TaxTMI Updates e-Newsletter
Jul 15,2021

Determination of value in respect of certain supplies - Rule 32(5) of the CGST Rules, 2017 - margin scheme for second hand goods - taxable supply - no input tax credit on purchase - goods sold as such / minor processing not changing nature

Rule 32(5) of the CGST Rules, 2017 - margin scheme for second hand goods - no input tax credit on purchase - goods sold as such / minor processing not changing nature - taxable supply - Whether the applicant dealing in second hand gold jewellery, purchased from unregistered persons and sold 'as such' after minor processing without availing input tax credit, is eligible to determine taxable value under Rule 32(5) of the CGST Rules, 2017 by charging tax on the difference between selling price and purchase price. - HELD THAT: - Rule 32(5) prescribes that where a person deals in buying and selling of second hand goods supplied as such or after minor processing which does not change the nature of the goods, and where no input tax credit has been availed on the purchase of such goods, the value of supply shall be the difference between the selling price and the purchase price (negative value ignored). The authority examined whether the supplier's transactions are taxable supplies, whether the supplier is dealing in second hand goods supplied as such or after minor processing that does not alter nature, and whether no input tax credit was availed. The applicant admitted purchasing used gold jewellery from unregistered individuals, selling the same invoiced as "used gold ornaments" after only cleaning and polishing without melting or changing form, and not claiming input tax credit. The authority found the supply falls within the taxable entry for second hand jewellery and that the applicant satisfies the conditions of being a person dealing in second hand goods supplied as such and of not availing input tax credit. Consequently, valuation may be made under sub rule (5) of Rule 32 as the margin (selling price minus purchase price). [Paras 9, 10]

Applicant is eligible to value supplies of second hand gold jewellery purchased from unregistered persons and sold as such after minor processing, without ITC, by applying Rule 32(5) and charging tax on the difference between selling price and purchase price.

Final Conclusion: The Advance Ruling holds that the applicant, dealing in second hand gold jewellery bought from unregistered persons and sold 'as such' after minor processing without availing input tax credit, may determine the taxable value under Rule 32(5) of the CGST Rules, 2017 by taxing the margin (selling price minus purchase price).

Advance ruling limited to supply of goods or services undertaken or proposed to be undertaken by the applicant - Admissibility of application for advance ruling - Rejection of application as inadmissible under Section 98(2) of the CGST Act, 2017 - Parity of CGST and KGST provisions

Advance ruling limited to supply of goods or services undertaken or proposed to be undertaken by the applicant - Admissibility of application for advance ruling - Rejection of application as inadmissible under Section 98(2) of the CGST Act, 2017 - Application for advance ruling held inadmissible because it relates to supplies undertaken by another entity and not by the applicant - HELD THAT: - The Authority examined the scope of 'advance ruling' as defined in Section 95 (referenced at paragraph 6) and concluded that an advance ruling may be sought only in relation to supplies of goods or services which are being undertaken or are proposed to be undertaken by the applicant (paragraph 7). The application before the Authority sought a ruling in respect of supplies undertaken by M/s. Mysore Stoneware Pipes and Potteries Limited rather than supplies of the applicant. Consequently the application did not fall within the statutory ambit of matters on which an advance ruling can be given and therefore was not maintainable. Applying these principles, the Authority found the application to be inadmissible and rejected it under the mandate of Section 98(2) of the CGST Act, 2017 (paragraphs 7-8 and the operative ruling at paragraph 9). [Paras 6, 7, 8, 9]

Application rejected as inadmissible under Section 98(2) of the CGST Act, 2017.

Final Conclusion: The Authority rejected the advance ruling application as inadmissible because the question related to supplies made by another entity and not to supplies undertaken or proposed to be undertaken by the applicant; the decision was rendered under the corresponding provisions of the CGST Act (with parallel application to the KGST Act).

Construction services - composite supply of works contract - governmental authority - residential complex predominantly meant for self-use or use of employees - concessional rate of tax for services provided to government entities - Explanation excluding activities of Government from "business"

Composite supply of works contract - residential complex predominantly meant for self-use or use of employees - governmental authority - concessional rate of tax for services provided to government entities - Explanation excluding activities of Government from "business" - Whether the applicant's construction of a residential colony for the Airport Authority of India falls under Sl. No. 3(vi)(c) of Notification No.11/2017-Central Tax (Rate) as amended and is therefore taxable at the concessional rate of 6% CGST + 6% KGST. - HELD THAT: - The Authority examined the nature of the recipient and the purpose of the construction. Airport Authority of India (AAI) is a statutory body established by an Act of Parliament and qualifies as a "governmental authority" for the purposes of the notification. The contract awarded to the applicant is for construction of a residential colony exclusively for the staff and employees of AAI, and this use falls within the description "residential complex predominantly meant for self-use or the use of their employees" in Sl. No. 3(vi)(c). The Explanation inserted by Notification No.17/2018, which excludes activities or transactions undertaken by Central/State/local governments as public authorities from the term "business", does not extend to exclude a "Government Entity" from the concessional entry; hence that Explanation does not alter the applicability of Sl. No. 3(vi)(c) to the present facts. The applicant's factual position is supported by the AAI certification that the residential colony is exclusively for its staff and employees. On these findings, the services supplied by the applicant to AAI fall within Sl. No. 3(vi)(c) and qualify for the concessional tax rate specified therein. [Paras 9, 10]

Construction of the AAI residential colony by the applicant is covered by Sl. No. 3(vi)(c) of Notification No.11/2017 (as amended) and is taxable at 6% CGST + 6% KGST.

Final Conclusion: Advance ruling: the construction of the Airport Authority of India residential colony for self-use or use by its staff/ employees at Devanahalli by the applicant attracts GST at the concessional combined rate of 12% (6% CGST + 6% KGST) under the cited notification.

Exemption under entry 3A of Notification No.12/2017 - composite supply where value of goods does not exceed 25% - composite supply of goods and services - supply of pure services covered under entry 3 of Notification No.12/2017 - supply to Central or State Government or local authority or Governmental Authority or Government Entity - functions entrusted to Municipalities under Article 243W of the Constitution - functions entrusted to Panchayats under Article 243G of the Constitution - landscaping and gardening services / maintenance of community assets

Exemption under entry 3A of Notification No.12/2017 - composite supply where value of goods does not exceed 25% - supply to Central or State Government or local authority or Governmental Authority or Government Entity - functions entrusted to Municipalities under Article 243W of the Constitution - landscaping and gardening services / maintenance of community assets - Landscaping and gardening work provided to specified government/local authorities attracts GST or is exempt under the notification - HELD THAT: - The Authority examined the applicant's contracts and held that the supplies fall into two categories: (i) pure services (not works contract or composite supply), which are covered by entry 3 of Notification No.12/2017 and are exempt; and (ii) composite supplies involving goods and services, which may be exempt under entry 3A of Notification No.12/2017 as amended, subject to the conditions in that entry. The Authority identified the cumulative conditions for exemption under entry 3A: (a) the value of goods in the composite supply must not exceed 25% of the total; (b) the recipient must be the Central/State Government or a local authority/Governmental Authority/Government Entity as defined in the notifications; and (c) the activity must relate to a function entrusted to a Panchayat under Article 243G or to a Municipality under Article 243W. Applying these principles, the Authority observed that maintenance and development of parks falls within activities entrusted to Municipalities under Article 243W (and maintenance of community assets is covered under Article 243G entries), and therefore, subject to satisfaction of the quantitative and recipient conditions, the landscaping and gardening services supplied to the listed government/local authorities are exempt under entry 3A. The Authority noted that the applicant had not furnished contract-wise quantification of the value of goods but proceeded on the assumption (for the purposes of ruling) that the goods component did not exceed 25%, and similarly assumed that the recipients fell within the required categories; the exemption is therefore made conditional upon those requirements being met. [Paras 9, 10, 11]

The landscaping and gardening work supplied to the listed municipal/local government bodies is exempt under entry 3A of Notification No.12/2017 (as amended), provided the goods component does not exceed 25% of the composite supply and the recipients qualify as Central/State Government, local authority or Governmental Authority/Entity and the activity relates to functions entrusted to a Municipality/Panchayat under Articles 243W/243G.

Final Conclusion: The Authority ruled that the applicant's landscaping and gardening services to the specified government/local bodies are exempt under Notification No.12/2017 as amended (entry 3A or entry 3 as applicable), subject to satisfaction of the conditions regarding the goods component, the character of the recipient, and that the activity relates to functions entrusted to Municipalities/Panchayats under the Constitution.

Construction of residential apartments - ongoing project - option to continue old rate for ongoing projects - valuation - one-third deemed value of land / undivided share of land - relevant date for refund under Section 54 (clause (h) of Explanation 2)

Construction of residential apartments - ongoing project - option to continue old rate for ongoing projects - Rate of GST applicable to construction services for the specified apartment types for the period 01.07.2017 to 31.03.2019. - HELD THAT: - The project satisfies the definition of an "ongoing project" under the notification, and it does not fall under any of the concessional schemes listed in the notification. Therefore the service of construction of the apartments in the project is not eligible for the concessional 12% rate under the specified sub-items and is taxable at the general rate applicable to construction services. Accordingly, for the period 01.07.2017 to 31.03.2019 the construction services for all the 12 categories of apartments are liable to GST at 18% (9% CGST + 9% SGST) as per Item (i) of SI No. 3 of Notification No. 11/2017-Central Tax (Rate). [Paras 8]

Construction services for the listed apartment types for 01.07.2017 to 31.03.2019 are taxable at 18%.

Valuation - one-third deemed value of land / undivided share of land - construction of residential apartments - Whether one-third deduction (deemed value of land) under Paragraph 2 can be applied where undivided share of land was appropriated in pre-GST period and actual appropriated land value is less than one-third. - HELD THAT: - Paragraph 2 of the notification prescribes that where the supply involves transfer of land or undivided share of land, the value of the land shall be deemed to be one third of the total amount charged for the supply and the taxable value of the service is the total amount less that deemed land value. The CBIC FAQ clarifies that actual land value cannot be substituted for the deemed one-third. Thus, irrespective of any earlier appropriation of land value in the pre-GST period, the deemed one-third abatement applies in determining taxable value. [Paras 9]

One-third deemed value of land under Paragraph 2 applies; actual pre-GST appropriation lower than one-third does not prevent taking the one-third deduction.

Option to continue old rate for ongoing projects - construction of residential apartments - valuation - one-third deemed value of land / undivided share of land - Rate of GST and applicability of one-third deduction for the apartments for the period from 01.04.2019 onwards where the promoter exercised the option to continue old rates. - HELD THAT: - The applicant validly exercised the prescribed option for the ongoing project to continue paying tax at the pre-amendment rates. The project does not fall under concessional schemes; consequently the construction services in the project remain taxable at 18% for the period from 01.04.2019 under the relevant item of the notification as retained by the option. Paragraph 2 continues to apply for valuation, entitling the promoter to the one-third deemed land deduction in determining taxable value post 01.04.2019 as well. [Paras 10]

For 01.04.2019 onwards, construction services for the listed apartment types are taxable at 18% and the one-third deemed land deduction applies.

Relevant date for refund under Section 54 (clause (h) of Explanation 2) - refund of tax on advances - Relevant date for filing refund application when a customer cancels a booked flat and tax has been paid on advances. - HELD THAT: - Section 54 of the CGST Act prescribes the time limit and the relevant date for filing refund claims, with Explanation 2 setting out the relevant date in different scenarios. In the situation of cancellation and refund of advances, the relevant date is the date of payment of tax as specified in clause (h) of Explanation 2 of Section 54. The authority applies that statutory prescription to determine the starting point for the limitation period for claiming refund. [Paras 11]

The relevant date for filing the refund claim on taxes paid on advances upon cancellation is the date of payment of tax as per clause (h) of Explanation 2 to Section 54.

Final Conclusion: The Authority ruled that (i) construction services for all the specified apartment types during 01.07.2017-31.03.2019 are taxable at 18%; (ii) the Paragraph 2 deemed one-third land valuation applies for determining taxable value notwithstanding any lower pre GST appropriation; (iii) having validly opted to continue old rates, the construction services for the project are taxable at 18% from 01.04.2019 with Paragraph 2 applicable; and (iv) the relevant date for refund on cancellation is the date of payment of tax as per clause (h) of Explanation 2 to Section 54.

Composite supply - principal supply - healthcare services exemption - clinical establishment - individual supply of medicines - separate billing and valuation

Composite supply - principal supply - healthcare services exemption - Taxability of medicines, implants and other supplies supplied to inpatients where a pre fixed all inclusive package covers treatment, medicines and supplies. - HELD THAT: - The hospital is a clinical establishment providing healthcare services which are exempt under the entry for healthcare services. Where an all inclusive package is offered covering treatment, required medicines and supplies for a consolidated pre fixed amount, the combined goods and services are naturally bundled in the ordinary course of business. The principal supply is healthcare service (the predominant element) and the other supplies (room, medicines, implants, consumables, food) are incidental or ancillary to that principal supply. Such composite supply must be treated as supply of the principal supply and, being healthcare, is exempt from GST. [Paras 8, 9]

Where an all inclusive pre fixed package is supplied to an inpatient, the package is a composite supply with healthcare as the principal supply and the entire composite supply (including medicines and implants included in the package) is exempt from GST.

Individual supply of medicines - separate billing and valuation - healthcare services exemption - Taxability of medicines, implants and other supplies supplied to inpatients where the package for treatment expressly excludes those items and they are billed separately according to type/brand/quantity. - HELD THAT: - When the package does not include medicines, implants or other supplies and those items are supplied as distinct, clearly identifiable goods with their value separately determined and billed according to the patient's choice, they are not naturally bundled with the principal healthcare service. In such circumstances the supplies cannot be treated as part of a composite supply and must be taxed individually at the rates applicable to those goods under the GST tariff, while the packaged healthcare service itself remains exempt. [Paras 9]

Medicines, implants and other items excluded from a treatment package and billed separately to an inpatient are taxable as individual supplies; the packaged healthcare service remains exempt.

Individual supply of medicines - healthcare services exemption - Taxability where no package is offered and treatment, medicines and other supplies are charged separately to an inpatient at actuals. - HELD THAT: - If treatment, medicines and other supplies are provided as distinct and separately charged items (with values separately determined according to patient choice), the combination does not constitute a composite supply with healthcare as principal. Each individual good or service (including medicines and consumables) is liable to GST according to its classification under the tariff. The healthcare treatment itself continues to fall within the exempt entry for healthcare services. [Paras 9]

Where items are billed separately to an inpatient (no package), the medicines and other goods are taxable individually; the healthcare service is exempt.

Composite supply - separate billing and valuation - Query as to taxability where medicines and supplies constitute a major proportion of the billed expenditure to an inpatient. - HELD THAT: - The question is too general and does not disclose whether supplies and services are bundled or separately identifiable and valued. Determination of composite versus separate supplies depends on the factual matrix - whether components are naturally bundled or are distinct with separate valuation - and cannot be answered without further particulars. [Paras 9]

The question is vague for want of sufficient information and cannot be answered.

Healthcare services exemption - clinical establishment - Taxability of services provided to patients treated as outpatients (examples: dialysis, dressing, chemotherapy, minor surgeries, casualty and other procedures not requiring admission). - HELD THAT: - The specified outpatient treatments fall within the definition of healthcare services and are provided by a clinical establishment. Such services are within the scope of the exempt entry for healthcare services and are not subject to GST. [Paras 8, 10]

Services provided to outpatients in the examples given are healthcare services and are exempt from GST.

Individual supply of medicines - separate billing and valuation - Taxability of medicines and allied items issued to outpatients on doctor's prescription for home consumption and treatment follow up; and treatment of returns/replacements. - HELD THAT: - When medicines and allied items are supplied to outpatients on prescription, the supply by the hospital pharmacy is an individual supply of goods; patients may procure medicines either from the hospital pharmacy or external dispensers, and the supply from the hospital pharmacy is not inherently bundled with the exempt consultation or treatment. Therefore such supplies are taxable at the rates applicable under the GST tariff. Where medicines are returned or replaced, adjustment of tax already paid may be effected by issuance of a credit note as provided in the statute and rules. [Paras 10]

Medicines and allied items supplied to outpatients on prescription are taxable as individual supplies; consultation/treatment remains exempt. Returns or replacements may be adjusted by issuing a credit note as per statutory provisions.

Final Conclusion: The Authority rules that (i) inclusive all in one packages for inpatients constitute composite supplies with healthcare as the principal supply and are exempt from GST (including medicines and consumables within such packages); (ii) where medicines, implants or supplies are expressly excluded from a package or are charged separately (for inpatients or outpatients) and valued/billed separately, those items are taxable as individual supplies; (iii) specified outpatient treatments (dialysis, chemotherapy, minor procedures, casualty, etc.) are healthcare services exempt from GST; and (iv) a vague query about medicines forming a major portion of the bill cannot be answered without further factual detail.

Construction services of residential apartments - Residential Real Estate Project (RREP) - promoter - valuation - one-third abatement for land under Paragraph 2 of Notification No. 11/2017 (as amended) - sale of developed plots/land not a supply under Schedule III - GST rates for promoter construction - 1.5% and 7.5%

Construction services of residential apartments - GST rates for promoter construction - 1.5% and 7.5% - Applicability of the notified GST rates of 1.5% and 7.5% to the applicant's construction of villas from 01.04.2019. - HELD THAT: - The entries at Items (i) and (ia) of SI No. 3 of Notification No. 11/2017 (as amended) apply to construction of affordable residential apartments and other residential apartments by a promoter in an RREP commencing on or after 01.04.2019 or certain ongoing projects. The definitions of 'apartment', 'promoter' and 'real estate project' under the Real Estate (Regulation and Development) Act, 2016 encompass the residential villas, the projects (including redevelopment projects) and the applicant as promoter. On a conjoint reading of the notification entries, the applicant's construction services fall within Item (i) and/or Item (ia) and are therefore taxable at the rates specified therein, subject to the conditions in those entries. [Paras 9, 10]

The applicant's construction of villas is taxable at 1.5% for affordable residential apartments and 7.5% for other residential apartments, subject to the prescribed conditions.

Residential Real Estate Project (RREP) - construction services of residential apartments - GST rates for promoter construction - 1.5% and 7.5% - Whether the above GST rates apply to redevelopment projects undertaken by the applicant after 01.04.2019 that were earlier commenced by other developers before 31.03.2019. - HELD THAT: - The definition of 'real estate project' is inclusive and the notification applies to projects which commence on or after 01.04.2019 or to ongoing RREPs where the promoter has not exercised the alternative option. Redeveloped projects taken over and undertaken by the applicant after 01.04.2019 fall within the scope of the entries in SI No. 3. Therefore, construction services in such redeveloped projects are taxable under the same entries and rates, subject to the conditions specified in those entries. [Paras 8, 10]

The notified rates of 1.5% and 7.5% apply to the applicant's redevelopment projects undertaken after 01.04.2019, subject to the conditions in the notification.

Valuation - one-third abatement for land under Paragraph 2 of Notification No. 11/2017 (as amended) - taxable value - Method of computation of taxable value for construction services of villas and entitlement to deduct one-third of total charged amount as deemed value of land. - HELD THAT: - Paragraph 2 of Notification No. 11/2017 (as amended) provides that where the supply involves transfer of land or undivided share of land, the value of the supply equals the total amount charged less the value of the land or undivided share, and that such value of land shall be deemed to be one third of the total amount charged. The CBIC FAQ (Q.36) clarifies that a developer cannot substitute actual land value for the deemed one-third abatement. Applying this mechanism, the applicant's taxable value for construction services is computed by deducting one-third of the total amount charged as the deemed value of land, irrespective of the actual land value stated in agreements. [Paras 11]

Taxable value of the applicant's construction services shall be determined by applying the one-third deemed deduction for land under Paragraph 2; the applicant is eligible for that deduction.

Sale of developed plots/land not a supply under Schedule III - sale of land - Whether sale of developed plots/land by the applicant (where no advance is received for development) attracts GST. - HELD THAT: - Schedule III to the CGST Act treats sale of land as neither a supply of goods nor a supply of services. Paragraph 5(b) of Schedule II treats construction of a complex/building intended for sale as a supply of services except where entire consideration is received after issuance of completion certificate or first occupation. The applicant states that plots are developed and sold after development without any advance received for undertaking development. Such transactions are sales of developed plots/land and fall within Paragraph 5 of Schedule III, and therefore are not subject to GST. [Paras 12]

Sale of developed plots/land by the applicant, where no advance for development is received, is not liable to GST.

Final Conclusion: The Authority ruled that (a) the applicant's construction of villas from 01.04.2019 is taxable as promoter construction at 1.5% for affordable residential apartments and 7.5% for other residential apartments subject to the notification conditions; (b) the same rates apply to redevelopment projects undertaken after 01.04.2019; (c) taxable value is computed after deducting the one third deemed land value under Paragraph 2 of Notification No. 11/2017 (as amended); and (d) sale of developed plots/land without receipt of advance for development is not a supply liable to GST.

Option to pay tax at old rates - ongoing project - project-wise exercise of option - interpretation of Notification No. 11/2017 as amended by Notification No. 03/2019 - binding effect of advance ruling on applicant and jurisdictional officer

Option to pay tax at old rates - ongoing project - project-wise exercise of option - interpretation of Notification No. 11/2017 as amended by Notification No. 03/2019 - Whether the applicant could exercise the option to pay tax at the old rate in respect of part of the VRINDHAVAN project (only 9 of 20 villas) or the option must be exercised for the entire ongoing project. - HELD THAT: - The Authority examined the definitions of "ongoing project", "project", "Real Estate Project" and "apartment" as set out in Notification No. 11/2017 (as amended by Notification No. 03/2019) and the CBIC FAQs issued on 07.05.2019. The notification contemplates exercise of the onetime option in respect of an "ongoing project" as defined therein. CBIC clarifications make clear that the option is to be exercised for each ongoing project and that part-completion or multiple commencement/completion certificates do not convert a portion of a project into a separate project for the purpose of the option. Consequently, the option under Item (if) of Sl. No.3 must be exercised project-wise and not unit-wise; where the promoter exercised the option for the ongoing project "VRINDHAVAN", that exercise applies to all apartments/villas comprised in that project. Applying these principles to the facts, the Authority held that the option claimed by the applicant in respect of only 9 villas cannot be read as a valid partial exercise for part of the project, and the old rate (with ITC) applies to the entire project comprising 20 villas. [Paras 8]

The option to pay tax at the old rate under the notification is project-wise; the applicant's exercise of option in respect of the "VRINDHAVAN" project applies to all villas in that project and not to a part thereof, hence the old rate with ITC applies to the entire project.

Binding effect of advance ruling on applicant and jurisdictional officer - Whether the ruling given for the VRINDHAVAN project is also applicable to other similar projects of the applicant in similar situations. - HELD THAT: - Section 103 of the CGST Act was applied to determine the precedential scope of the advance ruling. The Authority noted that an advance ruling is binding only on the applicant who sought it and the concerned jurisdictional officer in respect of that applicant, and remains binding unless the underlying law, facts or circumstances change. Therefore, the legal conclusion on project-wise exercise of option applies to other similar projects only insofar as they are projects of the same applicant and present similar facts and circumstances. [Paras 9]

The answer on project-wise applicability is binding on the applicant and its jurisdictional officer and therefore applies to the applicant's other similar projects in similar situations.

Final Conclusion: The Authority ruled that the onetime option to continue payment of tax at the pre-01.04.2019 rates under the amended notification must be exercised project-wise; accordingly, the applicant's exercise of option for the "VRINDHAVAN" project covers all villas in that project and the old rate with input tax credit applies to the entire project. The ruling is binding only on the applicant and its jurisdictional officer and accordingly applies to the applicant's other similar projects in similar situations.

Classification under Customs Tariff Heading 2008 (roasted and fried vegetable products) - residuary classification under Heading 2106 (food preparations not elsewhere specified or included) - application of General Rules for Interpretation of the First Schedule to the Customs Tariff Act (Rules of interpretation) - essential character test for mixed or composite goods - HSN-based rate applicability under the GST rate schedule

Classification under Customs Tariff Heading 2008 (roasted and fried vegetable products) - residuary classification under Heading 2106 (food preparations not elsewhere specified or included) - application of General Rules for Interpretation of the First Schedule to the Customs Tariff Act (Rules of interpretation) - Whether jackfruit chips sold without a brand name are classifiable as Namkeens under HSN 2106.90.99 and taxable under Entry 101A of the Central Tax (Rate) Notification - HELD THAT: - The Authority applied the General Rules for Interpretation of the First Schedule to the Customs Tariff Act and the Chapter/Heading notes. Heading 2106 is a residuary provision for food preparations not specified elsewhere and applies only when a product is not classifiable under a specific heading. Chapter 20 covers preparations of vegetables, fruit, nuts or other parts of plants, and Heading 2008 includes roasted and fried vegetable products. The Authority held that frying or roasting need not be read as cumulatively requiring both processes; the description of 2008 covers products like chips made by frying. Applying Rule 2 and Rule 3, jackfruit chips are classifiable under Tariff Heading 2008.19.40 rather than the residuary Heading 2106, and thus the specific heading takes precedence over the general residuary entry. [Paras 7, 8]

Jackfruit chips sold without a brand name are classifiable under Customs Tariff Heading 2008.19.40 and not under HSN 2106.90.99; GST at 12% as per SI No. 40 of Schedule II applies.

HSN classification by supplier - classification under Customs Tariff Heading 2008 - Whether the supplier's classification of jackfruit chips under HSN 1903 is correct - HELD THAT: - Having determined that jackfruit chips fall under Heading 2008.19.40, the Authority concluded that classification under HSN 1903 is incorrect. The decision follows from the application of chapter headings and the rules of interpretation which require classification according to the most specific applicable heading. [Paras 7, 8]

The supplier's classification under HSN 1903 is not correct.

Classification of roasted/salted nuts under specific headings of Chapter 20 - priority of specific tariff headings over residuary entries - Whether roasted and salted / salted / roasted preparations of ground nuts, cashew nut and other seeds are Namkeens and, when sold without a brand name, classifiable under HSN 2106.90.99 and taxed under Entry 101A - HELD THAT: - Chapter 20 contains specific headings for roasted/salted preparations of nuts. The Authority identified specific tariff items for cashew nuts and ground nuts under Chapter 2008 (for example, 2008.19.10 and 2008.19.20) which are more specific than the residuary Heading 2106. Applying the rules of interpretation, goods falling squarely within these specific headings must be classified there and not under the residuary entry for 'food preparations not elsewhere specified or included'. Consequently, roasted/salted preparations of cashew, ground nuts and similar seeds are classifiable under the relevant 2008 tariff items and not under HSN 2106.90.99. [Paras 7, 8]

Such roasted/salted preparations are classifiable under specific Tariff Headings in Chapter 2008 (e.g., 2008.19.10 and 2008.19.20) and are liable to GST at 12% under SI No. 40 of Schedule II; they are not classifiable under HSN 2106.90.99.

Classification of salted and masala chips of potato and tapioca under Heading 2008 - residuary classification under Heading 2106 - Whether salted and masala chips of potato and tapioca are Namkeens and, when sold without a brand name, classifiable under HSN 2106.90.99 and taxed under Entry 101A - HELD THAT: - Applying the Chapter notes and the General Rules for Interpretation, the Authority concluded that potato and tapioca chips, being fried products of vegetables/edible parts of plants, fall within Heading 2008.19.40 (other roasted and fried vegetable products). Because a specific heading in Chapter 20 applies, the residuary Heading 2106 cannot be invoked. Therefore these chips are not to be treated as falling under HSN 2106.90.99 merely because they are sold without a brand name. [Paras 7, 8]

Salted and masala potato and tapioca chips are classifiable under Customs Tariff Heading 2008.19.40 and are liable to GST at 12% under SI No. 40 of Schedule II; they are not classifiable under HSN 2106.90.99.

Final Conclusion: The Authority held that jackfruit chips, potato chips and tapioca chips (salted/masala) and roasted/salted preparations of cashew, ground nuts and other seeds are classifiable under the specific tariff items of Chapter 20 (primarily heading 2008.19.40 and relevant 2008 sub-headings) and are therefore taxable at 12% under SI No. 40 of Schedule II; these products are not classifiable under the residuary Heading 2106.90.99 and do not attract the 5% rate under Entry 101A.

Classification under Chapter 57 (carpets and other textile floor coverings) - classification under Customs Tariff Sub Heading 5703 90 90 - distinction between goods exclusively of coir and coir-backed products incorporating PVC - interpretation of SI No.219 of Schedule I vis-a -vis SI No.144 of Schedule II of Notification No.01/2017 - applicability of the Fitment Committee/GST Council principles for low band (5%) rates - GST at 12% applicable to goods classifiable under 5703 90 90

Interpretation of SI No.219 of Schedule I vis-a -vis SI No.144 of Schedule II of Notification No.01/2017 - distinction between goods exclusively of coir and coir-backed products incorporating PVC - SI No. 219 of Schedule I as amended does not cover PVC tufted coir mats and matting. - HELD THAT: - On a combined reading of the entries it is evident that SI No.219 of Schedule I refers to coir mats, matting and floor coverings that are exclusively made up of coir fibres. The applicant's product, though having coir as the exposed surface, is backed by PVC and manufactured using PVC resin and chemicals which materially influence the product's value and characteristics. Consequently the product does not fall within the exclusive description in SI No.219 and therefore that entry does not cover PVC tufted coir mats and matting. [Paras 8]

No. SI No.219 of Schedule I of Notification No.01/2017 does not cover PVC tufted coir mats and matting.

Applicability of the Fitment Committee/GST Council principles for low band (5%) rates - distinction between goods exclusively of coir and coir-backed products incorporating PVC - PVC tufted coir mats and matting do not attract the low band tax rate recommended by the Fitment Committee and approved by the GST Council. - HELD THAT: - The Fitment Committee and GST Council principles for classification into the low band (5%) were applied to goods normally consumed by vulnerable sections or produced in the cottage sector. The applicant's manufacturing uses technologically advanced machines, significant investment and limited labour; the product incorporates PVC and chemicals which affect value and is not an exclusively coir-made cottage-sector good. Hence it does not satisfy the principles for the low band rate. [Paras 6, 8]

PVC tufted coir mats and matting do not attract the low band of tax rate.

Classification under Chapter 57 (carpets and other textile floor coverings) - classification under Customs Tariff Sub Heading 5703 90 20 - PVC tufted coir mats and matting cannot be classified under tariff item 5703.90.20 (carpets and floor coverings of coir). - HELD THAT: - Although the exposed surface of the applicant's product is coir, the presence of PVC backing and the use of PVC/chemicals in manufacture mean the product is not an article exclusively of coir. The chapter note defining 'carpets and other textile floor coverings' permits classification under Chapter 57, but the specific sub heading reserved for products of coir exclusively is inapplicable to PVC backed goods. [Paras 8]

No. PVC tufted coir mats and matting are not classifiable under tariff item 5703.90.20.

Classification under Customs Tariff Sub Heading 5703 90 90 - classification under Chapter 57 (carpets and other textile floor coverings) - GST at 12% applicable to goods classifiable under 5703 90 90 - PVC tufted coir mats and matting are classifiable under Customs Tariff Sub Heading 5703 90 90 and attract GST at 12%. - HELD THAT: - Heading 5703 covers tufted carpets and other textile floor coverings. The applicant's product, being tufted with coir as the exposed textile surface but backed with PVC, falls within the description of 'other' textile materials under sub heading 5703 90 90 rather than the sub heading reserved for exclusively coir articles. Accordingly, the applicable entry in Notification No.01/2017 is SI No.144 of Schedule II which levies GST at the standard rate of 12% (CGST 6% + SGST 6%). [Paras 8]

Yes. PVC tufted coir mats and matting are classifiable under 5703.90.90 and attract GST at 12%.

Interpretation of SI No.219 of Schedule I vis-a -vis SI No.144 of Schedule II of Notification No.01/2017 - classification under Heading 5705 - PVC tufted coir mats and matting do not fall under tariff item(s) in Heading 5705. - HELD THAT: - Heading 5705 relates to 'other carpets and other textile floor coverings' and, on the basis of the chapter and heading descriptions, the applicant's tufted and PVC backed product is not classifiable under Heading 5705. The analysis of headings and sub headings leads to classification under 5703 rather than 5705. [Paras 8]

No. PVC tufted coir mats and matting are not classifiable under tariff item(s) of Heading 5705 corresponding to SI No.219 of Schedule I.

Final Conclusion: The Authority rules that the applicant's PVC tufted coir mats and matting are classifiable under Customs Tariff Sub Heading 5703 90 90 within Chapter 57 and attract GST at 12%; they are not covered by SI No.219 of Schedule I (the coir exclusive 5% entry), do not qualify for the low 5% band under Fitment Committee/GST Council principles, and are not classifiable under tariff items in Heading 5705 or under 5703.90.20.

Classification under Chapter 57 - exposed surface textile material - essential character of the goods - Harmonized System of Nomenclature and Chapter Notes - Tariff Sub-Heading 5703 90 90 - GST rate applicability under Schedule I (SI No.219) and Schedule II (SI No.144)

Classification under Chapter 57 - exposed surface textile material - essential character of the goods - Tariff Sub-Heading 5703 90 90 - GST rate applicability under Schedule II (SI No.144) - Classification and GST rate of coir mats, mattings and floor coverings backed by PVC, rubber, latex etc. - HELD THAT: - The Authority held that Chapter 57 applies because the exposed surface of the articles when in use is coir, a textile material, bringing them within the scope of 'carpets and other textile floor coverings'. Headings and sub-headings in Chapter 57 are to be construed having regard to the process of manufacture and the nature of the textile material serving as the exposed surface. Although the products have coir as the exposed surface, they are backed by PVC/rubber/latex and are manufactured using backing materials and processes that have equal importance to the coir. The description in SI No.219 of Schedule I pertains to coir mats, matting and floor coverings made exclusively of coir fibres and does not cover coir products with PVC or rubber backing. On the basis of the heading and sub-heading descriptions and the Chapter Notes, the applicant's backed coir products fall within Tariff Sub-Heading 5703 90 90. Consequently, they do not qualify for the 5% rate applicable to SI No.219 and instead attract the rate applicable to SI No.144 of Schedule II, namely 12%. [Paras 7]

Mats, mattings and floor coverings of coir backed by PVC, rubber, latex etc. are classifiable under Tariff Sub-Heading 5703 90 90 and attract GST at 12% as per SI No.144 of Schedule II.

Final Conclusion: The Authority ruled that coir mats, mattings and floor coverings with PVC/rubber/latex backing are classifiable under sub-heading 5703 90 90 and are liable to GST at 12% (entry at SI No.144 of Schedule II), not the 5% rate under SI No.219 of Schedule I.

Composite supply - Principal supply - Healthcare services exempted under Notification No.12/2017 - Clinical establishment - Inpatient services (SAC 999311) - Food supplied to inpatients as part of composite healthcare supply - Apportionment of input tax credit under Section 17(2) and Rule 42

Composite supply - Principal supply - Healthcare services exempted under Notification No.12/2017 - Inpatient services (SAC 999311) - Supply of medicines, surgical items, implants, stents and other consumables to inpatients is part of a composite supply whose principal supply is healthcare services and is exempt under Notification No.12/2017. - HELD THAT: - The Authority examined the character of supplies made to inpatients and applied the statutory tests for composite supply and principal supply. The Explanatory Notes for SAC 999311 recognise inpatient services as comprising medical, pharmaceutical and paramedical services, including supplies incidental to treatment. Where various elements are naturally bundled in the ordinary course of business and one element (healthcare) is predominant, the bundle is to be treated as a single supply characterized by the principal supply. Medicines, implants, consumables and related items supplied to admitted patients are integral to treatment, are ancillary to the dominant healthcare service and therefore form a composite supply whose essential character is healthcare services exempted at SI No.74 of Notification No.12/2017. The Authority recorded that this conclusion follows the statutory definitions of composite supply and principal supply and the classification under SAC 999311. [Paras 8]

The supply of medicines, surgical items, implants, stents and other consumables to inpatients is a composite supply with principal supply being healthcare services (SAC 999311) and is exempt under Notification No.12/2017.

Food supplied to inpatients as part of composite healthcare supply - Healthcare services exempted under Notification No.12/2017 - Inpatient services (SAC 999311) - Food supplied to inpatients admitted for diagnosis, treatment or procedures is a component of the composite supply of healthcare services and is exempt under Notification No.12/2017. - HELD THAT: - The Authority considered the nature and purpose of dietary supplies provided to inpatients and relied on the Explanatory Notes to SAC 999311 and CBIC Circular No.32/06/2018 which treats food supplied to inpatients as advised by the doctor/nutritionist as part of the composite healthcare supply. Given that dietary provision to admitted patients is integral to treatment and enhances enjoyment of the principal healthcare service, it is ancillary to and forms part of the exempt composite supply. [Paras 8]

Food supplied to inpatients admitted for diagnosis, treatment or procedures is a component of the composite healthcare supply (SAC 999311) and is exempt under Notification No.12/2017.

Apportionment of input tax credit under Section 17(2) and Rule 42 - Input tax credit on common purchases partly for taxable and partly for exempt supplies - Input tax credit on common purchases of medicines and surgical items used partly for taxable outpatient supplies and partly for exempt inpatient supplies must be determined and reversed in accordance with Section 17(2) of the CGST Act and the formula prescribed in Rule 42 of the CGST Rules, 2017. - HELD THAT: - The Authority noted that where inputs are used partly for effecting taxable supplies and partly for exempt supplies, Section 17(2) limits the credit to that attributable to taxable supplies. Rule 42 prescribes the method and formula for apportionment and reversal of common credit. Accordingly, the eligible input tax credit in respect of common purchases that are ultimately supplied to both outpatients (taxable) and inpatients (exempt) must be calculated as per the Rule 42 formula; the ad hoc formula proposed by the applicant has no legal backing. [Paras 8]

Eligible input tax credit on common purchases used for both taxable outpatient supplies and exempt inpatient supplies shall be computed and reversed as per Section 17(2) of the CGST Act and the formula in Rule 42 of the CGST Rules, 2017.

Final Conclusion: The Authority ruled that supplies of medicines, surgical items, implants, stents, consumables and food to inpatients form a composite supply whose principal supply is healthcare services (SAC 999311) and are exempt under Notification No.12/2017; input tax credit on common purchases used for both exempt inpatient supplies and taxable outpatient supplies must be apportioned and the exempt portion reversed in accordance with Section 17(2) and Rule 42 of the CGST Rules.

Classification under Tariff Heading 3822 (Diagnostic or laboratory reagents) - Specific tariff entry prevailing over residuary entry - Residuary entry for goods not specified in Schedules (SI No. 453) - Application of General Rules for the Interpretation of the First Schedule to the Customs Tariff Act to GST rate schedule - Rule 1 to Rule 4 of General Rules of Interpretation (HSN classification principles)

Classification under Tariff Heading 3822 (Diagnostic or laboratory reagents) - Specific tariff entry prevailing over residuary entry - Application of General Rules for the Interpretation of the First Schedule to the Customs Tariff Act to GST rate schedule - Whether the laboratory reagents for rapid testing of food safety parameters are classifiable under Customs Tariff Heading 3822 00 90 and hence chargeable to GST at 12% under SI No. 80 of Schedule II, or fall under the residuary entry SI No. 453 of Schedule III attracting 18% GST. - HELD THAT: - The Authority applied the rules for interpretation of the First Schedule to the Customs Tariff Act (Rules 1-4) to the GST rate notification, relying on the Explanation that the tariff/HSN interpretation rules apply to the GST Rate Schedule. The Heading 3822 expressly covers 'diagnostic or laboratory reagents' (including prepared laboratory reagents not falling under headings 3002 or 3006). The applicant's products are predominantly laboratory reagents used for food testing and do not fall within headings 3002 or 3006. Established principles require that a specific tariff heading be preferred over a residuary entry; residuary classification is impermissible where a product reasonably falls under a specific entry. Applying these principles, the reagents fall within Heading 3822 and thus within the description 'All diagnostic kits and reagents' at SI No. 80 of Schedule II to the IGST rate notification. Consequently, the residuary entry SI No. 453 is inapplicable. [Paras 8, 9]

The laboratory reagents are classifiable under Customs Tariff Heading 3822 00 90 and liable to GST at 12% as per SI No. 80 of Schedule II of Notification No. 01/2017 - Integrated Tax (Rate).

Final Conclusion: The Authority ruled that the applicant's laboratory reagents for rapid testing of food safety parameters are covered by Tariff Heading 3822 00 90 and attract IGST at 12% under SI No. 80 of Schedule II; the residuary 18% entry at SI No. 453 is not applicable.

Classification under Tariff Heading 2008.19.40 (roasted and fried vegetable products) - Classification under Tariff Heading 2106.90.99 (food preparations not elsewhere specified; sweetmeats and namkeens) - Application of the General Rules for Interpretation of the First Schedule to the Customs Tariff Act - Residuary entry principle (goods classifiable under 2106 only if not classifiable elsewhere) - GST rate applicable according to tariff heading (Schedule I and Schedule II of Notification No.01/2017 - Central Tax (Rate))

Classification under Tariff Heading 2008.19.40 (roasted and fried vegetable products) - Residuary entry principle (goods classifiable under 2106 only if not classifiable elsewhere) - Application of the General Rules for Interpretation of the First Schedule to the Customs Tariff Act - Jackfruit Chips and Banana Chips (raw and ripe; including masala) sold without brand name are classifiable under Tariff Heading 2008.19.40 and not under HSN 2106.90.99. - HELD THAT: - Applying the General Rules for Interpretation of the First Schedule and Chapter Notes, Chapter 20 (Preparations of vegetables, fruit, nuts or other parts of plants) and Heading 2008 cover roasted and fried vegetable products. The Heading 2106 is a residuary entry for food preparations not elsewhere specified; therefore products classifiable under specific headings of Chapter 20 cannot be diverted to Heading 2106. Frying falls within the scope of Chapter 20's description of roasted and fried vegetable products, and Rule 2/3 interpretation principles favour classification under the more specific Heading 2008 when applicable. Accordingly, banana and jackfruit chips (whether salted/masala or otherwise) are classifiable under 2008.19.40 and not under 2106.90.99. [Paras 7]

Jackfruit Chips and Banana Chips are classifiable under Customs Tariff Heading 2008.19.40 and liable to GST at 12% as per SI No. 40 of Schedule II of Notification No.01/2017 Central Tax (Rate).

Classification under Tariff Heading 2008.19.40 (roasted and fried vegetable products) - Classification under Tariff Heading 2106.90.99 (sweetmeats) - Application of the General Rules for Interpretation of the First Schedule to the Customs Tariff Act - Sharkara Varatty is classifiable under Tariff Heading 2008.19.40, whereas Halwa is classifiable under Tariff Heading 2106.90.99. - HELD THAT: - Applying Chapter Notes and the General Rules of Interpretation, Sharkara Varatty (a fried banana preparation) falls within the scope of Heading 2008 as a fried vegetable/fruit product and therefore cannot be classified under the residuary Heading 2106. Halwa, being prepared from maida and sugar and constituting a sweetmeat, falls within Tariff Item 2106.90 and is properly classified under 2106.90.99. The classification thus follows the specific headings where applicable and the residuary heading only where no specific heading applies. [Paras 7]

Sharkara Varatty is classifiable under 2008.19.40 and liable to GST at 12% (SI No. 40, Schedule II); Halwa is classifiable under 2106.90.99 and liable to GST at 5% (SI No. 101, Schedule I).

Classification under Tariff Heading 2008.19.10 and 2008.19.20 (roasted/salted nuts and seeds) - Residuary entry principle (goods classifiable under 2106 only if not classifiable elsewhere) - GST rate applicable according to tariff heading (Schedule II of Notification No.01/2017) - Roasted/salted and roasted & salted preparations of cashew nuts, ground nuts and other seeds are classifiable under Tariff Headings 2008.19.10 and 2008.19.20 respectively and not under HSN 2106.90.99. - HELD THAT: - Chapter 20 contains specific tariff items covering roasted and salted nuts and seeds. Where specific headings of Chapter 20 apply to such nut and seed preparations, they displace the residuary Heading 2106. Applying Rules 1-3 of the General Rules for Interpretation, the more specific descriptions in Chapter 20 are preferred. Consequently, roasted/salted cashew nuts and other roasted/salted nuts and seeds fall under the respective 2008 tariff items. [Paras 7]

Roasted/salted cashew nuts are classifiable under 2008.19.10 and other roasted/salted nuts and seeds under 2008.19.20, each liable to GST at 12% as per SI No. 40 of Schedule II.

Classification under Tariff Heading 2008.19.40 (roasted and fried vegetable products) - Common parlance and product character (namkeen vs. specific tariff description) - Application of the General Rules for Interpretation of the First Schedule to the Customs Tariff Act - Salted and masala chips of potato and tapioca sold without brand name are classifiable under Tariff Heading 2008.19.40 and not under HSN 2106.90.99. - HELD THAT: - Potato and tapioca chips, being fried preparations of vegetable/plant parts, fall within the description of Heading 2008 for roasted and fried vegetable products. The residuary Heading 2106 cannot be invoked where the specific Chapter 20 headings apply. The Authority applied the interpretation rules and chapter notes to classify these chips under 2008.19.40. [Paras 7]

Salted and masala potato and tapioca chips are classifiable under 2008.19.40 and liable to GST at 12% as per SI No. 40 of Schedule II.

Final Conclusion: The Authority ruled that except for Halwa (classifiable as a sweetmeat under 2106.90.99 and taxable at 5%), the products in question-jackfruit chips, banana chips, sharkara varatty, potato and tapioca chips, and roasted/salted nuts and seeds-are classifiable under specific tariff items of Chapter 20 (principally 2008.19.*) and therefore attract GST at 12% under SI No. 40 of Schedule II rather than being taxable under the residuary Heading 2106.

Classification under Heading 9964 and Service Accounting Code 996415 (local water transport services of passengers) - inland water cruises including transportation, accommodation and food in an all inclusive fare - applicability of 18% GST under Notification No.11/2017 (Heading 9964) - entry (vii) - eligibility for input tax credit under Section 16 read with exclusion and proviso in Section 17(5) (aa)(i)(B) and Section 17(5)(b)(i) of the CGST Act

Classification under Heading 9964 and Service Accounting Code 996415 (local water transport services of passengers) - inland water cruises including transportation, accommodation and food in an all inclusive fare - The services rendered by the applicant are classifiable under SAC 996415 (local water transport services of passengers). - HELD THAT: - The applicant operates house boats used for overnight cruises and day trips, providing transportation, accommodation and meals as an all inclusive fare. The Scheme of Classification of Services (Explanatory Notes to Heading 996415) expressly includes inland water cruises that combine transportation, accommodation, food services and other incidental services in an all inclusive fare. Applying that explanatory note to the facts as described, the services fall squarely within Heading 996415 and are therefore classifiable under SAC 996415. [Paras 8]

Services are appropriately classifiable under Heading 9964 - SAC 996415 (local water transport services of passengers).

Applicability of 18% GST under Notification No.11/2017 (Heading 9964) - entry (vii) - classification under Heading 9964 and Service Accounting Code 996415 (local water transport services of passengers) - The services so classified attract GST at the rate of 18% as per entry (vii) under Heading 9964 in Notification No.11/2017 - CGST (Rate). - HELD THAT: - Having held that the services fall under Heading 996415, the applicable rate is determined from Notification No.11/2017 Central Tax (Rate) dated 28.06.2017. Entry at Sl. No. 8 for Heading 9964 provides that passenger transport services not covered by preceding sub entries (the sub entry (vii)) are liable to tax at 18%. The applicant's services are covered by that entry and hence taxable at 18% (9% CGST + 9% SGST). [Paras 8]

The services are liable to GST at 18% [9% CGST + 9% SGST] under entry (vii) of SI No. 8, Notification No.11/2017.

Eligibility for input tax credit under Section 16 read with exclusion and proviso in Section 17(5) (aa)(i)(B) and Section 17(5)(b)(i) of the CGST Act - classification under Heading 9964 and Service Accounting Code 996415 (local water transport services of passengers) - The applicant is entitled to claim input tax credit on expenses relating to refurbishing, furnishing, maintaining and repairing the vessel and on food supplied as part of the cruise, subject to conditions in Section 16. - HELD THAT: - Section 17(5) lists exclusions to input tax credit, including vessels and food and beverages, but provides exceptions where such inputs are used for specified outward supplies. Clause (aa)(i)(B) permits ITC where vessels are used for transportation of passengers; the proviso to clause (b)(i) allows ITC where inward supply of food and beverages is used as an element of an outward taxable composite or mixed supply of the same category. Since the applicant's outward supply is passenger transport services classified under SAC 996415, the expenses on vessel refurbishment, furnishing, repair and maintenance and the food supplied as part of the cruise are used in making the taxable outward supply and therefore qualify for input tax credit, subject to the general conditions and restrictions of Section 16. [Paras 8]

Applicant entitled to claim input tax credit on the specified vessel and food related inputs, subject to compliance with Section 16 conditions.

Final Conclusion: Advance ruling: (i) Services of the applicant are classifiable under Heading 9964 - SAC 996415; (ii) such services are taxable at 18% as per entry (vii) of SI No. 8, Notification No.11/2017; (iii) the applicant may claim input tax credit on expenditures for refurbishing, furnishing, maintaining and repairing the vessels and on food supplied as part of the cruise, subject to the conditions of Section 16.

Additional depreciation - allowability in the year of purchase - computation of gross total income under Chapter IV prior to set off and carry forward under Chapter VI - carry forward and set off of depreciation

Additional depreciation - allowability in the year of purchase - Additional depreciation claimed on opening written down value for the assessment years in question was allowable notwithstanding that part of the claim related to earlier financial years. - HELD THAT: - The Division Bench, following its earlier decision in T.C.A. No. 228 of 2011 and the subsequent decision in T.C.A.Nos.1101 & 1102 of 2015, held that the ITAT was correctly allowed the assessee's claim. The Court applied the principle that the deduction for additional depreciation is to be considered at the stage of computing the gross total income of the eligible undertaking under Chapter IV, and therefore the Revenue's method of denying the deduction by first setting off carry forward/unabsorbed depreciation was contrary to the law as declared by higher authority and the Division Bench's precedent. Consequently, the assessee's claim for additional depreciation on the brought forward opening WDV could not be rejected on the ground relied upon by the Assessing Officer.

Assessee's claim of additional depreciation is sustained and the Assessing Officer's disallowance is set aside.

Carry forward and set off of depreciation - computation of gross total income under Chapter IV prior to set off and carry forward under Chapter VI - Whether the Revenue could first set off carry forward/unabsorbed depreciation and thereby nullify deductions under Chapter IV. - HELD THAT: - Relying on the earlier Division Bench exposition of the Apex Court's ratio, the Court reiterated that applying provisions for set off and carry forward (Chapter VI) prior to allowing deductions under Chapter IV is premature and legally incorrect. The deduction under the relevant provision must be allowed while computing gross total income of the eligible undertaking under Chapter IV and not postponed to the stage of computing total income under Chapter VI. The Revenue's approach of first carrying forward depreciation and making the return nil so as to deny the Chapter IV deduction was held to be contrary to that settled principle.

Revenue's computation by prior set off of carry forward depreciation is incorrect; deduction under Chapter IV must be considered first.

Precedential effect of Division Bench decisions - Whether the ITAT was wrong in not following the jurisdictional High Court decision relied upon by the Revenue (M.M. Forgings Ltd.). - HELD THAT: - The Court observed that the substantial questions of law raised were covered by the Division Bench's earlier decision in T.C.A. No. 228 of 2011 and the subsequent decision in T.C.A.Nos.1101 & 1102 of 2015, which settled the legal position against the Revenue. In view of those binding precedents, the contention that ITAT erred by ignoring M.M. Forgings Ltd. was not sustained and the admitted substantial questions were answered in favour of the assessee.

Contention that ITAT erred in ignoring M.M. Forgings Ltd. is rejected; precedent relied upon by the Division Bench governs the outcome.

Final Conclusion: Following the Division Bench's earlier decisions, the substantial questions of law are answered against the Revenue and in favour of the assessee; the Tax Case Appeals are dismissed, with no order as to costs.

Disallowance under section 14A read with Rule 8D - disallowance cannot exceed exempt income - Assessing Authority's satisfaction prerequisite to apply Rule 8D - exclusion of telecommunication and travel expenditure from total turnover for computing deduction under section 10A/10B

Disallowance under section 14A read with Rule 8D - disallowance cannot exceed exempt income - Assessing Authority's satisfaction prerequisite to apply Rule 8D - Validity and scope of disallowance under section 14A read with Rule 8D in relation to exempt dividend income - HELD THAT: - The Court applied and followed the precedent of this Court in Envestor Ventures Ltd. and other authorities to hold that computation under Rule 8D cannot be mechanically applied to yield a disallowance exceeding the exempt income earned by the assessee. The disallowance of expenditure attributable to exempt income must be a reasonable proportion of the exempt income and cannot result in a hypothetical or negative taxable income. Further, Rule 8D's computational method can be resorted to by the Assessing Authority only after recording satisfaction that the assessee's apportionment (or claim of no expenditure) is unacceptable; such satisfaction must be supported by cogent reasons and the assessee must be given an opportunity of hearing before applying Rule 8D. [Paras 9, 10, 11, 12]

Disallowance under Rule 8D/section 14A cannot exceed the exempt income for the assessment year and Rule 8D may be invoked only after the Assessing Authority records satisfaction with reasons and affords opportunity to the assessee.

Exclusion of telecommunication and travel expenditure from total turnover for computing deduction under section 10A/10B - Whether telecommunication and travel expenditure incurred in foreign currency are to be excluded from total turnover when computing export-linked deduction under section 10A/10B - HELD THAT: - Relying on the ratio of the Supreme Court in HCL Technologies Ltd. and consistent High Court authority, the Court held that amounts excluded from the numerator (export turnover) by Explanation 2(iv) - such as freight, telecommunication and insurance, and expenses for providing technical services abroad - must also be excluded from the denominator (total turnover) when applying the statutory formula for deduction. Importing exclusions permitted in the definition of export turnover into the total turnover is necessary to avoid an irrational and unworkable result and to effectuate the legislative intent underlying the deduction provisions. [Paras 14, 18, 19, 20, 21]

Telecommunication and travel expenditures incurred in foreign currency and other amounts excluded from export turnover must also be excluded from total turnover in computing the export-linked deduction under the applicable provision.

Final Conclusion: All Tax Case Appeals are dismissed; the issues raised by the Revenue were decided against it and in favour of the assessee in respect of Assessment Years 2008-09 and 2009-10.

Power under section 254(2) to rectify mistakes apparent on record (scope and limits) - Distinction between rectification under section 254(2) and review of tribunal's order on merits - Condonation of delay due to COVID-19 lockdown and extension of limitation - Application of superior courts' principles cannot be treated as mistake apparent from record

Condonation of delay due to COVID-19 lockdown and extension of limitation - Whether delay in filing the miscellaneous petition was to be condoned - HELD THAT: - The Tribunal accepted the Revenue's affidavit explaining that the limitation period for filing expired during the COVID-19 lockdown and referred to the Supreme Court order extending limitation w.e.f. 15/3/2020. On that basis the Tribunal found that there was a reasonable cause preventing timely filing and accordingly condoned the delay and admitted the miscellaneous petition. [Paras 3, 4, 5]

Delay in filing the miscellaneous petition is condoned.

Power under section 254(2) to rectify mistakes apparent on record (scope and limits) - Distinction between rectification under section 254(2) and review of tribunal's order on merits - Application of superior courts' principles cannot be treated as mistake apparent from record - Whether the miscellaneous petition under section 254(2) could be entertained to recall or review the Tribunal's earlier order granting exemption under section 54F by alleging mistake apparent on record - HELD THAT: - The Tribunal observed that it had earlier denied exemption under section 54F following authoritative precedent. It relied on the Karnataka High Court's view (following Supreme Court precedents) that the power under section 254(2) cannot be used to review or re-decide issues on merits. Errors arising from reconsideration of application of higher-court principles to facts, erroneous findings based on facts, or erroneous application of law do not amount to a "mistake apparent from record" warranting rectification under section 254(2). Reconsideration of the Tribunal's findings or re-application of law would amount to a review which is beyond the scope of section 254(2). Consequently the grievance seeking recall/review of the earlier order was not maintainable under section 254(2). [Paras 9, 10, 11]

The petition seeking to recall or review the Tribunal's earlier order on merits is not maintainable under section 254(2) and is dismissed.

Final Conclusion: The Tribunal condoned the delay caused by the COVID-19 lockdown and admitted the miscellaneous petition, but dismissed the petition to the extent it sought recall or review of the Tribunal's earlier order on merits as not being permissible under section 254(2) (mistake apparent from record does not include re examination or review of findings or application of superior courts' principles).

Assessment under section 153A is not de novo - fresh claims barred after completion of original assessment - disallowance under section 14A of the Income Tax Act - application of judicial precedent to statutory reassessment

Assessment under section 153A is not de novo - fresh claims barred after completion of original assessment - application of judicial precedent to statutory reassessment - Assessee not entitled to raise a fresh claim during assessment proceedings under section 153A after completion of the original assessment. - HELD THAT: - The Court upheld the Tribunal's reliance on the decision in JAI STEELS to hold that assessment or reassessment made pursuant to Section 153A is not a de novo assessment. Where the original assessment stood completed under Section 143(1), the assessee cannot introduce and succeed on deductions or allowances not claimed in the original assessment proceedings in the Section 153A proceedings. The Tribunal's conclusion that the appellant could not raise a fresh claim during the 153A proceedings was affirmed and the legal principle from the cited precedent was applied to the facts of the case. [Paras 6]

Answered against the assessee; fresh claims in 153A proceedings are not permissible where the original assessment was completed.

Disallowance under section 14A of the Income Tax Act - application of judicial precedent to statutory reassessment - Validity of the Tribunal's confirmation of the Commissioner (Appeals)'s disallowance under Section 14A. - HELD THAT: - The Assessing Officer had made a disallowance under Section 14A (as recorded in the assessment order) which was affirmed by the Commissioner (Appeals) and thereafter by the Tribunal. The High Court found no error in the Tribunal's approach in confirming the disallowance, applying the same principle that a Section 153A proceeding cannot be used to entertain a fresh claim that was not part of the completed original assessment. Consequently, the Tribunal's confirmation of the disallowance under Section 14A was sustained. [Paras 3, 6]

Tribunal's confirmation of the Section 14A disallowance is upheld.

Final Conclusion: The substantial questions of law are answered against the assessee and in favour of the revenue; the appeal is dismissed.

Condonation of delay under Section 119(2)(b) - genuine hardship - scope of CBDT's power in admitting time barred claims - prohibition on CBDT prejudging the merits of a claim when considering condonation - binding effect of CBDT circulars on the CBDT itself - weight to be given to recommendations of subordinate income tax authorities

Condonation of delay under Section 119(2)(b) - genuine hardship - scope of CBDT's power in admitting time barred claims - Validity of the CBDT's rejection of the application for condonation of delay in filing return for AY 2014-15. - HELD THAT: - The Court held that Section 119(2)(b) empowers the CBDT to issue general or special orders to enable an income tax authority to admit claims where time limits have expired if genuine hardship is shown, and that the concept of 'genuine hardship' must be construed liberally. The High Court found that the respondent's inability to file the return within time arose from circumstances beyond its control (internal management disputes, delayed statutory audit and adoption of accounts) and that subordinate tax authorities had recommended condonation. The CBDT, however, rejected the application by effectively examining the refund claim on merits and concluding the claim was not genuine. That approach traversed beyond the narrow exercise of power under Section 119(2)(b), which requires only satisfaction that the case merits consideration and does not suffer from an apparent defect, not a deep merits adjudication. [Paras 15, 16, 17, 21]

The CBDT's order rejecting condonation was quashed and delay in filing the return for AY 2014-15 was condoned.

Prohibition on CBDT prejudging the merits of a claim when considering condonation - improper adjudication of merits/prejudging refund claims - Whether the CBDT could reject condonation by conducting a merits level examination of the refund claim. - HELD THAT: - The Court reaffirmed that while the CBDT may verify that a time barred claim does not suffer from an apparent defect, it must not undertake an in depth merits examination or itself pass an assessment under the guise of condonation. The impugned order was held to have gone into the correctness of the return and relied on auditor observations and Circular No.9/2015 to conclude non genuineness of the claim, thereby effectively passing an assessment and exceeding the remit of Section 119(2)(b). [Paras 10, 11, 17]

CBDT erred in prejudging the return on merits; such merits adjudication is outside the scope of power under Section 119(2)(b).

Binding effect of CBDT circulars on the CBDT itself - weight to be given to recommendations of subordinate income tax authorities - Whether Circular No.9/2015 could be applied by the CBDT to refuse condonation and whether the CBDT was bound to follow recommendations of subordinate authorities. - HELD THAT: - The Court observed that circulars issued by the CBDT under Section 119(1) are binding on subordinate authorities but are not binding on the CBDT itself. The judgment also noted that the CBDT had sought and received favourable reports from the Principal Commissioner and Additional Commissioner recommending condonation but did not give those opinions appropriate weight when deciding the application. Reliance on the circular to reject condonation and to impugn the claim was therefore inappropriate. [Paras 18, 19, 20]

Circular No.9/2015 is not binding on the CBDT; the CBDT should have considered and given weight to the recommendations of subordinate authorities and not relied on the circular to refuse condonation.

Scope of CBDT's power in admitting time barred claims - weight to be given to recommendations of subordinate income tax authorities - Remedial direction concerning limitation for scrutiny and further proceedings following quashing of CBDT order. - HELD THAT: - The Court recognised the revenue's submission that condoning the delay might make the case time barred for future scrutiny if limitation were reckoned from the original date. As a protective measure, the High Court directed that for purposes of scrutiny and other proceedings the period of limitation shall run from the date of the Single Judge's order allowing the writ petition, thereby preserving the revenue's right to proceed in accordance with law. [Paras 22, 23]

For purposes of scrutiny and further proceedings, limitation shall be reckoned from the date the Single Judge's order was passed.

Final Conclusion: The High Court dismissed the revenue's writ appeal. It upheld the Single Judge's quashing of the CBDT's order dated 16.01.2018, condoned the delay in filing the return for AY 2014-15, held that the CBDT exceeded its power by prejudging the return and misapplying Circular No.9/2015, and directed that limitation for scrutiny and other proceedings shall run from the date of the Single Judge's order.

Summary order. The Tax Case Appeal filed against the interim order of the Income Tax Appellate Tribunal is dismissed as infructuous because the Tribunal disposed of the main appeal; the substantive substantial questions of law raised are left open for decision in an appropriate appeal; no costs.

Disallowance under section 14A read with Rule 8D(2)(ii) and 8D(iii) - requirement of receipt of exempted income as prerequisite for invoking section 14A - applicability of Board Circular No.5/2014 to years with no exempt income - precedential effect of earlier decision in ITA No.133/2015

Disallowance under section 14A read with Rule 8D(2)(ii) and 8D(iii) - requirement of receipt of exempted income as prerequisite for invoking section 14A - precedential effect of earlier decision in ITA No.133/2015 - Validity of deletion by the Tribunal of the disallowance made under section 14A read with Rule 8D(2)(ii) and 8D(iii) for AY 2010-2011. - HELD THAT: - The High Court accepted the revenue's admission that the substantial questions raised were answered in favour of the assessee by the Court's earlier judgment in ITA No.133/2015. Applying that precedent, the Tribunal's deletion of the disallowance under section 14A read with Rule 8D(2)(ii)/(iii) was upheld. The Court treated the ratio in the cited earlier decision as determinative of the present controversy and disposed of the appeal accordingly.

Deletion of the disallowance under section 14A read with Rule 8D(2)(ii)/(iii) sustained; issue answered in favour of the assessee.

Applicability of Board Circular No.5/2014 to years with no exempt income - precedential effect of earlier decision in ITA No.133/2015 - Whether Board Circular No.5/2014 mandates making disallowance under section 14A read with Rule 8D even in a year when the taxpayer has not earned exempted/dividend income. - HELD THAT: - The Court noted that the substantial questions were dealt with in the earlier decision (ITA No.133/2015) in a manner favourable to the assessee and that the revenue did not dispute the applicability of that precedent. On that basis the Court concluded that the Board circular could not be invoked to sustain the disallowance in the facts of this assessment year, and the Tribunal's conclusion was endorsed.

Board Circular No.5/2014 does not sustain the disallowance in the present facts; issue answered in favour of the assessee.

Final Conclusion: Substantial questions of law framed on the correctness of the disallowance under section 14A read with Rule 8D and the applicability of Board Circular No.5/2014 were answered in favour of the assessee following the Court's earlier decision in ITA No.133/2015; the revenue's appeal is dismissed.

Income Declaration Scheme, 2016 - credit of advance tax and tax deducted at source - Form No.4 under the Income Declaration Scheme Rules, 2016 - writ petition under Article 226 - competent authority's adjudicatory function - no roving enquiry in writ jurisdiction - direction to decide representation on merits - prohibition on coercive action pending decision

Income Declaration Scheme, 2016 - credit of advance tax and tax deducted at source - Form No.4 under the Income Declaration Scheme Rules, 2016 - competent authority's adjudicatory function - Whether the petitioner is entitled to credit the advance tax and TDS for Assessment Years 2010-11 to 2015-16 in computing liability under the Income Declaration Scheme, 2016 and obtain Form No.4 certifying full and final payment. - HELD THAT: - The court found that the question involves mixed issues of fact and law which require examination of documents and evidence by the competent authority; a High Court under Article 226 cannot conduct a roving inquiry into disputed factual matters. The petition seeking immediate credit and issuance of Form No.4 was therefore not disposed of on merits. Instead, the matter requires adjudication by the competent authority applying law to facts and following statutory procedure. Consequently the court declined to grant the substantive relief in the writ petition and directed the respondent to consider the petitioner's representation and pass orders on merits in accordance with law. [Paras 5, 6]

Substantive entitlement to credit and issuance of Form No.4 not decided on merits; matter remanded to competent authority for consideration and decision on merits.

Direction to decide representation on merits - no roving enquiry in writ jurisdiction - Direction to the respondent to consider and decide the petitioner's representation dated 06.09.2017 within a specified time-frame. - HELD THAT: - Having held that adjudication on the claim requires consideration by the competent authority, the court directed the respondent to consider the issues raised in the petitioner's representation and pass orders on merits and in accordance with law and procedure. The court imposed a timeline, directing that this be done expeditiously and preferably within twelve weeks from receipt of a copy of the order. [Paras 6]

Respondent directed to consider and decide the representation on merits within twelve weeks.

Prohibition on coercive action pending decision - Whether coercive action may be initiated against the petitioner pending decision on the representation. - HELD THAT: - As an interim protective measure attendant to remanding the substantive dispute, the court restrained the respondent from initiating any coercive action against the petitioner until final orders are passed on the representation. This restraint is conditional on the respondent carrying out the directed adjudication and does not decide the substantive merits of the tax credit claim. [Paras 6]

Respondent restrained from initiating coercive action against the petitioner until final orders are passed on the representation.

Direction to supply documents - direction to decide representation on merits - Obligation of the petitioner to supply a fresh copy of the representation and supporting documents to the respondent. - HELD THAT: - To facilitate adjudication by the competent authority the court directed the petitioner to send another copy of the representation along with all necessary documents and a copy of the court order within one week of receipt. This procedural direction ensures the respondent has the material required to decide the representation on merits. [Paras 6]

Petitioner directed to resend the representation with all necessary documents and a copy of the order within one week.

Final Conclusion: Writ petitions disposed of by remanding the substantive claim for credit of advance tax and TDS and issuance of Form No.4 to the competent authority for decision on merits; respondent directed to decide the petitioner's representation preferably within twelve weeks, restrained from taking coercive action till such decision, and petitioner directed to resubmit the representation and documents within one week.

Full and true disclosure - maintainability of application under Section 245C - settlement under Chapter XIX-A - Settlement Commission limited to matters in the application and reports - revision of disclosure by the applicant prohibited - proviso to Section 245C - judicial review under Article 226 limited to material irregularity

Full and true disclosure - maintainability of application under Section 245C - Whether the applicants made full and true disclosure of undisclosed income in their applications under Chapter XIX-A so as to render the settlement applications maintainable. - HELD THAT: - On the material placed before it, the High Court found a substantial and material divergence between the additional income declared by each 2nd respondent in their applications under Section 245C and the additional income ultimately determined by the Settlement Commission. The Court examined the income tables for each assesse-M/s. Maral Labs, The Madras Pharmaceuticals and M/s. Accent Pharma-and concluded that the discrepancies (including increases amounting to a significant percentage of the applicants' declared additional income) demonstrated that there was no "full and true" disclosure at the time of filing the settlement applications. The court treated the finding of inadequate disclosure as fatal to the maintainability of the applications under Section 245C and held that the Settlement Commission ought to have rejected the applications in light of such non-disclosure. [Paras 58, 59, 62, 63, 64]

The Court held that the applicants did not make full and true disclosure in their settlement applications and that the applications were not maintainable on that ground.

Settlement Commission limited to matters in the application and reports - revision of disclosure by the applicant prohibited - proviso to Section 245C - Whether the Settlement Commission was entitled to recast incomes and determine additional income beyond what was disclosed in the applicants' Section 245C applications. - HELD THAT: - Relying on the principle laid down by the Supreme Court in Ajmera Housing Corporation (as discussed in the judgment), the Court reiterated that the Settlement Commission's jurisdiction under Section 245D(4) is confined to matters covered by the application and the reports furnished to it; the scheme does not contemplate a post-application revision by the assessee of the additional income disclosed in the application. The Court observed that permitting such revision would frustrate the statutory bar on withdrawal and would amount to allowing an applicant effectively to make a fresh application by stealth. Given that the Settlement Commission in these cases altered/computed incomes (including lowering some years and increasing others) and accepted additional sums over and above the applicants' declared figures, the Court held that the Commission exceeded the permissible ambit and that Ajmera's ratio applied squarely. [Paras 51, 52, 57, 63, 64]

The Court held that the Settlement Commission could not permit or effect a revision that rendered the original requirement of full and true disclosure illusory, and that the Commission's acceptance of revised/augmented figures was impermissible in the circumstances.

Judicial review under Article 226 limited to material irregularity - material irregularity - Whether interference under Article 226 was permissible despite the Settlement Commission's order having attained finality under the Act. - HELD THAT: - The Court acknowledged the narrow scope of judicial review under Article 226 with respect to final orders of the Settlement Commission, confined to fraud, misrepresentation, arbitrariness or material procedural irregularity. It reasoned that where the Commission's decision-making process is vitiated by a fundamental defect-here, the absence of full and true disclosure which is a statutory precondition-the High Court can intervene. Applying that standard to the facts, the Court found the absence of true and full disclosure to be a material irregularity in the decision-making process warranting interference under Article 226. [Paras 18, 19, 20, 21, 66]

The Court held that interference under Article 226 was justified because the Settlement Commission's orders were vitiated by material irregularity (failure of full and true disclosure).

Final Conclusion: The writ petitions filed by the Commissioner of Income Tax were allowed: the High Court found that the applicants had not made full and true disclosure and that the Settlement Commission impermissibly accepted and/or recast disclosures beyond the scope of the applications; accordingly the impugned orders of the Settlement Commission dated 28.03.2012 were quashed and the petitions allowed with consequential relief.

Long-term capital gains treated as accommodation entries / bogus LTCG - Section 68 - unexplained cash credit - Section 69C - estimated expenditure attributable to procuring bogus LTCG - Section 10(38) - claim of exemption on long-term capital gains - Opportunity of cross-examination in assessment proceedings - Applicability of co-ordinate bench precedent and consideration of SEBI orders - Remand for fresh adjudication after affording opportunity of hearing

Long-term capital gains treated as accommodation entries / bogus LTCG - Section 68 - unexplained cash credit - Applicability of co-ordinate bench precedent and consideration of SEBI orders - Addition made by AO under Section 68 in respect of alleged LTCG on sale of shares of M/s Sunrise Asian Limited remanded for fresh adjudication. - HELD THAT: - The Tribunal noted that the AO treated the claimed long-term capital gains as arranged / accommodation entries and added them as unexplained cash credit under Section 68. The assessee produced purchase and sale notes, demat and bank statements and contended sales were effected on the exchange through a registered broker; the Revenue relied on an investigation identifying the scrip as used to generate bogus LTCG. The Tribunal considered the reliance placed by the assessee on a co-ordinate bench decision dealing with the same scrip and directed that the CIT(A) re-examine the factual matrix in light of that co-ordinate-bench decision and the events arising from SEBI orders, while affording the assessee an opportunity of hearing. All issues relating to the genuineness of the gains and admissibility of investigation material were kept open for fresh consideration by the CIT(A). [Paras 9]

Findings under Section 68 set aside and matter remanded to CIT(A) for fresh adjudication after considering co-ordinate bench decision and SEBI orders and after affording opportunity to the assessee.

Section 69C - estimated expenditure attributable to procuring bogus LTCG - Remand for fresh adjudication after affording opportunity of hearing - Addition made by AO under Section 69C as estimated commission/expenditure in connection with the alleged bogus LTCG remanded for fresh adjudication. - HELD THAT: - The Tribunal observed that the AO made an additional estimated disallowance under Section 69C relating to presumed expenditure in procuring the alleged bogus capital gains. In view of the directions to re-assess the primary question of genuineness of the gains and to consider the co-ordinate bench decision and SEBI findings, the Tribunal remanded the Section 69C issue to the CIT(A) for fresh consideration and afforded the assessee an opportunity to be heard. [Paras 9]

Section 69C addition set aside for fresh adjudication by CIT(A) with opportunity to the assessee.

Section 10(38) - claim of exemption on long-term capital gains - Applicability of co-ordinate bench precedent and consideration of SEBI orders - Claim of exemption under Section 10(38) in respect of the LTCG remanded for fresh adjudication. - HELD THAT: - The Tribunal recorded that the CIT(A) had rejected the assessee's claim of exemption under Section 10(38) on the grounds that the gains were dubious. Given the Tribunal's direction to reconsider the factual matrix in light of the co-ordinate bench decision and SEBI orders, the question of entitlement to exemption under Section 10(38) was remitted to the CIT(A) for fresh decision after hearing the assessee. [Paras 9]

Claim under Section 10(38) to be reconsidered by CIT(A) on remand.

Opportunity of cross-examination in assessment proceedings - Remand for fresh adjudication after affording opportunity of hearing - Assessee's grievance regarding denial of opportunity to cross-examine persons whose statements formed part of the investigation remanded for fresh consideration. - HELD THAT: - The Tribunal noted the assessee's contention that confessional/statements relied upon by the AO should be subject to cross-examination; the AO declined the request as belated. In ordering remand, the Tribunal directed that the CIT(A) reassess the matter afresh, affording appropriate opportunity to the assessee to meet the investigation material in accordance with procedural fairness. [Paras 9]

Allegation of denial of cross-examination to be considered afresh by CIT(A) on remand.

Tax computation and application of correct tax rates - Objections to tax computation and incorrect tax rate application remitted to lower authorities for correction. - HELD THAT: - The Tribunal observed a grievance regarding incorrect computation of gross tax and consequential surcharge, cess and interest. It directed the lower authorities to apply correct tax rates to the income as finally determined on remand, without deciding the tax computation issue on merits. [Paras 9]

Tax computations to be corrected by lower authorities in accordance with the income as finally determined.

Final Conclusion: The Tribunal set aside the findings of the CIT(A), allowed the appeal for statistical purposes and remanded the matter to the CIT(A) for fresh adjudication of all issues (including additions under Sections 68 and 69C, claim under Section 10(38), and objections regarding cross-examination and tax computation), directing reconsideration in light of the co-ordinate bench decision and SEBI orders, and affording the assessee an opportunity of hearing.

Specified domestic transaction - penalty under section 271AA - applicability of sections 92D and 92E - definition of "relative" in section 2(41) - context-specific definition in Explanation to section 56(2)(v) - no estoppel against statute

Definition of "relative" in section 2(41) - context-specific definition in Explanation to section 56(2)(v) - Meaning of the term "relative" for the purposes of section 40A(2)(b). - HELD THAT: - The Tribunal held that where a specific provision supplies its own definition (as the Explanation to section 56(2)(v) does) that definition applies only "for the purposes of that clause". In contrast, the general definition in section 2(41) operates throughout the Act "unless the context otherwise requires." Since section 40A(2)(b) contains no special definition of "relative," the statutory definition in section 2(41) governs the meaning of "relative" for section 40A(2)(b). Consequently, the narrower list in section 2(41) - husband, wife, brother, sister or any lineal ascendant or descendant - must be applied rather than the broader list found in the Explanation to section 56(2)(v). The Tribunal also noted that an assessee's mistaken reporting cannot create estoppel against the statute's proper scope. [Paras 9]

The term "relative" in section 40A(2)(b) is to be read in accordance with section 2(41).

Specified domestic transaction - applicability of sections 92D and 92E - penalty under section 271AA - Whether the transactions reported by the assessee qualify as specified domestic transactions and whether penalty under section 271AA is attracted. - HELD THAT: - Applying the section 2(41) definition of "relative" to the transactions disclosed in the tax-audit report, the Tribunal found that only the payment of rent to the assessee's husband fell within section 40A(2)(b). Other payments were to persons (mother-in-law, husband's brother, sister-in-law) who do not fall within section 2(41). Since the aggregate of transactions falling within section 40A(2)(b) thus amounted only to the payment to the husband (far below the Rs. 5 crore threshold in section 92BA), those transactions did not constitute a "specified domestic transaction." In consequence, the obligations under sections 92D/92E were not triggered and the AO had no basis to levy penalty under section 271AA. The Tribunal therefore deleted the penalty. [Paras 10, 11]

The transactions do not qualify as specified domestic transactions and penalty under section 271AA is not attracted; penalty deleted.

Final Conclusion: The Tribunal allowed the appeal, holding that the statutory definition in section 2(41) governs the meaning of "relative" for section 40A(2)(b), only the payment to the husband fell within that definition, the Rs.5 crore threshold for a specified domestic transaction was not met, sections 92D/92E did not apply and the penalty under section 271AA was deleted.

Characterisation of interest income as business income or income from other sources - nexus between deposits/bank guarantees and eligible undertaking for deduction under 10A/10AA - treatment of foreign exchange gains as profits of export business for purpose of deduction under 10AA - application of transfer pricing comparability and remand to TPO/AO for fresh determination of ALP - timing of deduction under 10AA vis-a -vis set-off of brought forward losses - deductibility of expenses on buy-back of shares - grant of brought forward MAT credit subject to factual verification - charging of interest under 234C on returned income

Characterisation of interest income as business income or income from other sources - nexus between deposits/bank guarantees and eligible undertaking for deduction under 10A - Interest income earned on bank deposits made to secure bank guarantees given in favour of the Income Tax Department and Customs Department - treatment for tax purposes and linkage to eligible undertaking. - HELD THAT: - The Tribunal examined the purpose of the deposits. It held that deposits made to secure bank guarantees in favour of the Income Tax Department arise from the assessee's liability as an entity and therefore cannot be linked to any particular eligible undertaking; interest earned thereon is not business income of an eligible undertaking and is taxable as income from other sources. By contrast, deposits made to secure bank guarantees for availing duty benefits under the Customs Act are connected to import/export transactions of a particular undertaking; such interest is normally part of the business income of the relevant undertaking and eligible for consideration under the deduction regime for eligible undertakings. The Tribunal set aside the appellate authority's order insofar as Customs-related deposits are concerned and directed the AO to treat the interest as business income of the relevant undertaking after the assessee links the deposits to the specific undertaking so that deduction under 10A (or applicable provision) can be worked out. [Paras 12, 13]

Interest on deposits for Income Tax Department guarantees assessed as income from other sources; interest on deposits for Customs-related guarantees to be treated as business income of the relevant undertaking and remitted to AO for linkage and consequent computation of deduction.

Application of transfer pricing comparability and remand to TPO/AO for fresh determination of ALP - Appropriateness of comparable companies selected by the TPO for determination of ALP in respect of ITeS international transactions and consequential adjustment. - HELD THAT: - The Tribunal reviewed the comparables relied upon by the TPO and followed co ordinate bench precedent. It directed exclusion of certain comparables (Infosys BPO Ltd, TCS e-Serve Ltd and Excel Infoways Ltd) and remitted the matters relating to Universal Print Systems Ltd and BNR Udyog Ltd to the file of the AO/TPO for fresh consideration in accordance with the directions reproduced from the coordinate-bench decisions. The Tribunal further directed inclusion of Crystal Voxx Ltd as a comparable. The overall determination of ALP and quantum of adjustment was restored to the AO/TPO for fresh adjudication, allowing the assessee appropriate opportunity. [Paras 19, 20, 21]

List of comparables modified as directed and issue restored/remitted to AO/TPO for fresh determination of ALP in accordance with Tribunal's directions.

Treatment of foreign exchange gains as profits of export business for purpose of deduction under 10AA - Whether foreign exchange gains on export proceeds form part of profits of the eligible undertaking for computing deduction under 10AA. - HELD THAT: - Relying on judicial precedents and reasoning that foreign exchange fluctuation gains arise directly from export activity and would not have arisen but for the exports, the Tribunal held that foreign exchange gains realised on export proceeds are income derived from the export business and therefore form part of the profits of the eligible undertaking for computing deduction under 10AA. The AO was directed to treat such gains as part of export profits for the purpose of the deduction. [Paras 22]

Foreign exchange gains on export proceeds to be included in profits of the eligible undertaking for computing deduction under 10AA.

Timing of deduction under 10AA vis-a -vis set-off of brought forward losses - Whether brought forward losses must be set off before computing deduction under 10AA or the deduction must be allowed prior to set-off. - HELD THAT: - Applying the Supreme Court ratio in Yokogawa India Ltd, the Tribunal held that the deduction under 10AA must be made independently and immediately after determining the profits and gains of the eligible undertaking and prior to application of set-off and carry forward provisions. Consequently, brought forward losses should not be set off before computing the deduction under 10AA and the AO was directed to allow the deduction without such set-off. [Paras 23, 24]

Deduction under 10AA to be allowed prior to set-off of brought forward losses; AO directed accordingly.

Deductibility of expenses on buy-back of shares - Whether expenses incurred on buy-back of shares are revenue or capital in nature for tax purposes. - HELD THAT: - Following the coordinate-bench decision in the assessee's own case (AY 2011-12) and the Karnataka High Court authority relied upon, the Tribunal accepted that the expenditure on buy-back of shares in the facts of the case is revenue in nature and allowed the claim. The AO was directed to allow the expense. [Paras 25]

Expenses on buy-back of shares allowed as revenue expenditure; AO directed to permit deduction.

Grant of brought forward MAT credit subject to factual verification - Claim for brought forward MAT credit. - HELD THAT: - The Tribunal observed that the question of entitlement to brought forward MAT credit required factual verification and therefore restored the issue to the file of the AO with a direction to examine the assessee's claim in accordance with law. [Paras 26]

Claim for brought forward MAT credit remitted to AO for factual examination and decision in accordance with law.

Charging of interest under 234C on returned income - Whether interest under section 234C is chargeable on returned income or assessed income. - HELD THAT: - The Tribunal accepted the assessee's submission that interest under section 234C is to be computed on the returned income rather than on the assessed income. It directed the AO to recalculate and charge interest under section 234C on the returned income. [Paras 27]

Interest under 234C to be charged on returned income; AO directed to give effect.

Final Conclusion: Appeal for AY 2010-11 partly allowed: interest on deposits for Income Tax Department guarantees held as income from other sources, while interest on deposits for Customs-related guarantees to be treated as business income of the relevant undertaking and remitted to AO for linkage and deduction computation. Appeal for AY 2012-13 allowed overall with multiple directions: transfer pricing comparables list modified and ALP remitted to AO/TPO for fresh adjudication; foreign exchange gains to be included in profits of the eligible undertaking for 10AA; 10AA deduction to be allowed prior to set-off of brought forward losses; buy-back expenses allowed as revenue expenditure; MAT credit claim remitted for factual verification; and interest under 234C to be charged on returned income.

Validity of reassessment initiated on the basis of investigation report without independent application of mind - Independent application of mind by Assessing Officer in recording reasons for reopening - Reopening held illegal where AO blindly relies on departmental investigation report - Illegality of reassessment proceedings renders subsequent assessment proceedings void

Validity of reassessment initiated on the basis of investigation report without independent application of mind - Independent application of mind by Assessing Officer in recording reasons for reopening - Illegality of reassessment proceedings renders subsequent assessment proceedings void - Reopening of assessment under section 147/148 which was based on the Investigation Wing's report without any independent application of mind by the Assessing Officer. - HELD THAT: - The Tribunal examined the reasons recorded for reopening and the material placed on record and found that the Assessing Officer had initiated reassessment proceedings solely on the basis of information received from the Investigation Wing without undertaking independent verification or applying his own mind to the information. Reliance was placed on precedents holding that reopening is invalid where the AO merely adopts the Investigation Wing's report as gospel truth without independent inquiry. As the reassessment was held to be founded on such a defective formation of belief, the initiation of proceedings under section 147/148 was held to be improper. Because the reassessment proceedings were illegal ab initio, all consequential actions and the additions made in those proceedings could not stand. The Tribunal therefore did not adjudicate the merits of the addition, treating the merit challenge as academic once the reopening was set aside. [Paras 10]

Reopening held invalid for lack of independent application of mind by the AO; reassessment proceedings and consequent additions declared illegal and the appeal allowed.

Final Conclusion: The reassessment for assessment year 2011-12, initiated on the basis of the Investigation Wing's report without independent application of mind by the Assessing Officer, was held illegal; consequent proceedings and additions were set aside and the appeal allowed.

Validity of reassessment proceedings under section 147/148 of the Income-tax Act - Application of section 68 to sale of investments reflected in preceding year's balance sheet - Deletion of addition on account of alleged accommodation entry where original purchase was not previously treated as bogus

Validity of reassessment proceedings under section 147/148 of the Income-tax Act - Reassessment proceedings reopened under section 147/148 were valid and upheld. - HELD THAT: - The Assessing Officer reopened assessment after recording reasons based on information from the Investigation Wing and obtained the necessary approval. The assessee was supplied the reasons, filed objections which were disposed of by a speaking order, and was afforded opportunity to file details and respond to notices. The Tribunal finds no contrary material to displace the findings of the AO and the CIT(A) on the procedural steps and reasons for reopening; accordingly the reassessment proceedings are sustained. [Paras 12]

Reassessment under section 147/148 is upheld.

Application of section 68 to sale of investments reflected in preceding year's balance sheet - Deletion of addition on account of alleged accommodation entry where original purchase was not previously treated as bogus - Addition of amount received on sale of shares treated as unexplained credit under section 68 and commission disallowance were not sustainable and were deleted. - HELD THAT: - The assessee sold shares during the year which had been shown as investments in the balance sheet of the preceding year and the sale proceeds were received by cheque. The Tribunal reasoned that if the sale were alleged to be bogus, the corresponding purchase in the earlier year would also be bogus; however, no action was taken in the earlier year to treat that purchase as bogus. In these circumstances, the AO could not sustain an addition under section 68 in respect of realization of an investment that was reflected in the preceding year's balance sheet. For the same reason, the commission addition was also deleted. The Tribunal therefore set aside the CIT(A)'s confirmation of the additions and directed deletion by the AO. [Paras 13]

Addition under section 68 and the commission disallowance deleted; grounds on merit allowed.

Final Conclusion: The appeal is partly allowed: reassessment proceedings are sustained, but the additions made under section 68 and the related commission are deleted and the grounds on merits are allowed.

Addition under s.69B for unexplained investment in stock - survey under section 133A and statement recorded during survey - valuation report by approved valuer - quantitative tally of stock - business nexus of loan and disallowance of interest - interest-free unsecured funds as a defence to disallowance - penal interest on delayed TDS deposit

Addition under s.69B for unexplained investment in stock - valuation report by approved valuer - survey under section 133A and statement recorded during survey - quantitative tally of stock - Validity of addition made on account of difference in stock value as undisclosed investment - HELD THAT: - The Tribunal examined whether the difference between the approximate stock value stated by the assessee in his survey statement and the valuer's valuation could sustain an addition as undisclosed investment. It found that there was no discrepancy in quantitative tally, purchases, sales or closing stock and that books of account were not rejected. The addition rested solely on a valuation mismatch between an approximate estimate recorded during survey and the valuer's report. Under these facts, merely differing valuations, without any excess quantity, unexplained purchases or rejection of accounts, cannot be characterised as undisclosed investment. The CIT(A)'s reliance on average monthly cost and sale rates and on comparison with market rates did not cure the fundamental absence of any quantitative or transactional discrepancy; consequently the addition could not be sustained. [Paras 7, 8, 9]

Addition of Rs. 45,97,325 made as unexplained investment in stock deleted.

Business nexus of loan and disallowance of interest - disallowance of interest under s.36(1)(iii) - interest-free unsecured funds as a defence to disallowance - Sustainability of disallowance of interest on the ground that advance was financed from interest-bearing loan - HELD THAT: - The Tribunal considered whether the interest on a bank loan could be disallowed on the premise that advances made by the assessee were financed out of interest-bearing borrowings. The assessee had substantial interest-free unsecured funds (from friends and relatives) which exceeded the advance given. In those circumstances the presumption that the advance was made out of the interest-bearing bank loan could not be drawn. The mere existence of an interest-bearing loan does not permit imputing utilisation of those funds for the interest-free advance when interest-free funds are available to meet the advance. [Paras 6, 10]

Disallowance of interest sustained by authorities set aside; interest disallowance deleted.

Penal interest on delayed TDS deposit - Claim regarding disallowance of penal interest on delayed deposit of TDS - HELD THAT: - No argument was advanced before the Tribunal in respect of the ground relating to disallowance of penal interest on delayed TDS deposit. [Paras 11]

Ground dismissed as not pressed.

Final Conclusion: The appeal is partly allowed: the addition made on account of difference in stock valuation is deleted and the disallowance of interest on the advance is set aside; the ground relating to penal interest on delayed TDS is dismissed as not pressed.

Composition fee - bank guarantee for non-fulfillment of export obligation - quashing of administrative order - remand for fresh adjudication - opportunity to be heard / principles of natural justice - interpretation of Public Notice in relation to reliefs under Foreign Trade Policy

Composition fee - quashing of administrative order - interpretation of Public Notice in relation to reliefs under Foreign Trade Policy - Validity of the impugned order dated 26.11.2007 insofar as it imposed composition fee and quantified payment obligations under extensions of export obligation. - HELD THAT: - The High Court found that the Public Notice dated 22.05.2013 unambiguously contemplates furnishing of a bank guarantee for non-fulfilment of export obligation and does not contemplate imposition of the composition fee which the third respondent sought to recover by the impugned order. Given that the issue of levy of composition fee is not provided for in the Public Notice, and that other contested factual and mixed questions require examination of records, the Court held that it cannot adjudicate those matters in writ proceedings. The Court therefore set aside the impugned administrative order and directed that the matter be reconsidered by the competent authority on merits and in accordance with law. [Paras 4, 5, 6]

Impugned order quashed and set aside; matter remanded to the third respondent for fresh adjudication on merits in accordance with law.

Remand for fresh adjudication - bank guarantee for non-fulfillment of export obligation - opportunity to be heard / principles of natural justice - Scope of reconsideration to be undertaken by the authority on remand and the procedural safeguards to be observed. - HELD THAT: - The Court directed that the third respondent shall reassess the matters raised by the petitioner - including factual and mixed questions concerning the composition fee, the adequacy and effect of the bank guarantee, and entitlement to any waiver or extension under the Foreign Trade Policy and Hand Book of Procedure - by examining the records and applying the relevant legal provisions. The authority must follow the procedures contemplated by law and afford the petitioner an opportunity to be heard before passing a fresh decision. The High Court emphasised that these determinations are to be made by the administrative authority and not by the Court in writ proceedings. [Paras 5, 6]

Remand for fresh adjudication with directions to decide on merits, in accordance with law, and after affording opportunity to the petitioner.

Final Conclusion: The writ petition is allowed: the impugned order dated 26.11.2007 is quashed and the matter is remitted to the third respondent for fresh adjudication on merits in accordance with law, with the petitioner to be afforded an opportunity to be heard; no costs.

Refund of duty - effect of proviso to Section 23(2) of the Customs Act, 1962 in depriving owner of right to relinquish title upon commission of an offence - payment of fine and penalty by e-payment and consequent acceptance - out of charge order for home consumption and loss of Customs control over goods - adjudication on mis-declaration and imposition of fine and penalty - adjudication without issuance of show cause notice or personal hearing

Refund of duty - effect of proviso to Section 23(2) of the Customs Act, 1962 in depriving owner of right to relinquish title upon commission of an offence - out of charge order for home consumption and loss of Customs control over goods - adjudication on mis-declaration and imposition of fine and penalty - Whether the refund of duty could be allowed where an offence of mis-declaration was adjudicated, penalties and fine were imposed, and an out-of-charge order for home consumption had been given. - HELD THAT: - The Tribunal accepted the Adjudicating Authority's finding that the consignment involved mis-declaration which was adjudicated and resulted in imposition of a fine and a penalty. That factual conclusion engages the proviso to Section 23(2) of the Customs Act, 1962 which, in the circumstances recorded, takes away the owner's right to relinquish title to the goods and thereby precludes the claimed refund. The fact that an out-of-charge order for home consumption had been issued and that Customs no longer had control over the goods did not override the effect of the adjudication and the proviso; the sequence of events and the adjudication operate to deny the refund claim. [Paras 3, 5]

Refund claim denied on account of adjudicated offence of mis-declaration and operation of the proviso to Section 23(2), notwithstanding out-of-charge order.

Payment of fine and penalty by e-payment and consequent acceptance - adjudication without issuance of show cause notice or personal hearing - Whether the appellant could challenge the levy of fine and penalty or assert denial of opportunity after having paid the amounts by e-payment and having sought adjudication without show cause notice or personal hearing. - HELD THAT: - The Tribunal noted that the appellant paid the fine and penalty by e-payment without contemporaneously challenging their validity, which amounted to acceptance of the sanction and disentitled the appellant from raising that challenge at this stage. Further, the record reflects the Adjudicating Authority's observation that the appellant had requested adjudication without issuance of a show cause notice and without personal hearing; the appellant did not deny that position nor file supporting sworn evidence to the contrary before the Tribunal. Having failed to dispute these procedural facts or to challenge the payments at the appropriate time, the appellant could not now successfully contend that opportunity was denied or that the levy lacked authority. [Paras 5, 6]

Challenge to levy of fine and penalty and claim of denial of opportunity rejected as untenable because of voluntary e-payment and failure to contest or furnish evidence at the appropriate time.

Final Conclusion: The appeal is dismissed; refund of duty is not allowable in view of the adjudicated mis-declaration, imposition and payment of fine and penalty, and the operation of the proviso to Section 23(2), and the appellant cannot now challenge the levy or assert denial of opportunity after voluntarily paying the sanctioned amounts and having sought adjudication without showing otherwise.

Scheme of Arrangement (Demerger) - Dispensing with meetings under clause (9) of Section 230 of the Companies Act, 2013 - Notices to statutory authorities under Section 230(5) and Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - Requirement of convening meetings of equity shareholders, secured creditors and unsecured creditors - Publication and service of notices for sanction process - Affidavit of exemption under the Competition Act, 2002 and notice to CCI

Dispensing with meetings under clause (9) of Section 230 of the Companies Act, 2013 - Requirement of convening meetings of equity shareholders, secured creditors and unsecured creditors - Dispensing with convening, holding and conducting of meetings of equity shareholders, secured creditors and unsecured creditors in respect of the Demerged Company and the Resulting Company. - HELD THAT: - The Tribunal recorded that the Demerged Company has 13 equity shareholders whose consent affidavits are on record, one secured creditor who has given consent by affidavit, and 49 unsecured creditors of whom affidavits from consenting unsecured creditors represent 92.42% in value. The Resulting Company has two equity shareholders who have filed consent affidavits, no secured creditors and one unsecured creditor who has filed a consent affidavit. On these facts and documents placed on record, the Tribunal dispensed with convening and holding the respective meetings under clause (9) of Section 230 of the Companies Act, 2013, treating the filed consents and the absence of secured creditors (where applicable) as sufficient to obviate the need for meetings. [Paras 7]

Meetings of equity shareholders, secured creditors and unsecured creditors of the Demerged Company and the Resulting Company are dispensed with under clause (9) of Section 230 on the basis of recorded consents and the stated creditor composition.

Notices to statutory authorities under Section 230(5) and Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - Affidavit of exemption under the Competition Act, 2002 and notice to CCI - Requirement to serve notices on statutory authorities and the scope of such service for the Scheme of Arrangement. - HELD THAT: - The Tribunal directed that the respective companies shall send notices to the Regional Director, Ministry of Corporate Affairs, Registrar of Companies, Income Tax authorities and other sectoral regulators as necessary, in terms of Clause (5) of Section 230 and Sub section (3) of the Act, and Rule 8. It further directed that if the scheme is exempt under the Competition Act, 2002, an affidavit of exemption be filed; otherwise notice to the Competition Commission of India is to be issued. Given the Demerged Company is an unlisted public company and the Resulting Company is a private company, notices to SEBI and stock exchanges were held unnecessary. Authorities were given 30 days from receipt of notice to file objections or representations, failing which it would be deemed they have no objections. [Paras 8]

Companies to serve statutory notices as directed; affidavit regarding Competition Act exemption or service to CCI to be furnished; SEBI and stock exchange notices not required in the facts of this case; authorities to respond within 30 days.

Publication and service of notices for sanction process - Requirement of convening meetings of equity shareholders, secured creditors and unsecured creditors - Directions as to public and private service of notices, website/display publication, filing proof, and timeline for presentation of the petition. - HELD THAT: - The Tribunal directed the Demerged Company and the Resulting Company to publish notices in one English (Business Standard, All India) and one vernacular (Dinamani) newspaper with wide circulation in Tamil Nadu on or before the specified date, place the notice on the companies' websites and on the registered office notice boards, send private notices to authorities by speed post and file proofs by affidavit at the time of filing the petition. The Registry of the Tribunal was directed to display the notice on its notice board. The Petition(s) were ordered to be presented on or before the date fixed by the Tribunal. [Paras 9, 11]

Publication, website/display and private service of notices to be carried out and proof filed by affidavit; registry to display the notice; petitions to be presented by the fixed date.

Final Conclusion: The Company Application is disposed of with directions dispensing the convening of meetings for shareholders and creditors of the Demerged and Resulting Companies on the recorded consents and creditor composition; statutory and newspaper notices, including Competition Act compliance or notice to CCI, are to be issued and proof filed; and the petition(s) are to be presented by the date fixed by the Tribunal.

Sanction of scheme of amalgamation under Sections 230 to 232 of the Companies Act, 2013 - Transfer of undertakings, assets and liabilities on the appointed date - Dispensing with meetings on the basis of consent letters - Vesting of properties subject to existing charges - Transferee's obligation to allot shares and increase authorised capital - Dissolution of transferor companies without winding-up - Regulatory compliance and Regional Director observations requiring remedial filings - Sanction without prejudice to departmental or regulatory action for statutory violations

Sanction of scheme of amalgamation under Sections 230 to 232 of the Companies Act, 2013 - Transfer of undertakings, assets and liabilities on the appointed date - Sanction of the Scheme of Amalgamation and its operative effect from the appointed date - HELD THAT: - The Tribunal considered the Scheme providing for transfer and vesting of the entire undertakings of the six Transferor Companies into the Transferee Company with effect from the appointed date 01.04.2017. The record shows that necessary documentation including audited financials, valuation-related board resolutions and statutory notices were placed before the Tribunal and that statutory authorities were served. The Regional Director's report did not conclude that the Scheme was prejudicial to shareholders or public interest except for specified observations which were addressed by the petitioners by rejoinder and by filing corrective e-forms where appropriate. On consideration of the material on record and explanations furnished by the petitioner companies, the Tribunal was satisfied to sanction the Scheme and make it binding with effect from 01.04.2017. [Paras 2, 12, 17, 19, 20]

The Scheme of Amalgamation is sanctioned and shall be binding with effect from 01.04.2017.

Transfer of undertakings, assets and liabilities on the appointed date - Vesting of properties subject to existing charges - Vesting of properties, rights, interests, liabilities and continuation of proceedings in the transferee company - HELD THAT: - The Tribunal ordered that all properties, rights and interests of the Transferor Companies shall stand transferred to and vested in the Transferee Company without further act or deed but subject to all charges affecting the same. It further directed that all liabilities and duties of the Transferor Companies shall be transferred and become liabilities and duties of the Transferee Company and that any proceedings, suits or appeals pending by or against the Transferor Companies shall be continued by or against the Transferee Company, thereby ensuring legal continuity post-merger. [Paras 20]

All assets, rights and liabilities stand transferred to and vested in the Transferee Company, subject to existing charges; pending proceedings shall continue against the Transferee Company.

Dispensing with meetings on the basis of consent letters - Dispensation of shareholder and creditor meetings for approval of the Scheme - HELD THAT: - The Tribunal recorded that in CA.(CAA) No.1096/KB/2018 meetings of equity shareholders and creditors had been dispensed with in view of receipt of consent letters and affidavits which are on record. Joint publication in Form NCLT 3A and service on statutory authorities were also made, supporting the dispensation of physical meetings and enabling the Tribunal to proceed to consider sanction. [Paras 3, 5]

Meetings of equity shareholders and creditors were dispensed with on the basis of consent letters and affidavits on record.

Regulatory compliance and Regional Director observations requiring remedial filings - Sanction without prejudice to departmental or regulatory action for statutory violations - Transferee's obligation to allot shares and increase authorised capital - Treatment of Regional Director's observations, remedial compliance and incidental directions connected with sanction - HELD THAT: - The Regional Director (ER) made specific observations concerning valuation documentation, RBI-related timelines and defective financial statements/forms for certain transferor companies. The petitioners filed rejoinders and corrective e-forms (GNL-1) and submitted that RBI had issued a No Objection Certificate. The Tribunal accepted the explanations and the corrective steps taken, but recorded that any deficiency or statutory violation discovered would not be prevented from being dealt with in accordance with law. Consequently, the Tribunal imposed incidental directions: a certified copy of the order to be filed with the Registrar of Companies within 30 days, the transferee to issue and allot shares as per the Scheme and increase authorised capital if necessary (with payment of fee), and the schedule of assets in respect of the transferor companies to be filed within 60 days. [Paras 16, 17, 18, 19, 20]

Regional Director's observations were addressed by the petitioners and accepted for purposes of sanction; the Tribunal directed specified remedial filings and compliance steps and clarified that sanction is without prejudice to lawful action against any statutory violation.

Dissolution of transferor companies without winding-up - Dissolution of the Transferor Companies consequent to the sanction - HELD THAT: - As part of the sanction, the Tribunal directed that upon the Scheme taking effect the Transferor Companies shall stand dissolved without winding-up, thereby effecting their cessation as separate legal entities consequent to vesting of assets and liabilities in the Transferee Company. [Paras 20]

The Transferor Companies shall stand dissolved without winding-up.

Final Conclusion: The Tribunal sanctioned the Scheme of Amalgamation between the six Transferor Companies and the Transferee Company, effective from 01.04.2017, directing transfer and vesting of assets and liabilities (subject to charges), continuation of pending proceedings by/against the Transferee Company, dissolution of the Transferor Companies without winding-up, and imposed specified compliance directions (filing certified copy with ROC, allotment of shares/increase of authorised capital if necessary, and filing schedule of assets), while noting that the sanction does not bar appropriate action in respect of any statutory non-compliance.

Sanction of scheme under Sections 230-232 of the Companies Act, 2013 - Scheme of Amalgamation by merger by absorption - Appointed Date - dissolution of transferor company without winding up and cancellation of shares - compliance with accounting standards including Ind AS 103 - acceptance of Regional Director's observations and undertakings - filing of certified copy for stamp duty adjudication and filing with Registrar of Companies - sanction conditional on parallel sanction by Tribunal having jurisdiction over transferor company's registered office

Sanction of scheme under Sections 230-232 of the Companies Act, 2013 - Scheme of Amalgamation by merger by absorption - Sanction of the Scheme of Amalgamation between Taj Madras Flight Kitchen Private Limited and Taj SATS Air Catering Limited - HELD THAT: - After considering the petition, the Scheme annexed thereto, the Report and Supplementary Report of the Regional Director and the Petitioner Company's replies and undertakings, the Tribunal found the Scheme to be fair and reasonable, not violative of law and not contrary to public policy. The Tribunal recorded that all requisite statutory compliances had been fulfilled and accordingly made the Company Scheme Petition absolute and sanctioned the Scheme in the terms presented to the Tribunal. [Paras 11, 12, 13]

The Scheme is sanctioned and the Company Scheme Petition CP (CAA) 59/MB/2021 is made absolute.

Appointed Date - Fixation of the Appointed Date for the Scheme - HELD THAT: - The Tribunal fixed the Appointed Date of the sanctioned Scheme as 1st April, 2020. The Court accepted that the Scheme specified the Appointed Date as a specific calendar date and that the Scheme stated it would be operative from the Effective Date but effective from the Appointed Date. [Paras 10, 13]

Appointed Date is fixed as 1st April, 2020.

Acceptance of Regional Director's observations and undertakings - compliance with accounting standards including Ind AS 103 - Treatment of and response to observations of the Regional Director and acceptance of Petitioner's undertakings - HELD THAT: - The Regional Director raised observations on accounting entries, appointed/effective dates, notices to creditors/authorities, set-off of fees, compliance with Income Tax and FEMA provisions, stamp duty and other matters. The Petitioner replied by affidavit and gave express undertakings to comply with applicable accounting standards (including Ind AS 103 and other relevant standards), statutory requirements, Income Tax provisions and FEMA/RBI guidelines if applicable, and to utilize fees/stamp duties as provided by law. The RD, on review of the Petitioner's replies and undertakings, informed the Tribunal that the explanations were satisfactory and expressed no objection to the Scheme. The Tribunal verified and accepted these clarifications and undertakings. [Paras 10, 11]

The Regional Director's observations are addressed; the Petitioner Company's clarifications and undertakings are accepted and recorded.

Dissolution of transferor company without winding up and cancellation of shares - Consequences on the transferor company's share capital and dissolution - HELD THAT: - The Scheme provides for amalgamation by absorption, consequent dissolution without winding up of the Transferor Company and cancellation of the equity shares of the Transferor Company held by the Petitioner Company. The Tribunal sanctioned the Scheme containing these provisions, subject to statutory compliance including the set-off of fees paid by the Transferor Company against any fees payable by the Transferee as permitted by law. [Paras 8, 10, 13]

Provision for dissolution of the Transferor Company and cancellation of its shares is sanctioned, subject to applicable statutory provisions regarding fees and stamp duty.

Filing of certified copy for stamp duty adjudication and filing with Registrar of Companies - Directions for further filings following sanction of the Scheme - HELD THAT: - The Tribunal directed the Petitioner Company to lodge a certified copy of the order with the concerned Superintendent of Stamps for adjudication of stamp duty, if any, within 60 days of receipt. The Petitioner Company was also directed to file a certified copy of the order and the sanctioned Scheme with the Registrar of Companies electronically along with e-form INC 28 within 30 days of receipt. The Tribunal further directed that all concerned authorities may act on the certified copy of the order and sanctioned Scheme. [Paras 14, 15, 16]

Petitioner Company to file certified copies for stamp duty adjudication and with the Registrar of Companies within the prescribed timeframes; authorities may act on certified copies.

Sanction conditional on parallel sanction by Tribunal having jurisdiction over transferor company's registered office - Conditional nature of sanction with respect to jurisdictional concurrence - HELD THAT: - The Transferor Company has filed the corresponding petition before the National Company Law Tribunal, Chennai Bench, as its registered office lies within that Bench's jurisdiction. The Tribunal made clear that the sanction granted by this Bench is subject to sanction of the Scheme by the National Company Law Tribunal, Chennai Bench in the petition filed by the Transferor Company; the sanction by this Tribunal is therefore conditional on the parallel sanction by the competent Tribunal for the Transferor Company. [Paras 10, 13]

Sanction by this Tribunal is subject to and conditional upon sanction of the Scheme by the NCLT, Chennai Bench.

Final Conclusion: The Tribunal has sanctioned the Scheme of Amalgamation between the parties, fixed the Appointed Date as 1st April, 2020, accepted the Regional Director's observations as satisfactorily addressed by the Petitioner and recorded the Petitioner's undertakings; the sanction is subject to the parallel sanction by the National Company Law Tribunal, Chennai Bench, and the Petitioner is directed to file certified copies for stamp duty adjudication and with the Registrar of Companies within specified periods.

Financial debt - financial creditor - corporate guarantee - disbursal against the consideration for the time value of money - secured creditor - Committee of Creditors

Financial debt - financial creditor - corporate guarantee - disbursal against the consideration for the time value of money - Committee of Creditors - Whether STCI Finance Limited, by virtue of the corporate guarantee and the underlying loan disbursement to Bohra Industries Ltd., is a financial creditor of Bohra Pratisthan Pvt. Ltd. and properly included as a member of the Committee of Creditors. - HELD THAT: - The Tribunal examined the definitions of "debt" and "financial debt" in Sections 3(11) and 5(8) of the IBC and the Supreme Court's exposition in Anuj Jain concerning the root requirement that a financial debt must involve a disbursal against the consideration for the time value of money. The material on record, not disputed by the parties, shows a loan facility disbursed by STCI Finance Ltd. to Bohra Industries Ltd. under a Loan Agreement and that Bohra Pratisthan Pvt. Ltd. executed an unconditional and irrevocable corporate guarantee in respect of that loan. Section 5(8)(i) expressly includes the amount of any liability in respect of a guarantee for the items enumerated in sub-clauses (a) to (h). While Anuj Jain distinguishes between mere third party security (which may render a party a secured creditor but not a financial creditor), that judgment does not control where the corporate debtor has given an express corporate guarantee and there exists an underlying disbursement by the creditor to the principal borrower. The Tribunal also considered the NCLAT reasoning in Ascot Realty and supporting authorities, and concluded that both conditions of the inclusive definition of financial debt are satisfied here - (i) there was disbursement by STCI to the borrower; and (ii) the corporate debtor furnished an irrevocable corporate guarantee, thereby rendering STCI's liability in respect of that guarantee a financial debt of the corporate debtor. Applying these legal principles to the undisputed documents (loan agreement, schedule of securities and deed of guarantee), the Tribunal found no error in the Adjudicating Authority's inclusion of STCI Finance Ltd. as a financial creditor and its membership in the Committee of Creditors. [Paras 21, 22, 23, 24, 27]

STCI Finance Limited is a financial creditor of Bohra Pratisthan Pvt. Ltd. by virtue of the corporate guarantee and the underlying disbursement to Bohra Industries Ltd.; the inclusion of STCI in the Committee of Creditors was correct and the appeal is dismissed.

Final Conclusion: The Adjudicating Authority's order upholding STCI Finance Ltd.'s status as a financial creditor (and its inclusion in the Committee of Creditors) is affirmed; the appeal is dismissed with no order as to costs.

Voluntary liquidation - dissolution of company - compliance with Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 - declaration of solvency - public announcement and solicitation of claims - final report and distribution to members - No Objection Certificate from tax authority

Voluntary liquidation - compliance with Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 - declaration of solvency - public announcement and solicitation of claims - final report and distribution to members - No Objection Certificate from tax authority - Whether the Voluntary Liquidator complied with the statutory requirements for voluntary liquidation and whether the company should be dissolved. - HELD THAT: - The Tribunal recorded that the Board of Directors and the members passed the requisite special resolution for voluntary liquidation on 30.09.2019 and that the Declaration of Solvency and Form MGT-14 and Form GNL-2 were filed. The liquidator published the public announcement, rectified a discrepancy in the Form A by issuing a corrigendum, submitted the preliminary and final reports, opened and subsequently closed a liquidation bank account for realization and distribution, and filed the final report and Form GNL-2 with the Registrar of Companies. The record also included the Auditor's Certificate of Solvency, audited financial statements up to the commencement date, annual stakeholder reporting, and a No Objection Certificate from the Income Tax Department; the liquidator affirmed that no claims or objections were received. On these facts the Tribunal was satisfied that the statutory and regulatory requirements under Section 59 of the Code and the IBBI Regulations were fulfilled and that liquidation had been completed in accordance with the prescribed procedure. [Paras 6, 7, 9]

Statutory requirements for voluntary liquidation are satisfied; the company is dissolved and the order is to be filed with the Registrar of Companies.

Final Conclusion: The Tribunal allowed the petition, held that the liquidator complied with the requirements of Section 59 of the Code and the IBBI Regulations, and ordered dissolution of the company with direction to file a copy of the order with the Registrar of Companies.

Operational creditor - operational debt - initiation of Corporate Insolvency Resolution Process - default - pre-existing dispute - admission of Section 9 application - appointment of Interim Resolution Professional - public announcement - moratorium under Section 14 of the Code

Operational creditor - operational debt - The applicant falls within the definition of an operational creditor in respect of services rendered to the corporate debtor. - HELD THAT: - The Tribunal analysed the statutory definitions of operational creditor and operational debt and applied them to the facts. The applicant rendered professional services (statutory audit) to the respondent and raised bills for those services which were not denied as to provision of services. On this basis the applicant qualifies as an operational creditor entitled to proceed under the Code. [Paras 10]

Applicant is an operational creditor.

Pre-existing dispute - default - There was no established pre-existing dispute and the corporate debtor was in default of payment of the claimed operational debt. - HELD THAT: - The Tribunal examined the reply to the demand notice and the material on record. Although the corporate debtor alleged payments from group companies and that the auditor did not complete assignments, it did not produce communications or proof showing a dispute over the services or that the payments formed part of the same transaction. The bills for earlier years were not objected to. In the absence of documentary proof of a pre-existing dispute, and given the admitted non-payment after demand, the Tribunal found subsistence of default. [Paras 13, 14, 16, 18]

No pre-existing dispute proved; default established.

Admission of Section 9 application - appointment of Interim Resolution Professional - public announcement - moratorium under Section 14 of the Code - The Section 9 application was admitted and consequential measures were directed including appointment of an IRP, public announcement, imposition of moratorium and deposit for CIRP expenses. - HELD THAT: - Having found that the application was complete, the debt was due and no dispute existed, the Tribunal held that the requirements for admission under Section 9(5)(i)(a)-(d) were satisfied and admitted the petition. The Tribunal appointed the proposed Interim Resolution Professional and directed immediate public announcement, declared the moratorium with its statutory consequences, entrusted duties and obligations to the IRP, and directed the operational creditor to deposit an amount to meet immediate IRP expenses to be accounted as CIRP cost and reimbursed by the Committee of Creditors. [Paras 21, 22, 24, 25, 26]

Section 9 petition admitted; IRP appointed; public announcement directed; moratorium declared; operational creditor directed to deposit amount for IRP expenses.

Final Conclusion: The Tribunal held that the applicant is an operational creditor, that no pre-existing dispute was proved and default in payment subsisted; consequently the Section 9 application was admitted, Mr. Parag Singhal was appointed as Interim Resolution Professional, public announcement was ordered, moratorium imposed and directions given for IRP's duties and deposit for immediate CIRP expenses.

Tribunal's power under Section 60(5) of the Insolvency and Bankruptcy Code to permit belated submission of resolution plans - eligibility to submit a resolution plan upon change in MSME classification - acceptance of a belated resolution plan by the resolution professional for placement before the committee of creditors - expedited time-limited relief to preserve CIRP timeline

Tribunal's power under Section 60(5) of the Insolvency and Bankruptcy Code to permit belated submission of resolution plans - acceptance of a belated resolution plan by the resolution professional for placement before the committee of creditors - expedited time-limited relief to preserve CIRP timeline - Permission to the suspended director/promoter to submit a belated resolution plan and the effect of such permission on the RP/CoC process. - HELD THAT: - The application under the prescribed provision seeking leave for the suspended director to submit a resolution plan was considered in the context of the nearing CIRP timeline. The Tribunal noted that the applicant had obtained an MSME registration certificate and that the Resolution Professional and the Committee of Creditors had indicated willingness to accept and consider a belated plan if the Tribunal so permitted. Balancing the need to conclude the CIRP within the prescribed timeline and the applicant's claim of inability to submit earlier due to exigencies, the Tribunal exercised its power to grant a short, specified period for submission. The Tribunal directed that upon submission within the time granted the RP shall place the plan before the CoC for consideration and required that the process proceed without delay, making clear that no further extension would be allowed. This relief was confined and time-bound to protect the CIRP timetable. [Paras 11, 12]

Applicant permitted to submit the resolution plan within one week from receipt of the order; RP to place the plan before the CoC for consideration and the CIRP to proceed without further delay; no further time to be granted.

Final Conclusion: The Tribunal allowed the limited, time-bound application under Section 60(5) permitting the suspended director/promoter to submit a belated resolution plan (within one week of receipt of the order), directed the RP to place any such plan before the CoC for consideration, and required the CIRP to be concluded without further delay, with no further extension of time permitted.

Contravention of approved resolution plan - Liquidation under Section 33(3) and (4) of the Insolvency and Bankruptcy Code, 2016 - Maximisation of value of stakeholders - Appointment of Liquidator subject to written consent under Section 34(1) of the Insolvency and Bankruptcy Code, 2016 - Duties and powers of Liquidator under Sections 35 to 41 of the Insolvency and Bankruptcy Code, 2016

Contravention of approved resolution plan - Liquidation under Section 33(3) and (4) of the Insolvency and Bankruptcy Code, 2016 - Maximisation of value of stakeholders - Whether the Corporate Debtor should be put into liquidation on account of contravention of the approved resolution plan by the Resolution Applicant. - HELD THAT: - The Tribunal found on the record that the Resolution Applicant failed to infuse the funds as per the timelines and terms of the resolution plan approved by the Adjudicating Authority, and that initial payments were substantially below the committed infusion. The Financial Creditor holding 89.12% of secured debt filed the application under Section 33(3) after such contravention. Having regard to the statutory scheme, which permits any person other than the corporate debtor prejudicially affected by contravention to seek liquidation, and to the object of protecting stakeholders' interests and maximising asset value, the Tribunal observed that the liquidation value of the corporate debtor exceeded the amount offered under the resolution plan. On these findings the Tribunal concluded that the only course available was to invoke Sections 33(3) and (4) and pass a liquidation order. [Paras 5, 7, 9]

M/s. Churakulam Tea Estate Private Limited is ordered to be liquidated with immediate effect.

Appointment of Liquidator subject to written consent under Section 34(1) of the Insolvency and Bankruptcy Code, 2016 - Duties and powers of Liquidator under Sections 35 to 41 of the Insolvency and Bankruptcy Code, 2016 - Who shall be appointed as Liquidator and on what conditions, and the scope of the Liquidator's duties. - HELD THAT: - The Tribunal appointed the former Resolution Professional as Liquidator but directed that he must submit the prescribed written consent in the form required by Section 34(1) within a week, noting that such consent had not been filed. The Tribunal further directed the Liquidator to discharge powers and duties under Sections 35 to 41 and to adhere to the IBBI Rules and Regulations while carrying out the liquidation process. [Paras 8, 9]

Shri Jasin Jose is appointed as Liquidator subject to submission of written consent in the prescribed form; the Liquidator must perform duties under Sections 35-41 and comply with IBBI rules.

Final Conclusion: The application under Section 33(3) is allowed; the corporate debtor is ordered into immediate liquidation and the former Resolution Professional is appointed as Liquidator subject to filing the prescribed written consent, with directions to perform statutory duties and comply with IBBI rules.

Finality of an approved resolution plan - inability of adjudicating authority to modify an approved resolution plan - interpretation of committee of creditors' minutes regarding cure/grace period - consequence of failure to comply with obligations under an approved resolution plan - invocation of performance guarantee upon default

Finality of an approved resolution plan - inability of adjudicating authority to modify an approved resolution plan - Modification of an approved resolution plan to incorporate a mutually agreed grace period - HELD THAT: - The Tribunal held that once a resolution plan is approved by the Adjudicating Authority it attains finality and cannot be reopened to add conditions. Reliance was placed on the principle (as applied by superior fora) that the Adjudicating Authority is not permitted to alter an approved plan under the guise of inherent powers. Accordingly, the prayer to modify the approved plan to incorporate the alleged mutually agreed grace period could not be entertained and the application seeking such modification was liable to be dismissed. [Paras 16]

Application to modify the approved resolution plan to incorporate a mutually agreed grace period is rejected because an approved plan is final and cannot be reopened.

Interpretation of committee of creditors' minutes regarding cure/grace period - consequence of failure to comply with obligations under an approved resolution plan - invocation of performance guarantee upon default - Whether the minutes of the CoC recorded a binding mutually agreed cure/grace period and whether the Resolution Applicant was entitled to further time on account of medical/COVID reasons - HELD THAT: - The Tribunal examined the CoC minutes and concluded that the record shows the applicant's request for a grace period (30 days or up to 19.03.2021) was recorded but there was no agreement to grant the extended cure period sought; the representative of the financial creditor had opposed a further curing period. The Tribunal found that the Resolution Applicant had failed to honour the timelines in the approved plan and had sought successive extensions; this conduct belied financial capacity. In those circumstances the invocation of the performance guarantee following default was not set aside and no further extension was warranted despite the applicant's medical difficulties. [Paras 17, 18]

Minutes do not record a binding mutually agreed cure period; Resolution Applicant's request for extension is refused and invocation of performance guarantee stands given the applicant's failure to comply with the approved plan.

Final Conclusion: IA/37/KOB/2021 is dismissed; the approved resolution plan remains final and cannot be modified, the CoC minutes do not record a binding grace period in favour of the applicant, and no further time is granted despite the applicant's medical claims.

Restructuring/rehabilitation of corporate debtor - compromise or arrangement under Section 230 - liquidation timeline under Regulation 2B - discretionary power under Rule 11 of the NCLT Rules, 2016 - power of liquidator to proceed on non-compliance

Restructuring/rehabilitation of corporate debtor - compromise or arrangement under Section 230 - liquidation timeline under Regulation 2B - discretionary power under Rule 11 of the NCLT Rules, 2016 - Whether additional time should be granted to the suspended directors to clear dues and effect restructuring of the corporate debtor during liquidation proceedings. - HELD THAT: - The Tribunal noted the competing considerations of enabling genuine attempts at revival and the statutory timelines applicable in liquidation. It referred to the JJ Irani Committee Report on providing opportunities for restructuring where viable and to the NCLAT direction in S.C. Sekaran v. Amit Gupta and Ors. that a liquidator may take steps under Section 230 for revival before asset sale. The liquidator relied on Regulation 2B which envisages completion of a compromise or arrangement under Section 230 within 90 days from commencement of liquidation and stated that the period allowed earlier had expired. Although the applicants' requested period had lapsed, the Tribunal found that in the circumstances it could exercise its discretionary power under Rule 11 of the NCLT Rules, 2016 to permit a final, time bound opportunity to attempt restructuring. The Tribunal balanced the need to allow a last chance for revival against the requirement that liquidation not be unduly delayed and made clear that any extension would be final and that the liquidator would be at liberty to proceed if the order was not complied with. [Paras 6, 9, 10]

Applicants granted 30 days from the date of the order to clear dues and pursue restructuring; no further time will be granted and the liquidator is free to proceed under the relevant rules if the order is not complied with.

Final Conclusion: The application for further time was allowed in part: a final 30 day period was granted to the applicants to clear dues and pursue restructuring of the corporate debtor, failing which the liquidator may continue the liquidation process.

Appointment of replacement liquidator - handover of records and assets to successor liquidator - obligation to file progress reports under the IBBI (Liquidation Process) Regulations, 2016 - division of liquidation fees between outgoing and incoming liquidator - communication of appointment to the Insolvency and Bankruptcy Board of India (IBBI)

Appointment of replacement liquidator - Appointment of Mr. Sourab Malpani as liquidator in place of Ms. Sarita Duck for M/s. Balajidham Buildestate Pvt. Ltd. - HELD THAT: - The Tribunal considered the application under Section 60(5) read with Section 34(4)(b) of the Code and, from the panel of resolution professionals approved for NCLT Jaipur Bench, selected Mr. Sourab Malpani. His credentials were verified on the IBBI website and no adverse record was found, leading to his appointment to continue the liquidation proceedings in respect of the corporate debtor. [Paras 5, 10]

Mr. Sourab Malpani is appointed as liquidator in replacement of Ms. Sarita Duck and IA 407/JPR/2020 is allowed.

Handover of records and assets to successor liquidator - Obligation of outgoing liquidator to hand over records and assets and of incoming liquidator to take charge and perform duties under the Code. - HELD THAT: - The Tribunal directed that Ms. Sarita Duck shall forthwith hand over the entire records and assets taken over during the insolvency and liquidation process to the newly appointed liquidator. The incoming liquidator, Mr. Sourabh Malpani, is directed to take over charge of those records and assets and to perform his duties as required under the Code and the relevant rules and regulations. [Paras 7]

Outgoing liquidator to hand over records and assets forthwith; incoming liquidator to take charge and perform statutory duties.

Obligation to file progress reports under the IBBI (Liquidation Process) Regulations, 2016 - Requirement for the newly appointed liquidator to file regular progress reports under Regulation 15 of the IBBI (Liquidation Process) Regulations, 2016. - HELD THAT: - The Tribunal specifically mandated that the appointed liquidator shall file his regular progress reports in accordance with Regulation 15 of the IBBI (Liquidation Process) Regulations, 2016, ensuring statutory compliance in the continuation of liquidation proceedings. [Paras 6]

Appointed liquidator to file regular progress reports as per Regulation 15.

Division of liquidation fees between outgoing and incoming liquidator - Allocation of liquidation fees between Ms. Sarita Duck and the newly appointed liquidator. - HELD THAT: - Having regard to the duties already carried out by the outgoing liquidator and the continuation of liquidation by the incoming liquidator, the Tribunal directed that the liquidation fees payable under the Code shall be divided between Ms. Sarita Duck and the appointed liquidator in the ratio of 3:7. [Paras 8]

Liquidation fees to be divided between outgoing and incoming liquidator in the ratio of 3:7.

Communication of appointment to the Insolvency and Bankruptcy Board of India (IBBI) - Direction to communicate the order and the appointment to relevant parties including IBBI. - HELD THAT: - The Tribunal ordered that a copy of the order be supplied to the applicant's counsel, sent immediately to the e-mail address of the newly appointed liquidator, and communicated to the IBBI for its records to ensure institutional and procedural notice of the change in liquidator. [Paras 9]

Order to be supplied to counsel, emailed to the appointed liquidator, and communicated to IBBI.

Final Conclusion: The application for substitution of the liquidator is allowed; Mr. Sourab Malpani is appointed as liquidator, the outgoing liquidator must hand over records and assets forthwith, the new liquidator must file progress reports as mandated, liquidation fees are apportioned 3:7 between outgoing and incoming liquidators, and the order is to be communicated to counsel, the appointed liquidator and the IBBI.

Mandatory submission of FC-4 Form - requirement of exclusive Foreign Contribution Account - prescription of a single bank branch for receipt of foreign contributions - retrospective operational effect of banking restriction - restraining coercive action for non-filing - penalisation for form discrepancy

Mandatory submission of FC-4 Form - requirement of exclusive Foreign Contribution Account - prescription of a single bank branch for receipt of foreign contributions - restraining coercive action for non-filing - penalisation for form discrepancy - Interim relief restraining the respondent from taking coercive action against petitioners for failure to file the FC-4 return for 2019-2020 where the FC-4 online form requires SBI, New Delhi account details introduced after the relevant filing date. - HELD THAT: - The petitioners, being registered recipients of foreign contributions, contended that the FC-4 Form (replacing earlier FC-6) was amended to mandate that the exclusive foreign contribution account be in the State Bank of India, New Delhi branch, and that this requirement was introduced after the relevant cut-off for filing the return for the year 2019-2020. The Court observed that the practical effect of the amended form is that, despite the relevant date for filing being 31st March, 2020, petitioners who maintained foreign contribution accounts elsewhere prior to the notification could not comply with the online entry requirement which accepts only SBI, New Delhi account details. The Court found the difficulty faced by the petitioners to be prima facie genuine and held that it would be inappropriate to permit penal action where the inability to file arises from a discrepancy in the form prescribed by the respondent rather than from wilful non-compliance by law abiding citizens. In that view and without adjudicating the underlying merits, the Court granted interim protection and directed that the respondent be restrained from taking coercive steps for non-filing until the next date, while permitting the respondent to seek instructions or approach the Court with a considered solution to the impasse. [Paras 11, 14, 15]

Respondent restrained, until the next date of hearing, from taking any coercive action against the petitioners for failure to file the FC-4 return for 2019-2020 on account of the form's SBI, New Delhi account requirement introduced after the relevant date.

Final Conclusion: Interim order: petitioners are protected from coercive action for non-filing of the FC-4 return for 2019-2020 pending further hearing; respondent permitted to obtain instructions or move the Court with a resolution to the difficulty.

Leave to amend - interim stay of adjudication order - stay subject to deposit - writ jurisdiction and discretionary interim relief - statutory deposit requirement in appeals

Leave to amend - Amendment of the petition was permitted and the consolidated application seeking leave to amend was allowed. - HELD THAT: - The Court observed that consolidating the leave application with a prayer for interim relief was improper but nevertheless granted leave to the petitioners to amend their petition. The amendment is to be carried out within three weeks and amended copies are to be supplied to counsel for the respondents within the same period. This permission to amend was granted as a matter of procedural direction without adjudicating the substantive merits of the amended pleadings. [Paras 3]

Leave to amend granted; amendment to be completed and served on respondents within three weeks.

Interim stay of adjudication order - stay subject to deposit - writ jurisdiction and discretionary interim relief - statutory deposit requirement in appeals - Operation of the adjudication order dated 18/2/2021 was stayed on terms requiring deposit of 10% of the demanded amount. - HELD THAT: - The petitioners sought stay of the adjudication order on the basis that the substantive issue is covered by an earlier Division Bench decision and that, if the impugned circular were struck down, the demand would fall away. While the parties disputed whether a 7.5% or 10% deposit is appropriate under the statutory appeal regime, the Court declined to determine that issue on the merits. Exercising writ jurisdiction and its discretionary power to grant interim relief, the Court held that statutory deposit conditions do not strictly bind a writ petition and directed that the stay be granted provided the petitioners deposit 10% of the demanded amount with the Commissioner within four weeks. The Court made clear that failure to deposit within the period will vacate the interim stay without further reference. [Paras 6, 7, 8, 9, 10]

Stay granted on condition that petitioners deposit 10% of the demanded amount within four weeks; non-deposit will result in automatic vacatur of the stay.

Procedural timetable for pleadings and replies - Timelines for filing replies, completing pleadings, and moving for final disposal were fixed. - HELD THAT: - The Court granted respondents four weeks to file any replies to the amended petition and required the parties to complete pleadings in the main petition within two months. Once pleadings are complete, the petitioners were given liberty to seek a fixed date for final disposal, noting the parties' divergent positions on whether existing precedent covers the issue. The Court also recorded that the newly impleaded respondent (Commissioner of GST, Goa) will be represented by the respondents' counsel. [Paras 4, 5, 11]

Respondents to file replies within four weeks; pleadings to be completed within two months; liberty to apply for a fixed date thereafter; counsel to appear for newly impleaded respondent.

Final Conclusion: The application for leave to amend is allowed (amendment within three weeks); the adjudication order dated 18/2/2021 is stayed on condition the petitioners deposit 10% of the demanded amount within four weeks; respondents may file replies within four weeks and all pleadings are to be completed within two months, after which the petition may be listed for final disposal upon application.

Chargeability of interest on short payment of service tax - settlement under Section 32E of the Central Excise Act, 1944 - limits of judicial interference in settlement orders - reverse charge mechanism

Chargeability of interest on short payment of service tax - settlement under Section 32E of the Central Excise Act, 1944 - Interest was correctly levied by the Settlement Commission because the service provider charged service tax at 100% but paid only 50% to the Government, constituting short payment. - HELD THAT: - The Settlement Commission examined the informations and particulars furnished by the applicant and found, on admitted facts, that the petitioner raised bills charging 100% service tax but remitted only 50% to the Government, the balance having been reimbursed/paid by the service recipient under the reverse charge mechanism. The Commission concluded that this resulted in short payment by the service provider and accordingly interest is chargeable from the date the service tax became payable by the applicant, as alleged in the show cause notice. The High Court accepted the Commission's factual finding and reasoning in para 5.4 that the short payment attracts interest and that the adjudication by the Settlement Commission on the materials placed before it is not amenable to re adjudication in writ proceedings. The Court observed that if there is any apparent error on the face of the record or a factual mistake in the admitted statements, the petitioner is entitled to seek clarification or rectification before the Settlement Commission, which is the appropriate forum to address such grievances. [Paras 6, 7, 8, 9]

The Settlement Commission's levy of interest was upheld; the writ petition is dismissed and the petitioner may approach the Settlement Commission for rectification if any error apparent on record is shown.

Final Conclusion: The High Court declined to interfere with the Settlement Commission's order insofar as interest was concerned, holding that the interest was lawfully chargeable on the short payment established by the admissions before the Commission; the writ petition is disposed of, subject to the petitioner's remedy of seeking rectification from the Settlement Commission if an apparent error is shown.

Exemption under Entry 44 of the Fourth Schedule to the Tamil Nadu Value Added Tax Act, 2006 - exemption of VSF and PFA hank yarn - interpretation of Entry 44 in light of legislative language versus Budget Speech - quashing of show cause notice insofar as levy on VSF hank yarn

Exemption under Entry 44 of the Fourth Schedule to the Tamil Nadu Value Added Tax Act, 2006 - exemption of VSF and PFA hank yarn - Proposal to assess and levy sales tax on sale of Viscose Staple Fibre (VSF) hank yarn was unsustainable and set aside. - HELD THAT: - The Court relied upon the Division Bench decision in M/s. Aakavi Spinning Mills (W.A.No.947 of 2018) which interpreted Entry 44 by reference to its plain language and rejected an inference from the Finance Minister's Budget Speech that exemption was limited to cotton hank yarn. The Division Bench held that cotton hank yarn and other types of hank yarn, including VSF and PFA, are entitled to exemption under Entry 44. Applying that precedent, the Court held that the departmental proposal in the impugned notice to levy tax on VSF hank yarn cannot be sustained and therefore set aside the proposal in respect of VSF hank yarn. [Paras 2, 4]

Impugned proposal for levy of sales tax on VSF hank yarn quashed; issue of exemption in respect of VSF and PFA hank yarn held covered by Entry 44 and not chargeable.

Liberty to reply to other issues in show cause notice - remand for fresh consideration of other proposed tax issues - Other issues raised in the impugned show cause notice were not adjudicated and parties were granted liberty to reply; those issues remain open for consideration. - HELD THAT: - The Court limited its order to the specific proposal concerning levy on VSF hank yarn and declined to decide any other contentions raised in the impugned notice. The assessee was given liberty to file replies to any other issues proposed in the show cause notice (except the matter relating to hank yarn exemption) within 30 days, thereby leaving those issues for the authority to consider afresh in accordance with law. [Paras 3, 4]

Assessee permitted to reply to other issues in the show cause notice within 30 days; those issues remitted for fresh consideration and not finally adjudicated by this order.

Final Conclusion: The writ petition is disposed of by setting aside the departmental proposal to levy sales tax on VSF hank yarn in view of the Division Bench ruling that Entry 44 exempts VSF and PFA hank yarn; other issues in the show cause notice are left open and the assessee is granted liberty to reply within 30 days for further consideration.

Power to review, amend or revoke rulings - Authority for Clarification and Advance Ruling (ACAR) - affected parties - maintainability of review petition at the instance of dealer - good and sufficient cause - binding nature of advance ruling

Power to review, amend or revoke rulings - maintainability of review petition at the instance of dealer - affected parties - Whether a review under Section 67(5) of the AP VAT Act can be initiated by a dealer (an affected party) or is limited to suo motu action by the ACAR. - HELD THAT: - Section 67(5) confers on the Authority for Clarification and Advance Rulings the power to review, amend or revoke its rulings "at any time for good and sufficient cause by giving an opportunity to the affected parties." A plain reading of Section 67(5) does not restrict that power to only suo motu action by ACAR. The term "affected parties" contemplates dealers other than the original applicant who are bound by rulings under Section 67(4). Consistent judicial exposition in Tirupati Chemicals and Ors. v. The Deputy Commercial Tax Officer and Ors. supports that any dealer affected by an ACAR ruling is entitled to invoke review under Section 67(5) by showing "good and sufficient cause," and that the provision does not prescribe a limitation period for invocation. Earlier practice of ACAR entertaining review applications filed by dealers reinforces that a dealer-initiated review is permissible. Accordingly, a dealer who is affected by an ACAR ruling may file an application for review under Section 67(5). [Paras 7]

Review under Section 67(5) is maintainable at the instance of a dealer affected by an ACAR ruling; the power is not confined to suo motu action by ACAR.

Binding nature of advance ruling - good and sufficient cause - Whether the pendency of an appeal before the VAT Appellate Tribunal renders a dealer's review petition under Section 67(5) automatically untenable. - HELD THAT: - Though Section 67(3) and (4) recognise the binding effect of ACAR rulings and provide for appeal to the Tribunal, the court examined the factual circumstance that the Tribunal could not expeditiously hear the pending appeal owing to operational constraints. Given the urgency caused by an assessment notice and the practical inability to secure prompt adjudication before the Tribunal, the petitioner legitimately sought review from ACAR. The court held that, in the peculiar facts, the pendency of an appeal did not preclude entertaining a dealer's review petition, provided procedural safeguards are observed. The court directed that upon numbering of the review petition the petitioner must withdraw the appeal pending before the Tribunal before ACAR proceeds to consider the review, thereby avoiding parallel proceedings and protecting the appellate forum's primacy. [Paras 8]

Pendency of an appeal does not automatically bar a dealer from seeking review under Section 67(5) in exceptional circumstances; petitioner must withdraw the pending appeal before ACAR proceeds with the review.

Final Conclusion: Writ petition allowed; the endorsement that review under Section 67(5) is entertainable only suo motu is set aside. The ACAR is directed to consider the petitioner's review application dated 14.12.2020 and afford personal hearing and pass appropriate orders expeditiously, subject to the petitioner withdrawing the appeal pending before the VAT Tribunal; decision to be rendered within eight weeks of receipt of this order.

Re-opening of assessment - speaking order - Section 17 of the Wealth Tax Act, 1957 - parity with Section 147 of the Income-tax Act, 1961 - G.K.N.Driveshafts doctrine

Re-opening of assessment - speaking order - G.K.N.Driveshafts doctrine - Section 17 of the Wealth Tax Act, 1957 - parity with Section 147 of the Income-tax Act, 1961 - Whether the Assessing Officer was required to pass a speaking order when reopening assessments under Section 17 of the Wealth Tax Act, 1957, and whether the absence of such a speaking order vitiated the impugned assessment orders. - HELD THAT: - The court held that the procedure and safeguards laid down by the Hon'ble Supreme Court in G.K.N.Driveshafts apply to reopening of assessments under the Wealth Tax Act because Section 17 of the Wealth Tax Act is pari materia with Section 147 of the Income-tax Act. The facts show no speaking order was issued prior to the impugned assessment orders. In view of the binding principle that reasons for reopening must be communicated in a speaking order so as to enable effective participation and to test the Assessing Officer's belief, the impugned orders cannot stand. Consequently, the assessment orders for the specified assessment years were set aside and the matter was remitted to the Assessing Officer for fresh consideration in accordance with law and the procedure mandated by G.K.N.Driveshafts, with opportunity given to the petitioner to participate (including by video conferencing if necessary). [Paras 2, 7, 8, 9]

Impugned assessment orders set aside; matter remitted to the respondent to pass speaking orders on merits in accordance with law and G.K.N.Driveshafts within three months, with opportunity to the petitioner to participate.

Final Conclusion: Writ petitions disposed of by quashing the assessment orders for the three assessment years and remitting the matter for fresh speaking orders in accordance with the G.K.N.Driveshafts principle; compliance to be completed within three months and the petitioner to be heard, including by video conferencing.

Right to reasonable opportunity to defend - right to cross-examination - right to lead defence evidence - fair trial and trial fairness - conviction under Section 138 of the Negotiable Instruments Act, 1881 - remand for fresh opportunity to adduce defence evidence

Right to reasonable opportunity to defend - right to cross-examination - fair trial and trial fairness - Accused was denied a reasonable opportunity to further cross-examine the complainant and to present defence evidence. - HELD THAT: - The Trial Court's proceedings show that after the complainant's examination-in-chief, further cross-examination of P.W.1 was adjourned and only partially completed. The accused's first request for adjournment to continue cross-examination was rejected without the Order Sheet recording reasons. Subsequent applications under Section 311 Cr.P.C. to recall P.W.1 were rejected on the same or subsequent dates, and the accused was not afforded sufficient time to challenge those rejections before an appropriate forum. When the matter was ultimately posted for defence evidence on a fixed date, the accused's request for adjournment was refused and defence evidence was recorded as 'nil'; defendant's arguments were likewise treated as 'heard' after an adjournment request was denied. The Sessions Court's cursory observation that several opportunities were given was held to be an inadequate appraisal of the Trial Court record. Balancing the need for expeditious disposal with the duty to ensure parties a fair opportunity to present their case, the High Court concluded that the aggregate of rejections and limited accommodation amounted to denial of a reasonable opportunity to cross-examine P.W.1 and to lead defence evidence, thereby affecting the fairness of the trial. [Paras 14, 15, 16, 17]

Findings of the Trial Court and the Sessions Judge show denial of a reasonable opportunity to the accused to further cross-examine P.W.1 and to lead defence evidence; this ground warrants interference.

Remand for fresh opportunity to adduce defence evidence - conviction under Section 138 of the Negotiable Instruments Act, 1881 - Whether the convictions and sentences should be set aside and the matter remanded for trial court to grant fresh opportunity to the accused. - HELD THAT: - Given the concluded finding that the accused was not afforded a reasonable opportunity to cross-examine the complainant and to lead defence evidence, the High Court held that the convictions recorded by the Trial Court and affirmed by the Sessions Court could not stand. Rather than deciding the merits afresh, the Court set aside the impugned judgments and remanded the criminal case to the Trial Court with directions to permit the accused to further cross-examine P.W.1 and to lead defence evidence if she elects to do so. The Court also directed the parties to appear before the Trial Court on a specified date and requested the Trial Court to dispose of the matter at the earliest, preferably within a limited time frame, to avoid further delay. [Paras 17]

Impugned judgments of conviction and sentence set aside; matter remanded to the Trial Court for disposal after granting the accused an opportunity to further cross-examine P.W.1 and to lead defence evidence if she so desires.

Final Conclusion: The High Court allowed the revision, set aside the convictions and sentences recorded by the Trial Court and affirmed by the Sessions Court, and remanded the criminal case for fresh disposal after granting the accused an opportunity to further cross-examine the complainant and to lead defence evidence, with directions for expeditious trial.

Arbitration clause - Existence of arbitrable dispute - Effect of statutory tax-rate change on contract price - Appointment of retired judicial officer as Sole Arbitrator - Reference to Arbitration Centre - Karnataka (Domestic & International) Rules, 2012

Arbitration clause - Existence of arbitrable dispute - Effect of statutory tax-rate change on contract price - Appointment of retired judicial officer as Sole Arbitrator - Whether there exists a dispute between the parties falling within the arbitration clause and whether a retired District Judge should be appointed as Sole Arbitrator to enter reference of the dispute. - HELD THAT: - The Court examined the contract clause providing that disputes arising out of the agreement shall be referred to arbitration under the Arbitration Centre - Karnataka (Domestic & International) Rules, 2012. The petitioner contends that the agreed unit prices were inclusive of all taxes and that there was no contractual mechanism permitting unilateral reduction of the agreed price upon a change in the applicable GST rate; the respondent contends that a Finance Department opinion on GST reduction precludes any dispute. The Court prima facie concluded that the controversy - specifically whether the respondent could insist on a reduction of the agreed cost per unit consequent to the reduction in GST rate - falls within the scope of an arbitrable dispute under the agreement. The petitioner had invoked the arbitration clause by issuing a legal notice and nominated a retired District Judge as Sole Arbitrator, but the respondent did not accept that nomination. In view of these facts and the contractual arbitration agreement, the Court found it appropriate to appoint the nominated retired judicial officer as Sole Arbitrator to enter reference and conduct the arbitration under the rules of the designated Arbitration Centre. The Court expressly left all substantive contentions open for decision by the arbitral tribunal. [Paras 5]

Petition allowed; Smt. H.S. Kamala, retired District Judge, appointed as Sole Arbitrator to enter reference of the dispute and conduct arbitration at the Arbitration and Conciliation Centre (Domestic and International), Bengaluru; all contentions left open for determination in arbitration; registry to communicate the order to the Centre and the arbitrator.

Final Conclusion: The High Court held that a prima facie arbitrable dispute exists regarding the respondent's unilateral reduction of the agreed contract price following a GST-rate change, permitted appointment of the nominated retired District Judge as Sole Arbitrator to enter reference and conduct arbitration under the Arbitration Centre rules, and left all substantive issues to be decided by the arbitral tribunal.