TaxTMI Updates e-Newsletter
Apr 03,2020

Maintainability of advance ruling application - Non-compliance with prescribed form and fee requirement

Advance ruling application procedure - Prescribed fee under CGST and SGST - Manual filing not overriding statutory compliance - The advance ruling application was not entertainable due to non-compliance with the prescribed form and fee requirements under the statutory scheme. - HELD THAT: - The Authority held that an application for advance ruling must be filed in the prescribed form and must be accompanied by the prescribed fee under both the CGST Act and the respective State GST Act. The applicant had neither filed the application in the prescribed format nor deposited the fee under the CGST head. The explanation based on portal difficulty and email communication from GSTN was not accepted, as such communication could not override the Act, the Rules, or the procedure prescribed under the circular governing manual filing. Since the defect persisted despite being pointed out and despite personal hearing, the application could not be entertained. The Authority only left it open to the applicant to seek refund of the amount paid and to apply afresh in accordance with law. [Paras 4, 5]

The application was held to be not maintainable in its present form and was not entertained, with liberty to seek refund and file a fresh application in compliance with the prescribed procedure.

Final Conclusion: The Authority declined to entertain the advance ruling application for failure to comply with the mandatory procedural requirements regarding prescribed form and payment of fee under both CGST and SGST. Liberty was reserved to the applicant to seek refund of the amount already paid and to file a fresh application in accordance with the Act and the Rules.

Transfer of a going concern - exemption under Notification No. 12/2017-Central Tax (Rate) - supply of services under Chapter 99 (Service Code) - definition of "business" under Section 2(17)

Transfer of a going concern - exemption under Notification No. 12/2017-Central Tax (Rate) - supply of services - definition of "business" - Whether the Business Transfer Agreement effecting transfer of an under construction project amounts to transfer of a going concern and is exempt from GST under serial no. 2 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. - HELD THAT: - The Authority examined the transaction documents, including the sale deed dated 24.10.2019, and the statutory definition of "business" in Section 2(17). The sale deed transferred the under construction building with all assets (including approved map and constructed flats) to the buyer, who is engaged in the same business and intends to carry on that business. The Authority applied the internationally accepted indicators for a 'going concern' (assets sold as part of a business, purchaser's intention to carry on the same business, capability of separate operation where part is sold, and absence of immediately consecutive transfers). On these facts there was a transfer of a running business capable of being carried on by the purchaser. The Authority further treated such transfer as a supply of service covered under Chapter 99 (services by way of transfer of a going concern) and noted that serial no. 2 of Notification No. 12/2017 exempts such supply from GST.

The transfer was held to be a transfer of a going concern and, being a supply covered by serial no. 2 of Notification No.12/2017-Central Tax (Rate), is exempt from GST as on date.

Final Conclusion: The Authority ruled that the Business Transfer Agreement transferring the under construction project constitutes a transfer of a going concern and is exempt from GST under serial no. 2 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Transaction Value - Value of supply - Valuation under Section 15 - Rule 34 of the CGST Rules, 2017 - Rate of exchange notified under section 14 of the Customs Act, 1962

Rule 34 of the CGST Rules, 2017 - Rate of exchange notified under section 14 of the Customs Act, 1962 - Transaction Value - Applicable rate of exchange to determine the value of goods supplied within India where billing is in foreign currency. - HELD THAT: - The value of a taxable supply is determined on the basis of Transaction Value and, where valuation requires conversion from foreign currency, Rule 34 of the CGST Rules, 2017 governs the rate of exchange to be applied. Rule 34(1) prescribes that the rate of exchange for taxable goods shall be the applicable rate of exchange as notified by the Board under section 14 of the Customs Act, 1962 for the date/time of supply. The Authority noted that the foreign currency price in the applicant's contract is intended to cover imported content used in the Indian supply, and therefore the exchange rate category notified for imports is the appropriate reference. Applying the statutory framework - valuation under Section 15 read with the Chapter IV rules and Rule 34 - the Authority concluded that the import rate of exchange as notified under section 14 of the Customs Act, 1962 is to be used for determining the value of such supplies billed in foreign currency. [Paras 7, 8, 9]

For goods supplied within India and billed in foreign currency, the rate of exchange notified for imported goods under section 14 of the Customs Act, 1962 (applied via Rule 34 of the CGST Rules, 2017) shall be used to determine the value of the taxable supply.

Final Conclusion: Advance ruling: where domestic supplies are billed in foreign currency and the foreign-currency price relates to imported content, valuation follows the transaction value principle and the rate of exchange for imports notified under section 14 of the Customs Act, 1962 (as applied by Rule 34, CGST Rules, 2017) shall be applied.

Advance ruling - classification of services - applicability of GST rate - right to use minerals including its exploration and evaluation - residual entry 17(viii) of Notification 11/2017-Central Tax (Rate) - rate same as supply of like goods involving transfer of title - amendment by Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018

Classification of services - residual entry 17(viii) of Notification 11/2017-Central Tax (Rate) - applicability of GST rate - rate same as supply of like goods involving transfer of title - amendment by Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018 - Rate of GST applicable to services rendered by M/s. Garhwal Vikas Nigam to the applicant for the period 01.07.2017 to 31.12.2018. - HELD THAT: - The Authority had earlier held that the services in question are classifiable under service code 997337 as "right to use minerals including its exploration and evaluation" and covered by the residual entry 17(viii) of Notification No. 11/2017-Central Tax (Rate). That classification was reiterated. The Notification's table shows that entry 17(viii) prior to amendment prescribed the rate as 9% (central tax 9% responsive to integrated structure), but entry (iii)/(via) and related clauses provide that certain leasing/rental services attract the same rate as on supply of like goods involving transfer of title. Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018 (effective 01.01.2019) altered the entries so that w.e.f. 01.01.2019 the service falls to be taxed at the rate applicable thereafter. Applying the notification as it stood during 01.07.2017 to 31.12.2018, the Authority concluded that the services for that period attract GST at the same rate as applicable on supply of like goods involving transfer of title, which is 5% (central tax equivalent basis), and that the amended position applies only from 01.01.2019. [Paras 7, 9, 10]

Services rendered by M/s. GMVN to the applicant during 01.07.2017 to 31.12.2018 attract GST at the same rate as on supply of like goods involving transfer of title in goods (i.e., 5%).

Final Conclusion: The Authority admits the application, reiterates the earlier classification of the service under residual entry 17(viii) of Notification No.11/2017, and rules that for the period 01.07.2017 to 31.12.2018 the service is taxable at the rate applicable to supply of like goods involving transfer of title (5%); the amended rate structure effected by Notification No.27/2018 applies only from 01.01.2019.

Licensing services for the right to use minerals including its exploration and evaluation - Classification of services - Service Code 997337 - Rate of GST as same rate of central tax as on supply of like goods involving transfer of title in goods - Applicability of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 - Advance ruling on classification and rate

Classification of services - Licensing services for the right to use minerals including its exploration and evaluation - Applicability of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 - Services rendered by Garhwal Mandal Vikas Nigam (GMVN) to the applicant are classifiable as licensing services for the right to use minerals including its exploration and evaluation under the annexure to Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. - HELD THAT: - On scrutiny of the MOUs and the Uttarakhand allotment regime, GMVN had been allotted areas to extract accessory minerals and in turn allotted extraction rights to the applicant for specified khasra numbers, for consideration. The annexure to Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 lists, at serial no. 257, the description "Licensing services for the right to use minerals including its exploration and evaluation." The services rendered by GMVN match this description and therefore fall within that entry of the Notification.

The services rendered by GMVN are covered as "Licensing services for the right to use minerals including its exploration and evaluation" under the annexure to Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017.

Service Code 997337 - Classification of services - The service in question is classifiable under Service Code (Tariff) 997337. - HELD THAT: - Having held that the services constitute licensing for the right to use minerals including exploration and evaluation, the corresponding service code in the annexure to the Notification is 997337. The factual matrix (MOUs granting extraction rights and consideration collected by GMVN) aligns the service with that tariff description.

The service is classified under Service Code (Tariff) 997337.

Rate of GST as same rate of central tax as on supply of like goods involving transfer of title in goods - Applicability of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 - For the period 01.07.2017 to 31.12.2018 the services rendered by GMVN to the applicant attract GST at the same rate as applicable on supply of the like goods involving transfer of title in goods. - HELD THAT: - Serial no. 17 of Notification No. 11/2017 sets out rates for leasing/licensing services; the specific description at issue did not fall within sub-entries (i)-(viia) and therefore fell in the residual entry (viii) of serial no. 17 as it stood for the period 01.07.2017 to 31.12.2018. The residual entry required levy at the same rate as on supply of like goods involving transfer of title. The goods involved (sand, gravel, boulders) are taxed at 5% when supplied with transfer of title; hence the service for the stated period attracts GST at 5%.

The services rendered by GMVN to the applicant during 01.07.2017 to 31.12.2018 attract GST at the same rate as on supply of like goods involving transfer of title in goods (i.e., 5%).

Final Conclusion: On the facts and documents before the Authority, the services rendered by GMVN to the applicant are licensing services for the right to use minerals including exploration and evaluation, classified under Service Code 997337; and for the period 01.07.2017 to 31.12.2018 such services attract GST at the same rate as applicable to the like goods (5%).

Interest on delayed refunds - Interpretation of Section 56 of the CGST Act - Proviso prescribing higher interest where refund arises from orders of adjudicating/appellate authorities - Rule 94 - order sanctioning interest on delayed refunds - Judicial discretion to award compensatory interest in appropriate cases - Review of judicial order

Interest on delayed refunds - Interpretation of Section 56 of the CGST Act - Proviso prescribing higher interest where refund arises from orders of adjudicating/appellate authorities - Judicial discretion to award compensatory interest in appropriate cases - Whether the earlier direction to award interest at 9% per annum ought to be reviewed and replaced by interest at 6% per annum in terms of Section 56 of the CGST Act. - HELD THAT: - The Court examined the statutory scheme concerning interest on delayed refunds and the proviso to Section 56 which contemplates a higher rate (not exceeding 9%) where the refund claim arises from an order of an adjudicating authority, appellate authority, tribunal or court. The earlier order had directed payment of simple interest at 9% per annum after assessing the chart of delays and the factual matrix of the writ applicants. On the review application, the Court considered the submissions that Section 56 permits interest at a rate not exceeding 6% as specified by notification. Having regard to the peculiar facts and circumstances of the case and the basis of the earlier direction (including reliance on the proviso and the factual delay chart), the Court found no ground to interfere with or review the earlier order. Consequently, the Court refused to substitute the 9% direction with a 6% rate and declined to reopen the conclusion previously reached.

Review application rejected; earlier direction awarding interest at 9% per annum is not disturbed and the rule is discharged.

Final Conclusion: The review petition challenging the Court's earlier direction to award simple interest at 9% per annum on delayed refunds is dismissed; the Court finds no merit to substitute the rate with 6% and declines to review its order.

Confiscation under Section 130 - procedure under Section 129 - release of detained goods subject to payment and bond - statutory appeal against confiscation order - condonation of delay in filing appeal

Confiscation under Section 130 - procedure under Section 129 - release of detained goods subject to payment and bond - statutory appeal against confiscation order - Permissibility of raising objections to invocation of confiscation proceedings and related procedural contentions in the statutory appeal against the confiscation order. - HELD THAT: - The Court noted that the Assistant Commissioner (Mobile Wing) had passed an order confiscating the goods on 19th July, 2019 and that the order was appealable. Although the petitioner had approached the High Court before availing the statutory remedy and the goods were released in compliance with interim directions, the Court authorised the petitioner to agitate in the statutory appeal all points raised in the writ petition, including contentions that the procedure under the prior provision was not followed before invoking confiscation. The permission to raise those contentions in the appeal follows from the appealability of the confiscation order and the Court's choice to permit adjudication of the legal issues by the appellate forum. [Paras 4]

Petitioner permitted to raise in the statutory appeal all grounds urged in the writ petition against the confiscation order.

Statutory appeal against confiscation order - condonation of delay in filing appeal - Whether delay in filing the statutory appeal would be objected to by the State and the court's direction on condonation of delay. - HELD THAT: - The State, through its counsel, expressly stated that if the petitioner filed the statutory appeal within 15 days from the date of the order, the respondents would not object to any application for condonation of delay. The Court recorded this undertaking and, on that basis, disposed of the writ petition while leaving the statutory remedy open to the petitioner. The Court's direction is procedural and permissive, enabling the appeal to be entertained with the benefit of the State's non-objection to condonation of delay if complied with within the specified time. [Paras 5]

Respondents will not object to condonation of delay provided the statutory appeal is filed within 15 days.

Final Conclusion: Writ petition disposed of: petitioner granted leave to raise before the appellate authority all grounds urged in the writ petition against the confiscation order; respondents undertook not to object to condonation of delay if the statutory appeal is filed within 15 days.

Confiscation of goods under PGST Act, 2017 - Release of detained goods subject to payment and personal bond - Right to pursue statutory appeal despite pendency of writ petition - Condonation of delay by respondents' consent in filing appeal

Right to pursue statutory appeal despite pendency of writ petition - Confiscation of goods under PGST Act, 2017 - Petitioner permitted to raise in the statutory appeal all points raised in the writ petition against the order of confiscation dated 20.07.2019. - HELD THAT: - The Court noted that the goods confiscated by order dated 20.07.2019 were released pursuant to its interim directions dated 24.10.2019. In view of that release and the fact that the earlier writ petition led to non availment of the statutory remedy, the Court permitted the petitioner to agitate all contentions raised in the writ petition in the statutory appeal to be filed against the confiscation order. The permission is granted so that the statutory appellate remedy may be efficaciously invoked and the points raised before this Court can be adjudicated by the competent appellate forum. [Paras 4]

Petitioner allowed to raise all points from the writ petition in the statutory appeal against the confiscation order.

Condonation of delay by respondents' consent in filing appeal - Release of detained goods subject to payment and personal bond - Respondents will not object to condonation of delay if the statutory appeal is filed within 15 days. - HELD THAT: - The State, through its counsel, gave a clear undertaking that if the petitioner files the statutory appeal within 15 days from the date of the order, the respondents will not oppose an application for condonation of delay in filing the appeal. This undertaking was recorded by the Court and forms part of the order disposing of the writ petition, thereby facilitating the petitioner's access to the statutory remedy without being prejudiced by delay attributable to the prior writ proceedings. [Paras 5]

Respondents will not raise objection to condonation of delay provided the appeal is filed within 15 days.

Final Conclusion: Writ petition disposed of: petitioner permitted to raise all grounds in the statutory appeal against the confiscation order dated 20.07.2019; respondents undertaking not to oppose condonation of delay if the appeal is filed within 15 days.

Release of detained goods and conveyance on payment of tax and penalty - confiscation under Section 130 of the Central Goods and Services Tax Act, 2017 - provisional release under Section 129 of the Central Goods and Services Tax Act, 2017 - requirement of application of mind for issuance of confiscation notice - duty to disclose material supporting formation of belief for confiscation - right to challenge show cause notice arising from detention and seizure

Release of detained goods and conveyance on payment of tax and penalty - provisional release under Section 129 of the Central Goods and Services Tax Act, 2017 - Validity of interim release of the vehicle and goods upon payment of tax/penalty and disposal of the writ insofar as release is concerned. - HELD THAT: - A coordinate Bench had directed interim release of the vehicle bearing No. RJ14GJ2683 on payment of the fine/amount specified in the notice under Section 130 of the Act. The writ applicant availed of that interim relief and obtained release of the vehicle along with the goods on payment of the tax amount. The Court records that the release took place in accordance with the interim order and that consequential proceedings on the show cause notice under Section 130 are to continue in accordance with law. Having recorded these facts and the availability of interim relief, the writ is disposed of and the rule is made absolute to the limited extent of the release order already effected.

Writ disposed of; rule made absolute to the extent of permitting release of the vehicle and goods on payment as ordered earlier.

Confiscation under Section 130 of the Central Goods and Services Tax Act, 2017 - requirement of application of mind for issuance of confiscation notice - duty to disclose material supporting formation of belief for confiscation - right to challenge show cause notice arising from detention and seizure - Permissibility of contesting the show cause notice and reliance on this Court's observations regarding invocation of Section 130 at the threshold. - HELD THAT: - The Court expressly permitted the writ applicant to rely upon and press the observations made by this Court in Synergy Fertichem Pvt. Ltd. (paras 99-104) which emphasize that invocation of Section 130 at the threshold requires a strong case, an application of mind and disclosure of materials upon which the authority's belief is founded. The judgment records that the present proceedings are at the stage of a show cause notice under Section 130 and that it remains open to the applicant to contend that the show cause notice merits discharge in light of those observations. The Court did not finally adjudicate the merits of the show cause notice but left the proceedings to continue in accordance with law while preserving the applicant's right to advance the cited authorities and contentions.

Applicant permitted to challenge the show cause notice and to rely on the Court's observations in Synergy Fertichem; substantive proceedings to continue in accordance with law.

Final Conclusion: The writ petition is disposed of: the vehicle and goods were released pursuant to the interim order on payment of the specified amount and the rule is made absolute to that extent; the departmental proceedings on the show cause notice under Section 130 of the Act shall continue, and the applicant is permitted to challenge the notice and to rely on this Court's observations regarding the stringent requirements for invoking confiscation at the threshold.

Summary order. Writ petition dismissed; Court declined to exercise its extraordinary jurisdiction under Article 226 in respect of the order dated 3rd June, 2019 passed under section 62 of the Uttar Pradesh Goods and Services Tax Act, 2017, and disposed of the petition with the observation that if the petitioner has taken steps in respect of that order, the concerned respondent authority shall deal with the same in accordance with law.

Bank guarantee as compliance for detention/prosecution proceedings under the Uttar Pradesh Goods and Services Tax regime - Conclusion of proceedings under Section 129(5) of the Uttar Pradesh Goods and Services Tax Act, 2017 upon deposit of bank guarantee - Conditional disposal of writ petition on deposit of security within a stipulated period - Automatic recall of interim/conditional order on failure to comply - Reliance on Writ Tax No. 344 of 2018 (M/s Skipper Limited )

Bank guarantee as compliance for detention/prosecution proceedings under the Uttar Pradesh Goods and Services Tax regime - Conclusion of proceedings under Section 129(5) of the Uttar Pradesh Goods and Services Tax Act, 2017 upon deposit of bank guarantee - Conditional disposal of writ petition on deposit of security within a stipulated period - Automatic recall of interim/conditional order on failure to comply - Petitioner's undertaking to deposit the bank guarantee within three weeks is accepted and, upon such deposit, the proceedings under section 129(3) are to be treated as concluded under section 129(5) and the Court's earlier decision in Writ Tax No. 344 of 2018 (M/s Skipper Limited ); failure to deposit will result in automatic recall of this order and authorities proceeding according to law. - HELD THAT: - The High Court recorded the petitioner's undertaking to deposit a bank guarantee equal to the amount stipulated in the show cause notice dated 20 March 2018 within three weeks. The Court directed that if the bank guarantee is deposited within that period, the proceedings initiated under section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 shall stand concluded in terms of section 129(5) of the Act and consistent with the law laid down by this Court in Writ Tax No. 344 of 2018 (M/s Skipper Limited ). The order expressly conditions the disposal of the writ petition on compliance with the undertaking and provides that non-compliance will automatically revive the proceedings, whereupon the authorities are free to proceed in accordance with law. The Court thus disposed of the writ petition by recording the conditional undertaking and linking the legal effect of deposit to the statutory consequence under section 129(5) and the cited precedent.

Writ petition disposed of on the petitioner's undertaking to deposit the bank guarantee within three weeks; deposit will conclude the section 129 proceedings as per section 129(5) and the cited precedent, and failure to deposit will result in automatic recall of the order and resumption of proceedings by authorities.

Final Conclusion: The writ petition is disposed of subject to the petitioner depositing the bank guarantee within three weeks; on such deposit the detention/prosecution proceedings under section 129(3) shall stand concluded under section 129(5) and the Court's earlier law, and in default the order shall be automatically recalled and authorities shall proceed in accordance with law.

Discharge of tax liability within the period stipulated under the GST laws - electronic liability register and Unique Identification Number under rule 88(2) of the CGST Rules - electronic cash ledger and challan identifiers (CPIN/CIN/BRN) as evidence of payment - liability to pay interest for delayed credit due to system failure - subsequent declaration/return accepted by the portal treated as discharge of earlier liability

Discharge of tax liability within the period stipulated under the GST laws - electronic cash ledger and challan identifiers (CPIN/CIN/BRN) as evidence of payment - electronic liability register and Unique Identification Number under rule 88(2) of the CGST Rules - subsequent declaration/return accepted by the portal treated as discharge of earlier liability - Whether the petitioner had discharged its tax liability for August, 2017 within the statutory period despite system glitches and whether the declaration filed in October 2019 (with September 2019 return) should be treated as discharge of the August 2017 liability. - HELD THAT: - The court found on the record that the petitioner had paid the full tax for August, 2017 by cash payments (with generated CPINs and bank CINs/BRNs recorded) and by utilisation of input tax credit, and those amounts remained to the credit of the GST Department. The failure to reflect the discharge in the electronic liability register and zeros in GSTR-3B arose from portal glitches and crash on 20-21 September 2017, not from any default by the petitioner. Given these facts and that the petitioner thereafter followed the process suggested by respondents resulting in the portal accepting the September 2019 filing which declared the August 2017 tax, the court held that the October 2019 declaration (filed with the September 2019 return) shall be treated as constituting discharge of the August 2017 liability within the period prescribed under the GST laws. The determinative reasoning rests on the evidentiary significance of the CPIN/CIN/BRN and the fact that the sums remained credited to the Department and were not applied elsewhere, combined with the inequity of penalising the petitioner for system failures beyond its control. [Paras 9, 14, 15]

The declaration submitted in October 2019 with the September 2019 return is to be treated as discharge of the petitioner's tax liability for August, 2017 within the period stipulated under the GST laws.

Liability to pay interest for delayed credit due to system failure - discretion and equity in imposing interest where default arises from portal malfunction - Whether the petitioner is liable to pay interest for the period from 21.9.2017 to October 2019 on the tax amount which was paid on time but not reflected in the electronic liability register due to system failure. - HELD THAT: - The court observed that the petitioner had promptly notified authorities and pursued remedies, but remedial action was delayed by the respondents and the portal malfunction. The Circular and procedures relied upon by respondents required reporting additional liability and payment with interest for subsequent periods; applying that requirement to a case where the taxpayer had in fact paid on time but the system failed would be unreasonable. Given that the amounts were deposited with the designated bank and remained credited to the Department and the failure to record the discharge was attributable to technical glitches and delayed administrative response, it would be inequitable to fasten interest liability on the petitioner for the period in question. The court therefore declined to impose interest for the period from 21.9.2017 to October 2019. [Paras 6, 11, 14, 15]

The petitioner shall not be liable to pay any interest on the tax amount for the period from 21.9.2017 to October, 2019.

Final Conclusion: The petition is allowed: the October 2019 declaration filed with the September 2019 return shall be treated as discharge of the petitioner's August, 2017 tax liability within the period prescribed under the GST laws, and the petitioner is not liable to pay interest for the period 21.9.2017 to October, 2019; rule made absolute, no costs.

Re-assessment - Challenge under Article 226 of the Constitution - Requirement of a separate speaking order (GKN Driveshafts principle) - Interim stay of demand pending statutory appeal - Deposit/remittance as condition for grant of interim stay

Re-assessment - Challenge under Article 226 of the Constitution - Requirement of a separate speaking order (GKN Driveshafts principle) - Whether the High Court should interfere with the reassessment order impugned for Assessment Year 2014-15 under Article 226 where a statutory appeal has been filed before the Commissioner of Income Tax (Appeals). - HELD THAT: - The petition challenged the reassessment order on multiple grounds including that the Assessing Authority had not passed a separate speaking order as required by the Supreme Court's decision in GKN Driveshafts. The objection filed by the petitioner also sought dropping of the re-opening proposal. However, the petitioner has instituted a statutory appeal before the Commissioner of Income Tax (Appeals). In these circumstances the court declined to exercise its extraordinary writ jurisdiction under Article 226 to interfere with the reassessment order and refused to grant the primary relief sought in the writ petition. [Paras 4]

Writ petition not entertained on merits; court not inclined to interfere under Article 226 as statutory appeal is pending.

Interim stay of demand pending statutory appeal - Deposit/remittance as condition for grant of interim stay - Interim relief to regulate the disputed demand and directions for filing and disposal of a stay application before the Commissioner of Income Tax (Appeals). - HELD THAT: - The Assessing Authority had earlier granted an instalment scheme. The petitioner had not paid any amount under that scheme. The court permitted the petitioner to file a stay application before the Commissioner of Income Tax (Appeals) within two weeks. As a condition for obtaining stay of the balance demand pending disposal of that application, the petitioner was directed to remit 10% of the disputed tax forthwith. The Commissioner of Income Tax (Appeals), upon receipt of an application filed within the stipulated period and compliance with the remittance condition, was directed to take up and dispose of the stay application after hearing the petitioner within four weeks from filing. The court further provided that failure to file the stay application within the permitted period would result in revival of the Assessing Authority's order and automatic vacatur of the interim stay previously granted by the court. [Paras 5, 6, 7]

Petitioner permitted to seek stay before the appellate authority on specified terms; 10% of disputed tax to be remitted as condition; stay application to be disposed within four weeks; non-filing within timeline results in revival of the impugned order.

Final Conclusion: Writ petition dismissed without interference with the reassessment order as a statutory appeal is pending; interim regime provided permitting the petitioner to seek stay before the Commissioner of Income Tax (Appeals) on payment of 10% of the disputed tax, with directions for expeditious disposal and revival of the Assessing Authority's order if the stay application is not filed within the prescribed period.

Principles of natural justice - notice under section 148 - obligation to furnish reasons for reopening - right to file objections and entitlement to disposal by a speaking order - quashing of assessment and remittance for fresh consideration

Principles of natural justice - notice under section 148 - obligation to furnish reasons for reopening - right to file objections and entitlement to disposal by a speaking order - Assessment order passed without disposal of the objections filed by the assessee and without compliance with the duty to furnish reasons for reopening was violative of principles of natural justice. - HELD THAT: - The Court relied on the settled principle that when a notice under section 148 is issued the noticee may seek reasons for issuance and the Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons the noticee is entitled to file objections and the Assessing Officer must dispose of those objections by passing a speaking order before proceeding with the assessment. As the objections filed by the petitioner were not considered and no speaking order disposing of those objections was recorded, the impugned assessment proceeded in breach of natural justice. The assessment order and consequential demand were therefore quashed and the matter remitted for fresh consideration from the stage of treating the objections, thereby preserving the assessee's right to have objections considered after receipt of reasons. The Court kept all contentions open for reconsideration by the Assessing Officer. The Court relied on the precedent of GKN DRIVESHAFTS (INDIA) LTD. for these principles.

Impugned assessment order and consequential demand quashed; matter remitted to respondent for fresh consideration from the stage of treating the objections filed by the petitioner within three months.

Final Conclusion: Writ petition allowed; assessment order dated 29.12.2018 and consequential demand set aside and remitted for fresh consideration from the stage of disposal of the objections, with compliance within three months; all substantive contentions left open.

Estimation of peak credit - rejection of books of accounts - onus on assessee to explain sums found credited - self-serving computation

Estimation of peak credit - rejection of books of accounts - onus on assessee to explain sums found credited - self-serving computation - Appellate Tribunal was legally justified in upholding estimation of peak credit made by the Assessing Officer without rejecting the books of accounts. - HELD THAT: - The Court examined the factual finding of the Appellate Tribunal that the assessee failed to establish with evidence that the credited sums were genuine commission receipts or were received on behalf of others. The Tribunal noted absence of any worthwhile evidence and found the reworked computation of peak credits advanced by the assessee to be self-serving. On that basis the Tribunal upheld the taxing of the peak credits. The High Court held that, in the facts of the case, the Tribunal's approach-sustaining the estimation without formally rejecting the books of account-was legally justified because the assessee did not discharge the onus to explain the nature and source of the credits and the alternate computation tendered was not dependable.

Tribunal's order upholding addition on account of peak credits is legally justified and does not warrant interference.

Final Conclusion: The appeal is dismissed; the Appellate Tribunal's confirmation of the addition on account of peak credits is sustained as legally justified on the record.

Disallowance under section 14A - Rule 8D computation - Recording of satisfaction by Assessing Officer - Average value of investments for Rule 8D(2)(iii) - Exclusion of investments not yielding exempt income - Computation of book profit under section 115JB - Explanation 1 clause (f) to section 115JB

Disallowance under section 14A - Rule 8D computation - Recording of satisfaction by Assessing Officer - Whether the Assessing Officer could substitute the assessee's suo-moto disallowance by computing disallowance under section 14A read with Rule 8D without recording requisite satisfaction, and whether such satisfaction was recorded in the present case. - HELD THAT: - The Tribunal examined the requirement established by the Supreme Court that the Assessing Officer must record satisfaction that he is not able to accept the assessee's claim before invoking subsection (2) and (3) of section 14A and Rule 8D. Applying that principle to the assessment order, the Tribunal found that the Assessing Officer had, after deliberation, recorded that he was not satisfied with the correctness of the assessee's suo-moto disallowance. Consequently the statutory precondition for invoking section 14A(2)/(3) r.w. Rule 8D was satisfied and the AO was competent to recompute the disallowance under Rule 8D in the facts of this case. The Tribunal therefore rejected the assessee's challenge to the AO's jurisdiction to apply Rule 8D on the ground of non-recording of satisfaction. [Paras 6]

The AO lawfully applied section 14A r.w. Rule 8D after recording satisfaction; his exercise of jurisdiction was sustained.

Average value of investments for Rule 8D(2)(iii) - Exclusion of investments not yielding exempt income - Rule 8D computation - Whether investments that did not yield exempt income during the year should be excluded when computing the average value of investments under Rule 8D(2)(iii). - HELD THAT: - The Tribunal considered the assessee's contention, supported by the ITAT (Del.) Special Bench in ACIT v. Vireet Investments Pvt. Ltd., that only investments which actually yielded exempt income in the relevant year should be included for computing the average value under Rule 8D(2)(iii). On the facts, the AO had included investments that did not yield exempt dividend in the year, inflating the average value. Relying on the Special Bench precedent and the assessee's chart isolating investments that produced exempt income, the Tribunal held that investments not yielding exempt income during the year ought to be excluded for the purpose of Rule 8D(2)(iii). The Tribunal therefore restricted the Rule 8D(2)(iii) component accordingly and computed the aggregate disallowance under Rule 8D at the reduced amount. [Paras 6]

Disallowance under Rule 8D(2)(iii) restricted to 0.5% of the average value of investments that yielded exempt income; total Rule 8D disallowance limited to Rs. 2,31,984.

Computation of book profit under section 115JB - Explanation 1 clause (f) to section 115JB - Rule 8D computation - Whether the disallowance computed under section 14A r.w. Rule 8D should be added back for computing book profit under section 115JB (Explanation 1 clause (f)). - HELD THAT: - The Tribunal referred to the Special Bench decision in ACIT v. Vireet Investments Pvt. Ltd., which holds that computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resort to the computation under section 14A r.w. Rule 8D. On the facts, the AO had added the Rule 8D disallowance to book profit. The Tribunal found this approach incorrect and vacated the addition made by the AO for the purpose of computing book profit under section 115JB. [Paras 7]

Addition of the Rule 8D disallowance to book profit under section 115JB is vacated; AO's addition reversed for computation of book profit.

Final Conclusion: The appeal is partly allowed: the AO was entitled to invoke section 14A r.w. Rule 8D after recording satisfaction, but the Rule 8D(2)(iii) component is restricted to investments that yielded exempt income (total Rule 8D disallowance reduced to Rs. 2,31,984), and the addition of the Rule 8D disallowance to book profit under section 115JB is vacated.

Disallowance under Section 14A of the Income-tax Act, 1961 - computation of disallowance under rule 8D - restriction of disallowance to corresponding exempt/dividend income - nexus between interest/expenses and exempt investments - allowability of business expenditure under Section 37(1) of the Income-tax Act, 1961 - related party/associate concern services - genuineness and commercial expediency

Disallowance under Section 14A of the Income-tax Act, 1961 - computation of disallowance under rule 8D - restriction of disallowance to corresponding exempt/dividend income - nexus between interest/expenses and exempt investments - Extent of disallowance under Section 14A read with rule 8D having regard to investments in group concerns and debt oriented mutual funds and the nexus with interest/expenses - HELD THAT: - The Tribunal followed earlier judicial pronouncements that where the assessee has not earned taxable exempt income in the relevant year (or has negligible dividend), corresponding expenditure disallowable under Section 14A/read with rule 8D cannot be worked out beyond the quantum of exempt income actually earned. The Tribunal accepted that the assessee's dividend income for the year was Rs. 1,320 and directed that the disallowance under Section 14A be restricted to that amount, excluding the investments made in group concerns and in debt oriented mutual funds for purposes of computing the disallowance since no sufficient nexus was shown to justify a larger disallowance. [Paras 6]

Disallowance under Section 14A/read with rule 8D restricted to the dividend actually earned (Rs. 1,320); investments in group concerns and debt mutual funds excluded for computation.

Allowability of business expenditure under Section 37(1) of the Income-tax Act, 1961 - related party/associate concern services - genuineness and commercial expediency - Whether payments made to the associate M/s Hero Global Design Ltd. for engineering/CAD/CAM services are disallowable as not incurred in the ordinary course or not wholly and exclusively for business - HELD THAT: - The Tribunal examined the material on record, including invoices and the nature of services rendered. It noted that the associate provided continuous design and engineering support on the assessee's shop floor for around ten years; that the billing approximated the employee costs of the small team engaged; and that the services were actually performed and utilised in the assessee's manufacturing process (including fragmentation of designs and costing assistance). On this factual basis the Tribunal affirmed the CIT(A)'s conclusion that the expenditure was genuine and allowable under Section 37(1), declining to interfere with the deletion of the addition made by the Assessing Officer. [Paras 11]

Addition deleted; payments to M/s Hero Global Design Ltd. held to be allowable business expenditure under Section 37(1).

Final Conclusion: Revenue appeal dismissed: disallowance under Section 14A/read with rule 8D restricted to the dividend actually received; addition disallowing payments to the associate for engineering/design services deleted and held allowable under Section 37(1).

Treatment of long term capital gains exemption under section 10(38) - assessment by treating sale proceeds as unexplained cash credits under section 68 - principles of natural justice - right to fair hearing and disclosure of statements relied upon - remand for fresh consideration with directions to furnish statements and afford opportunity of hearing

Treatment of long term capital gains exemption under section 10(38) - assessment by treating sale proceeds as unexplained cash credits under section 68 - Whether the long term capital gain claimed as exempt under section 10(38) could be treated as unexplained cash credit under section 68 in the facts of the case - HELD THAT: - The Tribunal did not adjudicate the merits of the addition on record but directed remand to the Assessing Officer for fresh decision. Reliance was placed on the earlier Tribunal order in Shri. Kirti K. Bhansali and the Karnataka High Court's view in M/s. Chandra Devi Kothari that where adverse action is founded on statements or investigative material not placed before the assessee, the matter requires reconsideration after affording a fair opportunity. In the present case the Assessing Officer's conclusion that the shares transaction was part of accommodation entries and hence assessable u/s 68 was not finally upheld; instead the matter is restored to the file of the AO to decide afresh after complying with the directions to disclose the materials and afford hearing. No merits-based conclusion on the applicability of section 10(38) or section 68 has been recorded by the Tribunal. [Paras 5, 6]

Issue remanded to the Assessing Officer for fresh decision, without adjudication on the merits of the addition.

Principles of natural justice - right to fair hearing and disclosure of statements relied upon - remand for fresh consideration with directions to furnish statements and afford opportunity of hearing - Whether the assessee was denied natural justice by not being furnished statements and related investigation details upon which the addition was based - HELD THAT: - Following the reasoning in the cited precedents, the Tribunal found that where the AO relies on statements or investigational material implicating the assessee, the assessee must be furnished copies of such statements and given a reasonable opportunity to meet the case. The Tribunal observed that similar factual circumstances warranted restoration of the matter for reconsideration after providing the assessee the copy of the statement(s) and related details as directed by the Karnataka High Court in the reproduced paragraph. Consequently the Tribunal set aside the orders below and remitted the matter to the AO with directions to afford a fair hearing and disclose the materials relied upon before passing a fresh order. [Paras 5, 6]

Remitted to the Assessing Officer with directions to furnish the statements and related details and to afford the assessee a fair and reasonable opportunity of hearing before deciding the matter.

Final Conclusion: Appeal partly allowed for statistical purposes by setting aside the orders below and remitting the dispute to the Assessing Officer for fresh consideration in accordance with the directions to disclose the investigative statements and to afford the assessee a fair hearing; no adjudication on the merits of the addition was made by the Tribunal.

Estimation of personal/household expenses - admission and corroboration of alleged creditors' affidavits and burden of proof in respect of cash credits - inadmissibility of third party statements recorded behind the back of the assessee and right to cross examination - assignment of entries in seized documents to the relevant assessment year and principle of accrual - presumption under Evidence Act where seized entries lack dates and onus on assessee to rebut - identification of ownership/possession of seized cash and attribution to third parties - treatment of duplicated/separate note books relating to jointly run business and allocation among co participants - requirement of corroborative evidence to sustain additions in search and seizure cases - application of provisions for dealing with materials belonging to third parties found during search (invoking appropriate statutory procedure)

Estimation of personal/household expenses - Validity of addition by estimating household expenses at a higher amount than declared by the assessee. - HELD THAT: - The Tribunal examined the assessee's status (retired army personnel, agriculturist, co owner of land and engaged in money lending/contract business) and the material on record. The CIT(A) had restricted household expenses to a figure higher than declared by the assessee. On review of status and record the Tribunal found the CIT(A)'s restriction reasonable and declined to interfere with the addition. The conclusion rests on the Tribunal's acceptance that the assessee had means inconsistent with the low personal expenses claimed. [Paras 3]

Addition sustained by CIT(A) upheld; ground dismissed.

Admission and corroboration of alleged creditors' affidavits and burden of proof in respect of cash credits - Whether additions disallowing loans shown as unsecured deposits (supported by affidavits of farmers) could be sustained where the Assessing Officer did not verify/depose the deponents or bring adverse material on record after remand. - HELD THAT: - Assessee produced notarised affidavits, names and addresses and sought verification; these were placed before the AO by the CIT(A) on remand but the AO did not make any inquiry or adverse finding regarding the affidavits or creditworthiness of depositors. The Tribunal held it is the AO's duty to examine the deponents or otherwise discredit the affidavits; in absence of any adverse material or verification the addition could not be sustained. The Tribunal relied on settled principles that once assessee furnishes particulars of creditors the burden shifts to Revenue to establish lack of creditworthiness and that additions cannot rest on conjecture. [Paras 4]

Addition disallowing the loans deleted; ground allowed.

Inadmissibility of third party statements recorded behind the back of the assessee and right to cross examination - Competency of making additions based solely on third party statements recorded without giving the assessee a chance to cross examine or confront the witness. - HELD THAT: - The AO made an addition relying on a statement by a third party recorded without furnishing it to the assessee or permitting cross examination. The Tribunal applied the principle that statements taken behind the back of the assessee cannot be used against him unless the assessee is afforded an opportunity to meet and test that evidence; corroboration is necessary before making an addition based on such statements. Following binding Supreme Court precedent, the Tribunal deleted the addition. [Paras 5]

Addition deleted; ground allowed.

Assignment of entries in seized documents to the relevant assessment year and principle of accrual - Whether additions based on entries in seized diary that relate to earlier years could be sustained for AY.2005 06. - HELD THAT: - The Tribunal and the CIT DR verified that the specific entries relied upon by the AO pertained to earlier dates/years and not to AY.2005 06. Applying the accrual principle, entries demonstrably referring to prior periods cannot be taxed in the year under consideration. The Tribunal examined the seized diary and accepted that the impugned entries were earlier balances or repetitions, not advances made in AY.2005 06. [Paras 6]

Addition deleted; ground allowed.

Presumption under Evidence Act where seized entries lack dates and onus on assessee to rebut - Whether additions based on undated seized entries (claimed by assessee to be for earlier years) can be sustained where assessee fails to satisfy the AO/Tribunal that entries are not for the year under consideration. - HELD THAT: - The Tribunal found many seized entries lacked dates. Under evidentiary principles, when documents are silent on dates a presumption may operate against the assessee; the onus is on the assessee to rebut that presumption by satisfactory explanation. The assessee failed to discharge this onus in respect of certain undated entries; accordingly the Tribunal upheld the additions relating to those entries. [Paras 7]

Addition sustained; ground dismissed.

Identification of ownership/possession of seized cash and attribution to third parties - Whether cash recovered from assessee's possession can be treated as belonging to third parties (a firm of assessee's brothers) when the assessee is not partner or owner of that firm. - HELD THAT: - Assessee claimed recovered cash belonged to his brothers' firm and relied upon his statement under section 132(4). The Tribunal examined the plea and found it implausible that the assessee, not being partner or owner, could have custodial possession on behalf of the firm without adequate corroboration. The Tribunal rejected the explanation and held that attributing recovered cash to third parties without convincing evidence was not acceptable, thus sustaining the addition. [Paras 8]

Addition sustained; ground dismissed.

Treatment of duplicated/separate note books relating to jointly run business and allocation among co participants - Proper treatment of entries found in six similar note books relating to joint toll collection business and extent of addition to be made in assessee's hands. - HELD THAT: - The Tribunal treated Grounds 7, 8 and 9 together because the seized six note books related to the same toll collection business claimed to be run jointly by six persons. The AO had attributed the entire transactions to the assessee; the CIT(A) accepted that the business was run jointly and computed a 1/6th share in surplus. Given uncertainties (six separate note books could indicate either separate partner accounts or suppression), and absence of conclusive material from either side, the Tribunal exercised its discretion to make a pragmatic adjustment: it restricted the net addition to a specified amount (thereby granting partial relief) rather than remanding. [Paras 11]

Grounds partly allowed; overall addition confined to a reduced amount (partial relief to assessee).

Requirement of corroborative evidence to sustain additions in search and seizure cases - Sustainability of additions made by treating entries/papers found in the name of other persons as income of the assessee where seized documents indicate third party ownership. - HELD THAT: - On several grounds (including payments/receipts recorded in names of third parties and entries said to belong to others), the Tribunal applied the settled proposition that mere presence of papers at the assessee's residence does not automatically make them his income; corroborative evidence is necessary. Where the assessee satisfactorily explained and where the AO failed to bring contrary material (or where entries clearly pertained to prior years), the Tribunal either deleted the addition or reduced it; where the assessee failed to prove the third party character, additions were sustained. [Paras 12, 14, 15, 16]

Mixed outcomes: some additions deleted or reduced for lack of corroboration or because entries related to earlier years; other additions sustained where assessee failed to discharge onus.

Final Conclusion: The Tribunal partly allowed the appeal for AY.2005-06: additions disallowing alleged loans supported by affidavits and certain items attributable to third parties or earlier years were deleted; additions based on undated seized entries where the assessee failed to rebut the presumption, recovered cash attributed to the assessee, and some entries were upheld. Several contested additions were reduced by the Tribunal, resulting in a partly allowed appeal.

Reduction of interest by Settlement Commission - EPCG scheme interest liability - finality of Settlement Commission order under Section 127J - immunity withdrawal under Section 127H(2)

Reduction of interest by Settlement Commission - EPCG scheme interest liability - Validity of the Settlement Commission's order reducing interest payable by the petitioner from contractual/notification rate to 15% per annum and the correctness of the quantified liability. - HELD THAT: - The petitioner had imported capital goods under the EPCG scheme and availed a customs duty exemption under Notification No.28/97-Cus, undertaking by bond to pay interest at 24% per annum in case of failure to discharge export obligation. After the petitioner failed to meet the obligation and sought extensions, the matter was settled by the Settlement Commission which quantified the petitioner's liability and exercised its discretion to fix interest at 15% per annum from date of import. The High Court noted that the Settlement Commission had granted substantial relief by accepting and quantifying the petitioner's liability at the reduced interest rate and that an amendment to the notification made after the impugned order (Notification No.46/2013-Cus) was not applicable to disturb the prior settlement. Having considered the facts and the Commission's exercise of discretion, the court found no reason to interfere with the Commission's reduction of interest or its quantification of the amount payable.

The Settlement Commission's order reducing the interest to 15% and quantifying the petitioner's liability is upheld; no interference is warranted.

Finality of Settlement Commission order under Section 127J - immunity withdrawal under Section 127H(2) - Whether the High Court should interfere with the Settlement Commission's order in view of the statutory finality of such orders and the provisions for withdrawal of immunity upon non-compliance. - HELD THAT: - The court observed that the order of the Settlement Commission is final and conclusive under Section 127J of the Customs Act, 1962. It further noted the statutory scheme under Section 127H(2) that an immunity granted by the Commission stands withdrawn if the person fails to pay any sum specified in the order within the time specified or fails to comply with conditions, in which case the provisions of the Act apply as if immunity had not been granted. Given the finality accorded to settlement orders and the available statutory remedy for enforcement or withdrawal of immunity on non-compliance, the High Court found no merit in the writ challenge seeking to upset the settlement and declined to interfere with the Commission's exercise of discretion.

The statutory finality of the Settlement Commission's order and the safeguards for withdrawal of immunity on non-compliance preclude interference; the writ petition is dismissed.

Final Conclusion: The writ petition challenging the Settlement Commission's order (which quantified liability and reduced interest to 15%) is dismissed; the Commission's order is upheld and no interference is warranted under the statutory scheme.

No substantial question of law under Section 130 of the Customs Act - remand to adjudicating authority - power of appellate tribunal to remit - litigation policy of Revenue as non binding guideline - maintainability of appeal under litigation policy

No substantial question of law under Section 130 of the Customs Act - The petition does not raise any substantial question of law under Section 130 of the Customs Act warranting the High Court's interference. - HELD THAT: - Having considered the materials and the impugned order, the Court held that no substantial question of law arises for its consideration under Section 130. The Tribunal examined the matter and remitted it to the adjudicating authority; on the facts and law before this Court, there is no jurisdictional or legal error warranting interference under the statutory provision invoked by the appellant. [Paras 6]

The petition under Section 130 is dismissed for lack of any substantial question of law.

Remand to adjudicating authority - power of appellate tribunal to remit - The Tribunal acted within its statutory powers in remanding the matter to the adjudicating authority for fresh adjudication. - HELD THAT: - The Court noted that the Tribunal, while hearing the appeal, has power to pass such orders as it 'thinks fit' and that this amplitude of power includes remitting the matter to the adjudicating authority for fresh enquiry and a reasoned speaking order. The High Court declined to interfere with the Tribunal's exercise of that power, observing that remand for fresh consideration is permissible where the Tribunal deems it appropriate after examining the case. [Paras 7]

The Tribunal's remand is upheld and not interfered with.

Litigation policy of Revenue as non binding guideline - maintainability of appeal under litigation policy - The appellant cannot insist on withdrawal of the Revenue appeal on the ground of the Ministry's litigation policy; such policy is only a guideline for the Revenue and does not confer a right on the opposite party to compel withdrawal. - HELD THAT: - The Court observed that the litigation policy of the concerned Ministry is administrative in nature and operates as guidance for the Revenue Department. It does not create a legal right enabling the assessee to demand withdrawal of an appeal filed by the Revenue before a Tribunal or Court. Accordingly, an objection based on the litigation policy does not impugn the Tribunal's jurisdiction to entertain and dispose of the appeal. [Paras 7]

Contention based on litigation policy is rejected; it does not justify interference with the Tribunal's order.

Final Conclusion: The appeals are dismissed; the Tribunal's remand to the adjudicating authority is upheld and there is no substantial question of law requiring the High Court's exercise of jurisdiction under Section 130.

Obligation of authority to implement judicial directions - quashing administrative decision - renewal of Letter of Approval under Special Economic Zone Rules - specific performance of court order - contempt for non-compliance

Obligation of authority to implement judicial directions - renewal of Letter of Approval under Special Economic Zone Rules - specific performance of court order - Whether the Development Commissioner, Kandla SEZ, has complied with the court's directions dated 18.04.2019 to renew and issue a formal Letter of Approval to the petitioner and what relief should follow for non compliance. - HELD THAT: - The court recorded that its earlier order dated 18.04.2019 had quashed the Board of Approval's decision insofar as it affected the petitioners and had allowed renewal of the petitioners' Letter of Approval for one year, directing that the petitioners be treated on par with twenty eight other units. The affidavit-in-reply filed by the Development Commissioner discloses that, instead of implementing the court's directions by issuing the formal renewal, the opponents explored remedies including filing a special leave petition which was ultimately dismissed. The court found that, having set aside the Board's decision and granted renewal, there was no requirement to place the matter again before the Board; rather, the Development Commissioner was obliged to issue the formal Letter of Approval. The refusal or delay in issuing the formal renewal was held to be unjustified, an attempt to delay implementation and in flagrant disregard of the court's directions. The court therefore afforded an opportunity to comply before taking further action for non compliance. [Paras 5, 6, 7, 8]

The Development Commissioner, KASEZ, is directed to forthwith renew and issue the formal Letter of Approval as per the court's order dated 18.04.2019 on or before 5th February, 2020, failing which action for non compliance and exemplary costs will follow; matter stood over to 07.02.2020.

Final Conclusion: The court found deliberate non compliance by the Development Commissioner with its earlier order directing renewal of the Letter of Approval, directed immediate issuance of the formal renewal by 5 February 2020, warned of consequences for failure to comply, and listed the matter on 7 February 2020.

Refund claim barred by limitation - payment made under protest during investigation - tolling of limitation by pending appellate proceedings - refund of amounts deposited under protest

Refund claim barred by limitation - payment made under protest during investigation - tolling of limitation by pending appellate proceedings - Whether the refund claim filed by the appellant was barred by limitation and whether the amount paid under protest during investigation was liable to be refunded despite the authorities treating the claim as time barred. - HELD THAT: - The Tribunal found as a fact that the appellant deposited the amount under protest during the course of DRI investigation and that the Tribunal had decided the substantive dispute in favour of the appellant by order dated 03.03.2011, which was subsequently upheld by the High Court on 23.05.2014. The refund claim was filed after the Tribunal's order but before the High Court delivered its decision; on these facts the claim cannot be treated as time barred. The court emphasised that the deposit was made under protest during investigation and that limitation cannot be imposed to defeat a refund claim in those circumstances. Both adjudicating authorities erred in rejecting the claim as time barred. Consequently, the Tribunal directed that the refund claim be sanctioned and paid to the appellant within fifteen days on production of the Tribunal's order to the Adjudicating Authority.

Refund claim not barred by limitation; amount deposited under protest during investigation to be sanctioned and refunded within fifteen days on production of this order.

Final Conclusion: Appeal allowed; refund claim upheld and respondent directed to sanction the refund of the amount deposited under protest within fifteen days upon presentation of a copy of this order.

Summary order. Writ petitions disposed directing the petitioners to file objections to the impugned show cause notices within two weeks from receipt of a copy of this order, and directing the first respondent to consider those objections on merits after affording opportunity to the petitioners and to pass appropriate orders in accordance with law within four weeks thereafter; no costs.

Failure to consider evidence - remand for fresh adjudication - opportunity to submit documents and be heard - goods transport agency exemption under notification dated 3 December 2004 - requirement of vehicle number in invoices - Circular dated 11 June 2007 on vehicle number for small consignments - duty of adjudicating authority to seek clarification from the assessee

Failure to consider evidence - goods transport agency exemption under notification dated 3 December 2004 - opportunity to submit documents and be heard - remand for fresh adjudication - duty of adjudicating authority to seek clarification from the assessee - Principal Commissioner erred in not considering the Chartered Accountant's certificate and in failing to provide the appellant an opportunity to substantiate its claim of exemption; matter remanded for fresh consideration. - HELD THAT: - The Tribunal found that the Principal Commissioner noted production of a Chartered Accountant's certificate but did not examine it or seek any clarification from the appellant before confirming the demand. The appellant had earlier filed the certificate and transaction details; if doubts existed, the proper course was to require further information or documents rather than decide the case without examination. Given these deficiencies in the adjudicatory process, the Tribunal concluded that the impugned order could not stand and remanded the matter to the Principal Commissioner for fresh determination after affording the appellant an opportunity to produce documents and to raise any additional grounds in support of its claim. [Paras 10, 11, 12, 13]

Order set aside and matter remanded to the Principal Commissioner for fresh consideration after giving the appellant an opportunity to submit documents and be heard.

Requirement of vehicle number in invoices - Circular dated 11 June 2007 on vehicle number for small consignments - duty of adjudicating authority to seek clarification from the assessee - Omission of vehicle number in invoices was not an unqualified ground to reject the exemption claim and required examination in light of the Board's Circular; Principal Commissioner should have sought necessary documents before taking a definitive view. - HELD THAT: - The Tribunal observed that the Principal Commissioner emphasized absence of vehicle numbers in invoices but failed to consider the Circular dated 11 June 2007 which acknowledges practical difficulties in recording truck numbers for small consignments and permits subsequent endorsement. Therefore, the omission of vehicle numbers called for verification and, if necessary, a request to the appellant for supporting documentation rather than immediate rejection of the exemption claim. The matter is to be re-examined by the Principal Commissioner with this guidance. [Paras 10]

Principal Commissioner to examine the vehicle-number issue in light of the Circular and may call for documents before determining the claim.

Final Conclusion: The Tribunal allowed the appeal in part by setting aside the order dated 15 May 2015 and remanding the matter to the Principal Commissioner for fresh adjudication: the Principal Commissioner must consider the Chartered Accountant's certificate and transaction details, examine the vehicle-number issue in light of the CBEC Circular of 11 June 2007, and afford the appellant an opportunity to submit documents and raise further grounds before passing a fresh order.

CENVAT Credit admissibility - Inputs, input services and capital goods used in construction vis-a -vis provision of output service - Renting of immovable property service - Direct nexus between inputs/input services and output service - Definition of "input", "input service" and "capital goods" under the CENVAT Credit Rules, 2004 - Utilisation of CENVAT Credit for payment of service tax - Rule 14 consequences and recovery - Applicability of amendment to definition of "input service" effective 1 April 2011 - CBEC clarification dated 29 April 2011 on availment of credit for services provided before 01.04.2011

CENVAT Credit admissibility - Inputs, input services and capital goods used in construction vis-a -vis provision of output service - Renting of immovable property service - Direct nexus between inputs/input services and output service - Definition of "input" and "input service" under Rule 2 - CENVAT Credit on inputs, input services and capital goods used in construction of the Mall and subsequently used for providing renting of immovable property service was admissible. - HELD THAT: - The Tribunal held that inputs, input services and capital goods used in construction of the Mall ultimately enabled the appellant to provide the output service of renting of immovable property; therefore such inputs/input services qualify as being used for providing an output service within the meaning of the CENVAT Credit Rules, 2004. The decision follows and applies earlier judicial precedents which recognise that credit is available where the inputs/input services are ultimately used in relation to provision of an output service, notwithstanding that an immovable structure may have come into existence at an intermediate stage. The Commissioner's conclusion that the building is neither goods nor service and hence credit cannot be taken was held unsustainable because the statutory definitions require a functional nexus between inputs/input services and the output service provided. Consequently the findings disallowing credit and ordering recovery under Rule 14 (and related provisions) were set aside. [Paras 20]

CENVAT Credit availed for construction-related inputs, input services and capital goods used for the Mall and applied against service tax on renting of immovable property is allowable; the Commissioner's contrary order is quashed.

Applicability of amendment to definition of "input service" effective 1 April 2011 - CBEC clarification dated 29 April 2011 - Temporal nexus of receipt of input services - Amendment to the definition of "input service" effective 1 April, 2011 could not be invoked to deny credit where the input services in question were received prior to 1 April, 2011; the Commissioner failed to examine this aspect and credit could not be denied on that ground. - HELD THAT: - The Tribunal examined the second show-cause period and the appellant's plea that the challenged input services were received before 1 April, 2011. The Commissioner did not investigate or record findings on whether the services were rendered before the effective date of amendment. The CBEC circular dated 29 April, 2011 clarifies that credit on services is available if provision of the service was completed before 01.04.2011. Documentary material (CENVAT register) and the appellant's pleadings showed the services were rendered prior to 1 April, 2011. On that basis the Tribunal held the amendment could not be used to disallow credit for the period in dispute and therefore the denial of credit on this ground could not be sustained. [Paras 21, 22, 23, 24]

The amendment effective 1 April, 2011 does not operate to deny credit where services were received prior to that date; the Commissioner's order rejecting credit on this ground is set aside.

Final Conclusion: The impugned order dated 23 July, 2014 is set aside. CENVAT Credit on inputs, input services and capital goods used in construction of the Mall and utilised for payment of service tax on renting of immovable property is held admissible; the denial based on the existence of an immovable property at an intermediate stage and the invocation of the 1 April 2011 amendment (for services received before that date) cannot be sustained. The appeal is allowed.

Service of decisions, orders by speed post with proof of delivery under Section 37C of the Central Excise Act - Presumption of delivery where postal consignment is not returned - Benefit of doubt in absence of proof of delivery - Time barred appeal under Section 85(3A) of the Finance Act, 1994

Service of decisions, orders by speed post with proof of delivery under Section 37C of the Central Excise Act - Presumption of delivery where postal consignment is not returned - Benefit of doubt in absence of proof of delivery - Time barred appeal under Section 85(3A) of the Finance Act, 1994 - Whether the appeal was time barred in view of presumed service of the adjudication order sent by speed post. - HELD THAT: - The Tribunal examined Section 37C concerning modes of service and the statutory recognition of service by speed post with proof of delivery. Although there is a legal presumption that non return of a dispatched order indicates delivery, the Revenue failed to produce clear proof of delivery. In the absence of such proof, the Tribunal applied the benefit of doubt to the appellant's uncontested assertion that the adjudication order was received on 15.01.2019 and observed that the appeal filed on 21.02.2019 before the Commissioner (Appeals) was within the prescribed period. Consequently the Commissioner (Appeals)'s dismissal as time barred could not stand. [Paras 4, 5]

Appellant's appeal is not time barred; the presumption of delivery could not be invoked in the absence of proof of delivery and benefit of doubt was accorded to the appellant.

Remand for fresh decision on merits - Whether the matter should be remitted to the Commissioner (Appeals) for adjudication on merits. - HELD THAT: - Having set aside the impugned order which dismissed the appeal as time barred, the Tribunal directed that the Commissioner (Appeals) decide the appeal on merits. The Tribunal did not decide the substantive controversies on merit and limited its order to setting aside the time bar dismissal and remanding the matter for fresh consideration by the learned Commissioner (Appeals). [Paras 6, 7]

Impugned order set aside and the matter remanded to the Commissioner (Appeals) for fresh decision on merits.

Final Conclusion: The Tribunal allowed the appeal by holding that, absent proof of delivery of the adjudication order sent by speed post, the appeal was not time barred; the impugned order was set aside and the matter remanded to the Commissioner (Appeals) to decide the appeal on merits.

Cenvat credit - Rule 6(3) of the Cenvat Credit Rules, 2004 - reversal of credit on clearances of waste/scrap - Board Circular No. 1027/15/2016-CX dated 25.4.2016 - ultra vires - precedential effect of Tribunal decision

Cenvat credit - Rule 6(3) of the Cenvat Credit Rules, 2004 - reversal of credit on clearances of waste/scrap - precedential effect of Tribunal decision - Board Circular No. 1027/15/2016-CX dated 25.4.2016 - ultra vires - Whether reversal under Rule 6(3) was exigible on clearance of empty plastic drums and similar waste where Cenvat credit had been availed on inputs - HELD THAT: - The appellant had availed Cenvat credit on inputs (bags and chemicals) delivered in plastic drums, which after use were emptied and sold as waste/scrap. The revenue demanded reversal at 6% under Rule 6(3) for clearances of empty bags/drums/waste for the period in dispute. The Commissioner (Appeals) declined to follow a Tribunal decision relied upon by the appellant on the ground that Board Circular No.1027/15/2016-CX (25.4.2016) was not placed before that Tribunal. The Tribunal noted that the impugned Circular has been declared ultra vires by the Hon'ble Allahabad High Court in M/s Balrampur Chini Mills Ltd. v. Union of India (decision dated 12.4.2019). In view of the Circular being struck down, the distinguishing premise relied upon by the Commissioner (Appeals) fell away. Applying the Tribunal's earlier decision to the present facts, and in the absence of a valid Circular to the contrary, the demand under Rule 6(3) could not be sustained. The appellate order confirming the demand therefore lacked merit and was set aside.

The demand for reversal under Rule 6(3) in respect of sale of empty drums/waste was not sustained; impugned orders set aside and the appeal allowed with consequential relief.

Final Conclusion: The Tribunal allowed the appeal, set aside the orders confirming reversal/demand under Rule 6(3) for the periods in dispute, and granted consequential relief to the appellant in view of the Tribunal precedent and the invalidation of the Board Circular relied upon by the revenue.

Refund of unutilized PLA balance - nature of PLA deposit as not a duty - inapplicability of limitation to PLA deposits - date of cause of action on account of abolition of usability (1 July 2017) - absence of transitional provision for transfer of PLA to GST

Refund of unutilized PLA balance - inapplicability of limitation to PLA deposits - date of cause of action on account of abolition of usability (1 July 2017) - absence of transitional provision for transfer of PLA to GST - Whether the balance lying in the assessee's Personal Ledger Account, which became non-usable with effect from 1 July 2017 on introduction of the GST regime, is refundable and whether the refund claim was barred by limitation. - HELD THAT: - The Tribunal applied the established principle that a PLA deposit is effectively a credit for future duty liability and is not itself a duty under the statute; consequently, limitation provisions applicable to recovery of duties do not govern refund claims of PLA deposits. The refund entitlement arises only when the PLA credit becomes non-usable, which in the facts recorded occurred with effect from 1 July 2017 due to absence of any transitional provision permitting transfer of PLA amounts to the GST accounts. Therefore the cause of action for refund crystallised on 1 July 2017, and an application filed within one year from that date cannot be treated as time-barred on the basis of the original deposit date. Applying these principles to the facts, the Tribunal found no justification to deny the refund on limitation grounds and set aside the orders of the lower authorities.

Refund of the unutilized PLA balance was held admissible; the refund claim was not barred by limitation as the cause of action arose on 1 July 2017, and the impugned orders rejecting the refund on limitation grounds were set aside.

Final Conclusion: Appeal allowed; the order rejecting the refund of the PLA balance on limitation grounds was quashed and the appellant granted consequential relief, the Tribunal holding that PLA deposits are not duties, limitation does not apply and the refund claim arose on 1 July 2017 when PLA became non-usable.

Re-quantification of Cenvat credit - Eligibility of Cenvat credit - Proportionate reversal of Cenvat credit - Remand to adjudicating authority for fresh computation

Re-quantification of Cenvat credit - Eligibility of Cenvat credit - Proportionate reversal of Cenvat credit - Demand in respect of Cenvat credit availed on specified services required re-quantification and fresh consideration of eligibility and proportionate reversal by the adjudicating authority. - HELD THAT: - The Tribunal noted that the adjudicating authority had confirmed a demand relating to Cenvat credit on five categories of services but that the appellant's detailed break-up and calculations, produced in soft copy, differed materially from the figures adopted in the impugned order. The Department contended that the appellant had not placed the complete break-up before the adjudicating authority and that correctness of the appellant's quantification could not be ascertained from the materials on record. Given these conflicting contentions and the need to verify entitlement and the basis for any proportionate reversal, the Tribunal held that the quantification of disputed Cenvat credit must be revisited. The adjudicating authority is directed to examine the available documents, re-determine eligibility of the claimed credit, and recompute the demand taking into account any legitimately claimable proportionate reversal, after affording the appellant an opportunity of personal hearing. [Paras 4]

Matter remanded to the adjudicating authority to re-compute the demand and consider proportionate reversal after hearing the appellant within three months from receipt of the order.

Final Conclusion: The Tribunal did not decide the quantification on merits; the matter is remanded for fresh computation by the adjudicating authority, including a review of eligibility and proportionate reversal of the contested Cenvat credit, with hearing to the appellant and completion within three months.

Permission to file objections to a show cause notice - opportunity of personal hearing - consideration of objections on merits and in accordance with law - time-bound adjudication

Permission to file objections to a show cause notice - admission of evidence and documents with objections - time-bound adjudication - opportunity of personal hearing - consideration of objections on merits and in accordance with law - Petitioner permitted to file objections to the show cause notice and respondent directed to consider and decide the objections within a specified time after affording hearing. - HELD THAT: - The petitioner limited the relief sought to leave to file objections to the show cause notice. The respondent did not press any serious objection to granting that limited relief. In exercise of supervisory jurisdiction the Court granted the petitioner two weeks from receipt of the order to file appropriate objections and permitted the petitioner to produce evidence and documents along with those objections. The respondent was directed, on receipt of the objections, to consider them and pass orders on merits and in accordance with law after affording the petitioner an opportunity of personal hearing. The Court required that the respondent complete this exercise within four weeks from receipt of the objections. [Paras 7]

Petitioner granted two weeks to file objections with evidence; respondent to consider and decide on merits after personal hearing within four weeks of receipt of objections.

Final Conclusion: Writ petition disposed by permitting the petitioner to file objections to the show cause notice within two weeks and directing the respondent to consider those objections, afford a personal hearing and decide the matter on merits within four weeks; no costs.

Classification of goods - common parlance test - accessory versus essential component - tax parity for parts and accessories - computer hardware, software and consumables

Accessory versus essential component - common parlance test - tax parity for parts and accessories - Whether H.P. toner and printer cartridges are parts of a computer printer and therefore taxable at the same rate as the printer - HELD THAT: - The Court applied the common parlance test and considered whether a cartridge is an essential component without which the printer cannot function or is merely a consumable accessory. It observed as a matter of common knowledge that a printer cannot produce printed pages in the absence of a cartridge and is therefore rendered useless without it. Reliance was placed on earlier decisions treating ribbon and toner cartridges as integral to printers and on the engineering function of cartridges (ink delivery/toner generation) that makes them necessary for the printer's operation. The Court held that where items are sold together with the printer and are necessary for its operation, they fall within the classification of the printer rather than the residuary/ancillary entry and accordingly must be taxed at the same rate as the printer. The taxing authority must first determine whether an item falls within a scheduled category; where a consumable is an integral part of the enumerated good, it should not be taxed under the residuary provision but at the rate applicable to the principal good. [Paras 13, 14, 15, 16, 17]

H.P. toner and printer cartridges are part of a printer and are taxable at the same rate as the printer (4%), not under the residuary/ancillary provision.

Final Conclusion: The Tribunal's order upholding taxation of toner and cartridges at the higher rate was set aside; the revision is allowed and the question of law answered in favour of the revisionist.

Illegality of deduction of GST from bid - re-evaluation of defective bids by adding statutory tax - employer/awarder's liability to pay GST - forfeiture of EMD and blacklisting consequences - territorial jurisdiction under Article 226(2)

Territorial jurisdiction under Article 226(2) - Maintainability of the writ petition before the Chhattisgarh High Court despite the NIT being issued from Ranchi. - HELD THAT: - The Court accepted that part of the cause of action arose within Chhattisgarh because the works (construction of roads for Talaipalli Coal Mining Project) and project office were situated in Raigarh and the tender related to work to be performed there. Article 226(2) permits exercise of writ jurisdiction where the cause of action wholly or in part arises within the State. A clause in the NIT conferring jurisdiction on Ranchi would operate only after execution of an agreement confining jurisdiction; no such agreement stage had been reached. Reliance on connecting-factor principles in A.B.C. Laminart and other authorities supports exercise of jurisdiction by this Court. [Paras 13]

The writ petition was held maintainable before the Chhattisgarh High Court.

Illegality of deduction of GST from bid - forfeiture of EMD and blacklisting consequences - Validity of Annexure P/8 which treated the petitioner's quoted amount as inclusive of GST, reduced the bid by deducting GST, branded it abnormally low, and threatened forfeiture of EMD and blacklisting. - HELD THAT: - The Court found that the tender documents required bidders to quote rates excluding GST and to specify the applicable GST in the designated column; payment of GST was the employer's liability under the tender. Given the web-portal's deficiency (single column) and the petitioner's leaving the GST column blank, the Respondents were not entitled to treat the petitioner's quoted amount as inclusive of GST and to deduct GST from that quote. Where a bid is defective as to taxes/duties, the ITB empowered the employer to re-evaluate by adding the omitted amount (clause 23.2.3 and 23.3) rather than reducing the bidder's quoted price. The impugned Annexure P/8 was issued without regard to the petitioner's explanation and the contractual re-evaluation mechanism and therefore was unlawful. [Paras 16]

Annexure P/8 dated 09.01.2020 was set aside as unlawful.

Employer/awarder's liability to pay GST - re-evaluation of defective bids by adding statutory tax - Legal effect of the employer's liability to satisfy GST and the consequence of a bidder not separately specifying GST in the tender. - HELD THAT: - The Court emphasised that the tender clauses (notably clause 12.4 of the ITB and clause 26.2 of the GCC) placed the obligation to satisfy GST on the awarder/employer, and the statutory incidence of tax is fixed. Consequently, whether or not a bidder mentions the rate, the tax liability does not alter the contractual evaluation. If a bid is defective for omission of the GST component, the correct contractual response under the ITB is to re-evaluate the bid by adding the applicable statutory tax to arrive at the evaluated bid price, rather than to reduce or treat the bid as inclusive and penalise the bidder. [Paras 16]

The omission to mention GST did not justify treating the bid as inclusive of GST or penalising the bidder; the employer must re-evaluate by adding the statutory tax where necessary.

Re-evaluation of defective bids by adding statutory tax - Scope of further proceedings: whether the respondents must re-evaluate bids or may retender. - HELD THAT: - The Court, having set aside Annexure P/8, directed that in view of the enabling provisions in the NIT and ITB the Respondents may re-evaluate the bids of all participants (including the petitioner) by adding the GST where appropriate and determine the evaluated bid prices in accordance with clauses 23.2.3 and 23.3 to identify the successful bidder. Alternatively, if the Respondents consider it preferable, they may re-issue the tender with clarifications and proper separate columns to reflect differing GST rates for Section B and Section C. [Paras 17]

The matter was remitted for re-evaluation of bids in accordance with the tender conditions or for re-tendering with appropriate clarifications; finalisation subject to other legal requirements.

Final Conclusion: Writ petition allowed; Annexure P/8 (09.01.2020) set aside. Respondents permitted to re-evaluate the bids by adding the applicable GST in accordance with the tender provisions (or to issue a fresh tender with necessary clarifications) and thereafter finalise the award subject to compliance with the tender conditions and law; no costs.