TaxTMI Updates e-Newsletter
Mar 15,2021

Classification of goods by tariff headings - textile fabrics impregnated, coated, covered or laminated with plastics - textile products and articles for technical uses - articles of plastics - residual heading - Chapter and Chapter Notes interpretation - applicability of GST rate entries in Notification No.01/2017-Central Tax (Rate)

Textile fabrics impregnated, coated, covered or laminated with plastics - textile products and articles for technical uses - classification of goods by tariff headings - Classifiability of 'Geo Membrane for Waterproof Lining fabrics (Pond Liner)' under Heading 5903 or 5911 versus Chapter 39 - HELD THAT: - The Authority examined the manufacturing process and materials and found that the product is made by weaving tapes extruded from HDPE granules (plastic) into a fabric and subsequently laminated/coated. Chapter 59 covers textile materials; however the HDPE granules/tapes are plastic raw material falling under Chapter 39. Reliance on the reasoning in M/s. Raj Packwell Ltd. (High Court of Madhya Pradesh) was applied: strips/tapes made of HDPE are articles of plastic and not textile 'fibre' as per statutory definitions. Consequently the product cannot be treated as textile for headings 5903 or 5911 even though coating/lamination is visible, because the substrate itself is plastic and the goods are therefore articles of plastic falling within Chapter 39. The Authority rejected the applicant's reliance on the AAR-Uttarakhand decision as factually distinguishable and noted the limited binding effect of AAR orders under Section 103. Applying Chapter and Chapter Notes, the product is not covered by headings 3901-3925 specifically and hence is classifiable under the residual provision of Heading 3926. [Paras 13, 14, 15, 16]

The Geo Membrane (Pond Liner) is not classifiable under Headings 5903 or 5911 and is an article of plastic falling within Chapter 39.

Articles of plastics - residual heading - Chapter and Chapter Notes interpretation - applicability of GST rate entries in Notification No.01/2017-Central Tax (Rate) - Precise tariff sub-heading and applicable GST rate for the product - HELD THAT: - Having concluded the product is an article of plastic, the Authority considered Chapter 39 and found no specific sub-heading for pond liners within headings 3901-3925. The Authority held the product falls under the residual provision of Heading 3926 and specifically under Sub-heading 39269099. The relevant Notification No.01/2017-Central Tax (Rate) and its amendments were examined: until 14.11.2017 the product corresponded to an entry in Schedule-IV (Entry No.45) attracting 28% GST; with effect from 15.11.2017 the amended Schedule-III (Entry No.111) covers other articles of plastics of headings 3901-3914, attracting 18% GST. The Authority therefore fixed classification as 39269099 with the two period-specific GST rates. [Paras 17, 18, 19, 20]

The product is classifiable under Sub-heading 39269099; GST at 28% (14% CGST + 14% SGST) upto 14.11.2017 and at 18% (9% CGST + 9% SGST) from 15.11.2017 onwards.

Final Conclusion: The Advance Ruling: the applicant's Geo Membrane for Waterproof Lining fabrics (Pond Liner) is an article of plastic classifiable under Sub heading 39269099 of the First Schedule to the Customs Tariff Act, 1975; GST liability is 28% (14% CGST + 14% SGST) up to 14.11.2017 and 18% (9% CGST + 9% SGST) from 15.11.2017 onwards.

Composite supply - health care services exempt when supplied by a clinical establishment - inpatient health care services as a composite supply including medicines, consumables, implants, room rent and food - occupational health check-up services supplied to a business entity are not exempt as 'health care services' and are taxable - classification under 'Human Health and social care services' (inpatient services vs. corporate health check-ups)

Composite supply - inpatient health care services as a composite supply including medicines, consumables, implants, room rent and food - health care services exempt when supplied by a clinical establishment - Supply of medicines, surgical items, implants, consumables and other allied items from hospital in-house pharmacy, and supply of food and room on rent to in patients, whether part of a composite supply of health care treatment and hence exempt from CGST/SGST. - HELD THAT: - The hospital admits in patients for diagnosis and treatment and, in the course of such treatment under directions of medical doctors, provides bed/ICU/room, nursing care, diagnostics, medicines, consumables and implants which are billed together. Such medicines, consumables and implants are naturally bundled with the principal supply of health services because treatment cannot be completed without them and they are supplied in conjunction with the health service. The Explanation/classification for SAC 999311 (Inpatient services) expressly includes medical, pharmaceutical and paramedical services, and Circulars and clarifications (including Circular No.32/06/2018-GST and Circular No.27/01/2018-GST) recognise that food supplied to in patients and room rent form part of the composite healthcare supply. Consequently, the aggregate supply to in patients qualifies as a composite supply where the principal supply is inpatient health care, and such supply by a clinical establishment falls within the exemption under the Notification that exempts health care services supplied by a clinical establishment/authorised medical practitioner/para medics. [Paras 7, 8]

Medicines, surgical items, implants, consumables, food and room rent supplied to in patients are part of a composite inpatient healthcare service and are exempt from CGST/SGST under the Notification exempting health care services by a clinical establishment.

Health care services exempt when supplied by a clinical establishment - occupational health check-up services supplied to a business entity are not exempt as 'health care services' and are taxable - classification under 'Human Health and social care services' - Whether Occupational Health Check up services (OHC) provided by the hospital to employees of business entities, with payment made by the business entity (including camps and ambulance/allied services), qualify as exempt 'health care services' when supplied to the business entity. - HELD THAT: - The exemption applies to services by way of diagnosis, treatment or care for illness, injury, deformity, abnormality or pregnancy provided by a clinical establishment under the defined meaning. Occupational/corporate health check ups described by the applicant are routine preventive screenings of ostensibly healthy employees, commissioned and paid for by business entities to ascertain fitness for employment, monitor health status or prevent workplace illness. These services are supplied to the business entity (the employer) and are aimed at workforce management and prevention rather than diagnosis/treatment of an identified patient's illness. Accordingly, such corporate/OHC services do not fall within the scope of the exempt 'health care services' entry and are classifiable as taxable services under the Human Health and social care services heading specified in the rate notification table. [Paras 15, 16, 17]

Occupational Health Check up services provided to employees where payment is received from a business entity do not qualify for the exemption and are taxable; the applicant is liable to pay GST on such supplies under the applicable tariff entry for human health and social care services.

Final Conclusion: The Authority ruled that supplies of medicines, consumables, implants, food and room rent to in patients form part of a composite inpatient healthcare service and are exempt from CGST/SGST when provided by the clinical establishment; however, occupational health check up services supplied to business entities (with payment made by the employer) do not fall within the exempt definition of health care services and are taxable under the GST law.

Exemption under Notification No.12/2017-Entry 5 (services by a Governmental Authority related to Panchayat functions) - Exemption under Notification No.12/2017-Entry 66(a) & (aa) (services by an educational institution; conduct of entrance examinations) - Definition of "Governmental Authority" for exemption - Definition of "Educational institution" for exemption - Classification of services - Education Services (Heading 9992; tariff 999299)

Exemption under Notification No.12/2017-Entry 5 (services by a Governmental Authority related to Panchayat functions) - Definition of "Governmental Authority" for exemption - Article 243G - functions entrusted to Panchayats (education including primary and secondary schools) - Eligibility of the applicant for exemption under Sr. No.5 of Notification No.12/2017-Central Tax (Rate) for services of conducting certain examinations. - HELD THAT: - Sr. No.5 exempts services by a "Governmental Authority" insofar as they relate to functions entrusted to a Panchayat under Article 243G. The Authority examined whether the State Examination Board is a Governmental Authority and whether its activities fall within the Panchayat function of "Education, including primary and secondary schools." On the facts, the Board is established and controlled by the State Government: its members are appointed by the Government, it was declared autonomous by Government notifications but remains a State body and displays indicia of government ownership and control. The Court compared the list of examinations conducted by the Board with the Article 243G entries and found that only a subset of the exams (those relating to primary/secondary education, scholarships and related school-level eligibility/certificates) are in relation to the Panchayat-entrusted function of education. Exams whose primary purpose is employment/qualification for jobs or departmental promotion do not fall within the Panchayat function of "education including primary and secondary schools." Applying these legal tests, the Authority concluded that services in respect of the examinations that directly relate to primary and secondary education (the exams listed at Sr. Nos.9 to 15 in the applicant's list) are eligible for exemption under Sr. No.5, whereas services for the remaining examinations are not. [Paras 22, 23, 24, 26, 27]

The applicant is eligible for exemption under Sr. No.5 of Notification No.12/2017-Central Tax (Rate) in respect of services for the exams listed at Sr. Nos.9 to 15 of the applicant's schedule; services for the other listed exams are not eligible.

Exemption under Notification No.12/2017-Entry 66(a) & (aa) (services by an educational institution; conduct of entrance examinations) - Definition of "Educational institution" for exemption - Clarificatory amendment treating Central/State Educational Boards as educational institutions for conduct of examinations - Whether the applicant qualifies as an "educational institution" and hence is eligible for exemption under Sr. No.66(a) & (aa) of Notification No.12/2017-Central Tax (Rate) for conduct of examinations. - HELD THAT: - Entry No.66(a) & (aa) grants exemption only where the supplier is an "educational institution," defined to mean institutions providing pre-school up to higher secondary education, education as part of a recognized curriculum, or approved vocational education. The Authority examined the Board's function and found that it does not impart education or provide education as part of a curriculum; its primary role is the conduct of a variety of examinations, many of which are for employment or qualification purposes rather than for imparting curriculum-based education. Although a later clarification in the notification treats Central and State Educational Boards as educational institutions for the limited purpose of conducting examinations to students, the Authority distinguished the State Examination Board on the ground that its functions are limited to conducting diverse examinations (many not within curriculum-based primary/secondary education) and that it is an autonomous examination body distinct in function from a State Educational Board. On this basis the Authority held that the applicant does not fall within the definition of "educational institution" for the purposes of Entry No.66 and therefore cannot claim exemption under Sr. No.66(a) & (aa). [Paras 28, 29, 30, 31, 32]

The applicant is not eligible for exemption under Sr. No.66(a) & (aa) of Notification No.12/2017-Central Tax (Rate).

Final Conclusion: Advance Ruling: (i) Exemption under Sr. No.5 of Notification No.12/2017-Central Tax (Rate) is available to the applicant for services in respect of the examinations that directly relate to primary and secondary education (those listed at Sr. Nos.9-15 of the applicant's list); services for the other examinations are not exempt under Sr. No.5. (ii) The applicant does not qualify as an "educational institution" for the purposes of Sr. No.66(a) & (aa) and is therefore not entitled to that exemption.

Power of arrest under section 69 of the CGST Act - Requirement of recorded reasons to believe including necessity for arrest - Application of Arnesh Kumar principle to offences punishable with imprisonment less than seven years - Section 132(1)(b) and (c) CGST Act - offence of availing ineligible input tax credit using fake invoices - Bail and custodial detention jurisprudence where no formal FIR/complaint has been lodged - Limit on detention under section 167 Cr.P.C. and inadmissibility of prolonged remand as de facto punishment

Power of arrest under section 69 of the CGST Act - Requirement of recorded reasons to believe including necessity for arrest - Application of Arnesh Kumar principle to offences punishable with imprisonment less than seven years - Legality of the arrest and continued detention of the petitioners under section 69 of the CGST Act - HELD THAT: - The Court applied the principle that exercise of power under section 69 requires the Commissioner to record reasons to believe both that an offence under section 132 has been committed and why arrest of the person is necessary. Where the maximum sentence for the alleged offence is below seven years (here, imprisonment up to five years for offences under section 132(1)(b) and (c)), the protections identified in Arnesh Kumar and reiterated in Daulat S. Mehta apply: a person who complies with summons cannot ordinarily be arrested unless cogent recorded reasons justify arrest. The record shows petitioners attended and had multiple statements recorded and there is no material on record of tampering with evidence or influencing witnesses. Applying these principles, the Court found no justification for the arrest or for continued detention of the petitioners. [Paras 11, 12, 13, 14]

Arrest and continued detention were unjustified; petitioners entitled to be released subject to conditions.

Section 132(1)(b) and (c) CGST Act - offence of availing ineligible input tax credit using fake invoices - Bail and custodial detention jurisprudence where no formal FIR/complaint has been lodged - Limit on detention under section 167 Cr.P.C. and inadmissibility of prolonged remand as de facto punishment - Significance of absence of formal FIR/complaint and legality of prolonged detention/remand in the investigation under GST regime - HELD THAT: - The Court noted that no FIR under section 154 Cr.P.C. nor complaint under section 200 Cr.P.C. was placed on record prior to arrest; the first formal accusation appeared only in the remand application after arrest. Bail jurisprudence differs where there is no formal accusation and where investigative detention risks becoming punitive. Further, section 167 Cr.P.C. limits detention periods and the remand papers sought extensive custody (a 60-day prayer overwritten to 14 days), indicating an attempt to convert detention into a penalty. In this factual matrix, continued custody was not justified despite the seriousness of the allegations concerning alleged ineligible ITC. [Paras 15, 16, 17, 18]

In absence of formal accusation prior to arrest and given statutory limits on detention, continued detention could not be sustained.

Bail and custodial detention jurisprudence where no formal FIR/complaint has been lodged - Power of arrest under section 69 of the CGST Act - Relief to be granted and conditions upon release - HELD THAT: - Exercising its supervisory jurisdiction, the Court directed issuance of notice and framed conditions for release: execution of personal bonds, furnishing of interim sureties, deposit of passports, cooperation with investigation, prohibition on tampering with evidence or influencing witnesses, and eventual furnishing of solvent sureties. The directions were framed in view of absence of justification for continued detention and to balance investigatory interests with liberty. [Paras 18]

Petitioners to be released on conditions (personal bond, interim sureties, deposit of passports, cooperation and non-interference) as specified by the Court.

Final Conclusion: The High Court held that the arrest and continued detention of the petitioners under section 69 of the CGST Act were unjustified in the facts of the case-applying Arnesh Kumar and Daulat S. Mehta-and directed their release on specified bonds and conditions while issuing formal notice to the respondents.

Clerical error in E-way bill - validity of e-way bill - proceedings under Section 129 of the CGST Act, 2017 - penalty under Section 125 of the CGST Act - CBEC Circular No. 64/38/2018-GST dated 14-09-2018 - right to hearing / audi alteram partem

Clerical error in E-way bill - proceedings under Section 129 of the CGST Act, 2017 - penalty under Section 125 of the CGST Act - CBEC Circular No. 64/38/2018-GST dated 14-09-2018 - Whether demand of CGST/SGST and invocation of Section 129 for transportation accompanied by invoice and an E-way bill which contained a typographical error in distance was sustainable - HELD THAT: - The court found on the material before it that the goods were indisputably being transported inter-state from Howrah to Agartala, that the distance was wrongly recorded as 470 kms instead of approximately 1470 kms due to a typographical clerical error, and that the goods were accompanied by invoice and other specified documents. Applying the Board's clarification in CBEC Circular No. 64/38/2018-GST dated 14-09-2018, proceedings under Section 129 ought not to be initiated for minor discrepancies such as one or two digit errors in e-way bill particulars; in such cases the proper course is collection of a nominal penalty under Section 125 (as specified in the circular) rather than confirmation of the tax demand and heavy penalties under Section 129. The Central Government and consignor's affidavits admitted the clerical lapse and supported application of the circular. On these findings the Inspector had no power to treat the clerical error as a ground for the substantial tax and penalty demand under Section 129. [Paras 6, 7, 8, 9]

Demand of CGST/SGST with penalties under Section 129 was not sustainable in view of the clerical error in the e-way bill and the Board's circular; at most the limited penalty regime under Section 125 as clarified by the circular would apply.

Right to hearing / audi alteram partem - Whether the impugned order could stand where the Inspector issued a notice fixable for personal appearance on a future date but passed the confirmatory order on the same day without affording the hearing - HELD THAT: - The court recorded that the Inspector issued a notice calling upon the petitioner to appear on a later date but, notwithstanding that, passed an independent order on the same day confirming the demand. Such procedure was held to be grossly irregular because the authority treated the order as a mandatory demand without granting the opportunity of personal hearing provided in the notice. Given this procedural defect the order could not be allowed to stand, and the petitioner should not be relegated to appellate remedy where the impugned order itself suffered from denial of hearing. [Paras 3, 10]

Impugned order passed without affording the hearing indicated in the notice was impermissible and is set aside for procedural irregularity.

Final Conclusion: Impugned order dated 05.11.2018 confirming tax and penalties under Section 129 is set aside: the tax and heavy penalties could not be imposed for a clerical error in the e-way bill in the presence of invoice and supporting documents in view of CBEC Circular No. 64/38/2018-GST, and the order was also vitiated by denial of the opportunity of hearing.

Availability of statutory appeal under Section 107 of the CGST Act - confiscation under section 129 of the CGST Act - interim release subject to undertaking

Availability of statutory appeal under Section 107 of the CGST Act - confiscation under section 129 of the CGST Act - Whether the writ petition seeking quashing of the final order of confiscation should be entertained when an appeal under Section 107 of the CGST Act is available - HELD THAT: - The Court recorded that during pendency of the writ petition a final order of confiscation in Form GST MOV 11 had been passed (recorded at para 3). In view of the existence of the statutory appellate remedy, the Court declined to entertain the writ petition and directed the writ applicant to avail the remedy of filing an appeal under Section 107 of the CGST Act in accordance with law. The Court therefore relegated the petitioner to the statutory remedy rather than adjudicating the challenge to the confiscation on merits. [Paras 3, 4]

Writ petition disposed of by relegating the petitioner to file an appeal under Section 107 of the CGST Act.

Interim release subject to undertaking - interim relief granted by coordinate bench - Effect of earlier ad-interim direction for release of vehicle and goods during pendency of proceedings - HELD THAT: - The Court took notice of an earlier order by a Coordinate Bench which had granted ad-interim release of the truck and goods subject to filing an undertaking to pay any liability if the petitioners ultimately failed (recorded at paras 2 and 3). That interim order was noted in the proceedings, but with the subsequent passing of the final confiscation order the Court directed the petitioner to pursue the appellate remedy; no further interim relief was granted by this Bench. [Paras 2, 3]

Earlier ad-interim release order noted; no continuation of interim relief by this Court - petitioner to pursue appeal.

Final Conclusion: The writ petition is disposed of by relegating the petitioner to invoke the statutory appeal under Section 107 of the CGST Act; the earlier ad interim release order was noted but no further relief granted by this Court.

Confiscation of conveyance - option to pay fine in lieu of confiscation under Section 130 of the Central Goods and Services Tax Act, 2017 - ad-interim release of vehicle upon deposit - appeal to appellate authority under Section 107 of the Central Goods and Services Tax Act, 2017

Confiscation of conveyance - option to pay fine in lieu of confiscation under Section 130 of the Central Goods and Services Tax Act, 2017 - ad-interim release of vehicle upon deposit - appeal to appellate authority under Section 107 of the Central Goods and Services Tax Act, 2017 - Disposition of the writ petition seeking release of the vehicle and clarity on remedy if a final order of confiscation is passed under Section 130 of the CGST Act. - HELD THAT: - The Court recorded that, by an earlier ad-interim order, the vehicle was directed to be released upon payment of the fine proposed in the notice issued under Section 130 of the Act. The Court observed that it is not clear from the record whether any final order of confiscation under Section 130 has been passed. The Court disposed of the writ petition without expressing any opinion on the merits, and noted the statutory remedy: if a final order of confiscation is passed, the writ applicant may prefer an appeal before the appellate authority under Section 107 of the CGST Act. The Court further observed that, if the writ applicant ultimately succeeds in such an appeal, he would be entitled to refund of the amount deposited pursuant to the ad-interim arrangement.

Writ petition disposed with observations that the earlier ad-interim release on deposit remains subject to the final outcome of proceedings under Section 130; no opinion expressed on merits; liberty to prefer appeal under Section 107 if a final confiscation order is passed, and entitlement to refund if the appeal succeeds.

Final Conclusion: The petition is disposed of by recording the ad-interim arrangement for release of the vehicle on payment of the proposed fine and by leaving open the statutory remedy of appeal under Section 107 of the CGST Act in the event a final confiscation order is passed; no opinion on merits expressed.

Interim stay on directions - obligation to pass on input tax credit - effect of GST transition on contractual tax burden - examination after filing of returns

Interim stay on directions - effect of GST transition on contractual tax burden - Court granted an interim stay on the operation of the directions contained in paragraph 23 of the order dated 09.12.2020 passed by respondent no.2. - HELD THAT: - The High Court, by an order, stayed the operation of the directions in paragraph 23 of the impugned order for the present. The stay was directed to operate while the court permits further examination of the legal position concerning whether any obligation to pass on input tax credit or to give reduction in tax arose in relation to contracts executed after 01.07.2017. The stay is interlocutory and limited to the continuance of the impugned directions pending further proceedings and consideration of returns filed by the respondents. [Paras 3]

Interim stay granted on the operation of the directions in paragraph 23 of the order dated 09.12.2020.

Obligation to pass on input tax credit - examination after filing of returns - Question whether the petitioner was required to pass on input tax credit or reduction in tax to flat buyers under contracts executed after 01.07.2017 was left for fresh consideration after the respondents file returns. - HELD THAT: - The court recorded the petitioner's contention that, from 01.07.2017 (when the Central Goods and Services Tax regime commenced), the petitioner was not required to pass on input tax credit or give any reduction in tax to flat buyers for negotiated contracts executed post that date, and that no reduction in taxes arose to be passed on. The Court did not decide the substantive question on the merits but directed that this aspect will be examined after the respondents file their returns. Consequently, the matter of whether any tax benefit was to be passed on under those contracts was remanded for consideration conditioned upon the filing and scrutiny of returns by the respondents. [Paras 3]

Substantive question remanded for fresh consideration after respondents file returns; no final adjudication on the obligation to pass on input tax credit for contracts post 01.07.2017.

Final Conclusion: The petition succeeds to the extent of an interim stay on paragraph 23 of the impugned order dated 09.12.2020; the substantive issue regarding passage of input tax credit or reduction in tax for contracts executed after 01.07.2017 is left for fresh consideration after respondents file their returns; respondents granted four weeks to file counter-affidavit and the matter listed for further hearing.

Limitation on scope of information requisition - requirement of disclosed basis for requisition - information request confined to subject-matter of notice - interim restriction on enforcement of investigatory demand

Information request confined to subject-matter of notice - requirement of disclosed basis for requisition - Whether respondent may insist on production of information/data relating to goods other than the washing machine when the notice was directed only to the washing machine. - HELD THAT: - The impugned communication, read with paragraph 4, discloses that the notice dated 03.02.2020 related only to the washing machine. The communication nevertheless sought information in respect of all goods manufactured and sold by the petitioner without setting out any basis for extending the requisition beyond the complained-goods. In the absence of any disclosed basis for seeking information relating to goods other than the washing machine, the Court was unwilling to permit enforcement of that broader demand at this stage. The Court therefore directed that respondent no.3 shall not insist on information/data concerning goods other than the washing machine until a basis is disclosed; respondent may file a counter-affidavit explaining the basis within three weeks, with liberty for rejoinder before the next hearing. Procedural steps were ordered to issue notice to respondent no.1.

Respondents restrained, for the present, from insisting on information relating to goods other than the washing machine; respondent no.3 may file a counter-affidavit within three weeks and the matter is listed for further hearing.

Final Conclusion: Writ petition allowed insofar as an interim direction is issued restraining the respondents from demanding information beyond the washing machine without disclosing the basis; respondent no.3 permitted to file a counter-affidavit within three weeks and the matter is listed for further consideration.

Inadvertent clerical error in GST return - rectification of GSTR-1 - unavailability of statutory enabling forms GSTR-2 and GSTR-1A - entitlement to input tax credit despite GSTIN mismatch - obligation of assessing officer to enable amendment on portal

Inadvertent clerical error in GST return - entitlement to input tax credit despite GSTIN mismatch - unavailability of statutory enabling forms GSTR-2 and GSTR-1A - Petitioner permitted to rectify the mistaken GSTIN entered in its GSTR-1 and not be deprived of input tax credit on account of a bonafide human error where enabling forms are not notified. - HELD THAT: - The court found that the petitioner had inadvertently entered the GST number of a purchaser in a different State and that the goods had in fact reached the intended recipient. The respondents did not dispute that Forms GSTR-2 and GSTR-1A-by which mismatches would ordinarily be detected and rectified-have not been notified, and that the petitioner was unaware of the error until notified by the recipient. Reliance was placed on the reasoning in Sun Dye Chem, where the court recognised that bonafide inadvertent mistakes in return filings ought to be permitted to be corrected in the absence of an effective statutory mechanism for detection and amendment. Given the absence of the enabling forms and the inadvertent nature of the mistake, the petitioner would be prejudiced if denied correction and consequent credit. The court therefore directed remedial action to permit correction of the return and restoration of the legitimate entitlement to credit, while leaving the mechanics of implementation to the assessing authority. [Paras 5, 6, 7, 8, 9]

Writ petition allowed; petitioner permitted to amend GSTR-1 to correct the GSTIN error and the Assessing Officer/R2 directed to enable amendment on the portal with all consequences within eight weeks.

Final Conclusion: The writ petition is allowed: in view of the inadvertent error and the non-notification of Forms GSTR-2 and GSTR-1A, the petitioner may rectify the GSTR-1 entry and shall not be deprived of legitimately claimable input tax credit; the Assessing Officer is directed to enable the amendment on the portal within eight weeks.

Deduction under Section 10B - computation of eligible profit for deduction - treatment of expenses incurred in foreign currency (freight, telecommunication, insurance, technical services) - exclusion of expenses from export turnover and proportionate exclusion from total turnover - treatment of exchange fluctuation gains

Deduction under Section 10B - exclusion of expenses from export turnover and proportionate exclusion from total turnover - treatment of expenses incurred in foreign currency - The correctness of the Tribunal's direction to recompute deduction under Section 10B by excluding telecommunication and other expenses incurred in foreign currency both from export turnover and from total turnover. - HELD THAT: - The Court examined the admitted substantial question of law and the authorities relied upon by the respondent, including the principle that expenses attributable to delivery of software (such as freight, telecommunication, insurance and technical services) if excluded from export turnover must, for the formula to be workable and non-absurd, be excluded from total turnover in the same proportion. The Court observed that adopting an interpretation that permits deduction from export turnover but not from total turnover would yield an illogical and unworkable result, contrary to legislative intent and prior decisions. Reliance was placed on the precedents cited by the respondent which held that where technical services form an integral part of software delivery, they cannot be artificially bifurcated, and that expenses incurred in foreign exchange for providing such services should be excluded from total turnover in the same proportion as from export turnover. Applying those authorities and reasoning to the facts of the present assessment year, the Court concluded that the Tribunal's direction to the Assessing Officer to recompute the deduction under Section 10B by excluding the specified foreign-currency expenses from both export turnover and total turnover was correct. [Paras 11]

The Tribunal's direction to recompute the Section 10B deduction by excluding the specified foreign-currency expenses from export turnover and proportionately from total turnover is upheld; the Revenue's appeal is dismissed.

Final Conclusion: Following the decisions relied upon by the respondent and applying the principle that expenses excluded from export turnover must be proportionately excluded from total turnover to make the statutory formula work, the High Court dismissed the Revenue's appeal and upheld the Tribunal's direction to recompute the Section 10B deduction for Assessment Year 2002-03.

Short term capital gains - slump sale - admissibility of undocumented payments as cost of acquisition - disallowance under section 40A(3) of the Act - allowability of retention money not crystallized during the assessment year - precedential binding effect of High Court decisions on the Tribunal

Short term capital gains - slump sale - admissibility of undocumented payments as cost of acquisition - Whether payments made and explained by the assessee (including amounts paid outside the registered document and payments by third parties treated as part of consideration) could be accepted as cost of acquisition for computing short term capital gains on the slump sale. - HELD THAT: - The Tribunal and the Commissioner of Income Tax (Appeals) accepted the factual account given by the assessee concerning the purchase and sale transactions, including payments made outside the registered document and amounts paid by third parties as part of the overall consideration. The Assessing Officer had omitted several entries and disallowed such payments, thereby arriving at a higher short term capital gain. The High Court noted that the Revenue did not specifically challenge the genuineness of the transactions and that the Commissioner (Appeals) correctly intervened to restore the cost treatments explained by the assessee. On that basis the Tribunal's confirmation of the appellate authority's order was held to be justified. [Paras 5]

Payments explained by the assessee were properly accepted as part of the cost of acquisition for computation of short term capital gains; the Tribunal rightly confirmed the Commissioner (Appeals) and set aside the Assessing Officer's disallowances.

Allowability of retention money not crystallized during the assessment year - precedential binding effect of High Court decisions on the Tribunal - Whether retention money withheld by clients, the liability for which had not crystallized in the assessment year, was allowable as not forming part of the assessee's income for that year. - HELD THAT: - The second question was resolved by reference to the coordinate Division Bench decision in Commissioner of Income Tax, Chennai v. Voltech Projects (P) Ltd., which followed earlier precedent (including dismissal of departmental Special Leave Petitions) and held in favour of assessee-claimants in similar circumstances. The learned Senior Standing Counsel for the Revenue conceded that the cited authority covers the issue. Respectfully following the coordinate Bench, the High Court answered the question in favour of the assessee and against the Revenue. [Paras 4, 6]

Retention money not crystallized during the assessment year is allowable and the Tribunal correctly applied binding High Court precedent in favour of the assessee.

Final Conclusion: The Tax Case Appeal is dismissed; the Tribunal's order confirming the Commissioner (Appeals) is upheld and both substantial questions of law are answered in favour of the assessee and against the Revenue.

Deduction under Section 37 for business expenditure - expenditure laid out wholly and exclusively for the purpose of business - appropriation of profits versus revenue expenditure - treatment of incentives/rebate granted to members of a co-operative society - board authorization of payments by a co-operative society - income tax authorities to view transaction as a prudent businessman would - meaning and application of 'net profit' in assessing deductibility

Deduction under Section 37 for business expenditure - expenditure laid out wholly and exclusively for the purpose of business - treatment of incentives/rebate granted to members of a co-operative society - appropriation of profits versus revenue expenditure - board authorization of payments by a co-operative society - Allowability as deduction of Rs. 4,45,00,000 paid as monetary incentives to member District Central Co-operative Banks and Primary Agricultural Co-operative Societies for AY 2009-10 under Section 37 of the Income Tax Act, 1961. - HELD THAT: - The Court considered whether the incentive payments were expenditure "wholly and exclusively" for the purpose of the assessee's business or were an appropriation of profits. The Assessing Officer did not impugn the genuineness or reasonableness of the payments and the amount was debited to the profit and loss account. The payments were authorised by the assessee's Board and had previously been treated as revenue expenditure by the Revenue in relation to Assessment Year 2008-09. A CBDT circular expressly states that incentives/rebate granted to members of a co-operative society should be allowed as a deduction in computing the business income of the society. The tribunal's conclusion rested on characterising the payments as an appropriation of profits and on the manner in which the incentives were paid; the Court held that revenue cannot dictate the mode of commercial transactions or substitute its own view for that of a prudent businessman. Applying the established principle that tax authorities must view the question from the standpoint of a prudent business person and that an assessee may incur expenditure in the course of business even if not strictly compelled to do so, the Court found the payments to be in the nature of revenue expenditure admissible under Section 37 and that the tribunal's contrary conclusion was unsustainable. [Paras 7, 8, 9, 10]

The incentive payments of Rs. 4,45,00,000 were held to be allowable as expenditure wholly and exclusively for the purpose of the assessee's business; the Tribunal's disallowance is quashed and the appeal is allowed.

Final Conclusion: The substantial question framed is answered in favour of the assessee; the impugned finding disallowing the incentive payments for Assessment Year 2009-10 is quashed and the appeal is allowed.

Eligibility for exemption under section 54F - revisional jurisdiction under Section 263 of the Income Tax Act - usage of property to determine residential or commercial character - erroneous order prejudicial to the interests of the revenue - concurrent reasonable view - where two views possible revision not warranted

Eligibility for exemption under section 54F - usage of property to determine residential or commercial character - Assessee entitled to claim deduction under Section 54F for Assessment Year 2005-06 despite ownership of more than two properties on paper because one property was used for commercial purposes and therefore not a residential house for Section 54F purposes. - HELD THAT: - The court examined whether the assessee, who sold two vacant sites and invested the sale proceeds in the construction of a new residential property, could claim exemption under Section 54F even though she owned other properties. The Assessing Officer recorded that at the time of sale the assessee occupied one house as residence and the other property was let out as office space. The character of a property depends on its usage; where a property is let out for commercial use it cannot be treated as a residential house for the purposes of Section 54F. The tribunal found that the Assessing Officer had considered and made enquiries regarding the exemption claim and had taken the view that one of the properties was used for commercial purposes. That view was held to be one of the possible reasonable views open on the facts and could not be characterised as unlawful or illegal. Applying these principles, the court held that the assessee was eligible for the deduction claimed under Section 54F for AY 2005-06. [Paras 7, 9]

The assessee satisfied the conditions of Section 54F on the material before the Assessing Officer and was entitled to the claimed exemption.

Revisional jurisdiction under Section 263 of the Income Tax Act - erroneous order prejudicial to the interests of the revenue - concurrent reasonable view - where two views possible revision not warranted - The Commissioner was not justified in invoking Section 263 to revise the assessment order because the Assessing Officer's order was not shown to be erroneous and prejudicial to the revenue where a reasonable view had been taken. - HELD THAT: - Section 263 requires that an Assessing Officer's order be both erroneous and prejudicial to the revenue before the Commissioner may exercise revisional jurisdiction. The court relied on the principle that every loss of revenue does not amount to an order prejudicial to the revenue and that where two reasonable views are possible the Assessing Officer's view cannot be treated as erroneous merely because the Commissioner prefers a different view. The tribunal had held that the Assessing Officer had the relevant information and had taken a view-that one property was commercially used- which was a permissible view. In those circumstances the revisional power under Section 263 could not be validly exercised to set aside the assessment. The court found no infirmity in the tribunal's conclusion and answered the substantial question of law against the revenue. [Paras 7, 8, 9]

The order under Section 263 was held to be unsustainable because the Assessing Officer's decision represented a permissible view and was not shown to be erroneous and prejudicial to the revenue.

Final Conclusion: The substantial questions of law were answered against the revenue: the assessee was entitled to the Section 54F exemption for AY 2005-06 and the Commissioner's exercise of revisional jurisdiction under Section 263 was not justified; the revenue's appeal is dismissed.

Reopening of assessment under Section 147 - Reason to believe based on tangible material - Obligation of assessee to disclose primary facts fully and truly - Explanation 1 to Section 147 - production of books not amounting to disclosure - Income escaped assessment

Reopening of assessment under Section 147 - Reason to believe based on tangible material - Obligation of assessee to disclose primary facts fully and truly - Explanation 1 to Section 147 - production of books not amounting to disclosure - Validity of reopening assessment by issuance of notice under Section 148/147 for A.Y. 2011-12 - HELD THAT: - The court examined whether the Assessing Officer had valid 'reason to believe' that income chargeable to tax had escaped assessment so as to justify reopening beyond four years. The investigating authority had communicated that the assessee introduced share application money of Rs. 52,50,000 in Gujarat Natural Resources Ltd. during the relevant year and the assessee did not furnish source particulars despite a non-statutory request. Applying the principle in Calcutta Discount Company Ltd., the court held that the assessee is under a duty to disclose primary facts necessary for assessment and that mere production of books does not dispense with the obligation to point out particular entries or specific portions of documents. The assessee, after receipt of the reopening notice, did not specifically draw the Assessing Officer's attention to the particular balance-sheet items (share capital and advances receivable) relied upon as the source of the investment. That omission amounted to failure to disclose primary facts. In those circumstances the Assessing Officer was entitled to form a reason to believe, based on the information from the investigation wing and the unexplained investment, that income had escaped assessment. Consequently the reopening was not a mere fishing or mechanical exercise and the notice under Section 148/147 was valid. [Paras 17, 18, 19, 20, 21]

Reopening of assessment for A.Y. 2011-12 was valid; writ dismissed.

Final Conclusion: The High Court held that the Assessing Officer had sufficient reason to believe, based on the unexplained investment and the assessee's omission to disclose primary facts, to reopen the assessment for A.Y. 2011-12; the writ petition was dismissed and the impugned notice sustained.

Deduction under section 43B - treatment of employer and employee contributions to provident fund and ESI - disallowance for belated remittance to Government account - income characterised under section 2(24)(x) read with section 36(1)(va) - reliance on binding Division Bench precedent

Deduction under section 43B - treatment of employer and employee contributions to provident fund and ESI - reliance on binding Division Bench precedent - Whether contributions (employer and employee) to PF and ESI fall for deduction under section 43B as interpreted in the binding Division Bench precedent relied upon by the assessee. - HELD THAT: - The Court accepted the assessee's submission that the question is squarely covered by the Division Bench decision in M/s. Essae Teraoka P. Ltd. The revenue did not dispute this reliance. Applying the reasoning of the cited Division Bench, the Court answered the substantial question against the revenue and in favour of the assessee, thereby following the binding precedent on the scope and application of section 43B to contributions to PF and ESI. [Paras 5]

The Tribunal was right to allow the deduction in accordance with the binding Division Bench precedent; the question is answered against the revenue and in favour of the assessee.

Disallowance for belated remittance to Government account - income characterised under section 2(24)(x) read with section 36(1)(va) - reliance on binding Division Bench precedent - Whether the disallowance under section 43B(b) for belated remittance of employees' contributions and the consequent treatment as income under section 2(24)(x) read with section 36(1)(va) was correctly set aside by the Tribunal. - HELD THAT: - Relying on the same Division Bench authority invoked by the assessee, the Court found that the Tribunal's decision to set aside the disallowance was correct. The revenue did not advance a disputing argument that would distinguish the binding precedent. Consequently, the Court answered the substantial question in favour of the assessee, upholding the Tribunal's direction to treat the matter consistently with the precedent rather than sustaining the assessing authority's disallowance. [Paras 5]

The Tribunal was right to set aside the disallowance and related treatment under sections 2(24)(x) and 36(1)(va); the question is answered against the revenue and in favour of the assessee.

Final Conclusion: For the reasons given and by following the Division Bench precedent relied upon by the assessee, the substantial questions of law are answered against the revenue and in favour of the assessee; the appeal is dismissed.

Cancellation of registration under section 12AA(3) - Definition of "charitable purpose" and proviso to section 2(15) - Non-application of sections 11 and 12 where proviso to section 2(15) applies (section 13(8)) - Clarificatory effect of CBDT Circular No.21/2016

Cancellation of registration under section 12AA(3) - Clarificatory effect of CBDT Circular No.21/2016 - Whether cancellation of a previously granted registration under section 12AA is mandatory where an institution's receipts from commercial activities exceed the cut-off in the proviso to section 2(15) for a particular year. - HELD THAT: - The Tribunal held that cancellation of registration already granted under section 12AA(3) is not mandatory merely because receipts in a particular year exceed the threshold specified in the first proviso to section 2(15). The CBDT Circular No.21/2016, which is clarificatory and retrospective, explains that a temporary excess of receipts does not necessarily alter the nature of the institution's activities and that section 13(8) (inserted by Finance Act, 2012) provides that exemption under sections 11 and 12 will not apply for any previous year in which the proviso to section 2(15) becomes applicable; this protects the revenue without requiring cancellation of registration. The Tribunal relied on the Karnataka High Court decision in DIT(E) v. Karnataka Badminton Association and its own precedents to the effect that section 12AA(3) permits cancellation only where the activities are not genuine or are not being carried out in accordance with the objects of the trust; mere application of the proviso to section 2(15) in a year is not a statutory ground for cancellation. In the present case there was no finding that the assessee's activities were not genuine or not in accordance with its objects; therefore cancellation was unwarranted and bad in law. The Assessing Officer remains competent to examine exemption claims in the relevant year in light of section 13(8) and section 2(15). [Paras 5]

Cancellation of the assessee's registration under section 12AA(3) was set aside; cancellation is not mandatory merely because the proviso to section 2(15) is attracted in a particular year.

Final Conclusion: The Tribunal allowed the appeal, set aside the Commissioner's order cancelling registration w.e.f. 01.04.2009, and restored the registration granted under section 12AA; excess receipts in a year engage section 13(8) and do not automatically compel cancellation of registration unless the statutory grounds in section 12AA(3) are made out.

Search under Section 132 and assessments under Section 153A - Requirement of incriminating material for interfering with completed assessments - Identification and creditworthiness under Section 68 - Reimbursement receipts are not taxable trading receipts - Disallowance under Section 40A(3) where no deduction is claimed - Disallowance under Section 37(1) for payments constituting penal consequence under other laws - Binding effect of coordinate-bench precedents and judicial discipline

Search under Section 132 and assessments under Section 153A - Requirement of incriminating material for interfering with completed assessments - Identification and creditworthiness under Section 68 - Addition of Rs. 30,00,000 treated as unexplained income under Section 68 in assessment completed under Section 153A for AY 2005-06. - HELD THAT: - The Tribunal held that no incriminating material was found during the search in respect of the assessee and therefore the Delhi High Court decision in Kabul Chawla governs. Under Section 153A read with settled authorities, completed assessments can be reopened in assessment under Section 153A only on the basis of some incriminating material unearthed in the search or post-search material relatable to seized evidence. The assessee produced evidence that the amount represented sale proceeds of earlier investments (share allotment and subsequent sale backed by share certificates and banking transactions) and traced the source to a preceding year. In absence of any seized or incriminating material connecting the receipt to undisclosed income, the addition under Section 68 could not be sustained. [Paras 7]

Addition of Rs. 30,00,000 for AY 2005-06 deleted and appeal allowed.

Reimbursement receipts are not taxable trading receipts - Disallowance under Section 40A(3) where no deduction is claimed - Binding effect of coordinate-bench precedents and judicial discipline - Disallowance under Section 40A(3) of Rs. 4,08,490 in assessment under Section 153A for AY 2006-07 in respect of cash payment for land where reimbursement was shown in books. - HELD THAT: - The Tribunal examined the collaboration agreement which provided that the developer would reimburse all costs and expenses incurred by the assessee in acquisition of land. The assessee maintained books showing the receipts as reimbursements and did not claim the cost of land as an expenditure in profit and loss or in computation of income. Earlier decisions of coordinate Benches (notably the Tribunal's decision in Westland Developers Pvt. Ltd.) dealing with identical facts were followed; the Revenue had not been able to distinguish those precedents. In these circumstances Section 40A(3) could not be invoked to disallow amounts that were not claimed as deductions and which were reimbursements rather than trading receipts. [Paras 13]

Disallowance under Section 40A(3) deleted for AY 2006-07 and ground allowed.

Disallowance under Section 37(1) for payments constituting penal consequence under other laws - Binding effect of coordinate-bench precedents and judicial discipline - Disallowance under Section 37(1) of Rs. 5,92,250 (partly confirmed as Rs. 20,000 by CIT(A)) in assessment under Section 153A for AY 2006-07 on account of additional payments made on purchase of land. - HELD THAT: - The Tribunal noted that the assessee had not claimed the disputed payments as deductible expenditure and that payments were recorded in the books. Reliance was placed on decisions in favour of group companies (including Westland Developers and orders accepted by Revenue or followed by other Benches) and on the principle that mere contravention of other statutes does not automatically attract disallowance under Section 37(1) unless the contravention draws a penal consequence as envisaged by that provision. Given identical facts and absence of distinguishing circumstances, the Tribunal held that the disallowance could not be sustained. [Paras 16]

Disallowance under Section 37(1) deleted (other than the directions already given by CIT(A) which were reflected in appeal effect) and grounds allowed for AY 2006-07.

Final Conclusion: Both appeals for Assessment Years 2005-06 and 2006-07 are allowed: the addition under Section 68 for AY 2005-06 is deleted for lack of incriminating material and proof of earlier investment redemption; for AY 2006-07 disallowances under Sections 40A(3) and 37(1) are deleted on the facts that amounts were reimbursements, not claimed as deductions, and in view of binding coordinate-bench precedent.

Validity of service of notice and deeming under Section 292BB - addition as unexplained investment under Section 68 vis-a -vis stamp valuation/circle rate - inapplicability of deeming under Section 50C and Section 56(2)(vii)(b) to a purchaser where statutory conditions are not satisfied - classification of sale of property as business income versus short term capital gain and allowance for cost of improvement - forfeiture of advance for intended purchase as capital loss and set-off against short term capital gains under Section 70(2) - inadmissibility of presumptive profit estimation on disposal of closing stock after cessation of business

Validity of service of notice and deeming under Section 292BB - Service of notice under section 143(2) was valid and within time; objection raised for interpolation was not accepted and provisions of Section 292BB applied. - HELD THAT: - The Tribunal examined the physically produced notice which bore the assessee's signature, time and telephone number and observed overwriting in the date but found no affirmative proof of interpolation by department staff. Absent a forensic report or specific adjudication by the AO on the objection during assessment, the benefit of doubt was not accorded to the assessee. As no objection was raised during the assessment proceedings, the deeming provision of Section 292BB (w.e.f. 1-4-2008) applied and precluded the assessee from contending non-service or late service of notice. On that basis the appellate finding that the notice was served on 30.09.2011 was upheld and the limitation ground was dismissed. [Paras 5]

Ground No.1 dismissed; notice held valid and timely under Section 292BB.

Addition as unexplained investment under Section 68 vis-a -vis stamp valuation/circle rate - inapplicability of deeming under Section 50C and Section 56(2)(vii)(b) to a purchaser where statutory conditions are not satisfied - Addition under Section 68 based on difference between registered consideration and circle rate was unsustainable and deleted. - HELD THAT: - The Tribunal noted the undisputed registered sale consideration and the stamp valuation (circle rate). It held that Section 50C (as then in force) operated for the seller and that the deeming fiction in Section 56(2)(vii)(b) for treating stamp valuation as income of the purchaser came into effect only from 1.10.2009 and, in any event, requires material linking payment to the purchaser. No material existed to show that any sum over and above the registered consideration was paid or credited to the assessee's books. Further, Section 68 additions require a sum found credited in books which was not the case. Consequently the addition treating the difference as unexplained investment was not maintainable and was directed to be deleted. [Paras 13]

Addition of Rs.88,97,333/- under Section 68 deleted.

Classification of sale of property as business income versus short term capital gain and allowance for cost of improvement - Sale of the Indirapuram property is taxable as short term capital gain; the assessee may claim cost of improvements which the AO is to verify. - HELD THAT: - The Tribunal accepted that the transaction was not reflected in the original return and the assessee's conduct and subsequent filings did not satisfactorily demonstrate an ongoing real estate business. A single transaction, occurring after acquisition and subsequent improvement, did not establish trading in property. The expenditure on alterations and construction prima facie constitutes cost of improvement allowable for capital gains computation rather than revenue business expenditure. The Tribunal therefore affirmed treatment as short term capital gain but remitted to the AO to verify and allow cost of improvement if supported by details. [Paras 16, 17]

Transaction treated as short term capital gain; AO to compute STCG after verifying cost of improvement.

Forfeiture of advance for intended purchase as capital loss and set-off against short term capital gains under Section 70(2) - Forfeiture of advance paid for purchase of Panipat property is a capital loss and is allowable to be set off against short term capital gains in the same year. - HELD THAT: - The Tribunal accepted that advances were paid (supported by agreement, cheques and confirmations) and that the sellers later confirmed cancellation of the agreement and forfeiture of the amounts, supported by bank statements. Since the payments were for acquiring a capital asset (a vested right to acquire property) and that right was extinguished on cancellation with forfeiture, the loss is capital in nature. The loss cannot be treated as business loss because the Tribunal has held the assessee was not engaged in property business. In view of the capital nature, the amount constitutes short term capital loss and is to be set off against short term capital gains in accordance with Section 70(2). [Paras 20]

Loss of forfeited advances allowed as short term capital loss; AO directed to set off against STCG.

Inadmissibility of presumptive profit estimation on disposal of closing stock after cessation of business - Presumptive addition by applying a net profit rate on sale of closing stock after cessation of business was not warranted and deleted. - HELD THAT: - The assessee had ceased the proprietary business and sold existing closing stock without purchases in the year. The AO's application of a normal net profit percentage applicable to an ongoing business lacked basis when stock was being liquidated on cessation; no discrepancy or material suggested sale at higher prices. The Tribunal therefore found the presumptive estimation inappropriate and directed deletion of the addition. [Paras 22]

Presumptive profit addition deleted.

Final Conclusion: The appeal is partly allowed: the limitation challenge to the notice is dismissed; the addition under Section 68 based on circle rate is deleted; the Indirapuram sale is held to be a short term capital gain (AO to allow admissible cost of improvement); the forfeited advance is allowed as short term capital loss to be set off against STCG; and the presumptive profit addition on disposal of closing stock is deleted.

Proof of agricultural income - estimation of income by revenue authorities - presumption attached to official revenue records (fasli khasra) - rejection of unexamined evidence - physical inspection of land

Proof of agricultural income - estimation of income by revenue authorities - presumption attached to official revenue records (fasli khasra) - rejection of unexamined evidence - physical inspection of land - Assessee proved agricultural income of Rs. 11,500 per bigha for 250 bighas taken on lease for AYs 2013-14 and 2014-15 and the estimations by AO/CIT(A) could not be sustained. - HELD THAT: - The Tribunal found that the assessee produced a fasli khasra-an official revenue record prepared after physical inspection for the relevant period-showing regular cultivation of paddy and wheat, and filed affidavits of purchasers corroborating sale of produce. The AO and CIT(A) proceeded to restrict agricultural income by mere estimation without conducting physical verification or examining the witnesses whose affidavits were on record. An earlier record treating the land as jalmagan dated 2010 was not contemporaneous with the years under appeal and therefore not decisive. The fasli khasra carries a presumption of truth and, together with unrebutted affidavits and the assessee's repeated requests for physical inspection (which were not acted upon), established the production and receipts relied upon by the assessee. In these circumstances the Tribunal held that the revenue's actuarial estimations were based on conjecture and could not override the documentary and testimonial evidence placed before the AO, which remained unexamined and unrebutted. [Paras 14, 15, 16, 17, 18]

Both appeals for AYs 2013-14 and 2014-15 are allowed and the agricultural income claimed at Rs. 11,500 per bigha is accepted.

Final Conclusion: The Tribunal accepted the assessee's documentary and affidavit evidence, found the AO/CIT(A)'s estimations to be guesswork in absence of physical verification or examination of witnesses, and allowed the appeals for AYs 2013-14 and 2014-15 by upholding the claimed agricultural income.

Jurisdiction of Assessing Officer - mandatory notice u/s. 143(2) for scrutiny assessment - scrutiny assessment u/s. 143(3) cannot be framed without valid 143(2) notice - directions under section 120 and vesting of territorial jurisdiction under section 124 - transfer of case under section 127 and continuity of proceedings - omission to issue statutory notice is not a curable defect

Mandatory notice u/s. 143(2) for scrutiny assessment - scrutiny assessment u/s. 143(3) cannot be framed without valid 143(2) notice - jurisdiction of Assessing Officer - Validity of scrutiny assessment framed by DCIT, Circle-3(1), Kolkata on 17.03.2015 in absence of a notice issued by that AO under section 143(2) - HELD THAT: - The Tribunal examined the admitted facts that a notice under section 143(2) was originally issued on 08.08.2013 by DCIT, Circle-2, Gorakhpur, that the assessee objected to Gorakhpur's jurisdiction, that the file was transferred to the AO in Kolkata, and that the Kolkata AO issued only a notice under section 142(1) and thereafter completed assessment under section 143(3) without issuing a fresh section 143(2) notice. The Bench held that issuance of a legally valid notice under section 143(2) is a sine qua non for assuming jurisdiction to frame a scrutiny assessment under section 143(3). Reliance was placed on the settled proposition that omission to issue the mandatory 143(2) notice is not a curable defect and, accordingly, an assessment framed without such notice is without jurisdiction. Although the AO who completed the assessment in Kolkata otherwise had territorial jurisdiction, the absence of service of a section 143(2) notice by that AO before framing the assessment rendered the assessment order null and void. The Tribunal therefore accepted the assessee's legal ground (admitted for consideration) and declined to go into merits as academic. [Paras 3, 11, 12]

Assessment order passed by DCIT, Circle-3(1), Kolkata under section 143(3) is null and void for want of issuance of a statutory notice under section 143(2); the assessment is quashed and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal on the legal ground that the Kolkata Assessing Officer framed the scrutiny assessment without issuing the mandatory notice under section 143(2), thereby lacking jurisdiction; the assessment order for AY 2012-13 is quashed.

Penalty under section 271(1)(c) for concealment or furnishing inaccurate particulars of income - Penalty not leviable where assessment additions are made by way of ad hoc or estimated computation - Absence of positive evidence of concealment where additions are based on estimation - Reliance on third party sales tax information without independent inquiry is insufficient to sustain penalty

Penalty under section 271(1)(c) for concealment or furnishing inaccurate particulars of income - Penalty not leviable where assessment additions are made by way of ad hoc or estimated computation - Absence of positive evidence of concealment where additions are based on estimation - Validity of levy of penalty under section 271(1)(c) where the assessing officer made additions by estimating non genuine purchases and the first appellate authority reduced the disallowance by applying an ad hoc percentage. - HELD THAT: - The Tribunal upheld the view that penalty under section 271(1)(c) cannot be sustained where the impugned addition is the result of an ad hoc or estimated computation. The Assessing Officer treated certain purchases as non genuine on the basis of information from the Sales Tax Department and made an addition; the Ld. CIT(A) restricted that disallowance to 25% by way of estimation. The Tribunal observed that additions made on estimate/adhoc basis do not by themselves establish concealment or furnishing of inaccurate particulars and that the onus to prove positive concealment lies on the Department. The bench relied on earlier coordinate decisions and High Court authorities holding that estimated determinations of income or profit do not attract penal consequences in the absence of concrete evidence of concealment or independent enquiries going beyond third party information. Applying these principles, the Tribunal found no infirmity in the Ld. CIT(A)'s deletion of the penalty. [Paras 5, 10, 11]

Penalty levied under section 271(1)(c) deleted; revenue's appeal dismissed.

Final Conclusion: The Tribunal affirms the order of the Ld. CIT(A) deleting the penalty under section 271(1)(c) for A.Y. 2009-10, holding that penalty cannot be sustained where additions are made on an ad hoc/estimated basis and there is no positive evidence of concealment.

Validity of search under Section 132 - Proceedings under Section 158BD - Information discovered in the course of search sustaining a notice under Section 158BD despite defects in the original search notice - Participation and cooperation of the taxpayer in antecedent proceedings affecting challenge to the search - Mistake apparent from record - power to recall or rectify tribunal orders in light of binding Supreme Court precedent

Validity of search under Section 132 - Proceedings under Section 158BD - Information discovered in the course of search sustaining a notice under Section 158BD despite defects in the original search notice - Appellate order quashing block period assessment because search was carried out in the name of a deceased person is inconsistent with the Supreme Court's decision in Gunjan Girishbhai Mehta and is a mistake apparent from record requiring recall. - HELD THAT: - The Tribunal's appellate order dated 01.02.2016 quashed the block assessment framed under Section 158BD read with Section 158BC(c) on the ground that the search under Section 132 was carried out in the name of a deceased person. The Special Bench applied the Supreme Court's ruling in Gunjan Girishbhai Mehta, which holds that information discovered in the course of a search, if capable of generating satisfaction for issuing a notice under Section 158BD, does not become irrelevant merely because the original search notice had a defect. The Bench found that the assessee had participated in and cooperated with the assessment proceedings and that the tribunal's conclusion was directly in conflict with the Supreme Court's ratio. As the Supreme Court's law is binding under Article 141, the appellate order could not be sustained and suffered from a mistake apparent from record warranting recall.

Recalled the appellate order dated 01.02.2016 and allowed the Misc. Application seeking rectification of that order.

Participation and cooperation of the taxpayer in antecedent proceedings affecting challenge to the search - Proceedings under Section 158BD - Where the taxpayer participated and cooperated in earlier proceedings and did not raise the specific defect of the search notice before the lower authorities, the subsequent proceedings under Section 158BD cannot be invalidated on that ground in the facts of this case. - HELD THAT: - The Bench examined the record and observed that the assessee filed return under protest, participated in assessment and appellate proceedings, and did not specifically challenge the legality of the search as being in the name of a deceased person before the AO or the CIT(A). In light of Gunjan Girishbhai Mehta, the information discovered during the search, if capable of generating satisfaction for issuing a Section 158BD notice, remains relevant. Given these facts and the binding Supreme Court precedent, the Bench concluded that the proceedings under Section 158BD could not be held void merely because the search notice purportedly named a deceased person.

Confirmed that the consequence contended for by the assessee (invalidity of proceedings under Section 158BD on account of search notice defect) does not survive in the present factual matrix.

Mistake apparent from record - power to recall or rectify tribunal orders in light of binding Supreme Court precedent - Whether the tribunal should exercise its power to recall its earlier orders and remit the matter for fresh adjudication in conformity with Supreme Court law. - HELD THAT: - Relying on precedent of the Tribunal and the duty to bring its orders into conformity with the law declared by the Supreme Court, the Bench held that where an earlier tribunal order is in direct conflict with a later authoritative Supreme Court decision, that earlier order may be recalled as suffering from a mistake apparent from record. In the present case the appellate order and the subsequent Misc. Application order were inconsistent with the Supreme Court's ratio; accordingly the Bench exercised its power to recall the appellate order and quash the earlier Misc. Application order. The Bench directed that the appeal be restored to the regular bench for fresh hearing and issued notices to the parties.

Allowed M.A. No.16/Alld/2017; quashed the MA order dated 28.11.2016 and recalled the appellate order dated 01.02.2016; directed registry to place the appeal before a Regular Bench for fresh adjudication.

Final Conclusion: The Tribunal allowed Revenue's miscellaneous application, held that its earlier appellate order quashing the block assessment (01.04.1989 to 08.12.1999) was in conflict with the Supreme Court's decision in Gunjan Girishbhai Mehta and amounted to a mistake apparent from record, recalled the appellate order and the MA order, and remitted the appeal for fresh hearing before a Regular Bench.

Genuineness of transactions - speculation transaction (settlement otherwise than by actual delivery) - Explanation to section 73-principal business exclusion (granting of loans and advances) - penalty under section 271(1)(c) contingent on quantum addition

Genuineness of transactions - The purchase and sale of 3,00,000 shares of Landmark Leisure Ltd. were genuine transactions and not a mere book-entry sham. - HELD THAT: - The Tribunal accepted the assessee's evidence of delivery and receipts (physical delivery documents, debit notes and bank settlement trail) and noted that the purchase consideration was settled by a sister concern (PFMS) by bank transfers on behalf of the assessee. The Tribunal found that delivery of shares was taken in the assessee's name on the date of transfer and that physical handover to PFMS on sale was supported by documents. The Commissioner (Appeals)'s inference of mere book entries was rejected because bank transfers and documentary proof showed settlement and actual delivery; borrowing from a sister concern to fund the purchase did not render the transactions bogus. [Paras 16, 17, 18]

Transactions held to be genuine; purchase and sale accepted as having occurred with physical delivery and bank settlements.

Speculation transaction (settlement otherwise than by actual delivery) - The transactions did not constitute speculative transactions within the meaning of the definition because they were settled by actual delivery. - HELD THAT: - The Tribunal observed that both the purchase and sale were effected by actual delivery of shares on the specific dates and at market rates prevailing on those dates. Since speculative transactions are contracts settled otherwise than by actual delivery, and the record established actual delivery in this case, the transactions could not be classified as speculative. [Paras 19]

Not speculative - actual delivery established; therefore section 43(5) did not class these as speculative transactions.

Explanation to section 73-principal business exclusion (granting of loans and advances) - Explanation to section 73 did not apply because the assessee's principal business fell within the exclusion (principal business of granting of loans and advances). - HELD THAT: - On examining the balance sheet composition the Tribunal noted that a substantial portion of the assessee's assets comprised loans and advances (figures for 31st March 2000 and 31st March 2001 were considered). The Tribunal concluded that the assessee's principal business was lending of loans and advances and therefore the carve out in the Explanation to section 73 applied. Consequently, even if the share transactions involved purchase and sale, the Explanation deeming such activity to be speculation did not apply to the assessee. [Paras 21]

Explanation to section 73 held not attracted on facts; assessee falls within the exclusion for companies whose principal business is granting loans and advances.

Penalty under section 271(1)(c) contingent on quantum addition - Penalty under section 271(1)(c) could not be sustained once the quantum addition was deleted. - HELD THAT: - The penalty was founded on the quantum addition disallowing the loss. Having deleted the quantum addition after holding the assessee's grounds in its favour (see the Tribunal's reasoning on genuineness and applicability of the Explanation), the Tribunal found the consequential penalty order to be infructuous and therefore quashed the penalty imposed under section 271(1)(c). [Paras 24]

Penalty order under section 271(1)(c) set aside as consequential to deleted quantum addition.

Final Conclusion: The Tribunal allowed the assessee's appeals: the share transactions were held genuine and not speculative; the Explanation to section 73 did not apply because the assessee's principal business was granting of loans and advances; the quantum disallowance was deleted and the consequential penalty under section 271(1)(c) was quashed.

Reopening of assessment under section 147 - Validity of notice under section 148 - Sanction/approval under section 151 - Requirement of competent authority for approval after four years - Application of mind in sanction - Tangible material/reasons to believe - Roving and fishing enquiries - Reassessment beyond four years

Reopening of assessment under section 147 - Validity of notice under section 148 - Tangible material/reasons to believe - Roving and fishing enquiries - Reopening for AY 2002-03 was not based on tangible material and therefore the notice under section 148 and consequent reassessment under section 147 were invalid. - HELD THAT: - The Tribunal found that the reasons recorded for reopening (AY 2002-03) relied on a recommendation from the investigation wing without any supporting or foundational documents being available with the Assessing Officer at the time of forming the reasons. The AO's reasons referenced alleged cancelled invoices and removal of goods without payment of duty, but the department failed to produce those invoices or other decisive material despite repeated directions. The investigation note alone, without examination of or possession of the underlying material by the AO, did not constitute the AO's independent satisfaction that income had escaped assessment; initiation of proceedings to merely examine the claim of exemption amounted to impermissible roving and fishing enquiries. Consequently, the reasons did not vest jurisdiction in the AO to reopen the assessment under section 147 read with section 148. [Paras 15]

Reassessment for AY 2002-03 quashed as without jurisdiction for lack of tangible material and independent application of mind by the AO.

Sanction/approval under section 151 - Requirement of competent authority for approval after four years - Application of mind in sanction - Reassessment beyond four years - Reopening for AYs 2003-04 and 2004-05 was invalid because the sanction under section 151 was mechanically recorded and was not obtained from the competent authority prescribed for reopenings after four years. - HELD THAT: - For AYs 2003-04 and 2004-05 the notices under section 148 were issued beyond four years. The proviso to section 151 requires approval by the Chief Commissioner or Commissioner (or the competent authority as statutorily mandated) where reopening is after four years. The Assessing Officer obtained approval from the Addl. CIT who merely recorded 'approved' without reasons; the sanction was therefore both mechanical (no apparent application of mind) and, for those years, from an authority not competent under the statute. Binding authority and statutory language require independent satisfaction by the designated superior officer; failure to obtain proper and reasoned sanction vitiates the reopening. Accordingly the notices for these years were held invalid. [Paras 16]

Reassessment for AYs 2003-04 and 2004-05 quashed for mechanical sanction and sanction by an authority not competent under section 151.

Final Conclusion: All three reassessment proceedings (AY 2002-03, 2003-04 and 2004-05) were quashed for want of jurisdiction: AY 2002-03 for lack of tangible material and independent application of mind by the AO; AYs 2003-04 and 2004-05 for mechanical and improperly authorised sanction under section 151. Appeals allowed.

Suspension of clearance of imported goods under the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 (Rule 7) - Importation of infringing copies and mandatory release after fourteen days under Section 53 of the Copyright Act, 1957 - Release of detained consignments on expiry of fourteen days under Rule 79 of the Copyright Rules, 2013 - Harmonious construction of delegated IPR Rules with parent statutes (Copyright Act and Copyright Rules) - Limits of rights conferred by trademark registration and co-existing registrations (Section 28 of the Trade Marks Act, 1999) - Jurisdictional limit on customs officers to detain goods absent court order

Importation of infringing copies and mandatory release after fourteen days under Section 53 of the Copyright Act, 1957 - Release of detained consignments on expiry of fourteen days under Rule 79 of the Copyright Rules, 2013 - Jurisdictional limit on customs officers to detain goods absent court order - Continuation of suspension/detention of imported consignments beyond the statutory fourteen day period under section 53(4) of the Copyright Act, 1957 and Rule 79 of the Copyright Rules, 2013 in absence of a court order. - HELD THAT: - The Court held that section 53(4) of the Copyright Act and Rule 79(5) of the Copyright Rules cast a mandatory duty on the customs officer to release goods and cease treating them as prohibited if the person who gave notice does not produce an order from a court having jurisdiction as to temporary or permanent disposal of the goods within fourteen days from detention. The statutory scheme requires the Commissioner/officer to scrutinise evidence under subsection (2) and inform parties under subsection (3), but subsection (4) plainly mandates release in the absence of a court order within fourteen days. Rule 79, enacted after the IPR Rules, similarly requires release on expiry of the fourteen day period if no restraining order is produced. Accordingly, detaining the petitioners' consignments beyond the prescribed period without a court order was beyond the jurisdiction of the customs officers and contrary to the statutory mandate; the suspended consignments must therefore be released subject to lawful conditions (such as bond/surety) and after affording a hearing by the customs authority. [Paras 10, 16, 19]

Detention beyond the statutory fourteen day period without a court order was unauthorized; the consignments suspended by the customs must be released, subject to such bond, surety or security and conditions as may be specified in accordance with law, after affording a hearing.

Suspension of clearance of imported goods under the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 (Rule 7) - Harmonious construction of delegated IPR Rules with parent statutes (Copyright Act and Copyright Rules) - Limits of rights conferred by trademark registration and co-existing registrations (Section 28 of the Trade Marks Act, 1999) - Interplay between the IPR Rules (delegated legislation under the Customs Act) and the parent statutes (Copyright Act and Copyright Rules) where ownership and entitlement to the relevant intellectual property right is disputed and pending adjudication in civil courts. - HELD THAT: - The Court held that the IPR Rules are remedial machinery framed under section 11 and section 156 of the Customs Act and do not create new substantive intellectual property rights; they must be read with the parent statutes included within the definition of 'intellectual property law'. Where ownership/entitlement to the right (copyright and related trademark rights) is in dispute and pending determination in civil proceedings, the customs authority cannot conclusively decide that dispute in summary fashion. The statutory provisions of the Copyright Act (including the post 2012 section 53) and Rule 79 (2013) govern the specific procedure for importation of alleged infringing copies and contain express safeguards (scrutiny, notice, and release after fourteen days absent court order). Further, rights conferred by trademark registration (Section 28) are subject to limitations where identical or similar marks are registered to different persons; registration does not automatically trump contested proprietary claims in ongoing litigation. Thus the IPR Rules must be construed harmoniously with the Copyright Act and Rules, and cannot be invoked to detain goods indefinitely in the face of pending civil adjudication and absence of an appropriate court order. [Paras 10, 18]

IPR Rules operate as enforcement machinery and must be read harmoniously with the Copyright Act and Copyright Rules; where ownership is disputed and no interim court order is produced, customs cannot indefinitely withhold consignments under the IPR Rules.

Final Conclusion: Writ petition allowed. In the absence of any court order restraining release, the consignments suspended under the six Bills of Entry dated 04.01.2021 are to be released to the petitioners subject to execution of such bond, surety or security and conditions as may be specified; the Commissioner of Customs or the duly authorised officer shall afford the petitioners a hearing within one week from receipt of this order and pass appropriate orders within a further week. No order as to costs.

Return of bank guarantee and bond pending appellate proceedings - effect of filing appeal in higher court on release of provisional securities - scope for release of securities where appellate forum has decided in favour of assessee - stay by higher court operates to suspend direction for release - provisional assessment and requirement of bond and bank guarantee

Return of bank guarantee and bond pending appellate proceedings - effect of filing appeal in higher court on release of provisional securities - stay by higher court operates to suspend direction for release - Direction for return of bonds and bank guarantees furnished at the time of provisional release despite departmental appeal, subject to any stay by the Supreme Court. - HELD THAT: - CESTAT allowed the petitioner's appeal on classification and provided consequential relief by order dated 12th December, 2019. More than fourteen months had elapsed since that decision and the departmental appeal in the Supreme Court had not resulted in a stay of the CESTAT order. The High Court accepted the petitioner's contention that mere filing of a civil appeal does not, by itself, justify withholding return of securities indefinitely. In the circumstances the respondents were directed to return the bonds and bank guarantees within three months from receipt of the order. The Court qualified the direction by stating that if the respondents obtain an express stay from the Supreme Court, operation of the return direction would be in abeyance until such stay is in place. [Paras 17, 18]

Respondents to return the bonds and bank guarantees within three months, subject to any stay by the Supreme Court.

Final Conclusion: Writ petitions disposed by directing respondents to release the bank guarantees and bonds within three months from receipt of the order, the direction remaining in abeyance only if a stay is granted by the Supreme Court.

Refund entitlement - implementation of court judgment - extension of time for compliance - stay by superior court

Extension of time for compliance - stay by superior court - implementation of court judgment - Application for extension of time to implement this Court's earlier judgment seeking refund - HELD THAT: - The Revenue sought a further six months' extension to implement the High Court's order dated 26.12.2019 which had directed grant of refund within four months. However, the Revenue had preferred Special Leave Petition No.9298 of 2020 to the Supreme Court. The Supreme Court admitted the appeal and stayed the operation of this Court's judgment by its order dated 12.01.2021. Once the superior court has stayed the judgment, there is no operative obligation on the Revenue to comply with the High Court's timeline, and consequently no necessity for an extension of the period previously granted by this Court. In view of the Supreme Court's stay, the Miscellaneous Civil Application seeking extension does not survive and requires dismissal. [Paras 5, 6]

Application for extension of time to implement the earlier judgment is disposed of as unnecessary in view of the Supreme Court's admission of the appeal and stay of the High Court's order.

Final Conclusion: The Miscellaneous Civil Application seeking extension of time to implement the High Court's refund direction is disposed of as unnecessary because the Supreme Court has admitted the appeal and stayed the operation of the High Court's judgment.

Grant of further time for compliance with court order - imposition of costs for non-compliance - rejection of pandemic as a sufficient ground for inaction where e filing was available - last opportunity to comply

Grant of further time for compliance with court order - last opportunity to comply - Respondent nos. 2 and 3 were granted one final opportunity to file the affidavit(s) called for by the order dated 05.03.2020. - HELD THAT: - The Court recorded that despite a year having elapsed since the earlier direction, the required affidavit(s) remained unfiled. Although counsel for the respondents attributed the delay to the COVID 19 pandemic, the Court observed that the High Court functioned during the lockdown and that e filing facilities were available, thereby negating the excuse. In consequence, the Court exercised its discretion to permit a further and final opportunity for compliance with the earlier order, while conditioning that indulgence on the fulfilment of ancillary requirements directed below. [Paras 1, 2]

Final opportunity granted to file the affidavit(s) in terms of the order dated 05.03.2020.

Imposition of costs for non-compliance - rejection of pandemic as a sufficient ground for inaction where e filing was available - Payment of costs was directed as a condition for the further opportunity to file the affidavit(s). - HELD THAT: - Because the respondents failed to comply within a year and their explanation based on the pandemic was found inadequate in light of available e filing, the Court directed payment of costs to the petitioner as a penal and conditional measure. The costs of Rs. 20,000/ are to be remitted within ten days, and the petitioner's counsel was directed to furnish bank details to the respondents' counsel to facilitate payment. [Paras 2]

Respondent nos. 2 and 3 to pay costs of Rs. 20,000/ to the petitioner within ten days as a condition for the final extension.

Final Conclusion: The Court granted a final extension for filing the affidavit(s) called for by the order dated 05.03.2020, declined to accept the pandemic as a sufficient excuse given availability of e filing, and imposed costs of Rs. 20,000/ payable to the petitioner; the matter was listed for further hearing on 3rd May, 2021.

Completion of show cause proceedings within reasonable time - interim continuation of status as customs broker - deference to merits determination by the licensing authority - suspension and continuation of customs broker licence under Customs Broker Licensing Regulation, 2013

Completion of show cause proceedings within reasonable time - suspension and continuation of customs broker licence under Customs Broker Licensing Regulation, 2013 - The 1st respondent was directed to conclude the show cause proceedings against the petitioner within a specified reasonable period. - HELD THAT: - The Court observed that interim orders had permitted the petitioner to continue functioning as a customs broker for an extended period. In view of the pendency and continued operation under interim protection, the Court considered it appropriate to direct the licensing authority to complete the inquiry and adjudicate the show cause notice in accordance with law. The court refrained from determining the merits of the underlying allegations, instead imposing a time-bound obligation on the authority to decide the matter. The directive is procedural and aimed at preventing undue delay while preserving the authority's power to decide on suspension or revocation after full consideration of evidence and submissions. [Paras 7, 9]

The 1st respondent shall pass appropriate orders on the show cause notice on merits within three months from receipt of this order.

Interim continuation of status as customs broker - deference to merits determination by the licensing authority - The petitioner's interim status to continue operating as a customs broker was preserved pending completion of the show cause proceedings, and merits were left open for decision by the authority. - HELD THAT: - Having earlier granted interim relief and noted its continuation over the preceding period, the Court maintained that interim protection. The Court explicitly left all substantive questions open for the licensing authority's determination and directed the petitioner to cooperate in the pending proceedings. The order therefore protects the petitioner's interim operating status while ensuring that the authority is not deprived of its power to decide on the merits within the prescribed timeframe. [Paras 6, 8]

The petitioner's interim status to operate as a customs broker remains unaffected by these proceedings; substantive issues to be decided by the 1st respondent on merits within the time directed.

Final Conclusion: Writ petition disposed by directing the licensing authority to conclude the show cause proceedings on merits within three months while preserving the petitioner's interim entitlement to operate as a customs broker; all substantive questions left open for the authority's decision; no costs.

Striking off of company name - publication and service of notices for removal of name - carrying on business or operations under section 248(1)(c) - restoration of company name

Publication and service of notices for removal of name - striking off of company name - Validity of the Registrar's procedures and notices in striking off the company's name - HELD THAT: - The Tribunal examined the steps taken by the Registrar of Companies prior to striking the company's name and found that notices in Form STK-1 and STK-5 were issued, the proposed removal was published on the Ministry website, the name appeared in the Official Gazette and in leading newspapers, and the dissolution order was published on the Ministry website. In the absence of any representation from the company, the Registrar proceeded to strike off the name. The petitioner's contention that notices were not sent was rejected on the basis of these publications and issued notices, and the Bench found no infirmity in the Registrar's action in this regard. [Paras 11, 12]

The Registrar complied with the prescribed notice and publication requirements and there is no ground to set aside the striking off on procedural grounds.

Carrying on business or operations under section 248(1)(c) - restoration of company name - Whether the company was carrying on business or operations so as to preclude striking off and warrant restoration - HELD THAT: - On the materials before it, including audited accounts and income-tax acknowledgements, the Tribunal observed that the company had no turnover for the past five years, modest cash and loan figures in the 2018-19 accounts, and the petitioner failed to produce proof of existing or prospective business when queried at the hearing. The Bench concluded that the company was not carrying on business or operations as contemplated by section 248(1)(c) and that the criteria for restoration were not met. Consequently, the contention that the striking off caused loss of legal status was insufficient to disturb the Registrar's order. [Paras 13, 14, 15]

The company was not carrying on business or operations; restoration of the name is not warranted and the appeal is rejected.

Final Conclusion: The appeal seeking restoration of the company's name is dismissed: the Registrar properly complied with notice and publication requirements, and the company was held not to be carrying on business or operations making the strike-off justified.

Compliance with section 30(2) of the Insolvency and Bankruptcy Code, 2016 - Mandated contents under regulation 38 and regulation 39 of the CIRP Regulations, 2016 - Eligibility under section 29A of the Insolvency and Bankruptcy Code, 2016 - Approval of resolution plan under section 31(1) of the Insolvency and Bankruptcy Code, 2016 - Monitoring and supervision of implementation of the resolution plan - Binding effect of approved resolution plan and cessation of moratorium

Compliance with section 30(2) of the Insolvency and Bankruptcy Code, 2016 - Mandated contents under regulation 38 and regulation 39 of the CIRP Regulations, 2016 - The resolution plan submitted by M/s. Marinaindia Traexim P. Ltd. conforms to the requirements of section 30(2) of the IBC and the mandatory contents of regulations 38 and 39 of the CIRP Regulations. - HELD THAT: - The resolution professional examined the plan and certified that its contents meet the requirements of the Code and the CIRP Regulations and submitted the compliance certificate in Form H. The Tribunal analysed the plan against the statutory checklist including provision for payment of insolvency resolution process costs in priority, treatment and timeline for payment to operational creditors, management and control arrangements post-approval, implementation and supervision mechanisms (monitoring committee), non-contravention of law and other Board-specified requirements. The plan was found to demonstrate feasibility and viability, provide an implementation schedule, supervisory arrangements, and address the causes of default as required by regulation 38(3). On this basis the Tribunal concluded that the plan satisfies section 30(2) and the requirements under regulations 38 and 39 and is fit for approval under section 31(1). [Paras 9, 10, 11, 12, 18]

Plan conforms to section 30(2) and regulations 38 and 39 and is approvable.

Eligibility under section 29A of the Insolvency and Bankruptcy Code, 2016 - The resolution applicant was eligible under section 29A to submit the resolution plan. - HELD THAT: - The resolution professional certified eligibility of the resolution applicant under section 29A in the compliance affidavit (Form H). The Tribunal noted the compliance table confirming that the resolution applicant had submitted the requisite affidavit and that there was no disqualification recorded; any past resolution plan submissions by the applicant were pending and had not resulted in failure of implementation. On this record the Tribunal accepted the RP's certification of eligibility under section 29A. [Paras 9, 11]

Resolution applicant is eligible under section 29A.

Monitoring and supervision of implementation of the resolution plan - The resolution professional is appointed as the monitoring agency to supervise implementation of the approved resolution plan, with specified remuneration and conditions for substitution. - HELD THAT: - The Tribunal appointed the resolution professional as monitoring agency to monitor and supervise implementation of the plan and fixed the monitoring agency's remuneration and out-of-pocket reimbursement. The order permits the resolution applicant to remove or substitute the monitoring agency with prior approval of the Adjudicating Authority if the agency fails to perform or breaches terms of appointment, thereby providing for supervisory continuity and judicial oversight of the monitoring function. [Paras 14, 15]

RP appointed as monitoring agency with prescribed remuneration and subject to replacement with Tribunal approval if necessary.

Binding effect of approved resolution plan and cessation of moratorium - The approved resolution plan is binding on the corporate debtor and all stakeholders, and the moratorium under section 14 ceases to have effect on approval. - HELD THAT: - The Tribunal directed that the approved resolution plan shall be binding on the corporate debtor, its employees, members, creditors, guarantors and other stakeholders involved in the plan. Consequent to approval, the moratorium previously ordered under section 14 of the Code shall cease to have effect. The RP was directed to forward records of the CIRP and the plan to the IBBI for recording on its database, ensuring administrative completion and public record of the outcome. [Paras 16, 18, 19]

Approved plan is binding on all stakeholders and the moratorium ceases upon approval.

Final Conclusion: The resolution plan submitted by M/s. Marinaindia Traexim P. Ltd. was held to comply with section 30(2), regulations 38 and 39 and with section 29A eligibility requirements; the plan is approved under section 31(1), the RP is appointed as monitoring agency with prescribed remuneration, the approved plan is binding on all stakeholders and the moratorium ordered under section 14 ceases to have effect; I.A. No. 150 of 2020 is disposed of.

Adjournment pending decision of higher court - deferral of hearing - appointment of counsel by resolution professional

Adjournment pending decision of higher court - deferral of hearing - Whether the listed Company Appeals should be adjourned pending the Supreme Court's reserved judgment and related appeals. - HELD THAT: - The Tribunal recorded that an appeal filed by one appellant is pending before the Supreme Court where judgment has been reserved along with connected appeals. Pleadings in the listed Company Appeals are complete and counsel for an appellant sought instructions on whether to continue or withdraw one appeal; another counsel sought deferral of hearings until the Supreme Court pronounces. In view of the pending reserved judgment and the request to await that decision, the Tribunal considered it appropriate to adjourn further proceedings in these matters.

Proceedings in the listed Company Appeals are adjourned and the matters are posted 'For Hearing' on 16th March, 2021.

Appointment of counsel by resolution professional - The Tribunal recorded the appointment and instructions of counsel representing the appellant through the Resolution Professional. - HELD THAT: - The Tribunal noted that counsel appearing for the appellant in one appeal was appointed by the Resolution Professional and that instructions were to be obtained by counsel in another appeal on whether to continue or withdraw. This recording was procedural and formed part of the order for adjournment and future listing.

The appointment of counsel by the Resolution Professional and the need for counsel to take instructions were recorded; no adjudication on merits was undertaken.

Final Conclusion: The Tribunal adjourned the listed Company Appeals in view of the Supreme Court's reserved judgment and the parties' requests, recorded counsel appointments and instructions, and posted the matters for hearing on 16th March, 2021.

Approval of resolution plan under Section 31(1) - compliance with Section 30(2) requirements - commercial wisdom of the Committee of Creditors - treatment of dissenting financial creditors and applicability of post approval amendments - provisions for effective implementation of the resolution plan - performance security under Regulation 39(4) - transaction audit and actions under sections 43, 45, 50 and 66

Approval of resolution plan under Section 31(1) - commercial wisdom of the Committee of Creditors - Approval of the resolution plan submitted by Akums Drugs & Pharmaceuticals Ltd. under Section 31(1) of the Code - HELD THAT: - The Tribunal examined whether the resolution plan was approved by the CoC and met the statutory requirements for approval under Section 31(1). The record shows the CoC approved the plan with 71.67% voting share (Form H and voting table). The Resolution Professional certified compliance with the Code and Regulations and confirmed the resolution applicant's affidavit under Section 30(1) regarding eligibility under Section 29A. The Tribunal treated the CoC's commercial evaluation as within its commercial wisdom and, after considering feasibility, viability and compliance materials placed on record, concluded the conditions of Section 31(1) are satisfied. [Paras 15, 20, 40, 41]

The resolution plan as approved by the CoC is approved under Section 31(1) and is binding on the corporate debtor and other stakeholders.

Compliance with Section 30(2) requirements - provisions for effective implementation of the resolution plan - Whether the resolution plan meets the requirements of Section 30(2) including payment priorities, management, implementation and non contravention of law - HELD THAT: - The Tribunal reviewed Form H and the resolution plan clauses. It found that the plan provides for payment of insolvency resolution process costs, treatment of operational creditors and dissenting financial creditors, mechanisms for management of affairs (Monitoring Committee and managing agency), implementation and supervision (implementation schedule and four year term), and contained a certification by the RP that it does not contravene law. Performance security under Regulation 39(4) was furnished. The Tribunal noted specific plan provisions addressing IRP costs, operational creditor payments, monitoring committee composition and implementation timetable and accepted the RP's compliance certification. [Paras 27, 36, 37, 38, 40]

The resolution plan satisfies the requirements of Section 30(2) and contains provisions for effective implementation as required by the proviso to Section 31(1).

Treatment of dissenting financial creditors and applicability of post approval amendments - Validity of the challenge by dissenting financial creditors that amended provisions (post approval) required greater priority to operational creditors or different treatment - HELD THAT: - Dissenting financial creditors argued the plan did not comply with amendments made to Section 30(2)(b) and Regulation 38(1)(b). The Tribunal observed that the resolution process and CoC approval predated the relevant amendments and treated the amendments as not applicable to a plan approved before their coming into force. The Tribunal relied on the precedent cited in similar circumstances to reject the contention and noted that the plan and subsequent addenda provided for payment to dissenting creditors in accordance with the plan and orders of the Adjudicating Authority. [Paras 27, 35]

The objection by dissenting financial creditors regarding applicability of subsequent amendments is rejected; the amendments do not apply to the plan approved before their effective date.

Performance security under Regulation 39(4) - Whether the resolution applicant furnished the required performance security under Regulation 39(4) - HELD THAT: - The record shows a bank guarantee was furnished in favour of the resolution process as performance security and particulars (bank, date, amount, validity) are on record. This satisfies the regulatory requirement regarding performance security. [Paras 22, 38]

Performance security under Regulation 39(4) has been furnished and accepted.

Transaction audit and actions under sections 43, 45, 50 and 66 - Existence of pending applications under sections 43, 45, 50 and 66 arising from transaction audit - HELD THAT: - The Tribunal records that four applications under sections 43, 45, 50 and 66 were filed and are pending and under hearing before the Tribunal. These matters remain to be adjudicated separately and were not decided in the present approval petition. [Paras 39]

Applications under sections 43, 45, 50 and 66 are pending and not decided in this order.

Moratorium cessation upon approval - Effect of approval on the moratorium - HELD THAT: - On approval of the resolution plan, the Tribunal directed cessation of the moratorium order previously in place under Section 14, reflecting the statutory consequence of plan approval. [Paras 42]

The moratorium order shall cease to have effect upon approval of the resolution plan.

Final Conclusion: The Tribunal, having satisfied itself on CoC approval, compliance with Section 30(2) requirements, availability of performance security and provisions for implementation, approves the resolution plan of Akums Drugs & Pharmaceuticals Ltd. under Section 31(1); objections based on subsequent amendments are rejected, applications under sections 43/45/50/66 remain pending, and the moratorium shall cease to have effect.

Eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - voluntary disclosure exclusion under clause (f) of section 125(1) - significance of cut off date 30.06.2019 in determining eligibility - construction of scheme provisions in context and purposive interpretation - requirement of opportunity of hearing and principles of natural justice in summary rejection - remand for fresh decision and speaking order

Voluntary disclosure exclusion under clause (f) of section 125(1) - significance of cut off date 30.06.2019 in determining eligibility - construction of scheme provisions in context and purposive interpretation - Whether the petitioner was ineligible to file a declaration under the voluntary disclosure category because an enquiry was initiated on 19.12.2019 prior to the declaration filed on 26.12.2019. - HELD THAT: - The Court examined the scheme as a whole, noting the defined meaning of "enquiry or investigation" and the several provisions which attach significance to the date 30.06.2019 (including clauses dealing with quantified amounts and exclusions). Clauses (e) and (f) of section 125(1) must be read harmoniously; clause (e) expressly disqualifies persons subjected to enquiries where the duty was quantified on or before 30.06.2019, and clause (f) forbids voluntary disclosures made after being subjected to an enquiry. Read in context and purposively, clause (f) must be understood as referring to enquiries initiated on or before 30.06.2019. The Court applied the principle of statutory construction endorsed in Tata Engineering and Locomotive Co. to construe the scheme in light of its object to clear legacy disputes. Consequently an enquiry initiated after 30.06.2019 (such as on 19.12.2019) does not render a declarant ineligible for the voluntary disclosure category. [Paras 23, 24, 28, 29]

Petitioner was not rendered ineligible by the initiation of enquiry on 19.12.2019 and respondent No.4 was not justified in rejecting the declaration on that ground.

Requirement of opportunity of hearing and principles of natural justice in summary rejection - remand for fresh decision and speaking order - Whether the designated committee was obliged to afford the petitioner an opportunity of hearing before rejecting the declaration and what remedial direction is appropriate. - HELD THAT: - The Court observed that summary rejection of a declaration without giving the declarant an opportunity to explain runs contrary to the scheme's objectives and the principles of natural justice, particularly where adverse civil consequences (continued investigation, coercive measures) may follow. Reliance was placed on this Court's earlier reasoning that where the designated committee proposes a higher estimate or rejects a declaration, the declarant must be heard and a reasoned order passed. In light of the finding on eligibility, the Court directed that the declaration be treated as a valid voluntary disclosure for the purpose of fresh consideration, and that the petitioner be afforded an opportunity of hearing and a speaking order be passed within a specified time. [Paras 31, 32]

The rejection without hearing violated principles of natural justice; the matter is remitted to respondent No.4 to decide afresh after giving the petitioner an opportunity of hearing and to pass a speaking order within eight weeks.

Final Conclusion: Writ petition allowed in part: order dated 29.01.2020 rejecting the declaration is quashed; the declaration dated 26.12.2019 shall be treated as a valid voluntary disclosure for fresh consideration and respondent No.4 shall afford opportunity of hearing and pass a reasoned order within eight weeks; no order as to costs.

Computation of limitation period - presentation versus filing of appeal - application of section 9 of the General Clauses Act for exclusion of first day - application of section 10 of the General Clauses Act for holiday extension - appellate authority's power to condone delay under section 85(3A) of the Finance Act, 1994 - dispatch by post/speed post as presentation where dispatched within limitation - pari materia comparison of section 85(3A) of the Finance Act and section 35 of the Central Excise Act - remand for fresh consideration of condonation application

Computation of limitation period - application of section 9 of the General Clauses Act for exclusion of first day - application of section 10 of the General Clauses Act for holiday extension - presentation versus filing of appeal - dispatch by post/speed post as presentation where dispatched within limitation - Whether the appeal was presented within the extended period of limitation under section 85(3A) of the Finance Act, 1994. - HELD THAT: - The Court held that limitation under section 85(3A) is to be computed 'from the date of receipt' and that the word 'from' requires exclusion of the day of receipt in computing the period (relying on section 9 of the General Clauses Act). A 'month' is a calendar month (British calendar) so two months from 31.08.2019 ran until 31.10.2019 and the further one month extension ran until 31.11.2019 which, by conventional calendar reckoning, spills over to 01.12.2019. As 01.12.2019 was a Sunday, section 10 of the General Clauses Act makes the next working day (02.12.2019) the effective last day for doing the act. The Court further accepted that there is no bar on dispatching the appeal by post/speed post and, following precedents, an appeal dispatched to the correct address before expiry of limitation is not barred merely because it was received later. Applying these principles, the appeal dispatched on 02.12.2019 was within the extended period, and the appellate authority erred in treating 04.12.2019 (date of receipt) as the date of presentation and in rejecting the appeal as time barred without considering the condonation application. [Paras 32, 36, 37, 38, 40]

The appeal was dispatched within the extended limitation period and therefore should not have been rejected as time barred; the question whether to grant the extended one month condonation remains within the appellate authority's discretion.

Appellate authority's power to condone delay under section 85(3A) of the Finance Act, 1994 - pari materia comparison of section 85(3A) of the Finance Act and section 35 of the Central Excise Act - remand for fresh consideration of condonation application - Whether respondent No.1 correctly held it had no jurisdiction to condone the delay in the circumstances of this case. - HELD THAT: - The Court observed that while the proviso to section 85(3A) prescribes the period (an additional one month) within which the appellate authority may allow presentation of an appeal for sufficient cause, the factual computation in this case shows the appeal was presented within that extended period. Consequently, the appellate authority erred in concluding it had no jurisdiction to condone delay and rejecting the appeal summarily. The Court noted a distinction between sections 35 and 85(3A) in language and did not accept the appellate authority's blanket pari materia characterization as determinative here. Given that the dispatch fell within the computed extended period, the matter of whether the condonation should be granted is to be reconsidered on merits by respondent No.1. [Paras 25, 26, 41]

Respondent No.1's conclusion that it lacked jurisdiction to condone the delay was unsustainable on the facts; the matter is remitted to respondent No.1 to decide the condonation application afresh.

Final Conclusion: The impugned order rejecting the condonation application and dismissing the appeal as time barred is set aside; the appeal was dispatched within the extended limitation period and the matter is remanded to the Commissioner (Appeals) for fresh consideration of the petitioner's application for condonation of delay. No order as to costs.

Works contract service as a distinct species - Commercial or Industrial Construction Service not chargeable where activity is works contract - Cargo Handling Service inapplicable to mere supply of goods - Cargo Handling Service inapplicable where activity is transportation covered by Goods Transport Agency - Supply of Tangible Goods Service upheld - penalty under Section 76 set aside by exercise of powers under Section 80 - interest payable under Section 75

Works contract service as a distinct species - Commercial or Industrial Construction Service not chargeable where activity is works contract - Demand confirmed under Commercial or Industrial Construction Service on activity held to be works contract was set aside - HELD THAT: - The Tribunal held that the activity in question was a works contract involving both supply of goods and rendition of services. Relying on the principle that works contract service is a separate species (as settled by the Supreme Court in Larsen & Toubro), service tax cannot be charged under any other head for an activity which is in substance a works contract. The fact that the assessee may not have complied with the formal conditions of the Works Contract (Composition Scheme) Rules did not permit the Department to sustain a demand under Commercial or Industrial Construction Service for an activity that is essentially a works contract. Accordingly, the demand under Commercial or Industrial Construction Service was set aside. [Paras 16]

Demand under Commercial or Industrial Construction Service set aside as the activity was properly characterised as works contract

Cargo Handling Service inapplicable to mere supply of goods - Cargo Handling Service inapplicable where activity is transportation covered by Goods Transport Agency - Demands confirmed under Cargo Handling Service were set aside in respect of (a) supply of river sand and (b) transportation of limestone - HELD THAT: - The Tribunal examined two distinct categories of contracts encompassed by the cargo handling demand. First, contracts for supply of river sand were substantive contracts for sale/supply of goods; incidental acts of loading and unloading do not convert such supply contracts into cargo handling services and therefore the cargo handling demand on these contracts was unsustainable. Second, contracts for transportation of limestone were contracts of carriage; loading and unloading incidental thereto do not convert the activity into Cargo Handling Service and the appropriate characterisation is Goods Transport Agency (GTA) or mere transportation. The Tribunal followed its earlier final order for an earlier period and found no reason to depart from that view, setting aside the cargo handling demands for both categories. [Paras 17, 18]

Demands under Cargo Handling Service set aside both for supply of river sand and for contracts which are transportation (GTA) in substance

Supply of Tangible Goods Service upheld - interest payable under Section 75 - Demand in respect of Supply of Tangible Goods Service was upheld and interest was held payable - HELD THAT: - The Tribunal noted that the appellant did not contest the demand relating to supply of tangible goods (their JCB and tractor supplied to the project). That part of the impugned order was sustained. The Tribunal also held that interest, if any, under the statutory provision applicable to delayed payment of service tax is payable on the sustained amount. [Paras 19]

Demand for Supply of Tangible Goods Service upheld; interest payable as applicable

Penalty under Section 76 set aside by exercise of powers under Section 80 - Penalty imposed under Section 76 was set aside - HELD THAT: - Having set aside the bulk of the demands, the Tribunal exercised its discretion under the applicable provision to set aside the penalty that had been imposed under Section 76. The Tribunal found no justification for imposing penalty given that the major demands were not sustained and in view of the appellant's prior discharge of tax under relevant heads for the period in question. [Paras 19]

Penalty under Section 76 set aside

Final Conclusion: The appeal was allowed in part: demands under Commercial or Industrial Construction Service and Cargo Handling Service were set aside, the demand for Supply of Tangible Goods Service was upheld with interest, and the penalty under Section 76 was set aside by exercise of powers under Section 80.

Cenvat Credit on Outward Transit Insurance - FOR sale basis - sale invoice as evidentiary contract - binding effect of jurisdictional High Court decisions - administrative circular subsequent to judicial pronouncement

Cenvat Credit on Outward Transit Insurance - FOR sale basis - sale invoice as evidentiary contract - Entitlement to Cenvat credit on outward transit insurance paid in respect of excisable goods sold on FOR basis where invoices and related documents record risk upto destination. - HELD THAT: - The original authority allowed credit after examining invoices, LR copies and CA certificate which indicated sale on FOR basis. The department and Commissioner (Appeals) reversed the allowance for want of an express sale contract. The Tribunal examined the invoices and found they expressly recorded the condition of sale being on FOR basis and that risk was covered upto destination. The Tribunal held that sale invoices evidencing the terms of sale constitute sufficient contractual evidence to establish a FOR sale, and there was no claim or evidence that outward transit insurance was borne by the consignee. The Tribunal considered and distinguished the reliance placed on the Supreme Court decision in Ultratech Cement and a later Hyderabad Bench decision by noting that earlier Tribunal and Gujarat High Court rulings on identical transactions had upheld credit on the basis that the transactions were FOR sales, and that a Board circular was issued after the Supreme Court pronouncement. Having regard to the materials on record and the controlling jurisdictional precedent, the Tribunal concluded that the sale was on FOR basis and therefore Cenvat credit for outward transit insurance is admissible. [Paras 1, 2, 4, 5]

Impugned order set aside; appeal allowed and Cenvat credit on outward transit insurance admitted as the sales were on FOR basis evidenced by invoices and related documents.

Final Conclusion: The Tribunal allowed the appellant's appeal and held that Cenvat credit on outward transit insurance is admissible where the sale is on FOR basis as evidenced by sale invoices and corroborative documents; the Commissioner (Appeals) order was set aside.

Levy of tax on works contract - Value of goods at time of incorporation - Exclusion of value of land from tax on works contract - Determination of taxable turnover under works contract - Machinery provisions for VAT computation - Penalty under Section 72(2) of the Karnataka Value Added Tax Act, 2003

Levy of tax on works contract - Value of goods at time of incorporation - Determination of taxable turnover under works contract - Machinery provisions for VAT computation - Whether the tribunal's order dated 24.06.2011 upholding assessment to tax sales of apartments should stand, or the matter requires fresh adjudication in light of the three-judge decision in LARSEN & TOUBRO - HELD THAT: - The tribunal's order was rendered before the three-judge bench decision in LARSEN & TOUBRO which clarified that a State may tax the value of goods forming part of a works contract provided the tax is directed to the value of goods at the time of their incorporation and does not purport to tax transfer of immovable property; the Supreme Court further held that a works contract becomes such from the stage a developer enters into a contract with the purchaser and that value addition after the agreement is chargeable to tax only as provided by the State. The Karnataka Value Added Tax Act and Rules contain machinery provisions (including provisions for levy and for determination of taxable turnover and prescribed deductions) which must be applied in the light of the principles laid down by the larger Bench in LARSEN & TOUBRO. Because the tribunal had applied law as it stood prior to the larger Bench decision, the High Court quashed the tribunal's order and remitted the matter for fresh determination of the assessee's liability to pay Value Added Tax in accordance with the ratio and parameters laid down by the three-judge bench in LARSEN & TOUBRO. [Paras 9]

Tribunal's order dated 24.06.2011 quashed; matter remitted for fresh assessment of the petitioner's liability to tax the sale of apartments for April 2005 to March 2006 in accordance with the decision in LARSEN & TOUBRO and the applicable machinery provisions in the Act and Rules.

Final Conclusion: The tribunal's order is set aside and the matter is remitted for fresh adjudication of the assessee's liability to Value Added Tax for the period April 2005 to March 2006 in accordance with the three judge bench decision in LARSEN & TOUBRO and the relevant machinery provisions; the Court did not decide the substantial questions of law framed, which therefore remain unnecessary to answer in this petition.

Transit/handling loss - suppressed turnover - reasonableness of transit/handling loss - acceptance of books of accounts - reliance on orders under other enactments - point of levy - burden on revenue to prove sales

Reliance on orders under other enactments - point of levy - acceptance of books of accounts - suppressed turnover - Validity of Tribunal's order setting aside the orders of the assessing authority and the first appellate authority which had treated the alleged transit/handling shortage as suppressed turnover. - HELD THAT: - The prescribed authority had accepted the assessee's books of accounts in entirety but, without conducting any independent inquiry, proceeded to treat the recorded transit/handling shortage as suppressed turnover relying principally on a CBI report and an order of the Excise Authority. The Court applied the established legal principle that an order under one enactment cannot, by itself, be the basis for levying tax under another enactment where the event and point of levy differ. The point of levy under the Excise law is removal, whereas under the Karnataka Value Added Tax Act the point of levy is sale; consequently the Excise order could not be treated as establishing a taxable sale under the Act. Both the prescribed authority and the first appellate authority had recorded that transit/handling loss is inevitable in the business of transporting iron ore; in those circumstances, and in the absence of material proving that the shortages represented sales, the Tribunal was justified in setting aside the addition. The Court found no legal infirmity in the Tribunal's conclusion and therefore declined to interfere. [Paras 8, 9]

Tribunal rightly set aside the concurrent orders; reliance on the Excise Authority/CBI report did not suffice to treat the shortage as suppressed turnover under the Act.

Transit/handling loss - reasonableness of transit/handling loss - burden on revenue to prove sales - Whether the Tribunal was right in holding the respondent's claim of transit/handling loss (approximately 5% over five years) to be within reasonable limits and in limiting any addition to the extent already allowed. - HELD THAT: - The authorities below acknowledged that transit/handling loss during transportation of iron ore fines and lumps is inevitable. The prescribed authority itself accepted books of accounts and had reduced demand by allowing a 1% shortage; the First Appellate Authority and the Tribunal examined the claim and the material on record and did not find evidence that the recorded shortages resulted from sales. In that factual and evidentiary backdrop, and given the absence of proof that the respondent had effected taxable sales corresponding to the shortages, the Tribunal's conclusion that there was no basis for treating the entire recorded shortage as suppressed turnover was sustainable. The High Court observed that the claimed aggregate loss over the period was not so exorbitant as to warrant interference and that the revenue bears the burden of proving actual sales to justify an addition. [Paras 8, 9]

No interference with the Tribunal's finding that the claimed transit/handling loss was within reasonable limits and that the revenue had not discharged the burden of proving sales to justify addition.

Final Conclusion: Substantial questions of law were answered against the petitioner and in favour of the respondent; the revision petition is dismissed and the Tribunal's order is upheld.

Imposition of check-post penalty under Section 53(2)(b) of the Karnataka Value Added Tax Act, 2003 - imposition of check-post penalty under Section 53(2)(c) of the Karnataka Value Added Tax Act, 2003 - imposition of check-post penalty under Section 53(2)(d) of the Karnataka Value Added Tax Act, 2003 - revisional jurisdiction under Section 64(1) of the Karnataka Value Added Tax Act, 2003 - appellate interference where two views are possible - requirement to carry and produce prescribed transit documents

Revisional jurisdiction under Section 64(1) of the Karnataka Value Added Tax Act, 2003 - appellate interference where two views are possible - imposition of check-post penalty under Section 53(2)(b) of the Karnataka Value Added Tax Act, 2003 - Whether the Additional Commissioner could, in exercise of revisional jurisdiction, set aside the orders of the Commercial Tax Officers and impose penalty under Section 53(2)(b) in respect of all 12 vehicles when the officers had accepted the assessee's explanation and two views were possible. - HELD THAT: - The Court held that the Commercial Tax Officers had accepted the appellant's explanation that the vehicles were stationed for weighment and subsequent delivery, and had levied penalty only in respect of six vehicles for failure to report at the entry check post under Section 53(2)(c). On the specific facts two reasonable views were available regarding applicability of Section 53(2)(b). Where two views are possible, exercise of revisional power under Section 64(1) to substitute the view of the revisional authority is not justified because the original orders could not be characterised as erroneous or prejudicial to revenue. Accordingly the Additional Commissioner was not justified in invoking Section 64(1) to impose penalty under Section 53(2)(b) for all 12 vehicles. [Paras 6]

Revisional jurisdiction could not be invoked to substitute the Commercial Tax Officers' accepted view; imposition of penalty under Section 53(2)(b) was not justified.

Imposition of check-post penalty under Section 53(2)(d) of the Karnataka Value Added Tax Act, 2003 - requirement to carry and produce prescribed transit documents - Whether Section 53(2)(d) was applicable to the goods in question. - HELD THAT: - The Court noted that Section 53(2)(d) applies in the context of interstate sales and reporting on entering and leaving State limits. On the facts, the consignments were in the course of inter-State movement for sale but the material findings established that the provision in question was not attracted to the fact situation before the authorities. Therefore the penalty under Section 53(2)(d) was not applicable. [Paras 6]

Section 53(2)(d) was not applicable to the facts of the case.

Final Conclusion: The order of the Additional Commissioner dated 30.12.2014 invoking revisional jurisdiction to impose enhanced check-post penalties is quashed; the appeal is allowed.

Suppressed turnover - seizure and mahazar - re assessment under the KVAT Act - pre assessment notice vagueness - presumption as to documents seized from business premises - third party documents not automatically attributable to the dealer - matching of suppressed purchases and suppressed sales - recomputation of penalty and interest

Seizure and mahazar - third party documents not automatically attributable to the dealer - Validity of a single seizure/mahazar covering documents seized from two different premises and attribution of documents seized from a third party premises to the assessee. - HELD THAT: - The Tribunal correctly held that issuing a common seizure/mahazar in respect of documents taken from two different premises without specifically identifying which document was seized from which place and without evidence that the third party premises formed part of the dealer's business undermined the basis for treating all seized material as the assessee's. The first appellate authority's reliance on documents seized from a third party (Sri Santosh Jha) as automatically belonging to the assessee was not justified in the absence of clear indication in those documents that particular entries related exclusively to the assessee. The Tribunal applied established authority that while a presumption may arise where documents are recovered from a dealer's own premises, such presumption does not extend to material seized from third party premises unless linkage or exclusive possession is demonstrated; strong suspicion alone is insufficient. The High Court found no error in these factual and legal conclusions and upheld the Tribunal's finding that the assessment authority was not justified in attributing all seized documents to the assessee. [Paras 12, 13, 14]

The seizure/mahazar and attribution of third party documents to the assessee was held unjustified; the Tribunal's interference with the assessment on this ground was upheld.

Pre assessment notice vagueness - presumption as to documents seized from business premises - Whether the pre assessment notice and processing of voluminous seized material complied with principles of fair notice and enabled the assessee to meet the case. - HELD THAT: - The 1st Appellate Authority recorded that a large volume of seized documents was processed much later and only parts of the verification basis were disclosed in the pre assessment notice, thereby disabling the assessee from offering meaningful explanations. The Tribunal accepted that defect and the High Court noted that the Appellate Authority's finding that the pre assessment notice was vague and that disclosure deficiencies were cured at the appellate stage was not challenged by the State. The Court treated these conclusions as supporting the Tribunal's remedial direction. [Paras 10, 12]

The Tribunal's view that the pre assessment notice was deficient and that the assessee was deprived of adequate opportunity was left intact.

Matching of suppressed purchases and suppressed sales - suppressed turnover - Extent to which suppressed sales should be treated as arising from suppressed purchases reflected in the seized documents and the correct quantification of suppressed turnover. - HELD THAT: - On the material, the Tribunal found it unreasonable to conclude that none of the suppressed sales arose out of the suppressed purchases recorded in the same seized documents. Applying the principle that some of the reported suppressed sales must be attributable to suppressed purchases, the Tribunal exercised a moderating adjustment: it excluded ten percent of the suppressed sales (as identified in the impugned order) from the assessee's suppressed turnover. The Tribunal then recalculated the aggregate suppressed turnover for the tax periods in question, arriving at a refixed figure. The High Court agreed that this exercise was a just and proper moderation of the assessment figures in the factual matrix and did not call for interference. [Paras 13, 14]

A portion of suppressed sales was excluded (10%) as relatable to suppressed purchases; the Tribunal's refixation of suppressed turnover was upheld.

Recomputation of penalty and interest - re assessment under the KVAT Act - Whether penalty and interest and the taxable turnovers should be recomputed in accordance with the Tribunal's findings. - HELD THAT: - Following the Tribunal's acceptance that part of the seized material could not be attributed to the assessee and the adjustment made to the suppressed turnover, the Tribunal directed the Prescribed Authority to recompute taxable turnovers for the tax periods from April 2005 to October 2006 and to re compute penalty and interest afresh on the basis of the taxable turnovers determined. The High Court found this remedial direction to be appropriate, noting that the Appellate Authority's earlier directions regarding recalculation and credit adjustments had not been challenged by the State, and upheld the mandate for recomputation. [Paras 1, 3, 13]

The Tribunal's directions to the Prescribed Authority to recompute taxable turnovers and to recompute penalty and interest in accordance with its findings were sustained.

Final Conclusion: The High Court found no substantial question of law and dismissed the State's revision petitions, upholding the Tribunal's interference with the reassessment to the extent it excluded third party material, moderated the suppressed turnover, and directed recomputation of taxable turnover, penalty and interest.

Cancellation of banking licence under Section 22 read with Section 56 of the Banking Regulation Act - winding up of an insured co-operative bank under Section 110A of the Maharashtra Co-operative Societies Act and effect of non-obstante clause - public interest and duty of the Reserve Bank of India as regulator and 'watchdog' of banks - exclusion of right to hearing / natural justice where Registrar acts on binding directions of Reserve Bank of India - liability of Deposit Insurance and Credit Guarantee Corporation for insured deposits - appeal under Section 22(5) of the Banking Regulation Act is available to the banking company and not depositors

Cancellation of banking licence under Section 22 read with Section 56 of the Banking Regulation Act - public interest and duty of the Reserve Bank of India as regulator and 'watchdog' of banks - Validity of Reserve Bank of India's order dated 28th April, 2020 cancelling the CKP Co operative Bank's banking licence. - HELD THAT: - The Court found that the Reserve Bank of India had repeatedly identified severe and continuing regulatory breaches and grave deterioration in the bank's financial position over a long period (including negative CRAR, substantial NPAs, accumulated losses and deposit erosion), afforded multiple opportunities and indulgences to the bank to submit revival/merger plans, and issued two detailed show cause notices prior to cancellation. Given the persistent failure of the bank to effect revival and the risk of further prejudice to depositors and public interest, the RBI's decision to cancel the licence under Section 22(4) (read with Section 56) was an exercise of its statutory duty as regulator and not vitiated by illegality, irrationality or procedural impropriety. The Court held that no fresh show cause notice was required after the second show cause in the circumstances and that the proviso to Section 22(4) (regarding urgency) was satisfied by the material before RBI. [Paras 76, 102, 103, 105, 107]

RBI's cancellation of the banking licence of the CKP Bank is valid and is not liable to be set aside.

Winding up of an insured co-operative bank under Section 110A of the Maharashtra Co-operative Societies Act and effect of non-obstante clause - exclusion of right to hearing / natural justice where Registrar acts on binding directions of Reserve Bank of India - Validity of the Registrar's order dated 4th May, 2020 appointing a liquidator and winding up the CKP Bank pursuant to RBI directions under Section 110A of the MCS Act. - HELD THAT: - The Court held that Section 110A (with its non-obstante clause) empowers the Registrar to act on the sanction or requisition of the RBI in relation to insured co operative banks and that such directions are binding on the Registrar. Consequently, the Registrar had no discretion to refuse winding up once RBI requisitioned it; the statutory scheme excludes the Registrar's obligation to issue a show cause or grant hearing in that situation. Pre-existing liabilities insured by DICGC remain in force. The Registrar's exercise of power under Section 110A to appoint a liquidator and wind up the bank pursuant to RBI directions was therefore lawful and not in contravention of Sections 102/103. [Paras 82, 92, 94, 98, 100]

The Registrar's order appointing the liquidator and winding up the bank pursuant to RBI directions under Section 110A is valid.

Exclusion of right to hearing / natural justice where Registrar acts on binding directions of Reserve Bank of India - Whether principles of natural justice required issuance of a fresh show cause notice or a hearing by RBI or the Registrar before cancellation/winding up. - HELD THAT: - The Court observed that the bank had been repeatedly put on notice over many years and had been given multiple opportunities to comply and to pursue revival/merger. When the Registrar acts solely pursuant to binding directions of RBI under Section 110A, the Registrar has no discretion and the right to hearing is excluded. On the facts, RBI was not obliged to issue a fresh show cause notice after the second show cause notice because of continuing deterioration and prior indulgences; the absence of a fresh notice or separate hearing did not render the impugned orders invalid. [Paras 76, 77, 90, 92, 93]

No fresh show cause notice or further hearing was required; principles of natural justice were not breached by the RBI or Registrar in the circumstances.

Liability of Deposit Insurance and Credit Guarantee Corporation for insured deposits - Effect of cancellation/winding up on DICGC liability and entitlement of depositors to insured amounts. - HELD THAT: - The Court noted that existing liabilities insured by DICGC as on the date of cancellation/winding up continue and that DICGC has sanctioned and remitted claim amounts for eligible depositors up to the insured limit. The statutory scheme obliges the liquidator (or transferee bank) to repay DICGC in the circumstances and manner prescribed. The DICGC's liability to pay eligible insured amounts remains intact and the liquidation process provides for refund/disbursal to depositors in accordance with DICGC policy. [Paras 72, 73, 74, 75, 81]

DICGC remains liable to pay insured deposits up to the statutory limit and sanctioned refunds proceed through the liquidator.

Appeal under Section 22(5) of the Banking Regulation Act is available to the banking company and not depositors - Whether depositors (or others) could invoke the appeal under Section 22(5) against RBI's cancellation order. - HELD THAT: - The Court recorded that the statutory appeal under Section 22(5) is available to the banking company aggrieved by RBI's cancellation and not to depositors. The petitioners' contention that cancellation/winding up defeated the right of appeal was not maintainable in their hands. The Court further noted that the liquidator had not filed an appeal but that such fact did not invalidate RBI's action. [Paras 78]

Depositors cannot invoke the statutory appeal under Section 22(5); that remedy lies with the banking company aggrieved.

Sections 102 and 103 of the MCS Act and mandatory procedure for winding up - Whether the Registrar was obliged to follow the procedural route under Sections 102/103 of the MCS Act before winding up the CKP Bank given RBI's directions. - HELD THAT: - The Court held that the Registrar's powers under Section 110A to act on RBI's sanction/requisition operate in a different field from Sections 102/103. Where RBI issues binding directions under Section 110A, the Registrar is not required to exercise powers under Section 102/103 or to follow that separate procedure; the Registrar's compliance with RBI directions is lawful and Sections 102/103 do not constrain that statutory duty. [Paras 82, 85, 93]

Registrar was not required to follow Sections 102/103 procedural steps when acting on RBI's binding directions under Section 110A.

Final Conclusion: The challenge to RBI's cancellation of the CKP Bank's banking licence and the Registrar's subsequent winding up order was dismissed. The Court upheld RBI's exercise of regulatory powers in public interest, confirmed the Registrar's authority to wind up pursuant to RBI directions under Section 110A of the MCS Act, recognised DICGC's continued liability for insured deposits, and dismissed the petitions with no costs.