TaxTMI Updates e-Newsletter
May 30,2017

Permanent establishment - Article 5(2)(h) of the Indo UAE DTAA (building site or construction project continuing for more than nine months) - taxability under section 44BB of the Income tax Act - aggregation of unconnected project durations for determination of PE - application of a different DTAA article not permissible where not invoked by the assessing officer

Taxability under section 44BB - Arcadia Shipping project - The receipts from the Arcadia Shipping Limited charter hire contract are taxable under section 44BB. - HELD THAT: - The assessee's counsel conceded that services rendered to Arcadia Shipping Limited are taxable under section 44BB. The Tribunal, having recorded that concession, set aside the CIT(A)'s deletion of the addition and restored the Assessing Officer's order in respect of the Arcadia contract. [Paras 8]

Order of Assessing Officer restored in respect of the Arcadia Shipping Limited contract; income taxable under section 44BB.

Permanent establishment - Article 5(2)(h) of the Indo UAE DTAA (building site or construction project continuing for more than nine months) - aggregation of unconnected project durations for determination of PE - The Reliance Ports and Leighton Contractors projects did not create a permanent establishment in India under Article 5(2)(h) because each project individually lasted less than nine months and unconnected project durations cannot be aggregated. - HELD THAT: - The CIT(A) found, on the material, that the Leighton project commenced upon actual arrival of the barge (9/11/2008) and continued for under nine months; the Reliance project likewise did not individually exceed nine months. The Assessing Officer's conclusion combined separate, unconnected projects and relied on speculative premises (such as presumed earlier visits by personnel) without cogent evidence. The Tribunal agreed with the CIT(A)'s factual finding and legal conclusion that Article 5(2)(h) is not attracted where individual projects do not continue for more than nine months and cannot be aggregated merely because the assessee had multiple contracts in the year. [Paras 9, 11]

CIT(A)'s decision upheld that the Reliance and Leighton projects do not constitute a PE under Article 5(2)(h); income not taxable under section 44BB on those contracts.

Application of a different DTAA article not permissible where not invoked by the assessing officer - change of legal basis on appeal - The Department's plea to invoke Article 5(1) (or otherwise reframe the case) was not entertained because that basis was neither taken by the Assessing Officer nor raised as a ground. - HELD THAT: - The Tribunal noted that the Assessing Officer had decided the matter on Article 5(2)(h). The Revenue's alternative submission to apply Article 5(1) or section 9(1) was not the foundation of the AO's order nor pleaded as a ground of assessment; accordingly the Tribunal declined to permit a different legal basis to be invoked at this stage. [Paras 10]

Alternative plea to apply Article 5(1) or a different provision not sustained; not considered because it was not the case made by the AO or framed in the grounds.

Final Conclusion: The Revenue appeal is partly allowed: the Assessing Officer's taxation under section 44BB in respect of the Arcadia Shipping contract is restored, while the CIT(A)'s finding that the Reliance and Leighton projects do not create a permanent establishment under Article 5(2)(h) of the Indo UAE DTAA is upheld; alternative pleas based on a different DTAA article or section 9(1) are not entertained.

Unexplained cash credits - reopening of assessment - burden to prove genuineness of entries in capital account - acceptance of books and supporting evidence - best judgment assessment

Unexplained cash credits - burden to prove genuineness of entries in capital account - acceptance of books and supporting evidence - Whether the unexplained increase in opening capital of Rs. 33,33,088/- should be brought to tax as unexplained cash credits for AY. 2009-10. - HELD THAT: - The Tribunal examined the material on record, including the capital accounts, earlier balance sheets, agreements of sale and statements of the parties. It found that the assessee had the capacity to advance the amounts earlier and that the prospective sellers admitted returning the advances on 01-04-2008. The discrepancy arose from an arithmetical/uploading error in the return filed for AY. 2009-10 which merged the opening capital and the advances returned. The AO's adverse inferences and characterisation of the receipts as fabricated were held to be unsupported by material; similarly, the CIT(A)'s adverse findings were found to be erroneous. Given the contemporaneous records and confirmations by the parties, the Tribunal concluded that the assessee had discharged the burden of establishing the genuineness of the entries and that there was no unaccounted income to be taxed as unexplained cash credits. The Tribunal therefore set aside the addition confirmed by the CIT(A). [Paras 15, 16]

Addition of Rs. 33,33,088/- as unexplained cash credits is not sustainable; appeal allowed.

Unexplained cash credits - reopening of assessment - acceptance of books and supporting evidence - Whether the addition made in the co-assessee's case (similar facts) is sustainable. - HELD THAT: - The facts and evidentiary material in the second appeal were similar to those in the first: the claimed increase in capital resulted from return of advances and an uploading error; supporting documents and confirmations from parties were on record. On the same reasoning as in the principal appeal, the Tribunal held that the addition could not be sustained. The Tribunal also observed that although the reopening of assessment had prima facie justification, the question of reopening became academic once it was concluded that no unaccounted income existed. [Paras 17, 18]

Addition in the second appeal is not sustainable; appeal allowed.

Final Conclusion: On examination of the records and parties' confirmations, the Tribunal held that the increases in opening capital arose from return of earlier advances and an uploading error; the additions as unexplained cash credits in both appeals are unsustainable and both appeals are allowed. The question of validity of reopening was rendered academic by these findings.

Addition based on seized documents - requirement of corroborative evidence for additions in search cases - evidentiary value of unsigned and draft/rough notes - documents seized from third parties and attribution to assessee - concurrent findings of fact not raising a substantial question of law

Addition based on seized documents - requirement of corroborative evidence for additions in search cases - documents seized from third parties and attribution to assessee - evidentiary value of unsigned and draft/rough notes - Deletion of the addition of Rs. 7,33,50,000/- made by the Assessing Officer was justified and rightly upheld by the CIT(A) and ITAT. - HELD THAT: - The Assessing Officer relied principally on a seized document (Annexure-A-1) found at the residence of the assessee's younger brother to make the addition. The CIT(A) examined the seized papers and found them to be cryptic, unsigned, and in the nature of draft/rough jottings recording negotiations and a proposed action plan which was not implemented. There was no evidence of cash being found at the premises of the persons from whose possession the papers were seized, no statement was recorded from those persons, and there was no addition in the hands of the alleged recipients that would corroborate receipt. The ITAT concurred that there was no corroborative evidence on record to justify the asserted payment and that the paper could not be attributed to the assessee. Having regard to the absence of corroboration, the unsigned and tentative character of the notes, and the fact that the documents were seized from third parties without proof of ownership or authorship by the assessee, the assumption of payment based solely on the seized papers could not be supported. The High Court held that these concurrent findings of fact by the CIT(A) and the ITAT do not give rise to any substantial question of law and declined to interfere. [Paras 6, 8, 9, 10, 11]

The appeal by the Revenue is dismissed; the deletion of the addition of Rs. 7,33,50,000/- for AY 2006-07 is sustained.

Final Conclusion: The High Court dismissed the Revenue's appeal against the ITAT order for AY 2006-07, upholding deletion of the addition as the seized rough, unsigned notes found at a third party's residence lacked corroboration and could not be attributed to the assessee; concurrent factual findings did not raise a substantial question of law.

Revenue's entitlement to file appeal subject to prescribed tax-effect threshold - Revenue Audit Objection requirement for contesting adverse judgments - Application of departmental Circular No. 21/2-15 (para 8) to maintainability of appeals

Revenue's entitlement to file appeal subject to prescribed tax-effect threshold - Revenue Audit Objection requirement for contesting adverse judgments - Application of departmental Circular No. 21/2-15 (para 8) to maintainability of appeals - Whether the Revenue could maintain an appeal under Section 260A despite the tax effect being below the prescribed limit by relying on an audit objection in respect of other assessment years. - HELD THAT: - The Court recorded that the tax effect in respect of AY 2007-08 was below the monetary threshold for Revenue appeals. The Revenue sought to justify filing the appeal by relying on para 8 of Circular No. 21/2-15 (dated 10.12.2015), which permits contesting adverse judgments on merits where a Revenue Audit Objection in the case has been accepted by the Department. The Court observed that the Revenue Audit Objection operates year-wise; the audit objections relied upon related only to other assessment years (AYs 2008-09, 2009-10 and 2010-11) and there was no audit objection pertaining to AY 2007-08. Consequently, the condition in para 8 of the Circular could not be invoked to bypass the tax-effect threshold for AY 2007-08, and the appeal was therefore not maintainable on that basis. [Paras 2, 3, 4]

Appeal dismissed as the Revenue could not rely on audit objections for other assessment years to justify an appeal in respect of AY 2007-08 where the tax effect was below the prescribed limit.

Final Conclusion: The Revenue's appeal under Section 260A was dismissed because the tax effect for AY 2007-08 was below the threshold and there was no Revenue Audit Objection for that particular assessment year to permit contesting the adverse order under the cited Circular.

Deduction under Section 80HHC - Explanation (aa) to Section 80HHC - Counter sales to foreign tourists and customs clearance - Genuineness and verifiability of purchases - Remand to Assessing Officer for factual verification

Deduction under Section 80HHC - Explanation (aa) to Section 80HHC - Counter sales to foreign tourists and customs clearance - Tribunal's allowance of deduction under Section 80HHC in respect of counter sales to foreign tourists was sustained. - HELD THAT: - The Court held that the questions framed in the admitted appeals on whether deduction under Section 80HHC could be allowed in respect of counter sales to foreign tourists-notwithstanding Explanation (aa)-were squarely covered by the Supreme Court decision in Commissioner of Income Tax v. Silver & Arts Palace. The parties accepted that the issue in the present appeals was governed by that precedent and that there was no dispute as to the legal position established thereby. Applying the binding principle in Silver & Arts Palace, the Court answered the framed questions in favour of the assessee and against the revenue insofar as the deduction issue was concerned. [Paras 3, 5]

Issue answered in favour of the assessee; deduction under Section 80HHC on the counter sales sustained in accordance with the cited Supreme Court precedent.

Genuineness and verifiability of purchases - Remand to Assessing Officer for factual verification - Findings on genuineness/verifiability of purchases were not finally adjudicated on the merits and were remitted for fresh factual verification by the Assessing Officer. - HELD THAT: - The Court observed that issues relating to the genuineness and verifiability of the purchases required factual scrutiny in the light of applicable High Court precedents (as referred in the judgment) and directed remand. While the Court indicated that certain issues were answered in favour of the revenue, it expressly remitted the matters to the Assessing Officer to examine and decide afresh the question of whether the purchases were genuine and verifiable, applying the principles laid down in the cited authorities. Consequently, the Tribunal's conclusions on verifiability were set aside to the extent necessary and delegated to the Assessing Officer for determination on the factual matrix. [Paras 4, 5]

Issue remitted to the Assessing Officer for fresh verification and decision on the genuineness and verifiability of purchases.

Final Conclusion: Appeals disposed: deduction under Section 80HHC in respect of counter sales to foreign tourists upheld for the assessee in conformity with the Supreme Court precedent; disputes as to genuineness/verifiability of purchases remitted to the Assessing Officer for fresh factual determination.

Revenue expenditure versus capital expenditure - expenditure on dismantling, transportation, re erection and commissioning of plant - necessity of shifting for survival of business - concurrent findings of fact - raising new grounds in appeal (inadmissible)

Revenue expenditure versus capital expenditure - expenditure on dismantling, transportation, re erection and commissioning of plant - necessity of shifting for survival of business - Allowability as revenue expenditure of expenses incurred in shifting the manufacturing unit from Chipri, Kolhapur to Ankleshwar, Gujarat. - HELD THAT: - The Tribunal and the Commissioner (Appeals) found on the facts that the assessee was compelled to shift its plant because of persistent agitation, resolutions and orders by local authorities rendering continued operation at the original location impossible, and that the shift was necessary for the survival and continuation of the manufacturing business. On that factual basis the Tribunal sustained the view that expenses of dismantling, transportation, re erection and commissioning were revenue in nature. The Court distinguished the decision in M/s Sitalpur Sugar Works Ltd. on facts: there the relocation was for advantage and improvement of business (capital in nature), whereas here the move was compelled to preserve the existing business activity. In the circumstances the view of the Tribunal was a possible view and therefore the allowance of the expenditure as revenue expenditure was sustainable. [Paras 2, 4, 5, 8]

The finding that the shifting expenses were revenue expenditure is upheld; no substantial question of law arises.

Concurrent findings of fact - raising new grounds in appeal (inadmissible) - Permissibility of raising, for the first time before this Court, the contention that the factory was on agricultural land and therefore the expenses should be treated differently. - HELD THAT: - The Revenue sought to advance before this Court a factual contention (that the factory was set up on agricultural land / not in an industrial zone) which was not pressed before the Assessing Officer, the Commissioner (Appeals) or the Tribunal and was not pleaded as a ground in the memo of appeal. The High Court declined to entertain this fresh factual contention, noting that the Revenue did not challenge the concurrent factual finding that the shift was compelled by agitation and that the Tribunal's view was open on the material on record. Introducing new facts to overturn concurrent findings of fact was held impermissible in these proceedings. [Paras 6, 7, 9]

The belated factual contention is not entertained; concurrent findings of fact stand.

Final Conclusion: Both appeals are dismissed; the Tribunal's allowance of the shifting expenses as revenue expenditure on the stated facts is sustained and no substantial question of law is made out.

Revision under section 263 - Erroneous and prejudicial to the interests of revenue - Assessment under section 143(3) - Addition on unexplained cash deposits - Disallowance under section 40A(3) for cash payments exceeding Rs.20,000 - Remand for fresh examination - Maintainability of revenue appeal below Rs.10 lakhs - CBDT Circular exception

Revision under section 263 - Assessment under section 143(3) - Erroneous and prejudicial to the interests of revenue - Validity of CIT's exercise of revisionary power under section 263 in setting aside the AO's assessment passed under section 143(3). - HELD THAT: - The CIT recorded that the AO did not examine bank accounts or payments exceeding Rs.20,000 and had simply accepted the return, rendering the assessment erroneous and prejudicial to revenue. The assessee neither appeared before the CIT nor produced details. The Tribunal found on the material before it, including the assessee's admission that no questionnaire or details were called for by the AO, that the AO failed to make necessary enquiries. In these circumstances the CIT was justified in setting aside the assessment for the AO to redo it, and the assessee's grounds challenging the revision were dismissed. [Paras 4, 8, 9]

Order under section 263 upheld; assessee's appeal dismissed.

Addition on unexplained cash deposits - Remand for fresh examination - Whether the deposits of Rs.30,34,850 in the assessee's bank account should be treated as the assessee's income or attributed to the partnership firm M/s Madhuri Agencies. - HELD THAT: - The AO made the addition after the assessee failed to appear and explain bank deposits. Before the CIT(A) the assessee claimed the deposits belonged to the firm, but the CIT(A) rejected that claim and confirmed the addition. The Tribunal observed that the question whether the deposits belong to the assessee or to the firm requires detailed examination and documentary substantiation. To meet the ends of justice the Tribunal remitted the matter to the AO for examination of all details and for decision after providing the assessee a reasonable opportunity to substantiate the claim with documentary proof. [Paras 11, 12, 16]

Matter remitted to the AO for fresh examination and decision after affording opportunity to the assessee to substantiate the claim.

Disallowance under section 40A(3) for cash payments exceeding Rs.20,000 - Remand for fresh examination - Validity of the disallowance of Rs.3,17,825 under section 40A(3) for alleged cash payments exceeding Rs.20,000 each. - HELD THAT: - The AO disallowed the amount treating diesel payments as cash payments in violation of section 40A(3). The assessee contended higher total diesel expenditure and denial of violation. The CIT(A) deleted the addition without examining records. The Tribunal noted documentary entries in the paper book indicating some payments exceeding Rs.20,000 but also observed discrepancies between amounts placed before different authorities. Given these inconsistencies the Tribunal set aside the CIT(A)'s deletion and remitted the ledger and related documents to the AO to examine whether any payments contravened section 40A(3) and to invoke that provision if a violation is established, after following due procedure. [Paras 11, 12, 17, 20]

CIT(A)'s deletion set aside; matter remitted to the AO for examination and decision in accordance with law.

Maintainability of revenue appeal below Rs.10 lakhs - CBDT Circular exception - Whether the revenue's appeal is maintainable despite being below the Rs.10 lakh threshold in view of the CBDT circular exception for cases taken up on audit objection. - HELD THAT: - The assessee argued the revenue appeal was not maintainable as it was below Rs.10 lakhs. The Revenue relied on CBDT Circular No.21/2015 (10th December 2015) which excepts cases taken up for scrutiny on audit objection. The Tribunal found it was a fact that scrutiny arose from an audit objection and this was not disputed by the assessee. Applying the circular, the Tribunal rejected the maintainability objection and held the revenue's appeal maintainable. [Paras 18, 19, 20]

Maintainability objection rejected; revenue appeal held maintainable under the CBDT circular exception.

Final Conclusion: The Tribunal upheld the CIT's revision under section 263 and dismissed the assessee's appeal in ITA No.1234/Hyd/2015; the additions relating to bank deposits and the disallowance under section 40A(3) were remitted to the AO for fresh examination and decision after affording opportunities to the assessee; the revenue appeal was held maintainable under the CBDT circular exception; appeals in ITA Nos.1066 and 1096/Hyd/2015 were allowed for statistical purposes.

Deemed income under section 41(1) - cessation of trading liability - remission of liability - adhoc disallowance without specific instance - disallowance for personal use of motor car - reasonable disallowance in absence of log book - claim of depreciation as part of machinery and plant

Deemed income under section 41(1) - cessation of trading liability - remission of liability - Deletion of addition of Rs. 84,10,126/- made by AO as income on account of alleged cessation/remission of sundry creditors. - HELD THAT: - The Tribunal affirmed the First Appellate Authority's finding that there was neither remission nor cessation of the sundry creditor liabilities and therefore no benefit had accrued to the assessee liable to be taxed under the deeming provision. The assessee had placed on record names, addresses and acknowledgements of creditors and bank statements showing payments to those creditors in the subsequent financial year, which rebutted the AO's inference drawn solely from unchanged ledger balances. In absence of any evidence of actual remission or cessation, the addition under the deeming provision could not be sustained. [Paras 7]

Addition of Rs. 84,10,126/- under section 41(1) deleted; CIT(A)'s order upheld.

Adhoc disallowance without specific instance - Deletion of disallowance of Rs. 17,200/- from sales promotion expenses. - HELD THAT: - The AO disallowed the amount on the basis of voucher examination but failed to point out any specific voucher or expenditure that was not business-related. The CIT(A) rightly held that an adhoc disallowance without identification of disallowable items cannot be sustained. The Tribunal found no reason to interfere. [Paras 8]

Disallowance of Rs. 17,200/- deleted; CIT(A)'s order upheld.

Disallowance for personal use of motor car - reasonable disallowance in absence of log book - claim of depreciation as part of machinery and plant - Reduction of AO's 30% disallowance on car running/maintenance and depreciation to 20%. - HELD THAT: - The assessee admitted the possibility of some personal use of cars but produced no log books. While depreciation on cars as part of plant and machinery was prima facie allowable if used in business, some personal use justified a reasonable disallowance. The CIT(A) reduced the AO's adhoc 30% disallowance to 20% as reasonable; the Tribunal concurred that 20% was an appropriate restriction in the factual matrix and declined to disturb that apportionment. [Paras 9]

Disallowance restricted to 20% (reduction from 30%); CIT(A)'s order upheld.

Adhoc disallowance without specific instance - Deletion of disallowance of Rs. 11,265/- out of tour and travelling expenses. - HELD THAT: - The AO made the disallowance on the basis of voucher examination but did not identify any specific expenditure or produce contrary material to show ineligibility. The CIT(A) deleted the disallowance for lack of particulars; the Tribunal found this deletion justified and refused to interfere. [Paras 10]

Disallowance of Rs. 11,265/- deleted; CIT(A)'s order upheld.

Final Conclusion: The Revenue's appeal is dismissed; the Tribunal upholds the CIT(A)'s deletions and the restriction of car-related disallowance to 20% for Assessment Year 2009-10.

Depreciation on aircraft - Entry No. III(3)(i) of Part-A of the Depreciation Table in Appendix-I of the Income Tax Rules, 1962 - distinction between aircraft and ordinary plant and machinery for depreciation purposes

Depreciation on aircraft - Entry No. III(3)(i) of Part-A of the Depreciation Table in Appendix-I of the Income Tax Rules, 1962 - distinction between aircraft and ordinary plant and machinery for depreciation purposes - Assessee's claim for depreciation on aircraft at 40% was allowable and the addition of excess depreciation made by the AO was rightly deleted by the CIT(A) and upheld by the Tribunal. - HELD THAT: - The assessee claimed depreciation on aircraft at 40% relying on the specific entry in the Depreciation Table (Entry No. III(3)(i), Part-A, Appendix-I, Income Tax Rules, 1962). The AO treated the aircraft as ordinary plant and machinery and applied a 15% rate, disallowing the excess. The First Appellate Authority examined the Rule Book, held that the depreciation rate of 40% is the correct statutory rate for aircraft under the cited entry, and found the AO's generalization incorrect. The Tribunal concurred with the CIT(A)'s reasoning that aircraft cannot be equated with motor vehicles or ordinary plant and machinery for the purpose of depreciation and that the specific depreciation entry governs. Consequently, the addition on account of excess depreciation was correctly deleted and required no interference. [Paras 6, 7]

Addition of excess depreciation made by the AO was deleted; CIT(A)'s order allowing depreciation at 40% and deleting the addition is upheld.

Final Conclusion: Revenue's appeal is dismissed; the Tribunal upholds the CIT(A)'s deletion of the addition relating to excess depreciation on aircraft for Assessment Year 2006-07.

Penalty under section 271(1)(c) of the Income Tax Act, 1961 - deduction under section 36(1)(viii) - acceptable explanation to avoid penalty - debatable legal position / bona fide claim - taxability of interest on project funds - amortization of leasehold land - capital v. revenue expenditure

Deduction under section 36(1)(viii) - penalty under section 271(1)(c) of the Income Tax Act, 1961 - debatable legal position / bona fide claim - Whether penalty under section 271(1)(c) could be sustained for disallowance of deduction claimed under section 36(1)(viii). - HELD THAT: - The Tribunal noted that the disallowance had been sustained on the basis that the assessee did not meet conditions for deduction, but the assessee had advanced a plausible explanation: that processing of milk and milk products is an industry by CBDT notification and that the proviso limiting deduction did not negate entitlement. The claim was pending before the High Court and was a debatable question with prima facie merit. Applying the established principle that an acceptable, not inherently fantastic, explanation rebuts the presumption of furnishing inaccurate particulars, the Tribunal held that the explanation was acceptable and penalty could not be levied. [Paras 6]

Penalty in respect of disallowance under section 36(1)(viii) deleted.

Taxability of interest on project funds - penalty under section 271(1)(c) of the Income Tax Act, 1961 - acceptable explanation to avoid penalty - Whether penalty under section 271(1)(c) could be sustained for addition of interest income on project funds. - HELD THAT: - The addition rested on the view that interest on project funds had accrued to the assessee and was not offered to tax. The Tribunal observed that the assessee consistently explained that interest related to designated project funds and was to be used for those purposes; there was no finding that the explanation was incorrect, false or inherently unbelievable. Given that the claim was transparently made and a plausible view existed that interest was not income of the assessee, the CIT(A)'s deletion of penalty was justified and interference was declined. [Paras 6]

Penalty in respect of addition of interest income on project funds deleted.

Amortization of leasehold land - capital v. revenue expenditure - penalty under section 271(1)(c) of the Income Tax Act, 1961 - debatable legal position / bona fide claim - Whether penalty under section 271(1)(c) could be sustained for disallowance of amortization claimed on leasehold land. - HELD THAT: - The Tribunal accepted the CIT(A)'s finding that at the time of filing the return the question whether amortization of leasehold land was allowable was not settled and was debatable; the claim had been made transparently and there was no material to show the explanation was false or unacceptable. As mere rejection of a deduction does not automatically warrant penalty when the issue was arguable at the relevant time, the deletion of penalty was upheld. [Paras 6]

Penalty in respect of amortization of leasehold land deleted.

Final Conclusion: All penalties under section 271(1)(c) challenged by the assessee for AY 2005-06 were deleted; the assessee's appeal is allowed and the Revenue's appeal is dismissed.

Deduction under section 54 of the Income-tax Act for investment in a residential house comprising multiple flats - Interpretation of 'residential house' in section 54/54F as including multiple residential units - Effect of development agreement - entitlement to built-up area as investment in new residential house - Application of coordinate bench and jurisdictional High Court precedents

Deduction under section 54 of the Income-tax Act for investment in a residential house comprising multiple flats - Interpretation of 'residential house' in section 54/54F as including multiple residential units - Application of coordinate bench and jurisdictional High Court precedents - Whether the assessee is entitled to claim deduction under section 54 in respect of all four flats allotted under the development agreement - HELD THAT: - The Tribunal found the issue to be squarely covered by its coordinate bench decision in Late K. Jaipal and others (ITA No.1188/Hyd/2015 dated 20-11-2015) which held that a 'residential house' for the purposes of section 54/54F can include multiple flats/residential units where the transaction relates to a percentage of built-up area under a development agreement rather than to discrete flat-by-flat transfers. The coordinate bench and the jurisdictional High Court decisions relied upon establish that prior to the 01.04.2015 amendment, investment in multiple flats forming the new residential house could attract exemption under section 54/54F, provided the property is to be regarded as one residential unit in the context of the transaction. Applying those precedents to the facts - namely receipt of multiple flats pursuant to a development agreement representing a share of built-up area - the Tribunal directed the Assessing Officer to allow the assessee's claim for deduction under section 54 in respect of all four flats. [Paras 8, 9]

Assessee's claim for deduction under section 54 in respect of all four flats is allowed and the appeal is allowed.

Final Conclusion: Following the coordinate-bench and binding jurisdictional precedents on the interpretation of 'residential house', the Tribunal allowed the assessee's claim for deduction under section 54 in respect of the four flats allotted under the development agreement for AY. 2010-11 and directed the Assessing Officer to give effect to the deduction; appeal allowed.

Preference of Double Taxation Avoidance Agreements where more beneficial - operation of section 206AA non-obstante clause vis-a -vis DTAA - section 90(2) supremacy of DTAA to the extent more beneficial - TDS deduction under section 195 and interplay with DTAA

Operation of section 206AA non-obstante clause vis-a -vis DTAA - preference of Double Taxation Avoidance Agreements where more beneficial - section 90(2) supremacy of DTAA to the extent more beneficial - TDS deduction under section 195 and interplay with DTAA - Whether section 206AA's higher TDS rate for non-furnishing of PAN overrides the concessional rates available under applicable DTAAs in respect of payments to non-residents. - HELD THAT: - The Tribunal applied the principle that where the provisions of a DTAA are more beneficial to a taxpayer, they govern the charging and deduction of tax by virtue of section 90(2). The Tribunal noted and followed the Special Bench decision in Nagarjuna Fertilizers (Hyderabad Special Bench), which held that section 206AA, though containing a non-obstante clause, must be read down so as not to negate concessional DTAA rates beneficial to non-resident payees. The Tribunal observed conflicting coordinate decisions but adhered to the Special Bench ratio that the charging provisions and beneficial treaty provisions override machinery provisions of the domestic law to the extent of benefit; therefore section 206AA cannot be applied to deny treaty relief where the DTAA is beneficial and applicable. Applying these principles to the facts, the Tribunal found no reason to interfere with the CIT(A)'s conclusion in favour of the assessee. [Paras 7]

Section 206AA does not override applicable DTAA rates which are beneficial to the non-resident deductees; the CIT(A)'s decision in favour of the assessee is upheld and Revenue's grounds on this point are dismissed.

TDS deduction under section 195 and interplay with DTAA - preference of Double Taxation Avoidance Agreements where more beneficial - Whether the AO should consider the PANs subsequently furnished and the applicability of DTAA rates where PANs were later made available. - HELD THAT: - The Tribunal recorded that revised Form 27Q filed by the assessee, containing PANs to the extent obtained, had been processed and resulted in reduction of demands; the CIT(A) directed the AO to verify those payments where DTAA applied and, if deductions conform to the DTAA rates, to reduce the demand accordingly. The Tribunal noted that AO had accepted some PANs and treated the Revenue's ground seeking to restrict consideration of PANs to those available at the time of deduction as infructuous. The Tribunal therefore sustained the CIT(A)'s direction requiring verification and adjustment by the AO. [Paras 4, 8]

The AO is to verify the deductees for whom DTAAs apply and, where the deductions conform to treaty rates (including cases where PANs were subsequently furnished and accepted), reduce the demand as directed by the CIT(A); the Revenue's ground limiting consideration of subsequently furnished PANs is dismissed as infructuous.

Final Conclusion: Both Revenue appeals are dismissed; the CIT(A)'s order upholding the application of DTAA rates over section 206AA in the facts of these cases is affirmed and the matter is remitted to the AO for verification and consequential adjustment where DTAA rates apply and PANs have been accepted.

Exemption under section 10A - manufacture or production of computer software - scope of "computer software" under Explanation 2(b) and Board notification - precedential effect of coordinate-bench Tribunal decision in assessee's own case

Exemption under section 10A - scope of "computer software" under Explanation 2(b) and Board notification - precedential effect of coordinate-bench Tribunal decision in assessee's own case - Assessee entitled to deduction under section 10A for AY 2007-08. - HELD THAT: - The Tribunal examined the material placed before the authorities, including invoices, SOFTEX forms and the Transfer Pricing Officer's finding that the assessee rendered services to its parent, and applied the definition of "computer software" in Explanation 2(b) read with the Board notification which brings specified services within the scope of computer software. The Coordinate Bench of the ITAT in the assessee's own case for AY 2006-07 (paras 5-9 of that decision) had considered identical facts and law, upheld the CIT(A)'s allowance of section 10A benefit, and found that the assessee had satisfactorily established development/export of software or notified services. Following that precedent, the Tribunal in the present appeal found no legal infirmity in the CIT(A)'s conclusion and observed that the CIT(A)'s reasoning is unassailable and does not warrant interference. [Paras 7, 8]

CIT(A)'s allowance of deduction under section 10A is upheld and the Revenue's appeal is dismissed.

Final Conclusion: The order of the CIT(A) allowing exemption under section 10A for AY 2007-08 is affirmed following the coordinate-bench Tribunal decision in the assessee's own case; the Revenue's appeal is dismissed and the assessee's cross-appeal is dismissed as infructuous.

Deduction under Section 80IC - income "derived from" versus "attributable to" - nexus between service/AMC charges and manufacturing business - AMC charges as income directly relatable to industrial undertaking

Deduction under Section 80IC - nexus between service/AMC charges and manufacturing business - Assessee is entitled to claim deduction under Section 80IC in respect of annual maintenance contract (AMC) / service charges received. - HELD THAT: - The Tribunal considered whether receipts from AMC/service charges are profits "derived from" the assessee's eligible industrial undertaking so as to qualify for deduction under Section 80IC. Relying on earlier decisions, including the Tribunal's decision in Spray Engineering Devices Ltd. and the Bombay High Court's decision in International Data Management Ltd. , the Tribunal held that where service receipts arise directly from the manufacture, commissioning, erection or sale of customer-specific equipment and there is a direct nexus between such receipts and the industrial operations, those receipts constitute income derived from the business. The Tribunal rejected the Revenue's contention that servicing is a secondary activity unconnected with the eligible business, and followed the reasoning that amounts received for after sales obligations (such as commissioning, erection or AMC for goods manufactured and supplied by the assessee) are directly relatable to the industrial undertaking and therefore eligible for the Section 80IC deduction. Having found such direct nexus on the facts before it, the Tribunal allowed the assessee's claim for both assessment years. [Paras 11, 12, 13]

Claim of deduction under Section 80IC in respect of AMC/service charges upheld for AY 2006-07 and AY 2007-08; appeals allowed.

Final Conclusion: Both appeals are allowed: the Tribunal holds that AMC/service charges received by the assessee are directly relatable to its manufacturing business and qualify for deduction under Section 80IC for assessment years 2006-07 and 2007-08.

Concealment of particulars of income - furnishing inaccurate particulars of income - notice under section 274 read with section 271(1)(c) of the Act - invalidity of penalty notice for vagueness - opportunity to be heard / principles of natural justice

Notice under section 274 read with section 271(1)(c) of the Act - invalidity of penalty notice for vagueness - concealment of particulars of income - furnishing inaccurate particulars of income - opportunity to be heard / principles of natural justice - Whether the penalty imposed under section 271(1)(c) is sustainable where the show-cause notice did not specify whether it was issued for concealment of particulars of income or for furnishing inaccurate particulars of income. - HELD THAT: - The Tribunal examined the show-cause notice and found that the relevant portion left both alternatives intact and did not specify which offence was the basis for initiating penalty proceedings. Reliance was placed on decisions of the Co-ordinate Bench and the Hon'ble Karnataka High Court (as affirmed by the Apex Court) holding that initiation of proceedings on one ground and imposing penalty on another or on either of two grounds without having specifically called upon the assessee to meet those grounds offends the requirements of fair notice and natural justice. Where the notice is vague or ambiguous as to the charge, the assessee is prejudiced in defending the case; the penalty order must therefore be confined to the grounds on which proceedings were initiated and put to the assessee. Applying those principles to the facts, the Tribunal concluded that the notice was illegal and the resultant penalty could not be sustained. [Paras 8, 9, 10]

Penalty proceedings initiated by an ambiguous notice which did not specify whether it was for concealment or for furnishing inaccurate particulars are invalid; the penalty imposed under section 271(1)(c) is quashed.

Final Conclusion: The appeal is allowed and the penalty under section 271(1)(c) is quashed because the show-cause notice failed to specify the precise charge, thereby rendering the penalty proceedings invalid.

Classification of vessels under Customs Tariff headings - Distinction between vessels designed for navigation and vessels with navigability subsidiary to main function - Principle of specific entry preference in tariff classification - Characterisation of barges versus floating cranes

Classification of barges under Heading 8901 vs Heading 8905 - Navigability as determinative feature for Heading 8901 - Heading 8905 covering vessels whose navigability is subsidiary to main function - Imported dumb barges lacking self-propulsion are classifiable under Heading 8905 and not under Heading 8901. - HELD THAT: - The tribunal examined the physical characteristics and primary function of the imported barges and applied the tariff classification principles. Although described as "barges", the vessels lacked engines for self-propulsion and required towing by tugs. The tribunal held that Heading 8901 applies to vessels designed for navigation (i.e., having the capacity to navigate under their own power) and that navigability is a prime characteristic for classification under Heading 8901. Where navigability is subsidiary to the main function, Heading 8905 is the appropriate classification. The imported units, being equipped with cranes and used chiefly to load/unload and move cargo between ship and shore with navigation not intrinsic to their operation, fall within Heading 8905 as vessels whose navigability is subsidiary to their main function. The tribunal considered the appellant's reliance on specific-entry preference and earlier authorities but concluded those decisions were distinguishable on the facts (notably the presence of self-propulsion in some earlier cases). Applying the determinative feature test to the material facts, the tribunal upheld classification under Heading 8905. [Paras 6, 7]

Appeals dismissed; impugned order upholding classification under Heading 8905 is affirmed.

Final Conclusion: The tribunal affirmed the Commissioner (A)'s classification of the imported dumb barges as vessels covered by Heading 8905 (navigability subsidiary to main function) on the ground that absence of self-propulsion precludes classification under Heading 8901; the appeals are rejected.

Confiscation in absence of seizure - redemption fine - penalty under Section 112(a) of the Customs Act - pre shipment certificate requirement for import of unshredded metallic scrap - designated ports for import of unshredded/compressed scrap

Confiscation in absence of seizure - redemption fine - Validity of order of confiscation and imposition of redemption fine where goods were not seized because they were not available/consumed - HELD THAT: - The Tribunal applied binding precedents holding that confiscation cannot be ordered in the absence of seizure of the goods. On the facts, the goods were not seized as they were not available and had already been consumed. In those circumstances an order directing confiscation subject to payment of a redemption fine was held not sustainable in law, and the redemption fine could not be imposed. The Tribunal therefore set aside the redemption fine by following the ratios of the cited decisions. [Paras 6]

Redemption fine set aside and the order of confiscation held not sustainable in law for want of seizure.

Penalty under Section 112(a) of the Customs Act - confiscation in absence of seizure - Whether penalty under Section 112(a) can be imposed where there was no seizure and confiscation is not sustainable - HELD THAT: - The Tribunal reasoned that imposition of penalty under Section 112(a) is contingent on acts or omissions that render goods liable to confiscation. Where confiscation cannot be validly ordered because there was no seizure, the consequential imposition of penalty under Section 112(a) is unsustainable. Applying this principle to the facts, the Tribunal held that once the redemption fine/confiscation was set aside for want of seizure, the penalty could not stand and must be set aside as well. [Paras 6]

Penalty under Section 112(a) quashed consequent to failure to sustain confiscation/redemption fine.

Final Conclusion: The appeal is allowed: the order imposing redemption fine and penalty is set aside because confiscation could not be ordered in the absence of seizure, and the consequential penalty under Section 112(a) cannot be sustained.

Classification of Rubber Process Oil - classification under Customs Tariff Heading 27079900 - exclusion from Heading 2710 where aromatic constituents predominate by weight - reliance on chemical test report showing aromatic content - hazardous waste characterisation under Hazardous Waste (Management, Handling & Trans-boundary Movement) Rules, 2008 - application of Tribunal precedent

Classification of Rubber Process Oil - classification under Customs Tariff Heading 27079900 - exclusion from Heading 2710 where aromatic constituents predominate by weight - reliance on chemical test report showing aromatic content - application of Tribunal precedent - Rubber Process Oil imported by the appellants is classifiable under CTH 27079900 and not under CTH 2710. - HELD THAT: - The Tribunal affirmed that the determinative chemical test report(s) disclosed a high proportion of aromatic constituents (around 78% as recorded), bringing the goods outside the scope of Heading 2710 which excludes oils with a predominance by weight of aromatic constituents. The Explanatory Notes to Heading 2710 and Note 2 to Chapter 27 require that non-aromatic constituents exceed aromatic constituents for classification under petroleum oils (Heading 2710); that condition was not satisfied. The Tribunal relied on its prior decision in Kushal N. Desai, which similarly treated goods with predominant aromatic content as classifiable under Heading 2707/27079900 and observed that such residues may attract hazardous-waste considerations under the Hazardous Waste (Management, Handling & Trans boundary Movement) Rules, 2008. Applying that reasoning to the facts and the test-report evidence before it, the Tribunal concluded that the proper tariff entry is CTH 27079900 and sustained the impugned departmental orders upholding that classification.

Impugned orders classifying the Rubber Process Oil under CTH 27079900 are sustained and the appeals are dismissed.

Final Conclusion: All five appeals are dismissed; the classification of the imported Rubber Process Oil under CTH 27079900 (and not under Heading 2710) is upheld, applying the chemical test results and the Tribunal's precedent.

Levy of additional duty of customs under Section 3(1) of the Customs Tariff Act, 1975 equal to cess levied as duty of excise under the Rubber Act, 1947 - Cess treated as a duty of excise - Validity and applicability of Board circulars clarifying levy of additional customs duty - Effect of prior Tribunal and Larger Bench decisions on levy of additional customs duty

Levy of additional duty of customs under Section 3(1) of the Customs Tariff Act, 1975 equal to cess levied as duty of excise under the Rubber Act, 1947 - Cess treated as a duty of excise - Validity and applicability of Board circulars clarifying levy of additional customs duty - Precedential effect of Larger Bench decision in T.T.K.-LIG Ltd. and subsequent Tribunal/Supreme Court orders - Whether additional customs duty under Section 3(1) of the Customs Tariff Act, 1975 is leviable on imported rubber equal to the cess levied as a duty of excise under Section 12 of the Rubber Act, 1947, and whether the appellant is entitled to refund of the amounts collected. - HELD THAT: - The Tribunal examined the line of authorities and Board circulars and concluded that where cess is levied as a duty of excise, Section 3(1) of the Customs Tariff Act, 1975 mandates levy of an additional customs duty on like imported goods equal to that excise duty. Earlier Board circulars and subsequent clarificatory circulars (including the withdrawal of some earlier circulars) and the Larger Bench decision in T.T.K.-LIG Ltd. were considered material. The Larger Bench held that additional customs duty is leviable on imported rubber equal to the cess levied as excise under the Rubber Act. The Bench analysed subsequent Tribunal orders and Supreme Court dismissals of Revenue appeals (many dismissed without decision on merits) and observed that those dismissals did not negate the Larger Bench conclusion. Having regard to the statutory scheme, the Board clarifications, and the Larger Bench precedent, the Tribunal held that the additional duty under Section 3(1) is leviable on imported rubber where the cess is leviable as a duty of excise. Applying that legal conclusion to the present refund claims, the Tribunal found no merit in the appellants' plea for refund and sustained the orders rejecting the refund applications.

Additional customs duty under Section 3(1) of the Customs Tariff Act, 1975 is leviable on imported rubber equal to the cess treated as a duty of excise under the Rubber Act, 1947; the rejection of the appellants' refund claims is sustained and the appeal is dismissed.

Final Conclusion: The Tribunal holds that additional customs duty under Section 3(1) of the Customs Tariff Act, 1975 is leviable on imported rubber equal to the cess levied as a duty of excise under Section 12 of the Rubber Act, 1947; the refund claims are accordingly rejected and the appeal is dismissed.

Initial burden to prove smuggling lies on the Revenue in case of non-notified goods - Town seizure under Section 123 of the Customs Act, 1962 - Confiscation with redemption fine and further penalty under Section 112(a) of the Customs Act, 1962 - Distinction between notified and non-notified goods and its evidentiary consequences

Initial burden to prove smuggling lies on the Revenue in case of non-notified goods - Town seizure under Section 123 of the Customs Act, 1962 - Confiscation with redemption fine and further penalty under Section 112(a) of the Customs Act, 1962 - Whether the Show Cause Notice, order of confiscation with redemption fine and penalty could be sustained when the goods were non-notified readymade garments and Revenue failed to prove smuggling. - HELD THAT: - The Tribunal held that the seized readymade garments were non-notified goods freely importable and that, as a legal matter, the initial burden to establish smuggling in a town seizure of non-notified goods rests on the Department. The appellants produced documentary evidence and explanations of licit import and subsequent sale/dispatch; the revenue rejected that material on what the Tribunal found to be flimsy or presumptive grounds without adducing independent evidence of illicit import. The Tribunal observed that mere discrepancies in addresses on carrier documents, absence of some transport papers, or refusal to accept certain documents do not, by themselves, permit drawing an inevitable inference of smuggling. Reliance on presumptions without positive evidence was held insufficient to sustain confiscation, redemption fine and the additional penalty under the Customs Act. Applying these principles to the facts, the Tribunal concluded the Show Cause Notice and the orders of confiscation and penalty were unsustainable.

The order of confiscation, redemption fine and penalty is set aside; appeal allowed and goods to be released (or sale proceeds given) with consequential benefits in accordance with law.

Final Conclusion: The Tribunal allowed the appeal, set aside the orders of confiscation, redemption fine and penalty after finding that Revenue failed to discharge the initial burden to prove smuggling of non-notified goods; the seized goods are to be released (or sale proceeds returned) and consequential benefits granted in accordance with law.

Bona fide dispute - winding-up petition as abuse of process - summary nature of winding-up proceedings - arbitration clause and forum of dispute resolution - company's inability to pay versus disputed debt - relegation to arbitration or civil forum

Bona fide dispute - company's inability to pay versus disputed debt - summary nature of winding-up proceedings - There exists a bona fide and substantial dispute between the parties as to the liability and the amount allegedly owing, which precludes the petitioner from treating the debt as undisputed for the purpose of a winding-up petition. - HELD THAT: - The Court found divergent claims by the parties on the value of goods supplied and the amounts due, including materially different figures advanced at different stages by both sides. The respondent disputed the quantity and value of supplies and asserted breach and cancellation of the contract; the petitioner has shifted its claimed quantum across various notices and the petition. The account reconciliation relied on by the respondent was hotly disputed by the petitioner with respect to multiple heads of deduction. Given these contested questions of fact and the absence of an undisputed debt, the petition founded on the alleged liability cannot be sustained. The Court applied the established principle that where a creditor's debt is bona fide disputed on substantial grounds, a winding-up petition should be dismissed and the dispute left to appropriate proceedings rather than a summary company process. [Paras 11, 12, 13, 14, 16]

The dispute as to liability and amount is bona fide and substantial, and therefore the debt cannot be characterised as an undisputed ground for winding up.

Arbitration clause and forum of dispute resolution - winding-up petition as abuse of process - relegation to arbitration or civil forum - The existence of an arbitration clause and pending arbitral proceedings renders the winding-up petition an improper forum and indicates prima facie abuse of process and forum shopping. - HELD THAT: - The contract contains an arbitration clause and both parties have initiated or are active before the Arbitral Tribunal and related courts under the Arbitration & Conciliation Act. The petitioner has also invoked interim reliefs before civil courts and the respondent has sought relief under Section 14 in another High Court, demonstrating parallel proceedings. Once parties have taken recourse to the contractual remedy of arbitration, the Company Court should not entertain a winding-up petition which appears aimed at exerting pressure or amounting to forum shopping. Considering the summary character of winding-up proceedings and the risk of prejudicing the respondent's credit and reputation, the Court concluded that the petition is prima facie an abuse and the parties should be relegated to arbitration or appropriate civil forum for full adjudication on merits. [Paras 15, 16, 17]

Presence of an arbitration clause and pending arbitral proceedings makes the winding-up petition inappropriate and prima facie an abuse of the Court's process; parties should pursue arbitration or appropriate civil remedies.

Final Conclusion: For the reasons stated, having found a bona fide dispute on substantial grounds and pending arbitration proceedings, the winding-up petition is dismissed as devoid of merit.

Relevant date for refund of export of services is date of receipt of foreign exchange - Section 11B limitation applies to refunds under Rule 5 of the Cenvat Credit Rules, 2004 as made applicable by Notification No.5/2006 - services used in the export of goods which satisfy the definition of Input Service under Rule 2(l) of the Cenvat Credit Rules, 2004 are eligible for refund under Rule 5 - Rent a Cab, Catering, Mobile/Telephone, Courier, Advertising and Marketing, Professional and Banking services qualify as Input Services

Relevant date for refund of export of services is date of receipt of foreign exchange - Section 11B limitation applies to refunds under Rule 5 of the Cenvat Credit Rules, 2004 as made applicable by Notification No.5/2006 - Limitation for refund claim of Rs. 6,04,051/- relating to export of services - HELD THAT: - The Tribunal rejected the appellant's contention that Notification No.5/2006-CE(NT) is inapplicable and held that Section 11B limitation applies to refund claims under Rule 5 of the Cenvat Credit Rules, 2004 as prescribed by the Notification. However, where the refund arises from export of services, export is complete only upon receipt of foreign exchange under the Export of Service Rules; accordingly the relevant date for computing limitation for such refund is the date of receipt of foreign remittance. The record did not disclose the date of receipt of remittance in the present case, therefore the question of timeliness requires factual verification by the adjudicating authority for calculation of the period of limitation and the refundable amount. [Paras 6, 7, 8]

Matter remanded to the adjudicating authority to verify and determine the date of receipt of foreign remittance and compute limitation accordingly; Section 11B limitation applies as made applicable by Notification No.5/2006.

Services used in the export of goods which satisfy the definition of Input Service under Rule 2(l) of the Cenvat Credit Rules, 2004 are eligible for refund under Rule 5 - Rent a Cab, Catering, Mobile/Telephone, Courier, Advertising and Marketing, Professional and Banking services qualify as Input Services - Eligibility of refund claim of Rs. 18,58,545/- on account of service tax paid on specified services used in export of goods - HELD THAT: - The Tribunal found that the services in question - Rent a Cab Service, Catering Service (Canteen), Mobile/Telephone Service, Courier Service, Advertising and Marketing Service, Professional Service and Banking Service (HP Finance Service) - have been held to be 'Input Service' in previous decisions relied upon by the appellant, and the Revenue did not place any contrary authority. Consequently, the credit availed on service tax paid in relation to these services, when used in the export of finished goods, is admissible for refund under Rule 5 of the Cenvat Credit Rules, 2004. [Paras 4, 8]

Refund claim of Rs. 18,58,545/- on account of the specified services is allowable as these services qualify as Input Services and the credit is admissible for refund under Rule 5.

Final Conclusion: Appeal disposed by remanding the issue of limitation for the refund claim relating to export of services to the adjudicating authority for verification of date of receipt of foreign remittance; claim of refund in respect of the specified services upheld as admissible Input Services under Rule 5 of the Cenvat Credit Rules, 2004.

Refund of CENVAT credit on input services - definition of input service under CENVAT Credit Rules - nexus between input services and output services - technical testing and analysis as input service - real estate agent services as input service - remand for reasoned decision on claimed input services

Real estate agent services as input service - nexus between input services and output services - Refund claim in respect of CENVAT credit paid on real estate agent services was allowed. - HELD THAT: - The Tribunal found that real estate agent services fall within the ambit of the definition of input service under the CENVAT Credit Rules and are related to the business activities of the appellant. The services were availed to provide residential accommodation for engineers and employees engaged in the appellant's exported service activities, demonstrating a sufficient nexus with the output services. On this basis the denial of refund by the Commissioner (A) for want of nexus was held unsustainable and refund was allowed. [Paras 6]

Refund of CENVAT credit on real estate agent services is allowed.

Technical testing and analysis as input service - quality control and testing in relation to output services - Refund claim in respect of CENVAT credit paid on technical testing and analysis services was allowed. - HELD THAT: - The Tribunal concluded that technical testing and analysis services constitute input services under the CENVAT Credit Rules and are integrally related to the appellant's business of providing engineering, design and development services. External testing-such as materials testing, software verification and environmental tests-was held to be essential for ensuring the quality of the output services, and therefore the Commissioner (A)'s rejection of refund on these grounds was set aside. [Paras 6]

Refund of CENVAT credit on technical testing and analysis services is allowed.

Advertisement services - cargo handling services - remand for reasoned order - Claims for refund of CENVAT credit on advertisement services and cargo handling services were remanded for fresh, reasoned consideration. - HELD THAT: - The Tribunal observed that the Commissioner (A) did not return any findings on the refund claims relating to advertisement and cargo handling services in the impugned order. Given the absence of a reasoned determination, the matter was remitted to the Commissioner (A) for adjudication afresh after affording opportunity to the appellant and keeping in view the relevant decisions cited by the appellant. The remand is for a reasoned order and not a final adjudication on merits by the Tribunal. [Paras 6]

Matter remanded to the Commissioner (A) to decide the refund claims in respect of advertisement and cargo handling services by a reasoned order after giving opportunity to the appellant.

Final Conclusion: The appeal is allowed in part: refunds in respect of real estate agent services and technical testing and analysis services are directed to be allowed, while claims relating to advertisement and cargo handling services are remanded to the Commissioner (A) for fresh, reasoned consideration after giving the appellant an opportunity.

Definition of exempted service under Rule 2(e) of the Cenvat Credit Rules, 2004 - embargo on utilization of cenvat credit under Rule 6(3) of the Cenvat Credit Rules, 2004 - exemption under Notification No.8/2005 ST - distinction between service tax exemption and Central Excise exemption (Notification 214/86 CE)

Definition of exempted service under Rule 2(e) of the Cenvat Credit Rules, 2004 - embargo on utilization of cenvat credit under Rule 6(3) of the Cenvat Credit Rules, 2004 - exemption under Notification No.8/2005 ST - Whether the exemption granted by Notification No.8/2005 ST for job work activities qualifies as an "exempted service" under Rule 2(e) and thereby attracts the embargo in Rule 6(3) restricting utilization of cenvat credit. - HELD THAT: - The Tribunal noted that Rule 2(e) defines "exempted service" to include taxable services which are exempt from payment of service tax and that the exemption under Notification No.8/2005 ST was availed by the appellant on fulfilment of the prescribed condition that goods processed by the job worker are returned to the client for use in manufacture where appropriate excise duty is payable. The exemption is therefore conditional but results in non payment of service tax on the taxable service provided by the job worker. On that basis the Tribunal held that such services fall within the definition of "exempted service" in Rule 2(e) and consequently the mischief of Rule 6(3) - which restricts the utilization of cenvat credit where exempted services are involved - is attracted. The Tribunal applied this legal principle to sustain the demand for wrongly utilized cenvat credit and associated interest and penalties as confirmed by the adjudicating authority. [Paras 5]

Exemption under Notification No.8/2005 ST is an "exempted service" for the purposes of Rule 2(e), and the embargo in Rule 6(3) is attracted.

Distinction between service tax exemption and Central Excise exemption (Notification 214/86 CE) - Whether the Tribunal's precedents applying Notification 214/86 CE (Central Excise) to permit cenvat credit to job workers are applicable to exemption under Notification No.8/2005 ST. - HELD THAT: - The Tribunal distinguished the Central Excise regime under Notification 214/86 CE from the service tax exemption under Notification No.8/2005 ST. Notification 214/86 CE operates in a context where the product processed by the job worker ultimately bears excise duty at the hands of the principal manufacturer, and prior Tribunal decisions allowing cenvat credit to job workers under that notification were founded on that continuing incidence of duty. By contrast, Notification No.8/2005 ST exempts the service tax on job work where the process does not amount to manufacture and there is no subsequent service tax liability on the principal manufacturer. Therefore the rationale of decisions under 214/86 CE is not applicable to Notification No.8/2005 ST, and those precedents do not preclude application of Rule 6(3) in the present case. [Paras 6]

Decisions construing Notification 214/86 CE are inapplicable to Notification No.8/2005 ST; the exemption under the latter does not afford the appellant the same entitlement to cenvat credit as in the 214/86 CE context.

Final Conclusion: The Tribunal upheld the adjudicating authority's finding that the job work exemption under Notification No.8/2005 ST amounts to an "exempted service" under Rule 2(e) and attracts the embargo in Rule 6(3); the appellant's reliance on precedents under Notification 214/86 CE was rejected and the appeal was dismissed.

Extended period of limitation - suppression of facts - proviso to Section 73(1) of the Finance Act, 1994 - supersession of show cause notice - reliance on same audit report for successive SCNs

Extended period of limitation - suppression of facts - proviso to Section 73(1) of the Finance Act, 1994 - supersession of show cause notice - Validity of invoking the extended period in the second show cause notice dated 11.04.2012 when an earlier show cause notice dated 05.01.2011 had already invoked the extended period in respect of the same services and facts. - HELD THAT: - The Tribunal affirmed the adjudicating authority's conclusion that the second show cause notice could not validly invoke the proviso to Section 73(1) for an extended period where the first show cause notice had already invoked the extended period on the same parties, contract and service transactions. The adjudicator found that the department was aware of the relevant activities when it issued the first notice and therefore could not invoke the suppression clause a second time in respect of the same activity/transaction. The earlier invocation of extended limitation by the first notice precluded relitigation of the extended-period demand in the subsequent notice, and demands beyond the normal period based on the second notice were hit by limitation and liable to be dropped. [Paras 5, 6, 8]

Second show cause notice dated 11.04.2012 cannot invoke extended limitation for the same facts already covered by SCN dated 05.01.2011; demands beyond the normal period under the second SCN are barred by limitation and are to be dropped.

Reliance on same audit report for successive SCNs - extended period of limitation - Permissibility of issuing a second SCN invoking extended period when it relies on the same audit report that formed the basis of the first SCN. - HELD THAT: - The Tribunal endorsed the finding that where the first show cause notice was issued based on an audit report invoking the extended period, the same audit point could not be the foundation for a fresh invocation of the extended period in a subsequent notice. Because the second SCN referred to and rested on the same audit paras as the first, it could not validly resurrect an extended-period demand already within the department's knowledge; consequently the extended-period portion of the second SCN was unsustainable. [Paras 7, 8]

The department could not issue a second SCN invoking the extended period on the basis of the same audit report that gave rise to the first SCN; such extended-period demand in the second SCN is unsustainable.

Final Conclusion: The Revenue's appeal is rejected; the adjudicating authority correctly dropped demands sought to be sustained beyond the normal period by the second SCN dated 11.04.2012 because the extended period could not be validly invoked again on the same facts and audit report already the subject of SCN dated 05.01.2011.

Refund of service tax under Notification No.41/2007-ST - interaction between service tax refund and customs drawback - specified services qualifying for refund - effect of Notification No.33/2008-ST removing relevance of drawback for refund - All Industry Rate of Drawback and Notification No.80/2006-Cus.(NT)

Refund of service tax under Notification No.41/2007-ST - interaction between service tax refund and customs drawback - specified services qualifying for refund - effect of Notification No.33/2008-ST removing relevance of drawback for refund - All Industry Rate of Drawback and Notification No.80/2006-Cus.(NT) - Refund of service tax payable under Notification No.41/2007-ST is available notwithstanding that the goods exported have availed customs drawback. - HELD THAT: - The Tribunal examined the ground of rejection which rested on the principle that refund cannot be considered where exporters have claimed drawback. Having regard to Notification No.80/2006-Cus.(NT) which indicates that incidence of service tax on input services has been factored into the All Industry Rate of Drawback, and to the amendments effected by Notification No.33/2008-ST which omitted the relevance of drawback for refund under Notification No.41/2007-ST, the Tribunal held that specified services covered by Notification No.41/2007-ST (as substituted and amended) qualify for refund even if drawback has been claimed. The Tribunal thus concluded that the rejection of the refund claims on the ground of claimed drawback was erroneous and directed refund in accordance with law.

Both appeals by the assessee are allowed; the impugned orders rejecting the refund claims are set aside and the appellant is entitled to refund under Notification No.41/2007-ST; the Adjudicating Authority to grant refund within 60 days with interest as per rules.

Dismissal of appeal as infructuous - Appeal No.ST/1038/2010 filed by Revenue is dismissed as infructuous. - HELD THAT: - In view of the Tribunal's decision allowing the appellant's refund claims and setting aside the impugned orders, the Revenue's earlier appeal challenging the remand/order stands rendered without practical consequence and is accordingly dismissed as infructuous.

Revenue's Appeal No.ST/1038/2010 is dismissed as infructuous.

Final Conclusion: The Tribunal allowed the assessee's refund appeals, set aside the orders rejecting refund claims under Notification No.41/2007-ST, directed the Adjudicating Authority to grant the refunds with interest within 60 days, and dismissed the Revenue's appeal as infructuous.

Rectification of mistake - apparent error on the face of the record - veracity of facts as per appeal memorandum - allegations against counsel in appellate proceedings

Rectification of mistake - apparent error on the face of the record - veracity of facts as per appeal memorandum - Whether the Revenue's Review/Rectification of Mistake (ROM) application established an apparent mistake on the face of the Final Order dated 31/08/2016 in Appeal No. ST/70081/2016. - HELD THAT: - The Tribunal examined the ROM application allegation that dates of realisation of export proceeds had been wrongly recorded in the Final Order. The record (specifically Para 13 of the appeal memorandum in ST/70081/2016) was compared with the statements in Para 4 of the Final Order. The Tribunal found that the dates and facts recorded in the Final Order tally with the appeal memorandum and therefore there was no apparent factual mistake on the face of the record warranting rectification. The contention that the ROM could be considered only in respect of the particular appeal was acknowledged and the Tribunal confined its consideration to Appeal No. ST/70081/2016. [Paras 3]

ROM application dismissed for failure to demonstrate any apparent mistake on the face of the record; the Final Order's facts were held to tally with the appeal memorandum.

Allegations against counsel in appellate proceedings - veracity of facts as per appeal memorandum - Whether the allegations in the ROM application that the counsel had wrongly submitted dates of realisation were justified and whether such allegations warranted any consequence. - HELD THAT: - The Tribunal considered the appellant's objection to the Revenue Officer's statement that the counsel had wrongly submitted dates, noting that the appellant had placed identical dates in the appeal memorandum which had been served on Revenue and argued in court in the presence of the Revenue representative. On comparing the records, the Tribunal held the allegations in the ROM application to be incorrect. The Tribunal observed that making such false allegations against counsel is objectionable and a wasteful exercise, but did not impose costs or any further sanction in the order under review. [Paras 3]

The allegations against the counsel were held to be unfounded; no rectification or sanction was ordered against the counsel or on account of the allegation.

Final Conclusion: The Revenue's ROM application in Appeal No. ST/70081/2016 was dismissed: the Final Order's factual findings matched the appellant's appeal memorandum and no apparent error on the face of the record was made out; the Tribunal also found the Revenue's allegation against counsel to be incorrect but did not impose any sanction.

Refund under Notification No. 41/2007-ST - port service-Terminal Handling Charges and Bill of Lading - Goods Transport Agency service-burden of proof on revenue for to-and-fro transportation - limitations of adjudication beyond show cause notice

Port service-Terminal Handling Charges and Bill of Lading - refund under Notification No. 41/2007-ST - The appellant's entitlement to refund of Terminal Handling Charges and Bill of Lading charges under Notification No. 41/2007-ST. - HELD THAT: - The Tribunal accepted the view expressed by the Hon'ble Gujarat High Court in AIA Engineering Pvt. Ltd. that Terminal Handling Charges fall within the ambit of port services. Applying that legal position, the Tribunal held that such charges (including Bill of Lading charges) qualify for refund under Notification No. 41/2007-ST dated 06.10.2007 and the appellant is therefore entitled to the claimed refund on these services.

Appellant entitled to refund of Terminal Handling Charges and Bill of Lading charges under Notification No. 41/2007-ST.

Goods Transport Agency service-burden of proof on revenue for to-and-fro transportation - refund under Notification No. 41/2007-ST - The appellant's entitlement to refund of Goods Transport Agency (GTA) service charges under Notification No. 41/2007-ST where Revenue alleged payment for transportation to-and-fro. - HELD THAT: - The Tribunal relied on the appellant's earlier decision in its own case for prior periods and noted that Revenue produced no documentary evidence to substantiate the allegation that transportation charges were paid for to-and-fro movement between factory and port. The appellant's explanation that charges were only for transportation from factory to port remained uncontroverted on record. In absence of proof by Revenue, the claim for refund of GTA service charges was accepted under Notification No. 41/2007-ST.

Appellant entitled to refund of Goods Transport Agency service charges under Notification No. 41/2007-ST, since Revenue failed to prove to-and-fro payments.

Limitations of adjudication beyond show cause notice - Validity of the lower authority's observations rejecting the refund on grounds of limitation and on account of the appellant having claimed drawback when such grounds were not raised in the show cause notice. - HELD THAT: - The Tribunal observed that the issues of time-bar and the appellant's drawback claim were not included in the show cause notice. Consequently, the observations and findings on those matters by the lower authority amounted to adjudication beyond the scope of the notice and were held not maintainable.

Findings rejecting the refund as time-barred or by reason of claimed drawback are not maintainable as they were not raised in the show cause notice.

Final Conclusion: The appeal is allowed: the appellant is entitled to refund of Terminal Handling Charges and Bill of Lading charges as port services, entitled to refund of Goods Transport Agency service charges due to absence of evidence by Revenue of to-and-fro transportation payments, and the lower authority's observations on limitation and drawback (not raised in the show cause notice) are not maintainable.

Assessable value of scrap - duty liability on job work scrap - comparative valuation with in house scrap - cum duty benefit for irrecoverable/processing loss - remand for recalculation of duty - penalty under Section 11AC of the Central Excise Act

Assessable value of scrap - comparative valuation with in house scrap - Admissibility of the value of Rs. 4/- per kg adopted by the appellant for assessing duty on scrap generated at job workers' premises, as opposed to the department's proposed value of Rs. 5.80/- per kg. - HELD THAT: - The Tribunal found no coherent reason or evidence to support adoption of the higher value of Rs. 5.80/- per kg which is the price for scrap generated and sold from the appellant's own factory. Scrap generated at job workers' premises during machining is distinct from in house scrap; the department produced no material to show job workers sold scrap at rates higher than Rs. 4/- per kg. In these circumstances the appellant's contractual arrangement of adjusting job charges by Rs. 4/- per kg and discharging duty on the physically available scrap at that value was upheld. Consequently no further duty could be demanded on the physically available scrap beyond that already discharged at Rs. 4/- per kg, and no penalty could be imposed in respect of that discharged duty. [Paras 5]

Value of Rs. 4/- per kg adopted by the appellant for job worker scrap affirmed; department's demand based on Rs. 5.80/- rejected and no further duty or penalty sustained in respect of physically available scrap.

Cum duty benefit for irrecoverable/processing loss - duty liability on job work processing loss - remand for recalculation of duty - Treatment of duty liability on burning/transportation/irrecoverable processing loss and entitlement to cum duty benefit for such quantum. - HELD THAT: - The appellant conceded liability in respect of processing loss but requested cum duty benefit on the ground that no sale proceeds were collected. The Tribunal accepted that, for processing loss there is no sale and no duty collected by the appellant; therefore the notional value for such loss may be maintained at Rs. 4/- per kg but the appellants are entitled to cum duty benefit when computing duty. For the limited purpose of recalculating duty liability accordingly, the matter was remanded to the adjudicating authority to revise computations consistent with this direction. [Paras 5, 6]

Appellants entitled to cum duty benefit on irrecoverable/processing loss valued at Rs. 4/- per kg; matter remanded for revised calculation of duty liability.

Penalty under Section 11AC of the Central Excise Act - Extent of penalty payable by the appellant in view of payment of duty prior to show cause notice and the redetermined duty liability in respect of irrecoverable scrap. - HELD THAT: - The Tribunal noted that the appellants had paid the entire duty liability at Rs. 4/- per kg even before issuance of the show cause notice. Applying the beneficiary principle in Section 11AC, the Tribunal held that penalty should be reduced and ordered that penalty equal to 25% of the duty liability would be leviable, and only on the quantum of duty redetermined in respect of scrap found irrecoverable on account of burning/processing loss. This narrows the penalty exposure to a quarter of the recalculated duty on the specified quantum. [Paras 7]

Penalty under Section 11AC limited to 25% of the duty liability, and only on the duty redetermined for irrecoverable/processing loss.

Final Conclusion: The Tribunal upheld the appellant's adoption of Rs. 4/- per kg as the assessable value for job worker scrap and rejected the department's demand based on Rs. 5.80/-. The appellants were granted cum duty benefit for irrecoverable/processing loss (valued at Rs. 4/- per kg) and the matter was remanded for recalculation of duty. Penalty under Section 11AC was limited to 25% of the redetermined duty on the irrecoverable scrap.

Pre-deposit - provisional assessment - finalisation of provisional assessment - treatment of amount paid during pendency of provisional assessment as duty - interest on excess/differential duty paid prior to finalisation of assessment - charging of interest on differential amount of duty upon finalisation of provisional assessments

Pre-deposit - provisional assessment - treatment of amount paid during pendency of provisional assessment as duty - interest on excess/differential duty paid prior to finalisation of assessment - Whether the sum of Rs. One Crore, paid on directions of the Commissioner (Appeals) during the pendency and before finalisation of provisional assessment, is to be treated as a pre-deposit (non-duty) or as duty paid, and whether the respondent is entitled to interest on that amount for the intervening period after finalisation of assessment. - HELD THAT: - The Tribunal accepted the factual position that the respondent had sought provisional assessment because the exact quantum of discounts was unknown at the time of clearance; the adjudicating authority later finalised the assessment and directed duty which led to deposit of the sum in question. When this Tribunal finally held that no duty was payable, the provisional assessment became final and the amounts paid during the pendency must be regarded as duty paid prior to finalisation. Under the legal scheme dealing with provisional assessments, an assessee who pays duty during pendency but is later found to have overpaid is entitled to refund and interest on the excess or differential duty for the intervening period. The judgment refers to the charging mechanism in Section 37(2)(ibb) as recognising interest on differential amounts becoming payable or refundable upon finalisation of provisional assessments, and to the reasoning in precedents applying Rule 7(4) which fixes the commencement of interest from the month succeeding the month for which the amount is determined. Applying these principles, the amount paid during pendency is treated as duty, and interest on the excess paid is leviable for the intervening period; therefore the Commissioner (Appeals) correctly allowed interest on the refunded pre-deposit.

Amount paid during pendency of provisional assessment is treated as duty paid and respondent is entitled to interest on the excess/differential duty for the intervening period; the Commissioner (Appeals) was rightly held to have allowed interest.

Final Conclusion: The appeal filed by the Revenue is dismissed; the impugned order allowing interest on the amount paid during the pendency of provisional assessment is upheld.

Deemed exports treated as physical exports for refund purposes - refund under Rule 5 of CENVAT Credit Rules, 2004 - binding effect of higher judicial precedent / judicial discipline

Deemed exports treated as physical exports for refund purposes - refund under Rule 5 of CENVAT Credit Rules, 2004 - Whether clearances to SEZ/EOU that are in the nature of deemed exports are to be treated on par with physical exports for the purpose of calculating and granting refund under Rule 5 of the Cenvat Credit Rules, 2004. - HELD THAT: - The Commissioner (A) allowed the assessee's appeal relying on earlier judicial decisions including Virlon Textile Ltd. Vs. CCE and subsequent authorities, holding that Rule 5 of the Cenvat Credit Rules, 2004 does not distinguish between physical exports and deemed exports for the purpose of refund. The Tribunal accepted that the jurisdictional precedents, including the Tribunal's own decision in M/s. Solidius Hi Tech Products (P) Ltd. and the Gujarat High Court decision in NBM Industries , applying the Supreme Court view in Virlon Textile Ltd. , establish that refunds cannot be denied merely because supplies are deemed exports. The Tribunal therefore held itself bound by judicial discipline and affirmed the Commissioner (A)'s conclusion that clearances to SEZ/EOU on deemed export basis must be included in the export value while applying the refund formula under Rule 5. [Paras 6]

Clearances to SEZ/EOU treated as deemed exports are to be counted as exports for calculating refund under Rule 5 of the Cenvat Credit Rules, 2004; the Commissioner (A)'s allowance on this ground is upheld.

Verification of export quantum and CENVAT debit before sanction - Whether the refund claim required further verification on aspects of quantum of exports and debit in the CENVAT account before sanction of the refund. - HELD THAT: - While permitting inclusion of deemed exports in the refund computation, the Commissioner (A) directed the original authority to re verify particulars concerning the quantum of exports and proof of debit in the CENVAT account for the amounts claimed. The Tribunal endorsed this approach, observing that the lower authority must verify these factual and documentary aspects and sanction the refund on merits after such verification. [Paras 6]

The matter of quantum of exports and proof of debit in the CENVAT account is remanded to the lower authority for verification and sanction of refund on merits.

Final Conclusion: The appeal by Revenue is dismissed; the order of the Commissioner (A) allowing the refund claim insofar as deemed exports are treated as exports under Rule 5 CCR, 2004 is upheld, subject to verification of export quantum and CENVAT debit by the lower authority before sanctioning the refund.

CENVAT credit on capital goods - movable property versus immovable property - attachment to the earth test - mode and object of annexation - Board's clarification under section 37B regarding excisability of plant and machinery - imposability of penalty where legal position is in doubt

Movable property versus immovable property - attachment to the earth test - mode and object of annexation - Board's clarification under section 37B regarding excisability of plant and machinery - CENVAT credit on capital goods - Whether the plants/machinery erected at site are movable or immovable for the purpose of admissibility of CENVAT credit and therefore require fresh adjudication applying the tests laid down in the Board's section 37B order and judicial authorities. - HELD THAT: - The Tribunal held that the question of whether the plants are movable or immovable must be tested by applying the parameters set out in the Board's section 37B order and by reference to the established tests of annexation - mode (degree) of attachment and object (intention) of annexation - as explained in the cited Supreme Court authorities. The Tribunal observed that mere bolting of machinery to foundations intended to provide operational stability does not necessarily render the plant "attached to the earth" within the meaning of Section 3 of the Transfer of Property Act and the General Clauses Act. Given that the Board's order is exhaustive and that the same tests have been applied in the Department's and the appellant's subsequent departmental appeal decision in favour of the appellant (subject to limited disallowance), the Tribunal found it appropriate to remit the matter to the original adjudicating authority for de novo consideration. The adjudicating authority is directed to apply the tests in the Board's order after affording the appellant adequate opportunity to produce evidence, including additional evidence if required, and to re-examine admissibility of CENVAT credit in light of those tests and authoritative precedents. [Paras 6]

Remitted to the adjudicating authority for de novo consideration to apply the Board's section 37B tests and relevant judicial tests on attachment/annexation, with opportunity to the appellant.

Imposability of penalty where legal position is in doubt - CENVAT credit on capital goods - Whether penalty should be imposed for the disputed denial of CENVAT credit in view of the prevailing confusion addressed in the Board's section 37B order. - HELD THAT: - The Tribunal noted that the legal position on excisability and on whether the plant constitutes immovable property has been the subject of clarification and judicial consideration, and that the Board itself acknowledged areas of confusion in the section 37B order. For this reason, the Tribunal directed that the question of imposability of penalty be adjudicated afresh by the original authority concomitantly with the remand on the credit issue, allowing full opportunity to the appellant to defend and to place evidence. [Paras 7]

Penalty issue remanded for fresh adjudication by the adjudicating authority, after giving the appellant due opportunity.

Final Conclusion: The appeal is remanded to the adjudicating authority for de novo consideration of (a) the admissibility of CENVAT credit on the disputed plants/machinery applying the Board's section 37B tests and the annexation/mode-and-object principles, and (b) the question of imposability of penalty, with directions to afford the appellant adequate opportunity to produce evidence and defend its case.

CENVAT credit utilisation - applicable duties on inputs cleared to DTA - Central Excise duty as measure of customs duty for DTA clearances - extended period of limitation under Section 11A of the Central Excise Act, 1944 - precedential value of Tribunal's final order - prima facie nature of tribunal stay orders

CENVAT credit utilisation - applicable duties on inputs cleared to DTA - Central Excise duty as measure of customs duty for DTA clearances - extended period of limitation under Section 11A of the Central Excise Act, 1944 - precedential value of Tribunal's final order - Validity of utilising CENVAT credit balance to discharge applicable duties on inputs cleared from a 100% EOU to DTA - HELD THAT: - The appeals concern clearances from a 100% EOU of inputs (imported duty free under Notifications) to DTA after obtaining permission to effect such clearances on payment of applicable duties; the respondents discharged the applicable duties by debiting their CENVAT account and the show cause notices invoked Section 11A(1)/(4) seeking recovery of Central Excise duty. The Tribunal held that where the demand is for Central Excise duty (as invoked in the show cause notices), utilisation of CENVAT credit lying in balance for discharge of that duty is permissible. Rule 3(4) of the CENVAT Credit Rules permits utilisation of credit for payment of excise duty on final products or an amount equal to the credit taken on inputs removed as such; the Tribunal further relied on its earlier Final Order in Matrix Laboratories Ltd. which treated the duty payable on DTA clearances (for the period in question) as Central Excise duty measured by the aggregate of customs duties that would have been leviable on import. A Division Bench stay order relied upon by Revenue was treated as a prima facie view and not overruling the Tribunal's final decision; no contrary higher court ruling was shown. Applying that precedent and the law recorded in the show cause notices, the Tribunal rejected the Revenue's contention and sustained the CENVAT debit as valid discharge of the excise liability. [Paras 6, 7, 8]

The utilisation of the CENVAT credit balance by the 100% EOU to discharge the applicable duties on inputs cleared to DTA is held valid; Revenue's appeals are rejected.

Final Conclusion: Revenue's appeals are dismissed: where show cause notices demand Central Excise duty under Section 11A and duties on DTA clearances are treated as Central Excise duty measured by customs, CENVAT credit available may be utilised to discharge that liability; the Tribunal followed its earlier final order in Matrix Laboratories Ltd.; stay orders do not displace a binding final Tribunal decision.

SSI exemption - aggregate value of clearances where goods are cleared by one or more manufacturers from a factory - treatment of two concerns as one manufacturer / clubbing of clearances - fraudulent evasion of duty by creating separate registrations for same premises - penalty under Section 11AC of the Central Excise Act

SSI exemption - aggregate value of clearances where goods are cleared by one or more manufacturers from a factory - treatment of two concerns as one manufacturer / clubbing of clearances - Whether the clearances of M/s. Executive Forms (P) Ltd. and M/s. Honeywell Forms must be aggregated for claiming SSI exemption under Notification No.8/2002-CE as clearances by one or more manufacturers from a factory. - HELD THAT: - The Tribunal accepted the department's case that Honeywell Forms operated from the same premises, used the same machinery and a single electricity connection, and that the appellants intended to keep aggregate clearances within the rupee one crore limit by assigning a new door number. The court found there was no evidence to show two separate premises or separate machinery, raw materials or employees. Admissions in statements (paras 17-20 of the show cause notice) that a new door number was used to obtain separate exemption, the single electricity connection and use of same machinery were relied upon to establish the modus operandi. Technical objections about retraction of statements and other investigative shortcomings were rejected as insufficient to rebut the department's evidence. Applying the expression in clause (vi) of Notification No.8/2002-CE, the Tribunal held that clearances ought to be aggregated as clearances by one or more manufacturers from a factory and SSI exemption could not be availed separately by each unit. [Paras 4]

The clearances of the two concerns were to be clubbed and SSI exemption under Notification No.8/2002-CE could not be claimed separately; the demand for differential duty was upheld.

Penalty under Section 11AC of the Central Excise Act - confiscation and redemption on payment of fine - appellate reduction of penalties - Whether imposition of penalties and confiscation, and the reductions made by the Commissioner (Appeals), were sustainable. - HELD THAT: - The Tribunal observed that the original authority had afforded some relief (cum-duty benefit) and the Commissioner (Appeals) had further moderated penalties on the individual appellants. Considering the finding of intent to evade duty and the established modus operandi, the Tribunal found no reason to interfere with the appellate authority's exercise of discretion in confirming differential duty, upholding penalty under Section 11AC while reducing other penalties, and allowing redemption of confiscated goods on payment of fine. The Tribunal noted that investigative imperfections did not negate the evidence of fraudulent conduct and intent. [Paras 4, 5]

Penalties and confiscation measures as sustained and moderated by the Commissioner (Appeals) were held to be justified; the appellate order was upheld.

Final Conclusion: The Tribunal dismissed the appeals, holding that the clearances of Executive Forms and Honeywell Forms must be aggregated for SSI exemption purposes and that the demand, penalties and incidental orders as confirmed and moderated by the Commissioner (Appeals) were sustainable.

Admissibility of computer printouts and electronic data - reliance on third-party records for proving clandestine removal - requirement of opportunity for cross-examination under Section 9D - clandestine manufacture and removal - settlement commission determination and its effect

Admissibility of computer printouts and electronic data - reliance on third-party records for proving clandestine removal - clandestine manufacture and removal - Demand and penalties confirmed against M/s Spack Coaters Limited and its director set aside. - HELD THAT: - The Tribunal found that no search was conducted at the premises of M/s SCL and the records, pen drives and computer printouts relied upon were recovered from M/s PPPL. The impugned demand was founded primarily on third party electronic records not shown to have been maintained by M/s SCL in the ordinary course of its business. The conditions for admissibility under Section 36B were not satisfied or established: there was no proof that the computer was regularly used for the relevant activity, that the data was supplied in the ordinary course, or that the computer produced the printouts reliably. Evidence showed entries in PPPL's computer were made on oral instructions and were therefore not a proper business record of M/s SCL; pen drive data was also open to alteration and manipulation. Further, Revenue failed to examine witnesses and did not provide the appellant the opportunity to cross examine persons whose statements or recoveries were relied upon, contrary to Section 9D. In the absence of corroborative material connecting the seized third party records to clandestine manufacture or removal by M/s SCL, and given procedural shortcomings, the demand and penalties could not be sustained. [Paras 14, 15, 16]

Impugned orders as against M/s Spack Coaters Limited and its director are set aside and their appeals are allowed.

Settlement commission determination and its effect - requirement of show cause notice to proper parties - Penalties confirmed against M/s Panchwati Prayogshala Pvt. Ltd. and its director were set aside in view of settlement and related findings. - HELD THAT: - The Tribunal noted that M/s PPPL obtained a final order from the Settlement Commission in respect of the period 01/07/2007 to 14/07/2011, which accepted liability only for the period from 01/04/2011 to date of search and held that earlier periods were to be borne by the proprietorship units taken over on 01/04/2011. The Settlement Commission quantified duty for 01/04/2011 to 14/07/2011 and imposed specified consequences; it also observed full and true disclosure and exercised its powers under Section 32F(3). In view of that settlement and the absence of separate show cause notices addressed to the pre 01/04/2011 proprietorship units, the Tribunal concluded that penalties and demands confirmed against M/s PPPL and its director could not be sustained and should be set aside. [Paras 9, 17]

Penalties and consequential orders against M/s Panchwati Prayogshala Pvt. Ltd. and its director are set aside in accordance with the Settlement Commission's determination; appeals allowed.

Final Conclusion: The Tribunal allowed all four appeals: the demand and penalties confirmed against M/s Spack Coaters Limited and its director were set aside for lack of admissible/corroborative evidence and procedural defects; penalties against M/s Panchwati Prayogshala Pvt. Ltd. and its director were set aside in light of the Settlement Commission's determination for the relevant period.

Abatement of duty - suo motu claim for abatement - pro-rata duty liability - precedent value of tribunal decision - penalty under Rule 17 read with Section 11AC

Abatement of duty - suo motu claim for abatement - pro-rata duty liability - precedent value of tribunal decision - Whether the assessee was required to pay duty for the entire month first and thereafter claim abatement, or whether abatement for the period of factory closure could be claimed when paying duty for the subsequent month. - HELD THAT: - The Tribunal held that payment of duty for the whole month before claiming abatement is not a precondition. The matter was disposed of by applying the Tribunal's precedent in M/s Trimurti Fragrances Pvt. Ltd., which construed the relevant proviso to the Rules to permit recalculation of monthly duty on a pro-rata basis where manufacture/discontinuation commences or ceases mid-month; accepting the Department's contention would render that proviso redundant. On the facts, the assessee had sealed machines and remained closed for the period 16/01/2009-02/02/2009 and had paid duty for January 2009 and, while paying February 2009 duty, claimed abatement for the continuous closed period. The Tribunal found the precedent squarely applicable and concluded that the abatement could be taken without first paying duty for the entire month.

Abatement for the period of closure is allowable without first paying duty for the entire month; the Revenue's contention to the contrary is rejected and the appeal is dismissed on this point.

Penalty under Rule 17 read with Section 11AC - abatement of duty - Whether the penalty imposed under Rule 17 read with Section 11AC was sustainable insofar as it was predicated on the assessee having taken abatement suo motu for two days. - HELD THAT: - The adjudicating authority had imposed a penalty inter alia because it held that the assessee had taken abatement for two days (1-2 February) suo motu without first paying duty. Having held that claiming abatement when paying the subsequent month's duty is permissible, the basis for the penalty falls away. The Commissioner (Appeals) had set aside the order-in-original; the Tribunal, dismissing the Revenue's appeal, affirmed that the respondent-assessee is entitled to consequential benefits.

Penalty imposed under Rule 17 read with Section 11AC is not sustained on the facts and is effectively displaced by the allowance of abatement; consequential relief to the assessee granted.

Final Conclusion: The Revenue's appeal is dismissed. The Tribunal, following its precedent, allows the abatement for the period the unit remained closed without requiring prior payment of duty for the entire month and declines to sustain the penalty; the assessee is entitled to consequential benefits in accordance with law.

Cenvat Credit on common input services - reversal of proportionate Cenvat credit - imposition of penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 - absence of malafide intention - remand for verification of evidence

Cenvat Credit on common input services - reversal of proportionate Cenvat credit - imposition of penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 - absence of malafide intention - Whether imposition of penalty equal to the Cenvat credit availed on common input services was warranted where the assessee had reversed proportionate credit and produced a Chartered Accountant's certificate - HELD THAT: - The Tribunal found that the appellant did not dispute the liability to reverse proportionate Cenvat credit attributable to trading activities and had effected reversals earlier, supported by a Chartered Accountant's certificate dated 03.05.2017. Given the appellant's disclosure of reversal before the authorities below and the subsequent documentary certification, the Tribunal concluded that malafide intention could not be attributed to the appellant for availing credit on common input services used for both manufacturing and trading. The Tribunal also observed that remanding the matter to the adjudicating authority for verification of evidence would not serve any useful purpose in view of the documentary proof of reversal. Applying these findings, the Tribunal held that the penal provisions under Rule 15(2) read with Section 11AC were not warranted and modified the impugned orders accordingly.

Penalty imposed under Rule 15(2) read with Section 11AC set aside; appeals disposed modifying impugned orders to the extent of deleting the penalty.

Final Conclusion: The appeals are allowed to the extent that the penalty equal to the Cenvat credit availed on common input services is held unwarranted in view of the proportionate reversal supported by a Chartered Accountant's certificate; the impugned orders are modified accordingly.

Penalty under clause (ii) of Sub-rule (2) of Rule 26 of Central Excise Rules, 2002 - prospective operation of statutory amendment - non-retrospective application of penal provision

Penalty under clause (ii) of Sub-rule (2) of Rule 26 of Central Excise Rules, 2002 - prospective operation of statutory amendment - Imposition of penalty under clause (ii) of Sub-rule (2) of Rule 26 of Central Excise Rules, 2002 on clearances made prior to 01.03.2007 - HELD THAT: - The Tribunal held that Sub-rule (2) of Rule 26, as inserted by Notification No.08/2007-CE(T) dated 01.03.2007, came into operation only on 01.03.2007. The clearances in dispute relate to periods between 11.06.2003 and 31.05.2005 (including specific spans 16.05.2004 to 31.12.2004; 01.04.2005 to 31.05.2005; and 11.06.2003 to 31.01.2005). As the penal provision was introduced after those clearances, the learned Commissioner could not invoke clause (ii) of Sub-rule (2) of Rule 26 for imposing penalty in respect of those earlier clearances. Consequently the invocation of the amended provision for conduct predating its operation was not sustainable. [Paras 5]

Penalty imposed under clause (ii) of Sub-rule (2) of Rule 26 of Central Excise Rules, 2002 quashed as not applicable to the clearances made before 01.03.2007; appeals allowed.

Final Conclusion: Both appeals allowed; penalties imposed under the clause (ii) of Sub-rule (2) of Rule 26 of Central Excise Rules, 2002 set aside as the provision inserted w.e.f. 01.03.2007 was not applicable to the clearances for the periods 11.06.2003 to 31.05.2005 (and the specific sub-periods adjudicated); appellants entitled to consequential relief in accordance with law.

Excisability of by-products/waste arising during manufacture - definition of "manufacture" under Section 2(f) of the Central Excise Act, 1944 - classification under chapter heading 2827.00 - non-excisability of waste/by-products as clarified by Board Circular dated 25/04/2016 - precedential effect of Supreme Court and High Court decisions on excisability (UOI v. DSCL Sugar Ltd. and Hindalco Industries Ltd. v. UOI)

Excisability of by-products/waste arising during manufacture - definition of "manufacture" under Section 2(f) of the Central Excise Act, 1944 - classification under chapter heading 2827.00 - non-excisability of waste/by-products as clarified by Board Circular dated 25/04/2016 - Ferric Chloride waste/used Ferric Chloride arising during manufacture of printed circuit boards is not excisable goods and cannot be classified or charged to duty under chapter heading 2827.00. - HELD THAT: - The Tribunal considered whether the used/diluted Ferric Chloride sold by the assessee constituted a manufactured product within the meaning of the definition of "manufacture" under Section 2(f) of the Central Excise Act, 1944 and whether it could be classified under chapter heading 2827.00 and subjected to duty. The Tribunal noted the Board's Circular dated 25/04/2016 and the ratios of higher court decisions, including the Supreme Court's decision in UOI v. DSCL Sugar Ltd. and the Bombay High Court's decision in Hindalco Industries Ltd. v. UOI, which hold that waste or by-products arising during the course of manufacture are not manufactured goods and are not excisable even after the insertion of Section 2(d) w.e.f. 10/05/2008. Applying those authorities, the Tribunal found that the Ferric Chloride waste did not satisfy the preconditions of the definition of "manufacture" and therefore could not be treated as excisable goods or reclassified and charged to duty under chapter heading 2827.00. Consequently, there was no infirmity in the Commissioner (Appeals) order which had held the waste to be non-excisable. [Paras 6]

The impugned order is upheld and the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the Commissioner(Appeals) finding that the Ferric Chloride waste arising during PCB manufacture is not an excisable product and cannot be charged to duty under chapter heading 2827.00, following the Board Circular and relevant higher court precedents.

Transaction value and inclusion of erection charges - presumption under Section 12B regarding passing on of duty - claimant must have borne incidence of duty to claim refund - treatment of composite contract price and inference on absorption of duty

Presumption under Section 12B regarding passing on of duty - treatment of composite contract price and inference on absorption of duty - Whether the respondent has proved that the incidence of excise duty was not passed on to M/s. IOCL - HELD THAT: - The Tribunal examined invoices and bills: factory invoices separately showed value of goods with excise duty, while IOCL's consolidated bills did not indicate any tax on installation charges. The contract provision making rates "inclusive of all duties" cannot, by itself, establish that duties which are not leviable on installation were recovered; a presumption of passing-on under Section 12B required rebuttal by evidence. On the material on record the incidence of duty on the disputed installation component was not shown to have been recovered from IOCL. The Tribunal found the decision in CIMMCO supportive and rejected reliance on authorities which hold that a composite price does not automatically show absorption of duty where evidence to the contrary exists.

The incidence of excise duty was not proved to have been passed on to M/s. IOCL.

Claimant must have borne incidence of duty to claim refund - transaction value and inclusion of erection charges - Whether the refund should be paid in cash to the respondent or credited to the Consumer Welfare Fund - HELD THAT: - Having held that the duty incidence was not passed on to IOCL and noting there was no dispute as to the respondent's entitlement to refund on merits, the Tribunal considered the consequential relief. The original authority had directed credit to the Consumer Welfare Fund; Commissioner(Appeals) ordered cash refund. Given the evidence that excise was shown on factory invoices and installation receipts did not bear tax or reimbursement of such duty, the Tribunal saw no reason to interfere with the appellate authority's direction for payment in cash. Reliance on precedents imposing the burden on a claimant to show ultimate incidence was considered but the factual finding on recovery was determinative.

Refund to the respondent to be paid in cash; the Revenue's appeal against the impugned order is rejected.

Final Conclusion: The Tribunal upheld the Commissioner(Appeals) order: the respondent did not prove that the duty incidence was passed on to IOCL, and consequently the refund already found due on merits is to be paid in cash; the Revenue's appeal is dismissed.

CENVAT credit on endorsed invoices - Validity of endorsed invoices after procedural change w.e.f. 01/04/1994 - Replacement of gate passes by invoices for claim of credit - Invoices issued by registered dealers/manufacturers as qualifying duty paid documents - Precedential choice between conflicting High Court decisions

CENVAT credit on endorsed invoices - Validity of endorsed invoices after procedural change w.e.f. 01/04/1994 - Replacement of gate passes by invoices for claim of credit - Whether CENVAT credit availed on the basis of invoices issued in the name of a supplier and subsequently endorsed in favour of the manufacturer during 01/04/1994 to 31/10/1994 was permissible. - HELD THAT: - The Tribunal examined the procedural amendments effective from 01/04/1994 which replaced gate passes by invoices as the qualifying duty paid documents for taking CENVAT credit and created specified categories of persons (manufacturers/dealers) authorized to issue such invoices. Under the amended procedure, endorsements of supplier invoices in favour of a consignee are not permitted as a substitute for invoices issued by the prescribed category of persons. Having regard to this change, credits taken on the basis of invoices originally raised in the name of the supplier and merely endorsed to the appellant during the period in question are irregular. The Tribunal further considered conflicting judicial decisions and, in view of subsequent authority from a High Court upholding the view that post amendment endorsements do not qualify for credit, followed that later decision and the Larger Bench approach that endorsed invoices are not valid for claiming credit after the procedural change. [Paras 5, 6, 7]

CENVAT credit availed on endorsed invoices for the period 01/04/1994 to 31/10/1994 is irregular and the disallowance is upheld.

Final Conclusion: The appeal is dismissed; the disallowance of CENVAT credit taken on the basis of invoices endorsed in favour of the appellant for the period 01/04/1994 to 31/10/1994 is sustained in view of the procedural amendment replacing gate passes with specified invoices and the subsequent authoritative decisions following that approach.

Marketability of intermediate products - excisability of intermediate goods - captively consumed goods not excisable - classification of goods - binding judicial precedent

Marketability of intermediate products - excisability of intermediate goods - captively consumed goods not excisable - Impregnated special woven fabric arising during the manufacture of tubular bags is not excisable as it is not marketable and is captively consumed. - HELD THAT: - The Tribunal found that the impregnated special woven fabric emerges during the continuous manufacturing process of tubular bags, has a self-life of only a few minutes and is not bought or sold in the market. Applying the principle that goods which lack marketability and are solely captive intermediates do not fall within the definition of excisable goods, and by following the binding judicial precedents relied upon by the appellant, the Tribunal concluded that the intermediate product cannot be subjected to central excise duty. The earlier classification under chapter/sub heading 5903.29/5903.90 and the consequent duty and penalty levied were therefore not sustainable in law.

The Tribunal allowed the appeals, held that the intermediate impregnated woven fabric is not marketable and not excisable, and set aside the duty and penalty demands.

Final Conclusion: Appeals allowed; duty and penalty confirmed in the impugned orders set aside as the intermediate impregnated woven fabric is non-marketable, captively consumed and not chargeable to Central Excise.

Cum duty benefit - assessable value includibility of Dharmada/charity - obligation to comply with tribunal remand directions - rate of duty applicable - remand for re-quantification of duty - penalty under Section 173Q

Cum duty benefit - rate of duty applicable - Entitlement to cum-duty benefit and correct rate of duty to be applied in re-quantification of duty. - HELD THAT: - The Tribunal held that the earlier order dated 6-1-2005 left no discretion to the adjudicating authority except to re-quantify duty by extending the cum duty benefit and applying the correct rate of duty. The Tribunal expressly recorded that the correct rate of duty applicable is 50% for the period July, 2000 to February, 2000 and 40% for the period March, 2001 to June, 2001. The adjudicating authority in another jurisdiction had already applied these rates and extended cum-duty benefit, an approach accepted by the Revenue. Consequently the appellant is entitled to the cum-duty benefit and the specified rates must be applied in re-quantification.

Appellant entitled to cum-duty benefit; rate of duty to be applied as 50% for July, 2000 to February, 2000 and 40% for March, 2001 to June, 2001.

Obligation to comply with tribunal remand directions - remand for re-quantification of duty - Whether the adjudicating authority complied with the Tribunal's remand directions and the appropriate remedy for non-compliance. - HELD THAT: - The Tribunal found that the impugned adjudication did not comply with the earlier remand direction and thus amounted to contempt of the Tribunal's order, since the Commissioner re-opened issues already finally left for re-quantification. The Tribunal reaffirmed that judicial discipline requires the adjudicating authority to follow the remand direction (citing the principle in Union of India v. Kamlakshi Finance Corporation Ltd.). The Tribunal accordingly directed that the adjudicating authority re-quantify the duty in accordance with the Tribunal's directions and remitted the matter for that limited purpose.

Impugned order set aside to the extent of non-compliance; matter remanded to adjudicating authority for re-quantification in accordance with the Tribunal's directions.

Penalty under Section 173Q - Sustainability of the enhanced penalty imposed in the subsequent order. - HELD THAT: - The Tribunal observed that a penalty of Rs. 10,000/- had been imposed in the first Order-in-Original and was not challenged by the Revenue; in the later adjudication a penalty of Rs. 1 Lakh was imposed. Having regard to the nature of the case and the earlier proceedings, the Tribunal found the imposition of the higher penalty to be unsustainable and indicated that such penalty ought not to stand.

Penalty of Rs. 1 Lakh imposed in the subsequent order is not sustainable and is to be set aside.

Final Conclusion: Appeal allowed in part: the adjudicating authority must re-quantify duty by extending cum-duty benefit and applying the rates of 50% for July, 2000 to February, 2000 and 40% for March, 2001 to June, 2001; the non-compliant adjudication is set aside and remanded for re-quantification; the enhanced penalty imposed in the subsequent order is held not sustainable.

Remand for fresh assessment - failure to comply with appellate directions - time-bound requirement for completion of reassessment under Section 34(2) of the DVAT Act - necessity of assessment for recovery of tax under Section 30 of the DVAT Act - quashing of demands issued beyond statutory period

Remand for fresh assessment - failure to comply with appellate directions - time-bound requirement for completion of reassessment under Section 34(2) of the DVAT Act - quashing of demands issued beyond statutory period - necessity of assessment for recovery of tax under Section 30 of the DVAT Act - Validity of demands and orders dated 7 March 2017 and 12 April 2017 insofar as they raise demands for AY 2006-07 where the OHA had remanded matters for verification/ fresh assessment but the VATO failed to act for several years - HELD THAT: - The OHA had directed the VATO to consider statutory forms and to pass fresh orders after verification; the VATO failed to take steps for approximately six years. The Court found no record of action on the file and concluded that the VATO's inaction constituted non compliance with the time bound mandate implicit in a remand for fresh assessment. Under the DVAT scheme a fresh assessment pursuant to the OHA's direction had to be completed within the period prescribed (referencing the statutory time bound requirement under Section 34(2)), and recovery by way of demand cannot properly be made without such assessment (as required by the scheme and Section 30). Demands and orders made far beyond the period envisaged for completion of reassessment, and without carrying out the mandated assessment, were thus legally vitiated. Reliance on prior judicial treatment of similar lapses (Shaila Enterprises) reinforced that failure to comply with superior authority's directions is fatal to belated demands. [Paras 12, 13, 14, 16]

Demands and orders dated 7 March 2017 and 12 April 2017 insofar as they relate to AY 2006-07 are quashed.

Remand for fresh assessment - failure to comply with appellate directions - time-bound requirement for completion of reassessment under Section 34(2) of the DVAT Act - quashing of demands issued beyond statutory period - necessity of assessment for recovery of tax under Section 30 of the DVAT Act - Validity of demands and orders dated 7 March 2017 and 12 April 2017 insofar as they raise demands for AY 2007-08 where the OHA had remanded matters for production/verification of statutory forms but the VATO failed to act for several years - HELD THAT: - The OHA afforded the assessee an opportunity to produce statutory forms and directed the Assessing Authority to pass fresh orders after verification. Notwithstanding that direction, the VATO remained inactive for nearly five years and then issued demands and orders without affording the reassessment mandated by the OHA. The Court held that such belated action, lacking the requisite fresh assessment within the time contemplated by the DVAT framework and without compliance with the OHA's directions, is unlawful. The Department's suggestion that the Petitioner be relegated back to the OHA was rejected as it would perpetuate delay and would not cure the fundamental illegality of issuing demands without carrying out the mandated assessment. The same legal principles regarding Section 30 and the requirement of assessment for recovery were applied. [Paras 11, 12, 13, 14, 16]

Demands and orders dated 7 March 2017 and 12 April 2017 insofar as they relate to AY 2007-08 are quashed.

Final Conclusion: The writ petitions are allowed; the writs of demand dated 7 March 2017 and the orders dated 12 April 2017 issued by the VATO/Assistant Commissioner, Ward No. 203 for AY 2006-07 and AY 2007-08 are quashed for being legally vitiated by the VATO's failure to carry out the fresh assessments directed by the OHA within the statutory/appropriate time and for issuing demands without proper assessment.