TaxTMI Updates e-Newsletter
Apr 08,2020

Summary order. Petition listed as fresh on 27.2.2020; learned Standing Counsel directed to examine the contention that the penalty could be imposed only under Section 122 and that the order dated 25.9.2018 ought not to have been passed under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017.

Non-maintainability of revenue appeal under CBDT policy on threshold of tax effect - Application of CBDT Circular No.17/2019 to pending appeals - Judicial acceptance of administrative policy limiting appeals below monetary threshold - Liberty to seek recall or restoration where appeals are wrongly dismissed or fall within exceptions - Dismissal of appeal as non-maintainable

Non-maintainability of revenue appeal under CBDT policy on threshold of tax effect - Application of CBDT Circular No.17/2019 to pending appeals - Judicial acceptance of administrative policy limiting appeals below monetary threshold - Appeal by the revenue is non-maintainable and is dismissed as the tax effect is below the threshold specified in CBDT Circular No.17/2019. - HELD THAT: - The Tribunal applied CBDT Circular No.17/2019 (read with earlier CBDT Circular No.3/2018 and its amendments) which directs non-filing or non-pressing of appeals where the overall tax effect (excluding interest except when interest is itself in dispute) is Rs. 50,00,000 or less. The Tribunal noted that the circular enhances earlier monetary limits and is to be read with the prior circular. The Tribunal also relied on the Supreme Court's treatment of the same circular in Keshav Power Ltd., where the court declined to interfere in a matter involving less than the circular's threshold and left questions of law open. In the facts before the Tribunal the tax effect fell below the prescribed threshold; accordingly, following the principles and authorities cited, the appeal was held non-maintainable and dismissed. [Paras 6, 7, 8, 11, 12]

Revenue appeal dismissed as non-maintainable under the CBDT policy embodied in Circular No.17/2019.

Liberty to seek recall or restoration where appeals are wrongly dismissed or fall within exceptions - Revenue granted liberty to point out appeals wrongly included in the summary dismissal and to seek recall or restoration where exceptions or miscomputations apply. - HELD THAT: - The Department sought and was granted liberty to identify appeals that may be covered by exceptions to the circular or where the tax effect exceeds the monetary threshold due to miscomputation or inadvertent inclusion. The Tribunal accepted that remedial steps may be taken upon such a demonstration and indicated willingness to recall the dismissal and restore the appeal for appropriate verification. [Paras 9, 10]

Liberty granted to the appellant to seek recall and restoration of the appeal upon demonstration of exceptions or erroneous inclusion.

Final Conclusion: Following CBDT Circular No.17/2019 (read with earlier circulars) and the Supreme Court's approach, the Tribunal dismissed the revenue's appeal for Assessment Year 2013-14 as non-maintainable because the tax effect was below the prescribed threshold, while granting the revenue liberty to seek recall/restoration if it demonstrates exceptions or misclassification.

Unexplained investment as income from undisclosed sources - alleged on-money payment and requirement of valuation evidence - valuation by Stamp Duty Authority / Registered Valuer / Valuation Officer as basis for additions - genuineness of loan proved by loan confirmation certificate - direct payment by creditor to seller not vitiating genuineness of loan - addition on account of low drawings for household expenses - re-opening of assessment under section 147/148

Unexplained investment as income from undisclosed sources - alleged on-money payment and requirement of valuation evidence - valuation by Stamp Duty Authority / Registered Valuer / Valuation Officer as basis for additions - Deletion of the addition of Rs. 7,00,000 treated as unexplained investment in purchase of land on account of alleged on money payment. - HELD THAT: - The Tribunal found that neither the Assessing Officer nor the Commissioner (Appeals) produced any material to establish that an on money payment was necessitated by the true market value of the land. No comparison with circle rate, no valuation by the Stamp Duty Authority, no report from a registered valuer and no Valuation Officer's report were placed on record. In absence of any material showing that the true value exceeded the price declared by the assessee, the addition based on alleged on money payment could not be sustained. The deletion was therefore directed having regard to the absence of valuation or other conclusive evidence to support the addition.

Addition of Rs. 7,00,000 as unexplained investment (on money) deleted.

Genuineness of loan proved by loan confirmation certificate - direct payment by creditor to seller not vitiating genuineness of loan - Deletion of the addition of Rs. 4,08,000 treated as unexplained credit despite loan transactions for purchase of land. - HELD THAT: - The assessee produced a Loan Confirmation Certificate from the lender, Mr. Rahul Kalsi, and other records proving identity, capacity and genuineness of the loan transaction aggregating Rs. 12,93,200. The Tribunal observed that there is no legal prohibition on a lender making payment directly to the seller and noted that the Commissioner (Appeals) accepted the genuineness of the remaining loan amount (Rs. 8,13,200) on identical facts. The CIT(A)'s distinction in treating Rs. 4,08,000 differently was inconsistent. In these circumstances, and in absence of material to discredit the lender's certificate or the transaction, the addition was deleted.

Addition of Rs. 4,08,000 as unexplained credit deleted.

Addition on account of low drawings for household expenses - Confirmation of the addition of Rs. 3,24,000 on account of alleged low drawings for household and personal expenses. - HELD THAT: - The addition was founded on an estimate of household expenses at Rs. 30,000 per month. On perusal of the record and having regard to the facts and circumstances, the Tribunal held that the estimate made by the Assessing Officer was not excessive, unreasonable or high pitched. Absent any convincing material to displace that estimate, the Tribunal sustained the addition which had also been upheld by the Commissioner (Appeals).

Addition of Rs. 3,24,000 on account of low drawings confirmed.

Final Conclusion: Appeal partly allowed: additions of Rs. 7,00,000 (on money) and Rs. 4,08,000 (cash deposited via lender) deleted; addition of Rs. 3,24,000 for low drawings confirmed; disposal is for statistical purposes.

Genuineness of creditors and additions under section 68 - remand proceedings and acceptance of remand report - applicability of TDS/40(a)(ia) to payments for printing of leaflets

Genuineness of creditors and additions under section 68 - remand proceedings and acceptance of remand report - Deletion of addition made by the Assessing Officer in respect of sundry creditors held under section 68. - HELD THAT: - The Tribunal examined the remand report furnished by the AO pursuant to directions of the CIT(A) to examine the sundry creditors by issuing summons and recording statements under section 131. The remand report records that statements on oath were recorded of the creditors, documentary evidence relating to transactions and existence of parties was produced, and one creditor's balance was reconciled after correction of a clerical mistake. The Revenue's representative conceded that enquiries were conducted and the AO accepted the genuineness of the transactions in the remand proceedings. On the material before the Tribunal, the AO in the remand report did not sustain the view that the creditors were bogus or that the transactions were not genuine. Having regard to the enquiries carried out, the recorded statements and documentary material accepted in the remand proceedings, the Tribunal found no infirmity in the CIT(A)'s deletion of the additions and confirmed deletion of the amount added under section 68. [Paras 5]

Addition of Rs. 2,75,06,612/- made on account of unexplained creditors deleted; findings of the CIT(A) confirmed.

Applicability of TDS/40(a)(ia) to payments for printing of leaflets - Deletion of addition made on account of failure to deduct TDS on payment for advertisement/printing expenses. - HELD THAT: - The Tribunal considered the nature of the payment for which TDS was not deducted. On the facts, the payment related to printing of leaflets and was treated by the supplier as a sale of goods with VAT charged under the local VAT law. The Tribunal held that such payments were in the nature of purchase of goods and, on these facts, provisions for deduction of tax at source (relied upon by the AO) did not apply. Consequently, no disallowance under the provision relied upon by the AO was warranted. [Paras 6]

Addition of Rs. 98,054/- for want of TDS deleted; ground dismissed.

Final Conclusion: Revenue's appeal dismissed; additions in respect of sundry creditors and the alleged TDS default on printing/advertisement expenses are deleted and the CIT(A)'s order is confirmed.

Unexplained cash credits under section 68 - identity, creditworthiness and genuineness of creditors - matching of bank withdrawals and deposits does not alone establish genuineness - remand for verification and computation of taxable net profit on undisclosed receipts

Unexplained cash credits under section 68 - identity, creditworthiness and genuineness of creditors - matching of bank withdrawals and deposits does not alone establish genuineness - Deletion of addition of Rs. 73,50,000 made under section 68 by the Assessing Officer - HELD THAT: - The Tribunal held that although the assessee identified the person from whom the cash was said to have come and there was numerical matching between withdrawals from the husband's account and deposits in the assessee's account, mere matching does not discharge the assessee's onus under section 68. The Court emphasised that identity, creditworthiness and genuineness are cumulative requirements and that genuineness is decisive where the Revenue has called the transaction into question. In the present case the claim that the amounts were cash loans from the husband to meet business expenditure was not supported by verifiable, demonstrable evidence; no confirmation by the husband on record and no satisfactory nexus or necessity for cash withdrawals was shown. Consequently the Tribunal found that the theory of bona fide cash loan was not established and the CIT(A)'s deletion could not be sustained in full on the basis of mere transaction matching.

The deletion by the CIT(A) of the addition under section 68 is not upheld on the ground of proven genuineness; the assessee failed to satisfactorily prove the genuineness of the cash credits.

Remand for verification and computation of taxable net profit on undisclosed receipts - Course of action to be taken in relation to the undisclosed cash receipts - HELD THAT: - While rejecting the assessee's explanation on genuineness, the Tribunal also recognised that the Revenue did not establish an independent source for the cash receipts nor dispute that the assessee carried on construction business. In such circumstances the Tribunal held it appropriate to treat the cash receipts as undisclosed business receipts and to bring to tax only the net profit thereon. The assessee had reported net profit at 8% in her return and that figure was accepted during assessment proceedings, but the CIT(A) had not made an independent finding. Therefore the matter was set aside to the file of the Assessing Officer with directions to verify the net profit reported by the assessee for the year under consideration and to apply the verified net profit rate to the undisclosed receipts of Rs. 73.50 lakhs to compute the taxable income.

Remand to the Assessing Officer to verify the net profit claimed by the assessee and compute tax on the undisclosed receipts by applying the verified net profit rate; appeal partly allowed in that limited manner.

Final Conclusion: The Tribunal found that the assessee failed to establish the genuineness of the cash credits so as to sustain the CIT(A)'s deletion, but directed remand to the Assessing Officer to verify the net profit rate claimed and to compute tax only on the net profit attributable to the undisclosed receipts; the Revenue's appeal is partly allowed.

Limitation for filing appeals - pre-deposit condition for appellate filing - Imposition of penalty under Section 112(a) of the Customs Act, 1962 - corroboration of co-noticee statements - hearsay evidence and admissibility - onus of proof on Revenue

Limitation for filing appeals - pre-deposit condition for appellate filing - acceptance of initial filing date when registry accepts later - Whether the appeals were barred by limitation and whether the pre-deposit requirement affected timeliness - HELD THAT: - The Tribunal held that the appeals were originally filed within the period of limitation on 23.05.2018 and that the subsequent return by the registry for lack of pre-deposit particulars did not defeat the initial filing date when the appeals were re-filed and subsequently accepted by the Commissioner (Appeals). The appellants thereafter deposited 10% of the penalties before the Tribunal, which encompassed the 7.5% required to be deposited before the Commissioner (Appeals). Consequently the impugned dismissal by the Commissioner (Appeals) as barred by limitation was unsustainable and the appeals were admitted for adjudication on merits. [Paras 2]

Impugned orders dismissing the appeals as barred by limitation set aside; appeals admitted and decided on merits.

Imposition of penalty under Section 112(a) of the Customs Act, 1962 - corroboration of co-noticee statements - hearsay evidence and admissibility - onus of proof on Revenue - Whether penalty under Section 112(a) could be sustained against the appellants on the basis of the material on record - HELD THAT: - The Tribunal found that the revenue's case rested predominantly on statements of co-noticees and third parties which were, in substance, hearsay and were not corroborated by independent documentary or oral evidence. There was no bill of entry, no documentary link in the bill of lading or invoices identifying the appellants as importers, no evidence of remittance to the foreign supplier, and no meaningful investigation of other identified persons whose involvement was alleged. The adjudicating authority impermissibly relied on uncorroborated statements of co-noticees (not tested by cross-examination) to cast the appellants as owners/importers; negative onus was impermissibly attempted to be cast on the appellants to disprove such statements. Absent independent corroboration and in view of the heavy onus on Revenue to establish ownership/importation for imposing penalty under Section 112(a), the imposition of penalty was not justified. [Paras 3, 9, 10, 11, 12]

Penalty imposed under Section 112(a) set aside for lack of admissible and corroborative evidence; appeals allowed on merits.

Final Conclusion: The impugned orders are set aside. The appeals are admitted (original filing date accepted) and, on merits, the penalties imposed under Section 112(a) are quashed for want of admissible and corroborative evidence; appeals allowed with consequential relief.

Limitation by acknowledgement under Section 18 of the Limitation Act, 1963 - non notification of dispute under section 8(2) of the Insolvency and Bankruptcy Code, 2016 - admission of section 9 application and initiation of corporate insolvency resolution process - moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016 - appointment of interim resolution professional

Limitation by acknowledgement under Section 18 of the Limitation Act, 1963 - Limitation objection to the section 9 petition was rejected. - HELD THAT: - The Tribunal examined the dates of alleged last payments and documentary material and found the applicant's bank record showing a credited amount on 6-2-2016. The Tribunal treated the recommendation by the Dean dated 22-12-2018 as an acknowledgement of debt within the period of limitation. Applying the principle that limitation runs from acknowledgement of debt, the Tribunal held the petition filed on 7-6-2019 to be within time and rejected the respondents' contention that the petition was barred by limitation. [Paras 18]

Limitation plea dismissed; petition not barred by limitation.

Non notification of dispute under section 8(2) of the Insolvency and Bankruptcy Code, 2016 - operational debt and employment relationship - There was no pre existing dispute raised under section 8(2) and the Operational Creditor established entitlement to the claimed operational debt as an employee/transfer on the Corporate Debtor's instructions. - HELD THAT: - The Tribunal found that the corporate debtor did not bring to the applicant's notice any dispute within ten days of the demand notice as required by section 8(2). The corporate debtor also failed to produce any termination order or documentary proof that the applicant's employment had been validly terminated; the offer letter permitted transfer of services to other projects and no fresh appointment was produced. On these facts the Tribunal concluded that the operational creditor continued to be an employee/engaged by the corporate debtor (including by transfer to a sister concern) and that the unpaid remuneration constituted operational debt which remained unpaid. [Paras 19, 21, 22]

No notice of dispute under section 8(2); claim of operational debt held admissible and attributable to the corporate debtor.

Admission of section 9 application and initiation of corporate insolvency resolution process - moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016 - appointment of interim resolution professional - The section 9 application was admitted, CIRP was ordered, moratorium declared, and the proposed IRP appointed. - HELD THAT: - Finding that the application was complete, that there was no payment of the unpaid operational debt, that the demand notice had been delivered and no notice of dispute received, and that no disciplinary proceedings affected the proposed IRP, the Tribunal held it was obliged to admit the petition. Consequentially the moratorium under section 14 was directed to operate forthwith. The Tribunal also confirmed the appointment of the proposed interim resolution professional and directed deposit to meet immediate IRP expenses. [Paras 22, 23, 24, 25]

Petition admitted; CIRP initiated, moratorium imposed, and IRP appointed.

Final Conclusion: The Tribunal rejected the limitation and dispute pleas, held that the unpaid remuneration constituted operational debt owing by the corporate debtor, admitted the section 9 petition, directed commencement of CIRP with immediate moratorium, and appointed the proposed interim resolution professional.

Valuation of taxable services under Section 67 of the Finance Act, 1994 - includability of non-monetary consideration / reimbursable expenditure in assessable value - Rule 5 of Service Tax (Determination of Valuation) Rules, 2006 - prospective operation of amendment to valuation provision - negative-list regime and scope of levy on services

Includability of non-monetary consideration / reimbursable expenditure in assessable value - valuation of taxable services under Section 67 of the Finance Act, 1994 - Rule 5 of Service Tax (Determination of Valuation) Rules, 2006 - prospective operation of amendment to valuation provision - Whether the cost of aviation turbine fuel supplied by, or reimbursed by, ONGC to the appellant for operation of helicopters during June 2012 to March 2015 was includable in the taxable value of the charter service - HELD THAT: - The Tribunal examined the statutory scheme of valuation under Section 67 and the scope of Rule 5 in light of the Supreme Court decisions relied upon. It held that prior to the amendment of Section 67 by Finance Act, 2015 (effective 14 May 2015) reimbursable expenditure or supplies by the service recipient did not form part of the value of the taxable service, because valuation must be limited to the gross amount charged by the service provider 'for such service' and cannot be expanded to include amounts not part of the contract consideration. The Tribunal applied the reasoning in the Supreme Court decisions that rules or notifications cannot override or expand the statutory mandate and that the legislature itself amended Section 67 only with prospective effect to bring reimbursable expenditure within valuation. Consequently, Rule 5 could not be read to include the cost of fuel supplied free by the recipient or reimbursed to the provider for the period in question. The adjudicating authority's reliance on inclusion of such fuel in value, and on comparisons with other charter agreements, was held to be inconsistent with the statutory scheme operative during June 2012 to March 2015. [Paras 6, 8, 13, 16]

Impugned order confirming inclusion of ONGC-supplied or reimbursed fuel in assessable value for the period June 2012 to March 2015 is incorrect in law and is set aside; appeal allowed.

Final Conclusion: For the tax period June 2012 to March 2015, the Tribunal set aside the demand that had included aviation turbine fuel supplied or reimbursed by the service recipient in the taxable value of the appellant's helicopter charter services, holding that such inclusion was not warranted under the statutory valuation regime operative prior to the May 2015 amendment to Section 67.

Taxability of manpower recruitment or supply service - support services of business or commerce - taxability of on site deployment versus off site (own premises) provision of services - export of services and non taxability of exports - inclusion of information technology or software service in taxable entries from 16th May 2008 - substance over form in contractual arrangements to determine service tax liability

Taxability of manpower recruitment or supply service - taxability of on site deployment versus off site (own premises) provision of services - substance over form in contractual arrangements to determine service tax liability - Whether consideration charged from four domestic customers for deployment of the respondent's employees working at the respondent's premises is exigible to service tax as manpower recruitment/supply or otherwise taxable service. - HELD THAT: - The Tribunal held that mere monetisation of time spent by the respondent's employees in fulfilling contractual obligations for the four customers, including deployment of staff in a segregated portion of the respondent's premises, does not convert the commercial transaction into a taxable manpower supply or other taxable service. Applying the principle that the nature and substance of the transaction govern taxability, and having regard to authorities which treat retention and management of staff by the service provider as inconsistent with supply of manpower, the Tribunal concluded that the deployed staff were retained and managed by the respondent and the activity amounted to off site or information technology/software activity not exigible to service tax under the facts. The Tribunal rejected Revenue's attempt to characterise routine commercial arrangements as falling within the taxable entry, observing such an extension would exceed legislative intent. [Paras 5, 8, 9]

The receipts from domestic customers for work performed by the respondent's employees at the respondent's premises are not taxable as manpower recruitment/supply or otherwise exigible under the impugned entries; Revenue's appeals in respect of these demands are dismissed.

Support services of business or commerce - inclusion of information technology or software service in taxable entries from 16th May 2008 - export of services and non taxability of exports - Whether the receipts for operation of the respondent's offshore development centre (ODC) or similar offshore/off premises arrangements are taxable as support services of business or commerce or under other entries. - HELD THAT: - The Tribunal treated the ODC contention as an extension of the core question concerning deployment and retention of personnel and held that the same reasoning applies: where the activity in substance is an off site information technology/software service or an export (as conceded for overseas customers after 16th May 2008), it is not exigible to service tax in the circumstances before the Tribunal. The earlier inclusion of IT/software services in the taxable list from 16th May 2008 and the admitted non taxability of exports meant the demands premised on ODC operations and on receipts from overseas customers were not sustainable. The Tribunal therefore accepted the respondent's factual and legal characterisation of the ODC and related receipts. [Paras 3, 4, 5]

The demands founded on operation of the offshore development centre and on receipts treated as exports are not exigible to service tax on the facts; the impugned demands in this respect are set aside.

Final Conclusion: Revenue's appeals are dismissed; the Tribunal finds no merit in treating the respondent's receipts from the specified customers (for employees working at the respondent's premises or through the offshore development centre) as taxable manpower supply or as other exigible services, and accepts that receipts from overseas customers were exports not taxable in the periods under challenge.

Appeal to High Court under section 35G - substantial question of law - service of order / date of receipt - limitation for filing appeal - condonation of delay-limits of appellate power - dispatch register as proof of service

Appeal to High Court under section 35G - substantial question of law - Whether the appeal to the High Court under section 35G involves a substantial question of law warranting admission. - HELD THAT: - Section 35G permits an appeal to the High Court from an Appellate Tribunal order only if the High Court is satisfied that the case involves a substantial question of law. A perusal of the Tribunal's reasoned order (reproduced in the judgment) shows that the Tribunal examined factual matters concerning service of the Order in Original, the dispatch register, receipt of cheques and the consequent delay in filing the appeals, and concluded that the appeals were time barred. The High Court examined the Tribunal's order and found no element in it raising a substantial question of law for determination by the High Court. As the statutory threshold under section 35G is not met, the High Court was not obliged to re open the factual findings or re appraise the limitation determination of the Tribunal for the purpose of admitting the appeal.

The appeal is dismissed as the case does not involve any substantial question of law under section 35G.

Final Conclusion: The petition for special leave under section 35G is dismissed because the reproduced Tribunal order does not disclose a substantial question of law; no interference with the Tribunal's factual conclusion on service and limitation was called for.

National Calamity Contingent Duty - captively consumed goods exemption - treatment of NCCD as surcharge or non-excise levy - applicability of binding Supreme Court precedent - availability of writ remedy against tribunal order where precedent governs

National Calamity Contingent Duty - captively consumed goods exemption - Whether POY produced and captively consumed within the factory was liable to National Calamity Contingent Duty in view of exemption from excise duty. - HELD THAT: - The High Court accepted the petitioners' submission that the ratio of the Supreme Court in Bajaj Auto Limited v. Union of India (2019) governs the present controversy. The court observed that the petition was filed before the Supreme Court judgment and that the dispositive legal principle announced by the Supreme Court was not in dispute between the parties. In light of that binding precedent, the court declined to remit the matter to alternative remedies and applied the Supreme Court ratio to the facts before it. On that basis the court held that the impugned Appellate Tribunal order confirming liability for NCCD could not stand.

Impugned CESTAT order dated 5.7.2018 quashed and set aside; petition allowed insofar as it challenged liability to NCCD for captively consumed POY.

Applicability of binding Supreme Court precedent - availability of writ remedy against tribunal order where precedent governs - Whether the petitioner should be relegated to alternative remedies (tax appeal) or may seek relief by writ where a binding Supreme Court decision directly governs the controversy. - HELD THAT: - The court considered the respondent's submission that the appropriate remedy was a tax appeal. Noting that the Supreme Court's decision was directly applicable and that the petition had been filed before that decision, the High Court exercised its writ jurisdiction rather than requiring the petitioner to pursue alternative proceedings. The court treated the Supreme Court ratio as dispositive and therefore granted relief without remanding the matter for fresh adjudication.

Writ petition entertained and allowed; petitioner not relegated to alternative remedy where binding Supreme Court precedent applies.

Final Conclusion: The petition was allowed: the CESTAT order dated 5.7.2018 was quashed and set aside because the binding ratio of the Supreme Court governs the case, and the petitioner was entitled to relief against demand of National Calamity Contingent Duty in respect of POY captively consumed in manufacture.

Interest on delayed refund of pre-deposit under Section 35FF - pre-deposit under Section 35F treated as amount deposited to pursue appeal (not duty/penalty) - applicability of rate specified in Section 11BB for computing interest under Section 35FF

Interest on delayed refund of pre-deposit under Section 35FF - pre-deposit under Section 35F treated as amount deposited to pursue appeal (not duty/penalty) - Entitlement of the appellant to interest on the pre-deposit amount made under Section 35F when that pre-deposit is ordered to be refunded by the appellate authority. - HELD THAT: - The Tribunal construed Section 35FF (as in force for the relevant period) to mean that amounts deposited by an appellant pursuant to the proviso to Section 35F are deposits made to pursue an appeal, and are not to be equated with duty, interest or penalty. Section 35FF prescribes payment of interest (at the rate specified in Section 11BB) where such deposited amount, ordered to be refunded by the appellate authority, is not refunded within three months from communication of that order. On a plain reading, reference to Section 11BB in Section 35FF serves only to fix the rate for computing interest. Consequently, where an appellate order directs refund of the pre-deposit, the appellant is entitled to interest on that pre-deposit under Section 35FF. Earlier decisions cited by Revenue were found inapplicable because they did not concern refunds of pre-deposits made under Section 35F during appellate proceedings. The Tribunal followed its prior view in Maithan Ceramics Ltd. that such pre-deposits attract interest under Section 35FF. [Paras 7]

Appellant is entitled to interest on the pre-deposit amount under Section 35FF.

Applicability of rate specified in Section 11BB for computing interest under Section 35FF - Computation and quantification of interest payable on the refunded pre-deposit. - HELD THAT: - Although entitlement to interest under Section 35FF was affirmed, the Tribunal did not compute the exact amount itself. The court directed that the adjudicating authority should compute the interest payable, applying the rate specified in Section 11BB as referenced by Section 35FF, and perform the refund computation in accordance with the statutory prescription for the relevant period. [Paras 8]

Matter remitted to the adjudicating authority to compute the interest payable on the pre-deposit in accordance with Section 35FF (with rate as per Section 11BB) and to effect refund.

Final Conclusion: Appeal allowed in part: Tribunal held that pre-deposits made under Section 35F are refundable with interest under Section 35FF (using the rate in Section 11BB) and remitted the matter to the adjudicating authority for computation of the interest and refund.