TaxTMI Updates e-Newsletter
Jun 19,2019

Valuation of second-hand goods by margin scheme under Rule 32(5) of the CGST Rules - applicability of presumptive valuation where no input tax credit has been availed - classification of antiques (age exceeding one hundred years) vis-a -vis specific product headings - HSN classification for paintings under Heading 9701 - HSN classification for jewellery under Heading 7113 - HSN classification for watches under Headings 9101/9102 - residuary entry for goods not specified in the rate schedules - margin-based valuation and reduced rate for old cars under the rate notification regime

Valuation of second-hand goods by margin scheme under Rule 32(5) of the CGST Rules - applicability of presumptive valuation where no input tax credit has been availed - Applicability of Rule 32(5) valuation to the applicant's supplies - HELD THAT: - The Authority found that the applicant deals in second hand/used goods and that Rule 32(5) prescribes valuation as the difference between selling price and purchase price where no input tax credit has been availed on purchase. Applying the rule and having regard to the submissions and notifications, the Authority held that Rule 32(5) applies to the applicant's transactions in old cars, old jewellery and old watches, so tax liability in respect of those categories can be discharged on the margin (difference). The Authority noted that the provision contemplates cases where the supplier has not availed ITC (including purchases from unregistered persons) and that the margin scheme still applies in those circumstances.

Rule 32(5) valuation (tax on difference between selling and purchase price) applies to old cars, old jewellery and old watches dealt by the applicant.

HSN classification for paintings under Heading 9701 - Classification and rate for paintings bought from individual art collectors - HELD THAT: - The Authority applied the tariff description and observed that paintings executed entirely by hand which answer the description of Heading 9701 are classifiable thereunder. Such paintings are taxable at the rate specified for Heading 9701. The Authority rejected the contention that paintings should be treated as second hand for the purpose of a different valuation when they otherwise satisfy the Heading 9701 description.

Paintings as described by the applicant are classifiable under Heading 9701 and attract 12% GST on the sale value.

Margin-based valuation and reduced rate for old cars under the rate notification regime - valuation of second-hand goods by margin scheme under Rule 32(5) of the CGST Rules - Classification, rate and valuation treatment for old cars - HELD THAT: - The Authority held that motor vehicles fall under Heading 8703. While most items under 8703 attract higher rates, Notification No. 08/2018 provides a reduced rate (18%) for specified old and used motor vehicles subject to the conditions in that notification. The notification also explains margin based valuation (difference between selling price and purchase price or depreciated value where relevant) and disallows the benefit if input tax credit has been availed. The Authority recorded that the applicant must satisfy the conditions of the notification to avail the reduced rate and that Rule 32(5) is applicable subject to those conditions.

Old cars are under Heading 8703; reduced 18% rate and margin-based valuation apply only if the conditions of the relevant notification are fulfilled; Rule 32(5) applies subject to those conditions.

HSN classification for jewellery under Heading 7113 - classification of antiques (age exceeding one hundred years) vis-a -vis specific product headings - valuation of second-hand goods by margin scheme under Rule 32(5) of the CGST Rules - Classification and valuation treatment for old jewellery and antique jewellery (age >100 years) - HELD THAT: - The Authority held that articles of jewellery and parts thereof ordinarily fall under Heading 7113 and that Rule 32(5) applies to old jewellery purchased and resold by the applicant (taxable on the margin). However, jewellery which qualifies as an antique of age exceeding one hundred years falls under tariff item 9706 and attracts the rate specified for antiques; Rule 32(5) is not applicable to such antiques falling under 9706.

Old jewellery is classifiable under Heading 7113 and taxable with valuation under Rule 32(5); antique jewellery exceeding 100 years is classifiable under Tariff item 9706 and taxed at the rate for antiques, with Rule 32(5) inapplicable.

HSN classification for watches under Headings 9101/9102 - classification of antiques (age exceeding one hundred years) vis-a -vis specific product headings - valuation of second-hand goods by margin scheme under Rule 32(5) of the CGST Rules - Classification and valuation treatment for old watches and antique watches (age >100 years) - HELD THAT: - The Authority observed that watches fall under Headings 9101 or 9102 as appropriate and are taxable at 18%. For old watches purchased and resold by the applicant, Rule 32(5) applies so tax can be discharged on the margin. Watches which qualify as antiques exceeding 100 years are classifiable under Tariff item 9706 and attract the antiques rate; Rule 32(5) does not apply to such antiques.

Old watches are taxable at 18% under Headings 9101/9102 with valuation permitted under Rule 32(5); antique watches exceeding 100 years fall under Tariff item 9706 and Rule 32(5) is not applicable.

Classification of antiques (age exceeding one hundred years) vis-a -vis specific product headings - HSN classification for printed books under Chapter 49 - residuary entry for goods not specified in the rate schedules - Classification and rate for books, antique books and collectible books - HELD THAT: - The Authority held that printed books ordinarily fall under Chapter 49 and relevant sub headings and that antique books exceeding 100 years are covered by Tariff item 9706 and attract the antiques rate. For books or collectibles described insufficiently, the Authority declined to answer classification questions in the absence of specific descriptions. The residuary entry applies only to goods not specified in the schedules.

Antique books exceeding 100 years are classifiable under Tariff item 9706 and attract the antiques rate; other printed books fall under Chapter 49 as applicable; questions on collectible books left unanswered for want of specifics.

Residuary entry for goods not specified in the rate schedules - classification of collectibles and memorabilia - Classification and rate for collectibles and memorabilia - HELD THAT: - The Authority found that 'collectibles' and 'memorabilia' are not defined and their classification depends on the specific nature of each item. Where a collectible answers a specific tariff heading (for example, a watch or garment), that heading and its rate apply. Where an item is not covered by any specific schedule entry, the residuary entry applies. Given the lack of specific descriptions for the various collectibles submitted, the Authority declined to give an advance ruling on those items.

Classification and rate for collectibles/memorabilia cannot be determined in general and remain unanswered for lack of specific particulars; specific items must be classified under their appropriate headings or, if none, under the residuary entry.

Final Conclusion: The Authority ruled that Rule 32(5) valuation (tax on margin) applies to the applicant's dealings in old cars, old jewellery and old watches (subject in the case of cars to conditions of the rate notification). Paintings, if answering Heading 9701, attract 12% on sale value. Antique items exceeding 100 years fall under Tariff item 9706 and attract the antiques rate; Rule 32(5) does not apply to such antiques. Classification and rates for collectibles and certain books were left unanswered for want of specific particulars.

Applicability of concessional rate under Notification No. 47/2017 - scope of goods specified in the notification - public funded research institution - classification of goods by HSN

Applicability of concessional rate under Notification No. 47/2017 - scope of goods specified in the notification - classification of goods by HSN - public funded research institution - Whether supply of Aluminium Alloy (HSN 76012010) to GTRE is eligible for concessional tax rate under Notification No. 47/2017 dated 14.11.2017. - HELD THAT: - The Authority examined Notification No. 47/2017 which grants exemption of IGST in excess of 5% for specified goods when supplied to certain public funded research institutions, subject to conditions. The notification applies only to the specific categories of goods listed in column (3) (for example, scientific and technical instruments, apparatus, equipment, accessories, parts, consumables, computer software, and prototypes subject to limits) and requires certification by the recipient regarding research use. Although GTRE was accepted as a public funded research institution and a certificate established that it is entitled to concessional rate generally, the certificate did not certify that the specific item supplied-Aluminium Alloy (HSN 76012010)-falls within the descriptions enumerated in column (3) or that it is required for research purposes only. The Authority therefore held that Aluminium Alloy (HSN 76012010) is not one of the goods specified in column (3) of the notification and, absent the requisite certification that the particular goods are for research purposes as required by the notification, the concessional rate cannot be applied. Consequently, the supply is taxable at the rate prescribed in the GST schedule (18%). [Paras 5]

Supply of Aluminium Alloy (HSN 76012010) to GTRE is not eligible for concessional rate under Notification No. 47/2017 and is taxable at the standard rate in the GST schedule.

Final Conclusion: The Authority answered the applicant's question in the negative: Aluminium Alloy (HSN 76012010) supplied to GTRE does not qualify for the concessional 5% rate under Notification No. 47/2017 and is taxable at the rate prescribed in the GST schedule (18%).

Interim injunction - release of goods and conveyance on deposit - prima facie case - seizure and detention under GST enforcement - applicability of Section 129 vis-a -vis Section 130 of the CGST Act

Release of goods and conveyance on deposit - seizure and detention under GST enforcement - Direction for interim release of the seized conveyance and goods on deposit of the amount claimed as tax and penalty in the eWay Bill. - HELD THAT: - The Court, having noted that the vehicle transporting goods was intercepted and seized by departmental authorities and that the eWay Bill recorded tax liabilities and penalty totaling the claimed amount, concluded that in the exercise of its supervisory jurisdiction it was appropriate to grant interim relief by permitting release upon deposit. The order directs that on deposit of the specified sum with the department the conveyance and goods shall be released immediately, thereby balancing the competing interests pending final adjudication. [Paras 3]

On deposit of the claimed amount of Rs. 1,44,180/ with the department, the conveyance and the goods shall be released immediately.

Prima facie case - interim injunction - Existence of a strong prima facie case in favour of the writ applicant to justify interim relief. - HELD THAT: - After hearing counsel and perusal of record, the Court found that the writ applicant had established a strong prima facie case warranting interim protection. That finding formed the basis for issuing notice and granting the conditional interim relief directing release on deposit. [Paras 1]

The writ applicant has a strong prima facie case and is entitled to interim relief; notice is ordered returnable on 19th June 2019.

Applicability of Section 129 vis-a -vis Section 130 of the CGST Act - Principal controversy concerning whether Section 129 or Section 130 of the CGST Act applies was not decided and is directed to be adjudicated subsequently. - HELD THAT: - The Court observed that multiple petitions raise the substantive legal question about the appropriate provision to be invoked for detention/seizure and that this principal issue requires consideration along with other pending petitions. The Court accordingly refrained from deciding the question at the interim stage and listed the matter for further hearing to determine the legality and validity of notices issued under Section 130 as opposed to actions under Section 129. [Paras 3, 4]

The substantive question regarding applicability of Section 129 vis-a -vis Section 130 is reserved for decision and posted for hearing along with allied petitions on 19th June 2019.

Final Conclusion: Notice issued; interim relief granted by directing immediate release of the seized conveyance and goods upon deposit of the claimed tax and penalty amount; the core question on the applicability of Section 129 versus Section 130 of the CGST Act is reserved for determination at the next hearing.

Confiscation and penalty under Section 130 of the GST Act - prima facie case for interim relief - interim release of vehicle and perishable goods on deposit - remand for consideration of legality of notice

Prima facie case for interim relief - interim release of vehicle and perishable goods on deposit - seizure under Section 130 of the GST Act - Grant of interim relief by directing release of seized vehicle and perishable goods on deposit - HELD THAT: - The Court found that the writ applicant had established a strong prima facie case warranting interim protection. Having regard to the perishable nature of the goods (groundnut) and the seizure of the conveyance and consignment under the provisions of the GST Act, the Court directed immediate release of the vehicle and goods upon deposit of a specified sum with the concerned authority. The order is interlocutory and aimed at preserving the subject-matter pending adjudication on merits.

Vehicle and perishable goods to be released at the earliest on deposit of the directed amount with the concerned authority.

Confiscation and penalty under Section 130 of the GST Act - legality and validity of notice under Section 130 of the GST Act - remand for consideration of legality of notice - Adjudication on the validity of the show-cause notice issued under Section 130 deferred for consideration on returnable date - HELD THAT: - The Court did not decide the substantive question regarding the legality or validity of the notice issued under Section 130 concerning confiscation and penalty. That controversy is to be considered along with allied matters on the returnable date; the interim release direction does not constitute a determination on the merits of that issue.

Substantive challenge to the notice under Section 130 to be heard and decided on the returnable date together with allied matters.

Final Conclusion: Notice issued returnable on the listed date; interim relief granted directing release of the seized vehicle and perishable goods on deposit, while the legality of the Section 130 notice is reserved for adjudication on the returnable date.

Interim release of seized goods and vehicle - Deposit as condition for release under sections 129 and 130 of the CGST Act - Prima facie requirement that proceedings under section 129 precede invocation of section 130

Interim release of seized goods and vehicle - Deposit as condition for release under sections 129 and 130 of the CGST Act - Directed interim release of the seized vehicle and goods on deposit of a specified sum with the Department - HELD THAT: - The Court, while noting that the broader question of interpretation and applicability of Sections 129 and 130 of the CGST Act is reserved for final hearing, addressed the limited interlocutory relief of release of the vehicle and goods seized in transit. The materials showed the petitioner to be a registered dealer who had received a tax invoice and that the Department contended undervaluation and initiated proceedings under section 130. The Bench observed that, if the Department's stance were ultimately sustained, an approximate liability would remain and, to balance interests pending final adjudication, directed release of the trailer and plywood on deposit of Rs. 1.50 lakh by a specified date. The order explicitly records reliance on a coordinate Bench decision addressing the procedure under section 129 and the need for a prima facie showing to justify interim relief, and frames the deposit as a protective condition to secure the revenue while preserving the petitioner's entitlement to contest the claim on merits. [Paras 6, 8]

Vehicle HR38Q7370 and the seized goods to be released immediately upon deposit of Rs. 1.50 lakh with the concerned Department by the date stipulated.

Final Conclusion: Interim relief granted: on deposit of Rs. 1.50 lakh with the Department the seized vehicle and goods shall be released; the substantive questions under Sections 129 and 130 are left open for final adjudication and the matter is posted for further hearing.

Benefit of input tax credit - commensurate reduction in price - methodology for computation of profiteering (ITC ratio to turnover) - determination and quantification of profiteered amount - interest on profiteered amount - show cause notice for penalty under Section 122 of the CGST Act, 2017 - monitoring and compliance by Commissioners of CGST/SGST

Benefit of input tax credit - commensurate reduction in price - Respondent had not passed on the benefit of input tax credit to buyers and thereby charged a higher price - HELD THAT: - The Authority found on admitted facts that the project was sold in instalments and completion certificate was obtained on 07.03.2018; Section 171 requires any benefit of ITC extended by the Government to be passed on to the end consumer and does not permit withholding the benefit until completion of the project. The DGAP's investigation, based on returns and project records, established that ITC benefit had accrued post-GST and was not fully passed to buyers. The Respondent's contentions about market-driven pricing, timing of sales, and composition scheme did not negate the statutory obligation to pass on ITC benefit. The Authority therefore concluded that benefit of ITC was denied to buyers. [Paras 16, 17, 19, 22]

Benefit of input tax credit was not passed on and the Respondent realized more price than entitled to collect

Methodology for computation of profiteering (ITC ratio to turnover) - determination and quantification of profiteering - Methodology adopted by the DGAP-comparison of ITC ratio to turnover pre- and post-GST and application of the incremental ITC ratio to post-GST collections-was correct and appropriate for quantification - HELD THAT: - The Authority rejected the Respondent's argument that the DGAP's methodology (comparing ITC-to-turnover ratios pre- and post-GST and applying the increase to relevant post-GST turnover) was unsuitable for real estate projects. Relying on Section 171's mandate to pass on ITC benefit, the Authority observed that where records (returns, saleable area, sold/unsold areas and ITC availed) are available, the DGAP's approach correctly accounts for reversal on unsold flats and proportionate ITC attributable to sold units. The Authority further distinguished the Respondent's reliance on the Pyramid Infratech interlocutory order, noting that the Delhi High Court's interim directions did not invalidate the DGAP's methodology in this case. [Paras 7, 8, 17, 18, 20]

DGAP's methodology to compute profiteering was upheld as correct

Determination and quantification of profiteered amount - interest on profiteered amount - Profiteered amount quantified at Rs. 99,20,246/- and directed to be distributed to identified buyers and the land owner with interest - HELD THAT: - On the materials and calculations submitted by the DGAP, including project saleable area, ITC availed, proportionate reversals and turnover, the Authority determined the increased ITC ratio (2.66%) and applied it to the relevant post-GST collections to compute the aggregate profiteered amount. The Authority accepted DGAP's allocation of amounts to the individual 232 units (Annexure-16) comprising amounts payable to the Applicant, other buyers and the land owner. It directed the Respondent to pass on the determined amounts along with interest at 18% per annum from the dates the excess amounts were collected until payment is made. [Paras 7, 8, 9, 20, 21]

Profiteered amount fixed at Rs. 99,20,246/-; Respondent directed to pass on amounts to the 232 affected recipients with interest @18% p.a.

Show cause notice for penalty under Section 122 of the CGST Act, 2017 - Initiation of penalty proceedings: a show cause notice under Section 122 read with Rule 133(3)(d) is to be issued for alleged offence of issuing incorrect invoices and realizing excess consideration - HELD THAT: - The Authority found that denial of ITC benefit and issuance of incorrect tax invoices amounted to an offence under Section 122(1)(i) of the CGST Act, 2017. Given the specific allegation of incorrect invoices, the Authority directed issuance of a show cause notice so the Respondent may explain why penalty should not be imposed, thus ensuring the Respondent an opportunity to contest the charge before penalty is considered. [Paras 22]

Show cause notice to be issued to the Respondent for penalty under Section 122 (read with Rule 133(3)(d))

Monitoring and compliance by Commissioners of CGST/SGST - Directives for monitoring compliance of the order by Commissioners of CGST/SGST Karnataka under supervision of the DGAP - HELD THAT: - To ensure implementation, the Authority directed the Commissioners of CGST/SGST Karnataka to monitor that the profiteered amounts are passed to eligible buyers as ordered, under the supervision of the DGAP, and to furnish a compliance report to the Authority within four months. [Paras 23]

Commissioners CGST/SGST Karnataka to monitor compliance and report within four months

Final Conclusion: The Authority held that the Respondent had not passed on the benefit of input tax credit and upheld the DGAP's methodology to quantify profiteering; it fixed the profiteered amount at Rs. 99,20,246/-, directed distribution of specified amounts with interest to 232 recipients, ordered issuance of a show cause notice for penalty under Section 122, and directed Commissioners CGST/SGST Karnataka to monitor compliance.

Revisionary jurisdiction under Section 263 - erroneous and prejudicial to the interests of Revenue - allowability of depreciation - plausible view / reasonableness of assessment order - doctrine of merger - definition of commercial vehicle in Appendix I

Revisionary jurisdiction under Section 263 - erroneous and prejudicial to the interests of Revenue - Validity of the Commissioner's exercise of powers under Section 263 to revise the assessment on the ground that the assessing officer's order was erroneous and prejudicial to the interests of Revenue. - HELD THAT: - The High Court upheld the Tribunal's conclusion that the Commissioner did not assume valid jurisdiction under Section 263. The Tribunal found that the Assessing Officer had made inquiries, issued show cause, considered the assessee's reply and evidence, and took one of two plausible views in allowing depreciation at the enhanced rate; such a view cannot be characterized as an erroneous order prejudicial to Revenue merely because the Commissioner disagreed. Reliance on authorities distinguishing lack of inquiry from an inadequate inquiry supports the proposition that a difference of opinion does not sustain revision under Section 263. Consequently, the Commissioner's notice and order under Section 263, directing the AO to re-examine the depreciation claim without valid jurisdiction, was held unlawful and quashed. [Paras 4]

Order under Section 263 quashing the AO's assessment was without jurisdiction and is unsustainable; the Tribunal correctly set aside the Section 263 order.

Allowability of depreciation - plausible view / reasonableness of assessment order - definition of commercial vehicle in Appendix I - doctrine of merger - Whether on merits the Assessing Officer's grant of depreciation at the enhanced rate on the motor car was a reasonable and correct view. - HELD THAT: - The Court agreed with the Tribunal that the AO's allowance of depreciation at the enhanced rate was a reasonable and plausible view. The vehicle in question was a light motor vehicle and the Tribunal's precedents interpreting Appendix I and the applicable CBDT notification supported entitlement to enhanced depreciation. The Tribunal also noted that appellate consideration (and the doctrine of merger where applicable) had been given effect to in earlier proceedings, reinforcing that the AO's conclusion could not be branded erroneous for purposes of invoking Section 263. [Paras 4]

The AO's allowance of enhanced depreciation was a tenable view and cannot be reopened under Section 263; the Tribunal's acceptance of that view is affirmed.

Final Conclusion: The Revenue's appeal is dismissed. The Tribunal's order quashing the Commissioner's Section 263 notice and order for AY 2010-11 is upheld, the AO's allowance of enhanced depreciation being a plausible view not amenable to revision under Section 263.

Due date for crediting employee's contribution to provident fund and ESIC - deductibility under section 36(1)(va) linked to due date of credit - interpretation of Section 38 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 - disallowance for late deposit of employees' contributions

Due date for crediting employee's contribution to provident fund and ESIC - deductibility under section 36(1)(va) linked to due date of credit - interpretation of Section 38 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 - disallowance for late deposit of employees' contributions - Whether the due date for payment/credit of employees' contribution to PF/ESIC is to be determined by the month to which the wages relate or by the month in which salary is paid, for the purpose of claim under section 36(1)(va). - HELD THAT: - Section 36(1)(va) permits deduction of sums received from employees provided such sums are credited by the employer to the relevant fund on or before the due date; the Explanation defines "due date" by reference to the date required under the relevant Act, rule or standing order. Section 38(1) of the Employees' Provident Funds Act requires an employer, before paying wages, to deduct the employee's contribution and to pay such contributions to the fund "within fifteen days of the close of every month." The expression "within fifteen days of the close of every month" refers to the month for which the wages are payable and the corresponding liability to deduct and deposit arises, and not to a later month merely because wages are paid in that later month. Consequently an employer cannot postpone the statutory due date by delaying payment of salary; delayed deposit beyond the period fixed by Section 38 attracts the disallowance under section 36(1)(va). Applying this construction, the Tribunal's approach of determining due date by the month in which salary was paid is incorrect, and the disallowance for late deposit is sustainable. [Paras 4, 5, 6]

Tribunal's order upholding assessee's claim on the basis that due date is determined by month of salary payment is quashed; disallowance for late deposit sustained and substantial question of law answered in favour of Revenue.

Final Conclusion: Appeal allowed; the Tribunal's order dated 27th June 2018 is quashed and set aside, and the substantial question of law is answered in favour of the Revenue.

Validity of notice under Section 148 of the Income Tax Act - requirement that the officer recording reasons under Section 148(2) must issue the notice under Section 148(1) - jurisdictional nature of notice under Section 148 - provisional cure under Section 292B of the Income Tax Act - e-assessment procedural migration of PAN

Requirement that the officer recording reasons under Section 148(2) must issue the notice under Section 148(1) - jurisdictional nature of notice under Section 148 - Notice issued under Section 148 was invalid because it was issued by an officer different from the officer who recorded the reasons for reopening. - HELD THAT: - On a conjoint reading of Sections 147 and 148(2), the court accepted the established principle that the officer who records the reasons for reopening must himself issue the Section 148 notice. In the present case the jurisdictional Assessing Officer (DCIT/ACIT, Circle2, Jamnagar) recorded the reasons but the notice dated 29.3.2018 was issued by the ITO, Ward 2(2), Jamnagar who did not hold jurisdiction over the petitioner. The respondents' explanation that this mismatch arose from e-assessment procedural requirements and non-migration of the PAN did not cure the defect because the requirement is jurisdictional. Consequently, proceedings founded on the invalid notice cannot be sustained and the reassessment initiated thereunder had to be quashed. [Paras 8, 9, 10, 11, 12]

The notice under Section 148(1) was invalid for being issued by an officer who had not recorded the reasons and had no jurisdiction; all proceedings under that notice could not be sustained.

Provisional cure under Section 292B of the Income Tax Act - participation in reassessment proceedings and locus to challenge jurisdictional notice - The defect in issuance of the notice could not be cured under Section 292B nor barred by the assessee's participation in the proceedings; the court entertained the challenge to jurisdiction. - HELD THAT: - The respondents relied on Section 292B and the assessee's participation in the reassessment proceedings to contend that the challenge was barred or the defect cured. The court held that because the defect related to the jurisdictional validity of the Section 148 notice, it was not amenable to cure under Section 292B. Although the petitioner had taken part in proceedings and filed objections before approaching the court, the court nonetheless entertained the petition given that the very jurisdiction of the Assessing Officer who issued the notice was in issue and that the Assessing Officer had not correctly recorded or appreciated the objection during proceedings. [Paras 6, 7, 10, 11, 12]

The irregularity was not cured by Section 292B and participation in proceedings did not preclude judicial review of the jurisdictional defect; the challenge was maintainable.

Final Conclusion: The petition is allowed: the notice dated 29.3.2018 issued under Section 148 and all proceedings and the assessment order dated 28.12.2018 consequent thereto are quashed and set aside.

Exemption under Section 10(26B) of the Income tax Act - promoting the interests of the Scheduled Castes, Scheduled Tribes or backward classes - objects of a corporation as determinative for tax exemption - reservation in recruitment not equivalent to corporation being formed for benefit of Scheduled Tribes

Exemption under Section 10(26B) of the Income tax Act - objects of a corporation as determinative for tax exemption - promoting the interests of the Scheduled Castes, Scheduled Tribes or backward classes - Whether the appellant corporation is entitled to exemption under Section 10(26B) for the Assessment Years 2009-2010 and 2010-2011 - HELD THAT: - The Court examined the memorandum of association and objects of the Arunachal Police Housing & Welfare Corporation Limited and held that the corporation was incorporated to formulate and execute housing schemes for the benefit and welfare of employees of the Police Department and to undertake construction and allied works for the Police Department, without any specific reference limiting such benefit to Scheduled Castes, Scheduled Tribes or backward classes. Section 10(26B) applies only where the corporation or body has been established or formed for promoting the interests of the Scheduled Castes, Scheduled Tribes or backward classes. The mere fact that the tribal population constitutes an overwhelming majority in the State, or that reservations exist in recruitment, does not convert a corporation established for the benefit of a class of government employees into an entity formed for promoting the interests of Scheduled Tribes. Decisions relied upon by the appellant were distinguished: Harijan Evam Nirbal Varg Awas Nigam involved an entity established specifically for Harijans and was considered on its objects and activities; Arunachal Pradesh Forest Corporation was held to be for the development of the general local population and thus benefitted the tribal majority, facts not analogous to the present case. The assessing authority, CIT(A) and the Tribunal all reached the conclusion that the appellant was not established for the promotion of Scheduled Castes/Tribes/backward classes and the Court found no reason to interfere.

The appellant is not entitled to exemption under Section 10(26B) for the Assessment Years 2009-2010 and 2010-2011.

Appellate tribunal's finding and perversity review - judicial interference with concurrent conclusions on exemption - Whether the Income Tax Appellate Tribunal's order dated 31.05.2017 is perverse and liable to be set aside - HELD THAT: - The Court reviewed the Tribunal's conclusion that the appellant corporation did not qualify for exemption under Section 10(26B) and found that the Tribunal, along with the Assessing Officer and the CIT(A), had applied the correct legal test by focusing on the objects and formation of the corporation. Observations in the orders about potential consequences if exemption were granted to similar corporations did not vitiate the substantive conclusion. There was no manifest perversity in the Tribunal's reasoning or conclusion warranting interference.

The Tribunal's order is not perverse and does not warrant setting aside.

Final Conclusion: The substantial questions are answered against the appellant; the appeals are dismissed. The appellant corporation is not entitled to exemption under Section 10(26B) for the Assessment Years 2009-2010 and 2010-2011, and the Tribunal's order is upheld.

Disallowance under section 14A read with Rule 8D(2)(iii) - Computation of book profit under section 115JB - Deduction of unrealized rent under Explanation to section 23 read with Rule 4

Disallowance under section 14A read with Rule 8D(2)(iii) - Scope of disallowance under Rule 8D(2)(iii) in computing disallowance under section 14A where some equity investments did not yield exempt income. - HELD THAT: - The Tribunal accepted the assessee's revised suo motu computation reducing the disallowance because Rule 8D(2)(iii) must be applied with reference only to the average equity investment that actually yielded tax exempt income. Investments that did not give rise to exempt (tax free) income during the year are to be excluded from the computation of average investments for the purpose of Rule 8D(2)(iii). The Tribunal relied on the Special Bench decision in ACIT v. Vireet Investment (P.) Ltd. and the assessee's own favourable decision for an earlier year, and observed that the assessee was entitled to revise the disallowance despite a higher self made disallowance in the return. [Paras 4]

Order of the CIT(A) set aside; AO directed to restrict the disallowance to the revised figure of Rs. 34,21,118/- instead of the higher disallowance.

Computation of book profit under section 115JB - Disallowance under section 14A read with Rule 8D(2)(iii) - Whether adjustments to book profit under section 115JB should reflect the restricted disallowance relatable to exempt income. - HELD THAT: - Applying the same principle adopted for disallowance under Rule 8D(2)(iii), the Tribunal held that the adjustment to book profit under section 115JB must be limited to the disallowance attributable to investments actually yielding exempt income. In view of the Special Bench authority and earlier coordinate bench findings in the assessee's case, the AO was directed to redo the computation of book profit to reflect the restricted disallowance of Rs. 34,21,118/-. [Paras 5]

Adjustment under section 115JB to be recomputed and restricted to the disallowance of Rs. 34,21,118/-; direction to AO to redo computation of book profit accordingly.

Deduction of unrealized rent under Explanation to section 23 read with Rule 4 - Allowability of deduction for unrealized rent (bad debts) in computing annual value under section 23. - HELD THAT: - The Tribunal found the assessee's claim covered by the Explanation to section 23 and Rule 4 of the Income tax Rules, 1962, which permit reduction of unrealized rent lost as irrecoverable from the chargeable annual value. The Tribunal noted it is not necessary that the unrealized rent relate to the same year and thus held that the disallowance of the bad debt in respect of unrealized rent was not sustainable. [Paras 7]

Disallowance of the bad debt in respect of unrealized rent set aside; the assessee's claim for deduction is allowed.

Final Conclusion: The appeal is allowed: the disallowance under section 14A/Rule 8D(2)(iii) is to be restricted to the revised figure, the book profit computation under section 115JB is to be redone reflecting that restriction, and the deduction for unrealized rent is allowed.

Penalty under section 271(1)(c) - notice under section 274 - concealment of particulars of income - furnishing inaccurate particulars of income - revised return filed before completion of assessment - principles of natural justice in quasi-criminal penalty proceedings

Notice under section 274 - penalty under section 271(1)(c) - concealment of particulars of income - furnishing inaccurate particulars of income - principles of natural justice in quasi-criminal penalty proceedings - Validity of the notice initiating penalty proceedings where the notice did not specify whether the charge was concealment of income or furnishing inaccurate particulars of income - HELD THAT: - The Tribunal examined the show-cause notice issued under section 274 read with section 271(1)(c) and noted that the notice merely mentioned the section without specifying the limb under which penalty was proposed (concealment or furnishing inaccurate particulars). Relying on the jurisdictional High Court precedents and the Tribunal's earlier decision in Varad Mehta, the Tribunal held that a notice in general proforma that fails to specify the particular charge frustrates the assessee's ability to know the case to be met and offends the requirements of natural justice in quasi-criminal proceedings under section 271(1)(c). The notice was therefore found to be invalid for want of specific application of mind by the Assessing Officer, rendering subsequent penalty proceedings void ab initio. [Paras 11]

Notice under section 274 was invalid for failure to specify the specific charge; penalty proceedings under section 271(1)(c) held void ab initio and Ground No.2 allowed.

Revised return filed before completion of assessment - penalty under section 271(1)(c) - Whether penalty under section 271(1)(c) could be sustained where the assessee voluntarily disclosed the long-term capital gain by filing a revised return before completion of assessment - HELD THAT: - The Tribunal observed that the assessee filed a revised return disclosing the long-term capital gain on 30.03.2013 while assessment proceedings under section 143(3) were still pending and within the period permitted by law for filing a revised return. The Assessing Officer had considered the revised return in completing assessment. Given that the revised return was filed before completion of the assessment, the assessee was legally entitled to revise the return and hence cannot be held liable to penalty under section 271(1)(c) for the income disclosed in that revised return. On this basis the Tribunal found the levy of penalty unjustified and deleted it. [Paras 13]

Penalty deleted as the revised return was filed before completion of assessment and disclosure in the revised return could not attract penalty; Ground No.1 allowed.

Final Conclusion: Both grounds of appeal allowed: the notice under section 274 was invalid for failure to specify the particular limb of section 271(1)(c), rendering penalty proceedings void ab initio; alternatively, the revised return was filed before completion of assessment and the penalty for the disclosed income was unsustainable, accordingly the penalty is deleted.

Defective show cause notice - requirement to specify charge in notice - penalty under section 271(1)(c) - quashing of penalty for defective notice

Defective show cause notice - requirement to specify charge in notice - penalty under section 271(1)(c) - Show cause notice issued under section 274 which did not specify whether the assessee was alleged to have concealed particulars of income or failed to disclose them was defective and the penalty under section 271(1)(c) could not be sustained. - HELD THAT: - The Assessing Officer issued a standard form show cause notice under section 274 without striking off the alternative limb, thereby failing to specify the precise charge against the assessee (whether concealment of particulars of income or failure to disclose them). The Tribunal observed that such omission renders the notice defective. The Tribunal followed the decision of the Hon'ble Kolkata High Court in Pr. CIT vs Bijoy Kr. Agarwal , which upheld the Tribunal's conclusion that a notice lacking specification of which of the two contraventions was alleged is defective and a penalty imposed pursuant to such notice is unsustainable. The Tribunal noted and applied the legal principle endorsed in Amrit Foods vs Commissioner of Central Excise and the decision in PCIT vs Dr. Murari Mohan Koley as supporting authority for the requirement that the charge in a penalty notice be clearly specified. Applying these precedents to the facts before it, and noting that the AO did not strike off the irrelevant portion of the printed notice, the Tribunal concluded that the penalty proceedings were vitiated for want of a valid, specific show cause notice and that the penalty could not be sustained. [Paras 3]

Penalty imposed under section 271(1)(c) set aside on account of a defective show cause notice.

Final Conclusion: Appeal allowed; penalty imposed under section 271(1)(c) quashed because the show cause notice was defective for not specifying the exact charge.

Penalty under section 271(1)(c) of the Income Tax Act, 1961 - res judicata - opportunity of being heard - remand for fresh adjudication - alternate explanation for bank deposits

Penalty under section 271(1)(c) of the Income Tax Act, 1961 - alternate explanation for bank deposits - opportunity of being heard - remand for fresh adjudication - Whether the order of the CIT(A) sustaining penalty under section 271(1)(c) was properly adjudicated in accordance with the directions of the ITAT and merits interference. - HELD THAT: - The Tribunal found that the CIT(A) did not address the penalty issue on its merits but instead considered matters relating to the quantum assessment. The CIT(A)'s observations (reproduced at para 5 of the impugned order) show that the alternate explanation offered by the assessee regarding the source of cash deposits was treated in the context of quantum and that material particulars (ownership details of M/s Sai Cold Storage Pvt. Ltd. and treatment of withdrawals in the company's books) were noted as not furnished. The Tribunal observed that the earlier ITAT order dated 18/11/2016 had directed the CIT(A) to examine the alternate explanation and that the CIT(A) failed to decide the penalty issue in accordance with that direction. For these reasons the Tribunal held that the impugned order cannot stand and that the matter requires fresh consideration by the CIT(A) in accordance with law and the directions of the earlier ITAT order. [Paras 7, 8]

Impugned order of the CIT(A) is set aside and the penalty issue under section 271(1)(c) is remitted to the CIT(A) for fresh decision in accordance with law and the ITAT's directions dated 18/11/2016.

Final Conclusion: The appeal is allowed for statistical purposes; the CIT(A)'s order sustaining the penalty is set aside and the matter is remitted to the CIT(A) for fresh adjudication of the penalty in accordance with law and the ITAT's earlier directions.

Penalty under section 271(1)(c) - Addition under section 68 - Deletion of assessment addition entailing cancellation of penalty - Judicial precedent in K.C. Builders on survival of penalty

Penalty under section 271(1)(c) - Addition under section 68 - Deletion of assessment addition entailing cancellation of penalty - Judicial precedent in K.C. Builders on survival of penalty - Whether penalty under section 271(1)(c) could be sustained after the deletion of the addition made under section 68 - HELD THAT: - The Tribunal noted that a coordinate Bench had deleted the addition made under section 68 in the assessee's own case by order dated 08.09.2016. Applying the law laid down by the Hon'ble Supreme Court in K.C. Builders, the Tribunal held that where the addition on the basis of which a concealment penalty was levied has been deleted, there remains no basis to sustain the penalty. Consequently, the penalty levied by the AO and confirmed by the CIT(A) was not sustainable and was liable to be cancelled. [Paras 5, 6]

Penalty levied under section 271(1)(c) deleted and the assessee's appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, deleted the penalty confirmed by the CIT(A) in view of the deletion of the underlying addition under section 68 by a coordinate Bench and the precedent in K.C. Builders, and set aside the penalty order for Assessment Year 2005-06.

Penalty under section 271(1)(c) for concealment of particulars or furnishing inaccurate particulars of income - Notice under section 274 requiring specification of limb of charge - Requirement of Assessing Officer's satisfaction before initiating penalty - Non-application of mind by Assessing Officer vitiating penalty proceedings - Bonafide claim under section 54/54F not amounting to furnishing inaccurate particulars

Notice under section 274 requiring specification of limb of charge - Requirement of Assessing Officer's satisfaction before initiating penalty - Non-application of mind by Assessing Officer vitiating penalty proceedings - Validity of penalty proceedings where the notice under section 274 read with section 271(1)(c) was vague and the Assessing Officer had not applied his mind as to which limb of section 271(1)(c) was invoked - HELD THAT: - Tribunal examined the show-cause notice and the assessment order and found that the Assessing Officer was not satisfied as to whether the case involved concealment of particulars or furnishing of inaccurate particulars, and invoked both limbs without clear application of mind. The notice reproduced by the Tribunal and the assessment record show ambiguity and indecision on the part of the AO at initiation and throughout the penalty process. Where initiation and prosecution of penalty is mechanical or founded on a non-application of mind as to the specific limb under which penalty is sought, the procedural requirement for a valid notice and precursor satisfaction is not met, rendering the proceedings unsustainable. The Tribunal distinguished Sundaram Finance (relied on by Revenue) on facts because here the defect was not merely a formal defect in the notice but showed lack of AO's satisfaction at the assessment stage itself. [Paras 10, 11, 14, 15]

Penalty proceedings quashed as vitiated by a vague/defective notice and non-application of mind by the Assessing Officer

Penalty under section 271(1)(c) for concealment of particulars or furnishing inaccurate particulars of income - Bonafide claim under section 54/54F not amounting to furnishing inaccurate particulars - Whether the assessee furnished inaccurate particulars or concealed income by claiming deduction under section 54/54F - HELD THAT: - On merits the Tribunal found that the assessee had disclosed details of the sale and construction and produced ledger accounts of capital work-in-progress which were not rejected by the AO. The AO's conclusion that the expenditure constituted renovation/interior works rather than construction was a view taken on evidence and did not establish any intentional concealment or that particulars furnished in the return were inaccurate. Relying on precedent that an incorrect claim which is not based on inaccurate or false particulars does not attract section 271(1)(c), the Tribunal held there was no iota of malafide and the facts supported a bona fide claim. Since the particulars in the return were not found to be incorrect, penalty could not be sustained. [Paras 16, 17, 19, 20]

Penalty not leviable on merits as the claim was bona fide and did not amount to furnishing inaccurate particulars or concealment

Final Conclusion: Penalty imposed under section 271(1)(c) for assessment year 2014-15 is deleted; the assessee's appeal is allowed.

Approval under section 80G(5)(vi) - registration under section 12AA - scope of examination for 80G - genuineness of activities versus exemption under sections 11 and 12 - natural justice - opportunity of being heard - reliance on non filing of appeal as sole ground for rejection - remand for fresh consideration to decide application on merits

Approval under section 80G(5)(vi) - reliance on non filing of appeal as sole ground for rejection - natural justice - opportunity of being heard - Whether the Commissioner erred in rejecting the fresh application for approval under section 80G(5)(vi) without taking cognizance of the documents filed and by treating non filing of an appeal against an earlier order as the sole ground for rejection - HELD THAT: - The Tribunal noted that the assessee had obtained registration under section 12AA and filed a fresh application for approval under section 80G(5)(vi) in February 2017 with the specific documents earlier found missing. The Commissioner rejected the application on the sole basis that the earlier order rejecting 80G was not appealed. The Tribunal held that the Commissioner ought to have taken cognizance of the documents submitted with the fresh application and decided the application on its merits rather than mechanically relying on non filing of an appeal. The absence of a fresh hearing or consideration of the submitted records rendered the impugned rejection unsustainable. [Paras 7]

Rejection of the fresh 80G application only on account of non filing of appeal and without considering the documents filed was erroneous; the Commissioner failed to decide the application on merits.

Remand for fresh consideration to decide application on merits - scope of examination for 80G - genuineness of activities versus exemption under sections 11 and 12 - Whether the matter should be restored to the Commissioner for fresh consideration of the application and the documents filed - HELD THAT: - Concluding that the Commissioner had not taken cognizance of the documents submitted with the fresh application, the Tribunal directed that the file be restored to the Commissioner of Income Tax (Exemptions) for consideration of the application along with the submitted documents. The Tribunal did not itself adjudicate the merits on whether the assessee's income is exempt under sections 11 and 12, or fully resolve the contested question as to the precise scope of inquiry under section 80G; instead it remitted the matter for appropriate decision after examining the material on record and giving the assessee opportunity as may be required. [Paras 7]

Matter restored to the file of the Commissioner of Income Tax (Exemptions) for taking cognizance of the documents submitted and for passing an appropriate order on the application on merits.

Final Conclusion: Appeal partly allowed for statistical purposes; impugned order set aside to the extent that the Commissioner must consider the documents filed with the fresh 80G application and decide the application afresh on merits after giving appropriate consideration and opportunity.

Disallowance under section 14A read with Rule 8D - Utilisation of borrowed funds for earning tax exempt income - Voluntary administrative expense disallowance - Remand for verification and opportunity of hearing

Disallowance under section 14A read with Rule 8D - Utilisation of borrowed funds for earning tax exempt income - Voluntary administrative expense disallowance - Remand for verification and opportunity of hearing - Whether the disallowance computed under section 14A read with Rule 8D deserved to be sustained or required fresh verification in view of the assessee's plea that no borrowed funds were utilised and a voluntary disallowance had already been made. - HELD THAT: - The Assessing Officer computed a disallowance under section 14A read with Rule 8D and treated investments in shares and securities as made out of borrowed funds, arriving at a figure which, after adjusting the assessee's own disallowance, produced the addition confirmed by the CIT(A). The assessee contended that no borrowed funds were used for the investments and that no fresh investments were made during the year, pointing out that it had voluntarily disallowed certain administrative expenses. Given these conflicting factual contentions and the Assessing Officer's finding regarding utilisation of borrowed funds, the Tribunal found it appropriate in the interest of justice to set aside the impugned orders and restore the matter to the Assessing Officer for verification of records. The Assessing Officer is directed to decide the issue afresh in accordance with law after giving the assessee a reasonable opportunity of being heard. [Paras 10]

Matter remitted to the Assessing Officer for verification and fresh decision on the disallowance under section 14A read with Rule 8D after affording the assessee a reasonable opportunity of being heard.

Final Conclusion: The appeal is allowed for statistical purposes: the addition under section 14A read with Rule 8D is not adjudicated on merits and the issue is remitted to the Assessing Officer for fresh verification and decision in accordance with law after giving the assessee an opportunity of hearing.

Approval under section 80G of the Income tax Act - registration under section 12AA as a prerequisite to 80G - requirement of establishment for charitable purpose - power of the Commissioner to call for documents to satisfy conditions of section 80G(5) - cash transactions affecting verifiability of receipts - remand for fresh consideration after opportunity to be heard

Registration under section 12AA as a prerequisite to 80G - approval under section 80G of the Income tax Act - Effect of registration under section 12AA on entitlement to approval under section 80G. - HELD THAT: - The Tribunal recorded that registration under section 12AA is undisputedly granted to the applicant society, but expressly held that such registration is only a prerequisite for applying for approval under section 80G and is not a sufficient condition to entitle the applicant to approval. The approval under section 80G requires independent satisfaction of the conditions in section 80G(5), including that the institution is established for a charitable purpose and complies with the specified requirements, which must be examined by the Commissioner before granting approval.

Registration under section 12AA does not automatically entitle the society to approval under section 80G; independent satisfaction of section 80G(5) conditions is required.

Power of the Commissioner to call for documents to satisfy conditions of section 80G(5) - cash transactions affecting verifiability of receipts - remand for fresh consideration after opportunity to be heard - Whether the Commissioner was justified in rejecting the application for approval under section 80G for failure to furnish required documents and whether the matter required remand. - HELD THAT: - The Tribunal extracted and relied on the conditions in section 80G(5), noting that the Commissioner is empowered to require production of accounts, bank statements and other documents to satisfy himself about the charitable purpose and verifiability of receipts and expenditures. The Commissioner had recorded specific deficiencies: non production of detailed salary/payment particulars and audited/provisional financial statements for FY 2017 18, substantial cash receipts not routed through bank (percentages shown for FY 2015 16 and FY 2016 17), lack of explanation about target donors and intended use of accumulated surpluses, and absence of evidence of prior donations. Because the required documents were not placed before the Commissioner to enable compliance verification, the Tribunal found that the Commissioner could not be satisfied on the statutory prerequisites for 80G approval. However, rather than upholding the rejection finally on merits, the Tribunal observed that the applicant should be afforded an opportunity to produce the documents and accordingly remanded the matter to the Commissioner for fresh decision after giving the applicant a hearing and chance to supply the specified records.

The rejection was not sustained finally; the matter is remanded to the Commissioner to decide afresh after affording the applicant society an opportunity to produce the documents called for and be heard.

Final Conclusion: The Tribunal held that 12AA registration is only a prerequisite and that the Commissioner is entitled to call for documents under section 80G(5); because the society had not produced the required records, the Tribunal remanded the matter to the Commissioner of Income tax (Exemptions) for fresh consideration after allowing the society to furnish the documents and be heard, and allowed the appeal for statistical purposes.

Disallowance under Section 40(a)(i) - Obligation to deduct tax at source under Section 195 - Explanation 2 to Section 9(2) - deemed accrual or arising - Fees for technical services - managerial, technical and consultancy services - Place of accrual - business connection and operations in India - India-USA Double Taxation Avoidance Agreement - Articles 7 and 12 - Taxability of non-resident's income under Section 5(2)

Disallowance under Section 40(a)(i) - Obligation to deduct tax at source under Section 195 - Explanation 2 to Section 9(2) - deemed accrual or arising - Fees for technical services - managerial, technical and consultancy services - India-USA Double Taxation Avoidance Agreement - Articles 7 and 12 - Place of accrual - business connection and operations in India - Validity of disallowance of referral fees under Section 40(a)(i) on account of alleged failure to deduct tax at source. - HELD THAT: - The Tribunal held that the Assessing Officer's disallowance under Section 40(a)(i) could not be sustained because the AO failed to demonstrate that the referral fees fell within the categories caught by the 'Explanation' to Section 9(2). The AO proceeded on a cryptic, non speaking basis by asserting retrospective applicability of Explanation 2 without showing whether the receipt was income by way of interest, royalty or fees for technical services as envisaged in Section 9(1)(v), (vi) or (vii). (Paragraphs 7 and 12.) On the merits, the Tribunal examined Section 5(2) and Section 9(1). Since the payment was made and services were rendered outside India, the amount was neither received nor deemed received in India, and could not be treated as accruing or arising in India under clause (i) to Section 9(1) because no part of the foreign concern's operations were carried out in India; the Toshoku Ltd. (supreme court) principle was applied to conclude that commission/referral income earned abroad by a non resident for services performed outside India does not accrue or arise in India. (Paragraphs 9 and 11.) Further, on a detailed factual and legal analysis the Tribunal found that the referral services did not amount to managerial, technical or consultancy services: the foreign concern merely introduced/referrred clients and did not manage, advise or provide technical skills or know how to the assessee. Hence the receipt could not be characterised as 'fees for technical services' under Section 9(1)(vii) or Explanation 2. (Paragraphs 10-11.) Alternatively, applying the India-USA DTAA, the Tribunal held that Article 12 (fees for included services) did not apply because the referral did not "make available" technical knowledge, experience, skill, know how or processes, and Article 7 supported taxation in the residence State since the services were performed wholly in the USA and there was no PE in India. Consequently, under Section 90(2) the DTAA barred taxation in India and negated any obligation on the assessee to deduct tax at source. (Paragraph 13.) [Paras 9, 10, 11, 12, 13]

The disallowance under Section 40(a)(i) is vacated because the referral fees paid to the foreign concern were not taxable in India and no obligation to deduct tax at source under Section 195 arose.

Final Conclusion: The Tribunal allowed the assessee's appeal for Assessment Year 2012-2013, set aside the CIT(A)'s order, and vacated the disallowance of the referral fees under Section 40(a)(i) on the grounds that the fees were not taxable in India nor subject to TDS, including by application of the India-USA DTAA.

International transaction - Arm's Length Price - transfer pricing adjustment for interest on receivables - reasonable credit period - benchmarking receivables using LIBOR - TNMM (transactional net margin method)

Procedural non-pressing of ground - Ground No.1 (failure to pass final assessment within prescribed time) was not pressed by the assessee and was dismissed as not pressed. - HELD THAT: - The tribunal recorded that the assessee did not press Ground No.1 which alleged delay in passing the final assessment order. The point was therefore not argued before the bench and was disposed of by treating the ground as not pressed. [Paras 4]

Ground No.1 dismissed as not pressed.

Prematurity of penalty challenge - Ground No.3 (challenge to initiation of penalty proceedings under sections 271(1)(c), 271AA and 271BA) was held to be premature and not adjudicated. - HELD THAT: - The tribunal observed that the challenge to initiation of penalty proceedings was premature at this stage of appellate consideration and declined to adjudicate the matter on merits. [Paras 4]

Ground No.3 not adjudicated as it was premature.

Transfer pricing adjustment for interest on receivables - reasonable credit period - benchmarking receivables using LIBOR - international transaction - Arm's Length Price - Adjustment of Rs. 8,47,788 made as notional interest on outstanding receivables from associated enterprises was not finally upheld but remitted to the TPO/AO for determination of industry average collection period and for quantification of adjustment only for periods beyond such average, applying LIBOR where appropriate. - HELD THAT: - The tribunal examined the rival contentions on whether outstanding receivables from associated enterprises constitute an international transaction after the amendment to the definition and whether notional interest could be levied. Noting earlier coordinate observations for the assessee's AY 2013-14, the tribunal accepted that the amendment brings delayed receivables within the scope of international transactions, but found that the question of what constitutes a reasonable credit period must be determined by reference to the industry average or the average collection period of the comparable companies used in the TP study and the assessee's average for the year. The tribunal directed the TPO/AO to verify the assessee's submissions on industry average and the assessee's collection period, to allow collections within the industry average and to compute interest on only that portion of receivables exceeding the industry average collection period. The tribunal also indicated that where interest is to be charged for periods beyond the reasonable credit period, the rate to be applied should be the LIBOR rate as appropriate for benchmarking the international transaction. [Paras 7, 8]

Matter remitted to TPO/AO to determine industry average collection period and to compute TP adjustment only for receivables outstanding beyond that period, applying LIBOR where appropriate; appeal treated as allowed for statistical purposes.

Final Conclusion: The tribunal dismissed Ground No.1 as not pressed and declined to adjudicate Ground No.3 as premature. On the substantive transfer-pricing issue, the tribunal remitted the matter to the TPO/AO to verify industry average and assessee's average collection periods and to quantify any notional interest adjustment only for receivables outstanding beyond the industry average (applying LIBOR where appropriate); the appeal was treated as allowed for statistical purposes.

Merchandise Exports from India Scheme - amendment of shipping bill - No Objection Certificate - electronic data interface (EDI) system and inadvertent omission - precedent attained legal quietus

Merchandise Exports from India Scheme - amendment of shipping bill - No Objection Certificate - electronic data interface (EDI) system and inadvertent omission - Whether the petitioner could be permitted to amend shipping bills and be issued an NOC to claim MEIS benefits where the declaration was inadvertently omitted in the EDI system and the Customs authority had earlier refused amendment. - HELD THAT: - The Court accepted that the petitioner inadvertently failed to declare the intention to claim MEIS benefits while filing shipping bills on the EDI platform. Although the respondents relied on the constraints of the EDI system to resist amendment, the Court held that the petitioner should not be made to suffer for an inadvertent omission. Relying on an earlier coordinate decision which has attained finality, the Court concluded that the appropriate remedy is to set aside the communication rejecting amendment, permit necessary amendments and direct issuance of a 'No Objection Certificate' to enable the petitioner to claim MEIS benefits from the DGFT. The Court therefore ordered that the impugned letter rejecting amendment be set aside, the respondents permit amendment, and the first respondent issue an NOC within three weeks to enable the claim before DGFT. [Paras 14]

Impugned rejection set aside; respondents directed to permit amendment of shipping bills and the first respondent directed to issue an NOC within three weeks to enable claim of MEIS benefits.

Final Conclusion: Writ petition allowed: the rejection of the amendment request is set aside and the respondents are directed to permit amendment and to issue a No Objection Certificate within three weeks so the petitioner may pursue MEIS benefits before the DGFT. No costs.

Jurisdiction of adjudicating authority under the Customs Act - availability of alternative remedy of appeal to Commissioner (Appeals) - non-application of Central Excise adjudication monetary limits to Customs Act proceedings - exercise of writ jurisdiction in presence of efficacious alternate remedy - pre-deposit requirement under Section 129E

Non-application of Central Excise adjudication monetary limits to Customs Act proceedings - jurisdiction of adjudicating authority under the Customs Act - Whether the Board's Master Circular on adjudication monetary limits for Central Excise and Service Tax (Circular No.1053) restricts the Additional Commissioner of Customs' power to adjudicate demands under the Customs Act. - HELD THAT: - The Court held that the monetary limits set out in the cited Master Circular apply to adjudication proceedings under the Central Excise Act, 1944 and the Finance Act, 1994 (Service Tax) and have no application to proceedings under the Customs Act. Consequently, the impugned order passed by the Additional Commissioner of Customs under the Customs Act could not be impugned as being without jurisdiction on the ground of the Circular's monetary limits. The Court therefore rejected the submission that the Additional Commissioner lacked jurisdiction to adjudicate the demand by reason of the Board's circular. [Paras 5]

Circular No.1053's monetary limits do not apply to adjudication under the Customs Act; the Additional Commissioner was not shown to be without jurisdiction on that basis.

Availability of alternative remedy of appeal to Commissioner (Appeals) - exercise of writ jurisdiction in presence of efficacious alternate remedy - Whether the writ petitions should be entertained despite an alternative statutory remedy of appeal to the Commissioner (Appeals). - HELD THAT: - The Court found that an efficacious alternative remedy in the form of an appeal to the Commissioner (Appeals) is available against the impugned adjudication order and that the petitioners' grievances on merits, including allegations such as non-grant of cross-examination, could and should be addressed in that appellate forum. In light of the availability of that remedy, the Court declined to exercise its extraordinary writ jurisdiction to entertain the petitions. The Court nevertheless directed that if an appeal is filed within three weeks, the Commissioner (Appeals) shall entertain it on merits and exclude the time consumed in prosecuting these writ petitions when considering limitation, following the principle in the cited Apex Court decision. [Paras 3, 6, 7]

Writ petitions dismissed for want of alternative remedy; appeal to Commissioner (Appeals) is the appropriate forum and, if filed within three weeks, must be entertained with time spent in these proceedings excluded.

Pre-deposit requirement under Section 129E - Whether the petitioners are required to comply with statutory pre-deposit requirements while filing an appeal to the Commissioner (Appeals). - HELD THAT: - The Court made clear that, notwithstanding its directions on condonation of time, the petitioners remain bound to satisfy the statutory conditions for filing an appeal, including the requirement of making any prescribed pre-deposit in accordance with the Customs Act. The Court therefore did not waive or alter statutory pre-conditions for maintainability of the appeal. [Paras 8]

Petitioners must comply with statutory requirements, including any pre-deposit under Section 129E, when preferring the appeal.

Final Conclusion: The writ petitions challenging the confiscation and penalties were dismissed because an efficacious alternative remedy by way of appeal to the Commissioner (Appeals) is available; the Board's Central Excise adjudication monetary limits do not restrict adjudication under the Customs Act; the Commissioner (Appeals) shall entertain an appeal filed within three weeks and exclude time spent in these proceedings, subject to the petitioners satisfying statutory requirements including the prescribed pre-deposit.

Discriminatory, arbitrary and capricious administrative action - Duty to follow judicial directions and parity with similarly situated parties - Board of Approval's powers are implementatory and not policy making - Requirement of written Central Government policy to bind the Board under Section 9(5) of the SEZ Act - Interpretation of Rule 18(4) of the SEZ Rules - prohibition on setting up new plastic recycling units and proviso empowering the Board to decide extensions

Discriminatory, arbitrary and capricious administrative action - Duty to follow judicial directions and parity with similarly situated parties - Validity of the Board of Approval's rejection of the petitioners' request for renewal of Letter of Approval for recycling of plastic waste and scrap - HELD THAT: - The Court found that the Board repeatedly deferred or rejected the petitioners' renewal application despite a positive recommendation by the Development Commissioner and an earlier direction of this Court to reconsider the case with reference to similarly situated units. The Board's ultimate decision (5.10.2018) rested on a newly asserted policy of phasing out plastic recycling units which was not shown to exist in writing from the Central Government and was applied only to the petitioners while other dormant units were granted renewals. On these facts the decision was held to be discriminatory, arbitrary and capricious and contrary to the Court's earlier direction to examine similarity with other units; consequently the impugned decision was quashed insofar as it related to the petitioners. [Paras 17, 18]

Impugned rejection quashed; petitioners' request for renewal allowed.

Board of Approval's powers are implementatory and not policy making - Requirement of written Central Government policy to bind the Board under Section 9(5) of the SEZ Act - Whether the Board could adopt and apply a policy to phase out plastic recycling units in the absence of a written policy from the Central Government - HELD THAT: - The Court analysed Section 9 of the SEZ Act and noted that while the Board has duties to promote and ensure orderly development and specific powers, sub section (5) expressly subjects the Board to directions on questions of policy given in writing by the Central Government. The Board is therefore not a policy making body; it may implement but cannot itself frame a binding policy. Consequently, for the purpose of phasing out units, there must exist a written policy of the Central Government. No such written policy was placed on record and the Board could not read a phasing out policy into Rule 18(4) of the SEZ Rules. [Paras 10, 11]

Board cannot unilaterally adopt a policy to phase out units; absent a written Central Government policy, the Board's asserted phasing out justification was unsustainable.

Interpretation of Rule 18(4) of the SEZ Rules - prohibition on setting up new plastic recycling units and proviso empowering the Board to decide extensions - Whether Rule 18(4) of the SEZ Rules itself embodies a policy to phase out existing plastic recycling units or only prohibits new units while leaving extensions to the Board's discretion - HELD THAT: - The Court examined Rule 18(4) which bars consideration of proposals for setting up certain units including recycling of plastic scrap or waste, but contains a proviso that extension of Letter of Approval for an existing unit shall be decided by the Board. The Court held that the proper reading of the provision is a policy not to permit new units, while the proviso preserves the Board's discretion to consider extensions. The Board's reading of Rule 18(4) as importing a phasing out policy applicable to existing units was held to be incorrect. [Paras 12, 13]

Rule 18(4) does not itself constitute a phasing out policy for existing units; it prohibits new units and leaves extension decisions to the Board under the proviso.

Duty to follow judicial directions and parity with similarly situated parties - Relief to be granted and parity with other units following quashing of the Board's decision - HELD THAT: - Having quashed the Board's rejection as arbitrary and in breach of the Court's directions, the Court directed that the petitioners be granted renewal of their Letter of Approval for a period of one year, consistent with the extension granted to twenty eight similarly situated plastic recycling units in the Board's subsequent meeting. The Court further clarified that the petitioners shall be treated on par with those units when future extension questions arise. [Paras 19]

Petitioners granted extension of Letter of Approval for one year and to be treated on par with the twenty eight units for future extensions.

Final Conclusion: The Board's decision rejecting renewal was quashed as arbitrary and discriminatory; the Board cannot itself frame a phasing out policy absent a written policy of the Central Government and Rule 18(4) does not supply such a policy; petitioners are granted a one year extension of their Letter of Approval and shall be treated on par with similarly situated units for future extensions.

Condition precedent for exercise of power under section 4(1)(b) - colourable exercise of power - delegated legislation - State versus Union legislative competence on import and export - applicability of regulatory measures to goods/animals in transit - Animal Quarantine and Certification Services (AQCS) and quarantine requirement for export - Prevention of Cruelty to Animals Act and Transport of Animals Rules - principles of non discrimination under Article 14

Condition precedent for exercise of power under section 4(1)(b) - delegated legislation - Validity of the notification dated 14.12.2018 issued under section 4(1)(b) of the Gujarat Essential Commodities and Cattle (Control) Act, 2005. - HELD THAT: - The Court held that subsection (1) of section 4 requires the State Government to form an opinion that action is necessary or expedient for maintaining or increasing the supply, or for securing equitable distribution and availability at fair prices, before issuing an order under clause (b). The impugned notification records an opinion only that cattle were 'at stake' due to shortage of fodder and disease risk, but does not record the required opinion about maintaining or increasing 'supply' of cattle or equitable distribution. Further, issues concerning infectious or contagious animal diseases fall under the specific Prevention and Control of Infectious and Contagious Diseases in Animals Act, 2009, and therefore are not a proper basis for an order under section 4(1)(b) of the Cattle Control Act. Considering these defects and the surrounding events showing an intention to prohibit exports (a Union subject), the notification was held to be issued in colourable exercise of powers and struck down. [Paras 12, 14, 15]

The notification dated 14.12.2018 under section 4(1)(b) is quashed as not meeting the statutory condition precedent and as being in colourable exercise of powers.

Applicability of regulatory measures to goods/animals in transit - principles of avoiding absurdity in statutory construction - Whether the notification dated 14.12.2018 applies to cattle merely transiting through drought affected areas (i.e., animals in transit). - HELD THAT: - Applying established construction principles and relying on authority that 'export'/'import' lexicologically do not include mere transit, the Court held that prohibiting entry into drought areas cannot be read to prohibit animals merely passing through in transit to an external destination. Chapter VI of the Transport of Animals Rules requires food/fodder to be carried during journeys, underscoring that transit animals do not impact local fodder supply. Construing the notification to cover transit would lead to absurd consequences and is therefore rejected; the notification does not apply to animals in transit. [Paras 13]

The impugned notification does not apply to cattle in transit and cannot lawfully be used to prohibit animals merely passing through drought affected areas for export.

Animal Quarantine and Certification Services (AQCS) and quarantine requirement for export - State versus Union legislative competence on import and export - Validity of the communication dated 14.12.2018 of the Director of Animal Husbandry withdrawing health/checkup/certification services and requesting Customs not to permit exports until AQCS facilities are established. - HELD THAT: - The Court observed that the State may choose whether to provide the delegated certification services, but the Director's request that Customs refrain from allowing exports until AQCS facilities are established by the Central Government went beyond the Director's authority. The export/import regulatory domain is a Union subject; moreover, the existing export procedural checklist shows that if the importing country prescribes no health format, an undertaking by the exporter suffices, and quarantine certification for export is not statutorily mandatory unless required by the importing country. To the extent the Director asked Customs to withhold export permissions and justified withdrawal on international guideline non compliance, that portion of the communication was beyond the Director's power and was set aside. [Paras 16, 17]

The communication of the Director of Animal Husbandry dated 14.12.2018 is quashed insofar as it requests the Customs Commissioner not to allow export until AQCS facilities are established and purports to impose requirements beyond the Director's authority; the State's withdrawal of services as such is within its domain but cannot be used to bind Customs contrary to law.

Prevention of Cruelty to Animals Act and Transport of Animals Rules - colourable exercise of power - principles of non discrimination under Article 14 - Validity of the communication dated 14.12.2018 of the Under Secretary, Home Department to the Superintendent of Police, Kutch (West), directing setting up of check posts and round the clock vigilance. - HELD THAT: - The Court noted that instructions invoking the Prevention of Cruelty to Animals Act and the Transport Rules were issued only to the Superintendent of Police, Kutch (West), though transport of animals occurs across Gujarat. The selective issuance, coinciding with the Chief Minister's press statement and other communications aimed at halting exports from Tuna Port, indicated a non bona fide, discriminatory purpose to obstruct export activity. The instruction to set up multiple check posts (not envisaged by the statutes) and to enable third party inspections had the effect of promoting hurdles to export and was held to be colourable exercise of power and violative of Article 14. [Paras 14, 18]

The Home Department communication dated 14.12.2018 to the Superintendent of Police, Kutch (West) is quashed as issued in colourable exercise of power and discriminatory, and therefore unlawful.

Final Conclusion: The writ petition is allowed. The State notification dated 14.12.2018 under section 4(1)(b) of the Gujarat Essential Commodities and Cattle (Control) Act, 2005 is quashed as not satisfying the statutory condition precedent and as colourable exercise of power; the Home Department letter to the Superintendent of Police, Kutch (West) is quashed as discriminatory and colourable; and the Director of Animal Husbandry's communication of 14.12.2018 is set aside to the extent it sought to require Customs to withhold export permissions until AQCS facilities were provided. No order as to costs.

Inordinate delay in adjudication - call book / consignment to call book - violation of principles of natural justice - statutory time limit under Section 11A of the Customs Act - resurrection of long pending proceedings - quashing of adjudication and appellate orders

Inordinate delay in adjudication - call book / consignment to call book - violation of principles of natural justice - statutory time limit under Section 11A of the Customs Act - resurrection of long pending proceedings - quashing of adjudication and appellate orders - Whether the revival and adjudication after the show cause notice was kept in the call book for 14 years violated statutory time limits and principles of natural justice and warranted quashing of the adjudication and appellate orders. - HELD THAT: - The Court found it undisputed that the show cause notice dated 30.09.2003 was consigned to the call book and lay dormant until adjudication in 2017; the respondents offered no cogent reason for the prolonged inaction. The Court relied on its earlier decisions holding that proceedings under the statutory scheme (Section 11A as it stood and as amended) are quasi judicial and, insofar as the legislature has prescribed a time frame for determination "where it is possible to do so", the authority must, as far as practicable, decide matters within that frame. Consigning matters to the call book for years together and later resurrecting them is contrary to the statutory mandate and the concept of the call book (and CBEC instructions implementing it) cannot be used to subvert the legislative time frame. Revival of proceedings after an inordinate delay without explanation results in denial of natural justice and vitiates the proceedings. Applying these principles to the facts, the Court concluded that the authorities' act of reviving the 2003 notice in 2017 and confirming demands without considering the petitioners' written submissions amounted to arbitrariness and breach of natural justice, rendering the show cause notice and consequent orders unsustainable. [Paras 7, 10, 11, 12]

The show cause notice dated 30.09.2003 and the orders dated 28.07.2017 and 24.01.2018 are quashed and set aside.

Final Conclusion: The High Court allowed the petition, holding that consigning the show cause notice to the call book for 14 years and later reviving it without plausible reason violated the statutory mandate and principles of natural justice; the impugned notice and subsequent adjudication and appellate orders were quashed. Parties to bear their own costs.

Condonation of delay - delay unexplained - dismissal for non-prosecution - requirement of properly signed and verified application with supporting documents - adjournment in the interest of justice

Condonation of delay - delay unexplained - requirement of properly signed and verified application with supporting documents - dismissal for non-prosecution - Application for condonation of delay in filing the appeal was rejected and the appeal dismissed for want of prosecution. - HELD THAT: - The Tribunal examined the condonation application and the procedural record. The application as filed was not in proper form, was unsigned and not duly verified, and the requisite copy of the demand cum show cause notice was not enclosed. The appellant was informed of these defects and given opportunities and adjournments; communications were served but no proper rectification or appearance was made when the matter was listed. The application merely pleaded "uncontrolled reasons" and an "honest mistake" without any factual or specific explanation of the cause of delay. The Tribunal found that no satisfactory or credible explanation had been offered and that mere conclusory assertions did not meet the requirement for condonation. In view of the unexplained delay and the appellant's non appearance to prosecute the condonation application despite adjournments given in the interest of justice, the condonation application was rightly rejected and the appeal could not be entertained. [Paras 6, 7, 8]

Condonation of delay rejected; appeal dismissed for want of prosecution.

Final Conclusion: The Tribunal refused to condone the delay because the application was defective and the delay was left unexplained; having rejected the condonation application, the appeal was dismissed for non-prosecution.

Summary order. Appeal dismissed for non-prosecution for failure of the appellant to appear despite repeated notices and a last-chance hearing.

Restoration of company name under section 252(3) of the Companies Act, 2013 - Carrying on business or in operation at the time of striking off - Registrar's power to strike off under section 248 of the Companies Act, 2013 - Requirement of cogent proof to justify restoration

Restoration of company name under section 252(3) of the Companies Act, 2013 - Carrying on business or in operation at the time of striking off - Requirement of cogent proof to justify restoration - Whether the name of the company should be restored on the register of companies under section 252(3) having regard to whether it was carrying on business or in operation when struck off - HELD THAT: - The Registrar complied with the procedure under section 248 in striking off the company's name for non-filing of financial statements and annual returns from the financial year ending March 31, 2014 onwards. The appellant produced financial statements, ITR acknowledgments and bank statements to show the company was a going concern, but the financials show no turnover, successive losses and negligible assets; ITRs reported zero gross income; bank transactions did not evidence business operations. Documents relied upon by the appellant, including pending contracts, involved a company in which the directing member was also a director, undermining the contention of bona fide business activity. On these facts the Tribunal found that the company was neither carrying on business nor in operation on the date of striking off and that the appellant failed to furnish cogent proof to justify restoration. Accordingly there was no just ground to exercise the discretion to restore the company's name.

Appeal dismissed; no order as to costs.

Final Conclusion: The appeal under section 252(3) is dismissed as the appellant failed to prove that the company was carrying on business or in operation when its name was struck off, and no justifiable reason for restoration was shown.

Corporate debtor voluntary insolvency under Section 10 of the I&B Code - power of board versus shareholders to initiate insolvency proceedings - interpretation of articles of association regarding winding up and presentation of winding up petition - requirement of an affirmative shareholder resolution for liquidation - applicability of legislative amendment made on 6th June, 2018

Interpretation of articles of association regarding winding up and presentation of winding up petition - power of board versus shareholders to initiate insolvency proceedings - requirement of an affirmative shareholder resolution for liquidation - Whether the Board of Directors of Ricoh India Ltd. was authorised under the Articles of Association to file an application under Section 10 of the I&B Code without a prior affirmative resolution of the shareholders. - HELD THAT: - The Tribunal examined the relevant Articles of Association and the decision in Gaja Trustee Co. (distinguished). Unlike the Articles considered in Gaja Trustee Co., the Articles of Ricoh (notably Article 127) empower the Board to pass resolutions in respect of significant matters including passing any resolution for winding up and/or presenting a petition for winding up. Article 164, which contemplates the liquidator obtaining sanction of a special resolution at the time of winding up, does not impose a prior affirmative-vote requirement on the Board to move an insolvency application and therefore is not a bar to the Board instituting proceedings under Section 10. The Tribunal also noted that the AGM subsequently ratified the decision in August 2018, reinforcing the corporate decision-making, but treated the Articles themselves as sufficient to sustain the Board's power to file the application. On this basis the admission of the application under Section 10 was not vitiated for lack of shareholder approval prior to filing.

The Board was authorised under the Articles to file the Section 10 application without a prior affirmative shareholder resolution; the filing was valid and not liable to be set aside on that ground.

Applicability of legislative amendment made on 6th June, 2018 - corporate debtor voluntary insolvency under Section 10 of the I&B Code - Whether the amendment to the I&B Code made on 6th June, 2018 (requiring prior AGM approval) rendered the Section 10 admission dated 14th May, 2018 invalid. - HELD THAT: - The Tribunal observed that the amendment imposing a requirement of prior shareholder approval was effected on 6th June, 2018, which is subsequent to the admission of the Section 10 application on 14th May, 2018. Consequently, the subsequent legislative change could not be applied retrospectively to invalidate an admission already made. The Tribunal further noted that the shareholders in fact approved the filing at the AGM held in August 2018, although that approval was not material to the temporal question of applicability of the amendment.

The amendment dated 6th June, 2018 is not applicable to the Section 10 admission made on 14th May, 2018 and does not invalidate the earlier admission.

Final Conclusion: Having found that the Board was empowered by the Articles to file the Section 10 application and that the subsequent amendment of 6th June, 2018 does not apply to an admission made on 14th May, 2018, the appeal is dismissed for lack of merit; no costs.

Corporate Insolvency Resolution Process - Section 7 of the Insolvency and Bankruptcy Code, 2016 - independence of insolvency proceedings from criminal proceedings - debt and default - I&B Code as a complete code - financial creditor

Section 7 of the Insolvency and Bankruptcy Code, 2016 - independence of insolvency proceedings from criminal proceedings - debt and default - Whether pendency of a criminal investigation or trial in respect of alleged fraud or misappropriation on the part of corporate officers or bank employees precludes initiation of corporate insolvency proceedings under Section 7. - HELD THAT: - The Tribunal held that an application under Section 7 is an independent statutory proceeding which does not stand defeated by the pendency of criminal proceedings concerning misappropriation of funds by the Chief Financial Officer or employees of a bank. The financial creditor is a distinct legal entity from individual officers of the corporate debtor or bank employees; accordingly, the existence of an FIR, investigation or even a charge sheet does not negate the statutory requirement of debt and default or entitle a party to stall initiation of the Corporate Insolvency Resolution Process. The I&B Code is a complete code and will prevail over other proceedings insofar as the statutory scheme for insolvency initiation is concerned; if the Section 7 application is complete and establishes debt and default, pendency of criminal proceedings is not a ground for refusal.

Pendency of criminal proceedings relating to alleged misappropriation does not bar initiation of proceedings under Section 7 where debt and default are established; appeal dismissed.

Final Conclusion: The appeal against initiation of the Corporate Insolvency Resolution Process under Section 7 was dismissed; the Tribunal affirmed that pendency of criminal proceedings does not preclude a valid Section 7 application when debt and default are established.

Admission of Section 9 application under I&B Code, 2016 - Commencement of Corporate Insolvency Resolution Process - Default in payment of operational debt - Service of Section 8 demand notice and compliance with Section 9(3)(b) - Admissibility of rent receipts as evidence of payment - Principle of estoppel against belated objection to contract formalities - Maintainability of joint application by co-owners - Declaration of moratorium under Section 14 of I&B Code - Appointment of Interim Resolution Professional from IBBI panel

Service of Section 8 demand notice and compliance with Section 9(3)(b) - Operational Creditors complied with statutory pre-conditions to file Section 9 application. - HELD THAT: - The Tribunal recorded that Form-3 demand notice dated 11.06.2018 was dispatched and delivered as evidenced by the track delivery report, and the Operational Creditors filed the required affidavit under Section 9(3)(b) stating no notice of dispute was received. These facts satisfied the statutory pre-conditions for proceeding under Section 9 of the I&B Code, 2016. [Paras 6, 7]

Pre-conditions under Section 8/9 were held fulfilled and not a bar to admission.

Admissibility of rent receipts as evidence of payment - Original rent receipt book containing counterfoils is admissible and proves mode and last date of payment. - HELD THAT: - The Tribunal examined the Rent Receipt Book produced by the Operational Creditors showing counterfoils from 04.06.2012 to 07.05.2015, which evidenced that rent had been paid in cash during that period and that no payment was made thereafter. The Bench held that production of the receipt book indicating the mode of payment would not prejudice the Corporate Debtor and therefore rejected the objection to its admission. [Paras 7, 9]

Rent receipt book accepted as evidence of payment history and last payment date.

Default in payment of operational debt - Corporate Debtor committed default in payment of rent as claimed by Operational Creditors. - HELD THAT: - On the material placed on record - the rental agreement, admitted payments up to 07.05.2015 as per rent receipts, absence of proof from the Corporate Debtor for alleged payments after that date, and the demand notice remaining unanswered - the Tribunal was satisfied that there was a default in payment of the outstanding operational debt. [Paras 5, 9, 11, 15]

Default was established and formed the basis for admission of the Section 9 application.

Principle of estoppel against belated objection to contract formalities - Corporate Debtor is estopped from raising belated objection about unregistered/insufficiently stamped rent agreement. - HELD THAT: - The Rental Agreement was signed and acted upon by the Corporate Debtor, which paid rent pursuant to its terms. The Tribunal found that the Corporate Debtor, having performed under the agreement and not objecting earlier, cannot at a belated stage challenge its registration or stamp deficiency; accordingly the estoppel principle was applied and the objection rejected. [Paras 13]

Objection regarding non-registration and insufficient stamping of the lease was rejected by application of estoppel.

Dispute as defence to Section 9 application - Alleged dispute between parties did not preclude admission where default remained unestablished by the Corporate Debtor. - HELD THAT: - The Corporate Debtor relied on altercations and cross complaints and asserted payment, but failed to produce evidence substantiating post 2015 payments. The Tribunal held that the existence of unrelated altercations or complaints did not vitiate the claim of unpaid rental arrears and that the defence of a dispute was untenable on the material before the Bench. [Paras 11, 12]

Contention of a dispute was rejected and did not prevent admission of the application.

Maintainability of joint application by co-owners - Joint filing of Section 9 application by co-owners who jointly executed the lease is maintainable. - HELD THAT: - The Rental Agreement was signed jointly by the three co-owners who are the Operational Creditors. The Tribunal observed that the claim arises from a single lease and could not be bifurcated; thus a joint application filed on behalf of the co owners who executed the agreement together was held to be maintainable under Section 9. [Paras 14]

Application by co owners jointly is maintainable.

Admission of Section 9 application under I&B Code, 2016 - Commencement of Corporate Insolvency Resolution Process - Section 9 application admitted and CIRP ordered to commence. - HELD THAT: - Having found that statutory pre-conditions were met, that default had occurred and that the Corporate Debtor's objections were either unsubstantiated or rejected, the Tribunal admitted the Section 9 application and ordered commencement of the Corporate Insolvency Resolution Process, to be ordinarily completed within 180 days from the date of the order. [Paras 15]

Application admitted and CIRP commenced.

Declaration of moratorium under Section 14 of I&B Code - Moratorium declared with specified prohibitions in effect from the date of the order until completion of CIRP. - HELD THAT: - The Tribunal declared moratorium and set out prohibitions on institution or continuation of suits, transfer or disposal of assets, enforcement of security interests, and recovery of property by lessors, and clarified that supply of essential goods or services shall not be terminated during the moratorium as provided in the Code. [Paras 16, 17]

Moratorium under Section 14 pronounced and its effects specified.

Appointment of Interim Resolution Professional from IBBI panel - Interim Resolution Professional appointed from the IBBI panel to take charge and perform statutory obligations. - HELD THAT: - The Operational Creditors did not propose an IRP; accordingly, the Tribunal appointed Mr. Swaminathan Venkatraman from the IBBI panel, directed him to file declarations, take charge of the corporate debtor's management, cause the public announcement, and comply with statutory provisions while the corporate debtor's management was directed to extend cooperation. [Paras 18, 19]

IRP appointed and directed to perform duties under the Code.

Final Conclusion: The Section 9 petition by the Operational Creditors was admitted after findings that statutory pre-conditions were met and default in payment of rent was established; CIRP was ordered to commence, moratorium declared, and an IRP appointed to manage the process.

Payment of salaries during corporate insolvency resolution process - representation to resolution professional for unpaid wages - limited verification by resolution professional - prohibition on representative re agitation until completion of the resolution process

Payment of salaries during corporate insolvency resolution process - prohibition on representative re agitation until completion of the resolution process - Disposition of the appeals regarding payment of employees' salaries during the Corporate Insolvency Resolution Process and the permissible scope of challenge by employee representatives. - HELD THAT: - The Tribunal recorded that the Resolution Professionals had represented that funds were released and salaries had been paid up to January 2019, and subsequently informed that salaries had been paid up to February 2019. Given that individual entitlement issues cannot be resolved by this Appellate Tribunal, the Tribunal declined to pass further specific directions against the Corporate Debtors or Resolution Professionals on a collective basis. The Tribunal expressly refused to permit the employees' representatives to re agitate the matter until the completion of the Resolution Process, while noting the factual position of payments made to date.

Both appeals disposed; salaries recorded as paid up to February 2019 and representatives barred from re agitating the matter until the Resolution Process is complete.

Representation to resolution professional for unpaid wages - limited verification by resolution professional - Whether individual employees aggrieved by non payment of salary components may seek relief and the course to be followed. - HELD THAT: - The Tribunal granted liberty to individual aggrieved employees to make representations to the respective Resolution Professionals showing that they were working but had not been paid basic salary or other components such as Dearness Allowance. The Tribunal directed that the Resolution Professionals may verify from their records whether the employee was working during the Corporate Insolvency Resolution Process and whether wages have been paid, thereby entrusting fact specific verification to the Resolution Professionals rather than adjudicating the individual claims in this appeal.

Individual employees may approach the Resolution Professionals with representations; the Resolution Professionals to verify employment status and payment and decide accordingly.

Final Conclusion: Appeals disposed; Tribunal recorded payments made up to February 2019, allowed individual employees to approach Resolution Professionals for verification of unpaid salary components, and precluded employee representatives from re agitating the matter until completion of the Corporate Insolvency Resolution Process.

CENVAT credit - utilisation limit of 20% under Rule 6(3)(c) of the CENVAT Credit Rules, 2004 - refund of service tax - extended limitation period - interest and penalty for excess utilisation of credit - lapsing of CENVAT credit - Circular No. 137/72/2008 - recovery of credit by show-cause and adjudication vis-a -vis departmental remedy of appeal against refund

Extended limitation period - interest and penalty for excess utilisation of credit - Whether invocation of the extended period for recovery of duty, interest and penalty in respect of alleged excess utilisation of CENVAT credit (utilised on services later held not taxable) was permissible. - HELD THAT: - The Tribunal held that the demand for recovery invoked by the Department related to CENVAT credit utilisation which became excessive only after the Bombay High Court ruled that the services were not taxable and a refund order was subsequently passed in favour of the appellant. The refund order examined ST-3 returns, invoices and CENVAT utilisation and expressly dealt with admissibility of CENVAT credit. In those circumstances, treating the appellant as having wilfully suppressed facts in 2007 and invoking the extended period to recover alleged excess utilisation was irrational and without legal basis. The Tribunal further observed that where a departmental refund order has been passed after scrutiny, the recognised remedy for the Department was to appeal that refund order rather than to initiate an unbounded recovery by show-cause and adjudication. Consequently, extended period could not be invoked and interest and penalty consequent to such extended-period demand could not be sustained.

Invocation of the extended period for recovery of duty, interest and penalty in respect of the contested CENVAT utilisation was not permissible; the extended-period demand is set aside.

Lapsing of CENVAT credit - utilisation limit of 20% under Rule 6(3)(c) of the CENVAT Credit Rules, 2004 - Circular No. 137/72/2008 - CENVAT credit - Whether unutilised CENVAT credit (balance beyond the 20% utilisation rule) lapses, and whether recovery of accumulated/unutilised credit is permissible after deletion of Rule 6(3)(c), having regard to Circular No. 137/72/2008. - HELD THAT: - Relying on earlier Tribunal precedent, the Bench accepted that there was no statutory lapsing provision for the unutilised balance of CENVAT credit and that deletion of Rule 6(3)(c) removed the explicit restriction on later utilisation. Circular No. 137/72/2008 was held to support the proposition that accumulated credit did not lapse; the Tribunal noted that the circular is a public document and, in absence of any culpable suppression by the assessee, the Department could not recover the accumulated credit by treating earlier utilisation as irregular. At best, in cases of excess utilisation prior to repeal, the Department's remedy might be confined to interest, but not recovery of the credit where no suppression or deliberate misuse is established. Applying these principles to the facts, the Tribunal concluded that recovery of the accumulated/unutilised credit could not be sustained.

There is no lapse of the unutilised CENVAT credit and recovery of such accumulated credit was not permissible on the facts; the Commissioner's order confirming demand on this ground is set aside.

Final Conclusion: The appeal is allowed; the order-in-appeal of the Commissioner confirming duty demand, interest and penalty in respect of alleged excess utilisation of CENVAT credit is set aside.

Reversal of Cenvat credit under Rule 6(3) of the Cenvat Credit Rules, 2004 - non-taking of Cenvat credit - liability to pay interest on wrongly availed Cenvat credit - self-payment before service of notice under Section 73(3) of the Finance Act, 1994 - penalty under Section 78 of the Finance Act, 1994 read with Rule 15(3) of the Cenvat Credit Rules, 2004 - adjudicator travelling beyond the show cause notice

Penalty under Section 78 of the Finance Act, 1994 read with Rule 15(3) of the Cenvat Credit Rules, 2004 - adjudicator travelling beyond the show cause notice - penalty requires suppression, fraud or willful misstatement - Penalty of equal amount under Section 78 read with Rule 15(3) is not imposable in the facts of the case. - HELD THAT: - The Tribunal found that the appellant had reversed the Cenvat credit required under Rule 6(3) and reflected the reversal in its financial statements for the relevant year prior to the audit visit, and had shown the reversal in ST-3 subsequently. There was no finding of fraud, collusion, willful misstatement or suppression with intent to evade tax; consequently the basic requirement for invoking the penal provision was absent. Further, the adjudicating authority imposed penalty under Section 78 though that provision had not been invoked in the show cause notice, thereby travelling beyond the scope of the notice. In these circumstances and having regard to precedents addressing bona fide or inadvertent errors and absence of suppression, the imposition of equal amount penalty was held to be unsustainable and was set aside. [Paras 12, 13, 16]

Penalty under Section 78 read with Rule 15(3) is not sustainable; the impugned penalty is set aside.

Liability to pay interest on wrongly availed Cenvat credit - non-taking of Cenvat credit - self-payment before service of notice under Section 73(3) of the Finance Act, 1994 - Interest was not legitimately leviable as the credit was reversed before utilization; moreover the appellant paid interest prior to issuance of the show cause notice under the scheme of Section 73(3). - HELD THAT: - Applying the principle that where wrongly availed Cenvat credit is reversed before it is taken or utilised it amounts to non-taking of the credit, the Tribunal held that interest liability arising from utilisation does not arise. The appellant had reversed the credit in its books and paid interest before the show cause notice was issued; therefore, in the absence of fraud or willful default, Section 73(3) contemplates that no notice need be issued where the amount and interest have been paid before service of notice. The factual matrix - reversal reflected in accounts and payment of interest by the appellant prior to SCN - led to the conclusion that interest demand was not a sustainable basis for further penal action. [Paras 11, 12, 14]

Interest liability is not attractable where credit was reversed before utilisation; the appellant had paid the interest prior to the show cause notice.

Final Conclusion: The appeal is allowed: the order-in-original is set aside; the equal amount penalty imposed under Section 78 read with Rule 15(3) is cancelled, and the interest matter is addressed in favour of the appellant on the basis that the credit was reversed before utilisation and interest was paid prior to issuance of the show cause notice.

Jurisdiction of assessing commissioner - power of officers to act within territorial jurisdiction - invalidity of show cause notice issued without jurisdiction - service tax treatment of export of services - requirement of receipt in convertible foreign exchange for export of services

Jurisdiction of assessing commissioner - invalidity of show cause notice issued without jurisdiction - power of officers to act within territorial jurisdiction - Whether the Show Cause Notice and the Order-in-Original issued by the Commissioner of Central Excise, Chennai-III Commissionerate are sustainable given that the services were rendered from a unit falling under Chennai-IV Commissionerate. - HELD THAT: - The Tribunal found it established on the record that the R&D services were rendered from the assessee's unit at Irungattukottai, which was registered under Chennai-IV Commissionerate, whereas both the Show Cause Notice and the Order-in-Original were issued by and made answerable to Chennai-III Commissionerate. There is no record of any corrigendum or transfer making the proceedings answerable to Chennai-IV. Officers exercise executive and quasi-judicial powers only within the jurisdiction conferred by law; consequently, proceedings initiated by a Commissionerate without territorial jurisdiction are without authority. In these circumstances the impugned order and all consequential proceedings founded on the defective Show Cause Notice cannot be sustained. [Paras 5, 6]

The Show Cause Notice and the Order-in-Original issued by Chennai-III Commissionerate are unsustainable for want of jurisdiction and are set aside.

Service tax treatment of export of services - requirement of receipt in convertible foreign exchange for export of services - Whether the demand for service tax on alleged Intellectual Property Rights (IPR) services is sustainable on the ground that remuneration was not received in convertible foreign exchange. - HELD THAT: - Although the Show Cause Notice was held to be jurisdictionally infirm, the Tribunal examined the merits. The adjudicating authority accepted the assessee's evidence, including a Chartered Accountant's certificate and confirmation from Director (Cost) regarding receipt of foreign exchange, and also noted the assessee's explanation that some receipts were recorded in the next financial year in accordance with accounting standards. The Department failed to substantiate the allegation that remuneration was not received in foreign currency itemwise. On the material before it the Tribunal found the adjudicating authority's conclusion-dropping the demand-well reasoned and that the demand alleging non-receipt in foreign currency was unsubstantiated. [Paras 7, 8, 9]

The substantive demand that the remuneration was not received in convertible foreign exchange is unsustainable and unsubstantiated; the adjudicating authority's dropping of the demand is affirmed on the merits.

Final Conclusion: Both the Show Cause Notice and the Order-in-Original issued by Chennai-III Commissionerate are set aside for lack of jurisdiction; on the merits the demand alleging non-receipt of remuneration in foreign currency for the IPR services is unsubstantiated, and the appeal is dismissed.

Management, maintenance or repair of roads - distinction between construction of roads and maintenance/repair of roads - retrospective non-levy and refund for management, maintenance or repair of roads (Section 97 of the Finance Act, 1994) - Board Circular No. 110/4/2009-ST on construction activities versus maintenance activities

Management, maintenance or repair of roads - distinction between construction of roads and maintenance/repair of roads - Board Circular No. 110/4/2009-ST on construction activities versus maintenance activities - retrospective non-levy and refund for management, maintenance or repair of roads (Section 97 of the Finance Act, 1994) - Liability to service tax under Management, Maintenance or Repair service for re-laying/repairing roads in the period 18.04.2006 to 30.09.2006. - HELD THAT: - The Tribunal examined whether the respondent's activity of removing existing gravel and laying a new road surface amounted to construction of a new road or to maintenance/repair of an existing immovable (road). Reliance was placed on Board Circular No. 110/4/2009-ST, which treats activities that change the nature of a road (such as laying a new road, widening or changing the road surface) as construction, whereas re-laying, filling potholes and similar works fall within maintenance/repair. Applying that distinction to the facts, the Tribunal found that the respondent's work of removing the gravel and laying a similar surface constituted maintenance and repair of the road rather than construction of a new road. However, Section 97 of the Finance Act, 1994 (introduced retrospectively) provides that no service tax shall be levied or collected in respect of management, maintenance or repair of roads for the period 16.06.2005 to 26.07.2009 and mandates refund of amounts collected. Since the relevant period falls within the statutory non-levy window, services rendered by the respondent during 18.04.2006 to 30.09.2006 are not chargeable to service tax under Management, Maintenance or Repair service and any tax collected must be refunded in accordance with the provision.

The demand under Management, Maintenance or Repair service for the period in question is not sustainable in view of the retrospective non-levy; the Revenue's appeal is rejected.

Final Conclusion: The Tribunal rejected Revenue's appeal: the respondent's road re-laying work was held to be maintenance/repair (not construction) but, as the period falls within 16.06.2005-26.07.2009, such services are not chargeable to service tax under the retrospective provision and amounts collected on this ground are liable to refund.

Exemption of services consumed within Special Economic Zone from service tax - procedural notifications not to override statutory exemption - liability to pay service tax under Notification No.9/2009-ST dated 3.3.2009 - Section 26 of Special Economic Zones Act, 2005

Exemption of services consumed within Special Economic Zone from service tax - procedural notifications not to override statutory exemption - liability to pay service tax under Notification No.9/2009-ST dated 3.3.2009 - Section 26 of Special Economic Zones Act, 2005 - Whether the appellant, having provided works contract services to a unit located in a Special Economic Zone, was liable to pay service tax under Notification No.9/2009-ST dated 3.3.2009 - HELD THAT: - The Tribunal applied its earlier decisions in Insta Pharma Limited and Nokia India Pvt. Ltd., holding that the procedural prescriptions in Notification No.9/2009 (and No.15/2009) are intended to provide a mechanism for refund where service tax has been assessed or collected, and cannot be interpreted to extinguish or override the substantive exemption conferred by the statute. On a harmonious construction, the exemption from service tax for services consumed wholly within the SEZ, as reflected by the statutory scheme (including Section 26 of the Special Economic Zones Act, 2005 and the service tax enactment), remains operative and is not negated by the notification's procedural obligations. Applying that reasoning to the facts that the appellant supplied services to an SEZ unit, the Tribunal concluded that the appellant was not obligated to pay service tax and that the demand founded on Notification No.9/2009 could not be sustained.

Demand of service tax confirmed by the lower authority is set aside and the appeal is allowed; appellant not liable to pay service tax in respect of services provided to the SEZ unit.

Final Conclusion: The Tribunal allowed the appeal, holding that services provided to a unit in a Special Economic Zone are not liable to service tax and that Notification No.9/2009 does not negate the statutory exemption; the demand is set aside with consequential relief.

Admissibility and evidentiary value of private documents recovered during search - presumption as to truth of documents seized from custody - retraction of prior admission and effect of delay in retraction - penalty for failure to pay service tax under Section 78 - restoration of demand based on search, confession and supporting documents

Admissibility and evidentiary value of private documents recovered during search - presumption as to truth of documents seized from custody - The private notebook recovered during search constitutes credible evidence of unaccounted taxable services and supports the demand for differential service tax. - HELD THAT: - The Tribunal found that the notebook recovered from the director, which recorded fortnightly and monthly receipts, was corroborated by the director's contemporaneous handwritten letter acknowledging that the entries reflected course fees not shown in ST-3 returns and enclosing cheques towards differential service tax. The records were recovered in the presence of witnesses and the director and were reflected in the panchnama. The Tribunal held that informal private records are admissible and relevant to establish unaccounted services where such services would, by their nature, not appear in books of account, balance sheets or returns. The contemporaneous admission in the handwritten letter and accompanying actions (cheques, subsequent correspondence) rendered the notebook sufficiently credible to sustain the demand.

Notebook and contemporaneous admissions are admissible and reliable evidence to establish unaccounted taxable services; demand restored.

Retraction of prior admission and effect of delay in retraction - The later denial that the notebook was prepared under duress, made about a year after the event in response to the show cause notice, is an afterthought and does not vitiate the earlier admission. - HELD THAT: - The Tribunal rejected the assessee's contention that the director was forced to make the entries under duress, reasoning that a person coerced would have protested promptly; no immediate complaint was made, and the director had on the same day given a letter admitting the entries and handed over cheques, later seeking time to arrange funds, and thereafter furnished balance sheets and returns. The retraction only appeared nearly one year later in reply to the show cause notice. The Tribunal held that a retraction made after such delay, without contemporaneous protest, could not be accepted as displacing the earlier admission or the evidentiary weight of the documents.

Retraction after about one year is an afterthought and does not nullify the earlier admission or the evidentiary value of the seized notebook.

Penalty for failure to pay service tax under Section 78 - restoration of demand based on search, confession and supporting documents - The first appellate authority erred in partially setting aside the demand while confirming only the amount the assessee admitted; the original order confirming demand, interest and penalties (including penalty under Section 78) is restored. - HELD THAT: - Having concluded that the seized notebook and the director's contemporaneous letter constituted credible evidence of unaccounted taxable services and that the later retraction was not credible, the Tribunal found no justification for the first appellate authority to confirm only part of the demand which the assessee admitted and reject the remainder when the entire demand rested on the same evidence. Accordingly, the Tribunal set aside the appellate order and restored the original authority's confirmation of the differential service tax, interest and penalties including the penalty under Section 78.

Revenue's appeal allowed; appellate order set aside; original demand, interest and penalties (including under Section 78) restored; assessee's appeal rejected.

Final Conclusion: The Tribunal allowed the revenue appeal, set aside the first appellate authority's order, restored the original demand of service tax, interest and penalties (including penalty under Section 78) based on the seized notebook and contemporaneous admission by the director, and rejected the assessee's appeal.

Service of order - limitation for filing appeal under Section 85(3A) of the Finance Act, 1994 - deemed service under Section 37C of the Central Excise Act, 1944 - power of Commissioner (Appeals) to condone delay - requirement of proof of dispatch and delivery

Service of order - limitation for filing appeal under Section 85(3A) of the Finance Act, 1994 - requirement of proof of dispatch and delivery - Validity of dismissal of the appeal as time barred where appellant stated a later date of communication but no documentary proof of service was on record - HELD THAT: - The Commissioner (Appeals) dismissed the appeal as barred by Section 85(3A) because, treating the adjudicating authority's order date as the date of receipt, the appeal was filed after the prescribed period. The Tribunal held that the appellant had specifically stated before the Commissioner (Appeals) that the order was communicated on 14 April 2015 and that, in the absence of any material on record to show dispatch or service, the Commissioner could not assume prima facie that the order was served within a week of its passing. Section 37C (applied to service tax matters by Section 83 of the Finance Act) prescribes modes of service (tender, registered post with acknowledgement, speed post with proof of delivery or courier) and deems service to occur on the date of tender or delivery; where none of these is on record the appellate authority should have sought proof of service or a report from the adjudicating authority instead of drawing an adverse inference. The assumption by the Commissioner that the order must have been received within seven days was held to be perverse and not sustainable. [Paras 5, 6, 7]

Impugned order dismissing the appeal as time barred is set aside for being founded on an impermissible assumption regarding service; the dismissal cannot be sustained.

Deemed service under Section 37C of the Central Excise Act, 1944 - power of Commissioner (Appeals) to condone delay - requirement of proof of dispatch and delivery - Procedure to be followed on remand for determination of the date of receipt and consequent maintainability of the appeal - HELD THAT: - The Tribunal directed that, in view of the absence of material establishing service by any of the methods specified in Section 37C, the matter should be remanded so that the adjudicating authority is asked to furnish a report regarding dispatch and service of the order. The Commissioner (Appeals) must then decide the question of service and, if necessary, the condonation of delay in exercise of the power available under Section 85(3A), after considering the report and any proof the appellant may produce. The Tribunal therefore did not decide the question of actual service on merits but required fresh consideration in accordance with law. [Paras 8]

Matter remanded to the Commissioner (Appeals)/Adjudicating Authority for fresh determination of service and maintainability after obtaining a report on dispatch and service; appeal allowed to that extent.

Final Conclusion: The order dismissing the appeal as time barred is set aside as based on an impermissible assumption about service; the matter is remanded for the adjudicating authority to report on dispatch and service and for the appellate authority to decide maintainability (including any application for condonation) afresh in accordance with law.

Refund of un-utilised CENVAT credit - Interpretation of proviso to Section 11B(2) - Scope of Rule 5 of the Cenvat Credit Rules, 2004 - Transitional provision under Rule 11 of the Cenvat Credit Rules, 2004 - Precedential effect of dismissal of Special Leave Petition and doctrine of merger - Interpretation of taxing statutes

Refund of un-utilised CENVAT credit - Scope of Rule 5 of the Cenvat Credit Rules, 2004 - Interpretation of taxing statutes - Cash refund of accumulated/un utilised CENVAT credit is permissible only if the amount is relatable to refund of credit of duty paid on excisable goods used as inputs in accordance with the rules and notifications; mere un utilised credit on account of closure or inability to utilise does not entitle to cash refund. - HELD THAT: - The Court examined Section 11B(2) proviso which permits payment of refund to the applicant only where the amount is relatable, inter alia, to refund of credit of duty paid on excisable goods used as inputs in accordance with rules or notifications. Rule 5 of the Cenvat Credit Rules, 2004 permits refund only where the input or input service has been used in goods/services cleared for export and where adjustment is not possible; it does not permit cash refund of credit where inputs have not been used in manufacture or where the scheme's conditions are unmet. The Court applied established principles that taxing statutes must be construed strictly and nothing should be read into them which is not expressed. On the scheme of the Rules and Section 11B, mere existence of un utilised credit owing to closure or cessation of manufacturing does not constitute a statutory entitlement to cash refund unless the specific rule/notification conditions are satisfied. [Paras 29, 30, 31, 40]

Claim for cash refund of un utilised CENVAT credit on account of closure or inability to utilise is not permissible in the absence of statutory provision meeting the conditions of the proviso to Section 11B(2) and the Cenvat Rules.

Transitional provision under Rule 11 of the Cenvat Credit Rules, 2004 - Refund of un-utilised CENVAT credit - The transitional provision (Rule 11) permitting carry forward of credit does not entitle the holder to a cash refund of un utilised CENVAT credit. - HELD THAT: - Rule 11(1) allows amounts of credit earned under prior rules and remaining un utilised on the specified date to be carried forward and utilised in accordance with the new rules; it is a mechanism for transition and not a source of a substantive right to cash refund. The Court held that reliance on transitional carry forward cannot be used to convert an un utilised credit into an entitlement to cash refund where the substantive rules (including Rule 5 and proviso to Section 11B(2)) do not permit such refund. [Paras 28, 29, 40]

Transitional carry forward under Rule 11 does not create a statutory right to cash refund of un utilised CENVAT credit.

Precedential effect of dismissal of Special Leave Petition and doctrine of merger - Interpretation of taxing statutes - Dismissal of a Special Leave Petition by the Supreme Court in the Slovak India matter cannot be read as a declaration of law under Article 141 nor does it bind this Court to accept the tribunal/High Court view as settled law where the Supreme Court expressly left the question of law open. - HELD THAT: - The Court analysed the sequence of tribunal, High Court and Supreme Court orders and noted that the Additional Solicitor General's factual concession in the Supreme Court led to dismissal of the SLP but there was no judicial pronouncement on the point of law. The Supreme Court expressly left the question of law open. Therefore the doctrine of merger or reliance on non appeal of certain tribunal orders does not preclude this Court from examining and answering the legal questions afresh. Established principles of strict construction of taxing statutes further support that earlier procedural dismissals or concessions do not amount to binding declarations of law. [Paras 33, 34, 35, 40]

The order dismissing the SLP in Slovak India does not operate as an Article 141 declaration and does not preclude re examination of the legal questions; the court is not bound to treat the tribunal/High Court view as settled law on that basis.

Final Conclusion: The reference is answered in the negative: cash refund of un utilised CENVAT credit on account of closure of manufacturing activities or inability to utilise input credit is not permissible unless it satisfies the specific conditions of Section 11B(2) proviso and the Cenvat Credit Rules; the transitional provision does not create a refund right; and the dismissal of the SLP in Slovak India does not constitute a binding declaration of law under Article 141. The reference is disposed and the appeals are directed to be listed before the Division Bench for disposal in accordance with this judgment.

Jurisdiction of adjudicating authority on remand - principles of natural justice - alternate remedy by statutory appeal - de novo adjudication remanded by appellate authority - exercise of powers under Section 12E - classification of excisable goods - invocation of extended period under proviso to Section 11A

Jurisdiction of adjudicating authority on remand - de novo adjudication remanded by appellate authority - exercise of powers under Section 12E - Whether the Additional Commissioner (respondent No.1) had jurisdiction to adjudicate the matter on remand. - HELD THAT: - The Court examined the earlier order which had set aside the original adjudication and remanded the matter for fresh decision, noted the later Board circular providing that remanded de novo adjudication should be decided by the authority of the same rank as had earlier passed the order, and recorded that Section 12E permits a Central Excise Officer to exercise powers of a subordinate officer. The amount of duty involved placed the matter within the monetary band where adjudication by a Joint Commissioner would normally lie, but the combined effect of the remand-direction in the later circular and operation of Section 12E justified adjudication by the Additional Commissioner who is senior to the Joint Commissioner. The Court therefore held that the Adjudicating Authority correctly proceeded with adjudication and that the contention of lack of jurisdiction did not succeed. [Paras 13, 14, 15, 16]

The Additional Commissioner had competence to adjudicate the matter on remand; the challenge to jurisdiction is rejected.

Principles of natural justice - Whether the impugned adjudication suffers from violation of principles of natural justice. - HELD THAT: - The Court considered the record of submissions and the adjudicating authority's recital that written submissions had been received and counsel's contentions recorded (including the letter of 25.01.2019). The Court noted that the earlier order of this Court setting aside the prior order had been complied with by remand and that the adjudicating authority recorded and considered the noticee's submissions. On the materials before it, the Court was not convinced that principles of natural justice had been breached in the fresh adjudication and declined to interfere on that ground. [Paras 17, 18, 19, 23]

No violation of principles of natural justice is found in the impugned order; challenge on this ground is rejected.

Alternate remedy by statutory appeal - Whether the writ petition should be entertained notwithstanding the availability of an alternative statutory appeal. - HELD THAT: - Having found that the contentions on jurisdiction and natural justice did not warrant writ interference, the Court applied settled principles that writ jurisdiction is discretionary where alternative statutory remedy exists. Observing that the petitioner has a statutory appeal to the Commissioner (Appeals) and that fiscal cases attract strict scrutiny of alternative remedies, the Court exercised its discretion to decline to entertain the writ on merits and relegated the petitioner to pursue the appellate remedy. The Court clarified that all issues except the jurisdiction point (which it decided) may be raised before the Appellate Authority, permitted applications for condonation of delay or exclusion under Section 14 of the Limitation Act to be filed and decided on merits, and directed expeditious disposal. [Paras 20, 21, 22, 23, 24]

Writ petition is disposed of by relegating the petitioner to the statutory appeal to the Commissioner (Appeals); petitioner may raise all issues except the jurisdiction issue decided by this Court.

Final Conclusion: The writ petition is dismissed on merits: the Additional Commissioner was competent to adjudicate on remand and no breach of natural justice is made out; the petitioner is relegated to the statutory appeal to the Commissioner (Appeals) to raise all issues except the jurisdiction point, with liberty to seek condonation of delay and direction to the Appellate Authority to decide the appeal expeditiously.

Classification of goods - procedure for testing and re-testing of samples - Basic Excise Manual as procedural guideline - show cause notice and audi alteram partem - remand for fresh consideration after re-test

Procedure for testing and re-testing of samples - Basic Excise Manual as procedural guideline - show cause notice and audi alteram partem - Validity of the show cause notice impugned on the ground that no re-test was conducted and the consequent remedial direction - HELD THAT: - The writ petitioner had sought a re-test of samples by communication dated 08.02.2017 invoking the procedure in paragraph 8.8 of the Basic Excise Manual. The respondent issued the impugned show cause notice without conducting a re-test. The Court observed that the Basic Excise Manual sets out the departmental procedure for testing and re-testing and that the petitioner was entitled to pursue re-test by making the requisite application and paying the prescribed fee. Having regard to precedents on challenges to show cause notices and in the interest of affording an effective opportunity of hearing, the respondent conceded that a re-test would be conducted on the petitioner making the application and complying with attendant requirements. The Court directed that the re-test be carried out in accordance with the Basic Excise Manual, that the petitioner shall pay the prescribed fee and comply with other requirements, and that the re-test report be furnished to the petitioner who will then have an opportunity to reply to the impugned show cause notice. The respondent was directed to decide the show cause notice within a fixed and short calendar after receipt of the petitioner's reply, thereby preserving the audi alteram partem principle while leaving the substantive adjudication to the departmental authority after compliance with the ordered procedure. [Paras 19, 20, 21, 22, 23]

Re-test to be conducted in accordance with the Basic Excise Manual on application and payment of prescribed fee; re-test report to be served on the petitioner and the petitioner given 30 days to reply; respondent to decide the show cause notice within 30 days of receipt of that reply.

Classification of goods - remand for fresh consideration after re-test - Whether the classification of the product ('Eco Bath Wipes') is finally determined by this Court - HELD THAT: - The Court confined itself to the narrow controversy of procedural compliance in relation to testing and re-testing of samples. Although the classification question (whether the product falls under CETH 34029091 or CETH 33073090) frames the dispute, the Court did not adjudicate on the substantive classification on merits. Instead, having directed a re-test and provided for the departmental decision-making process thereafter, the Court left the question of classification to be considered and decided by the respondent in accordance with law after the re-test and the petitioner's reply to the show cause notice. [Paras 6, 7, 23]

Substantive issue of classification is not finally decided and is remitted to the respondent for fresh consideration after completion of the re-test and the reply process directed by the Court.

Final Conclusion: Writ petition disposed by directing a departmental re-test in accordance with the Basic Excise Manual (on application and payment of prescribed fee), furnishing of the re-test report to the petitioner, a 30 day period for the petitioner to reply to the show cause notice thereafter, and a requirement that the respondent decide the show cause notice within 30 days of receipt of that reply; the substantive classification dispute is remitted to the respondent for fresh consideration following the above procedure. No costs.

National Calamity Contingent Duty (NCCD) - excise duty characterisation - entitlement to exemption notification - refund of amounts deposited pending appeal

National Calamity Contingent Duty (NCCD) - excise duty characterisation - entitlement to exemption notification - Liability of the assessee to pay NCCD and entitlement to exemption as governed by this Court's decision in Bajaj Auto Limited. - HELD THAT: - The Court held that the legal position on whether NCCD is exigible had been settled by this Court in Bajaj Auto Limited v. Union of India (27.03.2019), which concluded that NCCD is in the nature of excise duty and therefore within the scope of exemption notification. The respondent's contention that the appellant had abandoned this plea before the High Court was rejected on reading the High Court's order, which only recorded that the High Court's earlier view was against the assessee and that view has now been reversed by Bajaj Auto Limited. In consequence, the appeals challenging liability to pay NCCD were allowed in terms of the Bajaj Auto Limited judgment. [Paras 1, 2, 3]

Appeals allowed on the ground that NCCD is excise duty and the assessee is entitled to the benefit of the exemption notification as held in Bajaj Auto Limited.

Refund of amounts deposited pending appeal - Refund of amounts deposited with the Department pursuant to the orders subject to the appeals. - HELD THAT: - The Court noted that, while an interim order dated 19.03.2018 had stayed the penalty amount, other amounts had been deposited and are stated to have been so paid. In view of allowing the appeals, the Court directed that the amounts paid to the Department (other than the stayed penalty) shall be refunded to the appellant within a maximum period of two months from the receipt of a copy of the order. [Paras 4, 5, 6]

Amounts deposited with the Department shall be refunded within two months from receipt of the order; appeals accordingly allowed.

Final Conclusion: Appeals allowed in terms of this Court's decision in Bajaj Auto Limited; NCCD held to be in the nature of excise duty and entitled to exemption, and deposited amounts (excluding penalty stayed earlier) to be refunded within two months.

Quash of Trade Circular - withdrawal of Trade Circular and effect on pending challenges - issuance of Form C - interpretation of the word 'goods' under section 8(3) of the Central Sales Tax Act, 1956 - administrative reconsideration on fresh representation - obligation to decide representations on merits within a fixed time

Quash of Trade Circular - withdrawal of Trade Circular and effect on pending challenges - Challenge to Trade Circular No. 47T of 2017 dated 11th July, 2017 - HELD THAT: - The Court recorded that the impugned Trade Circular No. 47T of 2017 has been withdrawn on 14th February, 2019 and accordingly the petitioner's challenge to that circular does not survive. The Court observed that, with the withdrawal, officers of the sales tax department would not be constrained by the circular in interpreting the provisions of the Central Sales Tax Act concerning the meaning of 'goods'. [Paras 2, 3]

Challenge to the Trade Circular does not survive in view of its withdrawal.

Issuance of Form C - interpretation of the word 'goods' under section 8(3) of the Central Sales Tax Act, 1956 - administrative reconsideration on fresh representation - obligation to decide representations on merits within a fixed time - Petitioner's claim for issuance of Form C for purchase of natural gas from Gujarat and the procedure for its determination - HELD THAT: - The Court directed the petitioner to make a representation to the Commissioner of State Tax (with a copy to the assessing officer) setting out its claim for issuance of Form C for natural gas purchases. The Court ordered that the Commissioner and/or the Deputy Commissioner shall dispose of the representation on merits after hearing the petitioner and in accordance with law within two weeks from filing. The Court noted that if an online portal for Form C is opened the petitioner may apply online but any delay in opening the portal shall not extend the two week period for decision. All substantive contentions were kept open for consideration by the tax authorities. [Paras 3, 4, 5, 6]

Petitioner directed to file representation; tax authorities to decide the claim for Form C on merits within two weeks; substantive issues left open for adjudication by the authorities.

Final Conclusion: The petition was allowed to be withdrawn; the challenge to Trade Circular No. 47T of 2017 is rendered untenable by its withdrawal; petitioner is directed to submit a representation regarding issuance of Form C for natural gas purchases and the tax authorities are directed to decide the same on merits within two weeks, with all substantive contentions kept open.

Value Added Tax on grant of permissive use of brand name - Maharashtra Value Added Tax Act, 2002 - Effect of pending decisions of higher courts on adjudication - Payment of tax and waiver of interim relief

Value Added Tax on grant of permissive use of brand name - Effect of pending decisions of higher courts on adjudication - Payment of tax and waiver of interim relief - Proceedings initiated by issuing Rule; petitioners to file affidavit of tax payment and no interim relief is granted - HELD THAT: - The petitions challenge imposition of Value Added Tax under the Maharashtra Value Added Tax Act, 2002 on the grant of permissive use of the brand name. The Court recorded that determination of the legal question is affected by pending appeals before the Hon'ble Supreme Court (notably Tata Sons Ltd.) and by an appeal against this Court's decision in Subway Systems India Pvt. Ltd., both of which are awaiting consideration. Petitioners have stated that the tax in dispute has been paid and that they do not seek interim relief; an affidavit to that effect was directed to be filed within one week. In view of these changed circumstances and the pendency of relevant higher court proceedings, the Court issued Rule and granted liberty to apply, while not deciding the substantive question on merits at this stage. [Paras 3, 4, 5, 6]

Rule issued; petitioners to file affidavit within one week confirming payment of the tax and that no interim relief is sought; liberty to apply.

Final Conclusion: The Court issued Rule in the petitions challenging VAT on permissive use of brand name, recorded that relevant Supreme Court appeals remain pending, directed filing of an affidavit confirming payment of tax and waiver of interim relief, and granted liberty to apply.

Violation of principles of natural justice - writ jurisdiction despite alternative remedy - remand for fresh assessment - personal hearing to juristic person - Narasus principle - audit proposal not sole basis for assessment

Violation of principles of natural justice - writ jurisdiction despite alternative remedy - Impugned assessment order set aside for breach of principles of natural justice and exercise of writ jurisdiction despite existence of alternate remedy - HELD THAT: - The Court found that the respondent proceeded to pass the Assessment Order dated 08.02.2019 without granting the personal hearing which this Court had specifically directed in its earlier order. The conceded factual failure to provide the opportunity of personal hearing amounted to a clear violation of natural justice. Although an alternate remedy by way of appeal before the Appellate Deputy Commissioner (ST) exists, the Court exercised its discretionary writ jurisdiction because the exception of infringement of principles of natural justice applied. Having regard to the admitted absence of personal hearing and the prior direction from this Court, interference with the impugned order was warranted and appropriate. [Paras 6, 7, 12, 13, 14]

Assessment Order dated 08.02.2019 set aside on account of breach of principles of natural justice and the Court entertained the writ petition notwithstanding the availability of an alternate remedy.

Remand for fresh assessment - Narasus principle - audit proposal not sole basis for assessment - personal hearing to juristic person - Matter remanded for fresh adjudication with directions regarding procedure to be followed during reassessment - HELD THAT: - The Court directed that the matter be remanded for fresh assessment and adjudication in accordance with law. While conducting the fresh assessment the respondent was directed to apply the Narasus principle, namely that the audit team's proposal should not be the sole basis of the order and that there must be an independent adjudication by the Enforcement Wing. The respondent must give an opportunity of personal hearing to a duly authorised representative of the petitioner (a juristic person) and permit filing of documents in support of submissions and objections. The reassessment exercise was ordered to be completed within four weeks from receipt of this order. [Paras 15]

Impugned order set aside and matter remitted for fresh assessment with directions to follow Narasus principle, to afford personal hearing and to permit documentary filings; reassessment to be completed within four weeks.

Final Conclusion: Impugned Assessment Order dated 08.02.2019 is set aside for breach of natural justice; the matter is remanded for fresh assessment in accordance with the Narasus principle, with an opportunity of personal hearing to the petitioner's authorised representative and permission to file documents, to be completed within four weeks.

Penalty for willful non-disclosure under Section 27(3) of the Tamil Nadu Value Added Tax Act, 2006 - consideration of the assessee's conduct in remitting differential tax prior to issuance of show-cause notice - remand for fresh assessment on levy of penalty and equal time addition - deemed assessment under Section 22(2) of the Tamil Nadu Value Added Tax Act, 2006 - binding effect of earlier Single Judge decision

Penalty for willful non-disclosure under Section 27(3) of the Tamil Nadu Value Added Tax Act, 2006 - consideration of the assessee's conduct in remitting differential tax prior to issuance of show-cause notice - binding effect of earlier Single Judge decision - Validity of imposition of 150% penalty under Section 27(3) in assessment orders where differential tax was paid following inspection and before issuance of show-cause notice. - HELD THAT: - The Court applied the principle laid down in Saravana Super Market which holds that levy of penalty under Section 27(3) requires recorded satisfaction that escapement of tax was due to willful non-disclosure and mere non-disclosure does not automatically attract penalty. Where the assessee remitted the differential tax upon detection by Enforcement Wing officers and before issuance of the show-cause notice, that conduct is a material factor to be taken into account. The earlier Single Judge decision has attained finality and is binding; consequently the impugned assessment orders levying 150% penalty cannot stand and must be set aside. [Paras 11, 12]

Impugned orders levying 150% penalty under Section 27(3) are set aside as contrary to the binding principle in Saravana Super Market.

Remand for fresh assessment on levy of penalty and equal time addition - consideration of the assessee's conduct in remitting differential tax prior to issuance of show-cause notice - deemed assessment under Section 22(2) of the Tamil Nadu Value Added Tax Act, 2006 - Whether the matters should be remanded to the assessing authority for fresh consideration in light of the binding precedent. - HELD THAT: - Having set aside the impugned orders, the Court directed that the third respondent redo the assessments. The assessing authority is to take note of the assessee's conduct in remitting tax even prior to issuance of the show-cause notices and reconsider both the question of levy of penalty and of equal time addition in accordance with the law and the binding precedent. The remand is for fresh consideration on those heads and not for quantification apart from reassessment on the identified issues. [Paras 13, 14]

Matters remanded to the third respondent for fresh assessment and consideration of penalty and equal time addition in accordance with Saravana Super Market; writ petitions allowed.

Final Conclusion: Impugned assessment orders dated 15.03.2019 and 24.04.2019 imposing 150% penalty under Section 27(3) are set aside pursuant to the binding Single Judge decision in Saravana Super Market; matters remanded to the assessing authority for fresh consideration of levy of penalty and equal time addition, taking into account the assessee's prior payment of differential tax.

Alternate remedy - exercise of writ jurisdiction under Article 226 - relegation to statutory appeal - exceptions to alternate remedy: lack of jurisdiction, breach of natural justice, alternate remedy ineffective - interest on tax liability is automatic

Alternate remedy - exercise of writ jurisdiction under Article 226 - exceptions to alternate remedy: lack of jurisdiction, breach of natural justice, alternate remedy ineffective - Whether the writ petitions should be entertained despite the availability of statutory appeal and requirement of pre-deposit - HELD THAT: - The Court examined the settled doctrine that alternate remedy is a rule of discretion and not of compulsion, but must be applied strictly in revenue matters. The authorities and exceptions were considered - lack of jurisdiction, breach of natural justice, or where the alternate remedy is ineffective or illusory. Applying these principles to the facts, noting that proceedings were dropped on two heads and adverse finding was only on purchase and sales omission, the Court found no exceptional circumstance warranting interference under Article 226. The requirement of pre deposit cannot, by itself, justify bypassing the appellate remedy. Consequently, the petitioner is relegated to the statutory appeal available before the Appellate Deputy Commissioner-Sales Tax, Salem, to raise grievances including the challenge to interest. [Paras 21, 22, 23, 24, 25]

Writ petitions dismissed in limine and petitioner relegated to file the statutory appeal; no writ interference on merits.

Relegation to statutory appeal - appellate authority to decide uninfluenced by this order - condonation of delay and Section 14 of the Limitation Act - Scope and directions given when relegating petitioner to the appellate forum - HELD THAT: - The Court directed that if the petitioner files the statutory appeal, the Appellate Deputy Commissioner-Sales Tax shall hear and decide the appeal on merits uninfluenced by observations in this order. The Court further recorded that the petitioner may apply for condonation of delay and seek benefit under Section 14 of the Limitation Act before the appellate authority, and such applications shall be considered on their own merits. [Paras 25, 26, 27]

Appellate authority to decide the appeal on merits, uninfluenced by this order; petitioner permitted to seek condonation of delay and benefit under Section 14 before the Appellate Authority.

Interest on tax liability is automatic - Whether interest component challenged before this Court could be entertained despite availability of appellate remedy - HELD THAT: - The Court noted the Revenue's contention that interest is automatic. The petitioner sought relief only against the interest component, but the Court observed that the claim against interest does not avoid the availability of the statutory appeal. No independent adjudication on the substantive correctness of levy of interest was undertaken; the petitioner must raise this contention before the appellate authority. [Paras 13, 16, 25]

Challenge to interest is to be pursued in the statutory appeal; no relief granted in writ jurisdiction.

Final Conclusion: Writ petitions are dismissed and the petitioner is relegated to the statutory appeal remedy before the Appellate Deputy Commissioner-Sales Tax, Salem; the appellate authority shall decide the appeal on merits uninfluenced by this order, and the petitioner may apply for condonation of delay and seek benefit under Section 14 of the Limitation Act, which shall be considered on its merits.

Revision of assessment on basis of forms submitted post-assessment - exemption under Sub-Section (6) of Section 8 of the Central Sales Tax Act - applicability of East Coast Bearings precedent to post-assessment Forms - scrutiny of post-assessment Forms by assessing officer - impermissibility of cryptic rejection of binding precedent

Revision of assessment on basis of forms submitted post-assessment - scrutiny of post-assessment Forms by assessing officer - Whether Forms submitted after completion of assessment can be considered and occasion revision of the assessment. - HELD THAT: - The Court accepted the principle, as earlier laid down by the Division Bench in East Coast Bearings, that certain Forms produced post assessment may be taken into account and can lead to revision of the assessment, subject to scrutiny of those Forms by the Assessing Officer. The revenue did not dispute this legal principle. Given the absence of any other attendant facts preventing such exercise, the Assessing Officer is required to examine the Form submitted post-assessment and, if found acceptable on scrutiny, to revise the assessment accordingly. [Paras 15, 24]

Forms submitted post-assessment can be considered and may lead to revision of the assessment after proper scrutiny; respondent directed to examine the Form I and pass fresh assessment.

Applicability of East Coast Bearings precedent to post-assessment Forms - exemption under Sub-Section (6) of Section 8 of the Central Sales Tax Act - Whether the ratio in East Coast Bearings (concerning Form C) is applicable to Form I which seeks exemption under Section 8(6) CST Act. - HELD THAT: - The Court rejected the respondent's distinction between Form C (concessional rate) and Form I (exemption), observing that the underlying principle permitting post-assessment consideration of supporting forms operates equally whether the result is a concessional rate or a full exemption. The Court explained by analogy that if a post-assessment concessional form can reduce tax from a higher rate to a lower rate, similarly an acceptable post-assessment exemption form can reduce tax to nil. Accordingly, the East Coast Bearings principle governs the present case involving Form I under Section 8(6) of the CST Act. [Paras 16, 20]

The East Coast Bearings ratio applies equally to Form I seeking exemption under Section 8(6) CST Act; the distinction urged by revenue is not tenable.

Impermissibility of cryptic rejection of binding precedent - Whether the Assessing Officer's summary statement that the precedent is 'not relevant' without reasons was permissible. - HELD THAT: - The Court held that the impugned order's cryptic remark that the cited judgment was 'not relevant'-without articulating why or how it did not apply-was unacceptable, particularly because the decision disregarded a binding Division Bench precedent. The law does not permit improvement of an impugned order by a counter-affidavit; the assessing authority's failure to give reasons amounted to disregarding the superior Court's ratio and warranted setting aside the impugned order and remand for fresh consideration. [Paras 18, 21, 22]

Impugned order's summary rejection of the precedent without reasons is improper; order set aside and matter remanded for fresh consideration.

Final Conclusion: Impugned order dated 21.02.2019 is set aside. The Assessing Officer shall examine the Form I submitted on 13.02.2019, scrutinise it and, if appropriate, revise the assessment for 2014-2015 within three weeks; no further forms shall be permitted.

Power of a delegated authority to review or keep its own order in abeyance - Duty of a notified authority to act independently in exercise of powers - Amendment and cancellation of registration certificates under the Central Sales Tax regime - No automatic deregisration of CST registration upon amendment of the definition of goods - Coexistence of registration under CST Act and GST law for different goods - Entitlement to benefit of concessional inter-State rate under CST where goods fall within amended definition

Power of a delegated authority to review or keep its own order in abeyance - Duty of a notified authority to act independently in exercise of powers - Whether an authority empowered under section 7 of the Central Sales Tax Act can review or keep in abeyance an order passed by it by seeking guidance of a superior officer - HELD THAT: - The authority notified to decide applications under section 7 is required to exercise the powers vested in it independently and competently. Nothing in section 7 or the accompanying rules confers a power on the authority to review or put in abeyance an order by which it has granted registration or amended a registration certificate on the ground that it seeks guidance from a higher authority. An officer refusing to decide an application or keeping an approved amendment in abeyance for guidance reflects lack of competence and is not permissible under the statutory scheme. The impugned letters placing the earlier approvals in abeyance as having been granted 'through oversight' pending guidance therefore cannot be sustained. [Paras 10]

The practice of keeping the approval of amendment of registration in abeyance to seek superior guidance is without jurisdiction and is quashed.

Amendment and cancellation of registration certificates under the Central Sales Tax regime - No automatic deregisration of CST registration upon amendment of the definition of goods - Whether amendment of section 2(d) of the CST Act by the Taxation Laws (Amendment) Act, 2017 caused CST registrations of dealers not dealing in the newly specified goods to become automatically inactive or cancelled - HELD THAT: - Section 7(4)(b) and section 7(5) prescribe the manner in which a registration certificate under the CST Act may be cancelled; there is no provision for automatic cancellation where a dealer ceases to deal in a commodity or where the statutory definition of 'goods' is amended. The legislature demonstrated how to provide for automatic deregistration in the GVAT amendments when it intended to do so; no similar mechanism was inserted into the CST Act. Therefore, the amended definition of 'goods' does not itself operate to render existing CST registrations inactive or automatically cancelled. [Paras 11]

CST registration certificates do not automatically become inactive or cancelled by virtue of the 2017 amendment to the definition of 'goods'.

Coexistence of registration under CST Act and GST law for different goods - Entitlement to benefit of concessional inter-State rate under CST where goods fall within amended definition - Whether a dealer registered under the Goods and Services Tax law can also hold registration under the CST Act for commodities falling within the amended definition of 'goods' so as to avail the reduced inter-State rate under section 8 - HELD THAT: - The statutory scheme following the introduction of GST restricted the CST definition of 'goods' to commodities not covered by GST, so that dealers dealing in such commodities must be registered under the CST Act to claim the concessional inter-State rate. A dealer may simultaneously hold registrations under the GST law and the CST Act where he deals in goods falling within the ambit of both enactments. There is no legal bar to maintaining separate registrations for different classes of goods and to availing the benefits under section 8 of the CST Act for eligible commodities. [Paras 12]

A dealer registered under the GST law can also be registered under the CST Act in respect of commodities falling within the amended definition of 'goods' and may avail the reduced rate under section 8.

Final Conclusion: The petitions are allowed: the impugned letters placing the approved amendments to the petitioners' CST registration certificates in abeyance are quashed and set aside; the notified authority acted without jurisdiction in keeping the approvals pending guidance; and legally CST registrations do not automatically become inactive on the 2017 amendment and may coexist with GST registration where appropriate.

Cancellation of declaration form / Form C - rule-making power under Section 13(4)(e) of the Central Sales Tax Act - inconsistency and ultra vires of subordinate legislation - prescribed manner for furnishing declaration under Section 8(4) - retrospective cancellation of registration / effect of cancellation on third parties

Rule-making power under Section 13(4)(e) of the Central Sales Tax Act - inconsistency and ultra vires of subordinate legislation - Validity of Rule 17(20) of the Central Sales Tax (Rajasthan) Rules, 1957 - HELD THAT: - The State is empowered to make rules only within the scope conferred by the Central Act and those rules must not be inconsistent with the Act or the Rules made by the Central Government. Clause (e) of the rule-making entry permits the State to prescribe the authority, conditions and manner in which forms or declarations under Section 8 may be obtained, kept and used; it does not confer power to cancel a declaration once validly issued. Rule 17(20) of the Rajasthan Rules, which authorises cancellation of declaration Form(s)/Certificate(s) on grounds of misrepresentation or fraud and declares such forms as deemed never generated, goes beyond the rule-making competence under the Act and is therefore inconsistent with and in excess of the enabling provision. Applying the established tests of legislative competence and conformity with the parent statute, the impugned sub-rule is manifestly ultra vires.

Rule 17(20) of the Rajasthan Rules is declared ultra vires Section 8(4), 13(1)(d), 13(3) and 13(4)(e) of the Central Sales Tax Act.

Cancellation of declaration form / Form C - prescribed manner for furnishing declaration under Section 8(4) - retrospective cancellation of registration / effect of cancellation on third parties - Legality of communications and orders cancelling the petitioner's purchasers' Form C and the consequent cancellation order dated 07.12.2017 - HELD THAT: - Since the rule empowering cancellation of already issued declaration forms is invalid, actions taken by authorities pursuant to that rule are unsustainable. Communications sent to the Delhi authority concerning cancellation of the Form C(s) and the order cancelling those forms were founded on the impugned Rule 17(20) and therefore lacked legal basis. The court refrained from examining correctness of the registration-cancellation process itself insofar as it related to the competence to frame Rule 17(20), but held that the specific communications and the cancellation of the C-forms issued to the purchasers, insofar as they relied upon the impugned rule, are illegal.

The communications dated 20.11.2017 and 30.11.2017 and the cancellation of the Form C(s) by order dated 07.12.2017 are quashed and set aside.

Retrospective cancellation of registration / effect of cancellation on third parties - prescribed manner for furnishing declaration under Section 8(4) - Entitlement of the petitioner to the benefit under Section 8 of the Central Sales Tax Act in respect of sales made relying on the purchasers' registration and Form C - HELD THAT: - A selling dealer who has acted on the strength of a valid registration certificate and a declaration in the prescribed form and manner satisfies the obligation under Section 8(1); subsequent cancellation of the purchasing dealer's registration or related communications based on an invalid rule cannot deprive the selling dealer of that right. Established authorities recognise that a purchaser's retrospective cancellation does not affect a seller who acted when the registration was current. Given the quashing of the cancellation of the Form C(s), the petitioner is entitled to the concessional tax treatment under Section 8.

The petitioner is entitled to avail the benefit of the rates of tax under Section 8 of the Central Sales Tax Act.

Inconsistency and ultra vires of subordinate legislation - cancellation of declaration form / Form C - Maintainability of the writ petition challenging Rule 17(20) and related actions - HELD THAT: - A direct challenge to the vires of a subordinate rule which affects the petitioner's legal rights can be entertained by the High Court under Article 226/227; where the absence of power to cancel Form C is an important question of law directly affecting the petitioner, recourse to writ jurisdiction is appropriate despite existence of alternative statutory mechanisms. The preliminary objection that the petitioner lacked locus or should have pursued alternative remedies was overruled because the challenge raised a substantial question of law regarding legislative competence and the validity of the rule itself.

Objection as to alternative remedy/maintainability rejected; the writ petition is maintainable to challenge Rule 17(20) and its consequences.

Final Conclusion: The writ petition is allowed. Rule 17(20) of the Central Sales Tax (Rajasthan) Rules, 1957 is held ultra vires the Central Sales Tax Act; the impugned communications and the cancellation of the Form C(s) are quashed and set aside; the petitioner is entitled to the benefit of reduced rates under Section 8 of the Central Sales Tax Act.

Negotiable Instruments Act, 1881 - Offence under Section 138 - Presumption as to issuance and delivery of cheque under Section 139 - Dishonour of cheque for insufficiency/closure of account and mens rea for dishonour - Cheque issued as security - defence and evidentiary burden - Estoppel against raising title/ownership to defeat claim - Conversion of sentence to fine and award of compensation

Negotiable Instruments Act, 1881 - Offence under Section 138 - Presumption as to issuance and delivery of cheque under Section 139 - Conviction under Section 138 of the Negotiable Instruments Act sustained and presumption under Section 139 held not rebutted. - HELD THAT: - The trial and appellate courts have examined oral and documentary evidence including the agreement (exhibit-1), the cheque (exhibit-3), cheque-return memo and bank evidence. The cheque was deposited on the date instructed by the accused but was dishonoured due to closure of the account; the complainant proved issuance, delivery and presentation. The accused did not challenge execution of the agreement or the cheque-signature and failed to prove payment of the disputed amount by instalments. On appreciation of the record the courts rightly applied the statutory presumption under Section 139 and found that the accused failed to rebut it, warranting conviction under Section 138. [Paras 7, 9, 10, 12, 14]

Conviction under Section 138 NI Act is upheld; presumption under Section 139 was not rebutted.

Cheque issued as security - defence and evidentiary burden - Estoppel against raising title/ownership to defeat claim - Defences that the cheque was given only as security and that the complainant lacked title to the vehicle were rejected; accused estopped from raising lack of ownership to defeat claim. - HELD THAT: - The accused admitted issuing post-dated cheques but contended they were security and that the complainant was not the owner of the vehicle. The agreement (exhibit-1) records delivery of post-dated cheques and the complainant produced the sale deed from the original vendor showing purchase and ongoing steps for transfer. Defence witnesses gave contradictory evidence and the accused did not challenge execution of material documents. Having regard to conduct of the parties and the documentary proof, the lower courts correctly held that the accused could not be permitted to repudiate liability by raising title objections and that the security plea was not established. [Paras 11, 12, 14]

Defences of cheque-as-security and non-ownership were rejected; accused estopped from raising ownership to avoid liability.

Conversion of sentence to fine and award of compensation - Sentence of simple imprisonment was converted into a fine equal to twice the cheque amount and the fine directed to be given to the complainant as compensation; procedural direction given for deposit before the trial court. - HELD THAT: - While maintaining the conviction, the High Court noted the delay in realization of the complainant's dues and the trial court's leniency in quantifying compensation. Exercising its power, the court converted the sentence of simple imprisonment into payment of fine amounting to twice the cheque value, ordered that the fine be paid to the complainant as compensation and directed the complainant to deposit the amount before the trial court within two months. [Paras 14]

Custodial sentence converted to fine of twice the cheque amount payable to the complainant; complainant directed to deposit the amount in the trial court within two months.

Final Conclusion: Concurrent findings of conviction under Section 138 NI Act were affirmed; the accused's defences were rejected and the statutory presumption under Section 139 remained unrebutted. Sentence was modified by converting imprisonment into a fine of twice the cheque amount to be given as compensation, with directions for deposit before the trial court.

Summary suit under Order 37 CPC - cheque as a bill of exchange - recovery of debt arising from a written contract evidenced by import permits, invoices and GRs - admissibility of electronic records under Section 65B of the Indian Evidence Act - ex parte proceeding after substituted service by affixation and publication - award of interest on business debt

Summary suit under Order 37 CPC - cheque as a bill of exchange - Maintainability of the plaintiff's suit as a summary suit under Order 37 CPC in respect of claims founded on cheques and on a written contract. - HELD THAT: - The Court held that a summary suit under Order 37 CPC is maintainable for claims founded upon a "bill of exchange" and that a cheque is a special kind of bill of exchange within the meaning of the Negotiable Instruments Act, 1881. The plaintiff's claim for the amount represented by the dishonoured cheques (aggregate Rs. 50 lacs) is therefore maintainable under Order 37. Further, the broader claim for the outstanding amount arising on a written contract (invoices supported by import permits and transportation documents) falls within Order 37 Rule 1(2)(b)(i) as a liquidated demand arising from a written contract. The Court observed that separate decrees for the cheque amount were unnecessary if the plaintiff succeeds on the total claim, since the cheques form part payments towards the same outstanding liability. [Paras 11, 14, 15]

The suit is maintainable as a summary suit under Order 37 CPC both in respect of the cheques (as bills of exchange) and the claim arising from the written contract evidenced by import permits and invoices.

Recovery of debt arising from a written contract evidenced by import permits, invoices and GRs - Whether the plaintiff proved the existence and quantum of a written contract debt and entitlement to recovery of the claimed outstanding amount. - HELD THAT: - The Court found that the import permits (Form L-34), corresponding invoices, GRs and the supply acted upon by the plaintiff demonstrate a continuous contractual relationship: the import permits furnished by the defendant constituted offers which the plaintiff accepted by supplying goods and issuing invoices. Even if invoices were treated as counter-offers, acceptance was established by receipt and use of goods and part payments. The plaintiff produced original invoice books, cheques issued by the defendant, courier receipts for the legal notice, bank information on cheque dishonour, and a ledger of running account. The ledger was supported by a certificate under Section 65B of the Evidence Act attesting to the electronic record and its hard-copy reproduction. On this evidence the Court held the outstanding amount claimed was duly established. [Paras 12, 13, 18, 19]

The plaintiff established the written contract, the supply, and the outstanding debt; the plaintiff is entitled to recovery of the claimed amount.

Ex parte proceeding after substituted service by affixation and publication - Validity of proceeding ex parte against the defendant after substituted service by affixation and publication. - HELD THAT: - The Court recorded the steps taken to effect service-personal service attempts, dasti and registered notices returning unserved, followed by service by affixation and publication in two newspapers. Although an earlier affixation omitted pasting the plaint and annexures as required under Order 37 Rule 3(1), the defect was rectified by re-serving through affixation with the plaint and documents for the subsequent hearing. The defendant failed to appear thereafter and the Court proceeded ex parte. [Paras 7]

Proceeding ex parte against the defendant was valid after substituted service by affixation and publication and rectification of the earlier omission.

Admissibility of electronic records under Section 65B of the Indian Evidence Act - Admissibility and evidentiary weight of the plaintiff's ledger generated from computer records and supported by a Section 65B certificate. - HELD THAT: - The plaintiff placed on record the ledger of the running account, generated from its computer system, together with a certificate under Section 65B stating the ledger is a true and accurate reproduction of the electronic record. The Court accepted the certified electronic record as establishing the payments received and the outstanding balance due from the defendant. [Paras 13]

The electronic ledger, supported by a Section 65B certificate, was admissible and accepted as establishing the account between the parties.

Award of interest on business debt - Entitlement to and rate of interest on the amount found due to the plaintiff. - HELD THAT: - Recognising that the amount arises from a commercial transaction and that non-payment deprived the plaintiff of funds usable in its business, the Court found the plaintiff entitled to interest. Exercising its discretion, the Court awarded interest at the rate of 12% per annum from the date the liability arose until final realisation. [Paras 20, 21]

Interest awarded at 12% per annum on the amount decreed, from the date liability arose until realization.

Final Conclusion: The plaintiff's summary suit under Order 37 CPC succeeds. A decree is passed in favour of the plaintiff for recovery of the outstanding debt as established, together with interest at 12% per annum from the date the liability arose until final realisation, and with costs; the defendant having failed to appear, the decree was passed ex parte.