TaxTMI Updates e-Newsletter
Jul 08,2019

Composite supply - mixed supply - principal supply - naturally bundled supplies - definition of educational institution under the Exemption Notification - taxability of mixed supplies under Section 8(b) of the GST Act

Definition of educational institution under the Exemption Notification - Whether the Appellant qualifies as an "educational institution" within the meaning of clause 2(y) of the Exemption Notification and is therefore entitled to the exemption at serial no. 66. - HELD THAT: - The Appellant was not affiliated to any board or university and did not provide approved or recognised education as required by clause 2(y). The Memorandum of Understanding with St. Michael's School demonstrated that the Appellant's remedial classes were separate from the activities of the School and were provided at the instruction of parents, with the Appellant billing students directly. On this basis the Appellant was held not to fall within the definition of an educational institution under the Exemption Notification, and serial no. 66 was therefore inapplicable. [Paras 9]

The Appellant does not qualify as an educational institution under clause 2(y) of the Exemption Notification; the exemption at serial no. 66 is not available.

Composite supply - mixed supply - principal supply - naturally bundled supplies - taxability of mixed supplies under Section 8(b) of the GST Act - Whether the services provided by the Appellant to boarders constitute a composite supply or a mixed supply and the consequent tax treatment. - HELD THAT: - A composite supply requires (a) two or more goods or services supplied together, (b) those items to be naturally bundled in the ordinary course of business, and (c) they cannot be separated, with one being the principal supply. A mixed supply is a combination of two or more individual supplies for a single price which does not constitute a composite supply and where the items can be supplied separately. The Appellant supplied accommodation, food, laundry, housekeeping and other services, and also offered lodging without food (and day-boarders did not receive laundry), demonstrating that these components were independent and could be supplied separately. There was no established natural bundling or a single principal supply. Consequently the supplies fall within the definition of mixed supply and are taxable in accordance with the provision governing mixed supplies (Section 8(b) of the GST Act). The WBAAR's reasoning was found to be a well-reasoned speaking order and was upheld. [Paras 10, 11, 12]

The services form mixed supplies (not composite supplies) and the entire value of the combination is taxable under the rule for mixed supplies.

Final Conclusion: The appeal is dismissed; the Advance Ruling of the West Bengal Authority for Advance Ruling is upheld in all respects.

Profiteering - pass on benefit of tax rate reduction - scope of Section 171 of the CGST Act, 2017 - classification of goods by size for applicable GST rate

Profiteering - pass on benefit of tax rate reduction - classification of goods by size for applicable GST rate - scope of Section 171 of the CGST Act, 2017 - Whether the Respondent failed to pass on the benefit of the GST rate reduction to recipients in respect of the "HP V202b 19.5 inch Computer Monitor" for the investigation period - HELD THAT: - The Authority examined the notifications and classification of computer monitors by size and found that "Computer Monitors exceeding 17 inches but not exceeding 20 inches" had been attracting GST at 18% w.e.f. 22.07.2017, whereas the reduction effected w.e.f. 01.01.2019 applied only to monitors of size 20 inches to 32 inches. The product complained of, being a 19.5 inch monitor, was therefore already subject to GST @18% prior to 01.01.2019 and did not suffer any rate reduction on that date. As the anti-profiteering provisions under Section 171 can be invoked only where there is a reduction in the rate of tax or an additional benefit of input tax credit to be passed on, the core allegation that the Respondent had not passed on a rate reduction benefit for the 19.5 inch monitor during the relevant period was incorrect and unsustainable. The Respondent's documentary submissions showing consistent base price and charging of GST @18% further supported the finding of nil profiteering. [Paras 6, 7, 8, 10, 11]

The allegation of profiteering in respect of the 19.5 inch monitor is dismissed as there was no reduction in the rate of tax for that product during the relevant period and Section 171 is not attracted.

Final Conclusion: The application alleging non-passing of benefit of GST rate reduction in respect of the HP V202b 19.5 inch monitor is dismissed; the Authority finds nil profiteering as the product was already subject to the lower rate before 01.01.2019 and the conditions for invoking Section 171 of the CGST Act, 2017 are not satisfied.

Maintainability of writ petition pending statutory appeal - release of seized goods under the statutory scheme providing for release on payment of fine - interim relief in pending appellate proceedings - writ of mandamus against enforcement endorsement

Maintainability of writ petition pending statutory appeal - writ of mandamus against enforcement endorsement - interim relief in pending appellate proceedings - Maintainability of the writ petition seeking release of goods and conveyance when an appeal against the seizure order is pending before the statutory appellate authority - HELD THAT: - The Court found that the petitioner had filed an appeal before the Joint Commissioner (Appeals) against the order directing payment of tax and penalty in proceedings under the statutory scheme. The endorsement rejecting the petitioner's request for release recorded that confiscation proceedings were pending. Where an appeal is pending against the main order under the statutory remedy, the petitioner cannot seek by writ the relief which is the subject-matter of that appeal. The Court observed that the statutory provisions allow release of goods on payment of fine and that the appropriate course for the petitioner is to pursue interim relief in the pending appeal if the law permits.

Writ petition rejected; petitioner may seek appropriate interim relief before the appellate authority in the pending appeal.

Final Conclusion: The High Court dismissed the petition for writ relief against the enforcement endorsement and directed the petitioner to seek interim relief, if available, in the statutory appeal pending before the appellate authority.

Arm's length price - comparable uncontrolled price method - use of industry average as transfer pricing evidence - requirement of industry-specific empirical data for transfer pricing adjustments

Arm's length price - comparable uncontrolled price method - use of industry average as transfer pricing evidence - requirement of industry-specific empirical data for transfer pricing adjustments - Validity of ITAT's confirmation of royalty payments fixed at 5.6% as being at arm's length for AY 2007-2008 - HELD THAT: - The Court upheld the ITAT's conclusion that the royalty payments fixed at 5.6% were to be treated as at arm's length for AY 2007-2008. The ITAT had relied on the DRP's acceptance of a survey report (Franchising World) used in the subsequent AY 2008-09 showing an average royalty percentage of 5.6% in the travel industry. The TPO's rejection of the higher royalty paid by the assessee was unsatisfactory because the TPO did not rely on any industry-specific empirical data to demonstrate that the royalty was unreasonable; the mere absence of an identifiable tangible benefit to the assessee did not suffice to displace the transfer pricing method adopted. Given the DRP's acceptance of industry data for the closely succeeding year, it was not unreasonable for the ITAT to direct the TPO to adopt the 5.6% benchmark for the AY in question, and the direction did not raise any substantial question of law warranting interference. [Paras 6, 7, 8, 9, 10]

ITAT's direction to treat royalty at 5.6% as arm's length for AY 2007-2008 is affirmed and the appeal is dismissed.

Final Conclusion: The High Court dismissed the Revenue's appeal and upheld the ITAT's order confirming royalty payments at 5.6% as at arm's length for Assessment Year 2007-2008.

Choice of comparables for transfer pricing analysis - comparability analysis - wide-ranging clientele as ground for exclusion of a comparable - judicial review of tribunal's factual findings in transfer pricing matters

Choice of comparables for transfer pricing analysis - wide-ranging clientele as ground for exclusion of a comparable - comparability analysis - Exclusion of E-Infochips Bangalore Ltd. from the final set of comparables for the assessee's transfer pricing exercise was justified. - HELD THAT: - The ITAT agreed with the Dispute Resolution Panel in excluding E-Infochips on the basis that its client profile and service offerings were substantially different from the assessee. The High Court noted that E-Infochips provided hi tech engineering consulting and product innovation services across diverse sectors (including aerospace, defence, healthcare, media and broadcast, medical devices, security and surveillance) and not merely to software developers. This qualitative difference in clientele and service profile supported the conclusion that E-Infochips was not a sufficiently comparable entity for the assessee's transfer pricing analysis. The Court found no illegality or substantial question of law in the ITAT's factual and comparability assessment and therefore upheld the exclusion. [Paras 4]

Exclusion of E-Infochips Bangalore Ltd. as a comparable upheld; ITAT order sustained.

Choice of comparables for transfer pricing analysis - comparability analysis - judicial review of tribunal's factual findings in transfer pricing matters - Exclusion of Infinite Data Systems Private Limited from the final set of comparables was justified. - HELD THAT: - The ITAT's conclusion to exclude Infinite Data Systems was founded on a detailed analysis of the company's profile vis-a -vis the assessee. The High Court accepted that the ITAT had undertaken a reasoned comparability exercise and that those findings did not disclose any error of law warranting interference. The Court referred to its earlier exposition of the legal position on selection of comparables and held that the impugned order did not give rise to any substantial question of law. [Paras 5, 6]

Exclusion of Infinite Data Systems Private Limited as a comparable upheld; ITAT order sustained.

Final Conclusion: The applications for condonation of delay in filing and re-filing the appeal were allowed. On the merits, the High Court dismissed the Revenue's appeal and upheld the ITAT's decision ratifying the DRP's exclusions of the two comparables; no substantial question of law was found to warrant interference.

Disallowance of expenditure for failure to produce books of account - addition on unexplained receipts where tax was deducted at source - appellate interference limited to substantial question of law

Disallowance of expenditure for failure to produce books of account - appellate interference limited to substantial question of law - Whether the reduction of the disallowance of expenditure from 25% to 12.5% by the ITAT raised any substantial question of law warranting interference by this Court. - HELD THAT: - The ITAT recorded that the assessee failed to produce the books of account prepared by the chartered accountant, and the chartered accountant did not participate in assessment proceedings; only bank statements and sketchy details were available to the assessing officer. Taking a pragmatic view, the ITAT reduced the disallowance from 25% to 12.5%. Having considered the factual findings and the ITAT's exercise of discretion on the available material, the High Court found no substantial question of law arising from that conclusion and declined to interfere with the tribunal's factual and discretionary assessment. [Paras 2, 3]

The reduction of the disallowance to 12.5% by the ITAT does not give rise to any substantial question of law; no interference.

Addition on unexplained receipts where tax was deducted at source - appellate interference limited to substantial question of law - Whether the addition made in respect of amounts on which TDS had been deducted was unsustainable and raised a substantial question of law. - HELD THAT: - The tribunal upheld an addition of Rs. 4,73,047/- because the assessee failed to explain the corresponding income for which TDS had been deducted. The High Court agreed with the ITAT's conclusion that in absence of an explanation linking the TDS to taxable receipts, the addition was justified. The Court found no substantial question of law arising from the ITAT's factual finding and conclusion. [Paras 4]

The addition in respect of amounts on which TDS was deducted was sustainable; no substantial question of law warrants interference.

Final Conclusion: The appeal is dismissed; the ITAT's reduction of the disallowance to 12.5% and its upholding of the addition in respect of unexplained amounts on which TDS was deducted do not raise any substantial question of law requiring interference by this Court.

Assessment under Section 153A of the Income-tax Act, 1961 - search and seizure under Section 132 of the Income-tax Act - absence of incriminating material - followed precedent - substantial question of law

Assessment under Section 153A of the Income-tax Act, 1961 - absence of incriminating material - followed precedent - Validity of assessment framed under Section 153A where no incriminating material was found during search. - HELD THAT: - The ITAT set aside the assessment framed under Section 153A in favour of the assessee, following the decision of this Court in Commissioner of Income-tax (Central)-III v Kabul Chawla. The Revenue's challenge was that the assessment under Section 153A was permissible despite no incriminating material being found against the assessee during a search conducted on a related party. This Court observed that the ITAT had relied on the cited precedent of this Court, which remains operative and has not been stayed by the Supreme Court. In view of the applicable precedent and the absence of any stay, the Court found no reason to interfere with the ITAT's order quashing the assessment under Section 153A where no incriminating material had been discovered.

The ITAT's dismissal of the Revenue's appeal and the quashing of the assessment under Section 153A were upheld.

Final Conclusion: The appeal is dismissed for lack of any substantial question of law; the ITAT order quashing the assessment under Section 153A for AY 2010-11 is affirmed, the decision resting on an existing and unsuspended precedent of this Court.

Reopening of assessment under Section 148 - permanent establishment - arm's length principle - precedential effect of a higher court decision

Reopening of assessment under Section 148 - permanent establishment - arm's length principle - precedential effect of a higher court decision - Validity of the ITAT's reliance on the Supreme Court's decision affecting AYs 2004-05 to 2007-08, including AY 2006-07, to set aside the Assessing Officer's attribution of income to a permanent establishment and to decline reassessment. - HELD THAT: - The ITAT's impugned order proceeded entirely on the basis of the Supreme Court's decision in Honda Motor Co. Ltd., which quashed reassessment proceedings where the notice for reopening was premised only on allegations of a permanent establishment once the arm's length procedure had been followed. The Supreme Court's order was common to AYs 2004-05 to 2007-08. Given that the same legal principle and conclusion apply to AY 2006-07, the ITAT correctly held that the AO's attribution could not be sustained in law. The High Court found that no substantial question of law arises from the ITAT's order because it merely applied the binding reasoning of the Supreme Court to the assessment year in question.

The ITAT's order is upheld and no substantial question of law arises from its application of the Supreme Court's decision to AY 2006-07.

Final Conclusion: Appeal dismissed. The ITAT correctly applied the Supreme Court's decision (common to AYs 2004-05 to 2007-08) that where the arm's length procedure has been followed, reopening based solely on allegations of a permanent establishment cannot be sustained, and therefore no substantial question of law arises in respect of AY 2006-07.

Reopening of assessment under section 147: requirement of independent application of mind and prohibition of roving or fishing inquiries - borrowed satisfaction - roving and fishing inquiry - nexus between search participants and the assessee for valid reopening - interim restraint on framing final assessment without prior court permission

Reopening of assessment under section 147: requirement of independent application of mind and prohibition of roving or fishing inquiries - borrowed satisfaction - nexus between search participants and the assessee for valid reopening - Validity of the notice to reopen assessment where reasons rely on statements in searches of third parties and alleged manipulation of a scrip in which the assessee traded. - HELD THAT: - The court considered the contention that the Assessing Officer's reasons for reopening rely on statements recorded in searches of Shri Shailesh Shah and Shri Jignesh Shah and on alleged manipulation of the scrip of certain companies, without any seized material or specific material linking those persons to the petitioner. It was submitted that such reliance amounted to borrowed satisfaction and that reopening cannot be permitted as a pretext for a roving and fishing inquiry to subsequently discover a connection. The petitioner also contended there was no live nexus between search participants and the assessee, and that mere trading on a public exchange in a non-banned scrip does not by itself justify reopening. The court did not finally adjudicate the merits of these contentions but found them sufficient to issue notice and to accord ad interim protection against framing of the final assessment without further order of the court.

Notice issued and, by way of ad interim relief, respondent permitted to proceed pursuant to the impugned notice but restrained from framing the final assessment without prior permission of the Court.

Final Conclusion: Petition admitted for consideration; ad interim relief granted restraining the Assessing Officer from framing the final assessment pursuant to the reopening notice without prior permission of the High Court, while the respondent may continue other proceedings under the notice.

Annual value - chargeability of annual value on notional basis - notional rent - vacancy allowance - occupancy certificate - legally occupiable - Section 23(1)(a) of the Income Tax Act, 1961

Annual value - notional rent - occupancy certificate - legally occupiable - vacancy allowance - Section 23(1)(a) of the Income Tax Act, 1961 - Annual value for the relevant previous year could not be determined on a notional basis for the period when the property was legally not occupiable due to absence of an Occupancy Certificate. - HELD THAT: - The Assessee purchased the property by conveyance in December 2008 but the Occupancy Certificate was issued only in May 2009. Between 1 January 2009 and 31 March 2009 the property was therefore legally not occupiable. Although a lease deed purportedly put the lessee in possession with effect from 1 April 2009 (and the Assessing Officer treated notional rent as taxable for the three months prior), the property was not legally capable of being occupied during the three-month period in question. Consequently, charging tax on notional rental for that period is unsustainable. The Revenue's contention that tax could be levied for the entire period on the basis that the property was later leased out is fallacious where legal occupiability was absent for the period taxed. The Assessee's claim for vacancy allowance arose from having computed notional rent for that period and reflected a mistaken approach by the Assessing Officer; on the facts and first principles the notional assessment under Section 23(1)(a) did not arise for the period 1 January 2009 to 31 March 2009. [Paras 6, 7, 8]

The question is answered in favour of the Appellant: no charge on notional rental for the period when the property was legally not occupiable; the Tribunal's view is reversed.

Final Conclusion: The appeal is allowed; the Tribunal's judgment is reversed and the Assessing Officer's levy of tax on notional rental for the period 1 January 2009 to 31 March 2009 is set aside.

Addition under section 69C as unexplained expenditure - reliance on Sales Tax/ MVAT Department findings for income tax additions - burden of proof and duty of independent inquiry by the Assessing Officer - contemporaneous tax invoices, bank payments and stock registers as evidentiary proof - deletion of addition for lack of independent material - avoiding double taxation by correlating purchases and sales

Addition under section 69C as unexplained expenditure - reliance on Sales Tax/ MVAT Department findings for income tax additions - burden of proof and duty of independent inquiry by the Assessing Officer - contemporaneous tax invoices, bank payments and stock registers as evidentiary proof - Validity of the addition made by the Assessing Officer under section 69C based solely on information from the Sales Tax Department without independent inquiry by the Assessing Officer. - HELD THAT: - The Commissioner (Appeals) and the Tribunal found on the facts that the assessee produced tax invoices issued under the MVAT Act with purchaser details and signatures, bank statements evidencing payments by account payee cheque, audited books including stock registers and quantitative tally correlating inward and outward jewellery transactions. The Assessing Officer had not rejected the books of account under section 145 nor conducted any independent inquiry to controvert the documentary evidence and corroborative material placed on record. The Tribunal held that information from the Sales Tax Department, without independent verification or additional material in the income tax proceedings proving non genuineness, was insufficient to sustain an addition under section 69C. The appellate authorities concluded that the assessee discharged the primary onus of proof and that allowing the Assessing Officer to make additions on the mere basis of the Sales Tax Department's observations would be impermissible; at best such information would be a starting point for further investigation, which the Assessing Officer did not undertake.

The addition under section 69C was deleted; the Assessing Officer's invocation of section 69C based solely on Sales Tax Department material without independent inquiry was held unjustified.

Deletion of addition for lack of independent material - avoiding double taxation by correlating purchases and sales - Whether the concurrent factual findings of the Commissioner (Appeals) and the Tribunal are perverse and give rise to a question of law permitting interference. - HELD THAT: - The High Court held that the question was one of fact: the appellate authorities considered the entire record and concluded there was no independent material to establish that the purchases were bogus or made from the assessee's unexplained source. The findings that purchases were made through banking channels, that sales were offered to tax and that disallowing purchases would result in double taxation were factual conclusions based on evidentiary record. Absent perversity or any jurisdictional error, no question of law arose warranting interference with the concurrent findings.

The contention of perversity was rejected; the High Court declined to interfere with the concurrent factual findings and dismissed the Revenue's appeal.

Final Conclusion: The Revenue's appeal is dismissed. The Tribunal and the Commissioner (Appeals) correctly deleted the addition under section 69C on the factual basis that the Assessing Officer had no independent material and failed to conduct necessary inquiries, and the concurrent factual findings did not disclose any question of law or perversity warranting interference.

Territorial jurisdiction - cause of action arising within territorial limits - service of notice by electronic means and postal service - High Court discretion to refuse jurisdiction on grounds of convenience - forum for challenge to income tax assessment and appellate scheme

Territorial jurisdiction - cause of action arising within territorial limits - service of notice by electronic means and postal service - Whether the Bombay High Court has territorial jurisdiction to entertain a writ challenging a notice under section 148 of the Income Tax Act issued by the Deputy Commissioner of Income Tax, Hyderabad - HELD THAT: - The Court held that mere registration of the petitioner's office in Mumbai and service of the impugned notice at Mumbai do not, without more, establish that an integral part of the cause of action arose within the territorial limits of this Court. The Assessing Officer at Hyderabad has consistently conducted assessments of the petitioner; the petitioner's PAN and assessment proceedings are within Hyderabad jurisdiction; notices are generated electronically (ITBA) and also sent by speed post, and electronic delivery to email IDs located anywhere does not convert the place of service into the place where the cause of action arose. Authority and appellate fora for assessments conducted by the Deputy Commissioner, Hyderabad lie within the territorial jurisdiction of the High Court having supervisory jurisdiction over Hyderabad. Having regard to these factors, the Court concluded that the petition is not maintainable before the Bombay High Court. [Paras 3, 4]

Petition challenging the section 148 notice issued by the Hyderabad Assessing Officer is not maintainable before the Bombay High Court for lack of territorial jurisdiction.

High Court discretion to refuse jurisdiction on grounds of convenience - forum for challenge to income tax assessment and appellate scheme - Whether the Bombay High Court should, in any event, exercise jurisdiction even if a small part of the cause of action may be said to have arisen within its territory - HELD THAT: - The Court exercised its discretion not to entertain the petition even assuming arguendo that a part of the cause of action arose within its limits. It observed that the petitioner has been consistently assessed at Hyderabad, appeals and further proceedings would arise before authorities and tribunals within the territorial jurisdiction of the Hyderabad seat, and entertaining the petition here could lead to conflicting principles being applied to the same assessee and assessment year by different High Courts. Citing principles of convenience and comity in central statute matters, and relevant precedents, the Court declined to exercise jurisdiction and directed that the petitioner may move the appropriate High Court having jurisdiction over the Assessing Officer at Hyderabad. [Paras 9, 10, 11, 12]

Even if a part of the cause of action arose within Bombay, the Court declined to exercise jurisdiction on grounds of convenience and directed the petitioner to seek relief before the appropriate High Court having jurisdiction over Hyderabad.

Interim relief - right to move appropriate forum - Relief to be granted pending institution of proceedings before the appropriate High Court - HELD THAT: - Recognising that the petition has been pending in this Court with interim protection against continuation of assessment proceedings, the Court extended the interim order for a limited period to enable the petitioner to approach the appropriate High Court. The extension was granted for two weeks from the date of the order to avoid prejudice to the petitioner while ensuring the matter is decided by the forum of competent territorial jurisdiction. [Paras 13]

Interim relief previously granted is extended for two weeks to enable the petitioner to move the appropriate High Court.

Final Conclusion: The petition is not entertained by the Bombay High Court for lack of territorial jurisdiction and, on grounds of convenience and comity, the Court declines to exercise jurisdiction even if a part of the cause of action may have arisen within its territory; the petitioner is permitted to approach the appropriate High Court having jurisdiction over the Assessing Officer at Hyderabad and the interim protection is extended for two weeks.

Power to condone delay under proviso to sub section (3) of section 264 of the Income Tax Act, 1961 - application under section 264 of the Income Tax Act, 1961 - sufficient cause for condonation of delay - revised return and rectification proceedings as steps showing bona fide pursuit of remedies - consideration on merits of a section 264 petition - fact sensitive application of precedents - exemption claim of a non resident seafarer under section 5 of the Income Tax Act

Power to condone delay under proviso to sub section (3) of section 264 of the Income Tax Act, 1961 - sufficient cause for condonation of delay - revised return and rectification proceedings as steps showing bona fide pursuit of remedies - Delay in filing the petition under section 264 of the Income Tax Act was to be condoned. - HELD THAT: - The Court found on the undisputed record that the assessment intimation under section 143(1) was dated 23.10.2010, so the one year period for filing under section 264 expired on 22.10.2011. Within that period the petitioner filed a revised return on 05.08.2011 seeking exclusion of overseas seafarer income, which was rejected on a technical ground. The petitioner thereafter filed a rectification on 10.10.2011 (no order passed), responded to a demand by filing a second rectification on 25.02.2018 (rejected on 02.07.2018) and then filed the section 264 petition on 24.10.2018. The Court held these steps, taken and reflected in the departmental record, amounted to continuous and tenacious pursuit of remedies and were relevant in assessing whether sufficient cause existed. The Court distinguished the authorities relied on by the Revenue on their facts and reiterated that the question of sufficient cause is fact sensitive. Since the Commissioner had not addressed the merits and dismissed the petition solely for delay, and given the petitioner's documented attempts within the limitation period and thereafter, the Court concluded that ends of justice required condonation of delay so that the petition may be decided on merits. [Paras 32, 33, 34]

Impugned order dated 17.01.2019 set aside; delay in filing section 264 petition condoned.

Application under section 264 of the Income Tax Act, 1961 - consideration on merits of a section 264 petition - exemption claim of a non resident seafarer under section 5 of the Income Tax Act - The section 264 petition was remitted for fresh consideration on merits. - HELD THAT: - Because the Commissioner had dismissed the section 264 petition solely on the ground of delay without considering the merits, the Court directed that the petition be reconsidered on merits. The Court observed that the petitioner has advanced a substantive claim (exclusion/exemption of overseas seafarer income under section 5) supported by antecedent steps and by judgments of other High Courts, and that a merits determination is necessary to test that claim. The Court therefore remitted the matter to the third respondent with directions to grant a personal hearing to the petitioner and to decide the petition on merits within a specified time frame, furnishing the decision to the petitioner promptly. [Paras 34]

Matter remitted to the third respondent to decide the section 264 petition on merits after personal hearing; disposal to be within three months and communication within one week of decision.

Final Conclusion: Writ petition allowed: impugned order dated 17.01.2019 set aside; delay in filing the section 264 petition is condoned and the petition is remitted to the Commissioner for fresh merits adjudication after affording personal hearing, to be decided within three months and communicated within one week.

Best judgment assessment under Section 144 - corrigendum rectifying patent clerical error - withdrawal of approval under Section 10(23C)(vi) - cancellation of registration under Section 12AA - retrospective effect - collateral challenge to void order

Best judgment assessment under Section 144 - corrigendum rectifying patent clerical error - Validity of the corrigendum converting the assessment to a best judgment assessment under Section 144. - HELD THAT: - The assessment records show service of notices under Sections 153A, 143(2) and 142(1), non compliance by the assessee with notices and summons, withdrawal of authorised representative, seized documents and reliance on particulars available on record and statements recorded during search. The circumstances fall within clauses (b) and (c) of Section 144(1), permitting a best judgment assessment. The reference to Section 143(3) in the preamble was a clerical error apparent on the face of the record and was amenable to rectification by corrigendum. Case law cited by the assessee was distinguishable on facts and did not establish incurable non compliance of the mandatory steps required for a best judgment assessment in the present record. [Paras 14, 15, 16, 17, 18]

Corrigendum dated 22.01.2015 is legal and valid; the assessments are best judgment assessments under Section 144.

Withdrawal of approval under Section 10(23C)(vi) - cancellation of registration under Section 12AA - retrospective effect - Validity and temporal effect of the orders withdrawing approval under Section 10(23C)(vi) and cancelling registration under Section 12AA. - HELD THAT: - The orders of withdrawal (18.11.2014) and cancellation (07.12.2016) were grounded on material unearthed during the search relating to the assessment year 2010 2011 and were passed after providing opportunity to the assessee with speaking reasons. Such orders take effect from the assessment year 2010 2011 because that was the year in which the cause of action arose; they are not retrospective in the sense of affecting periods prior to the year in which the cause of action arose. The Tribunal and Courts decisions relied on by the assessee were inapplicable on the facts; the revenue produced cogent material to justify withdrawal/cancellation and the onus was discharged. [Paras 21, 22, 23, 24, 25]

Orders withdrawing approval under Section 10(23C)(vi) and cancelling registration under Section 12AA are valid and operate from assessment year 2010 2011; they are not impermissibly retrospective.

Collateral challenge to void order - Whether the assessee could challenge the withdrawal/cancellation orders as void in collateral proceedings before the Tribunal and this Court. - HELD THAT: - The assessee contended that an order void for want of jurisdiction may be attacked collaterally. The Court examined the withdrawal and cancellation orders and the supporting material and found them to be supported by substantial documentary evidence; the orders were not shown to be void. Consequently, the contention that the orders could be struck down in collateral proceedings as void was rejected. The decision in Nawabkhan Abbaskhan was inapposite to advance the assessee's case. [Paras 21, 22, 24]

Assessee's attempt to displace the withdrawal/cancellation by collateral challenge fails because the impugned orders are not shown to be void.

Final Conclusion: The corrigendum converting the assessment into a best judgment assessment under Section 144 was valid; the withdrawal of approval under Section 10(23C)(vi) and cancellation of registration under Section 12AA were valid and operate from assessment year 2010 2011; the assessee's collateral challenge to impugn those orders as void is rejected. Appeals dismissed.

Set off of brought forward business losses against capital gains - unabsorbed depreciation set-off - merger of a subsequent miscellaneous order with an earlier adjudication - absence of a substantial question of law - finality of Tribunal order affirmed by Division Bench

Set off of brought forward business losses against capital gains - unabsorbed depreciation set-off - Whether the Revenue could prosecute the appeal challenging the Tribunal's order allowing set off of carried forward business losses and unabsorbed depreciation against profit assessed as capital gains. - HELD THAT: - The Assessing Officer denied set off, CIT(A) allowed the assessee's claim, and the Tribunal by its substantive order dated 02.02.2007 confirmed the CIT(A)'s findings in favour of the assessee. The Tribunal subsequently allowed a miscellaneous petition (MP.No.0027/Mds/07) by order dated 04.04.2007 addressing set off against capital gains. The Revenue's challenge to the substantive Tribunal order was dismissed by the Division Bench in the earlier appeal, holding that no substantial question of law arose. In these circumstances the later miscellaneous order stood merged with the earlier adjudication and, because the Division Bench had already affirmed that no substantial question of law existed, the Revenue could not validly prosecute the present appeal. The Court therefore declined to answer the admitted substantial question of law on technical and finality grounds and dismissed the appeal. [Paras 9, 10]

Appeal dismissed on the ground that no substantial question of law is involved and the miscellaneous order merged with the earlier Tribunal order already dealt with by the Division Bench.

Final Conclusion: The appeal by the Revenue is dismissed as the miscellaneous order was subsumed in the earlier Tribunal adjudication which was effectively disposed of by the Division Bench, there being no substantial question of law for further consideration.

Summary order. Tax Case Appeal dismissed for non-service of notice on the respondent in accordance with the earlier self operating order dated 03.01.2013; liberty granted to the Revenue to restore the appeal by filing a restoration petition after obtaining the correct address of the respondent, and the Registry directed to number the restoration petition without insisting on a condone delay petition; no costs.

Disallowance of expenses attributable to exempt income under section 14A read with Rule 8D - Fringe Benefit Tax and consequential allowability of expenditure - classification of receipts as income from house property despite a leave and licence agreement - entitlement to MAT credit - deduction under section 80IC and the requirement of income being "derived from" the eligible undertaking - treatment of inter-company royalty payments as revenue expenditure versus capital expenditure - allocation of head-office expenses for computation of unit profit for deduction purposes - effect of court sanctioned scheme of amalgamation and assessment of colourable device/sham

Disallowance of expenses attributable to exempt income under section 14A read with Rule 8D - Extent of disallowance under section 14A/Rule 8D limited to the amount of exempt dividend disclosed by the assessee. - HELD THAT: - The Tribunal accepted the assessee's submission, following the ratio of the Hon'ble Delhi High Court, that the total disallowance under section 14A cannot exceed the amount of exempt income. The assessee had disclosed exempt dividend income of Rs. 20,995 under section 10(33); accordingly the Assessing Officer was directed to restrict the section 14A disallowance to that disclosed exempt income without going into the merits of the original disallowance. [Paras 3]

Disallowance under section 14A/Rule 8D restricted to the exempt dividend of Rs. 20,995; ground partly allowed.

Fringe Benefit Tax and consequential allowability of expenditure - Expenditure on gifts which was subject to Fringe Benefit Tax (FBT) is allowable and the corresponding disallowance must be deleted. - HELD THAT: - The Tribunal noted the Assessing Officer himself accepted 50% of the gift expenditure as allowable and that the assessee had paid FBT on the remaining 50%. Citing the concordant view that once expenses are subjected to FBT they are treated as fringe benefits and must be allowed as business expenditure, the Tribunal followed the coordinate bench precedent and directed deletion of the addition. [Paras 10]

Addition of Rs. 1,57,074 deleted; ground allowed.

Classification of receipts as income from house property despite a leave and licence agreement - Receipts from letting out assessee's factory building are taxable as income from house property notwithstanding that the arrangement was by a leave and licence agreement. - HELD THAT: - The Tribunal held that characterization of the agreement as a 'leave and licence' does not alter the substance that the assessee earned rental income by letting out its factory building. Consequently, such receipts must be taxed under the head 'income from house property' and be eligible for deductions under the relevant provisions (including the 30% deduction under section 24). [Paras 16]

Rental receipts to be taxed under 'income from house property'; ground allowed.

Entitlement to MAT credit - Assessee entitled to claim MAT credit in accordance with statutory provisions and assessment history. - HELD THAT: - The Tribunal, after considering the provisions and assessment history, directed the Assessing Officer to allow MAT credit as per law. The order refrained from detailed computation but remitted the matter for allowance in accordance with governing provisions. [Paras 18]

MAT credit to be allowed as per provisions of law; ground allowed (for statistical purposes).

Effect of court sanctioned scheme of amalgamation and assessment of colourable device/sham - deduction under section 80IC and the requirement of income being "derived from" the eligible undertaking - The Parwanoo manufacturing unit continued to belong to the eligible undertaking post court sanctioned amalgamation; the amalgamation is not a sham and the unit remains eligible for deduction under section 80IC. - HELD THAT: - The Tribunal found that the Assessing Officer erred in treating the facts backwards and misapplying provisions applicable to transfers in amalgamations. The Scheme of Amalgamation was sanctioned by the High Court; Mahle Filter Systems (India) Ltd merged into Purolator India Ltd (the transferee), and the Parwanoo unit continued to be owned and managed by the assessee. Consequently, the Assessing Officer's invocation of provisions applicable to transfers of undertakings was misplaced, and the CIT(A)'s findings upholding eligibility under section 80IC were affirmed. [Paras 25]

Findings of CIT(A) that unit remains eligible under section 80IC sustained; revenue grounds dismissed.

Deduction under section 80IC and the requirement of income being "derived from" the eligible undertaking - Various items shown as 'Other Income' of the Parwanoo unit (excluding amounts already taxed elsewhere) are sufficiently connected to the industrial undertaking and qualify for deduction under section 80IC. - HELD THAT: - The Tribunal examined the breakup of 'Other Income' and observed that, apart from rental income and interest on fixed deposits (which were taxed under other sources), the remaining items (including foreign exchange gain, discounts, tooling income, sale of scrap, etc.) had a direct nexus with the industrial undertaking. On that basis the CIT(A)'s acceptance of these items for computing deduction under section 80IC was upheld. [Paras 29]

Disallowance by Assessing Officer deleted; items other than those taxed elsewhere qualify for section 80IC deduction; ground dismissed (revenue appeal).

Allocation of head-office expenses for computation of unit profit - deduction under section 80IC - Allocation of head-office expenses to the Parwanoo unit as per audited accounts and sales ratio is acceptable; no recomputation of stock transfer price or profit is warranted. - HELD THAT: - The Tribunal reviewed the manner in which the head office allocated expenses to the three units based on sales ratios as reflected in the audited accounts. It found the Assessing Officer's assumption that profits were shifted to the unit was unfounded and that CIT(A) rightly accepted the head-office allocations. Consequently, recomputation under the cited provisions was not required. [Paras 37]

Assessing Officer's recomputation set aside; CIT(A)'s acceptance of allocations upheld; ground dismissed.

Treatment of inter-company royalty payments as revenue expenditure versus capital expenditure - Annual royalty payments for limited rights to use technical know how were revenue in nature and allowable as business expenditure; any depreciation allowed by the AO must be withdrawn. - HELD THAT: - The Tribunal noted that the agreements granted only limited, non transferable rights to use technical information; proprietary ownership remained with the licensors. The payments related to day to day technical assistance and use of know how for production, not to acquisition of enduring capital benefits. Following precedents and the factual matrix, the Tribunal held the payments revenue in nature. As the Assessing Officer had capitalised the amount and allowed depreciation, that depreciation had to be withdrawn when treating the payments as revenue expenditure. [Paras 44, 46]

Royalty payments allowed as revenue expenditure; AO's capitalisation and depreciation to be withdrawn; revenue ground dismissed.

Final Conclusion: The Tribunal partly allowed the assessee's appeal insofar as: (a) section 14A disallowance was restricted to the disclosed exempt dividend; (b) gift-related addition subject to FBT deleted; (c) rental receipts held to be income from house property; and (d) MAT credit to be allowed as per law. The revenue's appeal was dismissed in relation to the section 80IC issues and the royalty payment, and related recomputations or additions by the Assessing Officer were set aside.

Penalty under section 271(1)(c) of the Income-tax Act, 1961 - concealment of particulars of income - furnishing inaccurate particulars of income - vitiation of penalty proceedings for defective show-cause notice

Penalty under section 271(1)(c) of the Income-tax Act, 1961 - defective show-cause notice - distinction between concealment and furnishing inaccurate particulars - Validity of levy of penalty where the show-cause notice did not specify whether proceedings were initiated for concealment of particulars of income or for furnishing inaccurate particulars of income under section 271(1)(c). - HELD THAT: - The Assessing Officer levied penalty under section 271(1)(c) on the addition of disallowance of depreciation on house property. The show-cause notice and the assessment order, however, failed to specify which limb of section 271(1)(c) was invoked - concealment of particulars of income or furnishing inaccurate particulars of income. The Tribunal found that this omission rendered the penalty proceedings bad in law because the notice did not inform the assessee with requisite particularity which specific charge under section 271(1)(c) was being made. The Tribunal noted judicial authority in support of this principle as recorded in the impugned order [CIT vs. M/s. SSAs Emerald Meadows ] and the subsequent decision of the Supreme Court referred to in the order , and applied that principle to set aside the penalty. Consequently, the penalty proceedings were held to be vitiated and the penalty cancelled. [Paras 4, 5]

Penalty under section 271(1)(c) cancelled as the show-cause notice was defective for not specifying whether proceedings were for concealment or for furnishing inaccurate particulars of income.

Final Conclusion: The Tribunal allowed the assessee's appeal for AY 2007-2008 and set aside the penalty imposed under section 271(1)(c) on the ground that the show-cause notice was defective for not specifying which limb of section 271(1)(c) was invoked, thereby vitiating the penalty proceedings.

Notice and attachment of property involved in benami transaction - adjudication of benami property - provisional attachment - speaking order - parimateria - principles of natural justice

Notice and attachment of property involved in benami transaction - speaking order - Claim for a separate speaking order disposing objections raised to the show cause notice under Section 24(1) of the Benami Act before pronouncing the final adjudication - HELD THAT: - The court examined the scheme of Section 24 and related provisions culminating in adjudication under Section 26 and noted that the statutory framework envisages inquiries by the Initiating Officer, collection of materials, and reference of a statement of case to the adjudicating authority. There is no provision in the Benami Act for a separate preliminary order that separately disposes of objections prior to the final order. Consequently, the petitioner's claim for a distinct speaking order dealing with objections before passing the final order is not supported by the statutory scheme and cannot be read into the Act. [Paras 6]

Claim for a separate speaking order prior to final adjudication under the Benami Act rejected.

Parimateria - speaking order - Whether the principle in GKN Driveshafts (requiring disposal of objections by a speaking order in the reassessment/notice context under the Income tax Act) applies to Section 24 proceedings under the Benami Act - HELD THAT: - The court distinguished the Benami Act scheme from the reassessment process under Sections 147-153 of the Income tax Act. The judgment in GKN Driveshafts arose in the context of notices and objections in the income tax reassessment procedure where a specific course of furnishing reasons and entertaining objections has been recognized. Section 24 of the Benami Act, however, serves a different purpose and operates in a different sphere-determining whether property is to be treated as benami-and does not adopt the same procedural architecture that gave rise to the GKN obligation. Accordingly, the GKN principle cannot be imported into Section 24 proceedings. [Paras 7]

Reliance on GKN Driveshafts to require a separate speaking order under the Benami Act is not accepted.

Principles of natural justice - provisional attachment - Whether non supply of certain documents complained of by the petitioner amounted to a preliminary objection requiring separate adjudication before final order - HELD THAT: - The petitioner contended that incomplete supply of statements and affidavits violated natural justice and therefore constituted a preliminary objection. The court analysed the reply to the show cause notice and found no prima facie preliminary objection-the contentions on non supply were part of the merits of the defence and could be and should be addressed in the final order. The request for a separate speaking order was treated as an afterthought aimed at delaying proceedings and not a distinct preliminary legal bar to adjudication. [Paras 5, 8]

Complaint of non supply of certain documents is a merits issue to be decided in the final order; no separate preliminary adjudication warranted.

Final Conclusion: The petition seeking direction for a separate speaking order disposing objections prior to final adjudication under the Benami Act is dismissed; the statutory scheme does not provide for such a preliminary speaking order, the GKN precedent is inapplicable, and alleged non supply of documents is to be dealt with on merits in the final order.

Refund of customs duties - interest on CVD - duty drawback refund - time bound disposal of refund claims - writ of mandamus under Article 226 - administrative verification of refund claims

Refund of customs duties - interest on CVD - duty drawback refund - time bound disposal of refund claims - writ of mandamus under Article 226 - Respondent No.3 directed to complete the process and take a final decision on the writ-applicant's refund claim for interest on CVD and surrendered duty drawback within four weeks and communicate the decision in writing. - HELD THAT: - The writ-application pleaded that the petitioner, an SEZ exporter, paid CVD and interest and surrendered duty drawback under protest on re-import of defective goods though Notification No. 94/96-Cus appeared to cover re-exports and replacements; the petitioner submitted refund applications and pursued the matter with the refund and import groups, receiving inter-departmental queries. The Department informed the Court that the matter was being looked into. Observing that refund claims are time-bound and noting the correspondence between the refund office and the import/drawback sections seeking verification, the Court did not adjudicate the merits of the refund claim but directed the concerned authority to undertake the necessary process of sanctioning and to take an appropriate final decision at the earliest. The Court imposed a specific time-frame of four weeks for completion of the process and required written communication of the ultimate decision to the petitioner. [Paras 6, 7, 8]

The respondent No.3 shall, within four weeks of receipt of this order, complete the sanction process and take a final decision on the refund claim for interest on CVD and surrendered drawback and communicate the decision in writing; writ-application disposed.

Final Conclusion: Writ petition disposed by directing the refund authority to complete processing and to pronounce a final decision on the petitioner's refund claim (interest on CVD and surrendered drawback) within four weeks, with written communication of the outcome.

Service of notice under Section 153 of the Customs Act, 1962 - presumption of delivery under Section 27 of the General Clauses Act, 1897 - service by registered post / R.P.A.D. - deregistration of contract and enforcement of bond - exercise of writ jurisdiction under Article 226 of the Constitution

Service of notice under Section 153 of the Customs Act, 1962 - service by registered post / R.P.A.D. - presumption of delivery under Section 27 of the General Clauses Act, 1897 - Validity of service of the show cause notice and the order in original on the Petitioners - HELD THAT: - The Court found material on record indicating notices, including the show cause notice and the order in original, were sent by registered post to the addresses furnished by the Petitioners and that envelopes returned bore postal endorsements such as 'left' and 'not known'. Section 153 permits service by registered post and, read with Section 27 of the General Clauses Act, a properly directed letter put into the post is presumed to have been delivered in the ordinary course unless rebutted. The Petitioners failed to rebut that presumption or to intimate change of address despite being aware that provisional assessment had been made and final assessment remained pending. Decisions cited by the Petitioners were held to be distinguishable on their facts and did not assist. Consequently the Court held there was valid compliance with the service requirements of Section 153 and the presumption in Section 27 applied. [Paras 10, 11, 13, 15, 16]

Service by registered post to the addresses on record was valid and the presumption of delivery under Section 27 of the General Clauses Act applies; the Petitioners did not rebut that presumption.

Deregistration of contract and enforcement of bond - exercise of writ jurisdiction under Article 226 of the Constitution - Whether the writ court should interfere with the order deregistering the contract and confirming enforcement of the bond - HELD THAT: - Having concluded that service was valid and that the Petitioners had not notified the authority of any change of address or otherwise pursued the matter after provisional assessment and bond execution, the Court saw no grounds to interfere with the order in original or consequent actions (including notice requiring payment and bank debit freeze) in exercise of its writ jurisdiction. The Court also distinguished the authorities relied upon by the Petitioners as factually different and not applicable to the present case. [Paras 16, 17, 18, 19, 20]

No interference with the order deregistering the contract or with consequential steps; the writ petition is dismissed.

Final Conclusion: The Court dismissed the petition: service by registered post was held valid and the presumption of delivery under the General Clauses Act applied; having so found, the High Court declined to interfere with the order deregistering the contract and confirming enforcement of the bond.

Cenvat credit - Additional Duty of Customs (CVD) - benefit of reduced rate of CVD under Customs Notification No. 12/2012-Cus - inapplicability of Excise Notification No. 12/2012 to imported coal - Rule 3(1) of the Cenvat Credit Rules, 2004 - distinction between imported coal and domestically manufactured coal

Cenvat credit - Customs Notification No. 12/2012-Cus - Excise Notification No. 12/2012 - Rule 3(1) of the Cenvat Credit Rules, 2004 - imported coal vs domestically manufactured coal - Entitlement to avail cenvat credit of the 1%/2% CVD paid on imported coal where the reduced CVD rate was availed under Customs Notification No. 12/2012-Cus. - HELD THAT: - The appellants had imported coal and paid CVD at the reduced rates of 1%/2% by availing the exemption under Sl. No. 123 of Customs Notification No. 12/2012-Cus. The adjudicating authority denied cenvat credit by relying on conditions in Excise Notification No. 12/2012 (Sl. No. 67/condition 25) which restrict availment of cenvat credit for certain domestically manufactured goods. The Tribunal observed that the Excise Notification and its conditions apply to domestically manufactured coal and not to imported coal; the Customs Notification governs imports. Rule 3(1) of the Cenvat Credit Rules, 2004 bars credit in respect of goods specified under certain entries of the Excise Notification, but that restriction does not extend to imports governed by the Customs Notification relied upon by the appellants. The Tribunal further noted the binding exposition in SRF Ltd. v. CC Chennai that Excise Notification No. 12/2012 applies only to dug or manufactured coal and not to imported coal. Applying these principles, the denial of credit based on the Excise Notification was a legal error because the impugned CVD had been paid on imported coal under the Customs Notification which does not attract the Excise Notification condition relied upon by the department.

The Order-in-Original denying cenvat credit of the reduced-rate CVD on imported coal by applying Excise Notification No. 12/2012 was set aside and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the conditions in Excise Notification No. 12/2012 are not applicable to imported coal and that cenvat credit of the reduced-rate CVD paid on imported coal (under Customs Notification No. 12/2012-Cus) cannot be denied on that basis.

Resolution plan contrary to the objects of the Insolvency and Bankruptcy Code - closure of the corporate debtor during the corporate insolvency resolution process - malicious initiation of CIRP under Section 10 - violation of Section 30(2)(e) - company to be maintained as a going concern - moratorium under Section 14 - remand to the Adjudicating Authority for modification of the approved resolution plan

Resolution plan contrary to the objects of the Insolvency and Bankruptcy Code - violation of Section 30(2)(e) - company to be maintained as a going concern - Part of the approved resolution plan proposing closure of the corporate debtor is contrary to the objects of the I&B Code and in violation of Section 30(2)(e). - HELD THAT: - The Tribunal held that the Code's object is revival and continuation of the corporate debtor as a going concern (as explained in Swiss Ribbons and subsequent authorities). A resolution plan that proposes closure rather than revival is inconsistent with that object and therefore fails the test in Section 30(2)(e). The approved plan expressly provided for closure and retrenchment instead of revival, and the Committee of Creditors approved the plan without ensuring conformity with the statutory requirement and the Code's objectives. Consequently, the portion of the plan which effects closure cannot stand while other parts may remain. [Paras 25, 26, 28, 29, 30]

The Tribunal set aside the part of the approved resolution plan insofar as it relates to closure of the corporate debtor and held that such portion violates Section 30(2)(e).

Malicious initiation of CIRP under Section 10 - closure of the corporate debtor during the corporate insolvency resolution process - The Section 10 application was filed with intent to effect closure of the corporate debtor for a purpose other than resolution of insolvency. - HELD THAT: - On the facts, the Tribunal found the corporate applicant's initiation of proceedings under Section 10 was aimed at achieving closure of the company rather than genuine insolvency resolution or liquidation. The resolution plan submitted by the corporate applicant and the Ministry of Railways' recommendation for closure, together with ensuing closure and retrenchment steps after plan approval, supported the finding that the CIRP was maliciously initiated for a purpose not contemplated by the Code. The Tribunal treated this intent as making the plan impermissible in part. [Paras 1, 25, 29]

The Tribunal held that the Section 10 application was filed with intent for a purpose other than insolvency resolution and that this vitiates the part of the process which effects closure.

Closure of the corporate debtor during the corporate insolvency resolution process - remand to the Adjudicating Authority for modification of the approved resolution plan - Consequential orders of closure and retrenchment made following approval of the plan are set aside and the matter is remitted to the Adjudicating Authority for correction of the resolution plan. - HELD THAT: - Having held that the closure portion of the plan is impermissible, the Tribunal set aside the consequential administrative acts - the company's notice of closure and the retrenchment order - and directed that the corporate debtor be maintained as a going concern with no retrenchment. The Tribunal remitted the matter to the Adjudicating Authority, directing deletion of the closure proposal from the plan; if the corporate applicant refuses to delete that portion, the approved plan shall be treated as set aside and the Adjudicating Authority must direct the resolution professional to call for fresh expressions of interest and resolution plans in accordance with law. [Paras 30, 31, 32, 34]

The Tribunal set aside the closure and retrenchment orders, directed continuation of the company as a going concern, and remitted the case to the Adjudicating Authority to require deletion of the closure proposal or to recommence the resolution process if deletion is refused.

Moratorium under Section 14 - company to be maintained as a going concern - The resolution process and related moratorium must be used to preserve the corporate debtor as a going concern; employees' service-benefit claims are not decided by this Tribunal and must be pursued before the corporate debtor. - HELD THAT: - The Tribunal reiterated that the moratorium and the resolution process are intended to preserve assets and maintain the corporate debtor as a going concern for revival, protecting stakeholders including employees. It declined to adjudicate individual employee salary and service-benefit claims, instead granting the employees and associations liberty to raise such claims before the corporate debtor for decision consistent with the directions to keep the company as a going concern. [Paras 26, 27, 33]

Employees' salary and service-benefit claims were left to be raised before and decided by the corporate debtor; the Tribunal did not decide those claims but directed that employees shall not be retrenched and the company remain a going concern.

Final Conclusion: Appeals allowed. The part of the approved resolution plan proposing closure of the corporate debtor and the consequential closure and retrenchment orders are set aside; the corporate debtor must be maintained as a going concern and employees not retrenched. The matter is remitted to the Adjudicating Authority to direct deletion of the closure proposal from the resolution plan, failing which the approved plan shall be treated as set aside and the resolution process recommenced by inviting fresh expressions of interest and resolution plans. Employees may pursue their individual service and salary claims before the corporate debtor.

Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Corporate Insolvency Resolution Process - default under financial debt - record of default and Banker's Books Evidence Act presumption - evidence of default in Form 1 and Rule 4(1) - appointment of Interim Resolution Professional - moratorium under Section 14 of the Code

Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - evidence of default in Form 1 and Rule 4(1) - Petitioner satisfied the requirements of Sub-sections (1) and (2) of Section 7 by filing the application in Form 1 and establishing the contractual loan relationship. - HELD THAT: - The petition was filed in Form 1 as prescribed by Rule 4(1) and supported by the sanction letters, loan agreements, security documents and board resolution showing execution of loan documents. The Tribunal found that the corporate debtor had executed the documents and accepted the sanctioned credit facilities, and that the petitioner had complied with the procedural requirements of Sub sections (1) and (2) of Section 7. The factual admissions in the reply did not negate these documentary proofs and the application therefore met the statutory filing requirements. [Paras 3, 4, 16]

Requirements of Sub-sections (1) and (2) of Section 7 are satisfied and the application is maintainable.

Default under financial debt - record of default and Banker's Books Evidence Act presumption - There was sufficient evidence of default by the corporate debtor as required by clause (a) of Sub-section (3) of Section 7. - HELD THAT: - The bank produced demand notices under the SARFAESI Act, balance confirmations, statements of account certified under the Banker's Books Evidence Act and CIBIL record. The corporate debtor did not dispute execution of loan documents and admitted classification as NPA. The Tribunal held that these records, together with the presumption of correctness attached to bank books, established the existence of default. Contested matters such as alleged unaccounted payments or detail of penal interest were held to be matters for the Interim Resolution Professional or Resolution Professional to examine during CIRP and did not defeat the proof of default required at the admission stage. [Paras 9, 15, 18, 20, 21]

Clause (a) of Sub-section (3) of Section 7 is fulfilled; default is established for purposes of admission.

Appointment of Interim Resolution Professional - The name of the proposed Resolution Professional was validly furnished and accepted for appointment as Interim Resolution Professional under clause (b) of Sub-section (3) of Section 7. - HELD THAT: - Part III of Form 1 proposed a registered Resolution Professional and was accompanied by the written communication in Form 2. The Tribunal examined the communication and the registration certificate and found no disciplinary proceedings pending. Having found the proposal in order and the proposed professional eligible, the Tribunal appointed the proposed professional as Interim Resolution Professional and directed him to perform duties under the Code and regulations. [Paras 22, 23, 27]

Proposed Resolution Professional accepted and appointed as Interim Resolution Professional.

Moratorium under Section 14 of the Code - Corporate Insolvency Resolution Process - On admission of the Section 7 petition, the Corporate Insolvency Resolution Process is initiated and moratorium under Section 14 is declared with specified directions. - HELD THAT: - Having admitted the petition and appointed the Interim Resolution Professional, the Tribunal declared moratorium in terms of Sub-section (1) of Section 14, restraining institution or continuation of suits, transfer or disposal of assets by the corporate debtor, actions to enforce security interests (including under SARFAESI), and recovery of property occupied by the corporate debtor. The Tribunal also directed continued supply of essential goods and services during the moratorium as provided by the Code, set the term of appointment in accordance with Section 16(5), entrusted management to the Interim Resolution Professional under Section 17, and imposed related administrative directions including public announcement, constitution of the committee of creditors and reporting obligations. [Paras 24, 25, 26, 27]

CIRP initiated; moratorium declared and directions issued including appointment and duties of Interim Resolution Professional.

Final Conclusion: The petition under Section 7 is admitted; the Tribunal held that the financial creditor proved the loan relationship and default, appointed the proposed registered Resolution Professional as Interim Resolution Professional, declared the moratorium under Section 14 and issued consequential directions for initiation and conduct of the Corporate Insolvency Resolution Process.

Existence of debt and default - pre-existence of dispute - admission under Section 9 of the Insolvency and Bankruptcy Code - reconciled statement of accounts and reconciliation communications - reliance on Form 5 as proof of operational debt

Existence of debt and default - reliance on Form 5 as proof of operational debt - Whether the application under Section 9 was correctly admitted on the basis that a debt was due and a default had occurred. - HELD THAT: - The Adjudicating Authority's record (Form 5) disclosed particulars of the operational debt, the invoices culminating with the last invoice dated 8th November, 2017, and a reconciled statement of accounts communicated between the parties. Bhagwati Kripa Paper Mills regularly followed up for payment and provided reconciled figures; the corporate debtor did not raise any substantive dispute to those outstanding dues in its responses. The evidence also included cheques issued by the corporate debtor (some dishonoured) and bank receipts for partial payments, which undermined the appellant's contention that no debt existed. The appellant relied on a comparison ledger prepared by itself, but the Tribunal found that ledger to be an inadequate explanation in the face of the contemporaneous reconciliations, communications and cheque evidence. On this factual and documentary foundation the Tribunal concluded that there was a debt due and default by the corporate debtor and that admission under Section 9 was justified.

Appeal dismissed; admission under Section 9 sustained for lack of any established pre-existing dispute and on the finding that debt and default existed.

Pre-existence of dispute - reconciled statement of accounts and reconciliation communications - Whether a pre-existing dispute between the parties prevented admission of the Section 9 petition. - HELD THAT: - The material on record showed exchange of reconciled statements and comments thereon, with Bhagwati Kripa Paper Mills providing a reconciled outstanding amount and issuing reminders by e-mail on 27th and 28th February, 2018; the corporate debtor did not raise any concrete dispute regarding the outstanding dues in those communications. The Tribunal treated the absence of any contemporaneous dispute in response to reconciliations, together with the issuance of cheques and bank receipts, as evidence that no bona fide pre-existing dispute barred the application. Consequently the plea of a pre-existing dispute was rejected.

The plea of a pre-existing dispute was rejected and held not to preclude admission under Section 9.

Final Conclusion: The appeal by the shareholder was dismissed; the Adjudicating Authority's admission of the Section 9 petition was upheld on the findings that operational debt and default stood established on the documents and communications on record and that no genuine pre-existing dispute had been shown.

Summary order. Petition under Article 226 challenging the Commissioner, Service Tax order dated 21st December, 2016 was not finally adjudicated; petition stood adjourned to 1st August, 2019 for the Revenue to inform the court about the challenge/acceptance of the Tribunal's order dated 25th March, 2019 in the similarly placed matter.

Power of authorities to conduct audit of pre-GST period - validity and saving of Rule 5A(2) of the Service Tax Rules, 1994 on commencement of the CGST Act - scope of Section 174(2)(e) of the CGST Act, 2017 to authorize audits for pre-GST period - interim relief and balance of convenience in tax audit challenges

Interim relief and balance of convenience in tax audit challenges - power of authorities to conduct audit of pre-GST period - Whether interim relief should be granted to restrain respondents from conducting audit of the petitioner's records for the period October 2013 to June 2017 - HELD THAT: - The Court declined to grant interim relief. It observed that the substantive question concerning the saving and applicability of pre GST audit rules requires detailed consideration at the final hearing and that granting interim relief at admission would amount to granting final relief prematurely. The balance of convenience favoured the respondents because permitting the audit to proceed avoids difficulties that would arise from delay (loss of evidence, unavailability of records or persons, or potential time bar issues for actions consequent to audit). The Court noted that earlier High Court orders relied upon by the petitioner were interim orders still pending further consideration and a salient Delhi High Court decision relied upon by the petitioner has been stayed by the Supreme Court, reducing their precedential force. The petitioner was directed to submit to the audit and was left free to apply for interim relief if further proceedings are taken on the basis of the audit report, which such court(s) would consider at that stage. [Paras 5, 6]

Interim relief restraining the respondents from conducting the audit was refused; the respondents may proceed with the audit and the petitioner may seek interim relief later if adverse proceedings follow from the audit.

Validity and saving of Rule 5A(2) of the Service Tax Rules, 1994 on commencement of the CGST Act - scope of Section 174(2)(e) of the CGST Act, 2017 to authorize audits for pre-GST period - Whether Rule 5A(2) of the Service Tax Rules, 1994 is saved or rendered inapplicable on the introduction of the CGST Act, 2017 - HELD THAT: - The Court held that the question of the saving and applicability of Rule 5A(2) on the commencement of the CGST Act is a substantial legal issue that requires full and detailed adjudication at the final hearing. The Court did not decide the issue on merits and expressly recorded that it is not appropriate to determine this complex question at the interim stage. Consequently, the matter was left for final determination rather than being adjudicated in the present order. [Paras 6]

The validity/saving of Rule 5A(2) on introduction of the CGST Act is not decided and is reserved for final hearing; the issue requires detailed consideration.

Final Conclusion: The petition for interim relief restraining the respondents from auditing the petitioner's records for October 2013 to June 2017 is refused and the respondents are permitted to proceed with the audit; the substantive question whether Rule 5A(2) of the Service Tax Rules, 1994 is saved or disapplied by the CGST Act, 2017 is left open for determination at the final hearing.

Imposition of penalty for failure to pay service tax where tax and interest paid before issue of show-cause notice - Section 73(3) notice not required where tax and interest paid prior to issuance of show-cause notice - no suppression with intent to evade tax - penalties under Section 77 and Section 78

Imposition of penalty for failure to pay service tax where tax and interest paid before issue of show-cause notice - no suppression with intent to evade tax - penalties under Section 77 and Section 78 - Section 73(3) notice not required where tax and interest paid prior to issuance of show-cause notice - Whether penalty under Sections 77 and 78 is sustainable where service tax and interest were paid before issuance of show-cause notice and there was no suppression with intent to evade - HELD THAT: - The Tribunal found on the record that the appellant had paid the service tax along with interest prior to issuance of the show-cause notice and that there was no suppression of facts with intent to evade payment of tax. The Tribunal further noted that the question is no longer res integra and relied upon earlier decisions to hold that where tax and interest are paid before issuance of show-cause notice and there is no fraudulent suppression, imposition of penalties under the cited provisions is not sustainable. Applying that principle to the facts, the Tribunal concluded that the penalties imposed under Section 77 and Section 78 could not be sustained and were required to be set aside.

Penalties under Sections 77 and 78 set aside and the appeal allowed.

Final Conclusion: The appeal is allowed; penalties imposed under Section 77 and Section 78 are quashed as the service tax with interest was paid before issue of the show-cause notice and there was no suppression with intent to evade.

Reverse charge liability for goods transport agency services - requirement of consignment note for GTA service - taxability of renting of immovable property services and retrospective amendment - invocation of extended period of limitation where taxability was uncertain - penalty for non-payment in circumstances of bona fide confusion

Reverse charge liability for goods transport agency services - requirement of consignment note for GTA service - Liability under reverse charge for receipt of goods transport agency (GTA) services. - HELD THAT: - The Tribunal considered the statutory definition of 'goods transport agency' which requires that the service be received from a goods transport agency that issues a consignment note. The record shows no consignment note and the demand was founded on entries in the appellant's balance sheet showing freight payments. Mere payment of freight to a transporter who is not an agency issuing consignment notes does not satisfy the statutory test for receipt of GTA services under reverse charge. The Tribunal relied on the principle that GTA service is the service rendered by an agency issuing a consignment note and that Rule 4B prescribes the contents of the consignment note, distinguishing such agency services from ordinary transportation. [Paras 9, 10, 11]

Demand confirmed under reverse charge for GTA services set aside; appellant not liable under reverse charge in absence of consignment note.

Taxability of renting of immovable property services and retrospective amendment - invocation of extended period of limitation where taxability was uncertain - Liability for 'Renting of immovable property services' and validity of invocation of extended period of limitation for the period 2005-06 to 2009-10. - HELD THAT: - The Tribunal noted that renting of immovable property services was first brought into the tax net by a 2007 Notification and that a later amendment in the Finance Act (2010) operated retrospectively, with a provision permitting assessee to clear arrears. Given this sequence, there existed genuine confusion about taxability for the earlier period. The Department produced no positive evidence of mala fide intent to evade tax. In these circumstances the Tribunal found invocation of the extended period of limitation to confirm demand for the entire span 2005-06 to 2009-10 to be irregular. However, the Tribunal held that liability for the period from May 2009 till 2010 is sustainable and observed that the appellant had already deposited an amount which should be appropriated against the liability for 2009-10. [Paras 12, 13, 14, 15]

Demand for renting of immovable property services prior to the 2007 Notification set aside; extended period could not be invoked for the earlier period due to bona fide confusion, but demand sustained for May, 2009 till 2010 with deposited amount to be adjusted.

Penalty for non-payment in circumstances of bona fide confusion - Validity of penalty imposed on the appellant for non-payment of service tax. - HELD THAT: - Having held that non-payment in the relevant earlier period was attributable to prevailing confusion over taxability and that there was no evidence of mala fide intent, the Tribunal concluded that imposition of penalty was not justified. [Paras 16]

Penalty imposed on the appellant set aside.

Final Conclusion: Appeal partly allowed: reverse charge demand for GTA services set aside; demand for renting of immovable property services prior to the 2007 Notification set aside as barred by extended limitation in view of bona fide confusion, while liability for May, 2009 till 2010 is sustained and the deposit adjusted; penalty quashed.

Cenvat credit on capital goods - Disallowance of credit where capital goods are exclusively used for exempted goods or services - Availing of exemption under SSI notification and prohibition on availing Cenvat credit - Distinction between availing and utilising Cenvat credit - Principle of natural justice and remand for fresh consideration

Cenvat credit on capital goods - Disallowance of credit where capital goods are exclusively used for exempted goods or services - Admissibility of Cenvat credit claimed on a hydraulic excavator in view of Rule 6(4) and competing authorities - HELD THAT: - The Tribunal found that the impugned order did not record or address the specific legal submissions advanced by the appellant concerning the scope of Rule 6(4) (that credit is disallowed only when capital goods are exclusively used for exempted final goods/services). The appellant relied on authorities which, it was contended, support the proposition that Rule 6(4) is inapplicable where capital goods are used partly for taxable activity. Because these submissions were neither considered nor discussed in the Commissioner's order, the Tribunal concluded that the matter requires fresh adjudication. The Tribunal also noted that, even if the submissions had not been raised earlier, they are legal submissions which can be entertained at this stage and must be decided after hearing the parties.

Issue remanded to the Commissioner for fresh consideration and decision after allowing the appellant to make the submissions and following the principles of natural justice.

Availing of exemption under SSI notification and prohibition on availing Cenvat credit - Distinction between availing and utilising Cenvat credit - Denial of Cenvat credit on a screen imported in October 2009 on the ground that the appellant was enjoying SSI exemption and therefore could not avail credit - HELD THAT: - The Tribunal observed that the Commissioner's order denied credit on the basis of condition No.2(iii) of the SSI exemption notification, which the Commissioner interpreted as prohibiting availing of credit during the exemption period. The appellant's legal contention-namely that mere taking of credit does not amount to 'availing' unless the credit is both taken and utilised-was not considered in the impugned order. Given absence of any discussion or finding on this legal contention in the order under appeal, the Tribunal held that the question must be reconsidered by the Commissioner after affording the appellant an opportunity to press these submissions and after applying relevant authorities.

Issue remanded to the Commissioner for fresh consideration and decision after hearing the parties and in accordance with law.

Principle of natural justice and remand for fresh consideration - Whether the matter should be remanded for fresh adjudication because the impugned order did not address material legal submissions - HELD THAT: - The Tribunal recorded that the impugned order does not disclose consideration of the legal submissions placed before it concerning Rule 6(4) and the effect of SSI exemption on availing credit. In such circumstances, and because the submissions are legal in nature and may properly be entertained at the appellate stage, the Tribunal exercised its jurisdiction to remit the matters to the Commissioner for fresh decision. The remand is directed to ensure that the appellant is given a reasonable opportunity of hearing and that the Commissioner decides the claims after taking the contested legal submissions into account and following the principles of natural justice. Additional submissions were permitted during the remand proceedings.

Appeal allowed by way of remand; matter sent back to the Commissioner for fresh adjudication after complying with natural justice and considering the appellant's submissions.

Final Conclusion: The appeal is allowed by way of remand: the matters are directed to be decided afresh by the Commissioner after giving the appellant a reasonable opportunity of hearing, permitting additional submissions, and applying the relevant legal principles on admissibility of Cenvat credit and on the effect of SSI exemption.

Technical inspection and certification services - reverse charge mechanism - dominant service - support service of business and commerce - commission agent taxability and notification exemption

Reverse charge mechanism - Tax could not be levied on a reverse charge basis for the period in question without a legislative mechanism and whether the amounts remitted were consideration to the overseas provider required ascertainment. - HELD THAT: - The Tribunal noted that the statutory mechanism for imposition of service tax on the recipient under reverse charge was not in effect during the period under dispute and that the Hon'ble Supreme Court has held that reverse charge could not be applied prior thereto. There was no finding by the original authority on the appellant's plea that the remitted amounts were not consideration for services provided by the overseas entity; that factual determination is necessary before any reverse-charge liability can be imposed. [Paras 3, 9]

Reverse charge could not be applied as a matter of law for the period; remand for factual determination whether the remittances were consideration to the overseas provider.

Technical inspection and certification services - The appellant's activities did not fall within the scope of technical inspection and certification services as taxable under the Act. - HELD THAT: - The Tribunal examined the certificates and inspection reports and concluded they amounted to commercial approval of goods against buyer specifications rather than expert scientific or technical testing or certification. The certificates merely endorsed acceptance and the inspection reports were retained as commercial records; the service did not involve technical expertise required to attract the taxable service. Reliance was placed upon earlier Tribunal decisions that mere inspection or certification without technical expertise does not fall within this taxable category. [Paras 7, 8, 9]

Levy of service tax on the appellant's activity as technical inspection and certification cannot be sustained.

Commission agent taxability and notification exemption - Whether consideration received by the appellant was taxable as commission agency and the temporal effect of the notification restricting exemption required fresh determination. - HELD THAT: - The Tribunal observed that commission agents were within the scope of the relevant taxable description but that a notification had exempted such transactions until the exemption was narrowed to agricultural produce by the later notification. Accordingly, liability as a commission agent could arise only from the date the exemption was restricted. The original authority had not made findings on the appellant's submissions regarding this point, so classification and temporal application needed determination. [Paras 4, 9]

Liability as commission agent requires fresh consideration by the original authority with regard to the notification history and temporal applicability.

Dominant service - support service of business and commerce - Whether the appellant's umbrella activities should be classified by reference to the dominant service (and thereby as support service of business and commerce) was not finally determined and needs reconsideration. - HELD THAT: - The appellant relied on the concept of dominant service to challenge the splitting of its umbrella service into multiple taxable categories and contended that, at best, the activity could fall under business support services. The Tribunal recorded these submissions but found that the original authority had not addressed classification in light of the dominant-service principle; accordingly, the matter must be examined afresh. [Paras 2, 9]

Classification under the dominant-service principle and any consequent taxability as support service of business and commerce is remanded for fresh adjudication.

Final Conclusion: The impugned order is set aside and the matter is remitted to the original authority to decide on the merits: (a) reverse-charge liability cannot be applied for the period without factual findings on consideration remitted to the overseas provider; (b) the appellant's activity does not constitute taxable technical inspection and certification; (c) commission-agent taxability and the effect of notifications require fresh determination; and (d) classification under the dominant-service principle and computation of any sustainable tax are to be revisited. Appeal allowed by remand.

Input Service Distributor - Cenvat credit - Manner of distribution by ISD - nexus between input service and manufacture - Rule 7 of Cenvat Credit Rules, 2004

Input Service Distributor - Manner of distribution by ISD - Rule 7 of Cenvat Credit Rules, 2004 - Cenvat credit - Validity of denial of Cenvat credit at the recipient unit where credit was availed and distributed by the registered ISD - HELD THAT: - The Tribunal held that denial of Cenvat credit at the recipient unit cannot be sustained in the absence of specific findings that the conditions in Rule 7 were violated. Rule 7 permits an ISD to distribute CENVAT credit to its manufacturing or output-service units subject only to two limitations: the distributed credit against an eligible document must not exceed the service tax paid thereon, and credit attributable to units exclusively engaged in exempted manufacture/provision of exempted services cannot be distributed. The adjudicating authority and the Commissioner (Appeals) upheld disallowance mainly for want of nexus but failed to examine or record any violation of the two conditions in Rule 7 or to dispute the eligibility of the ISD itself; the jurisdictional Commissionerate in Mumbai had accepted the ISD claim. In such circumstances, where the receiver merely consumed credit duly distributed by an eligible ISD and no infirmity in invoices or distribution mechanism was pointed out, the recipient cannot be denied the credit. The Tribunal relied on the Board's Circular explaining the ISD mechanism and on prior decisions including CCE, Bangalore v. ECOF Industries Pvt. Ltd. and other Tribunal decisions to support that only the two limitations circumscribe ISD distribution and that inter-unit consumption of distributed credit is permissible. [Paras 5, 6, 7]

Impugned orders upholding disallowance of Cenvat credit set aside; appeals allowed and consequential benefits granted as per law.

Final Conclusion: The appeals succeed: the Tribunal found no basis to deny Cenvat credit at the recipient units where credit was availed and distributed by an eligible Input Service Distributor without any recorded violation of the limited conditions in Rule 7; the impugned orders are set aside and the appeals are allowed with consequential benefits.

Cenvat Credit - service tax on insurance premium - mediclaim policy for employees - definition of inputs under the Cenvat Rules up to 31st March, 2011 - substantial question of law

Cenvat Credit - service tax on insurance premium - mediclaim policy for employees - definition of inputs under the Cenvat Rules up to 31st March, 2011 - Cenvat credit of service tax paid on mediclaim insurance premium is admissible where the policy covers the employees - HELD THAT: - The Tribunal allowed the respondent's appeal holding that for the period up to March 2011 the respondent was entitled to Cenvat credit on service tax paid in respect of mediclaim insurance premiums for its employees, applying the definition of "inputs" under the Cenvat Rules as in force up to 31st March, 2011. The original adjudicating authority had found that the Cenvat credit taken related to policies covering employees and the Revenue did not challenge that factual finding before this Court. The Court further observed that the question arising from the Tribunal's order related only to policies covering employees (and not cover for family members) and that the point does not raise any substantial question of law in view of this Court's earlier decision in Commissioner of Central Excise Vs. Axis Bank Ltd., which is dispositive of the issue. For these reasons the appeal was not entertained and dismissed. [Paras 8, 9, 10]

Appeal dismissed; Tribunal's allowance of Cenvat credit on service tax paid for mediclaim policies covering employees upheld and not a substantial question of law in view of binding precedent.

Final Conclusion: The appeal is dismissed: the Tribunal's finding that Cenvat credit on service tax paid for mediclaim policies covering employees (for the periods in question) was admissible is upheld and the matter does not raise a substantial question of law in view of the earlier decision relied upon.

CENVAT credit on GTA services - place of removal - FOR destination basis - re-adjudication/remand for factual determination - application of binding precedents

CENVAT credit on GTA services - place of removal - FOR destination basis - application of binding precedents - re-adjudication/remand for factual determination - Adjudicating Authority directed to re-examine afresh the appellant's eligibility to avail CENVAT credit in respect of GTA outward transportation services on or after 1-4-2008. - HELD THAT: - The Tribunal held that the question whether CENVAT credit is admissible on GTA services used for outward transportation to the customer's premises requires detailed factual examination by the Adjudicating Authority in light of the decisions of the Hon'ble Supreme Court and the jurisdictional High Court. The jurisdictional High Court (M/s. Bata India Ltd.) after considering Ultra Tech Cement Ltd. emphasised that the Adjudicating Authority must first record the factual matrix - including the assessee's modus operandi, existence and role of RDCs/WSDCs, and whether transfers to such depots constituted a sale - before applying the legal ratio about the place of removal. The Tribunal noted its own prior orders remanding similar matters and observed that the Adjudicating Authority should take note of Vasavadatta Cements, the Delhi Tribunal decision in Lafarge India (as relied upon by the High Court), and the Apex Court's precedents, afford hearing, verify documentary evidence, and pass a de novo adjudication in accordance with law. [Paras 6, 7]

Matter remanded to the Adjudicating Authority for fresh factual and legal adjudication on eligibility for CENVAT credit in respect of GTA services on or after 1-4-2008.

Penalty deletion - The First Appellate Authority's deletion of the penalty under Rule 15 of the CCR, 2004 is left undisturbed. - HELD THAT: - The Tribunal observed that the Revenue did not challenge the FAA's finding deleting the penalty in the impugned orders; accordingly, there was no basis for interference with that deletion. [Paras 8]

No interference with the deletion of penalty by the First Appellate Authority.

Final Conclusion: Appeals allowed by way of remand for de novo adjudication on the admissibility of CENVAT credit for GTA outward transportation services on or after 1-4-2008; deletion of penalty by the First Appellate Authority upheld; all other contentions reserved.

Definition of "input" under the CENVAT Credit Rules, 2004 - exclusion clauses under Rule 2(k) of the CCR, 2004 - nexus between inputs and manufacture of the final product - eligibility of CENVAT credit on goods used for repair and maintenance of plant and machinery - interpretation of CBEC Circular No. 943/04/2011-CX

Definition of "input" under the CENVAT Credit Rules, 2004 - exclusion clauses under Rule 2(k) of the CCR, 2004 - nexus between inputs and manufacture of the final product - eligibility of CENVAT credit on goods used for repair and maintenance of plant and machinery - interpretation of CBEC Circular No. 943/04/2011-CX - Appellant entitled to CENVAT credit of duty paid on MS plates used in repair and maintenance of coal handling plant and HEMMs employed in coal production; exclusions in Rule 2(k) not attracted. - HELD THAT: - The Tribunal found as undisputed that MS plates were used for repair and maintenance of HEMMs and coal handling plant which are integral to the coal production process. Applying the definition of "input" in the CCR, 2004, the Tribunal examined each exclusion in Rule 2(k) and recorded that clauses (A) (petrol/diesel), (B) (goods used in construction of buildings or foundations), (C) (capital goods), (D) (motor vehicles) and (E) (food/guest house goods) are inapplicable on the facts. Clause (F) (goods having no relationship whatsoever with manufacture of final product) was held not attracted because the MS plates bear a direct and indispensable nexus to the mining activity and coal production; without such goods mining could not be undertaken. The Tribunal relied on CBEC Circular No. 943/04/2011-CX which requires a strict and narrow application of the "no relationship" exclusion and clarifies that goods used in or in relation to manufacture, directly or indirectly, are eligible for credit unless expressly denied. The Tribunal also followed precedents upholding credit for sheets/plates and steel items used in repair and maintenance of plant and machinery used in manufacture. On these grounds the demand, interest and penalty were set aside and credit was allowed. [Paras 6, 7, 8]

Credit on MS plates used for repair and maintenance of plant & machinery employed in coal production is admissible; exclusions in Rule 2(k) do not apply, and the demand including interest and penalty is set aside.

Final Conclusion: Appeal allowed. The appellant is entitled to CENVAT credit on MS plates used in repair and maintenance of HEMMs and coal handling plant; the demand of duty, interest and penalty is set aside with consequential relief.

SSI exemption under Notification No. 3/2003 - exemption for manufacture of PVC granules from old and used plastic under Notification No. 4/2006 - requirement of corroborative evidence to establish clandestine removal - consequential invalidation of penalty where principal demand unsustainable

SSI exemption under Notification No. 3/2003 - exemption for manufacture of PVC granules from old and used plastic under Notification No. 4/2006 - Availability of exemption to the appellant for manufacture of PVC granules/soles and correctness of denial of Notification No.4/2006 benefit. - HELD THAT: - The Tribunal concluded that the authorities below erred in denying the exemption. Relying on earlier Tribunal and High Court decisions, the Tribunal held that the department failed to establish that the appellant used material other than old and used PVC shoes for manufacture of PVC granules or that the brands relied upon had acquired such distinct reputation to disentitle SSI benefit. The Tribunal observed that Notification No.4/2006 does not expressly exclude benefit where some fresh material is mixed with waste and that CBEC guidance and precedents supported grant of exemption even where a proportion of fresh plastic was used. The Tribunal also found no corroborative evidence to prove clandestine removals. Following the reasoning in the appeal of M/s J.N. Footwears Pvt. Ltd. and other authorities, the Tribunal set aside the demand confirmed by the authorities below and held the exemption applicable to the appellant, allowing consequential relief as per law. [Paras 6, 7, 8]

Demand confirmed on account of denial of exemption was set aside and SSI/exemption benefit held available to the appellant; denial of Notification No.4/2006 relief was incorrect.

Requirement of corroborative evidence to establish clandestine removal - consequential invalidation of penalty where principal demand unsustainable - Whether the revenue established clandestine removal and whether penalties could survive if the principal demand failed. - HELD THAT: - The Tribunal found that the department did not produce corroborative evidence of clandestine removal - there were no inculpatory statements, no independent evidence of branded clearances, nor identification of purchasers or transport corroborating clandestine removals. In absence of such evidence, the confirmed demand could not be sustained. Because the principal demand was set aside, penalties imposed on the appellant and the authorised signatory could not stand and were consequently quashed. The Tribunal expressly relied on precedents emphasizing need for corroborative evidence before sustaining clandestine removal demands. [Paras 8]

Sustained demand for clandestine removal not established; penalties imposed consequentially set aside.

Final Conclusion: Appeals allowed; demands and penalties confirmed by the authorities below set aside as exemption was available and clandestine removal was not established, with consequential relief granted in accordance with law.

Eligibility of cenvat credit on outdoor catering services - suomotu recredit after reversal of inadmissible credit - interpretational issue vitiating intention to evade duty - setting aside penalty where demand upheld on interpretation

Eligibility of cenvat credit on outdoor catering services - suomotu recredit after reversal of inadmissible credit - Appellant is not eligible to avail cenvat credit on outdoor catering services for the relevant period and the recredit taken is not permissible. - HELD THAT: - The Tribunal applied its earlier ratio in the assessee's own batch of cases disposed of by Final Order No.40858-40864/2019 dated 24.06.2019 and concluded that outdoor catering services do not qualify as input services for the period after 01.04.2011. The appellant had initially reversed the inadmissible credit in ER-1 returns and later availed suomotu recredit which related to the same period and same invoices; such recredit is therefore incorrect and the demand raised for recovery of the credited amount is legal and proper. [Paras 5]

Demand for the amount availed as cenvat credit on outdoor catering services is upheld.

Interpretational issue vitiating intention to evade duty - setting aside penalty where demand upheld on interpretation - Penalty imposed for availing credit on outdoor catering services is set aside. - HELD THAT: - Although the substantive demand was sustained, the Tribunal found that the question of eligibility was an interpretational one already considered in the earlier final order; in such circumstances the appellant cannot be deemed to have acted with intent to evade duty. Consequently, the equal penalty confirmed by the authorities is not warranted and is accordingly set aside with consequential benefits, if any. [Paras 5, 6]

Penalty imposed in respect of the inadmissible credit is quashed.

Final Conclusion: Appeal partly allowed: substantive demand for cenvat credit on outdoor catering services for the specified periods upheld, but the penalty imposed for the same is set aside; consequential relief, if any, to follow as per law.

Interest on differential duty - price escalation clause - liability to pay interest

Interest on differential duty - price escalation clause - liability to pay interest - Assessee is liable to pay interest on differential duty arising from price escalation under contracts for supply on FOR destination basis. - HELD THAT: - The Tribunal noted that differential duty had been discharged by the appellant on account of a price escalation clause but the interest on such differential duty was not paid. The appellant conceded that the question whether interest is payable in such circumstances is covered by the decision of the Hon'ble Apex Court in Civil Appeal Nos. 2150/2012, 2562/2012, 600/2013, 1522-23/2013 and 599/2013 dated 08.05.2019 as reported in 2019 (5) TMI - Supreme Court. Applying the said precedent, the Tribunal concluded that the assessee is liable to pay interest on the differential duty and that there was no reason to interfere with the findings of the lower authority confirming the demand of interest.

Demand of interest on differential duty upheld and the appeal dismissed.

Final Conclusion: Following the Apex Court decision cited by the parties, the Tribunal affirmed the finding that interest is payable on differential duty arising from the price escalation clause and dismissed the appeal.

Place of removal - assessable value - transaction value - excludability of transportation charges from transaction value - Central Excise Valuation Rules, 2000 - conflict between provisions of the Act and subordinate Rules

Place of removal - assessable value - excludability of transportation charges from transaction value - transaction value - conflict between provisions of the Act and subordinate Rules - Whether transportation cost from factory gate to depots is includible in the assessable value of goods for the period July 2000 to February 2001 - HELD THAT: - The Tribunal examined the definition of place of removal as in force during the relevant period and held that it covered only (i) a factory or other place of production or manufacture and (ii) a warehouse or place where goods were permitted to be deposited without payment of duty, and did not include depots or premises from which goods were sold after clearance from the factory. In terms of Section 4(1) the assessable value is the transaction value at the time and place of removal; where goods are not sold at the time and place of removal valuation rules apply. Rule 5 of the Central Excise Valuation Rules, 2000 permits exclusion of transportation from the place of removal to the place of delivery from the transaction value. Applying these principles and following the reasoning in Ispat Industries (as applied by this Tribunal in earlier decisions), the Tribunal concluded that when the place of removal was the factory gate (and not the depot), the cost of transporting goods from factory to depot could not be added to the assessable value. The Tribunal further noted the primacy of the Act over subordinate rules where a conflict arises and found no infirmity in relying on the statutory definition of place of removal to exclude the transportation cost.

Impugned order confirming inclusion of transportation cost in assessable value is set aside; appeal allowed and demand/penalty on that basis quashed for the period in question.

Final Conclusion: For the period July 2000 to February 2001, since depots were not within the statutory definition of place of removal, transportation charges from factory to depots are not includible in the assessable value; the impugned order is set aside and the appeal is allowed with consequential relief as per law.

Exemption under Notification No. 89/1995-C.E. - waste, parings and scrap arising in the course of manufacture - by-product versus waste distinction - manufacture for excise levy - marketability not determinative of excisability

Exemption under Notification No. 89/1995-C.E. - waste, parings and scrap arising in the course of manufacture - by-product versus waste distinction - marketability not determinative of excisability - Whether gums, waxes and fatty acids arising during refining of crude vegetable oil are waste covered by Notification No. 89/1995-C.E. or are excisable by-products. - HELD THAT: - The Tribunal held that the question is one of characterising the incidental products that emerge while refining crude vegetable oil. Applying the ratio of the Larger Bench in Ricela Health Foods Ltd, the Tribunal rejected a test based solely on marketability or the value fetched by such products. The refining process removes unwanted materials to obtain the refined oil; the incidental gums, waxes and fatty acids are not intentionally manufactured final products but arise as waste in that process. Treating these incidental products as manufactured by-products because they are saleable would be contrary to the principle that the commercial value they may command is not the determinative criterion for excisability. Following the Larger Bench, the Tribunal concluded that such incidental products are waste/parings/scrap arising in the course of manufacture and therefore entitled to exemption under Notification No. 89/1995-C.E. [Paras 8, 9]

Impugned demand set aside; products held to be waste covered by Notification No. 89/1995-C.E. and appeal allowed.

Final Conclusion: Appeal allowed: the incidental gums, waxes and fatty acids arising from refining crude vegetable oil are waste and entitled to exemption under Notification No. 89/1995-C.E.; the impugned order confirming duty is set aside.

Marketability of an intermediary product - classification under Chapter heading 1702 (sub-heading 1702 90 90) requiring fructose content of 50% in dry stage - burden on department to establish marketability and excisability - eligibility for benefit of notification 67/1995-CE for captively consumed intermediary goods

Classification under Chapter heading 1702 (sub-heading 1702 90 90) requiring fructose content of 50% in dry stage - marketability of an intermediary product - burden on department to establish marketability and excisability - Whether the sugar syrup manufactured and captively consumed by the appellant is a marketable excisable product classifiable under sub-heading 1702 90 90 and liable to excise duty - HELD THAT: - The Tribunal examined whether the product falls within sub-heading 1702 90 90, which requires the sugar syrup blend to contain 50% by weight of fructose in the dry stage. The department had not produced any chemical test or evidence to establish the fructose content of the syrup manufactured by the appellant. Reliance on the marketability of 'invert sugar syrup' sold by other manufacturers was held insufficient: marketability must be established for the product as it emerges from the appellant's process and cannot be presumed from commercially different products without proof of identity. In absence of laboratory testing or other reliable evidence to show the requisite fructose content or that the appellant's syrup is identical to marketed invert sugar syrups, the department failed to discharge its burden to prove classification under 1702 90 90 and to prove marketability/excisability of the intermediary syrup. [Paras 7, 8, 9]

The department has not established by evidence that the syrup contains 50% fructose in dry stage or that it is a marketable excisable commodity; classification under 1702 90 90 and demand of duty on that basis cannot be sustained.

Eligibility for benefit of notification 67/1995-CE for captively consumed intermediary goods - marketability of an intermediary product - burden on department to establish marketability and excisability - Whether the demand of excise duty and penalties on the sugar syrup (manufactured and captively consumed) can be sustained in view of notification 67/1995-CE and the department's failure to prove marketability/excisability - HELD THAT: - Notification 67/1995-CE exempts captively consumed goods where the conditions are met; however the department sought to deny the exemption on the ground that the intermediary syrup is an excisable/marketable product. The Tribunal noted earlier consistent decisions (including Rishi Bakers, Lucky Biscuits, Parle Biscuits) holding that where the department fails to prove marketability or proper classification, demands on intermediary sugar syrup cannot be sustained. Applying that reasoning, and given the absence of evidence to prove fructose content or marketability of the appellant's syrup, the demand for excise duty and associated penalties lacked legal and factual foundation. Consequently the impugned demand was set aside and the appellant permitted to retain the benefit (as the demand could not be established). [Paras 8, 9, 10]

The demand of duty and penalties is set aside; the appellant is entitled to the relief sought insofar as the department failed to establish marketability/excisability and thus could not defeat the exemption for captively consumed intermediary product.

Final Conclusion: The appeal is allowed; the impugned order confirming demand of excise duty and penalty on the sugar syrup is set aside because the department failed to prove that the appellant's syrup met the fructose-content requirement for classification under sub-heading 1702 90 90 or that the product was marketable, and therefore the demand could not be sustained.

CENVAT credit on inputs and capital goods - reversal of CENVAT credit on export to a Special Economic Zone (SEZ) - export treated as distinct from domestic clearance for CENVAT purposes - eligibility of credit under Rule 3(5) of the CENVAT Credit Rules, 2004 - SEZ Act (overriding effect where inconsistent with other laws) - CBEC clarification in Circular No.1001/8/2015-CX.8

CENVAT credit on inputs and capital goods - reversal of CENVAT credit on export to a Special Economic Zone (SEZ) - export treated as distinct from domestic clearance for CENVAT purposes - SEZ Act (overriding effect where inconsistent with other laws) - CBEC clarification in Circular No.1001/8/2015-CX.8 - Whether the appellant was liable to reverse CENVAT credit availed on inputs and capital goods cleared to a unit in the SEZ - HELD THAT: - The Tribunal noted that for an identical earlier period it had rejected the appellant's claim but the Hon'ble High Court of Kerala on appeal examined the definition of "export" under the SEZ legislation and the statutory scheme, observed that the SEZ Act gives overriding effect where inconsistent with other laws, and relied on the CBEC circular to conclude that removal of inputs to an SEZ unit is to be treated as export and does not attract reversal of CENVAT credit. Having regard to the jurisdictional High Court's decision (paras 12-13 reproduced), and in view of the settled legal position that exports to SEZ are to be treated differently from normal domestic clearances for the purpose of CENVAT entitlement, the Tribunal applied the ratio of the High Court and held that the demand for reversal of credit, interest and penalty could not be sustained. [Paras 12, 13]

Impugned order rejecting appellant's claim is set aside; appeal allowed and demand for reversal of CENVAT credit on inputs/capital goods cleared to SEZ unit quashed, following the High Court's ratio.

Final Conclusion: The appeal is allowed by adopting the ratio of the Hon'ble High Court of Kerala that removals to a unit in the SEZ constitute export for CENVAT purposes and do not require reversal of credit; the impugned order is set aside with consequential relief, if any.

Rectification petition under Section 84 of TNVAT Act - deemed assessment under Section 22(2) of TNVAT Act - mandamus to dispose of statutory petition within time - time bound disposal of statutory applications

Rectification petition under Section 84 of TNVAT Act - mandamus to dispose of statutory petition within time - time bound disposal of statutory applications - Direction to dispose of the rectification petition dated 03.04.2019 filed by the writ petitioner within a specified time frame. - HELD THAT: - The writ petitioner, a registered dealer under the TNVAT Act, filed a rectification petition purportedly dated 03.04.2019 (acknowledging a typographical error earlier showing 11.01.2018). The petitioner confined its relief to seeking mandamus for disposal of that rectification petition. The Additional Government Pleader accepted notice and expressly undertook that the rectification petition would be disposed of within three weeks from receipt of a copy of the order. In view of the restricted prayer and the State's undertaking, the Court directed the respondent to dispose of the rectification petition dated 03.04.2019 within three weeks from the date of receipt of a copy of this order, thereby enforcing time bound disposal of the statutory application. [Paras 8, 9]

Respondent directed to dispose of the rectification petition dated 03.04.2019 within three weeks from receipt of a copy of this order.

Final Conclusion: Writ petition disposed of by directing the respondent to dispose of the rectification petition dated 03.04.2019 within three weeks; no costs.

Concessionary rate on inter-state purchases - downloading 'C' forms - applicability of a precedent in rem - binding effect of a single judge's order until stayed or reversed - direction to revenue to implement court order

Concessionary rate on inter-state purchases - downloading 'C' forms - applicability of a precedent in rem - binding effect of a single judge's order until stayed or reversed - Petitioner's entitlement to download 'C' forms and obtain concessional inter-state purchase rate for High Speed Diesel Oil in light of the decision in Ramco Cements and subsequent Southern Cotspinners order. - HELD THAT: - The Court found that the factual and legal position is not disputed and that the instant petition falls within the four corners of the Single Judge decision in the Ramco Cements batch (common order dated 26.10.2018) which allowed similar relief. The Court noted that an intra-Court appeal against Ramco Cements remains unnumbered and therefore the Ramco Cements order continues to hold the field. Relying on the subsequent Single Judge order in Southern Cotspinners (W.P.No.12520 of 2019) which held that until the Ramco Cements order is stayed or reversed, assessing authorities must apply its rationale to pending assessments and that such decisions operate in rem and are available to all dealers entitled thereto, the Court directed that the Department permit downloading of 'C' forms and extend the benefit of the decision to the petitioner. The Court therefore directed the Revenue/Department/Respondents to take necessary action forthwith, within five working days of receipt of the order. [Paras 6, 8, 9, 10]

Writ petition allowed; respondents directed to permit downloading of 'C' forms and to implement the Ramco Cements rationale in favour of the petitioner within five working days.

Final Conclusion: The writ petition is allowed and the Revenue is directed to implement the relief granted in the Ramco Cements/Southern Cotspinners orders by enabling the petitioner to download 'C' forms and receive the concessionary treatment forthwith; no costs.

Concessional rate of tax under Central Sales Tax Act dependent on production of C Forms - Opportunity of personal hearing before assessing authority - Setting aside assessment order to enable production of evidence - Remand for reconsideration on production of documents

Setting aside assessment order to enable production of evidence - Opportunity of personal hearing before assessing authority - Impugned assessment order dated 26.02.2019 is set aside and the writ petitioner is granted an opportunity of personal hearing to produce C Forms and supporting documents. - HELD THAT: - The Court found that the pre-assessment notice had been responded to by the writ petitioner on 03.11.2015 explaining difficulty in immediate production of C Forms owing to flooding and consequent disruption. The impugned order recorded that the dealer had not filed objections or declaration forms, but that premise was not entirely correct in light of the petitioner's earlier reply. In view of the factual background of deluge and the petitioner's assertion that C Forms are now available, the Court exercised its supervisory jurisdiction to set aside the order solely to afford a fair opportunity to the petitioner to be heard and to produce the C Forms. The Court did not express any view on the merits of entitlement to concessional rate; it confined its action to quashing the assessment order to facilitate fresh consideration after personal hearing. [Paras 11, 12, 15, 17]

Impugned order set aside and personal hearing fixed for production of C Forms; if petitioner fails to avail hearing the impugned order will revive.

Concessional rate of tax under Central Sales Tax Act dependent on production of C Forms - Remand for reconsideration on production of documents - Assessment remitted to the assessing authority for fresh consideration of entitlement to concessional rate upon production of C Forms and supporting documents. - HELD THAT: - The Court directed that if the petitioner appears at the personal hearing and produces the requisite C Forms and supporting materials, the assessing authority shall pass suitable orders after taking those materials and the petitioner's objections into account. The authority is required to complete consideration and pass orders within eight weeks from the date of personal hearing and communicate the same to the petitioner within seven working days. The remand is for fresh adjudication on the basis of the C Forms and materials; the Court expressly refrained from expressing any opinion on merits. [Paras 17]

Matter remitted for fresh consideration and final order by the assessing authority after personal hearing and production of C Forms, within the stipulated time frame.

Final Conclusion: Writ petition disposed by setting aside the assessment order dated 26.02.2019 to permit the petitioner a personal hearing and production of C Forms; matter remanded to the assessing authority to decide entitlement to concessional CST on fresh consideration of the produced C Forms and objections within the prescribed time limits.

Right to personal hearing - Compliance with departmental circular on personal hearing - Remand for fresh assessment on account of denial of personal hearing

Right to personal hearing - Compliance with departmental circular on personal hearing - Whether the revised assessment orders can be sustained when the orders are silent about grant of personal hearing and the dealer disputes receipt of any notice for personal hearing - HELD THAT: - The impugned revised assessment orders are silent on whether an opportunity of personal hearing was afforded to the writ petitioner. The counter affidavit merely asserts service of a communication and receipt without specifying date, time or venue of a personal hearing; that assertion cannot cure the silence in the orders. Circular No.7/2014, which recommends that personal hearing be invariably afforded to dealers and that a reasonable opportunity of fifteen days be given, is operative and relevant. In these circumstances, and having regard to the factual dispute as to receipt of notice, the Court remitted the matters for fresh consideration limited to affording personal hearing and redoing the assessment exercise on the basis of the objections already filed, without expressing any opinion on the merits of the issues originally raised in the revised assessments.

The seven impugned revised assessment orders are set aside solely for failure to record/grant personal hearing; the matters are remitted for affording personal hearing and for fresh assessment in accordance with the limits and timetable fixed by the Court.

Remand for fresh assessment on account of denial of personal hearing - The procedural outcome and directions following setting aside of the impugned orders - HELD THAT: - With consent of parties, the Court fixed a date, time and venue for personal hearing and limited the scope of the rehearing to the objections already submitted by the writ petitioner and documents supporting those objections. The respondent was directed to redo the assessment afresh after personal hearing and to pass revised assessment orders expeditiously and in any event within twelve weeks from the date of personal hearing, and to communicate the revised orders within seven working days under due acknowledgment. The Court made clear that it expressed no view on the merits; if the petitioner fails to avail the personal hearing, the impugned orders shall stand revived.

Personal hearing was directed to be afforded on the fixed date; the assessments are to be redone and finalised within the time stipulated, and the revised orders communicated as directed; failure by the petitioner to appear will revive the impugned orders.

Final Conclusion: The seven revised assessment orders for the assessment years 2009-2010 to 2015-2016 are set aside only for non-recording/grant of personal hearing; the matters are remitted for fresh personal hearing and reassessment within the limited scope and timetable directed by the Court, with no expression of opinion on the merits.

Personal hearing - reasonable opportunity - deemed assessment - deduction of tax at source (TDS) - Narasus principle - setting aside for fresh consideration

Personal hearing - reasonable opportunity - setting aside for fresh consideration - Impugned revised assessment orders dated 27.6.2018 were passed without granting personal hearing and were set aside solely to facilitate personal hearing. - HELD THAT: - The Court noted that the writ petitioner, in separate replies dated 12.12.2017 to the assessment notices, had specifically sought personal hearing, and that the impugned revised assessment orders contain no reference to any personal hearing having been afforded. The Court observed that the departmental Circular requires that personal hearing be afforded as a part of giving reasonable opportunity and, although the Circular is in recommendatory terms, in the facts of the case it would have been desirable to grant personal hearing. Consequently, the Court set aside each impugned order dated 27.6.2018 only for the limited purpose of enabling the writ petitioner to be heard and to produce documents, without expressing any opinion on the merits of the assessments. [Paras 14, 15, 20, 23]

Each of the seven impugned orders dated 27.6.2018 is set aside solely to facilitate personal hearing; personal hearing fixed and directions issued for fresh proceedings.

Deduction of tax at source (TDS) - Narasus principle - setting aside for fresh consideration - The matter was remanded for fresh consideration so that the respondent may take into account the writ petitioner's objections and documents (including TDS certificates) and pass fresh revised assessment orders; the Court expressed no view on the merits, including whether Narasus principle was violated. - HELD THAT: - The Revenue contended that the writ petitioner had not produced TDS certificates earlier and therefore the Narasus principle was not breached; the writ petitioner submitted that TDS certificates are now available and asked for a hearing to produce them. The Court declined to adjudicate on the merits or decide whether Narasus principle was violated, and directed that on availing the personal hearing the respondent shall consider all objections and documents produced by the writ petitioner and pass fresh revised assessment orders for each assessment year within eight weeks from the date of personal hearing. If the writ petitioner fails to avail the hearing, the impugned orders will revive. [Paras 21, 22, 23]

Issue remanded for fresh consideration: respondent to consider objections/documents (including TDS certificates) at personal hearing and pass fresh revised assessment orders within the stipulated time; no opinion expressed on merits.

Final Conclusion: The seven revised assessment orders dated 27.6.2018 are set aside only to enable the writ petitioner to be heard; personal hearing is directed and the respondent is to pass fresh revised assessment orders after considering the objections and documents within the time fixed; if the petitioner fails to attend, the original impugned orders shall revive.

JKM Graphics principle - assessment by adopting best judgment under TNVAT Act - invalid reliance on sellers' sale particulars (Annexure-II) without following JKM principles - centralised mechanism for comparison of dealer returns and departmental web-portal data

JKM Graphics principle - invalid reliance on sellers' sale particulars (Annexure-II) without following JKM principles - Impugned revised assessment dated 07.06.2018 is valid insofar as it relied upon Annexure-II without adherence to the JKM Graphics principle and the earlier judicial direction. - HELD THAT: - The Court held that the procedure of making an assessment by merely taking sale particulars of other dealers (Annexure-II) from the departmental web portal without following the norms and safeguards articulated in the JKM Graphics decision is incorrect and unsafe. The impugned order mirrors an earlier best-judgment order but fails to conform with the directions given by this Court in W.P.No.20738 of 2017 and with the JKM Graphics principle which requires a more structured and centralised exercise before calling upon a dealer to explain mismatches. Consequently, the impugned revised assessment, insofar as it is founded on such reliance without following the laid down procedure, cannot stand and is set aside. [Paras 8, 9, 10]

Impugned order dated 07.06.2018 is set aside for being inconsistent with the JKM Graphics principle and the earlier judicial direction.

Centralised mechanism for comparison of dealer returns and departmental web-portal data - assessment by adopting best judgment under TNVAT Act - Assessment to be remade afresh in accordance with any new centralised methodology to be finalised pursuant to the JKM Graphics decision. - HELD THAT: - The Court directed that once the new/module methodology recommended after JKM Graphics is finalised by the appropriate authority and any consequential orders are passed by the learned Single Judge handling JKM Graphics, the respondent shall re-make the assessment afresh. The fresh assessment shall be carried out after the new module becomes operative, within three months thereof, and communicated to the petitioner under due acknowledgement within seven working days of completion. The Court thereby remanded the matter for fresh consideration and assessment in conformity with the forthcoming centralised procedure. [Paras 10]

Assessment to be made afresh after the new module becomes operative; fresh assessment to be completed within three months and communicated within seven working days.

Final Conclusion: Impugned revised assessment dated 07.06.2018 is set aside as inconsistent with the JKM Graphics principle and the earlier order; respondent directed to re-assess afresh after the new centralised methodology becomes operative, with specified timelines for completion and communication.

Natural justice - personal hearing - reasonable opportunity - compliance with departmental circular instructions - remand for fresh assessment

Natural justice - personal hearing - reasonable opportunity - compliance with departmental circular instructions - Failure to respond to a request for adjournment sent within the time prescribed by the departmental circular amounted to denial of a reasonable opportunity and violated natural justice. - HELD THAT: - The Court found that the writ petitioner received the notice fixing personal hearing and, within the stipulated period, requested adjournment by a month because there was only one working day between receipt and the scheduled hearing. Paragraph 3(a)(i) of the departmental circular required that if further time is requested within fifteen days the assessing authority must examine the request and inform the dealer whether time is granted. The respondent did not reply to the adjournment request. In these circumstances the Court held that no effective personal hearing took place and that the prescribed procedure for affording a reasonable opportunity under the circular was not complied with, resulting in violation of the principles of natural justice. The Court expressly left open the question whether a personal hearing would otherwise have been mandatory, limiting its finding to the procedural default leading to denial of reasonable opportunity. [Paras 12]

The impugned assessment orders were set aside solely on the ground of violation of natural justice for failure to afford a reasonable opportunity by not responding to the adjournment request.

Remand for fresh assessment - personal hearing - Assessment orders set aside and matter remanded for fresh personal hearing and reconsideration of assessment without expressing any opinion on merits. - HELD THAT: - Having set aside the impugned orders for procedural infirmity, and with consent of parties, the Court directed that a fresh personal hearing be granted on a specified date, that the writ petitioner file final objections with supporting documents at that hearing, and that the respondent redo the assessment and pass fresh assessment orders within a stipulated period thereafter. The Court required communication of the fresh orders under due acknowledgement. The direction confines the order to procedural rectification and does not adjudicate the substantive merits of the assessments. [Paras 13]

The impugned orders were quashed and the assessments were remanded for fresh hearing and reassessment in accordance with the directions given.

Final Conclusion: Impugned assessment orders for the assessment years 2002-03, 2003-04 and 2004-05 were set aside for breach of natural justice caused by failure to respond to an adjournment request; matter remanded for a fresh personal hearing and reassessment, with directions for filing final objections and communication of fresh orders, no opinion being expressed on the merits.

Reversal of acquittal in absence of representation - duty to issue fresh notice or secure representation/appoint amicus curiae - conviction under Section 138 of the Negotiable Instruments Act - remittal for fresh consideration

Reversal of acquittal in absence of representation - duty to issue fresh notice or secure representation/appoint amicus curiae - Whether the High Court was justified in deciding the criminal appeal on merits and reversing the trial court's acquittal when the appellant-accused had no representation before it. - HELD THAT: - The Court found that the appellant-accused did not enter appearance in the High Court appeal and that no steps were taken by the High Court to issue a second notice, to request the High Court Legal Services Committee to appoint counsel, or to secure the assistance of an amicus curiae. Given that the accused had secured an acquittal at trial, the High Court ought not to have proceeded to decide the appeal on merits without affording representation or appointing amicus assistance to protect the interests of the unrepresented accused. On that basis the High Court's decision to set aside the acquittal was held to be erroneous. [Paras 9, 10]

Impugned orders of the High Court setting aside the acquittal and convicting the appellant are set aside.

Remittal for fresh consideration - conviction under Section 138 of the Negotiable Instruments Act - Disposition of the matter following the finding that the High Court erred by deciding the appeal in the appellant's absence. - HELD THAT: - Having set aside the High Court's orders, the Supreme Court restored the criminal appeal to the High Court and remitted the matter to the Madurai Bench of the Madras High Court for fresh consideration on merits. The High Court is directed to issue notice to the respondent-complainant, afford sufficient opportunity to both parties, and decide the appeal afresh in accordance with law; no opinion was expressed on the merits of the underlying charge under Section 138 of the Negotiable Instruments Act. [Paras 10, 11]

Criminal Appeal (MD) No.608 of 2007 restored and remitted to the Madurai Bench of the Madras High Court for fresh hearing with directions to afford opportunity and issue notice; no expression of opinion on merits.

Final Conclusion: The High Court's orders reversing the trial court's acquittal and convicting the appellant under Section 138 of the Negotiable Instruments Act are set aside for having been decided in the absence of representation; the appeal is restored and remitted to the Madurai Bench of the Madras High Court for fresh consideration after issuing notice and affording both parties adequate opportunity.