TaxTMI Updates e-Newsletter
Apr 13,2024

Cancellation of GST registration - service of notice by e-mode - revival of registration - principles of natural justice - personal hearing

Cancellation of GST registration - service of notice by e-mode - revival of registration - Obligation of the petitioner to receive show cause notices on the GST portal after cancellation of registration and the existence of any revival of registration - HELD THAT: - The court recorded that the petitioner's registration under the UPGST Act, 2017 had been cancelled on 6.5.2019 with retrospective effect from 31.1.2019 and that the revenue did not contend that the registration had been revived or that the petitioner had sought revival. In those circumstances the court held that the petitioner was not obliged to visit the GST portal to receive notices issued by e-mode for the period 2017-18. The court also noted that there was no case by the revenue that any physical or offline notice had been issued or served on the petitioner prior to the impugned adjudication order. [Paras 1, 2, 3]

Since registration stood cancelled and there was no revival or physical service, the petitioner could not be deemed obligated to check the portal and could not be treated as having been validly served by e-mode alone.

Principles of natural justice - personal hearing - Whether the adjudication order dated 31.12.2023 complied with principles of natural justice and the appropriate remedial course - HELD THAT: - The court found that essential requirements of natural justice had not been fulfilled because the petitioner had not been effectively served and therefore was denied an opportunity of hearing. In view of these facts the court set aside the adjudication order dated 31.12.2023. The court directed practical remedial steps: treating the impugned order as notice, permitting the petitioner four weeks to submit a final reply, and directing that a fresh order be passed after affording an opportunity of personal hearing, expeditiously and preferably within three months from compliance. [Paras 4, 5]

Adjudication order dated 31.12.2023 set aside for failure to comply with natural justice; matter remitted for fresh consideration after giving the petitioner an opportunity to file a final reply and to be heard personally.

Final Conclusion: Writ petition disposed of by setting aside the impugned adjudication order for breach of natural justice; petitioner to treat that order as notice, submit final reply within four weeks, and the authority to pass a fresh order after personal hearing, preferably within three months.

Refund of IGST - shipping bill deemed as application for refund - zero rated supply - mismatch between GST common portal and ICEGATE portal - limitation under Section 54 - validity and applicability of departmental circular - interest on delayed refund - retention of tax without authority (Article 265)

Refund of IGST - zero rated supply - Entitlement of the petitioner to refund of IGST paid on confirmed exports effected on consignment/exhibition basis for the period July, 2017 to December, 2018 - HELD THAT: - The Court found on undisputed facts that the petitioner exported goods on consignment/exhibition basis, declared confirmed sales on the common portal, paid IGST through available credit, and complied with Customs formalities on re-imports. Applying the statutory scheme, Rules 96 and 96A treat shipping bills as refund applications where required compliances are met. The authorities did not dispute applicability of those rules or the petitioner's compliance. Mere non-alignment of electronic portals or data between Customs (ICEGATE) and GST Common Portal does not extinguish the statutory entitlement to refund where the export and payments were duly recorded and verified by Customs. The departmental refusal to withhold or retain the IGST on account of portal incompatibility was therefore without authority. [Paras 41, 44, 46, 48]

Petitioner entitled to refund of IGST paid on the confirmed exports for the said period; denial on account of portal/data mismatch was unlawful.

Shipping bill deemed as application for refund - Rule 96 and Rule 96A - Whether shipping bills filed by the exporter under the facts would be deemed to be applications for refund under Rules 96 and 96A - HELD THAT: - The Court examined Rules 96 and 96A and noted that the shipping bill is statutorily deemed to be an application for refund when the conditions (export manifest/valid GSTR-3B, Aadhaar authentication, and rectification of any mismatch) are satisfied. The petitioner had furnished required returns and Customs had processed re-imports and bills of entry; respondents did not contend inapplicability of these rules. Consequently the shipping bills presented in accordance with the rules constituted valid refund applications and could not be ignored because of subsequent portal limitations or clarificatory circulars. [Paras 44, 45, 46]

Shipping bills constituted deemed refund applications under Rules 96/96A and conferred entitlement to refund.

Validity and applicability of departmental circular - mismatch between GST common portal and ICEGATE portal - Whether Circular dated 18 July, 2019 could be applied to deny or restrict the petitioner's refund claim for exports made during July, 2017 to December, 2018 - HELD THAT: - The Court held that the circular could not be foisted on the petitioner in respect of the period when the exports were undertaken. The circular, issued after the relevant transactions, could not override or narrow the statutory scheme embodied in Rules 96/96A and Section 16 of the IGST Act so as to defeat an already accrued entitlement. Even on its own terms, when exports had been confirmed, invoices raised, IGST paid and Customs had certified re-imports, the circular did not authorize denial of refund. Portal incompatibilities or later-issued clarifications could not be read into the statute to deprive the petitioner of its refund. [Paras 51, 52, 53]

Circular dated 18 July, 2019 not applicable to the petitioner's refund claims and could not be used to deny the refund.

Limitation under Section 54 - shipping bill deemed as application for refund - Whether the petitioner's refund claim was barred by limitation under Section 54 because a separate refund application under Section 54 was filed belatedly - HELD THAT: - The Court observed that where shipping bills are statutorily deemed to be refund applications under Rules 96/96A and were presented in time, compelling the petitioner to file a fresh application under Section 54 and then rejecting it as time-barred is impermissible. The filing and presentation of shipping bills at the appropriate time could not be ignored to deny the claim on limitation grounds; hence the rejection on that basis was unsustainable in the circumstances. [Paras 47, 51]

Rejection of refund as time-barred under Section 54 was unlawful given that shipping bills constituted timely refund applications under Rules 96/96A.

Interest on delayed refund - retention of tax without authority (Article 265) - Entitlement of the petitioner to interest on the illegally retained refund amount - HELD THAT: - Finding that the IGST was retained without authority in law and that the petitioner's entitlement to refund was clear, the Court applied precedents and statutory principles to award interest. The Court noted decisions awarding interest where refunds were withheld and observed that compensation for unlawful retention is appropriate. The Court directed payment of simple interest at 9% per annum from the date bills for refund were raised until actual payment, with further interest at the same rate if payment was not made within the stipulated period. [Paras 57, 58, 60]

Petitioner entitled to simple interest at 9% p.a. on the refunded amount from the date refund bills were raised until payment, with further interest at 9% if payment is delayed beyond the order's timeline.

Final Conclusion: Writ petition allowed: Circular dated 18 July, 2019 declared not applicable to the petitioner; impugned rejections set aside; respondents directed to refund the IGST amounts paid for the period July, 2017 to December, 2018 with simple interest at 9% p.a., failing which further interest at 9% until actual payment.

Full and true disclosure - jurisdiction of the Settlement Commission under Chapter XIX-A - power to examine matters not covered by the application but referred to in the report - prohibition on revision/withdrawal of application - immunity from prosecution and penalty under section 245H - scope of judicial review of Settlement Commission orders

Full and true disclosure - prohibition on revision/withdrawal of application - Disclosure made before the Income Tax Settlement Commission in respect of the land transaction satisfied the requirement of a "full and true" disclosure. - HELD THAT: - The Court found that the respondent had specifically disclosed the transaction with S.K. Jain in its application to the ITSC, described the nature of the transaction, the reasons why the sale did not fructify and the amounts received/refunded, and thus had not failed to disclose the matter. While an assessee cannot revise an application or resile from its stand so as to evade the prohibition in Section 245C(3), an applicant may legitimately contest the view taken by the tax authorities and invite the ITSC to adjudicate the character of a receipt. The ITSC confronted the conflicting versions, elicited the assessee's unequivocal position and the assessee voluntarily surrendered the amount; the Commission did not record suppression or falsification. Applying the principle that revision of disclosures is impermissible but that taking a contrary substantive position before the Commission to obtain its adjudication is not a forbidden revision, the Court held the statutory test of "full and true" disclosure was met in the present facts. [Paras 25, 26, 27, 28]

The disclosure insofar as the land transaction was concerned fulfilled the "full and true" disclosure requirement and did not vitiate the settlement.

Jurisdiction of the Settlement Commission under Chapter XIX-A - power to examine matters not covered by the application but referred to in the report - The ITSC possessed jurisdiction and statutory power to examine and decide the land-transaction issue and to treat related matters referred in the Principal Commissioner's report even if not expressly covered in the applicant's form. - HELD THAT: - Chapter XIX-A empowers the Settlement Commission to call for the Principal Commissioner/Commissioner's report, direct further inquiry, examine records and "pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report". The statutory scheme therefore permits a holistic examination of the case and confers on the ITSC wide powers to investigate and include in settlement matters arising from the same case/origin. The Court relied on statutory provisions and precedents to conclude that the Commission was entitled to examine the character of the receipt and to incorporate related additions in the settlement order. [Paras 19, 21, 22, 24]

The ITSC lawfully exercised its statutory jurisdiction and powers to examine the transaction and related matters referred by the tax authority.

Immunity from prosecution and penalty under section 245H - scope of judicial review of Settlement Commission orders - The High Court's scope of interference with the ITSC order is narrowly confined and the ITSC's grant of settlement and immunity (having regard to cooperation and disclosure) is not susceptible to broader appellate scrutiny. - HELD THAT: - The Court reiterated the settled principle that judicial review of Settlement Commission orders is limited: interference is permissible only where the Commission's order contravenes statutory provisions, causes prejudice, or is vitiated by fraud, bias or malice, and not as a merits appeal. Where the Commission is satisfied about cooperation and "full and true" disclosure, its decision to grant immunity and to accept voluntary surrender is beyond detailed re-examination by the High Court. Applying these principles to the facts, the Court found no demonstrable contravention of the Act nor any ground of fraud, bias or manifest illegality warranting interference. [Paras 30, 31, 32]

The petitioner's challenge failed; the Court declined to interfere with the ITSC settlement and grant of immunity.

Final Conclusion: The writ petition is dismissed. The Income Tax Settlement Commission's order recording the respondent's disclosures, accepting the voluntary surrender in relation to the land transaction, and granting settlement and immunity was held to be within its statutory powers under Chapter XIX-A and not amenable to interference on the grounds advanced.

Jurisdictional satisfaction under Section 153C - incriminating material having a bearing on the determination of the total income - nexus between seized material and specific assessment year(s) - distinction between Section 153A and Section 153C - abatement consequent to valid Section 153C satisfaction - no cascading/re en blanc reopening of block years

Jurisdictional satisfaction under Section 153C - incriminating material having a bearing on the determination of the total income - nexus between seized material and specific assessment year(s) - Requirement of a prima facie satisfaction by the jurisdictional AO under Section 153C that the material received would have a bearing on the determination of the total income of the other person, identified year wise. - HELD THAT: - The Court held that Section 153C, as amended w.e.f. 1 October 2014, obliges the Assessing Officer of the non searched person to form a satisfaction that the books, documents or assets handed over "have a bearing on the determination of the total income" of that other person for the relevant assessment year(s). This satisfaction is a jurisdictional precondition to issuance of notice under Section 153C and distinguishes Section 153C from Section 153A (where notice to the searched person is mandatory on search). The word "bearing" connotes relevance or practical effect on computation of income; accordingly the AO must identify the assessment year(s) to which the seized material relates or is likely to impact before initiating proceedings and causing abatement. Absent such year wise identification and satisfaction, issuance of Section 153C notices is legally unsustainable. [Paras 40, 41, 43, 44, 67]

The AO must prima facie identify and record satisfaction that the seized material is likely to have a bearing on the total income of specific assessment year(s) before issuing a Section 153C notice.

Distinction between Section 153A and Section 153C - no cascading/re en blanc reopening of block years - abatement consequent to valid Section 153C satisfaction - Whether discovery of incriminating material for one assessment year justifies mechanical reopening/abatement of the entire block of years under Section 153C. - HELD THAT: - The Court emphasised the difference between Sections 153A and 153C. While Section 153A mandates issuance of notice to the searched person and abatement of pending proceedings as a preordained consequence of search, Section 153C requires a separate satisfaction by the jurisdictional AO of the other person that the handed over material "have a bearing" on determination of income for the relevant year(s). Consequently, discovery of incriminating material relating to a particular year does not automatically authorise reopening or abatement of all years in the block; the AO must ascertain which year(s) the material relates to and record reasons if more than one year is implicated. Reliance was placed on binding precedent that completed assessments can be interfered with only if incriminating material relating to those years is found. [Paras 37, 48, 50, 54, 55]

Seizure of material for one year does not produce a cascading right to reopen the entire block; abatement/reopening is confined to those year(s) to which the material is shown to relate.

Incriminating material having a bearing on the determination of the total income - nexus between seized material and specific assessment year(s) - Relief in the present batch of petitions based on application of the above legal principles to the Satisfaction Notes and notices impugned in these petitions. - HELD THAT: - Applying the established principles, the Court examined the Satisfaction Notes and found, in most matters forming the batch, that the notes did not identify or explain how the material seized for particular financial years was likely to impact the determination of total income for the assessment years impugned. The respondents had treated discovery for a particular year as authorising Section 153C action for the entire range of years permissible under the "relevant assessment year" concept without recording year wise satisfaction or reasons. The Court found this approach contrary to precedent and the statutory requirement and concluded that notices issued insofar as they related to the specified assessment years lacked the requisite jurisdictional foundation. Two writ petitions (W.P.(C) 3007/2023 and 3019/2023) were treated as exceptions where the Satisfaction Notes specifically identified material correlative to the impugned assessment years; those petitions were dismissed. [Paras 61, 69, 70, 71, 73]

Impugned Section 153C notices quashed insofar as they relate to the listed assessment years, except W.P.(C) Nos. 3007/2023 and 3019/2023 which are dismissed because the Satisfaction Notes identified material relatable to those years.

Final Conclusion: The writ petitions are allowed and Section 153C notices are quashed insofar as they relate to the assessment years 2013-14 to 2020-21 listed in the chart, on the ground that the jurisdictional satisfaction required under Section 153C (year wise nexus of seized material to the determination of total income) was not recorded; W.P.(C) Nos. 3007/2023 and 3019/2023 are dismissed as the Satisfaction Notes there identified material correlative to the impugned years.

Rejection of books of account as precursor to DVO reference - Reference to Departmental Valuation Officer under Section 142A for valuation where books are rejected - Reliance on DVO report for Best Judgment Assessment - Requirement of prior rejection of books of account - Binding effect of Supreme Court precedent

Rejection of books of account as precursor to DVO reference - Reference to Departmental Valuation Officer under Section 142A for valuation where books are rejected - Requirement of prior rejection of books of account - Assessing Officer's power to refer matter to the Departmental Valuation Officer under Section 142A in the absence of prior rejection of the assessee's books of account. - HELD THAT: - Court held that reference to the Departmental Valuation Officer under Section 142A cannot validly be made unless the books of account have been rejected. The assessee had filed return for the relevant year accompanied by audited books and the Assessing Officer proceeded to make a reference to the DVO without rejecting the books on or before the statutory date; the consequence of rejection arose only after receipt of the DVO report. The High Court applied the binding commentary of the Supreme Court (as reflected in Sargam Cinema) and earlier coordinate decisions which establish that reference to the DVO in the absence of prior rejection of books is impermissible. [Paras 5, 7, 8, 9]

Reference to the DVO was not permissible prior to rejection of the books; such reference was contrary to settled law and could not sustain subsequent adverse action.

Reliance on DVO report for Best Judgment Assessment - Best judgment assessment based on valuation report - Binding effect of Supreme Court precedent - Validity of rejecting books of account and making a Best Judgment Assessment solely on the basis of the DVO's valuation report where books were not rejected before the reference. - HELD THAT: - Court found that the Assessing Officer, acting solely on the DVO's estimate, rejected the books of account only after receipt of the DVO report and proceeded to make a Best Judgment Assessment relying on the DVO's valuation. This course was held to be misconceived because the prerequisite rejection of books was absent at the time of making the reference; reliance on the DVO report in such circumstances cannot justify rejection and assessment. The High Court accepted the reasoning in authoritative precedents that the AO's reliance on the DVO report without first rejecting books is legally unsustainable. [Paras 6, 7, 8]

Addition based on the DVO report and consequent Best Judgment Assessment could not be sustained where the statutory requirement of prior rejection of books was not met; the Tribunal's deletion of the addition was upheld.

Final Conclusion: Both appeals by the revenue were dismissed for lack of merit; the Tribunal's order allowing the assessee's appeal and deleting the addition founded on the DVO report was sustained in view of the settled requirement that books of account must be rejected before a reference to the DVO and reliance on the DVO report for making a Best Judgment Assessment is impermissible otherwise.

Immunity granted by the Settlement Commission - Effect of settlement on pending criminal prosecution - Quashing of prosecution under Section 276CC of the Income Tax Act - Immunity granted under Section 245D(4) of the Income Tax Act - Application of precedent on settlement and immunity

Immunity granted by the Settlement Commission - Effect of settlement on pending criminal prosecution - Quashing of prosecution under Section 276CC of the Income Tax Act - Continuation of complaint and prosecution under Section 276CC notwithstanding immunity granted by the Settlement Commission - HELD THAT: - The Court examined whether proceedings under Section 276CC could continue after the Settlement Commission, in exercise of its power under Section 245D(4), had settled the taxpayer's case and granted immunity from prosecution. The facts show the Settlement Commission allowed the petitioner's application and granted immunity in respect of assessment years covered by its order, and that the complaint for prosecution related to assessment year 2013-14 which was within the settlement period. Reliance was placed on precedents where immunity granted by the Settlement/Settlement Commission, having attained finality, precluded continuation of criminal proceedings; in those cases the complaints were quashed. Applying the same principle, and noting that the Settlement Commission's order granting immunity was passed before framing of charges and has not been reversed, the Court held that continuation of the complaint would amount to misuse of the process of law. The Court further observed that statutory safeguards for non-compliance with Commission's order (as dealt with in the authorities) remain available to the revenue if compliance is in issue, but that on the present record immunity stands and bars the prosecution. [Paras 5, 8, 9]

The complaint, summoning order and charge-sheet proceedings arising under Section 276CC are quashed as barred by the immunity granted by the Settlement Commission.

Final Conclusion: Complaint No.COMA/736/2017, the summoning order dated 27.02.2017, the order framing charges dated 15.12.2022 and all consequential proceedings are quashed in view of the Settlement Commission's grant of immunity; pending applications disposed of.

Characterisation of capital receipt versus taxable income - relinquishment of trusteeship and its legal validity - trustees' right to trusteeship and rule against unilateral renunciation - capital gains computation and cost of acquisition doctrine - validity and sanctity of agreements executed subsequent to search - taxability of reimbursements/contract receipts for construction works - treatment of donations paid to a trust versus income of individual trustees - application of residuary head where specific head (capital gains) applies

Relinquishment of trusteeship and its legal validity - characterisation of capital receipt versus taxable income - capital gains computation and cost of acquisition doctrine - Characterisation and tax treatment of amounts received by trustees as consideration for relinquishment of trusteeship. - HELD THAT: - The Court rejected the Tribunal's conclusion that amounts received by the assessees on en banc relinquishment of trusteeship constituted a capital receipt not amenable to taxation as income. Relying on trust law principles (including the rule that trustees who have accepted the trust cannot renounce it except by court permission, beneficiary consent or express trust-deed power), the Court held that the purported collective resignation/relinquishment for consideration could not be given legal effect merely by agreement. Consequently, the amounts could not be characterised as capital gains exempt from tax because the relinquishment itself lacked lawful foundation. The Court therefore set aside the Tribunal's conclusion on this point and remanded the matter to the Tribunal for fresh consideration in the light of these findings. [Paras 8, 9]

Tribunal's finding that the consideration was a capital receipt is set aside; matter remanded to Tribunal to pass fresh order treating the consideration as assessable to tax in the hands of the assessees in accordance with the Court's view.

Taxability of reimbursements/contract receipts for construction works - validity and sanctity of agreements executed subsequent to search - Whether amounts received by certain trustees as reimbursement/contract payments for construction works were taxable in their individual hands. - HELD THAT: - The Tribunal had found, on the basis of the registered agreement dated 01/06/2010, audited balance sheets of Believers Church and TDS records, that construction activity had in fact been carried out and the payments to the assessees represented contract receipts for construction which were subject to tax as business/professional income. The High Court declined to interfere with these factual findings and the Tribunal's estimation (8% of contract amount) adopted for assessing income from construction contracts. The Revenue's contention that such payments were really consideration for relinquishment was not supported on the record. [Paras 12]

Tribunal's deletion of additions in respect of construction receipts is upheld; the Court refrained from interfering with the Tribunal's factual conclusion that construction activity took place and the payments were contract receipts.

Treatment of donations paid to a trust versus income of individual trustees - Whether donations received by St. Thomas Education Trust (assessed as trust income) were in truth diverted sale consideration taxable in the hands of individual trustees. - HELD THAT: - The Court accepted the finding that the amounts in question were received by the trust and not by the trustees in their individual names. The CIT(A)'s view, upheld by the Tribunal, that the donations received by St. Thomas Education Trust could not be treated as income of the individual trustees was not disturbed. There was no basis on record to treat the trust's receipts as diverted sale consideration of Carmel Educational Trust assessable to the individual trustees. [Paras 16]

Appeals relating to these donations are dismissed; the sums received by the trust are not treated as taxable income of the individual trustees.

Application of residuary head where specific head (capital gains) applies - characterisation of capital receipt versus taxable income - Whether an income that falls within the scope of capital gains (section 14 head E) can be taxed under the residuary head (section 56) when computation under section 48 is not feasible. - HELD THAT: - The Court reviewed the legal principle that income specifically falling under a particular head cannot be taxed under the residuary head; if a receipt is a capital receipt it must be assessed, if at all, under capital gains. The Court noted precedents which hold that where the asset is capable of being acquired at a cost, it falls within capital gains; where cost is inherently incapable of determination, capital gains may not be chargeable. However, in the present cases the High Court's primary finding was that the relinquishment itself was not legally effective, and therefore the Tribunal's reliance on capital gains reasoning was rejected on legal and trust-law grounds. [Paras 11]

Legal principle reiterated that specific heads are mutually exclusive; the Tribunal's capital gains approach was held inapplicable because the foundational act of relinquishment lacked lawful effect.

Validity and sanctity of agreements executed subsequent to search - Validity of certain questions relating to agreements executed after search and related contentions remanded for reconsideration. - HELD THAT: - Several substantial questions raised by the Revenue concerning the sanctity of agreements executed after the search, whether trustees are entitled to compensation for relinquishment of trusteeship, entitlement beyond remuneration, and related contentions were not finally adjudicated on merits by the High Court. The Court explicitly remanded these questions to the Tribunal for fresh consideration in the light of the High Court's legal findings regarding trusteeship and the rule against unilateral renunciation. [Paras 9]

Questions concerning validity of agreements executed post-search and related legal issues are remanded to the Tribunal for fresh consideration.

Taxability of Trust's expenditure where bills/vouchers are not available - book entries versus substantiation by vouchers - Whether creation of an asset in the Trust's books (without contemporaneous bills/vouchers) justified addition to Trust's income. - HELD THAT: - The Tribunal found that the Trust had reflected the construction in its balance sheet and the payments were reflected in the Believers Church accounts and subjected to TDS; accordingly it was held that construction activity had taken place and additions made by CIT(A) in respect of lack of vouchers were deleted. The High Court declined to interfere with that conclusion in appeal by the Revenue. [Paras 19]

Tribunal's deletion of the addition to the Trust's income for lack of vouchers is upheld; the creation of the asset in the balance sheet together with TDS and other corroborative materials sufficed in the record.

Final Conclusion: The Court dismissed the Revenue's appeals in respect of the issues finally decided in favour of the assessees (including appeals concerning construction payments, donations to the trust and the Trust's assessment for AY 2010-11 and AY 2011-12), set aside the Tribunal's finding that consideration for collective relinquishment was a capital receipt, and remanded the questions concerning the legal validity of the relinquishment/agreements and related tax characterisation to the Tribunal for fresh adjudication in light of the High Court's legal findings.

Disallowance under section 14A read with Rule 8D - Limitation of disallowance to exempt income - Non retrospectivity of Finance Act, 2022 amendment to section 14A - Disallowance under section 40(a)(ia) for non deduction of tax at source - Second proviso to section 201(1) - deeming non default where payee files return and pays tax - Remand for verification and fresh adjudication by Assessing Officer

Disallowance under section 14A read with Rule 8D - Limitation of disallowance to exempt income - Non retrospectivity of Finance Act, 2022 amendment to section 14A - Extent of disallowance under section 14A read with Rule 8D for the assessment year under consideration - HELD THAT: - The Tribunal examined the AO's invocation of Rule 8D(2)(iii) to compute a notional expenditure for earning exempt dividend income and the CIT(A)'s confirmation of that disallowance. The Tribunal noted the decision of the jurisdictional High Court in Joint Investments Pvt. Ltd. holding that a disallowance under section 14A read with Rule 8D cannot exceed the exempt income earned. The Tribunal also considered the Revenue's submission about the Finance Act, 2022 amendment to section 14A and, following the jurisdictional High Court's decision in PCIT v. M/s Era Infrastructure (India) Ltd. , observed that the 2022 amendment (introduced to remove doubts) cannot be presumed retrospective and thus is not applicable to AY 2013 14. Applying the jurisdictional precedent, the Tribunal restricted the disallowance under section 14A read with Rule 8D(2)(iii) to the amount of exempt income actually earned by the assessee in the year under consideration. [Paras 7]

Disallowance under section 14A read with Rule 8D limited to the exempt income earned in AY 2013 14 (Rs. 930); ground partly allowed.

Disallowance under section 40(a)(ia) for non deduction of tax at source - Second proviso to section 201(1) - deeming non default where payee files return and pays tax - Remand for verification and fresh adjudication by Assessing Officer - Whether disallowance under section 40(a)(ia) for interest is sustainable or requires fresh adjudication in light of payees' returns/certificates - HELD THAT: - The assessee contested the AO's disallowance under section 40(a)(ia) contending (i) the actual interest paid during the year was lower than the AO's figure and (ii) the payees had accounted for the interest and paid tax, invoking the protective fiction contained in the proviso to section 201(1). The Tribunal recorded that certificates and ledger details were placed on record and referred to the Delhi High Court decisions in CIT v. Ansal Landmark Township P. Ltd. and CIT v. Dr. Jaideep Kumar Sharma , which hold that where the resident payee has filed return disclosing the receipt and paid tax on it, the payer should not be treated as a person in default. Given these precedents and the factual contentions about quantum and certificates, the Tribunal found it appropriate that the Assessing Officer examine the assessee's contentions and the supporting documents afresh after granting the assessee an opportunity of hearing, rather than finally adjudicating the disallowance on the existing record before the Tribunal. [Paras 15]

Grounds 3-3.2 restored to the file of the Assessing Officer for fresh decision in accordance with the Tribunal's observations and after affording the assessee an opportunity of hearing; grounds allowed for statistical purpose.

Final Conclusion: Appeal partly allowed: disallowance under section 14A/Rule 8D restricted to the exempt income for AY 2013 14; disallowance under section 40(a)(ia) remanded to the Assessing Officer for fresh consideration in light of payee certificates and relevant Delhi High Court precedents.

Penalty under section 271(1)(c) - statutory notice under section 274 - omnibus show-cause notice - non-application of mind - vagueness of notice

Penalty under section 271(1)(c) - omnibus show-cause notice - vagueness of notice - non-application of mind - statutory notice under section 274 - Validity of penalty proceedings where the notice did not specify which limb of section 271(1)(c) (concealment or furnishing inaccurate particulars) was invoked - HELD THAT: - The Tribunal examined the penalty notice issued under section 274 read with section 271(1)(c) and found it to be a mechanically issued omnibus notice that did not strike off or otherwise specify the inapplicable limb, thereby failing to inform the assessee of the specific charge. Relying on the full bench decision of the Bombay High Court in Mohd. Farhan A. Shaikh v. ACIT, and the decisions of the jurisdictional High Court in PCIT v. Sahara India Life Insurance Co. Ltd. and PCIT v. Gopal Kumar Goyal, the Tribunal held that penalty proceedings must stand on their own and the assessee must be informed of the grounds of the penalty through a precise statutory notice. An omnibus notice bereft of such specificity betrays non-application of mind and suffers from vagueness, which is fatal in the context of the mandatory penal provision in section 271(1)(c). Applying that principle to the facts, the Tribunal held the penalty order to be invalid and liable to be quashed. As the preliminary legal ground was decided in the assessee's favour, the Tribunal did not adjudicate the merits of the other grounds raised. [Paras 4, 10, 11]

Penalty levied under section 271(1)(c) is quashed as the notice was omnibus and failed to specify the relevant limb; penalty order set aside.

Final Conclusion: The Tribunal allowed the appeal and quashed the penalty levied under section 271(1)(c) on the ground that the notice issued under section 274 read with section 271(1)(c) was an omnibus notice which failed to specify the limb attracting penalty, thereby vitiating the penalty proceedings.

Disallowance of interest under Section 36(1)(iii) of the Income-tax Act, 1961 - commercial expediency doctrine - relevance of allotment letter as date of acquisition for capital gains

Disallowance of interest under Section 36(1)(iii) of the Income-tax Act, 1961 - commercial expediency doctrine - Deletion of proportionate disallowance of interest where assessee had advanced amounts as commercial expediency and reflected same in books - HELD THAT: - The Tribunal examined the facts and records and followed the co-ordinate bench decision in the assessee's own case for an earlier year. The ledger entries and bank current account showed payments and receipts treated as advances/advances towards allotment; no interest was paid to the bank on those specific entries. The assessee had applied the receipts towards purchase/allotment as per mutual terms and had offered receipts to income on cash basis consistent with its accounting method. Applying the settled principle that amounts advanced as a measure of commercial expediency cannot be disallowed under Section 36(1)(iii), and having regard to precedents relied upon, the Tribunal held that the disallowance made by the AO (and confirmed by the CIT(A)) was unsustainable and set aside the addition. [Paras 6]

Ground No. 2 allowed; disallowance of interest deleted.

Relevance of allotment letter as date of acquisition for capital gains - Holding period for capital gains to be reckoned from date of allotment letter (not agreement date) for computation of long term/short term status - HELD THAT: - The Tribunal found revenue did not dispute genuineness of transactions and applied authoritative precedent of the Hon'ble Bombay High Court which, following CBDT circulars, held that where an allotment letter is issued in construction/allotment schemes, the allotment date is the date of acquisition for capital gains purposes. The Tribunal noted that the allotment was final unless cancelled and that instalment payments and possession are subsequent formalities. The Tribunal, respectfully following that precedent (and noting the SLP dismissal), held that the assessee's holding period begins from the allotment date and directed the AO to accept the long term capital loss as declared. [Paras 11]

Ground No. 3 allowed; holding period to be reckoned from date of allotment and long term capital loss accepted.

Final Conclusion: The appeal is allowed: the disallowance of interest under Section 36(1)(iii) is deleted and the holding period for the flat is to be reckoned from the allotment date, with the assessing officer directed to accept the long term capital loss reported by the assessee.

Unexplained money under Section 69A - Regular books of account versus consolidated cash flow statement - Affidavit as evidence to attribute transactions in a joint account - Demonetisation as circumstance explaining increased cash deposits

Affidavit as evidence to attribute transactions in a joint account - Unexplained money under Section 69A - Validity of sustaining addition in respect of cash deposits in the joint Agricultural Kisan Credit (KCC) account - HELD THAT: - The assessee produced an affidavit of his brother asserting that deposits/withdrawals in the joint KCC account related solely to the brother's farming business and that the brother owned the transactions. The CIT(A) sustained the addition without addressing or rebutting that affidavit. The Tribunal found that, in absence of any material on record falsifying the brother's claim and given that the brother had disclosed substantial agricultural income in his return, the CIT(A) could not summarily ignore the affidavit. If the first appellate authority had reservations about the affidavit's authenticity, the proper course was to verify the claim or seek a remand report from the AO. Accordingly, the matter is restored to the file of the CIT(A) for re adjudication after taking cognizance of the affidavit and affording the assessee an opportunity to be heard. [Paras 14]

Addition in respect of deposits in the joint KCC account is not finally sustained in the assessee's hands and is remanded to the CIT(A) for fresh consideration after taking cognizance of the affidavit dated 04.01.2024.

Regular books of account versus consolidated cash flow statement - Unexplained money under Section 69A - Demonetisation as circumstance explaining increased cash deposits - Sustainability of addition in respect of cash deposits in the assessee's own savings bank account - HELD THAT: - The Tribunal examined whether the cash/fund flow statements produced by the assessee amounted to regular books of account; it concluded they were consolidated cash flow statements for three years and could not be treated as regular books of account. On the merits, however, the assessee's returns for the subject and preceding years disclosed substantial agricultural income. Having considered past disclosed agricultural income and the circumstance of demonetisation compelling deposit of Specified Bank Notes, the Tribunal accepted that a portion of the cash deposits could be sourced from current and past agricultural savings. Quantifying conservatively from the disclosed income, the Tribunal held that cash in hand to the extent of Rs.4 lakhs (out of past savings and current agricultural income) could be regarded as available to source the deposits and accordingly reduced the addition. The Tribunal thus partly allowed the ground of appeal. [Paras 13, 15]

Addition in respect of deposits in the assessee's own savings bank account is partly cancelled to the extent indicated; the ground of appeal is partly allowed.

Final Conclusion: The appeal is partly allowed: the addition relating to the joint KCC account is remanded to the CIT(A) for fresh consideration after taking cognisance of the affidavit, and the addition relating to the assessee's own savings account is partly deleted to the extent found to be sourced from disclosed agricultural income and past savings.

Condonation of delay - treatment of cash deposits during demonetisation as unexplained income - application of section 115BBE - appreciation of documentary evidence and burden of proof - estimation by adoption of net profit rate

Condonation of delay - Whether the appeal filed 13 days late ought to be admitted by condoning the delay. - HELD THAT: - The assessee filed the appeal 13 days beyond the statutory period and moved for condonation, citing advanced age, limited education and delay in becoming aware of the NFAC order. The Tribunal weighed technical non-compliance against the imperative of substantial justice, applied the principle in Collector, Land Acquisition v. Katiji and found the reasons in the affidavit to constitute sufficient cause. In consequence, the Tribunal exercised its discretion to condone the delay and admit the appeal for hearing. [Paras 3, 6, 7]

Delay of 13 days condoned and appeal admitted.

Treatment of cash deposits during demonetisation as unexplained income - application of section 115BBE - appreciation of documentary evidence and burden of proof - estimation by adoption of net profit rate - Correctness of the AO's and CIT(A)'s treatment of bank deposits (including deposits during demonetisation) as unexplained income taxed under section 115BBE, and the quantum of addition. - HELD THAT: - The assessing officer treated total bank credits of Rs. 30,42,204 (including Rs. 25,02,500 deposited during the demonetisation period) as unexplained income and applied section 115BBE because the assessee had not filed a return for AY 2017-18 and, in the AO's view, failed to substantiate the entries. The assessee, however, produced earlier return for AY 2015-16 showing capital gains in the preceding previous year 2014-15, bank statements evidencing deposit and subsequent cash withdrawals, ledger cashbook and other documents demonstrating that the demonetisation-period deposits represented unused cash from earlier withdrawals of capital-gain proceeds. The Tribunal found that the lower authorities failed to appreciate these documentary evidences, did not hold them to be bogus, and did not point to specific defects sufficient to reject them. On that basis it concluded that treating the receipts as income of the year under consideration was erroneous. In the interests of justice and having regard to materials on record, the Tribunal adopted an estimation approach and directed that a net profit rate of 10% be applied to the cash deposits of Rs. 25,02,500 (i.e., addition of Rs. 2,50,250), to be taxed under the normal provisions of the Act rather than under section 115BBE. [Paras 18, 19, 20, 21]

Part of the addition confirmed by the AO/CIT(A) set aside; addition restricted to Rs. 2,50,250 (10% of the demonetisation-period cash deposit) and to be taxed under normal provisions, not under section 115BBE.

Final Conclusion: Delay in filing the appeal of 13 days is condoned and the appeal is admitted; on merits the Tribunal partly allows the appeal by disallowing the AO's and CIT(A)'s treatment of the total bank credits as unexplained income taxed under section 115BBE, directing an addition of 10% on the demonetisation-period cash deposit (to be taxed under normal provisions).

Deductibility of transfer expenses/brokerage as expenditure wholly and exclusively in connection with transfer - indexed cost of improvement - computation of capital gains under section 48 - evidentiary requirement - proof of payment and documentary evidence - trade practice and absence of written agreement in real estate brokerage

Deductibility of transfer expenses/brokerage as expenditure wholly and exclusively in connection with transfer - evidentiary requirement - proof of payment and documentary evidence - trade practice and absence of written agreement in real estate brokerage - Claim for deduction of transfer expenses of Rs. 45,00,000/- (brokerage) allowed - HELD THAT: - The assessee produced invoices bearing parties' names, addresses and PANs, and bank statements showing three cheque payments of Rs. 15,00,000/- each. The Assessing Officer conceded that vouchers and bank payments were submitted. The Tribunal accepted the explanation that in real estate practice brokers often act on oral instructions and that absence of a written agreement does not ipso facto defeat deduction where payment and supporting invoices are on record. Applying the principle of section 48 (deduction of expenditure wholly and exclusively in connection with transfer), and having regard to the documentary proof of payment, the Tribunal held the disallowance was unjustified and allowed the grounds challenging the transfer expense disallowance, relying on precedent recognizing brokerage as deductible where established. [Paras 13]

The disallowance of transfer expenses of Rs. 45,00,000/- is set aside and the brokerage claim is allowed.

Indexed cost of improvement - evidentiary requirement - proof of payment and documentary evidence - Disallowance of cash payments of Rs. 31,86,363/- claimed as construction/improvement expenses sustained - HELD THAT: - The assessee claimed construction expenditure incurred in AY 2010-11 and produced partial bank-paid vouchers which were accepted, but sought to substantiate the remaining cash payments to labourers by cash vouchers allegedly signed by the contractor and by asserting funds came from relatives, friends and cash in hand. The Tribunal found material deficiencies: no clear description of the built-up structure in the sale deed, lack of detail about cash disbursements, absence of corroboration of the alleged providers of cash, no bank withdrawals or deposits to trace the cash, and doubtful authenticity of the cash vouchers. The pleas raised later before the Tribunal (such as calling the contractor or departmental valuation) were new and not shown to have been raised before the AO/DRP and thus not entertained. On these facts the Tribunal agreed with the AO/DRP that the cash component was not proved and sustained the disallowance of the indexed amount corresponding to the cash payments. [Paras 14, 15, 16, 17, 19]

The disallowance of Rs. 31,86,363/- (indexed to Rs. 57,43,085/-) as cost of improvement is sustained.

Final Conclusion: Appeal partly allowed: the transfer expenses (brokerage of Rs. 45,00,000/-) are admitted as allowable; the cash component of construction/improvement expenditure (Rs. 31,86,363/-; indexed amount Rs. 57,43,085/-) is not proved and the disallowance is sustained.

Applicability of transfer pricing provisions to specified domestic transactions - Effect of omission of a statutory provision and saving under General Clauses Act - Most appropriate method for determination of arm's length price - Admissibility and evidentiary value of valuation report by an independent valuer - Use of circle rates/stamp duty valuation as benchmark for transfer pricing - Bench-marking of interest on non-convertible debentures/convertible debentures between associated enterprises

Applicability of transfer pricing provisions to specified domestic transactions - Effect of omission of a statutory provision and saving under General Clauses Act - Validity of transfer pricing reference under section 92CA in view of omission of clause (i) of section 92BA - HELD THAT: - The Tribunal examined competing authorities on whether omission of clause (i) of section 92BA w.e.f. 01.04.2017 renders prior proceedings void. Having considered explanatory notes to the Finance Act 2017, the decisions of the Supreme Court in Fibre Boards and Shree Bhagwati Steel, and relevant Tribunal and High Court orders, the Bench concluded that the coordinate Delhi practice of following the Hon'ble Karnataka High Court in Texport (and allied Tribunal decisions) was applicable in this case. The Tribunal distinguished the Mumbai-Bench decision relied upon by Revenue and noted factual and legal differences in the cases relied upon by the Revenue. Applying precedent and principle, the Tribunal held that omission operated to deprive the charging provision of continuing effect for the purpose of proceedings initiated after the omission, and therefore the AO's reference to the TPO and consequent benchmarking exercise in respect of the transaction in issue stood void. [Paras 27, 29, 30, 31]

Additional ground allowed; transfer pricing reference and related benchmarking exercise set aside as void.

Most appropriate method for determination of arm's length price - Admissibility and evidentiary value of valuation report by an independent valuer - Use of circle rates/stamp duty valuation as benchmark for transfer pricing - Whether the valuation by M/s Cushman & Wakefield and the 'other method' adopted by the assessee were appropriate and whether circle rates were the correct benchmark - HELD THAT: - The Tribunal analysed the nature of the transaction (purchase of development rights by a real estate developer) and the statutory scheme governing selection of the most appropriate method under section 92C. It held that the 'other method' (which may take into account quotations or valuation reports where CUP-type comparables are unavailable) could be the most appropriate method for this unique real estate transaction. The Tribunal disagreed with the CIT(A)/TPO's wholesale replacement of the valuer's methodology with state-notified circle rates, observing that circle rates are fiscal minimums for stamp duty and are not necessarily a true reflection of market value in every real estate transaction. The Tribunal found the Cushman & Wakefield report to be prepared on recognised real-estate valuation principles (sales-comparison and DCF) and, on a consideration of the report and sectoral peculiarities, held that the TPO/CIT(A) erred in discarding that valuation and substituting circle rates. [Paras 35, 36, 37, 38, 39]

Valuation by the independent valuer and the use of the 'other method' upheld as the most appropriate method; benchmarking on circle rates rejected; grounds 1 and 3 (and sub-grounds) decided in favour of the assessee.

Bench-marking of interest on non-convertible debentures/convertible debentures between associated enterprises - Comparable selection and percentile approach in CUP benchmarking - Whether the transfer pricing adjustment in respect of interest on CCDs/OCDs was justified - HELD THAT: - The Tribunal considered the TPO's rejection of the assessee's 47 comparables and the CIT(A)'s decision to direct inclusion of the assessee's 47 comparables together with the two comparables identified by the TPO. The CIT(A) computed the 35th and 65th percentiles after adding the two TPO comparables and arrived at a median which made the assessee's coupon rate acceptable. The Tribunal found no infirmity in the CIT(A)'s approach of broad-basing comparables and adopting the median/percentile outcome; the inclusion of the two TPO comparables was not objected to by the assessee and in any event did not overturn the result. The Tribunal therefore sustained deletion of the TPO/AO addition relating to interest. [Paras 42]

Addition in respect of interest on CCDs/OCDs deleted; Revenue appeal on this ground dismissed.

Admissibility and evidentiary value of business expenditure - Allowability of certain business expenditure disallowed by the AO and sustained by the CIT(A) - HELD THAT: - The Tribunal examined the material and observed that the disallowance rested on the AO's view that no business income was earned during the year and that requisite details were not furnished. On perusal of the audited accounts and the nature of expenses (routine business expenses such as insurance, auditors' fees, legal/professional fees), the Tribunal found that the claim appeared prima facie to be routine and connected with business but required verification by the AO. [Paras 41]

Ground restored to the file of the AO for verification; issue remanded for fresh consideration and factual verification.

Final Conclusion: The assessee's appeal is allowed: the Tribunal held the transfer pricing reference and benchmarking in respect of the purchase of development rights to be void in view of omission of clause (i) of section 92BA and upheld the valuation approach adopted by the assessee (Cushman & Wakefield / 'other method') over the TPO's circle-rate benchmark. The TP addition relating to interest on CCDs/OCDs was deleted. The disallowance of certain business expenses is remitted to the Assessing Officer for verification. The Revenue's appeal is dismissed.

Protective addition - over-invoicing of purchases - reliability of statement recorded under Section 132(4) - corroborative material requirement - bench-marking/comparative price analysis

Protective addition - over-invoicing of purchases - Validity of protective addition in assessee's hands corresponding to substantive addition for alleged over-invoicing - HELD THAT: - The Tribunal applied its concurrent findings in the appeals concerning M/s IPCA Laboratories Ltd. (paras 8.6-8.12 reproduced) that the substantive additions for alleged over-invoicing were unsustainable because the primary evidence (statements recorded during search) was factually unreliable and not corroborated by independent material. Given that the AO's substantive addition against the company was set aside for being fundamentally flawed and unsupported, the Tribunal held that the corresponding protective addition made in the hands of the assessee could not stand. The Tribunal therefore upheld the order of the Ld. CIT(A) deleting the protective addition. [Paras 3, 4]

Protective addition deleted; Revenue's grounds dismissed.

Reliability of statement recorded under Section 132(4) - corroborative material requirement - bench-marking/comparative price analysis - Weight to be attached to statements under section 132(4) and permissibility of AO's benchmarking/comparative price exercise to infer over-invoicing - HELD THAT: - Relying on the Tribunal's detailed reasoning in the IPCA matter (paras 8.6-8.12), the Tribunal reiterated that a statement recorded under Section 132(4) is an important piece of evidence but not conclusive; its weight depends on the circumstances and it may be rebutted by showing mistake of fact or absence of corroboration. The Tribunal found the statements in this factual matrix to be based on mistaken understanding (naming of parties) and that the AO's price-comparison exercise was infirm - involving selective data, failure to account for functional/economic differences among vendors, and no legal basis to benchmark prices of unrelated parties to infer over-invoicing without tangible evidence of recoupment. In absence of corroborative material, the AO could not sustain additions based solely on such statements or flawed benchmarking. [Paras 3]

Statements under Section 132(4) cannot be treated as conclusive without corroboration; AO's benchmarking/comparative exercise held unreliable and insufficient to sustain additions.

Final Conclusion: Applying the Tribunal's detailed findings in the related IPCA proceedings, the substantive additions for alleged over-invoicing were found unsustainable and, consequently, the protective additions in the assessee's hands were deleted; all appeals of the Revenue are dismissed.

Validity of revision under section 263 - Deductibility under section 80P of interest from deposits with cooperative banks - Characterisation of cooperative banks vis-a -vis cooperative societies - Binding precedent of the jurisdictional High Court

Validity of revision under section 263 - Binding precedent of the jurisdictional High Court - Revision order passed by the Principal Commissioner of Income-tax under section 263 is sustainable and does not warrant interference. - HELD THAT: - The Tribunal examined the Revision order dated 01.02.2022 under section 263 impugning the assessment for AY 2017-18 and applied the legal position laid down by the jurisdictional High Court in Katlary Kariyana (Gujarat). Having considered the submissions of the parties and the High Court's reasoning that limits the scope of deduction under section 80P in cases where the income arises from investments with entities not qualifying as cooperative societies, the Tribunal found no infirmity in the PCIT's conclusion to invoke revision. The assessee's grounds challenging the legality and opportunity given in the revision proceedings were considered and found not to displace the legal basis relied upon by the PCIT; accordingly the Tribunal rejected the grounds of the assessee and declined to interfere with the revision order. [Paras 6, 7]

Appeal dismissed; the section 263 revision order is upheld.

Deductibility under section 80P of interest from deposits with cooperative banks - Characterisation of cooperative banks vis-a -vis cooperative societies - Binding precedent of the jurisdictional High Court - Interest earned on deposits/FDRs with the cooperative bank in question is not deductible under section 80P where the bank does not qualify as a cooperative society for the purposes of that provision, as held by the jurisdictional High Court. - HELD THAT: - Relying on the Gujarat High Court decision in Katlary Kariyana, the Tribunal recorded that the High Court followed the Supreme Court and earlier authority in holding that interest derived from investments with banks (not being cooperative societies within the statutory and decisional tests) cannot be treated as income deductible under section 80P(2). The High Court also noted legislative amendments and relevant characterisation of cooperative banks which distinguish them from cooperative societies entitled to the special deduction. Applying that binding precedent to the facts of the assessee - whose surplus funds were deposited with a cooperative bank - the Tribunal concluded that the interest income claimed as deductible under section 80P was incorrectly allowed and formed valid basis for the PCIT's revision. [Paras 5]

Interest on deposits with the cooperative bank is not allowable as deduction under section 80P; the revision on this ground is justified.

Final Conclusion: The appeal is dismissed and the revision order dated 01.02.2022 under section 263 is upheld for Assessment Year 2017-18, applying the binding decision of the jurisdictional High Court that interest on deposits with the cooperative bank in the facts of the case is not deductible under section 80P.

Unexplained investment addition - notional rental income - valuation based on market value versus cost incurred as basis for addition - unexplained cash credit / sundry creditors - acceptance of books of account in presence of contractual sub-lease rental provision

Unexplained investment addition - valuation based on market value versus cost incurred as basis for addition - Addition on account of unexplained investment was not justified where AO used market valuation instead of purchase cost declared by the assessee. - HELD THAT: - The Assessing Officer made an addition on the basis of the market value of land and building as per a valuation report, whereas the assessee declared the assets at the purchase price (cost incurred) when the land was acquired in F.Y. 2010-11. The Tribunal found that the purchase price declared in the books represented the cost incurred by the assessee and that the AO erred in treating the market value as the relevant base for making an unexplained investment addition. The Tribunal upheld the CIT(A)'s finding that there was no justification for substituting market value for the purchase cost in making the addition. [Paras 6]

Addition of Rs. 1,65,39,595/- on account of unexplained investment deleted; Revenue's ground dismissed.

Notional rental income - acceptance of books of account in presence of contractual sub-lease rental provision - Addition by treating notional rental income on fair market value of constructed property was not warranted where rent was computed as per sub-lease agreement and supported by nearby market rent. - HELD THAT: - The assessee constructed a building for a school on a leasehold institutional plot and declared rental income computed at 8% per annum as stipulated in the sub-lease deed. Although the AO relied on the valuation report to assert that the market value of the constructed property was much higher and computed notional rent accordingly, the Tribunal accepted that the assessee's rental income computation conformed to the contractual provision and was corroborated by average rents in the vicinity. The Tribunal therefore found no merit in substituting a notional rental value based on fair market value for the rent fixed by agreement and shown in books. [Paras 8, 10]

Addition of Rs. 33,41,966/- on account of notional rental income deleted; Revenue's ground dismissed.

Unexplained cash credit / sundry creditors - acceptance of books of account where no expenditure claimed - Addition on account of sundry creditors/unexplained cash credit was unjustified where assessee's only income was from house property and no expenditure was claimed. - HELD THAT: - The Tribunal noted that the assessee's sole income was from house property and that no corresponding expenditure was claimed which could give rise to sundry creditors or payables warranting disallowance. In view of the nature of the assessee's declared income and absence of claimed expenses, the Tribunal found no infirmity in the CIT(A)'s deletion of the addition made by the AO for sundry creditors/unexplained cash credits. [Paras 11, 12]

Addition of Rs. 74,74,102/- on account of sundry creditors/unexplained cash credit deleted; Revenue's ground dismissed.

Final Conclusion: Revenue's appeal for A.Y. 2013-14 is dismissed in entirety; additions made by the Assessing Officer on account of unexplained investment, notional rental income and unexplained cash credits are deleted and the order of the CIT(A) is upheld.

Amendment of bill of entry under Section 149 of the Customs Act - Appeal under Section 128 not the exclusive remedy for modification of assessment/self assessment - Correction of clerical or arithmetical errors under Section 154 as source of post clearance amendment - Procedure prescribed by Circular No.16/2023 for amendment of bills of entry - Ineligibility of IGST refund under Rule 96(10) of the CGST Rules where import exemption availed

Amendment of bill of entry under Section 149 of the Customs Act - Appeal under Section 128 not the exclusive remedy for modification of assessment/self assessment - Whether amendment of a bill of entry is permissible under Section 149 and whether Section 128 is the only recourse for modification of an assessment/self assessment order - HELD THAT: - The Court held that Section 149 expressly vests a discretion in the proper officer to authorise amendment of documents presented in the customs house, which includes bills of entry. The proviso to Section 149 imposes a condition where amendment is sought after goods have been cleared, but does not oust the power to amend; it permits amendment subject to the condition specified. The Supreme Court's decision in ITC Ltd., as interpreted by the Telangana High Court in Sony India, does not confine modification of an assessment/self assessment order to Section 128 alone; modification may be effected under Section 128 or other relevant provisions such as Section 149 or Section 154. Reliance on these authorities and the statutory language leads to the conclusion that Section 128 is not the sole remedy and Section 149 provides an additional, viable route for amendment of bills of entry. [Paras 12, 13, 17, 18, 19]

Section 149 permits amendment of bills of entry and Section 128 is not the exclusive mechanism for modification of assessment/self assessment.

Correction of clerical or arithmetical errors under Section 154 as source of post clearance amendment - Amendment of bill of entry under Section 149 of the Customs Act - Whether clerical/arithmetical corrections under Section 154 and amendment under Section 149 can be invoked to rectify errors in bills of entry post out of charge - HELD THAT: - A conjoint reading of Sections 149 and 154 shows that customs authorities have jurisdiction to correct clerical or arithmetical mistakes or errors arising from accidental slips or omissions at any time, which includes post out of charge self assessment orders. Authorities may therefore effect corrections or amendments to bills of entry to rectify inadvertent errors (such as incorrect tariff classification or valuation) and consequential reassessment under Section 17(4) would follow. Precedents of High Courts (Bombay, Madras and Telangana) support the view that post clearance amendments/corrections are permissible in appropriate cases and that the proviso to Section 149 governs the condition for amendment rather than prohibiting it outright. [Paras 14, 20, 21, 22]

Sections 149 and 154 taken together permit correction/amendment of bills of entry post clearance to rectify clerical/arithmetic or inadvertent errors.

Procedure prescribed by Circular No.16/2023 for amendment of bills of entry - Ineligibility of IGST refund under Rule 96(10) of the CGST Rules where import exemption availed - Whether Circular No.16/2023 is applicable and permits amendment of bills of entry after payment of IGST and interest, and whether refusal to amend bills of entry despite deposit of IGST and interest was tenable - HELD THAT: - The Court noted that CBIC issued Circular No.16/2023 prescribing a port level procedure to facilitate amendment of bills of entry in cases where IGST/cess was required to be paid for non fulfilment of import conditions; the circular envisages payment through the Customs EDI system, re assessment, and a notional out of charge to enable transmission to GSTN. The petitioners had deposited IGST and, except in one petition where interest remained unpaid, had also paid interest. The respondents had, however, denied amendment to some petitioners while allowing it in other similarly placed cases, without explanation. Having regard to Circular No.16/2023 and the statutory provisions, the Court found the stand of the respondents untenable and directed amendment of the bills of entry upon verification of payment (and payment of interest where outstanding). The Court further recognised Rule 96(10)'s effect on refund eligibility but treated amendment as the means to regularise the position after payment. [Paras 15, 16, 23]

Circular No.16/2023 applies; respondents' refusal to amend bills of entry despite payment of IGST and interest (except where interest remains unpaid) was not sustainable and bills of entry must be amended upon verification/payment.

Final Conclusion: Writ petitions allowed. Respondents directed to amend the bills of entry of the petitioners and to verify the payments of IGST and interest; in the one petition where interest remains unpaid the petitioner is directed to pay interest within 15 days, after which amendment shall be effected.

Parts of aircraft - Prototype - Servicing, repair or maintenance - Replacement and upgradation as constituent of maintenance/repair - Exemption under Notification No.12/2012-CE - Payment of duty and interest before issuance of show cause notice - bar to penalty

Prototype - Parts of aircraft - Exemption under Notification No.12/2012-CE - First imported prototype does not qualify as a part of the aircraft intended for servicing, repair or maintenance and is not eligible for the Notification benefit. - HELD THAT: - The Tribunal accepted the appellant's own admission that the first unit was an engineering prototype tested on a ground rig only and was not fit for airworthy use without further testing and certification. By its nature and admitted purpose-testing and evaluation in designer's lab to verify functionality, mounting and interfaces-the first prototype does not form part of the aircraft for the purposes of the Notification which confers exemption only on parts intended for servicing, repair or maintenance. The Commissioner's denial of exemption in respect of the first prototype is therefore upheld. [Paras 5, 7]

Benefit of the Notification denied qua the first prototype imported vide Bill of Entry No.7362578 dated 11.07.2012.

Parts of aircraft - Replacement and upgradation as constituent of maintenance/repair - Exemption under Notification No.12/2012-CE - Prototype - Second and third imported prototypes are parts of the aircraft intended for replacement/upgradation and are eligible for exemption under the Notification. - HELD THAT: - On the technical material and certification placed on record the Tribunal found that the EFIS units replace conventional electro mechanical instruments and sensors and provide engine, fuel, flight and hydraulic parameters via cockpit displays. The technical write up and the flight clearance certificate establish that these units constitute aircraft parts and have been used/fitted for upgradation and testing in flyable aircraft after requisite airworthiness certification. The Tribunal rejected the Revenue's contradictory stance that treated the goods simultaneously as mere prototypes and yet not parts; having regard to the diagrams, technical write up and certification, the second and third units were held to be parts of the aircraft and eligible for the Notification benefit. [Paras 5, 7]

Benefit of the Notification allowed in respect of the other two imports which are meant for upgradation of the aircraft.

Payment of duty and interest before issuance of show cause notice - bar to penalty - Penalty is not sustainable because differential duty along with interest was paid prior to issuance of the show cause notice. - HELD THAT: - The appellants paid the differential duty and interest before the show cause notice was issued. Applying the legal principle that payment of duty with interest prior to issue of notice precludes imposition of penalty, and having regard to the precedents relied upon and the Karnataka High Court decisions cited, the Tribunal found no reason to sustain the penalty imposed on the appellant. [Paras 3, 6]

Penalty set aside as duty and interest had been paid before issuance of the show cause notice.

Final Conclusion: The appeal is allowed in part: the exemption under Notification No.12/2012 CE is denied for the first prototype (tested only on ground rig) but granted for the second and third imports which the Tribunal found to be aircraft parts used for replacement/upgradation; the penalty is set aside as differential duty with interest was paid before issuance of the show cause notice.

Confiscation of smuggled goods - onus under section 123 of the Customs Act - retracted statements and voluntariness of recorded statements - town seizure and evidentiary requirement to prove foreign origin - limitation for issue of show cause notice - release of seized goods/vehicle and entitlement to sale proceeds with interest

Onus under section 123 of the Customs Act - confiscation of smuggled goods - Whether the appellants discharged the burden to prove that the seized gold formed part of their licit stock so as to defeat confiscation. - HELD THAT: - The Tribunal found that the owner (Mr. TPK) from the outset claimed the seized gold as stock in trade and produced contemporaneous books, stock register entries, GST returns and financial statements. The relevant date for ascertaining stock was the date on which availability was claimed and not a later date compared by the Adjudicating Authority. The records showed the seized quantity accounted for in the books and reflected in the balance sheet. The Adjudicating Authority's comparison with stock as on a later date was held to be misconceived. On these materials the Tribunal held that the appellants discharged the onus under section 123 of the Act and there was no reliable evidence to sustain confiscation on that basis. [Paras 27, 29]

Appellants discharged the onus under section 123; confiscation on the ground that the gold formed no part of licit stock was not sustained.

Retracted statements and voluntariness of recorded statements - town seizure and evidentiary requirement to prove foreign origin - Whether the statements relied upon by Revenue (from the employee and third parties) and the circumstances of seizure furnished reliable evidence of the gold being smuggled foreign-origin metal. - HELD THAT: - The Tribunal observed that key witnesses (Mr. CNR and Smt. Padma Priya) had retracted their earlier statements in replies to the SCN and were not examined by the Adjudicating Authority, leaving retractions un-rebutted. The Tribunal noted the prosecutorial burden to establish voluntariness of statements and that the seized bars lacked standard foreign markings, size and shape; the assay showed irregular weights. Given the town seizure, absence of markings and the retractions, the Tribunal found no independent or corroborative evidence establishing smuggled foreign origin, and that reliance solely on the rebutted statements was impermissible. [Paras 28]

Revenue failed to establish that the seized gold was smuggled foreign-origin metal; the contested statements could not sustain confiscation.

Limitation for issue of show cause notice - Whether the show cause notice issued after more than six months from seizure vitiated the proceedings. - HELD THAT: - The Tribunal found as a fact that the SCN was issued after more than six months from the date of seizure and observed that the delay vitiated the proceedings. No valid extension of time for issuance of the SCN was shown to have been granted by the competent authority. [Paras 30]

Proceedings were vitiated by issuance of the SCN beyond six months; SCN held to be time-barred.

Release of seized goods/vehicle and entitlement to sale proceeds with interest - Relief to be granted in consequence of the findings on merits and procedural infirmity. - HELD THAT: - In view of the findings that appellants discharged the onus as to licit source, the absence of reliable evidence of smuggling, and the procedural defect in issuance of the SCN, the Tribunal allowed the appeals. It directed release of the seized 1431.61 gms of gold to Mr. T. Pavan Kumar or, if already sold, payment of sale proceeds with interest as per rules. Similarly, the owner of the seized vehicle was entitled to release or, if disposed, to sale proceeds with interest. [Paras 31]

Seized gold and vehicle to be released to rightful claimants or, if disposed, sale proceeds to be paid with interest as per Rules.

Final Conclusion: Appeals allowed: impugned adjudication ordering confiscation and penalties set aside; seized gold (1431.61 gms) and vehicle ordered released or, if already sold/disposed, sale proceeds to be paid with interest in accordance with rules; proceedings also vitiated by time-barred SCN.

Interest on delayed refund under Section 18(4) of the Customs Act, 1962 - provisional assessment and finalization under Section 18 of the Customs Act, 1962 - unjust enrichment under Section 18(5) of the Customs Act, 1962 - rate of interest as fixed by Central Government under Section 27A of the Customs Act, 1962

Interest on delayed refund under Section 18(4) of the Customs Act, 1962 - provisional assessment and finalization under Section 18 of the Customs Act, 1962 - rate of interest as fixed by Central Government under Section 27A of the Customs Act, 1962 - Legal effect of Section 18(4) where provisional assessment is finalized: entitlement to interest if refundable amount is not paid within three months from date of final assessment - HELD THAT: - The Tribunal held that upon finalisation of assessment after provisional assessment, a refundable amount under Section 18(2)(a) becomes payable and, if not refunded within three months from the date of the final assessment, interest is payable on the unrefunded amount at the rate notified under Section 27A until the date of refund. The correct temporal trigger for computing the three month period is the date of the final assessment, not the date of filing of a refund claim under Section 27. The rate of interest to be applied is that fixed by the Central Government under Section 27A. [Paras 7, 8]

On finalisation of provisional assessment an assessee becomes entitled to interest under Section 18(4) if the refundable amount is not paid within three months from date of final assessment, with interest at the rate fixed under Section 27A.

Unjust enrichment under Section 18(5) of the Customs Act, 1962 - Applicability of Section 18(5) (unjust enrichment) where the principal refund amount has already been sanctioned - HELD THAT: - The Tribunal noted that where the principal refundable amount has been sanctioned by the proper authority, the statutory bar of unjust enrichment under Section 18(5) does not apply to preclude payment of interest under Section 18(4). This finding rests on the factual position that the principal amount was already sanctioned in the appellant's case. [Paras 7, 8]

Section 18(5) for unjust enrichment is not applicable where the principal refundable amount has already been sanctioned.

Interest on delayed refund under Section 18(4) of the Customs Act, 1962 - Whether the appellant's specific claim for interest was to be adjudicated by this Tribunal or required fresh consideration by the adjudication authority - HELD THAT: - Although the Tribunal articulated the legal entitlement under Section 18(4), it observed that the adjudicating and appellate authorities below had not considered the appellant's plea under Section 18(4). The Tribunal therefore did not decide entitlement on the facts of the appellant's case; instead it remitted the matter to the adjudication authority to consider and decide the appellant's claim for interest in accordance with law and the principles stated, directing that the authority pass appropriate orders within four months of receipt of the final order. [Paras 9]

The appeal is allowed by way of remand to the adjudication authority to consider and decide the appellant's claim for interest under Section 18(4) in accordance with law within four months.

Final Conclusion: The Tribunal held that Section 18(4) entitles an importer to interest on unrefunded amounts not paid within three months of final assessment (at the rate fixed under Section 27A), found Section 18(5) inapplicable where the principal refund was sanctioned, and remitted the appellant's specific claim to the adjudication authority for fresh consideration and appropriate orders within four months; appeal allowed by way of remand.

Unearned increase - restriction on sale/transfer/assignment/parting with possession in perpetual lease - amalgamation and vesting of assets under section 394 of the Companies Act, 1956 - policy instructions governing charging of unearned increase - scope of "transfer" vis-a -vis section 5 of the Transfer of Property Act, 1882

Restriction on sale/transfer/assignment/parting with possession in perpetual lease - amalgamation and vesting of assets under section 394 of the Companies Act, 1956 - unearned increase - Amalgamation resulting in vesting of the transferor's properties in the transferee amounts to a transfer under the lease attracting liability to pay unearned increase. - HELD THAT: - The perpetual lease clause II(4)(a) bars the lessee from selling, transferring, assigning or otherwise parting with possession of the plots except with prior written consent of the lessor and permits the lessor to recover a portion of the unearned increase when consent is given. The Company Court's order sanctioning amalgamation expressly transfers the transferor company's properties to the transferee pursuant to section 394(2) of the Companies Act, 1956. That operative vesting of the specified plots in the transferee falls within the ambit of clause II(4)(a), which covers all categories of transfers and parting with possession and does not exclude transfers effected under orders of the Company Court. The Court relied on the principles articulated in Nalwa Sons Investment Ltd., where identical lease stipulations and the contemporaneous policy instructions were held to attract the unearned increase on vesting by order of the Company Court. The fact that the transfer arose from a sanctioned amalgamation (and not a sale consideration) does not negate the operation of clause II(4)(a) or the lessor's entitlement to recover the prescribed portion of the unearned increase. [Paras 6, 7, 8, 9]

The amalgamation which vested the plots in the transferee constituted a transfer/parting with possession under clause II(4)(a) and attracted liability to pay the unearned increase.

Scope of "transfer" vis-a -vis section 5 of the Transfer of Property Act, 1882 - unearned increase - The definition of "transfer of property" in section 5 of the Transfer of Property Act does not negate the wider transfer/parting with possession liability under the lease clause or operate to protect the appellant from paying the unearned increase. - HELD THAT: - Section 5 of the Transfer of Property Act defines "transfer of property" for purposes of that Act but expressly states that it shall not affect any law relating to transfer of property to or by companies. Clause II(4)(a) of the perpetual lease is drafted widely to cover transfers and parting with possession beyond the narrower statutory definition in section 5. Consequently, the appellant cannot rely on section 5 to contend that the amalgamation did not amount to a transfer attracting the obligations under the lease; section 5 offers no assistance in this context. [Paras 10, 11]

Section 5 of the Transfer of Property Act does not exclude the operation of the lease stipulation; the lease's wider language governs and the appellant is liable for the unearned increase.

Final Conclusion: The appeal is dismissed. The sanctioned amalgamation vested the specified plots in the transferee and therefore attracted the obligation under the perpetual lease to pay the prescribed unearned increase; Section 5 of the Transfer of Property Act does not negate that liability. The deposit earlier made under this Court's interim order may be withdrawn by the respondent-DDA.

Characterisation of a corporate guarantor under the Insolvency and Bankruptcy Code - claim against new promoters/management not converting into a claim against the corporate debtor or making them a financial creditor - inapplicability of Section 140 of the Contract Act, 1872

Characterisation of a corporate guarantor under the Insolvency and Bankruptcy Code - claim against new promoters/management not converting into a claim against the corporate debtor - The appellant is a corporate guarantor and its claim against the second/new promoters/management does not make them financial creditors of the corporate debtor. - HELD THAT: - The Court accepted that the appellant, Skil Infrastructure Limited, stands characterised as a corporate guarantor within the meaning of the Insolvency and Bankruptcy Code. The consequence drawn is that a claim by such a corporate guarantor against new or subsequent promoters/management cannot be treated as creating the status of a financial creditor vis-a -vis the corporate debtor itself. The judgment therefore excludes the attribution of financial-creditor status to the new promoters/management on account of the appellant's claim against them.

Appellant is a corporate guarantor and its claim against new promoters/management does not render those persons financial creditors of the corporate debtor.

Inapplicability of Section 140 of the Contract Act, 1872 - Section 140 of the Contract Act, 1872 is not applicable to the present contention raised by the appellant. - HELD THAT: - The Court held that the plea based on Section 140 of the Contract Act cannot be pressed in the facts of this case and is not applicable. The reasoning adopted treats that provision as irrelevant to alter the legal characterisation or consequences arising from the appellant's status as a corporate guarantor under the insolvency framework.

Section 140 of the Contract Act, 1872 does not apply to the appellant's contention in this matter.

Finality of impugned judgment - The appeal does not merit interference and is dismissed. - HELD THAT: - Having found no sufficient ground to upset the impugned judgment, the Court declined to interfere with the decision under challenge. Consequently, any pending applications connected to the appeal were directed to stand disposed of.

Appeal dismissed; impugned judgment upheld and pending applications disposed of.

Final Conclusion: The Supreme Court dismissed the appeal, upholding the impugned judgment: the appellant is a corporate guarantor whose claim against new promoters/management does not convert those persons into financial creditors of the corporate debtor, Section 140 of the Contract Act, 1872 is inapplicable, and pending applications stand disposed of.

Summary order. Appeal dismissed for delay: the period of delay of 142 days was held to be in excess of the delay which can be condoned under Section 62 of the Insolvency and Bankruptcy Code, 2016.

Secured Operational Creditor - Statutory charge under Section 13 A of the Uttar Pradesh Industrial Area Development Act, 1976 - Interaction of a statutory charge with the Insolvency and Bankruptcy Code, 2016 - Effect of subsequent statutory insertion on pre existing lease rights - Non registration of a charge under the Companies Act is immaterial where charge arises by operation of law

Secured Operational Creditor - Statutory charge under Section 13 A of the Uttar Pradesh Industrial Area Development Act, 1976 - Interaction of a statutory charge with the Insolvency and Bankruptcy Code, 2016 - Classification of Greater Noida Industrial Development Authority as a secured operational creditor by virtue of a statutory charge under Section 13 A of the UPIAD Act and its compatibility with the IBC - HELD THAT: - The Tribunal affirmed the Adjudicating Authority's conclusion that GNIDA is a secured creditor because any amount payable to the Authority under Section 13 constitutes a charge over the property by operation of Section 13 A. The court treated the admitted default in payment of lease rentals prior to commencement of CIRP as triggering the statutory charge. Relying on the Supreme Court's decision in Greater Noida Industrial Development Authority v. Prabhjit Singh Soni, the Tribunal held that non placement of a statutory charge-holder in the class of secured creditors affects its interests under the scheme of the IBC and therefore must be recognised. The Tribunal rejected the contention that Section 14(1) IBC or Section 238 IBC creates an escape from a charge created by virtue of law, holding there is no inconsistency between the UPIAD Act provisions and the IBC so as to displace the statutory charge, and therefore the Authority qualifies as a secured operational creditor. [Paras 16, 29]

GNIDA is a secured operational creditor by virtue of the statutory charge created under Section 13 A of the UPIAD Act and the Adjudicating Authority's declaration to that effect is upheld.

Effect of subsequent statutory insertion on pre existing lease rights - Statutory charge under Section 13 A of the Uttar Pradesh Industrial Area Development Act, 1976 - Whether insertion of Section 13 A after execution of the lease prevents GNIDA from claiming a statutory charge - HELD THAT: - The Tribunal held that the fact that Section 13 A was inserted after execution of the lease deed does not affect GNIDA's claim as a secured creditor. Section 13 A, as inserted by U.P. Act 10 of 2016, provides that amounts payable under Section 13 constitute a charge over the property recoverable as arrears of land revenue or by attachment and sale. The court observed that a statutory charge arises as soon as an amount under the lease becomes payable and that the admitted default in payments satisfies the condition for the charge to subsist irrespective of the timing of the legislative insertion. [Paras 11, 13]

The subsequent insertion of Section 13 A does not defeat GNIDA's statutory charge; the charge operates once amounts become payable and the admission of default establishes its applicability.

Non registration of a charge under the Companies Act is immaterial where charge arises by operation of law - Whether non registration of the charge under Sections 77 78 of the Companies Act affects GNIDA's status as a secured creditor - HELD THAT: - The Tribunal agreed with the Adjudicating Authority that registration under the Companies Act is inconsequential where the charge is created by operation of a statutory provision in another enactment. The court noted that the charge in the present case was created by virtue of Section 13 A of the UPIAD Act and therefore the statutory scheme, not registration under the Companies Act, determines the existence of the charge. Consequently, the objection based on non registration was rejected. [Paras 14]

Non registration of the charge under the Companies Act does not defeat GNIDA's status as a secured creditor where a statutory charge exists under the UPIAD Act.

Final Conclusion: The Tribunal dismissed the appeals, upholding the Adjudicating Authority's order that Greater Noida Industrial Development Authority is a secured operational creditor by virtue of the statutory charge under Section 13 A of the UPIAD Act; the impugned orders approving the Authority's classification are affirmed.

Production of additional documents - relevance of post-filing documents to pending proceedings - interaction between arbitration initiation and insolvency proceedings - effect of superior court observation on admissibility of documents

Production of additional documents - relevance of post-filing documents to pending proceedings - interaction between arbitration initiation and insolvency proceedings - effect of superior court observation on admissibility of documents - Whether the Adjudicating Authority erred in refusing to admit two documents (arbitration petition and Calcutta High Court order dated 13.09.2023) filed after initiation of Section 9 proceedings. - HELD THAT: - The two documents sought to be placed on record - Arbitration Petition No.640 of 2023 and the Calcutta High Court order dated 13.09.2023 - clearly post dated the filing of CP(IB) No.36/CB/2022 under Section 9. The Hon'ble Supreme Court, while dismissing the Special Leave Petition against the High Court order, expressly stated that the impugned arbitration order and its confirmation would not affect the pending proceedings under the Insolvency and Bankruptcy Code, 2016. The Adjudicating Authority noted that although a liberal approach is generally adopted towards applications for production of documents, the present application was 'wholly unwanted' because the additional documents emerged after the main petition was filed, were not relevant to adjudication of the Section 9 petition and, in any event, could not be allowed to undermine or contradict the clear observation of the Supreme Court that arbitration proceedings would not affect the pending IBC proceedings. The applicant also failed to explain how the documents were just and necessary to decide the Company Petition. Having regard to these factors, the Adjudicating Authority's refusal to admit the documents was sustainable. [Paras 11, 12, 13, 14]

The Adjudicating Authority did not err in dismissing IA(IB) No.36/CB/2024; the two post filing arbitration documents were rightly refused admission and the appeal is dismissed.

Final Conclusion: The appeal is dismissed; the Adjudicating Authority correctly refused to receive the two additional documents (arbitration petition and High Court order) filed after initiation of Section 9 proceedings, particularly in view of the Supreme Court's observation that the arbitration order would not affect the pending IBC proceedings.

Approval of Resolution Plan - giving effect to earlier adjudicating authority order - treatment of a foreign arbitral award-holder as other creditor - allocation of claim under Resolution Plan - mootness of challenge to pre-existing order consequent to plan approval

Approval of Resolution Plan - giving effect to earlier adjudicating authority order - mootness of challenge to pre-existing order consequent to plan approval - Whether the appeal challenging the Adjudicating Authority's order dated 30.11.2023 required adjudication after approval of the Resolution Plan which gave effect to that order. - HELD THAT: - The Tribunal recorded that the Resolution Plan approved on 04.01.2024 expressly reflected the admitted claim of the respondent and allocated a specific amount under the approved plan, thereby giving effect to the Adjudicating Authority's order dated 30.11.2023. Having noted that the impugned order has been implemented in the approved Resolution Plan and upheld in the related appeal proceedings, the Tribunal held that there was no occasion to re-open or decide the challenge to the earlier order in the present appeal. Accordingly, the Tribunal declined to enter upon the substantive contentions whether the Adjudicating Authority was right in partly allowing the application of the respondent, because the approval and implementation of the Resolution Plan rendered the challenge academic for the purposes of this appeal.

Appeal dismissed on the ground that the approved Resolution Plan gave effect to the impugned order, making further adjudication of that order unnecessary.

Final Conclusion: The appeal by the Resolution Professional is dismissed because the Resolution Plan approved on 04.01.2024 implemented the Adjudicating Authority's order of 30.11.2023 (including admission and allocation in respect of the respondent's claim), rendering the challenge to that order unnecessary to adjudicate.

Liquidation Value - Inter-Creditor Agreement - RBI Prudential Framework for Resolution of Stressed Assets, 2019 - cut-off date for the resolution process - binding effect of majority decision under ICA/RBI Circular (75% by value and 60% by number) - treatment of dissenting lenders

Liquidation Value - cut-off date for the resolution process - RBI Prudential Framework for Resolution of Stressed Assets, 2019 - Date on which the Liquidation Value for distribution to creditors must be computed and whether the Liquidation Value computed as on 30.09.2018 (cut off linked to the Tribunal's earlier order) is valid. - HELD THAT: - The Tribunal held that the cut off date for the resolution process had already been fixed by its earlier order (15.10.2018 treated as initiation of the resolution process) and that the Liquidation Value computed by the Lead Bank based on the cut off (30.09.2018 valuation) was not erroneous. The RBI Prudential Framework and the ICA require that the Resolution Plan provide for payment not less than the Liquidation Value to dissenting lenders and envisage an ICA providing majority decision making rules; they do not mandate a later valuation date in these circumstances. The Lead Bank had obtained valuer reports, engaged a third valuer to reconcile differences, and communicated the resultant Liquidation Value to lenders. The applicant's contention that Liquidation Value should be computed as on a later date (such as 31.03.2023 or date of MRA) was held to be without basis in the facts and orders of the case. [Paras 12, 14, 16]

Liquidation Value as assessed for 30.09.2018 is valid and binding; Lead Bank was not in error in using that valuation date.

Inter-Creditor Agreement - binding effect of majority decision under ICA/RBI Circular (75% by value and 60% by number) - treatment of dissenting lenders - Whether the applicant (SBI) can resist implementation of the Restructuring Plan or seek a different valuation yardstick notwithstanding approval by the requisite majority of lenders. - HELD THAT: - The Tribunal observed that the ICA and the RBI Circular provide that decisions by lenders representing 75% by value and 60% by number are binding on all lenders. A resolution plan approved by the requisite majority (94.21% in this case) is therefore binding on the applicant. The MRA and the Restructuring Plan implemented in accordance with the majority decision, including the Liquidation Value computed as above, cannot be set aside or re computed at the instance of the dissenting lender merely because it prefers a different valuation date. The applicant remained entitled to register consent or dissent but could not claim a different statutory yardstick to frustrate the majority decision. [Paras 10, 12]

The Restructuring Plan and its Liquidation Value, having been approved by the requisite majority, are binding on SBI; SBI cannot insist on a different valuation date to avoid the majority decision.

Liquidation Value - Inter-Creditor Agreement - Disposition of the three applications filed by SBI (IA No.3730 of 2023, IA No.4453 of 2023 and IA No.5112 of 2023). - HELD THAT: - Given the Tribunal's findings that (a) the Liquidation Value communicated by the Lead Bank based on the cut off date is not erroneous and (b) the Restructuring Plan approved by the requisite majority is binding, the applications seeking interim distribution, directions to provide a different liquidation value, or stay of payouts pending a fresh valuation have become infructuous or unsustainable. The factual record showed valuers' reports were obtained and the valuation process was discussed and communicated to lenders in Joint Lenders' meetings. [Paras 17]

IA No.3730 of 2023 and IA No.4453 of 2023 are dismissed as infructuous; IA No.5112 of 2023 is dismissed.

Final Conclusion: The Tribunal affirmed that the Liquidation Value computed with reference to the previously fixed cut off (30.09.2018) is valid; the Restructuring Plan approved by the requisite majority of lenders is binding on the applicant; accordingly the three applications filed by SBI are dismissed (two as infructuous and one on merits).

Sovereign functions of local authority - renting of immovable property - taxability of public amenities - accrual basis of recognition for taxable value - suppression of facts with intent to evade - extended period of limitation - remand for verification and redetermination

Sovereign functions of local authority - taxability of public amenities - renting of immovable property - Whether fees/charges for markets, bus stands, vehicle stands, slaughter houses and comfort stations rendered by the municipal corporation are taxable - HELD THAT: - The Tribunal accepted that the activities (public health and sanitation, public amenities including street lighting, parking lots, bus stops, public conveniences, regulation of slaughter houses and tanneries) fall within the functions entrusted to the municipality under Article 243W and the Twelfth Schedule and are sovereign functions of the local authority. It observed that where such services are public amenities rendered in discharge of constitutional/municipal functions, they are not taxable as "renting of immovable property" even if delivered through licensees or intermediaries. The Commissioner's finding that some licences operated the facilities as business ventures was considered, but the Tribunal agreed with earlier authorities and accepted that the civic nature of these services precludes their classification as taxable renting of immovable property for the municipality's acts in providing these sovereign services. The Tribunal, however, noted that where service tax had actually been collected by the appellant from licensees, such collected tax must be deposited with the tax authorities.

Demands in respect of the listed public amenities set aside as not taxable; where service tax was collected by the appellant it must be deposited.

Renting of immovable property - suppression of facts with intent to evade - Whether amounts received/retained from telecom agreements for permitting laying of cables are taxable and whether extended period of limitation applies - HELD THAT: - The Tribunal examined the agreements with the telecom company which showed that portions of the payments were retained by the appellant for renovation, supervision and installation services and were not recorded in the income and expenditure statement or advanced accounts. The agreements therefore established that part of the monies constituted consideration for services rendered and not merely refundable deposits. Non-disclosure of these receipts in the appellant's accounts amounted to suppression of facts for the purpose of invoking extended limitation; accordingly the demand of service tax in respect of these telecom transactions was upheld, including for periods beyond the normal limitation.

Service tax demand on telecom-related receipts upheld; extended period of limitation sustained for those transactions.

Accrual basis of recognition for taxable value - Point of Taxation Rules - Whether the Commissioner's methodology of arriving at taxable value by using the income and expenditure statement and advanced accounts (accrual basis) is appropriate - HELD THAT: - The Commissioner reworked taxable value on the basis of incomes recognised on an accrual basis as reflected in the income and expenditure statement and the advanced accounts, rejecting the Revenue's initial reliance on credit transactions in the trial balance. The Tribunal found no infirmity in this approach, noting that the Commissioner had considered the accounting system (including municipal accounting software) and correctly adopted accrual-basis recognition consistent with the Point of Taxation Rules and accounting principles to determine taxable value. The appellant's contention that the Commissioner traversed beyond the show-cause notice was not accepted because the Commissioner had considered and corrected the methodology relied upon in the notice.

Commissioner's methodology of using accrual-based income and expenditure and advanced accounts to determine taxable value upheld.

Suppression of facts with intent to evade - extended period of limitation - remand for verification and redetermination - Whether extended period of limitation is invocable for the remaining demands and whether remand for redetermination is required - HELD THAT: - Relying on the principle that suppression (to invoke extended limitation) requires proof of deliberate non-disclosure with intent to evade duty, the Tribunal found no material on record to establish such intent in respect of demands other than the telecom receipts. The Commissioner's allegation amounted to incorrect assessment of taxable value rather than deliberate suppression. Consequently, the Tribunal set aside invocation of the extended period for those demands and restricted adjudication to the normal period. The Tribunal also recorded factual errors and duplication/overlaps pointed out by the appellant and remanded the matters (except telecom) for redetermination of tax based on the Tribunal's observations, directing consideration of the appellant's written submissions and to afford an opportunity of hearing before finalisation. All penalties were set aside.

Extended period set aside except for telecom transactions; matters remanded for redetermination on the normal limitation period with opportunity to be heard; penalties quashed.

Final Conclusion: Appeal allowed in part: demands relating to municipal public amenities set aside as not taxable (collected tax, if any, to be deposited); service tax demand on specified telecom agreements upheld (extended limitation sustained); Commissioner's accrual based valuation method upheld; remaining demands are barred from extended limitation and remanded for redetermination on the normal limitation period with factual errors and alleged duplications to be considered and an opportunity of hearing afforded; all penalties set aside.

Exemption for site formation and clearance in the course of construction - liability of a sub-contractor to pay service tax despite main contractor discharging tax - penalty under Section 78 - proviso reducing penalty to 50% effective from 08.04.2011 - appropriation under Section 73A(2) - recalculation/remand for quantification of demand

Exemption for site formation and clearance in the course of construction - liability of a sub-contractor to pay service tax despite main contractor discharging tax - appropriation under Section 73A(2) - recalculation/remand for quantification of demand - Whether the adjudicating authority was correct in dropping the demand of Rs.87,14,512/- - HELD THAT: - The Tribunal held that for the post-01.07.2012 period the adjudicating authority correctly concluded that the respondent's services of excavation and site preparation fall within the exemption in S. No.13(a) of Notification No.25/2012 and are not leviable to service tax. For the period prior to 01.07.2012, however, there was no express exemption for the respondent's standalone excavation/site-preparation contracts; the exemption in Notification No.17/2005 applies only where such activities are "in the course of construction" of the listed public utilities. The Tribunal relied on contract particulars and precedents to conclude that pure excavation/site-formation contracts do not constitute construction covered by the notification, and that a sub-contractor remains liable to discharge service tax even if the main contractor has paid tax on the overall contract, the main contractor being entitled to CENVAT credit under the rules. The adjudicating authority had appropriated Rs.53,31,429/- collected from service recipients and deposited under section 73A(2); in view of that appropriation the matter is remanded to the adjudicating authority to recompute the respondent's service-tax liability for the pre-01.07.2012 period, taking into account amounts already paid and deposited. [Paras 6, 7, 11]

Part of the demand was rightly dropped for the post-01.07.2012 period; for the period prior to 01.07.2012 the respondent was liable to pay service tax and the matter is remanded for recalculation of the demand after adjusting the amount appropriated under section 73A(2).

Penalty under Section 78 - proviso reducing penalty to 50% effective from 08.04.2011 - recalculation/remand for quantification of demand - Whether imposition of 50% penalty under Section 78 of the Finance Act, 1994 was correct - HELD THAT: - Section 78(1) prescribes penalty equal to the amount of service tax evaded, and a proviso reduces penalty to 50% only where true and complete details are available in specified records. The Tribunal noted that the benefit of the proviso is available only with effect from 08.04.2011; consequently, imposition of 50% penalty for periods prior to 08.04.2011 was incorrect. The Tribunal directed recalculation of the penalty under Section 78 in accordance with the temporal applicability of the proviso and after taking into account amounts already appropriated/deposited. [Paras 12, 14, 15]

Imposition of 50% penalty for periods prior to 08.04.2011 was erroneous; penalty and related demand are to be recalculated by the adjudicating authority in accordance with the proviso's effective date and after adjustment of appropriated amounts.

Final Conclusion: The appeal is allowed in part: the Tribunal upheld exemption for the post-01.07.2012 period but held the respondent liable for service tax for the period prior to 01.07.2012; the matter is remanded to the adjudicating authority for recomputation of service-tax liability and penalty under Section 78, taking into account amounts already appropriated/deposited and the proviso to Section 78 effective from 08.04.2011.

Commercial or Industrial Construction Service - Works Contract Service - Composite contract - Separate activity / bifurcation of contract value - Taxability of road construction - CBEC Circular No. B-1/6/2005-TRU dated 27.07.2005 - para 14.5 - Bona fide belief and extended period

Composite contract - Separate activity / bifurcation of contract value - Taxability of road construction - CBEC Circular No. B-1/6/2005-TRU dated 27.07.2005 - para 14.5 - Whether the consideration for construction/strengthening of the road formed part of the gross taxable value as being a component of a single composite contract or was a separately identifiable and excluded activity - HELD THAT: - The Tribunal examined the contract terms and commercial context and concluded that the contract between the appellant and M/s LPGCL identified the improvement and strengthening of the road from Lalitpur NH to the project site as a distinct segment within Clause 3.1 and that Clause 5.1 contemplated valuation by reference to sub contract values (sub contractor's order value plus 7.5% markup) for specific works. The appellant had in fact subcontracted the road work and produced the sub contract invoices and tax invoices raised to the principal. On this basis the Tribunal held that the parties regarded the contract as capable of vivisection into component works and that the road work was separately identifiable and valued. Consequently para 14.5 of the CBEC Circular, which applies where a single contract does not recognize road construction as a separate activity, was not attracted. The Tribunal further observed that the question whether the road was for public use or private use was not material to the contractual characterisation; possession/ownership evidence (PWD certificate) was noted but not decisive. The lower authorities' conclusion that the contract was indivisible and hence the road element was taxable was reversed because there was no finding that the total contract value had been determined solely by the lump sum cap in Clause 5.1 (i.e. restricted to the capped figure), and the contractual scheme and documentary evidence supported segregation of the road work. [Paras 8, 11, 16, 20, 21]

The finding of the lower authorities that the contract was a single composite contract and that the value of road construction was includible in gross taxable value is set aside; the road construction was a separately identifiable activity and not taxable as part of a composite works contract under the circumstances of this contract.

Final Conclusion: The Tribunal allowed the appeal, set aside the impugned order, and held that the road construction/strengthening was a separately identifiable component of the contract (capable of valuation by reference to the subcontract) and therefore para 14.5 of the Board's Circular was not applicable; the demand and related conclusion of composite contract were quashed.

Business Auxiliary Service - Business Support Service - commission agent - extended period of limitation - penalty for non-payment of service tax

Business Auxiliary Service - commission agent - Whether the incentives/commissions received by the dealer amount to consideration for a taxable service under Business Auxiliary Service. - HELD THAT: - The Tribunal examined the statutory definitions of Business Auxiliary Service as in force during the relevant periods and applied them to the appellant's activities. It found that the appellant was not promoting or marketing services of the client (MUL); commission was received from MUL and not from the bank; and MUL had communicated that it had discharged the applicable service tax. The Tribunal also noted established authority holding similar dealer income not taxable as business auxiliary service. Applying these findings to the definitions, the activities did not fall within the scope of Business Auxiliary Service, and therefore the demand framed under that head was unsustainable. [Paras 7, 10]

Demand of service tax under Business Auxiliary Service set aside.

Business Support Service - Whether the impugned services should instead be taxed as Business Support Service for the periods in dispute. - HELD THAT: - The Tribunal noted the distinction in statutory coverage and amendments bringing Business Support Service under tax at later dates. It observed that even if some activities might conceptually fall within business support, the statutory entry bringing such services into taxability applied from dates after the tax periods in issue (notably w.e.f. 01.05.2011), and therefore could not sustain tax demands for the periods before that date.

No taxability under Business Support Service for the periods adjudicated.

Extended period of limitation - penalty for non-payment of service tax - Whether the Department validly invoked the extended period of limitation and whether penalties could be sustained. - HELD THAT: - The Tribunal found the demands were raised on the basis of departmental audit without evidence of deliberate suppression, fraud, collusion, or positive act to evade tax. The appellant had filed returns, been subject to audit, and the dispute chiefly involved interpretation of statutory provisions. Relying on precedent that extended limitation cannot be invoked for audit-based demands or pure interpretation issues, the Tribunal held the substantial demand lay beyond limitation. In consequence, imposition of penalties did not arise once the demand itself was annulled. [Paras 11, 12]

Extended period could not be invoked; penalties held not to arise in view of unsustainable demand.

Final Conclusion: All three appeals allowed; impugned orders confirming service tax demands and penalties set aside, with consequential relief as per law.

Continuous supply of service - point of taxation - proviso to Rule 3 of the Point of Taxation Rules - determination of taxable value under section 67 read with the Service Tax (Determination of Value) Rules, 2006 - addition of notional profit to cost for valuation - best judgment assessment - extended period of limitation - invoice/milestone as event of completion

Continuous supply of service - point of taxation - invoice/milestone as event of completion - proviso to Rule 3 of the Point of Taxation Rules - Whether the point of taxation was triggered during the disputed periods where the contract provided that payment and invoice arise only on achievement of the milestone of production and delivery of oil/gas to ONGC. - HELD THAT: - The Tribunal found as an admitted fact that during the disputed periods the contractual milestone entitling the contractor to raise invoice - production and delivery of crude oil/gas to ONGC - was not achieved and no invoice was raised nor consideration received. Under the definition of continuous supply of service and the proviso to Rule 3 of the Point of Taxation Rules, where a continuous service contract specifies completion of provision of the whole or part of service by reference to completion of an event which requires the receiver to make payment, the date of completion for taxation purposes is the date of that event. Reading the Rules and the contract (Article 15) together, the Tribunal held that the date of completion for point of taxation was the contractual event (supply/delivery) which had not occurred in the periods under dispute; accordingly the point of taxation had not been triggered and no output service tax liability arose for those periods. [Paras 17, 18, 21, 22, 32]

Point of taxation not triggered during the disputed periods; no service tax liability for output service as milestone/event for invoice and payment was not achieved.

Determination of taxable value under section 67 read with the Service Tax (Determination of Value) Rules, 2006 - addition of notional profit to cost for valuation - Whether Revenue could determine taxable value by treating consideration as not ascertainable and valuing the service by cost plus a notional profit (10%) under Rule 3(b) in the facts of this case. - HELD THAT: - Revenue treated consideration as not ascertainable and applied Rule 3(b) to determine value by taking cost of provision plus notional profit of 10%. The Tribunal held this approach contrary to the proviso to Rule 3 of the Point of Taxation Rules because the contractual event determining completion (and thereby consideration) had not occurred. In that factual matrix the invocation of section 67 and Rule 3(b) to compute a taxable value for the output service was held erroneous. The Tribunal also held that addition of a notional profit @10% was contrary to law in the circumstances where the point of taxation had not arisen and the contract expressly fixed consideration contingent on delivery/production. [Paras 16, 20, 26, 32, 33]

Determination of taxable turnover by section 67 read with Rule 3(b) and addition of notional profit of 10% is unsustainable in the facts; the valuation adopted by Revenue is erroneous.

Best judgment assessment - Whether the impugned orders made by way of best judgment assessment were valid given that the assessee maintained records, was registered and had filed returns. - HELD THAT: - The Tribunal noted that the appellants maintained proper books of account, were registered with the department and had filed ST-3 returns and paid tax under reverse/partial charge where applicable. In that admitted factual position the impugned orders, being in the nature of best judgment assessments based on audit reports without adequate verification, were held to be bad. The Tribunal observed that best judgment assessment is not warranted where records and returns are maintained and available for scrutiny and no concealment or suppression is established. [Paras 5, 28, 33]

Impugned orders in the form of best judgment assessment are bad and set aside.

Extended period of limitation - Whether the extended period of limitation was invokable by Revenue in the facts of the case. - HELD THAT: - Revenue invoked the extended period alleging suppression and failure to file returns for periods prior to 01.07.2012. The Tribunal found no material to satisfy the conditions precedent for invoking extended limitation - appellants had registrations, maintained books, filed returns (where applicable) and there was no finding of deliberate concealment or fraud. On these admitted facts the extended period could not be validly invoked. [Paras 10, 29, 34]

Extended period of limitation not available to Revenue; demands barred to the extent made beyond the ordinary period.

Final Conclusion: Appeals allowed. The impugned adjudication orders confirming service tax demands, valuation by cost plus notional profit, best judgment assessments and penalty/limitations invoked are set aside; appellant entitled to consequential benefits in accordance with law.

Reverse Charge Mechanism - body corporate - business entity - statutory/regulatory function - Business Support Services - Renting of Immovable Property Service - extended period of limitation under proviso to Section 73(1) - penalty under Section 78

Reverse Charge Mechanism - body corporate - business entity - Liability to discharge service tax under reverse charge for Manpower Supply and Rent-a-Cab services - HELD THAT: - The Tribunal found that GHMC is neither a business entity ordinarily carrying out activities relating to industry, commerce or any other business or profession nor a body corporate within the meaning of Section 65(14) of the Finance Act read with Clause (7) of Section 2 of the Companies Act, 1956. The statutory corporation status conferred by the GHMC Act, 1955 is a legal fiction limited to that statute and cannot be extended to attract the definition of body corporate for the purpose of Notification No.30/2012-ST. Incidental receipts such as rent do not convert GHMC into a profit motivated entity. Consequently, GHMC does not fall within the class of recipients liable under the Reverse Charge Mechanism invoked by the impugned notification, and the demands on Manpower Supply and Rent a Cab services were set aside. [Paras 15]

Demand of service tax of Rs.30,71,27,798/- (Manpower Supply) and Rs.1,49,02,365/- (Rent-a-Cab) under reverse charge set aside.

Statutory/regulatory function - Business Support Services - Taxability of Cell Tower verification/certification fee as Business Support Services - HELD THAT: - The Tribunal held that the activity of issuing permits/verification for telecommunication towers is a statutory and regulatory function performed by GHMC under State Government G.O.s, involving uniform, mandatory fees collected as regulatory levies and not consideration for a service rendered to particular recipients. In view of Circular No.89/7/2006 ST and the nature of the mandatory permit regime, there is no rendition of a taxable service and the activity does not fall within the Business Support Services category which applies to outsourced support activities used in business or commerce. Accordingly the demand in respect of Cell Tower verification was quashed. [Paras 16]

Demand of Rs.1,70,83,907/- in respect of Cell Tower verification/certification set aside.

Renting of Immovable Property Service - statutory/regulatory function - Taxability of road cutting/restoration and granting of right of way as Renting of Immovable Property Service - HELD THAT: - The Tribunal applied Notification No.1/2018 (30.11.2018) to hold that services by way of granting of 'right of way' by local authorities are not leviable to service tax for the period 1.7.2012 to 30.6.2017. Further, relying on precedents and statutory scheme, the Tribunal held that in the pre negative list regime mere owner led permitting or restoration of public roads does not amount to taxable Renting of Immovable Property Service. The road cutting/right of way activity entrusted to GHMC under state G.O.s is a regulatory/municipal function and not a leasing service in the taxable sense. Accordingly the demand for the entire contested period was annulled. [Paras 17]

Demand of Rs.15,18,18,931/- for road cutting/right of way under Renting of Immovable Property Service set aside.

Appropriation of payments - Appropriation of amounts paid during investigation - HELD THAT: - The Tribunal held that the appropriation by Revenue of Rs.7,98,52,484/ paid by GHMC during investigation was not legally sustainable in light of the substantive findings allowing the appeal on merits, and directed that the appropriation be set aside. [Paras 18]

Appropriation of Rs.7,98,52,484/- set aside.

Penalty under Section 78 - Imposition of penalties under Sections 77 and 78 of the Finance Act - HELD THAT: - Having quashed the tax demands on merits, the Tribunal held that the penalties imposed under Sections 77 and 78 could not survive and accordingly set aside the penalties. [Paras 19]

Penalties under Sections 77 and 78 set aside.

Extended period of limitation under proviso to Section 73(1) - Limitation (extended period) and invocation of proviso to Section 73(1) - HELD THAT: - The Tribunal observed that because all substantive demands were allowed on merits, no demand survives; accordingly it left the question of limitation open. The Tribunal did not decide whether the proviso to Section 73(1) was invokable on the facts; that aspect remains undetermined. [Paras 20]

Question of extended period of limitation/proviso to Section 73(1) left open for consideration.

Final Conclusion: The Tribunal allowed the appeal, set aside the service tax demands for the periods in question (including demands under reverse charge for Manpower Supply and Rent a Cab, Business Support Services for Cell Tower verification, and Renting of Immovable Property for right of way), quashed the appropriation and the penalties under Sections 77 and 78; the question of limitation under the proviso to Section 73(1) was left open.

Sub-contractor entitlement to SEZ exemption - exemption to services provided in Special Economic Zone - procedural requirement of Form A-1 declaration - substantive benefit cannot be denied for procedural non-compliance - overriding effect of SEZ law on other fiscal statutes

Sub-contractor entitlement to SEZ exemption - exemption to services provided in Special Economic Zone - overriding effect of SEZ law on other fiscal statutes - Subcontractor rendering services in relation to authorised operations of a SEZ unit is eligible for exemption under Notification No. 9/2009-ST (as amended). - HELD THAT: - The Tribunal held that where services are rendered in relation to authorised operations in a SEZ and are received/consumed by a SEZ unit, the identity of the immediate contract party (main contractor or subcontractor) does not disentitle the service-provider from the exemption. The notification exempts taxable services provided for consumption within a SEZ subject to prescribed conditions, and the fact that the subcontractor performed approved work for the SEZ unit satisfies the substantive condition. The Tribunal relied on precedents of this bench and other Tribunal decisions applying the same principle and noted the overriding protection conferred by SEZ statutory provisions, so that substantive exemption cannot be negated solely because the service was routed through a main contractor.

The adjudication denying exemption to the appellant on the ground of being a subcontractor is set aside and the exemption under Notification No. 9/2009-ST is held available.

Procedural requirement of Form A-1 declaration - substantive benefit cannot be denied for procedural non-compliance - Failure to furnish the Form A-1/A-3 authorization or other procedural formalities does not automatically defeat the substantive exemption where services were in fact provided to and consumed by a SEZ unit. - HELD THAT: - The Tribunal observed that the requirement to submit Form A-1 was introduced by a later amendment and that denial of the substantive exemption on account of non-filing of procedural documents, particularly when the services were admittedly rendered to a SEZ unit and approved, would be inappropriate. The Court emphasised that the substantial fiscal benefit conferred by the notification cannot be withheld for minor procedural lapses and followed earlier decisions where similar procedural non-compliance did not defeat exemption entitlement. Consequently, the demand confirmed solely on procedural grounds was found unsustainable.

The demand upheld for want of Form A-1/A-3 and related penalties is set aside insofar as it denies the substantive exemption.

Final Conclusion: The impugned order-in-original confirming service tax, interest and penalty is set aside; the appeal is allowed as the appellant, though a subcontractor, is entitled to exemption for services provided to the SEZ unit for the period in question and procedural non-compliance does not defeat that substantive exemption.

Review petition allowed - remand for determination of quantum - computation of cum-duty price - limitation of issues on remand - restoration of appeals to original numbers

Remand for determination of quantum - computation of cum-duty price - limitation of issues on remand - Direction to CESTAT to decide the appeals of the petitioner limited to the question of quantum of computation/cum-duty price. - HELD THAT: - Following this Court's prior judgment which set aside CESTAT's interpretation of the notified provisions, the review petitions were allowed insofar as the appeals filed by the petitioner require adjudication on the limited question of quantum. The Court directed that no issues other than the computation of cum-duty price shall be raised before the CESTAT. The matter is remitted to the CESTAT, Ahmedabad for fresh decision confined to quantification/computation of cum-duty price and related quantum questions without reopening other contentious issues previously foreclosed.

CESTAT directed to decide the appeals limited to the question of computation of cum-duty price; remanded for fresh consideration on quantum only.

Review petition allowed - restoration of appeals to original numbers - Disposition of review petitions and administrative restoration of connected civil appeals to their original numbering. - HELD THAT: - The Court allowed the review petitions and ordered restoration of Civil Appeal Nos. 10159-10161/2010 to their original numbers for disposal in accordance with the directions to remand the quantum issue. A hearing date was fixed before the CESTAT to expedite adjudication. The Court expressly refrained from expressing any view on the merits of the quantum claims of either party.

Review petitions allowed; the specified civil appeals restored and disposed of by remitting the quantum issue to CESTAT with directions for prompt hearing.

Final Conclusion: Review petitions allowed; appeals restored and remitted to the CESTAT, Ahmedabad to be heard on 02.05.2024 and decided strictly on the limited question of computation of cum-duty price, with no comment by this Court on the merits.

Relevancy of statements under certain circumstances - Right to cross-examination under Section 9D of the Central Excise Act, 1944 - Obligation to allow cross-examination for fair adjudication - Remand for fresh adjudication after allowing cross-examination

Relevancy of statements under certain circumstances - Right to cross-examination under Section 9D of the Central Excise Act, 1944 - Obligation to allow cross-examination for fair adjudication - Rejection by the adjudicating authority of the appellant's request to cross-examine witnesses whose statements were relied upon for adjudication was contrary to law and vitiated the order. - HELD THAT: - The Tribunal found that the adjudication rested substantially on statements of various persons. Section 9D makes such statements relevant only subject to the conditions set out therein and contemplates examination of the witness and an opportunity for cross-examination in the adjudicatory process. It is not within the adjudicating authority's discretion to refuse cross-examination where the appellant disputes the statements relied upon. The correct procedure is to allow examination-in-chief and then permit the accused/appellant to cross-examine; only thereafter, if the testimony remains consistent, may the statement be admitted. Since cross-examination was denied, the proceedings did not afford a fair trial and the impugned order could not stand. [Paras 4, 5]

Impugned order set aside and matter remanded to the adjudicating authority to allow cross-examination of the witnesses and to pass a fresh order after considering further submissions of the appellant.

Final Conclusion: Appeals allowed in part; impugned Order in Original set aside and the matter remitted for fresh adjudication after permitting cross examination of the witnesses and reconsideration of submissions.

Reassessment for escaped assessment - extension of limitation under Section 29(7) of the Act - inclusion of exempt by-product sale in turnover for exclusion from ITC - effect of binding Supreme Court precedent on reassessment proceedings - input tax credit adjustment where sale comprises taxable product and exempt by-product

Reassessment for escaped assessment - effect of binding Supreme Court precedent on reassessment proceedings - extension of limitation under Section 29(7) of the Act - Validity of reassessment proceedings and the order extending limitation dated 18.3.2020, together with the consequential notice dated 29.11.2022, in respect of A.Y. 2012-13 (UP). - HELD THAT: - The Court examined whether the reassessment and the extension of limitation under Section 29(7) could be sustained in view of the subsequently-declared law by the Supreme Court on the treatment of sale of an exempt by-product. The Supreme Court held that the sale value of the exempt by-product (DORB) must be included for the purpose of carving out the exclusion under the relevant provision, thereby reversing the earlier single-judge view relied upon by the Revenue. Applying that binding pronouncement, the High Court found that the material which formed the basis for initiating reassessment against the petitioner no longer exists and, accordingly, turnover cannot be said to have escaped assessment. In those circumstances the extension order and the reassessment notice could not be sustained and the reassessment proceedings had to be quashed. [Paras 8, 9, 10]

Reassessment proceedings for A.Y. 2012-13 (UP), including the order dated 18.3.2020 under Section 29(7) and the consequential notice dated 29.11.2022, are quashed.

Final Conclusion: Writ petition allowed; reassessment proceedings for A.Y. 2012-13 (UP) quashed in view of the Supreme Court's ruling that the sale value of the exempt by-product must be included, eliminating the basis for alleging escaped turnover; no order as to costs.

Measurement of embankment by composite cross section - Interpretation of contract by arbitral tribunal - Judicial interference under Section 34/Section 37 of the Arbitration and Conciliation Act, 1996 - Reasonableness / plausibility standard for setting aside arbitral awards - Dissenting opinion in a multi-member arbitral tribunal - Modification of interest awarded by court

Measurement of embankment by composite cross section - Interpretation of contract by arbitral tribunal - Whether the measurement for payment of embankment constructed with soil and pond ash is to be done as a composite cross section applying the average end area method, or whether the cross-section must be bifurcated to measure soil and pond ash separately. - HELD THAT: - The Court examined BOQ item 2.02 and the Technical Specification Clause 305 (specifically Clause 305.8 and the project-specific Clause 305.2.2.3.3) and the majority reasoning in the arbitral awards. The majority view adopted by tribunals and endorsed by several DRBs held that where the BOQ describes an embankment "with pond ash" the completed embankment (comprising soil cover and pond ash core/material) is a composite finished item and the mode of measurement prescribed by Clause 305.8 - taking cross sections at intervals and computing volumes by the method of average end areas - applies to the embankment as a whole. The Court held that the tribunals' interpretation was a plausible, technically-informed construction of the contract and, being a reasoned view by experts, did not merit interference. The Division Bench's contrary approach displaced the tribunal's plausible conclusion and substituted its own view, which the Court found impermissible under the limited scope of judicial review of arbitral awards. [Paras 15, 16, 17, 21, 22]

The tribunals' majority conclusion that embankment constructed with soil and pond ash is to be measured as a composite cross section by average end area method is a plausible interpretation of the contract and is upheld.

Judicial interference under Section 34/Section 37 of the Arbitration and Conciliation Act, 1996 - Reasonableness / plausibility standard for setting aside arbitral awards - Whether the Division Bench of the High Court was justified in setting aside the arbitral awards on the ground that the tribunals' interpretation was impermissible. - HELD THAT: - The Court reiterated the narrow confines of interference under Sections 34 and 37 of the Act: where an arbitral tribunal's construction of contractual terms is reasonable or plausible, courts must not substitute their own interpretive view. Citing authority and doctrinal principles, the Court found that the Division Bench had effectively engaged in appellate re-appraisal, substituted its conclusion for that of technical arbitrators, and thereby transgressed the limited scope of judicial review. The majority awards were reasoned and based on technical expertise; absent perversity or patent illegality, they ought not to have been set aside. [Paras 22, 23, 24]

The High Court's interference with the awards was impermissible; the awards must be restored.

Dissenting opinion in a multi-member arbitral tribunal - Whether a dissenting opinion of an arbitrator in a multi-member tribunal can be treated as an award if the majority award is set aside. - HELD THAT: - The Court considered authorities and commentary on the role and character of dissenting opinions. It held that a dissenting opinion is for the parties' information and does not, of itself, constitute an award. While a dissent may be admissible in challenge proceedings and can inform arguments, it cannot be elevated into an award if the majority award is set aside; doing so would be inappropriate because the dissent does not undergo the same scrutiny as the majority reasoning under challenge. [Paras 25, 26, 27]

A dissenting opinion cannot be treated as an award when a majority award is set aside; it may inform but not supplant the arbitral award.

Modification of interest awarded by court - What relief should be granted where the awards are upheld but directions as to interest require adjustment. - HELD THAT: - While restoring the arbitral awards, the Court modified the interest directions contained in the awards. Instead of compounded monthly interest as provided in some awards, the Court directed that NHAI shall pay uniform interest at the rate of 12% per annum on the amounts due in respect of the construction of embankment, from the date of the award to the date of payment, and that such payment be made within eight weeks from the date of the judgment. [Paras 28]

Awards are restored subject to modification of interest: uniform interest at 12% per annum from date of award to date of payment, payable within eight weeks.

Final Conclusion: The appeals are allowed. The Delhi High Court judgments impugned are set aside and the arbitral awards (to the extent they were set aside) are restored. The tribunals' majority interpretation that embankments with pond ash and soil are to be measured as a composite cross section by the average end area method is upheld. A dissenting arbitrator's opinion does not constitute an award. Interest directions in the awards are modified: NHAI to pay uniform interest at 12% per annum from the date of award to date of payment within eight weeks. No order as to costs.