TaxTMI Updates e-Newsletter
Mar 14,2019

Composite supply - principal supply - works contract - place of supply

Composite supply - principal supply - works contract - place of supply - Whether the Annual Maintenance Contracts entered into by the applicant constitute a composite supply and, if so, whether the principal supply is supply of services or goods - HELD THAT: - The agreements for Annual Maintenance Contracts involve rendering maintenance services together with supply of parts/consumables as and when required; such goods and services are naturally bundled and supplied in conjunction in the ordinary course of business, and therefore qualify as a composite supply. The works contract concept was considered and rejected as inapplicable because the contracts relate to maintenance of movable engines and not to execution of works on immovable property involving transfer of property in goods. The predominant element of the composite supply is the maintenance service: the contract obligations (including uptime guarantees, preventive visits, troubleshooting, provision of rental equipment during downtime and penalties for non performance) demonstrate that the dominant intention is provision of service, with supply of parts being incidental. Having found the principal supply to be service, the place of supply is to be determined under the IGST default rule applicable to services, with the supplier's registered premises being the supplier location where relevant.

The Annual Maintenance Contracts are a composite supply whose principal supply is supply of services; supply of goods is incidental.

Final Conclusion: The Authority rules that the principal supply under the applicant's Annual Maintenance Contracts is supply of services (the contracts being composite supplies), and the supply of goods is incidental to such services.

Regular bail under Section 439 CrPC - prima facie satisfaction for grant of bail - nature and gravity of offence - role of accused relative to co-accused - period of custody and maximum sentence - conditions of bail including surrender of passport and movement restrictions - preliminary observations not to influence trial court - precedent Sanjay Chandra v. CBI

Regular bail under Section 439 CrPC - prima facie satisfaction for grant of bail - nature and gravity of offence - role of accused relative to co-accused - period of custody and maximum sentence - conditions of bail including surrender of passport and movement restrictions - Applicant entitled to be released on regular bail in the criminal proceedings registered by the Flying Squad Unit-7, Chief Commissioner of State Tax, Gujarat. - HELD THAT: - The Court, after hearing parties and perusing the record, formed a prima facie view that the case was fit for the exercise of discretion under Section 439 CrPC to grant regular bail. The court took into account that the applicant was in custody since 30.12.2018, is a young person pursuing studies and employed under a co-accused, and that his role, as emerging from investigation and recorded statements, appears limited compared to the co-accailed. The court considered the nature and gravity of the allegations but, having regard to the period of incarceration and the maximum sentence that can be imposed, and in the absence of any special circumstances brought on record by the prosecution, exercised its discretion in favour of bail. The Court relied on the legal principle in Sanjay Chandra v. CBI in assessing the bail application and recorded that it was not discussing evidence in detail at this stage. Conditions were imposed to mitigate risk of misuse of liberty, including surrender of passport, restriction on leaving the State without permission, monthly reporting to police, provision of current residence and prohibition on acting in a manner prejudicial to the prosecution. The Court also directed that the trial Court should not be influenced by the preliminary observations made while granting bail.

Application allowed and applicant enlarged on regular bail on executing personal bond with one surety and subject to specified conditions including surrender of passport, restriction on travel, monthly police attendance, furnishing residence details and prohibition against interfering with the prosecution; trial Court not to be influenced by preliminary observations.

Final Conclusion: Bail granted by the High Court on exercise of discretion under Section 439 CrPC, subject to specified conditions; trial Court free to modify conditions and to proceed unimpaired by the High Court's preliminary observations.

Input Tax Credit - Form TRAN-1 - IT/technical glitches in GSTN portal - rectification of system errors to enable filing - CBIC Circular on resolution of stuck TRAN-1s

Form TRAN-1 - IT/technical glitches in GSTN portal - rectification of system errors to enable filing - Input Tax Credit - CBIC Circular on resolution of stuck TRAN-1s - Petitioner is to be enabled to file Form TRAN-1 electronically by rectifying technical difficulties in the GST system so that Input Tax Credit can be availed. - HELD THAT: - The petitioner was prevented from filing Form TRAN-1 and digitally authenticating it due to admitted technical glitches in the GSTN portal, thereby obstructing availment of Input Tax Credit. The respondents acknowledged system problems and, on instructions, undertook rectification. The Court relied on the administrative framework reflected in the CBIC Circular addressing resolution of "stuck" TRAN-1s and the accepted position that many taxpayers face similar access/upload issues. Having regard to the respondents' undertaking and the policy embodied in the Circular, the Court directed that the technical difficulties faced by the petitioner in uploading TRAN-1 be rectified within a limited time frame so that the petitioner can complete filing and thereby avail the benefit of Input Tax Credit. The Court recorded the chronology of the petitioner's regular requests and the internal communications but did not adjudicate the quantum or entitlement of credit beyond enabling completion of the electronic filing process. [Paras 5, 6, 7, 8]

Technical difficulties in uploading GST TRAN-1 shall be rectified within two weeks from receipt of the order and the petitioner shall be enabled to file TRAN-1 electronically; writ petition disposed of with no costs.

Final Conclusion: Writ petition disposed directing respondents to rectify the GST portal technical defects within two weeks from receipt of the order so that the petitioner may complete electronic filing of Form TRAN-1 and avail Input Tax Credit; no costs.

Summary order. Delay condoned; Special Leave Petition dismissed; question of law left open; pending application disposed of.

Summary order. Appeals allowed; delay condoned; leave granted; pending applications, if any, disposed of.

Validity of reassessment where assessing officer finalises assessment before expiry of mandated waiting period after disposal of objections - Reopening of assessment on basis of accommodation entries and alleged unexplained credits - Right of assessee to raise and have objections to reopening considered before finalisation - Quashing of reassessment order and revival of proceedings from stage of issuance of notice

Validity of reassessment where assessing officer finalises assessment before expiry of mandated waiting period after disposal of objections - Whether the reassessment order dated 3.12.2018 is valid when the Assessing Officer finalised the assessment before the four week period contemplated by this Court's decision in Asian Paints Ltd had expired following disposal of objections. - HELD THAT: - The Court found that the Assessing Officer finalised the reassessment without waiting for the four week period after disposal of the objections as required by the decision in Asian Paints Ltd. The Assessing Officer has filed an affidavit apologising for that lapse. The Court held that finalisation of assessment in breach of that procedural requirement cannot be approved and accordingly the reassessment order must be set aside. [Paras 5, 6]

Reassessment order dated 3.12.2018 quashed for being finalised prior to expiry of the four week period; such finalisation held invalid.

Right of assessee to raise and have objections to reopening considered before finalisation - Reopening of assessment on basis of accommodation entries and alleged unexplained credits - Disposition of the reopened proceedings after quashing of the reassessment order and scope for fresh objections by the petitioner regarding the factual basis for reopening (allegation of accommodation entries). - HELD THAT: - In view of the peculiar facts - namely the petitioner asserting that the alleged receipts were not from the bank account relied upon and that the sums were in fact investments made with a third party - the Court permitted the petitioner to raise further and more pointed objections to the notice of reopening. The Court revived the reassessment proceedings from the stage of issuance of the notice of reassessment and directed timelines for filing and disposal of objections. The stay of the notice of reopening was ordered to continue for a period of four weeks after communication of the order disposing of such objections. [Paras 5, 6]

Proceedings revived from issuance of the notice of reassessment; petitioner permitted to file further objections by 25.3.2019; Assessing Officer to dispose objections by 30.4.2019; notice of reassessment stayed for four weeks after communication of disposal order.

Final Conclusion: The reassessment order dated 3.12.2018 is quashed for being finalised in breach of the four week waiting requirement; proceedings are restored to the stage of issuance of the notice of reopening, the petitioner is permitted to file further objections and the Assessing Officer is directed to consider and dispose them within specified timelines, with a limited stay of the reopening notice thereafter.

Stay of recovery pending appeal - condition precedent for grant of stay - interim deposit for suspension of coercive measures - attachment and revocation of bank accounts - assessment under Section 153A and Section 153C of the Income Tax Act - assessment under Section 143(3) of the Income Tax Act

Stay of recovery pending appeal - condition precedent for grant of stay - interim deposit for suspension of coercive measures - attachment and revocation of bank accounts - Court directed interim condition for staying further recoveries of disputed tax and revocation of attachments. - HELD THAT: - The petitions challenged the department's insistence on deposit as a condition for staying recovery of disputed tax after assessments under the Act and the consequent attachment of bank accounts. The Court noted that the appeals were at an advanced stage before the Appellate Commissioner and that disposal might be achieved expeditiously, although a remand report might be required in respect of the company. Exercising its discretion to grant an interim arrangement, the Court ordered a specified further deposit to balance the competing interests of revenue and assessee: the petitioners collectively were directed to deposit a sum by a fixed date; upon such deposit the balance of recoveries would be stayed pending disposal of the appeals and the bank-account attachments would be revoked forthwith. The Court made clear that failure to make the deposit within the time permitted would entitle the department to resume recovery measures. The Court declined to adjudicate the merits of the disputed additions on the sale-of-shares question in these proceedings and limited its order to the interim formula. [Paras 7]

Petitions disposed by directing deposit of a further sum by the petitioners by the specified date; subject to such deposit, further recoveries stayed pending appeal and bank-account attachments revoked; failure to deposit permits the department to proceed with recoveries.

Final Conclusion: The High Court granted an interim conditional stay of further tax recoveries pending disposal of the appeals by directing a specified deposit by the petitioners and revoked the attachments of their bank accounts upon compliance, while permitting the department to resume recovery if the deposit is not made within the time fixed.

Carry forward and set off of losses - requirement of filing return to claim carry forward of losses - status determined by lex incorporation - no entitlement to tax benefit without being assessee - advance ruling dependent on question framed by applicant

Advance ruling dependent on question framed by applicant - Petitioner Nos. 2 to 4 are to be deleted from the petition as they were not parties before the Authority for Advance Ruling and the AAR's order relates only to Petitioner No.1. - HELD THAT: - The AAR admitted and decided the application filed by Petitioner No.1 alone; Petitioner Nos. 2 to 4 were not applicants before the AAR although described in the application as investment series of Petitioner No.1. Judicial review of the AAR's order is confined to the parties who sought the advance ruling; new parties cannot be added to challenge the AAR's order when they were not parties to the original AAR proceeding. Accordingly, Petitioner Nos. 2 to 4 were deleted and the petition is restricted to Petitioner No.1's grievance. [Paras 3, 4, 5]

Petitioner Nos. 2 to 4 deleted; petition confined to Petitioner No.1.

Carry forward and set off of losses - requirement of filing return to claim carry forward of losses - no entitlement to tax benefit without being assessee - status determined by lex incorporation - Petitioner No.1 is not entitled to carry forward accumulated losses under Section 74 of the Income Tax Act for Assessment Year 2011-12 and thereafter. - HELD THAT: - While the court accepted the principle of private international law that the corporate status of an entity incorporated abroad is determined by the law of the place of incorporation (and recognised that, under Delaware law, the trust converted into an LLC remains the same person), entitlement to carry forward losses under the Income Tax Act is governed by domestic statutory requirements. Section 139 and related provisions require that an assessee must have filed a return claiming the loss for the earlier year in order to avail carry forward and set off under Section 74. Petitioner No.1 had not filed any return of income, had not been allotted a PAN, and therefore was not an assessee before the Income Tax authorities in respect of the claimed losses. The AAR therefore correctly answered the question as posed by Petitioner No.1 by holding there was no entitlement to carry forward losses in Petitioner No.1's hands. [Paras 10, 11, 12, 13]

AAR's negative answer upheld; Petitioner No.1 not entitled to carry forward losses as it had not filed return and was not an assessee.

Carry forward and set off of losses - The question of whether the individual series/funds (the three investment series) are entitled to carry forward their losses under Section 74 was not decided and is left open. - HELD THAT: - The court expressly recorded that neither the AAR nor the court adjudicated the entitlement of the three series (funds) which had filed returns and were each allotted PANs. The ruling concerning Petitioner No.1 does not affect any claim by those series/funds to carry forward losses; their entitlement, if any, must be determined in appropriate proceedings in their individual capacities. [Paras 13]

Claim of the three series/funds to carry forward losses left untouched for determination in appropriate proceedings.

Final Conclusion: Petition dismissed: Petitioner Nos.2-4 deleted from the petition; AAR's ruling that Petitioner No.1 cannot carry forward losses under Section 74 for AY 2011-12 and thereafter is upheld because Petitioner No.1 had not filed returns and was not an assessee; entitlement of the individual series/funds to carry forward losses remains open for determination in appropriate proceedings.

Presumptive value under Section 50C - reference to Departmental Valuation Officer under Section 50C(2) - rebuttable presumption of guidance value - opportunity to meet objections and fair assessment - computation of exemption under Section 54F

Presumptive value under Section 50C - rebuttable presumption of guidance value - opportunity to meet objections and fair assessment - Whether the Guidance Value adopted by the Stamp Valuation Authority under Section 50C could be treated as the full value of consideration without meeting the assessee's objections and without undertaking the fact finding mandated by law. - HELD THAT: - The Court held that the Guidance Value under Section 50C(1) is a rebuttable statutory presumption and cannot be treated as conclusive 'gospel truth' for computing capital gains without allowing the assessee an opportunity to rebut it. Sub section (2) expressly provides for reference to a Departmental Valuation Officer if the assessee objects; accordingly a fact finding exercise to determine Fair Market Value is a sine qua non for levying tax on 'real' capital gains. In the present case the assessee's objections against the DVO report and the presumptive value were not meaningfully considered by the authorities; therefore the presumption under Section 50C(1) was never permitted to be rebutted. The Court emphasised that assessing and appellate authorities must hear and decide objections point by point or remit for appropriate fact finding, respecting principles of fair assessment and the powers under Section 131 of the Act. [Paras 12, 13, 16]

The Tribunal's and CIT(A)'s adoption of the Guidance Value without adequately meeting the assessee's objections was impermissible; the matter was remitted for fresh consideration to enable the assessee to rebut the presumptive value and for appropriate valuation determination.

Reference to Departmental Valuation Officer under Section 50C(2) - opportunity to meet objections and fair assessment - computation of exemption under Section 54F - Whether the Appellate Authority (CIT(A)) should have decided the objections itself or remitted the matter to the Assessing Officer for addressing objections and recomputing relief under Section 54F. - HELD THAT: - The Court found that where the DVO report was produced for the first time before CIT(A), the appellate authority had two lawful options: to adjudicate the objections itself after proper consideration or to remit the matter to the Assessing Officer for detailed fact finding. In the present case CIT(A) did not undertake a proper, recorded consideration of the assessee's objections nor did he remit the matter for detailed inquiry; the Tribunal likewise upheld the Guidance Value without such exercise. Given these failures, the Court held that remand to the Assessing Officer was necessary so that objections may be dealt with, valuation finalized and thereafter the Assessing Officer may compute capital gains and allow relief under Section 54F as appropriate. [Paras 18, 19, 21]

The matter is remitted to the Assessing Officer to decide the assessee's objections against the DVO report and the presumptive Section 50C value, determine the Fair Market Value, and thereafter compute entitlement under Section 54F; the appeals are allowed to that extent.

Final Conclusion: The appellate orders upholding the Guidance Value under Section 50C without meeting the assessee's objections are set aside; the matter is remitted to the Assessing Officer for fresh consideration of the objections, valuation in accordance with law (including reference to DVO if necessary), determination of Fair Market Value and recomputation of capital gains and any relief under Section 54F.

Undisclosed income under Section 68 - exemption under Section 10(38) - reliance on statement recorded under Section 131 - penny stock / sham and shell company - onus on the assessee to prove genuineness of transactions - consequence of non-appearance and ex parte adjudication - appeal under Section 260A

Undisclosed income under Section 68 - exemption under Section 10(38) - penny stock / sham and shell company - Long term capital gains claimed as exempt under Section 10(38) were liable to be treated as unexplained income under Section 68 on the findings of sham/penny stock transactions. - HELD THAT: - The authorities below found that the claimed long term capital gains arose from sale of shares of a company appearing in the Department's database as penny stock and part of a tax evasion racket, and concluded the company was a sham/shell. Concurrent findings by the Assessing Officer, the CIT(A) and the Tribunal-accepted by this Court-held that the claim of exemption was not believable in light of the material on record and the statement attributed to an entry provider. The Court held that these concurrent findings of fact, reached because the assessee did not produce evidence to establish the genuineness of the transactions, are not perverse and justify treating the gains as unexplained income under Section 68 rather than as exempt under Section 10(38). [Paras 2, 7]

The claim of exemption under Section 10(38) is rejected and the long term capital gains were rightly added as unexplained income under Section 68.

Reliance on statement recorded under Section 131 - consequence of non-appearance and ex parte adjudication - onus on the assessee to prove genuineness of transactions - The authorities were justified in deciding the matter on available materials, including the statement under Section 131, where the assessee failed to appear, furnish evidence or seek cross examination. - HELD THAT: - The Assessing Officer and the appellate authorities recorded that summonses were issued and that the assessee or relevant persons did not appear; the assessee also failed to file submissions before the CIT(A) and did not prosecute the appeal effectively before the Tribunal. In these circumstances the authorities proceeded on the materials available, including the statement recorded under Section 131, and drew adverse inferences. The High Court accepted that the assessee had the burden to adduce evidence to establish the genuineness of the transactions, and that failure to do so disentitled the assessee from upsetting the factual findings of sham transactions. [Paras 3, 5, 6]

Reliance on the available materials including the Section 131 statement was permissible in the absence of the assessee's evidence or appearance; the ex parte findings and adverse inference stand.

Appeal under Section 260A - No substantial question of law arises under Section 260A warranting interference by this Court; the appeal is therefore dismissed. - HELD THAT: - Having examined the record and the concurrent factual findings of the authorities below-which were reached after noting the assessee's non cooperation and absence of evidence-the Court concluded that there was no substantial question of law for its consideration under Section 260A. The High Court found the factual conclusions not to be perverse and declined to interfere with the impugned orders. [Paras 7, 8]

The Tax Case Appeal under Section 260A is dismissed for want of any substantial question of law.

Final Conclusion: The High Court upheld the concurrent findings that the claimed long term capital gains were not genuine and could be taxed as unexplained income under Section 68; reliance on the Section 131 statement and other materials in the absence of the assessee's evidence was held permissible; no substantial question of law under Section 260A was found and the appeal was dismissed.

Unexplained cash credit under section 68 - treatment of receipt as loan or gift and applicability of section 56(2)(v) - acceptance of affidavit and confirmations as evidence of genuineness

Unexplained cash credit under section 68 - cash flow reconciliation - Deletion of addition of Rs. 7,49,090 made as unexplained cash credit - HELD THAT: - The Assessing Officer treated aggregate bank cash deposits as unexplained cash credit and worked out a peak negative balance of Rs. 7,49,090. The CIT(A) confirmed that sum while deleting the balance of the additions. The assessee furnished an alternative cash flow, showing receipts from the Karta aggregating to approximately Rs. 8.5 lakhs which the Assessing Officer had not taken into account and on which the Assessing Officer did not file any adverse remand report. The Tribunal finds that when those receipts are considered the alleged negative cash balance does not arise and, in the absence of any contrary material or adverse finding by the Revenue, the addition cannot stand. [Paras 10]

Addition of Rs. 7,49,090 confirmed by lower authorities is deleted and the ground of appeal is allowed.

Treatment of receipt as loan or gift and applicability of section 56(2)(v) - acceptance of affidavit and confirmations as evidence of genuineness - Deletion of addition of Rs. 10,75,000 treated as gift under section 56(2)(v) - HELD THAT: - The Assessing Officer treated the amount as a gift from a non-HUF member and added it under the provision dealing with gifts. The assessee, however, produced confirmations and an affidavit from the donor stating the amount was an unsecured loan which was subsequently returned. The confirmations and affidavit were placed before the CIT(A), the Assessing Officer was asked for comments but did not make adverse findings, and there is no material to show the affidavit's contents to be false. On the totality of facts and absence of Revenue controversion, the Tribunal accepts the assessee's explanation that the amount was a loan and not a gift. [Paras 15]

Addition of Rs. 10,75,000 is deleted and the ground of appeal is allowed.

Final Conclusion: The Revenue's appeal is dismissed as withdrawn; the assessee's appeal is allowed by deleting the additions on both issues and the assessment is modified accordingly.

Disallowance of expenses - ad-hoc disallowance - verification of supporting bills - proof of payment by cheque - presumption of bogus payments - allowability of business expenses

Disallowance of expenses - ad-hoc disallowance - verification of supporting bills - proof of payment by cheque - Whether the ad-hoc disallowance made in respect of material purchase should be sustained. - HELD THAT: - The Assessing Officer made a 20% ad-hoc disallowance of material purchase expenditure on account of defects in bills (missing owner/business name, address, serial numbers and lack of evidence of transportation). The CIT(A) reduced the disallowance to 10%. Before the Tribunal the assessee produced a summary showing supplier details, bill numbers, material, amount and quantity and demonstrated that payments were made by cheque. Revenue did not produce evidence contradicting payment by cheque and proceeded on presumption only. Considering these facts and the acceptance that materials were essential for development, the Tribunal held that mere infirmities in bills, without any evidence of payments being fictitious or not made, do not justify an ad-hoc disallowance and deleted the disallowance confirmed by the CIT(A). [Paras 8]

Disallowance in respect of material purchase deleted.

Disallowance of expenses - ad-hoc disallowance - presumption of bogus payments - allowability of business expenses - Whether the disallowance of labour charges should be interfered with. - HELD THAT: - The Assessing Officer disallowed 20% of certain labour payments after noting that many labour pay-rolls were unsigned or lacked left thumb impressions. The CIT(A) upheld the disallowance. Before the Tribunal the assessee did not point out any specific infirmity in the CIT(A)'s findings or place additional evidence to rebut the material shortcomings in the labour pay-rolls. In the absence of any challenge to the appellate finding, the Tribunal found no reason to interfere with the CIT(A)'s confirmation of the disallowance. [Paras 8]

Disallowance in respect of labour charges upheld.

Final Conclusion: The appeal is partly allowed: the ad-hoc disallowance in respect of material purchases is deleted, while the disallowance of labour charges is sustained.

Penalty under section 158BFA(2) - addition on account of undisclosed investment - search and seizure evidence (hundies) - evidentiary burden to prove genuineness of seized documents

Penalty under section 158BFA(2) - addition on account of undisclosed investment - search and seizure evidence (hundies) - evidentiary burden to prove genuineness of seized documents - Validity of penalty of Rs. 90,000 levied under section 158BFA(2) on addition of Rs. 1,50,000 representing hundies seized during search - HELD THAT: - A search at the assessee's residence yielded hundies totalling Rs. 1,50,000 which the authorities treated as unaccounted/undisclosed investment and added to the assessee's income. The assessee failed to rebut the factual findings recorded by the authorities and could not produce evidence before the appellate fora to show that the hundies were kept merely as guarantees by the absconding broker. On these facts the Tribunal's confirmation of the addition stands upheld and the imposition of penalty under section 158BFA(2) consequent to the addition is legally justified. The Tribunal therefore confirmed the penalty levied by the assessing officer. [Paras 3, 5]

Penalty of Rs. 90,000 under section 158BFA(2) confirmed; ground of appeal dismissed.

Final Conclusion: The appeal is dismissed; the penalty of Rs. 90,000 imposed under section 158BFA(2) on the addition of Rs. 1,50,000 (hundies seized during search) is confirmed.

Deduction under section 43B of the Income-tax Act - non-obstante clause of section 43B - mercantile system of accounting - state levy / Local Body Tax (LBT)

Deduction under section 43B of the Income-tax Act - mercantile system of accounting - state levy / Local Body Tax (LBT) - non-obstante clause of section 43B - Assessee entitled to deduction of Local Body Tax paid during the year though relating to a prior period, under section 43B for Assessment Year 2015-16. - HELD THAT: - The Tribunal applied the express non obstante provision of section 43B which permits deduction of sums payable by way of tax, duty, cess or fees in the year in which they are actually paid, irrespective of the previous year in which the liability was incurred, subject to the method of accounting regularly employed. Although the assessee followed the mercantile system and the LBT would normally be chargeable in the preceding year, no charge was created then because payment was not made. The payment was made in the year under consideration to the State authority and therefore, being a state levy covered by section 43B, the amount paid in the year is allowable as deduction in that year. The orders of the Assessing Officer and the CIT(A) denying the claim because the amount was not shown as payable in the earlier year were held contrary to the statutory provision. The Tribunal also distinguished the decision relied upon by the Revenue (Deepak Nitrite Ltd.) as involving interest/penalty facts and a different enquiry in that case, and found it inapplicable to the present facts. [Paras 9, 10, 11]

Appeal allowed; deduction under section 43B of the Act granted for the LBT of Rs. 43,73,913/- paid in the year though relating to prior period.

Final Conclusion: The Tribunal allowed the appeal and held that the LBT paid during the year though relating to prior periods is deductible in the year of payment under section 43B for Assessment Year 2015-16, reversing the findings of the Assessing Officer and the CIT(A).

Stay of demand - conditional stay - deposit as precondition for stay - prima facie case - balance of convenience - rejection of books of account - rectification/appeal effect - early hearing of appeal

Stay of demand - conditional stay - deposit as precondition for stay - prima facie case - balance of convenience - early hearing of appeal - Grant of stay of collection of outstanding tax demand pending disposal of the appeal, on specified conditions. - HELD THAT: - The Tribunal, without adjudicating the merits, found that the assessee has a prima facie case and that the balance of convenience favours grant of relief. The Rectification Order dated 27.06.2017 (after giving appeal effect) reduced the net demand and the assessee had already deposited 15% of that demand; the assessee offered an additional deposit of Rs. 15 lakhs which would increase the aggregate deposit. The assessee's principal contention that substantial addition arose from rejection of books of account under the relevant provision without pointing to any specific defect was noted. The Revenue raised no objection to an early hearing and sought a higher deposit. Weighing these factors, the Tribunal stayed the outstanding demand for a limited period (six months or till disposal of the appeal, whichever is earlier) subject to the condition that the assessee deposits Rs. 15 lakhs within 10 days, and directed an early hearing of the appeal on the specified date while restricting unnecessary adjournments and mandating filing of paper book as per rules. [Paras 5]

Stay of the outstanding demand granted for six months or till disposal of the appeal, whichever earlier, subject to deposit of Rs. 15 lakhs within 10 days; appeal to be listed for early hearing on 09.05.2019 with directions against unnecessary adjournments and for filing paper book as per rules.

Final Conclusion: Stay application allowed: collection of the outstanding demand for A.Y. 2014-2015 is stayed for six months or until disposal of the appeal, subject to the assessee depositing Rs. 15 lakhs within 10 days and complying with directions for early hearing and procedural requirements.

Penalty under section 271(1)(b) - Compliance with notice under section 142(1) - Burden on Department to prove non-compliance - Deletion of penalty for established compliance

Penalty under section 271(1)(b) - Compliance with notice under section 142(1) - Burden on Department to prove non-compliance - Whether penalty under section 271(1)(b) could be sustained where the assessee had complied with notices issued under section 142(1). - HELD THAT: - The Tribunal examined the assessee's paper book and found a stamped and signed reply dated 19/10/2016 to the notice dated 07/10/2016, which the Department did not controvert. The Assessing Officer had noted subsequent notices dated 31/10/2016 and 08/11/2016 and recorded non-compliance, but the record showed that the assessee filed a reply on 09/11/2016 and furnished an explanation on 16/11/2016, both of which the AO himself admitted. Section 271(1)(b) is attracted only upon failure to comply with a notice such as one under section 142(1); where compliance is established on the record and the Department fails to show otherwise, the statutory basis for levy of penalty is absent. Applying these findings, the Tribunal held that penalty was uncalled for and ordered its cancellation. [Paras 3, 4, 5]

Penalty under section 271(1)(b) deleted as the assessee had complied with the notices under section 142(1) and the Department failed to demonstrate non-compliance.

Final Conclusion: All seven appeals are allowed and the penalties imposed under section 271(1)(b) are deleted for the assessment years 2009-10 to 2015-16.

Penalty under section 271(1)(c) for concealment or for furnishing inaccurate particulars of income - specificity of show cause notice - principles of natural justice - void ab initio - quasi criminal character of penalty proceedings

Penalty under section 271(1)(c) for concealment or for furnishing inaccurate particulars of income - specificity of show cause notice - principles of natural justice - void ab initio - quasi criminal character of penalty proceedings - Validity of the show cause notice and consequent penalty under section 271(1)(c) where the notice did not specify whether penalty was for concealment of income or for furnishing inaccurate particulars of income. - HELD THAT: - The Tribunal found that the show cause notice failed to specify the limb of section 271(1)(c) under which penalty proceedings were initiated - i.e., whether for concealment of income or for furnishing inaccurate particulars. The authority proposing penalty must be certain as to the basis of the charge and the notice must reflect that specific reason so the assessee can frame a defence; this requirement is rooted in the principles of natural justice. The Tribunal, relying upon established precedent and recognising the quasi criminal nature of penalty proceedings under section 271(1)(c), held that issuing a generic or non specific printed form that does not strike out the inapplicable limb offends natural justice. A showcause notice which does not specify the precise charge is therefore void ab initio, and any penalty imposed pursuant to such a notice is illegal. Applying this principle to the facts, the Tribunal directed deletion of the penalty. [Paras 5, 6]

Show cause notice held void for want of specificity; penalty under section 271(1)(c) deleted and appeals allowed.

Final Conclusion: The Tribunal allowed the appeals and deleted the penalty because the showcause notice under section 274 read with section 271(1)(c) did not specify whether penalty was for concealment or for furnishing inaccurate particulars of income, rendering the notice void and the consequent penalty illegal.

Exemption under section 54G - shift of industrial undertaking from urban to non-urban area - eligibility conditions for section 54G - time window for investment under section 54G - purpose of section 54G to promote deurbanisation and industrialisation of non-urban areas

Exemption under section 54G - shift of industrial undertaking from urban to non-urban area - eligibility conditions for section 54G - Whether the assessee was entitled to claim exemption under section 54G in A.Y. 2013-14 for the capital gain arising on sale of land when the transfer in the year under consideration was from a non-urban area to another non-urban area. - HELD THAT: - The Tribunal upheld the conclusion of the authorities below that the primary condition for claiming exemption under section 54G is that the capital asset transferred must be used for the business of an industrial undertaking situated in an urban area and the transfer must be effected in the course of, or in consequence of, shifting that industrial undertaking to a non-urban area. The assessee had earlier claimed and obtained exemption in A.Y. 2012-13 in respect of the original shift from the urban location to a non-urban site. In A.Y. 2013-14 the gain arose from the sale of an asset situated in a non-urban area and the reinvestment was into another non-urban site; therefore the transfer in the year under consideration was from non-urban to non-urban and did not satisfy the statutory precondition of an urban-to-non-urban shift. The contention that the shifting was a continuous process was rejected because the earlier year's transaction had already been treated as the urban-to-non-urban shift and exemption had been availed. Accordingly section 54G was not applicable to the gain in A.Y. 2013-14. [Paras 5, 6]

The Tribunal affirmed the findings of the CIT(A) and the Assessing Officer that exemption under section 54G was not admissible in A.Y. 2013-14 since the transfer was from a non-urban area to another non-urban area; the appeal is dismissed.

Final Conclusion: The appeal is dismissed; the order of the CIT(A) upholding the Assessing Officer's denial of exemption under section 54G for A.Y. 2013-14 is affirmed.

Provisional release of goods pending adjudication - deposit of bond without sureties for 90% of the enhanced valuation - security for remaining 10% of enhanced valuation - restriction under the Foreign Trade Policy requiring DGFT authorization - assessment and adjudication of detained consignments - classification as hazardous waste under Hazardous and other Wastes (Management & Transboundary Movement) Rules / E Waste Rules

Provisional release of goods pending adjudication - deposit of bond without sureties for 90% of the enhanced valuation - security for remaining 10% of enhanced valuation - restriction under the Foreign Trade Policy requiring DGFT authorization - Release of imported used Digital Multifunction Print & Copying Machines (DMPCM) notwithstanding non production of DGFT authorization, subject to conditions. - HELD THAT: - The Court confined its consideration to the limited prayer for release of the consignments. Section 110A of the Customs Act permits provisional release of seized goods on taking a bond with security pending adjudication. The Supreme Court's decision in Commissioner of Customs v. Athul Automations Pvt. Ltd. (Full Bench) authorised release on deposit of a bond without sureties for 90% of the enhanced valuation, leaving DGFT to decide confiscation or redemption at market value. Applying that precedent, and in cases where the policy itself is not being challenged before the Court, the High Court directed release of the DMPCM consignments upon the petitioner furnishing a bond for 90% of the enhanced valuation and security for the remaining 10%, within the timeline specified. The Division Bench order relied on by petitioners addressed a different factual posture (importers challenging the policy) and therefore its rationale was held not applicable to these petitioners. The respondents remain entitled to proceed with assessment and adjudication under the statutory scheme notwithstanding the provisional release. [Paras 21, 22, 23, 26]

Consignments to be released where the Foreign Trade Policy has not been challenged, upon furnishing a bond for 90% of the enhanced valuation and security for the remaining 10%; authorities may continue with assessment and adjudication in accordance with law.

Final Conclusion: Writ petitions disposed by directing provisional release of the DMPCM consignments (in cases where the policy is not challenged) on the security conditions mandated by the Supreme Court; statutory assessment and adjudication may proceed thereafter.

Rectification of mistake - extended period of limitation - suppression - penalty under section 112 of the Customs Act, 1962 - confiscation - redemption fine - application of precedent in Star Entertainment Pvt Ltd

Rectification of mistake - extended period of limitation - Tribunal erred in recording that the extended period was invoked and in treating submissions based on that premise; whether paragraph 11 of the earlier order required rectification. - HELD THAT: - The record shows the show cause notice did not invoke the extended period and the demand was limited to the normal period of limitation. The Tribunal's order recorded a contrary submission and reached findings premised on invocation of the extended period. That recording was erroneous and required correction. The bench has accordingly amended paragraph 11 to remove the misstatement that the extended period applied to the present facts and to clarify that the decision cited (Star Entertainment Pvt Ltd) was not applicable to the facts before the Tribunal. [Paras 3]

Rectification allowed by amending paragraph 11 to correct the erroneous recording that the extended period was invoked.

Penalty under section 112 of the Customs Act, 1962 - confiscation - redemption fine - application of precedent in Star Entertainment Pvt Ltd - Whether the decision in Star Entertainment Pvt Ltd entitled the appellant to relief from penalty under section 112, and whether the Tribunal erred in not setting aside the penalty where goods were held liable to confiscation. - HELD THAT: - The Tribunal upheld liability to confiscation on the ground that the importer failed to include mandated inclusions in declared value, which rendered the goods liable to confiscation. The enhancement did not arise from rejection of declared value with resort to contemporaneous imports or best judgment that would invoke the extended period and the penal provision considered in Star Entertainment (which arose in the context of extended limitation and section 114A). Since the penalty in Star Entertainment flowed from invocation of extended limitation, that decision is not applicable to goods held liable to confiscation on the present facts. The Tribunal therefore did not err in refusing to set aside the penalty; however, the redemption fine was set aside on the ground of non-availability of goods. [Paras 4]

The Tribunal's refusal to set aside the penalty is sustained (confiscation upheld); Star Entertainment is inapplicable to these facts and the redemption fine is set aside for non-availability of goods.

Final Conclusion: Applications for rectification are allowed to amend paragraph 11 to correct the erroneous recording regarding invocation of the extended period; the Tribunal's substantive findings upholding confiscation are sustained, Star Entertainment is held inapplicable to the present facts for resisting penalty under section 112, and the redemption fine is set aside for non-availability of goods.

Restoration of appeal - ex parte disposal - adequacy of notice - duty to intimate change of address - obligation to secure legal representation - application of JK Synthetics principle - principles of natural justice

Restoration of appeal - ex parte disposal - adequacy of notice - duty to intimate change of address - application of JK Synthetics principle - principles of natural justice - Whether the applications for restoration of appeals should be allowed where the appeals were disposed of ex parte and the appellants contend insufficiency of notice. - HELD THAT: - The Tribunal found that notices had, in fact, been issued and that the appeals were disposed of ex parte with detailed findings. The appellants failed to inform the Registry of their change of address and did not ensure legal representation for a prolonged period. While JK Synthetics acknowledges wide discretionary power to restore appeals in order to further justice, it requires the Tribunal to consider the facts and circumstances. Applying that principle, the Tribunal held that the appellants' lack of diligence in protecting their own interests - failing to intimate address change and to secure counsel - disentitles them to restoration. The plea advanced was effectively for a second chance at representation rather than for a denial of notice or hearing; principles of natural justice do not mandate restoration on that basis. [Paras 5, 6, 7]

Applications for restoration of the appeals are rejected.

Final Conclusion: The Tribunal refused restoration: notices were issued, appellants were negligent in not intimating change of address and in failing to secure representation, and under the relevant discretionary principles (including JK Synthetics) the applications for restoration are dismissed.

Competence to issue show cause notice - jurisdictional validity of notices issued by Directorate of Revenue Intelligence - remand for fresh adjudication pending resolution of jurisdictional doubt - finality of litigation and doctrine of merger

Competence to issue show cause notice - jurisdictional validity of notices issued by Directorate of Revenue Intelligence - remand for fresh adjudication pending resolution of jurisdictional doubt - Validity of the show cause notice issued by the Additional Director General, Directorate of Revenue Intelligence, and the appropriate course pending authoritative resolution of that question. - HELD THAT: - The Tribunal found that the show cause notice impugned in the proceedings was issued by the Additional Director General, DRI, an officer whose competence to issue such notices has been doubted in decisions of several High Courts (notably the Delhi High Court in Mangali Impex) and is the subject of proceedings before the Supreme Court. In view of the divergent judicial views at High Court level and consequent remedial practice of this Tribunal and other benches to avoid final disposal where competence is in dispute, the Tribunal concluded that it is appropriate to set aside the adjudication order and remand the matter to the original adjudicating authority. The Tribunal observed that deciding the merits while the foundational question of jurisdiction remains sub judice would be inappropriate; it also noted considerations of finality of litigation and the doctrine of merger deployed by some courts but held that the better course in these circumstances is remand so that the question of officers' competence can be determined and, thereafter, the matter decided afresh on merits if necessary.

Impugned order set aside and matter remanded to the adjudicating authority to be decided afresh after the question of jurisdiction of DRI officers to issue show cause notices is finally settled.

Final Conclusion: The Tribunal set aside the order-in-original and remanded the case to the adjudicating authority for fresh adjudication after the authoritative determination of whether officers of the Directorate of Revenue Intelligence possess competence to issue the show cause notice; disposal on merits is deferred pending resolution of that jurisdictional question.

Strict interpretation of exemption notification - pre-importation eligibility - post-importation conditions - utilisation for construction of roads - confiscation under section 111 of Customs Act, 1962 - recovery under section 28(1) read with section 125(2) of Customs Act, 1962 - penalty under section 112 of Customs Act, 1962

Pre-importation eligibility - strict interpretation of exemption notification - Whether the appellant had threshold eligibility to avail the exemption notification at the time of importation - HELD THAT: - The Tribunal found that the appellant had been awarded an eligible contract and therefore satisfied the threshold or pre-importation condition for availing the exemption. The notification's structure separates threshold entitlement from post-importation performance obligations; strict construction applies but must be read in the two distinct contexts of eligibility and continuing use. The pre-importation requirement does not mandate exclusive employment of the equipment on the originally intended project once eligibility is established at import. Accordingly, the appellants' entitlement at the threshold could not be denied merely because the equipment was later deployed elsewhere owing to non-availability of the original site. [Paras 5, 6]

Threshold eligibility to avail the exemption was established and cannot be denied on the facts.

Post-importation conditions - utilisation for construction of roads - confiscation under section 111 of Customs Act, 1962 - recovery under section 28(1) read with section 125(2) of Customs Act, 1962 - penalty under section 112 of Customs Act, 1962 - Whether deployment of the imported equipment on rail over bridge projects (and similar works) violated the post-importation conditions so as to justify confiscation, recovery and penalty - HELD THAT: - The Tribunal held that post-importation use must be for road development projects or other projects undertaken by the specified instruments; it need not be exclusively on the particular contract that conferred threshold eligibility. The equipment was deployed on rail over bridge works, which the Tribunal characterised as integral to road connectivity (connecting two sections of a road across a railway) and therefore within the scope of utilisation for construction of roads. Since the post-importation deployment involved projects that furthered road connectivity, there was no breach of the continuing obligations that would attract confiscation, recovery or penalty under the cited provisions. [Paras 7, 8]

Deployment on rail over bridge projects did not breach the post-importation conditions; confiscation, recovery and penalties based on such breach were not sustainable.

Final Conclusion: The impugned order of confiscation, recovery and imposition of penalties was set aside; the appeals were allowed as the appellants satisfied threshold eligibility and their deployment of the imported equipment on rail over bridge works did not violate the post-importation conditions of the exemption notification.

Bona fide dispute - winding up petition - final bill certification by company officers - use of winding-up as a debt recovery tool - provisional liquidation - appointment and powers of Official Liquidator - suspension of winding-up order on payment

Final bill certification by company officers - debt liability established by certified accounts - Validity of the certified running/final bill and quantum of debt payable to the petitioner - HELD THAT: - The court examined the 17th RA-cum-final bill and accompanying documents and found that the forwarding letter dated 21.06.2013 expressly recorded that the works were 100% completed and the RA-cum-final bill was certified by senior officers of respondent No.1 company, including the Site Billing Engineer and the Vice-President (Technical). The existence of WCT challans and TDS certificates issued by respondent No.1 further corroborated acceptance of the final bill. Contradictory communications relied upon by the respondent, including a later email by the same Vice-President (Technical), were treated as afterthoughts and inconsistent with the earlier certifications. On this basis the court held that the certified bill was validly issued and computed the outstanding dues (including security deposit) as due to the petitioner. [Paras 8, 9, 10, 11, 13]

The certificate dated 21.06.2013 is valid; the respondent-company is liable to pay the outstanding dues as certified (total outstanding dues determined in the order).

Bona fide dispute - use of winding-up as a debt recovery tool - Whether the respondent-company raised a bona fide dispute sufficient to defeat the winding-up petition - HELD THAT: - Applying the established principle that a winding-up petition should be dismissed if the company shows a bona fide and substantial dispute as to the debt, the court reviewed the respondent's contentions that the petitioner abandoned work and caused delay. The court found those defences to be spurious: the respondent's reliance on later contradictory communications and on an unrelated work order for different material were held to be inadequate and not a genuine substantial dispute. The court concluded that the respondent failed to demonstrate a bona fide dispute on substantial grounds. [Paras 10, 11, 12, 14, 15]

No bona fide dispute has been shown; the petition is not an abuse and may be admitted.

Provisional liquidation - appointment and powers of Official Liquidator - suspension of winding-up order on payment - Relief to be granted: appointment of Provisional Liquidator, directions to Official Liquidator, and conditional suspension of the appointment - HELD THAT: - The court admitted the petition and appointed the Official Liquidator as Provisional Liquidator with directions to take possession of assets, books and records, prepare inventory, seal premises, value assets and seize bank accounts, and to publish citations. The court, however, suspended the operation of that appointment for four weeks to enable the respondent-company to pay the certified dues. The suspension was conditional: if the respondent failed to pay the certified amount together with simple interest at the rate directed (calculated from the date of the legal notice), the appointment of the Official Liquidator would stand operative. The petitioner was also directed to deposit a specified sum towards publication costs with the Official Liquidator. [Paras 16, 17, 18]

Official Liquidator appointed Provisional Liquidator with specified powers; appointment suspended for four weeks on condition that respondent pays the certified dues with interest and petitioner deposits publication costs as directed.

Final Conclusion: Winding-up petition admitted: the certified final bill was held valid and the respondent failed to establish a bona fide dispute; the Official Liquidator was appointed as Provisional Liquidator with specified powers, subject to a four week suspension of that appointment on payment of the certified dues with simple interest and deposit of publication costs.

Compounding of offences - delay in filing statutory returns and forms - quantum of fine and judicial discretion in compounding - leniency in compounding - effect of death of applicant on compounding order - transparency and compliance obligations under the Companies Act

Delay in filing statutory returns and forms - quantum of fine and judicial discretion in compounding - leniency in compounding - Whether the quantum of fine imposed by NCLT for delayed filing of statutory forms was excessive and liable to be reduced. - HELD THAT: - The Tribunal examined the calculations made by the NCLT and found no illegality in the method or quantum imposed; the learned counsel for the appellants conceded that the calculations and the number of days were within parameters of the relevant provisions. The NCLT had already exercised leniency in arriving at the fines. The Court emphasised that delays in compliance of statutory return provisions undermine transparency and can facilitate misconduct, and that while leniency may be shown on facts, it must not be so great as to dilute the deterrent effect of the law. On this footing the appellate court declined to interfere with the quantum imposed by the NCLT. [Paras 6, 8, 9]

No interference with the NCLT's assessment of the fine; the quantum stands.

Compounding of offences - transparency and compliance obligations under the Companies Act - Whether any legal error arose from applying the relevant provisions (old Act/new Act) in calculating and imposing compounding fines for the defaults complained of. - HELD THAT: - The appellants contended that penalties applicable under the earlier statute should have been applied, and submitted facts concerning appointment dates and conversion of the company. The appellate court reviewed the impugned orders and the provisions applied by the NCLT and found no dispute as to the calculations; the NCLT's application of the relevant provisions and its exercise of discretion in compounding did not disclose illegality warranting interference. [Paras 4, 8]

The NCLT's application of the statutory provisions in calculating the compounding fines is upheld.

Effect of death of applicant on compounding order - Whether the death of one of the applicants (Ishwarlal Jariwala) after the impugned order mandates reduction or alteration of the fine imposed on him. - HELD THAT: - The court noted that the death occurred after the NCLT's order was passed and that the present appeal is not filed by the legal representatives of the deceased. No submissions or legal basis were shown to justify interference with the fine imposed on the deceased merely because death occurred post-order. Accordingly, the appellate court found no ground to alter the order as regards the deceased. [Paras 2, 10]

No reduction or modification of the fine imposed on the deceased applicant; no interference on this ground.

Final Conclusion: Both appeals are dismissed; the impugned NCLT orders upholding and quantifying the compounding fines are affirmed and no costs are awarded.

Admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Corporate Insolvency Resolution Process - Financial creditor and financial debt - Existence of default - Completeness of application under Rule 4 / Form I - Appointment of Interim Resolution Professional - Moratorium under Section 14 - Effect of Section 238 overriding other laws - Authority of bank's power of attorney to institute proceedings - Non bar by pendency of SARFAESI/DRT proceedings - Condition precedent for issuance of NOC under sanction terms

Jurisdiction of adjudicating authority - Adjudicating Authority has territorial jurisdiction over the corporate debtor and is the appropriate forum to entertain the Section 7 application. - HELD THAT: - The corporate debtor's registered office is located in New Delhi and, therefore, this Tribunal having territorial jurisdiction over NCT of Delhi is the Adjudicating Authority for initiation of Corporate Insolvency Resolution Process under Section 60(1) of the Code. The tribunal records jurisdictional competence accordingly. [Paras 2]

Tribunal has territorial jurisdiction to adjudicate the Section 7 petition.

Financial creditor and financial debt - Existence of default - Applicant bank is a financial creditor and the claim falls within the definition of financial debt; the corporate debtor has committed default. - HELD THAT: - The bank sanctioned and disbursed term loans to the corporate debtor under loan agreements, with repayment obligations and interest, which constitute 'financial debt' for consideration of time value of money. Documentary evidence including executed loan agreements, security documents, balance confirmations and certified statements of account show disbursement, utilization and non payment. The materials on record sufficiently demonstrate existence of default for the purposes of admission under Section 7. [Paras 51, 55, 56, 57, 58]

Applicant qualifies as financial creditor, the debt is financial debt and default is established.

Completeness of application under Rule 4 / Form I - The Section 7 application is complete and satisfies statutory requisites including absence of disciplinary proceeding against the proposed IRP. - HELD THAT: - A review of Form I filed under Section 7 read with Rule 4 shows the application is complete and in compliance with requirements. The proposed Interim Resolution Professional made necessary disclosures and declared no disciplinary proceedings are pending. The tribunal applies the summary test as directed by precedent and is satisfied on completeness and eligibility of the proposed IRP. [Paras 52, 60]

Application is complete and meets the formal requirements for admission under Section 7.

Admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Mobilox principle (summary satisfaction of default and completeness) - The Section 7 petition is admitted under Section 7(5)(a) of the Code. - HELD THAT: - Applying the governing principle that the adjudicating authority need only be satisfied as to occurrence of default and completeness of application (Mobilox), and having found documentary proof of financial debt, default, a complete application and no pending disciplinary proceedings against the proposed IRP, the tribunal admits the application under Section 7(5)(a). [Paras 52, 53, 59, 60, 61]

Section 7 application is admitted.

Appointment of Interim Resolution Professional - Ms. Anju Agarwal is appointed as Interim Resolution Professional. - HELD THAT: - The proposed candidate executed Form 2, made required disclosures and declared absence of disciplinary proceedings; she satisfies the requirement of Section 7(3)(b). On admission of the application, she is appointed as Interim Resolution Professional to discharge duties under the Code and Regulations. [Paras 4, 62]

Ms. Anju Agarwal appointed as Interim Resolution Professional.

Moratorium under Section 14 - Moratorium is declared and the statutory prohibitions under Section 14 are imposed. - HELD THAT: - Upon admission, the tribunal directs public announcement and declares moratorium in terms of Section 14. The order specifies prohibitions on institution or continuation of suits, transfer or disposal of assets by the corporate debtor, enforcement of security interests (including SARFAESI actions) and recovery of property from occupation by the corporate debtor, subject to statutory exceptions and amendments. [Paras 63, 64, 65]

Statutory moratorium is imposed on the corporate debtor in accordance with Section 14.

Non bar by pendency of SARFAESI/DRT proceedings - Effect of Section 238 overriding other laws - Pendency of proceedings under SARFAESI Act and before DRT does not bar initiation or admission of Section 7 petition. - HELD THAT: - The tribunal notes that the Code is a complete code and, by virtue of Section 238, has overriding effect; pendency of proceedings under SARFAESI and DRT cannot be relied upon to stall initiation of CIRP where the Section 7 application is otherwise complete and default established. Authorities are cited to support the proposition that pendency of other forum proceedings is not a ground to deny admission. [Paras 36, 37, 38, 39, 40]

Pendency of SARFAESI/DRT proceedings does not preclude admission of the Section 7 petition.

Authority of bank's power of attorney to institute proceedings - Specific power of attorney executed by the bank authorizing Shri Rajesh Kumar to act on behalf of the bank is sufficient to maintain the Section 7 petition. - HELD THAT: - The bank produced a specific power of attorney dated 11.08.2017 executed by three General Managers, stating it was pursuant to a board resolution. Given the incumbent's senior position (Asst. General Manager, Scale V) and the power of attorney, the tribunal finds Shri Rajesh Kumar was authorized and competent to file the present application on behalf of the bank, and the objection to authorization is without merit. [Paras 3, 25, 41, 42, 44]

Power of attorney authorising the bank's officer is valid and the application is maintainable.

Condition precedent for issuance of NOC under sanction terms - The corporate debtor's contention that denial of NOC prevented sales is unsustainable where preconditions for NOC under the sanction terms were not complied with by the corporate debtor. - HELD THAT: - The sanction letter prescribed specific conditions (use of escrow account, receipt of sale consideration into escrow, maintenance of stipulated FACR) for issuance of provisional/final NOC. The bank placed evidence that an escrow account was opened and that the corporate debtor did not fulfil the preconditions or request NOC in compliance with the agreed terms. The tribunal finds the corporate debtor's plea that lack of NOC caused failure of sales to be unsupported where the contractual prerequisites were unmet. [Paras 30, 31, 32, 33, 34]

Objection based on non issuance of NOC is rejected as preconditions for NOC were not fulfilled by the corporate debtor.

Final Conclusion: The Section 7 petition filed by the Union Bank of India is admitted; Ms. Anju Agarwal is appointed as Interim Resolution Professional; public announcement to be made and moratorium imposed. Objections regarding jurisdiction, authorization, pendency of SARFAESI/DRT proceedings and non issuance of NOC are rejected in accordance with the findings recorded.

Export of services - Place of provision of services / location of service recipient - International inbound roaming services - Service recipient - Rule 3(iii) of Export of Service Rules (place of recipient test) - Place of Provision of Services Rules, 2012 - location of service recipient test - Master Circular supersession of earlier circulars - Notification No. 36/2007 - temporal exemption and implication of taxability

International inbound roaming services - Service recipient - Export of services - Rule 3(iii) of Export of Service Rules (place of recipient test) - Place of Provision of Services Rules, 2012 - location of service recipient test - Master Circular supersession of earlier circulars - Whether international inbound roaming services provided by the appellant to foreign telecommunication operators for the periods 1.4.2011 to 30.6.2012 and 1.10.2013 to 30.9.2014 are exigible to service tax or qualify as export of services. - HELD THAT: - The Tribunal found that the contractual arrangement for international roaming is between the appellant and the foreign telecommunication operator (FTO), and not with the inbound roamer; accordingly the FTO is the service recipient. Applying Rule 3(iii) of the Export of Service Rules for the period prior to 01.07.2012 and Rule 3 of the Place of Provision of Services Rules, 2012 for the subsequent period, the location of the service recipient (being outside India) determines that the transaction is an export of services. The Tribunal rejected reliance on Circular No. 90/1/2007 by noting that the Master Circular dated 23.08.2007 expressly supersedes earlier circulars and clarifications, and the conclusion in Verizon Communication India Pvt. Ltd. that the master circular supersedes earlier circulars supports this view. The Tribunal also noted that the revisionary authority had earlier granted refunds for identical services up to 31.3.2011, which undermines the department's contention that the same services for later periods are taxable. On these bases the Tribunal concluded that the services in dispute are not exigible to service tax. [Paras 5, 6]

The services are export of services and not exigible to service tax; the impugned orders are set aside and the appeals are allowed with consequential relief as per law.

Final Conclusion: Appeals allowed; impugned demands, interest and penalties set aside as the international inbound roaming services in the specified periods are held to be exports of services.

Limitation and extended period for recovery of service tax - Suppression of facts with intent to evade tax - Service tax on Maintenance or Repair (including reconditioning) - Abatement benefit and conditions of Notification No.12/2003-ST - Service tax on Goods Transport Agency (GTA) services and liability of service recipient

Limitation and extended period for recovery of service tax - Suppression of facts with intent to evade tax - Whether the extended period for demand under the proviso to sub section (1) of Section 73 could be invoked in the absence of established suppression with intent to evade, thereby rendering the show cause notice time barred. - HELD THAT: - The adjudicating authority itself recorded that there existed confusion regarding exemption of the services rendered and found that the assessee had not deliberately evaded payment of tax and there was no malafide on the part of the assessee (recorded in para 43 of the Order in Original). The Tribunal observed that this finding is irreconcilable with the subsequent conclusion that the proviso to sub section (1) of Section 73 was invocable. The department failed to establish any positive act of suppression or mis statement by the appellant with intent to evade tax; mere non filing of returns or non registration, or bonafide belief in exemption, do not amount to suppression warranting extended limitation. In view of the adjudicatory finding of confusion and absence of malafide, and in light of the authorities applying the principle that extended period requires positive suppression, the invocation of the extended period was held to be unjustified and the demand to be time barred. [Paras 5]

The invocation of the extended period is not sustainable; the show cause notice is time barred and the demand is set aside.

Final Conclusion: The appeal is allowed; the confirmed demand is held time barred and set aside with consequential relief, if any, as per law.

Rectification of mistake - error apparent on the face of the record - recall of order and re-hearing - levy of service tax under Business Auxiliary Services on overriding commission - disallowance of CENVAT Credit on input services

Rectification of mistake - error apparent on the face of the record - recall of order and re-hearing - Whether the impugned Final Order contains patent errors requiring rectification and whether the Tribunal should recall the Final Order and re-hear the appeal. - HELD THAT: - The Tribunal found that the impugned Final Order had incorrectly recorded facts by narrating the facts of another case in paragraphs 1-3, thereby incorporating patent errors on the face of the record. Both parties agreed that the recorded facts did not correspond to the actual controversy before the Tribunal. Having identified these patent errors and noting that an identical recording error had been rectified in a contemporaneous matter, the Tribunal concluded that the proper remedy was to recall the Final Order and direct a re-hearing so that the factual narration and consequent reasoning could be corrected in toto. The ROM applications were therefore disposed of by allowing rectification through recall and re-hearing of the appeal. [Paras 2, 6, 7]

Impugned Final Order recalled; ROM applications disposed of; Registry directed to list the appeal for re-hearing.

Levy of service tax under Business Auxiliary Services on overriding commission - disallowance of CENVAT Credit on input services - Whether the substantive controversies concerning levy of service tax under BAS on overriding commission and disallowance of CENVAT Credit on various input services are to be finally adjudicated in the impugned order or require fresh consideration on re-hearing. - HELD THAT: - The Tribunal observed that the core substantive issues in the appeal related to (a) demand of service tax under Business Auxiliary Services on overriding commission received by the appellant as General Sales Agent, and (b) disallowance of CENVAT Credit on specified input services. Although the Tribunal noted that the BAS issue had been addressed in a prior decision relied upon by the appellant, the Final Order under challenge had misrecorded facts and discussed a different set of disputes. Because the factual misrecitals are integral to the adjudication of the stated tax issues, the Tribunal did not decide those substantive controversies on merits in the impugned order and instead remanded the appeal for re-hearing so that the BAS levy and CENVAT credit issues could be correctly considered on the proper factual matrix. [Paras 5, 6, 7]

Substantive issues concerning BAS levy on overriding commission and disallowance of CENVAT Credit were not finally adjudicated in the impugned order and are remanded for fresh consideration on re-hearing.

Final Conclusion: The Tribunal found patent factual errors in the impugned Final Order, recalled that order, disposed of the ROM applications, and directed that the appeal be re-heard so that the substantive issues (BAS levy on overriding commission and disallowance of CENVAT Credit) may be considered afresh on the correct facts.

Service tax liability on lease rentals for storage tanks - Storage and warehousing services - Right to use/lease of containers - Control over goods as test for taxability - Precedent and follow-on application of tribunal ratio

Service tax liability on lease rentals for storage tanks - Control over goods as test for taxability - Storage and warehousing services - Lease rentals charged for supply and installation of storage tanks (bullets) installed at the buyer's premises are not exigible to service tax as storage and warehousing services. - HELD THAT: - The Tribunal applied its earlier decision in the appellant's own case and the reasoning in Inox Air Products, holding that the transaction is a lease/right to use of the containers installed at the customer's premises. The contract placed responsibility on the customer to effect connections and the appellant had no control over the LPG stored in the bullets once transferred; consequently the appellant was not performing storage and warehousing services. On this determinative factual and legal basis the demand for service tax was held unsustainable and the impugned order was set aside.

Impugned order set aside; appeal allowed and demand cancelled with consequential relief, if any.

Final Conclusion: The Tribunal followed its prior ratio and Inox Air Products to hold that lease of storage bullets installed at the buyer's premises, where the lessee has control of the goods, does not amount to taxable storage and warehousing service; the demand was quashed and the appeal allowed with consequential relief.

Refund claim under Section 11B of the Central Excise Act - one year limitation for refund - Mafatlal principle that refund claims must be adjudicated under the respective enactment - applicability of Central Excise refund machinery to Service Tax via Section 83 of the Finance Act, 1994 - double payment and its characterisation for limitation purposes - surrender of licence and its bearing on refund claims

Refund claim under Section 11B of the Central Excise Act - one year limitation for refund - Mafatlal principle that refund claims must be adjudicated under the respective enactment - Refund claim filed in 2013 for excess Service Tax paid for the quarter January 2009 to March 2009 is barred by limitation under Section 11B of the Central Excise Act. - HELD THAT: - The Tribunal applied the nine-judge pronouncement in Mafatlal Industries Ltd., holding that all claims of refund (except those founded on a declaration of unconstitutionality of the charging provision) must be preferred and adjudicated under the procedure provided in the respective enactment. In the present case Service Tax refund falls to be adjudicated under Section 11B of the Central Excise Act (made applicable to Service Tax by Section 83 of the Finance Act, 1994), which prescribes a one-year time limit to prefer refund claims. The refund application filed in January 2013, in respect of the quarter January-March 2009, was therefore time-barred and not maintainable despite the appellant's contention of inadvertent double payment or factory closure/surrender of licence. [Paras 5]

Refund claim is time-barred under Section 11B and the rejection of the refund is upheld.

Double payment and its characterisation for limitation purposes - applicability of Central Excise refund machinery to Service Tax via Section 83 of the Finance Act, 1994 - Authoritative decisions relied on by the appellant that treat double/inadvertent payment differently do not assist where the statutory refund route and limitation under Section 11B govern Service Tax refunds. - HELD THAT: - Though the appellant relied on several decisions contending that double payments made inadvertently should not attract the one-year limitation applicable to duty refunds, the Tribunal held that those precedents are inapplicable in light of the binding Mafatlal principle. Since Service Tax refund claims are to be adjudicated under Section 11B (as applied to Service Tax), the appellant cannot escape the statutory one-year limitation by relying on the cited authorities. Consequently, the appellate forum correctly rejected the refund on limitation grounds. [Paras 3, 5]

The precedents invoked by the appellant do not override the applicability of Section 11B; those authorities do not afford relief from the statutory limitation in this case.

Final Conclusion: The appeal is dismissed and the order of the Commissioner (Appeals), Pune-III rejecting the refund claim is confirmed.

Reimbursable expenses - taxable value of service - remand for verification - mechanical application of Chartered Accountant's certificate - finality of adjudication on merits - reconsideration under the Finance Act, 1994 and rules

Reimbursable expenses - taxable value of service - mechanical application of Chartered Accountant's certificate - reconsideration under the Finance Act, 1994 and rules - Validity of deduction of reimbursable expenses from gross taxable value and adequacy of the adjudicating authority's verification - HELD THAT: - This Tribunal found that its earlier remand required the adjudicating authority to verify the particulars in the charts and, if necessary, call for invoices and supporting evidence to satisfy itself that the expenses were incurred on behalf of clients and therefore qualified as reimbursable. The adjudicating authority instead applied the Chartered Accountant's certificate mechanically and allowed deductions without analysing the nature, correctness or admissibility of the claimed reimbursable expenditures. That approach is contrary to the remand direction. Consequently the Tribunal set aside the impugned order insofar as it computed the demand by relying on the CA certificate without proper verification, and remanded the matter for fresh consideration by ascertaining the nature of the expenses, their correctness and whether they qualify as reimbursable for deduction under the Finance Act, 1994 and the rules framed thereunder; ancillary issues are to be decided in the remand proceedings. [Paras 6, 7]

Impugned computation set aside; matter remanded to adjudicating authority to verify and re-determine admissibility and quantum of reimbursable expenses and thereafter decide ancillary issues.

Finality of adjudication on merits - Whether the liability to service tax under the broadcasting agency service category had attained finality - HELD THAT: - The Tribunal recorded that, on the first round of litigation, the liability to service tax in respect of the broadcasting agency service had been finally determined on merits. Only the computation of demand (in respect of claimed reimbursable expenses) had been remitted for verification. Issues which were decided in favour of the assessee and which the Revenue has not challenged are to remain final and are not to be reopened in the fresh proceedings. [Paras 6, 7]

Liability on merits has attained finality; findings favourable to the assessee not challenged by Revenue shall remain final and shall not be reopened.

Final Conclusion: The appeals are allowed by setting aside the impugned order insofar as the computation of demand based on reimbursable expenses; the matter is remanded to the adjudicating authority for fresh verification and re-computation in accordance with this order, while findings already attained finality and not challenged by Revenue shall remain undisturbed.

Duty-free exemption under Sl. No. 3A of the Notification - evidentiary value of uncorroborated affidavit - limitation for periodical show cause notice - extended period of limitation not invocable where earlier identical adjudication exists - recalculation of duty within normal period of limitation - 'third-time cess' not leviable for purposes of differential duty

Duty-free exemption under Sl. No. 3A of the Notification - evidentiary value of uncorroborated affidavit - Whether the appellants breached the condition for duty-free exemption under Sl. No. 3A by using imported raw materials in goods cleared to DTA and whether the affidavit filed by the appellant suffices to rebut the allegation. - HELD THAT: - The Tribunal found that the exemption at Sl. No. 3A is available only where goods cleared to DTA have been produced or manufactured in India. The Department alleged that the appellants breached this condition by using duty-free imported raw materials in manufacture of goods cleared to DTA. The only material placed by the appellant to rebut this allegation was an affidavit asserting that imported granites were used only in exported goods or transfers to other EOUs. The Tribunal agreed with the Revenue that an affidavit, unsupported by corroborative evidence, lacks sufficient evidentiary value to discharge the burden of proof. Consequently the appeal on merits fails. [Paras 7]

Appeal dismissed on merits for failure to rebut the allegation that Sl. No. 3A condition was breached; affidavit without corroboration held insufficient.

Limitation for periodical show cause notice - extended period of limitation not invocable where earlier identical adjudication exists - recalculation of duty within normal period of limitation - 'third-time cess' not leviable for purposes of differential duty - Whether the demand for the period covered by the Show Cause Notice dated 19.07.2012 (01.12.2008 to 31.10.2011) could be sustained beyond the normal period of limitation given an earlier adjudication for an identical issue, and the consequential treatment of cess while recalculating liability. - HELD THAT: - The Tribunal accepted the appellant's limitation plea, observing that the subject matter was periodical and that an identical issue had already been adjudicated for an earlier period (March 2004 to November 2008). Relying on the principle that where all relevant facts were known at the time of the earlier Show Cause Notice the extended period cannot be invoked subsequently, the Tribunal held the impugned demand sustainable only for the normal period of limitation counted backwards from the date of the Notice. The Tribunal remanded the matter to the adjudicating authority for de novo recalculation of duty liability limited to the normal limitation period and directed that the so-called 'third-time cess' shall not be included in such recalculation, in accordance with the Larger Bench decision relied upon by the parties. [Paras 8, 9]

Demand upheld only for the normal period of limitation; remaining demand set aside. Matter remanded for recalculation within the normal limitation period excluding the 'third-time cess'.

Final Conclusion: Appeal partly allowed: on merits the appellant failed to rebut the allegation of breach of Sl. No. 3A, but the demand could be sustained only for the normal period of limitation (01.12.2008 to 31.10.2011 recalculated backwards from the Notice); remanded for de novo computation of duty for that normal period excluding the 'third-time cess'.

Reliance on specific energy consumption to infer clandestine production - computation of differential duty based on estimated excess production - valuation of goods cleared to related downstream unit under rule 8 - corroboration and cross-examination of statements relied upon in adjudication - requirement of positive evidence of clandestine removal before imposing duty and penalty

Reliance on specific energy consumption to infer clandestine production - computation of differential duty based on estimated excess production - Whether higher than normative electricity consumption alone justified computation of additional production and imposition of differential duty and matching penalty. - HELD THAT: - The adjudicating authority based additional duty on an inference that excess electricity consumption demonstrated manufacture of additional excisable goods. The Tribunal held that the order applied a per unit duty to the so estimated additional production without addressing the indisputable total cost of production nor any positive evidence of unaccounted expenditure or illicit removal. In these circumstances, merely estimating excess production from power consumption, without logical connection to value or evidence of clandestine diversion, is an inadequate foundation for levying differential duty and penalties. The finding that unit cost declared was mis declared lacked logical basis where the total cost of production was not assailed and the declared value remained below the downstream sale price after ordinary adjustments. [Paras 2, 7, 8]

The computation of additional duties solely on the basis of excess electricity consumption was unsustainable and the consequential duty and penalties could not be upheld.

Valuation of goods cleared to related downstream unit under rule 8 - Whether valuation had to follow the valuation methodology applicable to clearances to a related/own unit and whether rule 8 was the proper recourse. - HELD THAT: - The Tribunal noted there was no allegation or evidence of any addition to cost of production beyond that accounted for under the valuation methodology applicable to the declared clearances. The adjudication failed to demonstrate that the assessment under the compounded levy scheme and the net cost basis relied upon were incorrect. Given the absence of attack on total cost of production and no positive finding that valuation under the applicable rules was improper, the impugned exercise of computing additional duty by alternative means was unjustified. [Paras 3, 7, 8]

Valuation and duty liability could not be re computed by reliance on inferred excess production where the declared cost/valuation under the appropriate rule was not displaced by evidence.

Corroboration and cross-examination of statements relied upon in adjudication - requirement of positive evidence of clandestine removal before imposing duty and penalty - Whether the adjudicating authority could sustain its case relying on recovered slips and recorded statements without cross examination or independent corroborative findings of clandestine removal. - HELD THAT: - The Tribunal observed that the authority relied on recovered weighment slips and recorded statements but did not record findings concerning receipt or diversion of the alleged clandestinely manufactured goods at the downstream unit. The appellate court noted guidance that reliance on statements ordinarily requires opportunity for cross examination and that corroborative evidence is necessary where cross examination is not feasible. The absence of findings on diversion or unaccounted expenditure and the failure to validate relied materials by cross examination or adequate corroboration weakened the revenue case. [Paras 6, 8]

The evidence in the form of statements and slips, without corroboration or opportunity for proper testing, was insufficient to sustain allegations of clandestine removal and consequent duties/penalties.

Final Conclusion: The impugned order confirming differential duty and imposing penalties was set aside for lack of sufficient evidentiary basis and logical computation; the appeals were allowed.

Reversal under Rule 6(3) of the Cenvat Credit Rules, 2004 for common inputs/input services used for exempted services - High-sea sale and territorial jurisdiction of Central Excise/Finance Act, 1994 - Classification of high-sea sales as trading/exempted service under Rule 2(e) of CCR, 2004 - Penalty for wrongful availing of Cenvat credit

Reversal under Rule 6(3) of the Cenvat Credit Rules, 2004 for common inputs/input services used for exempted services - High-sea sale and territorial jurisdiction of Central Excise/Finance Act, 1994 - Whether demand for reversal of Cenvat credit (and interest and penalty) could be sustained on the ground that common inputs/input services were used partly for high-sea sales treated as trading/exempted service. - HELD THAT: - The Tribunal examined whether high-sea sales fall within the territorial jurisdiction of Central Excise/Finance Act, 1994 and thereby attract the obligation to reverse credit under Rule 6(3) CCR, 2004. It was held that high-sea sales occur outside the territorial waters of India, with the sale transaction commencing and concluding outside the territory of India; ownership is transferred while goods remain in transit beyond the Customs frontier. Consequently, such transactions cannot be treated as exempted services (trading) within the ambit of Rule 2(e) of the Cenvat Credit Rules, 2004 or as falling under the jurisdiction of Central Excise/Finance Act, 1994. Applying that legal principle, the demand for reversal of credit, interest and the penalty imposed on account of alleged use of common inputs/input services for trading (high-sea sales) was unsustainable.

The impugned demand and penalty were set aside and the appeal allowed with consequential relief.

Final Conclusion: The Tribunal allowed the appeal, holding that credits could not be demanded for high-sea sales occurring outside the territorial jurisdiction of Central Excise/Finance Act, 1994; the order confirming demand, interest and penalty was set aside with consequential relief.

Classification of goods - primary use test - printing merely incidental to primary use - Chapter Note 12 of Chapter 48 - classification under Chapter 48 versus Chapter 49 - CETA 4811 versus CETA 4901 - precedential application of ITC Ltd. on primary use

Classification of goods - primary use test - printing merely incidental to primary use - CETA 4811 versus CETA 4901 - Chapter Note 12 of Chapter 48 - Printed thermal paper rolls made to size for use in ATMs are classifiable under CETA 4811 rather than CETA 4901 because the pre-printing is merely incidental to their primary use. - HELD THAT: - The Tribunal applied the controlling test in Chapter Note 12 of Chapter 48 that printed paper falls in Chapter 49 only where the printing is not merely incidental to the primary use. The impugned thermal rolls are manufactured to fit ATMs and their primary function is to produce transaction statements; any pre-printing of bank name, logo or identification is for incidental identification and does not change the primary use. The decisions invoked by the Commissioner (Appeals) dealing with pre-printed labels and lottery tickets were held distinguishable because in those cases printing constituted the prime or mandatory use of the articles. By contrast, the Apex Court decision in ITC Ltd. (packaging printed for cigarettes) was found applicable, holding that where printing is merely incidental to the primary use the articles are classifiable under Chapter 48. Applying that ratio, the Tribunal concluded that the Revenue's classification under CETA 4811 is correct and that the Commissioner (Appeals) order classifying the goods otherwise cannot be sustained. [Paras 6, 7, 8, 9]

The impugned Commissioner (Appeals) order is set aside; the original adjudication orders are restored and the duty demands with interest and penalties confirmed.

Final Conclusion: Appeal allowed in part for the Revenue: ATM thermal rolls are classifiable under CETA 4811 because printing is merely incidental to their primary use; Commissioner (Appeals) order is set aside and the original orders confirming duty, interest and penalty are restored for the specified periods.

Redetermination of retail sale price under Section 4A(4) of the Central Excise Act, 1944 - prescribed manner for ascertaining RSP/MRP - validity of RSP/MRP re-determination prior to notification instituting rules - temporal operation of MRP Valuation Rules (Notification No.13/2008 w.e.f. 1-3-2008)

Redetermination of retail sale price under Section 4A(4) of the Central Excise Act, 1944 - prescribed manner for ascertaining RSP/MRP - temporal operation of MRP Valuation Rules (Notification No.13/2008 w.e.f. 1-3-2008) - Whether Revenue could re-determine the retail sale price/MRP and enhance assessable value for clearances made in November 2003-March 2004 and November 2004-March 2005 in absence of rules prescribing the manner of redetermination - HELD THAT: - The Tribunal held that sub-section (4) of Section 4A contemplated redetermination of RSP/MRP only in a manner prescribed by the Central Government. The Central Government framed the MRP Valuation Rules by Notification No.13/2008 effective from 1-3-2008. Prior to that date there was no statutory machinery prescribing how to re-determine RSP/MRP. Consequently, any exercise by the Department to redetermine RSP/MRP and enhance assessable value for clearances effected in the periods under dispute (November 2003-March 2004 and November 2004-March 2005) lacked legal authority. The Tribunal relied on consistent precedent holding that where the Legislature prescribes a particular manner, authorities cannot adopt an alternative method (including a best-judgment approach) before the prescribed procedure is in force. Applying that principle, the Tribunal found the departmental reassessment of RSP/MRP for the impugned periods to be without authority and unsustainable.

Demand based on re-determination of RSP/MRP for the specified clearances set aside; appeal allowed.

Final Conclusion: The appeal is allowed and the demand founded on re-determination of retail sale price/MRP for clearances in November 2003-March 2004 and November 2004-March 2005 is set aside because the statutory procedure for such redetermination (MRP Valuation Rules) commenced only from 1-3-2008.

Exemption limit under notification no. 8/2003-CE - classification of activity as manufacture versus job-work - burden of proof for non-manufacture/non-event - exclusion of supplies from third-party suppliers in computing clearances - payment of duty with interest - discretion to reduce penalty under section 11AC(1)(d) of the Central Excise Act, 1944

Classification of activity as manufacture versus job-work - burden of proof for non-manufacture/non-event - exemption limit under notification no. 8/2003-CE - Appellant's liability for central excise duty in 2007-08 on alleged manufacture/clearances exceeding the exemption ceiling - HELD THAT: - The Tribunal upheld the finding that the appellant was not entitled to exclude earlier supplies as mere job-work and that the claim of no manufacturing activity prior to September 2007 lacked independent evidence. The authority noted that proving a non-event requires more than a bare assertion, particularly where the factory had the capability to carry out machining and finishing and registration was sought only after investigation commenced. On these facts the total clearances were rightly aggregated for applying the exemption ceiling and the demand of duty was sustained. [Paras 5]

Demand of duty for 2007-08 upheld as the claim of non-manufacture prior to September 2007 was unsupported by evidence

Exclusion of supplies from third-party suppliers in computing clearances - exemption limit under notification no. 8/2003-CE - Whether values of goods allegedly procured from a supplier whose proceedings were set aside could be excluded from appellant's clearances to reduce duty liability - HELD THAT: - The Tribunal rejected the contention that a supplier's proceedings being set aside necessitated exclusion of corresponding values from the appellant's clearances. The linkage asserted between the dropping of proceedings against the supplier and the appellant's entitlement to exclude those supplies did not satisfy logical or evidentiary scrutiny and therefore could not displace the aggregated computation adopted by the lower authorities. [Paras 5]

Claims to exclude supplies from the specified supplier were rejected; aggregated clearances stand for applying the exemption threshold

Payment of duty with interest - discretion to reduce penalty under section 11AC(1)(d) of the Central Excise Act, 1944 - Relief in respect of penalty despite upholding duty demand - HELD THAT: - Although the Tribunal sustained the demand of duty with interest (which the appellant has discharged), it exercised discretion to grant the appellant the benefit of reduced payment of penalty under section 11AC(1)(d). The lower authorities had declined that concession; the Tribunal allowed it while maintaining the duty and interest liability. [Paras 6, 7]

Duty with interest upheld; appellant permitted reduced penalty under section 11AC(1)(d)

Final Conclusion: The appeal is partly allowed in that the Tribunal upholds the demand of central excise duty with interest for 2007-08 but grants the appellant the concession of reduced payment of penalty under section 11AC(1)(d).

Inclusion of value of buyer-supplied durable containers in assessable value - rule 6 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - additional consideration - transaction value and resort to valuation rules under section 4(1)(b) when section 4(1)(a) is inapplicable - ownership/monetisation requirement for attributing additional consideration

Rule 6 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - additional consideration - inclusion of value of buyer-supplied durable containers in assessable value - ownership/monetisation requirement for attributing additional consideration - Whether the value of durable containers supplied by the buyer/customers is required to be included in the assessable value of goods under rule 6 and whether rule 6 was appropriately invoked to sustain the demand. - HELD THAT: - The Court examined Explanation 1 to rule 6 which treats, as additional consideration, the money value of certain goods and services supplied directly or indirectly by the buyer free of charge or at reduced cost to the extent such value has not been included in the price paid. The tribunal noted that durable containers, which do not go into production of the goods, are not plainly covered by the Explanation as items consumed or incorporated in manufacture. Application of the valuation rules arises only where the transaction value is vitiated; it must be shown that clearances in buyer supplied containers resulted in a price different from clearances in containers procured by the manufacturer and that such difference is attributable to the containers. Further, rule 6 presupposes that the ownership or monetised value of the goods or services supplied by the buyer vests with the assessee as additional consideration. No material was placed on record establishing that the appellant acquired ownership or a monetised equivalent of the durable containers or that the transaction value differed for the relevant clearances on account of such containers. The valuation rules are to be applied as separate, mutually exclusive routes; in the absence of any other rule invoked and given the inappropriateness of invoking rule 6 on the facts, the demand based on inclusion of buyer supplied durable containers does not stand. [Paras 4, 5, 6, 7]

Rule 6 was inapplicable on the facts; the demand based on inclusion of value of buyer supplied durable containers is not sustainable and is set aside.

Final Conclusion: The appeals are allowed; the impugned orders upholding the demand founded on rule 6 for inclusion of the value of buyer supplied durable containers are set aside for the stated reasons.

Assessable value - Additional consideration - Transaction value - Excess freight not includable in assessable value - Profit on transportation not exigible to excise duty

Assessable value - Additional consideration - Transaction value - Profit on transportation not exigible to excise duty - Whether amounts recovered from customers as excess freight and by debit notes are includable in the assessable value of goods as "additional consideration" or part of "transaction value" for levy of excise duty. - HELD THAT: - The Tribunal applied its earlier decision in Mercedes Benz India Pvt Ltd which held that where goods are sold at factory gate and transportation is separate, the actual cost of transportation paid by the manufacturer is to be excluded from assessable value, but any excess amount collected from the buyer does not constitute "additional consideration" under Rule 6 or the definition of "transaction value" under Section 4(3)(d). The excess collected is characterised as profit on transportation and bears nexus to transportation rather than to the sale of goods; excise being a tax on manufacture does not extend to such profit. The Tribunal noted that the factual position determining the nature of excess freight (delivery at factory gate; transporter agreement separate from sale) precludes treating excess freight or similar recoveries by debit notes as includable in assessable value. Applying that principle to the present appeals, the excess amounts recovered from customers are not includable as additional consideration and therefore are not exigible to excise duty. [Paras 5, 6]

The excess freight and amounts recovered by debit notes do not form part of the assessable value as additional consideration; the impugned order confirming duty on those amounts is set aside and the appeals are allowed.

Final Conclusion: The Tribunal set aside the order-in-appeal and allowed the appeals, holding that the excess freight and similar recoveries from customers are profits on transportation and not includable in assessable value as additional consideration for excise duty purposes.

Deemed manufacture - imported goods - customs control - taxable event on importation - clearance for home consumption - labelling

Deemed manufacture - imported goods - customs control - clearance for home consumption - labelling - Whether labelling of imported shampoo while under customs control amounts to manufacture attracting liability to central excise duty. - HELD THAT: - The Tribunal held that the question turns on when importation is complete and whether the goods had ceased to be 'imported goods' for the purposes of excise. Relying on authoritative decisions that importation is not complete so long as goods remain under Customs' control, and that the taxable event in the present context is linked to clearance for home consumption, the activity of labelling carried out while the goods remained in Customs bonded or private bonded warehouses under bond did not transform the goods into excisable manufacture. The Tribunal observed that goods categorized as 'imported' under the Customs statutory definition retain that status until clearance for home consumption; consequently, activities performed while under Customs control do not attract Central Excise Act liability. Applying this principle, the demand based on treating labelling as 'manufacture' prior to customs clearance was unsustainable and refundable in law. The Tribunal also noted that for certain packaged goods CVD equivalent to excise duty had already been discharged on MRP, making any separate excise demand revenue neutral, further reinforcing that excise demands prior to clearance could not stand.

Impugned orders demanding excise duty and penalties on labelling performed while goods were under Customs control are set aside; the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that labelling of imported goods performed while they remained under Customs control does not amount to manufacture liable to central excise prior to clearance for home consumption, and set aside the demand and penalties upheld below.

Condonation of delay - sufficient cause under Section 5 of the Limitation Act, 1963 - law of limitation as founded on public policy - input tax credit - reassessment and reversal of input tax credit

Condonation of delay - sufficient cause under Section 5 of the Limitation Act, 1963 - law of limitation as founded on public policy - Whether the delay of 503 days in filing the appeals warranted condonation under Section 5 of the Limitation Act, 1963. - HELD THAT: - The Court applied the established principles that the law of limitation is founded on public policy and that the expression "sufficient cause" is elastic and to be determined on the facts of each case. While a liberal approach is to be adopted for short delays, a stricter standard applies to inordinate delays. The appellant's explanation - internal examination at Head Office, Legal Affairs Committee decision, vetting and instructions culminating over several months - did not, on appreciation of the totality of events, constitute sufficient cause for a delay of 503 days. The explanation was held to be bereft of justification and did not satisfy the test of reasonable diligence in prosecuting the appeal. [Paras 7, 8, 9, 10, 11]

Application for condonation of delay of 503 days dismissed; appeal not condoned.

Input tax credit - reassessment and reversal of input tax credit - Whether the Tribunal was justified in allowing the dealer's appeal and upholding the assessee's claim to input tax credit despite the selling dealer's failure to deposit tax into the Government treasury. - HELD THAT: - On merits the Court found no illegality in the Tribunal's reasoning. The Tribunal noted that the assessee's purchases were from M/s Kiran Industrial Corporation (KIC), a genuine dealer, and that in reassessment KIC's sales to the assessee had been assessed by order dated 27.8.2015. Those sales were reflected in KIC's returns and had been assessed, and therefore there was no occasion to reverse or disallow the assessee's ITC claim. The Court observed the Revisional Authority's direction to disallow ITC and to require a 'well speaking order' was perverse in light of the reassessment findings, and no ground was shown to interfere with the Tribunal's conclusion. [Paras 12, 13]

Tribunal's allowance of the assessee's input tax credit claim upheld; no interference on merits.

Final Conclusion: Applications for condonation of delay dismissed and, consequently, the appeals dismissed on grounds of delay; on merits the Tribunal's order allowing the assessee's input tax credit was upheld and the revenue's challenge failed.

Continuous service for one year under Section 6N of the U.P. Industrial Disputes Act - scope of writ jurisdiction of High Court - limits on reappraisal of findings of fact - appellate review under Article 136 - no de novo appreciation of evidence on findings of fact - distinguishability of precedent relied upon by parties - independence of proceedings under Section 17B of the Industrial Disputes Act and non-recoverability of interim payments

Continuous service for one year under Section 6N of the U.P. Industrial Disputes Act - scope of writ jurisdiction of High Court - limits on reappraisal of findings of fact - appellate review under Article 136 - no de novo appreciation of evidence on findings of fact - Whether the High Court was justified in allowing the writ petition and setting aside the award of the Industrial Tribunal by holding that the workman was not in continuous service for one year under Section 6N. - HELD THAT: - The Court held that the central question - whether the workman was in continuous service for one year under Section 6N - is a finding of fact. The High Court examined the factual matrix and concluded that the workman did not satisfy the requirement of continuous service. Such factual finding is not amenable to rehearing de novo by this Court under Article 136. The impugned finding was neither contrary to evidence nor perverse, and therefore binding on this Court. Consequently there was no merit in reappraising the evidence afresh to disturb the High Court's conclusion. [Paras 11, 12, 13, 16, 17]

The High Court was justified in setting aside the Industrial Tribunal's award; the finding that the workman did not have continuous service for one year stands.

Distinguishability of precedent relied upon by parties - scope of writ jurisdiction of High Court - limits on reappraisal of findings of fact - Whether the decision in Sriram Industrial Enterprises Ltd. entitled the workman to have the Industrial Tribunal's award restored. - HELD THAT: - The Court considered the reliance placed on Sriram Industrial Enterprises Ltd. and found that the decision is distinguishable on the facts of the present case. Given that the High Court's factual conclusion was supported by evidence and not vitiated by perversity or illegality, the Sriram precedent could not be invoked to overturn the High Court's order. The Court therefore declined to place reliance on that authority to set aside the impugned order. [Paras 14, 15, 18]

Sriram Industrial Enterprises Ltd. is distinguishable on facts and does not warrant restoring the Industrial Tribunal's award.

Independence of proceedings under Section 17B of the Industrial Disputes Act and non-recoverability of interim payments - Whether amounts already paid to the workman pursuant to orders under Section 17B during pendency of proceedings are recoverable after the main proceedings are decided in favour of the employer. - HELD THAT: - The Court affirmed the High Court's direction that amounts paid to the workman under Section 17B during pendency of litigation are not recoverable by the employer even though the employer ultimately succeeds on the merits. The judgment reiterates settled law that Section 17B proceedings are independent in nature and payments made thereunder cannot be reclaimed if the termination is later upheld. The High Court's non-recovery direction was held to be in conformity with precedents on the point. [Paras 19, 20, 21, 22]

Amounts paid under Section 17B during pendency are not recoverable and the High Court rightly protected the workman from restitution of such payments.

Final Conclusion: The appeals are dismissed. The High Court correctly set aside the Industrial Tribunal's award on the factual finding that the workman did not have continuous service for one year, the precedent relied upon by the workman was distinguishable, and the High Court properly directed that interim payments made under Section 17B during the pendency of proceedings are not recoverable.

Arbitrariness - Article 14 - deposit-at-call - clog on arbitration - frivolous claims - severability

Arbitrariness - Article 14 - deposit-at-call - clog on arbitration - frivolous claims - Validity of clause 25(viii) requiring a 10% deposit-at-call of the amount claimed as a condition precedent to invoking arbitration. - HELD THAT: - The Court held that clause 25(viii), which mandates a 10% deposit-at-call to guard against frivolous claims, is arbitrary and violative of Article 14. Although the clause applies equally to both parties and is not discriminatory, arbitrariness is a distinct facet of Article 14 and may be established even without comparative treatment. The Court observed that existing remedies-dismissal of frivolous claims and imposition of exemplary costs or punitive damages-address the problem of frivolous or inflated claims, and an advance deposit applicable to all claims (frivolous or otherwise) lacks a direct nexus to preventing frivolous litigation. A pre-deposit of 10% must be made before any determination of frivolousness and can be disproportionate, especially in large claims; it operates as a clog on arbitration, undermining the object of arbitration to provide a speedy, inexpensive alternative to court litigation. The Court illustrated the unfairness where a partially successful claimant would be refunded only in proportion to the amount awarded, while the balance could be forfeited to the respondent even when the claimant succeeds on substantive grounds. For these reasons the clause was held arbitrary, excessive and contrary to the policy of encouraging arbitration. [Paras 23, 24, 25, 26, 27]

Clause 25(viii) is struck down as arbitrary and violative of Article 14; it is an impermissible clog on arbitration and lacks requisite nexus to prevention of frivolous claims.

Severability - Effect of striking down clause 25(viii) on the remainder of clause 25 and the arbitration scheme. - HELD THAT: - The Court found clause 25(viii) to be severable from the rest of clause 25. Declaring that the offending provision is separable, the Court preserved the remaining contractual and arbitration provisions contained in clause 25, leaving the arbitration mechanism otherwise intact without the 10% deposit requirement. [Paras 28]

Clause 25(viii) is severed; the remaining parts of clause 25 survive unaffected.

Final Conclusion: The High Court judgment is set aside; clause 25(viii) (the 10% deposit-at-call requirement) is struck down as arbitrary and contrary to Article 14 and as a clog on arbitration, but it is severable and the remainder of clause 25 remains operative.