TaxTMI Updates e-Newsletter
Mar 14,2020

Anticipatory bail under Section 438 Cr.P.C. - offences under Section 132 of the CGST Act, 2017 - compounding and arrestability in GST offences - non-cooperation with investigation - risk of tampering with evidence / manipulating records - ongoing investigation as ground to refuse anticipatory bail

Anticipatory bail under Section 438 Cr.P.C. - offences under Section 132 of the CGST Act, 2017 - non-cooperation with investigation - risk of tampering with evidence / manipulating records - ongoing investigation as ground to refuse anticipatory bail - Prayer for anticipatory bail by the petitioners (directors of TEPL) in the GST evasion investigation was refused. - HELD THAT: - The Court recorded that the petitioners are directors of the accused company and there are specific allegations of provision of taxable services without raising invoices and non-payment of GST resulting in loss to the exchequer for the period 7/2007 to 12/2019. The petitioners had been summoned multiple times and, according to the prosecution, did not cooperate with the investigation. Reliance was placed on earlier Division Bench observations concerning the arrestability of offences under the CGST Act and the limited effect of compounding where large liabilities are involved. Given the ongoing investigation, the magnitude of alleged evasion, the prosecution's contention of non-cooperation and the real possibility of manipulation of records if custodial protection were granted, the Court concluded that the facts did not warrant anticipatory bail. The petition was therefore dismissed. [Paras 6, 7, 8]

Anticipatory bail rejected and the criminal petition dismissed.

Final Conclusion: The High Court declined to grant anticipatory bail to the petitioners-directors of TEPL-in the ongoing GST evasion investigation covering 7/2007 to 12/2019, on account of the seriousness and scale of the alleged offences, non-cooperation with investigation and risk of evidence manipulation.

Grant of exemption - interim stay of operation of impugned order - restraint on initiation of penalty proceedings - prima facie review of computation methodology - directions for filing counter-affidavit and rejoinder

Grant of exemption - Application for exemption was allowed. - HELD THAT: - The Court allowed the exemption application presented in CM APPL. 8682/2020 and disposed of that application. The order records the grant of exemption subject to just exceptions without further adjudicative reasoning in the present order. [Paras 1, 2]

Exemption application allowed and disposed of.

Prima facie review of computation methodology - interim stay of operation of impugned order - restraint on initiation of penalty proceedings - Interim relief was granted because the method adopted for computing the profiteered amount required consideration. - HELD THAT: - The Court observed that the impugned order proceeded on the same basis as an earlier order concerning different goods and that, prima facie, the method adopted for computation of the profiteered amount requires consideration. On that basis the Court stayed the operation of the impugned order until the next date and restrained the respondents from initiating any penalty proceedings against the petitioner pending further hearing. [Paras 5, 6]

Operation of the impugned order stayed and initiation of penalty proceedings restrained pending further consideration.

Directions for filing counter-affidavit and rejoinder - Procedural directions were issued for service, filing of counter-affidavit and rejoinder. - HELD THAT: - The Court issued notice in the writ petition, recorded acceptance of notice by learned counsel for the respondents, directed the filing of a counter-affidavit within six weeks and permitted the petitioner to file a rejoinder, if any, before the next date. These directions structure the timeline for further adjudication of the dispute. [Paras 3, 4]

Notice issued; counter-affidavit to be filed within six weeks and rejoinder, if any, before the next listing.

Final Conclusion: The Court allowed the exemption application, issued notice and procedural directions for filings, and on a prima facie view that the computation methodology for profiteering required consideration, stayed the impugned order and restrained initiation of penalty proceedings until the next date.

Cancellation of GST Registration - Show Cause Notice - Opportunity of Hearing / Principles of Natural Justice - Ex parte decision - Electronic communication of reply

Cancellation of GST Registration - Show Cause Notice - Opportunity of Hearing / Principles of Natural Justice - Electronic communication of reply - Ex parte decision - The order cancelling the petitioner's registration is set aside and the matter is remanded for fresh decision after affording opportunity of hearing and considering the petitioner's reply already on record. - HELD THAT: - The show cause notice alleged that registration had been obtained by means of fraud, wilful misstatement or suppression of facts. The petitioner did not participate in the impugned proceedings, submitting that a postal reply failed to reach due to an incorrect PIN code and that a reply was sent by e-mail to the address from which the show cause notice issued. The Court found that when cancellation of registration is sought, the petitioner was entitled to adequate opportunity of hearing and that an ex parte decision should not have been taken without considering the reply already on record. In view of these defects in procedure and in the interests of affording a fair hearing, the cancellation order dated 1st December, 2018, was set aside and the Assistant Commissioner was directed to allow the petitioner an opportunity of hearing and to decide the matter afresh, taking into account the petitioner's existing reply.

Impugned order of cancellation dated 1st December, 2018, is set aside; respondent no. 3 to afford hearing and decide afresh after considering the petitioner's reply within six to eight weeks from communication of a certified copy of this order.

Final Conclusion: The writ petition is disposed of by setting aside the cancellation order and remanding the matter to the Assistant Commissioner for fresh decision after hearing the petitioner and considering the reply already on record, to be completed within six to eight weeks.

Physical verification of stocks carried out in survey - reliance on documentary certificate in lieu of survey findings - undisclosed purchases and assessable income - profit element only - taxation by reference to notional sales

HC [2018 (8) TMI 1475 - CALCUTTA HIGH COURT] set aside the Tribunal's reliance on the FCI certificate and restored the Commissioner (Appeals)'s acceptance of the Assessing Officer's survey-based stock quantification, while upholding the Tribunal's legal conclusion that only the profit element of the undisclosed purchases (computed by reference to notional sales) is assessable as escaped income

HELD THAT:- Learned counsel for the petitioner, on instructions issued by the Department of Revenue, Ministry of Finance vide F.No.390/Misc./116/20l7-JC dated 22.08.2019, seeks permission to withdraw this special leave petition along with pending applications therein due to low tax effect.

Permission granted, subject to just exceptions. The special leave petition and pending applications are dismissed as withdrawn, leaving question(s) of law open.

Jurisdictional satisfaction for reference to Transfer Pricing Officer - prima facie determination of existence of an international transaction - obligation on Assessing Officer to record reasons that reference is necessary and expedient - opportunity of being heard before making reference to TPO where applicability of Chapter X is challenged - role of Form 3CEB / Accountant's report in forming AO's satisfaction - CBDT instructions as clarificatory procedural mandate

As decided by HC [2016 (8) TMI 151 - DELHI HIGH COURT] three references by the Assessing Officer to the Transfer Pricing Officer were set aside for failure to afford the petitioner an opportunity of being heard and for not recording the required prima facie satisfaction; the AO is directed to rehear the petitioner within prescribed short timelines and thereafter to pass fresh orders stating whether a reference to the TPO is necessary, subject to the petitioner's right to challenge that decision.

HELD THAT:- Leave granted.

Remand for fresh adjudication - setting aside appellate orders - restoration of appeal - leave open all contentions for fresh decision - substantial question of law left for determination by appellate authority

Remand for fresh adjudication - restoration of appeal - leave open all contentions for fresh decision - Whether the impugned orders of the ITAT and the Commissioner (Appeals) should be set aside and the matter remanded to the Commissioner (Appeals) for fresh adjudication on all grounds. - HELD THAT: - The Court found that although the Assessee had withdrawn the contention that the subject property was agricultural before the Commissioner (Appeals), the point went to the root of the matter and warranted adjudication. The record indicated that the Commissioner (Appeals) had decided in favour of the Assessee on one ground, but the ITAT reversed the Commissioner (Appeals) on all three grounds and thereafter did not permit the Assessee to urge the other two grounds which were central to the dispute. In these peculiar circumstances the Court concluded that fair adjudication requires that the Assessee be permitted to have all grounds, including the question regarding the agricultural character of the property and the substantial question of law framed on admission, decided afresh by the Commissioner (Appeals). Consequently the impugned orders were liable to be set aside and the appeal restored for comprehensive rehearing; all contentions of the parties were to be left open for decision on their merits in accordance with law. The Court also noted the appropriateness of consolidating the Assessee's appeal with her husband's pending appeal relating to the same property, if pending before the Commissioner (Appeals). [Paras 5, 6, 7, 8, 9]

Impugned orders of the ITAT and the Commissioner (Appeals) set aside; Assessee's appeal restored to the Commissioner (Appeals) for fresh adjudication on all grounds with all contentions left open.

Final Conclusion: The appeal is disposed of by setting aside the impugned orders and restoring the Assessee's appeal to the Commissioner (Appeals) for fresh adjudication on all raised grounds, including the question of the property's agricultural character and the substantial question of law, with parties directed to appear before the Commissioner (Appeals).

Applicability of Section 14A for computing income - Overriding effect of Section 44 read with the first schedule - Computation of profits and gains of insurance business under Section 44 and the first schedule - Non-obstante clause and exclusion of other computation provisions - Rule of consistency in Tribunal decisions

Applicability of Section 14A for computing income - Overriding effect of Section 44 read with the first schedule - Non-obstante clause and exclusion of other computation provisions - Section 14A is excluded from applicability in computing the income of the insurance company for the assessment year in question by virtue of Section 44 read with the first schedule. - HELD THAT: - The Tribunal interpreted Section 44 read with the first schedule and concluded that the special scheme for computation of income of an insurance company excludes application of the provisions otherwise relating to computation of income. Section 44 contains a non-obstante clause which overrides provisions of the Act relating to computation (including those contained in the range identified by the Tribunal), and therefore the Assessing Officer had to compute profits and gains of the insurance business by resort to Section 44 and the prescribed rules rather than by invoking Section 14A. Section 14A is framed "for the purposes of computing the total income under this chapter" and does not stand independently when the special computation regime of Section 44 applies; accordingly Section 14A falls within the sweep of exclusions effected by Section 44. The Tribunal's reliance on consistency of its earlier decisions for prior assessment years reinforced this conclusion. [Paras 9]

Section 14A does not apply to computation of income of the respondent insurance company for the assessment year; the Tribunal's conclusion that Section 14A is excluded by Section 44/read with the first schedule is upheld.

Computation of profits and gains of insurance business under Section 44 and the first schedule - Rule of consistency in Tribunal decisions - No remand to the Assessing Officer for fresh computation was warranted where remand was not a ground urged before the Tribunal and the Revenue did not seek such relief earlier. - HELD THAT: - The Court noted that the Revenue confined its challenge before the Tribunal to the applicability of Section 14A and did not seek remand for recomputation of income under Section 44 and the first schedule. It is impermissible at this stage to fault the Tribunal for not undertaking or ordering a recomputation on a ground not raised before it. While the Tribunal is a final fact-finding body, the Court will not entertain belated submissions that were not advanced earlier; accordingly remand for recomputation was not directed. [Paras 10]

No remand ordered; the Tribunal cannot be faulted for not recomputing income under the first schedule when such relief was not sought before it.

Final Conclusion: The petition is disposed of; no substantial question of law arises and the Tribunal's order dismissing the Revenue's appeal in respect of assessment year 2011-12 is upheld.

Admission of fresh evidence by the Tribunal - application of Rules 29 and 30 of the Income Tax (Appellate Tribunal) Rules, 1963 - relegation to Assessing Officer for examination of additional evidence / remand - finding of fact versus question of law - cognisance of documents issued by independent municipal authority - procedural rules as handmaid of justice

Admission of fresh evidence by the Tribunal - application of Rules 29 and 30 of the Income Tax (Appellate Tribunal) Rules, 1963 - relegation to Assessing Officer for examination of additional evidence / remand - Whether the Tribunal's acceptance of completion/occupation certificate produced before it, without remitting the matter to the Assessing Officer or recording satisfaction under the ITAT Rules, vitiated its order. - HELD THAT: - The Tribunal took cognisance of a completion/occupation certificate issued by the Municipal Corporation and decided the claim under Section 80IB(10) on the basis that the building was completed and occupied within the stipulated date. The Court observed that the certificate was an official document issued by an independent municipal authority over which the assessee had no control and which came into the assessee's possession only after earlier proceedings. Procedural requirements in Rules 29 and 30 are to be applied to advance justice and not to frustrate it. The revenue did not challenge the correctness of the Tribunal's factual conclusion nor the veracity of the certificate. In these circumstances the objection was essentially procedural and not a substantial question of law that would vitiate the Tribunal's order; relegation to the Assessing Officer was unnecessary where the Tribunal accepted the document and made a finding of fact based on it. [Paras 8, 9, 10]

Tribunal's acceptance of the completion/occupation certificate and its decision thereon does not vitiate the order; no requirement to remit to the Assessing Officer in the circumstances.

Finding of fact versus question of law - procedural rules as handmaid of justice - Whether the Tribunal's conclusion that the building was completed within the stipulated time amounted to a substantial question of law permitting interference by the High Court. - HELD THAT: - The Court held that the Tribunal's conclusion on completion date is a finding of fact. Revenue did not impugn the correctness of that finding nor the veracity of the completion/occupation certificate on which it was based. The challenge was therefore confined to procedure and not to any legal error in the Tribunal's reasoning. Procedural objections, being formal, cannot convert a factual finding into a substantial question of law warranting appellate interference. The Court emphasised that rules of procedure must serve justice and cannot be allowed to defeat it. [Paras 10]

The Tribunal's finding of fact is not a substantial question of law; the appeal does not disclose a substantial question of law.

Final Conclusion: Revenue's appeal is dismissed; the High Court finds no substantial question of law arising from the Tribunal's admission of the municipal completion/occupation certificate and its factual finding that the building was completed within the stipulated time.

Exemption under Section 11 - profit motive test for charitable trusts - principle of incidental activity - requirement of separate books under Section 11(4A) - precedential value of earlier decision between the same parties - reliance on coordinate bench and High Court precedents

Exemption under Section 11 - profit motive test for charitable trusts - Tribunal's direction to the assessing officer to allow exemption under Section 11 despite the assessee running an organized pharmacy and allegations of profit motive was sustained. - HELD THAT: - The High Court noted that the substantial questions raised by the revenue in relation to the Tribunal's direction on grant of exemption had been earlier considered and answered in favour of the assessee in an identical order between the same parties for an earlier assessment year. Having perused that earlier decision, the Court held that the proposed contentions concerning the pharmacy activity and alleged profit motive were already answered in favour of the assessee and did not warrant interference with the Tribunal's order for AY 2012-13.

Contentions that the pharmacy activity defeated exemption under Section 11 were rejected and the Tribunal's direction was upheld.

Principle of incidental activity - exemption under Section 11 - The Tribunal's finding that the pharmacy activity was incidental to the assessee's charitable objects and did not disentitle it from exemption under Section 11 was maintained. - HELD THAT: - The Court observed that the question whether turnover from the pharmacy was substantial enough to be non-incidental had been addressed in the earlier decision in favour of the assessee. Relying on that conclusion, the Court declined to reopen the issue and sustained the Tribunal's allowance of exemption on the basis that the activity was incidental to the main objectives.

Finding that the pharmacy's receipts were incidental and did not deprive the assessee of exemption was affirmed.

Requirement of separate books under Section 11(4A) - exemption under Section 11 - The objection that the assessee had not maintained separate books for the pharmacy as mandated by the statute was not accepted as a basis to deny exemption. - HELD THAT: - The High Court recorded that the specific contention regarding non-maintenance of separate books, though raised by the revenue, had been considered and answered in the earlier order in favour of the assessee. Consequently, the Court did not disturb the Tribunal's conclusion permitting exemption despite the said contention.

Non-maintenance of separate books for the pharmacy did not lead to denial of exemption in the circumstances dealt with by the Tribunal and earlier decision.

Reliance on coordinate bench and High Court precedents - precedential value of earlier decision between the same parties - The Tribunal's reliance on earlier decisions (including those of coordinate benches and the High Court) in allowing exemption was upheld despite revenue's challenge to those precedents and pending appeals in other matters. - HELD THAT: - The Court noted that the revenue's objections to the Tribunal's reliance on precedents (such as decisions relied upon by the Tribunal) and the pendency of appeals against those precedents did not justify disturbing the Tribunal's order. Given that identical questions had already been decided in favour of the assessee in the earlier order between the same parties, the Tribunal's reliance on relevant authorities was sustained.

Reliance on coordinate-bench/High Court decisions by the Tribunal was not a ground for interference in the present appeal.

Precedential value of earlier decision between the same parties - exemption under Section 11 - Whether the revenue's pending appeals in other cases permitted reopening the present question was negatived by reference to the earlier identical decision between the parties. - HELD THAT: - The High Court observed that the revenue candidly accepted that the identical questions for the assessee had been decided in its favour for another assessment year by an earlier order of this Court. In view of that prior adjudication on the same points, the Court declined to entertain the present appeal and dismissed it, leaving open no further interference.

Pending appeals in other matters did not warrant setting aside the Tribunal's order where identical questions had already been decided between the same parties in favour of the assessee.

Final Conclusion: The revenue's appeal under Section 260A was dismissed; the High Court held that the questions raised were identical to those previously decided in favour of the assessee and found no reason to interfere with the Tribunal's order allowing exemption under Section 11 for AY 2012-13; no order as to costs.

Transfer exigible to tax under Section 2(47)(v) read with Section 53-A of the Transfer of Property Act - reopening of assessment under Section 147 of the Income Tax Act - hypothetical income - remand for fresh adjudication - application of Balbir Singh Maini and Seshasayee Steels precedents

Reopening of assessment under Section 147 of the Income Tax Act - Reopening of assessment under Section 147 cannot be treated as a substantial question of law where the matter is fact specific. - HELD THAT: - The Court observed that the question whether assessment may be reopened under Section 147 depends upon the facts and circumstances of each case and therefore does not constitute a substantial question of law for admission in these proceedings. The appellant had not pressed the challenge to reopening as a substantial question of law. Consequently, the Court did not entertain a standalone legal determination on reopening in these appeals. [Paras 9]

Reopening under Section 147 is fact specific and was not treated as a substantial question of law in these appeals.

Transfer exigible to tax under Section 2(47)(v) read with Section 53-A of the Transfer of Property Act - hypothetical income - application of Balbir Singh Maini and Seshasayee Steels precedents - remand for fresh adjudication - Whether the transactions constituted a transfer exigible to tax under Section 2(47)(v) read with Section 53 A was not finally adjudicated and is remanded to the Assessing Officer for fresh consideration in the light of controlling Supreme Court decisions. - HELD THAT: - Having noted the ratio in Commissioner of Income Tax v. Balbir Singh Maini (as affirmed by the three Judge bench in Seshasayee Steels), the Court treated income from a capital gain on a transaction that never materialised as at best hypothetical income. In view of those precedents, the Court declined to finally decide the question of taxability under Section 2(47)(v) read with Section 53 A and directed that the Assessing Officer reexamine and adjudicate the issue afresh, applying the legal principles set out in the cited Supreme Court decisions. The remand includes reconsideration of the existence of a transfer and the consequent computation in accordance with law. [Paras 10]

Matter remitted to the Assessing Officer for fresh consideration and adjudication on whether a transfer exigible to tax took place, to be completed expeditiously and in accordance with the cited Supreme Court precedents.

Final Conclusion: The appeals are disposed of by remanding the question of taxability under Section 2(47)(v) read with Section 53 A to the Assessing Officer for fresh consideration in the light of the Supreme Court decisions in Balbir Singh Maini and Seshasayee Steels; the reopening point was treated as fact specific and not as a substantial question of law. No costs.

Unexplained investment/addition - allocation of unexplained income to relevant years of construction - remand to assessing officer for recomputation after taking evidence - adjudication based on evidence not on presumptions or conjectures

Allocation of unexplained income to relevant years of construction - remand to assessing officer for recomputation after taking evidence - Whether the addition of Rs. 2,48,048/- as unexplained investment could be sustained as made in a single assessment year or required reworking in the years in which construction was carried out, and whether the matter should be remanded for verification and recomputation. - HELD THAT: - The Court recorded that the Revenue was unable to verify the records and conceded it was not in a position to deny that the addition, if genuine, would have to be allocated to the period(s) in which the construction was carried out rather than be totalled in the last year alone. The appellant indicated possession of material that could assist the authorities. In view of the absence of verification and the availability of material from the appellant, the Court found it appropriate to set aside the impugned order and remit the matter to the assessing officer for fresh consideration. The assessing officer is directed to consider the material produced by the appellant, verify the relevant records, and compute the tax liability in accordance with law, applying the correct allocation to the years when construction expenditure was incurred, and without deciding the matter on mere presumptions or conjectures. [Paras 4, 5, 6]

Impugned addition set aside and matter remanded to the assessing officer to verify records, consider the appellant's material and recompute tax liability in accordance with law allocating the unexplained investment to the relevant years of construction.

Final Conclusion: Appeal allowed; the order sustaining the addition is set aside and the matter is remanded to the assessing officer for verification of records, consideration of the appellant's material and recomputation of tax liability in accordance with law.

Deduction under Section 80IB(10) - Composite housing project versus separate project - Built-up area limitation for entitlement to deduction - Reopening assessment and validity of notice under Section 148 - Precedential effect of earlier Division Bench judgments

Deduction under Section 80IB(10) - Composite housing project versus separate project - Precedential effect of earlier Division Bench judgments - Entitlement to deduction under Section 80IB(10) where development approvals were obtained separately for plots which, taken together, formed a composite project - HELD THAT: - The Court recorded the factual findings of the ITAT that the assessee had planned the entire development as a composite project, obtained approvals for the proposed project, and structured the development (number of floors, apartments, costing) on a composite basis. The Court relied on earlier Division Bench decisions (including the common judgment dated 01.11.2012 and the Division Bench decision in TCA.No.257 of 2012) which held that for considering entitlement to deduction under Section 80IB(10) the relevant inquiry is the nature of the project as undertaken and not merely the form of separate plan approvals for individual plots. Having regard to those precedents and the ITAT's finding that the site was developed as a single composite project despite approvals being on unit basis, the Court found no substantial question of law requiring interference with the ITAT's conclusion that the assessee was entitled to the deduction. The Court therefore dismissed the Revenue's challenge to the ITAT's factual and legal conclusion on this point. [Paras 12, 14, 15]

The claim for deduction under Section 80IB(10) was upheld on the basis that the development constituted a composite project and the Revenue's challenge did not raise any substantial question of law.

Built-up area limitation for entitlement to deduction - Deduction under Section 80IB(10) - Whether deduction under Section 80IB(10) is barred when certain residential units have built-up areas exceeding the statutory limit - HELD THAT: - Although the matter was framed as a substantial question of law, the Court noted the ITAT's factual determination and the lack of persuasive argument to displace the tribunal's conclusion. The Division Bench's earlier decisions addressed similar contentions and were not successfully impugned. In the circumstances the Court concluded that no substantial question of law arose for consideration on the issue of built-up area limits sufficient to warrant interference with the ITAT's order. [Paras 11, 15]

The challenge to allowance of deduction on account of alleged breach of built-up area limits was rejected and no substantial question of law was found to exist.

Reopening assessment and validity of notice under Section 148 - Validity of reopening the assessment under Section 148 in the facts of the case - HELD THAT: - The Appellate Authority had earlier recorded that the Assessing Officer was within jurisdiction in reopening the assessment. The High Court, after considering the materials and related findings recorded by the authorities and tribunals, did not find any ground to interfere with the exercise of jurisdiction in reopening the assessment for the Assessment Year 2008-09. The Court therefore did not disturb the findings on jurisdictional propriety of the reopening. [Paras 4, 15]

The reopening of assessment under Section 148 was not disturbed by the Court.

Final Conclusion: The Tax Case Appeal is dismissed; the order of the Income Tax Appellate Tribunal dated 20.11.2017 relating to Assessment Year 2008-09 is confirmed, with no costs.

Registration under Section 12A - direction to grant registration versus remand for fresh examination - delay in seeking registration after long period - dissolution clause in Memorandum of Association - corpus funds and application of receipts to objects - perversity review of appellate tribunal findings

Registration under Section 12A - direction to grant registration versus remand for fresh examination - perversity review of appellate tribunal findings - The validity of the Tribunal's direction to grant registration to the society instead of setting aside the order for re-examination by the Registering Authority. - HELD THAT: - The High Court examined the Tribunal's findings that the Commissioner (Exemptions) had no specific finding that the society was not working towards its aims and objectives and that there was no material to show diversion of funds. The Tribunal recorded that the society operated a public religious mandir, that the property could not be distributed among members, and that the corpus and accumulated surplus were accounted for and applied to temple maintenance and activities. The Court found no evidence on record to demonstrate that the Tribunal's conclusions were erroneous or perverse and observed that Learned Counsel for the revenue could not point to material contradicting the Tribunal's factual conclusions. Accordingly, the Tribunal's direction to accord registration was upheld rather than ordering a remand for fresh satisfaction by the Registering Authority.

Tribunal entitled to direct registration; no interference with Tribunal's order as its findings were not erroneous or perverse.

Delay in seeking registration after long period - Whether the fact that the society sought registration after 34 years of operation justified denial of registration in absence of cogent explanation. - HELD THAT: - The Court noted the revenue's contention about the long delay in applying for registration but observed that there was nothing on record to show the society was not functioning for its stated objects or that the delay was accompanied by conduct warranting denial. The revenue failed to produce material demonstrating prejudice or misuse arising from the delay. In those circumstances the Court held that the mere passage of time, without adverse material, did not sustain the rejection of registration.

Delay of 34 years, standing alone and unsupported by adverse material, did not justify refusal of registration.

Dissolution clause in Memorandum of Association - Whether absence of a dissolution clause in the Memorandum of Association warranted refusal of registration where a dissolution clause was subsequently incorporated by resolution. - HELD THAT: - The Tribunal recorded that the society had subsequently passed a resolution adding a dissolution clause to its Memorandum of Association and that this fact was brought to the notice of the Commissioner (Exemptions). The High Court found no material to show that the subsequent incorporation rendered the document legally inapplicable for the purpose of registration or that the absence of the clause at the time of application caused any substantive infirmity. On the factual record, the Court accepted the Tribunal's conclusion that the addition addressed the concern and did not justify denial of registration.

Subsequent addition of a dissolution clause cured the omission; absence of the clause initially did not justify refusal in the circumstances of the case.

Corpus funds and application of receipts to objects - Whether the corpus funds and accumulated assets were unexplained or used for purposes other than the society's aims and objects such as to justify refusal of registration. - HELD THAT: - The Tribunal found, and the High Court accepted, that corpus funds arose from donations for maintenance and development of the mandir and were accounted for; further explanations were given that funds had been applied to building a hall, temple premises, furnishing, staff salary and free food (langar). There was no allegation or material on record that funds were diverted to purposes outside the society's objects. The revenue could not point to evidence demonstrating misuse or unexplained receipts warranting the denial of registration.

Corpus and accumulated funds were not shown to be unexplained or diverted; this did not justify refusal of registration.

Final Conclusion: The High Court dismissed the revenue's appeal, upholding the Tribunal's order granting registration to the society; no substantial question of law requiring interference was made out.

Permanent Establishment - Agency Permanent Establishment - Dependent Agent - Principal to principal transactions - Article 5(4) of the DTAA - Habitually exercises authority to conclude contracts - Distribution agreement rights - Concurrent finding of fact

Agency Permanent Establishment - Article 5(4) of the DTAA - Principal to principal transactions - Habitually exercises authority to conclude contracts - Distribution agreement rights - Concurrent finding of fact - Whether Taj Television (India) Private Limited constituted an agency Permanent Establishment of the Mauritius-resident assessee in India in respect of distribution income under Article 5(4) of the India-Mauritius DTAA. - HELD THAT: - The appellate authorities (CIT(A)) and the Tribunal found as a matter of fact from the distribution agreement and related sub-distributor and cable-operator contracts that Taj India was appointed as an exclusive distributor and acted independently in promoting and marketing the channel, entered into contracts in its own name with sub-distributors and cable operators, and that the commercial relationship was arranged on a principal-to-principal basis with a revenue-sharing mechanism. Those findings demonstrate absence of the conditions in Article 5(4): there was no evidence that Taj India habitually exercised authority to conclude contracts in the name of the assessee or that it acted as a dependent agent subject to the assessee's comprehensive control and bearing no entrepreneurial risk. The Tribunal correctly upheld the CIT(A)'s concurrent factual conclusion that the distribution arrangement placed Taj India outside the scope of an agency PE for distribution income, and the High Court found no perversity in those concurrent findings warranting interference. [Paras 22, 23, 24, 25, 26]

Distribution income of the assessee is not taxable in India as Taj India does not constitute an agency Permanent Establishment under Article 5(4) of the DTAA.

Final Conclusion: The appeals are dismissed. The Tribunal's and CIT(A)'s concurrent factual findings that the distribution relationship was on a principal-to-principal basis and did not create an agency Permanent Establishment under Article 5(4) are upheld; no substantial question of law arises and there is no reason to interfere.

Reopening of assessment under Section 147: 'reason to believe' requirement - Explanation 2 to Section 147 as subordinate to the main provision - mere change of opinion not constituting 'reason to believe' - reopening permissible only on tangible material/new information - availability of remedy under Section 263 as alternative to reassessment

Reopening of assessment under Section 147: 'reason to believe' requirement - mere change of opinion not constituting 'reason to believe' - reopening permissible only on tangible material/new information - Validity of reassessment initiated under Section 147 in respect of deduction claimed for 1997-1998 and whether 'reason to believe' existed. - HELD THAT: - The Court upheld the Tribunal's conclusion that the precondition in Section 147, viz., formation of a 'reason to believe' based on tangible material or information coming to the Assessing Officer after the assessment, was not satisfied. An explanation that an assessment could be reopened merely because the revenue now holds a different view would convert reassessment into a review, which is impermissible. The Court observed that the original assessment under Section 143(3) dealt with the claim and a finding was recorded; absence of fresh tangible material to form the requisite belief renders reopening impermissible. Consequently, the reopening in the present case amounted at best to a change of opinion and could not be sustained under Section 147. [Paras 5, 6, 8]

Reopening under Section 147 was invalid as there was no 'reason to believe' based on fresh tangible material; reassessment could not be sustained.

Explanation 2 to Section 147 as subordinate to the main provision - availability of remedy under Section 263 as alternative to reassessment - Whether sub-clause (c) of Explanation 2 to Section 147 empowers reopening despite absence of 'reason to believe', or creates an exception to the main provision. - HELD THAT: - The Court held that explanations to a provision are subordinate and cannot operate as exceptions to the main legislative requirement. Reading Explanation 2(c) as conferring an independent exception would impermissibly negate the 'reason to believe' threshold. Where the revenue was aggrieved by the assessment already concluded under Section 143(3), the correct statutory remedy would have been recourse to Section 263 rather than invocation of Section 147 without the requisite material to form belief. The Court therefore rejected the appellant's contention that Explanation 2(c) supplants the main provision's requirement. [Paras 5, 6]

Explanation 2(c) cannot be read to override the principal requirement of 'reason to believe' in Section 147; the contention that it creates an exception was rejected.

Final Conclusion: Appeal dismissed. The reassessment under Section 147 was not justified for the year 1997-1998 because the Assessing Officer lacked fresh tangible material forming a 'reason to believe', and Explanation 2(c) cannot be construed to override the main provision; the Tribunal's order quashing the reopening is affirmed.

Penalty for failure to collect or pay (penal liability under Section 105) - reasonable cause defence and bar to penalty (Section 108) - requirement of reasonable opportunity of hearing before imposing penalty - separate penalty proceeding distinct from assessment - penalty requires wilful contravention or deliberate defiance - duty to collect STT under section 100(4)

Penalty for failure to collect or pay (penal liability under Section 105) - reasonable cause defence and bar to penalty (Section 108) - requirement of reasonable opportunity of hearing before imposing penalty - separate penalty proceeding distinct from assessment - penalty requires wilful contravention or deliberate defiance - duty to collect STT under section 100(4) - Deletion of penalty imposed under Section 105 of the Securities Transaction Tax and interpretation of the interplay between Sections 105 and 108. - HELD THAT: - Section 105 prescribes penalty for failure to collect or pay STT but, when read with Section 108, imposition of penalty is not automatic. Section 108, by its non-obstante opening, overrides Sections 105-107 insofar as it disapplies penalty where the assessee proves a reasonable cause for the failure; further the proviso requires that no penalty order be made without giving the assessee a reasonable opportunity of hearing. Consequently, finding a failure to collect or pay STT in an assessment order does not ipso facto warrant penalty: penalty must be the subject of a separate proceeding in which the assessee is afforded opportunity to demonstrate reasonable cause. Because penalty is punitive in nature, the Assessing Officer must be satisfied of deliberate defiance or wilful contravention before imposing it. Applying these principles to the present case, and having regard to the Tribunal's conclusion (affirmed by this Court) that the respondent was not liable for short deduction of STT, the Tribunal was justified in deleting the penalty imposed on the respondent. [Paras 8, 9, 10, 11, 12]

Penalty imposed under Section 105 was rightly deleted by the Tribunal; imposition of penalty requires separate proceedings, opportunity to be heard and proof of no reasonable cause or wilful contravention.

Final Conclusion: The appeal is dismissed; the Tribunal's deletion of the penalty under Section 105 for financial year 2006-07 is affirmed and upheld.

Validity of satisfaction note for initiating proceedings under Section 158BD - assessment under Section 158BD read with Section 143(3) - attribution of undisclosed income to the firm on basis of seized documents and statements - treatment of an entity as Association of Persons versus firm where actual partners exceed those in registered partnership deed - application of Section 184 regarding assessment as a firm - levy of interest under Section 158BFA(1) by way of rectification under Section 154

Validity of satisfaction note for initiating proceedings under Section 158BD - Assessing Officer's satisfaction note recorded prior to proceeding under Section 158BD was valid. - HELD THAT: - The Court examined the satisfaction note prepared by the Assessing Officer which identified the seized document from the searched person, recorded the partner's share and worked out the firm's profits. The note recited the search, described the seized exhibit, and explained why notice under Section 158BC read with Section 158BD was issued. The Court found that this satisfaction note complied with the requirements as interpreted in Calcutta Knitwears and the CBDT Circular dated 31.12.2015, including the need to record satisfaction even where the searched person and the 'other person' may be the same. Consequently the satisfaction requirement for invoking Section 158BD was held to be satisfied. [Paras 8]

Satisfaction note recorded by the Assessing Officer is valid; question decided for revenue.

Attribution of undisclosed income to the firm on basis of seized documents and statements - Undisclosed income reflected in the seized documents and the statement of the searched partner was attributable to the appellant firm. - HELD THAT: - The Court relied on the statement of G.T. Krishna Murthy (who admitted being a partner and having a 9/105 share), the seized trial balance sheets showing names and profit shares of nine persons, and the absence of any contrary evidence that a separate nine-partner firm carried on the same business. The Tribunal's factual finding that the firm carried out parallel clandestine business involving the four additional persons was viewed as a meticulous appreciation of material and not perverse. On this basis the Court upheld the Tribunal's attribution of the undisclosed income to the appellant firm. [Paras 9]

Finding that the undisclosed income belonged to the firm is sustained; question decided against the assessee.

Relevance of seized document showing nine shares to establish partner composition - Document seized from the searched partner showing nine profit shares was held to pertain to the appellant firm and supported the addition. - HELD THAT: - The seized trial balance reflected names of nine persons, including the five partners named in the registered partnership deed; the searched partner acknowledged the entries and his 9/105 share. He did not assert the existence of a distinct nine-partner firm conducting the same business. The Tribunal's conclusion that the seized document evidenced an undisclosed parallel business and extra persons sharing profits in relation to the appellant firm was a factual finding based on the seized material and statements and was accordingly upheld. [Paras 9]

Seized document showing nine profit shares is attributable to the appellant firm; finding upheld for revenue.

Application of Section 184 regarding assessment as a firm - treatment of an entity as Association of Persons versus firm where actual partners exceed those in registered partnership deed - Section 184 did not apply to treat the appellant as a firm for assessment purposes because, on the material, there were in fact nine partners though the registered deed showed five. - HELD THAT: - Section 184(1) requires that a partnership be evidenced by an instrument and that individual shares of partners are specified in that instrument to be assessed as a firm. The Court found that notwithstanding the registered partnership deed showing five partners, the material (including seized documents and statements) established that there were actually nine persons participating in profit sharing. Given that factual situation, the statutory test for assessment as a firm under Section 184 was not satisfied and the appellant could be treated as an Association of Persons for the purposes of assessment under the provisions invoked. [Paras 10]

Section 184 inapplicable on the facts; appellant not entitled to assessment as a firm.

Computation of undisclosed income in relation to block period where seized material related to excise accounting years - The appellant's contention on computation and deduction of payments did not require determination because the appellant had asserted firm status with five partners. - HELD THAT: - The Court recorded that the appellant had specifically maintained that it was a partnership firm of five partners; in view of that stance the Court held that the particular substantial question framed regarding computation of undisclosed income and allowance of deductions (premised on the appellant's asserted position) did not fall for further consideration in the appeal and was accordingly answered in that context. [Paras 11]

Point on computation/deductions treated as not arising for consideration given the appellant's pleaded position; answered accordingly.

Levy of interest under Section 158BFA(1) by way of rectification under Section 154 - Interest under Section 158BFA(1) levied by the Assessing Officer through an order under Section 154 was sustained. - HELD THAT: - After upholding the validity of the assessment under Section 158BD read with Section 143(3), the Court considered the Assessing Officer's rectification order charging interest under Section 158BFA(1) where such interest had been omitted in the original assessment order. The Court found that, having validated the assessment, the Assessing Officer was justified in levying the interest by rectification and accordingly upheld that action. [Paras 11]

Levy of interest under Section 158BFA(1) by way of order under Section 154 is upheld; decided against the assessee.

Final Conclusion: All substantial questions of law raised were answered against the assessee and in favour of the revenue; the High Court dismissed the appeal and upheld the assessment, attribution of undisclosed income to the firm, and the levy of interest under Section 158BFA(1).

Corpus donations - capital receipt - voluntary contributions - taxability of voluntary contributions under section 2(24)(iia) - exemption of corpus donations as capital receipts - registration under section 12AA and its effect on exemption - corpus donations outside scope of section 2(24)(iia) even prior to registration under section 12AA

Corpus donations - taxability of voluntary contributions under section 2(24)(iia) - exemption of corpus donations as capital receipts - registration under section 12AA and its effect on exemption - Whether the amounts received by the assessee-society as corpus donations/voluntary contributions are chargeable to tax as income under section 2(24)(iia) or are to be treated as capital/corpus receipts and excluded from income, including for the period prior to registration under section 12AA. - HELD THAT: - The Tribunal accepted the assessee's case that the receipts were corpus donations given for specific purposes and not income. The Assessing Officer had mechanically taxed the contributions under section 2(24)(iia) because the society did not possess 12A/12AA registration at the assessment stage, without calling for or examining detailed evidence on the nature, donor directions and purpose of the receipts. On appeal the CIT(A) considered authorities (including R.B. Shriram Religious and Charitable Trust, Indian Society of Anaesthesiologists and Vokkaligara Sangha) which hold that voluntary contributions with a specific direction to form part of the corpus are capital in nature and not taxable as income under section 2(24)(iia), and that such contributions remain outside the scope of income-tax even for periods prior to formal registration. The Tribunal found no reason to disturb the CIT(A)'s application of those precedents, observed that the AO had not tested the factual character of the donations, and upheld the view that the impugned receipts are corpus/capital receipts not chargeable to tax. [Paras 3, 7, 8]

The addition of the corpus/voluntary contributions to the assessee's income is deleted; the contributions are treated as corpus/capital receipts not taxable under section 2(24)(iia), and the Revenue's appeals are dismissed.

Final Conclusion: The Tribunal affirmed the CIT(A)'s finding that the voluntary/corpus donations received by the assessee are capital/corpus receipts outside the scope of section 2(24)(iia) (including for the period prior to registration under section 12AA) and dismissed the Revenue's appeals for AY 2014-15 and AY 2016-17.

Cost Recovery Charges - Handling of Cargo in Customs Areas Regulations, 2009 - Customs Cargo Service Provider - Payment of Merchant Over Time (MOT) charges - Requirement of posting of dedicated Customs officers - Retrospective operation of regulations - Validity of Regulation 5(2) of HCCAR, 2009 - Custodianship under Section 45 of the Customs Act, 1962

Cost Recovery Charges - Payment of Merchant Over Time (MOT) charges - Requirement of posting of dedicated Customs officers - Handling of Cargo in Customs Areas Regulations, 2009 - Whether the appellant was liable to pay cost recovery charges under HCCAR, 2009 for the period 17.03.2009 to 31.03.2015 or whether payment of MOT charges, as allowed by department's letter, was sufficient. - HELD THAT: - The Tribunal found as an undisputed factual position on record that no separate or dedicated Customs officer was posted for the appellant's private jetty and that the department itself had allowed the appellant to operate on payment of MOT charges by its letter dated 05.05.2003. Regulation 5(2) and Regulation 6(1)(o) of HCCAR, 2009 obligate a CCSP to bear the cost of Customs officers posted at the customs area on cost recovery basis; their plain language makes the obligation contingent upon such officers being posted. Regulation 4's retrospective provision only regularizes prior appointments of CCSPs and does not, by itself, render cost recovery payable where no dedicated posting occurred. Applying these principles, the Tribunal held that in the absence of any evidence of separate posting by competent authority, the statutory precondition for invoking cost recovery under HCCAR 2009 was not satisfied and hence the demand for cost recovery charges could not be sustained. The Tribunal further relied on decisions of High Courts (including GMR Hyderabad) which have examined the nature and scope of Regulation 5(2) and, in comparable facts, have set aside cost recovery demands and observed on the invalidity/unsustainability of obligatory cost recovery where no quid pro quo service to the custodian is shown. On these grounds the impugned demand for the period 17.03.2009 to 31.03.2015 was held to be unsustainable. [Paras 10, 11, 14]

Demand of cost recovery charges for 17.03.2009 to 31.03.2015 is not sustainable; payment of MOT charges as accepted by the department precluded liability for cost recovery in the absence of posting of dedicated Customs officers, and the impugned order is set aside.

Final Conclusion: The appeal is allowed. The adjudicating authority's confirmation of cost recovery charges for the period 17.03.2009 to 31.03.2015 is set aside and the demand quashed; consequential reliefs, if any, shall follow in accordance with law.

Amendment of documents under section 149 of the Customs Act, 1962 - Clearance under Advance Licence - Anti dumping duty levy and its effect on amendment of bill of entry - Requirement of documentary evidence existing at the time of clearance - Afterthought objection - Revenue neutrality by way of drawback

Amendment of documents under section 149 of the Customs Act, 1962 - Clearance under Advance Licence - Anti dumping duty levy and its effect on amendment of bill of entry - Requirement of documentary evidence existing at the time of clearance - Afterthought objection - Whether the Bill of Entry could be amended under section 149 to permit clearance against an existing Advance Licence where the levy of Anti Dumping Duty was notified after filing and out of charge, and whether the department's contention of afterthought and delay is sustainable. - HELD THAT: - The Court held that section 149 permits amendment where the documentary basis for the amendment was in existence at the relevant time. The Advance Licence was issued and in the possession of the appellant on the date of filing the Bill of Entry and at the time out of charge was given; accordingly the statutory criterion for amendment was satisfied. The imposition or demand of Anti Dumping Duty, which arose after filing and out of charge, did not preclude amendment because neither the department nor the appellant was aware of the levy at the time of filing. The Tribunal rejected the lower authority's characterization of the request as an afterthought, noting that the amendment was sought in response to the subsequent demand for ADD and that section 149 prescribes no temporal limitation for seeking such an amendment. The Tribunal also observed that the appellant's case was supported by precedent relied upon by it, while the decisions cited by the revenue were on different facts and inapplicable. As an ancillary point, the Tribunal noted (without making it the basis of the decision) that the exercise was revenue neutral since duties paid could be recouped by drawback in the event of export manufacture. [Paras 4, 5]

Amendment of the Bill of Entry under section 149 was allowable because the Advance Licence existed at the time of filing/out of charge; the afterthought objection and alleged delay were rejected; the impugned order set aside and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, set aside the impugned order and permitted amendment of the Bill of Entry under section 149 to permit clearance against the existing Advance Licence, rejecting the revenue's afterthought/delay objection.

Validity of Kimberley Process Certificates - Interpretation of the term "procure" in the context of KPCS and Office Memoranda - Effect of Office Memoranda dated 19.08.2011 and 24.11.2011 on import prohibition of rough diamonds - Confiscation and penalties under the Customs Act for prohibited or smuggled goods

Validity of Kimberley Process Certificates - Interpretation of the term "procure" in the context of KPCS and Office Memoranda - Effect of Office Memoranda dated 19.08.2011 and 24.11.2011 on import prohibition of rough diamonds - Confiscation and penalties under the Customs Act for prohibited or smuggled goods - Whether the imported rough diamonds were liable to confiscation and the penalties imposed under the Customs Act in view of the Kimberley Process Certificates and related documentary evidence showing procurement prior to 17.11.2010, and the effect of the Ministry of Commerce Office Memoranda. - HELD THAT: - The Tribunal accepted that the adjudicating authority did not dispute the authenticity of the Kimberley Process Certificates (KPCs) and other documentary records. The KPC No. ZW 000114 dated 12.11.2010 identified both seller and buyer (M/s MBADA/MMCZ and M/s C.D. Jewels) and thus evidenced that procurement was in process prior to 17.11.2010. Documentary confirmations from MMCZ, the KP Monitor and UAE KP authorities corroborated that the consignments were procured by C.D. Jewels before 17.11.2010 and that the shipments were KP Compliant. The Tribunal held that the date of invoice or the date of physical clearance from Zimbabwe, being post dated, is not decisive of when procurement occurred; raising of an invoice is a commercial formality and does not necessarily determine the date of procurement. Further, Office Memorandum dated 24.11.2011 permitted import of rough diamonds from the Marange region if accompanied by prescribed KP documentation and contains no retrospective restriction tied to excavation, sourcing or sale dates. Given the undisputed KPCs and corroborative letters, and in absence of any repudiation of those certificates by the relevant KP authorities, the consignments could not be treated as prohibited or smuggled goods. Consequentially, confiscation and penalties imposed under the Customs Act were unsustainable.

Confiscation of the diamonds and the penalties imposed upon M/s Surat Rough Diamond Sourcing India Ltd and its director were set aside; the appeals by the appellants allowed and the revenue's appeal for enhancement of fine and penalties dismissed.

Final Conclusion: The Tribunal held that the imported rough diamonds were KP Compliant and shown to have been procured prior to 17.11.2010; confiscation and penalties under the Customs Act were therefore not sustainable, the appellants' appeals were allowed and the revenue's appeal dismissed.

Liability of carrier/steamer agent for short landing - Shipper's Load Stow & Count clause - intact seals and outturn report - penalty under section 116 of the Customs Act, 1962

Liability of carrier/steamer agent for short landing - Shipper's Load Stow & Count clause - intact seals and outturn report - Whether the steamer agent/carrier can be held liable and penalised for short landing when the Bill of Lading contains 'Shipper's Load Stow & Count' and the container seals were found intact - HELD THAT: - The Tribunal found that the Bill of Lading expressly stated 'Shipper's Load Stow & Count', a term that indicates the particulars of the cargo were as furnished by the shipper and that the carrier was not present when the container was packed. The reasoning emphasises that where seals on containers remain intact and there is no evidence of tampering, the carrier cannot be held responsible for shortages because the carrier did not load, stow or count the cargo and relied upon the shipper's particulars. The appellant furnished an enquiry report and other documents supporting non liability, and the department failed to produce evidence to rebut that position; the penalty was therefore imposed mechanically without proof of carrier involvement in the short landing.

Findings absolve the steamer agent/carrier of liability for the short landing on the basis of the 'Shipper's Load Stow & Count' endorsement and intact seals; departmental evidence held insufficient to fasten responsibility on the appellant.

Penalty under section 116 of the Customs Act, 1962 - Whether the penalty of Rs. 10,00,000 imposed on the steamer agent under section 116 of the Customs Act, 1962 was justified - HELD THAT: - Having concluded that the carrier was not liable for the short landing because of the shipper's declaration in the Bill of Lading and intact seals, the Tribunal held that the adjudicating authority's imposition of penalty under section 116 was without adequate basis. The penalty was set aside on the ground that there was no proof linking the appellant to the alleged short landing and the authority had acted mechanically in imposing penalty.

Penalty imposed under section 116 set aside and the appeals allowed with consequential relief.

Final Conclusion: The Tribunal allowed the appeals, set aside the adjudicating authority's orders imposing penalty, and relieved the steamer agent of liability for the short landing because the Bill of Lading recorded 'Shipper's Load Stow & Count' and the container seals were intact, the department having failed to produce evidence to fasten responsibility on the appellant.

Settlement Commission immunity for co-noticees - Jurisdiction of Central Excise authority to recover differential duty under Rules governing concessional import for manufacture - Right to personal hearing and cross-examination - Admissibility of confessional statements and inapplicability of section 9D / section 138B to confessions - Liability under section 112B of the Customs Act for dealing with diverted imported goods

Settlement Commission immunity for co-noticees - Whether appellants are entitled to automatic immunity from adjudication by reason of settlement granted to the main noticee by the Settlement Commission. - HELD THAT: - The Tribunal held that immunity accorded to the applicant who approached and obtained settlement under the KVS/Settlement Commission does not automatically extend as a blanket protection to co-noticees. The merits of the case against co-noticees must be examined independently; where co-noticees have committed distinct or additional acts attracting penal consequences separate from those of the settlor, the Department may proceed against them. The Settlement Commission's order in the main noticee's favour expressly left liberty to the Revenue to take action against other co-noticees, and therefore the appellants could not claim automatic dismissal of proceedings. [Paras 5]

Appellants are not entitled to automatic immunity by reason of settlement of the main noticee; proceedings against them may be upheld.

Jurisdiction of Central Excise authority to recover differential duty under Rules governing concessional import for manufacture - Whether the Central Excise Commissioner (having jurisdiction over the factory) was the proper authority to issue the show cause notice for recovery of differential duty instead of the Customs officer at port of importation. - HELD THAT: - The Tribunal applied the scheme of the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 and relevant judicial precedents to conclude that verification of compliance with the conditions of concessional import (including post-import use for manufacture) falls within the competence of the Central Excise authority having jurisdiction over the factory. The certificate of registration for concessional import is issued by the excise authority and the excise authority is empowered to monitor maintenance of records and consumption; consequently the Assistant/Deputy Commissioner of Central Excise is competent to issue notices for recovery of differential duty. [Paras 5]

The adjudicating authority from Central Excise had jurisdiction to issue the show cause notice and proceed for recovery of duty.

Right to personal hearing and cross-examination - Whether appellants were denied opportunity of personal hearing and of cross-examining witnesses, thereby violating principles of natural justice. - HELD THAT: - The Tribunal found that the appellants were afforded multiple opportunities of personal hearing and had on several occasions either not appeared or chosen to submit written replies rather than pursue oral defence or cross-examination. The adjudicating authority recorded non-cooperation and adjournment-seeking by the appellants. Cross-examination, while important for testing evidence, is not an absolute right to be enforced where the party does not diligently seek it; moreover statements relied upon were held largely to be confessional in nature and not rendered inadmissible under the provision cited. On these facts the plea of denial of natural justice was rejected. [Paras 5]

No violation of the right to personal hearing or a right to cross-examination was established; grievance rejected.

Admissibility of confessional statements and inapplicability of section 9D / section 138B to confessions - Whether statements relied upon were barred by section 9D of the Central Excise Act or section 138B of the Customs Act, or otherwise rendered inadmissible. - HELD THAT: - The Tribunal concurred with the adjudicating authority that the statements relied upon were, in substance, confessional in nature and therefore not within the ambit of the evidentiary bar invoked by the appellants. The Tribunal referenced precedent holding that confessional statements are outside the scope of the statutory provision relied upon, and observed that where a statement amounts to confession the maker cannot be compelled to be cross-examined to render it admissible. Accordingly the objections based on those statutory provisions were repelled. [Paras 5]

Statements relied upon were admissible as confessions and the objections under section 9D/section 138B did not prevail.

Liability under section 112B of the Customs Act for dealing with diverted imported goods - Whether there was sufficient evidence to hold the appellants liable for knowingly dealing with imported CPO diverted from concessional use and to uphold confiscation/penalty under section 112B. - HELD THAT: - The Tribunal examined investigative material including admissions of the main noticee before the Settlement Commission, statements of third parties (notably the partner of the transport firm), receipt registers, and ST-31 forms obtained from Sales Tax authorities. These items, taken together, corroborated diversion of consignments to the appellants and demonstrated a nexus between the main noticee and the appellants in clandestine movement and sale of the imported CPO contrary to the concessional import condition. Given the appellants' failure to effectively rebut or appear to challenge this evidence, the Tribunal found no infirmity in the adjudicating authority's conclusion that the appellants had knowingly dealt with diverted imported goods and were liable to penalties under section 112B. [Paras 5, 6]

Evidence sufficed to uphold penalties under section 112B; the adjudicating order is upheld on merits.

Final Conclusion: The Tribunal dismissed the appeals and upheld the adjudicating authority's order: (i) settlement of the main noticee did not confer automatic immunity on the appellants; (ii) the Central Excise authority had jurisdiction to proceed; (iii) no breach of natural justice or inadmissibility of confessional statements was established; and (iv) the penalties under section 112B of the Customs Act were sustained.

Default - admission of Section 7 application - completeness of Form No.1 - one time settlement proposal - relevance of security value to initiation - moratorium under Section 14 - appointment of Interim Resolution Professional

Default - admission of Section 7 application - completeness of Form No.1 - Whether the Section 7 application was complete and a default had occurred such that the application must be admitted. - HELD THAT: - The Tribunal examined the bank's Form No.1 and accompanying material, including the CIBIL report and the statement of account certified under the Bankers' Books Evidence Act, and found that 'debt' and 'default' were proved. The application in the prescribed form was held to be complete. In view of satisfaction of the conditions under the provision cited by the Tribunal, the petition for initiation of CIRP was held to be fit for admission. [Paras 11, 12, 14, 16]

Application under Section 7 was admitted as the occurrence of default and completeness of the application were established.

One time settlement proposal - admission of Section 7 application - Whether pendency of an OTS proposal precluded initiation of CIRP under Section 7. - HELD THAT: - The Tribunal noted that an OTS proposal dated prior to the bank's demand notice was on record but held that pendency of an OTS proposal is irrelevant to the question whether a default has occurred. The demand notice having been issued and payment not made, the Tribunal treated the fact situation as amounting to rejection for the purpose of proceeding under the Code and proceeded to admit the application. [Paras 8, 13]

Pendency of an OTS proposal did not bar initiation and admission of CIRP once default was established.

Relevance of security value to initiation - admission of Section 7 application - Whether the market value of secured assets being in excess of the claim prevents initiation of proceedings under Section 7. - HELD THAT: - The Tribunal observed that the existence of security and its market value being higher than the claim does not operate as a bar to initiation of CIRP under Section 7 when the occurrence of default is proved. The adequacy or sufficiency of security was held to be immaterial to the admissibility of the Section 7 application. [Paras 13]

The claimed higher market value of mortgaged assets did not preclude admission of the Section 7 petition.

Moratorium under Section 14 - appointment of Interim Resolution Professional - Consequent directions on moratorium and appointment of an Interim Resolution Professional upon admission of the Section 7 application. - HELD THAT: - Having admitted the application, the Tribunal declared moratorium in terms of the statute, specifying the prohibitions on suits, transfer or encumbrance of assets, enforcement of security and recovery of property, and protections for supply of essential goods or services. The Tribunal examined the credentials of the proposed Interim Resolution Professional, was satisfied there were no disciplinary proceedings against him, and appointed him with directions concerning suspension of board powers, inventory, public announcement, constitution of the committee of creditors, reporting and other statutory duties. [Paras 16, 17, 18, 19, 20]

Moratorium was declared and the proposed IRP was appointed with directions to perform statutory duties and report to the Tribunal.

Final Conclusion: The Tribunal admitted the Section 7 petition filed by the Financial Creditor against the Corporate Debtor on the ground of established default and completeness of the application; declared statutory moratorium; and appointed the Interim Resolution Professional with directions to carry out the CIRP and report to the Tribunal.

Existence of debt and default - admissibility of petition under section 7 of the I&B Code, 2016 - moratorium and appointment of Interim Resolution Professional - pledge of dematerialised shares governed by Depositories Regulations not section 176 of the Contract Act - right of pawnee to redeliver security and consequence on suit for debt

Existence of debt and default - admissibility of petition under section 7 of the I&B Code, 2016 - The petition under section 7 was admissible as the creditor established existence of debt and default by the corporate debtor. - HELD THAT: - The Tribunal found that three express loan agreements existed between the parties and that amounts were disbursed to the corporate debtor. Documentary material and correspondence, including the debtor's own communications and requests for restructuring, demonstrated acknowledgement of liability. On the materials placed before it the Bench concluded that the corporate debtor had defaulted in repayment, that the financial creditor had established the essential constituents for admission under section 7, and that the application under section 7(2) was complete. [Paras 26, 27, 30, 31, 32]

The petition under section 7 is admitted and the statutory conditions for initiation of the corporate insolvency resolution process are satisfied.

Pledge of dematerialised shares governed by Depositories Regulations not section 176 of the Contract Act - notice requirement prior to sale of dematerialised pledged shares - Sale of pledged dematerialised shares was not subject to a prior notice requirement under section 176 of the Contract Act; the pledge and its enforcement were governed by the Depositories Regulations and applicable regulatory framework. - HELD THAT: - The Tribunal accepted the creditor's submission and relied upon the reasoning in the cited High Court authority to hold that pledge of dematerialised shares is governed by the Depositories Act and Regulations (including the post-invocation notice regime) and that requiring a prior notice under section 176 would undermine the depository framework. The Bench further found on the record that the pledged shares were in dematerialised form and that the creditor had furnished particulars and timing of sale, rejecting the debtor's contention that no information was provided and that sale was unnotified. [Paras 28, 29]

The creditor was not under an obligation to give prior notice under section 176 before selling dematerialised pledged shares; enforcement in the present case was governed by the Depositories Regulations and the creditor's steps were not contrary to that position.

Right of pawnee to redeliver security and consequence on suit for debt - The corporate debtor's plea that the creditor could not sue for the debt because it could not redeliver pledged security was rejected. - HELD THAT: - The debtor asserted that sale of pledged shares (and consequent inability to redeliver security) barred the creditor from seeking recovery of the debt. The Tribunal examined the security documents, the sequence of invocation and sale, and the creditor's disclosures regarding proceeds and timing. It concluded that the debtor's contention did not absolve it of the debt and that the creditor was entitled to claim the outstanding amounts after having taken steps to enforce the pledged security in accordance with applicable norms. [Paras 27, 28, 29]

The contention that inability to redeliver security precluded recovery of the debt was not accepted; the creditor remains entitled to pursue its claim and the petition stands admitted.

Final Conclusion: The Tribunal admitted the section 7 petition, imposed the moratorium with effect from 20.12.2019, directed public announcement of the CIRP, and appointed an Interim Resolution Professional to carry out functions under the Insolvency and Bankruptcy Code, 2016.

Operational Creditor - Operational Debt - maintainability of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - pre-existing dispute - admission of Section 9 application and initiation of Corporate Insolvency Resolution Process - moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - appointment of Interim Resolution Professional

Operational Creditor - Operational Debt - maintainability of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - pre-existing dispute - Whether the Section 9 application by the Operational Creditor is maintainable and the claimed operational debt is admissible for initiating CIRP - HELD THAT: - The Tribunal examined the documentary record and found a signed statement dated 23.09.2015 recording pending amounts signed by both parties, a Certificate of Appreciation dated 03.11.2015, subsequent part-payments by the corporate debtor and e-mail correspondence acknowledging the claims. The corporate debtor failed to produce probative documentary evidence to substantiate a pre-existing dispute prior to the demand notice and relied largely on unsubstantiated allegations and general denials. The Tribunal distinguished Transmission Corpn. of Andhra Pradesh Ltd. on facts, noting that in that authority the dispute pre-existed the demand notice. Given the signed acknowledgment, partial payments and absence of documentary proof of a bona fide pre-existing dispute, the Tribunal concluded the claim constituted an operational debt exceeding the statutory threshold and the Section 9 application was complete and maintainable. [Paras 17, 18, 19, 20, 21]

The Section 9 application is maintainable; the claimed operational debt is admitted for the purpose of initiating CIRP and the application is complete.

Admission of Section 9 application and initiation of Corporate Insolvency Resolution Process - moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Whether on admission the moratorium under the Code should be declared and its scope - HELD THAT: - Upon admission of the Section 9 application, the Tribunal applied Section 14 to declare the moratorium. The order specifies the prohibitions during moratorium, including institution or continuation of suits or proceedings against the corporate debtor, transfer or disposal of assets, enforcement of security interests and recovery of property occupied by the corporate debtor. The Tribunal also recorded that services to the corporate debtor, if continuing, shall not be terminated during the moratorium and acknowledged statutory exceptions as notified by the Central Government or as applicable to sureties. [Paras 22, 23]

Moratorium under Section 14 is declared from the date of the order till completion of CIRP or earlier order and its statutory prohibitions are applied.

Appointment of Interim Resolution Professional - Appointment of an Interim Resolution Professional and direction regarding interim funding - HELD THAT: - The Tribunal noted that the Operational Creditor had not recommended an IRP and therefore appointed an Interim Resolution Professional with the stated registration number to carry out functions under the Code. The Tribunal directed the Operational Creditor to deposit an initial sum (to meet IRP's initial expenses) within three days of receipt of the order, subject to subsequent adjustment by the Committee of Creditors, and directed registry to communicate the order to relevant parties. [Paras 23]

An Interim Resolution Professional is appointed and the Operational Creditor is directed to deposit the initial amount as directed for meeting IRP's expenses; registry to communicate the order.

Final Conclusion: The Tribunal admitted the Section 9 application, held that no bona fide pre-existing dispute barred initiation of CIRP, declared the moratorium under Section 14 with the specified prohibitions, appointed an Interim Resolution Professional and directed the Operational Creditor to deposit the initial amount to meet IRP's expenses.

Moratorium under Section 14(1)(d) of the Insolvency and Bankruptcy Code, 2016 - Supply of essential goods or services under Section 14(2) of the Insolvency and Bankruptcy Code, 2016 - Right to use of spectrum versus ownership of spectrum as State/national asset - Exception under Section 18(1)(f) of the Insolvency and Bankruptcy Code, 2016 for assets owned by third parties but in possession of the corporate debtor - Protection of assets and preservation of value for maximisation under the Insolvency and Bankruptcy Code, 2016

Moratorium under Section 14(1)(d) of the Insolvency and Bankruptcy Code, 2016 - Supply of essential goods or services under Section 14(2) of the Insolvency and Bankruptcy Code, 2016 - Right to use of spectrum versus ownership of spectrum as State/national asset - Application of the moratorium to the continued use and possession of the telecom license and spectrum by the corporate debtor during CIRP. - HELD THAT: - The Tribunal held that where an intangible asset (telecom license and assigned spectrum) is in the possession and use of the corporate debtor and is essential for conducting its business, the moratorium declared under Section 14 operates to prohibit the licensor from taking steps that would interrupt or terminate that use during the insolvency commencement date and the CIRP. The Bench treated the usage of the license/spectrum as akin to supply of essential goods or services envisaged by sub section (2) of Section 14, since without such usage the corporate debtor cannot operate as a going concern and the value of the company would be materially impaired. Although the State/DoT retains ownership of spectrum and the contractual arrangement grants only a 'right to use', that proprietary character does not, in itself, permit the licensor to take action during moratorium that would frustrate the objective of preserving and maximising the debtor's assets for a viable resolution plan. The Tribunal accepted that termination or suspension at this stage would severely prejudice the prospects of a successful resolution and deter resolution applicants, and therefore prohibited such action pending CIRP. [Paras 7]

The moratorium under Section 14 applies to prohibit the DoT from suspending, terminating or interrupting the corporate debtor's use and possession of the telecom license and spectrum during the CIRP; usage of the license/spectrum is protected as essential for the corporate debtor's business.

Exception under Section 18(1)(f) of the Insolvency and Bankruptcy Code, 2016 for assets owned by third parties but in possession of the corporate debtor - Right to use of spectrum versus ownership of spectrum as State/national asset - Effect of the separate statutory position that spectrum is a State/national asset and the scope of Section 18(1)(f) in permitting re possession by the owner during CIRP. - HELD THAT: - The Tribunal acknowledged the legal proposition that spectrum is a national asset owned by the State and that the contractual regime grants the licensee a right to use rather than ownership. The Bench also recognised the exception in Section 18(1)(f) that allows repatriation of assets owned by third parties even if in the debtor's possession. However, after examining the admitted facts, the Tribunal concluded that, notwithstanding ownership by the State, the doctrine of moratorium and the aim of the Code to preserve and maximise the debtor's value required protection of the debtor's continued use of the license/spectrum at this stage. The Tribunal noted existing contractual terms (including clauses on revocation and force majeure) and regulatory remedies available to the licensor (such as approaching TRAI or TDSAT) and observed that immediate re possession or cancellation by DoT would be prejudicial to the insolvency process. Thus, while accepting the State's ownership in principle, the Tribunal restrained the DoT from cancelling or impairing the debtor's use during CIRP. [Paras 6, 7, 8]

Although spectrum is owned by the State and the license confers only a right to use, the exception in Section 18(1)(f) did not justify permitting DoT to cancel or terminate the debtor's use during the moratorium; DoT was restrained from taking such action while CIRP continues.

Final Conclusion: The Tribunal directed that, within the scope of the Insolvency and Bankruptcy Code and for the purpose of protecting and maximising the corporate debtor's value during CIRP, the moratorium applies to the debtor's possession and use of the telecom license and spectrum and the DoT is restrained from suspending, terminating or cancelling the licence/spectrum allocation during the insolvency process; both applications were disposed of accordingly.

Admission of application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Proof of debt and default - Corporate Insolvency Resolution Process commencement and moratorium - Declaration of moratorium and its prohibitions - Appointment of Interim Resolution Professional - Jurisdiction of the Adjudicating Authority - Service by speed post, publication and ex parte proceedings

Admission of application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Proof of debt and default - The financial creditor has established existence of debt and default sufficient to admit the Section 7 application. - HELD THAT: - The Tribunal examined the loan facilities granted, the security documents and the bank records and concluded that the corporate debtor had availed term loans and cash credit facilities and had defaulted in repayment. The applicant established that an outstanding amount was due and payable by the corporate debtor and that the debt and default were proved, which satisfies the statutory requirement for admission under Section 7 of the Code. [Paras 5, 7, 9]

Section 7 application admitted on the basis that debt and default are proved.

Jurisdiction of the Adjudicating Authority - The Adjudicating Authority has jurisdiction to entertain the petition. - HELD THAT: - The Tribunal noted the registered office address of the corporate debtor and held that the petition lies within the territorial jurisdiction of this Bench. The matter was also transferred from the Mumbai Bench after constitution of this Bench and re numbered accordingly. [Paras 3, 6]

Petition is within the period of limitation and the Adjudicating Authority has jurisdiction.

Service by speed post, publication and ex parte proceedings - Proceedings were validly conducted ex parte after attempted service and publication. - HELD THAT: - The applicant filed an affidavit of service recording that notice sent by speed post was returned with an 'insufficient address' endorsement. Thereafter notice was published in an English and a vernacular newspaper and the corporate debtor did not appear. In view of these facts the Tribunal proceeded ex parte. [Paras 4]

Because personal service failed and published notice was effected, the respondent was called absent and the matter proceeded ex parte.

Corporate Insolvency Resolution Process commencement and moratorium - Declaration of moratorium and its prohibitions - Appointment of Interim Resolution Professional - On admission, CIRP is to commence with immediate moratorium and appointment of an IRP to manage the process. - HELD THAT: - Following admission, the Tribunal declared moratorium and directed public announcement in accordance with the Code. The moratorium's scope and prohibitions were set out as applicable from the date of admission until completion of the CIRP, subject to the statutory exceptions. The Tribunal appointed the named insolvency professional as Interim Resolution Professional and directed him to perform the statutory functions including convening the Committee of Creditors and filing reports within the stipulated time frame. [Paras 9, 10]

CIRP admitted; moratorium declared; public announcement ordered; named IRP appointed with directions to proceed under the Code.

Final Conclusion: The Tribunal admitted the Section 7 petition against the corporate debtor on proof of debt and default, held the Bench has jurisdiction, proceeded ex parte after attempted service and publication, declared the statutory moratorium, ordered public announcement and appointed the named Interim Resolution Professional to conduct the Corporate Insolvency Resolution Process.

Extended period of limitation - Cenvat credit reversal disclosed in returns as evidence of bonafide - invocation of extended period against bona fide disclosure

Extended period of limitation - Cenvat credit reversal disclosed in returns as evidence of bonafide - invocation of extended period against bona fide disclosure - Extended period of limitation could not be invoked where the appellant had bona fide disclosed reversal of Cenvat credit in returns and there was no evidence of malafide. - HELD THAT: - The Tribunal found that the demand related to the period October, 2006 to March, 2011 was beyond the normal limitation period. The appellants had been reflecting reversal of Cenvat credit in respect of items used in the galvanization job-work in their RG-12 returns. This disclosure established a bona fide belief on the part of the assessee that galvanization constituted manufacture and, given that hand-pumps were unconditionally exempt, no duty was payable. In the absence of any other evidence of malafide or concealment, the Revenue could not invoke the extended period of limitation. The Tribunal therefore set aside the impugned order on the ground of limitation and allowed the appeal with consequential relief. [Paras 4]

Impugned order set aside and appeal allowed on the ground that the extended period of limitation was not available to the Revenue.

Final Conclusion: The appeal was allowed by setting aside the confirmed demand and penalty as the extended period of limitation could not be invoked in view of bona fide disclosure of Cenvat credit reversal in the appellant's returns; consequential relief was granted to the appellant.

Admissibility of Cenvat credit on CVD paid on provisionally assessed bill of entry - Provisional assessment under Section 18 of the Customs Act - Payment under provisional assessment is duty and not mere deposit - Bill of entry as valid document under Rule 9 of the Cenvat Credit Rules, 2004 - Principle that credit of tax actually paid cannot be denied even if tax was not ultimately payable

Admissibility of Cenvat credit on CVD paid on provisionally assessed bill of entry - Provisional assessment under Section 18 of the Customs Act - Bill of entry as valid document under Rule 9 of the Cenvat Credit Rules, 2004 - Cenvat credit of CVD paid on the basis of a provisionally assessed bill of entry is admissible to the recipient - HELD THAT: - The Tribunal held that provisional assessment is a statutory mode of assessment under Section 18 of the Customs Act and the duty paid pursuant to such provisional assessment cannot be treated as a mere deposit. Rule 9 of the Cenvat Credit Rules prescribes bill of entry as the document on the basis of which customs duty payment is recognised; consequently a bill of entry whether provisionally assessed or finally assessed qualifies for availing Cenvat credit. The Tribunal applied settled precedents holding that where tax/duty has been paid by the supplier or under a statutory assessment (even if subsequently found excessive), the recipient's claim to credit of tax actually paid cannot be denied, and found no legal bar to the adjudicating authority's acceptance of credit taken on provisionally assessed bills of entry. The adjudicating authority's reasoning and interpretation of customs valuation, provisional assessment and Cenvat Credit Rules were examined and affirmed.

Held that Cenvat credit of CVD paid on provisionally assessed bill of entry is admissible; impugned order dropping proceedings is upheld.

Final Conclusion: Revenue's appeal dismissed; the adjudicating authority's order allowing Cenvat credit taken on CVD paid pursuant to provisionally assessed bills of entry is upheld.

Restriction on input tax credit for sales in the course of inter state trade under the proviso to Section 19(2)(v) of the TNVAT Act - entitlement of manufacturers to input tax credit under Section 19(1) of the TNVAT Act for inputs used in manufacture or processing - scope and temporal operation of the proviso inserted w.e.f. 08.11.2013 and deleted w.e.f. 01.04.2015

Restriction on input tax credit for sales in the course of inter state trade under the proviso to Section 19(2)(v) of the TNVAT Act - entitlement of manufacturers to input tax credit under Section 19(1) of the TNVAT Act for inputs used in manufacture or processing - Whether the proviso to Section 19(2) (clause (v)) of the TNVAT Act, as inserted w.e.f. 08.11.2013, applied to a manufacturer during 2013-14 so as to restrict the input tax credit claimed by the petitioner - HELD THAT: - The proviso to Section 19(2) was inserted into the TNVAT Act with effect from 08.11.2013 and, as interpreted by the Court, is confined to situations contemplated under clause (v) which concern sale of goods as such. The legislative intention behind the proviso was to restrict credit where dealers purchased goods at a higher rate of tax and sold under interstate provisions at a lower rate, thereby accumulating credit. A manufacturer, by contrast, avails input tax credit under Section 19(1) for inputs used in manufacture or processing in the State and pays tax on value addition. The restriction in the proviso was not intended to apply to manufacturers or processors who transform inputs into goods within the State. The Court concurs with the earlier Single Judge decision in Everest Industries Ltd. that the proviso does not apply to manufacturers and therefore the impugned order reversing ITC on that basis is unsustainable.

The finding that the proviso to Section 19(2)(v) restricted the petitioner's ITC as a manufacturer for 2013-14 is set aside; the impugned order is unsustainable on that basis.

Scope and temporal operation of the proviso inserted w.e.f. 08.11.2013 and deleted w.e.f. 01.04.2015 - Procedure to be followed in consequence of quashing the impugned order - HELD THAT: - Although the impugned order is quashed on the legal issue above, the Court directs that the matter be remitted to the respondent for fresh consideration. The respondent is required to pass a speaking order in light of the observations in this judgment and after taking into account the final outcome of W.A.No.1260 of 2017 (in which an earlier Single Judge decision was the subject of stay). The remand is for fresh adjudication consistent with the legal view expressed by this Court and any subsequent binding decision of the Division Bench.

The petition is disposed of by remitting the matter to the respondent to pass a fresh speaking order after considering this judgment and the final order in W.A.No.1260 of 2017.

Final Conclusion: Impugned order reversing input tax credit for 2013-14 on the ground that the proviso to Section 19(2)(v) applied to the petitioner as a manufacturer is quashed; the matter is remitted to the respondent for a fresh speaking order consistent with this judgment and any subsequent Division Bench decision in W.A.No.1260 of 2017.