TaxTMI Updates e-Newsletter
May 27,2019

Applicability of rate notification amendments - works contract service to government entity - construction for infrastructural development not commercial/business use - remittance to Consolidated Fund of India as government revenue - eligibility for concessional GST rate under the Rate Notification

Works contract service to government entity - construction for infrastructural development not commercial/business use - applicability of rate notification amendments - remittance to Consolidated Fund of India as government revenue - eligibility for concessional GST rate under the Rate Notification - Whether the amendments to Serial No. 3(vi) of Notification No. 11/2017-CT (Rate) are applicable to the appellant's supply of works contract service for construction of the Multi-modal IWT Terminal at Haldia to the Inland Waterways Authority of India (IWAI). - HELD THAT: - The Authority found that IWAI is a government entity. The determinative question was whether the civil structures constructed are meant for commerce, industry or other business or profession. The Authority examined the nature and objective of the project and concluded that the works create infrastructure for commercial utilisation of the national waterway but are undertaken for infrastructural development under the Government of India's "Jal Marg Vikas Project", not for propagating IWAI's commercial or business interests. The Authority relied on the certificate from the Ministry of Shipping confirming that remittances from IWAI are credited to the Consolidated Fund of India, treating such receipts as government revenue rather than business proceeds. On these findings the Authority held that the supply is to a government entity and the original work is for infrastructural development, thereby satisfying the conditions of Serial No. 3(vi)(a) of the Rate Notification. Consequently, the amendments to Serial No. 3(vi) introduced by Notification No. 24/2017-CT (Rate) and Notification No. 31/2017-CT (Rate) apply to the appellant's supply of works contract service for the project at Haldia. [Paras 8, 9, 10]

The amendments to Serial No. 3(vi) of Notification No. 11/2017-CT (Rate) are applicable to the appellant's works contract supply to IWAI for construction of the Multi-modal IWT Terminal at Haldia; the WBAAR order is modified accordingly.

Final Conclusion: The appeal is allowed; the advance ruling is modified to hold that the amendments to Serial No. 3(vi) of the Rate Notification apply to the appellant's supply of works contract service to IWAI for the Haldia multi-modal terminal.

Classification of goods - interpretation of tariff headings and Chapter and Section Notes - made-up textile articles - HSN 5603 - HSN 6305 33 00 - classification under Chapter 39 vs Chapter 63 - rate of tax under Notification No. 1/2017-C.T. (Rate) - advance ruling

Classification of goods - HSN 5603 - HSN 6305 33 00 - interpretation of tariff headings and Chapter and Section Notes - made-up textile articles - classification under Chapter 39 vs Chapter 63 - rate of tax under Notification No. 1/2017-C.T. (Rate) - Classification of polypropylene non-woven bags manufactured from purchased non-woven fabric and applicable GST rate - HELD THAT: - The Appellant procures ready-made non-laminated non-woven fabric sold and invoiced under HSN 5603 in roll form and thereafter folds, ultrasonically seals, cuts and prints the material to produce finished bags. Applying the rules for interpretation of the First Schedule to the Customs Tariff Act, including the Section and Chapter Notes and Explanatory Notes, bags of the kind used for packing of goods made from man-made textile materials fall under Chapter Heading 6305 and, on the facts, the goods correspond to HSN 6305 33 00 (of man-made textile materials: other, of polyethylene or polypropylene strip or the like). The WBAAR's reliance on authorities involving conversion from polypropylene granules and classification under Chapter 39 was inapposite where the Appellant's inputs are already non-woven textile fabric. On that basis the Appellate Authority holds that the bags are made-up textile articles classifiable under HSN 6305 33 00 and not as plastic goods under Sub heading 3923 29, and the applicable rate is to be determined accordingly under the notified GST schedules. [Paras 8, 10, 11, 12, 13]

PP non-woven bags manufactured by the Applicant from non-woven fabric (HSN 5603) are classifiable under HSN 6305 33 00 and taxable at the applicable rate specified in Notification No. 1/2017-C.T. (Rate) (as applied to bags of value not exceeding Rs. 1,000 per piece in the decision).

Final Conclusion: The Advance Ruling No. 31/WBAAR/2018-19 dated 08.01.2019 is modified: PP non-woven bags produced from procured non-woven fabric are classifiable under HSN 6305 33 00 and attract the GST rate as held by the Appellate Authority; the appeal is disposed of accordingly.

Integrated tax on imports - crossing the customs frontier - inter-State supply - point of levy under IGST proviso - export of goods - zero rated supply and refund of input tax credit - customs warehouse and warehoused goods

Crossing the customs frontier - inter-State supply - integrated tax on imports - Supply of imported goods to and from duty free shops (DFS) situated within the customs area are not subject to IGST as supplies liable to CGST and SGST. - HELD THAT: - The Court construed Section 7(2) of the IGST Act together with the Customs Act definitions to hold that goods kept in a customs port, customs airport or customs warehouse remain within the customs area and do not 'cross the customs frontier'. Supplies of imported goods to and from DFS located within the customs area therefore qualify as inter State supplies under Section 7(2) only for characterisation, but, in view of the timing rules under the proviso to Section 5(1) read with the Customs Act, they do not attract IGST at the DFS stage. The Court relied on the statutory scheme and precedent holding that the taxable event for customs (and hence for the IGST levy on imports under the proviso) occurs when goods are cleared for home consumption (bill of entry filed) and not while they remain in customs custody or warehouse, and concluded that neither customs duty nor IGST is payable by the DFS on such supplies. (See paras. 9, 11, 12, 15, 16, 18.) [Paras 11, 12, 15, 16, 18]

No IGST is payable on supplies to or from DFS located within the customs area at the time of those supplies.

Point of levy under IGST proviso - customs warehouse and warehoused goods - The point in time for levy and collection of integrated tax on imported goods is when customs duties are levied upon clearance for home consumption; earlier custody in warehouse/DFS does not trigger IGST. - HELD THAT: - Interpreting the proviso to Section 5(1) of the IGST Act with Section 3(7) of the Customs Tariff Act and Section 12 of the Customs Act, the Court held that IGST on imported goods is to be levied 'at the point' when duties of customs are levied, which occurs upon clearance for home consumption (filing of bill of entry). Reliance was placed on apex decisions that treat the taxable event for customs duty as the crossing of customs barriers and completion of import when goods become part of the mass of goods in the country; warehoused goods exported or sold from DFS before clearance for home consumption therefore do not give rise to customs duty or IGST at that stage. (See paras. 10, 11, 12, 13, 14, 15.) [Paras 11, 12, 13, 14, 15]

IGST on imported goods is leviable only at the customs clearance for home consumption; the earlier custody in customs warehouse/DFS does not trigger IGST.

Export of goods - zero rated supply and refund of input tax credit - Sales from DFS at international departure terminals constitute exports of goods under customs and GST law and are zero rated, permitting refund of accumulated unutilised input tax credit to the DFS operator. - HELD THAT: - The Court observed that the statutory definition of 'export of goods' in the IGST Act mirrors the Customs Act and that goods supplied at departure DFS are sold under customs supervision from warehoused stock and are cleared for export under the shipping bill mechanism (the invoice being deemed a shipping bill). The departing international passenger acts as carrier of goods out of India; accordingly the sale is in substance a taking out of India and hence an export. As exports are zero rated supplies under Section 16 of the IGST Act, a registered person making such supplies is entitled to claim refund of unutilised input tax credit. The Court noted supporting statutory provisions, public notices and precedents recognising DFS sales as export oriented transactions. (See paras. 19, 21, 22, 23, 24, 25, 26, 27.) [Paras 23, 24, 25, 26, 27]

Sales from departure terminal DFS are exports and zero rated under GST; the DFS operator is entitled to refund of unutilised input tax credit.

Final Conclusion: The petition challenging the GST treatment of duty free shop operations at Lucknow Airport is dismissed: supplies to and from DFS within the customs area do not attract IGST at the DFS stage because IGST on imports is leviable only upon customs clearance for home consumption, and sales at departure DFS qualify as exports (zero rated) entitling the DFS operator to refund of unutilised input tax credit.

Deemed registration under Rule 9(5) - verification and approval under Rule 9 - communication/notice for defective application - legal fiction of deeming - requirement of authorization to deal in lotteries not prescribed by GST Rules - judicial review of irrelevant considerations

Deemed registration under Rule 9(5) - communication/notice for defective application - legal fiction of deeming - Deeming provision in Rule 9(5) does not entitle the petitioner to registration where the proper officer had taken steps within the prescribed period to intimate defects, even if the applicant did not actually receive the communication due to a technical snag. - HELD THAT: - Rule 9 requires the officer to take specified steps within three working days to examine an application and, if defective, issue notice. The deeming fiction created by Rule 9(5) is to be strictly construed. Where the record shows an attempt by the officer to generate a response pointing out defects within the prescribed time, the deeming protection does not operate merely because the communication failed to reach the applicant due to technical difficulties beyond the Department's control. The determinative requirement is that the officer has taken the requisite steps within the timeframe, not the applicant's receipt of the notice. [Paras 6]

No deemed registration under Rule 9(5) arises on the facts; the petitioner is not entitled to registration on that ground.

Requirement of authorization to deal in lotteries not prescribed by GST Rules - judicial review of irrelevant considerations - The rejection reason demanding production of authorization under various lottery statutes (reason No.2) is beyond the scope of the GST Act/Rules and is set aside as an irrelevant consideration. - HELD THAT: - The officer cannot insist on documents or authorisations that are not mandated by the GST Act or the Rules for processing registration. The impugned reason requiring proof of authorization under the Lotteries (Regulation) Act/Rules and Kerala lottery rules is not a requirement under the GST registration provisions and thus is extraneous to the statutory scheme. The Court, exercising supervisory jurisdiction, has struck down that portion of the rejection as irrelevant to the statutory test for registration. [Paras 8]

Reason No.2 in the rejection order is set aside as being beyond the GST Act/Rules.

Verification and approval under Rule 9 - communication/notice for defective application - The matter is directed to be reconsidered afresh by the proper officer after the petitioner files a fresh application, excluding the disallowed reasoning in the earlier rejection. - HELD THAT: - Because the earlier rejection contains an irrelevant ground which would impede the petitioner, the Court ordered that the previous rejection shall not stand in the way of filing a fresh application. On such fresh application the authority must examine and decide in accordance with the GST Act and Rules, de hors the reasons struck down by the Court. This is a direction for fresh consideration rather than a mandamus to grant registration. [Paras 8]

The petition is disposed directing fresh application and reconsideration excluding the invalid reasons; the earlier rejection will not preclude the petitioner from reapplying.

Final Conclusion: Deemed registration under Rule 9(5) was not attracted because the officer had taken the requisite steps within time; reason No.2 in the rejection-demanding lottery authorisation-is beyond the GST Rules and is set aside; the petitioner may file a fresh application and the authority shall reconsider it afresh in accordance with the GST Act and Rules, uninfluenced by the invalid ground in the earlier rejection.

Anti-profiteering - benefit of input tax credit - reduction in rate of tax - pre-GST price history - effective tax rate calculation - provisions of Section 171 of the CGST Act, 2017 - applicability of anti-profiteering to projects launched post-GST

Benefit of input tax credit - pre-GST price history - applicability of anti-profiteering to projects launched post-GST - There was no increased benefit of ITC w.e.f. 01.07.2017 available for comparison because the project was launched after implementation of GST. - HELD THAT: - The Authority found on the documentary record that the project 'Habitat-78' was launched and registered after GST came into effect and that the buyer's agreement and allotment occurred post-GST. There was no sale, booking or price history in the pre-GST regime and construction and procurement of materials commenced after GST implementation. In the absence of any pre-GST input tax accumulation or pre-GST base price for the units, there was no comparative ITC benefit that could be shown to have been retained by the Respondent and thus no increased ITC benefit arose to be passed on. [Paras 10, 14, 15]

No increased benefit of ITC w.e.f. 01.07.2017; anti-profiteering provisions based on ITC benefit are not attracted where there is no pre-GST price/ITC history.

Reduction in rate of tax - effective tax rate calculation - There was a reduction in the effective rate of tax to 8% w.e.f. 25.01.2018 and the Respondent applied the reduced rate. - HELD THAT: - The Authority noted the statutory reduction of the effective GST rate for affordable housing from 12% to 8% w.e.f. 25.01.2018 and examined the demand letter relied upon by the Applicant. The demand letter showed that the Respondent computed tax by applying 12% to a taxable value equal to two-thirds of the total instalment, which produced an effective tax incidence of 8% on the total instalment. On this basis the Authority concluded that the Respondent had reduced the effective rate from 12% to 8% in accordance with the Notification dated 25.01.2018. [Paras 13, 16]

Reduction in the effective rate to 8% w.e.f. 25.01.2018 was given effect to by the Respondent.

Provisions of Section 171 of the CGST Act, 2017 - anti-profiteering - There was no contravention of Section 171 of the CGST Act, 2017 by the Respondent; the complaint is without merit. - HELD THAT: - Applying the findings that the project had no pre-GST price history or accumulated ITC to be compared, and that the effective tax rate reduction was applied, the Authority held that the essential preconditions for invoking Section 171 (i.e., a demonstrable benefit from ITC or tax-rate reduction retained by the supplier) were not satisfied. Consequently, the Respondent could not be held to have violated anti-profiteering obligations. [Paras 16, 17]

No violation of Section 171; the application is dismissed.

Final Conclusion: The Authority dismissed the complaint finding that the project was launched post-GST with no pre-GST price/ITC history and that the reduced effective GST rate was applied; accordingly Section 171 was not attracted and the proceedings are dismissed.

Prohibition order - detention of goods - natural justice - enquiry into ownership and liability to tax - release of detained goods - service of summons - expeditious disposal - registered dealer under GST

Prohibition order - detention of goods - enquiry into ownership and liability to tax - release of detained goods - expeditious disposal - Enquiry into detained goods shall be completed expeditiously and release orders passed in accordance with law. - HELD THAT: - The Court noted that respondent No. 2 has initiated enquiry to ascertain genuineness of ownership and tax liability in respect of goods stored in the appellant's cold storage, and that some release orders have already been passed during the enquiry. Considering that the appellant operates as a cold storage facility for multiple traders and is a registered dealer under the relevant GST enactments, the Court directed that the pending enquiry be concluded without delay so that entitlement to release can be determined. In the exercise of supervisory jurisdiction the Court fixed a timeline to prevent prolonged detention of perishable and third party goods and to protect the appellant's legitimate business interests while permitting the revenue to investigate ownership and tax liability. [Paras 7]

Respondent No. 2 to conclude the enquiry and pass orders releasing or otherwise dealing with the goods in accordance with law, expeditely and in any event within two weeks from receipt of certified copy of the order.

Service of summons - natural justice - registered dealer under GST - Unserved persons/dealers must be served and the petitioner must cooperate in effecting service so that they may prove ownership; appropriate action thereafter to be taken by respondent No. 2. - HELD THAT: - The Court observed that certain persons who had stored goods were not yet served with summons and that addresses were available with the petitioner. To secure compliance with principles of natural justice and to enable those persons to come forward with documents establishing ownership, the Court directed respondent No. 2 to initiate necessary action for service of summons on unserved persons/dealers. The petitioner was directed to cooperate in effecting such service. Once served, respondent No. 2 must consider any documents produced and act in accordance with law during the expedited enquiry. [Paras 8]

Respondent No. 2 to initiate service on unserved persons/dealers and the petitioner to cooperate; thereupon respondent No. 2 shall take further action in accordance with law as part of the expedited enquiry.

Final Conclusion: Writ petition disposed of with directions that respondent No. 2 conclude the enquiry and pass orders releasing or otherwise dealing with the detained goods within two weeks of receipt of certified copy of this order, and that respondent No. 2 effect service on unserved persons/dealers with the petitioner's cooperation so that further action may follow in accordance with law.

Passage of benefit of input tax credit - Obligation under Section 171(1) of the CGST Act to pass on reduction in rate or ITC - Comparison of ITC benefit - pre GST v. post GST - Treatment of construction supply and provisional ITC on unsold units under Schedule II/III and Section 17

Obligation under Section 171(1) of the CGST Act to pass on reduction in rate or ITC - Comparison of ITC benefit - pre GST v. post GST - Whether the respondent violated Section 171(1) of the CGST Act, 2017 by not passing on the benefit of input tax credit to recipients. - HELD THAT: - The Authority examined both limbs of Section 171(1): reduction in rate of tax and benefit of input tax credit. From the DGAP's reconciliation (Table B) the ratio of input tax credit to taxable turnover in the pre GST period (April, 2016 to June, 2017) was 7.56% and in the post GST period (July, 2017 to August, 2018) was 7.09%. There was therefore no additional net benefit of ITC post GST; indeed ITC as a percentage of turnover decreased. The DGAP also found the effective tax rate had risen from 8.02% (pre GST) to 12% (post GST), so no reduction in tax rate arose. In consequence the statutory trigger in Section 171(1) for requiring a commensurate reduction in price did not arise. The Authority further noted the applicants' own communications accepting the DGAP report and agreeing that no excess ITC benefit accrued to them. The Authority also recorded that ITC attributable to unsold/provisional units may require reversal under Schedule II/III and Section 17 principles, but that such provisional ITC on unsold units lay outside the requirement to pass on benefit in this matter. [Paras 15, 16]

No contravention of Section 171(1) was established as there was neither a reduction in tax rate nor an additional ITC benefit post GST.

Passage of benefit of input tax credit - Remedial quantification under Section 171(1) - Quantum of profiteering (wherever applicable). - HELD THAT: - Having found that the conditions mandating passing on of benefit under Section 171(1) were not satisfied (no additional ITC benefit and no reduction in rate), the Authority did not make any positive determination of profiteering or quantify any amount. Accordingly, no quantum was computed or directed to be returned to recipients. [Paras 15, 17]

Not applicable - no profiteering found and hence no quantification.

Final Conclusion: The applications alleging failure to pass on benefit of input tax credit were dismissed: the DGAP's reconciliation showed no additional ITC benefit post GST and the effective tax rate increased, so Section 171(1) CGST was not attracted; applicants accepted the DGAP report and no profiteering or quantification was ordered.

Change in method of accounting - revenue recognition - mercantile system of accounting - accrual of insurance agency commission - Accounting Standard-9 (AS-9) - rendering of services - taxability in year of accrual versus year of receipt

Change in method of accounting - revenue recognition - Accounting Standard-9 (AS-9) - rendering of services - mercantile system of accounting - accrual of insurance agency commission - Whether the deletion of the addition made by the Assessing Officer on account of change in method of accounting for insurance agency commission was erroneous. - HELD THAT: - The Assessing Officer made an addition treating commission as taxable on accrual because, in his view, the right to commission arose on effective commencement or renewal of policies. The assessee's auditor's report disclosed a revenue recognition policy linking commission to the payment of premium by the policyholder and stated that the company had re evaluated its policy to recognise commission on receipt of premium. AS 9 provides that insurance agency commissions should be recognised on the effective commencement or renewal dates of related policies. The CIT(A) accepted the assessee's explanation and directed the AO to verify, by random checks if necessary, whether premiums in respect of the entries aggregating the disputed amount were paid in the relevant or subsequent periods, giving the assessee opportunity to produce supporting evidence. The ITAT concurred, observing that the assessee consistently followed the mercantile system of accounting in subsequent years and that commission not actually earned in the year under assessment could not be taxed in that year. The High Court found no substantial question of law arising for its consideration and upheld the concurrent outcome that the addition could not be sustained without the AO's verification as directed by the CIT(A) and accepted by the ITAT. [Paras 6, 7, 8, 10]

The deletion of the addition was upheld and the Revenue's appeal dismissed.

Final Conclusion: The High Court dismissed the Revenue's appeal against the ITAT order for AY 2010-11, finding no substantial question of law and upholding the deletion of the addition made for change in method of accounting with directions for verification as ordered by the lower authorities.

Disallowance on account of change in profit sharing percentage - acceptance of assessee's explanation by appellate authorities - evaluation of commercial exigency to justify variation in contractual profit share - appellate fact finding and absence of substantial question of law

Disallowance on account of change in profit sharing percentage - acceptance of assessee's explanation by appellate authorities - evaluation of commercial exigency to justify variation in contractual profit share - Deletion of the disallowance made by the Assessing Officer consequent to the reduction in profit sharing percentage from 10% to 8% in favour of M/s Devki Devi Foundation. - HELD THAT: - The Revenue challenged the Tribunal's deletion of the disallowance imposed by the AO on the ground that the profit sharing percentage in the agreement had been reduced from 10% to 8%. The High Court noted that the AO had rejected the assessee's explanation, but the Commissioner of Income Tax (Appeals) and the ITAT examined the agreement and accepted the assessee's explanation that, due to business exigencies, the profit sharing percentage was reduced. The impugned order of the ITAT discusses relevant clauses of the agreement and found the explanation believable. The High Court concluded that the points urged by the Revenue amount to factual disputes about the correctness of the appellate fact finding, and do not raise any substantial question of law warranting interference. [Paras 3, 4, 5, 6]

Appeals dismissed; the Tribunal's deletion of the disallowance upheld on the basis that the appellate authorities' acceptance of the assessee's factual explanation was plausible and raised no substantial question of law.

Final Conclusion: The High Court dismissed the Revenue's appeals and upheld the ITAT's deletion of the disallowance, holding that the matter concerned appellate factual findings-acceptance of the assessee's explanation for reducing the profit sharing percentage-and did not present any substantial question of law.

Additions under Section 69B/69C for unexplained stock - undisclosed income brought to tax by unexplained investments/expenses - survey under Section 133A and admissions recorded under Section 131 - allegation of double taxation by separate addition despite inclusion in books

Additions under Section 69B/69C for unexplained stock - survey under Section 133A and admissions recorded under Section 131 - Whether the addition of the value of excess stock as undisclosed income was justified despite the assessee having recorded the excess in its stock register and having reported related sales. - HELD THAT: - The Court accepted the concurrent factual findings of the authorities below that during a survey under Section 133A an admission was made and surplus stock was found which had been entered in the stock register but without corresponding entries in the financial books. The Tribunal and lower authorities held that stock cannot appear from vacuum and, absent explanation of its source or corresponding debit in the financial accounts, the surplus must be treated as arising from an unexplained source and therefore taxable as undisclosed income under the provisions dealing with unexplained investments/expenses. The High Court observed that the suite of provisions (Sections 69, 69A, 69B, 69C and 69D) is intended to bring unexplained investments, expenses or stocks to tax and that there is no legal basis for allowing a corresponding deduction in respect of such additions simply because the stock figure was reflected in the stock register or because sales were reported; permitting the assessee to create new verifiable purchases after detection at survey is not permissible. The Court also noted that even if the wrong statutory heading was cited below, that mislabeling did not vitiate the addition on facts. Applying these principles, the Court found no perversity or illegality in upholding the addition. [Paras 6, 8, 9, 10, 11]

The addition of the excess stock as undisclosed income under the provisions relating to unexplained investments/expenses was upheld and did not give rise to a substantial question of law.

Allegation of double taxation by separate addition despite inclusion in books - remand for verification of inclusion of excess stock in closing stock - Whether the case required remand to verify that the excess stock had been included in the assessee's closing stock such that a separate addition would amount to double taxation. - HELD THAT: - The Court considered the Ahmedabad Bench decision relied on by the assessee, which remitted a matter for the AO to verify whether the excess stock had been included in closing stock without corresponding expenditure (and thus whether separate addition would be duplicative). The High Court found that on the facts of the present case the authorities below had contemporaneous findings-including the assessee's inability to explain source and absence of corresponding entries in financial books-justifying the addition. The Court held that the mere fact of inclusion in a stock register, without corresponding verifiable purchases or entries in financial books, does not establish that the amount has already been taxed so as to create double taxation; consequently, no remand was required and the Tribunal's dismissal was sustained. [Paras 4, 6, 10, 11]

No remand was necessary; the plea of double taxation was rejected and the Tribunal's order upholding the addition was affirmed.

Final Conclusion: The appeal is dismissed. The concurrent factual findings that unexplained surplus stock discovered at survey, admitted by the assessee and not supported by corresponding financial entries, properly warranted addition as undisclosed income under the provisions dealing with unexplained investments/expenses; no substantial question of law arises and no remand is required.

Deduction under Section 80HHC - computation of export profits by apportionment on turnover - application of Section 80AB to Chapter VI-A deductions - turnover for apportionment includes total business turnover - treatment of expenditure under Section 35(1)(ii) vis-a -vis Section 80GGA

Deduction under Section 80HHC - computation of export profits by apportionment on turnover - application of Section 80AB to Chapter VI-A deductions - turnover for apportionment includes total business turnover - Whether, for computing the deduction under Section 80HHC in the case of a composite business, export profits must be determined by reference to the export turnover as proportion of the total turnover of the entire business rather than by considering only the turnover of the exporting units. - HELD THAT: - The Court followed the ratio of the Supreme Court in Ipca Laboratory Ltd. and held that Section 80HHC(3)(a) requires the profits derived from exports to be determined by the proportion which export turnover bears to the total turnover of the business carried on by the assessee. Section 80AB, having an overriding effect within Chapter VI-A, mandates that the amount of income of the nature specified be computed in accordance with the Act before allowing deductions; consequently incomes and losses of all units must be clubbed for computing profits. The formula in Section 80HHC(3) therefore contemplates the total turnover of the assessee (including domestic turnover) in the denominator so as to arrive at the proportion of export profit eligible for deduction. The court rejected the contention that only the turnover of exporting units should be used, and declined to entertain for the first time on appeal the separate argument that commission income from a fuel-selling agency should be excluded from turnover because that point was not raised below. [Paras 10, 11, 12]

The deduction under Section 80HHC must be computed by apportioning export profits using export turnover divided by the total turnover of the entire business; the appeal on this point is dismissed.

Treatment of expenditure under Section 35(1)(ii) vis-a -vis Section 80GGA - application of Section 80AB to Chapter VI-A deductions - Whether expenditure claimed as business deduction under Section 35(1)(ii) (contribution to an approved scientific research institution) can be recharacterised as a donation under Section 80GGA so as to exclude it from business profits before computing deduction under Section 80HHC. - HELD THAT: - The court held that where the assessee carries on business and has treated the contribution as a business expenditure under Section 35(1)(ii), it cannot be converted into a deduction under Chapter VI-A (Section 80GGA) for the purpose of increasing profits eligible for Section 80HHC. Section 80AB requires computation of the amount of income in accordance with the Act before allowing deductions; the assessee's change of stance was impermissible. Consequently the contribution must remain within the computation of business profits and cannot be excluded as a Chapter VI-A donation to enlarge the quantum of export profits eligible for Section 80HHC relief. [Paras 11, 13, 14]

The asserted recharacterisation is not permitted; the expenditure under Section 35(1)(ii) remains part of business profits and cannot be claimed as a Section 80GGA deduction to augment Section 80HHC relief.

Final Conclusion: Both questions were answered against the assessee: (i) export-profit apportionment under Section 80HHC is to be computed with export turnover as a proportion of the total business turnover; and (ii) contribution treated as business expenditure under Section 35(1)(ii) cannot be reclassified as a Section 80GGA donation to exclude it from business profits. The appeals are dismissed.

Deduction u/s 80IA - inextricably linked nexus between sale of goods and qualifying services - examination of contracts to determine primary purpose - remand for fresh adjudication - opportunity of being heard before reassessment

Deduction u/s 80IA - inextricably linked nexus between sale of goods and qualifying services - examination of contracts to determine primary purpose - Whether receipts from sale of V-SAT equipments are eligible for deduction under section 80IA or are to be excluded as income from sale of goods - HELD THAT: - The Tribunal, following the ratio and directions of the Hon'ble Delhi High Court in the assessee's own case for AY 2005-06, held that the determinative test is whether the sale of goods was inextricably linked with and formed a necessary part of providing the qualifying telecommunication services. Each contract must be examined to ascertain the predominant or primary purpose - whether the transaction was essentially supply of goods or part of a composite arrangement to operationalize the telecommunication services. If the sale of equipment formed an integral, necessary requirement of providing the specified services under the same or a related contract, receipts may be eligible for deduction; standalone sales of items such as TV cameras, air conditioners or generators would not qualify. The Tribunal did not decide the merits for AY 2007-08 but directed remand to the Assessing Officer for fresh adjudication in light of the High Court's guidance, with a reasonable and sufficient opportunity to the assessee to be heard. [Paras 7]

Issue remitted to the Assessing Officer for fresh adjudication in accordance with the High Court's directions; Assessing Officer to examine contracts and nexus and to give the assessee an opportunity of being heard.

Final Conclusion: The appeal is treated as allowed for statistical purposes and the matter is remitted to the Assessing Officer to determine, after giving the assessee a reasonable opportunity of hearing, whether the receipts from sale of V-SAT equipments for AY 2007-08 are inextricably linked to the provision of qualifying telecommunication services and thus eligible for deduction u/s 80IA.

Requirement of a speaking order disposing objections to a notice issued under section 148 - reopening of assessment on the basis of audit objections - application of income by a charitable society - legitimacy of transfers between societies having similar objects - vesting and de facto use of property for university purposes under statutory university enactment

Requirement of a speaking order disposing objections to a notice issued under section 148 - reopening of assessment on the basis of audit objections - Whether failure of the Assessing Officer to pass a speaking order disposing the assessee's objections to the notice under section 148 vitiates the reassessment proceedings. - HELD THAT: - The Tribunal applied the binding principle enunciated by the Hon'ble Supreme Court in GKN Driveshafts that where a notice under section 148 is issued and the assessee files objections, the Assessing Officer is obliged to decide those preliminary objections by a speaking order. The record showed that the Assessing Officer did not pass any speaking order disposing the assessee's objections but proceeded to complete reassessment; this omission rendered the subsequent assessment order legally infirm. The Tribunal preferred the Supreme Court and the Gujarat High Court precedents over a single-judge Madras High Court writ decision and agreed with the CIT(A)'s conclusion quashing the reassessment on this ground. [Paras 10, 14]

The reassessment proceedings are vitiated for want of a speaking order disposing the objections to the notice under section 148; ground No.1 dismissed (in favour of the assessee).

Application of income by a charitable society - legitimacy of transfers between societies having similar objects - vesting and de facto use of property for university purposes under statutory university enactment - Whether the payment/repayment made by the assessee to the sponsor society, claimed as application of income, constitutes legitimate application of income and is allowable. - HELD THAT: - On the factual matrix the Tribunal accepted that the sponsor society raised funds, acquired land and created infrastructure for the University under an MoU which provided for eventual transfer of title to the University upon discharge of liabilities; the infrastructure is used by the University for its objects as per the ICFAI University Act. The Tribunal noted that the sponsor society is registered under section 12AA and held that contributions/transfers between two societies with similar objects amount to legitimate application of income by a charitable society. The Assessing Officer's objection that the cost or liabilities were not reflected in the society's balance sheet was not held to override the substantive character of the transaction as application of income for creation of university infrastructure. [Paras 15, 17, 18, 19]

The payment to the sponsor society is a legitimate application of income for the University's infrastructure and the disallowance is rightly deleted; ground No.2 dismissed (in favour of the assessee).

Final Conclusion: The revenue's appeal is dismissed: reassessment is quashed for want of a speaking order disposing objections to the section 148 notice, and the payment to the sponsor society is held to be a legitimate application of income by the charitable society for the University's infrastructure (Assessment Year 2008-09).

Set off of brought forward losses vis-a -vis deduction under section 10A - rectification of assessment under section 154 - precedential effect of a Tribunal decision reversed by the High Court - restoration for fresh adjudication after reversal of relied precedent

Precedential effect of a Tribunal decision reversed by the High Court - restoration for fresh adjudication after reversal of relied precedent - Appeal restored to the file of the CIT(A) for fresh adjudication and decision after affording the assessee a reasonable opportunity of being heard. - HELD THAT: - The CIT(A) had dismissed the assessee's appeal by relying on the Tribunal's decision in ITA Nos. 104 & 105/Del/2011 (Tecnovate E-solutions Pvt. Ltd.). Counsel for the assessee placed on record that that Tribunal decision has since been reversed by the Hon'ble High Court of Delhi. Because the dismissal by the CIT(A) was founded on a precedent which no longer stands, the Tribunal concluded that justice requires fresh consideration of the merits by the CIT(A). The Tribunal therefore directed that the appeal be restored to the CIT(A) so that the CIT(A) may decide the questions (including the question of whether deduction under section 10A should be claimed before or after setting off brought forward losses) afresh, after giving the assessee a reasonable opportunity to be heard. [Paras 5]

Appeal restored to the file of the CIT(A) for fresh decision after affording reasonable opportunity to the assessee; appeal treated as allowed for statistical purposes.

Final Conclusion: The Tribunal restored the appeal to the CIT(A) for fresh adjudication in view of the reversal by the High Court of the Tribunal decision relied upon by the CIT(A), and directed that the assessee be given a reasonable opportunity of hearing; appeal treated as allowed for statistical purposes.

Deduction under section 80P(2)(a)(i) for Primary Agricultural Credit Societies - distinction between primary agricultural credit society and cooperative bank for section 80P(4) - assessment of interest on investments as business income - unexplained cash credits under section 68 - non-allowability of deductions for income assessed as unexplained cash credits - remand to Assessing Officer for enquiry into factual activities

Deduction under section 80P(2)(a)(i) for Primary Agricultural Credit Societies - distinction between primary agricultural credit society and cooperative bank for section 80P(4) - remand to Assessing Officer for enquiry into factual activities - Entitlement to deduction under section 80P(2)(a)(i) claimed on basis of registration as a Primary Agricultural Credit Society - HELD THAT: - The Tribunal noted that the Jurisdictional High Court Full Bench in Mavilayi Service Co-operative Bank Ltd. directed that the Assessing Officer must enquire into the factual activities of the assessee rather than rely solely on the registration certificate. Applying that later binding view and following the Supreme Court precedent relied upon by the High Court, the Tribunal remitted the question of whether the assessee is carrying on activities qualifying it for deduction under section 80P to the file of the Assessing Officer for fresh examination of actual activities and transactions before granting or denying the deduction. [Paras 7]

Issue remitted to the Assessing Officer for fresh consideration of the assessee's actual activities before deciding entitlement to deduction under section 80P(2)(a)(i).

Assessment of interest on investments as business income - deduction under section 80P(2)(a)(i) - remand to Assessing Officer for enquiry into factual activities - Characterisation of interest income from investments in banks and treasury and eligibility for deduction under section 80P(2)(a)(i) - HELD THAT: - The Tribunal agreed with the coordinate Bench decision that interest earned on investments made in the course of banking activities (investments with cooperative banks and scheduled banks/treasury) should be assessed as "income from business" rather than "income from other sources." However, consistent with the earlier conclusion that the Assessing Officer must verify the assessee's actual activities under the Jurisdictional High Court Full Bench decision, the Tribunal remitted the question of grant of deduction under section 80P(2)(a)(i) in respect of such interest to the Assessing Officer for verification and fresh consideration. [Paras 10]

Interest on investments assessed as business income; entitlement to deduction under section 80P(2)(a)(i) remitted to the Assessing Officer for fresh examination of activities.

Unexplained cash credits under section 68 - non-allowability of deductions for income assessed as unexplained cash credits - remand to Assessing Officer for verification of depositors - Validity of addition under section 68 in respect of cash deposits and the consequence for claiming deduction under section 80P - HELD THAT: - For the cash deposits brought to tax as unexplained credits under section 68, the Tribunal recorded that the Assessing Officer must be satisfied about identity, genuineness and creditworthiness of depositors. Noting inconsistent treatment in related assessment years and judicial authorities, the Tribunal directed that the assessee be given opportunity to produce details and proof of identity of depositors and remitted the matter to the Assessing Officer to verify the depositors; if identity is proved the addition is to be deleted. Separately, following the Kerala High Court authority, the Tribunal held that income assessed as unexplained cash credits under section 68 cannot be treated as business income for the purpose of set-off or for attracting deductions such as under section 80P, and therefore such unexplained income is not eligible for deduction under section 80P. [Paras 12, 13]

Addition under section 68 remitted to the Assessing Officer for verification of depositors with direction to delete if identity and genuineness are proved; but income once assessed as unexplained cash credit under section 68 cannot be treated as business income or be allowed deduction under section 80P.

Final Conclusion: The Tribunal partly allowed the appeals for statistical purposes: entitlement to deduction under section 80P claimed on registration was remitted to the Assessing Officer for factual verification; interest on investments is to be treated as business income but grant of deduction under section 80P in respect of such income is remitted for fresh consideration by the Assessing Officer; additions made under section 68 were remitted for verification of depositors (with deletion if proved), while confirming that income assessed as unexplained cash credits under section 68 cannot be treated as business income nor allowed deduction under section 80P.

Long term capital gain - short term capital gain - period of holding - transfer by registered sale deed - occupation certificate relevance - deduction under section 48(1) - cost of improvement - brokerage and professional fees - remand for verification

Long term capital gain - short term capital gain - period of holding - transfer by registered sale deed - occupation certificate relevance - Whether the gain on sale of the properties is to be assessed as long term capital gain or short term capital gain - HELD THAT: - The Tribunal found that separate registered sale deeds executed on 23rd December 2005 conveyed right, title and interest in the properties to the assessee, and therefore the assessee must be treated as owner from that date. Relying on the ratio in Suraj Lamp and Industries Pvt. Ltd. that immovable property is transferred legally by a registered deed of conveyance, the Tribunal held that the period of holding is to be reckoned from the date of execution of the registered sale deeds and not from the later date of issuance of occupation certificate. Applying the definition of short term capital asset as an asset held for not more than 36 months immediately preceding the date of transfer, the Tribunal concluded that the properties were held for more than 36 months (from 23rd December 2005 to 22nd January 2010) and the gain is long term capital gain. The Tribunal also noted supportive precedents of the High Court and other Tribunals which reject reckoning of holding period from occupation certificate or completion certificate. [Paras 8]

Gain on sale of the properties is to be assessed as long term capital gain; Revenue's grounds dismissed.

Deduction under section 48(1) - cost of improvement - brokerage and professional fees - remand for verification - Allowability of deductions claimed under section 48(1) in respect of cost of improvement, brokerage and professional fees - HELD THAT: - The Commissioner (Appeals) had disallowed parts of the claimed cost of improvement and the Assessing Officer had disallowed brokerage and professional fees for lack of supporting evidence. The Tribunal observed that certain amounts debited after the date of sale (part of the cost of improvement) are claimed to relate to work done prior to sale and that the assessee produced bills and invoices during the hearing before the Tribunal. The Tribunal held that the claim in respect of the disputed portion of cost of improvement (Rs.35,00,045 as recorded by the authorities) and the claims for brokerage and professional fees require verification against the supporting evidence and accordingly restored these matters to the Assessing Officer for fresh verification, directing that the assessee be afforded a reasonable opportunity to substantiate the claims. The Tribunal upheld the disallowance of pre operative expenditure (Rs.9,39,800) as not being in connection with the transfer of the property but routine business expenditure. [Paras 15]

Issue remanded to the Assessing Officer for verification of the claimed cost of improvement (disputed portion) and brokerage/professional fees; pre operative expenditure disallowed; appeal partly allowed for statistical purposes.

Final Conclusion: The Revenue's appeal is dismissed (gain held to be long term capital gain). The assessee's appeal is partly allowed for statistical purposes: pre operative expenditure is disallowed, while the disputed portions of cost of improvement and the claims for brokerage and professional fees are remitted to the Assessing Officer for verification and fresh decision after affording the assessee an opportunity to produce supporting evidence.

Recall of ex-parte order - Recall under s. 254(2) of the Act - Sufficient cause for non-appearance - Fresh adjudication after recalling ex parte dismissal

Recall of ex-parte order - Sufficient cause for non-appearance - Recall under s. 254(2) of the Act - Whether the Tribunal should recall its ex parte order dated 30.11.2018 and restore the appeal for fresh adjudication in view of the assessee's plea of sufficient cause for non appearance. - HELD THAT: - The assessee filed a miscellaneous application under section 254(2) seeking recall of the Tribunal's ex parte order dated 30.11.2018, alleging non appearance caused by events beyond his control (death of the representative who was to appear) and asserting continued interest in prosecuting the appeal; a notarized affidavit and subsequent engagement of new representation were placed on record. The Departmental Representative raised no objection to recalling the order for fresh adjudication. The Tribunal examined service of notice and the absence of any adjournment application, noted reliance on precedent where ex parte dismissal for non prosecution is permissible, but accepted that the assessee demonstrated sufficient cause for non appearance. Having found the factual explanation credible and no prejudice in recalling the order, the Tribunal exercised its power under section 254(2) to recall the ex parte dismissal and restore the appeal for hearing on merits, fixing a further hearing date and directing that no separate notice be issued to the parties.

Miscellaneous application allowed; order dated 30.11.2018 recalled and the appeal restored for fresh hearing (next listed for hearing on the fixed date).

Final Conclusion: The Tribunal allowed the assessee's application under section 254(2), recalled its ex parte order of 30.11.2018 on the ground of sufficient cause for non appearance, and restored the appeal for fresh adjudication with a further hearing date fixed.

Penalty under section 271(1)(c) - concealment of income - furnishing inaccurate particulars of income - Explanation 5 to section 271(1)(c) - belated return filed after search under section 132 and notice under section 153A - recall/review of Tribunal order under section 254(2)

Recall/review of Tribunal order under section 254(2) - Miscellaneous petition to recall the Tribunal's order was not maintainable and was dismissed. - HELD THAT: - The Tribunal's order in I.T.A. No. 1112/Chny/2015 dated 23.09.2016 was examined and the petitioner sought recall alleging that penalty was treated as automatic and that his bona fide explanation was not appreciated. The Revenue respondent contended that there was no apparent error in the Tribunal's order and that review under section 254(2) is not permissible. The Tribunal had recorded findings after considering the materials on record and the orders below and addressed the grounds raised by the assessee. In the absence of any demonstrable mistake apparent on the face of the record or valid basis for reopening the adjudication, the petition for recall was found to have no merit and was accordingly dismissed. [Paras 3, 4]

Miscellaneous petition dismissed; no recall of the Tribunal's order.

Penalty under section 271(1)(c) - concealment of income - furnishing inaccurate particulars of income - Explanation 5 to section 271(1)(c) - belated return filed after search under section 132 and notice under section 153A - Penalty under section 271(1)(c) was rightly sustained on the finding of concealment and furnishing of inaccurate particulars. - HELD THAT: - The Tribunal found that the assessee had not filed a return under section 139 voluntarily and only filed a belated return after a search under section 132 and notice under section 153A. Seized material and verification revealed undisclosed investments; the assessee offered no credible or cogent explanation for not having offered such investment as income prior to the search. The assessee's admission to an addition for unexplained investment and absence of appeal against additions did not absolve him from concealment. The Tribunal applied Explanation 5 to section 271(1)(c) and concluded that the undisclosed investments, detected only because of the search, amounted to concealment of particulars of income and furnishing of inaccurate particulars in the belated return. On these findings the Tribunal sustained the penalty, and the revisional challenge failed. [Paras 3, 4]

Penalty under section 271(1)(c) sustained as attracted by concealment and furnishing inaccurate particulars; Tribunal's confirmation upheld.

Final Conclusion: The miscellaneous petition seeking recall of the Tribunal's order is dismissed; the Tribunal's confirmation of penalty under section 271(1)(c) for concealment and furnishing inaccurate particulars in relation to assessment 2009-10 is upheld.

Disallowance of expenses attributable to exempt income under section 14A read with rule 8D - recording of objective satisfaction by the Assessing Officer before invoking section 14A - application of judicial precedents regarding invocation of section 14A - credit for tax deducted at source and calculation of interest under section 234C

Disallowance of expenses attributable to exempt income under section 14A read with rule 8D - recording of objective satisfaction by the Assessing Officer before invoking section 14A - application of judicial precedents regarding invocation of section 14A - Assessee's suo moto disallowance of Rs. 6,91,341/- to be accepted because AO did not record objective satisfaction before applying section 14A read with rule 8D. - HELD THAT: - The Tribunal examined whether the Assessing Officer recorded an objective satisfaction, with reference to the assessee's books, before rejecting the disallowance computed by the assessee and applying section 14A read with rule 8D. The assessment order contains no such satisfaction or reasoned comparison with the assessee's books. The Tribunal followed the decision of the Hon'ble Bombay High Court in Godrej & Boyce Manufacturing Co. Ltd. and the co-ordinate bench's earlier orders in the assessee's own cases, which hold that no disallowance under section 14A read with rule 8D can be made where the AO fails to record objective satisfaction on the correctness of the assessee's computation. In view of the absence of any recorded satisfaction and following those precedents, the Tribunal set aside the appellate order and directed acceptance of the assessee's disallowance as per its tax audit report. [Paras 7]

Order of CIT(A) set aside and AO directed to accept the disallowance of Rs. 6,91,341/- as calculated by the assessee.

Credit for tax deducted at source and calculation of interest under section 234C - Excess interest under section 234C recalculation restored to AO for computation after allowing TDS credit of Rs. 14,85,028/-. - HELD THAT: - The Tribunal found that the alleged excess interest under section 234C arose because the Assessing Officer did not grant credit for TDS claimed by the assessee. The matter requires factual computation of interest after giving the appropriate credit of TDS and affording the assessee an opportunity to be heard. Accordingly, the Tribunal did not decide the quantum on merits but restored the issue to the file of the AO with a direction to calculate interest after allowing the TDS credit in accordance with law and after providing reasonable opportunity to the assessee. [Paras 12]

Issue restored to the file of the AO to compute interest under section 234C after allowing credit for TDS and after giving the assessee a reasonable opportunity.

Final Conclusion: Appeal partly allowed: disallowance under section 14A/read with rule 8D accepted at the assessee's figure; computation of interest under section 234C remitted to the Assessing Officer for recalculation after allowing TDS credit.

Penalty under section 271(1)(c) - Concealment of particulars of income - Furnishing inaccurate particulars of income - Mutual exclusivity of penalty limbs - Application of Explanation 5A to section 271(1)(c)

Penalty under section 271(1)(c) - Concealment of particulars of income - Furnishing inaccurate particulars of income - Mutual exclusivity of penalty limbs - Application of Explanation 5A to section 271(1)(c) - Validity of penalty imposed for assessment year 2005-06 where AO initiated and imposed penalty under both concealment and furnishing inaccurate particulars of income - HELD THAT: - The Tribunal found that the assessing officer both initiated and imposed penalty proceedings treating the matter under both limbs of section 271(1)(c) - concealment of particulars of income and furnishing inaccurate particulars of income. The Tribunal held that the two limbs are mutually exclusive and that initiating or imposing penalty under both simultaneously is impermissible. Reliance was placed on the decisions of the Bombay High Court and the Supreme Court cited in the order, holding that where both charges are invoked, the penalty cannot be sustained. In view of this legal principle and on the material on record, the Tribunal was not able to uphold the confirmation of penalty and directed deletion of the penalty imposed for the additional income declared during assessment proceedings (including reference to Explanation 5A as invoked by the AO/CIT(A) but rendered irrelevant by the procedural defect of invoking both limbs). [Paras 5]

Penalty imposed under section 271(1)(c) for AY 2005-06 set aside and directed the assessing officer to delete the penalty.

Penalty under section 271(1)(c) - Mutual exclusivity of penalty limbs - Applicability of the foregoing conclusion to assessment years 2006-07 and 2007-08 - HELD THAT: - The Tribunal applied the reasoning and outcome recorded in the decision for AY 2005-06 mutatis mutandis to the appeals for AY 2006-07 and AY 2007-08, as the issue raised in those appeals was identical - confirmation of penalty where both limbs were invoked. Having already held that invoking and imposing penalty under both mutually exclusive limbs is impermissible, the Tribunal allowed the appeals for these years on the same basis. [Paras 7]

Appeals for AY 2006-07 and AY 2007-08 allowed and the penalties confirmed by the authorities set aside.

Final Conclusion: All three appeals are allowed: the penalty orders under section 271(1)(c) for AY 2005-06, 2006-07 and 2007-08 are set aside because the assessing authority invoked and imposed penalty under both mutually exclusive limbs (concealment and furnishing inaccurate particulars), which is impermissible; the AO is directed to delete the penalties.

Rectification under section 154 - mandatory versus directory time limits - composite sale and allocation between land and depreciable assets - application of circle rate under section 50C - written down value of block of assets - penalty under section 271(1)(c) and Explanation 4

Rectification under section 154 - mandatory versus directory time limits - Whether the assessee's challenge that the order disposing the application under section 154 was time barred and therefore deemed allowed succeeds. - HELD THAT: - The Tribunal held that the contention that the order was time barred (grounds (i) and (ii)) is without merit. Section 154(4) requires amendment by an order in writing and section 154(8) contemplates a conscious decision to amend or not; where the statute does not prescribe the consequence of breach of a time limit the time limit is directory. Section 154(8) is accordingly directory while section 154(7), being cast in negative terms, is mandatory. The only consequence of a breach would be that the application remains undisposed, and there is no statutory deeming of acceptance; an order of amendment must be in writing and reflect a conscious decision. [Paras 3]

The plea of deemed acceptance or that the impugned order is non est because passed beyond the stipulated period is rejected; the time limits do not render the order void and the grounds fail.

Composite sale and allocation between land and depreciable assets - composite sale and allocation between land and depreciable assets - Whether the assessee could invoke rectification under section 154 to challenge the finding that land sold was not appurtenant to the feed mill and thus separately assessed. - HELD THAT: - The Tribunal accepted the CIT(A)'s approach that the question whether the land was appurtenant to the feed mill raised a contentious, debatable matter and formed part of the subject matter of the original appeal decided on merits. Such a controversy is not amenable to correction under section 154, which is confined to mistakes apparent from the record. The appellate order had already considered and upheld the AO's computation separating LTCG on land and STCG on depreciable assets; established authorities affirm that land is a separate asset from structures or plant thereon. The correct course, if aggrieved by that adjudication, is further appeal rather than rectification under section 154. [Paras 3]

The contention that the land was appurtenant cannot be remedied under section 154 as it raises a debatable issue decided on appeal; the remedy is by further appeal.

Application of circle rate under section 50C - Whether the assessee's assertion that a lower commercial/circle rate should have been applied (Rs.15,000 per marla) constituted a mistake that could be corrected in the disposed application under section 154. - HELD THAT: - The Tribunal observed there is no material on record to show the lower rate; moreover, that contention was not part of the original section 154 application disposed by the CIT(A) and was raised separately by a later letter dated 09.01.2018, thus amounting to a fresh application. A new alleged mistake distinct from those in the original application cannot be treated as a revision of the earlier application. The Tribunal further noted that even if the rate ascribed to land were changed, the effect would be an offsetting corresponding change in STCG and would not assist the assessee on the main controversy. [Paras 3]

The assertion of a different rate is a separate, undisposed application and not correctable within the disposed section 154 application; the assessee may seek disposal of the separate application.

Written down value of block of assets - penalty under section 271(1)(c) and Explanation 4 - Whether the penalty under section 271(1)(c) for furnishing inaccurate particulars of income was sustainable given the allowance by the CIT(A) of the WDV of the entire block of assets. - HELD THAT: - The Tribunal found that the primary reason for the AO computing a higher capital gain was non allowance of the WDV of the entire block (both units) as against allowance for only the feed mill unit; the CIT(A) allowed WDV of the whole block which produced a relief greater than the difference for which penalty was levied. In the absence of any explanation by the assessee in penalty or appellate proceedings, there nevertheless was no 'tax sought to be evaded' within the meaning of Explanation 4 to section 271(1)(c). Since the difference for which penalty was imposed is effectively covered by the relief accorded on WDV, the foundational requirement for sustaining penalty was absent. [Paras 3]

The penalty under section 271(1)(c) is quashed as there was no tax sought to be evaded in the sense required by Explanation 4.

Final Conclusion: The Tribunal dismissed the assessee's appeal in the quantum matter but allowed the penalty appeal: the time limit contention under section 154 failed, contentious factual/legal questions about appertenance of land could not be corrected under section 154, the complaint as to circle rate constituted a separate undisposed application, and the penalty under section 271(1)(c) was deleted as Explanation 4 was not attracted.

Revenue v. capital expenditure - treatment of expenses on shelved projects and feasibility studies - taxability of foreign exchange gain on repurchase/repayment of debt instruments issued for capital purposes - provision for wages - distinction between contingent liability and liability in praesenti (accrued/crystallised) under mercantile system - deduction under section 80IA - computation when undertaking is treated as sole source and concept of initial assessment year - allocation of pre-commissioning receipts - revenue receipt v. capital work-in-progress (trial run income and sale of scrap) - admissibility of additional/late evidence before appellate authority and remand to Assessing Officer for fresh verification

Revenue v. capital expenditure - treatment of expenses on shelved projects and feasibility studies - Allowability as revenue expenditure of amounts written off in respect of shelved projects and expenses on feasibility/preliminary studies for AY 2003-04. - HELD THAT: - The Tribunal found that the expenses were incurred in pursuit of the assessee's existing business of generation, transmission and distribution of electricity; the projects were closely connected with that business and were abandoned on commercial grounds. There was no suggestion that the payments were bogus. In view of precedents in the assessee's own case for earlier years and identical facts, the Tribunal held these amounts to be revenue in nature and upheld the CIT(A)'s allowance of the claim.

Ground allowed in favour of the assessee; Revenue's addition dismissed.

Taxability of foreign exchange gain on repurchase/repayment of debt instruments issued for capital purposes - Whether the surplus on premature buy back of Euro notes is taxable for AY 2003-04 - remand ordered for fresh adjudication. - HELD THAT: - Although the Tribunal noted earlier tribunal decisions in the assessee's favour for prior years, the Bench observed that the assessee had claimed interest as a revenue deduction and that the Supreme Court's decision in Mahindra & Mahindra and other authorities may bear on the question. The Tribunal therefore did not finally decide the taxability on merits for AY 2003-04 but directed restoration to the AO for de novo adjudication, allowing the assessee to produce full facts and documents and requiring the AO to consider relevant case law (including Mahindra & Mahindra and Ramaniyam Homes v. CIT) and the factual matrix before deciding.

Ground allowed for statistical purposes and remanded to the Assessing Officer for fresh adjudication.

Provision for wages - distinction between contingent liability and liability in praesenti (accrued/crystallised) under mercantile system - Allowability of provision for wages (created pending wage settlement) as business expenditure for AY 2003-04. - HELD THAT: - The Tribunal accepted that the assessee follows mercantile accounting and, based on past practice and negotiations, had a present and certain obligation whose quantification awaited final settlement. Similar allowance in the assessee's own prior-year tribunal decision was noted. The Tribunal held the provision to be an accrued/crystallised liability (liability in praesenti) and not a contingent liability, and therefore allowable as a business expense.

Revenue's addition disallowed; provision for wages held allowable.

Deduction under section 80IA - computation when undertaking is treated as sole source and concept of initial assessment year - Whether the assessee could claim deduction under section 80IA from the chosen initial assessment year without notionally adjusting earlier years' losses/depreciation that had already been set off. - HELD THAT: - Following the tribunal's earlier decision in the assessee's own case and the CBDT Circular No.1/2016 as well as relevant High Court authority, the Tribunal held that the term 'initial assessment year' is the year opted by the assessee for claiming the 80IA benefit. Where prior unabsorbed losses/depreciation were already set off in earlier years, they cannot be notionally brought back to be set off against profits of the undertaking in the initial year chosen; therefore the assessee was entitled to claim deduction under section 80IA from the assessment year it had elected.

Assessee's grounds 1(b) and 1(c) allowed; deduction under section 80IA to be computed from chosen initial assessment year without adjusting earlier already set off losses/depreciation.

Allocation of pre-commissioning receipts - revenue receipt v. capital work-in-progress (trial run income and sale of scrap) - Treatment of income earned during trial runs of broadband project and pre installation sale of scrap - whether reducible from capital work-in-progress or assessable as revenue. - HELD THAT: - The Tribunal found that the broadband project was under trial/pre installation and that the receipts were inextricably linked to the capital project. The assessee had reduced these receipts from capital work in progress and capitalised the net cost and claimed depreciation accordingly. Applying the principles in Bokaro Steel and consistent precedents, the Tribunal held these receipts to be properly attributable to capital work in progress and not taxable as revenue receipts.

Assessee's ground allowed; trial run income and pre installation scrap sale treated as reduction of capital work in progress.

Admissibility of additional/late evidence before appellate authority and remand to Assessing Officer for fresh verification - Admissibility and treatment of 'other income' claimed to derive from Belgaum unit (sale of sludge) for section 80IA purposes, and admissibility of payments to local schools (sec. 40A(9)/sec.37) raised first in assessment/appellate proceedings. - HELD THAT: - On the Belgaum 'other income', the assessee produced ledger details before the Tribunal for the first time claiming the amount arose from sale of sludge of the Belgaum unit; since the CIT(A) had allowed similar scrap income for another unit and did not have the particulars, the Tribunal restored the matter to the AO for verification and directed the AO to adjudicate on merits after allowing the assessee to produce evidence. On payments to local schools, the Tribunal held that the CIT(A) had the power to admit a claim not made in the return and, in the interest of justice, admitted the claim and remanded the matter to the AO for fresh adjudication with directions to admit the assessee's evidence and examine whether payments were wholly and exclusively for business (sec. 40A(9)/sec.37).

Both issues set aside and remanded to the Assessing Officer for fresh adjudication after admitting relevant evidence; interest on staff loans held not to be income of the industrial undertaking for 80IA purposes (part decision).

Final Conclusion: For AY 2003-04 the Tribunal: (a) allowed the assessee's claim for expenses on shelved projects and feasibility/preliminary studies as revenue expenditures; (b) remanded the question of taxability of surplus on premature buy back of Euro notes to the Assessing Officer for de novo consideration in light of Supreme Court and other authorities; (c) held the provision for wages to be an accrued/crystallised business liability and allowable; (d) held that section 80IA deduction is available from the initial assessment year chosen by the assessee without re opening earlier years' set off of losses/depreciation; (e) allowed treatment of trial run broadband receipts and pre installation scrap sale as reduction of capital work in progress; and (f) admitted and remitted for verification the claims relating to Belgaum sludge receipts and payments to local schools for fresh adjudication by the Assessing Officer.

Right to bail in bailable offences - no discretion to impose onerous conditions when granting bail - customs officer exercising powers under Section 104 of the Customs Act as officer-in-charge under Section 436 of the Code of Criminal Procedure - release on bail by taking surety or personal bond - limitations on conditions of bail in bailable cases established by Talab Haji Hussain

Right to bail in bailable offences - no discretion to impose onerous conditions when granting bail - release on bail by taking surety or personal bond - Validity of Condition Nos.2 to 4 imposed by the Assistant Commissioner of Customs while granting bail in bailable offences - HELD THAT: - The customs officer, when exercising powers under Section 104 of the Customs Act to grant bail, stands in the position of an officer in charge of a police station and is governed by the same principles as Section 436 of the Cr.P.C. Section 436 and the settled law establish that in bailable cases the accused is entitled to be released on bail as of right and the officer or Court has no discretion to impose conditions beyond reasonable terms as to bail, namely security by sureties or, where appropriate, a personal bond. The Court relied on the ratio in Talab Haji Hussain which recognises that a person accused of a bailable offence must be released on bail on reasonable terms and that discharge on personal bond is permissible instead of taking sureties. Applying these principles, the Court found that imposing recurring reporting conditions and broadly framed prohibitions going beyond terms of bail constitute onerous conditions not permissible where the offence is bailable. Consequently, Condition Nos.2, 3 and 4, being outside the permissible scope of terms of bail, were struck down. [Paras 6, 7, 8, 10]

Condition Nos.2, 3 and 4 imposed by the Assistant Commissioner of Customs while granting bail in these bailable offences are illegal and are set aside.

Final Conclusion: The petitions are allowed: the customs officer's power under Section 104 to grant bail is subject to the limits applicable to an officer in charge under Section 436 Cr.P.C., and onerous conditions beyond surety or a personal bond cannot be imposed in bailable cases; Condition Nos.2-4 are quashed.

Seizure and custody of imported goods - conditional release subject to bank guarantee - preservation of goods pending investigation - interim relief - cooperation with investigation and ex parte proceedings

Seizure and custody of imported goods - preservation of goods pending investigation - interim relief - Validity of conditions (i) to (iii) in letter dated 05.03.2019 restricting parting with, disposing of or otherwise dealing with the seized vehicle and keeping it in safe custody until further direction. - HELD THAT: - The Court examined the contention that continued possession of the vehicle by the Customs authority was illegal and considered the conditions imposing duties to keep the vehicle in safe custody, not to part with or alter the vehicle without permission, and to surrender it when directed. Having regard to the ongoing investigation pursuant to the seizure orders, the Court held that these conditions are tenable as measures to preserve the subject vehicle and protect the respondents' ability to secure recovery or continue inquiry. The Court emphasised that these conditions form part of an interim arrangement and that none of its observations are to be taken as an expression on the merits of the underlying investigation.

Conditions (i) to (iii) in the letter dated 05.03.2019 are held to be tenable and may be imposed as part of an interim release regime.

Conditional release subject to bank guarantee - interim relief - Appropriateness and quantum of the bank guarantee (condition No.2) required for provisional release of the seized vehicle. - HELD THAT: - The Court considered the respondents' submission that a bank guarantee was necessary to secure any dues that might be found payable and noted that the letter did not disclose the basis for fixing the earlier sum. On review of the available material and taking into account the taxes/duties alleged and the vehicle's value, the Court found the originally fixed amount to be onerous for interim possession. Exercising its supervisory jurisdiction under Article 226, the Court modified the bank guarantee requirement to a reduced sum to balance the interests of the petitioner and the respondents during the investigation.

Condition No.2 is modified so that the petitioner shall furnish a bank guarantee of Rs. 3 lakhs in favour of the Commissioner of Customs, Chennai, production of which along with a copy of the order will invite consideration for release subject to the other conditions in the letter dated 05.03.2019.

Preservation of goods pending investigation - cooperation with investigation and ex parte proceedings - Directions regarding completion of the ongoing investigation and consequences of non-cooperation by the petitioner. - HELD THAT: - Recognising that the investigation pursuant to the seizure orders remains pending, the Court directed the respondents to endeavour to complete the investigation expeditiously, preferably within three months, subject to the petitioner's cooperation. The Court authorised the respondents to record reasons and proceed ex parte if the petitioner fails to cooperate, thereby preserving the authority's procedural options while ensuring a temporal framework for concluding the inquiry.

Respondents directed to complete the investigation preferably within three months with the petitioner required to cooperate; in the event of non-cooperation, respondents may record reasons and proceed ex parte.

Final Conclusion: Seizure-related conditions requiring safe custody, non-disposal and surrender on direction are upheld as tenable; the bank guarantee requirement for provisional release is reduced from the earlier sum to Rs. 3 lakhs; respondents are directed to conclude the investigation preferably within three months, cooperation by the petitioner being obligatory and non-cooperation permitting ex parte action. This arrangement is interim and without expression on the merits of the investigation.

Anticipatory bail - custodial interrogation - production of records and access to computer systems - non-intimidation of witnesses - seriousness of allegations and documentary evidence

Anticipatory bail - custodial interrogation - seriousness of allegations and documentary evidence - Disposal of the anticipatory bail application of the petitioners by directing surrender and prescribing conditional bail. - HELD THAT: - The court noted admitted discrepancies and seized records indicating malpractices in the duty free shop, observed competing allegations of bias and counter-allegations between the parties and authorities, and recorded that earlier writ proceedings had addressed aspects of investigation and bias. Although the court expressed doubt as to the continuing necessity of custodial interrogation given the passage of time and earlier statements that investigation was completed, it also recognized the seriousness of the allegations (including alleged offences under multiple statutes) and the documentary nature of much of the material. Balancing these factors, the court declined to grant unfettered anticipatory bail but disposed of the application by requiring the petitioners to surrender for interrogation and providing for bail on specified conditions if arrest followed. [Paras 11, 12, 13, 14, 15]

Petitioners to surrender before the investigating officers within ten days; if arrested after interrogation, they shall be released on bail on executing bonds with sureties upon the conditions specified by the court.

Production of records and access to computer systems - non-intimidation of witnesses - Conditions to be complied with for release on bail following surrender and interrogation. - HELD THAT: - The court directed that, as part of cooperating with the investigation, the petitioners must appear when called, produce all records and registers, provide access to computer systems, hardware, software and servers if required, and must not threaten, coerce or intimidate the defacto complainant or witnesses. The direction is founded on the available materials and is aimed at enabling effective interrogation; the court also left open the investigating agency's right to seek modification of the order if necessary. [Paras 15]

On surrender and interrogation, bail shall be granted subject to execution of bonds and compliance with conditions including cooperation in production of records and non-intimidation of witnesses; investigating agency may move court for modification if required.

Final Conclusion: Anticipatory bail application disposed: petitioners must surrender within ten days and, if arrested after interrogation, will be released on bail on furnishing bonds and sureties and subject to conditions of cooperation with the investigation and non-interference with witnesses; the investigating agency may apply for modification if circumstances so require.

Demand on inputs where duty on finished goods has been confirmed under proviso to Section 3(1) - Confiscation and redemption fine when imported goods are not available for confiscation - Non-viability of penalty where foundational demand and confiscation are unsustainable

Demand on inputs where duty on finished goods has been confirmed under proviso to Section 3(1) - Duty could not be demanded on imported/indigenous raw material (POY) when duty on the finished goods (PTY) had already been confirmed as having been clandestinely cleared into DTA under the proviso to Section 3(1). - HELD THAT: - The Tribunal recorded that duty on the finished goods (PTY) had been adjudicated and confirmed against the purchasers (EOUs) under the proviso to Section 3(1) on the ground of diversion to DTA. The factual finding from adjudication against the EOUs established that the imported inputs were consumed for the intended purpose in manufacture of the finished goods. On that basis, and following consistent decisions of the Tribunal subsequently affirmed by the Apex Court, the Tribunal held that once duty is confirmed on the finished goods cleared clandestinely into DTA, a separate demand on the raw material used in manufacture of those finished goods cannot be sustained. The Tribunal therefore set aside the demand insofar as it related to the inputs. [Paras 6]

Demand of Customs duty on POY (inputs) set aside as unsustainable in view of confirmed demand on finished goods.

Confiscation and redemption fine when imported goods are not available for confiscation - Imported POY was not liable to confiscation and no redemption fine could be imposed where post-import conditions were not contravened and the goods were not available for confiscation. - HELD THAT: - The Tribunal found on the record that the imported POY had been used for the intended purpose and there was no contravention of the post-import condition of the relevant notification. Further, the goods were not available for confiscation at the time the show cause proceedings were initiated. Applying the principle that redemption fine cannot be imposed in the absence of goods available for confiscation, as recognised by the Bombay High Court and affirmed by the Supreme Court in the cited authority, the Tribunal held that neither confiscation nor a redemption fine could be sustained. [Paras 6]

Confiscation and the redemption fine set aside.

Non-viability of penalty where foundational demand and confiscation are unsustainable - Penalties imposed on the appellants under Section 112 could not be sustained once the substantive demands, confiscation and redemption fine were set aside. - HELD THAT: - Given that the Tribunal annulled the demand on inputs and held that confiscation and redemption fine were not sustainable, the consequential penalties founded on those determinations lacked a valid basis. The Tribunal therefore found no reason to uphold the impugned order insofar as it imposed penalties on the appellants and set those penalties aside. [Paras 7]

Penalties imposed on the appellants set aside.

Final Conclusion: Impugned adjudication order dated 30.07.2010 set aside; appeals allowed with consequential relief, holding that duty on inputs cannot be demanded after confirmation of duty on finished goods, that POY is not liable to confiscation nor to redemption fine where goods are not available and conditions were not contravened, and that penalties founded on those measures cannot be sustained.

Exemption for ocean going vessels at time of import - wreck - ships intended for breaking up - heading no. 8908 of First Schedule to Customs Tariff Act, 1975 - assessment under section 21 of Customs Act, 1962 - duty on salvaged parts presented for import

Exemption for ocean going vessels at time of import - ships intended for breaking up - heading no. 8908 of First Schedule to Customs Tariff Act, 1975 - Whether a vessel wrecked after import falls to be assessed as an import 'for breaking up' such that the exemption at the time of import is forfeited and the vessel must be taxed under the tariff entry for ships intended for breaking up. - HELD THAT: - The Tribunal held that the exemption granted to an 'ocean going vessel' at the time of import operates unconditionally at that time and that liability to duty as a ship 'intended for breaking up' under heading no. 8908 requires evidence of intent to import for breaking. Wrecking is distinct from deliberate breaking up: wrecking is often accidental and extinguishes the vessel's existence as a conveyance, whereas breaking up is a deliberate commercial process whose end use (intention to break) is a determinative characteristic under heading no. 8908. Consequently a vessel that became a wreck after import cannot be treated as having been imported for breaking up merely because it was subsequently wrecked; absent intent to import for breaking, heading no. 8908 cannot be applied to the wreck itself. [Paras 11, 12, 14, 15, 16]

The adjudicator erred in treating the wrecked vessel as an import 'for breaking up'; the exemption at time of import remained effective and heading no. 8908 could not be applied to the wreck without evidence of intent to import for breaking.

Wreck - assessment under section 21 of Customs Act, 1962 - duty on salvaged parts presented for import - Whether duty liability arises on parts removed from a wreck and presented for clearance, and the appropriate statutory route for such assessment. - HELD THAT: - The Tribunal held that wrecks themselves are not 'imported' but that any wreck or part thereof which is presented for import attracts duty. The proper mechanism for levy on goods recovered from a wreck is by invoking section 21 of the Customs Act read with the charging provisions, including section 12 as applicable, on presentation of the salvaged parts. Assessment based on the tonnage of the original vessel (as for ships imported for breaking up) is inappropriate for wrecks which have ceased to be vessels; liability therefore arises in relation to the salvaged goods actually presented for import and their appropriate classification and valuation. [Paras 13, 14, 16]

Duty is leviable on the salvaged parts presented for import under section 21 (read with section 12), and assessment must be confined to the goods actually presented; the wreck itself, without evidence of import for breaking, is not to be assessed as a ship for breaking up.

Remission - penalty - exemption for ocean going vessels at time of import - Whether penalty or refusal of remission could be justified on the basis that the owner breached the exemption conditions by not salvaging the wreck or by purportedly relinquishing title. - HELD THAT: - The Tribunal found that the adjudication impermissibly imputed motives and drew adverse inferences about the appellant's conduct instead of testing facts against statutory provisions and settled law. Since the vessel was exempt at import, there was no breach of the exemption's conditions merely because parts were later removed for salvage; remission on parts not sought to be cleared is consequentially irrelevant. Penalty cannot be imposed in the absence of a breach of the conditions of the exemption. Discharge of duty liability is confined to the goods actually removed from the wreck and presented for clearance. [Paras 16, 17]

No penalty can be sustained for breach of the exemption where no condition was breached; remission and penalty claims must be considered in the light of section 21 treatment of salvaged goods and not by imputing improper motives.

Assessment under section 21 of Customs Act, 1962 - duty on salvaged parts presented for import - Whether the adjudication should be reopened and, if so, the scope of the remand to the original authority. - HELD THAT: - The Tribunal concluded that the impugned orders had overreached and that the proper course was to set them aside and remit the matter to the original adjudicating authority. The remand is limited: the original authority must restrict its decision to the contents of those bills of entry that were actually presented, or should have been presented, under section 21 relating to goods recovered from the wreck, and determine duty/valuation only in respect of such salvaged parts. The Tribunal also directed expedition of the remand proceedings. [Paras 18]

The impugned order is set aside and the matter is remanded to the original authority with directions to confine adjudication to bills of entry presented or which should have been presented under section 21; proceedings to be completed within 180 days.

Final Conclusion: The appeal succeeds in part: the Tribunal holds that a wrecked vessel cannot be treated as an import 'for breaking up' absent intent to import for breaking, duty falls on salvaged parts presented under section 21 (read with section 12), no penalty can be sustained for breach of the exemption where none occurred, and the matter is remanded to the original authority to adjudicate only the bills of entry for the salvaged goods within 180 days.

Provisional assessment under section 18 of the Customs Act, 1962 - proper officer's assessment under section 17 of the Customs Act, 1962 - acceptance of invoice value as reliable guide - internal advisory guidance not binding on the proper officer - premature adjudication of future imports - preservation of appellate forum under section 128 of the Customs Act, 1962 - advance ruling / guideline affecting future imports - finalization of assessment and availability of appellate remedies

Provisional assessment under section 18 of the Customs Act, 1962 - acceptance of invoice value as reliable guide - premature adjudication of future imports - internal advisory guidance not binding on the proper officer - finalization of assessment and availability of appellate remedies - Whether the Tribunal should entertain and decide the challenge to the first appellate authority's order that set aside an earlier acceptance of invoice value and prescribed guidelines affecting future imports before any import or finalization of provisional assessment has occurred. - HELD THAT: - The Tribunal held that the challenge was premature because no import had yet been subjected to the guideline and no finalized assessment or adverse incidence had occurred. Internal advisory procedures that inform assessing officers do not carry statutory force and, in any event, may trigger only provisional assessments under section 18; a speculative or potential future detriment arising from such guidelines is not a present grievance warranting adjudication. To decide the matter now would amount to appropriating the statutory finalization function under section 18 and would eliminate an available layer of remedy envisaged by section 128, by preventing the assessing officer and subsequent appellate fora from exercising their roles when a concrete assessment is finalized. The Tribunal therefore declined to enter into the merits and to adjudicate on goods that are as yet provisionally assessed or unaffected by a finalized assessment.

Appeal dismissed as premature without deciding the merits.

Final Conclusion: The appeal is dismissed as premature because no import or finalized provisional assessment had occurred; the Tribunal declined to decide the merits of guidelines affecting future imports and left the matter to be raised, if necessary, after a concrete assessment is finalized and appellate remedies are triggered.

Condonation of delay - confiscation for violation of Import Trade Control restrictions - redemption fine and personal penalty - value enhancement with importer s concurrence - application of binding precedent ratio from Three Member Bench in Omex International

Condonation of delay - Whether the delay of 162 days in filing the appeals before the Tribunal should be condoned. - HELD THAT: - The Revenue filed Miscellaneous Applications seeking condonation of delay of 162 days. The Tribunal, on consideration of the reasons advanced in the application, exercised its discretion to condone the delay and allowed the Miscellaneous Applications (COD), permitting the appeals to be admitted and heard. [Paras 2]

Delay of 162 days in filing the appeals is condoned and the Miscellaneous Applications are allowed.

Redemption fine and personal penalty - confiscation for violation of Import Trade Control restrictions - value enhancement with importer s concurrence - application of binding precedent ratio from Three Member Bench in Omex International - Whether the Commissioner (Appeals) erred in reducing the redemption fine and personal penalty imposed by the original adjudicating authority. - HELD THAT: - The appeals relate to upholding of confiscation and enhancement of value; enhancement was accepted on the basis of importer s concurrence and confiscation was not challenged. Revenue contended for higher fines as a deterrent, relying on the importer s alleged repeated violations. The Commissioner (Appeals) reduced the redemption fine and personal penalty applying the ratio of the Three Member Bench in Omex International, which held that redemption fine of 10% and penalty of 5% of value would be appropriate for import violations of Exim Policy provisions. The Tribunal found no reason to interfere with the Commissioner (Appeals) application of that ratio and upheld his findings. [Paras 9, 10, 11]

The impugned order of the Commissioner (Appeals) reducing the redemption fine and personal penalty is upheld; the Revenue s appeals are rejected.

Final Conclusion: The Tribunal condoned the delay in filing the appeals and, on merits, upheld the Commissioner (Appeals) reduction of redemption fine and personal penalty by applying the ratio in Omex International; the Revenue s appeals are dismissed.

Reliance on NIDB data for enhancement of transaction value - necessity of disclosing test report and valuation data to the importer - application of Rule 5 of the Customs Valuation (Determination of the Value of Imported Goods) Rules, 2007

Reliance on NIDB data for enhancement of transaction value - Validity of enhancement of declared transaction value based on NIDB data. - HELD THAT: - The Tribunal noted that multiple precedents hold that NIDB data is not substantive material for enhancing the declared value of imported goods. The original authority enhanced the value by reference to NIDB data, but the Commissioner (Appeals) found that such reliance was improper in the absence of other substantive material. The Tribunal agreed with the appellate finding, observing that reliance solely on NIDB data to redetermine transaction value is not in order and that higher appellate decisions have consistently so held.

Enhancement of declared value based on NIDB data is not sustained and the appellate authority's rejection of that enhancement is upheld.

Necessity of disclosing test report and valuation data to the importer - application of Rule 5 of the Customs Valuation (Determination of the Value of Imported Goods) Rules, 2007 - Whether the procedure followed (non-disclosure of test report and NIDB data) justified re-determination of value under Rule 5. - HELD THAT: - The Tribunal recorded that the test report and the NIDB data relied upon by the original authority were not furnished to the importer before the valuation order was passed. The Commissioner (Appeals) found that the exact nature of the imported goods was not conclusively established on the record and that absence of disclosure of the test report and the basis of NIDB reliance vitiated the re-determination. The Tribunal concurred that in these circumstances, and having regard to the authorities disfavoring enhancement on NIDB alone, the order under Rule 5 could not be sustained.

Order re-determining value without providing the test report and the valuation data to the importer is defective; the Commissioner (Appeals) order setting aside the re-determination is affirmed.

Final Conclusion: The appeal filed by the department is dismissed; the Commissioner (Appeals) order rejecting the value enhancement is upheld because reliance on NIDB data alone and re-determination without disclosing the test report and valuation basis to the importer were not sustainable.

Enhancement of assessable value - use of NIDB data for valuation - consistency of valuation rulings - application of precedent by the Tribunal - comparability of imports from same supplier

Enhancement of assessable value - use of NIDB data for valuation - comparability of imports from same supplier - application of precedent by the Tribunal - Whether the enhancement of value of imported PU Belts, based on NIDB data, was sustainable where identical goods from the same supplier had earlier been the subject of successful appeals by other importers. - HELD THAT: - The Tribunal found that the present case involves the same product imported from the same supplier and raises the identical question of valuation as in earlier appeals by other importers in which this Tribunal allowed the appeals. Given the commonality of facts and legal issue, the Tribunal applied the ratio of its prior decisions rather than re-adjudicating the same point. On that basis the impugned order enhancing value on the basis of NIDB data was set aside. [Paras 4]

Impugned order enhancing the value set aside and the appeal allowed, following the Tribunal's earlier decisions on identical facts.

Final Conclusion: The Tribunal, applying its consistent view in earlier matters concerning the same product and supplier, set aside the order of enhancement based on NIDB data and allowed the appeal.

Possession of gold not prima facie smuggled - ownership of seized goods - onus of proof under Customs Act regarding smuggled goods - confiscation of imported goods - redemption on payment of fine

Possession of gold not prima facie smuggled - ownership of seized goods - onus of proof under Customs Act regarding smuggled goods - Seized gold rods were not proved to be of foreign origin or smuggled and therefore could not be validly confiscated. - HELD THAT: - The Tribunal found that the seized items bore no foreign markings, had non uniform weight and purity, and were accepted to belong to the respondent. Documentary material and income tax returns supported the provenance of the ornaments remelted into rods. The Tribunal applied the legal proposition that mere possession of gold in India cannot be treated as smuggled property and that the statutory onus to establish foreign origin and illegal importation could not be discharged by the Department on suspicion alone. In those circumstances, absolute confiscation was not legally sustainable. [Paras 5, 6]

Confiscation set aside as the gold was not established to be of foreign origin and could not be lawfully confiscated.

Redemption on payment of fine - confiscation of imported goods - Impugned appellate order allowing redemption on payment of fine and reducing penalty did not warrant interference. - HELD THAT: - Having held that the gold was not shown to be foreign or smuggled and acknowledging ownership by the respondent, the Tribunal found no reason to disturb the lower Appellate Authority's exercise of discretion in permitting redemption and moderating penalty. The Revenue's appeal challenging that relief thus failed. [Paras 7]

Impugned order sustained; Revenue appeal dismissed.

Final Conclusion: The appeal by the Revenue is dismissed; the impugned order is sustained since the Department failed to prove foreign origin or illegal importation of the seized gold and the confiscation and enhanced penalty were not legally justified.

Interim protection order - encumbrance by way of pledge/lien/non-disposal undertaking - treatment of committed shares as encumbered - reliance on stock-exchange disclosures - disclosure under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 - modification of interim order

Interim protection order - encumbrance by way of pledge/lien/non-disposal undertaking - reliance on stock-exchange disclosures - disclosure under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 - Whether the NCLT was justified in restricting the interim protection order to 1,48,59,726 shares of Omaxe held by Guild Builders, notwithstanding stock-exchange disclosures indicating a different extent of unencumbered shares. - HELD THAT: - The Tribunal found that the NCLT erred in adopting the figure "1,48,59,726" without taking into account the information filed by the respondent company with the stock exchanges under the prescribed disclosure format of the Regulations. The Court emphasised that disclosures made under the SEBI regulations are material and cannot be disregarded when assessing whether shares were encumbered or unencumbered on the relevant date. The NCLT did not reconcile the respondent's assertion about shares being "committed" with the disclosures made to the Bombay Stock Exchange and National Stock Exchange, which showed the position of pledged and unpledged shares in the prescribed format. Incomplete or inconsistent information in the statutory disclosure format could not be ignored in framing interim relief. For these reasons the figure used by the NCLT was deleted and the interim order modified. [Paras 8, 9]

The figure "1,48,59,726" in paragraphs 35 and 38 of the impugned order is deleted and the impugned order dated 15th March, 2019 is modified accordingly; the appeal is disposed of.

Final Conclusion: The appeal was allowed in part: the NCLT's reliance on the specific figure of 1,48,59,726 shares was set aside because the Tribunal failed to consider the company's stock-exchange disclosures under the SEBI Regulations; the interim order is modified and the appeal is disposed of with no costs.

Oppression and mismanagement - interim injunction - encumbrance of shares - Non-Disposal Undertaking - prima facie balance of convenience and irreparable loss - inspection of company records under Section 171 - undertaking to file statement of further pledge

Interim injunction - encumbrance of shares - prima facie balance of convenience and irreparable loss - undertaking to file statement of further pledge - Grant of interim relief restraining further encumbrance of specified unencumbered shares of Omaxe held by Guild and the scope of such restraint - HELD THAT: - The Tribunal examined the petitioners' claim that continued pledging/encumbrance of Omaxe shares held by Guild was causing erosion of Guild's net worth and consequent loss to the petitioners and considered the parties' competing contentions that pledging was necessary for group financing and protection of value. The Tribunal accepted the petitioners had made out a prima facie case, observing the factual position regarding the number of unencumbered shares and the absence of evidence showing disbursement under certain loan sanctions. On the balance of convenience and risk of irreparable harm, the Tribunal limited the interim restraint to 1,48,59,726 shares of Omaxe held by Guild, directing that those shares shall not be encumbered except for top-up and/or margin calls. The Tribunal further required Guild, if any further pledge is necessitated for top-up/margin calls, to file a statement before the Tribunal within one week of such pledge with advance copy to opposite counsel. The earlier direction restraining issuance of fresh equity shares by Guild was continued and all other interim prayers were declined. The order thus tailored injunctive relief to protect petitioners' interest while permitting secured financing measures limited to margin/top-up exigencies subject to prior intimation to the Tribunal. [Paras 34, 35, 36, 37, 38]

Guild is restrained from encumbering 1,48,59,726 shares of Omaxe held by it except for top-up and/or margin calls; Guild must file a statement in the Tribunal within one week if further pledge is made for such purposes; the direction that Guild shall not issue fresh equity shares is continued; remaining interim prayers are declined.

Final Conclusion: Interim relief is granted in part: restraint on further encumbrance is confined to 1,48,59,726 shares subject to permitted top-up/margin call pledges (with mandatory filing of statement), the prohibition on issuing fresh equity shares is continued, and all other interim reliefs are refused; the interim applications are disposed accordingly.

Conditional approval of resolution plan - equitable distribution between financial creditors and operational creditors - implementation of resolution plan subject to direction of the Adjudicating Authority - no interim stay of the impugned order - power to modify resolution plan if discriminatory without affecting viability and financial matrix - resolution professional to convene Committee of Creditors meeting - rectification of typographical error in court order

No interim stay of the impugned order - Interpretation of the Appellate Tribunal's orders of 15th and 18th March, 2019 as to whether any interim stay was granted on the impugned order. - HELD THAT: - The Appellate Tribunal recorded on 15th March, 2019 that no interim order had been passed and reiterated that the impugned order dated 18th March, 2019 was not stayed. The Tribunal clarified that its directions on 18th March, 2019 were not in the nature of an interim stay of the Adjudicating Authority's order; the acceptance of the resolution plan was not stayed except insofar as distribution between financial and operational creditors was to be examined. This construction was given to ensure that the successful resolution applicant does not suffer during the pendency of the appeal. [Paras 6, 9]

No interim stay was granted; the impugned order was not stayed by the Appellate Tribunal.

Equitable distribution between financial creditors and operational creditors - conditional approval of resolution plan - power to modify resolution plan if discriminatory without affecting viability and financial matrix - Extent to which the Appellate Tribunal left open consideration of discriminatory distribution and the scope for modification of the resolution plan. - HELD THAT: - The Tribunal noted the Adjudicating Authority's finding of discriminatory distribution and stated that the appeal would principally address whether amounts were properly distributed between financial and operational creditors. It observed that if the resolution plan is discriminatory the Tribunal may modify the plan after hearing parties, but such modification must not interfere with the viability, feasibility or financial matrix of the resolution plan, including the upfront payment proposed by the resolution applicant. The Tribunal accordingly allowed implementation subject to the Adjudicating Authority's directions and to the appellate consideration of distribution. [Paras 7, 8, 9]

The resolution plan was approved conditionally; distribution between financial and operational creditors remains open for examination and the Tribunal may order modification limited to correcting discriminatory distribution without disturbing the plan's viability or financial matrix.

Resolution professional to convene Committee of Creditors meeting - Obligation of the Resolution Professional during pendency of the appeal. - HELD THAT: - The Tribunal directed the Resolution Professional to call a meeting of the Committee of Creditors to take decisions in terms of the Adjudicating Authority's directions, making clear that such steps are to be taken subject to the final decision in these appeals. This direction flows from the Tribunal's aim to implement aspects of the plan while preserving the appellate forum's ability to decide on distribution. [Paras 10]

The Resolution Professional must convene the Committee of Creditors to decide in accordance with the Adjudicating Authority's directions, subject to the appeals.

Rectification of typographical error in court order - Correction of a typographical error in the order dated 18th March, 2019. - HELD THAT: - The Tribunal identified a typographical error in the last line of page 4 of its order dated 18th March, 2019 and directed the office to correct the phrase to read that the Resolution Professional is to be appointed as the Chairman of the Monitoring Committee. The correction was ordered to reflect the intended direction accurately. [Paras 11]

The typographical error in the earlier order is to be rectified to state that the Resolution Professional is to be appointed as Chairman of the Monitoring Committee.

Final Conclusion: The Appellate Tribunal clarified that no interim stay was granted on the impugned order and that the resolution plan is to be implemented subject to the Adjudicating Authority's directions and the Tribunal's appellate consideration of equitable distribution between financial and operational creditors; the Resolution Professional is directed to convene the Committee of Creditors accordingly, and a typographical correction in the 18th March, 2019 order was ordered.

Taxability of reimbursement of stock exchange transaction charges - service tax liability of stock brokers on pass through charges - followed precedents rendering issue no longer res integra

Taxability of reimbursement of stock exchange transaction charges - service tax liability of stock brokers on pass through charges - followed precedents rendering issue no longer res integra - Appellant is not liable to pay service tax on NSE/BSE transaction charges collected as reimbursement from clients for the period April 2007 to September 2007. - HELD THAT: - The Tribunal observed that the question whether transaction charges paid to NSE/BSE and collected from clients attract service tax in the hands of a stock broker has been previously considered and decided in favour of the assessees in the cited Tribunal decisions. Relying on those decisions, the Tribunal held the issue is no longer res integra and therefore the impugned order holding such charges taxable could not be sustained. On that basis the impugned order was set aside and the appeal allowed.

Impugned order set aside and appeal allowed; no service tax liability on the reimbursed NSE/BSE transaction charges for the stated period.

Final Conclusion: The Tribunal allowed the appeal, holding that transaction charges of NSE/BSE collected as reimbursement by the broker are not taxable with reference to the cited precedents, and set aside the order under challenge for April 2007 to September 2007.

Intermediary services - place of provision of service - export of services entitlement to refund of unutilized Cenvat credit - CBEC Guidance on intermediary - back office/BPO services not intermediary - liaison/coordination versus solicitation as intermediary activity

Intermediary services - CBEC Guidance on intermediary - back office/BPO services not intermediary - The nature of services rendered by the respondent (OBSISPL) - whether they constitute "intermediary services" for the purpose of Place of Provision of Service Rules and related tax liability. - HELD THAT: - The Tribunal examined the contractual papers, the sample Master Services Agreement and the factual matrix placed by the respondent and applied the factors distilled from the CBEC Guidance (20.6.2012) concerning the definition of an intermediary: arrangement/facilitation of a main service between two parties, involvement in two supplies simultaneously (the main supply and an agency/service to the principal), inability to alter nature or value of the main service, separately identifiable commission/fee, documentary agency authorization and principal's knowledge of the exact value. The respondent's role was found to be limited to remote network-management/back office/BPO functions performed as part of intra group shared service centre operations under instructions from ENSIL; OBSISPL had no contractual privity with the end customers, did not provide on site support, did not alter the nature or value of the main service, and received consideration as part of intra group arrangements rather than as a separately identifiable commission. The Tribunal further observed that mere involvement of more than two group companies and liaison/coordination does not ipso facto make the activity an intermediary service; the statutory/Guidance tests must be satisfied. Applying these tests, the Tribunal concluded that the respondent's activities are routine back office outsourcing and not intermediary services. [Paras 10, 12, 13, 14, 15]

Respondent is not providing intermediary services and therefore is not taxable as an intermediary.

Place of provision of service - export of services entitlement to refund of unutilized Cenvat credit - Consequential entitlement to refund of unutilized Cenvat credit under the refund notification in respect of services exported by the respondent. - HELD THAT: - Having held that the respondent's services are not intermediary services (and hence not subject to classification as a taxable intermediary service in India), the Tribunal confronted the Revenue's contention that the place of provision is India and the respondent therefore could not claim refund of unutilized Cenvat credit. The Commissioner (Appeals) had sanctioned the refund and, on review of the agreement, the nature of services and the absence of evidence from Revenue to treat the services as intermediary, the Tribunal found no infirmity in that sanction. Accordingly, the respondent's refund claim as allowed by the Commissioner (Appeals) was affirmed. [Paras 15, 16]

Impugned order sanctioning the refund is upheld; respondent is entitled to the refund and no service tax is payable on the said services.

Final Conclusion: The appeal filed by the Revenue is dismissed; the impugned order of Commissioner (Appeals) sanctioning the refund is upheld and the respondent is entitled to consequential relief as per the impugned order.

Cenvat credit on capital goods - reversal of Cenvat credit - physical removal - transfer to sister/unit/group company - Rule 3(5) of the Cenvat Credit Rules, 2004 - revenue neutrality - extended period of limitation

Cenvat credit on capital goods - physical removal - transfer to sister/unit/group company - Rule 3(5) of the Cenvat Credit Rules, 2004 - Whether reversal of Cenvat credit under Rule 3(5) is required where capital goods were transferred to a group/sister company but continued to remain at and be used in the original premises for providing output service. - HELD THAT: - The Tribunal examined whether Rule 3(5) is attracted by mere transfer of ownership to a sister/group company when the capital goods have not been physically removed from the premises and continue to be used for providing the output service. Relying on the binding exposition of 'removal' by the Hon'ble Supreme Court in J.K. Spinning and Weaving Mills Limited , which treats 'removal' as involving physical shifting from one place to another, the Tribunal held that the provisions requiring reversal are not attracted in the absence of physical removal. The Tribunal also reviewed its prior decisions and those of other courts and tribunals which took the same view that mere transfer of ownership without physical movement does not amount to removal for the purposes of invoking the reversal provision; invoices relied upon did not satisfy requirements to constitute a removal under the rules. Applying that legal position to the admitted facts - that the capital goods remained installed and in use at the same premises post-transfer - the Tribunal concluded that reversal under Rule 3(5) was not required. [Paras 9]

No reversal of Cenvat credit is required since the capital goods were not physically removed from the premises and continued to be used for output service.

Extended period of limitation - revenue neutrality - Whether the extended period of limitation was invokable for confirmation of duty demand, and whether revenue neutrality affected the obligation to reverse credit. - HELD THAT: - The Tribunal noted that the transfer of goods to a sister unit, where the benefit of credit remains within the group and the goods continue in use at the same location, creates a revenue-neutral position. In that factual and legal matrix, the Tribunal held that the invocation of the extended period of limitation to confirm duty was not justified. That conclusion follows the Tribunal's assessment of the settled position on non-attraction of reversal in absence of physical removal and the revenue-neutral character of the transaction. [Paras 11, 12]

Extended period of limitation is not invokable; the transaction is revenue neutral and does not justify confirmation of duty by extended limitation.

Final Conclusion: The impugned order confirming demand for reversal of Cenvat credit on capital goods and invoking extended limitation is set aside; the appellant is not required to reverse the Cenvat credit as the capital goods were not physically removed and the extended period of limitation is not invokable, with consequential reliefs granted.

Summary order. Miscellaneous Application for early hearing allowed; appellant granted out-of-turn hearing and case directed to be listed for hearing on 11.06.2019.

Business Auxiliary Service - taxability of distributor commission payments - extended period of limitation for service tax - suppression as prerequisite for invoking extended period - penalty under Section 78 - bona fide doubt as defence - appropriation of service tax paid (TR-6)

Business Auxiliary Service - taxability of distributor commission payments - bona fide doubt as defence - Whether amounts received by the appellants as commission from M/s. Amway are taxable as consideration for Business Auxiliary Service - HELD THAT: - The Tribunal considered the submissions and precedents (including Charanjeet Singh Kanuja and a recent Bench decision in P.K. Kutty) and concluded on merits against the appellants that the receipts constituted taxable services. Although the appellants contended a bona fide doubt as to taxability and pointed to payment of service tax after being pointed out, the Tribunal recorded that on the substantive question of taxability the finding goes against the assessee. [Paras 7]

On merits the receipts were held taxable as Business Auxiliary Service and the Tribunal sustained the substantive finding against the appellants.

Extended period of limitation for service tax - suppression as prerequisite for invoking extended period - penalty under Section 78 - appropriation of service tax paid (TR-6) - Whether the Revenue could invoke the extended period of limitation and levy penalties in the absence of evidence of suppression - HELD THAT: - The Tribunal found that the Revenue failed to bring on record any evidence to justify the allegation of suppression which is necessary to invoke the extended period of limitation. For that reason the extended period could not be sustained even though the substantive taxability was affirmed. Consequentially, penalties (including those under Section 78) were set aside. The Tribunal allowed the appeals insofar as they related to the larger period, while preserving the findings applicable to the normal period of limitation. [Paras 7, 8]

Extended period invocation rejected for lack of suppression; appeals allowed for the larger period and penalties set aside, without affecting the adjudication for the normal period.

Final Conclusion: The Tribunal affirmed the substantive finding of taxability of the commission receipts as Business Auxiliary Service but held that the extended period of limitation could not be invoked due to absence of any evidence of suppression; accordingly the appeals were allowed to the extent of the larger period and the penalties were cancelled, while the assessments for the normal period remain unaffected.

CENVAT credit of service tax - services relating to business - directly related to manufacture - bank charges for loan processing and up-front fee - penalty under Cenvat Credit Rules read with Central Excise Act

CENVAT credit of service tax - bank charges for loan processing and up-front fee - directly related to manufacture - services relating to business - Whether service tax paid on bank loan processing fee and up-front fee is admissible as CENVAT credit as an activity relating to business and directly related to manufacture of final products. - HELD THAT: - The Tribunal found that the processing fee and up-front fee were charged by the bank for providing term loan and cash credit facilities which were availed to run the assessee's business and to purchase capital goods necessary for manufacture. The charges were held to be exigencies of business for which there was no alternative; accordingly the service tax paid on such bank charges falls within the ambit of "activities relating to business" and is eligible for CENVAT credit. The Tribunal recorded that the loans were essential to meet business expenditure and facilitate manufacture, and therefore the payment of these bank charges could not be excluded from input credit merely because they were denominated as loan-related fees. [Paras 8, 9]

Impugned order set aside; appeal allowed and CENVAT credit on the service tax paid on the loan processing fee and up-front fee accepted with consequential benefits to the appellant.

Final Conclusion: The Tribunal allowed the appeal, holding that service tax paid on bank loan processing and up-front fees constituted services relating to business and were directly connected to manufacture, thereby entitling the assessee to CENVAT credit; the earlier demand and penalty were set aside and consequential relief granted.

CENVAT credit eligibility - definition of input under CENVAT Credit Rules - exclusion for goods used in construction of a civil structure - statutory requirement as determinative of eligibility - remand for fresh ascertainment of extent of credit

Exclusion for goods used in construction of a civil structure - CENVAT credit eligibility - statutory requirement as determinative of eligibility - Denial of CENVAT credit for goods used for roof support, roof stitching and related roofing works in underground mines under the exclusion to the definition of 'input'. - HELD THAT: - The Tribunal examined the exclusion which disallows credit for goods used in construction of a building or civil structure or for laying of foundation or making structures for support of capital goods. It held that fabricated poles, base/bed plates and similar items used to support capital goods (where they act as permanent supports) fall within that exclusion. By contrast, roofing, roof support and roof stitching in underground mines serve to prevent collapse and to protect workings; they do not properly fall within the concept of a 'civil structure' which ordinarily denotes constructions to house people, goods or equipment. Further, such roofing and stitching are statutorily mandated safety measures under mining regulations and, being essential to the process of mining, are functionally connected to manufacture; where an activity is statutorily required for manufacture, inputs and input services used for it are eligible for CENVAT credit. Applying these principles, the Tribunal found that denial of credit for roofing, roof support and roof stitching lacked legal basis. [Paras 5, 6, 7]

CENVAT credit cannot be denied on the ground that roofing, roof support and roof stitching in underground mines are 'civil structure' and therefore excluded; such denial has no basis in law.

CENVAT credit eligibility - definition of input under CENVAT Credit Rules - remand for fresh ascertainment of extent of credit - Whether the adjudicating authority could sustain denial of credit where it found lack of adequate particulars identifying inputs used for eligible activities. - HELD THAT: - The Tribunal observed that the adjudicating authority negatived claims on the ground that specific details were not produced to identify inputs attributable to maintenance/repair or manufacture of capital goods. The record, however, contained the requisite details which had been placed before the original authority. If information was deficient, the authority ought to have placed the appellant on notice and required production of supporting data rather than reaching a blanket denial. Because the original order contains no finding quantifying the extent of eligible credit and the adjudicating authority did not engage in the requisite fact-finding or give the appellant an opportunity to clarify deficiencies, the dispute as to extent of entitlement could not be finally resolved on the existing record. [Paras 4, 8]

Impugned order set aside insofar as it denies credit for roofing and related items; matter remanded to the original authority for fresh ascertainment of entitlement and quantification in accordance with this judgment.

Final Conclusion: The Tribunal set aside the denial of CENVAT credit for roofing, roof support and roof stitching used in underground mines and remanded the matter to the original authority for fresh ascertainment and quantification of eligible credit after giving the appellant an opportunity to produce or clarify particulars.

Restriction on utilisation of Cenvat credit pending payment of outstanding duty - Validity of sub-rule (3A) of Rule 8 of the Central Excise Rules, 2002 - Right to avail Cenvat credit - Reasonableness and proportionality of legislative restriction - Violation of Article 14 and Article 19(1)(g)

Validity of sub-rule (3A) of Rule 8 of the Central Excise Rules, 2002 - Restriction on utilisation of Cenvat credit pending payment of outstanding duty - Reasonableness and proportionality of legislative restriction - Right to avail Cenvat credit - Violation of Article 14 and Article 19(1)(g) - Impugned disbarment of utilisation of Cenvat credit under sub-rule (3A) of Rule 8 as applied to the appellant's clearances was not sustainable and the appeal was allowed. - HELD THAT: - The Tribunal applied the reasoning in Indsur Global Ltd which declared the portion of sub-rule (3A) that requires payment of duty "without utilizing the Cenvat credit" to be unconstitutional. The decision reasoned that the provision imposed an excessive and arbitrary restriction by preventing an assessee from availing credit of duty already paid, thereby infringing the right to carry on business under Article 19(1)(g) and the equality/proportionality norms under Article 14. The Tribunal observed that while liability to pay interest under sub-rule (3) remains, sub-rule (3A)'s complete withdrawal of the Cenvat credit facility operates as a disproportionate punitive mechanism and thus must be read down or struck insofar as it mandates payment without utilization of accumulated credit. Following that conclusion and relevant High Court precedents, the impugned order denying utilisation for the stated clearances was set aside. [Paras 4, 5]

The portion of sub-rule (3A) of Rule 8 that bars utilisation of Cenvat credit until outstanding duty is paid is invalid as applied; the impugned order is set aside and the appeal is allowed.

Final Conclusion: Applying the reasoning in Indsur Global Ltd and allied precedents, the Tribunal held that the disbarment of utilisation of Cenvat credit under sub-rule (3A) is arbitrary and disproportionate; the impugned order denying utilisation for clearances between 4th July 2010 and 3rd November 2010 is set aside and the appeal is allowed.

Proportionate CENVAT credit based on actual consumption - Obligation to reverse CENVAT credit under Rule 6 of the CENVAT Credit Rules, 2004 - Availability of CENVAT credit on inputs used in manufacture of exempted goods exported under Rule 6(6)(v) - Classification of clearances under Chapter X procedure as non-exempted for purposes of credit reversal - Precedent and consistency in departmental/tribunal decisions

Proportionate CENVAT credit based on actual consumption - Obligation to reverse CENVAT credit under Rule 6 of the CENVAT Credit Rules, 2004 - Assessee entitled to avail CENVAT credit proportionate to the quantity of inputs actually issued for manufacture of dutiable goods rather than taking full invoice credit and reversing proportionate amount for exempted goods. - HELD THAT: - The Tribunal noted that the assessee maintained inventory and issue records, and availed credit only to the extent inputs were actually consumed in manufacture of dutiable goods. The Bench relied on its earlier decision in the assessee's own case to accept that credit may be taken in proportion to actual usage. Where credit is availed strictly on the basis of actual consumption, the obligation to reverse credit under Rule 6 does not arise in respect of the portion not used for dutiable clearance. The Tribunal therefore followed the prior consistent view and set aside the demand confirmed by the Commissioner. [Paras 9]

Credit properly availed in proportion to actual input consumption; no reversal called for.

Availability of CENVAT credit on inputs used in manufacture of exempted goods exported under Rule 6(6)(v) - Obligation to reverse CENVAT credit under Rule 6 of the CENVAT Credit Rules, 2004 - CENVAT credit is available on inputs used in manufacture of exempted goods which are exported without requirement of reversal under Rule 6(6)(v). - HELD THAT: - The Tribunal accepted the proposition, as recognised by the Hon'ble High Court of Bombay in Repro India Limited , that removal of exempted goods for export on furnishing bond/conditions falls within the ambit of Rule 6(6)(v) and does not mandate reversal of credit. Having applied that legal principle and consistent Bench decisions, the Tribunal held that credit taken on inputs used for manufacture of exported exempted goods was allowable for the period in question. [Paras 9]

CENVAT credit on inputs for exported exempted goods allowed; no reversal required under Rule 6(6)(v).

Classification of clearances under Chapter X procedure as non-exempted for purposes of credit reversal - Obligation to reverse CENVAT credit under Rule 6 of the CENVAT Credit Rules, 2004 - Goods cleared under Chapter X procedure are not to be treated as exempted goods for the purpose of reversal under Rule 6 and credit need not be reversed for such clearances. - HELD THAT: - Relying on this Bench's earlier decision in Aurobindo Pharma Ltd. and the line of authority beginning with Hindustan Zinc Ltd. as upheld by the Supreme Court, the Tribunal held that Chapter X clearances do not render the goods 'exempted' so as to attract reversal under Rule 6(3)(i). Accordingly, credit claimed in respect of dutiable goods cleared under Chapter X procedure was held to be maintainable. [Paras 9]

Clearances under Chapter X are not exempted clearances for reversal purposes; no reversal of credit required.

Final Conclusion: All contested issues were decided in favour of the assessee by applying the Tribunal's and higher courts' precedents: proportionate credit based on actual consumption is permissible; credit on inputs for exported exempted goods is allowable under Rule 6(6)(v); and clearances under Chapter X are not treated as exempted for reversal. The demand, interest and penalties were set aside and the appeal allowed.

Assessable value of raw materials supplied to job worker - Price declaration vs delivery challan as basis for valuation - Recovery of duty for suppressed value under Section 11A(1) read with Rules 4, 5, 6 & 8 of the Central Excise Rules - Deemed CENVAT credit inadmissible where value is suppressed - Interest liability under Section 11AB - Penalty under Section 11AC and Rule 25 and Rule 26 of the Central Excise Rules - Extended period of limitation

Assessable value of raw materials supplied to job worker - Price declaration vs delivery challan as basis for valuation - The price reflected in the delivery challans is to be treated as the correct value of the grey fabric for determination of assessable value. - HELD THAT: - The Tribunal found no sale/purchase between the supplier (KHDCL) and the processor (Sanghi); the price declaration furnished by KHDCL expressly described a tentative price and undertook to reimburse any difference if excise authorities demanded the true value, and granted Sanghi a lien on stocks until reimbursement. That indicates the price declaration was provisional. The delivery challans set out the amount payable in the event of short supply, damage or loss, and Sanghi would be liable to reimburse at those delivery-challan rates. Because the true economic consequence (reimbursement on loss) is tied to the delivery-challan price, the Tribunal held the delivery-challan price reflects the correct value of the raw material. The adjudicating authority erred in treating the higher delivery-challan price as only a 15% transit-risk loading based solely on statements in personal hearing without documentary support; neither the delivery challan, the price declaration, the agreement nor other documents substantiated a 15% notional transit-risk adjustment.

Delivery-challan prices are the correct basis for valuing the raw material supplied to the job-worker; the adjudicating authority's conclusion that delivery-challan prices included a notional 15% transit risk is not sustained.

Recovery of duty for suppressed value under Section 11A(1) read with Rules 4, 5, 6 & 8 of the Central Excise Rules - Differential central excise duty on the higher delivery-challan value is recoverable from the respondent under Section 11A(1) read with the specified Rules of the Central Excise Rules. - HELD THAT: - Having held that the delivery-challan price represents the correct value of the grey fabric, the Tribunal concluded that where the assessee declared a lower value, the differential duty is recoverable under the statutory provisions cited in the show-cause notice. The Tribunal observed that the assessee mis-declared the value by adopting a lower figure than reflected in the delivery challans, thereby giving rise to liability for recovery of the differential duty.

Demand of differential excise duty on the basis of delivery-challan value is liable to be recovered.

Deemed CENVAT credit inadmissible on suppressed value - Any deemed CENVAT credit availed by reference to the suppressed (lower) value is liable to be disallowed and recovered. - HELD THAT: - Because the assessable value has been held to be the higher delivery-challan price, the Tribunal held that CENVAT credit taken on the basis of the lower declared value cannot stand and is liable to be recovered. The conclusion flows from the determination of the correct assessable value.

Deemed CENVAT credit, if any, taken on the mis-declared value must be disallowed and recovered.

Interest liability under Section 11AB - Interest under Section 11AB is payable on the duty shortfall arising from the suppressed value. - HELD THAT: - Since the Tribunal upheld recovery of the differential duty on the basis of delivery-challan value and found mis-declaration of value, it concluded that interest under the relevant provision is exigible on the duty shortfall.

Interest under Section 11AB is recoverable from the respondent on the differential duty.

Penalty under Section 11AC and Rule 25 and Rule 26 of the Central Excise Rules - Penalties proposed under Section 11AC read with Rule 25 and penalty on the supplier under Rule 26 are set aside as a matter of discretion. - HELD THAT: - Although the Tribunal found that duty and interest were exigible because of mis-declaration, it took a lenient view on penal consequences. The Tribunal observed there was scope to conclude that the assessee may have misunderstood the duty liability and, considering the facts and circumstances, exercised discretion to set aside the penalties proposed against the respondent and against KHDCL under the specified rules.

Penalties under Section 11AC read with Rule 25 and under Rule 26 against KHDCL are set aside.

Final Conclusion: On the facts, the Tribunal held that delivery-challan prices constitute the correct value of the grey fabric for assessable value; differential excise duty and interest are recoverable and any CENVAT credit availed on the suppressed value is liable to be disallowed, but penalties proposed under Section 11AC/Rule 25 and Rule 26 were set aside in exercise of discretion.

Sustainability of demand founded on remote investigation and presumption - entitlement to area-based exemption and refund under Notification No. 56/2002-CE dated 14.11.2002 - proof of receipt and movement of inputs by check-post/toll-barrier entries and departmental verification - inadmissibility of generalized adverse inference without corroborative evidence

Sustainability of demand founded on remote investigation and presumption - inadmissibility of generalized adverse inference without corroborative evidence - Whether the demand and denial of refund based on the investigation by Commissionerate Merrut-II alleging non existence of farmers and non supply of inputs to the appellant is sustainable. - HELD THAT: - The Tribunal held that the show cause notice and consequent demand rest on assumptions and generalized conclusions drawn from the Merrut investigation without concrete corroborative evidence specific to the appellant. The Tribunal placed weight on contemporaneous material on record showing physical movements at toll/check barriers, departmental verifications and visits (including District Industries Centre, preventive staff and other departmental inspections) which did not record adverse findings. Reliance was placed on earlier precedent where similar generalized allegations were held unsustainable in absence of direct, corroborative evidence against the particular units. In these circumstances the exercise of raising demands merely on the basis of the Merrut investigation was held to be unjustified. [Paras 6, 12]

Demand and refusal of refund founded on the Merrut investigation are not sustainable and are set aside.

Entitlement to area-based exemption and refund under Notification No. 56/2002-CE dated 14.11.2002 - proof of receipt and movement of inputs by check-post/toll-barrier entries and departmental verification - Whether the appellant was a manufacturing unit entitled to exemption under Notification No. 56/2002-CE and the refund of duty paid through PLA. - HELD THAT: - On the material placed before it - including toll/check-post records showing entry/exit of transport vehicles, reports from State/departmental officers that periodical inspections found manufacturing activity and no adverse remarks, inspections by Pollution Control and Electrical authorities, and other corroborative departmental verifications - the Tribunal concluded there was no cogent evidence to displace the conclusion that the appellant received inputs and manufactured the goods. Applying the principle that adjudication must be record based and generalized allegations cannot override specific contemporaneous departmental findings, the Tribunal held the appellant entitled to the benefit of the exemption Notification and to the refund claimed. [Paras 7, 10]

The appellant is held to be entitled to the benefit of Notification No. 56/2002-CE dated 14.11.2002 and to the refund of duty paid through PLA; the impugned order is set aside.

Final Conclusion: The impugned order is set aside; the appeal is allowed and the appellant is held entitled to the area based exemption under Notification No. 56/2002 CE and to consequential refund relief, the demands and proceedings founded solely on the Merrut investigation being unsustainable.

Limitation for refund claims under Section 11B - payment under protest - effect of appellate finality on limitation - appropriation of refund against demand - finality of Supreme Court decision - unjust enrichment

Limitation for refund claims under Section 11B - payment under protest - effect of appellate finality on limitation - finality of Supreme Court decision - Timeliness of the refund claim filed by the assessee after final disposal by the Hon'ble Supreme Court. - HELD THAT: - The Tribunal held that where a departmental challenge to a favourable classification/order by the Tribunal was pursued to the Supreme Court, the relevant one year limitation for filing a refund under Section 11B must be reckoned from the date when the Supreme Court settles the controversy. The assessee had paid duty under protest and, after dismissal of the department's appeal by the Supreme Court, filed the refund claim within one year from that Supreme Court order. Applying the principle that payment under protest preserves the right to claim refund and that the finality of the Supreme Court decision fixes the relevant date for limitation, the refund claim was held to be within time and not barred by limitation or by the plea of unjust enrichment. [Paras 9]

Refund claim held timely; refund rightly sanctioned by Commissioner (Appeals).

Appropriation of refund against demand - appropriation of refund - effect of appellate reversal on appropriation - Validity of appropriation of the sanctioned refund against a confirmed demand that was subsequently set aside by the Tribunal. - HELD THAT: - The Tribunal examined the order directing appropriation of the sanctioned refund against a demand confirmed earlier. Since this Tribunal subsequently set aside the demand in separate proceedings, there remained no sustainable demand against which the refund could be appropriated. Consequently the appropriation order was held to be unsustainable and was set aside. [Paras 10]

Order of appropriation set aside; refund not to be appropriated against the set aside demand.

Final Conclusion: The appeal by the Revenue is dismissed; the appeal by the assessee is allowed - the refund claim is held timely and the appropriation of the refund against the demand is set aside, with consequential reliefs, if any.

Entitlement to area-based exemption and refund under Notification No. 56/2002-CE - record-based adjudication and role of departmental verification - requirement of corroborative evidence to rebut receipt and manufacture - reliance on inter-departmental and toll-barrier records as proof of movement

Requirement of corroborative evidence to rebut receipt and manufacture - record-based adjudication and role of departmental verification - Whether the appellants were bona fide manufacturers entitled to the benefit of Notification No. 56/2002-CE and refund of duty paid where the Revenue's case rested on investigation alleging non-existence of suppliers and non-receipt of inputs. - HELD THAT: - The Tribunal examined the material relied upon by the Revenue-an investigation by the Commissioner of Central Excise, Meerut-which alleged that farmers and commission agents were non-existent and that inputs were not supplied to the Jammu & Kashmir units. The Tribunal contrasted that investigation with contemporaneous and corroborative records: toll-barrier entries showing movement of trucks carrying inputs/finished goods, reports by District Industries Centre and preventive staff verifying purchases and factory visits, inspections and certifications by other departments (Electrical Inspector, Pollution Control Department), transit insurance and continued industrial activity during investigation, and prior decisions of the Tribunal which on identical facts held that the impugned allegations were not sustainable. In the absence of any adverse report from the jurisdictional Central Excise authorities and lacking concrete, corroborative evidence to negate receipt of inputs and manufacture, the Tribunal held that the adjudicating authority could not sustain the demand. Emphasising that adjudication under excise is record-based and that departmental verifications and toll records cannot be lightly discarded, the Tribunal set aside the impugned order and allowed the appeals.

Impugned order set aside; appellants held to be manufacturers in Jammu & Kashmir and entitled to benefit of Notification No. 56/2002-CE and refund of duty paid; appeals allowed with consequential relief.

Final Conclusion: The appeals are allowed; in absence of concrete corroborative evidence to negate receipt of inputs or manufacture, the order demanding refund is unsustainable and is set aside, granting appellants the benefit of Notification No. 56/2002-CE and consequential relief.

Cenvat credit admissibility - evidence of manufacture - benefit under area-based exemption - reliance on third-party investigation - penalty not sustainable in absence of concrete evidence

Cenvat credit admissibility - evidence of manufacture - benefit under area-based exemption - reliance on third-party investigation - Cenvat credit claimed by M/s Sangam Aromatics on goods procured from Jammu & Kashmir manufacturers cannot be denied on the basis of the Merrut investigation. - HELD THAT: - The Tribunal held that the denial of cenvat credit was founded solely on an investigation carried out by the Commissioner, Merrut-II, which did not include independent investigation at the end of the Jammu based manufacturers. Material on record - entry records at toll barriers, periodic checks by range staff, certificates and verifications by District Industries Centre and other local authorities, preventive staff reports, sanctioned refund claims under Notification No. 56/2002-CE and earlier Tribunal decisions on identical facts - collectively demonstrated receipt of inputs and manufacture by the Jammu units. The Merrut investigation's generalisation (that farmers/commission agents were non-existent and therefore no manufacture occurred) amounted to assumption and presumption without concrete corroborative evidence against the manufacturers. In these circumstances and on the authorities noted, the Jammu based manufacturers were held to be manufacturers during the impugned period and entitled to the exemption/refund; consequently the recipient in U.P. was entitled to take cenvat credit on goods cleared by those manufacturers. [Paras 9, 10, 11, 12, 13]

Impugned denial of cenvat credit set aside; cenvat credit held admissible.

Penalty not sustainable in absence of concrete evidence - assumption and presumption - Penalties imposed on the appellants are not sustainable and are liable to be set aside. - HELD THAT: - The Tribunal found that the allegations underlying imposition of penalties rested on assumptions and generalisations drawn from the Merrut investigation without concrete, corroborative evidence against the appellants. Given that the basic contention - non-receipt of inputs and non-manufacture - was not established on the record and the manufacturers had contemporaneous verifications and allowances to continue activity during investigation, the imposition of penalties was held to be unjustified. [Paras 13]

Penalties set aside.

Final Conclusion: The impugned orders denying cenvat credit and imposing penalties are set aside; the Jammu based manufacturers are held to have manufactured the goods during the relevant period and the recipient is entitled to consequential relief.

Extended period of limitation under Section 11A of the Central Excise Act - valuation under Rule 6(b)(ii) of the Central Excise Valuation Rules, 1975 - addition of notional profit - deductibility of trade discounts in valuation - availment of Cenvat credit on the basis of supplementary invoice - exception to Cenvat credit for fraud, collusion or wilful mis-statement or suppression

Extended period of limitation under Section 11A of the Central Excise Act - valuation under Rule 6(b)(ii) of the Central Excise Valuation Rules, 1975 - addition of notional profit - deductibility of trade discounts in valuation - Validity of the differential duty demand for clearances during 31.03.2000 to 30.06.2000 and whether the demand is barred by limitation in absence of any recorded suppression or wilful mis-statement. - HELD THAT: - The show cause notice invoked the extended limitation under Section 11A by alleging short payment with intent to evade duty, but did not particularise any specific act of suppression by HVTL. Investigation began only after HVTL voluntarily paid differential duty as per its own computation. Given that the transmission gear activity had earlier been a division of TML and relevant price lists were already filed, there is no material to sustain an allegation of suppression or wilful mis-statement that would justify invocation of the extended period. In consequence, no demand for differential duty survives within the normal period of limitation and the differential demand is liable to be set aside. [Paras 11]

Differential duty demand for the period 31.03.2000 to 30.06.2000 set aside as time barred for want of any substantiated suppression to invoke the extended period.

Availment of Cenvat credit on the basis of supplementary invoice - exception to Cenvat credit for fraud, collusion or wilful mis-statement or suppression - Whether M/s. Tata Motors Limited is entitled to take Cenvat credit on the basis of supplementary invoices issued by HVTL for the differential duty paid. - HELD THAT: - It is undisputed that HVTL paid the differential duty and issued supplementary invoices. The Adjudicating Authority denied credit relying on the proviso in Rule 7(1)(b) which excludes credit where additional duty is due to fraud, collusion or wilful mis-statement or suppression. Having found no basis to hold that the extended period under Section 11A was properly invoked (i.e., no proven suppression or wilful mis-statement), the exception does not apply. The Tribunal also noted consistent authority permitting availment of credit on supplementary invoices even prior to issuance of the specific notification of 29.08.2000. Accordingly, TML is entitled to Cenvat credit on the basis of the supplementary invoices. [Paras 12, 13, 14, 15]

Cenvat credit to M/s. Tata Motors Limited allowed on the basis of supplementary invoices issued by HVTL.

Final Conclusion: The impugned Order in Original is set aside: the differential duty demand for 31.03.2000 to 30.06.2000 is quashed as time barred, and M/s. Tata Motors Limited is entitled to claim Cenvat credit on the basis of the supplementary invoices issued by HVTL.

Refund filing before jurisdictional Central Excise officer for SEZ Unit - Rule 47 of SEZ Rules read with section 51 - technical rejection for lack of jurisdiction - leave to re-file refund claim

Refund filing before jurisdictional Central Excise officer for SEZ Unit - Rule 47 of SEZ Rules read with section 51 - Whether the refund claim filed before the Central Excise Commissionerate at Trichy was maintainable where the SEZ Unit is situated in Gujarat. - HELD THAT: - The Tribunal held that, following the amendment to Rule 47 of the SEZ Rules effective 05.08.2016 and read with section 51, a refund in the circumstances of this case must be filed before the Central Excise officer having jurisdiction over the SEZ Unit. Although the excise duty had been paid to authorities within the Trichy Commissionerate, the statutory scheme requires the claim to be presented to the jurisdictional authority for the SEZ Unit in Gujarat. The appellant's filing before Trichy therefore amounted to presentation before the wrong authority. [Paras 5]

The refund claim filed before the Trichy Commissionerate was not maintainable and rejection for lack of jurisdiction is affirmed.

Technical rejection for lack of jurisdiction - leave to re-file refund claim - Whether the appellant may be permitted to present the same refund claim before the proper jurisdictional authority despite initial filing before the wrong forum. - HELD THAT: - The Tribunal recognised that the rejection was on a procedural ground of jurisdiction and noted the appellant had filed within the due date albeit before the wrong forum. While declining to interfere with the jurisdictional rejection, the Tribunal exercised a remedial discretion to avoid extinguishing the substantive right on account of the procedural mistake. Accordingly, the appellant was allowed liberty to file the refund claim before the correct Central Excise jurisdictional officer, who is to take into account that the claim was originally presented within time to the wrong forum. [Paras 6]

Appellant is permitted to re-file the refund claim before the proper jurisdictional authority; appeal dismissed on merits of jurisdictional correctness.

Final Conclusion: The Tribunal dismissed the appeal upholding the rejection of the refund claim for lack of jurisdiction under Rule 47 of the SEZ Rules read with section 51, but granted the appellant liberty to present the same claim before the Central Excise authority having jurisdiction over the SEZ Unit in Gujarat.

Violation of principles of natural justice - no personal hearing - non-application of mind - revision of assessment - independent verification and cross-verification of other end sellers - reliance on departmental web report without enquiry - quashing of assessment order and remand for fresh consideration

Violation of principles of natural justice - no personal hearing - non-application of mind - Impugned assessment order was vitiated for violation of natural justice and non-application of mind. - HELD THAT: - The Court found that the second respondent proceeded to pass the final assessment order without affording the petitioner a personal hearing and without accepting any reply from the petitioner to the pre-revision notice dated 03.01.2019. The assessment order itself records an invitation to file objections in writing but no personal hearing was granted and no independent application of mind was shown; the officer relied on departmental findings arising from an inspection report without conducting a separate enquiry. On these grounds the assessment was held to be legally unsustainable. [Paras 10, 11, 12]

Assessment order dated 28.02.2019 quashed for violation of principles of natural justice and non-application of mind.

Revision of assessment - independent verification and cross-verification of other end sellers - reliance on departmental web report without enquiry - quashing of assessment order and remand for fresh consideration - Matter remanded for fresh consideration with directions to permit filing of reply, grant personal hearing, and conduct independent verification. - HELD THAT: - The Court directed that on remand the assessing authority must give the petitioner adequate opportunity to raise all objections, including permitting a written reply to the pre-revision notice and affording personal hearing. The authority must not merely accept the departmental web report but must apply its mind independently and, where necessary, cross-verify sales and purchases with the other end sellers and conduct such intra-departmental or independent enquiries as appropriate before passing final orders. The Court required final orders to be passed within eight weeks from receipt of this order. [Paras 13]

Proceedings remanded to the second respondent for fresh consideration with directions to permit reply, provide personal hearing, carry out independent verification, and pass final orders within eight weeks.

Final Conclusion: The assessment order for Assessment year 2014-15 dated 28.02.2019 is quashed and the matter is remitted to the assessing authority for fresh consideration after affording the petitioner opportunity to file a reply and personal hearing, and after conducting independent verification; final orders to be passed within eight weeks.

Parallel proceedings - penalty proceedings independent of assessment - stay of proceedings - opportunity of hearing - disposal of appeals expeditiously

Parallel proceedings - penalty proceedings independent of assessment - stay of proceedings - Whether further proceedings under Exts.P5 and P5(a) should be stayed pending disposal of appeals Exts.P3 and P3(a). - HELD THAT: - The Court accepted the view expressed in the cited Division Bench decision in W.A. No.688 of 2017 that penalty or enquiry proceedings and assessment proceedings are distinct and that initiation or continuance of the former does not automatically require the assessment proceedings to be kept pending. On that basis the petitioner's contention for a stay of Exts.P5 and P5(a) was not accepted; the petitioner retains the right to file objections and to participate in the enquiry initiated by those notices. The Court therefore did not grant an interim restraint on the departmental proceedings under Exts.P5 and P5(a). [Paras 4, 5]

No stay of proceedings under Exts.P5 and P5(a); petitioner may participate and file objections in those enquiries.

Disposal of appeals expeditiously - opportunity of hearing - Direction for disposal of the appeals filed against the assessment orders (Exts.P3 and P3(a)). - HELD THAT: - Having noted that appeals against the assessment orders were pending, the Court directed the respondent to decide Exts.P3 and P3(a) expeditiously. The order records that the appeals should be disposed of preferably within four weeks and that assessment proceedings shall be finalized only after giving an opportunity of hearing to the appellant/assessee, consistent with the principle cited from the Division Bench decision. [Paras 5]

Respondent directed to dispose of Exts.P3 and P3(a) appeals preferably within four weeks, ensuring opportunity of hearing before finalizing assessment.

Final Conclusion: Writ petition disposed: no injunction on the departmental enquiries under Exts.P5 and P5(a); appeals Exts.P3 and P3(a) to be disposed of expeditiously, preferably within four weeks, with opportunity of hearing.