TaxTMI Updates e-Newsletter
Jun 24,2019

Rule 2(a) of the General Rules for the Interpretation of the Harmonised System - essential character - classification under HSN headings - Cartons, boxes and cases of corrugated paper or paper board (CH 4819) - Other paper, paperboard cut to size or shape; other articles of paperboard (CH 4823) - printing as principal supply versus ancillary supply

Rule 2(a) of the General Rules for the Interpretation of the Harmonised System - essential character - Cartons, boxes and cases of corrugated paper or paper board (CH 4819) - Classification and GST rate of cut to size blanks with corrugation and requisite creases supplied in flat form - HELD THAT: - The Authority examined samples and evidence that the cut to size blanks have corrugation and designated creases so that they can be folded on three sides and glued on the fourth to form cartons. The blanks can be converted into cartons manually or mechanically without special technical processes. Applying Rule 2(a), an incomplete or unassembled article is classifiable with the finished article where, as presented, it has the essential character of the finished article. The blanks are usable only as cartons/boxes after simple folding, and both supplier and customer understand that the goods supplied in flat form are intended to be cartons. The Authority accepted the applicant's reliance on authorities construing Rule 2(a) and concluded that the essential character of the goods is that of cartons or boxes, and therefore they fall within CH 4819 and attract the GST rate applicable to that heading.

Cut to size corrugated blanks with requisite creases supplied in flat form are classifiable under CH 4819 and taxable at the rate applicable to that heading (12% GST).

Classification under HSN headings - Other paper, paperboard cut to size or shape; other articles of paperboard (CH 4823) - printing as principal supply versus ancillary supply - Classification and GST rate of printed flat materials (e.g., hanging cards) without creases, supplied in flat form - HELD THAT: - The Authority found that printed hanging cards supplied in flat form are articles of paper cut to size or shape and do not possess the essential character of cartons or boxes. Such items fall squarely within the descriptive scope of Chapter Heading 4823 as 'other articles of paper, paperboard ... cut to size or shape.' The Authority noted the Circular clarifying that when printed goods made using the printer's physical inputs are primarily goods, printing is ancillary; however, this does not alter the characterisation of hanging cards as CH 4823 articles. Consequently, these items attract the rate applicable to CH 4823.

Printed flat materials such as hanging cards without creases are classifiable under CH 4823 and are taxable at the rate applicable to that heading (18% GST).

Final Conclusion: The Advance Ruling holds that (a) cut to size corrugated blanks with requisite creases supplied in flat form are classifiable as cartons/boxes under CH 4819 and attract 12% GST, and (b) printed flat materials such as hanging cards without creases are classifiable under CH 4823 and attract 18% GST.

Compulsory registration where recipient is liable to pay tax under reverse charge - persons not liable to registration engaged exclusively in exempt supplies - taxable supply and aggregate turnover threshold - Goods Transport Agency services notified for reverse charge - notwithstanding clause and overriding effect - harmonious construction to avoid redundancy of statutory provisions

Persons not liable to registration engaged exclusively in exempt supplies - compulsory registration where recipient is liable to pay tax under reverse charge - Goods Transport Agency services notified for reverse charge - taxable supply and aggregate turnover threshold - notwithstanding clause and overriding effect - Applicant liable to obtain registration despite dealing exclusively in exempt supplies because it is required to pay tax under reverse charge. - HELD THAT: - Section 23 exempts persons engaged exclusively in supplying goods or services that are not liable to tax or wholly exempt. Section 24 mandates compulsory registration for specified categories, including persons required to pay tax under reverse charge, and begins with a 'notwithstanding' clause in relation to sub section (1) of section 22 (the turnover threshold). By notification, services of a Goods Transport Agency (GTA) have been specified as subject to reverse charge where the recipient falls within the notified classes; the recipient is therefore liable to pay tax under reverse charge and, by virtue of sections 9 and 24 read together, must be registered so that the provisions of the Act apply to the recipient as the person liable to pay tax. Harmonious construction of the Act requires giving effect to both sections 23 and 24; where a person otherwise exempt under section 23 becomes liable to pay tax under reverse charge (by operation of notification and section 9), that person falls within the compulsory registration category of section 24 notwithstanding the turnover threshold in section 22(1). The Authority therefore concluded that the applicant, being a recipient required to pay tax under reverse charge for GTA services, must obtain registration to discharge its reverse charge liability. [Paras 5, 6]

Applicant is liable to take registration under section 24 of the GST Act, 2017.

Final Conclusion: The Advance Ruling holds that a person exclusively supplying exempt goods nevertheless must obtain registration where, as recipient, it is obliged to pay tax under the reverse charge mechanism (notably for notified GTA services), and such obligation triggers compulsory registration under section 24 notwithstanding the turnover threshold in section 22.

Composite supply - works contract - immovable property - original works - principal supply - taxability of composite supply of works contract

Composite supply - works contract - immovable property - Whether the supply of goods or services for setting up of the network qualifies as a works contract or composite supply - HELD THAT: - The Authority found that the contract envisages supply of more than two taxable supplies of goods and services supplied in conjunction with each other and therefore satisfies the statutory definition of composite supply. Having examined the nature of obligations - construction of buildings and ancillary civil works, supply and installation of equipment, interconnection, commissioning and related services - the Authority concluded that the overall transaction is a composite supply which falls within the ambit of a works contract as defined in Section 2(119) of the GST Act. The Authority noted that under the GST framework the concept of works contract is confined to works relating to an immovable property, and, on the facts and the contract terms, treated the bundled supplies as a composite works contract.

The supply for setting up of the network is a composite supply of works contract as defined in Section 2(119) of the CGST Act.

Original works - taxability of composite supply of works contract - Rate of tax applicable to the supplies made under the contract - HELD THAT: - The Authority considered applicability of Entry 3(vi)(a) of Notification No.11/2017 (reduction to 12% for certain services to Government entities in respect of a civil structure or other original works) and examined whether the contract constituted 'original works' or related to a civil structure meant predominantly for non-commercial use. Observing that the applicant chiefly supplies the equipment which are installed by it and that the contract does not fall within the description of original works/civil structure under the said entry, the Authority held that the contract does not attract the concessional entry. The composite supply of works contract therefore falls under the residual taxable category and the applicable rate is 18% GST.

The supplies under the contract are taxable at 18% GST.

Final Conclusion: The Authority ruled that the proposed transaction is a composite supply amounting to a works contract under Section 2(119) of the CGST Act and, having found that the contract does not qualify as 'original works' or a civil structure for the concessional entry, held that the applicable GST rate is 18%.

Right to be heard - Assessment under Section 144 read with Section 147 of the Income Tax Act - Opportunity to explain bank cash deposits - Setting aside assessment for fresh consideration and reassessment

Right to be heard - Opportunity to explain bank cash deposits - Setting aside assessment for fresh consideration and reassessment - Impugned assessment under Section 144 read with Section 147 was set aside to permit the assessee one final opportunity to explain cash deposits and to enable fresh assessment thereafter. - HELD THAT: - The Court observed that the cash deposits in the assessee's bank account were not disputed but that the assessee had not filed returns, produced documentary evidence or attended proceedings despite notices and opportunities. The writ petition disclosed personal hardships and lack of education which the Court accepted as a mitigating circumstance. Rather than adjudicating the merits of the additions, the Court exercised its discretionary supervisory jurisdiction to vacate the assessment order dated 22.12.2018 solely to afford the assessee a final opportunity to appear before the Assessing Officer with his chartered accountant and supporting documents and to explain whether the amounts were exempt or did not pertain to the assessment year. The Court directed that on appearance the respondent shall redo the assessment and pass a fresh order within the stipulated fortnight, and warned that failure to appear would revive the impugned order.

Assessment order dated 22.12.2018 set aside for the limited purpose of affording the assessee a final opportunity to explain the bank deposits; respondent to redo assessment afresh within the time directed.

Final Conclusion: Writ petition disposed by setting aside the impugned assessment order without expressing any opinion on merits and directing a final hearing and fresh assessment in accordance with the timetable fixed by the Court; no order as to costs.

Estimation of poultry droppings/manure recoverability - average stock of birds for computation of sale - admissibility of unaccounted cash accruals as telescoped receipts against property purchase - appellate scope under Section 260A - no re assessment of factual findings

Estimation of poultry droppings/manure recoverability - average stock of birds for computation of sale - appellate scope under Section 260A - no re assessment of factual findings - The tribunal and CIT(A)'s determination of average sale of poultry droppings/manure (adopting the assessee's estimate over the assessing officer's estimate and rejecting the officer's computed average stock of birds) is upheld. - HELD THAT: - The assessing officer relied on an expert opinion to adopt 19.10 kg per bird, while the assessee had adopted 14 kg; the expert himself indicated practical recoverability may not exceed 10 kg per bird. The Tribunal found the assessing officer's approach inconsistent for selectively accepting parts of the expert opinion and rejected the assessing officer's computation. The CIT(A) conducted an independent factual inquiry, including market enquiries about prevailing rates, and made a considered factual finding. The High Court held that the Tribunal's and CIT(A)'s factual re examination is entitled to deference and that, under Section 260A, the Court cannot reassess facts afresh in the absence of perversity in the findings of the lower authorities. [Paras 3]

Substantial question of law No.1 rejected; Tribunal's and CIT(A)'s factual findings on estimation are upheld.

Admissibility of unaccounted cash accruals as telescoped receipts against property purchase - evaluation of seized records and notebooks in support of telescoping - appellate scope under Section 260A - no re assessment of factual findings - The Tribunal and CIT(A)'s allowance of unaccounted cash accruals as telescoped receipts to offset against the purchase of property is upheld for the assessment year 2010-11. - HELD THAT: - The CIT(A) allowed telescoping of cash accruals amounting to the claimed unaccounted receipts after elaborating reasons; the Tribunal independently examined the records, including the seized notebook, and affirmed the telescoping. The High Court found that both authorities had examined the factual material and rendered a conclusion which the Court could not upset on appeal under Section 260A in the absence of any shown perversity in those findings. [Paras 4]

Substantial question of law No.2 rejected; allowance of cash accruals for offset against property purchase is upheld.

Final Conclusion: The Revenue's appeals are dismissed; no substantial question of law is established and the findings of the CIT(A) and the Tribunal on the estimation of manure sales and the telescoping of unaccounted cash receipts are upheld. Consequential miscellaneous petitions are dismissed and no costs awarded.

Disallowance under Section 14A - proviso to Section 14A limited to reassessment proceedings - reassessment under Section 147 - processing of return under Section 143(1) - administrative threshold for pursuing Departmental appeals (Circular No.3 of 2018)

Administrative threshold for pursuing Departmental appeals (Circular No.3 of 2018) - disallowance under Section 14A - proviso to Section 14A limited to reassessment proceedings - reassessment under Section 147 - processing of return under Section 143(1) - Whether the Revenue could maintain the appeal when the tax effect in dispute was below the monetary threshold specified in the CBDT's Circular No.3 of 2018, and consequentially whether the substantial questions of law framed required adjudication. - HELD THAT: - The Court noted that the tax effect in the appeal falls below the monetary limit prescribed by Circular No.3 of 2018 (Rs.50,00,000) for the Department to pursue the matter. The Revenue was unable to point out any distinguishing feature that would take the case outside the scope of the Circular. Having regard to that administrative threshold, the Court concluded that the Revenue cannot pursue the appeal; accordingly the appeal was dismissed for this reason. The Court expressly left the substantial questions of law (concerning the scope and applicability of the proviso to Section 14A, interplay with Section 147 and returns processed under Section 143(1)) open and did not decide them on merits. The Revenue was, however, granted liberty to seek restoration of the appeal if it is subsequently shown that the tax effect exceeds the threshold specified in the Circular.

Appeal dismissed on administrative threshold ground; substantial questions of law left open; liberty to restore if tax effect later exceeds Circular threshold.

Final Conclusion: The Revenue's appeal was dismissed because the tax effect was below the Rs.50,00,000 threshold in Circular No.3 of 2018; the substantial questions of law were not decided and the Revenue may seek restoration if the tax effect later exceeds the threshold.

Penalty for non-filing of Annual Information Return (Form 61B) - penalty under Section 271FA - reasonable cause for failure to furnish information - exemption from penalty under Section 273B - computation of daily penalty prior to 1.4.2018 - application of coordinate-bench precedent

Penalty for non-filing of Annual Information Return (Form 61B) - penalty under Section 271FA - reasonable cause for failure to furnish information - exemption from penalty under Section 273B - application of coordinate-bench precedent - Validity and quantum of penalty levied under Section 271FA for failure to file Form 61B for the relevant period, and whether reasonable cause existed to mitigate or delete the penalty. - HELD THAT: - The Tribunal examined the levy of penalty under Section 271FA for non-filing of the Annual Information Return in Form No.61B for the period 2014-15. The facts and chronology before the Tribunal - non-filing despite extended due date, issuance of show-cause notices, non-appearance at hearings and eventual filing on 14.12.2017 after resolution of technical portal integration difficulties - were materially identical to those in the coordinate-bench decision in Sub Registrar Jaora v. Director of Income Tax (I&CI), Bhopal. That earlier decision found that, although delay occurred, correspondence from State and departmental authorities established a technical problem in PAN authentication and non-integration of portals, constituting a reasonable cause for failure and permitting mitigation under the principle encapsulated in Section 273B. Applying the same reasoning to the present facts, the Tribunal treated the computed statutory penalty as excessive and sustained only a reduced penalty of Rs. 9,700 while deleting the balance. The Tribunal noted the statutory scheme permitting computation of daily penalty for the pre-1.4.2018 period and accepted that mitigation is available where reasonable cause is proved; in the absence of any contrary material from the Department, the coordinate-bench precedent was held binding on the same Bench and applied to reduce the penalty. [Paras 6, 7]

Penalty under Section 271FA upheld only to the extent of Rs. 9,700 and the remaining amount deleted; appeal partly allowed.

Final Conclusion: The Tribunal, applying its coordinate-bench precedent and on the facts of technical portal integration difficulties and subsequent filing, reduced the penalty levied under Section 271FA to Rs. 9,700 and deleted the balance, thereby partly allowing the assessee's appeal.

Deduction under section 80P(2)(a)(i) of the Income-tax Act - Assessment-year-specific inquiry into eligibility for section 80P deduction - Registrar's certificate not conclusive for section 80P(4) inquiry - Remand to Assessing Officer for factual verification of activities

Deduction under section 80P(2)(a)(i) of the Income-tax Act - Registrar's certificate not conclusive for section 80P(4) inquiry - Assessment-year-specific inquiry into eligibility for section 80P deduction - Remand to Assessing Officer for factual verification of activities - Entitlement of the assessee to deduction under section 80P(2)(a)(i) for the assessment years in question was not finally adjudicated and is remitted for factual verification by the Assessing Officer. - HELD THAT: - The Tribunal, applying the law laid down by the Larger Bench of the jurisdictional High Court in The Mavilayi Service Co-operative Bank Ltd., held that following the introduction of sub section (4) of section 80P the Assessing Officer must conduct an enquiry into the factual activities of the assessee society for each assessment year to determine eligibility for deduction. The Registrar's classification or certificate under the Kerala Co operative Societies Act is not conclusive to bar such inquiry. In view of these principles, the Tribunal restored the issue to the Assessing Officer to examine whether the assessee's activities for each assessment year conform to those of a cooperative society entitled to deduction under section 80P(2), and to grant or deny the deduction in accordance with law. [Paras 7]

The claim for deduction under section 80P(2)(a)(i) is remitted to the Assessing Officer for year wise factual enquiry and determination in accordance with law; appeals of the Revenue are allowed for statistical purposes.

Final Conclusion: The Tribunal remitted the question of entitlement to deduction under section 80P(2)(a)(i) to the Assessing Officer for assessment year specific factual verification, holding that registration as a Primary Agricultural Credit Society is not conclusive of eligibility; the appeals are allowed for statistical purposes.

Deduction under Section 80P of the Income-tax Act - Assessing Officer's inquiry into activities of a cooperative society - Registration certificate not determinative of entitlement - Each assessment year to be examined separately

Deduction under Section 80P of the Income-tax Act - Assessing Officer's inquiry into activities of a cooperative society - Registration certificate not determinative of entitlement - Each assessment year to be examined separately - Whether the assessees are entitled to deduction under Section 80P and whether the Assessing Officer is bound by the registration/classification certificate when deciding eligibility. - HELD THAT: - The Tribunal, following the Larger Bench decision of the jurisdictional High Court in The Mavilayi Service Co-operative Bank Ltd., held that entitlement to deduction under Section 80P cannot be determined merely by reference to the class or registration certificate issued under the Co-operative Societies Act. Relying on the precedents of the Apex Court invoked in the High Court's reasoning (Citizen Co-operative Society and Ace Multi Axes Systems' case as cited), the Assessing Officer must conduct an enquiry into the factual activities of the assessee-society to ascertain whether the society's activities satisfy the conditions for deduction under subsection (4) of Section 80P. The Tribunal noted that each assessment year is a separate unit and eligibility must be verified year-wise; consequently, the question of deduction under Section 80P(2)(a)(i) was not finally decided on merits by the Tribunal but restored to the Assessing Officer for fresh examination. The Tribunal ordered that the Assessing Officer examine whether the activities conform to those of a cooperative society functioning under the Kerala Co-operative Societies Act, 1969, and grant deduction under Section 80P(2) in accordance with law. [Paras 7]

The issue of deduction under Section 80P is restored to the Assessing Officer for factual enquiry and year wise determination; the Revenue appeals are allowed for statistical purposes.

Final Conclusion: The Tribunal set aside the CIT(A)'s categorical allowance by restoring the matter to the Assessing Officer to conduct a factual enquiry into the assessees' activities and determine year wise eligibility for deduction under Section 80P; appeals allowed for statistical purposes.

Penalty under section 271D - Prohibition on cash loans and deposits (section 269SS/271D) - Current account entries between related concerns - Journal/cash book entries showing no receipt of cash - Payments by sister concern on behalf of assessee treated as household expense debit

Penalty under section 271D - Prohibition on cash loans and deposits (section 269SS/271D) - Journal/cash book entries showing no receipt of cash - Payments by sister concern on behalf of assessee treated as household expense debit - Current account entries between related concerns - Whether the penalty under section 271D could be sustained for the alleged cash loan of Rs. 1,11,620 where the transactions represented household expenses paid by a sister concern and debited in the assessee's account. - HELD THAT: - The Tribunal found on the material on record that the amounts debited to the assessee arose from household expenses paid by M/s Rambilas Shiv Kumar (a sister concern/firm) and were equally debited in the books to the assessee, his brother and father as joint family household expenses. The cash book and journal entries showed corresponding credit to the firm and debit to the assessee's capital/current account with narration indicating household expenditure; no cash was shown as passing from the firm to the assessee except a single payment of Rs. 10,000 made directly to the Post Office on the assessee's behalf. The Tribunal treated the relationship as a current account between related parties and accepted authorities holding that payments made by a sister concern on behalf of an assessee, reflected by journal/current account entries, do not constitute a cash loan or deposit attracting the prohibition in section 269SS or penalty under section 271D. Applying that reasoning to the facts, the Tribunal concluded there was no violation of the prohibition on cash loans/deposits and no jurisdictional basis for the penalty. [Paras 4, 5, 6, 7, 8]

Penalty under section 271D deleted and the assessee's appeal allowed; A.O. directed to delete the penalty.

Final Conclusion: The Tribunal held that the impugned entries represented household expenses paid by a sister concern and recorded as current/journal entries, not cash loans or deposits; accordingly the penalty under section 271D was deleted and the appeal allowed.

Comparability in transfer pricing - Transactional Net Margin Method (TNMM) - arm's length price - functional dissimilarity as ground for exclusion of comparable - implementation of Dispute Resolution Panel directions by TPO - remand to TPO for speaking order and re-examination of comparables

Comparability in transfer pricing - functional dissimilarity as ground for exclusion of comparable - Exclusion of TCS e-serve Ltd. from the final set of comparables - HELD THAT: - The Tribunal examined the functional profile of TCS e-serve Ltd. against the assessee and found that TCS e-serve undertakes a broad spectrum of activities including transaction processing as well as technical services such as software testing, verification and validation and data centre management, whereas the assessee is a low-end BPO providing only transaction and data processing services to its single AE (a captive service provider). The Tribunal found support in the annual report and in precedential findings of the Delhi High Court and this Bench that a concern undertaking both transaction processing and technical services is functionally dissimilar to a pure BPO. Having concluded functional dissimilarity, the Tribunal held that TCS e-serve Ltd. is not an appropriate comparable and should be excluded. [Paras 5]

TCS e-serve Ltd. excluded from the final set of comparables.

Implementation of Dispute Resolution Panel directions by TPO - remand to TPO for speaking order and re-examination of comparables - Inclusion of IServices India Pvt. Ltd. and Savi Infoservice (India) Pvt. Ltd. as comparables subject to filters and directions of the DRP - HELD THAT: - The Dispute Resolution Panel had directed that IServices India Pvt. Ltd. and Savi Infoservice (India) Pvt. Ltd. be included if they passed the filters and were functionally comparable. The TPO/Assessing Officer excluded these companies without recording reasons or without implementing the DRP directions. The Tribunal found that the DRP directions were not implemented and that the TPO must therefore reconsider these comparables by implementing the DRP directions and pass a speaking order addressing inclusion/exclusion after applying the prescribed filters and functional comparability assessment. [Paras 5]

Both IServices India Pvt. Ltd. and Savi Infoservice (India) Pvt. Ltd. restored to the TPO's file for fresh consideration in accordance with the DRP directions and for passing speaking orders.

Implementation of Dispute Resolution Panel directions by TPO - remand to TPO for speaking order and re-examination of comparables - Re-examination of Microgenetics Systems Ltd. as a comparable in light of related party transaction data - HELD THAT: - The TPO excluded Microgenetics Systems Ltd. on the basis that the related party transaction filter was not met. The assessee contended that the relevant related party transaction data had been filed before the TPO. Given the contradictory positions between the assessee and the department and the absence of a reasoned finding, the Tribunal directed restoration of this comparable to the TPO's file for re-examination, requiring the TPO to consider the submitted data and decide on inclusion/exclusion by a speaking order. [Paras 5]

Microgenetics Systems Ltd. restored to the TPO's file for re-examination of related party transaction data and for passing a reasoned order on inclusion/exclusion.

Final Conclusion: The appeal is partly allowed: TCS e-serve Ltd. is excluded from the comparables; IServices India Pvt. Ltd., Savi Infoservice (India) Pvt. Ltd. and Microgenetics Systems Ltd. are restored to the TPO's file for reconsideration in accordance with the DRP directions and for issuance of speaking orders; other grounds are dismissed as not pressed.

Penalty under section 271(1)(c) - deeming fiction in Explanation 1 to section 271(1)(c) - estimation of income by Assessing Officer - ex parte assessment - concurrent findings of assessing officer and first appellate authority

Penalty under section 271(1)(c) - deeming fiction in Explanation 1 to section 271(1)(c) - estimation of income by Assessing Officer - ex parte assessment - Validity of imposition of penalty under section 271(1)(c) in view of ex parte assessment, seized papers evidencing undisclosed profit, and estimation of income by the Assessing Officer. - HELD THAT: - The Tribunal upheld the interpretation of section 271(1)(c) and its Explanation 1: penalty can be imposed where the Assessing Officer or the Commissioner (Appeals) is satisfied that the assessee has concealed particulars of income or furnished inaccurate particulars, and the deeming fiction applies where the assessee either fails to offer an explanation material to computation of income or is unable to substantiate an explanation as bona fide. On the facts the assessment was ex parte and material recovered in the search demonstrated non-disclosure of profit on turnover; the assessee did not offer an explanation for the income for which inaccurate particulars were furnished. Estimation of profit by the AO under compulsion (including best judgment assessment) is a permissible mode of computing income when the assessee fails to furnish requisite details. Having regard to the concurrent findings of the AO and the CIT(A) that the assessee failed to explain and substantiate the undisclosed income, the Tribunal found no merit in the appeal against the penalty and dismissed it. [Paras 6, 7, 8]

Penalty under section 271(1)(c) was validly imposed and confirmed; appeal dismissed.

Final Conclusion: The Tribunal dismissed the appeal and upheld the penalty imposed under section 271(1)(c), holding that seized material showing undisclosed profit, the assessee's failure to explain or substantiate that income, and the Assessing Officer's estimation in an ex parte assessment justified the penalty.

Holding period of a capital asset - date of allotment - date of possession/registration - definition of 'held' under section 2(42A) of the Income tax Act, 1961 - short term versus long term capital asset - exemption under section 54F of the Income tax Act, 1961

Holding period of a capital asset - date of allotment - definition of 'held' under section 2(42A) of the Income tax Act, 1961 - short term versus long term capital asset - Holding period for the purpose of capital gains is to be computed from the date of allotment (or date from which the assessee is held to have held the asset) and not from the later date of registration/possession. - HELD THAT: - The Tribunal examined the allotment letter, payment evidence and precedents and held that the assessee acquired the right to hold the plot on the allotment/payment date. The Tribunal followed earlier decisions which interpret the expression 'held' in section 2(42A) to mean that legal ownership by registered conveyance is not a prerequisite for computing holding period; rights conferred by allotment and payment suffice to commence the holding period. The assessing officer's reliance on date of registration as the commencement of ownership (and hence holding) was held inapplicable to the determinative question under section 2(42A). Applying these principles to the facts (allotment dated 15.02.2007 and sale on 04.08.2010) the Tribunal found the holding period exceeded 36 months and the asset qualified as a long term capital asset. [Paras 4, 5]

Holding period computed from date of allotment; asset is long term for purposes of section 2(42A).

Exemption under section 54F of the Income tax Act, 1961 - long term capital gain - Claim for exemption under section 54F based on the capital gain arising from the sale of the plot is allowable because the gain arises from a long term capital asset. - HELD THAT: - Because the Tribunal concluded the plot was a long term capital asset (holding period commencing on allotment), the capital gain on sale falls within long term capital gain. Consequently the assessee's claim for exemption under section 54F, as declared in the return and supported by purchase/allotment documents and improvement bills, must be allowed. The Tribunal rejected the assessing officer and first appellate authority's treatment of the gain as short term based on registration date and deleted the addition made by revenue. [Paras 4, 5]

Exemption under section 54F is to be allowed; addition deleted.

Final Conclusion: The Tribunal allowed the appeal, holding that the holding period is to be reckoned from the date of allotment (and payment), the asset was long term, and the assessee is entitled to exemption under section 54F for Assessment Year 2011 12; the addition made by the authorities below was deleted.

Deduction under section 80IB(10) - proportionate (pro rata) deduction - built up area limit for individual flats - valuation methodology for built up area (wall/projection inclusion) - precedential effect of a coordinate bench Tribunal order

Deduction under section 80IB(10) - proportionate (pro rata) deduction - built up area limit for individual flats - valuation methodology for built up area (wall/projection inclusion) - Assessee entitled to deduction under section 80IB(10) on a proportionate basis for those units which comply with the area limit, notwithstanding that some units in the same project exceed the prescribed built up area. - HELD THAT: - The Assessing Officer denied the deduction for the entire project because 10 flats allegedly exceeded the 1500 sq.ft. built up area limit. The CIT(A) and a Coordinate Bench of the Tribunal examined the competing valuations and architectural plans, noting that the disparity arose from whether external architectural projections and double wall thickness were to be included. The Tribunal recorded that the projections were external, for aesthetic purposes, not habitable or utilizable from inside, and were not counted in built up area calculations by the local authority; the Revenue's valuer had not given a detailed breakup of calculations. The Tribunal therefore held that units complying with the statutory area condition are entitled to deduction and that the deduction cannot be denied for the entire project merely because some units exceed the limit. In the present appeals the Revenue did not produce any distinguishing facts or any binding contrary decision overturning the Coordinate Bench's findings; accordingly the Tribunal declined to interfere with the appellate authority's grant of proportionate deduction. [Paras 7, 8, 9]

Proportionate deduction under section 80IB(10) allowed for units satisfying the area condition; denial for the entire project set aside.

Precedential effect of a coordinate bench Tribunal order - The Coordinate Bench's earlier decision in the assessee's A.Y. 2010 11 case was applied to the present assessment years where facts were identical and no contrary binding order was shown by the Revenue. - HELD THAT: - Both parties agreed the facts and issues for A.Ys. 2011 12 and 2012 13 were identical to those adjudicated in A.Y. 2010 11. The Tribunal noted that the Revenue did not demonstrate any distinguishing facts nor produce material showing the Coordinate Bench's order had been set aside, overturned or stayed by a higher forum. Given the identical factual matrix and absence of contrary binding precedent, the Tribunal followed the Coordinate Bench's findings and upheld the CIT(A)'s orders for the assessment years before it. [Paras 8, 11]

Coordinate Bench decision followed; Revenue's appeals dismissed for lack of contrary material or distinguishing facts.

Final Conclusion: Both appeals filed by the Revenue for A.Y. 2011 12 and 2012 13 were dismissed; the Tribunal upheld the grant of proportionate deduction under section 80IB(10) for units complying with the statutory area condition and applied the Coordinate Bench's prior decision in the assessee's own case where the facts were identical.

Validity of reassessment proceedings under section 147 r.w.s. 148 - Principles of natural justice in assessment proceedings - Disallowance of purchases as non-genuine and limitation to taxable income element - Burden of proof on the assessee to substantiate genuineness of transactions - Quantification of addition by applying a reasonable percentage to prevent revenue leakage

Validity of reassessment proceedings under section 147 r.w.s. 148 - Principles of natural justice in assessment proceedings - Grounds challenging reopening under section 147 r.w.s. 148 and alleged breach of principles of natural justice were not pressed and dismissed accordingly. - HELD THAT: - The assessee's counsel did not make specific submissions contesting the validity of reopening or the alleged denial of opportunity; the Tribunal recorded that these grounds were not contested before it. In view of absence of contest on these contentions, the Tribunal dismissed the grounds as not pressed and declined to entertain them for adjudication on merits. [Paras 6]

Grounds relating to reopening and denial of natural justice dismissed as not pressed.

Disallowance of purchases as non-genuine and limitation to taxable income element - Burden of proof on the assessee to substantiate genuineness of transactions - Quantification of addition by applying a reasonable percentage to prevent revenue leakage - Addition of aggregate purchases treated as non-genuine was restricted to 12.5% of the disputed purchases instead of disallowance of entire purchases. - HELD THAT: - The authorities below reopened assessment on third-party information that certain dealers issued accommodation entries and the assessee's purchases from five such dealers aggregated to the disputed amount. Notices to some dealers returned unserved and two dealers denied transactions. The Tribunal noted, however, that the assessee's sales for the year were not disputed and that profit on sales (gross profit 5.09%) had been declared and accepted in the original assessment. Applying the principle that only the real income is taxable and that where transactions are unverifiable the revenue may safeguard its interest by taxing the income element rather than the entire turnover, the Tribunal concluded that a full disallowance was not warranted. To meet the risk of revenue leakage while recognising the accepted sales, the Tribunal allowed a limited quantification-restricting the addition to a reasonable percentage (12.5%) of the disputed purchases. The Tribunal noted consonance with the view taken by the Hon'ble Bombay High Court in CIT Vs Hariram Bambani . [Paras 7, 8, 9]

Addition reduced and quantified at 12.5% of the total disputed purchases; ground partly allowed.

Final Conclusion: The appeal is partly allowed: grounds challenging reopening and breach of natural justice dismissed as not pressed, and the addition on account of alleged non-genuine purchases is restricted to 12.5% of the disputed purchases for Assessment Year 2009-10.

Penalty under section 271(1)(c) for furnishing inaccurate particulars of income - mere disallowance of expenditure not amounting to furnishing inaccurate particulars - concealment of particulars of income - applicability of Explanation (1) to section 271(1)(c) - meaning of "inaccurate particulars" in penalty jurisprudence

Penalty under section 271(1)(c) for furnishing inaccurate particulars of income - mere disallowance of expenditure not amounting to furnishing inaccurate particulars - meaning of "inaccurate particulars" in penalty jurisprudence - Whether penalty under section 271(1)(c) could be sustained where the Assessing Officer disallowed education expenses but did not find any inaccurate particulars or concealment of particulars of income. - HELD THAT: - The Tribunal held that penalty under section 271(1)(c) can be imposed only if there is concealment of particulars of income or the assessee has furnished inaccurate particulars of income. The Assessing Officer disallowed the expenditure as personal and not connected with income, and the CIT(A) reduced the disallowance, but neither authority found that particulars in the return were factually incorrect or that there was concealment. Reliance on the Supreme Court's decision in Reliance Petroproducts was applied: an incorrect claim in law does not by itself amount to furnishing inaccurate particulars; the word 'particulars' denotes the details of the claim and 'inaccurate' requires that those details are not true or are erroneous. As the record did not show any inaccuracy or concealment in the particulars furnished, mere disallowance of the claimed expenditure could not sustain the penalty. Having regard to these legal principles and the facts that no inaccurate particulars were found, the Tribunal concluded that the penalty was not justified. [Paras 5, 6, 7]

Penalty under section 271(1)(c) deleted as levy could not be sustained where no inaccurate particulars or concealment were found.

Final Conclusion: The appeal is allowed and the penalty imposed under section 271(1)(c) is deleted.

Weighted deduction under section 35(1)(ii) - retrospective withdrawal of approval - Explanation to Section 35 protecting donor from subsequent withdrawal - precedential effect of coordinate bench decisions

Weighted deduction under section 35(1)(ii) - Explanation to Section 35 protecting donor from subsequent withdrawal - retrospective withdrawal of approval - precedential effect of coordinate bench decisions - Entitlement to weighted deduction under section 35(1)(ii) for donations made to an institution whose approval was subsequently withdrawn with retrospective effect. - HELD THAT: - The Tribunal found that the assessee made the contribution to SHG&PH while the institution's approval under section 35(1)(ii) was in force and produced the CBDT notification of recognition. The CBDT later withdrew recognition with retrospective effect, but the Explanation inserted in section 35 (with retrospective effect from 1.4.2006) explicitly provides that deduction shall not be denied merely because approval was withdrawn subsequent to the payment. The Tribunal relied on and followed coordinate-bench decisions (including the Kolkata bench in DCIT vs M/s Maco Corporation (India) Pvt. Ltd. and the Mumbai coordinate-bench decision in M/s Motilal Dahyabhai Jhaveri & Sons) which held that a donor who paid during the period when recognition stood cannot be prejudiced by a later retrospective withdrawal of recognition. Applying that principle to the facts-donation made when approval existed-the Tribunal held that the disallowance could not be sustained and the deduction must be allowed. [Paras 7, 8, 9]

Assessee entitled to weighted deduction under section 35(1)(ii); disallowance deleted and appeal allowed.

Final Conclusion: Following the Explanation to section 35 and consistent coordinate-bench precedents, the Tribunal allowed the appeal and directed that the weighted deduction under section 35(1)(ii) be granted for the donation made when the institution's approval was in force.

Taxation of trust where deity is sole beneficiary - application of individual tax slabs to a juristic person-deity - provisions of section 167B - tax at maximum marginal rate where income is indeterminate - juristic person

Taxation of trust where deity is sole beneficiary - application of individual tax slabs to a juristic person-deity - provisions of section 167B - tax at maximum marginal rate where income is indeterminate - Whether the trust's income should be taxed at individual slab rates because the Deity is the sole beneficiary, or whether section 167B requires taxation at the maximum marginal rate. - HELD THAT: - The Tribunal found as an undisputed fact that the Trust, constituted in 1968, states the Deity as the sole beneficiary and that the entire income is to be applied for the upkeep of the Deity. Section 167B applies to an association of persons or body of individuals where the share of income of members is indeterminate or unknown, warranting taxation at the maximum marginal rate. In the present case the beneficiary is a single, identifiable juristic person (the Deity) and the share of income is neither indeterminate nor unknown. Relying on the legal position that a Deity as a juristic person can hold property and receive income, the Tribunal held that the situation does not fall within the mischief of section 167B. Consequently, the appropriate tax computation is by applying the tax slabs applicable to an individual (i.e., the Deity as juristic person) rather than charging tax at the maximum marginal rate under section 167B.

Provisions of section 167B are inapplicable; tax to be computed applying individual tax slabs as the Deity is the sole beneficiary and a juristic person; assessee's grounds allowed.

Final Conclusion: The appeal is allowed; the Tribunal directs that tax for Assessment Year 2015-16 be computed applying individual slab rates since the Deity is the sole beneficiary and section 167B does not apply.

Provisional determination of customs valuation - provisional release of imported goods - finality of administrative communication - right to be heard / presence of party during valuation - summoning only in accordance with law

Finality of administrative communication - right to be heard / presence of party during valuation - Ext.P8 is not a final decision and the respondents' insistence on the physical presence of a partner does not render the request for provisional valuation wholly impermissible. - HELD THAT: - The Court examined whether Ext.P8 constituted a final adjudicative order refusing provisional valuation and found that it did not. The 2nd respondent's communication only expressed a desire for the presence of one partner while undertaking valuation-possibly to confront the absentee partner regarding information from the intelligence wing-but did not amount to an absolute or final refusal to consider provisional valuation. The Court rejected the contention that the writ petition was maintainable only if Ext.P8 were final, holding instead that the departmental discretion to insist on presence must be exercised in the course of the valuation process and is not a bar to provisional determination where the petitioner has offered alternative means of representation and explanation of inability to produce the partner immediately. [Paras 4]

Ext.P8 cannot be treated as a final decision; the respondents remain obliged to consider the petitioner's request for provisional valuation notwithstanding the partner's absence.

Provisional determination of customs valuation - provisional release of imported goods - summoning only in accordance with law - Petitioner entitled to request provisional determination of value and provisional release subject to payment of duty and lawful summoning during the pending enquiry; respondents directed to consider and decide the request within specified timelines. - HELD THAT: - Balancing the petitioner's inability to ensure the immediate presence of the partner and the respondents' interest in determining valuation, the Court directed a practical course: the petitioner may represent to the 2nd respondent enclosing a copy of this order and seek provisional valuation; the 2nd respondent must consider and pass orders on that request and communicate the decision within ten days of receipt. The respondents were directed to consider releasing the goods provisionally on payment of duty computed on the provisional valuation. The Court clarified that such provisional determination and release are without prejudice to the final outcome of the pending departmental enquiry, and that any summoning of the partner (Sri. Mohammad Iqubal) during the enquiry must be effected only in accordance with law. [Paras 4]

Petitioner permitted to seek provisional valuation; 2nd respondent to decide within ten days and may provisionally release the goods on payment of duty, subject to the pending enquiry and lawful summoning.

Final Conclusion: Writ petition disposed by directing the petitioner to apply for provisional valuation (copy of this order to be enclosed); the 2nd respondent shall consider and communicate its decision within ten days and may provisionally release the goods on payment of duty, all without prejudice to the pending departmental enquiry and subject to lawful summoning of the partner.

Power to prescribe procedural change under regulations by the Board - delegation of statutory regulatory power by the Board to a Commissioner - binding effect of bilateral Treaty/Protocol terms on domestic administrative action - pilot project implementation pending mutual review and amendment of Treaty - interim judicial stay of administrative action

Power to prescribe procedural change under regulations by the Board - delegation of statutory regulatory power by the Board to a Commissioner - Whether the Commissioner of Customs (Port) could, by public notice, discontinue the old procedure and enforce the Electronic Cargo Tracking System in the absence of a Board notification under Section 143AA or other regulatory instrument. - HELD THAT: - The Court found that the power to prescribe or change procedures for import/export by class of importers or modes of transport is to be exercised by the Board by way of notification or regulations under the statute rather than by unilateral administrative action of a Commissioner. No Board notification or regulation authorising the Commissioner to effect the procedural change under the impugned public notice was produced. The Court observed that Section 143AA, as contemplated in the legislative memorandum, contemplates Board level regulations and does not on its face permit delegation to a Commissioner to abrogate the pre existing procedure. In view of the absence of any document showing that the Board had itself authorised or notified the change, the validity of the Commissioner's public notice to discontinue the old procedure was seriously in question. [Paras 16, 17]

The impugned public notice cannot validly discontinue the old procedure in the absence of a Board notification or regulation; prima facie the Commissioner lacked jurisdiction to effect the complete procedural change.

Binding effect of bilateral Treaty/Protocol terms on domestic administrative action - pilot project implementation pending mutual review and amendment of Treaty - Whether the pilot project and implementation of ECTS could lawfully displace the treaty based procedure for transit to Nepal before the mutual review and amendment of the Protocol to the Treaty of Transit. - HELD THAT: - The Court relied on the Memorandum/Protocol provisions which provide that after the pilot, the impact of ECTS shall be reviewed by India and Nepal and that any deployment would be subject to mutually agreed modalities and suitable amendments to the Protocol to the Treaty of Transit and the Railway Service Agreement. No evidence was produced of any such mutual review or amendment having been carried out. Given these treaty provisions, the Court concluded that a wholesale stoppage of the earlier treaty recognised procedure without the required mutual steps would be contrary to the treaty scheme and unsupported by any domestic authorisation. [Paras 13, 14, 15, 16]

In the absence of the mutual review and amendment required by the Treaty/Protocol, administrative action severing the old treaty based procedure is prima facie impermissible.

Interim judicial stay of administrative action - Relief to be granted pending production of Board documents and further consideration. - HELD THAT: - Given the absence of supporting Board notifications or treaty amendments on the record and the serious questions on jurisdiction and treaty compliance, the Court exercised its discretionary power to grant interim relief. The operation of the impugned public notice and the email of March 22, 2019 insofar as they effect a complete stoppage of the old procedure was stayed. The Court authorised Nepalese importers to use either the earlier procedure or the ECTS procedure during the interim. The Court fixed a temporal limit for the interim order and directed the Union to file affidavit(s) in opposition and listed the matter for further hearing, keeping maintainability open. [Paras 16, 18, 19, 20, 21]

Operation of the impugned notice and the March 22, 2019 email is stayed insofar as they stop the old procedure; importers may follow either procedure pending further orders (interim order until August 16, 2019 or further orders).

Final Conclusion: The Court granted an interim stay on the impugned public notice and related email to the extent they discontinued the pre existing treaty based procedure, held that no Board notification empowering such a change was shown, noted the Treaty/Protocol requirement of mutual review and amendment before full deployment of ECTS, directed filing of affidavits by the Union, and kept the question of maintainability open.

Refund of SAD under Notification No. 102/2007 - substantial compliance with statutory conditions - proof of payment of VAT for entitlement to refund - single TIN for multiple proprietorship concerns

Refund of SAD under Notification No. 102/2007 - proof of payment of VAT for entitlement to refund - Entitlement of the importer to refund of Special Additional Duty (SAD) claimed under Notification No. 102/2007 for the periods specified. - HELD THAT: - The Tribunal considered whether the respondent satisfied the conditions of Notification No. 102/2007 by showing payment of VAT on local sale of the imported goods. The Commissioner (Appeals) examined the documentary evidence and the endorsement from the Commercial Tax Officer certifying registration and concluded that VAT had been paid in respect of the imported material and that the importer had complied with the requirements of the Notification. The Tribunal found no infirmity in the Commissioner (Appeals) reasoning and upheld the conclusion that the importer had substantially complied with Notification No. 102/2007, thereby entitling it to the refund claims for the periods in question. [Paras 6, 7]

Refund claims under Notification No. 102/2007 are allowed; the appeals by the Department are rejected.

Single TIN for multiple proprietorship concerns - substantial compliance with statutory conditions - Whether invoices and VAT payment recorded in the names of two proprietorships with a common proprietor defeat the refund claim when a single TIN has been allotted. - HELD THAT: - The Tribunal accepted the Commissioner (Appeals) finding that both M/s. Mohiudeen Saw Mills and M/s. Hajee Timber Complex are sole proprietorships having a common proprietor and that the VAT authority had issued an endorsement stating one TIN is allotted to the individual proprietor. It was held that under the VAT regime one individual is entitled to only one TIN for businesses owned by him in the State and that the consolidated VAT records and endorsement demonstrate that VAT in respect of sales of the imported material was paid. Consequently, the departmental objection that VAT was paid by different legal entities was not justified and did not vitiate the entitlement to refund. [Paras 6]

The departmental objection based on difference of entity names is rejected; the single TIN and endorsement satisfy the VAT-payment requirement for refund purposes.

Final Conclusion: The Tribunal upholds the Commissioner (Appeals) order allowing the respondent's refund claims under Notification No. 102/2007, rejects the Revenue's appeals, and finds that the single TIN/endorsement and VAT records constituted substantial compliance with the Notification for the periods in question.

Eligibility of imported inputs under DFIA - Capability test (capable of being used) versus actual use - Scope of Notification No.40/2006-Cus for materials under DFIA - Application of SION value restrictions - Classification by description versus ITC (HS) code - Exemption from NOC under Drugs & Cosmetics for dual use substances - Reliance on departmental technical opinion

Eligibility of imported inputs under DFIA - Capability test (capable of being used) versus actual use - Scope of Notification No.40/2006-Cus for materials under DFIA - Ascorbic Acid imported under the transferred DFIA for 'Corrosion Inhibitor' is eligible for exemption under Notification No.40/2006-Cus. - HELD THAT: - The Tribunal accepted the technical opinion of the Joint Director, New Custom House Laboratory, which concluded that ascorbic acid can serve as an oxygen scavenger/corrosion inhibitor in boiler and cooling water systems used in the soda ash industry. The court applied the DGFT policy position that DFIA permits import of inputs which are "actually used or capable of being used" in the export product and held that capability suffices; actual use need not be proved. The Tribunal further held that where the DFIA description covers the imported item as a "Corrosion Inhibitor", benefit of Notification No.40/2006 follows and Customs should not go beyond the license to deny exemption. Reliance on the department's own laboratory opinion was held persuasive in line with precedent. The Tribunal therefore rejected Revenue's contention that ascorbic acid could not qualify as corrosion inhibitor and allowed the exemption under the DFIA. [Paras 4, 7, 8, 9]

Ascorbic Acid was held to be capable of use as a corrosion inhibitor and eligible for duty exemption under Notification No.40/2006-Cus when imported under the DFIA.

Application of SION value restrictions - The claimed breach of SION value limits for 'Corrosion Inhibitor' and related items was not sustained. - HELD THAT: - Revenue relied on SION limits (10% of FOB) for items at serial Nos.5 and 6 to contend that the value of imported ascorbic acid exceeded permissible limits. The Tribunal examined public notices and found that the restriction applicable earlier was removed by public notice w.e.f. 13.7.2006. The relevant DFIA was dated 27.12.2006, after removal of the restriction; hence no SION value cap applied on that date. The Tribunal also noted that paragraph 4.59 of the Handbook applies limiting factors only where SION so provides. [Paras 5]

No breach of SION value restrictions was established; the value limitation was not in force on the DFIA date.

Classification by description versus ITC (HS) code - The mismatch of ITC (HS) headings does not preclude import under the DFIA if the imported item falls within the description in the DFIA. - HELD THAT: - The Tribunal followed precedent holding that the duty exemption entitlement depends on whether the imported goods fall within the description mentioned in the DFIA, and not strictly on the ITC (HS) code stated therein. Accordingly, the fact that 'Corrosion Inhibitor' was classifiable under a different ITC heading than ascorbic acid (CTH 2936 2700) did not by itself disentitle the importer from DFIA benefit. [Paras 6]

ITC (HS) code mismatch did not defeat entitlement where the imported material corresponded to the DFIA description.

Exemption from NOC under Drugs & Cosmetics for dual use substances - No separate executive NOC/waiver was required under the Drugs & Cosmetics regime for import of ascorbic acid used for non medicinal purposes when Schedule 'D' exemption applied. - HELD THAT: - Revenue contended that ascorbic acid, being a pharmaceutical product, required NOC/waiver under the Ministry of Health order. The Tribunal examined the Drugs and Cosmetics Act/Rules and observed that substances not intended for medicinal use are exempted from Chapter III and that Schedule 'D' exempts dual use substances from NOC requirements when not for medicinal use; bulk containers must be marked 'Not for Medicinal use'. The Tribunal held that statutory exemption cannot be overridden by subsequent circulars and, therefore, an additional executive NOC could not be insisted upon. [Paras 6]

Requirement of a separate NOC/waiver was held unnecessary where statutory exemptions under Schedule 'D' applied to the dual use ascorbic acid.

Final Conclusion: The appeal filed by Revenue was dismissed. The Tribunal upheld the Commissioner (Appeals) order allowing import of ascorbic acid as a 'Corrosion Inhibitor' under the transferred DFIA and entitlement to exemption under Notification No.40/2006-Cus, rejecting Revenue's contentions on SION limits, HS classification, and NOC requirements.

Liability to pay customs duty of importer under ATA Carnet temporary importation regime - valuation under Customs Valuation Rules versus admission-based valuation - confiscation under Section 111(d) of the Customs Act, 1962 - penalty under Section 112 of the Customs Act, 1962 - penalty under Section 114A of the Customs Act, 1962 - mutual exclusivity of penalties under Sections 112 and 114A

Liability to pay customs duty of importer under ATA Carnet temporary importation regime - proviso to Section 28(2) of Customs Act, 1962 - Whether demand of customs duty could be sustained against M/s J.K. International for goods imported into India under ATA Carnets issued to M/s Billiards of Tulsa Inc. USA. - HELD THAT: - The Tribunal accepted that the ATA Carnets were issued to and the goods were imported by M/s Billiards of Tulsa Inc. USA for temporary exhibition in India and that FICCI had guaranteed the Carnets and relevant notifications and public notices governing ATA Carnet regime applied. The adjudicatory records and the de novo order did not provide principled reasoning to treat M/s J.K. International as the importer; the department's reliance on payment of duty by M/s J.K. International and on statements did not suffice to displace the statutory importation record showing the Carnets and the importer. Where the import and ATA Carnet guarantees rested with M/s Billiards of Tulsa Inc., the department could, if necessary, pursue recovery against that entity or others as provided by law, but it was not open to the department to invoke the proviso to Section 28 to demand the duty from M/s J.K. International in the circumstances of this case. For these reasons the demand of duty confirmed against M/s J.K. International was held unsustainable and was set aside, and the Tribunal did not proceed to adjudicate valuation merits for those Carnet-imported goods as against M/s J.K. International. [Paras 6]

Demand of customs duty from M/s J.K. International in respect of goods imported under ATA Carnets issued to M/s Billiards of Tulsa Inc. USA is not sustainable and is set aside.

Penalty under Section 112 of the Customs Act, 1962 - Whether M/s J.K. International and Shri Jeetendra H. Shah were liable to penalties for acts rendering the goods liable to confiscation. - HELD THAT: - The Tribunal noted investigative statements (not retracted) attributing supervisory and participatory roles in the ATA Carnet imports and subsequent sale-chain leading to domestic diversion. On that factual matrix the Tribunal held that both M/s J.K. International and Shri Jeetendra H. Shah had rendered themselves liable to penalty under Section 112. However, having regard to the age of the proceedings and litigation circumstances, the Tribunal exercised its power to reduce the quantum of penalties originally imposed by the adjudicating authority. [Paras 6, 7]

Penalty under Section 112 is sustained against M/s J.K. International and Shri Jeetendra H. Shah but the penalties are reduced (M/s J.K. International reduced to Rs. 1,00,000; Shri Jeetendra H. Shah reduced to Rs. 1,00,000).

Penalty under Section 114A of the Customs Act, 1962 - mutual exclusivity of penalties under Sections 112 and 114A - Whether penalty under Section 114A could be imposed on M/s J.K. International and whether the Revenue's appeal challenging non-imposition of Section 114A penalty elsewhere was maintainable. - HELD THAT: - The Tribunal held that because the demand of duty could not be sustained against M/s J.K. International under Section 28, the consequential question of imposing penalty under Section 114A (which relates to mis-declaration leading to duty evasion) did not arise in respect of M/s J.K. International. The Tribunal also observed that the Show Cause Notice pursued both Sections 112 and 114A notwithstanding their mutual exclusivity; pursuing both in the same proceedings was untenable. Consequently the Revenue's appeal predicated on imposition or non-imposition of Section 114A was held not maintainable to the extent it sought contrary reliefs. [Paras 6]

Penalty under Section 114A does not arise against M/s J.K. International given the unsustainable duty demand; Revenue's appeal in that respect is not maintainable.

Confiscation under Section 111(d) of the Customs Act, 1962 - redemption fine - Disposition of confiscation/redemption fine and procedural outcome of other appellants' matters. - HELD THAT: - The Tribunal recorded that the adjudicating authority had ordered confiscation of specified machines and provided an option of redemption on payment of a fine, but the original orders did not clearly identify who was liable to pay the redemption fine. Exercising its appellate powers and considering the overall circumstances, the Tribunal reduced the redemption fine. The Tribunal also noted that appeals of M/s Billiards of Tulsa, Galaxy Fun World and Mukesh J. Shah were not prosecuted and accordingly dismissed those appeals for non-prosecution. [Paras 6, 7]

Redemption fine reduced (from Rs. 7,50,000 to Rs. 4,00,000); appeals of M/s Billiards of Tulsa, Galaxy Fun World and Mukesh J. Shah dismissed for non-prosecution.

Final Conclusion: The Tribunal set aside the demand of customs duty confirmed against M/s J.K. International for goods imported under ATA Carnets issued to M/s Billiards of Tulsa Inc. USA; sustained but substantially reduced penalties under Section 112 against M/s J.K. International and Shri Jeetendra H. Shah; held that penalty under Section 114A did not arise against M/s J.K. International and that the Revenue's related appeal was not maintainable; reduced the redemption fine and dismissed certain appeals for non-prosecution.

Confirmation of customs duty - penalty under Section 114A of the Customs Act - penalty under Section 114AA of the Customs Act - advance authorization condition of export utilization - evidence of diversion of imported goods - reliance on sole statement of a witness - onus on revenue to investigate transporters and verify GRs - proof of transportation by toll receipts and GRs

Confirmation of customs duty - advance authorization condition of export utilization - evidence of diversion of imported goods - reliance on sole statement of a witness - proof of transportation by toll receipts and GRs - onus on revenue to investigate transporters and verify GRs - Validity of the demand of customs duty qua the entire consignment of imported Remelted Lead Ingots - HELD THAT: - The adjudicating authority confirmed duty for the entire imported quantity on the basis that the consignment was diverted into the local market. That conclusion rested primarily on the unspecific statement of a single deponent from the seller company, who was not examined in the proceedings. The tribunal held such sole and general statement insufficient to prove diversion. Revenue failed to produce independent evidence or to examine the transporters whose GRs covered the movement from ICD Loni to Kathua, and did not confront or displace the toll receipts and other transport documents produced by the appellant. Further, revenue did not dispute that the appellant exported 103.76 MT of lead alloys nor did it show any alternate source for procurement of raw material if the imported ingots had not reached the factory. In the absence of evidence of buyers, transporters, receipt of consideration, or alternate procurement, the case that the entire consignment was diverted is not established. The tribunal accordingly concluded that the confirmation of demand for the entire quantity could not be sustained, save for the admitted and already discharged liability in respect of the unutilized quantity. [Paras 7, 8, 9]

Impugned confirmation of duty set aside except to the extent of the admitted liability already discharged by the appellant.

Penalty under Section 114A of the Customs Act - penalty under Section 114AA of the Customs Act - reliance on sole statement of a witness - onus on revenue to investigate transporters and verify GRs - Sustainability of penalties imposed on the appellants - HELD THAT: - Penalties were imposed by the Commissioner alongside the demand based on the finding of diversion. Given that the finding of diversion was unsupported by reliable evidence-being founded on an unexamined and non specific statement and in the absence of enquiry into transporters or rebuttal of transport documentation-the factual foundation for imposing penalties fails. Since the principal conclusion of diversion cannot be sustained, the penalties imposed upon the appellants in the impugned order cannot be upheld. [Paras 8, 9]

Penalties imposed upon all appellants set aside.

Final Conclusion: The appeals are allowed: the demand of customs duty confirmed by the Commissioner is quashed except insofar as the appellant had already admitted and discharged liability for the unutilized quantity; all penalties imposed on the appellants are set aside.

Oppression and mismanagement - validity of board appointments - authenticity of resignation and acceptance of resignation - rectification of register of members - validity of rights issue/allotment - requirement of notice for board and shareholders' meetings - estoppel by acquiescence/delay in challenging corporate acts - restoration of board

Validity of board appointments - requirement of notice for board and shareholders' meetings - restoration of board - Validity of the appointment of Respondent Nos.6 and 7 (14.8.2010) and Respondent Nos.3 and 8 (16.8.2012) as directors and the consequential direction to take fresh decisions on such appointments. - HELD THAT: - The NCLT examined the evidence as to whether meetings authorising the appointments were duly convened and whether notices/agenda had been served. Though NCLT found deficiencies (delay in filing Form No.32 and lack of evidence of service of notice), it recognised that the parties had not uniformly followed formal notice practice in this closely held company and that the appellants had delayed raising objections. NCLT did not definitively annul all appointments but restored the original Board (P-2, R-2 and R-20) and directed the company to convene members' meeting and take fresh decisions on appointment of R-3, R-6 to R-8, while also directing compliance with Companies Act requirements for future meetings. The Appellate Tribunal found no reason to interfere with these directions, noting the NCLT's reliance on prima facie evidence, CLB observations about informal practices, and the appellants' acquiescence/delay in challenging the acts. [Paras 103, 113, 115, 116]

NCLT's approach and directions regarding appointments and restoration of the original Board affirmed; appeal dismissed on this point and NCLT directed fresh decisions in members' meeting.

Rectification of register of members - title to shares and procedural recording - Validity of the alleged transfer of 9,040 shares and the direction to set aside the recorded transfer and call for fresh decision on transfer. - HELD THAT: - The NCLT found that although consideration for the 9,040 shares had been paid in 1998 (as supported by bank entries and affidavits), the transfer was not recorded in the company's register for about 12 years and the transfer deeds appeared only on 7.8.2010. Given the delay, challenge to the meeting dated 14.8.2010 and defects in procedural recording, NCLT held that the recorded transfer could not be upheld and directed the company to make a fresh decision on the transfers, while noting that the fact of payment in 1998 was not disputed by transferors. The Appellate Tribunal accepted this reasoning, observing that title in 1998 was effectively acknowledged though formal entry in the register required rectification. [Paras 117, 122]

Direction to set aside the recorded transfer and for the company to take fresh decision on the 9,040 shares upheld; NCLT's requirement of rectification of the register affirmed.

Authenticity of resignation and acceptance of resignation - requirement of resolution accepting resignation - Validity of the purported resignation of Respondent No.20 (25.6.2012) and its effect on his directorship. - HELD THAT: - NCLT observed that the authenticity of the resignation letter could not be affirmatively determined in summary proceedings, noted absence of any resolution accepting the resignation, and observed that the respondents failed to produce the original resignation letter. NCLT also noted subsequent recognitions of R-20 as director in other orders and concluded that it could not be accepted that P-2 and R-20 had ceased to be directors under the statutory provision relied upon. Accordingly NCLT restored P-2 and R-20 to the Board. The Appellate Tribunal declined to interfere with this conclusion. [Paras 125, 129]

NCLT's finding that resignation was not conclusively established and restoration of R-20 to the Board affirmed; appeal dismissed on this point.

Validity of rights issue/allotment - estoppel by acquiescence/delay in challenging corporate acts - Validity of the rights issue/allotment of 27,081 equity shares dated 13.10.2012 and the appellants' challenge to that allotment. - HELD THAT: - NCLT examined the service of notices for the relevant board meetings and the appellants' participation in the rights allotment process. It noted that notices for the meetings were dispatched and that the appellants did not apply for allotment nor produce proof of having made any offer to purchase additional shares; it also found that funds were legitimately required for the company's plant modernisation and that the company and lessee had invested in expansion. Given the appellants' failure to participate and the delay in challenging the allotment, NCLT held the appellants estopped from impeaching the rights issue. The Appellate Tribunal held there was no reason to interfere with NCLT's conclusion that the rights issue could not be set aside on the grounds urged. [Paras 133, 135, 138, 144]

NCLT's finding that the rights issue/allotment of 27,081 shares was not liable to be set aside and that the appellants were estopped from challenging it affirmed; appeal dismissed on this point.

Final Conclusion: The appeal is dismissed. The Appellate Tribunal declined to interfere with the NCLT's order which restored the original Board, directed the company to take fresh decisions on disputed directorships and on the transfer of 9,040 shares (with rectification of the register), and refused to set aside the rights allotment of 27,081 shares, the NCLT having found procedural deficiencies, facts of payment in 1998, and estoppel by the appellants due to delay.

Validity of appointment and continuation of an additional director - quorum for board meetings and effect of invalid director on board decisions - lawfulness of share allotments made by an irregularly constituted board - vacation of directorship by non-attendance and filing of Form 32 - oppression and mismanagement remedial reliefs under company law - limited reliefs to preserve a going concern while setting aside irregular acts

Validity of appointment and continuation of an additional director - quorum for board meetings and effect of invalid director on board decisions - Continuation of Respondent No.3 as director after the AGM of 26.9.2010 and implications for subsequent board meetings. - HELD THAT: - Respondent No.3 was appointed as an additional director on 20.2.2010 and, under the law applicable at the time, held office only until the next AGM. The AGM on 26.9.2010 did not regularise his appointment. Even if the Articles purported to regularise such appointment contrary to the statutory provision, that would not cure non compliance with the Companies Act. Consequently the continuation of Respondent No.3 as an additional director after 26.9.2010 was not in accordance with law. Because a director not validly in office cannot be counted for purposes of quorum, meetings and decisions in which he participated were irregular. [Paras 46]

Continuation of Respondent No.3 as director with effect from 26.9.2010 is not valid and his participation vitiates subsequent board decisions where quorum depended on his presence.

Vacation of directorship by non-attendance and filing of Form 32 - Validity of the respondents' filing of Form No.32 with the ROC intimating vacation of the appellant's directorship with effect from 20.1.2011. - HELD THAT: - Form No.32 was filed stating vacation of office for non attendance at three consecutive meetings. The record showed the appellant had signed extracts of the 20.5.2010 meeting, and the tribunal found that reliance solely on computer generated notices without adequate proof of service was insufficient; objections as to service were not properly dealt with below. In those circumstances the filing and the conclusion that the appellant had vacated office were held not to be legal. [Paras 49]

The action of respondents in filing Form No.32 intimating vacation of the appellant's directorship is not legal.

Lawfulness of share allotments made by an irregularly constituted board - quorum for board meetings and effect of invalid director on board decisions - Validity of share allotments made on 27.10.2011 and subsequent allotments (20.12.2011, 16.1.2012, 3.8.2012, and later allotments/transfers) challenged as oppressive and effected by an irregular board. - HELD THAT: - Because Respondent No.3's continuation was held invalid and he participated in the board meeting of 27.10.2011, the quorum for that meeting was deficient and the allotment of 40,000 shares on that date cannot be regarded as valid. The tribunal noted the rapid sequence of filings and allotments following the contested Form 32 and concluded that the subsequent allotments to Respondent No.5 and related actions were hurried and carried out to reduce the appellant to a minority. In light of the invalid participation and procedural failings, those allotments and related decisions were irregular and are set aside. [Paras 53]

Allotments and decisions taken on 27.10.2011, 20.12.2011, 16.1.2012, 3.8.2012 (and related appointments/allotments thereafter) are irregular and set aside.

Oppression and mismanagement remedial reliefs under company law - limited reliefs to preserve a going concern while setting aside irregular acts - Whether the appellant had been subjected to oppression and appropriate reliefs to be granted without prejudicing the company's status as a running concern. - HELD THAT: - On review of the material the tribunal concluded that the appellant had been oppressed by the sequence of irregular acts that reduced his shareholding from majority to virtual insignificance. At the same time the company is a running concern employing over 100 persons, and winding up would be contrary to stakeholders' interests. Balancing the remedial aim to redress oppression with the need to preserve the company, the tribunal restored the appellant as director, set aside the irregular allotments and appointments, directed the parties (notably the appellant and the 2nd respondent) to take steps to ensure adequate funds for the company, and awarded costs against certain respondents. The tribunal also set aside the penalty imposed below. [Paras 56, 57, 58]

Appellant found to have been oppressed; appropriate reliefs granted to restore him as director, set aside irregular acts, preserve the company as a going concern, set aside the penalty imposed below, and award costs against Respondents No.2 and 3.

Forum limits for factually unrelated allegations - Competence of the Company Tribunal to adjudicate allegations about the appellant's personal conduct and alleged fabrication of documents used for immigration or employment. - HELD THAT: - Respondents raised allegations concerning the appellant's immigration documents and personal conduct. The appellate tribunal observed that such allegations fall outside the proper scope of the NCLT/this Appellate Tribunal and are not matters for determination in these corporate proceedings. [Paras 55]

Allegations regarding the appellant's personal conduct and immigration documents are not appropriate for adjudication by the Company Tribunal in these proceedings.

Final Conclusion: Appeal partly allowed: the continuation of Respondent No.3 as director after 26.9.2010 and board decisions in which he participated (including several share allotments) were held irregular and set aside; the filing of Form No.32 intimating the appellant's vacation of office was held not legal; the appellant was restored as director; the penalty in the impugned order was set aside; respondents No.2 and 3 ordered to pay costs to the appellant; the company is to be preserved as a going concern and the parties directed to ensure adequate funds for its continuation.

Ex-parte ad-interim order - Prima-facie finding - Natural justice - post-decisional hearing - Interim regulatory relief and urgency - Reliance on bank records and proof of authorized signatory - Fraud and market manipulation under PFUTP Regulations - Quashing of confirmatory order for failure to consider material evidence - Costs as compensatory remedy for wrongful restraint

Ex-parte ad-interim order - Quashing of confirmatory order for failure to consider material evidence - Impugned ex-parte ad-interim order and its subsequent confirmation against the appellant - HELD THAT: - The Tribunal found that, although SEBI was entitled to pass ex-parte interim orders where a prima-facie case of market manipulation exists, the WTM confirmed the interim restraint against the appellant without adequately considering material evidence placed on record by the appellant. The WTM mechanically relied on a bank statement indicating the appellant as a joint holder while failing to consider the bank's subsequent certificate and other evidence showing the appellant's resignation in 2013 and that he had not operated the account thereafter. In view of this failure to apply mind to crucial documents and to record any prima-facie causal link between the appellant and the manipulative scheme, the restraint could not be sustained in respect of the appellant. [Paras 9, 11, 13, 15, 21]

The ex-parte ad-interim order as confirmed is quashed insofar as it relates to the appellant.

Reliance on bank records and proof of authorized signatory - Prima-facie finding - Whether the WTM properly evaluated bank records and documentary evidence to link the appellant to the funding and dissemination of bulk SMSs - HELD THAT: - The Tribunal held that the WTM erred in treating the bank statement as conclusive without verifying the nature of the account, examining the account opening form, board resolution or the list of authorised signatories, or addressing the bank's letter and certificates produced by the appellant. The Tribunal observed that the manner in which the appellant was shown as a joint holder on a computer-generated statement could be attributable to a banking software classification error and required verification before attributing culpability. Absent a considered prima-facie finding of a causal nexus between the appellant and the manipulative transactions, the WTM's conclusion was unsustainable. [Paras 9, 10, 11, 13]

The WTM's reliance on the bank statement without proper verification of the account's nature and authorised signatories was unsound and vitiated the impugned order in respect of the appellant.

Natural justice - post-decisional hearing - Interim regulatory relief and urgency - Proper approach and safeguards required when passing and confirming ex-parte interim orders in market-regulation proceedings - HELD THAT: - The Tribunal recognised SEBI's power to pass ex-parte interim orders where urgency and prima-facie evidence of market mischief exist, and noted that pre-decisional hearing may not always be feasible; post-decisional hearing can satisfy natural justice. However, where a restrained party promptly seeks vacation (as here within days), the authority must act prudently and consider the evidence expeditiously. An ex-parte restraint with serious consequences cannot be confirmed mechanically after protracted delay without application of mind to replies and documents filed by the affected party. [Paras 16, 17, 18, 19]

While ex-parte interim orders are permissible in urgent cases, the authority must give prompt, considered attention to post-decisional submissions and material before confirming such orders.

Costs as compensatory remedy for wrongful restraint - Entitlement to costs for the appellant consequent to wrongful and prolonged restraint - HELD THAT: - Having found that the confirmatory order was unsustainable and that the appellant's replies and bank certificates were not properly considered, the Tribunal held that the appellant suffered consequential prejudice, including interruption of his trading activities. The Tribunal therefore awarded costs to the appellant as a compensatory measure for the wrongful continuation and confirmation of the interim restraint, while leaving open SEBI's power to pass a fresh order in accordance with natural justice if fresh evidence emerges. [Paras 20, 21, 22]

The appellant is entitled to costs, and the Tribunal directed payment of costs to the appellant.

Final Conclusion: The Tribunal quashed the ex-parte ad-interim order insofar as it affected the appellant for want of consideration of material evidence and absence of a prima-facie causal link; it clarified the proper limits and safeguards for ex-parte interim orders in market-regulation matters and awarded costs to the appellant, while permitting SEBI to pass a fresh order in accordance with principles of natural justice if fresh evidence is produced.

Liquidation as last resort - resolution plan under I&B Code and ineligibility under Section 29A - prospective effect of statutory amendment - preservation and revival of the corporate debtor - power to effect compromise or arrangement under Section 230 of the Companies Act, 2013 - liquidator's duties under Section 35 of the I&B Code - verification and admission of claims under Sections 33, 38, 39 and 40 of the I&B Code - sale of the corporate debtor as a going concern

Resolution plan under I&B Code and ineligibility under Section 29A - prospective effect of statutory amendment - Whether the appellant could challenge the rejection of its resolution plan and rely on the amendment effected after rejection - HELD THAT: - The Tribunal noted that the Committee of Creditors rejected the resolution plans on 16th April, 2018. Since the statutory amendment relied upon by the appellant was made on 6th June, 2018, the appellant could not take advantage of that amendment in respect of a resolution plan already rejected. Consequently, the challenge to rejection based on the post-rejection amendment was not available to the appellant.

Appellant cannot rely on the amendment dated 6th June, 2018 to challenge rejection of its resolution plan.

Liquidation as last resort - preservation and revival of the corporate debtor - sale of the corporate debtor as a going concern - Whether the liquidation order should be upheld and what directions govern steps during liquidation aimed at revival - HELD THAT: - The Tribunal observed that more than 270 days had elapsed and therefore upheld the Adjudicating Authority's order directing liquidation. However, relying on the ratio of Supreme Court and earlier Appellate Tribunal decisions, the Tribunal emphasised that liquidation is a last resort and the process must include steps aimed at revival and continuation of the corporate debtor. The liquidator is to attempt revival measures, including proposals for compromise or arrangement and the option to sell the business as a going concern before effecting complete dissolution.

Decision of liquidation upheld on procedural timing grounds, subject to directions that revival measures be pursued before final sale/liquidation.

Power to effect compromise or arrangement under Section 230 of the Companies Act, 2013 - liquidator's duties under Section 35 of the I&B Code - verification and admission of claims under Sections 33, 38, 39 and 40 of the I&B Code - Duties and steps to be taken by the liquidator after the liquidation order - HELD THAT: - The Tribunal directed the liquidator to perform statutory duties under the I&B Code: to take custody and control of assets, verify and consolidate claims, and admit or reject claims after verification. Before selling assets or the company, the liquidator must take steps under Section 230 of the Companies Act, 2013 to explore compromise or arrangement for revival; the Adjudicating Authority may be approached for orders under Section 230 and may extend timelines if required. If revival efforts fail, the liquidator may proceed to sell the business as a going concern and thereafter complete liquidation in accordance with law.

Liquidator directed to follow Sections 35, 33, 38-40 of the I&B Code and to pursue Section 230 compromise/arrangement steps before effecting sale/liquidation; Adjudicating Authority may make appropriate orders and extend time where justified.

Final Conclusion: The appeal is dismissed; the order directing liquidation is upheld because the resolution plans were rejected prior to the later statutory amendment, but the liquidator is directed to pursue revival measures including proceedings under Section 230 of the Companies Act, 2013 and to carry out statutory duties under the I&B Code (verification and admission of claims, preservation of assets, and, where possible, sale as a going concern) before final dissolution.

Moratorium under the Insolvency and Bankruptcy Code - Recovery of Government's share of Profit Petroleum under a Production Sharing Contract - Production Sharing Contract (Ravva PSC) - Enforcement of foreign arbitral award under Part II of the Arbitration and Conciliation Act, 1996 - Status quo / restraint on allocation of sale proceeds during corporate insolvency resolution process

Moratorium under the Insolvency and Bankruptcy Code - Recovery of Government's share of Profit Petroleum under a Production Sharing Contract - Status quo / restraint on allocation of sale proceeds during corporate insolvency resolution process - Operation of the Government's recovery notice demanding allocation of sale proceeds in favour of the Union during the Corporate Insolvency Resolution Process and effect of moratorium on such recovery - HELD THAT: - The Tribunal held that once an order admitting a petition under the Insolvency Code is passed and the moratorium under the Code is in force, actions for recovery against the corporate debtor that would affect its assets or revenue stream are prohibited. The Code's purpose - to maximize value of assets and balance stakeholders' interests during a time bound resolution process - and the express effects of the moratorium forbid coercive enforcement measures or unilateral appropriation of a debtor's receivables by third parties, including Government authorities, while CIRP continues. Although the Government contended that the claimed sums were its own share (and relied on foreign arbitral awards), the Bench confined itself to the Code's scheme and held that the appropriate course for the Ministry was to lodge its claim with the Resolution Professional rather than seek to implement the impugned recovery notice. Consequently, the Tribunal directed maintenance of status quo and restrained the operators (Respondents 3-6) from remitting the sale proceeds to the Ministry pursuant to the notice and ordered that payments be continued to the corporate debtor in the manner hitherto practiced until the moratorium / CIRP regime permits otherwise. [Paras 7, 8]

The recovery notice dated 22.10.2018 cannot be pressed or implemented during the period of moratorium; the Ministry must lodge its claim with the Resolution Professional and Respondents 3-6 are restrained from remitting the disputed sale proceeds to the Ministry, with status quo to be maintained.

Enforcement of foreign arbitral award under Part II of the Arbitration and Conciliation Act, 1996 - Production Sharing Contract (Ravva PSC) - Whether the Tribunal would adjudicate on enforceability or execution of foreign arbitral awards as a basis for the recovery notice - HELD THAT: - The Tribunal observed that the scope of the miscellaneous application was limited to the question of enforcement of the Insolvency Code and the effect of the moratorium on the impugned recovery steps. It declined to enter upon or decide the separate legal questions concerning recognition, enforcement or execution of foreign awards under Part II of the Arbitration and Conciliation Act, 1996, including whether such awards have been made enforceable as decrees of a domestic court. Those matters were held to be outside the limited remit of the present proceeding and not necessary for deciding the application under the Code. [Paras 6]

The Tribunal did not decide issues relating to recognition or enforcement of the foreign arbitral awards under the Arbitration Act and refrained from adjudicating those questions in this proceeding.

Final Conclusion: The Tribunal restrained the Government and the oil companies from implementing the recovery notice of 22.10.2018 during the moratorium, directed Respondents 3-6 to maintain status quo and continue payments to the corporate debtor as before, and required the Ministry to lodge any claim with the Resolution Professional; questions of enforcement of foreign awards were not decided by the Tribunal in these proceedings.

Contravention of Section 3(a) of the Foreign Exchange Management Act, 1999 - Penalty under Section 13(1) of FEMA - Principles of natural justice - right to cross examination - Admissibility and evidentiary value of private notebooks and statements relied upon by enforcement authorities

Contravention of Section 3(a) of the Foreign Exchange Management Act, 1999 - Penalty under Section 13(1) of FEMA - Liability of the appellant for unauthorized dealing in foreign exchange and imposition of penalty under Section 13(1) of FEMA. - HELD THAT: - The Tribunal examined the material relied upon by the Adjudicating Authority and concluded that there was no clear and cogent evidence to establish that the appellant dealt in foreign exchange without RBI permission. The recovery of Indian currency from the appellant and references in the seized note book did not, on the record before the Tribunal, constitute clinching proof of unlawful foreign exchange transactions. The principal witness whose statements formed the core of the prosecution case was absconding and therefore could not be tested by cross examination. In these circumstances the Tribunal held that the benefit of doubt must go to the appellant and that imposition of penalty could not be sustained. [Paras 8, 9, 11]

The adjudication holding the appellant liable under Section 3(a) and imposing penalty under Section 13(1) is set aside.

Admissibility and evidentiary value of private notebooks and statements relied upon by enforcement authorities - Whether the entries in the seized private note book and the statements relied upon by the Adjudicating Authority constituted admissible and reliable evidence to prove unauthorized foreign exchange dealings by the appellant. - HELD THAT: - The Tribunal analysed the reliance placed on the seized note book and the statements recorded by the enforcement authority and observed that the note book entries alone could not be treated as valid, admissible, and conclusive evidence of illegal foreign exchange transactions. Citing settled precedents on the limitations of such diaries/notes as book of accounts, the Tribunal found that the entries, especially when unexplained and untested by cross examination of the main declarants, did not possess the necessary cogency to support the penalty imposed. [Paras 10]

The entries in the seized note book and the relied upon statements were not sufficient or reliable evidence to sustain the adjudication.

Principles of natural justice - right to cross examination - Effect of non production of the principal witness for cross examination on the maintainability of the adjudication proceedings. - HELD THAT: - The Tribunal noted that the adjudicating process permitted cross examination of the principal witness but that the witness (allegedly absconding) was not produced and therefore his statement could not be tested. In the factual matrix of the case, where the witness' testimony underpinned the allegation against the appellant, the Tribunal held that the inability to cross examine deprived the appellant of an opportunity to meet the case and significantly diminished the evidentiary value of that testimony. Consequently, reliance on such untested material could not justify the imposition of penalty. [Paras 8, 11]

Non production and non cross examination of the principal witness vitiated the evidentiary basis of the case and favoured acceptance of the appellant's claim of doubt.

Final Conclusion: On the facts and evidence placed before it the Tribunal allowed the appeal, set aside the adjudicating order imposing penalty on the appellant, and declined to impose costs.

Provisional attachment under PMLA - Bonafide claimant / secured creditor - Priority of secured creditors vis-a -vis proceeds of crime - Interplay between PMLA and SARFAESI/RDB Acts - Jurisdiction of Appellate Tribunal under Section 26 PMLA - Role of Special Court for restoration of property during trial - Finality of attachment

Provisional attachment under PMLA - Bonafide claimant / secured creditor - Finality of attachment - Validity of the Provisional Attachment Order qua immovable properties mortgaged to the banks where properties were acquired prior to the commission of the alleged money laundering offence - HELD THAT: - The Tribunal found on the material on record that the immovable properties were acquired between 1994 and 2005, well before the commencement of the alleged money laundering activities (2011-2012). Such properties therefore do not fall within the definition of "proceeds of crime" under PMLA. The Adjudicating Authority's confirmation of the Provisional Attachment Order dated 31.03.2016 was set aside because the Adjudicating Authority had not legally dealt with the banks' reply nor recorded valid reasons to believe in accordance with settled law. Applying the High Court's guidance that the date of commission of the scheduled offence is the cut off, the Tribunal concluded the banks are bonafide claimants whose prior mortgage/charge defeats characterization of the properties as proceeds of crime and quashed the impugned order and the provisional attachment in respect of those mortgaged properties. [Paras 19, 20, 29, 30, 31]

Provisional Attachment Order and the Adjudicating Authority's confirmation in respect of the mortgaged properties are quashed; the banks are held to be bonafide claimants as the properties were acquired prior to commission of the alleged offence.

Jurisdiction of Appellate Tribunal under Section 26 PMLA - Role of Special Court for restoration of property during trial - Finality of attachment - Whether the Appellate Tribunal may adjudicate the banks' challenge to the confirmation of provisional attachment or whether such claims are exclusively to be decided by the Special Court - HELD THAT: - Relying on the legislative scheme and the High Court's exposition, the Tribunal held that it possesses jurisdiction under Section 26 to examine the validity of the Adjudicating Authority's confirmation of provisional attachment and to determine the bonafides of third party claims so long as the attachment has not attained finality. The Special Court's jurisdiction to adjudicate third party claims for restoration of property arises only after the confirmation order has attained finality, confiscation has been ordered, or trial under Section 4 PMLA has commenced. Exhaustion of remedies up to the High Court is relevant to finality; thus the Tribunal properly exercised its appellate jurisdiction to decide the appeals. [Paras 26, 27, 28]

Appellate Tribunal has jurisdiction to decide the appeals under Section 26 PMLA and adjudicate the banks' bonafide claims because the attachment had not attained finality.

Interplay between PMLA and SARFAESI/RDB Acts - Priority of secured creditors vis-a -vis proceeds of crime - Effect of pre existing SARFAESI/DRT measures and secured creditors' priority where such measures were initiated prior to the alleged commission of offence - HELD THAT: - The Tribunal accepted that SARFAESI measures (Section 13 notices and possession) and recovery proceedings before the DRT and RDB Act were initiated prior to the ED's Provisional Attachment Order. The High Court's conclusions were applied: where a secured creditor had created a mortgage/charge prior to the cut off date (date of commission of offence), its statutory rights and priority in realization from the sale of attached immovable assets are protected. The banks remained entitled to pursue recovery and, if necessary, seek disposal before the Special Court for adjustment of dues while undertaking to deposit any excess realisation with ED. [Paras 18, 21, 22, 30]

SARFAESI and recovery measures initiated before the alleged offence are valid and the secured creditors' prior charge and priority are protected; banks may pursue recovery and adjust any excess as directed.

Final Conclusion: The appeals are allowed in terms of the Delhi High Court judgment dated 02.04.2019; the Adjudicating Authority's order confirming the Provisional Attachment Order dated 31.03.2016 is set aside in respect of the mortgaged properties acquired prior to the alleged offence, the banks are recognised as bonafide secured creditors with protected rights, and the banks remain free to pursue recovery remedies (including before the Special Court) subject to depositing any excess realisation as directed.

Condonation of delay - limitation under the first proviso to Section 35(1) of the Finance Act, 1994 - extraordinary jurisdiction under Articles 226 and 227 of the Constitution - pre-deposit conditions - failure of justice - Point of Taxation Rules, 2011

Condonation of delay - failure of justice - Delay in preferring the appeal beyond the condonable period was to be condoned by the High Court. - HELD THAT: - The Court examined the explanation furnished by the petitioner for the delay in filing the appeal and found the reasons to constitute sufficient cause. Although the Commissioner (Appeals) concluded that the appeal was time-barred and beyond his condonation power under the statutory limitation, the High Court, invoking its supervisory jurisdiction, held that non-interference by the Court would result in failure of justice. Applying established principles permitting judicial relief where denial would cause such failure, the Court exercised its extraordinary jurisdiction to condone the delay of 64 days (as calculated by the Court) and ordered that the appeal be restored for adjudication on merits. [Paras 9]

Delay of 64 days condoned and sufficient cause accepted.

Extraordinary jurisdiction under Articles 226 and 227 of the Constitution - pre-deposit conditions - Appeal was restored to the Commissioner (Appeals) for fresh decision on merits subject to conditions. - HELD THAT: - Having condoned the delay, the Court directed restoration of the appeal to the Commissioner (Appeals) with an express mandate to decide the appeal on merits expeditiously and within a specified time. The Court imposed conditions to prevent undue benefit from the exercise of extraordinary jurisdiction: the petitioner was required to comply with the pre-deposit condition and to deposit costs of Rs. 10,000/- with the Commissioner (Appeals). All substantive rights and contentions were left open for adjudication by the appellate authority in accordance with law. [Paras 10]

Appeal restored to Commissioner (Appeals) for merit adjudication within three months subject to compliance with pre-deposit and payment of costs.

Final Conclusion: The High Court condoned the delay in filing the appeal, restored the appeal to the Commissioner (Appeals) for decision on merits within three months, subject to compliance with pre-deposit conditions and deposit of costs of Rs. 10,000/-, and left all substantive contentions open.

Point of Taxation Rules, 2011 - Transitional provisions - tax on receipt basis - tax on billing basis - Rule 9 of the Point of Taxation Rules, 2011 - penalty under Section 78

Point of Taxation Rules, 2011 - Transitional provisions - tax on receipt basis - tax on billing basis - Rule 9 of the Point of Taxation Rules, 2011 - Whether the appellant correctly discharged service tax liability for the period 2011-12 by applying the transitional provision (Rule 9) and using receipt basis for invoices up to 30.06.2011 and billing basis thereafter. - HELD THAT: - The Tribunal examined the amended Rule 9 of the Point of Taxation Rules, 2011 (as amended on 01.04.2011) and held that the transitional provision allows a taxpayer, at its option, to determine point of taxation on receipt basis where provision of service was completed on or before 30 June 2011 or invoices were issued up to that date. The appellant had exercised that option: it paid tax on amounts received during 01.04.2011-30.06.2011 and treated bills raised on or after 01.07.2011 on billing basis under Rule 3. Documentary evidence (CA certificate, party ledger, bank statements, bills and ST-3) and the appellant's calculations were considered and accepted. Applying Rule 9 to the facts, the Tribunal found that the appellant's total service tax liability for 2011-12 (aggregating receipt- and billing-based amounts) was Rs. 2,66,601/-, which the appellant had discharged through returns and challans. The Tribunal therefore concluded that the reassessment by the adjudicating authority and subsequent confirmation by the Commissioner (Appeals) of the larger demand for 2011-12 was incorrect.

The appellant correctly discharged service tax for 2011-12 by applying Rule 9 transitional provisions; the demand confirmed by Revenue for that year is set aside.

Penalty under Section 78 - payment with interest - Whether penalty under Section 78 should be imposed on the appellant in respect of the demand. - HELD THAT: - The Tribunal noted the sequence of amendments and changes in rules during the relevant period and that the appellant had paid the tax along with applicable interest, the interest amount being nearly equal to the demand. In view of the regulatory changes and the fact of payment with interest, the Tribunal exercised discretion to relieve the appellant from imposition of penalty under Section 78, finding punitive measures inappropriate in the circumstances.

Penalty under Section 78 is not to be imposed and is set aside.

Final Conclusion: The impugned order confirming the larger demand and penalty is set aside; the appeal is allowed as the appellant validly applied the transitional provision of Rule 9 of the Point of Taxation Rules, 2011 and has discharged the tax liability for 2011-12, and no penalty under Section 78 is imposed.

Revenue neutrality - Reverse charge mechanism - Mens rea for imposition of penalty - Imposition of penalty under Sections 77 and 78 of the Finance Act, 1994 - Payment of tax before issuance of show-cause notice

Payment of tax before issuance of show-cause notice - Reverse charge mechanism - Service tax liability and interest confirmed for alleged non-payment of tax on manpower supply under reverse charge for the period July, 2012 to October, 2013. - HELD THAT: - The Tribunal noted that the appellant had in fact paid the service tax and interest after audit observation and prior to issuance of the show-cause notice. The adjudicating and appellate authorities confirmed the tax and interest. The Appellants' contention of unawareness of the partial reverse charge mechanism did not lead to any cancellation of the confirmed tax; the Tribunal recorded that the tax and interest liability stood properly admitted and were appropriated by the original order.

Service tax and interest confirmed; payment appropriated by the original order and left undisturbed.

Revenue neutrality - Mens rea for imposition of penalty - Imposition of penalty under Sections 77 and 78 of the Finance Act, 1994 - Imposition of penalties under Sections 77 and 78 quashed on the ground of revenue neutrality and absence of mens rea. - HELD THAT: - The Tribunal accepted the appellant's submission that the transactions were revenue neutral because the service tax paid would have been available as Cenvat credit to the appellant. The authorities below had not examined or rejected the revenue-neutrality plea. Relying on precedents where penalties were set aside in revenue-neutral situations, the Tribunal held that mens rea for evasion was not made out and therefore penalties imposed under Sections 77 and 78 were not sustainable. Consequently, the Tribunal modified the impugned order to set aside the penalties.

Penalties under Sections 77 and 78 set aside as mens rea not established in a revenue-neutral situation.

Final Conclusion: Appeal partly allowed: tax and interest confirmed; penalties under Sections 77 and 78 set aside on the ground of revenue neutrality and absence of mens rea.

Taxability of trade margin - Business Auxiliary Service - air travel agent service - trading activity vs taxable service - commission/discount from main IATA agent

Taxability of trade margin - trading activity vs taxable service - air travel agent service - commission/discount from main IATA agent - Whether the discount received by the appellant from the main IATA agent, resulting in a margin on resale of air tickets, is taxable as Business Auxiliary Service or constitutes a non taxable trading margin. - HELD THAT: - The Tribunal accepted the finding of the Commissioner (Appeals) that the appellant purchases tickets from the main IATA agent at a discounted price and thereafter sells them to customers at a higher price, and that the difference constitutes a trade margin arising from sale and purchase. Such margin was treated as trading activity rather than a taxable service. The respondent relied on the view taken in CCE Goa vs Zauri Travel Corporation in support of the non taxability of commission/discount retained as trade margin. Applying that approach to the facts on record, the Tribunal held that the benefit retained by the sub agent in the resale process is a trading margin and not liable to service tax under the Business Auxiliary Service classification. No separate legal or factual basis was found to uphold the demand; the impugned order dropping the demand was therefore sustained. [Paras 4]

Demand raised on the trade margin from purchase and resale of tickets is not taxable and the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal upheld the Commissioner (Appeals) order: the margin earned by the sub agent on buying tickets at a discount and reselling them is a trading margin and not taxable as Business Auxiliary Service; the Revenue's appeal is dismissed.

Business auxiliary service - service tax liability of a commission agent - definition of 'service' under section 65(19) of Finance Act, 1994 - exemption under notification no. 13/2003-ST - sales tax liability of goods not a bar to service tax - payment of disputed tax, interest and penalty - absence of suppression, fraud or mis-statement

Business auxiliary service - service tax liability of a commission agent - definition of 'service' under section 65(19) of Finance Act, 1994 - Whether the appellant was liable to service tax as a commission agent under the category of business auxiliary service. - HELD THAT: - The appellant operated a company owned company operated retail outlet and promoted the sale of products manufactured by another entity. The Tribunal accepted that the appellant received consideration as a commission agent and that such receipts fall within the taxable ambit of 'business auxiliary service' as defined for service tax purposes. The factual finding that the appellant undertook promotional activities for products of another entity, which were not merely mandatory functions of outlet management, supported the conclusion of taxability. The appellant has also remitted the disputed tax, interest and part of the penalty, and the first appellate authority had considered and rejected the same grounds of challenge.

Appellant held liable to service tax as a commission agent under business auxiliary service; appeal on this ground dismissed.

Exemption under notification no. 13/2003-ST - sales tax liability of goods not a bar to service tax - Whether the claimed exemption under notification no. 13/2003-ST applied and whether the fact that goods were subject to sales tax precluded service tax liability. - HELD THAT: - The appellant's contentions that the transactions were covered by the exemption notification and that levy of sales tax on goods excluded any service tax obligation were considered by the first appellate authority and again addressed by the Tribunal. The Tribunal found no reason to reopen or accept these grounds: the nature of the appellant's activities and receipt of commission rendered service tax leviable notwithstanding the sales tax character of the goods, and the claimed exemption was not held to apply.

Contentions of exemption and of exclusion by reason of sales tax rejected; appeal on these grounds dismissed.

Payment of disputed tax, interest and penalty - absence of suppression, fraud or mis-statement - Whether there was any suppression, fraud or collusion by the appellant and what effect the appellant's payment of tax, interest and part penalty had on the appeal. - HELD THAT: - Although the appellant asserted there was no suppression, fraud or mis-statement, the Tribunal noted the appellant's voluntary remittance of the entire disputed tax and interest and 25% of the penalty as ordered by the original authority. The first appellate authority had considered the appellant's explanations and rejected the substantive challenges. In these circumstances, and on the basis of the record and the first appellate authority's findings, the Tribunal found no merit in the appellant's plea.

Claim of no suppression/fraud not accepted as a ground to disturb the orders; payment did not oust liability and appeal dismissed.

Final Conclusion: The appellate order upholding the demand, interest and penalties was affirmed; the appeal is dismissed.

Characterisation of receipts as commission or interest - Business Auxiliary Service - Taxability of commission under service tax - Receipts accounted as other income/finance income - Service tax liability on financing charges

Characterisation of receipts as commission or interest - Business Auxiliary Service - Receipts accounted as other income/finance income - Whether the amounts received and accounted as 'finance account' / 'other income' were commission chargeable to service tax as Business Auxiliary Service or were interest/finance charges not constituting commission. - HELD THAT: - The Tribunal found on the material placed before it - invoices, ledgers, and debit notes - that there was no transaction of commission between the seller and the appellant. The appellant financed the sale value on behalf of the buyer, paid the sellers, and subsequently recovered the financed amount from the buyers along with charges labelled and accounted as interest/finance income. On these facts the receipts represented charges for financing funds to the buyer and not commission earned from the seller for facilitating a sale. Since the amounts did not constitute commission, they did not fall within Business Auxiliary Service as characterised by the department, and therefore the demand framed under that head was unsustainable.

Amounts accounted as finance/other income are interest/financing charges and not commission liable to service tax under Business Auxiliary Service; the demand is set aside.

Final Conclusion: The Tribunal allowed the appeal, holding that the amounts recovered were financing/interest charges and not commission liable to service tax under Business Auxiliary Service, and set aside the demand confirmed by the authorities.

Manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944 - mere printing as an incidental process - classification under Chapter 48 versus Chapter 49 of the Tariff - change in tariff heading does not ipso facto amount to manufacture - classification of printed paper under heading 4911 99 90 carrying nil rate of duty - job work/exemption claim under Notification No. 83/1994 CE

Manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944 - mere printing as an incidental process - Whether the printing of already manufactured base paper by the appellant amounts to 'manufacture' within Section 2(f) of the Central Excise Act, 1944. - HELD THAT: - The Tribunal found as a fact that the appellant received already manufactured paper in rolls and carried out printing on that paper. Relying on the established principle that manufacture requires a transformation resulting in a new and different article having a distinctive name, character or use, the Tribunal concluded that the printing undertaken did not alter the basic character of the paper. The printing rendered the paper fit for a particular end use (decorative laminates/MDF boards) but did not effect a transformation amounting to manufacture. The reasoning follows Supreme Court authorities cited in the order (including decisions holding decoration/printing of an existing product not to be manufacture) and applies the test that mere decorative or enabling processes which leave the primary identity of the goods unchanged do not constitute manufacture. [Paras 7]

Printing of the base paper by the appellant does not amount to manufacture under Section 2(f); therefore the activity is not exigible to excise as manufacture.

Change in tariff heading does not ipso facto amount to manufacture - Whether a change in tariff heading consequent to the printing process renders the product dutiable as a manufactured article. - HELD THAT: - The Tribunal held that even if the process results in classification under a different tariff heading, that fact alone does not establish manufacture. The order applies the precedent that a mere alteration in tariff classification, absent the requisite transformational change in the goods, cannot be the basis for treating the activity as manufacture and imposing duty. Thus, a change of tariff heading without transformation amounting to manufacture does not make the product dutiable anew. [Paras 8]

A change in tariff heading arising from the printing process does not, by itself, convert the activity into manufacture liable to excise duty.

Classification under Chapter 48 versus Chapter 49 of the Tariff - classification of printed paper under heading 4911 99 90 carrying nil rate of duty - If the printing were to be treated as manufacture, whether the printed paper is classifiable under Chapter 49 (heading 4911 99 90) and thereby attract nil rate of duty. - HELD THAT: - The Tribunal considered Chapter Note 2 to Chapter 49, which defines 'printed' for the purposes of that chapter. It observed that where printed paper is treated as a product of printing within Chapter 49, the appropriate tariff heading would be 4911 99 90 which attracts nil duty. Applying that provision, the Tribunal held that even on the appellant's alternate contention that printing amounts to manufacture, the printed paper would be classifiable under Chapter 49 and not subject to excise duty. [Paras 8, 9]

Even if the printing were treated as manufacture, the printed base paper would fall under Chapter 49 (4911 99 90) and attract nil rate of duty; accordingly the demand is unsustainable.

Final Conclusion: The impugned demand for duty on printed base paper is unsustainable: the printing does not amount to manufacture under Section 2(f) and, alternatively, if treated as manufacture the product falls under Chapter 49 (4911 99 90) attracting nil duty. The appeal is allowed and the order demanding duty is set aside.

Adjustment of excess duty against short payment - sanction of refund as precondition for set off - unjust enrichment test for refund claims - provisional assessment and final assessment interaction - remand for fresh adjudication of refund claims

Adjustment of excess duty against short payment - sanction of refund as precondition for set off - unjust enrichment test for refund claims - Whether excess duty paid can be adjusted against duties short paid without first sanctioning the refund and applying the unjust enrichment test. - HELD THAT: - The Tribunal reviewed precedents and concluded that while adjustments between excess payments and short payments have been permitted in several decisions, such set off is not a freestanding administrative entitlement and depends on proper sanction of refund claims. The authorities must first ascertain eligibility for refund at the threshold, including whether the incidence of duty was borne by the claimant (the unjust enrichment inquiry). Only upon entitlement being established and refund sanctioned can the excess payment be treated for adjustment against short payments; merely demonstrating quantum of excess and shortage is insufficient. The judgment distinguishes decisions permitting adjustment from those denying it by reference to whether refund claims were appropriately adjudicated and whether unjust enrichment had been considered, and it affirms that the right to refund vests in the person who bore the duty.

Adjustment of excess duty against short payment is permissible only after the refund claim is sanctioned following the requisite unjust enrichment/eligibility determination.

Remand for fresh adjudication of refund claims - provisional assessment and final assessment interaction - Disposition required where refund claims were not properly adjudicated and provisional assessment/final assessment adjustments remained unresolved. - HELD THAT: - The Tribunal found that the appellant had lodged refund claims which were not properly disposed of and that the adjudicating authority had not undertaken the necessary threshold determination of eligibility nor the unjust enrichment inquiry. In view of settled law, the Tribunal set aside the impugned order and remanded the matter to the adjudicating authority to decide the refund claims afresh, taking into account the principles stated regarding sanction of refunds and the interplay between provisional and final assessment, and thereafter to consider lawful adjustment if entitlement is established.

Impugned order set aside and matter remanded to the adjudicating authority for fresh decision of the refund claims and consequent adjustments in accordance with law.

Final Conclusion: The Tribunal set aside the impugned order and remanded the matter for fresh adjudication of the refund claims; adjustments between excess payments and short payments may be made only after sanction of refund following the eligibility/unjust enrichment enquiry and in accordance with the interaction between provisional and final assessment.

Cenvat credit - place of removal - ownership of goods until delivery - charging of Central Sales Tax not determinative of place of removal - courier service as input service - CBCE Circular No. 10654/4/2018 dt. 08.06.2018

Cenvat credit - place of removal - charging of Central Sales Tax not determinative of place of removal - ownership of goods until delivery - CBCE Circular No. 10654/4/2018 dt. 08.06.2018 - Entitlement to avail Cenvat credit on courier service used for delivery of goods sent by courier where goods remain the assessee's property until delivery to buyer. - HELD THAT: - The Tribunal rejected the contention that charging C.S.T. by itself establishes that the sale was at the factory gate. Charging C.S.T. on inter-state sales is not a legal mandate that determines the place of removal. Applying the position laid down in CBCE Circular No. 10654/4/2018 dt. 08.06.2018, the decisive factor is the factual place of removal. Where goods are dispatched by courier and remain the appellant's ownership until accepted by the buyer (with the courier being obliged to return goods if delivery is refused), the place of removal is the buyer's location in the facts of the case. Consequently, courier service used for such delivery qualifies as an input service for which Cenvat credit can be availed. [Paras 5, 6]

The appellant is entitled to avail Cenvat credit on courier service; the impugned orders are set aside and the appeals are allowed with consequential relief.

Final Conclusion: The Tribunal allowed the appeals, holding that where goods sent by courier remain the seller's property until delivery and return is possible on refusal, the place of removal is the buyer's location and Cenvat credit on the courier service is admissible.

Condonation of delay - limitation for filing appeal under Section 62(3) of the Karnataka Value Added Taxes Act, 2003 - appellate authority's power to admit delayed appeal - preference for substantial justice over mere technicality - remand for consideration on merits

Limitation for filing appeal under Section 62(3) of the Karnataka Value Added Taxes Act, 2003 - appellate authority's power to admit delayed appeal - condonation of delay - Validity of the Appellate Authority's dismissal of the appeal as barred by limitation and condonation of two days' delay - HELD THAT: - Section 62 requires an appeal to be filed within thirty days from communication of the order, with a further discretionary extension of 180 days if sufficient cause is shown (total 210 days). The Appellate Authority dismissed the appeal on account of a two days' delay beyond that period. The High Court held that where substantial justice is at stake and the delay is non-deliberate and minimal, the Appellate Authority ought not to deny remedy on mere technical grounds. Referring to precedent that refusal to condone short delays can defeat meritorious matters, the Court applied the principle that substantial justice should prevail over procedural technicality and therefore condoned the delay of two days in filing the appeal. The Court thereby found the dismissal on the sole ground of the short delay to be erroneous. [Paras 9, 10, 11, 12]

The Appellate Authority's order dismissing the appeal as barred by limitation is quashed and the two days' delay is condoned.

Remand for consideration on merits - preference for substantial justice over mere technicality - Direction as to further adjudication of the appeal following quashing of the limitation-based dismissal - HELD THAT: - Having quashed the dismissal and condoned the delay, the Court remanded the matter to the Appellate Authority to decide the appeal on merits. The remand is to be conducted without reference to limitation, and the Appellate Authority is directed to consider and dispose of the appeal strictly in accordance with law on the merits of the case. [Paras 13]

Matter remanded to the Appellate Authority for consideration of the appeal on merits without reference to limitation.

Final Conclusion: Writ petitions allowed; impugned order dismissing the appeal on limitation grounds quashed, two days' delay condoned and the appeal remanded to the Appellate Authority for adjudication on merits in accordance with law.

Natural justice - opportunity to be heard - adjournment and intimation of hearing - setting aside administrative order and remand for fresh consideration - Section 67(1) of the KVAT Act, 2003

Natural justice - opportunity to be heard - adjournment and intimation of hearing - setting aside administrative order and remand for fresh consideration - Ext.P6 order dated 13.03.2019 under Section 67(1) of the KVAT Act, 2003 was set aside and the matter remitted for fresh consideration on grounds of denial of fair opportunity to the petitioner. - HELD THAT: - The Court found that Ext.P6 was passed swiftly without communicating the decision on the petitioner's request (Ext.P5) for time beyond 18.03.2019 or intimating any adjourned date, thereby depriving the petitioner of the opportunity to explain the case and effectively participate in the penalty proceedings. The impugned order recorded conclusions that sufficient opportunities had been given, but the Court observed a conflation between earlier opportunities granted and the fresh request made in Ext.P5. Having considered the order and the respondent's inability to justify the procedure, the Court concluded that fair play and the requirements of natural justice were not satisfied and remitted the matter for reconsideration and disposal in accordance with law within the time directed.

Ext.P6 is set aside; the matter is remitted to the respondent for fresh consideration and disposal in accordance with law within six weeks; petitioner to appear before the respondent on 24.04.2019.

Final Conclusion: The writ petition is allowed to the extent that Ext.P6 is set aside for want of fair opportunity; the matter is remitted for fresh consideration and disposal within six weeks, with the petitioner directed to appear on the specified date.

Prescribed authority's power to terminate lease and order eviction under the West Bengal Government Premises (Tenancy Regulation) Act, 1976 - termination of lease upon occurrence of events stipulated in lease deed - consent to mortgage accorded without prejudice to lessor's rights - mortgagee cannot acquire rights superior to those of the lessee or the grantor

Prescribed authority's power to terminate lease and order eviction under the West Bengal Government Premises (Tenancy Regulation) Act, 1976 - termination of lease upon occurrence of events stipulated in lease deed - Validity of the prescribed authority's orders terminating the lease and directing possession under the Act of 1976 - HELD THAT: - The prescribed authority, acting under the West Bengal Government Premises (Tenancy Regulation) Act, 1976, terminated the lease and directed delivery of possession after non-functioning reports, showcause and hearing notices, and further inquiry. The lease deed expressly provided that specified events (including non-payment, non-performance of covenants, closure of the unit, insolvency, attachment, appointment of a receiver, or similar defaults) would cause automatic determination of the lease and permit re-entry and recovery of possession by the lessor. The first respondent followed the statutory process under the Act and obtained possession; the lessee did not challenge the eviction order by appeal under the Act. On these facts, there is no ground for the Court to interfere with the prescribed authority's decision to terminate the lease and take possession.

The termination of the lease and the orders for possession made by the prescribed authority under the Act of 1976 are upheld; no interference warranted.

Consent to mortgage accorded without prejudice to lessor's rights - mortgagee cannot acquire rights superior to those of the lessee or the grantor - Effect of the first respondent's conditional consent to mortgage and the legal rights of the petitioner as mortgagee - HELD THAT: - The first respondent's written consent to the creation of an equitable mortgage was expressly qualified as being without prejudice to the lessor's rights under the lease deed. The lease itself reserved the lessor's right to terminate the lease upon occurrence of specified defaults. Applying the established principle that a donee or grantee (and similarly a mortgagee of a lessee) cannot possess rights greater than those of the donor or grantor, the petitioner, as mortgagee of the lessee's leasehold interest, cannot claim a right superior to that of the lessee. Consequently, the petitioner's security stood subject to the lessor's power to terminate and repossess pursuant to the lease and the Act of 1976.

The petitioner's claim as mortgagee is subordinate to the lessor's contractual and statutory rights; the mortgagee cannot challenge the lessor's termination and repossession on a superior footing.

Final Conclusion: Writ petition dismissed; the termination of the lease and repossession by the lessor under the Act of 1976 are sustained, and the petitioner as mortgagee has no superior right to the lessee or lessor's reserved rights.