TaxTMI Updates e-Newsletter
Jul 06,2020

Supply of service under Section 7(1) of the GST Act - consideration - reverse charge mechanism - recipient of service - charitable activities and GST liability - admissibility under Section 97(2)(e) and (g) of the GST Act

Supply of service under Section 7(1) of the GST Act - consideration - charitable activities and GST liability - The applicant's activities amount to 'supply' of service liable to GST. - HELD THAT: - The Authority found that the applicant, a charitable trust, facilitates legal, medical, psychological and vocational support to survivors but does not charge anything from the beneficiaries. The payments made by the applicant arise from donations and interest and are disbursed as reimbursements or financial support to the survivors (recipients), and the applicant does not receive consideration from those beneficiaries for the facilitation. Because there is no consideration and the applicant does not effect a supply for consideration, the activities described do not fall within the definition of 'supply' under Section 7(1) of the GST Act and therefore are not taxable as supply of services.

Applicant's activities do not amount to 'supply' of service and are not liable to GST.

Reverse charge mechanism - recipient of service - charitable activities and GST liability - Whether the applicant is liable to pay tax under the reverse charge mechanism as recipient of services for which it provides financial assistance. - HELD THAT: - The Authority observed that the payments made by the applicant are reimbursements or financial support directed to the survivor (the ultimate recipient) rather than payments made to the supplier of services by the applicant. The applicant does not stand as the recipient of the supplier's service in the transaction; rather it facilitates access and provides financial assistance to the beneficiary. Consequently, the applicant is not liable to discharge tax under the reverse charge mechanism in respect of such payments.

Applicant is not a recipient liable under the reverse charge mechanism and thus not liable to pay GST on such payments.

Final Conclusion: The Advance Ruling holds that the applicant's described activities do not constitute a taxable 'supply' and the applicant is not liable to pay GST, including under the reverse charge mechanism, on the financial assistance and facilitation provided to women survivors.

Supply of services - liability to pay tax - export of services - zero-rated supply - agent - recipient - place of supply

Supply of services - liability to pay tax - development, design, programming of IT software - The nature of the services provided by the applicant to Doyen Systems and whether those services attract GST liability. - HELD THAT: - The Authority found on the facts and the consultancy agreement that the applicant provided IT software related consulting services to Doyen Systems for a consideration agreed as consultancy fees. The activity falls within the scope of 'supply' under the Act and, as per Schedule II Para 5 read with Section 7(1A), constitutes a supply of services (development/implementation/enhancement of IT software). The applicant's services are thus taxable supplies made to Doyen Systems and attract GST at the applicable rates. The Authority rejected the contention that the applicant was supplying directly to the foreign client or acting as Doyen's agent for the purposes of treating the services otherwise; the applicant was not a party to the contract between Doyen and its foreign client, had no contractual privity with that client, and the contractual liability to pay the applicant lay on Doyen Systems. [Paras 7, 8]

The services provided by the applicant to Doyen Systems Private Limited are a supply of services under the CGST/TNGST Act and the applicant is liable to pay the relevant tax on such supply.

Export of services - zero-rated supply - refund of tax - receipt in convertible foreign exchange - Whether the applicant's supplies qualify as export of services, zero-rated supply or entitlement to refund of taxes already paid. - HELD THAT: - The Authority observed that the questions on export of services, zero-rating and refund fall outside the scope of matters it is empowered to decide under Section 97(2) of the CGST/TNGST Act. Consequently, those questions were not adjudicated on merits by the Authority and remain unanswered by this order. The applicant's alternative contentions regarding receipt in foreign exchange and agency status were noted but not finally determined in relation to export/zero-rating/refund because they are not matters within the jurisdiction of the Authority under Section 97(2). [Paras 7, 8]

The questions on whether the supplies qualify as export of services, zero-rated supply or entitlement to refund are not answered by this Authority as they are not within the ambit of Section 97(2) of the Act.

Final Conclusion: The Authority rules that the applicant's consultancy services supplied to Doyen Systems Private Limited are taxable supplies and the applicant is liable to pay GST; questions on export/zero-rating and refund are not decided by this Authority as they fall outside its jurisdiction under Section 97(2).

Advance Ruling - Classification of goods - Applicability of Compensation Cess - Pending proceedings bar to admission - Rejection of application under first proviso to Section 98(2)

Advance Ruling - Pending proceedings bar to admission - Rejection of application under first proviso to Section 98(2) - Classification of goods - Applicability of Compensation Cess - Whether the Authority should admit the applicant's advance ruling application on classification and compensation cess where departmental proceedings on classification were pending at the time of filing. - HELD THAT: - The Authority examined the remanded question of whether the issue raised before it was already pending with the department. The applicant accepted that a summons was issued on 08.01.2019 and a statement was recorded on 09.01.2019. The recorded statement contains admissions and responses specifically addressing classification of the final product and the applicable compensatory cess, and the recording officer had informed the applicant that the product was classifiable under a different HSN attracting a different compensation cess rate. Those factual disclosures demonstrate that the classification issue had been initiated and was under adjudication by the jurisdictional authorities when the advance ruling application was filed on 06.02.2019. Under the first proviso to Section 98(2) of the CGST/TNGST Act, 2017 the Authority is precluded from admitting an advance ruling application where the question raised is already pending or decided in any proceedings in the case of the applicant under the Act. Having afforded the applicant opportunity of hearing in compliance with the proviso, the Authority concluded that the statutory bar applied and that the application could not be admitted without adjudicating the merits. [Paras 6, 7]

Application rejected under the first proviso to Section 98(2) of the CGST/TNGST Act, 2017 as the question of classification and compensatory cess was already pending before the departmental authorities.

Final Conclusion: The advance ruling application on classification of chewing tobacco and applicability of Compensation Cess is rejected under the first proviso to Section 98(2) since the same question was already the subject of pending departmental proceedings when the application was filed.

Advance ruling admissibility - supply-specific facts for advance ruling - advance ruling in relation to supply of goods or services - works contract for residential building - Notification 11/2017 Sl.No.3(v)(b)

Advance ruling admissibility - supply-specific facts for advance ruling - advance ruling in relation to supply of goods or services - Application for advance ruling not admitted for want of particulars of the supply made or proposed to be made by the applicant. - HELD THAT: - The Authority applied the statutory premise that an advance ruling is a decision in relation to the supply of goods or services being undertaken or proposed to be undertaken by the applicant. The applicant sought a ruling on the applicability of Notification 11/2017 Sl.No.3(v)(b) to supplies of works contract for lifts to certain residential buildings but did not furnish details of any specific supply, quotation, work order or transaction despite opportunities and specific requests to provide such particulars. The Authority found that, in the absence of facts about the actual or proposed supply, it was not possible to adjudicate the question raised; advance rulings can be given only where the facts of the supply are disclosed and verifiable. Consequently the application could not be admitted for adjudication and was rejected on that ground. [Paras 6, 7]

Application for advance ruling is not admitted as the applicant failed to furnish details of the supply made or proposed to be made.

Final Conclusion: The Authority rejected the application for advance ruling and declined to decide the substantive question regarding applicability of Notification 11/2017 Sl.No.3(v)(b) because the applicant did not provide the requisite transaction-specific facts necessary for admission and adjudication.

Classification of knitted fabrics under Chapter 60 - Classification of woven fabrics of synthetic filament yarn under Chapter 5407 - Classification of composite textile goods where one textile material predominates by weight - Classification of made-up textile articles under Chapter 63 - Classification of bed linen and similar made-ups under Chapter 6302 - Chenille yarn as special yarn under Chapter 56 (Heading 5606) - Synthetic filament yarn classification under Chapter 5402 (not put up for retail sale) and 5406 (put up for retail sale) - Application of HSN/General Rules of Interpretation and Section/Chapter Notes to tariff classification - Applicable GST rates linked to tariff classification as per Notification No.1/2017-C.T.(Rate) and subsequent amendments

Classification of knitted fabrics under Chapter 60 - Applicable GST rate for knitted fabrics - Knitted fabrics manufactured and supplied by the applicant are classifiable under Chapter 60 and liable to the GST rate specified for that heading. - HELD THAT: - Having examined the manufacturing process, material composition and the Regional Laboratory test report identifying the sample as polyester weft knit fabric, the Authority found the goods to be knitted fabrics not falling within the exclusions to Chapter 60 (such as fabrics impregnated/coated that would push them to Chapter 59). The Explanatory Notes and Chapter Notes to Chapter 60 cover knitted fabrics irrespective of constituent textile material; further technical particulars necessary for sub heading level classification were not provided. Applying the rate notification, knitted fabrics under the relevant heading attract the specified concessional rate under Schedule I. The finding and rate are recorded in paragraph 7.1 and Ruling 1. [Paras 7]

Classifiable under CTH 60; CGST 2.5% and SGST 2.5% (as per Sl. No. 221 of Schedule I to Notification No.1/2017-C.T.(R) as amended).

Classification of woven fabrics of synthetic filament yarn under Chapter 5407 - Applicable GST rate for woven fabrics - Woven fabrics manufactured and supplied by the applicant are classifiable under CTH 5407 and liable to the GST rate specified for that heading. - HELD THAT: - The test report and material inputs establish that the fabrics are woven from synthetic filament yarns. The Authority applied Section XI explanatory notes and Chapter 54/54.07 notes to conclude that fabrics made of synthetic filament yarn fall within CTH 5407. Further sub heading classification could not be made for lack of additional technical details. The rate notification provides the concessional rate for woven fabrics of man made textile materials. The reasoning is set out in paragraph 7.2 and Ruling 2. [Paras 7]

Classifiable under CTH 5407; CGST 2.5% and SGST 2.5% (as per Sl. No. 217 of Schedule I to Notification No.1/2017-C.T.(R) as amended).

Classification of composite textile goods where one textile material predominates by weight - Preference to the most specific heading under General Rules of Interpretation (Rule 3 and Section Note 2A) - Woven fabric bonded with non woven fabric is classifiable as woven fabric under CTH 5407 because the woven fabric predominates by weight; applicable GST rate follows CTH 5407. - HELD THAT: - The product consists of woven fabric bonded to a polypropylene non woven backing. Applying the General Rules of Interpretation (Rule 3) and Section XI Note 2A, goods consisting of mixtures of textile materials are to be classified as if consisting wholly of the material which predominates by weight. The woven fabric is the predominant material and the non woven backing is added to strengthen it; therefore the composite good is classifiable under CTH 5407. Further sub heading classification was not possible without additional technical data. This reasoning appears at paragraph 7.3 and is recorded in Ruling 3. [Paras 7]

Classifiable under CTH 5407; CGST 2.5% and SGST 2.5% (as per Sl. No. 217 of Schedule I to Notification No.1/2017-C.T.(R) as amended).

Classification of made-up textile articles under Chapter 63 - Identification of covers for pillows, latex blocks and mattresses as 'made up' articles - Covers for pillows, latex blocks and mattresses manufactured by the applicant are made up textile articles classifiable under Chapter 63 (specific sub headings identified) and taxed according to the value based slabs in the Notification. - HELD THAT: - The manufacturing steps-cutting to size, sewing and finishing with accessories-show the goods are made up articles within the meaning of Section Note 7 to Section XI. Rule 1 and the specific chapter headings in Chapter 63 are applicable and provide more specific identification than textile fabric headings. The Authority assigned the appropriate sub headings for pillow covers, latex block covers and mattress covers (CTH 63049239, 63049289 and 63041990 respectively). The applicable tax rate depends on the retail selling price threshold stated in the Notification; this analysis is in paragraph 7.4 and Ruling 4. [Paras 7]

Covers are classifiable under CTH 6304 (sub headings as identified); CGST 2.5% and SGST 2.5% if selling price < Rs. 1000/piece, otherwise CGST 6% and SGST 6% (as per Sl. Nos. 224 and 171 of the Notification).

Classification of foot runners and pillow sheets as bed linen/made-ups under Chapter 63 (Heading 6302) - Value based GST slab application for made up articles - Foot runners and pillow sheets made of knitted or woven fabrics are classifiable under CTH 63021090 (bed linen/other bed linen) and taxed according to the value based slabs in the Notification. - HELD THAT: - The processes of embroidery, cutting, stitching and finishing demonstrate that the items are made up bed linen equivalents. Chapter 63 and specifically Heading 6302 cover bed linen and similar made up articles; the Authority concluded the articles fall under CTH 63021090. The applicable CGST/SGST rates depend on the selling price threshold identified in the Notification. This is explained in paragraph 7.5 and Ruling 5. [Paras 7]

Classifiable under CTH 63021090; CGST 2.5% and SGST 2.5% if selling price < Rs. 1000/piece, otherwise CGST 6% and SGST 6% (as per Sl. Nos. 224 and 171 of the Notification).

Chenille yarn as special yarn under Heading 5606 - Applicable GST rate for chenille yarn - Chenille yarn produced by the applicant is classifiable under CTH 56060020 (chenille yarn of man made fibres) and attracts the GST rate specified for that heading. - HELD THAT: - The process description and the Regional Laboratory test report identify the product as polyester chenille yarn, a special yarn produced by twisting core and pile yarns and forming pile tufts along its length. Explanatory Notes and Heading 5606 cover chenille yarn; on that basis the Authority placed the product under CTH 56060020. The applicable rate per the Notification is the rate provided for that entry. The analysis is set out in paragraph 7.6 and Ruling 6. [Paras 7]

Classifiable under CTH 56060020; CGST 6% and SGST 6% (as per Sl. No. 138 of Schedule II to Notification No.1/2017-C.T.(R) as amended).

Synthetic filament yarn classification under Chapter 5402/5406 - GST rate changes for synthetic filament yarns (retail sale status and notification amendments) - Polypropylene extrusion yarn, polypropylene texturized yarn and polyester texturized yarn are synthetic filament yarns classifiable under CTH 5402 when not put up for retail sale and under CTH 5406 when put up for retail sale; applicable GST rate depends on the time frame and whether put up for retail sale. - HELD THAT: - Test reports identify these products as 100% filament yarns (polypropylene or polyester textured/filament). The Customs Tariff entries distinguish synthetic filament yarns not put up for retail sale (Group 5402) and those put up for retail sale (5406). The Authority noted transitional/specific rate entries in the Notification series: initially entries in Schedule III (9% up to 12 Oct 2017) and subsequently the amended Schedule II rate (6%) apply; the notification provides rates at the four digit level used for levying tax. The classification and rate treatment, with the temporal amendment, are explained in paragraph 7.7 and Ruling 7. [Paras 7]

Classifiable under CTH 5402 (not put up for retail sale) or CTH 5406 (if put up for retail sale); GST as per Notification: transitional rate per Schedule III up to 12.10.2017 and thereafter per amended Schedule II (ultimately CGST 6% and SGST 6% as amended).

Final Conclusion: The Advance Ruling classifies the applicant's products as follows: knitted fabrics under CTH 60; woven fabrics and woven fabrics bonded with non woven backing under CTH 5407; covers for pillows/latex blocks/mattresses as made up articles under CTH 6304 (specified sub headings); foot runners and pillow sheets under CTH 63021090; chenille yarn under CTH 56060020; and the various synthetic filament yarns under CTH 5402 (or 5406 if put up for retail sale). The applicable GST rates are those linked to the respective tariff headings in Notification No.1/2017 C.T.(Rate) and its amendments, as specified in the Rulings above.

Classification of goods - Unmanufactured tobacco versus chewing tobacco - HSN Explanatory Notes and Rules for interpretation of the First Schedule to the Customs Tariff Act - Degree of fermentation/liquoring not decisive for classification - Application of compensation cess on chewing tobacco

Classification of goods - Unmanufactured tobacco versus chewing tobacco - HSN Explanatory Notes - Customs Tariff interpretation - Whether the product manufactured and supplied as 'Kavi cut tobacco' is classifiable as unmanufactured tobacco under CTH 2401 or as chewing tobacco under CTH 2403. - HELD THAT: - The Authority examined the manufacturing process, documentary material and HSN Explanatory Notes. The First Schedule and the Rules of interpretation govern classification. The Explanatory Notes show that tobacco cured and treated by processes that render it ready for direct consumption as chewing tobacco falls under the heading for manufactured tobacco and specifically under the chewing tobacco entry. The applicant procures dried (already cured) leaves, applies jaggery water, cuts/minces the leaves, alters moisture and ash parameters as shown in test reports, stores and packs the product in retail pouches for direct chewing use. The Notes and authoritative material (ICAR-CTRI) identify chewing tobacco as tobacco cured/smoked, stored and given jaggery/salt treatment and intended to be used directly for chewing. The degree of fermentation or liquoring (whether described as 'highly' or to a lesser extent) is not determinative; the Explanatory Notes do not exclude chewing tobacco which is not 'highly' fermented. The applicant's operations go beyond mere curing or preparation of leaves for further manufacture and produce a product ready for consumption as chewing tobacco. Therefore the product does not fall within CTH 2401 (unmanufactured tobacco) but qualifies under CTH 2403 as chewing tobacco. [Paras 6]

Product is classifiable under CTH 2403 99 10 as 'Chewing Tobacco', and not under CTH 2401.

Application of compensation cess on chewing tobacco - Tariff-based cess rate - The rate of Compensation Cess applicable to the product classified as chewing tobacco. - HELD THAT: - Notification No. 01/2017-Compensation Cess (Rate) fixes the compensation cess rates linked to the Customs Tariff headings. Having held that the product is classifiable as chewing tobacco under CTH 2403 99 10, the Authority applied the cess schedule and identified the relevant entry prescribing the compensation cess rate for chewing tobacco supplied without lime tube. The Authority therefore applies the cess rate corresponding to the chewing tobacco entry in the Notification. [Paras 7]

Compensation Cess applicable is that specified for chewing tobacco under the Notification, namely the rate provided at Sl. No. 26 of Notification No. 01/2017-Compensation Cess (Rate) dated 28.06.2017.

Final Conclusion: The Authority rules that the product marketed as 'Kavi cut tobacco' is chewing tobacco classifiable under CTH 2403 99 10 and is liable to the Compensation Cess rate notified for chewing tobacco (Sl. No. 26 of Notification No. 01/2017-Compensation Cess (Rate) dated 28.06.2017).

Classification of goods - Parts and accessories - Section Note 2 to Section XVII - Principal use - Exclusion by more specific headings in the Nomenclature - Uniform classification irrespective of supplier

Classification of goods - Parts and accessories - Section Note 2 to Section XVII - Whether Tank and parts manufactured by or supplied to the applicant fall under CTH 8710 0000 - HELD THAT: - The Authority applied the rules of interpretation in the First Schedule to the Customs Tariff Act and the Explanatory Notes to Section XVII. Chapter heading 8710 covers tanks and parts of such vehicles only where the parts (i) are not excluded by Note 2 to Section XVII, (ii) are identifiable as suitable for use solely or principally with the vehicles of Chapter 87, and (iii) are not more specifically included elsewhere in the Nomenclature. The Authority relied on the scheme of Section Notes, explanatory notes and precedents emphasising that parts excluded by Section Note 2 or specifically classifiable under other chapters cannot be treated as parts of Chapter 87 even if used principally with tanks. Applying these principles, tanks manufactured by the applicant are classifiable under CTH 8710 0000; only those parts meeting the three-fold test qualify as parts under CTH 8710 0000. [Paras 9, 10, 12]

Tank is classifiable under CTH 8710 0000; only parts satisfying the conditions in Section XVII (not excluded by Note 2, suitable solely/principally for tanks, and not more specifically covered elsewhere) qualify as parts under CTH 8710 0000.

Parts and accessories - Exclusion by more specific headings in the Nomenclature - Principal use - Classification of the specific items supplied by the applicant (the 17 listed parts) as to whether they fall under CTH 8710 0000 or not - HELD THAT: - Each item was examined against the three-fold test derived from Section XVII and the Explanatory Notes. Items classifiable elsewhere or expressly excluded by Note 2 were held outside CTH 8710 0000 (for example, dowel pins and other 'parts of general use' fall in Chapters such as 73; gaskets are excluded under the Note; bearings and certain gear parts are classifiable under Chapters 84/85/8482/8483). Conversely, items that are not excluded by Note 2, not more specifically covered elsewhere and are identifiable as suitable solely or principally for tanks were held to be classifiable under CTH 8710 0000. The Authority applied these legal criteria to the factual descriptions and supplier invoices provided by the applicant to reach individual determinations. [Paras 10, 12]

Retainer Steel, Valve Assembly, Casing Assembly, Hydraulic items (all types), Mandrel Assembly, Nozzle Assembly, Plate Assembly, Panel Assembly, Support Assembly and Sleeve Assembly are classifiable under CTH 8710 0000; Dowel Pin, Gasket Assembly, Stiffner, Clip Assembly, Connector Assembly, Needle Bearing and Planet Pinion are not classifiable under CTH 8710 0000 for the reasons stated.

Classification of goods - Uniform classification irrespective of supplier - Whether the HSN code adopted by the vendor binds the buyer or determines classification for the applicant - HELD THAT: - The Authority reiterated that classification depends on the nature of the goods and the applicable tariff rules, not on the HSN code chosen by any particular supplier. Correct classification is the obligation of the person supplying the goods or receiving them; uniformity is determined by applying the tariff nomenclature and interpretative notes to the goods themselves. [Paras 11, 12]

Classification is independent of the buyer or seller and depends solely on the goods; the vendor's HSN choice does not determinatively bind the applicant.

Final Conclusion: The Authority held that tanks manufactured by the applicant fall under CTH 8710 0000; individual tank parts qualify as parts under CTH 8710 0000 only if they are not excluded by Section Note 2, are suitable solely or principally for tanks and are not more specifically classifiable elsewhere. The Authority specified which of the 17 examined items fall within CTH 8710 0000 and which do not, and confirmed that classification is determined by the goods and applicable nomenclature, not by a supplier's coding.

Supply - supply of goods - supply of services - transaction in money (not goods or services) - exemption under Notification No. 12/2017 - transmission or distribution of electricity by an electricity transmission or distribution utility - Advance Ruling under Section 95/97 of the CGST Act - Deposit Contribution Works (DCW) as installation services (SAC 99873) - government entity (as defined in Notification No. 31/2017 / 32/2017 amending Notifications No. 11/2017 and 12/2017)

Supply - supply of goods - supply of services - transaction in money (not goods or services) - exemption under Notification No. 12/2017 - transmission or distribution of electricity by an electricity transmission or distribution utility - GST applicability on inter-company transactions between TANGEDCO Ltd. and TANTRANSCO Ltd. undertaken by TANGEDCO - HELD THAT: - The Authority examined each category of transactions supplied by TANGEDCO to TANTRANSCO to determine whether they constitute a taxable supply and whether they fall within the exemption at Sl. No. 25 of Notification No. 12/2017. Applying the statutory definitions of "supply", "goods", "services" and "consideration", the Authority held: (a) transfers of operation and maintenance materials (conductors, insulators, meters, cables etc.) are supplies of goods made in the course of business and are taxable at rates applicable to those goods; (b) transfer/disposal of capital assets that cease to be business assets is a supply of goods and is taxable; (c) transactions consisting solely of movement of money (physical fund flows, loan repayments, fund-swaps) are dealings in money which are neither goods nor services and therefore not subject to GST; (d) receipts of TANTRANSCO's income into TANGEDCO's bank account and subsequent bookkeeping adjustments are transactions in money and not supplies; (e) deployment/transfer of employees on account of utilisation by TANTRANSCO involves provision of manpower and is a supply of services subject to GST. On the exemption entry, the Authority held that Sl. No. 25 exempts services involving transmission or distribution of electricity by an electricity transmission or distribution utility (including maintenance of meters) and does not extend to supplies of goods or other services incidental to or billed separately; accordingly the stated supplies of goods and manpower services do not fall under that exemption.

Supply of operation and maintenance materials and transfer of capital assets are taxable supplies of goods; deployment of employees is a taxable supply of services; physical fund flows and adjustments in money are not subject to GST; the exemption at Sl. No. 25 of Notification No. 12/2017 does not apply to the stated transactions.

Deposit Contribution Works (DCW) as installation services (SAC 99873) - exemption under Notification No. 11/2017 / 12/2017 - Applicability of GST on Deposit Contribution Works (DCW) carried out by TANGEDCO for consumers - HELD THAT: - The Authority examined the nature of DCW work performed for consumers (shifting/installation of service lines, structures, transformers and allied accessories) and classified it under SAC 99873 (installation services other than construction). CBIC Circular No. 34/8/2018 was noted which treats such charges collected from consumers for shifting of service lines as taxable. The Authority held that DCW are installation services classifiable under SAC 99873 and are taxable at the rates provided in Notification No. 11/2017 (as amended) and the corresponding State notification; the exemption for transmission or distribution services under Sl. No. 25 of Notification No. 12/2017 does not render DCW exempt.

Deposit Contribution Works are classifiable as installation services (SAC 99873) and attract GST at the rates applicable under Notifications No. 11/2017 (Central) and corresponding State notifications; DCW are not exempt under Sl. No. 25 of Notification No. 12/2017.

Government entity (as defined in Notification No. 31/2017 / 32/2017 amending Notifications No. 11/2017 and 12/2017) - Whether TANGEDCO Ltd. qualifies as a "Government Entity" for purposes of the specified exemption notifications - HELD THAT: - The Authority applied the statutory definition of "Government Entity" as amended by Notifications dated 13.10.2017 which includes bodies established by a Government with 90% or more participation by way of equity or control to carry out a function entrusted by the Government. TANGEDCO was found to have been established by the Government of Tamil Nadu, to perform generation and distribution functions under the Electricity Act, to be a public limited company with over 90% control through the holding company established by the State, and to have directors appointed by the Government. On these facts, TANGEDCO meets the definition of "Government Entity" for the purposes of Notifications No. 11/2017 and 12/2017 (as amended) effective from 13.10.2017.

TANGEDCO Ltd. is a "Government Entity" as defined for the purposes of the cited notifications.

Advance Ruling under Section 95/97 of the CGST Act - Admissibility of a ruling on GST applicability of transmission charges billed by GAIL for natural gas (supply received by TANGEDCO) - HELD THAT: - The Authority considered whether it had jurisdiction to rule on the taxability of supplies made to the applicant. Section 95/97 permits advance rulings in relation to supplies of goods or services being undertaken or proposed to be undertaken by the applicant. The applicant is a recipient of the natural gas supply and associated transmission service billed by GAIL and does not make those supplies. Because the question relates to supplies received by the applicant and not supplies made by the applicant, the Authority held the question was not admissible for an advance ruling and therefore declined to decide the merits of taxability of GAIL's transmission charges.

Question on GST applicability of transmission charges billed by GAIL for natural gas is not admitted for advance ruling and is not answered on merits.

Final Conclusion: The Authority ruled that (i) transfers of materials and capital assets by TANGEDCO to TANTRANSCO are taxable supplies of goods, (ii) deployment of employees to TANTRANSCO is a taxable supply of services, (iii) pure fund transfers and receipt/adjustment of monies are not supplies and not subject to GST, (iv) DCW are installation services (SAC 99873) and taxable, (v) TANGEDCO qualifies as a "Government Entity" under the amended notifications, and (vi) the advance ruling on GST applicability of GAIL's transmission charges for natural gas is inadmissible and therefore not decided.

Summary order. Notice issued on respondents; respondents permitted to obtain instructions and matter listed for further hearing on 10th July, 2020.

Transitional credit - refund of excess amount - adjustment of transitional credit against tax liability - interest under Section 50 - disposal of writ petition in view of subsequent administrative order

Transitional credit - refund of excess amount - adjustment of transitional credit against tax liability - interest under Section 50 - Effect of respondent's subsequent order recognising refund of excess transitional credit and whether interest under Section 50 is payable by the petitioner. - HELD THAT: - The respondent, by order dated 24.06.2020, accepted that an excess amount was due to the petitioner and is liable to be refunded. The petitioner had already adjusted that excess by utilising transitional credit towards its tax liability. In these circumstances the Court held that the question of payment of interest under Section 50 does not arise because the amount has been recognised as refundable by the revenue and the petitioner has adjusted the same. In view of the subsequent administrative acceptance and adjustment, there is no ground to proceed with the writ petition seeking relief on that issue. [Paras 4, 5]

Writ petition disposed of as infructuous in light of respondent's order dated 24.06.2020 recognising the refundable excess and petitioner's adjustment; no interest under Section 50 is payable.

Final Conclusion: The Court disposed of the writ petition because the revenue's subsequent order acknowledged and allowed the refund of the excess transitional credit, which had already been adjusted by the petitioner, and consequently interest under Section 50 was not attracted.

Expedite assessment proceedings - modification of earlier order - time limit for making assessment orders - cooperation of the assessee in assessment proceedings - examination of foreign transactions - application of treaty protection under Article 13 of the Indo-Mauritius Treaty

Modification of earlier order - expedite assessment proceedings - time limit for making assessment orders - Modification of the orders dated 19th December, 2019 directing the Assessing Officer to expedite assessment proceedings and pass assessment orders within a specified timeline. - HELD THAT: - The Court noted that the orders dated 19th December, 2019 were passed on the premise (as stated by Revenue counsel then) that the time limit for making the assessment orders was 31st December, 2020. The Court observed that it now transpires that the statutory time limit for making the assessment orders is 31st March, 2022. In consequence, while recording the need for thorough scrutiny of foreign transactions and acknowledging the Department's statement regarding time required due to lockdown and the pandemic, the Court exercised its supervisory power to modify the earlier direction. The modified direction requires the Assessing Officer to expedite the assessment proceedings and to pass the assessment orders at the earliest, but not later than 31st December, 2020, subject to the petitioners cooperating and not taking adjournments as earlier envisaged. The Court disposed of the interlocutory applications accordingly and directed publication and service of the order.

Orders dated 19th December, 2019 modified to direct the Assessing Officer to expedite the assessment proceedings and to pass assessment orders at the earliest, but not later than 31st December, 2020; applications disposed of.

Final Conclusion: The High Court modified its earlier directions and ordered that, notwithstanding the subsequently noted statutory time limit of 31st March, 2022, the Assessing Officer shall expedite the assessment proceedings and pass the assessment orders at the earliest but in any event not later than 31st December, 2020; the applications are disposed of.

Allowability of depreciation on computer software @60% - verification of actual cost for computation of block of asset - allowability of ESOP / employee compensation expenses - claim made by way of letter versus requirement of revised return - application of Biocon (Special Bench) ratio for amortisation of ESOP on straight line basis - limits on appellate power to direct allowance for earlier assessment years

Allowability of depreciation on computer software @60% - verification of actual cost for computation of block of asset - Depreciation on purchased computer software is allowable at 60% and the Assessing Officer was directed to verify the actual cost on which depreciation is to be computed. - HELD THAT: - The Appellate Tribunal found no infirmity in the CIT(A)'s conclusion that the software qualifies for depreciation at 60% under the applicable rules. The CIT(A) accepted that the assessee was eligible for the higher rate and, for computation of the block and actual depreciation amount, properly directed the Assessing Officer to verify the cost of the asset. The Tribunal upheld that principle-based allowance while leaving determination of the correct amount to the AO's verification. [Paras 5, 9]

CIT(A)'s view that software depreciation is allowable at 60% is upheld; the AO to verify and compute depreciation based on actual cost.

Allowability of ESOP / employee compensation expenses - claim made by way of letter versus requirement of revised return - application of Biocon (Special Bench) ratio for amortisation of ESOP on straight line basis - limits on appellate power to direct allowance for earlier assessment years - The CIT(A)'s direction to the AO to consider the assessee's ESOP deduction claim on merits following the Biocon Special Bench ratio was upheld, but the CIT(A)'s further direction to the AO to allow or decide claims for earlier years was modified as beyond the CIT(A)'s power. - HELD THAT: - The Tribunal observed that although the Assessing Officer rejected the ESOP claim partly on the ground that no revised return was filed (relying on the Supreme Court decision cited by the AO), the CIT(A) was entitled to direct that the AO examine the ESOP claim on merits and compute the allowable deduction in accordance with the Special Bench decision in Biocon, which treats ESOP cost on a straight line basis. The Tribunal agreed that the AO should restrict the claim for the year to the expenditure actually pertaining to that year and follow the Biocon approach in computation. However, the Tribunal held that the CIT(A) lacked jurisdiction to direct the AO to decide or allow claims relating to earlier assessment years; if the assessee makes claims for earlier years those must be considered by the AO in accordance with law when raised. [Paras 10, 11]

CIT(A)'s direction to have the AO consider and compute the ESOP deduction for the year under law (following Biocon) is maintained; the direction to the AO to deal with or allow claims for earlier years is set aside as unwarranted.

Final Conclusion: The revenue's appeal is dismissed. The CIT(A)'s allowance in principle of 60% depreciation on software is upheld with the AO directed to verify actual cost for computation; the CIT(A)'s direction to have the AO consider the ESOP deduction on merits following the Biocon Special Bench ratio is sustained, but the CIT(A)'s instruction to the AO to allow or decide claims for earlier years is modified as beyond its power.

Allowability of business promotion expenses - nexus between expenditure and business - reasonableness of quantum of business expenditure - revenue's role vis-a -vis business judgment - disallowance in scrutiny assessment

Allowability of business promotion expenses - nexus between expenditure and business - reasonableness of quantum of business expenditure - revenue's role vis-a -vis business judgment - Whether the part-disallowance of business promotion expenses upheld by the Commissioner (Appeals) was justified. - HELD THAT: - The Tribunal examined the Assessing Officer's and the Commissioner (Appeals)'s findings that a substantial portion of the business promotion expenses related to purchase of jewellery and semi-precious items and cash payments, and that the assessee failed to establish a specific linkage between particular gifts and specific sales. The Tribunal accepted that while genuineness and nexus with business are relevant, the law does not demand demonstration of a live, item-for-item causation between each gift and a corresponding sale; nor can the revenue substitute its commercial judgment for that of the businessman. At the same time, the reasonableness of the quantum of expenditure in relation to turnover is a relevant consideration. Balancing these principles and noting that there was no allegation of personal expenditure or capital nature, and that turnover and profits had increased proportionately, the Tribunal concluded that the entire disallowance was excessive. In the interests of justice and having regard to the need to test reasonableness of the expenditure, the Tribunal directed that the disallowance be restricted to forty percent of the total disallowance originally made by the AO. [Paras 5, 6]

Partly allow the appeal by reducing the disallowance: limit the disallowance to 40% of the AO's original total disallowance; appeal partly allowed.

Final Conclusion: The Tribunal held that business promotion expenses could not be entirely disallowed where there was no finding of personal or capital expenditure and where turnover and profit increased; while nexus must be plausible and quantum reasonable, the AO's full disallowance was excessive and is reduced to 40% of the original disallowance, appeal partly allowed.

Classification of income as business income versus income from other sources - intention test - investment versus business activity - passive ownership and absence of control negating business undertaking - consistency in assessment treatment and limited applicability of res judicata in income-tax proceedings - onus on Revenue to prove that income or loss arises from business

Classification of income as business income versus income from other sources - passive ownership and absence of control negating business undertaking - intention test - investment versus business activity - consistency in assessment treatment - Loss from the assessee's unit in Trump Hotel International, New York is to be treated under the head 'income from other sources' and not as business loss. - HELD THAT: - The Tribunal found that the assessee was a passive owner of one unit in a 160-unit hotel complex and had entered into a hotel maintenance and operation agreement whereby a managing company operated the unit, collected tariffs, and proportionately charged operating expenses. The assessee had no control over letting, tariffs or amenities and was not engaged in running the hotel. The intention at the time of acquisition and the factual matrix point to an investment, not a business undertaking. The Tribunal applied the principle in Sultan Brothers that where property (and its furniture) is let out for hotel use and the owner does not carry on hotel business, income falls under other sources. The Tribunal also noted that the same receipts had been accepted as income from other sources in earlier assessment years and, absent any change in facts, consistency militates against treating the receipts as business income. The Revenue had not discharged the burden to show that the activity was business of the assessee. For these reasons the finding of the lower authorities classifying the loss as business loss was set aside and directed to be treated as loss under income from other sources. [Paras 6]

Loss from the Trump Hotel unit to be treated as loss under income from other sources.

Classification of income as business income versus income from other sources - intention test - investment versus business activity - onus on Revenue to prove that income or loss arises from business - consistency in assessment treatment - Losses shown by the assessee from two US limited liability companies are to be treated as losses under 'income from other sources' and not as business loss. - HELD THAT: - On the facts the assessee, being a whole-time employee in India, had made capital outlays in two US LLCs as investments to earn returns and could not, by reason of occupational constraints and the nature of holdings, be conducting business through those entities. The Assessing Officer did not establish that the assessee's intention was to carry on business, nor discharged the onus of proving business character of the losses. The losses had also been consistently treated as income from other sources in earlier years. In the absence of any contrary finding or material showing a business activity by the assessee, the Tribunal disagreed with the classification as business loss and directed that the losses be treated as under income from other sources. [Paras 7]

Losses from the two US LLCs to be treated as losses under income from other sources.

Final Conclusion: The appeal is allowed. The Assessing Officer is directed to treat the loss from the Trump Hotel unit and the losses from the two US LLCs as losses under 'income from other sources' for assessment purposes for AY 2016-17 and proceed accordingly.

Royalty - fees for technical services - business income versus royalty - Article 12 of the India-Finland tax treaty - Explanation 4/5/6 to Section 9(1)(vi) of the Income tax Act and treaty interpretation under Article 3(2)

Royalty - business income versus royalty - Article 12 of the India-Finland tax treaty - Explanation 4/5/6 to Section 9(1)(vi) of the Income tax Act and treaty interpretation under Article 3(2) - Whether receipts from sale of off the shelf software and payments for maintenance and support (including upgrades) are 'royalty' under Article 12 of the India Finland tax treaty and under Explanation 2 to Section 9(1)(vi) of the Income tax Act. - HELD THAT: - The Tribunal examined the reseller/distributor agreements and found that the assessee retained exclusive ownership of all intellectual property rights in the software; distributors were granted only a non exclusive right to market and distribute the copyrighted article and had no right to source code, to modify, to reproduce (except limited backup), or otherwise commercially exploit the underlying copyright. On that factual matrix the Court concluded that the transferee acquired the right to use the copyrighted article (the software product) and not the right to use the copyright embedded therein. Consequently, amounts received on sale/distribution of the software and for provision of sub releases/main releases, maintenance and support constituted business income and not 'royalty' within the meaning of Article 12(3)(a) of the India Finland treaty. The Tribunal further held that the retrospective domestic insertions (Explanation 4, 5 and 6 to Section 9(1)(vi)) could not be read into the treaty via Article 3(2) and that unilateral amendments to domestic law do not alter the treaty's exhaustive definition of 'royalty' absent a bilateral amendment. The Tribunal followed and applied its earlier reasoning in the assessee's own preceding years' decisions and declined to treat the receipts as royalty. [Paras 13, 14, 15, 16]

Amounts received from distributors for sale of specialized off the shelf software and for maintenance/support (including upgrades) are not 'royalty' under Article 12 of the India Finland tax treaty and are business income; Grounds of appeal Nos. 2 to 5 allowed.

Interest under Section 234A and Section 234B - Treatment of interest under Sections 234A and 234B consequent to the reassessment of tax liability. - HELD THAT: - The Tribunal observed that interest calculations under Sections 234A and 234B are consequential on tax liability determined after deciding the substantive issues. Accordingly, computation and quantification of interest were not finally determined by the Tribunal and are restored to the Assessing Officer for redetermination in the light of the Tribunal's decision on taxable income. [Paras 15]

Interest under Sections 234A and 234B restored to the file of the Assessing Officer for consequential computation; Grounds of appeal Nos. 8 and 9 disposed accordingly.

Penalty under Section 271(1)(c) - Validity of initiation of penalty proceedings under Section 271(1)(c). - HELD THAT: - The Tribunal considered the challenge to initiation of penalty proceedings premature and therefore did not adjudicate the merits of any penalty claim. The plea against initiation was dismissed as premature, leaving substantive penalty proceedings to be pursued (or not) in the appropriate forum and at the appropriate stage. [Paras 16]

Challenge to initiation of penalty proceedings under Section 271(1)(c) dismissed as premature.

Final Conclusion: Appeals for A.Y. 2013 14 and A.Y. 2014 15 are partly allowed: receipts from distributors for sale of software and for maintenance/support (including upgrades) are held to be business income and not 'royalty' under Article 12 of the India Finland treaty; interest computations are restored to the Assessing Officer for consequential determination; challenge to initiation of penalty proceedings dismissed as premature.

Revisional jurisdiction under Section 263 - Application of the proviso to Section 92C(4) - Eligibility for deduction under Sections 10A and 10B on suo-moto transfer pricing additions - Precedential weight of CIT v. I-Gate (Karnataka High Court) on Section 92C(4)

Revisional jurisdiction under Section 263 - Application of the proviso to Section 92C(4) - Eligibility for deduction under Sections 10A and 10B on suo-moto transfer pricing additions - Precedential weight of CIT v. I-Gate (Karnataka High Court) on Section 92C(4) - Whether the Commissioner was justified in exercising revisional jurisdiction under Section 263 to direct withdrawal of deductions under Sections 10A and 10B to the extent attributable to suo-moto deemed mark-up added by the assessee for A.Y 2009-10. - HELD THAT: - The Tribunal examined whether the A.O.'s implicit allowance of deductions under Sections 10A and 10B in respect of the assessee's own deemed mark-up could be held to be an erroneous order prejudicial to revenue so as to attract Section 263. The CIT had held that the proviso to Section 92C(4) disqualifies such additions from tax-holiday deductions and therefore the A.O.'s allowance was erroneous. The Tribunal, however, held that the A.O.'s view was consistent with the decision of the Hon'ble Karnataka High Court in CIT v. I-Gate Global Solutions Ltd., which concluded that the proviso to Section 92C(4) applies where the ALP is determined by the assessing authority and not where ALP (or adjustments) are determined by the assessee. The assessee had placed the I-Gate judgment and Tribunal decisions in support of its position during revisional proceedings, and those authorities were on record though not referred to by the CIT. In the absence of any contrary High Court decision brought to notice, and given that the A.O.'s view conformed to the cited precedent and Tribunal decisions, the Tribunal concluded that the A.O.'s view could not be characterized as "erroneous" so as to justify exercise of revisional jurisdiction under Section 263. Accordingly the order under Section 263 was set aside and the A.O.'s assessment order restored insofar as the issue related to A.Y. 2009-10. [Paras 8, 9, 10]

The order under Section 263 is set aside and the assessment order passed by the A.O. for A.Y. 2009-10 is restored in respect of the disputed 10A/10B deductions.

Revisional jurisdiction under Section 263 - Application of the proviso to Section 92C(4) - Eligibility for deduction under Sections 10A and 10B on suo-moto transfer pricing additions - Precedential weight of CIT v. I-Gate (Karnataka High Court) on Section 92C(4) - Whether the Commissioner was justified in exercising revisional jurisdiction under Section 263 to direct withdrawal of deduction under Section 10B attributable to the assessee's suo-moto deemed mark-up for A.Y 2011-12. - HELD THAT: - The Tribunal observed that the factual and legal controversy in A.Y. 2011-12 was identical to that decided in the A.Y. 2009-10 appeal. Having concluded in the earlier part of the consolidated decision that the A.O.'s allowance of deduction in respect of the assessee's own deemed mark-up was not "erroneous" in view of the I-Gate precedent and relevant Tribunal decisions, the Tribunal applied the same reasoning mutatis mutandis to A.Y. 2011-12. Consequently, the CIT's exercise of revisional jurisdiction under Section 263 to withdraw the Section 10B deduction was held to be unjustified and was set aside, restoring the A.O.'s assessment order insofar as the issue concerned. [Paras 16, 17]

The order under Section 263 is set aside and the assessment order passed by the A.O. for A.Y. 2011-12 is restored in respect of the disputed 10B deduction.

Final Conclusion: Both appeals are allowed: the orders passed by the Commissioner under Section 263 for A.Y. 2009-10 and A.Y. 2011-12 are set aside and the respective assessment orders passed by the Assessing Officer are restored insofar as they relate to the disputed deductions under Sections 10A and 10B.

Nature of receipts from sale of shrink-wrap software - definition of 'royalty' under Explanation 2 to section 9(1)(vi) - application of Article 12(3) of the India-USA DTAA - distinction between sale of copyrighted article and transfer of copyright - binding effect of coordinate bench decisions and rule of construction favouring the assessee where two reasonable interpretations exist

Nature of receipts from sale of shrink-wrap software - definition of 'royalty' under Explanation 2 to section 9(1)(vi) - application of Article 12(3) of the India-USA DTAA - distinction between sale of copyrighted article and transfer of copyright - binding effect of coordinate bench decisions and rule of construction favouring the assessee where two reasonable interpretations exist - Receipts from sale of shrink-wrap software to Indian distributors/resellers are not exigible to tax in India as 'royalty'. - HELD THAT: - The Tribunal found that the facts for A.Y. 2016-17 were pari materia with those in the assessee's earlier years where coordinate benches had held similar receipts not to be royalty. Having regard to the consistent series of Tribunal decisions in the assessee's favour (including the decision for A.Y.2015-16 in ITA No. 7027/Mum/2018), and applying the settled principle that where two reasonable constructions of a taxing provision are possible the construction favourable to the assessee should be adopted, the Tribunal followed the earlier coordinate-bench view. The Tribunal noted conflicting decisions of some High Courts and of lower authorities but accepted the coordinate-bench jurisprudence and relevant higher-court guidance relied upon in those orders. On that basis the addition treating the entire receipts from sale of shrink-wrap software as royalty under the domestic provision and the DTAA was vacated for the year under consideration. [Paras 9, 10]

The addition treating sale receipts of shrink-wrap software as 'royalty' is vacated and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal for A.Y 2016-17, holding that receipts from sale of shrink-wrap software to Indian distributors/resellers are not taxable as royalty in India and directing deletion of the addition.

Levy of fee under section 234E - prospective operation of amendment to section 200A - processing of TDS statements under section 200A - retrospective versus prospective effect of tax amendments - statutory machinery provision cannot confer retrospective charging power

Levy of fee under section 234E - prospective operation of amendment to section 200A - Whether fee under section 234E could be levied for the assessment year 2013-2014 in view of amendments enabling computation under section 200A taking effect from 01.06.2015. - HELD THAT: - The Tribunal accepted the view of the jurisdictional High Court that the amendments to section 200A enabling computation of fee under section 234E took effect only from 1.6.2015 and are prospective. The court in M/s. Sarala Memorial Hospital (referenced) relied on the reasoning in Fatheraj Singhvi that no express power existed under section 200A before 1.6.2015 to compute or determine the fee under section 234E, and therefore demands for periods prior to that date could not be sustained. The Tribunal noted the existence of contrary decisions but found that Circular No.19 of 2015 and the High Court's analysis support the conclusion that the amendment is prospective; accordingly the levy of fee for AY 2013-2014 could not be upheld. The Tribunal applied that binding High Court view to set aside the levy. [Paras 7, 8]

Levy of fee under section 234E for AY 2013-2014 set aside and appeal allowed.

Final Conclusion: The Tribunal allowed the appeal and directed that the fee levied under section 234E for assessment year 2013-2014 be deleted, holding that the amendment enabling computation under section 200A operates prospectively from 01.06.2015 and does not sustain demands for earlier periods.

Treatment of consumption incentives/discounts as revenue expenditure - treatment of software expenditure as revenue or capital (application software; enduring benefit test) - precedent of coordinate bench in assessee's own case

Treatment of consumption incentives/discounts as revenue expenditure - precedent of coordinate bench in assessee's own case - Whether the amounts shown as consumption debtors/discounts granted to advertisers are deductible as revenue expenditure and not an ascertained liability. - HELD THAT: - The Tribunal accepted the assessee's case that the entries represented consumption incentives/discounts granted to advertisers based on airtime consumption and recorded in a control discount account rather than an ascertained liability. The assessee produced deal documents and details of credit balances showing that the amounts were in the nature of incentives given to advertisers and were reflected against income. The CIT(A)'s conclusion treating the amounts as revenue expenditure was sustained by the coordinate bench in the assessee's earlier ITAT order (reproduced at para. 30 of that order), and the present Bench, after considering that reasoning, followed the coordinate-bench decision and dismissed the department's ground attacking the deletion of the addition. [Paras 6]

The addition disallowing consumption debtors/discounts is deleted; the amounts are revenue expenditure and the department's ground is dismissed.

Treatment of software expenditure as revenue or capital (application software; enduring benefit test) - precedent of coordinate bench in assessee's own case - Whether the software expenses claimed by the assessee are capital in nature or revenue expenditure. - HELD THAT: - The Tribunal's earlier decision (reproduced at para. 27 of that order) endorsed the view that the software expenditure related to application software upgradation and did not create an asset of enduring nature; accordingly, it was revenue in nature and allowable in the profit and loss account. The CIT(A)'s deletion of the disallowance was found to be justified on the ground that no enduring benefit or acquisition of a capital asset resulted from the expenditure, and reliance on relevant precedent was noted. The present Bench, having examined and adopted the coordinate-bench reasoning, dismissed the department's challenge to the deletion. [Paras 6]

The addition disallowing software expenses is deleted; the software expenditure is revenue in nature and the department's ground is dismissed.

Final Conclusion: The department's appeal is dismissed in respect of the challenged additions; the Tribunal followed its coordinate-bench decision sustaining the CIT(A)'s deletions of the additions for consumption incentives and software expenses.

Genuineness, identity and creditworthiness of sundry creditors - addition to income for unexplained sundry creditors - admission of additional evidence under Rule 46A - verification by issuing commission under section 131(1)(d)

Genuineness, identity and creditworthiness of sundry creditors - addition to income for unexplained sundry creditors - admission of additional evidence under Rule 46A - verification by issuing commission under section 131(1)(d) - Whether the addition of Rs. 19,98,102 made in respect of two sundry creditors was sustainable where the assessee furnished invoices, transport receipts, bank payment evidence, statutory forms and confirmations, and the assessing officer did not effectively disprove those materials or obtain verification by issuing commission. - HELD THAT: - The Tribunal found that the assessee produced before the lower authorities, and as additional evidence under Rule 46A, detailed supporting documents including bills, transporter receipts, bank statements evidencing payment, statutory sales tax forms and confirmations for the two creditors. The assessing officer's remand report accepted verification of one party (Westwind Shipping & Logistics Pvt. Ltd.) and confirmed maintenance of books and TDS deduction, while the notice to the other (Kankane Oil Mills) was returned unserved. The Tribunal observed that for verification of the out-of-state supplier (Kankane Oil Mills), the assessing officer could have availed the mechanism of issuing commission under section 131(1)(d) given the distance, but did not do so. The assessing officer neither expressly disproved the documentary evidence nor conducted the available avenues of verification; the CIT(A) sustained the addition without negativing the materials furnished by the assessee. In these circumstances the Tribunal concluded that the addition, made on an assumption basis despite admissible supporting evidence and without adequate disproval or verification by the assessing officer, could not be sustained and the appeal had to be allowed. [Paras 6, 7]

Addition of Rs. 19,98,102 in respect of the two sundry creditors set aside and the assessee's appeal allowed.

Final Conclusion: The Tribunal accepted the assessee's documentary evidence (admitted under Rule 46A), found that the assessing officer failed to disprove or properly verify the claims (including by not issuing commission under section 131(1)(d) where appropriate), and therefore set aside the additions; the appeal is allowed.

Eligibility for exemption under Notification No.21/2002-Cus (List 37, Sl. No.22 / Sl. No.363A) - interpretation of a taxing notification - plain meaning rule and supply of omission - distinction between 'Skin Barriers Micropore Surgical Tapes' and general-purpose micropore/transpore tapes - classification as ostomy appliance or accessory - invocation of extended period and penalty under customs law in face of bona fide belief

Eligibility for exemption under Notification No.21/2002-Cus (List 37, Sl. No.22 / Sl. No.363A) - distinction between 'Skin Barriers Micropore Surgical Tapes' and general-purpose micropore/transpore tapes - Whether the imported Micropore, Transpore and Tegaderm tapes qualify as 'Skin Barriers Micropore Surgical Tapes' and are therefore eligible for exemption under Notification No.21/2002-Cus (List 37, Sl. No.22 / Sl. No.363A). - HELD THAT: - The Tribunal examined the language of the notification and the material on record and accepted the Department's evidence that products described and marketed as 'Skin Barriers Micropore Surgical Tapes' exist in the market. The appellants' contention that the entry should be read with a comma as 'Skin Barriers', 'Micropore Surgical Tapes' was rejected: when products corresponding to the combined description exist, the notification cannot be rewritten by supplying punctuation. Applying the plain meaning rule in tax law, the Tribunal held that the impugned imported tapes did not match the description of the items in the notification because they lack the characteristic properties of skin-barrier microporous products as demonstrated by the Department's RUD. Consequently the goods imported by the appellants were not eligible for exemption under the said notification. [Paras 21, 22, 23, 26]

The imported Micropore, Transpore and Tegaderm tapes do not qualify as 'Skin Barriers Micropore Surgical Tapes' and are not eligible for exemption under Notification No.21/2002-Cus (List 37, Sl. No.22 / Sl. No.363A).

Classification as ostomy appliance or accessory - interpretation of 'appliance' in relation to ostomy products - Whether the impugned tapes can be treated as 'ostomy products (appliances)' or as accessories to ostomy appliances within List 37 so as to attract the exemption. - HELD THAT: - The Tribunal analysed the ordinary meaning of 'appliance' and the nature of the imported goods. It concluded that the impugned tapes are at best disposables or general-purpose adhesive tapes and do not constitute ostomy 'appliances' as intended by the notification. The Tribunal further found that the impugned products do not possess the special properties (such as hydrocolloid/skin barrier and absorbent characteristics) indicated by the notification's ostomy-related entries and therefore cannot be held to be accessories qualifying for exemption under Sl. No.363(A)/(B). [Paras 24, 26]

The impugned tapes are not 'ostomy products (appliances)' nor accessories meeting the ostomy-specific description in List 37 and therefore are not entitled to exemption on that basis.

Interpretation of a taxing notification - plain meaning rule and supply of omission - Whether the apparent lack of a comma (or other punctuation) in the notification could be supplemented by the adjudicating authority or the Tribunal to broaden the scope of the exemption. - HELD THAT: - Relying on settled principles that courts and tribunals must give effect to the plain and unambiguous language of taxing notifications and are not competent to supply alleged omissions, the Tribunal held that where products matching the combined description exist, it is impermissible to read the text as separate entries by inserting punctuation. The Tribunal applied the plain meaning rule and cited authority that omissions in a taxation notification cannot be judicially supplied. [Paras 22, 23, 26]

The notification cannot be re written by supplying a missing comma; the plain wording must be applied and no punctuation may be introduced to alter the scope of the exemption.

Invocation of extended period and penalty under customs law in face of bona fide belief - Whether the demand encompassed the extended period and whether penalties under Section 114A and other consequential penalties were sustainable. - HELD THAT: - The Tribunal assessed the assessment history, the fact that consignments had been cleared over a long period, and the appellants' bona fide belief in entitlement to exemption supported by prior certifications and a coordinate-bench decision (Sutures India). Given these circumstances, and that the Department did not demonstrate that consignments were uniformly cleared under self-assessment without examination, the Tribunal held that the extended period was not invocable. On merits, having found the goods ineligible for exemption for the extended period question the Tribunal limited the demand to the normal period only and held that penalties should not be imposed. [Paras 29, 30]

Demand sustained only for the normal limitation period; extended period not invoked and penalties set aside.

Final Conclusion: The Tribunal held that the appellants' imported Micropore, Transpore and Tegaderm tapes do not satisfy the description 'Skin Barriers Micropore Surgical Tapes' in Notification No.21/2002-Cus and are not ostomy appliances or qualifying accessories under List 37; accordingly exemption under Sl. No.363A/Sl. No.22 is denied. The extended period for demand was held not invocable in the circumstances and penalties were set aside; the demand was confirmed only for the normal limitation period.

Valuation of imported goods under Section 14 of the Customs Act, 1962 read with Customs Valuation Rules, 2007 - use of National Import Database (NIDB) for determination of customs value - confiscation and penalty under the Customs Act, 1962 - redemption fine and penalty in adjudication under the Customs Act, 1962

Valuation of imported goods under Section 14 of the Customs Act, 1962 read with Customs Valuation Rules, 2007 - use of National Import Database (NIDB) for determination of customs value - Whether the adjudicating authority could enhance declared CIF value for imported LED TVs solely on the basis of NIDB data without following Section 14 of the Customs Act, 1962 read with the Customs Valuation Rules, 2007. - HELD THAT: - The Tribunal found that the adjudicating authority enhanced the declared value relying exclusively on NIDB data without applying the statutory scheme for valuation contained in Section 14 of the Customs Act, 1962 read with the Customs Valuation Rules, 2007. The NIDB, being a compilation of import transaction data across ports, may indicate prevailing import prices but cannot supplant the statutory methodology prescribed for transaction value and related valuation inquiries. The Tribunal agreed with authorities cited that valuation must be ascertained in accordance with Section 14 and the Valuation Rules, and held that the impugned order was cryptic in that it ignored those provisions and proceeded directly on NIDB data. Because the adjudicating authority did not follow the prescribed legal process for valuation, the order enhancing value (and consequent consequential measures) was held to be unsustainable.

Impugned enhancement of value based solely on NIDB data is unsustainable; the order is set aside.

Confiscation and penalty under the Customs Act, 1962 - redemption fine and penalty in adjudication under the Customs Act, 1962 - Whether the order of confiscation, imposition of penalty and redemption fine could be sustained in view of the defective valuation exercise. - HELD THAT: - Because the foundational valuation exercise was not carried out in compliance with Section 14 and the Valuation Rules and instead rested on NIDB data, the Tribunal treated the consequential measures-confiscation, redemption fine and penalties-as founded on an unsustainable premise. The Tribunal therefore set aside the impugned order in its entirety and allowed the appeal filed by the importer. The departmental appeal against the relief granted to the importer was consequently dismissed.

Order of confiscation, redemption fine and penalty set aside; appeal of the importer allowed and Departmental appeal dismissed.

Final Conclusion: The Tribunal set aside the impugned adjudication order which had enhanced value and imposed confiscation, redemption fine and penalties based solely on NIDB data without applying Section 14 and the Customs Valuation Rules; the importer's appeal is allowed and the Departmental appeal is dismissed.

Liquidation expenses payable from sale proceeds - requirement of prior approval or intimation to the official liquidator/Court for expenses to qualify as liquidation expenses - secured mortgagee's entitlement vis-a -vis liquidation expenses and status as unsecured creditor for unapproved expenses - priority of claims under the Companies Act including government dues and salaries - official liquidator's report and its acceptance by the Court

Liquidation expenses payable from sale proceeds - requirement of prior approval or intimation to the official liquidator/Court for expenses to qualify as liquidation expenses - secured mortgagee's entitlement vis-a -vis liquidation expenses and status as unsecured creditor for unapproved expenses - Claims for reimbursement of travelling, lodging, manning, management and provisioning expenses were rightly rejected to the extent they were not approved by the Court or not communicated to the official liquidator before being incurred and thus were not admissible as liquidation expenses. - HELD THAT: - The Court examined the orders passed in the various Company Applications which expressly treated certain categories of expenditure as liquidation expenses to be paid from sale proceeds when incurred pursuant to or with the knowledge/approval of the official liquidator or Court. Where the applicant had agreed in specific orders to bear certain costs, or where the official liquidator had taken possession and liability for charges during a defined period, the official liquidator admitted those expenses (partly or wholly). However, claims for expenses incurred without prior approval or intimation to the official liquidator and not falling within the periods for which the official liquidator assumed responsibility were rejected. The Court found no infirmity in the official liquidator allowing only those parts of claims that conformed to the orders (e.g., valuation, publication, and manning for periods after official possession) and rejecting other amounts such as travelling and lodging which the applicant alone had to bear or had not procured prior sanction for. The rejection therefore accorded with the Court's directions and the principle that unapproved expenditures by a secured creditor do not automatically become liquidation expenses payable from the sale proceeds. [Paras 32, 33, 34, 35, 36]

The partial rejection of the applicant's claimed liquidation expenses for lack of Court approval or prior intimation to the official liquidator is justified and in conformity with the Court's orders.

Priority of claims under the Companies Act including government dues and salaries - secured mortgagee's entitlement vis-a -vis liquidation expenses and status as unsecured creditor for unapproved expenses - Claims for port dues and certain salary remittances were rightly rejected because they fall within the statutory priority mechanism (government dues and wages) and, if admitted, would disturb the order of priority prescribed under the Companies Act. - HELD THAT: - The Court accepted the official liquidator's reasoning that port dues and some salary claims fall within the statutory priority framework and therefore cannot be admitted from sale proceeds ahead of workmen and secured creditors. The report noted that such claims, being government dues or claims attracting priority under the Companies Act, must be paid only in accordance with the statutory order (the official liquidator correctly treated them as not payable as liquidation expenses from the sale proceeds in the manner claimed). Admission of those claims in the manner sought would disturb the priority mechanism; accordingly, the official liquidator's rejection of those amounts was upheld. [Paras 37]

The official liquidator correctly rejected port dues and certain salary claims on priority grounds under the Companies Act; those claims are not admissible as liquidation expenses in the manner claimed.

Official liquidator's report and its acceptance by the Court - requirement of prior approval or intimation to the official liquidator/Court for expenses to qualify as liquidation expenses - The Official Liquidator's Report No. 141 of 2018, allowing part of the applicant's claims and rejecting the rest, shows no infirmity and has been properly accepted by the Court. - HELD THAT: - Having reviewed the orders recording the parties' undertakings and the timeline of possession and sale confirmations, the Court found the official liquidator's determinations to be consistent with those orders and the applicable principles. The admitted items were those which fell within the periods and categories acknowledged by the Court or which had been properly communicated; the rejected items were either outside those periods, not approved, or attracted statutory priority. The Court observed that the applicant has not impugned the earlier order accepting the official liquidator's report, and no case was made out to set aside the report's rejections. [Paras 38, 39]

The Official Liquidator's Report No. 141 of 2018 was correctly made and accepted; the Company Application seeking reimbursement of the balance claims is dismissed.

Final Conclusion: The Court dismissed the Company Application and upheld the Official Liquidator's report which admitted part of the claimed liquidation expenses and rejected the remainder for lack of prior approval/communication or because the claims attracted statutory priority; there shall be no order as to costs.

Inordinate delay / laches in issuance of show cause notice - requirement to exercise adjudicatory powers within a reasonable period - prejudice from delayed proceedings as ground for quashing adjudication - raising delay at appellate stage as mixed question of fact and law - commonality of issues in group appeals - objection by one appellant covering all

Inordinate delay / laches in issuance of show cause notice - requirement to exercise adjudicatory powers within a reasonable period - prejudice from delayed proceedings as ground for quashing adjudication - Whether the seven-year delay in issuance of the show cause notice vitiates the adjudication and requires quashing of the penalty order. - HELD THAT: - The Tribunal found that SEBI detected irregularities in August 2011 and investigated the period January 4, 2010 to January 10, 2011, but issued the show cause notice only in 2017, a delay of seven years (para 6). The explanations offered by SEBI - delay due to changes in investigation officers and procedural steps - were examined and held to demonstrate a lackadaisical and leisurely approach rather than bona fide reasons for delay; substantial periods after preliminary and final reports remained unaddressed and the additional affidavit explanation was characterised as an afterthought (para 8). Reliance was placed on precedents establishing that, absent a statutory limitation, authorities must act within a reasonable time and undue delay causing prejudice can bar prosecution; the Tribunal treated the present facts as squarely covered by its earlier decisions (paras 12-14). Applying that principle, the Tribunal held that SEBI did not exercise its adjudicatory power within a reasonable period and therefore the penalty could not be sustained. The Tribunal declined to go into merits because the delay itself was determinative (paras 15-16). [Paras 8, 12, 14, 15, 16]

The seven-year delay in issuing the show cause notice was inordinate; the adjudication was not initiated within a reasonable period and the penalty order was quashed.

Raising delay at appellate stage as mixed question of fact and law - commonality of issues in group appeals - objection by one appellant covering all - Whether the appellants could raise the plea of delay before the Tribunal though not uniformly raised before the Adjudicating Officer. - HELD THAT: - The Tribunal observed that the issue of delay is a mixed question of fact and law which, when it goes to the root of the matter, may be raised at the appellate stage even if not pressed before the AO (para 11). It noted that some appellants had specifically raised the inordinate delay before the AO (para 9) and that, in group appeals decided by a common order, an objection raised by one appellant will cover all appellants where the objection is a mixed question of law going to the root of the matter (para 11). Accordingly, the Tribunal entertained the delay plea and proceeded to decide it on merits. [Paras 9, 11]

The plea of inordinate delay could be considered by the Tribunal at the appellate stage; an objection raised by one appellant in group proceedings covers all appellants when it is a mixed question of law going to the root of the matter.

Final Conclusion: The Tribunal held that SEBI's seven year delay in issuing the show cause notice was inordinate and, as adjudication was not initiated within a reasonable period, the penalty order was quashed; appeals allowed and no costs were imposed.

Opportunity of hearing - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - quantification and communication - section 125(1)(e) of Chapter V of Finance Act, 2019 - setting aside administrative communication for non consideration of representations

Opportunity of hearing - setting aside administrative communication for non consideration of representations - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Impugned communication dated 05th March, 2020 rejecting the petitioner's declaration under the Scheme was issued without affording an opportunity of hearing and without considering the petitioner's case. - HELD THAT: - The Court found that the respondents issued the communication rejecting the declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, without giving the petitioner an opportunity of hearing and without addressing the submissions advanced by the petitioner. Although parties disputed whether quantification occurred before the Scheme cut off date, the determinative defect was procedural: lack of hearing and non consideration. In consequence, the communication was set aside and the matter was remitted for fresh consideration by affording the petitioner a hearing on the directed date. The Court left open the substantive contentions, including any challenge under section 125(1)(e) of Chapter V of the Finance Act, 2019, permitting the respondents to decide afresh after hearing the petitioner.

Order dated 05th March, 2020 set aside; respondent No.2 directed to afford the petitioner a hearing on 09th July, 2020 at 11:30 a.m. and to reconsider the matter.

Final Conclusion: The writ petition is allowed to the extent that the impugned communication dated 05th March, 2020 is set aside for failure to afford an opportunity of hearing; respondent No.2 is directed to hear the petitioner on 09th July, 2020 at 11:30 a.m. and to decide the matter afresh. All other rights and contentions are left open.

Classification of activity as construction service - classification of activity as works contract service - supply of material with service - no service tax liability prior to 1.6.2007 on works contract - payment of VAT as relevant indicium - Larsen & Toubro principle on works contract

Classification of activity as works contract service - supply of material with service - no service tax liability prior to 1.6.2007 on works contract - Whether the activity carried out by the appellant, involving supply of material along with construction services, is classifiable as works contract service and, consequently, not liable to service tax for the period in question. - HELD THAT: - The Tribunal found on record that the appellant supplied material along with the construction activity and was paying VAT during the impugned period. Applying the principle in Larsen & Toubro as cited by the Tribunal, activities where material is supplied with the service are to be classified as works contract service. Under that classification, service tax was not leviable prior to 1.6.2007. On these concurrent facts and law, the demand of service tax under construction service cannot be sustained for the period 10.9.2004 to 31.12.2005.

The activity is classifiable as works contract service and no service tax is payable for the period 10.9.2004 to 31.12.2005; the demand is quashed.

Final Conclusion: The impugned order demanding service tax under construction service for the period 10.9.2004 to 31.12.2005 is set aside; the appeal is allowed with consequential relief.

Maintainability of appeal for non-compliance with statutory deposit - deposit of 7.5% under Section 35F of the Central Excise Act - cash deposit requirement cannot be substituted by attachment or other security - tribunal's powers are confined to the statute and cannot alter statutory mandate

Deposit of 7.5% under Section 35F of the Central Excise Act - maintainability of appeal for non-compliance with statutory deposit - tribunal's powers are confined to the statute and cannot alter statutory mandate - Appeals are not maintainable in the absence of the statutory cash deposit required by Section 35F. - HELD THAT: - The Tribunal noted that Section 35F, as amended, requires deposit of 7.5% of the confirmed dues for an appeal to be entertained. The appellants conceded that the requisite deposit had not been made and that they were unable to make the deposit even if time were permitted. The Tribunal observed that it is a creature of the Act and must follow the statutory mandate; it has no jurisdiction to modify or relax the cash-deposit requirement prescribed by Section 35F. Having regard to the admitted non-compliance, the appeals could not be entertained and were therefore not maintainable. [Paras 2, 5]

Appeals dismissed as not maintainable for non-compliance with the deposit requirement; stay petitions and miscellaneous applications disposed of.

Cash deposit requirement cannot be substituted by attachment or other security - tribunal's powers are confined to the statute and cannot alter statutory mandate - Attachment of the disputed premises cannot be treated as or adjusted against the cash deposit mandated by Section 35F. - HELD THAT: - The appellants sought to treat attachment of the disputed premises as satisfying the deposit requirement. The Tribunal examined Section 35F and held that the provision requires a cash deposit of 7.5% and contains no provision permitting adjustment by another form of security or attachment. Consequently, the attachment could not be accepted in lieu of the statutory cash deposit. [Paras 3]

Attachment of premises not acceptable as substitute for the statutory cash deposit under Section 35F.

Final Conclusion: The Tribunal held that, under the amended Section 35F, a cash deposit of 7.5% is mandatory for entertaining the appeals; attachment cannot substitute for such deposit; appellants admitted inability to deposit, and the appeals were dismissed as not maintainable while stay petitions and miscellaneous applications were disposed of.

Condonation of delay - Section 5 of the Limitation Act - sufficient cause for condonation - Strict adherence to limitation period - Review of previously accepted order without stated reasons - Negligence of department in procedural handling

Condonation of delay - Section 5 of the Limitation Act - sufficient cause for condonation - Review of previously accepted order without stated reasons - Negligence of department in procedural handling - Application for condonation of delay under Section 5 of the Limitation Act was not made out and is dismissed, with consequent dismissal of the appeal. - HELD THAT: - The Tribunal examined the explanation placed on record by the department in the datesheet chart and the annexed office note-sheet. It found that the order originally proposed to be challenged had been accepted by the Committee of Commissioners, with acceptance recorded on 19 December, 2018, and that a subsequent direction to review that acceptance was issued on 15 May, 2019 without any stated reasons. The reviewing authority's order likewise failed to state reasons for recalling the earlier acceptance. The department's initial explanation attributing delay to Lok Sabha elections was held insufficient; the later proffered explanation was inconsistent with the earlier one and was characterised by the Tribunal as unreasonable and reflective of negligence in departmental procedure. The Tribunal emphasised that where the limitation statute prescribes a time period for filing appeals, adherence to that timeline is required; although the Tribunal has power to condone delay, the applicant must demonstrate a sufficient cause. On the material before it the Tribunal concluded that the explanations do not satisfy the threshold of 'sufficient cause' under Section 5 and that the delay stemmed from departmental negligence in first accepting and then inexplicably directing a review of the order to be challenged. [Paras 4, 5, 6, 7]

Application for condonation of delay dismissed; appeal consequentially dismissed.

Final Conclusion: The Tribunal dismissed the application for condonation of delay for want of sufficient cause under Section 5 of the Limitation Act and accordingly dismissed the appeal; the departmental explanation was held inconsistent, unreasonable and attributable to procedural negligence and the unexplained review of an earlier accepted order.

Limitation for filing appeal before Commissioner (Appeals) under Section 35 of the Central Excise Act, 1944 - condonation of delay - benefit of doubt where adjudication order not received and mode of dispatch not ascertainable - remand for fresh decision on merits after affording opportunity to present case

Limitation for filing appeal before Commissioner (Appeals) under Section 35 of the Central Excise Act, 1944 - condonation of delay - benefit of doubt where adjudication order not received and mode of dispatch not ascertainable - Whether the appeal against the adjudication order dated 10.06.2014 was barred by limitation. - HELD THAT: - The Tribunal recorded that the adjudication order dated 10.06.2014 was not received by the appellant and the appellant's RTI response indicated that the mode of dispatch of the Order in Original could not be ascertained. Applying the rule that where non receipt of an order is established or dispatch cannot be proved, the benefit of doubt is to be given to the appellant, the Tribunal accepted the appellant's assertion that the order was received on 04.08.2016 and noted that the appeal was filed on 15.09.2016. On that basis the Tribunal concluded that the appeal was within the limitation prescribed under Section 35 of the Central Excise Act, 1944 and set aside the finding of the Commissioner (Appeal) that the appeal was time barred. [Paras 6]

Impugned order holding the appeal barred by limitation is set aside and the appeal is held to be within time.

Remand for fresh decision on merits after affording opportunity to present case - Whether the matter should be remitted for adjudication on merits. - HELD THAT: - Having held the appeal to be within time, the Tribunal did not decide the merits but directed that the Commissioner (Appeal) should decide the issue on merits. The Tribunal ordered that the Commissioner (Appeal) must afford the appellant a reasonable opportunity to present its case before adjudicating the appeal afresh. [Paras 7]

The appeal is remanded to the Commissioner (Appeal) with a direction to decide the merits after granting the appellant a reasonable opportunity to be heard.

Final Conclusion: The Tribunal allowed the appeal by setting aside the finding of limitation, held the appeal to be within time on the facts, and remanded the matter to the Commissioner (Appeal) for fresh adjudication on merits after affording the appellant a reasonable opportunity to present its case.

Reverse tax - input tax credit - special rebate - stay on recovery subject to deposit - Section 55(4) of the Kerala Value Added Tax Act, 2003 - exercise of powers under Article 226 of the Constitution of India

Stay on recovery subject to deposit - Section 55(4) of the Kerala Value Added Tax Act, 2003 - exercise of powers under Article 226 of the Constitution of India - Modification of the Tribunal's condition for grant of stay of recovery by reducing the deposit from 30% to 20% and prescribing instalments and timelines. - HELD THAT: - The petition challenged the Tribunal's stay order which had conditioned the stay on payment of 30% within one month. The Court observed that although Section 55(4) of the 2003 Act is not strictly applicable to the second appeal, the Tribunal ought to have imposed a condition consistent with the percentage envisaged under Section 55(4). Having regard to the exceptional circumstances caused by the COVID-19 lockdown and the resultant hardship in generating business funds, the High Court exercised its constitutional jurisdiction under Article 226 to interfere with the impugned order to the limited extent of reducing the deposit condition. The Court directed that the reduced deposit (20%) be paid in two specified instalments by the dates ordered, after which the Tribunal shall proceed to consider and decide the pending appeal; failure to comply would permit respondents to pursue recovery in accordance with law. [Paras 4, 5]

Impugned order varied: deposit condition reduced from 30% to 20%, to be paid in two instalments by 25.06.2020 and 25.07.2020; on compliance the Tribunal shall consider and decide the appeal; failure to pay permits recovery action.

Final Conclusion: Writ petition disposed by altering the Tribunal's stay condition-payment reduced to 20% in two instalments with specified dates; on compliance the Tribunal to decide the second appeal, and respondents may proceed with recovery in case of non-compliance.