TaxTMI Updates e-Newsletter
Feb 07,2019

Constitutional validity of a statutory saving clause - effect of a constitutional amendment on pre-existing state tax laws - simultaneous legislative power under Article 246A - transitional provision / sunset clause in constitutional amendment - effect of repeal/omission on pending proceedings and accrued rights - scope and operation of saving provisions in state GST enactment

Constitutional validity of a statutory saving clause - simultaneous legislative power under Article 246A - effect of repeal/omission on pending proceedings and accrued rights - Validity of Section 174 of the Kerala Goods and Services Tax Act, 2017 - HELD THAT: - The Court held that the State Legislature possessed the legislative competence to enact Section 174 of the KSGST Act to save and preserve rights, liabilities, proceedings and recoveries arising under pre-GST State enactments. The 101st Constitutional Amendment (inserting Article 246A and altering relevant entries) created a special scheme of simultaneous taxation powers for Centre and States but did not denude States of power to legislate transitional saving provisions. Section 19 of the Amendment Act operates as a transitional provision limiting coexistence of inconsistent State laws to one year, but it does not preclude a competent State Legislature from enacting express saving provisions to preserve past operations, proceedings and accrued liabilities; Section 19 is therefore a transitional/omissionary provision and not a bar to the State's saving provision. The Court rejected the petitioners' contention that omission or substitution of entries ipso facto obliterated the State's power to save past transactions or to preserve pending proceedings; the repeal/omission effected by the Amendment did not extinguish rights, liabilities or pending legal processes which the State, within its legislative competence, could save by Section 174. Applying established principles on repeal, sunset clauses, saving and transitional provisions, and construing the Amendment and State Act purposively and in favour of constitutionality where possible, the Court sustained Section 174 as intra vires and operative to preserve investigations, assessments, adjudications and recoveries under the pre-GST statutes for the saved matters. [Paras 142, 143, 144, 187, 188]

Section 174 of the Kerala Goods and Services Tax Act, 2017 is constitutionally valid and the State had power to enact the saving provisions which preserve past operations, proceedings and liabilities under the repealed/amended State tax laws.

Transitional provision / sunset clause in constitutional amendment - effect of repeal/omission on pending proceedings and accrued rights - Whether limitation and other procedural questions were decided by the Court - HELD THAT: - The Court expressly confined its adjudication to the constitutional challenge and did not decide other contested issues such as limitation, maintainability, composite notices or factual adjudications. Those matters were left untouched as mixed questions of fact and law. The Court provided interim equitable directions to avoid prejudice arising from time spent in these writ proceedings: departmental authorities are to exclude the period spent before the High Court when considering limitation; petitioners have specified time windows to file statutory appeals or replies and the Department will defer coercive action for limited periods to enable exhaustion of statutory remedies. [Paras 189, 190, 191]

Limitation and other procedural or factual issues remain undecided by this judgment and are left to the appropriate statutory fora; limited interim directions were given to preserve petitioners' opportunity to pursue statutory remedies.

Final Conclusion: The constitutional challenge to Section 174 of the Kerala GST Act fails; the State law saving past transactions and pending proceedings under pre-GST State tax statutes is intra vires and is upheld. Other issues raised in the petitions, including limitation and factual challenges to individual assessments or notices, were not adjudicated and remain open for decision by the competent authorities or appellate forums, with limited interim facilitation directed by the Court.

Technical glitch on GST portal - IT Grievance Redressal Mechanism - nodaI officer facilitation for FORM GST TRAN-1 upload - input tax credit on migration - relief without reference to statutory time frame

Technical glitch on GST portal - nodaI officer facilitation for FORM GST TRAN-1 upload - input tax credit on migration - relief without reference to statutory time frame - Direction to apply to the Nodal Officer for resolution of failed TRAN-1 upload due to portal glitch and facilitation for claiming input tax credit notwithstanding the time frame. - HELD THAT: - The Court noted the Government of India circular establishing an IT Grievance Redressal Mechanism and the role of nodal officers to examine applications where a demonstrable technical glitch on GST portal prevented completion of statutory processes. Applying that framework, the Court directed that the petitioner may apply to the Nodal Officer, who shall examine the matter and facilitate uploading of FORM GST TRAN-1 without reference to the prescribed time frame. The Court further directed a pragmatic timetable: if the petitioner applies within two weeks of this judgment, the Nodal Officer shall consider the application and take steps within one week. Where uploading remains impossible for reasons not attributable to the petitioner, the authority is to enable the petitioner to take credit of the input tax available on migration. These directions implement the grievance redressal procedure described in the circular and afford relief to taxpayers affected by portal glitches. [Paras 3, 5, 6]

Petitioner permitted to apply to the Nodal Officer who shall facilitate TRAN-1 upload and, if upload is not possible for reasons not attributable to the petitioner, enable claim of input tax credit; timetable specified for application and action.

Final Conclusion: Writ petition disposed by directing the petitioner to apply to the designated Nodal Officer for resolution under the IT Grievance Redressal Mechanism; Nodal Officer to facilitate TRAN-1 upload without regard to the time limit or, if uploading is impossible for reasons not attributable to the petitioner, to enable claim of the available input tax credit, with specified short timelines for action.

Certiorari - Writ under Articles 226/227 - Quashing of administrative orders - Withdrawal of petition with liberty to file representation - Availability of remedies in accordance with law

Certiorari - Quashing of administrative orders - Withdrawal of petition with liberty to file representation - Petition for quashing letters dated 11.06.2018 and 15.06.2018 dismissed as withdrawn with liberty to approach the respondent-authority by filing a detailed representation and to pursue available legal remedies. - HELD THAT: - Counsel for the petitioners elected to withdraw the writ petition after argument, seeking liberty to first approach the respondent by lodging a comprehensive representation setting out the factual matrix. The Court allowed withdrawal on that basis, recording that the petition stands dismissed as withdrawn while expressly permitting the petitioners to submit a detailed representation to the Deputy Commissioner and to avail themselves of any remedies available under law. No adjudication was undertaken on the merits of the challenge to the letters impugned.

Petition dismissed as withdrawn; petitioners granted liberty to file a detailed representation before the respondent and to pursue remedies in accordance with law.

Final Conclusion: The writ petition challenging the impugned letters was dismissed as withdrawn by consent; petitioners permitted to approach the respondent-authority with a detailed representation and to pursue statutory or other legal remedies.

Anti-profiteering - Section 171 of the CGST Act, 2017 - reduction in rate of tax - benefit of input tax credit - commensurate reduction in prices

Section 171 of the CGST Act, 2017 - reduction in rate of tax - commensurate reduction in prices - Whether the respondent had indulged in profiteering by not passing on the benefit of a reduction in the rate of tax and whether the provisions of Section 171 of the CGST Act, 2017 are attracted. - HELD THAT: - The DGAP's investigation recorded that the product in question attracted VAT at 5% pre-GST and GST at 5% post-implementation, and that the pre-GST and post-GST base prices (exclusive of tax) remained identical. Section 171 requires that any reduction in the rate of tax or benefit of input tax credit be passed on to recipients by way of a commensurate reduction in prices. As there was no reduction in the rate of tax and no change in the base price, the statutory condition triggering Section 171 was not satisfied. The Authority accordingly found that the anti-profiteering provisions were not contravened and that the allegation of profiteering was not established. [Paras 4, 7, 8, 9]

The application alleging profiteering is dismissed as Section 171 is not attracted in the absence of any reduction in the rate of tax or corresponding benefit to be passed on.

Final Conclusion: The complaint is dismissed: no reduction in the rate of tax or change in base price was found, and therefore the anti-profiteering provisions under Section 171 of the CGST Act, 2017 are not attracted.

Anti-profiteering under Section 171 of the CGST Act, 2017 - pass on benefit of reduction in rate of tax - rate of tax remaining unchanged - comparison of pre-GST and post-GST base prices

Anti-profiteering under Section 171 of the CGST Act, 2017 - pass on benefit of reduction in rate of tax - rate of tax remaining unchanged - comparison of pre-GST and post-GST base prices - Whether the respondent indulged in profiteering by failing to pass on benefit of any reduction in the rate of tax on supply of "Little Star Dhoti 406" following implementation of GST w.e.f. 01.07.2017. - HELD THAT: - The DGAP's investigation compared invoice-wise pre-GST and post-GST details and found that the product attracted VAT at 5% pre-GST and GST at 5% post-GST, with identical pre-tax (base) prices in both periods. The DGAP recorded that neither the rate of tax nor the base price changed on implementation of GST. Since Section 171(1) requires passing on a commensurate reduction in price only where there is a reduction in the rate of tax or benefit of input tax credit, and no reduction in the tax rate or change in base price was shown, the statutory trigger for anti-profiteering action was absent. The Kerala Screening Committee's contention of an increase in sales value was noted but not supported by the invoice comparison relied upon by the DGAP; the Authority found no establishment of profiteering under the statutory test.

No contravention of Section 171 of the CGST Act, 2017 was established; the application alleging profiteering is dismissed.

Final Conclusion: The Authority accepted the DGAP report that the tax rate and base price remained unchanged on implementation of GST; therefore the anti-profiteering provisions were not attracted and the complaint is dismissed.

Commensurate reduction in prices - denial of input tax credit (ITC) - pass on benefit of tax rate reduction - product/SKU-wise calculation of profiteering - transaction value (actual price paid) versus menu/MRP price - deposit in Consumer Welfare Fund - interest on refund and deposit - investigation period 15.11.2017 to 31.05.2018 - show cause for penalty under Section 122(1)(i)

Commensurate reduction in prices - denial of input tax credit (ITC) - pass on benefit of tax rate reduction - Whether the respondent failed to pass on to recipients the benefit of GST rate reduction and denial of ITC by way of commensurate reduction in prices and the quantum of profiteering. - HELD THAT: - The Authority applied Section 171 of the CGST Act, 2017 to examine whether reduction of the GST rate from 18% to 5% w.e.f. 15.11.2017 together with denial of ITC resulted in an obligation on the respondent to reduce prices in absolute terms. On analysis of product-wise pre- and post-rate-reduction base prices, ITC available prior to 15.11.2017 (computed for July-October 2017 after excluding inter-unit transfers) and the respondent's sales data reconciled with returns, it was found that the respondent increased base prices of a number of SKUs beyond the permissible adjustment for denial of ITC (computed as 5.59%). For 170 SKUs out of 393, base-price increases exceeded the 5.59% impact of denied ITC. The Authority accepted the DGAP's detailed calculations (Annexure-23) and concluded that the net higher sale realization (profiteered amount) for the investigation period was Rs. 41,42,97,635/-, inclusive of the small amount attributable to the complainant. [Paras 46, 61]

Respondent found to have not passed on the commensurate benefit; profiteered amount determined as Rs. 41,42,97,635/- and directions issued for reduction of prices, refund to complainant with interest and deposit of the balance into Central and State Consumer Welfare Funds with interest.

Product/SKU-wise calculation of profiteering - transaction value (actual price paid) versus menu/MRP price - Whether profiteering must be computed SKU/product-wise on actual transaction values (net realisation) rather than on menu/MRP prices or on an entity (P&L) basis. - HELD THAT: - The Authority held that Section 171 focuses on the recipient and requires that the benefit of tax reduction and of ITC be passed on in respect of each supply. Accordingly, profiteering must be examined at the level of each Product/SKU so that every recipient who buys a particular SKU receives the commensurate benefit. The value of supply for this purpose is the transaction value actually paid or payable (Section 15), and discounts recorded at or before supply must be excluded. The respondent's contention for an entity-level (P&L) or invoice-netting methodology was rejected because such approaches could deny individual customers the commensurate benefit on specific supplies. [Paras 51, 52, 55]

Calculation on SKU/product-wise actual transaction value is correct; entity/P&L-level netting or use of menu/MRP instead of transaction value rejected.

Deposit in Consumer Welfare Fund - interest on refund and deposit - Whether excess GST collected on the illegally increased base prices (including the tax component) forms part of the profiteered amount and whether unidentifiable recipients' refunds may be deposited in the Consumer Welfare Fund (CWF) with interest. - HELD THAT: - The Authority reasoned that when base prices are increased to negate a rate reduction, customers pay a higher cum-tax price and also incur additional tax on the excessive amount; that additional tax component therefore forms part of the excess charged and must be restored. Where recipients cannot be identified, the profiteered amount is to be deposited in the Central and State CWFs under Rule 133(3)(c). The Authority rejected the submission that such deposit equates to a tax or is otherwise impermissible. [Paras 54]

Excess GST collected forms part of the profiteered amount; respondent directed to refund identifiable amount with interest and deposit balance in Central/State CWFs with interest.

Investigation period 15.11.2017 to 31.05.2018 - show cause for penalty under Section 122(1)(i) - Whether the respondent was afforded due process and whether further penal action is warranted. - HELD THAT: - The Authority found that the respondent was given notice of the investigation, the DGAP's report and multiple opportunities to make submissions and produce data; the objection regarding absence of a separate show cause notice was rejected as belated. On the material, the Authority concluded that issuance of incorrect invoices with arbitrarily enhanced base prices amounted to denial of benefits and an offence under Section 122(1)(i) of the CGST Act, 2017, thereby directing issuance of a show cause notice for imposition of penalty. [Paras 59, 64]

No violation of principles of natural justice; show cause notice to be issued to respondent to explain why penalty under Section 122(1)(i) should not be imposed.

Investigation period 15.11.2017 to 31.05.2018 - Remand for further investigation whether the respondent passed on the benefit of tax reduction after 31.05.2018. - HELD THAT: - The Authority expressly limited its adjudication to the period 15.11.2017 to 31.05.2018 and directed the DGAP to continue investigation on the subsequent period to determine whether the benefit of tax reduction and denial of ITC was passed on to customers after 31.05.2018, to be reported back to the Authority under the CGST Act and Rules. [Paras 63]

Issue remanded: DGAP to investigate post 31.05.2018 compliance and submit findings.

Final Conclusion: The Authority concluded that the respondent (Domino's/parent company) did not pass on the commensurate benefit of GST rate reduction and denial of ITC for the period 15.11.2017-31.05.2018; profiteering was quantified at Rs. 41,42,97,635/-, the complainant is to be refunded his share with interest, the balance is to be deposited in Central and State Consumer Welfare Funds with interest within three months, the DGAP is to continue investigation after 31.05.2018, and a show cause notice for penalty under Section 122(1)(i) is to be issued.

Passing on benefit of reduction in rate of tax under Section 171(1) of the CGST Act, 2017 - Profiteering - Commensurate reduction in prices - Tax rate continuity (no change in rate)

Passing on benefit of reduction in rate of tax under Section 171(1) of the CGST Act, 2017 - Tax rate continuity (no change in rate) - Commensurate reduction in prices - Whether the respondent indulged in profiteering by failing to pass on benefit of reduction in tax rate so as to attract the provisions of Section 171(1) of the CGST Act, 2017. - HELD THAT: - The Directorate General of Anti-Profiteering (DGAP) investigation recorded that the product in question attracted 5% tax both before and after implementation of GST w.e.f. 01.07.2017. The invoice-wise comparison showed identical pre-GST and post-GST base prices (exclusive of tax) and identical tax amounts, demonstrating continuity of the tax rate and no increase in base price attributable to a tax-rate reduction. Section 171(1) requires passing on any reduction in the rate of tax or benefit of input tax credit by way of a commensurate reduction in prices. As there was no reduction in the rate of tax, the statutory trigger for Section 171(1) did not arise. The Authority therefore accepted the DGAP's conclusion that the anti-profiteering provision was not attracted on the facts and evidence before it. [Paras 4, 7, 8, 9]

Application dismissed as Section 171(1) of the CGST Act, 2017 is not attracted since there was no reduction in the rate of tax and no failure to pass on any tax-benefit to the recipient.

Final Conclusion: The Authority accepted the DGAP report that the tax rate and base price remained unchanged pre- and post-GST; since no reduction in tax rate occurred, the anti-profiteering provision under Section 171(1) was not attracted and the application was dismissed.

Anti-profiteering under Section 171 of the CGST Act, 2017 - Reduction in rate of tax and passing on of benefit - Passing on benefit of input tax credit - Comparison of pre-GST and post-GST prices

Reduction in rate of tax and passing on of benefit - Comparison of pre-GST and post-GST prices - Anti-profiteering under Section 171 of the CGST Act, 2017 - Whether the respondent contravened Section 171 of the CGST Act, 2017 by not passing on the benefit of reduction in tax rate in respect of supply of black pepper - HELD THAT: - The Authority considered the DGAP investigation which compared pre-GST and post-GST sale invoices relied upon by the Screening Committee. DGAP found that the product remained the same and that the applicable tax rate was 5% both before and after implementation of GST w.e.f. 01.07.2017. On that basis the Authority held that there was no reduction in the rate of tax and consequently no obligation to pass on any benefit under Section 171(1) of the CGST Act, 2017. The Authority also noted the absence of any complainant representation despite opportunities granted to the Screening Committee to appear and plead the case. [Paras 4, 7, 9]

No contravention of Section 171 of the CGST Act, 2017; the application alleging profiteering is not sustainable.

Final Conclusion: The Authority accepted the DGAP report that there was no reduction in the rate of tax on black pepper on implementation of GST and, accordingly, dismissed the profiteering allegation under Section 171 of the CGST Act, 2017.

Revisionary jurisdiction under Section 263 - erroneous order prejudicial to the interests of the revenue - prima facie material to form opinion for exercise of revisional power - reliability of books of account following survey surrender - duty to record reasons while accepting or rejecting books of account

Revisionary jurisdiction under Section 263 - erroneous order prejudicial to the interests of the revenue - reliability of books of account following survey surrender - prima facie material to form opinion for exercise of revisional power - Validity of the Commissioner's order under Section 263 enhancing income and the Tribunal's quashing of that order - HELD THAT: - The Court held that exercise of power under Section 263 requires a prima facie conclusion that the Assessing Officer's order is both erroneous and prejudicial to the interests of the revenue. Where material exists (here, a substantial surrender during a survey and admissions recorded in the survey statement pointing to unexplained investments, excess stock and cash) the CIT is entitled to form a prima facie opinion that the assessment was passed without proper application of mind to the reliability of the books of account. The Assessing Officer in the present case merely recorded that books were produced and test-checked but did not adequately deal with the admitted discrepancies or the surrender; he accepted the assessee's explanations without logical conclusion. On the material before him the CIT lawfully rejected reliance on the books and applied an appropriate GP rate to compute enhancement. The Tribunal erred in setting aside the revisional order; no illegality or perversity in the CIT's order was shown. [Paras 5, 8, 10, 11, 13]

Tribunal's order quashing the CIT's revision under Section 263 is set aside; the CIT's order enhancing income is sustained.

Duty to record reasons while accepting or rejecting books of account - reliability of books of account following survey surrender - Direction to the Department regarding treatment of cases involving search, seizure or survey and books of account - HELD THAT: - The Court observed that in cases of search, seizure or survey where surrender or concealed income is detected, Assessing Officers must ensure proper scrutiny and record reasons for accepting or rejecting books of account rather than making cursory entries that books were 'produced and test checked'. This obligation is procedural and intended to safeguard revenue interests and provide transparency in assessments influenced by survey or surrender findings. [Paras 16]

Registry directed to forward copy of the order to the CBDT for issuance of instructions to Assessing Officers to properly scrutinise and record reasons when accepting or rejecting books of account in search/survey cases.

Final Conclusion: Appeal allowed: the Tribunal's order dated 17.9.2014 quashing the CIT's Section 263 revision is set aside; the CIT's enhancement of income is sustained, and the Registry is directed to forward the order to the CBDT to issue instructions to Assessing Officers on detailed scrutiny and reasoned recording when books of account are accepted or rejected in search/survey cases.

Revisionary jurisdiction under section 263 - prejudicial to the interests of the revenue - corpus donation under section 11(1)(d) - voluntary contributions and application for charitable purposes - carry forward of deficit and set-off against future years

Revisionary jurisdiction under section 263 - prejudicial to the interests of the revenue - Validity of CIT's invocation of powers under section 263 to set aside the assessment order. - HELD THAT: - The Tribunal examined whether the twin conditions for exercise of jurisdiction under section 263 - that the assessing officer's order is erroneous and that it is prejudicial to the interests of the revenue - were satisfied. It found that even if corpus donation of a specified amount were treated contrary to the CIT's view, no loss to revenue would flow because the assessee had an overall deficit for the year which, when adjusted with the alleged misuse of corpus, still resulted in a surplus within the permissible accumulation limit; the Assessing Officer had earlier computed this position. Reliance was placed on binding principles that mere disagreement or the availability of an alternative view does not render an order "prejudicial to the interests of the revenue" unless the AO's view is unsustainable in law. On these facts the condition of prejudice to revenue was not fulfilled and the CIT's exercise of section 263 was held to be without jurisdiction. [Paras 7]

CIT's order under section 263 setting aside the assessment was quashed as the prerequisite of the AO's order being prejudicial to the interests of revenue was not satisfied.

Corpus donation under section 11(1)(d) - voluntary contributions and application for charitable purposes - carry forward of deficit and set-off against future years - Whether utilization of funds alleged to be from corpus donations violated the proviso to section 11(1)(d) so as to justify revisional action. - HELD THAT: - The Tribunal analysed the nature of receipts and expenditures: the receipts in question were voluntary contributions with donor letters qualifying part as corpus; there were no project/restrictive grants. The assessee showed an excess of expenditure over income for the year and corpus amounts were separately reflected in accounts. Authorities were cited holding that even if trustees expend corpus for charitable purposes, the trust does not ipso facto lose exemption and any breach would attract trustee liability rather than taxability of the trust. Further, the deficit may be carried forward and set off in subsequent years. On these legal and factual foundations the Tribunal concluded that there was no contravention of section 11(1)(d) warranting revisionary interference. [Paras 7]

No violation of section 11(1)(d) was established; the CIT's conclusion that corpus had been impermissibly applied was incorrect and cannot sustain the section 263 order.

Final Conclusion: The Tribunal allowed the appeal, quashed the CIT's order passed under section 263, and held that the conditions for invoking revisionary jurisdiction were not satisfied and that no breach of section 11(1)(d) was established in respect of the corpus donations for Assessment Year 2013-2014.

Capital gains on transfer of property - acquisition free of cost under amalgamation and its taxability - fair market value as on 01.04.1981 - precedent of the jurisdictional High Court

Capital gains on transfer of property - acquisition free of cost under amalgamation and its taxability - precedent of the jurisdictional High Court - Assessee liable to capital gains on sale of land at Olavakkode. - HELD THAT: - The Tribunal upheld the conclusion that capital gains arise on the sale of the Olavakkode land. The Assessing Officer had assessed the capital gains, the CIT(A) affirmed that view relying on the Kerala High Court's decision in the assessee's own case for assessment year 1991-1992, which rejected the contention that acquisition free of cost under a scheme of amalgamation precluded liability to capital gains. The Tribunal accepted the reasoning and the jurisdictional High Court precedent, and accordingly rejected the assessee's claim that the property, having been acquired free of cost, was not chargeable to capital gains. [Paras 7]

Liability to capital gains on the sale of the Olavakkode land is confirmed against the assessee.

Fair market value as on 01.04.1981 - Fair market value as on 01.04.1981 is to be taken at Rs. 269 per cent as adopted by the Assessing Officer. - HELD THAT: - The Assessing Officer adopted the value of Rs. 269 per cent based on transactions in adjacent survey numbers; the CIT(A) found no reason to disturb that adoption. The assessee failed to produce evidence or material to show that the fair market value as on 01.04.1981 exceeded the value adopted by the AO. On the material before it, the Tribunal found no basis to interfere with the valuation adopted by the authorities and therefore confirmed the FMV fixed at Rs. 269 per cent. [Paras 10]

The fair market value as on 01.04.1981 is confirmed at Rs. 269 per cent and the assessee's challenge is rejected.

Final Conclusion: Both the appeals and the stay applications filed by the assessee are dismissed; capital gains liability affirmed and the fair market value for 01.04.1981 confirmed at the value adopted by the Assessing Officer.

Commencement of business versus setting up of business - expenditure wholly and exclusively for the purpose of business - commercial expediency - allowability of foreign exchange fluctuation loss as business expenditure - allowability of interregnum expenses

Commencement of business versus setting up of business - allowability of interregnum expenses - Whether the assessee had commenced business prior to or during the relevant year. - HELD THAT: - The Tribunal analysed the factual matrix year-wise and the findings of the lower authorities. The Assessing Officer had recorded that the assessee had not started any business, but earlier proceedings showed the assessee returned business losses in AY 2009-10 which were accepted, and in AY 2010-11 the CIT(A) allowed the claim holding that the business was set up and commenced on 23rd July, 2008. The Assessing Officer's Central Scrutiny Report accepted the CIT(A)'s order on merits and noted the position. Applying the settled principle that a business may be 'set up' and ready to commence before revenue is earned and that expenditures incurred after setting up and before actual income arises (the interregnum) are allowable, the Tribunal held that the factual findings and precedents of the jurisdictional High Court supported the conclusion that the assessee's business had been set up/commenced in FY 2008-09 and therefore the Assessing Officer was not justified in holding no business had commenced for AY 2011-12. [Paras 8, 9, 10, 11, 13]

The assessee had commenced its business (set up on 23rd July, 2008) and the Assessing Officer's finding to the contrary for AY 2011-12 is incorrect.

Commercial expediency - expenditure wholly and exclusively for the purpose of business - allowability of foreign exchange fluctuation loss as business expenditure - Whether the foreign exchange fluctuation loss on repayment of advances to the subsidiary was deductible as expenditure for the purpose of business. - HELD THAT: - The Tribunal applied the principle laid down by the Supreme Court and the jurisdictional High Court that advances to related entities are deductible where they are made as a matter of commercial expediency in furtherance of the assessee's business. The assessee had incorporated an overseas subsidiary with identical objects to pursue power projects abroad and advanced funds for that commercial purpose. The subsidiary later refunded the monies, and on repatriation the assessee suffered a foreign exchange loss. Considering the object clauses, the conduct of bidding through the subsidiary and authoritative precedents establishing that commercially expedient advances to subsidiaries are business expenditure, the Tribunal concluded the exchange loss arose in the course of normal business activities and was incurred wholly and exclusively for business. [Paras 14, 15, 16, 17, 18]

The foreign exchange fluctuation loss on realization of the investment/advance to the subsidiary is an allowable business expenditure.

Final Conclusion: Following the findings that the assessee had set up and commenced business in FY 2008-09 and that the advance to the overseas subsidiary was made out of commercial expediency, the Tribunal upheld the CIT(A)'s reasoning and dismissed the Revenue's appeal for AY 2011-12.

Penalty under Section 271(1)(c) - Concealment of income - Furnishing inaccurate particulars of income - Show cause notice specifying limb of penalty - Recording of satisfaction by Assessing Officer - Initiation of penalty proceedings without clear charge

Penalty under Section 271(1)(c) - Show cause notice specifying limb of penalty - Recording of satisfaction by Assessing Officer - Initiation of penalty proceedings without clear charge - Whether the penalty imposed under section 271(1)(c) for Assessment Year 2012-13 is sustainable where the notice and penalty order do not clearly identify whether it was initiated for concealment of income or for furnishing inaccurate particulars of income and the Assessing Officer has not recorded a clear satisfaction under the correct limb. - HELD THAT: - The Tribunal examined the show cause notices and the penalty order and found that the notices did not specify which limb of section 271(1)(c) proceedings were initiated. The Assessing Officer's own statements in the penalty order are inconsistent-at one place referring to initiation for furnishing inaccurate particulars and elsewhere recording satisfaction for concealment of income-so that it is not clear under which charge the penalty was levied. The Tribunal held that initiating and sustaining penalty proceedings without specifying the precise limb and without a clear recorded satisfaction as to that limb is contrary to law. Reliance was placed on precedents where notices and penalty orders that failed to specify the limb attracted deletion of penalty. Applying these authorities, the Tribunal concluded that the penalty is not sustainable and deleted it. [Paras 5, 6]

Penalty under section 271(1)(c) for Assessment Year 2012-13 is cancelled and the appeal is allowed.

Final Conclusion: The Tribunal deleted the penalty levied under section 271(1)(c) for Assessment Year 2012-13 because the show cause notices and penalty order failed to specify clearly whether the proceedings were for concealment of income or for furnishing inaccurate particulars and the Assessing Officer did not record a consistent or clear satisfaction; appeal allowed.

Penalty under section 271(1)(c) - furnishing inaccurate particulars of income - initial onus on assessee under section 68 - burden to rebut evidence lies on Assessing Officer - distinctness of penalty proceedings and assessment/quantum proceedings

Penalty under section 271(1)(c) - furnishing inaccurate particulars of income - burden to rebut evidence lies on Assessing Officer - Whether the penalty imposed for the credited amount could be sustained when the Assessing Officer did not disprove the documents and confirmations filed by the assessee. - HELD THAT: - The Tribunal found that the assessee had filed confirmations, bank statements, PAN copies and identity/creditworthiness documents in support of the share capital and unsecured loans, thereby discharging the initial onus under the provision invoked in the assessment. The Assessing Officer, however, neither verified nor produced evidence in the penalty proceedings to disprove the veracity of those documents. The Tribunal emphasised that mere confirmation of an addition in the assessment order does not by itself establish that the particulars furnished were inaccurate; for penalty to be levied the Department must demonstrate that the documents were false or inadequate. In absence of any independent investigation or rebuttal evidence in penalty proceedings, the AO could not sustain satisfaction that the assessee furnished inaccurate particulars of income. [Paras 12]

Penalty set aside as Assessing Officer failed to disprove documents filed by the assessee; levy of penalty for furnishing inaccurate particulars was unsustainable.

Distinctness of penalty proceedings and assessment/quantum proceedings - initial onus on assessee under section 68 - Whether confirmation of an addition in the assessment (quantum) automatically justifies imposition of penalty under section 271(1)(c). - HELD THAT: - The Tribunal reiterated that assessment (quantum) proceedings and penalty proceedings are separate and distinct. Even if an addition in quantum is confirmed and the assessee does not appeal against that addition, it does not ipso facto establish a case for penalty. Once the assessee discharges the initial onus by producing evidentiary material, the burden shifts to the Department to rebut that material in penalty proceedings. The mere fact of confirmation of addition by the appellate authority in quantum without separate adjudication or evidence in penalty proceedings is not sufficient to sustain a penalty. [Paras 12]

Confirmation of addition in quantum does not automatically warrant penalty; penalty cannot be sustained without Department's rebuttal in penalty proceedings.

Final Conclusion: Appeal allowed; penalty confirmed by Assessing Officer and CIT(A) set aside because the Assessing Officer did not disprove the documents produced by the assessee and penalty proceedings are distinct from quantum proceedings, requiring independent satisfaction which was absent.

Deemed dividend under section 2(22)(e) - revision by Pr. CIT as being erroneous and prejudicial to the interests of revenue under section 263 - requirement of actual payment for invoking clause (e) of section 2(22) - transfer of liabilities versus distribution of assets/reduction of accumulated profits

Deemed dividend under section 2(22)(e) - requirement of actual payment for invoking clause (e) of section 2(22) - transfer of liabilities versus distribution of assets/reduction of accumulated profits - Whether amounts shown as creditors/loans transferred to the assessee attracted deeming fiction of dividend under section 2(22)(e) and thereby justified revision of the assessment under section 263 as erroneous and prejudicial to the revenue - HELD THAT: - The Tribunal examined the factual matrix and account entries and accepted the assessee's case that there was no actual payment or transfer of assets by the companies to the assessee; instead trade liabilities were taken over by the assessee through journal entries, increasing his obligation to pay creditors. The Tribunal applied the principle that clause (e) of section 2(22) contemplates an actual payment by the company to the shareholder such that there is a distribution of assets or reduction of accumulated profits, and relied on the ratio in CIT v. Parle Plastics Ltd. to the effect that only amounts actually advanced/paid during the relevant year fall within clause (e). Having found that reserves/accumulated profits were not reduced (reserves increased from 0.50 crores to 1.08 crores) and that no direct or indirect benefit in the form of asset distribution or reduction of accumulated profits accrued to the assessee, the Tribunal concluded there was no chargeable deemed dividend. Since there was no substantive omission or fact establishing revenue loss, the assessment order could not be held to be erroneous and prejudicial to the revenue warranting revision under section 263. [Paras 4]

The additions could not be treated as deemed dividend under section 2(22)(e); the Pr.CIT's view under section 263 is unsustainable and is set aside, and the assessment order is restored.

Final Conclusion: The Tribunal allowed the appeal, set aside the Pr.CIT's revision order under section 263, and restored the assessing officer's order for A.Y. 2013-14 on the ground that no actual payment or distribution reducing accumulated profits was made to attract deemed dividend under section 2(22)(e).

Prior period adjustments - crystallisation of liability - mercantile system of accounting - spillover expenditure - doctrine of consistency - remand for fresh consideration

Prior period adjustments - crystallisation of liability - mercantile system of accounting - spillover expenditure - doctrine of consistency - remand for fresh consideration - Prior period expenditure of Rs.3,45,98,000/- debited in the Profit & Loss account and disallowed by the Assessing Officer and confirmed by the CIT(A). - HELD THAT: - The Tribunal examined whether expenditure debited as prior period adjustment, though relating to earlier years, could be allowed in A.Y. 2010-11 when it was claimed on crystallisation during that year. While noting that the assessee follows the mercantile system and that each year is ordinarily to be determined independently, the Tribunal accepted that where expenditures regularly 'spill over' and are crystallized in subsequent years by reason of the assessee's consistent business practice and accounting procedure, they may be allowable in the year of crystallisation. Reliance was placed on precedents holding that consistent accounting practice and actual crystallisation of liability are relevant: if the expenditure is genuinely crystallized in the subsequent year and the practice is consistent (doctrine of consistency), denial is not warranted. The Tribunal observed that the CIT(A) had upheld the disallowance because the assessee had not produced evidence of crystallisation for the year under appeal. On the material before it, and because some items appeared to have been crystallized while others required verification, the Tribunal found it appropriate to remit the matter to the CIT(A) to examine, on merits and on the basis of records, which prior period expenditures were actually crystallized in A.Y.2010-11 in accordance with the assessee's regular business practice and to allow those amounts accordingly. [Paras 8]

The order of the CIT(A) is set aside and the matter is remitted to the CIT(A) to reconsider afresh and allow those prior period expenditures which are shown to have been crystallized during A.Y.2010-11 in accordance with the assessee's regular business practice.

Dismissal as not pressed - Ground No.3 concerning disallowance of demurrages - HELD THAT: - The assessee's authorised representative did not press Ground No.3 at the hearing. In the absence of any insistence on this ground by the assessee, the Tribunal treated the ground as not pressed and did not adjudicate the substantive merits. [Paras 9]

Ground No.3 is dismissed as not pressed.

Final Conclusion: Appeal partly allowed for statistical purposes: the Tribunal remitted the prior period expenditure issue to the CIT(A) for fresh consideration to allow amounts crystallized in A.Y.2010-11 as per the assessee's consistent business practice; Ground No.3 was dismissed as not pressed.

Reopening of assessment and validity of successive notices - Change of opinion doctrine - Reason to believe for escapement of income - Finality of assessment and provisional assessment - Determination of fair market value for cost of acquisition

Reopening of assessment and validity of successive notices - Change of opinion doctrine - Reason to believe for escapement of income - Validity of the second notice dated 28-03-2016 under section 148 after the earlier notice dated 30-03-2015 was dropped - HELD THAT: - The Tribunal held that there is no absolute bar on issuing reassessment notices more than once so long as statutory conditions are met. Ordinarily reinitiation on the same subject matter would amount to an impermissible change of opinion if the AO had earlier formed and decided upon an opinion; however an exception applies where the first proceedings were dropped at the threshold without adjudication on merits for technical or infirm reasons. The reasons recorded on 10-03-2015 were held to be vague and not reflecting a positive satisfaction that income had escaped assessment, being limited to a request to "verify the transaction." The AO validly dropped those proceedings and thereafter within time issued a fresh notice on 28-03-2016 after recording proper reasons to believe escapement of income based on the disparity between co-owners' declared cost of acquisition. The Tribunal therefore upheld the second notice as validly issued and not an impermissible change of opinion. [Paras 10, 11, 12, 13]

The second notice dated 28-03-2016 was validly issued; reassessment pursuant thereto was not barred as a change of opinion.

Finality of assessment and provisional assessment - Whether the assessment order dated 30-12-2016 was provisional because it stated adoption of FMV subject to DVO report - HELD THAT: - The Tribunal found that although the assessment order mentioned that the adopted FMV would be subject to any determination by the DVO, the AO concluded the assessment by adopting FMV at Rs. 400 per sq.mtr, passed the assessment order, and issued a demand notice under section 156. There was no subsequent revision of the assessment or any evidence that an adverse DVO report was taken into account; consequently the assessment operated as a final order and could not be characterized as provisional. [Paras 16, 17]

The assessment order is final and not provisional; the contention of provisional assessment is rejected.

Determination of fair market value for cost of acquisition - Reason to believe for escapement of income - Whether adoption of FMV at Rs. 400 per sq.mtr as on 01-04-1981 (for cost of acquisition) was justified instead of the assessee's registered valuer's rate of Rs. 700 per sq.mtr - HELD THAT: - The Tribunal compared the assessee's registered valuer's report, which admitted absence of comparable sales for 1981 and arrived at Rs. 700 per sq.mtr on the basis of spot enquiries, with the Ready Reckoner/municipal valuation and the value adopted by a co-seller (and supported by the Town Planning Department) of Rs. 400 per sq.mtr. Given the registered valuer's own admission of no comparable sales and that the municipal/official ready reckoner and co-seller's declared rate pointed to Rs. 400 per sq.mtr, the Tribunal found the latter to be more authentic and reliable. The AO therefore correctly adopted Rs. 400 per sq.mtr for computing cost of acquisition and capital gains. [Paras 18, 20]

Adoption of FMV at Rs. 400 per sq.mtr as on 01-04-1981 for computing cost of acquisition and capital gains was proper.

Final Conclusion: The reassessment proceedings and the assessment framed thereunder were upheld: the second notice dated 28-03-2016 was validly issued after the earlier proceedings were dropped; the assessment dated 30-12-2016 is final and not provisional; and the adoption of FMV at Rs. 400 per sq.mtr as on 01-04-1981 for computing capital gains is sustained. The appeal is dismissed.

Income from House Property - Deduction under section 24(a) - Assessability of rent from letting terrace and permitting erection of telecom towers - Income from Other Sources

Income from House Property - Deduction under section 24(a) - Assessability of rent from letting terrace and permitting erection of telecom towers - Income from Other Sources - Whether rent received by a co-operative housing society for letting out the building terrace and permitting erection/installation of cell phone towers is assessable under the head Income from House Property and eligible for deduction under section 24(a), or is taxable as Income from Other Sources and not eligible for such deduction. - HELD THAT: - The Tribunal examined identical facts for AYs 2013-14 and 2014-15 and found the issue squarely covered by earlier Tribunal precedents (as reproduced from Matru Ashish Co-operative Housing Society Ltd. v. ITO and related decisions) which held that receipts from letting out the terrace for erection of antennas/telecom equipment form part of the building and are to be assessed under the head Income from House Property. The Assessing Officer had treated such receipts as Income from Other Sources and disallowed the deduction claimed under section 24(a). Having found no distinguishing feature in the present facts, the Tribunal respectfully followed the consistent line of its earlier decisions and concluded that the letting out of the terrace must be assessed as Income from House Property and is therefore subject to statutory deduction under section 24(a). [Paras 6, 7]

Receipts from letting out the terrace for telecom towers are assessable under Income from House Property and the deduction under section 24(a) is allowable.

Final Conclusion: Both appeals for AY 2013-14 and AY 2014-15 are allowed: the receipts from letting out the terrace for installation of cell phone towers are to be assessed under the head Income from House Property and the deduction under section 24(a) is to be granted.

Section 68 - burden of proof: identity, creditworthiness and genuineness of loans - Statement recorded behind the back of the assessee - right to cross-examination / audi alteram partem - Material collected by investigation wing cannot be used against assessee without opportunity to confront and cross-examine

Section 68 - burden of proof: identity, creditworthiness and genuineness of loans - Statement recorded behind the back of the assessee - right to cross-examination / audi alteram partem - Deletion of addition made under Section 68 of the Act in respect of unsecured loan of Rs. 20,00,000/- on the ground that the assessee had established identity, creditworthiness and genuineness and the Assessing Officer relied solely on a statement recorded at the back of the assessee without permitting cross-examination. - HELD THAT: - The Tribunal examined whether the assessee discharged the initial onus under Section 68 by proving identity of the creditor, the creditworthiness of the creditor and genuineness of the loan transaction. The assessee produced PAN and income-tax return acknowledgement of the lender, ledger entries, bank statements showing receipts and repayment by account-payee cheques, loan confirmation and the lender's audited balance sheet showing sufficient net worth. The Assessing Officer's contrary conclusion rested predominantly on statements recorded during search proceedings in the matter of third parties (the Bhanwarlal Jain group) and information from the investigation wing. The assessee had requested an opportunity to cross-examine the persons whose statements were proposed to be used against her, but no such opportunity was afforded. Relying on the principle in Kishanchand Chellaram that statements obtained behind the back of the assessee cannot be used against the assessee without affording an opportunity of cross-examination, the Tribunal held that the AO could not rely on those statements. With the exclusion of that material there was no adverse material to controvert the documentary evidence produced by the assessee. Accordingly, the initial burden was held to be discharged by the assessee and the Revenue failed to bring independent evidence to disprove the claim; the addition therefore could not be sustained. [Paras 5, 6, 7]

Addition made under Section 68 in respect of unsecured loan of Rs. 20,00,000/- deleted and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal for A.Y.2010-11, deleting the addition under Section 68 of the Act in respect of the unsecured loan of Rs. 20,00,000/-, holding that the assessee had prima facie proved identity, creditworthiness and genuineness and that the AO could not rely on statements recorded behind the assessee's back without affording an opportunity of cross-examination.

Concealment of income - furnishing inaccurate particulars of income - penalty under section 271(1)(c) r.w. Explanation 5A - penalty under section 271AAA - search and seizure u/s. 132(1) - additional income declared in return filed under section 153A - strict construction of penal provisions

Concealment of income - furnishing inaccurate particulars of income - penalty under section 271(1)(c) r.w. Explanation 5A - additional income declared in return filed under section 153A - Sustainability of penalty under section 271(1)(c) where additional income arose from amounts reflected in balance sheet as 'advances from customers' and 'gifts from relatives'. - HELD THAT: - The Tribunal held that amounts which were already reflected in the assessee's balance sheet could not be treated as 'concealment of income' since they were not wholly withheld from books or return. Reliance was placed on the distinction between 'concealment of income' and 'furnishing inaccurate particulars of income' as explained by higher authorities, including T. Ashok Pai , to the effect that 'concealment' denotes a deliberate hiding of particulars whereas 'inaccurate particulars' arise where particulars have been furnished but are wrong, incomplete or unsubstantiated. On the facts the assessee had reflected the amounts in the balance sheet but failed to substantiate them, and therefore the correct characterisation was furnishing inaccurate particulars and not concealment. Because the Assessing Officer recorded satisfaction and levied penalty specifically on the charge of concealment under Explanation 5A to section 271(1)(c), the Tribunal found the invocation of the wrong limb fatal. Penal provisions are to be strictly construed and the penalty levied under the wrong charge was unsustainable; accordingly the penalty on the addition of Rs.10,35,950/- for A.Y. 2004-05 was deleted. [Paras 9, 10, 11, 12]

Penalty under section 271(1)(c) levied as for 'concealment of income' on amounts reflected in balance sheet is unsustainable and is deleted.

Penalty under section 271(1)(c) r.w. Explanation 5A - advances reflected in balance sheet - application of coordinate bench precedents - Whether the same conclusion on wrong charge and deletion of penalty applies to assessment year 2005-06 where facts are identical. - HELD THAT: - The Tribunal applied the reasoning and findings given in the A.Y. 2004-05 appeal mutatis mutandis to A.Y. 2005-06, noting that the additional income arose from amounts reflected in the balance sheet as advances received against sale of plots/flats and that the assessee raised an identical additional ground challenging levy of penalty on the charge of concealment. Given identity of facts and legal principle, the penalty levied for concealment in A.Y. 2005-06 was likewise held unsustainable and deleted. [Paras 15, 16]

Penalty under section 271(1)(c) for A.Y. 2005-06 deleted following the A.Y. 2004-05 decision.

Penalty under section 271AAA - appellate interference standard - Whether penalty confirmed by Commissioner of Income Tax (Appeals) under section 271AAA for A.Y. 2010-11 was liable to be set aside. - HELD THAT: - The Tribunal examined the Commissioner (Appeals)'s order which had partly allowed the assessee's appeal and restricted the penalty, and found no perversity or error warranting interference. The assessee failed to demonstrate that the First Appellate Authority's reasoning was incorrect or unreasonable. Accordingly, the Tribunal upheld the Commissioner (Appeals)'s order confirming penalty under section 271AAA to the extent affirmed by that authority. [Paras 18, 21, 22]

The order of the Commissioner of Income Tax (Appeals) confirming penalty under section 271AAA (as restricted) is upheld and the appeal is dismissed.

Final Conclusion: Appeals for A.Y. 2004-05 and 2005-06 allowing deletion of penalty under section 271(1)(c) (levied on the wrong charge of 'concealment') are allowed; appeal for A.Y. 2010-11 against confirmation of penalty under section 271AAA is dismissed.

Distress sale versus principal-to-principal sale - deemed consideration under section 50C - application of proviso to section 50C retrospectively - stamp duty valuation on the date of agreement - treatment of advance payments under builder's agreement as refundable liability

Distress sale versus principal-to-principal sale - Sale effected by the assessee was not a distress sale but a principal-to-principal sale. - HELD THAT: - The Tribunal compared the original builder's agreement of 10/10/2005 (covering 884.24 sq. m) with the memorandum of understanding/agreement to sell dated 11/10/2011 (covering 2591.12 sq. m). The increase in area in the later agreement and the recorded history of disputes limited to the original smaller area led the Tribunal to conclude the 2011 sale could not be characterised as a distress sale. Consequently, the CIT(A)'s characterisation of the entire sale as a distress sale was not sustained. [Paras 4]

Ground No.1 of the appeal allowed; sale held not to be a distress sale.

Application of proviso to section 50C retrospectively - deemed consideration under section 50C - stamp duty valuation on the date of agreement - The proviso inserted to section 50C by Finance Act 2016 is to be applied retrospectively so that stamp duty (circle) value prevailing on the date of the agreement is to be taken as deemed consideration where the proviso's conditions are satisfied. - HELD THAT: - The Tribunal examined the statutory amendment, its legislative rationale and precedent authorities holding curative amendments remedial in nature may operate retrospectively. Noting that part consideration (a cheque for Rs.15,00,000) was paid on the date of the 11/10/2011 agreement, the Tribunal held the proviso's conditions were satisfied and applied the principle that the amendment is curative and should be treated as retrospective. Accordingly, the circle rate (stamp duty valuation) as on the date of the agreement must be adopted for computing full value of consideration under section 50C. [Paras 4]

Ground No.2 dismissed; stamp duty value as on date of agreement to be treated as deemed consideration under section 50C.

Treatment of advance payments under builder's agreement as refundable liability - The advance of Rs.10,00,000 stated in the 2005 builder's agreement is a refundable liability and not part of the sale consideration for section 50C purposes. - HELD THAT: - The Tribunal relied on the terms of the original builder's agreement (clause 43) which provided for refund of the advance in case of dispute, and on the senior advocate's legal opinion concluding the advance remained repayable. Because the original 2005 agreement was not executed and disputes led to a fresh memorandum of understanding in 2011 which did not incorporate the advance as part of the re-fixed consideration, the AO's addition treating the advance as deemed consideration (and computing a deemed value thereon) was held incorrect. [Paras 4]

Addition of deemed value relating to the Rs.10,00,000 advance deleted.

Deemed consideration under section 50C - stamp duty valuation on the date of agreement - The Assessing Officer is directed to adopt the stamp duty (circle) valuation as on the date of agreement (11/10/2011) as the deemed consideration under section 50C and recompute capital gains accordingly. - HELD THAT: - Having held that the sale was not a distress sale and that the proviso to section 50C applies retrospectively, the Tribunal found that the approved valuer's stamp duty valuation on 11/10/2011 must be taken as the deemed consideration. The Tribunal therefore directed the Assessing Officer to take the circle rate valuation placed on record (stamp duty valuation as on the agreement date) instead of the agreed sale price relied upon by the CIT(A). The AO was directed to recompute capital gains on that basis. [Paras 5]

Ground No.4 allowed; AO directed to adopt stamp duty valuation as on 11/10/2011 and recompute capital gains.

Final Conclusion: The Revenue appeal is partly allowed: the Tribunal held the sale was not a distress sale; treated the Finance Act 2016 proviso to section 50C as retrospectively applicable and directed adoption of stamp duty value as on the date of agreement for computing deemed consideration; confirmed deletion of the addition relating to the alleged refundable advance; and remanded computation of capital gains to the Assessing Officer on the basis of the stamp duty valuation as on 11/10/2011.

Reopening of assessment under section 147/148 - "reason to believe" and scope after Explanation 3 - fresh information from investigation/search as valid basis for forming belief to reopen - limits on reopening - not mere change of opinion but belief must be based on material, not mere suspicion - unexplained credits charged under section 68 - identity, genuineness and creditworthiness - burden shifting under section 68 once assessee proves identity, genuineness and creditworthiness - revenue to disprove - use of third party/investigation statements - requirement of furnishing statement and opportunity for cross examination before drawing adverse inference

Reopening of assessment under section 147/148 - "reason to believe" and scope after Explanation 3 - fresh information from investigation/search as valid basis for forming belief to reopen - limits on reopening - not mere change of opinion but belief must be based on material, not mere suspicion - Validity of reassessment proceedings initiated by the Assessing Officer by issuance of notice under section 148 read with section 147 - HELD THAT: - The Tribunal considered whether the Assessing Officer had 'reason to believe' within the meaning of section 147 to reopen the assessment which was originally processed under section 143(1). The Bench held that, after insertion of Explanation 3 and by virtue of settled precedents, the AO may reopen if he has fresh material enabling a reasonable belief that income chargeable to tax has escaped assessment. Information from the investigation/search in respect of persons allegedly providing accommodation entries and subsequent material received after completion of the original assessment constituted fresh material that could furnish a prima facie basis for forming such belief. The Court rejected the contention that reopening was impermissible merely because the ultimate addition was later deleted on merits at first appeal, emphasising that validity of reopening is to be judged on material available at initiation stage and not on the eventual outcome on merits. While reiterating that mere suspicion is insufficient, the Tribunal found the material on record adequate to support the AO's honest and reasonable belief and therefore upheld the reopening.

Reopening under section 147/148 was valid; grounds challenging reopening (grounds 1-6) dismissed.

Unexplained credits charged under section 68 - identity, genuineness and creditworthiness - burden shifting under section 68 once assessee proves identity, genuineness and creditworthiness - revenue to disprove - use of third party/investigation statements - requirement of furnishing statement and opportunity for cross examination before drawing adverse inference - Sustenance of additions under section 68 in respect of share capital/share premium of Rs. 2,76,70,000 and related consequential additions - HELD THAT: - The Tribunal examined whether the AO was justified in treating the share capital/share premium received from twelve investor companies as unexplained credits. The First Appellate Authority had found that the assessee had produced detailed evidence - application forms, PANs, bank statements, confirmations from the investing companies, board resolutions, ROC filings and assessment orders of the investor companies - and that the investing parties confirmed the transactions and displayed bank balances indicating creditworthiness. The Tribunal agreed that once the assessee discharged the primary onus under section 68 by proving identity, genuineness and creditworthiness, the burden shifted to the Revenue to rebut those proofs with contrary material. The AO had relied largely on investigation reports and third party statements which were neither supplied to the assessee during reassessment nor subjected to cross examination; moreover no direct cash trail or cogent material was produced to show the funds originated from the assessee. Applying the settled principle that third party statements used adversely must be furnished and, if relied upon, made available for cross examination, the Tribunal concluded the AO had not disproved the evidence produced by the assessee. Consequently the addition of Rs. 2,76,70,000 (and consequential notional additions) was held to be unsustainable and deleted.

Addition of Rs. 2,76,70,000 as unexplained share capital/share premium under section 68 (and consequential additions) deleted; grounds 6-10 allowed in favour of the assessee.

Unexplained credits charged under section 68 - identity, genuineness and creditworthiness - use of third party/investigation statements - requirement of furnishing statement and opportunity for cross examination before drawing adverse inference - Sustenance of addition under section 68 in respect of the remaining challenged credits (including sums derived from statements of persons investigated) and consequential commission/disallowance - HELD THAT: - The Tribunal considered other additions founded on statements recorded in search/survey of third parties (including members of the Jain group). It observed that the statements did not specifically name the assessee and that the AO had not furnished such statements to the assessee nor permitted cross examination; further, there was no direct evidence of cash deposits in the investors' bank accounts prior to transfer nor any live nexus established between alleged cash injections and the cheques credited to the assessee. Having regard to the assessments of the investing parties under section 143(3) r.w.s.153A, confirmations received, and documents filed by the assessee, the Tribunal followed the approach in the cited coordinate and higher court decisions that, absent contrary cogent material, additions cannot be sustained. Consequential additions and disallowances premised on the deleted credits were also reversed as consequential relief.

Additions based on the unnamed third party statements and related notional commission/disallowances deleted; appellants' grounds in respect of these additions decided in favour of the assessee.

Final Conclusion: The Tribunal upheld validity of the reopening under section 147/148 on the basis of fresh information from investigation/search, but on merits deleted the impugned additions under section 68 (share capital/share premium and related consequential additions) after finding that the assessee had discharged the primary onus by proving identity, genuineness and creditworthiness of investors and that the Revenue failed to rebut those proofs or to furnish and allow cross examination of relied upon third party statements.

Disallowance under section 14A - rule 8D inapplicability - allowability of expenditure on issuance of convertible debentures - treatment of write back of provisions - real income principle - interest on refund offered under section 244A - deduction under section 43B for excise duty paid on closing stock - transfer pricing - arm's length price and Comparable Uncontrolled Price (CUP) - application of RBI Master Circular rates to lending transactions - computation of book profit under section 115JB and scope of Explanation 1 - final assessment to be completed in conformity with DRP directions under section 144C(13)

Disallowance under section 14A - rule 8D inapplicability - Appropriate quantum of disallowance under section 14A for assessment year 2006-07. - HELD THAT: - Rule 8D was not applicable to the impugned year. The DRP directed computation following the jurisdictional High Court's ratio in Godrej & Boyce and the AO, implementing DRP directions, had restricted disallowance to 5% of exempt income. The Tribunal noted earlier coordinate bench decisions in assessee's own cases which restricted the disallowance to 1% of exempt income for comparable years. Applying those consistent decisions to the facts of the present year, the Tribunal directed the AO to compute the disallowance at 1% of the exempt income earned in the previous year. [Paras 7]

Disallowance under section 14A to be computed @ 1% of exempt income; ground partly allowed.

Allowability of expenditure on issuance of convertible debentures - Whether expenditure incurred for issue of Foreign Currency Convertible Notes (FCCN) is capital (share issue expense) or allowable as revenue expenditure. - HELD THAT: - AO treated FCCNs as convertible debentures and disallowed the expenditure as capital. The Tribunal, following its coordinate bench decision in assessee's own case for AY 2005-06 and the Rajasthan High Court in Secure Meters Ltd., held that debentures (convertible or non convertible) are in the nature of loan and expenditure for issuance is allowable. There being no material difference in facts, the Tribunal deleted the addition made by the AO. [Paras 12]

Addition disallowing FCCN issue expenses deleted; ground allowed.

Treatment of warranty provision reversals - Allowability of the warranty provision write back of Rs. 20.77 crore. - HELD THAT: - Though the AO disallowed the provision on the basis that the liability had not crystallized, no specific disallowance was reflected in the final computation of income. The Tribunal treated the matter as academic and declined to adjudicate further. [Paras 18]

Ground dismissed as academic (no adjudication).

Treatment of write back of provisions - real income principle - Claim to exclude excess write back of bad debt provisions inadvertently offered in return and write back of amounts previously disallowed. - HELD THAT: - Assessee explained that an excess amount was inadvertently offered in the return and placed material before the AO during assessment proceedings. The AO and DRP rejected the claim solely because no revised return was filed. The Tribunal applied the principle that real income is taxable and, where excess income is offered by mistake, the claim must be considered on facts and material. It restored the issue to the AO for verification and fresh decision after affording the assessee hearing and considering relevant authorities to be cited by the assessee. [Paras 24]

Issue restored to the Assessing Officer for verification and decision after opportunity of being heard.

Interest on refund offered under section 244A - Quantum of income to be assessed in AY 2006-07 on account of interest on refund under section 244A granted for AY 2004-05. - HELD THAT: - Assessee had offered interest shown in intimation under section 143(1) but the assessment order for AY 2004-05 recorded a lower accepted amount. The dispute concerned the correct quantum assessable in the impugned year. The Tribunal directed the AO to verify facts relating to the claim and decide the correct quantum after giving the assessee an opportunity of hearing. [Paras 30]

Assessing Officer directed to verify and decide the correct quantum; ground allowed for statistical purposes.

Deduction under section 43B for excise duty paid on closing stock - Allowability of deduction under section 43B for excise duty and education cess actually paid on vehicles held as stock in trade as on 31st March 2006. - HELD THAT: - Assessee claimed deduction in assessment proceedings though not in the original return. The DRP had directed verification and reference to the High Court decisions in Berger Paints and Bharat Petroleum. The AO disallowed the claim again without discussing applicability of those ratios. The Tribunal held that if the cited High Court ratio makes the claim allowable, it cannot be rejected merely because it was not earlier allowed, and directed the AO to decide the issue following the cited decisions after affording hearing. [Paras 35]

Assessing Officer directed to decide claim following the cited High Court ratios after verification and hearing; ground allowed for statistical purposes.

Transfer pricing - arm's length price and Comparable Uncontrolled Price (CUP) - application of RBI Master Circular rates to lending transactions - Appropriateness of the transfer pricing adjustment to interest on loan advanced to Associated Enterprise (TTUS) and whether AO/ TPO properly considered assessee's comparable and submissions. - HELD THAT: - TPO determined arm's length interest at LIBOR plus 200 bps relying on RBI Master Circular, rejecting assessee's benchmarking at four month LIBOR plus 15 bps and internal CUP comparables. The Tribunal found that several of the assessee's submissions and workings were not properly examined and that applicability of the RBI circular to the assessee's short term lending required reconsideration. The matter was restored to the AO/TPO for fresh consideration in a speaking order after affording the assessee an opportunity to be heard and dealing with all submissions. [Paras 41]

Transfer pricing issue restored to Assessing Officer/ TPO for fresh consideration with directions to examine assessee's submissions and comparables; ground allowed for statistical purposes.

Computation of book profit under section 115JB and scope of Explanation 1 - final assessment to be completed in conformity with DRP directions under section 144C(13) - Validity of adjustments made by the AO to book profit under section 115JB in the final assessment order though not proposed in the draft and whether adjustments for provision for wealth tax and section 14A disallowance are permissible under Explanation 1 to section 115JB. - HELD THAT: - Section 144C(13) mandates that the AO must complete assessment in conformity with DRP directions; the AO cannot introduce adjustments in the final assessment order that were not in the draft and were not directed by the DRP because that denies the assessee the right to object before the DRP. Accordingly, the Tribunal held such adjustments invalid. Further, adjustments for provision for wealth tax and disallowance under section 14A are not permitted under Explanation 1 to section 115JB; therefore those specific book profit additions were deleted. [Paras 49, 50]

Adjustments to book profit in final order deleted; AO cannot make adjustments not in conformity with DRP directions; ground allowed.

TDS credit verification - Short grant of TDS credit claimed by the assessee. - HELD THAT: - The Tribunal directed the AO to verify facts and grant the actual TDS credit if established on verification. [Paras 52]

Assessing Officer directed to verify and grant actual TDS credit; ground allowed.

Restoration of additional grounds to Assessing Officer - Status of additional grounds (grounds no.12 to 14) raised before the Tribunal for the first time. - HELD THAT: - Given the decision on transfer pricing (ground no.7) and other determinations, the Tribunal restored grounds no.12 to 14 to the Assessing Officer for adjudication after due opportunity of being heard to the assessee. [Paras 55]

Grounds no.12 to 14 restored to the Assessing Officer for adjudication after affording opportunity of hearing.

Final Conclusion: The appeal is partly allowed. Specific additions and adjustments (notably the section 14A disallowance as reduced to 1%, deletion of FCCN issue expense disallowance, and deletion of impermissible book profit adjustments) were set aside or modified; several issues (write back of provisions, interest on refund quantum, excise duty under section 43B, transfer pricing adjustment, TDS credit and certain additional grounds) were restored to the Assessing Officer for verification and fresh decision after affording the assessee an opportunity of being heard in accordance with the directions stated above.

Provisional release of seized goods under Section 110A of the Customs Act, 1962 - country of origin versus transshipment dispute - safeguarding revenue interest during ongoing investigation - modification of conditions for provisional release - security by bond and bank guarantee for provisional release

Provisional release of seized goods under Section 110A of the Customs Act, 1962 - country of origin versus transshipment dispute - safeguarding revenue interest during ongoing investigation - security by bond and bank guarantee for provisional release - Whether the conditions imposed for provisional release of the seized consignments were justified and, if not, what conditions should be imposed to protect the interests of both parties pending investigation and adjudication. - HELD THAT: - The core controversy is the disputed country of origin versus transshipment, with the matter still under investigation; the court declined to decide competing factual materials so as not to prejudice the investigation. Since the respondents had agreed to provisional release under Section 110A of the Customs Act, 1962 but with what the court found to be onerous conditions, the question was whether those conditions were reasonable in the circumstances. The court observed that the latest communication from Sri Lanka prima facie supported the petitioner's claim of origin, and therefore imposing unduly stringent conditions could not be justified. At the same time, the revenue's interest must be protected pending completion of investigation and final adjudication. Balancing these considerations, the court held that modification of the conditions could adequately protect both parties: a full bond to secure the value of the seized goods together with a bank guarantee/security deposit covering a portion of the differential duty would secure the revenue without imposing disproportionate hardship on the importer. The court rejected reliance on a 10% guarantee taken at another port where that amount related to provisional assessment and not to an order under Section 110A, and therefore was not an apt comparator for the present provisional-release order. The order was made expressly without prejudice to the contentions of either party and without determining the merits of the origin dispute, which must be resolved by the investigating and adjudicating authorities. [Paras 12, 13, 14, 15, 16]

The impugned conditions for provisional release are modified: the petitioner shall furnish a bond equal to the value of the seized goods and a bank guarantee/security deposit covering 30% of the differential duty within seven working days, upon receipt of which the respondents shall provisionally release the goods; the order is without prejudice to the ongoing investigation and contentions of the parties.

Final Conclusion: Writ petition allowed in part; conditions for provisional release under Section 110A modified to require a bond for the value of the goods and a bank guarantee/security deposit for 30% of the differential duty, release to follow on compliance; connected writs closed.

Refund of Special Additional Duty (SAD) - Requirement of endorsement on sales invoices - Chartered Accountant's certificate as evidentiary proof - Non-mandatory nature of endorsement under Notification No.102/2007-Cus. - Precedential effect of Tribunal Larger Bench decision

Refund of Special Additional Duty (SAD) - Requirement of endorsement on sales invoices - Chartered Accountant's certificate as evidentiary proof - Non-mandatory nature of endorsement under Notification No.102/2007-Cus. - Whether rejection of the appellant's SAD refund claim on the ground that condition 2(b) of Notification No.102/2007-Cus. (endorsement on sales invoices) was not complied with was justified. - HELD THAT: - The Tribunal examined the record and found that the appellant had furnished a Chartered Accountant's certificate stating that the necessary endorsements were made on the sales invoices. The Tribunal applied the legal position laid down by the Larger Bench in Chowgule & Company and subsequent Tribunal decisions, which hold that the physical endorsement on the sales invoices is not a mandatory pre-condition for grant of the SAD refund under Notification No.102/2007-Cus. Given this precedent and the CA certificate produced by the appellant, the impugned rejection on the sole ground of non-compliance with paragraph 2(b) was unsustainable. The Tribunal therefore concluded that the refund claim had been wrongly denied and set aside the order below, granting consequential relief.

Impugned order rejecting the SAD refund set aside; appeal allowed and refund claim to be considered in accordance with the Tribunal's reasoning and applicable precedents.

Final Conclusion: The appeal succeeds: relying on the Larger Bench precedent that endorsement on sales invoices is not mandatory and on the Chartered Accountant's certificate produced by the appellant, the Tribunal set aside the rejection of the SAD refund and allowed the appeal with consequential relief.

Alteration of cause title following amalgamation - recovery under section 72 of Customs Act, 1962 - expiry of warehousing bond as triggering event for liability - inapplicability of limitation under section 28 to demands under section 72 - assessable value - transaction value versus depreciated value - incorrect citation of exemption notification not vitiating proceedings - penalty under section 117 of Customs Act, 1962

Alteration of cause title following amalgamation - Application for alteration of cause title consequent to amalgamation was allowed. - HELD THAT: - The appellant produced statutory approvals evidencing amalgamation of M/s Pune Software Park Pvt Ltd with M/s Capgemini India Private Limited. On perusal of the supporting documents the Tribunal allowed the application and directed the Registry to effect the necessary changes to the cause title. [Paras 1]

Application for alteration of cause title allowed and Registry directed to make amendments.

Recovery under section 72 of Customs Act, 1962 - expiry of warehousing bond as triggering event for liability - inapplicability of limitation under section 28 to demands under section 72 - Demand for recovery under section 72 was competent and not barred by the limitation applicable to section 28; the relevant date for computation of duty was the date the premises ceased to be bonded (expiry of the warehousing licence). - HELD THAT: - The proceedings arose from non-observance of conditions of the exemption notification after the warehouse licence expired. The Tribunal held that the statutory instrument of recovery under section 72, read with the licence condition, becomes operative upon expiry of the warehousing period (i.e., when premises cease to be bonded). A contrary approach computing liability from the date of transfer as a separate contractual event would require invoking section 28 and thereby attract the limitation bar, which is not applicable to the recovery under section 72. Consequently the Revenue's contention seeking to treat the transaction date as the relevant date was rejected as inconsistent and liable to be time-barred if pursued under section 28. [Paras 3, 5, 7]

Demand under section 72 sustained with the liability to be computed from expiry of the warehousing bond; limitation under section 28 does not operate to bar that demand.

Assessable value - transaction value versus depreciated value - Allowing depreciation in computing assessable value was acceptable and Revenue's insistence on transaction value as the assessable value was rejected. - HELD THAT: - Revenue contended that duty should have been computed on the agreed consideration (transaction value) for transfer to the third party. The Tribunal observed that when the duty liability is triggered by expiry of the warehousing bond, adoption of depreciated value as on that date is not in conflict with the circular relied upon by Revenue. Any alternative approach invoking transaction value would necessitate reliance on a different statutory provision and encounter the limitation difficulty described above. Hence the stand of Revenue to compute duty on the transaction value was held to be misdirected. [Paras 3, 5]

Depreciated value at the date premises ceased to be bonded is an acceptable basis for computation; Revenue's claim based on transaction value rejected.

Incorrect citation of exemption notification not vitiating proceedings - Incorrectly citing the exemption notification in the show cause notice did not vitiate the proceedings. - HELD THAT: - Although the notice cited a different notification than the one applicable, the Tribunal held that the interchange was attributable to oversight and that the authority's legislatively sanctioned power to recover duty was not vitiated by the incorrect citation. Reliance was placed on binding precedents to the effect that such clerical or drafting errors do not invalidate the exercise of statutory authority where the substantive locus for recovery exists. [Paras 6]

The mis-citation of the exemption notification is not fatal to the proceedings and does not invalidate the demand.

Penalty under section 117 of Customs Act, 1962 - No ground was made out to mitigate the duty liability or penalty; the appellant's pleas for escapement on technical grounds were rejected. - HELD THAT: - The Tribunal noted that the importer failed to seek renewal of the warehousing licence which resulted in extinguishment of the exemption privilege. The importer had undertaken compliance obligations and its cessation of interest after transfer did not absolve it of liability. Technical objections were insufficient to overcome the statutory obligations and the adjudicated duty and penalty were held to stand. [Paras 8, 9]

Appellant's plea for mitigation or escapement rejected; duty and penalty sustained.

Final Conclusion: The application to alter the cause title was allowed; on merits both appeals were dismissed - the demand under section 72 was held competent and not time-barred, depreciation as the basis for computation at the date the premises ceased to be bonded was accepted, mis-citation of the notification was not fatal, and no relief was granted to the appellant on mitigation grounds.

Refund of Special Additional Duty (SAD) - jurisdiction of refund processing authority - filing of refund claim before wrong forum - limitation not defeated by wrongly filed claim - duty to intimate deficiencies and transfer or forward claims - procedural lapse cannot defeat substantive remedy - opportunity of personal hearing / principles of natural justice - Regulation 2 of Customs Refund Application (Forms) Regulation, 1995

Jurisdiction of refund processing authority - filing of refund claim before wrong forum - limitation not defeated by wrongly filed claim - duty to intimate deficiencies and transfer or forward claims - Whether refund claims for SAD filed before Customs House, Chennai though pertaining to clearances through Tuticorin Customs House could be rejected for want of jurisdiction or required remand to the proper jurisdictional authority for disposal. - HELD THAT: - The Tribunal found that the refund claims were filed within the time prescribed by Notification No.102/2007 and otherwise complied with documentary requirements, but were presented to the Refund Section of Chennai though the relevant bill of entries related to clearances through Tuticorin. While para 2(c) of the Notification requires filing with the jurisdictional Customs officer, the authorities chose to reject the claims after an inordinate delay rather than forward them or intimate deficiencies. Regulation 2 of the Customs Refund Application (Forms) Regulation, 1995 requires the proper officer to intimate deficiencies within ten days, a step not taken here. The Tribunal relied on precedents which hold that a substantive remedy of refund should not be defeated by mere procedural error where the original claim was filed within time before a wrong authority, and that such wrongly-filed but timely claims should not be treated as barred by limitation. Having regard to these principles and the facts that the claims were filed within time and the department delayed action, the Tribunal concluded that rejecting the claims on the technical ground of jurisdiction without affording opportunity to rectify or forwarding for processing would work a disproportionate injustice. The Tribunal therefore directed that the matter be remanded to the Refund Section, Customs House, Tuticorin for adjudication in accordance with law.

Rejection for want of jurisdiction set aside; matter remanded to Refund Section, Customs House, Tuticorin to process the refund claims in accordance with law.

Procedural lapse cannot defeat substantive remedy - opportunity of personal hearing / principles of natural justice - Whether appellants were denied natural justice by not being given opportunity to be heard or to seek transfer of claims before rejection. - HELD THAT: - The Tribunal observed that the adjudicating authority did not give the appellants a personal hearing before rejecting the claims and did not issue deficiency memoranda within the period contemplated by the Regulations. In these circumstances, and given the substantive nature of the refund remedy, the absence of an opportunity to explain, seek transfer, or to rectify the filing before the appropriate jurisdiction weighed in favour of permitting the appellants to have their claims considered afresh by the correct authority. The Tribunal therefore directed remand rather than upholding the rejection.

Appellants to be afforded remedy by fresh consideration of the claims by the proper jurisdictional authority; rejection without hearing set aside.

Final Conclusion: Appeal allowed in part by way of remand: the order rejecting refund claims for lack of jurisdiction is set aside and the matters are remitted to the Refund Section, Customs House, Tuticorin for adjudication in accordance with law, with the departmental authorities to process the claims and afford appropriate opportunities in line with statutory/regulatory requirements.

Eligibility for exemption under Notification No.12/2012-CE (SI. No.255) - classification of External/Removable Hard Disk Drives under tariff heading 847170 - interpretation of tariff sub headings 84717020 and 84717030 - relevance of Office Memorandum dated 05.06.2013 - precedential effect of the Supreme Court's dismissal in Commissioner of Customs v. M/s. Supertron Electronics Ltd.

Eligibility for exemption under Notification No.12/2012-CE (SI. No.255) - classification of External/Removable Hard Disk Drives under tariff heading 847170 - interpretation of tariff sub headings 84717020 and 84717030 - relevance of Office Memorandum dated 05.06.2013 - precedential effect of the Supreme Court's dismissal in Commissioner of Customs v. M/s. Supertron Electronics Ltd. - External/Removable Hard Disk Drives imported by the respondent are eligible for exemption under SI. No.255 of Notification No.12/2012-CE. - HELD THAT: - The Tribunal examined whether goods described as External/Removable Hard Disk Drives fall within the description of Hard Disk Drives in the notification and thus attract the concessional rate. It accepted the Commissioner (Appeals)'s finding (including verification of samples) that such External/Removable HDDs are classifiable under subheading 84717020 and fit within the descriptive language of the notification. The Tribunal relied on the Office Memorandum dated 05.06.2013 and the consistent decisions of CESTAT, Delhi in M/s. Supertron Electronics Ltd., and subsequent Tribunal orders (including rehearing/ROM outcomes) which treated External/Removable HDDs as eligible. The Department's contrary reliance on earlier adverse orders was addressed: the earlier Mumbai order was reheard and recalled in ROM proceedings, and the Supreme Court, in the appeal arising from the Supertron decision, dismissed the department's appeal on merits having regard to the OM. In view of the Supreme Court's dismissal and the Tribunal's consideration of the OM, the issue was treated as finally settled in favour of the respondent and the Commissioner (Appeals)'s order upholding exemption was left undisturbed. [Paras 10, 11, 12, 13, 14]

The impugned order of the Commissioner (Appeals) holding the imported External/Removable HDDs eligible for exemption is upheld and the department's appeal is dismissed.

Final Conclusion: The appeal is dismissed; External/Removable Hard Disk Drives are held eligible for exemption under SI. No.255 of Notification No.12/2012-CE, the Tribunal relying on the Office Memorandum dated 05.06.2013 and the Supreme Court's dismissal of the department's appeal in the Supertron matter, such issue being finally settled in favour of the respondent.

Refund of fees by Resolution Professional - interim resolution professional's expenses and fees - remand for fixation of fee - adjudicating authority's scrutiny of claims

Refund of fees by Resolution Professional - interim resolution professional's expenses and fees - adjudicating authority's scrutiny of claims - Validity of the Adjudicating Authority's direction to the Interim Resolution Professional to refund part of the amount received. - HELD THAT: - The Appellate Tribunal examined whether the Adjudicating Authority was justified in directing the IRP to refund Rs. 1,80,000 despite records showing expenses incurred and a prior payment of Rs. 3,80,000 by the corporate debtor. The Tribunal noted that the Adjudicating Authority failed to take into account the bills and receipts (as placed before the Tribunal) evidencing expenses incurred by the IRP. Further, once the corporate debtor had accepted and paid the sum of Rs. 3,80,000 as payable to the IRP, the Adjudicating Authority was not correct in ordering a refund of Rs. 1,80,000. The Tribunal also recorded the counsel's statement that the IRP would not claim beyond Rs. 3,80,000, which removed any surviving dispute about entitlement above that amount. On these factual and legal considerations the Tribunal concluded that the impugned order could not be sustained. [Paras 4, 5, 6]

Impugned order dated 5th September, 2018 directing refund set aside and the appeal allowed.

Final Conclusion: The appeal is allowed; the Adjudicating Authority's order directing the Interim Resolution Professional to refund a part of the amount received is set aside, and no costs were awarded.

Supply of Tangible Goods - possession and effective control - transfer of right to use - exclusion clause - interpretation of fiscal statute/plain meaning rule - Board Circular F. No. 334/1/2008-TRU dated 29-2-2008

Supply of Tangible Goods - possession and effective control - transfer of right to use - exclusion clause - Whether the transactions for supply, installation, commissioning and maintenance of computer systems (with deployment of an IT Assistant) amounted to taxable service under the category "Supply of Tangible Goods" or fell outside that category because possession and effective control of the goods were transferred to the Lessee. - HELD THAT: - The Tribunal examined the contractual terms and surrounding facts to determine whether the right of possession and effective control of the computers was transferred to the Lessee despite ownership remaining with the appellant. Clause 14 barred the appellant from removing assets without concurrence of unit in-charges and empowered the Lessee to direct reassignment of equipment; clause 12(e) permitted transfer of hardware along with IT Assistant between units on Lessee's direction. Certificates from school authorities, absence of VAT/Sales Tax charging, and operational control by the Lessee supported the conclusion that the Lessee had deep and pervasive control. The Tribunal held that ownership remaining with the appellant does not preclude transfer of possession and effective control; the statutory entry targets transfer of the right to use goods and does not require transfer of ownership. Reliance was placed on the plain-language rule of statutory interpretation for fiscal statutes and on the Board Circular explaining that whether possession and control are transferred is a question of fact to be decided from contract and material facts. The IT Assistant was found to work under direct supervision and control of the Lessee and no separate charge was shown for his services; his deployment was to keep the leased assets in working condition, further evidencing transfer of effective control. On these facts the Tribunal concluded that the exclusion in the tax entry applied and the transactions did not constitute the taxable service "Supply of Tangible Goods." [Paras 11, 12, 13, 14, 16]

Transactions fall outside the category of "Supply of Tangible Goods" as possession and effective control of the computers (and operation by the IT Assistant) were transferred to the Lessee; therefore tax liability does not arise on that ground.

Interpretation of fiscal statute/plain meaning rule - Whether ownership retention by the appellant should be read into the definition of the taxable service so as to negate transfer of possession and effective control. - HELD THAT: - The Tribunal applied the rule of plain and ordinary meaning in fiscal statutes: where the statutory language is clear, words must be given their natural meaning and omitted words cannot be supplied. The definition of the taxable entry focuses on transfer of the right to use (possession and effective control) and does not mandate transfer of ownership; if the legislature intended transfer of ownership it would have expressly provided for it. The Tribunal therefore refused to import an ownership requirement into the definition and held that transfer of possession and control, not ownership, is determinative. [Paras 8, 9, 14]

Ownership retention does not preclude finding transfer of possession and effective control; statutory language must be applied as written and ownership need not be transferred to exclude the service entry.

Final Conclusion: The appeal is allowed on merits: the demand of service tax and penalties under the impugned order are set aside because the transactions did not fall within the taxable service "Supply of Tangible Goods"; the question of limitation was left open for the revenue.

Refund of Education Cess and Secondary & Higher Education Cess - entitlement under notification No. 39/01 dated 31/07/2001 - binding effect of Supreme Court decision

Refund of Education Cess and Secondary & Higher Education Cess - entitlement under notification No. 39/01 dated 31/07/2001 - binding effect of Supreme Court decision - Whether the appellant is entitled to refund of Education Cess and Secondary & Higher Education Cess in terms of notification No. 39/01 dated 31/07/2001. - HELD THAT: - The Tribunal examined the contention on refund of Education Cess and Secondary & Higher Education Cess under notification No. 39/01 dated 31/07/2001 and found the question to be settled by the Hon'ble Supreme Court in SRD Nutrients v. CCE 2017 (11) TMI 655 (SC). Relying on the binding precedent of the Apex Court, the Tribunal held that the impugned order denying the refund could not be sustained. In view of the Supreme Court decision, the Tribunal set aside the impugned order and allowed the appeal.

Impugned order set aside and appeal allowed; refund entitlement upheld in accordance with the Supreme Court precedent.

Final Conclusion: The Tribunal allowed the appeal, setting aside the impugned order and granting relief on the refund claim for Education Cess and Secondary & Higher Education Cess in light of the cited Supreme Court decision.

Cenvat credit on outward transportation - inclusion of transportation charges in assessable value - remand for factual verification and fresh adjudication - Board Circular No. 1065/4/2018-CX dated 8 June, 2018

Cenvat credit on outward transportation - inclusion of transportation charges in assessable value - remand for factual verification - Remand to the adjudication authority for verification whether transportation charges were included in the assessable value and for fresh adjudication on the admissibility of Cenvat credit. - HELD THAT: - The appellant contended that transportation charges were included in the assessable value and excise duty had been paid on that value, invoking Board Circular No. 1065/4/2018-CX dated 8 June, 2018 and judicial precedents relied upon before the Tribunal. The Revenue raised no objection to remand. The Tribunal found that the factual question of inclusion of transportation in assessable value had not been examined by the adjudicating authority and that verification by the adjudication authority was necessary before any final conclusion on admissibility of Cenvat credit could be reached. In view of the unresolved factual determination, the Tribunal remitted the matter for fresh adjudication and directed the adjudication authority to verify the factual position and pass a fresh order. [Paras 5]

Matter remanded to the adjudication authority for verification of whether transportation charges were included in assessable value and for fresh adjudication on admissibility of Cenvat credit.

Final Conclusion: The appeals are allowed insofar as they are remitted to the adjudication authority for factual verification and fresh decision on the admissibility of Cenvat credit in light of whether transportation charges were included in the assessable value.

Cenvat Credit - courier service - admissibility of input service - assessable value - place of removal

Cenvat Credit - courier service - admissibility of input service - Cenvat credit in respect of courier service for the period up to 31.03.2008 - HELD THAT: - The Tribunal accepted the appellant's submission and the relevant reasoning in Ambalal Sarabhai Enterprise Ltd (Supra) that, prior to the amendment effective 01.04.2008, courier service qualified as an input service for the purposes of Cenvat credit. On that basis the Tribunal held that denial of credit for the period up to 31.03.2008 was not sustainable and credit is admissible for that period.

Credit in respect of courier service up to 31.03.2008 is admissible.

Cenvat Credit - courier service - assessable value - place of removal - Admissibility of Cenvat credit in respect of courier service for the period from 01.04.2008 onwards - HELD THAT: - The Tribunal noted that the amended definition (effective 01.04.2008) limits eligibility in relation to services used for clearance of goods up to the place of removal and observed that the lower authority had not verified whether the courier charges were included in the assessable value of the final product on which duty was paid. The Tribunal therefore did not decide admissibility on merits for the post-amendment period but remanded the matter to the adjudicating authority for a factual verification of whether courier charges were included in assessable value; admissibility to be determined thereafter.

Matter remanded to the adjudicating authority to verify whether courier charges are included in the assessable value and thereafter decide admissibility of credit from 01.04.2008 onwards.

Final Conclusion: The appeal is allowed in part: Cenvat credit on courier service is admissible up to 31.03.2008; the question of credit from 01.04.2008 onwards is remanded to the adjudicating authority for verification whether courier charges were included in the assessable value, with admissibility to be decided thereafter.

Cenvat credit for export goods - export as taking out of India - Rule 6(6) of Cenvat Credit Rules, 2004 - no condition of receipt of export proceeds for credit

Cenvat credit for export goods - Rule 6(6) of Cenvat Credit Rules, 2004 - no condition of receipt of export proceeds for credit - Cenvat credit cannot be denied where goods have been physically exported out of India although foreign exchange proceeds were not received due to rejection abroad. - HELD THAT: - The Tribunal found that the goods were admittedly taken out of India and therefore qualify as export under the statutory meaning of "export" and the definition of "export goods". Rule 6(6) of the Cenvat Credit Rules, 2004 allows Cenvat credit in respect of goods cleared without payment of duty for export and contains no stipulation that receipt of foreign exchange is a pre-condition for allowing the credit. The lower authorities denied credit solely on the ground that export proceeds were not received; the Tribunal held that neither the Cenvat Credit Rules nor the notification impose such a condition. The Tribunal relied on its prior decisions in P&P Overseas and Shyam Telecom Ltd where similar denials were held unsustainable, and applied the same reasoning to set aside the impugned order. [Paras 4, 5, 6, 7]

Impugned order set aside and appellant entitled to Cenvat credit in respect of inputs contained in exported goods; appeal allowed.

Final Conclusion: Where goods have been physically exported out of India, Cenvat credit under Rule 6(6) of the Cenvat Credit Rules, 2004 is admissible and cannot be denied merely because foreign exchange remittance was not received due to rejection of the goods abroad; the impugned order is set aside and the appeal is allowed.

Cenvat Credit - input - repairs and maintenance of plant and machinery - admissibility of credit - distinguishing contrary High Court decisions - precedent of Supreme Court

Cenvat Credit - input - repairs and maintenance of plant and machinery - admissibility of credit - Cenvat Credit in respect of welding electrodes used for repairs and maintenance of plant and machinery is admissible. - HELD THAT: - The Tribunal examined the question whether welding electrodes consumed in repair and maintenance of plant and machinery qualify as an input for the purpose of claiming Cenvat Credit. The Tribunal placed decisive reliance on the Supreme Court decision in Ramala Sahkari Chini Mills Ltd. v. CCE, which held that welding electrodes used for repair and maintenance of plant and machinery are inputs. Having applied that precedent, the Tribunal distinguished contrary decisions of High Courts relied upon by the Revenue and concluded that those authorities are not applicable in view of the Apex Court ruling. On that basis the impugned order denying credit was set aside and credit held admissible. [Paras 4, 5]

The impugned order is set aside and the appeal is allowed; Cenvat Credit on welding electrodes used for repair and maintenance of plant and machinery is admissible.

Final Conclusion: Appeal allowed: welding electrodes used for repair and maintenance qualify as inputs and Cenvat Credit is admissible, in view of the Supreme Court precedent relied upon; contrary High Court decisions were distinguished.

Cenvat credit on outward transportation - assessable value - verification of factual inclusion of transportation charges - remand to adjudication authority - Board Circular No. 1065/4/2018 dated 8 June, 2018

Cenvat credit on outward transportation - assessable value - Board Circular No. 1065/4/2018 dated 8 June, 2018 - remand to adjudication authority - Whether Cenvat credit for outward transportation is admissible in the appellant's case, subject to verification whether transportation charges were included in the assessable value - HELD THAT: - The Tribunal recorded that the appellant contends transportation charges were included in the assessable value and excise duty has been paid on that value, invoking Board Circular No. 1065/4/2018 dated 8 June, 2018 and relevant precedents. The Tribunal noted that the factual question of inclusion of transportation charges in assessable value was not verified by the adjudicating authority. Both parties accepted remand for factual verification. In view of the absence of a factual finding by the adjudicating authority, the Tribunal did not decide the admissibility on merits but directed a remand for the adjudicating authority to verify the records on whether transportation was included in the assessable value and, after such verification, to pass a fresh adjudicatory order taking the Circular and precedents into account as applicable. [Paras 5]

Appeals allowed by way of remand to the adjudication authority to verify whether transportation charges were included in the assessable value and to pass a fresh order.

Final Conclusion: The appeals are allowed by directing remand to the adjudicating authority for factual verification of inclusion of transportation charges in assessable value and for passing a fresh order in accordance with law and the Board Circular relied upon.

Refund/re-credit of Education Cess and Secondary & Higher Education Cess - area-based exemption under notification no. 39/01-CE dated 31/07/2001 - payment from Public Ledger Account (PLA) - precedential effect of SRD Nutrients Pvt. Ltd. (Supreme Court)

Refund/re-credit of Education Cess and Secondary & Higher Education Cess - area-based exemption under notification no. 39/01-CE dated 31/07/2001 - payment from Public Ledger Account (PLA) - Appellant entitled to refund/re-credit of Education Cess and Secondary & Higher Education Cess paid from PLA in respect of unit availing benefit under notification no. 39/01-CE dated 31/07/2001. - HELD THAT: - The Tribunal examined whether the appellant's unit in Kutch, which availed area-based exemption under notification no. 39/01-CE dated 31/07/2001, could claim refund/re-credit of Education Cess and Secondary & Higher Education Cess that had been paid from the PLA. The Tribunal found the question to be covered by the Supreme Court's decision in SRD Nutrients Pvt. Ltd. Vs. CCE and noted that the Revenue's review against that decision was dismissed. In view of the binding precedent, the Tribunal concluded that the appellant is entitled to refund/re-credit of the cesses under the said notification and set aside the impugned order.

Appeal allowed; impugned order set aside and appellant entitled to refund/re-credit of the specified cesses.

Final Conclusion: The appeal is allowed and the appellant is entitled to refund/re-credit of Education Cess and Secondary & Higher Education Cess paid from PLA in respect of the unit covered by notification no. 39/01-CE dated 31/07/2001, following the Supreme Court precedent in SRD Nutrients Pvt. Ltd.

Suppression of facts - extended period of limitation - Cenvat credit adjustment - Small Scale Industry (SSI) exemption threshold - audit verification and its evidentiary significance

Suppression of facts - extended period of limitation - Cenvat credit adjustment - audit verification and its evidentiary significance - Whether the demand raised by invoking the extended period on the ground of alleged suppression of facts is sustainable, and whether the appellants had duty liability for 2011-12 after adjustment of Cenvat credit - HELD THAT: - The appellants had on 18.01.2013 informed the department that their aggregate clearances had exceeded the SSI threshold during 2011-12 and furnished detailed turnover and input credit particulars certified by a Chartered Accountant. An internal audit visit in 2013 examined the sales and purchase invoices for 2011-12 and except for a small ineligible credit on steel roofing (which was rectified) raised no objection regarding duty shortfall. The appellants produced to the adjudicating authorities a substantial number of invoices supporting the Cenvat credit claimed; the Commissioner (Appeals) verified further invoices with IOCL and allowed credit on most of them. The Tribunal finds that (i) the appellants had notified the department about the omission and taken registration, (ii) the audit verification, which inspected records and raised no adverse finding on duty liability, militates against a finding of deliberate suppression, and (iii) loss of some invoices due to a cyclone is a plausible explanation and, in any event, cannot convert prior disclosure and audit scrutiny into suppression. On these facts the department has not established that suppression with intent to evade duty occurred, and therefore the legal predicate for invoking the extended period is absent. [Paras 7, 8]

Demand raised by invoking the extended period is set aside and the appeal is allowed on the ground of limitation; the confirmed duty demand could not be sustained insofar as it rested on alleged suppression.

Final Conclusion: The Tribunal allowed the appeal: the department failed to prove suppression of facts or justify invocation of the extended period; audit verification and prior voluntary disclosure by the appellants showed that Cenvat credit sufficed to meet the duty liability for 2011-12, and the extended-period demand was set aside with consequential reliefs.

Cenvat credit on product liability insurance - eligibility of input service credit - post-manufacturing services - integral connection to manufacture

Cenvat credit on product liability insurance - post-manufacturing services - integral connection to manufacture - Admissibility of Cenvat/service tax credit on Product Liability Insurance taken to cover defects in finished products - HELD THAT: - The appellants obtained Product Liability Insurance to indemnify liabilities arising from defects in finished goods supplied to customers. The insurance did not cover costs of removal, replacement or repair but related to malfunctioning or manufacturing defects detected in the hands of customers. Such cover is not a post-manufacturing activity but is integrally connected to the manufacture of the finished products since it protects the manufacturer against liabilities arising from manufacturing defects. The Tribunal's earlier decision in the appellant's own case and other precedents relied upon by counsel support allowing the credit. Applying those decisions to the facts, the disallowance of credit was unwarranted.

Impugned order disallowing credit is set aside and credit on Product Liability Insurance for the period Apr.'16 to Mar.' 17 is held admissible; appeal allowed with consequential reliefs.

Final Conclusion: Credit on Product Liability Insurance taken to cover liabilities for defects in finished products is admissible for the period Apr.'16 to Mar.' 17; the order disallowing the credit is set aside and the appeal is allowed with consequential reliefs.

Restoration of appeal - dismissal for default - manufacture - excisable goods - site-assembled goods versus immovable property - extended period under proviso to section 11A(1) - Board's Circular No.58/1/2002-Cx. - issue finally decided in earlier proceedings

Restoration of appeal - dismissal for default - Application for restoration of appeal dismissed for default was allowed and the appeal was restored to file. - HELD THAT: - The Tribunal found on the record that the counsel for the appellant reached late due to a delayed flight and produced the air ticket and boarding pass to substantiate the travel. The delay was held to be neither intentional nor deliberate. For these reasons the application for restoration was allowed and the appeal was restored for adjudication on merits. [Paras 1, 2]

Restoration application allowed; appeal restored to the file of the Tribunal.

Manufacture - excisable goods - site-assembled goods versus immovable property - Board's Circular No.58/1/2002-Cx. - issue finally decided in earlier proceedings - The activity of assembling/erecting USGS and AW at the project site did not amount to 'manufacture' of excisable goods and the demand was unsustainable on merits. - HELD THAT: - The Tribunal examined the nature of the activity undertaken at the Chennai site and the adjudicating authority's findings describing the curtain wall/assembled structure and the manner of erection. Applying the Board's Circular No.58/1/2002-Cx., the Tribunal accepted that goods which, once erected at site, cannot be removed or sold without substantial damage to components are immovable and not excisable. The Tribunal noted that earlier proceedings in the appellant's case had reached the same conclusion and that the decision in the earlier de novo adjudication and subsequent Tribunal orders, upheld by higher fora, covered the same issue. The departmental decisions relied upon were held distinguishable on facts. By judicial propriety and on the merits the Tribunal followed the appellant's earlier favorable findings and set aside the impugned duty demand. [Paras 12, 14, 15]

Impugned order set aside on merits; appellant succeeds as the site-erected structures are not excisable.

Extended period under proviso to section 11A(1) - issue finally decided in earlier proceedings - The demand raised invoking the extended period for the tax period 06.06.2001 to 03.09.2001 could not be sustained and the appeal succeeds on limitation grounds. - HELD THAT: - The Tribunal observed that the appellant had, from 2000 onward, protested liability in writing and had been disclosing its activities in statutory returns and interacting with departmental authorities. There was no evidence of suppression with intent to evade duty. The matter involved an interpretative controversy which was the subject of prior litigation. In these circumstances the invocation of the extended period was held to be unsustainable and the demand was disallowed on limitation grounds. [Paras 16]

Demand raised for the extended period cannot be sustained; appeal allowed on limitation ground.

Final Conclusion: The restoration application was allowed; the appeal was adjudicated on merits and limitation and the impugned order setting aside the adjudicating authority's decision was set aside. The appeal is allowed and the duty demand for the period 06.06.2001 to 03.09.2001 is rejected with consequential reliefs, if any.

Quashment of assessment order - writ of certiorari - writ of mandamus - follow ratio of Division Bench - binding precedent

Quashment of assessment order - writ of certiorari - writ of mandamus - follow ratio of Division Bench - Disposition of the petition seeking quashment of the assessment order and injunction of further proceedings by applying the ratio of an earlier Division Bench judgment. - HELD THAT: - Counsel for both parties agreed that the legal question raised in the petition is squarely covered by the Division Bench decision in The Commercial Tax Officer v. S.Najeem dated 19.07.2018 in W.A. No.230/2017. The High Court, therefore, declined to embark upon fresh adjudication of the issue and disposed of the writ petition by applying the ratio of that Division Bench judgment. No separate or additional reasoning was recorded by this Court beyond adopting the precedent referred to by the parties.

Writ petition disposed by applying the ratio of the Division Bench judgment referred to by the parties.

Final Conclusion: The petition was disposed of by the High Court on the basis that the controversy is covered by the Division Bench decision in The Commercial Tax Officer v. S.Najeem dated 19.07.2018 in W.A. No.230/2017; the Court applied that ratio and closed the petition accordingly.

Penalty under Section 22(2) of the TNGST Act - consequential penalty under Section 16(2) of the TNGST Act - estimation in assessment by formula when records not produced - excess tax collection/excess realisation treated as taxable collection - onus of proof on the assessee and adverse inference for non-production of records - jurisdiction on revision under Section 38 to decide questions of law - tax cannot be collected without authority of law (Article 265)

Penalty under Section 22(2) of the TNGST Act - consequential penalty under Section 16(2) of the TNGST Act - excess tax collection/excess realisation treated as taxable collection - Validity of levy of penalty under Section 22(2) of the TNGST Act and consequential penalty under Section 16(2). - HELD THAT: - The Court considered whether the penalties imposed for alleged excess collection (described as Tax Sufferance/Incidental Charges) were justified. Having found that the petitioner collected amounts that in substance recouped sales tax liability and failed to discharge the onus of proving absence of excess collection, the assessing officer's imposition of penalty was held to be lawful. The Tribunal's reliance on precedent holding that unauthorised collections in any guise must be taken into account for penalty under Section 22(2) was endorsed. The Supreme Court authority relied upon by the petitioner was distinguished on facts and held not to advance the petitioner's case. [Paras 4, 7, 11, 12, 13]

Penalties under Section 22(2) and consequentially under Section 16(2) were justified and sustained; no error of law was found.

Estimation in assessment by formula when records not produced - onus of proof on the assessee and adverse inference for non-production of records - Permissibility of completing assessment by adopting a formula/estimation where the dealer failed to produce records called for. - HELD THAT: - The Court held that because the petitioner failed to produce the records despite notices and specific directions (including earlier Court directions), the Assessing Officer was entitled to adopt a formula based on available sale bills and make an estimation. The assessing authority's adoption of an adverse inference and formula-based computation was held to be justified by the petitioner's non-cooperation and failure to discharge the burden of proof. [Paras 5, 6, 7, 11, 12]

Estimation by formula in the assessment was permissible in the circumstances and was properly applied.

Jurisdiction on revision under Section 38 to decide questions of law - Whether the court should remand the matter to the assessing officer to permit production of records in a tax case revision under Section 38. - HELD THAT: - The Court observed that tax case revisions under Section 38 are confined to determining whether the Appellate Tribunal erred on questions of law. Consequently, a remand for fresh evidence or production of records was inappropriate in the present revision proceedings. The petitioner's plea for remand was therefore rejected as outside the scope of the revisional jurisdiction. [Paras 8, 9, 10, 13]

Request for remand to produce records in the revision under Section 38 was refused; the revisional court limited itself to hearing the question of law.

Final Conclusion: The High Court found no substantial question of law; the assessing officer's estimation and imposition of penalties were upheld, the petitioner's request for remand was refused, and the tax case revisions were dismissed with no costs.

Implied repeal - continuance of pre existing statutes under Section 19 of the Constitution (One Hundred and First Amendment) Act, 2016 - saving clause in subsequent GST enactments - availability of alternative statutory remedy / jurisdictional remedy before appellate authority - exclusion of pendency period in computing limitation (principles akin to Section 14 of the Limitation Act)

Implied repeal - continuance of pre existing statutes under Section 19 of the Constitution (One Hundred and First Amendment) Act, 2016 - saving clause in subsequent GST enactments - Whether the U.P. Value Added Tax Act, 2008 stood impliedly repealed w.e.f. 16.09.2016 by reason of the One Hundred and First Amendment and whether revisional orders passed under the VAT Act, 2008 were without jurisdiction. - HELD THAT: - The Court examined the One Hundred and First Amendment and found no provision effecting a direct repeal of the VAT Act, 2008 as from 16.09.2016. Section 19 of the Amendment expressly permitted pre existing enactments to continue in force until amended or repealed by a competent legislature or authority or until the expiry of one year from commencement, whichever was earlier. The Court observed that subsequent GST enactments which came into force in 2017 contained saving clauses; by virtue of Section 19 and the saving provisions in the GST statutes, the VAT Act continued to operate insofar as those savings applied. Consequently, the mere occurrence of the Amendment did not render actions under the VAT Act ipso facto void for want of jurisdiction. The Court declined to determine in the writ petitions the detailed question how far the saving clauses protected the impugned orders, holding that such questions are appropriate for determination in the statutory appeal where evidentiary and legal subtleties can be examined.

The contention of implied repeal was rejected; the VAT Act, 2008 continued in force in terms of Section 19 and subject to the saving clauses of the GST enactments, and jurisdiction under the VAT Act to pass revisional orders was not held to be absent on that ground.

Availability of alternative statutory remedy / jurisdictional remedy before appellate authority - exclusion of pendency period in computing limitation (principles akin to Section 14 of the Limitation Act) - Whether the writ petitions were maintainable before the High Court notwithstanding the existence of an alternative and efficacious appeal remedy under the taxing statute, and what protection (if any) should be afforded where limitation for appeal would expire during pendency of the writ petition. - HELD THAT: - The Court held that the taxing enactment provided an efficacious alternative statutory remedy by appeal and that there was no justifiable reason to bypass that remedy by preferring writ petitions; accordingly the writ petitions were dismissed on the ground of availability of alternative remedy. Addressing the petitioner's plea about limitation, the Court applied the equitable principle of excluding the period during which the writ petitions were pursued (analogous to the doctrine in Section 14 of the Limitation Act) and directed that if an appeal is filed within 15 days from the order, the appellate authority should decide it with expedition, preferably within six months. All legal pleas remain open for consideration by the appellate authority.

Writ petitions dismissed for want of necessity to invoke writ jurisdiction; limited protective direction given to exclude pendency period for limitation and to expedite any appeal filed within 15 days.

Final Conclusion: The writ petitions were dismissed on the ground that an alternative statutory appeal remedy exists; the Court rejected the plea of implied repeal of the VAT Act, 2008 by the One Hundred and First Amendment and left questions about the scope of saving clauses to be adjudicated on appeal. The petitioner was granted limited protection in relation to limitation: if an appeal is filed within 15 days it should be decided with expedition (preferably within six months).