TaxTMI Updates e-Newsletter
May 04,2023

Interim relief - Affidavit in opposition - Directions for filing affidavits and replies - List for final hearing

Interim relief - Affidavit in opposition - No interim order to be passed; parties directed to file affidavits for final adjudication - HELD THAT: - The court held that there is no scope for granting any interim relief in the petition and that the substantive issues raised cannot be finally adjudicated without affidavits from the respondents. Accordingly, the court directed the respondents to file an affidavit in opposition within four weeks and permitted the petitioner to file a reply affidavit within two weeks thereafter. The matter is to be listed for final hearing in the monthly list for July, 2023, and parties were directed to be ready with short written notes of argument at that hearing.

Interim relief refused; respondents to file affidavit within four weeks; petitioner may reply within two weeks; matter listed for final hearing in July, 2023; parties to bring short written notes of argument.

Final Conclusion: The petition is not granted interim protection; procedural directions issued for filing of affidavits and replies and for listing the matter for final hearing in July, 2023.

Entertainment of writ petition in absence of constituted second appellate tribunal - interim stay of tax demand subject to deposit of entire tax demand - non-admission of first appeal on grounds of delay under sub-sections (1) & (4) of Section 107 of the GST Act - limitations on condonation of delay by appellate authority

Entertainment of writ petition in absence of constituted second appellate tribunal - interim stay of tax demand subject to deposit of entire tax demand - Whether the writ petition may be entertained and interim relief granted in view of non-constitution of the second appellate tribunal - HELD THAT: - The Court entertained the writ petition because the Second Appellate Tribunal has not yet been constituted, making the usual statutory appellate forum unavailable to the petitioner. In view of the unavailability of the second appellate forum the Court granted interim relief by staying the balance of the tax demand during the pendency of the writ petition on the condition that the petitioner deposit the entire tax demand within four weeks. The order records that the petition is entertained only for this reason and frames the interim arrangement as a temporary measure until the appellate mechanism is available or the writ is finally adjudicated. The Court directed service and filing of pleadings and issued notice to the respondents, disposing of the interlocutory application accordingly. [Paras 2, 8]

Writ petition entertained in view of non-constitution of the Second Appellate Tribunal; interim stay granted on the balance of the demand subject to deposit of the entire tax demand within four weeks and the rest of the demand to remain stayed during pendency of the petition.

Final Conclusion: The High Court entertained the writ petition because the second appellate forum is not constituted and granted an interim stay of the balance of the tax demand on the condition that the petitioner deposit the entire tax demand within four weeks; notice was ordered and the interlocutory application disposed of.

Grant of instalments under Section 80 excluding self assessed admitted tax - GSTR 1 as a statutory return for outward supplies - self assessed liability / admitted tax - assessment under Section 73 not prerequisite for exclusion under Section 80 - sales suppression and computation of tax on account of under reported outward supplies

Grant of instalments under Section 80 excluding self assessed admitted tax - GSTR 1 as a statutory return for outward supplies - self assessed liability / admitted tax - Whether the petitioner was entitled to the benefit of payment by instalments under Section 80 in respect of tax admitted by filing the prescribed outward supply return (GSTR 1). - HELD THAT: - Section 80 permits the Commissioner to allow payment of amounts due in instalments but expressly excludes "the amount due as per the liability self assessed in any return." The scheme of the Act defines a "return" to include any return prescribed under the Act and Chapter IX (Sections 37-48) contemplates that the various prescribed forms, including the form for outward supplies, constitute returns. Section 39 requires furnishing of returns of inward and outward supplies and connects payment of tax to such returns. The petitioner's filing of Form GSTR 1 therefore constitutes filing of a statutory return reflecting outward supplies and taxable liability. Accordingly, tax shown as due in that return is a self assessed or admitted liability and falls within the exclusion in Section 80. Allowing the instalment facility in such circumstances would permit a delinquent assessee who has filed the prescribed return but not paid tax to obtain the benefit intended only for those with disputed liability. The court rejected the contention that GSTR 1 is merely "details" and not a return, and held that admitted tax reflected in the filed return is ineligible for instalments under Section 80. [Paras 12, 13, 14, 15, 17]

Benefit under Section 80 cannot be extended to tax admitted by the petitioner in the statutory outward supply return (GSTR 1); the petitioner is barred from instalments in respect of such admitted/self assessed tax.

Assessment under Section 73 not prerequisite for exclusion under Section 80 - sales suppression and computation of tax on account of under reported outward supplies - Whether the exclusion in Section 80 applies only after completion of assessment under Section 73, or whether it applies to self assessed admitted liability even prior to assessment. - HELD THAT: - Section 80 refers to amounts due as per liability self assessed in any return and does not condition its exclusion upon completion of any assessment. The petitioner had filed the prescribed outward supply return showing taxable sales and had, at inspection and subsequently during assessment proceedings under Section 73, acceded to suppression of sales and the tax computed thereon. The statutory text and scheme therefore demonstrate that the exclusion applies to liabilities reflected in returns regardless of whether an assessment under Section 73 has been framed. The court accordingly upheld the respondents' view that the instalment facility is inapplicable to admitted liabilities even if formal assessment proceedings are pending or subsequent. [Paras 6, 7, 8, 16]

The exclusion in Section 80 is not dependent on completion of assessment; admitted/self assessed liability in the filed return is excluded from instalment relief even if assessment proceedings under Section 73 are pending or thereafter.

Final Conclusion: Writ petition dismissed; the impugned orders rejecting the petitioner's requests for payment by instalments under Section 80 in respect of tax admitted in the statutory outward supply return are sustained.

Cancellation of registration for non-filing of statutory returns - service by electronic means under Section 169(1)(d) constitutes valid service - appeal time-limit and condonation under Section 107 (90 days plus 30 days) - delay in filing appeal and absence of satisfactory explanation defeats condonation

Cancellation of registration for non-filing of statutory returns - service by electronic means under Section 169(1)(d) constitutes valid service - Validity of cancellation of the petitioner's GST registration where returns were not filed and cancellation notice was served online - HELD THAT: - The Assessing Authority issued an online notice of cancellation after the petitioner admitted defaults in filing statutory returns and did not respond or appear for the personal hearing. The Court noted its prior view in W.P.No.25666 of 2022 that service effected online in terms of Section 169(1)(d) of the Act amounts to valid service; relying on that position, the Assessing Authority's cancellation order, uploaded on the official portal, was validly served and lawfully passed. The petitioner's assertion of unawareness did not negate the validity of online service or the correctness of the cancellation in view of admitted defaults and the procedural steps taken by the authority. [Paras 4, 5]

Cancellation of registration was validly effected and the order of cancellation is sustainable.

Appeal time-limit and condonation under Section 107 (90 days plus 30 days) - delay in filing appeal and absence of satisfactory explanation defeats condonation - Whether the appellate authority was justified in dismissing the belated appeal filed by the petitioner for want of limitation and non-satisfaction of conditions for condonation - HELD THAT: - Section 107 prescribes a 90-day period for filing an appeal with a further one-month window for condonation upon sufficient explanation. The petitioner filed the appeal six months beyond the statutory 90+30 day period and provided no adequate or justifiable explanation for such delay. Given the admitted defaults leading to cancellation and the absence of any explanation meeting the statutory requirement for condonation, the appellate authority correctly treated the appeal as time-barred and dismissed it. The Court found no ground to interfere with that conclusion. [Paras 6, 7, 8]

The appellate authority rightly dismissed the appeal as barred by limitation; condonation was not warranted in the absence of a satisfactory explanation.

Final Conclusion: The impugned order cancelling registration and dismissing the belated appeal for want of limitation is confirmed; the writ petition is dismissed with no costs.

Input tax credit blocked for construction of immovable property - immovable property-things attached to the earth or permanently fastened for permanent beneficial enjoyment - degree and nature of annexation-intention and factum of fastening - works contract services for construction of immovable property - prefabricated structures affixed to RCC platform constitute immovable property

Input tax credit blocked for construction of immovable property - immovable property-things attached to the earth or permanently fastened for permanent beneficial enjoyment - degree and nature of annexation-intention and factum of fastening - Input Tax Credit entitlement in respect of construction of a shed using prefabricated technology where the prefabricated structure is fixed to an RCC platform embedded in the land. - HELD THAT: - The Authority applied the statutory test in Section 17(5) read with the definitions of "goods" and the concepts of "attached to the earth" in the General Clauses Act and the Transfer of Property Act to determine whether the prefabricated shed (PFS) is an immovable property. The determinative inquiry is the degree and nature of annexation and the intention and factum of fastening: whether the PFS is attached to what is imbedded in the earth for the permanent beneficial enjoyment of that to which it is attached. The Authority found that the PFS is erected on an RCC platform embedded in the earth and that the PFS is intended to enable and sustain business activity permanently on that platform; the prefabricated components have no separate existence independent of the civil foundation and enable beneficial enjoyment of the land. Reliance on precedents holding movable machines (fixed for operational efficiency) to be goods was distinguished on facts, because those decisions concerned plant or machinery capable of market sale and separate use; by contrast the PFS, as fixed to the RCC platform, cannot be sold or enjoyed separately and the floor/foundation cannot be dismantled without substantial damage. Applying this reasoning, the PFS falls within the concept of immovable property and therefore inward supplies and works contract services used for its construction fall within the blocked categories under Section 17(5)(d) and 17(5)(c). [Paras 7, 8, 9]

Input tax credit is not available for the construction of the prefabricated shed fixed to the RCC platform because the structure is an immovable property and such inward supplies/works contract services are blocked under Section 17(5).

Final Conclusion: The Advance Ruling clarifies that a prefabricated shed erected on an RCC platform embedded in the land, intended for permanent beneficial enjoyment for carrying on business, constitutes immovable property; accordingly input tax credit on supplies and works contract services used for its construction is not admissible under Section 17(5) of the GST Act.

Summary order. The application filed by M/s. Aludecor Lamination Private Limited seeking advance ruling on classification and applicable GST rates for Aluminium Composite Panels is referred to the Appellate Authority for Advance Ruling, Telangana under Section 98(5) of the TGST Act, 2017 for hearing and decision, as the Members of the Authority have recorded divergent opinions on the classification issue.

Nullity of Settlement Commission order - failure to follow due procedure under Section 245D(4) - remand to Settlement Commission/interim Board for fresh decision - set aside of assessment/re-assessment - power to call for fresh Rule 9 report

Nullity of Settlement Commission order - failure to follow due procedure under Section 245D(4) - Validity of the Settlement Commission order dated 31.03.2008 - HELD THAT: - The Settlement Commission itself recorded that it was "not practicable" to examine records, investigate the cases or give adequate opportunity as required by Section 245D(4) but proceeded to pass an order to comply with High Court directions to dispose by 31.03.2008. The Supreme Court held that an order passed in that manner is a nullity and cannot be treated as an order in law. The High Court was therefore justified in so holding, and the Settlement Commission's order must be set aside and cannot stand as a valid adjudication on merits. [Paras 3]

Settlement Commission order dated 31.03.2008 is a nullity and is set aside.

Set aside of assessment/re-assessment - Consequences for assessment/re-assessment passed by the Assessing Officer - HELD THAT: - Because the Settlement Commission's order was quashed as a nullity, the Supreme Court set aside the subsequent assessment/re-assessment order passed by the Assessing Officer which was the subject-matter of the writ petition before the High Court. [Paras 4]

The assessment/re-assessment order passed by the Assessing Officer is set aside.

Remand to Settlement Commission/interim Board for fresh decision - power to call for fresh Rule 9 report - Remand for fresh adjudication and procedural directions - HELD THAT: - The matter is remitted to the Settlement Commission for fresh decision. Noting that the Settlement Commission has been wound up and an interim Board under Section 245AA is adjudicating pending matters, the Supreme Court remitted the case to the interim Board with a request for expeditious disposal and indicated it would be preferable that a reasoned order be passed within six months from first hearing. The interim Board is permitted to call for a fresh Rule 9 report and proceed to pass a final order after following the due procedure under Section 245D(4). [Paras 4, 5]

Matter remitted to the Settlement Commission/interim Board for fresh decision in accordance with law and procedure; interim Board may call for fresh Rule 9 report and is requested to decide preferably within six months.

Final Conclusion: Appeals allowed to the extent indicated: the Settlement Commission order dated 31.03.2008 and the consequent assessment/re-assessment are set aside; the matter is remitted to the Settlement Commission/interim Board for fresh adjudication in accordance with Section 245D(4), with liberty to obtain a fresh Rule 9 report and a request for expeditious disposal preferably within six months.

Income from Other Sources - interest on enhanced compensation - Section 56(2)(viii) of the Income-tax Act - deduction under Section 57(iv) - specific statutory provision prevailing over general classification as PGBP

Income from Other Sources - interest on enhanced compensation - Section 56(2)(viii) of the Income-tax Act - deduction under Section 57(iv) - Claim of fifty per cent deduction under Section 57(iv) in respect of interest on enhanced compensation is allowable and the income is taxable under the head Income from Other Sources notwithstanding the assessee's business of dealing in real estate. - HELD THAT: - The Tribunal examined Section 56(2)(viii), which expressly taxes interest received on compensation or enhanced compensation under the head "Income from other sources", and Section 57(iv), which grants a deduction equal to fifty per cent of income of the nature referred to in clause (viii) of section 56(2). The assessing officer and the Commissioner (Appeals) had disallowed the deduction on the ground that the assessee's activities constituted business and the income should be treated as profit and gains of business or profession. The Tribunal held that the specific statutory mandate in Section 56(2)(viii) classifying interest on enhanced compensation as income from other sources governs the tax treatment, and that Section 57(iv) accordingly applies to allow a fifty per cent deduction. The general characterization of the assessee's receipts as business income is therefore irrelevant where the specific provision prescribes a different head and a statutory deduction; accordingly the orders of the lower authorities were set aside and the deduction allowed. [Paras 5]

Deduction of fifty per cent under Section 57(iv) allowed in respect of interest on enhanced compensation; income to be taxed under Income from Other Sources as per Section 56(2)(viii); orders below set aside.

Final Conclusion: Appeal allowed; the Tribunal set aside the orders of the lower authorities and directed that interest on enhanced compensation be taxed under Income from Other Sources with the statutory fifty per cent deduction under Section 57(iv) to be allowed.

Penalty under Section 271C for failure to deduct TDS under Section 195 - Limitation for imposition of penalty under Section 275(1)(c) - Jurisdiction to initiate and levy penalty proceedings - Reasonable cause defence for non-deduction of TDS - Opportunity of hearing in penalty proceedings - Condonation of delay in filing appeal

Limitation for imposition of penalty under Section 275(1)(c) - Penalty under Section 271C for failure to deduct TDS under Section 195 - The penalty order dated 28.03.2017 under section 271C(1)(a) was passed within time and not barred by Section 275(1)(c). - HELD THAT: - The Tribunal accepted the appellate authority's reasoning that penalty proceedings under section 271C are independent and are initiated on receipt of a reference from the AO. The reference from the AO was received on 25.04.2016 and the notice for initiation of penalty proceedings was issued on 03.05.2016, which falls in the financial year 2016-17. Section 275(1)(c) permits imposition of penalty up to six months from the end of the month in which action for imposition of penalty is initiated or until the end of the relevant financial year, whichever is later. The impugned penalty order dated 28.03.2017 was therefore within the permissible period and not time-barred. [Paras 4]

Penalty order is validly within the limitation prescribed by Section 275(1)(c) and ground of appeal on limitation is dismissed.

Jurisdiction to initiate and levy penalty proceedings - The officer who passed the orders under sections 201(1)/201(1A) and 271C had jurisdiction over the assessee. - HELD THAT: - On perusal of the assessment order under sections 201(1)/201(1A), the AO treated the assessee as an assessee in default for non-deduction of tax under section 195(1). The appellate authority examined jurisdictional objections and concluded that the Deputy Commissioner of Income Tax, International Taxation, Circle, Lucknow was the officer concerned having jurisdiction over the person responsible to deduct tax under section 195. Consequently, the officer who passed the orders under sections 201(1)/201(1A) and 271C was held to have jurisdiction to pass such orders. [Paras 4]

Jurisdictional challenge is rejected and the officer is held to have jurisdiction.

Opportunity of hearing in penalty proceedings - The assessee was afforded a reasonable opportunity of being heard in the penalty proceedings. - HELD THAT: - Notices under section 271C(1)(a) were issued on 03.05.2016 and 29.08.2016, the assessee received those notices and filed submissions (notably a submission dated 03.06.2016). The appellate authority recorded that the submissions were considered and included in the impugned order. The Tribunal noted these facts and that the assessee had been provided reasonable opportunity during the penalty proceedings. [Paras 4]

Ground of appeal alleging denial of opportunity of hearing is dismissed.

Reasonable cause defence for non-deduction of TDS - Penalty under Section 271C for failure to deduct TDS under Section 195 - There was no reasonable cause for the assessee's failure to deduct TDS under section 195, and the penalty under section 271C was rightly imposed on merits. - HELD THAT: - The assessee contended lack of knowledge of the seller's NRI status and reliance on Indian address details in the sale deed as a reasonable cause for not deducting TDS. The appellate authority, upheld by the Tribunal, found this explanation to be unsubstantiated: a purchaser in an immovable property transaction is expected to make sufficient enquiries about owners and their status, and NRI status would ordinarily be evident in initial enquiries and registry formalities. The authority concluded the assessee failed to prove reasonable cause or any mitigating circumstance; consequently the penalty amounts for the respective AYs were confirmed. [Paras 4]

Reasonable cause defence rejected; penalty on merits confirmed.

Condonation of delay in filing appeal - The application to condone delay of 1005 days in filing the appeals is rejected and the appeals are dismissed as time-barred and devoid of merit. - HELD THAT: - The assessee attributed the delay to non-delivery by the courier service and produced a courier receipt, but did not pursue or follow up with the Tribunal for over two years and a half and only inquired when deciding to opt for the Vivad Se Vishwas Scheme. The Tribunal held that the explanation did not satisfactorily cover the entire period of delay and amounted to negligence or inaction. Reliance was placed on authorities emphasising that 'sufficient cause' must cover the whole period of delay and that in cases of apparent lethargy a pragmatic approach does not become a shield for inaction. Moreover, the assessee failed to appear at multiple fixed hearings before the Tribunal, leaving the findings below uncontroverted. In view of these circumstances the Tribunal declined to exercise discretion in favour of condonation. [Paras 9, 11, 13, 14, 15]

Condonation refused; appeals dismissed as time-barred and for being devoid of merit.

Final Conclusion: The Tribunal affirmed that the penalty under section 271C for failure to deduct TDS under section 195 was validly imposed within the limitation period, that the officer had jurisdiction, that the assessee was afforded opportunity of hearing, and that the defence of reasonable cause was not established; the assessee's belated appeals (AY 2004-05, AY 2005-06, AY 2006-07) were not condoned for delay and are dismissed.

Employee Stock Option Plan expenses - Revenue expenditure - Deduction under section 37 - Ascertained liability - Notional versus crystallized loss - Perquisite taxation timing

Employee Stock Option Plan expenses - Revenue expenditure - Deduction under section 37 - Ascertained liability - Notional versus crystallized loss - Perquisite taxation timing - Allowability of ESOP/RSU related expenses claimed by the assessee as a deduction under section 37 for the assessment year 2014-2015. - HELD THAT: - The Tribunal held that, on the facts of the case, the ESOP/RSU expenditure represented employee compensation and constituted revenue expenditure allowable under section 37. The coordinate-bench precedents (including Novo Nordisk and the Special Bench in Biocon) were applied: the assessee had an actual outflow to the parent company evidenced by debit notes, the liability had accrued in the relevant previous year and was capable of being estimated with reasonable certainty, and the discount on shares was disbursed as compensation to retain and motivate employees. The Tribunal rejected characterisation of the expense as merely notional, contingent, capital or a colourable device, and noted that any indirect benefit to the parent company does not negate the assessee's wholly and exclusively business purpose. In view of identical facts to the assessee's earlier coordinate-bench decision for AY 2015-2016, that decision was followed and applied to allow the ESOP expenditure in computing income for AY 2014-2015. [Paras 10]

Expenditure towards ESOP/RSU is an allowable deduction under section 37 for assessment year 2014-2015.

Final Conclusion: The appeal is partly allowed: the disallowance of ESOP/RSU expenses is set aside and the expenditure is allowed as a deduction under section 37 for AY 2014-2015.

Leave travel concession exemption and foreign leg / circuitous route - assessee in default under section 201(1) and 201(1A) - limitation for passing order u/s.201(1) under the 'reasonable time' doctrine (applicable to pre-01.04.2010 cases) - limitation under section 201(3): two years from the end of the financial year in which the TDS statement is filed - remand for verification of declaration and tax payment by employees

Limitation for passing order u/s.201(1) under the 'reasonable time' doctrine (applicable to pre-01.04.2010 cases) - Additional ground based on Mahindra & Mahindra Ltd. (Special Bench) / High Court decision that orders under section 201(1) must be passed within a 'reasonable time'. - HELD THAT: - The Tribunal examined the assessee's contention that the impugned order dated 03.01.2019 was barred by limitation relying on Mahindra & Mahindra Ltd., which held that though section 201 does not prescribe a limitation, the Revenue must exercise powers within a 'reasonable time'. The Tribunal observed that the Mahindra principle applies to cases prior to the amendment to section 201(3) made by the Finance Act, 2012 (effective 01.04.2010). On the facts, the assessee's case does not fall within the ambit of the pre-01.04.2010 doctrine relied upon; accordingly the additional ground based on that decision was rejected as not applicable. [Paras 10]

The additional ground based on the Mahindra & Mahindra line of authority is dismissed as inapplicable to the assessee's case.

Limitation under section 201(3): two years from the end of the financial year in which the TDS statement is filed - Whether the order under section 201(1) was barred by limitation under section 201(3), which prescribes a two year period linked to filing of the TDS statement. - HELD THAT: - The Tribunal noted that this ground was raised before the first appellate authority but was not decided by the CIT(A). The assessee had not placed the quarterly TDS statement(s) before the Tribunal which are material for determination of the temporal cut off under section 201(3), namely 'two years from the end of the financial year in which the statement is filed'. In the interest of fair opportunity and adjudication on the merits, the Tribunal remanded the issue to the file of the CIT(A) for fresh consideration and adjudication of limitation on the factual matrix of the case. [Paras 11, 12]

Issue remanded to the CIT(A) for adjudication whether the order under section 201(1) is barred by limitation under section 201(3).

Leave travel concession exemption and foreign leg / circuitous route - remand for verification of declaration and tax payment by employees - Whether amounts paid as leave travel concession (LTC/LFC) involving a foreign leg should be treated as taxable (and whether the assessee is an assessee in default), and whether employees declared such LTC and paid tax thereon. - HELD THAT: - For a subset of appeals where the assessee relied on precedents (including a Madras High Court order) and did not pursue the section 201(3) limitation plea, the Tribunal declined to decide the substantive questions on the merits. Instead, the Tribunal directed remand to the Assessing Officer to verify factual matters: whether the employees had declared the LTC in their income tax returns and paid tax accordingly, and to examine compliance with conditions to the first proviso to section 201(1). The AO was directed to afford the assessee adequate opportunity of being heard. Other substantive grounds were left open for adjudication as necessary. [Paras 16, 18]

These issues are remanded to the Assessing Officer for factual verification and adjudication; other grounds left open.

Final Conclusion: Appeals are not finally adjudicated on the main merits: one additional limitation plea founded on Mahindra was rejected as inapplicable; the question of limitation under section 201(3) is remanded to the CIT(A) for fresh adjudication; separate factual issues regarding LTC involving foreign legs are remanded to the Assessing Officer for verification of employee declarations and tax payment. All appeals are disposed of for statistical purposes consistent with these directions.

Deduction under section 80IB(10) - search and seizure proceedings under section 132 and assessment under section 153C - bar on making new claim after search pursuant to section 80A(5) - onus on assessee to prove source and character of undisclosed receipts

Deduction under section 80IB(10) - search and seizure proceedings under section 132 and assessment under section 153C - bar on making new claim after search pursuant to section 80A(5) - Whether deduction under section 80IB(10) could be allowed on additional income declared by the assessee pursuant to search and assessment under section 153C when the deduction was not claimed in the original return or Form No.10CCB. - HELD THAT: - The Tribunal held that the assessee had declared additional income only after the search and seizure action and had not claimed the deduction under section 80IB(10) in the original return or in the auditor's report (Form No.10CCB). The Assessing Officer invoked the principle that a new claim of deduction or allowance cannot be introduced in completed assessments post-search and relied on the bar in section 80A(5). The Tribunal noted that though some higher forum decisions permit claim of deduction on additional income disclosed after search where the income is clearly business income of the eligible project, those decisions are fact-sensitive and depend on there being no dispute that the undisclosed receipts arose from the eligible project. On the facts, the Tribunal found the present case did not fall within those precedents because the deduction was a fresh claim made only after the search, and the statutory bar and relevant authorities relied upon by the A.O. supported denial of the new claim. [Paras 3, 12, 13]

The claim for deduction under section 80IB(10) made for the additional income declared post-search, which was not claimed in the original return or Form No.10CCB, was not allowable.

Onus on assessee to prove source and character of undisclosed receipts - deduction under section 80IB(10) - Whether the assessee discharged the burden of proving that the additional undisclosed receipts related to business income of the eligible housing project and were therefore entitled to deduction under section 80IB(10). - HELD THAT: - The Tribunal examined the seized documents and the assessee's explanations and observed contradictions in the assessee's identification of the seized papers. The assessee failed to satisfactorily establish that the seized entries represented on-money receipts from the housing project or that the payments were business expenditure related to the eligible project. The Tribunal emphasised that entitlement to the beneficial provision requires the assessee to come with clean hands and to substantiate the source and character of the income. In absence of corroborative evidence and given the assessee's inability to prove that the undisclosed amounts pertained to the eligible project, the Tribunal sustained the denial of the deduction. [Paras 12, 13]

On the facts, the assessee failed to prove that the additional declared income related to the eligible housing project; therefore the deduction under section 80IB(10) on that amount could not be allowed.

Final Conclusion: Both appeals challenging denial of deduction under section 80IB(10) on additional income declared after search (A.Y. 2009-10 and 2010-11) were dismissed: the claims were new post-search and not shown to arise from the eligible project, hence deduction not allowable.

Deduction under section 54B - reopening of assessment under section 147 - condonation of delay - time limit for utilisation of capital gains under section 54/section 139(4) - eligibility where agricultural activities are carried out by co-owners - characterisation of 'Bin Kheti Premium Patra' as agricultural land - liberal/beneficial construction of exemption provisions

Reopening of assessment under section 147 - Ground challenging reopening of assessment under section 147 was not pressed and is dismissed as not pressed. - HELD THAT: - The assessee's authorised representative expressly stated at the outset that Ground No.1, which related to reopening under section 147, would not be pressed before the Tribunal. The Tribunal recorded that submission and dismissed Ground No.1 as not pressed, without adjudicating the merits of the reopening. [Paras 5]

Ground No.1 dismissed as not pressed.

Deduction under section 54B - eligibility where agricultural activities are carried out by co-owners - time limit for utilisation of capital gains under section 54/section 139(4) - characterisation of 'Bin Kheti Premium Patra' as agricultural land - liberal/beneficial construction of exemption provisions - Whether the assessee was entitled to claim exemption under section 54B in respect of capital gains on sale of agricultural land given the Assessing Officer's three objections, and whether those objections justified disallowance of the claimed exemption. - HELD THAT: - The Assessing Officer disallowed the section 54B exemption on three grounds: (i) absence of agricultural expense bills in the assessee's name, (ii) alleged failure to utilise the capital gains within the time prescribed, and (iii) the purchased land being described as 'Bin Kheti Premium Patra Land'. The Tribunal examined each objection and found them unsustainable. First, the Assessing Officer himself recorded that bills were in the name of a co-owner who was party to the sale deed; that fact, together with the small shareholding and size of the land, negated the objection that the assessee did not carry on or benefit from agricultural activity. Second, following precedents relied upon and reasoning cited, utilisation of capital gains within the extended due date under section 139(4) satisfied the time-limit requirement for claiming the exemption; the deposit/utilisation need not be before the original due date where utilisation occurred before the extended date. Third, the description 'Bin Kheti Premium Patra' was found to denote conditional permission for non-agricultural use upon payment of premium and did not establish that the land had ceased to be agricultural at the time of purchase. Applying a beneficent construction of the exemption provisions to the facts and evidence presented, the Tribunal concluded that the Assessing Officer's reasons did not justify denial of the section 54B claim. [Paras 12, 13, 14, 15]

Assessment addition disallowing the section 54B exemption is overruled; appeal allowed.

Final Conclusion: Delay in filing the appeal to the Tribunal is condoned; Ground No.1 (reopening under section 147) is not pressed and dismissed as not pressed; on merits the Tribunal finds the assessee entitled to the exemption under section 54B, overrules the Assessing Officer's objections, and allows the appeal.

Disallowance under section 40(a)(ia) relating to failure to deduct tax at source - Exemption from TDS on hiring of goods carriage where PAN is furnished - Proviso to section 40(a)(ia) / section 201(1) - relief where recipient includes income and procedural Form 26A compliance - Disallowance of cash-paid "machine salary" expenses and appellate restriction of disallowance percentage - Deduction of interest under the head "Income from Other Sources" - requirement of nexus between interest incurred and income earned - Remand to Assessing Officer for verification of documentary compliance

Disallowance under section 40(a)(ia) relating to failure to deduct tax at source - Exemption from TDS on hiring of goods carriage where PAN is furnished - Validity of disallowance under section 40(a)(ia) in respect of transport payments and interest payments to specified recipients - HELD THAT: - The Tribunal held that the transport payments to Kishan Tempowala were supported by the transport vouchers and the PAN of the transporter; the genuineness of the expense was not doubted and, under the statutory exception for hiring of goods carriage where PAN is furnished, no disallowance was warranted. As to the interest payments to three recipients, the assessee produced the recipients' income-tax returns and a Chartered Accountant's certificate (Form 26A) indicating that the recipients had included the interest in their returns; accordingly the Tribunal allowed this part of the ground but made the allowance subject to verification by the Assessing Officer regarding compliance with the proviso and documentary requirements. [Paras 7]

Transport expense disallowance deleted; disallowance in respect of interest payments allowed subject to verification by the Assessing Officer.

Disallowance of cash-paid "machine salary" expenses and appellate restriction of disallowance percentage - Sustainability of disallowance in respect of machine-salary expenses paid in cash and the percentage disallowed - HELD THAT: - The Tribunal noted that the entire machine-salary expenditure was shown to have been paid in cash and that the Assessing Officer reasonably disallowed 20% of the cash payments; the Commissioner (Appeals) had reduced that disallowance to 10%. Having regard to the mode of payment (cash) and the lack of further justification, the Tribunal found no reason to interfere with the appellate authority's reduction and dismissed the assessee's plea for complete deletion of the disallowance. [Paras 10]

Assessee's challenge dismissed; the 10% disallowance upheld.

Deduction of interest under the head "Income from Other Sources" - requirement of nexus between interest incurred and income earned - Allowability of interest claimed under section 57 against interest income shown under "Income from Other Sources" - HELD THAT: - The Tribunal found that the assessee failed to prove the requisite nexus between the interest outgo and the interest income offered in the return. Despite submissions and some documents, the material on record did not establish that the interest expenditure was incurred for the purpose of earning the declared income under the head "other sources". Consequently the addition made by the Assessing Officer and confirmed by the Commissioner (Appeals) was sustained. [Paras 13]

Addition for interest expense under section 57 upheld; assessee's ground dismissed.

Final Conclusion: Appeal partly allowed: disallowance under section 40(a)(ia) in respect of transport payments deleted and the portion relating to interest payments allowed subject to verification by the Assessing Officer; disallowance in respect of machine-salary payments (10% upheld) and the disallowance of interest under section 57 sustained.

Depreciation on goodwill arising on amalgamation - Explanation 7 to section 43(1) - cost of capital asset in amalgamation - Sixth proviso to section 32(1)(ii) - aggregate depreciation limit in amalgamation - Revision under section 263 - assessment erroneous and prejudicial to revenue - Obligation of Assessing Officer under section 142(1) to examine and call for details - Permissible view / two-views principle in exercise of revision jurisdiction

Depreciation on goodwill arising on amalgamation - Explanation 7 to section 43(1) - cost of capital asset in amalgamation - Sixth proviso to section 32(1)(ii) - aggregate depreciation limit in amalgamation - Admissibility of depreciation claimed by the amalgamated company on goodwill created by amalgamation and correctness of the assessment in that regard - HELD THAT: - The Tribunal examined whether depreciation claimed by the amalgamated company on goodwill recorded upon amalgamation was admissible. The authorities below recorded that the amalgamating companies had no goodwill in their books (WDV zero) whereas the amalgamated company recorded substantial goodwill and claimed depreciation thereon. Under Explanation 7 to section 43(1), the actual cost of a capital asset to the amalgamated company is to be taken as it would have been had the amalgamating company continued to hold the asset; accordingly, where the amalgamating company's WDV of goodwill was nil, the amalgamated company's cost for that goodwill should also be nil. Further, the sixth proviso to section 32(1)(ii) restricts the aggregate deduction for depreciation in an amalgamation such that the deduction cannot exceed the amount calculated as if amalgamation had not occurred and must be apportioned between amalgamating and amalgamated companies. Applying these provisions, the Tribunal agreed with the Principal Commissioner of Income Tax that the depreciation claimed on the goodwill as recorded in the amalgamated company's books was not admissible and required disallowance, because the statutory scheme restricts depreciation to the WDV that existed in the hands of the amalgamating companies. [Paras 9, 10, 11, 13, 16]

Depreciation claimed on the goodwill recorded by the amalgamated company is not admissible in view of Explanation 7 to section 43(1) and the sixth proviso to section 32(1)(ii); the assessment is erroneous and prejudicial to revenue on this ground.

Revision under section 263 - assessment erroneous and prejudicial to revenue - Obligation of Assessing Officer under section 142(1) to examine and call for details - Permissible view / two-views principle in exercise of revision jurisdiction - Whether the Principal Commissioner was justified in invoking section 263 to set aside the assessment on the ground that the Assessing Officer failed to examine the claim of depreciation on goodwill - HELD THAT: - The Tribunal considered whether the Assessing Officer had applied his mind and examined the claim, or whether the order was a permissible view such that revision under section 263 could not be sustained. The Tribunal found that the Assessing Officer did not call for explanations or otherwise examine the claim that goodwill was artificially created on amalgamation nor consider the applicability of Explanation 7 to section 43(1) and the sixth proviso to section 32(1)(ii). The Court held that it is the Assessing Officer's duty under section 142(1) to call for and examine relevant details; absence of such examination, particularly where amalgamation facts showed no goodwill in the transferor books, rendered the assessment order erroneous and prejudicial to the revenue. The Tribunal rejected the submission that reliance on a Supreme Court decision or the possibility of a permissible view absolved the Assessing Officer of the obligation to examine the matter; until the AO examines the facts and reaches a reasoned conclusion, section 263 can validly be invoked. [Paras 9, 10, 11, 12, 13]

The Principal Commissioner rightly exercised jurisdiction under section 263 because the Assessing Officer failed to examine the artificially created goodwill and did not discharge the duty to call for details under section 142(1); the assessment is therefore set aside as erroneous and prejudicial to the revenue.

Final Conclusion: The revision order passed by the Principal Commissioner under section 263 is upheld; the assessment under section 143(3) for AY 2017-18 is set aside as erroneous and prejudicial to the revenue for having allowed depreciation on goodwill created on amalgamation without proper examination, and the appeal is dismissed.

Condonation of delay - ex parte appellate decision for non-compliance with notices - rectification under section 154 - disallowance under 36(1)(va) based on tax audit report - processing of return under section 143(1) by CPC on the basis of audit report

Condonation of delay - Delay of 91 days in filing the appeal before the Tribunal was condoned. - HELD THAT: - The Tribunal considered the assessee's petition supported by an affidavit, medical certificate and death certificate of the partner's grandfather and noted the Revenue raised no serious objection. Applying the standard of reasonable cause, the Tribunal found the delay was neither wilful nor wanton and therefore condoned the 91-day delay and admitted the appeal for adjudication. [Paras 2]

Delay of 91 days condoned and appeal admitted.

Ex parte appellate decision for non-compliance with notices - Validity of the CIT(A)'s dismissal of the appeal for non-compliance with opportunities to file submissions and documents. - HELD THAT: - The Tribunal examined the record of multiple notices issued by the CIT(A) (dated 17.08.2021, 27.10.2021, 10.11.2021 and 19.05.2022) and found that the assessee repeatedly failed to upload submissions or accompanying documents despite adjournments and final notice warning of decision on available materials. The Tribunal concluded that the appellate order was not faulted since adequate opportunities were given and the assessee elected not to comply. [Paras 3, 7]

CIT(A)'s dismissal for non-compliance upheld.

Rectification under section 154 - disallowance under 36(1)(va) based on tax audit report - processing of return under section 143(1) by CPC on the basis of audit report - Whether the disallowance made by CPC under section 36(1)(va) based on the tax audit report was liable to rectification under section 154. - HELD THAT: - The Tribunal noted that the CPC processed the return under section 143(1) relying on the audit report filed by the assessee. The assessee's contention that the audit report contained defects and required rectification under section 154 was examined against the fact that there was no demonstrated mistake on record warranting rectification. The Tribunal held that where the processing was done in accordance with the audit report submitted by the assessee, the order under section 143(1) did not suffer from a rectifiable mistake under section 154, and the CIT(A) correctly sustained the disallowance in absence of supporting proof of deposit of employees' contributions or other submissions. [Paras 4, 8]

No rectification under section 154; disallowance under section 36(1)(va) sustained.

Final Conclusion: Having condoned the delay, the Tribunal considered the merits and found that the assessee had been given adequate opportunities before the CIT(A) and that the CPC had rightly processed the return on the basis of the assessee's audit report; accordingly, the CIT(A)'s order upholding the disallowance under section 36(1)(va) was sustained and the appeal dismissed.

Utilisation of technical know-how - Commercial exploitation of licensed technology - Apportionment of royalty expenses among units - Deduction under Section 80IB

Utilisation of technical know-how - Commercial exploitation of licensed technology - Whether the Jammu Unit utilised the technical know-how/licensed technology provided under the MoUs. - HELD THAT: - The Tribunal examined documentary evidence including the technology transfer agreement, excise records and the inventory of machinery at the Jammu Unit. The arrangement permitted commercial exploitation at the Jammu plant, but the excise invoices show sales of packing material in roll form and the list of machinery for the Jammu Unit does not include a pouching machine; submissions to the Superintendent Audit Central Excise Jammu likewise do not show pouching capability. Bills raised by the licensor were on the ultimate flexipacks Jammu but the cumulative evidences demonstrate that the assessee did not in fact exploit the licensed technology at any of its units. The Tribunal therefore accepted the assessee's factual contention that the technology was not used and found the earlier contrary conclusion unsubstantiated on the materials before it. [Paras 12, 13, 14]

The Jammu Unit did not utilise the technical know-how; the assessee's factual plea that the technology was not exploited is accepted.

Apportionment of royalty expenses among units - Deduction under Section 80IB - Whether the royalty payment net of licence fee received should be apportioned between the assessee's manufacturing units or treated as pertaining only to the Jammu Unit for computing deduction under Section 80IB. - HELD THAT: - The Tribunal noted that the allowability of the royalty itself had been considered and allowed by the Assessing Officer and was not under challenge before it. Having found that the licensed technology was not utilised at the Jammu Unit, the Tribunal proceeded to determine allocation of the net royalty burden. Applying the established approach of prorating corporate or common expenses among eligible units, the Tribunal held that the royalty payment net of licence fee received should be apportioned between the manufacturing units on a pro rata basis similar to other corporate expenses, and therefore rejected the revenue's contention that the amount should be treated as pertaining solely to the Jammu Unit. [Paras 13, 14]

Net royalty/licence income is to be apportioned pro rata among the manufacturing units for purposes of computing deduction under Section 80IB; revenue's claim that it pertains only to the Jammu Unit is dismissed.

Final Conclusion: On the remand from the High Court the Tribunal found that the Jammu Unit did not exploit the licensed technology and, consequently, directed that the royalty payment net of licence fees received be apportioned pro rata among the manufacturing units; the assessee's appeal on the remanded issue is allowed and the revenue's cross-appeal on apportionment is dismissed (the allowability of the royalty at assessment stage was noted as already decided by the AO).

Unexplained cash deposit - cash book evidence - opening cash balance - books of account not disturbed - double addition - source of funds

Unexplained cash deposit - cash book evidence - opening cash balance - books of account not disturbed - double addition - source of funds - Whether the cash deposit of Rs.46,50,000 made during the demonetisation period could be treated as unexplained income despite the assessee's cash book showing adequate opening and contemporaneous cash balance and the books not having been disturbed. - HELD THAT: - The Tribunal found that the assessee's cash book showed an opening cash balance of Rs.54,62,363 as on 1.4.2016 and a cash balance of Rs.49,79,711 as on 1.11.2016, which were both in excess of the bank deposit of Rs.46,50,000. The books of account and cash book produced before the Assessing Officer were not rejected or disturbed. The assessee's only source of receipts was Hundi collections (and bank interest), and the Revenue did not establish any other source of funds. The amount deposited in the bank had been taken into account in preparing the income and expenditure account and in the return for the relevant year; treating the same deposit as unexplained income would amount to a double addition. For these reasons the addition made by the Assessing Officer and confirmed by the lower authority was held unsustainable and liable to be deleted. [Paras 5]

The addition treating the bank deposit as unexplained income is deleted and the assessee's appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal for AY 2017-18, holding that the cash deposit was adequately explained by the undisputed cash book and opening balances and had been reflected in the return; the addition as unexplained income was therefore deleted.

Disallowance under section 14A read with Rule 8D - No exempt income - section 14A inapplicable - Non-retrospective effect of Finance Act, 2022 amendment to section 14A - Revenue expenditure v. capital expenditure - R&D for customised products - Reliance on precedent in assessee's own case - Circulars cannot override judicial decisions

Disallowance under section 14A read with Rule 8D - No exempt income - section 14A inapplicable - Non-retrospective effect of Finance Act, 2022 amendment to section 14A - Circulars cannot override judicial decisions - Validity of disallowance under section 14A r.w. Rule 8D where the assessee earned no exempt income - HELD THAT: - The Tribunal upheld the CIT(A)'s deletion of the disallowance made under section 14A read with Rule 8D on the ground that the assessee did not earn any exempt income in the relevant years. Relying on High Court and tribunal precedents, and the Delhi High Court's decision that the Finance Act, 2022 amendment (non-obstante clause and Explanation) takes effect from 01-04-2022 and is not retrospective, the Tribunal held that section 14A cannot be invoked in years where no exempt income was earned or received. The Tribunal further noted that a Board circular contrary to judicial decisions cannot be applied to sustain a disallowance, and that the onus to establish nexus for disallowance lies on the assessing authority. Applying these principles to the facts, the Tribunal found no infirmity in the CIT(A)'s deletion of the disallowance. [Paras 7, 8, 17]

Department's appeals challenging deletion of section 14A disallowances dismissed.

Revenue expenditure v. capital expenditure - R&D for customised products - Reliance on precedent in assessee's own case - Whether R&D expenditure incurred for development of customised products is capital in nature or allowable as revenue expenditure - HELD THAT: - The Tribunal sustained the CIT(A)'s decision to delete the Assessing Officer's addition treating the claimed R&D expenditure as capital. The CIT(A) had followed the earlier ITAT Ahmedabad decision in the assessee's own case for an earlier year, which held that expenditure incurred in preparing prototypes or developing products specifically required by customers, and whose benefits are exhausted on delivery, is business/R&D expenditure allowable under the relevant provisions. On the identical facts of the present years, the Tribunal found no infirmity in relying on the assessee's own precedent and in holding the expenditure to be of revenue/R&D nature. [Paras 10, 12, 14]

Department's appeals challenging disallowance on account of R&D expenditure dismissed.

Final Conclusion: The Department's appeals are dismissed; the deletions of disallowances under section 14A r.w. Rule 8D and the deletions of additions treating R&D expenditure as capital are sustained for the assessment years in issue.

Deduction under Section 80IA(4) - infrastructure facility - agreement with Central/State Government, local authority or statutory body - condition (b) of Section 80IA(4)(i) - nodal agency / Special Project Company and subrogation - port certificate as sufficient compliance - CBDT Circular relaxing agreement requirement (Circular No.10/2005) - profit linked incentive

Deduction under Section 80IA(4) - condition (b) of Section 80IA(4)(i) - agreement with Central/State Government, local authority or statutory body - nodal agency / Special Project Company and subrogation - port certificate as sufficient compliance - CBDT Circular relaxing agreement requirement (Circular No.10/2005) - Whether the assessee satisfied the conditions of Section 80IA(4) despite entering into an agreement with KSPL (an SPC/nodal agency) and, alternatively, whether the port certificate and CBDT circular suffice to claim the deduction. - HELD THAT: - The Tribunal held that the three substantive conditions of Section 80IA(4) were to be read in their commercial and statutory context. The assessee satisfied the ownership and commencement conditions. On condition (b) the agreement was with KSPL, which, by virtue of the concession framework (clause 2.9 of the Concession Agreement), was constituted and recognised by the Government of Andhra Pradesh as the Special Project Company (SPC)/nodal agency and accepted subrogation of rights and obligations with GoAP's approval. A literal and rigid insistence on a direct agreement only with the Government would frustrate the purpose of creating nodal agencies and the legislative intent of the profit linked deduction. Further, CBDT Circular No.10/2005 relaxed the requirement by providing that a port authority certificate that the structure forms part of the port satisfies the condition for port structures; the assessee produced such a certificate certifying the mechanised coal handling system as part of Kakinada Deep Water Port. The assessee also obtained statutory permissions from Customs authorities. Reliance was placed upon the reasoning of coordinate and higher judicial authorities to the same effect (CIT vs. Ranjit Projects Pvt. Ltd. ; United Liner Agencies of India (P) Ltd. ; DCIT vs. Belair Logistics ; CIT vs. A.L. Logistics Pvt. Ltd. ) as supporting the view that agreement with a government constituted nodal agency and production of port certificate/approvals satisfy the statutory requirement. Applying these principles to the facts, the Tribunal concluded that the assessee met the requirements of Section 80IA(4) and was entitled to the deduction for the years under appeal. [Paras 14, 15]

Claim for deduction under Section 80IA(4) allowed for Assessment Years 2015-16 and 2016-17; grounds 1-9 allowed and appeals partly allowed.

Final Conclusion: On the facts and in law the Tribunal allowed the assessee's claim of deduction under Section 80IA(4) for AY 2015-16 and AY 2016-17, holding that agreement with the Government recognised nodal agency (KSPL), supported by the port certificate and statutory approvals and in light of CBDT Circular No.10/2005, satisfies the condition for deduction.

Unaccounted job work receipts - assessment of profit element only - estimation of income by the Assessing Officer - rectification under section 154 of the Act - telescoping/credit for voluntarily disclosed income - binding coordinate bench precedent - search-and-seizure material as evidentiary foundation

Unaccounted job work receipts - assessment of profit element only - estimation of income by the Assessing Officer - binding coordinate bench precedent - Reduction of addition on alleged unaccounted job work receipts to 5% of receipts was justified and is to be upheld. - HELD THAT: - The Tribunal applied the decision of a Coordinate Bench dealing with the same search action and group cases, which examined the evidentiary material retrieved from the Purchi software, comparisons with books, enquiries with parties and the Assessing Officer's detailed reasoning for estimating additions. While AO estimated addition at 20%, the CIT(A) restricted taxation to the profit element and quantified that at 5%. The Tribunal held that where there is no conclusive proof of unaccounted sales amounting to the whole turnover, taxing only the profit component avoids excessive taxation and revenue leakage; having considered the authorities and the material on record, the Tribunal found no reason to enhance or further reduce the disallowance and therefore affirmed the CIT(A)'s restriction to 5%. [Paras 5, 6]

Grounds challenging the restriction of addition were dismissed and the disallowance limited to 5% was upheld.

Rectification under section 154 of the Act - telescoping/credit for voluntarily disclosed income - Validity of rectification order under section 154 granting set-off/credit for additional income voluntarily declared by the assessee was upheld. - HELD THAT: - The assessee had filed an original return and subsequently, in response to notice under section 153A after search, declared additional business income. CIT(A) accepted that the additional income was voluntarily offered and rectified his earlier order under section 154 to give credit (telescoping) for that declared income. The Tribunal examined the record, including the assessee's written submissions and the subsequent return showing additional income, and found the rectification to be within jurisdiction and factually justified. Consequently, the Tribunal found no infirmity in the CIT(A)'s exercise of rectification power and refused to disturb the grant of credit. [Paras 5]

Grounds attacking the CIT(A)'s rectification under section 154 and the grant of credit were dismissed.

Rectification under section 154 of the Act - procedural challenge to orders under section 154 - Revenue's procedural grounds 1 and 2 challenging the manner of passing the order under section 154 (DIN generation and reinstatement) were dismissed as not maintainable before the Tribunal. - HELD THAT: - The Tribunal noted that Revenue had not filed an appeal against the CIT(A)'s order under section 154 and therefore these procedural challenges could not be adjudicated. On that basis the contentions regarding manual issuance without DIN and reinstatement by order under section 154 were dismissed for want of a proper appeal against the section 154 order. [Paras 7]

Grounds 1 and 2 were dismissed because Revenue did not appeal the CIT(A)'s section 154 order; they could not be adjudicated by the Tribunal.

Final Conclusion: Following the Coordinate Bench precedent and on the facts and material on record, the Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s directions limiting the addition to the profit element and confirming the rectification/credit under section 154.

Beneficial proviso to section 212(6) of the Companies Act, 2013 - twin conditions for bail under section 212(6) - gender based enabling provision for bail and purposive interpretation - inherent jurisdiction under Section 482 Cr.P.C. to set aside bail orders - cancellation of bail versus rejection of bail - requirement of cogent and supervening circumstances

Inherent jurisdiction under Section 482 Cr.P.C. to set aside bail orders - perversity and infirmity in subordinate court orders - Whether this Court should exercise its inherent jurisdiction under Section 482 Cr.P.C. to set aside the Special Court's order granting bail to the respondent. - HELD THAT: - The High Court examined whether the bail order was unreasonable, perverse, without jurisdiction or based on irrelevant material. The Court reiterated that interference under Section 482 Cr.P.C. is limited and is not a substitute for appellate re appreciation of evidence. The impugned order was found to be reasoned and based on relevant material; no legal infirmity or perversity was demonstrated. The petitioner did not point to any specific instance of abuse of the bail liberty or any new supervening circumstance that would render continuation of bail unconducive to a fair trial. In these circumstances, the Court declined to exercise inherent jurisdiction to set aside the bail order. [Paras 59, 60, 61, 62]

The petition under Section 482 Cr.P.C. seeking to set aside the Special Court's bail order is dismissed; no interference with the bail order.

Beneficial proviso to section 212(6) of the Companies Act, 2013 - twin conditions for bail under section 212(6) - gender based enabling provision for bail and purposive interpretation - cancellation of bail versus rejection of bail - requirement of cogent and supervening circumstances - Whether the Special Court correctly applied the proviso to section 212(6) to grant bail to the respondent and whether that application was susceptible to being set aside. - HELD THAT: - The Court analysed the scope of Section 212(6) and its proviso which permits the Special Court to release certain categories (including women) notwithstanding the twin conditions otherwise required. The proviso was held to be an enabling discretion and must not be rendered nugatory by treating the twin conditions as a mandatory precursor for persons within the proviso. While the discretion is to be exercised with care and regard to the nature and gravity of the offence, it may be invoked on special facts. The Special Court considered the respondent's age, gender, role as assessed on the material before it, the documented nature of the offences, prior custodial interrogation, the fact that main co accused had interim protection in related proceedings, and the availability of stringent bail conditions. On that appreciation the Special Court exercised its discretion under the proviso to grant bail. The High Court found no illegality or perversity in that approach and observed that allegations about role and culpability are matters for trial and do not by themselves render the bail order perverse absent cogent supervening facts. [Paras 42, 43, 44, 45, 46]

The Special Court rightly exercised its discretion under the proviso to Section 212(6); the grant of bail to the respondent is upheld.

Final Conclusion: The High Court found no infirmity or perversity in the Special Court's reasoned order granting bail under the proviso to section 212(6) of the Companies Act, 2013 and declined to exercise its inherent jurisdiction under Section 482 Cr.P.C.; the petition is dismissed and the bail order is upheld.

Offence of money-laundering - knowledge as not being a sine qua non for money laundering - cognizable and non-bailable offences - powers under Section 482 Cr.P.C. to quash complaints to be exercised sparingly - authorized officers empowered to arrest without warrant subject to Section 19

Cognizable and non-bailable offences - authorized officers empowered to arrest without warrant subject to Section 19 - Whether offences under the PMLA are cognizable and non-bailable and whether authorised officers are empowered to arrest without warrant - HELD THAT: - The Court examined the amendments to Section 45 and the Explanation inserted by the Finance (No.2) Act, 2019 and held that all offences under the PMLA are and have always been cognizable and non bailable notwithstanding the Code of Criminal Procedure. Consequently, officers authorized under the PMLA are empowered to arrest an accused without warrant subject to fulfilment of conditions under Section 19 and the conditions contained in Section 45. The prosecution complaint was found to have been lodged by an authorized officer competent to file the complaint under Section 45 and the impugned challenge on that ground was rejected. [Paras 21, 22, 23, 24]

All offences under the PMLA are cognizable and non bailable; authorised officers may arrest without warrant subject to statutory conditions; complaint was lodged by a competent authorised officer.

Offence of money-laundering - knowledge as not being a sine qua non for money laundering - continuing activity - Whether prosecution under Section 3 of the PMLA requires proof that the accused had knowledge that the property dealt with was proceeds of crime - HELD THAT: - The Court analysed Section 3 which criminalises whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with proceeds of crime, including concealment, possession, acquisition, use or projecting as untainted property. The Court held that the definition covers both (a) acts done with knowledge and (b) acts where a person directly or indirectly attempts to indulge or is actually involved in the relevant processes or activities; thus knowledge is not a condition precedent in all cases. Where direct involvement in activities connected with proceeds of crime is alleged with material particulars, the matter requires trial and cannot be quashed at the threshold. [Paras 25, 26, 27]

Knowledge that property is proceeds of crime is not an absolute sine qua non; direct or indirect involvement in activities connected with proceeds of crime suffices to attract Section 3 and warrants trial.

Powers under Section 482 Cr.P.C. to quash complaints to be exercised sparingly - abuse of process - Whether the High Court erred in refusing to quash the prosecution complaint and whether the case fell within the limited categories warranting exercise of inherent power to quash - HELD THAT: - Applying the principles in Bhajan Lal, the Court observed that the extraordinary power under Section 482 Cr.P.C. is to be exercised only in rare cases such as where allegations, even taken at face value, do not prima facie constitute any offence, or where proceedings are manifestly mala fide or barred by law. The Court found none of those exceptional categories present on the record: the prosecution complaint contained detailed allegations and sufficient material particulars prima facie indicating involvement of the petitioners in money laundering. There was therefore no basis to interfere with the High Court's dismissal of the writ petitions. [Paras 28, 29]

High Court rightly dismissed the petitions; the matter does not fall within the narrow categories for quashing under Section 482 and must proceed to trial.

Final Conclusion: The Special Leave Petitions are dismissed. The High Court's order refusing to quash the ECIR based prosecution complaint stands affirmed; the interim stay is vacated; the ED is at liberty to proceed in accordance with law and the trial court shall decide the case on merits uninfluenced by prima facie observations.

Res judicata - jurisdiction of assessing/commissionerate - Renting of Immovable Property Service - Franchise Service - extended period / limitation for issuing show cause notice

Res judicata - Franchise Service - Whether the Tribunal was justified in allowing the respondent's appeal on the ground of res judicata in relation to the demand framed for the upfront fee treated as franchise fee - HELD THAT: - The Court accepted the Tribunal's conclusion that demands framed in subsequent show cause notices, seeking service tax on the same Rs.35 crore upfront payment characterised as franchise fee, could not be sustained after the Raigad Commissionerate had earlier examined and set aside the three show cause notices concerning that amount. The judgment records that the three notices, issued for the period January 2007 to March 2012, were set aside by order dated 30.04.2014, and that the impugned proceedings sought recovery for the same payment and quantum already the subject of those notices. On that basis the Tribunal correctly treated the later demand as falling foul of res judicata principles and concluded in favour of the respondent; no contrary finding of fact or law was shown to warrant interference.

The Tribunal's allowance of the respondent's appeal on res judicata grounds was upheld.

Jurisdiction of assessing/commissionerate - Renting of Immovable Property Service - Whether the Chandigarh Commissionerate had jurisdiction to issue the impugned notice in respect of the upfront fee received in Mumbai prior to the registration at Chandigarh - HELD THAT: - The Court noted that after 12.01.2007 the respondent obtained registration at Chandigarh and paid service tax on the annual Rs.10 crore fee under the category of Renting of Immovable Property Service. However, the upfront Rs.35 crore had been received earlier at Mumbai and had been the subject-matter of show cause notices issued by the Raigad Commissionerate, which exercised jurisdiction and set those notices aside. Given that the Raigad Commissionerate had addressed and set aside the notices relating to the upfront payment, the Chandigarh Commissionerate lacked jurisdiction to proceed afresh in respect of that same franchise-related receipt. The Court therefore found no error in the Tribunal's view that the impugned demand could not be maintained by the Chandigarh Commissionerate.

The impugned notice issued by the Chandigarh Commissionerate in respect of the upfront fee was not maintainable for want of jurisdiction.

Final Conclusion: The appeal is dismissed; the Tribunal's order allowing the respondent's appeal on grounds of res judicata and lack of jurisdiction in relation to the upfront franchise fee is upheld and no substantial question of law arises for consideration.

Taxability of ocean freight and airfreight - profit/markup on freight not consideration for service - principal-to-principal transactions in carriage contracts - cargo handling services - reverse charge liability for services of non-resident providers

Taxability of ocean freight and airfreight - profit/markup on freight not consideration for service - principal-to-principal transactions in carriage contracts - Whether the freight charged by foreign associates (including any notional surplus/profit or markup) constituted taxable consideration for cargo handling or business auxiliary services and therefore liable to service tax. - HELD THAT: - The Tribunal held that the differential in ocean/air freight arises from the appellant purchasing space from carriers and reselling that space to customers; this is a business activity of buying low and selling high and not a service for the client. Following the Tribunal's earlier decisions, including the reasoning in M/s Tiger Logistics (India) Ltd. and Greenwich Meridian Logistics, the profit or markup retained on such purchase-and-sale transactions represents business margin and cannot be characterised as consideration for a taxable service. Consequently, sums collected as freight and any surplus retained by foreign associates under such principal-to-principal arrangements are not exigible to service tax as cargo handling or as consideration for business auxiliary services under the reverse charge mechanism. The adjudicating authority's attempt to treat the entire ocean/air freight and the profit element as taxable consideration was therefore unsustainable. [Paras 6]

The demand confirmed in respect of ocean/air freight and profit/markup as consideration for taxable services is not maintainable; such amounts are not exigible to service tax.

Cargo handling services - reverse charge liability for services of non-resident providers - Disposition of cross-appeals: whether the departmental appeal against the adjudicating authority's dropping of a major portion of the demand should succeed, and whether the appellant's appeal against the confirmed demand should be allowed. - HELD THAT: - The Tribunal, applying the legal principles above and following precedents, found no justification to sustain the departmental demand that sought to tax amounts characterised as freight and related profit. The departmental appeal against the dropping of demand was therefore dismissed. Concurrently, the appellant's appeal against the confirmed demand (to the limited extent retained by the adjudicating authority) was allowed, with consequential relief as appropriate. [Paras 5, 7]

Departmental appeal dismissed; appellant's appeal allowed and the confirmed demand set aside with consequential relief.

Final Conclusion: For the disputed period 01.10.2008 to 31.3.2013 the Tribunal held that freight and the profit/markup arising from purchase and resale of carriage space are business margins not taxable as consideration for cargo handling or business auxiliary services; the departmental appeal was dismissed and the appellant's appeal allowed with consequential relief.

Cargo Handling Service - Labour contract on piece rate basis - Business Auxiliary Service - Taxability of intra-factory movement of goods - Packing for purpose of transport versus packaging activity - Penalty under Section 78 of the Finance Act, 1994

Cargo Handling Service - Labour contract on piece rate basis - Taxability of intra-factory movement of goods - Packing for purpose of transport versus packaging activity - Penalty under Section 78 of the Finance Act, 1994 - Classification of the services provided by the appellant and the consequence for demand and penalty - HELD THAT: - The appellant supplied labour on a piece rate basis to perform activities within the factory premises - unloading milk cans and crates, dumping into weighment vessels, cleaning cans/crates/bottles, putting pouches/bottles into crates, cleaning pre pack machines and loading crates for dispatch - under work orders delineating rates per unit of work and supervisory/contractual terms. The Tribunal found these arrangements to be labour contracts on a piece rate basis and not contracts involving custody of goods or transport. Movements of goods within the factory did not convert the goods into "cargo" so as to attract the definition of Cargo Handling Service. The decision in Signode was considered distinguishable because that case concerns packing that renders goods ready for transportation (packing for purpose of transport), whereas the activities here were stages prior to goods becoming cargo. Applying that distinction, the classification of the appellant's services as Cargo Handling Service could not be sustained and the measures sought by Revenue under the impugned order (including demand and imposition of penalty under Section 78) fall away once the services are correctly characterised as labour contracts/Business Auxiliary Service rather than cargo handling.

The services are labour contracts on piece rate basis and not Cargo Handling Service; classification under cargo handling is unsustainable and the impugned order is set aside.

Final Conclusion: Appeal allowed; the impugned order confirming demand (and related penalty) under the classification of Cargo Handling Service is set aside because the services were correctly characterised as labour contracts performed within the factory on a piece rate basis.

Renting of Immovable Property Service - Negative list exclusion for services by Agricultural Produce Marketing Committee relating to agricultural produce - Proviso to limitation for extended period where fraud, collusion, wilful misstatement or suppression of facts is alleged - cum-tax value principle

Renting of Immovable Property Service - liability for period prior to introduction of Negative List Regime - Appellant liable to service tax for renting out shops/shops/godowns as "renting of immovable property service" for the period up to 30-6-2012. - HELD THAT: - Applying the reasoning in Krishi Upaj Mandi Samiti (reproduced), the allotments and agreements evidenced an arrangement of letting immovable property for consideration (allotment fee/lease amount). Such transactions fall within the taxable category of "renting of immovable property service" for the pre-Negative List period and are not rendered exempt by the appellants' statutory status where the allotment is not part of a statutory function. The Tribunal therefore sustained liability for the period prior to 1-7-2012.

Liability for service tax sustained for period up to 30-6-2012.

Negative list exclusion for services by Agricultural Produce Marketing Committee relating to agricultural produce - renting for storage/warehousing of agricultural produce - Renting/lease of sheds/shops/platforms/land in the notified market area for storage/warehousing of agricultural produce is excluded from service tax under the Negative List regime with effect from 1-7-2012; renting for non-agricultural commercial purposes remains taxable. - HELD THAT: - On construction of the Negative List entries and the Board's explanatory guidance, services by an Agricultural Produce Marketing Committee in relation to agricultural produce (including leasing of land/structures incidental to agricultural use, storage and warehousing in primary market areas) fall within the negative list and are not taxable from 1-7-2012. The Tribunal followed the harmonised reading of the legislative intent and administrative clarifications to hold that premises let out for storage of agricultural produce in the market area are excluded, while lettings for other commercial uses are taxable.

Renting for storage/warehousing of agricultural produce not taxable from 1-7-2012; renting for other commercial purposes remains taxable.

Proviso to limitation for extended period where fraud, collusion, wilful misstatement or suppression of facts is alleged - burden of proof regarding mala fide on a statutory body - Demands raised invoking the extended period of limitation were unsustainable and set aside because there was no evidence of fraud, collusion, wilful misstatement or suppression of facts on the part of the appellant. - HELD THAT: - The Tribunal (as affirmed in the reproduced decision) applied the proviso to the extended limitation rule and observed that, given the appellants' status as a government/statutory body and the contested nature of the tax entry, there was a rebuttable presumption against the ingredients necessary for extended limitation. Absent material establishing malafide conduct or intention to evade tax, the Tribunal restricted demands to the normal period and set aside penalties imposed for extended-period demands.

Extended-period demands set aside; demands limited to normal period and penalties set aside insofar as they flowed from extended-period assessments.

Cum-tax value principle - verification and quantification of normal period demand - Appellant entitled to benefit of cum-tax value; Revenue may compute/re-quantify demand for the normal period after extending cum-tax benefit and adjust/recover against deposits. - HELD THAT: - The Tribunal directed application of the cum-tax value principle in computing the demand for the normal period and permitted the Revenue to work out the liability accordingly, including adjustment or recovery from deposits made by the appellant. This follows settled legal position permitting extension of the cum-tax benefit where applicable.

Cum-tax value benefit to be extended; Revenue to re-compute normal-period demand and adjust/recover as permissible.

Final Conclusion: The Tribunal upheld liability for renting of immovable property service for the pre-Negative List period (up to 30-6-2012), held that lettings for storage/warehousing of agricultural produce in market areas are excluded from service tax from 1-7-2012 while other commercial lettings remain taxable, set aside demands raised for the extended limitation period for want of malafide, and directed that the normal-period demand be re-quantified after extending the cum-tax value benefit with liberty to adjust/recover from deposits.

Real Estate Agent service - consideration for service - trading in land vs agency - taxable value finality - extended period of limitation

Real Estate Agent service - consideration for service - trading in land vs agency - taxable value finality - Whether the appellant's activity of purchasing land from landowners and reselling it to a developer amounts to a taxable "Real Estate Agent service" and is liable to service tax. - HELD THAT: - The Tribunal examined the contractual matrix and found no specific, quantified remuneration agreed as a quid pro quo for any discrete service. The arrangement involved purchase of land from owners and transfer to the developer, with the appellant procuring land, examining titles and facilitating execution, but the Memorandum of Understanding did not fix a defined payment for such activities. The terms indicated that the appellant's pay was effectively a margin or share in the profit of the land-trading transaction rather than a specified service fee. On that basis the activity was characterised as trading in land (where profit or loss accrues to the purchaser/reseller) rather than provision of a taxable real estate agent service. Because the taxable value had not attained finality (remuneration was not determinable) and the MoUs were not fully executed, the demand for service tax under the Real Estate Agent category could not be sustained. The Tribunal also noted absence of mala fide, proper accounting in books and no suppression of facts, accordingly the extended period of limitation was held inapplicable.

The appellant's purchase-and-resale transactions do not fall within "Real Estate Agent service" and the service tax demand under that head is set aside.

Extended period of limitation - Whether the extended period of limitation is invokable against the appellant. - HELD THAT: - The Tribunal recorded that there was no mala fide on the part of the appellant, the transactions were recorded in books of account and there was no suppression of information from the revenue. In these circumstances the extended period of limitation could not be applied.

Extended period of limitation is not applicable.

Final Conclusion: The impugned service-tax demand under the head "Real Estate Agent service" is set aside; the appeal is allowed and the appellant is entitled to consequential reliefs in accordance with law.

Cash refund of accumulated CENVAT credit - transition of CENVAT credit to input tax credit - Section 142(3) of the CGST Act, 2017 - second proviso - Rule 5 of CENVAT Credit Rules, 2004 and Notification No.27/2012-CE(NT) - carry forward of balance as on the appointed day

Cash refund of accumulated CENVAT credit - transition of CENVAT credit to input tax credit - Section 142(3) of the CGST Act, 2017 - second proviso - Rule 5 of CENVAT Credit Rules, 2004 and Notification No.27/2012-CE(NT) - Entitlement to cash refund of accumulated CENVAT credit for the specified quarters when the claims were filed after 01/07/2017 despite transition of the closing CENVAT balance into input tax credit on 01/07/2017. - HELD THAT: - The Court held that the second proviso to Section 142(3) of the CGST Act, 2017 expressly precludes refund of any amount of CENVAT credit where the balance as on the appointed day has been carried forward under the Act. The appellant had transitioned the entire closing CENVAT balance as on 30/06/2017 into input tax credit w.e.f. 01/07/2017. Once transition was effected and the balance carried forward under the CGST regime, the statutory bar in the second proviso applies and precludes grant of refund under the pre-existing CENVAT rules. A subsequent debit of the input tax credit in returns filed under the CGST/IGST rules does not, in the absence of any provision to that effect, revive or create a right to refund under Rule 5 read with Notification No.27/2012-CE(NT). The decisions cited by the appellant were distinguished as dealing with different factual matrices (delay in transition or inability to transition) and not with a case where the unutilised balance had been validly carried forward under the CGST Act.

The orders rejecting the refund claims were upheld and the appeals were dismissed.

Final Conclusion: Where an assessee has transitioned the closing CENVAT balance as on 30/06/2017 into input tax credit under the CGST Act w.e.f. 01/07/2017, the second proviso to Section 142(3) bars grant of cash refund of that accumulated CENVAT credit filed after the appointed day; the appeals are dismissed.

Claim for refund of duty - relevant date for refund - payment made without authority of law / excessive collection - payment under protest - limitation under Section 11B

Relevant date for refund - limitation under Section 11B - When the refund claim is to be dated - whether from the date of the Commissioner (Appeals) order or from the date of payment of duty where amounts were paid in excess - HELD THAT: - The Tribunal considered clauses (ec) and (f) of Section 11B and examined whether the refund claim period should be reckoned from the Commissioner (Appeals) order (when duty becomes refundable as a consequence of an appellate order) or from the date of payment of duty. The impugned order treated the relevant date as the date of payment of duty because the payments were made by the appellant. However, the Tribunal accepted the appellant's submissions and relied on precedents holding that where amounts were collected without any authority of law or were paid by mistake/excess, the limitation under Section 11B does not bar refund claims. The Tribunal held that Section 11B clause (f) applies only if the amounts are properly considered payments of duty; where the amounts are in fact excess payments collected without authority (and subsequently set aside by appellate order), the limitation period under Section 11B is not a complete bar and the relevant date can be the appellate order making the duty refundable. [Paras 5]

Where amounts were paid in excess and collected without authority, the limitation under Section 11B does not preclude refund and the Commissioner (Appeals) order making the demand void is the relevant event for the refund claim.

Payment under protest - payment made without authority of law / excessive collection - Whether payments made while disputing the levy are to be treated as payments under protest (thereby exempting the refund claim from the one year limitation) - HELD THAT: - The Tribunal referred to judicial authorities and held that payments made while the assessee is challenging the levy are to be regarded as payments under protest. It observed that where the department compelled payment in excess of the legally due amount and the assessee had appealed against the demand, such payments fall into the category of unauthorised collection and are deemed to be made under protest. On this basis, the Tribunal concluded that the one year limitation in Section 11B would not apply to the appellant's refund claim. [Paras 5, 6]

Payments made while contesting the levy are deemed to be under protest and do not attract the one year limitation under Section 11B; the appellant's refund claim is maintainable.

Final Conclusion: The Commissioner (Appeals) order rejecting the refund on limitation grounds was set aside. Refund claims filed by the appellant are allowed and the authorities are directed to refund the amount within three months from receipt of this order.

Kar Vivad Samadhan Scheme - settlement of tax disputes including penalty under the Scheme - redemption fine not leviable under the Scheme - certificate of intimation (Form 2-B) and full and final settlement

Kar Vivad Samadhan Scheme - redemption fine not leviable under the Scheme - certificate of intimation (Form 2-B) and full and final settlement - Whether the redemption fine of Rs.7,500/- was payable under the Kar Vivad Samadhan Scheme and whether non-deposit of that amount could prevent issuance of certificate of full and final settlement under the Scheme. - HELD THAT: - The Court examined the scope and object of the Kar Vivad Samadhan Scheme, which was designed to settle disputes relating to arrears of taxes including duties and penalties for matters where notices had been issued on or before 31.03.1998 and declarations were filed between 01.09.1998 and 31.12.1998. Relying on the rationale in a comparable appellate decision (Kedia Great Galleon Ltd. v. Commissioner of Central Excise, Indore), the Court observed that once a matter is settled under the Scheme the order imposing a redemption fine does not retain validity. The Scheme was held to be intended to settle disputes as to tax and penalty dues and not to permit imposition or recovery of a redemption fine as an independent liability. Applying that principle to the facts, the designated authority's certificate (Form 2-B) which required payment of Rs.7,500/- as redemption fine was inconsistent with the Scheme and the petitioner was not legally liable to deposit that amount; therefore failure to deposit the sum could not be made a ground to withhold the certificate of full and final settlement.

The requirement to pay the redemption fine of Rs.7,500/- under the Kar Vivad Samadhan Scheme was not legally tenable and non-deposit of that amount could not bar issuance of the certificate of full and final settlement; the impugned Form 2-B and the subsequent communication were set aside.

Final Conclusion: Writ petition allowed; the certificate of intimation (Form 2-B) dated 29.12.1998 and the letter dated 26.04.2001 are set aside because the redemption fine was not exigible under the Kar Vivad Samadhan Scheme and non-payment thereof could not defeat issuance of full and final settlement.

Refund of pre-deposit under Section 35F - entitlement to interest on delayed refund - interest payable from expiry of three months from date refund became due - rate of interest at 12% per annum as applicable to refunds of pre-deposits - procedure for claiming refund (simple application / departmental circulars)

Refund of pre-deposit under Section 35F - procedure for claiming refund (simple application / departmental circulars) - refund of the pre-deposit was to be returned to the assessee and a simple application under departmental circulars sufficed for claiming the refund. - HELD THAT: - The amount deposited pursuant to an interim order under Section 35F was a pre-deposit for prosecuting an appeal and, once the appellate authority allowed the appeal, the deposit became returnable. The Central Board of Excise & Customs circulars (including the circular dated 16.09.2014 and earlier clarifications) provide that a simple letter together with an attested copy of the appellate order and evidence of payment is sufficient to process the refund and that records of such deposits must be maintained to facilitate verification. Applying these principles, the Tribunal's decision to direct refund of the pre-deposit was correct and the departmental machinery was obliged to process the refund upon receipt of the requisite simple application or claim documentation.

Refund of the pre-deposit was to be returned to the assessee and could be claimed by a simple application under the departmental instructions.

Entitlement to interest on delayed refund - interest payable from expiry of three months from date refund became due - rate of interest at 12% per annum as applicable to refunds of pre-deposits - the assessee was entitled to interest at the rate of 12% per annum from the expiry of three months from the date the refund became due until payment. - HELD THAT: - The determinative question was whether interest should be paid for the period of delay in refunding the pre-deposit. The court followed the consistent approach in precedents cited in the judgment, holding that where a refund becomes due on account of a favourable appellate order, the department must pay interest after the expiry of three months from the date the refund became due. In the circumstances of the case the pre-deposit had been held by the department for an extended period and the refund became due on the date of the favourable appellate order; interest therefore accrued from the expiry of three months thereafter. Having regard to the binding judicial guidance referenced in the judgment, the rate of interest was fixed at 12% per annum for the period from the date interest became payable until actual payment.

Assessee entitled to interest at 12% per annum from expiry of three months from the date the refund became due until payment.

Final Conclusion: The appeal is allowed: the pre-deposit directed to be refunded must be returned and the assessee is entitled to interest at 12% per annum from the expiry of three months from the date the refund became due until actual payment.

Input service - Cenvat Credit - Works Contract Service exclusion - modernisation and renovation as admissible input service - substantial question of law - perversity and appellate interference

Substantial question of law - perversity and appellate interference - No substantial question of law arises for consideration and the Tribunal's factual conclusion is not perverse. - HELD THAT: - The Court applied the principles governing the admission of second appeals and substantial questions of law, observing that a High Court should interfere only if a substantial question of law is raised or the Tribunal's conclusion is not a possible one or is perverse. The Tribunal re appreciated the material and relevant facts and reached a conclusion favourable to the assessee that is a possible conclusion on the record. There was no demonstration of gross violation of procedure or principles of natural justice nor perversity in the Tribunal's finding warranting interference in the second appeal. Accordingly, the appeal did not raise any substantial question of law requiring this Court's determination.

Appeal dismissed; no substantial question of law and no interference with the Tribunal's factual conclusion.

Input service - Cenvat Credit - Works Contract Service exclusion - modernisation and renovation as admissible input service - The adjudicating authority erred in interpreting Rule 2(l); services used for modernisation/renovation fall within the definition of input service and Cenvat credit was rightly allowed by the Tribunal. - HELD THAT: - The Court found that the show cause notice was premised on an incorrect reading of Rule 2(l) of the Cenvat Credit Rules, 2004 which led the adjudicating authority to misconceive the scope of the allegation. On re appreciation, the Tribunal concluded that the project related to modernisation and renovation of the existing plant, and therefore the Works Contract Services so used were not excluded from input service for the relevant period. The Court endorsed the Tribunal's approach, noting precedent relied upon by the Tribunal holding that exclusion in Rule 2(l) applies to initial setting up of a factory whereas services used for renovation and modernisation remain admissible as input service. Consequently, the Tribunal's allowance of Cenvat credit was not interfered with.

Finding of the Tribunal that Cenvat credit on Works Contract Services used for modernisation/renovation is admissible is upheld; the adjudicating authority's contrary reading of Rule 2(l) was erroneous.

Final Conclusion: The revenue's appeal fails. The Tribunal's factual conclusion that the services were for modernisation/renovation and hence eligible as input service under the law prevailing from 1.4.2011 to 30.6.2017 is not perverse; no substantial question of law arises and the appeal is dismissed.

Adjustment of excise duty - Suo moto adjustment of excess duty against short payment - Provisional assessment procedure under Rule 7 - Interest payable after adjustment of duty - Survival of penalty and limitation where substantive issue is decided - Binding effect of earlier Tribunal and High Court decisions unless stayed

Suo moto adjustment of excess duty against short payment - Adjustment of excise duty - Binding effect of earlier Tribunal and High Court decisions unless stayed - Adjustment of excess duty paid may be set off against short payment suo moto and such adjustment is permissible and shall be allowed to the assessee. - HELD THAT: - The Tribunal found the controversy to be settled in favour of the assessee by a series of earlier Tribunal decisions and by reliance on the Apex Court's recognition of the concept of adjustment of duties in CCE, Hyderabad v. Divya Enterprises Ltd. The Commissioner's view that no provision permits suo moto adjustment and that provisional assessment and separate refund claims were the only remedy was rejected in light of consistent tribunal precedents and the affirmation by the High Court in the appellant's earlier matter. No stay of those judicial pronouncements by the Supreme Court was shown; accordingly the appeal must be decided conformably with those binding decisions and the assessee is entitled to the benefit of adjustment of excess duty against shortfall. [Paras 2, 7, 8, 10]

Adjustment of excess duty against short payment is permitted and the impugned order is set aside on this ground; appeal allowed on merits on this issue.

Interest payable after adjustment of duty - Adjustment of excise duty - Interest liability is to be determined after allowing the adjustment of excess duty against short duty and the matter is remanded for that limited purpose. - HELD THAT: - While the tribunal allowed adjustment in favour of the assessee, it held that interest remains payable on any net short payment determined after giving effect to the allowed adjustment. The matter was therefore remanded to the original authority to quantify the adjusted duty position and to compute interest payable by the appellant accordingly. The remand is limited to carrying out the adjustment and determining interest; no fresh adjudication on the substantive permissibility of adjustment is required. [Paras 9, 10]

Matter remanded to the original authority for adjustment of duties and determination of interest payable after such adjustment.

Survival of penalty and limitation where substantive issue is decided - Penalty and limitation aspects do not survive once the substantive issue of adjustment is decided in favour of the assessee. - HELD THAT: - The Tribunal held that because the core controversy-permissibility of adjustment of duty-was decided for the assessee on merits, the question of limitation and the imposition of penalty arising from the impugned order fell away and thus do not survive for adjudication. [Paras 9]

Penalty and limitation do not survive and require no further adjudication.

Final Conclusion: Impugned order set aside. Appeal allowed by remanding the matter to the original authority for carrying out the adjustment of excess duty against short payment and for determination of interest payable after such adjustment; penalty and limitation aspects do not survive.

Works contract deemed sale - transfer of property in goods - transfer of right to use goods - dealer liable to tax - use of C-Form / CST registration in inter-State purchases - binding effect of Tribunal's precedents on subordinate authorities (consistency)

Works contract deemed sale - transfer of property in goods - transfer of right to use goods - dealer liable to tax - use of C-Form / CST registration in inter-State purchases - Whether the handing over by the assessee of goods purchased from outside the State (against C Forms) to contractors for erection/laying of transmission lines, sub stations and grid stations amounted to a "sale" under Section 2(L) of the GST Act during the relevant periods, and whether the assessee thereby became liable as a dealer to sales tax under the GST Act. - HELD THAT: - For the accounting year 1996-97 the Court found that goods purchased by the assessee and handed to contractors were given without consideration and ownership/dominion remained with the assessee; there was no transfer of right to use supported by consideration and therefore the transaction between the assessee and its contractors did not constitute a "sale" as defined in Section 2(L) for that period. From 15.05.1997 (and thereafter until 08.11.2004) the statutory definitions were amended so that services in the shape of works contracts were included within the definition of "goods" and deemed to be sale by the person providing the works contract; however, clause (i) of Section 2(L) (which made transfers of property in goods involved in execution of works contract a sale) was deleted w.e.f. 15.05.1997. Applying the amended definitions to the subsequent accounting years, the Court held that what the revenue sought to tax was effectively the transaction between the assessee and the contractors; on the material before the Court there was no transfer of property in goods or of a right to use goods for consideration from the assessee to the contractors and therefore no sale exigible to tax. The Court also observed that the assessee indisputably was registered under the CST Act and had used C Forms for inter State purchases, so the assessee was a dealer under the CST Act; but that status did not convert the particular handing over of goods (without consideration) into a taxable sale under the GST Act on the facts before the Court. The Court noted factual lacunae in record (notably lack of clarity whether completed works were handed over to third parties) and confined its decision to the transactions between the assessee and its contractors on the available material. [Paras 21, 22, 23, 24, 31]

The handing over of goods by the assessee to contractors for the erection/laying of transmission lines, sub stations and grid stations did not amount to a "sale" under Section 2(L) of the GST Act for the relevant periods on the facts before the Court, and accordingly the assessee is not liable to sales tax under the GST Act in respect of those transactions.

Binding effect of Tribunal's precedents on subordinate authorities (consistency) - Whether the Tribunal's earlier decisions bind the Assessing Authorities and Statutory Appellate Authorities under the GST Act and whether those authorities must follow the law laid down by the Tribunal unless there is a change in law or fact. - HELD THAT: - The Court emphasised the need for judicial discipline and certainty: the Tribunal occupies the apex position among the quasi judicial fora created under the GST Act, and its legal pronouncements on questions of law should be followed by subordinate Authorities. Subordinate Authorities may take a different view only where there is a change in law or in the material facts, and in such cases they must record reasons for deviation. Failure by Assessing or Appellate Authorities to follow Tribunal law without justification is improper and may invite departmental action. The Court observed that on earlier occasions the Tribunal had taken a view favourable to the assessee on similar questions which should have been followed by the Authorities below. [Paras 30, 31]

The Tribunal's legal conclusions bind subordinate Authorities under the GST Act; Assessing Authorities and Statutory Appellate Authorities should follow the Tribunal's law unless reasons for departure (such as change in law or facts) are recorded.

Final Conclusion: The references are answered: (i) on the material before the Court the transactions between the assessee and its contractors did not amount to "sale" under Section 2(L) of the GST Act for the accounting years in question and are not exigible to sales tax; and (ii) the Tribunal's decisions on questions of law bind subordinate Authorities, who may deviate only for recorded reasons such as change in law or facts.

Interpretation of contractual description/specification - Acceptance and rejection of goods - Implied condition as to merchantable quality - Buyer's right to examine and waiver of inspection - Seller's burden to prove conformity to contract - Refund of price and award of contractual/compensatory interest

Interpretation of contractual description/specification - Seller's burden to prove conformity to contract - The equipments supplied by defendant did not satisfy the specifications in the purchase order and FH 160 denotes the job lifting capacity of the equipment irrespective of gripper weight. - HELD THAT: - The Court examined the purchase order, contemporaneous correspondence and technical material, and found no basis for the defendant's contention that the numerical designation FH 160 included the gripper weight. The defendant failed to produce or prove any trade usage or its own brochure contemporaneously relied upon at the time of contract; it also did not establish the gripper weight as 60 kg (the plaintiff's expert reported an average gripper weight of 31.5 kg and the defendant did not effectively controvert this). Communications and minutes during installation and tests showed repeated inability to meet the plaintiff's requirement of lifting 160 kg at all angles and the defendant's own admissions about inadequate performance. On these facts the Court held that the defendant failed to supply goods conforming to the contractual description and that the numeral 160 refers to the job lifting capacity irrespective of gripper weight. [Paras 27, 28, 31, 35, 36]

Issue answered for the plaintiff: the equipments were not supplied in conformity with the purchase order; FH 160 denotes job lifting capacity.

Acceptance and rejection of goods - Buyer's right to examine and waiver of inspection - Implied condition as to merchantable quality - The plaintiff was entitled to reject the goods despite payments and was not precluded from rejecting by reason of opportunity to inspect or partial payments. - HELD THAT: - Applying the principles of the Sale of Goods Act, the Court distinguished authorities relied on by the defendant and found them inapplicable on the facts. The contract envisaged installation and satisfactory trials at plaintiff's premises; the defendant did not demonstrate conformity at site and repeatedly demanded payment without completing agreed trials or rectification. The plaintiff did not accept the goods as conforming to contract and the circumstances do not show a waiver of the right to inspection sufficient to constitute deemed acceptance. Given the failure of the defendant to discharge its burden of proving conformity, the buyer's right to reject remained available. [Paras 34, 36, 37, 40, 47]

Issue answered for the plaintiff: rejection was justified and the plaintiff is not precluded from seeking recovery of amounts paid.

Refund of price and award of contractual/compensatory interest - Plaintiff is entitled to recover the amounts paid and to interest at 12% p.a. from 02.10.2008 to 28.02.2010 and thereafter at 6% p.a. until realisation; upon payment the defendant may take delivery of the equipments. - HELD THAT: - As a consequence of holding that the goods did not conform to the contract and that rejection was justified, the Court awarded refund of the amounts paid. Considering the commercial nature of the transaction and the plaintiff's claim, the Court granted interest at 12% per annum for the period pleaded up to the date of the plaint and reduced the rate to 6% per annum thereafter until realisation. The Court also clarified that after payment in accordance with the decree the defendant may take delivery of the equipments. [Paras 47, 48]

Issue answered for the plaintiff: decree for recovery of amounts paid with interest at the rates and periods specified; defendant may take delivery on payment.

Final Conclusion: The trial Court's decree is confirmed. The plaintiff's suit succeeds on the ground that the goods did not conform to the contract (FH 160 denotes job lifting capacity), the plaintiff was entitled to reject the goods and recover the price paid; interest awarded at 12% p.a. from 02.10.2008 to 28.02.2010 and at 6% p.a. thereafter until realisation. The appeal is dismissed and the cross-objection allowed to the extent of interest; no costs.