TaxTMI Updates e-Newsletter
Jun 24,2023

Statutory right to appeal - stay of recovery pending appeal - non-constitution of Tribunal causing deprivation of remedy - deposit condition for obtaining stay - limitation period to commence after Tribunal is constituted and President/State President enters office - power to issue removal of difficulties notification affecting limitation

Statutory right to appeal - non-constitution of Tribunal causing deprivation of remedy - stay of recovery pending appeal - deposit condition for obtaining stay - Petitioner entitled to the benefit of stay of recovery under the appellate provision despite non-constitution of the Tribunal, subject to specified deposit conditions. - HELD THAT: - The Court held that the petitioner, though prevented from filing the statutory appeal due to the respondents' failure to constitute the Tribunal, cannot be deprived of the statutory benefit of stay under the appellate provision. For equitable balance the stay was made conditional: the petitioner must deposit an amount equal to 20% of the remaining tax in dispute (if not already deposited) in addition to any earlier deposit made under the other statutory provision, and upon such deposit the recovery of the balance amount and any steps taken for its recovery shall be deemed stayed. The Court noted the respondents themselves have recognised non-constitution of the Tribunal and issued a difficulty-removal notification providing that the limitation for preferring appeal will commence only after the President/State President enters office, and relied on that position in granting relief.

Stay of recovery granted on deposit of 20% of the remaining disputed tax (plus prior deposit), recovery stayed pending availability of appellate remedy.

Limitation period to commence after Tribunal is constituted and President/State President enters office - statutory right to appeal - deposit condition for obtaining stay - Stay is not open-ended; petitioner must file the appeal when the Tribunal is constituted and functional, failing which authorities may proceed. - HELD THAT: - The Court emphasised that the grant of stay flows from the exceptional circumstance of non-constitution of the Tribunal and is thus provisional. To balance equities the petitioner is required to present/file the appeal under the relevant appellate provision once the Tribunal is constituted and the President or State President enters office, observing statutory requirements and limitation as may be applicable after constitution. If the petitioner elects not to file the appeal within the period specified upon constitution, the respondent authorities are entitled to continue proceedings in accordance with law.

Stay limited in duration and conditional upon filing the appeal after constitution of the Tribunal; non-filing permits respondents to proceed.

Final Conclusion: Writ petition disposed by directing that, because the Tribunal was not constituted by the authorities, the petitioner is granted the stay available under the appellate provision on deposit of the specified amount; the stay is provisional and the petitioner must file the statutory appeal once the Tribunal is constituted, failing which the authorities may proceed in accordance with law.

Garnishee notice - statutory requirement of depositing percentage of disputed tax for preferring appeal under Section 107(7) of the CGST Act - payment of disputed tax - stay of tax recovery on deposit - appellate authority to decide appeal on merits after personal hearing

Garnishee notice - statutory requirement of depositing percentage of disputed tax for preferring appeal under Section 107(7) of the CGST Act - payment of disputed tax - stay of tax recovery on deposit - Validity of the condition imposed by the Single Bench directing the appellant to deposit 20% of the interest amount as a pre-condition for staying the garnishee notice - HELD THAT: - The Single Bench stayed the garnishee notice but imposed a condition that the appellant deposit 20% of the interest liability. The Court noted that the appellant had paid the full tax as recorded in the order under Section 73(9) of the W.B.G.S.T. Act, 2017. The statutory scheme under Section 107(7) of the CGST Act (read with Section 107(6) for preferring an appeal) mandates deposit of 10% of the disputed tax for lodging an appeal. Having regard to these facts and the statutory requirement which prescribes only a 10% deposit of disputed tax, the Court concluded that imposing a condition to deposit 20% of the interest was not warranted. Accordingly that portion of the Single Bench's order was set aside. [Paras 3, 4, 5]

Portion of the Single Bench order directing payment of 20% of the interest amount set aside; no requirement to pay 20% of interest as a condition for stay.

Appellate authority to decide appeal on merits after personal hearing - stay of tax recovery on deposit - Direction to the appellate authority regarding consideration of the appeal after grant of stay - HELD THAT: - Having removed the impugned condition, the Court directed the appellate authority to consider the appeal filed by the appellant on its merits and in accordance with law. The appellant is to be afforded an opportunity of personal hearing before the appellate authority decides the appeal. This constitutes a positive remedial direction to ensure adjudication on merits without the now-set-aside deposit condition. [Paras 5]

Appellate authority directed to decide the appeal on merits and in accordance with law after giving personal hearing to the appellant.

Final Conclusion: The intra Court appeal is allowed: the Single Bench's condition requiring deposit of 20% of the interest is set aside and the appellate authority is directed to consider the appeal on merits and in accordance with law after affording a personal hearing; no order as to costs.

Detention and release of seized goods - perishable goods - expedited release - investigation into alleged smuggling - furnishing an undertaking to appear for enquiry - liberty of authorities to continue investigation and take action

Detention and release of seized goods - perishable goods - expedited release - furnishing an undertaking to appear for enquiry - Release of the detained tea consignments in favour of the petitioner subject to conditions - HELD THAT: - The Court directed release of the petitioner's detained tea consignments as no purpose would be served by keeping the writ petition pending and because the tea is perishable. The release is ordered in accordance with law if there is no impediment to release, within one week from receipt of the copy of the order. Release is conditioned upon the petitioner furnishing an undertaking to appear before the authority for any enquiry or investigation as and when required. The order balances the perishability of the goods and the need to protect investigation by making release conditional and time-bound.

The detained tea consignments are to be released to the petitioner within one week subject to legal formalities and an undertaking to appear for enquiry/investigation if required.

Investigation into alleged smuggling - liberty of authorities to continue investigation and take action - Continuation of investigation into the poppy seeds and authority to take appropriate action remains unimpaired - HELD THAT: - The Court expressly preserved the State Authorities' and the Directorate of Revenue Intelligence's right to continue investigation into the poppy seeds found in the vehicle. The order clarifies that release of the perishable tea consignments does not fetter ongoing inquiries; if further investigation establishes illegal transportation of poppy seeds or other impediments, the authorities are free to take appropriate steps in accordance with law. The Directorate had indicated no objection to release of the tea, and the State retains responsibility to pursue investigation regarding the poppy seeds.

Authorities are at liberty to continue investigation into the poppy seeds and, if illegality is found, to take appropriate legal action notwithstanding the release of the tea consignments.

Final Conclusion: Writ petition disposed by directing release of the perishable tea consignments to the petitioner within one week subject to statutory formalities and an undertaking to appear for enquiry, while preserving the investigating authorities' liberty to continue inquiry into the poppy seeds and take appropriate action in accordance with law.

Input Tax Credit - availability of effective alternate remedy - maintainability of writ petition - consideration of appeal without reference to limitation

Availability of effective alternate remedy - maintainability of writ petition - Writ petition dismissed on account of an effective alternate statutory remedy being available. - HELD THAT: - The Court found that the petitioner had an effective alternate remedy before the appellate authority, namely the Deputy Commissioner, GST Appeal, Salem, against the impugned proceedings challenging denial of Input Tax Credit. In view of the existence of that statutory appellate forum, the High Court declined to entertain the writ petition and held that the petitioner must first avail the alternate remedy. The Court therefore dismissed the writ petition on this ground without adjudicating the merits of the challenge to the respondent's order. [Paras 7, 8]

Writ petition dismissed for want of maintainability as an effective alternate remedy exists.

Consideration of appeal without reference to limitation - Input Tax Credit - Liberty granted to file statutory appeal and appellate authority directed to consider it afresh without reference to limitation. - HELD THAT: - Although the High Court dismissed the writ on maintainability grounds, it granted the petitioner liberty to file an appeal before the Deputy Commissioner, GST Appeal, Salem within four weeks from receipt of the order and directed the appellate authority to consider all grounds raised in the writ. The Court further directed that upon receipt of such appeal the appellate authority shall consider and pass appropriate orders without reference to limitation. The Court did not decide the substantive question of entitlement to the claimed Input Tax Credit for 2019-2020, leaving that to the appellate process. [Paras 8]

Petitioner permitted to file appeal within four weeks; appellate authority to consider the appeal and decide afresh without reference to limitation.

Final Conclusion: The writ petition challenging denial of Input Tax Credit for 2019-2020 is dismissed as not maintainable in view of an effective alternate remedy; the petitioner is permitted to file an appeal before the Deputy Commissioner, GST Appeal, Salem within four weeks, and the appellate authority is directed to consider the appeal on merits without reference to limitation.

Composite supply and principal supply - printing services as principal supply where content is supplied by the recipient - exemption under Serial No. 66(b)(iv) of Notification No. 12/2017-services relating to admission to or conduct of examination - classification under Heading 9989 (printing services) - CBIC Circular No. 151/07/2021-clarification on exemption at Sr. No. 66

Composite supply and principal supply - printing services as principal supply where content is supplied by the recipient - classification under Heading 9989 (printing services) - Whether supply of printed question papers, OMR sheets and similar items by the applicant is supply of goods or supply of service. - HELD THAT: - The Authority examined whether the applicant's supply should be treated as sale of goods or as a service. The content for printing is supplied by the educational institutions while the physical inputs (paper, ink) belong to the applicant. Applying the definition of composite supply and principal supply, and following Circular No. 11/11/2017-GST, the Authority held that where only content/manuscript is supplied by the recipient and the printer supplies physical inputs and performs the printing, the printing of that content is the principal element. Consequently the composite transaction is to be classified on the basis of the principal supply. The Authority therefore concluded that the applicant's activity is a composite supply whose principal supply is printing services and that the HSN/service classification of the entire supply is to be under Heading 9989 (printing services). [Paras 8]

The supply is a composite supply with printing as the principal supply and is to be classified as a service under Heading 9989.

Exemption under Serial No. 66(b)(iv) of Notification No. 12/2017-services relating to admission to or conduct of examination - CBIC Circular No. 151/07/2021-clarification on exemption at Sr. No. 66 - Whether printing services supplied to educational institutions for conduct of examinations are exempt from GST under Sr. No. 66(b)(iv) of Notification No. 12/2017. - HELD THAT: - The Authority noted that Serial No. 66(b)(iv) of Notification No. 12/2017 grants exemption to services provided to an educational institution by way of services relating to admission to, or conduct of examination. The CBIC Circular No. 151/07/2021 specifically clarifies that input services such as printing of question papers, admit cards and related activities, when provided to educational Boards/institutions for conduct of examinations, are exempt. Since the principal supply has been held to be printing services and the applicant supplies such services to educational institutions in relation to conduct of examinations, those services fall within the exemption at Sr. No. 66(b)(iv). The Authority therefore concluded that the applicant can avail the exemption when the printing services are supplied to educational institutions for admission or conduct of examinations. [Paras 8]

Printing services supplied to educational institutions in relation to admission to, or conduct of, examinations are exempt from GST under Sr. No. 66(b)(iv) of Notification No. 12/2017.

Final Conclusion: The Authority ruled that the applicant's supply of printing of test/question papers, OMR sheets and similar items is a composite supply whose principal supply is printing services (classified under Heading 9989) and, when supplied to educational institutions in relation to admission to or conduct of examinations, such services are exempt from GST under Serial No. 66(b)(iv) of Notification No. 12/2017, consistent with CBIC Circular No. 151/07/2021.

Regular bail under Section 439 Cr.P.C. - Prima facie incriminating material and requirement of custody for further investigation - Bail not to be denied as punishment - Tracing and recovery of evaded tax as primary concern - Conditional bail and surety requirement

Regular bail under Section 439 Cr.P.C. - Prima facie incriminating material and requirement of custody for further investigation - Bail not to be denied as punishment - Tracing and recovery of evaded tax as primary concern - Admission of the accused to regular bail in the criminal proceeding registered by CGST. - HELD THAT: - The Court examined the investigation material filed by the department including e-way bill records, supplier-chain analysis and the departmental reply which disclosed suspicious and broken inward supply chains and instances of vehicles showing 'no record found' in RTO checks. Those facts create doubt as to the accused's culpability but do not establish that custody of the accused is necessary for continuing investigation. Applying the principle that the primary concern of tax authorities is to trace and recover evaded tax, and that bail should not be refused as a form of punishment, the Court held that incarceration cannot be continued where the accused is not required for further investigation and where remedies at trial (prosecution, penalty, and recovery) remain available to the department. Considering the period of incarceration and the stage of investigation, the Court concluded that conditional release is appropriate while preserving the department's right to prosecute and recover illegitimate ITC if guilt is established. [Paras 8, 9]

Accused admitted to bail on furnishing bond and surety, subject to conditions including cooperation with investigation and not leaving the country without trial court permission.

Conditional bail and surety requirement - The conditions on which bail is to be granted. - HELD THAT: - The Court imposed bail on terms of a bail bond of the specified sum with one surety of equal amount, subject to satisfaction of the concerned magistrate, and further conditioned release on the accused joining investigation when called and not departing the country without trial court's permission. These conditions were directed to secure attendance and safeguard the department's interest in investigation and recovery proceedings. [Paras 9, 10]

Bail granted subject to bond, surety and the stated conditions.

Final Conclusion: Bail application allowed; accused released on conditional bail with specified bond and surety, required to cooperate with investigation and obtain trial court permission before leaving the country. The department retains the right to prosecute and recover any illegitimate ITC if guilt is established.

Anticipatory bail jurisdiction - Section 438 Cr.P.C. - anticipatory bail jurisdiction - Transit anticipatory bail - Power to grant anticipatory bail where arrest is apprehended - Purpose of CGST Act: tracing tax evasion and collection - Custodial interrogation not warranted under CGST regime

Anticipatory bail jurisdiction - Section 438 Cr.P.C. - anticipatory bail jurisdiction - Power to grant anticipatory bail where arrest is apprehended - Maintainability of anticipatory bail application before a court within whose territorial jurisdiction the alleged offence is not said to have been committed. - HELD THAT: - The court examined the scope of section 438 Cr.P.C. and concluded that the statutory phraseology does not confine grant of anticipatory bail exclusively to the court within whose territorial limits the offence is alleged to have been committed. While acknowledging the general rule of territorial jurisdiction under Chapter VIII (sections 177-189) of the Cr.P.C., the court held that exceptional circumstances permit a court where the accused resides or apprehends arrest to entertain an anticipatory bail application, at least for transit protection. Reliance was placed on Delhi High Court decisions (including Pritam Singh, Capt. Satish Kumar Sharma and subsequent authorities) and other High Court authorities which recognise concurrent or protective jurisdiction for bail when the arrest is apprehended outside the forum of investigation. The court emphasised that such jurisdiction must be exercised judiciously and is not an absolute displacement of territorial competence of the forum investigating the offence.

Application for anticipatory bail is maintainable in the present court in the peculiar facts of the case and the court may grant transit anticipatory protection notwithstanding that the investigation is being conducted by a unit outside its territorial jurisdiction.

Transit anticipatory bail - Purpose of CGST Act: tracing tax evasion and collection - Custodial interrogation not warranted under CGST regime - Whether the accused should be granted transit anticipatory bail and on what conditions. - HELD THAT: - Having found that the court can exercise jurisdiction to grant protective relief, the court applied the statutory purpose of the CGST Act-identifying tax evasion and securing recovery-to conclude that custodial interrogation was not warranted in the facts before it. The applicant expressed willingness to join and cooperate with the DGGI Jaipur investigation and no specific quantification of alleged tax evasion was placed on record; some departmental statements had been retracted. In this context and to enable the accused to join the investigation, the court granted transit anticipatory bail while permitting the investigating agency to proceed by serving summons under section 70 and, if it intends to arrest, to give two weeks' notice so the accused may approach the competent territorial court in Rajasthan for final adjudication on custody or full anticipatory relief.

Transit anticipatory bail granted subject to the accused joining the investigation and the investigating agency serving two weeks' notice before arrest so that the territorial forum may be approached.

Final Conclusion: Application under section 438 Cr.P.C. was held maintainable in this court in the special facts of the case; the accused was granted transit anticipatory bail to enable cooperation with the DGGI Jaipur investigation, subject to conditions including joining the probe and two weeks' notice before any intended arrest so that the competent territorial court may be approached.

Income deemed to accrue or arise in India - India - USA DTAA - FTS OR FIS - payments received by the Assessee from its Indian Customers on account of Centralized Services viz. sales and marketing, loyalty programs, reservation service, technological service, operational services and training programs/human resources do not constitute ‘Fee for Technical Services’ u/s 9(l)(vii) or 'Fee for included services’ as defined under Articles 12(4) (a) of the Indo-US DTAA - Appeal dismissed by HC [2022 (11) TMI 641 - DELHI HIGH COURT] and the ITAT's determination that the centralized service payments do not constitute FTS / Fee for Included Services is upheld, subject to the final decision of the Supreme Court in the related Civil Appeal

HELD THAT:- Delay condoned. Leave granted.

Issue notice on the appeal, returnable in four weeks.

Applicability of Section 43B - electricity duty collected by the assessee as per the provisions of Punjab Electricity (Duty) Act, 1958 - As per HC [2022 (9) TMI 306 - PUNJAB AND HARYANA HIGH COURT] electricity duty collected by the licensee under the Punjab Electricity (Duty) Act, 1958 is not a sum payable by the assessee for the purpose of Section 43B, and thus the disallowance made by revenue is set aside - HELD THAT:- No ground to interfere with the impugned judgment and order passed by the High Court. Accordingly, the Special Leave Petition is dismissed.

Pending application(s), if any, stand disposed of.

Addition u/s 68 - genuineness and credit worthiness of the transaction in question - As per HC [2022 (12) TMI 1168 - ALLAHABAD HIGH COURT] assessee though has disclosed the source of the deposit but could not establish the nature thereof and conditions which are required to be proved by the Assessee as per Section 68 could not be proved by him - HELD THAT:- Delay condoned.

We are not inclined to interfere with the impugned judgment and hence, the special leave petition is dismissed. Pending application(s), if any, shall stand disposed of.

Reopening of assessment under Section 148 of the Income Tax Act, 1961 - reasoned order - sanction under Section 151 of the Income Tax Act - non-application of mind - personal hearing - quashing and remand for denovo consideration

Reopening of assessment under Section 148 of the Income Tax Act, 1961 - The petition to quash the notice dated 29th March 2019 issued under Section 148 was rejected. - HELD THAT: - The Court considered the petitioner's submission that the reopening notice was issued after the expiry of four years of the assessment year but noted that no order under Section 143(3) had been passed in the case. After hearing counsel and considering the merits, the Court declined to quash the notice dated 29th March 2019. [Paras 2, 3]

Notice under Section 148 dated 29th March 2019 not quashed.

Reasoned order - non-application of mind - sanction under Section 151 of the Income Tax Act - personal hearing - quashing and remand for denovo consideration - The order dated 15th November 2019 disposing of the objections was quashed and the matter was remanded for fresh consideration with directions. - HELD THAT: - The Court found that the order disposing the objections failed to furnish reasons for rejecting the assessee's objections and did not address the contention that the Principal Commissioner of Income Tax's sanction (endorsed simply as "Yes") showed non-application of mind, lacked date and reasoning, and was not explained. Consequently, the order disposing the objections was set aside and the matter remitted to the Jurisdictional Assessing Officer for de novo consideration. The Court directed production of the missing enclosures referenced in the sanction application, permitted the assessee to file further submissions, required the Assessing Officer to afford a personal hearing with advance notice, and mandated that the final order be a reasoned order dealing with every submission and listing any authorities relied upon so the assessee may respond. The Court expressly recorded that it made no observations on the merits. [Paras 4, 5, 6, 7, 9]

Order dated 15th November 2019 quashed; matter remanded to the Jurisdictional Assessing Officer to decide objections afresh by a reasoned order after supplying the specified document(s), giving personal hearing, and following the timelines and procedural directions prescribed by the Court.

Final Conclusion: Petition dismissed insofar as challenge to the Section 148 notice is concerned; the order disposing objections dated 15th November 2019 is quashed and remanded for de novo consideration with directions to supply the missing documents, afford personal hearing, and pass a reasoned order addressing all submissions within the timelines specified by the Court.

Taxation of share premium under Section 56(2)(viib) of the Income tax Act - valuation of unquoted equity shares by DCF method under Rule 11UA(2) - judicial review of valuation report and appellate interference with valuation - scope of entertainability under Section 260A - substantial question of law

Taxation of share premium under Section 56(2)(viib) of the Income tax Act - valuation of unquoted equity shares by DCF method under Rule 11UA(2) - judicial review of valuation report and appellate interference with valuation - Validity of the addition made by the Assessing Officer treating the excess received on issue of shares as income under Section 56(2)(viib) after rejecting the assessee's DCF valuation. - HELD THAT: - The Tribunal considered Section 56(2)(viib) and Rule 11UA(2) and recorded that Rule 11UA(2) permits determination of fair market value either by the prescribed formula or by the DCF method at the option of the assessee. The Tribunal found that the Chartered Accountant's valuation followed the income approach using the DCF method (as per ICAI guidance), included relevant background and projections, and that the Assessing Officer had not pointed to any infirmity in the valuation other than that it was not performed by a merchant banker. On this basis the Tribunal concluded that the Assessing Officer's adoption of nominal face value for valuation and addition of share premium was unsustainable. The High Court, after considering the Tribunal's reasoning and materials on record, found no error in the Tribunal's application of Rule 11UA(2) and its acceptance of the DCF valuation, and upheld deletion of the addition under Section 56(2)(viib). [Paras 7]

Addition of share premium made by the AO under Section 56(2)(viib) was not sustainable; Tribunal correctly upheld deletion by CIT(A).

Scope of entertainability under Section 260A - substantial question of law - Whether the Revenue raised a substantial question of law warranting admission of the appeal under Section 260A. - HELD THAT: - The Court examined the contentions and the impugned Tribunal order and concluded that no substantial question of law, as formulated by the Revenue, arose from the Tribunal's determination. In view of the Tribunal's reasoned application of Rule 11UA(2) and acceptance of the DCF valuation, the High Court was not inclined to entertain the Tax Appeal under Section 260A and found no jurisdictional basis to admit the appeal for further adjudication. [Paras 8]

No substantial question of law arose; appeal under Section 260A dismissed.

Final Conclusion: The High Court dismissed the Revenue's Tax Appeal: the Tribunal correctly applied Rule 11UA(2) in upholding the assessee's DCF valuation and deletion of the addition under Section 56(2)(viib), and no substantial question of law was shown to admit the appeal under Section 260A.

Allowability of provision for performance-linked incentives as revenue expense - treatment of tax deduction at source on rent in tri-partite/sub lease arrangements - distinction between revenue repair & maintenance and capital/leasehold improvements - treatment of reversal of prior-year provision and consequential deduction - revenue treatment of application software expenditure

Allowability of provision for performance-linked incentives as revenue expense - timing of TDS on employee emoluments - Provision made for performance service incentives (treated by AO as unascertained liability) is allowable as a revenue provision and not an unascertained liability; no disallowance for nondeduction of TDS at provision stage. - HELD THAT: - The Tribunal accepted the assessee's case that the incentives formed part of pay and emoluments accruing to employees and became payable on completion of the stipulated service period. The amount therefore constituted an accrued/contingent liability arising from the service contract and was not an unascertained liability. TDS obligation arises on actual payment; since tax was deducted in subsequent years when payments were made, non deduction at the time of creating the provision could not be treated as contravention warranting disallowance. The CIT(A)'s characterisation of the provision as a bonus (which was not the AO's case nor a point raised below) was impermissible. [Paras 4]

Ground allowed; provision upheld as revenue/contingent liability and non deduction of TDS at provision stage did not justify disallowance.

Treatment of tax deduction at source on rent in tri-partite/sub lease arrangements - liability under section 194-IB as between lessee, sub-lessee and original lessor - No disallowance for rent on account of non deduction of TDS where rent was paid to the intermediate lessee who had deducted tax; assessee was a sub-lessee in a tri-partite arrangement and the actual lessee's deduction satisfied statutory mandate. - HELD THAT: - The Tribunal found that the assessee was in possession of the premises through Triune Projects Pvt. Ltd. (TPPL) under a tri partite factual matrix and payments to TPPL were reimbursements to the actual lessee. TPPL had deducted tax when paying the landlord, and therefore the assessee could not be disallowed for failure to deduct TDS. The CIT(A) erred in denying this factual and legal position by ignoring the tri partite nature of the transaction and the role of TPPL as the payor to the landlord. [Paras 5]

Ground allowed; TDS obligation met by the intermediate lessee and disallowance in the hands of the assessee was not warranted.

Distinction between revenue repair & maintenance and capital/leasehold improvements - assessment of enduring benefit in leasehold possession - Expenditure on interior work, painting and woodwork incurred by the assessee in possession under lease was revenue in nature and not a capital/leasehold improvement attracting capitalization and depreciation. - HELD THAT: - The AO's conclusion that the works were of an enduring nature was not supported by examination of the assessee's rights under the lease or by cogent reasoning. The Tribunal accepted that the works (interior decoration, painting, woodwork) were temporary, removable on vacation and part of day to day maintenance while the assessee enjoyed possession; therefore they were revenue expenditures. The Department's contrary contention (e.g., insurance/demolition) introduced a different case not made out by the assessment order and could not be entertained. [Paras 6]

Ground allowed; expenditures treated as revenue repair and maintenance, not capital improvements.

Treatment of reversal of prior-year provision and consequential deduction - tax consequence of payment against prior year provision - Amount claimed as audit fee (provisioned in an earlier year and reversed) properly deductible in the year of actual payment; no disallowance as a prior period expense. - HELD THAT: - The assessee had created a provision for audit fee in the earlier year which remained undisturbed in that year's assessment; when the auditor raised a bill in the present year and payment was made, the expense was debited to the current P&L and the earlier provision reversed. The Tribunal held that recording the actual expense in the year of payment was permissible and that the AO's treatment as a non crystallized prior period expense was incorrect. Reconciliation issues raised by the Department did not justify disallowance. [Paras 7]

Ground allowed; audit fee payment deductible in the year of payment and reversal of prior provision correctly reflected.

Revenue treatment of application software expenditure - perpetual versus application software - revenue character - Expenditure on software licenses held to be revenue in nature (application software) and allowable as deduction. - HELD THAT: - The Tribunal applied settled precedent that expenditure on application software is revenue in nature. It noted that similar claims were allowed in adjacent assessment years (A.Y. 2007 08 and deletions in 2009 10 at appellate stage), and that the Department's reliance on apparent multi year use did not alter the legal character where the software amounted to application software. In view of binding decisions on the point, the denial by the AO was reversed. [Paras 8]

Ground allowed; software expenditure treated as revenue and allowed.

Final Conclusion: All grounds raised in the appeal are allowed and the impugned additions/disallowances sustained by the lower authorities are set aside; the appeal is allowed.

Validity of notice under Section 148 as a jurisdictional requirement - Issuance of reassessment notice to a deceased person - Applicability of Section 159 to legal representatives where proceedings were not pending at death - Inapplicability of Section 292B/Section 292BB to notices issued in the name of a dead person - Nullity of reassessment proceedings founded on invalid notice

Issuance of reassessment notice to a deceased person - Validity of notice under Section 148 as a jurisdictional requirement - Nullity of reassessment proceedings founded on invalid notice - Assessment reopened by issuing notice under Section 148 in the name of a deceased assessee is invalid and vitiates the reassessment proceedings. - HELD THAT: - The Tribunal held that issuance of a notice under Section 148 is the foundation for reopening an assessment and is a condition precedent to the Assessing Officer acquiring jurisdiction. The AO issued notices in the name of the deceased assessee and subsequently served those notices upon the legal heir; the procedure adopted was erroneous. Reliance on the decision of the Hon'ble Delhi High Court in Savita Kapila and related authorities establishes that a notice issued in the name of a dead person is invalid, and such defect goes to jurisdiction rather than being a mere procedural or curable error. Consequently, reassessment proceedings founded on such an invalid notice cannot be sustained. [Paras 9, 10]

Reassessment proceedings quashed for lack of jurisdiction as notice under Section 148 was issued to a deceased person.

Applicability of Section 159 to legal representatives where proceedings were not pending at death - Inapplicability of Section 292B/Section 292BB to notices issued in the name of a dead person - Section 159 does not apply where proceedings were not initiated or pending against the assessee during his lifetime; Sections 292B and 292BB cannot cure or validate notices issued to a deceased person or be invoked against legal representatives in such circumstances. - HELD THAT: - The Tribunal accepted the principle that Section 159 operates when proceedings are already pending against an assessee at the time of death and the legal representative steps into the assessee's shoes; it is inapplicable where no proceedings were initiated during the assessee's lifetime. The Tribunal further followed authority holding that Sections 292B and 292BB, intended to cure certain defects or to estop an assessee who participates, cannot be applied to notices issued to a dead person or to preclude a legal representative from contending non-service of the notice. The AO's reliance on impleading the legal heir and subsequent service did not validate the jurisdictional defect arising from issuance of notice in the name of the deceased. [Paras 9, 10]

Findings that Section 159, Section 292B or Section 292BB validate the proceedings were rejected; those provisions do not cure the jurisdictional invalidity arising from issuing notice to a deceased person.

Final Conclusion: The appeals are allowed; the reassessment and penalty proceedings founded on notices issued in the name of the deceased assessee are quashed for want of jurisdiction, as issuance of notice under Section 148 to a dead person is invalid and cannot be cured by Sections 159, 292B or 292BB.

Levy of late fee under section 234E of the Income Tax Act - Prospective operation of the amendment w.e.f. 01.06.2015 - Intimation under section 200A of the Income Tax Act

Levy of late fee under section 234E of the Income Tax Act - Prospective operation of the amendment w.e.f. 01.06.2015 - Intimation under section 200A of the Income Tax Act - Deletion of late fee charged under section 234E for Assessment Years 2013-14 to 2015-16. - HELD THAT: - The Tribunal found no material on record showing that the assessee was served with any intimation under section 200A for the Assessment Years in question; only a reminder letter of outstanding demand dated 30.12.2020 with Form No.36 was on record. The CIT(A) dismissed the appeals in limine for being preferred against a reminder rather than an order under section 200A, but did not hold that the appeals were time-barred if time were reckoned from any section 200A order. The Tribunal observed that, in the interest of justice, the CIT(A) ought to have decided the matter on merits. On the merits, the Tribunal applied existing judicial precedents which have held that the charging provision under section 234E, introduced with effect from 01.06.2015, operates prospectively and is not retrospective. Relying on those decisions, the Tribunal held that the late fee could not be levied for the Assessment Years 2013-14 to 2015-16 and deleted the levy.

Late fee under section 234E for AYs 2013-14 to 2015-16 deleted and appeals allowed.

Final Conclusion: The Tribunal allowed the appeals, deleted the late fee charged under section 234E for Assessment Years 2013-14 to 2015-16, and directed accordingly.

Approval under section 80G(5) of the Income Tax Act, 1961 - registration under section 12AA as evidence of charitable purpose - establishment of the real purpose of a trust - corroboration of claimed activities with financial statements and bank records

Approval under section 80G(5) of the Income Tax Act, 1961 - establishment of the real purpose of a trust - corroboration of claimed activities with financial statements and bank records - registration under section 12AA as evidence of charitable purpose - Whether approval under section 80G(5) could be granted when the trust failed to establish its real purpose and did not corroborate claimed activities with financial statements and bank records despite being registered under section 12AA. - HELD THAT: - The CIT(E) recorded that the trust's asserted activities were limited to isolated events not shown to be in consonance with the trust deed's objects or undertaken on a systematic basis, and that the bank statements for F.Y. 2016-17 and entries for F.Y. 2017-18 did not corroborate the receipts and expenditures claimed. The trust declined to furnish final or provisional financial statements for the year ending 31 March 2018 despite a specific request; the CIT(E) found the absence of such corroborative financial statements and the paucity of banking entries sufficient to conclude that the real purpose of the trust was not established. The Tribunal noted that the assessee did not appear or adduce further material before it and, after hearing the departmental representative and perusing the record, found no infirmity in the CIT(E)'s conclusion that approval under section 80G(5) could not be granted on the basis of the materials produced. While registration under section 12AA is relevant, the decision explains that such registration alone does not dispense with the requirement to demonstrate, by corroborative financial and bank records, that activities claimed are genuine, systematic and in furtherance of the objects; in the absence of such corroboration the approval was rightly denied. [Paras 6, 7]

The Tribunal upheld the CIT(Exemption)'s denial of approval under section 80G(5) for AY 2018-19 on the ground that the trust failed to establish its real purpose and did not corroborate claimed activities with financial statements and bank records; the appeal was dismissed.

Final Conclusion: Appeal dismissed. The Tribunal affirmed the CIT(Exemption)'s refusal to grant approval under section 80G(5) because the trust failed to establish its real purpose and did not provide corroborative financial statements or bank evidence to support the claimed activities.

Revision under Section 263 - errorous and prejudicial to the interest of revenue - Assessing Officer's application of mind - Form 26AS mismatch - Percentage completion method of accounting - Timing differences in revenue recognition

Revision under Section 263 - Assessing Officer's application of mind - errorous and prejudicial to the interest of revenue - Validity of the Principal Commissioner's exercise of revisional jurisdiction under Section 263 to annul the assessment completed under section 143(3). - HELD THAT: - The Tribunal found that the Assessing Officer issued specific notices under section 142(1), obtained replies and detailed reconciliations from the assessee, considered the explanations and accepted the return by passing the assessment order dated 24.05.2018. The PCIT recorded alleged deficiencies in inquiry but failed to demonstrate how the AO's conclusion was erroneous or prejudicial to the revenue. Mere difference of opinion between the PCIT and the AO, without showing that the AO did not apply his mind or that the assessment order was per se erroneous, is insufficient to invoke revisionary jurisdiction. The court distinguished inadequate inquiry from lack of inquiry and held that, on the material on record, the AO had made sufficient and adequate enquiries before accepting the assessee's explanation. [Paras 11, 12, 14]

The order passed by the Principal Commissioner under Section 263 setting aside the assessment was cancelled; the AO's order stands.

Form 26AS mismatch - Percentage completion method of accounting - Timing differences in revenue recognition - Whether the discrepancies between receipts recorded in the assessee's books and amounts reflected in Form 26AS rendered the assessment erroneous and prejudicial to revenue when explained as arising from accounting method and timing differences. - HELD THAT: - The assessee explained that turnover was recognised under the percentage completion method (AS-7) and that TDS reflected in Form 26AS related to payments for flats valued above prescribed limit, while some receipts were taxed in prior or subsequent assessment years. The Tribunal accepted that these explanations and the reconciliations submitted during assessment showed that the alleged mismatches were attributable to timing differences and permissible accounting treatment. The PCIT did not demonstrate that the method adopted by the assessee was impermissible or that the explained differences were not substantiated, and therefore the alleged mismatch did not make the assessment order prejudicial to the revenue. [Paras 11, 12, 14]

The discrepancies were explained by legitimate accounting treatment and timing of recognition; they do not render the assessment order erroneous or prejudicial to revenue.

Final Conclusion: The Tribunal allowed the appeal, holding that the Principal Commissioner's order under Section 263 was not sustainable because the Assessing Officer had made adequate inquiries, the assessee furnished reconciliations and plausible explanations (including percentage completion accounting and timing differences), and the PCIT failed to establish that the assessment order was erroneous and prejudicial to the interests of revenue.

Revision under section 263 - Erroneous and prejudicial to the interest of the Revenue - Scope of revisional power where Assessing Officer has called for information and passed a speaking order - Obligation on Revising Authority to point out specific error - Speaking order and satisfaction recorded by Assessing Officer after verification of documents - Applicability of section 56(2)(viib) to non-residents

Revision under section 263 - Scope of revisional power where Assessing Officer has called for information and passed a speaking order - Obligation on Revising Authority to point out specific error - Speaking order and satisfaction recorded by Assessing Officer after verification of documents - Validity of the Pr. CIT's revision under section 263 where the AO had called for details, the assessee furnished documentary evidence including a valuation report, and the AO recorded satisfaction in a speaking assessment order. - HELD THAT: - The Tribunal held that revision under section 263 may be invoked where an assessment order is erroneous and prejudicial to revenue, but where the AO has initiated enquiry, called for and received relevant details and documents, and has expressly considered them and recorded satisfaction in a speaking order, the Pr. CIT cannot set aside the assessment merely by alleging lack of verification. The Court analysed two broad factual categories: (i) cases where the AO did not take up or enquire into an issue (or necessary material was not supplied by the assessee) - where revision is permissible at the threshold; and (ii) cases where the AO called for information and, after receiving and examining it, decided the issue - where the revising authority must specifically identify the error in the AO's conclusion and show how it is erroneous and prejudicial. In the present case the AO issued notices under sections 143(2)/142(1), the assessee furnished detailed replies, bank statements, ITRs, valuation report and other evidence, and the AO after examination recorded that returned income was accepted. The Pr. CIT's revision proceeded on an incorrect factual assumption that the AO failed to verify the share premium and did not point out any distinct defect in the AO's reasoning. Allowing revision on such generalized assertion would license revisional authorities to set aside speaking assessment orders without discharging the jurisdictional requirement of demonstrating a specific error prejudicial to revenue. The Tribunal therefore set aside the revisionary order and quashed it. [Paras 3, 4, 5, 7]

Revision under section 263 was unjustified; the Pr. CIT's order set aside and quashed.

Final Conclusion: The Tribunal allowed the appeal, holding that the Pr. CIT was not justified in revising the speaking assessment order where the AO had called for and examined necessary documents and recorded satisfaction; the revisionary order is set aside and quashed.

Rectification under section 154 - mistake apparent from the record - finality of tribunal order - merger of orders of lower authority with order of superior authority - limits on re-opening an assessment after appellate finality

Rectification under section 154 - mistake apparent from the record - limits on re-opening an assessment after appellate finality - merger of orders of lower authority with order of superior authority - Whether an Assessing Officer or CIT(A) can rectify an assessment order under section 154 after the assessment has been finally upheld by the Tribunal - HELD THAT: - The Tribunal held that the jurisdiction under section 154 is limited to correcting a mistake that is apparent from the record-i.e., a patent and obvious error discoverable without lengthy reasoning. A debatable question of law or fact, or an issue which may reasonably admit two opinions, does not constitute a mistake apparent from the record and cannot be corrected under section 154. Once the assessment order has been upheld by a superior authority (the CIT(A) and ultimately the Tribunal), the order of the lower authority merges with the order of the superior authority; thereafter the Assessing Officer cannot, by way of rectification, revisit or unsettle matters which have attained finality. Allowing rectification in such circumstances would enable an Assessing Officer or a lower authority to override or nullify the settled position established by the appellate process. The Tribunal applied these principles to the facts of AY 2010-11, noting that the issue concerning the share-application amounts involved debatable questions and that the Tribunal's dismissal of the assessee's appeal rendered the assessment final, obliging the Assessing Officer to give effect to the appellate order rather than entertain a section 154 rectification that would amount to revisiting the final decision. [Paras 7, 20, 21, 22, 23]

Rectification under section 154 could not be used to reopen or alter an assessment which had attained finality on appeal; the Assessing Officer and CIT(A) were not entitled to revisit the issue after the Tribunal's order became final.

Final Conclusion: The appeal of the Revenue is allowed; the tribunal set aside the rectification-based relief granted by the lower authority and held that section 154 could not be used to revisit issues already finally adjudicated for AY 2010-11.

Arm's length price - international transaction - transfer pricing adjustment - working capital adjustment - re-characterisation of receivables as loans - comparability with unrelated parties - remand for verification

Arm's length price - international transaction - re-characterisation of receivables as loans - comparability with unrelated parties - working capital adjustment - Whether the adjustment imputing interest on outstanding inter-company receivables and re-characterising those receivables as unsecured loans was sustainable, having regard to the assessee's contention that receivables are closely linked to the main services transaction, working capital adjustments were made, and no interest was charged to unrelated parties. - HELD THAT: - The Tribunal noted that the TPO/AO imputed interest on inter-company receivables by treating outstanding receivables as an advance/ unsecured loan and applied an imputed rate, rejecting the assessee's economic analysis which applied working capital adjusted margins and treated receivables as closely linked to the principal service transactions. The Tribunal found the factual matrix and contentions in the immediately preceding assessment year to be identical and observed that the assessee asserts that it did not charge interest to unrelated parties on similar transactions. In light of that contention, which the Tribunal considered to have force but requiring verification, the matter was not finally adjudicated on merits by the Tribunal; instead the Tribunal restored the issue to the file of the AO/TPO for fresh examination. The AO/TPO is directed to call for and examine documentary evidence from the assessee to establish whether no interest was charged to unrelated parties on comparable transactions and thereafter decide the question of imputing interest or re-characterisation afresh in accordance with law, including consideration of the working capital adjustment and comparability analysis. [Paras 7, 8]

Issue remitted to the Assessing Officer/TPO for verification of the assessee's claim that no interest was charged to unrelated parties and for fresh adjudication in accordance with law; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal remitted the transfer pricing issue concerning imputed interest on outstanding receivables to the Assessing Officer/TPO for fresh consideration and verification of the assessee's documentary evidence regarding non-charge of interest to unrelated parties; appeal allowed for statistical purposes.

Validity of return of income filed by a non-existent company - voidness of assessment and transfer pricing orders passed in the name of a non-existent entity - treatment of revised return where original return is non est - credit for tax deducted at source under section 199

Validity of return of income filed by a non-existent company - treatment of revised return where original return is non est - Original and revised returns filed in the name of Star Sports India Pvt. Ltd. (a company that had ceased to exist after amalgamation) are to be treated as non est. - HELD THAT: - The Tribunal found that the scheme of amalgamation was effective before the filing dates of both the original and the revised returns; consequently Star Sports India Pvt. Ltd. did not exist when those returns were filed. The Explanation to section 139(9) was examined and the returns were held not to suffer from the defects listed therein, but the Tribunal concluded that that explanation does not validate a return filed in the name of a legally non-existent person. The judicial precedents relied upon by the assessee, which concern curable defects under section 139(9), were considered inapplicable where the return was filed in the name of a 'dead' or non-existent entity. Having regard to these facts and law, the Tribunal held that both the original and revised returns were correctly treated as non est. [Paras 15, 16]

Original and revised returns filed in the name of the non-existent amalgamating company are non est.

Voidness of assessment and transfer pricing orders passed in the name of a non-existent entity - Draft assessment order and transfer pricing order passed in the name of the non-existent entity are null and void ab initio and were correctly quashed by the DRP. - HELD THAT: - Since the returns on which the draft assessment and TP proceedings were based were held to be in the name of a non-existent company, the Tribunal agreed with the DRP that assessment proceedings conducted in that name are bad in law. The Tribunal emphasised that an assessment or TP order cannot be validly made in the name of an entity which had ceased to exist on the relevant dates and therefore upheld the DRP's quashing of the draft assessment and TP orders. [Paras 15, 16]

Assessment and transfer pricing orders passed in the name of the non-existent company are void ab initio and have been quashed.

Credit for tax deducted at source under section 199 - claim for refund where returns are non est - Notwithstanding that the returns were non est, the Assessing Officer must compute tax liability and, where tax credit under section 199 and other facts show refund due, verify and allow the refund in accordance with law. - HELD THAT: - The Tribunal recognised that the AO, after quashing the return-based proceedings, had proceeded to assess the assessee's income on independent consideration. Given the admitted tax liability and the tax deducted at source recorded, the Tribunal held that section 199 treats TDS paid to the Government as payment of tax on behalf of the person; accordingly, if computation discloses an excess (refund due), the AO is duty bound to credit such taxes and grant refund. The Tribunal therefore directed the AO to verify the refund claim and allow the refund in accordance with law, while upholding the non est character of the returns and quashing of the draft orders. [Paras 15, 16]

AO to compute tax, give credit for TDS under section 199 and verify and allow any refund due despite the returns being non est.

Final Conclusion: The Tribunal upheld the DRP's finding that the original and revised returns filed in the name of the now non-existent amalgamating company are non est and that assessment/TP orders in that name are void ab initio; however, since the AO assessed the assessee on independent consideration, the AO must grant credit for tax deducted at source under section 199 and verify and allow any refund due in accordance with law.

Onus under section 68 - Identity, creditworthiness and genuineness of investors - Burden shifts to Revenue to disprove - Valuation under Rule 11UA(2)(b) - Discounted Cash Flow Method - Section 56(2)(viib) - taxation of share premium - Assessing Officer cannot substitute or reject prescribed valuation without statutory basis - Expression unis est exclusio alterius

Onus under section 68 - Identity, creditworthiness and genuineness of investors - Burden shifts to Revenue to disprove - Addition of Rs. 90,00,300/- made under section 68 treating share capital and share premium as unexplained was not sustainable. - HELD THAT: - The Tribunal found that the assessee had produced detailed documentary evidence - bank statements, copies of ITRs, balance sheets, confirmations and valuation-related material - to establish the identity, creditworthiness and genuineness of the investor companies, thereby discharging the initial onus under section 68. The authorities neither carried out further investigation nor produced tangible material to rebut the documentary evidence. In such circumstances, and following binding and persuasive precedents holding that once the assessee proves identity, creditworthiness and genuineness the onus shifts to the Revenue, the addition could not be sustained and was liable to be deleted. [Paras 10, 11, 15]

Addition under section 68 deleted.

Valuation under Rule 11UA(2)(b) - Discounted Cash Flow Method - Section 56(2)(viib) - taxation of share premium - Assessing Officer cannot substitute or reject prescribed valuation without statutory basis - Expression unis est exclusio alterius - Enhancement of income under section 251(1) by applying section 56(2)(viib) on a protective basis by rejecting the DCF valuation under Rule 11UA(2)(b) was unsustainable. - HELD THAT: - The assessee chose the DCF method as permitted by Rule 11UA(2)(b) and furnished a valuation by a qualified valuer. The Tribunal applied the statutory principle that where a method is prescribed by statute and adopted by the assessee, the authority must follow that method and cannot substitute its own valuation or reject the report without statutory foundation. Reliance was placed on precedents recognising valuation as an exercise based on projections and that an assessing officer has no express power under the Act or Rules to tinker with a valuation made by the prescribed expert. Accordingly, the rejection of the DCF valuation and consequent enhancement under section 56(2)(viib) was held erroneous and deleted. [Paras 17, 18, 21]

Enhancement under section 56(2)(viib)/section 251(1) deleted; valuation accepted.

Final Conclusion: The Tribunal partly allowed the appeal: the addition under section 68 and the enhancement under section 56(2)(viib)/section 251(1) were deleted; remaining grounds rendered academic and not adjudicated.

Summary order. Appeal dismissed for delay (condonation refused) and, alternatively, on merits for lack of any substantial question of law.

Summary order. The appeal is dismissed on the ground that it does not involve any substantial question of law.

Export Promotion Capital Goods Scheme (EPCG) - show cause notice for alleged violation of licence conditions - non-utilisation of licence - surrender of licence - verification of records - remand for fresh consideration - penalty levy and consequential waiver

Non-utilisation of licence - surrender of licence - verification of records - penalty levy and consequential waiver - remand for fresh consideration - Whether the representation of the petitioner asserting non-utilisation and surrender of the EPCG licence should be considered and the penalty levied be reopened for re-consideration. - HELD THAT: - The petitioner asserted that the EPCG licence issued on 8-4-2004 was never utilised and, although a show cause notice was issued and an order-in-original dated 6-2-2013 was passed concluding violation, the petitioner subsequently lodged a representation on 12-5-2014 and surrendered the original licence. The petitioner produced the original customs TRA and non-utilisation certificate before the authority; the Asstt. Commissioner of Customs (EPCG) communicated that the TRA was not registered in the system but did not deny surrender of the licence or the non-utilisation certificate. In these circumstances the High Court sustained the impugned order-in-original but directed that the petitioner be heard without further notice and that the Joint Director General of Foreign Trade, Chennai verify the records to ascertain availability and veracity of the EPCG licence and the non-utilisation certificate and pass a reasoned order on the representation within four weeks from 30-1-2023. The court further directed that if, upon verification, the authority accepts that the licence was not utilised, consequential orders shall be passed to drop the levy of penalty. Recovery proceedings in W.P. No.16052 of 2015 were ordered to be subject to the outcome of the re-consideration directed above. [Paras 8, 9, 10]

Petitioner permitted to appear before the Joint Director General of Foreign Trade on 30-1-2023; authority to verify records and decide the representation within four weeks; if non-utilisation is accepted, penalty to be dropped; recovery proceedings in the connected petition to remain subject to that decision.

Final Conclusion: Impugned order-in-original dated 6-2-2013 is sustained, but the petitioner's representation dated 12-5-2014 is remanded for fresh consideration: the Joint Director General of Foreign Trade, Chennai is directed to verify the licence and non-utilisation certificate, hear the petitioner and pass a reasoned order within four weeks from 30-1-2023, with directions to drop the penalty if non-utilisation is established; related recovery proceedings shall await that outcome.

Regular bail - Custody and interim detention - Stringent bail conditions - Execution of bond and local sureties - Mandatory appearance for investigation - Surrender of passport - Restriction on leaving the State - Prohibition on interference with investigation and witnesses - Cancellation of bail on breach of conditions

Regular bail - Custody and interim detention - Stringent bail conditions - Execution of bond and local sureties - Mandatory appearance for investigation - Surrender of passport - Restriction on leaving the State - Prohibition on interference with investigation and witnesses - Cancellation of bail on breach of conditions - Grant of regular bail to the petitioners on specified conditions. - HELD THAT: - The petitioners, who have been in custody since 25-11-2022 and have no other criminal antecedents, were held entitled to regular bail despite the prosecution's contention that investigation is in its initial stage and further interrogation is required. Balancing these factors, the Court exercised its discretion to release the petitioners on bail subject to stringent conditions tailored to secure their attendance and to protect the investigation. The conditions ordered include execution of bonds with two solvent sureties (one surety to be a native of Kerala), regular mandatory appearance before the investigating officer every Saturday until filing of the final report, cooperation with investigation, prohibition on interfering with the investigation or influencing witnesses, surrender of passport or filing an affidavit if no passport exists, a prohibition on leaving the State of Kerala until the investigation is complete, and an undertaking not to commit any other offence while on bail. The Court further provided that breach of any condition would permit the investigating officer to apply for cancellation of bail before the jurisdictional court. [Paras 6, 7]

Petitioners released on bail on the stated stringent conditions; investigating officer may move for cancellation of bail if conditions are violated.

Final Conclusion: Bail granted to the petitioners on conditions ensuring their availability for investigation and trial, including bond with local sureties, weekly attendance before the investigating officer, surrender of passport (or affidavit), prohibition on leaving Kerala and on interfering with the investigation; violation may invite cancellation of bail.

Preparations of a kind used in animal feeding - Flours, meals and pellets of fish or of crustaceans, molluscs or other aquatic invertebrates - General Rules for the Interpretation of the Tariff - Rule 1 and Rule 3(b) - Essential character test - Natural justice - non-provision of test report at show-cause stage - No estoppel against law in tax classification

Preparations of a kind used in animal feeding - Flours, meals and pellets of fish or of crustaceans, molluscs or other aquatic invertebrates - Essential character test - Classification of imported 'squid liver powder' under CTH 2309 versus CTH 2301 - HELD THAT: - The Tribunal held that 'squid liver powder' is a preparation of a kind used in animal feeding and is therefore classifiable under CTH 2309. The product as imported contains substantial ingredients of both animal (squid) and plant (soyabean meal) origin. Chapter and HSN Notes show that heading 2309 includes products 'for use in making complete or supplementary feeds' and preparations obtained by processing vegetable or animal materials to the extent that they have lost the essential characteristics of the original material; such preparations include feed ingredients, premixes and additives (e.g., carriers, attractants, proteins, peptides and amino acids) used to improve palatability, digestion and nutrient uptake. By contrast, heading 2301 covers flours, meals and pellets obtained from whole animals or animal products and does not cover products containing ingredients of plant origin. On a plain reading of the Tariff and HSN explanatory notes, and in light of the nature and use of the imported product as an ingredient/attractant in shrimp/prawn feed, the goods fall within 2309 and not within 2301. Because the product is properly classifiable under Rule 1 by reference to the headings and explanatory notes, application of Rule 3(b) (essential character) was unnecessary. [Paras 7, 8]

Squid liver powder is correctly classifiable under CTH 23099090 (Preparations of a kind used in animal feeding); classification under CTH 2301 is rejected.

Natural justice - non-provision of test report at show-cause stage - Reliance on a test report not supplied to the appellant at show-cause stage - HELD THAT: - The Tribunal found that the test report relied upon in the Order in Original did not pertain to the appellant and was not furnished to the appellant at the show-cause stage. Such non-provision would amount to a violation of principles of natural justice. Consequently, the Tribunal discarded the disputed test report and proceeded to decide classification on the factual description provided by the appellants and the Tariff/HSN materials. [Paras 3, 7]

The disputed test report was disregarded for being neither supplied to the appellant at the show-cause stage nor relevant to the appellant's consignments.

No estoppel against law in tax classification - General Rules for the Interpretation of the Tariff - Rule 1 and Rule 3(b) - Whether earlier classification/assessment practice estops Revenue or the appellant from contesting classification - HELD THAT: - The Tribunal confirmed that prior assessment practice or previously accepted classification cannot operate as a substantive bar to rectifying a wrong classification; there is no estoppel against law in tax matters. Each Bill of Entry and assessment may be independently examined. Authorities and case law were cited to show that wrong earlier orders do not create binding precedent that prevents correct classification thereafter. The Tribunal further noted that Rule 3(b) of the General Rules of Interpretation is applicable only if classification under Rule 1 is not possible; since Rule 1 and the HSN notes resolved classification in favour of heading 2309, reliance on Rule 3(b) was unnecessary. [Paras 9]

Earlier classification practice does not prevent reclassification; Revenue rightly reclassified the goods and Rule 3(b) was not invoked as Rule 1/HSN resolved the issue.

Final Conclusion: The Tribunal upheld the impugned classification under CTH 23099090 (Preparations of a kind used in animal feeding), discarded the disputed test report as not supplied and irrelevant, rejected the appellants' contention that CTH 2301 applied, and dismissed the appeals.

Onus of proof - smuggled goods - reasonable belief - confiscation and penalty - non-notified goods and burden under Section 123 of the Customs Act, 1962

Onus of proof - smuggled goods - reasonable belief - non-notified goods and burden under Section 123 of the Customs Act, 1962 - Whether the Revenue discharged the burden of proving that the seized betel nuts were smuggled goods so as to justify absolute confiscation and imposition of penalty. - HELD THAT: - The Tribunal found that although authorities had a reasonable belief that the betel nuts were smuggled, the Revenue did not produce cogent evidence to prove that the goods were smuggled. The burden to establish smuggling lies on the Revenue where the goods are not notified under the statutory scheme referred to in the record. Mere reliance on a reasonable belief, without supporting evidence, is insufficient to sustain an order of confiscation or penalty. Applying this principle to the facts on record, the adjudicatory finding of smuggling was not supported by proof. [Paras 8, 9]

The Tribunal held that the Revenue failed to prove smuggling; therefore the goods were not liable for confiscation and no penalty was imposable.

Final Conclusion: The appeal is allowed; the order of absolute confiscation and the penalty imposed are set aside for failure of the Revenue to prove that the goods were smuggled.

Import restriction on second-hand goods - Licensing requirement for import of used Digital Multifunction Printers - Reliance on Chartered Engineer's valuation - Corroborative evidence requirement for valuation enhancement - Confiscation for mis-declaration of value

Import restriction on second-hand goods - Licensing requirement for import of used Digital Multifunction Printers - No specific import licence was required for import of the old and used Digital Multifunction Printers for the period before 28.02.2013. - HELD THAT: - The Tribunal followed its earlier decision in Bhawani Enterprises , which applied the Madras High Court view that up to 28-02-2013 there was no restriction on import of the subject goods. On that basis the Tribunal held that the impugned consignments of second hand Digital Multifunction Printers did not require a licence for import for the relevant period and that the Commissioner (Appeals) was correct in so holding. The finding treats the licensing question as settled by precedent and therefore declines to interfere with the impugned order. [Paras 4]

No licence was required for import of the impugned goods for the period before 28.02.2013; the Commissioner (Appeals) was correct.

Reliance on Chartered Engineer's valuation - Corroborative evidence requirement for valuation enhancement - Confiscation for mis-declaration of value - Declared value could not be enhanced solely on the basis of a Chartered Engineer's certificate in the absence of corroborative evidence; enhancement alone did not justify treating the value as mis-declared. - HELD THAT: - The Tribunal agreed with the Commissioner (Appeals) and the precedent in Bhawani Enterprises that mere enhancement of value on the basis of a Chartered Engineer's certificate, accepted by both parties, cannot by itself demonstrate mis-declaration of value. Absent additional corroborative material indicating mis-declaration, enhancement founded only on the C.E.'s certificate cannot sustain a finding of mis-declaration or justify confiscation. [Paras 4]

Enhancement of value based solely on a Chartered Engineer's certificate is insufficient without corroborative evidence; the impugned enhancement cannot be treated as mis-declaration.

Final Conclusion: The impugned order of the Commissioner (Appeals) is upheld; the Revenue's appeal is dismissed.

Priority of provident fund and gratuity dues in corporate insolvency resolution - treatment of provident fund and gratuity outside the liquidation estate - obligation of the successful resolution applicant to satisfy admitted provident fund claims - violation of Section 30(2) of the Code by short payment of provident fund and gratuity - incorrect classification of provident fund dues as ordinary operational creditor claims

Priority of provident fund and gratuity dues in corporate insolvency resolution - treatment of provident fund and gratuity outside the liquidation estate - obligation of the successful resolution applicant to satisfy admitted provident fund claims - Provident fund and gratuity dues admitted in the insolvency process are payable in full and must be provided for in the approved resolution plan; they are not to be treated as ordinary operational claims subject to pro rata distribution under the liquidation waterfall. - HELD THAT: - Relying on this Tribunal's decision in Jet Aircraft Maintenance Engineers Welfare Association (upheld by the Supreme Court) and the principles in the cited authorities, the Tribunal held that provident fund and gratuity dues enjoy priority such that they fall outside distribution under Section 53(1) and must be paid in full. The Supreme Court's pronouncement that workmen dues are to be kept outside liquidation assets and paid from available provident fund/gratuity funds was held not to be read restrictively; absence or insufficiency of such funds does not permit treating those dues as ordinary creditors' claims for pro rata distribution. Consequently, the successful resolution applicant must include and satisfy the admitted provident fund and gratuity claims in the resolution plan to avoid contravention of Section 30(2) of the Code. [Paras 2, 3, 4]

The appeal is allowed and the admitted provident fund and gratuity amounts are to be included in and provided for by the resolution plan.

Incorrect classification of provident fund dues as ordinary operational creditor claims - violation of Section 30(2) of the Code by short payment of provident fund and gratuity - The Resolution Professional's treatment of the appellant's admitted provident fund claim as an ordinary operational creditor entitlement and provision of only 35.13% was impermissible and amounted to non-compliance with the mandate to provide for such dues in the resolution plan. - HELD THAT: - The Tribunal observed that the RP classified the appellant as an operational creditor and limited payment to 35.13% of the admitted claim. Applying the legal principles affirmed in Jet Aircraft and the Supreme Court's decision, the Tribunal found that such short payment contravened the requirement to satisfy provident fund and gratuity dues in full and thus violated Section 30(2) of the Code. Prior decisions of this Tribunal dealing with the same corporate debtor were relied upon to conclude that treating provident fund and gratuity as pro rata operational claims was erroneous. [Paras 1, 2, 3]

The RP's classification and the limited admission leading to partial payment are set aside and the amounts must be included in the resolution plan for full payment.

Final Conclusion: The appeal is allowed; the approved resolution plan must include provision for and payment of the admitted provident fund and gratuity dues in full, and connected interlocutory applications are closed.

Business Auxiliary Service - service tax on remuneration for playing sports - employment versus independent service - brand promotion by sports players - arrangement of employment

Business Auxiliary Service - employment versus independent service - brand promotion by sports players - Remuneration received by the appellant from the team owner for playing in the Indian Premier League is not taxable as Business Auxiliary Service but is remuneration under an employment arrangement. - HELD THAT: - The Tribunal found that the payments to the appellant were made pursuant to an agreement by which the appellant was engaged by the team owner to play cricket in IPL matches and that the arrangement is one of employment rather than an independent service of brand promotion. Relying on identical agreements and precedents, including the decision of the Calcutta High Court in Sourav Ganguly Vs. UOI & other 2016 (7) TMI 237 - CALCUTTA HIGH COURT, the Tribunal held that players under such arrangements are not directly engaged in brand promotion of the owner and therefore their activity does not fall within the scope of Business Auxiliary Service. Applying that settled legal position to the facts of the present case, the demand of service tax on the remuneration as Business Auxiliary Service was found unsustainable. [Paras 5, 6]

The demand of service tax under the head Business Auxiliary Service is set aside and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the remuneration paid to the appellant under the employment-like agreement with the team owner does not constitute a taxable Business Auxiliary Service; the impugned demand is set aside.

Technical inspection and certification service - limitation under section 73 of Finance Act, 1994 - convention service - support service of business or commerce - club or association service - evidentiary value of chartered accountant's certificate

Technical inspection and certification service - certificate of origin - limitation under section 73 of Finance Act, 1994 - Whether the confirmation of demand relating to issue of 'certificate of origin' as technical inspection and certification service is barred by the period of limitation. - HELD THAT: - The adjudication treating issue of 'certificate of origin' as taxable under technical inspection and certification service crystallised only after CBEC clarified the position by circular dated 19 August 2011. The receipts in question for issue of such certificates to non-members were prior to 2011-12 and thus beyond the normal limitation period. The Tribunal accepted that the ingredients for invoking the extended period under section 73 are not established: the appellant acted under bona fide belief that certificate issuance did not attract service tax, and inclusion of service tax in billings would lead to CENVAT credit consequences and reimbursement considerations which negate invocation of the extended period. For these reasons the confirmation of demand on this head was held to be barred by limitation and was set aside. [Paras 6, 10]

Confirmation of demand on account of 'technical inspection and certification service' in respect of issuance of certificates of origin is set aside as barred by limitation.

Convention service - support service of business or commerce - club or association service - limitation under section 73 of Finance Act, 1994 - Extent to which demands confirmed under convention service, support service of business or commerce and club or association service are sustainable and whether any part is barred by limitation or requires further scrutiny. - HELD THAT: - The Tribunal found that amounts treated as convention service beyond the normal period of limitation were fixedly and vaguely taxed without proper inquiry into the nature of the activities; accordingly, demands insofar as they relate to periods beyond limitation are set aside. Secretarial services rendered to trade associations and support work undertaken for non-members can constitute taxable support service of business or commerce and remain exigible; similarly, taxation under club or association service was not sustained except insofar as services were rendered to non-members. The Tribunal directed that the original authority must scrutinise and determine conformity of the confirmed amounts (including arbitration charges and amounts collected from members for secretarial services) with the definitions under the statute. [Paras 7, 10]

Demands for convention service beyond the normal limitation period are set aside; liabilities under support service of business or commerce and club or association service require re-examination by the original authority for conformity with statutory definitions and are remitted for that purpose.

Evidentiary value of chartered accountant's certificate - review by competent authority - Whether the adjudicating authority erred in relying upon a chartered accountant's certificate to segregate receipts between members and non-members and whether the Revenue's review challenge warranted remand. - HELD THAT: - The Tribunal held that a certificate issued by a professional chartered accountant is not to be lightly discarded and the Revenue did not point to material grounds that would justify rejecting the certification adopted by the adjudicating authority. The jurisdictional committee's doubts were described as academic and insufficient to warrant directed remand for verification. Given the adjudicating authority's acceptance of the principle that services to members are not taxable, there was no basis to disturb the segregation adopted on the certification before it. [Paras 8, 9, 11]

Revenue's appeal challenging reliance on the chartered accountant's certificate is dismissed; no remand directed on that ground.

Final Conclusion: The Tribunal set aside demands relating to issuance of certificates of origin as technical inspection and certification service and certain convention service amounts insofar as barred by limitation, directed the original authority to examine residual demands under support service of business or commerce and club or association service for conformity with statutory definitions, and dismissed the Revenue's appeal against reliance on the chartered accountant's certificate.

Levy of service tax on manpower supply services - Works contract service exemption for State Government approved projects - Reliance on Chartered Accountant's certificate for bifurcation of labour charges - Computation of taxable portion from books of accounts - Reduction of penalty where tax is paid after adjudication

Works contract service exemption for State Government approved projects - Demand in respect of Works Contract Services was correctly dropped by the Adjudicating Authority. - HELD THAT: - The Adjudicating Authority examined the appellant's contention that the works contract services were undertaken for various State Government approved projects and consequently no service tax was leviable. Having considered the factual evidence and statutory provisions, the Adjudicating Authority dropped the demand relating to works contract services. The Tribunal, on review of the record and the material placed before the Adjudicating Authority, found no error in that conclusion and did not disturb the dropping of the demand. [Paras 1, 7]

The order of the Adjudicating Authority dropping the demand for Works Contract Services is upheld.

Levy of service tax on manpower supply services - Reliance on Chartered Accountant's certificate for bifurcation of labour charges - Computation of taxable portion from books of accounts - The confirmed service tax demand of Rs.25,16,900/- in respect of Manpower Services is justified and is upheld. - HELD THAT: - The show cause notice in relation to manpower services proceeded from figures in the Profit & Loss Account and Balance Sheet. The appellant produced a Chartered Accountant's certificate which bifurcated total labour charges into amounts paid to labour contractors and amounts paid to locally hired labour. The Adjudicating Authority accepted that bifurcation, dropped the portion attributable to directly hired workers, and confirmed the demand only for the labour charges paid to contractors. The Tribunal examined the CA certificate and its Annexure showing the bifurcation and found that the Adjudicating Authority correctly computed the taxable portion based on the books of account and the CA certification; thus no interference was warranted. [Paras 1, 6, 7]

The confirmed service tax demand of Rs.25,16,900/- for manpower services is sustained.

Reduction of penalty where tax is paid after adjudication - Penalty imposed is liable to be reduced in view of payment of the confirmed tax after adjudication, subject to payment of interest. - HELD THAT: - Records show that the appellant paid the entire adjudicated tax amount after the adjudication order. Having regard to that payment, the Tribunal exercised its discretion to reduce the penalty to 25% of the confirmed amount, conditional upon the appellant also paying the interest thereon within 30 days of receipt of the order. The Tribunal directed that failure to pay the interest together with the reduced penalty within the stipulated period would render the earlier confirmed penalty fully recoverable. [Paras 8, 9]

Penalty reduced to 25% of the confirmed tax amount, subject to payment of interest within 30 days; failure to comply will revive the earlier confirmed penalty.

Final Conclusion: The appeal is partly allowed: the demand relating to Works Contract Services is upheld as dropped, the confirmed demand of Rs.25,16,900/- for Manpower Services is sustained, and the penalty is reduced to 25% of the confirmed amount subject to payment of interest within 30 days, failing which the original penalty will be recoverable.

Service tax not leviable on construction of residential complex provided directly to Government for its personal use - CBEC Circular No.332/16/2010-TRU as clarificatory guidance on levy for residential complex construction for Government - sub-contractor liable where contractor is service receiver and engages sub-contractor - penalty under Sections 76 and 77 cannot be imposed where no service tax demand subsists

Service tax not leviable on construction of residential complex provided directly to Government for its personal use - CBEC Circular No.332/16/2010-TRU as clarificatory guidance on levy for residential complex construction for Government - Liability to service tax for construction of residential complexes undertaken for Indian Army and West Bengal Power Development Corporation Limited - HELD THAT: - The Tribunal accepted that the flats constructed by the assessee were for the personal use of the Indian Army and WBPDCL, entities forming part of Central/State Government. Reliance was placed on CBEC Circular No.332/16/2010-TRU dated 24.05.2010 which clarifies that where the Government is the direct service recipient and the construction is for its personal use, service tax is not leviable. The Tribunal further noted and followed the decision in Khurana Engg. Ltd. (Tri.-Ahmedabad) where identical factual and legal conclusions were reached. Applying that clarificatory guidance and precedent, the Tribunal held that the impugned demand of service tax could not be sustained and set aside the demand confirmed against the assessee. [Paras 6, 7, 8, 9]

Impugned demand of service tax set aside and appeals filed by the assessee allowed.

Penalty under Sections 76 and 77 cannot be imposed where no service tax demand subsists - Imposition of penalty under Sections 76 and 77 for short payment of service tax - HELD THAT: - The Revenue sought imposition of penalties under Sections 76 and 77 for short payment. Having held that the service tax demand itself was unsustainable, the Tribunal concluded that there was no foundation for imposing the penalties. The question of penalty was therefore resolved on the basis that no demand survives. [Paras 10, 11]

Revenue's appeal dismissed; penalties under Sections 76 and 77 not imposed.

Final Conclusion: The Tribunal held that construction of the residential complexes for Indian Army and WBPDCL constituted services provided directly to Government for its personal use and therefore service tax was not leviable; the confirmed demand was set aside and, consequentially, penalties sought by Revenue were not imposed.

Cenvat credit - Input service - Goods Transport Agency (GTA) service - Used by the provider of taxable service for providing output service - Utilization of input service credit for payment of service tax on output service

Cenvat credit - Input service - Goods Transport Agency (GTA) service - Used by the provider of taxable service for providing output service - Entitlement to avail and utilize cenvat credit on GTA paid for inward transportation of new vehicles for payment of service tax on output service of vehicle servicing. - HELD THAT: - The Tribunal applied the definition of "input service" in Rule 2(l) of the Cenvat Credit Rules, 2004, which requires that an input service be used by the provider of taxable service for providing output service and does not impose a narrower requirement of direct correlation between the particular input service and a specific output service. The Adjudicating Authority's presumption that the input service must be utilized for the identical output service was rejected. Reliance was placed on this Tribunal's decision in Shariff Motors, affirmed by the High Court of Andhra Pradesh, where credit for GTA on transportation of vehicles to the dealer's premises was held to be admissible to a provider who renders the output service of vehicle servicing. Applying that reasoning to the present facts, where GTA was used to transport new vehicles to the appellant's premises and the appellant is a provider of the output service of motor-vehicle servicing, the Tribunal held that the appellant was entitled to take and utilize the cenvat credit on GTA for payment of service tax on the output service. [Paras 6, 7]

The appellant is entitled to avail and utilize cenvat credit of input service on GTA for transportation of new vehicles to its premises for payment of service tax on vehicle servicing; impugned order set aside and appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that cenvat credit on GTA for inward transportation of new vehicles to the assessee's premises is admissible and may be utilized for payment of service tax on the output service of motor-vehicle servicing; the impugned order denying credit and imposing recovery, interest and penalty was set aside with consequential relief.

Manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944 - fractional distillation versus recrystallisation/distillation as purification - emergence of a new excisable product (distinct name, character and use) - eligibility for Small Scale Industrial (SSI) exemption - reliance on precedential Tribunal decisions

Manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944 - fractional distillation versus recrystallisation/distillation as purification - emergence of a new excisable product (distinct name, character and use) - Processes undertaken by the appellant do not amount to manufacture under Section 2(f) of the Central Excise Act, 1944. - HELD THAT: - The Tribunal examined whether the appellant's operations-described as recrystallisation and distillation-constituted fractional distillation giving rise to distinct components at different stages and hence new excisable products. The record contained no evidence that components emerged at different temperatures during processing, and departmental tests found that no new product came into existence. The mere assignment of different trade names to marketable grades does not demonstrate the emergence of a new excisable product with distinct name, character and use. Reliance on the Tribunal's earlier decision in the appellant's Baroda unit and on S.D. Fine Chem (Tribunal) supported the view that purification processes by recrystallisation and distillation do not amount to manufacture. Applying these authorities and the factual findings, the Tribunal held that the processes were purification and not manufacture, and therefore the finished goods are not leviable to central excise duty. [Paras 13, 14, 15, 16, 17]

Demand confirmed in the impugned order is set aside because the processes do not amount to manufacture.

Eligibility for Small Scale Industrial (SSI) exemption - effect of denial or allowance of SSI benefit where demand itself is unsustainable - SSI exemption availability need not be adjudicated because the excise demand itself is held unsustainable. - HELD THAT: - The department had disputed SSI exemption while computing aggregate clearances. However, having held that the appellant's processes do not amount to manufacture and that the demand is therefore unsustainable, the Tribunal observed that the question of SSI exemption becomes academic and does not affect the result. Consequently, determination of SSI eligibility was not necessary for the final outcome. [Paras 18]

SSI exemption issue does not alter the result once the excise demand is set aside.

Final Conclusion: Appeal allowed; the adjudicated demand set aside on the ground that the processes in question are purification (recrystallisation/distillation) and do not constitute manufacture under Section 2(f) of the Central Excise Act, 1944; SSI benefit question rendered academic.

SSI exemption - Proof of export by Form-H - Exports through merchant-exporter - Exclusion of export clearances from aggregate value of clearances - Central Excise Board Circular No. 648/39/2002 dated 25.07.2002

SSI exemption - Proof of export by Form-H - Exports through merchant-exporter - Exclusion of export clearances from aggregate value of clearances - Central Excise Board Circular No. 648/39/2002 dated 25.07.2002 - Whether export clearances evidenced by Form H issued by merchant exporters can be excluded from the aggregate value of clearances for determining entitlement to SSI exemption, and whether the demand based on inclusion of such clearances is sustainable. - HELD THAT: - The Tribunal examined the Board's Circular No. 648/39/2002 dated 25.07.2002 which accepts prescribed Sales Tax documents such as Form H as proof of export for exempted SSI units where exports are undertaken by the unit itself or through merchant exporters directly from the unit. Relying on precedents of the Tribunal and the Gujarat High Court, the Tribunal recognised that where Form H and its annexures establish export of consignments removed from the SSI unit, the value of such clearances ought not to be added to domestic clearances for computing SSI exemption. The adjudicating authority's conclusion that exports were not direct from the SSI unit was rejected because Form H produced by the appellant, together with corroborative particulars, furnished prima facie proof that the goods were exported by the merchant exporters and therefore liable to be excluded from aggregate clearances. The Tribunal further noted that the Commissioner may verify particulars in the Form H schedule, but substantive compliance with the circular and the documentary proof adduced entitled the appellant to the benefit of exclusion. Applying these principles to the facts of the case for the years 2006 07 and 2007 08, the Tribunal found the demand unsustainable.

Demand set aside; appeal allowed and appellant entitled to exclusion of export clearances evidenced by Form H for the stated periods.

Final Conclusion: The impugned demand founded on inclusion of clearances evidenced by Form H in the aggregate domestic clearances for 2006 07 and 2007 08 is unsustainable; the appeal is allowed and the order under challenge is set aside with consequential reliefs, if any.

New industrial unit - renovation versus fresh establishment - entitlement under Notification No.20/2007-CE dated 25.04.2007 - condition of utilisation of CENVAT credit

New industrial unit - renovation versus fresh establishment - Whether the unit re started at the same site after the earlier closure and dismantling is to be treated as a new industrial unit rather than mere renovation. - HELD THAT: - The Tribunal accepted the factual findings that the earlier unit had ceased operations after the ban, the Central Excise registration and factory licence were surrendered, machinery was transferred out and some plant and machinery sold, the director resigned and, after a significant gap, fresh licences, registration and other statutory clearances were obtained and new machinery commissioned. Those cumulative facts distinguish mere refurbishment or renovation from a fresh establishment. The Divisional Forest Officer's letter relating to licensing did not, by itself, justify treating the re commenced activity as only a renovation when considered against the totality of documents evidencing fresh clearances, registration and recommencement after a long discontinuance. [Paras 7, 8]

The re started unit at the same premises is to be treated as a new industrial unit and not merely a renovation of the old unit.

Entitlement under Notification No.20/2007-CE dated 25.04.2007 - condition of utilisation of CENVAT credit - Whether the respondent is entitled to benefit under Notification No.20/2007-CE dated 25.04.2007 for the relevant period (November 2009). - HELD THAT: - The Commissioner(Appeals) found on verification of records that the unit fulfilled all conditions of the Notification, including commencement of commercial production after 1 April 2007 and first clearance in November 2009. Although the adjudicating authority declined the refund by applying the condition that available CENVAT credit must first be utilised thereby resulting in nil refund for the month, the appellate fact finding established that the respondent had established a new unit and satisfied the statutory conditions for exemption under the Notification. The Tribunal, on perusal of the material and the reasoning in the impugned order, found no infirmity in that conclusion and upheld the grant of benefit. [Paras 5, 8]

The respondent is entitled to the benefit of Notification No.20/2007-CE dated 25.04.2007 in respect of the claim relating to November 2009; the impugned order granting such entitlement is upheld and the Revenue's appeal is dismissed.

Final Conclusion: On the facts and documents before it the Tribunal concluded that the unit restarted at the same site after a long discontinuance constituted a new industrial unit and that the respondent satisfied the conditions for benefit under Notification No.20/2007-CE dated 25.04.2007; the impugned order granting the benefit (relating to November 2009) was upheld and the Revenue's appeal dismissed.

Principles of natural justice - ex parte order - remand for fresh adjudication - reconciliation of gate passes with Central Excise invoices - lack of corroborative evidence for clandestine removal

Principles of natural justice - ex parte order - Impugned order passed without awaiting reconciliation statement violated principles of natural justice and was liable to be set aside. - HELD THAT: - The Adjudicating Authority had itself granted the appellant time to file a reconciliation statement till 31.03.2013 but passed the impugned order on 28.03.2013, prior to supply of documents to the appellant and before the expiry of the extended time. The Tribunal found that the order was thus passed in haste and amounted to an ex parte determination without allowing the appellant the opportunity promised to submit material in defence. In these circumstances the impugned order lacked procedural fairness and could not be sustained. [Paras 5]

Impugned order set aside for violation of principles of natural justice.

Remand for fresh adjudication - reconciliation of gate passes with Central Excise invoices - lack of corroborative evidence for clandestine removal - Matter remanded to Adjudicating Authority for fresh adjudication after considering the reconciliation statement and related documents; other legal and factual issues left open for decision afresh. - HELD THAT: - Because the appellant filed a reconciliation statement and sought documents necessary for reconciling gate passes with Central Excise invoices, the Tribunal directed a remand so that the Adjudicating Authority may consider the reconciliation and any other relevant documents and evidence before adjudicating the question of clandestine removals and related demands. The Tribunal expressly left all other legal and factual issues open for the Adjudicating Authority to decide on merits after hearing the appellant, and mandated that the appellant approach the authority within fifteen days and that adjudication be completed within three months from the fixed hearing date. [Paras 6, 7, 8]

Remitted for fresh adjudication to consider the reconciliation and related evidence; other issues reserved for fresh decision.

Final Conclusion: Appeal allowed by way of remand: impugned order set aside for breach of natural justice and the matter remitted to the Adjudicating Authority for fresh hearing and decision on reconciliation of gate passes with Central Excise invoices and other issues within the time directions given.

Extended period of limitation - suppression of facts - exemption Notification No.6/06 dated 01.03.2006 - declaration in periodical returns - cenvat credit on inputs and input services - separate accounting for dutiable and exempted goods - remand for computation of demand for normal period

Extended period of limitation - suppression of facts - declaration in periodical returns - Whether the extended period of limitation was invokable for demand in respect of allegedly exempted solar batteries. - HELD THAT: - The Tribunal found that the appellant had declared clearance of solar batteries availing the exemption in its periodical returns and there was no suppression of facts. Revenue had been aware or under confusion regarding the exemption claim (including separate proceedings about accounting). In those circumstances the Tribunal held that the precondition for invoking the extended period of limitation (i.e., suppression or evasion) was not satisfied and the extended period could not be invoked to sustain the demand. [Paras 8, 9]

Extended period of limitation is not invokable and the demand insofar as it rests on extended limitation is set aside.

Cenvat credit on inputs and input services - separate accounting for dutiable and exempted goods - Whether the appellant is entitled to claim cenvat credit on inputs and input services used in manufacture of solar batteries for the normal period of limitation, and whether penalty is imposable. - HELD THAT: - The Tribunal noted that the appellant had already reversed the cenvat credit pertaining to solar batteries. It accepted that the appellant manufactured both dutiable and exempted goods and that reversal had been made. Accordingly, the appellant is entitled to claim cenvat credit for the relevant inputs/input services within the normal period of limitation; duty for the normal period remains payable along with interest. Because the extended period was held inapplicable and reversal had been made, the Tribunal concluded that imposition of penalty was not justified. [Paras 10]

Appellant entitled to take cenvat credit for the normal period; duty payable for the normal period with interest; no penalty is imposable.

Remand for computation of demand for normal period - Computation of duty demand after excluding extended period and allowing cenvat credit for the normal period. - HELD THAT: - Although the Tribunal disposed the legal controversies in favour of the appellant regarding limitation, entitlement to cenvat credit and penalty, it did not quantify the demand. The matter was therefore remitted to the Adjudicating Authority to compute the demand limited to the normal period of limitation, allowing applicable cenvat credit on inputs and input services for that period and computing interest accordingly. [Paras 11]

Matter remanded to the Adjudicating Authority for computation of demand for the normal period of limitation permitting cenvat credit and assessing interest.

Final Conclusion: The appeal is allowed in part: the extended period of limitation is held inapplicable and demands based thereon are set aside; the appellant may claim cenvat credit and is liable to pay duty for the normal period with interest; no penalty is leviable; the matter is remanded for computation of demand for the normal period allowing credit and interest.

Territorial jurisdiction in proceedings under Section 138 of the Negotiable Instruments Act - insertion of Section 142-A providing concurrent territorial jurisdiction of courts where drawer and drawee banks are situated - retrospectivity of statutory amendment - effect of a subsequent amendment on pre-amendment judicial orders

Territorial jurisdiction in proceedings under Section 138 of the Negotiable Instruments Act - insertion of Section 142-A providing concurrent territorial jurisdiction of courts where drawer and drawee banks are situated - retrospectivity of statutory amendment - Validity of the trial Court's order dated 23.04.2015 returning complaints for lack of territorial jurisdiction in view of the 2015 amendment inserting Section 142-A and its retrospective operation. - HELD THAT: - The trial Court returned the complaints on 23.04.2015 relying on pre-amendment territorial jurisprudence. The 2015 amendment inserting the provision now described as Section 142-A confers concurrent territorial jurisdiction on courts at the places where the drawer bank and the drawee bank are situated. The amendment came into force w.e.f. 15.06.2015 and, as held by the Supreme Court in the cited authority relied upon by the petitioners, operates retrospectively. In light of the retrospective effect, the pre-amendment return orders based on territorial incompetence are contrary to the statute as amended. Consequently, the earlier orders returning the complaints must be set aside and the trial Court at Bathinda (where the drawee bank is situated and where complaints were filed) is entitled to entertain and proceed with the complaints under Section 138 of the Act.

Impugned orders dated 23.04.2015 returning the complaints for lack of territorial jurisdiction set aside; trial Court at Bathinda directed to entertain and proceed with the complaints in accordance with law.

Final Conclusion: The petitions are allowed: the orders returning the complaints dated 23.04.2015 are quashed and the trial Court at Bathinda is directed to proceed with the complaints filed under Section 138 of the Negotiable Instruments Act, having concurrent territorial jurisdiction in terms of the 2015 amendment (Section 142-A) which is held to operate retrospectively.