TaxTMI Updates e-Newsletter
May 29,2019

Manual filing and processing under Rule 97A - Provisional refund under Rule 91 - Wilful disobedience of court orders - Administrative constitution and authority of Refund Approval Committee

Manual filing and processing under Rule 97A - Validity of rejection of manually filed refund application solely on ground that it was not filed electronically. - HELD THAT: - The Court found that once it had granted liberty to the petitioners to file refund applications manually and Rule 97A recognises manual filing where electronic filing is prescribed, the rejection dated 22nd March 2019 on the sole ground of non-electronic filing was unsustainable. The earlier order granting liberty to file manually could not be undermined by rejection for non-electronic filing. The Court set aside the impugned rejection and directed the proper officer to re-examine the petitioners' manual refund applications, hear the petitioners and pass fresh reasoned orders. [Paras 3, 7]

Order dated 22nd March 2019 rejecting the manual refund application set aside; officer directed to re-examine the manual application, hear petitioner and pass fresh reasoned order.

Provisional refund under Rule 91 - Wilful disobedience of court orders - Failure of authorities to comply with court directions to decide refunds and, in absence of decision, obligation to grant provisional refunds under Rule 91. - HELD THAT: - The Court recorded that despite its direction and subsequent assurance, the Refund Approval Committee did not take the required decision and no provisional refunds were issued as mandated by Rule 91. The non-action - including postponement because an officer was on election duty and the RAC's inaction thereafter - amounted to disobedience of the Court's orders. The Court issued notices to specified RAC members and the officer who reconstituted the RAC to explain their conduct, and directed that provisional refunds due to the petitioners in the two specified writ petitions be paid on or before the next date of hearing. [Paras 6, 7, 9, 14]

Notices issued to specified RAC members and the Commissioner VAT; provisional refunds in W.P.(C) Nos. 13881/2018 and 194/2019 to be paid on or before the next date of hearing.

Administrative constitution and authority of Refund Approval Committee - Whether the Refund Approval Committee has legal basis or can supplant the officer statutorily empowered to pass refund orders - left for explanation and further consideration. - HELD THAT: - The Court observed that the RAC appears to lack an express basis under the CGST Act or Rules and that its constitution has, in practice, hindered compliance with statutory refund provisions. Rather than deciding the legal question on the papers, the Court directed the Commissioner VAT to file an affidavit explaining the basis on which the RAC was constituted and reconstituted and how it functions relative to the officer statutorily empowered to pass refund orders. The matter is to be considered after the Commissioner and affected officers file explanations. [Paras 11, 13, 14]

Commissioner VAT directed to file affidavit explaining constitution and authority of the RAC; question of RAC's legal sanctity to be considered on receipt of explanation.

Final Conclusion: The Court set aside the refund rejection for manual filing and directed fresh examination; found non-compliance with its directions warranting notices to RAC members and the Commissioner, and ordered provisional refunds to be paid forthwith while calling for affidavits on the constitution and authority of the Refund Approval Committee for further consideration.

Advance Ruling under Section 97 of CGST Act, 2017 - Withdrawal of Advance Ruling Application - Transitional Matters

Advance Ruling - Withdrawal of Application - Transitional Matters - Application for advance ruling disposed of as withdrawn. - HELD THAT: - The applicant, engaged in works contract services, filed an application under the advance ruling provision seeking guidance on adjustment of service tax paid on mobilization advances in the pre GST regime. The Authority directed the applicant to reframe and revise the question(s), but the applicant did not file a revised application. The applicant thereafter requested permission to withdraw the application, stating that advance ruling could not be sought in respect of transitional matters. No adjudication on the substantive question was undertaken. On the applicant's request the application was disposed of as withdrawn.

Application disposed of as withdrawn.

Final Conclusion: The advance ruling application filed by M/s. Urbanac Projects Private Limited was not adjudicated on merits and has been disposed of on the applicant's request as withdrawn.

Power of Central Government u/s 85 & 86 - Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - Prospective operation - date of commencement / coming into force - exercise of executive powers under enabling Act prior to commencement - power to remove difficulties - advancement of commencement date - interim stay / interim relief - whether notifications issued making them effective prior to 01.04.2016 are ultravirus? - HELD THAT:- Until further orders, operation of the impugned order is stayed. [2019 (5) TMI 1070 - DELHI HIGH COURT]

The petitioners are free to prosecute respondent and proceed further in accordance with law, subject to the final decision of this matter.

Recall of court order - Restoration of appeal - Inadvertent error on the face of the record - Withdrawal of appeal - Applicability of CBDT Circular allowing appeals in composite orders where tax effect in one assessment year exceeds prescribed monetary limits

Applicability of CBDT Circular allowing appeals in composite orders where tax effect in one assessment year exceeds prescribed monetary limits - Inadvertent error on the face of the record - Recall of court order - Restoration of appeal - Order dated 27.11.2018 permitting withdrawal of Tax Appeal No.749 of 2017 is liable to be recalled and the appeal restored because the appeal was covered by paragraph 5 of CBDT Circular No.3/2018 and was withdrawn due to an inadvertent error. - HELD THAT: - The court found that the appeal had been withdrawn on account of low tax effect but the captioned appeal arose from a composite order involving more than one assessment year. Paragraph 5 of CBDT Circular No.3/2018 permits filing of an appeal in respect of a composite order where the tax effect in one assessment year exceeds the prescribed monetary threshold; the tax effect for assessment year 2009-10 in the present matter was Rs. 56,28,744/-, which exceeded the prescribed limit. Given that the withdrawal occurred despite the appeal being covered by the circular and was attributable to inadvertence on the face of the record, the court concluded that the earlier order permitting withdrawal warranted recall and the appeal should be restored for adjudication on merits.

Order dated 27.11.2018 is recalled and Tax Appeal No.749 of 2017 is restored to file.

Final Conclusion: Application allowed; the earlier order permitting withdrawal is recalled and the tax appeal is restored for adjudication, with no order as to costs.

Application of section 50C and stamp duty/ready reckoner valuation - Valuation of encumbered/tenanted property - Appropriate valuation method-capitalisation of rent versus development potential - Marketable title and effect of pending litigation on fair market value - Burden on Revenue to prove understatement of consideration (K.P. Varghese principle)

Application of section 50C and stamp duty/ready reckoner valuation - Valuation of encumbered/tenanted property - Appropriate valuation method-capitalisation of rent versus development potential - Marketable title and effect of pending litigation on fair market value - Burden on Revenue to prove understatement of consideration (K.P. Varghese principle) - Whether the market value determined by the Valuation Officer / adopted by CIT(A) under section 50C could be applied in computing long term capital gains in respect of the transfer of the disputed, tenanted property, or whether the consideration shown by the assessee (and valuation on an appropriate basis) should govern the computation. - HELD THAT: - The Tribunal examined documentary record and authorities and found that the property was subject to multiple litigations, not in the absolute possession of the assessee (only ~627 sq.ft. in possession), and that title and realization were encumbered. In such circumstances the mere stamp duty/ready reckoner or a development potential based valuation cannot be mechanically adopted under section 50C. The Tribunal relied on the principle that Revenue must show more than a higher notional market value-there must be material to infer understatement of actual consideration (K.P. Varghese) and on precedents holding that where property is encumbered/tenanted the stamp duty value may not reflect transferrable market value. The Tribunal further held that valuation by development method, which assumes free sale and future development potential, was inappropriate for a heavily tenanted and litigated property; valuation should have regard to the rent actually collectible (capitalisation method) for the occupied portions. Applying these principles to the record, the Tribunal was not satisfied with the DVO/VO approach and the CIT(A)'s direction to adopt the higher value; it accepted that the assessee's contentions and coordinate decisions supported valuation on an 'as is' / rental capitalisation basis and that adoption of the higher stamp/VO value was not justified in absence of evidence that the assessee had actually received higher consideration than declared. [Paras 11, 12, 13]

CIT(A)'s direction to adopt the Valuation Officer's market value is set aside; the valuation method premised on development potential/stamp value is inappropriate for the encumbered, tenanted property and the AO is directed to delete the disallowances and compute capital gains consistent with the record and law (appeal allowed on this ground).

Verification of distributions to beneficiaries / restoration to Assessing Officer - Proof of offer of income by recipients and double taxation - Whether the addition of amounts distributed to beneficiaries (claimed to be taxed in their hands) should be sustained or whether the matter requires verification of returns/evidence of beneficiaries to avoid double taxation. - HELD THAT: - The Tribunal noted that the assessee claimed the amounts had been offered to tax by the individual beneficiaries but the assessee had not produced supporting returns/copies before the CIT(A). The CIT(A) recorded inability to verify shares and taxation by beneficiaries. Considering the contentions of both parties the Tribunal directed restoration of this issue to the Assessing Officer for verification; AO is to grant opportunity to the assessee to file documentary evidence (returns of beneficiaries and trust deed allocation) and to act in accordance with law after verification. [Paras 17, 19]

Issue restored to the Assessing Officer for factual verification and adjudication; AO to grant opportunity and verify evidence and then decide afresh.

Final Conclusion: The Tribunal allowed the appeal in respect of valuation and application of section 50C for AY 2012-13, setting aside the CIT(A)'s direction to adopt the Valuation Officer's higher market value and directing deletion of the disallowances; the issue concerning taxation of amounts distributed to beneficiaries is remitted to the Assessing Officer for verification and fresh disposal. Appeal allowed.

Time-bar under section 144C(13) - final assessment order void ab initio for non compliance with statutory time limit - recall of order / liberty to file miscellaneous application where records contradict certified dates

Time-bar under section 144C(13) - final assessment order void ab initio for non compliance with statutory time limit - Validity of the final assessment order passed after the period prescribed by section 144C(13). - HELD THAT: - The Dispute Resolution Panel issued directions on 03.06.2010, and the Assessing Officer received those directions on 17.06.2010 as shown by a certified annexure. Section 144C(13) requires completion of the assessment within one month from the end of the month in which the directions are received. The final assessment order dated 27.08.2010 was passed after the statutory period had expired. In these circumstances the Tribunal held that the assessment was passed in breach of the mandatory time limit and is therefore void ab initio. The Tribunal accordingly quashed the assessment passed by the Assessing Officer. [Paras 13, 14, 15]

The final assessment order is quashed as time barred for non compliance with section 144C(13).

Recall of order / liberty to file miscellaneous application where records contradict certified dates - Whether the revenue may seek recall of the Tribunal's order if departmental records show the certified chronology to be incorrect. - HELD THAT: - Because assessment records were not produced and the Tribunal's finding on dates relied on certified copies filed by the assessee, the Tribunal granted the revenue liberty to file a miscellaneous application for recall if it can show that the dates certified by the assessee are contrary to the departmental records. The liberty is limited to cases where the revenue produces contrary evidence showing the certified chronology to be incorrect. [Paras 16]

Liberty granted to the revenue to move for recall by way of miscellaneous application if it can produce records contradicting the certified dates relied upon by the Tribunal.

Unadjudicated grounds rendered academic - Status of the other grounds of appeal not argued before the Tribunal. - HELD THAT: - The additional ground on limitation was argued and decided; the remaining grounds were not argued at the hearing. The Tribunal therefore did not adjudicate those grounds and treated them as academic in light of the decision on the limitation point. [Paras 17]

Other grounds of appeal remain unadjudicated and are treated as academic.

Final Conclusion: The appeal is allowed: the assessment order dated 27.08.2010 is quashed as time barred under section 144C(13); revenue is granted liberty to seek recall by miscellaneous application if it can produce departmental records contradicting the certified chronology relied upon; other grounds were not adjudicated as they were not argued.

Remand to the Assessing Officer for fresh consideration after giving adequate opportunity of hearing - right to confront and cross-examine witnesses and principles of natural justice - evidential value of statements recorded under search provisions - treatment of accommodation entries / bogus purchases

Right to confront and cross-examine witnesses and principles of natural justice - evidential value of statements recorded under search provisions - Ld. CIT(A) did not adjudicate the assessee's complaint that collected/seized material and retracted statements were not furnished and that opportunity to confront or cross examine persons whose statements under search provisions were relied upon was not afforded. - HELD THAT: - The Tribunal found merit in the contention that the appellate authority did not deal with the assessee's plea regarding non provision of collected material and retracted statements nor the request to confront and cross examine persons whose statements recorded under search provisions were used as basis for additions. The Tribunal held that denial of opportunity to cross examine witnesses whose statements are made the basis of an order is a serious flaw and a violation of principles of natural justice, relying on the reasoning in Andaman Timber v. CIT to the effect that where the adjudicating order rests on such statements the assessee must be permitted to test their veracity. Because these contentions were not adjudicated by the CIT(A), the Tribunal set aside the issues to the file of the Assessing Officer for fresh consideration after giving the assessee adequate opportunity to be heard and to confront or cross examine as appropriate. [Paras 7]

Assessee's complaint regarding non adjudication of provision of collected material and denial of opportunity to confront/cross examine is remanded to the Assessing Officer for fresh consideration after giving adequate opportunity of being heard.

Treatment of accommodation entries / bogus purchases - remand to the Assessing Officer for fresh consideration after giving adequate opportunity of hearing - Whether the additions made by the Assessing Officer treating purchases from M/s Mohit International as bogus accommodation entries and the quantification (including embedded profit and commission) were properly upheld by the CIT(A). - HELD THAT: - The Tribunal noted that the CIT(A) had confirmed additions treating the purchases as bogus relying on statements recorded under search provisions and had quantified the addition (partly allowing the assessee). However, because the appellate authority did not properly address the assessee's contentions concerning evidential material, retracted statements and the absence of opportunity to confront witnesses, the Tribunal considered it appropriate in the interest of justice to remit the matter. Consequently, the Tribunal set aside the questions of fact and quantification (including the issue of embedded profit/percentage and commission) to the file of the Assessing Officer for fresh adjudication after affording the assessee adequate hearing and considering the assessee's objections and evidence afresh. [Paras 4, 7]

The question of treating purchases as bogus and the quantum of addition (embedded profit and commission) is remanded to the Assessing Officer for fresh consideration after giving the assessee adequate opportunity of being heard.

Final Conclusion: Both the assessee's and the Revenue's appeals are allowed for statistical purposes and the contested issues-relating to reliance on statements recorded during search, denial of opportunity to confront/cross examine, and the treatment and quantification of alleged bogus purchases-are set aside and remitted to the Assessing Officer for fresh adjudication after giving the assessee adequate opportunity to be heard.

Violation of the principles of natural justice - notice and opportunity of being heard - reliance on seized material and assessment of another person - unexplained cash credit under section 68 - onus on the assessee to prove source of credits - admission of additional evidence before appellate authority - treatment of entries as accommodation entries / peak credit

Violation of the principles of natural justice - notice and opportunity of being heard - reliance on seized material and assessment of another person - Whether non-issuance of notices under sections 143(2)/142(1) and non-supply of seized material under section 153C vitiated the assessment or appellate decision. - HELD THAT: - The Tribunal noted that the earlier assessment order under sections 144/142(1) read with section 153C had been set aside by the Principal CIT by invoking section 263, and that the assessee did not challenge that section 263 order. The record showed that the Assessing Officer issued a show-cause/notice dated 01.03.2016 and afforded opportunity of hearing, a fact which the assessee did not rebut before the authorities. The CIT(A)'s finding that the section 263 order remained unchallenged and that there was no failure to afford hearing was upheld. In these circumstances any contention based on non-supply of seized material or prior non-issuance of notices was held to have no present consequence at this appellate stage. [Paras 6]

Contentions of violation of natural justice and non-supply of seized material are rejected; finding upheld for revenue.

Unexplained cash credit under section 68 - onus on the assessee to prove source of credits - treatment of entries as accommodation entries / peak credit - Whether the deposits in the assessee's bank account are liable to be treated as unexplained cash credit under section 68 and added to income. - HELD THAT: - It was undisputed that large credits totalling the relevant sums were reflected in the assessee's bank account and that amounts were withdrawn immediately after deposit. The assessee did not produce any cogent evidence before the AO, CIT(A) or the Tribunal to explain the source of such credits or to rebut the view that they were accommodation entries. The AO had initially treated some receipts as commission income but, following the section 263 direction, treated the receipts as unexplained cash credit and made additions under section 68. The CIT(A)'s detailed reasoning, including the absence of any pleading on peak credit theory or documentary proof, was upheld. Having found no sufficient explanation on record, the Tribunal found no reason to interfere with the additions. [Paras 7, 8]

Addition of the deposits as unexplained cash credit under section 68 is confirmed in favour of the revenue.

Admission of additional evidence before appellate authority - procedure under Rule 46A - Whether the assessee's affidavit and letter dated 03.03.2016 could be admitted at the appellate stage. - HELD THAT: - The CIT(A) recorded that the purported reply dated 03.03.2016 and affidavit were not available before the AO and that filing them during appellate proceedings would amount to adducing additional evidence. The assessee did not make a formal application under Rule 46A nor provide an adequate explanation to admit such material. The CIT(A) therefore declined to admit the documents, a conclusion which the Tribunal found justified given the absence of a proper prayer or explanation and the fact that the assessee failed to place those materials before the AO. [Paras 7]

The affidavit and letter were not admitted; the rejection of those documents is sustained.

Treatment of entries reflected in Form 26AS - non-pressing of ground of appeal - Whether the addition based on entries shown in Form 26AS (Rs. 1,55,000) should be deleted. - HELD THAT: - The CIT(A) recorded that the assessee did not press this ground in the return submission filed on 06.09.2017 and therefore the ground was dismissed. The assessee likewise did not press or produce evidence on this issue before the Tribunal. In absence of prosecution of the ground or supporting material, the Tribunal confirmed the CIT(A)'s dismissal. [Paras 9, 10]

Addition relating to Form 26AS was not pressed and the dismissal of that ground is upheld.

Final Conclusion: All grounds of the assessee's appeals are dismissed; the Tribunal affirms the CIT(A)'s confirmation of additions as unexplained cash credit and the rejection/non-admission of additional evidence, and upholds the dismissal of the 26AS-related ground.

Section 40(a)(ia) disallowance for short or wrong deduction of tax at source - TDS under Chapter XVII-B - applicability and distinction between 194C and 194J - judicial consistency and precedent in adjudication of recurring issues

Section 40(a)(ia) disallowance for short or wrong deduction of tax at source - TDS under Chapter XVII-B - applicability of sections 194C and 194J - judicial consistency and precedent - Whether disallowance under Section 40(a)(ia) can be made where the assessee deducted TDS under Section 194C though Revenue contended TDS ought to have been deducted under Section 194J. - HELD THAT: - The Tribunal examined that the assessee, engaged in advertising and market research, had deducted tax at source under Section 194C on payments to field agents for surveys, data compilation and translation, while Revenue contended the payments were for professional/technical services attracting Section 194J. The Tribunal noted that in the present case there existed a bona fide difference of opinion as to the nature of the payments. In such factual matrix the Tribunal followed a sequence of earlier decisions in the assessee's own cases for AYs 2005-06 to 2011-12, which held that where TDS has been deducted under some provision of Chapter XVII-B and the nature of payments is disputed between payer and Revenue, disallowance under Section 40(a)(ia) is not warranted and the correct remedy is to invoke provisions dealing with recovery or Section 201 where applicable. The Tribunal distinguished the Kerala High Court decision in PVS Memorial Hospital to the extent that that court had recorded a factual finding that the payments were for professional services and thus deducted under the wrong provision; facts in the present appeal were different. Emphasising the object of TDS provisions and the need for judicial consistency, and relying on precedent and earlier tribunal rulings in the assessee's own case, the Tribunal concluded that no disallowance under Section 40(a)(ia) was warranted on the facts of this case where TDS was deducted under Section 194C. [Paras 7, 8]

Held that, on the facts and following the assessee's earlier favourable tribunal decisions, no disallowance under Section 40(a)(ia) is warranted for AY 2012-13 where TDS was deducted under Section 194C despite Revenue's contention that Section 194J applied.

Final Conclusion: Revenue's appeal is dismissed; the Tribunal upholds the CIT(A)'s order deleting the disallowance under Section 40(a)(ia) for assessment year 2012-13, following earlier tribunal decisions in the assessee's own cases and on the factual finding of a difference of opinion as to the nature of the payments.

Allowability of business expenditure under section 37(1) - disallowance under section 14A read with rule 8D - evidentiary value of confirmations, purchase orders and contemporaneous communications - appellate fact finding by examination under section 131 - principle that section 14A is triggered by earning of exempt income and that disallowance cannot exceed exempt income

Allowability of business expenditure under section 37(1) - evidentiary value of confirmations, purchase orders and contemporaneous communications - appellate fact finding by examination under section 131 - Deletion by the CIT(A) of disallowance of commission payments to M/s A.S. Marketing and M/s Action Udyog was justified. - HELD THAT: - The assessing officer accepted the identity/existence of the recipients but disallowed the payments for want of satisfaction that services were rendered. The CIT(A) reviewed the material ignored or discounted by the AO - including purchase orders showing names/telephone numbers, email exchanges between customers and employees of the recipients, salary slips of recipient employees, an agreement evidencing entitlement to commission/fixed profit, and oral examination of the proprietor of the recipient under section 131 - and found that the recipients had in fact rendered services (A.S. Marketing) or had acted as a trader dealing in purchases/sales under an agreement (Action Udyog). The CIT(A) also noted consistent treatment in other years and that the AO had not placed contrary evidentiary findings to rebut the contemporaneous documents and examinations. Having considered the AO's enquiries and the additional verifications undertaken by the CIT(A), the Tribunal finds no infirmity in the CIT(A)'s concurrent appreciation of facts and upheld deletion of the disallowances in respect of these commission payments. [Paras 9, 10, 11]

Grounds 1-3 dismissed; deletion of disallowance in respect of commissions to A.S. Marketing and Action Udyog upheld.

Disallowance under section 14A read with rule 8D - principle that section 14A is triggered by earning of exempt income and that disallowance cannot exceed exempt income - Extent of disallowance under section 14A read with rule 8D in view of the actual exempt income earned by the assessee. - HELD THAT: - The AO had disallowed an amount under rule 8D based on an erroneous figure of exempt income. The Tribunal held that section 14A is attracted as soon as exempt income is earned, irrespective of whether it is treated as exempt or offered to tax, but any disallowance under section 14A cannot exceed the exempt income actually earned. On verification, the correct exempt income for the year was INR 1,759 (not the figure shown in the assessment order). Accordingly the AO was directed to restrict any disallowance under section 14A to the extent of INR 1,759. [Paras 14]

Grounds 4-7 partly allowed; disallowance under section 14A to be restricted to the exempt income of INR 1,759.

Final Conclusion: The departmental appeal is partly allowed. The Tribunal affirms the CIT(A)'s deletion of disallowance of commission payments to A.S. Marketing and Action Udyog, and directs that any disallowance under section 14A read with rule 8D be restricted to the actual exempt income of INR 1,759 for Assessment Year 2010-11.

Penalty under section 158BFA(2) - Limitation for imposition of penalty under section 158BFA(3)(c) - Effect of appellate proceedings on computation of limitation for penalty - Time of receipt of Appellate Tribunal order for computing limitation

Penalty under section 158BFA(2) - Limitation for imposition of penalty under section 158BFA(3)(c) - Time of receipt of Appellate Tribunal order for computing limitation - Whether the penalty order dated 19.05.2011 is barred by limitation under section 158BFA(3)(c) of the Income Tax Act. - HELD THAT: - The Tribunal examined the sequence of orders: assessment framed by AO on 10.06.2002, CIT(A) confirming on 14.11.2002, Tribunal allowing the assessee's appeal by order dated 03.08.2007 (earlier Tribunal order dated 03.08.2007 reversing CIT(A) findings), and the High Court reversing the Tribunal on 29.11.2010. The penalty under section 158BFA was imposed by AO on 19.05.2011. Section 158BFA(3)(c) prescribes that where the assessment is subject-matter of an appeal to the Tribunal, no penalty shall be imposed after the expiry of the financial year in which the proceedings in the course of which action for imposition of penalty has been initiated are completed, or six months from the end of the month in which the order of the Tribunal is received by the Commissioner, whichever expires later. Applying that provision, the Tribunal held that the penalty should have been passed within six months from the end of the month in which the Tribunal's order (03.08.2007) was received by the concerned authority, and that the impugned penalty dated 19.05.2011 falls beyond that prescribed period. The Tribunal relied on a coordinate-bench precedent which held that time for computing limitation runs from the Tribunal order relevant to the main appeal under section 253 and cannot be extended by reference to miscellaneous applications under section 254(2) or by the assessee's request to keep proceedings in abeyance. The Revenue did not place any contrary judicial precedent before the Tribunal. Consequent upon this analysis, the Tribunal concluded the penalty order is time-barred and need not be considered on merits. [Paras 8, 9, 10, 11, 12]

Penalty order dated 19.05.2011 is barred by limitation under section 158BFA(3)(c) and is quashed.

Final Conclusion: The appeal of the assessee is allowed and the penalty order passed by the Assessing Officer on 19.05.2011 under section 158BFA(2) is quashed as time-barred under section 158BFA(3)(c).

Transfer as defined under section 2(47)(vi) of the Income Tax Act - irrevocable power of attorney and instrument of transfer - capital gains taxable in year of transfer (section 45 principle) - valuation under section 50C and stamp valuation authority - agency versus transfer: power of attorney as creation of agency

Capital gains taxable in year of transfer (section 45 principle) - date of transfer - sale deed date versus earlier instruments - Capital gain on the sale of the impugned land is not taxable in AY 2012-13 because the date of transfer is the date of registration of the sale deed, 19 April 2012, which pertains to AY 2013-14. - HELD THAT: - The Assessing Officer himself recorded the date of the sale deed as 19 April 2012. Having taken that date as the date of transfer, computation of capital gain in the year under consideration (AY 2012-13) was inconsistent with that finding. In accordance with the principle that income under the head capital gains is taxable in the year of transfer, the capital gain arising on registration of the sale deed on 19 April 2012 falls in the financial year 2012-13 corresponding to AY 2013-14 and therefore not assessable in AY 2012-13. The Revenue did not place any material before the Tribunal to contradict the conclusion reached by the learned CIT(A). [Paras 7]

The finding of the learned CIT(A) that there was no transfer in the year under consideration is upheld; the capital gain is not taxable in AY 2012-13.

Irrevocable power of attorney and instrument of transfer - agency versus transfer: power of attorney as creation of agency - transfer as defined under section 2(47)(vi) of the Income Tax Act - An irrevocable power of attorney executed by the assessee did not constitute a transfer of the immovable property for the purposes of section 2(47) and therefore did not give rise to capital gains in the assessment years claimed by the assessee. - HELD THAT: - Although section 2(47)(vi) treats any agreement or arrangement enabling enjoyment or transfer of immovable property as a transfer for capital gains, the Supreme Court's ruling in Suraj Lamp Industries Pvt. Ltd. (as relied upon by the Tribunal) establishes that a power of attorney is the creation of an agency and, even if made irrevocable, does not effect transfer of title. Applying that binding precedent, the Tribunal held that execution of the (irrevocable) power of attorney did not effectuate transfer of the property in the earlier assessment years and therefore the contention that transfer occurred on execution/registration of the POA must fail. The Tribunal declined to place reliance on the Delhi High Court decision cited before it because its facts were not germane to taxability of capital gains under section 2(47). [Paras 7]

Following the Supreme Court precedent, the power of attorney did not amount to a transfer; the claim of transfer in the earlier years is rejected.

Final Conclusion: The Revenue's appeal is partly allowed. The addition of capital gains in AY 2012-13 is deleted and the Assessing Officer is directed to remove the addition, as the taxable event (registration of the sale deed) occurred on 19 April 2012 corresponding to AY 2013-14 and the irrevocable power of attorney did not effect transfer for capital gains purposes.

Addition to income under section 68 on account of unexplained cash credits - accommodation entries - bank statement as evidence for making additions - onus of proof in respect of cash credits - distinguishing precedents where assessee was not in business - remand for fresh adjudication and verification

Addition to income under section 68 on account of unexplained cash credits - bank statement as evidence for making additions - accommodation entries - onus of proof in respect of cash credits - distinguishing precedents where assessee was not in business - Whether the Assessing Officer was justified in making addition of cash deposits to the assessee's income under section 68 on the basis of bank statements when the assessee was engaged in providing accommodation entries and failed to satisfactorily explain the source of deposits. - HELD THAT: - The Tribunal found that the assessee was engaged in the business of providing accommodation entries and had deposited cash into bank accounts which he failed to satisfactorily explain. In these circumstances the Assessing Officer was justified in making additions under section 68 on the basis of bank statements and related material. The argument that additions could not be made because a bank statement is not the assessee's books of account was rejected on the facts: the cited decision relied upon by the assessee (Vinesh Maheshwari) was distinguishable because there the assessee was not engaged in business and had long term capital gains with no books of account. The Tribunal relied on authorities holding that where the assessee cannot furnish list/confirmations or explain sources of large cash deposits, additions are warranted. Consequently the additional legal ground that bank statements alone cannot support an addition was rejected on the facts of this case. [Paras 11, 12, 13]

The addition under section 68 on account of unexplained bank deposits is sustainable on the facts; the contention that bank statements alone cannot be relied upon is rejected.

Accommodation entries - commission as assessable business income from accommodation entries - remand for fresh adjudication and verification - Whether only commission income (and not the entire cash deposits) ought to be assessed, and at what rate, in view of prior proceedings in the assessee's group and earlier Tribunal directions. - HELD THAT: - While the Tribunal rejected the preliminary legal contention that bank statements could not support additions, it noted that the Assessing Officer had followed an earlier order for AY 2004-05 and that the Tribunal in the assessee's earlier appeals for AY 2003-04 and 2004-05 had restored the issue to the file of the Assessing Officer with directions. Respectfully following that earlier Tribunal order, the present Tribunal did not determine on merits whether only commission should be taxed (or the appropriate rate such as 0.25% or 0.5%); instead the Tribunal restored the matter to the Assessing Officer for fresh adjudication in accordance with the Tribunal's earlier directions and law, after giving the assessee an opportunity of being heard. [Paras 14]

Issue restored to the file of the Assessing Officer for fresh adjudication in the light of the Tribunal's earlier directions; merits on quantum/commission to be examined afresh.

Final Conclusion: Both appeals are partly allowed for statistical purposes: the Tribunal upheld that additions under section 68 can be sustained on the facts where the assessee, engaged in providing accommodation entries, failed to explain bank deposits, but it restored the question whether only commission income (and at what rate) should be assessed to the Assessing Officer for fresh adjudication in accordance with earlier Tribunal directions; identical result followed for both assessment years 2005-06 and 2006-07.

Penalty under section 271(1)(c) of the Income tax Act - addition by treating receipts as unexplained cash credit under section 68 - sustainability of penalty in absence of a subsisting assessment/quantum - remand for fresh assessment and consequential initiation of penalty proceedings

Penalty under section 271(1)(c) of the Income tax Act - sustainability of penalty in absence of a subsisting assessment/quantum - Whether the penalty levied under section 271(1)(c) is maintainable when the assessment/quantum has been set aside and there is no subsisting assessment order. - HELD THAT: - The Tribunal noted that the quantum assessment upon which the penalty rested had been set aside and no subsisting assessment order exists. The earlier appellate disposal in ITA Nos.731 & 732/M/2013 (order dated 09.09.2015) had remitted the quantum for fresh consideration and observed that penalty proceedings could be re-initiated only after a fresh assessment if additions are sustained. In the absence of any operative assessment determining the additions, the penalty could not be sustained. Applying that principle, and having regard to the fact that the quantum is nowhere in existence, the Tribunal held that the penalty has no leg to stand and therefore deleted the penalty. [Paras 5, 6]

Penalty levied under section 271(1)(c) deleted as unsustainable in the absence of a subsisting assessment/quantum.

Final Conclusion: The appeal is allowed: the penalty under section 271(1)(c) is deleted because the assessment/quantum on which it depended has been set aside and no operative assessment exists; the Assessing Officer remains at liberty to initiate penalty proceedings afresh after making a fresh assessment if warranted.

Disallowance under section 14A read with rule 8D - Exempt income not claimed - non applicability of section 14A - Netting of interest income against interest expense for computation of disallowance - Computation of book profit under section 115JB - treatment of section 14A disallowance - Average cost of borrowing - ultimate cost after netting interest income from deployment of borrowed funds

Disallowance under section 14A read with rule 8D - Exempt income not claimed - non applicability of section 14A - Netting of interest income against interest expense for computation of disallowance - Deletion of disallowance made under section 14A read with rule 8D where dividend income was not claimed as exempt but was set off against interest expenditure and only net interest was claimed. - HELD THAT: - The assessee did not claim the dividend income as exempt under section 10(35) but reduced that dividend against finance charges and claimed only net interest as deduction under section 36(1)(iii). The Tribunal accepted the assessee's position, relying on precedents that section 14A is not attracted where exempt income is not claimed as exempt and where interest income/benefit has been netted against interest expense. The Tribunal noted consistent treatment in earlier assessment years and authority supporting non application of section 14A in such circumstances, and therefore found the CIT(A)'s confirmation of the section 14A disallowance to be erroneous and directed deletion of the disallowance. [Paras 8]

Disallowance under section 14A read with rule 8D deleted.

Computation of book profit under section 115JB - treatment of section 14A disallowance - Whether a disallowance made under section 14A read with rule 8D is to be included in book profit computation under clause (f) of Explanation 1 to section 115JB. - HELD THAT: - The Tribunal held that section 115JB constitutes a separate code and a disallowance under section 14A read with rule 8D is not to be included in the computation of book profit under clause (f) of Explanation 1 to section 115JB. The Tribunal relied on precedents to that effect. In the present case, since the section 14A disallowance has been deleted on merits, the assessee's ground on book profit is consequently allowed. [Paras 10]

Section 14A disallowance is not to be included in computation of book profit under section 115JB; ground allowed (also rendered academic by deletion of the disallowance).

Average cost of borrowing - ultimate cost after netting interest income from deployment of borrowed funds - Netting of interest income against interest expense for computation of overall cost of borrowed funds - Upholding CIT(A)'s direction to compute the overall cost of borrowing by reducing gross interest expense by interest income earned from short term deployment of borrowed funds. - HELD THAT: - The Revenue contended that gross finance charges should be used because dividend income was treated as exempt and interest income was assessed separately. The CIT(A) and the Tribunal took the view that the ultimate cost of borrowing is the effective cost after netting interest income earned from deployment of those borrowed funds, and that it is immaterial whether such interest income is assessed as business income or other sources. The Tribunal found the CIT(A)'s reasoning to be a permissible view and, in absence of new material from the Revenue, declined to interfere. [Paras 15]

Order of the CIT(A) upheld - overall cost of borrowing to be computed after reducing interest income from gross interest expense; Revenue's appeal dismissed.

Final Conclusion: For AY 2011 12 the Tribunal deleted the section 14A/read with rule 8D disallowance because the dividend income was not claimed as exempt but was netted against interest expenditure; held that any section 14A disallowance is not to form part of book profit under section 115JB (and the point is academic here since the disallowance was deleted); and upheld the CIT(A)'s approach of computing the average cost of borrowing by netting interest income from gross interest expense, dismissing the Revenue's appeal.

Customs duty exemption under Notification No.25/2001-Cus - requirement of prior RBI permission for import of gold after toll processing - onus to prove that exported Copper Anode Slime contained gold/silver and that imported metal was extracted therefrom - discretion to relieve adverse consequence of time limit where delay caused by authorities' non clarification

Requirement of prior RBI permission for import of gold after toll processing - RBI permission is not necessary for import of gold obtained from toll processing of exported Copper Anode Slime (CAS). - HELD THAT: - The Court recorded the RBI's stand and subsequent affidavit that its permission for import of gold after processing of CAS 'is not necessary' and treated that aspect as no longer requiring clarification. Having received the categorical affidavit, the Court concluded that RBI approval is not a precondition to avail the exemption under the notification and that Respondents cannot insist on production of RBI permission when deciding the Petitioner's claim for exemption. [Paras 11, 12, 13]

RBI permission is not required and this ground shall not be a basis for rejecting the Petitioner's claim for exemption.

Customs duty exemption under Notification No.25/2001-Cus - onus to prove that exported Copper Anode Slime contained gold/silver and that imported metal was extracted therefrom - discretion to relieve adverse consequence of time limit where delay caused by authorities' non clarification - Respondents are directed to decide on the Petitioner's entitlement to exemption under the notification on merits without rejecting the claim solely on account of the one year import period having lapsed or for non production of RBI permission; the Petitioner must satisfy Respondents about origin and derivation of the metals. - HELD THAT: - The Court found that delay in the Petitioner receiving authoritative clarification from Customs/CBIC caused the one year period to elapse and that it would be unjust to deny the exemption solely for that reason. The Court therefore directed that, subject to the Petitioner completing the import within the specified short period and satisfying the Respondents that the exported CAS contained gold/silver and that the imported metal was extracted from that CAS, the Respondents shall take a decision on the exemption claim. The Court imposed a timetable for completion of import and for Respondents to communicate their decision, leaving the substantive adjudication on merits to the Respondents while precluding rejection based only on the expiry of the one year period or absence of RBI permission. [Paras 16, 17]

Respondents shall decide the exemption claim on merits and shall not reject it solely because the one year import period has lapsed or for non production of RBI permission; the Petitioner must prove presence of metals in the exported CAS and that the imported metals were extracted from it.

Final Conclusion: The Court clarified that RBI permission is not required and directed the Customs/CBIC to consider the Petitioner's claim for exemption under Notification No.25/2001 Cus on merits (without rejecting it merely for delay or absence of RBI permission), subject to the Petitioner completing the import within the short time prescribed and satisfying the authorities about the origin and derivation of the imported gold/silver; the authorities were given a timetable to decide.

Penalty for aiding/abetting in evasion of customs duty - negligence of Customs House Agent - reduction of penalty in exercise of appellate discretion - appellate interference standard

Exemption from filing formalities - Exemption application allowed. - HELD THAT: - The Court allowed the exemption application (CM Appl. No. 24278/2019) as prayed, recording that exemption is granted subject to all just exceptions. No substantive legal principle was articulated beyond the allowance of the exemption. [Paras 1]

Exemption allowed, subject to all just exceptions.

Condonation of delay - Delay in filing the appeal condoned. - HELD THAT: - On the application (CM Appl. No. 24279/2019) the Court, for the reasons stated in the application, exercised its discretion to condone a delay of 206 days in filing the appeal and disposed of the application accordingly. [Paras 2]

Delay of 206 days condoned and application disposed of.

Penalty for aiding/abetting in evasion of customs duty - negligence of Customs House Agent - reduction of penalty in exercise of appellate discretion - appellate interference standard - High Court declined to interfere with the CESTAT order which upheld the adjudication against the CHA and reduced the penalty. - HELD THAT: - The admitted facts show the CHA filed five Bills of Entry for eight consignments of Synthetic Diamond Powder and it was found that weight and proportionate value were misdeclared. The CHA admitted awareness that carats were wrongly shown, establishing negligence and justifying imposition of penalty for aiding/abetting evasion. The CESTAT nonetheless reduced the penalty considering that a CHA is not an expert in conversion of carats to grams. The High Court found no question of law in the CESTAT's order and, applying the appellate interference standard, saw no reason to disturb the tribunal's concurrent conclusion or its exercise of discretion on penalty. [Paras 5, 6, 7, 8]

Appeal dismissed; no interference with the impugned order of the CESTAT.

Final Conclusion: Exemption application allowed; delay of 206 days condoned; appeal dismissed as the High Court found no question of law and declined to interfere with the CESTAT's concurrent findings that the CHA's negligence justified penalty and with the tribunal's reduction of penalty in the exercise of its discretion.

Service of Show Cause Notice within statutory period under Section 124 of the Customs Act, 1962 - Burden of proof of service of notice - Production and preservation of original records / missing original acknowledgements - Release of seized goods subject to undertaking - Interim abeyance of adjudication orders pending inquiry

Service of Show Cause Notice within statutory period under Section 124 of the Customs Act, 1962 - Burden of proof of service of notice - Production and preservation of original records / missing original acknowledgements - Whether the show cause notices were served on the petitioners within the mandatory six month period and whether service has been satisfactorily proved - HELD THAT: - The Court examined the counter affidavits which annexed copies of show cause notices dated 19th June 2018 and acknowledgements said to be signed on 20th June 2018, and the rejoinders which disputed service and alleged the acknowledgements were forged or signed later while the petitioners were in custody. On production of the original departmental file the originals of the acknowledgements were not traceable and the file contains a departmental query about the missing originals and an ensuing inquiry. In the absence of convincing proof of service within the stipulated period and given the non production of original acknowledgements, the Court was not satisfied that statutory service had been demonstrated

Finds that the Respondents have failed, as on date, to produce convincing proof of service of the show cause notices within the mandatory period and does not accept that service has been satisfactorily proved

Release of seized goods subject to undertaking - Interim abeyance of adjudication orders pending inquiry - Relief to be granted in view of failure to prove service and directions pending outcome of inquiry into missing documents - HELD THAT: - In view of the failure to produce original acknowledgements or other convincing proof of service, the Court directed conditional release of the seized goods to the respective petitioners subject to their filing affidavits undertaking to produce gold of the same quantity and purity when directed by the Court. The Court prescribed a date for filing the undertaking and a timeline for release thereafter. The Court further directed that the respondents file an affidavit setting out the outcome of the departmental explanation/inquiry into the missing original acknowledgements at least one week prior to the next hearing, and ordered that adjudication orders in the matters be kept in abeyance until the next date of hearing

Directed conditional release of the seized goods to the petitioners upon filing specified undertakings by the stated date; directed the Respondents to file an affidavit about the outcome of the inquiry into the missing originals and kept adjudication orders in abeyance

Final Conclusion: Because the originals of the acknowledgements proving service were not produced and service within the statutory period was not satisfactorily proved, the Court granted conditional release of the seized goods to the petitioners upon their filing undertakings and directed the respondents to file an affidavit reporting the outcome of the departmental inquiry into the missing originals; adjudication orders are kept in abeyance pending the next hearing.

Mandatory issuance of show cause notice within the statutory extended period under the Customs Act - service of show cause notice by acknowledgment at address of noticee - release of seized goods subject to undertaking - respect for stay/operative orders of the Supreme Court and limits on High Court relief

Mandatory issuance of show cause notice within the statutory extended period under the Customs Act - service of show cause notice by acknowledgment at address of noticee - Whether the statutory requirement that a show cause notice be issued within the extended six month period was complied with in relation to the petitioner. - HELD THAT: - The Court examined the respondents' counter-affidavit which annexed an acknowledgement of receipt of the show cause notice dated 28th October, 2013 showing that the petitioner's wife received the notice at the petitioner's address. The petitioner did not file a rejoinder disputing that document despite the passage of time. In view of the acknowledged receipt at the same address and the absence of any denial or contrary evidence from the petitioner, the Court concluded that the petitioner failed to establish a breach of the requirement to serve the show cause notice within the extended statutory period. The Court therefore refused to entertain the writ petition on that ground while preserving the petitioner's right to raise other contentions in the adjudication arising from the impugned notice.

The petitioner's challenge to service of the show cause notice is rejected and the writ petition is not entertained on that ground.

Release of seized goods subject to undertaking - respect for stay/operative orders of the Supreme Court and limits on High Court relief - Whether this Court should direct release of the seized goods on terms similar to the interim order of the Supreme Court permitting release of 50% of goods subject to an undertaking. - HELD THAT: - The Court noted that a Division Bench of this Court had earlier declined to pass an identical release order after observing that the Supreme Court had stayed the operation of that DB judgment and that the High Court's powers are not equivalent to those of the Supreme Court. The petitioner sought a relief on the same terms as the Supreme Court's interim order in a related appeal, but the Court declined to grant similar relief in the present proceedings for the reasons recorded by the earlier Division Bench and because the petitioner had not established the primary contention regarding non-service of the show cause notice.

The prayer for release of 50% of the seized watches on terms similar to the Supreme Court's interim order is declined.

Final Conclusion: The writ petition is dismissed and the interim order is vacated; the petitioner remains free to advance available contentions in the proceedings pursuant to the impugned show cause notice except the contention that it was not served.

Service of show cause notice - affixture under Section 153(1)(e) - requirement of notice within six months under Section 124(a) - seizure and return where no notice within six months - adjudication of confiscation proceedings

Service of show cause notice - affixture under Section 153(1)(e) - Validity of the show cause notice issued and its mode of service under the Customs Act. - HELD THAT: - The Court held that the show cause notice issued on 29.8.2018, which was returned unserved by speed post, was validly effected by affixing a copy at the last known residence of the petitioner in terms of Section 153(1)(e) of the Act and substantiated by a mahazar. The phrase 'given' in sub-section (2) of Section 110, read with clause (a) of Section 124, does not strictly refer to personal service; the statutory alternatives in Section 153(1) permit affixture where delivery by post is not practicable. In the factual matrix, affixture and the mahazar satisfied the modes of service prescribed by the Act and therefore no fault could be found with issuance and service of the notice. [Paras 5]

Service of the show cause notice by affixture in terms of Section 153(1)(e) was valid and the notice issued on 29.8.2018 is not vitiated for want of service.

Requirement of notice within six months under Section 124(a) - seizure and return where no notice within six months - Whether failure to issue a show cause notice within six months obliges return of seized goods in the present case. - HELD THAT: - Section 110(2) provides for return of goods where no notice under Section 124(a) is 'given' within six months of seizure. The Court observed that a show cause notice was issued within the statutory period and, having regard to the acceptable mode of service under Section 153(1), the condition for return did not arise. Consequently, the petitioner cannot challenge the proceedings on the ground of failure to issue notice within six months. [Paras 5]

No ground for return of the seized foreign currency on the basis of non-issuance of notice within six months arises in the facts of this case.

Adjudication of confiscation proceedings - Direction to the adjudicating authority to consider the petitioner's objections and decide the confiscation/adjudication proceeding. - HELD THAT: - The authorities have issued a show cause notice and the petitioner has appeared before the adjudicating authority. The Court left open all contentions of the parties and directed that the adjudicating authority must consider the objections filed by the petitioner and decide the matter in accordance with law. The Court mandated expedition by requiring final disposal within four weeks from filing of the reply/objections, while preserving the petitioner's right to raise all grounds before that authority. [Paras 6]

The adjudicating authority is directed to consider the petitioner's objections and pass a reasoned order in accordance with law within four weeks of filing of reply/objections.

Final Conclusion: The petition is disposed of: the service and issuance of the show cause notice were held valid, no entitlement to return of the seized foreign currency on the ground of non-issuance within six months was found, and the adjudicating authority is directed to decide the objections of the petitioner expeditiously within four weeks.

Transaction value - sequential application of Customs Valuation Rules (Rules 4 to 8) - rejection of declared value for mis-declaration - acceptance of enhanced value under compulsion/detention - confiscation and redemption

Transaction value - rejection of declared value for mis-declaration - sequential application of Customs Valuation Rules (Rules 4 to 8) - Whether the assessing authority lawfully rejected the declared transaction value and re-determined assessable value without following the sequential valuation procedure under Section 14 read with the Customs Valuation Rules, 2007. - HELD THAT: - The Tribunal found that the assessing authority rejected the declared transaction value on the ground of mis-declaration concerning certain items but did not demonstrate any exercise of valuation in conformity with Section 14 read with the Customs Valuation Rules, 2007. The order of assessment lacked indication of market survey or contemporaneous import data and did not proceed through the mandatory sequential recourse to Rules 4 to 8 after rejecting the transaction value. The appellant's payment of differential duty was held to have been made under compulsion to avoid demurrage and detention and therefore did not constitute voluntary acceptance of the re-determined value. Reliance placed on decisions cited by Revenue was held distinguishable on facts. The Tribunal applied the principle, as reflected in Eicher Tractors and followed in Innobiz and Orient Sales, that even where Rule 12 empowers rejection of a transaction value, any revision of value for assessment must be the outcome of the sequential application of the valuation rules; absence of that exercise vitiates enhancement of value. [Paras 11, 12, 13, 14]

Re-determination of assessable value was set aside for failure to follow the sequential valuation procedure; the appeal was allowed with consequential benefit.

Final Conclusion: The Tribunal set aside the impugned order of the Commissioner (Appeals) and allowed the appeal, holding that the assessing authority erred in enhancing the assessable value without conducting the mandatory sequential valuation under Section 14 and Rules 4-8 of the Customs Valuation Rules, 2007; the appellant's payment was made under compulsion and did not cure the procedural infirmity.

Restoration of company name to the Register of Companies under section 252(3) of the Companies Act, 2013 - effect of statutory takeover of management of an undertaking on existence and control of the company - interplay between special enactment taking over management and nationalization of an undertaking - leave open disputes pending before a High Court while restoring corporate status

Restoration of company name to the Register of Companies under section 252(3) of the Companies Act, 2013 - Name of the appellant company to be restored to the Register of Companies subject to conditions - HELD THAT: - The Tribunal found that, notwithstanding the Registrar of Companies having struck off the company's name following non-response to statutory notices and non-filing of returns, the pending litigation before the High Court concerning the scope of takeover and ownership of properties made striking off prejudicial to the company's ability to pursue its remedies. The NCLT's conclusion that management was vested exclusively in the Government under the special Act was questioned on a prima facie basis. Having regard to the pendency of substantive disputes and the consequence of striking off, the Appellate Tribunal exercised the power under section 252(3) of the Companies Act, 2013 to restore the name, while imposing conditions to protect statutory compliance and Registrar's interests. The Tribunal directed payment of costs to the ROC and filing of all overdue financial statements, annual returns and compliance under the Companies Act, 2013 within specified time limits, leaving the substantive disputes to be adjudicated by the High Court.

The name of the Appellant Company is restored in the Register of Companies subject to payment of costs and compliance with filing and statutory requirements within stipulated time.

Effect of statutory takeover of management of an undertaking on existence and control of the company - interplay between special enactment taking over management and nationalization of an undertaking - Prima facie view on scope of the Acts taking over management/undertaking and leave of substantive disputes to the High Court - HELD THAT: - The Tribunal examined the special Act of 1976 and the Nationalization Act and observed that the 1976 Act's language relates to taking over management of the undertakings. The Tribunal disagreed with the NCLT's categorical conclusion that the management of the entire company had been taken over and that exclusive control vested in the Government. However, the Tribunal limited its observations to a prima facie view for the purpose of deciding restoration and expressly left open the determination of the actual scope and effect of the 1976 Act and the nationalization provisions for final adjudication by the High Court, where related writ proceedings are pending. Consequently, the questions regarding which properties or assets were taken over and whether the company retained other operational assets are not finally decided but retained for the High Court's consideration.

Substantive questions regarding the scope and effect of the statutory takeover and nationalization are left open and to be adjudicated by the High Court; the Tribunal only took a prima facie view and did not finally decide those issues.

Final Conclusion: The Appellate Tribunal quashed and set aside the impugned order of striking off and directed restoration of the company's name under section 252(3) of the Companies Act, 2013 subject to payment of costs and specified compliance; substantive disputes about statutory takeover and ownership of properties are left to the High Court for final decision.

Striking off of company name - restoration under Section 252 - service of notice under Section 248 - burden to prove company was carrying on business or in operation

Service of notice under Section 248 - opportunity to be heard before striking off - Whether the Registrar of Companies complied with notice requirements and gave the appellant opportunity before striking off the company name - HELD THAT: - The Tribunal accepted the ROC's affidavit that STK-1 notice dated 21.3.2017 was issued and noted that the STK-5 public notice (13.6.2017) provided an opportunity to the appellant to move the ROC. The appellant's contention that no STK-1 copy was produced before the NCLT and that there was no proof of service was rejected by this Tribunal on the strength of the ROC's official records and the admitted publication. The appellate bench found no reason to accept the claim that the appellant was denied opportunity prior to striking off. [Paras 7]

The notice procedure was duly complied with and the appellant was given opportunity before striking off.

Burden to prove company was carrying on business or in operation - striking off of company name - Whether the appellant proved that the company was carrying on business or was in operation when its name was struck off - HELD THAT: - The Tribunal considered the documents placed before the NCLT and before it, including audited balance sheets, limited bank statements, purchase/sale invoices and income-tax returns for assessment years 2016-17 and 2017-18. The returns showed negligible gross total income and the balance sheets and bank records did not demonstrate business activity or transactions at the time of striking off. The Tribunal accepted the NCLT's reasoning that there were no convincing documents to establish that the company was operational when its name was removed from the register. [Paras 7, 8]

The appellant failed to prove that the company was carrying on business or was in operation at the relevant time.

Restoration under Section 252 - striking off of company name - Whether the company's name should be restored on the register under Section 252 - HELD THAT: - Section 252(3) permits restoration only if one of the conditions is satisfied, namely that the company was carrying on business, was in operation, or it is otherwise just that the name be restored. Applying that statutory test, and having found that the appellant did not establish carrying on business or operation, the Tribunal upheld the NCLT's conclusion that there was no just reason to direct restoration of the company's name on the register. [Paras 8, 9]

There is no just reason to restore the company's name; restoration under Section 252 is not warranted.

Final Conclusion: The appeal is dismissed; the Tribunal upheld the NCLT's finding that (i) proper notice was given, (ii) the appellant failed to prove the company was carrying on business or in operation when its name was struck off, and (iii) restoration under Section 252 is not justified.

Restoration of company name under Section 252 of the Companies Act, 2013 - requirement to show carrying on of business or operations in the two immediately preceding financial years - effect of existence of agreement for sale or disclosed immovable property on restoration - procedural regularity of striking off and requirement of responding to statutory notices

Restoration of company name under Section 252 of the Companies Act, 2013 - requirement to show carrying on of business or operations in the two immediately preceding financial years - The appeal to restore the company's name was dismissed for failure to show that the company was carrying on business or operations in the two immediately preceding financial years. - HELD THAT: - The Tribunal examined the documents placed before NCLT, including audited financial statements for years ended 31.3.2015, 31.3.2016 and 31.3.2017, provisional statements after striking off, bank statements and income tax records. NCLT found no revenue generation for the years ended 31.3.2015 to 31.3.2017 and bank statements did not demonstrate ongoing business operations. Reliance on provisional statements relating to periods after the company was struck off was held to be irrelevant to the question of operations before striking off. On that factual basis, the appellants failed to satisfy the statutory requirement to show that the company was carrying on business or operations in the two immediately preceding financial years, and therefore no ground existed for restoration under Section 252.

Appeal dismissed for failure to demonstrate carrying on of business or operations in the relevant preceding years; restoration refused.

Effect of existence of agreement for sale or disclosed immovable property on restoration - An earlier agreement for sale and inclusion of an immovable property in accounts did not, without further proof of completion, possession or ongoing activity, justify restoration of the company's name. - HELD THAT: - The appellants relied on a 2010 agreement for sale and on entries in the balance sheet. The Tribunal noted absence of any sale deed, evidence of completion, possession, physical work on the land or use of the property. NCLT's view that an old sale agreement alone, especially predating the period during which statutory returns ceased, is insufficient was affirmed. The presence of a tentative asset entry in a balance sheet prepared around the time of striking off did not counter the lack of evidence of actual ownership or active utilization that would warrant restoration.

Existence of an agreement for sale and a balance-sheet entry did not establish a just ground for restoring the company; claim rejected.

Procedural regularity of striking off and requirement of responding to statutory notices - The Registrar's process of striking off complied with due procedure and the appellants' failure to respond to statutory notices weighed against restoration. - HELD THAT: - Record showed issue of STK-5 (referenced) and subsequent STK-7 dated 30.6.2017. NCLT observed that ROC followed due process in publishing notices and giving the company opportunity to show cause, which the appellants did not avail themselves of. The Tribunal held that subsequent attempts to establish operations or assets after failing to respond to the statutory process could not be used to fault the ROC's action; non-response to the notices was a material factor in dismissing the restoration application.

ROC's striking off was procedurally regular; appellants' non-response to notices militated against restoring the company.

Final Conclusion: The appeal against the NCLT order dismissing the restoration application was rejected: the appellants failed to prove carrying on of business in the relevant years, an old agreement for sale and balance-sheet entries did not suffice to justify restoration, and the Registrar's striking off was procedurally regular with the appellants having not responded to statutory notices.

Fee continuity - refund of registration fee - interest on unlawfully recovered fees - Order II Rule 2 CPC - suit to include the whole claim / relinquishment of part of claim - single cause of action / prohibition on splitting claims - estoppel by omission

Interest on unlawfully recovered fees - Order II Rule 2 CPC - suit to include the whole claim / relinquishment of part of claim - single cause of action / prohibition on splitting claims - Entitlement to interest on the refunded registration fee - HELD THAT: - The Tribunal held that the appellant's claim for interest flows from the same cause of action as the claim for refund of the registration fee which was litigated before the Securities Appellate Tribunal and the Supreme Court. The memo of appeal before SAT and the Special Leave Petition to the Supreme Court sought only refund of the additional registration fee and did not seek interest. Applying the salutary rule in Order II Rule 2 CPC, where a plaintiff omits or intentionally relinquishes any portion of a claim arising from the same cause of action, he cannot thereafter sue for the omitted relief. The Court applied the principle that a party cannot split a single cause of action into successive proceedings to obtain relief not claimed earlier, and therefore the appellant was barred from claiming interest in the second round of litigation. Consequently, SEBI's refusal to grant interest was upheld as the claim for interest had not been pursued previously and was barred by Order II Rule 2 CPC. [Paras 12, 14, 15, 16]

Claim for interest on the refunded fee is barred by Order II Rule 2 CPC as the appellant omitted to claim interest earlier; appeal dismissed.

Final Conclusion: The appeal is dismissed. The appellant is not entitled to interest on the refunded registration fee because the claim for interest was not pursued in the earlier proceedings and is barred by Order II Rule 2 CPC; no order as to costs.

Moratorium under Section 14 of the Insolvency & Bankruptcy Code, 2016 - powers and duties of the Interim Resolution Professional/Resolution Professional - control and custody of assets by the Resolution Professional - appointment and recall of court commissioners - management of perishable assets to salvage value - time bound mandate under Section 12 of the Insolvency & Bankruptcy Code, 2016 - entitlement under Section 18 to monitor and take control of assets

Moratorium under Section 14 of the Insolvency & Bankruptcy Code, 2016 - powers and duties of the Interim Resolution Professional/Resolution Professional - control and custody of assets by the Resolution Professional - management of perishable assets to salvage value - Validity of the DRAT's view that the moratorium prohibits the Resolution Professional from taking possession or effecting measures in relation to the corporate debtor's assets, including perishable stocks. - HELD THAT: - The Court held that the moratorium envisaged by Section 14 does not bar actions which are not proceedings 'against' the corporate debtor and that the IRP/RP, once appointed and entrusted with management, must be able to take control and custody of the corporate debtor's assets to discharge the statutory, time bound mandate. Given the IRP/RP's duty under the Code and the perishable nature of certain assets, continuing possession by court commissioners appointed by another forum which prevents the IRP/RP from salvaging value would be contrary to the objects of the insolvency process. The Bank's consent to the IRP/RP taking control further underscored that no real contest existed to such exercise of powers. [Paras 6]

DRAT's interpretation that the moratorium entirely prohibited the Resolution Professional from taking possession or control was set aside; the Resolution Professional was permitted to act in exercise of powers vested by the Code to take control of the corporate debtor's assets.

Appointment and recall of court commissioners - entitlement under Section 18 to monitor and take control of assets - time bound mandate under Section 12 of the Insolvency & Bankruptcy Code, 2016 - Whether the order appointing Court Commissioners could be recalled and what directions should follow to enable the Resolution Professional to perform duties within the statutory period. - HELD THAT: - The Court found that the DRAT was not powerless to modify or recall its earlier order appointing court commissioners. In the circumstances, to enable the IRP/RP to fulfil the statutory timeline (including the 180 day period under Section 12) and to preserve the value of perishable goods, the High Court recalled the appointment of the two Court Commissioners, directed desealing of premises and handover of possession to the IRP/RP within a short stipulated period, and addressed incidental matters of cost and fees for the commissioners. The Court exercised supervisory jurisdiction to ensure the insolvency process is not frustrated by parallel custodial arrangements. [Paras 7, 8]

Appointment of the two Court Commissioners was recalled; directions were issued for desealing and handover of possession to the IRP/RP within specified time; commissioners' fees were ordered to be paid and defrayed by the IRP/RP.

Final Conclusion: The High Court set aside the DRAT order which had dismissed the Resolution Professional's application on the ground of moratorium, recalled the appointment of the Court Commissioners, permitted the IRP/RP to take possession and act under the Code to preserve asset value (including perishable stock), directed desealing and handover within specified time, and provided for payment of the commissioners' fees to be defrayed by the IRP/RP.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Proceedings under the Prevention of Money Laundering Act, 2002 - Proceeds of crime and attachment under PMLA - Non-application of moratorium to penal/criminal proceedings - Interplay and absence of overriding effect between IBC and PMLA

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Proceedings under the Prevention of Money Laundering Act, 2002 - Non-application of moratorium to penal/criminal proceedings - Proceeds of crime and attachment under PMLA - Whether the moratorium under Section 14 of the I&B Code applies to proceedings and attachments under the Prevention of Money Laundering Act, 2002. - HELD THAT: - The Court analysed the scope of Section 14 I&B Code and the object and scheme of the PMLA. Section 14 prohibits institution or continuation of suits or proceedings and certain actions in relation to corporate debtor during the moratorium, but Section 14 is not intended to cover criminal proceedings or penal actions directed at proceeds of crime. The PMLA targets proceeds of crime, money laundering offences and confiscation of property derived from or involved in such offences; those provisions operate in the field of penal law and attach property connected with criminal activity. Applying these statutory objects and scheme, the Court held that proceedings under the PMLA (including attachment of proceeds of crime) do not fall within the protective ambit of the moratorium and that the I&B Code does not override the PMLA in this respect. [Paras 8, 9, 10, 11, 12]

Section 14 moratorium does not apply to PMLA proceedings or attachments in respect of proceeds of crime; the I&B Code has no overriding effect to grant protection from PMLA penal proceedings.

Proceedings under the Prevention of Money Laundering Act, 2002 - Proceeds of crime and attachment under PMLA - Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Whether attachments effected by the Directorate of Enforcement prior to commencement of the corporate insolvency resolution process could be ordered released during moratorium. - HELD THAT: - The attachment in question was made on 10 July 2017 before commencement of the moratorium. Even if the moratorium were to have prospective effect, attachments made under the PMLA in respect of proceeds of crime are not sheltered by Section 14. The Resolution Professional therefore cannot derive advantage from Section 14 to seek release of attachments made by the Directorate of Enforcement prior to the moratorium, and an order directing release was not maintainable in the circumstances. [Paras 2, 13]

Attachments made under the PMLA prior to initiation of corporate insolvency resolution cannot be released by invoking Section 14; the Resolution Professional is not entitled to protection under the moratorium for such attachments.

Final Conclusion: The appeal is dismissed. The moratorium under the I&B Code does not protect PMLA proceedings or attachments in respect of proceeds of crime, and attachments made before the insolvency commencement date cannot be released by relying on Section 14; no costs.

Quashing of criminal proceedings - Compounding of offence - Applicability of executive circular to bar prosecution - Pre trial quashing where trial has progressed - Trial court appreciation after evidence is recorded

Pre trial quashing where trial has progressed - Quashing of criminal proceedings - Whether the High Court should quash the trial court's and revisional court's orders and stay the trial at the stage when part of the prosecution evidence has been recorded. - HELD THAT: - The Court found that evidence of three out of six prosecution witnesses had already been recorded and the trial had substantially progressed with remaining evidence scheduled to be recorded shortly. In these circumstances the legality of the impugned orders and the substantive pleas raised by the petitioner did not require determination by the High Court in a petition for quashing. The Court observed that the existence and applicability of the Circular relied upon by the petitioner was yet to be established and that the petitioner's contentions would be more appropriately assessed after evidence is led and at the stage of final arguments before the trial court. The Court therefore declined to exercise its extraordinary jurisdiction to quash the proceedings at the pre trial stage given the advanced stage of the trial.

The petition for quashing is disposed of without deciding the merits; no interference with the trial which shall proceed, and the petitioner is granted liberty to raise the pleas before the trial court at final arguments.

Applicability of executive circular to bar prosecution - Compounding of offence - Trial court appreciation after evidence is recorded - Whether the Circular of 5th July, 2001 (and the related contention that prosecution is barred where the amount involved is below a specified threshold because the offence stands compounded) applies and bars prosecution in the present case. - HELD THAT: - The Court noted that the existence and applicability of the Circular relied upon by the petitioner had not been established on the record before it. Given that evidence is still being recorded and the factual matrix remains to be fully examined, the Court refrained from adjudicating the legal effect of the Circular or from determining whether compounding had occurred such as to bar prosecution. The petitioner was permitted to place the documentary and evidentiary material before the trial court so that these contentions may be tested in the regular trial process and considered at the stage of final arguments.

The question of applicability of the Circular and compounding is left to be considered by the trial court after evidence is led; petitioner may urge these pleas during final arguments.

Final Conclusion: Petition dismissed without deciding merits; no interference with ongoing trial. Liberty granted to petitioner to urge all pleas, including reliance on the Circular and compounding, before the trial court at final arguments; High Court expresses no opinion on merits.

Dispensation of pre-deposit of penalty under Section 19(1) of FEMA - vicarious liability under Section 42 of FEMA - current account transaction versus capital account transaction under FEMA - compliance with Rule 4 (4), (5) and (9) of the Adjudication Rules and principles of natural justice - formation of opinion under Rule 4(3) of the Adjudication Rules - duties of an authorised person under Section 10(4) and (5) of FEMA - principle of parity in vicarious liability - no penalty for venial or bona fide breach in quasi criminal proceedings

Dispensation of pre-deposit of penalty under Section 19(1) of FEMA - Interim dispensation from deposit of penalties and the terms on which provisional security was to be furnished - HELD THAT: - The Tribunal, on a prima facie assessment, found force in appellants' contentions on procedural infirmities and on the substantive questions (not finally decided) about nature of the transactions. In the exercise of interim jurisdiction it directed BCCI to furnish a bank guarantee for Rs. 10 crores on its behalf and on behalf of appellants nos. 2 to 9 within four weeks, to be initially valid for six months (renewable for a further six months). Appellant nos. 10 and 11 were granted interim relief without condition. The Tribunal emphasised that this direction is provisional and that the final merits will be decided at the hearing listed for 29.07.2019, and that the tentative findings have no bearing on the final adjudication. [Paras 63, 74, 75, 76, 77]

BCCI to furnish a bank guarantee of Rs. 10 crores within four weeks (initial six months), appellants nos. 2-9 covered thereby; appellants nos. 10 and 11 granted interim relief without condition; appeals listed for final hearing.

Compliance with Rule 4 (4), (5) and (9) of the Adjudication Rules and principles of natural justice - formation of opinion under Rule 4(3) of the Adjudication Rules - Prima facie non-compliance with Rule 4 and breach of principles of natural justice in respect of some noticees (requiring final adjudication) - HELD THAT: - The Tribunal recorded that Rule 4 (including the duty to explain contraventions under Rule 4(4) and to permit production of evidence and adjournment under Rule 4(5)) and the requirement to record reasons under Rule 4(9) had not been complied with, at least in relation to certain noticees (notably Shri M.P. Pandove). The Tribunal observed that cross-examination opportunities granted to some co-noticees were not equally extended to others and that this prima facie affected parity and natural justice. The Tribunal did not finally decide these issues on merits but treated them as important matters reserved for final hearing and as a basis for granting interim relief. [Paras 34, 35, 39, 40, 73]

Found prima facie that Rule 4 procedural requirements and natural justice concerns arose and should be considered at final hearing; these concerns contributed to grant of interim relief.

Current account transaction versus capital account transaction under FEMA - Whether the remittances by BCCI to CSA were current account transactions or capital account transactions was left open for final adjudication, but prima facie view favoured appellants' contention for further consideration - HELD THAT: - The Tribunal noted the central substantive controversy-whether the remittances were permissible current account transactions or prohibited capital account transactions requiring RBI permission. While the Adjudicating Authority treated certain remittances as creating contingent liabilities (capital account), the Tribunal held that this cannot be finally concluded at the interim stage and observed that prima facie arguments and the legislative scheme (Section 5 and the Current Account Rules) lend force to the appellants' contention that the transactions may fall within current account heads. The Tribunal reserved the issue for final hearing. [Paras 61, 62, 63]

Issue of current vs capital account transactions left for final disposal; prima facie the appellants' argument merits full consideration at final hearing.

Vicarious liability under Section 42 of FEMA - principle of parity in vicarious liability - Applicability of Section 42 vicarious liability to BCCI and its office bearers reserved for final determination; prima facie doubts recorded - HELD THAT: - The Tribunal acknowledged conflicting authorities and substantial submissions on whether BCCI (a society/association of associations) fits within the Explanation to Section 42 (company/association of individuals) for imposition of vicarious liability on office bearers. The Tribunal recorded that the issue is important, undecided at this stage, and prima facie raised forceful arguments in favour of appellants; accordingly the question is to be argued and decided at final hearing. The Tribunal also observed parity concerns where some co noticees were exonerated while penalties were imposed on others. [Paras 42, 57, 59, 60, 73]

Applicability of Section 42 to BCCI and the basis for vicarious liability on individual noticees is left for final adjudication; interim relief granted in light of prima facie doubts.

Duties of an authorised person under Section 10(4) and (5) of FEMA - no penalty for venial or bona fide breach in quasi criminal proceedings - Prima facie findings on bank's responsibility and scope of penalty to be examined at final hearing; penalty imposition viewed as excessive at interim stage - HELD THAT: - The Tribunal recorded appellants' submissions that the bank (State Bank of Travancore / SBI) complied with required declarations and RBI reporting and that Section 10(4)-(5) carve out the bank's duties when transactions on their face satisfy regulatory requirements. The Tribunal observed established principles that penalties in quasi criminal contexts ought not be imposed for venial or bona fide breaches and that penal provisions must be strictly construed. On the record, the Tribunal considered the total penalties excessive and reserved final determination of the bank's liability for the merits hearing. [Paras 23, 69, 70, 73]

Bank's liability under Section 10(4)/(5) and appropriateness/quantum of penalties to be finally decided; interim relief granted and penalties provisionally stayed subject to the bank guarantee direction.

Final Conclusion: The Tribunal granted interim relief by permitting BCCI to furnish a bank guarantee of Rs. 10 crores (covering BCCI and appellants nos. 2-9) and by allowing unconditional interim relief to appellants nos. 10 and 11; it recorded prima facie infirmities in procedure (Rule 4 and natural justice), raised substantial questions on vicarious liability under Section 42 and on whether the remittances were current account or capital account transactions, and found the penalties prima facie excessive; all such substantive and procedural issues are reserved for final hearing listed on 29.07.2019, and the Tribunal clarified that its interim observations are tentative and without prejudice to the final decision.

Return of seized property on furnishing security - Retention of property under PMLA beyond 180 days - Notice and adjudication under Section 17(4) and Section 8 of the PMLA - Custodia legis

Return of seized property on furnishing security - Custodia legis - Retention of property under PMLA beyond 180 days - Notice and adjudication under Section 17(4) and Section 8 of the PMLA - Release of jewellery seized on 22.09.2014 to the respondents on furnishing fixed deposit security and an undertaking, while preserving the Department's rights. - HELD THAT: - The Court recorded that the seized jewellery admittedly belongs to the respondents and noted that no notice under Section 17(4) had been issued to them nor had the respondents sought or been granted an extension under Section 20 to retain the property beyond the 180 day period. The petitioners sought only conditional return by way of furnishing fixed deposit receipts for the Department's valuation and giving an undertaking not to transfer, encumber or alienate the jewellery; the undertaking was accepted. The Court held that permitting recovery of the jewellery on these conditions would not cause prejudice to the Department because the Department would remain entitled to liquidate the security if it ultimately succeeds, and the jewellery would remain subject to attachment as custodia legis. The Court further directed photographic identification of the jewellery in the presence of the parties (to be signed) and return against proper receipt, thereby securing identification and safeguarding the Department's interests. [Paras 11, 12, 13, 14, 15]

The jewellery is to be released to the respondents on furnishing fixed deposit receipts for the departmental valuation and an undertaking; the jewellery remains custodia legis and identification photographs and proper receipts are to be taken.

Final Conclusion: The appeal is dismissed; the High Court directed conditional return of the seized jewellery on the terms ordered, with directions for identification and compliance within 10 days.

Retention of seized records and property under the Prevention of Money Laundering Act - outer temporal limit for retention under Sections 17 to 21 of PMLA - continuation of retention/attachment during investigation for a period not exceeding ninety days under Section 8(3)(a) - requirement to file prosecution/complaint within the prescribed period to sustain retention - right to obtain copies of seized records under Section 21(2) - mandatory-compliance principle: if a thing is to be done in a particular manner it must be done in that manner

Retention of seized records and property under the Prevention of Money Laundering Act - continuation of retention/attachment during investigation for a period not exceeding ninety days under Section 8(3)(a) - requirement to file prosecution/complaint within the prescribed period to sustain retention - right to obtain copies of seized records under Section 21(2) - Validity of the Adjudicating Authority's order dated 5.9.2017 authorising continued retention of documents seized from the appellant when no prosecution complaint was filed within the statutory period - HELD THAT: - The Tribunal held that Sections 17 to 21 of the PMLA prescribe the outer limits and procedure for seizure, freezing and retention of records and property, and that continuation of attachment/retention during investigation is governed by Section 8(3)(a) which permits such continuation for a period not exceeding ninety days. The statutory scheme contemplates strict compliance with the temporal limits and procedural steps; if the requisite action (such as filing of prosecution/complaint) is not taken within the prescribed period, the retention/attachment lapses. In the present case the record shows that no prosecution complaint was filed within the ninety-day period following the retention order, and more than a year elapsed thereafter. Applying the mandatory-compliance principle, the Tribunal concluded that the retention order had lapsed and therefore was unsustainable. Consequentially, while the seized documents could not be retained further, the appellant was entitled to obtain copies of the records as provided by Section 21(2). [Paras 17, 18, 19, 20, 21]

Impugned retention order of 5.9.2017 is set aside as having lapsed for non-compliance with the statutory timeline; copies of documents retained by the Enforcement Directorate to be handed over to the appellant in terms of Section 21(2).

Final Conclusion: The appeal is allowed: the Adjudicating Authority's order permitting continued retention of the appellant's documents is set aside as lapsed for failure to take required prosecutorial action within the statutory period; the appellant is entitled to copies of the seized records under Section 21(2) of the PMLA.

Reason to believe - provisional attachment under PMLA - recording of reasons - bona fide third party claimant - secured creditor's right to enforce security (SARFAESI) - PMLA attachment to take a back seat vis a vis prior third party interest

Reason to believe - recording of reasons - provisional attachment under PMLA - Validity of the provisional attachment and the show cause notice issued to the appellant in the absence of recorded reasons to believe. - HELD THAT: - The Tribunal held that recording valid reasons to believe is not a mere formality but a mandatory exercise of mind by the authorised officer before issuing a provisional attachment or the notice under Section 8(1). The reasons must be based on material and must be recorded in writing and communicated to the affected party; reliance on mere reproduction of statutory language or on prior documents without independent application of mind is impermissible. In the present case no valid reasons to believe in respect of the appellant were recorded or furnished; the provisional attachment order and the show cause notice merely repeat statutory language and do not disclose a nexus showing that the appellant was in possession of proceeds of crime or likely to conceal or transfer them. Consequently the attachment insofar as it relates to the mortgaged property of the appellant is vitiated. [Paras 29, 30, 31, 32, 33]

Provisional attachment and the confirmation insofar as it concerns the appellant's mortgaged property are quashed for failure to record valid reasons to believe; the show cause notice is invalid.

Bona fide third party claimant - PMLA attachment to take a back seat vis a vis prior third party interest - secured creditor's right to enforce security (SARFAESI) - Entitlement of a secured creditor/bonafide third party who acquired an interest prior to commission of the scheduled offence to enforce its rights despite a PMLA attachment. - HELD THAT: - The Tribunal accepted the principle in the cited Axis Bank decision that a bona fide third party interest acquired prior to the commission of the scheduled offence should not be defeated by a PMLA attachment; the PMLA attachment remains valid but may 'take a back seat' to allow the secured creditor to enforce its claim, with any surplus value remaining available to the enforcement authority. Applying that principle, and on the material that the appellant's mortgage was created prior to the scheduled offence and the property was not derived from proceeds of crime, the Tribunal held that the appellant is entitled to have its legitimate claim recognised and to proceed under SARFAESI for enforcement. [Paras 13, 14, 15, 16, 17]

Appellant, as a bona fide secured creditor whose mortgage preceded the scheduled offence, is entitled to enforce its rights (including proceeding under SARFAESI) and the PMLA attachment cannot be allowed to defeat that prior legitimate interest at the confirmation stage.

Secured creditor's right to enforce security (SARFAESI) - provisional attachment under PMLA - Whether the appellant may continue SARFAESI recovery proceedings and realise the mortgaged property during pendency of PMLA proceedings. - HELD THAT: - The Tribunal observed that the appellant may continue and pursue remedies available under SARFAESI and related recovery laws and may sell the secured property for recovery of dues. The appellant gave an undertaking to deposit any excess realisation with the Enforcement Directorate. Given the absence of a valid recorded reason to believe and the appellant's prior mortgage interest, denying the appellant an effective remedy during potentially prolonged PMLA proceedings would be futile and contrary to its statutory rights as a secured creditor. [Paras 11, 16, 17, 33]

Appellant is permitted to proceed with SARFAESI enforcement and realise the secured property; any surplus realisation is to be deposited with the Enforcement Directorate as undertaken.

Final Conclusion: The appeal is allowed; the impugned order confirming the provisional attachment, insofar as it relates to the property mortgaged to the appellant, is set aside and the provisional attachment quashed because no valid 'reason to believe' was recorded; the appellant, being a bona fide secured creditor whose interest pre dated the scheduled offence, may enforce its security under SARFAESI and must deposit any excess realisation with the Enforcement Directorate.

Provisional attachment and confirmation within one hundred and eighty days under Section 5(1) PMLA - mandatory nature of statutory limitation period - exclusion of period of judicial stay for computing statutory period - confirmation of provisional attachment - territorial/temporal applicability of PMLA to pre schedule offences

Provisional attachment and confirmation within one hundred and eighty days under Section 5(1) PMLA - mandatory nature of statutory limitation period - confirmation of provisional attachment - Effect of failure to confirm a provisional attachment within the 180 days prescribed by Section 5(1) of the PMLA - HELD THAT: - The Tribunal held that Section 5(1) prescribes a mandatory period of one hundred and eighty days for confirming a provisional attachment and that the period must be strictly construed. The provisional attachment order No. 08/2018 dated 28.03.2018 was not confirmed within the statutory period which expired on 24.09.2018; consequently the attachment ceased to subsist and the Adjudicating Authority had no option but to return the file and direct release of the properties. The Tribunal rejected any extension of the statutory period as impermissible, set aside the impugned confirmation order passed beyond 180 days and quashed the provisional attachment, concluding that the Adjudicating Authority's order was passed without proper application of mind. [Paras 14, 15, 16, 19]

Impugned order set aside and provisional attachment quashed for failure to confirm within 180 days.

Exclusion of period of judicial stay for computing statutory period - applicability of amendment providing exclusion and additional thirty days - Whether the proviso (excluding the period of stay and allowing up to 30 days thereafter for computing the 180 day period) applies to the provisional attachment dated 28.03.2018 - HELD THAT: - The Tribunal noted that the proviso excluding the period of stay from computation and permitting an additional period up to thirty days was inserted by amendment on 29.03.2018 (corrigendum 03.04.2018). Since the provisional attachment in the present case was dated 28.03.2018, the Tribunal held that the amendment is not applicable to the facts of this case and therefore could not be invoked to extend the statutory period for confirmation. [Paras 18]

Amendment providing exclusion of stay period and thirty day extension held inapplicable to the attachment dated 28.03.2018.

Territorial/temporal applicability of PMLA - Question whether PMLA could be invoked in view of earlier FIR/RC date and omission of that date from the ECIR - HELD THAT: - The Tribunal observed that the FIR/RC was registered on 23.09.2003 and that the ECIR did not mention the date of the alleged offence or the date of registration of the FIR/RC; it recorded that reasons to believe were not produced and that it was the duty of the authorised officer to mention such dates. The Tribunal declined to express any opinion on whether PMLA could be invoked in the circumstances (including the effect of schedule offences being incorporated later) and left that question open for appropriate consideration elsewhere. [Paras 20]

Question left undecided; Tribunal refrained from expressing an opinion on the applicability of PMLA and did not adjudicate that issue.

Final Conclusion: The Tribunal allowed the appeals, set aside the Adjudicating Authority's confirmation order passed beyond the statutory 180 day period, quashed the provisional attachment, held the March 29, 2018 amendment inapplicable to the attachment dated 28.03.2018, and left unresolved the separate question of PMLA's applicability in relation to the earlier FIR/RC and omissions in the ECIR.

Retention of seized property pending adjudication - Reason to believe requirement for search and seizure - Continuation of retention during investigation for not exceeding ninety days under Section 8(3)(a) - Outer time-limit of one hundred and eighty days for retention/decision under Section 21 - Return of seized property on lapse of statutory period

Continuation of retention during investigation for not exceeding ninety days under Section 8(3)(a) - Return of seized property on lapse of statutory period - Whether the retention order in favour of the Enforcement Directorate could be sustained after the expiry of the statutory period for continuation of retention during investigation. - HELD THAT: - The Tribunal held that the statutory scheme confines continuation of attachment/retention during investigation to a period not exceeding ninety days under the provision relied upon by the respondent, and that the outer limit for adjudicating applications for retention under Sections 17-21 is one hundred and eighty days. It was an admitted position that no prosecution complaint had been filed against the appellant and that the period prescribed for continuation under the said provision had expired. In view of the mandatory nature of the time-limits and the principle that matters required to be done in a particular manner must be done in that manner only, the retention order lapsed on expiry of the prescribed period and could not be sustained. [Paras 19, 21, 23, 24, 25]

Order allowing retention set aside; properties retained by the respondent to be returned to the appellant within two weeks, subject to retention of photocopies/copies if required.

Reason to believe requirement for search and seizure - Retention of seized property pending adjudication - Whether the respondent had recorded and placed on record reasons to believe and material establishing nexus between the seized property and proceeds of crime as required under the statutory scheme. - HELD THAT: - The Tribunal recorded that the respondent had not produced any material linking the appellant to the alleged proceeds of crime, nor had it placed on record any reason to believe that the seized property was involved in money-laundering. The Judgment notes that Section 17 mandates recording of reasons to believe in writing and forwarding the same to the Adjudicating Authority along with material, and that no such reasons or material were provided in the proceedings impugned. These deficiencies were noted notwithstanding the primary relief based on lapse of statutory period. [Paras 8, 9, 10, 14]

Findings recorded that no reasons to believe or material establishing nexus were placed on record; adverse consequence of this defect reinforced return of seized property.

Final Conclusion: The appeal is allowed: the Adjudicating Authority's order permitting retention is set aside as the statutory period for continuation of retention has lapsed; the respondent shall return the seized properties to the appellant within two weeks, while being permitted to retain photocopies/prints of records or copies of electronic material if required.

Taxability of sale of goods versus provision of service - Exclusion of sale of goods from the definition of 'service' under Section 65B(44) - Mode of receipt of consideration not determinative of service tax liability - Benefit of Notification No.12/2003 ST - Section 73(3) - bar to issuance of show cause notice where tax is paid before notice - Penalty not leviable where non-payment is bona fide and tax with interest was paid before notice

Taxability of sale of goods versus provision of service - Exclusion of sale of goods from the definition of 'service' under Section 65B(44) - Mode of receipt of consideration not determinative of service tax liability - Benefit of Notification No.12/2003-ST - Demand of service tax and penalty insofar as they relate to sale of construction material to private parties - HELD THAT: - The Tribunal accepted that invoices were raised for sale of construction material but held that the Revenue failed to identify any taxable service that was actually provided. The Appellate Authority's reliance on the absence of VAT on invoices and the fact that consideration was received in cash to characterise the transactions as services was rejected as unsupported. Sale of building material remained a matter of State law and, in any event, sale of goods is excluded from the definition of 'service' (including by operation of the post 1.7.2012 exclusion), with the appellant also entitled to rely on the notifications and certificates produced to show the transactions were sales. In these circumstances the demand of service tax confirmed against the appellant for such sales, and the penalty tied thereto, were set aside. [Paras 4]

Demand of Rs. 5,29,556/- confirmed on account of alleged service in sale of building material to private parties and the penalty imposed thereon set aside.

Section 73(3) - bar to issuance of show cause notice where tax is paid before notice - Penalty not leviable where non-payment is bona fide and tax with interest was paid before notice - Validity of penalty imposed in relation to construction services provided for U.P. Avas Evam Vikas Parishad - HELD THAT: - The Tribunal noted that service tax along with interest had been deposited by the appellant before issuance of the show cause notice. In view of Section 73(3) and the factual position that the services were rendered for a government body, the appellant could have a bona fide belief regarding tax liability; Revenue did not produce evidence of mala fide conduct. Consequently, imposition of penalty in respect of the confirmed demand for construction of a residential complex was not justified and was set aside. [Paras 5]

Penalty of Rs. 6,72,643/- imposed in connection with the construction services for U.P. Avas Evam Vikas Parishad set aside.

Final Conclusion: The appeals are allowed in part: the service tax demand and penalty relating to sale of construction material to private parties are quashed, and the penalty relating to construction services for U.P. Avas Evam Vikas Parishad is set aside; appeal disposed accordingly.

Demand based on information from service recipients - failure to maintain records and non-filing of ST-3 returns - benefit of Notification No. 30/2012 - taxability on actual receipts versus invoice value - confirmation of interest and penalties under sections 75, 77 and 78 of the Finance Act, 1994

Demand based on information from service recipients - failure to maintain records and non-filing of ST-3 returns - Validity of service tax demand raised by the department on the basis of information collected from service recipients for the period 2008-2009 to 2012-2013 where the appellant did not maintain financial records or file ST-3 returns. - HELD THAT: - The Tribunal found that the appellant admitted non-maintenance of proper records and had not filed ST-3 returns for the relevant period. The department independently collected details from various service recipients and issued a show cause notice based on those details. The appellant failed to substantiate its contention that the departmental calculations were incorrect. In these circumstances, the demand founded on information obtained from service recipients was held to be lawful and sustainable, particularly in view of the statutory obligation to maintain records and file returns under the Finance Act and Service Tax rules.

Demand confirmed; no interference with the adjudicating authority's and Commissioner (Appeals)'s orders.

Taxability on actual receipts versus invoice value - benefit of Notification No. 30/2012 - Whether service tax liability should be computed on actual receipts received as opposed to invoice amounts, and whether the appellant was entitled to the concessional levy under Notification No. 30/2012. - HELD THAT: - The appellant claimed that service tax should be charged only on amounts actually received and asserted that the invoices did not reflect actual receipts, alleging a much smaller tax liability which they said had been paid. The Tribunal observed that the appellant did not produce any evidence before the adjudicating authority or the Tribunal to substantiate non-realisation of invoiced amounts. The adjudicating authority had, however, granted the appellant the benefit of Notification No. 30/2012 (concessional levy at 25% for services to corporate bodies). Given the absence of supporting evidence for the appellant's assertion about non-receipt, the Tribunal rejected the contention that tax must be computed on alleged actual receipts rather than on the amounts determined by the department.

Claim that tax should be computed on actual receipts rejected; concessional benefit under Notification No. 30/2012 was correctly considered.

Confirmation of interest and penalties under sections 75, 77 and 78 of the Finance Act, 1994 - failure to maintain records and non-filing of ST-3 returns - Legitimacy of confirmation of interest and imposition of penalties where short payment was found and statutory returns were not filed. - HELD THAT: - The Tribunal noted that short payment of service tax was adjudicated against the appellant and that statutory provisions for recovery of interest and levy of penalties were invoked. The appellant's failure to maintain records and to file ST-3 returns was material to the imposition of interest and penalties. The appellant did not provide any evidence or legal basis to negate the applicability of interest and penalties, and no grounds were shown to interfere with the confirmations made by the lower authorities.

Confirmation of interest and penalties upheld; no interference warranted.

Final Conclusion: The appeal is dismissed in limine; the departmental demand based on information from service recipients for financial year 2008-2009 to 2012-2013, the rejection of the appellant's contention that tax should be computed only on alleged actual receipts, and the confirmation of interest and penalties are all sustained.

Service tax liability - negative list regime - extended period of limitation - bona fide belief - mala fide / intent to evade - penalty under Section 78 - remand for re-quantification

Service tax liability - negative list regime - extended period of limitation - bona fide belief - remand for re-quantification - Demand of service tax confirmed by lower authorities was set aside on the ground of time bar and remanded for re-quantification of amounts within the limitation period. - HELD THAT: - The appellant did not contest that it rendered services to cement companies and did not claim that those services were excluded or exempt. However, the period in question falls after introduction of the negative list regime in 2012, which could give rise to a bona fide belief that the services were not taxable. In absence of evidence of mala fide or any proof to the contrary, the Revenue could not invoke the extended period of limitation. Consequently the demand confirmed by invoking the longer limitation period cannot be sustained. As some part of the demand may nevertheless fall within the ordinary limitation period, the matter is remanded to the Original Adjudicating Authority for re-quantification and adjudication of the demand limited to amounts within the limitation period.

Demand set aside as time-barred; matter remanded to original authority to re-quantify and decide amounts within the limitation period.

Penalty under Section 78 - mala fide / intent to evade - bona fide belief - Penalty equal to the amount of demand imposed under Section 78 was set aside for lack of mala fide. - HELD THAT: - The Commissioner (Appeals) and the Original Adjudicating Authority had held that intent to evade was established and sustained the penalty. The Appellate Tribunal, however, found no evidence of mala fide conduct by the appellant and recognised the possibility of a bona fide belief arising from the change to the negative list regime. In those circumstances imposition of penalty of equal amount was not justified and is therefore set aside.

Penalty imposed under Section 78 set aside for want of mala fide.

Final Conclusion: The appeal is allowed to the extent that the demand is set aside on limitation grounds and remanded for re-quantification of amounts within the limitation period; consequentially the penalty under Section 78 is set aside.

Transfer of development rights - exclusion from 'service' for transfer of title in immovable property under Section 65B(44) - benefit arising out of land - extended period of limitation

Transfer of development rights - exclusion from 'service' for transfer of title in immovable property under Section 65B(44) - benefit arising out of land - Liability of the appellant to pay service tax on alleged transfer of land development rights. - HELD THAT: - The Tribunal examined the factual matrix and the agreements relied upon by the department and recorded that the appellant never acquired ownership of the land or any development rights from M/s DCPC; amounts received by the appellant were remitted to land owning companies for acquisition of land. The Tribunal placed reliance on its earlier final order in the DCPC proceedings which found that DCPC had not transferred any development rights to the appellant. On the facts - no acquisition of development rights by the appellant, no sale deed or transfer of title by the land owning companies to the appellant, and the transactional structure showing remittance for land purchase - the Tribunal held that the appellant could not have transferred development rights to third parties. Further, the Tribunal accepted the legal position that benefits arising out of land fall within the concept of immovable property and that a transfer which effectively transfers rights/undivided interest in land falls outside the definition of "service" as excluded by Section 65B(44) (as interpreted with Section 3(26) of the General Clauses Act). Applying these legal principles to the admitted facts, the Tribunal concluded that the demand for service tax founded on an alleged transfer of development rights by the appellant is unsustainable. [Paras 8, 9, 10]

Impugned demand confirmed against the appellant set aside; appeal allowed and the demand discharged.

Final Conclusion: On the facts and agreements before it the Tribunal found that the appellant did not acquire or transfer any land development rights and that the transactions, insofar as they involved benefits arising out of land, do not constitute a taxable "service" under the accepted statutory interpretation; the impugned order confirming service tax demand was set aside and the appeal allowed.

Service tax not payable by sports professional for promotional activities/appearance - taxability of promotion/endorsement by sportsperson - extended period for demand - precedential reliance on Sourav Ganguly

Service tax not payable by sports professional for promotional activities/appearance - precedential reliance on Sourav Ganguly - Whether the respondent, a professional cricketer, was liable to pay service tax for wearing franchise clothing and displaying franchise marks/branding - HELD THAT: - The Tribunal accepted the respondent's position that his facts are analogous to the decision in Sourabh Ganguly v. Union of India as relied upon by the Commissioner (Appeals) and by earlier Tribunal decision in Shri Karan Sharma. Applying those precedents, the activities complained of did not attract service tax liability. Because service tax was held not payable on the respondent's conduct, the revenue's appeal challenging the Commissioner (Appeals) order could not be sustained.

The appeal by the revenue is rejected; no service tax liability is upheld in respect of the respondent's promotional/appearance activities.

Extended period for demand - Whether the extended period for demand was invokable against the respondent - HELD THAT: - The Commissioner (Appeals) had held that the extended period was not invokable. Given the Tribunal's determination-based on applicable precedent-that no service tax was payable by the respondent, the extended period could not be applied to create a demand.

Extended period for making a demand is not invokable in the present case.

Penalty when tax liability discharged - Whether penalty was imposable on the appellant - HELD THAT: - The Commissioner (Appeals) found that tax liability stood discharged and therefore no penalty was imposable. The Tribunal, upholding the conclusion that no service tax was payable, concurs that penalty cannot be imposed.

No penalty is imposable.

Final Conclusion: The Tribunal, following relevant precedent, holds that the respondent was not liable to service tax for his promotional/appearance activities; accordingly the extended period for demand is not invokable and no penalty is imposable, and the revenue's appeal is dismissed.

Mega exemption for services to Government by construction and original works - taxability of works contract service under section 65(105)(zzzza) - exemption for services to railways and defence establishments as governmental authorities - original works including erection, commissioning or installation of plant, machinery or equipment - threshold exemption for small taxable turnover - reliance on earlier tribunal order under challenge and effect of independent findings by appellate authority

Mega exemption for services to Government by construction and original works - exemption for services to railways and defence establishments as governmental authorities - original works including erection, commissioning or installation of plant, machinery or equipment - taxability of works contract service under section 65(105)(zzzza) - threshold exemption for small taxable turnover - Validity of demand of service tax on construction and related services rendered to Military Engineering Services and Railways for FY 2012-13 and FY 2013-14, and applicability of threshold exemption - HELD THAT: - The Commissioner (Appeals) held that construction and allied services provided to Indian Railways and Military Engineering Services qualify as services to governmental authorities exempted by the mega exemption notification from 01.07.2012, since such services include construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of a civil structure or original works and original works expressly cover erection, commissioning or installation of plant, machinery or equipment. The Commissioner (Appeals) further found that certain civil constructions executed for defence were predominantly for use other than commerce or industry and therefore not taxable as works contract service under the statutory definition relied upon by the original authority. Independently, the Commissioner (Appeals) observed that the taxable amounts for FY 2012-13 and FY 2013-14 were below the threshold exemption limit and, having regard to the assessee's earlier recorded turnover, the appellant was eligible for threshold exemption for those years. The Tribunal noted that the Commissioner (Appeals) reached these conclusions on facts and law and did not merely rely on the earlier Tribunal order. [Paras 5]

Demand of service tax for the periods and years in question is not sustainable; exemption and threshold exemption were correctly applied in favour of the respondent.

Reliance on earlier tribunal order under challenge and effect of independent findings by appellate authority - Effect of the Commissioner (Appeals) referring to an earlier Tribunal final order which was under challenge before the High Court, and whether that reliance vitiated the impugned appellate order - HELD THAT: - Revenue contended that the Commissioner (Appeals) impermissibly relied on this Tribunal's earlier Final Order No.71141/2017 dated 25.09.2017 which was under challenge before the High Court. The Tribunal examined the record and found that the Commissioner (Appeals) did not base his decision solely on that earlier Final Order but gave independent findings grounded in fact and law. Accordingly, the pendency of a challenge to the earlier Tribunal order did not affect the validity of the Commissioner (Appeals)'s independent decision. [Paras 5]

Ground based on reliance on the earlier Tribunal order is unsustainable because the Commissioner (Appeals) gave independent reasons for his decision.

Final Conclusion: The revenue appeals are dismissed and the impugned Order-in-Appeal is upheld.

Revenue cannot be determined merely by comparing ST-3 returns with balance sheet figures - Onus lies on the revenue to prove that excess income in financial statements reflects taxable services - Recognition of revenue in profit and loss account under Accounting Standard-9 (AS-9) - Provisional accounting entries cannot substitute evidential proof of taxable service provision

Revenue cannot be determined merely by comparing ST-3 returns with balance sheet figures - Onus lies on the revenue to prove that excess income in financial statements reflects taxable services - Recognition of revenue in profit and loss account under Accounting Standard-9 (AS-9) - Whether demand for service tax can be confirmed by comparing the assessee's ST-3 returns with its balance sheet figures in the absence of independent evidence that the excess income recorded in the balance sheet relates to taxable services. - HELD THAT: - The Tribunal accepted the assessee's explanation that differences between the balance sheet and ST-3 returns arose from application of accounting principles, specifically recognition of revenue under Accounting Standard-9, and provisional entries made to comply with accounting standards. The lower authorities had recognized that the assessee followed the prescribed accounting standards but nevertheless confirmed the demand solely on the basis of numerical mismatch. The Court reiterated the settled legal position that a demand cannot be sustained merely by comparing return figures with balance sheet figures unless the revenue produces independent evidence to show that the excess in the financial statements represents provision of taxable services. The burden to prove deliberate suppression or short-payment of tax rests on the revenue and was not discharged in the present case. In consequence, the comparison-based presumption adopted by the adjudicating authorities was held to be unsustainable.

Impugned demand, interest and penalty confirmed solely on comparison of ST-3 returns with balance sheet figures set aside; appeal allowed.

Final Conclusion: The appeal is allowed; the order confirming demand, interest and penalty-based only on a comparison between ST-3 returns and balance sheet figures without independent evidence that the excess income represented taxable services-is set aside with consequential relief as per law.

Liability under reverse charge mechanism - definition of "business entity" for service tax - interpretation of "industry" in tax/ commercial sense - definition of "body corporate" for applicability of reverse charge - eligibility for refund of service tax paid under reverse charge

Liability under reverse charge mechanism - definition of "business entity" for service tax - interpretation of "industry" in tax/ commercial sense - eligibility for refund of service tax paid under reverse charge - Whether Indian Institute of Technology, Kanpur is a "business entity" such that it was liable to pay service tax under the reverse charge mechanism and consequently not entitled to the claimed refund. - HELD THAT: - The Commissioner (Appeals) considered Rule 2(1)(d) of the Central Excise Rules, 1994 read with Notification No.30/2012-ST and the definition of "business entity" in Section 65B(17) of the Finance Act, 1994 as any person ordinarily carrying out activities relating to industry, commerce or any other business. Reliance placed by the adjudicating authority on Bangalore Water Supply & Sewerage Board was examined in light of the Supreme Court's later distinction in M/s Msco. Pvt. Ltd. v. UOI that the word "industry" in taxing statutes must be understood in its commercial sense and that definitions in labour/industrial statutes are not automatically transferable. The Commissioner (Appeals) noted that the definition of "industry" in the Industrial Disputes Act expressly excludes educational, scientific, research or training institutions. The powers and duties conferred on IIT Kanpur by the Institutes of Technology Act, 1961-primarily instruction, research, advancement of learning and related welfare activities-demonstrate that its activities are not activities ordinarily relating to industry, commerce or business. On that basis the Commissioner (Appeals) concluded that IIT Kanpur is not a "business entity" for the purposes of the reverse charge provisions and was therefore not liable to pay service tax as recipient of manpower supply and works contract services, entitling it to the refund claimed. [Paras 16, 17, 18, 19, 23]

IIT Kanpur is not a "business entity" within the meaning of Section 65B(17) and therefore was not liable under the reverse charge mechanism; the refund claim succeeds on that basis.

Definition of "body corporate" for applicability of reverse charge - Whether Indian Institute of Technology, Kanpur falls within the definition of "body corporate" so as to attract reverse charge liability where the supplier is an individual, HUF or partnership firm. - HELD THAT: - The Commissioner (Appeals) examined the definition of "body corporate" as set out in Section 65(14) of the Finance Act read with clause (7) of Section 2 of the Companies Act, 1956 and observed that the term refers to companies as defined under the Companies Act. IIT Kanpur, being established under the Institutes of Technology Act, 1961 and not a company under the Companies Act, does not fall within the statutory meaning of "body corporate" for the purposes of the reverse charge provision relied upon by the Revenue. [Paras 20, 21]

IIT Kanpur is not a "body corporate" within the meaning of the statute and thus does not attract reverse charge liability on that ground.

Final Conclusion: The Tribunal upholds the Commissioner (Appeals) order: Revenue's appeal is dismissed as the findings that IIT Kanpur is neither a "business entity" nor a "body corporate" for the reverse charge provisions are sustained, resulting in allowance of the refund claim.

Service tax on renting of immovable property - Association of Persons - Clubbing of income of co-owners - Exemption under Notification No. 06/2005-S.T. dated 01.03.2005

Association of Persons - Clubbing of income of co-owners - Service tax on renting of immovable property - Exemption under Notification No. 06/2005-S.T. dated 01.03.2005 - Whether joint owners of an immovable property are to be treated as an Association of Persons for the purpose of service tax so as to club their respective rental receipts for determining liability and benefit of the exemption notification. - HELD THAT: - The Tribunal held that co-owners of a property, although jointly owning the immovable property, are independent owners with regard to their respective shares and the consideration received by each. Service tax liability is determined with reference to the individual service provider and registration is PAN-based; therefore, treating all co-owners together as an Association of Persons and levying service tax on the aggregate rent is not legally sustainable. The Tribunal relied on consistent precedents addressing identical facts which rejected the Revenue's contention that indivisibility of the physical property mandates aggregation of receipts. Where each co-owner's share of rent falls below the threshold specified in the exemption, the benefit of Notification No. 06/2005-S.T. dated 01.03.2005 applies to that individual; conversely, if an individual co-owner's receipts exceed the threshold in a financial year, that individual alone becomes liable for service tax. The Tribunal further noted that collection of service tax from one co-owner on account of total rent received by all is neither supported by law nor by the procedural framework of PAN-based registration, and affirmed prior orders granting exemption to individual co-owners and rejecting joint treatment by the department.

Impugned orders setting aside individual entitlement to exemption were reversed; co-owners are not to be treated as an Association of Persons for clubbing rental receipts, and the appeals are allowed with consequential relief.

Final Conclusion: The Tribunal set aside the demands based on clubbing of rent of co-owners, held that each co-owner is an independent service provider for renting of immovable property and entitled to claim exemption under Notification No. 06/2005-S.T. where his individual receipts fall below the threshold; the appeals are allowed.

Territorial jurisdiction of adjudicating authority - registration versus centralized registration - place of provision of service vis-a -vis place of registration - remand for fresh adjudication after verification of factual position

Territorial jurisdiction of adjudicating authority - place of provision of service vis-a -vis place of registration - Jurisdiction of Commissioner, Noida, to adjudicate and confirm Service Tax demand in respect of construction activities undertaken by the appellant at places outside Noida - HELD THAT: - The Tribunal records that on earlier remand it had directed the Commissioner to examine whether the Noida registration entitled the Commissioner to adjudicate demands relating to activities carried out outside the Noida Commissionerate. The Adjudicating Authority's subsequent order asserted jurisdiction on the basis that services were provided from the registered premises at Greater Noida and relied on a precedent stating that the Commissioner within whose territorial jurisdiction the registered office is located has jurisdiction. The Tribunal finds that the Adjudicating Authority made no factual finding that the Noida registration was a centralized registration or that Noida was the assessee's registered office; the record contains assertions that the registered particulars referred to a single premises and indicia that operations and notices were linked to the Mumbai office. In the absence of verified factual findings on whether the Noida registration covered services provided at other locations, the Tribunal concludes that jurisdiction has not been finally determined and the matter requires fresh adjudication after factual verification.

Impugned order set aside and the question of territorial jurisdiction remanded to the Adjudicating Authority for fresh decision after verifying factual positions; issue kept open.

Registration versus centralized registration - remand for fresh adjudication after verification of factual position - Whether the Noida registration was a centralized registration covering multiple places of service or a registration confined to a single premises - HELD THAT: - The Tribunal notes that the earlier ST-I form indicated 'registration of a single premises' and that investigative steps suggested the assessee may not have been operating from the Noida premises, while show cause notices and summons were addressed to the Mumbai office. The Adjudicating Authority made no express finding that the Noida registration was a centralized registration or that services were provided from Noida for all projects. Given these unresolved factual aspects, the Tribunal holds that the characterization of the registration (centralized or single-premises) was not adjudicated and must be examined afresh by the Commissioner with verification of records and facts.

Characterization of the Noida registration remanded to the Adjudicating Authority for fresh determination after verification; issue kept open.

Final Conclusion: The appeal is disposed by setting aside the impugned order and remanding the matter to the Adjudicating Authority for fresh adjudication on all points, including territorial jurisdiction and the nature of the Noida registration, after verification of factual positions; all issues are kept open.

Service tax on reimbursable travelling expenses - architect services - visiting charges - inclusion of reimbursable expenditure in taxable value - reimbursable expenditure not includible prior to amendment effective 14.05.2015

Service tax on reimbursable travelling expenses - architect services - visiting charges - inclusion of reimbursable expenditure in taxable value - Liability to pay service tax on travelling expenses charged during provision of architect services. - HELD THAT: - The Tribunal applied the ratio in Swaminathan Associates which, in turn, relied on the Hon'ble Supreme Court in Intercontinental Consultants & Technocrats Pvt. Ltd., holding that "visiting charges" or reimbursable travelling expenditure do not form part of the taxable value of architect services for the period in question. The reasoning records that the amendment rendering reimbursable expenditure includible in value became effective only from 14.05.2015; hence for the earlier period reimbursable travelling charges are not taxable. In view of the settled interpretation by the superior Courts, the demand and associated penalties could not be sustained and the impugned order was set aside. [Paras 4, 5]

Appeal allowed; impugned order set aside and no service tax payable on travelling/reimbursable visiting charges for the period covered by the adjudication.

Final Conclusion: The Tribunal allowed the appeal, setting aside the impugned order and holding that travelling/reimbursable visiting charges in relation to architect services are not exigible to service tax for the period before the amendment effective 14.05.2015.

Chargeability of service tax on discounts - service tax liability in respect of turnover routed through a main contractor/subcontractor relationship - taxability of amounts arising from erroneous/inadvertent accounting entries - evidentiary value of audited accounts and auditor's certificate in tax assessment

Chargeability of service tax on discounts - evidentiary value of audited accounts and auditor's certificate in tax assessment - Whether service tax is leviable on amounts allowed as discounts to customers. - HELD THAT: - The Tribunal found that the Department produced no evidence to contradict the appellant's books of account and accepted an auditor's certificate dated 11 November 2014 certifying that discounts were allowed to customers and that service tax was chargeable on the net billed amount after such discounts. The Commissioner erred in disregarding that certificate without recording reasons and in selectively relying on audited final accounts. On the materials on record the purported demand insofar as it related to discounted amounts could not be sustained. [Paras 4]

Demand of Rs. 4,99,802/- on account of discounts set aside.

Service tax liability in respect of turnover routed through a main contractor/subcontractor relationship - Whether the appellant (subcontractor) is liable to service tax on turnover received from the main contractor where the main contractor had charged and paid service tax to the department. - HELD THAT: - The Tribunal noted the admitted fact that the main contractor certified it had charged service tax to its client and deposited it with the Government in respect of activities performed through the appellant. Relying on the principle, as applied by the High Court in Hindustan Dorr Oliver Pvt. Ltd. in the context of works contracts, that there is one transaction and the tax cannot be levied twice where the main contractor has charged tax for work done either by itself or through a subcontractor, the Tribunal held that service tax could not be imposed again on amounts routed through the main contractor. [Paras 5]

Demand of Rs. 37,12,000/- raised on account of turnover routed through the main contractor set aside.

Taxability of amounts arising from erroneous/inadvertent accounting entries - Whether service tax is leviable on amounts which inflated service receipts due to inadvertent/erroneous journal entries in the books of account. - HELD THAT: - The Tribunal accepted the explanation that two journal entries dated 31 March 2011 were made inadvertently in the service receipt account to adjust 'Cenvat credit adjustment' and that these credits did not arise from rendering of services but from erroneous accounting entries. On that basis the amounts which had artificially inflated service receipts could not be treated as taxable receipts for service tax purposes. [Paras 6]

Demand of Rs. 17,99,839/- attributable to inadvertent credits set aside.

Final Conclusion: All demands confirmed by the adjudicating authority in respect of discounts, turnover routed through the main contractor, and inadvertent accounting credits are set aside; the penalty imposed thereon is also set aside and the appellant is entitled to consequential relief in accordance with law.

Summary order. Early hearing application allowed; appeal listed for hearing on 13/06/2019 along with appeal nos. ST/10767/2016 and ST/10680/2018.

Man power recruitment and supply service under Section 65(105)(k) and Section 65(68) - sharing of common staff/facilities between sister concerns does not constitute provision of service - service tax liability requires an activity of supplying manpower as a commercial concern - sharing of expenditure or joint arrangement/venture is not consideration for a service

Man power recruitment and supply service under Section 65(105)(k) and Section 65(68) - sharing of common staff/facilities between sister concerns does not constitute provision of service - service tax liability requires an activity of supplying manpower as a commercial concern - sharing of expenditure or joint arrangement/venture is not consideration for a service - Common staff and other common facilities used on a sharing basis by two sister concerns are not liable to service tax as manpower recruitment and supply service. - HELD THAT: - The Tribunal examined whether inter-company adjustments for shared employees and common facilities amounted to a taxable supply of manpower. Relying on earlier findings of this Tribunal and the reasoning in higher authority decisions reproduced in the order, it held that where employees remain on the payroll and perform duties for both sister concerns and the costs are shared, there is no provision of manpower by one company to the other. The arrangement was characterised as sharing of services/facilities or a joint arrangement where each party bears its share of expenditure rather than one commercial concern supplying manpower to another for consideration. The Tribunal further noted the Supreme Court's reasoning in an analogous case that payments representing a party's share of jointly used handling facilities are not consideration for a service. On these consistent authorities, the impugned adjudication confirming service tax was found to be unsustainable.

Impugned orders demanding service tax set aside; appeals allowed.

Final Conclusion: On the facts for 01.07.2006 to 31.03.2007, sharing of staff and common facilities between sister concerns was held not to attract service tax under manpower recruitment and supply service; the adjudication and appellate orders confirming tax are set aside and the appeals are allowed.

Extended period of limitation - suppression of facts - wilful suppression with intent to evade payment - burden on the Revenue to prove suppression - self-assessment

Extended period of limitation - suppression of facts - wilful suppression with intent to evade payment - burden on the Revenue to prove suppression - Invokability of the proviso extending limitation from one year to five years for issuance of a show cause notice. - HELD THAT: - The Tribunal held that the proviso permitting an extended period applies only where the non-levy, short-levy or short-payment of service tax is by reason of fraud, collusion, wilful misstatement, suppression of facts or contravention with intent to evade payment, and that these words must be strictly construed. Reliance was placed on the principle in Pushpam Pharmaceuticals and subsequent Supreme Court decisions cited in the order that 'suppression of facts' requires a deliberate omission to disclose correct information with the intention to evade payment; mere incorrect claim or ordinary default does not attract the proviso. The show cause notice in the present case merely stated that facts were "suppressed" without alleging that such suppression was deliberate and with intent to evade payment of service tax; the adjudicating authority did not examine or record any finding that suppression was wilful or intentional to evade tax. The Tribunal therefore found that the extended five-year limitation could not legitimately be invoked on the basis of the impugned notice and order, since the requisite averment and proof of intent to evade were absent and the Commissioner failed to address the appellant's specific plea on this point. [Paras 20, 21, 22]

The extended five-year period under the proviso could not be invoked as the show cause notice and impugned order did not allege or establish wilful suppression with intent to evade payment; the invocation of extended limitation was therefore improper.

Final Conclusion: The order of the Commissioner dated 16 February 2010 confirming the demand by invoking the extended period is set aside and the appeal is allowed.

Cenvat Credit - input services - maintenance charges as part of lease/rent - services availed outside factory premises but related to manufacture - place of manufacture

Cenvat Credit - services availed outside factory premises but related to manufacture - maintenance charges as part of lease/rent - input services - Entitlement to Cenvat credit on maintenance services charged by the operator of a vendor park for facilities (roads, drainage, lighting, effluent treatment) located outside the assessee's factory premises. - HELD THAT: - The Tribunal examined whether maintenance charges levied by the vendor-park operator, though for services beyond the physical factory boundary, qualify as input services for the place of manufacture and thereby attract Cenvat credit. The Tribunal relied on precedents dealing with maintenance charges apportioned on the basis of area occupied by the lessee and treated such charges as an integral part of lease/rent, which are eligible inputs. It observed that availability and upkeep of the industrial plot and its common infrastructure are essential for the assessee's manufacturing activity, and that maintenance charges computed per square metre of the leased premises are effectively part of the cost of occupying the place of manufacture. The Tribunal distinguished authorities concerned with clearance of goods from the place of manufacture, and held those inapplicable to the present factual matrix. Applying this reasoning, the Tribunal concluded that the maintenance services provided by the vendor-park operator are input services related to manufacture and the appellants are entitled to Cenvat credit thereon. [Paras 4]

Appeal allowed; Cenvat credit on the maintenance services provided by the vendor-park operator is admissible.

Final Conclusion: The Tribunal allowed the appeal and held that maintenance charges levied by the vendor-park operator for upkeep of common facilities, though incurred outside the factory premises, are input services related to the place of manufacture and eligible for Cenvat credit.

Admissibility of Cenvat credit on Goods Transport Agency (GTA) services - clearance of goods under section 4A of the Central Excise Act, 1944 - reliance on precedent: Hawkins Cookers Ltd. v. CCE

Admissibility of Cenvat credit on Goods Transport Agency (GTA) services - clearance of goods under section 4A of the Central Excise Act, 1944 - Cenvat credit on GTA services used for clearance of goods from factory to depot where goods are cleared under section 4A is admissible. - HELD THAT: - The Tribunal considered whether Cenvat credit could be availed in respect of GTA services employed for transporting goods cleared under section 4A of the Central Excise Act, 1944. The matter was held to be squarely covered by the Tribunal's earlier decision in Hawkins Cookers Ltd. v. CCE, and the ratio of that decision was applied. Following the precedent, the present appeal was allowed, recognising entitlement to the Cenvat credit on the GTA services used for such clearances.

Appeal allowed; Cenvat credit on the GTA services in question held admissible following the cited precedent.

Final Conclusion: The appeal was allowed by applying the ratio of Hawkins Cookers Ltd.; Cenvat credit on GTA services used for clearances under section 4A was held admissible.

Natural justice - Cenvat Credit - Rule 16 of the Central Excise Rules, 2002 - credit on receipt of duty paid goods returned to factory - burden of proof on Revenue - restriction on Cenvat credit where inputs are used in manufacture of exempted final products - compliance with Tribunal's remand directions

Natural justice - compliance with Tribunal's remand directions - Impugned adjudication vitiated for non consideration of material produced by the appellant and for deciding the case on the basis of a verification report not supplied to the appellant. - HELD THAT: - The Original Authority relied upon a verification report dated 18.02.2016 from the jurisdictional Assistant Commissioner without furnishing a copy of that report to the appellant or affording an opportunity to comment. In addition, the Original Authority failed to take into account documents and records placed before him, and recorded that original RG 1 was not produced without giving the appellant an opportunity to produce it. These omissions amount to a breach of principles of natural justice and a failure to comply with the Tribunal's earlier directions for de novo quantification and verification on remand. The impugned order therefore cannot stand.

Impugned order set aside for violation of natural justice and non compliance with remand directions.

Rule 16 of the Central Excise Rules, 2002 - credit on receipt of duty paid goods returned to factory - burden of proof on Revenue - Whether denial of Cenvat credit on returned duty paid goods was legally sustainable where the Original Authority faulted the appellant for not intimation and for not producing details of process undertaken. - HELD THAT: - Rule 16 requires the manufacturer to maintain record of receipt of duty paid final products returned to the factory and permits taking credit subject to conditions; it does not mandate prior intimation to the Department on receipt. The Tribunal held that the Original Authority wrongly placed the onus on the appellant to prove that the returned goods were subjected to processes amounting to manufacture. The proper legal position is that Revenue bears the burden to show that the returned duty paid goods were not reprocessed in a manner that permits claim of Cenvat credit. The Original Authority's contrary approach is unsustainable.

Denial of credit on the ground of non intimation and shifting of burden to the appellant is unsustainable.

Cenvat Credit - restriction on Cenvat credit where inputs are used in manufacture of exempted final products - Whether the Original Authority established the quantity of inputs/finished goods that were used in or formed part of exempted final products cleared for home consumption without payment of duty. - HELD THAT: - The Tribunal noted that while Rule 11(3) and Rule 6 principles limit credit attributable to inputs used in exempted products, the Original Authority did not establish any specific quantity of final product cleared for home consumption without payment of duty as required by the remand directions. Absent such quantification and lawful adjudication on the basis of evidence, confirmation of full demand and penal consequences cannot be sustained.

Demand confirmed without quantification of goods used for exempted clearances is not sustained.

Final Conclusion: For breach of natural justice, incorrect allocation of burden regarding returned duty paid goods, and failure to quantify and establish clearances of exempted products as directed on remand, the impugned Order in Original is set aside and the appeal is allowed.

Exemption application allowed - Condonation of delay - Setting aside appellate orders - Restoration for fresh adjudication uninfluenced by prior orders

Exemption application allowed - Application for exemption was allowed. - HELD THAT: - The Court granted the application captioned CM APPL. 24604/2019 for exemption, recording allowance subject to all just exceptions. No further reasoning is recorded in the order.

Application for exemption allowed.

Condonation of delay - Delay in filing the appeal was condoned. - HELD THAT: - The Court considered the reasons set out in CM APPL. 24605/2019 and, being satisfied therewith, exercised its discretion to condone the delay in filing the appeal and allowed the application seeking such condonation.

Delay in filing the appeal condoned and application allowed.

Setting aside appellate orders - Restoration for fresh adjudication uninfluenced by prior orders - Impugned orders of the CESTAT dated 5th June 2018 and 21st February 2019 were set aside and the appeal restored to the CESTAT for fresh decision. - HELD THAT: - The impugned CESTAT order in Customs Appeal No. C/361-363/2010 (SM) was a common order also affecting co-noticees. Referring to the reasoning in the Court's earlier order dated 15th May 2019 in related appeals, the Court set aside the CESTAT orders dated 5th June 2018 and 21st February 2019 and restored Customs Appeal No. C/361-363/2010 to the CESTAT for fresh consideration uninfluenced by those orders.

Impugned CESTAT orders set aside; appeal restored to CESTAT for fresh decision in accordance with law.

Final Conclusion: The appeal was allowed: the exemption application was granted, the delay in filing the appeal was condoned, and the impugned CESTAT orders were set aside with the appeal restored to the CESTAT for fresh adjudication.

Captively consumed goods exemption - clearance beyond factory gate and excise liability - time bar and extended period of limitation - Cenvat credit admissibility on inputs - remand for re quantification and verification of records - penalty relief for absence of mala fide

Captively consumed goods exemption - clearance beyond factory gate and excise liability - Whether trolleys cleared from the factory gate and used for packing and transportation qualify as captively consumed goods eligible for exemption under Notification No.67/1995-CE. - HELD THAT: - The tribunal found no dispute on facts: the assessee manufactured trolleys which crossed the factory gate and were cleared for use in packing and transportation of motor vehicle parts. Where goods leave the factory and are cleared, they cannot be treated as captively consumed for purposes of the exemption. Applying this principle to the material facts, the trolleys cleared by the appellant do not qualify for exemption under the notification.

Benefit of Notification No.67/1995-CE is not available in respect of trolleys cleared from the factory gate; demand in respect of such cleared trolleys sustained insofar as within limitation.

Remand for re quantification and verification of records - captively consumed goods exemption - Whether the appellant's contention that certain trolleys were procured from third party suppliers (and not manufactured by the appellant) negates excise liability, and the procedural treatment of that contention. - HELD THAT: - The tribunal recorded that the appellants raised this defence before lower authorities but were unable to produce supplier records earlier due to a factory fire; they now seek to place parallel records from suppliers to establish purchase. Given the factual nature of this claim and absence of decisive record level findings by the adjudicating authorities, the tribunal remanded the matter to the Original Adjudicating Authority for verification and re quantification limited to the period not barred by limitation, permitting the appellant to produce supporting evidence including supplier records.

Issue of whether certain trolleys were purchased (and hence not liable) is remanded to the Original Adjudicating Authority for fresh examination and re quantification within the limitation period.

Time bar and extended period of limitation - Whether the extended period of limitation is available to the revenue for the demand raised. - HELD THAT: - The tribunal noted that the manufacture and use of trolleys were reflected in statutory records maintained in the ordinary course, earlier audits did not raise objections, and there was no evidence of suppression or mala fide. In the absence of evidence to the contrary, malafide could not be attributed to the assessee and the extended period of limitation could not be invoked by the revenue. Consequently, demands falling beyond the normal limitation period were to be set aside and only amounts within the normal period were liable to be re quantified.

Extended period of limitation not available to the revenue; demand beyond the normal limitation period set aside and remanded only for re quantification of amounts within limitation.

Cenvat credit admissibility on inputs - remand for re quantification and verification of records - Whether the appellant is entitled to Cenvat credit for duty on inputs used in manufacture of the trolleys and the manner of adjudication of that plea. - HELD THAT: - The tribunal permitted the appellant to substantiate the claim for Cenvat credit before the Original Adjudicating Authority when the matter is remanded for re quantification. The authority is to consider the evidentiary material produced by the appellant and decide admissibility of credit in accordance with law.

Claim for Cenvat credit left open; appellant permitted to produce evidence before the Original Adjudicating Authority on remand for appropriate adjudication.

Penalty relief for absence of mala fide - Whether penalty imposed on the appellant should be sustained. - HELD THAT: - Having held there was no malafide or intent to suppress or misstate (records were maintained and earlier audits did not object), the tribunal found no justification for imposing penalty. In view of findings on absence of mala fide, the penalty was set aside.

Penalty imposed by the lower authorities is set aside for lack of mala fide.

Final Conclusion: The appeal is allowed in part: exemption under Notification No.67/1995-CE is not available for trolleys cleared from the factory; demands are set aside to the extent barred by limitation and remanded to the Original Adjudicating Authority for re quantification within the limitation period and for verification of supplier records and Cenvat credit claims; penalties are quashed for absence of mala fide.

Treatment of debit notes as assessable consideration - burden of proof for cancellation of debit notes - relevance of chartered accountant certificate vis-a -vis books of account - remand for verification of records - limitation and extended period

Treatment of debit notes as assessable consideration - burden of proof for cancellation of debit notes - relevance of chartered accountant certificate vis-a -vis books of account - Adjudicating authority directed to verify whether the debit notes were cancelled and no amount was recovered, before confirming demand of duty on debit notes. - HELD THAT: - The Tribunal found that duty was demanded on the value of printing cylinders and that debit notes were subsequently issued. The appellant produced a chartered accountant's certificate asserting cancellation of the debit notes and non-recovery of the amounts, but did not produce supporting primary books of account such as parties' ledger, profit and loss account or balance sheet. The Tribunal agreed with the lower authority that a CA certificate alone is insufficient to establish non-recovery; factual verification of records is necessary to determine whether the debit notes were effectively cancelled and whether any amount was actually recovered from buyers. In view of this evidentiary deficiency, the Tribunal set aside the impugned order and remanded the matter for fresh adjudication after verification of records and facts on this point. [Paras 4, 5]

Matter remanded to the adjudicating authority to pass a fresh order after verification of records regarding cancellation of debit notes and non-recovery of amounts.

Limitation and extended period - Question of invocation of extended period of limitation was left open for determination by the adjudicating authority. - HELD THAT: - The appellant challenged invocation of the extended period on the ground that the department was aware of discrepancies through successive audits and there was no suppression; however, the Tribunal did not decide the limitation point at this stage. The issue was expressly kept open for consideration by the adjudicating authority, presumably after factual verification conducted on remand. [Paras 5]

Limitation issue left open for fresh consideration by the adjudicating authority.

Final Conclusion: The impugned order is set aside and the matter is remanded to the adjudicating authority for fresh adjudication: factual verification is required to establish whether the debit notes were cancelled and no amount was recovered, and the question of extended limitation period is kept open for determination on reconsideration.

CENVAT credit on inputs - Post-supply price reduction for inferior quality - Debit notes and reversal of credit

CENVAT credit on inputs - Debit notes for inferior quality - Reversal of credit - CENVAT credit could not be denied merely because debit notes were issued after receipt and use of inputs on account of inferior quality and consequent reduction in price. - HELD THAT: - The Tribunal found that the debit notes were issued not for any quantity shortfall, but for inferior quality of the inputs and related commercial adjustments. Since it was undisputed that the entire quantity covered by the invoices had been received and used in manufacture, eligibility to credit attached to the full duty paid on such inputs. Rule 14 could not be invoked in the absence of any allegation that the inputs were not received or not utilized. Following Indore Composite Pvt. Ltd, 2017 (352) ELT 238 (Tri.Del), the Tribunal held that a later reduction in price through debit notes, made to compensate for sub-standard goods, does not require proportionate reversal of CENVAT credit when the statute contains no such provision. [Paras 4, 5]

The denial of CENVAT credit was held to be erroneous and the impugned order was set aside.

Final Conclusion: The Tribunal held that issuance of debit notes for inferior quality of inputs, after the inputs had been fully received and used in manufacture, did not justify proportionate reversal or denial of CENVAT credit. The appeal was accordingly allowed.

Refund of tax - interest on delayed refund under Section 42(1)(a) of the DVAT Act - election duty not a valid ground for administrative delay - duty of the Commissioner to ensure timely discharge of statutory functions - personal attendance before Court for non-compliance with judicial direction

Refund of tax - duty of the Commissioner to ensure timely discharge of statutory functions - Commissioner (VAT) was directed to ensure payment of the refund claimed by the petitioner on or before 27th May, 2019. - HELD THAT: - The Court found that the department's practice of officers being requisitioned for election duty had resulted in prolonged non-disposal of refund applications, causing inordinate delay in payment of a refund claim originally due after expiry of two months from the claim date. The Court rejected administrative excuses that the VATO or Joint Commissioner being on election duty, or the need to place the matter before the Refund Approval Committee, could justify further delay. In view of the substantial delay and accruing interest, the Court directed that the Commissioner (VAT) himself shall issue the necessary orders to ensure payment by the stated date and ordered that the Commissioner remain personally present in Court if he fails to comply. [Paras 5]

Commissioner (VAT) to ensure payment of the refund to the petitioner on or before 27th May, 2019; failure to comply will require the Commissioner's personal presence.

Interest on delayed refund under Section 42(1)(a) of the DVAT Act - refund of tax - Interest is payable on the delayed refund and the amount of interest up to 22nd May, 2019 was noted by the Court. - HELD THAT: - The Court noted the statutory entitlement to interest on delayed refunds under Section 42(1)(a) of the DVAT Act and accepted the petitioner's calculation of interest accumulated up to 22nd May, 2019. The Court observed that continued delay would increase the daily interest burden and emphasised that the taxpayer should not bear additional interest due to administrative inaction. [Paras 3, 4]

Interest on the refund is payable as per Section 42(1)(a) of the DVAT Act; the Court recorded the interest accrued up to 22nd May, 2019 and recognised further daily accrual until payment.

Election duty not a valid ground for administrative delay - personal attendance before Court for non-compliance with judicial direction - The excuse that officers are on election duty cannot be accepted as a ground to defer statutory obligations of the department. - HELD THAT: - While the Court recorded that officers, including the VATO and a Joint Commissioner, had been requisitioned for election duty, it held that such requisition does not absolve the department from its statutory duties nor justify paralysing departmental functioning leading to prolonged non-payment of refunds. Consequently, the Court declined to entertain the contention that election duty or the need for further internal approvals could delay payment, and attached direct consequences for non-compliance. [Paras 2, 5]

Election duty is not a permissible ground for further delay in discharging the department's statutory obligations; the Court will require personal attendance of the Commissioner for non-compliance.

Final Conclusion: The High Court directed the Commissioner (VAT) to cause payment of the petitioner's refund forthwith and not later than 27th May, 2019, recorded that interest is payable under Section 42(1)(a) of the DVAT Act (as noted up to 22nd May, 2019) and refused to accept election duty or procedural approval processes as grounds for further delay, with personal consequences for non-compliance.

Transfer of goods to branch not being a sale under Section 6A of the CST Act - declaration in Form F - mandamus to issue Form F - entitlement to statutory form despite absence of return field - systemic error in electronic return data preventing issuance of statutory forms - limitation/assessment not to be sustained where departmental/system fault prevents compliance

Transfer of goods to branch not being a sale under Section 6A of the CST Act - declaration in Form F - entitlement to statutory form despite absence of return field - systemic error in electronic return data preventing issuance of statutory forms - mandamus to issue Form F - Petitioner entitled to issuance of Form F for 2012-13 in respect of its own goods sent to its Bhiwadi factory for job work - HELD THAT: - The Court accepted that transfer of goods by a dealer to its branch is not a sale and requires furnishing a declaration in Form F. For the period 2012-13 the online DVAT 16 return did not contain a specific column to indicate own goods sent for job work; the omission was subsequently remedied only from 20th September 2013. The petitions and correspondence demonstrate that the Department's systems erroneously uploaded data and prevented the Petitioner from generating the requisite F forms. The Respondents did not dispute the material facts or the existence of the system fault and offered no corrective solution. Given that the inability to furnish particulars arose from a departmental/systemic defect and not from any omission by the Petitioner, the Department could not deny issuance of Form F for consignments sent for job work. Accordingly, relief by way of mandamus directing issuance of F forms for the specified consignments for 2012-13 was granted. [Paras 5, 8, 11, 13, 14]

Respondents directed to issue Form F to the Petitioner for the year 2012-13 in respect of its own goods sent to the Bhiwadi factory for job work, within two weeks.

Final Conclusion: Writ petition allowed; Respondents to issue Form F for 2012-13 for the Petitioner's consignments sent for job work, within two weeks.

Refund of tax - interest under Section 244-A of the Income Tax Act, 1961 - technical glitch in computerised tax system not to delay refunds - mandamus to release refunds already processed and approved

Refund of tax - technical glitch in computerised tax system not to delay refunds - mandamus to release refunds already processed and approved - interest under Section 244-A of the Income Tax Act, 1961 - Direction to release refunds that have been processed and approved despite a technical system glitch, and to credit interest on such refunds. - HELD THAT: - The Court found that the Assessing Officer had processed the petitioner's refund claim for the relevant assessment years but that disbursal was stalled due to a reported technical glitch in the department's computer system. The Court held that a technical or computerised systems failure cannot override the factual entitlement to a refund and that delay caused by such a glitch would lead to avoidable interest liability under Section 244-A payable from public funds. Relying on comparable reasoning in an order of the High Court of Bombay, the Court directed the respondents to release refunds already processed and approved and to credit the interest due as at a specified date, irrespective of whether the system glitch was rectified, so that the refund disbursal is not linked to correction of the technical defect. The Court also provided fixed timelines for release of the refund and for crediting interest and reserved the petitioner's right to seek further directions in case of non-compliance. [Paras 6, 8, 9]

Respondents directed to release the refunds already processed and approved in favour of the petitioner by 31st May, 2019 and to credit interest due as of 31st March, 2019 by 30th June, 2019; refund disbursal must not be linked to rectification of the technical glitch; writ petitions disposed of.

Final Conclusion: Writ petitions disposed directing immediate release of processed refunds to the petitioner and payment of interest by fixed dates; non-compliance may invite further directions.

Power of review under Section 74B(5) of the Delhi Value Added Tax Act, 2004 - quashing of suo moto review order - right to hearing before reassessment - opportunity to inspect material and offer explanation - remand for fresh decision on merits

Quashing of suo moto review order - power of review under Section 74B(5) of the Delhi Value Added Tax Act, 2004 - right to hearing before reassessment - Validity of the AVATO's order dated 29th January 2018 exercising suo moto review and directing recovery without affording the petitioner a fresh hearing. - HELD THAT: - The Court set aside the impugned order dated 29th January 2018 and directed that the AVATO shall hear the petitioner afresh in respect of the assessments for the specified quarters. The petition was disposed of on the basis that the petitioner must be given an opportunity to be heard before any reassessment or determination adverse to it is made. The respondents agreed to withdraw the impugned order subject to a fresh hearing. The Court expressly refrained from expressing any opinion on the merits, leaving the contentions in the pleadings to be considered by the AVATO in the fresh proceedings. [Paras 6, 7]

Impugned suo moto review order set aside; matter remitted to the AVATO for fresh hearing and decision.

Opportunity to inspect material and offer explanation - remand for fresh decision on merits - Procedural directions to be followed on remand concerning disclosure of departmental material, timeframe for hearing and reasoned decision, and the treatment of refund claims. - HELD THAT: - The Court directed that any material relied upon by the Department and referred to in its counter-affidavit be furnished to the petitioner and that a reasonable opportunity be afforded to explain. Specific timelines were mandated: appearance and hearing on 1st June 2019, and a reasoned order to be passed by the AVATO not later than 31st July 2019. The question of any refund due to the petitioner was ordered to abide the outcome of the fresh decision by the AVATO. The Court clarified that it did not decide the merits and left substantive issues to be addressed by the AVATO in accordance with law. [Paras 6, 7]

Petitioner to be furnished departmental material, heard afresh within prescribed timeline; refund issue to abide fresh decision; reasoned order to be passed by AVATO within fixed time.

Final Conclusion: The AVATO's impugned suo moto review order dated 29th January 2018 is set aside; the matter is remitted to the AVATO for fresh hearing, disclosure of departmental material and a reasoned decision within the timelines directed, with the question of any refund to await that decision.

Refund of input tax on zero-rated export sales - entitlement to refund within 120 days - interest for delayed refund - rate of interest 24% per annum where delay exceeds three months - application of Section 55(3) and (4) of the Jammu & Kashmir Value Added Tax Act, 2005

Application of Section 55(3) and (4) of the Jammu & Kashmir Value Added Tax Act, 2005 - entitlement to refund within 120 days - interest for delayed refund - rate of interest 24% per annum where delay exceeds three months - Whether interest on the refund of input tax for zero-rated export sales must be calculated from the date of sale and at the rate prescribed by Section 55(3) and (4), including 24% per annum where delay beyond prescribed period exceeds three months. - HELD THAT: - The Court held that Section 55(3) prescribes that the refund must be made within 120 days from the date of sale and that Section 55(4) entitles a dealer to simple interest where refund is not granted within the prescribed period. Where delay exceeds three months beyond the 120-day period, the statutory rate is 24% per annum. The departmental position that interest should run only from the date of administrative approval (30.10.2014) was found to be inconsistent with the statutory scheme, because the date of sale (and concomitant tax deposit) is the relevant date for computation of the statutory refund and interest. The impugned order's calculation principle and the rate applied were therefore held not to accord with Section 55(3) and (4). [Paras 11, 12, 13, 14]

The Court held that interest must be computed in accordance with Section 55(3) and (4) from the date of sale, applying the appropriate statutory rate including 24% where applicable, and that the impugned order was not in conformity with those provisions.

Remand for recalculation - computation strictly in terms of Section 55(3) and (4) - Whether the matter should be remitted to the Commissioner for reassessment of the amount payable to the petitioner in accordance with Section 55(3) and (4). - HELD THAT: - Having found the impugned order defective in principle and in the rate/date applied for interest, the Court set aside the Commissioner's order and directed re-computation. The Commissioner was instructed to re-work the amount payable to the petitioner strictly in terms of sub-section (3) and (4) of Section 55, taking the date of sale as the relevant date for interest calculation. The recalculation was to be completed within six weeks. [Paras 14, 15, 16]

The impugned order is set aside and the matter is remitted to the Commissioner to re-compute the refund and interest strictly in terms of Section 55(3) and (4), considering the date of sale, to be done within six weeks.

Final Conclusion: The High Court set aside the Commissioner's order dated 22.08.2017 as not in conformity with Section 55(3) and (4) of the J&K VAT Act, 2005, held that interest must be computed from the date of sale and at the statutory rate (including 24% where applicable), and remitted the matter to the Commissioner for re-calculation within six weeks.

Classification of goods for concessional inter-State sale - use and misuse of "C" Forms for concessional rate of tax - electrical meters as equipment for distribution of electricity - concessional rate under section 8(3)(b) of the Central Sales Tax Act - scope of revision jurisdiction - points not urged before the Tribunal - condonation of delay in filing statutory revisions

Classification of goods for concessional inter-State sale - electrical meters as equipment for distribution of electricity - use and misuse of "C" Forms for concessional rate of tax - concessional rate under section 8(3)(b) of the Central Sales Tax Act - Validity of the Tribunal's finding that electrical meters qualify as equipment used for distribution of electricity and the Revenue's contention that their purchase against "C" Forms was misuse - HELD THAT: - The Court held that the scope of revision is limited and points not urged before or decided by the Tribunal cannot be considered for the first time in revision. The Tribunal had examined binding precedents on the classification of electrical meters and concluded that meters installed at consumers' premises to record supplied electrical energy are electrical equipment required for distribution. As such, their purchase against concessional "C" Forms falls within the ambit of section 8(3)(b) of the Central Sales Tax Act and the Tribunal's conclusion was sustained. The contention regarding CFL bulbs was not pressed before the Tribunal and no finding was rendered by the Tribunal on that point; accordingly it could not be entertained in this revision. [Paras 5]

Tribunal's classification of electrical meters as equipment for distribution and allowance of concessional rate on purchases against "C" Forms upheld; CFL contention not entertained as it was not before the Tribunal.

Scope of revision jurisdiction - points not urged before the Tribunal - condonation of delay in filing statutory revisions - Whether the delay of 1165 days in filing the revision petitions should be condoned - HELD THAT: - The Court observed that condonation of delay is unnecessary if no substantial question of law arises for consideration. Having found no merit in the Revenue's challenges to the Tribunal's decision and noting that the Revenue failed to offer a satisfactory explanation for the inordinate delay, the Court declined to exercise discretion to condone delay. The Court therefore dismissed the application for condonation and refused to admit the delayed revisions. [Paras 6]

Application for condonation of delay dismissed and revision petitions dismissed for want of merit and unexplained inordinate delay.

Final Conclusion: The Tribunal's judgment upholding classification of electrical meters as equipment for distribution and permitting concessional inter State purchases against "C" Forms is affirmed; issues not raised before the Tribunal (such as CFL bulbs) are not entertained in revision, and the Revenue's application for condonation of 1165 days' delay is refused, leading to dismissal of the revision petitions.