TaxTMI Updates e-Newsletter
May 29,2020

Time of supply - Place of supply where supply does not involve movement of goods - Export/import of goods definitions - Intra State supply - Supply occurring outside the taxable territory - Reverse charge on import of goods - Input tax credit eligibility

Place of supply where supply does not involve movement of goods - Time of supply - Intra State supply - Input tax credit eligibility - Tax treatment where applicant manufactures a steel die, raises an invoice in the name of an overseas buyer while retaining the die in India, and supplies castings using that die - HELD THAT: - The invoice issued by the applicant immediately after manufacture constitutes the time of supply. At that time the die remains in the applicant's location and has not been moved out of India. Where supply does not involve movement of goods, the place of supply is the location of the goods at delivery; here that is the applicant's location. Since the supplier's location and the place of supply are in the same State, the transaction is an intra State supply and liable to CGST and SGST. The applicant, being the supplier who issued the invoice, is not the recipient of that supply and therefore cannot treat the tax on that invoice as input tax credit. If thereafter the die is scrapped domestically (on customer instruction) and supplied as scrap to a third party, the applicant must issue intra or inter State invoice as appropriate and discharge the applicable tax under the GST law. [Paras 18, 19, 20, 22]

The manufacture and invoice transaction where the die remains in India is an intra State supply; applicant must collect and pay CGST and SGST and cannot claim the tax on that invoice as input tax credit.

Export/import of goods definitions - Reverse charge on import of goods - Supply occurring outside the taxable territory - Input tax credit eligibility - Tax treatment where a foreign supplier manufactures a die abroad, invoices the applicant though the die is not physically imported, and later either the applicant imports the die or the die is scrapped abroad - HELD THAT: - A tax invoice issued abroad by the foreign supplier in respect of a die that has not been brought into India does not amount to import under the IGST Act. If subsequently the applicant physically imports the die into India, IGST is payable under the reverse charge mechanism by the applicant at the time of import and the applicant may claim the IGST paid as input tax credit subject to the usual conditions. Conversely, if the die is scrapped at the foreign supplier's location and never brought into India, that event occurs outside the taxable territory and does not attract GST. [Paras 21, 22]

If the die is later physically imported into India the applicant must pay IGST on reverse charge and may claim input tax credit if eligible; if the die is scrapped abroad and never imported, the transaction lies outside the GST net.

Final Conclusion: The Authority rules that when the applicant invoices a foreign buyer while retaining the die in India the transaction is an intra State supply liable to CGST and SGST and the applicant cannot claim input tax credit on that self issued invoice; where a foreign supplier invoices for a die retained abroad, no import arises unless the die is physically brought into India, in which case IGST on reverse charge is payable and eligible as input credit subject to conditions, while scrapping abroad is outside GST.

Works contract service - definition of "Government Entity" for applicability of concessional rate - services to a Government Entity procured in relation to a work entrusted by the Government - inapplicability of concessional rate under Notification No.11/2017 - Serial No.3(vi) - residual taxability at 9% CGST and 9% KGST under item (xii) of Serial No.3 of Notification No.11/2017

Works contract service - definition of "Government Entity" for applicability of concessional rate - inapplicability of concessional rate under Notification No.11/2017 - Serial No.3(vi) - residual taxability at 9% CGST and 9% KGST under item (xii) of Serial No.3 of Notification No.11/2017 - Applicability of concessional rate under Notification No.11/2017 (as amended) to works contract services supplied to National Centre for Biological Sciences (NCBS) and the correct GST rate. - HELD THAT: - The authority found that the supply by the applicant is a works contract service. The question was whether NCBS falls within the category of "Government Entity" so as to attract the concessional entry in Serial No.3(vi) of Notification No.11/2017 (as amended). The definition of "Government Entity" requires an entity to be set up by statute or established by government with 90% or more participation by way of equity or control and to carry out a function entrusted by government. NCBS is neither set up by an Act nor established by the Government; its managing council has only four government appointed members and thus does not reflect 90% government participation or control; and the institute does not perform a function entrusted by the Government. Further, the proviso to clause (vi) requires that the services be procured by the Government Entity in relation to a work entrusted to it by the Government, which is not satisfied. For these reasons the supply is not covered by Serial No.3(vi) and the concessional rate is inapplicable. Consequently, the works contract service falls under the residual entry (item (xii) of Serial No.3 of Notification No.11/2017 as amended) and is taxable at 9% CGST and 9% KGST. [Paras 5, 6]

The works contract service supplied to NCBS is not eligible for the concessional entry in Serial No.3(vi) and is taxable at 9% CGST and 9% KGST under item (xii) of Serial No.3 of Notification No.11/2017 (as amended).

Final Conclusion: Advance ruling: works contract services provided by the applicant to NCBS do not qualify for the concessional government entity rate and are taxable at the residual rate of 9% CGST and 9% KGST.

Exemption under entry no.66 of Notification No.12/2017-Central Tax (Rate) - catering services to educational institutions - tax deduction at source under section 51 - applicability of TDS only to taxable supplies

Exemption under entry no.66 of Notification No.12/2017-Central Tax (Rate) - catering services to educational institutions - The supply of catering services by the applicant to the residential schools falls within Entry No.66 of Notification No.12/2017-Central Tax (Rate) and is exempt from CGST and SGST. - HELD THAT: - The Authority examined the tender agreements and records and found that contracts were entered separately with the Heads of the respective residential schools, the food was required to be prepared within the school premises and supplied to the students of those schools, and the beneficiaries were in the primary school category. Given that Entry No.66 covers catering services to educational institutions (including mid-day meals schemes sponsored by Government) and the conditions of the contracts establish that the recipient is an educational institution and the service is provided to its students on the premises, the supply qualifies under Entry No.66 and is therefore exempt from central and state GST. [Paras 6, 7, 8]

Supply of food and drinks by the applicant to the specified residential schools is covered by Entry No.66 and is exempt from CGST and SGST.

Tax deduction at source under section 51 - applicability of TDS only to taxable supplies - TDS under section 51 of the CGST Act (and corresponding provision under the KGST Act) is not leviable on the amounts received for the exempted catering services. - HELD THAT: - Section 51(1) specifies deduction of tax at source from payment made to a supplier of taxable goods or services where the value under a contract exceeds the threshold. The Authority observed that the applicant's supplies have been held to be exempt under Entry No.66; consequently, such supplies are not "taxable services" for the purpose of section 51. Therefore, the obligation to deduct tax at source under section 51 does not arise in respect of payments made to the applicant for those exempted services. [Paras 9, 10]

Amounts received for the exempted catering services are not liable to deduction of tax at source under section 51 of the CGST Act and the corresponding provision of the KGST Act.

Final Conclusion: The Authority ruled that the applicant's on-premises catering services to the specified residential schools fall within Entry No.66 of Notification No.12/2017 and are exempt from CGST and SGST, and accordingly no tax is required to be deducted at source under section 51 of the CGST Act (and the corresponding KGST provision) in respect of such exempt supplies.

Regular bail - release on bail where investigation not completed within specified period - completion of investigation as condition for filing charge-sheet - trial court to consider bail application on merits - maximum sentence as relevant to bail consideration

Release on bail where investigation not completed within specified period - regular bail - Order for release on bail if investigation is not completed within three months from 17.04.2020. - HELD THAT: - The Court applied and gave effect to the direction contained in the Supreme Court's order dated 17.04.2020 in the co-accused's matter. Having regard to that order and the fact that the petitioner is in custody since 03.08.2018 and that the maximum sentence attractable is five years, the High Court directed that if the investigation is not completed within three months from 17.04.2020, the trial court shall release the petitioner on bail, subject to the trial court's satisfaction and imposition of appropriate terms and conditions. The direction is framed as a continuation of the Supreme Court's timeline and operates as the basis for interim bail in the event of non-completion of investigation within the stated period.

If investigation is not completed within three months from 17.04.2020, the petitioner shall be released on bail by the trial court on appropriate terms.

Completion of investigation as condition for filing charge-sheet - trial court to consider bail application on merits - Consequences if investigation is completed within the three-month period and the petitioner's entitlement to seek bail thereafter. - HELD THAT: - The Court held that if the investigation is completed and the report filed within the three-month period from 17.04.2020, the petitioner remains entitled to move the trial court for bail. Any such application must be decided by the trial court on its own merits and in accordance with law. Thus, completion of investigation within the stipulated period removes the interim entitlement to mandatory release under the earlier paragraph and leaves the matter to ordinary bail principles to be considered by the trial court.

If investigation is completed and report is filed within three months from 17.04.2020, the petitioner may apply for bail and the trial court shall decide the application on merits in accordance with law.

Final Conclusion: The petition is disposed by directing that, following the Supreme Court's order of 17.04.2020, the petitioner shall be released on bail by the trial court if investigation is not completed within three months from that date; if the investigation is completed and the report filed within that period, the petitioner may seek bail and the trial court shall decide any application on its merits.

Profiteering - benefit of input tax credit (ITC) - commensurate reduction in price - investigation by Director General of Anti Profiteering (DGAP) - ratio of ITC to turnover methodology - exclusion of non turnover petty demands - treatment of pre GST VAT/WCT credit - inclusion of tax component in profiteered amount - constitutional validity of Authority without Judicial Member

Investigation by Director General of Anti Profiteering (DGAP) - standing committee time limit - Validity and maintainability of the DGAP investigation initiated on recommendation of the Standing Committee - HELD THAT: - The Authority examined whether the Standing Committee complied with the two month timeline under Rule 128(1) before referring the complaint to the DGAP. The record showed that the Standing Committee had been reconstituted on 20.02.2019 and the matter was considered on 11.03.2019 within two months of receipt of the complaint; accordingly the referral to the DGAP under Rule 129(1) was lawful. The DGAP, as the investigating arm charged by departmental office order to collect evidence about non passing of ITC benefit, was entitled to investigate and report on all instances of denial of benefit that came to his notice, not only the unit of the complainant. The challenge that the DGAP exceeded the complaint's scope or that the referral was barred by limitation was rejected. [Paras 43, 46, 47]

The DGAP's investigation and the Standing Committee's referral were held valid and maintainable.

Ratio of ITC to turnover methodology - profiteering - Appropriateness of calculating additional ITC benefit by comparing pre GST and post GST ratios of ITC to turnover - HELD THAT: - The Authority held that the quantum of additional ITC to be passed on can be computed by comparing the ITC/CENVAT availability in the pre GST period with ITC in the post GST period and expressing both as a percentage of relevant turnover; this comparison, applied project wise and unit wise, yields the benefit that must be passed on. The Authority found this methodology reasonable for the facts of real estate projects where ITC accrual and stagewise turnover are relatable, and noted that the mathematical method will vary case by case. The Authority therefore approved the DGAP's use of the ITC to turnover ratio and rejected the Respondent's objection that the approach was inherently incorrect. [Paras 50, 66]

The methodology of comparing pre GST and post GST ITC/turnover ratios for computing additional ITC benefit was held to be correct and applicable in this case.

Treatment of pre GST VAT/WCT credit - evidentiary requirement for VAT/WCT - Whether VAT credit and WCT rebate claimed by the Respondent for the pre GST period should have been included in pre GST ITC - HELD THAT: - The Authority found that the Respondent did not substantiate the claimed VAT credit and WCT rebate for the impugned project with project wise breakup or with returns reflecting such claims. The total VAT paid figure produced related to all projects in the State and the Respondent had not shown requisite deductions or assessment orders required under the relevant VAT law. In absence of cogent documentary evidence in the returns or assessment orders, the DGAP rightly excluded VAT and WCT amounts from pre GST ITC computation. [Paras 53, 54]

Claims of pre GST VAT credit and WCT rebate were not accepted for computation due to lack of supporting evidence.

Exclusion of non turnover petty demands - Legitimacy of excluding negative entries and petty demand notes from turnover for profiteering computation - HELD THAT: - The DGAP excluded negative values and petty demands up to a small threshold because such entries reflected rounding adjustments or ancillary charges (delayed payment/transfer charges) not forming part of the basic consideration for the unit. The Authority accepted that excluding these items produced a more accurate measure of turnover relevant to the main construction service and would avoid distortion in computing proportionate ITC. [Paras 20, 55]

Exclusion of negative and petty demand note entries from turnover was justified for the purposes of profiteering calculation.

Inclusion of tax component in profiteered amount - commensurate reduction in price - Whether GST charged on the illegally collected excess base price should be included in the profiteered amount - HELD THAT: - The Authority held that the price paid by buyers comprises the base price plus tax; where a builder has not passed on ITC benefit and has charged excess base price, the excess tax collected on that inflated base also results from denial of benefit. Therefore, inclusion of the GST collected on the over charged base in the quantified profiteered amount was correct. [Paras 65]

GST charged on the illegally collected excess price was rightly included in the profiteered amount.

Profiteering - quantification of profiteered amount - Whether the Respondent profiteered and the quantification of the amount to be returned with interest - HELD THAT: - On the basis of verified returns, ledgers and home buyer data, the DGAP computed ITC/turnover ratios of 9.08% (pre GST) and 20.98% (post GST), yielding an additional ITC benefit of 11.90%. Applying this to the demands in the investigation period produced a profiteered amount inclusive of tax. The Authority examined the DGAP computations, accepted them as based on the Respondent's records, and found that the Respondent had profiteered. It directed return of the quantified amount to the identified buyers with interest at 18% per annum from dates of collection, and directed issue of a show cause for imposition of penalty under the Act. [Paras 23, 24, 67, 68, 69]

Respondent found to have profiteered; directed to return quantified amount to buyers with 18% interest and to be issued a show cause notice for penalty.

Constitutional validity of Authority without Judicial Member - Validity of the Authority's constitution in the absence of a Judicial Member - HELD THAT: - The Respondent challenged the Authority's constitution for lack of a judicial member. The Authority reviewed precedent and legislative design and held that the body is a specialised fact finding/quasi judicial authority constituted under Section 171 and Rule 122 with technical members competent to perform the function; its orders remain amenable to judicial review. Absence of a judicial member did not render the constitution invalid in the present scheme. [Paras 62, 63, 64]

Constitution of the Authority without a Judicial Member was held not to invalidate the proceedings.

Final Conclusion: The Authority upheld the DGAP investigation and methodology, found the Respondent guilty of profiteering by not passing on additional ITC benefit (01.07.2017 to 31.03.2019), quantified the profiteered amount based on the approved ITC/turnover comparison, directed restitution of the identified amount (inclusive of GST) to affected buyers with 18% interest, and ordered issuance of a show cause notice for penalty; procedural and constitutional challenges to the probe and to the Authority were rejected.

Deduction under Section 10A - computation of export turnover and total turnover for Section 10A - inclusion of interest income within Section 10A deduction - precedential effect of Division Bench decisions

Deduction under Section 10A - computation of export turnover and total turnover for Section 10A - Whether the Assessing Officer was justified in excluding certain expenditure from both export turnover and total turnover for computing deduction under Section 10A. - HELD THAT: - The Court accepted the parties' concession that this question is covered by the Division Bench decision in CIT v. Tata Elxsi Ltd., which addresses the proper treatment of expenditures in computing export and total turnover for Section 10A purposes. Applying the legal principle laid down in that precedent, the Court held that the substantial question framed in the appeal is answered against the Revenue. The Division Bench reasoning on the computation in Tata Elxsi was treated as determinative of the issue in the present appeal. [Paras 4, 5]

Question answered against the Revenue; the Tribunal's direction on excluding the expenditure was sustained in view of Tata Elxsi.

Deduction under Section 10A - inclusion of interest income within Section 10A deduction - precedential effect of Division Bench decisions - Whether interest income forms part of deduction under Section 10A notwithstanding that such interest is not derived from 10A activities. - HELD THAT: - The Court observed that this substantial question is covered by the decision in CIT v. Motorola India Electronics Pvt. Ltd., relied upon by the Tribunal. On the parties' submissions that Motorola governs the point, the Court proceeded to follow that precedent and held the question in favour of the assessee. The Court accordingly answered the framed question against the Revenue by applying the Motorola ratio as determinative for the inclusion of interest income within the Section 10A computation in the facts of this case. [Paras 4, 5]

Question answered against the Revenue; interest income treated in accordance with the Motorola decision relied upon by the Tribunal.

Final Conclusion: Both substantial questions were answered against the Revenue by applying the cited Division Bench precedents; consequently the appeal is dismissed.

Summary order. Notice to be issued to the respondent; matter listed for admission on 4th November, 2019.

Reopening of assessment under section 147-tangible material and change of opinion - Approval under section 151-satisfaction of approving authority - Notice under section 143(2)-application of mind and timing - Bogus purchases-treatment when sales and gross profit recorded - Relief limited to commission/investment where sales and gross profit accepted

Reopening of assessment under section 147-tangible material and change of opinion - Reopening of assessment was validly initiated on the basis of tangible material received from the investigation wing and statements of the entry operator/supplier. - HELD THAT: - The Tribunal upheld the reopening after examining the material gathered during search and post-search enquiries which showed that the supplier was part of an accommodation-entry network and had confessed that goods were not genuinely supplied. The Tribunal relied on the reasoning in the Gujarat High Court decision (Pushpak Bullion) that where the original return was not subject to scrutiny and there exists tangible material to form a belief that income has escaped assessment, reopening is permissible. The Assessing Officer considered objections and did not abandon the reasons for reopening; the investigation material supplied live links to the assessee's transactions and justified formation of belief for issuing notice under section 148/147. [Paras 5, 18, 19]

Reopening of assessment sustained.

Approval under section 151-satisfaction of approving authority - Satisfaction recorded by the approving authority for issuance of notice under section 148 (approval under section 151) was valid. - HELD THAT: - The Tribunal found no infirmity in the sanction/approval by the Joint Commissioner, observing that identical forms of satisfaction recorded in earlier decisions (including those of the Delhi High Court) had been held to be in accordance with law. Given the nature of the investigation material and the approving authority's recorded view that it was a fit case, the sanction complied with statutory requirements. [Paras 20]

Approval by the joint Commissioner upheld.

Notice under section 143(2)-application of mind and timing - Issuance of notice under section 143(2) on the same day that the assessee intimated the original return as response to notice under section 148 did not vitiate proceedings. - HELD THAT: - The Tribunal rejected the argument that an assessing officer cannot apply his mind immediately upon receipt or intimation of a return. The original return was already available with the Assessing Officer and the statute imposes no minimum temporal gap between intimation/receipt and issuance of a section 143(2) notice. Where the Assessing Officer has tangible material from investigations, he may immediately require attendance under section 143(2) to examine the return and supporting material. [Paras 10, 21]

Notice under section 143(2) issued the same day is valid; no absence of application of mind established.

Bogus purchases-treatment when sales and gross profit recorded - Relief limited to commission/investment where sales and gross profit accepted - On merits, addition is restricted to a specified percentage (2% as commission and 5% as investment) of the alleged bogus purchases; remainder of addition deleted where sales and gross profit are recorded in assessee's books. - HELD THAT: - The Tribunal examined factual patterns where an assessee records purchases from an entry provider but also records corresponding sales and gross profit in trading account. Citing precedent and an earlier Tribunal decision (SIL Gold) on identical facts, it held that where sales and resultant gross profit on those sales are accepted by the revenue, making an additional full-disallowance of purchase would amount to double addition. However, expenditure incurred to obtain the accommodation entry (treated as commission) and investment in procuring goods outside books could be disallowed. Applying that approach to the present appeals, the Tribunal directed the Assessing Officer to confirm additions limited to 2% of the alleged bogus purchases (as commission) and a further 5% representing investment in goods procured and sold outside books, and to delete the balance additions. [Paras 22, 23, 24, 26, 28]

Addition confirmed to the extent of 2% (commission) and 5% (investment) of the alleged bogus purchases; remainder deleted.

Final Conclusion: Appeals partly allowed: reopening and sanction upheld; notices valid; on merits additions reduced - Assessing Officer to retain additions equal to 2% (commission) and 5% (investment) of the alleged bogus purchases for the assessment years 2007-08 and 2008-09 and delete the balance.

Disallowance under Section 14A in relation to exempt income - Applicability of Rule 8D: AO to record satisfaction before invoking apportionment - Principle of apportionment for expenditure relatable to exempt income - Deductibility of ESOP discount as employee cost under Section 37(1) - Depreciation on computer software: software as integral to computer hardware

Disallowance under Section 14A in relation to exempt income - Applicability of Rule 8D: AO to record satisfaction before invoking apportionment - Principle of apportionment for expenditure relatable to exempt income - Deletion of disallowance made by the Assessing Officer under Section 14A/Rule 8D - HELD THAT: - The Assessing Officer re-computed and increased the disallowance without recording the requisite satisfaction under Section 14A(2) that the assessee's apportionment was incorrect and without applying the mandated procedure in Rule 8D. The tribunal noted that authorities relied upon by the Revenue concern cases where the AO had recorded detailed reasons and applied the statutory procedure; by contrast, in the present case the AO did not record satisfaction based on the accounts before invoking the apportionment exercise. In view of the statutory requirement that the AO must first record satisfaction before applying the methodology in Rule 8D, the tribunal declined to interfere with the CIT(A)'s deletion of the disallowance. [Paras 11]

Disallowance under Section 14A deleted; reassessment/re-computation by AO set aside for want of recorded satisfaction and non-application of Rule 8D procedure.

Depreciation on computer software: software as integral to computer hardware - Allowability of depreciation on software at the higher rate claimed by the assessee - HELD THAT: - The tribunal accepted that the software acquired were licenses and that software forms an integral part of the computer system and cannot be treated in isolation as an intangible conferring enduring separate rights. Relying on consistent precedents and the nature of the software (licenses used to maximize performance and efficiency), the tribunal held there was no merit in the AO treating the software as an intangible for lower depreciation. The claim for higher depreciation on the software was sustained and the CIT(A)'s deletion of the addition was affirmed. [Paras 14]

Depreciation at the rate claimed by the assessee on the software upheld; AO's adjustment set aside.

Deductibility of ESOP discount as employee cost under Section 37(1) - Allowability of ESOP discount as deduction under Section 37(1) and remand for year-wise arithmetic apportionment - HELD THAT: - The tribunal followed the Special Bench reasoning that the discount under ESOPs represents employee compensation (a substitute for direct cash incentive) and is therefore an allowable business expenditure under Section 37(1). The Bench also explained the theory of vesting: entitlement accrues proportionately over the vesting period and the discount should be spread over that period on a straight-line basis. Given the factual matrices and year-wise details filed, the tribunal directed a limited remand to the AO for arithmetic computation and year-wise apportionment of the ESOP discount, taking into account options granted, perk values, and applicable tax consequences, to quantify and allow the deduction in accordance with the Income Tax Act. [Paras 28]

ESOP discount held deductible under Section 37(1); matter remanded to AO for limited purpose of year-wise arithmetic apportionment and computation.

Final Conclusion: Both appeals filed by the Revenue are dismissed. The deletion of the Section 14A disallowance and the allowance of higher depreciation on software are affirmed; the claim for ESOP expenses is accepted in principle but remanded to the AO for limited arithmetic computation and year wise apportionment.

Allowability of interest as deduction where borrowed funds are advanced to sister concerns - Commercial expediency test for inter company advances - Proof of availability of own funds by cash flow statements - Assessment of benefit to the assessee from interest free advances to related concerns - Remand for verification of records and pre assessment notice procedure

Allowability of interest as deduction where borrowed funds are advanced to sister concerns - Commercial expediency test for inter company advances - Proof of availability of own funds by cash flow statements - Assessment of benefit to the assessee from interest free advances to related concerns - Whether interest on borrowings was allowable where borrowed funds were advanced to sister concerns and whether the assessee established commercial expediency and availability of own funds. - HELD THAT: - The Tribunal examined the advance of funds by the assessee to sister concerns and the claim of deduction of interest on borrowings. The High Court had earlier remitted the matter to the Assessing Officer for verification, directing production of cash flow statements, evidence of the assessee's interest in the sister concerns, and documents showing the financial position of those concerns so that commercial expediency and availability of own funds could be established. On remand the assessee did not produce cash flow statements or other material evidencing that the advances were out of own funds or that the advances conferred a concrete commercial benefit to the assessee (for example, by safeguarding mortgaged property or affecting the assessee's profitability). In the absence of such evidence and having regard to the requirement that interest on borrowed capital is allowable only when the borrowing was for the purpose of business and, if advances to related concerns are relied upon, commercial expediency and benefit to the assessee are shown, the Tribunal sustained the disallowance. The Tribunal further held that the authorities below rightly treated the unproven advances as not meeting the commercial expediency test and therefore not qualifying the related interest for deduction. [Paras 6, 7]

Disallowance of proportionate interest on borrowed funds advanced to sister concerns upheld for lack of evidence of commercial expediency and absence of cash flow statements or proof of benefit to the assessee; appeal dismissed.

Final Conclusion: The Tribunal dismissed the appeal for assessment year 2005-06, upholding the disallowance of interest on borrowings in respect of funds advanced to sister concerns because the assessee failed to substantiate commercial expediency or the use of own funds as directed by the High Court and on remand.

Revenue v. capital expenditure on leasehold premises - Effect of Tribunal remand on scope of reconsideration - Admissibility of ex parte remand inquiries and evidence - Requirement of opportunity to be heard/natural justice in remand proceedings - Disallowance under Section 40(a)(ia) for failure to deduct TDS

Revenue v. capital expenditure on leasehold premises - Whether the renovation and repair expenditure on leased premises is capital or revenue in nature. - HELD THAT: - The Tribunal's remand was narrowly confined to examination of the lease deeds and determination whether the expenditure was capital or revenue. The assessee had taken premises on lease and incurred expenses such as flooring, temporary partitions, roofing and wall covering. The Tribunal held that these works were of a reparative/renovation character on leased premises and did not confer an enduring benefit on the assessee. Precedents treating repair and renovation of leased premises as revenue expenditure were relied upon. Applying the remand direction and the nature of the works, the expenditure was held to be revenue in nature and therefore allowable.

The repair and renovation expenses incurred on the leased premises are revenue expenditure and the additions disallowing them are deleted.

Admissibility of ex parte remand inquiries and evidence - Requirement of opportunity to be heard/natural justice in remand proceedings - Effect of Tribunal remand on scope of reconsideration - Whether inquiries conducted behind the back of the assessee in remand proceedings could be relied upon to doubt genuineness of the claimed expenses. - HELD THAT: - The Tribunal's directions admitted the lease deeds and required reconsideration confined to the capital/revenue question. The appellate authority's conduct in obtaining remand inquiries from third parties without confronting the assessee altered the scope and introduced a new case on genuineness that was outside the remand's mandate. Statements obtained ex parte after a substantial lapse of time were held to lack credibility, particularly where the assessee had produced invoices and vouchers. The Tribunal found such material inadmissible for drawing adverse inference in the present remand and rejected the appellate authority's suspicion as impermissible.

Material obtained through ex parte remand inquiries behind the assessee's back cannot be relied upon to impugn genuineness; genuineness of the expenses was not displaced.

Disallowance under Section 40(a)(ia) for failure to deduct TDS - Whether the repair and renovation expenses could be disallowed under Section 40(a)(ia) for non-deduction of TDS. - HELD THAT: - The Tribunal examined the composition of the claimed expenditure and noted that the major part related to purchase of materials while only a small portion represented labour charges. On that basis the Tribunal held that the provision invoked by the appellate authority for disallowance was not attracted, since the main expenditure did not give rise to tax deduction obligations under the cited provision.

Disallowance under Section 40(a)(ia) is not sustainable; the provision does not apply to the bulk of the expenditure which comprised material purchases.

Final Conclusion: The appeal is allowed: the repair and renovation expenses on leased premises for AY 2007-08 are held to be revenue in nature and allowable; ex parte remand inquiries cannot be used to impugn genuineness; and disallowance under Section 40(a)(ia) is not attracted.

Condonation of delay - reasonable and sufficient cause - pursuit of alternative remedy (rectification under section 154) - maintainability of appeal against rectification order - remand for fresh adjudication on merits

Condonation of delay - reasonable and sufficient cause - pursuit of alternative remedy (rectification under section 154) - Delay in filing appeals before the Commissioner of Income Tax (Appeals) was condoned. - HELD THAT: - The Tribunal found that the assessee had pursued rectification proceedings under section 154 up to the Tribunal as an alternative remedy and, in consequence, did not file appeals against the original intimation under section 200A within the statutory period. The assessee's counsel explained that the appeals were filed belatedly because the assessee had been pursuing the rectification route and only realized at the Tribunal hearing that appeals against the rectification orders were not maintainable and that the proper remedy was to appeal the original intimation. The Tribunal accepted that the pursuit of the alternative remedy, coupled with the factual circumstances narrated (including personal exigencies of management), constituted a reasonable and sufficient cause for the delay. The Revenue did not allege mala fides. Having regard to these circumstances, the Tribunal reversed the CIT(A)'s orders refusing condonation and held that delay should be condoned. [Paras 7]

Delay in filing the appeals is condoned and the orders of the CIT(A) refusing condonation are reversed.

Remand for fresh adjudication on merits - maintainability of appeal against rectification order - Whether the matters should be remitted to the CIT(A) for adjudication on merits after condoning delay. - HELD THAT: - Since the Tribunal condoned the delay and the CIT(A) had not decided the appeals on merits (having dismissed them for being time-barred), the Tribunal set aside the CIT(A)'s orders and remitted the matters to the CIT(A) for fresh adjudication on merits. The Tribunal expressly declined to examine the merits and directed that the CIT(A) decide the appeals afresh after affording the assessee a reasonable opportunity of being heard. [Paras 8]

Matters are set aside to the file of the CIT(A) for adjudication on merits after granting the assessee a reasonable opportunity of hearing.

Final Conclusion: The Tribunal condoned the substantial delays in filing the appeals, reversed the CIT(A)'s refusal to condone delay, and set aside the CIT(A)'s orders; the appeals are remitted to the CIT(A) for fresh adjudication on merits after providing the assessee a reasonable opportunity of being heard.

Percentage of completion method - revenue recognition in real estate transactions - application of Guidance Note GN(A) 23 (R2012) - recognition of profit on unsold inventory - enhancement of income based on revised project estimates - application of AS-9 principles to completed real estate projects with unsold stock

Percentage of completion method - revenue recognition in real estate transactions - application of AS-9 principles to completed real estate projects with unsold stock - Whether the percentage of completion method was the appropriate basis to recognise additional profit for the NOP project in AY 2013-14, or whether AS-9 principles and recognition on the basis of unsold stock/sales should govern. - HELD THAT: - The Tribunal found that although the assessee generally followed the percentage of completion method, the NOP project did not have the same economic substance as ongoing construction contracts because construction was complete and the remaining component was sale of completed units. The Guidance Note GN(A) 23 (R2012) permits percentage completion only where transactions have the same economic substance as construction contracts. Where a real estate project is completed but units remain unsold, revenue recognition aligns with the principles applicable to sale of goods (AS-9) rather than recognising the entire revised project profit immediately. Given the completed status of the project and the existence of unsold inventory, it was prudent to absorb revised estimate profit against unsold stock and recognise profit proportionately as actual sales occur, rather than applying the revised margin across prior years' sales which are closed. [Paras 10, 11, 12]

The percentage of completion method was not the appropriate basis to recognise the entire revised project profit for AY 2013-14; AS-9 principles and proportionate recognition based on unsold stock/sales apply.

Enhancement of income based on revised project estimates - recognition of profit on unsold inventory - Whether the enhancement of income proposed by the CIT(A) by applying the revised project margin to aggregate project revenue should be sustained for AY 2013-14, or reduced to profit attributable to actual sales in the year. - HELD THAT: - The CIT(A) had enhanced income by applying a revised higher margin to the project's aggregate revenue, thereby attributing differential profit to the current year. The Tribunal accepted the assessee's revised computation of per square foot profit based on the revised project profit less profit already recognised up to 31.03.2012, and concluded that only profit attributable to units actually sold in AY 2013-14 should be taxed in that year. The Tribunal observed uncertainty as to future costs and holding expenses which could reduce profit on unsold stock, making immediate full absorption of revised profit imprudent. Consequently, the Tribunal directed the AO to estimate profit for the year on the basis of actual sales (1032 sq. ft.) at the calculated per sq. ft. profit. [Paras 11, 12]

The enhancement was reduced; the AO is directed to compute taxable profit for AY 2013-14 as the proportionate profit attributable to the 1032 sq. ft. sold, amounting to the quantified per sq. ft. computation.

Profits exceeding revenue - recognition of income in the correct assessment year - Whether profit recognised in a year can exceed the revenue of that year as a matter of law, in the context of revised project estimates. - HELD THAT: - The Tribunal noted that profits in a year may, in some accounting permutations, appear to exceed sales of that year (illustrated by the CIT(A)), for example where cumulative percentage completion and revised estimates result in recognition of previously understated profit. However, in the facts of the present case where the project was complete and prior years' sales had been finally accounted, the Tribunal preferred proportionate recognition against unsold inventory and actual sales rather than treating the excess as taxable in the current year. The Tribunal therefore rejected the submission that the profit for the year must never exceed that year's sales as a rigid rule, but applied prudence in recognition tied to unsold stock and actual sales. [Paras 5, 11]

There is no absolute rule that profit cannot exceed sales in a year; nonetheless, on the facts the Tribunal restricted recognition to proportionate profit on actual sales and unsold inventory rather than taxing the full revised excess in AY 2013-14.

Final Conclusion: The appeal is allowed. The Tribunal held that the full enhancement proposed by the CIT(A) was not appropriate for the completed NOP project with unsold stock; the AO is directed to compute taxable profit for AY 2013-14 by applying the revised per square foot profit to the actual area sold in the year (1032 sq. ft.), resulting in a reduced enhancement as directed by the Tribunal.

Unexplained cash deposits - reconciliation of bank withdrawals and deposits - onus of proof for source of cash deposits - credit for cash in hand - acceptance of explanation in absence of contrary evidence

Unexplained cash deposits - reconciliation of bank withdrawals and deposits - onus of proof for source of cash deposits - credit for cash in hand - Whether the addition of Rs. 10,10,000 as unexplained deposit in the assessee's bank account was justified. - HELD THAT: - The Tribunal examined the bank transactions showing prior cash withdrawals and subsequent redeposit and noted that the department produced no evidence to show that the withdrawals had been spent for specified purposes or were otherwise unavailable for redeposit. The assessee explained that withdrawals were made for prospective medical admission formalities for his son, supported by admission-related documents, and that funds were redeposited when the admission did not materialize. The CIT(A) had restricted relief to part of the withdrawals due to temporal gap between withdrawals (June 2012) and the impugned deposit (November 2012), but the Tribunal observed that mere passage of time does not, without contrary material, rebut the explanation that cash withdrawn remained with the assessee and was later redeposited. In the absence of evidence to the contrary and having regard to precedent accepting redeposit from earlier withdrawals where withdrawals themselves were not disputed, the Tribunal concluded that the explanation was acceptable and that the addition could not be sustained. [Paras 5, 6]

Addition of Rs. 10,10,000 as unexplained deposit deleted and the appeal allowed.

Final Conclusion: The Tribunal upheld the assessee's explanation that the impugned bank deposit was from earlier cash withdrawals which, absent any contrary material from the department, entitled the assessee to credit; the addition was deleted and the appeal allowed.

Registration under section 12AA - Charitable purpose - advancement of education and general public utility - Training of government employees as charitable activity - Bona fides and documentation for registration

Bona fides and documentation for registration - Registration under section 12AA - Whether the rejection of the assessee's application for registration was justified on the ground of non furnishing of documents and lack of bona fides when the assessee had uploaded the requisite documents on the ITBA portal. - HELD THAT: - The Tribunal found that the Commissioner (Exemption) rejected the application primarily on the ground that the assessee had not furnished material to establish the bona fides of its objects. The assessee, however, had responded to queries and uploaded the requisite documents and information on the Department's ITBA portal. The CIT(Exemption) failed to make use of the uploaded material for reasons not recorded as determinative, and proceeded to rely on earlier rejection without considering the newly submitted documents. In these circumstances the rejection on the sole basis of non furnishing was held to be unsustainable and the Tribunal directed issuance of registration from the date of application under section 12AA. [Paras 4]

Rejection for non furnishing of documents was untenable; registration ordered to be granted from date of application.

Training of government employees as charitable activity - Charitable purpose - advancement of education and general public utility - Whether imparting training to State Government employees falls within the object of general public utility/advancement of education such that registration under section 12AA can be granted. - HELD THAT: - The Tribunal held that the object of general public utility is wide enough to encompass training imparted to government employees. It observed that government employees belong to varied sections of society and improvement in their skills and managerial capacity produces indirect benefits to the public and the Government. Relying on precedents which recognise training of government personnel as within public utility/educational charitable objects, the Tribunal concluded that denying registration solely because the training benefits a specific category of government employees was incorrect and contrary to law. Accordingly, the assessee was held entitled to registration. [Paras 5]

Imparting training to State Government employees qualifies as charitable activity for public utility; registration to be granted.

Final Conclusion: The appeal is allowed: the Tribunal set aside the CIT(Exemption)'s rejection, held that the assessee had furnished requisite material and that training of government employees falls within advancement of education/general public utility, and directed grant of registration under section 12AA from the date of application.

Revenue expenditure vs capital expenditure - treatment of dunnage based on useful life - depreciation on commercial/licence right - license/registration fee as asset under section 32(1)(ii)

Revenue expenditure vs capital expenditure - treatment of dunnage based on useful life - Whether expenditure on ordinary dunnage is revenue expenditure and expenditure on special dunnage is capitalizable and subject to depreciation. - HELD THAT: - The Tribunal recorded that the assessee used two distinct types of dunnage for the same purpose but with materially different useful lives: special dunnage with life in excess of five years (capitalized by the assessee and depreciated) and ordinary dunnage usable for a single season and discarded thereafter (charged to profit and loss by the assessee). The Revenue accepted capitalization of special dunnage in earlier years and allowed depreciation. The Tribunal held that life expectancy and single use are the determining factors and, on that basis, there was no illegality, irregularity or perversity in the CIT(A)'s finding that ordinary dunnage is revenue expenditure allowable under the Act and that no addition was warranted. [Paras 11, 12]

The disallowance by the Assessing Officer in respect of ordinary dunnage is deleted; the expenditure on ordinary dunnage is revenue expenditure while special dunnage is capitalized and depreciable.

Depreciation on commercial/licence right - license/registration fee as asset under section 32(1)(ii) - Whether the license/registration fee paid to Indian Railways is an asset attracting depreciation under section 32(1)(ii) or must be amortized over 20 years as deferred revenue expenditure. - HELD THAT: - The Tribunal noted the assessee paid a license/registration fee to acquire the right to run container trains and that the CIT(A) relied on the Tribunal's earlier decision in ONGC Videsh Ltd. which treated such a license/registration fee as a commercial right constituting an asset within the meaning of section 32(1)(ii). No contrary binding authority was placed before the Tribunal. Applying that reasoning, the Tribunal agreed with the CIT(A) that the fee is an asset and that depreciation under section 32(1) is allowable, rather than mandatory straight-line amortisation over a presumed 20-year period as deferred revenue expenditure. [Paras 5, 6, 13]

The Assessing Officer's addition for alleged excess depreciation is deleted; the license/registration fee is an asset on which depreciation under section 32(1) is allowable.

Final Conclusion: Both grounds of Revenue appeal are dismissed and the assessee's cross-objections are dismissed as academic; the CIT(A) findings on treatment of ordinary and special dunnage and on depreciation of the license/registration fee are upheld.

Admission of additional ground under Rule 11 of the ITAT Rules - validity of assessment framed under section 153A based on search under section 132 and material gathered during survey under section 133A - use of seized/impounded documents for estimation of undisclosed receipts - treatment of unaccounted sale receipts and allowance of corresponding cost in work in progress - remand for re-quantification of additions limited to verification of cost of construction and apportionment with work in progress

Admission of additional ground under Rule 11 of the ITAT Rules - Admission of the additional ground challenging validity of search/assessment - HELD THAT: - The Tribunal considered the pleadings and authority on the Tribunal's power to admit new grounds and held that the additional ground goes to the root of the matter and did not require further factual investigation. The assessee had not been furnished the copy of the search warrant earlier and produced it at the hearing; on that basis the Tribunal found reasonable cause for delay and admitted the additional ground for adjudication (applying the principles in National Thermal Power Co. Ltd. and allied precedents). [Paras 4]

Additional ground admitted for adjudication

Validity of assessment under section 153A based on search under section 132 and material from survey section 133A - use of seized/impounded documents for estimation of undisclosed receipts - Legality of framing assessments under section 153A where search and survey actions were contemporaneous and seized/impounded records were used - HELD THAT: - Having examined the Form No.45, panchanamas, seized/impounded material and statements, the Tribunal concluded that search action under section 132 did take place at relevant premises and was supported by panchanamas and seized documents. The Tribunal held that material gathered during the course of survey under section 133A and incriminating documents seized during search could be used for framing assessments under section 153A; accordingly the contention that assessments were illegal because only survey (and not search) was carried out was rejected. The Tribunal relied on jurisdictional High Court precedents accepting use of seized/survey material where suppression is established. [Paras 5]

Contention that assessment under section 153A is illegal because only survey was conducted rejected; assessments under section 153A upheld as valid

Treatment of unaccounted sale receipts and allowance of corresponding cost in work in progress - remand for re-quantification of additions limited to verification of cost of construction and apportionment with work in progress - Quantification of undisclosed on money receipts and allowance of corresponding construction cost shown as work in progress - HELD THAT: - The Tribunal accepted that the CIT(A) was justified in extrapolating undisclosed cash receipts from seized documents and fixed total unaccounted receipts at the figure adopted by the CIT(A). However, the Tribunal found the CIT(A)'s computation produced an unrealistically high profit ratio and that part of the work in progress disclosed in the assessee's books related to the unaccounted receipts. Consequently, the Tribunal held that the Assessing Officer must give due credit for cost of construction relating to the unaccounted collections by verifying the assessee's WIP and apportioning total WIP between accounted and unaccounted collections in their respective ratio. The matter of recomputation was remitted to the Assessing Officer for limited purpose of re quantification after giving the assessee an opportunity of hearing; the Tribunal clarified the addition is not under sections 69/69A but relates to turnover and unaccounted receipts. [Paras 13, 14]

Extrapolation of undisclosed receipts upheld but remitted for re quantification to allow proportionate deduction of cost of construction from work in progress; appeals partly allowed

Final Conclusion: The Tribunal admitted the additional ground, held that assessments under section 153A were validly framed relying on seized and survey material, sustained the extrapolation of unaccounted receipts but remitted the matter to the Assessing Officer for limited re quantification by apportioning disclosed work in progress against the unaccounted collections; the appeals were partly allowed.

Amendment of writ petition under Article 226 and Section 482 Cr.P.C. - Section 7(1)(b) of COFEPOSA - powers in relation to absconding persons - Pre-execution challenge to detention order - caution and exceptions - Personal liberty - prima facie satisfaction for amendment - Constructive res judicata not applicable to Article 21 petitions

Amendment of writ petition under Article 226 and Section 482 Cr.P.C. - Section 7(1)(b) of COFEPOSA - powers in relation to absconding persons - Pre-execution challenge to detention order - caution and exceptions - Application to amend the writ petition to impugn the notification issued under Section 7(1)(b) of the COFEPOSA Act was permissible and granted - HELD THAT: - The Court proceeded on a prima facie assessment of the proposed amendment only to the extent necessary to satisfy that it was not frivolous or wholly misplaced, particularly because personal liberty is engaged. Section 7(1)(b) enables the appropriate Government to notify directions where it has reason to believe the detenue has absconded or is concealing himself so that the detention order cannot be executed; because the Section 7 notification emanates from and is directly connected to the detention order, it is not legally impermissible to challenge that notification along with the petition against the detention order. Were the amendment refused, quashing of the detention order could leave the Section 7 proceedings intact and produce piecemeal or procedurally inconvenient results; permitting the amendment avoids such complications. Although courts must exercise caution in entertaining pre-execution challenges to detention orders (and consider the conduct of a proposed detenu in cases of absconding), the present stage did not call for adjudication of the merits of the notification or findings of malice; those merits remain for final hearing. The Court also noted that constructive res judicata does not preclude comprehensive adjudication of Article 21 challenges and that delay concerns can be managed by expedited pleadings and hearing. [Paras 9, 10, 11, 12, 13]

Application to amend the writ petition to incorporate challenge to the Section 7(1)(b) notification is allowed; timetable for amended pleadings and final listing directed

Final Conclusion: The petitioner's application to amend the writ petition to challenge the notification under Section 7(1)(b) of the COFEPOSA Act is allowed; the petitioner was directed to file the amended petition and the parties to complete pleadings on an expedited schedule, with the matter listed for final hearing.

Amendment of documents under Section 149 of the Customs Act - Rebate of service tax under paragraph 2 of Notification No. 41/2012 ST - Documentary evidence requirement for post export amendment - Distinction between paragraph 2 and paragraph 3 procedures of the Notification

Amendment of documents under Section 149 of the Customs Act - Rebate of service tax under paragraph 2 of Notification No. 41/2012 ST - Documentary evidence requirement for post export amendment - Whether amendment of shipping bills under Section 149 to incorporate a declaration claiming rebate under paragraph 2 of Notification No. 41/2012 ST was permissible after export. - HELD THAT: - Section 149 empowers the proper officer to authorize amendment of a shipping bill after presentation, but the proviso permits such post export amendment only on the basis of documentary evidence which was in existence at the time of export. Paragraph 2 of Notification No. 41/2012 ST contemplates claiming rebate by making a declaration in the shipping bill and computing rebate by reference to rates in the Schedule; it does not require production of the documentary proof envisaged by paragraph 3. The appellant sought only to incorporate the statutory declaration (that rebate under paragraph 2 was claimed) in the shipping bills; the court accepted the appellant's case that the information required by paragraph 2 was in existence at the time of export and had been submitted with the shipping bills. Applying the principles in the cited authorities, an amendment under Section 149 to record the declaration for claiming rebate under paragraph 2 is within the scope of Section 149 provided the documentary evidence relied upon existed at the time of export. The Tribunal therefore held that the amendment sought should have been permitted and that the Commissioner (Appeals) erred in denying it. [Paras 10, 12, 15, 22, 23]

Amendment under Section 149 to incorporate the declaration for rebate under paragraph 2 was permissible and the appellant is entitled to carry out the amendments in the shipping bills.

Distinction between paragraph 2 and paragraph 3 procedures of the Notification - Documentary evidence requirement for post export amendment - Whether failure to produce documentary evidence and invoices (requirements of paragraph 3) justified refusal of amendment when relief was sought under paragraph 2. - HELD THAT: - Paragraph 2 and paragraph 3 of the Notification set out distinct procedures: paragraph 2 permits rebate by declaration and application of schedule rates, paragraph 3 permits rebate on the basis of documents showing actual service tax paid. The Commissioner (Appeals) sought documents and a proforma relevant to paragraph 3 and treated their absence as fatal to the paragraph 2 claim. The Tribunal found that the Commissioner (Appeals) failed to distinguish the two procedures and wrongly imported paragraph 3 documentary pre conditions into a paragraph 2 amendment application. Since the appellant sought relief under paragraph 2, the documents demanded by the Commissioner (Appeals) were not the relevant pre condition for allowing the post export amendment under Section 149; the absence of paragraph 3 style documents therefore did not justify refusal of the amendment sought under paragraph 2. [Paras 13, 16, 17]

Refusal of amendment on the ground that paragraph 3 documents were not produced was incorrect; the Commissioner (Appeals) ought to have allowed amendment for a paragraph 2 declaration.

Final Conclusion: The Commissioner (Appeals) order dated 6 June, 2019 is set aside; the appellant is permitted to amend the shipping bills to incorporate the declaration claiming rebate under paragraph 2 of Notification No. 41/2012 ST in accordance with Section 149 of the Customs Act.

Protection of assets by the Official Liquidator - duty to file affidavit on physical status of assets - repossession of property in liquidation - vagueness and fishing expedition as ground for dismissal

Exemption from court fees subject to compliance - Application for exemption from court fees in C.A. No.199/2020 - HELD THAT: - The application for exemption was allowed on the terms that the applicant must file duly affirmed affidavit(s) together with the court fees or any deficit court fees within 72 hours from the resumption of the regular functioning of the Court. The order disposes of the exemption application conditioned on compliance with the specified filing and payment requirements. [Paras 1]

Exemption application allowed subject to filing affirmed affidavit(s) and payment of court fees/deficit within 72 hours of court resumption; application disposed of.

Protection of assets by the Official Liquidator - duty to file affidavit on physical status of assets - repossession of property in liquidation - vagueness and fishing expedition as ground for dismissal - Application in C.A. No.198/2020 seeking directions to the Official Liquidator to protect land, file an affidavit on its physical status, and for the applicant to resume possession - HELD THAT: - The Court recorded that security personnel had already been engaged by the Official Liquidator and were posted at the land, removing any immediate need for further protective directions. The Court refused to direct the Official Liquidator to file an affidavit verifying that the physical condition of the land remained as in August 2019 because the applicant had not placed specific facts on affidavit identifying when, by whom, or the nature of any alleged construction activity. The Court characterised the application as a vague request amounting to a fishing expedition intended to obtain material on record for potential future use. The Court also noted that, where the land is in the possession of the Official Liquidator and the applicant is required to execute a sale deed in favour of the Official Liquidator, there was no basis to direct repossession. [Paras 2, 7, 8]

Application for directions dismissed as meritless; no order directing the Official Liquidator to file an affidavit or permitting repossession.

Final Conclusion: The exemption application (C.A. No.199/2020) was allowed subject to specified filing and payment conditions. The application for directions (C.A. No.198/2020) seeking protective steps, an affidavit on the land's physical status, and repossession was dismissed as vague and meritless, there being security already engaged and no specific facts averred to justify the reliefs sought.

Valuation under Section 4(1)(a) transaction value - valuation under Rule 4 of the Central Excise Valuation Rules, 2000 - valuation under Rule 8 of the Central Excise Valuation Rules, 2000 (job work valuation) - physician samples - principal to principal sales versus manufacturer supplying free samples - application of Ujagar Prints principle for job-work valuation - precedential application of Supreme Court decisions in Sun Pharmaceuticals and Biochem Pharmaceuticals

Valuation under Section 4(1)(a) transaction value - valuation under Rule 4 of the Central Excise Valuation Rules, 2000 - valuation under Rule 8 of the Central Excise Valuation Rules, 2000 (job work valuation) - physician samples - principal to principal sales versus manufacturer supplying free samples - application of Ujagar Prints principle for job-work valuation - Physician samples manufactured on job work basis and physician samples sold on principal to principal basis are not to be valued under Rule 4; transaction value under Section 4(1)(a) or job work valuation under Rule 8 applies as appropriate. - HELD THAT: - The Tribunal applied the Supreme Court precedents in Sun Pharmaceuticals and Biochem Pharmaceuticals to distinguish cases where Rule 4 applies. Rule 4 of the Valuation Rules operates where the manufacturer manufactures physician samples and supplies them free into the market; it does not apply where the goods are manufactured on behalf of a buyer (job work) or sold on a principal to principal basis to the purchaser. In principal to principal sales the transaction value under Section 4 governs valuation. In job work clearances the valuation follows the principles applicable to job work (as in Ujagar Prints), i.e., value determined by cost components and job charges (reflected in Rule 8 formulation), including appropriate profit of the job worker. The Tribunal found no case made by Revenue that the appellants' declared values were lower than values computed under the principles of Ujagar Prints or transaction value rules; accordingly Rule 4 was inapplicable to the clearances in issue. The impugned demand premised on applying Rule 4 to such clearances was thereby unsustainable.

Demand confirmed under Rule 4 set aside; valuation to be governed by Section 4(1)(a) for principal to principal sales and by job work valuation principles/Rule 8 for manufacture on job work basis.

Final Conclusion: Following the Supreme Court authorities relied upon, the Tribunal set aside the impugned order, allowed the appeals and directed valuation to be determined by transaction value for principal to principal sales and by job work valuation principles for goods manufactured on job work basis, with consequential relief as per law.

Deemed assessment - Pondicherry General Sales Tax (Assessment) Rules, 2007 - finality to pending assessments - delay in assessment proceedings - assessment under successor enactment

Deemed assessment - delay in assessment proceedings - Pondicherry General Sales Tax (Assessment) Rules, 2007 - Validity of impugned notice dated 25.08.2016 calling for records in respect of assessment for 2001-02 - HELD THAT: - The Court held that the Pondicherry General Sales Tax (Assessment) Rules, 2007 were intended to bring finality to assessment proceedings pending as on the relevant cut-off and to require respondents to pass deemed assessment orders before initiating fresh proceedings under the successor law. The respondent had unduly delayed passing the deemed assessment and, in those circumstances, the impugned notice calling for records for the year 2001-02 was quashed as lacking merit. The reasoning rests on the mandate and purpose of the 2007 Rules and the respondents' failure to act in accordance therewith, rendering the notice improper. [Paras 7]

Impugned notice dated 25.08.2016 quashed.

Assessment under successor enactment - Pondicherry General Sales Tax (Assessment) Rules, 2007 - finality to pending assessments - Direction to respondent to pass appropriate assessment orders in terms of the 2007 Rules and permission to initiate fresh proceedings - HELD THAT: - The Court directed that, having quashed the notice, the respondent must pass appropriate assessment orders in accordance with the Pondicherry General Sales Tax (Assessment) Rules, 2007, giving effect to the scheme for deemed assessment of pending matters and thereafter may initiate proceedings under the applicable law. This effectively requires the assessing authority to regularise the assessment for 2001-02 by following the procedure and sequence envisaged by the 2007 Rules rather than proceeding on the basis of the belated notice. [Paras 8]

Respondent directed to pass appropriate assessment orders under the 2007 Rules; liberty to initiate proceedings in accordance with law.

Final Conclusion: Writ petition allowed: the notice of 25.08.2016 is quashed and the respondent is directed to pass assessment orders in accordance with the Pondicherry General Sales Tax (Assessment) Rules, 2007, with liberty to proceed thereafter as permitted by law.

Waiver of GST - abeyance of GST dues - release of loan under government revival scheme - sale of FAR - disclosure of outstanding dues to buyers - rate of interest and compounding on outstanding lease premium - lifting embargo on attachment - attachment by Enforcement Directorate - relaxation in financing norms by RBI - transmission of rent by DRT to court registry account

Waiver of GST - abeyance of GST dues - Request for waiver of GST or keeping GST dues in abeyance - HELD THAT: - The Court noted submissions by the Receiver seeking either waiver of GST by the Government of India or that GST dues be kept in abeyance in view of the dispute. The Court granted an opportunity to the Union of India through the learned Additional Solicitor General to obtain and place instructions on these aspects. No final waiver or abeyance was ordered at this stage; the matter was left to the Executive to consider and report back.

Opportunity granted to the Union of India/ASG to obtain instructions regarding waiver or abeyance of GST; no substantive determination on waiver or abeyance.

Release of loan under government revival scheme - Proposal to release an amount by way of loan under a Government scheme to revive projects - HELD THAT: - The Receiver informed the Court of a proposal that Rs. 500 Crores be released as a loan under a Government scheme to revive stalled projects so that construction may resume and funds be repaid on completion. The Court again permitted the learned Additional Solicitor General to obtain instructions on funding and on the specific proposal, as earlier opportunities had been given. The Court did not itself decide on release of funds but directed that instructions be procured and placed before the Court.

Directed the ASG to obtain instructions from the Government on the proposed loan and place them before the Court; no final order on release of funds.

Sale of FAR - disclosure of outstanding dues to buyers - rate of interest and compounding on outstanding lease premium - Proposals relating to sale of FAR, informing buyers of outstanding dues, and fixation of interest/compounding on outstanding lease premium - HELD THAT: - The Receiver suggested sale of FAR to raise funds for construction. The Noida/Greater Noida Authority was directed to obtain and place instructions on the proposal. The Court emphasised that prospective buyers must be informed of existing dues of the Authorities; accordingly the Noida/Greater Noida Authority was asked to obtain instructions on the appropriate interest rate and compounding to be applied to outstanding lease premium so that liabilities may be disclosed and ultimately passed to home buyers. The Court observed that the Authority must act reasonably in view of changed interest rates and past divergences of funds.

Directed Noida/Greater Noida Authority to obtain instructions on sale of FAR, to advise on disclosure of dues to buyers and on the rate/compounding of interest on outstanding lease premium; directed reasonable conduct by the Authority.

Lifting embargo on attachment - attachment by Enforcement Directorate - Application by Enforcement Directorate to attach assets of J.P. Morgan and its Directors - HELD THAT: - The Enforcement Directorate informed the Court that its criminal investigation had prima facie traced proceeds to the extent indicated in its submissions and sought attachment against J.P. Morgan and its Directors. The Court lifted the prior embargo (vide the order dated 2 December, 2019) that had restrained attachment of property of J.P. Morgan and its Directors, and permitted the Enforcement Directorate to attach bank accounts and other properties of J.P. Morgan and its Directors to the extent required for its investigation.

Embargo lifted; Enforcement Directorate permitted to attach bank accounts and other property of J.P. Morgan and its Directors to the extent required.

Relaxation in financing norms by RBI - Request for relaxation in financing norms to facilitate funding for projects and home buyers - HELD THAT: - Given the peculiar factual matrix and the Receiver's proposals involving financing, the Court requested the learned ASG (who also appeared for SBI CAP) to obtain instructions from the Reserve Bank of India regarding possible relaxation in lending norms to enable financing of projects and release of loans to home buyers. The Court did not itself prescribe any relaxation but directed the ASG to seek instructions from RBI and report.

Directed the ASG to obtain instructions from RBI on granting relaxation in financing norms and report back; no substantive relaxation ordered by the Court.

Sale status report by MSTC - Requirement for MSTC to report steps taken in sale of properties - HELD THAT: - The Court directed MSTC to inform the Court of steps taken so far in relation to sale of properties and directed the learned ASG to obtain instructions on the present stage of MSTC's sale process. The Court's direction was for factual reporting and an update, not adjudication on the sale process itself.

Directed MSTC to inform steps taken and directed the ASG to obtain instructions on the present stage of the sale.

Financing of unsold inventory by UCO Bank - Consideration by UCO Bank of a proposal to finance unsold inventory - HELD THAT: - The Receiver advised that UCO Bank was considering financing of unsold inventory. The Court directed UCO Bank to consider the proposal and take a decision within 15 days in consultation with the Receiver, noting the urgency of the financing decision in the factual context.

Directed UCO Bank to consider and decide the financing proposal within 15 days in consultation with the Receiver.

Transmission of rent by DRT to court registry account - Transmission of rent received by DRT from property attached to Amrapali account - HELD THAT: - The Court directed the Debt Recovery Tribunal to transmit rent received from property attached to the Amrapali Account maintained by the Registry of this Court. This is a direct administrative direction to give effect to realisation and custody of funds in the registry account.

Directed the DRT to transmit rent received from the attached property to the Amrapali Account maintained by the Court Registry.

Responding to note on sale completed by NBCC - Examination of a note concerning sale of flats by NBCC and status of allotment - HELD THAT: - A note was submitted regarding sale of certain properties in Eden Park and Castle completed by NBCC. The Court directed the Receiver to respond to that note on the next date of hearing and to indicate whether the flats in question have already been allotted. The direction is for factual verification and reporting rather than final adjudication.

Directed the Receiver to respond to the note and confirm whether the flats sold by NBCC stand allotted on the next date of hearing.

Final Conclusion: The Court heard various parties and issued a series of administrative and procedural directions: it permitted the Enforcement Directorate to attach specified assets, directed multiple authorities (Union/ASG, Noida/Greater Noida Authority, MSTC, UCO Bank, RBI through ASG, the Receiver and the DRT) to obtain instructions, report or take specified steps within timeframes, and reserved substantive determinations (including waiver or abeyance of GST and release of Government loans) pending receipt of instructions and further orders.