TaxTMI Updates e-Newsletter
Jan 20,2021

Restoration of GST registration - implementation of appellate order - mandamus for compliance with statutory order - software or portal defect not a defence to non-compliance - requirement of FORM GST REG-12 and furnishing of returns for revocation

Restoration of GST registration - implementation of appellate order - mandamus for compliance with statutory order - Respondents must restore the petitioner's GST registration on the GST Portal in compliance with the appellate order which set aside the cancellation. - HELD THAT: - The Court found that the order of the Additional Commissioner (Appeal) setting aside the cancellation of the petitioner's GST registration was not shown to be illegal or without jurisdiction by the respondents. The respondents could not justify non-implementation of that judicially rendered order by pointing to the petitioner's failure to access the GST Portal within the initial seven-day period. The Court held that a departmental or portal failure cannot be used to defeat or avoid compliance with a valid appellate order. Accordingly, the writ petition was allowed and the respondents were directed to restore the petitioner's GST registration on the GST Portal forthwith, within ten days from filing of a copy of the order before them.

Writ petition allowed; respondents directed to restore the petitioner's GST registration on the GST Portal within ten days and to cooperate for compliance.

Requirement of FORM GST REG-12 and furnishing of returns for revocation - software or portal defect not a defence to non-compliance - The contention that restoration could not be effected because the petitioner failed to file FORM GST REG-12 or furnish old returns was not accepted as a ground to refuse implementation of the appellate order. - HELD THAT: - Respondents relied on the statutory scheme and portal procedure, including the requirement of filing FORM GST REG-12 and furnishing outstanding returns and payments for revocation, to contend that manual restoration was impermissible. The Court observed that even if the statutory procedure requires an application for revocation, the department could not decline to give effect to an appellate order on the ground that the portal/software lacks a facility. The respondents were obliged to make necessary provisions or otherwise ensure compliance; inability or omission of the portal cannot be visited on the petitioner so as to deny the relief granted by the competent appellate authority.

Respondents cannot refuse to implement the appellate order on the ground that FORM GST REG-12 was not filed or that the portal lacks functionality; they must facilitate restoration and cooperate to give effect to the order.

Final Conclusion: The writ petition was allowed: the appellate order restoring the petitioner's GST registration must be implemented by the respondents forthwith (within ten days of service of this order), and the respondents are directed to cooperate and take such steps, including addressing any portal/software deficiency, to give effect to the order.

Exemption for legal services - service tax show cause cum demand notice - recovery from service recipient - interim stay

Exemption for legal services - service tax show cause cum demand notice - recovery from service recipient - interim stay - Challenge to the show cause cum demand notice dated 28.12.2020 seeking levy of service tax for the financial year 2014-15 by an advocate. - HELD THAT: - The petitioner, an advocate, contended that Central Government notifications exempt services provided by an individual as an advocate or by a partnership firm of advocates from service tax, and that there exists a provision for recovery from the service recipient. The writ petition challenges the impugned notice as having been issued mechanically without regard to these exemptions and the recovery provision. Having heard learned counsel and considered the submissions, the Court granted interim relief by staying the operation of the impugned notice pending further orders. [Paras 7]

Interim stay granted on the show cause cum demand notice dated 28.12.2020 until further orders; matter posted to 15.03.2021.

Final Conclusion: Writ petition challenges a service tax show cause cum demand notice for FY 2014-15 issued to an advocate on grounds of exemption and recovery provisions; the Court granted an interim stay of the impugned notice until further orders and listed the matter for further consideration on 15.03.2021.

Interest on delayed payment of GST - Prospective operation of amendment to section 50(1) - No recovery for past periods in respect of interest on tax discharged from electronic credit ledger - Liability to pay interest where tax discharged from cash ledger (net liability)

Prospective operation of amendment to section 50(1) - Interest on delayed payment of GST - Amendment to section 50(1) as notified by Notification No.63/2020 operates prospectively from 01.09.2020 and will be applied prospectively by the tax administration. - HELD THAT: - The state, by affidavit and supported by the CBIC circular, has clarified that the amendment to section 50(1) was made effective prospectively w.e.f. 01.09.2020 due to technical limitations. The administration has undertaken that the amended charging mechanism for interest will not be applied retrospectively, and no recoveries shall be made for prior periods in contravention of this prospective application. The court records and acts on this stand, taking the state affidavit and the CBIC clarification into account.

Amendment to section 50(1) applies prospectively from 01.09.2020 and will not be applied to recoveries for past periods.

No recovery for past periods in respect of interest on tax discharged from electronic credit ledger - Interest on delayed payment of GST - No recovery will be made for interest charged for past periods where the delayed payment of tax was discharged by debiting the electronic credit ledger. - HELD THAT: - The state affidavit affirmatively states that, in light of the Notification and CBIC clarification, no recoveries will be undertaken for interest on delayed payments that were discharged by utilization of the electronic credit ledger. The court accepts and records this stand and disposes of the petition accordingly.

Tax administration will not recover interest for past periods in cases where tax was discharged by debiting the electronic credit ledger.

Liability to pay interest where tax discharged from cash ledger (net liability) - Interest on delayed payment of GST - Under the amended provision, interest may be payable in respect of delayed payments made by debiting the cash ledger (i.e., on net liability) prospectively. - HELD THAT: - The state has prayed that taxpayers may be directed to pay interest on delayed payments that were discharged by debiting the cash ledger in terms of the amended section 50(1). The court records this position and, by disposing the petition on the basis of the state's affidavit and the CBIC circular, leaves the application of the amended provision to operate prospectively in respect of payments from the cash ledger.

From 01.09.2020 onward, interest may be attracted where tax is discharged from the cash ledger; the petition is disposed taking the state's stand on this point.

Final Conclusion: Petition disposed of on the basis of the state's affidavit and the CBIC circular: the amendment to section 50(1) is prospective w.e.f. 01.09.2020; no recoveries will be made for past periods in respect of interest where tax was discharged from the electronic credit ledger; liability to pay interest on amounts discharged from the cash ledger will be governed by the amended provision prospectively.

Search and seizure under GST - Reason to believe test for search - Judicial review scope of search action - Cross-empowerment of Central and State GST authorities - Admissibility and voluntariness of statement recorded during search - Requirement of independent witnesses/signatures during search - Validity of authorization in Form GST INS-01

Search and seizure under GST - Reason to believe test for search - Judicial review scope of search action - Validity of the search conducted at the petitioner's premises under the DGST Act - HELD THAT: - The Court examined the reasons recorded to justify the inspection and search and applied settled principles limiting judicial review of search actions. It held that the court's role is confined to testing formation of belief and whether there is a rational connection between the material and the belief; it will interfere only where the grounds are non-existent, irrational, or such that no reasonable person could form that belief. The reasons produced by the respondents satisfied the mandate of Section 67(2) and relevant rules, and on the test of the reasonable person the issuance of the search was not vitiated. Consequently the Court declined to countermand the search action and refused to quash it on these grounds. [Paras 9, 11, 19]

Search action held lawful; petition dismissed insofar as it seeks quashing of the search on adequacy of reasons grounds.

Cross-empowerment of Central and State GST authorities - Whether the DGST authorities unlawfully assumed jurisdiction to investigate matters already under inquiry by Central GST authorities - HELD THAT: - The Court considered statutory provisional scheme and administrative clarifications by the Board (letters dated 5.10.2018 and 22.06.2020) concerning cross-empowerment. It noted that officers of Central and State GST are authorised to take intelligence-based enforcement action across the entire value chain and that where such action is initiated by one authority it may be pursued to its logical conclusion by that authority. A mere requisition for documents covering earlier periods does not ipso facto establish an impermissible parallel investigation. The Court observed that if eventual proceedings overlap, the petitioner retains remedies under law to challenge such overlap at the appropriate stage. [Paras 12, 15, 16]

Cross-empowerment recognised; no bar to State action in present circumstances and overlap, if any, can be challenged during appropriate proceedings.

Admissibility and voluntariness of statement recorded during search - Treatment of the statement recorded from the petitioner's director during the search - HELD THAT: - The Court noted that the director made admissions during the search and has not retracted them. It held that the question of voluntariness and admissibility of that statement cannot be finally determined in writ jurisdiction and must be gone into at the stage of adjudication or during the course of investigation. The Court observed that had coercion truly existed, the petitioner ought to have promptly retracted the statement; nevertheless, admissibility remains a matter for the adjudicatory process rather than interim quashing of search proceedings. [Paras 11, 17]

Admissibility/voluntariness of the statement left to adjudication; not a ground to invalidate the search at this stage.

Requirement of independent witnesses/signatures during search - Validity of authorization in Form GST INS-01 - Effect of absence of independent witnesses' signatures and missing signatures on Form GST INS-01 on validity of search - HELD THAT: - The Court observed there was no panchnama on record and that the petitioner's complaint about absence of independent witnesses/signatures did not furnish a specific statutory provision making such signatures a precondition to the validity of statements recorded during search. As to Form GST INS-01, the Court noted that the persons conducting the search were named in the authorisation and displayed identity cards; absence of signatures on the form did not demonstrate absence of delegation or vitiate the search. The Court further held that references to provisions of the erstwhile DVAT Act do not render the proceedings illegal because of saving provisions in GST law. [Paras 7, 17, 18]

Absence of independent witness signatures and missing signatures on Form GST INS-01 held not to invalidate the search.

Final Conclusion: Writ petition dismissed; search proceedings upheld. Questions of admissibility of statements and any overlapping consequences between State and Central proceedings were left open for determination during adjudication or by appropriate proceedings; the petitioner may pursue available remedies if overlap or other procedural defects emerge.

Refund of unutilized Input Tax Credit of Compensation Cess - non-communication of IT grievance resolution - mandamus to open GSTN portal or manual acceptance of refund application - opportunity to comply with resolution comments - no relaxation of procedural requirements for claiming refund

Non-communication of IT grievance resolution - opportunity to comply with resolution comments - Petitioner entitled to an opportunity to file statutory refund applications because the resolution comment generated by respondents was not communicated to the petitioner. - HELD THAT: - The court found on the material that the petitioner had lodged a help-desk complaint (ticket No. 201903045258658) and thereafter representations seeking facilitation to upload Form GST RFD-01, but did not receive communication of the resolution comment which respondents now rely upon. The counter-affidavit quoted a resolution comment dated 25.03.2019 advising remedial steps, but produced no material showing that this resolution was communicated to the petitioner. In these circumstances the court held that the petitioner should not be made to suffer on account of respondents' laches in not communicating the resolution and therefore must be granted an opportunity to comply with the directions contained in the resolution comment and to file the refund applications. [Paras 44, 45, 46, 47]

Respondents directed to communicate the resolution comment and permit the petitioner to file refund applications for 2017-18 and 2018-19.

Mandamus to open GSTN portal or manual acceptance of refund application - refund of unutilized Input Tax Credit of Compensation Cess - Court directed respondents either to open the GSTN portal for the petitioner to file GST RFD-01 or to manually accept the petitioner's refund applications for the stated periods within specified time limits. - HELD THAT: - Balancing the factual finding of non-communication and the legal position that Input Tax Credit is a statutory concession conditioned upon compliance with procedure, the court declined to relax substantive or procedural conditions for claiming refund. Instead, the court issued a mandamus limited to providing the petitioner an opportunity: respondents must either reopen the portal or accept manual applications within one month of the judgment's communication, and petitioner shall file within 15 days of such communication. The court explicitly left the question of entitlement on merits to the authorities to decide in accordance with law. [Paras 46, 48, 49]

Respondents directed to open portal or accept manual refund applications within one month and to communicate choice to petitioner; petitioner to file applications within 15 days thereafter; merits to be decided by authorities in accordance with law.

No relaxation of procedural requirements for claiming refund - refund of unutilized Input Tax Credit of Compensation Cess - Court did not relax procedural or substantive requirements for claiming refund; entitlement to refund remains to be adjudicated by the authorities following law. - HELD THAT: - The court emphasised that Input Tax Credit is a form of concession and conditions for its exercise must be strictly complied with. While granting the petitioner an opportunity to cure the filing impediment caused by non-communication, the court expressly refrained from determining the petitioner's entitlement on merits or from relaxing statutory procedural requirements. The authorities are directed to deal with the filed applications in accordance with the applicable law and procedure. [Paras 46, 49]

No relaxation of procedural requirements; merits of refund claim to be adjudicated by revenue authorities in accordance with law.

Final Conclusion: Writ petition allowed to the limited extent of directing respondents to communicate the resolution comment and to permit filing of refund applications for 2017-18 and 2018-19 (either by opening the GSTN portal or by manual acceptance) within the time frames ordered; the entitlement to refund is left open for decision by the authorities in accordance with law and procedure.

Classification under Heading 8607 - parts of railway or tramway locomotives or rolling stock - admissibility under Section 98(2) proviso - pending proceedings bar to advance ruling - summons under Section 70

Admissibility under Section 98(2) proviso - pending proceedings bar to advance ruling - summons under Section 70 - classification under Heading 8607 - Application for advance ruling on classification of WSP and Pantograph not admitted as the question was already pending in investigation initiated prior to filing. - HELD THAT: - The Authority examined the application under Section 97-98 and the first proviso to Section 98(2) which bars admission where the question is 'already pending' in any proceedings under the Act. Records called for from DGGSTI show summons dated 10.10.2018 issued under Section 70 seeking invoice-wise descriptions, chapter headings and GST rates for supplies to Indian Railways from 01.07.2017 onwards. The summoned documents, statements and subsequent communications demonstrate that the investigation specifically concerns classification and rates of goods supplied to Indian Railways classified by the applicant under CTH 8607. The applicant had furnished lists to DGGSTI that included 'Pantograph and parts' and re classification and differential payments in respect of other items were made during investigation. DGGSTI confirmed the probe covers goods supplied to Railways under Chapter 8607 and that the subject goods form part of the investigation (including corrigendum regarding Pantograph). The Authority found that the investigation on classification was initiated prior to filing of the advance ruling application and that the subject question was therefore part of pending proceedings. The applicant's contention that the summons were 'generic' and that WSP/Pantograph were not specifically under inquiry was rejected because the summons and documents called for classification details and HSN for items supplied to Railways (including Pantograph), establishing that the proviso to Section 98(2) applies and precludes admission. [Paras 8, 9, 10]

Application not admitted under the first proviso to Section 98(2) of the CGST/TNGST Act 2017 because the question of classification was already pending in investigation initiated prior to the filing of the application.

Final Conclusion: The Authority declined to admit the advance ruling application: the question of classification of the subject goods was found to be part of investigations by DGGSTI initiated on 10.10.2018 concerning supplies to Indian Railways (covering the period from 01.07.2017), and admission is barred by the first proviso to Section 98(2).

Classification as Support services to agriculture under SAC 9986 - exemption under entry Sl. No. 54 of Notification No. 12/2017 - C.T. (Rate) - classification as Water-well drilling under SAC 995434 - letting out of general-purpose machinery versus provision of agricultural machinery - operation of irrigation systems for agricultural purposes

Classification as Support services to agriculture under SAC 9986 - classification as Water-well drilling under SAC 995434 - exemption under entry Sl. No. 54 of Notification No. 12/2017 - C.T. (Rate) - Drilling of borewells for supply of water in agricultural land is not classifiable as Support service for agriculture under SAC 9986 and is not eligible for exemption under Sl. No. 54 of Notification No.12/2017-C.T.(Rate). - HELD THAT: - The Authority examined the relevant entries and Explanatory Notes. SAC 9986 expressly lists 'provision of agricultural machinery with crew and operators' and 'operation of irrigation systems for agricultural purposes' as support services to crop production. The applicant, however, undertakes drilling of borewells, an activity that falls within the scope of water-well drilling and related construction services. SAC 995434 specifically includes water-well drilling services and covers drilling of water wells without exception. Because the drilling activity is a construction/trade service properly classifiable under SAC 995434 rather than a support service to agriculture under SAC 9986, it does not meet the classification prerequisite for exemption under entry Sl. No. 54 of Notification No.12/2017-C.T.(Rate). [Paras 8]

Drilling of borewells in agricultural land is classifiable under SAC 995434 (water-well drilling) and not under SAC 9986; therefore the exemption at Sl. No. 54 is not available for this activity.

Letting out of general-purpose machinery versus provision of agricultural machinery - classification as Support services to agriculture under SAC 9986 - exemption under entry Sl. No. 54 of Notification No. 12/2017 - C.T. (Rate) - Letting out of compressors for pumping of water from borewells to agricultural fields is not classifiable as Support service for agriculture under SAC 9986 and is not eligible for exemption under Sl. No. 54 of Notification No.12/2017-C.T.(Rate). - HELD THAT: - The Authority found that compressors are general-purpose machinery and are not listed as 'agricultural machinery' in the Explanatory Notes to SAC 9986. Entry Sl. No. 54 contemplates renting or provision of agro machinery and operation of irrigation systems as support services; mere letting out of general-purpose compressors does not equate to provision of agricultural machinery with crew or the operation of an irrigation system. Consequently, letting out compressors for pump operation does not satisfy the classificatory requirement for exemption under SAC 9986 and therefore is not covered by the Nil rate at Sl. No. 54 of Notification No.12/2017-C.T.(Rate). [Paras 8]

Letting out of compressors for pumping water from borewells is not classifiable under SAC 9986 and is not eligible for the exemption at Sl. No. 54.

Final Conclusion: The Authority ruled that neither the drilling of borewells in agricultural land nor the letting out of compressors for pumping water to agricultural fields qualify as 'Support services for agriculture' under SAC 9986; both activities are therefore not eligible for the Nil-rated exemption under Sl. No. 54 of Notification No.12/2017-C.T.(Rate).

Support services for agriculture - SAC 9986 - Water-well drilling services - SAC 995434 - Provision of agricultural machinery with crew and operators - Operation of irrigation systems for agricultural purposes

Support services for agriculture - SAC 9986 - Water-well drilling services - SAC 995434 - Whether drilling of borewells for supply of water in agricultural land is classifiable as 'Support services for agriculture' under SAC 9986 and eligible for exemption at Sl. No. 54 of Notification No. 12/2017-C.T.(Rate). - HELD THAT: - The Authority examined the service-classification provisions and explanatory notes. SAC 9986 lists support services such as provision of agricultural machinery with crew and operation of irrigation systems. The applicant does not undertake operation of irrigation systems or provide agricultural machinery with crew; it performs drilling of borewells. Water-well drilling is specifically described under SAC 995434 as a special trade construction service involving drilling of water wells. The explanatory notes show that water-well drilling services are encompassed by SAC 995434 without exception. Because the drilling activity falls within SAC 995434 and not within the activities enumerated under SAC 9986, the drilling of borewells, even when carried out on agricultural land to supply water for cultivation, is not classifiable as a 'support service to agriculture' under SAC 9986 and thus is not covered by the exemption at Sl. No. 54 of Notification No. 12/2017-C.T.(Rate). [Paras 8, 9]

Drilling of borewells for supply of water in agricultural land is not a 'Support Service for agriculture' classifiable under SAC 9986 and is not eligible for exemption at Sl. No. 54.

Support services for agriculture - SAC 9986 - Provision of agricultural machinery with crew and operators - Whether letting out of compressors for pumping water from borewells to agricultural fields is classifiable as 'Support services for agriculture' under SAC 9986 and eligible for exemption at Sl. No. 54 of Notification No. 12/2017-C.T.(Rate). - HELD THAT: - The Authority noted that SAC 9986 expressly contemplates provision of agricultural machinery with crew and operators and operation of irrigation systems as support services. Compressors are general-purpose machinery and not agricultural machinery as envisaged by the explanatory notes. The applicant lets out compressors without undertaking the operation of an irrigation system or providing the machinery with crew and operators. Consequently, letting out compressors does not fall within SAC 9986's description of support services to agriculture and therefore does not qualify for exemption under Sl. No. 54 of Notification No. 12/2017-C.T.(Rate). [Paras 8, 9]

Letting out of compressors for pumping water from borewells to agricultural fields is not a 'Support Service for agriculture' classifiable under SAC 9986 and is not eligible for exemption at Sl. No. 54.

Final Conclusion: Both drilling of borewells and letting out of compressors are not classifiable as 'Support services for agriculture' under SAC 9986 and hence are not eligible for exemption under Sl. No. 54 of Notification No. 12/2017 C.T.(Rate).

Value of supply between distinct persons - open market value - invoice value deemed to be open market value where recipient is eligible for full input tax credit - 90% of ultimate sale value option for supplies intended to be supplied 'as such' - application of Rule 28 read with Section 15 - valuation hierarchy for related/distinct persons

Value of supply between distinct persons - open market value - invoice value deemed to be open market value where recipient is eligible for full input tax credit - 90% of ultimate sale value option for supplies intended to be supplied 'as such' - Method(s) by which the value is to be determined for stock transfers from the applicant to its distinct persons located outside the State. - HELD THAT: - The Authority examined Section 15 (transaction value and prescribed valuation) and Rule 28 (valuation between distinct or related persons) and its two provisos. Rule 28 prescribes a hierarchy: (a) open market value; (b) value of supply of like kind and quality if open market value not available; (c) rules 30/31 if (a) and (b) are not applicable. The provisos set out two specific scenarios: an elective valuation at 90% of the price charged by the recipient to unrelated customers where goods are intended for supply 'as such', and a deeming provision that where the recipient is eligible for full input tax credit, the invoice value shall be deemed to be the open market value. Applying these provisions to the facts (where the applicant supplies to registered distinct units which in turn sell to unrelated customers and the distinct units are eligible for full input tax credit), the Authority held that the supplier may adopt any one of the methods provided under Rule 28. The Authority followed precedent reasoning that the provisos are not sequentially subordinate but address distinct situations and that the second proviso independently renders invoice value as open market value when the recipient is eligible for full credit. Consequently, valuation for the applicant's stock transfers may be determined by (i) open market value as presently adopted, or (ii) at the supplier's option, 90% of the ultimate sale value in cases of 'as such' supplies, or (iii) where the recipient is eligible for full input tax credit, the invoice value being deemed the open market value. [Paras 7, 8, 9, 10]

The applicant may adopt any one of the three valuation methods under Rule 28 read with Section 15: (a) open market value; (b) 90% of ultimate sale value for 'as such' supplies (at supplier's option); or (c) invoice value deemed to be open market value where the recipient is eligible for full input tax credit.

Final Conclusion: The Advance Ruling: valuation for stock transfers to distinct persons may be determined by any one of the three methods prescribed in Rule 28 read with Section 15 - open market value, 90% of ultimate sale value in 'as such' cases (option), or invoice value deemed as open market value where the recipient is eligible for full input tax credit.

Admissibility under section 97(2)(e) of the GST Act, 2017 - bar on fresh application where same question has been decided under the first proviso to section 98(2) of the GST Act - scope of matters permissible for advance ruling under section 97(2) of the GST Act, 2017 - inadmissibility of questions falling outside the ambit of section 97(2)

Bar on fresh application where same question has been decided under the first proviso to section 98(2) of the GST Act - admissibility under section 97(2)(e) of the GST Act, 2017 - Application insofar as it sought rulings on whether supply of goods and onsite services in SEZ to SEZ units or developers is zero-rated and whether GST is payable on such supplies was barred as already decided by a prior advance ruling. - HELD THAT: - The Authority recorded that the first two questions were admissible under section 97(2)(e) but had been the subject of an earlier advance ruling (Order No 14/WBAAR/2018-19 dated 01/08/2018) on an application by the same applicant. As those questions have therefore been previously decided in a proceeding under the GST Act, a fresh application on the same questions cannot be admitted in terms of the first proviso to section 98(2) of the GST Act. The Authority relied on this bar to refuse admission of those aspects of the application.

The application insofar as it sought determinations on zero-rating and GST liability for supplies to SEZ units or developers was rejected as barred by the prior advance ruling.

Scope of matters permissible for advance ruling under section 97(2) of the GST Act, 2017 - inadmissibility of questions falling outside the ambit of section 97(2) - The applicant's question on the documentation required for supply of goods or services to SEZ units was not admissible because it did not fall within the matters enumerated in section 97(2) of the GST Act. - HELD THAT: - On hearing, the applicant sought a ruling on documentary requirements for supplies to SEZ units. The Authority observed that advance rulings are confined to matters specified in section 97(2). The third question raised by the applicant did not fall within any clause of section 97(2) and hence was not a matter competent for an advance ruling. Accordingly, that part of the application was rejected under section 98(2).

The request for a ruling on documentation for supplies to SEZ units was rejected as not falling within the scope of section 97(2) and therefore inadmissible.

Final Conclusion: The Authority rejected the application: the first two questions were barred by a prior advance ruling and the third question on documentation was outside the scope of matters on which an advance ruling may be sought under section 97(2) of the GST Act, 2017.

Textile versus plastics classification - Residuary entry for other articles of plastics (heading 3926) - Classification by reference to Chapter and Section Notes of the First Schedule to the Customs Tariff - Interpretation of tariff headings for goods made from plastic tapes - Application of tariff classification to determine GST rate under Notification No.01/2017-Central Tax (Rate)

Textile versus plastics classification - Classification by reference to Chapter and Section Notes of the First Schedule to the Customs Tariff - Residuary entry for other articles of plastics (heading 3926) - Classification of the applicant's manufactured products under the First Schedule to the Customs Tariff Act, 1975. - HELD THAT: - The Authority found that the applicant's products are manufactured from HDPE/PP granules converted into HDPE/PP tapes which are then woven and laminated. Relying on the Chapter and Section Notes, and the principle that Chapters 50-63 cover textile materials while Chapter 39 covers plastics, the Authority held that tapes made from HDPE/PP are plastic material and not textile fibres. The Authority applied the reasoning in M/s. Raj Packwell Ltd. (as discussed) that HDPE tapes and goods woven therefrom are articles of plastics and not textiles, and therefore cannot be classified under Chapters 54, 56 or 59 merely because they are woven. As most of the products are not specifically provided for in headings 3901-3925, they fall under the residuary heading 3926 (other articles of plastics) and are classifiable accordingly, while 'grow bags' were held to fall under heading 3923. The determinative classification conclusions are set out in the table of sub-headings in paragraph 13.3 and reflected in the Ruling. [Paras 13, 15]

HDPE Tarpaulin, PE laminated fabric, PP Ropes, pondliner, vermibed, weed mat, wagon cover, fumigation cover, azolla bed, agro shade net, HDPE woven laminated fabrics and PP/HDPE woven fabric are classifiable under sub-heading 39269099 of Chapter 39; grow bags are classifiable under sub-heading 39232990.

Application of tariff classification to determine GST rate under Notification No.01/2017-Central Tax (Rate) - Interpretation of Notification entries and subsequent amendments - GST rate applicable to each product as determined by its tariff classification and by reference to Notification No.01/2017-Central Tax (Rate) as amended. - HELD THAT: - Having classified the goods under the First Schedule, the Authority applied Notification No.01/2017-Central Tax (Rate) (and its amendments) to determine the GST rate tied to the relevant sub-headings and notification entries. The Authority noted the placement of headings 3923 and 3926 in Schedule-III (18% in the consolidated notification as amended) and the presence of entries in Schedule-IV earlier attracting higher rates for certain items until specific amendment dates. Consequently, most products classified under sub-heading 39269099 attract the rate applicable to entry for heading 3926 in the notification (18% as per the amended schedules), grow bags under 39232990 attract the rate applicable to heading 3923 (18%), while PE laminated fabric and agro shade net were recorded with a temporal rate difference-28% up to 14.11.2017 and 18% from 15.11.2017 onwards-reflecting the amendments to the notification as set out in the discussion (paragraphs 14-14.4) and the Ruling. [Paras 14, 15]

GST rate: products under sub-heading 39269099 (majority of listed items) attract 18% (9% CGST + 9% SGST); grow bags under 39232990 attract 18% (9% CGST + 9% SGST); PE laminated fabric and agro shade net attracted 28% up to 14.11.2017 and 18% from 15.11.2017 onwards, as per the notification amendments.

Final Conclusion: The Advance Ruling concludes that the applicant's goods made from HDPE/PP tapes are articles of plastics and are classifiable primarily under Chapter 39 (sub-heading 39269099) except grow bags (39232990); GST liability is determined by those tariff classifications and the applicable entries in Notification No.01/2017-Central Tax (Rate) as amended, with the temporal rate variation for specified items noted.

Rate of tax applicable to composite supply of works contract - nature of supply and recipient as determinative of rate - effective date of a notification - publication in the Official Gazette as commencement of notification - where notification itself specifies effective date, that date governs

Rate of tax applicable to composite supply of works contract - nature of supply and recipient as determinative of rate - Applicability of the GST rate (18% or 12%) on the applicant's composite works contract supply - HELD THAT: - The Authority held that the applicable rate depends on the specific nature of the supply and, in several entries of the amending notifications, also on the identity of the recipient. The amending notifications notified different rates for different types of works and for specified recipients; therefore satisfaction of the twin conditions-nature of the supply and identity of the recipient-is necessary to determine the rate. The applicant did not furnish particulars of the specific works undertaken, the recipient's particulars, or copies of work orders. In the absence of these relevant and necessary facts, the Authority could not determine which notification entry applied and therefore could not answer the question on the applicable rate. [Paras 7, 8]

Unable to answer the query on the rate applicable to the applicant's composite works contract supply for want of necessary particulars regarding the nature of the work and the recipient.

Effective date of a notification - publication in the Official Gazette as commencement of notification - where notification itself specifies effective date, that date governs - Effective date of Notifications No. 20/2017 and 24/2017 amending Notification No. 11/2017 - HELD THAT: - The Authority examined the statutory scheme and precedents. Section 9(1) empowers notification of rates on the recommendations of the Council and Section 2(80) defines 'notification' as publication in the Official Gazette. Reliance was placed on Supreme Court authority establishing that where a notification does not itself specify an effective date, it takes effect from the date of its publication in the Official Gazette. The Authority further observed that if an amending notification expressly states an effective date in its body, that date governs. Applying these principles, the amended rates in Notification Nos. 20/2017 and 24/2017 take effect from the dates on which those notifications were published in the Official Gazette. [Paras 7, 8]

The amendments made by Notification Nos. 20/2017 and 24/2017 are effective from the respective dates of their publication in the Official Gazette (unless an amending notification itself specifies a different effective date).

Final Conclusion: The Authority declined to determine the applicable GST rate on the applicant's works contract for want of particulars about the nature of supply and the recipient; it ruled that the effective date of the amendments embodied in Notification Nos. 20/2017 and 24/2017 is the date each notification was published in the Official Gazette, except where the notification itself specifies a different effective date.

Classification under HSN heading 1106 (flour, meal and powder of dried leguminous vegetables) - classification under HSN heading 2302 (bran, sharps and other residues of milling) - classification under HSN heading 2106 (food preparations not elsewhere specified) - General Rules for the Interpretation of the Customs Tariff - Rule 3 (essential character / last in numerical order) - Chapter and Explanatory Notes to Chapter 11 (criteria for headings 1101-1104 and scope of 1106) - Chapter Notes and exclusion of heading 1901 for flours of dried leguminous vegetables - Explanation (iii) and (iv) to Notification No.01/2017 - application of First Schedule and interpretation rules - Circular No.80/31.12.2018 on classification of Chhatua/Sattu - composite supply definition (Section 2(30) CGST Act, 2017) - mixed supply definition (Section 2(74) CGST Act, 2017) - tax liability on mixed supplies (Section 8 CGST Act, 2017)

Classification under HSN heading 1106 (flour, meal and powder of dried leguminous vegetables) - General Rules for the Interpretation of the Customs Tariff - Rule 3 (essential character) - Chapter and Explanatory Notes to Chapter 11 - Certain branded 'instant mix' flours (Khaman, Gota, Handwa, Dahi wada, Dalwada, Meduvada, Pudla, Moong bhajiya, Chorafali, Bhajiya, Dhokla, Idli and Dosa mixes) are classifiable under sub-heading 11061000 and attract GST at 5% under Entry No.59 of Schedule-I. - HELD THAT: - On the materials and the percentage-wise composition provided by the applicant, these products have leguminous flours as their dominant component. Applying Rule 3(b) of the General Rules for interpretation, mixtures which cannot be classified under a single more specific heading are to be classified by the material giving them their essential character. The Chapter and Explanatory Notes to Chapter 11 recognise flours of dried leguminous vegetables as falling in heading 1106 where obtained by milling and without further processing into food preparations. The Authority found that for the listed branded products the essential character is that of leguminous flour and accordingly they fall under sub-heading 11061000. That sub-heading appears at Entry No.59 of Schedule I to Notification No.01/2017 Central Tax (Rate), attracting GST at 5% (2.5% CGST + 2.5% SGST). [Paras 12, 13]

The specified branded instant mix flours are classifiable under sub-heading 11061000 and attract GST at 5%.

Classification under HSN headings 1101, 1102, 1103 and exclusion to Chapter 11 (starch/ash/sieve criteria) - classification under HSN heading 2302 (bran, sharps and other residues) - General Rules for the Interpretation of the Customs Tariff - Rule 3 (essential character) - Upma mix, Rava (Rava idli) mix, Muthiya mix and Khichu mix are not classifiable under headings 1101/1102/1103 due to lack of technical data; they are classifiable as residues under heading 2302 and fall under Entry No.103A of Schedule I attracting GST at 5%. - HELD THAT: - The Chapter Notes to Chapter 11 require objective criteria (starch content, ash content and sieve passage) to classify products under headings 1101-1104. The applicant did not furnish data on starch/ash/sieve passage for the products containing high proportions of suji/wheat or rice, thus the Authority concluded it cannot be determined that they meet the Chapter 11 criteria. Applying Rule 3(b), where the essential character is that of milling residues or similar, the goods fall under heading 2302. The Authority accordingly treated Upma mix and Rava idli mix (each with 70% suji), Muthiya mix (90% wheat flour) and Khichu mix (95% rice flour) as classifiable under appropriate sub headings of 2302; those sub headings are covered by Entry No.103A of Schedule I to Notification No.01/2017 CTR and attract GST at 5% (2.5% CGST + 2.5% SGST). [Paras 12, 13]

Upma mix flour, Rava idli mix flour and Muthiya mix flour are classifiable under sub-heading 23023000 and Khichu mix flour under sub-heading 23024000; these appear at Entry No.103A of Schedule I and attract GST at 5%.

Classification under HSN heading 2106 (food preparations not elsewhere specified) - Circular No.80/31.12.2018 on Chhatua/Sattu - Application of Notification entries and subsequent amendments - Chutney powder is classifiable under sub heading 21069099; it was subject to 18% GST until 14.11.2017 and 5% GST with effect from 15.11.2017 under Entry No.100A of Schedule I. - HELD THAT: - Chutney powder, on the applicant's own composition (90% wood apple powder, 10% spices), is a ready food preparation and falls in heading 2106. The Notification at inception placed food mixes in an 18% entry, but subsequent amendment excluded chutney powder from the 18% entry and inserted chutney powder and idli/dosa batter in Entry No.100A of Schedule I, reducing the rate to 5% with effect from 15.11.2017. The Authority also noted Circular No.80 which treats mixtures of pulses and cereals (Sattu/Chhatua) as falling under 1106 when applicable, but that circular does not alter the classification of chutney powder under 2106 in the facts of this case. [Paras 11, 12, 13]

Chutney powder is classifiable under sub heading 21069099; GST rate was 18% up to 14.11.2017 and 5% from 15.11.2017 under the cited notifications.

Composite supply definition (Section 2(30) CGST Act, 2017) - mixed supply definition (Section 2(74) CGST Act, 2017) - tax liability on mixed supplies (Section 8 CGST Act, 2017) - When chutney powder is supplied free along with Gota mix or Bhajiya mix for a single price, the combined transaction is a 'mixed supply' and is taxable as the supply attracting the highest rate; since both components attract 5% GST, the mixed supply is treated as supply of the principal listed mix (Gota or Bhajiya) and taxed at 5%. Chutney powder supplied with these mixes is not a 'composite supply'. - HELD THAT: - Applying the statutory definitions, chutney powder and the flours are not 'naturally bundled' or supplied in conjunction in the ordinary course (they can be consumed separately and are not dependent), so the transaction is not a composite supply. The applicant charges a single price for the bundled goods; therefore the transaction is a mixed supply within Section 2(74). Section 8(b) directs that a mixed supply be treated as that supply attracting the highest rate. Here the applicable GST rate for Gota mix, Bhajiya mix and chutney powder is the same (5%), so the mixed supply will be treated as supply of the principal mix (Gota or Bhajiya) and taxed at 5%. [Paras 14]

Supply of Gota Mix with chutney powder and Bhajiya Mix with chutney powder (sold for a single price) are 'mixed supplies' and are taxable as supply of Gota Mix and Bhajiya Mix respectively at 5% GST.

Final Conclusion: The Authority ruled that most of the applicant's branded instant mix flours (as listed) are classifiable under sub heading 11061000 and attract GST at 5%; certain mixes with dominant cereal content are classifiable under heading 2302 and likewise attract 5%; chutney powder is classifiable under 21069099 and was taxable at 18% until 14.11.2017 and at 5% from 15.11.2017; when chutney powder is supplied free with Gota or Bhajiya mixes for a single price the supply is a 'mixed supply' and taxable at 5% as supply of the respective mix.

Input tax credit eligibility - Restriction on credit for motor vehicles under Section 17(5)(a) - Exceptions for further supply, transportation of passengers and imparting training - Capital goods capitalisation

Input tax credit eligibility - Restriction on credit for motor vehicles under Section 17(5)(a) - Exceptions for further supply, transportation of passengers and imparting training - Capital goods capitalisation - Input tax credit on demo motor vehicles purchased and capitalised in the books by an authorised dealer. - HELD THAT: - The authority examined the interplay between Section 16 (entitlement to credit) and the exception carved out by Section 17(5), as amended w.e.f. 1.2.2019, which disallows credit in respect of motor vehicles subject to limited exceptions. Section 17(5) operates 'notwithstanding' Section 16 and therefore its bar applies where the conditions of the exceptions are not met. The applicant's demo vehicles, though used in the furtherance of business for test drives and demonstrations and capitalised as assets, do not fall within any of the statutory exceptions in clause (A) (further supply of such motor vehicles), (B) (transportation of passengers) or (C) (imparting training on driving such motor vehicles) as contemplated by Section 17(5)(a). The authority furthermore observed that subsequent sale of a demo vehicle after use is a sale of a used/second-hand vehicle and cannot be equated with 'further supply' within the exception. Undertakings given by the applicant (non claim of depreciation on the tax component, adherence to provisions on adjustment on sale of capital goods) do not alter the statutory applicability of Section 17(5)(a). Consequently, eligibility for input tax credit cannot be predicated on mere capitalisation, intended business use, or later sale; the statutory exceptions must be satisfied. (Findings and reasoning appear at paras. 7.3-7.5; ruling at para. 8.1.) [Paras 7, 8]

The applicant is not eligible to avail input tax credit on demo vehicles purchased and capitalised in the books since such vehicles do not fall within the exceptions specified in clause (A), (B) or (C) of Section 17(5)(a) of the GST Act.

Final Conclusion: Advance Ruling: Input tax credit on demo motor vehicles purchased for demonstration and capitalised in the applicant's books is not admissible under Section 17(5)(a) of the GST Act as the demo vehicles are not covered by the statutory exceptions for credit.

Outdoor catering - Specified premises - Hotel accommodation - Composite supply of outdoor catering with renting of premises - Pure agent - Value of supply (hotel accommodation) including extra bedding - Reverse charge under section 9(4)

Outdoor catering - Specified premises - Hotel accommodation - Whether catering and banquet services supplied by the applicant in its own marriage and party halls qualify as 'outdoor catering' taxable at 5% under Notification No. 20/2019. - HELD THAT: - The notification confers the 5% rate on 'outdoor catering' subject to conditions that the supply must be at premises which are not 'specified premises' and must not be provided by suppliers who provide 'hotel accommodation' at 'specified premises'. The Authority found that the applicant's different units are not distinct persons for GST purposes but part of the same registered entity, and that the applicant provides hotel accommodation at Noor Mahal, a 'specified premises'. Consequently the applicant fails the condition in the notification and its catering at its own marriage and party halls does not attract the 5% rate for outdoor catering. [Paras 3]

Catering and banquet services supplied by the applicant in its own marriage and party halls are not covered by the 5% outdoor catering rate under Notification No. 20/2019.

Outdoor catering - Specified premises - Composite supply of outdoor catering with renting of premises - Whether Hotel Jewels may charge 5% GST for outdoor catering provided at Hazuri Bagh (party lawn) under Notification No. 20/2019. - HELD THAT: - Entitlement to the reduced rate requires that the supply take place at premises which are not 'specified premises' and that the supplier is not providing hotel accommodation at a 'specified premises' or located therein. The Authority found Hazuri Bagh to be situated within the precincts of Noor Mahal (a specified premises of the same registered entity), so the condition that the supply be at premises other than specified premises is not satisfied. Therefore the applicant cannot avail the 5% rate for supplies at Hazuri Bagh. [Paras 3]

M/s Hotel Jewels Classic Pvt. Ltd. is not eligible to charge 5% GST for outdoor catering at Hazuri Bagh under Notification No. 20/2019.

Pure agent - Value of supply - Whether additional arrangements (decoration, DJ, special cutlery, electronics, vendor supplies) arranged by the applicant qualify for exclusion from the value of supply as a 'pure agent' under Rule 33 of the CGST Rules. - HELD THAT: - Rule 33 excludes from value of supply the expenditure incurred by a supplier acting as a pure agent provided specific conditions are met, including that the pure agent receives only the actual amount paid to third parties. The Authority accepted that the applicant arranges such supplies and invoices them separately but noted the applicant charges a nominal/facilitation fee. Recovery of facilitation/convenience charges beyond the actual third party amounts disqualifies the supplier from being treated as a pure agent under the valuation rule. On this basis the applicant does not satisfy the pure agent conditions and such additional arrangements cannot be excluded from the value of supply. [Paras 3]

The additional arrangements arranged by the applicant do not qualify for exclusion from the value of supply as a 'pure agent' and are taxable.

Reverse charge under section 9(4) - Whether tax is payable by the applicant under reverse charge on supplies procured from unregistered persons. - HELD THAT: - Section 9(4) as amended makes reverse charge applicable only to specified classes of registered persons and specified supplies notified by the Government. The Authority observed that notifications issued under the amended provision identify specific categories and that, on the basis of presently issued notifications, the reverse charge mechanism under section 9(4) is not applicable to the applicant. Therefore the applicant is not presently liable to pay tax under reverse charge for supplies arranged from unregistered persons until a notification applies to it. [Paras 3]

Tax on supplies arranged from unregistered persons is not payable by the applicant under reverse charge u/s 9(4) until a notification makes the provision applicable to the applicant.

Value of supply (hotel accommodation) including extra bedding - Whether charges for extra bed form part of the room tariff and are included in the value of supply for determining the GST rate on hotel accommodation. - HELD THAT: - Notifications were amended to determine tax on the basis of 'value of supply' of a unit of accommodation. The Authority clarified that extra bedding charges form part of the gross value of supply for a unit of accommodation; if extra bedding is included in the composite charges such that the value falls within a higher slab, tax is to be levied on the amount inclusive of extra bedding. Accordingly, extra bed charges are part of the room's value of supply and taxed as such. [Paras 3]

Extra bed charges form part of the value of supply for hotel accommodation and are liable to GST accordingly.

Final Conclusion: The Authority rules that the applicant cannot avail the 5% outdoor catering rate for its in house halls or at Hazuri Bagh because the supplies are linked to 'specified premises' of the same registered entity; the additional arrangements arranged by the applicant are not excludable as supplies of a 'pure agent' and are taxable; reverse charge under amended section 9(4) is not currently applicable to the applicant; and extra bed charges form part of the value of supply for determining GST on hotel accommodation.

Extension of time for filing Income Tax Return - mandamus to executive to extend filing dates - lenient view regarding consequences of late filing under Section 271B - fresh representation to Central Board of Direct Taxes - opportunity of hearing and reasoned order by administrative authority

Mandamus to executive to extend filing dates - extension of time for filing Income Tax Return - Petition for writ of mandamus directing respondents to extend the due dates for filing Tax Audit Reports and Income Tax Returns was not granted. - HELD THAT: - The Court noted that an identical contention had been earlier considered by the High Court of Gujarat which dismissed a similar petition; having regard to that decision and the nature of the relief sought, the Court did not itself direct an extension of statutory due dates. Instead of issuing the mandatory relief sought, the Court confined its intervention to permitting the petitioner to pursue administrative remedies. The Court therefore refrained from issuing a writ commanding the CBDT to extend filing dates. [Paras 3, 6]

Writ of mandamus directing extension of filing dates not issued; petition otherwise disposed of.

Fresh representation to Central Board of Direct Taxes - lenient view regarding consequences of late filing under Section 271B - opportunity of hearing and reasoned order by administrative authority - Petitioner permitted to file fresh representation and CBDT directed to consider it leniently, hear the petitioner and pass a reasoned order. - HELD THAT: - Recognising the continuing difficulties caused by the COVID-19 pandemic, the Court allowed the petitioner to submit a fresh representation setting out grievances about consequences arising under various provisions of the Act (including those under Section 271B). The CBDT was directed to consider the representation leniently, afford the petitioner an opportunity of hearing, and pass a reasoned order on the representation. The directive focused on administrative consideration and reasoned disposal rather than judicially dictating the content of any circular or executive decision. [Paras 5, 6]

Petitioner permitted to file fresh representation; CBDT directed to consider it with leniency, hear the petitioner and pass a reasoned order.

Final Conclusion: The petition for mandamus to extend statutory filing dates was not granted; instead the petitioner was allowed to submit a fresh representation and the CBDT was directed to consider it leniently, grant an opportunity of hearing and pass a reasoned order, and the petition was disposed of.

Stay of recovery - exercise of judicial discretion - guidelines for grant of stay of demand - cancellation of registration under section 12AA - denial of exemption under section 11 - expeditious disposal of appeals

Stay of recovery - exercise of judicial discretion - guidelines for grant of stay of demand - Validity of the Tribunal's order directing deposit of Rs.20 crores (Rs.5 crores per assessment year) in two installments as condition for stay of recovery of balance demand. - HELD THAT: - The Tribunal reduced the conditional deposit earlier directed by the Revenue from Rs.100 crores to Rs.20 crores and granted stay of recovery of the balance demand for 180 days or till disposal of the appeals, whichever was earlier. The High Court examined the Tribunal's order and found that the Tribunal had considered the prima facie case, balance of convenience, the character of the assessee as a State Government undertaking, the history of pendency and adjournments, and the prior conditional stay granted by the CIT (Exemption). The Court held that mere status as a government undertaking does not automatically disentitle the Revenue from requiring a deposit nor put the assessee in a separate category; however, the Tribunal's exercise of discretion in scaling down the deposit and recording reasons did not suffer from legal infirmity. Applying the guiding principles cited in earlier decisions, the Tribunal's order was viewed as within permissible discretion and not liable to be quashed under Articles 226 and 227. [Paras 24]

Tribunal's order imposing deposit of Rs.20 crores as condition for stay is not interfered with; writ petition dismissed on this ground.

Expeditious disposal of appeals - cancellation of registration under section 12AA - denial of exemption under section 11 - Whether the Tribunal should be directed to expedite hearing of the appeals, including the appeal against cancellation of registration under section 12AA and appeals on merits under section 11. - HELD THAT: - Although the writ petition seeking quashing of the Tribunal's stay order was dismissed, the High Court expressed the view that the Tribunal should hear the pending appeals expeditiously. The Court indicated that if the petitioner files an application for early hearing, the Tribunal shall duly consider it so that the appeals, including the one against cancellation of registration under section 12AA and the merits relating to denial of exemption under section 11, can be decided promptly. [Paras 25]

Tribunal directed to consider any application for early hearing and to proceed expeditiously with the disposal of the pending appeals.

Final Conclusion: Writ petition challenging the Tribunal's order of 10.06.2020 is dismissed; the Tribunal's conditional stay directing deposit of Rs.20 crores is upheld and the Tribunal is directed to expedite hearing of the pending appeals.

Disallowance under section 40(a)(ia) - forfeiture of advances - deduction under section 37(1) - income from business under section 28 - exercise of power under section 263

Disallowance under section 40(a)(ia) - Whether the sum of Rs. 2,24,000 admitted in Form 3CD as tax not deducted at source was correctly directed to be disallowed under section 40(a)(ia). - HELD THAT: - Form 3CD recorded a sum of Rs. 2,24,000 on which TDS was not made. The assessee's contention that this total comprised multiple small payments each below the threshold for TDS was not substantiated. In absence of evidence to demonstrate that no individual payment attracted TDS, the Tribunal agreed with the CIT that the AO's failure to disallow the sum was erroneous and prejudicial to the revenue. The Tribunal therefore confirmed the direction to disallow the sum under section 40(a)(ia). [Paras 8]

The direction to disallow Rs. 2,24,000 under section 40(a)(ia) is confirmed.

Forfeiture of advances - deduction under section 37(1) - income from business under section 28 - Whether the sum of Rs. 50 lakhs, written off as advances forfeited to a third party, was a genuine business loss and liable to be added back by exercise of powers under section 263. - HELD THAT: - The CIT concluded the loss was not genuine after construing various clauses of the MoU and observed that the assessee could have pursued legal remedy; consequently he directed addition. The Tribunal held that parties are free to settle rights by agreement and that the assessee, being in the business of property development, incurred the payment for acquiring land for an SEZ project. There was no material to conclude the advance was not for genuine business purposes. The Tribunal held the forfeiture was incidental to the assessee's business and therefore allowable as a deduction either under section 37(1) or as business income application under section 28, following the reasoning in Harshad J. Choksi. Accordingly, the addition made by the CIT under section 263 was deleted. [Paras 9]

The addition of Rs. 50 lakhs is deleted and the expenditure is held to be allowable as incidental to business under section 37(1) or section 28.

Final Conclusion: The appeal is partly allowed: confirmation of disallowance of Rs. 2,24,000 under section 40(a)(ia); deletion of the addition of Rs. 50 lakhs relating to forfeited advances as allowable business expenditure.

Entitlement to exemption upon deposit in specified capital gain account scheme - exemption under section 54F - proviso to section 54F(4) - chargeability under section 45 upon non utilisation within three years - AO's power to examine construction of new residential house within three years

Entitlement to exemption upon deposit in specified capital gain account scheme - exemption under section 54F - Assessee was entitled to claim exemption under section 54F for the year in which the capital gain amount was deposited in the specified capital gain account scheme. - HELD THAT: - The Tribunal recorded as an admitted fact that the assessee deposited the balance capital gain in the specified capital gain account scheme (para 2). Section 54F(4) mandates that the amount not appropriated or utilised before furnishing the return be deposited in the designated capital gain account scheme and, upon such deposit, for the purposes of subsection (1) the deposited amount is to be deemed part of the cost of the new asset. Applying this mandate, the Tribunal held that deposit in the designated account confers entitlement to exemption for the year under consideration, and therefore the assessee is entitled to the exemption in that year. [Paras 2, 3, 4]

Exemption under section 54F is allowed for the year in which the assessee deposited the capital gain in the specified capital gain account scheme.

Proviso to section 54F(4) - chargeability under section 45 upon non utilisation within three years - AO's power to examine construction of new residential house within three years - AO may, at the end of the three year period, examine whether the deposited amount was utilised for purchase or construction and, if not so utilised or conditions not satisfied, invoke the proviso to section 54F(4) to charge the previously allowed exemption as income under section 45. - HELD THAT: - The proviso to section 54F(4) provides that if the amount deposited is not utilised wholly or partly for purchase or construction of the new asset within the specified period, the portion of exemption earlier allowed shall be charged under section 45 as income of the previous year in which the period of three years from the date of transfer expires. The Tribunal interpreted this as creating a two stage process: initial entitlement arises on deposit; subsequent verification by the AO at the expiry of the three year period determines whether the deposited amount was duly applied to construction or purchase. If the AO finds non utilisation or failure to satisfy other conditions, he is competent to withdraw the exemption in the third year and make the addition under section 45 (paras 3-4; modified para 10). [Paras 3, 4, 10]

The AO is entitled to examine utilisation and, if the conditions are not met at the end of three years, to invoke the proviso to section 54F(4) and charge the amount as income under section 45.

Final Conclusion: The Miscellaneous Application is allowed: the Tribunal modified its order to hold that the assessee is entitled to exemption under section 54F for the year in which the capital gain was deposited in the specified capital gain account scheme, subject to the AO's right to examine utilisation within three years and to withdraw the exemption under the proviso to section 54F(4) if conditions are not satisfied.

Addition of profit element in disputed purchases - estimation of income by applying a percentage to unverified purchases - burden of verification where parties are not traceable - reopening assessment based on information from Sales Tax Department

Addition of profit element in disputed purchases - estimation of income by applying a percentage to unverified purchases - burden of verification where parties are not traceable - Whether the Commissioner (Appeals) was justified in restricting the Assessing Officer's 100% disallowance of disputed purchases to an addition equal to 30% as the profit element. - HELD THAT: - The Tribunal noted that the reassessment was prompted by information from the Sales Tax Department alleging bogus purchases from two parties and that notices issued to those parties were returned unserved. The assessee, however, had filed copies of bills, bank statements and delivery challans. The Commissioner (Appeals) applied an estimated profit element of 30% on the disputed purchases and deleted the balance of the addition on the view that 100% disallowance could not be made unless it was proved that no purchase at all had taken place and that cash was returned in lieu of cheques. The Tribunal relied on the principle, as applied by the Gujarat High Court in cited authorities, that where purchases cannot be fully verified or parties are untraceable, the correct approach is to tax the embedded profit element rather than disallow the entire purchase amount. Having regard to the materials produced by the assessee and the cited legal position, the Tribunal held that the exercise of estimating and taxing 30% as the profit element was justified and sustained the Commissioner (Appeals) order. [Paras 6, 7]

The Commissioner (Appeals)'s estimation of 30% of the disputed purchases as the taxable profit element is affirmed and the Assessing Officer's 100% disallowance is not sustained.

Final Conclusion: The appeal is dismissed; the order of the Commissioner of Income Tax (Appeals) sustaining an addition of 30% of the disputed purchases is affirmed.

Rectification of tribunal order under section 254(2) - reference to Valuation Officer under section 50C(2) of the Income tax Act - scope of appellate powers of Commissioner (Appeals) to set aside or restore assessment - mistake apparent from record - annulment of appellate order

Rectification of tribunal order under section 254(2) - mistake apparent from record - MA seeking rectification of the Tribunal's order dated 27.12.2019 under section 254(2) was maintainable and required determination whether there was any mistake apparent from record warranting rectification. - HELD THAT: - The Department sought rectification on the ground that the Tribunal's order should be modified because both the CIT(A) and the Tribunal agreed that invocation of section 50C was correct. The Tribunal examined its order and the contention raised in the MA and concluded that no mistake apparent from the record had been made in the order dated 27.12.2019. The Tribunal's earlier reasoning and ultimate annulment of the CIT(A) order were deliberate conclusions of law and fact, not clerical or obvious errors susceptible to rectification under section 254(2). [Paras 5]

MA dismissed for lack of any mistake apparent from the record; no rectification under section 254(2) was warranted.

Reference to Valuation Officer under section 50C(2) of the Income tax Act - scope of appellate powers of Commissioner (Appeals) to set aside or restore assessment - annulment of appellate order - Whether the Commissioner (Appeals) had power, in appeal against an assessment order, to direct the Assessing Officer to refer valuation to a Valuation Officer under section 50C(2), and whether the CIT(A)'s direction was intra vires. - HELD THAT: - The Tribunal noted the CIT(A)'s direction that the Assessing Officer should refer the valuation to a Valuation Officer under section 50C(2). It also recorded the legislative change (w.e.f. 1-6-2001) withdrawing the power of the first appellate authority to set aside an assessment and refer the case back to the AO for fresh assessment. The Tribunal held that while section 50C(2) contemplates reference to a Valuation Officer where the assessee makes the requisite claim and the stamp valuation has not been disputed in appeal or revision, the CIT(A) does not possess power to set aside or restore the assessment to the file of the AO; a direction equivalent to setting aside or restoration is not within the appellate powers of the CIT(A). Consequently the CIT(A)'s order directing reference to the Valuation Officer was not in conformity with the law and was annulled by the Tribunal. [Paras 4]

CIT(A)'s direction to refer valuation to Valuation Officer was beyond the appellate power to set aside/restore assessment; CIT(A) order annulled.

Final Conclusion: The Miscellaneous Application for rectification was dismissed as devoid of merit; the Tribunal's order of 27.12.2019 stands, having annulled the CIT(A) direction as beyond the scope of the first appellate authority and having found no mistake apparent from record requiring rectification.

Bogus purchases - estimation of profit element - proof of genuineness of purchases - reliance on information from sales tax authorities - application of Jakharia Fabric principle - reassessment under section 147/148

Bogus purchases - proof of genuineness of purchases - reliance on information from sales tax authorities - application of Jakharia Fabric principle - estimation of profit element - Validity of deletion by the CIT(A) of the addition made on account of alleged bogus purchases and the appropriate method and quantum for estimating the profit element to be added to the assessee's income. - HELD THAT: - The Tribunal applied the principle in Jakharia Fabric (P.) Ltd. to the facts on record. The Assessing Officer had acted on information from the Sales Tax Department and on a sworn statement by the proprietor of the supplier denying genuine transactions, and the supplier did not respond to notices under section 133(6). The assessee, however, produced ledger entries and purchase bills. The CIT(A) concluded that non-compliance by the supplier could not be used as evidence against the assessee and deleted the addition. The Tribunal held that where purchases are shown to have been effected through parties alleged to be hawala/bogus dealers, the entire purchases need not be treated as bogus but the embedded profit element must be added to the assessee's income. Applying that ratio to the instant case and having regard to the assessee's manufacturing business, the Tribunal concluded that the AO's flat estimation at a higher rate was not appropriate and directed a limited estimation of the profit element at a lower percentage, leaving computation to the AO. [Paras 6]

The order of the CIT(A) was set aside in part and the matter remitted to the AO to estimate and add the profit element in respect of the disputed purchases at the directed percentage.

Final Conclusion: Appeal partly allowed: the Tribunal applied the Jakharia Fabric principle, held that only the profit element in purchases from the alleged hawala supplier should be added, and directed the Assessing Officer to estimate and add the profit element at the percentage indicated by the Tribunal, with computation to be carried out in reassessment proceedings.

Most appropriate method - Resale Price Method (RPM) - Transactional Net Margin Method (TNMM) - Comparability and working capital adjustment - Transfer Pricing adjustment under section 92CA(4) - Remand for fresh search of comparables - Interest consequential on transfer pricing adjustment

Resale Price Method (RPM) - Transactional Net Margin Method (TNMM) - Comparability and working capital adjustment - Resale Price Method rejected and Transactional Net Margin Method adopted as the most appropriate method for benchmarking the import of finished goods. - HELD THAT: - The Tribunal upheld the view of the TPO and DRP that RPM was unsuitable on the facts of the case because of lack of product and functional comparability, failure of the trading filters for the comparables proposed by the assessee, and difficulties in ascertaining consistent gross profit margins due to differences in accounting treatment and the presence of significant selling, distribution and employee costs in the assessee's operations. The Tribunal noted that the assessee itself had adopted TNMM in its original transfer pricing study and that TNMM is less affected by transactional and functional differences; having regard to the assessee's expense profile and the inability to make reliable adjustments under RPM, no infirmity was found in the adoption of TNMM by the revenue authorities. [Paras 10]

Grounds challenging selection of TNMM and urging adoption of RPM are dismissed; TNMM is held to be the most appropriate method.

Remand for fresh search of comparables - Verification of comparable margins - The claim for a fresh search of comparables and related verification is remanded to the TPO for fresh consideration and computation. - HELD THAT: - While upholding TNMM as the MAM, the Tribunal found merit in the assessee's contention regarding a fresh search for comparables under TNMM. The matter is set aside to the TPO with directions that the assessee shall submit the complete search, an accept/reject matrix and the computation of margins under TNMM; the TPO is directed to verify the search, provide opportunity of hearing and compute the correct comparable margin and consequent transfer pricing adjustment, including any working capital adjustments, after such verification. [Paras 11]

Grounds 3 and 4 are allowed to the extent of remanding the comparables issue to the TPO for fresh search, verification and recomputation.

Interest consequential on transfer pricing adjustment - Claims challenging the levy of interest are dismissed as consequential. - HELD THAT: - The Tribunal treated the grievance on interest (claimed to be under revenue interest provisions) as consequential to the primary transfer pricing adjustment and found no independent merit to sustain separate relief on interest in the present appeal. [Paras 12]

Ground relating to interest is dismissed as consequential.

Final Conclusion: The appeal is partly allowed: the rejection of RPM and adoption of TNMM as the most appropriate method is upheld; the issue of comparables is remanded to the TPO for fresh search, verification and recomputation after giving the assessee an opportunity of hearing; the challenge to interest is dismissed. Appeal accordingly partly allowed.

Limitation for passing order under section 201(1) as amended with retrospective effect from 01.04.2010 - quashing of order as void for being beyond limitation - classification of payments for TDS: fee for technical services under section 194J versus contractual payments under section 194C - requirement of speaking order and fresh adjudication on disputed character of services - restoration/remand for fresh consideration after hearing and on merits

Limitation for passing order under section 201(1) as amended with retrospective effect from 01.04.2010 - quashing of order as void for being beyond limitation - Validity of order passed under section 201(1)/201(1A) insofar as it related to the first three quarters of Financial Year 2011-12 (Assessment Year 2012-13) on grounds of limitation - HELD THAT: - The Tribunal examined the dates of filing of TDS statements for the first three quarters of Financial Year 2011-12 and applied the amended section 201(3) (effective 01.04.2010) which prescribes a two-year limitation from the end of the financial year in which the statements are filed. The Assessing Officer's order dated 30.03.2015 was held to have been passed after the two-year limitation (which expired 31.03.2014) for those quarters. The revenue did not challenge the dates of filing, and the Tribunal followed the ratio of Tata Teleservices Ltd. (Gujarat High Court) and coordinate ITAT precedents to conclude that the impugned order insofar as it related to the first three quarters was beyond the statutory limitation and therefore not valid. [Paras 9]

Order under section 201(1)/201(1A) dated 30.03.2015 insofar as it relates to the first three quarters of Financial Year 2011-12 is quashed as beyond limitation.

Classification of payments for TDS: fee for technical services under section 194J versus contractual payments under section 194C - requirement of speaking order and fresh adjudication on disputed character of services - restoration/remand for fresh consideration after hearing and on merits - Whether payments in the fourth quarter of Financial Year 2011-12 (Assessment Year 2012-13) to specified vendors were chargeable to TDS under section 194J (10%) or under section 194C (2%), and the attendant interest under section 201(1A) - HELD THAT: - The Tribunal noted that the assessee had placed agreements, invoices and other evidence before the AO and CIT(A) to show that services were standard/contractual and deductible under section 194C at 2%, while the AO treated them as technical services under section 194J at 10%. The CIT(A) had failed to examine the assessee's evidence and explanations in detail and had not rendered a speaking adjudication, notwithstanding an earlier appellate position in the assessee's own case for an earlier year. In the interest of substantial justice, the Tribunal found it appropriate to restore this specific fourth-quarter issue to the file of the CIT(A) with a direction to consider the materials, provide proper opportunity to the assessee and pass a speaking order deciding classification and any resultant interest. [Paras 9]

Issue relating to short deduction and interest for the fourth quarter of Financial Year 2011-12 is restored to the file of the CIT(A) for fresh, speaking adjudication after giving the assessee an opportunity to be heard.

Classification of payments for TDS: fee for technical services under section 194J versus contractual payments under section 194C - requirement of speaking order and fresh adjudication on disputed character of services - restoration/remand for fresh consideration after hearing and on merits - Whether in Assessment Year 2013-14 the payments to specified vendors were liable to TDS under section 194J as opposed to section 194C and the correctness of interest charged - HELD THAT: - For Assessment Year 2013-14 the factual matrix and the documentary evidence submitted by the assessee on classification of payments were similar to the earlier year. The Tribunal observed that both lower authorities had ignored the assessee's evidences and explanations and had not rendered a detailed adjudication. Applying the same reasoning as in respect of Financial Year 2011-12, and in the interest of substantial justice, the Tribunal restored the appeals for AY 2013-14 to the CIT(A) to be decided afresh after giving due opportunity to the assessee to present its case and after passing a speaking order on the character of the services and consequential tax and interest implications. [Paras 11, 12]

Appeal(s) for Assessment Year 2013-14 restored to the file of the CIT(A) for fresh decision on the classification of payments and resultant TDS/interest after affording opportunity to the assessee.

Final Conclusion: The Tribunal quashed the AO's order under section 201(1)/201(1A) insofar as it related to the first three quarters of Financial Year 2011-12 (Assessment Year 2012-13) as time-barred. Remaining contested issues-classification of payments as attractable to section 194J or to section 194C and the consequent determination of short deduction and interest for the fourth quarter of Financial Year 2011-12 and for Assessment Year 2013-14-are restored to the CIT(A) for fresh, speaking adjudication after giving the assessee an opportunity to be heard. Both appeals are allowed for statistical purposes.

Proviso to the definition of "charitable purpose" in section 2(15) - section 13(8) - denial of exemption for the year in which proviso to section 2(15) applies - effect of registration under section 12A/12AA on the assessing officer's powers - harmonious construction of sections 2(15), 11, 10(23C), 13(8) and 143 - test whether an activity is "in the nature of trade, commerce or business" (dominant object / profit motive and factual enquiry) - treatment of incidental receipts (including interest) where the institution is statutory and discharges public functions

Proviso to the definition of "charitable purpose" in section 2(15) - test whether an activity is "in the nature of trade, commerce or business" (dominant object / profit motive and factual enquiry) - Whether receipts and activities of the Jhansi Development Authority for AY 2010-11 were hit by the proviso to section 2(15) and therefore not charitable - HELD THAT: - The Tribunal examined the statutory objects under the Uttar Pradesh Urban Planning & Development Act and the nature, scope and purpose of the Authority's activities. It held that development, land acquisition, plotting, allotment and collection of statutory fees/cess are statutory functions performed as an extended arm of the State for public utility and are not, by their nature, trade, commerce or business carried on for profit. Applying a purposive/creative construction and reading the related amendments (including the explanatory memorandum and CBDT circular), the proviso to section 2(15) applies only where activities are genuinely commercial in nature - assessed by predominant object, profit motive and business-like operation. In the facts found, charging of fees/cess and receipt of incidental income (including interest) were incidental to statutory public-purpose activities and did not attract the proviso. [Paras 31, 37, 43, 49]

Proviso to section 2(15) did not apply to the Authority's activities for AY 2010-11; those activities remained charitable in nature.

Effect of registration under section 12A/12AA on the assessing officer's powers - section 13(8) - denial of exemption for the year in which proviso to section 2(15) applies - harmonious construction of sections 2(15), 11, 10(23C), 13(8) and 143 - Whether the assessing officer could disregard registration under section 12A and examine the Authority's objects/activities for deny ing exemption under section 11 for AY 2010-11 - HELD THAT: - The Tribunal reviewed prior decisions, the legislative history of the amendments and the interplay between registration under section 12A and the amended provisions (including section 13(8)). It concluded that registration under section 12A, as granted earlier, is significant and the AO's adverse conclusion that the Authority was commercial lacked basis in view of the statutory objects and judicial precedents upholding registration of statutory development authorities. While the statute permits denial of exemption for a year if the proviso to section 2(15) truly applies (and section 13(8) implements that denial), that mechanism presupposes a factual finding of commercial activity. Here, no such factual basis existed; harmonious construction of the provisions did not justify treating registration as irrelevant where activities are statutory and non-commercial. [Paras 7, 69, 71]

The AO's examination could not, on the facts, override the registration and deny exemption; registration remained effective and AO's denial was set aside.

Treatment of incidental receipts (including interest) where the institution is statutory and discharges public functions - proviso to the definition of "charitable purpose" in section 2(15) - Whether surplus items and interest receipts are taxable as business income or eligible for exemption under section 11 when the Authority's activities are charitable - HELD THAT: - Having found that the Authority's activities are charitable and not commercial, the Tribunal held that the surplus shown in the income and expenditure account and interest on deposits were incidental receipts arising from charitable/statutory activities. In these circumstances, and following relevant authorities on exempt treatment of incidental receipts where no other taxable source exists, such receipts fall within the exemption under section 11. The Tribunal relied on the purposive reading of exemption provisions and precedents allowing exemption of interest when it is the by product of charitable/statutory functioning. [Paras 56, 57]

The additions made by the AO in respect of surplus and interest were deleted and such receipts were held exempt under section 11 for the year under consideration.

Proviso to the definition of "charitable purpose" in section 2(15) - effect of registration under section 12A/12AA on the assessing officer's powers - Whether the lead decision for AY 2010-11 would govern assessment years 2011-12 to 2013-14 - HELD THAT: - The Tribunal recorded that the facts and legal questions in the subsequent assessment years were similar to the lead year. Applying the same legal conclusions about the non-application of the proviso to section 2(15), the validity of registration and the exempt treatment of incidental receipts, the Tribunal extended the lead decision to the remaining years. [Paras 3, 58]

Appeals for AYs 2011-12 to 2013-14 allowed following the decision in the lead appeal (AY 2010-11).

Final Conclusion: The Tribunal allowed the assessee's appeals: it held that the Jhansi Development Authority's activities are statutory and charitable (not activities "in the nature of trade, commerce or business"), the proviso to section 2(15) did not apply for the years in issue, the AO's denial of exemption despite the Authority's registration under section 12A was unsustainable, incidental receipts (including interest) were exempt under section 11, and the lead decision for AY 2010-11 was applied to AYs 2011-12 to 2013-14.

Revisionary jurisdiction under section 263 of the Income-tax Act - Erroneous and prejudicial to the interests of the Revenue - Exemption of Long Term Capital Gain under section 10(38) - Assessment completed after inquiry and application of mind - Prohibition on fishing and roving inquiries in revisional proceedings - Precedential application of coordinate-bench and High Court decisions on scope of section 263

Revisionary jurisdiction under section 263 of the Income-tax Act - Erroneous and prejudicial to the interests of the Revenue - Assessment completed after inquiry and application of mind - Prohibition on fishing and roving inquiries in revisional proceedings - Validity of the PCIT's order under section 263 revising the AO's assessment for AY 2014-15 - HELD THAT: - The Tribunal examined whether the PCIT had satisfied the twin conditions for invoking section 263 - that the assessing officer's order was both erroneous and prejudicial to the interests of the Revenue. The AO had issued detailed queries (including contract notes, bank statements, mode of payment and STT details) during scrutiny, received and considered the documents, and accepted the assessee's claim of Long Term Capital Gain exempt under section 10(38). The PCIT's action relied on an alleged DIT(INV) report which was not placed on record before the AO. Applying settled principles from coordinate-bench and High Court authorities, the Tribunal held that mere suspicion or the desire for further inquiry does not suffice to characterise an assessment as erroneous and prejudicial; the revisional authority cannot initiate fishing or roving inquiries where the AO has applied his mind and reached a plausible view. In absence of materials on record establishing that the AO's view was unsustainable in law or that the order was erroneous and prejudicial, the PCIT's order remanding the matter was not sustainable. The Tribunal further relied on precedents accepting similar LTCG claims where assessments were completed after enquiry, concluding that the AO's view was one of the possible views and cannot be disturbed under section 263. [Paras 5, 6, 8, 9, 10]

The PCIT's order dated 12.02.2019 passed under section 263 is quashed and the assessment framed by the AO for AY 2014-15 is restored.

Final Conclusion: The appeal is allowed: the revisional order under section 263 is quashed and the assessing officer's order accepting the exemption of the declared LTCG under section 10(38) for Assessment Year 2014-15 is restored.

Unexplained cash credit - addition under section 68 of the Income tax Act - natural justice - right to cross examination of third party statements - identity, genuineness and creditworthiness of creditors - conversion of limited scrutiny to complete scrutiny - disallowance under section 36(1)(va) for delayed deposit of employees' contributions - adhoc disallowance of expenses

Unexplained cash credit - addition under section 68 of the Income tax Act - natural justice - right to cross examination of third party statements - identity, genuineness and creditworthiness of creditors - Validity of additions under section 68 for unsecured loans and whether AO's reliance on third party statements recorded by investigation wing without affording opportunity of cross examination vitiated the assessment - HELD THAT: - The Tribunal examined the AO's reliance on statements and other material gathered by the Investigation Wing and found that the AO did not conduct independent inquiries nor confronted the assessee with those statements or offer opportunity for cross examination despite the assessee's specific requests for summons/letters. The CIT(A) held that this omission offended principles of natural justice and, after independently scrutinising the documentary evidence (bank statements, audited financials, confirmations, earlier assessments of the lender companies and source of source material), concluded that the assessee had discharged the onus of proving identity, genuineness and creditworthiness of the lenders and the genuineness of transactions. The Tribunal, after considering precedent and the materials on record, agreed with the appellate fact finding of the CIT(A) both on the procedural defect and on the merits, noting that (i) transactions were through banking channels, (ii) lenders were assessed and had shown interest income and TDS credit, (iii) no incriminating material was found in survey/search to contradict the documentary trail, and (iv) AO accepted share capital transactions from the same companies in the same year. Consequently the additions were held unsustainable. [Paras 23, 24, 28, 31, 39]

The Tribunal dismissed the revenue's appeal and upheld deletion of the addition under section 68 for Assessment Year 2016-17.

Disallowance under section 36(1)(va) for delayed deposit of employees' contributions - adhoc disallowance of expenses - unexplained cash credit - addition under section 68 of the Income tax Act - identity, genuineness and creditworthiness of creditors - Sustainability of additions/disallowances in the assessee's return for Assessment Year 2015-16: (a) PF/ESIC delayed deposit disallowance; (b) adhoc disallowance of power & fuel expenses; and (c) additions under section 68 for unsecured loans from group companies - HELD THAT: - On (a) the Tribunal followed precedents and the CIT(A)'s conclusion that the addition for delay in depositing employees' contributions was not maintainable and dismissed the revenue ground. On (b) the adhoc disallowance for power & fuel was held to be based on lump sum assumption without examination of manufacturing particulars; payments were through banking channels and books were audited, hence CIT(A)'s deletion was affirmed. On (c) the Tribunal applied its reasoning in the co group Ariba decision: the CIT(A) had found that documentary evidences (bank records, audited financials, confirmations, earlier assessments of lenders) established identity, genuineness and creditworthiness of the lenders and that AO had not made independent inquiries or confronted the assessee with investigation material. The Tribunal, adopting a consistent view, held that the assessee discharged its onus and the AO's additions under section 68 were unsustainable. [Paras 42, 44, 49, 50, 51]

All grounds of the revenue were dismissed; additions/disallowances for AY 2015-16 (PF delay, adhoc power & fuel disallowance, and section 68 additions) were deleted.

Unexplained cash credit - addition under section 68 of the Income tax Act - identity, genuineness and creditworthiness of creditors - Sustainability of additions under section 68 for Assessment Year 2011 12 relating to (i) refunds received on liquidation of earlier investments and (ii) unsecured loan from a lender alleged to be a paper company - HELD THAT: - The Tribunal agreed with CIT(A) that (i) the assessee had shown investments in earlier years in audited balance sheets and had produced bank statements and details demonstrating realization of those investments; the source (share capital and share premium) had been shown in earlier year accounts and had been subjected to assessment for that year, so realization of those earlier investments could not be taxed again as unexplained credits; and (ii) in respect of the unsecured loan, the assessee furnished incorporation documents, bank statements, audited financials and confirmations showing that the lender existed, had net owned funds, had declared interest income and was assessed - and the AO failed to conduct independent enquiries or confront the assessee with investigation material. In these circumstances, and having regard to precedent, the Tribunal found the CIT(A)'s deletion of the additions correct. [Paras 71, 72, 73, 74, 75]

The Tribunal dismissed the revenue's appeal and upheld deletion of the additions under section 68 for Assessment Year 2011-12.

Final Conclusion: For the three assessed years and taxpayers in the Shriji Polymers group the Tribunal upheld the CIT(A)'s deletions: additions under section 68 were quashed where the AO relied on third party statements recorded by investigation authorities without affording confrontation/cross examination and, on the merits, the assessees had produced documentary proof establishing identity, genuineness and creditworthiness of the creditors; ancillary disallowances raised by the revenue were also dismissed.

Principle of mutuality - taxation of receipts from non-members/non voting associates - surplus of mutual concerns exempt from tax - interest income not covered by mutuality - distinguishing Citizen Co-operative Limited v. ACIT from Bankipur/Chelmsford line of authorities

Principle of mutuality - taxation of receipts from non-members/non voting associates - distinguishing Citizen Co-operative Limited v. ACIT from Bankipur/Chelmsford line of authorities - Whether entrance fees collected from persons not having voting rights are taxable or fall outside tax as part of a mutual concern - HELD THAT: - The Tribunal examined the Memorandum, Articles and bye laws and found that the objects, rules of application of income, restriction on distribution on winding up, and membership rules satisfy the tests of mutuality as explained in CIT v. Bankipur Club Ltd. and Chelmsford Club v. CIT. The coordinate decisions and the assessee's constitution establish identity between contributors and participators and operation on a no profit/no loss basis for members. The Tribunal held that the Supreme Court decision in Citizen Co operative Limited v. ACIT was inapplicable on facts because that decision concerned an association engaged in finance business and lacking mutuality; those distinguishing factual findings are absent here. Applying the Bankipur/Chelmsford principles, the receipts treated as entrance fees in issue are attributable to members' mutual activities and the addition confirmed by the authorities below is set aside.

Addition of entrance fees for the assessment years is deleted and the orders of authorities below on this point are set aside.

Surplus of mutual concerns exempt from tax - interest income not covered by mutuality - Whether surplus (excess of receipts over expenditure) and interest income are exempt under the doctrine of mutuality (AY 2013 14) and whether a claimed loss under other sources (AY 2015 16) can be allowed - HELD THAT: - Assuming jurisdiction, the Tribunal proceeded on merits and followed Bangalore Club v. CIT which, while upholding that a surplus arising from mutual transactions may be exempt, held that interest earned from third party banks does not fall within the mutuality principle and is taxable. The assessee did not controvert this legal position. Applying that binding ratio, the Tribunal rejected the assessee's claim to exempt interest income and dismissed the contentions as to surplus and the claimed loss under other sources accordingly.

Claims for exemption of interest and related surplus/loss under other sources are dismissed and the grounds raised in respect of those items are rejected.

Final Conclusion: Appeals partly allowed: additions made by authorities in respect of entrance fees are deleted on the ground of mutuality; claims relating to interest income and the surplus/loss under other sources are dismissed in accordance with the Bangalore Club line of authority.

Evidentiary value of statement recorded during survey under section 133A - onus to prove identity, genuineness and creditworthiness of creditors in unexplained loans cases - treatment of admissions in survey vis-a -vis relevant assessment year - treatment of unsecured loans as unexplained cash credits and consequent disallowance of interest - taxation of unaccounted receipts - only profit component to be taxed where applicable - application of percentage completion method for revenue recognition in real estate transactions - reasoned estimation and restriction of addition by applying an appropriate profit percentage to unaccounted advances

Evidentiary value of statement recorded during survey under section 133A - treatment of admissions in survey vis-a -vis relevant assessment year - Whether the statement of the partner recorded during the survey could be treated as conclusive evidence against the assessee for AY 2012-13. - HELD THAT: - The Tribunal accepted the appellate finding that a statement recorded during survey has limited evidentiary value and that the survey party has no power to administer oath; hence such statement cannot, without supporting material, form the sole basis for addition. The Tribunal noted that the statement related to the subsequent assessment year (2014-15) and that the Assessing Officer made additions for AY 2012-13 on the basis of that survey statement without independent enquiry. Once the assessee produced confirmations, returns and other documents establishing the lenders and banking trail, the onus to prove that the credits were not genuine shifted to the Revenue, which did not issue notices to the alleged lenders or undertake independent verification. For these reasons the Tribunal affirmed the deletion of additions founded solely on the survey statement. [Paras 15, 19, 20]

Statement recorded during survey could not, by itself and without independent corroboration or year-specific linkage, be treated as conclusive evidence for making additions in AY 2012-13; the appellate view rejecting sole reliance on the survey statement is upheld.

Treatment of unsecured loans as unexplained cash credits and consequent disallowance of interest - onus to prove identity, genuineness and creditworthiness of creditors in unexplained loans cases - Whether the Assessing Officer was justified in treating unsecured loans as unexplained credits under section 68 and disallowing interest for AY 2012-13. - HELD THAT: - The Tribunal examined the Assessing Officer's addition of unsecured loans on the basis of the partner's survey statement and the AO's conclusion that creditworthiness was not proved. The Tribunal noted that the assessee produced lender confirmations, copies of lenders' returns and the banking channel through which amounts were received. The Commissioner (Appeals) found, and the Tribunal agreed, that after such production the onus lay on the AO to disprove the genuineness by independent inquiry, which was not done. Consequently, the deletion of the addition of unsecured loan and the related disallowance of interest was affirmed. [Paras 15, 17, 20]

The addition of unsecured loans treated as unexplained credits and the consequential disallowance of interest are deleted; Revenue failed to discharge the burden of proving non-genuineness after the assessee furnished confirmations and supporting material.

Taxation of unaccounted receipts - only profit component to be taxed where applicable - application of percentage completion method for revenue recognition in real estate transactions - reasoned estimation and restriction of addition by applying an appropriate profit percentage to unaccounted advances - Whether the Assessing Officer was justified in treating the entire difference between impounded receipts and books as income, and if an addition was warranted, what is the correct measure of such addition for AY 2012-13. - HELD THAT: - The Tribunal approved the Commissioner (Appeals)'s approach that in real estate transactions, where unaccounted receipts are detected, only the profit component is generally taxable. The assessee's working under the percentage completion method was considered; the Commissioner (Appeals) computed the project profit and observed that the assessee had already declared profit higher than that computed under the project completion method. The Tribunal noted that the Assessing Officer had not rejected the books or invoked provisions for rejecting accounts, and had not demonstrated that the percentage method was unacceptable. Given defects in the assessee's working to the limited extent noted, the Commissioner (Appeals) restricted the addition by applying the assessed profit percentage (8.7%) to the unaccounted advances, rounding the result to a reasonable figure. The Tribunal found no legal infirmity in restricting the addition accordingly and upheld the quantification. [Paras 9, 10, 18, 20]

The Assessing Officer's inclusion of the entire difference as income is not sustained; the addition is restricted to the profit component by applying the appropriate percentage (as determined by the Commissioner (Appeals)), and the restriction so made is affirmed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and affirmed the Commissioner (Appeals)'s order: (i) survey statements cannot, without corroboration and year-specific linkage, be the sole basis for additions; (ii) deletion of the addition treating unsecured loans as unexplained credits and the consequent deletion of interest disallowance is upheld; and (iii) the addition arising from unaccounted booking advances is restricted to the profit component as computed by the Commissioner (Appeals), which the Tribunal has affirmed.

Short term capital gains - treatment of stamp duty valuation as actual consideration under Section 50C - validity of reopening of assessment and de novo assessment - agency versus ownership in transfer effected under power of attorney - requirement of production/consideration of registered sale deed and evidentiary foundation for additions

Short term capital gains - treatment of stamp duty valuation as actual consideration under Section 50C - agency versus ownership in transfer effected under power of attorney - requirement of production/consideration of registered sale deed and evidentiary foundation for additions - validity of reopening of assessment and de novo assessment - Whether the addition on account of alleged short term capital gains (computed with reference to stamp duty value) sustained by the authorities below can be upheld, and whether the assessment order requires restoration for de novo consideration. - HELD THAT: - The Tribunal noted that the assessing officer's order did not clearly record or appear to have considered the registered sale deed and that material facts on transfer - including that the sale deed was executed by a person who had earlier entered into agreements with the original owners and that the assessee acted under a power of attorney and claimed only commission - were not properly examined by the authorities below. In view of the absence of clear treatment of the registered deed and the factual uncertainty about ownership versus agency, the Tribunal found it inappropriate to adjudicate the addition on merits without the assessing officer first re-examining the evidence and making fresh findings. Consequently, the impugned appellate confirmation was set aside and the matter was restored to the file of the assessing officer for de novo assessment so that the AO may consider the sale deed, the nature of transfers, the applicability of valuation under Section 50C (and the stamp duty valuation claimed), and the question whether only commission income arose to the assessee. [Paras 6, 7]

Impugned order set aside; assessment restored to the assessing officer for de novo assessment and fresh adjudication on the addition.

Final Conclusion: Appeal disposed of in appellant's favour for statistical purposes only; the Tribunal set aside the orders below and directed de novo assessment by the assessing officer to decide, on evidence, the questions of ownership/agency, applicability of stamp duty valuation as consideration, and any resultant short term capital gains.

Force majeure arising from the COVID-19 pandemic - reasonableness and non-arbitrariness in administrative decision-making - validity period of registered sales contracts for import of poppy seeds (four months) - competent authority's power to validate/extend registrations subject to judicial review - commercial prejudice from refusal to grant extension (advance payments and future dealings)

Force majeure arising from the COVID-19 pandemic - commercial prejudice from refusal to grant extension (advance payments and future dealings) - reasonableness and non-arbitrariness in administrative decision-making - Validity of the impugned order refusing extension of time to import on the ground that COVID-19-related disruptions did not justify extension - HELD THAT: - The Court held that the impugned order's factual premise - that there was no outbreak or disruption in February 2020 - was unsustainable because the COVID-19 pandemic originated in China and its adverse effects on supply chains in China in February 2020 could be judicially noticed. The authority's reasoning that advance payment did not oblige it to grant extension was not a sufficient or rational answer given the commercial prejudice (advances paid, sole recognized exporter, risk of future non-dealing). Applying the requirement that public authorities act fairly, objectively and non-arbitrarily, the Court found the decision to refuse extension to be irrational and to ignore the realities of the pandemic and commercial consequences for the importers, and therefore not tenable. [Paras 13, 14, 15, 16, 17]

Impugned refusal set aside; petitioners permitted to import the licensed quantities on or before 31st March, 2021.

Validity period of registered sales contracts for import of poppy seeds (four months) - competent authority's power to validate/extend registrations subject to judicial review - Whether the four-month validity clause and related penalties precluded judicially-directed extension - HELD THAT: - The Court recognised the guideline provision that registrations are valid for four months and that penalties for non-performance exist, but held that those guidelines do not immunize administrative action from review where the authority's refusal to extend is irrational in the factual matrix of a pandemic. The Court exercised supervisory jurisdiction to grant a time-limited extension, directing the competent authority to validate registrations to permit imports by the stipulated date. [Paras 11, 12, 19, 20]

Guideline timings and penalties do not preclude judicial intervention; CBN directed to validate registrations to enable imports by 31st March, 2021.

Reasonableness and non-arbitrariness in administrative decision-making - competent authority's power to validate/extend registrations subject to judicial review - Reliability of the Government's contention regarding quota and allocation as a justification for refusing extension - HELD THAT: - The Court found the submission about limited quotas and interference with quota allocations to be without merit because that contention was not raised in the counter-affidavit. Moreover, the quantities sought by petitioners were within licensed allocations. Therefore, the quota argument could not sustain the impugned refusal. [Paras 18]

Quota-based objection rejected as not pleaded and not applicable to the licensed quantities sought to be imported.

Final Conclusion: The High Court set aside the impugned order refusing extensions, directing CBN to validate the petitioners' registration certificates so that the licensed quantities of poppy seeds may be imported on or before 31st March, 2021 (validation to be granted by 20th January, 2021), holding that refusal was irrational in light of COVID-19 disruptions in China and the commercial prejudice to the importers.

Exemption from integrated tax on re-imported goods after repairs - meaning of "duty of customs" in an exemption notification - distinction between levy (Integrated Tax Act) and collection (Customs Tariff Act) - principle that different expressions used in the same notification carry different meanings

Condonation of delay - Ten appeals filed beyond the prescribed period were dismissed and not condoned - HELD THAT: - The appellant conceded that there was no infirmity in the orders of the Commissioner (Appeals) dismissing ten appeals for delay and that the delay could not be condoned. The Tribunal therefore dismissed those ten appeals as recorded in the order list cited in paragraph 2, leaving the remaining appeals to be decided on merits. [Paras 2, 50]

The ten specified appeals are dismissed for being time-barred.

Exemption from integrated tax on re-imported goods after repairs - meaning of "duty of customs" in an exemption notification - distinction between levy (Integrated Tax Act) and collection (Customs Tariff Act) - principle that different expressions used in the same notification carry different meanings - Integrated tax is exempt on re-import of repaired aircraft and parts under serial no. 2 of the Exemption Notification; "duty of customs" in that condition does not include Integrated Tax or compensation cess - HELD THAT: - The Tribunal examined the Exemption Notification issued under section 25(1) of the Customs Act and the statutory scheme in the Customs Act, the Tariff Act and the Integrated Tax Act. Section 2(15) of the Customs Act confines the meaning of "duty" to duties leviable under the Customs Act; section 3 of the Tariff Act separately provides for additional levies including integrated tax and prescribes the manner of collection. Integrated tax is levied under section 5 of the Integrated Tax Act while section 3(7) of the Tariff Act provides for its collection on import; it is not a duty leviable under section 12 of the Customs Act. The Tribunal applied established authorities that where a term is defined in an Act it bears that meaning in subordinate legislation, and that different expressions used in the same notification must be given different meanings. The main body of the Exemption Notification refers separately to "duty of customs" and to "integrated tax, compensation cess"; column (3) for serial no. 2 refers only to "Duty of customs" on the fair cost of repairs. The omission of the words "leviable thereon which is specified in the said First Schedule" in column (3) does not expand "duty of customs" to include integrated tax; such phrasing in the main body was ex abundanti cautela and cannot alter the meaning assigned by statute. Comparison with earlier notifications and judicial precedent supported the view that additional levies do not fall within the expression "duty of customs" for the purpose of exemption notifications. Consequently, integrated tax and compensation cess were held to be wholly exempt under serial no. 2 on the facts before the Tribunal. [Paras 36, 37, 47, 48, 49]

The orders upholding assessment of integrated tax on re-imported repaired aircraft/parts are set aside; the appellant is entitled to exemption from integrated tax under serial no. 2 of the Exemption Notification for the period in dispute.

Final Conclusion: Ten appeals listed in paragraph 2 are dismissed as time-barred; the remaining 51 appeals are allowed on merits and the assessments imposing integrated tax on re-imported repaired aircraft/parts are set aside, holding that the Exemption Notification exempts integrated tax and compensation cess in respect of re-imports covered by serial no. 2.

Restoration of company name - company carrying on business / going concern - power under Section 252(3) of the Companies Act, 2013 - compliance with filing of financial statements and annual returns - verification by Registrar of Companies before restoration - conditional restoration subject to compliance and payment of costs

Company carrying on business / going concern - restoration of company name - power under Section 252(3) of the Companies Act, 2013 - The Tribunal concluded that the company was in existence and was a going concern at the time of strike off and thereby merited restoration of its name under Section 252(3). - HELD THAT: - The Tribunal examined the audited financial statements up to 31st March 2018, noted the company's total assets and that revenue from operations was shown as nil, and considered the parties' submissions and the RoC report. Applying the statutory test in Section 252(3) - whether the company was carrying on business or in operation or whether it is otherwise just that the name be restored - the Tribunal found that the company was in existence and a going concern and that restoration was justified. The Tribunal accordingly exercised its power under Section 252 to order restoration of the company's name, while making consequential directions to effectuate revival. [Paras 6, 7]

Name of the company ordered to be restored to the Register of Companies as it was found to be in existence and a going concern.

Compliance with filing of financial statements and annual returns - verification by Registrar of Companies before restoration - conditional restoration subject to compliance and payment of costs - Restoration was made subject to specified conditions and directed verification by the Registrar before effecting restoration. - HELD THAT: - The Tribunal imposed specific pre- and post-restoration conditions: the company must file pending income-tax returns and submit proof, provide information and supporting documents demonstrating the purpose to be served by restoration (given zero revenue shown for the period 2013-14 to 2017-18), file all statutory documents with prescribed fees/additional fee/fine as determined by the RoC, ensure personal compliance by company representatives, and pay the costs directed by the Tribunal. The RoC was directed to satisfy itself about compliance with these directions before restoring the name and to publish the order in the Official Gazette. The Tribunal also clarified that the order is confined to the violations that led to striking off and does not preclude the RoC from taking lawful action for any other violations. [Paras 8]

Restoration granted conditionally; RoC to verify compliance with filing, documentation, fees and payment of directed costs before restoring the company's name, and to publish the order thereafter.

Final Conclusion: The Tribunal allowed the company application and ordered restoration of the company's name under Section 252(3) as the company was found to be in existence and a going concern, subject to specified compliance, verification by the Registrar of Companies and payment of costs; the RoC may still take appropriate action for other violations in accordance with law.

Scheme of Amalgamation - Dispensation of meetings of shareholders and creditors - Consent affidavits as substitute for convening meetings - Cancellation of intra-group shareholding on merger - Requirement of notice to statutory authorities in Form CAA-3 - Second motion with disclosure of PANs for service on Income Tax Authorities - Employees to continue on same terms on effective date - Compliance with Accounting Standards under Section 133

Cancellation of intra-group shareholding on merger - Effect of the Scheme on shares held by the Transferee Company in the Transferor Companies and whether any allotment of shares as consideration is required. - HELD THAT: - The Tribunal found that the Transferor Companies are directly or indirectly wholly owned subsidiaries of the Transferee Company. Accordingly, upon the Scheme becoming effective, all equity shares held by the Transferee Company in the Transferor Companies, whether held directly or through subsidiaries/nominees, shall stand cancelled and extinguished. Consequentially there will be no issue or allotment of shares by the Transferee Company to shareholders of the Transferor Companies as consideration on the Scheme taking effect. [Paras 75]

The shares held by the Transferee Company in the Transferor Companies shall stand cancelled on the Scheme becoming effective; no allotment of shares as consideration is required.

Dispensation of meetings of shareholders and creditors - Consent affidavits as substitute for convening meetings - Requirement of notice to statutory authorities in Form CAA-3 - Whether meetings of equity shareholders, secured creditors and unsecured creditors of the Applicant Companies could be dispensed with and the consequence for statutory notice obligations. - HELD THAT: - The Tribunal recorded that all equity shareholders of each Applicant Company had given their consent by affidavits, and that in several Applicant Companies there were no secured or unsecured creditors as indicated by the certificates filed. On that basis the Tribunal dispensed with convening meetings of equity shareholders of all Applicant Companies and, where applicable, meetings of secured and unsecured creditors of the specified Applicant Companies, since requisite consents had been received. The Tribunal, however, emphasised that Rule 8 requires that notices to statutory authorities in Form CAA-3 still be issued; because convening of meetings is being dispensed with, the applicants must make a specific prayer in the Second Motion Petition for issuance of those notices to the Central Government, Registrar of Companies, Income Tax Authorities and Official Liquidator. [Paras 81]

Meetings are dispensed with where consent affidavits or absence of creditors exist, but applicants must seek in the Second Motion a direction to issue notices to statutory authorities in Form CAA-3.

Second motion with disclosure of PANs for service on Income Tax Authorities - Employees to continue on same terms on effective date - Compliance with Accounting Standards under Section 133 - Procedural requirements imposed on the Applicant Companies when filing the Second Motion and ancillary safeguards. - HELD THAT: - The Tribunal granted liberty to the Applicant Companies to file the Second Motion Petition but directed that the applicants must: (a) specifically pray for sending notices to the Central Government, Registrar of Companies, Income Tax Authorities and Official Liquidator; (b) disclose the PAN numbers of all Applicant Companies in the title of the Second Motion Petition so that the Income Tax Department may be properly served and can respond; and (c) file an affidavit declaring that none of the Applicant Companies are governed by any sectoral regulator. The Tribunal also noted that the Scheme provides for continuity of permanent employees on terms not less favourable than existing terms and that statutory auditors have certified compliance of the accounting treatment with the Accounting Standards under Section 133. [Paras 78, 79, 80, 82]

Liberty to file Second Motion granted subject to specific prayers for notices to statutory authorities, disclosure of PANs in the petition title, and filing an affidavit regarding absence of sectoral regulator; Scheme provisions concerning employees and accounting compliance noted.

Final Conclusion: First Motion allowed: meetings of shareholders and creditors dispensed with where valid consent affidavits or absence of creditors exist; intra-group shareholding to be cancelled on effectiveness of the Scheme with no allotment of shares as consideration; applicants granted liberty to file the Second Motion subject to making specific prayers for statutory notices (Form CAA-3), disclosing PANs for service on Income Tax Authorities, and filing an affidavit about sectoral regulators.

Restoration of company struck off under Section 252(3) of the Companies Act, 2013 - carrying on business / going concern - satisfaction of the Tribunal to restore name to register - directions for restoration and consequential actions by Registrar of Companies - conditional restoration subject to filing of statutory documents and payment of fees and costs

Carrying on business / going concern - restoration of company struck off under Section 252(3) of the Companies Act, 2013 - The Tribunal was satisfied that the company was in existence and carrying on business and therefore its name should be restored to the register of companies under Section 252(3). - HELD THAT: - The Tribunal examined the material on record, including the company's audited balance sheet as at 31.03.2019 and the ROC's report. Although the company had defaulted in filing financial statements and annual returns leading to STK notices and eventual striking off, the Tribunal was satisfied on the evidence that the company was a going concern and in operation at the time of striking off. Applying Section 252(3), the Tribunal concluded that it was just to restore the company's name to the register and to place the company and other persons as nearly as may be in the position as if the name had not been struck off. [Paras 6]

Restoration of the company's name ordered as the company was carrying on business / was a going concern.

Directions for restoration and consequential actions by Registrar of Companies - conditional restoration subject to filing of statutory documents and payment of fees and costs - The Tribunal directed specific consequential actions by the Registrar of Companies and imposed conditions on restoration including filing of statutory documents, payment of prescribed fees/additional fee, and payment of costs. - HELD THAT: - Exercising powers under Section 252 and relevant NCLT rules, the Tribunal ordered the ROC to restore the company's status in the register and take consequential steps (re-activate status for e-filing, restore/activate DINs if applicable, intimate bankers to defreeze accounts, and publish the order in the Official Gazette). The restoration was made subject to the company filing all outstanding statutory documents with prescribed fees/additional fee/fine within thirty days of restoration, personal supervision by the company's representatives to ensure compliance, and payment of a cost to the ROC online as directed. The Tribunal also clarified that the order was confined to the violations that led to striking off and would not preclude ROC from taking action for any other violations/offences under law. [Paras 7]

Restoration directed with enumerated consequential actions by ROC and conditional obligations on the company (filing, fees, compliance and payment of costs).

Final Conclusion: The Tribunal allowed the application under Section 252(3), directing the Registrar of Companies to restore the company's name as if it had not been struck off, subject to specified compliance by the company (filing of statutory documents with prescribed fees/additional fee, payment of costs, and other consequential steps) and without prejudice to ROC taking action for any other violations in accordance with law.

Revival/Restoration of struck off company - Power under Section 252(3) of the Companies Act, 2013 - Strike off under Section 248 of the Companies Act, 2013 - Requirement to satisfy realization of liabilities before striking off - Principle of ease of doing business and leniency in restoration - Conditions for restoration including filing of statutory documents and payment of costs

Revival/Restoration of struck off company - Power under Section 252(3) of the Companies Act, 2013 - Principle of ease of doing business and leniency in restoration - Restoration of the Company's name struck off under Section 248 was directed by the Tribunal. - HELD THAT: - The Tribunal held that although the Registrar had acted in accordance with Section 248 in striking off the Company, the Tribunal may, in exercise of powers under Section 252(3), take into account bona fide contentions of the promoters and directors and adopt a lenient stance in the interest of justice and ease of doing business. The Tribunal observed that promoters were engaged in substantive business activity (development of fire-fighting equipment) and that revival would prevent irreparable loss to the Company and stakeholders; there were no pending investigations and the ROC did not oppose restoration but left the matter to the Tribunal subject to terms. Applying these considerations, the Tribunal directed restoration of the Company's name as if it had not been struck off, including restoration of consequential actions such as DINs of directors. [Paras 5, 6, 7]

Name of the Company restored and Registrar of Companies directed to enter the Company on the register as if it had not been struck off.

Conditions for restoration including filing of statutory documents and payment of costs - Requirement to satisfy realization of liabilities before striking off - Strike off under Section 248 of the Companies Act, 2013 - Restoration was ordered subject to specific conditions including filing of statutory documents, payment of prescribed fees/additional fees/fine, payment of costs, and procedural formalities with the Registrar. - HELD THAT: - The Tribunal conditioned restoration on compliance with procedural and financial obligations to protect stakeholders and ensure statutory regularity. It directed the Company to file all statutory documents along with prescribed fees/additional fee/fine as decided by the Registrar within 30 days from the date of restoration; required the Company's representative who filed the petition to personally ensure compliance; imposed a cost to be paid online to the Central Government within three weeks (failure to pay to result in lapse of the order); permitted delivery of a certified copy of the order to the Registrar; and directed the Registrar to publish the order in the Official Gazette after compliance. The Tribunal clarified that the order is confined to violations that led to striking off and does not preclude the ROC from taking action for any other violations or offences. [Paras 6, 7]

Restoration granted on conditions: filing of statutory documents with prescribed fees within 30 days, personal assurance of compliance by the petitioner's representative, payment of specified costs within three weeks, delivery of certified order to ROC and subsequent publication in the Official Gazette; ROC free to pursue other violations if any.

Final Conclusion: The Tribunal allowed the petition and ordered restoration of the Company's name under Section 252(3) subject to compliance with specified conditions (statutory filings with fees/fines within 30 days, personal assurance of compliance, payment of costs within three weeks, delivery of certified order and Gazette publication), while reserving the ROC's right to take action for other violations.

Condonation of delay - Extension of time under Section 5, Limitation Act, 1963 - Filing of Tribunal order with Registrar of Companies within prescribed period - Acceptance of eForm INC-28 by Registrar of Companies - Inadvertence as sufficient cause for condonation

Condonation of delay - Extension of time under Section 5, Limitation Act, 1963 - Inadvertence as sufficient cause for condonation - Whether the delay of 569 days in submitting the Tribunal's order dated 26.04.2018 and corrigendum dated 05.07.2018 to the Registrar of Companies should be condoned. - HELD THAT: - The Tribunal noted that the main Company Petition had been disposed of by order dated 26.04.2018 and that the prescribed rule requires filing of the Tribunal's order with the Registrar of Companies within thirty days of receipt. The Demerged Company accepted that the delay occurred and attributed it to inadvertence. The Tribunal observed that the Scheme's benefits for the Resulting Company would be frustrated if the delay were not condoned. Applying the principles permitting extension of time under Section 5 of the Limitation Act, 1963 and Rule 11 of the NCLT Rules, 2016, and having regard to the absence of any suggestion of deliberate or mala fide conduct, the Tribunal exercised its discretion to condone the delay of 569 days as just and equitable in the circumstances and in furtherance of the corporate reorganisation sanctioned earlier. [Paras 5, 6]

Delay of 569 days in submission of the Tribunal's order dated 26.04.2018 and corrigendum dated 05.07.2018 to the Registrar of Companies is condoned; ROC directed to accept the eForm INC-28 filed by the Demerged Company upon submission of this order; applicant to submit a copy of this order to the ROC within 30 days of receipt.

Acceptance of eForm INC-28 by Registrar of Companies - Filing of Tribunal order with Registrar of Companies within prescribed period - Whether the Registrar of Companies should be directed to accept the belated filing (eForm INC-28) of the Tribunal's order and corrigendum. - HELD THAT: - Following the condonation of delay, the Tribunal directed the Registrar of Companies, Karnataka to take appropriate action by accepting the eForm INC-28 filed by the Demerged Company (SRN R33866682) along with the Tribunal's order dated 26.04.2018 and the corrigendum dated 05.07.2018 on production of the present order. The Tribunal thereby removed the ROC's objection to acceptance of the filing on grounds of delay and provided a limited, contingent direction to accept the documents upon submission of this order within the time directed. [Paras 6]

ROC directed to accept the eForm INC-28 and accompanying Tribunal order and corrigendum on production of this order; applicant to submit copy of this order to ROC within 30 days.

Final Conclusion: Application allowed: the Tribunal condoned the 569-day delay in filing its order and corrigendum with the Registrar of Companies, directed the ROC to accept the belated eForm INC-28 upon production of this order, and required the applicant to submit a copy of this order to the ROC within 30 days; no order as to costs.

Forfeiture of earnest money deposit - auction terms and conditions - enforceability of Letter of Intent and timelines - right to withdraw offer vis-a -vis contractual forfeiture - effect of COVID 19 lockdown on contractual obligations - pre contractual forfeiture and Section 74 of the Indian Contract Act

Forfeiture of earnest money deposit - auction terms and conditions - enforceability of Letter of Intent and timelines - effect of COVID 19 lockdown on contractual obligations - pre contractual forfeiture and Section 74 of the Indian Contract Act - Whether the liquidator was justified in forfeiting the earnest money deposited by the successful bidder for failure to pay the stipulated 25% by the prescribed timelines. - HELD THAT: - The Appellant accepted the Letter of Intent unconditionally on 23.03.2020 and was bound by the revised timelines in the Corrigendum requiring payment of up to 25% of the sale consideration by 25.03.2020. Clause J(3) of the E Auction terms expressly permitted forfeiture where the successful bidder failed to pay 25% within the stipulated time. The record shows multiple reminder communications from the liquidator and an express notice calling upon the Appellant to deposit the consideration within 48 hours, which went unheeded. The contention that Clause 13 (providing interest for delayed payments of the balance consideration) applied to the initial 25% is contrary to the Corrigendum's structure and timelines and is therefore untenable. Reliance on precedents concerning forfeiture in different factual matrices (where 25% had been paid and extension/notice issues arose) was distinguished. The Court applied established principles that parties who, by their conduct, prevent formation or completion of a contract cannot claim the benefit of their own default and that contractual terms providing for forfeiture of security/earnest are enforceable. The COVID 19 lockdown did not, on the facts, excuse non payment because the Appellant had accepted the LoI after the pandemic was known and bank digital services remained available, and the liquidator had granted a short extension which the Appellant did not utilise.

Forfeiture of the earnest money was justified under the auction terms; the Adjudicating Authority rightly dismissed the application for refund and the appeal is dismissed.

Final Conclusion: The appeal is dismissed. The forfeiture of the EMD in terms of the E Auction Process Document and Corrigendum was lawful as the successful bidder failed to comply with the stipulated timelines despite notices and extensions; consequential reliance on different facts in cited authorities was rejected.

Operational debt - debt due and payable - acknowledgement of debt - service of demand notice - affidavit under section 9(3)(b) - power of attorney authority to institute CIRP - initiation of Corporate Insolvency Resolution Process

Operational debt - debt due and payable - acknowledgement of debt - service of demand notice - affidavit under section 9(3)(b) - Whether the petition under section 9 of the I&B Code established an operational debt and satisfied the statutory prerequisites for initiation of CIRP - HELD THAT: - The Tribunal found that the Operational Creditor failed to furnish any documentary evidence that the Annual Maintenance Contract was executed or that services were provided and accepted by the Corporate Debtor. There is no record of acknowledgement or confirmation by the Corporate Debtor that any debt was due, nor proof of service/acknowledgement of the demand notices relied upon. The petitioner also did not file the affidavit required by section 9(3)(b) of the Code. In the absence of evidence showing that a debt had become due and payable and without compliance with the procedural requirement of the affidavit and proof of notice, the conditions identified in Mobilox Innovations (as applied by the Tribunal) for admission under section 9 are not fulfilled. Consequently, the petition cannot be admitted for initiating CIRP. [Paras 6, 7, 8, 10, 11]

The petition did not prove an operational debt nor comply with mandatory procedural requirements and therefore cannot be admitted.

Power of attorney authority to institute CIRP - initiation of Corporate Insolvency Resolution Process - Whether the petition filed by the Power of Attorney holder was competent to institute proceedings under section 9 - HELD THAT: - The Tribunal noted that the petition was presented by a Power of Attorney holder whose document did not contain specific authorisation to institute CIRP proceedings. Relying on the principle applied in the cited NCLAT decision, the Tribunal held that a Power of Attorney without explicit authority to file an application under the Code is incompetent to present a section 9 petition. This deficiency contributed to the infirmity of the petition and weighed against admission. [Paras 4, 9, 11]

The Power of Attorney produced did not confer specific authority to institute CIRP and thus the petition was not competent on that ground.

Final Conclusion: The section 9 petition was rejected: the Operational Creditor failed to establish a debt due and payable or to comply with required procedural formalities, and the Power of Attorney did not vest competent authority to file the petition; accordingly the petition for initiation of CIRP stands dismissed.

CIRP timeline under Section 12 - proviso to Section 12 - extended 330 days completion period - extension of CIRP period by Adjudicating Authority - exclusion of lockdown period from CIRP time - delay and laches defeating equitable relief

CIRP timeline under Section 12 - extension of CIRP period by Adjudicating Authority - delay and laches defeating equitable relief - Application for acceptance of a belated Resolution Plan and direction to the Resolution Professional to admit and place the same before the Committee of Creditors. - HELD THAT: - The admitted Company Petition initiated CIRP which, in absence of extension by the Adjudicating Authority, is governed by the time limit under Section 12. The Tribunal recorded that the original 180-day period expired and that an extension of 60 days was granted only up to 16th January, 2020; no further extension under Section 12 was sought or granted. The Applicant failed to submit EOI or a Resolution Plan within the notified last dates (6th and 30th December, 2019) and offered the EOI only on 4th June, 2020. No satisfactory explanation was provided for non-submission within the prescribed timeline. The Tribunal applied the equitable principle that unexplained delay and sleeping over rights disentitles a party to relief, and held that indulgence for the unexplained delay could not be granted. [Paras 5, 6, 7, 8]

Application seeking acceptance of a belated Resolution Plan and directions to the Resolution Professional is rejected.

Exclusion of lockdown period from CIRP time - proviso to Section 12 - extended 330 days completion period - Claim that the Covid-19 lockdown/limitation extensions operate to extend the CIRP period and validate the late submission of EOI/Resolution Plan. - HELD THAT: - The Tribunal found that the national lockdown and the Supreme Court's order extending limitation began with effect from mid-March 2020, whereas the CIRP period in the present case had already expired on 16th January, 2020. Consequently, the contention that the lockdown period or the proviso to Section 12 operated to extend the CIRP timeline or excuse the Applicant's delay was untenable. The Tribunal held that the intervening pandemic and lockdown could not retrospectively validate submissions made after the CIRP had lawfully expired. [Paras 6, 7]

Claim based on lockdown/limitation extension is rejected as inapplicable because the CIRP had already expired before the lockdown or limitation extension took effect.

Final Conclusion: The interlocutory application for acceptance of a belated Resolution Plan and for directions to the Resolution Professional is dismissed for unexplained delay; the Covid-19 lockdown and related limitation extensions did not operate to extend the CIRP in this case, and no costs are awarded.

Validity of application under Section 482 Cr.P.C. to extend interim bail - Doctrine of merger of interim order into final order - Maintainability of extension of interim bail after final rejection - Alternative remedies: fresh application under Section 439 Cr.P.C. or challenge to final order

Validity of application under Section 482 Cr.P.C. to extend interim bail - Doctrine of merger of interim order into final order - Maintainability of extension of interim bail after final rejection - Alternative remedies: fresh application under Section 439 Cr.P.C. or challenge to final order - Whether the present petition under Section 482 Cr.P.C. is maintainable for seeking extension of interim bail previously granted by this Court. - HELD THAT: - The Court observed that interim bail was granted to the applicant by this Court on 14.10.2020 in Bail Application No.5974 of 2020 and that the same bail application was subsequently finally decided and rejected by this Court on 09.12.2020. Applying the doctrine of merger, the Court held that the interim order of bail stood merged into the final order rejecting bail. Consequently, an application under Section 482 Cr.P.C. seeking extension of the interim bail granted earlier is not maintainable once the bail application has been finally decided against the applicant. The Court noted that the proper course for the applicant is to either file a fresh bail application under Section 439 Cr.P.C. or to challenge the final order dated 09.12.2020 by appropriate proceedings, rather than seek extension of the interim order by invoking Section 482 Cr.P.C.

Application under Section 482 Cr.P.C. seeking extension of interim bail dismissed as not maintainable; applicant directed to pursue alternative remedies under law.

Final Conclusion: The petition under Section 482 Cr.P.C. for extension of interim bail is dismissed as misconceived because the interim bail was merged in the final order rejecting bail; the trial court to proceed in accordance with law and the applicant may seek relief by filing a fresh bail application under Section 439 Cr.P.C. or by challenging the final order.

Cenvat credit admissibility - transport arrangement by buyer - reliance on D.T.O. vehicle reports - benefit of doubt - penalty under Rule 26 of the Central Excise Rules, 2002

Cenvat credit admissibility - reliance on D.T.O. vehicle reports - transport arrangement by buyer - Admissibility of cenvat credit on invoices listed in the show cause notice in light of investigation findings about shortages, unloading of duty-free goods and vehicle-capacity reports. - HELD THAT: - The Tribunal recorded that investigation disclosed a shortage of inputs and presence of duty-free goods at the premises which cast doubt on whether duty-paid inputs were actually received. Vehicle screen reports from the D.T.O. showed that some vehicles (Sr. No.1 & 2 of the SCN) were auto-cycles and otherwise not capable of transporting the goods; in those circumstances the cenvat credit claimed on invoices issued by Kanhya Lal Jai Narain (S No.1 & 2 of the SCN) was held not admissible. Conversely, the invoices issued by Ram Parkash & Sons were supported by D.T.O. information that the vehicle was a Tractor Trailer capable of transporting heavy goods, and therefore cenvat credit in respect of those invoices was held admissible. For invoices of Marwah Trading Co., the Tribunal applied the reasoning of an earlier order of the Tribunal where goods were sold at factory gate and transportation arranged by buyers, and, on the appellants' assertion that the previous order applied to their case, held that the benefit of doubt favoured the appellant and allowed cenvat credit on that invoice (S No.14). For invoices of M/s Madan Industrial Corporation, while the supplier stated that buyers arranged transportation and payments were received, the D.T.O. report showed scooters were involved which could not carry heavy goods; consequently cenvat credit claimed at S No.5-8 was denied. [Paras 7, 8]

Cenvat credit denied on invoices issued by Kanhya Lal Jai Narain and M/s Madan Industrial Corporation (as per S Nos.1-2 and 5-8 of the SCN); cenvat credit allowed in respect of invoices issued by Ram Parkash & Sons and Marwah Trading Co. (S Nos.3,4,9-13 and S No.14 as specified).

Penalty under Rule 26 of the Central Excise Rules, 2002 - benefit of doubt - Imposability and quantum of penalty on the appellants in relation to the denial of cenvat credit and the suppliers' role in transportation and delivery. - HELD THAT: - The Tribunal accepted that denial of cenvat credit which is upheld would attract penalty on the manufacturer/buyer to the extent of the disallowed credit. However, where the suppliers had demonstrably arranged transportation by buyers or where there was an earlier Tribunal order favouring the supplier (Marwah Trading Co.), the Tribunal declined to impose penalty on those suppliers. Specifically, penalty was held imposable on appellant no.1 to the extent of the denial of cenvat credit. Penalty against M/s Madan Industrial Corporation was held not imposable given the supplier's statement and absence of decisive adverse finding; penalty on M.R. Jaidka was moderated and reduced to a specified sum. [Paras 8, 9]

Penalty imposable on appellant no.1 to extent of denied cenvat credit; no penalties imposable on M/s Madan Industrial Corporation; penalty on M.R. Jaidka reduced.

Final Conclusion: Appeals partly allowed: cenvat credit disallowed in respect of certain invoices (Kanhya Lal Jai Narain and M/s Madan Industrial Corporation) and recovered with interest; cenvat credit upheld for invoices from Ram Parkash & Sons and Marwah Trading Co.; penalty imposed on appellant no.1 to the extent of disallowed credit, no penalty on M/s Madan Industrial Corporation, and penalty on M.R. Jaidka reduced; appeals disposed on these terms.

Right to be heard - quash and remit for fresh assessment - fresh assessment after affording opportunity of hearing - hearing by video conferencing

Right to be heard - Exts.P12 and P13 assessments issued without affording the petitioner an opportunity of being heard were vitiated and required setting aside. - HELD THAT: - The Court found on the face of Exts.P12 and P13 that the petitioner had not been heard and that fact was recorded in the orders. The respondents conceded issuance of the orders without hearing. The absence of an opportunity to be heard in relation to an assessment of the kind made in Exts.P12 and P13 rendered those orders unsustainable in the sense that the petitioner must be afforded a hearing before such assessments are allowed to operate. The Court did not decide adversely on the merits of the assessment; instead, it set the orders aside to permit fresh consideration after hearing the petitioner. [Paras 5]

Exts.P12 and P13 set aside to enable the petitioner to be heard before any assessment of like character is allowed to operate.

Quash and remit for fresh assessment - fresh assessment after affording opportunity of hearing - hearing by video conferencing - The matter was remitted to the 2nd respondent for reconsideration and a fresh assessment after giving the petitioner an opportunity of hearing, with directions on manner and timeline. - HELD THAT: - Having set aside the impugned orders for want of hearing, the Court directed that the 2nd respondent reconsider the matter and issue a fresh assessment after affording an opportunity of hearing to the authorised person of the petitioner. The hearing may be conducted physically or through video conferencing. The Court imposed a timeline for expeditious action, directing that the fresh assessment be completed as expeditiously as possible and in any event within two months from receipt of a copy of the judgment. To facilitate compliance, the petitioner was directed to appear in the 2nd respondent's office at a specified date and time for fixation of hearing or for being heard. [Paras 5]

The 2nd respondent to reconsider and issue a fresh assessment after affording the petitioner an opportunity of hearing (physically or via video conferencing) within two months; petitioner to mark appearance as directed to facilitate hearing.

Final Conclusion: The impugned assessment orders were quashed for want of hearing and the matter remitted for fresh assessment after affording the petitioner an opportunity of being heard (including by video conferencing), to be completed expeditiously and in any event within two months of receipt of this judgment.

Sufficient cause for belated submission of Form C - duty of the assessing authority to record satisfaction under the proviso to Rule 12(7) - non-automatic reception of delayed C forms - application of the proviso to Rule 12(7) of the Central Sales Tax (Registration and Turnover) Rules, 1957

Sufficient cause for belated submission of Form C - duty of the assessing authority to record satisfaction - non-automatic reception of delayed C forms - The proviso to Rule 12(7) requires the assessee to show sufficient cause for delayed filing of Form C and the assessing authority must record satisfaction before accepting such late forms; reception is not automatic. - HELD THAT: - The Court construed Rule 12(7) as mandating that declarations in Form C be furnished within three months after the end of the relevant period, and that the proviso empowers the prescribed authority to allow a longer time only if it is satisfied that the person was prevented by sufficient cause from furnishing the declaration within the prescribed time. The obligation to demonstrate sufficient cause rests upon the assessee and the authority must consider the material on record and record satisfaction before admitting delayed forms. Reliance was placed on the composite High Court's reasoning in Godrej Agrovet Limited v. Commercial Tax Officer, which recognises that while there is no absolute limitation on receiving delayed forms, their reception is contingent upon the authority being satisfied about sufficient cause and that acceptance is not automatic. The Court held that the assessing authority must apply this legal test to the facts before it rather than mechanically admitting or rejecting delayed submissions. [Paras 7]

Assessee must demonstrate sufficient cause for belated filing of Form C; the authority is required to consider the materials and record satisfaction before admitting delayed C forms.

Consideration of belated representations under Rule 12(7) - direction to reconsider representations after affording hearing - The first respondent must consider the petitioner's representations dated 23.07.2016 and 20.08.2020 under Rule 12(7) and pass appropriate orders after affording an opportunity of hearing. - HELD THAT: - The Court found no response to the petitioner's application dated 23.07.2016 and observed that, having regard to the statutory scheme and the requirement that the authority record satisfaction on sufficient cause, the representations require fresh consideration. Accordingly, rather than deciding the sufficiency of cause itself, the Court directed the assessing authority to examine the representations and take action strictly in accordance with law and the observations made in the judgment, affording the assessee a hearing and arriving at a reasoned conclusion. [Paras 8]

Writ petition disposed with a direction to the first respondent to consider the representations dated 23.07.2016 and 20.08.2020 under Rule 12(7), after hearing the assessee, and pass appropriate orders preferably within one month; no costs.

Final Conclusion: The Court construed Rule 12(7) as requiring demonstration of sufficient cause for late filing of Form C and directed the assessing authority to consider the petitioner's belated representations dated 23.07.2016 and 20.08.2020 afresh, after hearing, and to pass reasoned orders in accordance with law within the time stipulated; writ petition disposed of with no order as to costs.

Date of refusal of legal notice - service by refusal - premature complaint under Section 138 of the Negotiable Instruments Act - clause (c) of the proviso to Section 138 - cause of action for offence under Section 138

Date of refusal of legal notice - service by refusal - Finding of the lower appellate court that the date of refusal of the demand notice was 02.04.2007 as opposed to 10.04.2007 - HELD THAT: - The appellate court relied on entries showing multiple visits by the postal peon and inferred that refusal occurred on an earlier visit (02.04.2007). There is no oral or documentary evidence to show what transpired on the earlier visits, and the postal peon was not examined. The postal envelope bears an endorsement of refusal dated 10.04.2007. In the absence of evidence to the contrary, the specific endorsement dated 10.04.2007 must be treated as the date of refusal/ service. The appellate court's presumption that refusal occurred on 02.04.2007 is unsupported by evidence and is therefore perverse; the trial court's finding that the date of refusal is 10.04.2007 is sustained and the appellate finding is set aside. [Paras 18, 19]

The appellate court's finding that the date of refusal was 02.04.2007 is set aside; the date of refusal/ service is 10.04.2007.

Premature complaint under Section 138 of the Negotiable Instruments Act - clause (c) of the proviso to Section 138 - cause of action for offence under Section 138 - Maintainability of the complaint filed on 17.04.2007 when the refusal/ service endorsement is dated 10.04.2007 (i.e., whether the complaint was premature under clause (c) of the proviso to Section 138) - HELD THAT: - The Supreme Court in Yogendra Pratap Singh has held that all three eventualities in the proviso to Section 138 must be satisfied and a complaint filed before the expiry of 15 days from service of the demand notice is not a complaint in law; consequently a court cannot take cognizance of such a complaint. Here, taking the date of refusal/service as 10.04.2007, the statutory 15 day period had not expired when the complaint was filed on 17.04.2007. There is no provision to curtail the statutory 15 day period in cases of refusal to receive the demand notice. The trial court's reliance on subsequent issuance of summons after 15 days cannot validate a complaint that was filed before the period prescribed by clause (c) had expired. Applying the law laid down by the Supreme Court, the complaint filed on 17.04.2007 did not disclose the requisite cause of action and was therefore legally not maintainable. [Paras 23, 24, 25, 27, 28]

The complaint filed on 17.04.2007 was premature and not legally maintainable; the convictions and sentences recorded by the courts below are set aside and the petitioner is acquitted and discharged from his bail bond.

Final Conclusion: The appellate court's finding on the date of refusal is set aside and the date of refusal/service is held to be 10.04.2007. Applying the law in Yogendra Pratap Singh, a complaint filed on 17.04.2007 (i.e. before the expiry of 15 days from 10.04.2007) was premature and not maintainable; both impugned judgments are set aside, the petitioner is acquitted and discharged, and the complainant is at liberty to pursue remedy in accordance with law.