TaxTMI Updates e-Newsletter
Mar 06,2021

Summary order. The application for advance ruling filed by M/s. Premier Solar systems Private Limited is dismissed as withdrawn.

Advance Ruling - withdrawal of application - classification of services - applicable rate of GST - application rendered infructuous

Advance Ruling - withdrawal of application - application rendered infructuous - Application for advance ruling withdrawn by the applicant and dismissed as withdrawn; application rendered infructuous. - HELD THAT: - The applicant had filed for an advance ruling on classification of services and applicable GST rate relating to royalty paid for quarrying licences. Subsequently the applicant communicated that statutory amendment and earlier AAR decisions affected the legal position and prayed to withdraw the applications without prejudice. The Authority accepted the applicant's request and recorded that the applications are infructuous. No adjudication was made on the substantive questions of classification or rate because the proceedings were terminated on withdrawal by the applicant.

The application for advance ruling is dismissed as withdrawn at the behest of the applicant and declared infructuous.

Final Conclusion: The Authority accepted the applicant's unilateral withdrawal and dismissed the advance ruling application as withdrawn; no substantive determination on classification or GST rate was made.

Advance Ruling - Application Withdrawn - Infructuous Application - Fee Payment Defect - Dismissal as Withdrawn

Advance Ruling - Application Withdrawn - Infructuous Application - Dismissal as Withdrawn - Application for advance ruling filed by M/s. Eclery Foods LLP is withdrawn and consequently dismissed as infructuous. - HELD THAT: - The applicant initially filed for an advance ruling and, after a procedural defect in fee payment was identified and the application was returned for fresh payment, filed anew. A hearing was scheduled and the departmental officer was asked to comment. Prior to the hearing, the applicant informed the Authority by email that its business had shut down and that it no longer required the ruling, thereby withdrawing the application. The Authority treated the communication of withdrawal as effective and held that the pending application had become infructuous.

The advance ruling application is dismissed as withdrawn and declared infructuous.

Final Conclusion: The Authority recorded the withdrawal by the applicant and dismissed the advance ruling application as infructuous.

Advance Ruling - Classification and rate of tax - Application withdrawn - Infructuous application

Advance Ruling - Classification and rate of tax - Application withdrawn - Infructuous application - Application for advance ruling dismissed as withdrawn after the applicant withdrew its request following administrative clarification. - HELD THAT: - The applicant had sought an advance ruling on the classification and rate of tax applicable to sacks and bags manufactured from Polypropylene non-woven fabric and Polypropylene woven sack fabric. Subsequent to filing, the Central Board of Indirect Taxes and Customs issued notifications clarifying the classification and rate of tax on such sacks and bags. The applicant thereupon informed the Authority by email that it wished to withdraw its application in view of the CBIC clarification. Given the withdrawal and the intervening administrative clarification, the application became infructuous. The Authority accordingly treated the filing as withdrawn and did not proceed to decide the substantive questions on merits.

Application for advance ruling dismissed as withdrawn at the behest of the applicant; application declared infructuous.

Final Conclusion: The Authority dismissed the advance ruling application as withdrawn and declared it infructuous in view of the applicant's withdrawal following CBIC notifications clarifying the contested classification and tax rate.

Advance Ruling - Application withdrawn - Infructuous application - Dismissal as withdrawn - Notification substituting tariff entry

Advance Ruling - Application withdrawn - Infructuous application - Dismissal as withdrawn - Application for advance ruling filed by M/s. Compass Group (India) Support Services Private Limited is dismissed as withdrawn and held to be infructuous. - HELD THAT: - The applicant initially sought an advance ruling. Subsequent to the issuance of a central tax notification which substituted the relevant entry, the applicant filed a letter withdrawing its application. The Authority records that, in view of the explanation effected by the later notification and the applicant's withdrawal, the pending advance ruling application no longer requires adjudication. Consequently the application is treated as infructuous and is dismissed at the behest of the applicant.

Application for advance ruling dismissed as withdrawn and declared infructuous.

Final Conclusion: The Authority accepted the applicant's withdrawal and dismissed the advance ruling application as infructuous; no adjudication on the merits was undertaken.

Eligibility for concessional GST rate on construction services to government entities - definition of "Government Entity" under the notification - use predominantly for non-commercial purposes - application of standard rate for works contracts

Definition of "Government Entity" under the notification - Whether M/s TSSPDCL is a "Government Entity" within the meaning of the notification. - HELD THAT: - The explanation to the relevant notification defines "Government Entity" to include a body (authority, board or any other body including a society, trust, corporation) set up by an Act or established by government with 90% or more participation by equity or control to carry out a function entrusted by government or a local authority. The Authority examined the shareholding disclosed in TSSPDCL's annual accounts which show 100% shares held by the Governor of Telangana, indicating complete government control. Applying the statutory definition to these facts, TSSPDCL falls within the scope of "Government Entity" under the notification.

M/s TSSPDCL is a "Government Entity" as defined in the notification.

Eligibility for concessional GST rate on construction services to government entities - use predominantly for non-commercial purposes - application of standard rate for works contracts - Whether the works executed by the applicant for TSSPDCL qualify as services provided for "use other than for commerce, industry, or any other business or profession" and thereby attract the concessional rate of 12% (6% CGST + 6% SGST). - HELD THAT: - Entry prescribing concessional rate applies where construction-type services are supplied to specified government recipients and the works are meant predominantly for use other than commerce, industry or any other business or profession. The applicant's projects include capacitor bank works and conversion to HVDS for agricultural feeders. The Authority noted that the State Government reimburses TSSPDCL for agricultural electricity consumption, meaning the corporation's activities are funded/reimbursed and operate in the commercial/business sphere rather than being non-commercial public service in the sense required for the concessional entry. On the facts presented, the impugned works are used for business/commercial purposes and therefore do not satisfy the requirement of being for use other than commerce, industry or any other business or profession. Consequently the concessional 12% rate is not attracted.

The works do not qualify as "other than commercial" use; the applicant is not entitled to the concessional 12% rate for the cited works and the services are taxable at the standard rate applicable to such works contracts.

Application of standard rate for works contracts - What is the applicable rate of GST for the services supplied by the applicant to TSSPDCL. - HELD THAT: - Having held that the impugned works do not meet the non-commercial use condition for the concessional entry, the Authority applied the entry for construction/works contracts that are not covered by the concessional provision. The services described by the applicant therefore fall under the standard classification for such works.

The applicable rate of tax for the services referred to by the applicant is 18% (9% CGST + 9% SGST).

Final Conclusion: TSSPDCL qualifies as a "Government Entity" under the notification, but the specific works executed by the applicant are for commercial/business use (including where reimbursement by Government occurs) and thus do not attract the concessional 12% rate; the services are taxable at 18% (9% CGST + 9% SGST).

Pre-deposit for entertaining statutory appeal under Section 107 of the CGST Act, 2017 - entertainment of appeal without insisting on pre-deposit - filing of statutory appeal within time allowed by the Court - blocking of transitioned GST credit without prior notice

Pre-deposit for entertaining statutory appeal under Section 107 of the CGST Act, 2017 - entertainment of appeal without insisting on pre-deposit - filing of statutory appeal within time allowed by the Court - Petitioner directed to file appeal before the Appellate Authority within ten days and the Appellate Authority directed to entertain the appeal without insisting on pre-deposit and decide it on merits within three months. - HELD THAT: - The High Court, without expressing any opinion on the merits of the tax demand, required the petitioner to invoke the statutory remedy under Section 107 by filing the appeal within a limited period of ten days. In view of the petitioner's apprehension that the Appellate Authority might insist on the statutory pre-deposit (sub-section (6) of Section 107), the Court exercised its supervisory jurisdiction to direct that, in the peculiar facts of the case, the Appellate Authority shall entertain the appeal and not insist on payment of pre-deposit for admission. The Court further directed that the Appellate Authority shall adjudicate the appeal on its merits and complete the decision within three months from the date of admission, thereby confining relief to procedural accommodation and expedition without adjudicating contested substantive questions.

Petition disposed by directing immediate filing of appeal within ten days; Appellate Authority to admit the appeal without pre-deposit and decide on merits within three months.

Blocking of transitioned GST credit without prior notice - Allegations concerning denial or blocking of transitioned GST credit and other claimed credits were not decided on merits and are left for determination by the Appellate Authority. - HELD THAT: - The petitioner's contentions about the blocking of certain transitioned GST credit and claimed credit under the State GST Act were recorded by the Court but were expressly not adjudicated. The matter was remitted to the Appellate Authority for consideration and decision on merits as part of the statutory appeal directed to be filed. The Court declined to express any view on substantive entitlement to credit or on the correctness of the impugned demand, limiting its intervention to procedural directions to facilitate appellate adjudication.

Contentions regarding blocked or disallowed input tax credit and related substantive issues remitted to the Appellate Authority for fresh consideration and decision in the appeal.

Final Conclusion: Writ petition disposed by directing the petitioner to file the statutory appeal within ten days; the Appellate Authority shall admit and hear the appeal without insisting on pre-deposit and decide it on merits within three months, while substantive questions about transitioned or blocked input tax credit are left to be determined in that appeal.

Provisional attachment of bank accounts - power under Section 83 of the Central Goods and Services Tax Act, 2017 - provisional attachment under Rule 159(1) - constitutional validity of Rule 159 and sub rules 1, 5 and 6 - clerical/reference error in statutory citation (Section 7 vis a vis Section 67)

Provisional attachment of bank accounts - power under Section 83 of the Central Goods and Services Tax Act, 2017 - provisional attachment under Rule 159(1) - constitutional validity of Rule 159 and sub rules 1, 5 and 6 - Whether the notice for provisional attachment dated 14.08.2020 and the impugned order rejecting objections dated 28.09.2020 require further adjudication, including challenges to the constitutional validity of Rule 159 and its sub rules. - HELD THAT: - The Court recorded that the petitioners challenge the provisional attachment notice and the impugned order, and that there is a specific challenge to the constitutional validity of Rule 159 and sub rules 1, 5 and 6, in addition to the merits challenge to the notice. The matter was held to require examination rather than being summarily decided at this stage. The Court therefore directed issuance of notice to the respondents, allowed time for filing of counter affidavits and rejoinders and listed the matter for further hearing, thereby preserving the petitioners' contentions for adjudication on merits. [Paras 4, 5, 7, 8, 10]

Proceedings to be continued: notice issued; counter affidavits and rejoinders ordered; matter listed for further hearing for examination of the attachment and the constitutional challenge to Rule 159 and sub rules.

Clerical/reference error in statutory citation (Section 7 vis a vis Section 67) - Whether the impugned order's reference to Section 7 of the Act was correct or a clerical/inadvertent error. - HELD THAT: - The Court noted that the impugned order states proceedings were lodged under Section 7, while counsel for the petitioners pointed out Section 83 does not advert to Section 7. The Revenue's counsel accepted that the reference to Section 7 was inadvertent and said the notice properly refers to powers under Section 67 (as evident from the photocopy of the notice). The Court recorded this position while proceeding to issue notice and list the matter for detailed consideration. [Paras 3, 4]

Recorded that reference to Section 7 was inadvertent and that reference ought to have been to Section 67 as asserted by the Revenue; matter nonetheless ordered to proceed for fuller hearing.

Disposition of the interlocutory stay application filed by the petitioners. - HELD THAT: - Counsel for the petitioners expressly declined to press the application for stay (CM Appl. 3939/2021). The Court thereupon closed that application. [Paras 9]

Interlocutory stay application not pressed and closed.

Final Conclusion: The High Court has issued notice to the respondents and directed further proceedings to examine the validity and propriety of the provisional attachment (including the constitutional challenge to Rule 159 and its sub rules); counter affidavits and rejoinders were directed to be filed and the matter listed for further hearing. The Court recorded that the impugned reference to Section 7 was inadvertent and the stay application was not pressed and is closed.

Economic offences - wrongful availment of Input Tax Credit (ITC) - issuance of invoices without actual movement of goods - cognizable and non-bailable offences based on quantum of loss - lawful arrest under Section 69 of the CGST Act - absence of notice under Section 74 of the CGST Act not fatal to criminal proceedings - denial of bail while investigation is pending in serious fiscal frauds

Issuance of invoices without actual movement of goods - wrongful availment of Input Tax Credit (ITC) - economic offences - Allegations against the accused constituted an offence under Section 132 of the CGST Act and not under Section 122 - HELD THAT: - The court examined the allegations that the accused not only issued invoices without actual movement of goods but also wrongfully availed Input Tax Credit by receiving only invoices without receipt of goods. On the record, these allegations attracted the higher offence provision under Section 132 of the CGST Act. The court found no merit in the applicant's contention that the case was limited to issuance of invoices and therefore fell under Section 122. The prima facie material collected in the enquiry was held to support the departmental contentions about the accused's role in the offence, and the question whether named firms were genuinely bogus or the extent of involvement of their nominal owners was left to be determined by evidence during investigation.

Allegations prima facie constitute an offence under Section 132 of the CGST Act.

Lawful arrest under Section 69 of the CGST Act - absence of FIR or complaint - The arrest of the accused was lawful under the provisions of Section 69 of the CGST Act despite absence of a lodged FIR or complaint - HELD THAT: - The court considered the submission that no FIR or complaint had been lodged and that the apprehension was therefore unlawful. It observed that apprehension under the CGST Act is governed by Section 69 and that, on the facts, the accused had been apprehended after compliance with the procedure under that provision. Consequently, the court found no reason to declare the arrest improper or illegal.

Arrest held lawful; absence of a separate FIR/complaint does not render the apprehension illegal where Section 69 procedures are followed.

Cognizable and non-bailable offences based on quantum of loss - denial of bail while investigation is pending in serious fiscal frauds - economic offences - Bail was refused having regard to the nature and gravity of the alleged economic offence, the substantial tax loss alleged, and the pendency of investigation - HELD THAT: - The court placed weight on the seriousness of fiscal offences, authoritative observations treating economic offences as a class apart, and the prosecution's case that substantial loss to the Government exchequer had been caused (quantum exceeding the threshold rendering offences cognizable and non-bailable). It also noted that the investigation was ongoing and that the possibility of tampering with witnesses could not be ruled out. On these considerations, the court concluded that concession of bail was not appropriate at the present stage.

Bail application dismissed; no concession of bail while investigation is pending in view of gravity and quantum of alleged offence.

Absence of notice under Section 74 of the CGST Act not fatal to criminal proceedings - investigative sufficiency of prima facie material - The contention that no notice under Section 74 had been issued and that tax liability was not ascertained was not sufficient to entitle the accused to bail - HELD THAT: - The applicant argued that no notice under Section 74 had been served and that the department had not ascertained tax liability, contending this undermined the criminal case. The court observed that issuance of a notice under Section 74 is not a mandatory precondition to initiating criminal proceedings in such matters. Further, the enquiry officer had collected substantial record which prima facie supported departmental allegations connecting the accused to the offence. Therefore, absence of a Section 74 notice or completed tax quantification did not, at this stage, justify grant of bail.

Lack of a Section 74 notice or finalized tax assessment did not warrant bail; prima facie material justified continuation of investigation and detention.

Final Conclusion: The application for regular bail was dismissed. The court held that on prima facie material the allegations attracted the offence under Section 132 of the CGST Act, the arrest under Section 69 was lawful, absence of a Section 74 notice or of a lodged FIR did not render proceedings invalid, and the gravity and quantum of the alleged economic offence together with the pendency of investigation warranted refusal of bail.

Jurisdiction under Section 179 Cr.P.C. - place of commission of offence / result of the act - registration and location of firms as indicia of territorial nexus - central agency jurisdiction of D.G.G.I.

Jurisdiction under Section 179 Cr.P.C. - place of commission of offence / result of the act - registration and location of firms as indicia of territorial nexus - Whether the Special Chief Judicial Magistrate, Meerut has territorial jurisdiction to proceed in respect of the allegations against the accused under Section 179 Cr.P.C. - HELD THAT: - The court examined the factual matrix relevant to territorial jurisdiction under Section 179 Cr.P.C., which looks to the place where the act was done or where the result was achieved. The prosecution's case alleged issuance of fake invoices by three firms which are admittedly registered and located in Delhi. The prosecution did not demonstrate any transaction by those three Delhi-registered firms with any entity within the territorial jurisdiction of this Court that would establish the requisite nexus to Uttar Pradesh. Although the investigating agency is a central body (D.G.G.I.) with nationwide mandate, the mere fact of central agency involvement does not displace the territorial rule where the alleged acts and firms are situated outside the forum. The prosecution also relied on alleged links with investigations against other persons, but the prosecution failed to show how those investigations or arrests connected the accused's alleged conduct to the jurisdiction of this Court. On the material before the Court there was no prima facie basis to treat Meerut as the locus delicti for the offences alleged against the accused.

The Court held it lacks jurisdiction to proceed; remand and records of the accused are to be submitted to the competent jurisdictional court, namely the Ld. C.M.M., Patiala House Court, New Delhi, and the investigating agency was directed to seek transit remand/advance remand as per procedure.

Final Conclusion: Application under Section 179 Cr.P.C. disposed of by holding that the Meerut Magistrate's Court has no territorial jurisdiction over the accused's case; remand and records to be forwarded to the Ld. C.M.M., Patiala House Court, New Delhi, and the investigating agency to apply for appropriate transit/advance remand.

Admissibility of advance ruling application - transaction designed for avoidance of tax - application of Double Taxation Avoidance Agreement benefit to tax liability under Section 115-O - admission under Section 245R(2)

Transaction designed for avoidance of tax - admissibility of advance ruling application - Whether the transactions in question amounted to a design for avoidance of tax and whether the advance ruling application was admissible. - HELD THAT: - The Authority examined the Revenue's objection that the transaction was prima facie designed for tax avoidance and noted that this objection effectively challenged the merits of the case rather than presenting evidence of improper or illegal design. Having considered the submissions, the Authority found no indication of a scheme to avoid tax by illegal or improper means. It relied on the prior ruling in Signify Innovations India Private Limited (AAR/NCR/02/2019) and concluded that the mere seeking of treaty benefit in relation to tax liability under Section 115-O does not render the application a tax-avoidance design. On that basis the Authority admitted the application for hearing under Section 245R(2). [Paras 3]

No tax-avoidance design found; application admitted under Section 245R(2).

Application of Double Taxation Avoidance Agreement benefit to tax liability under Section 115-O - treatment of substantive questions on merits - Whether the substantive treaty and refund questions (Questions 1-5) were finally decided. - HELD THAT: - The Authority did not adjudicate the substantive questions on the merits in the present order. Instead, having admitted the application for hearing, the Authority treated the Revenue's objection as a merits contention and reserved consideration of the applicant's substantive requests - including whether DDT is in substance a tax on dividends, applicability of reduced rates under the India Singapore and India Mauritius DTAAs, beneficial ownership of dividend recipients, entitlement to refund, and interest thereon - for further proceedings. The Authority directed that the next date of hearing would be intimated, thereby leaving these substantive questions open for determination. [Paras 3]

Substantive questions (Q1-Q5) not decided and reserved for further hearing.

Final Conclusion: The Authority found no prima facie design for tax avoidance and admitted the advance ruling application under Section 245R(2); the substantive treaty and refund questions raised in Questions 1-5 are reserved for determination at a subsequent hearing.

TP Adjustment - comparable selection - delay of 359 days in filing the Special Leave Petition - Revenue's appeal against the ITAT order for Assessment Year 2008-2009 is dismissed; the High Court [2019 (5) TMI 1853 - DELHI HIGH COURT] finds no substantial question of law in the challenge to the ITAT's exclusion of ten comparables in determining the Arm's Length Price.

HELD THAT:- The explanation offered in support of the prayer for condonation is far from being satisfactory, we refuse to condone delay. Consequently, the SLP stands dismissed on the ground of delay.

Undisclosed payment - Addition based on seized material - assessee never provided the details of the transaction either during the course of assessment proceedings or thereafter and the assessee was in the exclusive knowledge - close business relationship between the assessee and PA - Tribunal held that the said amount may be demanded by the assessee but there was no evidence of the same having been paid as confirmed by HC [2019 (7) TMI 1754 - BOMBAY HIGH COURT] - HELD THAT:- SLP dismissed.

Penalty levied u/s. 271(1)(c) - defective notice - notices issued had not struck off the portion which were inapplicable - As decided by HC [2020 (2) TMI 333 - BOMBAY HIGH COURT] penalty u/s 271(1)(c) was rightly deleted due to absence of recorded satisfaction and a defective notice that did not strike off inapplicable portions - HELD THAT:- SLP dismissed.

Re-opening of assessment u/s 147 - reason to believe - re-assessment proceedings - independent inquiry by assessing officer - borrowing of investigation findings of another agency - perversity standard of appellate interference - as alleged that bribe was paid to the Iraqi officials which required to be added to the income of the Assessee

HC [2019 (8) TMI 515 - DELHI HIGH COURT] held no perversity in the ITAT's conclusion that the re-opening and addition were unsustainable because the AO failed to make an independent inquiry and merely relied on the Enforcement Directorate's material; no substantial question of law arises.- HELD THAT:- SLP dismissed.

Reopening of assessment beyond the normal period of limitation - notice under Section 148 for reopening assessment - proviso to Section 147 of the Income Tax Act, 1961 - failure to truly and fully disclose - change of opinion - reason to believe - disallowance under Section 40(a)(i)

Reopening of assessment beyond the normal period of limitation - notice under Section 148 for reopening assessment - proviso to Section 147 of the Income Tax Act, 1961 - failure to truly and fully disclose - disallowance under Section 40(a)(i) - Validity of reopening assessment for Assessment Year 2004-05 by issue of notice under Section 148 read with proviso to Section 147. - HELD THAT: - The court examined whether there was failure to truly and fully disclose material facts at the time of original assessment which would justify reopening beyond the normal limitation period. During assessment proceedings the petitioner had been specifically called upon for details and in reply declared freight payments of Rs. 68,89,14,292/-, of which only BBCD hire charges of Rs. 6,08,98,646/- were disallowed under Section 40(a)(i) in the original assessment. The court found that the material relating to payments to non-residents had been furnished and that there was no suppression or non-disclosure of facts that would attract the proviso to Section 147. Invocation of reopening machinery three days before expiry of the extended period therefore amounted to reopening on the basis of a mere change of opinion and was not justified. Applying the principle that reopening requires material constituting reason to believe and not mere disagreement with an earlier view, the court quashed the reassessment notice and order for Assessment Year 2004-05. [Paras 26, 27]

Impugned reassessment for Assessment Year 2004-05 quashed for lack of justification to reopen; W.P.No.947 of 2012 allowed.

Reopening of assessment beyond the normal period of limitation - notice under Section 148 for reopening assessment - proviso to Section 147 of the Income Tax Act, 1961 - failure to truly and fully disclose - change of opinion - disallowance under Section 40(a)(i) - Validity of reopening assessment for Assessment Year 2005-06 by issue of notice under Section 148 read with proviso to Section 147. - HELD THAT: - The court considered whether any omission or suppression at the time of the original assessment justified reopening after the expiry of the normal period. The petitioner had been served with questionnaires and had furnished particulars of BBCD hire charges as well as the broader charter hire payments totaling the amounts stated; the original assessment disallowed only BBCD hire charges, apparently influenced by an earlier international taxation order. The court concluded that the reassessment was prompted by a change of opinion rather than any undisclosed material or suppression. Reopening the assessment four years after the end of the year, therefore, was not permissible in the absence of fresh material forming a reason to believe as required to invoke the proviso to Section 147. [Paras 30, 31]

Impugned reassessment for Assessment Year 2005-06 quashed as being founded on change of opinion; W.P.No.948 of 2012 allowed.

Final Conclusion: Both writ petitions are allowed and the reassessment notices/orders dated 28.12.2011 for Assessment Years 2004-05 and 2005-06 are quashed on the ground that there was no failure to truly and fully disclose material facts and reassessment proceeded merely on change of opinion; connected petitions closed, no costs.

Depreciation on asset kept ready for use - passive user of an asset - trial production qualifies as use for business - used for the purposes of business

Depreciation on asset kept ready for use - passive user of an asset - trial production qualifies as use for business - used for the purposes of business - Entitlement to claim depreciation on windmills for the assessment year despite negligible or nominal generation where the assets were owned and kept ready for use. - HELD THAT: - The High Court accepted the assessee's contention that the windmills, though producing negligible electricity during the previous year, had been put into use in the sense recognised by earlier decisions of this Court and other High Courts. The court applied the ratio in the Division Bench decision in T.C.A. Nos. 655, 666 and 657 of 2009 (M/s. Tenzing Match Works) which held that assets kept ready for use or used for trial production amount to being "used for the purposes of the business" and qualify for depreciation. The judgment relied on precedents holding that the word "used" permits a wider meaning, encompassing passive use where assets are maintained and made available for business operations, and that trial production or minimal generation does not preclude allowance of depreciation. On these legal principles the court found the Tribunal's conclusion-that production had commenced albeit in negligible quantity-and concurred that the assessee was entitled to depreciation, leaving only quantification to the Assessing Officer as previously remitted by the Tribunal.

The Revenue's appeal is dismissed and the Tribunal's order upholding the assessee's entitlement to depreciation on the windmills is sustained.

Final Conclusion: The Tax Case Appeal is dismissed; the assessee is entitled to claim depreciation on the windmills in Assessment Year 1999-2000 as the assets were held to be in use (including passive/trial use) for the purposes of business, and the matter of quantification remains as remitted earlier. No costs.

Reopening of assessment under Section 147 read with Section 148 - reasons to believe - jurisdiction to reopen assessment - change of opinion doctrine - plea under Rule 27 of the Income Tax (Appellate Tribunal) Rules

Plea under Rule 27 of the Income Tax (Appellate Tribunal) Rules - Whether the Tribunal could entertain an additional ground challenging the legality of the notice under Sections 147 and 148 by relying on Rule 27 of the ITAT Rules. - HELD THAT: - The Court found that the Respondent assessee had challenged the legality and jurisdiction of the notice under Sections 147 and 148 before the Assessing Officer and before the Commissioner of Income Tax (Appeals). The Tribunal's reliance on Rule 27, which permits a party to support the order on any of the grounds decided against it even if not specifically pleaded in the appeal, was therefore permissible. The factual position showed that the ground was raised below and was not a belated submission; consequently the Tribunal did not err in entertaining the ground under Rule 27. [Paras 6, 7]

Tribunal permissibly entertained the challenge to the legality of the reopening notice under Rule 27.

Reopening of assessment under Section 147 read with Section 148 - reasons to believe - jurisdiction to reopen assessment - change of opinion doctrine - Whether the reassessment proceedings were validly initiated - i.e., whether the Reasons recorded furnished a bona fide "reason to believe" that income had escaped assessment. - HELD THAT: - The Court agreed with the Tribunal's appraisal of the Reasons recorded by the Assessing Officer. The Reasons merely referred to a need to verify documents and did not establish a nexus between any tangible material and a bona fide belief that income had escaped assessment. The information alleged to have been received from the investigation wing was not reflected in the Reasons; it is impermissible to add to or embellish the Reasons. On that basis the Tribunal's conclusion that the reopening was without jurisdiction and amounted to impermissible change of opinion was neither perverse nor illegal. [Paras 8, 9]

Reopening was without jurisdiction as the Reasons did not sustain a bona fide reason to believe; Tribunal rightly quashed the reassessment.

Final Conclusion: Appeal dismissed. The Tribunal correctly held that the reassessment for Assessment Year 2006-07 was without jurisdiction because the recorded Reasons did not disclose a bona fide reason to believe that income had escaped assessment; the Tribunal was also justified in entertaining the challenge under Rule 27.

Deduction under section 10B - export turnover - Explanation 2(iii) to section 10B - treatment of foreign exchange expenditure incurred abroad in computing export turnover and total turnover - allowability of foreign exchange loss as an ascertained liability - precedential effect of the Supreme Court decision in Commissioner of Income-Tax v. Mphasis Ltd.

Deduction under section 10B - export turnover - Explanation 2(iii) to section 10B - treatment of foreign exchange expenditure incurred abroad in computing export turnover and total turnover - Whether expenditure incurred in foreign exchange for providing technical services outside India must be excluded from "export turnover" (and if so, whether it must also be excluded from "total turnover") for computing deduction under section 10B. - HELD THAT: - The Tribunal's conclusion that the expenditure incurred abroad should not be excluded from the export turnover for computing deduction under section 10B was sustained. The High Court declined to disturb the Tribunal's approach, having regard to binding precedent of the Supreme Court in Commissioner of Income-Tax III v. Mphasis Ltd. and this Court's earlier decision in Commissioner of Income Tax-I v. Tata Consultancy Services Ltd., which construed the scope of export turnover and the application of RBI/FEMA remittance guidelines as not determinative for exclusion under section 10B. Consequently, the expenditure in foreign exchange for onsite/overseas technical services was not to be treated as non-export turnover for the purposes of computing the section 10B deduction; and, even if excluded from export turnover, it would correspondingly be excluded from total turnover for computing the deduction, resulting in no adverse adjustment against the assessee's benefit under section 10B. [Paras 7]

The Tribunal's view was upheld and the expenditure in foreign exchange was not excluded from export turnover for computation of deduction under section 10B; alternatively, if excluded from export turnover it would also be excluded from total turnover.

Allowability of foreign exchange loss as an ascertained liability - precedential effect of the Supreme Court decision in Commissioner of Income-Tax v. Mphasis Ltd. - Whether loss on foreign exchange fluctuation (claimed by the assessee) is allowable notwithstanding decision of the jurisdictional High Court in Indian Overseas Bank. - HELD THAT: - The Tribunal allowed the foreign exchange loss claimed by the assessee, treating it as allowable. The High Court, applying the Supreme Court's and this Court's subsequent authoritative decisions on identical questions, found no basis to reverse that view. The Court noted that the matter was covered by higher precedents which led to acceptance of the assessee's claim and disposed of the Revenue's challenge accordingly. [Paras 7]

The allowance of foreign exchange loss by the Tribunal was upheld.

Export turnover - unrealised onsite contract revenue - Whether unrealised onsite development revenue should be excluded from export turnover (and whether the Tribunal's failure to deal with this ground prejudiced the Revenue). - HELD THAT: - Although the Revenue had urged exclusion of unrealised onsite contract receipts from export turnover, the High Court observed that the substance of the dispute was covered by controlling decisions of the Supreme Court and this Court which resolved similar contentions in favour of the assessee. In that context the Court found no reason to fault the Tribunal's ultimate treatment and declined to accede to the Revenue's contention that the Tribunal's omission required interference. [Paras 5, 6, 7]

The challenge based on unrealised onsite revenue was rejected and the Tribunal's treatment was sustained.

Final Conclusion: Following the Supreme Court's decision in Commissioner of Income-Tax v. Mphasis Ltd. and this Court's precedent, the questions of law raised by the Revenue were decided in favour of the assessee and the appeals are dismissed.

Revisionary jurisdiction under Section 263 of the Income Tax Act - jurisdictional limits of Commissioner (CIT) to revise assessment - principle that revision is impermissible where original assessment is not erroneous or prejudicial and is based on full verification - absence of reasons in a revision order - scope of Assessing Officer's verification of sources and confirmation letters

Revisionary jurisdiction under Section 263 of the Income Tax Act - absence of reasons in a revision order - scope of Assessing Officer's verification of sources and confirmation letters - jurisdictional limits of Commissioner (CIT) to revise assessment - Validity of the order passed by the Commissioner under Section 263 impugning the assessment completed by the Assessing Officer and whether the Tribunal rightly set aside that order for want of jurisdiction. - HELD THAT: - The Tribunal found that the assessment order was passed after full verification by the Assessing Officer, including consideration of confirmation letters and examination of the claimed sources, and that the CIT's revision order proceeded on an abrupt finding without giving reasons. On that basis the Tribunal concluded there was no error in the assessment order and that the CIT lacked jurisdiction to reopen/revise under the revisionary power. The High Court, on review of the Tribunal's reasoning, recorded that the Tribunal had given categorical findings that the CIT's order was unreasoned and that the Assessing Officer had properly investigated the materials; finding no error or illegality in those conclusions, the High Court declined to interfere with the Tribunal's order. [Paras 4, 5]

The Tribunal's setting aside of the CIT's order under Section 263 for want of jurisdiction was upheld and the assessment order passed by the Assessing Officer was restored.

Final Conclusion: The Tax Case Appeal is dismissed; the Tribunal's order setting aside the CIT's revision under Section 263 and restoring the assessment is affirmed.

Exemption under Section 10(21) of the Income Tax Act - charitable purpose comprising education and scientific research - treatment as an association as against classification as an institution - precedent of the Tribunal in the assessee's own case - approval under Section 35(1)(ii) of the Income Tax Act

Exemption under Section 10(21) of the Income Tax Act - charitable purpose comprising education and scientific research - treatment as an association as against classification as an institution - Assessee entitled to exemption under Section 10(21) by being treated as an association engaged in education and scientific research; Assessing Officer's contrary classification as an institution/contractor was unsustainable. - HELD THAT: - The Tribunal's conclusion that the assessee qualifies for exemption under Section 10(21) was affirmed. The assessee is a society registered under the Tamil Nadu Societies Registration Act, 1975 and, since its inception in 1987, has consistently conducted activities of education and scientific research, including R&D impacting non-clinical, health and environmental safety. The Assessing Officer's characterisation of the assessee as akin to a contractor and as an 'institution' was contrary to the objects and sustained activities of the assessee and was therefore held to be legally unsupportable. The Tribunal accepted the assessee's factual and documentary material and rightly reversed the Assessing Officer's finding, with the High Court finding no error in that conclusion. [Paras 8, 12, 14, 15]

Tribunal's allowance of exemption under Section 10(21) stands; Assessing Officer's reclassification set aside and Revenue's contention rejected.

Precedent of the Tribunal in the assessee's own case - approval under Section 35(1)(ii) of the Income Tax Act - Prior decisions of the Tribunal in the assessee's own cases and consistent departmental acceptance were entitled to weight; Revenue failed to show those Tribunal orders were successfully challenged and hence the Assessing Officer's departure from that position was not justified. - HELD THAT: - The assessee relied on several earlier Tribunal decisions in its own favour for prior years, which had not been reversed. The Revenue could not establish that those Tribunal orders had been admitted or set aside on challenge; the purported representation to the Registry did not demonstrate successful challenge. In view of the un-reversed Tribunal precedents and the long-standing departmental treatment (including recognition under Section 35(1)(ii)), the Assessing Officer's change of view lacked proper basis and was rightly reversed by the Tribunal. [Paras 10, 11, 14]

Revenue's contention that the assessee could not claim benefit on account of classification/approval was rejected; Tribunal precedents and prior departmental acceptance upheld.

Final Conclusion: Revenue's appeals under Section 260A are dismissed; the substantial question of law is answered against the Revenue and the Tribunal's order allowing exemption under Section 10(21) and reversing the Assessing Officer's reclassification is affirmed; no costs.

Disallowance under section 14A - application of Rule 8D - CBDT Circular No.5/2014 - assessment of expenditure in relation to exempt income

Disallowance under section 14A - application of Rule 8D - Extent of disallowance under section 14A when exempt income is limited or quantifiable - HELD THAT: - The Court held, following the decision referred to in T.C.A.Nos.732 and 733 of 2018, that the Assessing Officer is not justified in making a disallowance under section 14A in excess of the exempt income attributable to the assessee. The ratio in earlier decisions and authoritative exposition (including the principles extracted from Godrej & Boyce) requires the AO first to examine the assessee's accounts and claims and to arrive at an objective satisfaction before applying the prescribed method under the rules. Where the claim of the assessee as to expenditure attributable to exempt income is acceptable and the exempt income is quantifiable, the disallowance is to be restricted to that extent; the AO cannot ipso facto apply the mechanical computation under Rule 8D to arrive at a disallowance exceeding the exempt income found to exist.

The disallowance under section 14A read with Rule 8D cannot exceed the amount of exempt income attributable to the assessee; the Tribunal's deletion of any excessive disallowance is upheld.

CBDT Circular No.5/2014 - disallowance under section 14A - Whether CBDT Circular No.5/2014 obliges AO to make disallowance under section 14A even where the assessee has not earned any exempt income in that year - HELD THAT: - Relying on the precedent applied by the High Court in the cited Tax Case Appeals, the Court answered this question against the Revenue. The judicial approach requires that the existence and quantum of exempt income be considered before applying section 14A/Rule 8D; the Circular cannot be read to mandate a disallowance in a year where there is no exempt income earned by the taxpayer. The Tribunal's conclusion, endorsed by higher authorities and followed by the High Court, is that the Circular does not permit automatic or mechanical disallowance in absence of exempt income.

CBDT Circular No.5/2014 does not require a disallowance under section 14A read with Rule 8D where the taxpayer has not earned any exempt income in the relevant year; the Tribunal's view in favour of the assessee is affirmed.

Final Conclusion: The Tax Case Appeals for Assessment Years 2008-09 and 2009-10 are dismissed; the substantial questions of law raised by the Revenue regarding the scope and application of section 14A, Rule 8D and CBDT Circular No.5/2014 are answered against the Revenue and in favour of the assessee.

Penalty under Section 271FA - Failure to file Annual Information Return under Section 285BA - Mandatory notice requirement under Section 285BA - Purpose of statutory compliance - Onus of proof under Section 273B

Penalty under Section 271FA - Mandatory notice requirement under Section 285BA - Purpose of statutory compliance - Validity of penalty imposed under Section 271FA where mandatory notice and the procedural requirements of Section 285BA were not complied with prior to penalty and returns were subsequently filed belatedly. - HELD THAT: - The Court examined whether the mandatory procedural prerequisites under Section 285BA had been complied with before imposing penalty under Section 271FA. The record did not disclose copies of the earlier notice said to have been issued on 30.03.2010 and the respondents' pleadings were silent on that aspect. The impugned order itself proceeded to impose penalty while recording that the Annual Information Return had not been filed in the prescribed manner and that notices had been issued; however, the cumulative record demonstrated that the petitioners filed the return belatedly on 20.10.2011. The Court noted that where the statutory requirement is aimed at securing information, the eventual filing of the return satisfied the purpose of Section 285BA. In the absence of proof that the mandatory notice procedure was followed and having regard to the fact that the returns were ultimately furnished (albeit late), the Court found no merit in sustaining the penalty order. The Court therefore quashed the orders imposing penalty under Section 271FA. Although the impugned order discussed the onus under Section 273B, the determinative conclusion rested on the failure to show compliance with the mandatory notice requirement and the fact that the statutory purpose was fulfilled by subsequent filing.

Impugned penalty orders under Section 271FA quashed as mandatory requirements under Section 285BA were not shown to have been complied with and the returns were subsequently filed, satisfying the purpose of the provision.

Final Conclusion: Writ petitions allowed; orders imposing penalty under Section 271FA set aside on the ground that mandatory procedural requirements under Section 285BA were not demonstrated and the Annual Information Return was ultimately filed, thereby satisfying the purpose of the statutory obligation.

Penalty under Section 271(1)(c) for concealment or furnishing inaccurate particulars - Requirement of recording satisfaction by the Assessing Officer before initiating penalty proceedings - Notice under Section 274 specifying the precise charge and addition sought to be taxed - Disallowance of expenditure is not ipso facto concealment - Allowability of expenditure under Section 57(iii) - dominant purpose and nexus test

Penalty under Section 271(1)(c) for concealment or furnishing inaccurate particulars - Requirement of recording satisfaction by the Assessing Officer before initiating penalty proceedings - Notice under Section 274 specifying the precise charge and addition sought to be taxed - Disallowance of expenditure is not ipso facto concealment - Validity of levy of penalty under Section 271(1)(c) in respect of disallowance of expenses claimed against "income from other sources" - HELD THAT: - The Tribunal examined the assessment order, the penalty order and the notices and found that the Revenue did not specify under which limb of Section 271(1)(c) the penalty was levied. The Assessing Officer must record, at least prima facie, satisfaction that the assessee either concealed income or furnished inaccurate particulars before invoking penalty jurisdiction, and the show-cause notice under Section 274 must specify the particular addition/disallowance and the precise ground on which penalty is proposed. In the present case the particulars of expenses and the basis of apportionment were placed on record by the assessee; therefore the Tribunal held that the facts did not demonstrate furnishing of inaccurate particulars. Further, mere disallowance of an expense by the AO does not amount to concealment of income within Explanation 1 to Section 271(1)(c). Applying these principles to the material on record, the Tribunal concluded that the statutory requirements for initiating and sustaining penalty proceedings were not satisfied and the case was not fit for levy of penalty under Section 271(1)(c). [Paras 17, 18, 19]

Penalty imposed under Section 271(1)(c) quashed; appeal allowed.

Final Conclusion: The Tribunal set aside the penalty levied under Section 271(1)(c), holding that the Assessing Officer had not recorded the requisite satisfaction nor specified the precise charge in the notice under Section 274, and that disallowance of expenses did not constitute concealment or furnishing of inaccurate particulars; the assessee's appeal is allowed.

Addition on account of non-genuine purchases - reopening of assessment on basis of information from investigation - genuineness of purchases and evidentiary burden - corresponding sales indicating grey market purchases - profit element in suppressed/grey market purchases - reasonableness of estimating profit rate for disallowance - ex parte disposal where assessee unrepresented

Addition on account of non-genuine purchases - genuineness of purchases and evidentiary burden - corresponding sales indicating grey market purchases - profit element in suppressed/grey market purchases - reasonableness of estimating profit rate for disallowance - Whether the addition made by the Assessing Officer by disallowing entire purchases on the ground of alleged bogus purchases was tenable or whether disallowance limited to the profit element at 12.5% as adopted by the Commissioner (Appeals) was appropriate. - HELD THAT: - The Assessing Officer treated the entire purchases from a supplier as non-genuine and added the full amount to the assessee's income because notices to the selling dealers returned unserved and the assessee failed to satisfy the AO on the genuineness. The Commissioner (Appeals) observed, however, that the Assessing Officer did not dispute that corresponding sales had been effected by the assessee. That factual position supports an inference that the assessee acquired goods from the grey market and suppressed the profit element rather than having made no purchases at all. In such circumstances the correct approach is to bring to tax the concealed profit element embedded in those purchases rather than disallow the entire purchase amount. The Tribunal finds the appellate authority's estimation of the profit rate at 12.5% to be fair and reasonable on the record and, accordingly, declines to interfere with the restricted disallowance. [Paras 5]

Addition sustained only to the extent of profit element estimated at 12.5%; full disallowance by AO set aside and ground of appeal dismissed.

Final Conclusion: The Tribunal dismissed the revenue appeal and upheld the Commissioner (Appeals)'s restriction of the addition to the profit element estimated at 12.5%, concluding that only the suppressed profit from grey market purchases was taxable and the Assessing Officer's full disallowance required interference.

Mistake apparent from the record - power under Section 129B(2) of the Customs Act, 1962 - rectification of an order versus substitution of an order - remand for de novo consideration - limits of tribunal's corrective jurisdiction

Mistake apparent from the record - power under Section 129B(2) of the Customs Act, 1962 - rectification of an order versus substitution of an order - remand for de novo consideration - Whether the Tribunal should have exercised its power under Section 129B(2) to rectify an apparent mistake in its earlier order and delete observations which it had itself remanded for de novo consideration. - HELD THAT: - The Court examined the scope of the Tribunal's power under Section 129B(2) against the established principle that only a mistake which is apparent from the record and not one requiring long-drawn reasoning or debate can be rectified. The Tribunal had earlier held the question whether the product was computer software to be a highly technical issue and remanded the matter for de novo consideration, yet proceeded in the same order to make conclusive observations adverse to the petitioner. The Judicial Member found that those conclusive observations were inconsistent with the remand and constituted a mistake apparent on the face of the record which, if allowed to stand, would be fatal to the petitioner. The Court accepted that such an inconsistency is discernible by a prudent examination of the record without elaborate argument and accordingly falls within the remedial scope of Section 129B(2). Applying the principle that rectification permits amendment of an order to remove an apparent error but does not permit wholesale substitution, the Court held that deleting the conclusive observations did not amount to rewriting the order but to correcting an obvious mistake so as to preserve the efficacy of the remand for fresh adjudication on merits. [Paras 8, 13, 14]

The Tribunal ought to have exercised its power under Section 129B(2) to delete the conclusive observations which were inconsistent with the remand; the miscellaneous petition should have been allowed to rectify that apparent mistake and preserve the remand for de novo consideration.

Final Conclusion: Writ petition allowed; the impugned order rejecting the miscellaneous petition is set aside, the Judicial Member's view that the mistake should be rectified is upheld, paragraph 7(b) of the Tribunal's order is deleted and the matter is remanded to the Adjudicating Authority for fresh de novo decision in accordance with paragraph 7(a) of the Tribunal's order; no costs.

Writ jurisdiction discretionary - Alternate statutory remedy - Mixed question of fact and law - Self imposed restriction on writ jurisdiction - Entitlement to appellate adjudication before Commissioner of Customs (Appeals) - Relaxation of limitation for filing appeal in view of prior writ proceedings

Writ jurisdiction discretionary - Alternate statutory remedy - Self imposed restriction on writ jurisdiction - Whether the appellants were precluded from approaching the High Court by the existence of an alternate remedy under the Customs Act. - HELD THAT: - The Court reiterated that the exercise of writ jurisdiction under Article 226 is discretionary and that the existence of an alternate statutory remedy is a relevant factor but not an absolute legal bar. Reliance on binding authorities establishes that limitations on the writ power are self imposed and that certiorari or other writ relief can be granted despite available appeals where requisite grounds exist. Applying these principles, the Court held that the appellants could have maintained a writ petition in the present case on the grounds they urged before the High Court. [Paras 7]

The writ could have been maintained notwithstanding the availability of an alternate remedy.

Mixed question of fact and law - Entitlement to appellate adjudication before Commissioner of Customs (Appeals) - Relaxation of limitation for filing appeal in view of prior writ proceedings - Whether the writ petition should be entertained on merits or the appellants should be directed to pursue the alternate appellate remedy and whether any concession on limitation should be made. - HELD THAT: - The Court found that the controversies raised involved mixed questions of fact and law requiring adjudication on evidence and could not be resolved on affidavits in writ proceedings. Consequently, the Court agreed with the learned Writ Court's conclusion that the appellants should avail the statutory appellate remedy before the Commissioner of Customs (Appeals). In view of the fact that the writ petition was filed in 2016 and the appellants had instituted proceedings in this Court within time, the Court directed that if an appeal is filed within the time granted, the Commissioner of Customs (Appeals) shall entertain it without reference to limitation. [Paras 8, 9]

Writ petition dismissed; appellants directed to file appeal before the Commissioner of Customs (Appeals), which shall be entertained without regard to limitation if filed within the time permitted.

Final Conclusion: Writ appeal dismissed. Although the High Court held that a writ could have been maintainable, the disputes involve mixed questions of fact requiring adjudication; appellants are granted 60 days to prefer an appeal before the Commissioner of Customs (Appeals), who is directed to entertain the appeal notwithstanding limitation.

Penalty under Section 114A of the Customs Act, 1962 - Interpretation of 'or' as disjunctive versus conjunctive - Principles of statutory interpretation - reading words in context to effect legislative intent - Doctrine that administrative circulars cannot override plain statutory language - Precedential effect of tribunal decisions when not challenged

Penalty under Section 114A of the Customs Act, 1962 - Interpretation of 'or' as disjunctive versus conjunctive - Principles of statutory interpretation - reading words in context to effect legislative intent - Whether the expression 'or' in Section 114A must be read as 'and' so that penalty is to be imposed equivalent to both duty and interest where both are attracted. - HELD THAT: - Section 114A, read as a whole, employs the disjunctive 'or' and the phrase 'as the case may be', indicating the provision contemplates distinct situations - one where duty is leviable and another where only interest is leviable - and prescribes a penalty equal to the duty or the interest so determined in each respective situation. Established principles of statutory interpretation permit reading 'or' as 'and' only where the context or clear intention of the legislature compels such alteration; absent such compulsion, the plain and unambiguous language must be followed. The court applied these principles (referring to authoritative exposition) and concluded that the word 'or' in Section 114A is properly read disjunctively and not converted into 'and'. [Paras 11, 12]

The expression 'or' in Section 114A is disjunctive and must not be read as 'and'; penalty is payable equal to the duty or equal to the interest as the case may be, not necessarily both.

Doctrine that administrative circulars cannot override plain statutory language - Precedential effect of tribunal decisions when not challenged - Whether the CBEC Circular dated 20.09.2002 (interpreting Section 114A to impose penalty equivalent to duty and interest) is binding where it conflicts with the clear statutory language, and whether the Tribunal's consistent view binds the revenue. - HELD THAT: - A departmental clarification cannot prevail over the plain and unambiguous language of the statute; consequently the Circular purporting to require penalty equal to both duty and interest cannot be enforced where the statute discloses a disjunctive scheme. Separately, the Tribunal had taken a like view in the cited decision and there is no material to show that that Tribunal decision was successfully challenged by the revenue. In these circumstances the Court declined to interfere with the Tribunal's order and observed that the Tribunal's view, not having been set aside, binds the revenue. [Paras 13]

The CBEC Circular cannot override the clear statutory language of Section 114A; the Tribunal's contrary view binds the revenue where it has not been set aside.

Final Conclusion: The appeal is dismissed; Section 114A must be read disjunctively so that penalty equals the duty or equals the interest 'as the case may be', the CBEC circular cannot alter this plain statutory meaning, and the Tribunal's decision on the point, not having been challenged, stands.

Penalty under Section 112 of the Customs Act - Liability of Customs House Agent for importer's mis-declaration - Knowledge and collusion requirement for imposing penalty - Good faith reliance on importer's documents - Precedent requirement of positive evidence of participation

Penalty under Section 112 of the Customs Act - Liability of Customs House Agent for importer's mis-declaration - Knowledge and collusion requirement for imposing penalty - Good faith reliance on importer's documents - Whether the penalty imposed on the Customs House Agent under Section 112 for mis-declaration by the importer is sustainable in the absence of material evidence of knowledge or collusion by the CHA - HELD THAT: - The Tribunal examined the record and found no material evidence that the appellant CHA had knowledge of, or colluded with, the importer in the mis-declaration discovered on physical examination. The importer himself stated that the CHA filed the Bill of Entry based on the invoice description and that the importer did not instruct the CHA to commit any wrong. The authorities below proceeded on conjecture rather than positive evidence of participation. The Tribunal relied on earlier decisions holding that imposition of penalty on a CHA under Section 112 requires proof of knowledge and collusion; mere signing or filing on documents supplied by the importer is insufficient. In view of absence of any specific role or participation by the CHA in defrauding the Revenue, the penalty could not be sustained. [Paras 6, 7]

Penalty under Section 112 set aside and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, set aside the penalty imposed on the appellant CHA under Section 112 of the Customs Act for lack of material evidence of knowledge or collusion, and held that reliance in good faith on documents supplied by the importer does not, without more, attract penalty.

Reverse Corporate Insolvency Resolution Process - extension of timelines on account of COVID-19 pandemic - cooperation of promoter as financial creditor - forfeiture of amounts invested by promoter for non-compliance - interim resolution professional reporting obligations

Extension of timelines on account of COVID-19 pandemic - Reverse Corporate Insolvency Resolution Process - Whether timelines earlier fixed by this Tribunal for completion of the project under the Reverse Corporate Insolvency Resolution Process should be extended in view of the outbreak of COVID-19 and resultant lockdowns. - HELD THAT: - The Tribunal found that the global pandemic and resultant nationwide lockdown from 25th March, 2020 had disastrous effects on economic and construction activities, disrupted cash flows and labour availability and thereby materially affected the ability to comply with the timelines fixed by the judgment dated 5th February, 2020. Viewing the Reverse Corporate Insolvency Resolution Process as an experimental but result-oriented mechanism safeguarding interests of all stakeholders and having regard to stakeholder support for completion of the project, the Tribunal was inclined to mitigate the hardship caused by the pandemic by granting an extension of the timelines. The Tribunal did not treat a single instance of default in infusion of funds on the eve of the lockdown as aborting the Reverse CIRP, but regarded it as an aberration and extended timelines without altering the structural terms of the original directions. The Tribunal accepted the proposed revised schedule filed by the promoter and specifically extended the deadline for allottees to deposit the balance and pay 90% to 15th June, 2021, while adopting the extended dates in the promoter's proposal for other milestones. [Paras 17, 18]

Extension of the timelines fixed on 5th February, 2020 is allowed in the terms of the proposed revised schedule (filed vide Diary No.24606 dated 12.1.2021), with the allottees' payment deadline extended to 15th June, 2021.

Cooperation of promoter as financial creditor - forfeiture of amounts invested by promoter for non-compliance - Whether the Reverse CIRP would stand aborted or whether consequences should follow if the promoter fails to comply with the undertaking to invest and cooperate. - HELD THAT: - The Tribunal reiterated the operative safeguard from its earlier order that if the promoter fails to comply with the undertaking to invest as a financial creditor or does not cooperate with the Resolution Professional, the Adjudicating Authority (NCLT) will complete the insolvency resolution process. The Tribunal further provided that any amount invested by the promoter as a Financial Creditor pursuant to the judgment shall stand forfeited in case of his failure to comply with the undertaking. Thus, extension of time was granted without modifying the structural consequence for non-compliance previously ordained, preserving the remedy of completion of CIRP by the Adjudicating Authority and forfeiture of investments made by the promoter for non-performance. [Paras 3, 18]

The Reverse CIRP is not held to be aborted by the single instance of default; however, non-compliance by the promoter will attract forfeiture of amounts invested by him and entail completion of the insolvency resolution process by the Adjudicating Authority.

Interim resolution professional reporting obligations - What reporting mechanism should be adopted to monitor compliance with the extended timelines? - HELD THAT: - The Tribunal directed that the Resolution Professional shall report compliance with each step of the fresh schedule by filing a report within 15 days on the first working day of every month. The Tribunal also kept open the right of homebuyers to approach this Tribunal with any grievance arising out of implementation of the extended schedule. This imposes periodic reporting obligations on the RP to enable oversight of the reverse CIRP's progress under the extended timelines. [Paras 18]

The Resolution Professional shall report compliance in respect of each step of the fresh schedule within 15 days on the first working day of every month; homebuyers may approach the Tribunal with grievances.

Final Conclusion: Application for extension of timelines (I.A. No.2166 of 2020) is allowed to the extent indicated: the Tribunal has extended the schedule for completion and related steps as per the promoter's proposed revised timelines (with allottee payment deadline extended to 15th June, 2021), retained the original structural terms of the Reverse CIRP, provided for forfeiture and completion of CIRP by the Adjudicating Authority in case of promoter's non-compliance, and directed monthly compliance reports by the Resolution Professional.

Statutory claim submission requirement under Form A and Form C of the CIRP Regulations - admission as a financial creditor and formation of the committee of creditors - preferential transactions under Section 43 of the Insolvency and Bankruptcy Code - fraudulent transactions and avoidance under Section 66 of the Insolvency and Bankruptcy Code - strict compliance with prescribed procedure for collation and verification of claims - power to reconstitute the committee of creditors

Statutory claim submission requirement under Form A and Form C of the CIRP Regulations - admission as a financial creditor and formation of the committee of creditors - strict compliance with prescribed procedure for collation and verification of claims - Admission of Respondent Nos. 2 to 7 into the Committee of Creditors on the basis of the purported Corporate Guarantees dated 03/03/2017 was proper. - HELD THAT: - The Tribunal found no material to show that R2 to R7 submitted their claims electronically with proof as mandated by Form A and Form C of the CIRP Regulations, nor that the IRP retained the claimed proofs as part of the statutory record. The RP's oral assertion that he perused the guarantees at a location outside the prescribed submission process does not satisfy the statutory requirement that claims and supporting proof be submitted in the prescribed manner for collation and verification. When a statute prescribes a mode, that mode must be followed; the IRP admitted R2 to R7 without the required compliance. On this basis the Tribunal concluded that the admission was improper. [Paras 16, 18, 19, 21]

Admission of R2 to R7 as Financial Creditors is not recognised; their admission into the CoC was improper.

Preferential transactions under Section 43 of the Insolvency and Bankruptcy Code - fraudulent transactions and avoidance under Section 66 of the Insolvency and Bankruptcy Code - The Corporate Guarantees dated 03/03/2017 do not constitute preferential transactions under Section 43 of the Code; no case for fraud under Section 66 is made out. - HELD THAT: - To constitute a preferential transaction under Section 43, there must be a transfer of property or interest by the corporate debtor for the benefit of a creditor so as to place that creditor in a better position vis-a -vis distribution under Section 53. The Tribunal noted that on the date of execution (03/03/2017) R2 to R7 were not creditors of the corporate debtor; accordingly the guarantees cannot be characterised as transfers conferring a preference upon existing creditors. The Applicant also did not press the preferential transaction prayers during hearing, and no sufficient material was produced to establish fraud under Section 66. Therefore the guarantees fall outside the parameters of Section 43 and fraud was not established. [Paras 22, 23]

The guarantees are not preferential transactions; no case of fraud under Section 66 is made out.

Admission as a financial creditor and formation of the committee of creditors - power to reconstitute the committee of creditors - Whether the Application by the Applicant (Doha Bank) challenging admission of R2-R7 is maintainable. - HELD THAT: - The Tribunal held that the admission of R2 to R7 adversely affected the Applicant's position in the CoC and therefore the Applicant was entitled to agitate the matter before the Adjudicating Authority. In light of the finding that the admissions of R2-R7 were improper for want of prescribed proof and procedure, the Application is maintainable. [Paras 24]

The Application is maintainable.

Final Conclusion: Application allowed in part: Respondent Nos. 2 to 7 are not recognised as Financial Creditors of the Corporate Debtor and the Resolution Professional is directed to reconstitute the Committee of Creditors; declarations under prayers (a) and (b) (relating to avoidance as fraudulent/preferential transactions and contributions under Section 66) are refused; decisions already taken by the CoC while R2-R7 were members shall not be called into question.

Corporate Insolvency Resolution Process - Section 7 of the Insolvency and Bankruptcy Code, 2016 - Application completeness under Rule 4 - Limitation not barred - Jurisdiction of Adjudicating Authority - Admission of debt by corporate debtor - Appointment of Interim Resolution Professional - Moratorium under Section 14

Application completeness under Rule 4 - Section 7 of the Insolvency and Bankruptcy Code, 2016 - Application under Section 7 read with Rule 4 is complete and maintainable - HELD THAT: - The Tribunal examined the Form I filed under Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 together with the Section 7 petition and found the application to be complete. The petition complies with the prescribed format and contains the required particulars and annexures, enabling the adjudicating authority to proceed to consider admission under Section 7. [Paras 12]

The application is complete and competent for adjudication under Section 7.

Limitation not barred - The claim is not barred by limitation - HELD THAT: - The Tribunal considered the chronology: the last confirmation of account dated 01.04.2017; the debt was payable in 2019; the applicant approached the corporate debtor in April 2019 and filed the application on 04.09.2019. On this basis the Tribunal held that the petition was filed within the applicable period and is not time-barred. [Paras 13]

The Section 7 application is not barred by limitation.

Jurisdiction of Adjudicating Authority - This Tribunal has jurisdiction to entertain the application - HELD THAT: - The registered office of the corporate debtor is located in Delhi. The Tribunal accordingly concluded that it has territorial jurisdiction to entertain and decide the Section 7 petition against the corporate debtor. [Paras 14]

The NCLT, New Delhi has jurisdiction to try the application.

Admission of debt by corporate debtor - Admission of debt by the corporate debtor and consent to initiation of CIRP - HELD THAT: - During hearings the corporate debtor's counsel admitted that the corporate debtor is in financial difficulty and stated it had no objection to initiation of CIRP. The Tribunal recorded this admission as determinative of the dispute on the pleaded debt and proceeded to admit the application on that basis. [Paras 15]

The admission by the corporate debtor supports admission of the Section 7 application.

Appointment of Interim Resolution Professional - Interim Resolution Professional appointed as proposed by the applicant - HELD THAT: - The applicant proposed a named insolvency professional as IRP. The Tribunal examined the registration certificate and consent in Form 2, found disclosures in order, and appointed the proposed professional as Interim Resolution Professional to carry out functions under the Code. [Paras 16]

Mr. Anil Tayal is appointed as Interim Resolution Professional.

Moratorium under Section 14 - Moratorium under Section 14 follows upon admission - HELD THAT: - Following admission of the Section 7 application under Section 7(5), the Tribunal directed that the moratorium envisaged under Section 14(1) shall apply to the corporate debtor, with the provisos and subsequent provisions of Sections 14(2) and 14(3) operating during the moratorium, thereby prohibiting specified actions against the corporate debtor during the CIRP. [Paras 17]

The moratorium under Section 14 is declared effective in relation to the corporate debtor.

Interim operational directions - Applicant directed to deposit an amount to meet IRP's initial expenses - HELD THAT: - As an incidental and practical step to enable the IRP to perform statutory functions, the Tribunal directed the applicant to deposit a specified sum with the IRP within three days. The Tribunal observed that this amount would be adjusted by the Committee of Creditors and may be repaid to the applicant as accounted for by the IRP. [Paras 18]

Applicant to deposit the directed amount with the IRP to meet initial expenses.

Communication and statutory compliance - Directions for communication of the order and intimation to regulatory bodies - HELD THAT: - The Tribunal directed that copies of the admission order be communicated to the applicant, the corporate debtor, the IRP, the Insolvency and Bankruptcy Board of India and the Registrar of Companies for updating records, and required the applicant to supply the IRP with the complete paper book, thereby ensuring compliance with statutory and administrative post-admission requirements. [Paras 19]

Registry to communicate the order and notify IBBI and ROC; applicant to provide documents to the IRP.

Final Conclusion: The Section 7 petition under the Insolvency and Bankruptcy Code, 2016 was admitted by the Tribunal as the application was complete, not time barred, and the corporate debtor admitted indebtedness and consented to initiation of CIRP; an Interim Resolution Professional was appointed, the moratorium under Section 14 was declared, the applicant was directed to deposit funds for IRP expenses, and consequential communications to the IRP, IBBI and ROC were ordered.

Directions to hand over keys to the liquidator - access to registered office versus exclusive possession - coercive relief by engaging police to break locks - requirement of opportunity to be heard before contempt proceedings - remand for fresh consideration by the Adjudicating Authority

Directions to hand over keys to the liquidator - access to registered office versus exclusive possession - coercive relief by engaging police to break locks - Validity of the Adjudicating Authority's directions to hand over keys to the liquidator and to enable police assistance to break and replace locks, in the context of a premises used by multiple companies and where the liquidator did not claim exclusive possession. - HELD THAT: - The Tribunal found that the Adjudicating Authority's direction requiring handing over of keys and authorising the liquidator to approach the Superintendent of Police to break and replace locks treated the premises as if it were in the liquidator's exclusive possession. The liquidator had expressly stated he sought only access to records of the corporate debtor and did not claim exclusive possession. Given that the office premises was used by some twenty other companies for registered offices and record storage, the coercive direction to hand over keys and to obtain police assistance for breaking locks was erroneous and unsustainable. The impugned orders in this respect were set aside. [Paras 12, 13, 16]

Directions to hand over keys and to seek police assistance to break locks were erroneous and are set aside.

Requirement of opportunity to be heard before contempt proceedings - remand for fresh consideration by the Adjudicating Authority - Whether the Adjudicating Authority erred in proceeding on the contempt application without first deciding the application for clarification filed by the appellants and whether the matter should be reconsidered afresh. - HELD THAT: - The Tribunal recorded that the appellants were not arrayed in the original Section 19(2) r/w Section 34(3) proceedings and that they filed an application for clarification of the order dated 17.07.2020 which remained undecided when the Adjudicating Authority proceeded to pass the order dated 14.08.2020 on the contempt application. The Tribunal held that the Adjudicating Authority ought to have decided the clarification application before taking coercive steps in contempt proceedings. In view of this procedural lacuna and the factual complexity (multiple users of the premises), the impugned orders were set aside and the matter remitted to the Adjudicating Authority for fresh consideration and appropriate orders in accordance with law. [Paras 10, 11, 15, 17]

Impugned orders set aside and matter remanded to the Adjudicating Authority to consider afresh, including the pending clarification application, before taking coercive action.

Final Conclusion: The appeals are allowed; the orders dated 17.07.2020 and 14.08.2020 are set aside insofar as they direct handing over of keys and authorise police assistance to break locks and insofar as contempt action proceeded without deciding the clarification application. The Adjudicating Authority is directed to consider the matter afresh and pass appropriate orders in accordance with law.

Extension of Corporate Insolvency Resolution Process - invitation of fresh Expression of Interest - due diligence and eligibility under section 29A - compliance with Regulation 39(4) and Regulation 36B - performance security in the form of Performance Bank Guarantee - role and commercial discretion of the Committee of Creditors

Extension of Corporate Insolvency Resolution Process - role and commercial discretion of the Committee of Creditors - Extension of the CIRP period by 90 days from 18-10-2020 was allowable and ordered. - HELD THAT: - The Tribunal considered the factual position that there was only one resolution plan then before the Committee of Creditors, that the original CIRP timeline had been affected by prior exclusions and by the COVID-19 lockdown, and that time was inadequate to complete necessary verification and negotiations. The Committee of Creditors had unanimously resolved on 15th October 2020 to seek an extension of ninety days to enable completion of due processes. In view of these constraints and the Committee's resolution, the Tribunal found the request for extension justifiable and directed the Resolution Professional to complete the CIRP on or before 16-1-2021 while adhering to IBBI rules and regulations.

Prayer to extend the CIRP period for 90 days from 18-10-2020 allowed; CIRP to be completed on or before 16-1-2021.

Invitation of fresh Expression of Interest - due diligence and eligibility under section 29A - compliance with Regulation 39(4) and Regulation 36B - performance security in the form of Performance Bank Guarantee - Resolution Professional permitted to invite fresh EOIs during the extended period if the plan under consideration is rejected. - HELD THAT: - The Tribunal accepted the Resolution Professional's submission that due diligence to satisfy section 29A eligibility and verification of a resolution plan could not be reasonably completed within the existing time, and that the pandemic had likely deterred some bona fide applicants from participating. Given these practical difficulties and the Committee of Creditors' resolution to invite fresh EOIs, the Tribunal allowed the RP to invite fresh Expression of Interest during the extended period. The order preserves the requirement to comply with applicable regulations, including the mechanics concerning submission of the plan, Form H compliance certificate and receipt of performance security (as envisaged by the regulations), while affording time to carry out mandated verifications.

RP permitted to invite fresh Expression of Interest during the extended 90-day period if the existing plan is rejected, subject to compliance with the Code and regulations.

Final Conclusion: The application under section 12(2) seeking a 90-day extension of the CIRP was allowed and the Resolution Professional was authorised to invite fresh EOIs during the extended period if the pending plan is rejected; the RP was directed to comply with the IBBI regulations and complete the process by 16-1-2021.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (Amnesty Scheme) - voluntary disclosure - enquiry, investigation or audit - interpretation of Section 125 of the Finance Act, 2019 - date of commencement of scheme - freeze of eligibility as on commencement date - beneficial legislation - liberal interpretation - Board circulars as aids to interpretation - Article 14 - discrimination between similarly situated persons

Voluntary disclosure - enquiry, investigation or audit - date of commencement of scheme - interpretation of Section 125 of the Finance Act, 2019 - beneficial legislation - liberal interpretation - Whether a declarant is disqualified from filing under the voluntary disclosure category if an enquiry/ investigation/ audit notice was issued after the scheme commenced on 01.09.2019. - HELD THAT: - The court held that the Scheme came into force w.e.f. 01.09.2019 and declarations could be filed up to 31.12.2019; Section 125(1)(f) bars a person who has been subjected to enquiry/investigation/audit, but does not prescribe any separate cut-off date for the voluntary disclosure category. Had the legislature intended the status as on the date of filing to govern eligibility, it would have so provided. Therefore the eligibility/ ineligibility of a person must be determined with reference to the position as on the commencement date of the Scheme (01.09.2019), and not by events - such as issuance of notices or summons - occurring after that date. The court further observed that the Scheme is beneficial legislation and ought to be given a liberal construction to effectuate its object of reducing litigation and realising dues; contemporaneous Board circulars expanding eligibility reinforce a purposive, non-strict interpretation. Finally, treating post-commencement notices as disqualifying would produce arbitrary distinctions between persons similarly situated on 01.09.2019 and would thus be contrary to Article 14. Applying these principles, notices or summons initiating enquiry, investigation or audit issued after 01.09.2019 cannot render a declarant ineligible under the voluntary disclosure category. [Paras 8, 9, 10]

Notices/summons initiating enquiry, investigation or audit issued after 01.09.2019 do not disqualify a person from filing under the voluntary disclosure category; eligibility is to be determined with reference to the position as on the commencement date of the Scheme.

Final Conclusion: Writ petitions allowed; impugned orders rejecting declarations set aside on the ground that initiation of enquiry/ investigation/ audit after 01.09.2019 does not disqualify persons from filing under the voluntary disclosure category of the Scheme.

Applicability of administrative clarification issued by Directorate General of Export Promotion - Application of excise exemption in computation of countervailing duty (CVD) on DTA clearances by Export Oriented Units - Remand for de novo adjudication - Duty to afford personal hearing before fresh adjudication - Setting aside Order in Original and judicial discretion to refuse relegation to alternative remedy

Setting aside Order in Original and judicial discretion to refuse relegation to alternative remedy - Order in Original dated 28.05.2015 set aside and writ petition allowed with remand rather than relegation to statutory appeal. - HELD THAT: - The High Court declined to relegate the assessee to the appellate remedy after a prolonged pendency of the writ petition and, exercising judicial discretion, set aside the impugned Order in Original. The Court observed that where a writ petition has been pending for several years and the matter involves a contention of wider application, it would be harsh to direct the party to begin fresh statutory proceedings after such delay. In the circumstances of this case the Court considered that no useful purpose would be served by directing an appeal and therefore set aside the OIO and remitted the matter for fresh consideration. [Paras 3, 4, 7]

Impugned Order in Original set aside; writ petition allowed and matter remitted for fresh consideration instead of directing statutory appeal.

Applicability of administrative clarification issued by Directorate General of Export Promotion - Application of excise exemption in computation of countervailing duty (CVD) on DTA clearances by Export Oriented Units - Remand for de novo adjudication - Adjudicating Authority must examine applicability of the DGEP clarification dated 02.04.2008 to the assessee's case and decide on merits. - HELD THAT: - The Court recorded that a departmental clarification dated 02.04.2008, issued by the Directorate General of Export Promotion, addressed the applicability of excise exemptions for computing the additional customs duty (CVD) payable by EOUs on DTA clearances. Given that the clarification may be favourable to the assessee and that the adjudicating authority recorded the assessee's submissions without resolving their merit, the Court directed a de novo adjudication. The authority is required to consider the clarification's applicability to the appellant's case and decide the matter afresh in accordance with law. [Paras 5, 6]

Matter remanded to Adjudicating Authority to examine and decide, on merits, the applicability of the DGEP clarification dated 02.04.2008 and the related exemption question for computation of CVD on DTA clearances by the EOU.

Duty to afford personal hearing before fresh adjudication - Respondent directed to afford opportunity of personal hearing to the authorised representative and then take a fresh decision on merits. - HELD THAT: - The Court mandated that on remand the respondent shall afford an opportunity of personal hearing to the authorised representative of the appellant, consider their submissions and thereafter pass a fresh decision on merits and in accordance with law. This procedural direction is integral to the remand and ensures that the assessee's contentions, including reliance on the departmental clarification, are considered before a fresh adjudicatory conclusion is reached. [Paras 7]

Respondent to afford personal hearing to authorised representative and decide afresh on merits in accordance with law.

Final Conclusion: Writ appeal allowed; Order in Original dated 28.05.2015 set aside and the matter remitted to the respondent for de novo adjudication-including consideration of the DGEP clarification dated 02.04.2008-and after affording a personal hearing, a fresh decision shall be rendered in accordance with law.

CENVAT credit on capital goods - user test for classification as capital goods - admissibility of credit for structural steel/ construction materials used in plant erection - precedential value of earlier judicial decisions - immovability not decisive for capital goods classification

CENVAT credit on capital goods - admissibility of credit for structural steel/ construction materials used in plant erection - user test for classification as capital goods - Cenvat credit is allowable on M.S. Angles, M.S. Joint Beams and TOR/TMT steel used in fabrication and erection of plant structures for the assessee's dry process cement manufacturing plant. - HELD THAT: - The Court followed earlier Division Bench decisions of this High Court (including India Cements Ltd. and Dalmia Cements (Bharat) Ltd.) which applied the user test as recognised by the Supreme Court in Commissioner of Central Excise, Jaipur v. Rajasthan Spinning & Weaving Mills Ltd. and related authorities. Those decisions hold that structural steel and construction materials used to fabricate structurals which are integral to erection and functioning of machinery qualify as capital goods for purposes of claiming Cenvat credit. In the facts and on the authorities relied upon by the High Court, the impugned items were used to fabricate supports and structurals without which the machinery could not be erected or would not function; hence they fall within the scope of capital goods and credit was rightly available to the assessee. The Tribunal's contrary denial was set aside following these precedents and the application of the user test.

Allow Cenvat credit on the specified structural steel and construction materials used in erecting and supporting plant machinery; Tribunal order denying credit set aside.

Precedential value of earlier judicial decisions - immovability not decisive for capital goods classification - The Tribunal's reliance on contrary precedent (Vandana Global) to disallow credit is unsustainable in view of the contrary view adopted by the High Court and the Supreme Court authorities applied by it; immobility of goods is not a determinative criterion for denial of Cenvat credit. - HELD THAT: - The Court held that the legal position is no longer res integra in this jurisdiction because of consistent decisions of the High Court (notably India Cements and subsequent rulings) and the application of the user test as laid down by the Supreme Court. Where structural items are used as supports or integral components enabling machinery to be erected and function, denial of credit on the ground of immovability or a narrow reading of 'capital goods' is not sustainable. Consequently, earlier orders or Tribunal rulings disallowing credit on that basis were displaced by the controlling judicial pronouncements relied upon by the High Court.

Displace the Tribunal's reliance on contrary precedent; answer substantial questions of law in favour of the assessee and against the Revenue.

Final Conclusion: The civil miscellaneous appeal is allowed; the Tribunal's order dated 11.06.2012 is set aside, and the substantial questions of law are answered in favour of the assessee, permitting Cenvat credit on the specified structural steel and construction materials used in the plant.

Forum non conveniens - Article 226 writ jurisdiction - interpretation of retrospective application of statutory amendments - recovery under rule 14 of the CENVAT Credit Rules, 2004 - imposition of interest and penalty - Rule 3(5) and Rule 3(5A) of the CENVAT Credit Rules, 2004 - Explanation to Rule 3 - recovery mechanism - Rule 8(3A) of the Central Excise Rules, 2002 - settlement by the Settlement Commission - scope and conditions

Forum non conveniens - Article 226 writ jurisdiction - Maintainability of writ petitions before the High Court despite respondent's plea of forum non conveniens - HELD THAT: - The Court applied the doctrine of forum conveniens and noted it must be invoked at the threshold. The objection to jurisdiction was raised belatedly (first raised in 2020 though petitions filed in 2014) and no counter was filed. The Court observed that where the challenge is to interpretation of statutory provisions (no disputed questions of fact), judicial review under Article 226 is available and the High Court may adjudicate the matter. Reliance on precedents where forum non conveniens was upheld was distinguished on facts (earlier invocation at threshold, forum-shopping found, or different procedural posture). Given absence of disputed factual issues and that the challenge concerned interpretation of Central enactments and rules, the Court held the petitions were maintainable in this Court and refusal on ground of forum non conveniens at this stage was inappropriate. [Paras 31, 35, 41, 44, 45]

Writ petitions are maintainable before this High Court; objection of forum non conveniens raised at final stage is rejected.

Rule 3(5) of the CENVAT Credit Rules, 2004 - Rule 3(5A) of the CENVAT Credit Rules, 2004 - Explanation to Rule 3 - recovery mechanism - recovery under rule 14 of the CENVAT Credit Rules, 2004 - interpretation of retrospective application of statutory amendments - Validity of levying interest under Rule 14/Section 11AA for removals of capital goods effected between 22.11.2011 and 14.03.2012, in light of subsequent amendments inserting recovery machinery and explanations - HELD THAT: - The Court examined the text and chronology of Rule 3(5) and Rule 3(5A). As originally in force at the time of removals (22.11.2011-14.03.2012), Rule 3(5) required payment only where inputs or capital goods were removed "as such" and did not apply to capital goods removed after use; Rule 3(5A) (as then in force) applied only to clearance as waste/scrap and did not make used-capital-goods removals liable. The fuller levy for used capital goods under substituted Rule 3(5A) became applicable only with effect from 01.04.2012. Separately, the Explanation making amounts payable under sub-rules (5),(5A),(5B),(5C) recoverable under Rule 14 was first introduced w.e.f. 01.03.2013 (and later substituted by Notification No.1/2014). Because the recovery and interest machinery under Rule 14/Section 11AA did not exist at the time of the removals or when the show cause notice was issued, invoking Rule 14 to levy interest on the petitioner for those removals was without jurisdiction. The Court therefore held that the direction in the settlement order requiring payment of the balance interest under Rule 14/Section 11AA could not be sustained. [Paras 60, 61, 62, 63, 67]

Order demanding the balance interest under Rule 14 read with Section 11AA is set aside; the petitioners are not liable to pay the balance interest so directed in the impugned order.

Imposition of interest and penalty - Rule 8(3A) of the Central Excise Rules, 2002 - settlement by the Settlement Commission - scope and conditions - Validity of imposition of penalty, redemption fine and invocation of Rule 8(3A) in the Settlement Commission's order - HELD THAT: - The Court held that the removals were contrary to the spirit of the CENVAT Credit Rules and found no merit in the petitioners' challenge to the imposition of penalty and redemption fine as conditions for granting immunity in the settlement order. The amount already paid towards interest was to be treated as part of amounts admitted for settlement. However, the Court found invocation of Rule 8(3A) of the Central Excise Rules, 2002 misplaced, since that rule applies to default in payment of "duty" beyond prescribed due dates and consequences for clearance without payment of duty; it is inapplicable to the facts of these cases. The net result was that penalties and the redemption fine imposed by the Settlement Commission were upheld, while the portion of the order relying on Rule 8(3A) was set aside. [Paras 64, 65, 66, 67, 68]

Penalties and the redemption fine imposed by the Settlement Commission are upheld and must be paid; invocation of Rule 8(3A) is misplaced and is set aside.

Final Conclusion: The writ petitions are partly allowed: the Court retains jurisdiction and sets aside only the Settlement Commission's direction to pay the balance interest under Rule 14/Section 11AA in respect of capital goods removed between 22.11.2011 and 14.03.2012; the penalties and redemption fine imposed by the Settlement Commission are upheld (with payments to be made within 30 days), and the invocation of Rule 8(3A) is held to be misplaced.

Attachment/encumbrance for recovery of government dues - ownership under registered sale deed as conclusive title - proving source of funds for property acquisition (gifts versus inheritance) - relevance of aborted/unregistered transactions to subsequent registered transfer - limits on revenue authority to investigate or impeach duly registered title

Proving source of funds for property acquisition (gifts versus inheritance) - ownership under registered sale deed as conclusive title - Whether the four flats were acquired by the appellant from her own source of income (monies received as gifts from her parents in law) and not by inheritance from her late husband. - HELD THAT: - The Tribunal applied the limited remit directed by the High Court and examined the documentary material placed before the Commissioner. The appellant produced Chartered Accountant certificates, income tax returns, bank statements and assessment orders of herself and her parents in law showing receipt of gifts and subsequent payments to the builder from her bank account. The Tribunal found these materials undisputed and sufficient to establish that the payments for the registered sale deeds were made by the appellant from legally earned funds received as gifts and not by inheritance from her late husband. The Tribunal further observed that the earlier, abortive attempts by third parties to make part payments which were returned and did not culminate in registered sale deeds have no bearing on ownership created by the later registered sale deeds in the appellant's name. [Paras 9, 10, 11]

Established that the four flats were purchased by the appellant from her own source of income (gifts from parents in law) and were not inherited from her late husband.

Attachment/encumbrance for recovery of government dues - relevance of aborted/unregistered transactions to subsequent registered transfer - limits on revenue authority to investigate or impeach duly registered title - Whether the encumbrance created by the Revenue on the four flats (by letter dated 09.02.2011) was sustainable in light of the appellant's established ownership and the High Court's remand directions. - HELD THAT: - The Tribunal held that the High Court had remanded only the question whether the flats were purchased from the appellant's own funds or inherited, and that the Revenue, in maintaining the encumbrance, impermissibly relied on prior uncompleted transactions and speculative linkages to the late husband. Since the initial payments by Zenith Chemicals Pvt. Limited and Ms. Shivangi Agarwal were returned and did not result in registered transfer, they were irrelevant to ownership under the subsequent registered sale deeds. Having concluded that the appellant purchased the flats from her own source, the Tribunal found no basis to sustain the encumbrance and held the Department's continuation of the encumbrance to be contrary to the High Court's directions and to the established facts. [Paras 9, 10, 11]

The encumbrance dated 09.02.2011 is quashed and set aside; the appeal is allowed.

Final Conclusion: Considering the High Court's remand, the undisputed documentary evidence that the flats were purchased by the appellant from gifts received from her parents in law, and the irrelevance of aborted unregistered transactions, the Tribunal set aside the encumbrance created by the Revenue and allowed the appeal.

Cutting/slitting of coils not amounting to manufacture - manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944 - waste and scrap - incidental emergence of scrap - excisability of metal waste and scrap

Cutting/slitting of coils not amounting to manufacture - manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944 - The process of cutting and slitting of imported or locally procured HR/CR coils into smaller coils or sheets does not constitute manufacture under the Central Excise law. - HELD THAT: - The Tribunal accepted the appellant's contention, supported by the CBEC Circular No. 811/8/2005-CX and authoritative Supreme Court decisions, that cutting or slitting of jumbo coils into baby coils or sheets is not a manufacturing process. The activity merely alters size and shape without producing a new product distinct in identity or character; therefore it falls outside the scope of "manufacture" as envisaged under Section 2(f) of the Central Excise Act. Prior decisions and departmental clarification treating such mechanical reduction of size as non-manufacture were applied to the facts of the case. [Paras 5, 6, 7]

Demand of excise duty cannot be sustained because the cutting/slitting activity does not amount to manufacture.

Waste and scrap - incidental emergence of scrap - excisability of metal waste and scrap - Scrap arising incidentally from the non-manufacturing activity of cutting and slitting of coils is not excisable as "waste and scrap" manufactured by the assessee. - HELD THAT: - Because the primary activity was held not to be "manufacture", the scrap generated was incidental to the size-reduction process and was not consciously manufactured as a distinct commodity. Note 8 to Section XV, which defines "metal waste and scrap", applies to waste from manufacturing or mechanical working where such material constitutes an excisable product; it does not support taxing scrap that merely incidentally emerges from a non-manufacturing activity. The Tribunal also relied on precedent and Notification No. 89/95-CE to conclude that the department's demand for duty on such scrap is unsustainable. [Paras 5, 7, 8, 9]

Demand of duty on the scrap is not maintainable as the scrap is incidental to a non-manufacturing process and was not manufactured as an excisable product.

Final Conclusion: The impugned order confirming duty, interest and penalty is set aside; the appeal is allowed and the demand cannot be sustained as the cutting/slitting activity is not manufacture and the resultant scrap is not excisable.

Transfer of right to use - Article 366(29A) constitutional scope - availability and deliverability of goods - consensus ad idem as to identity of goods - effective control/possession criterion for levy - taxable event/situs of sale for transfer of right to use - exercise of writ jurisdiction when no disputed facts - alternate remedy via statutory appeal - quashing of assessment orders

Transfer of right to use - Article 366(29A) constitutional scope - availability and deliverability of goods - consensus ad idem as to identity of goods - effective control/possession criterion for levy - taxable event/situs of sale for transfer of right to use - Whether the transactions between the petitioner and banks amounted to a taxable "transfer of right to use" for levy under the Tamil Nadu General Sales Tax Act, 1959 and the Central Sales Tax Act, 1956. - HELD THAT: - The court applied the legal tests articulated by the Supreme Court in Bharat Sanchar Nigam Ltd. regarding the scope of Article 366(29A), noting the attributes required for a transfer of the right to use: availability of goods for delivery, consensus ad idem as to identity of the goods, transferee's legal right to use including necessary permissions, exclusion of the right to use from the transferor during the period, and inability of the owner to transfer the same right again. On the facts found by the court, these attributes were not satisfied: the effective control and possession over the ATMs continued to vest with the petitioner and the statutory test for a transfer of right to use was not met. Consequently, the transactions could not be treated as deemed sales under Article 366(29A)(d) for the purposes of TNGST/CST; the impugned assessments premised on such a transfer therefore failed. [Paras 17, 18, 21, 22, 23]

The petitioner was not liable to tax under the TNGST Act or the CST Act on the basis of a "transfer of right to use"; the assessments on that basis are unsustainable.

Exercise of writ jurisdiction when no disputed facts - alternate remedy via statutory appeal - Whether the High Court should entertain the writ petitions despite the existence of an alternate statutory appeal remedy. - HELD THAT: - The court considered whether to remit the petitioner to the statutory appellate mechanism but found there were no disputed questions of fact and that the determinative question involved application of settled law (clarified by the subsequent Supreme Court decision in Bharat Sanchar Nigam Ltd.). In those circumstances the court was satisfied that exercise of writ jurisdiction under Article 226 was appropriate to decide the legal issue on merits rather than relegating the petitioner to the appellate forum. [Paras 15, 16]

Writ jurisdiction was rightly exercised and the petitions were disposed of on merits.

Quashing of assessment orders - Relief to be granted consequent to the conclusion that transactions were not taxable as transfer of right to use. - HELD THAT: - Having held that the statutory tests for a deemed sale by transfer of right to use were not satisfied and that the court could decide the matter on merits, the court determined that the impugned assessment orders, which sought to tax the petitioner under the TNGST and CST Acts on that basis, must be set aside. The court noted, by way of observation, that later statutory provisions relating to service taxation of supply of tangible goods (post-2008) were not operative for the periods under challenge. [Paras 25, 26]

The impugned assessment orders are quashed and the writ petitions are allowed; consequential relief granted to the petitioner.

Final Conclusion: Writ petitions allowed on merits: assessments dated 15.10.2005 for the stated assessment years, insofar as they tax the petitioner for alleged "transfer of right to use" ATMs under the Tamil Nadu General Sales Tax Act, 1959 and the Central Sales Tax Act, 1956, are quashed; court exercised Article 226 jurisdiction because no disputed facts remained and settled law governed the issue.

Reassessment under Section 27 of the Tamil Nadu Value Added Tax Act, 2006 - characterisation of sale of software licence as goods (IT software on media) vis-a -vis taxable Information Technology Software Service - binding effect of an opinion of the Assistant Commissioner of Service Tax on State VAT authorities - onus on assessee to establish nature of transaction by production of agreements and invoices - prematurity of writ challenge to statutory reassessment notices - remand for fresh consideration and adjudication on merits

Prematurity of writ challenge to statutory reassessment notices - reassessment under Section 27 of the Tamil Nadu Value Added Tax Act, 2006 - Writ petitions challenging the notices under Section 27 were not maintainable in the summary manner sought and are dismissed. - HELD THAT: - The Court held that the petitioner cannot seek to quash reassessment notices issued under Section 27 in a summary writ when the statutory reassessment process has been initiated. The opinion obtained from the Assistant Commissioner of Service Tax did not bind the Commercial Tax Department and therefore was not a self-sufficient answer to the impugned notices. The petitioner was directed to produce all agreements and invoices for the disputed period and to file written submissions before the 2nd respondent so that the departmental authority may consider the factual and legal position. The Court emphasised that there is no finding of facts in this order and that the observations were made only to justify refusal of summary interference with the reassessment proceeding.

Writ petitions dismissed; petitioner directed to submit agreements, invoices and written submissions to the 2nd respondent within 45 days.

Characterisation of sale of software licence as goods (IT software on media) vis-a -vis taxable Information Technology Software Service - onus on assessee to establish nature of transaction by production of agreements and invoices - remand for fresh consideration and adjudication on merits - Whether the transactions prima facie fall within VAT as sale of IT software on media or are taxable as Information Technology Software Service was not finally decided and is remitted for adjudication. - HELD THAT: - The Court observed that where software is copied on media (CD, magnetic disk or other forms of transmission) goods come into existence and such transactions prima facie attract tax under the TNVAT Act entry relating to Information Technology Products. However, it recognised that the precise nature of each transaction requires detailed factual and documentary scrutiny. Consequently, the matter was remitted to the 2nd respondent for consideration on merits after the petitioner files the agreements, invoices and submissions; the 2nd respondent is to afford personal hearing and pass appropriate orders in accordance with law. The Court rejected the view that payment of service tax or registration/filing with Service Tax authorities conclusively absolves the petitioner from VAT liability.

Issue remitted for fresh consideration by the 2nd respondent with opportunity of personal hearing; orders to be passed on merits within six months from receipt of this Order.

Final Conclusion: The writ petitions are dismissed; the petitioner must submit agreements, invoices and written submissions within 45 days and the 2nd respondent shall consider the matter on merits after personal hearing and pass appropriate orders in accordance with law within six months; no findings on merits were recorded by the Court.

Sale - transfer of assets on dissolution - requirement of valuable consideration - assessment officer's finding - appellate tribunal's duty to examine factual position

Sale - transfer of assets on dissolution - requirement of valuable consideration - assessment officer's finding - appellate tribunal's duty to examine factual position - Whether the transaction effected by the assessee amounted to a sale or merely a transfer of firm assets on dissolution, and whether the Appellate Tribunal was justified in dismissing the State's appeal without examining the factual findings recorded by the Assessing Officer. - HELD THAT: - The Assessing Officer recorded that the dealer's books declared stock transfer of Rs.32,45,350 for 2002-03 but contemporaneous materials and enquiries showed no dissolution agreement, no disclosure of such transfer in applications for registration, and the partner allegedly receiving the goods had separate registration and gave statements of independent purchases and investment; the Assessing Officer therefore held that the claim of stock transferred on dissolution could not be accepted. The Tribunal, despite adverse assessment findings and absence of cooperation by the assessee, dismissed the Revenue's appeal treating the transaction as a transfer of assets on dissolution without confronting or reconciling the Assessing Officer's specific findings. One essential element of a sale is valuable consideration; the record does not disclose that the Tribunal examined whether such consideration existed or whether the material contradicted the assessee's plea of transfer on dissolution. By failing to examine the factual position and the Assessing Officer's findings, the Tribunal committed an error of law in concluding the transaction was not a sale solely on the basis that invoices represented transfer of assets on dissolution. [Paras 7, 10, 11, 12, 13]

Tribunal's dismissal of the State's appeal without examining the Assessing Officer's factual findings was unsustainable; the substantial questions of law are answered in favour of the State.

Final Conclusion: Tax Case Revision allowed; the High Court held that the Appellate Tribunal erred in dismissing the Revenue's appeal without examining the factual findings recorded by the Assessing Officer regarding the alleged transfer on dissolution, and answered the substantial questions of law in favour of the State.

Works contract versus sale: characterization of supply of Ready Mix Concrete - Inclusion of ancillary charges (freight and pumping) in taxable turnover - Benefit of composition/compounding under Section 7C of the TNGST Act, 1959 - Adjustment of Tax Deducted at Source (TDS) and administrative transfer of credit - Availability of alternate appellate remedy and forum competence for factual disputes

Inclusion of ancillary charges (freight and pumping) in taxable turnover - Inclusion of freight and pumping charges under Rule 6-C(iii) of the TNGST Rules, 1959 - Legality of including separately charged freight and pumping/unloading charges in the taxable turnover of supplies of Ready Mix Concrete. - HELD THAT: - The Court found the question covered by its earlier decision in the petitioner's own case and subsequent Madras High Court authority which treated separately charged freight and pumping (unloading) as post-sale services not includible in taxable turnover. The State has not appealed those decisions. Having regard to the consistent authority and that the assessing/appellate orders did not properly distinguish such separately recorded charges from sale consideration, the demand sustained by the Appellate Joint Commissioner for inclusion of freight and pumping charges is quashed. The Court therefore set aside the inclusion of those charges in the impugned order and allowed the petitioner relief on this item. [Paras 20, 21, 22, 32]

Demand insofar as inclusion of freight and pumping charges in taxable turnover is quashed and the impugned order is set aside to that extent.

Adjustment of Tax Deducted at Source (TDS) and administrative transfer of credit - Duty to pass a speaking order after verification - Whether the petitioner was entitled to adjustment/credit of TDS deducted and the consequence of administrative delay in transfer of TDS credits. - HELD THAT: - The appellate authority had referred the matter of adjustment of TDS back to the assessing authority to effect transfer and to pass a rectification/speaking order after verification. The High Court held there was no substantive grievance against this direction because the 2nd respondent recorded that the petitioner should not suffer on account of administrative delay or deficiency in the transfer mechanism. The Court declined to disturb that portion of the impugned order and directed the 1st respondent to pass appropriate orders within three months or to file a report before the Tribunal if an appeal is filed, ensuring that TDS paid and deposited to the Government would be adjusted against the petitioner's liability. [Paras 3, 23, 24, 34]

The direction remitting the TDS adjustment to the assessing authority for verification and rectification is sustained; 1st respondent to pass appropriate orders within three months (or report to the Tribunal if appeal filed).

Works contract versus sale: characterization of supply of Ready Mix Concrete - Benefit of composition/compounding under Section 7C of the TNGST Act, 1959 - Availability of alternate appellate remedy and forum competence for factual disputes - Whether supplies of Ready Mix Concrete in the petitioner's transactions amounted to works contracts qualifying for compounding under Section 7C or were sales liable to tax under other provisions. - HELD THAT: - The Court emphasised that the characterization of transactions as sale or works contract is essentially a question of fact and ultimately for the fact finding tribunal. While the petitioner relied on precedents favouring classification as works contract, the assessing and first appellate authorities had recorded that some transactions were pure sales whereas others might be deemed sales, and noted factual distinctions (method of invoicing, nature of service, responsibility for quality, manner of delivery). The High Court declined to decide these contested factual issues under Article 226 and observed that the Tribunal is the competent forum to resolve them. Consequently the Court did not adjudicate the merits on this issue but granted the petitioner liberty to file a statutory appeal within 30 days (with mandatory pre-deposit) and directed the Tribunal to proceed to final disposal on merits if an appeal is filed. [Paras 27, 29, 31, 33, 34]

No final adjudication on the characterisation of RMC supplies as works contract; petitioner granted liberty to file statutory appeal within 30 days with pre-deposit and the factual issue is to be decided by the Appellate Tribunal.

Final Conclusion: Writ petition partly allowed: the demand for inclusion of freight and pumping charges in taxable turnover quashed; direction on adjustment of TDS upheld and remitted for verification and speaking orders; the core question whether supplies of Ready Mix Concrete qualify as works contract under Section 7C is left open for determination by the Appellate Tribunal, petitioner granted time-limited liberty to file a statutory appeal subject to pre-deposit.

Classification of computer peripherals - taxability of routers, switches and hubs as computer peripherals - interpretation of schedule entries relating to computer peripherals - weight of advance rulings and clarifications as persuasive indicators - setting aside revised assessment orders and remand for fresh consideration

Setting aside revised assessment orders and remand for fresh consideration - Impugned revised assessment orders for the specified assessment years were set aside and the matters were remitted for fresh decision. - HELD THAT: - The Court, having considered the petitioner's challenge to the revised assessment orders and the reliance placed by the respondents on earlier clarifications, disposed the writ petitions by setting aside the revised Assessment Orders dated 01.02.2006 for Assessment Years 2001-2002 to 2003-2004. The matter is remitted to the respondents to pass a fresh order in accordance with law and the decisions of this Court cited by the petitioner. The Court directed that the fresh orders be passed within three months from receipt of this order, granted the petitioner thirty days to file a reply or representation, and required that the respondents afford the petitioner an opportunity of personal hearing or through video conferencing before passing the final order. [Paras 6, 7, 8, 9]

Assessment orders set aside and case remitted to respondents to pass fresh orders within three months; petitioner permitted to file reply within 30 days and to be heard before final order.

Classification of computer peripherals - taxability of routers, switches and hubs as computer peripherals - weight of advance rulings and clarifications as persuasive indicators - Routers, switches and hubs are to be regarded as computer peripherals for the purpose of classification and taxation and the respondents must decide the assessment in accordance with the cited precedents of this Court. - HELD THAT: - Relying on this Court's earlier decisions in M/s. Dax Networks Ltd. and The State of Tamil Nadu v. CMC Limited., the Court accepted the legal position that devices such as routers, switches and hubs fall within the category of computer peripherals and should be classified accordingly under the relevant schedule entry. While acknowledging that advance rulings or clarifications are not binding on the respondents, the Court treated those authorities as persuasive indicators of classification. The respondents were directed to apply the aforesaid decisions and relevant legal principles while passing the fresh assessment orders. [Paras 3, 4, 5, 6]

Classification of routers, switches and hubs as computer peripherals to be applied by the respondents in the fresh orders in accordance with the cited precedents.

Final Conclusion: Writ petitions allowed in part: impugned revised assessment orders for Assessment Years 2001-2002 to 2003-2004 are set aside and the matters remitted for fresh decision within three months; respondents to apply this Court's precedents treating routers, switches and hubs as computer peripherals; petitioner permitted to file reply within 30 days and to be heard; no costs.

Input tax credit - burden of proof under Section 70 of the KVAT Act - bogus transaction - liability of purchaser for non-remittance by supplier - power of assessing authority to disallow input credit

Input tax credit - burden of proof under Section 70 of the KVAT Act - bogus transaction - liability of purchaser for non-remittance by supplier - Assessee's entitlement to input tax credit for purchases from specified dealers and whether the assessee discharged the burden to prove transactions were not bogus despite the suppliers' non-remittance of tax. - HELD THAT: - The Court found that the assessee produced contemporaneous documents including registration details and turnover analysis for 2012-13 and account-payee cheque particulars reflected in the invoices, which together established that the suppliers were not bogus and that the purchases were genuine. Applying the principle that the burden to prove correctness of a claim to deduction of input tax lies on the dealer under Section 70, the Court held that the assessee had discharged that burden by placing the necessary documents. The Court further held that, under the statutory scheme, the purchaser cannot be penalized or deprived of input credit merely because the selling dealer did not remit tax; the authorities have no power to deny input tax credit to a purchasing dealer on that ground alone. On these conclusions the Karnataka Appellate Tribunal's finding that the Assistant Commissioner and the First Appellate Authority were incorrect in disallowing the input tax credit was upheld. [Paras 11, 12, 13, 14]

Assessee entitled to input tax credit; burden under Section 70 satisfied and disallowance for supplier's non-remittance unsustainable.

Final Conclusion: The Revision Petition is dismissed and the Karnataka Appellate Tribunal's order allowing the assessee's appeal and restoring the input tax credit is upheld.