TaxTMI Updates e-Newsletter
Jan 31,2023

Applicability of notification - Interpretation of "pre-packaged and labelled" under the Legal Metrology Act - Taxability of jaggery under Notification No.6/2022 - Rate of tax on notified goods

Applicability of notification - Interpretation of "pre-packaged and labelled" under the Legal Metrology Act - All types of jaggery covered by Notification No.6/2022 only if they are pre-packaged and labelled. - HELD THAT: - The Authority examined the language of Notification No.6/2022 which inserts S. No. 91A describing "Jaggery of all types including Cane Jaggery (gur), Palmyra Jaggery, pre-packaged and labelled; Khandsari Sugar, pre-packaged and labelled" into the Rate Schedule and the substituted Explanation defining "pre-packaged and labelled" by reference to the definition of "pre-packaged commodity" in Section 2(1) of the Legal Metrology Act, 2009. The entry thus applies to jaggery only where it is "pre-packaged and labelled" as so defined; loose, wrapped or stitched consignments not meeting the Legal Metrology definition are not brought within the scope of the inserted entry. The Authority therefore read the Schedule entry together with the substituted Explanation and held that the taxability under S. No. 91A is confined to pre-packaged and labelled jaggery. [Paras 12, 13]

Only pre-packaged and labelled jaggery is covered by S. No. 91A of Notification No.6/2022.

Taxability of jaggery under Notification No.6/2022 - Rate of tax on notified goods - The rate of tax applicable to jaggery covered by the notification. - HELD THAT: - Having held that the notification applies to jaggery which is pre-packaged and labelled, the Authority stated that such jaggery is exigible to GST at the composite rate specified in the Schedule. The Schedule entry was inserted in Schedule I 2.5% which, when read with the corresponding State levy, results in CGST at 2.5% and SGST at 2.5%, i.e., an aggregate GST of 5% on the notified category. [Paras 12, 13]

Pre-packaged and labelled jaggery is taxable at an aggregate GST rate of 5% (CGST 2.5% and SGST 2.5%).

Applicability of notification - Interpretation of "pre-packaged and labelled" under the Legal Metrology Act - Types of jaggery that do not fall under Notification No.6/2022 and remain outside the inserted entry. - HELD THAT: - The Authority, by construing the Schedule entry together with the Explanation, concluded that jaggery which is not "pre-packaged and labelled" within the meaning of the Legal Metrology Act is not covered by S. No. 91A. The applicant's description of jaggery sold in loose gunny sheets, wrapped for transport and weighed after sale at APMC yards indicates such produce does not meet the statutory definition of a pre-packaged commodity and therefore remains outside the scope of the amended entry. [Paras 11, 12, 13]

Loose, non pre-packaged and unlabelled jaggery (such as consignments wrapped in gunny or plastic for transport and sold/weighed at APMC yards) is not covered by the notification and is not brought within S. No. 91A.

Final Conclusion: The Authority ruled that Notification No.6/2022 makes taxable only jaggery that is "pre-packaged and labelled" as defined under the Legal Metrology Act; such jaggery is liable to GST at 5% (CGST 2.5% + SGST 2.5%), whereas loose or non pre-packaged/unlabelled jaggery sold as described by the applicant does not fall within the inserted entry and is not covered by S. No. 91A.

Bail condition of pre-deposit - imposition of financial condition pending assessment - presumption of legal liability without final assessment - challenge to condition requiring deposit of disputed tax - availability of Input Tax Credit and FIR based on alleged wrongful availing

Bail condition of pre-deposit - presumption of legal liability without final assessment - challenge to condition requiring deposit of disputed tax - Validity of the High Court's bail condition directing the appellant to deposit Rs.70 Lakhs as a pre-requisite for bail in respect of disputed Input Tax Credit where no final assessment has been made - HELD THAT: - The Supreme Court examined whether a condition requiring the appellant to deposit a substantial sum in favour of the tax authority as a prerequisite to grant of bail could be sustained where the underlying controversy relates to alleged wrongful availing of Input Tax Credit and there has been no final assessment under the GST law. The Court observed that, in the absence of a concluded assessment or an established legal liability to pay the disputed amount, it was not permissible to presume such liability and make deposit of the disputed tax an essential condition for bail. The Union's counsel conceded that such a condition cannot be imposed. Applying these principles to the facts before it, the Court concluded that the specific mandate to deposit Rs.70 Lakhs within 45 days could not be sustained, while leaving intact the other conditions of bail imposed by the High Court.

The condition directing deposit of Rs.70 Lakhs as a pre-requisite for bail is set aside; other bail conditions are sustained.

Final Conclusion: The appeal is allowed to the extent of striking down the High Court's condition that the appellant deposit Rs.70 Lakhs as a pre-requisite for bail; all other conditions in the impugned order remain in force.

Classification of goods - customs tariff classification - writ jurisdiction under Article 226 - jurisdictional limits of writ court - requirement of scientific and technical expertise - appellate remedy and forum competence - principles of natural justice

Classification of goods - customs tariff classification - requirement of scientific and technical expertise - writ jurisdiction under Article 226 - Whether the High Court in writ jurisdiction may independently determine the Customs Tariff classification of the petitioner's product. - HELD THAT: - The Court held that determination of the tariff heading for the product involves scientific and technical analysis of composition and manufacturing process which is beyond the appropriate function of a writ court exercising jurisdiction under Article 226. The High Court should not act as an expert or sit in the place of the adjudicating authority by reappreciating evidence or substituting its own technical findings on classification. Such questions are for the specialised authority or appellate fora equipped to examine technical evidence and make classification determinations.

Writ Court will not adjudicate the tariff classification; petition cannot be sustained on merits in this Court.

Principles of natural justice - jurisdictional limits of writ court - Whether the impugned order suffers from violation of principles of natural justice or any procedural irregularity warranting interference by the High Court. - HELD THAT: - On the material before it, the Court found no occasion to conclude that the Appellate Authority committed any breach of principles of natural justice or violated any specific statutory procedure in passing the impugned order. Absent such jurisdictional or procedural illegality, interference under Article 226 is not justified merely because the petitioner disputes the classification adopted by the authority.

No violation of natural justice or procedural irregularity was found; no relief on this ground.

Appellate remedy and forum competence - writ jurisdiction under Article 226 - Whether the petitioner should be permitted to pursue its classification grievance before the appropriate appellate forum or Tribunal. - HELD THAT: - Although the writ petition was dismissed for the reasons stated, the Court recognised the petitioner's right of remedy before competent appellate fora. The Court therefore granted liberty to the petitioner to raise the classification issue before the appropriate appellate authority or Tribunal when such forum is available, preserving the petitioner's right to seek adjudication by the specialised appellate mechanism.

Liberty granted to the petitioner to pursue the issue before the appropriate appellate forum or Tribunal in future; writ petition dismissed.

Final Conclusion: Writ petition dismissed: the High Court will not undertake technical classification of the product under the Customs Tariff in exercise of Article 226 and found no breach of natural justice or procedural irregularity; petitioner granted liberty to raise the classification issue before the appropriate appellate forum or Tribunal.

Search and seizure - quashing of panchnama - maintainability of writ petition during adjudication - jurisdiction of adjudicating authority to decide release of seized goods - efficacious remedy - direction to competent authority to consider representation expeditiously

Amendment of petition - Application for amendment (I.A. No.7745/2022) allowed and necessary amendment to be incorporated. - HELD THAT: - The Court, after hearing the parties and having regard to the reasons set out in the application, permitted the petitioner to amend the petition. The order records allowance of I.A. No.7745/2022 and directs incorporation of the necessary amendment as prayed in the application.

I.A. No.7745/2022 allowed and amendment to be incorporated.

Search and seizure - quashing of panchnama - maintainability of writ petition during adjudication - efficacious remedy - Writ petition challenging search, seizure and panchnama dismissed as premature because adjudication proceedings are pending and a show cause notice has been issued. - HELD THAT: - The Court noted that the investigation had been completed and a show cause notice dated 04.12.2020 had been issued to the petitioner and others, placing validity of the panchnama and related actions directly before the adjudicating authority. In these circumstances the Court held that the petitioner has an efficacious alternative remedy of contesting the show cause notice before the adjudicating authority and that invocation of extraordinary writ jurisdiction was not appropriate at this stage. Accordingly, the Court declined to entertain the challenge to the search, seizure and panchnama in the writ petition and dismissed the petition on that ground. [Paras 4, 5]

Challenge to search, seizure and panchnama dismissed as premature; petitioner to pursue remedy before the adjudicating authority.

Jurisdiction of adjudicating authority to decide release of seized goods - direction to competent authority to consider representation expeditiously - Petitioner's requests for release of trucks and testing of seized goods left to the adjudicating authority to decide; Court directed that any application by the petitioner be considered expeditiously by the competent authority. - HELD THAT: - The Court observed that matters concerning release of seized goods or vehicles fall within the jurisdiction of the adjudicating authority which has taken over the adjudication (transferred to GST authority at Bhopal). Since the show cause notice is pending, the Court declined to grant the reliefs sought in the writ and instead mandated that if the petitioner files an application before the competent adjudicating authority seeking release of trucks or testing of seized goods, that authority shall consider the application in accordance with law and expeditiously. The Court therefore refrained from deciding these reliefs on merits and left them for determination by the adjudicating authority. [Paras 2, 4, 5]

Requests for release of trucks and testing of seized goods to be considered and decided by the adjudicating authority; if an application is filed it shall be considered expeditiously.

Final Conclusion: I.A. No.7745/2022 allowed and amended petition permitted; writ petition challenging search, seizure and panchnama dismissed as premature in view of pending adjudication and show cause notice dated 04.12.2020; petitioner is permitted to apply to the adjudicating authority for release or testing of seized goods, and the competent authority is directed to consider such application expeditiously in accordance with law.

Apportionment of input tax credit for mixed supplies - Eligibility of input tax credit under sections 16 and 17 read with Rule 42 - Scope of advance ruling jurisdiction under section 97(2)

Apportionment of input tax credit for mixed supplies - Eligibility of input tax credit under sections 16 and 17 read with Rule 42 - Extent and manner in which input tax credit is to be claimed by an applicant making both taxable and exempt supplies (for services received and general goods purchased). - HELD THAT: - The applicant supplies both taxable and exempted goods and therefore is not fully entitled to input tax credit on inward supplies. The Authority applied the statutory scheme governing availability and apportionment of credit and held that input tax credit must be availed proportionately in accordance with the entitlement and apportionment procedure prescribed under the law. The Authority specifically directed that input tax credit be availed in terms of the eligibility and restrictions under sections 16 and 17 read with the apportionment and reversal mechanism provided by Rule 42 of the Rules, which set out the method for pro rata common credit apportionment between taxable and exempt supplies. No specific percentage was prescribed by the Authority; the applicant must follow the statutory procedure to compute the proportionate credit. [Paras 9]

Input tax credit to be availed proportionately in terms of sections 16 and 17 read with Rule 42.

Scope of advance ruling jurisdiction under section 97(2) - Admissibility of a question on GST consequences of purchasing from unregistered and composition dealers before the Advance Ruling Authority. - HELD THAT: - The question raised by the applicant regarding GST consequences of purchases from unregistered and composition dealers was examined for its fit within the matters on which an advance ruling can be sought. The Authority concluded that this question does not fall within the list of issues covered under section 97(2) for which advance rulings may be rendered. Consequently, the Authority declined to give a ruling on that question. [Paras 10]

The Authority refrains from giving a ruling on purchases from unregistered and composition dealers as the question is not covered under section 97(2).

Final Conclusion: The Authority ruled that the applicant must avail input tax credit proportionately in accordance with the eligibility and apportionment provisions (sections 16 and 17 read with Rule 42) and declined to rule on the question concerning purchases from unregistered and composition dealers as outside the advance ruling jurisdiction under section 97(2).

Works contract services - composite supply of works contract involving predominantly earth work - supply of ballast to railways - exigibility of GST rates under Notification No. 11/2017 Central Tax (Rate) - admissibility under Section 97(2)(e) of the CGST Act, 2017

Works contract services - exigibility of GST rates under Notification No. 11/2017 Central Tax (Rate) - Rate of GST applicable to construction of rail under bridge and construction of tunnels executed to Indian Railways by the applicant either as main contractor or as sub-contractor. - HELD THAT: - The Authority examined Notification No. 11/2017 Central Tax (Rate) as amended by Notification No. 3/2022-Central Tax (Rate) and held that, following the amendment, construction services such as rail under bridge works and tunnel construction fall within entry No. 3(xii) of the Notification. Accordingly these works contract services supplied to Indian Railways are exigible to GST at the rate specified for that entry. The ruling applies irrespective of whether the applicant supplies such services as the main contractor or as a sub-contractor to the main contractor. [Paras 9, 13]

Construction of rail under bridge and construction of tunnels executed to Indian Railways by the applicant (whether as main contractor or sub-contractor) are exigible to GST at the rate specified in entry No. 3(xii) of Notification No. 11/2017.

Composite supply of works contract involving predominantly earth work - exigibility of GST rates under Notification No. 11/2017 Central Tax (Rate) - Rate of GST applicable where the works contract involves predominantly earth work (constituting more than 75% of the contract value) executed to Indian Railways by the applicant either as main contractor or as sub-contractor. - HELD THAT: - The Authority referred to entry No. 3(vii) of Notification No. 11/2017 which covers composite works contracts involving predominantly earth work provided to Central Government departments, and to entry No. 3(x) which covers sub-contractors providing services to main contractors covered by item (vii). Where the works contract predominates in earth work (more than 75% of value) and is provided to Indian Railways (a Central Government department), the supply by the applicant as main contractor is covered by entry No. 3(vii) and, where supplied as a sub-contractor to such a main contractor, is covered by entry No. 3(x). The Authority applied these entries to determine the applicable GST rate for each situation. [Paras 10, 11, 13]

Works contract services involving predominantly earth work (more than 75% of contract value) executed to Indian Railways by the applicant are exigible to GST at the rates specified in entries No. 3(vii) (when supplied as main contractor) and No. 3(x) (when supplied as sub-contractor) of Notification No. 11/2017.

Supply of ballast to railways - exigibility of GST rates under Schedule I of Notification No. 1/2017-Central Tax (Rate) - GST rate applicable to supply and stacking of ballast supplied to Konkan Railway Corporation Limited by the applicant. - HELD THAT: - The Authority noted the applicant's contract for supplying and stacking of ballast and examined Schedule I of Notification No. 1/2017-Central Tax (Rate). It concluded that pebble, gravel and crushed stone commonly used for railway ballast fall under the relevant tariff item and are covered by the Schedule entry cited, making the supply of ballast to railways exigible to the rate applicable under that Schedule entry. [Paras 12, 13]

Supply of ballast to railways by the applicant is exigible to GST under the Schedule entry cited in Notification No. 1/2017.

Final Conclusion: The Authority admits the application under Section 97(2)(e) and rules that (i) construction of rail under bridge and tunnel works supplied to Indian Railways by the applicant (whether as main contractor or sub-contractor) fall under entry No. 3(xii) of Notification No. 11/2017, (ii) works contracts predominantly involving earth work provided to Indian Railways fall under entries No. 3(vii) (main contractor) and No. 3(x) (sub-contractor) of Notification No. 11/2017, and (iii) supply of ballast to railways by the applicant is covered by the cited Schedule entry of Notification No. 1/2017.

Exemption of catering services to educational institutions - Definition of "educational institution" for exemption purposes - Recipient of service and person liable to pay consideration - Entry No.66 of Notification No. 12/2017-Central Tax (Rate) - Appropriation of fee and rejection of duplicate advance ruling application

Exemption of catering services to educational institutions - Entry No.66 of Notification No. 12/2017-Central Tax (Rate) - Definition of "educational institution" for exemption purposes - Recipient of service and person liable to pay consideration - Providing catering services to an educational institution from 1st standard to 2nd PUC is exempt from GST under entry No.66 of Notification No. 12/2017-Central Tax (Rate) as amended. - HELD THAT: - The applicant supplies ready-to-eat breakfast and lunch to a Pre-University College and bills the college, which pays the consideration; therefore the college is the recipient of the service within the meaning of the CGST Act. Entry No.66 of Notification No.12/2017-Central Tax (Rate) exempts services by way of catering to an educational institution providing pre-school education and education up to higher secondary school or equivalent. The definition of "educational institution" in the Notification includes institutions providing education up to higher secondary school. Since the recipient is such an educational institution and the supply is by way of catering, the service falls within the scope of the exemption under entry No.66 and is not liable to GST. [Paras 9, 10]

Catering services supplied to an educational institution providing education from 1st standard to 2nd PUC are exempt from GST under entry No.66 of Notification No.12/2017-Central Tax (Rate) as amended.

Appropriation of fee and rejection of duplicate advance ruling application - Admissibility of advance ruling on determination of liability to pay tax - The duplicate online application was rejected and the fee paid under a second ARN was appropriated to the primary application. - HELD THAT: - The applicant had inadvertently filed two advance ruling applications and paid the requisite fees under different ARN numbers. As the ruling sought related to a single issue, the Authority appropriated the fee paid under the second ARN towards the fee for the primary ARN and rejected the duplicate application. The application was otherwise admissible because it concerned determination of liability to pay tax on services. [Paras 8]

Payment under the second ARN is appropriated to the primary ARN and the duplicate application is rejected; the advance ruling application on the tax liability question is admitted.

Final Conclusion: The Authority ruled that catering services provided to an educational institution offering education from 1st standard to 2nd PUC are exempt from GST under Entry No.66 of Notification No.12/2017-Central Tax (Rate) as amended; administratively, a duplicate advance ruling application was rejected and the fee paid under the second ARN appropriated to the main application.

Exemption for pure services to State Government under Notification No.12/2017-Central Tax (Rate) in relation to functions entrusted to Panchayats/Municipalities - works contract service not exempt under GST notification - manpower supply services liable to GST as taxable pure services - tissue culture activity not covered within 'agriculture' in the Eleventh Schedule for purposes of the notification - supply of materials (fertilisers, soil, sand) not exempt under Notification No.2/2017-Central Tax (Rate)

Works contract service not exempt under GST notification - Whether works contract services provided to Bio Centres, Department of Horticulture and Centre of Excellence are exempt from GST. - HELD THAT: - The Authority noted there is no specific exemption for works contract services in Notification No.12/2017-Central Tax (Rate) dated 28.06.2017. As the notification does not provide an exemption in respect of works contract services supplied to the Horticulture Department/Bio Centres, such services cannot be treated as exempt under the said notification. [Paras 10, 13]

Works contract services supplied to the Bio Centres/Department of Horticulture/Centre of Excellence are not exempt from GST.

Exemption for pure services to State Government under Notification No.12/2017-Central Tax (Rate) in relation to functions entrusted to Panchayats/Municipalities - manpower supply services liable to GST as taxable pure services - tissue culture activity not covered within 'agriculture' in the Eleventh Schedule for purposes of the notification - Whether supply of manpower for tissue culture production and research-related activities to the Horticulture Department attracts exemption or is taxable. - HELD THAT: - Entry 3 of Notification No.12/2017 provides exemption only for pure services (excluding works contract or composite supplies involving goods) provided to government by way of any activity in relation to functions entrusted to Panchayats under Article 243G or Municipalities under Article 243W. The Authority found the applicant satisfied the first requirement of supplying services to the State Government but held that the activities of tissue culture and the research/planting processes do not fall within the matters listed in the Eleventh or Twelfth Schedule so as to qualify as functions entrusted to Panchayats/Municipalities. Reliance was placed on the nature of 'tissue culture' (a laboratory technique) and the absence of direct nexus to the items in the Eleventh Schedule. Consequently, such manpower services cannot claim exemption under the notification and are exigible to tax at the applicable rate. [Paras 11, 13]

Supply of manpower for tissue culture production and for handling research/planting processes to the Horticulture Department is not exempt and is taxable under GST (18%).

Supply of materials (fertilisers, soil, sand) not exempt under Notification No.2/2017-Central Tax (Rate) - Whether materials like fertilisers, soil and sand supplied for use of Bio Centres are exempt from GST. - HELD THAT: - The Authority observed there is no specific exemption for supply of materials such as fertilisers, soil and sand for use of bio centres in Notification No.2/2017-Central Tax (Rate) dated 28.06.2017. In the absence of any exemption provision, the supply of such materials cannot be treated as exempt under the cited notification. [Paras 12, 13]

Supply of materials like fertilisers, soil and sand for use of Bio Centres is not exempt under GST.

Final Conclusion: The Authority ruled that: (i) works contract services to the Bio Centres/Department of Horticulture/Centre of Excellence are not exempt from GST; (ii) supply of manpower for tissue culture and related research/planting activities to the Horticulture Department does not fall within the notificational exemption tied to Panchayat/Municipality functions and is taxable (18%); and (iii) supply of materials such as fertilisers, soil and sand for use of the Bio Centres is not exempt under the relevant notification.

Transfer of jurisdiction - jurisdiction of Assessing Officer - objection to jurisdiction under Section 124 - opportunity of hearing before transfer - principal place of business rule

Transfer of jurisdiction - objection to jurisdiction under Section 124 - opportunity of hearing before transfer - jurisdiction of Assessing Officer - Validity of transfer of the petitioner's income tax jurisdiction to Balasore Circle and the consequent issuance of notices without complying with the statutory scheme under Section 124. - HELD THAT: - The Court held that the mere fact that the petitioner was a director or partner in entities assessed in Balasore did not automatically effect transfer of the petitioner's own jurisdiction from Kolkata to Balasore. The statutory scheme grants an assessee a valuable right to have assessment at his principal place of business and to challenge jurisdiction; therefore transfer or determination of jurisdiction must comply with the procedure in Section 124 (including the entitlement to have objections determined by the appropriate authority and the requirement of affording opportunity). Reliance was placed on the principle, as explained in Devidas v. Union of India, that an assessee must be given an opportunity of hearing and reasons before an adverse adjudication on jurisdiction. The Department failed to show compliance with those mandatory requirements and did not give a convincing explanation for shifting the petitioner's jurisdiction when he had been filing returns at Kolkata. For these reasons the notices issued by the ACIT, Balasore were quashed, subject to the clarification that the department remains free to proceed lawfully if it proposes a lawful transfer of jurisdiction thereafter.

Impugned notices issued by ACIT, Balasore for AY 2013-14 quashed for want of compliance with the statutory scheme governing transfer/determination of jurisdiction; petitioner to remain within Kolkata circle unless jurisdiction is validly transferred in accordance with law.

Final Conclusion: Writ petitions allowed: notices issued by the ACIT, Balasore for AY 2013-14 quashed for failure to comply with the statutory procedure for transfer/determination of jurisdiction under Section 124; petitioner to remain within Kolkata circle subject to any lawful future transfer by the Department.

Capital account transaction versus income arising in India - initiation of reassessment and jurisdiction under Sections 148 and 148A(d) - deeming escapement of income on non-filing of return (Explanation 2 to Section 147) - applicability of special tax regime for non-resident companies (Section 115A) - requirement of a speaking order and opportunity of personal hearing in reassessment

Capital account transaction versus income arising in India - initiation of reassessment and jurisdiction under Sections 148 and 148A(d) - Impugned order under Section 148A(d) and notice under Section 148 set aside and matter remanded for fresh consideration whether the investment in shares constituted a capital account transaction and whether any income chargeable to tax arose in India. - HELD THAT: - The Court found that the Assessing Officer's order under Section 148A(d) adopted a broad brush approach and did not address the central question whether the petitioner's purchase of shares in Agile was a capital account transaction such that no income accrues or arises in India. The order also failed to engage with material contentions raised in the petitioner's objections. Given this absence of focused adjudication on the determinative legal question, the impugned order and the consequent notice were set aside and the matter remitted to the AO for de novo adjudication. The AO is directed to consider the petitioner's contention on the characterisation of the transaction, afford a personal hearing to the petitioner's authorised representative and pass a reasoned (speaking) order furnished to the petitioner. The petitioner is given liberty to pursue appropriate remedies if the fresh order is adverse. [Paras 4, 12, 14]

Impugned order dated 28.07.2022 under Section 148A(d) and the notice under Section 148 are set aside; AO to examine afresh the characterisation of the transaction, grant personal hearing and pass a speaking order.

Deeming escapement of income on non-filing of return (Explanation 2 to Section 147) - applicability of special tax regime for non-resident companies (Section 115A) - Whether the AO should consider, in the fresh adjudication, the contentions relating to non filing of return and the applicability of the non resident tax provisions. - HELD THAT: - The Court recorded the Revenue's contention that non filing of return invokes the deeming provision in Explanation 2 to Section 147; however, it noted that the requirement to file a return (Section 139) must be read with the special taxation treatment for non resident companies (Section 115A). The impugned order contains no reference to Section 115A and the Court observed that whether Section 115A applies to the petitioner is a question the AO must determine in the de novo exercise. Accordingly, these statutory contentions were left open for consideration in the remand rather than being decided by the Court. [Paras 10, 13, 14]

Contentions regarding deemed escapement from non filing and applicability of Section 115A are to be considered afresh by the AO in the de novo proceedings; the Court did not adjudicate these statutory questions on merits.

Final Conclusion: Writ petition allowed by setting aside the order dated 28.07.2022 passed under Section 148A(d) and the notice under Section 148; matter remitted to the Assessing Officer for de novo consideration of whether the share purchase was a capital account transaction and of attendant statutory contentions (including non filing/deeming and applicability of non resident provisions), with directions to grant personal hearing and to pass and furnish a speaking order; liberty to the petitioner to pursue remedies against any adverse order.

Charitable purpose - exemption under section 11 - proviso to section 2(15) - trade, commerce or business - consistency of treatment in successive assessment years - precedential effect of appellate orders

Charitable purpose - exemption under section 11 - proviso to section 2(15) - trade, commerce or business - consistency of treatment in successive assessment years - precedential effect of appellate orders - Whether the assessee's activities are charitable in nature and therefore eligible for exemption under section 11, notwithstanding receipt of fees from members and non-members and the invocation of the proviso to section 2(15) on the ground of trade, commerce or business. - HELD THAT: - The Tribunal examined the history of adjudication in the assessee's case, noting denials of exemption in earlier assessments were subsequently reversed by the CIT(A), this Tribunal and ultimately the Hon'ble Delhi High Court, which treated the assessee as a charitable institution. The CIT(A) followed the principle of consistency in treatment and the binding effect of earlier appellate decisions in the assessee's own case from Assessment Years 2006-07 through 2014-15. The Tribunal found that the CIT(A)'s reliance on these prior appellate orders and on consistency did not suffer from legal infirmity. In that factual and legal matrix the Tribunal concluded that the proviso to section 2(15) invoked by the assessing officer could not be sustained for the year under consideration and that the assessee was entitled to exemption under section 11. The Tribunal therefore declined to interfere with the CIT(A)'s order allowing exemption. [Paras 8, 9]

The CIT(A)'s order allowing exemption under section 11 for Assessment Year 2016-17 is affirmed and the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s grant of exemption under section 11 for Assessment Year 2016-17, relying on consistent earlier appellate treatment of the assessee as a charitable institution and concluding no error in the CIT(A)'s decision.

Place of accrual of income - fee for technical services (FTS) - deeming fiction under section 9(1)(vii) read with section 9(2) Explanation - India USA DTAA Article 12(4)(b) - "make available" technical knowledge test - judicial consistency

Place of accrual of income - fee for technical services (FTS) - India USA DTAA Article 12(4)(b) - "make available" technical knowledge test - Whether amounts received by the assessee for services rendered from facilities in the USA are taxable in India as FTS or deemed to accrue/arise in India. - HELD THAT: - The Tribunal affirmed the CIT(A) and followed its earlier decision in the preceding assessment year where identical facts and legal contentions were considered. The tribunal applied the principle that income accrues or arises where the income generating activity is performed, noting that the assessee rendered services from its facilities in the USA, used infrastructure located in the USA and stored/processed the data in the USA. Even if the deeming fiction under section 9(1)(vii) read with the Explanation to section 9(2) could be invoked, the India USA DTAA Article 12(4)(b) conditions operate to exclude taxation in India unless the services "make available" technical knowledge, experience, skill, know how or processes enabling the recipient to apply them independently. The Tribunal found no material to satisfy the "make available" test; the services (colocation, managed private cloud, mainframe, disaster/data recovery) provided facilities and operational support rather than transfer of technology or know how. In view of these findings and in the interest of judicial consistency with the tribunal's earlier decision for A.Y. 2017 18, the CIT(A)'s orders holding the receipts as not taxable in India were affirmed. [Paras 4, 5, 6]

Receipts for services rendered from the USA do not accrue or arise in India and are not taxable in India as FTS under the facts; the CIT(A)'s orders are affirmed and the Revenue's appeals are dismissed.

Final Conclusion: The Tribunal, applying the place of accrual principle and the India USA DTAA "make available" test, affirmed the CIT(A) and dismissed the Revenue's appeals for A.Y. 2018-19 and 2019-20; the receipts in issue were held not taxable in India.

Addition under section 68 (income from undisclosed sources) - identity, genuineness and creditworthiness of creditors - onus on the assessee to prove transactions under section 68 - remand report and enquiries under section 133(6)

Addition under section 68 (income from undisclosed sources) - identity, genuineness and creditworthiness of creditors - remand report and enquiries under section 133(6) - Validity of the addition of Rs. 5,00,00,000 treated as unexplained income under section 68 in respect of advances shown to have been received from two companies. - HELD THAT: - The Tribunal upheld the finding that the assessee had discharged the initial onus under section 68 by furnishing loan confirmations, bank statements and copies of income-tax returns of the two creditor companies during assessment and appellate proceedings. The Assessing Officer, although recording deficiency initially, conducted enquiries on remand and issued notices under section 133(6) to the two parties, who responded with confirmations, audited accounts and ITRs for AY 2013-14, and no adverse findings were recorded against them. In view of the documentary confirmations and the absence of adverse comments in the AO's remand report, the Commissioner (Appeals) correctly deleted the addition; there was no infirmity in accepting the genuineness, identity and creditworthiness of the creditors and in treating the advances as not liable to be taxed as unexplained income under section 68. [Paras 11, 12]

Deletion of the addition made under section 68 is sustained; the addition of Rs. 5,00,00,000 is deleted and the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal for AY 2013-14, upholding the CIT(A)'s deletion of the addition under section 68 after findings that the assessee proved identity, genuineness and creditworthiness of the creditors and that the AO's remand enquiries produced no adverse material.

Unexplained cash credit u/s 68 - Onus on assessee to prove identity, creditworthiness and genuineness - Summons under section 131 vis-a -vis notice under section 133(6) - Evaluation of evidence and cross verification - Duty of appellate authority to consider material facts

Unexplained cash credit u/s 68 - Onus on assessee to prove identity, creditworthiness and genuineness - Summons under section 131 vis-a -vis notice under section 133(6) - Evaluation of evidence and cross verification - Deletion of addition made by AO treating share capital and share premium as unexplained cash credit under section 68 - HELD THAT: - The Tribunal upheld the order of the Ld. CIT(A) deleting the addition made by the AO under section 68 in respect of share capital and share premium raised by the assessee. The assessee furnished before the AO names, addresses, PANs, share application forms, allotment advices, bank statements, Form 2 (Return of Allotment), Form 5 (increase in authorised capital), copies of assessments and other material proving receipt of share application money and source of funds. The AO issued notices under section 133(6) to the subscribers and received responses containing ledger entries, bank statements, explanations for source of funds, ITRs and audited financial statements; yet the AO made the addition only because the managing directors of subscriber companies were not produced pursuant to summons under section 131 issued to the assessee's directors. The Tribunal found that the AO did not point out any defect in the documentary evidence filed by the assessee or the subscribers and that cross verification had been carried out through the section 133(6) responses. Relying on the principle that the assessee bears the onus to prove identity, creditworthiness and genuineness and that such onus was discharged by documentary evidence and independent verification, the Tribunal held non production of directors pursuant to summons under section 131, without any contrary finding on the records produced, was insufficient to sustain an addition under section 68. The Tribunal further relied on precedents emphasising that appellate authorities must consider and record findings on material evidence; having regard to the comprehensive factual findings of the Ld. CIT(A) and absence of pointed deficiencies in the evidence, the addition was rightly deleted. [Paras 4, 5]

Appeal dismissed and deletion of addition under section 68 upheld.

Final Conclusion: The Tribunal dismissed the revenue's appeal and upheld the Ld. CIT(A)'s deletion of the addition under section 68 for AY 2012-13, finding that the assessee had discharged the onus of proving identity, creditworthiness and genuineness of the share capital and premium by documentary evidence and by responses to section 133(6) notices, and that non production under summons alone did not justify the addition.

Estimation of business profits by Assessing Officer - Assessee's acceptance of estimation - Requirement to point out specific defects in books or details - Use of preceding years' profit trend in fixing estimated income - Judicial reduction of estimated profit rate on appeal

Estimation of business profits by Assessing Officer - Assessee's acceptance of estimation - Requirement to point out specific defects in books or details - Use of preceding years' profit trend in fixing estimated income - Judicial reduction of estimated profit rate on appeal - Whether the net profit of the assessee for A.Y. 2011-12 was correctly estimated at 5% of turnover by the Assessing Officer, and if not, what rate should be applied. - HELD THAT: - The Assessing Officer estimated net profit at 5% of turnover after the assessee was unable to produce books of account which were with the Department following survey proceedings and after relying on the assessee's letter which accepted the proposed 5% estimation. However, the AO did not point out any specific defect in the details actually filed by the assessee, which included sales, purchases, unsecured loans, bank account and sundry debtors/creditors. The audited balance-sheets for the preceding two years showed net profit rates of 1.16% and 1.11% respectively. The Assessing Officer made no reference to comparable cases or the assessee's past profit history when fixing the 5% rate. Having regard to the facts, the past trend appearing in audited statements, the absence of any specific defect in the particulars furnished and to bring finality to the litigation, the Tribunal exercised its appellate power to moderate the estimate and fixed the net profit rate at 2.5% for A.Y. 2011-12, thereby reducing the addition confirmed by the lower authorities. [Paras 8, 9, 10]

Net profit for A.Y. 2011-12 estimated at 2.5% of turnover instead of 5%; appeal partly allowed.

Final Conclusion: The Tribunal partly allowed the appeal for A.Y. 2011-12 by reducing the estimated net profit rate from 5% to 2.5% of turnover, applying the preceding years' profit trend and noting absence of any specific defect in the details filed by the assessee.

Effect of revised return - validity of revised return filed u/s 139(4) - obligation of assessing officer to consider a valid revised return - remand for de-novo assessment on account of non-consideration of revised return

Effect of revised return - validity of revised return filed u/s 139(4) - obligation of assessing officer to consider a valid revised return - remand for de-novo assessment on account of non-consideration of revised return - Whether the revised return filed by the assessee on 19.03.2015 effaces the original return and, if so, whether failure of the AO to consider the revised return vitiates the assessment framed on 27.03.2015 and requires remand for fresh assessment. - HELD THAT: - The Tribunal found as a fact that the assessee filed the original return and subsequently filed a revised return on 19.03.2015, admission of which is recorded in the appellate file. Applying the principle in CIT v. Mangalore Chemicals & Fertilizers Ltd. (59 Taxmann 508), the Tribunal held that once a valid revised return is filed it effaces and obliterates the earlier return for all purposes under the Act. Because the revised return filed on 19.03.2015 was valid under the law then in force, the AO was obliged to consider that revised return when framing the assessment. The AO, however, framed the assessment on 27.03.2015 without taking the revised return into account. That omission rendered the assessment vitiated. In consequence, the Tribunal set aside the appellate order and remanded the matter to the AO with a direction to frame de novo assessment after considering the revised return and after affording the assessee proper opportunity to file and produce relevant details and documents. [Paras 4, 5]

Revised return filed on 19.03.2015 effaces the original return; assessment dated 27.03.2015 quashed for non-consideration of the revised return and remitted for de-novo assessment taking the revised return into account.

Final Conclusion: Appeal allowed for statistical purposes; assessment set aside and remanded to the AO to frame de-novo assessment for AY. 2013-14 after considering the revised return filed on 19.03.2015 and after affording the assessee opportunity to produce relevant material.

Quashing for violation of principles of natural justice in proceedings under Section 148A - consideration of reply received before passing of a Section 148A(d) order - effect of typographical error in the assessee's name and PAN on validity of proceedings - remand for fresh consideration on merits and opportunity to file additional reply in notices issued under Section 148/148A

Consideration of reply received before passing of a Section 148A(d) order - quashing for violation of principles of natural justice in proceedings under Section 148A - effect of typographical error in the assessee's name and PAN on validity of proceedings - Validity of the impugned order under Section 148A(d) where the assessee's reply dated 24.03.2022 was received by the department on 30.03.2022 prior to the order passed at 6.30 p.m., and where the order contained a wrong name and PAN. - HELD THAT: - The Court found on the admitted material that the petitioner's reply dated 24.03.2022 was dispatched on 25.03.2022 and was received by the second respondent on 30.03.2022, before the impugned order was passed at 6.30 p.m. on that day. Despite receipt, the reply was not considered and the impugned order recorded that no reply had been received. Further, the impugned order and consequential notice incorrectly recorded another name and a different PAN; the respondents admitted the typographical mistake. In these circumstances the Court held that there was total non-application of mind and a violation of the principles of natural justice in passing the order under Section 148A(d), and that the department ought to have considered the reply on merits before issuing notice under Section 148. The petitioner's assertion that the property was not his was not supported by independent evidence on record, but the failure to consider the reply and the erroneous identification in the order rendered the impugned order invalid. [Paras 9, 10]

Impugned order dated 30.03.2022 under Section 148A(d) and consequential notice dated 31.03.2022 quashed for non-application of mind and violation of principles of natural justice.

Remand for fresh consideration on merits and opportunity to file additional reply in notices issued under Section 148/148A - Relief and further procedure after quashing: whether matter should be remanded and whether the petitioner should be allowed to file an additional reply. - HELD THAT: - The Court directed that the matter be remanded to the second respondent for fresh consideration on merits and in accordance with law. The petitioner was allowed to submit an additional reply within two weeks from receipt of the order; on receiving that reply the second respondent is directed to pass final orders on merits after giving due consideration to the reply and additional reply within one month, in accordance with law and the timelines provided under Section 148A(d). This direction remedies the procedural defect and ensures the petitioner an effective opportunity to be heard before any fresh notice or assessment proceedings continue. [Paras 11, 12]

Matter remanded to the second respondent for fresh consideration; petitioner permitted to file additional reply within two weeks and second respondent to pass final order within one month after considering the replies.

Final Conclusion: The High Court quashed the impugned order under Section 148A(d) and the consequential notice for non-application of mind and breach of natural justice (including failure to consider a reply received before the order and erroneous identification), and remanded the matter for fresh consideration, allowing the petitioner a further two weeks to file an additional reply and directing the authority to decide the matter on merits within one month.

Notice issued to a deceased person is invalid - Initial defect in notice renders subsequent proceedings bad - Fundamental defect in notice not curable under procedural regularity - Quashing of defective tax notices without prejudice to fresh action

Notice issued to a deceased person is invalid - Fundamental defect in notice not curable under procedural regularity - Validity of notices issued in the name of the deceased assessee. - HELD THAT: - The Court found that the notice under section 148AB was issued in the name of the deceased assessee and that any notice addressed to a deceased person is bad and illegal. The defect was characterised as fundamental and not curable under the statutory provisions relied upon by the department, so the initial notice's invalidity vitiates the proceedings that followed from it. The Court relied on the settled legal position that service or issuance of a notice on a non-existent legal persona cannot sustain consequent assessment action and therefore required quashing of the defective notices. [Paras 4]

Notices issued in the name of the deceased are invalid and quashed.

Initial defect in notice renders subsequent proceedings bad - Quashing of defective tax notices without prejudice to fresh action - Effect of the initial defective notice on subsequent notices issued to the legal heir and the departmental right to proceed afresh. - HELD THAT: - The Court held that because the initial notice was issued in the name of the deceased, the subsequent notice issued to the legal heir suffered from that initial defect and could not stand. Consequently, the impugned notices dated 20.03.2022 and 31.03.2022 were quashed and set aside. However, the Court expressly left open the department's statutory right to initiate fresh proceedings if permissible under law, thereby confining the relief to quashing the defective notices rather than imposing a bar on future valid action. [Paras 4, 5]

Subsequent notice to the legal heir is vitiated by the initial defect; impugned notices quashed, without prejudice to fresh lawful action by the department.

Final Conclusion: Petition allowed; notices dated 20.03.2022 and 31.03.2022 quashed as issued in the name of the deceased and therefore illegal, while preserving the department's right to initiate fresh proceedings if otherwise permissible by law.

Deduction under section 80P(2)(a)(iii) - Deduction under section 80P(2)(a)(iv) - Verification and remand of grants to members - Rule of consistency in assessment proceedings

Deduction under section 80P(2)(a)(iii) - Deduction under section 80P(2)(a)(iv) - Rule of consistency in assessment proceedings - Claimed deductions under section 80P(2)(a)(iii) and 80P(2)(a)(iv) were correctly allowed by the Commissioner (Appeals). - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that profits from supply of agricultural inputs to members fell within the scope of 80P(2)(a)(iv) because there was no evidence of trading with non-members. The Tribunal also agreed that receipts arising from marketing and related incidental activities of members' agricultural produce, including commission, entry fees, other incidental receipts and cheque-book fees, qualified for deduction under 80P(2)(a)(iii), the Assessing Officer having failed to furnish cogent reasons to deny the exemption. The CIT(A)'s reliance on the assessee's registrations, activity of marketing sugarcane for members, prior appellate order for the immediately preceding year and the absence of contradiction in accounts was held to be a valid basis for allowing the claims. The Tribunal rejected the Revenue's contention that alleged defects in accounts or the quantum of commission justified denial of exemption, noting that the assessee disclosed net profit and full commission and supervised activities under statutory oversight. The Tribunal found no perversity or legal error in CIT(A)'s application of the principle of consistency and in allowing the deductions. [Paras 5, 7, 8, 9, 10]

Findings of the CIT(A) allowing the claimed deductions under 80P(2)(a)(iii) and 80P(2)(a)(iv) are upheld and the Revenue's grounds are dismissed.

Verification and remand of grants to members - Direction to the Assessing Officer to verify whether state grants were passed on to members was appropriate and must be complied with. - HELD THAT: - The CIT(A) directed the AO to ascertain if the grants labelled as Anudan Keetnashak and Anudan Krishi Yantra were actually passed on to the members; to the extent they were distributed to members no profit would arise and deduction should be allowed. The Tribunal found no ambiguity in this direction and agreed that factual verification by the AO was necessary before finalising taxability of those grants. This is a remand for factual verification and quantification rather than a decision denying or allowing the claim outright. [Paras 5, 7, 9]

The CIT(A)'s direction to the AO to verify passage of the state grants to members is sustained and the AO is to act on that direction.

Final Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s allowance of deductions under section 80P(2)(a)(iii) and (iv), and sustained the direction to the Assessing Officer to verify distribution of specified state grants to members for appropriate treatment.

Long-term capital gains on transfer of property - ownership and change in constitution affecting title - distinction between provision for bad debts and write-off of bad debts - allowability of write-off of excise duty as business loss - reversal of previously debited expenses constituting income

Long-term capital gains on transfer of property - ownership and change in constitution affecting title - Addition of long-term capital gain on sale of industrial plot of Rs. 91,90,000/- upheld - HELD THAT: - The tribunal affirmed the finding that the registered sale deed and related HSIDC communications showed that the industrial plot's ownership had changed in constitution to the assessee company and that the conveyance deed was executed by the company through its director. The fact that consideration was received by the assessee and that the sale deed recorded the company as vendor established title in the assessee. The Supplementary Agreement and HSIDC clauses relied upon by the assessee did not controvert documentary evidence that HSIDC recognised change in constitution in favour of the company. Given the registered deed and uncontroverted documentary record, the Assessing Officer and the CIT(A) correctly treated the receipt as taxable capital gain in the hands of the assessee. [Paras 16, 17]

Addition on account of long-term capital gain confirmed and ground dismissed.

Distinction between provision for bad debts and write-off of bad debts - Disallowance of Rs. 17,00,000 claimed as bad debts/write-off upheld - HELD THAT: - The authorities found that the entry in the books was a write-off of a provision for bad and doubtful debts rather than an actual deduction of a specific bad debt. Ledger entries and exhibits demonstrated that a provision was created and credited against the debtor account, and subsequently a substantial portion of the outstanding amount was recovered after the write-off. The recovery after write-off undermines the claim of genuine irrecoverability and establishes that the write-off represented a provisionary entry not allowable as a deduction. [Paras 23, 24, 25]

Disallowance upheld and ground dismissed.

Allowability of write-off of excise duty as business loss - Write-off of excise duty of Rs. 12,00,624/- allowed as business loss - HELD THAT: - The assessee had an unutilisable excise credit balance because no stock remained to allow set-off under excise law. The tribunal accepted that inability to claim the excise credit due to absence of stock rendered the write-off a genuine business loss. The Assessing Officer's disallowance was therefore set aside and the claim directed to be allowed in assessment. [Paras 31]

Write-off of excise duty allowed and ground allowed.

Reversal of previously debited expenses constituting income - Denial of reversal entries claimed as sales return and service tax (total disallowance of Rs. 3,91,615/-) sustained - HELD THAT: - Ledger evidence showed reversal entries during the year for sales return and for service-tax-related adjustments transferred on factory closure. Amounts earlier debited as expenditure were subsequently reversed in the books during the year under consideration. The tribunal held that such reversals, having the effect of restoring previously claimed expenditure, constitute income and the Assessing Officer and CIT(A) were correct in treating the entries as taxable. [Paras 36, 37, 38]

Addition on account of reversal entries affirmed and ground dismissed.

Final Conclusion: The appeal is partly allowed: the addition for long-term capital gain and the disallowance for bad debts are sustained; the write-off of excise duty is allowed as a business loss; the claimed reversals were treated as income and the corresponding addition is upheld.

Chargeability of capital gains under Section 45 - transfer of capital asset - owner liable for capital gains - power of attorney and taxability - beneficial ownership and receipt of sale proceeds - non-speaking order

Chargeability of capital gains under Section 45 - beneficial ownership and receipt of sale proceeds - non-speaking order - Whether the Assessing Officer was justified in treating amounts credited to the assessee's bank account as capital gains in the hands of the assessee. - HELD THAT: - The Assessing Officer treated sale consideration credited into the assessee's bank account as the assessee's capital gain and computed long term capital gain after adopting an assumed cost. The CIT(A) sustained the addition without examining corroborative evidence, resulting in a non speaking confirmation. The Tribunal held that the AO's conclusion was founded on conjecture - receipt of sale proceeds in the assessee's account does not ipso facto establish that the assessee was the owner of the capital asset transferred. The determinative legal principle is that capital gain is chargeable in the hands of the owner of the capital asset; mere credit of sale proceeds into a third party's or attorney's account does not convert the recipient into the transferor for the purpose of capital gains tax. In view of these principles and the absence of evidence establishing ownership or transfer by the assessee, the addition as capital gain cannot be sustained and is to be deleted, while preserving the revenue's right to tax the gains in the correct hands if established. [Paras 5, 6, 7]

Addition assessed as capital gains by charging the amounts credited to the assessee's account is deleted; the assessing officer may, however, tax capital gains in the correct hands if warranted.

Owner liable for capital gains - power of attorney and taxability - Whether capital gains arising from transfer of immovable property can be charged to an attorney or third party merely because the sale consideration was received in their account. - HELD THAT: - The Tribunal applied the statutory scheme that profit or gains arising from transfer of a capital asset are chargeable to tax as capital gains in the hands of the owner of the asset. It concluded that even if sale consideration is received in the account of an attorney or third party, that circumstance alone does not render the recipient liable to tax under the head 'capital gains' unless ownership or transfer by that person is otherwise established. Consequently, taxing the assessee as the transferor on the sole basis of receipt of funds in his account was not permissible. [Paras 7]

Capital gains cannot be charged to an attorney/third party merely on receipt of sale proceeds in their account; taxability attaches to the owner unless ownership/transfer by the recipient is proved.

Final Conclusion: The appeal is allowed: the addition of capital gain in the assessee's hands is deleted as unsupported by evidence and contrary to the principle that the owner alone is liable for capital gains; the Revenue remains free to examine and tax the gains in the correct hands if substantiated.

Depreciation on intangible asset - License to collect toll as commercial right - Section 32(1)(ii) - intangible assets - Reliance on coordinate-bench precedents - Distinction between toll-collection right and road as building - Amortisation under CBDT Circular 09/2014

Depreciation on intangible asset - License to collect toll as commercial right - Section 32(1)(ii) - intangible assets - Reliance on coordinate-bench precedents - Distinction between toll-collection right and road as building - Depreciation on 'License to Collect Toll' held allowable as an intangible asset under section 32(1)(ii) for the assessment years in issue - HELD THAT: - The Tribunal considered whether the assessee's right to collect toll under the concession agreement qualifies as an intangible commercial right within clause (ii) of section 32(1) and is therefore eligible for depreciation. The Bench noted that the same question arose between the parties in earlier assessment years and was decided by a coordinate bench in favour of the assessee, holding that the right to collect toll is a commercial/intangible right and attracts depreciation at the prescribed rate. The Tribunal distinguished authorities concerning allowance of depreciation on roads treated as 'building', observing those decisions are inapplicable to the present facts. Although the Assessing Officer had followed CBDT Circular No.9/2014 and amortised the construction cost over the concession period, the Commissioner (Appeals) reversed that view by applying the coordinate-bench precedent. In the absence of any distinguishing factual or legal point urged by Revenue for these years, the Tribunal upheld the Commissioner (Appeals)'s acceptance of depreciation on the toll-collection right and dismissed the Revenue's appeals. [Paras 6, 7, 8]

Appeal dismissed; findings of the Commissioner (Appeals) allowing depreciation on the 'License to Collect Toll' upheld.

Final Conclusion: The Revenue's appeals are dismissed; the Tribunal upholds the CIT(A)'s view that the right to collect toll is an intangible commercial right eligible for depreciation under section 32(1)(ii) for AYs 2017-18 and 2018-19, following coordinate-bench precedent.

Notional rent under Section 23(1)(c) - taxation of deemed rental income - vacancy allowance - legal disability/municipal action affecting lettability of property - receivable rent - requirement of property being actually available to be let - admission of additional evidence / affidavit under Rule 46A - unexplained investment in jewellery - onus to prove source and mode of payment - treatment of stridhan/gift in unexplained jewellery cases - penalty under Section 271AAB - search and seizure unexplained investment

Notional rent under Section 23(1)(c) - taxation of deemed rental income - legal disability/municipal action affecting lettability of property - receivable rent - requirement of property being actually available to be let - admission of additional evidence / affidavit under Rule 46A - Addition on account of notional rent confirmed by authorities was set aside and the issue decided in favour of the assessee. - HELD THAT: - The Tribunal accepted that where municipal action or other legal disability renders a property not available for letting, the notional rent under Section 23(1)(c) cannot be treated as "receivable". The court relied on the reasoning in the cited ITAT decision which held that the word "receivable" in Section 23(1)(c) implies that rent must be likely to be payable because the property is available to be let; where legal or physical impossibility prevents tenancy, notional rent is not leviable. The ITAT decision further found that an affidavit admitted under Rule 46A corroborated by contemporaneous minutes of a meeting showing demolition/sealing disputes in the locality furnished sufficient material to establish that the property was not rent-worthy during the year. Applying those identical facts, the Tribunal found no distinction and followed that precedent, setting aside the orders of the lower authorities and allowing the assessee's claim. [Paras 9, 10]

Order of authorities below on notional rent set aside; addition under Section 23(1)(c) deleted in favour of the assessee for the relevant year.

Unexplained investment in jewellery - onus to prove source and mode of payment - treatment of stridhan/gift in unexplained jewellery cases - penalty under Section 271AAB - search and seizure unexplained investment - Addition in respect of unexplained jewellery for A.Y. 2014-15 was upheld by the Tribunal. - HELD THAT: - During search proceedings jewellery was recovered and the assessee failed to satisfactorily substantiate the source of investment or mode of payment; bills produced did not mention mode of payment and could not be corroborated. The AO allowed a reasonable relief by treating a portion as stridhan/gift and made addition of the remaining unexplained jewellery to income, and indicated initiation of penalty proceedings under Section 271AAB. The assessee's representative conceded inability to substantiate source and mode of payment. In these circumstances the Tribunal found no infirmity in the AO/CIT(A) conclusion sustaining the addition and thus confirmed the revenue authorities' action. [Paras 15]

Addition in respect of unexplained jewellery sustained; related relief granted by AO treated as reasonable, and the appeal allowed only in part.

Final Conclusion: Appeal for A.Y. 2013-14 allowed by deleting the notional rent addition; appeal for A.Y. 2014-15 partly allowed with the addition in respect of unexplained jewellery sustained.

Remand for speaking order - principles of natural justice - consideration of precedent - direction to comply with tribunal order - requirement of contemporaneous date for enhancement of value

Remand for speaking order - consideration of precedent - principles of natural justice - Assessing Officer/Adjudicating Authority to consider the appellant's representation, all judgments relied upon, and pass a detailed speaking order. - HELD THAT: - The Tribunal (Customs Appeal No.12443 of 2019-DB) found conflicting decisions on whether an assessee can challenge an assessment after giving an acceptance letter of enhanced value and noted that the adjudicating authority had not passed a speaking order nor provided a contemporaneous date for enhancement of value, thereby infringing principles of natural justice. The Tribunal remitted the matter to the assessing officer to consider the appellant's representations, to take into account all relevant judgments on the issues raised, and to pass a detailed speaking order within a stipulated period. The High Court directed compliance with the Tribunal's order and required the Assessing Officer/Adjudicating Authority to decide all aspects and pass a detailed speaking order within two months, thereby enforcing the remand for fresh consideration on merits with reasons and adherence to natural justice and precedent.

Matter remitted to the Assessing Officer/Adjudicating Authority to consider the representations and relevant judgments and to pass a detailed speaking order within two months.

Final Conclusion: Petition disposed of by directing the Assessing Officer/Adjudicating Authority to comply with the Tribunal's remand and to pass a detailed speaking order within two months; copy of this order to be furnished to the learned Standing Counsel for compliance.

Penalties under Section 112(a) - Penalty under Section 114AA - Reliance on statement of co-accused / co-noticee - Evidentiary value of statement under Section 108 of the Customs Act - Requirement of corroboration for co-accused statements - Customs Broker Licensing Regulations, 2013 - Regulation 11(n) and KYC obligations - Requirement of expert opinion for disputed signatures

Penalties under Section 112(a) - Penalty under Section 114AA - Reliance on statement of co-accused / co-noticee - Requirement of corroboration for co-accused statements - Requirement of expert opinion for disputed signatures - Validity of penalties imposed on Shri Hari Prabhu and Shri Thirumalai Thiyagarajan under Section 112(a) and Section 114AA of the Customs Act, 1962. - HELD THAT: - The Tribunal examined the material relied upon by the adjudicating authority and the Commissioner (Appeals) and found that the case against the appellants rested principally on the statement of a co-noticee (Shri M.D. Karthikeyan) and on a Preventive Officer's denial of signature on certain documents. The Court observed contradictions in the depositions and in the dates of alleged removal of the container, and noted absence of independent documentary evidence linking the appellants to forging or illegal removal. Although statements recorded under Section 108 are admissible, the Tribunal held they require corroboration by independent evidence before they can ground imposition of penalties; a co-accused's statement alone, particularly when not supported by other reliable material, is insufficient. Further, where forgery of signatures is alleged, the department was obliged to obtain expert opinion to establish forgery; mere denial by an officer without expert verification was inadequate. Applying these principles to the facts, the Tribunal concluded that the department failed to establish the allegations against the appellants and that the penalties imposed could not be sustained. [Paras 19, 21, 22, 23]

Penalties imposed on Shri Hari Prabhu and Shri Thirumalai Thiyagarajan under Sections 112(a) and 114AA are set aside; appeals allowed with consequential relief if any.

Penalties under Section 112(a) - Customs Broker Licensing Regulations, 2013 - Regulation 11(n) and KYC obligations - Liability of M/s. Southern Clearing & Forwarding Agencies Pvt. Ltd. and Ms. J. Lakshmi for penalty under Section 112(a) for alleged failure to comply with Regulation 11(n) of CBLR 2013 and for abetting misdeclaration. - HELD THAT: - The Tribunal considered the Show Cause Notice allegation that the Customs Broker had not obtained KYC/authorization documents directly from the importer but through an intermediary. It reviewed Regulation 11(n) and related authorities and held that CBLR 2013 does not mandate physical collection of KYC documents directly from the importer; rather, the obligation is to ensure due diligence in obtaining KYC. A customs broker cannot be expected to independently verify the nature of goods in a container; where the KYC documents submitted are not disputed and the broker has exercised due diligence in accepting them, penalising the broker for misdeclaration by the importer is unwarranted. Applying these principles and authorities cited, the Tribunal found no factual basis to uphold the penalties on the broker and its authorized signatory. [Paras 26, 27, 29]

Penalties imposed on M/s. Southern Clearing & Forwarding Agencies Pvt. Ltd. and Ms. J. Lakshmi under Section 112(a) are set aside; appeals allowed with consequential relief if any.

Evidentiary value of statement under Section 108 of the Customs Act - Requirement of corroboration for co-accused statements - Evidentiary weight of statements recorded under Section 108 and their sufficiency to sustain penalties. - HELD THAT: - The Tribunal acknowledged that statements under Section 108 are admissible as evidence, but emphasised that such statements, particularly by co-accused or co-noticees, cannot be the sole basis for imposing penalties without independent corroboration. The Tribunal relied on precedents and its own reasoning to conclude that where the department's case depends primarily on such statements and there exist contradictions or lack of supporting documentary material, the statements do not suffice to establish guilt or render goods liable for confiscation for purposes of penalty imposition. [Paras 21, 22]

Statements under Section 108 are admissible but require corroboration; uncorroborated statements of co-accused are insufficient to sustain penalties.

Final Conclusion: The Tribunal allowed the appeals: penalties imposed on the two individual appellants under Sections 112(a) and 114AA were set aside for want of reliable corroborative evidence and unexplained contradictions (and absence of expert opinion on alleged forgery), and the penalties imposed on the customs broker and its authorized signatory under Section 112(a) for alleged breach of CBLR 2013 were set aside because Regulation 11(n) does not compel direct physical collection of KYC from the importer and no factual basis existed to hold the broker liable; appeals allowed with consequential relief, if any.

Custodian duties under Section 45 of the Customs Act - penalty under Section 112 for abetment/abetting - penalty under Section 114AA for use of forged or fabricated documents - misdeclaration and confiscation under Section 111(f) and Section 111(j) - liability of customs-house agents acting in good faith - handling of cargo in customs areas-Regulation 12(8) of HCCA Regulations, 2009 - evidentiary value of statements recorded under Section 108

Penalty under Section 112 for abetment/abetting - penalty under Section 114AA for use of forged or fabricated documents - Confirmation of penalties imposed on Shri Dhananjay Kumar Singh for abetment of attempted removal and for arranging use of forged documents. - HELD THAT: - The Tribunal found Shri Dhananjay Kumar Singh to be the central orchestrator of the attempted removal of imported goods without filing Bill of Entry, having agreed remuneration with the cargo consolidator and having arranged and directed others to effect delivery. His own recorded statement admitted agreement to clear the shipment for consideration and admission of earlier similar acts. The Tribunal held that abetment does not require physical presence at the scene and that admissions, supporting statements and call records collectively establish culpability. On these findings the penalties under Section 112 and Section 114AA imposed by the adjudicating authority were confirmed and his appeal rejected. [Paras 21, 22, 23, 35]

Penalties under Section 112 and Section 114AA confirmed and appeal rejected.

Penalty under Section 112 for abetment/abetting - penalty under Section 114AA for use of forged or fabricated documents - Reduction of penalties imposed on Shri Upendra Kumar Chaubey for connivance in attempted removal and use of forged documents. - HELD THAT: - The Tribunal accepted that Shri Upendra Kumar Chaubey knowingly connived in the attempted removal and used forged documents, but held the amounts of penalty originally imposed disproportionate having regard to his means and status as an employee of the importer. Consequently the Tribunal reduced the penalty under Section 112 and also reduced the penalty under Section 114AA, allowing the appeal in part. [Paras 24, 36]

Penalty under Section 112 reduced to a lower amount and penalty under Section 114AA reduced; appeal allowed in part.

Penalty under Section 112 for abetment/abetting - penalty under Section 114AA for use of forged or fabricated documents - Partial confirmation and partial setting aside of penalties imposed on Shri Abhishek Mishra. - HELD THAT: - The Tribunal found that Shri Abhishek Mishra, an H-card holder with knowledge of customs procedures, had participated in the attempted removal and had indicia of connivance (including promised remuneration and presence in CCTV). However, the Tribunal concluded there was insufficient basis to hold he had fabricated the documents; while he had some awareness of illegality and thus violated provisions attracting penalty under Section 112, the specific penalty under Section 114AA for fabrication/use with knowledge was set aside. Accordingly, the penalty under Section 112 was confirmed and the penalty under Section 114AA was vacated. [Paras 25, 37]

Penalty under Section 112 confirmed; penalty under Section 114AA set aside; appeal allowed in part.

Liability of customs-house agents acting in good faith - penalty under Section 112 for abetment/abetting - Allowance of appeal of M/s. Shri Krishna Logistics Management (CHA) finding no connivance or lapse in filing the Bill of Entry in good faith. - HELD THAT: - The Tribunal accepted that the CHA filed the Bill of Entry on first-check basis relying on documents presented by the importer and sought examination by Customs; there was no material to establish that the CHA was party to the smuggling attempt or had knowledge of forged documents. On this basis, the Tribunal found no culpability and set aside the penalties imposed, allowing the CHA's appeal. [Paras 2, 32, 38]

Penalties set aside; appeal allowed.

Custodian duties under Section 45 of the Customs Act - handling of cargo in customs areas-Regulation 12(8) of HCCA Regulations, 2009 - Reduction of penalty imposed on M/s. CELEBI Delhi Cargo Terminal Management India Pvt. Ltd. for lapses in internal control while not being party to attempted removal. - HELD THAT: - The Tribunal held that Celebi, as licensed custodian, had lapses in internal control and record-keeping which facilitated the attempted removal, but was not a party to the smuggling. The Tribunal accepted CELEBI's explanation about delay in informing Customs due to holidays and noted that they provided evidence and CCTV. Balancing the culpability, the Tribunal reduced the penalty under Regulation 12(8) of HCCA and set aside the penalty under Section 112 of the Act. [Paras 14, 15, 16, 39, 40]

Penalty under Regulation 12(8) reduced and penalty under Section 112 set aside; appeal allowed in part.

Final Conclusion: The Tribunal affirmed the adjudicating authority's findings of culpability against the principal orchestrator and certain participants, confirming or modifying penalties in accordance with proven participation and proportionality; it exonerated the CHA which acted in good faith and reduced the custodian's penalty for procedural lapses while setting aside an imposition under Section 112 against it.

Sanction by Central Government to file winding up petition - principles of natural justice - lack of sanction and dismissal on merits - identical factual matrix and binding precedent

Identical factual matrix and binding precedent - lack of sanction and dismissal on merits - Whether the appeal against the NCLT order dismissing the winding up petition deserves interference in view of an identical earlier decision of this Tribunal and subsequent orders - HELD THAT: - The Tribunal found that the facts of the present petition were the same and identical to those in Registrar of Companies v. Apoorva Leasing Finance & Investment Co. Ltd., a matter dismissed by this Bench and thereafter considered by a three-Member Bench of this Appellate Tribunal. That earlier decision has attained finality in the sense that the related challenge in the Supreme Court was dismissed on limitation grounds and the NCLAT finding (that sanction was vitiated for want of adherence to principles of natural justice) was not gone into on merits by the Supreme Court. In light of the identical factual matrix and the binding effect of the earlier adjudication on the same controversy, this Tribunal saw no ground to interfere with the NCLT's dismissal of the petition and declined to reopen the matter on merits. [Paras 2, 11]

Appeal dismissed as lacking merit because the present case is covered by an earlier Tribunal decision on identical facts which has attained finality.

Sanction by Central Government to file winding up petition - principles of natural justice - Whether the sanction granted for filing the winding up petition complied with the requirement of affording opportunity and application of mind - HELD THAT: - The Tribunal relied on the three-Member Bench's reasoning in the Apoorva Leasing matter, which held that a sanctioning authority must record the allegations and the materials considered and must afford the company a reasonable opportunity to make representations before sanction is accorded. That earlier bench concluded that the sanction order did not demonstrate consideration of explanations or application of mind and held the sanction defective for non-adherence to principles of natural justice. The present appeal did not persuade this Tribunal to depart from that conclusion; having regard to the identical circumstances, the NCLT's decision to dismiss the petition on the grounds of lack of sanction and on merits was left undisturbed. [Paras 8, 9, 11]

Sanction was treated as defective in accordance with the earlier bench's reasoning; no interference with the NCLT's dismissal.

Final Conclusion: The appeal is dismissed. The Tribunal concluded that the present case is covered by an earlier decision of this Appellate Tribunal on an identical factual matrix-which has not been determined adversely on merits by the Supreme Court-and accordingly found no ground to interfere with the NCLT order; registry directed to upload and circulate the judgment.

Defectiveness and service of Section 8 Demand Notice - nomenclature and identity of Corporate Debtor in notice - service at registered/operating office under Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - pre-existing dispute and applicability of Mobilox test - admission of operational debt and initiation of CIRP under Section 9 of IBC

Defectiveness and service of Section 8 Demand Notice - nomenclature and identity of Corporate Debtor in notice - service at registered/operating office under Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - Demand Notice was not defective and was effectively served on the Corporate Debtor. - HELD THAT: - The Tribunal examined whether the Demand Notice dated 09.12.2019 was vitiated by wrong nomenclature or defective service. On nomenclature, the record showed the Corporate Debtor had itself used the name "Lexinnova" in its appointment letter and settlement documents, and the Demand Notice also contained the CIN and the name "LI Digital Payments Pvt. Ltd." Thus the Adjudicating Authority rightly held there was no deficiency in addressing the notice. As to service, the Adjudicating Authority considered the settlement slip and the postal tracking report showing delivery at the Gurgaon address (4th Floor, Plot No.30, STPI Building, Electronic City, Udyog Vihar, Sector 18, Gurgaon), which the Corporate Debtor had used in its communications. The Tribunal agreed with the Adjudicating Authority's conclusion that the Demand Notice had been despatched and delivered properly and that the challenge based on the lease termination or presence of an alternate office address did not establish defective service. Consequently, non-compliance with the procedural contention raised by the Corporate Debtor did not vitiate the Section 9 proceedings. [Paras 13, 14, 15, 16, 17]

Challenge to the Demand Notice on grounds of incorrect name and defective service rejected; service and issuance held valid.

Pre-existing dispute and applicability of Mobilox test - admission of operational debt and initiation of CIRP under Section 9 of IBC - No genuine pre-existing dispute existed to bar admission under Section 9; admission of the Section 9 application was justified. - HELD THAT: - Applying the Mobilox principles, the Tribunal assessed whether the FIR and related allegations established a real dispute existing prior to the Demand Notice. The FIR registered at Malad did not name the Operational Creditor as an accused, and the Corporate Debtor thereafter sent an email on 21.11.2019 acknowledging the settlement of dues. The lay-off notice and absence of contemporaneous communication warning the Operational Creditor of fraud were relied on to conclude the corporate debtor had not demonstrated bona fide pre-existing dispute. The Adjudicating Authority's finding that the operational debt had been acknowledged and that no substantive dispute impeded the Section 9 admission was upheld. On the totality of records, the plea of a pre-existing dispute was held to be concocted and not a bar to initiation of CIRP. [Paras 19, 20, 21, 22, 23]

Pre-existing dispute plea dismissed; admission of Section 9 petition and initiation of CIRP upheld.

Final Conclusion: The appeal is dismissed. The Adjudicating Authority's order admitting the Section 9 petition and initiating CIRP against the Corporate Debtor is affirmed: the Demand Notice was validly addressed and served, and no real pre-existing dispute barred admission.

Condonation of delay under Section 61(2) of the IBC - computation of limitation - e filing date versus date of presentation/physical filing - effect and temporal operation of administrative circulars - prospectivity and non retroactivity - application of Section 10 of the General Clauses Act, 1897 to limitation falling on a holiday - mandatory presentation under Rule 22 of the NCLAT Rules and requirement of certified copy

Condonation of delay under Section 61(2) of the IBC - computation of limitation - e filing date versus date of presentation/physical filing - mandatory presentation under Rule 22 of the NCLAT Rules and requirement of certified copy - Whether the delay in filing the appeal was condonable and whether limitation is to be computed from e filing or from physical presentation of the appeal - HELD THAT: - The Tribunal found that Section 61(2) of the IBC permits condonation of delay only up to fifteen days beyond the thirty day period and that the appellant's appeal papers were physically presented on 12.12.2022 which was beyond the outer limit of 45 days (30 + 15). The appellants had e filed on 09.12.2022 but the Tribunal observed that, as per the Tribunal's Circular dated 21.10.2022 (in force from 01.11.2022) and Rule 22 of the NCLAT Rules, limitation was to be computed from date of presentation/physical filing. Consequently the physical filing on 12.12.2022 (47th day) rendered the appeal time barred and beyond the condonable period. The Tribunal therefore held that the delay could not be condoned and the application for condonation was not maintainable. [Paras 44, 45, 50, 51, 54]

Application for condonation is dismissed and the appeal is time barred; the appeal is rejected.

Effect and temporal operation of administrative circulars - prospectivity and non retroactivity - application of Section 10 of the General Clauses Act, 1897 to limitation falling on a holiday - Whether the subsequent circular of 24.12.2022 operates retrospectively to render the earlier date of e filing computation applicable to revive the time barred appeal, and whether Section 10 of the General Clauses Act applied to extend limitation to the next working day - HELD THAT: - The Tribunal held that the earlier Circular dated 21.10.2022 (effective 01.11.2022), which required computation from date of presentation, was in force on the relevant dates and was not annulled so as to operate retrospectively by the later circular of 24.12.2022. The 24.12.2022 circular was prospective in character and could not revive an appeal already barred on 10.12.2022. Further, reliance on Section 10 of the General Clauses Act was negatived because the computation required by the then subsisting administrative direction meant the limitation had already expired; invoking Section 10 could not override the requirement of presentation under the circular and Rule 22. [Paras 46, 52, 53]

The later circular has no retrospective effect to revive a time barred appeal and Section 10 of the General Clauses Act does not render the appeal within time.

Final Conclusion: IA No.34 of 2023 seeking condonation of delay is dismissed and the main Company Appeal (AT) (CH) (INS.) No.13 of 2023 is rejected as barred by limitation; connected interim applications are closed.

Ex parte hearing and setting aside under Rule 49 of the NCLT Rules, 2016 - sufficient cause - presumption of due service - effect of COVID-19 pandemic on service and appearance

Ex parte hearing and setting aside under Rule 49 of the NCLT Rules, 2016 - sufficient cause - effect of COVID-19 pandemic on service and appearance - presumption of due service - Whether the ex parte order dated 03.03.2022 should be set aside on the ground that the bank could not appear due to the COVID-19 pandemic and skeletal staff operations, and whether there was sufficient cause under Rule 49 to reopen the hearing. - HELD THAT: - The Tribunal examined the service history and the bank's explanation for non-appearance. Notices for appearance had been sent to and received by the bank at its corporate and alternative offices on multiple dates well before the hearing. Where notice is sent to the proper and correct address of an entity that actually and voluntarily conducts business, a presumption of due service arises. Rule 49(2) permits setting aside an ex parte hearing if notice was not duly served or the person was prevented by sufficient cause from appearing; however, the Tribunal must be satisfied by the reasons offered. The bank's plea that COVID-19 and skeletal staffing prevented follow-up and appearance was considered but found insufficient in the face of documentary service to corporate, branch and alternative offices on the specified dates. The Tribunal agreed with the Adjudicating Authority that adequate opportunities had been given and that the pandemic-related explanation did not constitute sufficient cause to reopen the ex parte order. The Tribunal therefore found no legal infirmity in the Adjudicating Authority's conclusion. [Paras 22, 24, 25, 26]

The application to set aside the ex parte order dated 03.03.2022 was rejected for want of sufficient cause; the appeal is dismissed.

Final Conclusion: The appeal is dismissed for lack of merit; the Adjudicating Authority's ex parte order dated 03.03.2022 was correctly upheld as there was no sufficient cause to set it aside under Rule 49 of the NCLT Rules, 2016. No costs.

Existence of pre-existing dispute - plausible contention requiring further investigation - patently feeble legal argument - admission of Section 9 application and initiation of CIRP - treatment of Section 9 applications under Mobilox test - admissibility of additional documents in appellate review

Existence of pre-existing dispute - patently feeble legal argument - plausible contention requiring further investigation - Whether the Corporate Debtor had raised a pre-existing dispute that prevented admission of the Section 9 petition. - HELD THAT: - The Tribunal applied the Mobilox test to determine if the defence raised by the Corporate Debtor was more than a patently feeble assertion and whether it presented a plausible contention requiring further investigation. The record showed a Legal Notice dated 07.03.2018 and a reply thereto denying liability and asserting a counterclaim, both predating the Section 8 demand notice, together with exchanged emails alleging deficient work and unlawful retention of social media credentials. The Adjudicating Authority's characterization of the Corporate Debtor's contentions as an afterthought was held to be misplaced because the replies and contemporaneous communications demonstrated factual disputes about quality of services and alleged hijacking of accounts. Consequently, the defence was not illusory or mere bluster but required adjudication by a competent forum under the Mobilox standard. [Paras 9, 22, 24, 25]

The Corporate Debtor had raised a genuine pre-existing dispute which was not a patently feeble legal argument and therefore barred admission of the Section 9 petition.

Admission of Section 9 application and initiation of CIRP - treatment of Section 9 applications under Mobilox test - Whether the Adjudicating Authority was correct in admitting the Section 9 application and initiating CIRP. - HELD THAT: - Applying the conclusion that a genuine dispute existed, the Tribunal found that the Adjudicating Authority erred in admitting the Section 9 application. Admission under Section 9 requires absence of a pre-existing dispute; since the Corporate Debtor had raised plausible, contemporaneous disputes in formal replies and emails (including counterclaims and allegations of hijacked accounts), the statutory threshold for admission was not met. The Tribunal therefore set aside the impugned order admitting the Section 9 petition and the consequential CIRP orders, releasing the Corporate Debtor from the rigours of CIRP. [Paras 14, 22, 25, 26]

The Adjudicating Authority's admission of the Section 9 petition and initiation of CIRP was set aside for having ignored the genuine pre-existing disputes.

Admissibility of additional documents in appellate review - Whether the Tribunal should take cognisance of additional email communications filed by the Corporate Debtor in IA No. 4032 of 2022. - HELD THAT: - The Tribunal examined the proposed additional emails and determined they related directly to the controversy already raised before the Adjudicating Authority and did not introduce extraneous matters. Relying on the principle that additional documents may be admitted where necessary for just adjudication, the Tribunal admitted these emails for consideration, noting they corroborated pre-existing disputes concerning service quality and retention of social media credentials. [Paras 23, 24]

The additional email communications in IA No. 4032 of 2022 were admitted and taken on record as relevant to the existence of a pre-existing dispute.

Final Conclusion: The appeal is allowed: the Tribunal held that the Corporate Debtor had raised genuine pre-existing disputes (not patently feeble) which should have precluded admission of the Section 9 petition; the Adjudicating Authority's order admitting the petition and initiating CIRP is set aside, the Corporate Debtor is released from CIRP, and the additional emails filed in the appeal were admitted for consideration.

Rights of secured creditor under the SARFAESI Act versus attachment under PMLA - interim preservation and realisation of secured assets pending adjudication - provisional attachment and taking of possession under PMLA - deposit of sale proceeds in court as escrow pending final adjudication - overriding effect of PMLA vis-a -vis other laws

Interim preservation and realisation of secured assets pending adjudication - deposit of sale proceeds in court as escrow pending final adjudication - Whether an interim adhoc arrangement should be permitted to enable the secured creditor to sell mortgaged properties which are subject to PMLA attachment, and the appropriate protective mechanism for sale proceeds. - HELD THAT: - The Court observed that the properties mortgaged to the appellant are prima facie secured to it and that, absent an interim arrangement, the attached properties may suffer waste, encroachment or erosion of value pending adjudication. Balancing these concerns, the Court permitted a limited interim arrangement without expressing any view on the parties' rival rights on the merits. The appellant was authorised to sell the properties under the SARFAESI procedure; sale proceeds were directed to be deposited with the Registrar, Appellate Side, Bombay High Court within one week of receipt. The Registrar was directed to invest the deposited amount in a fixed deposit with a nationalised bank for a minimum period of 13 months, to be renewed similarly until final disposal of the appeal, unless otherwise ordered. The order is expressly stated to be adhoc and without any adjudication on priority between the parties. [Paras 5, 6]

Interim adhoc relief granted permitting appellant to sell the mortgaged properties under SARFAESI; sale proceeds to be deposited with Registrar and kept in fixed deposit as directed; no expression on priority of rights.

Rights of secured creditor under the SARFAESI Act versus attachment under PMLA - provisional attachment and taking of possession under PMLA - overriding effect of PMLA vis-a -vis other laws - Whether the substantive questions concerning the priority of the appellant's SARFAESI rights over PMLA attachment and related contentions are finally adjudicated at this interim stage. - HELD THAT: - The Court recorded that the substantive contentions raised by the appellant - including whether secured creditor rights under SARFAESI prevail over attachment under PMLA, whether the attachment was made without requisite reasons, and whether the secured assets are proceeds of crime or likely to be dissipated - require consideration on merits. The Court did not decide these questions; it granted only an interim protective arrangement to preserve the value of the secured assets pending adjudication. The order makes clear that no opinion has been formed on whether the appellant ranks higher in priority than the respondent. [Paras 5, 6]

Substantive disputes about priority, legality of PMLA attachment, and related questions are left for adjudication on merits; only interim preservation measures ordered.

Final Conclusion: Interim application disposed by permitting the appellant to sell the mortgaged properties under SARFAESI and deposit sale proceeds with the Registrar to be held in fixed deposit pending final disposal of the appeal; the court expressly refrained from adjudicating the substantive questions of priority or the correctness of PMLA attachment.

Tax dues - total amount of duty which is being disputed - pre-deposit requirement under the Sabka Vishwas (Legacy Dispute Resolution) Scheme - distinction between 'duty' and 'tax dues'

Tax dues - total amount of duty which is being disputed - pre-deposit requirement under the Sabka Vishwas (Legacy Dispute Resolution) Scheme - Whether the amount already deposited by the petitioners satisfied the pre-deposit requirement under the SVLDR Scheme, having regard to the definition of "tax dues". - HELD THAT: - The Court construed the definition of tax dues in Section 123(a)(i) as referring to the "total amount of duty which is being disputed in the said appeal", which embraces the full amount payable as determined in the adjudication including the principal duty component and the interest component. The legislature's use of distinct expressions - "duty" and "tax dues" - was held to be deliberate; the terms are not interchangeable and must be given their respective meanings. Applying that construction to the facts, the disputed amount before the appellate forum was the total amount of duty (which included interest) of Rs.1,03,25,054/-, and the petitioners had already deposited an amount exceeding the department's computation for the purposes of the Scheme. The department's approach of segregating the deposit into a portion treated as adjustable only against interest and not countable as part of the tax dues for pre-deposit purposes was rejected. Consequently, the impugned communication demanding further payment was set aside and the department directed to consider the petitioners' SVLDR application without insisting on any additional deposit, after affording a hearing. [Paras 10, 11, 12, 13]

The Court held that tax dues includes the total disputed amount (duty plus interest) and that the petitioners' prior deposit satisfied the pre-deposit requirement; the impugned intimation demanding further payment was set aside and the application under the SVLDR Scheme directed to be considered without additional deposit.

Final Conclusion: Impugned communication dated 27th February 2020 quashed; Department directed to consider the petitioners' SVLDR application without requiring further deposit and to decide after hearing the petitioners within three months.

Taxability under section 65(105)(zi) as video-tape production - Export of Service Rules, 2005 - rule 3(1)(ii) - Place of Provision of Service Rules, 2012 - rule 4(a) - definition of 'goods' for place of provision - negative list regime and classification of taxable services - destination-based consumption tax

Taxability under section 65(105)(zi) as video-tape production - Export of Service Rules, 2005 - rule 3(1)(ii) - Whether the respondent's activities for the period prior to 1 July 2012 were correctly classified as 'video-tape production' thereby negating export of services exemption. - HELD THAT: - The Tribunal held that the adjudicating authority's classification as a provider of 'video-tape production' services was not supported by the material on record. Definitions in section 65 must be read in context of the specific taxable service in section 65(105); a part of a definition cannot be isolated to stretch another service beyond its legislated scope. There was no evidence that the respondent handled or recorded material on video media as envisaged by the principal limb of the 'video-tape production' definition, and the transmission described occurred electronically rather than on the media contemplated by the provision. Reliance on the inclusive limb of the definition to subsume the respondent's post-production and digital services was therefore erroneous. Because the classification failed, the invocation of rule 3(1)(ii) of the Export of Service Rules, 2005 as a basis to deny exemption was rendered without effect and Revenue's argument about partial performance outside India became academic. [Paras 14, 15]

Classification as 'video-tape production' rejected; export of services exemption under the Export of Service Rules, 2005 upheld for the period prior to 1 July 2012.

Place of Provision of Service Rules, 2012 - rule 4(a) - definition of 'goods' for place of provision - destination-based consumption tax - Whether rule 4(a) of the Place of Provision of Service Rules, 2012 applies by treating the items or outputs involved as 'goods' (including intangible or 'deemed' goods) so as to render the services taxable in India for the period after 1 July 2012. - HELD THAT: - The Tribunal analysed the purpose and context of the Place of Provision Rules within the destination-based consumption tax framework and observed that rule 3 ordinarily treats the place of the recipient as the site of provision, with specific rules like rule 4(a) providing targeted exceptions where the place of performance on tangible goods displaces the default. The Rules are intended to identify the territorial location for taxing services under section 66B and are not to be stretched to convert all intangible transmissions into 'goods' for the purposes of rule 4(a). The Tribunal accepted that decisions construing 'goods' in sales or customs contexts (dealing with media or encoded copies) do not automatically alter the scope of service-tax place of provision rules. Given the contextual limitation of rule 4(a) to situations involving tangible goods physically present for performance, the Revenue's contention that 'goods' must be read to include intangible or 'deemed' goods for invoking rule 4(a) was rejected. [Paras 20, 21, 22]

Revenue's contention that rule 4(a) applies by treating the output as 'goods' (including intangible media) is not tenable; the adjudicating authority's approach is sustained and the services for the period after 1 July 2012 are treated as exported under the applicable rules.

Final Conclusion: Revenue's appeal fails. The impugned order is sustained: the respondent's activities are held to qualify as export of services under the Export of Service Rules, 2005 and rule 6A of the Service Tax Rules, 1994 for the relevant periods; the classification as 'video-tape production' and the attempt to invoke rule 4(a) for the later period are rejected.

Recovery under reverse charge as deemed recipient of service - Place of Provision of Service Rules - Rule 3 and taxable territory - Classification of composite/bundled information technology software services - dominant character test - Limitation for recovery of service tax - Remand for fresh adjudication in light of overlooked precedents

Recovery under reverse charge as deemed recipient of service - Place of Provision of Service Rules - Rule 3 and taxable territory - Classification of composite/bundled information technology software services - dominant character test - Adjudication on leviability of service tax on payments made by the assessee to its foreign subsidiaries (whether assessee is a 'deemed recipient' liable under reverse charge and whether services are taxable in India) - HELD THAT: - The Tribunal did not decide the substantive question on the merits. It found that the original adjudicating authority had relied on its view that bundled software services provided by subsidiaries accrued to the assessee in taxable territory and were chargeable under the reverse charge mechanism, but that the original order had not addressed or distinguished a range of authorities relied upon by the parties. Given competing decisions and the absence of detailed scrutiny of proximate precedents, the Tribunal considered it appropriate to remit the matter for fresh consideration. The remand directs the original authority to re-examine leviability, classification of the services (including whether the dominant character renders them information technology/software services), and applicability of Rule 3 of the Place of Provision of Service Rules in light of the judicial decisions noted by both sides and any other submissions. [Paras 2, 4, 6, 8, 9]

Impugned order set aside and adjudication on levy remanded to the original authority for fresh consideration of leviability, classification and applicability of Rule 3 in light of the authorities and submissions.

Limitation for recovery of service tax - Validity of limiting recovery to the normal period by invoking bar of limitation for earlier years - HELD THAT: - The Tribunal observed that the question of limitation is fact-sensitive and that the assessee had not offered justification for alterations in accounting narration relied upon by the original authority. Because the adjudicating authority's invocation of limitation proceeded without addressing certain precedents and factual contentions placed on record at the appellate stage, the Tribunal directed that the original authority should re-examine the limitation defence and related factual matters when reconsidering the show cause notice. [Paras 6, 7, 8, 9]

Determination on limitation remitted to the original authority for fresh factual and legal consideration.

Final Conclusion: The impugned order is set aside and the adjudication of the show cause notice restored to the original authority with directions to reconsider, after detailed examination, the issues of leviability (including classification and place of provision), applicability of the reverse charge as 'deemed recipient', and the bar of limitation in light of the judicial decisions and submissions noted by the Tribunal.

Non-refundability of amounts paid under SVLDRS - pre-deposit in excess of amount payable under designated committee statement - voluntary disclosure under SVLDRS and procedural requirement of expressing disagreement (SVLDRS-2/SVLDRS-2B and personal hearing) - operation of proviso to Section 124(2) and Section 130 of the Finance Act, 2019

Voluntary disclosure under SVLDRS and procedural requirement of expressing disagreement (SVLDRS-2/SVLDRS-2B and personal hearing) - Whether the appellant proved disagreement with the amount estimated by the designated authority such that the designated authority's determination could be set aside - HELD THAT: - The appellant contended that it had objected to the amount payable at the time of SVLDRS-1 and therefore the excess payment ought to be refunded. The Tribunal recorded that the appellant produced SVLDRS-1, SVLDRS-3 and SVLDRS-4 but did not produce SVLDRS-2 or SVLDRS-2B which are the forms demonstrating that disagreement was formally taken up and a personal hearing convened. The scheme expressly provides for issuance of SVLDRS-2 where disagreement is claimed and mandates opportunity of personal hearing; adjournment and SVLDRS-2B are available if sought. In absence of SVLDRS-2/2B the appellant failed to establish that it had properly challenged the designated authority's quantification. The Tribunal therefore rejected the contention that the designated authority's determination was untested or erroneously arrived at. [Paras 12]

Appellant failed to prove a valid disagreement under the scheme; the designated authority's quantification stands.

Non-refundability of amounts paid under SVLDRS - pre-deposit in excess of amount payable under designated committee statement - operation of proviso to Section 124(2) and Section 130 of the Finance Act, 2019 - Whether the excess pre-deposit paid by the voluntary declarant is refundable despite payment being over and above the amount determined payable by the designated committee - HELD THAT: - The Tribunal examined the scheme's objects and procedural mechanism and noted that in cases of voluntary disclosure the declarant pays the full amount stated in the declaration but the designated authority issues a statement of amount payable; if pre-deposit or other deposit exceeds that payable amount, Section 130(2) expressly bars refund of the difference. The Tribunal found that the designated committee determined the payable amount at Rs.32,03,701 and that the appellant had paid that amount; the questioned sum constituted a pre-deposit in excess of the amount indicated by the committee. Section 130 generally provides that any amount paid under the scheme shall not be refundable and sub-section (2) specifically provides that where any predeposit or other deposit already paid exceeds the amount payable as indicated in the statement of the designated committee, the difference shall not be refunded. Applying these provisions, and having found no valid procedural challenge by the appellant, the Tribunal held there was no basis to order a refund of the excess payment. [Paras 13, 14, 15]

Excess pre-deposit over the amount payable as determined by the designated committee is non refundable under the scheme; the appeal is dismissed.

Final Conclusion: The Tribunal upheld the orders below: the appellant failed to establish a valid disagreement under the SVLDRS procedural mechanism and, in any event, amounts paid in excess of the payable amount determined by the designated committee are non-refundable under the scheme (Section 124(2) proviso and Section 130); the appeal is dismissed.

Clubbing of clearances from alleged dummy firms - Precedent and issue estoppel arising from prior appellate and High Court decisions - Applicability of earlier investigation findings to subsequent periods where no fresh inquiry is conducted

Clubbing of clearances from alleged dummy firms - Precedent and issue estoppel arising from prior appellate and High Court decisions - Whether the clearance value of various firms/companies alleged to be dummy units could be clubbed with the clearance value of the respondent for the period under appeal - HELD THAT: - The Tribunal examined whether the Revenue could club the clearances of several firms/companies with those of the respondent on the ground that they were dummy units. For an earlier period this Tribunal had adjudicated the identical controversy in favour of the respondent (Kich Industries) and had held that the units are separate and their clearance values could not be clubbed. That decision was thereafter affirmed by the Gujarat High Court. In the present proceedings no fresh investigation or new evidence has been undertaken; the department has followed the earlier proceedings. In these circumstances the question is not res-integra. Reliance on the earlier appellate and High Court rulings was therefore legitimate, and the Commissioner (Appeals) correctly dropped the demand by applying that settled position. There was thus no infirmity in the impugned order warranting interference by the Tribunal. [Paras 4]

Impugned order of the Commissioner (Appeals) dropping the demand is upheld; Revenue's appeal dismissed.

Cross objection and condonation of delay - Disposition of the respondent's cross objection and application for condonation of delay - HELD THAT: - The Tribunal recorded that the respondent filed a cross objection together with an application for condonation of delay. The condonation of delay (COD) was allowed and the cross objection was disposed of accordingly. [Paras 5]

COD allowed; cross objection disposed of.

Final Conclusion: The Commissioner (Appeals) was correct in applying this Tribunal's earlier decision (as affirmed by the Gujarat High Court) that the alleged firms are distinct and their clearances cannot be clubbed with the respondent; hence the demand was rightly dropped and the Revenue's appeal is dismissed. The respondent's condonation application was allowed and the cross objection disposed of.

Eligibility for CENVAT credit on input services - nexus between input services and manufacture - input service as defined in rule 2(l) of the CENVAT Credit Rules, 2004 - application of rule 3 of the CENVAT Credit Rules, 2004 - remand for fresh adjudication - compliance with appellate direction - burden of proof to establish nexus between service and manufacture

Compliance with appellate direction - remand for fresh adjudication - Whether the first appellate authority complied with the Tribunal's direction on remand and whether the impugned order should be set aside for non-compliance. - HELD THAT: - The Tribunal had earlier remanded the matter with a specific direction to decide the appeals on merits in the light of reported decisions relied upon by the appellant. The first appellate authority, however, dismissed the appeals without examining the scope of availment of the specific services and treated the matter as concluded on the basis that the appellant had not produced evidence to prove nexus. The Tribunal held that such dismissal did not constitute disposal in accordance with its direction because there was no examination of the specific services or of the applicability of the cited authorities to the appellant's factual case. Given that notices for recovery implicate substantive rights and that the appellant had not been afforded the opportunity in the earlier round to meet factual specifics required by the authorities cited, the appellate order was set aside for failing to adhere to the remand direction. [Paras 5, 6]

Impugned appellate order set aside for non-compliance with Tribunal's direction; matter remanded for fresh adjudication.

Eligibility for CENVAT credit on input services - nexus between input services and manufacture - input service as defined in rule 2(l) of the CENVAT Credit Rules, 2004 - application of rule 3 of the CENVAT Credit Rules, 2004 - burden of proof to establish nexus between service and manufacture - Whether the disputed credits taken in respect of specified services (telecom, air travel agent, mandap/pandal/shamiana, event management) were admissible for the tax periods in question and the nature of the adjudicatory exercise required. - HELD THAT: - The Tribunal observed that the legitimacy of availment of CENVAT credit on the listed services turns on factual establishment of nexus with manufacture and on application of the legal principles laid down by the High Court and Tribunal decisions relied upon by the parties. Because lower authorities did not make the necessary factual findings applying those principles to each specific service, the Tribunal declined to adjudicate the merits itself and directed that the original authority should verify the appellant's factual submissions and apply the law afresh. The Tribunal noted that subsequent decisions have refined application of the High Court's principles to particular services and that a detailed exercise on fact and law is appropriate before appellate adjudication. [Paras 2, 7, 8]

Merits not decided by the Tribunal; the notices are remitted to the original authority for fresh adjudication on the question of eligibility of the disputed CENVAT credits after verifying factual submissions and applying the law.

Final Conclusion: Appeals allowed by way of setting aside the impugned appellate order and remitting the matters to the original adjudicating authority for fresh adjudication of the disputed CENVAT credit claims after verification of factual submissions and application of the governing legal principles.

Deemed credit - Explanation 3 - processed fabrics - Cenvat Credit - job work - manufacture (as per Chapter Note 3)

Explanation 3 - processed fabrics - deemed credit - Scope of Explanation 3 and its effect on entitlement to deemed credit where processed fabrics are used as inputs for further processing - HELD THAT: - The Tribunal held that the Explanation expressly provides that where processed fabrics themselves are used as an input for further processing the provisions of the notification are not applicable. That interpretative conclusion recognises that the Explanation was inserted to exclude benefit of the notification at stages where a processed fabric (for example bleached/mercerized/dyed/printed fabric) is being used as an input for subsequent processing, consistent with the concept of 'manufacture' in Chapter Note 3. Accordingly, Explanation 3 operates to deny deemed credit in cases where the input received by a manufacturer/processor is itself a processed fabric used for further processing. [Paras 6]

Explanation 3 excludes entitlement to deemed credit where processed fabrics are used as inputs for further processing.

Deemed credit - job work - Cenvat Credit - Whether the appellants actually received grey fabrics (and therefore are eligible for deemed credit) and whether the appellants have produced necessary documentary proof - HELD THAT: - On remand from this Tribunal the factual question whether the processors received grey fabrics (which were then sent out for bleaching/mercerizing and returned for further processing) must be determined by the original authority. The Tribunal noted earlier findings and directions indicating a prima facie position that grey fabrics were received, but on scrutiny of the record before it the appellants failed to produce original bills/invoices and transport documents to substantiate receipt. The Tribunal observed that denial for lack of proper documentary evidence appears prima facie correct but, in the interest of justice, afforded the appellants one more opportunity to produce documents proving receipt of grey fabric. Consequently the matter is remanded to the adjudicating authority for de novo verification of facts and grant/rejection of deemed credit in accordance with law and evidence. [Paras 6, 7]

Matter remanded to the adjudicating authority to verify whether grey fabrics were received and to decide eligibility for deemed credit after permitting appellants to produce requisite documents.

Final Conclusion: Impugned orders set aside and the appeals are allowed for the limited purpose of remand: the adjudicating authority is directed to undertake de novo verification whether appellants received grey fabrics (and thereby qualify for deemed credit) and to decide the claims in accordance with the Explanation, relevant notifications and evidence after affording the appellants an opportunity to produce documentary proof.

Illicit removal of excisable goods without payment of duty - reliance on LR and transporters' statements as evidence - requirement of corroborative evidence to fasten liability - confirmation and quantification of duty demand - imposition of penalty and interest concomitant to sustained duty

Reliance on LR and transporters' statements as evidence - requirement of corroborative evidence to fasten liability - Extent to which demand for duty can be sustained where some transport LRs bear the appellant's name but other LRs do not and no corroborative evidence links the appellant to those clearances. - HELD THAT: - The tribunal found that the case against the appellant rested predominantly on LRs recovered from transporters and the statements of those transporters. Where LRs specifically showed the appellant's name, the material was sufficient to sustain the demand in respect of those consignments. However, for transactions where the LRs did not bear the appellant's name and no other corroborative evidence was produced to connect the appellant with those clearances, the demand could not be sustained. The decision distinguishes between matters supported by documentary evidence naming the appellant and matters lacking such corroboration, rejecting the extension of liability in the absence of independent proof linking the appellant to the alleged illicit removals.

Demand sustained only in respect of clearances evidenced by LRs showing the appellant's name; demands in respect of other consignments where no corroborative evidence existed set aside.

Imposition of penalty and interest concomitant to sustained duty - Consequences in relation to penalty and interest where part of the duty demand is sustained. - HELD THAT: - The tribunal held that where a portion of the duty demand is sustained on the basis of available evidence, the appellant is liable to pay penalty and interest corresponding to that sustained portion. The impugned order was accordingly modified to confine duty, penalty and interest liability to the sustainment determined above.

Penalty and interest upheld to the extent of the sustained duty; remaining penalty and interest insofar as they relate to the set-aside demand are discharged.

Final Conclusion: The appeal is partly allowed: the demand, penalty and interest are sustained only in respect of clearances supported by LRs showing the appellant's name; the remaining demand (and attendant penalty/interest) is set aside.

Input service - CENVAT credit - nexus with manufacture - direct or indirect use - inclusive leg of the definition - inclusion in cost of production - remand for fresh consideration

Input service - direct or indirect use - nexus with manufacture - inclusive leg of the definition - remand for fresh consideration - Whether CENVAT credit of service tax paid on services deployed in townships is allowable and whether the matter requires remand for fresh determination under the entirety of the definition of 'input service' in rule 2(l) of the CENVAT Credit Rules, 2004. - HELD THAT: - The Tribunal examined competing precedents (including Manikgarh Cement and Coca Cola India) and held that the broad notion of a generic 'nexus' is insufficient by itself. Conformity must be tested against the entirety of the definition of input service in rule 2(l), including both the principal and inclusive legs. The expression direct or indirect use in the principal leg is material because many services cannot be shown to be directly absorbed in manufacture but may qualify by indirect deployment. The impugned order did not make requisite findings on the applicability of the main (principal) leg of the definition or on whether the disputed services were used directly or indirectly in or in relation to manufacture and clearance of final products. For these reasons the appellate court concluded that appellate determination is hindered and that the original authority must be directed to examine the appellant's submissions on direct/indirect use and determine nexus in light of the full definition. [Paras 9, 10, 11]

Impugned order set aside and matter remanded to the original authority to determine, under the entirety of rule 2(l), whether the services procured for townships were used directly or indirectly in or in relation to manufacture and clearance of final products; appeals allowed by way of remand.

Final Conclusion: The Tribunal allowed the appeals by setting aside the impugned order and remitting the matter to the original authority for fresh determination of eligibility for CENVAT credit of township-related services under the full test of 'input service' in rule 2(l), including assessment of direct or indirect use and the inclusive leg of the definition.

Summary order. Notice issued returnable on 11.1.2023; service of notice waived for respondent No.1, direct service permitted to respondents No.2 and No.3 (including by e-mode on official e-mail); petition seeks refund and mandamus but merits not adjudicated.

Sale price - inclusion of amounts charged at or before delivery in sale price (Explanation II) - exclusion of transport cost from sale price when separately charged (Explanation III) - separately invoiced freight - aggregate turnover / G.T.O. - remittal for fresh consideration of segregated freight

Sale price - inclusion of amounts charged at or before delivery in sale price (Explanation II) - exclusion of transport cost from sale price when separately charged (Explanation III) - separately invoiced freight - Whether freight/transportation charges, though collected by the seller and invoiced separately, form part of the "sale price" and taxable turnover for Financial Year 2010-11. - HELD THAT: - The Court examined the statutory definition of "sale price" under section 2(xlviii) of the JVAT Act and its explanations. Explanation II includes any amount charged by the dealer for anything done in respect of the goods at the time of or before delivery as part of sale price, whereas Explanation III expressly excludes the cost of transport of the goods from seller to buyer provided such cost is separately charged to the buyer. The tribunal and tax authorities relied upon Explanation II but ignored Explanation III and documentary evidence showing separate invoices and a contractual/contractual practice that freight was payable separately (including clause in purchase orders and prior assessments treating freight as not forming part of sale price). Applying the statutory text in context, and following precedent constraining Explanation II to amounts that are consideration for transfer or activities integral to sale, the Court held that where transport charges are genuinely charged separately as freight and supported by invoices and consistent practice, they do not form part of the sale price and taxable turnover. The authorities below therefore erred in law by conflating Explanation II with Explanation III and treating separately invoiced freight as part of G.T.O. [Paras 6, 7, 8, 9, 10]

The finding of the tribunal and the tax authorities that the freight charges formed part of the sale price for 2010-11 was incorrect; separately charged transport cost is excluded from sale price under Explanation III and cannot be treated as taxable turnover on the facts established.

Remittal for fresh consideration of segregated freight - aggregate turnover / G.T.O. - Whether the matter should be remitted for fresh adjudication limited to the claim relating to freight charges shown and charged separately in invoices. - HELD THAT: - Although the Court concluded that the orders under challenge were legally unsustainable insofar as they treated separately invoiced freight as part of sale price, it did not itself compute or quantify adjustments. The Court therefore quashed the assessment order, appellate order, tribunal judgment and consequential demand notice to the extent they relate to the freight issue, and directed remand to the Deputy Commissioner to pass a fresh order after considering material and hearing the petitioner. The remand is confined to the claim concerning freight realized and shown separately, and the fresh exercise is to be completed within twelve weeks from receipt/production of the order copy. [Paras 11]

Orders and demand to the extent they impose sales tax on the separately invoiced freight are quashed; matter remitted to the assessing authority for fresh consideration of the segregated freight claim within twelve weeks.

Final Conclusion: Writ petition allowed: the tribunal and revenue orders treating separately invoiced transport/freight as part of sale price for Financial Year 2010-11 are quashed and set aside; the matter is remitted to the Deputy Commissioner for fresh consideration of the separately charged freight claim within twelve weeks.

Levy of tax on the transfer of goods involved in works contract - deduction for goods purchased from registered dealers and used in the same form - conversion of purchased goods into other goods (conversion test) - reliance on Enforcement Wing D 3 proposal - scope of judicial review of Tribunal orders

Levy of tax on the transfer of goods involved in works contract - deduction for goods purchased from registered dealers and used in the same form - conversion of purchased goods into other goods (conversion test) - reliance on Enforcement Wing D 3 proposal - Whether the purchases of steel by the petitioner were properly treated as deemed sales of steel grills and includible in taxable turnover under the works contract levy. - HELD THAT: - The Court examined the material and the statutory test under the Tamil Nadu General Sales Tax Act relating to works contracts and deductions for goods purchased from registered dealers and used in the same form. The Assessing Officer, relying on the Enforcement Wing's D 3 proposal, treated the steel purchases as converted into grills and assessed deemed sales. The Appellate Commissioner had reversed that treatment on the basis that the original assessment had accepted that the steel was purchased from registered dealers and used as such, and that the Enforcement Officials had not verified accounts before sending the D 3 proposal. The Tribunal, on review of the appellant's own statement and the admitted turnover, concluded that the dealer had himself admitted conversion (having worked out SC) and fixed the tax at the higher rate. The High Court held that the Tribunal did not err in affirming the assessment because the petitioner failed to produce documents to substantiate that steel purchased from a registered dealer was not used in execution of works contract or not converted into grills; accordingly the Tribunal's conclusion on taxability under the works contract provisions was sustainable. [Paras 10, 12, 13, 14]

Tribunal's confirmation that the steel purchases were appropriately taxable under the works contract levy was upheld; petitioner failed to prove non conversion or entitlement to deduction.

Scope of judicial review of Tribunal orders - Whether the High Court should interfere with the Tribunal's order on merits under Article 226. - HELD THAT: - The Court recalled the limited scope of judicial review of Tribunal orders, permitting interference only for violation of principles of natural justice or where an order is ex facie perverse or arbitrary. Applying that standard, the Court found no flaw in the Tribunal's decision making process: there was no evident perversity, arbitrariness, or breach of natural justice in the impugned order, and the Court was concerned only with the decision making process rather than re adjudicating the merits. Consequently, the writ petition seeking to quash the Tribunal's order was not maintainable. [Paras 15, 16]

High Court will not interfere; the Tribunal's order stands as it does not suffer from any reviewable infirmity.

Final Conclusion: Writ petition dismissed; the Tribunal's order confirming the assessment in respect of the steel purchases under the works contract levy is upheld and the High Court finds no ground for interference under Article 226.

Power under Section 91 of the Code of Criminal Procedure to summon persons and documents - Right of accused to summon documents and witnesses for defence - Authenticity of documents as a material issue in trial under Section 138 of the Negotiable Instruments Act - Burden and standard of proof in defence under Section 138 of the Negotiable Instruments Act (preponderance of probability) - Finality of Income Tax authority's orders not ousting Court's power to summon records

Power under Section 91 of the Code of Criminal Procedure to summon persons and documents - Right of accused to summon documents and witnesses for defence - Authenticity of documents as a material issue in trial under Section 138 of the Negotiable Instruments Act - Finality of Income Tax authority's orders not ousting Court's power to summon records - Whether the trial Court erred in refusing to issue summons to the Income Tax Authorities to produce ITRs, balance sheets and related records sought by the accused under Section 91 Cr.P.C. in defence of a complaint under Section 138 NI Act. - HELD THAT: - The High Court held that an accused is entitled to call for production of documents and to summon witnesses under the Court's power in Section 91 Cr.P.C. when such material is necessary for his defence. The trial Court's conclusion that the proceedings were not for deciding authenticity of documents was incorrect where the accused specifically alleged fabrication and sought production of the records actually submitted to the Income Tax Authorities so that genuineness could be tested. The Court relied on precedent holding that the finality attached to orders of the Income Tax Commissioner does not impair the power of a criminal Court to summon production of records, and that refusal to issue summons where documents in possession of a third party are necessary for defence amounts to misapplication of Section 91. The petitioners' application for witness summons to the Income Tax Authority therefore should have been allowed; the High Court found no bar to calling the Income Tax officer and obtaining the official records for inspection and cross examination in the trial. [Paras 11, 12]

Impugned order refusing summons is set aside; trial Court directed to issue summons to the Income Tax Authorities as prayed and to proceed with and expedite the trial.

Final Conclusion: Writ petition allowed. The order of the JMFC dated 02.08.2022 is set aside; the trial Court is directed to issue summons to the Income Tax Authorities for production of ITRs, balance sheets and related records as sought by the accused and to expeditiously proceed with the trial, preferably within six months.