TaxTMI Updates e-Newsletter
Feb 21,2024

Cancellation of GST registration with retrospective effect - Objective satisfaction for retrospective cancellation - Admission of additional documents - Consequences of retrospective cancellation on input tax credit - Application of Section 29(2) of the Central Goods and Services Tax Act, 2017

Admission of additional documents - Additional documents filed by the petitioner taken on record without formal listing by the Registry. - HELD THAT: - The petitioner produced a copy of an application and accompanying documents which were not initially on the file. The Court accepted the production and took the documents on record, observing that where the relief sought is only to place additional documents on record the Registry need not list the application for hearing and the documents can be considered. [Paras 1, 2]

Additional documents produced in court are taken on record and shall be considered.

Cancellation of GST registration with retrospective effect - Objective satisfaction for retrospective cancellation - Consequences of retrospective cancellation on input tax credit - Application of Section 29(2) of the Central Goods and Services Tax Act, 2017 - Whether the impugned order cancelling GST registration retrospectively from 01.07.2017 is sustainable and, if not, the appropriate operative date of cancellation. - HELD THAT: - The impugned cancellation order recorded retrospective effect from 01.07.2017 on the ground of non-filing of returns for a continuous period of six months, but there was no material explaining why cancellation should be retrospective. The show cause notice did not put the petitioner on notice that cancellation would be retrospective, depriving the petitioner of an opportunity to object to retrospective effect. Under Section 29(2) the proper officer may cancel registration from a date including retrospective dates, but retrospective cancellation cannot be mechanical or purely subjective; it must be founded on objective criteria and take into account relevant consequences, including the impact on third parties such as denial of input tax credit. In the present case there was no material to justify backdating to 01.07.2017, and both parties sought cancellation albeit for different reasons. [Paras 6, 7, 8, 9, 10]

The retrospective cancellation to 01.07.2017 is not sustained; the cancellation is modified to operate with effect from 30.09.2020. The revenue remains free to take further action or recover any tax, penalty or interest in accordance with law.

Final Conclusion: Additional documents produced are taken on record. The cancellation of the petitioner's GST registration is not to operate retrospectively from 01.07.2017 for want of objective justification; the cancellation is modified to have effect from 30.09.2020, subject to the respondent's statutory rights to further action or recoveries.

Cryptic order - ex parte demand - failure to consider taxpayer's reply - opportunity of hearing - re-adjudication with opportunity to be heard - direction to seek clarification and documents

Cryptic order - failure to consider taxpayer's reply - Whether the impugned order sustaining the demand can be upheld when it records that the taxpayer's detailed reply was not found satisfactory without stating reasons or considering the reply. - HELD THAT: - The Court found that the show cause notice contained specific allegations and that the petitioner filed a detailed reply addressing each head. The impugned order, however, is cryptic and records only that the reply was not satisfactory, stating that no reply/explanation was received despite opportunities and proceeding to create an ex parte demand. The Proper Officer's brief conclusion that the reply was unclear or unsatisfactory is inadequate where a considered response was on record. For these reasons the order cannot be sustained on merits absent proper consideration of the reply. [Paras 2, 5, 6, 9]

Impugned order set aside insofar as it was based on a recorded failure to receive or consider the taxpayer's reply.

Opportunity of hearing - ex parte demand - direction to seek clarification and documents - re-adjudication with opportunity to be heard - Whether the proceedings were vitiated for failure to afford the petitioner an opportunity to furnish further details or to be heard before creating a demand. - HELD THAT: - The Court observed that if the Proper Officer considered the reply incomplete, an opportunity to clarify or to furnish further documents ought to have been afforded and recorded; the record does not show any such opportunity. Further, the petitioner was not given an adequate hearing before the ex parte demand was confirmed. In consequence, the Court remitted the matter for fresh adjudication, directing the Proper Officer to specify required details/documents within one week, permit the petitioner one week to furnish them, and thereafter to re-adjudicate the show cause notice within two weeks after giving an opportunity of hearing. The Court expressly refrained from expressing any view on merits. [Paras 6, 7, 8, 10, 11]

Proceedings quashed and matter remitted for re-adjudication with directions to seek any required clarification/documents, allow the petitioner to respond, and afford an opportunity of hearing within specified timelines.

Final Conclusion: The impugned order confirming demand is set aside for failure to consider the taxpayer's detailed reply and for denial of adequate opportunity to clarify and be heard; the matter is remitted to the Proper Officer for re-adjudication after intimating required documents, allowing the petitioner time to respond, and affording a hearing, with timelines specified by the Court.

Cancellation of GST registration with retrospective effect - Suspension of registration and filing obligation - Requirement of objective satisfaction by the proper officer for cancellation - Power to cancel registration from a retrospective date under Section 29(2) of the Central Goods and Services Tax Act, 2017 - Consequences of retrospective cancellation on third party input tax credit

Cancellation of GST registration with retrospective effect - Power to cancel registration from a retrospective date under Section 29(2) of the Central Goods and Services Tax Act, 2017 - Requirement of objective satisfaction by the proper officer for cancellation - Validity of retrospective cancellation of the petitioner's GST registration - HELD THAT: - The Court held that while Section 29(2) permits cancellation from a retrospective date, such retrospective cancellation cannot be mechanical or purely subjective. The proper officer must be objectively satisfied that cancellation from a retrospective date is warranted and must consider relevant consequences of such an order. Mere non filing for some period does not automatically justify cancelling registration retrospectively to cover earlier periods when the taxpayer was compliant. In the facts of this case, there was no material justifying retrospective cancellation to 01.07.2017 and the cancellation was therefore not sustainable to that extent; the cancellation was accordingly modified to operate from the date the petitioner discontinued business, 31.03.2020. [Paras 11, 12, 14]

Retrospective cancellation to 01.07.2017 is not sustained; registration cancellation is modified to operate from 31.03.2020.

Suspension of registration and filing obligation - Cancellation of GST registration with retrospective effect - Sustainability of cancellation on ground of non filing where registration had been suspended - HELD THAT: - The Court found that the respondent had suspended the petitioner's registration with effect from 13.01.2021 pursuant to the show cause notice, and once registration stood suspended the petitioner had no obligation to file returns for the suspended period. Therefore cancellation of registration on the stated ground of failure to file returns (in circumstances where the registration had been suspended) is unsustainable. That factual and legal context undermined the respondent's stated basis for cancellation. [Paras 6, 10]

Cancellation based on alleged non filing is unsustainable where registration was suspended; cancellation cannot be sustained on that ground.

Procedural fairness - requirement to state reasons in show cause notice and order - Cancellation of GST registration with retrospective effect - Validity of the show cause notice and cancellation order insofar as they failed to specify reasons and to put the petitioner on notice of retrospective cancellation - HELD THAT: - The Court observed that the show cause notice and the resulting cancellation order did not specify reasons for cancellation or inform the petitioner that cancellation would be applied retrospectively; the cancellation order also contained internal contradictions regarding whether a reply had been received and did not record dues. The absence of clear reasons and prior notice of retrospective effect rendered the procedure defective. In light of these defects and the broader legal requirements for retrospective cancellation, the Court modified the operative date of cancellation. [Paras 5, 6, 7, 8, 9]

Show cause notice and cancellation order were procedurally defective for failing to state reasons and not putting the petitioner on notice of retrospective cancellation; relief granted by modifying the effective date of cancellation.

Final Conclusion: The writ petition is allowed in part: the retrospective cancellation of the petitioner's GST registration to 01.07.2017 is not sustained; the cancellation is modified to operate from 31.03.2020 (the date the petitioner discontinued business). Respondents remain free to pursue any lawful recovery of tax, interest or penalty.

Validity of GST registration certificate submitted with tender - Requirement to submit GST certificate "if applicable" under tender conditions - Liability for GST registration under Sections 22 and 23 of the Central GST Act in special category States (threshold for registration) - Inquiry into alleged fabricated or invalid GST document and setting aside of settlement - Remand for administrative verification with opportunity of hearing and time-bound decision

Validity of GST registration certificate submitted with tender - The GST certificate produced by respondent No.7 as part of his tender was, on the face of the tender records, a valid certificate and therefore did not vitiate the settlement unless the document is found to be fabricated or invalid upon inquiry. - HELD THAT: - The Court examined the tender records and official communications and observed that the GST certificate appended to respondent No.7's bid showed an issuance date within the tender period, and therefore, as a document forming part of the tender, it was to be treated as a valid certificate for purposes of accepting the bid. Notwithstanding letters from tax authorities indicating an earlier cancellation and a later registration date, the contemporaneous tender document itself demonstrates a GST certificate issued in the relevant timeframe. The Court therefore found no inherent infirmity in the State respondents' acceptance of respondent No.7's bid based on that certificate, subject to the qualification that the certificate might be a fabricated or invalid document which requires verification. [Paras 10, 15, 17]

On the face of the tender records the GST certificate submitted by respondent No.7 was valid for purposes of the settlement, unless subsequent inquiry establishes it to be fabricated or invalid.

Requirement to submit GST certificate "if applicable" under tender conditions - Liability for GST registration under Sections 22 and 23 of the Central GST Act in special category States (threshold for registration) - As Assam is a special category State, bidders whose aggregate turnover exceeds the statutory threshold are required to submit valid GST registration certificates; therefore the petitioner and respondent No.7, having bid above the relevant threshold, were required to submit valid GST certificates. - HELD THAT: - The Court referred to the statutory scheme under Sections 22 and 23 of the Central GST Act and noted that special category States attract a lower threshold for compulsory registration. Applying that principle to the facts, the Court held that where the bid value exceeded the special category threshold, submission of a GST certificate was 'applicable' within the meaning of the tender condition and therefore necessary for compliance with Clause 8(f) of the NIT. [Paras 11, 12, 13, 14]

Because Assam is a special category State, the bidders whose bid values exceeded the statutory threshold were required to submit valid GST certificates under the tender condition.

Inquiry into alleged fabricated or invalid GST document and setting aside of settlement - Remand for administrative verification with opportunity of hearing and time-bound decision - The matter of whether respondent No.7 submitted an invalid or fabricated GST certificate was remitted to the designated State authorities for inquiry and decision; if found invalid or fabricated, the settlement shall be set aside and the market offered to the next highest compliant bidder. - HELD THAT: - Given conflicting records regarding cancellation, registration and issuance dates and the possibility of multiple GSTIN entries, the Court declined to determine the question of fabrication on the merits and instead directed respondents No.2 and 6 to conduct an inquiry into the validity of the GST certificate submitted with respondent No.7's tender. The inquiry must afford the parties an opportunity of hearing, be completed within one month of receipt of a certified copy of the order, and its outcome communicated to the parties. If the certificate is found invalid or fabricated, the Settlement Order shall be cancelled and the market offered to the second highest bidder in accordance with the Court's direction. The interim order earlier passed shall continue till decision. [Paras 16, 17, 18]

Respondents No.2 and 6 were directed to inquire into the validity of respondent No.7's GST certificate, decide after hearing within one month, and if the certificate is found invalid or fabricated, set aside the settlement and offer the market to the second highest compliant bidder; interim relief to continue until that decision.

Final Conclusion: Writ petition disposed; respondents No.2 and 6 to make a time-bound inquiry into the validity of respondent No.7's GST certificate with opportunity of hearing and take consequential action (including cancellation of settlement and settlement with the next highest compliant bidder) within one month; interim order to remain in force until decision is communicated.

Statutory right to personal hearing under Section 75(4) of the U.P. G.S.T. Act, 2017 - rules of natural justice requiring opportunity for oral hearing notwithstanding written reply - distinct and independent requirements of written reply and oral hearing - remand for fresh adjudication where mandatory procedure is vitiated

Statutory right to personal hearing under Section 75(4) of the U.P. G.S.T. Act, 2017 - rules of natural justice requiring opportunity for oral hearing notwithstanding written reply - distinct and independent requirements of written reply and oral hearing - Failure to afford personal hearing in issuance of show-cause notice amounted to denial of the statutory and natural justice right, rendering the impugned order procedurally invalid. - HELD THAT: - The Court found that Section 75(4) mandates that a registered person be granted an opportunity of personal hearing before any adverse decision is taken. The notices issued to the petitioner recorded "NA" against the columns for date, time and venue of personal hearing, and therefore no oral hearing was afforded. The adjudicating authority sought only a written reply; non-compliance of the show-cause notice could close the opportunity to submit a written response but did not extinguish the statutory right to participate in an oral hearing. The statute enshrines a dual requirement: submission of a written reply and a separate oral hearing, each to be satisfied independently. The absence of personal hearing was held to be a self-apparent procedural deficiency critical to the outcome of the proceedings, which vitiated the impugned order. [Paras 1, 2, 3, 4, 5]

Impugned order quashed insofar as it was passed without affording the statutory opportunity of personal hearing; procedural lapse established.

Remand for fresh adjudication where mandatory procedure is vitiated - Appropriate remedy was remand for fresh consideration after giving the petitioner an opportunity to file a final reply and to be heard orally. - HELD THAT: - Given the procedural infirmity, the Court declined further interlocutory steps such as calling for counter-affidavit or relegating the petitioner to alternative remedies. The deficiency being critical to the outcome, the appropriate course was to set aside the impugned order and remit the matter for fresh disposal. The Court directed that the petitioner may file its final reply within two weeks and fixed a date for appearance before the assessing authority, which was to pass an appropriate reasoned order thereafter. [Paras 8, 9, 10]

Matter remitted for fresh adjudication after affording the petitioner the final opportunity to file reply and to be heard; impugned order set aside.

Final Conclusion: Writ petition allowed; impugned order dated 17.12.2023 set aside and matter remitted to respondent No.2 for fresh, reasoned adjudication after the petitioner files its final reply within two weeks and is afforded a personal hearing (appearance directed on 11.03.2024).

Violation of principles of natural justice - denial of opportunity to cross examine - Input tax credit entitlement determined by electronic records (GSTR 1 / GSTR 2A / GSTR 2B) - Transitional credit - verification from legacy VAT records - Reversal of input tax credit for non payment to supplier under the proviso to Section 16(2) and Rule 37 - Pari materia application of CGST and TNGST provisions - Remand for fresh adjudication after affording opportunity of cross examination and electronic verification

Violation of principles of natural justice - denial of opportunity to cross examine - Impugned assessment orders were passed in violation of principles of natural justice by not permitting cross examination of the bank officers who had taken possession of the petitioner's premises. - HELD THAT: - The Court found that the adjudicating authority dispensed with cross examination of officers of the second respondent despite summons and the petitioner's request to examine them in relation to documents and facts relevant to the show cause notice. This procedural denial vitiates the impugned orders. The vitiation is sufficient to set aside the orders and requires remand for fresh adjudication after affording the petitioner the opportunity to cross examine the concerned officers and be heard on merits. [Paras 35, 36]

Impugned orders quashed on this ground and matters remitted for fresh decision after permitting cross examination and hearing.

Transitional credit - verification from legacy VAT records - Claim to transitional credit must be verified from legacy VAT returns/archives before denial. - HELD THAT: - The Court held that denial of transitional credit can be justified only if unutilised credit was not available as on 30.06.2017, a fact ascertainable from returns filed under the Tamil Nadu Value Added Tax Act, 2006. The department is directed to examine its archival VAT records and to furnish such information to the petitioner prior to passing a fresh order, and to treat the availability of transitional credit as a verifiable electronic/archival fact rather than relying solely on absence of physical documents at the premises. [Paras 40, 41, 42]

Department directed to verify legacy VAT records and furnish information; remand for fresh adjudication with verification of transitional credit.

Input tax credit entitlement determined by electronic records (GSTR 1 / GSTR 2A / GSTR 2B) - Reversal of input tax credit for non payment to supplier under the proviso to Section 16(2) and Rule 37 - Denial or allowance of input tax credit must be decided on verification of electronic returns and statutory tests including non payment to supplier under the proviso to Section 16(2) and Rule 37. - HELD THAT: - The Court recognised that physical invoices and registers may be unavailable due to the bank's possession but emphasised that input tax credit claims can be verified from the electronic records maintained on the common portal (supplier's GSTR 1, recipient's GSTR 2A/GSTR 2B and returns filed by the petitioner). The Court also observed that reversal of credit is justified where the recipient fails to pay the supplier within the period specified under the proviso to Section 16(2), and that Rule 37 requires furnishing details and reversal in such cases. Consequently, the department must source and examine electronic records and apply the statutory tests before denying credit; denial on mere non availability of physical documents is not warranted where electronic records corroborate the claim. [Paras 48, 49, 52, 54, 55]

Department directed to verify electronic returns/records and apply the proviso to Section 16(2) and Rule 37; input tax credit and transitional credit may be allowed if validated electronically; fresh adjudication on merits required.

Pari materia application of CGST and TNGST provisions - Objection that proceedings invoked only under TNGST Act while not invoking CGST Act is untenable because provisions are pari materia. - HELD THAT: - The Court rejected the petitioner's contention that demand must be restricted to TNGST Act because similar provisions of CGST Act were not specifically invoked. It held that the provisions are pari materia and therefore invocation under the State Act does not preclude application of corresponding Central enactment principles in adjudication of ITC issues. [Paras 9]

Objection overruled; pari materia character of the enactments upheld.

Final Conclusion: Writ petitions allowed by quashing the impugned orders and remitting the matters to the adjudicating authority for fresh adjudication on merits. The authority is directed to permit the petitioner to cross examine the relevant bank officers if desired, to verify transitional credit from legacy VAT archives, and to source and examine electronic GSTR records before denying input tax credit; fresh orders to be passed in accordance with these directions within six months. No costs.

Cancellation of registration - revival of GST registration subject to compliance - filing of returns and payment of tax, interest and fee for belated filing - non-utilisation of Input Tax Credit pending departmental scrutiny and approval - scrutiny and approval of Input Tax Credit by competent officer - directions to GST Network to enable portal functionality for filing and payment

Revival of GST registration subject to compliance - cancellation of registration - Registration cancelled on 15.06.2023 to be revived on compliance with specified conditions - HELD THAT: - The Court disposed of the writ petition by directing conditional revival of the petitioner's GST registration without adjudicating the merits. Revival is made contingent on compliance with the directions issued in paragraph 5, which set out the steps the petitioner must take and the respondents' obligations to facilitate compliance. The restoration is explicitly stated to be subject to and conditional upon fulfillment of those conditions. [Paras 5, 6]

Registration shall stand revived forthwith on fulfillment of the conditions prescribed by the Court.

Filing of returns and payment of tax, interest and fee for belated filing - Petitioner directed to file returns for the period prior to cancellation and pay tax, interest and belated filing fee within forty five days - HELD THAT: - Following Suguna Cutpiece, the Court directed the petitioner to file outstanding returns for the period prior to cancellation, discharge the tax dues together with interest and the fee fixed for belated filing within 45 days of receipt of the order. The Court did not adjudicate entitlement or validity of the tax demands but prescribed these steps as preconditions for revival of registration. [Paras 5]

Petitioner must file the prior-period returns and pay tax, interest and belated filing fee within the stipulated period as a condition for revival.

Non-utilisation of Input Tax Credit pending departmental scrutiny and approval - scrutiny and approval of Input Tax Credit by competent officer - Unutilised Input Tax Credit shall not be adjusted or utilised until scrutinised and approved by a competent officer - HELD THAT: - The Court prohibited adjustment or utilisation of any unutilised Input Tax Credit for making the payments required for revival. It directed that any Input Tax Credit claimed shall remain unutilised until it has been scrutinised and approved by an appropriate competent officer of the Department; only approved ITC may thereafter be utilised for discharging future tax liabilities under the Act and Rules. [Paras 5]

Unutilised ITC cannot be used for payment and may be utilised only after departmental scrutiny and approval.

Filing returns for period subsequent to cancellation - declaration of correct value of supplies - Petitioner to pay GST and file returns for the period after cancellation declaring correct value of supplies - HELD THAT: - In addition to prior-period compliance, the Court required the petitioner to file returns and pay GST for the period subsequent to cancellation, ensuring that the correct value of supplies is declared. This requirement is part of the conditional pathway for revival of registration. [Paras 5]

Petitioner must file returns and pay GST for the post-cancellation period declaring correct values as a condition of revival.

Directions to GST Network to enable portal functionality for filing and payment - Respondents to instruct GST Network to make portal changes to allow filing of returns and payment within thirty days - HELD THAT: - The Court directed the respondents to take suitable steps, by instructing the GST Network, New Delhi, to make necessary changes in the architecture of the GST web portal to permit the petitioner to file returns and make payments of tax, penalty and fee. The respondents were directed to complete this exercise within 30 days from receipt of the order. [Paras 5]

Respondents shall instruct GST Network to enable necessary portal functionalities and complete the steps within 30 days.

Final Conclusion: Writ petition disposed by directing conditional revival of GST registration on the petitioner's filing of outstanding returns and payment of tax, interest and belated filing fee, with prohibition on utilising unapproved Input Tax Credit until departmental scrutiny; respondents directed to facilitate portal changes within thirty days.

Duplication of proceedings - concurrent jurisdiction of central and state tax authorities - Section 70 summons - show cause notice under Section 74 - prima facie case and balance of convenience for interim relief - stay of tax demand

Duplication of proceedings - Section 70 summons - show cause notice under Section 74 - prima facie case and balance of convenience for interim relief - stay of tax demand - Whether the impugned order dated 20.05.2023 (Annexure P-10) imposing GST liability on the petitioner should be stayed pending adjudication in view of parallel proceedings and deposits made with central authorities. - HELD THAT: - The Court noted that respondent No.2 issued summons under Section 70 covering 01.01.2021 to 30.06.2021 and thereafter a show cause notice under Section 74 was issued on 12.01.2023, culminating in an order dated 20.05.2023 (Annexure P-10) imposing tax, interest and penalty. It was also recorded that central authorities had earlier issued summons under Section 70 for the broader period 01.07.2017 to 30.06.2021 and, by order dated 21.12.2023 (Annexure P-12), computed a GST liability in respect of the petitioner's dealings with M/s R.J. Trading which the petitioner had deposited with the central authorities and which led to closure of those proceedings. On these material facts the Court found a prima facie case that the petitioner faced duplication of proceedings and being vexed twice for the same liability. Bearing in mind the balance of convenience and the risk of grave and irreparable harm not compensable in money, the Court concluded that interim relief by way of stay of the impugned state order was warranted until further orders. [Paras 8, 9, 10, 11, 12]

The impugned order dated 20.05.2023 (Annexure P-10) is stayed until further order.

Final Conclusion: On finding a prima facie case of duplication of proceedings and having regard to balance of convenience and irreparable harm, the High Court granted interim stay of the state authority's order dated 20.05.2023 (Annexure P-10) until further orders; notices were directed and pleadings ordered to be completed.

Ex parte assessment and audi alteram partem - Assessment under the OGST Act, 2017 - Setting aside assessment order and remand for fresh assessment

Ex parte assessment and audi alteram partem - Setting aside assessment order and remand for fresh assessment - Ex parte assessment order was set aside for failure to afford opportunity to reply and be heard; matter remanded for fresh assessment after opportunity to file reply. - HELD THAT: - The assessment order dated 23.11.2023 was passed ex parte and the petitioner had not filed a reply to the show cause notice dated 27.09.2023, having been unable to appear due to medical incapacity for which a medical certificate was produced. The Court concluded that the petitioner ought to be given another opportunity to reply to the SCN and to be heard before any fresh assessment is made. Consequently the impugned order was set aside and the assessing authority was directed to take the matter up afresh, hear the petitioner and pass a fresh assessment order in accordance with law within a specified timeframe. The Court preserved the petitioner's right to challenge the fresh assessment order by appropriate remedies. [Paras 3, 4, 5, 6]

Impugned assessment order set aside; petitioner to file reply to SCN by 02.01.2024; assessing authority to hear petitioner on 08.01.2024 and pass fresh assessment order within two months; right to challenge preserved.

Final Conclusion: Writ petition disposed by setting aside the ex parte assessment order for the tax period 1st July, 2017 to 31st March, 2018 and remanding the matter for fresh assessment after affording the petitioner an opportunity to reply and to be heard; directions given for timetable to file reply and for completion of fresh assessment.

Validity of GST demand on royalty payable to State mining department - Judicial precedent and stare decisis in tax litigation - Interference by writ jurisdiction in revenue demands

Validity of GST demand on royalty payable to State mining department - Interference by writ jurisdiction in revenue demands - Judicial precedent and stare decisis in tax litigation - Challenge to show cause notice/assessment orders raising GST demand on royalty paid to the State Mining Department dismissed following earlier Division Bench decisions. - HELD THAT: - The petitioner challenged the GST demand raised on royalty paid to the respondent Mining Department. The Division Bench recorded that identical controversy had been considered and decided by this Court in Shree Basant Bhandar Int Udyog (D.B. Civil Writ Petition No.5678/2022) and in the bunch of writ petitions led by Sudershan Lal Gupta (D.B. Civil Writ Petition No.8109/2022). Counsel for the petitioner did not dispute that those decisions are binding. In view of the settled precedent of this Court upholding the action of respondents in imposing GST on royalty, the writ petition could not be entertained and was dismissed accordingly. The prayer for interim relief was also rejected. [Paras 4, 5]

Writ petition dismissed and stay petition refused in accordance with the earlier Division Bench orders upholding GST demand on royalty.

Final Conclusion: The petition challenging levy of GST on royalty paid to the State Mining Department is dismissed and the interim stay is refused, following the Division Bench precedents referred to by the Court.

Summary order. Notice issued to the respondents in the writ petition challenging the cancellation of the petitioner's GST registration and the appellate order; two extra copies to be served on standing counsel by 06.10.2023; matter listed after two weeks.

Subordinate authority bound by appellate order - quasi-judicial duty to comply with higher authority - remand for speaking order - opportunity of hearing - remand for fresh consideration

Subordinate authority bound by appellate order - quasi-judicial duty to comply with higher authority - remand for speaking order - opportunity of hearing - Impugned adjudicating order rejecting refund was set aside for refusing to comply with the Appellate Authority's remand and the matter was remanded for fresh consideration. - HELD THAT: - The Adjudicating Authority, on remand from the Appellate Authority, recorded that the Appellate Authority's order was not in accordance with law and declined to obey it, thereby rejecting the petitioner's refund claim. The High Court held that a subordinate/quasi-judicial authority is bound to comply with the binding direction of its superior appellate authority and, if aggrieved, must pursue further appeal rather than defy the order. Such conduct was characterised as unacceptable and beyond proper quasai-judicial function. Consequently, the court set aside the impugned order and directed remand to the Adjudicating Authority to pass a fresh speaking order in accordance with law after giving the petitioner or its authorised representative an opportunity of hearing. The Commissioner of CGST was directed to note the conduct and issue appropriate instructions to prevent recurrence. [Paras 2, 4]

Impugned order dated 21st February, 2022 set aside; matter remanded to the Adjudicating Authority to pass a fresh speaking order after hearing the petitioner within four weeks; copy of the order to be forwarded to the Commissioner of CGST.

Final Conclusion: Writ petition allowed in part: impugned order rejecting refund quashed and remanded for fresh speaking consideration after hearing within four weeks; administrative note to Commissioner of CGST to address the adjudicating officer's conduct.

Penalty imposed u/s 271C - Bar of limitation for imposing penalties - Limitation for imposition of penalty under Section 275(1)(c) - Delay in issuing the impugned SCN - fixation of period of limitation when penalty is sought to be imposed as fallout of action taken in another proceeding - As decided by HC [2023 (3) TMI 369 - DELHI HIGH COURT] delay in issuing the impugned SCN dated 09.11.2017 was inexcusable. There is no explanation, whatsoever, available on the record, as to why the SCN under Section 274 of the Act was not issued in 2013-14, if not earlier.

HELD THAT:- No case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The Special Leave Petition is, accordingly, dismissed.

Non-discrimination under DTAA - Double Taxation Avoidance Agreement - Section 40(a)(i) disallowance - Section 195 - obligation to deduct tax where sum is chargeable under the Act - Permanent Establishment - Explanation 2 to Section 195 - more beneficial provision under Section 90(2)

Non-discrimination under DTAA - Section 40(a)(i) disallowance - more beneficial provision under Section 90(2) - Applicability of the non-discrimination clause in the India-Japan and India-USA DTAAs to disallowance under Section 40(a)(i) for payments made to certain foreign group companies - HELD THAT: - For AY 2006-07 the Court held that Articles 24(3)/26(3) (non-discrimination) of the India-Japan and India-USA DTAAs apply to payments for purchases made to five specified foreign group companies (MC (Japan), Metal One Corporation (Japan), Tubular (USA), Petro (Japan) and Miteni (Japan)). Because the DTAA provisions are more beneficial, Section 90/90(2) permits the assessee to invoke them. The Court observed that the transfer pricing (Article 9) arguments relate to service income and were not the basis for the Section 40(a)(i) disallowance; accordingly Article 9 did not negate application of the non discrimination clause to the purchase payments in issue for AY 2006 07. [Paras 15, 16, 17, 22]

The non discrimination clause in the India-Japan and India-USA DTAAs applies in favour of the assessee and the disallowance under Section 40(a)(i) cannot be sustained for the five specified entities.

Section 195 - obligation to deduct tax where sum is chargeable under the Act - Permanent Establishment - Explanation 2 to Section 195 - Whether payments made to MC Metal (Thailand) and Metal One (Singapore) were chargeable to tax in India (existence of PE) so as to attract deduction of tax at source and consequent disallowance under Section 40(a)(i) - HELD THAT: - The Tribunal's finding that MC Metal (Thailand) and Metal One (Singapore) do not have a PE in India was accepted. Chargeability to tax is the precondition for the obligation under Section 195(1); absent a PE and hence absent chargeability, there was no obligation to deduct tax and the Section 40(a)(i) disallowance consequent on alleged non deduction was unsustainable. The Court noted that the AO's inference, drawn by analogy from MC (Japan), that these entities had PE was not supported by any order holding them to have a PE; therefore their income was not taxable in India for the AY concerned. [Paras 18, 19, 22]

MC Metal (Thailand) and Metal One (Singapore) do not have a PE in India for the period in issue; payments to them are not chargeable to tax in India and the consequential disallowances under Section 40(a)(i) are invalid.

Reformulation of judicial question after pronouncement - more beneficial provision under Section 90(2) - Validity of the division bench judge's reformulation of the second question after pronouncement - HELD THAT: - The Court held that the learned judge could not reformulate the question after the judgment had been pronounced. Recasting the second question to add 'business connection' after the decision was impermissible because the assessee could legitimately rely on DTAA provisions (which are more beneficial under Section 90(2)); consequently the business connection test could not be substituted for the PE/DTAA analysis adopted for the period in issue. [Paras 20, 21, 22]

The post pronouncement reformulation of the second question was not permissible; the matter must be decided on the questions as framed and in light of the DTAA/PE analysis.

Final Conclusion: All questions framed in the orders of 29.04.2014 and 17.11.2017 are answered in favour of the assessee and against the revenue: the non discrimination clause in the India-Japan and India-USA DTAAs applies to the specified purchase payments for AY 2006 07; MC Metal (Thailand) and Metal One (Singapore) do not have a PE in India and payments to them are not chargeable to tax in India; and the attempted post pronouncement reformulation of the second question was impermissible.

Taxation of consideration in redevelopment transactions - Taxation of corpus receipts - timing and head of income - Characterisation of transfer as development rights not transfer of land or building

Taxation of consideration in redevelopment transactions - Double taxation principle - Whether the consideration received on redevelopment, though paid to members pursuant to agreements, could be taxed in the hands of the society. - HELD THAT: - The Tribunal found, and this Court accepted, that the developer made payments to the society members who had offered those amounts to tax in their individual returns, and that the society itself did not receive the aggregated consideration except a nominal sum. The Court applied the factual findings and the reasoning in Raj Ratan Palace CHS (as relied upon by the Tribunal) that mere execution of agreements by the society or members does not justify taxing the society where the receipts accrued to and were offered by individual members. The society remained a lessee and no transfer of land or building occurred so as to attract taxation in the society's hands; taxing the society in such circumstances would amount to double taxation contrary to recognised principles. [Paras 6, 7]

Resolved in favour of the assessee-the consideration paid to members was not taxable in the hands of the society.

Characterisation of transfer as development rights not transfer of land or building - Scope of capital asset - land or building versus development rights - Whether the transaction amounted to transfer of land or building (attracting provisions applicable to land/building) or only transfer of development rights. - HELD THAT: - Following the Tribunal and the High Court precedents, the Court held that the society was only a lessee and what was transferred to the developer were development rights, not the land or building. The Court observed that the terms 'land or building' do not include development rights and, therefore, the transaction could not be treated as a transfer of land or building for the purposes invoked by the Revenue. This factual and legal characterisation reinforced the conclusion that the aggregated receipts could not be taxed in the society's hands. [Paras 6]

Resolved in favour of the assessee-the transaction constituted transfer of development rights, not land or building.

Taxation of corpus receipts - timing and head of income - Realisation principle in taxation - Whether the amount of Rs. 3.50 Crores received towards corpus on execution of the development agreement was taxable in the year of receipt and under which head of income. - HELD THAT: - The Assessing Officer treated the corpus receipt as a non-recurring windfall assessable as 'income from other sources' and disallowed related tax payments as expenditure. The CIT(A) accepted taxation only of the Rs. 3.50 Crores received in the year as 'income from other sources'. The ITAT, on facts that possession had not been delivered in the year and in view of the nature of the receipt, concluded that the Rs. 3.50 Crores was to be assessed under the head 'capital gains'. The High Court found no error in the ITAT's conclusion and upheld its characterisation and timing of taxation for the amount actually received during the year. [Paras 8, 9, 10]

Resolved in favour of the assessee as to timing and characterisation upheld by the ITAT-the Rs. 3.50 Crores received in the year was assessable as capital gains in that year.

Final Conclusion: The appeal is dismissed. The High Court upheld the Tribunal's factual findings and conclusions: (i) amounts paid to individual members under the redevelopment arrangement cannot be taxed in the hands of the society; (ii) the transaction involved development rights, not transfer of land or building; and (iii) the Rs. 3.50 Crores received on execution of the agreement was properly characterised and assessed in the year as held by the ITAT.

Disallowance of expenditure for lack of documentary proof - requirement of e-way bill and lorry receipt for movement of gold and jewellery - use of GST returns/Form GSTR-2A as corroborative evidence of purchase transactions - summary judicial review under Article 226 in presence of disputed questions of fact - penalty proceedings under Section 270A flowing from assessment additions

Disallowance of expenditure for lack of documentary proof - penalty proceedings under Section 270A flowing from assessment additions - Validity of the additions disallowing commission payments and purchases of bullion/jewellery and consequential penalty proceedings - HELD THAT: - The High Court examined the assessing officer's findings that the assessee failed to produce documentary evidence to substantiate foreign and local commission payments and the purchase and movement of bullion/jewellery from three sellers. The Court observed that the assessee did not furnish GST returns/Form GSTR-2A and other corroborative records called for during scrutiny, and several disputed questions of fact remained unresolved. In view of the factual record and the assessee's incomplete responses during assessment proceedings, the Court found no basis to interfere with the impugned assessment order which disallowed the said expenses and initiated penalty proceedings. The challenge to the consequential order under Section 270A, which arises from the assessment, therefore also fails. [Paras 54, 55, 56, 57]

Writ petitions dismissed; impugned assessment and penalty orders upheld

Requirement of e-way bill and lorry receipt for movement of gold and jewellery - use of GST returns/Form GSTR-2A as corroborative evidence of purchase transactions - Whether absence of e-way bills/LR receipts vitiates claim of purchases of gold and jewellery - HELD THAT: - The Court acknowledged that, under the GST rules and notifications relied upon by the petitioner, movement of certain gold and jewellery need not be accompanied by e-way bills. Nevertheless, the Court held that despite this exemption the assessee ought to have produced GST returns/Form GSTR-2A and other corroborative documents to substantiate the claimed purchases and their entry into the assessee's books. The absence of such GST documents and other evidence persuaded the Court that the assessing officer was entitled to treat the transactions as not adequately proved for the purposes of assessment. [Paras 14, 15, 16, 54]

Exemption from e-way bills does not absolve the assessee from producing GST returns and other corroborative evidence; non-production justified disallowance

Summary judicial review under Article 226 in presence of disputed questions of fact - Appropriateness of relief under writ jurisdiction when assessment involves disputed factual questions - HELD THAT: - The Court emphasised that several determinations in the assessment turn on disputed questions of fact - including genuineness of commissions, movement and utilisation of purchased stock, and adequacy of documentary proof. Such factual controversies do not call for interference in summary proceedings under Article 226. The proper remedy, the Court noted, is appellate process before the designated statutory authorities where the factual record can be tested and adjudicated. [Paras 55, 56, 58]

Writ petition not the appropriate forum to re-open disputed factual findings of the assessing officer; liberty granted to pursue statutory appeals

Final Conclusion: The writ petitions challenging the assessment for AY 2021-2022 and the consequential penalty order are dismissed. The High Court upheld the assessing officer's disallowances for lack of adequate documentary proof, observed that exemption from e-way bills does not replace the need to produce GST returns/Form GSTR-2A and other corroborative evidence, and declined to intervene in disputed questions of fact in writ jurisdiction; liberty granted to the petitioner to file statutory appeals within six months.

Interpretation of "amount of refund" - proviso to Section 244A(1)(a) - interest under Section 244A(1)(a) and Section 244A(1)(b) - character of advance tax, TDS and self-assessment tax on assessment - meaning of "regular assessment"

Interpretation of "amount of refund" - proviso to Section 244A(1)(a) - Whether the expression "amount of refund" in the proviso to Section 244A(1)(a) must be read as the entire refund payable to the assessee or may be artificially split into components (advance tax, TDS, SA tax and tax paid pursuant to demand). - HELD THAT: - The Court held that the words "amount of refund" must be given their natural and ordinary meaning and therefore denote the whole refund payable to the assessee, not an artificial partition into advance tax, TDS, self-assessment tax and taxes paid pursuant to demand. The proviso refers to the "amount of refund" without any language permitting a component-wise test; to read it otherwise would require the proviso to have expressly referred to the "advance tax or TDS component". The amended statutory scheme (w.e.f. 1st April 1989) and subsequent decisions of the Supreme Court and this Court endorse applying the plain meaning rule to such expressions and treating refunds arising from advance tax/TDS as attracting interest from the first day of the assessment year when the refund exceeds tax determined on assessment. Consequently, the Revenue's contention that only the advance tax/TDS portion of the refund should be compared with the 10% threshold in the proviso was rejected as contrary to the statutory text and purpose. [Paras 11, 12, 13, 14]

The expression "amount of refund" means the entire refund and cannot be dissected into components for the purpose of the proviso to Section 244A(1)(a); accordingly the proviso does not apply on the component-wise basis urged by the Revenue.

Interest under Section 244A(1)(a) and Section 244A(1)(b) - character of advance tax, TDS and self-assessment tax on assessment - meaning of "regular assessment" - Whether the appellant was entitled to interest under Section 244A on the refund and, if so, the quantum and from which date such interest is payable. - HELD THAT: - The Court rejected the ITAT's focus on whether "regular assessment" referred to the original assessment or the assessment giving effect to the appellate order as academic in light of the correct construction of "amount of refund". Relying on the amended statute's purpose and the Supreme Court's interpretation in Tata Chemicals Ltd., the Court held that where refund arises out of advance tax or tax deducted at source, interest is payable from the first day of the assessment year. The pre-amendment decision in Modi Industries was distinguished as relating to the law prior to 1st April 1989 and not controlling for the amended scheme; acceptance of the Revenue's reliance on that decision would either wrongly deny interest or, if characterised under clause (b), lead to a different start date and higher interest liability. Applying these principles, the Court answered the substantial questions in favour of the assessee and held entitlement to interest under Section 244A, fixing the quantum as determined by the Court below and confirming that interest is payable accordingly. [Paras 15, 16, 17]

Appellant is entitled to interest under Section 244A on the refund; the proviso to Section 244A(1)(a) does not operate to deny interest on the refund and interest is payable as held, with the quantum affirmed in favour of the assessee.

Final Conclusion: Appeal allowed. The proviso to Section 244A(1)(a) does not permit component-wise computation of the "amount of refund"; the appellant is entitled to interest under Section 244A on the refund as determined by the Tribunal/Lower authorities, and the substantial questions of law framed were answered in favour of the appellant.

Reopening of assessment and duty to furnish reasons on request - treatment of original return as response to notice under Section 148 - assessment on best judgement basis under Section 144 where no return filed - application of Section 143(2) in re-assessment proceedings where return not filed - reliance on third party statements in assessment and requirement of prejudice for interference - right to cross examination in tax proceedings and requirement of demonstrable prejudice - exercise of writ jurisdiction under Article 226 in income tax assessments

Reopening of assessment and duty to furnish reasons on request - treatment of original return as response to notice under Section 148 - Whether the assessment dated 16.12.2021 is vitiated for failure to furnish reasons for reopening the assessment. - HELD THAT: - The Court held that the duty to furnish reasons for reopening arises where the noticee files a return in response to the Section 148 notice or treats the earlier return as the return responding to that notice and then requests reasons. The petitioner neither filed a revised return in response to the Section 148 notice nor expressly asked the Assessing Officer to treat the original return as the return under Section 148. On that factual basis the principle in GKN Driveshafts does not entitle the petitioner to interference. Consequently absence of earlier disclosure of reasons did not amount to a ground for quashing the impugned reassessment in writ jurisdiction. [Paras 7, 8]

Non provision of reasons for reopening did not vitiate the assessment since the petitioner did not file a return in response to the Section 148 notice nor treat the original return as such.

Assessment on best judgement basis under Section 144 where no return filed - application of Section 143(2) in re-assessment proceedings where return not filed - Whether the failure to issue a notice under Section 143(2) or to follow its procedure required interference with the assessment. - HELD THAT: - The Court observed that where no return is filed in response to the Section 148 notice and assessment proceeds on a best judgement basis under Section 144, the procedural requirements of Section 143(2) do not arise. Given the factual finding that the petitioner did not file a revised return in response to the reopening notice, non compliance with Section 143(2) was not a ground for interference in the exercise of writ jurisdiction. [Paras 8]

Absence of a Section 143(2) notice did not invalidate the assessment where the assessee had not filed a return in response to the Section 148 notice and assessment proceeded on best judgment.

Reliance on third party statements in assessment and requirement of prejudice for interference - Whether reliance on the statement of M/s. Meenakshi Timber & Plywood without furnishing it to the petitioner justified quashing the assessment. - HELD THAT: - The Court examined the statement relied upon and noted that it recorded that the proprietary concern of the petitioner had mobilised labour and resources and thus circled back to the petitioner's involvement. The assessing officer's reliance on that statement did not, on the material before the Court, cause such prejudice as would warrant exercise of extraordinary writ jurisdiction. The petitioner was given opportunities to place evidence showing execution of the civil works but failed to produce corroborative material. [Paras 9, 12]

Reliance on the third party statement did not justify interference in writ jurisdiction in the absence of demonstrable prejudice or contrary material.

Right to cross examination in tax proceedings and requirement of demonstrable prejudice - Whether denial of opportunity to cross examine the petitioner's husband, who gave a statement, vitiated the assessment. - HELD THAT: - The petitioner's husband stated he lacked experience in mass excavation and sand filling. The Court held that denial of cross examination does not automatically warrant interference; interference is justified only where the assessee shows real prejudice from the denial. On the material before the Court no such prejudice was established and, therefore, refusal to allow cross examination did not invalidate the assessment in writ proceedings. [Paras 10]

Denial of cross examination of the petitioner's husband did not warrant quashing the assessment in the absence of shown prejudice.

Exercise of writ jurisdiction under Article 226 in income tax assessments - Whether a second remand or the timing of the impugned assessment order justified interference in writ jurisdiction. - HELD THAT: - The Court rejected the contention that a second remand is inherently impermissible and found no statutory or precedent bar to a subsequent assessment step. Given the conclusions on merits and the petitioner's failure to place adequate evidence of execution of works, the proximity of the assessment order to the Court fixed deadline did not warrant setting aside the order. The Court accordingly declined to exercise discretionary writ relief and observed that the petitioner may pursue statutory appeal remedies. [Paras 11, 12, 13]

No interference on ground of second remand or timing; writ relief refused and statutory appeal was left open.

Final Conclusion: Writ petitions challenging the assessment order dated 16.12.2021 and the consequential penalty order were dismissed. The High Court found no merit in grounds of non furnishing reasons for reopening, failure to issue Section 143(2) notice, reliance on third party statements, denial of cross examination or the timing/second remand; the petitioner was left free to pursue statutory appellate remedies.

Escaped assessment - Consideration of reply and supplementary reply - Speaking and reasoned order - Opportunity of personal hearing - Quashing and remanding for fresh decision

Consideration of reply and supplementary reply - Speaking and reasoned order - Escaped assessment - Impugned order and notice were quashed for failure to consider the assessee's replies and for lack of reasons in concluding that income had escaped assessment. - HELD THAT: - The Court found that although the impugned order records that the assessee's reply was considered, there is no reference to the documents filed with that reply nor to the supplementary reply dated 03.04.2023. The respondents' own filing (Annexure R-1) shows that a reply from the assessee was received on 03.04.2023, contradicting the authority's contention that the supplementary reply was not received. In these circumstances the authority neither dealt with the material placed before it nor furnished a speaking, reasoned conclusion for the finding that income/transactions had escaped assessment to the stated extent. For these defects the impugned order and notice cannot stand. [Paras 3, 5, 6, 7, 8]

Order dated 13.04.2023 and notice dated 13.04.2023 are quashed and set aside; matter remitted for fresh decision after taking into account the replies and documents and passing a speaking, reasoned order, with opportunity for personal hearing.

Final Conclusion: Impugned order and notice quashed; matter remanded to the concerned authority to decide afresh after considering the replies (including the supplementary reply of 03.04.2023) and documents, and after affording the petitioner an opportunity of personal hearing; petition disposed of.

Substitution of consideration under section 50C - third proviso to section 50C(1) - 10% tolerance band - reference to the Departmental Valuation Officer under section 50C(2) - retrospective operation of the amendment to section 50C(1)

Substitution of consideration under section 50C - third proviso to section 50C(1) - 10% tolerance band - reference to the Departmental Valuation Officer under section 50C(2) - Whether the value determined by the Departmental Valuation Officer could be substituted for the assessee's declared sale consideration when the variance was 4.97% - HELD THAT: - The Tribunal found that the assessee sold the property for Rs. 1.10 crores and, on reference to the DVO under section 50C(2), the DVO valued the property at Rs. 1.15 crores, a variance of 4.97% from the declared consideration. The third proviso to section 50C(1) (introducing a tolerance band of 10%) permits acceptance of the consideration where the stamp valuation does not exceed 110% of the consideration. The Tribunal accepted the view of a coordinate bench that the 2018 amendment introducing the third proviso operates retrospectively to the date section 50C was introduced, and therefore the tolerance applies to the present transfer. As the variance (4.97%) falls within the 10% tolerance, no substitution of the declared sale consideration was warranted and the assessee's declared consideration must be accepted for computing long-term capital gains. [Paras 2, 3, 4, 5]

Declared sale consideration accepted; no substitution with DVO value as variance is within the 10% tolerance under the third proviso to section 50C(1).

Final Conclusion: The assessee's declared sale consideration for AY 2015-16 is accepted for computation of long term capital gains because the DVO valuation differed by only 4.97%, which falls within the 10% tolerance under the third proviso to section 50C(1), the amendment to which was applied retrospectively.

Treatment of on-money in real estate transactions - reading seized documents in totality - telescoping of undisclosed income within a group - application of disclosure among group concerns - reliance on statement recorded under section 132(4)

Treatment of on-money in real estate transactions - reading seized documents in totality - Whether the entire on-money received on sale of plots is taxable or only the profit element (net profit method) is taxable in the assessee's hands. - HELD THAT: - The Tribunal upheld the lower authorities' conclusion that the net profit method adopted in construction/manufacturing cases is not readily applicable to land/plot development where price determination and cost structures differ and market/land values vary. The assessee failed to furnish details of expenses, development charges or other evidence to demonstrate that only a profit element should be taxed. The seized pages and admissions were to be read in totality; the authorities legitimately treated the on-money receipts as taxable receipts in the absence of cogent material to compute and substantiate a net profit portion. The case law cited by the assessee was held distinguishable as those related to construction/manufacturing facts where net profit computations are feasible, unlike the present facts concerning plots. Applying that reasoning, the Tribunal dismissed the assessee's challenge to the additions and refused to restrict taxability to an 8% profit element. [Paras 11, 12]

Assessee's plea to tax only an 8% profit element on on-money received in plot sales is rejected; entire on-money receipts were held taxable as determined by the authorities.

Telescoping of undisclosed income within a group - application of disclosure among group concerns - reliance on statement recorded under section 132(4) - Whether the disclosure of Rs. 16.42 crores found on seized material should be taxed wholly in the assessee's hands or apportioned/taxed in the hands of other group concerns as per the disclosure chart. - HELD THAT: - The Tribunal noted the earlier direction to verify the disclosures against group concerns and found that other group entities had been assessed/returned income corresponding to parts of the seized disclosure. The CIT(A)'s approach of reading the seized pages and the statement in totality and accepting the assessee's party-wise disclosure to the extent reflected in other group members' assessments was sustained. The Revenue failed to demonstrate error in limiting the assessee's liability to the amounts attributable to it after accounting for taxation of corresponding disclosures in other group concerns. Consequently, the Revenue's appeal seeking to aggregate the entire disclosed amount into the assessee's hands was dismissed. [Paras 6, 15, 16]

The CIT(A)'s apportionment limiting the assessee's tax liability in respect of the Rs.16.42 crores disclosure (so as to avoid double taxation where other group members have been taxed) was affirmed; Revenue's appeal dismissed.

Final Conclusion: Both the assessee's appeals and the Revenue's appeal were dismissed: the Tribunal rejected the claim to tax only an 8% profit on on-money from plot sales and upheld the appellate authority's apportionment of the seized disclosure among group concerns, thereby confirming the assessments as framed.

Revisionary jurisdiction under section 263 - faceless assessment scheme and section 144B procedure - territorial jurisdiction of the Assessing Officer and Principal Commissioner - concurrent jurisdiction of faceless units and jurisdictional AO - percentage completion method of accounting - capitalisation of borrowing cost / treatment of interest - treatment of Transfer of Development Rights as stock-in-trade

Faceless assessment scheme and section 144B procedure - territorial jurisdiction of the Assessing Officer and Principal Commissioner - concurrent jurisdiction of faceless units and jurisdictional AO - revisionary jurisdiction under section 263 - Whether the Pr.CIT-27, Mumbai had jurisdiction to invoke revisionary jurisdiction under section 263 in respect of an assessment completed under the faceless e-assessment procedure - HELD THAT: - The Tribunal examined the Faceless Assessment Scheme (E assessment / Faceless Assessment Scheme) and the statutory procedure under section 144B which provides for assignment of a case to an assessment unit and, upon completion of assessment, transfer of all electronic records to the Assessing Officer having territorial jurisdiction for actions required under the Act. The Bench noted the CBDT notifications and the Office Memorandum emphasising concurrent jurisdiction during assessment proceedings but a transfer back of electronic records to the jurisdictional AO on completion. Applying these provisions, the Tribunal held that after completion of the faceless assessment and transfer of electronic records back to the jurisdictional AO, the territorial PCIT (here PCIT 27, Mumbai) retained the power to call for and examine the record and to invoke section 263 where an order appeared erroneous and prejudicial to revenue. The Tribunal distinguished authorities relied upon by the assessee as addressing different factual or statutory contexts (notably transfer pricing or other non comparable delegation structures) and found those decisions inapplicable to the facts where records had been retransferred to the jurisdictional AO. Having found that the electronic record was available with the jurisdictional office and that section 144B contemplates such transfer, the invocation of section 263 by the territorial PCIT was held valid. [Paras 2, 8, 11, 19]

Pr.CIT-27, Mumbai had jurisdiction to invoke section 263 in respect of the faceless assessment for A.Y. 2018-19; ground challenging PCIT's jurisdiction is dismissed.

Percentage completion method of accounting - capitalisation of borrowing cost / treatment of interest - treatment of Transfer of Development Rights as stock-in-trade - revisionary jurisdiction under section 263 - Whether the assessment order was erroneous and prejudicial to revenue on merits in relation to (a) recognition of revenue methodology and corresponding allowance of interest and (b) allowability of TDR expenses as revenue expenditure - HELD THAT: - The Tribunal reviewed the material placed before the Assessing Officer during assessment - including the audit report (Form 3CB) disclosing the assessee's significant accounting policies which stated that the Company followed the Percentage Completion Method (PCM) for revenue recognition per the Guidance Note for Real Estate Developers and that borrowing costs relating to acquisition and construction of assets are capitalised until assets are ready for intended use. The AO's questionnaire under section 142(1) had specifically sought loan/interest details, project wise WIP/finished stock and the method of booking profits (AS 7/ICDS), and the assessee furnished project wise computations, work in progress accounts and cost sheets. On this record the Tribunal found that the AO had examined and verified the method of revenue recognition and related allocations during assessment, and that the assessee consistently followed PCM (not project completion method). Consequently the Pr.CIT's conclusion that interest should be disallowed in the year under consideration (by applying a project completion rule) was not borne out by the record. With regard to TDR, the Tribunal accepted the assessee's explanation that TDR constituted a right of construction/FSI forming part of stock in trade of its real estate business and that treating the TDR amount as capital expenditure was not justified on the material placed before the AO. The Pr.CIT had not demonstrated how the AO's order was erroneous and prejudicial to revenue on these points. For these reasons the Tribunal allowed the assessee's grounds attacking the 263 order on merit. [Paras 13, 14, 15, 16, 17]

The Pr.CIT's order under section 263 was erroneous insofar as it treated interest as not allowable (on a project completion premise) and treated TDR as capital expenditure; these grounds are allowed and the 263 set aside on these merits is not sustained.

Final Conclusion: The appeal is partly allowed: the challenge to the Pr.CIT's jurisdiction to invoke section 263 is dismissed; however, on merits the Tribunal held that the assessment record shows the assessee followed the percentage completion method and that borrowing costs and TDR were appropriately treated by the AO, and therefore the Pr.CIT's conclusions under section 263 in respect of interest disallowance and capitalisation of TDR are not sustained.

Stamp-duty value versus actual sale consideration - Circle rates as indicia of market value - Role and admissibility of District Valuation Officer (DVO) report - Right to opportunity of hearing before enhancement based on DVO report - Effect of encroachment on valuation of land - Remand for fresh adjudication by assessing officer

Stamp-duty value versus actual sale consideration - Circle rates as indicia of market value - Adoption of circle rate as sale value and related addition remanded for fresh adjudication - HELD THAT: - The Tribunal found that the assessee raised bona fide objections regarding the use of circle rate for valuation - including evidence as to the interior location of the plot, temporary construction and later downward revision of circle rates for the area - and that these objections had not been adequately considered by the DVO or in the assessment proceedings. Given the change in circle rates and the contention that the adopted circle rate did not represent the prevailing market value at the time of sale, the Tribunal considered it appropriate that the Assessing Officer re-examine the matter and adjudicate afresh, taking into account the assessee's written submissions and documentary material. [Paras 11]

Matter remanded to the Assessing Officer for fresh adjudication of valuation in light of the assessee's objections to adoption of circle rate and supporting material.

Role and admissibility of District Valuation Officer (DVO) report - Right to opportunity of hearing before enhancement based on DVO report - Validity of enhancement based on DVO report remanded for reconsideration, including failure to afford opportunity and non-consideration of written objections - HELD THAT: - The Tribunal recorded that the DVO's preliminary and final reports did not appear to have dealt with the written objections filed by the assessee and that the assessee asserted it was not given a reasonable opportunity to rebut or have its submissions considered. In view of these procedural and substantive concerns about the DVO report, the Tribunal directed that the Assessing Officer revisit the matter and ensure the DVO's considerations and the assessee's objections are properly adjudicated. [Paras 11]

Enhancement founded on the DVO report remitted to the Assessing Officer for fresh consideration after affording appropriate opportunity and dealing with the assessee's objections.

Effect of encroachment on valuation of land - Treatment of encroachment and its impact on assessed value remanded for fresh examination - HELD THAT: - The Tribunal noted that encroachment on the subject land had been asserted by the assessee, affirmed in statements recorded and by a broker, but the DVO and assessment records did not appear to have given due effect to the encroachment in valuation. As this factual aspect may materially affect valuation, the Tribunal directed the Assessing Officer to re-examine and quantify any deduction in value attributable to the encroached portion. [Paras 11]

Issue of encroachment and its impact on valuation remitted to the Assessing Officer for fresh adjudication.

Disallowance of brokerage/commission - Disallowance of commission remanded for fresh consideration by the Assessing Officer - HELD THAT: - The assessee contested the disallowance of brokerage/commission paid in connection with the sale, asserting the absence of tangible material on record to justify the disallowance. The Tribunal observed that the assessee's objections deserved consideration and remitted the issue to the Assessing Officer to examine the documentary evidence and decide the claim afresh. [Paras 11]

Commission disallowance directed to be reconsidered afresh by the Assessing Officer.

Final Conclusion: The Tribunal found the assessee's objections to valuation, the DVO report, the effect of encroachment and the disallowance of commission to be genuine and remitted these matters to the Assessing Officer for fresh adjudication; the appeal is allowed for statistical purposes.

Revenue expenditure versus capital expenditure - Deduction under section 35E - amortisation for prospecting or development of mines - Deduction under section 37 - expenditure wholly and exclusively for purpose of business - Section 35E as an enabling provision and not a restriction on deductions available under other provisions - Commercial production - year of commercial production - Accounting treatment in books is not conclusive for tax liability

Deduction under section 37 - expenditure wholly and exclusively for purpose of business - Deduction under section 35E - amortisation for prospecting or development of mines - Revenue expenditure versus capital expenditure - Section 35E as an enabling provision and not a restriction on deductions available under other provisions - Accounting treatment in books is not conclusive for tax liability - Commercial production - year of commercial production - Whether the claimed Mine Development Expenditure (overburden removal) is allowable as a revenue deduction under section 37(1) or requires amortisation under section 35E. - HELD THAT: - The Tribunal held that the overburden removal expenditure incurred by the assessee (a mine operator/contractor) is a revenue expenditure allowable under section 37(1). Section 35E is intended as an enabling provision to permit amortisation of expenditure incurred wholly and exclusively on prospecting or development of a mine where such expenditure would otherwise be non deductible; it cannot be invoked by the Assessing Officer to deny a deduction which is otherwise allowable under section 37. The characterisation of the expenditure in the company accounts as "Mine Development Expenditure" and its amortisation policy under company law do not determine taxability; accounting treatment is not conclusive for income tax purposes. The factual feature that overburden removal can be a continuing part of extraction operations (and in many cases necessary for extraction) supports treatment as revenue expenditure where it facilitates the assessee's business of excavation under contract and does not bring into existence an enduring capital asset for the assessee. Consequently, the CIT(A)'s conclusion that the expenditure is allowable under section 37(1) was upheld and the AO's invocation of section 35E to disallow the claim was held to be incorrect. [Paras 8]

Assessee's claim for Mine Development Expenditure is allowable as revenue expenditure under section 37(1); revenue's appeal is dismissed.

Assessment under section 143(3) - date of passing versus upload/dispatch - Receipt/dispatch of order not decisive where order becomes infructuous - Whether the cross-objection challenging timeliness of the assessment order passed under section 143(3) (date uploaded versus date allegedly passed) requires separate adjudication in view of the outcome of the main appeal. - HELD THAT: - The assessee contended that the assessment order was not validly passed within time because the order was uploaded to the system on a later date than the date shown on the manual order. The revenue relied on precedent about the date an order is "made". Given that the main appeal was decided in favour of the assessee (revenue's appeal dismissed), the Tribunal found no necessity to adjudicate the cross objection on timeliness and treated the cross objection as infructuous. Consequently, no separate determination on the uploading/dispatch timing was undertaken. [Paras 10, 11, 12, 13]

Cross-objection alleging time bar of the assessment order is dismissed as infructuous.

Final Conclusion: The Tribunal affirms the CIT(A): the mine development/overburden removal expenditure incurred by the assessee is revenue expenditure allowable under section 37(1) and the AO was not justified in invoking section 35E to deny the deduction; revenue's appeal is dismissed. The cross objection contesting timeliness of the assessment order is treated as infructuous and dismissed.

Proviso to section 2(15) of the Income-tax Act - charitable purpose - exemption under sections 11 and 12 - dominant purpose test - infrastructure development fund - nature and taxability - remand for fresh adjudication

Proviso to section 2(15) of the Income-tax Act - charitable purpose - exemption under sections 11 and 12 - dominant purpose test - Whether the assessee (Ghaziabad Development Authority) is hit by the proviso to section 2(15) and hence not entitled to exemption under sections 11 and 12 for the relevant years - HELD THAT: - The Tribunal, following the decision of the Hon'ble Allahabad High Court (as applied in co ordinate Bench decisions and earlier Tribunal orders in the assessee's own cases), held that the question of applicability of the proviso to section 2(15) must be determined on the facts and dominant purpose. The Tribunal accepted the High Court's reasoning that statutory development authorities may qualify as charitable under section 2(15) where their objects and conduct demonstrate non commercial, public utility purposes, and that mere incidental commercial receipts do not ipso facto attract the proviso if activities are not carried on on commercial lines with profit motive. Having regard to parity with the Allahabad High Court and co ordinate Bench precedents which were held applicable to the assessee, the Tribunal allowed the grounds challenging denial of exemption and directed that the exemption issue be considered consistent with those precedents.

Grounds relating to denial of exemption under sections 11 and 12 were allowed for the assessee by applying the ratio of the Allahabad High Court and co ordinate Tribunal precedents.

Infrastructure development fund - nature and taxability - remand for fresh adjudication - exemption under sections 11 and 12 - Whether amounts transferred to the Infrastructure Development Fund constitute taxable income of the assessee or are non taxable custodial/earmarked sums - HELD THAT: - The Tribunal did not decide the question on merits but remanded the matter to the Assessing Officer for de novo adjudication. The Tribunal directed the AO to examine the source of the funds, control over them, the obligations as to their utilization, and whether the amounts were received and held subject to directions of State authorities such that they are not the assessee's taxable receipts. The remand is to be conducted in the light of the ratios laid down by co ordinate Bench decisions in Saharanpur Development Authority and Khurja Development Authority, and having regard to the fact that the assessee has been granted registration under section 12AA; the AO is to give the assessee a reasonable opportunity of being heard.

Issue remanded to the Assessing Officer for fresh decision in accordance with Tribunal precedents and law.

Final Conclusion: Appeals partly allowed: denial of exemption under sections 11 and 12 set aside for the relevant years by applying the Allahabad High Court and co ordinate Tribunal precedents; contentious receipts transferred to the Infrastructure Development Fund remitted to the Assessing Officer for fresh adjudication in accordance with the Tribunal's directions and applicable precedents.

Allowability of club subscription payments as business expenditure - disallowance under Section 14A read with Rule 8D - apportionment of interest and mixed funds doctrine - transfer pricing treatment of issuance of Letter of Comfort and its characterisation as an international transaction - benchmarking of fees for Letters of Comfort and appropriate comparable - transfer pricing benchmark for interest on delayed realization - currency of loan determines relevant market rate (LIBOR vs PLR) - admission of additional evidence and remand to assessing officer for verification - allowability of retainer/agency fees - requirement of cogent evidence of services rendered - computation of book profit under Section 115JB - effect of Section 14A disallowance on clause (f) of Explanation 1

Allowability of club subscription payments as business expenditure - Disallowance of payments to clubs was not sustainable and was deleted. - HELD THAT: - The Tribunal followed coordinate-bench precedent in the assessee's own earlier years and the jurisdictional High Court (as applied in the assessee's prior years) holding that payments to clubs are revenue in nature and allowable. The bench applied the ratio of earlier coordinate-bench decisions in identical factual and legal circumstances and allowed the ground in favour of the assessee.

Addition/disallowance relating to payments to clubs is deleted; ground allowed in favour of the assessee.

Disallowance under Section 14A read with Rule 8D - apportionment of interest and mixed funds doctrine - computation of book profit under Section 115JB - effect of Section 14A disallowance on clause (f) of Explanation 1 - Disallowance made under Section 14A read with Rule 8D and consequent enhancement of book profit under Section 115JB were not justified and were deleted. - HELD THAT: - On the facts, the assessee's own funds exceeded the cost of investments that yielded exempt income; relying on jurisdictional High Court decisions and a Special Bench decision, the Tribunal concluded that investments can be presumed to have been made from own funds where own funds exceed the investments, obviating a Section 14A disallowance. Consequently, the Tribunal held that no addition under clause (f) of Explanation 1 to Section 115JB(2) was warranted since the Section 14A disallowance could not be sustained. Alternative contentions (exclusions of certain investments, exclusion of interest on EPC/pre-shipment credits, or restricted 0.5% Rule 8D computation) were not necessary to decide in view of the principal conclusion.

Disallowance under Section 14A read with Rule 8D deleted; corresponding enhancement under Section 115JB deleted; grounds allowed in favour of the assessee.

Transfer pricing treatment of issuance of Letter of Comfort and its characterisation as an international transaction - benchmarking of fees for Letters of Comfort and appropriate comparable - Transfer pricing adjustment in respect of fees for issuance of Letters of Comfort was not sustainable; issuance of Letters of Comfort did not constitute an international transaction requiring the imposition of the proposed adjustment. - HELD THAT: - The Tribunal followed its coordinate-bench decisions in the assessee's earlier assessment years which distinguished a Letter of Comfort from a legally enforceable guarantee, held that a unilateral Letter of Comfort does not create binding recourse and may amount only to an incidental/passive association benefit, and therefore does not constitute an international transaction under Section 92B for the years in question. Having regard to those precedents and absence of contrary material, the Tribunal deleted the addition.

Transfer pricing addition relating to Letters of Comfort deleted; ground allowed in favour of the assessee.

Transfer pricing benchmark for interest on delayed realization - currency of loan determines relevant market rate (LIBOR vs PLR) - Imputed interest on delayed realization should be benchmarked by reference to the rate applicable to the currency of the credit (LIBOR), not the Indian PLR; the assessee's charge was acceptable. - HELD THAT: - Applying the reasoning of the Delhi High Court in Cotton Naturals and international transfer pricing principles, the Tribunal held that the relevant market interest rate is the rate applicable to the currency in which the credit is denominated. The assessee had charged 6%, which exceeded the average LIBOR for the year (4.74%), and there was no persuasive basis to apply PLR. The Tribunal accordingly confirmed the assessee's treatment and deleted the TPO/DRP adjustment.

Transfer pricing addition on account of interest on delayed realisation is deleted; ground allowed in favour of the assessee.

Allowability of retainer/agency fees - requirement of cogent evidence of services rendered - Payment to Vaishnavi Corporate Communications Pvt. Ltd. was disallowed for lack of cogent evidence that services were rendered commensurate with the payment. - HELD THAT: - Although an agreement and invoices were on record, the Tribunal found that the assessee failed to produce substantial evidence demonstrating delivery of services proportionate to the payments. The nature of the assessee's business (export-oriented trading house) and comparisons with earlier decisions did not establish entitlement to deduction on the present facts. The DRP's conclusion that evidence did not substantiate the payments was upheld.

Disallowance of professional charges paid to VCCPL is sustained; ground dismissed for the assessee (i.e., addition upheld).

Admission of additional evidence and remand to assessing officer for verification - Additional documents relating to Additional Sales Tax were admitted and the matter was restored to the assessing officer for verification; issues concerning certain computation items (claimed refunds, DDT, interest under Section 244A) were remitted to the assessing officer for verification. - HELD THAT: - The Tribunal admitted the additional orders/challans produced for the Additional Sales Tax ground under Rule 29 as complying with the Rules and directed restoration to the AO for verification that the payments were not penalties and are allowable. Separately, computation entries alleged to show refund, DDT payable, and interest under Section 244A involved factual verification and were restored to the AO for scrutiny and determination within a timeline. These matters were not finally adjudicated on merits by the Tribunal but remanded for verification and resolution.

Additional evidence admitted; Additional Sales Tax issue and grounds relating to refund, DDT and Section 244A interest are remanded to the jurisdictional AO for verification and final disposal.

Non-pressing/abandonment of grounds - Ground relating to payment to Tata Public School was not pressed and was dismissed. - HELD THAT: - The assessee's authorised representative did not press the ground; accordingly the Tribunal dismissed it as not pressed.

Ground dismissed as not pressed by the assessee.

Final Conclusion: The appeal is partly allowed: disallowances relating to club payments, Section 14A/Rule 8D and the consequent Section 115JB enhancement, transfer pricing adjustments on Letters of Comfort and on interest on delayed realisations have been deleted in favour of the assessee; the professional charges paid to VCCPL were sustained as disallowance; Additional Sales Tax and computation-related claims (alleged refund, DDT, interest u/s 244A) are restored to the assessing officer for verification on production of documents and final disposal within the prescribed time.

Remand for proportionate apportionment of capital grants and adjustment against cost/WDV of specific assets - treatment of capital grants/subsidies/consumer contributions in computation of book profit under section 115JB - entitlement to additional depreciation under section 32(1)(iia) (post amendment) for power distribution activities - classification of receipts as business income or income from other sources (interest on staff loans, miscellaneous receipts, sale of scrap) - capitalization of borrowing costs/interest to Capital Work in Progress in accordance with Accounting Standard (AS) 16 - scope of notional disallowance without evidentiary basis

Remand for proportionate apportionment of capital grants and adjustment against cost/WDV of specific assets - scope of Explanation 10 to section 43(1) in relation to capital grants - Whether the assessment addition by applying a uniform 15% disallowance on capital grants/subsidies/consumer contributions is sustainable or the matter should be remitted for verification and apportionment asset wise. - HELD THAT: - The Tribunal accepted the assessee's submission that capital grants must be reduced from the actual cost/WDV of the specific assets and depreciation computed at the rates applicable to those assets. The Tribunal held that applying a uniform 15% disallowance is not legally justified where different assets attract different rates of depreciation. Following earlier coordinate bench reasoning, the Tribunal set aside the orders of the lower authorities and remitted the matter to the Assessing Officer for fresh adjudication, directing verification of the proportionate amount of grant attributable to each asset and application of the actual rate of depreciation relevant to those assets. [Paras 4, 20]

Issue remitted to the Assessing Officer for re adjudication after verifying proportionate grant allocation to different assets and applying asset specific depreciation rates.

Treatment of capital grants/subsidies/consumer contributions in computation of book profit under section 115JB - Whether additions on account of capital grants and consumer contributions should be included in book profit under section 115JB or be reconsidered by the Assessing Officer. - HELD THAT: - Following coordinate bench precedent, the Tribunal directed that the issue be set aside to the Assessing Officer for fresh adjudication in accordance with law. The Tribunal observed that the matter requires verification of the treatment of capital grants/subsidies/consumer contributions and gave the Assessing Officer liberty to pass orders after affording the assessee a hearing. [Paras 5]

Matter remitted to the Assessing Officer for consideration and orders in accordance with law in relation to computation of book profit under section 115JB.

Entitlement to additional depreciation under section 32(1)(iia) (post amendment) for power distribution activities - Whether the assessee is entitled to claim additional depreciation under section 32(1)(iia) for the relevant year and whether the claim should be verified by the Assessing Officer. - HELD THAT: - The Tribunal noted that detailed submissions and annexures relating to additional depreciation were filed before the Assessing Officer but were not adequately considered by the lower authorities, and that the amended statutory provisions extend the benefit to distribution activities. In the interest of natural justice and in view of the need to apply the amended law, the Tribunal set aside the denial and remitted the claim to the Jurisdictional Assessing Officer for verification and decision in accordance with the amended provisions. [Paras 6, 7]

Claim of additional depreciation remitted to the Jurisdictional Assessing Officer for verification and adjudication under the amended law.

Classification of receipts as business income or income from other sources (interest on staff loans) - Whether interest income on loans and advances to staff should be treated as business income or income from other sources. - HELD THAT: - The Tribunal referred to precedent (including a High Court decision favourable to a power undertaking) and observed that interest on advances or loans given to employees or incidental receipts closely connected to the commercial activity may constitute business income. The Tribunal found it appropriate to direct fresh examination of the nature and nexus of such receipts and remitted the matter to the Assessing Officer to consider the correct head of income after examining factual materials. [Paras 8, 9]

Issue remitted to the Assessing Officer for fresh verification of facts and classification of interest on staff loans as business income or income from other sources.

Classification of receipts as business income or income from other sources (miscellaneous receipts and sale of scrap) - Whether miscellaneous receipts (staff quarter charges, guest house charges, water charges, supervision charges, forfeiture, unclaimed deposits, etc.) and sale of scrap should be treated as business income rather than income from other sources. - HELD THAT: - Relying on authorities that income arising from use of company property or receipts incidental to the business should be treated as business income, and noting absence of specific reasons by the lower authorities to classify such receipts as income from other sources, the Tribunal directed that these heads be re examined by the Assessing Officer with appropriate verification of facts and materials. [Paras 10, 11, 12]

Matters remitted to the Assessing Officer for verification and re classification of miscellaneous receipts and sale of scrap in accordance with law.

Capitalization of borrowing costs/interest to Capital Work in Progress in accordance with Accounting Standard (AS) 16 - scope of notional disallowance without evidentiary basis - Whether the Assessing Officer was justified in making a notional disallowance of interest expenditure attributable to CWIP, and whether the CIT(A) was justified in deleting that addition. - HELD THAT: - The Tribunal examined the assessee's accounting treatment which capitalized borrowing costs in accordance with AS 16 and noted that the Assessing Officer's disallowance was a notional computation applying a uniform rate without adducing evidence that the entire CWIP was financed solely by borrowings. The Tribunal found no infirmity in the CIT(A)'s deletion of the addition, observed that the assessee provided detailed CWIP workings and break up of capitalized amounts, and that Revenue failed to justify the notional disallowance. [Paras 25, 26, 28]

Addition disallowing interest attributable to CWIP deleted; Revenue appeal dismissed.

Penalty and interest grounds not pressed - Disposition of grounds relating to penalty under section 270A and interest under sections 234A/234B/234C/234D which were not pressed by the assessee. - HELD THAT: - The Tribunal recorded that the assessee did not press grounds relating to penalty under section 270A and consequential interest provisions, and therefore those grounds were dismissed as not pressed without separate adjudication. [Paras 14, 15]

Grounds relating to penalty and consequential interest dismissed as not pressed.

Final Conclusion: The Tribunal remitted several issues (asset wise apportionment of capital grants and adjustment against cost/WDV; inclusion of grants in book profit under section 115JB; entitlement to additional depreciation under section 32(1)(iia); classification of interest, miscellaneous receipts and sale of scrap) to the Assessing Officer for fresh verification and adjudication. The Tribunal upheld the CIT(A)'s deletion of the Assessing Officer's notional disallowance of interest attributable to CWIP (Revenue appeals dismissed). Certain grounds (penalty and consequential interest) were dismissed as not pressed. Overall, the assessee appeals were allowed for statistical purposes and the revenue appeals were dismissed.

Summary order. Special Leave Petitions dismissed for lack of merit in view of the concurrent finding of fact; delay condoned; pending application disposed of accordingly.

Disqualification under Section 29A(c) of the IBC - temporal test for ineligibility - at the time of submission and proximate antecedent control - de jure and de facto control - positive/effective control - sham/colourable transactions to avoid Section 29A - effect of a binding MoU conferring management rights pending definitive agreements

Disqualification under Section 29A(c) of the IBC - temporal test for ineligibility - at the time of submission and proximate antecedent control - Scope and temporal application of Section 29A(c) in relation to control and management vis-a -vis the date of submission of resolution plan - HELD THAT: - The Tribunal held that Section 29A(c) is not confined to persons who were in management or control of the corporate debtor only at the historical date when the account was classified as NPA. The relevant time for examining ineligibility is the date of submission of the resolution plan, but antecedent facts reasonably proximate to that date may be considered to determine whether a person, in substance, arranged affairs to avoid the proviso (payment of overdue amounts). Persons exercising management or control in close temporal proximity to the submission of the plan, and who failed to regularise the NPA, fall within the mischief of Section 29A(c). A narrow interpretation limited to the date of NPA would frustrate the purpose of the amendment and allow those who arranged affairs to evade the proviso to participate. [Paras 10, 11, 12, 13, 14]

Section 29A(c) disqualifies not only those in control at the date of NPA but also those who were in management or control in the proximate period before submission of the resolution plan and who, in substance, sought to avoid payment of NPA dues.

Effect of a binding MoU conferring management rights pending definitive agreements - de jure and de facto control - positive/effective control - Whether the Second MoU dated 23/28.03.2016 vested the appellant with management and control of the corporate debtor from its effective date - HELD THAT: - On construing the MoU as a whole, the Tribunal found that the MoU became effective upon execution (Effective Date 23/28.03.2016) and, by express clauses, conferred on the appellant rights to nominate a majority of directors, require affirmative votes on specified matters, appoint/replace key managerial personnel and mandate quorum rules favoring the appellant's nominees. Clause 1.9, properly read, granted management control/affirmative rights 'until such time' the appellant held 51% equity, which the Tribunal interpreted as conferring those rights from the Effective Date and not contingent solely on completing the 51% investment. Other clauses (including Clause 3 and Annexure A) and correspondence evidencing operational involvement supported the conclusion of de jure and de facto control. [Paras 24, 25, 26, 30, 31]

The Second MoU vested the appellant with management and control of the corporate debtor from its effective date (23/28.03.2016).

Sham/colourable transactions to avoid Section 29A - de facto control through related entities and officers - Whether the transfer of the appellant's 100% shareholding in its subsidiary RIPL on 22.09.2017 was a genuine divestment or a sham transaction - HELD THAT: - The Tribunal examined documentary material including the share transfer certificate, loan relationships, timing (six days before initiation of CIRP), the paucity of payment evidence and the identity of transferees (directors/officials related to the appellant). The Adjudicating Authority's finding that the transfer was a sham was affirmed: even if the transfer were assumed genuine, the appellant continued to exercise control over RIPL through directors of related/connected companies, demonstrating continued de facto control relevant for Section 29A(c). [Paras 33, 36, 50]

The transfer of RIPL shares on 22.09.2017 was a sham transaction; the appellant continued to exercise control over RIPL and thereby over the corporate debtor.

Disqualification under Section 29A(c) of the IBC - effect of antecedent conduct and MoU in determining eligibility - Whether the Adjudicating Authority erred in holding the appellant ineligible under Section 29A(c) - HELD THAT: - Applying the correct legal test (temporal focus on submission date but scrutiny of proximate antecedent facts), and on the factual matrix - admitted equity infusion through RIPL, the binding MoU conferring management rights from March 2016, correspondence showing operational engagement and the sham share transfer - the Tribunal concluded that the Adjudicating Authority rightly held that all three ingredients of Section 29A(c) were satisfied: (i) account classified as NPA, (ii) appellant in management/control (directly or via RIPL), and (iii) lapse of more than one year between NPA classification and commencement of CIRP. The order rejecting the appellant's application was passed after considering relevant materials and does not warrant interference. [Paras 34, 35, 38, 40, 41]

The Adjudicating Authority did not err; the appellant is disqualified under Section 29A(c) and the appeal is dismissed.

Final Conclusion: The appeal is dismissed. The Tribunal affirmed the Adjudicating Authority's conclusion that the appellant was ineligible under Section 29A(c): the provision applies with reference to the time of submission of the resolution plan while permitting scrutiny of proximate antecedent conduct; the 23/28.03.2016 MoU vested the appellant with management and control from its Effective Date; the 22.09.2017 share transfer was a sham and control persisted through RIPL and related persons, and therefore the Adjudicating Authority's decision rejecting the appellant's challenge is upheld.

Approval of resolution plan - addendum to resolution plan - consideration of statutory dues of the Income Tax Department - rejection of resolution plan for non-compliance with Section 31(2) of IBC - compliance with Section 30(2) of the Code - direction to convene meeting of the committee of creditors - remand for fresh consideration

Consideration of statutory dues of the Income Tax Department - addendum to resolution plan - direction to convene meeting of the committee of creditors - Whether the matter should be remitted for consideration by the Committee of Creditors of the proposal by the Successful Resolution Applicant to treat Income Tax Department dues by way of an addendum to the approved resolution plan and whether the Adjudicating Authority's rejection should be set aside. - HELD THAT: - The Adjudicating Authority rejected the application for approval of the resolution plan inter alia because the plan did not address a claimed liability from the Income Tax Department and therefore, in its view, did not satisfy Section 31(2) of the IBC. The Successful Resolution Applicant filed an affidavit stating that, although no claim was filed by the Income Tax Department during CIRP and the corporate debtor's financial statements did not reflect outstanding tax liability, the SRA proposed by e-mail to pay statutory dues of the Income Tax Department and offered to pay an additional sum in accordance with payment terms for operational creditors; and contended that the plan complied with Section 30(2) of the Code. Having considered these facts, the Tribunal directed that the Resolution Professional convene a meeting of the Committee of Creditors to consider the SRA's proposal as an addendum to the resolution plan which had earlier been approved by the CoC, and, if approved, to file a fresh application for approval of the plan along with the addendum. The Tribunal set aside the Adjudicating Authority's order for the limited purpose of permitting this exercise and imposed a time schedule to complete the process and file the fresh application. [Paras 6, 7]

Order of the Adjudicating Authority is set aside and the matter is remitted to the Resolution Professional to place the SRA's proposal as an addendum before the CoC for consideration; on approval, a fresh application for approval of the plan with the addendum is to be filed within the stipulated timelines.

Final Conclusion: The Adjudicating Authority's rejection is set aside and the Tribunal directs the Resolution Professional to convene the Committee of Creditors to consider the Successful Resolution Applicant's proposal as an addendum to the approved resolution plan and, if approved, to file a fresh application for approval within the time schedule specified by the Tribunal.

Offence of money-laundering and continuing nature of process or activity connected with proceeds of crime - definition and scope of 'proceeds of crime' including Explanation (Act 23 of 2019) - power of arrest under Section 19(1) of PMLA (requirement to record and communicate written grounds) - twin conditions for bail under Section 45 of PMLA - statutory presumption under Section 24 of PMLA - scope of Section 50 of PMLA regarding summons, production and compelled disclosures - anticipatory bail under Section 438 CrPC in economic offences and exceptional nature of relief - impact of ECIR/complaint stage on exercise of PMLA powers and prosecutorial opposition

Power of arrest under Section 19(1) of PMLA (requirement to record and communicate written grounds) - impact of submission of ECIR/conversion into complaint on arrest and prosecution - Whether submission of the ECIR or conversion into a complaint/registration of an FIR ousts the Enforcement Directorate's power to arrest or its right to oppose anticipatory bail - HELD THAT: - The Court held that submission of an ECIR and registration of a complaint do not operate as a bar on exercise of arrest powers under Section 19(1). Section 19(1) confers power to arrest whenever there is a reason to believe, to be recorded in writing, that a person is guilty of an offence under the Act; there is no statutory stage-based limitation which extinguishes the power to arrest upon preparation or submission of ECIR. The Court further explained that Section 45(1)(i) expressly contemplates that the Public Prosecutor (here, for the ED) be given an opportunity to oppose an application for bail even at stages following lodgment of ECIR/complaint; therefore the ED does not lose its right to oppose bail once ECIR is submitted. The Court relied on authorities requiring written communication of grounds of arrest and emphasised that statutory procedures must be followed literally where prescribed. [Paras 45, 53, 55]

Submission of the ECIR/registration of complaint does not preclude arrest under Section 19(1) and does not deprive the Enforcement Directorate of the opportunity to oppose anticipatory bail.

Twin conditions for bail under Section 45 of PMLA - statutory presumption under Section 24 of PMLA - anticipatory bail under Section 438 CrPC in economic offences and exceptional nature of relief - Whether the twin conditions in Section 45(1) are mandatory for grant of bail and their application to an anticipatory bail application under Section 438 CrPC - HELD THAT: - The Court reiterated the binding precedents that the twin conditions in Section 45(1) - (i) opportunity to the Public Prosecutor to oppose and (ii) satisfaction that there are reasonable grounds to believe the accused is not guilty and will not commit an offence while on bail - are mandatory and apply even to anticipatory bail under Section 438 CrPC because of the overriding effect of the PMLA (Section 71) and related provisions (Sections 24, 65). The statutory presumption under Section 24 that proceeds of crime are involved in money-laundering (unless contrary is proved) was noted as relevant to the court's evaluation. The Court also emphasised the exceptional and sparing exercise of anticipatory bail in economic offences, and that grant of such relief may impede investigation in multi-stage money-laundering matters (placement, layering, integration). [Paras 36, 38, 41, 53]

The twin conditions in Section 45(1) are mandatory and must be satisfied before granting anticipatory or regular bail in PMLA cases; the statutory presumption under Section 24 is a material consideration.

Offence of money-laundering and continuing nature of process or activity connected with proceeds of crime - definition and scope of 'proceeds of crime' including Explanation (Act 23 of 2019) - impact of ECIR/complaint stage on exercise of PMLA powers and prosecutorial opposition - Whether, on the material collected in the ECIR, a prima facie case for money-laundering and active involvement of the petitioner is made out so as to refuse anticipatory bail - HELD THAT: - The Court examined the ECIR and summarised the investigative material: allegations of routing of proceeds of crime through bank accounts controlled by the petitioner and his associates; statements recorded under Section 50 and Section 17 indicating that dummy entities and forged documents were used; transactional links, admission of cash receipts and commission, involvement of petitioner's employees in account operations, provisional attachment of petitioner's assets, and narrated conduct during search. Considering this material collectively, the Court found prima facie evidence of the petitioner's role in concealment, layering and transfer of proceeds of crime and held that the gravity and nature of the allegations in an economic offence of this character weighed against a grant of anticipatory bail. The Court expressly refrained from adjudicating merits, treating its conclusions as prima facie. [Paras 61, 62, 63, 76, 77]

Prima facie material in the ECIR indicates the petitioner's active involvement in alleged money laundering; therefore, no exceptional case is made out for grant of anticipatory bail.

Final Conclusion: The High Court dismissed the petition for anticipatory bail under Section 438 CrPC: the court held that ECIR submission does not bar arrest or ED's right to oppose bail, the twin statutory conditions in Section 45 of PMLA are mandatory and apply to anticipatory bail, and on prima facie appraisal of the material the petitioner was not entitled to anticipatory bail; the order is confined to prima facie findings without adjudicating merits.

Extended period of limitation - revenue neutrality - reverse charge mechanism - import of service - classification of software services versus management consultant services - Cenvat credit

Extended period of limitation - revenue neutrality - Cenvat credit - Whether the demand and penalty in the order in original are sustainable in view of limitation and the revenue-neutral position arising from payment of service tax and availment of Cenvat credit - HELD THAT: - The Tribunal found that the appellant had, in respect of the same contract, paid service tax under reverse charge on certain activities (project management and validation) and had availed Cenvat credit, while bona fide treating other activities as software-related and not taxable for the period in question. The Tribunal accepted that even if there was a dispute on classification, the composite position showed that service tax was discharged on the overall supply to the ultimate customer and any tax liability (if established) would be available as Cenvat credit to the appellant, rendering the exercise revenue neutral. In that factual matrix and having regard to the appellants' bona fide belief about taxability, the Tribunal held that no mala fide suppression could be attributed and the demand fell under the extended period; accordingly the demand was held not sustainable on limitation grounds.

Impugned order set aside and appeal allowed on the ground that the demand is not sustainable by reason of limitation and the revenue-neutral position; penalty not sustained.

Classification of software services versus management consultant services - import of service - reverse charge mechanism - Classification of the services rendered by the foreign provider as management consultant services or as software services - HELD THAT: - The Tribunal observed that there was prima facie force in the appellant's contention that several contested activities (application software development, FAT, training and related tasks) were software-related and, in light of earlier decisions (including IBM India), such services became taxable as information technology/software services only with effect from 16.05.2008. However, the Tribunal expressly refrained from adjudicating the merits of classification, noting the appellant had made out a strong case on limitation and revenue neutrality; the substantive question of classification was not finally decided.

Substantive classification left undecided; not adjudicated on merits.

Final Conclusion: The appeal is allowed: the Tribunal set aside the order in original on the ground that the demand is barred by limitation in the factual matrix of bona fide belief and revenue neutrality (with available Cenvat credit). The substantive classification issue between software services and management consultancy was noted but not finally decided.

Taxability of director's commission as "service" under Section 65B(44) of the Finance Act, 1994 - Exception for services provided by an employee to the employer in the course of or in relation to employment - Employer-employee relationship of whole-time/whole time director - Commission treated as part of salary/remuneration for employment under Section 17(1) - Reverse charge liability asserted under Section 68(2) read with Rule 2(1)(d)(i)(EE) of the Service Tax Rules, 1994

Taxability of director's commission as "service" under Section 65B(44) of the Finance Act, 1994 - Employer-employee relationship of whole-time/whole time director - Commission treated as part of salary/remuneration for employment under Section 17(1) - Whether commission on profit paid to the joint managing director forms part of salary/remuneration within an employer-employee relationship and is therefore excluded from service tax liability. - HELD THAT: - The Tribunal held that the adjudicating authority's conclusion treating the commission paid to the joint managing director as a taxable service was unsustainable. Reliance was placed on the legal characterisation of whole-time directors as employees (and as key managerial personnel) under company law and on the documentary record (Form 16) showing salary inclusive of commission. The Tribunal accepted the view that remuneration paid to a whole-time director in conformity with company law, including variable pay in the form of profit-linked commission, arises from an employer-employee relationship and falls within the exception for services provided by an employee to the employer. The Tribunal observed that the temporary nature of appointment (term-limited appointment) does not negate employee status; a distinction between temporary and permanent employment is immaterial for the purpose of the employee-exception. Applying these principles and consistent precedents where whole-time/whole time directors' commission was held to be part of employment remuneration, the Tribunal concluded that the demand for service tax, interest and penalty could not be sustained.

Demand of service tax on commission paid to the joint managing director set aside; interest and penalty consequent on that demand are not sustainable.

Final Conclusion: Impugned order-in-original confirming service tax demand, interest and penalty in respect of commission on profit paid to the joint managing director is set aside and the appeal is allowed.

Reverse Charge Mechanism - Goods Transport Agency composite service - Ancillary and intermediary services forming part of GTA - Abatement on GTA service - Notification No. 30/2012-ST reverse charge for legal services - Penalty for suppression and contravention

Goods Transport Agency composite service - Ancillary and intermediary services forming part of GTA - Abatement on GTA service - Whether amounts shown as 'Freight, Insurance & Other Charges', 'Loading & Unloading Charges', 'Pole Shifting & Stacking Charges' are taxable under GTA on reverse charge and liable to the differential demand confirmed by the lower authorities. - HELD THAT: - The tribunal examined whether services received from different sources (transporters and casual labour) could be clubbed as a single composite GTA service for valuation and abatement. Relying on the distinction between services provided by the GTA (evidenced by consignment notes/invoices issued by the GTA) and services procured from other persons, the tribunal found that the revenue failed to produce any invoice or agreement showing that the disputed charges were paid to the GTA or formed part of a consignment note. The appellate authority noted that where ancillary services are included in the invoice issued by the GTA they form part of GTA service; but where those services are received from separate providers and accounted separately, they cannot be indiscriminately treated as GTA receipts. In the circumstances the tribunal concluded that the lower authorities had erred in creating a composite GTA service by aggregating charges paid to different persons without documentary proof tying them to the GTA. [Paras 4]

Demand under GTA head (differential Rs.3,31,667/- as confirmed below) is not sustainable and is set aside.

Reverse Charge Mechanism - Notification No. 30/2012-ST reverse charge for legal services - Whether the expenditures shown under 'Legal & Professional Charges' in the accounts (other than amounts paid to individual advocates or firms of advocates) are taxable under reverse charge as legal services. - HELD THAT: - The tribunal interpreted Notification No.30/2012-ST and observed that reverse charge on legal services applies only to services provided by an individual advocate or a firm of advocates. The appellate authority found that the appellant produced ledger entries and vouchers showing that a substantial portion of the expenditure under the head related to non-legal items (stamp papers, CA fees, TDS filing, consultants, court expenses etc.). The revenue had relied on mere ledger entries from the P&L without supporting bills or invoices to establish that the amounts were payments to advocates. On the documentary record before it the tribunal concluded that the impugned demand beyond the amount already deposited could not be upheld. [Paras 4]

Demand on 'Legal & Professional Charges' except the small amount already deposited is not sustainable and is set aside.

Penalty for suppression and contravention - Reverse Charge Mechanism - Whether penalties under the Finance Act for suppression/contravention and invocation of extended period are sustainable in view of the tribunal's findings on tax demand. - HELD THAT: - The tribunal observed that under the self-assessment scheme the appellant was required to correctly assess and pay tax, but where the substantive demands are not established by the revenue the basis for penalties and invocation of extended limitation is weakened. The tribunal noted that the appellant had deposited a small amount before issuance of the SCN and, given the meagre amount and the absence of merit in the broader demands, declined to uphold penalties under Sections 77(1)(a), 77(2) and 78 insofar as they related to the disputed demands. The appellate authority therefore quashed the penalties imposed by the lower authorities. [Paras 4, 5]

Penalties confirmed by the lower authorities are not sustainable and are set aside; appeal allowed.

Final Conclusion: The appeal is allowed: the demands confirmed by the adjudicating authorities for GTA-related charges and for 'Legal & Professional Charges' (except the minor amount deposited by the appellant) are set aside, and the penalties imposed in relation thereto are quashed; the appeal is allowed and the order below is modified accordingly.

Pre-deposit under section 35F of the Central Excise Act, 1944 as applied to service tax - liability of a sub-contractor to pay service tax despite payment by main contractor - remand for adjudication on merits where appeal dismissed solely for non-deposit - deposit of 10% at time of filing as compliance consideration for pre-deposit requirement

Pre-deposit under section 35F of the Central Excise Act, 1944 as applied to service tax - deposit of 10% at time of filing as compliance consideration for pre-deposit requirement - remand for adjudication on merits where appeal dismissed solely for non-deposit - liability of a sub-contractor to pay service tax despite payment by main contractor - Whether the appeal dismissed by the Commissioner (Appeals) solely for non-deposit should be reopened and remitted for decision on merits in view of the appellant's deposit and contemporaneous confusion on sub-contractor liability. - HELD THAT: - The Tribunal noted that the Commissioner (Appeals) dismissed the appeal because the appellant had not made the statutory pre-deposit envisaged by section 35F as applied to service tax (para 7). The appellant contended that the main contractor (M.P. Housing Board) had deposited the required tax and that, as a sub-contractor, it believed no separate deposit was necessary; at the relevant time there was conflicting Tribunal authority on whether a sub-contractor remained liable even if the main contractor paid the tax (para 2-3, 8). The appellant had, however, deposited 10% of the amount confirmed when filing this appeal (para 4). In view of the bona fide confusion in law at the relevant time and the fact that the appeal was dismissed only for failure to make the pre-deposit, the Tribunal considered it appropriate to set aside the Commissioner (Appeals) order and remit the matter for adjudication on merits (paras 8-9). The Tribunal further recorded that because the appellant deposited 10% on filing the appeal, it would not be necessary for the appellant to make the statutory pre-deposit before the Commissioner (Appeals) for the purpose of rehearing (para 9). [Paras 7, 8, 9, 10]

The order of the Commissioner (Appeals) dated 01.03.2016 is set aside and the matter is remitted to the Commissioner (Appeals) to decide the appeal on merits; the appellant's deposit of 10% at the time of filing suffices so as not to require further pre-deposit before the Commissioner (Appeals).

Final Conclusion: The Tribunal allowed the appeal in part by setting aside the Commissioner (Appeals) order that dismissed the appeal for non-deposit and remitted the matter to the Commissioner (Appeals) for decision on merits, recording that the appellant's 10% deposit at filing obviates the need for fresh pre-deposit before the Commissioner (Appeals).

Franchise service - representational right - host, stage and promote - limited commercial/financial right - import of service / reverse charge - extended period of limitation for tax recovery - penalty under Section 78 - penalty under Section 77

Franchise service - representational right - host, stage and promote - limited commercial/financial right - The Race Promotion Contract dated 13.09.2011 does not constitute a 'franchise' granting representational rights and therefore is not liable as a franchise service. - HELD THAT: - Having examined the Organisation Agreement, the Race Promotion Contract, the Artworks Agreement and the Service Agreement, the Tribunal found that FOWC granted JSIL only the limited right to host, stage and promote the Event and that the sporting conduct and regulatory control remained with the FIA and its affiliates. The contract expressly limited the right to the Event (Clauses 4.1-4.2), preserved JSIL's obligation to obtain licences and consents in its own name, prohibited JSIL from exercising control over competitors, advertising on cars or issuing passes, and retained that FOWC and JSIL were independent contractors (Clauses 5, 6, 7, 8, 14, 36.1, 37). There was no intention or contractual mechanism by which JSIL would represent FOWC or subsume its identity; the licence to use intellectual property was incidental and not shown to confer representational rights. Applying the settled test that a franchise requires a franchisee to lose its individual identity and represent the franchisor, the Tribunal held the Race Promotion Contract does not confer the requisite representational right and therefore is not a taxable franchise service (paras 19-26). [Paras 19, 23, 24, 26]

Demand of service tax based on treating the Race Promotion Contract as a franchise service is unsustainable and set aside.

Import of service / reverse charge - Demand in respect of services provided by FOM under the Service Agreement was not pressed on merits because service tax with interest was deposited prior to issuance of show cause notice. - HELD THAT: - The invoice from FOM was dated 17.04.2012, payment made on 16.05.2012 and service tax (with interest) amounting to the recorded sum was deposited on 06.06.2012. In view of sub-section (3) of Section 73, and because the appellant did not press this demand on merits, the Tribunal found no reason to sustain the show cause notice on this count and no further adjudication on merits was necessary (para 27). [Paras 27]

No further demand sustained in respect of the Service Agreement count; the claim having been deposited before the show cause notice, the point is not pressed.

Extended period of limitation for tax recovery - Invocation of the extended period of limitation could not be sustained. - HELD THAT: - The Event occurred on 31.10.2011 and revenue officers attended JSIL's premises on 03.11.2011 when all relevant agreements and invoices were furnished. The appellant's returns for Oct 2010-Mar 2011 filed on 20.04.2012 did not admit tax liability. In the absence of any positive act of suppression by JSIL and given that material was available to revenue before filing of the return, the Tribunal applied precedents disallowing extended limitation where there was no deliberate suppression and held the invocation of extended limitation was not justified (para 28). [Paras 28]

Extended period of limitation for raising demand cannot be invoked.

Penalty under Section 78 - penalty under Section 77 - Penalties imposed under Sections 78 and 77 and related interest could not be sustained. - HELD THAT: - Because the principal demand premised on franchise service was held unsustainable, penalty under Section 78 could not stand. Further, Explanation 2 to Section 73(3) disbars penalty where the short-paid service tax along with interest was deposited prior to issuance of the show cause notice; accordingly the penalty related to the amount deposited and any related demand and interest were not sustainable. Given the cancellation of the principal demand, penalties and interest tied thereto were set aside (para 29). [Paras 29]

Penalties under Sections 78 and 77 and the demand for interest are set aside.

Final Conclusion: The appeal is allowed in part: the Tribunal has held that the Race Promotion Contract is not a franchise conferring representational rights and accordingly set aside the service-tax demand premised on franchise service; the claim regarding services by FOM was not pressed because tax with interest was deposited prior to show cause notice; invocation of extended limitation and the penalties and interest imposed are quashed, with consequential reliefs to the appellant.

Extinguishment of claims under an NCLT approved resolution plan - binding effect of NCLT approved resolution plan under Section 31(1) of the Insolvency and Bankruptcy Code, 2016 - extinguishment of statutory dues owed to government authorities upon approval of resolution plan - effect of non filing of claim by a creditor during the corporate insolvency resolution process/public announcement - application of Ghanashyam Mishra & Sons Pvt Ltd v. Edelweiss Asset Reconstruction Company Ltd on pre approval dues

Extinguishment of claims under an NCLT approved resolution plan - binding effect of NCLT approved resolution plan under Section 31(1) of the Insolvency and Bankruptcy Code, 2016 - extinguishment of statutory dues owed to government authorities upon approval of resolution plan - Whether the demands in respect of the specified dispute periods are irrevocably extinguished by the NCLT approved resolution plan and whether the appeals must be dismissed on that basis. - HELD THAT: - The Tribunal found that the resolution plan approved by the NCLT (and ultimately affirmed by the Supreme Court) contains express provisions extinguishing all liabilities, claims and statutory dues pertaining to periods on or before the Effective Date, and that the plan treats statutory dues as settled in perpetuity (including clauses in Part 6 and Clause 8 providing for discharge/extinguishment and a maximum quantified payment towards verified statutory dues). Section 31(1) of the IBC renders an NCLT approved resolution plan binding on the corporate debtor and its creditors, including government authorities. The Tribunal relied on the Supreme Court authority in Ghanashyam Mishra & Sons Pvt Ltd v. Edelweiss Asset Reconstruction Company Ltd to the effect that dues not part of the NCLT approved plan stand extinguished and proceedings for recovery of such pre approval dues cannot be continued. The record showed that the department did not file a claim pursuant to the public announcement made in the CIRP. Given these facts and the operative clauses of the resolution plan, the Tribunal concluded that the demands for the specified periods are irrevocably and unconditionally settled, discharged and extinguished.

The demands in respect of the three dispute periods stand extinguished by the NCLT approved resolution plan; the appeals are dismissed.

Final Conclusion: The Tribunal held that, in view of the NCLT approved resolution plan (confirmed by the Supreme Court) and Section 31(1) of the IBC, the statutory demands for the periods 01 May 08 to 31 Mar 13, Apr 13 to Jul 13 and 01 Jan 16 to 31 Jun 17 are irreversibly extinguished and the appeals are dismissed.

Exemption under Notification No. 33/2005-CE dated 08.09.2005 - items required for initial setting-up of the project for generation of power using non-conventional materials - insulation as an essential part of boiler/furnace

Exemption under Notification No. 33/2005-CE dated 08.09.2005 - insulation as an essential part of boiler/furnace - CENVAT credit on ceramic fiber as capital goods - Eligibility of ceramic fiber board and ceramic fiber twisted rope for exemption under Notification No. 33/2005-CE dated 08.09.2005 - HELD THAT: - The Tribunal rejected the departmental view that benefit of the Notification could be denied because the goods do not play a direct role in power generation. The Tribunal held that ceramic fiber board and ceramic fiber twisted rope are used to insulate furnaces/kilns, prevent heat loss, protect metal headers from flame exposure, maintain required temperatures and ensure safety around the furnace. Such insulating materials form an essential part of the boiler and the power project. Consequently, they fall within the exemption's scope for "all items of machinery ... and auxiliary equipment ... required for initial setting-up of the project for generation of power using non-conventional materials." The Tribunal noted precedent in Chemplast Sanmar Ltd (Tri-Chennai) where ceramic fiber used for insulation was held eligible as capital goods/CENVAT credit, and applied the same reasoning to allow the Notification benefit here. [Paras 7, 8]

The demand, interest and penalties confirmed by the lower authorities were set aside and the appeal was allowed; the goods are eligible for exemption under Notification No. 33/2005-CE dated 08.09.2005.

Final Conclusion: The Tribunal allowed the appeal, holding that ceramic fiber board and ceramic fiber twisted rope used for insulating furnaces/kilns constitute essential parts of the boiler/power project and are eligible for exemption under Notification No. 33/2005-CE dated 08.09.2005; the impugned demand, interest and penalties were set aside with consequential relief as per law.

CENVAT credit - validity of debit notes as document for availing credit - refund/rebate under Notification No. 41/2012-ST - verification under proviso to Rule 9 of the CENVAT Credit Rules, 2004 - correlation of service tax payment with export documents

CENVAT credit - validity of debit notes as document for availing credit - refund/rebate under Notification No. 41/2012-ST - verification under proviso to Rule 9 of the CENVAT Credit Rules, 2004 - Appellant's entitlement to refund/rebate under Notification No. 41/2012-ST on credit availed on the basis of debit notes. - HELD THAT: - The Tribunal examined whether debit notes, though not expressly listed in Rule 9 as prescribed documents, could sustain CENVAT credit claimed for refund under Notification No. 41/2012 ST. The adjudicating authority had verified the refund claim and found that service tax could be correlated with export documents, that specified services were received, and that required certificates and supporting material were submitted and arithmetical scrutiny was in order. The proviso to Rule 9 permits verification by the AC/DC where particulars in the supporting document raise doubt; here the department conducted verification and there was no evidence that service tax was not paid or services not availed. The Tribunal followed earlier decisions holding that denial of credit solely because the supporting paper is titled a "debit note" is not legal where the document contains necessary particulars equivalent to an invoice. Applying those authorities and the factual finding of satisfactory verification, the Tribunal concluded that rejection of the rebate on the ground that credit was availed on debit notes was unjustified and the appellant is eligible for refund. [Paras 7, 8, 9, 10, 11]

Impugned order rejecting the rebate/refund claim was set aside and the appeals were allowed; appellant held eligible for refund with consequential reliefs, if any.

Final Conclusion: The Tribunal allowed the appeals, holding that debit notes cannot be the sole basis to deny CENVAT credit for rebate/refund under Notification No. 41/2012 ST where verification shows service tax payment and receipt of specified services; the impugned order rejecting the refund is set aside and the appellant is entitled to refund with consequential reliefs.