TaxTMI Updates e-Newsletter
May 16,2019

Composite supply as defined in Section 2(30) of the CGST Act, 2017 - principal supply as contemplated in Section 2(90) of the CGST Act, 2017 - health care services eligible for exemption under Sl.No. 74 of Notification No.12/2017-CT(R) dated 28th June, 2017 - ancillary supplies to health care services - tax liability determination under Section 8 of the CGST Act, 2017

Composite supply as defined in Section 2(30) of the CGST Act, 2017 - principal supply as contemplated in Section 2(90) of the CGST Act, 2017 - health care services eligible for exemption under Sl.No. 74 of Notification No.12/2017-CT(R) dated 28th June, 2017 - ancillary supplies to health care services - tax liability determination under Section 8 of the CGST Act, 2017 - Whether supplies of medicines, consumables, surgical items, laboratory items and room rent provided to in patients, being naturally bundled with treatment, constitute a composite supply and are eligible for exemption as health care services under Sl.No.74 of Notification No.12/2017-CT(R). - HELD THAT: - The Authority found that in patients attend the hospital with the primary intention of receiving treatment and, depending on clinical need, are admitted for continuous monitoring and care under the control of doctors and nursing staff. The hospital issues a single consolidated bill for all facilities and services provided during admission, including room rent, nursing care, laboratory services, medicines, consumables, surgical items and doctors' charges. Such items are naturally bundled and supplied in conjunction with the treatment. Applying the definition of composite supply, the provision of health care services is the predominant element (principal supply) while the other supplies are ancillary and dependent on the provision of medical treatment. Taxability therefore must be determined under Section 8 of the CGST Act using the principal supply test. Because the principal supply is health care services and such services are covered by the exemption at Sl.No.74 of Notification No.12/2017 CT(R) dated 28th June, 2017, the bundled supplies to in patients qualify as exempt health care services.

Supplies of medicines, consumables, surgical items, laboratory items and room rent provided as part of in patient treatment constitute a composite supply with health care services as the principal supply and are classifiable as exempt health care services under Sl.No.74 of Notification No.12/2017 CT(R) dated 28th June, 2017.

Final Conclusion: The Authority ruled that supplies bundled with in patient treatment are composite supplies whose principal element is health care services and are eligible for exemption under Sl.No.74 of Notification No.12/2017 CT(R) dated 28th June, 2017.

Service by way of job work - SAC 9988 - characterisation as an outsourced portion or complete outsourced manufacturing process - valuation of job work services based on service charge (including recoveries) - applicability of Entry No.26(i)(b) of Notification No.11/2017 - Central Tax (Rate) (taxability at 5% GST) - job work on goods falling under Chapters 50 to 63 of the First Schedule to the Customs Tariff Act, 1975

Service by way of job work - SAC 9988 - characterisation as an outsourced portion or complete outsourced manufacturing process - valuation of job work services based on service charge (including recoveries) - Whether the processes and treatments carried out by M/s. Irene Rubbers on materials supplied by the principal amount to job work. - HELD THAT: - The Authority applied the statutory definition of job work and relevant administrative clarification to hold that manufacturing services performed on physical inputs owned by another registered person constitute services by way of job work. The Authority noted that such services are outsourced portions of a manufacturing process or a complete outsourced manufacturing process, that the output remains owned by the principal, and that the service provider's liability to tax and invoicing obligations arise from supply of services. The value of the job work service is determined by the service charge and includes any goods or services used by the job worker insofar as they are recovered from the principal. On these foundations the Authority classified the petitioner's activity under SAC 9988 as job work.

Yes; the processes and treatments described amount to job work and are covered under SAC 9988.

Applicability of Entry No.26(i)(b) of Notification No.11/2017 - Central Tax (Rate) (taxability at 5% GST) - job work on goods falling under Chapters 50 to 63 of the First Schedule to the Customs Tariff Act, 1975 - Whether job work carried out on goods falling under HSN 5702 and 5703 is taxable at the rate specified in Entry No.26(i)(b) of Notification No.11/2017-Central Tax (Rate). - HELD THAT: - The Authority observed that the raw materials and inputs supplied by the principal (including carpets, coir and related items) fall within Chapters 50 to 63 of the First Schedule to the Customs Tariff Act, 1975. Entry No.26(i)(b) of Notification No.11/2017-Central Tax (Rate) applies to services by way of job work in relation to textiles and textile products falling under Chapters 50 to 63. Applying that entry to the petitioner's facts, the Authority concluded that the job work services performed on materials covered by HSN 5702 and 5703 attract the concessional tax rate prescribed by the entry. The Authority thereby determined the central and state components of tax accordingly.

Yes; job work on materials falling under HSN 5702 and 5703 is taxable under Entry No.26(i)(b) of Notification No.11/2017-Central Tax (Rate) at the concessional rate (5% GST as 2.5% CGST and 2.5% SGST).

Final Conclusion: The Authority ruled that the petitioner's operations constitute services by way of job work (classified under SAC 9988) and that job work performed on materials falling under HSN 5702 and 5703 is taxable under Entry No.26(i)(b) of Notification No.11/2017-Central Tax (Rate) at the concessional GST rate (2.5% CGST and 2.5% SGST).

Printing of pictures - colour printing of images from digital media - photographic and videographic processing services - printing and reproduction services of recorded media - service classification - taxable at the rate of 18%

Printing of pictures - colour printing of images from digital media - photographic and videographic processing services - printing and reproduction services of recorded media - service classification - Whether the applicant's high-quality digital printing of customers' supplied images falls within the service of "printing of pictures" as classified in Circular No.84/03/2019-GST and thereby under Service Classification Code 998386. - HELD THAT: - The Authority examined the scope of Service Classification Code 998912 and the specific inclusions and exclusions therein and compared it with Service Classification Code 998386 and the explanatory notes and Circular No.84/03/2019-GST. Service code 998912 covers general printing and reproduction services (newspaper, book printing, printing on various media and related finishing and reprographic services) but expressly excludes colour printing of images from film or digital media. Service code 998386 expressly includes developing and colour printing of images from film or digital media and other photographic processing activities. Circular No.84/03/2019-GST clarifies that the service of printing pictures is to be treated as falling under 998386 and not under 998912. The Authority noted that technological differences and the use of glossy/photo paper producing photographic quality prints do not convert such work into ordinary printing for the purposes of classification; rather, colour printing of images from digital media is specifically allocated to 998386. Applying these classifications and the Circular, the applicant's service of producing photo quality prints from digital content supplied by customers falls within the ambit of photographic and videographic processing services under 998386.

The applicant's colour printing of images from digital media is classified under Service Classification Code 998386 and not under 998912.

Final Conclusion: The Authority rules that the colour printing of images from digital media carried out by the applicant constitutes "printing of pictures" within the meaning of Circular No.84/03/2019-GST, falls under Service Classification Code 998386 (photographic and videographic processing services) and is taxable at the rate of 18%.

Works contract - turnkey project - service to Central Government by way of construction, erection, commissioning, installation, completion, fitting out of a civil structure - GST at 12% under Sl. No. 3(vi) of Notification No. 08/2017 (Integrated Tax (Rate)) - concessional rate of GST of 5% for supply of equipment

Works contract - turnkey project - service to Central Government by way of construction, erection, commissioning, installation, completion, fitting out of a civil structure - GST at 12% under Sl. No. 3(vi) of Notification No. 08/2017 (Integrated Tax (Rate)) - Whether the design, fabrication, procurement, integration and commissioning of the Trisonic Wind Tunnel with Ejector System constitutes a works contract attracting 12% GST under Sl. No. 3(vi) of Notification No. 08/2017. - HELD THAT: - The project, executed as a turnkey contract comprising design, realisation, integration and commissioning of the wind tunnel including civil construction and permanently integrated machinery and equipment, falls within the definition of "works" under Section 2(119) of the CGST Act, 2017. The civil works together with the integrated machinery form an inseparable, immovable composite system intended for use predominantly for purposes other than commerce, industry or any other business or profession. Such service provided to the Central Government by way of construction, erection, commissioning, installation, completion and fitting out of a civil structure or other original works is covered by Sl. No. 3(vi) of Notification No. 08/2017 (Integrated Tax (Rate)) dated 28.06.2017, as amended, and therefore attracts GST at the rate specified therein (12%). The Authority noted that because the supply and installation constitute a works contract, it did not decide the question of applicability of the concessional 5% rate for supply of equipment under the other notification.

The turnkey contract for the Trisonic Wind Tunnel is a works contract and attracts GST at 12% under Sl. No. 3(vi) of Notification No. 08/2017.

Final Conclusion: Advance Ruling: the design, fabrication, integration and commissioning as a turnkey works contract for the Trisonic Wind Tunnel is taxable as construction/works service provided to the Central Government and attracts 12% GST under the specified entry; the question of applicability of the concessional 5% rate for supply of equipment was not decided.

Composite supply - Principal supply - Health care services - Ancillary supply - Exemption under Notification No.12/2017-CT(R) dated 28th June, 2017 (Sl. No. 74) - Section 2(30) and Section 2(90) of the CGST Act, 2017 - Taxability determination under Section 8 of the CGST Act, 2017

Composite supply - Principal supply - Health care services - Ancillary supply - Exemption under Notification No.12/2017-CT(R) dated 28th June, 2017 (Sl. No. 74) - Supply of medicines, consumables, surgical items, laboratory items and room rent provided to in-patients forms a composite supply and is eligible for exemption as health care services under Sl. No. 74 of Notification No.12/2017-CT(R) dated 28th June, 2017 - HELD THAT: - The Authority examined the nature of supplies provided to in-patients and found that an in-patient receives a bundle of supplies - lodging, nursing care, medical treatment, medicines, consumables, laboratory items and related services - which are supplied in conjunction with each other in the ordinary course of the hospital's business. The treatment furnished by the hospital is the predominant element of that bundle and other items (medicines, consumables, surgical items, needles, reagents, room rent, etc.) are dependent on and incidental to the provision of treatment. Applying the statutory definitions, such supplies fall within the concept of composite supply as envisaged by Section 2(30) and the dominant element qualifies as the principal supply under Section 2(90) of the CGST Act, 2017. Tax liability therefore must be determined in accordance with Section 8, whereby the tax treatment of the composite supply follows that of the principal supply. Since the principal supply is health care services, the composite supply provided to in-patients is classifiable as health care services and eligible for exemption under Sl. No. 74 of Notification No.12/2017-CT(R) dated 28th June, 2017.

The supplies to in-patients constitute a composite supply with health care services as the principal supply and are eligible for exemption under Sl. No. 74 of Notification No.12/2017-CT(R) dated 28th June, 2017.

Final Conclusion: The Authority ruled that items such as medicines, consumables, surgical items, laboratory reagents and room rent supplied to in-patients form a composite supply whose principal element is health care services and, accordingly, the bundled supply is exempt under Sl. No. 74 of Notification No.12/2017-CT(R) dated 28th June, 2017.

Exemption of health care services from GST - Definition of clinical establishment for exemption - GST registration not required for persons exclusively supplying exempt or nil-rated supplies - Compulsory registration where reverse charge applies

GST registration not required for persons exclusively supplying exempt or nil-rated supplies - Compulsory registration where reverse charge applies - Whether a diagnostic service provider engaged exclusively in exempt health care services is required to obtain GST registration. - HELD THAT: - The Authority applied the statutory scheme that persons engaged exclusively in supplying goods or services that are not liable to tax or wholly exempt are not required to register under the GST law. However, Section 24 contains mandatory categories of persons who must obtain registration despite Section 22; in particular, persons required to pay tax under reverse charge must register. The Authority therefore held that a diagnostic service provider exclusively making exempt supplies is not liable to registration, but must obtain registration if it receives supplies on which tax is payable under reverse charge notifications issued under the relevant provision.

A diagnostic service provider exclusively supplying exempt health care services is not required to register under GST, unless it is liable to pay tax under reverse charge in respect of any inbound supplies, in which case registration is compulsory.

Exemption of health care services from GST - Definition of clinical establishment for exemption - Whether the applicant's diagnostic services qualify for exemption under Notification No.12/2017-Central Tax (Rate) dated 28-06-2017. - HELD THAT: - The Authority examined the notification and its definitions: health care services include services by way of diagnosis or treatment in any recognized system of medicines, and 'clinical establishment' includes a place established as an independent entity or part of an establishment to carry out diagnostic or investigative services. The applicant's activities-medical diagnostic tests and laboratory and radiological investigations performed to facilitate diagnosis-fall within these definitions. The Authority also noted supportive reasoning in a prior advance ruling that diagnostic tests, pre- and post-counselling, therapy and prevention by tests qualify as health care services. Applying these provisions, the Authority concluded that the applicant's diagnostic services fall within SAC 9993 covered by the exemption notification and are therefore exempt from GST.

The applicant's diagnostic services qualify as health care services provided by a clinical establishment and are exempt under Notification No.12/2017-Central Tax (Rate) dated 28-06-2017.

Final Conclusion: The Authority ruled that the applicant's diagnostic services constitute exempt health care services under the notification and thus are not subject to GST; registration is not required for a person exclusively making such exempt supplies unless that person is required to pay tax under reverse charge, in which case registration is mandatory.

Transitional input tax credit - form TRAN-1 - technical glitch in the GSTN portal - entitlement under Section 140(3) of the CGST Act to claim credit of eligible duties on inputs held on appointed day - revision/rectification under Rule 120A - judicial direction to reopen portal or accept manually filed TRAN-1 - electronic credit ledger visibility and acknowledgement

Technical glitch in the GSTN portal - form TRAN-1 - judicial direction to reopen portal or accept manually filed TRAN-1 - electronic credit ledger visibility and acknowledgement - Relief where a procedural/technical defect in the GSTN portal prevents the TRAN-1 credit from being reflected in the electronic ledger - HELD THAT: - The Court found that the dispute concerned a procedural/technical failure of the portal which impeded reflection of the TRAN-1 entries in the electronic ledger and thereby precluded the authorities from examining the claim on merits. Noting that assessees could not save, print or obtain a pre-submission screenshot of the filled TRAN-1 and that the portal's design limited rectification, the Court concluded that such genuine filing difficulties should not bar adjudication of substantive claims. In the exercise of its supervisory jurisdiction the High Court directed the Respondents to either reopen the portal to enable the petitioner to re-file TRAN-1 electronically or to accept a manually filed TRAN-1 on or before 31st May 2019 and thereafter to process the petitioner's claims in accordance with law. The Court also directed consideration of software improvements (save, review, print and automated acknowledgement features) to prevent recurrence of similar difficulties. [Paras 9, 11, 12]

Respondents directed to reopen the portal or accept manually filed TRAN-1 by 31st May 2019 and to process the petitioner's claims; respondents to consider portal enhancements for saving, review, printing and acknowledgements.

Transitional input tax credit - entitlement under Section 140(3) of the CGST Act to claim credit of eligible duties on inputs held on appointed day - revision/rectification under Rule 120A - Adjudication on the merits of the petitioner's claim to input tax credit and entitlement under Section 140(3) is not decided and is to be examined by the authorities - HELD THAT: - The Court expressly refrained from deciding whether the petitioner is entitled to the claimed input tax credit under Section 140(3) of the CGST Act, observing that the authorities had not examined supporting documents because the TRAN-1 entries did not reflect the claimed amount in the electronic ledger. The Court's directions remedied the procedural impediment but left the substantive question of eligibility and the assessment of supporting evidence to the competent tax authorities for determination under law, noting that revision under Rule 120A was a limited facility and did not amount to adjudication on entitlement. [Paras 9, 11]

Substantive entitlement to the claimed transitional credit left open for examination and decision by the authorities after submission/process of TRAN-1.

Final Conclusion: Petition disposed by directing the respondents to enable refiling or accept manual TRAN-1 and to process the petitioner's claimed transitional input credit; substantive entitlement under Section 140(3) to be examined and decided by the tax authorities. Dasti.

Stay against coercive recovery - Revocation of attachment and prohibitory instructions during subsistence of stay - Validity of revenue official's action in contravention of appellate stay - Deference to orders of the first appellate authority

Stay against coercive recovery - Revocation of attachment and prohibitory instructions during subsistence of stay - Validity of revenue official's action in contravention of appellate stay - Continuation of instructions to RTOs restraining transfer of vehicles and attachment of agricultural land despite an operative stay against coercive recovery. - HELD THAT: - The petitioner had preferred appeals against assessment orders for the tax periods 2013-14, 2015-16 and 2016-17. After making part payments, the first appellate authority by order dated 30.05.2018 granted stay against coercive recovery for the remaining dues in respect of all three years; that stay was extended and continued to operate. Notwithstanding the operative stay, the second respondent continued the instructions to RTO authorities to debar transfer of the petitioner's vehicles and maintained attachment of the petitioner's agricultural land, and declined to revoke them even after being informed of the appellate stay. The court held that when an appellate authority has granted stay against coercive recovery, revenue authorities cannot persist with coercive measures which the stay is designed to thwart. The impugned communication continuing the restraining instructions and attachment was therefore in clear contravention of the appellate stay, amounted to flagrant disregard of the order of the first appellate authority, and could not be sustained. The communication was quashed and the prohibitory instructions and attachment were revoked. [Paras 8, 9]

Impugned communication dated 11.3.2019 quashed; instruction to RTOs restraining transfer of petitioner's vehicles revoked; attachment of petitioner's agricultural land revoked.

Final Conclusion: Petition allowed; the State Tax Officer's communication continuing prohibitory instructions to RTOs and attachment of land despite an operative appellate stay was quashed and set aside, and the restraint and attachment were revoked, with costs.

Writ jurisdiction vis-a -vis availability of efficacious alternative remedy - Availability of alternative remedy under Section 107 of the Goods and Services Act - Requirement of statutory deposit under Section 107(6) as condition for filing appeal - Principles of natural justice may be raised before appellate authority - Recovery proceedings and attachment under Section 79

Writ jurisdiction vis-a -vis availability of efficacious alternative remedy - Availability of alternative remedy under Section 107 of the Goods and Services Act - Whether the writ petition is maintainable when an efficacious alternative remedy in the form of appeal under Section 107 of the Act is available. - HELD THAT: - The Court held that writ jurisdiction should not be invoked where a statutory efficacious alternative remedy exists. Section 107 of the Act provides the appellate remedy which the petitioner could pursue. The petitioner's attempt to approach the High Court by way of writ to circumvent the appellate mechanism was impermissible. The availability of the appeal route therefore precluded exercise of the writ jurisdiction in the present case.

Writ petition dismissed as not maintainable for existence of an efficacious alternative remedy under Section 107.

Requirement of statutory deposit under Section 107(6) as condition for filing appeal - Principles of natural justice may be raised before appellate authority - Whether the petitioner can avoid the statutory condition of deposit prescribed by Section 107(6) by approaching the High Court and whether alleged breach of natural justice justifies bypassing the appellate forum. - HELD THAT: - The Court observed that Section 107(6) requires the appellant to make a statutory deposit before the appellate authority, and that the petitioner had resorted to the High Court apparently to escape that obligation. The Court noted that any complaint about breach of natural justice in the impugned orders can be raised before the appellate authority and does not warrant invocation of writ jurisdiction to bypass the statutory appeal process. Accordingly, the alleged violation of principles of natural justice did not justify circumventing the appeal provision or the deposit requirement.

Alleged breach of natural justice does not entitle the petitioner to bypass the appeal process or avoid the statutory deposit; grievance must be raised before the appellate authority.

Recovery proceedings and attachment under Section 79 - Whether interlocutory or consequential steps such as attachment and initiation of recovery under Section 79 justify maintaining the writ petition. - HELD THAT: - The Court recorded that the respondent had initiated attachment of the petitioner's bank account and threatened recovery under Section 79, but held that such consequential enforcement steps did not alter the availability of the statutory appellate remedy. The existence of enforcement action does not, in itself, oust the appellate remedy or render the writ petition maintainable where an effective statutory remedy exists.

Initiation of attachment or recovery under Section 79 does not preclude the petitioner from availing the appellate remedy and does not make the writ maintainable.

Final Conclusion: The writ petition was dismissed for want of maintainability because an efficacious statutory appeal under Section 107 was available (subject to the deposit requirement under Section 107(6)); alleged denial of natural justice and subsequent attachment/recovery do not justify bypassing the appellate forum. No order as to costs.

De-freezing of bank account - waiver of challenge to legality of search and seizure - show cause notice - petition rendered infructuous - liberty to revive

De-freezing of bank account - show cause notice - petition rendered infructuous - liberty to revive - Release of the petitioner's current bank account and consequent disposition of the writ petition. - HELD THAT: - The petitioner limited the relief sought in the writ petition to the de-freezing of its current account and expressly declined to press any challenge to the legality of the search and seizure proceedings. On instructions, respondents Nos.2 and 3 informed the Court that a show cause notice had been issued to the petitioner and undertook to release the petitioner's account on or before the date stated to the Court. In light of that assurance and the petitioner's concession narrowing the controversy, the Court treated the writ petition as rendered infructuous and disposed of it, while granting the petitioner liberty to seek revival of the petition should the account not be released as assured.

Writ petition disposed as infructuous on account of respondents' undertaking to release the account; petitioner permitted liberty to revive the petition if the account is not released as promised.

Waiver of challenge to legality of search and seizure - Effect of the petitioner's withdrawal of challenge to the legality of the search and seizure proceedings. - HELD THAT: - At the hearing the petitioner, through its counsel, expressly stated that it would not press the question of the legality of the search and seizure conducted on the stated date and would not agitate that issue at any time in future. The Court recorded that the petitioner's prayer was confined to the de-freezing of the current account as a consequence of that concession. The waiver operated to remove any challenge to the search and seizure from the scope of adjudication in this petition.

Petitioner's renunciation of any future challenge to the legality of the search and seizure was recorded and the Court proceeded solely on the limited issue of de-freezing the account.

Final Conclusion: The petition was disposed of as rendered infructuous following the petitioner's narrowing of relief to the de-freezing of its current account and the respondents' undertaking to release the account; liberty granted to the petitioner to revive the petition if the account is not released as assured.

Power of inspection, search and seizure - Entitlement to copies of seized documents under Section 67(5) - Punishment under Section 132 for offences relating to wrongful availment of input tax credit and bill trading - Requirement of determination/assessment before initiation of prosecution under Section 132 (except habitual offenders) - Provisional attachment to protect revenue under Section 83

Entitlement to copies of seized documents under Section 67(5) - Power of inspection, search and seizure - Petitioner entitled to copies of documents and statements seized or recorded during inspection subject to remittance of copying charges - HELD THAT: - The Court examined Section 67(5) which permits the person from whose custody documents are seized to make copies or take extracts except where, in the opinion of the proper officer, such supply may prejudicially affect an on-going investigation. The respondents relied on Section 67(5) orally but did not aver in the counter that furnishing the particular documents sought would prejudice the investigation. In the absence of any such specific averment or reasons on file, the Court concluded there was no established apprehension of prejudice and directed the respondents to furnish copies of the documents seized on specified dates and copies of statements recorded, on payment of copying charges within two weeks of receipt of the order. [Paras 30]

Copies of the seized documents and recorded statements to be furnished to the petitioner on payment of copying charges within two weeks.

Punishment under Section 132 for offences relating to wrongful availment of input tax credit and bill trading - Requirement of determination/assessment before initiation of prosecution under Section 132 (except habitual offenders) - Invocation of coercive/punitive consequences under Section 132 cannot be exercised prior to determination of liability by an assessment except in cases of a shown habitual offender; threats of arrest in the absence of such determination are impermissible - HELD THAT: - The Court analysed Section 132 and the statutory scheme of the CGST Act, concluding that the offences in Section 132 concern matters that are essentially determinable in assessment proceedings (Sections 73/74) and that committal of the offence must be established before punishment is imposed. Reliance was placed on the reasoning in Make My Trip and the Supreme Court's confirmation that procedural safeguards must be followed before exercising coercive powers. The Court held that absent any allegation or material establishing that the petitioner is a habitual offender, pointing out Section 132 to intimidate or threaten arrest prior to adjudication was contrary to the scheme of the Act and amounted to excess of authority. Consequently, interim protection from coercive action under Section 69 read with Section 132 was granted. [Paras 36, 40, 46]

Interim protection granted; respondents restrained from invoking coercive/punitive powers under Section 132 against the petitioner pending adjudication (subject to statutory exceptions for habitual offenders).

Requirement of determination/assessment before initiation of prosecution under Section 132 (except habitual offenders) - Provisional attachment to protect revenue under Section 83 - Respondents directed to complete adjudication by issuing show cause notice and passing reasoned assessment within a specified time; protective measures under Section 83 are available to the Department pending adjudication - HELD THAT: - The Court emphasised that determination of any excess input tax credit and assessment under Sections 73/74 must precede recovery or prosecution. To ensure timely resolution, the Court directed the respondents to issue a show cause notice specifying proposed assessments, afford the petitioner full opportunity to reply and to pass a reasoned, speaking order within twelve weeks. While refusing to compel a pre-adjudication deposit from the petitioner in the absence of statutory authority, the Court noted that the statute contains Section 83 empowering provisional attachment to protect revenue and that such remedies are available to the Department. [Paras 46, 50, 52]

Adjudication to be completed within twelve weeks after issuance of show cause notice and opportunity to the petitioner; Department may resort to statutory protective measures such as provisional attachment under Section 83 where appropriate.

Final Conclusion: Writ petition allowed: respondents directed to furnish copies of seized documents and recorded statements on payment of copying charges; respondents restrained from invoking coercive/punitive measures under Section 132 prior to assessment (except in cases of established habitual offenders); adjudication to be completed by issuing show cause notice and passing a reasoned order within twelve weeks; respondents may use statutory protective measures such as provisional attachment under Section 83 to protect revenue.

Rectification of error on GST Portal - revision of TRAN-1 - appointment of Nodal Officer for disposal of representations - executive instructions dated 01/04/2009

Rectification of error on GST Portal - revision of TRAN-1 - appointment of Nodal Officer for disposal of representations - Petition seeking direction for revision of TRAN-1 and rectification of omission on the GST Portal was considered and disposed of by directing respondents to refer the matter to the Nodal Officer for appropriate action. - HELD THAT: - The petitioner submitted that while filing TRAN-1 on the GST Portal an error occurred by omission of claimed State Tax credit and that attempts to revise the form online were unsuccessful despite multiple representations. Respondents informed the Court that executive instructions dated 01/04/2009 envisage appointment of a Nodal Officer to deal with such cases and that the petitioner's grievance would be examined. Relying on this categorical submission, the Court disposed of the writ petition by directing the respondents to place the petitioner's case before the Nodal Officer so that the transitional form TRAN-1 may be revised as appropriate in accordance with law. The Court imposed a timeline for the exercise to be completed, reflecting its supervisory direction to ensure effective consideration of the petitioner's representation under the existing executive framework. [Paras 4]

Respondents to place the petitioner's matter before the Nodal Officer and ensure appropriate action to revise TRAN-1 is completed within 30 days from receipt of certified copy of the order.

Final Conclusion: Writ petition disposed; respondents directed to refer the petitioner's representation to the Nodal Officer and to conclude the exercise of revising TRAN-1 within 30 days.

Payment of tax arrears by installments - default in installment payment - willful defaulter - indulgence in recovery proceedings - balancing recovery of dues and preservation of industry

Payment of tax arrears by installments - default in installment payment - willful defaulter - balancing recovery of dues and preservation of industry - Grant of instalment facility for payment of tax arrears despite prior default, and the terms governing such facility - HELD THAT: - The Court noted that the Commissioner had earlier granted the petitioner facility to pay arrears in installments but the petitioner defaulted. Ordinarily a beneficiary who defaults would not be entitled to further indulgence. However, the Court accepted the petitioner's factual case that it became a sick company, its account was declared a Non-Performing Asset, and a One Time Settlement (OTS) sanctioned by the bank in 2017 led the petitioner to prioritise bank dues over tax installments. On this basis the petitioner was held not to be a willful defaulter disentitled to relief. Balancing the State's interest in recovery and the public interest in keeping the industry alive (including employment of about 100 persons), the Court exercised its discretion to grant a further instalment facility. The Court prescribed a time bound schedule for payments and made clear that any default in payment of any instalment would permit the department to proceed as per law. [Paras 3, 5, 6, 7]

Writ petition disposed by permitting payment of the arrears in twelve equal monthly instalments beginning on or before 15 April 2019, with subsequent instalments due on or before the 15th of each succeeding month; departmental remedy available on any default; no order as to costs.

Final Conclusion: The writ petition was allowed in part: the petitioner was permitted to pay the tax arrears by twelve monthly instalments on the schedule directed by the Court; failure to pay any instalment will entitle the department to proceed in accordance with law; no costs awarded.

Full and true disclosure under Section 245C - Commission's power to allow or reject application under Section 245D - settlement void if obtained by fraud or misrepresentation - voluntary disclosure as precondition to Commission's jurisdiction - no provision for revision of application under Section 245C - obligation of the Commission to follow statutory procedure before relegating matters

Commission's power to allow or reject application under Section 245D - obligation of the Commission to follow statutory procedure before relegating matters - Validity of the Settlement Commission's order relegating the petitioner to the Assessing Officer instead of deciding the settlement application under Section 245D(4). - HELD THAT: - The Court held that upon receipt of an application under Section 245C the Commission, after following the prescribed procedure under Section 245D, has only two principal courses: reject the application or allow it to be proceeded with so that the Commission may exercise its settlement jurisdiction. The Commission cannot avoid its statutory duty by referring or relegating the applicant to the Assessing Officer without deciding the application on merits or permitting it to proceed further. If further inquiry is necessary, the Commission may direct the relevant Commissioner to enquire and report, but that does not justify a wholesale relegation to the Assessing Officer in lieu of taking a decision under Section 245D. The impugned order, which relegated the petitioner to the Assessing Officer without deciding the settlement application, was therefore held to be unsustainable. [Paras 11, 14, 16]

Order of the Settlement Commissioner relegating the petitioner to the Assessing Officer was set aside as contrary to the statutory scheme; the Commission could not relegate instead of rejecting or permitting the application to proceed.

Full and true disclosure under Section 245C - voluntary disclosure as precondition to Commission's jurisdiction - no provision for revision of application under Section 245C - settlement void if obtained by fraud or misrepresentation - Interpretation of statutory requirements for a settlement application under Chapter XIX-A and the limits on the Commission's power to mould settlements. - HELD THAT: - The Court reiterated that an application under Section 245C must contain a 'full and true disclosure' of income not disclosed earlier and the manner in which it was derived; voluntary disclosure and truthfulness are preconditions to invoke the Commission's jurisdiction. There is no statutory provision permitting revision of a Section 245C application, indicating legislative intent that disclosures be complete and accurate at the threshold. While the Commission has a measure of discretion in assessing disclosed income and setting settlement terms, it cannot make settlement terms that conflict with mandatory provisions of the Act (for example as to tax and interest). Further, every order under subsection (4) must record terms of settlement and provide that the settlement is void if obtained by fraud or misrepresentation, with the determination of such fraud being a matter for the Commission. [Paras 12, 13, 14, 15]

The statutory requirements and limitations were affirmed: the Commission's jurisdiction is triggered only by true voluntary disclosure in the application, applications cannot be revised, and settlement terms must conform to statutory mandates and be subject to voidance for fraud or misrepresentation.

Obligation of the Commission to follow statutory procedure before relegating matters - Remedial direction consequent to the invalidation of the Settlement Commission's order. - HELD THAT: - Because the Settlement Commission's order was set aside for failing to perform its statutory duty under Section 245D, the Court directed that the Commission proceed to decide the petitioner's settlement application afresh in accordance with law. The Court observed that if the Commission considers further inquiry necessary it may call for reports or direct enquiries from the Principal Commissioner or Commissioner, but it must ultimately either reject the application or allow it to proceed to settlement determination as provided by the statute. [Paras 16, 17]

Order dated 30.8.2017 set aside and matter remitted to the Settlement Commission to decide the application afresh in accordance with law.

Final Conclusion: The Settlement Commission's order of 30.8.2017 was set aside because the Commission could not lawfully relegate the petitioner to the Assessing Officer instead of either rejecting the Section 245C application or allowing it to proceed; the Commission is to decide the petitioner's settlement application afresh in accordance with the statutory scheme and procedure.

Compounding of offences - fees for compounding - higher rate for subsequent application - compounding is not a matter of right - eligibility conditions for compounding - Category-'A' offence: failure to pay tax deducted at source

Fees for compounding - higher rate for subsequent application - compounding of offences - eligibility conditions for compounding - Compounding fees for Financial Years 2013-14 and 2014-15 were correctly levied at the higher (5%) rate as subsequent applications. - HELD THAT: - The Court applied the CBDT guidelines dated 23.12.2014, in particular paragraph 12.1 which prescribes 3% per month for the first compounding application and 5% per month where the same person comes forward for compounding through a subsequent application. On the facts the petitioner's earlier application dated 19.07.2017 filed before the Deputy Commissioner (TDS) was invalid for non-compliance with the prescribed mode and for failure to pay outstanding demand prior to filing; a compounding application for F.Y. 2015-16 was, however, received by the Principal Chief Commissioner on 16.10.2017 and the applications in respect of F.Y. 2013-14 and 2014-15 were received later on 17.01.2018. Given that chronology and the eligibility requirements in the guidelines, the Principal Chief Commissioner was entitled to treat the 2013-14 and 2014-15 applications as subsequent occasions and levy compounding fees at the 5% rate. [Paras 18, 20, 21]

Compounding fees for 2013-14 and 2014-15 were lawfully computed at the 5% rate as subsequent applications; the writ petition challenging that computation is dismissed.

Compounding is not a matter of right - compounding of offences - Category-'A' offence: failure to pay tax deducted at source - The Principal Chief Commissioner acted within the discretion conferred by the guidelines in granting compounding and in applying the guidelines to the petitioner's case. - HELD THAT: - The Court reiterated that compounding is discretionary and subject to eligibility conditions and relevant factors such as conduct and magnitude of the offence. The offences under Section 276B fall in Category-'A' and the Principal Chief Commissioner considered the matter in light of the CBDT guidelines, the factual record and the timing of applications. The guidelines remain valid and the question whether an application is first or subsequent is essentially one of fact; on the record the authority's treatment was in consonance with the guidelines and therefore not susceptible to interference. [Paras 22, 23]

The Principal Chief Commissioner acted within guideline and statutory discretion in compounding the offences and applying the higher rate; there is no ground for judicial interference.

Final Conclusion: The writ petition is dismissed; the compounding fees for F.Y. 2013-14 and 2014-15 as determined by the Principal Chief Commissioner at the subsequent-application rate are upheld and the authority's exercise of discretion under the CBDT guidelines is sustained.

Stay of demand - appeal pending before Commissioner (Appeals) - directions to appellate authority to dispose appeals expeditiously - leave to file appropriate application for interim relief

Appeal pending before Commissioner (Appeals) - directions to appellate authority to dispose appeals expeditiously - Petitioner's appeals before the Commissioner of Income Tax (Appeals), Kolkata 6 XXIV, in respect of the two assessment years were directed to be disposed within four weeks. - HELD THAT: - The petitioner informed the Court that orders under Section 271(c) had been passed for the two assessment years and appeals against those orders were pending before the Commissioner (Appeals). In view of the pendency and the petitioner's request for early hearing, the Court recorded the position and directed the Commissioner of Income Tax (Appeals), Kolkata 6 XXIV, to dispose of the pending appeals for Assessment Years 2012 613 and 2013 614 within a period of four weeks from the date of this order. The Court also asked that the petitioner's counsel communicate the order to the Commissioner (Appeals).

The Commissioner of Income Tax (Appeals) is requested to dispose of the appeals for Assessment Years 2012 613 and 2013 614 within four weeks.

Stay of demand - leave to file appropriate application for interim relief - Petitioner granted leave to file appropriate application for interim relief and respondent permitted to file affidavit-in-opposition. - HELD THAT: - The petitioner stated that the Assessing Officer had rejected its application for stay of demand while the appeals were pending. The Court permitted the Revenue to file an affidavit-in-opposition within four weeks and allowed the petitioner two weeks to reply. Noting that no coercive steps had been taken till date, the Court granted leave to the petitioner to file any appropriate application for interim relief if necessary. These directions preserve the parties' rights to seek or oppose interim measures while the appeals are being expeditiously disposed.

Leave granted to the petitioner to file an appropriate application for interim relief; respondents permitted to file affidavit-in-opposition within four weeks with leave to the petitioner to reply in two weeks.

Final Conclusion: The High Court directed expedited disposal of the petitioner's appeals before the Commissioner (Appeals) for Assessment Years 2012 613 and 2013 614 within four weeks, permitted the Revenue to file an affidavit-in-opposition and granted the petitioner leave to file appropriate interim application(s); the matter was listed for further hearing in the Monthly List of June.

Priority of charge - Section 281 of the Income Tax Act - validity of transactions during pendency of assessment proceedings - interaction between the Insolvency and Bankruptcy Code and the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act - rights of third party guarantor's property vis-a -vis insolvency proceedings of the borrower - registration of sale deeds in presence of income-tax attachment orders

Section 281 of the Income Tax Act - validity of transactions during pendency of assessment proceedings - priority of charge - Whether a mortgage created prior to issuance of attachment orders by the Tax Recovery Officer is rendered null and void by operation of Section 281 of the Income Tax Act for the assessment years 2008-2009 to 2014-2015. - HELD THAT: - The Court found that the mortgages in favour of the petitioner were created between 26.12.2013 and 05.02.2014, predating the orders of attachment dated 13.10.2016. The Tax Recovery Officer relied on Section 281 to contend that transactions during the pendency of assessment proceedings become automatically void. The Court, referring to its earlier decision in W.P.No.33417 of 2018, held that a transaction or creation of mortgage during the pendency of assessment proceedings does not automatically become null and void by virtue of Section 281. Accordingly, the attachment orders issued after creation of the mortgage cannot impinge upon the prior charge of the bank. [Paras 7, 8, 9]

Mortgage created prior to the attachment retains priority; attachment under Section 281 issued after creation of mortgage does not automatically render the mortgage void.

Interaction between the Insolvency and Bankruptcy Code and the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act - rights of third party guarantor's property vis-a -vis insolvency proceedings of the borrower - registration of sale deeds in presence of income-tax attachment orders - Whether properties of third party guarantors sold by the bank under the Securitization Act can be registered despite the borrower's liquidation under the Insolvency and Bankruptcy Code and attachment orders by the Tax Recovery Officer. - HELD THAT: - The Court distinguished between properties of the corporate borrower (which are subject to insolvency proceedings and liquidation under Section 33(2) of the Insolvency and Bankruptcy Code) and properties belonging solely to third party guarantors. While acknowledging the submission that questions relating to priority in respect of the company's assets should be addressed before the liquidator, the Court held that such insolvency-based impediment cannot prevent enforcement against and sale of third party guarantor properties which do not form part of the corporate insolvency estate. The Sub-Registrars' refusal to register sale certificates of third party properties on the basis of attachment orders issued after creation of the bank's charge was therefore held to be contrary to law. [Paras 10, 11, 12]

Sale and registration of properties belonging to third party guarantors effected by the bank under the Securitization Act cannot be stayed by attachment orders in respect of the borrower; refusal to register such sale deeds is not in accordance with law.

Final Conclusion: Writ petition allowed: Sub-Registrars directed to proceed with registration of sale deeds of third party guarantor properties sold by the bank; petition otherwise disposed of and ancillary petitions dismissed; no order as to costs.

Disallowance of salary expenses as excessive or not genuine - estimation of income and additions based on gross profit variation - allowability of travelling expenses as business expenditure - reconciliation of turnover and deletion of addition for suppression of sales - appellate authority's fact finding and its affirmation in absence of contrary material

Disallowance of salary expenses as excessive or not genuine - appellate authority's fact finding and its affirmation in absence of contrary material - Whether the disallowance of salary expenses made by the Assessing Officer could be sustained or whether the CIT(A)'s restriction of the addition to a lesser amount was justified. - HELD THAT: - The CIT(A) examined the particulars of increments and new appointments, assessed qualifications, experience and duties, and made specific factual findings: modest increases for longstanding employees justified; part of increases to family members and certain newly employed family members lacked special qualifications and therefore a limited disallowance was warranted. The Revenue did not place any contrary material to controvert these findings. The Tribunal accordingly affirmed the CIT(A)'s fact based conclusion that the AO's total disallowance was excessive and that restriction of the addition to the amount determined on appeal was appropriate. [Paras 6, 7]

Addition on account of salary expenses restricted as held by the CIT(A) and affirmed.

Allowability of travelling expenses as business expenditure - estimation of income and additions based on gross profit variation - Whether the travelling expenses disallowed by the Assessing Officer could be sustained where the AO made the addition on an estimate without specific reasoning. - HELD THAT: - The AO made the addition on an estimated basis without articulating reasons or specific findings to show the expenditure was personal rather than for business. The CIT(A) deleted the addition after noting absence of reasoned basis for disallowance. The Tribunal found no infirmity in the appellate authority's approach and affirmed deletion since the AO's estimate lacked supporting reasoning and the Revenue did not rebut the appellate finding. [Paras 11]

Deletion of the travelling expenses addition by the CIT(A) affirmed.

Estimation of income and additions based on gross profit variation - reconciliation of turnover and deletion of addition for suppression of sales - appellate authority's fact finding and its affirmation in absence of contrary material - Whether the addition on account of alleged suppression of sales, computed by reference to a fall in gross profit percentage, was sustainable where the assessee reconciled turnover and provided comparative details. - HELD THAT: - The CIT(A) found that the assessee demonstrated that prior year trading figures had been misstated (manufactured goods wrongly booked as traded goods) and filed complete details of traded goods and comparative particulars, showing that the gross profit and turnover variations were verifiable and not indicative of suppression. The AO's addition, premised on a comparison distorted by the misclassification and made on estimation, could not be sustained. The Revenue produced no material to rebut the appellate findings; the Tribunal therefore affirmed the deletion. [Paras 15, 16]

Addition of Rs. 93,35,000 made by the AO on account of alleged suppression of sales deleted as held by the CIT(A) and affirmed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal in all respects, affirming the CIT(A)'s restriction and deletions of the additions disputed in Assessment Year 2010-11.

Assessment under section 153A - Validity of notice under section 143(2) in search assessments - Applicability of cash credit provisions under section 68 to unexplained bank deposits - Bank passbook as record/book of account for section 68 purposes - Admission of additional legal grounds in appellate proceedings

Validity of notice under section 143(2) in search assessments - Assessment under section 153A - Validity of notice under section 143(2) issued before filing of return where assessment is under section 153A - HELD THAT: - The Tribunal held that assessments made under section 153A do not mandatorily require a separate notice under section 143(2). The scheme of section 153A, read with the phrase 'so far as may be', does not convert issue of notice under section 143(2) into a mandatory precondition for completion of assessment under section 153A. The assessee's contention that a notice under section 143(2) issued on 6/12/2007 (prior to filing of return on 7/12/2007) vitiated the assessment was rejected: the return filed was not a timely or valid response to the original section 153A notice, and in any event there is no statutory requirement to issue a fresh notice under section 143(2) for search assessments. Reliance on the Delhi High Court decision in CIT v. Ashok Chadha was accepted to the effect that notice under section 143(2) is not mandatory for assessments under section 153A. [Paras 12]

Grounds challenging issuance and timing of notice under section 143(2) were dismissed.

Admission of additional legal grounds in appellate proceedings - Admissibility of an additional ground of appeal raised before the Tribunal - HELD THAT: - The Tribunal admitted the additional ground because it raised a legal contention only and did not require fresh facts or further investigation. The Tribunal observed that a pure legal ground can be raised at any stage of appellate disposal and that the additional ground had factual material already on record from earlier proceedings. [Paras 6]

The additional ground of appeal was admitted.

Applicability of cash credit provisions under section 68 to unexplained bank deposits - Bank passbook as record/book of account for section 68 purposes - Whether additions under section 68 could be sustained in respect of unexplained cash deposits in the assessee's bank account when the assessee did not maintain books of account - HELD THAT: - On the merits the Tribunal upheld the additions. The assessee could not satisfactorily establish the identity, genuineness and creditworthiness of purported lenders; the affidavits produced were self-serving, documentary proof (bank passbooks or other records) from the lenders was not produced for most transactions, and witnesses appeared tutored. The assessing officer afforded opportunities and conducted remand enquiries; the limited persons produced lacked credibility. The Tribunal further accepted precedent reasoning that monies deposited in a bank account which remain unexplained can be treated as income under section 68 and noted that after the statutory definition of 'books of account' was introduced a bank passbook may constitute a book/record of the assessee. Consequently absence of independently maintained books did not preclude invoking section 68 where unexplained deposits could not be satisfactorily explained. [Paras 13, 16, 19]

Additions under section 68 in respect of unexplained bank deposits were sustained (confirmed to the extent upheld by the CIT(A)).

Final Conclusion: The Tribunal dismissed the appeals for Assessment Years 2004-05 and 2005-06: the challenge to the notice under section 143(2) in a section 153A assessment failed; the additional legal ground was admitted; and the additions under section 68 in respect of unexplained bank deposits were sustained.

Addition as unexplained income - survey/seizure material and corroborative evidence - rebuttable presumption arising from search/seizure - burden of proof and explanation by the assessee

Addition as unexplained income - survey/seizure material and corroborative evidence - rebuttable presumption arising from search/seizure - burden of proof and explanation by the assessee - Validity of the addition of INR 7,500,000 to the assessee's income on the basis of a memorandum of understanding and an unsigned/undated receipt found during survey. - HELD THAT: - The Tribunal examined the documentary material found during survey-an unsigned memorandum of understanding (MOU) relating to a disputed property and a receipt purporting to record payment of INR 1,00,00,000 (of which INR 7,500,000 in cash was in issue). The assessing officer and the CIT(A) sustained the addition on the basis that the seized receipt indicated payment and that witness signatures on the documents linked them to the assessee. The Tribunal, however, found the following determinative facts: the MOU was not signed by the assessee; the property was in dispute and did not belong to the alleged payee; the MOU had not resulted in any transaction and there were no title deeds or other corroborative documents recovered from the premises; the receipt was undated and the witnesses did not substantiate that the cash payment of INR 7,500,000 was in fact made; and both parties confirmed before the assessing officer that the transaction had not fructified. In that factual matrix the Tribunal held that the mere presence of an unsigned MOU and an undated receipt in isolation, without corroborative material (such as title documents or independent confirmation of cash payment), was insufficient to maintain an addition. The Tribunal applied the principle that presumptions or adverse conclusions drawn from material found during search/survey are rebuttable and require adequate corroboration; where explanation by the assessee is plausible and the seized documents do not reliably establish receipt of cash, the addition cannot be sustained. [Paras 9, 10, 11]

The addition of INR 7,500,000 is deleted and the ground of appeal is allowed.

Final Conclusion: The appeal is partly allowed: the Tribunal reversed the orders of the lower authorities and deleted the addition of INR 7,500,000 for AY 2011-12 on the ground that the seized MOU and receipt, without corroborative material and given the assessee's explanation, did not establish unexplained income.

Mistake apparent on the face of the record under power of rectification - rectification cannot be used as a device for review - protective additions under section 69B - binding effect of earlier Tribunal order in identical facts - maintainability of departmental appeals governed by monetary limit under CBDT Circular No.3/2018

Mistake apparent on the face of the record under power of rectification - rectification cannot be used as a device for review - binding effect of earlier Tribunal order in identical facts - Whether the Tribunal's order dated 4th December 2015 suffers from a mistake apparent on the face of the record warranting recall under its rectification power. - HELD THAT: - The Tribunal examined the factual background and found that additions on identical facts had been made on protective basis in the assessment years 2005-06 to 2007-08, arising from material discovered during a search. The learned Commissioner (Appeals) had deleted the protective additions in a consolidated order and, in view of an earlier Tribunal decision in the appeal for assessment year 2007-08, the Tribunal applied that decision to the present appeals. The Revenue's misc. applications alleged that the Tribunal relied on an incorrect remand report and on another assessee's order; however the Tribunal concluded that no mistake apparent on the face of the record had been demonstrated. The applications were characterized as an attempt to review the Tribunal's decision, which is impermissible by way of rectification. Accordingly the plea for recall on the ground of a purported apparent error was rejected. [Paras 4]

Applications seeking recall on the ground of mistake apparent on the face of the record are dismissed; rectification cannot be used to re-open the merits of the order.

Maintainability of departmental appeals governed by monetary limit under CBDT Circular No.3/2018 - Whether the departmental appeals are maintainable in view of the monetary threshold prescribed by CBDT Circular No.3/2018. - HELD THAT: - The Tribunal considered the submission that the tax effect of the disputed additions falls below the monetary limit of Rs. 20 lakh specified in CBDT Circular No.3/2018, and that appeals by the Department would therefore be non-maintainable. Finding that the tax effect was substantially below the specified monetary limit, the Tribunal held that the appeals were covered by the Circular and would not be maintainable, rendering any attempt to recall the earlier order futile. [Paras 5]

Appeals by the Revenue are not maintainable under the CBDT Circular No.3/2018 as the tax effect is below the prescribed monetary limit; misc. applications dismissed on this ground.

Final Conclusion: Both misc. applications filed by the Revenue seeking recall of the Tribunal's order are dismissed: no mistake apparent on the face of the record is shown and the departmental appeals are non-maintainable as they fall below the monetary threshold in CBDT Circular No.3/2018.

Deduction under Chapter VI-A - Section 80IC - computation of deduction treating each eligible undertaking separately - Applicability of section 80IA(5) to section 80IC via section 80IC(7) - Non-netting of profits and losses of eligible units for 80IC deduction - Section 80AB notwithstanding clause and its interplay with specific provisions of Chapter VI-A

Section 80IC - computation of deduction treating each eligible undertaking separately - Non-netting of profits and losses of eligible units for 80IC deduction - Applicability of section 80IA(5) to section 80IC via section 80IC(7) - For the purpose of quantifying deduction under section 80IC, the profits and losses of eligible undertakings are not to be netted and each eligible undertaking is to be treated separately. - HELD THAT: - The Tribunal examined the wording of section 80IC read with section 80IA(5) as made applicable by section 80IC(7). Section 80IA(5) contains a notwithstanding clause directing that profits and gains of the eligible business be computed as if such eligible business were the only source of income; section 80IC(7) applies those provisions to eligible "undertaking or enterprise." The language of section 80IC therefore requires that the computation be made with reference to each eligible undertaking or enterprise as the only source of income. The decision in Him Teknoforge Ltd., rendered in the context of section 80IA, cannot be mechanically applied to section 80IC because of this distinct wording and the substitution of "undertaking or enterprise" for "business." Relying on literal construction and legislative intent discernible from the statutory language, the Tribunal held that section 80IC mandates a stand alone treatment of profits of each eligible unit and precludes set off of losses of one eligible undertaking against profits of another for computing the 80IC deduction. The Tribunal followed earlier ITAT decisions applying this reasoning and observed that applying the Him Teknoforge approach to section 80IC would produce anomalous results where different eligible units attract different rates of deduction.

Assessee entitled to deduction under section 80IC with respect to profits of eligible units without netting losses of other eligible units.

Final Conclusion: The appeals are allowed: for AYs 2010-11, 2011-12 and 2012-13 the Tribunal directs that deduction under section 80IC be computed treating each eligible undertaking separately, ignoring losses of other eligible undertakings for the purpose of quantification.

Section 68 unexplained cash credit - identity genuineness and creditworthiness of shareholders - remand for de novo assessment due to lack of verification - opportunity of being heard before fresh adjudication

Section 68 unexplained cash credit - identity genuineness and creditworthiness of shareholders - remand for de novo assessment due to lack of verification - opportunity of being heard before fresh adjudication - Whether the deletion of the addition made under section 68 by the CIT(A) should be sustained or the matter should be remitted to the Assessing Officer for fresh adjudication. - HELD THAT: - The Tribunal noted that the CIT(A) had deleted an addition made by the AO treating share application money and premium as unexplained cash credit under section 68 after accepting the assessee's production of subscriber details, bank statements, audited accounts and statutory replies from subscribers. The Revenue challenged the deletion contending that the AO had not been able to verify the investors and had not had a full opportunity to examine evidence. Having regard to consistent decisions of co ordinate Benches of the Tribunal and higher courts emphasising that where the AO has not conducted adequate verification or enquiry on identity, genuineness and creditworthiness, the appropriate course is to remit the matter to the AO for fresh inquiry, the Tribunal concluded that the issue should be set aside to the file of the AO. The matter is to be decided afresh in accordance with law after giving the assessee adequate opportunity of being heard and permitting the AO to examine the evidence already on record and any further documentary evidence the assessee may file. The Tribunal therefore did not finally adjudicate the merits of the section 68 addition but directed de novo assessment to enable proper verification.

The orders of the authorities below are set aside on this issue and the matter is restored to the file of the Assessing Officer for fresh adjudication after affording the assessee adequate opportunity of being heard and after considering the evidence on record.

Final Conclusion: Revenue's appeal is allowed for statistical purposes by setting aside the CIT(A)'s deletion of the addition and remitting the issue to the Assessing Officer for de novo adjudication with opportunity to the assessee.

Claim for refund of duty under Section 27 - Effect of 2011 amendment widening Section 27 - Requirement of an order of assessment for claiming refund (pre 2011 rule) - Assessing Officer's discretion and timeline for assessment - Amendment of documents under Section 149 - Premature refund application

Claim for refund of duty under Section 27 - Effect of 2011 amendment widening Section 27 - Requirement of an order of assessment for claiming refund (pre 2011 rule) - Whether, in view of the post 2011 amendment to Section 27, a refund application can be entertained without there being a prior order of assessment. - HELD THAT: - Prior to the 2011 amendment Section 27 permitted refund claims only in respect of duty paid pursuant to an order of assessment and the Supreme Court in Priya Blue Industries had so held. The amendment effected on and after 08.04.2011 widened Section 27 to permit a claim for refund in respect of any amount paid or borne by a person. The impugned communication rejected the refund application as premature on the sole ground that the Bill of Entry had not been re assessed by the assessing group, thereby treating the existence of an order of assessment as a precondition for entertaining a refund claim. That approach fails to take into account the legislative widening of Section 27 and effectively places the power to seek refund at the mercy of an assessing officer's decision to reassess. The court held that insisting upon a prior order of assessment as a jurisdictional precondition is contrary to the amended statutory scheme; the Assistant Commissioner ought to consider the refund application on merits under Section 27(2), which permits grant of refund if the officer is satisfied that the whole or part of the duty paid is refundable. [Paras 15, 16, 17, 18, 20]

The refund application could not be returned as premature on the ground that no order of assessment had been passed; the Assistant Commissioner must entertain the refund claim under the amended Section 27 and consider it on merits.

Amendment of documents under Section 149 - Premature refund application - Assessing Officer's discretion and timeline for assessment - Whether Section 149 requires a formal amendment of the bill of entry before a refund can be granted under Section 27 in the present facts. - HELD THAT: - Section 149 permits amendment of documents by the proper officer and contains a proviso restricting amendment after clearance except on the basis of documentary evidence existing at the relevant time. In the present case the petitioner claimed refund on account of an error in unit price evidenced by supplier correspondence. The court held that the operation and purpose of Section 149 (amendment of documents) is distinct from the statutory right to seek refund under Section 27. It is not necessary that a formal amendment of the bill of entry be carried out as a precondition to granting refund where the refund claim is otherwise supported and the assessing authority is satisfied. Accordingly reliance on Section 149 to refuse consideration of the refund application was misplaced. [Paras 13, 21]

Section 149 does not operate as a bar to consideration of a refund application under Section 27; a formal amendment of document is not a prerequisite to granting refund if the claim is otherwise maintainable and the authority is satisfied.

Final Conclusion: Impugned communication returning the refund application as premature is quashed. The petitioner is permitted to re submit the refund application within two weeks; the respondents are directed to consider the application on merits and in accordance with law (Section 27(2)). Writ petition allowed.

Interest on delayed refunds - Commencement of interest from expiry of three months from date of application - Refund ordered under sub-section (2) of Section 27 - Explanation deeming appellate orders as orders under Section 27(2) - Doctrine of merger

Interest on delayed refunds - Commencement of interest from expiry of three months from date of application - Refund ordered under sub-section (2) of Section 27 - Whether interest under Section 27A is payable only with reference to an order passed under Section 27(2) or is determined with reference to the date of receipt of the refund application. - HELD THAT: - The Court held that Section 27A prescribes the starting point for calculation of interest as the date immediately after the expiry of three months from the date of receipt of the refund application, and not the date of the original order or any appellate order. Although Section 27A refers to duties "ordered to be refunded under sub-section (2) of section 27," the Explanation to Section 27A treats an order of the Commissioner (Appeals) or the Appellate Tribunal as deemed to be an order under Section 27(2). Thus appellate orders are recognised for the purposes of Section 27A, but the liability to pay interest accrues from the statutory three month trigger tied to the application. The Explanation reflects the operation of the common law doctrine of merger: where an original order is set aside on appeal, the appellate order is deemed the operative order; however, that deeming does not alter the statutory commencement of interest which is linked exclusively to the date of the application. Applying this construction, the Revenue's contention that interest is payable only with reference to an order under Section 27(2) (and hence dependent on the date of such order) was rejected and the appeals were dismissed. [Paras 11, 13, 14, 15, 16]

The substantial question of law is answered against the Revenue: interest under Section 27A accrues from the expiry of three months from the date of receipt of the refund application, and not only with reference to an order under Section 27(2); the appeals are dismissed.

Interest on delayed refunds - Commencement of interest from expiry of three months from date of application - Doctrine of merger - Whether the Adjudicating Authority was correct in granting interest only from the date of the reminder sent after disposal of writ petitions instead of from the statutory three month point from the date of the original application. - HELD THAT: - The Court found that granting interest from the date of filing a reminder after disposal of appeals is contrary to the mandate of Section 27A. The statutory trigger for interest is the expiry of three months from the date of the original application; it cannot be postponed to the date of a subsequent reminder. Consequently the Adjudicating Authority's limited grant of interest (from the reminder date) was erroneous. The Department was directed to calculate and disburse interest in accordance with Section 27A from the proper commencement date, applying the original refund applications as the triggering events. [Paras 10, 17]

The writ petitions are allowed; the Adjudicating Authority's grant of interest only from the reminder date is set aside and the Department is directed to compute and pay interest from the date immediately after expiry of three months from the date of the original applications within eight weeks.

Final Conclusion: The appeals filed by the Revenue are dismissed; the writ petitions filed by the assessee are allowed. Interest under Section 27A is payable from the date immediately after the expiry of three months from the date of receipt of the refund applications (and not from the date of a later reminder), and the Department is directed to calculate and disburse the interest accordingly within eight weeks.

Restoration of name struck off from register of companies - escapement of income and reopening of income tax assessment - effect of striking off on initiation and continuation of statutory proceedings - exclusion of time for limitation under Sections 12 to 15 of the Limitation Act read with Section 433 of the Companies Act, 2013 - condition precedent of publication in newspapers and Official Gazette for restoration - non-consideration of removal of director disqualification where CODS validity expired

Restoration of name struck off from register of companies - effect of striking off on initiation and continuation of statutory proceedings - escapement of income and reopening of income tax assessment - Restoration of the name of M/s. Blue Eye Infotech Pvt. Ltd. to the register of companies so as to enable the Income Tax Department and other regulatory authorities to proceed with statutory actions. - HELD THAT: - The Tribunal found on the material before it that the Income Tax Department had taken a considered view of escapement of income and had reopened assessment proceedings which were pending. The Companies (Removal of Names...) Rules and the proviso to Section 248(7) of the Companies Act show that legal or administrative actions in respect of a company are a relevant consideration against striking off. In the circumstances of public interest and to protect revenue interest the Tribunal concluded that the company's name ought to be restored so that statutory proceedings by the Income Tax Department and other authorities may proceed. Restoration was therefore directed, subject to conditions imposed by the Tribunal. [Paras 17, 18, 19, 20]

The appeal is partly allowed and the Registrar of Companies, Ahmedabad is directed to restore the name of the company in its register.

Condition precedent of publication in newspapers and Official Gazette for restoration - Restoration of the company's name is to be subject to compliance with publication formalities prescribed by the ROC. - HELD THAT: - The ROC indicated no objection to restoration but proposed restoration be made subject to specified conditions. The Tribunal accepted restoration but made it conditional on publication of notice in two leading newspapers circulating in the district and in the Official Gazette in the form approved by the ROC, with cost to be borne by the petitioner. This condition implements procedural safeguards and public notice requirements attendant on restoration. [Paras 10, 21]

Restoration ordered subject to publication in two leading newspapers and the Official Gazette as per draft approved by the ROC, at the cost of the petitioner.

Exclusion of time for limitation under Sections 12 to 15 of the Limitation Act read with Section 433 of the Companies Act, 2013 - Time consumed in the present proceedings is excluded for limitation purposes for initiating Income Tax and other legal proceedings. - HELD THAT: - The Tribunal directed that the period from filing of the appeal to the date of formal restoration by the ROC shall be exempted under Sections 12 to 15 of the Limitation Act, 1963 read with Section 433 of the Companies Act, 2013, thereby ensuring that statutory or prosecutorial actions by Revenue or other authorities are not time barred as a result of the company having been struck off and the pendency of restoration proceedings. [Paras 22]

The time/period consumed in these proceedings is exempted for limitation purposes as stated.

Non-consideration of removal of director disqualification - CODS scheme expiry - Relief for removal of disqualification of directors under section 164 could not be considered in these proceedings. - HELD THAT: - The ROC pointed out that the petition was filed after expiry of the CODS scheme (01.05.2018) and accordingly reliefs relating to removal of director disqualification could not be entertained in the present appeal. The Tribunal did not grant any order on removal of disqualification and confined relief to restoration of the company's name subject to conditions. [Paras 8, 9]

Relief regarding removal of disqualification of the director was not considered/granted.

Final Conclusion: The Tribunal partly and conditionally allowed the appeal by directing restoration of the company's name in the ROC register to enable continued income tax and regulatory proceedings, imposed publication conditions for restoration, exempted the period of these proceedings for limitation purposes, and did not grant relief for removal of director disqualification.

Pre-existing dispute - admission under Section 9 of IBC - completeness of Section 9 application - proof of service - fabrication of documents - initiation of CIRP

Pre-existing dispute - proof of service - fabrication of documents - No pre-existing dispute between the Operational Creditor and the Corporate Debtor was established; the admission of the Section 9 application was valid. - HELD THAT: - The Appellant relied on correspondence said to show a prior dispute (letters dated 23.12.2017 and earlier communications) and contended that the Operational Creditor had been informed of defective supply. The Operational Creditor, however, expressly denied receipt of the said letter and alleged fabrication. The record contains no proof of service or other evidence proving that the Corporate Debtor's purported letter was sent and received by the Operational Creditor. The Adjudicating Authority found the Section 9 application to be complete and, in the absence of substantiated evidence of a pre-existing dispute, law and precedent require admission to stand. Remitting the matter would not serve any purpose where the plea of dispute is unsupported by evidence. [Paras 3, 6]

The claim of a pre-existing dispute is rejected for want of evidence; the admission order under Section 9 is upheld.

Final Conclusion: The appeal is dismissed; the Adjudicating Authority's order admitting the Section 9 application and initiating CIRP is affirmed.

Strict proof of debt and default - non-compliance with the requirement of certificate from financial institution under Section 9(3)(c) - demand notice and proof of service of invoices - limitation and time-barred claims

Strict proof of debt and default - demand notice and proof of service of invoices - Whether the Adjudicating Authority was justified in dismissing the Section 9 application for want of strict proof of debt and default where invoices were not shown to have been forwarded to or received by the corporate debtor. - HELD THAT: - The Appellate Tribunal affirmed the Adjudicating Authority's finding that the Operational Creditor failed to establish, by specific evidence, that the invoices dated 23rd July, 2014 were forwarded to or received by the Corporate Debtor. In the absence of such proof and given the resulting doubt about the existence of the claimed debt, the Tribunal held that the Section 9 application, which requires strict proof of debt and default, was rightly refused. The Tribunal thus endorsed the conclusion that mere production of invoices in the proceedings, without evidence of service/receipt, does not discharge the requirement of establishing the debt for the purposes of initiating insolvency proceedings under Section 9. [Paras 10]

Adjudicating Authority rightly dismissed the Section 9 application for failure to establish strict proof of debt and default due to absence of evidence that the invoices were forwarded to or received by the Corporate Debtor.

Limitation and time-barred claims - non-compliance with the requirement of certificate from financial institution under Section 9(3)(c) - Whether the claims based on invoices of 2013-14 were barred by limitation and whether procedural non-compliance justified the dismissal. - HELD THAT: - The Tribunal noted the corporate debtor's contention that the claims related to invoices from 2013-14 and were time-barred, but observed that, on the material before it, the claims could not be held to be conclusively barred by limitation. Separately, the Adjudicating Authority had recorded non-compliance with the requirement of a certificate from the financial institution maintaining the Operational Creditor's accounts under Section 9(3)(c); the Tribunal treated the combination of procedural non-compliance and the substantive doubt about service/receipt of invoices as sufficient to uphold dismissal of the application. The Tribunal did not grant substantive relief and left open the appellant's right to seek appropriate remedies before a court of competent jurisdiction. [Paras 6, 10, 11]

The claims could not be conclusively held barred by limitation on the record, and procedural non-compliance together with doubt about invoice service justified dismissal; appellant may pursue other remedies in a competent court.

Final Conclusion: The appeal is dismissed. The Appellate Tribunal upheld the Adjudicating Authority's refusal to entertain the Section 9 application for want of strict proof of debt and for procedural defects; the order does not preclude the appellant from approaching a court of competent jurisdiction for appropriate relief.

Show Cause Notice - Article 226 of the Constitution - Services by way of education - authority under law - Fee Fixation Committee order - adjudication and passing of final orders

Show Cause Notice - Article 226 of the Constitution - authority under law - Whether the impugned Show Cause Notice dated 13.01.2017 could be quashed in writ jurisdiction under Article 226 on the ground that it was issued without authority under law. - HELD THAT: - The Court noted the settled principle that a Show Cause Notice may be quashed in public law only if it was issued without any authority under law. The petitioner asserted that, being an educational institution and offering recognised courses, the impugned notice under the Finance Act, 1994 was without authority; the respondent contended the notice was issued in accordance with law. Given the competing contentions and the absence of a final adjudication, the Court held that it could not exercise writ jurisdiction to quash the Show Cause Notice at this stage. The matter requires adjudication by the authority competent to decide the tax demand, and mere issuance of the notice, when its vires and application are disputed, does not warrant summary quashing by this Court. [Paras 10]

The impugned Show Cause Notice is not quashed.

Services by way of education - Fee Fixation Committee order - adjudication and passing of final orders - What directions, if any, should be given to the respondent authority pending adjudication of the objections raised by the petitioner. - HELD THAT: - The Court examined the petitioner's objections that (a) as an educational institution providing recognised courses it falls outside the levy under the Finance Act, 1994; (b) the courses for which degrees are awarded include internet and skill-development elements as part of the recognised curriculum; and (c) the Fee Fixation Committee's order fixed a composite annual fee which did not contemplate service tax. In view of these pleaded contentions and the Fee Fixation Committee order relied upon by the petitioner, the Court directed that the respondent shall consider and adjudicate the objections raised by the petitioner on merits and pass final orders in accordance with law. The authority was given a definitive time-frame to conclude the adjudication so that the dispute is determined by the appropriate forum rather than by interim quashing. [Paras 8, 10]

Respondent directed to adjudicate the objections (a)-(c) and pass final orders within 12 weeks from receipt of a copy of this order.

Final Conclusion: Writ petition disposed of: the Show Cause Notice is not quashed; respondent directed to consider the petitioner's objections including reliance on recognised educational status and the Fee Fixation Committee order, and to pass final adjudicatory orders within 12 weeks. No costs.

Rectification under Section 74 of the Finance Act, 1994 - mistake apparent on the face of the record - non-application of applicable rule as ground for rectification - appeal under Section 85(3A) of the Finance Act, 1994 - limitation - computation from date of receipt - Service Tax (Determination of Value) Rules, 2006 - Rule 2A

Rectification under Section 74 of the Finance Act, 1994 - mistake apparent on the face of the record - non-application of applicable rule as ground for rectification - Whether rejection of the rectification application under Section 74 could be set aside by writ on the ground that a relevant rule (Rule 2A) was not applied. - HELD THAT: - The Court held that the scope of Section 74 is limited and that not every instance of application of a wrong provision, or non-application of a correct provision, will amount to a mistake apparent on the face of the record warranting rectification. While the petitioner may have arguable merits on the applicability of Rule 2A of the Service Tax (Determination of Value) Rules, 2006, the limited remedial jurisdiction under Section 74 meant that the mere rejection of the rectification application could not be treated as demonstrably erroneous for the purposes of writ relief. Consequently, the appropriate remedy is to pursue the statutory appeal against the original order rather than challenge the rejection of the rectification by writ. [Paras 4]

Rejection of the rectification application was not set aside; petitioner directed to avail statutory appeal.

Appeal under Section 85(3A) of the Finance Act, 1994 - limitation - computation from date of receipt - Computation of the two-month limitation period for filing the appeal under Section 85(3A) in the context of a rejected rectification application. - HELD THAT: - The Court construed Section 85(3A) to mean that the two-month period for filing the appeal runs from the date of receipt of the order rejecting the rectification application. Applying that principle to the facts before it, the rejection order dated 28.02.2019 was received by the petitioner on 04.03.2019, and therefore the two-month period to file the appeal would expire on 04.05.2019. [Paras 5]

Limitation for appeal runs from date of receipt of the rejection order; deadline fixed as 04.05.2019 in the facts of this case.

Service Tax (Determination of Value) Rules, 2006 - Rule 2A - Whether the appellate authority should consider the petitioner's contentions, including applicability of Rule 2A, when the appeal is filed. - HELD THAT: - The Court granted liberty to the petitioner to file a regular appeal against the original order and directed that the appellate authority shall entertain the appeal as within time if filed on or before the fixed date. The appellate authority was directed to consider the objections raised by the petitioner, including the applicability of Rule 2A and other contentions, afresh in accordance with law. This constitutes a remit of the substantive objections to the appellate forum for consideration on merits. [Paras 6]

Appellate authority to consider all objections, including Rule 2A, when appeal is filed within the extended time.

Final Conclusion: Writ petition dismissed; petitioner granted liberty to file the statutory appeal against the original order and the appellate authority directed to treat any appeal filed on or before 04.05.2019 as within time and to consider the objections, including applicability of Rule 2A, on merits.

Levy of service tax on Renting of Immovable Property - laches - waiver of limitation for filing appeal - statutory pre-deposit requirement - continuation of attachment of rents - interim stay on recovery of arrears

Laches - Levy of service tax on Renting of Immovable Property - interim stay on recovery of arrears - Whether the writ petition, though hit by laches, should be entertained in view of the substantial legal controversy concerning levy of service tax on renting of immovable property and intervening proceedings in higher fora. - HELD THAT: - The Court observed that the impugned order is dated 05.01.2017 and that the writ petition is therefore prima facie hit by laches. Notwithstanding the delay, the learned counsel for the petitioner urged that the core controversy relates to levy of service tax on renting of immovable property, a question with an extended and unsettled litigation history including interim orders of the Supreme Court. The Court took into account that related proceedings before higher fora (including leave and interim directions) and the extended litigation on the legal question furnished context for relief. Having noted that a substantial portion of the disputed demand had already been collected and that the dispute involves the stated legal issue, the Court exercised its discretion to permit further appellate remedy despite the delay. [Paras 4, 6]

Petition, though hit by laches, was not dismissed; Court permitted the petitioner to challenge the order-in-original by filing an appeal before the Commissioner (Appeals).

Waiver of limitation for filing appeal - statutory pre-deposit requirement - continuation of attachment of rents - Relief to be granted in respect of procedural regularity for filing appeal, pre-deposit and status of existing attachments. - HELD THAT: - The Court directed that the petitioner may file an appeal against OIO SL.No.03/2017-ADC dated 05.01.2017 before the Commissioner of Service Tax (Appeals) within two weeks and that such appeal shall be received by the appellate registry/office without reference to limitation. The petitioner must accompany the appeal with the statutory pre-deposit. The Court further stipulated that the existing attachment of rents by the revenue shall continue in force, subject to any order that may be passed by the Appellate Authority. These directions effectuate a conditional waiver of limitation for the limited purpose of presenting the appellate remedy while preserving the statutory pre-deposit requirement and the operative status of prior attachments. [Paras 5, 6]

Petitioner permitted to file appeal within two weeks with statutory pre-deposit; registry to receive the appeal without reference to limitation; attachment of rents to continue subject to appellate orders.

Final Conclusion: Writ petition disposed by permitting the petitioner to prefer an appeal to the Commissioner of Service Tax (Appeals) within two weeks with statutory pre-deposit and without regard to limitation; existing rent attachments to continue until the Appellate Authority orders otherwise; connected petitions closed with no costs.

Pre-show cause notice consultation - Consultative process for dispute resolution - Personal hearing / face-to-face consultation - Trade facilitation and voluntary compliance - Audit objections and issuance of show cause notice

Pre-show cause notice consultation - Personal hearing / face-to-face consultation - Audit objections and issuance of show cause notice - Validity of the show cause notice dated 11.10.2018 in the absence of pre-SCN consultation and a face-to-face personal hearing as mandated by departmental instructions and the consultative process. - HELD THAT: - The Court applied its earlier reasoning in W.P.No.1618 of 2019 and the Board's Instructions/Circulars and Master Circular which make pre-SCN consultation mandatory in appropriate cases as a measure of trade facilitation and to promote voluntary compliance. The consultative process necessarily contemplates interaction between the adjudicating authority and the assessee, including an opportunity for a personal hearing, prior to issuance of an adversarial show cause notice. In the present case the impugned SCN was issued without affording the petitioner the pre-SCN consultation or the face-to-face opportunity it had expressly sought; accordingly the SCN was held to be issued in breach of the prescribed consultative procedure and liable to be set aside. [Paras 11, 12, 13, 14]

Impugned show cause notice dated 11.10.2018 set aside for failure to conduct the mandatory pre-SCN consultation including an opportunity for personal hearing.

Consultative process for dispute resolution - Trade facilitation and voluntary compliance - Audit objections and issuance of show cause notice - Procedure to be followed by the respondents upon setting aside the SCN-whether the matter should be remitted for pre-SCN consultation before any fresh show cause notice is issued. - HELD THAT: - Having quashed the SCN for procedural non-compliance, the Court directed that the respondents shall call upon the petitioner to appear with all relevant materials and shall afford it a full opportunity of pre-SCN consultation consistent with the Board's instructions and the consultative ethos recommended by TARC. The Court left the question of taxability and merits for determination by the assessing authorities after the mandated consultation process is completed; the order therefore remands the matter for fresh procedural compliance prior to any adversarial action. [Paras 14]

Respondents directed to afford the petitioner full pre-SCN consultation (including personal hearing) and may issue a show cause notice only thereafter if still considered necessary; matter remitted for such procedure.

Final Conclusion: Writ petition allowed: the show cause notice dated 11.10.2018 is set aside for failure to conduct the mandated pre-SCN consultation; respondents shall afford the petitioner full pre-SCN consultation, including a personal hearing, before issuing any fresh show cause notice; no order as to costs.

Interim stay of recovery - condition of deposit for grant of stay - pendency of appeal - vires of the Act

Interim stay of recovery - condition of deposit for grant of stay - pendency of appeal - Grant of interim stay of collection of the balance tax during the pendency of the first appeal subject to a deposit condition. - HELD THAT: - The petitioner had already deposited 12.5% of the disputed tax at the time of filing the first appeal. Having regard to that payment and the fact that a batch of writ petitions challenging the vires of the Act is pending before the Court, the Court exercised its discretion to grant an interim stay of recovery of the balance tax during the appeal. The stay is made conditional: the petitioner must deposit an additional 12.5% of the demand (in addition to the 12.5% already deposited) within six weeks from receipt of the order. No costs were awarded and pending miscellaneous petitions are closed as a consequence. [Paras 3, 4]

Interim stay granted on the stated deposit condition; no order as to costs; pending miscellaneous petitions closed.

Final Conclusion: Writ petitions disposed of by granting interim stay of collection of the balance tax during the pendency of the first appeal, subject to deposit of an additional 12.5% of the demand within six weeks; no order as to costs.

Condonation of delay - effect of death of a relative on limitation and service of orders - pedantic approach by adjudicatory forum in grant of relief - voluntary compliance including VCES and payment of liability as a mitigating factor - proviso to Section 73(1) of the Finance Act, 1994

Condonation of delay - effect of death of a relative on limitation and service of orders - pedantic approach by adjudicatory forum in grant of relief - voluntary compliance including VCES and payment of liability as a mitigating factor - Whether the Tribunal erred in rejecting the application for condonation of delay of 350 days by treating the death of the appellant's brother as not constituting sufficient cause for delay. - HELD THAT: - The Tribunal dismissed the condonation application on the basis that the demise of the appellant's brother had occurred before the Order-in-Original was received and therefore did not constitute sufficient cause. The High Court examined the record and noted the Order-in-Original was dated 23.01.2015 while the death occurred on 13.02.2015 - that is, after the order had been passed but before it was received. The Court held that the timing of service prior to the death could not rationally render the bereavement irrelevant; the family's distress following the death and difficulty in organizing business affairs were bona fide explanations for delay. Further, the appellant had already filed a VCES application and paid the service tax liability, which the Court treated as a mitigating circumstance. The Tribunal's strict or pedantic treatment of the explanation was therefore contrary to law and unjustified. Applying these conclusions, the Court answered the question of law in favour of the appellant and directed that the delay be condoned so that the appeal may be numbered and heard on merits. [Paras 7, 8, 9, 10, 11]

The delay of 350 days in filing the appeal before the CESTAT is condoned; the Tribunal's refusal to condone delay is set aside and the Tribunal is directed to number and take up the appeal for disposal in accordance with law.

Final Conclusion: The appeal is allowed; the condonation of delay is granted and the matter is remitted to the Tribunal to number and decide the appeal on merits, with no order as to costs and pending miscellaneous applications closed.

Valuation under Section 4A of the Central Excise Act, 1944 versus transaction value under Section 4 - Applicability of Standards of Weights and Measures (Packaged Commodities) Rules to attract MRP based valuation - Assessability of promotional/complimentary supplies not intended for retail sale - Effect of precedent: Jayanti Food Processing (Nestle) on valuation of goods supplied for free as promotional packs

Valuation under Section 4A of the Central Excise Act, 1944 versus transaction value under Section 4 - Applicability of Standards of Weights and Measures (Packaged Commodities) Rules to attract MRP based valuation - Assessability of promotional/complimentary supplies not intended for retail sale - Whether toothbrushes cleared in bulk/combo/naked form for supply to toothpaste manufacturers for free distribution fall to be valued on MRP basis under Section 4A or on transaction value under Section 4. - HELD THAT: - The Tribunal found as undisputed fact that the toothbrushes were cleared without retail packing and were supplied to toothpaste manufacturers to be included as complimentary items in combo packs; they were not sold in retail by either the appellant or the purchasers. Applying the legal test in Jayanti Food Processing (as explained in the Nestle decision), Section 4A is attracted only when the packages are required by the Standards of Weights and Measures Rules to declare the MRP. Where there is no statutory requirement to print MRP on the specific package because the goods are not intended for retail sale (for example, promotional packs or goods supplied for free with another consumer item), the goods are not brought within the restricted field of Section 4A and must be valued under Section 4 on the transaction value. The Tribunal held that the present supplies of toothbrushes fall within the same principle: absence of retail packaging and absence of any obligation to declare MRP disentitle the department from invoking Section 4A, and the transaction value declared by the appellant is the correct basis of assessment. The Tribunal relied on the Supreme Court's reasoning that the requirement under the Weights & Measures regime is the determinative test for attraction of Section 4A and on earlier tribunal decisions following that ratio.

The valuation under Section 4 adopted by the appellant is correct; the impugned demand based on Section 4A (MRP) is set aside and the appeal is allowed.

Final Conclusion: The appeal is allowed: toothbrushes cleared in bulk/combo/naked form for free distribution with toothpaste, and not required to bear MRP under the Standards of Weights and Measures Rules, are to be valued on transaction value under Section 4 and not on MRP under Section 4A; the impugned order demanding differential duty on MRP basis is set aside.

Classification of goods as accessories vis-a -vis parts, components and assemblies - valuation under Section 4 (transactional value) versus Section 4A (MRP/RSP based valuation) - applicability of Notification No. 49/2008-CE (NT) Sr. No. 108 - meaning and scope of "retail package" and "retail sale" under the Legal Metrology (Packaged Commodities) Rules, 2011 - liability for duty on goods removed for job work under delivery challans and proof of clandestine diversion - recovery of cenvat credit on inputs alleged to have been removed without reversal - confiscation of goods where invoices exist but stock/finished goods register irregular

Classification of goods as accessories vis-a -vis parts, components and assemblies - valuation under Section 4 (transactional value) versus Section 4A (MRP/RSP based valuation) - applicability of Notification No. 49/2008-CE (NT) Sr. No. 108 - meaning and scope of "retail package" under the Legal Metrology Rules - Whether the impugned goods are parts/components/assemblies of two wheelers so as to attract valuation under Section 4A read with Sr. No.108 of Notification No.49/2008-CE (NT), or whether they are accessories assessed on transaction value under Section 4. - HELD THAT: - The Tribunal examined the nature and use of the impugned goods (various guards, panels, footrests, bumpers and allied items) and the statutory scheme. It held that the Notification entry at Sr. No.108 (pre amendment) covered only "parts, components and assemblies" and did not include "accessories" until an amendment expressly added the word "accessories". The Tribunal accepted the distinction between "parts" (elements necessary or used in manufacture/functioning of vehicle) and "accessories" (adjuncts or add ons used optionally for convenience or appearance). Evidence on record showed that the two wheelers could function without these items, their affixation was optional at dealer/consumer choice, and the goods were cleared in bulk packs to industrial buyers who repack and affix MRP subsequently. Further, the Legal Metrology rules define "retail package" and "retail sale" and show that goods intended for wholesale/bulk supply to industrial customers are not retail packages triggering declaration of RSP. Given these findings and the fact that prior to the 2016 amendment accessories were not part of Sr. No.108, the Tribunal concluded that the impugned items are accessories and were not liable to valuation on MRP under Section 4A/Notification No.49/2008. The Tribunal therefore upheld assessment on transactional value under Section 4. [Paras 12, 13, 14, 15, 16]

The impugned goods are accessories (not parts/components/assemblies) and, being supplied in wholesale packages to industrial buyers and not retail packages, are not liable to valuation under Section 4A/Notification No.49/2008-CE (NT); assessment under Section 4 on transactional value is correct.

Liability for duty on goods removed for job work under delivery challans and proof of clandestine diversion - Whether demands based on alleged clandestine removal of goods sent to job workers on delivery challans (and not received back) are sustainable. - HELD THAT: - The Tribunal found that it was an undisputed fact that semi finished goods/inputs were sent to job workers under delivery challans and that the appellant produced invoices showing clearance of finished goods after job work. The show cause notice and adjudicating order relied on incomplete challans and suspicions (ice factory as job worker, related party job worker, ledger entries) but did not produce independent corroborative evidence of diversion, any buyer of the purportedly diverted goods, statements of job workers, or proof of non receipt/shortfall in stocks. The Tribunal observed that allegations of clandestine removal require investigation and proof and cannot be sustained on the basis of incomplete challans or record lacunae alone. No discrepancy in stocks or destination evidence was established. [Paras 17, 18]

Demands premised on clandestine removal of goods sent for job work are not sustainable for want of corroborative evidence; the confirmed demand is set aside.

Recovery of cenvat credit on inputs alleged to have been removed without reversal - Whether the demand of cenvat credit reversal/recovery in respect of inputs allegedly removed on delivery challan for job work is sustainable. - HELD THAT: - The Tribunal noted that the inputs and semi finished goods removed for job work were sent on a returnable basis under delivery challans and were returned and accounted for before final clearance to buyers. The appellant relied on the mechanism under the Cenvat Credit Rules for reversal where inputs removed as such are not returned. The adjudicating authority based the demand on the assertion that inputs were cleared without reversal, but did not demonstrate diversion or non return. In absence of evidence showing that inputs were not returned or that credit was misused, the demand could not be sustained. [Paras 6, 17, 18]

The demand for recovery of cenvat credit on inputs removed for job work is not sustainable.

Confiscation of goods where invoices exist but stock/finished goods register irregular - Whether confiscation of goods (and duty demand) in respect of goods covered by invoices but not found accounted in finished goods register is sustainable. - HELD THAT: - The Tribunal observed that at the time of visit invoices for the goods (invoice nos. 55 and 56) had been prepared and there was no allegation of duplicate invoices or intent to evade duty. The only irregularity was non maintenance/updating of the finished goods register. The Tribunal held that irregular maintenance of records, without evidence of intent to evade duty or of clandestine removal, cannot justify confiscation. Further, since the Tribunal held valuation under Section 4 to be correct, confiscation premised on non assessment under Section 4A was also unsustainable. [Paras 7, 18, 19]

Confiscation of the goods and the incidental duty demand are not sustainable; goods are not liable to confiscation where invoices exist and no proof of evasion is shown.

Final Conclusion: The Tribunal allowed the appellant's appeal and dismissed the Revenue's appeal: the impugned items are accessories (not parts/components/assemblies) and are to be assessed on transaction value under Section 4, not on MRP under Section 4A/Notification No.49/2008 (Sr. No.108 as then worded); demands based on alleged clandestine removal, recovery of cenvat credit and confiscation were held unsustainable for lack of corroborative evidence, and the confirmed demands and confiscation were set aside.

Exemption under General Exemption Notification No. 06/2006-C.E. - requirement of supply against International Competitive Bidding - exemption condition that goods be exempt from customs duty when imported - applicability of conditions of a Customs Notification to domestic manufacturers - inapplicability of Condition No. 29 of Customs Notification to indigenous supplies

Exemption under General Exemption Notification No. 06/2006-C.E. - requirement of supply against International Competitive Bidding - exemption condition that goods be exempt from customs duty when imported - inapplicability of Condition No. 29 of Customs Notification to indigenous supplies - Whether the appellant is entitled to excise exemption under Notification No. 06/2006-C.E. for indigenously manufactured goods supplied against international competitive bidding when those goods are exempt from customs duty if imported into India - HELD THAT: - The Tribunal analysed the Excise Notification which imposes two operative conditions: supply against international competitive bidding and that the goods be exempt from customs duty leviable when imported. The supplies in question were made against international competitive bidding and the goods are admittedly covered by the Customs Notification exempting them when imported. The Tribunal held that Notification No. 06/2006-C.E. requires only that the goods be exempt from customs duty when imported and does not incorporate, by reference, the detailed import-specific stipulations contained in Condition No. 29 of the Customs Notification. Condition No. 29 imposes requirements aimed at importers and, on its plain reading, applies to imported goods; those import-specific conditions are not applicable mutatis mutandis to domestic manufacturers supplying indigenously produced goods. The Tribunal followed its earlier decision in Kent Intro Pvt. Ltd. (upheld by the Bombay High Court) and other precedents, and rejected the Revenue's contention that all conditions of the Customs Notification must be separately satisfied by domestic suppliers. Since both conditions of the Excise Notification (ICB supply and exemption from customs duty if imported) were satisfied on the material before the Tribunal, the appellant was held entitled to the excise exemption. [Paras 5, 6, 7]

Impugned order set aside; appeal allowed and exemption under Notification No. 06/2006-C.E. granted to the appellant for the supplies in question.

Final Conclusion: The Tribunal allowed the appeal, holding that where supplies are against international competitive bidding and the goods are exempt from customs duty if imported, the excise exemption under Notification No. 06/2006-C.E. applies to indigenously manufactured goods and import-specific conditions in the Customs Notification (Condition No. 29) are not applicable to domestic suppliers.

Place of removal - Transfer of ownership under the Sale of Goods Act - Eligibility of CENVAT credit on outward transportation (GTA services) - Transactional value and includibility of freight - Re-adjudication / remand for fresh adjudication - Board Circular dated 08.06.2018

Place of removal - Transfer of ownership under the Sale of Goods Act - Eligibility of CENVAT credit on outward transportation (GTA services) - Transactional value and includibility of freight - Board Circular dated 08.06.2018 - Whether the denial of CENVAT credit on GTA services is sustainable or requires fresh adjudication to determine place of removal and transfer of ownership - HELD THAT: - The Tribunal declined to decide the entitlement to CENVAT credit on the merits and held that the adjudicating authority must first ascertain, on the facts and documents, whether the contract/purchase orders established delivery and transfer of ownership at the buyer's premises (place of removal) or at the factory gate. The Bench applied the principles laid down in M/s. Roofit Industries Ltd. regarding determination of place of removal and transfer of ownership under the Sale of Goods Act, and noted the scope of Ultra Tech Cement Ltd. concerning eligibility of credit for outward transportation to the buyer's premises. In view of those authorities and Board Circular dated 08.06.2018, the Tribunal concluded that the adjudicating authority must re-examine the nature of the agreement/contract, terms of payment, purchase orders, freight and insurance arrangements and other relevant materials to determine when ownership passed and whether freight/transport cost is includible or the GTA credit is admissible. Consequently, the impugned orders were set aside and the matters remanded for de novo adjudication, with all contentions left open for reconsideration. [Paras 9, 10]

Impugned orders set aside and matter remanded to the adjudicating authority for de novo adjudication to determine place of removal, transfer of ownership and consequent eligibility of CENVAT credit; all contentions left open.

Final Conclusion: The appeals are allowed by way of remand: the impugned orders are set aside and the matters are remitted to the adjudicating authority for fresh adjudication on the issues of place of removal, transfer of ownership and entitlement to CENVAT credit on GTA services in the light of the cited Supreme Court decisions and the Board Circular.

Cenvat credit admissibility on structural components - Capital goods as including components, spares and accessories - User test for identifying capital goods - Relevance of Chartered Engineer's certificate in determining technical integration - Classification of structural staging as part of machinery - Administrative circulars clarifying admissibility of credit on structural supports

Cenvat credit admissibility on structural components - User test for identifying capital goods - Capital goods as including components, spares and accessories - Whether Cenvat credit was admissible on the purchased staging/structural items used in the sugar mill - HELD THAT: - Applying the user test as expounded by the Supreme Court, the Tribunal found that the structural steel items and staging were not mere generic support structures but were integrated with the sugar machinery so as to make the equipment function technically. The purchase order and technical specifications showed the structures were procured to modify and complete the plant for the Energy Efficient Expansion. The Chartered Engineer's certificate supported that various machineries are installed at heights and the structural staging is essential for functioning, access, maintenance and condensate transfer-without which the plant would be incomplete. As the definition of capital goods in the Cenvat Credit Rules expressly includes components, spares and accessories of specified goods, the impugned structural items fall within the ambit of capital goods. Consequently, Cenvat credit was held to be allowable on those items. [Paras 9, 10]

Cenvat credit allowed on the staging/structural items as they qualify as components/accessories of capital goods under the user test.

Relevance of Chartered Engineer's certificate in determining technical integration - Classification of structural staging as part of machinery - Whether the Chartered Engineer's certificate and technical specifications were material to distinguish the present facts from the Vandna Global decision - HELD THAT: - The Tribunal held that the adjudicating authorities below erred in ignoring the Chartered Engineer's certificate, which was pivotal to apply the user test and to demonstrate that the staging formed an integral part of the machinery. On the facts, the structural components were shown to be technologically necessary for the machines to operate, distinguishing the present case from Vandna Global where supporting structures were treated differently. The Tribunal therefore relied on the technical certification and factual matrix to reach its conclusion. [Paras 6, 8, 12]

Chartered Engineer's certificate and technical specifications were material and their disregard by lower authorities was erroneous; the present facts distinguish Vandna Global.

Administrative circulars clarifying admissibility of credit on structural supports - Cenvat credit admissibility on structural components - Whether the Department's circulars support admissibility of Cenvat credit for the impugned structural components - HELD THAT: - The Tribunal noted Circular No. 964/07/2012 and Circular No. 966/2009 which clarify that structural components used for laying foundation or making structural support may be treated as accessories/components of machinery where the machine cannot work without such support, thereby entitling the manufacturer to Cenvat credit. These administrative clarifications reinforced the conclusion reached by applying the user test and the technical evidence in the record. [Paras 11]

Departmental circulars support the allowance of Cenvat credit on the structural components in the present case.

Distinguishing precedent and reliance on later High Court decision - Whether reliance on the Larger Bench decision in Vandna Global was binding in the facts of this case - HELD THAT: - The Tribunal observed that the Larger Bench decision was distinguishable on facts and that the Chhattisgarh High Court in Vandna Global vs. CCE had set aside the Larger Bench view. Although an appeal to the Supreme Court by the Department was pending, there was no stay on the High Court decision; accordingly, the Tribunal treated the High Court ruling and the present factual matrix as determinative and set aside the orders of the lower authorities. [Paras 4, 12, 13]

Lower authorities' reliance on Vandna Global was incorrect on the facts; in light of the High Court decision and absence of any stay, the Tribunal set aside the impugned orders.

Final Conclusion: The Tribunal allowed the appeal, holding that the purchased staging/structural items qualified as components/accessories of capital goods under the user test and relevant Cenvat provisions; the Chartered Engineer's certificate and departmental circulars supported admissibility of Cenvat credit for the period July, 2011 to October, 2011, and the orders of the adjudicating authorities were set aside.

Pre-deposit under Section 62(5) of the Punjab Value Added Tax Act, 2005 - entertainment of appeal conditional on compliance with pre-deposit requirement - dismissal of appeal for non-compliance with statutory pre-deposit condition

Pre-deposit under Section 62(5) of the Punjab Value Added Tax Act, 2005 - dismissal of appeal for non-compliance with statutory pre-deposit condition - partial protection by first appellate authority by prescribing 25% pre-deposit - Validity of the Tribunal's order dismissing the appeal for non-compliance with the requirement to deposit 25% of the additional tax demand as a precondition for hearing the appeal. - HELD THAT: - The Assessing Authority raised a demand for the assessment year 2008-09 and the appellant sought appellate relief before the first Appellate Authority along with an application for waiver of the statutory pre-deposit required under Section 62(5) of the Act. The first Appellate Authority directed deposit of 25% of the additional demand as a condition for admission of the appeal and, on non-compliance, dismissed the appeal. The Tribunal affirmed dismissal but granted two months' time to make the 25% pre-deposit, observing that entertaining an appeal is conditional on compliance with Section 62(5) and that the first Appellate Authority had already provided partial protection by fixing the pre-deposit at 25%. The High Court found no illegality or perversity in these findings, held that the requirement to make the stipulated pre-deposit before entertaining the appeal was reasonable and justified, and that the Tribunal rightly dismissed the appeal for failure to comply with the statutory pre-deposit condition. [Paras 7, 8, 9]

Tribunal's order upholding dismissal of the appeal for non-compliance with the 25% pre-deposit requirement is sustained; the appeal is dismissed.

Final Conclusion: Appeals dismissed; requirement to make the 25% pre-deposit as directed by the first Appellate Authority and affirmed by the Tribunal was reasonable and its non-compliance justified dismissal of the appeals. Applications for condonation of delay are disposed of as unnecessary in view of the dismissal on merits.

Service of notice at record address - failure to intimate change of address - non-filing of statutory form (Form VAT 112) - classification of turnover as stock transfer - set aside and remand for fresh adjudication - opportunity of personal hearing - deposit as condition for grant of relief - refund where no tax liability is ultimately determined

Service of notice at record address - failure to intimate change of address - non-filing of statutory form (Form VAT 112) - Whether the Assessing Officer erred in sending the show cause notice to the address reflected in records when the petitioner did not file Form VAT 112 or intimate change of address. - HELD THAT: - The Court found that the show cause notice was sent to the previous address but that the Assessing Officer's records reflected that address because the petitioner had not filed Form VAT 112. In those circumstances the Assessing Officer did not commit error in dispatching the show cause notice to the address on record. The petitioner's failure to intimate change of address and to file the statutory form justified the Assessing Officer's communication being sent to the recorded address, and this fact formed the basis for denying fault on the part of the respondents. [Paras 3]

Finding that the Assessing Officer did not err in sending the show cause notice to the address in records; petitioner culpable for not filing Form VAT 112 or intimating change of address.

Classification of turnover as stock transfer - set aside and remand for fresh adjudication - opportunity of personal hearing - deposit as condition for grant of relief - refund where no tax liability is ultimately determined - Validity of the assessment treating claimed exempt turnover as stock transfer under the Central Sales Tax Act and the appropriate remedy. - HELD THAT: - Although the respondents were not found to be at fault in service of notice, the assessment treating the turnover claimed as exempt under the Telangana VAT Act as a stock transfer under the CST Act was set aside. The Court granted the petitioner one opportunity to file a reply to the show cause notice and to the points in the impugned order and directed the Assessing Officer to fix a date for personal hearing and to pass a fresh order after hearing. The Court conditioned its relief on the petitioner having deposited a sum, which was in fact paid; it directed that the deposit shall be dealt with according to the outcome of the fresh assessment and ordered that if ultimately no tax liability is fastened, the deposited amount shall be refunded. [Paras 4, 5]

Impugned order set aside; matter remanded for fresh consideration after petitioner files reply and is heard; deposit to be adjusted according to final outcome and refundable if no tax liability is imposed.

Final Conclusion: Writ petition allowed: impugned assessment order set aside; petitioner permitted to file reply by 13.05.2019, Assessing Officer to hear petitioner and pass fresh orders by 31.05.2019; deposit made pursuant to Court's earlier direction to be adjusted in accordance with the result of the fresh assessment and refunded if no tax liability is finally imposed.

Liability of legal representatives - firm and partner not liable for sole proprietor's arrears - recovery of tax and penalty from legal heirs - withholding of statutory forms pending recovery

Firm and partner not liable for sole proprietor's arrears - liability of legal representatives - Validity of demand notice addressed to the Partnership Firm and one of its partners for penalties assessed against a deceased sole proprietor. - HELD THAT: - The Court found that the legal heirs of the deceased sole proprietor had pursued and litigated the penalty demands and thereby admitted liability as legal representatives. However, the impugned demand notice is addressed to the Partnership Firm and one partner who are not legal heirs of the deceased proprietor. A firm and its partner cannot be fastened with the liability of a sole proprietorship. Consequently the demand notice insofar as it is directed to the Firm and the partner is flawed and must be set aside, while preserving the Department's right to recover from the legal heirs in accordance with law.

Demand notice to the Firm and the partner set aside; Department may recover amounts from the legal heirs of the deceased proprietor.

Liability of legal representatives - recovery of tax and penalty from legal heirs - Whether the legal heirs are liable for the penalties levied on the deceased sole proprietor. - HELD THAT: - The Court noted that the legal heirs (named petitioners in the related Tax Case (Revision) proceedings) had taken upon themselves to defray the arrears by carrying forward litigation and filing revisions specifically contesting penalty. Two undertakings dated 10.09.2009 and 30.09.2009 by the legal heirs to defray pending sales tax arrears corroborate their assumption of liability. Accordingly, the legal heirs are liable and the Department is at liberty to pursue recovery from them in accordance with law.

Legal heirs held liable for the penalties; Department may recover amounts from them.

Withholding of statutory forms - withholding of statutory forms pending recovery - Lawfulness of the Department's refusal to permit the Partnership Firm to download 'C' Forms required to avail concessional tax rate where the Firm has no arrears. - HELD THAT: - Section 43 authorises withholding of statutory forms where a dealer has amounts due under the Act. The Court found that the Firm has no arrears of sales tax, penalty or interest. In light of the finding that the demand notice directed at the Firm and partner is set aside, the Department's refusal to allow the Firm to access and download 'C' Forms was not in accordance with law. The respondent is directed to permit the petitioner to access the Department's website and download the necessary 'C' Forms forthwith.

Department directed to permit the Firm to download 'C' Forms immediately.

Final Conclusion: The demand notice dated 03.01.2019 insofar as addressed to the Partnership Firm and one of its partners is quashed; the Department remains entitled to recover the penalties from the legal heirs of the deceased sole proprietor; and the Department is directed to permit the Firm to download the necessary 'C' Forms without delay.

Admission of additional grounds in appeal - Validity of notice issued under section 17 and assessment under section 16(3) - Revision proceedings under section 25(2) of the Wealth Tax Act - Right to challenge original assessment in revision proceedings - Requirement to record reasons for reopening assessment

Admission of additional grounds in appeal - Admissibility of the assessee's additional ground challenging the legality of the notice issued under section 17 and consequent assessment. - HELD THAT: - The Tribunal found that the additional ground went to the root of the matter by challenging the legality and jurisdictional validity of the original assessment order. The omission to raise the ground in the original memorandum was not shown to be intentional and the ground raised a pure legal/jurisdictional issue not requiring fresh facts. In these circumstances the additional ground was properly admitted for adjudication. [Paras 6]

Application for admission of the additional ground is allowed and the ground is admitted for adjudication.

Right to challenge original assessment in revision proceedings - Revision proceedings under section 25(2) of the Wealth Tax Act - Whether an assessee can challenge the validity of the original order passed under section 16(3) in proceedings under section 25(2). - HELD THAT: - The Tribunal held that an assessee may challenge the validity of the original assessment order in an appeal against an order passed under section 25(2) when that original order is subject to revision. The coordinate-bench precedent in income-tax matters (relying on similarity of provisions) was held to be applicable by analogy to wealth-tax revision, supporting the proposition that jurisdictional or illegality defects in the original order can be contested in revision proceedings. [Paras 11]

The assessee is entitled to challenge the validity of the original assessment order in the appeal against the revision order passed under section 25(2).

Requirement to record reasons for reopening assessment - Validity of notice issued under section 17 and assessment under section 16(3) - Revision proceedings under section 25(2) of the Wealth Tax Act - Validity of the Commissioner's order under section 25(2) where the original assessment under section 16(3) was effected following a notice under section 17 but no reasons for reopening were recorded. - HELD THAT: - On production of records the Department could not produce any reasons recorded for issuing the notice under section 17 which formed the basis for the assessment under section 16(3). The assessment records and order sheet showed no recorded reasons demonstrating escapement of wealth from taxation. Since the revision under section 25(2) proceeded from an original assessment made without the requisite recorded reasons for reopening, the Tribunal found the revision order to be invalid. The absence of reasons recorded for reopening rendered the revisional proceedings defective and the consequent order under section 25(2) liable to be quashed. [Paras 12, 13]

Order passed under section 25(2) is quashed for the relevant assessment years for lack of recorded reasons for reopening; appeals allowed.

Final Conclusion: The Tribunal admitted the additional ground, held that an assessee may challenge the original assessment in appeal against a revision order under section 25(2), and quashed the Commissioner's orders under section 25(2) for Assessment Years 2003-04 to 2006-07 because the original assessments were reopened without recorded reasons; accordingly the appeals are allowed.

Right of advocates to practise before any tribunal or person legally authorised to take evidence - tribunal-requirement of judicial power of the State to decide a lis - administrative powers v. judicial power - principles of natural justice - show cause notice and opportunity to reply - Article 19(1)(g) - protection of right to carry on business - reasoned order and right to make written representation

Tribunal-requirement of judicial power of the State to decide a lis - right of advocates to practise before any tribunal or person legally authorised to take evidence - administrative powers v. judicial power - Whether the in-house Committees under the RBI Revised Circular dated 01.07.2015 are 'tribunals' within the meaning of Section 30 of the Advocates Act and thus attract a right of appearance by advocates. - HELD THAT: - The Court held that for a body to be a 'tribunal' it must be invested with the judicial power of the State to decide a lis, typically conferred by statute or statutory rule. Applying established tests, the in-house Committees under the Revised Circular are administrative fact-finding bodies and are not vested with the State's judicial power. The Circulars do not convert these committees into statutory tribunals nor do they make them persons 'legally authorised to take evidence' by statute or subordinate legislation. Consequently, Section 30 does not confer a right for advocates to appear before these in-house Committees. [Paras 11, 12]

No right under Section 30 of the Advocates Act to appear before the in-house Committees; the Committees are not 'tribunals' or persons legally authorised by statute to take evidence.

Principles of natural justice - show cause notice and opportunity to reply - oral hearing not invariably mandatory - Whether an oral hearing is mandatory under the Revised Circular dated 01.07.2015 before declaring a person a wilful defaulter. - HELD THAT: - The Court observed that natural justice is flexible and that a decision may be validly taken after considering written representations in response to a show cause notice. The Revised Circular permits the First Committee to call for submissions and to give a personal hearing only if it considers it necessary. Given precedent that written opportunity to reply can satisfy natural justice, the Court concluded that an oral hearing is not universally mandatory under the Revised Circular. [Paras 13]

Oral hearing is not mandatorily required in every case; written opportunity to reply to a show cause notice can satisfy principles of natural justice.

Article 19(1)(g) - protection of right to carry on business - reasoned order and right to make written representation - procedural protections in public interest - Whether, notwithstanding the absence of a right to lawyer's appearance before the in-house Committees, any additional procedural protections are required because of the severe consequences of declaring a wilful defaulter. - HELD THAT: - Recognising that classification as a wilful defaulter has immediate and drastic consequences affecting the right to carry on business under Article 19(1)(g), the Court read reasonable procedural safeguards into the Revised Circular. It directed that the First Committee must serve its order on the borrower as soon as it is made; the borrower shall have 15 days to file a written representation (which may address facts and law) to the Review Committee; and the Review Committee must pass a reasoned order on the representation and serve it on the borrower. These steps are adopted as reasonable measures consistent with the earlier Master Circular and in public interest to ensure fairness. [Paras 21]

Although there is no general right to be represented by a lawyer before the in-house Committees, the Revised Circular must be read to require service of the First Committee's order on the borrower, a 15 day period for written representation to the Review Committee, and a reasoned served order by the Review Committee.

Final Conclusion: The impugned judgment is set aside. The Court held that RBI's in house Committees under the Revised Circular are not tribunals under Section 30 of the Advocates Act and there is no general right to legal representation before them; oral hearings are not universally mandatory; however, because classification as a wilful defaulter impairs Article 19(1)(g) rights, the Court read in procedural safeguards requiring service of the First Committee's order, a 15 day window for a full written representation to the Review Committee, and a reasoned, served decision by the Review Committee.

Mechanism for identification of wilful defaulters - Wilful Defaulter Identification Committee - show cause notice - natural justice - opportunity of hearing - premature challenge to administrative action

Natural justice - opportunity of hearing - show cause notice - premature challenge to administrative action - Petitioners were afforded adequate opportunity of hearing before initiation of proceedings and the writ petition is premature. - HELD THAT: - The Court found that the petitioner company had been issued notices in advance and repeatedly invited to appear before the Wilful Defaulter Identification Committee to explain why it should not be declared a wilful defaulter. The record shows that documents were furnished to the petitioner and opportunities for personal hearing were offered (including specific dates notified), but the petitioner repeatedly failed, neglected and avoided appearance. Having regard to those facts, the Court concluded that the petitioners' challenge to the initiation notices was premature and that there was no breach of the obligation to afford a reasonable opportunity of hearing. [Paras 8, 10]

Writ petition dismissed as premature; no interference with the initiation notices on the ground of denial of hearing.

Mechanism for identification of wilful defaulters - Wilful Defaulter Identification Committee - Impugned notices were issued in accordance with the Master Circular and applicable identification mechanism. - HELD THAT: - The Court examined the Master Circular provisions concerning the transparent mechanism for identification of wilful defaulters and noted that the bank's Wilful Defaulter Identification Committee had acted under those guidelines. The Court found that the bank had followed the prescribed procedure by forming the appropriate committee, issuing a show cause notice, furnishing relevant documents and offering personal hearing opportunities. Reliance placed by the petitioners on precedents was held inapplicable on the facts, because in the present case the bank had complied with the formalities while the petitioners failed to avail the opportunities. [Paras 8, 9]

Not persuaded that the notices were contrary to the Master Circular; procedural compliance by the bank established.

Final Conclusion: The writ petition is dismissed as premature and without costs; dismissal does not preclude the petitioner company from attending any future hearing dates fixed by the bank.