TaxTMI Updates e-Newsletter
Jul 29,2019

De-oiled cake as marketable goods and not 'waste' or incidental by-product - definition of supply under the GST law and scope of sale as supply - applicability of Section 17(2) CGST Act for reversal of input tax credit attributable to exempt supplies - classification under Chapter 2306 of the Tariff vis-a -vis residuary entries - entitlement to input tax credit under Section 16 CGST Act for taxable supplies

De-oiled cake as marketable goods and not 'waste' or incidental by-product - De-oiled cake (including de-oiled rice bran/mahua cake) is not to be treated as waste or an unintended by product but is an intended, marketable product manufactured through desolventising, testing and packing. - HELD THAT: - The Authority found that the de oiled cake undergoes deliberate downstream processing (desolventising, chemical testing to meet specifications, branded packing) and is actively marketed and sold by the manufacturer. The factual and technical process shows the product is intended and commercially significant, so precedents treating pure waste or unintended residues are inapplicable. The court decisions cited by the appellant were thus held not to govern the present facts where two commercially viable products (oil and de oiled cake) emerge and the de oiled cake materially contributes to revenue. [Paras 9]

De-oiled cake is not waste or mere technological residue but an intended and marketable product.

Definition of supply under the GST law and scope of sale as supply - applicability of Section 17(2) CGST Act for reversal of input tax credit attributable to exempt supplies - Sale of de oiled cake amounts to 'supply' under the GST definition and, where the product is exempt, Section 17(2) requires reversal of input tax credit attributable to such exempt supplies. - HELD THAT: - The Authority applied the statutory definition of 'supply' to conclude that any sale (with or without consideration) falls within GST's ambit; exclusions are limited to items specified in Schedule III. Having held that de oiled cake is marketable goods and is sold, it constitutes 'supply'. Consequently, where the de oiled product is exempt from tax, the input tax credit attributable to such exempted supply must be reversed in terms of Section 17(2). The Authority also relied on Supreme Court authority affirming that where a by product is marketable and yields significant revenue yet is exempt, the mechanism of Section 17 must operate to disallow or require reversal of proportional credit. [Paras 11, 12, 13, 14]

De oiled cake sales are 'supply' and Section 17(2) applies to require reversal of input tax credit attributable to exempt supplies.

Classification under Chapter 2306 of the Tariff vis-a -vis residuary entries - entitlement to input tax credit under Section 16 CGST Act for taxable supplies - De oiled mahua cake is classifiable under Heading 2306 of Chapter 23 and is taxable at the rate applicable to that heading (5%), and input tax credit is available for supplies of de oiled mahua cake in accordance with Section 16. - HELD THAT: - Examination of the tariff entries showed that oil cake and solid residues resulting from extraction of vegetable fats or oils (other than specified headings) fall under Heading 2306. De oiled mahua cake does not fall within the specific headings for soybean or groundnut and therefore properly classifies under Heading 2306. As goods covered by Chapter 2306 attract the notified GST rate of 5%, supplies of de oiled mahua cake are taxable and the appellant is entitled to claim input tax credit in respect of inputs used for that taxable supply under Section 16, subject to other statutory conditions. [Paras 16, 17, 18, 19, 22]

De oiled mahua cake is classifiable under Chapter 2306, taxable at 5%, and input tax credit is allowable for such taxable supplies.

Applicability of Section 17(2) CGST Act for reversal of input tax credit attributable to exempt supplies - De oiled rice bran has been notified as fully exempt and input tax credit attributable to supplies of de oiled rice bran must be reversed by the appellant under Section 17(2). - HELD THAT: - The Authority noted the specific tariff/notification granting full exemption to de oiled rice bran. Given that exemption, the statutory prescription in Section 17(2) requires reversal of the input tax credit proportionate to the exempted supplies. Accordingly, the Authority directed reversal of input credit attributable to de oiled rice bran. [Paras 14, 22]

De oiled rice bran is exempt and the input tax credit attributable to its supply must be reversed under Section 17(2).

Final Conclusion: The appeal was disposed by upholding that de oiled cakes are marketable goods (not waste), that supplies thereof constitute 'supply' under GST, that de oiled rice bran is exempt requiring reversal of input credit under Section 17(2), and that de oiled mahua cake is classifiable under Chapter 2306 attracting 5% GST with corresponding entitlement to input tax credit for taxable supplies.

Classification of goods - fittings for furniture, coachwork or the like - parts and accessories of motor vehicles - parts of general use - classification according to constituent material - General Rules of Interpretation (GRI) I - Explanatory Notes to the HSN

Classification of goods - fittings for furniture, coachwork or the like - parts of general use - classification according to constituent material - Explanatory Notes to the HSN - General Rules of Interpretation (GRI) I - Classification of plastic door-handle, plastic fittings for motor vehicle doors (bracket, housing, bracket housing, gasket, stator) and glove box locking - HELD THAT: - The Authority applied GRI I and the Chapter and Section Notes and relied on the Explanatory Notes to conclude that the impugned articles are small parts/fittings made of plastic. Note 2 to Section XVII and the Explanatory Notes exclude "parts of general use" from classification under Section XVII; such parts are to be classified according to their constituent material. The Explanatory Notes and Note 2 to Section XV treat items like door handles, mountings, gaskets and locks as parts of general use which, if of plastic, fall in Chapter 39. Accordingly, even though the items are identifiable for motor vehicles, they are excluded from Heading 8708 and are classifiable by material under Heading 3926 as "other articles of plastics" including fittings for coachwork. The Authority rejected the competing contention that such identifiable automotive parts must be classified under Heading 8708 and followed the rule that parts of general use are to be classified by constituent material.

All the impugned goods are classifiable under Chapter 3926 (other articles of plastics) and not under Heading 8708.

Final Conclusion: The Advance Ruling holds that the door-handle, the listed plastic fittings for motor vehicle doors and the glove box locking are classifiable under Chapter 3926 and shall be taxable to GST at the rate applicable to that heading.

Photographic and videographic processing services - Printing and reproduction services of recorded media - Classification of services - Explanatory Notes to the Scheme of Classification of Services - CBIC Circular No. 84/03/2019 - Advance Ruling

Photographic and videographic processing services - Printing and reproduction services of recorded media - CBIC Circular No. 84/03/2019 - Explanatory Notes to the Scheme of Classification of Services - Classification of the applicant's activity of printing or reproducing content supplied by photographers/retail customers from digital storage media under SAC 998386 or SAC 998912. - HELD THAT: - The Authority examined the facts that the applicant receives edited images on pen drives, CDs, memory cards or other storage media and performs colour printing of those images without undertaking photographic processing or editing. The CBIC Circular No. 84/03/2019, relying on the Explanatory Notes to the Scheme of Classification of Services, expressly includes "colour printing of images from film or digital media" within Service Code 998386 and excludes such colour printing from Service Code 998912. The subject transaction therefore falls squarely within the descriptive ambit of SAC 998386 as per the Circular. The West Bengal AAR decision relied upon by the applicant was not treated as binding and pre-dated the Circular; accordingly the Circular's clarificatory position governs the present classification. Applying the Circular to the facts, the Authority concluded that the applicant's printing activity is classifiable under SAC 998386 and not under SAC 998912. [Paras 5]

The printing or reproduction of content provided by photographers/retail customers from storage media is classifiable under SAC 998386.

Final Conclusion: The Authority answered that the activity of printing or reproducing content supplied on pen drive, CD, memory card or other storage media is classifiable under SAC 998386 and attracts GST at 18% (9% CGST and 9% MGST).

Exemption under Notification No.12/2017 - Serial No.66 (services to educational institutions) - exemption under Notification No.12/2017 - Serial No.3 (pure services to a Governmental authority in relation to functions under Articles 243G/243W) - definition of "educational institution" in Notification No.12/2017 - definition of "governmental authority" for purposes of the Notification - functions entrusted to Panchayats and Municipalities under Articles 243G and 243W of the Constitution

Exemption under Notification No.12/2017 - Serial No.66 (services to educational institutions) - definition of "educational institution" in Notification No.12/2017 - Whether security services supplied to VNIT qualify for nil rate/exemption under Serial No.66 of Notification No.12/2017 as services to an educational institution. - HELD THAT: - Serial No.66 grants nil rate for certain services to or provided by an "educational institution" but the proviso limits the benefit under entry (b) to institutions providing pre-school education and education up to higher secondary school or equivalent. The Notification's definition of "educational institution" also covers institutions providing education as part of a curriculum for obtaining a qualification recognised by law. VNIT conducts undergraduate, postgraduate and doctoral programs recognised by law and thus falls within the definition of "educational institution". However, the proviso to Serial No.66 excludes educational institutions other than those providing pre-school to higher secondary education from entry (b). VNIT does not provide pre-school or education up to higher secondary; therefore the security services supplied in the present case do not attract the exemption under Serial No.66.

Answered in the negative - the security services to VNIT are not exempt under Serial No.66 of Notification No.12/2017.

Exemption under Notification No.12/2017 - Serial No.3 (pure services to a Governmental authority in relation to functions under Articles 243G/243W) - definition of "governmental authority" - functions entrusted to Panchayats and Municipalities under Articles 243G and 243W - Whether security services supplied to VNIT are nil-rated under Serial No.3 of Notification No.12/2017 as "pure services" to a Governmental authority in relation to functions entrusted to Panchayats/Municipalities. - HELD THAT: - Serial No.3 exempts "pure services" provided to a "Governmental authority" only when the services relate to activities entrusted to Panchayats under Article 243G or to Municipalities under Article 243W. The Notification adopts the Explanation to section 2(16) of the IGST Act for the meaning of "governmental authority" (bodies set up by Act of Parliament/State Legislature or bodies established by Government with 90%+ participation to carry out functions entrusted to municipalities). The Authority finds that VNIT was not set up by an Act of Parliament or State Legislature to carry out municipal/panchayat functions nor established by government with the specified participation to discharge such functions; moreover, security of an educational institution is not listed among the functions in the Eleventh/Twelfth Schedules under Articles 243G/243W. Consequently, even if VNIT were treated as a governmental body for other purposes, the security services supplied do not relate to functions entrusted to Panchayats/Municipalities and therefore do not qualify for exemption under Serial No.3.

Answered in the negative - the security services to VNIT are not exempt under Serial No.3 of Notification No.12/2017.

Final Conclusion: The Authority rules that the security services provided by the applicant to Visvesvaraya National Institute of Technology, Nagpur are not exempt under Serial No.66 nor under Serial No.3 of Notification No.12/2017; both questions are answered in the negative for the reasons stated above.

Composite supply of health care treatment - exemption of health care services under Notification No. 12/2017 - clinical establishment - incidental supplies to health services - taxable supply of goods - distinction between in patient and out patient supplies - room rent and food as part of composite health care supply

Composite supply of health care treatment - incidental supplies to health services - room rent and food as part of composite health care supply - clinical establishment - exemption of health care services under Notification No. 12/2017 - Supply of medicines, surgical items, implants, consumables and other allied items supplied by the hospital through its pharmacy, and food and room on rent provided to in patients, form part of composite supply of health care treatment and are not taxable under CGST/SGST. - HELD THAT: - The Authority found that the hospital is a clinical establishment providing health care services exempt under the classification relied upon by the applicant. In patients admitted for diagnosis or treatment receive a package of services - lodging, medicines, consumables, implants, dietary food and attendant care - which are provided under medical supervision and are naturally bundled in the course of treatment. The supply of food (when advised by doctor/nutritionist) and room on rent to admitted patients is integral to the treatment package and, together with medicines and allied items supplied via the hospital pharmacy for in patients, constitutes a composite supply of health care treatment. The Authority accepted the applicant's submissions and the relevant governmental clarifications to the effect that such supplies to in patients are not separately taxable under the GST laws.

Affirmative - such supplies to in patients form part of composite health care treatment and are exempt from GST.

Composite supply of health care treatment - distinction between in patient and out patient supplies - taxable supply of goods - Supply of medicines, surgical items, implants, consumables and other allied items by the hospital pharmacy to out patients (and to walk in customers) is not part of composite supply of health care treatment and is taxable under CGST/SGST. - HELD THAT: - The Authority distinguished out patients from admitted patients on the facts that out patients receive clinical consultation and prescription but retain freedom to procure medicines from any pharmacy. Once the prescription is issued and the patient is free to purchase medicines, the hospital's role in treatment ceases at prescription; sales from the hospital pharmacy to out patients or walk in customers constitute direct supply of goods. Such supplies are comparable to sales by any retail pharmacy and are therefore sales of goods liable to GST. The Authority accordingly held that the criteria for exemption as a composite supply of health care are not satisfied in respect of outpatient pharmacy sales.

Negative - such supplies to out patients do not form part of composite health care treatment and are taxable.

Final Conclusion: The Authority ruled that supplies to admitted patients (medicines, consumables, implants, food and room rent) form a composite, exempt health care supply, while supplies from the hospital pharmacy to out patients or walk in customers are separate taxable supplies of goods.

Natural justice (audi alteram partem) - Seizure of goods and vehicle and show-cause notice under UPGST Act - Remand for fresh decision by appellate authority

Natural justice (audi alteram partem) - Seizure of goods and vehicle and show-cause notice under UPGST Act - Remand for fresh consideration - Order dated 12.03.2019 of the Appellate Authority was passed without hearing and thereby violated principles of natural justice; the order is set aside and the matter is remanded for fresh decision. - HELD THAT: - The Court found from the record that the Appellate Authority's judgment and order dated 12.03.2019 was rendered without hearing the petitioner, which offended the fundamental principle of audi alteram partem. The judgment emphasises that notice must be precise and afford a reasonable opportunity to meet the case against the party and that failure to accord such an opportunity vitiates the order. Having held that natural justice was violated in the appellate process relating to the seizure of goods, vehicle and the show-cause notice issued under the UPGST regime, the Court set aside the impugned appellate order and remitted the matter to the Appellate Authority for fresh adjudication. The remand is for a decision on merits after affording the petitioner an opportunity of hearing; procedural directions include disposal within eight weeks and a restraint on unnecessary adjournments by the petitioner.

Impugned order dated 12.03.2019 set aside for breach of natural justice; matter remanded to the Appellate Authority to decide afresh within eight weeks on receipt of certified copy, with petitioner not to seek unnecessary adjournments.

Final Conclusion: Writ petition allowed; appellate order quashed for violation of natural justice and the matter remitted to the Appellate Authority for fresh hearing and decision within eight weeks from receipt of certified copy, subject to the direction that the petitioner shall not seek unnecessary adjournments.

Alternative statutory remedy - maintainability of writ petition - final order under the CGST Act - non-justiciability of merits in writ where alternative remedy exists

Alternative statutory remedy - maintainability of writ petition - final order under the CGST Act - Writ petition dismissed as not maintainable because a final order under the CGST Act has been passed and a statutory remedy of appeal exists. - HELD THAT: - The High Court noted that a final order has been passed in the proceedings arising from the detention and penalty notices and that the petitioners have a statutory remedy of appeal under the CGST Act. The petitioners did not dispute the existence of the final order. In these circumstances the Court declined to entertain a writ petition challenging the same, observing that where an alternative statutory remedy is available against a final order, the writ is not maintainable. The Court expressly refrained from adjudicating any issue on merits and left the petitioners free to pursue the statutory appeal remedy.

Writ petition dismissed; petitioners permitted to avail the statutory appeal remedy and no merits were decided.

Final Conclusion: The petition is dismissed on maintainability grounds because a final order under the CGST Act exists and the petitioners have an alternative statutory remedy of appeal; the Court has not decided the merits.

Entitlement to interest for delayed tax refunds - refund under the CGST regime - interest at 9% per annum - entitlement to interest from the date of filing of the GSTR38 - calculation of aggregate refund based on annexed chart - reliance on earlier decision in M/s. Saraf Natural Stone

Entitlement to interest for delayed tax refunds - interest at 9% per annum - entitlement to interest from the date of filing of the GSTR38 - reliance on earlier decision in M/s. Saraf Natural Stone - The writ applicants are entitled to interest on delayed refund at the rate of 9% per annum, payable from the date of filing of the GSTR38. - HELD THAT: - The Court held that the grievance of delayed refund is governed by the ratio in M/s. Saraf Natural Stone (Special Civil Application No.15925 of 2018) and, for the reasons recorded therein, the writ applicants must be awarded interest for the period of delay. The interest rate fixed is 9% per annum and accrues from the date of filing of the GSTR38 in respect of the aggregate refundable amount. The Court therefore accepted the claim for interest in principle and directed payment on that legal basis. [Paras 2, 4]

Interest at 9% per annum is payable to the writ applicants on the aggregate refund amount from the date of filing of the GSTR38.

Calculation of aggregate refund based on annexed chart - mandamus for payment within specified time - The authority is directed to calculate the aggregate refund using the chart at Page 30, Annexure D and to compute and pay the requisite interest within the time specified by the Court. - HELD THAT: - The Court directed the respondents to examine the chart furnished by the writ applicants (Page 30, Annexure D), compute the aggregate refundable amount and the interest due thereon at 9% per annum from the date of filing of the GSTR38. The exercise of computation and verification was ordered to be completed within two months of receipt of the writ of this order, and the payment of the computed interest was to be effected within two months of receipt of the writ. [Paras 4, 5]

Respondents to calculate the aggregate refund and interest as per Annexure D and complete computation within two months and effect payment of the interest within two months thereafter.

Final Conclusion: Writ petition allowed in part: applicants entitled to interest at 9% per annum on the aggregate refund amounts (for the months July'17 to Nov'17) from the date of filing of the GSTR38; respondents directed to compute the aggregate refund and interest using the annexed chart and complete computation within two months and pay the interest within two months thereafter.

Unexplained deposits - foreign currency brought into India and declaration forms - burden of proof on revenue to demolish explanation - standard of perversity for appellate interference with factual findings - appellate jurisdiction under Section 260-A of the Income Tax Act, 1961 - FERA contraventions not conclusive for income-tax additions

Unexplained deposits - foreign currency brought into India and declaration forms - burden of proof on revenue to demolish explanation - standard of perversity for appellate interference with factual findings - Appellate Tribunal's finding that the assessee had satisfactorily explained deposits of foreign currency despite absence of certain customs declaration forms and that the amount could not be treated as unexplained income was not liable to be set aside by the High Court. - HELD THAT: - The Tribunal examined exchange vouchers, charts prepared by the assessee and other material and concluded that the foreign currency was brought into India and deposited in the assessee's NRE accounts, that certain sums corresponded to declared currency while other amounts shown in exchange vouchers plausibly represented currency brought in and later surrendered on departure, and that the revenue produced no evidence to demolish that explanation. The High Court, which added the impugned sum as unexplained income because declaration forms were not produced long after the events, erred in substituting its view on facts without any perversity in the Tribunal's findings. Where the revenue fails to rebut the assessee's explanation and the tribunal's factual conclusion is supportable on the record, interference under the appellate jurisdiction (Section 260-A) is not permissible. The Court also noted that alleged contraventions under FERA, even if relevant for other penalties, do not by themselves justify treating the foreign currency deposits as unexplained income for income-tax purposes when the source and presence of funds have been satisfactorily explained.

Allow appeal; set aside High Court judgment; reinstate Appellate Tribunal's order deleting the addition made on account of unexplained deposit of dollars.

Final Conclusion: The Supreme Court allowed the appeal, holding that the High Court wrongly interfered with the Appellate Tribunal's factual findings that the assessee had explained the foreign-currency deposits; the Tribunal's order deleting the addition was reinstated.

Determination of Arm's Length Price - remand to the Transfer Pricing Officer for fresh determination - application of Comparable Uncontrolled Price (CUP) and acceptance of intra group service dealings - evaluation of Transfer Pricing Officer's findings by appellate forum - substantial question of law

Determination of Arm's Length Price - remand to the Transfer Pricing Officer for fresh determination - evaluation of Transfer Pricing Officer's findings by appellate forum - application of Comparable Uncontrolled Price (CUP) and acceptance of intra group service dealings - substantial question of law - Whether the ITAT erred in deleting the addition without remanding the matter to the TPO and without giving effect to the TPO's findings in determining the ALP of international transactions for AY 2014-15. - HELD THAT: - The High Court held that the ITAT recorded detailed reasons for declining to remand the matter to the TPO and for accepting the Assessee's case on the ALP of intra group services. The ITAT noted prior acceptances by the DRP for related years regarding certain services (Ticketing HUB and VIPFS) and that for other intra group services the ALP had been ascertained as NIL by applying the CUP. The ITAT addressed the evidentiary avenues advanced by the Assessee and observed that written agreements and documentary evidence of services, including electronic transmission, provided a reasonable basis to treat payments as legitimate (see the ITAT's observations reproduced at para 24 of the impugned order). The High Court found those conclusions to be plausible factual findings, that the ITAT had applied its mind to the materials placed before the TPO, and that the findings were not perverse. On that basis the Court concluded that no substantial question of law arose from the ITAT's decision to delete the addition and not to remand for fresh TP determination. [Paras 8, 9, 10, 11]

The ITAT's deletion of the addition and its refusal to remand the matter to the TPO for AY 2014-15 was upheld; the findings were plausible and not perverse, and no substantial question of law arises.

Final Conclusion: The Revenue's appeal is dismissed and no substantial question of law is made out in respect of the ITAT's order for AY 2014-15.

Disallowance of business expenditure - verification of commission payments under inquiry and summons - presumption of regularity of banking transactions and TDS deduction - rule of consistency in assessments - scope of independent scrutiny by assessing officer - substantial question of law

Disallowance of business expenditure - verification of commission payments under inquiry and summons - Validity of the AO's and appellate authorities' disallowance of the commission expenditure claimed by the assessee - HELD THAT: - The authorities (AO, CIT(A) and ITAT) examined the material and found that the assessee failed to produce witnesses or satisfactory documentary evidence despite repeated calls for verification; summons to ten persons produced replies from only three, whose statements and bank records raised adverse inferences (deposits followed by near-immediate withdrawals/transfers and discrepancies in submissions). The CIT(A) applied established principles that business expenditure must be supported by the conduct of business, relevant vouchers and verifiable accounting where inquiry is made, and concluded that the commission claim was not verifiable and therefore non-genuine. The High Court observed that concurrent scrutiny by three fora sustained the conclusion that the disallowance was not arbitrary and that the AO was entitled to make adverse findings in the face of non-production and unsatisfactory replies. [Paras 6, 7, 8]

The disallowance of the commission expenditure was held to be valid and is confirmed.

Presumption of regularity of banking transactions and TDS deduction - Whether banking entries and TDS deduction alone required acceptance of the commission payments as genuine - HELD THAT: - The Court rejected the submission that payments routed through banking channels and deduction of TDS, together with ITRs, conclusively established genuineness. The authorities were entitled to probe further; in the present case banking entries combined with subsequent withdrawals or transfers and inconsistent replies undermined the presumption of regularity and justified adverse inferences against the assessee's claim. [Paras 4, 6, 7]

Banking transactions and TDS deduction did not preclude disallowance where verification disclosed unsatisfactory or inconsistent evidence.

Rule of consistency in assessments - scope of independent scrutiny by assessing officer - Whether past treatment of similar claims precluded independent inquiry in the assessment year under consideration - HELD THAT: - The Court held that prior assessments, though furnishing a guide to the nature of business, do not bar fresh and independent scrutiny by the AO in a later year. Reliance on the rule of consistency does not prevent the AO from undertaking adjudication and inquiry necessary to determine true taxable income; the Court cited the principle that prior methods of assessment do not oust the statutory duty of the AO to examine and determine amounts chargeable to tax. [Paras 9]

The rule of consistency did not restrain the AO from conducting independent inquiry and making the disallowance.

Substantial question of law - Whether the appeal raised any substantial question of law warranting interference - HELD THAT: - Having found concurrent factual and legal scrutiny by the AO, CIT(A) and ITAT and having rejected the appellant's contentions of arbitrariness and preclusive effect of prior assessments, the Court concluded there was no substantial question of law arising from the present challenge that required its intervention. [Paras 8, 10]

No substantial question of law arises; the appeal is dismissed.

Final Conclusion: Concurrent findings of fact and law that the commission payments were not satisfactorily verified were upheld; prior assessment treatment did not preclude fresh inquiry and no substantial question of law was made out, accordingly the appeal is dismissed.

Special audit under Section 142(2A) - Nature and complexity of accounts - Interest of the revenue - Reasonable opportunity of being heard - Objective satisfaction of the Assessing Officer - Previous approval of the Commissioner - Principles of natural justice

Special audit under Section 142(2A) - Nature and complexity of accounts - Interest of the revenue - Objective satisfaction of the Assessing Officer - Previous approval of the Commissioner - Validity of the order directing special audit under Section 142(2A) on the ground that the accounts were complex and it was in the interest of the revenue to direct such audit. - HELD THAT: - The Court examined Section 142(2A) and related authorities, observing that invocation of the provision requires the Assessing Officer to form an opinion based on objective criteria that the accounts are of a complex nature and that special audit is necessary in the interest of the revenue, and that such direction requires prior approval of the Commissioner. The Court noted the nebulous character of the word 'complexity' but reiterated that the Assessing Officer must make a genuine attempt to understand the accounts before resorting to special audit. Applying these principles to the material on record, the Court recorded that the Assessing Officer had considered specific aspects - absence of head-wise income details, mixing of purchases under single heads, non-segregation of flight catering accounts, omission of basic expense heads in one unit, past delays in submitting audit reports - and reached a reasoned satisfaction that the accounts were mixed up and not amenable to logical analysis without special audit. The Assessing Officer's reasoning was not an eyewash and the Commissioner granted the requisite approval. On this basis the Court declined to interfere with the exercise of power under Section 142(2A). [Paras 31, 32, 33, 37, 38]

Order directing special audit under Section 142(2A) sustained; the Assessing Officer had applied his mind and the statutory conditions for directing special audit were satisfied.

Principles of natural justice - Reasonable opportunity of being heard - Whether the impugned order was vitiated for lack of compliance with the principles of natural justice or failure to consider the assessee's reply. - HELD THAT: - The Court considered the earlier proceedings in which a previous order was set aside and liberty granted to the Assessing Officer to pass a fresh and reasoned order after considering the assessee's reply and giving reasonable opportunity. The record showed that the Assessing Officer issued show-cause, gave time for submission of separate accounts, and ultimately passed a detailed order (dated 11.5.2007) recording the grounds for special audit. The Court found that the Assessing Officer had given opportunity and had applied mind to the explanations and materials, and there was no ground to hold the impugned order to be made without affording reasonable opportunity or contrary to principles of natural justice. [Paras 8, 9, 11, 37, 38]

No violation of natural justice found; the impugned order is not vitiated for failure to consider the assessee's reply or for lack of reasonable opportunity.

Final Conclusion: Writ petition dismissed; the direction for special audit under Section 142(2A) is upheld and the interim order is vacated.

Reopening of assessment under Section 147 - intimation under Section 143(1) and its effect - change of opinion - tangible material / reason to believe that income has escaped assessment - deduction under Section 80IA

Reopening of assessment under Section 147 - intimation under Section 143(1) and its effect - tangible material / reason to believe that income has escaped assessment - change of opinion - Validity of reassessment proceedings initiated after an intimation under Section 143(1). - HELD THAT: - The Court found that the reassessment was not founded on a mere change of opinion but on tangible material which came to the Assessing Officer's notice during the course of assessment proceedings for a later year (AY 2001-02) indicating that the Pondicherry unit did not carry out maintenance work. The judgment distinguishes cases (Tanmac India and Orient Craft Ltd.) where reopening was based solely on material available in the return and characterized such reopening as review; here, by contrast, the reason for reopening arose from information coming to the Assessing Officer subsequent to the Section 143(1) intimation. In view of settled law cited (including Rajesh Jhaveri Stock Brokers Pvt. Ltd. and Zuari Estate Development and Investment Co. Ltd.), reopening under Section 147 read with the provisions applicable to reassessment was held to be legally sustainable where such fresh tangible material gives rise to a reason to believe that income had escaped assessment. [Paras 14, 15]

Reopening of assessment for AY 1999-2000 was valid and legally sustainable.

Deduction under Section 80IA - Entitlement to deduction under Section 80IA in respect of AMC charges, other income and treatment of interest income. - HELD THAT: - The Court followed an earlier decision in the assessee's own case for AY 2001-02, where it was held that income from AMC, installation, technical charges, consultation charges and licence fee did not arise from the industrial undertaking at Pondicherry because men, material and machinery of that unit were not used to earn such income; the assessee failed to establish otherwise before the fact-finding authorities and could not raise new pleas for the first time before this Court. The alternate claim that AMC expenditures should be excluded while computing profit under Section 80IA was also considered and rejected by the CIT(A) on the ground that there was no positive income from the Pondicherry unit. Following that reasoning, the Court answered the second substantial question against the assessee. [Paras 5]

Assessee is not entitled to deduction under Section 80IA for the disputed AMC and related incomes; addition regarding interest income stands affirmed.

Final Conclusion: Appeal dismissed; both substantial questions of law answered against the assessee.

Revisional jurisdiction under section 263 - erroneous order prejudicial to the interest of the revenue - application of Rule 8D read with section 14A - disallowance of interest under Rule 8D(2)(ii) - disallowance on average value of investment under Rule 8D(2)(iii) - presumption of investment out of own funds - division of issues between permissible views and unsustainable view in law

Revisional jurisdiction under section 263 - erroneous order prejudicial to the interest of the revenue - Validity of the Principal Commissioner's invocation of revisional jurisdiction under section 263 in relation to the assessment order dated 30.03.2015. - HELD THAT: - The Tribunal applied the twin conditions from Malabar Industries that an assessing officer's order must be both erroneous and prejudicial to the revenue before section 263 can be invoked. The Court examined the assessment on the specific grounds relied upon by the Pr. CIT (treatment under section 14A read with Rule 8D) and found that, except insofar as the Assessing Officer failed to make any computation under Rule 8D(2)(iii), the AO's conclusions on other aspects did not amount to an erroneous and prejudicial order. Where the AO adopted a permissible view supported by material - including the finding that own funds exceeded investments - the exercise of revisional power was not justified. Consequently, the Pr. CIT's blanket revision was not sustainable; only the particular omission relating to Rule 8D(2)(iii) warranted further action. [Paras 6, 7]

Pr. CIT could not validly exercise section 263 except insofar as the Assessing Officer had failed to compute disallowance under Rule 8D(2)(iii); the remainder of the revisional exercise was not justified.

Disallowance of interest under Rule 8D(2)(ii) - presumption of investment out of own funds - Whether the Assessing Officer's acceptance of the assessee's limited disallowance on account of interest (and consequent failure to apply Rule 8D(2)(ii) computation) was erroneous and prejudicial to revenue. - HELD THAT: - The Tribunal examined the balance-sheet position and noted that own funds (share capital and reserves) exceeded total investments, giving rise to the presumption that investments were made from own funds rather than borrowed funds. Reliance was placed on the principle that overall availability of interest-free funds is determinative and that where such funds suffice, disallowance under Rule 8D(2)(ii) is not warranted. Since the AO's acceptance of the assessee's suo motu disallowance fell within a permissible view supported by material, it could not be treated as an erroneous order prejudicial to revenue. [Paras 7]

AO's treatment under Rule 8D(2)(ii) was neither erroneous nor prejudicial to the interest of revenue.

Disallowance on average value of investment under Rule 8D(2)(iii) - application of Rule 8D to dividend bearing investments - Whether the Assessing Officer was required to compute disallowance under Rule 8D(2)(iii) and, if so, the correct basis for such computation. - HELD THAT: - The Tribunal followed the coordinate-bench decision in REI Agro Ltd., as affirmed by the Calcutta High Court, that for the purpose of Rule 8D(2)(iii) the average value of only those investments which yielded dividend during the previous year must be taken into account. The AO had not applied this principle and had not made any disallowance under Rule 8D(2)(iii). That omission rendered the assessment erroneous and prejudicial to revenue to the extent indicated. The Tribunal therefore directed that the AO should compute and make the disallowance under Rule 8D(2)(iii) taking into account only dividend bearing securities as per the stated precedent. [Paras 7]

AO's failure to compute disallowance under Rule 8D(2)(iii) was erroneous and prejudicial; matter is remitted to AO to compute disallowance limited to dividend bearing investments.

Final Conclusion: The Tribunal allowed the assessee's appeal against the Pr. CIT's revisional order insofar as the revisional exercise was unwarranted, upheld the AO's conclusions on direct expenses and interest disallowance under Rule 8D(2)(i) and (ii), and remitted the limited issue of disallowance under Rule 8D(2)(iii) to the Assessing Officer for computation taking into account only dividend bearing investments for Assessment year 2013-14.

Reopening of assessment under section 147 - reason to believe - change of opinion - tangible material - rectification under section 154 as indication of mistake apparent from record

Reopening of assessment under section 147 - reason to believe - change of opinion - tangible material - rectification under section 154 as indication of mistake apparent from record - Validity of reopening the assessment under section 147 for assessment year 2007-08 - HELD THAT: - The Tribunal found that the Assessing Officer did not place any fresh tangible material before him after completion of the original assessment that could furnish a 'reason to believe' that income had escaped assessment. The reasons recorded merely reappraised material already on record and amounted to a change of opinion, which is impermissible as a basis for reopening. The Assessing Officer's contemporaneous resort to rectification proceedings under section 154 to correct apparent mistakes demonstrated that the alleged discrepancies were on record at the time of the original assessment. Relying on the settled principle that reassessment must be founded on new tangible material and not on a mere change of opinion, the Tribunal quashed the reassessment proceedings initiated under section 147. [Paras 11]

Reassessment proceedings under section 147 quashed as founded on change of opinion and not on fresh tangible material.

Final Conclusion: The reassessment proceedings under section 147 for assessment year 2007-08 are quashed and the appeal is allowed; consequential merits issues are rendered infructuous.

Allowability of provision for Non-Performing Assets under section 36(1)(viia) - classification of a bank branch as a rural branch for tax benefit purposes - admissibility of provision for leave encashment in income computation - restoration to Assessing Officer for fresh adjudication on accepted precedent - allowability of provision for discrepancy between General Ledger and Detailed Ledger - verification of double assessment and corresponding relief by AO

Allowability of provision for Non-Performing Assets under section 36(1)(viia) - classification of a bank branch as a rural branch for tax benefit purposes - restoration to Assessing Officer for fresh adjudication on accepted precedent - Whether provisions made for NPA by the assessee are allowable in the respective assessment years having regard to rural-branch classification of the concerned branches - HELD THAT: - The Tribunal admitted additional documentary evidence produced by the assessee showing population/administrative certification relevant to the contention that certain branches qualified as rural branches and therefore the provision for NPA could fall within the ambit of deduction under section 36(1)(viia). The CIT(A) had rejected rural status based on municipal population data; the Tribunal found the new evidence material and, with no objection from the Departmental Representative, set aside the CIT(A)'s orders and restored the matters to the file of the Assessing Officer for fresh decision after verification of the additional evidence. Identical issues in A.Y. 2012-13 and A.Y. 2013-14 arise and are remanded on the same footing. [Paras 4, 10, 11]

Orders of the CIT(A) on the NPA-provision issue are set aside and the matters are restored to the Assessing Officer for fresh adjudication after verification of the additional evidence; the appeals are treated as allowed for statistical purposes.

Admissibility of provision for leave encashment in income computation - restoration to Assessing Officer for fresh adjudication on accepted precedent - Whether the provision for leave encashment claimed by the assessee is allowable in computation of income - HELD THAT: - The parties agreed the issue is covered by Tribunal precedent which, following jurisdictional and Supreme Court guidance, directs re-adjudication by the Assessing Officer in accordance with the binding decision of the Hon'ble Apex Court (as applied in the cited coordinate-bench decisions). Respectfully following those coordinate-bench orders, the Tribunal set aside the orders below and restored the matter to the Assessing Officer for fresh adjudication in accordance with the Apex Court's decision. [Paras 5, 6]

Orders below set aside and matter restored to the Assessing Officer for adjudication as per the direction in the cited coordinate-bench / Apex Court authorities; ground allowed for statistical purposes.

Allowability of provision for discrepancy between General Ledger and Detailed Ledger - Whether the assessee is entitled to deduction for provision made on account of unreconciled difference between General Ledger and Detailed Ledger - HELD THAT: - The Tribunal agreed with the authorities below that the provision relates to an internal discrepancy noted at the time of computerisation and does not represent an obligation or liability allowable under the Income-tax Act. There is no provision in the Act permitting a deduction for such an unreconciled ledger difference. The Tribunal found no infirmity in the CIT(A)'s confirmation of the Assessing Officer's disallowance and upheld that conclusion. [Paras 9, 12]

Disallowance of the provision for GL/DL difference is upheld and the ground is dismissed.

Verification of double assessment and corresponding relief by AO - Whether interest accrued on certain investments, added in A.Y. 2013-14, had already been offered and assessed in A.Y. 2014-15 such that the addition in 2013-14 would require deletion to avoid double assessment - HELD THAT: - The assessee claimed the interest was offered on receipt basis and taxed in A.Y. 2014-15; the Department sought verification. The Tribunal directed that the Assessing Officer verify whether the amount in question was assessed finally in A.Y. 2014-15 and, if so, delete the addition made in A.Y. 2013-14. The parties did not object to remand for factual verification by the Assessing Officer. [Paras 13, 14]

Matter remanded to the Assessing Officer for verification of whether the amount was assessed in A.Y. 2014-15 and deletion of the addition in A.Y. 2013-14 if assessment in the later year is final; ground treated as allowed for statistical purposes.

Final Conclusion: The Tribunal set aside and remitted the NPA-provision issues (A.Ys. 2010-11, 2012-13, 2013-14) to the Assessing Officer for verification of additional evidence; directed re-adjudication of the leave-encashment claim by the AO in accordance with the binding apex/coordinate-bench authority; upheld the disallowance of the provision for GL/DL discrepancy; and remitted the issue of interest-on-investments in A.Y. 2013-14 to the AO to verify whether it was already assessed in A.Y. 2014-15, with consequential relief if so. Appeals are accordingly disposed of as recorded.

Concealment of particulars of income - furnishing inaccurate particulars of income - penalty under section 271(1)(c) - notice under section 274 read with section 271(1)(c) - non-application of mind in issuing penalty notice

Penalty under section 271(1)(c) - notice under section 274 read with section 271(1)(c) - non-application of mind in issuing penalty notice - Validity of penalty where the penalty notice did not specify whether it was proceeding for concealment of particulars or for furnishing inaccurate particulars of income. - HELD THAT: - The Tribunal examined the printed proforma of the notice issued under section 274 read with section 271(1)(c) and found that the notice did not explicitly inform the assessee which limb of section 271(1)(c) was being invoked; the relevant portions remained struck out or not deleted. Reliance was placed on precedents holding that a standard proforma without deletion of inappropriate clauses indicates non-application of mind and that omission to specify the limb (concealment or inaccurate particulars) renders the penalty proceedings vitiated. The Tribunal recognised that confirmation of additions in assessment proceedings is not by itself sufficient to sustain a penalty under section 271(1)(c); the Assessing Officer must prove concealment or furnishing of inaccurate particulars. In the factual matrix, because the assessee was not made specifically aware of the charge-whether concealment or inaccurate particulars-the notice and consequent penalty proceedings demonstrated non-application of mind and were thus unsustainable. The Tribunal distinguished the Revenue's reliance on other decisions and observed that those do not alter the requirement that the charge be clearly communicated in the notice; accordingly the penalty could not stand. [Paras 10, 11]

Penalty under section 271(1)(c) deleted on ground that penalty notice failed to specify the limb invoked and showed non-application of mind.

Final Conclusion: The appeal is allowed; the penalty of Rs. 3,92,709/- under section 271(1)(c) for AY 2011-12 is quashed because the penalty notice did not clearly specify whether it was for concealment or for furnishing inaccurate particulars, demonstrating non-application of mind.

Transfer Pricing - Profit Split Method (PSM) - Arm's Length Price (ALP) - Comparability of external comparables - Inclusion/exclusion of loss-making comparables - Use of relevant financial year data under Rule 10B(4) versus multiple-year data - Application of Rule 10 vis-a -vis Rule 10B for non-resident receipts - Binding directions of Dispute Resolution Panel under Section 144C

Comparability of external comparables - Inclusion/exclusion of loss-making comparables - Inclusion of Raj Television Network Limited as a comparable after adjustment for exceptional items; reconsideration of IBN18 Broadcast Ltd as a comparable by AO/TPO. - HELD THAT: - The Tribunal examined the audited financials and noted that Raj Television's operating losses in FY 2010-11 were attributable to an identified exceptional expenditure which the company itself described as abnormal. The Tribunal held that after excluding that exceptional item the company would be in profit for the year under consideration and therefore directed Raj TV to be included as a comparable with recomputation of its profit level indicator after adjusting for the exceptional item. In contrast, IBN18 (TV18) showed mixed results: consolidated segmental results indicated a profit in the broadcasting segment while standalone results showed operating losses. The authorities below did not adequately examine standalone versus consolidated segmental data or the appellant's supporting workings. The Tribunal therefore declined to decide inclusion finally and restored IBN18 to the AO/TPO for de novo consideration; the assessee was directed to produce supporting explanations and evidence and the AO/TPO were directed to decide the inclusion/exclusion on merits in accordance with law. [Paras 7]

Raj Television to be included as a comparable after adjustment for the exceptional expense; IBN18 restored to AO/TPO for fresh adjudication on comparability with directions to the assessee to furnish supporting material.

Profit Split Method (PSM) - Arm's Length Price (ALP) - Application of Rule 10 vis-a -vis Rule 10B for non-resident receipts - Whether revenues from non-associated enterprises can be separately taxed by applying a higher profitability rate (28%) outside the PSM framework. - HELD THAT: - The Tribunal, following its earlier decisions in the Star group matters for preceding years, held that where the Profit Split Method is the most appropriate method and international transactions are highly integrated, the combined net profit must be determined and apportioned by FAR analysis; segregating out non-AE receipts and applying a separate higher net profit rate (Rule 10) would lead to double taxation/uplift and is not permissible. The Tribunal noted that once combined profit under PSM has been computed including inter company eliminations, there is no justification for separate computation under Rule 10 for non AE receipts. Applying that principle to AY 2011-12, the Tribunal set aside the AO/DRP direction to apply 28% to non-AE receipts and directed deletion of the separate 28% adjustment. [Paras 7]

No separate ALP adjustment @28% on non-AE receipts; the 28% adjustment is set aside and deleted.

Use of relevant financial year data under Rule 10B(4) versus multiple-year data - Transfer Pricing - Approach to use of single-year comparables data under Rule 10B(4) and the role of earlier-year data. - HELD THAT: - The Tribunal recorded the DRP/TPO position that Rule 10B(4) requires use of comparable data of the relevant financial year unless the taxpayer demonstrates how earlier years' data influenced the current year. While the DRP had rejected the assessee's reliance on multiple-year data, the Tribunal's directions on comparables (inclusion of Raj TV after adjustment and reconsideration of IBN18) implicitly require the AO/TPO to apply the Rule 10B(4) principles and to justify any use of prior-year data by quantifying its influence. The Tribunal did not remand the Rule 10B(4) legal proposition itself but directed fresh fact-based consideration in light of the relevant-year data principle.

AO/TPO to apply comparability analysis consistent with Rule 10B(4): use relevant financial year data unless the assessee quantifies and proves the impact of earlier years; the authorities must apply that test while re-examining comparables.

Final Conclusion: The appeals are partly allowed. Raj Television Network Limited is to be included as a comparable after adjustment for identified exceptional expenses and recomputation of its profit level indicator; IBN18 Broadcast Ltd. is restored to the AO/TPO for fresh consideration on comparability upon production of supporting evidence; and the separate application of a 28% ALP to non AE receipts is set aside (no separate 28% adjustment). The AO/TPO shall decide the remanded comparability issues afresh in accordance with law and the directions in this order.

Remand for de novo adjudication - restoration to file of AO/TPO - transfer pricing comparability - benchmarked under Transaction Net Margin Method (TNMM) - comparables and comparability analysis - opportunity of being heard / principles of natural justice - allowed for statistical purposes

Dismissal of unpressed grounds - grounds not pressed before the tribunal - Certain grounds in the assessee's memo of appeal which were not pressed before the Tribunal were dismissed. - HELD THAT: - The Tribunal recorded that grounds numbered 1, 2, 3, 9 and 12 in the assessee's memo of appeal were not pressed by the assessee during hearing. Having noted the assessee's election not to press those grounds, the Tribunal dismissed those grounds accordingly and ordered as such. No adjudication on the merits of those grounds was undertaken.

Grounds 1, 2, 3, 9 and 12 are dismissed as not being pressed.

Remand for de novo adjudication - comparables and comparability analysis - transfer pricing comparability - opportunity of being heard / principles of natural justice - restoration to file of AO/TPO - allowed for statistical purposes - Other contested transfer pricing and related issues were restored to the file of the AO/TPO for fresh adjudication on merits in accordance with law, and both appeals were allowed for statistical purposes. - HELD THAT: - The Tribunal considered the assessee's challenges concerning selection and exclusion of comparables (including Kidde India Ltd., Nitin Fire Protection Industries Ltd., and proposed comparables New Fire Engineers Pvt. Ltd. and Logicon Building Systems Pvt. Ltd.), the use of single-year versus multi year data, alleged extraordinary/project over run costs and related PLI adjustments, and the disallowance of foreseeable loss. The Revenue did not oppose restoration. In the interests of justice and without expressing any view on merits, the Tribunal directed that all these issues (grounds 4-8, 10 and 11) be adjudicated afresh by the AO/TPO de novo. The AO/TPO is to admit and consider all evidence, explanations and contentions of the assessee, to provide proper and adequate opportunity of being heard in accordance with principles of natural justice, and to proceed unhindered by the Tribunal's observations. The Tribunal explicitly kept all issues open for fresh decision and clarified it had not commented on merits.

Matters raised by grounds 4-8, 10 and 11 are remanded to the AO/TPO for fresh adjudication on merits; the appeal is allowed for statistical purposes and the same direction applies mutatis mutandis to the companion appeal.

Final Conclusion: The Tribunal dismissed the unpressed grounds and, without deciding the merits, restored the remaining transfer pricing and related issues to the file of the AO/TPO for de novo adjudication with full opportunity to the assessee; both appeals are allowed for statistical purposes.

Arm's length price - Transfer pricing adjustment - Aggregation of closely linked international transactions / Transactional Net Margin Method (TNMM) - Benefit test for intra group management services - Recharacterisation of Compulsory Convertible Debentures as debt for TP purposes - Benchmarking of interest on related party funding using LIBOR versus domestic PLR - Notional interest on outstanding inter company receivables - Average collection period for working capital / receivables for TP adjustment - Section 14A disallowance and Rule 8D apportionment

Arm's length price - Aggregation of closely linked international transactions / Transactional Net Margin Method (TNMM) - Benefit test for intra group management services - Whether the ALP of management services paid to associated enterprises could be held to be nil and whether those services could be benchmarked as part of aggregated TNMM already accepted for other transactions - HELD THAT: - The Tribunal disagreed with the TPO's conclusion that the ALP of the management services was Nil based on a benefit test and on the TPO's rejection of the assessee's TP documentation. The Tribunal observed that the TPO had accepted TNMM for purchases, sales and manufacturing services at entity level and erred in carving out management services for assessment at NIL without applying a recognised TP method or adopting a separate, permissible method. Drawing on coordinate decisions, the Tribunal held that the TPO cannot substitute a subjective view of commercial expediency for a permissible method of ALP determination and that in cases of closely linked transactions aggregation and TNMM may be appropriate. The Tribunal found that the agreement and supporting material showed integrated services and directed that the management services transaction should be benchmarked separately by the TPO (classifying the nature of compensation and considering appropriate method), remitting the matter for fresh benchmarking rather than endorsing an ALP of Nil. Grounds of the assessee on this issue were partly allowed to the extent of remitting the matter for proper benchmarking.

Issue remitted to the file of the TPO to benchmark the management services transaction separately (TPO to evaluate nature of services and appropriate method); adjustment of ALP at Nil set aside and grounds partly allowed.

Recharacterisation of Compulsory Convertible Debentures as debt for TP purposes - Benchmarking of interest on related party funding using LIBOR versus domestic PLR - Whether interest on CCDs should be benchmarked using LIBOR plus spread or whether the rate charged (12%) and domestic benchmarks (SBI PLR / market coupon data) justified deletion of TP addition - HELD THAT: - The Tribunal found the issue covered by a coordinate bench decision in the assessee's own case for an earlier assessment year, which had accepted the rate applied by the assessee (comparing with SBI PLR and NSDL coupon data). Applying that precedent, the Tribunal concluded that the rate of interest on the CCDs (12%) fell within acceptable range and there was no need to remit the matter for re examination. The Tribunal observed that CCDs, until conversion, may have the character of debt but on the facts and in light of the earlier Tribunal decision the addition on account of benchmarking to LIBOR plus spread was not sustainable in this assessment year.

Addition on account of interest on CCDs deleted; grounds on this issue allowed.

Notional interest on outstanding inter company receivables - Average collection period for working capital / receivables for TP adjustment - Whether notional interest should be imputed on outstanding receivables from associated enterprises and, if so, the correct methodology to determine the interest adjustment - HELD THAT: - The Tribunal agreed with the principle that receivables from AEs constitute an international transaction for TP purposes but held that the TPO's selective application of a credit period (and corresponding interest adjustment) was incorrect. Relying on coordinate authority, the Tribunal directed that the TPO should compute the average collection period for the assessment year (considering all invoices) and make adjustment only to the extent the average collection period exceeded a reasonable period (per directions in cited cases). The issue was therefore remitted to the TPO for recalculation of the interest adjustment in accordance with these directions; the assessee's grounds were treated as allowed for statistical purposes pending that recalculation.

Issue remitted to TPO to calculate average collection period for AY and determine any interest adjustment accordingly; grounds allowed for statistical purposes.

Section 14A disallowance and Rule 8D apportionment - Whether disallowance under section 14A read with Rule 8D should be made in respect of interest and other expenses in relation to dividend income from mutual funds - HELD THAT: - On the facts, the Tribunal accepted the assessee's submission that no fresh investments were made in the year and that interest borne related to specific financing (CCDs, working capital) and other identified items. The Tribunal concluded that disallowance under Rule 8D(2)(ii) (proportionate disallowance of interest not directly attributable) should not be made in the circumstances of this case. However, the Tribunal was not persuaded that no administrative/overhead costs relating to the investments existed; accordingly it sustained the disallowance under Rule 8D(2)(iii) (0.5% of average investments) as applied by the AO. The ground was therefore partly allowed.

Disallowance under Rule 8D(2)(ii) set aside; disallowance under Rule 8D(2)(iii) sustained; ground partly allowed.

Final Conclusion: Appeal partly allowed: addition relating to interest on CCDs deleted; management services ALP not accepted as Nil and remitted to TPO for separate benchmarking; notional interest on receivables remitted to TPO to compute average collection period and any adjustment; section 14A disallowance set aside insofar as Rule 8D(2)(ii) is concerned but sustained under Rule 8D(2)(iii).

Penalty under Sec. 271(1)(c) for furnishing inaccurate particulars and concealment of income - Bonafide and inadvertent error not amounting to concealment - Disclosure in block of assets / balance sheet as indicium of bona fides - Offer of omitted income during assessment proceedings as mitigating factor - Application of Price Water House Cooper Pvt. Ltd.

Penalty under Sec. 271(1)(c) for furnishing inaccurate particulars and concealment of income - Bonafide and inadvertent error not amounting to concealment - Disclosure in block of assets / balance sheet as indicium of bona fides - Offer of omitted income during assessment proceedings as mitigating factor - Whether penalty under Sec. 271(1)(c) was rightly imposed for failure to disclose long term capital gains on sale of three shops in the return for A.Y 2013-14. - HELD THAT: - The Tribunal found that although the assessee omitted to offer long term capital gains from sale of three shops in the return, the deduction of Rs. 67,00,000 from the block of tangible fixed assets was clearly disclosed in Note No.6 to the balance sheet, demonstrating that the sale/transfer was reflected in the financial statements. On becoming aware of the omission during scrutiny assessment the assessee computed the LTCG and offered it to tax. The Tribunal held that these facts establish a bonafide and inadvertent error rather than an intention to conceal income or to furnish inaccurate particulars. Reliance was placed on the Supreme Court decision in Price Water House Cooper Pvt. Ltd., where a similar human error in computing income was held not to attract penalty. In the totality of facts - disclosure in the block of assets, immediate correction and offer of tax during assessment - the imposition of penalty under Sec. 271(1)(c) was held to be unwarranted and was set aside. [Paras 8, 9]

Penalty imposed under Sec. 271(1)(c) deleted and the assessee's appeal allowed.

Final Conclusion: The Tribunal set aside the penalty levied under Sec. 271(1)(c) for A.Y 2013-14, holding the omission to disclose the LTCG to be a bonafide inadvertent error disclosed in the block of assets and rectified during assessment; appeal allowed.

Transfer Pricing - Arm's Length Price - Most Appropriate Method - Comparable Uncontrolled Price (CUP) method - Transactional Net Margin Method (TNMM) - Rule 10B of the Income tax Rules - Determination of ALP by estimation/ad hoc adjustments - Employees' contribution to Provident Fund - Deductibility under section 43B

Transfer Pricing - Arm's Length Price - Comparable Uncontrolled Price (CUP) method - Transactional Net Margin Method (TNMM) - Rule 10B of the Income tax Rules - Validity of CUP method and concurrent application of CUP and TNMM for benchmarking export of finished goods to Associated Enterprises - HELD THAT: - The Tribunal examined the TPO/DRP approach of applying CUP on certain commonly sold finished products (and TNMM on others) instead of accepting the assessee's aggregation/TNMM at entity level. Following the coordinate bench decisions in the assessee's own and related cases, the Tribunal held that comparability must take into account market conditions including geographical location, volume, functional and risk differences and that CUP drawn from domestic non AE sales (largely in India) cannot be mechanically used as a CUP for exports to overseas AEs without quantifying or adjusting for material differences. The Tribunal found that the TPO had compared prices across different geographic markets and materially different volumes and functions without appropriate adjustments or quantification as required by rule 10B(2)/(3), and that the TPO/DRP thereby erred in treating those domestic non AE sales as comparable CUPs. Applying the ratio of the coordinate bench decisions (including authority accepting TNMM as the most appropriate method where products are customised and markets differ), the Tribunal held that CUP was not the most appropriate method and that the TNMM aggregation claimed by the assessee should not have been rejected on the record before the TPO/DRP.

Transfer pricing adjustment of Rs. 3,18,81,702 in respect of export of finished goods deleted; direction to AO/TPO to delete the addition.

Transfer Pricing - Arm's Length Price - Royalty for technical know how - Transactional Net Margin Method (TNMM) - Determination of ALP by estimation/ad hoc adjustments - Sustainability of the TPO/DRP adjustment to royalty payments and use of ad hoc/benefit test to fix ALP - HELD THAT: - The Tribunal reviewed the TPO's approach which rejected the assessee's aggregated TNMM benchmarking and sought to determine ALP of royalty on ad hoc/benefit test basis or by selecting non comparable external agreements. Relying on earlier coordinate bench decisions, the Tribunal held that the TPO is bound to determine ALP by applying one of the statutory methods and not by ad hoc estimation or by substituting a benefit test; where comparables are unavailable or differences are material (including geographic differences), CUP cannot be mechanically applied. The Tribunal observed that the TPO failed to bring any valid comparable or to perform the statutory comparability adjustments, and that prior Tribunal decisions in the assessee's case supported deletion of such adjustments to royalty.

Transfer pricing adjustment of Rs. 3,96,90,306 in relation to payment of royalty for use of technical know how deleted; direction to AO/TPO to delete the addition.

Transfer Pricing - Arm's Length Price - External Commercial Borrowings (ECB) - LIBOR plus spread as benchmark - Appropriate benchmark for arm's length interest rate on ECB from Associated Enterprise - HELD THAT: - The Tribunal considered the TPO/AO reduction of the assessee's LIBOR(+300 bps) based rate using alternate Bloomberg data and noted coordinate bench precedent in the assessee's own case and related authorities holding that the arm's length rate for similar ECBs is six months USD LIBOR(+300 bps). On the facts and the binding nature of the coordinate bench decision, the Tribunal found no basis to sustain the downward adjustment made by the AO/TPO/DRP.

Transfer pricing adjustment of Rs. 51,74,209 in relation to interest on ECB deleted; direction to AO/TPO to delete the addition.

Transfer Pricing - Information Systems (IS) services - Arm's Length Price - Determination of ALP by estimation/ad hoc adjustments - Validity of TPO's ad hoc determination of ALP for IS/software charges and rejection of assessee's evidence and aggregation/TNMM benchmarking - HELD THAT: - The Tribunal reviewed the TPO's approach of estimating IS charges on a man hour and ad hoc basis after rejecting the assessee's benchmarking and supporting documents (including external auditor certification and user details). Following coordinate bench precedents in the assessee's own case, the Tribunal held that the TPO cannot determine ALP by ad hoc estimation where the assessee has produced a benchmarking study and supporting documentation; if the TPO disagrees, he must determine ALP by applying one of the statutory methods with proper comparables and adjustments. The TPO's estimate without any comparable or statutory method was therefore unsustainable.

Transfer pricing adjustment of Rs. 2,21,62,308 in relation to IS services deleted; direction to AO/TPO to delete the addition.

Employees' contribution to Provident Fund - Deductibility under section 43B - Allowability of employees' provident fund contribution paid after statutory due dates but on or before due date of filing return - HELD THAT: - The Tribunal found no dispute that the employees' contributions were remitted after the dates prescribed under the relevant PF enactment but on or before the due date for filing the return under section 139(1). Relying on Bombay High Court authority and Supreme Court precedent cited in the order, the Tribunal held that such payments when made on or before the due date for filing the return are allowable under section 43B and cannot be disallowed under section 36(1)(viia). Applying those authorities to the facts, the AO erred in disallowing the employees' contribution.

Disallowance in respect of employees' contribution to Provident Fund set aside; AO directed to delete the addition.

Other miscellaneous expenses - Assessee's abandonment of challenge to disallowance of small miscellaneous expenses - HELD THAT: - The assessee elected not to press the ground relating to write off of rent deposits due to the smallness of the amount and the point was accordingly not pursued before the Tribunal.

Ground not pressed; dismissed as not pressed.

Final Conclusion: The Tribunal allowed the assessee's appeal in part: it deleted the transfer pricing additions in respect of export of finished goods, royalty for technical know how, interest on ECB and information systems charges; set aside the disallowance of employees' provident fund contribution paid on or before the return filing due date; and dismissed as not pressed the challenge to minor miscellaneous expenses. The appeal is otherwise partly allowed and the AO/TPO is directed to give effect to these directions.

Section 68 - unexplained cash credit - onus to prove identity, creditworthiness and genuineness of creditor transactions - shift of burden to Assessing Officer to rebut documentary evidence - proof by bank evidence and account-payee cheques - failure of AO to conduct independent verification or summon lenders under Section 131

Section 68 - unexplained cash credit - onus to prove identity, creditworthiness and genuineness of creditor transactions - shift of burden to Assessing Officer to rebut documentary evidence - proof by bank evidence and account-payee cheques - failure of AO to conduct independent verification or summon lenders under Section 131 - Validity of addition under Section 68 in respect of alleged unsecured loans of Rs. 1,05,00,000/-, and whether the assessee discharged the onus of proving the nature and source of the credited amounts - HELD THAT: - The assessee produced confirmations, audited financial statements and bank statements of the lender companies, affidavits of principal officers, evidence of interest payment with TDS and records showing repayment. These materials showed receipt of amounts by account-payee cheques and no immediate cash deposits to the lenders' bank accounts prior to issuance of the cheques. On this prima facie material the initial burden under Section 68 to prove identity, creditworthiness and genuineness of the creditors stood discharged by the assessee. Once that onus was discharged, the burden shifted to the Assessing Officer to objectively form an opinion and to rebut the evidence with material of his own. The AO relied primarily on information that the lenders were allegedly controlled by an accommodation-entry provider, but did not undertake independent verifications: no summonses under Section 131 were issued to the lenders, no statements recorded, and no field inquiries or other contrary material were placed on record to dislodge the documentary evidence. Merely observing that the lenders were part of a group alleged to give accommodation entries, without specific material showing that the impugned transactions were not genuine, was insufficient. In those circumstances the CIT(A) rightly held that the AO failed to rebut the assessee's evidence and directed deletion of the addition under Section 68.

Addition of Rs. 1,05,00,000/- under Section 68 deleted; revenue appeal dismissed.

Final Conclusion: The Tribunal upheld the CIT(A)'s deletion of the addition under Section 68 for A.Y. 2010-11, concluding that the assessee had discharged the initial onus by documentary evidence and that the Assessing Officer failed to rebut that evidence by independent verification; revenue's appeal dismissed.

Natural justice - reliance on undisclosed material - setting aside order for procedural infirmity - remand for fresh adjudication - reference to adjudicating authority under Section 127-I of the Customs Act, 1962 - contemptuous misrepresentation to the Court

Natural justice - reliance on undisclosed material - Whether the Settlement Commission's final order could stand where it relied upon a communication that was not furnished to the petitioner. - HELD THAT: - The Court found that a communication relied upon by the Settlement Commission in passing the final order was not furnished to the petitioner. The petitioner produced evidence showing that the said communication was returned undelivered to the Settlement Commission's office, thereby contradicting the respondents' assertion that it had been communicated. Having regard to the conceded position that material not furnished to the petitioner was taken into account, the Court held that the principles of natural justice were violated, rendering the impugned order legally unsustainable.

Impugned order set aside on grounds of violation of natural justice; matter remanded for fresh consideration.

Contemptuous misrepresentation to the Court - Whether the respondents' incorrect statement before the Court warranted contempt proceedings. - HELD THAT: - The Court observed that an incorrect or false statement was made by the respondents regarding service of the communication, which amounted to contemptuous conduct. The Court, while strongly deprecating the conduct, declined to initiate contempt proceedings in view of the assurance given by the officer present in Court to exercise greater care in future filings and replies.

No contempt action initiated; admonition recorded and assurance accepted.

Remand for fresh adjudication - reference to adjudicating authority under Section 127-I of the Customs Act, 1962 - setting aside order for procedural infirmity - The appropriate remedy and forum for re-adjudication where the Settlement Commission's order is vitiated by non-furnishing of material and parties have differing claims on duty. - HELD THAT: - The parties agreed that the matter should be remitted to the Settlement Commission for de novo consideration in accordance with law. The Court directed that upon remand the Settlement Commission shall decide the issue afresh. It was further agreed and recorded that, in case of non-consensus between the duty declared by the petitioner and the duty proposed by the DRI, the Settlement Commission should consider whether to refer the matter back to the adjudicating authority in terms of the procedural mechanism envisaged by Section 127-I of the Customs Act, 1962 and relevant case law.

Matter remanded to the Settlement Commission for fresh adjudication; Settlement Commission to consider referral to the adjudicating authority under Section 127-I if there is no consensus on duty.

Final Conclusion: Annexures P16-P18 taken on record; impugned order dated 31.7.2017 set aside for violation of natural justice and remitted to the Settlement Commission for fresh decision, with direction to consider referral to the adjudicating authority under Section 127-I of the Customs Act, 1962 in case of non-consensus; respondents' misstatement deprecated but no contempt proceedings initiated.

Natural justice - service of notice - setting aside administrative order for want of service and fair hearing - redemption and export obligation discharge certificate - alert notice and prohibition on import/export - remand for fresh decision after issuance of show-cause/demand notice and hearing

Natural justice - service of notice - setting aside administrative order for want of service and fair hearing - alert notice and prohibition on import/export - remand for fresh decision after issuance of show-cause/demand notice and hearing - Impugned order dated 7th June, 2017 denying benefit of Notification No.47/02 and consequent alert notice set aside for failure to serve the order and prior notices and for not affording opportunity of hearing. - HELD THAT: - The petitioners contended, and respondents did not dispute, that the impugned order and the antecedent show-cause/demand notices and hearing notices were never served on the petitioners, and that the petitioners had procured redemption and export obligation discharge certification which had been communicated to the adjudicating authority prior to the impugned order. The Court found the decision-making process leading to the impugned order to be vitiated for want of service and breach of the principles of natural justice. Consequently the impugned order was set aside and the connected alert notice fell with it. The Court directed that if the respondents wish to proceed against the petitioners alleging breach of Notification No.47/02, they must first serve an appropriate show-cause or demand notice and thereafter pass a fresh order after hearing the petitioners. [Paras 6, 7]

Impugned order dated 7th June, 2017 and the consequent alert notice set aside; matter restored for fresh decision after issuance of appropriate show-cause/demand notice and hearing.

Final Conclusion: Petition allowed: the administrative order denying benefit under Notification No.47/02 and the consequent alert notice were quashed for want of service and breach of natural justice, and the matter was remitted for fresh consideration after serving proper notice and affording a hearing.

Delay in adjudication and lapse of show cause notice - Mandatory adjudication period under Section 28(9) of the Customs Act, 1962 - Operation of newly inserted Section 28(9A) and Explanation 4 - Retroactive application of procedural limitation/amendment - Para materia - Section 11A Central Excise Act and Section 28 Customs Act

Delay in adjudication and lapse of show cause notice - Para materia - Section 11A Central Excise Act and Section 28 Customs Act - Show cause notices issued in 2009 pending adjudication for over ten years were quashed for inordinate and unreasonable delay. - HELD THAT: - The Court applied the ratio of its Division Bench decision in GPI Textile (which dealt with Section 11A of the Central Excise Act) and held that the provisions of Section 11A are para materia to Section 28 of the Customs Act; consequently, show cause notices cannot be kept pending beyond a reasonable period. The notices in the present petitions, issued in 2009, remained undecided for more than ten years despite the court having granted liberty to proceed with adjudication; such delay cannot be treated as reasonable and, following the principles in GPI Textile and related authorities, the notices merit quashing. The Court rejected the respondent's contention that pendency of a Special Leave Petition before the Supreme Court justified non-adjudication, noting that the respondent's SLP was ordered to be tagged with an earlier SLP and thus did not oust the operative rationale applying here. (See paras 9, 10, 11, 12, 13.) [Paras 9, 10, 11, 12, 13]

Show cause notices dated 20.02.2009 and 19.03.2009 were quashed on the ground of inordinate delay in adjudication.

Mandatory adjudication period under Section 28(9) of the Customs Act, 1962 - Operation of newly inserted Section 28(9A) and Explanation 4 - Retroactive application of procedural limitation/amendment - Lapsing of show cause notice for non-adjudication - The 2018 amendment to Section 28 (sub sections (9) and (9A)) operates retroactively for the purpose of limitation and, as applied to the pending notices, resulted in lapse of the notices for non-adjudication within the prescribed period. - HELD THAT: - The Court examined the amended Sub section (9) and newly inserted Sub section (9A) and Explanation 4 to Section 28 w.e.f. 29.03.2018, noting that the amendment makes it mandatory for the proper officer to determine the amount within the specified period (one year for cases under sub section (4)), subject to a single extension by a senior officer and certain specified exceptions under sub section (9A). The Court held that the amendment, while not retrospective in the sense of altering past substantive rights, is retroactive in operation as to limitation and must be applied to pending show cause notices - treating the time limit as running from 29.03.2018. Since no extension was recorded and no notice under sub section (9A) was served, the proper officer failed to adjudicate within the prescribed period (and any permissible extension), resulting in lapse of the notices. The Court relied on the principle applied in Ballarpur's case concerning retroactive application of procedural limitation provisions to pending matters. (See paras 14, 15, 16.) [Paras 14, 15, 16]

Amended Section 28(9)/(9A) applied retroactively to pending show cause notices; absence of adjudication or prescribed extension caused the notices to lapse and warranted quashing.

Final Conclusion: Both writ petitions are allowed: the Show Cause Notices dated 20.02.2009 and 19.03.2009 are quashed - first on the ground of inordinate delay in adjudication under the para materia principle with Section 11A, and secondly because the 2018 amendment to Section 28, applied retroactively as to limitation, resulted in lapse of the pending notices in the absence of required extension or invocation of Section 28(9A).

Pre-import condition - ultra vires - Advance Authorisation Scheme - Foreign Trade Policy, 2015-2020 - Handbook of Procedures - annulment of proceedings for violation

Pre-import condition - ultra vires - Advance Authorisation Scheme - Foreign Trade Policy, 2015-2020 - Handbook of Procedures - annulment of proceedings for violation - Validity of the "preimport condition" inserted into the Foreign Trade Policy, 2015-2020 and corresponding Customs notification, and the consequence for proceedings initiated for its alleged violation. - HELD THAT: - Relying on this Court's decision in Messrs Maxim Tubes Company Pvt. Ltd. v. Union of India (Special Civil Application No.14558 of 2018 and allied petitions), particularly paragraph 50 of that judgment, the Court has held that the "preimport condition" contained in paragraph 4.14 of the Foreign Trade Policy, 2015-2020 (inserted by Notification No.33/2015-2020 dated 13.10.2017) and as incorporated by clause (xii) in the relevant Customs notification is beyond the scope of the Advance Authorisation Scheme and inconsistent with the Handbook of Procedures. For the foregoing reasons, the provision is declared ultra vires the Advance Authorisation Scheme and the Handbook of Procedures. Consequentially, proceedings initiated for alleged violation of the "preimport condition" cannot be sustained and must cease. [Paras 3, 4]

The "preimport condition" is struck down as ultra vires the Advance Authorisation Scheme and the Handbook of Procedures, and proceedings for its alleged violation do not survive.

Final Conclusion: The petition is disposed of in view of the prior decision striking down the "preimport condition" as ultra vires; no further adjudication is required and proceedings arising from the said condition stand quashed.

Penalty under Section 114AA - "knowingly" and "intentionally" mens rea requirement - burden of proof on Revenue - effect of subsequent Plant Quarantine clearance on prior adverse report - requirement of specific factual finding before imposing penalty

Penalty under Section 114AA - "knowingly" and "intentionally" mens rea requirement - burden of proof on Revenue - effect of subsequent Plant Quarantine clearance on prior adverse report - Whether penalty under Section 114AA could be sustained in absence of any finding that the importer knowingly or intentionally used a false or incorrect Phytosanitary Certificate, particularly where the PQ Authority subsequently granted clearance. - HELD THAT: - The Tribunal held that Section 114AA penalises acts where a person "knowingly or intentionally" makes, signs or uses a false or incorrect document, and consequently the burden lies squarely on the Revenue to prove mala fides. An allegation that the first Phytosanitary Certificate was fake does not ipso facto establish liability under Section 114AA. The record showed that during the pendency of appeal a subsequent certificate from the same PQ authority cleared the consignment by relaxing conditions, the First Appellate Authority remanded the matter for fresh adjudication in light of that clearance, and the subsequent adjudication accepted the PQ clearance. In these circumstances the initial adverse report lost its operative basis. The authorities below imposed penalty without any reasoned finding that the appellant had the requisite knowledge or intention or that the appellant caused, made or used the false document; there was no enquiry or evidence brought on record to establish culpability. Absent a specific factual finding on mens rea and with the subsequent PQ clearance on record, imposition of penalty under Section 114AA was unjustified and peremptory. [Paras 8, 9, 10, 11]

Penalty under Section 114AA set aside for want of proof of knowing or intentional use of false or incorrect material; appeal allowed and penalty deleted.

Final Conclusion: The adjudicating authorities failed to establish the requisite mens rea and factual basis for imposing penalty under Section 114AA; having regard to the subsequent PQ clearance and absence of findings of knowledge or intention, the penalty was quashed and the appeal allowed.

Pre-deposit requirement before filing appeal - discretion to waive pre-deposit - substitution of statutory provision - prospective or retrospective effect of amendment - application of proviso in statutory interpretation - effect of repeal and General Clauses Act, Section 6

Pre-deposit requirement before filing appeal - discretion to waive pre-deposit - substitution of statutory provision - prospective or retrospective effect of amendment - Whether the amended provision of Section 129E of the Customs Act, 1962 (as substituted by the Finance (No.2) Act, 2014) applies to the petitioner's appeal and whether the petitioner is entitled to the pre-amendment discretionary waiver of pre-deposit. - HELD THAT: - The Court held that the determinative question is governed by the law in force on the date the appeal is sought to be filed where the entire Section has been substituted. The pre-amendment Section 129E conferred a discretionary power on the appellate authority to dispense with deposit where undue hardship would be caused; the amended provision prescribes a mandatory pre-deposit (7.5% or 10% as applicable) and removes the discretion to waive that pre-deposit for appeals filed after the amendment. The petitioner's contention that Section 6 of the General Clauses Act preserves a pre-existing right to seek waiver was rejected because a statutory right to appeal can be subjected to conditions and the substitution of the provision changes the condition precedent for filing the appeal; the earlier 'chance' of obtaining a discretionary waiver is not a vested right. The Court relied on its prior decision in Dream Castle v. Union of India which construed similar amendments and held that the substituted provision governs appeals filed on or after 6.8.2014, and that the amendment does not impermissibly take away a vested right but standardises the pre-deposit condition, thereby precluding arbitrary discretionary waivers. Circulars or contrary High Court decisions taking a different prima facie view were considered and not accepted. Applying these principles, the present appeal, filed after substitution, is governed by the amended Section 129E and the tribunal correctly required compliance with the mandatory pre-deposit provision. [Paras 17, 18, 19, 20, 21]

The amended Section 129E applies to the petitioner's appeal filed after the substitution; the discretionary waiver under the pre-amendment provision is not available, and the writ petition is dismissed.

Final Conclusion: Writ petition dismissed; appeal must comply with the substituted provisions of Section 129E as applicable to appeals filed on or after the amendment (Finance (No.2) Act, 2014); no costs.

Consent terms recorded by the court - undertaking to the court - civil contempt for breach of undertaking - non-compliance of consent decree/consent terms - requirement of express written undertaking or incorporation in order - maintainability of contempt proceedings

Consent terms recorded by the court - undertaking to the court - requirement of express written undertaking or incorporation in order - Whether the consent terms taken on record by the Appellate Tribunal on 29th June, 2018 constituted an undertaking to the court such as to attract contempt proceedings for non compliance. - HELD THAT: - The Tribunal held that the appeal had been allowed to be withdrawn on the basis of consent terms and that the Tribunal had merely taken the final consent terms on record. There was no finding that any party gave an express undertaking before the Tribunal, nor was any undertaking incorporated into the Tribunal's order. Applying the principle in Babu Ram Gupta v. Sudhir Bhasin, the Court observed that absent a written undertaking filed before the Court or incorporation of such undertaking in the order, mere non compliance with consent terms does not amount to wilful disobedience of an undertaking to the court. The Tribunal therefore concluded that no undertaking to the court existed which could form the basis for contempt proceedings. [Paras 14, 15, 17]

The consent terms recorded on 29th June, 2018 did not amount to an undertaking to the Tribunal enforceable by contempt in the absence of an express written undertaking or incorporation of the same in the order.

Non-compliance of consent decree/consent terms - civil contempt for breach of undertaking - maintainability of contempt proceedings - Whether non compliance with the parties' consent terms, without an express undertaking to the court, amounts to civil contempt. - HELD THAT: - Relying on established authority, the Tribunal reiterated the legal distinction between breach of an undertaking to the court (which may constitute civil contempt) and breach of a consent order or compromise decree between parties (which normally gives rise to ordinary remedies, e.g., execution), not contempt. The Court emphasized that where there is no express written undertaking or its incorporation in the court's order, non compliance with consent terms is not wilful disobedience of the court. The Tribunal therefore held that execution or other remedies are appropriate, but initiation of contempt proceedings is not justified on the facts. [Paras 15, 16]

Non compliance with consent terms, absent an express undertaking to the court or incorporation thereof in the order, does not constitute civil contempt.

Maintainability of contempt proceedings - Whether contempt proceedings as framed in the present petitions were maintainable against the impleaded entities. - HELD THAT: - The Tribunal examined the pleadings and observed that the contempt petitions were, in substance, seeking execution of the consent terms. The Court noted that certain companies had been impleaded as contemnors though contempt proceedings in the form presented were not maintainable against them in the circumstances relied upon. In the absence of any court incorporated undertaking and given that the relief sought was effectively execution of a private settlement, the Tribunal found no case for initiating contempt proceedings. [Paras 18, 19]

Contempt proceedings as instituted were not maintainable; no case made out for initiating contempt against the alleged contemnors.

Final Conclusion: The Appellate Tribunal dismissed the contempt petitions, holding that the final consent terms taken on record did not constitute an express undertaking to the Tribunal and that mere non compliance with consent terms (not incorporated as an undertaking in the order) does not amount to civil contempt; accordingly, contempt proceedings were not maintainable and are dismissed.

Initiation of Corporate Insolvency Resolution Process - default under the Insolvency and Bankruptcy Code - admission under Section 7 - completeness of application under Section 7 - appointment of Interim Resolution Professional - moratorium under Section 14 - acknowledgement/revival letter as evidence of liability - claims of government/third parties to be lodged with IRP

Default under the Insolvency and Bankruptcy Code - acknowledgement/revival letter as evidence of liability - Existence and quantum of default by the corporate debtor - HELD THAT: - On perusal of the documents annexed to the petition, including revival/acknowledgement letters signed by the corporate debtor, the Tribunal found that non payment had occurred within the meaning of default under the Insolvency and Bankruptcy Code and quantified the default at the figure recorded in the petition. The Tribunal relied on the statutory definitions of "debt" and "default" and treated the revival letter as an admission relevant to the existence of liability and limitation. [Paras 18, 19]

Held that default is established and the default amount as stated in the petition stands for the purpose of admission.

Admission under Section 7 - completeness of application under Section 7 - Initiation of Corporate Insolvency Resolution Process - Whether the application filed by the financial creditor under Section 7 was complete and liable to be admitted - HELD THAT: - The Tribunal examined the petition against the procedural requirements of Section 7 and the accompanying rules and forms, and having regard to the Supreme Court's exposition in Innoventive Industries, concluded that the application was complete and that a default had been established from the material on record. Consequently, the petition fulfilled the conditions for admission under Section 7 and the Corporate Insolvency Resolution Process could be initiated. [Paras 17, 21, 22, 23]

Application under Section 7 admitted and CIRP ordered to commence.

Appointment of Interim Resolution Professional - Appointment of the proposed Interim Resolution Professional - HELD THAT: - The financial creditor had proposed a resolution professional and produced the requisite written communication and registration details showing no disciplinary proceedings pending. The Tribunal accepted the proposed individual and formally appointed her as Interim Resolution Professional under the Code to perform the functions conferred on the IRP. [Paras 20, 23]

CA Vineeta Maheshwari appointed as Interim Resolution Professional.

Moratorium under Section 14 - Imposition and temporal effect of the moratorium - HELD THAT: - Upon admission of the Section 7 petition, the Tribunal directed that the moratorium under Section 14 shall have effect from the date specified in the order until completion of the CIRP or until approval of a resolution plan or an order for liquidation. The Bench also specified the usual protections and prohibitions included within Section 14. [Paras 23]

Moratorium declared to operate from the specified date until completion of CIRP or further order.

Claims of government/third parties to be lodged with IRP - Treatment of correspondence from Central GST and third party demands during admission - HELD THAT: - The Tribunal noted receipt of a letter from Central GST alleging outstanding dues but observed that such correspondence from third parties, not filed by way of formal impleadment, cannot be entertained by the Bench in the admission proceedings. However, in the interest of the Government, the Tribunal stated that the department is at liberty to lodge its claim before the IRP once CIRP is initiated. [Paras 15, 16, 25]

Third party governmental claims not entertained in the admission order but permitted to be presented to the IRP.

Final Conclusion: The petition under Section 7 was admitted: default was found on the materials produced, the proposed IRP was appointed, moratorium was declared with effect from the date specified in the order, and third party government claims were directed to be lodged with the IRP; CP (IB) No.320/7/NCLT/AHM/2018 is admitted and the CIRP is directed to proceed.

Initiation of Corporate Insolvency Resolution Process - eligibility under section 10 of the I&B Code - operational debt - operational creditor - statutory dues as operational debt

Initiation of Corporate Insolvency Resolution Process - eligibility under section 10 of the I&B Code - Whether the Adjudicating Authority was correct in rejecting the corporate applicant's application under section 10 of the I&B Code on the ground that the corporate debtor was earning sufficient income - HELD THAT: - The Appellate Tribunal examined the record and noted the corporate debtor had generated income and profit in the financial year 31st March, 2017. Although the appellant contended the company was in loss and could not pay the claimed liability, the Tribunal was not persuaded to interfere with the NCLT's finding that prima facie there was no reason to declare the company eligible for initiation of the Corporate Insolvency Resolution Process under section 10. The Tribunal also observed, by reference to its prior decision, the legal position that statutory dues and corresponding claims constitute "operational debt" and related claimants may be "operational creditors", but that observation did not lead the Tribunal to disturb the NCLT's conclusion based on the company's income/profit in the stated financial year.

The NCLT order rejecting the section 10 application is upheld and the appeal is dismissed.

Final Conclusion: Appeal dismissed; the NCLT's rejection of the section 10 application is affirmed on the record showing income/profit in the financial year 31st March, 2017, and no interference is made with the finding of ineligibility for initiation of CIRP.

Refund of tax paid by mistake - limitation under Section 11B of the Central Excise Act, 1944 - Article 265 of the Constitution of India - unjust enrichment

Refund of tax paid by mistake - limitation under Section 11B of the Central Excise Act, 1944 - Article 265 of the Constitution of India - Whether the refund claim filed after the one year period prescribed by Section 11B can be rejected as time-barred where tax was paid by the assessee in consequence of its export and not by virtue of any adjudicatory order - HELD THAT: - The Tribunal held that the refund accrued to the appellant by virtue of its export transactions and not as a consequence of any order of the Tribunal. Reliance was placed on the decision of the Hon'ble High Court of Madras in M/s. 3E Infotech, which held that a claim for refund of service tax paid by mistake cannot be barred by limitation under Section 11B and that refusing such a refund would be contrary to Article 265. Applying that principle, the Tribunal found that the impugned appellate order which set aside the sanction on the ground of limitation could not be sustained. The authorities are directed to consider the refund claim in light of the High Court's directions; the Tribunal therefore allowed the appeal and set aside the impugned order to that extent. [Paras 6, 7]

Impugned order rejecting the refund as time-barred set aside; refund claim to be reconsidered by authorities in accordance with the High Court's ruling that limitation under Section 11B does not bar refund of tax paid by mistake.

Final Conclusion: The appeal is allowed; the Tribunal set aside the order upholding rejection on limitation grounds and directed the authorities to reconsider the refund claim in accordance with the Madras High Court decision that a refund of tax paid by mistake cannot be denied solely on the ground of limitation under Section 11B.

Refund of CENVAT credit to exporters - compliance with paragraph 2(h) of Notification No. 27/2012 - effect of transition to GST on pre GST refund compliance - application of second proviso to Section 142(3) of the C.G.S.T. Act, 2017 to refund claims - travelling beyond the scope of a Show Cause Notice - administrative clarification in Circular No. 58/32/2018-G.S.T.

Compliance with paragraph 2(h) of Notification No. 27/2012 - effect of transition to GST on pre GST refund compliance - refund of CENVAT credit to exporters - application of second proviso to Section 142(3) of the C.G.S.T. Act, 2017 to refund claims - administrative clarification in Circular No. 58/32/2018-G.S.T. - Whether failure to reverse amount in ST-3 return under paragraph 2(h) of Notification No.27/2012 defeated the refund claim where ST 3 filing was discontinued on introduction of GST and the assessee had debited the amount in its books and complied under the GST regime. - HELD THAT: - The Tribunal applied its earlier reasoning in M/s. Global Analytics India Pvt. Ltd. that, post GST, the factual and procedural matrix differs from the pre GST regime. The court observed that where there was no facility in the ACES system to debit the refund and the assessee had reversed/treated the credit in its GSTR 3B (and debited the amount in its books, transferring to a Refund Receivable account and executing an indemnity bond), these steps satisfied the substantive purpose of paragraph 2(h). The Tribunal noted the Board's clarification in Circular No.58/32/2018 G.S.T. and found that insisting on reversal only in ST 3 (which was discontinued) would make compliance impossible and frustrate the refund. On that basis the Tribunal held the condition was complied with in the post GST context and the rejection on that ground could not be sustained. [Paras 7]

Refund rejection on the ground of non compliance with paragraph 2(h) was unsustainable; the appellant's alternate debits and GST era compliances met the condition and refund must be granted.

Travelling beyond the scope of a Show Cause Notice - refund of CENVAT credit to exporters - Whether the Adjudicating Authority travelled beyond the scope of the Show Cause Notices in rejecting the refund. - HELD THAT: - The Tribunal found that the Show Cause Notices did not contain a proposal to reject the refund, and therefore the Adjudicating Authority's order amounted to adjudication beyond the matters put to the assessee. That procedural overreach was a separate and independent ground for holding the rejection unsustainable. The Tribunal further observed that the Revenue had granted refund in respect of a later period on similar facts, reinforcing the view that rejection was unwarranted. [Paras 7]

Rejection of refund could not be sustained because the Adjudicating Authority travelled beyond the scope of the Show Cause Notices.

Final Conclusion: Impugned orders rejecting the refund claims for the periods April 2016 to September 2016 and October 2016 to March 2017 are set aside and the appeals are allowed; consequential benefits, if any, to follow as per law.

Condonation of delay - dismissal for delay - fresh cause of action from notice of hearing - exercise of discretion by appellate tribunal in condoning delay

Condonation of delay - fresh cause of action from notice of hearing - exercise of discretion by appellate tribunal in condoning delay - Whether the Tribunal was justified in refusing to condone a delay of 2743 days in filing the appellant's appeal. - HELD THAT: - The appellant initially decided not to file an appeal but, upon receiving a notice of hearing in the department's appeal in 2017, reconsidered and filed an appeal seeking condonation of delay of 2743 days. The High Court examined whether the subsequent receipt of the Tribunal's hearing notice could be treated as giving rise to a fresh cause of action sufficient to justify condonation of the prior delay dating from 2010. It was noted that the appellant had received notice of the department's appeal in 2010, and mere subsequent receipt of a date-of-hearing notice in 2017 did not alter the position or create a fresh cause of action. The Court found no infirmity in the Tribunal's exercise of discretion in refusing to condone such a substantial delay, holding that the reasons recorded by the Tribunal for rejecting condonation were sustainable.

Tribunal's refusal to condone the delay of 2743 days upheld and the appeal dismissed.

Final Conclusion: The High Court dismissed the appeal, holding that the Tribunal did not err in refusing to condone the inordinate delay in filing the appellant's appeal and that no substantial question of law arises for determination.

Suppression - Burden on Revenue to prove suppression for invoking extended limitation - Extended period of limitation under Section 11A of the Central Excise Act - CENVAT Credit admissibility - Disclosure in ER-1 returns - Intention to evade payment of duty - Penalty under Section 11AC of the Central Excise Act and Rule 15(2) of the CENVAT Credit Rules - Reversal of credit upon audit

Suppression - Burden on Revenue to prove suppression for invoking extended limitation - Extended period of limitation under Section 11A of the Central Excise Act - Disclosure in ER-1 returns - Whether the extended period of limitation was rightly invoked by the Revenue on the ground of suppression so as to sustain demand for the period December 2012 to October 2014. - HELD THAT: - The Tribunal found that the alleged wrong availment of CENVAT credit was detected from the assessee's own books and records during audit and that the Show Cause Notice did not specifically allege suppression, fraud or collusion. The ER-1 returns disclosed the availment of credit and the assessee subsequently reversed the contested credit on being pointed out. Applying the settled test in the cited Supreme Court authorities, mere incorrect availment disclosed in records, without evidence of deliberate concealment or intent to evade duty, does not amount to suppression. Consequently the Revenue failed to discharge the burden of proving suppression necessary to invoke the extended period under Section 11A; the invocation of the larger limitation for the period December 2012 to October 2014 cannot be sustained. [Paras 5, 7, 9]

Demand for the period December 2012 to October 2014 founded on invocation of the extended period of limitation is set aside for want of proof of suppression.

CENVAT Credit admissibility - Reversal of credit upon audit - Penalty under Section 11AC of the Central Excise Act and Rule 15(2) of the CENVAT Credit Rules - Intention to evade payment of duty - Whether penalty for wrongful availment of CENVAT credit (allegedly by fraud or suppression) is sustainable where the Show Cause Notice does not make out suppression and the credit was disclosed and later reversed. - HELD THAT: - The Tribunal observed that statutory penal provisions (Section 11AC and Rule 15(2)) require demonstration of fraud, suppression or intent to evade duty. In the present case the ER-1 returns disclosed the availment, there is no independent material showing concealment or deliberate intent, and the assessee reversed the credit when pointed out. Absent evidence of suppression or fraudulent intention, the requisites for imposing penalty under the cited provisions were not made out. [Paras 6, 7, 9]

Penalty predicated on suppression/fraud is not sustainable and is liable to be deleted.

Final Conclusion: The appeal is allowed: the demand for the period December 2012 to October 2014 based on invocation of the extended period of limitation is set aside, and the penalty imposed for alleged suppression/fraud is not sustained in the absence of evidence of deliberate concealment or intent to evade duty.

CENVAT credit - input service - Business Auxiliary Services - GTA services (courier/transportation) - remand for de novo adjudication in light of C.B.I.C. Circular and Supreme Court decisions - eligibility of pest control service as input service - eligibility of employee medical maintenance service as input service - eligibility of hotel service as input service

GTA services (courier/transportation) - remand for de novo adjudication in light of C.B.I.C. Circular and Supreme Court decisions - CENVAT credit claim on Courier/Transportation (GTA) service remanded for fresh adjudication - HELD THAT: - The Tribunal found no agreement or contract on record concerning the GTA services claimed as input service credit. In fairness to both parties and having regard to the guidance in C.B.I.C. Circular dated 08.06.2018 and the Supreme Court decisions cited, the matter requires fresh inquiry. The Tribunal therefore remanded the issue to the Adjudicating Authority for de novo adjudication in the light of the Circular and the Supreme Court precedents referenced. [Paras 7]

Remanded to the Adjudicating Authority for de novo adjudication in terms indicated.

Eligibility of pest control service as input service - input service - Denial of CENVAT credit in respect of Pest Control Service set aside - HELD THAT: - Relying on the coordinate Bench's decision in M/s. Hindustan Coca-Cola Beverages Pvt. Ltd. (CESTAT Chennai), the Tribunal observed that pest control services availed to keep premises (including storage premises for inputs) pest free are input services when such services are integral to maintaining inputs used in manufacture for human consumption. Applying that ratio, the Tribunal held that denial of credit for pest control service was incorrect and set aside the impugned order to that extent. [Paras 8]

Denial of CENVAT credit on Pest Control Service set aside; credit allowed.

Eligibility of employee medical maintenance service as input service - eligibility of hotel service as input service - input service - Denial of CENVAT credit in respect of Employee Medical Maintenance Service and Hotel Service set aside - HELD THAT: - For Employee Medical Maintenance Service, the Tribunal noted that medical examinations provided to employees-consistent with the Factories Act obligation to safeguard health, safety and welfare-were held by earlier Benches to qualify as input services; applying those precedents the denial was set aside. As to Hotel Service, the Tribunal found the ratios in the decisions of the Mumbai and Delhi Benches (Warburg Pincus India Pvt. Ltd. and Adobe Systems India Pvt. Ltd.) squarely applicable and accordingly set aside the denial of credit on that service. [Paras 9, 10]

Denial of CENVAT credit on Employee Medical Maintenance Service and Hotel Service set aside; credit allowed.

Final Conclusion: The appeal is partly allowed and partly remanded: CENVAT credit denial for Pest Control, Employee Medical Maintenance and Hotel services is set aside (credit allowed), while the claim in respect of Courier/Transportation (GTA) service is remanded for de novo adjudication in light of the C.B.I.C. Circular dated 08.06.2018 and the cited Supreme Court decisions.

Mismatch of ITC - centralised mechanism for mismatch verification - remand for fresh consideration - revised assessment under Section 27 of TNVAT Act - deemed assessment

Mismatch of ITC - revised assessment under Section 27 of TNVAT Act - Validity of the revised assessment order in light of the Departmental circular issued pursuant to the JKM Graphics Solutions decision - HELD THAT: - The Court noted that the matter is covered by this Court's decision in M/s. JKM Graphics Solutions which recommended evolution of a centralized procedure to examine mismatches before calling upon dealers. The Commissioner issued Circular No.3 of 2019 prescribing that assessing authorities may leave mismatch of ITC pending until a mechanism is evolved and maintain lists and abstracts of such cases. Applying that position, the Court set aside the revised Assessment Order dated 29.01.2019 and remitted the matter to the respondent for fresh consideration, expressly without expressing any opinion on the merits. The order was vacated because the circular (issued in consequence of the JKM principle) requires the Department to follow the prescribed procedure before finalizing mismatch-related ITC adjustments. [Paras 6, 9, 10]

Impugned revised Assessment Order dated 29.01.2019 is set aside and the matter is remitted to the respondent for fresh consideration in accordance with the circular and law; no opinion expressed on merits.

Centralised mechanism for mismatch verification - remand for fresh consideration - Procedure to be followed on remand and interim treatment pending evolution of the centralized mechanism - HELD THAT: - The Court directed that the respondent shall await the outcome of the new module/mechanism contemplated by the Department pursuant to the JKM principle and the circular. Once the Department frames and notifies the mechanism or module, the respondent is to issue fresh notice to the writ petitioner and redo the revised assessment expeditiously and in accordance with law. The Court's directions preserve the mismatch issue alive (consistent with the circular) while directing administrative steps to be taken before re-assessment. [Paras 7, 8, 10]

Respondent to await the notified mechanism/module, thereafter issue fresh notice and redo the revised assessment expeditiously in accordance with law; matter remitted for compliance with these directions.

Final Conclusion: Impugned revised Assessment Order dated 29.01.2019 is set aside and remitted to the respondent for fresh consideration in conformity with Circular No.3 of 2019 and the JKM principle; respondent shall await and act upon the centralized mechanism/module before issuing fresh notice and redoing the assessment expeditiously; no costs.

Treatment of a revised assessment order as a show cause notice - Right of dealer to file reply and objections on a revisional assessment - Requirement of deposit of a portion of proposed tax pending adjudication - Remand for fresh consideration and redoing of assessment - Retrospective cancellation of registration and its procedural consequences

Treatment of a revised assessment order as a show cause notice - Right of dealer to file reply and objections on a revisional assessment - Impugned revised assessment order to be treated as a show cause notice and the writ petitioner afforded an opportunity to file objections accompanied by a partial deposit - HELD THAT: - The Court found that the assessing authority passed a revised assessment order under Section 27 of the TNVAT Act without the petitioner having replied to the revisional notice dated 15.6.2015. Noting that cancellation proceedings of the selling dealers were initiated post the assessment year though made retrospective, the Court exercised supervisory discretion to convert the impugned revised assessment order dated 14.12.2017 into a show cause notice to enable the writ petitioner to file objections. The petitioner was directed to file his reply/objections within a fortnight and to deposit 15% of the proposed tax (excluding penalty) along with the objections. These directions were issued so that the statutory authority can reconsider the matter on receipt of the petitioner's objections and deposit before passing a fresh assessment order. [Paras 8, 11, 13]

Impugned revised assessment order shall be treated as a show cause notice; petitioner to file objections with 15% deposit within a fortnight.

Remand for fresh consideration and redoing of assessment - Requirement of deposit of a portion of proposed tax pending adjudication - Respondent directed to reconsider objections, redo the revised assessment afresh on receipt of objections and the 15% payment; consequences if petitioner fails to comply - HELD THAT: - The Court directed that upon receipt of objections and the specified 15% payment, the assessing authority shall consider the petitioner's submissions, redo the revised assessment and pass a fresh revised assessment order, and communicate it under due acknowledgment as per TNVAT rules. The Court also clarified the consequence of non-compliance: if the petitioner does not file objections with the required deposit, the impugned order will remain as a revised assessment order without further reference to the Court. The order thus remits the matter to the tax authority for fresh adjudication subject to the procedural conditions imposed by the Court. [Paras 13]

On receipt of objections and 15% payment, respondent to redo the revised assessment and pass fresh order; absent compliance, the impugned order will stand as a revised assessment.

Final Conclusion: Writ petition disposed of by converting the impugned revised assessment into a show cause notice; petitioner given a fortnight to file objections with 15% of the proposed tax, and respondent directed to reconsider and pass a fresh revised assessment on receipt of objections and payment; failure to comply will leave the impugned order operative. No order as to costs.

Revisional jurisdiction under the Tamil Nadu Value Added Tax Act - Consequences of failure to file objections to a revisional notice - Exclusion of time for limitation under Section 14 of the Limitation Act - Right of statutory appeal and pre deposit requirement under the Tamil Nadu Value Added Tax Act - Remand to Appellate Authority for fresh examination of facts and records

Revisional jurisdiction under the Tamil Nadu Value Added Tax Act - Consequences of failure to file objections to a revisional notice - Whether the impugned revised assessment orders made in revision under the TNVAT Act should be interfered with by the High Court. - HELD THAT: - The Court declined to interfere with the impugned revisional orders but expressly refrained from upholding them on merits. The orders record that revisional notices were issued and that the dealer did not file objections; that factual position was not disputed before the Court. Given the absence of objections at the revisional stage, the Court considered it unfair to enter upon merits in the writ proceedings and therefore did not disturb the orders while leaving all merits open for consideration in the statutory appeal. [Paras 5, 6, 9]

Impugned revisional orders are not interfered with, but they are not sustained on merits; questions on merits remain open for statutory appeal.

Exclusion of time for limitation under Section 14 of the Limitation Act - Right of statutory appeal and pre deposit requirement under the Tamil Nadu Value Added Tax Act - Whether the period spent by the petitioner in prosecuting these writ petitions should be excluded for computing limitation for filing statutory appeals under the TNVAT Act. - HELD THAT: - On the petitioner's request to pursue the alternative remedy of statutory appeal, the Court ordered that the period from presentation of the writ petitions (18.6.2019) until certified copies of this order are made available to the petitioner shall be excluded for computing limitation for filing appeals. This exclusion was expressly made by placing reliance on Section 14 of the Limitation Act. The Court clarified that after such exclusion, limitation and any condonation remain subject to the statutory prescription and that the pre deposit conditions in Section 51 of the TNVAT Act continue to apply. [Paras 8, 9]

Time spent in pursuing the writ petitions is excluded for computation of limitation for statutory appeals; statutory limitation, condonation and pre deposit conditions apply thereafter.

Remand to Appellate Authority for fresh examination of facts and records - Right of statutory appeal and pre deposit requirement under the Tamil Nadu Value Added Tax Act - What directions should be given to the Appellate Authority upon filing of the statutory appeals? - HELD THAT: - The Court directed that if statutory appeals are filed, the Jurisdictional Deputy Commissioner (Appellate Authority) shall dispose of them as expeditiously as possible and may examine books of account, documents and other relevant material on facts for deciding the appeals on merits. The direction preserves the appellate authority's power to deal with factual matters and to re examine evidence; the Court therefore remitted the matters for fresh consideration by the statutory forum. [Paras 9]

If statutory appeals are filed, the Appellate Authority shall decide them in accordance with law, with liberty to examine records and decide merits; matters are remitted to the Appellate Authority for fresh consideration.

Final Conclusion: Writ petitions are disposed of by refraining to interfere with the revisional orders while leaving merits open; the period spent prosecuting the writ petitions is excluded for limitation under Section 14 of the Limitation Act for filing statutory appeals under the TNVAT Act, subject to statutory pre deposit and limitation/condonation rules, and the appeals are remitted to the Jurisdictional Deputy Commissioner for expeditious and merits based disposal.

Non-speaking orders - principles of natural justice - duty to furnish reasons in assessment orders - remand for fresh consideration - Maharashtra Value Added Tax Act, 2002 - Central Sales Tax Act, 1956

Non-speaking orders - principles of natural justice - duty to furnish reasons in assessment orders - Impugned assessment orders are non-speaking and breach principles of natural justice by failing to deal with the petitioner's submissions - HELD THAT: - The Court examined the assessment orders dated 29th March, 2019 and observed that while the petitioner's contention - that it acted only as an online marketplace and was not engaged in buying and selling of goods - was recorded, the Assessing Officer did not explain why those submissions were rejected. The impugned orders failed to address material submissions (including reliance on intermediary immunity under information technology law) and reached a conclusion that the petitioner carried on business of buying and selling without stating reasons for discarding the petitioner's case. Such omission renders the orders non-speaking and contrary to the requirements of natural justice because the affected party and any appellate forum remain uninformed of the rationale underlying the adverse conclusion. [Paras 4, 5, 6]

Impugned assessment orders are set aside for being non-speaking and violative of principles of natural justice.

Remand for fresh consideration - Maharashtra Value Added Tax Act, 2002 - Central Sales Tax Act, 1956 - Assessment for the period 2010-11 is restored to the Assessing Officer for fresh consideration under MVAT Act and CST Act with directions to follow principles of natural justice and record reasons - HELD THAT: - Given the flawed decision-making process at the original stage, the Court concluded that relegating the petitioner to the statutory appellate remedy would be ineffective because the original orders do not disclose the basis on which the petitioner's submissions were rejected. The appropriate remedy is to set aside the impugned orders and direct the Assessing Officer to reconsider the assessment for 2010-11 afresh, to deal explicitly with the submissions made by the petitioner, to record reasons for accepting or rejecting those submissions, and to dispose of the assessment in accordance with law and the principles of natural justice. [Paras 6, 7]

Assessments for 2010-11 restored to the Assessing Officer for fresh consideration and disposal in accordance with law after affording opportunity and recording reasons.

Final Conclusion: The petition is allowed: both impugned assessment orders dated 29th March, 2019 are set aside and the assessments for 2010-11 are remitted to the Assessing Officer for fresh consideration under the MVAT Act and CST Act, with directions to follow principles of natural justice and to record reasons for conclusions.

Stay of demand - interim relief pending appeal - input tax credit dispute - State's assurance to invoke machinery against defaulting dealers - direction for expeditious disposal of pending appeal

Stay of demand - interim relief pending appeal - Validity of the Tribunal's order granting stay on part payment/deposit of the tax demand - HELD THAT: - The High Court examined the petition seeking to challenge the Tribunal's order disposing of the petitioner's stay application. The Court held that the impugned order was an interim order on a stay application and therefore did not warrant in-depth examination at this stage. The petitioner's factual contentions and documentary material concerning alleged cheating by the selling dealer and entitlement to input tax credit are matters to be considered at the final hearing of the appeal. The Court recorded that no fault was found with the Tribunal's disposal of the stay application and refrained from interfering with the interim order. The Court also noted the earlier assurance referred to in M/s. Mahalaxmi Cotton Ginning Pressing and Oil Industries that the State would invoke its machinery against defaulting selling dealers, while observing that the Sales Tax Department retained the option to deny set-off until recovery is made. [Paras 3, 4]

No interference with the Tribunal's interim stay order; the Tribunal's handling of the stay application is sustained and the petitioner's detailed contentions to be decided at final hearing.

Direction for expeditious disposal of pending appeal - Direction to the Tribunal for expeditious final disposal of the petitioner's pending appeal - HELD THAT: - In view of the grievance of hardship arising from the tax demand and because the stay order was interim, the Court directed the Tribunal to take up the pending appeal for final disposal at the earliest. The Court gave a specific timeline, requesting that the appeal be decided preferably within eight weeks from the date of the order. The Court made it clear that it has not examined the merits and that any observations made by the High Court should not influence the Tribunal's adjudication on merits. [Paras 4]

Tribunal directed to decide the pending appeal preferably within eight weeks; merits to be adjudicated by the Tribunal afresh.

Final Conclusion: Writ petition disposed; no interference with the Tribunal's interim stay order and the Tribunal is directed to expeditiously decide the pending appeal preferably within eight weeks, merits to be considered by the Tribunal.

Taxability of machinery and spare parts - threshold valuation test - identification of a single taxable article versus composite aggregation - strict construction of taxing entry - interpretive weight of administrative circular

Taxability of machinery and spare parts - threshold valuation test - identification of a single taxable article versus composite aggregation - strict construction of taxing entry - interpretive weight of administrative circular - Entry tax is leviable only where a single machine imported or an individual spare part imported is valued at more than Rs. 10,00,000/-, and not on the composite value of several distinct machines or multiple spare parts aggregated together. - HELD THAT: - The Court construed Schedule Entry 2 to the Act to mean that taxability depends on the value of the individual article - either a single machine or an individual spare part - exceeding the specified threshold. The Commissioner's circular clarifies that splitting a single machine into parts for import does not defeat taxability where the assembled machine's value exceeds the threshold, while conversely the mere aggregation of separate spare parts or distinct machines (each below the threshold) into a single import declaration does not create a taxable event. This interpretation follows the rule of strict construction of taxing entries and prevents artificial aggregation or fragmentation to create or avoid tax liability. The Court accepted and applied this principle and rejected the Revenue's contrary approach of levying tax on composite values of multiple distinct items imported under one declaration. [Paras 14, 15, 16, 20]

Tax may be imposed only on import of a single machine whose value exceeds Rs. 10,00,000/- or on an individual spare part whose value exceeds Rs. 10,00,000/-, not on composite aggregations of distinct items.

Remand for fresh assessment - examination on record - The matter is remitted to the Assessing Authority to re-examine and pass fresh assessment orders in light of the Court's legal interpretation. - HELD THAT: - Having determined the correct legal test for taxability under Schedule Entry 2, the Court directed that the Assessing Authority reconsider the disputed import transactions applying the threshold valuation test and the principles articulated in the judgment. The reassessment is to be conducted on the basis of evidence and material already on record and in accordance with the Court's ruling. [Paras 21]

The assessment is remitted to the Assessing Authority to pass fresh orders expeditiously, applying the Court's interpretation.

Final Conclusion: The revision is allowed: the taxing entry applies only to a single machine or an individual spare part whose value exceeds Rs. 10,00,000/-, and the matter is remitted to the Assessing Authority to re-assess the transactions in light of this interpretation and pass fresh orders, preferably within six months.

Expeditious disposal of delay condonation petition - expeditious disposal of stay petition - restraint on coercive recovery pending disposal of appellate applications - preservation of effectiveness of statutory appeal

Expeditious disposal of delay condonation petition - preservation of effectiveness of statutory appeal - Appellate authority to consider and dispose of the delay condonation petition filed in respect of the appeal. - HELD THAT: - The Court prima facie found that mere filing or pendency of an appeal does not itself operate as a stay and that undue delay in deciding the delay condonation petition can render the statutory appeal academic or ineffective by permitting recovery steps to proceed. In view of the limited prayer and the material on record, the Court directed the appellate authority to consider and dispose of the delay condonation application at the earliest, preferably within two months from receipt of the judgment copy, so as to protect the appellant's right to effective appellate remedy.

The appellate authority is directed to consider and dispose of the delay condonation petition preferably within two months from receipt of a copy of this judgment.

Expeditious disposal of stay petition - restraint on coercive recovery pending disposal of appellate applications - Appellate authority to consider and dispose of the stay petition and restraint on respondents from taking coercive recovery steps pending such disposal. - HELD THAT: - The Court observed that the delay in deciding the stay petition similarly risks making the appeal ineffective if the assessing authority takes recovery measures. Having regard to the limited relief sought and the balance of convenience, the Court directed the appellate authority to consider and dispose of the stay application within the same two-month timeframe and restrained the respondents from initiating coercive recovery of the amounts under challenge for a limited period of ten weeks from the date of the order, thereby preserving the appellant's ability to obtain effective relief on appeal.

The appellate authority is directed to consider and dispose of the stay petition preferably within two months and the respondents are restrained from taking coercive recovery steps for ten weeks from the date of this order.

Final Conclusion: Writ petition disposed by directing the appellate authority to expeditiously decide the delay condonation and stay applications preferably within two months from receipt of this judgment, and by restraining respondents from taking coercive recovery measures for ten weeks from the date of the order.

Condonation of delay - pre-deposit of 25% for entertaining appeal under Section 62(5) of the Punjab VAT Act - power of the First Appellate Authority to waive pre-deposit in appropriate cases - reasonableness of the pre-deposit condition

Condonation of delay - Delay in refiling and filing the appeal was condoned - HELD THAT: - Applications for condonation of delay were considered and allowed. The court observed that the delay of 47 days in refiling and the delay of 5 days in filing the appeal were insignificant and, for the reasons stated in the applications, were accordingly condoned.

Both delays were condoned and the applications for condonation were allowed.

Pre-deposit of 25% for entertaining appeal under Section 62(5) of the Punjab VAT Act - power of the First Appellate Authority to waive pre-deposit in appropriate cases - reasonableness of the pre-deposit condition - Requirement of depositing 25% of the tax for entertaining an appeal and the appellate authority's power to waive that precondition - HELD THAT: - The appellant conceded that the controversy raised in this appeal is covered by a Division Bench decision of this Court which held that Section 62(5) requires deposit of 25% of the tax amount for entertaining an appeal, that the First Appellate Authority has power to waive the precondition in appropriate cases, and that the condition of depositing 25% is reasonable and justified. Given this precedent and the appellant's concession, the court found no need for further adjudication on the merits of the taxation and reassessment issues.

The appeal was dismissed in view of the binding Division Bench precedent upholding the 25% pre-deposit requirement and recognising the appellate authority's power to waive it in appropriate cases.

Final Conclusion: Applications for condonation of short delays were allowed; on the substantive appeal the court, the appellant having conceded that the issue is governed by a Division Bench decision affirming the 25% pre-deposit rule and the appellate authority's power to waive it, dismissed the appeal.

Statutory presumption under Sections 118 and 139 of the Negotiable Instruments Act - reverse onus clause and standard of proof for rebuttal (preponderance of probabilities) - offence under Section 138 of the Negotiable Instruments Act as quasi criminal - proprietary concern is not a separate legal entity; proprietor sues in his own right - cheque given as security versus cheque given for discharge of debt - admissibility and marking of documents on appeal - non availability of Record & Proceedings does not vitiate appeal absent prejudice

Non availability of Record & Proceedings does not vitiate appeal absent prejudice - procedure under Section 385 Cr.P.C. - Whether the appellate court could proceed despite non availability of the trial Court Record & Proceedings and whether such non availability prejudiced the accused - HELD THAT: - The High Court held that where an appeal is filed and respondents notified, it may be presumed parties have access to certified copies of the trial record and must be ready to proceed. The substance of the complainant's examination under Section 200 Cr.P.C. records only the gist and is non adversarial; it is not substantial evidence to be used to contradict the complainant. The unavailability of that record did not materially prejudice the respondents given the parties' conduct and the documents before the Court; thus proceeding with the appeal was permissible. [Paras 23, 25, 26, 27, 28]

Appellate proceedings could continue in the absence of the R & P where non availability did not cause prejudice and the substance recorded under Section 200 Cr.P.C. is not substantive evidence.

Admissibility and marking of documents on appeal - Which documents the Appellate Court would consider where the record/schedule of documents was not before it - HELD THAT: - The Court confined itself to documents expressly mentioned in the impugned judgment as admitted. It observed that not all documents placed on record are automatically marked or admitted and adopted the course of considering only those documents that the trial Court had treated as admitted in its judgment. [Paras 29, 30]

Only documents recorded in the trial Court's judgment as admitted were considered by the Appellate Court.

Proprietary concern is not a separate legal entity; proprietor sues in his own right - Whether the complainant (a proprietary concern) could maintain the complaint and whether the trial Court's doubts about 'authorization' were justified - HELD THAT: - The Court explained that a proprietary concern is not a separate legal entity from its proprietor. Consequently, proceedings filed in the proprietary name are effectively proceedings by the proprietor. The trial Court's insistence on separate authorization was a conceptual error. As the issue was not raised below and the defect was curable, it did not warrant dismissal. [Paras 31, 32, 33, 35, 36]

The complaint was maintainable in the proprietor's name; the trial Court's finding of lack of authorization was misconceived and curable.

Statutory presumption under Sections 118 and 139 of the Negotiable Instruments Act - cheque given as security versus cheque given for discharge of debt - reverse onus clause and standard of proof for rebuttal (preponderance of probabilities) - offence under Section 138 of the Negotiable Instruments Act as quasi criminal - Whether the cheques were given as security or for discharge of a legally enforceable debt and whether the accused successfully rebutted the presumption under Section 139, thereby justifying acquittal - HELD THAT: - The Court applied the statutory presumptions under Sections 118 and 139, holding that an admitted cheque gives rise to a presumption it was issued for discharge of debt in whole or part. While the presumption is rebuttable, the accused bears only an evidentiary burden measured by preponderance of probabilities. The respondents admitted ordering steel and the cheques but did not produce evidence to rebut the presumption-no direct evidence was led to show the cheques were given only as security or that the goods were not supplied. The trial Court's requirement that the complainant prove every transactional detail and produce account registers or the accountant was inconsistent with statutory presumptions. Collateral factors (prior returned cheques in the account statement) reinforced the complainant's case. On the record, the defence did not raise a probable defence sufficient to displace the statutory presumption. [Paras 52, 54, 55, 58, 60]

The presumption under Sections 118 and 139 was not rebutted; the cheques were held to have been issued for discharge of liability and the respondents' acquittal was set aside, leading to conviction under Section 138.

Final Conclusion: The appeal was allowed: the trial Court's acquittal was set aside and the Company and its director were convicted under Section 138 of the Negotiable Instruments Act. The High Court held that (i) absence of the trial R&P did not prejudice the accused sufficiently to prevent the appeal; (ii) only documents shown admitted in the judgment would be considered; (iii) a proprietary concern is not distinct from its proprietor and the complaint was maintainable; and (iv) statutory presumptions under Sections 118 and 139 were not rebutted, warranting conviction.

Principles of natural justice - opportunity to be heard under Section 8-B of the Commission of Inquiry Act, 1952 - right of representation and cross-examination under Section 8-C of the Commission of Inquiry Act, 1952 - legal status of a Commission of Inquiry report as a non-adjudicatory fact-finding exercise - judicial review under Articles 226 and 227 of the Constitution - quashing of inquiry report for non-compliance with mandatory procedure

Opportunity to be heard under Section 8-B of the Commission of Inquiry Act, 1952 - right of representation and cross-examination under Section 8-C of the Commission of Inquiry Act, 1952 - principles of natural justice - Whether non-compliance with the procedural safeguards in Sections 8-B and 8-C (denial of opportunity to be heard, representation and cross-examination) vitiates the Third Report insofar as it impugns the Petitioners - HELD THAT: - The Court acknowledged that Sections 8-B and 8-C afford a person likely to be prejudicially affected by an inquiry the statutory right to be heard, to produce evidence, to cross-examine witnesses and to be represented. Such procedural protection is an application of the principles of natural justice and, where omitted, can render parts of a report vulnerable to challenge. However, the Court also noted the character of the Commission's mandate - a broad fact-finding exercise - and that its findings are expressions of opinion without adjudicatory finality. Crucially, both the Union and the State gave categorical assurances that they will not take action against persons named in the Third Report solely on the basis of the report and will make their own assessment and provide an opportunity of hearing before any action is taken. In these circumstances the Court concluded that, despite the Petitioners' grievance of denial of procedure, there was no compelling reason to exercise writ jurisdiction to quash the report at this stage. [Paras 11, 12, 14, 15, 16]

The complaints of non-compliance with Sections 8-B and 8-C were noted, but the Court declined to quash the Third Report in view of the Union's and State's assurances and the non-adjudicatory character of the Commission's findings.

Legal status of a Commission of Inquiry report as a non-adjudicatory fact-finding exercise - judicial review under Articles 226 and 227 of the Constitution - quashing of inquiry report for non-compliance with mandatory procedure - Whether the writ court should entertain and set aside the Commission's Third Report on merits or in absence of final action by the appointing authorities - HELD THAT: - The Court reviewed authorities establishing that a Commission's report is a non-binding expression of opinion and lacks adjudicatory finality. Where the appointing authority has not accepted the report and where the Executive expressly undertakes to make independent assessments and to afford affected persons an opportunity before taking action, premature judicial interference in the form of quashing the report is not warranted. The Court distinguished earlier decisions which allowed challenges where reputational prejudice could persist despite absence of action; it recorded that, having considered those precedents, the present factual matrix - including the Commission's admitted broad-brush approach and the Executive assurances - does not justify exercise of writ jurisdiction to annul the report. [Paras 11, 12, 13, 14, 15]

The Court declined to exercise its writ jurisdiction to quash or set aside the Third Report on the merits or prematurely, noting the non-adjudicatory nature of the report and the assurances given by the Union and the State.

Final Conclusion: The petitions are disposed of by recording and accepting the Union's and the State's assurances that no action will be taken against persons named in the Third Report solely on its basis and that affected persons will be given an independent assessment and an opportunity of hearing; the Court did not quash the report, having considered the statutory procedure complained of but declined premature interference in view of the Executive assurances and the non-adjudicatory character of the Commission's findings.

Venue versus seat of arbitration - party autonomy in choice of place of arbitration - jurisdiction under Section 11(6) of the Arbitration and Conciliation Act, 1996 - exclusive jurisdiction of the courts at the seat of arbitration - distinction between seat and venue - supervisory jurisdiction of courts in arbitration

Venue versus seat of arbitration - jurisdiction under Section 11(6) of the Arbitration and Conciliation Act, 1996 - exclusive jurisdiction of the courts at the seat of arbitration - party autonomy in choice of place of arbitration - Whether the Madras High Court could exercise jurisdiction under Section 11(6) of the Arbitration and Conciliation Act, 1996 despite the agreement providing that the venue of arbitration shall be Bhubaneswar. - HELD THAT: - The Court held that designation of Bhubaneswar as the venue of arbitration manifests the parties' intention to confine jurisdiction to the courts at that place. Relying on the distinction between "seat" and "venue" explained in BALCO and subsequent authorities, and on the principle of party autonomy recognised by Section 20, the Court treated the named place as the juridical seat for purposes of Part I jurisdictional consequences. The Court applied the reasoning in Swastik and Indus Mobile to conclude that where parties agree upon the place of arbitration, that agreement operates as an exclusive jurisdiction clause and excludes other competent courts even if words like "exclusive" or "only" are not used. Consequently, Madras High Court erred in assuming jurisdiction under Section 11(6); only the Orissa High Court has jurisdiction to entertain the Section 11(6) petition for appointment of an arbitrator in the present case. [Paras 12, 13, 16, 17, 18]

Impugned order of the Madras High Court appointing an arbitrator under Section 11(6) set aside; only the Orissa High Court has jurisdiction and the parties may approach it for appointment of the arbitrator.

Final Conclusion: Appeal allowed; Madras High Court's order under Section 11(6) set aside on the ground that agreement's designation of Bhubaneswar as the venue operates to confine supervisory jurisdiction to the courts at Bhubaneswar, and parties are at liberty to approach the Orissa High Court for appointment of the arbitrator.

Appropriate Government - industrial dispute - reference jurisdiction - Central enactment - competence to refer dispute - invalid reference renders award void

Appropriate Government - reference jurisdiction - Central enactment - invalid reference renders award void - The validity of the State Government's reference of the industrial dispute to the Labour Tribunal in respect of the Institute of Chartered Accountants of India. - HELD THAT: - The Court held that the petitioners are a body constituted by a Central enactment (Chartered Accountants Act, 1949) and therefore fall within the class of entities for which the Central Government is the appropriate Government for making a reference under the Industrial Disputes Act. Because the reference in this case was made by the State Government instead of the Central Government, the referral was erroneous. An invalid referral vitiates the jurisdiction of the Tribunal to adjudicate the dispute and, consequently, the award based on such a bad reference is liable to be set aside. The Court therefore did not decide the factual questions as to whether the petitioners were an 'industry' or whether an employer-employee relationship existed, since the defective reference rendered consideration of those issues unnecessary.

The reference made by the State Government was improper; the award arising from that reference is set aside.

Industrial dispute - reference jurisdiction - Procedure to be followed for fresh adjudication of the dispute following quashing of the award. - HELD THAT: - Although the Court set aside the award for want of a proper reference, it permitted the respondent to seek adjudication afresh by obtaining a reference from the proper appropriate Government. The Court stipulated a timeline for such a fresh reference and for subsequent adjudication, directing that the respondent may get a reference made by the appropriate Government within two months and, if so made, the dispute should be settled within the next six months. This preserves the right to adjudication while correcting the jurisdictional defect in the initial referral.

Respondent may seek a fresh reference from the appropriate Government within two months; if made, the dispute shall be resolved within six months thereafter.

Industrial dispute - employer-employee relationship - industry - Whether the questions of the petitioners being an 'industry' and existence of an employer-employee relationship were adjudicated. - HELD THAT: - The Court expressly declined to decide the merits of whether the petitioners constituted an industry or whether there existed an employer-employee relationship between the parties because the primary jurisdictional defect (improper reference) rendered those inquiries unnecessary at this stage. Those factual and legal questions remain open for determination if and when a valid reference is made by the appropriate Government.

Issues on 'industry' status and employer-employee relationship were not decided and remain to be considered upon a valid reference.

Final Conclusion: The State Government's reference was erroneous because the Institute is a body constituted by a Central enactment and the Central Government is the appropriate authority to refer the dispute; the award dated 22.1.2010 is set aside. The respondent is permitted to obtain a fresh reference from the appropriate Government within two months, and if so made the dispute shall be adjudicated within six months.