TaxTMI Updates e-Newsletter
Jul 08,2021

Classification of goods: medicament vs disinfectant - Common parlance test for product identity - Scope of Chapter Heading 3004 (medicaments) - Scope of Chapter Heading 3808 (disinfectants and sanitizers) - Incidence of GST linked to tariff classification - Reliance on regulatory/administrative notifications for tariff classification

Condonation of delay - Condonation of 12 days' delay in filing the appeal under the proviso to Section 100(2) of the CGST Act. - HELD THAT: - The appeal was filed 12 days after the 30-day statutory period for filing appeals against an Advance Ruling. The proviso to Section 100(2) permits this Authority to condone delay up to an additional 30 days. The appellant explained delay due to communication lag and quarantine of the authorised signatory. The Authority, having considered the explanation, exercised the proviso power and condoned the 12-day delay. [Paras 9]

Delay of 12 days in filing the appeal is condoned.

Classification of goods: medicament vs disinfectant - Scope of Chapter Heading 3004 (medicaments) - Common parlance test for product identity - Whether the alcohol-based hand sanitizer is classifiable as a 'medicament' under Chapter Heading 3004. - HELD THAT: - Chapter 3004 covers products for therapeutic or prophylactic uses; mere regulation under the Drugs & Cosmetics Act or compliance with pharmacopoeial standards does not automatically render a product a medicament. The deciding tests are whether the product has substantial therapeutic or prophylactic qualities and whether its primary market identity in common parlance is that of a medicine. The Authority found that alcohol-based hand sanitizers act externally to inactivate or remove pathogens and do not treat or confer internal preventive characteristics; they prevent transmission but do not prevent onset or progression of disease in the sense required for prophylactic/therapeutic medicaments. Applying the common parlance test, the product is commonly understood as a hand-hygiene/disinfecting product rather than a medicine. Judicial authorities relied upon by the appellant were found not to be sufficiently analogous to change this conclusion. [Paras 12, 13]

Alcohol-based hand sanitizer is not a 'medicament' classifiable under Chapter Heading 3004.

Scope of Chapter Heading 3808 (disinfectants and sanitizers) - Whether the alcohol-based hand sanitizer is classifiable under Chapter Heading 3808 as a disinfectant (including sanitizers). - HELD THAT: - Heading 3808 covers products intended to destroy or inactivate micro-organisms and expressly includes sanitizers. The Explanatory Notes describe disinfectants as agents that destroy or irreversibly inactivate undesirable micro-organisms 'generally on inanimate objects', but that phrase does not exclude external use on animate objects where the function remains destruction or inactivation of micro-organisms. The Authority relied on precedent recognizing products used externally on animate objects can still be disinfectants. Given the product's disinfecting function and common identity as a sanitizer, the Authority agreed with the lower Authority that the product falls within Heading 3808, specifically 3808.94. [Paras 14]

Alcohol-based hand sanitizer is classifiable under Chapter Heading 3808 (disinfectant/sanitizer), specifically 3808.94.

Reliance on regulatory/administrative notifications for tariff classification - Whether the DGFT Notification or other administrative notices can determine tariff classification for GST purposes. - HELD THAT: - The Authority held that a DGFT Notification is not authoritative for tariff classification under the Customs Tariff/ GST law; classification must be determined from the First Schedule to the Customs Tariff Act read with relevant notes. Statutory measures or restrictions under a different statute, having different objects, should not be mechanically imported into the fiscal classification exercise. Consequently, the DGFT references could not override the statutory description under the Customs Tariff Act. [Paras 16]

DGFT Notification cannot be treated as determinative of classification under the Customs Tariff/ GST law; reliance on it is rejected.

Incidence of GST linked to tariff classification - Appropriate GST rate applicable to alcohol-based hand sanitizers classified under Heading 3808.94. - HELD THAT: - Goods under Chapter Heading 3808 attract 9% CGST and 9% SGST as per the relevant schedule. The Authority noted a temporary concessional GST rate applicable to hand sanitizer under 3808.94 - from 14th June 2021 to 30th September 2021 the rate was reduced to 5% (2.5% CGST + 2.5% SGST) by a specific notification - and recorded the applicable rates accordingly. [Paras 17]

Hand sanitizers under 3808.94 attract 9% CGST and 9% SGST ordinarily; reduced GST of 5% applied for the specified temporary period per notification.

Final Conclusion: The Authority condoned the delay in filing the appeal, affirmed the Advance Ruling that alcohol-based hand sanitizers are not medicaments under Chapter 3004 but are disinfectants/sanitizers classifiable under Chapter Heading 3808.94, rejected reliance on DGFT notifications for tariff classification, and recorded the applicable GST rates (ordinary 9% CGST + 9% SGST, with a temporary reduced rate of 5% for the stated period). The appeal is dismissed and the Advance Ruling is upheld.

Classification of goods - medicaments - disinfectants - common parlance test - Drugs and Cosmetics Act regulation not determinative of classification - Chapter Heading 3004 - Chapter Heading 3808 - GST rate on Chapter Heading 3808 - condonation of delay under proviso to Section 100(2)

Medicaments - common parlance test - Chapter Heading 3004 - classification of goods - Alcohol-based hand sanitizers are not classifiable as medicaments under Chapter Heading 3004. - HELD THAT: - Chapter 3004 covers medicaments for therapeutic or prophylactic uses; a product must have substantial curative or preventive value and be manufactured primarily to control or cure disease or be commonly used by consumers as a medicine. Alcohol-based hand sanitizers (Isopropyl Rubbing Alcohol and Chlorhexidine Gluconate & Isopropyl Alcohol solution) are used externally for hand hygiene to prevent transmission of pathogens but do not control disease within the body nor develop preventive characteristics in the human body. Regulation under the Drugs & Cosmetics Act and conformity with Pharmacopeia standards do not ipso facto convert a product into a medicament for tariff classification; the identity in common parlance governs classification. Applying the common parlance test and considering the product's nature and use, the hand sanitizers are commonly understood as hygiene/disinfecting products, not medicines used for treatment or prevention of disease, and therefore do not qualify under Chapter Heading 3004. [Paras 12, 13]

The alcohol-based hand sanitizers are not medicaments and are not classifiable under Chapter Heading 3004.

Disinfectants - Chapter Heading 3808 - classification of goods - Alcohol-based hand sanitizers are classifiable as disinfectants under Chapter Heading 3808 (specifically 3808.94). - HELD THAT: - Chapter 38.08 includes products intended to destroy or irreversibly inactivate micro-organisms and expressly lists disinfectants, sanitizers and bacteriostats. The Explanatory Notes describe disinfectants as agents acting generally on inanimate objects, but that description does not exclude products with disinfecting properties that are formulated for external use on animate objects. Precedent supports that an agent retaining the function of destroying or inactivating microorganisms remains a disinfectant even when used externally on animate objects. The impugned alcohol-based hand sanitizers perform external disinfection of hands and accordingly fall within the meaning and ambit of 'disinfectant' classifiable under Heading 3808.94. [Paras 14]

The products are classifiable under Chapter Heading 3808 (disinfectants), affirming classification under Heading 3808.94.

GST rate on Chapter Heading 3808 - The applicable GST rate for the products classified under Chapter Heading 3808 and the temporary reduced rate applicable for the specified period. - HELD THAT: - Goods classifiable under Chapter Heading 3808 attract the GST rate specified for that heading in the Notifications. The Authority notes that the standard applicable rate is 9% CGST and 9% SGST as per the relevant entry. Additionally, a temporary reduced rate was notified: with effect from 14th June 2021 to 30th September 2021, hand sanitizers falling under Chapter Heading 3808.94 were subject to a reduced GST of 5% (2.5% CGST and 2.5% SGST). [Paras 17]

The products attract the GST applicable to Chapter Heading 3808; the reduced rate of 5% (2.5% CGST + 2.5% SGST) applies for 14th June 2021 upto 30th September 2021 as notified.

Condonation of delay under proviso to Section 100(2) - Delay in filing the appeal was condoned. - HELD THAT: - The appeal was filed 14 days after the statutory due date. Under the proviso to Section 100(2) the Authority may condone delay up to 30 days. Considering the facts presented, including difficulties arising from the COVID-19 pandemic and quarantine of the authorised signatory, the Authority exercised its discretion to condone the delay in filing the appeal. [Paras 9]

The 14-day delay in filing the appeal is condoned.

Final Conclusion: The appeal is dismissed and the Advance Ruling NO.KAR ADRG 07/2021 dated 26/02/2021 is upheld: the impugned alcohol-based hand sanitizers are not medicaments under Chapter Heading 3004 but are disinfectants classifiable under Chapter Heading 3808.94 and attract the GST applicable to that heading (with the temporary reduced rate of 5% operative from 14th June 2021 to 30th September 2021); the appellant's delay in filing the appeal was condoned.

Definition of 'intermediary' under the IGST Act - arrange or facilitate the supply - place of supply - export of services - principal to principal relationship - classification of services under SAC/HSN (9983, 9985, 998599)

Definition of 'intermediary' under the IGST Act - arrange or facilitate the supply - classification of services under SAC/HSN (9983, 9985, 998599) - Whether the activities carried out in India by the applicant constitute "intermediary services" or fall under other service headings such as 9983/9985. - HELD THAT: - The authority examined the contractual terms and the nature of activities performed by the applicant and applied the statutory definition of intermediary which requires that the person arrange or facilitate the supply of goods or services between two or more persons and not supply such goods or services on its own account. The applicant's work - identifying vendors, conducting on site assessments, advising vendors on product and quality standards, reporting supplier compliance and obtaining initial quotations to be passed to the holding company - was held to be directed at vendors and to assist the overseas holding company in procuring supplies. The Authority rejected the applicant's reliance on principal to principal characterisation as determinative for intermediary status, noting that an intermediary need not be an agent or broker in the narrow sense and that facilitation of the main supply (the raw materials to the holding company) fulfills the definition. Having found the activities satisfy the parameters of arranging or facilitating supply, the Authority held the services fall within the description of business support/intermediary services and, as the most specific applicable code, are classifiable under SAC 998599 rather than under 9983 or 9985. [Paras 16, 17, 18]

The activities constitute "Intermediary services" and are classifiable under SAC 998599.

Place of supply - export of services - definition of 'intermediary' under the IGST Act - Whether the services rendered by the applicant qualify as "export of services" and thus as zero rated supply. - HELD THAT: - The Authority applied the cumulative tests for export of services, including location of supplier, location of recipient, place of supply, receipt of payment in convertible foreign exchange and independent legal status of the establishments. Because the services were held to be intermediary services, the place of supply is determined under the specific rule for intermediaries (place of supply being in India). Consequently the place of supply is India and the services do not satisfy the place of supply criterion for export of services. The Authority further noted that the form of remuneration (cost plus) does not alter the place of supply analysis or the intermediary determination. As a result, the services cannot be treated as export of services or as zero rated. [Paras 19, 20]

The services do not qualify as "export of services" and are not zero rated; they are exigible to GST.

Final Conclusion: The Authority ruled that the activities performed by the applicant are intermediary services classifiable under SAC 998599 and, being intermediary services with place of supply in India, do not qualify as export of services; the supplies are therefore taxable under GST at the applicable rate (18%).

Interest liability under the CGST Act for delayed remittance of tax - Effect of adjustment of input tax credit on interest liability under Section 50 - Partial setting aside of interest where tax discharged by utilisation of electronic credit - Admission of liability and payment by cash as determining payable interest

Effect of adjustment of input tax credit on interest liability under Section 50 - Partial setting aside of interest where tax discharged by utilisation of electronic credit - Interest levied under Section 50 on tax liability discharged by adjustment of input tax credit is not payable and is to be set aside. - HELD THAT: - The petitioner contended that no interest was payable on the component of tax liability which was discharged by adjustment of credit available in the electronic register. The revenue accepted this position and the standing counsel conceded that the interest attributable to tax remitted by utilisation of credit must be set aside. The Court applied its earlier decision in M/s. Maansarovar Motors Private Limited (WP.No.28437 of 2019 and batch, dated 29.09.2020) and, on that basis, directed that the impugned demand be partly set aside insofar as it relates to interest on tax discharged by adjustment of electronic credit.

Demand for interest under Section 50 insofar as it relates to tax discharged by adjustment of input tax credit is quashed.

Interest liability under the CGST Act for delayed remittance of tax - Admission of liability and payment by cash as determining payable interest - Interest is payable on the portion of delayed tax liability admitted to be remitted by cash, and the admitted amount having been paid, that portion of the demand stands satisfied. - HELD THAT: - The petitioner admitted liability for the delayed component of tax to be remitted by cash. The revenue computed the interest payable on that cash component and communicated the breakup. The petitioner confirmed payment of the cash portion of the interest (as noted in the order) and the standing counsel recorded the computation. On these admissions and payments, the Court treated the cashborne interest liability as discharged and did not interfere with the demand to the extent already paid.

Interest demand in respect of the cash-paid component is sustained to the extent admitted and paid; that payment satisfies the liability for that portion.

Final Conclusion: The writ petition is allowed in part: the impugned demand for interest under Section 50 is set aside insofar as it pertains to tax discharged by adjustment of electronic input tax credit, while the interest demand relating to the cash-paid component stands satisfied on admission and payment; connected miscellaneous petitions are closed and there shall be no costs.

Satisfaction for reopening under section 153C - principles of natural justice - exhaustion of alternative remedies - prima facie material test for reopening - borrowed satisfaction/borrowed information - mistaken identity

Satisfaction for reopening under section 153C - exhaustion of alternative remedies - principles of natural justice - prima facie material test for reopening - Maintainability of writ petition challenging notice under section 153C after the Assessing Officer considered and rejected the assessee's objections. - HELD THAT: - The Court held that where the assessee's objections to the satisfaction note under section 153C have been considered and rejected by the Assessing Officer, the proper course is for the Assessing Officer to frame the assessment and for the assessee to exhaust remedies provided under the Act if aggrieved by the assessment. The writ petition was not maintainable merely because the assessee had earlier challenged the notice; the existence of alternative statutory remedies and the fact that objections were decided meant there was no violation of principles of natural justice warranting interference at this stage. The Court relied on the Supreme Court's direction that reply/objections should be filed and assessments framed before invoking writ jurisdiction, and applied that approach to the facts of this case. [Paras 3, 4, 6]

The petition challenging the notice under section 153C is not maintainable at this stage; objections having been decided, the Assessing Officer shall frame the assessment and statutory remedies must be exhausted.

Borrowed satisfaction/borrowed information - prima facie material test for reopening - Whether the satisfaction recorded by the respondent was merely based on borrowed information and thus vitiated. - HELD THAT: - The Court found that the respondent received information and seized documents from the officer who conducted searches at the MS Patel Group premises and, after examining the material, recorded satisfaction that the seized documents pertained to the petitioner and had bearing on determination of his total income for A.Y. 2012-13. The objections on this ground were considered and rejected by the Assessing Officer, and the Court held that mere receipt of information from another officer does not establish borrowed satisfaction where the concerned Assessing Officer has applied his mind and found prima facie material linking the documents to the assessee. Sufficiency or correctness of the material is not to be gone into at this stage; the relevant test is whether there was prima facie material to open the case. [Paras 8, 11, 13]

Recorded satisfaction was not vitiated as mere borrowed belief; respondent had prima facie material and applied mind to record satisfaction.

Mistaken identity - principles of natural justice - Whether proceedings were vitiated by mistaken identity or incorrect factual basis (transactions alleged with SVP Corporation and relevance to A.Y. 2017-18). - HELD THAT: - The Court noted these contentions were not raised before the Assessing Officer in the objections and were first urged during the writ proceedings (some by affidavit-in-rejoinder). The Court declined to entertain new factual contentions raised for the first time before it, observing that if mistaken identity or incorrect factual basis existed, the assessee ought to have raised them in objections earlier. The Court further observed that the question of relevance of alleged transactions to A.Y. 2017-18 had been dealt with in an earlier order dropping proceedings for that year; in any event, these contentions were not pressed before the authority and so could not be allowed to be raised belatedly in the writ petition. [Paras 7, 9, 10]

Contentions of mistaken identity and incorrect factual basis not considered as they were not raised before the Assessing Officer; belated pleas cannot be entertained.

Final Conclusion: Writ petition dismissed; objections to the satisfaction note having been considered and rejected, the Assessing Officer may proceed to frame assessment for A.Y. 2012-13; interim relief vacated and notice discharged.

Treatment of lump-sum prepayment premium as revenue expenditure - deductibility of prepayment charges as business expenditure - concept of deferred revenue expenditure and year of allowance - crystallization of expenditure vis-a -vis classification as prior period expenditure - application of controlling Supreme Court precedent

Crystallization of expenditure vis-a -vis classification as prior period expenditure - Whether the expenditure was crystallized during the relevant previous year despite the assessee having classified the expenses as prior period expenditure. - HELD THAT: - The High Court accepted the submission that the substantial question raised had been authoritatively addressed by the Supreme Court and applied that ratio. Following the Supreme Court's approach, the Court concluded that the legal characterisation of the payment must be governed by its true nature and the applicable precedent, not merely by the assessee's ledger classification as a prior period expenditure. On that basis the Court found the question of crystallization was to be decided against the Revenue and in favour of the assessee.

Decided against the Revenue and in favour of the assessee.

Treatment of lump-sum prepayment premium as revenue expenditure - deductibility of prepayment charges as business expenditure - concept of deferred revenue expenditure and year of allowance - Whether the one-time payment towards prepayment premium and interest compensation is business expenditure in the nature of revenue expenditure and therefore allowable in the relevant year. - HELD THAT: - Relying on the Supreme Court's decision in the cited appeals, the High Court held that a lump-sum prepayment premium paid to secure a reduction in the rate of interest represents an upfront payment of the differential interest and falls within the ambit of interest/prepayment charges. Such prepayment charges are to be treated as revenue expenditure and allowable in the year of accrual because the statute does not recognise the doctrine of deferred revenue expenditure in this context. Applying that binding precedent, the Court rejected the Revenue's contention that the payment was capital in nature and disallowance was warranted.

Held to be revenue/business expenditure and allowed in favour of the assessee.

Final Conclusion: Following and applying the controlling Supreme Court precedent, the High Court dismissed the Revenue's appeal, deciding both substantial questions of law against the Revenue and in favour of the assessee for Assessment Year 2007-2008.

Premature invocation of writ jurisdiction - extraordinary jurisdiction under Article 226 - maintainability of writ petition - interference in pending tax proceedings - return of seized property pending decision

Premature invocation of writ jurisdiction - extraordinary jurisdiction under Article 226 - interference in pending tax proceedings - return of seized property pending decision - Writ petition seeking direction for return of seized materials while proceedings before the Tax Authority are pending is not maintainable as premature. - HELD THAT: - The petitioner had been served with summons under the Income Tax Act and had responded; no final decision has been taken by the Tax Authority. The Court held that when proceedings before the tax authority are pending and no definitive action has culminated, it is not open to the High Court to exercise its extraordinary jurisdiction under Article 226 to grant the relief sought. Allowing such relief would amount to indirectly obtaining what could not be obtained before the statutory authority. Consequently the petition is premature and not maintainable, and the Court will not direct return of seized material while the tax proceedings remain undecided. [Paras 3, 4]

Writ petition dismissed as premature and not maintainable; no costs.

Final Conclusion: The High Court dismissed the writ petition for being premature and not maintainable, refusing to direct return of seized materials pending disposal by the Tax Authority.

Power of rectification under section 254(2) - apparent (patent) mistake - requirement that mistake be obvious from the record - appreciation of evidence and factual findings - distinction between development rights and ownership

Power of rectification under section 254(2) - apparent (patent) mistake - requirement that mistake be obvious from the record - appreciation of evidence and factual findings - distinction between development rights and ownership - Whether the Tribunal's order dated 06.12.2016 contained an apparent patent error regarding the finding that Jay Corporation had development rights (and was not absolute owner of the land) and whether the Revenue's miscellaneous application to recall the order under section 254(2) should be allowed. - HELD THAT: - The Tribunal's power to rectify under section 254(2) is confined to obvious, patent mistakes apparent on the record and does not extend to errors that require argument or detailed appreciation where two opinions are possible. The Tribunal had considered multiple documents including the agreement of 27.6.2007, the affidavit of Shri Naresh Muktilal Shah dated 23.12.2010 and the letter of Jay Construction dated 2.12.2010. The Revenue relied on the phrase in the 2.12.2010 letter that refers to "building on the land space owned by us" to contend that Jay Construction claimed absolute ownership; however the Tribunal construed that expression as referring to the land space (i.e., development rights) and not as an assertion of absolute ownership. On overall appreciation of the documents in context, the Tribunal recorded a factual finding that Jay Corporation had development rights. That conclusion did not amount to an apparent patent mistake warranting rectification; it involved factual appreciation and interpretation of the record. Consequently, the miscellaneous application seeking recall and correction of the Tribunal's order was without merit. [Paras 4, 5]

Miscellaneous application dismissed; no apparent/patent error in the Tribunal's finding that Jay Corporation had development rights rather than absolute ownership, and rectification under section 254(2) was not warranted.

Final Conclusion: The Revenue's application to recall the Tribunal's order was dismissed: the Tribunal's factual conclusion that Jay Corporation had development rights (not absolute ownership) was the result of evidential appreciation and did not disclose an obvious patent error fit for rectification under section 254(2).

Principle of mutuality - diversion of income by overriding title - carry forward and set off of losses - interest under Section 234B

Principle of mutuality - Income of the assessee is not exempt under the principle of mutuality. - HELD THAT: - The Tribunal held that the claim of exemption under the principle of mutuality is foreclosed by the decision of the Hon'ble Supreme Court in the assessee's own case , which dismissed the assessee's appeal. Applying that precedent, the Tribunal concluded that the receipts in question are chargeable to tax and the doctrine of mutuality does not apply to exclude them from income. [Paras 7]

Grounds 2 to 7 are dismissed; the principle of mutuality does not exempt the assessed receipts.

Diversion of income by overriding title - Doctrine of diversion of income by overriding title is not applicable to exempt the assessee's receipts. - HELD THAT: - The Tribunal found that the contention based on diversion of income by overriding title is covered against the assessee by earlier co ordinate bench decisions in the assessee's own case (ITAT order dated 9th September, 2019, paras 6-41), which held that the doctrine does not apply. Relying on those findings, the Tribunal held that the claimed diversion does not render the receipts non taxable. [Paras 8]

Grounds 8 and 9 are dismissed; diversion by overriding title does not apply.

Business model - appreciation of facts - Allegation of change in facts and non appreciation of the business model was not pressed and is dismissed. - HELD THAT: - Grounds alleging change in facts since earlier decisions and errors in appreciating the assessee's business model were not argued before the Tribunal. The Tribunal accordingly dismissed these grounds without further consideration. [Paras 9]

Grounds 10 and 11 are dismissed for want of argument.

Interest under Section 234B - Interest under Section 234B upheld as consequential and dismissed by the Tribunal. - HELD THAT: - The Tribunal recorded that the issue as to applicability of interest under Section 234B is consequential upon the assessment and therefore dismissed the ground challenging that interest accordingly. [Paras 10]

Ground 12 is dismissed as consequential.

Carry forward and set off of losses - Assessee entitled, in principle, to claim set off of carry forward losses against the assessed income subject to verification and determination by the Assessing Officer in accordance with law. - HELD THAT: - While confirming that the receipts are chargeable to tax, the Tribunal directed that the assessee is in principle entitled to the benefit of set off of any carry forward losses of earlier years. The Tribunal directed the assessee to produce relevant details and directed the Assessing Officer to examine and consider the claim in accordance with law, thereby leaving factual and legal determination of entitlement and computation to the AO. [Paras 11]

Assessee's claim for set off of carry forward losses is to be examined and determined by the Assessing Officer in accordance with law.

Final Conclusion: The appeal is dismissed. The Tribunal affirmed that the receipts are chargeable to tax (mutuality and diversion arguments rejected) but directed that any claim for carry forward losses may be examined and allowed by the Assessing Officer in accordance with law; consequential interest issue is dismissed.

Proof of agricultural income - Exemption under section 10(1) - Admissibility of agricultural income certificates issued for bank loans - Opportunity of being heard / fairness of proceedings - Section 292B - validity of proceedings despite procedural or technical defects

Proof of agricultural income - Exemption under section 10(1) - Addition of Rs. 24,17,633 by disallowing claimed agricultural income upheld for lack of proof of ownership and corresponding income - HELD THAT: - The Tribunal examined the record and the CIT(A)'s findings that the assessee failed to establish ownership of the agricultural lands, failed to show crop details or personal savings, and that the declared agricultural holdings and returned income did not account for the large cash amount claimed as agricultural income. The agricultural income certificates produced were held not to substantiate possession of the claimed amount. On this basis the authorities concluded that the assessee did not prove entitlement to exemption under section 10(1), and the impugned addition was confirmed. [Paras 4, 5]

Addition confirmed and claim of exemption under section 10(1) rejected for want of proof

Admissibility of agricultural income certificates issued for bank loans - Proof of agricultural income - Agricultural income certificates issued for the purpose of bank loans are not sufficient evidence in direct tax proceedings to establish agricultural income - HELD THAT: - The CIT(A) noted that the agricultural income certificates expressly stated they were valid only for obtaining bank loans and not for civil or criminal proceedings. The Tribunal agreed with the view that such certificates, given their limited purpose and disclaimer, do not carry probative value in Direct Tax adjudication to establish the existence of agricultural income or cash in hand. Reliance on judicial precedents was examined but distinguished on factual matrix. [Paras 4]

Certificates held inadequate to prove agricultural income; reliance on them rejected

Opportunity of being heard / fairness of proceedings - Section 292B - validity of proceedings despite procedural or technical defects - Complaint that the assessment was completed without affording adequate opportunity was rejected; proceedings upheld despite any alleged procedural omission - HELD THAT: - The CIT(A) considered the contention regarding denial of opportunity and applied the legislative principle embodied in Section 292B that a proceeding shall not be invalid merely due to mistake, defect or omission if in substance it conforms with the intent of the Act. The Tribunal found that procedural or technical omissions do not vitiate the assessment in the absence of a substantive infirmity and accordingly dismissed the ground alleging denial of opportunity. [Paras 4]

Ground alleging lack of opportunity dismissed; assessment held valid under Section 292B despite any procedural or technical lapse

Final Conclusion: The Tribunal dismissed the assessee's appeal for A.Y. 2009-10, confirming the disallowance of the amount treated as agricultural income for lack of requisite proof, rejecting the evidentiary value of bank loan agricultural certificates in direct tax proceedings, and upholding the assessment despite alleged procedural omissions under the protection of Section 292B.

Taxation of anonymous donations under Section 115BBC - Effect of reversal and cancellation of ledger entries and receipts on chargeability - Burden on revenue to verify and establish actual receipt from donors before invoking anonymous donation tax - Claimed exemption of a registered charitable trust and relevance to assessment

Taxation of anonymous donations under Section 115BBC - Effect of reversal and cancellation of ledger entries and receipts on chargeability - Burden on revenue to verify and establish actual receipt from donors before invoking anonymous donation tax - Claimed exemption of a registered charitable trust and relevance to assessment - Whether the addition of Rs. 18,97,271/- as anonymous donation under Section 115BBC was justified where the books showed immediate cancellation/reversal entries and cancelled receipts were on record and the revenue did not verify actual receipt from the alleged donors. - HELD THAT: - The Tribunal accepted the assessee's contemporaneous books showing credit entries for proposed donations and immediate contra debit entries neutralising those credits on the same date, and placed reliance on the original cancelled receipts with counterfoils produced by the trust. The authorities below had not made any independent enquiry of the persons named on the receipts to establish actual receipt of donations. The assessee was a registered trust entitled to exemption under the relevant charitable provisions, a factual status not controverted by the Department. In these circumstances the Tribunal held that where entries were nullified by reversal on the same date and documentary evidence of cancellation was available, it must be presumed that no amount was actually received; the revenue could not sustain an addition under Section 115BBC without establishing actual receipt by objective verification. Applying these determinations, the addition made by the AO and confirmed by the CIT(A) was found to be without basis and unsustainable. [Paras 9, 10]

Addition under Section 115BBC deleted and appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, held that the impugned donation entries were nullified by same-day reversal and cancelled receipts on record, and directed deletion of the addition under Section 115BBC due to lack of verification of actual receipt by the revenue.

Section 50C deemed full value of consideration in transfers of land - application of proviso to Section 50C where agreement date precedes registration and part consideration received by banking channel - reliance on stamp valuation authority / DVO valuation versus registered valuer's report - computation of indexed cost of acquisition and fair market value as on 01.04.1981 - remand for fresh adjudication by Assessing Officer with reference to agreement date valuation - curative/retrospective effect of statutory proviso to remove anomaly - treatment of registered valuer's valuation evidence - deduction under section 54B in computation of capital gains

Section 50C deemed full value of consideration in transfers of land - application of proviso to Section 50C where agreement date precedes registration and part consideration received by banking channel - remand for fresh adjudication by Assessing Officer with reference to agreement date valuation - Whether the value to be adopted under section 50C should be the stamp valuation as on the date of agreement to sell (29.09.2010) where a registered agreement exists and part consideration was received by account-payee cheques prior to that date, and consequent direction to the Assessing Officer. - HELD THAT: - The Tribunal examined the assessee's contention that a registered agreement to sell dated 29.09.2010 fixed the sale consideration and that account payee cheques totalling Rs.50,00,000/- were received at that time. The Bench noted the first proviso to section 50C (as amended by Finance Act, 2016) which permits, where agreement date and registration date differ and part consideration is received by non cash banking modes on or before the agreement date, the stamp valuation on the agreement date to be taken for computing full value of consideration. The Tribunal observed that both conditions of the proviso are factually satisfied on the material on record. After reviewing precedents and the rationale for treating the amendment as curative/retrospective to remove an incongruity, the Tribunal concluded that the question requires factual verification by the Assessing Officer as to genuineness of the registered agreement and receipt of consideration through banking channels. Consequently the matter is remitted to the Assessing Officer to verify those facts and, if found, to adopt the stamp duty valuation as on 29.09.2010 for computation of capital gains, with opportunity to the assessee and by way of a speaking order. [Paras 11, 12, 13]

Issue remitted to the Assessing Officer to verify the registered agreement dated 29.09.2010 and receipt of part consideration through banking channels; if established, AO to adopt stamp duty valuation as on 29.09.2010 for computing full value of consideration under section 50C and recompute capital gains.

Computation of indexed cost of acquisition and fair market value as on 01.04.1981 - reliance on stamp valuation authority / DVO valuation versus registered valuer's report - treatment of registered valuer's valuation evidence - Determination of appropriate fair market value per sq. metre as on 01.04.1981 for computing indexed cost of acquisition and allowance of part of the assessee's claim on indexation. - HELD THAT: - The dispute concerned competing valuations for fair market value as on 01.04.1981 - the DVO/AO's low rate (approx. Rs.114.30 per sq. metre) and the registered valuer's higher rate (claimed Rs.825 per sq. metre), with the assessee urging acceptance of the registered valuer's methodology and evidence. The Tribunal reviewed relevant decisions of coordinate Benches and principles for valuing agricultural/land parcels where direct sale instances for the relevant period are scarce (including reverse escalation and averaging of methods). Finding that the DVO had relied on near neighbour sale instances without adequately considering location and other relevant factors which favoured the assessee's land, and having regard to precedents and a holistic view of facts, the Tribunal held that neither extreme should be applied. To meet the ends of justice the Tribunal directed adoption of an intermediate rate of Rs.607 per sq. metre as fair market value on 01.04.1981 for computation of indexed cost of acquisition, and directed the AO to apply that rate for calculating indexed cost and recomputing long term capital gain (allowing Ground No.2 partly). [Paras 22]

Adopt fair market value of Rs.607 per sq. metre as on 01.04.1981 for computing indexed cost of acquisition; AO to apply this rate and recompute indexed cost and long term capital gain accordingly (Ground No.2 partly allowed).

Final Conclusion: The appeal is partly allowed: the question whether stamp duty valuation as on the agreement date (29.09.2010) must be adopted under section 50C is remitted to the Assessing Officer for factual verification of the registered agreement and receipt of consideration through banking channels and, if established, for recomputation of capital gains; separately, for computation of indexed cost of acquisition as on 01.04.1981 the Tribunal directs adoption of Rs.607 per sq. metre and directs the AO to recompute long term capital gain accordingly.

Condonation of delay in filing appeal - Admission of additional grounds of appeal - Validity of reference to Valuation Officer under section 55A as amended w.e.f. 01.07.2012 - Prospective operation of statutory amendment - Power of Assessing Officer to refer valuation where assessee's declared value is higher than fair market value - Estoppel against law and inadmissibility of estoppel to preclude legal relief - Application of binding precedent of the jurisdictional High Court

Condonation of delay in filing appeal - Whether the delay of 29 days in filing the appeals before the Tribunal should be condoned. - HELD THAT: - The Tribunal examined the explanation that delay occurred due to the accountant's casual approach and lack of technical awareness and that the appeal was filed promptly after obtaining the order. Balancing technicalities of limitation against substantial justice and noting the modest length of delay, the Tribunal accepted that the delay was neither intentional nor deliberate and that no prejudice would be caused to the revenue. [Paras 6]

Delay of 29 days in filing the appeals is condoned.

Admission of additional grounds of appeal - Whether the assessee's additional legal ground challenging the validity of reference to the Valuation Officer could be admitted. - HELD THAT: - The Tribunal noted that the additional ground was purely legal and arose from materials already on record in the assessment and first appellate proceedings, requiring no fresh facts. Applying the principles in National Thermal Power Corporation v. CIT and Jute Corporation of India Ltd. v. CIT, the Tribunal held the ground to be admissible for adjudication. [Paras 15, 16]

The additional ground of appeal is admitted for adjudication.

Validity of reference to Valuation Officer under section 55A as amended w.e.f. 01.07.2012 - Prospective operation of statutory amendment - Power of Assessing Officer to refer valuation where assessee's declared value is higher than fair market value - Application of binding precedent of the jurisdictional High Court - Whether the assessing officer validly referred the valuation to the Departmental Valuation Officer (DVO) under the amended clause of section 55A, and whether the DVO-based valuation could be used to reduce the cost of acquisition for the impugned transaction. - HELD THAT: - The Tribunal considered the legislative amendment to section 55A effected w.e.f. 01.07.2012 (substituting 'is at variance with its fair market value' for 'is less than its fair market value') and the object and memorandum to the Finance Bill, 2012. It followed binding decisions of the jurisdictional High Court and co-ordinate Benches holding that the 2012 amendment is prospective and does not apply to transactions (and assessments) antecedent to its operative effect; specifically, transactions in the financial year 2011-12 (relevant to AY 2012-13) are governed by the unamended provision. Under the unamended clause (a), reference to the Valuation Officer could be made only where the Assessing Officer formed an opinion that the value claimed by the assessee was less than the fair market value. Where the assessee's declared/replaced cost (based on a registered valuer) exceeded the DVO-determined value, the Assessing Officer had no jurisdiction to invoke clause (a) of section 55A as it stood then. Applying these principles and following the cited High Court and Tribunal precedents, the Tribunal held that the reference to the DVO was not competent and therefore the additions based on that reference could not be sustained. [Paras 16, 17, 26, 27]

Amended proviso to section 55A is not applicable to the assessed transaction; the reference to DVO under the amended provision is invalid for the impugned assessment, and the additions based on that reference are to be deleted.

Estoppel against law and inadmissibility of estoppel to preclude legal relief - Whether the assessee is estopped under section 115 of the Evidence Act from challenging the DVO report. - HELD THAT: - The Tribunal observed that estoppel cannot operate against law and that no tax can be levied without authority of law (Article 265). Since the Tribunal held the amended provision of section 55A inapplicable to the transaction, the Revenue's plea of estoppel did not preclude the assessee from seeking relief based on that legal premise. [Paras 18]

The plea of estoppel under section 115 of the Evidence Act does not bar the assessee from raising the legal challenge; estoppel cannot override the legal position.

Final Conclusion: The Tribunal condoned the delay, admitted the additional legal ground, held that the 2012 amendment to section 55A does not apply to the transaction relevant to AY 2012-13 (financial year 2011-12), found the reference to the DVO invalid for the impugned assessment and deleted the additions based on that reference; consequently, the appeals are allowed.

Binding effect of NCLT order - limitation on tax recovery where resolution plan fixes liability - monetary threshold for departmental appeals under Board Circular No. 17/2019 - declining to adjudicate substantive tax controversy where recoverable amount is crystallized below threshold - consequential dismissal of cross-objection

Binding effect of NCLT order - limitation on tax recovery where resolution plan fixes liability - Whether the Revenue can recover tax in excess of the amount crystallized by the NCLT/resolution plan. - HELD THAT: - The Tribunal found that the NCLT had accepted the resolution plan which expressly treated the disputed Income Tax liability as deemed crystallized and provided for settlement at a nominal amount of Rs. 1,00,000. Reliance was placed on judicial authorities cited by the Revenue Representative to the effect that orders of the insolvency forum fixing or crystallizing liabilities bind recovery processes and that recovery in excess of amounts specified in such orders is not permissible. Given that the NCLT order limits the claim to the specified amount, the Revenue is not in a position to recover any amount beyond that crystallized figure. The Tribunal therefore held that, in the facts of this case and having regard to the NCLT resolution, there is no practical prospect of recovering sums in excess of the amount fixed by the resolution plan and the NCLT order. [Paras 4]

The Revenue cannot recover any amount exceeding the sum crystallized by the NCLT/resolution plan and, consequently, the Revenue's appeal is dismissed as being below the monetary limit specified under Board Circular No. 17/2019.

Declining to adjudicate substantive tax controversy where recoverable amount is crystallized below threshold - Whether the Tribunal should adjudicate the substantive tax issue despite the NCLT having fixed the recoverable amount at a nominal sum. - HELD THAT: - The Tribunal noted the Department did not press for recovery beyond the amount specified by the NCLT but sought to keep the legal issue alive for adjudication. Having regard to the limited tax value actually recoverable and the monetary threshold in the Board Circular, the Tribunal considered that no useful purpose would be served by deciding the substantive controversy at this stage. The Tribunal therefore declined to decide the substantive legal question and left the issue open for adjudication in an appropriate case where the question of recovery is materially significant. [Paras 2, 3, 4]

The substantive tax issue is not adjudicated and is left open to be decided in an appropriate case.

Consequential dismissal of cross-objection - Whether the assessee's cross-objection should be adjudicated after dismissal of the Revenue's appeal. - HELD THAT: - The assessee submitted that if the Revenue's appeal is dismissed, the cross-objection can also be dismissed. In the light of the Tribunal's dismissal of the Revenue's appeal for the reasons recorded, the Tribunal accepted the assessee's submission and treated the cross-objection as having no independent utility. [Paras 5, 6]

The assessee's cross-objection is dismissed.

Final Conclusion: For Assessment Year 2012-2013 the Revenue's appeal is dismissed as the NCLT-accepted resolution plan limits recovery to the specified nominal amount and the matter is below the monetary threshold in Board Circular No. 17/2019; the substantive tax controversy is left open for adjudication in an appropriate case; the assessee's cross-objection is dismissed.

Deduction under section 10A - splitting up or reconstruction of business - applicability of CBDT Circular No. 1/2005 to section 10A - precedent of Tribunal in assessee's own case - reliance on Karnataka High Court in CIT v. Expert Outsource

Deduction under section 10A - splitting up or reconstruction of business - precedent of Tribunal in assessee's own case - applicability of CBDT Circular No. 1/2005 to section 10A - reliance on Karnataka High Court in CIT v. Expert Outsource - The correctness of disallowing the assessee's claim of deduction under section 10A on the ground that the STPI unit was formed by splitting up or reconstruction of the existing business. - HELD THAT: - The Assessing Officer disallowed the section 10A deduction for AY 2011-12 by adopting findings recorded in relation to AY 2010-11 that the export unit was formed by splitting up/reconstruction. The Ld. CIT(A) deleted the disallowance by placing reliance on the Tribunal's order in the assessee's own case for AY 2010-11, which had examined the issue in detail and applied the Karnataka High Court's decision in CIT v. Expert Outsource and CBDT Circular No. 1/2005. The Tribunal in the earlier order had held that the ratio of the High Court's decision and the Circular (though issued in the context of section 10B) applies equally to section 10A. The Revenue conceded that the issue is squarely covered by the Tribunal's order in the assessee's own case and did not press for a contrary conclusion. Having considered the records and the earlier detailed judicial and administrative pronouncements relied upon, the Appellate Tribunal found no reason to interfere with the CIT(A)'s conclusion deleting the disallowance under section 10A.

Deletion of the disallowance under section 10A upheld; assessment for AY 2011-12 sustained in favour of the assessee.

Final Conclusion: The Revenue's appeal is dismissed and the order of the Ld. CIT(A) deleting the disallowance under section 10A for AY 2011-12 is upheld.

Income treated as unexplained cash credit and taxable under the concept of unexplained income - Income treated as unexplained cash credit under 69A of the Income Tax Act, 1961 - Burden of proof for claimed chit-fund investments and requirement of documentary evidence - Admissibility and evidentiary weight of statement recorded under section 131 of the Income Tax Act, 1961 - Use of AIMS (Actionable Information Monitoring System) information as a basis for inquiry - Inference from conduct rules applicable to government employees regarding prohibited speculative investments

Income treated as unexplained cash credit under 69A of the Income Tax Act, 1961 - Burden of proof for claimed chit-fund investments and requirement of documentary evidence - Admissibility and evidentiary weight of statement recorded under section 131 of the Income Tax Act, 1961 - Inference from conduct rules applicable to government employees regarding prohibited speculative investments - Whether the addition of Rs. 10,00,000 as unexplained income under section 69A was rightly sustained. - HELD THAT: - The Tribunal upheld the CIT(A)'s confirmation of the addition. The AO's action was founded on AIMS information showing cash deposits during the demonetisation period and on the assessee's failure to comply with notices. The assessee's belated return and non-compliance with earlier notices left the claimed sources unverified. The assessee asserted that the cash originated from chit-fund savings and relied on his statement under section 131 and on general socio economic explanations; however, he did not produce contemporaneous documentary evidence to substantiate the chit fund claim. The CIT(A) examined bank statements, recorded the assessee's monthly expenditure and cash flows, and found the assessee lacked sufficient demonstrated means to support the asserted instalments; the CIT(A) also noted that, as a government employee, the assessee was governed by conduct rules that disallowed speculative investments and that no declaration of such investments was filed. The Tribunal found the written submissions and the oral case before it to be general and unsupported by evidence, endorsed the CIT(A)'s factual findings and reasoning on the insufficiency of proof, and concluded that the addition under section 69A was justified. [Paras 2, 4, 8, 9]

Addition of Rs. 10,00,000 as unexplained income under section 69A is sustained and the assessee's appeal on this ground is dismissed.

Final Conclusion: The Tribunal dismissed the appeal and upheld the addition of Rs. 10,00,000 as unexplained income under section 69A for AY 2017-18, the CIT(A)'s findings on lack of documentary proof and the evidentiary weight of bank statements and the section 131 statement being affirmed.

Validity of exercise of powers under section 263 of the Income-tax Act - Disallowance under section 40(a)(ia) for failure to deduct tax at source - Effect of compliance with section 194C(6) despite non-compliance with section 194C(7) - When two views are possible, AO's view cannot be treated as erroneous and prejudicial

Validity of exercise of powers under section 263 of the Income-tax Act - Disallowance under section 40(a)(ia) for failure to deduct tax at source - Effect of compliance with section 194C(6) despite non-compliance with section 194C(7) - When two views are possible, AO's view cannot be treated as erroneous and prejudicial - Whether the Principal Commissioner could set aside the assessment under section 263 on account of alleged non-compliance with section 194C(7) when the assessee had furnished PAN under section 194C(6) and the Assessing Officer accepted the claim. - HELD THAT: - The Tribunal found that the sole controversy related to transport charges claimed without TDS deducted, where the assessee had obtained and furnished PANs pursuant to section 194C(6) and the Assessing Officer had accepted the explanation in the assessment. The PCIT invoked section 263 on the basis that non-furnishing of details contemplated by section 194C(7) rendered the assessment erroneous and prejudicial to revenue. The Tribunal observed that established authorities had held that compliance with section 194C(6) precludes disallowance under section 40(a)(ia) even if formalities under section 194C(7) were not complied with, and that where two reasonable views are possible the AO's conclusion cannot be treated as erroneous and prejudicial so as to attract section 263. The PCIT did not address the assessee's legal objections or conduct requisite enquiry before setting aside the assessment, and therefore erroneously assumed jurisdiction under section 263. Applying these principles to the material before it, the Tribunal held that the PCIT's exercise of revisionary power was unsustainable and the order under section 263 had to be set aside.

The order passed by the Principal Commissioner under section 263 was set aside and the assessee's appeal allowed.

Final Conclusion: The Tribunal held that the PCIT's revision under section 263 was not sustainable because the Assessing Officer's acceptance of PANs under section 194C(6) represented a view reasonably open on the facts and law; consequently the assessment was not shown to be erroneous and prejudicial to revenue and the section 263 order was set aside.

Allowability of bonus or commission to directors under section 36(1)(ii) of the Income-tax Act - relevance of agreements of appointment in determining allowance of remuneration - compliance with company law limits as determinative for allowance - precedential effect of coordinate bench decisions

Allowability of bonus or commission to directors under section 36(1)(ii) of the Income-tax Act - relevance of agreements of appointment in determining allowance of remuneration - compliance with company law limits as determinative for allowance - Whether the additions disallowing bonus and commission paid to directors amounting to Rs. 15,99,169/- are sustainable under section 36(1)(ii) where payments were made pursuant to agreements of appointment and were within limits prescribed by company law. - HELD THAT: - The Tribunal found that the payments were made to directors pursuant to agreements for payment of bonus and commission, copies of which were placed on record, and that the amounts were within the limits prescribed by company law. The Tribunal held that section 36(1)(ii), which disallows sums paid as bonus or commission to an employee for services rendered where such sum would have been payable as profits or dividend if not paid as bonus or commission, did not apply to the facts of the case. The coordinating bench's earlier decision in the assessee's own case for the adjacent year, which allowed the claim on similar facts, was followed as there was no change in law or material facts; accordingly the corroborative effect of the agreement and compliance with statutory company-law limits were held determinative in allowing the expenditure.

Addition disallowing bonus and commission of Rs. 15,99,169/- deleted and the claim of the assessee allowed.

Final Conclusion: The appeal is partly allowed; the Tribunal, following a coordinate-bench decision, directed deletion of the addition of Rs. 15,99,169/- made by the assessing officer in respect of bonus and commission paid to directors for A Y 2014.

Validity of assessment under section 153A in absence of incriminating material - Requirement of incriminating material where assessment for the relevant year is already a completed assessment - Reliability of creditor-lender transactions for disallowance under section 68

Validity of assessment under section 153A in absence of incriminating material - Requirement of incriminating material where assessment for the relevant year is already a completed assessment - Additions made under proceedings initiated by search under section 153A are not sustainable where no incriminating material was found during the search and the assessment for the year in question was already a completed assessment. - HELD THAT: - The Tribunal examined precedent of the Jurisdictional High Court in CIT v. Kabul Chawla and subsequent decisions of higher courts, which hold that where search and seizure yield no incriminating material, additions under section 153A cannot be legally sustained. The search in the present case (26.08.2015) preceded an assessment for AY 2012-13 that had been completed; therefore the assessment could not be treated as one kept in abeyance that would permit additions in the absence of incriminating material. On the facts, no incriminating material relating to the assessee was found in the seized documents, and coordinate decisions in related proceedings (Nimbus India Ltd.) deleting similar additions supported this principle. Applying that legal position to the record of the present case, the Tribunal held that the addition caused by the search could not be sustained. [Paras 7, 8, 10]

Addition under proceedings initiated by the search is not sustainable; appeal allowed on this ground.

Reliability of creditor-lender transactions for disallowance under section 68 - Characterisation of lending company as a paper company - Addition made treating unsecured loan from M/s Cindy Goods & Supply Pvt. Ltd. as unexplained income under section 68 is not warranted where the assessee substantiates sources and the lender cannot be treated as a paper company from the record. - HELD THAT: - The Tribunal considered documentary and concurrent material: the lender's recorded returns for the relevant and preceding year, the statement of the lender's director admitting investment, and the coordinate Bench's deletion of matching additions in related appeals. These facts rebutted the conclusion that the lender was a paper company and supported the assessee's contention that sources for a portion of amounts received were substantiated. In light of the absence of incriminating material from the search and the evidence on record establishing the genuineness of the loan transactions, the Tribunal found the addition under section 68 unsustainable. [Paras 8, 9, 10]

Addition of Rs. 1,50,00,000 treated as unexplained loan under section 68 deleted; appeal allowed on this ground.

Final Conclusion: The Tribunal allowed the assessee's appeal, holding that additions made in the assessment arising from the search could not be sustained in the absence of incriminating material and that the unsecured loan from M/s Cindy Goods & Supply Pvt. Ltd. was substantiated and not a basis for addition under section 68.

Exit from SEZ scheme - No Dues Certificate - Transfer of non-IT assets - Rule 74(5) of the SEZ Rules, 2006 - Permission to file bill of entry and assessment under Customs Tariff - Due process of adjudication on merits

No Dues Certificate - Exit from SEZ scheme - Rule 74(5) of the SEZ Rules, 2006 - Permission to file bill of entry and assessment under Customs Tariff - Respondents to process and, on fulfillment of conditions, issue No Dues Certificate and exit certificates for units No. 501 and 601 and complete assessment/clearance formalities. - HELD THAT: - The petitioner sought permission to exit the SEZ scheme for units No. 501 and 601 and offered to pay applicable duties on depreciated value of non IT assets under Rule 74(5) SEZ Rules, 2006, and had filed bills of entry for clearance. The respondents' affidavit records that permission to file bills of entry was granted, assessment would be done expeditiously under the Customs Tariff, and exit certificates and No Dues Certificate would be issued upon completion of requisite compliances under Rule 74. Having considered the parties' positions and the progress made, the Court directed the respondents to carry out the necessary processing and to issue the No Dues Certificate and exit certificates for units No. 501 and 601 as early as possible, preferably within a week, upon fulfillment of the conditions prescribed by the rules (paras. 8, 9). [Paras 8, 9]

Respondents directed to process the petitioner's exit application, complete assessment/clearance, and issue No Dues and exit certificates for units No. 501 and 601 promptly upon fulfillment of conditions.

Transfer of non-IT assets - Due process of adjudication on merits - Proceedings in respect of the show cause notices remain undetermined and shall proceed according to law; all contentions are left open. - HELD THAT: - The petitioner had challenged a Committee Report and show cause notices relating to earlier transfer of non IT assets of unit No. 402. The Court recorded that the petitioner was not pressing reliefs in respect of those show cause notices. The respondents stated that adjudication of the show cause notices would be carried out after following the due process of adjudication on merits. The Court therefore declined to decide or quash the show cause notices and left adjudication and all contentions open for determination in the statutory process (para. 8, 9). [Paras 8, 9]

Show cause notices are not adjudicated by this order; they shall be adjudicated on merits through the statutory process and all contentions remain open.

Final Conclusion: Writ petition disposed. The respondents are directed to process the petitioner's exit application, complete assessment/clearance formalities and, upon fulfillment of conditions under the SEZ Rules, issue the No Dues Certificate and exit certificates for units No. 501 and 601 promptly (preferably within a week). The challenge to the Committee Report and the show cause notices is not decided; adjudication of the notices will proceed according to law and all contentions remain open.

Maintainability of writ under Article 226 in contractual disputes - exercise of writ jurisdiction where substantial contractual questions require adjudication on documents and evidence - delay and laches affecting maintainability of writ petitions - liberty to seek alternate adjudicatory forum for contractual grievances

Maintainability of writ under Article 226 in contractual disputes - exercise of writ jurisdiction where substantial contractual questions require adjudication on documents and evidence - Writ petition under Article 226 is not maintainable where the dispute is founded on contractual obligations requiring adjudication on documents and evidence. - HELD THAT: - The Court held that the controversy arises out of contractual obligations between the parties and involves factual adjudication based on documents and evidence which cannot be appropriately resolved in proceedings under Article 226. The High Court observed that such matters require an adjudicatory process in the appropriate forum and cannot be determined on affidavits in writ proceedings. Consequently, the petition seeking quashal of the impugned order was unsuitable for disposal by writ jurisdiction and the petitioner must seek redressal before the competent adjudicatory authority.

Writ petition dismissed as not maintainable on merits because the dispute is essentially contractual and requires adjudication on evidence.

Delay and laches affecting maintainability of writ petitions - liberty to seek alternate adjudicatory forum for contractual grievances - The writ petition was also vulnerable to rejection on the ground of inordinate delay, the Credit Limit Application having been disposed of many years earlier. - HELD THAT: - The Court noted that the Credit Limit Application filed on 12.06.2008 had been disposed of by an order dated 24.09.2020 and that the present writ was filed after a substantial lapse of time (eight years), which militates against maintainability. Although the petitioner relied on subsequent communications and pressed for adjudication, the combination of delay and the contractual nature of the dispute supported dismissal of the writ. The Court nevertheless recorded that the petitioner is free to approach the appropriate forum for relief.

Writ petition rejected on the additional ground of delay; petitioner permitted to pursue remedy before the appropriate forum.

Final Conclusion: The writ petition is dismissed for want of maintainability - the dispute being essentially contractual and requiring adjudication on documents and evidence, and also being filed after inordinate delay; the petitioner is at liberty to seek redressal before the appropriate forum. No costs.

Scheme of Arrangement by way of Amalgamation - dispensing with convening of meetings - consent affidavits constituting unanimous consent - no necessity to convene meetings where there are no creditors - appointed date for amalgamation - provisions of Sections 230-232 of Companies Act, 2013

Dispensing with convening of meetings - consent affidavits constituting unanimous consent - Dispensation of convening/holding of meeting of equity shareholders of Transferor Company No. 1 in respect of the proposed Scheme. - HELD THAT: - The Transferor Company No. 1 filed certificates and affidavits evidencing that its two equity shareholders together hold 100% of the voting share and have given their consent to the Scheme. There are no secured or unsecured creditors recorded for Transferor Company No. 1. On that basis the Tribunal accepted that unanimous shareholder consent has been placed on record and that there are no creditors whose meetings require convening, and accordingly dispensed with calling/holding the meeting of equity shareholders and treated the question of creditors' meetings as not arising.

Meeting of equity shareholders of Transferor Company No. 1 is dispensed with; meetings of secured and unsecured creditors do not arise.

Dispensing with convening of meetings - consent affidavits constituting unanimous consent - Dispensation of convening/holding of meeting of equity shareholders of Transferor Company No. 2 in respect of the proposed Scheme. - HELD THAT: - The Transferor Company No. 2 produced certificates and affidavits showing that its five equity shareholders together hold 100% of the voting share and have given their consent to the Scheme. The company also has no secured or unsecured creditors. The Tribunal accepted the filed unanimous consents and the absence of creditors and accordingly dispensed with convening/holding the meeting of equity shareholders and recorded that meetings of creditors do not arise.

Meeting of equity shareholders of Transferor Company No. 2 is dispensed with; meetings of secured and unsecured creditors do not arise.

Dispensing with convening of meetings - consent affidavits constituting unanimous consent - no necessity to convene meetings where there are no creditors - Dispensation of convening/holding of meetings of equity shareholders, secured creditor and unsecured creditors of the Transferee Company in respect of the proposed Scheme. - HELD THAT: - The Transferee Company filed affidavits showing that its three equity shareholders have given consent constituting 100% in value. The sole secured creditor filed a consent affidavit representing 100% of secured debt. Of 28 unsecured creditors, 27 filed consent affidavits amounting to 99.92% in value. Having regard to these consents placed on record, the Tribunal accepted that the requisite majority/unanimity for dispensing with requisite meetings has been satisfied and dispensed with the convening/holding of the meetings of equity shareholders, secured creditor and unsecured creditors accordingly.

Meetings of equity shareholders, the secured creditor, and the unsecured creditors of the Transferee Company are dispensed with.

Appointed date for amalgamation - Scheme of Arrangement by way of Amalgamation - Specification of the appointed date for the Scheme. - HELD THAT: - The Scheme itself specifies the appointed date as 1st April 2020. The Tribunal recorded the appointed date as stated in the Scheme, subject to its directions in the order regarding convening or dispensing with meetings.

Appointed date for the Scheme recorded as 1st April 2020, subject to the Tribunal's directions.

Final Conclusion: Application under Sections 230-232 of the Companies Act, 2013 for sanctioning directions to dispense with convening meetings in relation to the proposed Scheme of Amalgamation is allowed: meetings of shareholders and creditors are dispensed with as recorded, and the appointed date is fixed as 1st April 2020.

Corporate insolvency resolution process - financial creditor's application under Section 7 - existence of default - admission of petition - appointment of Interim Resolution Professional - moratorium under Section 14 - public announcement by Interim Resolution Professional within three days - deposit for IRP expenses - territorial jurisdiction under Section 60(1)

Territorial jurisdiction under Section 60(1) - Territorial jurisdiction of the Adjudicating Authority over the corporate debtor. - HELD THAT: - The Corporate Debtor's registered office is situated in Delhi, and therefore the Tribunal, being the Adjudicating Authority for that territorial jurisdiction, has competence to entertain the Section 7 application against the Corporate Debtor. [Paras 3]

The Tribunal has territorial jurisdiction to hear the application.

Existence of default - financial creditor's application under Section 7 - Whether the applicant, as financial creditor, has established a debt and default sufficient to admit the Section 7 application. - HELD THAT: - The applicant placed the loan agreement, board resolution and transaction evidence on record and the Corporate Debtor did not contest the claim; indeed counsel for the Corporate Debtor admitted the default and consented to initiation of CIRP. The material on record demonstrates that a loan was sanctioned and remains unpaid as on the due date. The application filed in the prescribed proforma is complete and satisfies the statutory satisfaction required under Section 7(5)(a). [Paras 8, 10, 11, 12, 14]

Default is established and the Section 7 application is complete and admits consideration for initiation of CIRP.

Admission of petition - Admission of the Section 7 application and initiation of the Corporate Insolvency Resolution Process. - HELD THAT: - Having found that default has occurred and the application is complete under the Rules and Section 7, the Tribunal admits the application and directs initiation of CIRP in accordance with the Code. The admission is founded on the evidence of debt, absence of payment, and completeness of the application. [Paras 12, 14]

The application is admitted and CIRP is initiated.

Appointment of Interim Resolution Professional - Appointment of the Insolvency Resolution Professional proposed by the financial creditor. - HELD THAT: - The proposed IRP submitted the written communication required by Rule 9(1) and declarations that no disciplinary proceedings are pending; necessary disclosures as required by IBBI Regulations were placed on record. The Tribunal is satisfied that the proposed person meets the requirements of Section 7(3)(b) and accordingly appoints him as Interim Resolution Professional. [Paras 15]

Mr. Vinay Kumar Singhal is appointed as the Interim Resolution Professional.

Public announcement by Interim Resolution Professional within three days - Direction as to timeline for public announcement by the Interim Resolution Professional. - HELD THAT: - Pursuant to Section 13(2) of the Code and the Explanation to Regulation 6(1), the Tribunal directs the Interim Resolution Professional to make the statutory public announcement promptly, clarifying that 'immediately' is to be read as within three days for compliance with the Regulations. [Paras 16]

IRP shall make the public announcement within three days of appointment.

Moratorium under Section 14 - Operation of moratorium consequent to admission of the Section 7 application. - HELD THAT: - On admission of the application, the moratorium under Section 14(1) follows automatically, invoking the prohibitions set out therein; relevant exceptions and provisions in Sections 14(2) and 14(3) will operate during the moratorium as prescribed by the Code. [Paras 17]

Moratorium under Section 14 is declared upon admission, with Sections 14(2)-14(3) applicable as appropriate.

Deposit for IRP expenses - Direction to the financial creditor to deposit funds for meeting IRP's initial expenses. - HELD THAT: - To enable the IRP to perform his functions, the Tribunal directs the Financial Creditor to deposit the specified sum within three days; the amount is to be accounted for by the IRP, subject to adjustment by the Committee of Creditors and repayment to the Financial Creditor if attributable. [Paras 18]

Financial Creditor must deposit the directed amount with the IRP within three days; the sum is subject to accounting and adjustment by the Committee of Creditors.

Corporate insolvency resolution process - Administrative directions following admission including intimation to Registrar of Companies. - HELD THAT: - The registry is directed to communicate the order to relevant parties and Registrar of Companies, and the Registrar is directed to update the corporate debtor's status on its website to reflect admission of the petition, ensuring public record of CIRP initiation. [Paras 19]

Registry to communicate the order and RoC to update the corporate debtor's status accordingly.

Final Conclusion: The Tribunal admits the Section 7 application filed by the financial creditor, having found debt and default; CIRP is initiated, Mr. Vinay Kumar Singhal is appointed as Interim Resolution Professional, who shall make the public announcement within three days; moratorium under Section 14 operates; the financial creditor is directed to deposit the specified sum for IRP expenses within three days; and registry/Registrar of Companies are directed to notify and update records.

Existence of default - financial debt - admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - completeness of application under Rule 4(2) - limitation - jurisdiction of the Adjudicating Authority - appointment of Interim Resolution Professional - public announcement of admission - moratorium under Section 14 - deposit to meet IRP expenses

Existence of default - financial debt - Default in repayment of financial debt has occurred and is established on the record. - HELD THAT: - The Tribunal examined the documents and submissions and found no satisfactory evidence produced by the corporate debtor to substantiate payment of the claimed debt. Although extensions and rollovers were granted earlier, no document was produced to show that the debt ceased to be due and payable after 21.10.2019. The Tribunal applied the standard that the Adjudicating Authority's scope is confined to determining existence of debt and default and relied on the principle that if the records produced by the financial creditor satisfy the authority that a default has occurred, the application must be admitted. On the material placed before it, the Bench was satisfied that default had occurred in respect of a financial debt. [Paras 12, 13, 16]

Default proved; debt remains unpaid and constitutes financial debt for the purposes of admission under the Code.

Admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - completeness of application under Rule 4(2) - The Section 7 application is complete and admits the initiation of Corporate Insolvency Resolution Process. - HELD THAT: - The Tribunal found the application to be filed in the prescribed form and complete in all respects under Rule 4(2). Having concluded that default had occurred, and that the application was complete, the Bench held that admission was warranted and accordingly admitted the application initiating CIRP as prescribed under the Code. [Paras 16]

Application under Section 7 admitted; CIRP initiated.

Limitation - The application is within the period of limitation. - HELD THAT: - The Tribunal noted the date of default as 22.10.2019 and observed that the application filed on 07.11.2020 falls within the limitation period. No bar of limitation was found on the face of the record. [Paras 14]

Application not barred by limitation.

Jurisdiction of the Adjudicating Authority - This Bench has jurisdiction to entertain and try the application. - HELD THAT: - The Tribunal observed that the registered office of the corporate debtor is situated in Delhi and therefore the Bench has territorial jurisdiction to entertain the Section 7 petition. [Paras 15]

Adjudicating Authority (NCLT, New Delhi Bench) has jurisdiction.

Appointment of Interim Resolution Professional - The proposed Insolvency Resolution Professional satisfies the statutory requirements and is appointed as IRP. - HELD THAT: - The applicant proposed Ms. Minni Katariya as IRP and placed on record her written communication under Rule 9(1) along with declarations that no disciplinary proceedings are pending and the requisite disclosures as per IBBI Regulations. The Tribunal found that she satisfies the requirement of Section 7(3)(b) of the Code and appointed her as Interim Resolution Professional. [Paras 17]

Ms. Minni Katariya appointed as Interim Resolution Professional.

Public announcement of admission - The IRP is directed to make the public announcement of admission immediately. - HELD THAT: - Pursuant to Section 13(2) of the Code and the Regulations, the Tribunal directed the Interim Resolution Professional to make the public announcement regarding admission of the application. The Tribunal clarified that 'immediately' is to be understood as within three days, consistent with the Explanation to Regulation 6(1) of the IBBI Regulations. [Paras 18]

IRP to make public announcement within three days.

Moratorium under Section 14 - Moratorium under Section 14(1) follows upon admission, with relevant provisos and subsequent provisions applying. - HELD THAT: - The Tribunal held that as a consequence of admission under Section 7, the moratorium envisaged under Section 14(1) shall operate in relation to the corporate debtor, applying the provisos to sub section (1) and the provisions of Sections 14(2) and 14(3) during the moratorium period. [Paras 19]

Section 14 moratorium declared as consequence of admission.

Deposit to meet IRP expenses - Applicant directed to deposit an initial amount to meet IRP expenses, subject to adjustment by the Committee of Creditors. - HELD THAT: - The Tribunal directed the applicant to deposit a specified sum with the Interim Resolution Professional to meet expenses for performance of IRP functions in accordance with the Regulations, to be done within three days of receipt of the order. The amount was ordered to be subject to adjustment by the Committee of Creditors as accounted for by the IRP and refundable to the applicant accordingly. [Paras 20]

Applicant to deposit amount with IRP within three days; amount subject to adjustment by CoC.

Final Conclusion: The Tribunal admitted the Section 7 application, having found default in respect of a financial debt, held the petition to be within limitation and competent, appointed the proposed Interim Resolution Professional, directed immediate public announcement and operation of the statutory moratorium, and ordered the applicant to deposit funds to meet initial IRP expenses.

Entertainment of interlocutory application - effect of appellate remand - annulment of CIRP by appellate order - handing over of management on setting aside CIRP - discharge of Interim Resolution Professional and settlement of CIRP costs - continuing life of Section 7 application - liberty to seek fresh adjudication after apex court decision

Entertainment of interlocutory application - effect of appellate remand - The IA filed by the Corporate Debtor in compliance with the NCLAT order is not entertained and stands disposed of. - HELD THAT: - Having considered the submissions of both parties, the affidavits and the orders of the NCLAT and the Supreme Court placed on record, the Tribunal found no reason to entertain the IA filed by the Corporate Debtor. The Bench noted the pendency of the Financial Creditor's appeal before the Supreme Court and divergent contentions on whether proceedings should await that verdict; on balance the Tribunal declined to proceed with the IA and disposed it without entertaining the substantive reliefs sought.

IA not entertained and disposed of.

Annulment of CIRP by appellate order - handing over of management on setting aside CIRP - It is recorded that the NCLAT set aside the admission/order commencing CIRP and that the IRP handed management back to the erstwhile management on 20/06/2020. - HELD THAT: - The Tribunal recorded the operative effect of the NCLAT's final order remanding the matter and setting aside the impugned admission: the CIRP stands set aside and, consequent thereto, the IRP ceased control of the corporate debtor and restored management to the suspended/erstwhile management on 20/06/2020. This factual finding was taken on record by the Bench as the current position of the proceedings. [Paras 8]

CIRP taken as set aside and management handed back to erstwhile management as recorded.

Discharge of Interim Resolution Professional and settlement of CIRP costs - The IRP has been discharged from his assignment with effect from 20/06/2020 and the IRP's fees and CIRP costs have been amicably settled between the IRP and the Financial Creditor. - HELD THAT: - The Tribunal took on record the statement that the IRP was discharged from the assignment w.e.f. 20/06/2020 and that the issue concerning his fees and reimbursement of CIRP costs has been settled between the IRP and the Financial Creditor. The Bench therefore declined to pursue further the reliefs relating to continuation or payment claims of the IRP in the present IA. [Paras 9]

IRP discharged w.e.f. 20/06/2020 and fees/CIRP cost settled.

Continuing life of Section 7 application - liberty to seek fresh adjudication after apex court decision - The original Section 7 application filed by the Financial Creditor remains live and is not dismissed; both parties have liberty to approach the Tribunal after the outcome of the appeal pending before the Supreme Court. - HELD THAT: - Although the CIRP was set aside by the appellate order, the Tribunal clarified that the Financial Creditor's application under Section 7 of the IBC continues to be alive. The Bench recorded that, in view of the pending appeals before the Supreme Court, it will not proceed at present and granted both Financial Creditor and Corporate Debtor liberty to return to this Bench for adjudication of the Section 7 petition after the Supreme Court renders its decision. [Paras 10, 11]

Section 7 application remains pending; parties may seek fresh adjudication post apex court outcome.

Final Conclusion: The Tribunal declined to entertain the IA filed by the Corporate Debtor; it recorded that the NCLAT has set aside the admission (CIRP) and that management was restored to the erstwhile management on 20/06/2020, the IRP stood discharged and his fees/CIRP costs settled, while the Financial Creditor's Section 7 petition remains alive and the parties are at liberty to approach the Tribunal after the Supreme Court delivers its judgment.

Natural justice - Sabka Vishwas (Legacy Dispute Resolution) Scheme - pre-deposit adjustment / deduction - verification of payment / genuineness of pre-deposit - personal hearing under the scheme - procedural compliance of automated online scheme

Natural justice - pre-deposit adjustment / deduction - personal hearing under the scheme - verification of payment / genuineness of pre-deposit - Whether issuance of Form SVLDRS-3 without taking into account the petitioners' claimed pre-deposit of Rs. 50,00,000/- and without completing the opportunity of personal hearing/verification violated principles of natural justice and the procedure under the SVLDRS Rules, warranting setting aside and remand. - HELD THAT: - The Court found that the petitioners' claim of having deposited the sum towards the liability stated in the show-cause notice was not denied and that the Designated Committee itself considered verification of the pre-deposit necessary. The scheme provides for a hearing and verification (including under section 127) before finalising the statement in Form SVLDRS-3, and the Designated Committee had called for verification from the jurisdictional office. Due to typographical/clerical errors in communications and scheduling of the personal hearing (including reliance on automated system entries), the personal hearing could not take place through no fault of the petitioners. In those circumstances, issuing Form SVLDRS-3 without affording the hearing or completing verification of the claimed payment amounted to a breach of procedural requirements and principles of natural justice. The Court concluded that the impugned Form SVLDRS-3 ought to be set aside and the matter restored to the Designated Committee for verification of the payment claim and for hearing, after which a revised Form SVLDRS-3 should be issued reflecting the verified factual position. [Paras 10, 11, 12]

Impugned Form SVLDRS-3 set aside; matter remitted to the Designated Committee to verify the claimed pre-deposit and to afford personal hearing, and to issue a revised Form SVLDRS-3 on verification.

Final Conclusion: Writ petition allowed; Form SVLDRS-3 dated 07/03/2020 quashed and the matter restored to the Designated Committee for verification of the payment claimed by the petitioners, hearing and issuance of a revised Form SVLDRS-3 in accordance with the scheme and principles of natural justice.

Membership of Clubs and Association Service - service tax liability - application of a binding Supreme Court precedent on liability - remand for fresh consideration in light of higher court judgment - effect of interim stay on subsequent statements of demand

Membership of Clubs and Association Service - application of a binding Supreme Court precedent on liability - remand for fresh consideration in light of higher court judgment - Validity of the order-in-original dated 31.03.2016 levying service tax under the head 'Membership of Clubs and Association Service' and the appropriate remedy. - HELD THAT: - The court held that the assessing authority did not have the benefit of the Supreme Court's decision in State of West Bengal v. Calcutta Club Limited (reported judgment dated 03.10.2019) when it passed the impugned order-in-original. In view of that binding precedent, the impugned order-in-original dated 31.03.2016 was set aside. The matter was remitted to the assessing authority for fresh adjudication, directing that the assessment be redone afresh while bearing in mind and applying the Supreme Court's judgment cited by the parties. The remand requires the assessing authority to reconsider the question of liability on merits in accordance with the law as laid down by the Supreme Court. [Paras 4]

Impugned order-in-original dated 31.03.2016 set aside and matter remitted to the assessing authority to decide afresh in light of the Supreme Court's judgment.

Statements of Demand - effect of interim stay on subsequent statements of demand - service tax liability - remand for fresh consideration in light of higher court judgment - Validity of subsequent Statements of Demand issued after the order-in-original dated 31.03.2016 and the direction for their disposal. - HELD THAT: - The court observed that the merits of the subsequent SODs turn on the same legal question as the order-in-original - the liability under 'Membership of Clubs and Association Service'. Noting that there was an interim stay of the order-in-original and that the SODs were prima facie misconceived, the court set aside the impugned SODs. The assessing authority was directed to hear the petitioner and pass orders for all relevant periods in accordance with law and the Supreme Court's decision in Calcutta Club Limited. The court imposed a timetable, directing that this exercise be completed within sixteen weeks from the date of the order. [Paras 6]

Impugned Statements of Demand set aside; assessing authority directed to rehear and decide all periods in accordance with law and the Supreme Court's judgment within sixteen weeks.

Final Conclusion: The challenge to the assessment order dated 31.03.2016 is allowed by setting aside that order and remitting the matter for fresh consideration in accordance with the Supreme Court's decision in State of West Bengal v. Calcutta Club Limited; consequent Statements of Demand are also set aside and the assessing authority is directed to hear and decide all periods in accordance with law and that precedent within sixteen weeks.

Remittance under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - quantification in Form 3 attaining finality - acceptance of payment and issuance of settlement certificate in Form 4 - extension of payment period due to COVID-19 - interest on delayed payment under Notification No.13 of 2016 and Section 75 of the Finance Act, 1994 - board's duty to consider representations and pass appropriate orders

Remittance under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - quantification in Form 3 attaining finality - interest on delayed payment under Notification No.13 of 2016 and Section 75 of the Finance Act, 1994 - acceptance of payment and issuance of settlement certificate in Form 4 - extension of payment period due to COVID-19 - board's duty to consider representations and pass appropriate orders - Permission to remit the amount quantified in Form 3 with interest and direction to the Board to consider petitioner's representation and decide within a fixed time-frame. - HELD THAT: - The petitioner had Form 3 quantifying the demand which the Court recorded as having attained finality. Although the Scheme required remittance within 30 days (extended by the Department to 30.06.2020), the petitioner failed to remit by that date because the portal did not accept payments after 30.06.2020 and the delay was limited (recorded as nine days). The court noted existing recognition by the Board of declarants unable to pay by 30.06.2020 and the broader difficulties caused by the COVID-19 lockdown. While declining to grant the substantive relief sought, the Court permitted the petitioner to remit the quantified amount along with interest (as applicable under Notification No.13 of 2016 and Section 75 of the Finance Act, 1994) within one week as a measure to demonstrate bona fides. The Court further directed that the petitioner may file a representation accompanied by a copy of the order and that the Board shall consider the representation and pass appropriate orders within four weeks of receipt. The Court observed that the respondents had taken the stand that the application ought to be treated as lapsed, but found no reason to keep the writ petition pending once the Board's decision-making was secured by the direction to consider the representation promptly. [Paras 3, 4, 5, 12]

Petitioner permitted to remit the quantified amount with interest within one week; petitioner to make a representation to the Board and the Board directed to consider and pass orders within four weeks; writ petition disposed.

Final Conclusion: The writ petition is disposed after permitting the petitioner to remit the demand quantified in Form 3 with interest to demonstrate bona fides and directing the Board to consider the petitioner's representation and pass appropriate orders within four weeks; connected miscellaneous petition closed, no costs.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - time limit for remittance under settlement scheme - extension of time due to COVID-19 - judicial intervention in time-barred claims - pursuit of administrative representation as alternative remedy

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - time limit for remittance under settlement scheme - extension of time due to COVID-19 - judicial intervention in time-barred claims - pursuit of administrative representation as alternative remedy - Whether the High Court should grant relief by intervening where the applicant under the Scheme failed to remit the quantified amount within the extended period and instituted writ proceedings nearly a year after the last date stipulated by the Board. - HELD THAT: - The Court noted that the petitioner filed the application under the Scheme in 2019 and that Form 3 is dated 03.01.2020. Although the Board had extended the remittance deadline to 30.06.2020 in view of difficulties caused by the COVID 19 pandemic, there was no further extension. The petitioner filed representations dated 30.03.2021 and 05.04.2021 to the Chairman, CBIC, which had no recorded acknowledgement. The writ petition itself was filed on 16.06.2021-approximately one year after the Board's last stipulated date for payment. In these circumstances the Court held that it was not appropriate to exercise its discretionary jurisdiction to intervene in favour of the petitioner, who had not complied with the Scheme timeline and had a pending administrative representation which could be pursued before the Board. [Paras 4, 5]

Writ petition dismissed; petitioner left to pursue any representation before the Board.

Final Conclusion: The High Court, on the facts that the Scheme remittance deadline (extended to 30.06.2020) had expired and the writ was filed nearly a year later, refused to intervene and dismissed the petition, directing the petitioner to pursue its representation, if any, before the Board.

On-line information and database access or retrieval (OIDAR) - service tax on convenience fee - extended period of limitation under proviso to section 73(1) - suppression of facts - wilful suppression and intent to evade payment of tax - essential character / dominant intention test for classification of composite services - e commerce transactions do not ordinarily fall within OIDAR - classification of composite service based on essential character

Extended period of limitation under proviso to section 73(1) - suppression of facts - wilful suppression and intent to evade payment of tax - Whether invocation of the extended five-year limitation under the proviso to section 73(1) was justified in respect of amounts charged as convenience fee for the period prior to the one-year limitation. - HELD THAT: - The Tribunal examined the material on record and precedent. The Department had been informed of the appellant's collection of convenience fees well before issuance of the impugned show cause notice: the appellant disclosed the convenience fee in responses to audit enquiries, in a summons schedule, in a detailed note dated 23.07.2009, ST-3 returns and in Annual Reports (showing the same quantum later demanded). Jurisprudence cited (Pushpam Pharmaceuticals and subsequent Supreme Court and High Court decisions and Tribunal authority) requires that 'suppression of facts' in the proviso must be deliberate and accompanied by intent to evade payment of tax; mere omission or non declaration is insufficient. The Commissioner erred in treating mere non-disclosure as suppression and in holding that intent need not be shown. As there was no finding of wilful suppression with intent to evade, and the Department was aware of the convenience fee prior to the relevant one-year period, the extended period could not be invoked for the earlier years and the portion of the demand attributable to the period beyond one year (identified in the order) was unsustainable.

Invocation of the extended five year limitation for the earlier period is not justified; the demand insofar as it relates to the period beyond one year is set aside.

On-line information and database access or retrieval (OIDAR) - service tax on convenience fee - essential character / dominant intention test for classification of composite services - e commerce transactions do not ordinarily fall within OIDAR - classification of composite service based on essential character - Whether the 'convenience fee' charged by the appellant for online movie ticket booking is taxable as OIDAR for the period prior to 01.07.2012. - HELD THAT: - The Tribunal applied the essential character test to the Terms & Conditions and the transaction structure. The website provided free information (show timings, trailers, seat availability), but the chargeable component (convenience fee) was levied only when a user availed the online booking facility. The contract and Terms & Conditions expressly described the convenience fee as charged 'in lieu of the convenience given to the user by PVR' and 'shall not form a part of the value of the ticket.' The dominant intention of the transaction is to procure a ticket by an online/e commerce mechanism; provision of information on the website is ancillary and freely available. Board circulars and Tribunal authority distinguish e commerce (online sale/booking) from OIDAR, and OIDAR liability arises only where a fee is charged for providing information/data. The booking code and subsequent retrieval/print of ticket are incidental to the ticket sale facility and do not convert the transaction into OIDAR. Applying these principles, the convenience fee is for the online booking facility (e commerce) and not for access to information or database; therefore it is not taxable as OIDAR for the pre 01.07.2012 period.

Convenience fee does not qualify as OIDAR and is not exigible to service tax under OIDAR for the period prior to 01.07.2012; the demand on merits for that period cannot be sustained.

Final Conclusion: The confirmed demand of service tax in the impugned order is set aside. The invocation of the extended limitation for the earlier years is unsustainable for lack of wilful suppression with intent to evade, and on merits the convenience fee is not taxable as OIDAR for the pre 01.07.2012 period; consequential interest and penalties are also set aside. The appeals are allowed.