TaxTMI Updates e-Newsletter
Jul 24,2021

Classification of wastes from the manufacture of iron or steel under HSN 2619 00 90 - treatment of unburnt or partially burnt coal (cinder / char-dolachar) as residue with negligible calorific value - classification of ESP/Bag Filter dust arising from sponge iron manufacture - non-applicability of GST Compensation Cess on sale of industrial residue (cinder/char-dolachar) - taxability of such wastes under the Schedule entry dealing with wastes and scrap for IGST/CGST/SGST

Classification of wastes from the manufacture of iron or steel under HSN 2619 00 90 - treatment of unburnt or partially burnt coal (cinder / char-dolachar) as residue with negligible calorific value - Whether cinder half-burnt coal / char-dolachar generated in the DRI sponge iron process is classifiable under HSN 2619 00 90. - HELD THAT: - The Authority examined the nature of the material generated during the DRI sponge iron process and accepted the applicant's factual position that the material is a residue left from coal used as fuel and has very low calorific value with no capacity to produce flame. Relying on the reasoning in earlier decisions that unburnt or partly burnt pieces of coal constitute cinder (having negligible fuel value) and on tribunal precedents classifying by-product char/dolochar from sponge iron manufacture under CETH/HSN 2619 00 90, the Authority concluded that the half-burnt/non-burnt coal is not classifiable as a fuel product of heading 2701 but falls within the heading for slags, dross, scaling and other waste from the manufacture of iron or steel. The determinative reasoning is that the material's reduced calorific value and residual character make it a waste/by product of iron manufacture and hence properly classifiable under 2619 00 90.

Cinder Half-burnt Coal / Char Dolachar generated during the DRI sponge iron process is classifiable under HSN 2619 00 90.

Classification of ESP/Bag Filter dust arising from sponge iron manufacture - taxability of such wastes under the Schedule entry dealing with wastes and scrap for IGST/CGST/SGST - Whether ESP / Bag Filter dust produced during the DRI sponge iron process is classifiable under HSN 2619 00 90 and the applicable tax treatment. - HELD THAT: - The Authority accepted the applicant's description that dust collected from bag filters and ESP consists of process residues generated during sponge iron manufacture and is sold to third parties (for example, brick manufacturers). Applying the same classification approach as for the cinder/char material, and following tribunal precedents treating such process dust as waste from manufacture of iron or steel, the Authority held that ESP/Bag Filter dust falls under HSN 2619 00 90. The Authority further observed that such wastes are covered by the relevant Schedule entry for wastes/scrap and attract the GST rates prescribed therein (18% under IGST and 9% under CGST/SGST as stated in the ruling).

ESP / Bag Filter dust generated during the DRI sponge iron process is classifiable under HSN 2619 00 90 and is taxable under the Schedule entry applicable to such wastes.

Non-applicability of GST Compensation Cess on sale of industrial residue (cinder/char-dolachar) - Whether GST Compensation Cess @ Rs. 400 per tonne is leviable on sale of cinder half-burnt coal generated during the process. - HELD THAT: - Having concluded that the half-burnt coal is a residue/by-product classifiable under HSN 2619 00 90 and not a fuel falling under the tariff for coal/fuel products, the Authority addressed cess liability. The Authority, applying the classification outcome and relevant schedule coverage, held that the GST Compensation Cess at the stated rate is not applicable on the sale of the said waste material.

GST Compensation Cess is not applicable on sale of cinder half-burnt coal generated during the DRI sponge iron process.

Final Conclusion: The Authority ruled that both cinder half-burnt coal/char-dolachar and ESP/Bag Filter dust from the DRI sponge iron process are classifiable under HSN 2619 00 90 and are taxable as wastes under the relevant Schedule entry; further, GST Compensation Cess is not leviable on sale of the cinder half-burnt coal.

Time of supply - point of taxation - constructed complex - transfer of possession - conveyance deed - allotment letter - liability to pay tax on development rights - literal construction - noscitur a sociis

Constructed complex - literal construction - noscitur a sociis - Meaning of the phrase 'Constructed complex' in Notification No.4/2018. - HELD THAT: - The Authority applied principles of literal construction and noscitur a sociis to construe the phrase 'Constructed complex' in the notification. The words 'building' and 'civil structure' that follow the phrase qualify its meaning, restricting the term to a building or a completed structure in its ordinary and popular sense. Accordingly, a constructed complex contemplates an existing building or completed structure before any transfer of possession or right under the notification can occur.

'Constructed complex' refers to a building or a completed structure.

Time of supply - point of taxation - transfer of possession - conveyance deed - allotment letter - liability to pay tax on development rights - Determination of the time of supply and point of taxation for development rights under Notification No.4/2018 where a supplementary agreement was executed prior to the GST regime but possession/right is transferred after introduction of GST. - HELD THAT: - Notification No.4/2018 fixes the time of supply for the taxable event of transfer of development rights at the moment when the builder/developer transfers possession or the right in the constructed complex to the person supplying development rights by entering into a conveyance deed or a similar instrument (for example, an allotment letter). A plain reading of the notification requires that (i) a constructed building or structure be in existence, and (ii) the transfer of possession/right be effected by a conveyance deed or similar instrument. Applying this to the facts, an agreement executed before the GST regime does not by itself satisfy these conditions where the actual transfer of possession/right occurs later; therefore the time of supply is the date of transfer of possession/right by conveyance/allotment, and liability to tax arises on that date. Where such transfer occurs after the commencement of CGST/SGST, liability arises under CGST & SGST.

The time of supply and liability to pay tax on development rights is the date on which possession of, or the right in, the constructed building is transferred to the person supplying development rights by conveyance deed or similar instrument; it is not the earlier date of the supplementary agreement.

Final Conclusion: The Authority ruled that 'constructed complex' means a building or completed structure and that, under Notification No.4/2018, the time of supply (and hence the point of taxation) for development rights is the date of transfer of possession or right by conveyance deed or similar instrument; an earlier supplementary agreement does not determine tax liability if possession/right is transferred later, and where transfer occurs after introduction of CGST/SGST the liability arises under those Acts.

Procedural irregularity in show cause notice - Requirement of order of assessment before recovery - Right to be heard / opportunity to reply - Validity and technical defects in e-way bill - Interim release of detained goods on security

Requirement of order of assessment before recovery - Procedural irregularity in show cause notice - Demand notice raised without passing an order of assessment was irregular and liable to be set aside. - HELD THAT: - The Superintendent of Taxes issued a demand notice for unpaid tax with penalty to the consignee without first passing an order of assessment. The initial show cause notice dated 15th May 2021 did not contain the ground subsequently relied upon in the communication of 20th May 2021, so the petitioner did not have an opportunity to meet that case. Recovery proceedings by way of demand must be founded on a proper assessment order which is amenable to challenge; issuing a demand in the absence of such an assessment was procedurally improper. For these reasons the demand notice dated 29th May 2021 was set aside.

Demand notice dated 29th May 2021 quashed for lack of assessment and procedural irregularity.

Right to be heard / opportunity to reply - Validity and technical defects in e-way bill - Interim release of detained goods on security - The show cause process was directed to be regularised by treating the show cause notice dated 15th May 2021 read with the communication dated 20th May 2021 as the show cause, permitting further reply, and remitting the matter for fresh assessment; vehicles to be released on specified security pending proceedings. - HELD THAT: - Because the original show cause did not include the later-stated ground, the court permitted the Superintendent of Taxes to carry out assessment afresh after giving the petitioner an opportunity to file a further reply and to be heard. The court constrained indefinite detention of the vehicles given the petitioner's contention of earlier payment, that the defect in e-way bills was technical and later remedied, and the deteriorating condition of unattended vehicles. Consequently the Superintendent was directed to consider any further reply, give hearing if demanded, and pass an assessment order in accordance with the GST law. Pending those proceedings, the vehicles were ordered released on the petitioner furnishing an unconditional bank guarantee for 25% of the total amount indicated in the demand notices and a bond for the remaining 75%.

Show cause (15th May 2021 read with 20th May 2021) to be treated as the notice for assessment; petitioner granted time to reply; matter remitted for assessment; vehicles released on stipulated security.

Final Conclusion: The petition was disposed of by setting aside the demand notice dated 29th May 2021, regularising the show cause procedure by treating the 15th May 2021 notice read with the 20th May 2021 communication as the show cause, granting the petitioner time to file further reply and directing fresh assessment; meanwhile the detained vehicles were ordered released on the furnishing of specified bank guarantee and bond.

Procedural fairness - right to be heard - service of notice via email - virtual personal hearing - remand for de novo adjudication

Procedural fairness - right to be heard - service of notice via email - virtual personal hearing - remand for de novo adjudication - Impugned appellate order rejecting the petitioner's refund claim was passed without hearing because the intimation for virtual personal hearing was sent to an incorrect e mail address; whether the order must be set aside and the matter remanded for fresh adjudication after affording hearing. - HELD THAT: - The Court relied on the RTI response placed on record which showed that the intimation for personal hearing by virtual mode was sent to [email protected], whereas the petitioner's correct e mail registered with the Department was [email protected]. Learned counsel for the respondents conceded that the notice had been sent to the wrong e mail address. In these circumstances the appellate order, having proceeded without hearing the petitioner due to defective service of the hearing notice, could not stand. The appropriate relief is to set aside the impugned order and remit the appeal to the appellate authority for fresh consideration on merits, after giving the petitioner an opportunity of hearing and passing a reasoned order in accordance with law.

Impugned order set aside; appeal remanded to the Joint Commissioner, Appeals-I, Central GST, Delhi for de novo adjudication with opportunity of hearing and a reasoned order.

Final Conclusion: The writ petition is disposed of by setting aside the appellate order and remanding the appeal for fresh adjudication after providing the petitioner a hearing; directions given for a reasoned decision in accordance with law.

Search and seizure under Section 67(2) of the CGST Act - reasons to believe - authorization to empower another officer to search and seize - order of prohibition and seizure - provisional release under Section 67 read with Rule 140 of the CGST Rules

Search and seizure under Section 67(2) of the CGST Act - reasons to believe - authorization to empower another officer to search and seize - order of prohibition and seizure - Validity of the authorization and consequent exercise of powers of search, seizure and prohibition at the petitioner's premises under Section 67(2) of the CGST Act. - HELD THAT: - The Court examined whether the jurisdictional prerequisites for invoking Section 67(2) existed. Section 67(2) vests search and seizure powers in a proper officer not below the rank of Joint Commissioner and permits such officer to authorize another officer in writing; the controlling requirement is formation of "reasons to believe" that goods liable to confiscation or documents relevant to proceedings are secreted. The authorisation dated 05.03.2021 issued by the Additional Commissioner (CGST Delhi North) was founded only on a request from Joint Commissioner (AE), Gautam Budh Nagar seeking assistance to establish existence of RJT as an L2 supplier to an entity under investigation. That communication did not furnish material indicating that any goods of RJT were liable to confiscation or that any documents were secreted, and thus did not furnish a basis for the formation of the requisite belief. The search and seizure were therefore not preceded by independent application of mind by the proper officer. The seizure order and prohibition order merely reproduced statutory language from subsection (2) without demonstrating actionable material or nexus for belief. Further, the panchnama recorded non-production of a stock register, but that document had earlier been seized by DGGI (AZU) on 14.02.2021, which furnished a reasonable explanation for its absence; respondents did not satisfactorily rebut the petitioner's assertion that primary documents such as e-invoices, e-waybills and transporter challans supported the deliveries. Given these defects, the authorization and consequent exercise of power under Section 67(2) were legally untenable and the search and seizure could not be sustained in writ jurisdiction limited to legality of the authorization. [Paras 8, 9, 12, 16]

Authorization for search and seizure dated 05.03.2021 was legally unsustainable for want of jurisdictional materials; the search and seizure and the orders of seizure and prohibition dated 05.03.2021 are declared unlawful and are set aside; seized documents to be released to the petitioner, with liberty to retain copies if required for further investigation.

Final Conclusion: The search and seizure conducted at the petitioner's premises and the consequent orders of seizure and prohibition dated 05.03.2021 are quashed for lack of requisite "reasons to believe" and absence of independent application of mind by the proper officer; seized documents shall be released to the petitioner while the authorities may retain copies if necessary for further investigations; no order as to costs.

Jurisdiction of Central GST officers versus State GST officers - challenge to jurisdiction based on GST Council Circular No. 01/2017 dated 20.09.2017 - withdrawal of inquiry and mootness of writ petition

Jurisdiction of Central GST officers versus State GST officers - challenge to jurisdiction based on GST Council Circular No. 01/2017 dated 20.09.2017 - The substantive question as to whether Central GST officers have jurisdiction over the petitioner, including the contention based on Circular No. 01/2017, was not adjudicated and is left open for future consideration. - HELD THAT: - The impugned summons dated 30.03.2021 and the inquiry proceedings initiated thereby have been withdrawn and closed by the respondents, as communicated by letter dated 20.05.2021 and affidavit material placed before the Court. In view of the withdrawal and closure of the inquiry, the Court found that the petitioner's challenge to the jurisdiction of Central GST officers could not be meaningfully decided in the absence of live proceedings. Consequently, the writ petition was disposed of as premature on the merits of the jurisdictional issue, with the legal question expressly reserved for adjudication if fresh proceedings are instituted or new summons issued by Central GST officers in the future. [Paras 6]

Writ petition disposed as the inquiry has been withdrawn; jurisdictional issue left open for decision only if fresh proceedings are initiated.

Final Conclusion: The petition is disposed of as academic because the inquiry and summons have been withdrawn and closed; the petitioner's challenge to the jurisdiction of Central GST officers (including reliance on Circular No. 01/2017) is left open for adjudication in the event fresh proceedings are commenced.

Transition of unutilised CENVAT credit to the electronic credit ledger - vested right to unutilised input tax credit as protected under Article 300A - application of section 140 of the CGST Act, 2017 - Rule 117 of the CGST Rules - time limit for filing TRAN-1 and extensions - IT-related glitches and the role of the GST IT Redressal Committee - protection against denial of statutory rights on technical or procedural grounds - natural justice - opportunity of hearing - Article 14 - arbitrariness in denying transitional credit

Transition of unutilised CENVAT credit to the electronic credit ledger - IT-related glitches and the role of the GST IT Redressal Committee - protection against denial of statutory rights on technical or procedural grounds - Whether a registered person may be denied transfer of unutilised CENVAT credit to the electronic credit ledger on account of failure to successfully file Form TRAN 1 due to IT glitches. - HELD THAT: - The Court accepted the factual finding that bona fide attempts to file TRAN 1 were impeded by an IT-related glitch and that the petitioner had communicated the error to the GST help desk with supporting screenshots. The Court recorded that section 140 entitles registered persons to carry forward unutilised CENVAT credit and that the statute itself does not provide for lapsing of such credit merely for non-filing of TRAN 1. Given that the failure to file resulted from technical problems in the electronic portal, the petitioner's statutory right to have unutilised credit credited to the electronic credit ledger could not be defeated by such procedural or technological impediments. The Court emphasized that in the transition to an electronic regime, departments must assist claimants and not allow technicalities to extinguish vested statutory rights. [Paras 6, 7, 8, 9]

Held that unutilised CENVAT credit could not be denied solely because TRAN 1 was not successfully filed due to IT glitches; such technical failures do not extinguish the statutory entitlement to transitional credit.

Application of section 140 of the CGST Act, 2017 - Rule 117 of the CGST Rules - time limit for filing TRAN-1 and extensions - vested right to unutilised input tax credit as protected under Article 300A - Article 14 - arbitrariness in denying transitional credit - Whether the time limits in Rule 117 could operate to deprive a dealer of the vested right to carry forward unutilised input tax credit under section 140. - HELD THAT: - The Court observed that section 140 confers the substantive entitlement to carry forward unutilised credit and does not itself prescribe lapsing of that entitlement. Rule 117 prescribes procedural time limits for filing TRAN 1 (initially 90 days, later extended) and authorities were given power to extend that period. The Court reiterated established principles that a vested right in unutilised credit is akin to property protected under Article 300A and that arbitrary denial of such credit or discriminatory time bar rules may attract Article 14 infirmities. While procedural rules set filing windows, the right created by section 140 cannot be defeated by procedural technicalities except as provided by statute. The Court referred with approval to precedents holding that denial of transitional credit on technical grounds may be arbitrary and violative of constitutional protections. [Paras 7, 8, 11, 12]

Held that procedural time limits cannot, by themselves and in the absence of statutory provision to that effect, operate to extinguish the substantive right to transitional credit; denial on technical or arbitrary grounds is impermissible.

IT-related glitches and the role of the GST IT Redressal Committee - natural justice - opportunity of hearing - protection against denial of statutory rights on technical or procedural grounds - Whether the Single Judge's direction that the GST IT Redressal Committee consider the petitioner's request and afford an opportunity of hearing was appropriate. - HELD THAT: - The High Court found no error in the Single Judge's order which directed consideration of the petitioner's request by the IT Redressal Committee in light of section 140 and to afford the petitioner a hearing. The Court emphasized that granting an opportunity of hearing is a basic requirement of natural justice and facilitates fair decision making. Given the technical nature of the difficulty and the availability of a remedial forum (the Redressal Committee), remanding the matter for consideration after hearing was proportionate and appropriate. The appellate challenge to that direction was rejected as untenable. [Paras 4, 6, 13]

Held that directing the IT Redressal Committee to consider the claim and to afford a hearing was appropriate; the appellate challenge to that direction was dismissed.

Final Conclusion: The writ appeal is dismissed. The High Court's direction that the GST IT Redressal Committee consider the petitioner's claim for transition of unutilised CENVAT credit (in light of section 140) and afford a hearing was upheld; technical failures in filing TRAN 1 do not, by themselves, defeat the statutory entitlement to transitional credit and procedural time limits cannot arbitrarily extinguish that vested right.

Transition of unutilised input tax credit - Section 140 of the Central Goods and Services Tax Act, 2017 - IT Redressal Committee of GST Council - opportunity of hearing - Grievance Cell forwarding of complaint

Transition of unutilised input tax credit - Section 140 of the Central Goods and Services Tax Act, 2017 - IT Redressal Committee of GST Council - opportunity of hearing - Petitioner's claim for transition of unutilised input tax credit filed through FORM GST TRAN-1 was to be considered by the appropriate GST authority. - HELD THAT: - The High Court did not adjudicate the merits of the entitlement to the transition credit. Instead, the Court directed that the IT Redressal Committee of the GST Council examine the petitioner's request for transition input tax credit in accordance with law, with specific reference to the provisions of Section 140 of the Central Goods and Services Tax Act, 2017. The Committee is to afford the petitioner an opportunity of hearing before taking a decision. The direction fixed a time-bound mandate of forty five days from receipt of a certified copy of the judgment for the Committee to take a call. The order leaves open the substantive determination of entitlement to the authority tasked with statutory examination and hearing rather than resolving the claim on merits. [Paras 5]

The IT Redressal Committee of the GST Council is directed to decide the petitioner's request for transition input tax credit after hearing and in accordance with Section 140, within forty five days from receipt of certified copy of the judgment.

Grievance Cell forwarding of complaint - Procedure where the complaint was submitted to an authority lacking jurisdiction. - HELD THAT: - The Court observed that if the petitioner's complaint had been filed with an authority without jurisdiction, that authority is required to forward the complaint to the Grievance Cell. The petitioner's existing complaint is to be forwarded to the Grievance Cell, which shall take it up and deal with it in the manner directed by the Court. This procedural direction ensures the complaint reaches the correct forum for consideration in accordance with the statutory grievance mechanism. [Paras 6]

The complaint already submitted will be forwarded to the Grievance Cell, which shall take a call in the prescribed manner.

Final Conclusion: Writ petition disposed of by directing the IT Redressal Committee of the GST Council to consider the transition input tax credit claim after hearing the petitioner and in accordance with Section 140 within forty five days, and by directing that any complaint submitted to an authority without jurisdiction be forwarded to the Grievance Cell for appropriate action.

Refund of excess payment of tax - re-credit to electronic credit ledger - Form GST PMT-03 - proportionate refund in original mode of payment - Rule 86(4A) of CGST Rules - Rule 92(1A) of CGST Rules

Refund of excess payment of tax - re-credit to electronic credit ledger - Form GST PMT-03 - Rule 86(4A) of CGST Rules - Rule 92(1A) of CGST Rules - Whether excess tax paid by the appellant through debit to the electronic credit ledger in October-2019 is admissible as refund and should be re credited to the appellant's electronic credit ledger by an order in Form GST PMT-03 in terms of Rule 86(4A) read with Rule 92(1A). - HELD THAT: - The appellate authority examined the refund application, the departmental show cause, the appellant's admissions and supporting records (GSTR-1, GSTR-3B, reconciliation and CA certificate) and the jurisdictional officer's comments. The records show outward supplies for October-2019 attracting GST of Rs. 9,093.76 while the appellant debited the electronic credit ledger for a much larger amount, resulting in excess debit of Rs. 2,60,118.24. Rule 86(4A) provides for re-credit to the electronic credit ledger where refund relates to amounts paid by debit from that ledger, and Rule 92(1A) contemplates issuance of FORM GST PMT-03 for the portion attributable to credit. The adjudicating authority's original order contained ambiguity and remarks indicating an intention to re-credit through PMT-03 but recorded inadmissibility; the jurisdictional officer explained that a technical issue prevented re-crediting in the ITC ledger. On the face of the records and in view of the statutory scheme for proportionate refund in original mode of payment, the Tribunal found the appellant's claim for re-credit by PMT-03 to be sustainable and directed the proper officer to process the refund accordingly. [Paras 6, 7, 8]

Appeal allowed; proper officer directed to process re credit of the excess tax paid through the electronic credit ledger by issuing Form GST PMT-03 in accordance with Rule 86(4A) read with Rule 92(1A).

Final Conclusion: The appellate authority allowed the appeal, holding that the excess tax debited from the electronic credit ledger in October 2019 is refundable by re credit to the electronic credit ledger and directed the proper officer to process the re credit by issuing FORM GST PMT-03 as mandated by Rule 86(4A) read with Rule 92(1A).

Addition based on incriminating material seized during search - client code modification and profit/loss shifting - abatement of assessment on account of pending proceedings at the time of search - standard of interference with findings of fact - requirement of disclosure of seized incriminating material

Addition based on incriminating material seized during search - requirement of disclosure of seized incriminating material - standard of interference with findings of fact - Whether the addition made by the assessing officer on account of client code modifications was sustainable on the basis of incriminating material allegedly found during the search. - HELD THAT: - The Tribunal and the First Appellate Authority found that the additions were not founded on any described incriminating material seized during the search; the Revenue failed to identify or disclose the seized material either before the appellate authorities or before this Court. The assessing officer's brief recital that incriminating documents and cloned computer data were seized does not supply particulars or connect specific seized material to the impugned additions. In absence of disclosure or explanation by the Revenue identifying the seized material relied upon, the appellate findings that the additions were not based on incriminating material found during the search stand unimpeached. Findings of fact returned by the appellate authorities are not to be lightly disturbed and, on the record, the Revenue's challenge does not establish perversity or any demonstrable error warranting interference. [Paras 4, 6, 7]

Addition on account of client code modification deleted as not based on disclosed incriminating material seized during the search; appellate findings upheld.

Abatement of assessment on account of pending proceedings at the time of search - client code modification and profit/loss shifting - Whether any assessment or reassessment proceedings were pending on the date of search (30.03.2012) so as to attract abatement principles relied upon by the Revenue. - HELD THAT: - Both the CIT(A) and the Tribunal concluded that no assessment or reassessment proceedings were pending on 30.03.2012 and therefore no abatement occurred. The Court notes that the CIT(A) applied the principle in CIT v. Kabul Chawla to reach this conclusion. The Revenue did not demonstrate before the appellate authorities or this Court that proceedings were pending on the date of search; therefore the conclusion that there was no abatement is supported by the record and by applicable authority relied upon by the appellate authorities. [Paras 4, 7]

No assessment/reassessment was pending on the date of search; abatement not attracted and the appellate conclusion is sustained.

Final Conclusion: The Revenue's appeal is dismissed. The Tribunal's and CIT(A)'s factual findings that the additions were not based on disclosed incriminating material seized during the search and that no assessment was pending on the date of search are upheld; no substantial question of law arises.

Characterisation of a draft assessment order versus a notice under Section 142(1) - right to raise interpretation of a draft assessment order before appellate authority - availability of alternative efficacious remedy and consequent bar to writ jurisdiction - challenge to consideration of a reply to a show-cause notice to be considered in appeal and not in writ proceedings

Characterisation of a draft assessment order versus a notice under Section 142(1) - right to raise interpretation of a draft assessment order before appellate authority - Whether the document held out as a Draft Assessment Order amounted to a mere notice under Section 142(1) or constituted a draft assessment order attracting the consequences of a draft assessment. - HELD THAT: - On perusal of the Draft Assessment Order the Court found that it specifically recorded that certain losses and expenditures were either not admissible, not genuine or not verifiable and identified the items proposed to be disallowed. Those statements and the identification of specific disallowances placed the assessee on notice as to proposed additions and deletions. The Court observed that questions of interpretation regarding the nature of the document fall within the competence of the appellate authority and can be agitated and considered on appeal. Accordingly, the Court treated the document as a draft assessment order which put the petitioner on notice as to what additions and deletions were proposed, and noted that interpretation of its nature is a matter properly determinable in appeal rather than by writ. [Paras 5]

The Draft Assessment Order was properly seen as putting the petitioner on notice as to proposed additions/deletions and interpretation of its nature is a matter for the appellate authority.

Availability of alternative efficacious remedy and consequent bar to writ jurisdiction - challenge to consideration of a reply to a show-cause notice to be considered in appeal and not in writ proceedings - Whether the writ petition was maintainable challenging the assessment order, demand notice and initiation of penalty proceedings, including the contention that the petitioner's response was not considered. - HELD THAT: - The Court held that the contention that the petitioner's response was not considered would require detailed examination of the show-cause notice and the petitioner's reply, which is not permissible in writ jurisdiction. Given that the petitioner has an alternative efficacious remedy of appeal and that issues such as interpretation of the draft order and whether the reply was considered can be ventilated and decided by the appellate authority, the High Court concluded that the matter need not be entertained by way of writ. The availability of the appellate forum to examine these contentions renders the writ remedy inappropriate in the circumstances. [Paras 6]

Writ petition is not maintainable as the petitioner has an alternative efficacious remedy by way of appeal; challenges about consideration of the reply and interpretation of the draft order should be raised before the appellate authority.

Final Conclusion: Writ petition dismissed: the Draft Assessment Order placed the assessee on notice as to proposed additions/deletions and matters of its interpretation and the question whether the assessee's reply was considered are matters for the appellate authority; alternative efficacious remedy exists and writ jurisdiction is therefore inappropriate.

Refund of excess advance tax - stale claim - delay and laches - representations do not extend period of limitation

Refund of excess advance tax - stale claim - delay and laches - representations do not extend period of limitation - Whether the petitioner is entitled to refund of excess advance tax for Assessment Year 2000-01 despite long delay - HELD THAT: - The petitioner sought refund of an alleged excess advance tax payment for Assessment Year 2000-01 after locating the original challan and providing bank certification. The bank informed the department in 2016 that relevant records for 2001 had been destroyed. The Court held that by 2021 the claim had become stale and that representations made by the petitioner do not extend the statutory period of limitation. The petitioner did not initiate proceedings within three years of the bank's 2016 communication; on that basis the Court dismissed the petition on the ground of delay and laches. [Paras 6]

Petition dismissed on the ground of delay and laches; the refund claim for Assessment Year 2000-01 is rejected as a stale claim.

Final Conclusion: Writ petition seeking refund of excess advance tax for Assessment Year 2000-01 dismissed as time-barred; representations do not extend limitation and delay and laches bar the claim.

Effect of cessation of prior assessment provisions and application of the faceless assessment regime under Section 143(3D) - Non est of assessments not made in accordance with the faceless procedure - Failure to serve draft assessment order and notice under the faceless assessment procedure - Violation of principles of natural justice by omission of mandatory faceless-procedure steps - Opportunity to respond and personal hearing where variation prejudicial to assessee is proposed

Effect of cessation of prior assessment provisions and application of the faceless assessment regime under Section 143(3D) - Assessment orders passed after 1 April 2021 could not be validly made under the provisions which stood replaced and had to be made in accordance with the faceless assessment regime. - HELD THAT: - The Court, having regard to the clear language of the provision stating that sub-sections (3A) and (3B) shall not apply to assessments made on or after 1 April 2021, concluded that assessments post that date must conform to the faceless assessment framework. The Court treated an assessment made under the earlier sub-sections after 31 March 2021 as inconsistent with the statutory mandate and not in conformity with the changed legislative scheme. A Coordinate Bench decision was noted as supporting this view. [Paras 11, 12]

Assessment made under the earlier provisions after 31 March 2021 was not in accordance with the statutory scheme and could not stand.

Failure to serve draft assessment order and notice under the faceless assessment procedure - Non est of assessments not made in accordance with the faceless procedure - Violation of principles of natural justice by omission of mandatory faceless-procedure steps - Non-service of the show-cause cum draft assessment order and notice in the manner prescribed by the faceless assessment provision rendered the assessment non est and in violation of principles of natural justice. - HELD THAT: - The Court examined the faceless-procedure provisions which require the National Faceless Assessment Centre to examine the draft order and either finalise it by serving the order and demand or, where a variation prejudicial to the assessee is proposed, serve a notice calling upon the assessee to show cause. The provision that assessments made on or after 1 April 2021 shall be non est if not made in accordance with this procedure was held to be mandatory. In the present case the mandatory step of serving the draft assessment order/notice was not complied with; consequently the assessment, notice of demand and notice for initiating penalty proceedings were set aside as being contrary to the prescribed procedure and principles of natural justice. [Paras 13, 14, 15]

Impugned assessment order, demand notice and notice initiating penalty proceedings set aside for failure to follow the faceless-procedure and for contravening principles of natural justice.

Opportunity to respond and personal hearing where variation prejudicial to assessee is proposed - Non est of assessments not made in accordance with the faceless procedure - Revenue permitted to proceed afresh under the faceless assessment procedure, with requirement to serve show-cause/draft order and to afford opportunity to file objections and personal hearing where variation is proposed. - HELD THAT: - Although the impugned orders were set aside for non-compliance, the Court expressly left the Revenue free to recommence the assessment process in accordance with the faceless-assessment provisions. If a show-cause cum draft assessment order is served, the assessee must be given opportunity to respond; and if any variation prejudicial to the assessee is proposed, an opportunity of personal hearing must be provided. The Court therefore directed fresh compliance with the statutory procedure rather than imposing a bar on reassessment under the faceless regime. [Paras 16]

Revenue may proceed with assessment afresh under the faceless procedure, subject to service of show-cause/draft order and affording of statutory opportunities to the assessee.

Final Conclusion: The impugned assessment order dated 06.04.2021, the demand notice and the notice for initiating penalty proceedings are set aside for non-compliance with the statutory faceless-assessment procedure and for violation of principles of natural justice; the Revenue is, however, permitted to proceed afresh under the faceless-assessment provisions, ensuring service of the draft/show-cause order and affording the assessee the prescribed opportunities including personal hearing where a prejudicial variation is proposed.

Personal hearing under Section 144B(7)(vii) of the Income tax Act - faceless assessment - obligation to consider request for personal hearing - non est provision under Section 144B(9) - breach of principles of natural justice - remand for fresh hearing and reasoned order

Personal hearing under Section 144B(7)(vii) of the Income tax Act - obligation to consider request for personal hearing - breach of principles of natural justice - faceless assessment - Validity of the assessment and demand notices passed without dealing with the assessee's request for personal hearing under Section 144B(7)(vii). - HELD THAT: - The Court examined Section 144B(7)(vii) which permits an assessee, where a variation is proposed, to request a personal hearing to make oral submissions. The provision of a right to request a personal hearing imposes on the faceless assessment machinery an obligation to consider such request; the use of the word 'may' does not absolve the Revenue from deciding requests for personal hearing. Failure to consider the request and to afford an opportunity to present material in response to a draft variation amounts to a breach of the principles of natural justice in faceless assessments. The statutory framework, read with the non establishing safeguard in Section 144B(9), requires that assessments be completed according to the procedures under Section 144B, including dealing with requests for personal hearing where applicable. [Paras 9, 10]

The assessment order and notice of demand dated 30th April, 2021 were set aside for having been passed without affording or considering the petitioner's request for personal hearing in breach of natural justice.

Remand for fresh hearing and reasoned order - faceless assessment - Relief and procedural course to be followed after setting aside the impugned assessment and demand notices. - HELD THAT: - Having invalidated the assessment for failure to deal with the request for personal hearing, the Court remanded the matter to the Assessing Officer for fresh consideration. The Assessing Officer is directed to grant an opportunity of hearing to the petitioner by way of video conferencing, consider the petitioner's submissions and evidence, and thereafter pass a reasoned order in accordance with law and the procedures laid down under Section 144B. The remand contemplates fresh adjudication on merits after affording the statutory opportunity to be heard. [Paras 12]

Matter remanded to the Assessing Officer to grant a hearing by video conferencing and to pass a reasoned order in accordance with law.

Final Conclusion: Writ petition allowed to the extent that the assessment order and notice of demand dated 30th April, 2021 are set aside; the matter is remanded to the Assessing Officer for grant of personal hearing by video conferencing and for passing a reasoned order in accordance with Section 144B and law.

Commercial expediency - taxation of notional interest / notional income - transfer of income without transferring assets under sections 60 and 61

Commercial expediency - taxation of notional interest / notional income - transfer of income without transferring assets under sections 60 and 61 - Whether the addition made on account of interest-free loans advanced by the assessee to its subsidiaries could be sustained as taxable notional interest under the provisions equivalent to sections 60 and 61. - HELD THAT: - Both the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal recorded concurrent findings of fact that the interest-free advances to group companies were genuine commercial transactions and were made for reasons of commercial expediency rather than being sham or paper transactions. The appellate authorities found on the material on record that the assessee was the holding company with a significant proprietary interest in the subsidiaries, that the subsidiaries did not earn interest income from the advances, and that the assessee had substantial reserves, facts which supported the finding of commercial expediency. The Tribunal relied on precedents holding that notional interest cannot be included where there is no finding that interest was actually due or collected and where the transactions are not mere devices to evade tax. The Court distinguished S.P. Jaiswal on its factual matrix, where the transactions were found to be paper transfers, and applied the principles in S.A. Builders and subsequent decisions that the question of allowing tax consequences depends on the facts and whether commercial expediency is established. Given the concurrent findings of fact supported by the record and the applicable legal principles, the test of commercial expediency was held to be satisfied and the addition for notional interest was not justified.

The addition made on account of notional interest in respect of interest-free loans to subsidiaries was deleted; the orders of the CIT(A) and the ITAT upholding deletion are affirmed.

Final Conclusion: The substantial question of law framed in favour of the Revenue is answered against the Revenue; the appeal is dismissed and the deletion of the notional interest by the lower authorities is upheld.

Deductibility under Section 48 of the Income Tax Act, 1961 - Deduction of compensation paid for surrender of lease as expenditure wholly and exclusively for transfer of a capital asset - Genuineness of transaction and finding of fact - Preclusion from denying existence of previously assessed rental income - Perverse finding of fact

Deductibility under Section 48 of the Income Tax Act, 1961 - Deduction of compensation paid for surrender of lease as expenditure wholly and exclusively for transfer of a capital asset - Amount of Rs. 1 Crore paid as compensation to the lessee is deductible as expenditure incurred in connection with transfer of the capital asset. - HELD THAT: - The assessee executed a lease in 1996 which was cancelled by deed in 2009 on payment of compensation of Rs. 1 Crore, and thereafter the leased portion was sold by registered sale deed in May 2009. The sale deed expressly referred to the lease and recited delivery of possession; the lessee was a consenting witness to the sale and had offered the amount received as income in its return. The compensation was paid wholly and exclusively for effecting the transfer of the capital asset and thus falls within the scope of expenditure allowable under Section 48 as expenditure in connection with transfer. The authorities recorded findings hostile to the assessee which the Court characterised as perverse in view of the documentary evidence of lease cancellation, sale and the lessee's own tax treatment of the receipt. For these reasons the Court answered the substantial question on deductibility in favour of the assessee.

Deduction under Section 48 allowed; findings disallowing the compensation held perverse and set aside.

Genuineness of transaction and finding of fact - Preclusion from denying existence of previously assessed rental income - Perverse finding of fact - The transaction for cancellation of the lease and payment of compensation was genuine; the authorities' conclusion of non-genuineness was held to be perverse. - HELD THAT: - The assessee had previously offered rental income from the lessee and that income was assessed in an earlier year; the lease deed of 1996 and its cancellation in 2009 are reflected in the registered sale deed and corroborated by the lessee's acceptance of the receipt as income. The Assessing Officer's inspection did not contradict that the specific portion sold had been vacated and the documentary record supported the assessee's case. In these circumstances the Court held that it was not open to the Assessing Officer to deny the existence of the earlier transaction in the subsequent assessment year and concluded that the finding of non-genuineness was perverse.

Transaction held genuine; findings of non-genuineness overturned in favour of the assessee.

Levy of interest under Sections 234B and 234C - Levy of interest under Sections 234B and 234C was not adjudicated by the Court and remains to be considered. - HELD THAT: - Although the substantial questions admitted included whether the Tribunal had adjudicated the issue of levy of interest under Sections 234B and 234C, the Court's determination addressed the deductibility and genuineness issues (questions a and b) and did not decide the question on interest. That matter was not resolved on merits in the judgment and therefore requires fresh consideration by the appropriate authority.

Issue as to levy of interest under Sections 234B and 234C remanded for fresh consideration.

Final Conclusion: Appeal allowed; tribunal order dated 08.09.2016 quashed to the extent it relates to the admitted substantial questions concerning deductibility of the compensation and genuineness of the transaction (both answered in favour of the assessee) while the question on levy of interest under Sections 234B and 234C was not decided and is left for fresh consideration.

Section 54F - capital gain exemption for investment in residential house - construction of new residential house within three years - date of acquisition (registration/possession) governs entitlement, not date of payment - beneficial/construed liberally - purposive interpretation of tax exemption - perverse finding - appellate interference where concurrent authorities ignored material compliance

Section 54F - capital gain exemption for investment in residential house - construction of new residential house within three years - date of acquisition (registration/possession) governs entitlement, not date of payment - beneficial/construed liberally - purposive interpretation of tax exemption - Assessee entitled to claim exemption under Section 54F for the capital gain arising on transfer of shares, having acquired the new residential property within three years of transfer. - HELD THAT: - The assessee transferred shares on 21.08.2008 and acquired the flat which was transferred in his favour by agreement on 18.03.2009 and finally registered by sale deed on 28.03.2011, which falls within three years from the date of transfer. Section 54F provides exemption where an assessee has purchased within one year before or two years after the transfer or constructed within three years after the transfer, a residential house. The Court held that entitlement under Section 54F depends on the date of acquisition of the new asset (registration/acquisition) and not on the date when payments were made to the builder. The transaction in the present case constituted construction/acquisition under agreement to sell and agreement to build, and therefore required examination on whether the residential house was constructed/acquired within three years. The tribunal's conclusion that payments made prior to one year before the transfer defeated the claim was held to be perverse because it ignored the date of acquisition and the purpose of the provision. The Court emphasised that Section 54F is a beneficial provision intended to promote investment in housing and must be construed liberally to effectuate that object. Consequently, the tribunal's denial of exemption was quashed and the appeal allowed insofar as it pertained to the Section 54F claim.

Tribunal order denying exemption under Section 54F quashed; assessee held entitled to the benefit on the facts that the residential property was acquired/registered within three years of transfer.

Final Conclusion: The substantial question of law is answered in the negative and in favour of the assessee; the tribunal's order dated 13.02.2015 is quashed insofar as it rejects the claim under Section 54F, and the appeal is allowed.

Refund claim under Section 89(1) of the Income Tax Act - Credit for tax deducted at source (TDS) / E-TDS - Direction to consider representation - Opportunity of hearing before decision - Mandamus limited to administrative consideration

Refund claim under Section 89(1) of the Income Tax Act - Credit for tax deducted at source (TDS) / E-TDS - Direction to consider representation - Opportunity of hearing before decision - Respondents were directed to consider the petitioner's representation dated 17.12.2019 seeking refund for AY 2014-2015 and to pass appropriate orders after giving opportunity to the petitioner. - HELD THAT: - The Court declined to decide the merits of the petitioner's claim for refund under Section 89(1), or to adjudicate the underlying entitlement, but treated the writ as seeking a limited procedural remedy. Having noted earlier correspondence and a rectification in respect of TDS-credit, the Court found it sufficient to require the respondents to examine the pending representation on merits and in accordance with law. The respondents were directed to afford the petitioner a due opportunity of being heard and to dispose of the representation within twelve weeks from receipt of a copy of the order. No pronouncement was made on the correctness of the claimed refund or on the question of tax liability; those matters remain to be considered by the respondents in the exercise of their statutory functions. [Paras 6]

The respondents are directed to consider the representation dated 17.12.2019 on merits, after giving due opportunity to the petitioner, and to pass appropriate orders within twelve weeks.

Final Conclusion: Writ petition disposed by directing respondents to consider and decide the petitioner's representation dated 17.12.2019 regarding the claimed refund for financial year 2013-2014 / AY 2014-2015 on merits and in accordance with law within twelve weeks, after affording the petitioner an opportunity to be heard; merits of the refund claim left open.

Revisional jurisdiction under Section 263 - Erroneous and prejudicial to the revenue - Explanation 2 to Section 37(1) - CSR expenditure not a business deduction - Deduction under Section 80G - Plausible view / two views permissible - Expressio unius est exclusio alterius

Revisional jurisdiction under Section 263 - Erroneous and prejudicial to the revenue - Plausible view / two views permissible - Validity of Pr. CIT's exercise of revisional jurisdiction under Section 263 in setting aside AO's assessment order for AY 2016-17 - HELD THAT: - The Tribunal examined whether the prerequisite twin conditions for exercise of revisional jurisdiction under Section 263 - that the AO's order is both erroneous and prejudicial to the revenue - were satisfied. Applying the tests in Malabar Industries (as summarized by the Tribunal), an AO's order cannot be treated as erroneous and prejudicial merely because the higher authority disagrees where the AO has adopted a view that is plausible or sustainable in law. The record showed that the AO had specifically queried the assessee under Section 142(1) about the CSR-related claim, the assessee replied with particulars and authorities, and the AO considered the replies before allowing the claim under Section 80G. The Pr. CIT's finding that the AO had not made any enquiry or verification (invoking clause (a) of Explanation 2 to Section 263) was factually incorrect. Because the AO had enquired and taken a plausible view after consideration, the order could not be characterized as erroneous and prejudicial to revenue in the legal sense required to invoke Section 263. The Pr. CIT's usurpation of revisional power was therefore held to be without jurisdiction and arbitrary. [Paras 16, 23, 24]

Pr. CIT's invocation of revisional jurisdiction under Section 263 quashed for want of the requisite jurisdictional facts; the AO's order was a plausible view not liable to be set aside under Section 263.

Explanation 2 to Section 37(1) - CSR expenditure not a business deduction - Deduction under Section 80G - Expressio unius est exclusio alterius - Legality of AO allowing deduction under Section 80G in respect of donations classified as CSR expenditure - HELD THAT: - The Tribunal accepted that Explanation 2 to Section 37(1) excludes CSR expenditure from deduction as business expenditure for computing business income. However, that embargo applies specifically to Chapter IV-D computation of business income and does not, by its terms, negate a separate, otherwise-eligible claim under Chapter VI (Section 80G). Section 80G expressly provides certain exceptions in sub-clauses (notably for Swachh Bharat Kosh and Clean Ganga Fund) which disallow deduction to the extent those sums are pursuant to mandatory CSR; the presence of those specific exceptions indicates by the interpretive maxim expressio unius est exclusio alterius that other donations qualifying under Section 80G(2)(a)(iv) and satisfying Section 80G(5) conditions remain eligible. On the facts, the assessee had suo motu added back the CSR amount while computing business income and then claimed deduction under Section 80G for donations to donees approved under Section 80G(5)(vi); the AO enquired into and allowed the claim. The Tribunal concluded that allowing 50% deduction under Section 80G in respect of such qualifying donations was a legally tenable view, consistent with tribunal precedents cited and statutory construction. [Paras 17, 18, 19, 22, 23]

The AO's allowance of deduction under Section 80G for donations to donees approved under Section 80G(5)(vi), despite classification as CSR expenditure for business-income computation, was a plausible and sustainable view; such allowance is not precluded by Explanation 2 to Section 37(1).

Final Conclusion: The Tribunal allowed the appeal for AY 2016-17, quashed the Pr. CIT's order passed under Section 263 as lacking requisite jurisdictional satisfaction, and upheld the AO's allowance of the assessee's deduction under Section 80G as a plausible and legally tenable view.

Corpus donations - characterisation of receipts as capital or revenue - application of income - provision for gratuity determined by actuarial valuation - Explanation to section 10(23C) - retrospective operation of a statutory clarification - income not to include voluntary contributions made with a specific direction that they shall form part of the corpus

Corpus donations - characterisation of receipts as capital or revenue - Explanation to section 10(23C) - income not to include voluntary contributions made with a specific direction that they shall form part of the corpus - Whether corpus donations received by the educational institution are to be included in income for the purposes of claiming exemption under section 10(23C)(vi) or are capital receipts excluded from income. - HELD THAT: - The Tribunal found that the receipts in question were donations given by third party trusts and entities with a specific direction that they shall form part of the corpus, and not receipts collected from students as fees. The lower authorities had erred by treating such corpus donations as part of annual receipts/income for the purpose of section 10(23C)(vi). The Tribunal relied on the Explanation inserted to section 10(23C) (by Finance Act, 2020) which clarifies that, for the purposes of the proviso to section 10(23C), income of an educational institution shall not include voluntary contributions made with a specific direction that they shall form part of the corpus. The Tribunal regarded this Explanation as a clarification for removal of doubts and as having retrospective operation, and held that corpus donations are capital in nature and correctly shown as liabilities (corpus) in the balance sheet rather than routed through the income and expenditure account. On that basis the addition of the corpus donation to income was reversed and the claim of the assessee allowed. [Paras 3]

Corpus donations given with a specific direction to form part of corpus are capital receipts and, in view of the Explanation to section 10(23C), are not to be included in income for claiming exemption under section 10(23C)(vi); the addition is reversed.

Provision for gratuity determined by actuarial valuation - application of income - characterisation of accrued liabilities - Whether provision for gratuity, determined by actuarial valuation and booked in the income and expenditure account, constitutes application of income for the purposes of section 10(23C)(vi). - HELD THAT: - The Tribunal accepted the assessee's submission that the gratuity liability was determined by actuarial valuation and thus represented an accrued and ascertained liability rather than a mere contingent estimate. Relying on the principles in authority cited (which recognise that for mercantile accounting an accrued liability payable in future can be recognised and deducted), the Tribunal held that such actuarially determined provision for statutory gratuity is akin to an accrued liability and may be treated as application of income. The Tribunal distinguished authorities relied upon by the Revenue where mere appropriations or reserves not representing accrued liabilities were disallowed, and directed the AO to allow the provision for gratuity as application of income. [Paras 4]

Provision for gratuity determined by actuarial valuation is an accrued liability and, on the facts, amounts to application of income; the provision is to be allowed.

Final Conclusion: The Tribunal allowed the appeal: the corpus donations (shown as corpus in the balance sheet and given with specific directions) are capital receipts not includible in income for exemption under section 10(23C)(vi) in view of the Explanation to section 10(23C), and the actuarially determined provision for gratuity is an accrued liability constituting application of income and is to be allowed.

Educational activities - hostel facilities as integral part of education - incidental activity to charitable purpose - treatment of hostel surplus as business income - exemption under Section 11 of the Income-tax Act - registration under section 12AA

Hostel facilities as integral part of education - incidental activity to charitable purpose - treatment of hostel surplus as business income - exemption under Section 11 of the Income-tax Act - Whether surplus from hostel operations is taxable as business income or forms part of the exempt charitable educational activities of the society - HELD THAT: - The Tribunal found that the assessee is a society registered under the Societies Registration Act and under section 12AA, carrying on educational activities and operating hostels for students in compliance with statutory/regulatory requirements (AICTE/UGC). There was no evidence that hostel accommodation was provided to persons other than students or staff. Relying on precedents holding that provision of hostel and transport facilities to students and staff is incidental and subservient to the primary object of education, the Tribunal held that such hostel activity is intrinsic to the educational purpose of the society. Consequently, surplus arising from hostel operations cannot be characterised as independent business income when the activity is ancillary to and in furtherance of the charitable educational objects. Applying this reasoning, the Tribunal concluded that the Assessing Officer's addition treating hostel surplus as business income and invoking disallowance was incorrect, and that the hostel surplus falls within the exemption under Section 11 as part of the charitable educational activities of the society. [Paras 7, 8]

Addition of Rs. 3,92,25,432/- treating hostel surplus as business income is reversed and the hostel surplus is held to be part of the exempt charitable educational activities; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the hostel activities are incidental to the assessee's educational charitable purpose and that the addition treating hostel surplus as business income was unjustified; the addition sustained by the authorities is deleted.

Deduction under section 80IB(10) - Percentage completion method - CBDT Instruction No.4 of 2009 dated 30.06.2009 - Assessing Officer's power to determine correct profit and withdraw relief

Deduction under section 80IB(10) - Percentage completion method - Assessing Officer's power to determine correct profit and withdraw relief - Whether the claim of deduction under section 80IB(10) can be allowed where the assessee follows the percentage completion method though the project is not fully completed within the specified period, and whether the AO may later revise or withdraw such relief. - HELD THAT: - The Tribunal accepted the finding that the assessee consistently offered profits under the percentage completion method. Relying on the CIT(A)'s application of CBDT Instruction No.4 of 2009 and relevant judicial decisions, the Tribunal held that profits offered each year under the percentage completion method are entitled to relief under section 80IB(10) even though the physical completion of individual units or the entire project may not have occurred in that year. At the same time the CIT(A) correctly preserved the Assessing Officer's authority to determine the correct quantum of profit under the percentage completion method and to withdraw the relief subsequently if, on completion of the project, it is found that the assessee did not comply with the statutory requirements of section 80IB(10). The Tribunal found no infirmity in allowing the deduction subject to such verification and possible adjustment by the AO, and declined to interfere with the appellate authority's order.

Deduction under section 80IB(10) allowed in respect of profits offered under percentage completion method, subject to the AO determining correct profit and withdrawing relief if statutory conditions are not met.

Final Conclusion: The revenue's appeal is dismissed; the CIT(A)'s order allowing the deduction under section 80IB(10), while permitting the AO to determine correct profit and withdraw relief if non-compliance is later found, is affirmed.

Exemption under sections 11 and 12 of the Income-tax Act, 1961 - proviso to section 11(1)(c) of the Income-tax Act, 1961 and CBDT direction thereunder - Foreign Contribution (Regulation) Act, 2010 applicability - clause 51 of FCRA (transaction between Governments) - instrumentality of the Government

Proviso to section 11(1)(c) of the Income-tax Act, 1961 and CBDT direction thereunder - exemption under sections 11 and 12 of the Income-tax Act, 1961 - Whether the amount expended outside India for charitable purpose for A.Y. 2014-15 is to be treated as application of income under the proviso to section 11(1)(c) in view of a subsequent CBDT direction. - HELD THAT: - The CIT(A) examined the assessment-stage disallowance of the expenditure incurred outside India and recorded that the requisite order by the Board under the proviso to section 11(1)(c) was subsequently issued. The CBDT direction dated 13.01.2017 specifically provided that income applied outside India by the trust for international welfare be excluded from total income for assessment years including 2014-15 and identified the amount for that year. The Tribunal found no reason to disturb the first appellate authority's conclusion that, in the presence of the Board's direction, the amount stands allowed as application of income outside India under the proviso to section 11(1)(c).

The disallowance in respect of the expenditure incurred outside India for A.Y. 2014-15 is deleted and the amount is allowed as application of income under the proviso to section 11(1)(c).

Foreign Contribution (Regulation) Act, 2010 applicability - clause 51 of FCRA (transaction between Governments) - instrumentality of the Government - Whether the foreign grant received from the Government of France falls within FCRA regulation or is excluded as a transaction between Governments (clause 51), permitting exemption under sections 11 and 12. - HELD THAT: - The CIT(A) followed the Tribunal's earlier decision in the assessee's own case for an earlier assessment year and the Ministry of Home Affairs letter dated 02.01.2014 which states that transactions between the Government of India and the Government of any foreign country do not attract FCRA. The assessee is a society established as a joint venture of the Governments of India and France to promote scientific research and, on the facts accepted by the appellate authority and the Tribunal, the grant from the Government of France was treated as a transaction between the two Governments. The Tribunal declined to interfere with the CIT(A)'s reliance on the prior ITAT finding and the MHA clarification, and accordingly affirmed deletion of the addition made by the Assessing Officer.

The addition made by the Assessing Officer treating the foreign grant as falling within FCRA and denying exemption is deleted; the grant is not treated as attracting FCRA and the exemption under sections 11 and 12 is sustained.

Final Conclusion: The appeal by the Revenue is dismissed: (i) the disallowance relating to application of income outside India for A.Y. 2014-15 is deleted in view of the CBDT direction under the proviso to section 11(1)(c); and (ii) the addition treating the grant from the Government of France as subject to FCRA is deleted since the transaction is held to fall within clause 51 (transaction between Governments) and the assessee is treated as an instrumentality of the Government for this purpose.

Long Term Capital Gain exemption under Section 10(38) - Reliance on investigation report without corroboration - Onus on assessee under Section 68 discharged by documentary evidence - Suspicion or abnormal price rise insufficient without cogent evidence - Remand for verification of bank deposits

Long Term Capital Gain exemption under Section 10(38) - Suspicion or abnormal price rise insufficient without cogent evidence - Denial of exemption claimed under Section 10(38) on Long Term Capital Gain was not justified and is reversed. - HELD THAT: - The Tribunal examined the documentary record showing purchase through a broker, dematerialisation, payment from the assessee's bank account, contract notes evidencing sale on the recognised exchange, payment of STT, brokerage and service tax, and credit of sale proceeds to the assessee's bank account. The authorities below had denied the exemption primarily on the basis of a general investigation report and on the ground of abnormal rise in scrip price. The Tribunal held that suspicious circumstances or a startling spike in share price may give rise to suspicion but cannot substitute for cogent material. Reliance solely on the Investigation Wing's report, without independent corroboration or specific adverse material tying the assessee or her broker to the alleged racket, does not justify treating genuine LTCG as bogus. Co ordinate judicial precedents and the reasoning in the cited Delhi High Court decision were followed in concluding that evidence produced by the assessee overcomes mere probabilities and suspicion.

Addition disallowing exemption under Section 10(38) deleted; appeal allowed on this ground.

Onus on assessee under Section 68 discharged by documentary evidence - Reliance on investigation report without corroboration - Assessee discharged the initial onus under Section 68 by production of contemporaneous documents; Revenue's reliance on pre-existing investigation statements was inadequate. - HELD THAT: - The Tribunal recorded that the assessee produced sale bills, broker ledger entries, demat statements, contract notes and bank statements demonstrating payment for acquisition and receipt of sale proceeds through banking channels and sale on electronic exchange. The Investigation Wing's report did not name the assessee or her broker and the broker was not shown to have been examined. The Tribunal held that where the assessee furnishes cogent documentary evidence establishing the transactions, the burden shifts to the Revenue to rebut such evidence with specific material; absent such corroboration, pre-existing investigation statements cannot be the sole basis for addition.

Findings of authorities rejecting genuineness of transactions reversed; onus held to be discharged by assessee.

Remand for verification of bank deposits - Certain issues relating to deposits in bank accounts were remitted to the Assessing Officer for fresh consideration after affording opportunity to the assessee. - HELD THAT: - The Tribunal noted that additional evidence concerning bank deposits could not be filed earlier due to illness and mistake of counsel. In view of these circumstances it directed remand of the limited issue to the Assessing Officer to examine the newly filed material and pass appropriate orders after hearing the assessee. This remand was ordered for statistical purposes and limited to the verification of the deposits.

Issue remitted to AO for fresh consideration after affording reasonable opportunity to the assessee.

Final Conclusion: The Tribunal allowed the appeal in part: it reversed the denial of exemption under Section 10(38) and deleted the addition, held that the assessee had discharged the onus by documentary evidence whereas mere reliance on an investigation report and suspicion based on price movement was insufficient; certain points concerning bank deposits were remitted to the Assessing Officer for fresh consideration.

Detention certificate - demurrage and rent charges - re-assessment of customs value - Extended Producer Responsibility Authorization - auction of seized goods - interim restraint/injunction

Detention certificate - demurrage and rent charges - auction of seized goods - interim restraint/injunction - Whether the third respondent should be restrained from auctioning the seized imported goods pending adjudication of the writ petition. - HELD THAT: - The petition records that self-assessed bills of entry were filed and the goods were examined and found to conform to declarations. Customs proceedings challenging declared value culminated in the Commissioner of Customs (Appeals) setting aside the assessment order and accepting the declared value, and holding that prior submission of EPR-Authorization was not required. Detention certificates were thereafter issued directing the custodian not to charge rent/demurrage for specified periods. Despite deposit of duty and issuance of detention certificates, the third respondent proceeded towards auction. In view of the factual matrix and the petitioners' grievance that auction is threatened despite the detention certificates and successful appellate outcome on value and EPR requirement, the High Court issued notice and granted interim relief to maintain the status quo. The court exercised its discretionary injunctive power to prevent prejudice to the petitioners pending adjudication, while directing filing of affidavits on a short timetable.

The third respondent is temporarily restrained from carrying out the auction of the seized items; notice issued to respondent no. 3 returnable in five weeks with directions for filing affidavits and rejoinder on an accelerated schedule.

Final Conclusion: Notice issued to respondent no. 3; interim injunction restraining auction of the seized goods granted pending further orders, with directions for expedited filing of counter and rejoinder affidavits.

Duplicate payment - excess payment - application for refund under Section 19 of the Lighthouse Act, 1927 - unjust enrichment - jurisdiction to grant refund

Duplicate payment - excess payment - application for refund under Section 19 of the Lighthouse Act, 1927 - Section 19 of the Lighthouse Act, 1927 is not applicable to a forced or involuntary dual/duplicate payment made due to a technical failure of the payment portal, because the provision contemplates an "excess payment" and not a duplicate payment. - HELD THAT: - The High Court reviewed the language and purpose of Section 19 as interpreted by the writ court and accepted the conclusion that the term used in the provision is "excess payment" and not "dual" or "duplicate" payment. The court found that the writ petitioner was compelled to make a second/manual payment after the web portal failed to generate a receipt for the first attempt, and such circumstances do not fall within the scope of Section 19. The court recorded that the State should not retain money resulting from an erroneous or forced payment and that invoking limitation under the statute would be inappropriate where Section 19 does not apply. The determinative reasoning is that the statutory remedy under Section 19 cannot be invoked for the distinct factual scenario of duplicate payment caused by system error, and therefore that provision does not bar relief in the present case. [Paras 3]

Section 19 of the Lighthouse Act, 1927 does not apply to the duplicate payment made by the petitioner due to a technical flaw in the web portal.

Jurisdiction to grant refund - unjust enrichment - The Director General of Lighthouses and Lightships is directed to refund the duplicate payment to the petitioner within one month; the court declined to adjudicate the collateral controversy over which specific officer (Commissioner of Customs or Director General) is the proper officer to effect the refund and issued a direct mandate to the Director General since the amount had been deposited with that office. - HELD THAT: - Acknowledging that the offline-collected amount was stated to have been deposited with the Office of the Director General of Lighthouses and Lightships, the court chose not to enter into the dispute as to the precise statutory competence of the Commissioner of Customs to make the refund. To avoid further litigation and in view of the deposit, the court issued a direct direction to the Director General to refund the sum to M/s. Seahorse Ship Agencies Pvt. Ltd. within one month. The court observed that any delay in implementing the directions would attract interest for delayed refund, thereby addressing the practical consequence of unjust enrichment if the respondents failed to act promptly. [Paras 6, 7, 8]

The Director General of Lighthouses and Lightships, U.P. is directed to refund the duplicate payment to the petitioner within one month; the court did not decide the contested question of the Commissioner's jurisdiction but issued the refund direction to the Director General.

Jurisdiction to grant refund - The question whether the Commissioner of Customs is the proper officer to refund the amount was not adjudicated and was left undetermined by the court. - HELD THAT: - Counsel for the appellant contended that the Commissioner of Customs lacked jurisdiction to pass any order or grant a refund because the relevant amount had been deposited with the Director General of Lighthouses and Lightships. The court expressly stated it was not inclined to enter into that controversy and therefore did not resolve the statutory question of which officer possessed the authority to effect the refund. Instead, to resolve the matter and prevent further litigation, the court directed the Director General to make the refund. Thus the jurisdictional issue remains undecided by the court. [Paras 6]

Left undecided; the court did not determine whether the Commissioner of Customs was the proper officer to make the refund.

Final Conclusion: The High Court upheld the writ court's conclusion that Section 19 of the Lighthouse Act, 1927 does not apply to the duplicate payment caused by a technical failure and, to avoid further litigation, directed the Director General of Lighthouses and Lightships, U.P. to refund the duplicate payment to the petitioner within one month, while declining to adjudicate the separate jurisdictional contest over the Commissioner of Customs' authority.

Customs House Agent licence renewal - suspension and revocation of CHA licence - forfeiture of security deposit and imposition of penalty - effect of appellate order - regulatory compliance with Customs Brokers Licensing Regulations, 2018

Suspension and revocation of CHA licence - forfeiture of security deposit and imposition of penalty - Validity of the respondent's orders suspending, refusing renewal, revoking the CHA licence and imposing forfeiture and penalty - HELD THAT: - The High Court examined the chronology of orders and the appellate adjudication by the CESTAT and held that the orders of the respondent placing the appellant under suspension, denying renewal, confirming revocation, forfeiture and penalty have been set aside by the Tribunal and, on cumulative consideration, there is currently no subsisting adverse order against the appellant warranting fresh initiation. The court found nothing on record which would justify treating the appellant as disentitled to consideration on the basis of the original renewal application, and accordingly treated the respondent's earlier operative orders as having been displaced by the appellate decision.

The respondent's suspension, refusal to renew, revocation, forfeiture and penalty are set aside in effect and there is no extant adverse order against the appellant requiring a fresh application.

Customs House Agent licence renewal - effect of appellate order - regulatory compliance with Customs Brokers Licensing Regulations, 2018 - Propriety of the CESTAT's direction that the appellant must apply afresh for CHA licence despite setting aside the respondent's orders - HELD THAT: - The Court held that the Tribunal's direction to the appellant to apply afresh was inconsistent with the operative effect of the Tribunal's earlier orders which had set aside the respondent's adverse orders. The High Court concluded that requiring a fresh application would negate the benefits conferred by the appellate decision. In consequence the Court set aside that portion of the Tribunal's order and directed that the respondent shall consider the renewal application already filed (Annexure-B) forthwith in accordance with law. The Court recorded that the respondent will take a decision on Annexure-B within ten days from the date of communication.

The CESTAT's direction to apply afresh is quashed; the respondent is directed to consider the pending renewal application (Annexure-B) forthwith and pass orders in accordance with law within ten days.

Final Conclusion: The appeal is allowed; the High Court set aside the direction that the appellant must apply afresh and directed the respondent to consider the renewal application already on record (Annexure-B) and decide it in accordance with law within ten days, thereby giving effect to the appellate outcome that displaced the respondent's adverse orders.

Principles of natural justice - tribunal not bound by Code of Civil Procedure - transposition of parties - dominant/litis dominus - necessary or proper party - abuse of process and delay tactics - party autonomy in framing relief

Transposition of parties - necessary or proper party - party autonomy in framing relief - Application by Petitioner No.3 to be transposed as a Respondent in the Company Petition - HELD THAT: - The Tribunal held that Petitioner No.3, having been originally arrayed and having given a notarised vakalatnama, cannot be transposed to the respondents' side against the wish of the remaining petitioners where no relief or allegation has been made against him. The bench noted that the remaining petitioners are the masters of their lis and are entitled to choose the persons against whom relief is sought; since no relief was claimed against Petitioner No.3 he is neither a necessary nor a proper party to be impleaded as respondent. The Tribunal also observed that the application was filed after a substantial delay and at a stage when the main petition was part-heard, concluding that the application appeared to be filed to delay proceedings rather than for any bona fide purpose. On these grounds the application for transposition was rejected. [Paras 6, 8, 9, 10, 11]

Application to transpose Petitioner No.3 as Respondent rejected; Petitioner No.3 is not a necessary or proper party and cannot be added as respondent against the wish of the remaining petitioners.

Abuse of process and delay tactics - principles of natural justice - Imposition of costs for bringing the application and its disposal - HELD THAT: - The Tribunal found that the application was filed after nearly two years from the time Petitioner No.3 purportedly sought to withdraw and was filed at a stage intended to delay the hearing. Taking that conduct into account, and noting that the matter was part-heard, the Tribunal imposed a cost as compensatory and deterrent measure. The bench also clarified that while it is guided by principles of natural justice and not strictly bound by the Code of Civil Procedure, the absence of a specific rule in the NCLT Rules for such applications did not preclude the exercise of its discretion to award costs. [Paras 6, 10, 12]

Application rejected with costs of Rs. 1,00,000/- to be paid to the remaining petitioners.

Evidence of a party - party autonomy in framing relief - Permissibility of calling the applicant as a witness despite rejection of transposition - HELD THAT: - Although the application to transpose the party was dismissed, the Tribunal permitted the respondents in the Company Petition to cite the applicant as a witness if they so wished and stated it may consider his evidence in the case. This preserves the respondents' ability to examine the applicant without altering party status. [Paras 13]

Respondents may cite the applicant as a witness and the Tribunal may consider his evidence.

Final Conclusion: The application to transpose Petitioner No.3 as a respondent is rejected on merits and as an apparent delay tactic; costs of Rs. 1,00,000/- awarded to the remaining petitioners, while the applicant remains available to be examined as a witness if the respondents so elect.

Restoration of company struck off - power under Section 252(3) - striking off under Section 248(5) - company being in operation / going concern - compliance of pending statutory filings - conditions for revival including costs and publication

Restoration of company struck off - power under Section 252(3) - company being in operation / going concern - striking off under Section 248(5) - Whether the Tribunal should order restoration of the company's name struck off under Section 248(5) on the ground that the company was carrying on business when its name was struck off, and whether the applicant is entitled to relief under Section 252(3). - HELD THAT: - The Tribunal examined the documentary material placed on record by the appellant - audited annual accounts for the defaulting years, an Income Tax return acknowledgment for Assessment Year 2019-20, and bank statements - and found that these documents prima facie established that the company had generated revenues and recorded profits in the years immediately preceding the striking off and maintained banking operations. Applying the power conferred by Section 252(3), the Tribunal concluded that the material showed the company was in operation when its name was struck off under the procedure initiated under Section 248(5). In consequence, the conditions for restoration under Section 252(3) were satisfied. The Tribunal therefore accepted the appellant's request for restoration but exercised its discretion to impose compliance conditions, requiring filing of pending statutory documents for the relevant financial years, payment of prescribed fees/late fees, payment of a specified cost for revival, delivery of certified copy of the order, and publication by the Registrar in the Official Gazette; the order was confined to relief from striking off and did not preclude ROC from taking any other lawful action for other violations. [Paras 8, 11, 13]

The Tribunal ordered restoration of the company's name in the Register under Section 252(3) subject to filing of pending statutory documents for Financial Years 2009 onwards, payment of prescribed fees/late fees and a revival cost, delivery of the certified order to ROC, and publication by ROC in the Official Gazette; the order is confined to the striking-off consequences and does not bar other lawful action by ROC.

Final Conclusion: The Tribunal allowed the appeal and directed the Registrar of Companies, Odisha to restore the appellant company's name as if it had not been struck off, subject to stipulated compliance (filing of pending returns/accounts, payment of fees/late fees and revival cost, delivery of certified order and publication); the restoration is confined to consequences of striking off and does not preclude further action by ROC for other violations.

Dispensation of meetings of shareholders and creditors - Scheme of Arrangement - Compliance with the Companies Act, 2013 and Companies (CAA) Rules, 2016 - Certified list of shareholders and creditors - Statutory auditor's certificate on accounting treatment - Board approval of the scheme

Dispensation of meetings of shareholders and creditors - Certified list of shareholders and creditors - Dispensation of convening and holding of the meeting of Equity Shareholders of all the Applicant Companies. - HELD THAT: - The Tribunal examined the certificates issued by the Chartered Accountants certifying the number and identities of Equity Shareholders and noted that a majority of the shareholders (including principal shareholders) filed affidavits consenting to the scheme and to the dispensation of meetings. The Board of Directors of the Applicant Companies had approved and adopted the Scheme. Having perused the pleadings, certifications and affidavits and being satisfied that material facts were disclosed and requisite compliance under the Companies Act and Rules was followed, the Tribunal found it appropriate to dispense with the convening and holding of meetings of the Equity Shareholders. [Paras 5, 6]

Convening and holding of the meetings of the Equity Shareholders of all the Applicant Companies is dispensed with.

Dispensation of meetings of shareholders and creditors - Certified list of shareholders and creditors - Dispensation of convening and holding of the meeting of the Unsecured Creditors of the Applicant Companies. - HELD THAT: - The Tribunal relied on the certificates from the Chartered Accountants identifying Unsecured Creditors and on affidavits filed by those creditors consenting to the Scheme and to the dispensation of meetings. In light of the disclosures in the application, the certifications, and the absence of any pending investigations or proceedings under the Companies Act that would affect the Scheme, the Tribunal was satisfied that the dispensation of meetings of Unsecured Creditors was justified. [Paras 5, 6]

Convening and holding of the meeting of the Unsecured Creditors of the Applicant Companies is dispensed with.

Dispensation of meetings of shareholders and creditors - Statutory auditor's certificate on accounting treatment - Compliance with the Companies Act, 2013 and Companies (CAA) Rules, 2016 - Dispensation of convening and holding of the meeting of the Secured Creditors of the Transferee Company. - HELD THAT: - The Tribunal noted the certificate identifying Secured Creditors and the affidavits filed by authorised representatives of the Secured Creditors consenting to the Scheme and to the dispensation of meetings. The Statutory Auditor certified that the proposed accounting under the Scheme complied with applicable accounting standards. Satisfied that the Applicant Companies had followed the extant provisions of the Companies Act and Rules, and that material facts were disclosed, the Tribunal found it appropriate to dispense with the meeting of Secured Creditors of the Transferee Company. [Paras 5, 6]

Convening and holding of the meeting of the Secured Creditors of the Transferee Company is dispensed with.

Scheme of Arrangement - Compliance with the Companies Act, 2013 and Companies (CAA) Rules, 2016 - Board approval of the scheme - Directions regarding publicity and further prosecution of the Company Application and sanction petition following dispensation of meetings. - HELD THAT: - The Tribunal directed issuance of a paper notification in one English and one vernacular newspaper informing stakeholders of the dispensation order, allowed any aggrieved party to file a miscellaneous application seeking directions, and permitted the Company to file the necessary petition for sanction of the Scheme after following statutory requirements. These directions follow from the Tribunal's satisfaction with procedural compliance and are procedural steps to ensure notice and opportunity for challenge before final sanction. [Paras 6]

Applicant Companies to publish notifications in specified newspapers; aggrieved parties may file miscellaneous application; Company permitted to file petition for sanction after complying with law.

Final Conclusion: The Tribunal, after considering certificates from Chartered Accountants and affidavits of consenting shareholders and creditors and being satisfied with compliance by the Applicant Companies with the Companies Act and Rules and with auditor certification of accounting treatment, dispensed with the convening and holding of meetings of the Equity Shareholders and Unsecured Creditors of the Applicant Companies and of the Secured Creditors of the Transferee Company; directed publication of notices, permitted aggrieved parties to seek appropriate directions, and allowed filing of the sanction petition after statutory compliance.

Liquidation under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016 - Committee of Creditors' commercial decision - Role of Adjudicating Authority in liquidation - Moratorium cessation - Powers and duties of the Liquidator

Liquidation under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016 - Committee of Creditors' commercial decision - Role of Adjudicating Authority in liquidation - Application under Section 33(1)(a) IBC for liquidation of the Corporate Debtor is maintainable and is to be allowed where the CoC, after conducting CIRP and receiving no viable resolution plan, resolves for liquidation. - HELD THAT: - The Resolution Professional filed the application for liquidation after the Committee of Creditors, exercising its commercial wisdom, unanimously resolved in favour of liquidation following failure to receive any viable resolution plan by the extended deadline and unsuccessful One Time Settlement attempts by the corporate debtor. The Tribunal, applying the principle in K. Sashidhar v. Indian Overseas Bank, recognised that the Adjudicating Authority is not to re-appraise the commercial decision of the CoC but is obligated to initiate liquidation under Section 33(1) when the CoC so resolves. The record showed due CIRP steps were taken, delays were attributable to non-cooperation of the erstwhile directors and COVID-19 lockdowns, extensions were sought and granted, and the CoC conducted e-voting obtaining 100% votes in favour of liquidation. Given the absence of any contrary material or viable resolution plan, the Tribunal had no reason to take a different view and therefore directed liquidation in accordance with Chapter III of the Code. [Paras 6]

Application allowed; Corporate Debtor ordered to be liquidated as per Chapter III of the Code.

Powers and duties of the Liquidator - Moratorium cessation - Consequential directions on appointment of liquidator and the conduct of liquidation are to follow upon an order for liquidation. - HELD THAT: - On allowing the liquidation application the Tribunal appointed the incumbent Resolution Professional as Liquidator and directed him to issue public announcements, exercise the powers and perform duties prescribed under the Code and the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, and to be entitled to fees in terms of the Code. The moratorium under Section 14 was declared to cease, powers of the board and KMP were to vest in the Liquidator, proceedings against the Corporate Debtor were restrained subject to statutory exceptions, personnel connected with the Corporate Debtor were directed to cooperate, and statutory and administrative notifications and copies of the order were directed to be furnished to the appropriate authorities.

The incumbent Resolution Professional is appointed Liquidator and directed to conduct liquidation with specified ancillary directions including cessation of moratorium and vesting of management powers in the Liquidator.

Final Conclusion: The Tribunal allowed the application under Section 33(1)(a) IBC, ordered liquidation of M/s. ISR Infra Private Limited in accordance with Chapter III of the Code, appointed the then Resolution Professional as Liquidator and issued consequential directions governing the liquidation process.

Initiation of corporate insolvency resolution process under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Limitation - date of default - time barred application

Date of default - Limitation - time barred application - The application under Section 7 of the IBC is barred by limitation as the date of default is 22.12.2014 and the petition was filed on 21.11.2019. - HELD THAT: - The Form 1 filed by the financial creditor did not state a date of default; the Tribunal ascertained the date of default from the material on record as 22.12.2014, being the date on which the corporate debtor emailed the financial creditor accepting delay in the project and acknowledging liability. Applying the Supreme Court's criterion for ascertaining the date of default, the Tribunal found that the application filed on 21.11.2019 was filed more than three years after the date of default and therefore failed the test of limitation under the Code. Consequently the petition could not be admitted and was dismissed. [Paras 5, 6, 7]

The Section 7 petition is time barred and is dismissed.

Final Conclusion: The Tribunal dismissed the Section 7 application as barred by limitation, having held the date of default to be 22.12.2014 and the petition filed on 21.11.2019 to be beyond the prescribed period.

Power to initiate proceedings under Chapter V of the Finance Act, 1994 after repeal by the Goods and Services Tax Act, 2017 - reopening of assessments - continuation of proceedings pending adjudication - interim stay of enforcement of final orders

Power to initiate proceedings under Chapter V of the Finance Act, 1994 after repeal by the Goods and Services Tax Act, 2017 - reopening of assessments - continuation of proceedings pending adjudication - interim stay of enforcement of final orders - Whether proceedings pursuant to the impugned show cause notice and summons may continue pending adjudication of the writ petition challenging initiation of proceedings under the repealed Chapter V of the Finance Act, 1994 - HELD THAT: - The Court issued notice on the writ petition challenging the show cause notice and summons and other impugned notifications and circulars, and recorded that the question whether fresh proceedings under Chapter V of the Finance Act, 1994 can be initiated after repeal by the Goods and Services Tax Act, 2017 has been the subject of contrary consideration (reference to Vianaar Homes decision). In the interim, the Court directed that proceedings in response to the impugned show cause notices and summons may continue, but any final orders arising therefrom shall not be given effect to until the writ petition is finally disposed of. The direction preserves the ability of the respondents to carry forward the adjudicatory process while protecting the petitioners from execution of any final adjudication until the legal challenge is resolved.

Proceedings may continue, but final orders shall not be given effect to until disposal of the writ petition.

Interim procedural orders - filing of counter-affidavit and rejoinder - Interim procedural directions relating to service of pleadings and listing - HELD THAT: - The Court directed issuance of notice, permitted respondents to file a counter-affidavit within four weeks and allowed rejoinder before the next date of hearing. The writ petition was listed along with WP(C) 8730/2013 on the adjourned date. Concurrent miscellaneous applications (CM APPLs. 21307-21308/2021) were allowed subject to just exceptions and disposed of; CM APPL. 21306/2021 was disposed of in terms of the interim direction.

Counter-affidavit directed to be filed within four weeks; rejoinder allowed; listed for further hearing; specified miscellaneous applications allowed/ disposed.

Final Conclusion: Notice issued; respondents to file counter-affidavit; interim direction permits continuation of adjudicatory proceedings on the impugned show cause notices and summons but bars giving effect to any final orders until the writ petition is disposed of; miscellaneous applications disposed of as recorded.

Refund of CENVAT credit under Notification No.27/2012-CE(NT) - production and admissibility of FIRC as proof of export turnover - eligibility of invoices addressed to unregistered premises - compliance with condition 2(g) and 2(h) of the notification (debit in returns) - ceiling under section 142(3) of the CGST Act, 2017 - remand for de novo adjudication of refund claims

Production and admissibility of FIRC as proof of export turnover - eligibility of invoices addressed to unregistered premises - Whether the refund claims require fresh adjudication to examine FIRCs and invoices addressed to unregistered premises as part of export turnover admissibility. - HELD THAT: - The Tribunal found that the appellants had not been able to explain or produce before the refund sanctioning authority the documents relied upon (including FIRCs and invoices) which were relevant to the determination of export turnover and admissibility. The appellants sought an opportunity to produce and explain those documents. In view of those facts and the appellants' request, the Tribunal did not decide the merits of admissibility but held that the matters ought to be reconsidered by the refund sanctioning authority with opportunity to the appellants to produce and explain the documents. The Tribunal therefore remanded the issue for fresh adjudication rather than adjudicating the documentary admissibility itself.

Remanded to the refund sanctioning authority for de novo consideration of admissibility of FIRCs and invoices, with an opportunity to the appellants to produce and explain documents.

Compliance with condition 2(g) and 2(h) of the notification (debit in returns) - failure to debit claimed refund in ST-3 / reflection in GSTR-3B - Whether the refund sanctioning authority should reconsider compliance with conditions 2(g) and 2(h) of the notification, including the alleged non-debit in ST-3 and the appellants' contention about debit being reflected in post-GST returns. - HELD THAT: - The Tribunal recorded the appellants' plea that, after introduction of GST, the required debit under clause 2(h) can be reflected in GSTR-3B (or equivalent returns) and that they could explain or produce the necessary evidence if given an opportunity. The Tribunal did not pronounce on the correctness of the contention but directed fresh processing so that the adjudicating authority may examine compliance with conditions 2(g) and 2(h) and the relevant return entries on the basis of documents and explanations to be furnished by the appellants.

Remanded for de novo consideration of compliance with conditions 2(g) and 2(h), including examination of return entries and any explanations or documents produced by the appellants.

Ceiling under section 142(3) of the CGST Act, 2017 - Whether the application of the ceiling under section 142(3) in rejecting the refund claims requires fresh consideration by the refund sanctioning authority. - HELD THAT: - The Tribunal noted that the adjudicating authority had applied the ceiling under section 142(3) as a ground for rejection. As the appellants sought an opportunity to place supporting documents and explanations before the authority, the Tribunal did not rule on the applicability or correctness of the ceiling's application but remitted the matter for fresh adjudication so that the sanctioning authority may apply the statutory ceiling after examining the complete record and submissions.

Remanded to the refund sanctioning authority for reconsideration of the application of the ceiling under section 142(3) after de novo processing of the refund claims.

Final Conclusion: The appeals are allowed by way of remand: the refund sanctioning authority is directed to conduct de novo processing of the refund claims for the periods Oct.'16 to Dec.'16, Jan.'17 to Mar.'17 and Apr.'17 to Jun.'17, giving the appellants opportunity to produce and explain relevant documents and thereafter decide the claims afresh.

Refund of Cenvat credit on input services used for export of services - reverse charge mechanism - eligibility for credit despite non-disclosure in ST-3 returns - procedural lapse in ST-3 returns - condonation of procedural lapse - Rule 5 of Cenvat Credit Rules, 2004

Refund of Cenvat credit on input services used for export of services - eligibility for credit despite non-disclosure in ST-3 returns - procedural lapse in ST-3 returns - condonation of procedural lapse - reverse charge mechanism - Rule 5 of Cenvat Credit Rules, 2004 - Whether appellants are entitled to refund of service tax credit for July, 2013 to September, 2013 though the credit was not reflected in ST-3 returns - HELD THAT: - The appellants had availed Cenvat credit on service tax paid under the reverse charge mechanism on input services used for exported services and have properly accounted for that credit in their books. The sole ground for denial by the department was non-reflection of the availment in ST-3 returns for the claimed period. As the services were exported, refund of the service tax paid on input services is claimable under Rule 5 of the Cenvat Credit Rules, 2004. Non-disclosure in the ST-3 return is a procedural lapse; there is no contention that the appellants were substantively ineligible for the credit. The procedural omission can be condoned and does not defeat the substantive entitlement to refund where the credit is otherwise admissible and accounted for. [Paras 5, 6]

Appellants are entitled to the refund claimed for July, 2013 to September, 2013; the impugned order is set aside and the appeal is allowed with consequential reliefs.

Final Conclusion: The Tribunal allowed the appeal, holding that the appellants, having legitimately availed Cenvat credit on input services used for export and accounted for it in books, are entitled to refund under Rule 5 of the Cenvat Credit Rules, 2004 for July, 2013 to September, 2013 despite non reflection in ST 3 returns, the omission being a condonable procedural lapse; the impugned order is set aside with consequential reliefs.

Exemption under Notification No.6/2005-ST and Notification No.33/2012-ST - branded service - extended period of limitation and penalty - service tax liability on gross value of subscription - cenvat credit of service tax paid by MSO as input service - assessment under Section 72 (best judgment assessment) - remand for quantification of demand

Exemption under Notification No.6/2005-ST and Notification No.33/2012-ST - branded service - Entitlement of the cable operator to exemption under the stated notifications on the ground they are not providing branded service. - HELD THAT: - Relying on the Tribunal's earlier decision in M/s. Blue Star Communication (reproduced at length), the Tribunal held that the appellants receive signals from an MSO and do not provide any service that indicates a trade connection or brand to the subscribers. Applying the tests articulated by the Apex Court (as cited in the reproduced order) for when a name or mark constitutes a brand connection, the Tribunal concluded that the cable operators are not providing branded services and therefore fall within the exemption contained in Notification No.6/2005-ST and Notification No.33/2012-ST. [Paras 6, 7, 13]

The appellants are entitled to exemption under Notification No.6/2005-ST dated 01.03.2005 and Notification No.33/2012-ST dated 20.06.2012.

Extended period of limitation and penalty - Invokability of the extended period of limitation and imposition of penalty. - HELD THAT: - The Tribunal accepted that appellants acted under a bona fide belief, given industry confusion on whether tax liability lay on MSOs or local cable operators. Following the reasoning in the reproduced authorities, the Tribunal held that the extended period for invoking liability is not invokable and consequently penalties should not be imposed. [Paras 6, 13]

Extended period of limitation is not invokable and no penalty is imposable.

Service tax liability on gross value of subscription - cenvat credit of service tax paid by MSO as input service - Whether appellants are liable to pay service tax on the gross subscription received and whether they can avail cenvat credit for service tax paid by the MSO. - HELD THAT: - Applying the valuation principle in Section 67 as explained in the cited authority reproduced in the order, the Tribunal held that service tax is leviable on the gross amount charged by the service provider for providing such service; accordingly the appellants are liable to pay service tax on the gross subscription received from subscribers. Separately, since amounts remitted to the MSO for signals constitute input services, the Tribunal held that service tax paid by the MSO on that amount is available as cenvat credit to the appellants. [Paras 6, 13]

Appellants are liable to pay service tax on the gross value of subscriptions received and are entitled to avail cenvat credit of service tax paid by the MSO.

Assessment under Section 72 (best judgment assessment) - remand for quantification of demand - Validity of the best judgment assessment made on the basis of data supplied by the MSO and the need for quantification/verification by the adjudicating authority. - HELD THAT: - The Tribunal reproduced its earlier finding that assessments made on the basis of MSO-supplied data without affording the appellants an opportunity to produce their own records are not correct. The Tribunal directed that appellants supply data of services provided within a specified time so that the adjudicating authority can determine the correct liability. Consequently the matter is remanded for quantification and re-assessment limited to the period within limitation upon production of appellant's data. [Paras 6, 8, 13]

Assessment under Section 72 is not sustained on the existing record; matter remanded to the adjudicating authority to quantify demand within the period of limitation on production of the appellants' data within 30 days.

Final Conclusion: The appeal is allowed by way of remand: the Tribunal held the appellants are entitled to the exemptions relied upon, the extended period is not invokable (no penalty), the appellants remain liable to pay service tax on gross subscriptions but may claim cenvat credit for service tax paid by the MSO, and the matter is remanded to the adjudicating authority for quantification of demand for the period from 1.10.2009 to 31.3.2014 upon production of appellant's data within 30 days.

Denial of CENVAT credit - Reliance on concurrent adjudication - Recovery of duty and imposition of penalty - Violation of principles of natural justice - Extended period of limitation - Remand for fresh adjudication

Denial of CENVAT credit - Reliance on concurrent adjudication - Recovery of duty and imposition of penalty - Violation of principles of natural justice - Impugned adjudication order setting aside CENVAT credit, recovering duty and imposing penalties is not sustainable and is set aside. - HELD THAT: - The Tribunal held that the adjudicating authority had grounded the denial of CENVAT credit and the consequent recovery and penalties principally on the adjudications against the suppliers, without separately and properly examining documentary proof of receipt produced by the recipient. The adjudicator's reliance upon findings of non-manufacture by the coordinate authority-findings subsequently nullified by the coordinate bench-meant the impugned order lacked an independent and sustainable basis. Further, several contentions raised by the appellants were not considered and there was an appearance that the adjudicating authority acted on the assurance of the coordinate finding rather than on a separate inquiry; this course strained conformity with the principles of natural justice and rendered the order not legal and proper. The Tribunal also noted that the question of invocation of the extended period of limitation could not be decided by it because that plea had not been pressed before the original authority. [Paras 5, 6, 8, 9]

Impugned order quashed to the extent challenged as being unsustainable for lack of independent adjudication and failure to observe principles of natural justice.

Remand for fresh adjudication - Violation of principles of natural justice - Matter remanded to the original adjudicating authority for fresh determination in accordance with statute and established precedent. - HELD THAT: - Given the deficiencies in the impugned proceedings-chiefly the over-reliance on the coordinate authority's findings and the non-consideration of the recipients' documentary evidence-the Tribunal directed that the adjudicating authority re-open and determine the issues afresh. The remand contemplates a fresh inquiry applying the principles of natural justice, independently examining the evidence on record (including transport and receipt documents), and reaching conclusions in accordance with statutory requirements and judicial precedent. The Tribunal expressly set aside the impugned order and directed re-adjudication rather than pronouncing on the substantive merits of all contested points. [Paras 9]

Proceedings set aside and remitted to the original authority to decide afresh in accordance with law and precedent, applying principles of natural justice.

Final Conclusion: The impugned order is set aside and the matter is remanded to the adjudicating authority for fresh adjudication, with directions to independently examine the evidence, apply principles of natural justice and decide in accordance with statute and judicial precedent.

Admissibility of statements under Section 14 and Section 9D of the Central Excise Act - dummy/front companies and fictitious invoices - clandestine removal and misdeclaration to evade Central Excise duty - flow back of sale proceeds as corroborative evidence - preponderance of probabilities as standard of proof in adjudication

Admissibility of statements under Section 14 and Section 9D of the Central Excise Act - Statements recorded under Section 14 are admissible in adjudication only if the requirements of Section 9D are satisfied and makers are examined before the adjudicating authority; statements of persons not cross examined before the authority lack evidentiary value. - HELD THAT: - The Tribunal applied the statutory scheme that treats statements recorded under Section 14 as relevant in subsequent proceedings only in accordance with Section 9D. The bench noted the earlier authority construing Section 9D as mandatory and followed its dictates. In the denovo proceedings 12 of the 18 recorded statements were cross examined and thus could be considered; six statements which were not so examined (including one deceased witness and others who did not appear) could not be treated as admissible evidence. Where witnesses later negated their earlier statements on cross examination, the Tribunal examined the effect of that negation on evidentiary value and held that such negation undermines the probative force of the original statement under Section 9D. [Paras 8, 10, 11, 18, 19]

Only statements made under Section 14 whose makers were examined (and available for cross examination) before the adjudicating authority are admissible; six unexamined statements are excluded from evidence.

Dummy/front companies and fictitious invoices - clandestine removal and misdeclaration to evade Central Excise duty - Whether M/s Kalyan Chemicals and M/s Prasad Chemicals were dummy firms used by the assessee for clandestine clearance was established. - HELD THAT: - On the material before it the Tribunal found consensus among members that the two proprietorships were created and operated by employees of the assessee at the instance of the Managing Director, with evidence including admissions in statements, correspondence, rent receipts, the location of the purported units within or adjacent to the assessee's premises, and documentary records showing matching entries. The Technical Member and the Third Member expressly recorded that the dummy nature of these firms was proved and not effectively controverted by the assessee. [Paras 18, 21, 46, 62]

The existence and use of M/s Kalyan Chemicals and M/s Prasad Chemicals as dummy units of the appellant were established.

Clandestine removal and misdeclaration to evade Central Excise duty - flow back of sale proceeds as corroborative evidence - preponderance of probabilities as standard of proof in adjudication - Whether the revenue established clandestine manufacture/transportation/sale of resins and flow back of sale proceeds to the assessee on the required preponderance of probabilities, and the consequent fate of the appeals. - HELD THAT: - The members reached differing conclusions on the sufficiency of proof. The Technical Member concluded that, although the dummy firms were proved, the transportation and sale to buyers and the flow back of money were not established to the requisite preponderance because several transporters and buyers negated earlier statements on cross examination and certain witnesses were not examined under Section 9D; accordingly he set aside the impugned order. The Judicial Member and the Third Member, after reviewing the documentary matrix (seizure of barrels misdeclared as orthoxylene, private diaries and ledgers correlating consignments and amounts, bank deposit counterfoils and account statements, and admissions by employees and the Managing Director), held that the totality of documentary and oral evidence sufficed to prove clandestine clearances and flow back on a preponderance standard and that retractions or non appearance did not nullify the corroborative documentary evidence. On reference to a third member, the deciding opinion accepted the Judicial Member's view and rejected the appeals. [Paras 20, 21, 22, 59, 68]

By majority (Third Member), the documentary and testimonial material was held sufficient on preponderance of probabilities to establish clandestine removal, misdeclaration and flow back, and the appeals were dismissed.

Final Conclusion: The Tribunal, after a difference of opinion between the two original Members and reference to a Third Member, concluded by majority that the evidence (documentary records together with key admissions) established clandestine clearances through dummy firms and flow back of sale proceeds on the preponderance of probabilities; accordingly the appeals were dismissed and the impugned adjudication order upheld in the final order.