TaxTMI Updates e-Newsletter
Apr 26,2022

Amendment of pleading - summons for examination under the GST summons provision - freezing of electronic credit ledger and bank accounts in GST enforcement - interim procedural directions including service and listing

Amendment of pleading - Draft amendment filed by the writ applicant was allowed and ordered to be incorporated at the earliest. - HELD THAT: - The Court permitted the proposed amendment to the petition filed by the writ applicant. The order directs that the necessary incorporation of the draft amendment shall be carried out expeditiously. The allowance of the amendment was recorded as the operative direction in the order.

Draft amendment allowed; incorporation to be carried out at the earliest.

Summons for examination under the GST summons provision - freezing of electronic credit ledger and bank accounts in GST enforcement - interim procedural directions including service and listing - Procedural directions were issued in respect of ongoing summons and enforcement steps: notice to respondents was issued returnable on a specified date; direct service was permitted; the matter was ordered to be placed on top of the board on the returnable date. - HELD THAT: - The Court noted that proceedings are at the stage of issuance of summons under the GST summons provision and that a director had his statements recorded. The Court observed that the writ applicant's electronic credit ledger has been blocked and bank accounts frozen under GST enforcement powers. In the circumstances the Court issued notice to the respondents, permitted direct service, and directed that the matter be given priority listing on the returnable date. No final determination was made on the merits of the summons or the enforcement actions in this order.

Notice issued returnable on the specified date; direct service permitted; matter to be placed on top of the board on returnable date.

Final Conclusion: The petitioner's draft amendment was permitted to be incorporated forthwith; interim procedural directions were given (notice returnable on the stated date, direct service permitted and priority listing directed), while no adjudication on the merits of the summons or enforcement measures was undertaken in the order.

Composite supply - principal supply - naturally bundled and supplied in conjunction with each other - tax liability on separate supplies

Composite supply - naturally bundled and supplied in conjunction with each other - principal supply - tax liability on separate supplies - Whether sale of coal followed later by a separate work order for coal handling and distribution constitutes a composite supply or two independent supplies taxable separately - HELD THAT: - The Authority examined the statutory definition of composite supply, which requires supplies to be "naturally bundled and supplied in conjunction with each other in the ordinary course of business" and one of them to be the principal supply. The applicant's case discloses that the purchaser first issues a purchase order for coal, title and ownership of coal vest with the buyer on that sale, and only thereafter issues a separate work order for handling and distribution which is performed subsequently. Documentary evidence produced (purchase order and later work order) and the applicant's own admissions show that the two transactions are entered into at different times, invoices are raised separately, and the handling service is rendered in respect of goods already owned by the buyer. Consequently the supplies are not "supplied in conjunction with each other in the ordinary course of business" nor are they naturally bundled; they are independent supplies. Applying that legal test, the Authority held that the handling and distribution service cannot be clubbed with the earlier sale of coal as a composite supply and must be taxed on its own merits at the rate applicable to the service. [Paras 7, 8, 9, 10, 11]

Sale of coal effected by a separate purchase order and a subsequently ordered coal handling and distribution service are independent supplies and not a composite supply; each supply is taxable at its applicable rate.

Final Conclusion: The Authority ruled that where coal is sold under a separate purchase order and handling/distribution is later contracted by a distinct work order, the transactions are separate supplies; coal is liable to GST at the rate applicable to supply of coal and the subsequent handling and distribution service is liable to GST at the rate applicable to that service (at present 18%).

Input tax credit - works contract service - construction of immovable property - plant and machinery - foundation or structural support - blocked credits for construction of immovable property - composite supply of works contract - requirement of invoice in recipient's name for availment of ITC

Input tax credit - works contract service - construction of immovable property - plant and machinery - foundation or structural support - blocked credits for construction of immovable property - composite supply of works contract - requirement of invoice in recipient's name for availment of ITC - Eligibility of ITC on steel, cement and other consumables used for enhanced foundation/structural works in the integrated factory building - HELD THAT: - The Authority examined whether additional reinforcement, increased volume of foundation, plinth beams and related civil works executed as part of construction of the integrated factory qualify as 'foundation or structural support' of 'plant and machinery' and thus attract input tax credit. The materials and services in question were procured and invoiced as part of a composite works contract for construction of the factory premises. The Explanation to the definition of 'plant and machinery' excludes 'land, building or any other civil structures' and permits ITC only where the foundation or structural support is that with which apparatus, equipment or machinery is fixed to earth. The Authority found that the incremental works constituted part of the civil structure of the factory (a building housing plant and machinery) and were not shown to be the specific foundation by which plant and machinery are fixed to earth. Further, the supplies were received as composite works contract invoices and the applicant did not establish that inputs (steel, cement, consumables) were purchased in their name as distinct supplies, a pre-condition for claiming ITC. Applying these principles, the Authority held that the additional civil works fall within 'any other civil structure' excluded from ITC and the GST paid on the steel, cement and consumables is not eligible as ITC. [Paras 8, 9, 10]

ITC on steel, cement and other consumables used for the enhanced foundation/structural works is not available to the applicant.

Input tax credit - plant and machinery - foundation or structural support - requirement of invoice in recipient's name for availment of ITC - Eligibility of ITC on purchased structures, pre-cast reinforced concrete beams, poles and other capital goods (rails) claimed to be procured 'as is' - HELD THAT: - The applicant sought a ruling on credit for pre-cast structures, reinforced beams, poles and other capital goods such as rails claimed to have been purchased as distinct goods. The Authority observed that the applicant did not furnish documentary substantiation evidencing procurement of those items as separate supplies (invoices in applicant's name) nor details of the specific capital goods. Advance rulings require verification of facts and supporting documents to determine ITC eligibility on such items. In absence of requisite factual documents and proof of distinct procurement, the Authority could not adjudicate entitlement to credit for these items. [Paras 7, 9, 10]

Question on ITC eligibility for pre-cast structures, reinforced concrete beams, poles and other capital goods (rails) is not answered for want of factual and documentary substantiation.

Final Conclusion: The Authority rules that ITC on steel, cement and other consumables used in the enhanced civil works of the integrated factory is not admissible; the claim for ITC on pre-cast structures, reinforced beams, poles and other capital goods (rails) remains unanswered due to lack of documentary proof of separate procurement.

Advance ruling admissibility - applicability of notification - Explanation to Rule 96(10) of CGST Rules - refund of integrated tax on export - scope of Section 97(2) of the CGST Act - definition of advance ruling applicant under Section 95(a) - receipt of supply v. supply

Explanation to Rule 96(10) of CGST Rules - refund of integrated tax on export - applicability of notification - scope of Section 97(2) of the CGST Act - Questions 1, 2 and 4 seeking clarity on applicability of Notification No.16/2020 (the Explanation to Rule 96(10)) and on procedural aspects of claiming refund of IGST/compensation cess are not admissible before the Authority. - HELD THAT: - Rule 96(10) and the Explanation inserted by Notification No.16/2020 relate to restrictions and conditions for claiming refund of integrated tax paid on exports. Section 97(2) prescribes the matters on which advance ruling can be sought, and the Authority has no jurisdiction to admit questions that pertain to refund procedure or the admissibility of refund claims. The notification relied upon amends Rule 96(10)(b) by inserting an Explanation effective from 23.10.2017; however, since the questions concern refunds and their procedural application, they fall outside the ambit of matters admissible for advance ruling under Section 97(2). Accordingly, the Authority does not admit questions 1, 2 and 4 for ruling. [Paras 6, 7]

Questions 1, 2 and 4 are not admitted as they concern refund-related provisions outside the Authority's jurisdiction.

Receipt of supply v. supply - definition of advance ruling applicant under Section 95(a) - advance ruling admissibility - Question 3 on whether an EOU is compulsorily required to procure goods/services without payment of tax from domestic suppliers is not admissible before the Authority. - HELD THAT: - Section 95(a) limits advance ruling to decisions in relation to supplies undertaken or proposed to be undertaken by the applicant (i.e., the supplier). Question 3 concerns the applicant's procurement (receipt of supplies) and whether recipients like EOUs must procure without tax under Notification No.48/2017 read with Section 147. Since the question is about receipt of supplies rather than supplies made by the applicant, it does not fall within the matters on which an advance ruling may be sought and is therefore outside the Authority's jurisdiction. [Paras 6, 7]

Question 3 is not admitted as it relates to receipt of supplies and not to supply by the applicant, and thus falls outside the Authority's remit.

Final Conclusion: All questions raised by the applicant are rejected as inadmissible: questions 1, 2 and 4 for being refund-related matters outside the Advance Ruling Authority's jurisdiction, and question 3 for relating to receipt of supplies rather than supply by the applicant.

Services of a pure agent - Rule 33 of the CGST Rules - Explanation to Rule 33 - value of supply - transaction value - incidental expenses - operational lease

Services of a pure agent - Rule 33 of the CGST Rules - Explanation to Rule 33 - Whether the payments for registration fees, motor vehicle tax, RTO charges, insurance premium and similar 'on-road' components paid by the applicant in respect of vehicles leased out fall within the concept of a "pure agent" under Rule 33 and its Explanation. - HELD THAT: - The Authority examined whether the applicant satisfied the conditions in Rule 33 and the Explanation thereto: (i) payment to a third party on authorization by the recipient; (ii) separate indication in the invoice; and (iii) supplies procured as pure agent are in addition to the supplier's own supplies. The Authority found that the applicant carries on operational leasing and remains the owner of the vehicles; the on road components are procured to enable the vehicle (owned by the applicant) to be put to use for the very purpose of the lease. There is no contractual arrangement under which the applicant procures those components solely as an agent of the lessee; rather such payments are made by the owner/lessor to satisfy statutory requirements necessary to put the vehicle to use. Consequently, the applicant did not establish that it neither intended to hold title nor procured the services solely for the recipient's account as required by the Explanation. The Authority therefore concluded that the applicant does not qualify as a "pure agent" for these on road components. [Paras 7, 8, 9]

The applicant is not a "pure agent" in relation to the on road components (registration fees, motor vehicle life tax, RTO charges, insurance premium etc.).

Value of supply - transaction value - incidental expenses - operational lease - Whether the on road components reimbursed by the lessee form part of the value of the leasing service and are includible in the transaction value for GST. - HELD THAT: - Section 15 defines transaction value as the price actually paid or payable and requires inclusion of taxes, duties and incidental expenses. The Authority found that the dealer's debit notes for on road components form part of the consideration incurred by the applicant in purchasing and preparing the vehicle for lease. Those on road components are incidental expenses necessary to put the vehicle to use and are capitalised in the applicant's books and built into the EMI. Since the applicant does not act as a pure agent, these costs cannot be excluded under Rule 33 and therefore must be included in the transaction value of the leasing supply. The Authority accordingly held that such amounts are part of the taxable value of the leasing service and taxable at the rate applicable to the leased goods. [Paras 8, 9]

On road components recovered from the lessee form part of the value of the leasing service and are includible in the transaction value for GST (taxable at the rate applicable to the leased goods).

Final Conclusion: The Authority rules that payments by the applicant towards registration, motor vehicle life tax, RTO charges, insurance premium and similar on road components are not supplies procured as a "pure agent" under Rule 33 and, being incidental to the operational lease, must be included in the transaction value of the leasing service and are taxable accordingly.

Classification under Customs Tariff / HSN - Rate of tax under Notification No. 01/2017-C.T.(Rate) (Schedule III) - Advance ruling admissibility limited to supplies proposed or undertaken by the applicant - Binding effect of advance ruling on applicant and jurisdictional authorities - Distinction between air separators and therapeutic respiration apparatus

Classification under Customs Tariff / HSN - Distinction between air separators and therapeutic respiration apparatus - Rate of tax under Notification No. 01/2017-C.T.(Rate) (Schedule III) - Classification of the PSA Medical Oxygen Generation Plant and the applicable GST rate for its supply by the applicant. - HELD THAT: - The Authority examined the product, its manufacturing process, component composition and functioning and concluded that the PSA Medical Oxygen Generation Plant operates as an air separator that generates oxygen by Pressure Swing Adsorption and is not a therapeutic respiration appliance. The relevant Customs Tariff (CTH) headings and Explanatory Notes were considered. Heading 9019 (oxygen therapy and therapeutic respiration apparatus) was found inapplicable because the PSA plant is not an appliance used directly for oxygen therapy or artificial respiration. The product falls within the scope of filtering or purifying machinery and apparatus for gases under Chapter 8421. Specifically, having regard to the nature and function of the plant, it is classifiable under CTH 8421 39 and more precisely under CTH 8421 39 90 (other). In view of this classification, the applicable rate is that specified for Chapter/heading 8421 in Schedule III of Notification No. 01/2017-C.T.(Rate) dated 28.06.2017, namely CGST 9% and corresponding SGST 9% (SI.No.322 of Schedule-III). [Paras 8, 9, 10]

The PSA Medical Oxygen Generation Plant is classifiable under CTH 8421 39 90 and taxable at CGST 9% and SGST 9% as per SI.No.322 of Schedule III of Notification No.01/2017-C.T.(Rate).

Advance ruling admissibility limited to supplies proposed or undertaken by the applicant - Binding effect of advance ruling on applicant and jurisdictional authorities - Admissibility of the applicant's query seeking tax benefits available to a recipient (hospital) for installing the PSA plant. - HELD THAT: - The Authority considered the scope of advance rulings under Section 95/97 of the Act and reiterated that advance rulings relate only to matters specified in Section 97(2) and apply to supplies undertaken or proposed to be undertaken by the applicant seeking the ruling. Questions concerning tax benefits applicable to a recipient (the hospital) fall outside the ambit of matters admissible for advance ruling by the applicant. The Authority therefore declined to entertain the question seeking tax benefits available to the hospital. The binding nature of the ruling is confined to the applicant and the jurisdictional tax authorities as provided in the statute. [Paras 6, 10]

The question on tax benefits for the hospital is not admissible before the Authority and is rejected.

Final Conclusion: The Authority ruled that the PSA Medical Oxygen Generation Plant supplied by the applicant is an air separator classifiable under CTH 8421 39 90 and taxable at CGST 9% and SGST 9%; the query on tax benefits to the hospital was held inadmissible and rejected.

Determination of value of supply - Margin scheme for second-hand goods - Rule 32(5) of CGST Rules - Input tax credit not availed - Taxable supply - Advance Ruling under Section 97(2) of the CGST Act

Rule 32(5) of CGST Rules - Margin scheme for second-hand goods - Input tax credit not availed - Determination of value of supply - Eligibility to determine taxable value under Rule 32(5) of the CGST Rules for sale of used/second hand gold jewellery purchased from unregistered persons and taxed only on the margin. - HELD THAT: - Rule 32(5) prescribes that where a person deals in buying and selling of second hand goods (used goods as such or after minor processing not changing the nature of the goods) and no input tax credit has been availed on purchase, the value of supply may be taken as the difference between selling price and purchase price. The Authority examined whether the applicant satisfies the conditions of Rule 32(5): (i) the supplies are taxable (applicant's supplies of jewellery fall under the relevant rate entries and thus are taxable); (ii) the goods are second hand/used and, if processed, only subjected to minor processing not altering their nature (applicant asserts cleaning/polishing only); and (iii) no input tax credit has been availed on purchase (applicant purchases predominantly from unregistered persons). However, the Authority found that the applicant failed to furnish documentary evidence to substantiate the asserted link between specific purchases and subsequent sales, the minor nature of processing, and accounting trail despite specific requests and notices to produce purchase particulars, grammage and process documentation. Because advance rulings rely on verifiable material, and the applicant did not supply the required substantiation called for during the hearing and in subsequent notices, the Authority could not pronounce a ruling on the applicability of Rule 32(5) to the applicant's transactions. [Paras 7, 8, 9]

No ruling is extended as the applicant failed to furnish the substantiating documents required by the Authority to determine eligibility under Rule 32(5).

Final Conclusion: The application under Section 97(2) was admitted but, for want of required documentary substantiation demonstrating that the conditions of Rule 32(5) are satisfied, the Authority declined to extend any ruling on whether the applicant may determine value of supply on the margin basis.

Classification as static converters under Chapter 85 - HSN 8504 40 90 - solar power based devices - application of Explanatory Notes and Chapter Note 2 to Chapter 85 - concessional rate entry for renewable energy devices (Sl. No. 234 / Sl. No. 201A of Notification No. 01/2017 C.T.(Rate)) - MPPT and MNRE specifications as determinative of functional character

Classification as static converters under Chapter 85 - HSN 8504 40 90 - application of Explanatory Notes and Chapter Note 2 to Chapter 85 - Classification of the Versa Solar Pump Drive (solar pump controller) for solar submersible pump application. - HELD THAT: - The Authority examined the product's construction, function and features (DC input from solar panels; MPPT; conversion/optimization of power for driving ACIM/PMSM submersible pumps; standalone controller with protections and remote monitoring) and applied the Chapter 85 explanatory notes and Chapter Note 2. Heading 8504 (electrical static converters) covers apparatus used to convert electrical energy and may include auxiliary circuits to regulate voltage/current; Headings 8501-8504 do not apply to goods described in headings 8511, 8512, 8540-8542, which the product does not fall under. Given that the controller converts DC from solar panels into suitable power for the pump and incorporates MPPT and regulating/protective circuits, the Authority concluded the product is a static converter properly classifiable under CTH 8504 and, more precisely, under CTH 8504 40 90 (other static converters). [Paras 7, 9]

Versa Solar Pump Drive is classifiable under CTH 8504, specifically CTH 8504 40 90.

Solar power based devices - concessional rate entry for renewable energy devices (Sl. No. 234 / Sl. No. 201A of Notification No. 01/2017 C.T.(Rate)) - MPPT and MNRE specifications as determinative of functional character - Applicable GST rate on the Versa Solar Pump Drive when supplied for integration with solar panels and AC submersible pumps. - HELD THAT: - Having classified the product as a static converter that, when used between solar panels and AC submersible pumps, functions as a solar power based device, the Authority examined the relevant rate notifications. Entry Sl. No. 234 (Schedule I) had earlier covered "solar power based devices" at concessional rate up to 30.09.2021. With effect from 01.10.2021 the concessional coverage for such renewable energy devices is provided by Sl. No. 201A of Schedule II to Notification No. 01/2017 C.T.(Rate) (as amended by Notification No. 08/2021). Applying Sl. No. 201A to goods falling within Chapters 84 or 85 described as solar power based devices, the Authority held that the product when supplied for solar integration attracts the concessional rate prescribed by that entry as effective from 01.10.2021. [Paras 8, 9]

When supplied for integration with solar panels and AC submersible pumps, the Versa Solar Pump Drive qualifies as a "solar power based device" and is covered by Sl. No. 201A of Schedule II of Notification No. 01/2017 C.T.(Rate) effective from 01.10.2021; accordingly the rate is CGST @ 6% and SGST @ 6% (w.e.f. 01.10.2021).

Final Conclusion: The Authority ruled that the Versa Solar Pump Drive is classifiable under CTH 8504 40 90 as a static converter, and when supplied for integration with solar panels and AC submersible pumps it qualifies as a solar power based device covered by Sl. No. 201A of Notification No. 01/2017 C.T.(Rate) (effective 01.10.2021), attracting CGST 6% and SGST 6%.

Concessional GST rate for construction services to Government Entity - Tax treatment of sub-contractors under Notification No. 11/2017 (as amended) - Definition of Government Entity in notification - Application of concessional rate from effective date of amended notification or contract commencement - Scope of Section 97(2) - matters admissible to Advance Ruling

Concessional GST rate for construction services to Government Entity - Tax treatment of sub-contractors under Notification No. 11/2017 (as amended) - Definition of Government Entity in notification - Entitlement of the applicant (sub-contractor) to the concessional GST rate of 12% for works contract services in relation to construction for IIT Bhubaneswar. - HELD THAT: - The Authority examined Notification No. 11/2017-Central Tax (Rate) (as amended) and its item 3(vi)(b) and item 3(ix), identifying three pre-requisites: (i) construction of a structure meant predominantly for educational use; (ii) services provided to a Government/ Governmental Authority or Government Entity; and (iii) where supplied to a Government Entity, the services must have been procured by that entity in relation to work entrusted to it by the Central/State government or local authority. The applicant's contract documents establish that the works are towards construction of IIT Bhubaneswar (an educational institution). The Authority found that IIT Bhubaneswar satisfies the notification's definition of Government Entity-being a society established under the Institutes of Technology Act, 1961 and constituting an institution established by the Government of India-thus fulfilling the second prerequisite. Reliance on section 6 of the Institutes of Technology Act showed that the construction works fall within functions entrusted to IITs by statute, satisfying the third prerequisite. Consequently, the subcontracted works contract services supplied in relation to the IIT project fall within the concessional entries and merit GST @ 12% (CGST 6% + SGST 6%). [Paras 4, 5]

The applicant's works contract services in relation to construction for IIT Bhubaneswar as sub-contractor qualify for the concessional GST rate of 12% under Notification No. 11/2017 (as amended).

Application of concessional rate from effective date of amended notification or contract commencement - Effective date of amended notification - Temporal applicability of the 12% concessional rate - whether it applies from the date of the amended notification or from a later date. - HELD THAT: - The Authority held that the concessional rate of 12% applies from the date when Notification No. 1/2018-Central Tax (Rate) dated 25.01.2018 came into effect, or from the commencement date of the contract, whichever is later. This conclusion follows the Authority's view that the amendment establishing the concessional rate governs the temporal scope of applicability and that the contract commencement may post-date the notification, in which case the later date governs. [Paras 4, 5]

The 12% rate is applicable from the date the amended notification (Notification No.1/2018 dated 25.01.2018) came into effect or from the commencement date of the contract, whichever is later.

Final Conclusion: The Authority rules that the applicant's subcontracted works contract for construction of IIT Bhubaneswar qualifies for the concessional GST rate of 12% under Notification No. 11/2017 (as amended), and that the 12% rate applies from the effective date of the amending notification (25.01.2018) or the contract commencement date, whichever is later; the applicant's question on revision of invoices was not considered under Section 97(2).

Classification of supply as goods or services - job work - GST rate for job work services in relation to manufacture of food products - application not to be admitted where question is pending in other proceedings under first proviso to Section 98(2) of the CGST Act

Application not to be admitted where question is pending in other proceedings under first proviso to Section 98(2) of the CGST Act - classification of supply as goods or services - job work - GST rate for job work services in relation to manufacture of food products - Advance Ruling application not admitted under the first proviso to Section 98(2) of the CGST/TNGST Act 2017. - HELD THAT: - The Authority examined whether the applicant's questions on (a) classification of the activity as supply of goods or services and (b) the applicable GST rate for job work relating to extraction of coconut oil, rice bran oil and the respective de-oiled residues could be admitted for advance ruling. Records supplied by the State showed that adjudication orders for FY 2017-18, FY 2018-19 and FY 2019-20 had been passed on the basis of available investigation material, and an appeal by the Department (Form GST APL-03) sought reassessment on multiple grounds including rate of tax and job work (points Nos. 14 and 24 of the Grounds of Appeal). Those grounds demonstrate that the very questions raised in the ARA application are pending in ongoing departmental proceedings. In view of the statutory embargo in the first proviso to Section 98(2), an application raising questions already pending or decided in any proceedings in the applicant's case cannot be admitted. Consequently, the Authority declined to decide the merits of classification or rate and refused to admit the application. [Paras 7, 8]

Application not admitted under the first proviso to Section 98(2) of the CGST/TNGST Act 2017.

Final Conclusion: The Advance Ruling application filed by M/s. Vaighai Agro Products Limited is not admitted because the questions on classification and applicable GST rate for the job work are already pending in departmental proceedings; hence the Authority declined to rule on the merits.

Composite supply of works contract - concessional rate under Sl.No.3(vi) of Notification No.11/2017-CT (Rate) - Government Entity - procured by the Government entity in relation to a work entrusted to it - residual entry attracting 18% (Sl.No.3(xii) of Notification No.11/2017-CT (Rate)) - advance ruling jurisdiction under Section 97(2) - procedural questions outside the scope of advance ruling

Composite supply of works contract - concessional rate under Sl.No.3(vi) of Notification No.11/2017-CT (Rate) - Government Entity - procured by the Government entity in relation to a work entrusted to it - residual entry attracting 18% (Sl.No.3(xii) of Notification No.11/2017-CT (Rate)) - Applicability of the concessional rate in Sl.No.3(vi) to the works contract for construction of residential quarters at KKNPP - HELD THAT: - The applicant performed a works contract comprising pre-construction and construction activities for residential quarters awarded directly by Nuclear Power Corporation of India Ltd (NPCIL). NPCIL was found to be a Government Entity because it is a public sector enterprise under the Department of Atomic Energy with 100% shareholding of the Central Government. However, entry Sl.No.3(vi) grants concessional rate only where the supplies are "procured by the said Government entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority." The authority examined whether construction of residential quarters is "in relation to" NPCIL's entrusted work of implementing atomic power projects for generation of electricity. In the absence of any document evidencing that the construction of the township/quarters is in relation to the work entrusted to NPCIL by the Central Government, and because the residential construction was for employee welfare rather than the core entrusted function, the condition in Sl.No.3(vi)(c) is not satisfied. The Authority accordingly held that the concessional entry does not apply and the supply falls under the residual entry (Sl.No.3(xii)) attracting 18% GST. The Authority also noted that it could not proceed on assumptions and efforts to obtain supporting documentation from NPCIL and the applicant were unsuccessful. [Paras 7, 8, 11, 12]

The works contract for construction of residential quarters at KKNPP is not covered by Sl.No.3(vi) and is taxable at 18% under the residual entry.

Advance ruling jurisdiction under Section 97(2) - procedural questions outside the scope of advance ruling - Whether the question on mechanism to pay any differential tax (if rate found higher) is admissible for advance ruling under Section 97(2) - HELD THAT: - The applicant asked whether, if the applicable rate is held to be higher, the differential tax should be paid through a debit note under GSTR-1. The Authority examined the scope of Section 97(2) and found that questions which are purely procedural in nature do not fall within the advance ruling jurisdiction. The question on the modality of payment of differential tax is procedural and does not relate to determination of tax liability itself. Consequently, the Authority declined to answer this question as being outside the ambit of Section 97(2). [Paras 6, 7, 11, 12]

The question on how the differential tax is to be paid is procedural and not answered as it is outside the purview of Section 97(2).

Final Conclusion: The Advance Ruling holds that the applicant's works contract for construction of residential quarters for NPCIL does not satisfy the condition in Sl.No.3(vi) and is therefore taxable at 18% under the residual entry; the query on the procedural modality for payment of any differential tax is not adjudicated as it falls outside the advance ruling jurisdiction.

Exemption for pure services provided to government under Notification No. 12/2017-Central Tax (Rate) - exemption for composite supply where value of goods does not exceed 25% of the composite supply - functions entrusted to Panchayats under Article 243G - functions entrusted to Municipalities under Article 243W - Tax Deduction at Source under Section 51 of the Central Goods and Services Tax Act, 2017

Exemption for pure services provided to government under Notification No. 12/2017-Central Tax (Rate) - exemption for composite supply where value of goods does not exceed 25% of the composite supply - functions entrusted to Panchayats under Article 243G - functions entrusted to Municipalities under Article 243W - Applicability of Notification No. 12/2017-Central Tax (Rate) to works carried out by the Divisional Forest Office (seed collection, nursery management, plantation, digging contour trenches, chal-khal, clearing fire lines, controlled burning, creation of check-dams, repair of trails/roads). - HELD THAT: - The Authority held that the exemption at Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) (as amended) applies only where two cumulative conditions are satisfied: (a) the recipient of the service is the Central Government, State Government, Union territory, local authority, governmental authority or a government entity; and (b) the service provided is either a pure service (excluding works contract or other composite supplies involving supply of goods) or a composite supply in which the value of goods does not exceed 25% of the composite supply. The functions performed must relate to functions listed in the Eleventh Schedule (Article 243G) or Twelfth Schedule (Article 243W) of the Constitution to qualify. The applicant's broad assertions that the goods component is below 25% were not supported by documentary evidence; consequently, each contract must be examined on its own facts to ascertain whether the goods component is within the 25% threshold and whether the activity relates to a specified Panchayat/Municipal function. Therefore, the exemption cannot be applied generically to all the works described; eligibility depends on contract-specific facts and the elemental composition of the supply. [Paras 10, 12]

The exemption under Notification No. 12/2017-Central Tax (Rate) is available for the cited works only if (i) the contract is for a pure service or (ii) the contract is a composite supply where the value of goods is not more than 25% of the composite supply, and the service relates to a function entrusted to a Panchayat under Article 243G or to a Municipality under Article 243W; each contract must be examined individually.

Tax Deduction at Source under Section 51 of the Central Goods and Services Tax Act, 2017 - Whether TDS under Section 51 is required where individual work orders are below the prescribed threshold but aggregate contracts with the same supplier exceed that threshold. - HELD THAT: - The Authority noted that Section 51 mandates deduction of tax at source by specified deductors where the total value of supply under a contract exceeds Rs. 2,50,000. The applicant's generalised statement that most individual contracts are below the threshold was insufficient to displace the statutory test. Consequently, TDS obligation turns on the value of supply under each contract as envisaged by Section 51; where the value of supply under a contract does not exceed the threshold, TDS is not required, but where it exceeds the threshold the provisions of Section 51 must be complied with. Aggregation for TDS purposes must conform to the statutory construct of 'under a contract'. [Paras 11, 12]

TDS need not be deducted only when the value of supply under a contract does not exceed Rs. 2,50,000; where the value under a contract exceeds that amount, Section 51 applies and TDS must be deducted.

Final Conclusion: The Authority ruled that the Notification No. 12/2017 exemption applies to the applicant's forest-related works only if each contract is either a pure service or a composite supply with goods not exceeding 25% of the value and the activity relates to functions in Article 243G/243W; each contract must be examined individually. Further, TDS under Section 51 is not required only where the value of supply under a contract does not exceed Rs. 2,50,000, otherwise Section 51 must be followed.

Representation to the Principal Commissioner to decide on release of seized property - search and seizure under Section 132 of the Income Tax Act, 1961 - release of seized jewellery upon proof of ownership and nexus with declared wealth - writ jurisdiction under Article 226 of the Constitution - direction to administrative authority to decide a pending representation within a specified time and after personal hearing if necessary

Representation to the Principal Commissioner to decide on release of seized property - release of seized jewellery upon proof of ownership and nexus with declared wealth - direction to administrative authority to decide a pending representation within a specified time and after personal hearing if necessary - The Principal Commissioner, Income Tax, Ahmedabad was directed to consider and decide the representation dated 13.02.2021 seeking release of jewellery seized during search on 13.06.2013 and to pass an appropriate order in accordance with law within a specified time. - HELD THAT: - The Court recorded that jewellery seized during the search at the premises of the son could be claimed by the writ applicants who assert ownership and reliance on the wealth tax return for A.Y.2012-13. Noting the exhaustive nature of the representation and the lapse of time without decision, the Court held it appropriate to require the Principal Commissioner to examine the representation, give an opportunity of personal hearing if necessary, and decide the matter in accordance with law. The Court left open the scope for the Principal Commissioner to question the legality or validity of the seizure and for the writ applicants to challenge any adverse order before the appropriate forum.

Principal Commissioner, Income Tax, Ahmedabad to consider the representation and pass a reasoned order in accordance with law after hearing if necessary within the time directed by the Court.

Final Conclusion: Writ petition disposed with a direction that the Principal Commissioner, Income Tax, Ahmedabad shall consider and decide the representation dated 13.02.2021 regarding release of seized jewellery and pass an appropriate order in accordance with law after giving opportunity of hearing if required, within the period specified by the Court; liberty reserved to challenge any adverse order before the appropriate forum.

Refund and interest under Section 143(1) of the Income Tax Act, 1961 - delay in issuance of tax refund - personal liability and penalising the delinquent officer - protection of public funds where interest is paid from public exchequer - judicial direction to file affidavit explaining administrative delay - communication of court orders to the Central Board of Direct Taxes (CBDT)

Refund and interest under Section 143(1) of the Income Tax Act, 1961 - delay in issuance of tax refund - personal liability and penalising the delinquent officer - judicial direction to file affidavit explaining administrative delay - Respondents directed to explain non-release of admitted refund and to justify why the officer(s) responsible should not be penalised and ordered communication of the order to CBDT. - HELD THAT: - The petition established that an intimation under Section 143(1) recorded an entitlement to a refund which had not been paid despite the return having been filed on 15th February 2021. The Court noted the Department's own Citizen's Charter expectation of issuance of refund with interest within six months of the return. In view of the pending statutory/administrative deadline to complete assessment, the Court required respondent nos.4 and 5 (not below the rank of Assistant Director of Income Tax) to file an affidavit within two weeks explaining the cause of delay in issuing the refund and to explain why the concerned officer should not be subjected to penalty or directed to bear the interest personally, emphasising the public interest in avoiding use of public funds to discharge interest that arises from administrative delay. The Court also observed that similar instances had arisen and directed that CBDT be informed of the order. The matter was listed for further consideration on the prescribed date. [Paras 4, 5, 6]

Respondent nos.4 and 5 to file an affidavit within two weeks explaining the delay and why the officer should not be penalised; CBDT to be informed; matter stood over to 13th April 2022.

Final Conclusion: The High Court directed specified Income Tax officers to file an affidavit within two weeks explaining the non-release of an admitted refund and to state why the responsible officer should not be penalised or directed to bear interest personally; the Court ordered communication of its order to the CBDT and adjourned the matter to 13th April 2022.

Demand Notice under Section 156 - Rectification under Section 154 - Interest under Section 234C - TDS credit - assessment computation error

Demand Notice under Section 156 - assessment computation error - Rectification under Section 154 - TDS credit - Interest under Section 234C - Demand notice raised pursuant to an apparent computation error in the assessment and omission of TDS credit required fresh rectification under Section 154. - HELD THAT: - The assessment order for AY 2018-19 recorded a loss (negative total income), yet a demand was issued showing taxable income and a payable sum. The Assessing Officer's computation sheet had erroneously taken taxable income at a positive figure, which was acknowledged in the Rectification Order. A subsequent rectification acknowledged the wrongful charging of interest under Section 234C and modified the rectification order, but the Assessing Officer overlooked the petitioner's claim for additional TDS credit. Given that the demand flowed from the admitted computation error and the continued omission of the claimed TDS credit, the matter required fresh consideration under the rectification power to bring the assessment and demand into conformity with the corrected computation and applicable credits. [Paras 3, 5, 6, 7]

Respondent directed to pass a fresh rectification order for AY 2018-19, considering the petitioner's grievance regarding overlooked TDS credit and earlier computation errors, within 30 days of receipt of the order.

Final Conclusion: Writ petition disposed by directing the Assessing Officer to pass a fresh rectification order for Assessment Year 2018-19 to rectify the computation error and consider the petitioner's claim for TDS credit; compliance to be completed within 30 days.

Exemption under Section 54F - Long-term capital gains on sale of residential property - Purchase or construction of new residential house within statutory period - Burden of proof and admissibility of supporting documents - Deductibility of interest as business expense - Application of loan proceeds as determinative of expenditure allowance

Exemption under Section 54F - Purchase or construction of new residential house within statutory period - Burden of proof and admissibility of supporting documents - Claim for exemption under Section 54F in respect of long term capital gains on sale of a residential plot - HELD THAT: - Assessee sold a residential plot on 27.10.2009 and purchased another plot on 21.07.2009 and claimed exemption under Section 54F. The Assessing Officer and the CIT(A) denied relief on the ground that the property sold was not a residential house chargeable under the head 'Income from house property' and that construction/activity within the statutory period (or proof thereof) was not established. Before the Tribunal the assessee filed additional documents (electricity bills, payment receipts, building material bills and a paper book) which were not placed before the lower authorities. In the interest of justice the Tribunal held that the matter should be examined afresh by the Assessing Officer in the light of the paper book and the statutory tests for Section 54F, rather than finally adjudicating the entitlement without consideration of those documents. [Paras 8]

Matter set aside to the file of the Assessing Officer for fresh consideration of the documents filed before the Tribunal and decision in accordance with law; ground allowed for statistical purposes.

Deductibility of interest as business expense - Application of loan proceeds as determinative of expenditure allowance - Allowability of interest expense claimed on unsecured loans as business expenditure - HELD THAT: - Assessee claimed interest of Rs.3,15,247 on unsecured loans alleged to have been used for business. The AO disallowed the interest on the ground that the unsecured loans were not used for purchase of the land or construction and the assessee failed to produce supporting evidence. The CIT(A) confirmed the disallowance for lack of documentary proof. The Tribunal examined the material and found no infirmity in the conclusions of the lower authorities that the amounts were not shown to have been applied to acquisition or construction of the new asset; consequently the interest was not allowable. [Paras 10]

Action of the lower authorities in disallowing the interest expense is confirmed; ground dismissed.

Final Conclusion: Appeal is partly allowed: the claim under Section 54F is remanded to the Assessing Officer for fresh consideration of the documents filed before the Tribunal and decision as per law; the disallowance of interest as business expenditure is confirmed.

Capital gains exemption under Section 54B - characterisation of land as agricultural - advance payment treated as purchase for exemption - application of CBDT circulars by analogy to Section 54B

Characterisation of land as agricultural - capital gains exemption under Section 54B - The land sold in 2009-10 was held to be agricultural for the purpose of claiming exemption under Section 54B. - HELD THAT: - The Tribunal accepted the Commissioner (Appeals)'s finding that the assessment-stage statement of the Talati describing the land as barren was based on his personal post-facto visit and incomplete information, and that the Collector's 2004 order classifying the land as agricultural was material and unrebutted. The cross-examination revealed flaws in the Talati's statement which the Assessing Officer did not address. On this basis the appellate authority concluded that the preponderance of evidence establishes that the land was put to agricultural use, and the Tribunal agreed with that conclusion. [Paras 11]

Finding that the land was agricultural is upheld and the condition of Section 54B relating to the nature of the original asset is satisfied.

Advance payment treated as purchase for exemption - application of CBDT circulars by analogy to Section 54B - capital gains exemption under Section 54B - The advance payment made before the due date of filing the return was held to qualify as 'purchase' for the purposes of Section 54B, enabling the assessee to claim exemption. - HELD THAT: - The Tribunal endorsed the CIT(A)'s reasoning that Section 54B requires 'purchase' and not necessarily registration by the return-filing date, and that payment of advance from the net sale consideration manifests the requisite intention to invest the capital gain. The CIT(A) applied by analogy CBDT Circulars No. 471 (15.10.1986) and No. 672 (06.12.1993) which treat amounts paid towards booking or construction as eligible for relief under Sections 54/54F; the Tribunal found it reasonable to apply that analogy to Section 54B in the factual matrix of this case. Because the assessee paid a sum exceeding the capital gain before the return due date and completed registration within the statutory two-year period, the condition in Section 54B(1) was found to be fulfilled. [Paras 10, 12]

Advance payment out of sale proceeds was treated as purchase and the exemption under Section 54B was rightly allowed by the CIT(A); the AO's rejection on this ground is overturned.

Capital gains exemption under Section 54B - Whether the Tribunal's decision in A.Y. 2010-11 applies to A.Y. 2011-12. - HELD THAT: - The Tribunal observed that the identical issue raised in respect of A.Y. 2011-12 had been considered in the appeal for A.Y. 2010-11 and, in the absence of any change in circumstances, the same conclusion applies mutatis mutandis to A.Y. 2011-12. [Paras 13]

The appeal for A.Y. 2011-12 is dismissed on the same reasoning as A.Y. 2010-11.

Final Conclusion: The Tribunal upheld the CIT(A)'s allowance of the exemption under Section 54B for A.Y. 2010-11, finding the sold land to be agricultural and the advance payment to constitute purchase for the purpose of the exemption; the identical appeal for A.Y. 2011-12 was dismissed on the same reasoning. Appeals by the Revenue are dismissed.

Transfer pricing adjustment - non-binding investment advisory services - Transactional Net Margin Method (TNMM) - entity-level benchmarking - comparability and selection of comparables - arm's length price (ALP) - cost allocation between associated enterprises - adhoc adjustment - requirement to determine ALP using methods under Section 92C read with Rule 10B

Transfer pricing adjustment - non-binding investment advisory services - comparability and selection of comparables - Transactional Net Margin Method (TNMM) - entity-level benchmarking - arm's length price (ALP) - Deletion of transfer pricing adjustment made in respect of provision of non-binding investment advisory services to associated enterprise - HELD THAT: - The Tribunal found that the 15 comparables adopted by the TPO had been rejected in earlier Tribunal and High Court decisions and that IDC India Ltd. and ICRA Management Consultancy Services Ltd., are suitable comparables for benchmarking the assessee's non-binding investment advisory services. The Tribunal held that inclusion of these comparables would place the assessee's margin within the acceptable tolerance band and therefore no adjustment to ALP was required. It also held that the TPO erred in applying entity-level TNMM for benchmarking instead of confining the analysis to the international transaction with the AE, noting that the assessee had furnished segmental/transactional information. Consequently the transfer pricing adjustment in respect of advisory fees was directed to be deleted. [Paras 3]

The addition/transfer pricing adjustment in respect of provision of non-binding investment advisory services is deleted; the TPO is directed to exclude the 15 comparables he had used and to include IDC and ICRA as comparables.

Cost allocation between associated enterprises - adhoc adjustment - requirement to determine ALP using methods under Section 92C read with Rule 10B - Deletion of adhoc disallowances made by the TPO in respect of cost allocations for software development/IT services and central/regional support services - HELD THAT: - The Tribunal observed that the TPO made disallowances on an adhoc basis without applying any of the prescribed transfer pricing methods. The assessee had produced inter-company agreements, invoices, allocation workings, allocation methodologies, sample workings and global TP documentation demonstrating that services were rendered and costs allocated on appropriate bases (including where applicable a mark-up). Relying on the principle that the ALP must be determined by methods under Section 92C read with Rule 10B and on precedents rejecting ad hoc determinations, the Tribunal held that the TPO's adhoc reductions were not sustainable. Accordingly, the adjustments of Rs. 91,29,037 (50% of software/IT cost allocation) and Rs. 1,18,42,942 (central and regional support services) were directed to be deleted. [Paras 5]

The TPO's adhoc disallowances in respect of cost allocations towards software/IT services and central/regional support services are deleted and the adjustments directed to be removed.

Prior period expenses - business expenditure deduction - Allowability of certain prior period business promotion expenses and confirmation of a small disallowance - HELD THAT: - The Tribunal held that invoices received and payments made during the assessment year in question crystallized the liability in that year; consequently expenditure evidenced by invoices received during AY 2007-08 (though dated earlier) and paid during the year is deductible. The assessee established genuineness and business purpose for Rs. 10,00,972 and was directed to be allowed deduction. Separately, an item of Rs. 50,205 was found to have been accounted for inadvertently and insufficiently explained; the AO's disallowance of that amount as a prior period expense was affirmed. [Paras 6]

Deduction of Rs. 10,00,972 allowed; disallowance of Rs. 50,205 confirmed; Revenue's ground is partly allowed.

Comparability and selection of comparables - Academic nature of Revenue's challenge to exclusion of Unit Trust of India Investment Advisory Services Ltd. from comparables - HELD THAT: - The Tribunal noted that since, in the assessee's appeal, all 15 comparables used by the TPO were directed to be removed, the Revenue's separate ground challenging exclusion of Unit Trust of India Investment Advisory Services Ltd. became academic and required no adjudication. [Paras 4]

The Revenue's ground is rendered academic and is not decided on merits.

Final Conclusion: For AY 2007-08 the Tribunal allowed the assessee's appeal by deleting the transfer pricing adjustment in respect of non-binding investment advisory services (directing inclusion of IDC and ICRA as comparables and rejecting entity-level TNMM), deleted the adhoc disallowances relating to cost allocations for software/IT and central/regional support services, and partly allowed the Revenue's appeal by confirming a limited disallowance of prior period expenses while allowing the main prior period claim.

Unexplained cash credit - benami bank accounts - acceptance of cashbook and cash flow by Settlement Commission - availability of opening cash balance - avoidance of double taxation by recognizing earlier settlement position - deletion of addition under section 68

Benami bank accounts - admission in Rule 9 report - Three additional bank accounts (a/c nos. 855, 1227 and 909) are held to be benami accounts of the assessee. - HELD THAT: - The Tribunal accepted that the assessee had disclosed these three accounts in the Settlement Commission petition as part of 19 benami accounts and that the learned PCIT, in a report under rule 9, admitted the assessee as the benamidar of these accounts. The PCIT's admission and the disclosure before the Settlement Commission removed the basis for treating the accounts as an afterthought, and the AO's contrary inference was rejected. [Paras 11]

Assessee held to be benamidar of accounts 855, 1227 and 909.

Availability of opening cash balance - acceptance of cashbook and cash flow by Settlement Commission - The cashbook prepared (including opening balance as on 1 April 2004 / cash position for FY 2004-05) is acceptable to establish availability of cash for deposits in the year under consideration. - HELD THAT: - The AO had not questioned or required production of earlier years' cashbook during assessment proceedings; the assessee prepared and produced a cashbook and cash flow statements covering earlier years which were accepted by the Settlement Commission (including an opening cash figure). In absence of any material showing that the withdrawn cash was expended for other purposes, the presumption favours the assessee that such cash remained available and was used for the deposits. The Tribunal held that the AO's assertion of negative cash balance was incorrect and that the cashbook could not be rejected as an afterthought given acceptance by the Settlement Commission and the rule 9 report. [Paras 12]

Cashbook and earlier opening balances accepted as establishing availability of cash.

Avoidance of double taxation by recognizing earlier settlement position - utilisation of cash from related society - Receipts from the related society are to be recognised for the purpose of explaining deposits so as to avoid double taxation arising from the Settlement Commission having accepted a lower opening cash position. - HELD THAT: - Although full quantum of cash shown in the assessee's books was not declared before the Settlement Commission (which accepted only a portion), denial of the assessee's claim that money was received from the society would lead to taxing the same cash twice - once in the year under appeal and once in the Settlement Commission proceedings by denying enhancement of opening balance. To prevent such double addition and in view of the Settlement Commission's acceptance of the cash flow mechanism and the assessee's repayment transactions with the society, the Tribunal admitted the contention that cash from the society was available and used for deposits. [Paras 12]

Receipts from the society accepted as explaining deposits to avoid double taxation.

Unexplained cash credit - deletion of addition under section 68 - The addition made by the AO under section 68 in respect of the cash deposits aggregating to Rs.1,99,91,050/- is to be deleted except for specific unexplained entries. - HELD THAT: - Considering that (i) the three additional accounts are benami of the assessee, (ii) the cashbook and cash flows for earlier years establish availability of cash, and (iii) recognising receipts from the related society avoids impermissible double taxation, the Tribunal found no reason to interfere with the CIT(A)'s deletion of the section 68 addition. However, the CIT(A) sustained the AO's addition in respect of particular unexplained cheque and cash deposits (cheque deposit of Rs.13,00,000 in a/c 2542 and cash deposit of Rs.4,50,000 in name of Suresh Goswami), and the Tribunal did not disturb that limited confirmation. [Paras 3, 6, 12]

Majority of the addition under section 68 deleted; limited addition in respect of certain unexplained entries sustained.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s deletion of the unexplained cash credit additions under section 68 for Assessment Year 2006-07, holding the three disputed accounts to be benami, accepting the cashbook/opening balances as establishing available cash (including receipts from the related society to avoid double taxation), while sustaining the limited additions in respect of specific unexplained entries.

Charitable purpose v. religious activity - registration under section 12A and protection against denial of benefits - voluntary contributions forming part of corpus excluded from income under section 11(1)(d) - advances/interest-free loans to like-minded institutions and section 11(5) / section 13(1)(d) - doctrine of consistency in successive assessments

Charitable purpose v. religious activity - registration under section 12A and protection against denial of benefits - voluntary contributions forming part of corpus excluded from income under section 11(1)(d) - doctrine of consistency in successive assessments - Construction of the prayer hall and related activities were in consonance with the trust's objects and did not disentitle the trust to exemption under section 11. - HELD THAT: - The Tribunal accepted the detailed reasoning of the Commissioner (Appeals) that the prayer hall was constructed out of accumulated corpus and that the trust's registration under section 12A subsisted. The Assessing Officer's conclusions based on architecture, presence of deities, website language and magazine were held to be a narrow factual interpretation insufficient to convert the trust's character into a religious trust. The corpus nature of the large specific donations for building construction satisfied the twin conditions of section 11(1)(d) (voluntary contribution made with a specific direction to form part of the corpus) and therefore those receipts were not includible as income. Prior completion of assessments for relevant years without adverse findings and the settled registration status supported the conclusion; absent material change in circumstances the AO could not depart from earlier consistent treatment. [Paras 8]

The prayer hall construction did not make the trust a religious institution for the purposes of section 11; the trust is entitled to exemption under section 11 for AY 2014-15.

Advances/interest-free loans to like-minded institutions and section 11(5) / section 13(1)(d) - doctrine of consistency in successive assessments - The interest free advance of Rs. 1.50 crore to Shri Sardar Patel Cultural Foundation did not attract disallowance under section 11(5) read with section 13(1)(d) and did not disentitle the trust to exemption. - HELD THAT: - The Tribunal agreed with the Commissioner (Appeals) that the advance was given in financial year 2011 12 and that the assessment for that year (and the year in which the amount was repaid) were completed under section 143(3) without any adverse finding. The advance was made to an institution carrying out similar charitable objects, was returned in full, and therefore did not constitute a contravention under section 11(5) nor trigger section 13(1)(d). Reliance on precedents and the absence of any material showing misuse supported allowing the benefit of section 11. [Paras 8]

The advance did not violate section 11(5) / section 13(1)(d); no disqualification of exemption arises on that ground.

Final Conclusion: Revenue's appeal is dismissed. The trust is entitled to exemption under section 11 for Assessment Year 2014-15: donations forming part of corpus are excluded from income under section 11(1)(d), and the advance to a like minded institution did not attract disqualification under section 11(5) / section 13(1)(d).

Disallowance under Section 36(1)(iii) of the Income Tax Act, 1961 - disallowance under Section 14A of the Income Tax Act, 1961 read with Rule 8D - computation of book profits under Section 115JB of the Income Tax Act, 1961 - application of interest free own funds to investments - precedent of coordinate bench and consistency of decisions

Disallowance under Section 36(1)(iii) of the Income Tax Act, 1961 - application of interest free own funds to investments - precedent of coordinate bench and consistency of decisions - Deletion of addition of Rs. 50,47,871 made by the Assessing Officer by disallowing interest expense under Section 36(1)(iii) in respect of interest free advances given for acquisition of immovable properties. - HELD THAT: - The Tribunal accepted the finding of the CIT(A) that the assessee had sufficient interest free funds available vis a vis the advances made and that on identical facts earlier orders of the coordinate bench in the assessee's own cases and relevant judicial precedents supported deletion of the disallowance. The Assessing Officer's proportionate disallowance was set aside because the factual basis for applying Section 36(1)(iii) - namely, that borrowed/interest bearing funds were used for the advances - was not established and identical earlier decisions on the same facts were relied upon to uphold deletion. [Paras 8]

Addition under Section 36(1)(iii) deleted; Revenue's ground dismissed.

Disallowance under Section 14A of the Income Tax Act, 1961 read with Rule 8D - application of interest free own funds to investments - precedent of coordinate bench and consistency of decisions - Deletion of addition of Rs. 2,28,23,930 made by the Assessing Officer under Section 14A in respect of exempt income earned on investments. - HELD THAT: - The Tribunal agreed with the CIT(A)'s conclusion that the assessee had substantial interest free funds and had shown that investments (largely capital introduced in partnership firms/LLPs) were made out of such funds; interest income from those firms was disclosed. The Assessing Officer's disallowance under Section 14A read with Rule 8D was reversed because the factual requirement for applying Section 14A - nexus of borrowed funds to the exempt income generating investments - was not established, and identical findings in the assessee's earlier assessment years and supporting High Court authorities militated against sustaining the disallowance. [Paras 13]

Addition under Section 14A deleted; Revenue's ground dismissed.

Computation of book profits under Section 115JB of the Income Tax Act, 1961 - disallowance under Section 14A of the Income Tax Act, 1961 read with Rule 8D - Whether the disallowance under Section 14A should be imposed while computing book profits under Section 115JB. - HELD THAT: - Having upheld deletion of the disallowance under Section 14A on the merits, the Tribunal found it justified to direct deletion of the same adjustment from the computation of book profits under Section 115JB. The CIT(A)'s direction to omit the Section 14A disallowance in computing book profits was therefore confirmed as the underlying disallowance itself stood deleted. [Paras 16]

Disallowance excluded from computation of book profits under Section 115JB; Revenue's ground dismissed.

Final Conclusion: Appeal of the Revenue dismissed in toto: additions/disallowances under Section 36(1)(iii) and Section 14A (read with Rule 8D), and their effect on book profit under Section 115JB for Assessment Year 2015-16, were deleted by the Tribunal following identical earlier decisions and absence of factual nexus to borrowed funds.

Deduction under section 11(1)(a) - Income of the trust ascertained from books of account - Accumulation or setting apart of income for charitable purposes - Distinction between gross receipts and actual receipts - Application of income for charitable purposes - Precedent in CIT v. Programme for Community Organisation

Deduction under section 11(1)(a) - Income of the trust ascertained from books of account - Distinction between gross receipts and actual receipts - Precedent in CIT v. Programme for Community Organisation - Whether the deduction allowable under section 11(1)(a) is to be computed on the gross income as shown in the trust's accounts or restricted to amounts actually received during the year. - HELD THAT: - The Tribunal found that the assessing officer's and the Commissioner (Appeals)'s approach of restricting the deduction to amounts actually received during the year was contrary to law. Relying on the principles in the decision of the Hon'ble Supreme Court in CIT v. Programme for Community Organisation, the Tribunal held that the statutory entitlement to accumulate or set apart a specified percentage of income under section 11(1)(a) is to be determined with reference to the income of the trust as reflected in its books (gross receipts), and not limited to hypothetical or only cash receipts. The Tribunal observed that the gross income entered in the books and reflected in the final accounts constitutes the income of the trust for this purpose and that income which is not received in cash during the year but is shown in the accounts cannot be disregarded for computing the allowable accumulation under section 11(1)(a). Applying that legal proposition to the facts, the Tribunal allowed the assessee's claim for deduction computed on the gross income as per accounts. [Paras 3, 6, 7]

Assessee entitled to deduction under section 11(1)(a) computed on gross income as reflected in books of account; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the deduction under section 11(1)(a) for A.Y. 2013-14 must be computed on the income of the trust as shown in its books (gross receipts) in accordance with the Supreme Court precedent, and not curtailed to amounts actually received during the year.

Revisionary powers under section 263-assessment erroneous and prejudicial to revenue - Onus to explain unexplained cash deposits - Addition under section 69 for unexplained cash deposits - Dismissal of appeal for non-representation without adjudication on merits - Remand for fresh consideration and opportunity to produce witnesses

Dismissal of appeal for non-representation without adjudication on merits - Ld. CIT(A) dismissed the assessee's appeal for want of representation without deciding the appeal on merits. - HELD THAT: - The Tribunal noted that the impugned order of the Ld. CIT(A) records dismissal of the appeal for lack of representation and does not contain a decision on the substantive merits of the claim regarding cash deposits. In these circumstances, the appellate forum's failure to adjudicate the merits precluded final disposal on the substantive controversy and justified further consideration by the assessing authority. [Paras 4, 6]

The dismissal by the Ld. CIT(A) for want of representation was treated as not constituting a decision on merits and warranted remand for fresh consideration.

Onus to explain unexplained cash deposits - Addition under section 69 for unexplained cash deposits - Remand for fresh consideration and opportunity to produce witnesses - Whether the addition of the cash deposits as unexplained income under the revenue's action should be finally upheld or the matter remanded for opportunity to produce evidence and witnesses. - HELD THAT: - The Tribunal recorded that the Assessing Officer and Ld. CIT found the assessee unable to discharge the onus to explain deposits of Rs. 44.00 lacs, relying on recorded statements and the view that the agreements were ingenuine, and consequently made an addition under the provision dealing with unexplained cash deposits. However, since several witnesses were not produced before the assessing authorities and the appellate authority did not decide the appeal on merits, the Tribunal considered it appropriate in the interest of justice to remit the matter. The remand directs the Assessing Officer to afford the assessee an opportunity to produce documentary evidence and requisite witnesses, to examine them, and to make assessment afresh, while directing the assessee to cooperate and avoid unnecessary adjournments. [Paras 2, 3, 6]

The issue of whether the deposits are unexplained income/addition under the relevant provision is not finally adjudicated and is remanded to the Assessing Officer for fresh adjudication after giving the assessee an opportunity to adduce witnesses and evidence.

Final Conclusion: The appeal is allowed for statistical purposes; the matter is remanded to the Assessing Officer for fresh assessment after giving the assessee an opportunity to place evidence and produce witnesses, and the assessee is directed to cooperate and avoid unnecessary adjournments.

Condonation of delay - sufficient cause - advancing substantial justice over technical consideration - penalty under section 271(1)(c) - omnibus show-cause notice - non-application of mind - striking off inapplicable portions of printed notice - prejudice as a requisite for invalidation of proceedings

Condonation of delay - sufficient cause - advancing substantial justice over technical consideration - Delay of 30 days in filing appeals before the ld. CIT(A) was condoned and the appeals were admitted for hearing on merits. - HELD THAT: - The Tribunal examined the affidavits placed on record explaining the delay and concluded the delay was non-deliberate and attributable to serious health-related incapacity of the authorised representative, corroborated by the director's affidavit. Applying the principle that where substantial justice and technical considerations conflict, substantial justice should prevail, and having regard to the Supreme Court's guidance that 'sufficient cause' must be construed to advance substantial justice, the Tribunal found no malafide or culpable negligence. The explanation was not controverted by the revenue. Accordingly, the Tribunal exercised its discretion to condone the 30-day delay and admit the appeals for adjudication on merits. [Paras 8, 9, 10]

Delay condoned; appeals admitted for hearing on merits.

Penalty under section 271(1)(c) - omnibus show-cause notice - non-application of mind - striking off inapplicable portions of printed notice - prejudice as a requisite for invalidation of proceedings - Penalty imposed under section 271(1)(c) was quashed because the notices were omnibus/defective by failing to strike out inapplicable portions, giving rise to non-application of mind. - HELD THAT: - On merits the Tribunal considered the form of the notices issued under section 271(1)(c) and observed that the assessing officer had not struck off irrelevant portions of the printed pro-forma, leaving the precise charge-whether concealment of particulars of income or furnishing inaccurate particulars-ambiguous. Relying on the principle that a generic omnibus show-cause notice that is not made precise betrays non-application of mind and may cause prejudice when mandatory statutory procedure is involved, the Tribunal followed the reasoning of the Bombay High Court in Mohd. Farhan A. Shaikh , which in turn interprets and applies the Supreme Court's approach in Dilip N. Shroff and related authorities. Applying those principles to the notices before it, the Tribunal concluded the defect was fatal to the penalty proceedings and, therefore, quashed the penalty imposed under section 271(1)(c). [Paras 11, 12, 13, 14]

Impugned penalty under section 271(1)(c) quashed for defective omnibus notices; appeals allowed on merits.

Final Conclusion: The Tribunal condoned the 30-day delay and admitted the appeals; on merits it quashed the penalties imposed under section 271(1)(c) for the Assessment Years 2001-02 to 2004-05 on the ground that the omnibus/printed notices, with inapplicable portions not struck off, evidenced non-application of mind and were thus fatally defective.

Assessment of notional interest - real income principle - allowability of interest expenditure under Section 36(1)(iii) - commercial expediency - related party / group advances

Assessment of notional interest - real income principle - allowability of interest expenditure under Section 36(1)(iii) - commercial expediency - related party / group advances - Whether the assessing officer was justified in adding notional interest on interest free advances made to a group concern and whether such addition is sustainable in law - HELD THAT: - The Tribunal noted the undisputed facts that the assessee paid interest to its lenders (claimed as expenditure) and had given substantial advances to a sister concern which, by mutual understanding, was not charged interest after 31.03.2012 because it was facing financial difficulties. Applying the principle that only real income is assessable unless a statute provides otherwise, the Tribunal held that there is no statutory basis for taxing notional interest. The AO could have invoked Section 36(1)(iii) to disallow interest expenditure if borrowed capital was not used for business purposes, but he did not do so; instead he computed notional interest on advances without statutory support. The Tribunal further accepted that non charging of interest to a related group entity, in the commercial context and on grounds of commercial expediency, falls within the ambit of the decisions in S.A. Builders Ltd. and Hero Cycles Pvt. Ltd., which allow expenditure (or related commercial adjustments) made out of commercial expediency where nexus with business is established. Having regard to these principles and the factual matrix of related party advances and mutual understanding, the Tribunal concluded that the notional interest addition was not sustainable and directed deletion of the impugned addition and recomputation of income accordingly. [Paras 6, 7]

Notional interest addition is unsustainable; addition deleted and AO directed to recompute income.

Final Conclusion: The appeal is allowed: the addition of notional interest on interest free advances to the group concern is held to be without statutory basis and deleted; the assessing officer is directed to recompute the assessee's income accordingly.

Reopening of assessment - Jurisdiction of Assessing Officer - Validity of notice under section 148 of the Income Tax Act - Transfer of assessment and change of AO under section 127 of the Income Tax Act - Reassessment void ab initio for lack of jurisdiction

Reopening of assessment - Jurisdiction of Assessing Officer - Validity of notice under section 148 of the Income Tax Act - Transfer of assessment and change of AO under section 127 of the Income Tax Act - Reassessment void ab initio for lack of jurisdiction - Assessment framed under section 143(3) read with section 147 following a notice issued by ITO, Bareli under section 148 is liable to be quashed for want of jurisdiction. - HELD THAT: - The Tribunal found as an admitted fact that the jurisdictional assessing officer for the assessee was ACIT (Exemption)-2(1), Mumbai and that no order under section 127 effecting transfer of jurisdiction to ITO, Bareli was ever passed. Noting that reopening was initiated by ITO, Bareli by issuance of notice under section 148, the Bench applied the settled principle that a notice under section 148 issued by a non jurisdictional officer, without transfer of jurisdiction, renders any reassessment founded on that initiation invalid. The Tribunal therefore held that the assessment framed by ACIT (Exemption)-2(1), Mumbai on the basis of the reopening initiated by ITO, Bareli is void ab initio for lack of jurisdiction and unsustainable in law. The appeal was allowed on this ground without adjudicating the substantive merits of the additions or denial of exemption. [Paras 11, 12, 13]

Assessment framed pursuant to reopening initiated by ITO, Bareli is quashed for want of jurisdiction; appeal allowed.

Final Conclusion: Reopening initiated by ITO, Bareli by issuance of notice under section 148, without any transfer of jurisdiction under section 127 and notwithstanding that ACIT (Exemption)-2(1), Mumbai was the jurisdictional AO, rendered the reassessment void ab initio; the appeal is allowed and the assessment is quashed.

Clandestine removal - undervaluation of sales - addition on estimated profit element - reopening of assessment - reliance on excise show-cause notice - finality of excise adjudication - lack of independent application of mind by assessing officer

Clandestine removal - undervaluation of sales - addition on estimated profit element - reliance on excise show-cause notice - finality of excise adjudication - lack of independent application of mind by assessing officer - Whether the addition of Rs. 1,45,83,848/- made by the Assessing Officer in AY 2009-10 on account of profit element in alleged clandestine/undervalued sales is sustainable. - HELD THAT: - The Tribunal affirmed the deletion of the addition by the Commissioner (Appeals). The Assessing Officer reopened assessment and made the impugned addition solely on the basis of an Excise Department show-cause notice (DGCEI), estimating suppressed sales and applying a profit rate. The Tribunal noted that the Revenue did not demonstrate any independent application of mind beyond the contents of the Excise show-cause notice. Further, the Excise proceedings which formed the basis of the AO's action were quashed by the CESTAT and that order attained finality as the appeal to the Apex Court was dismissed as withdrawn and related High Court tax appeal was disposed as noted. A coordinate Bench of the Tribunal had earlier deleted similar additions for the immediately preceding years on these grounds; given the identical facts and material, the present Bench followed that decision. In these circumstances, the addition-being founded on a quashed Excise action and on an estimate applied without independent verification by the income-tax authorities-could not be sustained. [Paras 5, 6]

The deletion of the addition of Rs. 1,45,83,848/- for AY 2009-10 is upheld and the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal dismissed the Revenue appeal and upheld the Commissioner (Appeals) order deleting the addition made on account of alleged undervaluation and clandestine removal for AY 2009-10, following the finality of excise proceedings and the absence of independent application of mind by the Assessing Officer.

De novo adjudication - remand for fresh consideration - opportunity to adduce evidence including contemporaneous import data - reclassification based on laboratory test report - assessment and reassessment of customs value - failure to reply to show cause notice and non-attendance at personal hearing

De novo adjudication - remand for fresh consideration - opportunity to adduce evidence including contemporaneous import data - Remand of the entire matter to the adjudicating authority for fresh adjudication de novo, with liberty to the appellant to adduce evidence and contest classification and valuation. - HELD THAT: - The Tribunal noted that the appellant had not filed any reply to the show cause notice nor attended the personal hearing before the adjudicating authority, but the appellant's counsel orally urged that contemporaneous import values and other evidence could rebut the department's valuation and classification (which was founded on laboratory test reports). Taking into account the submissions and the significance of those factual and evidentiary contentions, the Tribunal held that the appellant should be afforded an opportunity to contest the case on merits. Consequently, the Tribunal remanded the matter for a fresh adjudication de novo by the adjudicating authority, leaving all substantive issues open for determination, and directed that the adjudicating authority provide sufficient opportunity to the appellant to adduce evidence, including contemporaneous import data. The Tribunal further directed completion of the de novo adjudication within three months from receipt of the order and observed that the goods remain in detention, without deciding classification, valuation, confiscation or penalties on merits.

Matter remitted to the adjudicating authority for de novo adjudication; all issues left open and appellant given opportunity to adduce evidence; de novo adjudication to be completed within three months.

Final Conclusion: The Tribunal did not decide the merits on classification, valuation, confiscation or penalties; instead it remitted the entire matter for fresh adjudication de novo by the adjudicating authority, granting the appellant an opportunity to produce evidence and directing completion of the proceedings within three months.

Sanction of scheme of amalgamation under Section 232(3) of the Companies Act, 2013 - fixation of appointed date - vesting of assets and liabilities pursuant to sanction - dispensing with meetings under Section 230 - transferee's liability for pre existing statutory defaults - continuing personal liability of directors for breaches of the Reserve Bank of India Act - compliance with applicable accounting standards in amalgamation - payment of stamp duty on transfer of immovable property

Sanction of scheme of amalgamation under Section 232(3) of the Companies Act, 2013 - fixation of appointed date - Sanction of the Scheme of Amalgamation and fixation of the Appointed Date as 1st April, 2019. - HELD THAT: - The Tribunal, having heard the authorized representative, perused the records including statutory notices, affidavits of consent, auditors' certificates and representations of the Regional Director and Official Liquidator, found that statutory formalities for sanction had been complied with. Meetings of shareholders and creditors were dispensed with by earlier order on account of written consents. The Tribunal accepted the Scheme as bona fide and in the interest of all concerned and sanctioned it with the Appointed Date fixed as 1st April, 2019, making the Scheme binding on the companies, their shareholders and creditors. [Paras 3, 4, 9]

The Scheme is sanctioned and the Appointed Date is fixed as 1st April, 2019.

Vesting of assets and liabilities pursuant to sanction - transferee's liability for pre existing statutory defaults - Transfer and vesting of all properties, rights, liabilities and obligations of the Transferor Companies in the Transferee Company and responsibility for pre existing defaults. - HELD THAT: - The Tribunal ordered that, from the Appointed Date and without further act or deed, all properties, rights, powers, debts, liabilities, duties and obligations of the Transferor Companies shall be transferred to and vest in the Transferee Company as provided by the Scheme and Section 232(4). Additionally, the Tribunal directed that in case of any default including under the Income Tax Act or other statutory provisions, the Income Tax Department, Registrar of Companies and other statutory authorities remain at liberty to initiate appropriate proceedings against the Transferee Company, which will be responsible for liabilities/non compliance of the Transferor Companies after sanction. [Paras 7, 9]

All assets and liabilities stand transferred and vested in the Transferee Company and the Transferee Company is liable for pre existing statutory defaults of the Transferor Companies.

Continuing personal liability of directors for breaches of the Reserve Bank of India Act - Directors of Transferor Companies remain personally liable for breaches of the Reserve Bank of India Act despite sanction of the Scheme. - HELD THAT: - In respect of the Regional Director's observations that the Transferor Companies appeared to be functioning as NBFCs without RBI registration, the Tribunal directed that if any violation of the Reserve Bank of India Act is found, the directors liable for breaching the applicable provisions shall continue to be personally liable notwithstanding the sanction of the Scheme. This preserves regulatory and personal accountability separate from corporate vesting. [Paras 8]

Directors of the Transferor Companies remain personally liable for any breaches of the Reserve Bank of India Act.

Compliance with applicable accounting standards in amalgamation - payment of stamp duty on transfer of immovable property - Petitioners' undertaking to comply with accounting standards and to pay applicable stamp duty; other regulatory undertakings. - HELD THAT: - The Tribunal noted the Regional Director's observations and the Petitioners' undertakings: to make accounting entries in accordance with applicable Accounting Standards (including IND AS/AS as applicable), to pay applicable stamp duty on transfer of immovable properties upon effectiveness of the Scheme, to comply with provisionally required filings (annual returns/financial statements) and to ensure the Scheme filed in the petition corresponds to the Scheme in the company application. The Tribunal recorded these undertakings and required compliance as part of sanction. [Paras 6, 9]

Petitioners must comply with applicable accounting standards, pay stamp duty on transfers, and adhere to other statutory and filing undertakings recorded before sanction.

Dispensing with meetings under Section 230 - Dispensing with meetings of shareholders and creditors was appropriate on the basis of affidavits of consent; no secured creditors. - HELD THAT: - The Tribunal recorded that by earlier order meetings of equity shareholders and creditors had been dispensed with because all such parties had given consent by affidavit, and that there were no secured creditors requiring meetings. This formed part of the procedural background on which sanction was granted, and the Petitioners reaffirmed compliance with section 230 requirements. [Paras 3, 9]

Meetings of shareholders and creditors were properly dispensed with and the procedural dispensation is accepted.

Final Conclusion: The National Company Law Tribunal, Kolkata Bench, after considering representations and the Petitioners' undertakings, sanctioned the Scheme of Amalgamation with Appointed Date 1st April, 2019; ordered vesting of assets and liabilities in the Transferee Company; recorded directives preserving the Transferee Company's liability for pre existing statutory defaults and the continuing personal liability of Transferor Company directors for any RBI Act breaches; and imposed compliance requirements as part of the sanction.

Failure of resolution professional to classify and admit a creditor's claim as a financial creditor - commercial wisdom of the committee of creditors and non interference - material irregularity in exercise of powers by the resolution professional - time limits for completion of CIRP and extensions under Section 12 - requirement of Section 30(2) and Section 31 for approval of a resolution plan - remedial direction to regulatory authority (IBBI) for guidance to resolution professionals

Failure of resolution professional to classify and admit a creditor's claim as a financial creditor - material irregularity in exercise of powers by the resolution professional - Whether the Resolution Professional erred in not treating and admitting the appellant's claim as that of a financial creditor and whether that omission amounted to a material irregularity requiring relief. - HELD THAT: - The Tribunal recorded that the Interim Resolution Professional had directed the appellant to file Form C as an unsecured financial creditor and that the appellant complied on the same day; notwithstanding this, the Resolution Professional did not consider the claim as a financial creditor. The Tribunal found this omission to be a prima facie mistake by the Resolution Professional. Although the appellant's claim was numerically small relative to total debt and would not have altered the CoC decision, the Tribunal held that allowing such practice would prejudice small creditors and is not consistent with the Code and Regulations. Rather than setting aside the approved and implemented resolution plan, the Tribunal directed that the matter be remedially addressed by requiring the financial creditors who received payments under the plan to refund the original claim (minus any amounts already received) to the appellant in the same proportion as such creditors received from the Resolution Applicant. The Tribunal observed that the conduct merits reference to the IBBI for appropriate clarification or direction to Resolution Professionals.

Prima facie error by Resolution Professional established; directions issued for proportionate refund by Financial Creditors who received payments under the approved plan and referral of the practice to IBBI for guidance.

Commercial wisdom of the committee of creditors and non interference - requirement of Section 30(2) and Section 31 for approval of a resolution plan - material irregularity in exercise of powers by the resolution professional - Whether the approval of the resolution plan should be set aside on grounds alleged by the appellants (expiry of CIRP, non consideration of OTS, alleged procedural irregularities) and whether the Tribunal should disturb the implemented plan. - HELD THAT: - The Tribunal reiterated the settled principle that the commercial wisdom of the Committee of Creditors is paramount and ordinarily not justiciable except on limited statutory grounds set out in Section 61(3). The Tribunal examined the appellants' contentions concerning expiration of CIRP, virtual extension, non consideration of the OTS and alleged professional error, and noted the constraints of the Code which circumscribe judicial intervention to procedural and statutory compliance (not re weighing commercial decisions). The record showed that the CoC approved the plan by requisite majority, the Adjudicating Authority had approved it, and the plan was implemented. Given those circumstances and the limited scope of interference under Sections 30, 31 and 61(3), the Tribunal declined to set aside the approved and implemented resolution plan. The Tribunal observed that time bound resolution is an object of the Code and that belated challenges which jeopardise implemented plans cannot be entertained except on cogent statutory grounds; no such grounds were found to warrant annulment of the plan here.

Challenges to the resolution plan on the grounds advanced by the appellants were rejected; the Tribunal declined to disturb the approved and implemented resolution plan.

Remedial direction to regulatory authority (IBBI) for guidance to resolution professionals - Whether the Tribunal should seek regulatory guidance in relation to the practice of non admission of small creditor claims as financial creditors and related conduct by resolution professionals. - HELD THAT: - Noting the potential adverse impact on small and marginal financial creditors if claims are misclassified or ignored, and observing a prima facie incorrect practice in the case at hand, the Tribunal considered that systemic clarification is appropriate. Instead of expanding judicially mandated remedies that would unsettle an implemented plan, the Tribunal directed that the matter be referred to the Insolvency and Bankruptcy Board of India for appropriate view, clarification or directions to Resolution Professionals to prevent recurrence of such practice.

Matter to be referred to IBBI for appropriate clarification/direction to Resolution Professionals.

Final Conclusion: Appeals partially allowed in limited respects: the Tribunal found a prima facie error by the Resolution Professional in not admitting the appellant's claim as a financial creditor and directed proportionate refund by financial creditors who received payments under the implemented plan; the Tribunal, however, refused to set aside or disturb the approved and implemented resolution plan and declined broader relief, and directed that the issue of such practices be referred to the IBBI for guidance.

Moratorium - current dues during moratorium - insolvency resolution process cost - essential supplies - duties of resolution professional under Section 25

Moratorium - current dues during moratorium - insolvency resolution process cost - essential supplies - duties of resolution professional under Section 25 - Claim for lease premium and lease rent arising after commencement of CIRP (period 11.10.2019 to 30.06.2021 and Financial Year 2021-22) is payable despite moratorium or alternatively includible as Insolvency Resolution Process Cost. - HELD THAT: - The Tribunal examined whether amounts claimed by the lessor for rescheduled premium instalments and lease rent falling after the insolvency commencement date are barred by the moratorium. While Regulation 32 identifies specified "essential supplies", the Explanation to Section 14(1) (as amended w.e.f. 28.12.2019) preserves rights where there is no default in payment of current dues arising for use or continuation of a license, permit or similar grant during the moratorium. Section 25 casts on the resolution professional the duty to preserve and protect the assets and continue operations of the corporate debtor. On the facts, the lease premium and lease rent for use/continuation of the leased asset during the moratorium period are current dues which, if unpaid, cannot be relied upon to suspend the lessor's rights under the Explanation to Section 14. Consequently, the amounts due for the specified period are payable by the resolution professional; alternatively the RP must include such payable current amounts as part of the Insolvency Resolution Process Cost under Regulation 31. The RP is, however, permitted to negotiate a rescheduling with the lessor. [Paras 17, 18, 19]

Application allowed; respondent directed to pay the current lease premium and lease rent due for 11.10.2019 to 30.06.2021 and Financial Year 2021-22 within six months or include the amounts as Insolvency Resolution Process Cost under Regulation 31; RP permitted to negotiate rescheduling.

Final Conclusion: The Tribunal allowed the application and directed the Resolution Professional to discharge or include as CIRP cost the lease premium and lease rent falling due during the moratorium period (11.10.2019 to 30.06.2021 and FY 2021-22), observing that such current dues are not barred by the moratorium; RP may negotiate rescheduling.

Voluntary liquidation - dissolution of company - compliance with Insolvency and Bankruptcy Code and IBBI (Voluntary Liquidation Process) Regulations - declaration of solvency - public announcement and notice to creditors - final report and audit of liquidation accounts

Voluntary liquidation - declaration of solvency - public announcement and notice to creditors - final report and audit of liquidation accounts - Whether the company has complied with the statutory and regulatory requirements for voluntary liquidation and is fit to be dissolved. - HELD THAT: - The Tribunal considered the petitioner's averments that the board resolved for voluntary liquidation after full enquiry, that the declaration of solvency was filed, that a special resolution appointed a voluntary liquidator, that requisite intimation was given to tax authorities, that public announcements were published and no creditor claims were received, that a bank account for liquidation was opened and closed after distribution, that indemnity affidavits were furnished by stakeholders, that final distribution was effected and liquidation accounts audited, and that the final report was submitted to IBBI and RoC. The RoC filed a reply noting the affidavit of solvency and no objection was raised by RoC or IBBI following service of notices. The voluntary liquidator also affirmed absence of any objections. On these facts the Tribunal was satisfied that the requirements of section 59 of the Code and the applicable IBBI Regulations had been complied with and that there was no impediment to dissolution. [Paras 5, 6, 7]

The company has complied with the statutory and regulatory requirements for voluntary liquidation and is dissolved with effect from the date of the order.

Final Conclusion: The petition under section 59 of the Code is allowed; having found compliance with the Code and the IBBI Regulations and no objections from RoC or IBBI, the Tribunal dissolved the company and directed filing of the order with the RoC within the statutory period.

Initiation of corporate insolvency resolution process - default in payment under an operational debt - pre-existing dispute and the Mobilox test for plausibility of dispute - appointment of Interim Resolution Professional and related disclosures - moratorium under the Code and its consequences - security for IRP expenses and adjustment by Committee of Creditors

Default in payment under an operational debt - initiation of corporate insolvency resolution process - The application under Section 9 of the Code is maintainable as default in payment of operational debt has been established and CIRP is to be initiated against the corporate debtor. - HELD THAT: - The Tribunal examined the documents on record including invoices, statement of accounts, bank statements and correspondence and found that the corporate debtor had failed to pay the operational debt claimed by the applicant. The corporate debtor's bare denial and the contention of defective goods were not supported by documents showing that the invoices were disputed prior to the demand notice. The Tribunal observed that part payment and issuance of cheques (some dishonoured) did not negate the existence of default. Applying the principle that an operational creditor who establishes a due and payable debt is entitled to initiation of CIRP, the Tribunal held that default had occurred and admitted the Section 9 application. [Paras 6, 8]

Section 9 application admitted and CIRP initiated against the corporate debtor.

Pre-existing dispute and the Mobilox test for plausibility of dispute - The dispute pleaded by the corporate debtor regarding quality of goods is not a pre-existing, genuine dispute sufficient to defeat the Section 9 application. - HELD THAT: - Relying on the test in Mobilox Innovative (as cited in the order), the Tribunal considered whether the corporate debtor had brought to the applicant's notice the existence of a dispute or pending suit/arbitration prior to the filing. The corporate debtor failed to place documentary evidence demonstrating that the invoices were disputed before issuance of the demand notice; partial payment and contested quality allegations in reply were held to be unsupported and therefore a 'moonshine' or spurious dispute. The Tribunal separated plausible contentions requiring investigation from assertions unsupported by evidence and rejected the latter. [Paras 5, 6, 7]

The pleaded dispute is not bona fide or pre-existing and does not bar admission of the Section 9 petition.

Appointment of Interim Resolution Professional and related disclosures - security for IRP expenses and adjustment by Committee of Creditors - moratorium under the Code and its consequences - An Interim Resolution Professional is appointed, the applicant is directed to deposit security for IRP expenses, and the moratorium under the Code shall commence upon admission. - HELD THAT: - As the applicant had not proposed an IRP, the Tribunal appointed a named IRP subject to his consent, disclosures and absence of disciplinary proceedings. The applicant was directed to deposit a specified sum with the IRP within one week to meet costs of the resolution process, with the amount to be adjusted later by the Committee of Creditors as accounted for by the IRP. Consequent upon admission under Section 9(5), the moratorium envisaged under the Code follows and the corresponding prohibitions and other provisions of the moratorium were to apply. Administrative directions were given for communication of the order to the parties, IBBI and ROC, and for providing the paper book to the IRP. [Paras 9, 10, 11, 12]

IRP appointed; applicant directed to deposit security for IRP expenses; moratorium under the Code to operate; administrative directions issued.

Final Conclusion: The Tribunal admitted the Section 9 application, holding that default was established and the pleaded dispute was not bona fide; an Interim Resolution Professional was appointed, the operational creditor was directed to deposit funds for IRP expenses, the moratorium as prescribed by the Code was imposed, and administrative steps were ordered to give effect to the admission.

Initiation of Corporate Insolvency Resolution Process under Section 7 - Corporate Insolvency Resolution Process - Moratorium under the Code - Filing of claims before the Interim Resolution Professional - Liberty to revive petition if earlier admission is set aside

Initiation of Corporate Insolvency Resolution Process under Section 7 - Filing of claims before the Interim Resolution Professional - Liberty to revive petition if earlier admission is set aside - Disposition of a Section 7 application where a Corporate Insolvency Resolution Process has already been admitted against the same corporate debtor. - HELD THAT: - The Tribunal noted that a Corporate Insolvency Resolution Process against the same corporate debtor had already been admitted by this Bench on 11.03.2022. In view of that earlier admission and the appointment of an Interim Resolution Professional with directions to invite claims, the Tribunal declined to proceed with the present Section 7 petition on merits. Instead, the applicant was directed to file its claim before the Interim Resolution Professional appointed pursuant to the earlier admission so that the claim may be considered in the ongoing CIRP. The Tribunal expressly preserved the applicant's right to revive the present petition in the event the prior admission dated 11.03.2022 is set aside by a higher court, thereby allowing the applicant to seek fresh adjudication if the earlier CIRP is annulled. [Paras 11, 13]

The Company Petition is disposed of by directing the applicant to file its claim before the Interim Resolution Professional in the CIRP initiated on 11.03.2022, with liberty to revive the petition if that admission is set aside by a higher court.

Final Conclusion: The Section 7 application is disposed of as interlocutory: the applicant must submit its claim to the Interim Resolution Professional in the already-admitted CIRP against the corporate debtor, and may revive the petition if the prior admission is later set aside.

Abatement under Notification No. 1/2006-ST - commercial and industrial construction service - threshold exemption for service tax - composite works contract / supply of goods and services - burden of proof to substantiate abatement - service tax demand and penalties under Sections 76, 77 and 78

Abatement under Notification No. 1/2006-ST - commercial and industrial construction service - burden of proof to substantiate abatement - composite works contract / supply of goods and services - Entitlement of the appellant to 67% abatement from gross receipts for commercial construction services. - HELD THAT: - The claim for 67% abatement under Notification No. 1/2006-ST was examined on the basis of documentary evidence showing that the gross amount charged included value of goods or material supplied or used. Both the Original Authority and the Commissioner (Appeals) recorded that the appellant failed to produce work orders, invoices or bills demonstrating that the contracts involved supply or deemed supply of materials as required by the notification. Tender documents and state commercial tax assessments produced before the Tribunal did not establish that the receipts under the contracts were for composite supply of goods and services or could be correlated to the amounts claimed. In the absence of such substantiating documents, the conditions of the notification were not fulfilled and the abatement could not be allowed. [Paras 10, 11, 12, 13]

The appellant is not entitled to the 67% abatement for the commercial construction receipts for the period in question for want of requisite documentary proof; the related part of the demand is upheld.

Threshold exemption for service tax - service tax demand and penalties under Sections 76, 77 and 78 - Whether service tax, interest and penalties can be levied for the financial year 2008-2009 in view of the threshold exemption. - HELD THAT: - The Tribunal noted that even if the gross receipts for 2008-2009 are taken (i.e., without allowing the claimed abatement), the total receipts for that financial year fall below the statutory threshold limit for levy of service tax for 2008-2009. Consequently, no service tax can be levied for that year, and any interest and penalties predicated on a tax demand for that period cannot be sustained. The Tribunal therefore set aside the demand, interest and penalties for 2008-2009. [Paras 14, 15]

The service tax demand, interest and the penalties (under Sections 76 and 78) for 2008-2009 are set aside as the receipts fall below the threshold exemption; the remainder of the demand is sustained.

Final Conclusion: The appeal is disposed of by upholding the assessment and penalties for the period 2007-2008 (abatement disallowed for want of proof) while setting aside the service tax demand, interest and penalties for 2008-2009 because the receipts for that year fall below the exemption threshold.

Rectification of mistake under the Finance Act - Finality of adjudication upon disposal of a rectification (ROM) application - Computation of limitation period under Section 85 of the Finance Act

Rectification of mistake under the Finance Act - Finality of adjudication upon disposal of a rectification (ROM) application - Computation of limitation period under Section 85 of the Finance Act - Date to be reckoned for the two month limitation under Section 85 is the date on which the original authority disposes of and communicates its decision on the ROM application, and not the date of the original order. - HELD THAT: - The Tribunal held that once an application for rectification of mistake under the Finance Act has been adjudicated by the original adjudicating authority, the finality of the original order is affected by that adjudication irrespective of whether the ROM is allowed or rejected. Section 74 (rectification) permits amendment of the original order on adjudication of the ROM; accordingly, the relevant date for computing the two month appeal period under Section 85 is the date when the original authority passed and communicated the order disposing of the ROM. The Tribunal rejected the respondent's contention that the ROM was not maintainable and therefore the original order date should govern; on facts the alleged mistakes were matters properly considered by the original authority. The decision is supported by earlier Tribunal and High Court precedents treating the disposal date of a ROM application as the triggering date for limitation. Applying this principle, the ROM decision dated 23.11.2020 (communicated 27.11.2020) is the relevant date; the appeal filed on 25.1.2021 was within two months. [Paras 7, 9, 11, 13, 14]

The relevant date for the two month limitation is the date when the original authority disposes of and communicates its decision on the ROM; the appeal was filed within time and the Commissioner (A)'s order rejecting the appeal on limitation is set aside and the matter is remanded to Commissioner (A) for adjudication on merits.

Final Conclusion: The Commissioner (A)'s order declining to admit the appeal as time barred is set aside; the appeal is allowed by remanding the matter to the Commissioner (A) to decide the appeal on merits, the Tribunal having held that limitation runs from communication of the ROM decision.

Refund of deposit in Personal Ledger Account (PLA) - refund of unutilized PLA balance consequent to introduction of GST from 01/07/2017 - time limitation for refund under Section 11B - appropriation of PLA deposits - mischaracterisation of PLA deposit as advance cash payment

Refund of deposit in Personal Ledger Account (PLA) - refund of unutilized PLA balance consequent to introduction of GST from 01/07/2017 - time limitation for refund under Section 11B - mischaracterisation of PLA deposit as advance cash payment - The appellant's claim for refund of the unutilized deposit lying in its Personal Ledger Account was valid and not time-barred under Section 11B. - HELD THAT: - The Tribunal found that the amount claimed was an unutilized deposit in the appellant's PLA intended for future appropriation towards duty and, by reason of the introduction of GST from 01/07/2017, remained unappropriated and hence refundable as the appellant's own money. Section 11B prescribes a time limit for refund of duty and interest paid; it does not apply to a deposit which has not been appropriated as duty. The lower authorities erred by recharacterising the PLA deposit as 'Advance Cash Payment' without supporting documentation and by applying the one-year limitation under Section 11B to reject the claim. The Tribunal relied on the settled position that PLA deposits not appropriated into duty are not subject to the time-bar applicable to duty refunds and noted supporting precedent from the Mumbai Bench of CESTAT. For these reasons the denial of refund was held unsustainable. [Paras 3, 4]

Impugned order rejecting the refund claim as time-barred is set aside and the appeal is allowed; consequential benefits to follow as per law.

Final Conclusion: The appellant's refund claim of the unutilized PLA deposit was held valid and not governed by the time-limit in Section 11B; the rejection was set aside and the appeal allowed with consequential relief.

Cenvat credit - denial of Cenvat credit on account of invoices issued by an alleged bogus supplier - recovery of Cenvat credit under Rule 14 of the Cenvat Credit Rules, 2004 - interest and penalty under Rule 14/Rule 15(2) of the Cenvat Credit Rules, 2004 read with Sections 11AA/11AB/11AC of the Central Excise Act, 1944 - effect of prior tribunal finding in connected appeals on subsequent orders

Cenvat credit - denial of Cenvat credit on account of invoices issued by an alleged bogus supplier - effect of prior tribunal finding in connected appeals on subsequent orders - Cenvat credit availed and utilized by the assessee during April, 2005 to March, 2006 cannot be disallowed where the supplier's alleged non-manufacture and non-supply findings are set aside by a connected Tribunal order. - HELD THAT: - The impugned denial of Cenvat credit rested on the allegation that the supplier, M/s V.K. Metal Works (VKM), had not manufactured or supplied copper ingots and had only issued invoices. A Division Bench of this Tribunal, in Final order No. A/51982-51997 of 2018 - EX (DB) dated 23.05.2018, found that VKM had duly manufactured and cleared copper ingots and that recipients had received and utilized those ingots, holding that Cenvat credit availed by recipients was correctly taken. Given that the foundational allegation against VKM was rejected by the prior Tribunal finding (expressly recorded in paragraph 6 of that order), the impugned order's primary basis for disallowing the assessee's Cenvat credit no longer subsists. Consequently, the disallowance cannot be sustained. [Paras 4, 5, 6]

Disallowance of Cenvat credit is set aside and the credit availed by the assessee is upheld.

Recovery of Cenvat credit under Rule 14 of the Cenvat Credit Rules, 2004 - interest under Section 11AB/Rule 14 - Orders directing recovery of Cenvat credit and interest cannot be sustained where the underlying disallowance of credit is set aside by application of the prior Tribunal finding. - HELD THAT: - The impugned order directed recovery of the disallowed credit and interest on the premise that the credit was wrongly availed. Since the Tribunal has held that the supplier had in fact manufactured and supplied the goods and that recipients properly availed and utilized the credit, there is no basis for recovery or for the levy of interest flowing from the disallowance. The recovery and interest directions are therefore set aside as consequential to the quashing of the disallowance. [Paras 1, 2, 5, 6]

Directions for recovery of the claimed Cenvat credit and interest are set aside.

Penalty under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC - personal penalty on director - Penalties imposed on the assessee and the personal penalty on its director cannot be sustained where the foundational allegation supporting such penalties is negatived by a prior Tribunal decision. - HELD THAT: - The Commissioner imposed penalty on the assessee under Rule 15(2) read with Section 11AC and a personal penalty on Shri Anil Gupta on the basis that the invoices from VKM were bogus and the Cenvat credit was therefore wrongly availed. The Tribunal's prior decision established that VKM had manufactured and supplied the ingots and that recipients legitimately availed credit. Absent any independent finding of culpability against the assessee or the director distinct from the debunked allegation against VKM, the imposition of penalty lacks foundation and cannot be sustained. Accordingly, the penalties are set aside. [Paras 3, 4, 5, 6]

Penalties imposed on the assessee and the personal penalty on the director are set aside.

Final Conclusion: The impugned order dated 26.09.2013, insofar as it disallowed Cenvat credit for April, 2005 to March, 2006, directed recovery and interest, and imposed penalties on the assessee and its director, is set aside in view of the prior Tribunal finding that the supplier had manufactured and supplied the goods; both appeals are allowed with consequential relief, if any.

Adjustment/appropriation of sanctioned rebate against government dues - finality of demand for invoking Section 11 - sub judice bar and stay effect on appropriation - Board Circular No.13/92-CX-6 regarding appropriation of refunds - disbursement of sanctioned rebate with interest under Section 11BB

Adjustment/appropriation of sanctioned rebate against government dues - sub judice bar and stay effect on appropriation - Board Circular No.13/92-CX-6 regarding appropriation of refunds - finality of demand for invoking Section 11 - Legality of adjusting sanctioned rebate against government dues which were sub judice and not finally adjudicated - HELD THAT: - The Tribunal held that appropriation of a sanctioned rebate against a demand which was still under adjudication and sub judice before appellate fora was impermissible. The adjudicating authority adjusted amounts confirmed by protective show-cause notices (relating to May and June, 2008) against subsequent sanctioned rebate for September 2012 to November 2012 despite those demands not having attained finality and being the subject of pending litigation and stay orders. This conduct violated the Board's instruction in Circular No.13/92-CX-6 and the settled principle that Section 11 (appropriation) can be invoked only when the demand proposed to be adjusted has reached finality. The Tribunal relied on its precedents to the same effect and concluded that adjudication and appellate orders passed pursuant to the protective show-cause notices while the matter remained sub judice were vitiated and therefore void ab initio. Consequently the sanctioned rebate could not be withheld or appropriated against the unfinalised demands. [Paras 16, 17]

Appropriation of the sanctioned rebate against the disputed demands was illegal; those adjudication and appellate orders are void, and the sanctioned rebate must be disbursed.

Disbursement of sanctioned rebate with interest under Section 11BB - Relief to be afforded to the assessee consequent to the finding that appropriation was unlawful - HELD THAT: - In consequence of declaring the appropriations and related adjudications void, the Tribunal directed that the sanctioned rebate relating to September 2012 to November 2012 be disbursed to the appellant with interest under Section 11BB of the Act. The adjudicating authority was directed to effect the disbursement within 30 days from receipt of the Tribunal's order, and the appellant was held entitled to consequential benefits flowing from this order. [Paras 18, 19]

The adjudicating authority is directed to disburse the sanctioned rebate with interest under Section 11BB within 30 days; consequential benefits granted to the appellant.

Final Conclusion: Appeals allowed; appropriations/adjustments of sanctioned rebate against demands that were sub judice and not final are unlawful and void; the sanctioned rebate for September 2012 to November 2012 is to be disbursed with interest under Section 11BB within 30 days, with consequential benefits to the appellant.

Assessable value - VAT remission retained by assessee - Area based exemption - Extended period of limitation - Normal period of limitation - Re quantification of demand - Penalty not justified

Assessable value - VAT remission retained by assessee - Area based exemption - Inclusion of the amount of VAT remission retained by the appellant in the assessable value for central excise duty - HELD THAT: - The Tribunal noted that the substantive legal position on whether VAT retained by an assessee pursuant to a remission/subsidy should be included in the assessable value has been ruled against the assessee by the Hon'ble Supreme Court in Super Synotex (India) Ltd. The appellant conceded that the legal position on inclusion is adverse but contested the applicability of the extended period of limitation. The Tribunal did not re open the binding legal conclusion on inclusion; it proceeded on the basis that any differential duty arising from such inclusion would be payable but addressed limitation and quantification issues separately. [Paras 6, 8, 10]

Any duty arising from inclusion of VAT remission retained by the appellant is liable to be recovered, subject to limitation constraints and re quantification within the normal time limit.

Extended period of limitation - Normal period of limitation - Applicability of the extended period of limitation to demands based on inclusion of retained VAT remission - HELD THAT: - Having considered the Supreme Court precedent and subsequent High Court decision as well as the CBEC Circular recognising conflicting judicial views, the Tribunal concluded that, in the circumstances of these cases where earlier judicial uncertainty existed, the Department cannot invoke the extended period of limitation. Consequently, the demand must be confined to the period falling within the normal time limit and the original adjudicating authority was directed to re quantify the demand accordingly. [Paras 8, 9, 10, 11]

Extended period of limitation will not be available to the Department; the demand is to be restricted to the normal period of limitation and re quantified.

Re quantification of demand - Remand for limited purpose of re quantifying the demand within the normal period of limitation - HELD THAT: - The Tribunal modified the impugned order and remanded the matter to the original adjudicating authority for the limited purpose of re calculating the differential duty that falls within the normal limitation period. The remand is confined to quantification and does not reopen the legal conclusion on inclusion, which the Tribunal treated as settled by superior courts. [Paras 10, 11]

Matter remanded to the adjudicating authority for re quantification of demand within the normal period of limitation.

Penalty not justified - Whether penalty imposed on the appellant is justified - HELD THAT: - In view of the legal landscape and the Tribunal's conclusion that the demand must be confined to the normal limitation period, the Tribunal found no justification for imposition of penalty in the facts and circumstances of these cases and accordingly set aside the penalties. [Paras 10]

Penalties are set aside.

Final Conclusion: Appeals partly allowed: the Tribunal held that any duty on retained VAT remission is recoverable only to the extent falling within the normal limitation period, directed re quantification of demand by the adjudicating authority accordingly, remanded the matter for that limited purpose and set aside the penalties.

Input Tax Credit entitlement for goods used as raw material - Interpretation of input tax credit provision where purchased goods are not sold in the same form - Application of Section 13(1)(a) table for Input Tax Credit - Reversal of Input Tax Credit (RITC)

Input Tax Credit entitlement for goods used as raw material - Application of Section 13(1)(a) table for Input Tax Credit - Reversal of Input Tax Credit (RITC) - The revisionist was entitled to claim input tax credit on purchase of plastic chairs which, after being made scrap, were used as raw material in manufacture of new chairs; the reversal of ITC by the authorities was unjustified. - HELD THAT: - The Court found that the revisionist, being both a trader and a manufacturer, purchased plastic chairs on which tax had been paid and used those purchased chairs as scrap/raw material for manufacturing new chairs. The tribunal and authorities had reversed the ITC on the ground that the purchased chairs were not sold in the same form and condition. The Court examined the table in clause (a) of Section 13(1) and noted that serial no. 2 expressly provides that where purchased goods are used in the manufacture of taxable goods and such manufactured goods are sold (either inside the State or in the course of inter-State trade or commerce), the full amount of input tax credit shall be allowed. Applying that provision to the undisputed fact that the purchased chairs were used in manufacturing and that tax had been paid on them, the Court held there was no statutory prohibition to the claim and that the RITC made by the authorities was incorrect. The Standing Counsel did not point to any provision restricting the revisionist's activity that would justify reversal of ITC. Consequently the tribunal's order denying ITC was set aside and the claim allowed. [Paras 9, 10, 11, 12, 13]

Revision allowed; Tribunal's order set aside and ITC claim upheld under the table in Section 13(1)(a).

Interpretation of input tax credit provision where purchased goods are not sold in the same form - Application of Section 13(1)(a) table for Input Tax Credit - The proposition that input tax credit is available only when purchased goods are sold in the same form and condition was rejected as inconsistent with Section 13(1)(a)'s table provision permitting ITC where purchased goods are used in manufacture and the manufactured goods are sold. - HELD THAT: - The Court addressed the contention that ITC is limited to cases where purchased goods are resold in the same form. It observed that clause 2 of the table under Section 13(1)(a) provides for full input tax credit where purchased goods are used in manufacture of taxable goods and the manufactured goods are sold (inside the State or in inter-State trade). Given that legal text, the authorities' approach-denying ITC because the purchased chairs were not sold in the same form but converted into scrap for manufacture-was unsustainable. The Court therefore interpreted Section 13(1)(a) to permit ITC in the factual matrix before it and declined to read an additional restriction into the provision. [Paras 8, 9, 10, 11]

The restriction that ITC is available only when purchased goods are sold in the same form was rejected; Section 13(1)(a) entitles ITC where purchased goods are used in manufacture and the manufactured goods are sold.

Final Conclusion: Revisions allowed; the Tribunal's order of 5.4.2019 is set aside and the revisionist's claim for input tax credit for the purchased chairs used as raw material in manufacture of new chairs is upheld for Assessment Year 2013-14.