TaxTMI Updates e-Newsletter
Jun 02,2021

Summons kept in abeyance due to pandemic - exclusion of period from computation of limitation - inability of authorised representatives to participate in investigation

Summons kept in abeyance due to pandemic - inability of authorised representatives to participate in investigation - Summons issued to the petitioner are to be kept in abeyance in view of the COVID-19 pandemic until the next listed date. - HELD THAT: - The Court, having considered the representations of the petitioner regarding the impossibility of participation by its employees and authorised representatives because of the prevailing pandemic and the DGAP's proposal to keep the summons in abeyance, concluded that there was no assurance the pandemic would abate by the earlier suggested date. For the interim period and for pragmatic reasons of protecting the ability of the petitioner's representatives to participate, the Court ordered that the summons be kept in abeyance until the next date of hearing (09.08.2021). This relief is interlocutory and granted in light of the exceptional public-health circumstances then prevailing. [Paras 4]

Summons to the petitioner are kept in abeyance until 09.08.2021.

Exclusion of period from computation of limitation - The period for which the summons are kept in abeyance shall not be available to the petitioner as part of any limitation defence. - HELD THAT: - The Court accepted the principle that the leeway granted by keeping the summons in abeyance is for the benefit of the petitioner's authorised representatives and employees. Consequently, the petitioner cannot later rely on the period of abeyance as part of a defence of limitation. The Court recorded that the DGAP had proposed exclusion of the abeyance period from limitation calculations under the relevant rules and held that the petitioner cannot plead limitation by including that period. [Paras 4]

Period of abeyance is excluded from the petitioner's limitation defence; the petitioner cannot include that period to plead limitation.

Final Conclusion: Interim relief granted: summons are kept in abeyance until 09.08.2021, and the abeyance period cannot be invoked by the petitioner as part of a limitation defence; matter listed for further hearing on 09.08.2021.

Interim abeyance of statutory summons - exclusion of period from limitation - verification of claimed passing on of profiteered amount - obligation to file sworn affidavits and payment of court-fee

Obligation to file sworn affidavits and payment of court-fee - Direction to furnish sworn affidavits and deposit requisite court-fee for the petition - HELD THAT: - The application for exemption from filing the requisite court-fee and sworn affidavits was disposed of by directing the petitioner to place on record the duly sworn affidavits and to deposit the requisite court-fee. The compliance timeline was linked to the resumption of the Court's normal working: the petitioner is to comply within three days thereafter. This disposes of the exemption prayer without granting relief from the statutory filing requirements. [Paras 1]

Application for exemption refused; petitioner directed to file sworn affidavits and deposit court-fee within three days of resumption of normal court work.

Interim abeyance of statutory summons - exclusion of period from limitation - Summons issued by the authority are to be kept in abeyance until the next listed date and the period of abeyance cannot be relied upon by the petitioner to plead limitation - HELD THAT: - Having regard to the prevailing COVID-19 situation and uncertainty about its abatement, the Court directed that the summons issued to the petitioner remain in abeyance until the next date of hearing (09.08.2021). The Court recorded that the leeway is granted for the benefit of authorised representatives and employees who may be unable to participate in the investigation. Consequentially, the petitioner cannot invoke the period of abeyance when pleading limitation; the period excluded by the authority (as suggested under the rules) cannot be used by the petitioner to extend limitation as a defence. [Paras 5]

Summons kept in abeyance till 09.08.2021; period of abeyance excluded from calculation of limitation for the petitioner's benefit and cannot be pleaded by the petitioner as part of limitation defence.

Verification of claimed passing on of profiteered amount - Direction to the authority to verify the petitioner's assertion regarding passing on of the purported profiteered amount and to revert with instructions - HELD THAT: - The petitioner asserted that the purported profiteered amount has been passed on to customers and furnished information in support. The Court, without prejudicing the parties' rights and contentions, directed respondent no.3 (DGAP) to verify the details furnished by the petitioner and to revert with appropriate instructions on the next date of hearing. This was a directive for verification and factual examination by the authority rather than an adjudication on the merits of the claim. [Paras 5, 6]

DGAP directed to verify the details of the claimed passing on and report back with appropriate instructions on the next date.

Final Conclusion: The applications were disposed of: exemption from filing affidavits and court-fee was refused subject to compliance within three days of resumption of Court work; summons were kept in abeyance till 09.08.2021 with the abeyance period excluded from limitation and not available to the petitioner as a limitation defence; DGAP was directed to verify the petitioner's claim regarding passing on of the profiteered amount and to revert on the next date.

Extension of time - attested affidavits - interim relief - service accepted - counter affidavit - rejoinder - delay in processing refund of Integrated Goods and Services Tax - duty drawback - categorised as "risky exporter" - enquiry to be completed - listing for hearing

Extension of time - attested affidavits - Prayer for extension of time to file attested affidavits with the petition - HELD THAT: - The application seeking extension of time for filing attested affidavits was considered and allowed subject to just exceptions. The court directed that the petitioner shall file the duly attested affidavits within three days of the resumption of the court's normal and usual work pattern. The order disposes of the captioned application by fixing a specific timeline tied to resumption of normal court functioning. [Paras 1, 2]

Application for extension of time allowed subject to just exceptions and affidavits to be filed within three days of resumption of normal court work.

Interim relief - service accepted - counter affidavit - rejoinder - Application for interim relief and procedural directions for service and pleadings - HELD THAT: - Notice was issued in the writ petition seeking interim relief. Service was accepted on behalf of respondent no.1 and on behalf of respondent nos.2 to 8. The respondents were directed to file counter-affidavit(s) within four weeks, and any rejoinder(s) were permitted to be filed before the next date of hearing. These procedural directions fix the timetable for pleadings relevant to interim relief. [Paras 3]

Notice issued; service accepted; counter-affidavits to be filed within four weeks and rejoinder(s) before the next hearing.

Delay in processing refund of Integrated Goods and Services Tax - duty drawback - categorised as "risky exporter" - enquiry to be completed - Direction for completion of enquiry into delay in processing IGST refund and duty drawback where petitioner was categorised as a 'risky exporter' - HELD THAT: - Respondent counsel stated that the delay in processing the IGST refund and duty drawback arose because the petitioner had been categorised as a "risky exporter." The court directed that any enquiry relating to that categorisation and the consequent delay shall be completed at the earliest and in any event not later than one week before the next date of hearing. The result of the enquiry is to be placed before the court on the next date, thereby ensuring that factual verification relevant to the refund and drawback processing is completed in advance of further judicial consideration. [Paras 4]

Enquiry into delay arising from categorisation as a 'risky exporter' to be completed not later than one week before the next hearing and its result placed before the court.

Listing for hearing - Adjournment and listing of the matter for further hearing - HELD THAT: - The matter was listed for further hearing on the date specified by the court, thereby fixing the next judicial engagement after the timelines ordered for filing affidavits, pleadings and completion of the enquiry. [Paras 5]

Matter listed for hearing on the specified date.

Final Conclusion: The court allowed the application for extension of time to file attested affidavits subject to exceptions and prescribed a timeline tied to resumption of court work; issued notice in the writ petition with directions for service, filing of counter-affidavits within four weeks and rejoinders before the next hearing; directed completion of an enquiry into delay in processing IGST refund and duty drawback (attributable to categorisation as a 'risky exporter') not later than one week before the next hearing and ordered the matter to be listed on the specified date.

Summary order. Direction issued to respondents to complete verification proceedings with specified follow-up: petitioner to furnish self attested copy of title deed of an immovable property as proposed security within two days; respondents to take instructions on acceptance of the title deed and may have the concerned officer evaluate the property; matter listed for further hearing on 04.06.2021.

Extension of time for filing affidavits - direction to file attested affidavits on resumption of court work - deletion from array of parties - filing of amended memo of parties - service of notice and filing of counter-affidavit and rejoinder - appointment of a party subject to final adjudication

Extension of time for filing affidavits - direction to file attested affidavits on resumption of court work - Application for extension of time to file attested affidavits disposed of with a direction to file within a specified short period after resumption of normal court functioning. - HELD THAT: - The application seeking additional time for filing attested affidavits accompanying the writ petition was not acceded to indefinitely; instead the Court disposed of the application by directing that the petitioner shall file duly attested affidavits within three days of the resumption of the normal and usual work pattern of the Court. The order therefore grants a limited extension tied to the resumption of court work rather than a fixed calendar extension. [Paras 2]

Application disposed of with direction to file attested affidavits within three days of resumption of normal court work.

Deletion from array of parties - filing of amended memo of parties - Respondent No.2 (GST Council) was ordered to be deleted from the array of parties and the petitioner directed to file an amended memo of parties within one week. - HELD THAT: - On the petitioner's application, the Court accepted the submission that respondent no.2 could be removed from the list of respondents. The Court recorded the deletion and directed the petitioner to file an amended memo of parties within one week from the date of the order, thereby formalising the change in the party array and fixing a timeline for compliance. [Paras 3]

Respondent No.2 deleted; petitioner to file amended memo of parties within one week.

Service of notice and filing of counter-affidavit and rejoinder - Notice was issued to respondents and timelines fixed for filing counter-affidavit(s) and rejoinder(s). - HELD THAT: - The Court issued notice in the writ petition and recorded acceptance of notice by counsel for the respective respondents. It directed that counter-affidavit(s) be filed within four weeks and that any rejoinder(s) be filed before the next date of hearing, thereby setting a procedural timetable for pleadings in response to the petition. [Paras 4]

Notice issued; counter-affidavits to be filed within four weeks and rejoinders before the next hearing.

Appointment of a party subject to final adjudication - The appointment of respondent no.4 (now respondent no.3) was ordered to be subject to the final outcome of the writ petition. - HELD THAT: - The Court recorded that the appointment of the individual named as respondent no.4 would not be treated as finally effective for purposes of these proceedings and would remain subject to the final decision in the writ petition. This preserves the petitioners' challenge to the appointment pending adjudication on merits. [Paras 5]

Appointment of respondent no.4 to remain subject to final outcome of the writ petition.

Listing of matter - The matter was listed for further hearing on a specified date. - HELD THAT: - The Court directed that the petition be listed on 16.08.2021 for further consideration, thereby fixing the next date in the case calendar. [Paras 7]

Matter listed for hearing on 16.08.2021.

Final Conclusion: The Court granted limited procedural reliefs: allowance of an application subject to exceptions; a time-limited direction to file attested affidavits upon resumption of court functioning; deletion of respondent no.2 with a direction to amend the memo of parties; issuance of notice with prescribed timelines for counter-affidavit and rejoinder; and a holding that the appointment challenged in the petition remains subject to the final adjudication. The matter is listed for further hearing on 16.08.2021.

Classification and rate of tax on job work bottling - GST Council's primacy in policy decision-making - interim protection from coercive measures pending policy decision - virtual appearance in proceedings during pandemic - filing of affidavits and procedural compliance

Filing of affidavits and procedural compliance - Disposal of application for exemption from filing attested affidavits and direction to file duly attested affidavits. - HELD THAT: - The application seeking exemption from filing attested affidavits is disposed of. The court directed that the petitioner shall place on record the duly attested affidavits within three days of the resumption of the normal and usual work pattern of the court. The direction balances the petitioner's interim difficulty arising from the pandemic with the requirement of record-completeness for adjudication. [Paras 2]

Application for exemption from attested affidavits disposed of; attested affidavits to be filed within three days of resumption of normal court functioning.

Classification and rate of tax on job work bottling - GST Council's primacy in policy decision-making - Notice issued in the writ petition concerning classification and rate of tax on job work activities of contract bottlers; matter listed for further hearing with directions for filing of counter-affidavits and rejoinders. - HELD THAT: - The court noted the absence of uniformity among States and recorded that the GST Council has indicated it will take a decision on the matter. In view of the pending policy consideration, the court issued notice in the writ petition and interlocutory application. The respondents accepted service. The court directed filing of counter-affidavits within six weeks and permitted rejoinders before the next date of hearing, fixing the matter for listing on the specified date. These procedural directions preserve the adjudicatory process while acknowledging the pending consideration by the GST Council. [Paras 3, 5, 6]

Notice issued; respondents to file counter-affidavits within six weeks; rejoinders permitted; matter listed for hearing on the appointed date.

Virtual appearance in proceedings during pandemic - interim protection from coercive measures pending policy decision - Interim directions restraining personal appearance requirements and coercive measures against noticees until the next hearing and urging the GST Council to decide the issue expeditiously. - HELD THAT: - Having regard to the continuing COVID-19 pandemic and the GST Council's indication that it will decide the issue, the court directed that concerned officers shall pursue proceedings only by virtual mode and shall not insist upon personal appearance of noticees, so as to avoid exposing noticees to pandemic-related risk. Further, the court restrained the concerned officers from taking any coercive measures against noticees until the next date of hearing. The court also requested that the GST Council take up and decide the matter at the earliest and directed respondents' counsel to inform the court of the Council's decision on the next date. [Paras 7, 8]

Proceedings to continue only via virtual mode; personal appearance shall not be insisted upon; no coercive measures to be taken against noticees till the next date; GST Council requested to decide the issue urgently.

Final Conclusion: The court issued notice in the writ petition concerning the classification and tax rate on contract bottlers' job work, disposed of the affidavit-exemption application with a conditional filing direction, ordered procedural timelines for pleadings, directed virtual-mode appearances and stayed coercive measures until the next hearing, and requested that the GST Council decide the matter expeditiously.

Zero rated supply - refund of input tax credit - revenue neutral character of tax liability - liability to pay GST on renting of immovable property within airport premises - refund under Section 54 of the CGST Act - verification of tax actually paid to Government before refund

Zero rated supply - refund of input tax credit - refund under Section 54 of the CGST Act - Whether the petitioner, operating Arrival and Departure Duty Free Shops inside the airport, is entitled to refund of input tax borne for the period July 2017 to December 2017 and February 2018 to March 2018. - HELD THAT: - The court records that there is no dispute that the petitioner is engaged in zero rated supply within the meaning of Section 16 of the Integrated Goods and Service Tax Act, 2017 and that refund applications in Form GST RFD-01A were filed and sanctioned for the periods concerned. The orders sanctioning refund for August 2017-December 2017 and for February-March 2018 were based on the Authority for Advance Ruling, Delhi decision as communicated by the Central Board of Indirect Taxes and Customs. Given that the petitioner can obtain refund of the incidence of tax by way of sanctioned refund orders, the court held that directing the Airport Authority to first collect and pay tax and then require the petitioner to seek refund would serve no useful purpose. The determinative reasoning is that the petitioner's entitlement to refund of input tax renders the tax liability in relation to supplies at the airport effectively revenue neutral for the petitioner.

Petitioner entitled to refund of input tax for July 2017 to December 2017 and February 2018 to March 2018; no purpose in directing payment-then-refund route.

Verification of tax actually paid to Government before refund - liability to pay GST on renting of immovable property within airport premises - Whether GST paid by the third respondent for the period 01.01.2018 to 30.06.2019 should be refunded to the third respondent. - HELD THAT: - The court noted that the third and fourth respondents had paid GST directly to the Government for the period 01.01.2018 to 30.06.2019 and the third respondent sought refund of that amount. The court directed that such sums be refunded to the third respondent but qualified the direction by requiring verification that the tax was indeed correctly paid to the credit of the Government as tax for the supply of such service to the petitioner. The reasoning recognises the payment made by the Airport Authority but conditions the refund on administrative verification of correct payment to avoid unjust enrichment or incorrect refunds.

GST paid by third respondent for 01.01.2018 to 30.06.2019 ordered to be refunded to the third respondent, subject to verification that such tax was correctly paid to Government for the petitioner's supplies.

Revenue neutral character of tax liability - liability to pay GST on renting of immovable property within airport premises - Treatment of GST for the period July 2019 to March 2021 when neither collection nor payment of GST occurred during subsistence of interim orders. - HELD THAT: - The court observed that during July 2019 to March 2021, owing to interim orders and decisions, the Airport Authority neither collected nor paid GST and estimated any tax liability. However, because the petitioner's position is that the incidence of tax is refundable (rendering the issue revenue neutral), the court exercised its discretion and directed that the taxing authority shall not charge GST from the third respondent for supplies to the petitioner alone for renting duty free shops within Chennai Airport for that period. The court declined to require retrospective charging and remittance for that interregnum period.

For July 2019 to March 2021, the first respondent and its jurisdictional officer shall not charge GST from the third respondent for the petitioner's renting of duty free shops at Chennai Airport.

Liability to pay GST on renting of immovable property within airport premises - refund under Section 54 of the CGST Act - How GST liability is to be treated prospectively from April 2021 onwards. - HELD THAT: - The court made clear that going forward, there shall be no concession: the third respondent is directed to charge GST on the petitioner from April 2021 and to pay the same to the Government. The petitioner may discharge GST and seek refund under the statutory refund mechanism where applicable. The directive balances recognition of the petitioner's refund entitlement for past periods with a clear prospective rule that GST must be charged and remitted from the stated date.

From April 2021 onwards the third respondent shall charge GST on the petitioner and remit it to the Government; no further concession is permitted.

Final Conclusion: Writ petition disposed: petitioner's refund entitlement for specified past periods recognised and refund directions issued subject to verification; no retrospective charging for the interregnum July 2019-March 2021; prospectively GST to be charged and remitted by the Airport Authority from April 2021, with petitioner to pursue refunds under statutory procedure where applicable.

Refund of unutilised input tax credit - relevant date for refund - time bar under Section 54(1) - prospective operation of statutory amendment - fresh refund application under Rule 90(3) - rectified application treated as fresh application - Circular No. 125/44/19 GST and its effect - deficiency memo and portal technical glitches

Prospective operation of statutory amendment - relevant date for refund - The amendment to the explanation of "relevant date" made w.e.f. 1 2 2019 has prospective effect. - HELD THAT: - The CGST (Amendment) Act, 2018 brought the changed definition of "relevant date" into force from 1 2 2019 and contains no provision making the change retrospective. Rules of statutory interpretation indicate that a newly introduced provision is to be given prospective operation unless the amending statute expressly provides otherwise or is clarificatory of an existing provision. Applying these principles, the changed explanation to Section 54 was held to operate prospectively from 1 2 2019. [Paras 7]

The amended explanation to Section 54 for computing the "relevant date" operates prospectively from 1 2 2019.

Time bar under Section 54(1) - relevant date for refund - fresh refund application under Rule 90(3) - The fresh refund application filed on 25 1 2020 is beyond two years from the relevant date as defined by the amended provision and is therefore time barred. - HELD THAT: - Having held that the amended definition of "relevant date" applies prospectively, the due date for furnishing the return under Section 39 for the period in which the refund arises is to be used for reckoning the two year limitation for refund claims arising after 1 2 2019. The rectified (fresh) refund application in the present matter was filed on 25 1 2020; applying the amended reckoning, that filing falls outside the two year period from the relevant date and is accordingly time barred. [Paras 7, 8]

The rectified/fresh refund application dated 25 1 2020 is time barred under the amended computation of the relevant date and cannot be entertained.

Rectified application treated as fresh application - Circular No. 125/44/19 GST and its effect - A rectified refund application filed pursuant to a deficiency memo is to be treated as a fresh application and must satisfy the time limit requirement indicated in Circular No.125/44/19 GST where applicable. - HELD THAT: - Rule 90(3) requires that where deficiencies are noticed, the proper officer shall communicate them and require the applicant to file a fresh refund application after rectification. The CBIC Circular clarifies that a rectified application is given a new ARN and is to be treated as a fresh application; such rectified applications must also be submitted within two years of the relevant date as defined in the Explanation to Section 54. The adjudicating authority applied this framework to conclude that the rectified filing filed after issuance of the deficiency memo is a fresh filing subject to the two year limitation. [Paras 6, 8]

The rectified application filed in response to the deficiency memo is a fresh application and must meet the limitation requirement; it was not filed within the period required under the amended reckoning.

Deficiency memo and portal technical glitches - refund of unutilised input tax credit - Technical difficulties on the GST portal and the short interval between issuance of the deficiency memo and rectification do not excuse non compliance where the rectified filing, treated as a fresh application, falls outside the prescribed period under the amended reckoning. - HELD THAT: - The appellant submitted that portal glitches caused the omission of supporting documents in the original filing on 20 1 2020 and that the deficiency was rectified on 25 1 2020 within two days of the deficiency memo. While factual circumstances of portal malfunction were recorded, the legal consequence is that a rectified filing treated as a fresh application must meet the statutory/circular time limit. Because the rectified filing occurred after the applicable two year period under the amended definition of relevant date, the procedural difficulties did not alter the conclusion that the fresh filing was time barred. [Paras 6, 8]

Portal technical glitches and the short interval for rectification do not validate a rectified filing that is time barred under the applicable limitation.

Final Conclusion: The appeal is dismissed. The amended definition of "relevant date" (effective 1 2 2019) is to be applied prospectively, a rectified refund application filed on 25 1 2020 was treated as a fresh application and falls outside the two year limitation as computed under the amended provision, and therefore the original Order in Original rejecting the refund claim is upheld.

Deemed export - refund of unutilized input tax credit on deemed exports - compliance with procedural safeguards in Circular No. 14/14/2017-GST - eligibility for refund upon non-compliance with prescribed procedure - Rule 89 of the CGST Rules-claim by recipient or supplier

Compliance with procedural safeguards in Circular No. 14/14/2017-GST - eligibility for refund upon non-compliance with prescribed procedure - Rule 89 of the CGST Rules-claim by recipient or supplier - Whether the appellant was required to follow the procedure prescribed in Circular No. 14/14/2017-GST and whether failure to comply with that procedure disentitles the appellant to claim refund of unutilized input tax credit on deemed exports. - HELD THAT: - The adjudicatory findings note that supplies to the appellant, being a 100% EOU, are treated as deemed exports and that Rule 89 permits either recipient or supplier to claim refund where the recipient does not avail ITC and furnishes an undertaking. Circular No. 14/14/2017-GST prescribes specific procedural safeguards for supplies to EOU units, including prior intimation in Form A to the supplier and jurisdictional officers, endorsement of tax invoices, maintenance and monthly submission of digital records in Form B and related audit trail requirements. Paragraph 41 of Circular No. 125/44/2019-GST reiterates that the procedure in Circular No. 14/14/2017-GST must be complied with. The adjudicator found that the appellant did not follow the procedure and failed to comply with the conditions set out in the circular; on that basis the appellant was held not eligible for refund. The appellate authority upheld that conclusion after considering the appellant's submissions and noting that the circular's procedural requirements are mandatory for claiming the refund in the context of deemed exports. [Paras 5, 7, 8, 9]

The appellant was required to follow the procedure in Circular No. 14/14/2017-GST; failure to comply with those procedural safeguards disentitles the appellant to the refund, and the refunds were correctly denied.

Deemed export - refund of unutilized input tax credit on deemed exports - Whether the case law relied upon by the appellant (M/s. J.K. Lakshmi Cement Ltd.) applied to the facts of these appeals. - HELD THAT: - The appellant relied on precedent to contend that the impugned rejection was illegal. The appellate authority examined the citation and concluded that the facts of that decision are different and therefore the precedent is not applicable to the present facts. No substitutionary legal principle from the cited decision was found to alter the requirement of compliance with the circular and rules governing deemed exports and refund claims in this case. [Paras 10, 11]

The cited authority is not applicable on the facts; reliance on it does not affect the conclusion that the refunds were correctly denied.

Final Conclusion: Appeals dismissed. The adjudicating authority's rejection of the refund claims for the listed periods is upheld on the ground that the appellant failed to comply with the mandatory procedural safeguards prescribed for deemed export refunds, as set out in Circular No. 14/14/2017-GST and reiterated by Circular No. 125/44/2019-GST.

Exemption from filing notarised affidavits - acceptance of service - direction to file sworn/notarised affidavits - issuance of State notification for parity with other States - placing matters before the GST Council for consideration

Exemption from filing notarised affidavits - Application for exemption from filing sworn/notarised affidavits (CM APPL. 17266/2021). - HELD THAT: - The application seeking exemption from filing sworn/notarised affidavits was allowed by the Court, subject to just exceptions. The order records the Court's discretion to grant the exemption while preserving the requirement that exceptions may be imposed as appropriate.

CM APPL. 17266/2021 allowed, subject to just exceptions.

Direction to file sworn/notarised affidavits - Application seeking exemption from filing sworn/notarised affidavits (CM APPL. 17267/2021) and interlocutory requirement for record of affidavits. - HELD THAT: - Rather than grant a blanket exemption, the Court disposed of the application by directing the petitioner to place on record duly sworn/notarised affidavits. A temporal condition was fixed: the affidavits must be filed within three days of the resumption of the normal and usual work pattern of the Court. The order therefore balances the request for exemption with the Court's need to have sworn affidavits on record once normal functioning resumes.

CM APPL. 17267/2021 disposed of with direction to file sworn/notarised affidavits within three days of resumption of normal Court work.

Acceptance of service - issuance of State notification for parity with other States - placing matters before the GST Council for consideration - Preliminary directions in Writ Petition W.P.(C) 5568/2021 regarding service, potential State notification and referral to the GST Council; issue of notice in the writ petition. - HELD THAT: - The Court issued notice in the writ petition and recorded acceptance of service by counsel appearing for the Union of India, the GST Council and the GNCTD. The Court directed the counsel for GNCTD to ascertain whether the GNCTD could issue a notification on lines similar to notifications issued by the State of Haryana and State of Gujarat. Further, the Court requested the learned ASG to place the facts of the case before the GST Council so that the Council may consider the matter. These directions were given to facilitate early disposal of the writ petition by seeking administrative action and consideration at the GST Council level.

Notice issued; service accepted by respondents; GNCTD to consider issuing a notification on lines of Haryana/Gujarat and revert; ASG to place the matter before the GST Council; matter listed for further hearing.

Final Conclusion: The Court allowed CM APPL. 17266/2021 subject to just exceptions, disposed CM APPL. 17267/2021 directing the petitioner to file sworn/notarised affidavits within three days of resumption of normal Court work, issued notice in the writ petition with respondents accepting service, directed the GNCTD to consider issuance of a notification on lines of other States and directed the Union/ASG to place the matter before the GST Council; the matter was listed for further hearing.

Carry forward of unutilised CENVAT/ITC on transition - distribution of transitional credit amongst registrations - processing of manually filed FORM GST TRAN-1 - technical difficulties on the common portal - benefit of Rule 117(1A) - extended timeline for TRAN-1 - verification of genuineness of transitional claims

Carry forward of unutilised CENVAT/ITC on transition - distribution of transitional credit amongst registrations - Petitioner entitled to carry forward and distribute the CENVAT credit available as on 1st July, 2017 and to have the same reflected under GST where the TRAN-1 has been filed (manually) due to earlier electronic filing complications. - HELD THAT: - The Court found on the material placed that the petitioner had an eligible CENVAT credit as per service tax return for the period ending 30th June, 2017 and sought to carry forward the same into the GST regime under Section 140(8) of the CGST Act, 2017. Attempts to file TRAN-1 electronically failed and a manual TRAN-1 was submitted. The Court accepted that the petitioner, which earlier had a centralised registration, was entitled to transfer and thereafter distribute the transitional credit to its registrations/locations in accordance with the distribution documents/GSTINs. The inability to effect such distribution was attributed to technical problems on the GST network and not to any substantive ineligibility, and therefore the petitioner's entitlement to have the transitional credit reflected and distributed was upheld. [Paras 3, 5, 6]

Petitioner entitled to avail and distribute the transitional CENVAT/ITC and to have the manually filed TRAN-1 processed so the credit is reflected and distributable in accordance with law.

Technical difficulties on the common portal - benefit of Rule 117(1A) - extended timeline for TRAN-1 - Rule 117(1A) relief applies where filing of TRAN-1 electronically was obstructed by technical difficulties on the common portal, and the petitioner falls within that category. - HELD THAT: - Having considered the screenshot and other documents evidencing electronic filing errors, the Court concluded that the petitioner's case squarely falls within situations of 'technical difficulties on the common portal' entitling it to the extended timelines/benefit under Rule 117(1A) of the CGST Rules, 2017. The Court relied on and followed earlier decisions of this Court addressing similar factual scenarios and relief (Aadinath Industries , Aman Motors , A.B. Pal Electricals , The Tyre Plaza ) and rejected the narrower construction urged by the Revenue which would confine sub-rule (1A) to a restricted class. Consequently, the petitioner is eligible for relief under Rule 117(1A). [Paras 6, 7]

Petitioner eligible for benefit under Rule 117(1A) because electronic filing was frustrated by technical difficulties on the common portal.

Processing of manually filed FORM GST TRAN-1 - verification of genuineness of transitional claims - Court directed respondents to process the manually filed TRAN-1 and to verify the genuineness of the petitioner's claims before allowing the credit and its distribution. - HELD THAT: - In view of the established entitlement and the demonstrated technical impediments to electronic filing, the Court ordered that the respondents process the TRAN-1 filed manually by the petitioner. The Court afforded the respondents the statutory and administrative liberty to verify the genuineness of the claims and thereafter allow the petitioner to avail and distribute the input tax credit in accordance with law. A specific timeline was imposed for such processing. [Paras 8, 9]

Respondents directed to process the manually filed TRAN-1 and, after due verification of genuineness, permit availment and distribution of the transitional credit within the time fixed by the Court.

Final Conclusion: Writ petition allowed; respondents directed to process the TRAN-1 filed manually and, after verifying the genuineness of the transitional credit claim, to permit the petitioner to avail and distribute the input tax credit available as on 1st July, 2017; petitioner held eligible for relief under Rule 117(1A) where electronic filing was frustrated by technical difficulties.

Transitional input tax credit - TRAN-1 Form - electronic credit ledger - direction to process TRAN-1 - portal reopening or manual acceptance of TRAN-1

TRAN-1 Form - transitional input tax credit - electronic credit ledger - Petitioner's TRAN-1 Form, filed within the prescribed time, had not been processed and the transitional credit not reflected in the electronic credit ledger; whether the respondents must process the TRAN-1 and reflect the credit. - HELD THAT: - The Court found that the petitioner filed the TRAN-1 Form within the time prescribed under the Rules and produced screenshots evidencing such filing. Despite repeated communications and production of proof, the respondents had not processed the TRAN-1 nor reflected the transitional input tax credit in the electronic credit ledger, and no counter-affidavit was filed to explain the denial. The Court noted prior decisions of this Court deprecating the practice of making assessees run from pillar to post where transitional credit legitimately claimed is not being reflected, and treated those authorities as covering the petitioner's case. In view of the petitioner's timely filing and absence of any communicated legal or factual ground for refusal, the Court directed respondents to process the TRAN-1 Form and ensure the claimed transitional credit is reflected in the electronic credit ledger. [Paras 3, 4, 5, 6]

Petition allowed; respondents directed to immediately process the TRAN-1 filed by the petitioner and reflect the transitional input tax credit in the electronic credit ledger.

Portal reopening or manual acceptance of TRAN-1 - direction to process TRAN-1 - Whether, and by what means, the respondents must facilitate processing of TRAN-1 where technical or administrative impediments exist. - HELD THAT: - The Court provided a remedial direction to ensure effective relief: if processing requires the petitioner to re-file the TRAN-1, the respondents must open the GST portal to permit such filing or accept the TRAN-1 manually. A specific date was fixed for compliance to prevent further delay. This direction was issued as a consequence of the respondents' failure to act and to give practical effect to the right to transition unutilised input credit into the GST regime. [Paras 6]

Respondents to open the GST portal or accept the TRAN-1 manually and complete processing on or before 30th June, 2021.

Final Conclusion: Writ petition allowed; respondents directed to process the petitioner's TRAN-1 and reflect the transitional input tax credit in the electronic credit ledger and, if necessary, to reopen the GST portal or accept the TRAN-1 manually, to be completed by 30th June, 2021.

Transitional input tax credit - form GST TRAN-1 - writ of mandamus - precedential effect of an earlier decision

Transitional input tax credit - form GST TRAN-1 - precedential effect of an earlier decision - Petition seeking direction to allow carry forward of transitional input tax credit by filing form GST TRAN-1 was unnecessary because identical relief had already been granted in an earlier decision in Brand Equity Treaties Limited. - HELD THAT: - The Court recorded that the relief sought by the petitioner to carry forward the transitional input tax credit by filing form GST TRAN-1 had been granted by this Court in Brand Equity Treaties Limited v. Union of India & Ors., a decision in which a batch of petitions including the petition filed by the present petitioner was allowed. Having found that the identical relief already stands granted by the earlier judgment, the Court held that no further orders were required in the present petition and disposed of the petition accordingly. [Paras 2, 3]

Petition disposed of as the relief sought has already been granted by the earlier Brand Equity decision; no further orders are necessary.

Final Conclusion: The petition is disposed of on the ground that the identical relief to carry forward transitional input tax credit via form GST TRAN-1 has already been granted by this Court in Brand Equity Treaties Limited, and no further orders are called for.

Transitional input tax credit - TRAN-1 and TRAN-2 filing - rectification of bona fide errors in TRAN-1 - proviso to Section 140(3) - procedural lapse not to defeat substantive rights - time for filing under Rule 117(4)(b)(iii)

Transitional input tax credit - TRAN-1 and TRAN-2 filing - rectification of bona fide errors in TRAN-1 - procedural lapse not to defeat substantive rights - Inadvertent omissions in TRAN-1 and inability to amend the TRAN-1 on the portal do not preclude a taxpayer from claiming transitional ITC and from filing TRAN-2 where the claim is otherwise admissible. - HELD THAT: - The Court held that genuine and inadvertent mistakes in completing TRAN-1 which prevented submission of TRAN-2 should not defeat the substantive right to transitional ITC. The judgment relies on earlier decisions of this Court recognizing systemic difficulties in the GST portal and directing remedial measures where bona fide errors occurred. On the facts, the petitioner could not fill required parts of TRAN-1 and was prevented by the portal from revising the form; when the petitioner attempted to upload TRAN-2 on 4 January 2018 no statutory time-limit under Rule 117(4)(b)(iii) had been prescribed, and the time limit was specified only thereafter by Notification No.12/2018-CT dated 7 March 2018. The Court therefore treated the omission as a procedural lapse arising from the portal and filing regime rather than as a bar to adjudication of the petitioner's entitlement to transitional credit under the proviso to Section 140(3). The Court concluded that the petitioner ought to be permitted to have its claim examined on merits after correction of TRAN-1 and corresponding filing of TRAN-2. [Paras 9, 10, 11, 12]

The petitioner's inability to file TRAN-2 due to inadvertent errors in TRAN-1 and portal constraints does not extinguish the right to seek transitional ITC; the petitioner is entitled to rectify TRAN-1 and file TRAN-2 for adjudication of its claim.

TRAN-1 and TRAN-2 filing - rectification of bona fide errors in TRAN-1 - procedural lapse not to defeat substantive rights - Appropriate remedial directions: respondents directed to enable correction of TRAN-1 and acceptance of TRAN-2 electronically or manually within a specified timeframe. - HELD THAT: - Having found that the petitioner was prevented from filing TRAN-2 by reason of an inadvertent error in TRAN-1 and the portal's limitations, the Court directed the respondents either to reopen the online portal to permit electronic rectification of TRAN-1 and filing of TRAN-2 or to accept the corrected TRAN-1 and TRAN-2 manually. The direction fixes a definitive timetable for compliance to ensure the petitioner's claim can be processed and examined by the authorities in accordance with law. [Paras 13]

Respondents shall enable the petitioner to file a rectified TRAN-1 and correspondingly file TRAN-2, either electronically by reopening the portal or manually, on or before 30th June, 2021.

Final Conclusion: Petition allowed. The Court directed respondents to permit electronic or manual rectification of TRAN-1 and acceptance of TRAN-2 so that the petitioner's claim for transitional input tax credit may be adjudicated; compliance ordered by 30th June, 2021.

Summary order. Writ appeal disposed in light of a co-ordinate Bench judgment dated 23.02.2021 in W.A. No.18/2020 and connected matters; respondents-assessees granted thirty days from today to submit TRAN-1 form.

Application under Section 154 of the Income Tax Act, 1961 - claim for refund and consequential interest under Section 244A of the Income Tax Act, 1961 - mandamus for expeditious disposal of statutory applications - personal hearing before disposal - requirement of a speaking order

Application under Section 154 of the Income Tax Act, 1961 - claim for refund and consequential interest under Section 244A of the Income Tax Act, 1961 - personal hearing before disposal - requirement of a speaking order - Whether the pending applications filed by the petitioner under Section 154, seeking refund and consequential interest for the stated assessment years, should be disposed of without further delay and on specified procedural terms. - HELD THAT: - The Court did not adjudicate the merits of the petitioner's claims for refund or entitlement to interest. Instead, it found undue delay in disposal of the applications under Section 154 and directed that the concerned officer shall consider the pending applications afresh. The officer is to grant a personal hearing to the petitioner's authorised representative and thereafter dispose of the applications at the earliest and in any event within four weeks from receipt of the order. If the officer concurs with the petitioner's contentions, consequential steps shall be taken in accordance with law. The officer is also directed to consider the petitioner's prayer for refund and for interest under Section 244A. The Court emphasised that a reasoned, speaking order must be passed and a copy furnished to the petitioner. The writ petitions were disposed of by issuing these directions; the substantive claims remain for adjudication by the assessing authority.

Pending Section 154 applications (relating to AY 2016-17, AY 2015-16 and AY 2012-13) are remitted to the concerned officer for fresh consideration, after a personal hearing, to be completed within four weeks; the officer must consider claims for refund and interest under Section 244A and pass a speaking order furnished to the petitioner.

Final Conclusion: Writ petitions disposed of by directing the assessing officer to expeditiously consider and decide the petitioner's pending Section 154 applications (relating to AY 2016-17, AY 2015-16 and AY 2012-13) after giving a personal hearing, to consider refund and interest under Section 244A, and to pass and supply a speaking order within four weeks.

Personal hearing under faceless assessment - Section 144B(7)(vii) of the Income Tax Act, 1961 - Standard Operating Procedure for personal hearing through video conference - Duty to frame standards, procedures and processes under clause (xii) of Section 144B(7) - Faceless Assessment Scheme

Personal hearing under faceless assessment - Section 144B(7)(vii) of the Income Tax Act, 1961 - Standard Operating Procedure for personal hearing through video conference - Validity of the assessment order, notice of demand and notice for initiating penalty proceedings insofar as no personal hearing was granted despite a specific request under Section 144B(7)(vii) and the SOP. - HELD THAT: - The Court held that Section 144B(7)(vii) expressly contemplates that where a variation is proposed in a draft assessment order and an opportunity to show cause is provided, the assessee or authorised representative may request a personal hearing to make oral submissions. The CBDT's SOP for personal hearing through video conference recognises circumstances in which such hearing may be allowed and prescribes the procedure for VC hearings. In the present case a specific request for personal hearing was made (communication dated 23.04.2021), and therefore the respondents could not lawfully proceed to pass the impugned assessment order, notice of demand and penalty notice without affording the requested personal hearing. The Court further noted that no standards, procedures and processes appear to have been laid down under clause (xii) of Section 144B(7) to guide grant of personal hearings, and that omission cannot justify denying the statutory right to request personal hearing under sub-clause (vii). Consequently the impugned orders were set aside and the matter was remitted to the revenue to proceed from the stage of the show cause notice-cum-draft assessment order, with a direction to grant a personal hearing via video-conference to the authorised representative, after serving prior notice (by registered e-mail) and thereafter to pass a fresh order as per law. [Paras 7, 8]

Impugned assessment order, notice of demand and penalty notice set aside; matter remitted to proceed from show cause notice-cum-draft assessment order stage and respondents directed to grant a video-conference personal hearing to the authorised representative and thereafter pass a fresh order.

Final Conclusion: The writ petition is allowed: the assessment order and consequential notices dated 29.04.2021 are set aside; respondents may proceed from the show cause notice-cum-draft assessment order, must grant the requested personal hearing by video-conference after prior notice to the petitioner and then pass a fresh order in accordance with law.

Requirement of show cause notice-cum-draft assessment under Section 144B and Faceless Assessment Scheme, 2019 - setting aside assessment for non-compliance with statutory procedure - validity of consequential notice of demand and initiation of penalty proceedings where draft assessment was not issued - grant of personal hearing via videoconferencing to authorised representative

Requirement of show cause notice-cum-draft assessment under Section 144B and Faceless Assessment Scheme, 2019 - setting aside assessment for non-compliance with statutory procedure - validity of consequential notice of demand and initiation of penalty proceedings where draft assessment was not issued - grant of personal hearing via videoconferencing to authorised representative - Impugned assessment order dated 07.04.2021 and consequential notices were invalid for being passed without issuance of a show cause notice cum draft assessment order as required under Section 144B and the Faceless Assessment Scheme, 2019, and were therefore set aside; matter remitted for fresh assessment with opportunity of personal hearing via videoconferencing. - HELD THAT: - The Court found that the assessment in question related to AY 2018-2019 and recorded that the respondent passed the impugned assessment order without issuing a show cause notice cum draft assessment order despite variation in declared income. Applying the requirement of Section 144B read with the Faceless Assessment Scheme, 2019 (as interpreted in the Court's earlier decision in W.P. (C) No. 5552/2021), the Court held that issuance of a show cause notice cum draft assessment was mandatory where there was a variation, and non compliance vitiated the assessment. Consequential orders flowing from the impugned assessment - the notice of demand under Section 156 and notice initiating penalty proceedings under Section 274 read with Section 270A - were likewise set aside as they derived from the invalid assessment. The Court granted liberty to the revenue to pass a fresh assessment in accordance with law, directing that the authorised representative of the petitioner be afforded a personal hearing to be convened by videoconferencing with adequate advance intimation by registered e mail. The Court therefore quashed the impugned orders and remitted the matter for fresh proceedings compliant with the statutory scheme and procedure. [Paras 13, 14, 15, 16, 17]

Impugned assessment order dated 07.04.2021 and consequential notices set aside for failure to issue show cause notice cum draft assessment; respondent permitted to pass fresh assessment as per law after affording personal hearing via videoconferencing.

Final Conclusion: Writ petition allowed: assessment and consequential notices set aside for procedural non compliance; matter remitted for fresh assessment in accordance with Section 144B and the Faceless Assessment Scheme, 2019, with personal hearing to the authorised representative by videoconference and advance intimation by e mail.

Arm's length principle - comparability analysis in transfer pricing - exclusion and inclusion of comparable companies - Transaction Net Margin Method (TNMM) - operating profit to total cost as profit level indicator - recomputation of arithmetic mean of comparables - Advance Pricing Agreement (APA) - applicability to other associated enterprises

Comparability analysis in transfer pricing - exclusion and inclusion of comparable companies - arm's length principle - Exclusion of Motilal Oswal Private Equity Advisory Private Limited from the list of comparables for computing ALP - HELD THAT: - The Tribunal examined the functional profile of the assessee and of Motilal Oswal and, following earlier coordinate-bench decisions in appeals involving non binding investment advisory service providers for the same year, found Motilal Oswal functionally dissimilar to the assessee which provides non binding, non discretionary investment advisory and research services. In light of the detailed functions performed by the assessee and the absence of distinguishing facts, the Tribunal directed exclusion of Motilal Oswal from the final list of comparables for working out the arithmetic mean margin. [Paras 3]

Motilal Oswal Private Equity Advisory Private Limited excluded from the comparable set and direction given to the TPO/AO to remove it when recomputing the margin.

Comparability analysis in transfer pricing - exclusion and inclusion of comparable companies - arm's length principle - Exclusion of Ladderup Corporate Advisory Pvt Ltd from the list of comparables for computing ALP - HELD THAT: - The Tribunal compared the functional profiles and relied on earlier coordinate-bench decisions for the same assessment year which held that Ladderup, being a merchant banker/investment banking firm registered as a Category I Merchant Banker with SEBI, is not functionally comparable to a non binding investment advisory service provider. No distinguishing facts were established by Revenue; consequently Ladderup was held functionally dissimilar and excluded from the comparable set. [Paras 3]

Ladderup Corporate Advisory Pvt Ltd excluded from the comparable set and direction given to the TPO/AO to remove it when recomputing the margin.

Comparability analysis in transfer pricing - inclusion of comparable companies - recomputation of arithmetic mean of comparables - Inclusion of Cyber Media Research Limited in the list of comparables for computing ALP - HELD THAT: - The Tribunal noted that Cyber Media Research Limited was held functionally comparable in the assessee's own Tribunal order for the immediately preceding assessment year and that there was no change in functional profile between the two years. Applying consistent treatment, the Tribunal directed inclusion of Cyber Media Research Limited in the final list of comparables for computing the arithmetic mean margin. [Paras 3]

Cyber Media Research Limited included in the comparable set and direction given to the TPO/AO to include it when recomputing the margin.

Transaction Net Margin Method (TNMM) - operating profit to total cost as profit level indicator - recomputation of arithmetic mean of comparables - arm's length principle - Recomputation of the ALP margin by the TPO/AO after modifying the comparable set as directed - HELD THAT: - The Tribunal accepted the assessee's submission that adjudication on the three specific comparables would determine whether the assessee's originally reported TNMM margin fell within the acceptable tolerance. Having excluded two comparables and included one, the Tribunal directed the TPO/AO to recompute the arithmetic mean margin of the retained comparables (using the assessee's adopted MAM and PLI) and proceed accordingly. The Tribunal did not itself compute the new margin but remitted the mechanical recomputation to the assessing authorities. [Paras 3, 5]

TPO/AO directed to recompute the arithmetic mean margin of comparables after excluding Motilal Oswal and Ladderup and including Cyber Media Research Limited; Ground No.1.3 allowed to that extent.

Advance Pricing Agreement (APA) - applicability to other associated enterprises - arm's length principle - APA rate applicability to other associated enterprises left open for future consideration - HELD THAT: - The assessee relied on an APA that fixed ALP at Cost plus 20% for transactions with two associated enterprises (covering the assessment year). Revenue contended APA applicability to other AEs is governed by the mechanism in the Rules. The Tribunal observed that this question need not be decided in light of its directions on comparables and explicitly refrained from expressing any opinion on the APA related contention, leaving the issue open for consideration later by the authorities or on appropriate challenge. [Paras 4]

APA related contention not decided and left open.

Final Conclusion: The appeal is allowed in part: two comparables (Motilal Oswal and Ladderup) are excluded and one comparable (Cyber Media Research Limited) is included; the TPO/AO is directed to recompute the arithmetic mean margin of the retained comparables accordingly. The question of adopting the APA rate for the other associated enterprises is left open. Consequential interest issues need no separate adjudication.

Receipt as reimbursement not taxable - taxability of software licence as royalty - fees for technical services (FTS) and the 'make available' clause - IT support services not ancillary to royalty - application of Indo Swedish tax treaty (Article 12) - parity of reasons and precedent reliance

Receipt as reimbursement not taxable - taxability of software licence as royalty - application of Indo Swedish tax treaty (Article 12) - Receipt of SAP licence charges by the assessee from its Indian subsidiary is not taxable as royalty but is a reimbursement and therefore not income in the hands of the assessee. - HELD THAT: - The Tribunal applied parity of reasons with its earlier decision in the assessee's own case for AY 2015-16, which concluded that the assessee had purchased the SAP licence from a third party and supplied it to the Indian subsidiary on a cost to cost basis without markup. The tribunal observed that a pure reimbursement, devoid of any income element, cannot be charged to tax in the hands of the recipient. The decision noted that contentions about routing to avoid withholding tax do not convert a reimbursement into taxable income. Because the income was not taxable under domestic law, the Tribunal saw no need to separately decide treaty issues, but recorded that the earlier decision also found non taxability under the Indo Swedish tax treaty. The Revenue did not point to any distinguishing fact or contrary decision applicable to the impugned year; accordingly, the Tribunal allowed the ground for parity of reasons.

Addition treating SAP licence receipts as royalty deleted; receipts held to be reimbursements not chargeable to tax.

Fees for technical services (FTS) and the 'make available' clause - application of Indo Swedish tax treaty (Article 12) - parity of reasons and precedent reliance - Consultancy fees received by the assessee are not taxable as Fees for Technical Services under the Indo Swedish tax treaty because the services did not 'make available' technical knowledge or enable the recipient to perform the services independently. - HELD THAT: - Relying on the coordinate bench's analysis in AY 2015 16, the Tribunal examined the nature of the consultancy services and held that they involved project leadership, coordination and execution by the assessee's personnel rather than transfer of technical knowledge or tools to the recipient. The tribunal emphasized that incidental benefits such as improved efficiency or enduring benefit do not satisfy the 'make available' test; the critical question is whether the recipient is enabled to perform the services in future without recourse to the provider. The facts in the impugned year being identical to those in AY 2015 16 and in absence of contrary material, the Tribunal applied the same reasoning and directed deletion of the addition.

Addition treating consultancy receipts as FTS deleted; consultancy fees held not taxable as FTS.

IT support services not ancillary to royalty - fees for technical services (FTS) and the 'make available' clause - application of Indo Swedish tax treaty (Article 12) - Payments received for IT support services are neither taxable as Fees for Technical Services nor as royalty because they are not properly characterised as ancillary to a royalty payment nor do they satisfy the 'make available' requirement. - HELD THAT: - Following the coordinate bench decision for AY 2015 16, the Tribunal rejected conclusions that IT support services constituted ancillary or subsidiary services to a royalty within Article 12(4)(a). The Tribunal noted that ancillary treatment applies where the same person receives royalty and provides ancillary services; here the SAP vendor and the assessee were different entities. Further, the Tribunal reiterated that incidental benefits, improved efficiency or skill development of the recipient do not amount to 'making available' technology or enablement to perform the services independently. Given identical facts and no distinguishing material, the Tribunal applied the earlier findings and allowed the ground.

Addition treating IT support receipts as FTS/royalty deleted; IT support services held not taxable under Article 12.

Final Conclusion: The appeal is allowed in entirety: additions treating SAP licence charges as royalty, consultancy fees as FTS, and IT support receipts as FTS/royalty are deleted by applying the Coordinate Bench's findings in the assessee's AY 2015 16 case on parity of reasons.

Dependent agent permanent establishment - agent of independent status - permanent establishment - business profits attributable to a permanent establishment - apportionment of profits to a permanent establishment - royalty - information concerning industrial, commercial or scientific experience - principle of mutuality - remand for limited verification

Dependent agent permanent establishment - agent of independent status - permanent establishment - Whether the Authorized Training Centres (ATCs) in India constitute a dependent agent permanent establishment (DAPE) of the assessee under the India Canada tax treaty - HELD THAT: - The Tribunal analysed Article 5(5) (and the rider) and found that the ATCs were independent organisations acting in the ordinary course of their business and provided multiple third party and self designed courses, not being devoted wholly or almost wholly to the assessee. No finding was recorded by the revenue that transactions between the assessee and the ATCs were not at arm's length. Since both cumulative conditions in Article 5(5) for divesting independent status (activities devoted wholly or almost wholly; and transactions not at arm's length) were not satisfied, the ATCs retained independent agent status and did not create a PE of the assessee in India. The Tribunal relied on and followed its precedent reasoning in Delmas France and related authorities to place the onus on the revenue to establish lack of arm's length dealings before treating an independent agent as a dependent agent PE. [Paras 11, 12, 13]

ATCs are agents of independent status under Article 5(5) and do not constitute a dependent agent PE of the assessee; the addition attributing income to such alleged DAPE is vacated.

Royalty - information concerning industrial, commercial or scientific experience - Whether consideration for sale of distance learning course material (and alternatively sale of DGR manuals) constitutes 'royalty' under Article 12(3) of the India Canada tax treaty - HELD THAT: - The Tribunal examined the nature of the course material and DGR manuals and found them to be simplicitor sales of books/manuals or compilations based on ICAO technical instructions available in the public domain. No right to use or reproduce intellectual property, nor any undivulged technical know how, was transferred to buyers. Consequently, the receipts did not fall within the treaty definition of 'royalty' as consideration for use of, or right to use, information concerning industrial, commercial or scientific experience. The Tribunal followed comparable authorities holding that mere sale or provision of access to materials that do not confer proprietary rights or undisclosed know how does not amount to royalty. [Paras 14, 15, 16]

Receipts from sale of distance learning materials and DGR manuals do not constitute 'royalty' under Article 12(3); the alternative characterisation as royalty is vacated.

Royalty - information concerning industrial, commercial or scientific experience - Whether consideration for provision of advertising space on the assessee's website and publications is 'royalty' under the India Canada tax treaty - HELD THAT: - The Tribunal held that supplying advertising space did not grant the advertiser any 'use' or 'right to use' the assessee's copyright, trademark or other proprietary rights; advertisers were not vested with rights to exploit or modify the assessee's brand or logo. The activity was therefore not within the treaty's definition of 'royalty' and aligns with precedents treating banner/portal hosting or advertising space services as business type receipts rather than royalties. [Paras 18, 19]

Receipts for provision of advertising space are not 'royalty' and the lower authorities' taxation of such receipts as royalty is vacated.

Business profits attributable to a permanent establishment - apportionment of profits to a permanent establishment - Whether certain receipts (BSP link charges, ICH facility fees, membership fees) are taxable in India as business profits attributable to the Indian PE and whether the DRP/AO's fixed apportionment should be sustained - HELD THAT: - The Tribunal accepted the legal proposition that only the portion of profits attributable to the PE - based on the role actually played by the PE in the transactions - is taxable in India, and that transactions carried out and revenues received wholly outside India should not be attributed to the Indian PE. As the AO/DRP had not fully examined or verified whether the BSP link charges were mere reimbursements remitted without mark up, whether ICH services were actually provided from outside India, and whether collection of membership dues was effected outside India, the Tribunal restored these matters to the AO for limited verification and recomputation. Consequentially, the DRP's arbitrary scaling down (from AO's 90% to 40%) is set aside and the attribution percentages are restored for fresh adjudication by the AO. [Paras 20, 21]

Issues as to taxability and apportionment of BSP link charges, ICH facility fees and membership fees are remanded to the AO for limited verification and fresh adjudication; the DRP/AO apportionments are set aside for that purpose.

Remand for limited verification - Whether credits and interest computations (self assessment tax credit, TDS credit, interest under Sections 234A/234B/234C) require further verification and recomputation - HELD THAT: - The Tribunal observed that factual verification of records was necessary to determine entitlement to self assessment tax credit and TDS credit, and to recompute interest where such credits, if established, would affect interest liability. The Tribunal therefore remitted these limited factual and arithmetical issues to the AO for verification, allowing the assessee a reasonable opportunity to substantiate claims and directing recomputation as appropriate. The Tribunal also permitted the assessee to advance (before the AO) any legal contentions regarding leviability of interest for a foreign company. [Paras 22, 23, 24, 25]

Claims for self assessment tax credit and TDS credit, and recomputation of interest under 234A/234B/234C, are remanded to the AO for verification and recomputation; the assessee to be afforded opportunity to substantiate its claims.

Principle of mutuality - Whether the assessee's collection of membership fees is exempt from tax by application of the principle of mutuality - HELD THAT: - The AO/DRP found that the assessee did not cumulatively satisfy conditions for mutuality (complete identity of contributors and recipients; instrumentality; inability to derive profit). The Tribunal did not decide the substantive applicability of mutuality on the merits: instead, because key factual aspects (where collections were effected and role of PE) required verification, the matter was remitted to the AO for limited factual inquiry; the Tribunal reiterated that only profits attributable to the PE may be taxed. [Paras 20, 21]

The mutuality plea is not finally decided on merits and related factual aspects are remanded to the AO for verification; outcome to depend on those verifications.

Penalty proceedings - Validity of initiation of penalty proceedings under the Act as challenged in these appeals - HELD THAT: - The Tribunal observed that initiation of penalty proceedings did not arise from the impugned assessment order and was premature. Accordingly, the plea against initiation of penalty proceedings could not be entertained in the present proceedings. [Paras 26]

Ground challenging initiation of penalty proceedings is dismissed as infructuous.

Final Conclusion: The Tribunal held that the ATCs in India are independent agents and do not constitute a dependent agent PE of the assessee; accordingly, the attribution of 40% (and the AO's earlier attribution) of distance learning revenues to an alleged DAPE and the alternative characterisation of those receipts as royalty are vacated. Receipts from sale of DGR manuals and from provision of advertising space are not 'royalty' under the India Canada treaty and the related additions are vacated. Issues concerning BSP link charges, ICH facility fees, collection of membership dues, entitlement to self assessment tax and TDS credits, and recomputation of interest under Sections 234A/234B/234C involve factual verifications; those matters are remanded to the AO for limited verification and fresh adjudication with opportunity to the assessee. The challenge to initiation of penalty proceedings is dismissed as infructuous.

Principles of natural justice - show cause notice-cum-draft assessment order under Section 144B - Faceless Assessment Scheme, 2019 - opportunity of personal hearing - fresh assessment subject to statutory safeguards

Principles of natural justice - show cause notice-cum-draft assessment order under Section 144B - Faceless Assessment Scheme, 2019 - Absence of a show cause notice-cum-draft assessment order and denial of opportunity of response amounted to violation of principles of natural justice where the assessee's income was varied. - HELD THAT: - The Court found that Section 144B of the Act, read with the Scheme, mandates issuance of a show cause notice-cum-draft assessment order and an opportunity to the assessee to respond where the revenue proposes to vary the assessee's income. The impugned assessment order varied the petitioner's declared position by making an addition; no such show cause-cum-draft assessment order was served prior to passing the final order. Had the draft been served, the authorised representative could have requested a personal hearing. The respondent's contention that other notices had been issued prior to the assessment does not satisfy the specific schematic requirement under Section 144B and the Scheme and therefore cannot cure the procedural shortfall. For these reasons the Court held that the principles of natural justice were violated and set aside the impugned assessment and consequential notices. [Paras 16, 17]

Impugned assessment order and the notices under Section 156 and Section 270A read with Section 274 were set aside for breach of natural justice.

Fresh assessment subject to statutory safeguards - opportunity of personal hearing - videoconferencing mechanism - Permissibility and manner of fresh assessment after setting aside the impugned order. - HELD THAT: - The Court granted liberty to the revenue to pass a fresh assessment in accordance with law and subject to the procedural protections mandated by the statute and the Scheme. The respondent is required to grant a personal hearing to the authorised representative of the petitioner; the hearing shall be convened through videoconferencing and the date and time must be communicated in advance to the petitioner by registered e-mail. These directions limit the remand to a fresh assessment compliant with the identified statutory safeguards rather than an unfettered re examination. [Paras 18]

Respondent permitted to pass fresh assessment in accordance with law, after giving personal hearing via videoconference and prior intimation to the petitioner.

Final Conclusion: The writ petition was disposed by setting aside the impugned assessment and consequential notices for breach of principles of natural justice; the revenue is permitted to make a fresh assessment in compliance with statutory safeguards, including service of draft/show cause process and grant of a personal hearing by videoconference.

Limitation under Section 26(7) of the Prohibition of Benami Property Transactions Act, 1988 - communication/passing of order and commencement of limitation - order being beyond the control of the authority for limitation to be satisfied - burden on the authority to prove compliance with statutory time limit - attachment, adjudication and confiscation under Chapter IV of the Act

Limitation under Section 26(7) of the Prohibition of Benami Property Transactions Act, 1988 - communication/passing of order and commencement of limitation - order being beyond the control of the authority for limitation to be satisfied - burden on the authority to prove compliance with statutory time limit - Whether the adjudication orders dated 26.08.2019, 27.08.2019 and 28.08.2019 were passed within the one year period prescribed by Section 26(7) of the Act. - HELD THAT: - The Court held that Section 26(7) imposes a strict, negative prohibition on passing an order after one year from the end of the month in which the reference under Section 24(5) was received, and the burden to demonstrate compliance lies upon the Adjudicating Authority. Established authorities were applied to the effect that an order affecting rights is not to be treated as 'passed' for limitation purposes until it has been communicated or otherwise comes to the knowledge of the affected person; an order kept in the private control of the authority does not satisfy the statutory time limit because it may be altered before communication. The matters were reserved on 17.07.2019 and, on the material placed before the Court, there was no contemporaneous evidence that the impugned orders were pronounced in open court or that the files and orders had been transferred out of the Adjudicating Authority's control before 31.08.2019. Registers and office records produced by respondents were inadequate and contained discrepancies (including mismatches in dates of attestation and dispatch), and the presumption under Section 114 of the Evidence Act could not be availed of in the absence of records establishing compliance. Given these lacunae, the respondents failed to discharge the burden of proving the orders had been passed and placed beyond the authority's control within the statutory period, so the orders could not be held to have been validly passed within limitation. [Paras 40, 52, 53, 56, 57]

The impugned adjudication orders dated 26.08.2019, 27.08.2019 and 28.08.2019 are barred by limitation and are quashed.

Final Conclusion: Writ petitions allowed; impugned orders quashed for non compliance with the one year limitation under Section 26(7) of the Act as the respondents failed to prove the orders were passed and placed beyond the Adjudicating Authority's control within the statutory period; no costs.

Waiver of customs duty on import of life-saving drugs - clearance of imported life-saving drugs on bond pending final decision - prompt customs clearance of consignments of medicines for treatment of Covid-19 and Mucormycosis - allocation system for distribution of Amphotericin B - obligation of hospitals to furnish prescribed data for drug allocation - medical necessity of lyposomal Amphotericin B as the required formulation

Waiver of customs duty on import of life-saving drugs - Central Government should consider waiver of customs and other duties on import of Amphotericin B while it is in short supply. - HELD THAT: - The Court, noting the acute shortage of Amphotericin B and its role in treating Mucormycosis (Black Fungus) which is causing large-scale morbidity, directed that the Central Government should seriously consider a complete waiver of Customs and other duties on imports of the drug at least for the period it remains in short supply. The Court observed urgency given the public health exigency and recorded that the matter would be communicated to the relevant authorities for an early decision. [Paras 3, 4]

The Court urged the Central Government to consider waiver of import duties on Amphotericin B for the period of shortage and directed communication to central fiscal authorities for an early decision.

Clearance of imported life-saving drugs on bond pending final decision - Interim mechanism for clearance of imports of Amphotericin B without payment of duties subject to acceptance of a bond. - HELD THAT: - Pending the Central Government's decision on waiver of duties, the Court directed that imports of Amphotericin B may be cleared by accepting from the importer a bond undertaking that, if duties are ultimately payable, they will be paid. This interim measure permits immediate clearance without actual payment of duties until a final determination is made. [Paras 5]

Imports of Amphotericin B may be cleared on the basis of an accepted bond without payment of duties until a final decision is taken.

Prompt customs clearance of consignments of medicines for treatment of Covid-19 and Mucormycosis - Customs shall clear consignments of medicines required for treatment of Covid-19 and Mucormycosis without delay. - HELD THAT: - An assurance was placed on record that Customs authorities will clear all consignments of medicines needed for treatment of Covid-19 and Mucormycosis without any delay. The Court recorded this assurance and directed that consignments be handled expeditiously in the interregnum. [Paras 6]

Customs to ensure prompt clearance of consignments of medicines for Covid-19 and Mucormycosis.

Allocation system for distribution of Amphotericin B - Petitioner has been included in the allocation system and allocations have been made for his treatment. - HELD THAT: - The Court noted the affidavit of the hospital indicating that the petitioner had been allocated Amphotericin B vials for specified days and that the petitioner is now included in the system established for allocation of medicines for treatment of Mucormycosis. The Court expressed hope that further allocations would be made for the petitioner as for other patients. [Paras 7]

The petitioner is included in the allocation system for Amphotericin B and has received allocations for treatment.

Obligation of hospitals to furnish prescribed data for drug allocation - medical necessity of lyposomal Amphotericin B as the required formulation - Hospitals must supply prescribed data for allocation and only lyposomal Amphotericin B is suitable for patients who have received steroids. - HELD THAT: - The Court recorded that the hospital had not been providing requisite data to the District Magistrate, affecting collation and allocation. The hospital informed the Court that a system requiring submission of information in the prescribed format was instituted on 26.05.2021 and that it is complying. The hospital also stated, on instructions, that only lyposomal Amphotericin B can be safely administered to patients already given steroids because other formulations may adversely affect kidneys, underscoring the need for allocation of the correct formulation. [Paras 8, 9]

Hospitals must provide prescribed data for allocation; lyposomal Amphotericin B is the medically required formulation for patients who have received steroids.

Final Conclusion: The Court directed the Central Government to consider waiver of import and other duties on Amphotericin B during the period of shortage, authorised interim clearance of imports on the basis of bonds pending that decision, recorded an assurance of expedited customs clearance of necessary medicines, noted inclusion of the petitioner in the allocation system, and required hospitals to furnish prescribed data while recognising the medical need for lyposomal Amphotericin B.

Classification of goods by tariff heading - goods of a kind used for soldering, brazing, welding - parts imported in unassembled/knockdown form treated as the whole - burden of proof on Revenue to establish alternate classification - inadmissibility of re classification first raised in appeal

Classification of goods by tariff heading - goods of a kind used for soldering, brazing, welding - parts imported in unassembled/knockdown form treated as the whole - Whether the imported Bronze Cladding Panels are classifiable under CTH 8311 9000 (welding/soldering filler materials) or under CTH 8306 2110 / alternatively CTH 9703, and whether the demand based on classification under CTH 8311 9000 is sustainable. - HELD THAT: - The Tribunal found as an undisputed fact that the imported Bronze Cladding Panels were components of the Statue of Unity and were used as parts of the installed statue. The plain language of CTH 8311 covers goods that are coated or cored with flux material and are of a kind used for soldering, brazing, welding or deposition of metal; it is directed to filler metals and similar products used in those processes. The panels themselves are base metal parts which were assembled by welding, and the welding/filler materials were separately imported and classified under CTH 8311. The Revenue failed to explain or furnish any basis to treat the panels as welding/filler material; the Show Cause Notice and adjudication relied on an audit objection that did not discharge the statutory onus. Accepting the Revenue's contention would lead to an absurdity whereby any metal part joined by welding could be treated as a welding material. The Tribunal also noted the appellant's submission invoking the interpretative rule treating unassembled parts as the whole item and observed that it need not decide the correctness of the appellant's claimed heading; it was sufficient that Revenue did not establish the proposed reclassification. Reliance was placed on settled authorities holding that the burden to establish classification different from that claimed by the importer lies on Revenue and that a classification raised for the first time in appeal is impermissible to uphold an adjudication below. For these reasons the Tribunal concluded that classification under CTH 8311 9000 was untenable and the demand based thereon could not be sustained. The Tribunal expressly declined to adjudicate the alternative classification suggested by the appellant (CTH 9703) because that was not the case made out in the Show Cause Notice. [Paras 4, 5, 10]

Classification under CTH 8311 9000 is incorrect; Revenue has not discharged the burden of proof to reclassify the imported panels as welding material, the proceedings are quashed and the impugned order is set aside.

Final Conclusion: The appeal is allowed; the adjudication and demand based on classification under CTH 8311 9000 are quashed and the impugned order is set aside, with consequential reliefs as per law.

Power to call for information, inspect books and conduct inquiries under Section 206 of the Companies Act, 2013 - Inspection and inquiry under Section 206(4) where business is alleged to be carried on for fraudulent or unlawful purpose - Requirement to record reasons in writing before issuing notice under Section 206(3) - Limits on judicial intervention to prevent stalling of statutory investigation - Obligation of Registrar to consider objections and to afford opportunity of hearing before passing adverse orders

Power to call for information, inspect books and conduct inquiries under Section 206 of the Companies Act, 2013 - Limits on judicial intervention to prevent stalling of statutory investigation - Maintainability of writ petitions challenging summons issued under Section 206 of the Companies Act, 2013. - HELD THAT: - The summons impugned were issued under Section 206(4) upon complaints alleging fraudulent removal of directors and after consideration of the replies received; the Registrar has power to call for further information and to conduct inquiry where satisfied on available material that inquiry is warranted. A statutory summons under Section 206 can be challenged only if issued without jurisdiction or authority; mere apprehension of investigation or existence of parallel civil/mediation proceedings does not render the issuance of summons without jurisdiction. The Court held that the present petitions were prematurely filed before any adverse order under Section 206 had been passed and that interlocutory interference would amount to stalling a statutory inquiry which the Registrar is empowered to conduct. [Paras 11, 16, 17, 18, 19]

Writ petitions challenging the Section 206 summons are premature and not maintainable at this stage; judicial interference to stay or quash the impugned summons is declined.

Requirement to record reasons in writing before issuing notice under Section 206(3) - Obligation of Registrar to consider objections and to afford opportunity of hearing before passing adverse orders - Obligations of the Registrar in proceeding with inspection/enquiry and treatment of objections raised by the petitioners. - HELD THAT: - Although the petitions were dismissed as premature, the Court emphasised that the Registrar must consider all legal objections and explanations raised by the petitioners in response to the complaint, and must afford the petitioners and the complainants a fair hearing in accordance with the procedure laid down in Chapter XIV of the Companies Act. The Registrar's invocation of Section 206 must comply with the safeguards in the statute, including recording reasons where required, and any adverse order should follow consideration of the objections and production of documentary evidence by the parties. [Paras 14, 15, 20, 21]

Registrar directed to proceed with the inspection, enquiry and investigation under Section 206 after considering all objections and giving adequate opportunity of hearing; interim stay is vacated.

Final Conclusion: Writ petitions dismissed as premature; the Registrar of Companies may proceed with the Section 206 enquiry but must consider the petitioners' objections, afford full opportunity of hearing and follow the procedure under Chapter XIV before passing any adverse order; interim stay vacated.

Members' voluntary winding up - Declaration of solvency - Compliance with statutory liquidation formalities - Final meeting and filing of liquidator's accounts - No dues certificate - Official Liquidator's satisfaction - Dissolution of company

Official Liquidator's satisfaction - Dissolution of company - The petition under section 497(6) seeking dissolution of the company in members' voluntary liquidation is allowed. - HELD THAT: - The Official Liquidator filed the petition under section 497(6) of the Companies Act, 1956 and has recorded satisfaction that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to the public interest. On the basis of the Official Liquidator's satisfaction as set out in the petition, the Court ordered that the company be wound up and dissolved with effect from the date of filing of the petition. [Paras 14, 15]

Petition allowed; company is wound up and dissolved with effect from 15th December, 2020.

Declaration of solvency - Compliance with statutory liquidation formalities - Final meeting and filing of liquidator's accounts - No dues certificate - The statutory formalities required for members' voluntary winding up have been complied with and no objections impeded dissolution. - HELD THAT: - The record shows filing of Form No.149 (Declaration of Solvency), convening of the extraordinary general meeting and passing of special resolution for voluntary liquidation, appointments and filings concerning voluntary liquidators, publication of requisite notices including the Gazette notification, holding of the final meeting and filing of liquidator's accounts in Forms 156 and 157, and issuance of a No Dues Certificate by the Income Tax Department. The Official Liquidator also relies on indemnity bonds and affidavits by the voluntary liquidator and a director undertaking that any governmental demand will be met by shareholders or directors. On this factual and documentary foundation the Court accepted that the necessary compliance under section 497 and other relevant provisions has been made. [Paras 10, 11, 12, 13, 14]

Statutory liquidation formalities are satisfied and there are no outstanding objections preventing dissolution.

Dissolution of company - Administrative direction as to filing of order with Registrar of Companies. - HELD THAT: - The Court directed that a copy of the dissolution order be filed by the Official Liquidator with the Registrar of Companies within the statutory period, as required by the Act. [Paras 16]

Official Liquidator to file the order with the Registrar of Companies within the statutory period.

Final Conclusion: The petition under section 497(6) is allowed; having accepted the Official Liquidator's satisfaction and the compliance with statutory formalities, the company is wound up and dissolved with effect from the date of filing the petition (15th December, 2020); the Official Liquidator is directed to file a copy of this order with the Registrar of Companies within the statutory period and the petition stands disposed of.

Operational creditor - operational debt - due and default - maintainability of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - requirement of documentary proof (invoice/debit note) to establish operational debt

Operational creditor - operational debt - due and default - requirement of documentary proof (invoice/debit note) to establish operational debt - Maintainability of the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 filed by the applicant as an operational creditor. - HELD THAT: - The Tribunal examined whether the applicant established a claim as an operational creditor and demonstrated existence of an operational debt with a clear due date and date of default. The application (Form V) alleged a receivable amount and interest but did not annex any invoice, bill or debit note nor indicate the due date or date of default. The Tribunal observed that, to fall within the definition of operational debt, the claim must arise from provision of goods or services and be substantiated by supporting documentation; mere reference to an agreement without invoices or other primary documents is insufficient. In the absence of invoices/debit notes and without particulars of the due date/default, the essential elements of 'due' and 'default' required under Section 9 were not established. Relying on the statutory definition of operational debt, the Tribunal concluded that the applicant failed to prove entitlement as an operational creditor and therefore the petition was not maintainable under Section 9. [Paras 13, 14, 15]

The Section 9 petition is dismissed for want of prima facie establishment of operational debt and absence of requisite documentary proof and particulars of due date/default.

Final Conclusion: The petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 is dismissed for non-establishment of operational debt and failure to annex invoices/debit notes or specify the due date and date of default; liberty granted to the applicant to pursue other appropriate remedies.

Default in payment of operational debt - admission of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - limitation for filing Section 9 petition - moratorium under Section 14 of the Code - appointment of Interim Insolvency Resolution Professional - public announcement and invitation of claims under Section 15 - prohibition on striking off during corporate insolvency resolution process

Default in payment of operational debt - admission of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - limitation for filing Section 9 petition - Petition under Section 9 of the Code filed by the operational creditor was maintainable and liable to be admitted on the basis of admitted debt and absence of pre-existing dispute within limitation. - HELD THAT: - The Tribunal found that invoices for the supplies were raised in December 2014, the corporate debtor acknowledged the debt by email dated 03.06.2017 and the demand notice under section 8 was served on 20.08.2018. On the material on record, including invoices, delivery challans, bank statements, bounced cheque particulars and affidavit under section 9(3)(b), the petition was within the limitation period and the corporate debtor had committed default by not paying the operational debt and not raising a pre-existing dispute. Consequently the application was complete and the Adjudicating Authority was satisfied that the conditions for admission under Section 9(5)(1) were met and the petition was admitted. [Paras 12, 13, 19]

The application under Section 9 was admitted and the corporate insolvency resolution process initiated.

Moratorium under Section 14 of the Code - Moratorium as provided by Section 14(1) of the Code was declared upon admission and its statutory scope was applied. - HELD THAT: - Upon admission, the Tribunal declared the moratorium prohibiting institution or continuation of suits or proceedings against the corporate debtor, transfer or disposal of assets, enforcement of security interests and recovery of property by lessors for the period of the CIRP. The Tribunal also recorded the statutory exception that supply of goods and essential services shall not be terminated during the moratorium and noted that certain transactions notified by the Central Government may be excluded. The duration of the moratorium was tied to completion of the CIRP, approval of a resolution plan under Section 31(1) or an order for liquidation under Section 33, as applicable. [Paras 15, 16, 17]

A moratorium under Section 14(1) was declared, with the statutory scope and exceptions applied.

Appointment of Interim Insolvency Resolution Professional - public announcement and invitation of claims under Section 15 - Interim Insolvency Resolution Professional was appointed and directed to make the statutory public announcement and call for claims. - HELD THAT: - The operational creditor proposed a registered insolvency professional and submitted the requisite written communication in Form-2. The Tribunal appointed the proposed professional as Interim Insolvency Resolution Professional and directed him to make the public announcement of the initiation of the CIRP and to call for submission of claims in accordance with section 15 and section 13(1)(b) of the Code, thereby initiating the procedural steps necessary for the CIRP. [Paras 14, 18, 20]

The proposed IRP was appointed and instructed to make the public announcement and invite claims.

Prohibition on striking off during corporate insolvency resolution process - Registrar of Companies was directed not to initiate striking off proceedings against the corporate debtor while CIRP is ongoing. - HELD THAT: - The Tribunal directed the Registry to inform the Registrar of Companies that the respondent company is under corporate insolvency resolution process and that any proceedings for striking off the company's name arising from non-compliance with specified provisions of the Companies Act would be detrimental to the CIRP, liquidation and sale of assets, and therefore should not be initiated. [Paras 21]

ROC was informed and directed not to proceed with striking off the corporate debtor during the CIRP.

Final Conclusion: The Section 9 petition was admitted on the finding of default and timeliness; moratorium under Section 14 was declared; an Interim Insolvency Resolution Professional was appointed and directed to make the public announcement and call for claims; and the Registrar of Companies was directed not to initiate striking off proceedings during the CIRP.

Pre-existing dispute - maintainability of application under Section 9 - demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 - initiation of corporate insolvency resolution process under Section 9 - Mobilox principle on existence of dispute prior to notice

Pre-existing dispute - demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 - maintainability of application under Section 9 - Mobilox principle on existence of dispute prior to notice - Existence of a pre-existing dispute between the parties prior to receipt of the demand notice and its effect on the maintainability of the Section 9 application. - HELD THAT: - The Tribunal examined the documents and correspondence attached to the application and found that the email trail between the operational creditor and the corporate debtor (including emails dated 11.04.2017, 12.04.2017 and 27.05.2017) shows that the corporate debtor had raised objections and denied that certain invoices related to it prior to the issuance of the demand notice dated 11.02.2019. Applying the principle laid down in Mobilox Innovations Pvt. Ltd. v. Kirusa Software (P) Ltd., the Tribunal held that a dispute must pre-exist the receipt of the demand notice or invoice for Section 9 to be barred. On appraisal of the evidence, the Tribunal concluded that the dispute existed before the demand notice was issued and therefore the statutory condition for admission of a Section 9 petition was not satisfied. Consequently, the application under Section 9 was held to be not maintainable and was liable to be rejected. [Paras 6, 7, 8, 11]

Application under Section 9 rejected and the petition dismissed for existence of a pre-existing dispute prior to the demand notice.

Final Conclusion: The Tribunal dismissed the application for initiation of CIRP under Section 9 of the Insolvency and Bankruptcy Code, 2016 on the ground that a pre-existing dispute between the parties existed prior to the demand notice, rendering the Section 9 petition not maintainable.

Financial debt - default - initiation of corporate insolvency resolution process under Section 7 of the Insolvency and Bankruptcy Code, 2016 - scope of adjudicating authority under Section 7 - moratorium - appointment of interim resolution professional

Financial debt - default - scope of adjudicating authority under Section 7 - The Corporate Debtor had incurred a financial debt and had committed a default entitling the Financial Creditor to invoke Section 7. - HELD THAT: - The Tribunal examined the loan agreement dated 25.07.2019 and the documents on record and applied the settled test that admission under Section 7 requires proof of a financial debt and existence of default; the Adjudicating Authority need not go into disputed questions so long as debt and default are proved. On appreciation of the loan agreement terms (loan of Rs. 15,00,000, interest at 18% p.a., repayment date) and the parties' correspondence evidencing non-payment of interest and recall of the loan, the Tribunal found that the Corporate Debtor had defaulted in repayment obligations and that the claim constituted a financial debt within the meaning relevant for Section 7 proceedings. The Tribunal therefore concluded that the threshold for initiation under Section 7 was satisfied. [Paras 4, 5, 6, 7]

Default on a financial debt was held to be established and the Section 7 threshold satisfied.

Initiation of corporate insolvency resolution process under Section 7 of the Insolvency and Bankruptcy Code, 2016 - The petition under Section 7 was admitted and CIRP was initiated against the Corporate Debtor. - HELD THAT: - Having found that a financial debt and default existed based on the loan agreement and supporting documents, and after hearing the parties, the Tribunal exercised its power under the Code to admit the petition. The admission was founded on careful consideration of the material placed on record and the parties' submissions, leading to initiation of the corporate insolvency resolution process with immediate effect. [Paras 7, 8]

The Section 7 petition was admitted and CIRP was initiated against the Corporate Debtor.

Moratorium - A moratorium under the Code was imposed consequential to admission of the CIRP. - HELD THAT: - Upon admission of the Section 7 petition, the Tribunal applied the statutory consequence of admission and imposed the moratorium in the terms set out in the Code. The order enjoins institution or continuation of suits or proceedings against the Corporate Debtor, transfer or disposal of assets, actions to enforce security interests, and recovery of property from the Corporate Debtor for the duration of the CIRP, subject to the exceptions and qualifications provided in the statute. [Paras 9]

Moratorium was imposed forthwith in the terms prescribed by the Code.

Appointment of interim resolution professional - An interim resolution professional was appointed to manage the CIRP. - HELD THAT: - The Tribunal appointed the IRP proposed by the Applicant and directed him to carry out the functions and take steps under the Code (including Sections 15, 17 and 18) and to file his report within 30 days before the Bench. The appointment follows admission and is incidental to commencement of the resolution process. [Paras 10]

The proposed interim resolution professional was appointed and directed to proceed with CIRP duties and reporting.

Final Conclusion: The Tribunal found that the Financial Creditor proved a financial debt and default, admitted the Section 7 petition, initiated the corporate insolvency resolution process against the Corporate Debtor, imposed the statutory moratorium, and appointed the interim resolution professional to carry forward the CIRP.

Manufacture - transformation into a marketable commodity - marketability - excisable goods - exclusion from service tax where activity amounts to manufacture - business auxiliary service - definition of manufacture in clause (f) of section 2 of the Central Excise Act, 1944

Manufacture - transformation into a marketable commodity - marketability - excisable goods - Conversion of whole spices/seeds (turmeric, chilly, coriander, cumin) into powdered form by crushing, pulverizing, converting and packing whether amounts to manufacture within excise jurisprudence. - HELD THAT: - Applying settled Supreme Court tests, the Tribunal examined whether the processes effected a change such that a new and different article emerges which is known in the market and has distinct commercial identity and use. The Larger Bench held that each of the powdered spices has its own market, independent commercial identity and use distinct from the harvested whole product; the transformation undertaken complies with the established tests of manufacture including loss of original commodity identity and emergence of marketable goods. Prior decisions which addressed different factual or statutory contexts (including sales tax or small scale exemption issues) or limited clarifications (such as the Central Board circular of 2000 in the cosmetic context) were distinguished. The Bench found the reasoning and precedent in Jayakrishna Flour Mills (P) Ltd relevant and persuasive and concluded that the conversion of spices into spice powders constitutes manufacture for the purposes of excise law. [Paras 17, 21, 24, 29, 30]

The conversion of the disputed spices into powder constitutes manufacture: the powdered spices are marketable commodities with distinct use and identity and therefore fall within the concept of 'manufacture'.

Exclusion from service tax where activity amounts to manufacture - business auxiliary service - Whether, having found manufacture, the activity is excluded from levy as a 'business auxiliary service' under the Finance Act, 1994. - HELD THAT: - Sectional and legislative amendments and the Explanation to section 65(19) of the Finance Act, 1994 treat production or processing for a client as a taxable business auxiliary service but expressly exclude activities that amount to 'manufacture' of excisable goods as defined in clause (f) of section 2 of the Central Excise Act. Because the Larger Bench concluded that the processing in question amounts to manufacture of excisable goods (spice powders), such activity falls outside taxable 'business auxiliary service'. The Bench therefore restricted the scope of further proceedings, noting that the question of service tax liability follows from the finding of manufacture. [Paras 3, 17, 18, 30]

Since the activity is manufacture of excisable goods, it is excluded from taxation as a 'business auxiliary service' under the Finance Act, 1994.

Final Conclusion: The Larger Bench answered the reference by holding that the crushing, pulverizing, converting and packing of the implicated spices into powder amounts to 'manufacture' (meeting the marketability and transformation tests) and, consequently, such activity is excluded from levy as a 'business auxiliary service' under the Finance Act, 1994; the response is to be placed before the Division Bench for disposal of the appeals.

Service tax liability of recipient - reverse charge mechanism - Banking and Financial Services taxable under reverse charge - revenue neutrality - limitation and extended period - penalty for suppression, fraud or wilful misstatement

Service tax liability of recipient - reverse charge mechanism - Banking and Financial Services taxable under reverse charge - Liability to pay service tax on fees paid in foreign currency to overseas service providers for raising ECB/FCCB was accepted and upheld. - HELD THAT: - The appellant did not contest the taxability of the services before the adjudicating authority or in the appeal; the Tribunal accordingly treated the service received as taxable under the reverse charge mechanism applicable to banking and financial services. The Tribunal noted that Section 73(3) was relied upon by the appellant but, on the record, the appellant had not challenged taxability and therefore the Tribunal held the services were liable to service tax. The finding that the appellant had not raised the question of taxability at earlier stages led the Tribunal to affirm that the service recipients' liability stood established. [Paras 4]

Service tax liability on the impugned services is upheld.

Revenue neutrality - limitation and extended period - penalty for suppression, fraud or wilful misstatement - Limitation, invocation of extended period and imposition of penalties were not finally adjudicated and were remanded for fresh consideration in light of revenue neutrality material produced by the appellant. - HELD THAT: - The Tribunal observed that the adjudicating authority did not verify facts concerning revenue neutrality and relied on earlier case law to deny the benefit of revenue neutrality and to sustain penalties. The appellant submitted documents before the Tribunal showing entitlement to Cenvat credit and evidence of substantial duty payments from PLA during the relevant period; the Tribunal noted subsequent authorities relied on by the appellant and found that limitation and penalty required reconsideration, particularly in view of the material tendered on revenue neutrality. Consequently, the Tribunal declined to decide these matters on the record before it and remitted them to the adjudicating authority for fresh examination and determination. [Paras 4, 5]

Limitation, extended period invocation and penalties set aside for fresh adjudication by the authority on the question of revenue neutrality and related documents.

Final Conclusion: The appeal is allowed in part: the Tribunal affirms that the services are taxable under the reverse charge mechanism but remands the issues of limitation, invocation of extended period and imposition of penalties to the adjudicating authority for fresh consideration in light of the appellant's revenue-neutrality material.

Eligibility of credit on returned goods under Rule 16(1) of the Central Excise Rules, 2002 - onus of proof and requirement of admissible evidence to deny credit - validity of adjudication based on departmental investigation - need to investigate intermediary/ultimate buyer before recording adverse findings

Eligibility of credit on returned goods under Rule 16(1) of the Central Excise Rules, 2002 - onus of proof and requirement of admissible evidence to deny credit - validity of adjudication based on departmental investigation - Whether denial of credit of Rs. 6,75,872/- on account of alleged fake letters and returned goods was tenable in view of the departmental investigation and evidence produced. - HELD THAT: - The Tribunal found that the consigness (M/s Adarsh Enterprises and M/s Gandhi Springs) had recorded statements denying any return of goods but had produced ledger accounts which were in the department's possession. Those ledger accounts were not placed on record or incorporated in the show cause notice for verification. Further, no investigation or statement was recorded from the buyer through whom the goods had been sold (M/s Sikkim Ferro Alloy). The adjudication rested on the allegation that the letters on which credit was taken were fake, but the department did not produce the ledger entries or complete the investigation into the intermediary to corroborate the allegation. In these circumstances the Tribunal held that the denial of credit was founded on an incomplete and therefore faulty investigation, and that an allegation unsupported by the withheld documents and without proper inquiry into the intermediary could not sustain denial of the credit.

Impugned order denying credit set aside; appeal allowed and credit restored, with consequential relief if any.

Final Conclusion: The appeal succeeds. The denial of credit was founded on a faulty and incomplete investigation (material ledger accounts were not produced and the intermediary buyer was not examined); accordingly the order denying credit is set aside and the credit is restored with consequential relief.

Cenvat credit on Goods Transport Agency service - Place of removal - FOR contract and risk in transit - Freight included in assessable value - Custom House Agent service for export - Port of export as place of removal - Board Circular on determination of place of removal

Cenvat credit on Goods Transport Agency service - Place of removal - FOR contract and risk in transit - Freight included in assessable value - Board Circular on determination of place of removal - Cenvat credit in respect of Goods Transport Agency (GTA) service is admissible to the appellant. - HELD THAT: - The Tribunal found the factual matrix to be that supplies were on FOR basis and the freight element was included in the assessable value on which duty was discharged. Applying the tribunal's earlier decision in Ultra Tech Cement (as explained in the order) and the Board circular interpreting determination of "place of removal", where goods are supplied on FOR terms with freight included and seller bears obligations up to the customer's doorstep, the place of removal shifts so as to make transportation services integral to removal. Although the adjudicating authority relied on the absence of a finding that the seller bore risk during transit, the Tribunal held the facts identical to Ultra Tech Cement and, in view of the Board circular and the precedent upheld by the High Court, concluded that GTA services used up to the place of removal are input services eligible for Cenvat credit. [Paras 4, 5]

GTA service Cenvat credit allowed and impugned finding denying credit set aside.

Custom House Agent service for export - Port of export as place of removal - Cenvat credit on services used up to place of removal - Cenvat credit in respect of Custom House Agent (CHA) service used for export is admissible to the appellant. - HELD THAT: - The Tribunal held that where goods are exported the place of removal shifts to the port of export; consequently services used beyond the factory gate but up to the port of export qualify as being used for removal. Relying on precedent (including the Gujarat High Court decision in Dynamic Industries Ltd recognising CHA as input service) and the principle that services used up to the place of removal are eligible as input services, the Tribunal allowed Cenvat credit on CHA services employed for export clearance. [Paras 5]

CHA service Cenvat credit allowed and impugned finding denying credit set aside.

Final Conclusion: The appeals are allowed; the impugned orders are set aside and the appellant is entitled to Cenvat credit on both GTA and CHA services used up to the place of removal.

Regular bail - conscious possession - coconspiracy - applicability of the rigours of Section 37 of the NDPS Act - role of mere driver in narcotics transactions

Regular bail - role of mere driver in narcotics transactions - conscious possession - coconspiracy - applicability of the rigours of Section 37 of the NDPS Act - Grant of regular bail to the petitioner who was the driver and alleged co-accused in an NDPS complaint - HELD THAT: - The Court found that the petitioner was only the driver of the vehicle and no contraband was recovered from him. The prosecution's case attributed to the petitioner, at best, that he handed over money from his pocket on the asking of the co-accused; he neither received nor had the contraband in his possession. Prior decisions dealing with drivers and transfer of contraband were considered analogous. To classify the petitioner as a coconspirator, prosecution must show knowledge that the money was being handed over for purchase of narcotics; that element is not established. The prosecution did not contend that the money belonged to the petitioner and the evidence establishes he acted at the direction of the vehicle owner in the course of his employment. Given absence of conscious possession, lack of previous involvement, custody since 30th January, 2020, and the likelihood of protracted trial, the strict bail standard under Section 37 NDPS Act does not preclude bail in the facts of this case. For these reasons the petition for regular bail was allowed. [Paras 6, 7, 8]

Petitioner granted regular bail on furnishing personal bond and surety, subject to conditions including court's satisfaction, prohibition on leaving the country without permission, and intimation of change of contact/address.

Final Conclusion: Bail allowed: the driver (petitioner), against whom no contraband was recovered and who was not shown to have been in conscious possession or to have had requisite knowledge to be treated as a coconspirator, was released on regular bail subject to bond, surety and customary conditions.

Interim compensation under Section 143A(1) of the Negotiable Instruments Act - prohibition on defence for non-payment of interim compensation - quashing of order to the extent of barring defence - recovery of interim compensation as if it were a fine under Section 421 of the Code of Criminal Procedure, 1973

Prohibition on defence for non-payment of interim compensation - quashing of order to the extent of barring defence - Validity of the Trial Court's direction prohibiting the accused from producing defence in the event of non-payment of interim compensation. - HELD THAT: - The Revisional Court set aside Para 5 of the Trial Court's order insofar as it directed that failure to deposit interim compensation would bar the accused from producing his defence. The High Court records that the Revisional Court held such a prohibition to be not legal and proper and thus quashed that portion of the Trial Court's order. The Trial Court's direction to the extent of imposing interim compensation was left undisturbed; only the punitive consequence of disallowing defence for non-payment was invalidated. The High Court does not re-adjudicate the correctness of the Revisional Court's exercise but recognises that the prohibition on presenting defence was quashed and set aside. [Paras 5]

Para 5 of the Trial Court order insofar as it prohibited the accused from producing defence for non-payment of interim compensation is not legal or proper and has been quashed by the Revisional Court; the High Court records and disposes the present application accordingly.

Interim compensation under Section 143A(1) of the Negotiable Instruments Act - recovery of interim compensation as if it were a fine under Section 421 of the Code of Criminal Procedure, 1973 - Availability of remedy to the complainant to recover interim compensation if the accused does not deposit the same. - HELD THAT: - The Court notes that interim compensation awarded under Section 143A(1) may, under Section 143A(5), be recovered as if it were a fine under Section 421 CrPC. The High Court observed that if the accused fails to deposit the interim compensation, the complainant is entitled to pursue the statutory remedy and approach the competent authority for recovery under the provisions analogous to Section 421 CrPC. The order leaves intact the Trial Court's direction for interim compensation and indicates that enforcement mechanisms under the Act and CrPC remain available to the applicant. [Paras 5]

The applicant may avail the remedy of recovery of the interim compensation as if it were a fine under Section 421 CrPC; the Trial Court's order for interim compensation stands and enforcement may be sought through the competent authority.

Final Conclusion: The petition is disposed of and the Rule is discharged. The Revisional Court's quashing of the Trial Court order to the extent of barring the accused from producing defence for non-payment of interim compensation is recorded; the direction for interim compensation remains in force and the complainant may seek recovery of the award by invoking the remedy available under the Act and Section 421 CrPC.

Parity in grant of bail - Bail under Section 439 CrPC - Temporary bail for a fixed period - Conditions of personal bond and surety - Surrender on expiry of temporary bail - Offences under the NDPS Act

Parity in grant of bail - Bail under Section 439 CrPC - Offences under the NDPS Act - Applicant entitled to bail on parity with co-accused who were earlier released on identical terms. - HELD THAT: - The Court considered the case diary and the admitted fact that co-accused persons named in the judgment had earlier been granted bail by this Court on 30.4.2021 for a period of six months under identical circumstances. In the absence of any distinguishing circumstance in the applicant's case and having perused the record, the Court found no reason to refuse parity. Applying the principle of parity in bail matters, the Court granted bail to the applicant on similar temporary terms while noting the NDPS Act offences alleged against him.

Bail allowed on parity with co-accused; application partially allowed.

Temporary bail for a fixed period - Conditions of personal bond and surety - Surrender on expiry of temporary bail - Grant of temporary bail for six months subject to furnishing of bond and surety and surrender on expiry. - HELD THAT: - The Court exercised its discretion to grant temporary bail for a period of six months. Release was made conditional on the applicant furnishing a personal bond in the specified amount with one surety of like amount to the satisfaction of the concerned JMFC/CJM and giving an undertaking to surrender before the trial court on expiry of the six-month period. The Court recorded that failure to surrender would render the applicant liable to arrest and continuation of trial in accordance with law.

Applicant released on temporary bail for six months on specified bond, surety and surrender conditions.

Final Conclusion: Bail application partially allowed: applicant released on temporary bail for six months on furnishing the prescribed bond and surety and on condition of surrendering before the trial court at the end of the period; failure to surrender will attract arrest and continuation of trial.

Quashing of criminal complaint - Prima facie case - Section 482 Cr.P.C. and scope of interference - Section 420 IPC - cheating and dishonest intention - Business transaction versus criminality - Inapplicability of precedents on the Negotiable Instruments Act to prosecutions under Section 420 IPC

Section 482 Cr.P.C. and scope of interference - Prima facie case - Quashing of criminal complaint - Section 420 IPC - cheating and dishonest intention - Whether the High Court should quash the private complaint alleging offence under Section 420 IPC by exercising powers under Section 482 Cr.P.C. - HELD THAT: - The Court applied the settled principle that while exercising inherent jurisdiction under Section 482 Cr.P.C. it should not encroach upon the domain of investigation unless no prima facie case is made out. Having examined the contents of the complaint and the material placed before it, the Court found specific allegations that (i) goods were supplied and receipt is not disputed, (ii) only part payment was made and a cheque was returned with endorsement 'payment stopped by drawers', (iii) no objection to quality was raised contemporaneously until a belated legal notice, and (iv) communications between the parties supported the complainant's case that payment was promised but not made. Those averments, read together, disclose a prima facie case that dishonest intention existed at the inception of the transaction, which is the ingredient of the offence under Section 420 IPC. In view of these findings and the Apex Court guidance that the High Court should not sit in judgment over investigative materials, the petition to quash was rejected and the matter left for investigation and trial. [Paras 10, 11, 12, 13]

Petition to quash the complaint under Section 482 Cr.P.C. is rejected; the complaint prima facie discloses commission of offence under Section 420 IPC and requires investigation.

Inapplicability of precedents on the Negotiable Instruments Act to prosecutions under Section 420 IPC - Business transaction versus criminality - Whether the judgments relied upon concerning prosecution under provisions of the Negotiable Instruments Act (and the need to arraign the company) are applicable to the present complaint under Section 420 IPC. - HELD THAT: - The Court considered the authorities cited by the petitioner which address prosecution under Sections 138/141 of the Negotiable Instruments Act and issues about arraigning a company. It noted that those decisions are premised on statutory tests peculiar to the NI Act and the need to consider corporate prosecution under that enactment. The present complaint, however, invokes Section 420 IPC for cheating founded on alleged dishonest intention at the transaction's inception; no prosecution under Section 138 NI Act has been initiated. Accordingly, the precedents concerning the NI Act were held not to be directly applicable to the facts and offences alleged in this case. [Paras 8, 12]

Authorities on the NI Act relied upon by the petitioner are not applicable to a prosecution under Section 420 IPC in the present factual matrix.

Final Conclusion: The petition under Article 226/Section 482 Cr.P.C. seeking quashing of the private complaint was rejected: the complaint on its face discloses a prima facie offence under Section 420 IPC and the matter is to proceed to investigation; precedents concerning the NI Act were held inapplicable to the present allegation of cheating.