attachment order under PMLA, observing that respondents cannot use third party or regulatory restrictions as blanket justification for non-cooperation without assisting the RP. Exercising the authority under Section 19(2) of the Code, the Tribunal directed the respondents to cooperate with the RP by responding to an inventory prepared by the RP and handing over information, documents and possession as listed, within a stipulated timeframe, failing which the RP may proceed with contempt remedies. [Paras 8, 9]

Application under Section 19(2) of the Code allowed; respondents directed to provide cooperation and hand over information, documents and assets as per an inventory within ten days of receipt; RP may initiate contempt proceedings for non-compliance.

Contempt for non-compliance - effect of PMLA attachment and interim orders by Enforcement Authorities - Consequences of non-compliance with directions and interplay with prior enforcement orders. - HELD THAT: - The Tribunal expressly empowered the RP to initiate contempt proceedings against any respondent who fails to comply with the directions to provide documents, information and possession as per the inventory. At the same time, the Tribunal noted the existence of prior PMLA attachment and interim orders but did not accept them as absolving the respondents of the duty to assist the RP; respondents must, notwithstanding such constraints, assist the RP or state the precise nature of any legal impediment. The order therefore contemplates compliance subject to lawful restrictions but places the onus on respondents to cooperate and not to cause delay to the CIRP. [Paras 6, 9]

Respondents held liable to comply unless a lawful impediment is demonstrated; failure to comply will attract contempt proceedings as permitted by the Tribunal.

Final Conclusion: The Tribunal allowed the application under Section 19(2) of the I&B Code, 2016 and directed the directors of the suspended board and the auditor to furnish information, documents and hand over possession of assets as per an inventory to be prepared by the RP within ten days of receipt, with liberty to the RP to initiate contempt proceedings for non compliance; the application is disposed of with no order as to costs.

Prosecution under section 3 of the PML Act distinct from prosecution for predicate offence - existence of predicate offence not a precondition for prosecution under the PML Act - possession and enjoyment of 'proceeds of crime' sustaining prosecution under the PML Act - scope of discharge by Sessions Judge under Section 227 Cr.P.C. - prima facie case required for framing of charge

Prosecution under section 3 of the PML Act distinct from prosecution for predicate offence - existence of predicate offence not a precondition for prosecution under the PML Act - possession and enjoyment of 'proceeds of crime' sustaining prosecution under the PML Act - Whether the trial court was justified in discharging accused Nos.2 and 3 under Section 227 Cr.P.C. on the ground that the acquittal of the principal accused in the predicate offence defeats prosecution under section 3 of the PML Act. - HELD THAT: - The complaint contains direct allegations that the respondents were involved in money laundering and were in possession/enjoyment of property alleged to be proceeds of an offence under the PC Act, prima facie disclosing ingredients of section 3 of the PML Act. Section 3, read with the definition of 'proceeds of crime', penalises activities connected with proceeds of crime and does not make conviction in a predicate or scheduled offence a precondition for prosecuting an accused under the PML Act. The prosecution under section 3 is a distinct offence and may be sustained if the accused is shown, on the materials, to be in possession or enjoyment of proceeds of crime even where the alleged predicate offender has been acquitted. The trial court erred in discharging the respondents solely by relying on earlier High Court decisions which have been overtaken or rendered non binding; the material on record furnishes sufficient grounds for proceeding to trial. The determinative legal principle applied is that absence of a conviction for the predicate offence does not, by itself, oust criminal proceedings for money laundering where there is prima facie material showing involvement with proceeds of crime. [Paras 6, 7, 9]

The trial court's order discharging the accused was set aside and the application under Section 227 Cr.P.C. dismissed; the trial court is directed to proceed with the trial.

Scope of discharge by Sessions Judge under Section 227 Cr.P.C. - prima facie case required for framing of charge - Whether the Sessions Judge rightly applied the law governing discharge under Section 227 Cr.P.C. in the circumstances of the complaint under the PML Act. - HELD THAT: - Section 227 requires the Sessions Judge to consider the record and documents and hear parties to determine if there are sufficient grounds to proceed. The power to discharge under Section 227 is narrower than under Section 239 Cr.P.C.; a Sessions Judge may not examine the accused as under Section 239 but must assess whether the material on record makes out a prima facie case. In the present matter, the material produced with the complaint prima facie disclosed ingredients of the offence under the PML Act; therefore the Sessions Judge should not have discharged the accused on the limited basis that the predicate accused had been acquitted, without addressing whether a prima facie case existed from the material on record. [Paras 8, 9]

The trial court's exercise of power under Section 227 was incorrect insofar as it discharged the accused without properly applying the test of sufficiency of grounds to proceed; hence the discharge order is set aside and proceedings are to continue.

Final Conclusion: Criminal revision allowed; the impugned order discharging accused Nos.2 and 3 is set aside, the application under Section 227 Cr.P.C. is dismissed and the Trial Court is directed to proceed with the trial in accordance with law.

Attachment under the PML Act - proceeds of crime - predicate offence - offence under section 3 of the PML Act (money laundering) as an independent and standalone offence - retrospective application of procedural amendment to attachment provisions - availability of alternative remedy under the PML Act (appeal to Appellate Tribunal)

Attachment under the PML Act - retrospective application of procedural amendment to attachment provisions - availability of alternative remedy under the PML Act (appeal to Appellate Tribunal) - Validity of confirmation of provisional attachment made under the pre amended provision when confirmed after amendment and relief in writ jurisdiction in view of an alternative statutory appeal. - HELD THAT: - The court examined the challenge to the provisional attachment passed under the earlier text of section 5(1) and its subsequent confirmation after amendment. It observed that the adjudicatory scheme and remedies under the PML Act are available, that the petitioner had availed the statutory appeal under section 26 which was pending, and that the provisional attachment order showed application of mind and reasons recorded. There was no demonstrable jurisdictional error or breach of principles of natural justice in the impugned proceedings that would justify interference under Article 226/227 or section 482 Cr.P.C. Consequently, the availability and pendency of the statutory appellate remedy, together with the absence of any vitiating infirmity in the attachment order, precluded grant of writ relief. [Paras 8, 9, 11, 12, 15]

Challenge to confirmation of the attachment was rejected and no writ relief was granted in view of the impugned order's validity and the pending statutory appeal.

Proceeds of crime - predicate offence - offence under section 3 of the PML Act (money laundering) as an independent and standalone offence - Whether prosecution under section 3 of the PML Act mandates prior conviction or prosecution of the accused for the predicate offence, or that the offender must be a party to the predicate offence, before a money laundering prosecution can be sustained. - HELD THAT: - The court held that the offence under section 3 of the PML Act is distinct and independent from the scheduled/predicate offences. The determinative element for money laundering is the existence of proceeds of crime and involvement in processes or activities connected with them, not the pendency or outcome of a trial for the predicate offence or conviction thereunder. Therefore, absence of a prosecution or conviction in respect of a predicate offence against the petitioner (or the fact that the predicate prosecution was only against her husband) does not preclude initiation of proceedings under section 3 where material establishes involvement with proceeds of crime. [Paras 14]

The contention that section 3 prosecution cannot be sustained without a predicate conviction or that the offender must be a party to the predicate offence was rejected.

Final Conclusion: Writ petition dismissed; the court refused interference with the attachment and money laundering prosecution, noting the availability and pendency of the statutory appeal and holding that offence under section 3 of the PML Act is independent of predicate conviction.

Payment system operator - reporting entity - applicability of the Prevention of Money Laundering Act to facilitator platforms - writ jurisdiction - maintenance of records under Section 12(1)(a) of the PML Act - bank guarantee as interim security - reference/consultation with Reserve Bank of India and Ministry of Finance

Payment system operator - reporting entity - applicability of the Prevention of Money Laundering Act to facilitator platforms - Whether the impugned order declaring the petitioner to be a "payment system operator" and a "reporting entity" under the PML Act should be sustained at this stage. - HELD THAT: - The Court recognised that a substantial legal question arises as to whether a business model such as the petitioner's-described as a facilitator platform that does not itself collect or disburse funds except for a nominal facilitation fee-falls within the definitions of "payment system operator" and "reporting entity" under the PML Act. Given conflicting positions, including the RBI affidavit stating the petitioner is not operating or participating in a payment system under the PSS Act, the Court did not finally decide the merits. Instead the Court issued notice and directed further institutional consultation to clarify whether entities of this kind ought to be categorised as payment system operators and reporting entities under the PML Act. The matter was therefore retained for adjudication after these steps are taken. [Paras 4, 6, 8, 9, 11]

Notice issued; the question of whether the petitioner is a "payment system operator" and "reporting entity" under the PML Act is not finally adjudicated and is to be considered after the directed consultation and further proceedings.

Writ jurisdiction - Whether this High Court may entertain the writ petition despite the availability of an alternative appellate remedy under the PML Act. - HELD THAT: - The Court observed that the preliminary contention regarding the alternative remedy under Section 26 of the PML Act and the contention as to jurisdiction raised by respondents are substantial questions warranting consideration. Consequently, the Court issued notice to the respondents rather than declining jurisdiction at the threshold, thereby keeping the question of maintainability and forum competence open for adjudication on merits. [Paras 6, 9]

Jurisdictional objection recorded and notice issued; maintainability to be considered on the returnable date.

Reference/consultation with Reserve Bank of India and Ministry of Finance - Whether a consultative committee should be constituted to determine the regulatory position of platforms like the petitioner. - HELD THAT: - The Court directed the Secretary, Ministry of Finance to constitute a Committee including a nominee of the RBI and the Ministry of Finance to clarify whether companies claiming to be facilitators of monetary transactions in foreign exchange and Indian Rupees ought to be categorised as "payment system operators" and thus "reporting entities" under the PML Act. The Committee was directed to meet within ten days and file its conclusions by affidavit within two weeks thereafter. The direction reflects the Court's view that executive clarification is necessary given the institutional interest and conflicting positions on regulatory coverage. [Paras 11]

Committee to be constituted by the Ministry of Finance with RBI participation; timeline fixed for meeting and filing of conclusions.

Maintenance of records under Section 12(1)(a) of the PML Act - bank guarantee as interim security - Interim measures to be imposed pending final disposal of the writ petition and the committee's report. - HELD THAT: - The Court directed that, pending further orders, the petitioner shall maintain records of all transactions under Section 12(1)(a) of the PML Act in electronic form on a secure server located in India, subject to further orders. The Court further required the petitioner to furnish a bank guarantee to the satisfaction of the Registrar General for the sum specified in the impugned order and to file an undertaking by its Managing Director that it will comply with any orders in the petition, including furnishing data as may be required of a reporting entity, if unsuccessful. These directions were imposed as conditions for the interim stay of the impugned order. [Paras 12, 13]

Petitioner ordered to maintain records in India, furnish the directed bank guarantee, and file the undertaking; compliance is a condition for an interim stay of the impugned order.

Stay of order - Whether the impugned order should be stayed pending compliance with interim directions. - HELD THAT: - Subject to the petitioner's compliance with the directions requiring record maintenance, furnishing of a bank guarantee, and filing of an undertaking, the Court stayed the impugned order. The stay is conditional and expressly linked to the petitioner's fulfilment of the specified interim requirements within stipulated timeframes. [Paras 12, 13, 14]

Impugned order stayed conditionally upon the petitioner's compliance with the interim directions; matter listed for further hearing as directed.

Impleadment of Reserve Bank of India - Whether RBI should be impleaded as a party in the petition. - HELD THAT: - Given the RBI's expressed position in affidavit material relied upon by the petitioner, and the wider regulatory question raised about platforms of this nature, the Court deemed it appropriate to implead the Reserve Bank of India as Respondent No.2. The petitioner was directed to file an amended memo of parties within one week. [Paras 10, 11]

RBI impleaded as Respondent No.2; amended memo of parties to be filed within one week.

Final Conclusion: The Court issued notice and retained the substantial legal question whether the petitioner is a "payment system operator" and a "reporting entity" under the PML Act for determination after institutional consultation; directed constitution of a Committee with RBI and Ministry of Finance nominees with a fixed timetable; impleaded RBI; and granted a conditional stay of the impugned order subject to maintenance of records in India, furnishing of a bank guarantee, and filing an undertaking, with further listing for hearing.

Rectification of mistake in judicial order - consideration of written submissions and cited judgments - applicability of judicial precedents to facts - typographical/oversight correction - reverse charge mechanism - revenue neutrality

Rectification of mistake in judicial order - consideration of written submissions and cited judgments - The Miscellaneous applications for rectification of the Tribunal's order were maintainable and required correction to reflect the written submissions and judgments actually argued. - HELD THAT: - The Tribunal examined whether the Authorised Representative's written submissions dated 14/09/2020 and the judgments relied upon at the hearing on 15/09/2020 had been considered in the impugned order dated 22/09/2020. The Bench found that although those judgments had been considered during hearing, an oversight and typographical error resulted in citation of different earlier judgments in the published order. The Tribunal concluded that this constituted a correctable mistake and that the record should be amended to record the actual judgments relied upon by the Authorised Representative.

Applications for rectification are allowed to correct the oversight so that the order records the written submission and judgments actually relied upon.

Applicability of judicial precedents to facts - reverse charge mechanism - revenue neutrality - The six judgments cited in the Authorised Representative's written submission were considered and their relevance vis-a -vis the facts of the case was assessed; none altered the Tribunal's factual finding that no service had been received by the appellants. - HELD THAT: - The Tribunal reviewed each cited decision. It observed that the decision on reverse charge mechanism concerned levy of service tax on services received from abroad and was not applicable where the factual finding was absence of any service received. Decisions addressing strict construction of notifications were inapplicable because the Tribunal's finding was that the commission/discount did not represent a taxable service. Decisions decided on the basis of revenue neutrality were also not on point as the Tribunal had not relied on revenue neutrality but on the facts of the present case. Accordingly, the judgments did not warrant alteration of the substantive conclusion reached in the final order.

The cited precedents were considered but held not to affect the Tribunal's factual and legal conclusion that no taxable service was received by the appellants.

Typographical/oversight correction - rectification of mistake in judicial order - The error in the impugned order consisting of incorrect citation of judgments was a mistake apparent on the record capable of rectification and is corrected by substituting the judgments actually relied upon. - HELD THAT: - Having found that the Authorised Representative had placed on record and argued specific judgments which were mistakenly not cited in the published order, the Tribunal held that the appropriate remedy was to replace the incorrect citations in paragraph 5 of the order dated 22/09/2020 with the six judgments actually cited. This correction was limited to recording the judgments relied upon and did not disturb the merits of the final order.

The impugned order is rectified by replacing the incorrectly cited judgments with those actually relied upon; the miscellaneous applications are disposed of accordingly.

Final Conclusion: The Tribunal allowed the miscellaneous applications, held that the written submissions and six cited judgments were considered though omitted from the published order due to oversight, corrected the order by substituting the actual judgments cited, and disposed of the applications accordingly.

Non-speaking order - reasoned order - tax collected under statutory obligation not part of taxable turnover - interpretation of "purchase price" and "turnover of purchases" - statutory appeal under Section 73 of the Gujarat Value Added Tax Act, 2003 - interim relief

Tax collected under statutory obligation not part of taxable turnover - interpretation of "purchase price" and "turnover of purchases" - statutory appeal under Section 73 of the Gujarat Value Added Tax Act, 2003 - interim relief - Petition admitted for consideration; interim relief granted and notice issued while the question whether the amount of service tax collected by the petitioner is includible in taxable turnover is left for adjudication. - HELD THAT: - The Court proceeded to examine the challenge to the fresh order dated 11th November, 2020 but did not decide the substantive controversy on the merits. It relied on the ratio of this Court in Tax Appeal No.349 of 2016 (paras 7-8), which construed the definition of "purchase price" and held that amounts collected by dealers under a statutory obligation are ordinarily not part of taxable turnover; that interpretation led to the conclusion that value added tax collected on purchases is excluded from purchase price and, consequently, from input tax credit computation. Applying and drawing attention to that precedent, the learned senior counsel submitted that the taxable turnover of sale should not include the amount of service tax separately collected by the petitioner. The Court, while noting the availability of a statutory appeal under Section 73 of the GVAT Act, chose to entertain the writ petition because the earlier directly applicable decision had not been dealt with in the impugned order. Rather than resolve the dispute on merits, the Court issued notice to the respondents, granted ad-interim protection in the terms indicated (paras 9(D)(i) and 9(D)(ii) of the earlier order), and directed service; the substantive question whether service tax collected is includible in taxable turnover remains to be adjudicated on return of the respondents. [Paras 5, 6]

Notice issued to respondents, ad-interim relief granted, and the substantive issue whether the service tax component is includible in taxable turnover is reserved for adjudication on return of the respondents.

Final Conclusion: The High Court entertained the writ petition despite availability of a statutory appeal because an earlier binding decision was not addressed; citing that precedent the Court observed that statutory taxes collected ordinarily do not form part of taxable turnover, issued notice to respondents, granted interim relief, and left the substantive question for decision on the return date.

Offence under section 138 of the Negotiable Instruments Act treated as primarily a civil wrong - Discretion of the court to close proceedings where complainant is duly compensated - Compounding not strictly requiring consent if compensation makes further prosecution unnecessary - Application of Meters and Instruments principle to discretionary acquittal on payment of compensation - Summary trial principles under Chapter XVII of the Act and Section 258 Cr.P.C.

Discretion of the court to close proceedings where complainant is duly compensated - Application of Meters and Instruments principle to discretionary acquittal on payment of compensation - Whether the Appellate Court rightly acquitted the accused in view of the deposit of compensation and the principles laid down in Meters and Instruments Pvt. Ltd. - HELD THAT: - The High Court held that the Appellate Court exercised its discretion in accordance with the Supreme Court's observations in Meters and Instruments Pvt. Ltd., which recognise that the offence under section 138 is primarily compensatory and that a court, satisfied that the complainant has been duly compensated, may in the interests of justice close proceedings and discharge the accused even without formal compounding by consent. The record showed that the accused had first offered a demand draft during trial which the complainant refused and subsequently deposited a larger amount in court during the appeal; the deposit of four times the cheque amount was directed to be paid to the complainant and was in fact received. Applying the cited principle, the Appellate Court's acquittal was a discretionary order based on the adequacy of compensation and did not call for interference by this Court. [Paras 6, 7, 8]

The Appellate Court's order acquitting the accused on the basis of adequate compensation deposited was not interfered with and the appeal was dismissed.

Final Conclusion: The High Court dismissed the appeal, upholding the Appellate Court's discretionary acquittal of the accused after finding that the complainant had been duly compensated in line with the Supreme Court's guidance in Meters and Instruments.