TaxTMI Updates e-Newsletter
Jul 23,2024

Penalty under Section 74 of the TNGST Act - Interference under Article 226 of the Constitution - Maintainability of writ petitions challenging assessment orders under GST - Time-bar / laches in filing writ petitions - Availability of statutory appellate remedy

Penalty under Section 74 of the TNGST Act - Interference under Article 226 of the Constitution - Maintainability of writ petitions challenging assessment orders under GST - Whether the writ petitions challenging assessment orders passed under Section 74 of the TNGST Act warrant interference under Article 226. - HELD THAT: - The Court held that the impugned orders passed under Section 74 of the respective GST enactments do not call for interference under Article 226. The scope for judicial interference in such statutory assessment and penalty orders is limited and, on the material before it, there were no extenuating circumstances justifying relief. The petitioner, a small-time contractor who admitted mistakes and had paid the disputed tax with interest, failed to establish grounds for the Court to exercise writ jurisdiction to reduce or set aside the penalty levied under Section 74. The Court noted that law as understood does not permit reduction of penalty contrary to the statutory mandate in Section 74 and that the petitioner may press grievances before the prescribed appellate fora. [Paras 12, 13, 14]

Writ petitions dismissed on merits; no interference with the Section 74 orders under Article 226.

Time-bar / laches in filing writ petitions - Maintainability of writ petitions challenging assessment orders under GST - Whether the writ petitions were time-barred and liable to be dismissed on account of laches. - HELD THAT: - The respondent urged that the petitions filed on 08.04.2024 against orders dated 16.05.2023 were hopelessly time-barred and liable to be dismissed in the light of Supreme Court authorities on delay and laches. The Court recorded this contention (noting the submission and relevant precedent) but ultimately did not rest its dismissal solely on the ground of delay; instead the Court dismissed the petitions on the substantive view that interference was not warranted. Thus the plea of laches was considered but not adopted as the sole basis for dismissal. [Paras 9, 12]

Delay/laches was urged by the respondent and noted, but the Court dismissed the petitions on substantive grounds rather than solely on time-bar.

Availability of statutory appellate remedy - Maintainability of writ petitions challenging assessment orders under GST - Whether the petitioner should be permitted to pursue statutory appellate remedies despite dismissal of the writ petitions. - HELD THAT: - Although the writ petitions were dismissed, the Court granted the petitioner liberty to file the statutory appeal within a limited period. The Court observed that the petitioner may ventilate grievances before the Appellate Authority or further appellate fora in the hierarchy prescribed under the GST enactments, and that arguments as to the harsh operation of Section 74 may be pursued before the Division Bench if a challenge to vires is raised. In consequence, a curtailed opportunity to prefer the statutory appeal was provided. [Paras 14, 15]

Liberty granted to file statutory appeal within 30 days from receipt of the order.

Final Conclusion: Writ petitions dismissed; Court declined to interfere with assessment and 100% penalty orders under Section 74 of the TNGST Act, while permitting the petitioner liberty to file the statutory appeal within 30 days.

Quash and remit for fresh adjudication - liability of legal representative under Section 93 of the CGST Act, 2017 - opportunity to be heard/right to defend tax liability

Quash and remit for fresh adjudication - liability of legal representative under Section 93 of the CGST Act, 2017 - Impugned orders passed after the death of the taxable person are quashed and the matter remitted for fresh decision on merits, with recognition that the petitioner may be liable as legal representative under Section 93. - HELD THAT: - The Court noted that the impugned order and consequential demand orders were rendered after the death of the petitioner's father and that, while a legal representative may be liable to be taxed under Section 93 of the CGST Act, 2017, the petitioner must be afforded a proper opportunity to defend the tax liability. Following the reasoning and relief granted in the petitioner's earlier writ (W.P(MD)No.11646 of 2024), the Court found the case fit for quashing of the impugned order and remitting the matter to the respondent to pass fresh orders on merits and in accordance with law. The remand is directed because the impugned order was passed post the death of the taxable person and therefore requires fresh adjudication ensuring procedural fairness to the legal representative.

Impugned order quashed; matter remitted for fresh adjudication on merits with recognition that the petitioner may be liable as legal representative under Section 93.

Opportunity to be heard/right to defend tax liability - quash and remit for fresh adjudication - Procedural directions on service of notice, opportunity to reply and timeline for fresh adjudication were issued while remitting the matter. - HELD THAT: - The Court directed that the notice which preceded the impugned order be served on the petitioner within 30 days of receipt of the judgment, treating the impugned order as an addendum to the show cause notice. The petitioner was expected to reply to the show cause notice within two months of service, after which the respondent was to endeavour to pass fresh orders on merits and in accordance with law expeditiously, preferably within three months. The Court emphasised that the petitioner shall be heard and shall cooperate with the respondent, thereby safeguarding the petitioner's right to defend the asserted tax liability during the remand proceedings.

Respondent directed to serve notice within 30 days; petitioner to reply within two months; respondent to pass fresh orders preferably within three months thereafter, with opportunity to be heard.

Final Conclusion: Writ petition allowed. The impugned orders, passed after the death of the taxable person, are quashed and the matter is remitted for fresh adjudication on merits, with directions for service of notice, timelines for reply and disposal, and an express provision that the petitioner be given an opportunity to defend any liability as legal representative under Section 93 of the CGST Act, 2017.

Proceedings against a non-existent company - effect of approved scheme of amalgamation on transfer of liabilities - invalidity of show-cause notices issued to a dissolved/amalgamating entity - intimation of amalgamation and cancellation of registration

Proceedings against a non-existent company - effect of approved scheme of amalgamation on transfer of liabilities - invalidity of show-cause notices issued to a dissolved/amalgamating entity - intimation of amalgamation and cancellation of registration - Whether the show-cause notices/endorsements in Form GST DRC-01 issued to M/s. Trelleborg Sealing Solutions (India) Private Limited, a non-existent entity after an approved scheme of amalgamation, are maintainable. - HELD THAT: - The Court noted that the Scheme of Amalgamation was approved by the NCLT on 13.06.2017 and the amalgamating company ceased to exist on the effective amalgamation date; thereafter the transferee company represents the new entity. The petitioner also filed for cancellation of registration of the amalgamating company (application dated 29.11.2021; order of cancellation dated 03.12.2021 with effective cancellation date 29.11.2021). In view of the binding principle in Principal Commissioner of Income Tax v. Maruti Suzuki (India) Limited [(2020) 18 SCC 331] and consistent decisions of this Court, once an amalgamating entity ceases to exist pursuant to an approved scheme, proceedings cannot be continued against the non-existent company. The show-cause notices/endorsements at Annexure 'A' were therefore issued to a non-existent entity and are invalid. The Court observed that the respondents remain at liberty to pursue proceedings against the appropriate entity (the transferee/continuing entity) as permissible in law, but the present notices insofar as addressed to the dissolved/amalgamated company cannot be sustained. All other contentions were left open.

The proceedings by reason of the show-cause notices/endorsements in Form GST DRC-01 issued to the non-existent amalgamating company are set aside; respondents may pursue the appropriate entity in accordance with law.

Final Conclusion: Writ petitions allowed to the extent that notices/endorsements in Form GST DRC-01 issued to the amalgamating company are quashed as issued to a non-existent entity; respondents remain free to proceed against the appropriate transferee/continuing entity in accordance with law.

Refund of IGST paid on exports - Prohibition under Rule 96(10) of the CGST Rules - Refund of unutilised input tax credit under Rule 89 of the CGST Rules - Section 16(3) of the IGST Act - conditions and safeguards for refund - Procedural irregularity not to defeat substantive entitlement to export incentives - Remand for fresh adjudication in light of amendment to Rule 96 and CBIC Instruction

Refund of IGST paid on exports - Prohibition under Rule 96(10) of the CGST Rules - Section 16(3) of the IGST Act - conditions and safeguards for refund - Whether the refund of IGST claimed by the petitioner under Rule 96 was precluded by Rule 96(10) and Section 16(3), and whether the petitioner should be denied refund on that basis. - HELD THAT: - The court recognised that Rule 96(10) bars persons who have availed specified notifications (including Notification No.48/2017 and Customs Notifications No.78/79/2017) on procurement of inputs from claiming refund of IGST paid on exports under Rule 96, consistent with the conditionality in Section 16(3) of the IGST Act. It was, however, held that the petitioner - a 100% Export Oriented Unit which admittedly made exports and had claimed refunds based on shipping bills - had wrongly availed refunds under Rule 96 despite being within the ambit of Rule 96(10). Notwithstanding that procedural error, the court emphasised that procedural irregularity should not defeat a legitimate substantive entitlement to export incentives and that the petitioner may be entitled to relief under the appropriate refund mechanism (Rule 89), rather than outright forfeiture of the claimed benefit. The court therefore declined to sustain the impugned demand solely on the ground of procedural contravention of Rule 96(10) without re-examination under the correct refund provisions. [Paras 10, 11, 12]

The court found that although Rule 96(10) bars refund under Rule 96 where the specified notifications were availed, the petitioner's substantive entitlement to export-related refund requires re-examination under Rule 89 and cannot be defeated by procedural irregularity.

Refund of unutilised input tax credit under Rule 89 of the CGST Rules - Remand for fresh adjudication in light of amendment to Rule 96 and CBIC Instruction - Procedural irregularity not to defeat substantive entitlement to export incentives - Whether the impugned Order-in-Original should be set aside and the matter remitted for fresh adjudication of refund eligibility under Rule 89 in light of subsequent amendments and administrative instructions. - HELD THAT: - Applying the principle that procedural rules are handmaids of justice and should not defeat substantive rights, the court set aside the impugned order and remitted the matter to the fifth respondent for fresh adjudication of the petitioner's entitlement to refund under Rule 89 of the CGST Rules read with Section 16(3) of the IGST Act. The court directed that the fifth respondent take into account the amendment to Rule 96 (sub-rule 5A) and Instruction No.04/2022-GST (F.No.CBEC-20/08/02/2020-GST/1377-78) dated 28.11.2022 when re-processing the claim. The exercise of fresh adjudication was ordered to be completed within three months from receipt of the judgment copy. [Paras 12, 14]

Impugned order set aside and matter remitted to the fifth respondent to re-examine and decide the refund claim under Rule 89 in terms of Section 16(3) IGST Act and the subsequent amendments/instruction, to be completed within three months.

Final Conclusion: The writ petition is allowed to the extent that the impugned Order-in-Original is quashed and the matter is remitted to the fifth respondent to re-adjudicate the petitioner's refund claim under Rule 89 read with Section 16(3) of the IGST Act, taking note of the amendment to Rule 96 and CBIC Instruction, within three months; no costs.

Classification as drug or cosmetic - Entry 36 vs Entry 37 of Schedule I (APGST Act) - scope of definition of "cosmetic" under the Drugs and Cosmetics Act - scope of definition of "drug" under the Drugs and Cosmetics Act - dominant/primary use test (capable of being used as cosmetic) - reliance on composition, licensing and ayurvedic literature for classification

Classification as drug or cosmetic - Entry 36 vs Entry 37 of Schedule I (APGST Act) - scope of definition of "drug" under the Drugs and Cosmetics Act - reliance on composition, licensing and ayurvedic literature for classification - Himani Sonachandi Chavanprash is a drug and not a cosmetic - HELD THAT: - The product's label, composition (approximately fifty-two herbs and minerals, including gold, silver and saffron), references in classical ayurvedic texts and the licence obtained under the Drugs and Cosmetics Act were accepted by STAT and affirmed by this Court. The Court contrasted the statutory definition of "cosmetic" (articles applied externally for beautifying, cleansing or altering appearance) with the definition of "drug" which expressly covers substances intended for internal use and for treatment, mitigation or prevention of disease. Sonachandi Chavanprash is edible and claimed for therapeutic benefits (improving eyesight and complexion, building immunity, strengthening teeth and bones, improving stomach function, building body and energy), bringing it within the definition of a drug and Entry 37 rather than Entry 36 of Schedule I. [Paras 13, 17]

Finding of STAT that Sonachandi Chavanprash is a drug is affirmed.

Classification as drug or cosmetic - Entry 36 vs Entry 37 of Schedule I (APGST Act) - reliance on composition, licensing and ayurvedic literature for classification - Himani Boroplus Antiseptic Cream is a drug and not a cosmetic - HELD THAT: - The product's name, declared antiseptic composition and the detailed composition (ingredients with medicinal properties and references to ayurvedic texts) demonstrated predominant medicinal character. The cream is used for preventive and curative purposes (dry skin diseases, cuts, burns, wounds, chapped skin, furuncle, impetigo, intertrigo) and is not a mere facial/body cosmetic or toiletry. The Court accepted STAT's finding that the product is a medicated ayurvedic ointment with curative effect and, absent contrary material from the Department, declined to interfere with that well-reasoned factual conclusion, holding it to fall within Entry 37 of Schedule I. [Paras 18, 20, 21]

Finding of STAT that Boroplus Antiseptic Cream is a drug is upheld.

Classification as drug or cosmetic - Entry 36 vs Entry 37 of Schedule I (APGST Act) - dominant/primary use test (capable of being used as cosmetic) - reliance on composition, licensing and common parlance - Himani Boroplus Prickly Heat Powder is a drug and not a cosmetic - HELD THAT: - The Tribunal's analysis, adopted by this Court, examined whether the product was covered by the exclusion for items 'capable of being used' as cosmetics/toiletries and applied the primary-use test. The product contains medicinal ingredients (Jasad Bhasma/zinc oxide, Tankan Amla/boric acid, salicylic acid and other antiseptic components) and is formulated for treatment/prevention of skin conditions. The Court distinguished legislative classifications adopted in other States and relied on composition, therapeutic purpose, licensing and judicial precedents and common parlance to conclude that Boroplus Prickly Heat Powder possesses predominant medicinal character and falls within Entry 37 rather than Entry 36. [Paras 22, 31, 32]

Finding of STAT that Boroplus Prickly Heat Powder is a drug is upheld and challenge by Department is rejected.

Classification as drug or cosmetic - Entry 36 vs Entry 37 of Schedule I (APGST Act) - reliance on composition, licensing and ayurvedic literature for classification - Himani Navaratan Oil is a drug and not a cosmetic - HELD THAT: - The product's composition, references to ayurvedic texts and the licence as an ayurvedic product were accepted as demonstrating therapeutic claims (keeping head cool, relieving headache, promoting sleep, aiding memory, toning muscles, treating minor burns and cuts, preventing premature hair fall) beyond cosmetic purposes. The Tribunal's classification of Navaratan Oil as a cosmetic was set aside because, on the material produced and in the absence of persuasive contrary evidence, the Court found the product's dominant character to be medicinal, bringing it within Entry 37 of Schedule I. [Paras 36, 38, 40]

Order of STAT holding Navaratan Oil to be a cosmetic is set aside; Navaratan Oil is held to be a drug under Entry 37.

Classification as drug or cosmetic - Entry 36 vs Entry 37 of Schedule I (APGST Act) - reliance on composition, licensing and ayurvedic literature for classification - Himani Gold Turmeric Ayurvedic Cream is a drug and not a cosmetic - HELD THAT: - The product was licensed as an ayurvedic drug; its label claims therapeutic uses (healing cracked skin, pimples, boils, antiseptic and anti-microbial effects) and the composition (high proportion of turmeric and other ayurvedic extracts with textual references) establishes medicinal character. The Tribunal's finding that it was a cosmetic was reversed because the product is marketed and licensed as an ayurvedic medicine and is not promoted as enhancing complexion or purely as a toiletry, thereby falling within Entry 37 of Schedule I. [Paras 41, 42, 43]

Order of STAT holding Gold Turmeric Ayurvedic Cream to be a cosmetic is set aside; the product is held to be a drug under Entry 37.

Final Conclusion: The Court upheld STAT's classification of Himani Sonachandi Chavanprash, Himani Boroplus Antiseptic Cream and Himani Boroplus Prickly Heat Powder as drugs (Entry 37) and set aside STAT's classification of Himani Navaratan Oil and Himani Gold Turmeric Ayurvedic Cream as cosmetics, holding them to be drugs (Entry 37). Tax Revision Cases filed by the Department are rejected; Tax Revision Cases filed by the assessees are allowed. No costs.

Breach of principles of natural justice - remand for fresh consideration - opportunity of personal hearing - conditional interim relief - composition scheme returns in Form GSTR 4 - comparison of inward supply (GSTR-2A) and outward supply

Breach of principles of natural justice - opportunity of personal hearing - remand for fresh consideration - conditional interim relief - Impugned order confirming a tax proposal was set aside on grounds of breach of natural justice and remanded for fresh consideration on conditions. - HELD THAT: - The court found that the tax proposal had been confirmed because the petitioner did not reply to the show cause notice and that the proposal arose from a comparison between inward supplies as reflected in GSTR-2A and outward supplies. The petitioner placed on record that it had opted for the composition scheme and filed quarterly returns in Form GSTR 4, which warranted reconsideration. In the interest of justice the court set aside the impugned order but imposed conditional interim relief: the petitioner was directed to remit 10% of the disputed tax demand within two weeks of receiving this order and permitted to submit a reply to the show cause notice within that period. Upon receipt of the petitioner's reply and satisfaction that the 10% was remitted, the respondent was directed to afford a reasonable opportunity, including a personal hearing, and to pass a fresh order within three months from receipt of the reply. The court thereby addressed the procedural infirmity by ensuring a fresh adjudicatory process while putting the petitioner on terms to prevent prejudice to revenue.

Impugned order dated 22.12.2023 set aside; matter remanded for fresh consideration on the petitioner remitting 10% of disputed tax within two weeks, filing a reply within that period, and thereafter being afforded a personal hearing before a fresh order is passed within three months.

Final Conclusion: Writ petition allowed in part: impugned order set aside and matter remanded for fresh consideration on the stated conditions; no costs.

Maintainability of appeal against release order - option to pay demanded tax and avoid adjudication - seizure, payment and release of goods - refund application and right to adjudication - operation of Section 129 of the SGST Act in cases of seizure and adjudication

Maintainability of appeal against release order - seizure, payment and release of goods - Whether the order releasing the seized goods after payment (Ext. P5) required a formal adjudication under the statute and whether an appeal against Ext. P5 was maintainable. - HELD THAT: - The Court held that at the time of seizure the appellant had an option to either pay the amounts demanded and thereby obtain release of the goods or to contest the seizure and insist upon a formal adjudication. By choosing to make the payment the appellant availed the statutory route which results in release of the goods; Ext. P5 was a release order given in consequence of that payment and recorded that the authorities were not proceeding to determine tax and penalty. An appeal was therefore filed against an order which was in the appellant's favour; the Court found no merit in the contention that Ext. P5 required a separate adjudication under Section 129. The proper remedy, if payment was alleged to be a mistake, was to seek refund and press for adjudication on the refund claim rather than to contend that Ext. P5 was not an order contemplated by the statute. [Paras 4, 5]

Ext. P5 was a release order consequent to payment; an appeal against that release order was not rendered invalid on the ground that there was no separate adjudication, and the appellant's course of action (payment followed by appeal) cannot now be allowed to reframe the remedy.

Refund application and right to adjudication - option to pay demanded tax and avoid adjudication - Whether the appellant's remedy lay in seeking refund and adjudication and whether delay in approaching the Court precluded relief. - HELD THAT: - The Court observed that if the payment was made by mistake the appellant should have preferred an application for refund of the tax/penalty paid and sought adjudication on the refund application. Instead, the appellant preferred an appeal against the release order and suffered dismissal of that appeal on the ground of delay. Having waited more than seven years after the release of the goods to approach the Court, the appellant could not be permitted to now challenge the course it itself chose. The Single Judge's dismissal of the writ petition, including on the ground of delay, was affirmed. [Paras 5, 6]

The appellant ought to have invoked the refund-adjudication route if payment was a mistake; in the absence of that and given the long delay, the writ petition could be dismissed.

Final Conclusion: Writ Appeal dismissed; the appellate course taken by the appellant after payment and release of goods was not a ground to require fresh adjudication under Section 129, and in view of the appellant's election to pay and the inordinate delay the High Court affirmed dismissal of the writ petition.

Input Tax Credit mismatch between GSTR-2A and GSTR-3B - Turnover mismatch between GSTR-1 and e-way bill portal - Principles of natural justice / right to be heard - Remand for fresh consideration - Personal hearing - Bank attachment / raising of attachment

Input Tax Credit mismatch between GSTR-2A and GSTR-3B - Turnover mismatch between GSTR-1 and e-way bill portal - Principles of natural justice / right to be heard - Remand for fresh consideration - Personal hearing - Whether the assessment order could be sustained despite the assessing authority not considering the petitioner's replies on ITC and turnover mismatches and whether the matter required fresh consideration. - HELD THAT: - The Court examined the show cause notice, the petitioner's reply and the impugned order and found that the petitioner's specific contentions - that month-wise ITC available in GSTR-2A exceeded ITC claimed in GSTR-3B and that taxes due on account of turnover reflected in the e-way bill portal had been discharged and declared in returns - were not taken into consideration. In view of these omissions and to secure compliance with the principles of natural justice, the High Court held that the assessment could not be sustained without fresh consideration. The matter is therefore remitted to the first respondent for reconsideration after giving the petitioner a reasonable opportunity, including a personal hearing, and a fresh order is to be issued within three months from receipt of a copy of the order.

Impugned order dated 30.01.2024 set aside and the assessment remanded for fresh consideration after providing reasonable opportunity and personal hearing; fresh order to be passed within three months.

Bank attachment / raising of attachment - Whether the bank attachment effected pursuant to the impugned assessment order should continue pending reconsideration. - HELD THAT: - Since the assessment order was set aside and remitted for fresh consideration, the Court directed that the consequential recovery measure in the form of bank attachment be lifted. The lifting of the attachment follows from the setting aside of the order on merits and the remand for fresh adjudication.

Bank attachment is raised (lifted) consequent to setting aside of the impugned assessment order.

Final Conclusion: Impugned assessment order dated 30.01.2024 set aside and remitted for fresh consideration; petitioner to be afforded a reasonable opportunity including personal hearing and a fresh order to be passed within three months; consequential bank attachment lifted; writ disposed of with no costs.

Quashing of assessment order - remand for fresh adjudication on merits - opportunity of hearing before final order - conditional interim relief subject to deposit of disputed tax - assessment based on mismatch between GSTR-2A and GSTR-3B - limitation pleaded

Quashing of assessment order - remand for fresh adjudication on merits - Impugned assessment order dated 28.12.2023 set aside and proceedings remanded for fresh decision - HELD THAT: - The High Court quashed the assessment order passed on 28.12.2023 and directed that the impugned order shall stand treated as an addendum to the show cause notices. The court expressly declined to consider or express any opinion on the merits of the tax demand, and instead remitted the matter to the assessing authority for fresh adjudication on merits and in accordance with law. The remand requires the assessing authority to hear the petitioner before passing final orders. [Paras 3]

Impugned order quashed and matter remanded to the respondent for fresh adjudication on merits

Opportunity of hearing before final order - conditional interim relief subject to deposit of disputed tax - Petitioner granted one opportunity to reply subject to deposit condition and timeline for fresh order - HELD THAT: - The court directed that the petitioner shall deposit 25% of the disputed tax from its Electronic Cash Register within 30 days of receipt of the order and file a reply within the same period. On receipt of the reply and deposit, the respondent is directed to pass a fresh order on merits within two months thereafter. The court mandated that the petitioner shall be heard before final orders are passed. The court framed these directions as conditions for granting the opportunity and for continuation of the adjudicatory process, without adjudicating the substantive tax contentions. [Paras 3, 4]

Petitioner to deposit 25% of disputed tax and file reply within 30 days; respondent to pass fresh order within two months after hearing

Final Conclusion: Writ petition allowed; impugned assessment order dated 28.12.2023 quashed and remitted for fresh adjudication for assessment year 2017-18, subject to petitioner depositing 25% of the disputed tax and filing a reply within 30 days; fresh decision to be rendered within two months thereafter.

Quashing and remand of assessment orders - opportunity of hearing before fresh adjudication - conditional interim relief by deposit of part of disputed tax - treatment of notices uploaded on GST common portal - entitlement to input tax credit

Quashing and remand of assessment orders - conditional interim relief by deposit of part of disputed tax - opportunity of hearing before fresh adjudication - treatment of notices uploaded on GST common portal - Whether the impugned assessment orders for the assessment years 2017-18 to 2019-20 should be quashed and remitted for fresh consideration and on what terms. - HELD THAT: - The writ petitions challenging the assessment orders for the stated assessment years were entertained despite the petitioner's non-response to pre-decisional notices on the ground that the petitioner asserted unawareness of notices uploaded on the GST common portal. Balancing the parties' interests and having regard to the bar on filing an appeal in the factual matrix noted, the Court exercised supervisory jurisdiction to set aside the impugned orders and remand the matter for fresh adjudication. The Court directed conditional interim relief: the petitioner must deposit 25% of the disputed tax from the Electronic Cash Register within 30 days of receipt of the order, failing which the interim arrangement would cease. The petitioner is required to file a consolidated reply within the same period; the impugned orders are quashed and to be treated as addenda to the show cause notices. The respondent is directed to pass a fresh order on merits in accordance with law within two months thereafter, after affording the petitioner an opportunity of hearing. The Court's order preserves the substantive contest (notably the petitioner's contention regarding classification of supplies as B2C vs B2B and entitlement to input tax credit) for fresh decision by the assessing authority rather than deciding those merits on writ review. [Paras 7, 8, 9]

Impugned assessment orders quashed and remanded for fresh adjudication on merits subject to deposit of 25% of disputed tax within 30 days; petitioner to file consolidated reply within that period; respondent to decide afresh within two months after hearing the petitioner.

Final Conclusion: Writ petitions allowed: assessment orders for 2017-18 to 2019-20 quashed and remitted for fresh decision on the terms that the petitioner deposits 25% of the disputed tax from the Electronic Cash Register within 30 days, files a consolidated reply, and the respondent passes a fresh order after hearing the petitioner within two months.

Cancellation and revocation of GST registration - Restoration subject to compliance with tax, interest and fee - Requirement to file returns for pre-cancellation and post-cancellation periods - Prohibition on utilization of Input Tax Credit pending departmental scrutiny and approval - Revival of registration upon payment of tax, penalty and uploading of returns - Direction to instruct GST Network to enable portal functionality

Restoration subject to compliance with tax, interest and fee - Requirement to file returns for pre-cancellation and post-cancellation periods - Revival of registration upon payment of tax, penalty and uploading of returns - Registration cancelled on 04.03.2022 was ordered to be restored subject to specified compliance by the petitioner. - HELD THAT: - The Court directed that the petitioner must file all not-yet-filed returns for the period prior to cancellation together with outstanding tax, interest and the fee for belated filing within forty five days from receipt of the order. The petitioner was also directed to pay GST and file returns for the period subsequent to cancellation by declaring the correct value of supplies. The order provides that on payment of tax, penalty and uploading of the requisite returns the GST registration shall stand revived forthwith. The writ petition was disposed accordingly on these conditional terms.

Petition allowed in part: registration to be revived on fulfillment of the specified filing and payment conditions within the prescribed time.

Prohibition on utilization of Input Tax Credit pending departmental scrutiny and approval - Revival of registration upon payment of tax, penalty and uploading of returns - Any unutilized Input Tax Credit (ITC) could not be used to pay the tax, interest, fee or penalty and could be utilized only after departmental scrutiny and approval. - HELD THAT: - The Court expressly prohibited payment or adjustment of outstanding tax, interest, fine or fee from any ITC lying unutilized or unclaimed with the petitioner. Where ITC remained unutilized, it was ordered not to be utilized until it was scrutinized and approved by an appropriate or competent officer; only such approved ITC could thereafter be used for discharging future tax liability. This condition was made part of the restoration mechanism to ensure departmental verification before ITC utilization.

ITC not to be adjusted against outstanding liabilities and to be utilized only after departmental scrutiny and approval.

Direction to instruct GST Network to enable portal functionality - Respondent was directed to take steps to enable the GST portal to permit the petitioner to file returns and pay tax/penalty/fine. - HELD THAT: - The Court directed the respondent to instruct the GST Network, New Delhi to effect necessary changes in the architecture of the GST web portal so as to allow the petitioner to file returns and make the requisite payments. The respondent was required to carry out this exercise within thirty days from receipt of a copy of the order, thereby facilitating compliance by the petitioner and operationalising the conditional revival.

Respondent to ensure portal changes via GST Network within thirty days to enable filing and payment.

Final Conclusion: The writ petition was disposed of by directing conditional revival of the GST registration on the petitioner's filing of pre- and post-cancellation returns and payment of tax, interest, fee and penalties within specified timeframes; ITC could not be used to meet those liabilities until it was scrutinized and approved, and the respondent was directed to coordinate with GST Network to enable portal functionality within thirty days.

Availment of Input Tax Credit in respect of ineligible commodities under Section 17(5) - recovery of Input Tax Credit due to supplier's non-payment of tax - burden of proof on taxpayer for entitlement to Input Tax Credit - assessment order requiring documents not specified in the show cause notice - remand for fresh consideration with opportunity of hearing

Availment of Input Tax Credit in respect of ineligible commodities under Section 17(5) - Input Tax Credit - Impugned order contains no findings on the claim of Input Tax Credit for MS Scrap classified under HSN 7204 and that matter requires fresh consideration. - HELD THAT: - The petitioner responded to the show cause notice asserting that materials classified under HSN 7204 (MS Scrap) were procured and used in furtherance of business and therefore did not fall within the scope of Section 17(5). Relevant invoices and e-way bills were enclosed with the reply. The High Court observed that the impugned order contains no discussion or finding addressing this specific contention. In the absence of any adjudicatory finding on this issue, the order cannot be sustained and the matter is set aside and remanded for reconsideration so that the claim may be examined and a reasoned finding recorded. [Paras 1, 4, 5, 6]

Order set aside and the claim regarding Input Tax Credit on MS Scrap remitted for fresh consideration with liberty to the petitioner to file additional documents.

Recovery of Input Tax Credit due to supplier's non-payment of tax - burden of proof on taxpayer for entitlement to Input Tax Credit - assessment order requiring documents not specified in the show cause notice - Confirmation of tax proposal on the ground that the petitioner failed to establish movement of goods by producing lorry receipts, weighment slips and payments - when such documents were not called for in the show cause notice - is unsustainable and the matter is remanded. - HELD THAT: - The show cause notice proceeded on the basis that a supplier's registration was cancelled and that the supplier had not paid taxes, calling upon the petitioner to show cause why Input Tax Credit should not be recovered. The petitioner furnished sales invoices, e-way bills and proof of filing of returns by the supplier. The assessing officer confirmed the proposal relying on absence of lorry receipts, weighment slips and proof of payments to the supplier; however, those documents were not requisitioned in the show cause notice and the order rests on a different factual basis than the notice. While the Court noted the statutory principle that the burden of proof on the taxpayer lies in establishing entitlement to Input Tax Credit, an assessing officer cannot sustain an order by imposing requirements that were not specified in the show cause notice without giving an opportunity to meet such a case. Consequently the order was set aside and remitted for fresh consideration after permitting the petitioner to file additional reply and documents and after affording a reasonable opportunity of personal hearing. [Paras 3, 4, 5, 6]

Order set aside and matter remitted for reconsideration; petitioner permitted to file additional reply within fifteen days and respondent directed to afford hearing and pass a fresh order within three months thereafter.

Final Conclusion: Impugned order dated 28.04.2024 is set aside and the matter remanded for fresh consideration on both issues; petitioner may file additional documents within fifteen days, respondent to provide reasonable opportunity including personal hearing and decide afresh within three months.

Appeal rejected on ground of limitation - condonation of delay - limitation under Section 107 of the GST statute - remand for fresh consideration on merits - re-presentation of appeal - mismatch between GSTR-1 and GSTR-3B returns

Appeal rejected on ground of limitation - condonation of delay - remand for fresh consideration on merits - re-presentation of appeal - Whether the appellate authority was justified in rejecting the appeal solely on the ground of limitation and whether the appeal should be received and adjudicated on merits. - HELD THAT: - The appellate order shows the appeal was rejected because it was presented 29 days beyond the condonable period under the applicable provision identified as Section 107. The petitioner explained that the order was uploaded on the portal and he became aware of it only on a later date, and the mismatch between GSTR-1 and GSTR-3B had been rectified before the original order was issued. Having regard to these cumulative facts - a short delay of 29 days, the explanation for delay, and the rectification of the asserted mismatch - it is just and appropriate to set aside the impugned appellate order and direct the appellate authority to receive and decide the appeal on its merits. The court conditioned the relief on the petitioner re-presenting the appeal within ten days of receipt of this order and directed the appellate authority not to take a prima facie view on limitation but to adjudicate the appeal on merits. [Paras 4, 5]

Impugned appellate order set aside; matter remanded with direction to receive and dispose of the appeal on merits upon re-presentation within ten days, and without going into the question of limitation.

Final Conclusion: The High Court set aside the appellate rejection for delay and remanded the appeal for fresh consideration on merits, subject to the petitioner re-presenting the appeal within ten days and the appellate authority deciding the appeal without regard to limitation.

Interim relief vis-a -vis statutory pre-deposit for tribunal appeals - jurisdiction to grant interim relief despite statutory stay mechanism - discretionary refusal to grant interim stay - falsity of averments in pleadings affecting entitlement to interim relief

Discretionary refusal to grant interim stay - interim relief vis-a -vis statutory pre-deposit for tribunal appeals - falsity of averments in pleadings affecting entitlement to interim relief - Whether the Single Bench was justified in declining to grant interim relief in the writ petition challenging appellate orders. - HELD THAT: - The Court noted that the writ petition was filed because the statutory GST tribunal was not constituted and that, had an appeal been preferred before the tribunal, the statutory regime permits a prayer for stay subject to payment of a 20% pre-deposit. However, the Court observed that when exercising its jurisdiction in a writ petition it is not bound to apply the tribunal's statutory stay principle and that such statutory rule can only have persuasive effect in shaping the nature of interim relief. The Court further recorded that an averment in the appellants' stay petition (denying knowledge of writings by Eastern Traders) was factually untenable given that the second appellant is one of the partners of Eastern Traders and that multiple writ petitions had been filed by related entities, undermining the appellants' stand. Having considered these circumstances, the Court found no basis to interfere with the Single Bench's exercise of discretion in refusing interim relief and declined to disturb that order. [Paras 9, 10, 11, 12, 13]

Appeal dismissed; no interference with the Single Bench's refusal to grant interim relief.

Procedural remand for affidavit-in-opposition and listing - Whether the respondent authorities should be directed to file affidavit-in-opposition and the writ petition be placed for further hearing. - HELD THAT: - Although the appeal against the refusal of interim relief was dismissed, the Court directed the respondent authorities to file their affidavit-in-opposition in the writ petition by 14th June, 2024 and ordered that the writ petition be listed before an appropriate Bench in the week commencing 17th June, 2024. This directs further adjudication on the writ petition with the respondents' affidavit on record. [Paras 14, 15]

Respondents to file affidavit-in-opposition by 14th June, 2024; writ petition listed for hearing in the week commencing 17th June, 2024.

Final Conclusion: The intra-court appeal is dismissed; the Single Bench's refusal to grant interim relief is upheld, respondents are directed to file affidavits and the writ petition is placed for further hearing.

Deduction under section 80P(2)(d) - Entitlement of cooperative society to exemption under section 80P(2) - Effect of insertion of sub section (4) of section 80P - Classification of cooperative banks as cooperative societies for section 80P purposes - Precedential application of Supreme Court decision in Pr. Commissioner of Income Tax v. Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Ltd.

Deduction under section 80P(2)(d) - Classification of cooperative banks as cooperative societies for section 80P purposes - Whether the assessee is entitled to deduction under section 80P(2)(d) in respect of interest income received from deposits placed with cooperative banks/other cooperative societies. - HELD THAT: - The Tribunal found on the material that the appellant is a cooperative agricultural society and had placed funds with entities which, as a matter of law, enjoy the status of cooperative societies. Applying the principle laid down by the Hon'ble Supreme Court in the Annasaheb Patil case and following earlier decisions of this Bench, the Tribunal held that where the recipient of interest is a cooperative society (including cooperative banks insofar as they retain the character of cooperative societies), the interest income received by a cooperative agricultural society falls within the exemption envisaged by section 80P(2)(d). The Tribunal rejected the approach of the authorities which disallowed the deduction by reference to the authorities' reliance on a different clause of section 80P, and concluded that the facts and legal characterisation of the recipient entities attract the exemption under section 80P(2)(d). [Paras 3, 4, 6, 7, 8]

Deduction claimed by the appellant under section 80P(2)(d) in respect of the interest income is allowed.

Effect of insertion of sub section (4) of section 80P - Entitlement of cooperative society to exemption under section 80P(2) - Whether the insertion of sub section (4) of section 80P operates to deny the assessee the deduction in the facts of this case. - HELD THAT: - The Tribunal held that sub section (4) of section 80P does not operate to deprive the assessee of the deduction where the assessee is a cooperative society and the interest is derived from other cooperative societies which retain the legal status of cooperative societies. Relying on the Supreme Court's concurrent finding that a credit society could not be characterised as a cooperative bank for the purpose of denying section 80P(2) relief, the Tribunal concluded that the proviso/limitation in sub section (4) is not attracted on the facts before it and therefore the denial of deduction by the revenue was perverse. [Paras 4, 6, 8]

Sub section (4) of section 80P does not exclude the assessee's entitlement to deduction under section 80P(2)(d) in the present facts; the disallowance is set aside.

Final Conclusion: The Tribunal allowed the appeal, annulled the CIT(A)'s order and permitted the deduction of the claimed amount under section 80P(2)(d) for Assessment Year: 2017-18, following the Supreme Court precedent and its own Bench decisions that interest from deposits with cooperative societies/cooperative banks (where such entities retain cooperative character) is exemptible under section 80P(2).

Re-opening of assessment beyond four years - Notice under Section 148 and Proviso to Section 147 of the Income tax Act - Change of opinion doctrine - Disclosure of material facts during assessment

Notice under Section 148 and Proviso to Section 147 of the Income tax Act - Change of opinion doctrine - Disclosure of material facts during assessment - Validity of the notice issued under Section 148 for Assessment Year 2015-16 where the Assessing Officer relied on unclaimed TDS despite the assessee having explained and placed relevant material during original scrutiny assessment. - HELD THAT: - The Assessing Officer issued a notice under Section 148 after the four year period, recording belief that income had escaped assessment on account of unclaimed TDS. The assessee had during the original scrutiny assessment responded to the TDS query, explained that the disputed TDS related to interest credited to and accounted for by the transferee company after sale of the unit, and placed on record the transferee company's return and interest ledger. The court found that the Assessing Officer's subsequent reliance on the same material to assert that there was a failure to disclose material facts amounted to a mere change of opinion. The impugned reasons recorded did not disclose any new material or change in facts to justify re opening; therefore the exercise fell foul of the Proviso to Section 147 which guards against re opening based simply on a different view of material already considered. In these circumstances the notice under Section 148 was held to be without jurisdiction and liable to be quashed. [Paras 3, 4, 5, 6]

Impugned notice under Section 148 issued for AY 2015-16 quashed as being mere change of opinion and barred by the Proviso to Section 147; rule made absolute.

Final Conclusion: The High Court quashed the reassessment notice under Section 148 for Assessment Year 2015-16, holding that reopening on the same material already considered in scrutiny assessment amounted to a change of opinion and was without jurisdiction under the Proviso to Section 147.

Ex-parte dismissal - remand for fresh decision - failure of authorised representative not imputable to assessee - opportunity of hearing - quashing and setting aside of impugned order - costs imposed on remand

Ex-parte dismissal - failure of authorised representative not imputable to assessee - opportunity of hearing - Whether the ex-parte dismissal of the statutory appeal by the Tribunal, attributable to default of the assessee's Chartered Accountant, warranted interference and remedial relief. - HELD THAT: - The Court found that the appeal before the Tribunal was dismissed ex-parte due to failure of the Chartered Accountant engaged by the assessee to represent the matter. The Court recorded that negligence on the part of the authorised representative cannot be equated with negligence of the assessee, and that the assessee had not been personally at fault in prosecuting the appeal. In view of these facts and on humanitarian grounds, the Court considered it appropriate to interfere with the ex-parte order to secure the assessee's right to a hearing. The Court declined to examine the merits of the tax disputes themselves and confined its intervention to ensuring a fresh opportunity of hearing before the Tribunal.

Ex-parte dismissal set aside and interference granted to afford the assessee a fresh opportunity of hearing.

Remand for fresh decision - quashing and setting aside of impugned order - Relief to be granted once interference is warranted - procedural disposition directing restoration and fresh adjudication by the Tribunal. - HELD THAT: - The Court quashed and set aside the impugned Tribunal order dated 22.3.2023 and remanded ITA No. 270/AHD/2017 to the Tribunal for fresh adjudication on merits. The Tribunal was directed to restore the appeal, issue fresh notice to the assessee, and decide the appeal afresh in accordance with law after affording a reasonable opportunity of hearing. The Court expressly refrained from adjudicating any of the substantive substantial questions of law raised by the assessee.

Matter remanded to the Tribunal for restoration, fresh notice and decision on merits after hearing the assessee.

Costs imposed on remand - Whether any costs should be imposed as a condition of remand. - HELD THAT: - Although the Court exercised its discretion to remit the matter for fresh adjudication, it directed the assessee to pay costs in recognition of the procedural disruption. The cost was quantified and ordered to be deposited with the concerned Department, and proof of the challan was to be produced before the Tribunal at the time of first hearing.

Assessee directed to deposit costs of Rs. 25,000/- with the Department and produce challan before the Tribunal at first hearing.

Final Conclusion: The appeal is allowed for the limited purpose of quashing the ex-parte Tribunal order and remanding ITA No. 270/AHD/2017 for restoration, fresh notice and hearing; the Tribunal to decide the appeal afresh on merits in accordance with law, subject to payment of the quantified costs by the assessee.

Estimation of income - Computation of agricultural income from undocumented receipts - Condonation of delay in filing appeal - Dismissal of appeal for non-prosecution

Condonation of delay in filing appeal - Dismissal of appeal for non-prosecution - Whether the delay in filing the appeal should be condoned and the appeal dismissed by the CIT(A) for non prosecution sustained - HELD THAT: - The Tribunal considered the assessee's explanation that the impugned order was not noticed and that the appeal was filed only after intimation from the auditor; having regard to the facts and circumstances and despite the Revenue's resistance, the Tribunal found it just to condone the delay and proceed to decide the appeal on merits. Although the CIT(A) dismissed the appeal for non-prosecution, the Tribunal entertained the appeal and adjudicated the substantive contentions instead of upholding summary dismissal. [Paras 1, 3]

Delay in filing the appeal condoned and the CIT(A)'s dismissal for non-prosecution did not preclude the Tribunal from deciding the appeal on merits.

Estimation of income - Estimation percentage as basis for addition - Proper estimate of taxable income from the assessee's real estate turnover - HELD THAT: - The Assessing Officer estimated income at 15% of turnover having found no books or supporting details; the assessee contended the correct estimation should be 5% and the Revenue supported the AO's 15% estimate. The record contained no material to sustain either the 15% or the 5% figure. Applying a pragmatic approach to achieve justice between the competing contentions and in absence of supporting evidence for either extreme, the Tribunal exercised its power to reassess the estimation and directed the Assessing Officer to compute the income at 8% of turnover. [Paras 7]

Income from real estate business to be estimated at 8% of turnover; the Assessing Officer directed to compute accordingly.

Computation of agricultural income from undocumented receipts - Whether the agricultural receipts of Rs. 5.85 Lacs should be disallowed in entirety or partly accepted as agricultural income - HELD THAT: - The authorities found that documents produced to substantiate agricultural receipts did not bear the assessee's name and related to other persons; the assessee explained practical difficulties such as receipts being issued in landlords' names due to tenancy issues. The Tribunal concluded that complete disallowance was not justified but, given lack of documentary proof directly in the assessee's name and considering the modest amount involved, it was not appropriate to remand for further verification. Taking a pragmatic view, the Tribunal directed that 40% of the receipts be accepted as the assessee's agricultural income and upheld the remainder of the addition. [Paras 8]

40% of the receipt to be taken as agricultural income of the assessee; the balance addition upheld.

Final Conclusion: The appeal is allowed in part: delay in filing condoned and merits adjudicated; income from real estate business to be estimated at 8% of turnover; 40% of the agricultural receipts accepted as the assessee's agricultural income and the remainder of the addition upheld.

Foreign Tax Credit - Rectification under Section 154 - Intimation under Section 143(1) - Form 67 and supporting annexures - Remand for reconsideration

Foreign Tax Credit - Form 67 and supporting annexures - Intimation under Section 143(1) - Rectification under Section 154 - Remand for reconsideration - Impugned rectification order set aside and matter remanded for reconsideration of the Foreign Tax Credit claim - HELD THAT: - The petitioner filed original and revised returns for Assessment year 2022-2023 claiming Foreign Tax Credit and furnished Form 67 together with the Australian company tax return and activity statements showing tax discharged by the Australian branch. The Central Processing Centre's intimation under Section 143(1) contains a computation of Foreign Tax Credit that matches the petitioner's claim, yet the rectification under Section 154 denied the claim without any discernible reasons. On a prima facie examination the materials indicate taxes were remitted in Australia and the Foreign Tax Credit claim was duly substantiated by the petitioner. The respondents accepted notice and sought remand. In these circumstances the court found that the rectification order could not stand and ordered fresh consideration of the Foreign Tax Credit claim, directing the CPC to provide the petitioner a reasonable opportunity and to pass a fresh order within three months from receipt of the court's order; any remaining tax and consequent interest, if determined, are to be discharged by the petitioner.

Rectification order dated 27.05.2024 set aside; matter remanded to the Central Processing Centre, Bangalore for reconsideration of the Foreign Tax Credit claim and a fresh order to be issued within three months after giving the petitioner a reasonable opportunity.

Final Conclusion: The writ petition is disposed of by setting aside the impugned rectification order dated 27.05.2024 and remanding the matter for fresh consideration of the Foreign Tax Credit claim, with liberty to the petitioner to discharge any dues found payable; no order as to costs.

Transfer / Centralization order u/s 127 - cases of the assessees are centralized to the board of Deputy Commissioner of Income Tax [‘DCIT’], Central Circle, Karnal, Haryana - link between the assessee and the searched party - As decided by HC [2024 (5) TMI 456 - DELHI HIGH COURT] Revenue before passing the impugned order has provided the opportunity of hearing to the assessee [Mark Gulati] and considered the assessee‘s [Mark Gulati] objections, thus, the order would reflect that the Revenue had duly applied its mind and powers under Section 127 was invoked on the grounds of administrative convenience and meaningful assessment.

Powers of Section 127 of the Act can be invoked for public interest and administrative convenience. Furthermore, the ground of ‘coordinated investigation‘ is a good ground of transfer as upheld by various decisions quoted above. Thus we are hereby not inclined to interfere with the orders passed under Section 127 of the Act.

HELD THAT:- We do not find any good ground and reason to interfere with the impugned judgment(s) and, hence, the present special leave petitions are dismissed.

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

Denial of exemption under Section 11 - Cancellation of registration under Section 12AA - Additions to income based on seized material - Restriction of additions to extent of seized material - Reliance on Board Circular in assessment from search - Monetary limit for Revenue appeals under CBDT Circulars - Finality of tribunal order not appealed by Revenue

Monetary limit for Revenue appeals under CBDT Circulars - Finality of tribunal order not appealed by Revenue - Maintainability of Revenue appeals for certain assessment years in view of CBDT circulars and the quantum of tax effect - HELD THAT: - The Court applied Circular No.3 of 2018 (and the subsequent Circular No.17 of 2019 enhancing the limit) as interpreted by the Supreme Court in S.R.M.B. Diary Farming (P) Ltd., holding that the circulars apply to pending appeals and preclude the Revenue from prosecuting appeals before the High Court where the tax effect does not exceed the prescribed monetary limit and there is no cascading effect or common issues affecting large groups of matters. Applying that principle, the Court found that the tax effect in the appeals relating to assessment years 2006-07, 2007-08, 2008-09, 2009-10 and 2010-11 was below the monetary threshold and, in the absence of any qualifying caveat, those appeals are not maintainable and were dismissed on that ground.

Appeals relating to assessment years 2006-07 to 2010-11 dismissed as not maintainable under the CBDT monetary-limit circulars.

Denial of exemption under Section 11 - Cancellation of registration under Section 12AA - Additions to income based on seized material - Restriction of additions to extent of seized material - Reliance on Board Circular in assessment from search - Finality of tribunal order not appealed by Revenue - Validity of additions based on seized material and related legal questions for assessment years 2011-12 and 2012-13 in light of the Tribunal's earlier final finding on registration and exemption - HELD THAT: - The Court noted that the Income Tax Appellate Tribunal had earlier (order dated 16.01.2018) held as a matter of fact that the Trust had not misapplied funds and that the conditions for denial of exemption or cancellation of registration were not made out, and that the Revenue did not challenge that favourable Tribunal finding; that order thus attained finality. Given that position, the Court held that the more fundamental question of entitlement to exemption under Section 11/registration under Section 12AA had been conclusively determined in favour of the assessee, and accordingly the Revenue's challenges to additions (even if sustained) would not result in tax liability. On the specific contentions raised in I.T.A. Nos.27 and 31 of 2020 - that additions for earlier years could be sustained by relying on seized material for 2012-13 and on a sworn statement, that additions for 2012-13 should not be restricted to the seized material, and that the Tribunal erred in relying on Board Circular No.286/2/2003-IT (Inv. II) dated 10.03.2003 - the Court answered these questions against the Revenue. The Tribunal was held justified in (a) not making additions for earlier years in the absence of seized material pertaining to those years, (b) restricting additions for 2012-13 to the extent supported by seized material, and (c) placing reliance on the Board Circular in giving relief to the assessee where confession or direct material to sustain broader additions was lacking. Because the Tribunal's finding on registration/exemption was final and accepted by the Revenue, the Revenue's legal contentions on additions were rejected.

Appeals for assessment years 2011-12 and 2012-13 disposed of by answering the legal questions raised against the Revenue and in favour of the assessee; additions challenged by Revenue not sustained.

Final Conclusion: The Revenue's appeals for assessment years 2006-07 to 2010-11 are dismissed as not maintainable under the CBDT monetary-limit circulars; the appeals for 2011-12 and 2012-13 are disposed of against the Revenue, the Tribunal's findings limiting additions to seized material and its reliance on the Board Circular upheld, and the prior final Tribunal order upholding the Trust's registration and exemption treated as decisive, precluding tax liability on the additions.

Reopening of assessment notice under section 148 void ab initio - burden under Section 68 to prove identity, creditworthiness and genuineness of shareholders - reliability of third party confessional statements and requirement of corroboration - duty of Assessing Officer to make independent enquiries and enforce attendance/cross examination - assessment based on surmise and conjecture inadmissible

Reopening of assessment notice under section 148 void ab initio - reliability of third party confessional statements and requirement of corroboration - Validity of reassessment notice under section 148 - HELD THAT: - The Tribunal upheld the finding that the reasons recorded for reopening were infirm and did not disclose an independent application of mind linking the information to the assessee. The Assessing Officer relied primarily on a third party statement which did not specifically implicate the assessee, and the same statement had been subsequently retracted by the deponent. The Assessing Officer did not enforce attendance or make meaningful enquiries to corroborate the investigation report before reopening. In these circumstances the reopening was held to be founded on mere suspicion and conjecture and the notice under section 148 was held to be void ab initio; the appellate authority's conclusion in this regard was affirmed. [Paras 9, 10, 12, 13]

Reopening under section 148 quashed as void ab initio and sustained.

Burden under Section 68 to prove identity, creditworthiness and genuineness of shareholders - assessment based on surmise and conjecture inadmissible - Deletion of addition made under Section 68 - HELD THAT: - On merits the Tribunal agreed with the Commissioner (Appeals) that the assessee had furnished PANs, incorporation documents, audited financial statements, bank statements showing receipt by banking channels and other documentary material establishing identity, creditworthiness and genuineness of the investor companies. The Assessing Officer accepted many of these documents but failed to verify or contradict them by independent enquiries. In absence of contrary evidence or proper investigation, the primary onus placed on the assessee was held to be discharged and the addition under Section 68 was deleted. [Paras 7, 8, 12]

Addition under Section 68 of Rs. 5,60,00,000 deleted.

Duty of Assessing Officer to make independent enquiries and enforce attendance/cross examination - reliability of third party confessional statements and requirement of corroboration - Whether Assessing Officer breached duty by not conducting enquiries and denying opportunity for cross examination - HELD THAT: - The Tribunal accepted the appellate authority's conclusions that the Assessing Officer did not pursue available avenues of verification (such as enquiries with ROC, jurisdictional assessing officers or banks), did not enforce attendance of persons whose statements were relied upon, and denied the assessee's request for cross examination. The officer also dismissed a later sworn affidavit without confronting it by adverse evidence. These lapses showed a predetermined approach and rendered reliance on the investigation statement unsafe. Consequently, the officer's failure to make independent enquiries and to allow appropriate confrontation was a material defect in the assessment process. [Paras 7, 12]

AO's failure to investigate and to allow confrontation/cross examination was material and vitiated the assessment.

Final Conclusion: The Tribunal dismissed the Revenue's appeal, upheld the CIT(A)'s order quashing the reassessment notice as void ab initio and deleting the addition under Section 68 for AY 2011 12, concluding that the reassessment rested on uncorroborated third party statements and inadequate enquiries by the Assessing Officer.

Mercantile system of accounting - treatment of bank credits versus turnover - inclusion of non-revenue bank entries in taxable receipts - Section 69A unexplained money - recognition of unexpired/advance fees - allowability of rent expenses supported by TDS and rent agreements - deductibility of payments to contractors and evidentiary standard - principles of natural justice in assessment proceedings

Treatment of bank credits versus turnover - inclusion of non-revenue bank entries in taxable receipts - mercantile system of accounting - principles of natural justice in assessment proceedings - Deletion of addition on account of alleged excess cash deposits/ mismatch between bank credits and declared turnover - HELD THAT: - The Tribunal upheld the CIT(A)'s finding that the AO erred in aggregating bank credit entries as turnover without appreciating the nature of entries and the assessee's mercantile accounting. The CIT(A) accepted the assessee's detailed reconciliation and documentary evidence showing (a) incorrect bank credit figure used by the AO, (b) exclusion of service-tax component which is not income, (c) deletion of contra/inter-bank transfers, (d) cancellation of entries on cheque bounce reversals, (e) director's capital infusion treated as loan/capital and not turnover, (f) exclusion of income-tax refund and refund of security deposit, and (g) recognition of cash expenses not banked. The Tribunal found the AO's approach to be contrary to basic accounting principles and natural justice, and therefore declined to interfere with the deletion of the addition. [Paras 6, 11, 12, 13, 14]

Addition of Rs. 21,96,68,518/- deleted; ground dismissed.

Section 69A unexplained money - treatment of alleged investment in property - evidence of ownership versus leasehold/occupancy - Deletion of addition on account of alleged undisclosed investment in property - HELD THAT: - The Tribunal endorsed the CIT(A)'s conclusion that the assessee did not purchase the property and had only taken premises on lease/ rent. The assessee produced lease/rent agreements, TDS on rent deposited (reflected in Form 26AS), ledger entries for security deposit and an affidavit denying any purchase. The AO relied on SFT/26AS information but produced no concrete evidence of transfer of title. The onus to establish ownership/investment was not discharged by the AO and the addition under Section 69A was rightly deleted. [Paras 15]

Addition of Rs. 52,96,000/- deleted; ground dismissed.

Recognition of unexpired/advance fees - mercantile system of accounting - Deletion of addition on account of unexpired fee carried as liability (advance receipts) - HELD THAT: - The Tribunal agreed with the CIT(A) that the assessee consistently follows mercantile (accrual) accounting and recognizes revenue proportionately over the period in which services are rendered. The assessee produced auditors' notes, methodology of pro rata computation, ledgers and prior year treatment showing symmetrical recognition of earlier unexpired fees. The AO neither rejected the books nor pointed to any breach of accounting principles; treating the unexpired fee as income was contrary to the admitted accounting policy. Accordingly, the addition was correctly reversed. [Paras 16]

Addition of Rs. 7,66,29,091/- deleted; ground dismissed.

Allowability of rent expenses supported by TDS and rent agreements - evidentiary standard for disallowance - Deletion of estimated disallowance of rent on account of alleged non-production of all rent agreements - HELD THAT: - The Tribunal endorsed the CIT(A)'s finding that the assessee furnished rent agreements, details of 54 parties with electricity bills, TDS certificates, Form 3CD and payment records. The AO's ad hoc 10% disallowance across numerous rented premises was unjustified where payments were through banking channels and documentary evidence supported the genuineness and business use of the premises. The CIT(A)'s cancellation of the addition was held to be correct. [Paras 17]

Addition of Rs. 1,66,64,284/- deleted; ground dismissed.

Deductibility of payments to contractors and evidentiary standard - requirement to avoid double disallowance - Deletion of addition on account of payments to contractors alleged to be unsupported - HELD THAT: - The Tribunal agreed with the CIT(A) that the assessee produced comprehensive details of 46 contractors, nature of payments, PANs, sample bills, TDS deductions and bank payment evidence. The expenditures related to the coaching business (advertisement, maintenance, security, SMS charges etc.) and were incurred wholly and exclusively for business purposes. The AO failed to show these were not business expenses; separate disallowance would amount to multiple disallowances of same items. On the documentary record and banking/TDS confirmations, the addition was rightly deleted. [Paras 18]

Addition of Rs. 5,38,57,551/- deleted; ground dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal in its entirety, upholding the CIT(A)'s deletions of the additions/disallowances for AY 2017-18 and declining to interfere with the appellate findings grounded in accounting principles and documentary evidence.

Penalty under section 271(1)(c) - concealment of income - furnishing inaccurate particulars of income - void ab initio for failure to specify limb of provision - binding precedent of the Jurisdictional High Court

Penalty under section 271(1)(c) - void ab initio for failure to specify limb of provision - furnishing inaccurate particulars of income - concealment of income - Impugned penalty order quashed for failure to specify whether penalty was levied for concealment of income or for furnishing inaccurate particulars of income - HELD THAT: - The AO's penalty order records that the assessee "has furnished inaccurate particulars of its income & concealment of income" but does not specify which limb of section 271(1)(c) was invoked. Following the binding decision of the Jurisdictional High Court in PCIT & others v. M/s Sahara India Life Insurance Company Ltd., a penalty notice/order that does not indicate the specific charge under section 271(1)(c) (i.e., whether for concealment of particulars of income or furnishing inaccurate particulars) is bad in law. Applying that precedent, the Tribunal held that the ambiguity in the penalty order renders it contrary to law and therefore quashed the order. [Paras 6, 7, 8]

Penalty order passed u/s 271(1)(c) quashed.

Penalty under section 271(1)(c) - binding precedent of the Jurisdictional High Court - Revenue's appeal against deletion of penalty and admission of evidence dismissed - HELD THAT: - The Revenue challenged the deletion of penalty and the admission of additional evidence before the CIT(A). Having quashed the penalty order as legally infirm for not specifying the limb of section 271(1)(c) in accordance with the binding High Court precedent, there remained no sustainable basis to uphold the penalty. In view of the primary finding quashing the penalty, the Revenue's appeal is dismissed. [Paras 9, 10]

Revenue's appeal dismissed; assessee's cross-objection allowed.

Final Conclusion: The Tribunal, following the binding decision of the Jurisdictional High Court, held that the penalty order under section 271(1)(c) is vitiated for failing to specify whether it was imposed for concealment of income or for furnishing inaccurate particulars, quashed the penalty for AY 2013-14 and dismissed the Revenue's appeal.

Disallowance under section 14A - Rule 8D applicability - reasonable basis for quantification of 14A disallowance (2% of exempt income) - disallowance under section 40(a)(ia) - tax withholding obligation under section 194C/194J - Fees for Included Services - 'make available' clause in Article 12(4)(b) of the India-USA DTAA - disallowance under section 40(a)(i) - transfer pricing - CUP method and comparability adjustments (volume/marketing/research) - proviso to Section 92C(2) - 5% tolerance margin - deductibility of education cess post-retrospective amendment

Disallowance under section 14A - Rule 8D applicability - reasonable basis for quantification of 14A disallowance (2% of exempt income) - quantum of disallowance under section 14A for AY 2005-06 - HELD THAT: - The Tribunal held that Rule 8D was not applicable to the assessment year in question following the Bombay High Court precedent; therefore the AO's application of Rule 8D was incorrect. However, the court recognised the duty of the AO to quantify the disallowance on a reasonable basis for years prior to Rule 8D's applicability. Having regard to precedents of the Bombay Bench/Tribunal, the Tribunal restricted the disallowance to 2% of the exempt dividend income as a reasonable basis of quantification for the year under appeal and partly allowed the assessee's grounds to that extent.

Disallowance under section 14A restricted to 2% of the exempt dividend income; enhancement by CIT(A) set aside to that extent.

Disallowance under section 40(a)(ia) - tax withholding obligation under section 194C/194J - disallowance under section 40(a)(ia) in respect of payments to M/s Team Lease (secretarial/clerical staff) - HELD THAT: - The Tribunal affirmed the CIT(A)'s finding that in the absence of a valid nil withholding certificate under section 197(1) containing the assessee's name for the relevant year, the assessee was obliged to deduct tax at source under section 194C. The subsequent rectification of the certificate in a later year was a procedural correction and did not relieve the assessee of the withholding obligation for the year under consideration.

Disallowance under section 40(a)(ia) in respect of payments to Team Lease upheld; assessee's ground dismissed.

Fees for Included Services - 'make available' clause in Article 12(4)(b) of the India-USA DTAA - disallowance under section 40(a)(i) - whether global overhead charges paid to Deutsche Securities Inc., New York, constituted 'fees for included services' requiring TDS and disallowance under section 40(a)(i) - HELD THAT: - On examination of the Cost Contribution Agreement, the Transfer Pricing record and the Memorandum of Understanding to the India-USA DTAA, the Tribunal found no factual foundation that technical knowledge, skill or know how was 'made available' to the assessee by the US entity. The payments were held to be managerial/business support in character and not taxable as 'fees for included services' under Article 12(4)(b) of the DTAA; consequently the assessee was not obliged to withhold tax and invocation of section 40(a)(i) was incorrect.

Disallowance under section 40(a)(i) in respect of global overhead charges to the US AE deleted; assessee's ground allowed.

Disallowance under section 40(a)(ia) - Fee for technical services vs facility - Kotak Securities (Supreme Court) - whether VSAT/leased line and transaction charges paid to stock exchanges constitute fees for technical services attracting TDS and disallowance under section 40(a)(ia) - HELD THAT: - Following the Supreme Court's decision in Commissioner of Income-tax-4, Mumbai v. Kotak Securities Ltd., the Tribunal held that transaction charges and VSAT/leased line charges are payments for facilities provided by stock exchanges and not specialised 'technical services' as envisaged in Explanation 2 to section 9(1)(vii). Such charges are common, non exclusive facilities obligatory for members and therefore do not attract TDS under section 194J; deletion of the AO's disallowance under section 40(a)(ia) was upheld.

Disallowance under section 40(a)(ia) in respect of VSAT/leased line and transaction charges deleted; Revenue's grounds dismissed.

Transfer pricing - CUP method and comparability adjustments (volume/marketing/research) - validity of TPO's benchmarking for CH Trades and requirement for adjustments for volume and marketing/research cost - HELD THAT: - The Tribunal found the TPO's selection of the assessee's transactions with non AEs (top 10 FIIs) as comparables to be acceptable given the facts, but observed that the assessee had demonstrated prima facie the need for adjustments to account for differences in volume and marketing/research costs. The Tribunal directed the TPO/Assessing Officer to verify and grant suitable volume and marketing cost adjustments as per the computations placed on record and recompute the ALP and resultant adjustment accordingly. The assessee's alternative plea to adopt TNMM as MAM was rendered infructuous by the order directing adjustments under CUP.

TPO's comparables upheld in principle; matter remitted to TPO/Assessing Officer to allow and verify volume and marketing cost adjustments and recompute ALP; related grounds partly dismissed/partly allowed for statistical purposes.

Proviso to Section 92C(2) - 5% tolerance margin - availability of 5% variation/tolerance margin under proviso to section 92C(2) - HELD THAT: - Applying the Special Bench ruling in IHG IT Services and the retrospective amendment position, the Tribunal held that the 5% tolerance margin is available only if the variation falls within that margin; where the variation exceeds 5%, the ALP as worked out must be taken without giving the benefit of the tolerance margin. Accordingly the CIT(A)'s grant of the 5% benefit was overturned and the TPO/Assessing Officer was directed to recompute the adjustment in conformity with that principle.

CIT(A)'s allowance of a 5% reduction set aside; Revenue's ground allowed and assessee's cross-objection dismissed; recomputation directed.

Deductibility of education cess post-retrospective amendment - claim for deduction of education cess - HELD THAT: - The Tribunal rejected the assessee's belated claim for deduction of education cess raised for the first time before it, noting the retrospective amendment to section 40(a)(ii) and the Supreme Court authority; consequently the claim could not be allowed.

Claim for deduction of education cess dismissed.

Final Conclusion: The appeals are partly allowed and partly dismissed. For AY 2005-06: the section 14A disallowance is restricted to 2% of exempt dividend income; the disallowance under section 40(a)(ia) for payments to Team Lease is upheld; disallowance under section 40(a)(i) for global overhead charges to the US AE is deleted; VSAT/leased line and transaction charges disallowances under section 40(a)(ia) are deleted; transfer pricing adjustment is remitted to the TPO/Assessing Officer for verification and grant of volume and marketing cost adjustments and recomputation of ALP; the CIT(A)'s allowance of a 5% tolerance margin under section 92C(2) is set aside; and the claim for education cess deduction is dismissed.

Reopening of assessment beyond four years and failure to disclose fully and truly all material facts - jurisdiction under Section 147 of the Income-tax Act, 1961 - deemed dividend under Section 2(22)(e) of the Income-tax Act, 1961

Reopening of assessment beyond four years and failure to disclose fully and truly all material facts - jurisdiction under Section 147 of the Income-tax Act, 1961 - Validity of the second reopening of assessment under Section 147 after four years - HELD THAT: - The Tribunal examined whether the first proviso to Section 147 applied to the second reopening carried out after four years and whether the Assessing Officer had recorded or demonstrably established a failure by the assessee to disclose fully and truly all material facts so as to justify reopening. The reasons recorded by the AO merely noted information about loans from M/s Shri Rang Infrastructure Pvt. Ltd. and reserves shown in that company's balance-sheet, but did not record any specific satisfaction of failure to disclose by the assessee. The loan was reflected in the assessee's accounts as a current account/loan with opening and closing balances, and there was no requirement at that time to disclose deemed dividend under Section 2(22)(e) in the ITR or tax-audit report; nor was it shown that details were called for by the AO and withheld by the assessee. The CIT(A) had confined the alleged deemed dividend to the closing credit balance after treating the account as current account transactions and directed verification against accumulated profits, thereby demonstrating that the AO had not established a failure to disclose all material facts. In these circumstances the essential condition in the proviso to Section 147 for reopening beyond four years - that income had escaped assessment by reason of the assessee's failure to disclose fully and truly all material facts - was not satisfied. [Paras 9, 10, 11, 12, 15]

Second reopening under Section 147 quashed for want of the requisite finding of failure to disclose fully and truly all material facts; jurisdiction of AO to reopen after four years held not properly assumed.

Final Conclusion: The reopening of assessment for Assessment Year 2010-11 under Section 147 was quashed for non-compliance with the proviso requiring recorded failure to disclose fully and truly all material facts; consequently the Revenue's appeal is dismissed and the departmental grounds on merits were not adjudicated.

Deduction under Section 57 - Income chargeable under the head Other Sources (Section 56) - Apportionment of expenses - Consistency in apportionment across assessment years - Remand to Assessing Officer for verification

Deduction under Section 57 - Income chargeable under the head Other Sources (Section 56) - Apportionment of expenses - Consistency in apportionment across assessment years - Remand to Assessing Officer for verification - Appropriateness of the method of apportioning expenses for deduction under Section 57 against interest income offered under Section 56 and whether the Assessing Officer's re-allocation (41.1%) should stand or the assessee's formula (59.9%) as used in AY 2014-15 should be accepted. - HELD THAT: - The Tribunal recorded that the Assessing Officer had applied a proportionate rate of 41.1% to total interest income to determine deductible expenditure under Section 57, thereby taxing the balance; the assessee contended that apportionment should follow its Profit & Loss account computation (yielding 59.9% apportionment) and relied on an earlier ITAT direction in AY 2014-15 where a similar formula was accepted by the AO. The Revenue did not oppose remand for verification. In view of these facts, the Tribunal did not decide the apportionment on merits but directed that the issue be restored to the Assessing Officer to verify whether the formula adopted by the assessee for apportioning interest expenses in AY 2018-19 is the same as that accepted in AY 2014-15; if the Assessing Officer finds that the same formula has been adopted and accepted earlier, no addition is to be made. The direction is limited to verification and apportionment in the manner done in AY 2014-15 and does not constitute an express appellate adjudication on the correct percentage on merits. [Paras 10, 11]

Issue restored to the Assessing Officer to verify and, if the assessee's formula matches that accepted in AY 2014-15, to apportion expenses accordingly; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal has remanded the question of apportionment of expenses claimed under Section 57 against interest income returned under Section 56 to the Assessing Officer for verification of whether the assessee's formula matches that accepted in AY 2014-15; if so, no addition is to be made. The appeal is allowed for statistical purposes.

Definition of "charitable purpose" and proviso excluding activities involving trade, commerce or business - application of the proviso to section 2(15) - test whether fees/consideration are at cost or with markup - exemption under section 11 and 12 of the Income-tax Act - accumulation of income for specified purpose under section 11(2) - allowability of prior period expenditure in relation to objects of the trust

Definition of "charitable purpose" and proviso excluding activities involving trade, commerce or business - application of the proviso to section 2(15) - test whether fees/consideration are at cost or with markup - exemption under section 11 and 12 of the Income-tax Act - Whether the proviso to section 2(15) attracted to deny exemption under section 11 and 12 in respect of exhibition and trade fair activities of the assessee. - HELD THAT: - The Tribunal followed its earlier decisions in favour of the assessee for earlier assessment years and applied the legal principles laid down by the Supreme Court (as discussed in the quoted ITAT reasoning). The decisive test is whether the fee/consideration charged for the activity is essentially at cost or carries a substantial markup; where charges approximate cost or involve at most a marginal mark up the activity does not fall within the "trade, commerce or business" mischief of the proviso. On the facts the exhibitions showed expenditure broadly equal to or exceeding receipts (net loss from exhibitions in the relevant years and no markup on consideration charged to exhibitors), and therefore the proviso to section 2(15) did not apply to the exhibition/trade fair activities. Respectfully following the jurisdictional ITAT decisions, the AO's denial of exemption was set aside and the benefit of sections 11 and 12 was directed to be granted. [Paras 15]

Proviso to section 2(15) does not attract in respect of the assessee's exhibition/trade fair activities; exemption under sections 11 and 12 is allowable.

Accumulation of income for specified purpose under section 11(2) - Whether the assessee's claim to accumulate income under section 11(2) was allowable despite form No.10 describing the purpose in general terms. - HELD THAT: - The CIT(A)'s view, affirmed by the Tribunal, was that accumulation under section 11(2) is permissible where the accumulated funds are for objects provided in the trust deed and the assessee had specified the purpose in its board resolution and trust objects. Reliance was placed on the Gujarat High Court decision (and the fact that the Supreme Court dismissed the departmental SLP) holding that lack of minute specificity in Form No.10 is not fatal where the objects of the trust cover the purpose. On the material before the Tribunal (including the board resolution dated 18.08.2015), the accumulation claim was held to be valid and the AO's alternative disallowance was deleted. [Paras 18]

Accumulation of income under section 11(2) allowed; AO's disallowance deleted.

Allowability of prior period expenditure in relation to objects of the trust - exemption under section 11 of the Income-tax Act - Whether the prior period expenditure disallowed by the AO was rightly denied. - HELD THAT: - The CIT(A) found, and the Tribunal concurred, that the expenditures were incurred towards the objects of the trust and the AO had not produced contrary material to show the amounts were not for trust objects. In absence of evidence negativing the assessee's claim that the expenses related to its charitable objects, the disallowance was not sustained. [Paras 20]

Disallowance of prior period expenditure deleted; expenditure admitted as pertaining to the trust's objects.

Final Conclusion: Both appeals filed by the Revenue for assessment years 2015-16 and 2016-17 are dismissed: the Tribunal upheld the allowance of exemption under sections 11 and 12 in respect of the assessee's exhibition activities (proviso to section 2(15) not attracted), allowed accumulation under section 11(2), and deleted the disallowance of prior period expenditure.

Deduction under section 80P(2)(d) of the Income-tax Act - Interest/dividend from co-operative banks as investment income - Definition of "co-operative society" under section 2(19) - Exclusion of certain co-operative banks by proviso/sub-section (scope of section 80P(4)) - Construction favouring the assessee where two reasonable constructions are possible

Deduction under section 80P(2)(d) of the Income-tax Act - Interest/dividend from co-operative banks as investment income - Exclusion of certain co-operative banks by proviso/sub-section (scope of section 80P(4)) - Whether interest/dividend income earned by the assessee (a co operative society) from deposits/investments with co operative banks is deductible under section 80P(2)(d) of the Income tax Act - HELD THAT: - The Tribunal analysed section 80P(2)(d) which permits deduction of income by way of interest or dividend derived by a co operative society from its investments with any other co operative society, and observed that the term "co operative society" is defined under section 2(19). The Tribunal considered coordinate bench decisions holding that interest earned from co operative banks is allowable under section 80P(2)(d) (including Belgaum Coal and Coke Consumer Co operative Association Ltd. , Nawbharat Darpan Co operative Credit Society Ltd. , Borivali Jan Kalyan Sahkari Patpedhi Ltd. and Pathare Prabhu Co operative Housing Society Ltd. ) and examined the scope of sub section (4) of section 80P which excludes certain co operative banks from claiming deduction when they themselves are assessees. The Tribunal relied on the Hon'ble Supreme Court's exposition in Mavilayi Service Co operative Bank Ltd. v. CIT that section 80P(4) operates as a proviso excluding co operative banks that function as commercial banks and is not a broad embargo on treating co operative banks as "co operative societies" for all purposes. The Tribunal noted divergent High Court views (Pr. CIT v. Totagars Co operative Sales Society ) but applied the principle from CIT v. Vegetable Products Ltd. that where two reasonable constructions of a taxing statute are possible, the construction favourable to the assessee should be adopted. On that basis the Tribunal held that interest/dividend earned by a co operative society from investments with co operative banks falls within the language of section 80P(2)(d) and is deductible, while observing that the allowance is subject to verification by the Assessing Officer. [Paras 5]

Deduction under section 80P(2)(d) is allowable in respect of interest/dividend earned by the assessee from investments with co operative banks; the Assessing Officer is directed to allow the deduction subject to verification.

Final Conclusion: The appeal is allowed: the Tribunal directs that the deduction under section 80P(2)(d) be granted for interest income earned from co operative banks (subject to verification), and the impugned orders disallowing the claim are set aside.

Communication of grounds of arrest in writing - Compliance with Section 104 of the Customs Act regarding grounds of arrest - Violation of Article 22 rights by verbal communication of grounds - Grant of bail under Section 439 Cr.P.C. where arrest/detention vitiated by non-compliance - Admissibility of statements recorded under Section 108 of the Customs Act - Effect of look out notice and interception on arrest

Communication of grounds of arrest in writing - Compliance with Section 104 of the Customs Act regarding grounds of arrest - Violation of Article 22 rights by verbal communication of grounds - Grant of bail under Section 439 Cr.P.C. where arrest/detention vitiated by non-compliance - Entitlement to bail under Section 439 Cr.P.C. in view of alleged non-compliance with requirement to communicate grounds of arrest in writing. - HELD THAT: - The Court found that though there are prima facie materials against the petitioner, the grounds of arrest were communicated verbally and not in writing. Relying on the principle articulated by the Apex Court in Prabir Purkayashta and earlier precedents, the requirement to communicate grounds of arrest or detention in writing in a language understood by the accused is mandatory and non-compliance vitiates custody/detention. The Court rejected the contention that post-arrest service of remand papers or later service on counsel cures the defect, holding that verbal explanation does not satisfy the statutory and constitutional mandate under Section 104 of the Customs Act and Article 22. In view of this prima facie illegality in arrest/detention, the petitioner was held entitled to bail subject to conditions preserving prosecution interests. [Paras 17, 18, 19, 20, 21]

Petitioner entitled to be enlarged on bail subject to conditions because arrest/detention was prima facie vitiated by non-compliance with the mandate to communicate grounds of arrest in writing.

Admissibility of statements recorded under Section 108 of the Customs Act - Effect of statements of co-accused on prima facie case - Admissibility and probative value of statements recorded under Section 108 of the Customs Act made by accused Nos. 1 and 2 and their bearing on the case against the petitioner. - HELD THAT: - The Court observed that the statements of accused Nos. 1 and 2 were recorded by the Customs Authority under Section 108 and not by police; therefore they are admissible in law. Those statements, together with supporting material such as the travel agent's statement and bank transaction extract, furnish prima facie evidence pointing towards the petitioner's involvement. However, admissibility and prima facie weight of these materials did not outweigh the fatal procedural defect in arrest communication for purposes of bail. [Paras 14, 15]

Statements under Section 108 of the Customs Act are admissible and furnish prima facie material against the petitioner, but do not preclude bail given the procedural infirmity in arrest/detention.

Final Conclusion: Bail allowed under Section 439 Cr.P.C. because the grounds of arrest were not communicated in writing as required by law; release granted subject to specified conditions and verification of sureties by the Investigating Officer.

Determination of Fe content on Wet Metric Ton basis - conversion of Fe percentage from DMT to WMT - application of Board Circular No.04/2012-Cus - finalisation of provisional assessment - refund of excess customs duty - remand for reassessment on WMT basis

Determination of Fe content on Wet Metric Ton basis - application of Board Circular No.04/2012-Cus - conversion of Fe percentage from DMT to WMT - Fe content for the purpose of classification and levy of export duty is to be determined on Wet Metric Ton (WMT) basis for the shipments in question - HELD THAT: - The Tribunal held that the assessing authority erred in finalising the provisional assessments on Dry Metric Ton (DMT) basis notwithstanding the Supreme Court decision in Union of India v. Gangadhar Narsingdas Aggarwal and Board Circular No.04/2012-Cus directing pending assessments to be completed on WMT basis. The finalisation order ignored moisture figures shown in the shipping bills and therefore failed to determine the Fe percentage in the form in which goods were exported. The Tribunal relied on preceding decisions of the Kolkata Bench and the established formula for converting DMT-based Fe to WMT-based Fe (Iron content = Fe x (100 - M) / 100) and observed that prior to 01.05.2022 Fe must be assessed on WMT basis. Applying the WMT certificate produced by the appellant, the Tribunal found the Fe content to be below 62% and consequently the applicable duty-rate falls within the lower slab notified for that period. [Paras 6]

Assess Fe content on WMT basis; the provisional assessments finalised on DMT basis are legally unsustainable

Finalisation of provisional assessment - refund of excess customs duty - remand for reassessment on WMT basis - Finalisation order charging duty on DMT basis set aside and matter remanded for fresh finalisation on WMT basis with consequential refund if any - HELD THAT: - The Tribunal set aside the Deputy Commissioner's finalisation order which assessed the shipping bills on DMT basis despite Board directions and judicial precedent. The Tribunal accepted the appellant's WMT certificate showing Fe below the notified threshold and held that customs duty at the lower rate applies; since duty at the higher rate was already paid, the appellant is entitled to refund of the excess. The Tribunal remitted the matter to the adjudicating authority to finalise the provisional assessments in accordance with the directions to determine Fe on WMT basis and to grant consequential relief. [Paras 7]

Impugned finalisation order set aside and matter remanded for fresh finalisation on WMT basis with direction to grant refund of excess duty paid

Final Conclusion: The Tribunal allowed the appeal, held that Fe content for the shipments in 2007-08 must be determined on WMT basis in accordance with the Supreme Court decision and Board Circular, set aside the finalisation order that assessed on DMT basis, and remanded the matter to the adjudicating authority to finalise assessments on WMT basis and grant refund of excess customs duty paid.

Non-scheduled (passenger) services - customs duty exemption under Serial No. 347B - condition No.104 of Notification No.21/2002-Customs - interpretation of Aircraft Rules and Civil Aviation Requirements - jurisdiction to enforce undertaking - role of DGCA - requirement of published tariff and issuance of tickets - confiscation and penalty under the Customs Act

Condition No.104 of Notification No.21/2002-Customs - non-scheduled (passenger) services - interpretation of Aircraft Rules and Civil Aviation Requirements - Import fulfils the conditions prescribed under Condition No.104 for aircraft imported for non-scheduled (passenger) services. - HELD THAT: - The Tribunal examined Condition No.104 and the Explanation thereto in light of the definitions in Rule 3 of the Aircraft Rules and the Civil Aviation Requirements (CAR). It held that an "air transport service" carried out for remuneration which is not a "scheduled (passenger) air transport service" falls within "non-scheduled (passenger) services" and that CAR permits NSOP (passenger) permit holders to undertake charter operations. Consequently, absence of a published timetable, non-issuance of passenger tickets, or carriage of employees of related companies do not, by themselves, displace the character of the service as non-scheduled (passenger). The Tribunal also recorded that DGCA had issued clarifications and that monitoring of compliance with the permit conditions is primarily within the domain of the DGCA; Customs could act under the undertaking only if DGCA found violation of the permit. Applying these principles to the facts, the appellants held a valid NSOP permit, executed the required undertaking at import, and used the helicopter for remunerative transport consistent with the permit and CAR; therefore Condition No.104 was satisfied. [Paras 8, 9, 11, 12]

Condition No.104 is satisfied and the import complies with the requirement to be used for non-scheduled (passenger) services.

Customs duty exemption under Serial No. 347B - condition No.104 of Notification No.21/2002-Customs - requirement of published tariff and issuance of tickets - The imported helicopter is eligible for exemption under Serial No.347B of Notification No.21/2002-Customs, as amended. - HELD THAT: - Having found that the appellants fulfilled the prerequisites of Condition No.104 (valid DGCA permit and undertaking executed at import, with no DGCA finding of breach), the Tribunal held that the import falls within the descriptive coverage of the tariff headings and is therefore entitled to the exemption under Serial No.347B. The Tribunal rejected the Revenue's reliance on absence of published tariff and non-issuance of tickets as grounds to deny the exemption because the statutory definitions and CAR do not make such elements determinative of entitlement. The Tribunal further relied on consistent panel and judicial authorities (including the Larger Bench in VRL Logistics and subsequent pronouncements) to support the view that NSOP (passenger) permit holders may use aircraft for charter operations without losing exemption. [Paras 8, 12]

Exemption under Serial No.347B applies to the imported helicopter and the benefit of nil duty is allowable.

Confiscation and penalty under the Customs Act - jurisdiction to enforce undertaking - role of DGCA - Confiscation of the helicopter and penalties imposed by the Commissioner are not sustainable and are set aside. - HELD THAT: - The Commissioner had found contravention of the exemption condition and ordered confiscation and penalties, but also recorded absence of collusion, willful misstatement or suppression. The Tribunal observed that, as held by the Larger Bench and followed by subsequent benches and courts, Customs may invoke the undertaking to demand duty or impose penal consequences only upon a DGCA finding that the permit conditions were violated. In the present case DGCA had not cancelled or found breach of the permit and had renewed the permit; therefore there was no established violation warranting confiscation or penalty. Further, given that the Commissioner himself treated the matter as one of interpretation rather than culpable suppression, imposition of confiscation and penalties was inappropriate. Accordingly, the Tribunal set aside the confiscation, redemption fine option and penalties imposed in the impugned order. [Paras 11, 12, 13]

Confiscation and penalties confirmed by the impugned order are quashed; no liability for confiscation or penalty arises on the facts found.

Final Conclusion: The appeal is allowed. The Tribunal set aside the Commissioner's order confirming duty, confiscation (with redemption fine) and penalties, and held that the imported helicopter qualified for exemption under Serial No.347B of Notification No.21/2002-Customs (as amended) because the import satisfied Condition No.104 and there was no DGCA finding of breach authorising Customs to invoke the undertaking.

Limitation for refund claims under Section 27 of the Customs Act - payment under protest and its effect on limitation - applicability of Section 27 to refund of redemption fine and penalty - consequential refund following appellate order - statutory interpretation of taxing provisions by plain and strict construction

Payment under protest and its effect on limitation - consequential refund following appellate order - limitation for refund claims under Section 27 of the Customs Act - Whether the refund claim filed after the Tribunal set aside the penalty was barred by the one year limitation prescribed in Section 27. - HELD THAT: - The Tribunal had allowed the appeals and directed consequential relief; amounts were deposited by the appellant under protest for release of confiscated goods. The Tribunal's order operated as the relevant date from which the duty (or amount) became refundable. The Court held that where amounts were paid under protest and the appellate authority vacates the liability, the one year limitation in Section 27 (computed from the appellate order) does not operate to defeat a consequential refund claim filed after the date of deposit but within the statutory scheme. Reliance was placed on precedents and Board circulars recognising that payments made under protest (including pre deposits) resulting in consequential relief are to be refunded and that limitation cannot be applied to deny such refunds. Applying these principles to the facts, the refund claim could not be rejected as time barred. [Paras 4]

Refund claim was not barred by limitation and the impugned rejection on time bar grounds was set aside.

Applicability of Section 27 to refund of redemption fine and penalty - statutory interpretation of taxing provisions by plain and strict construction - Whether Section 27 of the Customs Act applies to refunds of redemption fine and penalty and whether limitation under Section 27 can be excluded for such amounts paid under protest. - HELD THAT: - The Court observed that Section 27 is the statutory mechanism for refund claims under the Customs Act and extends to amounts paid that become refundable pursuant to appellate orders. Citing authoritative decisions on statutory construction of fiscal provisions, the Court held that the statute recognises payments made under protest and the proviso disapplies the one year limitation in such cases. The tribunal and judicial precedents and Board guidance were relied upon to show that refunds of penalties/fines and pre deposits directed as consequential relief by appellate bodies are required to be processed and cannot be negated by a strict application of limitation where the payment was under protest and appellate relief was granted. [Paras 4]

Section 27 governs refund claims including consequential refunds of fines and penalties; where amounts were paid under protest and vacated by an appellate order, limitation under Section 27 does not preclude grant of refund.

Final Conclusion: The appeal is allowed: the impugned orders rejecting the refund on the ground of limitation are set aside and the refund claim (a consequential refund following the Tribunal's order) is to be processed in accordance with law.

Personal liability of Resolution Professional - payments forming part of CIRP costs with Committee of Creditors approval - waiver of pre CIRP claims by Asset Preservation Team members - prohibition of double payment to creditors/workmen - preservation and maximisation of corporate debtor's assets under the Code

Personal liability of Resolution Professional - payments forming part of CIRP costs with Committee of Creditors approval - Application seeking direction to file settlement documents and holding the Resolution Professional personally liable for payments to 103 employees rejected - HELD THAT: - The Tribunal examined the RP's affidavit and the record showing that the lump sum payments to the 103 members of the Asset Preservation Team were made in circumstances intended to preserve assets and to enable continuation of essential functions during CIRP. The payments were included in the operational budget and were approved by the Committee of Creditors. The RP explained the factual background, the rationale for making the payments to secure services essential for preservation and maximisation of value, and that payments were not pre CIRP dues but were incentivisation/compensation during CIRP. Where payments were made with CoC approval in the CIRP process, the Tribunal found no basis to fasten personal liability on the RP. The Tribunal therefore concluded that the appellant's prayer to hold the RP personally liable and to require production of the settlement on the record was not maintainable. [Paras 10, 11]

Prayers to hold the Resolution Professional personally liable and to direct production of settlement documents were dismissed; no personal liability is fastened on the RP.

Waiver of pre CIRP claims by Asset Preservation Team members - prohibition of double payment to creditors/workmen - preservation and maximisation of corporate debtor's assets under the Code - Whether the 103 employees would receive double payment and whether they remain entitled to amounts under the approved Resolution Plan - HELD THAT: - The RP filed an additional affidavit clarifying that the 103 APT members had agreed to waive their claims towards unpaid salaries and had accepted lump sum payments in lieu thereof; consequently they would not be entitled to further payment under the approved Resolution Plan for those waived claims. The RP further explained that the APT payments were separate incentivisation measures during CIRP and that amounts for provident fund and gratuity remain payable in accordance with the Tribunal's earlier order. The Tribunal accepted the RP's explanation and affidavit, held there was no double payment, and recorded that other workmen's entitlements under the Resolution Plan would remain unaffected. [Paras 6, 7, 9]

The affidavit establishes waiver by the 103 employees and dispels the apprehension of double payment; those members shall not receive payment under the Resolution Plan for the waived unpaid salaries, though provident fund and gratuity entitlements remain subject to the Tribunal's earlier decision.

Final Conclusion: The appeal is dismissed; the Adjudicating Authority's rejection of the application is upheld with the Tribunal accepting the RP's affidavits that the lump sum payments were made with CoC approval to preserve assets, that the 103 APT members waived their claims so as to avoid double payment, and that no personal liability is attributable to the RP.

Invocation of extended period of limitation under proviso to Section 73(1) of the Finance Act, 1994 - requirement to specify cogent reasons in the show cause notice for invoking extended period - jurisdiction to issue show cause notice for service tax liability based on information from income tax returns/Form 26AS - alternative efficacious remedy by appeal under Section 85 of the Finance Act, 1994

Invocation of extended period of limitation under proviso to Section 73(1) of the Finance Act, 1994 - requirement to specify cogent reasons in the show cause notice for invoking extended period - Validity of show cause notice and adjudication which invoked the extended five year period under proviso to Section 73(1) for the period April 2015 to March 2016 - HELD THAT: - The Court examined whether the proviso to Section 73(1) - permitting an extended period beyond 30 months - was properly invoked. Although the show cause notice did not in granular detail narrate all proofery of the ingredients for invoking the extended period, the record shows that the department issued the notice on the basis of ITR data, afforded the petitioner an opportunity to file documents and to be heard, and the petitioner replied and maintained that the services related to agricultural work and were exempt. Having regard to the course of proceedings - issuance of the notice, opportunity to reply and personal hearing, and adjudication on the materials and replies - the Court did not find cogent grounds to hold that the revenue lacked jurisdiction to invoke the proviso or that the adjudication was invalid for that reason. The Court therefore declined to quash the show cause notice or the adjudication on the ground that the extended period was invoked. [Paras 22, 23, 24, 27]

Invocation of the extended period and the consequent adjudication were not set aside on jurisdictional grounds.

Jurisdiction to issue show cause notice for service tax liability based on information from income tax returns/Form 26AS - Whether proceedings could be initiated and a show cause notice issued on the basis of information obtained from the petitioner's income tax returns/Form 26AS - HELD THAT: - The Court considered the contention that reliance solely on ITR/Form 26AS is impermissible. It noted that the department used ITR information to shortlist the petitioner, issued the show cause notice, called for documentary proof, and conducted a personal hearing. The petitioner failed to substantiate the claimed exemption from service tax. In these circumstances the Court held that initiation of proceedings on the basis of information from the tax department, followed by opportunity to reply and adjudication, could not be struck down merely because the information originated from ITR/Form 26AS. [Paras 20, 23]

Proceedings commenced on ITR/Form 26AS data, followed by notice and hearing, were not impermissible and did not vitiate adjudication.

Alternative efficacious remedy by appeal under Section 85 of the Finance Act, 1994 - Maintainability of writ petition under Article 226 when an alternative statutory appeal under Section 85 is available - HELD THAT: - The Court applied the principle that where an alternative efficacious statutory remedy exists, writ jurisdiction should ordinarily not be exercised. Section 85 of the Finance Act, 1994 provides for appeals against orders of the authorities. The Court observed that the petitioner had the appellate remedy and that the writ petition could not be used to bypass the appeal mechanism. Reliance was placed on authority emphasising restraint in exercising writ jurisdiction where statutory appeals are available. [Paras 26]

Writ petition was not maintainable in view of the alternative remedy of appeal under Section 85.

Final Conclusion: The petition is dismissed. The High Court found no grounds to quash the show cause notice or adjudication on the basis of invocation of the extended period or initiation from ITR/Form 26AS where the petitioner was afforded opportunity to reply; the petitioner must pursue statutory appellate remedy and any pending appeal is to be decided strictly in accordance with law.

Export of services - Export of Service Rules, 2005 - receipt of consideration in convertible foreign exchange - payment routed through associate/related enterprise - reimbursement not being taxable consideration - suppression and extended period/time-bar

Export of services - Export of Service Rules, 2005 - receipt of consideration in convertible foreign exchange - payment routed through associate/related enterprise - Services provided from India for clients situated abroad, with consideration remitted in convertible foreign exchange via an associate company, qualify as export of services under Rule 3(2)(b) of the Export of Service Rules, 2005. - HELD THAT: - The Agreement showed the appellant performed services on behalf of the USA associate for foreign clients. Rule 3(2)(b) requires that services rendered abroad be paid for in convertible foreign exchange. The Department's objection that payment must be received directly from the foreign client was rejected as there is no stipulation in Rule 3(2)(b) to that effect. The commercial arrangement whereby the USA company collects payment from its clients and remits convertible foreign exchange to the appellant does not defeat export character so long as there is a direct relation between the foreign currency received and the services rendered. The Tribunal therefore held that the appellant fulfilled the conditions of the Export of Service Rules and the demand confirmed on this ground is unsustainable. [Paras 8, 9]

Confirmed demand set aside on merits: services treated as export of services.

Reimbursement not being taxable consideration - Amounts reimbursed to Nalco USA for costs initially incurred by the USA company do not constitute taxable consideration for services provided by Nalco USA and are not liable to service tax. - HELD THAT: - The Tribunal found that the amounts in question were costs initially borne by the USA company and subsequently reimbursed by the appellant. There was no allegation or evidence that such payments were made as consideration for any service provided by Nalco USA. Accordingly, the confirmed demand insofar as it related to these reimbursements was held legally unsustainable and was set aside. [Paras 10]

Confirmed demand in respect of reimbursements set aside.

Suppression and extended period/time-bar - Extended period demand based on suppression cannot be sustained where the assessee was registered, filing ST-3 returns, paying service tax for domestic operations and had a bona fide belief that services exported were not taxable. - HELD THAT: - The Tribunal noted that the appellant was duly registered with the Service Tax Department, filed ST-3 returns and discharged service tax where applicable in India. The appellant's bona fide belief that services rendered abroad (with consideration in convertible foreign exchange) did not attract service tax was found to be reasonable. The Department did not produce concrete evidence of suppression. In these circumstances the invocation of the suppression provision to justify an extended period demand was rejected and the extended period demand was set aside on limitation grounds. [Paras 11, 12]

Extended period demand based on suppression/time-bar set aside.

Final Conclusion: The appeal is allowed: the confirmed demand is set aside on merits (export of services and reimbursements) and the extended-period demand based on suppression is also disallowed; consequential relief to follow as per law.

Renting of immovable property - exclusionary clause for buildings used for accommodation - abatement under Notification No.26/2012 - supply of tangible goods (SOTG) - possession and effective control - penalty under Section 77 and 78

Renting of immovable property - exclusionary clause for buildings used for accommodation - abatement under Notification No.26/2012 - Liability to service tax on letting out hotel premises before and after 01.07.2012 - HELD THAT: - The Tribunal applied its earlier findings that buildings used for accommodation including hotels are excluded from the definition of immovable property and therefore renting such buildings up to June 2012 does not attract service tax under the challenged entry. With effect from 01.07.2012, under the post-Negative List regime the taxable nature of renting hotels is subject to the abatement provided by Notification No.26/2012; the appellants are entitled to the 40% abatement and had deposited service tax on 60% of the value, leaving no further liability for the period in question. [Paras 8, 9, 14]

Renting of the hotel premises is not taxable as renting of immovable property up to June 2012; from 01.07.2012 the appellants are liable only on 60% of the value after abatement and have no further liability.

Supply of tangible goods (SOTG) - possession and effective control - Whether letting out of plant, machinery and fixtures to the lessee attracts service tax as supply of tangible goods - HELD THAT: - The statutory test for supply of tangible goods requires that goods be supplied for use without transfer of the right of possession and effective control. Examination of the facts and contract shows that the lessee was given complete control and possession of the goods (fixtures and machinery forming part of the premises), and such items are integral to the premises and hence not within the scope of SOTG levy. The Tribunal therefore follows its earlier decision in the appellant's favour and holds that the supply of those goods does not attract service tax under SOTG. [Paras 11, 13, 14]

No service tax is leviable under the category of supply of tangible goods on the plant, machinery and fixtures let out, as right of possession and effective control stood transferred to the lessee.

Penalty under Section 77 and 78 - Imposability of penalty under Sections 77 and 78 in respect of the assessed service tax demand - HELD THAT: - The Tribunal observed that the issue was one of interpretation and the transactions were recorded in the books of account maintained in the ordinary course of business. In these circumstances, there was no basis for invoking penal provisions. The adjudicating authority's imposition of penalty was therefore not sustained. [Paras 15]

Penalty under Sections 77 and 78 is not imposable and the impugned penalty is set aside.

Final Conclusion: The appeal is allowed: the demand for service tax on letting out the hotel premises up to June 2012 is not sustainable; for the post-01.07.2012 period the appellants are taxable only on 60% after abatement and have no further liability for the period in dispute; no service tax is leviable under SOTG on the plant and machinery let out; and penalties under Sections 77 and 78 are set aside.

Works Contract Service - commercial or industrial construction - exemption for construction for educational/charitable institutions - binding effect of Board circulars - extended period / limitation in service tax demands - withdrawal of earlier circulars by master circular

Works Contract Service - exemption for construction for educational/charitable institutions - binding effect of Board circulars - commercial or industrial construction - Liability to pay service tax under Works Contract Service for construction of educational institutions during the period 01.10.2008 to 30.06.2012 - HELD THAT: - The Board's Circular No.80/10/2004-ST dated 17.09.2004 clarified that constructions for use by organizations established solely for educational, religious, charitable, health, sanitation or philanthropic purposes and not for profit are non commercial and not taxable. The Master Circular list does not show withdrawal of Circular No.80/10/2004 ST and departmental correspondence confirmed the circular remained in force. The department did not dispute that the buildings constructed by the appellant were used principally and solely for educational purposes. Reliance on consistent Tribunal and High Court decisions applying the same principle reinforced that mere charging of fees by an institution does not convert it into a commercial undertaking for purposes of works contract levy. On these foundations the Tribunal held that construction of the educational institutions in question did not fall within taxable commercial/industrial construction and the demand under WCS could not be sustained. [Paras 17]

Demand of service tax under Works Contract Service in respect of construction of educational institutions is unsustainable and is set aside.

Extended period / limitation in service tax demands - binding effect of Board circulars - Whether the demand could be raised by invoking the extended period of limitation - HELD THAT: - The appellant had disclosed receipts in ST 3 returns as exempted and acted on a bona fide interpretation based on Board Circular No.80/10/2004 ST. The department relied on information from investigation but failed to establish a positive act of suppression with intent to evade tax. Given the interpretational nature of the issue, the existence of Board clarification and the absence of proven suppression, the conditions for invoking the extended period were not satisfied. Accordingly the demand is time barred. [Paras 18]

Invocation of the extended period is not justified; the demand is time barred.

Final Conclusion: The appeal is allowed: the impugned order confirming demand, interest and penalties is set aside; service tax demand in respect of construction of educational institutions for 01.10.2008 to 30.06.2012 is quashed and the demand is held time barred.

Necessity of material evidence to sustain demand for short production/clearance without payment of duty - use of industry production norms as basis for assessing duty liability - reliance on precedent by the Tribunal where facts are indistinguishable - insufficiency of a marginal variation in production percentage to infer clandestine removal

Necessity of material evidence to sustain demand for short production/clearance without payment of duty - use of industry production norms as basis for assessing duty liability - reliance on precedent by the Tribunal where facts are indistinguishable - insufficiency of a marginal variation in production percentage to infer clandestine removal - Whether the Tribunal was correct in allowing the appeal and setting aside the show-cause order where the departmental demand rested solely on a 2% variation from SAIL's production norm without other material evidence. - HELD THAT: - The Court recorded that, other than the mere variation of production percentage vis-a -vis the norm fixed by SAIL, the Department had no material to demonstrate that the alleged excess production was cleared without payment of duty. The Tribunal found no evidence was led regarding use of raw material, electricity consumption, sale or mode of transport, nor evidence to show the assessee used the same advanced technology as SAIL. Those findings of the Tribunal were not challenged. No factual distinction from the precedent relied upon by the Tribunal was shown during arguments. In that factual matrix, a marginal (2%) variation and reliance on SAIL's norms, without supporting material, was held insufficient to sustain the demand, and the Tribunal's reliance on its earlier decision was held to be justified. [Paras 7, 8, 9, 10]

Tribunal's order allowing the appeal and setting aside the show-cause order upheld; departmental demand quashed for lack of material evidence.

Final Conclusion: Appeal dismissed. The Tribunal rightly set aside the demand where it was founded only on a marginal production variance from an industry norm and the Department produced no independent material to substantiate clandestine removal or duty evasion.

Effect of proportionate reversal of CENVAT credit on liability to pay presumptive amount - Option under Rule 6(3) to pay ten per cent. of value or to reverse CENVAT credit attributable to exempted goods - Obligation to maintain separate accounts for inputs and input services and alternative options when such accounts are not maintained - Remand for verification of quantification of CENVAT credit reversal - Appellate authority's role in verifying compliance with conditions for reversal under Rule 6

Effect of proportionate reversal of CENVAT credit on liability to pay presumptive amount - Option under Rule 6(3) to pay ten per cent. of value or to reverse CENVAT credit attributable to exempted goods - Whether reversal of proportionate CENVAT credit (with interest) in respect of input services used for exempted goods precludes recovery of the ten per cent. amount for the period April, 2008 to June, 2009 - HELD THAT: - The Tribunal found, and this Court accepted, that the assessee had reversed the proportionate CENVAT credit attributable to input services used for the manufacture of exempted goods and had paid interest thereon; following such reversal the position is as if the credit had not been availed. Rule 6(3) provides an option where separate accounts are not maintained either to pay a presumptive percentage (ten per cent. for manufacturers) or to pay an amount equivalent to the CENVAT credit attributable to exempted goods. The objective of Rule 6 is to ensure that credit is not availed in relation to exempted goods; it is not enacted to extract an amount in excess of the credit attributable to such exempted manufacture. Consequently, where the assessee has validly reversed the attributable credit and paid interest, the Department cannot insist on recovery of the ten per cent. presumptive amount for the period governed by the amended rule (with effect from 01.04.2008). The Court agreed with the Tribunal's reasoning that the demand based on ten per cent. would not sustain in such circumstances and that the Tribunal correctly set aside the demand for April, 2008 to June, 2009 subject to verification of the quantification of reversal. [Paras 4, 5, 6]

Demand of ten per cent. for April, 2008 to June, 2009 cannot be sustained insofar as the assessee has proportionately reversed the CENVAT credit and paid interest; the Tribunal's conclusion on this point is upheld.

Remand for verification of quantification of CENVAT credit reversal - Appellate authority's role in verifying compliance with conditions for reversal under Rule 6 - Whether the matter should be remanded for verification of the correctness of the quantification of the CENVAT credit reversed by the assessee - HELD THAT: - The Tribunal noted that although the Commissioner had demanded ten per cent. of the value of exempted goods, he had not verified the correctness of the actual CENVAT credit attributable to the exempted goods as reversed by the assessee. The Tribunal therefore remanded the matter to the adjudicating authority for verification of the quantification of the reversal. The High Court observed and accepted this remedial step; the remand is limited to verification of the quantification of the reversal and not to relitigation of the legal principle that a valid reversal with interest negates the obligation to pay the presumptive amount under Rule 6(3). [Paras 3]

Matter is remanded to the adjudicating authority for verification of the correctness of the quantification of the CENVAT credit reversed by the assessee.

Final Conclusion: The appeal is dismissed. The Tribunal's conclusion that reversal of proportionate CENVAT credit with interest negates liability to pay the ten per cent. presumptive amount for the period April, 2008 to June, 2009 is upheld; the matter is remanded solely for verification of the quantification of the reversal.

Refund of excise duty on post clearance credit notes/turnover discounts - bar of unjust enrichment under Section 11B / Section 12B - provisional assessment as precondition for claiming discounts - transaction value versus MRP based valuation - credit notes evidencing quantity and prompt payment discounts - consumer welfare fund and proviso to Section 11B(2)

Refund of excise duty on post clearance credit notes/turnover discounts - provisional assessment as precondition for claiming discounts - transaction value versus MRP based valuation - Entitlement to refund on merits for excess duty paid by reason of credit notes issued post clearance in respect of quantity and prompt payment discounts. - HELD THAT: - The Tribunal held that refunds claimed by the appellant for discounts given post clearance by way of credit notes are, on the facts, admissible on merits. The Commissioner (Appeals) had applied the Board Circular and supplementary instructions and denied merit solely because the appellant did not opt for provisional assessment. The Tribunal observed that the first three parameters in the Circular (discount known as a common practice, actually passed to the buyer, and extendable as per commercial considerations) were satisfied and that failure to seek provisional assessment under Rule 7 is procedural and not a sacrosanct bar to entitlement where the substantive conditions are met. The Tribunal therefore concluded that the Commissioner (Appeals) was not sustainable insofar as he rejected refund on merits for non resort to provisional assessment, and that earlier Tribunal orders in appellant's favour on identical facts supported admissibility of refund on merits. [Paras 19, 20]

Refunds are admissible on merits notwithstanding non opt in for provisional assessment, since the substantive conditions for treating quantity/turnover discounts as allowable were satisfied.

Bar of unjust enrichment under Section 11B / Section 12B - consumer welfare fund and proviso to Section 11B(2) - credit notes evidencing quantity and prompt payment discounts - Applicability of unjust enrichment as a bar to disbursal of refund where the manufacturer fails to demonstrate that the incidence of duty was not passed on to ultimate customers. - HELD THAT: - Although the appellant proved that discounts were given and produced Chartered Accountant certification and ledger entries, the Tribunal found that the burden under Section 11B to show that the incidence of duty was not passed on rested on the claimant and was not discharged. Reliance was placed on the Larger Bench decision in Addison and Company which requires that refund payable to a manufacturer will be credited to the Consumer Welfare Fund unless it is shown that the incidence of duty was not passed on; only in such case may the amount be paid to the claimant. Applying that principle, the Tribunal concluded that even if refund is allowable on merits, disbursal to the appellant is barred by unjust enrichment because the appellants did not establish that dealers/stockists had not passed on the duty to ultimate customers. The Tribunal therefore held that the refund must be dealt with in accordance with provisions for crediting to the Fund (Section 12D) rather than paid to the appellant. [Paras 14, 15, 16, 20]

Refunds, though meritorious, cannot be disbursed to the appellant owing to unjust enrichment; such amounts are to be dealt with under the statutory provision directing credit to the Consumer Welfare Fund.

Final Conclusion: Appeals disposed: refund claims held admissible on merits but the appellants failed to discharge the onus under Section 11B/12B of showing that the duty incidence was not passed on; consequently the refunds cannot be paid to the appellants and must be dealt with in accordance with the statutory scheme (credit to the Consumer Welfare Fund).

Power to set aside an ex parte order - non-application of mind - duty to communicate order under Rule 63(7) of the U.P. VAT Rules - condonation of delay in filing rectification/recall application - remand for fresh consideration

Power to set aside an ex parte order - duty to communicate order under Rule 63(7) of the U.P. VAT Rules - condonation of delay in filing rectification/recall application - non-application of mind - Whether the Commercial Tax Tribunal erred in rejecting the application for recall/rectification of its ex parte order dated 16.03.2017 without considering the revisionist's plea that the order was not communicated to him and therefore the delay in seeking rectification should be condoned - HELD THAT: - The Court recorded that the second appeal in respect of assessment year 2009-2010 was decided ex parte on 16.03.2017 and that the revisionist alleged non-communication of that order and applied for a certified copy only on 19.02.2024, when he moved for rectification and condonation of delay. The Tribunal's impugned order of 30.03.2024 merely rejected the application after seven years without addressing or giving reasons on the factual and legal grounds raised by the revisionist. The High Court held that the Tribunal ought to have applied its mind to the asserted failure of communication (noting the duty imposed by Rule 63(7) of the U.P. VAT Rules) and to the question whether sufficient cause existed to condone the delay. Relying on established principle that a tribunal has jurisdiction to set aside an ex parte order and re-hear the matter where a party was prevented from participating for sufficient cause, the Court found that the Tribunal's failure to consider the grounds amounted to non-application of mind and arbitrariness. For these reasons the impugned order was set aside and the matter remitted to the Tribunal for fresh decision in accordance with law. [Paras 11, 12, 13, 14, 16]

Impugned order dated 30.03.2024 set aside for non-application of mind; matter remitted to the Commercial Tax Tribunal to decide the revisionist's application for recall/rectification and condonation of delay afresh in accordance with law, to be completed expeditiously (within three months on production of certified copy).

Final Conclusion: The Tribunal's order rejecting the application for recall/rectification of its ex parte order was set aside for non-application of mind; the matter is remitted to the Tribunal to consider the asserted non-communication and the request for condonation of delay and to decide the application afresh within three months on production of a certified copy.

Characterisation of a concession agreement as a lease - definition of "lease" under the Indian Stamp Act versus Transfer of Property Act - stamp duty chargeability on Build-Operate-Transfer (BOT) agreements - legitimate expectation - promissory estoppel against legislative action - validity of statutory amendment affecting stamp duty rates

Validity of statutory amendment affecting stamp duty rates - promissory estoppel against legislative action - Insertion of proviso (c) to Clause (C) of Entry 33 of Schedule 1-A by M.P. Amendment Act No.12 of 2002 and challenge based on legitimate expectation and promissory estoppel - HELD THAT: - The Court held that the proviso merely prescribes the rate and basis of chargeability for certain lease-like instruments under BOT projects and does not redefine or expand the legal meaning of 'lease'. The doctrine of legitimate expectation and promissory estoppel does not operate to restrain the State Legislature from enacting or amending statutes in exercise of its legislative power. Executive communications or clarifications cannot override subsequent statutory amendments; legitimate expectation grants procedural protection (fair hearing/explanation) but does not create an enforceable substantive right against a legislative change. Promissory estoppel, being an equitable doctrine, cannot be invoked to prevent the legislature from enacting laws, save in exceptional circumstances to prevent fraud or manifest injustice, which were not shown. Consequently, the challenge to the 2002 amendment on grounds of arbitrariness or estoppel was rejected. [Paras 23, 24, 25, 26, 27]

The proviso inserted by the 2002 Amendment is not ultra vires; legitimate expectation and promissory estoppel do not preclude the State legislature from enacting the amendment and the challenge is rejected.

Characterisation of a concession agreement as a lease - definition of "lease" under the Indian Stamp Act versus Transfer of Property Act - Whether the Concession Agreement under the BOT scheme constitutes a lease for the purpose of stamp duty - HELD THAT: - The Court upheld the High Court's conclusion that the Concession Agreement satisfies the ingredients of a lease. For stamp law purposes the definition of 'lease' under Section 2(16) of the Indian Stamp Act is of wider import and expressly covers instruments by which tolls are let; Section 105 of the Transfer of Property Act likewise supplies the necessary hallmarks (transfer of right to enjoy property for a term for consideration). The Court found no perversity in the High Court's reasoning, and subsequent Supreme Court precedents reinforce the broader application of 'lease' under the Stamp Act to toll concession instruments. [Paras 28, 29, 30]

The Concession Agreement is a lease for the purposes of stamp duty and the High Court's finding to that effect is upheld.

Stamp duty chargeability on Build-Operate-Transfer (BOT) agreements - Basis for computation of stamp duty under proviso (c) - whether stamp duty is payable on the amount likely to be spent by the lessee only or on the entire project cost - HELD THAT: - A plain reading of proviso (c) indicates stamp duty at the specified rate is leviable on 'the amount likely to be spent under the agreement by the lessee.' Therefore, the liability to pay stamp duty arises only in respect of the amount to be spent by the lessee under the Concession Agreement and not on sums to be expended by the lessor or other stakeholders. Where the agreement contemplates the lessee funding approximately 50% of the project cost, stamp duty must be calculated with reference to the lessee's share as determined under the agreement. [Paras 31, 32, 33, 34]

Stamp duty under proviso (c) is chargeable at the prescribed rate only on the amount likely to be spent by the lessee; demands based on the entire project cost are unjustified to that extent.

Stamp duty chargeability on Build-Operate-Transfer (BOT) agreements - Recalculation of stamp duty demand and fresh determination of the amount spent by the lessee under the Concession Agreement - HELD THAT: - The Court did not undertake a factual quantification of the lessee's share where the Concession Agreement contains differing figures at different places. Instead, the Court directed the Collector (Stamps)/Revenue Officer of the concerned district to determine, for each case, the precise amount 'likely to be spent under the agreement by the lessee' in accordance with proviso (c) and re-calculate the stamp duty payable. If appellants have already deposited amounts calculated on entire project cost, any excess determined must be refunded; if deficit remains, appellants must pay within the prescribed period. This factual determination and recomputation is remitted to the revenue authorities for individual assessment and communication to the parties within the timelines specified by the Court. [Paras 33, 34]

Matter remitted to the Collector (Stamps)/Revenue Officer to ascertain the amount to be spent by the lessee and re-calculate stamp duty; demands based on whole project cost set aside to the extent inconsistent, with directions for refund or payment as appropriate.

Final Conclusion: The appeals are partly allowed: the High Court's determinations upholding the characterisation of the concession agreements as leases and the validity of the 2002 statutory amendment are affirmed; however, demands for stamp duty calculated on the entire project cost are set aside to the extent they exceed the duty chargeable on the amount to be spent by the lessee, and the matter of quantification is remitted to the Collector (Stamps)/Revenue Officer for fresh computation and appropriate refund or recovery.

Grant of bail - sufficiency of prima facie material - role of WhatsApp messages and Call Detail Records as linking evidence - reliance on statement recorded under Section 164 Cr.P.C. - non-beneficiary status of accused - imposition of conditional bail - trial court to proceed uninfluenced by interim observations

Grant of bail - sufficiency of prima facie material - Whether the applicant should be released on bail in Crime No.66 of 2023/FIR No.0911 of 2023. - HELD THAT: - The Court examined the charge-sheet and documentary material and noted whatsapp chats and CDRs indicating communication between the applicant and accused No.1. However, the Court found that mere forwarding of messages and business-related contact, given the applicant's role as a stock broker, does not by itself establish a major role in the alleged fraud. The charge-sheet's assertion that the applicant actively opened fake accounts is not supported by independent material; specifically, a statement recorded under Section 164 Cr.P.C. by an employee of accused No.1 details the manner of opening fake accounts without attributing such a role to the applicant. In view of scant direct material linking the applicant to the core fraudulent activity and absence of evidence showing the applicant benefited from the alleged offence, and having regard to the period of incarceration already undergone, the Court concluded that the applicant had made out a case for bail. [Paras 4, 5, 6, 7, 8]

Applicant is entitled to be released on bail.

Imposition of conditional bail - non-tampering and non-influence conditions - Terms and conditions to be imposed upon grant of bail. - HELD THAT: - The Court prescribed standard conditional terms to protect the integrity of the investigation and trial process. The applicant was directed to furnish a PR bond and sureties, to refrain from tampering with evidence or influencing informant or witnesses, and to provide and update his contact details with the Investigating Officer. The Court made clear that violation of these conditions would render the bail liable to cancellation. [Paras 9, 10]

Bail granted subject to furnishing bond and sureties and observance of non-tampering, non-influence and reporting conditions.

Trial court to proceed uninfluenced by interim observations - Whether the observations made by the High Court at the bail stage should influence the trial court's further proceedings. - HELD THAT: - The High Court limited its observations to the bail application and expressly directed that the Trial Court shall proceed with the matter without being influenced by the interim remarks made in this order. The observations were confined to the limited exercise of deciding bail and do not constitute adjudication on merits of the charges. [Paras 11]

Trial Court to continue adjudication on merits without being influenced by the High Court's interim observations.

Final Conclusion: Bail granted to the applicant in Crime No.66 of 2023/FIR No.0911 of 2023 on furnishing PR bond and sureties, subject to conditions against tampering or influencing witnesses and requirement to furnish contact details; High Court's observations confined to the bail order and Trial Court to proceed uninfluenced.