TaxTMI Updates e-Newsletter
Apr 24,2021

Classification of goods under Customs Tariff/HSN - Interpretation of FSSAI product categories (Para 2.3.10 vs 2.3.30) - Carbonated fruit beverages-classification and GST rate - Application of HSN Explanatory Notes - Distinguishing precedent (Appy Fizz) - Fitment Committee/GST Council recommendations as contextual aid to classification

Interpretation of FSSAI product categories (Para 2.3.10 vs 2.3.30) - Carbonated fruit beverages-classification and GST rate - Whether the product 'K Juice Grape' is a thermally processed fruit beverage under Para 2.3.10 of the FSSAI regulations or a carbonated fruit beverage under Para 2.3.30. - HELD THAT: - The authority examined the FSSAI definitions. Para 2.3.10 covers thermally processed fruit beverages which are not carbonated and require specific thermal processing and product characteristics. Para 2.3.30 expressly covers 'Carbonated Fruit Beverages or Fruit Drinks', defined as beverages prepared from fruit juice and water or carbonated water containing sugar and other appropriate ingredients and requiring minimum fruit content (10% for fruits other than lime/lemon). The appellant's documented manufacturing process shows only mild thermal treatment with subsequent carbonation (0.6%), the product is marketed and sold as a carbonated fruit beverage and meets the fruit-content and soluble solids thresholds set out in Para 2.3.30. On these facts the product falls within Para 2.3.30 and not within Para 2.3.10. [Paras 8]

The product is a 'Carbonated Fruit Beverage or Fruit Drink' under Para 2.3.30 of the FSSAI regulations.

Classification of goods under Customs Tariff/HSN - Application of HSN Explanatory Notes - Carbonated fruit beverages-classification and GST rate - Fitment Committee/GST Council recommendations as contextual aid to classification - Classification of 'K Juice Grape' under the Customs Tariff/HSN and the applicable GST rate. - HELD THAT: - The chapter and subheadings of CTH 2202 were examined along with the HSN Explanatory Notes. Heading 2202.10 covers waters including aerated waters and similar flavored beverages (with subheading entries including 'Aerated waters', 'Lemonade' and 'Other'), while 2202.99 covers other non-alcoholic beverages including 'Fruit pulp or fruit juice based drinks' at a separate subheading. The scheme and explanatory notes indicate a distinction between beverages based on whether they are essentially waters/aerated waters flavored (2202.10) or other non-alcoholic beverages (2202.99). Given that the product is carbonated and marketed as a carbonated fruit beverage, it falls within the 'waters/aerated waters/flavoured' group and is classifiable under the 'Other' entry of 2202.10 (CTH 2202 10 90) rather than under 2202.99. The Fitment Committee/GST Council's treatment of carbonated beverages with fruit juice was noted as contextual support for the higher tax treatment for such carbonated products under GST. [Paras 9, 11]

The product is classifiable under CTH 2202 10 90 (the 'Other' entry under 2202.10) and attracts the rate of tax as held by the lower authority.

Distinguishing precedent (Appy Fizz) - Classification of goods under Customs Tariff/HSN - Whether the Supreme Court decision in the 'Appy Fizz' case requires classification of the appellant's product as a thermally processed fruit beverage (and thereby a different tariff treatment). - HELD THAT: - The earlier Supreme Court decision concerning 'Appy Fizz' turned on facts where that product was held to fall within Para 2.3.10 on the materials before the Court and FSSAI's classification. In the present case the authority compared the factual and regulatory matrix and found that the appellant's product does not fall under Para 2.3.10 but under Para 2.3.30 and is marketed as carbonated. Because the factual and categorical basis differs, the Appy Fizz decision was distinguished and not applied to change the classification reached on the present facts. [Paras 10]

The Appy Fizz precedent is not applicable on the facts; it is distinguished and does not alter the classification in this case.

Final Conclusion: The appeal is dismissed. The Appellate Authority upholds the Advance Ruling: the product is a carbonated fruit beverage under FSSAI Para 2.3.30, classifiable under CTH 2202 10 90, and the tax treatment determined by the Authority for Advance Ruling is confirmed.

Reimbursement forming part of consideration - time of supply - advances under Section 13 - inclusion of reimbursed expenses in taxable value under Section 15 read with Rules 28-31 - rate of tax to follow the principal supply

Reimbursement forming part of consideration - inclusion of reimbursed expenses in taxable value under Section 15 read with Rules 28-31 - GST leviability on reimbursements made by the appellant to its overseas holding company for expenses initially borne by the holding company. - HELD THAT: - The Appellate Authority found that expenses incurred through credit cards issued by the overseas holding company to the appellant's employees were incurred in the course of providing software development services and constitute part of the software development cost. These expenses, though initially borne by the recipient (the overseas holding company) and subsequently reimbursed by the appellant, are regarded as consideration attributable to the appellant's supply and not a standalone transaction in money. Consequently, such reimbursements must be included in the value of supply in terms of the valuation provisions and attracted to GST; the time of supply provisions governing advances (Section 13) apply to determine the time when tax becomes payable. The Authority observed that this treatment restores the appellant's accounts for operational convenience and reflects the economic transfer between supplier and recipient, mandating inclusion in taxable value and levy of tax accordingly. [Paras 5, 6]

GST is leviable on the reimbursement amounts as they form part of the consideration for the appellant's supply and are taxable as per the time of supply provisions for advances.

Rate of tax to follow the principal supply - reimbursement forming part of consideration - Applicable GST rate on the reimbursed expenses. - HELD THAT: - Since the reimbursed amounts are held to be part of the taxable value of the software development services supplied by the appellant, the Authority concluded that the GST rate applicable to those reimbursements is the same rate that applies to the principal supply of software development services. The reimbursed expenses are therefore taxed at the rate indicated in the tax invoice for the software development charges issued by the appellant to the overseas holding company. [Paras 5, 6]

The applicable GST rate on the reimbursement is the same rate as that charged on the appellant's software development services.

Final Conclusion: The Advance Ruling is modified to hold that reimbursements paid by the appellant to its overseas holding company for expenses initially borne by the latter form part of the consideration for the appellant's software development services and are taxable under GST as per the time of supply for advances; the tax rate applicable is the same as that on the software development services.

Pending judicial proceedings precluding advance ruling - binding effect of advance ruling - competence of Appellate Authority to uphold non-adjudication by AAR where jurisdictional bar exists

Pending judicial proceedings precluding advance ruling - competence of Appellate Authority to uphold non-adjudication by AAR where jurisdictional bar exists - Whether the Advance Ruling Authority was correct in declining to decide the applicant's application on the ground that a writ petition on the subject-matter was pending before the High Court at the material time. - HELD THAT: - The Appellate Authority examined the sequence of events and the submissions of the appellant that the AAR should have decided the application on merits. The Authority noted that at the material time a writ petition relating to the same subject-matter was pending before the Hon'ble High Court. The Appellate Authority concluded that the AAR's refusal to give a ruling was justified by the existence of pending judicial proceedings addressing the same issue, and therefore the AAR was precluded from pronouncing on the application. The Appellate Authority also recorded that, following the subsequent withdrawal of the writ petition, the appellant remains free to approach the AAR afresh for adjudication on merits.

The Order of the Advance Ruling Authority declining to rule was upheld since a writ petition on the same matter was pending at the material time; the appellant may file a fresh application before the AAR now that there are no pending proceedings in the High Court.

Final Conclusion: The appeal is dismissed; the Appellate Authority affirms that the AAR correctly refrained from deciding the application because of a pending writ petition at the relevant time and notes that the appellant is at liberty to file a fresh application before the AAR now that there are no pending High Court proceedings.

Advance ruling admissibility - Eligibility to seek advance ruling by a recipient vis-a -vis a supplier - Binding effect of an advance ruling on the applicant - Interpretation of sections 95 and 97 regarding scope of matters admissible for advance ruling - Purposeful and harmonious construction of advance ruling provisions

Advance ruling admissibility - Interpretation of sections 95 and 97 regarding scope of matters admissible for advance ruling - Application for advance ruling on taxability of the upfront lease amount paid to RLDA was not admissible and the AAR order declining admission is confirmed. - HELD THAT: - The Appellate Authority considered the appellant's request for a ruling on whether the upfront lease premium paid to RLDA for a 45-year lease is exempt under GST and whether the application could be admitted under the advance ruling provisions. It observed that the advance ruling scheme must be interpreted purposively and harmoniously. Because a ruling is binding only on the applicant, permitting a recipient-only application on the taxability of an inward supply would leave the supplier free to take an inconsistent position, defeating the purpose of the scheme. On a conjoint reading of the provisions relied upon by the appellant, an application in respect of the lease transaction was not admissible under the advance ruling provisions as the supply in question was not undertaken or proposed to be undertaken by the applicant in the relevant capacity, and therefore the AAR correctly declined to admit the application. [Paras 6, 7]

The order of the Advance Ruling Authority declining to admit the application is confirmed and the appeal is dismissed on this ground.

Eligibility to seek advance ruling by a recipient vis-a -vis a supplier - Binding effect of an advance ruling on the applicant - Purposeful and harmonious construction of advance ruling provisions - A party who is a recipient (even if also a supplier) may seek an advance ruling only in the capacity of recipient in respect of its inward supplies, and the ruling is binding only on the applicant. - HELD THAT: - The Appellate Authority examined the interplay between the eligibility to obtain an advance ruling and the binding nature of such rulings. Section 103(1) (as interpreted by the Authority) makes clear that a ruling is binding only on the applicant; consequently, if a recipient obtains a ruling on the taxability of its inward supply, that ruling would not bind the supplier, who could adopt a different position, thereby nullifying the usefulness of the ruling. Applying a constructive and harmonious reading of the statutory provisions, the Authority held that eligibility to seek an advance ruling is confined to the applicant in the relevant capacity (for example, as a recipient of an inward supply) and does not extend to allowing a recipient to obtain a ruling that would bind other parties such as the supplier. [Paras 7]

The appellant cannot, merely by virtue of also being a supplier in other transactions, seek an advance ruling beyond its capacity as recipient; the ruling is binding only on the applicant in respect of matters for which it sought the ruling.

Final Conclusion: For the reasons stated, the Appellate Authority affirms the Advance Ruling Authority's decision declining to admit the application for an advance ruling on the upfront lease premium paid to RLDA; the appeal is disposed of accordingly.

Classification of services as Waste Collection, treatment and disposal services - Exemption under Notification 12/2017 - pure services provided to local authority - Distinction between recipient and beneficiary for exemption - Ineligibility of sub-contractors for exemption absent specific provision - Composite supply involving goods and services not a pure service - Principal-to-principal relationship between service provider and concessionaire

Classification of services as Waste Collection, treatment and disposal services - Supply of services by the appellant relating to waste collection, segregation, treatment, transportation and disposal are classifiable under SAC 9994. - HELD THAT: - The Appellate Authority considered the nature of services supplied under the service agreements and noted that the Advance Ruling Authority had classified the services under SAC 9994. The AAAR found nothing in the appeal to persuade it to alter that classification and observed that the services performed by the appellant squarely fall within the description of waste collection, treatment and disposal services. The reasoning of the AAR on classification was accepted and upheld. [Paras 3, 6, 7]

The classification under SAC 9994 is affirmed.

Exemption under Notification 12/2017 - pure services provided to local authority - Distinction between recipient and beneficiary for exemption - Ineligibility of sub-contractors for exemption absent specific provision - Composite supply involving goods and services not a pure service - Principal-to-principal relationship between service provider and concessionaire - Services supplied by the appellant under the agreements with the concessionaires are not exempt under entry no.3 of Notification 12/2017-Central Tax (Rate) dated 28.06.2017. - HELD THAT: - The AAAR examined whether the appellant's services qualified as 'pure services provided to the local authority' so as to attract the exemption. It held that the exemption requires the service to be legally provided to the local authority (recipient) and not merely for the benefit of the local authority; here the appellant's contractual recipient is the concessionaire and not the Greater Chennai Corporation. The Authority further observed that GST exemption entries do not ordinarily extend to subcontractors unless expressly provided; the notification's wording and related entries restrict exemptions to clearly specified subcontracting scenarios, which are absent here. The AAAR also found that the original concession agreement involved supply of both goods and services and therefore the services rendered by the appellant cannot be treated as pure services to avail the exemption. Additionally, the appellant and the concessionaires are distinct legal persons contracting on a principal-to-principal basis, not agent-principal, negating the contention that the appellant is effectively supplying to the local authority. For these reasons the AAR's conclusion denying exemption was upheld. [Paras 3, 6, 7]

The denial of exemption under Notification 12/2017 (entry no.3) is affirmed; the services are not exempt.

Final Conclusion: The Appellate Authority affirms the Advance Ruling: the appellant's waste management services are classifiable under SAC 9994 and are not exempt under entry no.3 of Notification 12/2017; the appeal is dismissed.

Easement - license - lease - composite supply - activities to be treated as supply of services under Schedule II - agreeing to tolerate an act - classification under SAC 9997

Easement - license - Whether the right of shared access granted to the landowner constituted an easement appurtenant to the residential dwelling and therefore was not a taxable supply. - HELD THAT: - The Appellate Authority examined the nature of the right granted under the Memorandum of Understanding and the factual matrix of acquisition and settlement. Relying on the definition of easement in Section 4 of the Indian Easement Act, 1882, the Authority found that an easement is ordinarily a right that flows automatically on the sale of land and is not a grant by the purchaser. In the present case the shared access was granted by the appellant to the landowner for a specific period of 35 years against payment of rentals under an MOU; it was not an easement that the landowner acquired on the sale. Consequently the shared access was a right granted by the appellant and, in law, falls within the concept of a license rather than an easement. [Paras 7]

The shared access is not an easement appurtenant acquired on sale but is a right granted by the appellant and is therefore a license.

Lease - activities to be treated as supply of services under Schedule II - Whether the shared access amounted to a lease or transfer of possession and thereby fell outside or inside the scope of Schedule II services. - HELD THAT: - The Authority considered the definition of 'lease' under Section 105 of the Transfer of Property Act, 1882 and concluded that a lease involves transfer of the right to enjoy property, typically with transfer of possession. In the instant facts the pathway continued to be used by both the appellant and the landowner; there was no transfer of exclusive possession. The Authority rejected the appellant's narrow interpretation that 'to occupy' must mean exclusive possession, holding that transfer of the right to use/occupy space without exclusive physical transfer can still amount to a supply covered by Schedule II. Thus the shared access granted for consideration does not qualify as a lease that absolves it from treatment as a service under Schedule II. [Paras 7]

The shared access is not a lease involving transfer of exclusive possession; Schedule II covers such rights to use/occupy and the contention that it falls outside Schedule II is rejected.

Composite supply - agreeing to tolerate an act - classification under SAC 9997 - Whether the grant of shared access was ancillary to the sale of land forming a composite supply (with sale of land as principal supply) or an independent taxable service classifiable as 'agreeing to tolerate an act' under SAC 9997. - HELD THAT: - The Authority analysed the supplies and parties: the sale of land was a supply from the landowner to the appellant, whereas the shared access was a supply from the appellant to the landowner. Because the supplier and recipient differ for the two transactions, they cannot form a single composite supply where the principal supply is the sale of land. Having held the shared access to be a distinct grant of rights by the appellant for consideration and characterising it as a license (a non-exclusive right to use), the Authority concluded that the activity falls within the description of 'agreeing to tolerate an act' and is classifiable under SAC 9997. Consequently, it is liable to GST at the rates notified. [Paras 7, 8]

The grant of shared access is not a composite supply with the sale of land and is an independent service classifiable as 'agreeing to tolerate an act' under SAC 9997 and therefore taxable under GST.

Final Conclusion: The Appellate Authority affirms the Lower Authority's ruling: the shared access granted for consideration is not an easement appurtenant nor a lease transferring exclusive possession; it is a license and an independent taxable service (classifiable under SAC 9997 as 'agreeing to tolerate an act') and is liable to GST. The appeal is dismissed.

Advance ruling admissibility - Scope of advance ruling under Section 95 - Applicant as supplier or recipient - Rejection under Section 98(2)

Advance ruling admissibility - Scope of advance ruling under Section 95 - Applicant as supplier or recipient - Rejection under Section 98(2) - Application for advance ruling was inadmissible because the applicant was a recipient of services and not a supplier, and therefore not entitled to seek an advance ruling under the Act. - HELD THAT: - The Authority examined the statutory definition of 'advance ruling' and the definition of 'applicant' under Section 95 of the CGST Act, 2017, which limit advance rulings to matters in relation to the supply of goods or services being undertaken or proposed to be undertaken by the applicant and to persons registered or desirous of registration. The Authority found that M/s Hubli-Dharwad Municipal Corporation is a recipient of services supplied by others and does not act as the supplier in respect of the transactions which are the subject matter of the application. Consequently, the application did not fall within the scope of matters for which an advance ruling may be sought and was not maintainable. The application therefore had to be rejected as inadmissible under Section 98(2) of the CGST Act, 2017. [Paras 7, 8, 9]

Application rejected as inadmissible under Section 98(2) of the CGST Act, 2017 because the applicant is a recipient of services and not a supplier entitled to seek an advance ruling.

Final Conclusion: The Authority dismissed the application for advance ruling as inadmissible and rejected it under Section 98(2) of the CGST Act, 2017 on the ground that the applicant is a recipient of services and not a supplier within the meaning of Section 95.

Applicability of Rate Notification entry covering 'All diagnostic kits and reagents' - Classification as Prepared laboratory reagents under Chapter Heading 3822 - Use of Customs Tariff Act classification and HSN Explanatory Notes for determining GST rate - Relevance of Fitment Committee recommendations to rate fixation - Inapplicability of ejusdem generis to general words preceding an enumeration in tariff entries

Applicability of Rate Notification entry covering 'All diagnostic kits and reagents' - Classification as Prepared laboratory reagents under Chapter Heading 3822 - Use of Customs Tariff Act classification and HSN Explanatory Notes for determining GST rate - Inapplicability of ejusdem generis to general words preceding an enumeration in tariff entries - Relevance of Fitment Committee recommendations to rate fixation - Pharmaceutical Reference Standards (Prepared Laboratory Reagents) classifiable under Tariff Item 3822 00 90 are covered by Entry No. 80 of Schedule II to Notification No. 1/2017-Integrated Tax (Rate) and attract Integrated Tax at 12%. - HELD THAT: - The Authority accepted that the goods are correctly classifiable as 'prepared laboratory reagents' under Chapter Heading 3822 of the Customs Tariff Act and that HSN Explanatory Notes identify prepared laboratory reagents as within that heading. The Authority noted prior rulings and the appellate authority's interpretation that the phrase 'All diagnostic kits and reagents' in Entry No.80 is intended to cover the full range of reagents falling under Heading 3822 and that the rule of ejusdem generis does not operate to restrict the term where the general word 'All' precedes the enumeration. Reliance was placed on the Fitment Committee's recommendation, which treated 'Diagnostic or laboratory reagents' together for rate purposes, indicating a legislative intent to cover reagents under Entry No.80 at the reduced rate. On that basis, the residuary Entry No.453 of Schedule III (18%) does not apply to goods falling within Heading 3822, and the import and supply of Pharmaceutical Reference Standards classifiable under Tariff Item 3822 00 90 fall within Entry No.80 attracting 12% IGST. [Paras 12, 13, 14]

Pharmaceutical Reference Standards (Prepared Laboratory Reagents) under Tariff Item 3822 00 90 are covered by Entry No.80 of Schedule II to Notification No.1/2017-Integrated Tax (Rate) and liable to Integrated Tax at 12%.

Final Conclusion: The Authority rules that Pharmaceutical Reference Standards classified under Tariff Item 3822 00 90 are taxable under Entry No.80 of Schedule II to Notification No.1/2017-Integrated Tax (Rate) dated 28.06.2017 at the rate of 12% Integrated Tax; the residuary 18% entry is not applicable to such goods.

Prepared laboratory reagents - diagnostic reagents - classification under Chapter Heading 3822 - Entry No. 80 of Schedule II to Notification No. 01/2017-IT (R) - residuary Entry No. 453 of Schedule III - ejusdem generis - HSN Explanatory Notes

Prepared laboratory reagents - classification under Chapter Heading 3822 - Entry No. 80 of Schedule II to Notification No. 01/2017-IT (R) - residuary Entry No. 453 of Schedule III - ejusdem generis - HSN Explanatory Notes - Applicability of Entry No. 80 of Schedule II (12%) or Entry No. 453 of Schedule III (18%) to Pharmaceutical Reference Standards classifiable under Tariff Item 3822 00 90. - HELD THAT: - The Authority examined the description of Chapter Heading 3822 and the HSN Explanatory Notes which treat prepared laboratory reagents (including analytical reference standards) as falling within that heading when labelling and use indicate in vitro or laboratory use. The applicant's product (Pharmaceutical Reference Standards) is admitted to be a prepared laboratory reagent classifiable under Tariff Item 3822 00 90. The Authority placed reliance on earlier adjudications (including the CESTAT decision affirmed by the Supreme Court) that such Pharmaceutical Reference Standards are laboratory reagents within Chapter 3822. The Authority also considered the Karnataka Appellate Authority for Advance Rulings' reasoning that the phrase "All diagnostic kits and reagents" in Entry No. 80 was intended to cover the full range of diagnostic and laboratory reagents under Heading 3822, and that the doctrine of ejusdem generis did not restrict the scope because the general word "All" precedes the enumeration. The Fitment Committee's recommendation to treat "Diagnostic or laboratory reagents" at the 12% rate supported a legislative intent to include reagents of Heading 3822 within Entry No. 80. Applying these conclusions, the Authority held that goods classifiable under Tariff Item 3822 00 90 are covered by Entry No. 80 of Schedule II and are not to be treated as residuary goods under Entry No. 453 of Schedule III. [Paras 9, 10]

Pharmaceutical Reference Standards (prepared laboratory reagents) classifiable under Tariff Item 3822 00 90 are covered by Entry No. 80 of Schedule II to Notification No. 01/2017-IT (R) and attract Integrated Tax at the rate of 12%.

Final Conclusion: The Advance Ruling holds that Pharmaceutical Reference Standards imported and supplied by the applicant, classifiable under Tariff Item 3822 00 90, fall within Entry No. 80 of Schedule II to Notification No. 01/2017-IT (R) and are taxable at 12% integrated tax; they are not to be treated under the residuary 18% Entry No. 453 of Schedule III.

Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India (Schedule III clause 7) - Import of service and Reverse Charge Mechanism where supplier is located outside India and place of supply is in India - Place of supply of services determined under the place of supply provisions (Section 13 of IGST Act) - Composite supply and principal supply determining taxability of ancillary charges - Input tax credit exclusion where transaction does not amount to supply

Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India (Schedule III clause 7) - Supply of books from a warehouse in USA to customers in USA/UK/Canada without the books entering India is a supply under GST or not. - HELD THAT: - The Authority examined the business model where printed books are located and delivered wholly outside India. Clause 7 of Schedule III relevant to Section 7 of the CGST Act treats supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering India as neither a supply of goods nor a supply of services. Applying that provision to the facts, the delivery of books from the USA warehouse to customers in USA/UK/Canada without the goods entering India does not amount to a supply under GST. [Paras 11, 16]

The transaction does not amount to supply under GST.

Composite supply and principal supply determining taxability of ancillary charges - Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India (Schedule III clause 7) - Whether shipping charges collected by the applicant for delivery from the USA warehouse to customers outside India are exigible to GST. - HELD THAT: - The Authority treated shipping as ancillary to the principal supply of books. Because the principal supply (delivery of books wholly outside India) falls under Schedule III as not being a supply, the shipping charges collected from customers for delivery outside India are not exigible to GST. However, where the applicant pays for shipping services procured from a supplier outside India and the place of supply of that service is in India, such service qualifies as import of service and is taxable under reverse charge. The Authority found that the applicant arranges shipping through an overseas agent and did not establish the agent as a pure agent; the supplier of shipping is outside India, the recipient (applicant) is in India, and the place of supply is in India under Section 13, thereby triggering RCM on the shipping service paid for by the applicant. [Paras 12, 16]

Shipping charges collected from customers for deliveries outside India are not exigible to GST, but the shipping service procured from an overseas supplier qualifies as import of service and is taxable under Reverse Charge Mechanism in the hands of the applicant.

Place of supply of services determined under the place of supply provisions (Section 13 of IGST Act) - Import of service and Reverse Charge Mechanism where supplier is located outside India and place of supply is in India - Composite supply and principal supply determining taxability of printing services - Whether printing charges charged by a printer in USA for printing content supplied by the applicant are taxable under Reverse Charge Mechanism. - HELD THAT: - The Authority applied the Circular clarifying that where the recipient supplies the content and the printer supplies the physical inputs, the predominant element is the printing service and such supplies constitute a supply of service (SAC 9989). The supplier (printer) is located outside India, the recipient is in India, and the place of supply is in India under Section 13. Consequently, the printing service is an import of service in the hands of the applicant and is taxable under the Reverse Charge Mechanism. [Paras 13, 16]

Printing charges charged by the overseas printer are taxable under Reverse Charge Mechanism.

Place of supply of services determined under the place of supply provisions (Section 13 of IGST Act) - Import of service and Reverse Charge Mechanism where supplier is located outside India and place of supply is in India - Whether warehousing services provided by a foreign service provider for books located outside India are taxable under Reverse Charge Mechanism. - HELD THAT: - Applying the import of service test, the Authority noted that although the supplier is located outside India and the recipient is in India, the place of supply of the warehousing service is outside India under Section 13. Because the place of supply is outside India, the service does not qualify as import of service and therefore is not exigible to GST under Reverse Charge Mechanism. [Paras 14, 16]

Warehousing services for books located outside India are not taxable under Reverse Charge Mechanism.

Input tax credit exclusion where transaction does not amount to supply - Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India (Schedule III clause 7) - Whether input tax credit can be claimed for inputs and input services used in the transactions covered by Question 1. - HELD THAT: - Credit eligibility depends on the existence of taxable supplies. Since the supply of books (Question 1) does not amount to supply under GST by virtue of Schedule III clause 7, the applicant cannot claim input tax credit in respect of inputs and input services attributable to those transactions. [Paras 15, 16]

Input tax credit cannot be availed for the inputs and input services used in the transactions that do not amount to supply.

Final Conclusion: Advance ruling: deliveries of books from a USA warehouse to customers in USA/UK/Canada without the books entering India are not supplies under GST; shipping charges collected from customers for such deliveries are not exigible to GST though the overseas shipping service procured by the applicant is an import of service taxable under RCM; printing charges charged by the overseas printer are taxable under RCM; warehousing services for goods located outside India are not taxable under RCM; and input tax credit is not available for inputs/services attributable to the non-supply transactions.

Garnishee order under Section 79 of the CGST Act, 2017 - input tax credit - adjudication under Sections 73 and 74 of the CGST Act, 2017 - CBIC circulars extending time-limits due to COVID-19 - interim stay of coercive steps on deposit

Garnishee order under Section 79 of the CGST Act, 2017 - interim stay of coercive steps on deposit - Whether coercive action pursuant to the garnishee notice dated 24.07.2020 should be restrained pending further proceedings - HELD THAT: - Petitioner challenged a garnishee notice issued to his banker under Section 79, contending that the notice was issued without completion of adjudication under Sections 73 and 74 and without accounting for the petitioner's admitted input tax credit. The Court, on an interim application, did not adjudicate the substantive claim but considered the balance of convenience and prejudice. The Court permitted respondents time to file a counter-affidavit and conditioned interim protection on an immediate deposit by the petitioner. No determination was made on the validity of the garnishee order or on the substantive entitlement to credit; the order is protective and provisional in nature.

If the petitioner deposits Rs. 20 lacs within ten days, no coercive steps shall be taken pursuant to the notice dated 24.07.2020 until the next listed date.

Input tax credit - adjudication under Sections 73 and 74 of the CGST Act, 2017 - CBIC circulars extending time-limits due to COVID-19 - Status of the petitioner's claim to input tax credit and requirement of adjudication - HELD THAT: - The petitioner asserted entitlement to substantial input tax credit and relied on CBIC circulars extending statutory time-limits during the COVID-19 period. The Court did not decide the merits of the petitioner's entitlement to input tax credit or the correctness of the respondents' calculation; instead the Court directed respondents to file a counter-affidavit and refrained from making substantive findings. The question of denial of ITC and any required adjudication under Sections 73 and 74 remains for consideration in the proceedings and was not finally adjudicated by this order.

The petitioner's substantive claim to input tax credit and the correctness of the impugned recovery are left open for adjudication; respondents to file counter-affidavit by the date directed and the matter is listed for further hearing.

Final Conclusion: Interim protection granted: conditioned on deposit of Rs. 20 lacs within ten days, no coercive action pursuant to the 24.07.2020 garnishee notice shall be taken until the next date; respondents directed to file counter-affidavit and substantive issues concerning entitlement to input tax credit and adjudication under Sections 73/74 remain undetermined.

Pre-arrest bail under Section 438 Cr.P.C. - interim protection - conditions of anticipatory bail - investigation into genuineness of documents - obligation to produce documents to the Investigating Police Officer - non-tampering and non-inducement conditions

Pre-arrest bail under Section 438 Cr.P.C. - interim protection - conditions of anticipatory bail - obligation to produce documents to the Investigating Police Officer - non-tampering and non-inducement conditions - Interim protection granted to the accused-petitioner with conditions and directions for appearance and furnishing of bail bond. - HELD THAT: - The High Court considered the petition under Section 438 Cr.P.C. and, on the material placed before it including the FIR and copies of the E-way Bill and GSTR formats, granted interim protection until the date fixed for further consideration. The accused-petitioner was directed to appear before the Investigating Police Officer within seven days and, in the event of arrest, to be released on furnishing a bail bond of Rs. 20,000 with one surety of the like amount to the satisfaction of the arresting authority. The Court imposed specific conditions: the petitioner shall not leave the territorial jurisdiction of the police station without prior written permission of the officer-in-charge; shall not hamper the investigation or tamper with evidence; shall not, directly or indirectly, induce, threaten or promise any person acquainted with the facts so as to dissuade disclosure; and shall appear before the Investigating Police Officer with the documents produced before the Court to enable verification.

Interim protection granted till 03.02.2021; petitioner to appear within seven days and, if arrested, to be released on bail bond of Rs. 20,000 with one surety of like amount subject to the stated conditions.

Investigation into genuineness of documents - obligation to produce documents to the Investigating Police Officer - Genuineness of the E-way Bill left to investigation by the Investigating Police Officer for verification. - HELD THAT: - Although the petitioner claimed that the E-way Bill transmitted by him is genuine and produced copies in GSTR-1 and GSTR-3B formats, the Court did not adjudicate on the authenticity or falsity of the documents. The Court directed that it is for the Investigating Police Officer to carry out the investigation and ascertain the genuineness of the E-way Bill and other documents, and required the petitioner to produce the same before the Investigating Police Officer to facilitate verification.

Issue of genuineness of the E-way Bill remitted to the Investigating Police Officer for investigation and verification.

Final Conclusion: Interim anticipatory bail protection granted to the petitioner subject to appearance, bail bond and specified conditions; the authenticity of the E-way Bill is left to the Investigating Police Officer for investigation and verification; case diary called and matter listed on 03.02.2021.

Re-opening of assessment - reason to believe - change of opinion - income escaping assessment - formation of belief - reassessment beyond four years

Re-opening of assessment - reason to believe - change of opinion - income escaping assessment - Validity of re-opening the assessment for assessment year 2003-04 under Section 147/148 in view of the requirement of 'reason to believe' and the prohibition on mere change of opinion. - HELD THAT: - The Court applied the ratio of the Hon'ble Supreme Court in Commissioner of Income Tax, Delhi v. Kelvinator of India Ltd., noting that post-amendment Section 147 requires 'reason to believe' and that reopening cannot be based on a mere change of opinion. Reasons for reopening must have a live link with formation of belief and tangible material indicating escapement of income; otherwise reassessment would amount to an impermissible review. Having accepted the departmental concession and relied upon the binding Supreme Court precedent, the Court held that the re-opening was not valid. [Paras 5, 7]

Re-opening of assessment was invalid; the appeal dismissed.

Reassessment beyond four years - formation of belief - re-opening of assessment - Whether the Assessing Officer could form fresh opinion in reassessment proceedings on disallowances (such as under Section 40(a)(i) and depreciation on brand equity) which were not dealt with in the original assessment. - HELD THAT: - The Court, following the Kelvinator ratio, concluded that the Assessing Officer must demonstrate tangible material and a valid 'reason to believe' to justify reopening; mere non-decision or later scrutiny of particular disallowances does not justify reassessment if it stems from a change of opinion. The departmental concession and the binding Supreme Court precedent led the Court to decide the framed question against the Revenue. [Paras 3, 5, 7]

Assessing Officer could not validly reopen assessment on the basis of issues not decided earlier where reopening amounted to change of opinion; reassessment invalid.

Final Conclusion: Appeal dismissed following the Supreme Court's decision in Commissioner of Income Tax, Delhi v. Kelvinator of India Ltd.; re-opening of assessment for assessment year 2003-04 held invalid and the departmental appeal rejected.

Adjustment of refund under section 245 - Prior intimation requirement under section 245 - Refund determined under section 143(1) - Application of mind and reasoned communication before adjustment - Operation of interim stay orders and their effect on recoverability of demands - Writ relief by certiorari and mandamus for restoration of refund

Prior intimation requirement under section 245 - Application of mind and reasoned communication before adjustment - Adjustment of refund under section 245 - Adjustment of the refund for AY 2019-20 could not be sustained because the statutory requirement of prior intimation under section 245 and a reasoned communication applying mind to the assessee's objections was not complied with. - HELD THAT: - The court found no record of any separate intimation issued to the petitioner under section 245 proposing adjustment of the refund, notwithstanding the note in the section 143(1) intimation. The affidavit of respondents did not show that a revenue officer recorded reasons addressing the petitioner's objections or that such a reasoned order was communicated prior to adjustment. Reliance placed on earlier division bench authorities emphasising that prior intimation and communication of reasons are mandatory was not controverted by the respondents. In absence of evidence that the statutory procedure - hearing the assessee's objections, applying mind, recording reasons and communicating them - was followed, the adjustment under section 245 was held to be unlawful and unsustainable. [Paras 27, 28, 29, 30]

Adjustment of refund was set aside for non-compliance with the procedural requirements of section 245; the respondents failed to show they issued prior intimation or communicated reasoned rejection of objections before adjusting the refund.

Operation of interim stay orders and their effect on recoverability of demands - Refund determined under section 143(1) - Writ relief by certiorari and mandamus for restoration of refund - Interim stay orders extending operation of interim orders (including those of the ITAT) until 31st January, 2021 were operative in respect of the outstanding demands for AYs 2007-08 and 2008-09, and that fact reinforced the conclusion that the respondents should not have adjusted the AY 2019-20 refund. - HELD THAT: - The court examined its suo motu order dated 26th March, 2020 and subsequent continuations, noting that the orders applied to interim orders of courts, tribunals and authorities under the high court's superintendence and were continued till 31st January, 2021. Given that the petitioner had produced the relevant orders and that the respondents did not satisfactorily demonstrate that the tribunal's stays were not in effect, the court held that it was difficult to accept the Revenue's contention that the high court orders did not cover matters before the ITAT. This finding on the operation of interim stays supported the conclusion that the adjustment ought not to have been made while those stays were in force. [Paras 31, 32, 33, 34]

The interim stay orders were found to be applicable and the adjustment made while such stays were operative was not sustainable; this reinforced the order setting aside the adjustment and restoring the refund.

Final Conclusion: Writ petition allowed. The adjustment of the refund for AY 2019-20 was set aside for failure to comply with the prior-intimation and reasoned-communication requirements under section 245 and having been made while interim stay orders in relation to demands were operative. Respondents directed to refund the amount determined under the section 143(1) intimation for AY 2019-20 with interest in accordance with law within four weeks.

Allowability of depreciation as application of income - double deduction - exemption under Section 11 - treatment of cost of capital asset as application of income - precedential effect of higher court decision

Allowability of depreciation as application of income - double deduction - exemption under Section 11 - treatment of cost of capital asset as application of income - Whether depreciation claimed on assets used for charitable purposes is allowable as application of income notwithstanding that the cost of the assets was treated as application of income, and whether allowance of depreciation results in a prohibited double deduction. - HELD THAT: - The Court answered the admitted substantial questions of law against the Revenue. Having regard to the binding precedent of the Supreme Court in CIT v. Rajasthan and Gujarati Charitable Foundation and earlier Division Bench decisions of this Court, the Tribunal's conclusion that depreciation is allowable as application of income was followed. The Court accepted that allowing depreciation in these circumstances does not amount to an impermissible double deduction where the cost of the capital asset has been treated as applied towards the charitable objects. The decision of the Tribunal was therefore upheld and the substantial questions framed were resolved against the Revenue.

Tribunal's allowance of depreciation was affirmed; allowance does not result in double deduction; questions answered against the Revenue.

Final Conclusion: Appeal dismissed; admitted substantial questions of law answered against the Revenue, following the Supreme Court precedent and Division Bench authorities, and the Tribunal's order upheld. No costs.

Assessment under Section 153A - Assessment under Section 153C - Jurisdictional fact - Incriminating material requirement for Section 153C - Constructive possession - Abatement under the second proviso to Section 153A(1) - Reopening of concluded assessments

Assessment under Section 153A - Assessment under Section 153C - Jurisdictional fact - Incriminating material requirement for Section 153C - Validity of notices issued under Sections 153A and 153C and existence of jurisdictional facts to initiate reassessment proceedings - HELD THAT: - The Court held that jurisdictional facts existed to initiate proceedings under both Sections 153A and 153C. The assessing officer's satisfaction was founded on documents seized during the September 2016 search and subsequent investigative material, including witness statements, bank-deposition excerpts and confessional material linking money laundering operators to transactions with MMHRC. The Court observed that the seized records, corroborated by statements and enquiries, showed the transactions were not genuine and therefore amounted to incriminating material relevant for reopening assessments. The Court also noted that correspondence between seized documents and assessment years may be refined only after enquiry; at the notice stage leeway is permissible so long as the statutory ceiling remains respected. Having examined the material on record, the Court concluded the assessing officer was justified in assuming jurisdiction to issue notices under Sections 153A and 153C. [Paras 14, 15, 17, 18]

Notices under Sections 153A and 153C were validly issued; jurisdictional facts existed and the initiation of reassessment could not be said to be without basis.

Abatement under the second proviso to Section 153A(1) - Reopening of concluded assessments - Whether the second proviso to Section 153A(1) required abatement of earlier reassessment proceedings so as to bar the later search-based action - HELD THAT: - The Court rejected the petitioners' contention that the earlier reassessment proceeding (arising from a 2014 search) had to abate and thereby preclude later action. The Court observed that had the assessees sought abatement they should have filed an application before the assessing officer, which they did not, and that, in any event, the proviso affects the first search assessment and does not preclude a subsequent independent search and consequent proceedings. The Court therefore held that the earlier concluded assessment did not immunize the petitioners from notices issued pursuant to the later search. [Paras 13]

The second proviso did not bar the later proceedings; the earlier assessment's conclusion did not preclude initiation of reassessment after the subsequent search.

Constructive possession - Incriminating material requirement for Section 153C - Whether documents seized from the personal assistant could be attributed to the assessee by way of constructive possession - HELD THAT: - The Court applied the principle of constructive possession, reasoning that the personal assistant was not an unrelated third party but the Managing Trustee's aide and custodian of documents related to MMHRC. Relying on analogous reasoning in criminal jurisprudence regarding constructive receipt/possession, the Court held that incriminating material found with the personal assistant could be attributed to the assessee, and therefore such possession furnished a permissible basis for issuing notices under the relevant provisions. [Paras 16]

Constructive possession was attributable to the assessee; material seized from the personal assistant could be treated as incriminating material against the petitioners.

Final Conclusion: The writ petitions were dismissed; the Court found adequate incriminating material and jurisdictional facts to sustain notices under Sections 153A and 153C, rejected the abatement contention, held constructive possession by the personal assistant attributable to the assessees, and vacated the interim orders.

Treatment of payments as royalty under section 9(1)(vi) of the Income-tax Act - royalty under Article 12 of DTAA - use of or right to use copyright - EULA/distribution agreements not creating interest or right in copyright - taxability of payments to non-resident software suppliers

Treatment of payments as royalty under section 9(1)(vi) of the Income-tax Act - royalty under Article 12 of DTAA - EULA/distribution agreements not creating interest or right in copyright - Whether payments received by the non-resident assessee for sale of software licenses to Indian distributors/end-users constitute "royalty" taxable in India - HELD THAT: - The Tribunal, following the decision of the Hon'ble Supreme Court in Engineering Analysis Centre of Excellence Pvt. Ltd., held that distribution agreements and End User Licence Agreements (EULAs) in the facts of these cases do not create any interest or right in the distributors or end-users amounting to "use of or right to use" copyright. Consequently, such receipts do not fall within the definition of "royalty" under Article 12 of the applicable DTAA, and the domestic provision dealing with royalty (section 9(1)(vi) along with its explanations) is not applicable where the DTAA definition is determinative. The Tribunal therefore concluded that amounts received by the assessee for sale of software licences are not taxable as royalty in India and that there was no obligation to treat them as such for TDS purposes. [Paras 8, 9]

The assessment treating the receipts as royalty is set aside; the orders of the CIT(A) are deleted on this issue and the Assessing Officer is directed to delete the income assessed as royalty for both years.

Final Conclusion: Both appeals are allowed: payments for sale of software licences in assessment years 2008-09 and 2009-10 are held not to be "royalty" under the DTAA and the assessments sustaining such taxation are set aside.

Suo motu refund under section 240 of the Income-tax Act - order of the Settlement Commission as an order passed in 'other proceeding under this Act' - application to the Settlement Commission 'at any stage of a case' under section 245C - credit for tax deducted at source as payment of tax on behalf of the assessee under section 199

Suo motu refund under section 240 of the Income-tax Act - order of the Settlement Commission as an order passed in 'other proceeding under this Act' - application to the Settlement Commission 'at any stage of a case' under section 245C - Whether an order of the Income-tax Settlement Commission under section 245D(4) amounts to an order passed in 'other proceeding under this Act' thereby obliging the Assessing Officer to grant refund suo motu under section 240 even though no return under section 139 was filed before making the application to the Settlement Commission. - HELD THAT: - The Tribunal held that an order under section 245D(4) by the Settlement Commission is an order in an 'other proceeding under this Act' within the meaning of section 240 and therefore, where a refund becomes due by virtue of such an order, the AO is obliged to refund without requiring a separate claim. Section 245C(1) permits an assessee to apply to the Settlement Commission 'at any stage of a case' and section 245C(1B) expressly contemplates applications both where a return has and where a return has not been furnished for the year. Consequently, non-filing of a return under section 139 before filing the ITSC application does not prevent the Settlement Commission from passing an order under section 245D(4) nor does it exclude the applicability of section 240 for suo motu refund giving effect to that order. The ITSC's determination in the application was therefore an order in 'other proceeding' triggering the AO's duty under section 240. [Paras 4, 6]

The ITSC order under section 245D(4) is an 'other proceeding under this Act' and obliges the AO to grant refund suo motu under section 240 notwithstanding non-filing of a return under section 139 prior to the ITSC application.

Credit for tax deducted at source as payment of tax on behalf of the assessee under section 199 - suo motu refund under section 240 of the Income-tax Act - Whether the ITSC's direction to the AO to give credit for 'taxes already paid' includes tax deducted at source and therefore requires the AO to allow TDS credit in computing the refund due pursuant to the ITSC order. - HELD THAT: - The Tribunal interpreted the ITSC direction that the AO shall compute tax payable 'after giving credit for taxes already paid by the applicant' to include taxes paid on behalf of the assessee. Section 199(1) treats tax deducted at source and paid to the Central Government as payment of tax on behalf of the person from whose income the deduction was made. Therefore, TDS constitutes 'taxes already paid' within the meaning of the ITSC's direction. The AO's narrow reading that the direction covered only direct payments by the assessee was rejected. Applying these legal principles, the Tribunal found that the CIT(A) correctly directed the AO to allow credit for TDS in determining the refund due under the ITSC order. [Paras 7, 8]

The direction to give credit for 'taxes already paid' includes tax deducted at source under section 199, and the AO must grant credit for TDS when giving effect to the ITSC order.

Final Conclusion: The Tribunal dismissed the Revenue's appeal, upheld the CIT(A)'s direction to allow credit for TDS while giving effect to the ITSC order for assessment year 2014-15, and confirmed that the AO is obliged under section 240 to grant refund suo motu in the circumstances.

Deduction under section 80P(2)(a)(i) for co-operative societies - principle of mutuality - application of Supreme Court decision in Mavilayi Service Co-operative Bank Ltd. - deduction under section 80P(2)(d) in respect of interest income - entitlement to proportionate cost and administrative expenses deduction against interest income - follow the jurisdictional High Court decision in Totgars Co-operative Sale Society Ltd.

Deduction under section 80P(2)(a)(i) for co-operative societies - principle of mutuality - application of Supreme Court decision in Mavilayi Service Co-operative Bank Ltd. - Claim for deduction under section 80P(2)(a)(i) restored to the Assessing Officer for fresh examination. - HELD THAT: - The Tribunal observed that the question whether the assessee satisfies the requirements for deduction under section 80P(2)(a)(i) must be re-examined in the light of the principles laid down by the Hon'ble Supreme Court in Mavilayi Service Co-operative Bank Ltd. As the Supreme Court clarified that the expression 'members' must be construed having regard to the relevant co-operative societies Act and settled several points material to entitlement under section 80P(2)(a)(i), the facts and applicability of the mutuality principle in the present case require fresh factual and legal scrutiny by the AO. For these reasons the Tribunal set aside the CIT(A)'s order on this issue and restored the matter to the file of the AO for reconsideration applying the Supreme Court's guidance. [Paras 5, 6]

Issue remitted to the Assessing Officer for fresh examination in accordance with Mavilayi Service Co-operative Bank Ltd.

Deduction under section 80P(2)(d) in respect of interest income - entitlement to proportionate cost and administrative expenses deduction against interest income - follow the jurisdictional High Court decision in Totgars Co-operative Sale Society Ltd. - Deduction claimed under section 80P(2)(d) in respect of interest income remitted to the AO with directions to allow proportionate expenses if assessed as other income. - HELD THAT: - The Tribunal followed the coordinate-bench treatment and the decision of the jurisdictional High Court in Totgars Co-operative Sale Society Ltd., whereby interest earned on bank deposits, if assessed under the head 'Income from other sources', is to be allowed subject to deduction of proportionate cost of funds, administrative and other expenses. The Tribunal found merit in the assessee's submission that such proportionate deductions must be allowed and therefore set aside the CIT(A)'s order on this point and directed the AO to permit the proportionate deduction of costs and administrative expenses if the interest income is brought to tax as other income. [Paras 6, 7]

Matter remitted to the Assessing Officer with direction to allow proportionate cost, administrative and other expenses against interest income if assessed as income from other sources.

Final Conclusion: The Tribunal set aside the CIT(A)'s orders on both points and remitted them to the Assessing Officer for fresh consideration: the section 80P(2)(a)(i) claim to be re-examined applying the Supreme Court's decision in Mavilayi, and the section 80P(2)(d) claim to be dealt with allowing proportionate expenses in accordance with the jurisdictional High Court authority; appeal treated as allowed for statistical purposes.

Validity of re-opening of assessment under the Income-tax Act - Deduction under section 80P(2)(a)(i) - Principle of mutuality - Deduction under section 80P(2)(d) - interest income from co-operative banks and allowance of proportionate cost and administrative expenses - Deduction under section 80P(2)(c) - commission income from activities not specified in clauses (a) or (b) - Assessment of interest as "income from other sources" and entitlement to expenses under the ordinary provisions

Deduction under section 80P(2)(d) - interest income from co-operative banks and allowance of proportionate cost and administrative expenses - Assessment of interest as "income from other sources" and entitlement to expenses under the ordinary provisions - Entitlement to deduction of proportionate cost, administrative and other expenses against interest income from deposits with co-operative banks. - HELD THAT: - The Tribunal accepted the assessee's contention, following the decision of the Karnataka High Court in Totgars Co-operative Sale Society Ltd. and the Tribunal's own decision in Karkala Co-op. S. Bank Ltd., that where interest from bank deposits is assessed as income under the head "other sources" the assessee is entitled to claim proportionate cost, administrative and other expenses attributable to earning that interest. The matter was set aside to the Assessing Officer with a direction to allow such proportionate deductions if the AO proposes to assess the interest as income from other sources. The Tribunal therefore reversed the CIT(A)'s confirmation of disallowance and remanded for computation/allowance of expenses consistent with the legal position recognised by the Karnataka High Court and applied by the Tribunal. [Paras 7, 9]

Order of CIT(A) on disallowance under section 80P(2)(d) set aside and matter restored to AO with direction to allow proportionate cost, administrative and other expenses if interest is assessed as income from other sources.

Deduction under section 80P(2)(c) - commission income from activities not specified in clauses (a) or (b) - Eligibility for deduction under section 80P(2)(c) in respect of commission income earned on sale of e-stamps and requirement for attribution of profits. - HELD THAT: - The Tribunal held that section 80P(2)(c) does not restrict deduction to income earned only from members, and that commission from sale of e-stamps is an activity not covered by clauses (a) or (b) and thus falls within clause (c). The Tribunal observed that it is necessary to determine the profits and gains attributable to the activity of earning commission on e-stamp sales and thereafter compute the allowable deduction under section 80P(2)(c) subject to statutory limits. Consequently the CIT(A)'s rejection was set aside and the matter restored to the AO for fresh examination and computation in light of this legal position. [Paras 8]

Order of CIT(A) on denial of deduction under section 80P(2)(c) set aside and matter remitted to AO to determine profits attributable to e-stamp commission and compute deduction under section 80P(2)(c).

Validity of re-opening of assessment under the Income-tax Act - Re-opening of assessment under section 148 was not adjudicated as the Tribunal considered the substantive issues on merits. - HELD THAT: - Because the Tribunal decided the substantive claims in favour of the assessee, it treated the assessee's challenge to the validity of the reopening as academic and declined to adjudicate that legal question, leaving the issue open. [Paras 9]

Assessee's challenge to validity of reopening left open (not adjudicated) as academic.

Final Conclusion: The appeal is allowed. The Tribunal directed the Assessing Officer to allow proportionate cost, administrative and other expenses against interest income if assessed as income from other sources, and remitted the commission income issue for determination of profits attributable to e-stamp sales and computation of deduction under section 80P(2)(c); the challenge to reopening under section 148 was left open as academic.

Application of Section 43B regarding timing of deduction for payments to third parties - treatment of notional interest as taxable income - ad-hoc disallowance for lack of bills and vouchers - deductibility of education cess and higher education cess

Application of Section 43B regarding timing of deduction for payments to third parties - Deletion of disallowance under Section 43B in relation to service tax component charged by a service provider. - HELD THAT: - The Tribunal found that on the facts the service tax component formed part of the cost of services paid to the service provider and was not a tax payable by the assessee to the Government. The assessee had paid the service provider, who alone was liable to remit service tax, and the separate book entries showing service tax did not make the assessee itself liable under the statutory provision. Applying these factual conclusions, Section 43B was held inapplicable and the disallowance was deleted. [Paras 3]

Disallowance under Section 43B deleted.

Ad-hoc disallowance for lack of bills and vouchers - Validity of ad-hoc disallowances made by the AO for expenses not supported by bills or vouchers. - HELD THAT: - The AO made ad-hoc disallowances because the assessee failed to produce supporting bills, vouchers or other documentary evidence to segregate personal from business expenses. The CIT(A) confirmed those findings. The Tribunal found no infirmity in the factual conclusion that the assessee did not discharge the burden of proof and therefore upheld the ad-hoc disallowances. [Paras 4]

Ad-hoc disallowances upheld.

Deductibility of education cess and higher education cess - Allowability as deduction of education cess and higher education cess paid. - HELD THAT: - Relying on admitted additional grounds and precedents considered by various Benches and High Courts, the Tribunal followed the reasoning of the Hon'ble Bombay High Court in Sesa Goa Ltd. and held that education cess and higher education cess are allowable as a deduction. The Tribunal noted divergent decisions and remands in other fora but concluded that the propositions applied supported allowing the claim for deduction. [Paras 4]

Claim for deduction of education cess and higher education cess allowed.

Treatment of notional interest as taxable income - Whether notional interest can be brought to tax where lower interest was charged to a related party. - HELD THAT: - The assessee had charged a lower rate of interest to a related party than to others; the AO treated the differential as notional income. The Tribunal, following precedents including the decision of the Gauhati High Court, held that notional interest which was neither bargained for nor received cannot be included in the assessee's taxable income. On that basis the addition of notional interest was deleted. [Paras 6]

Addition of notional interest deleted.

Ad-hoc disallowance for lack of bills and vouchers - Upholding of ad-hoc disallowances for AY 2014-15 where evidence was not furnished. - HELD THAT: - For AY 2014-15 the AO made ad-hoc disallowances as the assessee failed to produce vouchers, log books or explanations. The CIT(A) confirmed those findings. The Tribunal found the factual conclusion unassailable since the assessee failed to discharge the onus of proof, and therefore dismissed the grounds assailing the ad-hoc disallowances. [Paras 6]

Ad-hoc disallowances upheld.

Deductibility of education cess and higher education cess - Allowability as deduction of education cess and higher education cess for AY 2014-15. - HELD THAT: - Admitting the additional ground under settled principles, and having regard to the discussed authorities including the decision of the Hon'ble Bombay High Court, the Tribunal concluded that the education cess and higher education cess are deductible and accordingly allowed the assessee's claim for the assessment year. [Paras 7]

Claim for deduction of education cess and higher education cess allowed.

Final Conclusion: Both appeals for Assessment Years 2013-14 and 2014-15 are allowed in part: disallowances under Section 43B (service tax component) and the addition of notional interest are deleted; ad-hoc disallowances for lack of supporting evidence are sustained; the claims for deduction of education cess and higher education cess are allowed.

Treatment of ESOP expenses as revenue expenditure - deductibility of provision for contribution to approved gratuity fund under section 40A(7)(b) - non-applicability of section 43B to provision for approved gratuity fund - allocation of borrowings vis-a -vis interest-free internal accruals for purpose of interest disallowance - presumption that investments were from interest-free funds where internal accruals suffice

Treatment of ESOP expenses as revenue expenditure - Deletion of disallowance of ESOP expenditure of Rs. 26,59,559/- - HELD THAT: - The AO disallowed the loss on exercise of stock options treating the expenditure as not allowable as revenue. The CIT(A) deleted the disallowance following the Tribunal's earlier decision in the assessee's own case for the preceding year. The Tribunal, after considering the parties' submissions and the earlier ITAT precedent, found no infirmity in the CIT(A)'s reliance on that decision and upheld the deletion of the disallowance. [Paras 6]

Disallowance deleted; ground raised by the revenue dismissed.

Deductibility of provision for contribution to approved gratuity fund under section 40A(7)(b) - non-applicability of section 43B to provision for approved gratuity fund - Allowability of provision for contribution to approved gratuity fund claimed in computation and deletion of disallowance under section 43B (gratuity provisions of Rs. 1,28,79,193/- and Rs. 50,07,765/- respectively) - HELD THAT: - The AO disallowed gratuity provision under section 43B as unpaid on the date of filing the return. The CIT(A) allowed the claim relying on judicial decisions holding that provision for contribution to an approved gratuity fund is deductible under section 40A(7)(b) and is not hit by section 43B. The Tribunal examined the High Court authorities cited and found those decisions persuasive, accordingly upholding the CIT(A)'s deletion of the disallowance in the revenue appeal and, in the assessee's separate appeal for AY 2014-15, setting aside the CIT(A)'s order and directing the AO to allow the deduction under section 40A(7). [Paras 7]

CIT(A)'s allowance upheld for the revenue appeal; AO directed to allow gratuity deduction under section 40A(7) in the assessee's appeal.

Allocation of borrowings vis-a -vis interest-free internal accruals for purpose of interest disallowance - presumption that investments were from interest-free funds where internal accruals suffice - Deletion of disallowance of interest expenditure of Rs. 48,75,175/- on advances to employees' welfare trust - HELD THAT: - The AO disallowed interest on the ground that advances to the employees' welfare trust were funded from borrowings. The assessee contended, and produced material before the CIT(A), that sufficient internal accruals existed and no fresh borrowings were raised in the year; reliance was placed on precedent permitting a presumption that investments were made from interest-free funds where internal funds suffice. The CIT(A) accepted this position, and the Tribunal, having regard to the assessee's submissions, prior Tribunal findings in the assessee's own cases and absence of contrary authority from the Department, found no reason to interfere with the deletion of the interest disallowance. [Paras 8]

Disallowance of interest deleted; revenue's ground dismissed.

Final Conclusion: The Tribunal dismissed the revenue's appeal and allowed the assessee's appeal: the ESOP-related disallowance and the interest disallowance were deleted, and deductions for provision to an approved gratuity fund were held allowable under section 40A(7)(b) and not hit by section 43B, with the AO directed to give effect accordingly.

Disallowance of commission - burden of proof for genuineness of payments - account payee cheque not conclusive evidence of rendition of services - preponderance of probabilities - valuation of closing stock - lower of cost or net realizable value - remand for fresh consideration

Disallowance of commission - burden of proof for genuineness of payments - account payee cheque not conclusive evidence of rendition of services - preponderance of probabilities - Deletion/confirmation of additions made by the Assessing Officer in respect of commission payments to five persons. - HELD THAT: - The Tribunal examined the evidence regarding commission payments to five women. Two of them, Ayushi Goyal and Sangeeta Aggarwal, appeared before the Assessing Officer and their statements, recorded and placed on record, confirmed receipt of commission and particulars of customers introduced. The Tribunal found no reason to sustain the addition qua these two and directed deletion of the addition in their cases. As to the other three (Silky Aggarwal, Sonu Goyal and Priyanka Goyal), the assessee failed to produce their statements or other evidence of rendition of services; the fact that payments were made by account payee cheques and that two of the five persons were properly examined did not, on preponderance, establish the genuineness of transactions with the remaining three. Consequently, the Tribunal confirmed disallowance in respect of those three persons. [Paras 18, 19, 20, 21]

Addition of commission payments deleted in respect of Ayushi Goyal and Sangeeta Aggarwal and confirmed in respect of Silky Aggarwal, Sonu Goyal and Priyanka Goyal; Ground No.1 partly allowed.

Valuation of closing stock - lower of cost or net realizable value - remand for fresh consideration - Validity of the Assessing Officer's recalculation of closing stock value and addition made on alleged under valuation. - HELD THAT: - There was a conflict between the assessee's case and observations in the appellate proceedings as to the method of stock valuation (cost or market, whichever is lower, versus average cost). Given these inconsistent assertions in the orders below, the Tribunal considered it appropriate to remit the matter to the Assessing Officer for fresh examination. The assessee was directed to demonstrate that it consistently valued stock at cost or net realizable value (whichever is less) in earlier years; if the AO is satisfied on that basis no addition would be warranted, otherwise the AO may decide the issue afresh in accordance with law. [Paras 22, 23]

Issue remanded to the Assessing Officer for fresh consideration; Ground No.2 allowed for statistical purposes.

Final Conclusion: The appeal is partly allowed: the addition for commissions is deleted in part (two assessees) and confirmed in part (three assessees); the dispute over valuation of closing stock is remitted to the Assessing Officer for fresh decision after the assessee demonstrates consistent application of the prescribed valuation method.

Deemed dividend under section 2(22)(e) of the Income-tax Act, 1961 - substantial interest (shareholding exceeding 10%) - reserves and surplus for determining distributable profits - current account debit/credit balance of director - business exigency as defence to deemed dividend - calculation of accumulated profits on date of advance

Deemed dividend under section 2(22)(e) of the Income-tax Act, 1961 - substantial interest (shareholding exceeding 10%) - current account debit/credit balance of director - business exigency as defence to deemed dividend - reserves and surplus for determining distributable profits - Amount withdrawn by Rajendra Kumar Vemuluri from company over and above his credit balance treated as deemed dividend under section 2(22)(e) - HELD THAT: - The Tribunal examined the director's current account ledger, including an opening debit balance and subsequent entries, and found that amounts withdrawn in excess of the credit balance were debited to the director's account and, in part, used for acquisition of shares. The assessee's contention that the withdrawals were not for personal use but to acquire shares and that there existed a business exigency was not substantiated: no interest was charged on debit balances and the assessee failed to prove reserves and surplus on the specific dates of advances. The Tribunal rejected the submission that reserves and surplus should be computed by adjusting depreciation as per the Income-tax Act and held that it was the assessee's onus to demonstrate the correct computation on the date of advance. On these findings, and having regard to the assessee's more than 10% shareholding, the Tribunal held that the excess withdrawals constitute deemed dividend under section 2(22)(e) and quantified the deemed dividend at the concluded extent. [Paras 9]

Partly allowed; withdrawals treated as deemed dividend under section 2(22)(e) to the extent of Rs. 20,00,000.

Deemed dividend under section 2(22)(e) of the Income-tax Act, 1961 - substantial interest (shareholding exceeding 10%) - current account debit/credit balance of director - calculation of accumulated profits on date of advance - Amount withdrawn by Nagabhushanam Vemuluri from company over and above his credit balance treated as deemed dividend under section 2(22)(e) - HELD THAT: - Facts and contentions being materially identical to the co-appeal, and the assessee holding substantial interest in the company, the Tribunal applied the same reasoning: excess withdrawals over the credit balance in the director's current account, without proof of business exigency or correct computation of reserves and surplus on the date of advance, fall within section 2(22)(e). The Tribunal therefore upheld the deemed dividend character and quantified it for the assessee accordingly. [Paras 10]

Partly allowed; withdrawals treated as deemed dividend under section 2(22)(e) to the extent of Rs. 25,00,000.

Final Conclusion: Both appeals were partly allowed: the Tribunal held that, on the facts, portions of the amounts withdrawn by the respective directors who held substantial interest in the company are taxable as deemed dividends under section 2(22)(e) for AY 2006-07, quantified as stated.

Condonation of delay in filing appeals in the interest of substantial justice - withdrawal of approval under section 10(23C)(vi) of the Income tax Act as a power of the prescribed authority - jurisdiction of the Principal Commissioner of Income Tax to act as prescribed authority under amended Rule 2C/2CA - retrospective withdrawal of approval and its validity

Condonation of delay in filing appeals in the interest of substantial justice - Whether the identical delay of 121 days in filing the appeals should be condoned. - HELD THAT: - The Tribunal recorded un-rebutted explanations for the 121 days' delay and applied the principle of substantial justice, relying on the reported authorities that technical delay should yield to merits. In view of the explanations and absence of any contrary material from the Revenue, the Tribunal held that the delay was properly condoned and the appeals could be taken up on merits. The Tribunal therefore proceeded to hear the appeals despite the delay. [Paras 2]

Delay of 121 days condoned; appeals admitted for hearing on merits.

Withdrawal of approval under section 10(23C)(vi) of the Income tax Act as a power of the prescribed authority - jurisdiction of the Principal Commissioner of Income Tax to act as prescribed authority under amended Rule 2C/2CA - retrospective withdrawal of approval and its validity - Whether the Pr. Commissioner of Income Tax (Central) had jurisdiction to issue show cause and withdraw the assessee's approval under section 10(23C)(vi) with retrospective effect, and whether the withdrawal order is sustainable. - HELD THAT: - The Tribunal examined the Pr.CIT(Central)'s own clarification and the sequence of notifications amending the prescribed authority under the Rules. The material on record showed that the initial show cause notice dated 16 09 2019 (and the consequent withdrawal order dated 26 12 2019) was issued before the CBDT notification of 05 11 2019 which effected the change of prescribed authority; thus, at the time the show cause was issued the Pr.CIT(Central) had not been the duly authorised prescribed authority. The Tribunal treated this as a patent lack of jurisdiction at the threshold which could not be cured later. The Tribunal also noted that the Pr.CIT withdrew approval retrospectively to the date of original sanction (27 03 2008), well beyond the scope of the show cause and without establishing how conditions were violated in intervening assessment years. Given the absence of lawful jurisdiction when the exercise commenced and the retrospective effect imposed, the Tribunal found the impugned order unsustainable and did not decide the merits of the factual allegations underlying the show cause. [Paras 7, 8, 9, 10]

Impugned order of withdrawal is set aside for want of jurisdiction; the approval is restored.

Final Conclusion: The Tribunal condoned the delay and allowed the appeals on the ground that the Pr.CIT(Central) lacked jurisdiction to issue the show cause and to withdraw the approvals under section 10(23C)(vi); the impugned withdrawal orders dated 26 12 2019 are reversed and the approvals are restored.

Validity of notice under section 153C - Recording of satisfaction by the Assessing Officer of the searched person - Effect of proviso to section 153C regarding date of receiving seized documents - Computation of the six previous years and application of Rule 6F - Admissibility of jurisdictional challenge in appellate proceedings

Validity of notice under section 153C - Recording of satisfaction by the Assessing Officer of the searched person - Admissibility of jurisdictional challenge in appellate proceedings - Whether assessments framed under section 153C/143(3)/144 are valid where no satisfaction was recorded in the file of the assessed searched person and the AO accepted that no such satisfaction was recorded. - HELD THAT: - The Tribunal found it to be an admitted and decisive fact that no satisfaction was recorded in the file of the searched person. The statutory scheme contemplates two distinct roles: the Assessing Officer of the searched person must record satisfaction that documents seized pertain to another person and appear incriminating, and only thereafter the Assessing Officer of the other person may proceed and issue notices under section 153C. The remand report itself recorded that the AO had not recorded any satisfaction in the searched person's file and merely relied on the fact that the same officer held jurisdiction over both persons. In these circumstances the notice and consequent assessments were held to be without jurisdiction and therefore void. The Tribunal also observed that jurisdictional objections to proceedings under section 153C are maintainable and can be raised in appellate proceedings, and that the CIT(A) erred in rejecting the assessee's additional grounds raising this jurisdictional defect. [Paras 7]

Assessments and notices issued under section 153C/related provisions are invalid for want of the mandatory satisfaction recorded by the AO of the searched person; appeal allowed on this ground.

Effect of proviso to section 153C regarding date of receiving seized documents - Computation of the six previous years and application of Rule 6F - Whether the proviso to section 153C (construing the date of search for the other person as the date of receipt of seized documents) governs the relevant search year and the six previous years to be considered, and whether the AO erred in treating the impugned years as search years under the normal assessment provisions. - HELD THAT: - The Tribunal accepted the assessee's contention that where documents of the other person are received after the date of search in the searched person's case, the proviso to section 153C substitutes the date of receiving the books/documents as the reference point for the 'search' in relation to the other person. Applying that principle and the mandate of Rule 6F (which fixes the period for maintenance of accounts), the Tribunal agreed with the assessee's chronology that the date of receipt governs the computation of the relevant search year and the preceding six years. The Tribunal held that the Assessing Officer had wrongly assumed earlier assessment years as search years and proceeded under the normal provisions instead of applying the proviso; this error, together with the CIT(A)'s failure to admit additional evidence, supported allowing the appeals on merit. [Paras 7, 8]

The proviso to section 153C applies so that the date of receipt of seized documents determines the search year and the six previous years under Rule 6F; the AO's contrary approach was erroneous and the appeals succeed on this ground.

Final Conclusion: Both appeals are allowed: the assessments founded on notices under section 153C/related provisions are set aside because no satisfaction was recorded by the AO of the searched person and because the AO misapplied the proviso to section 153C (and Rule 6F) in determining the relevant search year and six previous years; the CIT(A) also erred in not admitting additional evidence and in rejecting the jurisdictional challenge.

Unexplained cash credit and burden of proof under section 68 - treatment of unsecured loans as unexplained credits - net profit embedded in sales versus gross turnover as taxable income - principle of natural justice and opportunity to be heard - remand for de novo adjudication with speaking order

Procedural forfeiture for not pressing a ground - Dismissal of Ground No.1 as not pressed by the assessee. - HELD THAT: - The counsel for the assessee expressly stated that Ground No.1 was not being pressed before the Tribunal. The Bench recorded that concession and dismissed Ground No.1 accordingly without further adjudication. [Paras 3]

Ground No.1 is dismissed as not pressed.

Unexplained cash credit and burden of proof under section 68 - treatment of unsecured loans as unexplained credits - principle of natural justice and opportunity to be heard - remand for de novo adjudication with speaking order - Additions made treating fresh capital introduced by partners and unsecured loans as unexplained cash credits were set aside and remitted to the Assessing Officer for fresh adjudication after affording opportunity to the assessee. - HELD THAT: - The AO added amounts as unexplained cash credits on the ground that the assessee failed to establish identity, genuineness and creditworthiness of partners' capital introductions and unsecured loans. The assessee explained inability to furnish documents due to serious intra-partner criminal events (including one partner's death and another's incarceration), supported by documentary material (partnership deed, FIR, related orders). The Tribunal accepted that these events prevented timely compliance and emphasized the requirement of fair opportunity under natural justice. In the interest of justice the Tribunal set aside the appellate order and remitted the matters to the AO for de novo adjudication, directing affording of sufficient opportunity and issuance of a speaking order. For statistical purposes the grounds were treated as allowed. [Paras 5, 6, 8, 9, 10]

Additions on account of fresh capital and unsecured loans remitted to the Assessing Officer for fresh adjudication after affording opportunity to the assessee; grounds treated as allowed for statistical purposes.

Net profit embedded in sales versus gross turnover as taxable income - principle of treating profit element, not entire turnover, as income - Addition made on account of alleged suppression of 'pass income' was deleted and net income as per reconciled accounts was to be treated as the income of the assessee. - HELD THAT: - The AO noted discrepant figures of 'pass income' in provisional accounts presented to the investigating wing and later reconciled accounts, and added the difference as undisclosed income. The assessee explained that the provisional figures were produced during an ongoing event (survey during Navratri) and final reconciliation post-event increased the pass income; the assessee also voluntarily filed the higher figure subsequently. The Tribunal relied on the settled principle (as applied by the Gujarat High Court) that where undisclosed sales are shown, it is the profit embedded in the sales - not the entire turnover - which is assessable as income unless suppression of investments is established. Having regard to the reconciled accounts showing net profit of the assessee, the Tribunal deleted the addition and directed the AO to treat the net income at the stated reconciled figure. [Paras 11, 12, 14, 15]

Addition of alleged suppressed 'pass income' is deleted; assessing officer to treat the net income as per reconciled accounts.

Final Conclusion: The appeal is partly allowed: Ground No.1 dismissed as not pressed; additions relating to partners' capital and unsecured loans remitted to the Assessing Officer for de novo adjudication after affording opportunity to the assessee; addition on account of alleged suppressed 'pass income' deleted and net income as per reconciled accounts to be accepted.

Immunity granted by Settlement Commission - revenue recovery proceedings - competent authority's adjudication on disputed facts - stay of coercive action pending consideration of representation - scope of writ under Article 226

Competent authority's adjudication on disputed facts - scope of writ under Article 226 - immunity granted by Settlement Commission - High Court will not adjudicate disputed factual questions regarding liability, payments, adjustment or immunity granted by the Settlement Commission in writ proceedings and such matters must be determined by the competent authorities. - HELD THAT: - The Court held that questions whether penalty was paid, adjusted or waived by the Settlement Commission involve disputed facts and documentary evidence which require adjudication by the statutory authorities. A writ court under Article 226 is empowered to scrutinise the decision-making process and legality, but it cannot conduct a roving inquiry into facts or substitute its own fact-finding for that of the competent authorities. Consequently, the existence or effect of the Settlement Commission's grant of immunity is a matter to be examined and decided by the appropriate authorities on the basis of documents and evidence placed before them rather than by writ adjudication. [Paras 7, 8, 9]

Writ court declined to determine the factual controversy about immunity/adjustment and held that the competent authorities must adjudicate those issues.

Revenue recovery proceedings - stay of coercive action pending consideration of representation - immunity granted by Settlement Commission - Representation by the writ petitioner challenging the revenue recovery action and relying on the Settlement Commission's order must be considered afresh by the Deputy Director General of Foreign Trade, and coercive action shall be restrained until such consideration is complete. - HELD THAT: - The Court directed that the respondent-Deputy Director General of Foreign Trade must consider the representation dated 14.02.2017 (and any connected documents) on merits and in accordance with law, providing personal hearing if requested. Timelines were fixed for re-submission of documents by the petitioner and for disposal by the respondent. Pending disposal of the representation, the respondents were restrained from initiating any coercive action, thereby preserving the petitioner's position while the statutory authority examines the claim of immunity and related factual contentions. [Paras 10, 11]

Representation to be considered afresh by the Deputy Director General of Foreign Trade within the prescribed time; respondents restrained from coercive measures until disposal.

Final Conclusion: Petitions disposed by directing the Deputy Director General of Foreign Trade to consider the petitioner's representation on merits within fixed timelines and, until that is done, respondents are restrained from taking coercive recovery action; the High Court refrained from deciding the underlying factual dispute about immunity, leaving such questions to the competent authorities.

Summary order. Matter adjourned for short accommodation to enable the Assistant Commissioner to obtain instructions regarding a supplier categorised as a 'risky supplier'; matter listed on 03.05.2021 and the Assistant Commissioner directed to join the next hearing.

Restoration of company name to the register - striking off from the register and consequent dissolution - filing of pending statutory documents and payment of prescribed fees/late fees - court-imposed conditions for revival including payment of costs - continuing power of Registrar of Companies to take appropriate action for other violations - standing of a director/representative to seek restoration notwithstanding struck off status

Restoration of company name to the register - filing of pending statutory documents and payment of prescribed fees/late fees - court-imposed conditions for revival including payment of costs - standing of a director/representative to seek restoration notwithstanding struck off status - The Tribunal allowed the company application for restoration of the company's name on the Register of Companies subject to specific conditions. - HELD THAT: - Having considered the pleadings and documentary material filed by the applicant and the submissions of the ROC, the Tribunal found that restoration was warranted in the circumstances and that the application should be allowed. Restoration was directed to be effected as if the name had not been struck off, with consequential change of status from "struck off" to "active". The Tribunal required compliance conditions as an integral part of the restoration: filing of all pending statutory documents including financial statements and annual returns from the date of incorporation, payment of prescribed fees/additional fees/late fees/fines as decided by the ROC within thirty days of restoration, payment of costs for revival through online payment as specified, delivery of a certified copy of the order to the ROC within thirty days, and publication of the order in the Official Gazette by the ROC after compliance. The Tribunal also recorded that the applicant's representative must personally ensure compliance. These conditions were treated as necessary to regularise statutory non-compliance which had led to the striking off. The Tribunal proceeded despite the ROC's contention about the company's dissolution and the applicant's locus, and permitted restoration on fulfilment of the prescribed conditions. [Paras 5]

Application CA/337/2020 allowed; ROC directed to restore the company's name and the company directed to comply with filing, fees, cost payment and procedural steps within specified timelines.

Striking off from the register and consequent dissolution - continuing power of Registrar of Companies to take appropriate action for other violations - The Tribunal clarified that the restoration order was confined to violations which led to the striking off and did not preclude the ROC from taking any other lawful action for other violations/offences by the company. - HELD THAT: - While ordering restoration, the Tribunal expressly limited the relief to the consequences of striking off and restoration of status, and made it clear that the ROC remained free to initiate or continue proceedings under law in respect of any other violations or offences committed by the company before or during the period it was struck off. This preserved the ROC's statutory powers to examine and act upon other compliance failures or offences separate from the restoration exercise. [Paras 5]

Restoration confined to striking-off related violations; ROC retains liberty to take appropriate action in respect of other violations/offences.

Final Conclusion: The Company Application was allowed: the Tribunal directed restoration of the company's name on the Register of Companies subject to specified compliance conditions (filing of pending documents, payment of prescribed fees/late fees and costs, delivery of certified order and Gazette publication), and clarified that the ROC remains at liberty to take lawful action in respect of any other violations or offences.

Restoration of company name to the Registrar's register - striking off for non filing of statutory documents - restoration subject to filing of outstanding statutory documents and payment of late fees - exercise of equitable discretion to protect immovable assets of a struck off company - lifting of freeze on bank accounts consequent to restoration

Restoration of company name to the Registrar's register - exercise of equitable discretion to protect immovable assets of a struck off company - Restoration of the Appellant Company's name in the Register of Companies was allowed. - HELD THAT: - The Tribunal found it just and fair to restore the company's name despite the Registrar having validly struck off the company for non filing of financial statements and annual returns. The presence of immovable property owned by the company and the risk of dissipation or fraudulent alienation of such assets were treated as a material factor favouring restoration; the Tribunal expressly relied on analogous judicial recognition of the need to protect significant land holdings pending restoration. On this basis the appeal was allowed and restoration ordered. [Paras 9, 11]

The name of the Appellant Company shall be restored in the Register of Companies as if it had not been struck off.

Striking off for non filing of statutory documents - restoration subject to filing of outstanding statutory documents and payment of late fees - Restoration was made conditional on compliance with outstanding statutory filings and payment of applicable fees/charges. - HELD THAT: - While permitting restoration, the Tribunal required the company to file all outstanding documents for the defaulting years and to complete all formalities including payment of any late fee or other charges leviable by the Registrar for late filing. Restoration was therefore ordered to take effect only after statutory compliance and payment obligations are discharged, preserving the Registrar's entitlement to statutory fees. [Paras 11]

Restoration to be subject to filing all outstanding documents and payment of late fees and other charges as required by law.

Exercise of equitable discretion to protect immovable assets of a struck off company - The Tribunal treated protection of the company's immovable property as a determinative equitable consideration favouring restoration. - HELD THAT: - The Tribunal noted that ownership of land by the struck off company was a relevant circumstance because of the risk of encroachment, fraudulent transfers or misuse if the company remained unregistered. Relying on precedent recognising the public interest in safeguarding immovable property, the Tribunal held that restoration was warranted to protect those assets. [Paras 8, 9]

The company's ownership of immovable property justified restoration in the exercise of the Tribunal's equitable discretion.

Lifting of freeze on bank accounts consequent to restoration - restoration of company name to the Registrar's register - Any freeze on the Appellant Company's bank account(s) grounded on the strike off was to be set aside upon restoration. - HELD THAT: - The Tribunal directed that directions freezing the company's bank account(s), if based on the strike off, shall be set aside immediately to enable the company to carry out business operations. The respondent was directed to give effect to restoration with all consequential effects within one week of the appellant's compliance with the conditions of restoration. [Paras 12]

Bank account freezes founded on the strike off shall be lifted immediately upon restoration and compliance with conditions.

Costs payable on restoration - Restoration was allowed subject to payment of specified costs to the Ministry of Corporate Affairs and the Prime Minister's Relief Fund. - HELD THAT: - The Tribunal imposed costs as a condition of allowing the appeal: the appellant was required to pay specified amounts to the Ministry of Corporate Affairs and to the Prime Minister's Relief Fund and to furnish proof of such payments to the Tribunal Registry within seven days. The Registry was to maintain particulars of such deposits in a separate e register. [Paras 10]

Appeal allowed subject to payment of the directed costs and proof of deposit to the Tribunal Registry.

Final Conclusion: The appeal is allowed: the Tribunal restored the company's name in the Registrar's Register on payment of prescribed costs and subject to filing all outstanding statutory documents and payment of applicable late fees and charges; any bank account freezes predicated on the strike off are to be lifted once the appellant complies with the conditions, and the respondent shall give effect to restoration with consequential effects within the stipulated time.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Assets of the corporate debtor include amounts in bank accounts - Powers and duties of the Interim Resolution Professional/Resolution Professional to take custody and control of assets - Section 14(2A) - supply of goods or services critical to protect and preserve the value of the corporate debtor - Related party transactions and transfers during the corporate insolvency resolution process - Scope and limits of High Court's jurisdiction under Section 482 Cr.P.C. vis a vis statutory mandates

Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Assets of the corporate debtor include amounts in bank accounts - Related party transactions and transfers during the corporate insolvency resolution process - Validity of the High Court's interim order permitting Respondent No.1 to operate its bank account without first restoring the sum transferred from the corporate debtor after commencement of CIRP. - HELD THAT: - The Court held that after admission of the Section 7 petition and declaration of moratorium the prohibitions in Section 14 operate and the corporate debtor's assets include bank balances. Transactions transferring funds out of the corporate debtor's account after the moratorium (the sum in question) fell within the ambit of Section 14 and could not be permitted to remain outside the control of the Resolution Professional without proper restoration. Consequently, the High Court's interim order allowing operation of the respondent's account without first placing the amount back in the corporate debtor's account cannot be sustained. The Court modified the impugned order to require remittance of the amount into the corporate debtor's account before allowing operation, while preserving the RP's duties under the IBC and not deciding the merits of the criminal proceedings. [Paras 16, 18, 25]

High Court order set aside insofar as it allowed operation of the account without the respondent first remitting the amount transferred after moratorium; respondent may operate account only after remitting that amount into the corporate debtor's account and assets are to be managed strictly under the IBC.

Powers and duties of the Interim Resolution Professional/Resolution Professional to take custody and control of assets - Section 14(2A) - supply of goods or services critical to protect and preserve the value of the corporate debtor - Extent to which the Resolution Professional may permit or authorise payments for supplies during moratorium and the role of Section 14(2A) in permitting critical supplies. - HELD THAT: - The Court reiterated that from the date of admission the management vests in the IRP/RP and that Sections 17 and 14 govern exercise of powers; Section 14(2A) (inserted 28.12.2019) permits non termination of supplies critical to preserve value where the IRP/RP so considers. Raw material supplies may fall within Section 14(2A) but the permissibility must be determined by the IRP/RP guided by the object of the IBC and factual matrix and, where committee approvals are required, by the Committee of Creditors. The judgment emphasises that such decisions cannot be permitted to undermine the statutory moratorium or to allow unauthorised transfers by the suspended management. [Paras 17, 21, 22, 23]

RP must exercise the power to permit critical supplies in accordance with Section 14(2A) and the IBC; unauthorised transfers by previous management during moratorium are not to be sustained.

Scope and limits of High Court's jurisdiction under Section 482 Cr.P.C. vis a vis statutory mandates - Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Whether the High Court, invoking Section 482 Cr.P.C., could pass an interim order that effectively permitted breach of statutory moratorium and the RP's control over assets. - HELD THAT: - The Court observed that the inherent jurisdiction under Section 482 cannot be used to countenance or validate a breach of statutory provisions. The phrase 'to secure the ends of justice' does not authorize the High Court to overlook or negate statutory dictates - here the moratorium and vesting of management in the IRP/RP under the IBC. Thus, the High Court exceeded permissible limits by granting interim relief which had the effect of undermining Section 14 and the RP's statutory control over assets. The Court therefore corrected the order to align with the statutory scheme, while not prejudging the pending criminal proceedings. [Paras 24, 25]

Section 482 power cannot be invoked to validate or perpetuate breach of the IBC moratorium; the High Court's interim order was modified to conform with statutory obligations under the IBC.

Final Conclusion: The appeal is allowed in part: the High Court's interim order is modified so that Respondent No.1 may operate its bank account only after remitting the sum transferred during the moratorium into the corporate debtor's account; the management of the corporate debtor's assets shall be governed strictly by the provisions of the IBC and the RP shall have regard to Section 14(2A) where applicable; the Court's modifications do not decide merits of the pending criminal proceedings and do not preclude Respondent No.1 from pursuing its claim in an appropriate forum.

Extension of Corporate Insolvency Resolution Process - extension under Section 12(2) and 12(3) of the Insolvency and Bankruptcy Code, 2016 - Rule 11 of the National Company Law Tribunal Rules, 2016 - exemption of COVID-19 period under Section 40C of the Code - Committee of Creditors' unanimous resolution for extension - consideration of impediments faced by the Resolution Professional in computing CIRP period

Extension of Corporate Insolvency Resolution Process - extension under Section 12(2) and 12(3) of the Insolvency and Bankruptcy Code, 2016 - Rule 11 of the National Company Law Tribunal Rules, 2016 - Committee of Creditors' unanimous resolution for extension - consideration of impediments faced by the Resolution Professional in computing CIRP period - exemption of COVID-19 period under Section 40C of the Code - Grant of extension of the Corporate Insolvency Resolution Process period and allowance of related applications under the IBC and NCLT Rules. - HELD THAT: - The Adjudicating Authority considered the application filed under Sections 12(2) and 12(3) read with Section 60(5) of the Code and Rule 11 of the NCLT Rules seeking extension of the CIRP. The Committee of Creditors had passed a unanimous resolution on 10.02.2021 in favour of seeking an extension to allow the Resolution Professional time to analyse and negotiate resolution plans. The RP submitted that time had been lost due to an error in the name of the Interim Resolution Professional and due to harassment and pending criminal complaints in another matter, in addition to the operational disruption caused by the COVID-19 pandemic. The Court took into account the computation of days since admission, the statutory ceiling on CIRP duration (maximum period under Sections 12(2) and 12(3)), and the statutory exemption of the COVID-19 period under Section 40C of the Code. Applying these considerations, the Authority found sufficient justification to extend the CIRP period for the limited additional time sought and, on that basis, allowed the applications and extended the CIRP to the date specified in the order. [Paras 3, 6, 7, 9]

Applications IA/142(CHE)/2021, IA/318/IB/2020 and IA/1226/IB/2020 allowed and the CIRP extended until 08.04.2021.

Final Conclusion: The Tribunal allowed the applications and extended the Corporate Insolvency Resolution Process of the corporate debtor until 08.04.2021 under Sections 12(2) and 12(3) of the IBC read with Rule 11 of the NCLT Rules, 2016.

Maintainability of a company petition under Section 7 of the Code - group corporate insolvency - jurisdiction to entertain proceedings under Section 60(5) of the Code - separate legal entity of corporate persons - estoppel and sub judice - lifting the corporate veil - solvency tests (cash-flow test and balance-sheet test)

Maintainability of a company petition under Section 7 of the Code - group corporate insolvency - jurisdiction to entertain proceedings under Section 60(5) of the Code - Whether the petition seeking initiation of a group CIRP by invoking Section 7 read with Section 60(5) of the Code is maintainable as a fresh company petition. - HELD THAT: - The Tribunal examined Section 60(5) and held that the provision confers jurisdiction to entertain or dispose of applications or proceedings by or against a corporate debtor or corporate person but does not entitle a party to file a fresh company petition for initiating a group insolvency in the manner attempted in the instant petition. The Association sought to rely on and re plead matters already the subject of CP(IB) No. 389/BB/2019 (pending on appeal) and asked for group CIRP by bringing the corporate debtor into separate proceedings; the Tribunal found this approach to be a misconstruction of Section 60(5) and not a permissible route to initiate a fresh group insolvency petition. The petition was therefore held to be not maintainable in law on this ground. [Paras 10]

Petition is not maintainable as a fresh group CIRP petition by invoking Section 60(5) and Section 7 in the manner prayed for.

Estoppel and sub judice - separate legal entity of corporate persons - Whether the petitioner is estopped from filing the present petition and whether prosecution of the instant petition is precluded by the pendency of related proceedings. - HELD THAT: - The Tribunal noted that the same association had earlier filed CP(IB) No. 389/BB/2019 against the holding company and had relied upon materially similar pleadings and documents. The present petition repeats substantial averments already raised and relies on the record of the earlier petition which is under appeal before the NCLAT. The Tribunal held that the petitioner cannot, after having taken the earlier course and omitted parties then, reopen the same contest by filing a fresh petition to cover earlier lapses; several issues including the scope of CIRP in relation to the project are sub judice before the appellate forum. On these facts the petitioners were held to be estopped from re litigating the same matters in a fresh company petition while the connected proceedings remain pending. [Paras 11, 13, 15]

Petitioner is estopped from invoking the Code again in respect of matters already raised and is bound by the pendency of the earlier proceedings.

Solvency tests (cash-flow test and balance-sheet test) - lifting the corporate veil - separate legal entity of corporate persons - Whether a prima facie case is made out to initiate CIRP against the corporate debtor on the basis of insolvency when the corporate debtor prima facie appears solvent. - HELD THAT: - The Tribunal considered the Respondent's contention that the corporate debtor (IEPL) satisfies the cash flow and balance sheet tests and has sufficient receivables and project cash to complete the project. It observed that initiation of CIRP is not warranted where the corporate debtor prima facie appears solvent and the Code is not to be used to push a viable company towards insolvency. The Tribunal recorded material particulars about project completion stages and available funds (as relied upon by the respondent and on record in the earlier CIRP material) and accepted that, on the prima facie record before it, the corporate debtor appears to have requisite cash flow and assets to complete the project. Consequently, the petition failed to demonstrate a prima facie case of insolvency of the corporate debtor warranting CIRP. [Paras 12, 14]

On the prima facie material, the corporate debtor appears solvent and initiation of CIRP against it is not justified.

Maintainability of a company petition under Section 7 of the Code - estoppel and sub judice - Whether, having considered the rival contentions and the pending appeals, the petitioners have made out even a prima facie case to initiate CIRP. - HELD THAT: - Weighing the jurisdictional interpretation of Section 60(5), the estoppel arising from the earlier petition and the prima facie solvency of the corporate debtor, the Tribunal concluded that the petitioners failed to establish a prima facie case to invoke CIRP in the present proceedings. The Tribunal explicitly stated that its decision is without prejudice to rights of parties in the pending appeals before the NCLAT, but on the material before it, initiation of CIRP could not be allowed. [Paras 16, 17]

Petitioner has failed to make out a prima facie case for initiation of CIRP; the petition is liable to be dismissed.

Final Conclusion: The Company Petition is dismissed for want of maintainability and for failure to establish a prima facie case for initiation of CIRP against the corporate debtor; no order as to costs.

Admission under Section 10 of the Insolvency and Bankruptcy Code, 2016 - corporate insolvency resolution process - default to operational creditor - interim resolution professional - moratorium - public announcement of corporate insolvency resolution process - supply of essential goods or services during moratorium

Admission under Section 10 of the Insolvency and Bankruptcy Code, 2016 - default to operational creditor - corporate insolvency resolution process - Application under Section 10 for initiation of corporate insolvency resolution process by the corporate applicant is admitted. - HELD THAT: - The Corporate Applicant filed an application under Section 10 alleging default in payment to its Operational Creditor. The record includes Form VI, audited and provisional financial statements reflecting the default, a chartered accountant's certificate indicating absence of financial creditors, a special resolution authorising initiation of CIRP and other statutory documents. In view of the established default and the material placed before the Bench, the application satisfies the requirements for admission under Section 10 and is therefore admitted. [Paras 2, 3, 5, 6, 8]

The Company Application under Section 10 is admitted and CIRP is initiated.

Interim resolution professional - Appointment of the Interim Resolution Professional on admission of the Section 10 application. - HELD THAT: - The Corporate Applicant recommended an IRP and the proposed IRP expressed consent to act. Having admitted the application, the Bench appointed the consenting IRP to take over management of the corporate applicant and directed him to carry out functions under the Code, with fees to be in accordance with IBBI regulations and directions. [Paras 6, 7, 8]

Mr. T. Sivagurunathan is appointed as Interim Resolution Professional and directed to perform functions under the Code.

Moratorium - supply of essential goods or services during moratorium - Declaration and scope of moratorium consequent to admission of CIRP. - HELD THAT: - Upon admission, the Bench declared the moratorium operative from the date of the order until completion of CIRP, approval of a resolution plan or order for liquidation. The moratorium prohibits institution or continuation of suits or execution of orders against the corporate applicant, transfer or disposition of assets by the corporate applicant, enforcement of security interest and recovery of property from the corporate applicant; it also provides that supply of essential goods or services, if continuing, shall not be terminated, suspended or interrupted during the moratorium. The Bench noted statutory exceptions where subsection (1) of Section 14 does not apply as notified by the Central Government. [Paras 7, 8]

Moratorium is declared with the stated prohibitions and safeguards; supply of essential goods or services shall continue during the moratorium as directed.

Public announcement of corporate insolvency resolution process - Obligation to make public announcement of the CIRP. - HELD THAT: - The Bench directed that the public announcement of the CIRP be made immediately in the manner specified under the Code, thereby ensuring commencement of statutory processes following admission. [Paras 7, 8]

Public announcement of the CIRP shall be made immediately as specified under the Code.

Communication of order to parties - Direction to the Registry to communicate the order to the corporate applicant and the IRP. - HELD THAT: - To effectuate the consequences of admission and the appointment, the Registry was directed to immediately communicate this order to the Corporate Applicant and the Interim Resolution Professional by e mail. [Paras 9]

Registry to immediately communicate the order to the corporate applicant and the IRP.

Final Conclusion: The Tribunal admitted the Section 10 application, initiated CIRP, appointed the consenting Interim Resolution Professional, declared moratorium with its statutory scope and safeguards, directed immediate public announcement of the CIRP and ordered communication of the order to the corporate applicant and the IRP.

Power of Adjudicating Authority to permit modification of list of stakeholders under Regulation 31(3) - reconstitution of Stakeholders' Consultation Committee under Regulation 31A - effect of withdrawal of claim on stakeholder list - liquidator's obligation to file modified list as directed by Adjudicating Authority

Power of Adjudicating Authority to permit modification of list of stakeholders under Regulation 31(3) - effect of withdrawal of claim on stakeholder list - reconstitution of Stakeholders' Consultation Committee under Regulation 31A - liquidator's obligation to file modified list as directed by Adjudicating Authority - Liquidator permitted to remove the Operational Creditor from the filed list of stakeholders and to reconstitute the Stakeholders' Consultation Committee following withdrawal of the claim, subject to filing a modified list before the Adjudicating Authority. - HELD THAT: - Regulation 31(3) of the IBBI (Liquidation Process) Regulations, 2016 authorises the liquidator to apply to the Adjudicating Authority to modify entries in the list of stakeholders and requires modification in the manner directed by the Adjudicating Authority. The Operational Creditor withdrew its claim and the liquidator removed the creditor from the stakeholders' list; this change therefore necessitated approval under Regulation 31(3). Given the withdrawal, reconstitution of the Stakeholders' Consultation Committee under Regulation 31A was consequential and appropriate. The Tribunal, applying the regulation, concluded that the liquidator is entitled to effect the revision but must file the modified list with the Adjudicating Authority for record and direction. The Tribunal directed the liquidator to file the amended list within seven days, thereby allowing the application and authorising modification and consequent reconstitution as sought. [Paras 3, 4, 5]

IA/749/IB/2020 is allowed; the Liquidator is permitted to revise the list of stakeholders and reconstitute the Stakeholders' Consultation Committee, and shall file the modified list before the Tribunal within seven days.

Final Conclusion: The application filed by the Liquidator under Regulation 31(3) seeking removal of the Operational Creditor from the stakeholders' list and reconstitution of the Stakeholders' Consultation Committee is allowed; the Liquidator must file the modified list within seven days.

Maintainability of review under Section 60(5) of the Insolvency and Bankruptcy Code - power to rectify mistake apparent from record - recourse to appellate forum instead of review (NCLAT) - date of default - limitation under Article 137 of the Limitation Act

Maintainability of review under Section 60(5) of the Insolvency and Bankruptcy Code - recourse to appellate forum instead of review (NCLAT) - Application under Section 60(5) IBC seeking review of admission order on limitation grounds is not maintainable before the Tribunal where an appeal to the NCLAT was available. - HELD THAT: - The applicant sought review of the Tribunal's admission order under Section 7 of the IBC on the ground that the petition was barred by limitation. The Tribunal considered the factual background and authorities relied upon but held that it would be inappropriate to "reverse the clock" at the review stage. Where an aggrieved party wished to challenge the admission order, the appropriate remedy was to move the appellate authority (NCLAT) when the order was passed. The Tribunal therefore declined to entertain the interlocutory review application under Section 60(5) and dismissed it as improper on procedural grounds, rather than adjudicating the limitation issue on merits. [Paras 6, 7]

IA No.114/2021 dismissed; petitioner's remedy was to appeal to the NCLAT and the Tribunal will not entertain the review seeking to reopen admission on limitation grounds.

Final Conclusion: The review application under Section 60(5) IBC seeking to set aside the admission on limitation grounds is dismissed as not the appropriate forum to reopen the admitted petition; the petitioner should have preferred an appeal to the NCLAT when the admission order was passed.

Refund under Rule 5 of Cenvat Credit Rules, 2004 - Cenvat credit of input services - no one-to-one correlation between input services and output services - definition of input service and its exclusion clause - requirement of production of invoices for refund - Department cannot dispute previously availed credit in refund proceedings - Board Circular DOF No. 334/1/2012-TRU dated 16/03/2012

Refund under Rule 5 of Cenvat Credit Rules, 2004 - no one-to-one correlation between input services and output services - Board Circular DOF No. 334/1/2012-TRU dated 16/03/2012 - Entitlement to refund of unutilized cenvat credit where the nexus between individual input services and exported output services was not established on a one-to-one basis. - HELD THAT: - The Tribunal accepted the appellant's submission that post-amendment to Rule 5 of the Cenvat Credit Rules, 2004 the phrases requiring the input service to be "used in relation to" a particular output were omitted, and that the Board's DOF No. 334/1/2012-TRU dated 16/03/2012 clarifies that no strict correlation is required. Applying the consistent view in earlier decisions relied upon by the appellant, the Tribunal held that the intention of the rule and the Circular is to facilitate refunds to exporters without demanding a one-to-one mapping between each input service and the exported output service; accordingly the learned Commissioner's rejection on grounds of lack of nexus was not sustainable. [Paras 5]

Refund claim allowed on the ground that no strict one-to-one correlation between input services and exported output services is required and the rejection for lack of nexus cannot be sustained.

Requirement of production of invoices for refund - Cenvat credit of input services - Whether rejection of refund on the ground that invoices were not produced was justified. - HELD THAT: - The Tribunal found the Commissioner's finding that invoices were not produced to be incorrect in relation to the services in question: the appellant had filed and produced the invoices before the original authority and again before this Tribunal. The invoices were examined by the original authority, and the Tribunal accepted the appellant's evidence of production of invoices, noting that some rejections had proceeded beyond the scope of the deficiency memo and Order in Original. [Paras 5]

Rejection of refund on the ground of non-production of invoices is not sustained; invoices were on record and examined.

Definition of input service and its exclusion clause - Rent-a-Cab service - Cenvat credit of input services - Whether Rent a Cab services availed for bringing and dropping employees fall outside the definition of 'input service' by way of exclusion and are ineligible for refund. - HELD THAT: - Although the Department relied on precedents excluding Rent a Cab in certain contexts, the Tribunal distinguished those decisions on facts, observing that in the present case the Rent a Cab services were used to bring and drop employees as a safety and operational necessity directly connected with provision of the exported engineering consultancy services. The invoices for such services were produced. On this factual basis and following the approach that input services used in the business enabling the output are covered, the Tribunal held Rent a Cab to be within the main clause of 'input service' for the appellant. [Paras 5]

Rent a Cab services, as used here to bring and drop employees in furtherance of the output service, qualify as input services and the rejection on exclusion grounds is not sustained.

Department cannot dispute previously availed credit in refund proceedings - Cenvat credit of input services - Whether the Department may, in refund proceedings, challenge the assessee's earlier availment of cenvat credit for input services. - HELD THAT: - The Tribunal followed precedent holding that where the Department had not questioned the availment of credit at the time the credit was taken and the assessee had been regularly filing returns showing the credit, the Department is not permitted to challenge the eligibility of that credit in the refund proceedings. Applying that principle, the Tribunal noted the Department had not disputed the credits earlier and therefore could not sustain the rejection of the refund on that ground. [Paras 5]

Departmental challenge to previously availed cenvat credit during refund proceedings is not permissible; refund cannot be rejected on that basis.

Final Conclusion: The appeal is allowed; the Tribunal directs grant of refund of the disputed amount of cenvat credit of Rs. 10,95,715/-, holding that (i) after amendment to Rule 5 and in view of the Board Circular no strict one to one correlation is required between input services and exported output services, (ii) invoices were produced and examined, (iii) Rent a Cab services used to bring/drop employees qualify as input services on the facts, and (iv) the Department cannot challenge previously availed credits in refund proceedings.

Refund of service tax paid on development charges - refund under Section 104 of the Finance Act, 1994 - time-bar and condonation of delay - entitlement to refund where payment/collection effected by third party (SIPCOT)

Refund under Section 104 of the Finance Act, 1994 - time-bar and condonation of delay - entitlement to refund where payment/collection effected by third party (SIPCOT) - Whether the refund claim filed by the appellant after the six month period prescribed under Section 104 was liable to be rejected as time barred, or whether the delay was excusable on account of confusion as to who should file the claim and delay in obtaining necessary documents from SIPCOT, thereby entitling the appellant to refund. - HELD THAT: - Section 104 prescribes a six month limitation running from the date the Bill received the assent of the President (assent received 31.3.2017). The refund claim was received by the authority on 9.10.2017, after the prescribed period. However, the record shows that when service tax was collected by SIPCOT, the appellant required supporting documents from SIPCOT to prosecute the refund, and there was initial confusion as to whether SIPCOT or the appellant should claim the refund-a position taken by the original authority in the first round. The Tribunal noted precedents where time limits have been considered in the light of who actually held the relevant documents and when the claimant was put in a position to file a refund claim. Applying that approach, the Tribunal found the delay resulted from legitimate inability to obtain documents and confusion about the proper claimant rather than inaction by the appellant. For these reasons the rejection of the refund as time barred was held to be unsustainable and the claim was to be processed.

Rejection of the refund claim as time barred set aside; appeal allowed and refund claim to be processed with consequential relief, if any.

Final Conclusion: The Tribunal held that although the refund claim was filed after the six month period specified by Section 104, the delay was excusable due to confusion over who should claim the refund and the appellant's need to obtain documents from SIPCOT; the impugned order rejecting the refund as time barred was set aside and the appeal allowed with consequential relief.

Bar on grant of bail under Section 37 NDPS Act - controlled substance under Section 9A NDPS Act - commercial quantity concept limited to narcotic drugs and psychotropic substances - entitlement of foreign national to bail - grant of bail subject to conditions and reporting obligations

Bar on grant of bail under Section 37 NDPS Act - controlled substance under Section 9A NDPS Act - commercial quantity concept limited to narcotic drugs and psychotropic substances - Applicability of the bar in Section 37 NDPS Act to the offence involving alleged recovery of pseudo ephedrine hydrochloride. - HELD THAT: - The Court held that the accused is prosecuted under Section 9A read with Section 25A of the NDPS Act for an alleged recovery of pseudo ephedrine hydrochloride, a notified "controlled substance" under Section 9A. The concept of "commercial quantity" and the consequent operation of the bar in Section 37 applies to offences involving "narcotic drugs" and "psychotropic substances" and not to substances which are notified merely as controlled substances under Section 9A. Since pseudo ephedrine is a controlled substance and not classified as a narcotic drug or psychotropic substance within the Act, the statutory bar under Section 37 does not get attracted in the present prosecution. [Paras 7, 8, 9, 10]

Section 37 NDPS Act does not apply to the prosecution for alleged possession of the controlled substance pseudo ephedrine hydrochloride; the bar is not attracted.

Entitlement of foreign national to bail - grant of bail subject to judicial satisfaction - Whether the petitioner, a foreign national, can be granted bail despite apprehensions about nationality and risk of absconding. - HELD THAT: - Relying on precedent principles emphasising the primacy of personal liberty and the rule that foreign nationality alone cannot deprive an accused of bail, the Court observed that incarceration cannot be justified merely on grounds of foreign origin. The petitioner had her passport seized at the time of arrest, has no criminal antecedents on record, and the investigation has been completed with the police report filed; moreover the trial is in the early stage and likely to take time. Concerns about influencing witnesses or absconding were noted by the prosecution but the Court framed appropriate supervisory conditions to address such risks rather than denying bail outright. [Paras 4, 11, 12, 13, 14]

Foreign nationality alone is not a bar to bail; petitioner is entitled to be considered for bail subject to appropriate conditions.

Grant of bail subject to conditions and reporting obligations - Grant of regular bail to the petitioner and the conditions to be imposed. - HELD THAT: - Applying the conclusions that Section 37 is not attracted and balancing the liberty interest with safeguards, the Court admitted the petitioner to bail on furnishing a personal bond and two solvent sureties, directed disclosure of and updates to the NCB of her residential address, weekly reporting to the NCB office until trial conclusion, and prohibition on leaving the NCT of Delhi without prior permission of the trial court. The Court clarified these measures as safeguards to allay concerns about attendance and witness influence while expressly refraining from expressing any opinion on merits. [Paras 17, 18]

Petitioner admitted to bail on specified conditions and reporting obligations; no expression of opinion on merits.

Relevance of Union of India v. Prateek Shukla - Applicability of the decision in Union of India v. Prateek Shukla to the present facts. - HELD THAT: - The Court examined the respondents' reliance on Union of India v. Prateek Shukla and found it inapplicable because the factual and statutory matrix in that case involved different provisions and combinations of sections than those invoked against the petitioner. Consequently, the precedent did not preclude grant of bail in the present matter. [Paras 16]

The cited decision is distinguishable and not applicable to the present case.

Final Conclusion: The petitioner, a foreign national prosecuted for alleged possession of the controlled substance pseudo ephedrine hydrochloride under Section 9A read with Section 25A NDPS Act, is admitted to regular bail on furnishing bond and sureties and subject to specified reporting, address disclosure and territorial restrictions; Section 37 NDPS Act is not attracted to this prosecution and the Court has not expressed any opinion on the merits.

Regular bail - NDPS Act - offences under Sections 21 and 23 - Section 50 of the NDPS Act - notice and personal search - Section 67 of the NDPS Act - sampling, testing and seizure procedure - Standing Orders/Instructions on sampling (NCB 1/88 and 1/89) - Fag end of trial - Section 37 NDPS Act - bar on bail for commercial quantity

Regular bail - Fag end of trial - Section 37 NDPS Act - bar on bail for commercial quantity - Whether the petitioner is entitled to regular bail pending trial. - HELD THAT: - The petition for regular bail was dismissed without deciding the merits. The Court noted that trial is at an advanced stage with only one prosecution witness remaining and that the petitioner, a foreign national, is accused of trafficking contraband in commercial quantity attracting the rigours of the NDPS Act. The complaint and investigation record state that notice under Section 50 was given and the petitioner recorded a voluntary statement, and that samples were drawn and tested under Section 67 procedures. The Court observed that alleged procedural infirmities in sampling and seizure (including compliance with Standing Orders 1/88 and 1/89) and inconsistencies in witness testimony can be agitated during defence evidence and final arguments before the trial court. In view of the stage of trial and the availability of appropriate forum for detailed scrutiny of procedural and evidentiary contentions, the Court declined to grant bail at this stage and did not examine the merits of the prosecution case. [Paras 25, 26, 27, 28]

Petition for regular bail dismissed at this stage; merits left to trial court.

Final Conclusion: Bail petition dismissed without adjudication on merits because trial is at the fag end (only one prosecution witness remains); alleged procedural infirmities and evidentiary disputes may be raised during defence at trial; no interim liberty granted.

Withdrawal of writ petition without liberty and abandonment of remedy under Article 226 - maintainability of fresh writ petition after unconditional withdrawal - public interest litigation v personal interest distinction - application of Order XXIII Rule 1 CPC principles by analogy to writ petitions - right under the Income Tax Informants Reward Scheme, 2018

Withdrawal of writ petition without liberty and abandonment of remedy under Article 226 - maintainability of fresh writ petition after unconditional withdrawal - application of Order XXIII Rule 1 CPC principles by analogy to writ petitions - Maintainability of the present writ petition in view of unconditional withdrawal of earlier writ petition W.P. No.3635/2020 (PIL). - HELD THAT: - The Court held that the petitioner, having unconditionally withdrawn the earlier public interest writ petition, cannot maintain the present writ petition which re-urges substantially the same core complaints. The petitioner's attempt to distinguish the earlier petition from the present one by asserting a different locus (claim to a reward under the Reward Scheme) and by splitting causes across multiple petitions was examined and rejected as an impermissible device to relitigate the same subject matter. The Court relied on the principle affirmed in Sarguja Transport Services that, in the interests of administration of justice and public policy, withdrawal of a writ petition without permission to file a fresh petition should be treated as abandonment of the remedy under Article 226 in respect of the cause of action relied upon. The Court noted that coordinate Benches had dismissed other petitions filed after the unconditional withdrawal on the same ground, and that permitting the present petition would subvert the rigours of unconditional withdrawal and encourage re-agitation of the same issues. Consequently, the Court found the present petition not maintainable and liable to dismissal. [Paras 21, 22]

The petition is dismissed as not maintainable in view of the unconditional withdrawal of the earlier writ petition; the remedy under Article 226 in respect of the same cause of action is deemed abandoned.

Final Conclusion: The writ petition is dismissed on the ground that the petitioner, having unconditionally withdrawn the earlier writ petition, cannot re-institute a fresh petition under Article 226 re-agitating the same core cause of action; the Court applied the principle in Sarguja Transport Services and treated the remedy under Article 226 as abandoned.