TaxTMI Updates e-Newsletter
Apr 30,2022

Bail - quantification under Section 74 of the GST Act, 2017 - charge sheet after completion of investigation - anticipatory bail to a Managing Director

Bail - quantification under Section 74 of the GST Act, 2017 - charge sheet after completion of investigation - Grant of bail to the appellant where a charge sheet has been filed but no notice under Section 74 of the GST Act, 2017 has been issued for quantification of the amount. - HELD THAT: - The Court observed that although the charge sheet (third charge sheet) had been filed and the investigation, which commenced in October 2021, was thereby essentially complete, no notice under Section 74 of the GST Act, 2017 had been issued to the Company to enable quantification of the alleged amount. The absence of any process for quantification was treated as a material circumstance in assessing the bail application. Applying these facts, the Court found it appropriate to release the appellant on bail subject to terms and conditions to be settled to the satisfaction of the trial court.

Bail granted to the appellant on terms and conditions to the satisfaction of the trial court.

Anticipatory bail to a Managing Director - Whether the order should operate as precedent for anticipatory bail applications by Managing Directors. - HELD THAT: - On the request of the Attorney General, the Court clarified that the present order is confined to the facts of this case and cannot be treated as laying down a precedent for anticipatory bail to a Managing Director; such applications will be considered on their own facts.

The order shall not be treated as a precedent for anticipatory bail to a Managing Director.

Final Conclusion: Bail granted to the appellant on terms to be fixed by the trial court in view of the filing of the charge sheet without issuance of a Section 74 notice for quantification; the order is confined to the facts and is not a precedent for anticipatory bail applications by Managing Directors.

Refund under Section 54 of the Central Goods and Service Tax Act, 2017 - Rule 89(5) of the Central Goods and Service Tax Rules, 2017 - computation of limitation excluding period 15.03.2020-14.03.2021 - remand for consideration in light of Supreme Court directions

Refund under Section 54 of the Central Goods and Service Tax Act, 2017 - computation of limitation excluding period 15.03.2020-14.03.2021 - Rule 89(5) of the Central Goods and Service Tax Rules, 2017 - Validity of rejection of the petitioner's refund claim for the period April, 2018 to January, 2019 and whether the claim must be reconsidered in light of the Supreme Court's order excluding 15.03.2020-14.03.2021 for limitation computation. - HELD THAT: - The writ court found that the petitioner filed a refund application in Form RFD-01 on 13.03.2021 for the period April, 2018 to March, 2019 and responded to the show-cause notice. The impugned order rejected the claim for April, 2018 to January, 2019 on the ground of limitation, observing that an application ought to have been filed on or before 19.05.2020. The High Court examined the Supreme Court's directions in Suo Motu Writ Petition (Civil) No.3 of 2020 dated 08.03.2021, which directed exclusion of the period 15.03.2020 to 14.03.2021 in computing limitation and prescribed transitional rules for remaining limitation. The Court held that respondent No.1, though referring to the Apex Court's order, failed to apply its directions in computing limitation and did not make an endeavour to consider the consequence of exclusion of the specified period. In view of that omission, the High Court concluded that the petitioner's claim insofar as it was rejected for April, 2018 to January, 2019 could not stand and required fresh consideration by the authority applying the Supreme Court's directions and the governing provisions relating to refund and Rule 89(5). [Paras 6, 7]

Order dated 30.04.2021 is set aside insofar as it rejected the refund claim for April, 2018 to January, 2019; matter remanded to respondent No.1 for fresh consideration applying the Supreme Court's directions excluding 15.03.2020-14.03.2021 for limitation computation.

Final Conclusion: Writ petition allowed; impugned order set aside to the extent of rejecting the refund claim for April, 2018 to January, 2019 and remanded to respondent No.1 for reconsideration in accordance with the Supreme Court's order dated 08.03.2021. No order as to costs.

Trade discount - value of supply (transaction value) - consideration for supply - export of services - essential conditions - place of supply - services supplied in respect of goods physically made available

Trade discount - Section 15(3) - discounts excluded from value of supply - Incentives paid by Intel Inside US LLC (IIUL) under IACSP are not trade discounts for the applicant. - HELD THAT: - The incentives are paid by IIUL although the applicant purchases goods from independent distributors who import and sell Intel products. Section 15(3) treats discounts as excluded from the value of supply only where the discount is given by the supplier in respect of the supply of goods or services; here IIUL is not the supplier of the goods to the applicant and no discount or incentive is received from the distributors. Consequently the incentives paid directly by IIUL cannot be characterised as trade discounts under Section 15(3). [Paras 5]

The incentives cannot be considered as trade discounts.

Consideration for supply - supply of services (marketing) - The incentives paid by IIUL constitute consideration for a supply of services by the applicant. - HELD THAT: - There is no supply of goods between IIUL and the applicant; IIUL appointed distributors to sell its products and the applicant is not a distributor. The payments by IIUL are made to the applicant to augment sales of Intel products, which in substance are marketing services rendered by the applicant. Amounts flowing from IIUL to the applicant therefore amount to consideration for such services and cannot be treated as trade discounts. [Paras 5]

The incentives are consideration for a supply of services (marketing services).

Export of services - essential conditions - place of supply - services supplied in respect of goods physically made available - Section 13(2) and 13(3)(a) - place of supply rules - The supply (marketing services) does not qualify as export of service. - HELD THAT: - Export of services requires satisfaction of all conditions including that the place of supply is outside India. While the supplier (applicant) is in India, the recipient (IIUL) is outside India and payment is in convertible foreign exchange, the place of supply rule in Section 13 applies. Services supplied in respect of goods which are made physically available by the recipient to the supplier fall under Section 13(3)(a), making the place of supply the location where services are actually performed. Here the goods are made available in India through distributors and services are performed in India by the applicant; hence the place of supply is in India and the transaction is not an export of services. [Paras 5]

The supply does not qualify as export of service.

Final Conclusion: The Advance Ruling holds that incentives received from IIUL under IACSP are not trade discounts; they constitute consideration for marketing services provided by the applicant; and such services do not qualify as export of services because their place of supply is in India.

Intermediary - export of services - place of supply of intermediary services - composite supply

Intermediary - composite supply - Whether the marketing services to be provided by the applicant constitute 'Intermediary Services' or 'Support Services'. - HELD THAT: - The Authority examined the agreement and the nature of activities proposed to be undertaken by the applicant - including liaising with customers, connecting prospective customers with GTRS representatives, collecting and reporting customer specifications and feedback, facilitating discussions and interpretation, and monitoring regulatory developments - and found these activities to amount to arranging or facilitating supply between GTRS and its customers rather than supplies made on the applicant's own account. The Authority noted that the applicant's interactions with customers and the transfer of information to GTRS demonstrate that the applicant acts as a conduit on behalf of GTRS. The presence of a transfer pricing arrangement and clauses in the draft agreement (including liability and the applicant's role in promoting GTRS's business) further support the conclusion that the applicant is not supplying services on its own account. Applying the statutory definition of intermediary, the Authority held that the applicant satisfies the elements of arranging or facilitating supply and not supplying on its own account; accordingly the marketing services fall within intermediary services rather than being characterised as a principal composite supply of support services. [Paras 5]

The impugned marketing services constitute 'Intermediary Services' classifiable under HSN Code 9961/9962.

Export of services - place of supply of intermediary services - Whether the marketing services provided by the applicant qualify as export of services under the IGST Act. - HELD THAT: - Having held that the services are intermediary services, the Authority applied the place of supply rule for intermediaries. Under the provisions cited, the place of supply of intermediary services is the location of the supplier of services. Since the applicant is located in India, the place of supply is in India and the statutory condition for export of services that requires the place of supply to be outside India is not satisfied. Consequently, even though the recipient is located outside India, the services cannot be treated as export of services because condition (iii) of the export definition is not met when the place of supply is the supplier's location in India. [Paras 5]

The marketing services do not qualify as export of services; Question No.2 is answered in the negative.

Final Conclusion: The Authority ruled that the proposed marketing services are intermediary services (HSN 9961/9962) and, because the place of supply of such intermediary services is the applicant's location in India, the services do not qualify as export of services under the IGST Act.

Composite supply of works contract - Works contract involving transfer of property in goods - Predominantly meant for use other than for commerce, industry or any other business or profession - Local authority engaged as a public authority - Classification under Notification No.11/2017-Central Tax(Rate) - Serial Number 3(vi)(a)

Composite supply of works contract - Local authority engaged as a public authority - Predominantly meant for use other than for commerce, industry or any other business or profession - Classification under Notification No.11/2017-Central Tax(Rate) - Serial Number 3(vi)(a) - Classification of the composite works contract for construction of a fire station and staff quarters for Surat Municipal Corporation under Serial Number 3(vi)(a) of Notification No.11/2017-Central Tax(Rate). - HELD THAT: - The Authority identified three cumulative criteria for application of entry 3(vi)(a): (a) the supply must be a composite works contract; (b) the recipient must be a Central/State Government, Union Territory, local authority, governmental authority or government entity; and (c) the civil structure must be predominantly meant for use other than commerce, industry or any other business or profession (paragraph 8). Applying these criteria, the Authority found that the contract involves transfer of property in goods in execution and therefore qualifies as a works contract and a composite supply encompassing the fire station, administrative building, officers' quarters, site development, roads, compound wall and ancillary structures (paragraph 9). The recipient, Surat Municipal Corporation, was held to be a local authority (paragraph 9). With reference to the Explanation to Serial No.3(vi), the Authority held that activities undertaken by a local authority in the exercise of functions listed in the Twelfth Schedule (including fire services) fall outside the definition of 'business' for the entry, and that a fire station is not a commercial building but is for public-purpose fire services (paragraphs 10-11). The Authority rejected the Revenue's contention that the completed structure might be used for commerce or business absent specific contrary material, observing no evidence was produced to show commercial use (paragraph 11). The Authority also noted that staff quarters fall within the scope of Serial No.3(vi)(c) but proceeded to classify the overall supply under Serial No.3(vi)(a) as applicable to the fire station project provided to a local authority (paragraph 10). [Paras 8, 9, 10, 11, 12]

The composite works contract for construction of the fire station and staff quarters for Surat Municipal Corporation merits classification under Serial Number 3(vi)(a) of Notification No.11/2017-Central Tax(Rate).

Final Conclusion: The Authority ruled that the subject supply is a composite works contract provided to a local authority and, being predominantly for non commercial public use (fire services), falls within Serial No.3(vi)(a) of Notification No.11/2017 Central Tax(Rate).

Composite supply of works contract - Works contract - Supply to State Government as public authority - Predominantly meant for use as an educational establishment - Entry at Serial Number 3(vi) of Notification No.11/2017 (rate applicability) - Explanation excluding 'business' for government activities

Works contract - Composite supply of works contract - Classification of the subject activity as a works contract and as a composite supply of works contract service. - HELD THAT: - The Authority found that the contract involves construction of immovable property wherein transfer of property in goods is involved in execution of the contract. The supply comprises construction of school building, school hostel, college hostel, Principal's bungalow and staff quarters. On these facts the Authority held that the subject supply qualifies as a works contract service and, being composed of those component works, is a composite supply of works contract service. [Paras 9]

The subject supply is a works contract and a composite supply of works contract service.

Supply to State Government as public authority - Explanation excluding 'business' for government activities - Whether the service recipient (Government of Gujarat) is a government/public authority for the purpose of Notification entry. - HELD THAT: - The Authority noted that the service recipient is the Government of Gujarat. Applying the Explanation to Serial No. 3(vi) which excludes activities undertaken by the State Government in which it is engaged as a public authority from the term 'business', the Authority held that the work undertaken by the State Government in providing the educational establishment falls outside 'business' and thus satisfies the requirement of supply to a government/public authority under the Notification. [Paras 9, 10]

The recipient is the State Government acting as a public authority and the Explanation excludes the activity from 'business' for the Notification's purpose.

Predominantly meant for use as an educational establishment - Entry at Serial Number 3(vi) of Notification No.11/2017 (rate applicability) - Whether the civil structures to be constructed are predominantly meant for use as an educational establishment (and thus fall within Sr. No. 3(vi)(a)/(b)/(c) of the Notification). - HELD THAT: - The Authority examined the nature of the works comprised in the contract and observed that the supply includes a school building and hostels which are structures meant for use as an educational establishment. It concluded that the subject contract meets the criterion of being predominantly for use as an educational establishment and also includes staff quarters covered by the residential complex limb of the entry, thereby bringing the supply within Serial No. 3(vi) of the Notification. [Paras 9, 10]

The civil structures are predominantly meant for use as an educational establishment (and include residential staff quarters) and therefore fall within Serial No. 3(vi) of the Notification.

Entry at Serial Number 3(vi) of Notification No.11/2017 (rate applicability) - Admissibility of Revenue's contention that the structure may be used for commerce or business and its effect on applicability of the Notification entry. - HELD THAT: - Revenue contended that the civil structure may be used for commerce or business and thus the Notification entry would not apply. The Authority observed there was no material or specific intelligence showing that the structure in question would be used for commercial purposes. Given the nature of the buildings (school, hostels) and the Explanation excluding government activities from 'business', the Authority rejected Revenue's contention as lacking merit. [Paras 11]

Revenue's contention that the structure may be used for commerce/business is rejected; no material showed commercial use, and the Notification entry applies.

Final Conclusion: The Advance Ruling records that the subject supply is a composite works contract supplied to the Government of Gujarat as a public authority and that the civil structures are predominantly for use as an educational establishment (with staff residential accommodation); consequently the supply merits entry at Serial Number 3(vi) of Notification No.11/2017 and the ruling is passed in favour of the applicant.

Supply of services under Schedule II(3) CGST Act - Job work as defined in Section 2(68) CGST Act - Manufacturing services on physical inputs (goods) owned by others - Bus body building - Classification under Heading 9988 and Service Code 998882

Supply of services under Schedule II(3) CGST Act - Bus body building - Fabrication and mounting of tankers, tippers, etc. on chassis supplied by the owner is a supply of service. - HELD THAT: - The Authority applied Schedule II(3) of the CGST Act which treats any treatment or process applied to another person's goods as a supply of service. The activity described - receiving customer-owned chassis, fabricating body components and mounting them on the chassis - falls within that description. The Authority therefore concluded that bus body building on chassis owned by the customer is not a supply of goods but a supply of services. [Paras 9]

Fabrication and mounting of bodies on customer-owned chassis is a supply of service.

Job work as defined in Section 2(68) CGST Act - Manufacturing services on physical inputs (goods) owned by others - Classification under Heading 9988 and Service Code 998882 - Classification of the service and applicable GST rate when chassis are supplied by registered or unregistered persons. - HELD THAT: - The Authority relied on the definition of job work in Section 2(68) CGST Act to treat bus body building on chassis supplied by a GST-registered person as job work, attracting the entry at Sr. No. 26(ic) of Notification No. 11/2017-Central Tax (Rate). Where the chassis is supplied by an unregistered person, the activity falls under the residual description of "manufacturing services on physical inputs (goods) owned by others" at Sr. No. 26(iv). Under the Scheme of Classification of Services the supply is classifiable at Heading 9988 and specifically at Service Code 998882 (other transport equipment manufacturing services). In both scenarios the applicable GST rate is 18% as per the cited entries in Notification No. 11/2017-CT(Rate). [Paras 9, 10, 11]

Where chassis are supplied by a GST-registered person the service is classifiable as job work under Sr. No. 26(ic); where supplied by an unregistered person it is classifiable under Sr. No. 26(iv); in either case the service is classified at Heading 9988, Service Code 998882, and taxable at 18% GST.

Final Conclusion: The Authority ruled that bus body building on customer-owned chassis is a supply of service; it is classifiable under Heading 9988 (Service Code 998882) and, whether the chassis is supplied by a registered or an unregistered person, the activity falls under the respective entries Sr. No. 26(ic) or Sr. No. 26(iv) of Notification No. 11/2017-CT(Rate) and attracts GST at 18%.

Supply - consideration - in the course or furtherance of business - services by an employee to the employer (Schedule III) - quid pro quo / reciprocity

Supply - consideration - in the course or furtherance of business - services by an employee to the employer (Schedule III) - quid pro quo / reciprocity - Whether the subsidised deduction from employees' salaries for canteen meals constitutes a supply by the applicant under Section 7 of the CGST Act and is therefore liable to GST. - HELD THAT: - The Authority examined whether the provision of subsidised canteen meals by M/s. Cadila to its employees, with recovery of a portion from employees and payment to a third party canteen service provider, amounts to a taxable supply by the applicant. The Authority applied the statutory concept of Supply, which requires a transaction to be for a consideration, involve an intention to supply and receive, and be made in the course or furtherance of business. It considered that the arrangement involved collection of employees' shares merely as recoveries paid through the applicant to the canteen service provider, without any profit margin retained by the applicant and without an independent contractual relationship between the applicant and employees for provision of canteen services. The Authority also noted the relevance of Schedule III, which excludes services by an employee to the employer from the scope of supply, and the principles that supply requires enforceable reciprocal obligations or quid pro quo between supplier and recipient. On the facts, the canteen facility was provided as an employment benefit and as a statutory/administrative measure for employees rather than as an activity in furtherance of the applicant's business. Therefore the deductions recovered from employees for subsidised meals do not constitute consideration for a supply by the applicant and are not taxable as the applicant's outward supply. [Paras 8]

GST is not leviable on the amount representing the employees' portion of canteen charges collected by M/s. Cadila and paid to the canteen service provider.

Final Conclusion: The Authority ruled that the applicant's recovery of subsidised canteen charges from employees does not amount to a taxable supply by the applicant; GST is not leviable on the employees' portion so collected and remitted to the canteen service provider.

Advance Ruling - Supply being undertaken or proposed to be undertaken - Maintainability under Section 95(a) CGST Act

Maintainability under Section 95(a) CGST Act - Supply being undertaken or proposed to be undertaken - Whether the advance ruling application was maintainable under Section 95(a) of the CGST Act - HELD THAT: - The Authority found the applicant's submissions cryptic and noted absence of material showing that the supply in question was either being undertaken or proposed to be undertaken at the time of filing. The work order relied upon was dated 1-12-20 for completion within nine months, and the Authority observed that the timeline expired on 1-9-21. The advance ruling application was filed on 20-1-22, and no evidence was produced that the activity remained ongoing or was proposed after expiry of the contract period. Under Section 95(a) CGST Act, an advance ruling is available only in relation to supplies being undertaken or proposed to be undertaken by the applicant; since that statutory precondition was not satisfied, the application did not fall within the Authority's jurisdiction to decide on the merits. [Paras 6, 7, 8]

Application held non-maintainable under Section 95(a) CGST Act and rejected.

Final Conclusion: The Authority dismissed the application as non-maintainable because the supply was neither being undertaken nor proposed to be undertaken at the time of filing; the advance ruling application is therefore rejected under Section 95(a) CGST Act.

Supply - in the course or furtherance of business - outward supply - incidental to employment - obligation under the Factories Act, 1948

Supply - in the course or furtherance of business - outward supply - incidental to employment - Whether recovery of employees' share of third party canteen charges collected by the employer pursuant to an obligation under the Factories Act, 1948, constitutes an outward supply taxable under GST. - HELD THAT: - The Authority found that the canteen at the appellant's factory is operated by an independent Canteen Service Provider and that the employer merely collects the employees' share and remits the consolidated amount to that provider. The employer does not retain any profit margin on such collections. The facility is provided pursuant to a statutory obligation and under the terms of employment; it serves employees by virtue of their employment and is not an activity undertaken to carry forward or advance the employer's commercial business of manufacturing machinery. On these findings, the transaction of collecting and paying the employees' portion was held not to be an activity made "in the course or furtherance of business" by the employer and therefore does not amount to an outward supply taxable under the GST law. The Authority declined to treat the employer's role in collection and remittance as a separate taxable supply when the service itself is provided by a third party and the employer neither gains a margin nor performs an economic supply to non employees. [Paras 10]

GST is not leviable on the amount representing the employees' portion of canteen charges collected by the employer and paid to the third party Canteen Service Provider.

Final Conclusion: The Advance Ruling holds that the employer's collection and remittance of employees' share of third party canteen charges-provided pursuant to the Factories Act and as an incident of employment, with no margin retained by the employer-does not constitute an outward supply taxable under GST.

Transfer of unutilized input tax credit on sale, merger or transfer of business - applicability of a notification issued under the Act - scope of Advance Ruling jurisdiction under Section 97(2) - limitations on AAR to entertain questions beyond supplies-related notifications

Advance Ruling - maintainability under Section 97(2)(b) CGST Act - applicability of a notification issued under the Act - transfer of unutilized input tax credit on sale, merger or transfer of business - Whether the Advance Ruling application seeking confirmation on transfer of ITC on merger of two GST registrations is maintainable under Section 97(2)(b) of the CGST Act and entertainable by the AAR. - HELD THAT: - The Authority examined Section 95(a) and the matters enumerated in Section 97(2). Section 97(2)(b) permits advance rulings on the applicability of a notification issued under the provisions of the Act in relation to supplies of goods or services. The Authority held that the term 'notification' in Section 97(2)(b) denotes notifications concerning the incidence, rate or exemption of GST on specified supplies and similar supplies related notifications, and does not extend to permitting the substitution of the word 'CGST Rules' for 'notification'. Allowing such substitution would expand the AAR's statutory jurisdiction beyond the confines expressly carved out by the legislature and would permit the AAR to decide matters not limited to supply related notifications, including validity or legality of notifications, which is impermissible. The Authority therefore concluded that questions regarding the proposed internal corporate merger and the consequent transfer of ITC, as posed in the application, fall outside the functional jurisdiction conferred by Section 97(2)(b). The Revenue's position that transfer of ITC may be permissible subject to compliance with Section 18(3) read with Rule 41 was noted, but the Authority found itself bound to decide only questions within Section 97(2). Precedential reliance on an AAR order from another State was disapproved as that ruling had been set aside on appeal and because advance rulings bind only the applicant and the concerned officer under Section 103. In consequence, the application was held non maintainable and could not be adjudicated on merits by this Authority. [Paras 16, 17, 18, 19, 21]

Application is non maintainable under Section 97(2)(b) and is rejected; the Authority will not decide the merits of the proposed ITC transfer as the matter falls outside its statutory jurisdiction.

Final Conclusion: The Authority dismissed the advance ruling application as not maintainable under Section 97(2)(b) CGST Act, holding that the AAR's jurisdiction is confined to notifications relating to supplies and does not extend to adjudicating the proposed merger and transfer of ITC between the applicant's GST registrations.

Scope of supply - in the course or furtherance of business - supply excluded under Schedule III - employee recoveries and employer-employee contractual benefits - input tax credit - blocked credits under Section 17(5)(b)(i) - ITC admissibility for motor vehicle hire with approved seating capacity above thirteen

Scope of supply - in the course or furtherance of business - employee recoveries and employer-employee contractual benefits - Whether recoveries made by the applicant from employees for canteen facility constitute a taxable supply under GST - HELD THAT: - The Authority found that the canteen is arranged for employees through a third-party canteen service provider, that the applicant collects only the employees' subsidised portion and does not retain any profit, and that the facility is provided pursuant to the employer's HR/employment arrangements. On these findings the Authority was not inclined to treat the activity as made in the course or furtherance of the applicant's business and therefore held that the employee recoveries do not amount to a supply by the applicant under the GST law. [Paras 12, 15]

GST is not leviable on the amount representing employees' portion of canteen charges collected by the applicant and paid to the canteen service provider.

Scope of supply - in the course or furtherance of business - supply excluded under Schedule III - employee recoveries and employer-employee contractual benefits - Whether free bus transportation provided to employees constitutes a taxable supply under GST - HELD THAT: - The Authority recorded that free transportation is provided to employees by a third-party vendor as part of the HR policy and employment arrangement, and that no recoveries are made from employees. On these facts the Authority concluded that the activity is not in the course or furtherance of the applicant's business and therefore does not constitute a supply by the applicant under GST. [Paras 12, 15]

GST is not leviable on the free bus transportation facility provided to the applicant's employees.

Input tax credit - blocked credits under Section 17(5)(b)(i) - Whether input tax credit is admissible on GST paid to the canteen service provider - HELD THAT: - The Authority examined Section 17(5)(b)(i) and its punctuation and concluded that the subclauses are independent; the proviso to clause (iii) cannot be read into clause (i). Applying this construction, the Authority held that supplies of food and beverages (including canteen services) fall within the blocked list under Section 17(5)(b)(i) and, on the basis of that statutory reading, input tax credit on GST paid for canteen services is not admissible to the applicant. [Paras 13, 15]

Input tax credit on GST paid for canteen facility is a blocked credit under Section 17(5)(b)(i) and is inadmissible to the applicant.

Input tax credit - ITC admissibility for motor vehicle hire with approved seating capacity above thirteen - Whether input tax credit is admissible on GST paid for hiring buses used for employee transportation - HELD THAT: - The Authority noted the factual position that the buses hired have approved seating capacity of more than thirteen persons. Section 17(5) blocks ITC for motor vehicles with seating capacity of not more than thirteen, but does not block ITC for vehicles with seating capacity exceeding thirteen. On this basis the Authority held that ITC on GST paid for hiring buses with approved seating capacity above thirteen is admissible to the applicant. [Paras 14, 15]

Input tax credit on GST paid for hiring buses having approved seating capacity of more than thirteen persons is admissible.

Final Conclusion: The Authority ruled that (i) employee recoveries for canteen charges collected and remitted to the canteen service provider do not constitute a taxable supply by the applicant; (ii) free bus transportation provided to employees is not a taxable supply by the applicant; (iii) input tax credit on GST paid for canteen services is blocked under Section 17(5)(b)(i) and is inadmissible; and (iv) input tax credit on GST paid for hiring buses with approved seating capacity exceeding thirteen persons is admissible.

Maintainability of an advance ruling application - locus standi of the applicant to seek an advance ruling - binding nature of an advance ruling on the applicant and concerned officer - recipient seeking classification, rate or nature of supply made by another registered supplier - admissibility of input tax credit and liability to pay tax as categories of advance ruling questions

Maintainability of an advance ruling application - locus standi of the applicant to seek an advance ruling - recipient seeking classification, rate or nature of supply made by another registered supplier - Application by the recipient (SSCDL) for an advance ruling on the classification, tax rate and nature of supply made by another registered supplier (NEC) is non maintainable for want of locus standi. - HELD THAT: - The Authority examined the statutory scheme of advance rulings and the scope of questions permissible under Section 97(2), noting that advance ruling is to be sought in relation to supplies "being undertaken or proposed to be undertaken by the applicant." The facts on record show NEC is the supplier and SSCDL is the recipient. The Authority emphasised that recipients may seek rulings only in specific situations such as admissibility of input tax credit or when recipient is liable under reverse charge; no such circumstances obtain here. Consequently, SSCDL lacks the statutory locus to seek determination of the supplier's SAC and applicable GST rate, rendering the application non maintainable. [Paras 4, 5, 7, 8, 9]

Application is non maintainable and rejected because SSCDL, as recipient, has no locus to seek an advance ruling on the supplier's classification and rate of supply.

Binding nature of an advance ruling on the applicant and concerned officer - advance ruling not binding on third party supplier - An advance ruling, even if issued to the applicant recipient, would not be binding on the actual supplier (NEC), and issuing such a ruling would frustrate the statutory binding scheme under the advance ruling provisions. - HELD THAT: - The Authority relied on the provision that an advance ruling is binding only on the applicant who sought it and on the concerned officer/jurisdictional officer in respect of that applicant. NEC is a distinct GST registered supplier in a different jurisdiction; any ruling addressed to SSCDL cannot bind NEC or compel NEC to describe supplies or adopt a tax rate in its invoices. Issuing a ruling to SSCDL on matters peculiarly concerning NEC's tax liability would therefore be ineffective and contrary to the binding scheme, defeating the purpose of Section 103(1). [Paras 6, 10]

Any ruling in favour of the applicant would not bind the supplier NEC; hence issuance of such a ruling is inappropriate and the application is rejected.

Final Conclusion: The Authority rejected the application as non maintainable for want of locus standi of the recipient to seek an advance ruling on the supplier's classification and tax rate; further, any decision so issued would not be binding on the supplier, rendering the application inappropriate for adjudication.

Classification as part or device - part of machine - interpretation of notification wording - solar power generating system vs solar power generator - tax rate applicability under Notification No. 1/2017 - Bill-to-Ship-to invoicing - advance ruling

Classification as part or device - part of machine - interpretation of notification wording - Whether the specially designed transformers supplied for use with Wind Operated Electricity Generators (WOEG) are parts of WOEG for purposes of concessional entries in the Notification. - HELD THAT: - The Authority examined whether the transformers are an integral constituent of WOEG or merely devices that link the generator to the distribution network. The wording of the relevant entries in the Notification was treated strictly: the entry uses the term WOEG (generator) and not a broader expression such as 'WOEG system' or 'wind power system'. Reliance was placed on the distinction between a generator and a system (illustrated by the difference between 'solar power generating system' and 'solar power generator'), and on authoritative clarifications and instructions which list specific parts of a WOEG (tower, nacelle, rotor, controllers) without including transformer. The Authority noted that WOEG is capable of generating electricity independently and that the transformer, even if specially designed and having dual step-down/step-up functions, serves to make the generated electricity usable for evacuation/distribution rather than being a constituent without which the generator cannot function. Invoicing and supply arrangements showed the applicant supplies transformers directly on principal-to-principal basis, undermining a finding that the transformers form part of the WOEG supplied as a composite. Case law and past circulars were considered but distinguished on facts or found not to displace the clear wording of the Notification. On these grounds, the transformers were held not to be parts of WOEG for the concessional entries. [Paras 36, 37, 38, 40, 41]

Transformers are not parts of WOEG and therefore do not qualify as 'parts for manufacture' under the concessional entries relied upon.

Tax rate applicability under Notification No. 1/2017 - Bill-to-Ship-to invoicing - advance ruling - The GST rate and classification applicable to the specially designed transformers supplied by the applicant. - HELD THAT: - Having held that the transformers are not parts of WOEG, the Authority proceeded to classification under the Notification scheme. The contractual and invoicing evidence demonstrated that the applicant supplied transformers directly to the recipient and there was no composite supply of WOEG including the transformer from the supplier in question. In view of the transformers not falling under the concessional entries for WOEG or 'system' items, the Authority applied the residual classification and relevant entries of the Notification and concluded that the transformers attract the standard rate applicable to such goods. The finding references the Notification schedules and earlier requests for clarification, and culminates in the specific ruling on the applicable entry. [Paras 39, 40, 41, 42, 43]

The specially designed transformers are leviable to CGST at the rate specified in Sr. No. 375 of Schedule-III of Notification No. 1/2017-CT (Rate) (i.e., taxable at the non-concessional rate determined in the ruling).

Final Conclusion: The Authority ruled that the specially designed dual-function transformers supplied for use with WOEG are not parts of WOEG for purposes of the concessional entries in Notification No. 1/2017 and accordingly are taxable under the applicable non-concessional entry (Sr. No. 375 of Schedule-III) attracting the prescribed GST rate in that entry.

Natural justice - opportunity to be heard - show cause notice - reopening and assessment under Section 143(3) read with Section 153A - reasoned order - remand for fresh consideration and verification

Natural justice - opportunity to be heard - show cause notice - Adequacy of opportunity given to the petitioner to respond to the show cause notice dated 22nd March, 2022 and compliance with principles of natural justice. - HELD THAT: - The Court examined the circumstances in which the 92 page show cause notice, accompanied by depositions, was served around midnight on 22nd March, 2022 with a deadline of 3:45 pm on 23rd March, 2022. The petitioner had earlier complied with four notices under Section 142(1) but the material sought in the March 22 notice was first made available then. Having regard to the volume of the notice, the new nature of the material (including depositions) and the short time given, the Court held that one and a half days was not sufficient in the peculiar facts of the case and that the principles of natural justice were not satisfied. The Court expressly refrained from commenting on the merits of the assessment and limited its conclusion to the procedural infirmity arising from inadequate opportunity to be heard. [Paras 8]

Impugned assessment order set aside on the ground that the time given to respond to the show cause notice was not adequate and principles of natural justice were not complied with.

Remand for fresh consideration and verification - reasoned order - reopening and assessment under Section 143(3) read with Section 153A - Relief and remedial directions following the finding of procedural infirmity in the assessment order dated 31st March, 2022. - HELD THAT: - In consequence of setting aside the impugned order, the Court directed that the petitioner be permitted to file its response to the show cause notice dated 22nd March, 2022 within three weeks. Thereafter the respondent was directed to pass a fresh assessment order within four weeks by way of a reasoned order in accordance with law. The Court emphasised that it has not adjudicated the merits and left the rights and contentions of the parties open for determination in the reassessment. [Paras 9]

Petition allowed in part; matter remanded for the petitioner to file response and for the Revenue to pass a fresh, reasoned assessment order within the specified timelines.

Final Conclusion: Writ petition allowed to the extent that the assessment order dated 31st March, 2022 for Assessment Year 2020-21 is set aside for failure to afford adequate opportunity; petitioner to file response within three weeks and respondent to pass a reasoned assessment order within four weeks thereafter; no comment on merits; parties' rights left open.

Comparability of entities for determination of arm's length price - functional dissimilarity as determinant of comparability - exclusion of comparable not a question of law absent perversity or vital factual error - appellate interference standard in transfer pricing disputes

Comparability of entities for determination of arm's length price - functional dissimilarity as determinant of comparability - exclusion of comparable not a question of law absent perversity or vital factual error - Whether the Income Tax Appellate Tribunal rightly excluded Eclerx Services Pvt. Ltd., TCS E-Serve Ltd., BNR Udyog Ltd. and Excel Infoways Ltd. from the comparability set for determining the assessee's arm's length price. - HELD THAT: - The High Court upheld the Tribunal's exclusion of the four companies as comparables, finding that the Tribunal recorded cogent factual and functional reasons for exclusion which go to material differences in business profile and profitability drivers. The Tribunal relied on prior findings (including a confirmed finding in respect of Eclerx) and applied the functional dissimilarity test: Eclerx was held incomparable on grounds previously affirmed by the High Court; TCS E-Serve was excluded by applying the same jurisdictional principle; BNR Udyog's activities combined medical transcription with billing and coding without separate segmental disclosure, making the medical-transcription profile non-comparable; Excel Infoways derived a substantial portion of revenue from infrastructure facilities with no segmental details, preventing identification of margins attributable to the ITeS/BPO activity and undermining reliability as a comparable. The Court treated these findings as factual and not vitiated by perversity or error of law, and therefore held that mere disagreement over inclusion or exclusion of particular comparables does not, by itself, raise a substantial question of law.

Tribunal's exclusion of the four companies as comparables is sustained; no substantial question of law is made out and the appeal is dismissed.

Final Conclusion: The High Court dismissed the appeal against the ITAT order for AY 2012-13, upholding the Tribunal's factual and functional reasoning for excluding the four companies from the comparability list and holding that no substantial question of law arose for interference.

Exclusion of comparables - benchmarking of international transaction - functional comparability - non-availability of segmental financials - significant intangible and brand value - diversified operations and business model dissimilarity - no substantial question of law

Exclusion of comparables - functional comparability - non-availability of segmental financials - significant intangible and brand value - ITAT's exclusion of Persistent Systems Ltd., E-Infochips Bangalore Ltd., Infinite Data Systems Pvt. Ltd. and Zylog Systems Ltd. from the comparable set for benchmarking the international transaction was justified - HELD THAT: - The Court examined the ITAT's reasons recorded in the impugned order and concluded that the Tribunal gave cogent, specific grounds for excluding each of the four companies. Persistent was excluded because segmental financials were not available and earlier coordinate bench decisions in the taxpayer's own case had rejected it on similar grounds. E-Infochips was excluded on account of its product and semiconductor engineering focus, substantial intangibles and brand value and absence of segmental financials, making it unsuitable as a comparable. Infinite was excluded because it was functionally dissimilar-providing a wide range of solutions and having entered into a BOT arrangement with Fujitsu and showing exceptional growth-rendering it an invalid comparable. Zylog was excluded due to diversified operations, substantial brand value and significant intangibles manifested by AMP and R&D expenditures, which made it unlike the taxpayer that provided captive software development services to its AE. Having considered these reasons, the Court found no error in the ITAT's exercise and held that there was no substantial question of law warranting interference. [Paras 16, 17, 28, 32, 35]

The ITAT's exclusions of the four companies as comparables are upheld.

Final Conclusion: Delay in filing the appeal was condoned; the appeal is dismissed for lack of any substantial question of law arising from the ITAT's justified exclusion of the four comparables.

Exemption under Section 11(1)(d) - corpus donation - application of income - purchase of capital asset - substance over form - misapplication of trust assets

Exemption under Section 11(1)(d) - corpus donation - purchase of capital asset - substance over form - Whether the Rs. 19 crore transferred from corpus to general reserve and used by the trust could be treated as application of income eligible for exemption under Section 11(1)(d) or had to be treated otherwise. - HELD THAT: - Both the Commissioner (Appeals) and the Income Tax Appellate Tribunal held that the Rs. 19 crore could not be added as income because the substance of the transaction showed the corpus donation was utilised for the purchase of a capital asset. The High Court agreed that substance must prevail over form and noted there was no challenge on appeal to the concurrent finding that the corpus funds were applied in acquiring a capital asset. The Court referred to the principle that a donation will be treated as corpus and not income where the donor imposes, and the donee accepts, the condition that the gift shall form part of the corpus; conversely, expenditure from corpus in breach of such condition would amount to misapplication. Given the concurrent factual and legal conclusion that the corpus was used for purchase of a capital asset, the appellate contention that transfers from corpus to general reserve preclude exemption under Section 11(1)(d) was not sustained.

Appeal dismissed; no substantial question of law arises in view of the finding that the corpus fund was utilised for purchase of a capital asset and the principle that substance prevails over form.

Final Conclusion: The High Court dismissed the appeal, endorsing the concurrent finding that the Rs. 19 crore constituted corpus utilised for purchase of a capital asset and concluding that no substantial question of law arose for consideration.

Exemption under Section 10(23C)(vi) - solely for educational purposes - dominant object test - nexus between expenditure and educational purpose - capitation fee

Exemption under Section 10(23C)(vi) - solely for educational purposes - nexus between expenditure and educational purpose - capitation fee - Whether the amounts collected by the Trust under the head 'Placement and Training' and their utilisation were 'solely' for educational purposes so as to qualify the Trust for exemption under Section 10(23C)(vi) for FY 2008-09. - HELD THAT: - The Court confined the re-examination remitted earlier to two limited questions: the nature of collection under the head 'Placement and Training' and the utilisation of that amount, and whether both were solely for educational purposes. The petitioner's explanation that the excess collection (difference in ledger figures) represented refunds was found plausible and should not have been viewed adversely. The Court accepted that institutions conducting placement and training may legitimately incur incidental expenses-such as costs of in house training, salaries of visiting faculty, food, commuting and accommodation for trainers and trainees-that are part of imparting education. Applying the settled dominant object test from the Supreme Court (noting that incidental surplus or incidental expenditures do not convert an educational institution into a profit making one), the Court held that a narrow view of permissible educational expenses was inappropriate. On the facts, there was a sufficient nexus between the incidental expenditures (fooding, hostel room rent, mementos, transport, etc.) and the educational/training activities, and those expenditures did not demonstrate a predominant profit motive or sever the character of the institutions as non profit educational entities. Accordingly, the collection and utilisation of the 'Placement and Training' fees could not be characterised as capitation or non educational income that would disentitle the Trust to exemption under Section 10(23C)(vi). [Paras 15, 21, 22, 23]

The Court set aside the CCIT's order denying exemption and directed that exemption under Section 10(23C)(vi) be granted to the Trust for FY 2008-09, with consequential orders to follow within four weeks.

Final Conclusion: The writ petition is allowed: the impugned order rejecting exemption is set aside and the petitioner is to be granted exemption under Section 10(23C)(vi) for FY 2008-09; consequential orders to be passed within four weeks, with no order as to costs.

Re-opening of assessment - change of opinion - reasons to believe - consideration during original assessment - query raised and replied considered - notice under Section 148 - notice under Section 143(3)

Consideration during original assessment - query raised and replied considered - notice under Section 142(1) - Whether the payments to senior employees as incentives and the difference in VAT turnover were matters considered by the Assessing Officer during the original assessment proceedings - HELD THAT: - The Court examined the assessment record including notices issued under Section 142(1) and the assessee's replies. The Assessing Officer had specifically called for details of payments to persons covered by section 40A(2)(b) and for quarterly and revised VAT returns; a targeted query about the alleged Rs. 20,01,84,990 difference in turnover was raised. The petitioner furnished detailed replies and supporting documents, including Form 704 and audit materials, on multiple dates during the original proceedings. Applying the principle that a query raised in assessment proceedings which is met by the assessee's response is thereby a subject of consideration by the Assessing Officer, the Court held that both the incentive payments and the VAT turnover difference were in fact the subject matter of consideration in the original assessment even though the final assessment order did not expressly discuss those queries. [Paras 7, 8]

Both the incentive payments to senior employees and the VAT turnover difference were matters considered by the Assessing Officer during the original assessment proceedings.

Re-opening of assessment - change of opinion - reasons to believe - notice under Section 148 - notice under Section 143(3) - Whether the notice reopening assessment under Section 148 (and consequent proceedings) was justified or amounted to impermissible reopening based on change of opinion - HELD THAT: - Having found that the same issues were considered during the original assessment, the Court applied the settled principle that re-opening an assessment on account of a mere change of opinion from that formed during the completed assessment is not a valid basis for invoking the re-assessment provisions. The Court concluded that the impugned notice under Section 148 and the subsequent proceedings were founded on a change of opinion rather than fresh material giving rise to a bona fide reasons to believe that income chargeable to tax had escaped assessment. Consequently, the reopening and consequent notices could not be sustained. [Paras 9, 10]

The reopening notice under Section 148 and consequential proceedings were quashed as they were based on an impermissible change of opinion and not on any valid reasons to believe that income had escaped assessment.

Final Conclusion: The petition is allowed: the notice dated 30th March 2021 under Section 148, the order dated 24th February 2022 rejecting objections, and the notice dated 25th February 2022 under Section 143(3) are quashed; petition disposed of with no order as to costs.

Availability of alternate statutory remedy - appealability under Section 253(1)(f) of the Income Tax Act, 1961 - relegation to statutory appeal before the Income Tax Appellate Tribunal - no expression on merits

Availability of alternate statutory remedy - appealability under Section 253(1)(f) of the Income Tax Act, 1961 - relegation to statutory appeal before the Income Tax Appellate Tribunal - Whether the writ petition challenging the order of the CIT (Exemption) should be entertained or the petitioner should be relegated to the statutory remedy of appeal before the Income Tax Appellate Tribunal. - HELD THAT: - The High Court observed that the impugned order of the CIT (Exemption) rejecting the petitioner's claim for exemption is an appealable order under Section 253(1)(f) of the Income Tax Act, 1961 and that the appropriate forum for challenging such order is the Income Tax Appellate Tribunal. In view of the availability of the specific statutory remedy, the Court declined to entertain the writ petition and directed the petitioner to pursue the remedy of appeal before the Tribunal. The Court recorded that the writ was filed during the pandemic lockdown and noted that, if limitation issues arise before the Tribunal, the Tribunal may consider them appropriately. The Court expressly refrained from expressing any opinion on the merits of the underlying claim for exemption. [Paras 4, 5, 6, 7]

Writ petition dismissed by relegating the petitioner to file an appeal before the Income Tax Appellate Tribunal; no opinion expressed on merits and Tribunal to consider any limitation issues.

Final Conclusion: The writ petition challenging the CIT (Exemption)'s refusal to grant exemption is dismissed and the petitioner is relegated to the statutory remedy of appeal before the Income Tax Appellate Tribunal; the High Court has not expressed any view on the merits.

Re-opening of assessment - change of opinion - reopening notice under Section 148 - deemed consideration of query upon reply to notice under Section 142(1) - application of Section 43CA - income from house property

Re-opening of assessment - change of opinion - income from house property - deemed consideration of query upon reply to notice under Section 142(1) - Validity of reopening the assessment for A.Y. 2017-18 on the ground that closing finished goods/unsold flats were not offered to tax as income from house property. - HELD THAT: - The Court examined the reasons recorded and concluded that the proposed re-opening in respect of the claimed closing finished goods (unsold flats) amounted to a change of opinion by the Assessing Officer. An identical issue had earlier been the subject-matter of challenge in respect of A.Y. 2016-17; the Court noted that the Assessing Officer had the benefit of the judicial decision relied upon by him at the time of the original assessment but nevertheless completed the assessment without finding against the petitioner. Given that the assessment under Section 143(3) was completed, the reopening based on the same issue is not sustainable as it rests on a change of opinion. The Court therefore treated the re-opening on this ground as impermissible. [Paras 3, 5]

Reopening in respect of the contention that unsold flats should have been offered as income from house property is quashed as based on change of opinion and therefore invalid.

Application of Section 43CA - change of opinion - deemed consideration of query upon reply to notice under Section 142(1) - Validity of reopening the assessment for A.Y. 2017-18 on the ground that market value of flats exceeded agreement value and hence Section 43CA applied. - HELD THAT: - The Court found that the issue relating to the market value of the flats vis-a -vis the agreement value was a subject of specific query during the original assessment proceedings and the petitioner had furnished the requested documents (Index II) in response to the notice. Relying on the principle that a query raised during assessment which is replied to is deemed to have been considered by the Assessing Officer, the Court held that the matter had been considered while completing the assessment. Consequently, the reopening on this ground amounted to a mere change of opinion, which does not justify issuance of a notice under Section 148 where the assessment under Section 143(3) has been completed. [Paras 6]

Reopening in respect of the applicability of Section 43CA to the sold flats is quashed as based on change of opinion and therefore invalid.

Final Conclusion: Writ petition allowed; the notice dated 30th March 2021 under Section 148 for A.Y. 2017-18, the order dated 10th December 2021 rejecting objections, and subsequent notices set aside as the re-openings were founded on impermissible change of opinion.

Scope of Section 292BB - service of notice versus issuance of notice - failure to issue statutory notice under Section 143(2) - effect on jurisdiction under Section 143(3) - jurisdictional defect goes to root and may be raised at any stage

Scope of Section 292BB - service of notice versus issuance of notice - Section 292BB does not cure complete absence of a notice and is confined to curing infirmities in the service of a notice emanating from the Department. - HELD THAT: - The Court agreed with the Tribunal and earlier High Court decisions that Section 292BB operates where there has been participation by the assessee despite defects in the service of a notice; it does not validate a situation where no notice has been issued by the Department. Reliance was placed on the Supreme Court's exposition in Commissioner of Income-Tax v. Laxman Das Khandelwal that the provision cures only infirmities in manner of service and presupposes that the notice has emanated from the Department. Consistent precedents of this Court and other High Courts were noted to the effect that failure to issue the statutory notice cannot be condoned by invoking Section 292BB. [Paras 6, 7]

Section 292BB is inapplicable where there is complete absence of issuance of the statutory notice; it only applies to defects in service.

Failure to issue statutory notice under Section 143(2) - effect on jurisdiction under Section 143(3) - Non-issuance of notice under Section 143(2) within the prescribed period renders the jurisdiction assumed under Section 143(3) erroneous. - HELD THAT: - On the admitted facts that the notice under Section 143(2) was not issued within the six-month period prescribed, the Court held that the Assessing Officer's assumption of jurisdiction under Section 143(3) was invalid. The Court relied on established authority and prior decisions holding that failure to issue the requisite notice before completion of assessment/reassessment vitiates the reassessment order and cannot be cured by Section 292BB. [Paras 8]

The assessment framed under Section 143(3) was without jurisdiction due to non-issuance of the Section 143(2) notice in time.

Jurisdictional defect goes to root and may be raised at any stage - A challenge to jurisdiction may be raised at any belated stage of the proceedings, including on appeal. - HELD THAT: - The Court reiterated settled law that issues relating to jurisdiction are fundamental and may be raised even at a belated stage. The Court referred to authoritative decisions to support the proposition that jurisdictional objections are not waived by late raising and can be urged in appellate proceedings. [Paras 9]

The assessee was entitled to challenge jurisdiction despite the belated stage of proceedings.

Final Conclusion: No substantial question of law was found to arise; appeal dismissed.

Validity of notice under Section 148 of the Income Tax Act - Quashing of assessment notice - Ultra vires character of Explanations A(a)(ii)/A(b) in CBDT Notifications

Validity of notice under Section 148 of the Income Tax Act - Quashing of assessment notice - The impugned notice dated 25.04.2021 issued under Section 148 for Assessment Year 2015-16 is quashed. - HELD THAT: - The Court found that the question raised in the petition is squarely covered by the Division Bench judgment dated 15.12.2021 in W.P.(C) 6176/2021, a position not disputed by respondents' counsel. Reliance on that precedent formed the basis for concluding that the impugned Section 148 notice could not be sustained. Consequently, the notice dated 25.04.2021 (Annexure-A1) for Assessment Year 2015-16 was quashed. The Court recorded that the Revenue remains at liberty to act within the law if further steps are permissible, and the petitioner may challenge any future action by available remedies.

Impugned notice dated 25.04.2021 under Section 148 for Assessment Year 2015-16 quashed.

Ultra vires character of Explanations A(a)(ii)/A(b) in CBDT Notifications - Prayer seeking setting aside of the 'Explanation' in Notification No. 20/2021 dated 31.03.2021 and Notification No. 38/2021 dated 27.04.2021 stands redressed. - HELD THAT: - A Division Bench had already declared Explanations A(a)(ii)/A(b) in the cited CBDT notifications as ultra vires in the earlier judgment relied upon. In view of that declaration, the specific relief sought by the petitioner to set aside those Explanations was rendered unnecessary and hence stood satisfied without further adjudication in this petition.

Relief seeking annulment of the Explanations in the cited CBDT notifications treated as redressed in view of the prior declaration of ultra vires; no further order required.

Final Conclusion: Writ petition allowed: the Section 148 notice dated 25.04.2021 for Assessment Year 2015-16 is quashed; contention regarding the Explanations in the CBDT notifications is treated as redressed by the prior Division Bench declaration; Liberty granted to the Revenue and to the petitioner to act under law in respect of any future steps.

Non-speaking order - faceless assessment - show cause notice - remand for fresh consideration - opportunity to file reply / right to be heard - jurisdiction of assessing officer in faceless regime

Non-speaking order - faceless assessment - Impugned assessment orders are non-speaking and liable to be quashed and remitted for fresh consideration. - HELD THAT: - The impugned Assessment Orders reproduce the petitioners' replies and state only that the replies were not satisfactory without any discussion or reasoned consideration. Such conclusory orders lack the requisite reasoning to support the conclusion reached. Although the faceless assessment regime aims at efficiency, the limited time available under the procedure does not excuse passing mechanically concluded orders. Where an assessing authority fails to record reasons and engage with the assessee's submissions, the order is non-speaking and liable to be set aside. The Court therefore quashed the impugned orders and remitted the matters to the National Faceless Assessment Centre for fresh adjudication requiring a speaking order based on the replies already filed by the petitioners. [Paras 8, 9, 15]

Impugned assessment orders quashed; matter remitted to National Faceless Assessment Centre to pass fresh speaking orders within sixty days based on the replies filed.

Opportunity to file reply / right to be heard - remand for fresh consideration - On remand petitioners must be given opportunity to make further representations and a hearing by video conferencing before fresh orders are passed. - HELD THAT: - In view of the short timelines under the faceless regime and the Court's direction for fresh consideration, the respondents are required to fix a hearing by video conferencing and instruct the web-portal Administrator to permit the petitioners to file additional replies or representations, if any, prior to the passing of fresh orders. The respondents are directed to carry out this exercise within thirty days of receipt of the order so that the assessing authority has the benefit of any further submissions before forming reasons for the fresh order. [Paras 16, 17]

Respondents to fix video-conference hearing and permit filing of additional replies/representations; exercise to be completed within thirty days.

Jurisdiction of assessing officer in faceless regime - Question of jurisdiction of the National Faceless Assessment Centre was not decided and is left open for the petitioners to raise before the assessing authority. - HELD THAT: - Although jurisdictional objections were urged by the petitioners, the Court did not adjudicate the jurisdictional question. The order expressly records that the issue relating to jurisdiction is left open and may be canvassed by the petitioners before the first respondent during the remand proceedings. Consequently, no final finding on jurisdiction was rendered by the Court. [Paras 3, 17]

Jurisdictional issue left open for consideration by the assessing authority; not decided by the Court.

Final Conclusion: Writ petitions allowed; impugned non-speaking assessment orders for Assessment Years 2019-2020 quashed and remitted to the National Faceless Assessment Centre for fresh speaking orders within sixty days; respondents to hold video-conference hearing and permit additional replies within thirty days; jurisdictional objection left open for consideration.

Evidentiary value of statements recorded under Section 132(4) - retraction of statements and its legal effect - requirement of corroborative evidence for additions based on search-recorded statements - concurrent findings of fact and appellate interference

Evidentiary value of statements recorded under Section 132(4) - retraction of statements and its legal effect - Whether the Tribunal was justified in relying upon the statement recorded on 22.06.1998 under Section 132(4) despite the assessee's subsequent retraction. - HELD THAT: - The Court reviewed the chronology of events, noting the original statement recorded on 22.06.1998, subsequent confirmations on 24.06.1998 and 06.07.1998, and a belated retraction by the assessee dated 28.07.1999. In its earlier judgment (Annexure I) the Court had emphasised that the Tribunal erred in wholly disregarding the original statement and directed that due evidentiary value be attached to it. Applying that direction on remand, the Tribunal afforded due weight to the 22.06.1998 statement. The High Court found no illegality in treating the retraction as insufficient to erase the evidentiary value of the original recorded statement, particularly given the delay in retraction and absence of corroborative material or explanation that would substantiate the claim of compulsion at the time of recording. The Court therefore upheld the Tribunal's reliance on the statement subject to the evidentiary appraisal carried out by the Tribunal.

Tribunal's reliance on the Section 132(4) statement upheld; the retraction did not automatically negate the evidentiary value of the original statement.

Requirement of corroborative evidence for additions based on search-recorded statements - Whether additions made on the basis of the statement recorded under Section 132(4) required independent corroborative material, particularly in light of the remand direction. - HELD THAT: - The Court recalled its remand direction that the Tribunal should give due evidentiary value to the statement and decide the appeal in accordance with law with reference to other materials produced by the Revenue. On remand the Tribunal considered the statement along with the material placed before it and recorded findings. The High Court observed that the assessee had not placed any material before the Tribunal to displace the effect of the original statement despite the opportunity afforded by the remand. In these circumstances the Court concluded there was no merit in the contention that the additions were illegal for lack of corroboration where the Tribunal had applied the remand direction and the assessee failed to adduce evidence to counter the statement.

No infirmity in confirming additions on the basis of the recorded statement where the Tribunal, following the remand, evaluated evidentiary materials and the assessee offered no sufficient corroborative material to displace the statement.

Concurrent findings of fact and appellate interference - Whether this Court should interfere with the concurrent findings recorded by the Assessing Officer, the Commissioner (Appeals) and the Tribunal. - HELD THAT: - The High Court noted that the Tribunal's order on remand adhered to the directions in the earlier judgment and that the Tribunal, after examination, allowed the appeal only in part while confirming certain additions. The Court found that the assessee had failed to demonstrate any illegality or infirmity in the Tribunal's findings, and that disturbing concurrent findings of fact was unwarranted in absence of a demonstrable question of law. Having regard to the prior judgment's directive and the absence of fresh material from the assessee on remand, the Court declined to disturb the conclusions recorded by the Tribunal.

Concurrent findings affirmed; no interference warranted by this Court.

Final Conclusion: The appeal is dismissed. The Tribunal's decision on remand - which gave due evidentiary value to the statement recorded under Section 132(4), found the assessee's retraction insufficient, and confirmed the additions after appraisal of materials - is affirmed; no question of law has been shown that warrants interference.

Mistake apparent from record - rectification under section 154 of the Act - disallowance under section 43B of the Act - processing under section 143(1)(a)

Mistake apparent from record - rectification under section 154 of the Act - disallowance under section 43B of the Act - processing under section 143(1)(a) - Whether additions made by CPC and confirmed by CIT(A) under the head of disallowance u/s 43B were a mistake apparent from record and liable to be rectified/deleted. - HELD THAT: - The assessee filed return for AY 2017-2018 along with the tax audit report which recorded three items allegedly unpaid before the due date and noted, in respect of two items, that they were routed through the profit and loss account, while the third item (service tax) was expressly recorded as not routed through the profit and loss account. The assessee, in its computation of income, had added back the two amounts routed through profit and loss account but did not add back the third item. The CPC, on processing u/s 143(1)(a), made additions in respect of all three items and later declined the assessee's rectification application; the CIT(A) upheld that view. The Tribunal found that the material on record (audit report together with computation) demonstrated that two items had already been added back by the assessee and the third item was not debited to profit and loss account and thus not disallowable u/s 43B. Consequently the error in treating all three amounts as disallowable was a mistake apparent from the record that was rectifiable under section 154, and the CIT(A)'s conclusion to the contrary was incorrect. Applying these findings, the Tribunal reversed the CIT(A)'s order and deleted the additions. [Paras 4, 5]

The additions made under section 43B were deleted and the assessee's appeal allowed.

Final Conclusion: The Tribunal held that the CPC and CIT(A) erred in treating all three audit-reported items as disallowable under section 43B; two items had already been added back in the assessee's computation and the third item was not routed through the profit and loss account, constituting a mistake apparent from record rectifiable under section 154. The appeal is allowed and the additions deleted.

Complete scrutiny under CASS - limited scrutiny - onus to prove identity, creditworthiness and genuineness under section 68 - unexplained cash credits - addition under section 68 - burden of proof on the assessee

Complete scrutiny under CASS - limited scrutiny - Validity of selection of the return for complete scrutiny and consequent sustainment of notice under section 143(2). - HELD THAT: - The Tribunal examined whether the assessee's return was wrongly selected for complete scrutiny on the ground that the field of business was misstated. The record shows the case was in fact selected for complete scrutiny under CASS and a notice under section 143(2) was issued and served, with assessment completed under section 143(3). The CIT(A)'s reliance on the CBDT instruction concerning scope of limited scrutiny was inapposite because that instruction relates to limited scrutiny only and does not affect a case selected for complete scrutiny. In these circumstances there was no infirmity in the assessment process arising from the asserted misclassification of the assessee's business and the appellate authorities correctly declined to quash the notice or assessment on that ground. [Paras 6, 9]

Selection for complete scrutiny was valid and the CIT(A) rightly rejected the contention that the notice/assessment was void for want of proper selection.

Onus to prove identity, creditworthiness and genuineness under section 68 - unexplained cash credits - addition under section 68 - burden of proof on the assessee - Whether the addition under section 68 in respect of unsecured loans amounting to Rs. 33,32,906/- was justified. - HELD THAT: - The AO added the loan amounts as unexplained cash credits under section 68 because the assessee did not satisfy the AO as to the identity, creditworthiness and genuineness of the creditors and the loan transactions. The CIT(A) upheld the addition, observing that basic documents such as PAN, Aadhaar and bank statements alone may not discharge the onus where other indicia (interest, repayment, purpose, collateral) are absent. On appeal the Tribunal examined the material placed before the AO and CIT(A) and found that, except for two creditors whose transactions of Rs. 2,00,000/- each remained unexplained, the assessee had furnished PAN, Aadhaar, bank details and confirmations which sufficiently established the identity, creditworthiness and genuineness of the remaining creditors and loan transactions. The Tribunal therefore concluded that the addition could not be sustained in respect of the proved transactions and directed deletion of the addition except in respect of the two unexplained transactions. [Paras 10, 11, 12, 14]

Addition under section 68 is deleted except in respect of two unexplained creditors (totaling Rs. 4,00,000/-); the remainder of the addition is directed to be deleted.

Final Conclusion: The appeal is partly allowed: the Tribunal upheld validity of selection for complete scrutiny but set aside the addition under section 68 except for two unexplained loan transactions aggregating Rs. 4,00,000/-, and directed the Assessing Officer to delete the balance addition.

Allowability of interest under section 36(1)(iii) of the Income tax Act - diversion of borrowed funds for non business purposes - classification between loans & advances and trade receivables / mistake in accounting treatment - remand for verification of factual matrix

Allowability of interest under section 36(1)(iii) of the Income tax Act - classification between loans & advances and trade receivables / mistake in accounting treatment - diversion of borrowed funds for non business purposes - Whether disallowance of interest on account of alleged interest free advance to Kadam should be sustained where the assessee contends the sum was an unpaid sale price mistakenly shown under loans and advances. - HELD THAT: - The Tribunal examined the ledger entries and the parties' contentions and held that invocation of section 36(1)(iii) presupposes that interest free advances were in fact made. If no actual cash outflow occurred and the amount merely represents a journaled trade receivable mistakenly classified as loans and advances, section 36(1)(iii) cannot be mechanically applied. The Tribunal observed that the CIT(A) did not address this particular factual contention in his order. However, the assessee failed to place before the Tribunal or the lower authorities supporting documentary evidence such as agreement(s) for sale, correspondence, or proof that the amount of Rs. 20,00,000/- was received as sale consideration and that the balance was only a book entry. In view of the absence of corroborative documents, the Tribunal considered it appropriate in the interests of justice to remit the matter to the Assessing Officer for verification of whether the sum represented an actual advance (cash outflow) or a mere accounting journal entry representing trade receivables; if found to be the latter, no disallowance under section 36(1)(iii) would be warranted merely on account of incorrect accounting classification. [Paras 6, 7]

Appeal allowed in part; matter remanded to the Assessing Officer to verify whether the amount was in fact an advance or only a journal entry representing trade receivables, and to decide the question of disallowance under section 36(1)(iii) accordingly.

Final Conclusion: The Tribunal allowed the appeal by setting aside the addition insofar as it depended on the contested accounting classification and remitted the issue to the Assessing Officer for factual verification; if the sum is established as a trade receivable and not an interest free advance, no disallowance under section 36(1)(iii) is called for.

Recovery of excess drawback under Rule 16 of the Drawback Rules - reasonable period to be read into a statute which is silent on limitation - time barred show cause notice - self assessment and finality of shipping bill - jurisdiction of territorial Commissionerate/proper officer - confiscation for misdeclaration - binding precedent and obligation on authorities to follow

Recovery of excess drawback under Rule 16 of the Drawback Rules - reasonable period to be read into a statute which is silent on limitation - time barred show cause notice - Whether Rule 16 of the Drawback Rules, which does not prescribe a period of limitation, must be read as having a reasonable period and whether show cause notices issued after more than three years from payment of drawback are time barred. - HELD THAT: - The Court accepted the principle, as reflected in binding precedent, that where a statutory provision does not prescribe any period of limitation a reasonable period must be read into it and what constitutes a reasonable period depends on the facts of each case. Applying that principle to the facts before the Coordinate Bench in Special Civil Application No.20484 of 2019, the Court held that issuance of show cause notices more than three years after payment of drawback-where authorities had not acted promptly despite earlier clarifications-could not be regarded as within a reasonable period. Consequently, show cause notices issued after such inordinate delay were held to be time barred and invalid, and the orders passed pursuant thereto fell with the invalidation of the notices. [Paras 2, 3]

Rule 16 must be read to include a reasonable period; show cause notices issued after more than three years from payment of drawback are time barred and invalid.

Self assessment and finality of shipping bill - jurisdiction of territorial Commissionerate/proper officer - binding precedent and obligation on authorities to follow - Validity of the show cause notice dated 09.02.2018 and related Order in Original insofar as they challenge finally assessed shipping bills and whether the authority may proceed in respect of bills not covered by the limitation ruling. - HELD THAT: - The Court noted that many shipping bills had been finally assessed and duty drawback paid long before issuance of the impugned SCN. While recognizing that the proper officer of the territorial Commissionerate has jurisdiction to investigate and recover erroneously paid drawback, the Court held that where finality of assessment and payment has been attained and the SCN is issued beyond the reasonable period, interference is warranted. The Court therefore quashed the SCN dated 09.02.2018 and consequential orders insofar as they related to shipping bills held to be time barred. The Court clarified, however, that for shipping bills not covered by the limitation ruling (for example where payment was within three years of the SCN), the authority remains free to proceed in accordance with law. [Paras 2, 3]

The SCN dated 09.02.2018 and consequential orders are quashed insofar as they are time barred; authorities may proceed in respect of shipping bills not covered by the limitation ruling if otherwise permissible by law.

Final Conclusion: The writ petition is allowed by quashing and setting aside the show cause notice dated 09.02.2018 and consequential orders to the extent they are time barred under the principle that a reasonable period must be read into Rule 16; authorities remain entitled to proceed on shipping bills not affected by the limitation ruling in accordance with law.

Export Promotion Capital Goods (EPCG) Scheme benefit - Export Obligation Discharge Certificate (EODC) - denial of statutory benefit due to delay by public authority - production of documentary proof post-facto for claiming exemption - remand for verification on production of documents

Export Promotion Capital Goods (EPCG) Scheme benefit - Export Obligation Discharge Certificate (EODC) - denial of statutory benefit due to delay by public authority - Delay in obtaining Export Obligation Discharge Certificate (EODC) from the authority cannot defeat the EPCG Scheme benefit where the export obligation has in fact been discharged. - HELD THAT: - The Court found on the material that a Redemption Letter/Export Obligation Discharge Certificate (EODC) dated 27.10.2021 had been issued by the Assistant Director General of Foreign Trade, Chennai, showing that the petitioner had discharged the export obligation under the EPCG Scheme. The Court held that production of the EODC is necessary to claim benefit, but where the importer has discharged the obligation and has furnished requisite documents to the appropriate authority, delay in issuance by the public authority cannot lead to denial of the Scheme benefit. The Court applied the principle that a condition dependent on the action of a public authority over which the importer has no control must not be allowed to frustrate a public-interest scheme, relying on the reasoning in Commissioner of Customs (Imports) v. Tullow India Operations Ltd. and subsequent authorities which held that delay by public functionaries in granting certificates should not penalise the beneficiary. [Paras 5, 6, 8]

The petitioner is entitled to the benefit under the EPCG Scheme despite the delay in obtaining the EODC, since the export obligation has been discharged as evidenced by the Redemption Letter dated 27.10.2021.

Production of documentary proof post-facto for claiming exemption - remand for verification on production of documents - Relief in the form of permitting production of documents was granted and the respondent's order confiscating goods/demanding duty was set aside subject to verification on production of documents. - HELD THAT: - The Court set aside the respondent's order dated 30.07.2021 and permitted the petitioner to produce documents in support of the claim that the export obligation had been discharged. The petitioner was directed to produce the documents within eight weeks from receipt of the judgment so that the authority may verify the claim and act accordingly. This constituted an order allowing post-facto production and remanding the matter to the respondent for verification and consequential action. [Paras 9]

The impugned order dated 30.07.2021 is set aside and the petitioner is permitted to produce documents within eight weeks for verification; matter remanded to respondent for consequential action.

Final Conclusion: Writ appeal allowed: respondent's order set aside; petitioner may produce documents within eight weeks to demonstrate discharge of export obligation and respondent to verify and proceed accordingly; no costs.

Modification of interim order - Settlement / Modified Resolution Plan - Completion of project by promoter during CIRP - Undertaking by promoter treated as court pledge - Monitoring by Interim Resolution Professional and periodic reporting to appellate forum

Settlement / Modified Resolution Plan - Completion of project by promoter during CIRP - Undertaking by promoter treated as court pledge - Whether, in light of the settlement reached with most homebuyers, the minutes of the stakeholders' meeting, the revised status reports and the promoter's affidavit/undertaking, the NCLAT was justified in rejecting the modification application and directing continuation of the CIRP, or whether the promoter should be permitted to complete the housing project subject to conditions - HELD THAT: - The Court examined the record including the minutes of the meeting dated 23rd October, 2021, the IRP's revised status report of 3rd November, 2021, and the affidavit-cum-undertaking dated 27th December, 2021 filed by the promoter. The affidavit contained specific, time-bound commitments to complete the project stagewise within the stipulated timeline, to start work immediately with arranged funds, to honour the existing buyer agreements without escalation of flat cost, to procure further financing, to incorporate homebuyers' suggestions, and to refund objecting buyers on request. Only seven out of 452 homebuyers opposed the settlement. The Court accepted that continuing CIRP could result in higher costs to homebuyers and that the promoter's undertaking, recorded on affidavit and supplemented by an agreement to subject progress to IRP supervision, furnished adequate assurance for completion. Having found that the NCLAT had not given due weight to the stakeholders' meeting minutes and the IRP's status report, the Court concluded that permitting the promoter to complete the project on the terms of the recorded undertaking better served the interest of the homebuyers. [Paras 21, 22, 23, 24]

The impugned NCLAT order is quashed and set aside; the appellant/promoter is permitted to complete the project in accordance with the minutes of 23rd October, 2021 and the promoter's affidavit/undertaking dated 27th December, 2021; the modification application is allowed.

Monitoring by Interim Resolution Professional and periodic reporting to appellate forum - Supervisory mechanism in lieu of CIRP - Whether adequate supervisory safeguards should be imposed if the promoter is permitted to complete the project instead of continuation of CIRP - HELD THAT: - The Court imposed supervisory conditions to protect the interests of homebuyers: the promoter's affidavit is taken on record as an undertaking; a monitoring mechanism comprising a team to include homebuyer and management representatives was accepted as part of the undertaking; the IRP was directed to submit quarterly progress reports to the NCLAT; and the matter was listed for an initial status report on a fixed date. These measures were treated as sufficient oversight to ensure implementation of the promoter's commitments and to enable the appellate forum to assess progress without reinitiating CIRP immediately. [Paras 21, 24]

The promoter's undertaking is recorded as binding; the IRP shall monitor implementation and submit quarterly reports to the NCLAT; matter listed for first status report on 22nd August, 2022.

Final Conclusion: The Supreme Court allowed the appeal, set aside the NCLAT order, permitted the promoter to complete the housing project subject to the promoter's affidavit/undertaking and specified monitoring and reporting safeguards, and directed periodic oversight by the IRP with a status listing before the NCLAT.

Corporate Insolvency Resolution Process - Operational Creditor under Section 9 of IBC, 2016 - Notice of default and compliance with Section 9(3) - Existence of a dispute within the meaning of Section 8 & 9 - Interest claim not recoverable where not stipulated in invoice - Appointment of Interim Resolution Professional and moratorium under Section 14

Operational Creditor under Section 9 of IBC, 2016 - Notice of default and compliance with Section 9(3) - Existence of a dispute within the meaning of Section 8 & 9 - Admissibility of the application filed by the operational creditor under Section 9 of the IBC, 2016. - HELD THAT: - The Tribunal found that the operational creditor had placed on record invoices, a demand notice and an affidavit in compliance with Section 9(3)(b) and (c). It was noted that the notice of default under Section 8 was delivered and the application under Section 9 complied with the requirements of the Code, Rules and Regulations. The corporate debtor admitted the principal amount due in its reply and the admitted principal exceeded the statutory threshold. On the record there did not exist a dispute within the meaning of Sections 8 and 9 of the Code; therefore the application was liable to be admitted. [Paras 1, 2, 14, 15, 16]

Application under Section 9 is admitted as complete and no dispute exists within the meaning of the Code.

Interest claim not recoverable where not stipulated in invoice - Recoverability of interest at the rate claimed by the operational creditor. - HELD THAT: - The Tribunal recorded that the corporate debtor had admitted the principal amount but observed that interest at 18% per annum had not been mentioned in any invoice issued by the operational creditor. Applying this factual finding, the Tribunal held that the claimed interest is not payable as it was not invoiced. [Paras 13]

Interest at the rate claimed by the operational creditor is not liable to be paid since it was not specified in the invoices.

Appointment of Interim Resolution Professional and moratorium under Section 14 - Corporate Insolvency Resolution Process - Consequential orders on admission: appointment of IRP, declaration of moratorium, public announcement and related procedural directions. - HELD THAT: - As the operational creditor had not proposed an IRP, the Tribunal appointed a qualified insolvency professional from the IBBI list to act as Interim Resolution Professional. The Tribunal declared the moratorium and directed the IRP to make the public announcement and call for submission of claims. Further directions included convening the Committee of Creditors, identifying prospective resolution applicants within the prescribed period, requirement for the operational creditor to deposit an amount with the IRP towards preliminary costs, and communication of the order to concerned authorities. [Paras 17, 18, 19]

IRP appointed, moratorium declared and procedural directions issued including deposit by the operational creditor and public announcement.

Final Conclusion: The Tribunal admitted the Section 9 application filed by the operational creditor, holding that the application complied with the Code and that no dispute existed under Sections 8 and 9; it refused the claimed interest as not invoiced, appointed an Interim Resolution Professional, declared moratorium and issued consequential procedural directions.

Application under Section 9 of IBC - operational debt - financial debt - initiation of Corporate Insolvency Resolution Process (CIRP) - interest as component of debt - appropriation of payments - remedy for recovery of interest before competent forum - Interest Act

Application under Section 9 of IBC - operational debt - interest as component of debt - remedy for recovery of interest before competent forum - Application under Section 9 of IBC cannot be continued or maintained solely for a claim of interest where the principal operational debt has been discharged by the Corporate Debtor. - HELD THAT: - The Tribunal observed that operational debt, as defined under the Code, does not include interest as an automatic component unless a contract specifically provides for interest. The CIRP under application under Section 9 of IBC is triggered by a default in repayment of an operational debt; where the principal amount constituting the operational debt stands discharged by the Corporate Debtor, there is no continuing default to justify initiation of CIRP. The Tribunal noted that common practice of appropriation towards interest does not avail the Operational Creditor where it is admitted that payments were applied to principal and there is no contractual provision for interest nor any quantification by a court. While statutory remedies such as the Interest Act or other fora may permit recovery of interest, initiation or continuation of CIRP merely for unpaid interest not agreed between parties would be contrary to the object and scheme of the IBC. The Tribunal therefore held that claims for interest, in the absence of an agreement making interest part of the operational debt or a judicial quantification, do not qualify as an operational debt for the purposes of Section 9 and that the Operational Creditor's remedy for interest lies before a competent forum for recovery.

Application under Section 9 dismissed because only interest remained unpaid and the principal operational debt was discharged.

Final Conclusion: The petition for initiation of CIRP under Section 9 is dismissed as the admitted payment of the principal discharged the operational debt; a standalone claim for interest not agreed under contract does not sustain CIRP and must be pursued before a competent forum.

Liquidation under section 33(1) of the Insolvency and Bankruptcy Code, 2016 - Appointment of liquidator under section 34(1) read with regulation 7A of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2019 - Vesting of management and cessation of powers of the board on liquidation - Public notice of liquidation - Restriction on suits and legal proceedings during liquidation subject to section 52 and section 33(5) - Deemed notice of discharge to officers, employees and workmen under section 33(7) - Filing of liquidation order with the Registrar of Companies

Liquidation under section 33(1) of the Insolvency and Bankruptcy Code, 2016 - The Corporate Debtor, Savaria Roller Flour Mills Private Limited, is ordered to be liquidated. - HELD THAT: - The Resolution Professional, acting on the unanimous recommendation of the Committee of Creditors (which, in the 15th CoC meeting, recorded that no resolution plan had been received and recommended liquidation with 100% voting share), filed the application under section 33(1) of the Code. The Adjudicating Authority considered the CoC's decision and the RP's application and allowed CA No. 367/2019, directing liquidation of the corporate debtor under section 33(1). [Paras 5, 7]

Application allowed and the Corporate Debtor ordered to be liquidated under section 33(1) of the Code.

Appointment of liquidator under section 34(1) read with regulation 7A of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2019 - The Resolution Professional proposed by the Committee of Creditors is appointed as liquidator. - HELD THAT: - The RP had filed his consent to act as liquidator and the CoC had proposed his appointment. The Adjudicating Authority, in exercise of powers under section 34(1) of the Code and in terms of regulation 7A of the IBBI (Insolvency Professionals) Regulations, 2019, appointed the person proposed by the CoC as liquidator. [Paras 6, 7]

The person proposed by the CoC and consenting to act is appointed as liquidator.

Vesting of management and cessation of powers of the board on liquidation - All powers of the Board of Directors and key managerial personnel cease and vest in the liquidator. - HELD THAT: - Upon initiation of liquidation, the Adjudicating Authority directed that the powers previously exercised by the board and key managerial persons shall cease in accordance with the Code and shall henceforth vest in the liquidator, who will manage the liquidation process. [Paras 7]

Board and KMP powers cease and vest in the liquidator.

Public notice of liquidation - Filing of liquidation order with the Registrar of Companies - A public notice of liquidation is to be issued and a copy of the liquidation order shall be filed with the Registrar of Companies within whose jurisdiction the corporate debtor is registered. - HELD THAT: - The Adjudicating Authority directed issuance of a public notice in the same newspapers in which earlier advertisements were issued, stating that the corporate debtor is in liquidation. The liquidator is also directed, in terms of the Code, to file a copy of the liquidation order with the Registrar of Companies having jurisdiction over the corporate debtor. [Paras 7]

Public notice to be issued and copy of the liquidation order to be filed with the Registrar of Companies.

Restriction on suits and legal proceedings during liquidation subject to section 52 and section 33(5) - Deemed notice of discharge to officers, employees and workmen under section 33(7) - No suit or other legal proceeding shall be instituted by or against the corporate debtor except as permitted; the liquidation order shall operate as notice of discharge to officers, employees and workmen, subject to exceptions. - HELD THAT: - The Adjudicating Authority applied the Code's provisions to restrain initiation of suits or proceedings by or against the corporate debtor after initiation of liquidation, except as permitted under section 52 and except where the liquidator, with prior approval of the Adjudicating Authority, institutes proceedings on behalf of the corporate debtor. The order further provided that the liquidation order shall be deemed to be a notice of discharge to officers, employees and workmen, except insofar as the business is continued during liquidation by the liquidator. [Paras 7]

Restrictions on suits during liquidation imposed and liquidation order is deemed notice of discharge to officers, employees and workmen subject to stated exceptions.

Final Conclusion: CA No. 367/2019 filed by the Resolution Professional is allowed: the Corporate Debtor is ordered to be liquidated; the CoC proposed and consenting Resolution Professional is appointed liquidator; the liquidator shall carry out the liquidation process, issue public notice, file the order with the ROC, exercise vested management powers, and observe the statutory restrictions and consequences of liquidation as directed.

Refund under Rule 5 of CENVAT Credit Rules, 2004 - nexus between input service and output service - exclusion of health/medical insurance from definition of input service - requirement of invoices for admissibility of CENVAT credit - interpretation of "during the relevant period" for eligible refund - effect of remand and finality of earlier appellate orders

Nexus between input service and output service - refund under Rule 5 of CENVAT Credit Rules, 2004 - Whether the departmental authorities may test nexus between input services and output services at the stage of deciding refund claims under Rule 5. - HELD THAT: - The Tribunal held that, following the precedents relied upon by the appellant, nexus between input services and the exported output service is not to be traversed at the stage of grant of refund under Rule 5 of the CENVAT Credit Rules, 2004. On the facts, save for the specifically excluded categories (see separate issues below) and invoices deficiencies, the Bench found a prima facie case in favour of the appellant and concluded that credit relating to the contested input services (Business Support, Event Management, Rental Charges for employee accommodation, rent of cafeteria, out of pocket CA/consultant expenses) could not be denied in the refund exercise. The Tribunal therefore held that the revenue officers erred in rejecting refund claims on nexus grounds during the refund adjudication. [Paras 5, 7]

Nexus cannot be tested to deny refund at the Rule 5 stage; appellants entitled to refund on these services subject to other admissibility conditions.

Exclusion of health/medical insurance from definition of input service - Admissibility of CENVAT credit and refund claimed in respect of Health/Medical Insurance services. - HELD THAT: - The Tribunal accepted the revenue's contention, supported by earlier decisions of this Bench, that w.e.f. 1 April 2011 Health/Medical Insurance is excluded from the definition of input service and therefore credit availed on such services is not admissible. On the facts the credit availed by the appellant for Health Insurance was held to be inadmissible. [Paras 5]

Credit and consequent refund claimed in respect of Health/Medical Insurance is not admissible.

Requirement of invoices for admissibility of CENVAT credit - Admissibility of CENVAT credit/refund where invoices are not available or not addressed appropriately. - HELD THAT: - The Tribunal recorded that certain credits were availed without supporting invoices or on invoices not addressed to the assessee/registered premises. The appellants conceded some items; for others no evidence was produced to show proper invoicing. The Tribunal upheld that credit so availed is not admissible and refund cannot be granted in respect of such items. [Paras 5]

Credits lacking proper invoice support or not in the name of the assessee are inadmissible and refunds in respect thereof are refused.

Interpretation of "during the relevant period" for eligible refund - refund under Rule 5 of CENVAT Credit Rules, 2004 - Whether the phrase "during the relevant period" in the refund formula applies to the CENVAT credit availed as well as to exports, and whether refund claims including credits availed in prior quarters are allowable under Notification No.27/2012. - HELD THAT: - The Tribunal examined prior Division Bench authority which held that the words "during the relevant period" apply to both components of the net CENVAT formula. The Bench observed that the cited decisions support the proposition that credit availed must relate to the relevant period and that refund claims must comply with the time limits of Notification No.27/2012. However, the Tribunal expressed caution in making any definitive pronouncement on that interpretive issue in this case because the earlier decision relied upon was by a Division Bench; it therefore refrained from making final remarks on the point in the present proceedings. [Paras 6]

No final adjudication on the broader interpretive issue; the Tribunal refrained from deciding the point conclusively in this judgment.

Effect of remand and finality of earlier appellate orders - Whether the original authority could traverse beyond the scope of prior appellate orders which had not been appealed by the Department. - HELD THAT: - The Tribunal found that in two matters the Commissioner (Appeals) had granted relief in the first round and those appellate orders were not appealed by the Department. The original authority in the second round nevertheless re decided and denied the refunds, thereby traversing beyond the scope of the remand and disregarding the finality of the appellate orders. The Tribunal held that such re examination by the original authority was not permissible where the appellate orders had attained finality by non appeal. [Paras 7]

Original authority was not entitled to traverse beyond the remand/earlier appellate orders; appellants succeed on this ground and are eligible for refund to that extent.

Final Conclusion: The appeals are partly allowed. Refunds are disallowed in respect of credits lacking proper invoices and for Health/Medical Insurance (held not to be input service); otherwise the appellants are entitled to refunds where denial was based on nexus at the refund stage or on re examination contrary to prior unappealed appellate orders. The broader interpretive issue concerning application of "during the relevant period" under Notification No.27/2012 is not finally decided in this order.

Refund of service tax paid under Finance Act, 1994 - double taxation arising from transition to Central Goods and Services Tax Act, 2017 - Point of Taxation Rules, 2011 determining liability - application of section 11B of the Central Excise Act, 1944 to service tax - no refund where tax was lawfully discharged under the prevailing statute

Refund of service tax paid under Finance Act, 1994 - double taxation arising from transition to Central Goods and Services Tax Act, 2017 - Point of Taxation Rules, 2011 determining liability - no refund where tax was lawfully discharged under the prevailing statute - Claim for refund of service tax paid in June 2017 where the same transactions were subsequently taxed under the Central Goods and Services Tax Act, 2017 - HELD THAT: - The Tribunal held that liability to discharge service tax in respect of the invoices dated between 6th June 2017 and 30th June 2017 crystallised in accordance with Rule 3 of the Point of Taxation Rules, 2011, and tax was therefore lawfully discharged under the Finance Act, 1994. Although the same transactions were later invoiced and taxed under the Central Goods and Services Tax Act, 2017 to enable customers to avail credit, the fact that tax had been paid under the statute then in force precludes entitlement to refund. The applicability of provisions made applicable to service tax by section 83 of the Finance Act, including section 11B of the Central Excise Act, 1944 as contended by the Revenue, supports the conclusion that no statutory provision authorised refund in the circumstances. Equitable considerations and the inconvenience caused to the appellant's customers were not held to override the legal position that a constitutionally valid levy lawfully discharged does not give rise to a refund merely because the taxation regime subsequently changed. [Paras 4, 5]

The claim for refund is not maintainable and the orders of the lower authorities rejecting the refund claim are upheld.

Final Conclusion: Appeal dismissed; no refund of service tax paid for transactions between 6th June 2017 and 30th June 2017 where tax was lawfully discharged under the Finance Act, 1994 despite subsequent taxation under the Central Goods and Services Tax Act, 2017.

Refund of tax collected without authority - violation of Article 265 of the Constitution of India - maintainability of writ petition seeking refund - limitation under Section 39 of the JVAT Act - requirement of assessment before retention of ad-hoc deposits - self-assessment applies only to registered dealers - unjust enrichment

Refund of tax collected without authority - maintainability of writ petition seeking refund - violation of Article 265 of the Constitution of India - Petitioner entitled to seek refund of amounts retained by the State despite being an unregistered dealer where retention is without authority of law and no assessment or demand has crystallised. - HELD THAT: - The Court applied the settled principle that realization or retention of money without authority of law is susceptible to challenge under Article 265 and that a writ petition for refund is maintainable where levy or retention is unauthorised. On the admitted facts no assessment or demand was made against the petitioner for the relevant periods and the amounts were deposited as ad-hoc amounts to avoid coercive action. The Tribunal's and JCCT(Admin)'s rejection of the refund claim solely on the ground that the petitioner was not a registered dealer and that the JVAT Act has no provision to entertain such refund was held unsustainable. Whether the transactions were intra-state or inter-state and whether tax liability crystallised were matters for assessment, but in absence of assessment and demand retention could not be sustained. [Paras 11, 12]

Rejection of the claim of refund for being an unregistered dealer was set aside and the petitioner may seek refund; the matter requires verification by the assessing authority.

Limitation under Section 39 of the JVAT Act - requirement of assessment before retention of ad-hoc deposits - self-assessment applies only to registered dealers - Assessment for Financial Years 2014-15 and 2015-16 is impermissible due to expiry of limitation, and retention of ad-hoc deposits is tenable only if liability crystallises through assessment. - HELD THAT: - The court found that Section 39 prohibits assessment after five years from the end of the tax period; accordingly assessment for the stated tax periods cannot now be undertaken. In consequence, amounts deposited ad-hoc could be retained by the Revenue only if an assessment proceeding resulted in a demand; absent any assessment or demand the Revenue cannot retain such deposits. Further, the concept of self-assessment under the JVAT Act applies to registered dealers (per Section 35(3)), and therefore cannot be invoked to justify retention where the petitioner was not a registered dealer and no assessment was carried out. [Paras 11, 12]

Assessment for both financial years is time-barred; retention of ad-hoc deposits without an assessment-based demand is untenable.

Maintainability of writ petition seeking refund - unjust enrichment - Matter remitted to the Joint Commissioner for fresh consideration of the refund claim in accordance with law. - HELD THAT: - Relying on its earlier order in W.P.(T) No. 2429 of 2018 and having held that assessment for the relevant periods is impermissible, the Court concluded that the proper course is to set aside the orders rejecting refund and remit the claim to the Joint Commissioner (Admin) of the respective divisions for adjudication. The assessing authority is to verify facts (including whether amounts were recovered from customers) and decide the claim in accordance with law within a stipulated period; the Court refrained from expressing further opinion that might prejudice the parties. [Paras 13]

Orders rejecting the refund claim set aside; matter remitted to the Joint Commissioner of State Tax (Admin) of the relevant divisions to consider the petitioner's refund claim in accordance with law within six weeks.

Final Conclusion: Writ petitions allowed to the extent of setting aside the orders rejecting the refund claims; assessment for Financial Years 2014-15 and 2015-16 is time-barred and the revenue cannot retain ad-hoc deposits absent an assessment-based demand; the claims are remitted to the respective Joint Commissioner (Admin) for fresh consideration in accordance with law within six weeks.