TaxTMI Updates e-Newsletter
Mar 26,2019

Power to summon under Section 70 of the Goods and Services Tax Act - power of arrest in exercise of powers under Section 69 read with Section 132 of the Goods and Services Tax Act - offence under Section 132 of the Act - determination of tax not prerequisite to action for offences under Section 132 - inapplicability of Make My Trip precedents to cases of fraudulent availing of input tax credit on fake invoices

Power to summon under Section 70 of the Goods and Services Tax Act - power of arrest in exercise of powers under Section 69 read with Section 132 of the Goods and Services Tax Act - Whether the writ petition seeking quashing of summons and restraint on arrest should be allowed. - HELD THAT: - The Court found that the Department's case discloses fraudulent availment of input tax credit on the basis of fake invoices and that senior officials have already been arrested. Petitioner, as Managing Director, has not controverted the factual allegations and has been a director since 2012 with managerial remuneration, undermining the contention of non-involvement. In these circumstances the Department is entitled to proceed by issuing summons and, where reasonable grounds exist for offences under Section 132, to authorise arrest under Section 69. The petition confined to technical objections and apprehension of arrest therefore fails. [Paras 20, 21, 27, 28]

Writ petition dismissed; petitioners not entitled to quash the summons or obtain a blanket protection from arrest.

Offence under Section 132 of the Act - determination of tax not prerequisite to action for offences under Section 132 - Whether tax must first be determined under Sections 73 and 74 before the Department can proceed against persons for offences under Section 132. - HELD THAT: - The Court held that where an offence under Section 132 is established or reasonable grounds to believe such offence exist, determination of tax under Sections 73 and 74 is not a precondition to departmental action including issuance of summons or arrest. The reasoning is that the statutory scheme permits direct action where offences specified in Section 132 are involved. [Paras 15, 21]

Determination under Sections 73 and 74 is not required prior to proceeding under provisions relating to offences under Section 132.

Inapplicability of Make My Trip precedents to cases of fraudulent availing of input tax credit on fake invoices - precedential applicability - Whether the decisions in Make My Trip and the other cited authorities preclude arrest or departmental action in the present facts. - HELD THAT: - The Court found the cited authorities distinguishable. In Make My Trip the issue concerned collection of tax and alleged non-deposit by an intermediary with different factual and procedural features; the present case involves alleged fraudulent input tax credit based on fake invoices and a syndicate of related concerns. Similarly, the Meghraj Moolchand Burad decision related to anticipatory bail and is not factually apposite. Consequently those precedents do not entitle the petitioner to protection from arrest or to quash the summons. [Paras 25, 26]

Reported precedents relied upon by the petitioner are not applicable to the facts of this case.

Fraudulent availment of input tax credit on fake invoices - director's responsibility for company conduct - Whether the factual findings of fraudulent input tax credit and the managing director's responsibility stand controverted. - HELD THAT: - The Court recorded that the Department's investigation and statements reveal extensive fraudulent input credit claimed by the company and its related concerns, and that the petitioner did not controvert these allegations in pleadings. The petitioner had been a director since 2012 and received managerial remuneration, and the Court rejected the claim of non-involvement in day-to-day affairs. The factual matrix thus supports departmental action. [Paras 18, 22, 23, 24]

The findings of fraudulent availment of input tax credit and the petitioner's responsibility are accepted; factual denials are absent.

Final Conclusion: The writ petition is dismissed with costs of Rs. 1,00,000/-, to be deposited with the Rajasthan High Court Legal Services Authority within four weeks; stay application disposed of.

Condonation of delay - sufficient cause - registration under Section 12A - cancellation of registration under Section 12AA - entitlement to exemption under Section 11 - proviso to Section 2(15) - liberal view in exercise of discretion to condone delay - bar on fresh application for registration after cancellation

Condonation of delay - sufficient cause - liberal view in exercise of discretion to condone delay - Whether the delay of 618 days in filing the appeal before the Income Tax Appellate Tribunal should be condoned. - HELD THAT: - The Court examined the reasons offered for delay and the consequences of refusing to entertain the appeal on merits. The Assessee produced an affidavit that the earlier Chartered Accountant advised against filing an appeal and that only upon obtaining a later opinion from a new Chartered Accountant did the Assessee file the appeal. The Court also took into account that the Director's order cancelling the Assessee's registration under Section 12AA would permanently deprive the trust of benefits under Section 11, and that the Commissioner had rejected a fresh application for registration on the ground that no provision permits re-registration once registration has been cancelled. In these circumstances the Court held that, notwithstanding the considerable delay, a liberal exercise of the discretionary power to condone delay was justified so that the substantive controversy could be heard on merits. The Court imposed costs as a condition for condonation and directed the Tribunal to decide the appeal on merits. [Paras 6, 7]

Delay of 618 days is condoned; the Assessee to deposit Rs.50,000 with High Court Legal Aid Services within two weeks; the impugned order refusing condonation is reversed and the Tribunal is directed to decide the appeal on merits.

Final Conclusion: The appeal is allowed on the substantial question of law: the Tribunal's refusal to condone the delay is set aside and the delay is condoned on payment of costs; the Tribunal must proceed to decide the Assessee's appeal on merits.

Re-opening of assessment under Section 147/148 - change of opinion - reason to believe - writ jurisdiction under Article 226 - alternative remedy of statutory appeal - maintainability of writ against reassessment

Maintainability of writ against reassessment - writ jurisdiction under Article 226 - alternative remedy of statutory appeal - Whether the High Court should entertain a writ petition under Article 226 challenging initiation of reassessment proceedings when no objection was raised before the Assessing Authority and an adequate alternative statutory remedy is available. - HELD THAT: - The Court held that the assessee's failure to object to the reasons for reopening before the Assessing Authority amounted to acquiescence and that nothing prevented the assessee from raising that objection at the relevant time for adjudication by the Assessing Authority. Given the availability of a specific and adequate alternative remedy in the form of statutory appeals under the Income-tax Act, entertaining the controversy on merits in writ jurisdiction would subvert the appellate scheme and convert the High Court into a forum for deciding mixed questions of fact and law which are to be resolved in the statutory appellate fora. The decisions relied upon by the assessee were held distinguishable because interference in writ jurisdiction depends on the facts of each case. Consequently, the writ petition was not maintainable and the Single Judge did not err in dismissing it. [Paras 5, 8, 9, 10]

Writ petition challenging initiation of reassessment is not maintainable; the assessee must pursue the statutory appellate remedy.

Re-opening of assessment under Section 147/148 - change of opinion - reason to believe - Whether the reassessment was invalid as a mere change of opinion because the expenditure had earlier been allowed as revenue expenditure. - HELD THAT: - The Court found no merit in the contention that the reassessment amounted to a prohibited change of opinion. It explained that the distinction between a 'change of opinion' and formation of 'reason to believe' for invoking Sections 147/148 is narrow; an item correctly disclosed and regarded by the assessee as revenue expenditure may, in the opinion of the Assessing Authority, be capital in nature. Such a dispute involving mixed questions of fact and law must be resolved by the appellate authorities, and the mere assertion of prior allowance does not preclude formation of a fresh reason to believe. On the facts of the case the Court was satisfied that the Assessing Authority had valid and reasonable grounds to reopen the assessment and there was no jurisdictional infirmity shown. [Paras 7, 9, 11]

Reassessment was not vitiated as a change of opinion; the reasons to reopen were valid and the reopening stands.

Alternative remedy of statutory appeal - Whether the assessee should be permitted to file the statutory appeal despite delay. - HELD THAT: - Although the writ was dismissed, the Court exercised discretion to permit the assessee to file the regular statutory appeal within a limited time. The Court directed that if the assessee files the appeal within two weeks, it would be entertained without objection to limitation, subject to compliance with other conditions for maintaining an appeal under the Act. [Paras 12]

Assessee permitted to file statutory appeal within two weeks; appeal to be entertained without limitation objection subject to usual conditions.

Final Conclusion: The intra court appeals are dismissed: the writ challenge to reassessment is not maintainable; the reassessment was held not to be a mere change of opinion and is valid; liberty granted to file the statutory appeal within two weeks, to be entertained without objection as to limitation subject to usual conditions.

Capital expenditure - revenue expenditure - forfeiture clause - agreement to sale and transfer of title - permissive possession - advance for acquisition of capital asset - lease rental

Capital expenditure - revenue expenditure - forfeiture clause - advance for acquisition of capital asset - agreement to sale and transfer of title - permissive possession - lease rental - Nature of the sum forfeited on cancellation of the MOU - capital loss (investment in a capital asset) or revenue loss deductible as business expenditure. - HELD THAT: - The MOU envisaged acquisition of a windmill project for a lump sum payable in installments, with title and original documents to pass only on receipt of full and final payment. The contract therefore constituted an integrated agreement for sale where the assessee was at best a permissive user until completion of payment. The forfeiture clause fixed a lump sum amount to be retained by the seller on default irrespective of the period of possession or use and without reference to any rent or lease period. Such a fixed forfeiture, unconnected to duration of use and expressed as a forfeiture rather than periodic payment, indicates an incident of an advance towards acquisition of a capital asset and not lease rental. Reliance on authorities involving pure leases or failed projects of an essentially different contractual character is distinguishable. The assessee's alternative contention that depreciation ought to have been allowed was not raised before the authorities below and lacked requisite factual foundation; accordingly the claim cannot be entertained for the first time before the High Court. Applying these conclusions, the retained sum is attributable to the capital advance invested in acquiring the project and the loss is capital in character, not an allowable revenue deduction. [Paras 9, 10, 11, 13]

Forfeited amount treated as capital loss arising from investment in a capital asset; not allowable as revenue expenditure or lease rental; appeal dismissed.

Final Conclusion: The forfeited sum retained on cancellation of the MOU is a capital loss arising from an advance for acquisition of a capital asset (windmill project) and not a revenue expenditure or lease rental; the Income Tax Appeal is dismissed.

Deeming fiction under section 50C - exemption under section 54EC - computation of capital gains under section 48 - charging provision under section 45

Deeming fiction under section 50C - exemption under section 54EC - computation of capital gains under section 48 - charging provision under section 45 - Whether the deeming fiction in section 50C applies when computing capital gain and the consequent exemption under section 54EC where stamp valuation exceeds declared sale consideration. - HELD THAT: - The court held that sections 45 and 48 together charge and compute capital gains and that section 50C operates at the computation stage by creating a deeming fiction whereby the value adopted or assessed by the stamp valuation authority is treated as the full value of consideration for the purposes of section 48. Once section 50C substitutes the deemed consideration for computation of capital gain, the resulting computation necessarily governs the operation of exemption provisions such as section 54EC. Thus the exemption available under section 54EC must be worked out with reference to the capital gain computed on the deemed sale consideration under section 50C. The court rejected the argument that the deeming fiction in section 50C is inapplicable to section 54EC, observing that limiting section 50C's effect would render it redundant and produce anomalous results (notably permitting an assessee to avoid additional tax by claiming exemption merely on the declared consideration). The legislative limits within section 54EC (including the investment cap) remain applicable when computing the exemptible portion, but the basic quantum of capital gain for that computation is governed by the substituted value under section 50C. [Paras 11, 12, 13, 14]

Deeming fiction in section 50C applies to computation of capital gain under section 48 and the exemption under section 54EC must be calculated with reference to the capital gain computed on the deemed sale consideration; tribunal's view upheld and appeals dismissed.

Final Conclusion: Appeals dismissed. The High Court affirmed the Tribunal's view that the value adopted or assessed by the stamp valuation authority under section 50C is to be treated as full consideration for computing capital gains, and exemption under section 54EC must be worked out on that deemed figure.

Exemption under Section 54 - timing of chargeability of capital gains - transfer as defined in Section 2(47) - possession and part-performance under Section 53A of the Transfer of Property Act

Exemption under Section 54 - timing of chargeability of capital gains - The Tribunal was right in holding that the assessee is entitled to exemption under Section 54 because the transfer for capital gains purposes occurred in Assessment Year 2013-2014 and not in Assessment Year 2011-2012. - HELD THAT: - The High Court held that the Tribunal's factual findings-that only a licence to the developer to measure land and prepare plans existed prior to statutory approvals, that physical possession was handed over to the developer only after Chennai Metropolitan Development Authority granted approval on 31.3.2012, and that therefore the effective transfer took place in the assessment year 2013-2014-are findings of fact and not perverse. The court observed that no part of consideration had passed to the developer in Assessment Year 2011-2012 and that the assessee retained physical possession until approval was obtained; accordingly the assessee's revised return claiming exemption under Section 54 was in relation to the year in which the transfer occurred. The court declined to disturb the Tribunal's conclusion that the cost attributable to the developer's share was to be treated as invested in construction for purposes of Section 54, and therefore affirmed the Tribunal's allowance of the exemption. [Paras 4, 5, 8]

Tribunal's finding that the capital gains arose in Assessment Year 2013-2014 and that the assessee is entitled to exemption under Section 54 is upheld; no interference.

Transfer as defined in Section 2(47) - possession and part-performance under Section 53A of the Transfer of Property Act - Execution of the joint development agreement and the general power of attorney without handing over physical possession or payment of consideration did not constitute a 'transfer' under Section 2(47) and Section 53A was not attracted in the Assessment Year 2011-2012. - HELD THAT: - The court concluded that mere execution of documentation (Joint Development Agreement and General Power of Attorney) and licence to enter for plan preparation did not amount to transfer within the meaning of Section 2(47). The Tribunal correctly found that physical possession was not handed over prior to statutory approvals and that part-performance under Section 53A could not be invoked where no consideration had passed and no effective possession was given. The Bombay High Court decision relied upon by Revenue was found distinguishable on its facts and, in any event, supportive of the principle that actual handing over/consideration are material to fixing the year of transfer. [Paras 4, 5, 6]

The contention that the transaction amounted to transfer in Assessment Year 2011-2012 is rejected; Section 53A does not apply on the facts, and the findings of the Tribunal are affirmed.

Final Conclusion: The Revenue's appeal is dismissed. No substantial question of law is made out; the Tribunal's factual findings that the taxable transfer occurred in Assessment Year 2013-2014 and that the assessee was eligible for exemption under Section 54 are affirmed.

Estimation of income from pisciculture - Water spread area for fish ponds - CBDT Instruction No.5160 dated 19.10.1993 - Reliance on statements made to bank for tax assessment - Use of comparable admitted incomes for estimation - Unexplained cash deposits - Proof of agricultural receipts as source - Rejection of books of account and consequential estimation - Unexplained cash deficit

Estimation of income from pisciculture - Water spread area for fish ponds - CBDT Instruction No.5160 dated 19.10.1993 - Use of comparable admitted incomes for estimation - Reliance on statements made to bank for tax assessment - Estimation of income from pisciculture by applying 70% water spread area and income at Rs.15,000 per acre on that area - HELD THAT: - The Assessing Officer applied 90% water spread area based on a letter the assessee had furnished to the bank, and estimated income at Rs.15,000 per acre relying on comparables. The Tribunal held that in absence of any physical inspection or other evidence by Revenue, the CBDT guideline (Instruction No.5160 dated 19.10.1993) adopting 70% of water spread area is reasonable and must be applied; the bank letter cannot override the guideline absent corroboration. On valuation per acre, the Tribunal found the case-law relied on by the assessee to be distinguishable on facts and noted that comparable admissions of up to Rs.20,000 per acre were on record; the assessee did not demonstrate that income was below Rs.15,000 per acre. Having regard to earlier similar decisions on facts, the Tribunal directed estimation at Rs.15,000 per acre on 70% of the water spread area and allowed the appeal partly on this ground. [Paras 7, 8]

Income from pisciculture to be estimated at Rs.15,000 per acre on 70% of the water spread area of the leased 124 acres; appeal allowed partly on this ground.

Unexplained cash deposits - Proof of agricultural receipts as source - Reliance on statements made to bank for tax assessment - Addition of deposits of Rs.14,17,500 as unexplained income upheld - HELD THAT: - The assessee claimed the deposits were from sale proceeds of agricultural produce and/or repayment of a gold loan taken for agricultural operations. The assessee failed to produce bills, vouchers, adangal, miller receipts or any documentary evidence of gross agricultural receipts to substantiate cash receipts totalling the amount deposited. The date and details of the alleged gold loan were not furnished and the explanation that such funds remained as cash was found improbable given the assessee's business activities. In absence of credible documentary proof, the AO's addition was held to be justified and the CIT(A)'s confirmation sustained. [Paras 10, 13]

Addition of Rs.14,17,500 as unexplained income is sustained; appeal dismissed on this ground.

Unexplained cash deficit - Rejection of books of account and consequential estimation - Addition on account of cash deficit set aside where AO had rejected books and estimated income - HELD THAT: - The Assessing Officer, having rejected the books of account and estimated income, could not thereafter rely on the same books to compute a separate cash-deficit addition unless unexplained investments or independent evidence justified such treatment. The Tribunal observed that once estimation is made after rejection of accounts, revisiting those accounts to treat cash deficit as income is impermissible absent other grounds. The CIT(A) had noted an arithmetical discrepancy and directed verification; on appeal the Tribunal held the cash-deficit addition unsustainable and deleted it. [Paras 18]

Addition on account of cash deficit deleted; appeal allowed on this ground.

Final Conclusion: The appeal is partly allowed: estimation from pisciculture is fixed at Rs.15,000 per acre on 70% of water spread area (partly allowing the appeal), the addition of Rs.14,17,500 as unexplained deposits is upheld (appeal dismissed on that ground), and the addition on account of cash deficit is deleted (appeal allowed on that ground).

Exercise of powers under section 263 - Erroneous and prejudicial to the interests of revenue - Assessment vitiated for lack of verification - Allowability of interest paid to firm in which assessee is partner - Allowability of chit loss against income - Remand to Assessing Officer for verification and fresh enquiry

Allowability of interest paid to firm in which assessee is partner - Assessment vitiated for lack of verification - Exercise of powers under section 263 - Whether the assessment was prima facie erroneous and prejudicial to the interests of revenue for allowing interest claimed as business expenditure without proper verification - HELD THAT: - The Principal Commissioner observed that the Assessing Officer allowed interest claimed by the assessee without obtaining details of the concerns where overdrawn amounts were invested or verifying the proceeds from such investments. The Pr.CIT concluded that the AO had simply accepted the assessee's explanation without making proper enquiries, thereby rendering the assessment prima facie erroneous and prejudicial under Explanation 2 to section 263. The Tribunal examined the material and concurred with the Pr.CIT's finding that proper verification was not carried out and that the prerequisites for exercise of revisionary power under section 263 were satisfied. The matter was remitted to the Assessing Officer to examine the correctness and entitlement of the interest claim after affording the assessee a reasonable opportunity of hearing. [Paras 4, 9]

Assessment held prima facie erroneous and prejudicial; direction to Assessing Officer to re-examine the interest claim after verification and hearing

Allowability of chit loss against income - Assessment vitiated for lack of verification - Remand to Assessing Officer for verification and fresh enquiry - Exercise of powers under section 263 - Whether the assessment was prima facie erroneous and prejudicial to the interests of revenue for allowing entire chit loss without verifying the extent of investment of bid amounts - HELD THAT: - The Pr.CIT noted that although the assessee claimed that the entire chit bid amount was invested in the partnership firm, the firm's capital account reflected a lesser investment by the assessee. The Assessing Officer had allowed the full chit loss without verifying the correctness of the claimed investment or proportionately restricting the chit loss to the amount actually invested against income from the firm. The Pr.CIT found that the AO failed to make necessary enquiries and thus the assessment was prima facie erroneous and prejudicial. The Tribunal agreed with this conclusion and upheld the Pr.CIT's order setting aside the assessment and directing the AO to re-examine entitlement and extent of the chit loss claim, giving the assessee an opportunity of being heard. [Paras 4, 9]

Assessment held prima facie erroneous and prejudicial; direction to Assessing Officer to verify and determine the correct admissible chit loss after enquiry and hearing

Final Conclusion: The Tribunal upheld the Principal Commissioner's exercise of powers under section 263, held the assessment for AY 2013-14 to be prima facie erroneous and prejudicial in respect of the interest and chit-loss claims, set aside the assessment to the file of the Assessing Officer for verification and fresh consideration of those claims after affording the assessee a reasonable opportunity of hearing, and dismissed the assessee's appeal.

Disallowance under section 14A - Rule 8D computation - Assessing Officer's satisfaction requirement for applying Rule 8D - Treatment of securities transactions as business income versus capital gains - Consistency of treatment across assessment years and principle against changing established position - Application of judicial precedent in determining applicability of section 14A/Rule 8D

Disallowance under section 14A - Rule 8D computation - Assessing Officer's satisfaction requirement for applying Rule 8D - Application of judicial precedent in determining applicability of section 14A/Rule 8D - Deletion of addition made under section 14A read with Rule 8D in respect of exempt dividend income. - HELD THAT: - The Tribunal held that Rule 8D(1)(a) and section 14A operate only where the Assessing Officer, having regard to the accounts placed before him, is not satisfied with the correctness of the assessee's claim about expenditure incurred in relation to exempt income. The AO in the assessment merely treated the assessee's own nominal disallowance as an admission and mechanically applied Rule 8D(2) without recording requisite satisfaction about the correctness of the assessee's claim. Reliance on the Apex Court's decision in Godrej & Boyce shows that a satisfaction is a precondition to invoke the formula under Rule 8D; absent such satisfaction, the disallowance cannot be sustained. Applying that principle to the facts, the Tribunal directed deletion of the addition made under section 14A/Rule 8D. [Paras 7, 8, 9, 10, 11]

Assessee's appeal allowed; addition under section 14A read with Rule 8D deleted and AO directed to delete the same.

Treatment of securities transactions as business income versus capital gains - Consistency of treatment across assessment years and principle against changing established position - Whether profits/losses from purchase and sale of securities for the year should be treated as income from business or as short-term and long-term capital gains. - HELD THAT: - The Tribunal accepted the view of the CIT(A) that on the consistent facts across assessment years the receipts should be taxed as short-term and long-term capital gains as declared by the assessee, not as business income. The Tribunal noted identical factual matrix in earlier years, the decision of a coordinate bench upholding the CIT(A)'s view for AY 2010-11, and Revenue's acceptance of the same view for AY 2012-13. In absence of any change in fundamental facts, and having regard to the principle in Radhasoami Satsang that an established position should not be disturbed in a subsequent year, the Tribunal directed the AO to treat the impugned receipts as capital gains and upheld the CIT(A)'s deletion of the business-income addition. [Paras 13, 14, 15, 16, 17]

Revenue's appeal dismissed; receipts to be assessed as short-term and long-term capital gains and not as business income.

Final Conclusion: The assessee's appeal is allowed by deleting the addition made under section 14A/Rule 8D; the Revenue's appeal is dismissed and the receipts are to be treated as short-term and long-term capital gains for AY 2013-14.

Penalty under section 271(1)(c) - requirement of specifying concealment or furnishing inaccurate particulars - Validity of notice under section 274 r.w.s. 271 - necessity of application of mind and specificity - Principles of natural justice in penalty proceedings

Penalty under section 271(1)(c) - requirement of specifying concealment or furnishing inaccurate particulars - Validity of notice under section 274 r.w.s. 271 - necessity of application of mind and specificity - Principles of natural justice in penalty proceedings - Notice issued under section 274 r.w.s. 271 which does not specify whether penalty is for concealment of income or for furnishing inaccurate particulars is invalid and consequential penalty proceedings/orders are liable to be quashed. - HELD THAT: - The Tribunal examined the notice dated 26.12.2011 and found that the Assessing Officer had not deleted inappropriate portions so as to indicate which limb of clause (c) was alleged - concealment of income or furnishing inaccurate particulars. Relying on the Karnataka High Court decision in M/s Manjunatha Cotton & Ginning Factory and subsequent coordinate authority, the Tribunal held that where the notice is vague and does not identify the specific ground, the assessee is deprived of a fair opportunity to meet the case, thereby offending principles of natural justice. The Tribunal followed the ratio that initiation and the imposition of penalty must be confined to the same stated grounds and that a proforma notice without striking out irrelevant clauses indicates non-application of mind; consequently such defective notice renders the penalty proceedings invalid. Applying that principle to the facts, the Tribunal cancelled the penalty levied under section 271(1)(c) for Assessment Year 2009-10. [Paras 4]

Penalty levied under section 271(1)(c) for Assessment Year 2009-10 is cancelled as the notice under section 274 r.w.s. 271 is invalid for want of specificity.

Final Conclusion: The assessee's appeal is allowed - the penalty under section 271(1)(c) for Assessment Year 2009-10 is quashed because the notice initiating penalty proceedings was defective for not specifying the particular limb relied upon, and accordingly the consequent penalty proceedings/orders are invalid.

Rectification under section 154(7) - limitation period for rectification - Mistake apparent from record - TDS credit claim - maintainability of rectification application

Rectification under section 154(7) - limitation period for rectification - TDS credit claim - maintainability of rectification application - Mistake apparent from record - The rectification application filed on 18.03.2017 for Assessment Year 2008-09 was barred by limitation and thus not maintainable under section 154(7) of the Act, so the claimed TDS credit could not be allowed by way of rectification. - HELD THAT: - The intimation processed under section 143(1) was dated 15.02.2010. Sub section (7) of section 154 mandates that no amendment/rectification shall be made after the expiry of four years from the end of the financial year in which the order sought to be amended was passed. Applying that prescription, the rectification remedy in respect of the intimation processed on 15.02.2010 could be availed only up to 31.03.2014. The assessee filed the rectification application on 18.03.2017, nearly three years beyond the prescribed period. Consequently the rectification application was time barred and not maintainable; the Tribunal found no error in the CIT(A)'s conclusion to that effect and rejected the assessee's reliance on authorities decided in different contexts. The Tribunal observed that the assessee remains free to pursue other remedies under the Act but, on the facts and in law relating to section 154(7), the belated application could not be acted upon to grant the claimed TDS credit. [Paras 3]

Rectification application dated 18.03.2017 is time barred under section 154(7) and the claimed TDS credit cannot be allowed by way of rectification.

Final Conclusion: The appeal is dismissed; the Tribunal upheld the CIT(A)'s finding that the rectification application for Assessment Year 2008-09 was barred by limitation under section 154(7) and therefore the claimed TDS credit could not be granted by rectification, with liberty to the assessee to seek alternative remedies under the Act.

Deduction under section 80IB(10) - Pro-rata deduction for completed part of housing project - Completion certificate and fulfillment of statutory conditions - Reliance on coordinate bench precedent

Deduction under section 80IB(10) - Pro-rata deduction for completed part of housing project - Completion certificate and fulfillment of statutory conditions - Reliance on coordinate bench precedent - Allowability of proportionate deduction under section 80IB(10) in respect of Buildings B, C and D of the housing project 'Faith' for A.Y. 2012-13. - HELD THAT: - The Tribunal upheld the view that where parts of a sanctioned residential project are completed and the assessee has obtained completion certificates and satisfied the conditions of section 80IB(10), deduction may be allowed on a pro-rata basis for the completed units. The Assessing Officer disallowed the claim on the ground that the deduction is available only for the project as a whole and noted non-completion of Building A by the prescribed date; however the CIT(A) accepted the assessee's contention for Buildings B, C and D after noting completion certificates and the Valuation Officer's report confirming compliance with the conditions. The Co-ordinate Bench's earlier decision in the assessee's case for A.Y. 2011-12, which dismissed Revenue's appeal and upheld pro-rata allowance, remained binding and was not shown to be distinguished, overruled or stayed by higher authorities. In absence of any contrary binding precedent or distinguishing facts, the Tribunal found no reason to overturn the CIT(A)'s determination allowing proportionate deduction in respect of the completed buildings. [Paras 3, 5, 6]

Deduction under section 80IB(10) allowed on a pro-rata basis for Buildings B, C and D; Revenue's grounds dismissed.

Final Conclusion: Following the CIT(A)'s findings and the co-ordinate Bench's earlier decision in the assessee's own case, the Revenue's appeal is dismissed and proportionate deduction under section 80IB(10) is upheld for the completed buildings in the project for A.Y. 2012-13.

Assessment under Section 153A - Applicability of Section 153C for using seized material of another person - Utilisation of incriminating material found in search of third party - Evidentiary value of statements recorded under Section 132(4) - Year of investment governs year of addition for unexplained investment

Assessment under Section 153A - Applicability of Section 153C for using seized material of another person - Utilisation of incriminating material found in search of third party - Material seized from search of a person other than the assessee cannot be used in assessment framed under Section 153A of the assessee; Section 153C must be invoked to utilize such material. - HELD THAT: - Following the decisions of the Jurisdictional High Court (including Kabul Chawla and Best Infrastructure), the Tribunal held that interference with a completed assessment under Section 153A is permissible only on the basis of incriminating material unearthed in the search of the assessee. Material seized from the premises of another person (here, Aerens Group) cannot be relied upon in proceeding under Section 153A against the assessee unless the procedure under Section 153C is invoked to transfer such seized books/documents/assets to the Assessing Officer of the other person. In the present case Section 153C was not invoked and therefore the excel sheet seized from Aerens Group could not be used as incriminating material against the assessees in assessment framed under Section 153A. [Paras 15]

Addition based on material allegedly found in search of Aerens Group could not be sustained in assessment framed under Section 153A.

Evidentiary value of statements recorded under Section 132(4) - Assessment based solely on statement under Section 132(4) - Year of investment governs year of addition for unexplained investment - A statement recorded under Section 132(4) does not, on a standalone basis, constitute incriminating material sufficient to make additions under Section 153A; additions must also correspond to the year in which the investment was actually made. - HELD THAT: - Relying on Jurisdictional High Court precedents (notably Harjeev Aggarwal and Best Infrastructure), the Tribunal held that statements recorded during search operations are 'information' and do not by themselves amount to 'evidence found as a result of search' to sustain additions. Such statements may be used only if corroborated by other material discovered during the search. The Tribunal examined the recorded statement of Shri Lalit Mahajan and noted that he himself attributed the cash payments to financial years 2006-07 to 2008-09; consequently any addition must be made in the year of actual payment, not necessarily in AY 2006-07. As no incriminating material was found at the assessees' premises apart from the statement, and the statement did not confine the payments to the year under consideration, the addition could not be sustained. [Paras 16, 17, 18, 28, 30]

Addition made solely on the basis of the statement recorded under Section 132(4) was deleted; no addition could be sustained for AY 2006-07.

Final Conclusion: The Tribunal upheld the CIT(A)'s deletion of the additions: the Department's appeals are dismissed and the assessees' cross-objections are allowed, with the order of the CIT(A) in respect of AY 2006-07 affirmed.

Penalty under Section 271(1)(c): concealment of income versus furnishing inaccurate particulars - Requirement of specific charge in penalty notice issued under Section 274 - Non-application of mind where standard proforma notice is not appropriately marked - Vitiation of penalty proceedings where initiation and imposition are on different limbs - Deletion of penalty in accordance with binding precedent

Penalty under Section 271(1)(c): concealment of income versus furnishing inaccurate particulars - Requirement of specific charge in penalty notice issued under Section 274 - Non-application of mind where standard proforma notice is not appropriately marked - Whether the penalty imposed under Section 271(1)(c) is vitiated because the show-cause notice was not framed with a specific charge and the penalty was initiated on one limb but imposed on another. - HELD THAT: - The Assessing Officer initiated penalty proceedings in the quantum assessment order for "furnishing inaccurate particulars of income" but the final penalty order records satisfaction of "concealment of particulars of income". The show-cause notice under Section 274 did not mark the appropriate limb or set out a specific charge, and a standard proforma without striking out irrelevant clauses indicated non-application of mind. Binding judicial precedent establishes that "concealment of income" and "furnishing inaccurate particulars" carry different connotations and that penalty proceedings must be initiated and imposed on the same limb, or both limbs must be clearly indicated at the initiation stage so the assessee can meet the specific charge. Because the initiation and imposition differed and the notice lacked a specific, appropriately marked charge, the penalty proceedings were vitiated and unsustainable. Having regard to these legal defects, examination of merits was unnecessary. [Paras 4]

Impugned penalty under Section 271(1)(c) is vitiated and deleted.

Final Conclusion: Appeal allowed; the penalty imposed under Section 271(1)(c) for Assessment Year 2010-11 is deleted because the penalty notice failed to frame a specific charge and the penalty was imposed on a different limb than that on which proceedings were initiated, following binding precedent.

Deeming provision of section 68 requiring proof of identity, genuineness and creditworthiness - initial burden on assessee and shift of burden to revenue upon satisfactory explanation - requirement of appellant-specific corroborative evidence and opportunity for cross-examination before relying on third party statements - deletion of additions under section 68 where investor identity, genuineness and creditworthiness are satisfactorily proved - consequential deletion of addition under section 69C linked to disallowance under section 68 - remedial course of reopening assessments of alleged bogus shareholders rather than treating receipts as income of recipient company

Deeming provision of section 68 requiring proof of identity, genuineness and creditworthiness - initial burden on assessee and shift of burden to revenue upon satisfactory explanation - requirement of appellant-specific corroborative evidence and opportunity for cross-examination before relying on third party statements - Deletion of addition made under section 68 in respect of share capital and share premium received from two investor companies. - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that the assessee had discharged the initial burden under section 68 by furnishing identity, confirmations, bank statements, income-tax return acknowledgements and audited financials of the investor companies, and that the investor companies had responded to notices u/s 133(6). The AO's case rested on general information from the Investigation Wing and statements recorded during search which did not specifically implicate the assessee; no appellant-specific incriminating evidence or cash trail linking the investors to the assessee was placed on record. Further, statements relied upon were retracted and, in any event, reliance on third party statements to draw adverse inference required opportunity for cross examination and/or corroboration which was not afforded. In this factual matrix, once the assessee established identity, genuineness and creditworthiness, the burden shifted to the Revenue to disprove the explanation, which the AO failed to do. The Tribunal therefore found no jurisdictional basis to sustain the addition under section 68 and agreed with the appellate conclusion deleting the addition. [Paras 7, 8]

Addition under section 68 of the Act in respect of share capital/share premium was deleted and the order of the CIT(A) upholding deletion was affirmed.

Consequential deletion of addition under section 69C linked to disallowance under section 68 - Deletion of addition made under section 69C being 5% commission treated as unexplained expenditure. - HELD THAT: - The Tribunal held that the addition under section 69C was consequential to the addition under section 68. Having upheld deletion of the section 68 addition on merits, the Tribunal found that the basis for treating any commission as unexplained expenditure no longer survived and therefore the section 69C addition was also not maintainable. [Paras 9]

The addition under section 69C was deleted as it did not survive the deletion of the addition under section 68.

Final Conclusion: The appeals filed by the Revenue were dismissed; the Tribunal affirmed the CIT(A)'s deletion of additions under section 68 and, consequentially, under section 69C for Assessment year 2012-13.

Summary order. The Special Leave Petition is dismissed; delay condoned.

Liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016 - corporate insolvency resolution process failure - voting by Committee of Creditors - appointment of company liquidator - cessation of moratorium - powers and duties of liquidator under the Code and Regulations - liquidation in accordance with Chapter III of Part II of the Code

Liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016 - corporate insolvency resolution process failure - voting by Committee of Creditors - Liquidation of the Corporate Debtor was to be ordered because no resolution plan was approved by the Committee of Creditors before expiry of the CIRP. - HELD THAT: - The Resolution Professional recorded that no Resolution Plan was received and approved under Sub Section (6) of Section 30 of the I&B Code prior to the expiry of the Corporate Insolvency Resolution Process. The Committee of Creditors had considered and rejected the plans after deliberations, and subsequent revised offers were also rejected (including unanimous rejection in the 13th meeting). In view of these facts and the failure of the CIRP to yield an approved plan within the prescribed time, the Adjudicating Authority exercised its power under Clause (a) of Sub Section (1) of Section 33 to direct liquidation of the Corporate Debtor. [Paras 16, 18]

MA/341/2018 in CP/558/IB/CB/2017 is allowed and the Corporate Debtor is ordered to be liquidated.

Appointment of company liquidator - powers and duties of liquidator under the Code and Regulations - The Resolution Professional was appointed as Company Liquidator and shall exercise the statutory powers and duties during liquidation. - HELD THAT: - Pursuant to the liquidation order, the Authority appointed the then Resolution Professional as Company Liquidator and directed that he shall issue the requisite public announcement. The Liquidator is to exercise the powers and duties conferred under the Code and the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, including those set out in the specified sections of the Code, and is entitled to charge fees as may be specified by the Board. [Paras 17]

Mr. R. Venkatakrishnan is appointed as Company Liquidator with the powers, duties and fee entitlements as provided under the Code and Regulations.

Cessation of moratorium - effect of liquidation on suits and proceedings - vesting of management powers in liquidator - Consequences of liquidation: the moratorium ceases, suits are barred except as permitted, and management powers vest in the Liquidator. - HELD THAT: - The Authority ordered that the moratorium declared under Section 14 shall cease from the date of liquidation. Subject to Section 52, no suit or other legal proceedings shall be instituted by or against the Corporate Debtor, but the Liquidator may institute proceedings on behalf of the Corporate Debtor with prior approval of the Authority. The order further provides that all powers of the board, key managerial personnel and partners shall cease and be vested in the Company Liquidator, and that personnel of the Corporate Debtor must assist the Liquidator. [Paras 17]

With liquidation, the moratorium ends, litigation by or against the Corporate Debtor is restricted as stated, and management and control are vested in the Company Liquidator.

Final Conclusion: The Tribunal, after recording that no Resolution Plan was approved within the CIRP period and following the Committee of Creditors' rejections, allowed the application under Section 33 and ordered liquidation of M/s. Infinitas Energy Solutions Pvt. Ltd., appointed the Resolution Professional as Company Liquidator, and specified the consequential legal and operational effects of liquidation.

Financial debt - consideration for the time value of money - financial creditor - commercial effect of a borrowing - long term borrowings - Section 5(8)(f) of the I&B Code - amount raised under any other transaction having the commercial effect of a borrowing

Financial debt - consideration for the time value of money - financial creditor - commercial effect of a borrowing - long term borrowings - Section 5(8)(f) of the I&B Code - amount raised under any other transaction having the commercial effect of a borrowing - Whether the amount advanced by Respondent No.1 to the Corporate Debtor constitutes a 'financial debt' and whether Respondent No.1 is a 'financial creditor' under the I&B Code. - HELD THAT: - The Tribunal examined the statutory definition of 'financial debt' which requires that the debt be disbursed against the consideration for the time value of money, noting that the presence of interest is not a sine qua non. The Court observed documentary evidence in the Corporate Debtor's balance sheets and account confirmations showing the advances to Respondent No.1 recorded as 'unsecured loans' and, in later accounts, as 'long term borrowings'. The statutory auditor's communication corroborated the classification of the amounts as unsecured loan liabilities. The Tribunal held that funds advanced by a promoter/shareholder or other stakeholder to protect or improve the company's financial health and to derive future benefit (increase in assets, profits or share value) have the commercial effect of a borrowing and thus embody the consideration for the time value of money even if interest is not expressly charged. Applying these principles to the facts, the advances recorded in the books and confirmed by the Corporate Debtor possessed the 'trappings of a financial debt' and fell within clause (f) of Section 5(8). Prior decisions relied upon by the appellant were found distinguishable on facts and did not militate against the classification adopted on the evidence before the Tribunal. [Paras 7, 8, 9, 10, 11]

The advances by Respondent No.1 are financial debt within the meaning of Section 5(8), Respondent No.1 is a financial creditor, and the Adjudicating Authority's admission under Section 7 is upheld.

Final Conclusion: Appeal dismissed; impugned order admitting the Section 7 petition and appointing an Interim Resolution Professional is affirmed; no order as to costs.

Financial debt - financial creditor - corporate insolvency resolution process - time value of money - limitation (Limitation Act applicability) - continuous cause of action - transfer of pending proceedings - Rule 5 / abatement - Form 1 filing requirement for admission under the I&B Code - rectification/amendment of Tribunal order

Financial debt - financial creditor - time value of money - Whether the amounts disbursed by IL&FS Financial Services Limited fall within the definition of financial debt and whether IL&FS qualifies as a financial creditor for the purposes of initiating the Corporate Insolvency Resolution Process under the I&B Code. - HELD THAT: - The Tribunal examined the SPA and the Letter of Undertaking together and found that the transactions involved not merely purchase of shares but an agreed arrangement to reverse the transaction within a specified time, with an express element of return linked to an internal rate of return of 15%. This structure demonstrated an economic/commercial effect of borrowing and the presence of consideration for the time value of money. Consequently, the amount disbursed by IL&FS constituted a "financial debt" as defined in the I&B Code, and IL&FS was correctly classified as a "financial creditor" entitled to file Form 1 under Section 7. [Paras 18]

The amount disbursed is a financial debt and IL&FS Financial Services Limited is a financial creditor; the Section 7 application was maintainable on this ground.

Limitation (Limitation Act applicability) - continuous cause of action - Whether the Section 7 application was barred by limitation under the Limitation Act, 1963. - HELD THAT: - The Tribunal applied Article 137 (Part II) of the Limitation Act as applicable to Section 7 applications (guided by Supreme Court precedent). It held the right to apply accrued when the I&B Code came into force on 1 December 2016, and the Section 7 application filed thereafter was within the three year period. The Tribunal also noted a continuous cause of action arising from communications and correspondence between parties (including the legal notice of 3 November 2015 and subsequent replies), and that the corporate debtor had not earlier taken a limitation plea. On these bases the application was not time barred. [Paras 20, 21, 22, 24, 25]

The Section 7 application is not barred by limitation and was filed within the applicable period.

Transfer of pending proceedings - Rule 5 / abatement - Form 1 filing requirement for admission under the I&B Code - Whether the petition transferred from the High Court abated for failure to file Form 1 within the prescribed period under the Companies (Transfer of Pending Proceedings) Rules, 2016 as amended. - HELD THAT: - The Tribunal considered the sequence of Notifications, including the original Rules dated 7 December 2016 and the subsequent amendment by Notification dated 29 June 2017 which altered the date for submission. Applying the principle of substitution of rules, the Tribunal held the amended Notification operated to replace the earlier requirement. IL&FS filed Form 1 on 25 May 2017 (immediately after transfer) and thus the petition did not abate under the amended regime; parties remained eligible to file fresh applications thereafter if the amended deadline had been missed. [Paras 27, 29, 31]

The petition did not abate on transfer; filing of Form 1 as done preserved the petition and it was not rendered void by the transfer rules.

Rectification/amendment of Tribunal order - Whether the addendum cum corrigendum signed on 30 August 2018 correcting the bench composition and reflecting the concurrence of the second Member was permissible. - HELD THAT: - The Tribunal observed that the Section 7 application had been considered by both Members, although the order of 28 August 2018 was signed by only one Member. Under the power to amend orders to rectify mistakes apparent on the record (drawing on the amendment power of the Tribunal under the Companies Act), it was open to the Adjudicating Authority to correct the omission within the statutory scope. Given that both Members had participated and the correction recorded the concurrence of the other Member, the addendum cum corrigendum was held permissible and did not vitiate the admission. [Paras 6, 32, 33]

The correction by addendum/corrigendum was permissible and did not invalidate the order admitting the Section 7 application.

Corporate insolvency resolution process - Whether, in view of the findings on financial debt, limitation and non abatement, the Adjudicating Authority was correct to admit the Section 7 application and initiate the Corporate Insolvency Resolution Process against the corporate debtor. - HELD THAT: - Having held that (a) the disbursed amount constituted financial debt and IL&FS was a financial creditor, (b) the Section 7 application was within limitation, and (c) the petition had not abated on transfer, the Tribunal concluded that the application under Section 7 satisfied the statutory requirements for admission. The Tribunal declined to remit the matter on the technicality of signature/corrigendum and treated the admission as properly made. [Paras 5, 18, 20, 31, 33]

The Adjudicating Authority rightly admitted the Section 7 application and initiated the Corporate Insolvency Resolution Process; the appeals are without merit.

Final Conclusion: The appeals are dismissed. The Tribunal held that the amounts involved constituted a financial debt making IL&FS a financial creditor entitled to maintain a Section 7 application; the application was not barred by limitation, did not abate on transfer, and the corrigendum to the Adjudicating Authority's order was permissible, hence the admission under Section 7 was upheld.

Exclusion of intervening period from computation of 270 days of corporate insolvency resolution process - no Resolution Professional functioning - period between appointment approval and communication/taking charge - maximum 270 days time-limit under the Code

Exclusion of intervening period from computation of 270 days of corporate insolvency resolution process - period between appointment approval and communication/taking charge - no Resolution Professional functioning - maximum 270 days time-limit under the Code - Exclusion of the period between the Committee of Creditors' decision to appoint the appellant and the date on which the appellant was communicated the Adjudicating Authority's approval for the purpose of computing the 270-day corporate insolvency resolution process. - HELD THAT: - The Appellate Tribunal applied its reasoning in Quinn Logistics India Pvt. Ltd. that certain intervening periods may be excluded when computing the aggregate 270 days, including periods when no Resolution Professional is functioning and the interval between appointment/approval and the actual taking of charge. The record shows the Committee of Creditors decided to appoint the appellant on 15th June, 2018; the Adjudicating Authority approved the appointment on 6th August, 2018, and the approval was communicated to the appellant on 16th August, 2018 when he joined. In light of the earlier non-performance by the prior Resolution Professional and the pendency of the approval/communication process, the Tribunal found it just and consistent with the established principle to exclude the period between the filing/application for approval of the appellant's name and the date of communication (16th August, 2018) from the computation of the 270 days, subject to the overall ceiling of 270 days. [Paras 6, 7, 8]

The period between the Committee of Creditors' appointment of the appellant (15th June, 2018) and communication of the Adjudicating Authority's approval (16th August, 2018) is to be excluded in addition to the period already excluded by the Adjudicating Authority, for computing the 270-day limit; the Resolution Professional, Committee of Creditors and Adjudicating Authority are directed to take expeditious action accordingly.

Final Conclusion: Appeal allowed; the specified intervening period is excluded from computation of the 270-day corporate insolvency resolution process and parties (Resolution Professional, Committee of Creditors and Adjudicating Authority) are directed to proceed expeditiously; no costs.

Exclusion of intervening period in computation of 270 days for Corporate Insolvency Resolution Process - calculation of the total period of CIRP - period between date of admission and communication to the Insolvency Resolution Professional - power to exclude certain period for completion of CIRP in unforeseen circumstances - maximum time limit of 270 days

Exclusion of intervening period in computation of 270 days for Corporate Insolvency Resolution Process - period between date of admission and communication to the Insolvency Resolution Professional - power to exclude certain period for completion of CIRP in unforeseen circumstances - Whether the period from the date of admission of the petition to the date on which the admission order was communicated to the Insolvency Resolution Professional is to be excluded while counting the 270 days prescribed for completion of the Corporate Insolvency Resolution Process. - HELD THAT: - The Tribunal relied on the principle laid down by the appellate authority that, in suitable cases and for justified or unforeseen reasons, the adjudicating authority may exclude an intervening period from counting the 270 days prescribed for CIRP. The period between the date of admission/moratorium and the actual date on which the Resolution Professional takes charge has been recognised as an example of an intervening period which can be excluded if facts justify such exclusion. Applying that principle to the facts before it, the Tribunal accepted the Resolution Professional's submission that the certified copy of the admission order was issued on 6.4.2018 and that communication to the IRP occurred only thereafter; consequently the interval from 25.3.2018 (date of admission) to 6.4.2018 is an intervening period which should be excluded from computation of the 270 days, subject to the overarching constraint that the total period after allowable exclusions cannot exceed the statutory maximum of 270 days. [Paras 3]

The period from 25.3.2018 to 6.4.2018 is excluded from counting the total period for completion of CIRP; MA 1186/2018 is partly allowed and disposed of accordingly.

Final Conclusion: The Tribunal allowed the application in part and excluded the 12-day period between the admission order and its communication to the IRP from computation of the 270-day CIRP period, applying the appellate authority's principle permitting exclusion of such intervening periods in appropriate cases.

Financial debt - commercial effect of a borrowing - occurrence of default - admission under Section 7 and commencement of CIRP - appointment of Interim Resolution Professional - moratorium under the Code

Financial debt - commercial effect of a borrowing - The obligation arising from the Letter of Undertaking and related transaction qualifies as a "financial debt" under Section 5(8) of the Insolvency and Bankruptcy Code, 2016. - HELD THAT: - The Tribunal analysed the wide scope of the definition of "financial debt" in Section 5(8), observing that the term covers (i) disbursements against the consideration for the time value of money and (ii) amounts "raised" under transactions that have the commercial effect of a borrowing. The Tribunal held that the SPA and the contemporaneous Letter of Undertaking must be read together and that the arrangement had commercial characteristics: a limited agreed period for exit, an agreed mechanism fixing a Buy Back Price providing for an internal rate of return of 15%, and an obligation on La Fin to purchase the shares within the agreed period. Those features indicated an element of time value and assured commercial return such that the transaction was not a mere long term investment but had the commercial effect of a borrowing and thus falls within the examples in Section 5(8). [Paras 11, 12, 13]

The claim is a "financial debt" within the meaning of Section 5(8) of the Code.

Occurrence of default - There was an occurrence of default by the Corporate Debtor in respect of the financial debt. - HELD THAT: - Having found that the claimed liability qualified as a financial debt, the Tribunal examined the record and concluded that the debtor had failed to pay the amounts due within the stipulated period and therefore a default had occurred. The Tribunal treated the Petitioner as a Financial Creditor who established the existence of default supporting initiation of insolvency proceedings under the Code. [Paras 14, 15]

Default is established.

Admission under Section 7 and commencement of CIRP - The application under Section 7 was admitted and the Corporate Insolvency Resolution Process (CIRP) was declared to have commenced. - HELD THAT: - On the dual findings that the claim constitutes a financial debt and that default has occurred, the Tribunal proceeded to admit the Section 7 application. The Tribunal recorded the statutory consequences: admission of the application, declaration of moratorium, and commencement of CIRP from the date of the order, directing the IRP to undertake the prescribed actions including public announcement and further steps under the Code. [Paras 15, 19, 20]

The Section 7 application is admitted and CIRP is commenced.

Appointment of Interim Resolution Professional - The proposed Interim Resolution Professional was approved and appointed. - HELD THAT: - The Petitioner proposed an Insolvency Professional as IRP who furnished the required certificate on Form No.2. Having considered the proposal and the compliance of the proposed IRP, the Tribunal confirmed the appointment and directed the IRP to perform duties under the Code and report progress within 30 days. [Paras 16, 17]

The proposed IRP is appointed as Interim Resolution Professional.

Moratorium under the Code - Moratorium under Section 14 of the Code was declared and its effects specified. - HELD THAT: - Upon admission, the Tribunal declared the moratorium operative as prescribed by the Code, prohibiting institution or continuation of suits or parallel proceedings and restraining liquidation of assets for the duration of the insolvency resolution process, while permitting supply of essential goods and services. This direction was made effective from the date of the order until completion of the CIRP. [Paras 18]

Moratorium is declared with the specified consequences.

Final Conclusion: The Tribunal held that the claim arising from the SPA and the Letter of Undertaking constituted a "financial debt" and that default had occurred; consequently the Section 7 application was admitted, the proposed IRP appointed, moratorium declared, and the Corporate Insolvency Resolution Process was commenced.

Maintainability of writ petition in presence of an efficacious alternative statutory remedy by way of appeal - mixed question of fact and law - applicability of a notification exempting services relating to sanitation conservancy - entertaining writ to circumvent statutory appellate forum - consideration of appeal on merits by the appellate forum without objection to limitation

Maintainability of writ petition in presence of an efficacious alternative statutory remedy by way of appeal - mixed question of fact and law - entertaining writ to circumvent statutory appellate forum - Writ petition not maintainable because the dispute raises mixed questions of fact and law and there exists an efficacious alternative remedy by way of appeal under the statute - HELD THAT: - The Court held that the core controversy - interpretation and applicability of the Mega Notification to the agreements between the petitioner and the Railways for the period in question - involves mixed questions of fact and law which are required to be adjudicated by the statutory appellate forum. Relying on the principle that a writ court should not permit bypassing of an efficacious remedy of appeal (as explained in the cited Apex decision), the Court concluded that entertaining the writ would defeat the statutory machinery and conditions prescribed for appeal. Consequently, the writ remedy was refused without expressing any opinion on the merits of the exemption claim. [Paras 11, 12]

Writ petition dismissed as not maintainable; merits not decided.

Consideration of appeal on merits by the appellate forum without objection to limitation - applicability of a notification exempting services relating to sanitation conservancy - Petitioner granted liberty to approach the appellate forum and the CESTAT directed to consider any such appeal on merits without raising objection to period of limitation, subject to fulfillment of other statutory procedures - HELD THAT: - Although the writ was dismissed for want of maintainability, the Court permitted the petitioner to file an appeal before the CESTAT within four weeks from receipt of the certified copy of the order. The Court directed that if such an appeal is filed within the specified period, the CESTAT shall consider it on merits and shall not object to the period of limitation, while preserving compliance with other procedural requirements. The Court also ordered refund of any deposit made by the petitioner. [Paras 13]

Liberty granted to file appeal within four weeks; CESTAT to decide on merits without objection to limitation; registry to refund any deposit.

Final Conclusion: Writ petition dismissed as not maintainable for want of an alternative efficacious statutory remedy; petitioner permitted to file appeal within four weeks and the appellate forum directed to decide the appeal on merits without raising limitation objections, with refund of any deposit to the petitioner.

Classification of service as supply of manpower - contracted inspection and trimming services - service tax liability on manpower recruitment/supply - payment by output/quantum of work versus payment by man-hours

Classification of service as supply of manpower - contracted inspection and trimming services - payment by output/quantum of work versus payment by man-hours - Whether the services rendered under the agreement constituted supply of manpower attracting service tax or were contractually for inspection, trimming and related jobs and thus not a manpower supply service. - HELD THAT: - The agreement between the appellant and M/s. SRF Ltd. defines the agency's obligations as carrying out specified tasks: loading, lacing, selection, weighing, inspection, trimming/length cutting, winding, wrapping, recording roll details, delivering to packing area and maintaining the inspection area clean. The company supplied machinery, tools and documentation. Payment under clause 7 was per meter rates for various categories of inspection/trimming/re winding work, i.e., remuneration was linked to the quantum of work executed and not to man hours or the number of personnel provided. On these facts the Tribunal concluded that the contract was for performance of inspection and trimming services and not merely for provision/supply of manpower. Therefore the impugned finding that the appellant supplied manpower and was liable to service tax on manpower recruitment/supply was unsustainable and liable to be set aside. [Paras 5, 6, 7]

The services were contractual inspection/trimming services paid per unit of work and did not constitute supply of manpower; the orders holding liability for manpower supply service tax are set aside and the appeal is allowed.

Final Conclusion: The appeal is allowed; the orders confirming service tax liability on the ground of manpower supply are set aside as the contract provided and was paid for inspection and trimming services on per meter/output basis, not for supply of manpower, with consequential relief as per law.

Refund of unutilised CENVAT credit - interpretation of Section 109 of Finance Act, 2013 in relation to VCES - applicability of CENVAT Credit Rules, 2004 to declarations under VCES - clarificatory effect of CBEC Circular No. 170/5/2013-ST dated 08.08.2013 - principles of natural justice in adjudication of refund claims

Refund of unutilised CENVAT credit - interpretation of Section 109 of Finance Act, 2013 in relation to VCES - applicability of CENVAT Credit Rules, 2004 to declarations under VCES - clarificatory effect of CBEC Circular No. 170/5/2013-ST dated 08.08.2013 - Entitlement of the appellant to refund of unutilised CENVAT credit despite payment of tax dues under VCES. - HELD THAT: - A conjoint reading of Sections 107 and 109 shows that the non refund clause in Section 109 applies to amounts paid pursuant to a declaration under VCES and does not ipso facto bar an assessee from claiming refund of admissible CENVAT credit. The CBEC clarificatory Circular dated 08.08.2013 (Sr. Nos. 17 & 18) confirms that admissibility of CENVAT credit on inputs and input services used for provision of declared output services continues to be governed by the CENVAT Credit Rules, 2004; only the payment of tax dues under VCES could not be discharged using CENVAT credit. Where CENVAT credit is admissible and remains unutilised, the CENVAT Credit Rules permit its refund. Consequently, the Commissioner (Appeals) erred in treating Section 109 as having an overriding effect to extinguish the appellant's right to refund of legitimately accrued but unutilised CENVAT credit. [Paras 5, 6]

The orders rejecting refund were set aside and the appellant is entitled to refund of the unutilised CENVAT credit for the stated periods, with applicable interest.

Principles of natural justice in adjudication of refund claims - Validity of the rejection of refund without affording an opportunity of being heard. - HELD THAT: - The Commissioner (Appeals) rejected the refund claims without providing the appellant an opportunity of being heard. The Tribunal found such denial contrary to principles of natural justice and that the rejection, being both legally unfounded and procedurally improper, required setting aside. The consequence of this procedural lapse is remittal of the claim for refund to be allowed in accordance with law as held on merits by the Tribunal. [Paras 5]

The rejection without hearing was improper; the appellate order was set aside and the refund directed to be paid with interest.

Final Conclusion: Both appeals are allowed. The orders rejecting refund of unutilised CENVAT credit for the periods October, 2013 to December, 2013 and January, 2014 to March, 2014 are set aside; the appellant is entitled to refund of the unutilised CENVAT credit with applicable interest, to be paid by the respondent within three months of communication of this order.

CENVAT credit eligibility - extended period of limitation for recovery/reversal of CENVAT credit - bonafide belief as defence to penalty and extended limitation - importer's invoice and documentary evidence for CVD/CVD pass on - reversal of CENVAT credit in respect of pre taxability period - penalty for suppression or misstatement with intent to evade tax - taxability of mining services from 01.06.2007

CENVAT credit eligibility - extended period of limitation for recovery/reversal of CENVAT credit - bonafide belief as defence to penalty and extended limitation - Validity of demand and penalties for CENVAT credit availed on dumpers and tippers - HELD THAT: - On merits the Tribunal's earlier view in Ganta Ramanaiah Naidu (recorded by one of the Members) applies and the assessee was not entitled to CENVAT credit on registered vehicles such as dumpers and tippers. However, the show cause notice invoking the extended period was issued after the period when the returns were filed and the monthly returns produced do not require itemised disclosure of specific capital goods; therefore the demand is time barred. In addition, the assessee could have entertained a bonafide belief that credits were allowable when used in taxable mining services; nothing on record shows suppression or misstatement with intent to evade tax. Consequently the demand on this point is set aside as barred by limitation and penalties are not sustainable. [Paras 7]

Demand for reversal of CENVAT credit on dumpers and tippers set aside as time barred; penalties in respect thereof vacated.

Importer's invoice and documentary evidence for CVD/CVD pass on - CENVAT credit eligibility - reversal of CENVAT credit in respect of pre taxability period - Eligibility of CENVAT credit on capital goods imported through Voltas Ltd. - HELD THAT: - Documents annexed to the Voltas invoice (bill of entry, challans and delivery evidence) show that capital goods were imported, CVD/customs discharged by Voltas, and goods were delivered to and used by the appellant in mining operations. A hyper technical rejection because the importer's invoice did not separately state the CVD passed on is not warranted where co relation of documents establishes receipt, payment and use for taxable output services. However, CENVAT credit in respect of capital goods received prior to 01.06.2007 (when mining services were not taxable) is not allowable. Accordingly the adjudicating authority was incorrect in denying admissible credit except to the extent of credits attributable to the pre taxability period. [Paras 8]

CENVAT credit of Rs. 63,67,543/- on importer's invoices held admissible; CENVAT credit of Rs. 55,85,080/- relating to period prior to 01.06.2007 upheld for reversal.

CENVAT credit eligibility - reversal of CENVAT credit in respect of pre taxability period - documentary evidence of service invoices and payments - Admissibility of CENVAT credit availed on input services rendered by ASIP Pvt. Ltd. - HELD THAT: - Invoices issued by ASIP show agreement date, billing period, service tax registration number and service tax charged; ledger entries corroborate payments. On this documentary material the adjudicating authority erred in rejecting the credits. However, credit attributable to services rendered prior to 01.06.2007 (when the appellant's services were not taxable) is not allowable. The admitted amount for reversal for the pre taxability period is accepted, and the balance of credits recorded in the records is held admissible. [Paras 9]

CENVAT credit of Rs. 11,33,442/- relating to period prior to 01.06.2007 to be reversed; remaining credit of Rs. 1,12,53,713/- held admissible.

Penalty for suppression or misstatement with intent to evade tax - bonafide belief as defence to penalty - Sustainability of penalties imposed on the appellant - HELD THAT: - Given that major parts of the contested credits were found admissible and that the claim on dumpers and tippers was entertained under a bona fide belief and ultimately found time barred, there is no evidence of suppression or intent to evade tax. In these circumstances imposition of penalties is not warranted. [Paras 10]

Penalties set aside.

Final Conclusion: Appeal allowed in part: demands in respect of CENVAT credit on dumpers and tippers set aside as time barred; CENVAT credit on importer's invoices and on ASIP service invoices largely upheld except insofar as credits relate to the pre taxability period prior to 01.06.2007 which must be reversed; penalties vacated; appellant directed to reverse specified pre taxability credits with interest and entitled to refund of any balance deposit.

Renting of immovable property service - revenue sharing agreement - service tax liability - principle to principle arrangement - CENVAT credit reversal - common input services - exempted output services - remand for fresh consideration - principles of natural justice

Renting of immovable property service - revenue sharing agreement - service tax liability - principle to principle arrangement - Amounts received under the revenue sharing agreements for operation of food courts and entertainment zones are exigible to service tax as renting of immovable property. - HELD THAT: - The Tribunal examined the agreements dated 05.09.2009 and 03.11.2007 and found that the parties had entered into a revenue sharing arrangement with a minimum guaranteed payment, and that the arrangement did not involve delivery of possession in the nature of a tenancy or creation of a service provider-service recipient relationship. Applying the reasoning in Ambience Hospitality P. Ltd., the Tribunal concluded that where parties operate on a principle to principle basis and one party only grants the right to manage and operate for mutual benefit, the arrangement does not attract service tax under the renting of immovable property rubric. The Adjudicating Authority's conclusion treating the receipts as rent was thus found unsustainable on the facts and law considered. [Paras 5, 6, 7]

Impugned demand and confirmation to the extent founded on classification of the revenue share receipts as renting of immovable property are set aside and the appeal is allowed on this issue.

CENVAT credit reversal - common input services - exempted output services - remand for fresh consideration - principles of natural justice - Validity of reversal of CENVAT credit claimed on common input services and services used for exempted output services. - HELD THAT: - The Tribunal noted that the appellant asserted maintenance of segregated records and a plea of non availment of CENVAT credit on common input services, which the Adjudicating Authority did not consider holistically. Rather than deciding the merits, the Tribunal found that the Adjudicating Authority should re examine the evidence, hear the parties and apply the relevant legal standards. Consequently, the matter was remitted to the Adjudicating Authority for fresh consideration, permitting the appellant to produce evidence and requiring adherence to principles of natural justice. No opinion was expressed on the correctness of the demand on merits. [Paras 8, 9]

The portion of the impugned order confirming reversal of CENVAT credit is remitted to the Adjudicating Authority for fresh adjudication after affording opportunity in accordance with natural justice.

Final Conclusion: The appeal is allowed insofar as the Tribunal has set aside the demand treating the revenue share receipts as renting of immovable property; the balance relating to reversal of CENVAT credit is remitted to the Adjudicating Authority for fresh consideration after complying with principles of natural justice.

Reverse charge mechanism - service tax liability on recipient - charging provision effective from 18.04.2006 - intellectual property rights services - registration of IPR with Indian Patents Authority

Reverse charge mechanism - charging provision effective from 18.04.2006 - service tax liability on recipient - Liability to pay service tax under reverse charge for the period prior to 18.04.2006. - HELD THAT: - The Tribunal applied the precedent of the Apex Court in Indian National Ship Owners Association and held that Section 66A (the charging provision operating the reverse charge on recipients) came into effect from 18.04.2006; therefore no service tax liability can be fastened on the recipient under the reverse charge mechanism for any period prior to that date. The demand raised against the appellant for the pre-18.04.2006 period being under reverse charge is therefore unsustainable. [Paras 6]

No service tax liability arises on the appellant under reverse charge for the period prior to 18.04.2006; demand for that period is set aside.

Intellectual property rights services - registration of IPR with Indian Patents Authority - service tax liability on recipient - Whether payment of royalty to a foreign licensor for technical know how (not registered in India) attracts service tax under the IPR services category post 18.04.2006. - HELD THAT: - For the post-18.04.2006 period the Tribunal examined whether the technical know how supplied by the foreign licensor constituted taxable intellectual property rights services. Relying on the Tribunal's earlier decision in Reliance Industries Ltd (considered and followed in subsequent Tribunal decisions), the Court held that to fasten service tax liability under the IPR category the person providing the technical know how must have the IPR registered with the Patents Authority in India; foreign registration alone, where the IPR is not registered in India, does not attract service tax under that category. Applying that ratio to the facts, the impugned demand post 18.04.2006 was unsustainable and had to be set aside. [Paras 7, 8]

Demand under the IPR services category for the post-18.04.2006 period is not sustainable where the technical know how/provider is not registered with the Indian Patents Authority; impugned orders for the post-18.04.2006 period are set aside.

Final Conclusion: The appeals are allowed: demands under reverse charge prior to 18.04.2006 are rejected; demands under the IPR services category post 18.04.2006 are also set aside insofar as the foreign licensor's technical know how was not registered with the Indian Patents Authority.

Reverse charge mechanism - service tax liability of service recipient - penalty under Section 78 of the Finance Act, 1994 - revenue neutrality as defence to penalty - availment of CENVAT credit by service recipient

Reverse charge mechanism - service tax liability of service recipient - availment of CENVAT credit by service recipient - Appellant's liability to discharge service tax under the reverse charge mechanism for specified services received from overseas providers during the relevant period - HELD THAT: - The Tribunal accepted that the appellant received taxable services from overseas service providers and failed to discharge service tax under the reverse charge mechanism. The appellants did not contest the substantive liability; they acknowledged that Section 66A of the Finance Act, 1994 made them liable to pay service tax as recipients and that payment would permit them to avail CENVAT credit. The Tribunal therefore upheld the demand and interest while recognising that payment gives rise to an entitlement to credit, rendering the tax consequence revenue neutral for the assessee. [Paras 6, 7]

Demand of service tax under the reverse charge mechanism and interest sustained; entitlement to CENVAT credit noted.

Penalty under Section 78 of the Finance Act, 1994 - revenue neutrality as defence to penalty - Validity of the penalty imposed under Section 78 in view of the revenue neutral position resulting from payment and availment of credit - HELD THAT: - The Tribunal analysed that the appellants had paid the service tax and would be eligible to take credit for the same, producing a revenue neutral outcome. Relying on the principle that where the exercise is revenue neutral the assessee could not have achieved any purpose by evading duty, the Tribunal held that the allegation of intention to evade tax was not sustainable. In light of the payment and the availability of credit, the Tribunal found it appropriate to set aside the penalty imposed under Section 78 while leaving the demand and interest undisturbed. [Paras 7, 8]

Penalty under Section 78 set aside on account of revenue neutrality; demand and interest left intact.

Final Conclusion: Appeal partly allowed: demand and interest confirmed for the reverse charge liability, but the penalty under Section 78 of the Finance Act, 1994 is set aside due to the revenue neutral position arising from payment and availment of credit.

Taxability of professional photographer under "photography studio or agency" - definition of "photography studio or agency" for service tax - suppression and invocation of extended period of limitation - effect of voluntary registration and departmental audit on limitation - deletion of penalty where fraud/suppression not established

Taxability of professional photographer under "photography studio or agency" - definition of "photography studio or agency" for service tax - Whether the assessee, an individual professional photographer, falls within the scope of the definition of "photography studio or agency" and is therefore liable to service tax under the Finance Act. - HELD THAT: - The Court examined the statutory definition which includes any professional photographer or a commercial concern engaged in rendering services relating to photography and observed that the assessee did not dispute being a professional photographer. The Court rejected the submission that only a commercial studio or agency in trade parlance can be taxed, holding that an individual professional photographer who renders photographic services falls within the definition of "photography studio or agency". Consequently, the provisions attracting service tax were held to be applicable to the assessee. [Paras 9, 10]

The assessee is liable to service tax as he falls within the definition of "photography studio or agency".

Suppression and invocation of extended period of limitation - effect of voluntary registration and departmental audit on limitation - deletion of penalty where fraud/suppression not established - Whether the extended period of limitation could be invoked in view of the assessee's claimed bona fide belief about non-taxability and whether registration in 2005 and subsequent departmental audit amount to suppression justifying extended limitation; and whether penalty could be sustained. - HELD THAT: - The Court noted the period in question and that the normal time limit for issuing a show cause notice was one year unless suppression is shown. It observed that the assessee voluntarily registered in October 2005 and paid service tax up to September 2006, and that on audit and scrutiny of records the department found taxable receipts for the earlier period. The Court held that the facts disclosed failure to get registered earlier when the assessee was realizing taxable service and that this amounted to suppression enabling invocation of the extended period of limitation. The Court also considered the decision relied upon by the assessee where departmental doubt prevented allegations of suppression, but found that the facts of that case were distinguishable. Separately, the Tribunal had deleted the penalty and the Court noted that the Revenue did not challenge that relief; the deletion of penalty was therefore not disturbed. [Paras 5, 10]

Extended period of limitation was rightly invoked on the finding of suppression; the Tribunal's deletion of penalty was left undisturbed.

Final Conclusion: Both substantial questions of law were answered against the assessee: the individual professional photographer falls within the taxable definition of "photography studio or agency", and the extended period of limitation could be invoked on the facts (while the Tribunal's deletion of penalty was not interfered with); the appeal is dismissed.

Non-speaking order - speaking order requirement - remand for fresh consideration - natural justice - final fact-finding authority - rectification application

Remand for fresh consideration - speaking order requirement - Remand of the question whether goods were received under fictitious invoices to the Adjudicating Authority. - HELD THAT: - The Tribunal's order recorded the appellant's submissions and, after considering them, remanded the issue to the Adjudicating Authority for fresh consideration. The High Court examined the impugned order and found that the Tribunal had noted the appellant's contentions (reference made to paragraph nos. 3 and 4 of the impugned order) and, on that basis, legitimately directed reconsideration by the Adjudicating Authority. Given that the Tribunal engaged with the submissions and expressly remanded the matter, the High Court declined to interfere with the remand. [Paras 6, 10]

The remand to the Adjudicating Authority is sustained; no interference with issue (ii).

Non-speaking order - speaking order requirement - natural justice - final fact-finding authority - rectification application - Validity of the Tribunal's conclusions on (i) re-credit of duty on goods returned by customer, (iii) scrap generated at job-worker unsupported by duty-paid documents, and (iv) levy on goods destroyed in manufacture - whether the Tribunal's order is a speaking order and lawful. - HELD THAT: - The Tribunal upheld the view of the lower authority on these issues but did not record any submissions of the appellant in support of its conclusion. The High Court emphasised that when an Appellate Authority concurs with a lower authority it must nonetheless indicate, in brief, reasons in the context of submissions made on appeal so that the order qualifies as a speaking order. The Tribunal, being the final fact-finding authority under the Act, must record the essence of the dispute and the basis of its decision; failure to do so frustrates the process of review, denies transparency to the litigant and amounts to breach of natural justice. Although rectification applications to the Tribunal are ordinarily the remedy where submissions are omitted from the record, the Court found the impugned order ex facie bad on these points and declined to remit the matter by a rectification route. [Paras 7, 8, 9]

The impugned order is set aside insofar as issues (i), (iii) and (iv); the appeal is restored to the Tribunal for fresh decision on those issues after recording and considering the parties' submissions.

Final Conclusion: The appeal is disposed: issue (ii) stands remanded to and sustained in favour of further adjudication by the Adjudicating Authority; issues (i), (iii) and (iv) are set aside for want of a speaking order and the matter is restored to the Tribunal for fresh determination after recording and considering the parties' submissions.

Eligibility for exemption under Central Excise Notification No. 06/2006-CE (ICB supplies) - waiver under Section 11A(2B) of the Central Excise Act, 1944 - extended period of limitation - mis-declaration / suppression - penalty under Section 11AC of the Central Excise Act, 1944

Penalty under Section 11AC of the Central Excise Act, 1944 - Validity of the penalty imposed under Section 11AC in respect of clearances made during the period of dispute. - HELD THAT: - The Tribunal found that the material on record established a bona fide belief by the appellants in their eligibility for exemption under Notification No. 06/2006-CE based on certificates and communications from M/s. BHEL and prior intimation to the jurisdictional Superintendent. The adjudicating authority's conclusion that the appellants had indulged in mis-declaration or suppression was held to be contrary to the evidence. As the essential ingredients for imposing penalty under Section 11AC were absent, the penalty could not be sustained. The appellants did not contest the quantification of duty (which was paid), and sought only vacation of the penalty. [Paras 9]

Penalty imposed under Section 11AC is set aside.

Waiver under Section 11A(2B) of the Central Excise Act, 1944 - extended period of limitation - mis-declaration / suppression - Whether extended limitation could be invoked and whether the appellants were entitled to benefit of Section 11A(2B) given payment made after audit objection. - HELD THAT: - The Tribunal recorded that appellants and M/s. BHEL had repeatedly informed the jurisdictional Superintendent that clearances were being made under the exemption notification, evidencing a bona fide belief in entitlement. After an audit objection and a subsequent communication from BHEL, the appellants paid the duty with interest and informed the authorities on 30.08.2010. On these facts the Tribunal concluded that the case was appropriate for extension of the benefit of Section 11A(2B). The Show Cause Notice issued nearly four years after the audit and payment, and the adjudicating authority's finding of mis-declaration, were inconsistent with the documentary record; thus invocation of the extended period and the characterization of suppression/mis-statement were not sustained in the circumstances of this case. [Paras 6, 7, 8]

Appellants entitled to benefit of Section 11A(2B); adjudicating authority's reliance on extended limitation and mis-declaration is rejected on the facts.

Disposition of the appeal challenging rejection of refund claim. - HELD THAT: - The appellants informed the Tribunal that they were not pressing the appeal challenging the rejection of the refund claim of the specified amount. Having been not pressed by the appellants, the appeal required no adjudication on the merits and was dismissed accordingly. [Paras 11, 12]

Refund appeal dismissed as not pressed.

Final Conclusion: Appeal against adjudication is partly allowed: penalty under Section 11AC is set aside and the appellants are held to be entitled to the benefit of Section 11A(2B) on the facts; the appeal against refund rejection is dismissed as not pressed.

Refund of excess excise duty - application of Section 11B - refund where duty paid through CENVAT credit - unjust enrichment burden of proof - limitation/time bar and computation of date of application

Application of Section 11B - refund where duty paid through CENVAT credit - Section 11B governs refund of excise duty whether paid in cash or by debiting CENVAT credit and is the relevant provision for the appellant's claim. - HELD THAT: - The Tribunal held that Section 11B provides the exclusive mechanism for refund of excise duty irrespective of the mode of payment. If the duty qualifies as excise duty, refund must be claimed under Section 11B; conversely, if the tax is not excise duty then Section 11B would not apply and the excise authorities would lack locus to grant a refund. The appellant's contention that Section 11B does not apply because duty was discharged through CENVAT credit, or because the duty was not leviable, was rejected: the appellant was liable to pay duty and had paid excess duty, so Section 11B applies in full including its provisions on limitation and unjust enrichment. [Paras 7, 8]

Section 11B applies to the appellant's refund claim whether duty was paid in cash or by CENVAT credit; the claim must be considered under Section 11B.

Unjust enrichment burden of proof - Burden lies on the claimant to prove that the excess duty was not passed on to customers; refund cannot be rejected merely on the ground of alleged unjust enrichment where claimant proves non-passing on. - HELD THAT: - The Tribunal explained that where unjust enrichment is alleged the claimant must prove that the excise duty burden was not collected from customers; failing such proof the amount may be credited to the Consumers Welfare Fund. In the present case the appellant produced documentary evidence (credit and debit notes) showing that the excess billed amounts were returned to customers, and it was evident that the burden of excess excise duty was not passed on. Consequently the refund could not be refused on the ground of unjust enrichment. [Paras 8]

The appellant discharged the burden to show the excess duty was not passed to customers; refund cannot be denied on unjust enrichment in these facts.

Limitation/time bar and computation of date of application - The original refund application dated 20.10.2014 must be reckoned as the date of filing for limitation purposes; departmental delay in processing disentitles the department from rejecting the claim on time bar grounds. - HELD THAT: - The Tribunal found that a substantial part of the claim related to periods within time and that the appellant's original application of 20.10.2014 was filed within limitation. The department sought information twice, returned the application twice for lack of details, and only thereafter issued a show cause notice; having caused delay in processing, the department could not take advantage of the appellant's subsequent delay in resubmission. In this factual matrix the delay attributable to the appellant was less than the delay attributable to the department, and the original date of filing must be reckoned for limitation. [Paras 9]

The refund claim is not time barred; the date of filing is to be treated as 20.10.2014 for limitation purposes.

Final Conclusion: The appeal is partly allowed: Section 11B governs the refund claim (whether duty paid by cash or CENVAT), the appellant has shown the excess duty was not passed to customers so unjust enrichment does not justify refusal, and the original filing date 20.10.2014 is to be reckoned for limitation; consequential relief to follow.

CENVAT credit on inputs - credit based on duty actually paid by supplier - non-variation of credit at recipient's end - binding effect of supplier's duty determination on recipient - demand under Section 11A of the Central Excise Act read with Rule 14 of the CCR - interest under Section 11AA

CENVAT credit on inputs - credit based on duty actually paid by supplier - non-variation of credit at recipient's end - binding effect of supplier's duty determination on recipient - Entitlement of the recipient-manufacturer to avail CENVAT credit on inputs received from a sister concern based on the duty shown as paid in supplier's invoice, notwithstanding contention that the duty so shown exceeded the actual duty payable by the supplier. - HELD THAT: - The appellant purchased inputs from its sister concern and availed CENVAT credit on the basis of invoices showing duty as paid by the supplier. The original adjudicating authority invoked Section 11A and Rule 14 to demand recovery of such credit on the ground that duty shown was in excess of actual liability. Applying binding precedents, the Tribunal relied on the Apex Court's decision in CCE v. MDS Switchgear Ltd. that the duty and its quantum once determined for the supplier unit by the jurisdictional officer cannot be challenged by the officer of the recipient unit. Consistent Tribunal decisions (including Cipla Ltd. and IPF Vikram India Ltd. following VG Steel Industry) hold that the recipient's credit cannot be varied on the ground that the supplier should have paid lesser duty; the recipient is entitled to take credit of duty as per the supplier's invoice and as actually paid. On these principles the impugned demand is unsustainable and the Commissioner(A)'s order rejecting the appellant's appeal was set aside. [Paras 6]

Impugned order set aside; appeal allowed and CENVAT credit retained in favour of the appellant.

Final Conclusion: Following binding authority that the recipient-manufacturer may avail CENVAT credit on inputs on the basis of duty shown as paid by the supplier and that such credit cannot be re-opened at the recipient's end merely because the supplier might have been liable to pay lesser duty, the Tribunal allowed the appeal and set aside the Commissioner(A)'s order directing recovery of the credit.

Application of Rule 6(3) of CENVAT Credit Rules, 2004 to by-products/waste - treatment of slag (MBF slag) as a waste/by-product arising in the course of manufacture - no requirement to reverse CENVAT credit where an exempted by-product emerges in the course of manufacture of dutiable goods - effect of exemption under Notification No.4/2006-CE on duty liability of by-products - binding effect of judicial precedents including Hindustan Zinc Ltd. on reversal liability - relevance of Board Circular No.904/24/2009/CX to Revenue's contention

Application of Rule 6(3) of CENVAT Credit Rules, 2004 to by-products/waste - treatment of slag (MBF slag) as a waste/by-product arising in the course of manufacture - no requirement to reverse CENVAT credit where an exempted by-product emerges in the course of manufacture of dutiable goods - binding effect of judicial precedents including Hindustan Zinc Ltd. on reversal liability - Whether the assessee was liable to reverse a percentage of CENVAT credit under Rule 6(3) in respect of MBF slag cleared without payment of duty for the period October 2007 to August 2012. - HELD THAT: - The Tribunal held that the question is no longer res integra and is settled by authoritative decisions cited by the assessee. Applying those precedents, MBF/EOF slag generated during the manufacture of iron and steel is a waste or by-product emerging in the course of manufacture of dutiable final products and, accordingly, the obligation to reverse credit under Rule 6 (as contemplated for exempted goods not separately inventoried) is not attracted. The Tribunal noted reliance on higher judicial decisions which establish that where a common input or service produces both dutiable output and an exempted by-product or waste, Rule 6 does not mandate reversal of a percentage of credit. Having applied those ratios and the Division Bench decision in Mukand Ltd. on identical facts, the impugned order of the Commissioner (Appeals) was upheld and the Revenue's demand set aside. [Paras 6]

Revenue's appeal dismissed; impugned order allowing assessee's appeal is upheld and demand set aside.

Final Conclusion: The Tribunal dismissed the Revenue's appeal, holding that MBF slag is a waste/by-product arising in the course of manufacture and that Rule 6(3) does not require reversal of CENVAT credit on its clearance; the impugned appellate order in favour of the assessee is therefore upheld for the period October 2007 to August 2012.