TaxTMI Updates e-Newsletter
Jul 31,2019

Classification of composite machines by principal function - Section Notes 3 and 4 to Section XVI (classification of composite machines) - HSN Explanatory Notes on gear boxes and motors - classification under Tariff Heading 8501 versus 8483 - applicability of rate entries in GST Rate Notification by reference to Customs Tariff headings - scope of Advance Ruling Authority under Section 97(2)

Classification under Tariff Heading 8501 versus 8483 - classification of composite machines by principal function - HSN Explanatory Notes on gear boxes and motors - Geared motors supplied by the applicant are classifiable under CTH 8501. - HELD THAT: - The Authority examined Section Notes 3 and 4 to Section XVI and the HSN Explanatory Notes to Chapters 84 and 85. A geared motor is a single unit integrating a gear reducer and an electric motor; the components are intended to contribute together to a clearly defined function. The Explanatory Note to heading 8483 expressly excludes gear boxes combined with a motor, stating such products are classified with the motor, while the Explanatory Note to heading 8501 states motors remain classified there even when equipped with gears or gear boxes. Applying the Section Notes that composite machines are to be classified according to the component which performs the principal function, and on the factual finding that the geared motor combines motor and gearbox into a single supply providing controlled conversion of electrical to mechanical energy, the principal function aligns with heading 8501. The Authority therefore held that the geared motor is to be classified under CTH 8501. [Paras 7, 10]

Geared motors are classifiable under CTH 8501.

Scope of Advance Ruling Authority under Section 97(2) - Whether gear motors can be considered as 'gears' and 'gearings' is not answered by the Authority under Section 97(2). - HELD THAT: - The Authority noted that the scope of matters on which an advance ruling may be given is limited to the categories enumerated in Section 97(2) (such as classification, applicability of notifications, time and value, admissibility of ITC, liability to tax, registration and whether a particular activity amounts to supply). The question as framed by the applicant concerning whether gear motors can be considered as 'gears' and 'gearings' does not fall within the matters amenable to ruling under Section 97(2) and therefore the Authority did not answer that question. [Paras 8, 10]

Question on whether gear motors are 'gears and gearings' not answered as outside the scope of Section 97(2).

Applicability of rate entries in GST Rate Notification by reference to Customs Tariff headings - classification under Tariff Heading 8501 versus 8483 - The applicable GST rate on the geared motors (classifiable under CTH 8501) is 9% CGST and 9% SGST as per Sl. No. 372 of Schedule-III of Notification No. 1/2017-C.T. (Rate) and corresponding State notification. - HELD THAT: - Having classified geared motors under CTH 8501, the Authority applied the GST rate notification which adopts the tariff headings of the First Schedule to the Customs Tariff Act. Sl. No. 372 of Schedule-III of Notification No. 1/2017-C.T. (Rate) covers goods of chapter/heading 8501 and prescribes the rate applicable to electric motors and generators. Consequently, geared motors classifiable under 8501 attract the rate specified at Sl. No. 372, namely 9% CGST and 9% SGST. [Paras 9, 10]

Rate applicable on geared motors is 9% CGST and 9% SGST under Sl. No. 372 of Schedule-III.

Final Conclusion: The Authority ruled that the applicant's geared motors are classifiable under CTH 8501; the question whether they amount to 'gears and gearings' is not answered as outside the Advance Ruling jurisdiction under Section 97(2); and the applicable tax rate on geared motors is 9% CGST and 9% SGST as per Sl. No. 372 of Schedule-III of the GST rate notification.

Transitional input tax credit - electronic credit ledger reflection - input tax credit wrongly availed or utilized - proceedings under Section 73 for recovery of wrongly availed credit - Rule 117 and Rule 121 - verification and initiation of recovery

Transitional input tax credit - electronic credit ledger reflection - input tax credit wrongly availed or utilized - Whether mere reflection of transitional credit in the electronic credit ledger amounts to "availment" or "utilization" of input tax credit making the dealer liable under provisions for wrongly availed credit. - HELD THAT: - The Court held that 'availment' and 'utilization' are positive acts by which input tax credit is put to use to reduce tax liability. A mere reflection of transitional credit in the electronic credit ledger consequent to an application under the transitional provisions does not, without more, constitute availment or utilization. Section 73 speaks of recovery where credit has been wrongly availed or utilized; the statutory scheme, read with Rules 117 and 121, contemplates verification and, only if credit is actually availed/ utilized (i.e., brought into use reducing the dealer's tax liability), can recovery proceedings be sustained. Absent evidence that the credited amount was applied to meet any tax liability, the ledger entry alone cannot be treated as an act attracting proceedings under Section 73.

Reflection of transitional credit on the electronic ledger is not, by itself, availment or utilization; it cannot be treated as wrongful availment in the absence of evidence of use to reduce tax liability.

Proceedings under Section 73 for recovery of wrongly availed credit - Rule 117 and Rule 121 - verification and initiation of recovery - Whether the Assistant Commissioner could convert the transitional-credit rejection into a Section 73 recovery proceeding for the entire ledger balance without establishing quantification of the amount actually availed or utilized. - HELD THAT: - The Court found that the Assistant Commissioner misapplied Section 73 by treating the entire transitional credit reflected in the electronic ledger as an outstanding tax liability and initiating recovery including interest and penalty, despite absence of any record showing that the credit had been availed or utilized to discharge tax liability. The statutory scheme permits initiation of recovery only when credit has been wrongly availed or utilized; Rule 121 allows verification and initiation of proceedings in respect of wrongly availed credit, but not merely because a credit is reflected. Consequently, initiation of a Section 73 proceeding against the whole credited amount without demonstration of actual use or reduction of tax liability was erroneous and amounted to abuse of jurisdiction.

The impugned order initiating recovery under Section 73 in respect of the ledger balance was illegal and an abuse of jurisdiction; the order was quashed.

Final Conclusion: The writ petition is allowed; the order dated 6.11.2018 initiating recovery under Section 73 in respect of the transitional credit reflected in the petitioner's electronic credit ledger is quashed because mere reflection of transitional credit does not constitute availment or utilization and, in absence of evidence of use to reduce tax liability, Section 73 proceedings and the consequent demand for tax, interest and penalty could not be sustained.

TP adjustment - Arm's length price of corporate guarantee - allocation of R&D expenditure for deduction under Section 80-IC - weighted deduction under Section 35(2AB) - nexus requirement for unit-specific deductions - The Court [2019 (1) TMI 676 - BOMBAY HIGH COURT] declines to entertain the Revenue's questions of law: the transfer-pricing issue is precluded by the earlier decision as ITAT deleted addition, and the R&D allocation/weighted-deduction matters were correctly dealt with by the Tribunal following this Court's precedent and remitted for factual determination by the Assessing Officer.

HELD THAT:- Special Leave Petition is dismissed.

Reopening of assessment u/s 147 - unexplained source of fund under Section 68 and cash fund under Section 269SS - Appeals allowed in favour of the assessee by HC [2019 (1) TMI 355 - CALCUTTA HIGH COURT] as the substantial question answered in the affirmative that contravention of Section 269SS discovered in a later assessment year, without cogent material linking it to the earlier year, cannot be a ground for reopening under Section 147

HELD THAT:- Special Leave Petition is dismissed.

Assessment framed in the name of a non-existent entity - void ab initio - mistake, defect or omission curable under Section 292B - amalgamation and succession of liabilities - amalgamating company ceases to exist - participation of successor cannot create estoppel against law - precedential effect of dismissal of SLP and doctrine of merger/Article 141

Assessment framed in the name of a non-existent entity - void ab initio - mistake, defect or omission curable under Section 292B - amalgamation and succession of liabilities - participation of successor cannot create estoppel against law - Validity of assessment proceedings and final assessment order for AY 2012-13 where notices and assessment were in the name of the amalgamating company after its amalgamation with the transferee - HELD THAT: - The Court held that the scheme of amalgamation approved with effect from 1 April 2012 resulted in the amalgamating company ceasing to exist and the transferee assuming liabilities. A jurisdictional notice under Section 143(2) issued after the scheme was effective, addressed only to the amalgamating (now non-existent) entity, meant that jurisdiction was assumed on a legally non-existent person. That initiation of proceedings was therefore void ab initio. The participation of the successor (amalgamated) company in the assessment proceedings could not cure the jurisdictional defect or operate as an estoppel against law. Section 292B, which preserves proceedings from being invalidated for mere mistakes, defects or omissions where they are in substance in conformity with the Act, was held inapplicable because the error in issue constituted a substantive illegality (proceedings against a non-existent juristic person) rather than a mere procedural or clerical irregularity. The Court distinguished decisions where clerical errors were curable on their peculiar facts and relied on the consistent line of authority (including the decisions of the Delhi High Court affirmed by this Court) that an assessment completed in the name of a dissolved/amalgamating company is a nullity. In view of the value of consistency and certainty in tax litigation, the Court applied the earlier ruling in the assessee's case for the preceding year and dismissed the appeal. [Paras 16, 19, 30, 34, 35]

Assessment proceedings and the final assessment order for AY 2012-13, having been initiated and framed in the name of an entity which had ceased to exist on amalgamation, are void ab initio; appeal dismissed.

Final Conclusion: The assessment for AY 2012-13 was properly set aside as void because the jurisdictional notice and assessment were issued in the name of the amalgamating company after it had ceased to exist on amalgamation; Section 292B does not cure this substantive illegality, and the appeal is dismissed.

Definition of charitable activity under Section 2(15) of the Income Tax Act, 1961 - management fee and administrative expenses not converting charitable activity into business activity - registration as a company under Section 25 of the Companies Act

Definition of charitable activity under Section 2(15) of the Income Tax Act, 1961 - management fee and administrative expenses not converting charitable activity into business activity - registration as a company under Section 25 of the Companies Act - Whether charging a management fee to defray administrative expenses caused the assessee's activities to cease to be charitable for the purposes of Section 2(15) of the Income Tax Act, 1961. - HELD THAT: - The Tribunal found on the material before it that the assessee was a company registered under Section 25 of the Companies Act, that 85% of donations were given to the Government of India for HIV/AIDS purposes and the remaining 15% to other societies for awareness and treatment of poor HIV patients, that the entire amount was spent through societies and trusts, and that the assessee also ran its own project for the welfare of HIV/AIDS patients. On those findings the Tribunal held that the mere charging of a management fee to defray administrative costs did not convert the assessee's essential activity into a business activity so as to take it outside the scope of charitable activity under Section 2(15). The High Court, after considering the Tribunal's reasoning and factual findings, found no legal infirmity in that conclusion and recorded that no substantial question of law arose. [Paras 2, 3, 4]

Tribunal's conclusion upheld: charging a management fee to meet administrative expenses did not displace the assessee's charitable character; appeal dismissed.

Final Conclusion: The High Court dismissed the Revenue's appeal against the ITAT order for AY 2010-11, holding that the assessee's charging of a management fee to defray administrative expenses did not convert its activities into a business and therefore did not remove them from the scope of charitable activity under Section 2(15).

Recording of satisfaction under section 153C - validity of assessment under section 153C read with section 153A - obligation to hand over seized material and jurisdiction to initiate proceedings - compliance with CBDT Circular No.24/2015

Recording of satisfaction under section 153C - validity of assessment under section 153C read with section 153A - compliance with CBDT Circular No.24/2015 - Whether assessment proceedings initiated under section 153C read with section 153A are valid when no satisfaction note was recorded by the Assessing Officer of the searched person regarding belongingness of seized documents to another person. - HELD THAT: - The Tribunal found, and this Court agreed, that the provisions of section 153C can be invoked only after the Assessing Officer of the person searched records a satisfaction that the assets, books or documents seized during the search belong to a person other than the searched person. The record in the present case showed that no such satisfaction note is traceable; the Assessing Officer himself admitted the non-availability of any satisfaction note. Reliance was placed on judicial pronouncements and CBDT Circular No.24/2015 which require strict compliance with the recording of satisfaction (including where the AO of the searched person and the other person is the same). In absence of the mandatory satisfaction having been recorded and communicated as contemplated, the issuance of notices and the assessment proceedings under section 153C read with section 153A were held to be bad in law and the assessment was declared illegal and void ab initio. This Court declined to disturb the Tribunal's factual and legal conclusion. [Paras 12]

Assessment proceedings under section 153C read with section 153A declared illegal and void ab initio for failure to record the mandatory satisfaction; Revenue's appeal dismissed.

Final Conclusion: The Tribunal's conclusion that the assessment pursuant to notices under section 153C read with section 153A was void ab initio for lack of a recorded satisfaction was affirmed; Revenue's appeal is dismissed.

Deduction under Section 80P of the Income-tax Act - deduction in respect of income of cooperative societies - Operational income versus income from surplus investments - Deduction under Section 80P(2)(d) - interest from investments in other cooperative societies - Alternate statutory remedy by way of appeal to the Commissioner (Appeals) - Application of the Satyawati Tandon principle in fiscal matters - insistence on alternate remedy - Exclusion of time under Section 14 of the Limitation Act for computing period of statutory appeal - Power of the Commissioner (Appeals) to condone delay under Section 249(3) of the Income-tax Act

Deduction under Section 80P of the Income-tax Act - deduction in respect of income of cooperative societies - Alternate statutory remedy by way of appeal to the Commissioner (Appeals) - Application of the Satyawati Tandon principle in fiscal matters - insistence on alternate remedy - Whether the High Court should exercise writ jurisdiction to adjudicate claims for deduction under Section 80P when an alternate statutory appeal remedy exists - HELD THAT: - The Court observed that the writ petitioners are cooperative societies challenging assessment orders under Section 143(3) raising questions under Section 80P. While certain principles favourable to cooperative societies were noted from a Division Bench decision, the specific controversy regarding deductions under Section 80P(2)(d) remained open (res integra). Applying the principle that alternate statutory remedies should be insisted upon with greater rigour in fiscal matters (as explained in Satyawati Tandon and reiterated in K.C. Mathew), the Court exercised its discretion to decline to entertain the writ petitions on merits and relegated the petitioners to the statutory remedy of appeal to the Commissioner (Appeals) under Section 246A. The Court observed that some petitioners have already filed such appeals and others are free to do so; all grounds raised in the writ petitions may be canvassed before the Appellate Authority. [Paras 16, 17, 18]

Writ petitions disposed of by relegating the petitioners to file/ pursue statutory appeals before the Commissioner (Appeals) under Section 246A; substantive questions left open for determination in the appeals.

Deduction under Section 80P(2)(d) - interest from investments in other cooperative societies - Operational income versus income from surplus investments - Totgars' Cooperative Sale Society Ltd. - distinction between operational interest and interest on surplus investments - Whether interest earned on investments (surplus funds invested in a District Central Cooperative Bank) qualifies as operational income eligible for deduction under Section 80P(2)(d) - HELD THAT: - The Court analysed the position that Section 80P(2)(d) permits deduction for interest derived from investments only when such investments are made in other cooperative societies. The factual question whether the impugned interest was operational (attributable to the activities specified in Section 80P) or constituted income from surplus investments (taxable as 'other income') was held to be res integra and not covered by the Division Bench authority relied upon by the petitioners. The Court noted that the Assessing Officer had treated such interest as income from other sources relying on the reasoning in Totgars' Cooperative Sale Society Ltd., where interest on funds not required for business purposes was held to be taxable under Section 56. Given the factual character of the dispute, the Court refrained from deciding the question on merits and directed that it be raised and adjudicated in the statutory appeals. [Paras 13, 14, 15, 16]

Question as to whether the interest qualifies for deduction under Section 80P(2)(d) is not decided on merits and is left open for determination in the statutory appeals.

Exclusion of time under Section 14 of the Limitation Act for computing period of statutory appeal - Power of the Commissioner (Appeals) to condone delay under Section 249(3) of the Income-tax Act - Whether time spent in pursuing the instant writ petitions should be excluded in computing the period for filing statutory appeals, and the authority to condone any residual delay - HELD THAT: - The Court directed that the time from presentation of the writ petitions to the date the instant order copy is made available shall be excluded for computing the limitation period for filing statutory appeals, relying on Section 14 of the Limitation Act. The Court made clear that notwithstanding this exclusion, if any delay remains, the petitioners may seek condonation before the Commissioner (Appeals) under Section 249(3) of the Income-tax Act and that the Appellate Authority shall consider such prayers on their merits in accordance with law. [Paras 19]

Time spent in the writ proceedings excluded while computing limitation for statutory appeals; petitioners may apply to the Commissioner (Appeals) for condonation of any remaining delay under Section 249(3).

Final Conclusion: The High Court declined to adjudicate the substantive entitlement to deduction under Section 80P(2)(d) on merits, disposed of the writ petitions by directing the petitioners to pursue statutory appeals before the Commissioner (Appeals), excluded the time spent in these writ proceedings for limitation purposes under Section 14 of the Limitation Act, and left open the petitioners' right to seek condonation of any remaining delay under Section 249(3) of the Income-tax Act.

Deductions under Section 80P of the Income tax Act, 1961 - alternate statutory remedy - exclusion of time spent in writ proceedings for computation of limitation - condonation of delay under Section 249(3) of the Income tax Act, 1961 - exercise of writ jurisdiction in fiscal matters - application of alternate remedy rule with greater rigour

Deductions under Section 80P of the Income tax Act, 1961 - precedential effect of division bench decisions - Whether the disallowance in the assessment order of deductions claimed by the Primary Agricultural Cooperative Credit Society under Section 80P survives in view of earlier Division Bench decisions - HELD THAT: - The Court recorded that earlier Division Bench decisions of this Court (drawing upon the Veerakeralam principle) have held that Primary Agricultural Cooperative Credit Societies carrying on the business of providing credit to members are entitled to claim deductions under Section 80P. Applying that settled position, the challenge to the assessment to the extent it relates to denial of such deductions does not survive. The Court, however, noted that the Department has placed those Division Bench orders before the Supreme Court by Special Leave Petitions and that the question is the subject matter of such proceedings, but that factual backdrop did not sustain the impugned disallowance in the present proceedings. [Paras 6, 7, 8, 10, 11]

The part of the assessment order disallowing deductions under Section 80P does not survive in view of the cited Division Bench precedents.

Alternate statutory remedy - exclusion of time spent in writ proceedings for computation of limitation - condonation of delay under Section 249(3) of the Income tax Act, 1961 - exercise of writ jurisdiction in fiscal matters - application of alternate remedy rule with greater rigour - Availability and modality of alternate remedy against the assessment order and computation of limitation for filing the statutory appeal to the Commissioner (Appeals) - HELD THAT: - The Court directed that the petitioner may pursue the alternate remedy of an appeal under Section 246A to the Commissioner (Appeals). Time spent in the instant writ petition (from filing of the writ to date of this order) shall be excluded for computing the 30 day limitation prescribed for filing the appeal. If, after such exclusion, any delay remains, the petitioner is permitted to seek condonation of delay under Section 249(3), and the Appellate Authority shall decide such condonation application on merits. The Court emphasised that the alternate remedy rule is a discretionary self imposed restraint and must be applied with greater rigour in fiscal statutes, following the principles reiterated in Satyawati Tondon and K.C. Mathew. [Paras 12, 13, 14, 15, 16]

Writ petition disposed of leaving the petitioner free to file an appeal under Section 246A; time spent in the writ is excluded for limitation purposes and any remaining delay can be addressed under Section 249(3).

Final Conclusion: Writ petition disposed of: the challenge to denial of deductions under Section 80P does not survive in view of Division Bench precedents; petitioner may file a statutory appeal under Section 246A (time spent in the writ excluded for limitation) and, if necessary, seek condonation under Section 249(3). No costs.

Deduction under Section 80P for Primary Agricultural Cooperative Societies - Precedential binding effect of Division Bench decisions - Alternate statutory remedy by way of appeal under Section 246A - Computation of limitation-exclusion of time spent in writ petition - Condonation of delay under Section 249(3) - Application of alternate remedy rule in fiscal statutes

Deduction under Section 80P for Primary Agricultural Cooperative Societies - Precedential binding effect of Division Bench decisions - Entitlement of the writ petitioner (a Primary Agricultural Cooperative Credit Society) to claim deductions under Section 80P in light of earlier Division Bench decisions. - HELD THAT: - The Court noted that Division Bench decisions in Veerakeralam Primary Agricultural Co-operative Credit Society and Tiruchengode Agricultural Producers Cooperative Marketing Society have held that Primary Agricultural Societies carrying on credit activities are entitled to deductions under Section 80P. Given those precedents, the challenge to the assessment order insofar as it denies or questions the Section 80P deductions does not survive. The Court, however, recorded that the Revenue has carried those Division Bench orders to the Supreme Court by way of Special Leave Petitions, and that in another batch this Court had observed that the question is subject to the outcome of those SLPs; notwithstanding that contextual observation, the impugned order cannot stand with respect to the Section 80P issue in view of the binding Division Bench decisions. [Paras 6, 7, 8, 10]

The aspect of the impugned assessment denying or questioning deductions under Section 80P does not survive in view of controlling Division Bench precedents.

Alternate statutory remedy by way of appeal under Section 246A - Computation of limitation-exclusion of time spent in writ petition - Condonation of delay under Section 249(3) - Application of alternate remedy rule in fiscal statutes - Availability and terms of the alternate remedy to challenge aspects of the impugned order not covered by the Section 80P precedents. - HELD THAT: - The Court held that the writ petitioner has an alternate statutory remedy by filing an appeal to the Commissioner (Appeals) under Section 246A. The prescribed period for filing that appeal is 30 days; the Court ordered that the time spent prosecuting the instant writ petition (from its filing to the date of this order) shall be excluded for computing limitation for the appeal. If, after such exclusion, any delay remains, the petitioner may apply for condonation under Section 249(3), and the Appellate Authority shall decide such condonation on merits. The Court reiterated the settled principle that the alternate remedy rule is a discretionary, self-imposed restraint of the writ jurisdiction and must be applied with greater rigour in fiscal matters, citing the need to exhaust statutory remedies before resorting to Article 226. [Paras 12, 13, 14, 15, 16]

Writ disposed of while leaving the petitioner free to prefer an appeal under Section 246A; time spent in the writ petition excluded for limitation and any residual delay may be condoned under Section 249(3) by the Appellate Authority.

Final Conclusion: Writ petition disposed of: the challenge to denial of deductions under Section 80P does not survive in view of Division Bench precedents; remaining issues are left to be agitated before the Commissioner (Appeals) under Section 246A, with the period of the writ proceedings excluded for limitation and any residual delay to be considered under Section 249(3).

Penalty under Section 271AAB - show-cause notice under Section 274 - correction / corrigendum of statutory reference - curable defect under Section 292B - formation of satisfaction for penalty post-assessment - approval of penalty order by superior authority - mistaken reference to an obliterated provision

Show-cause notice under Section 274 - correction / corrigendum of statutory reference - mistaken reference to an obliterated provision - curable defect under Section 292B - Whether the initial show-cause notice titled under the erstwhile section and the subsequent corrigendum/fresh notice sufficed for valid initiation of penalty proceedings under Section 271AAB. - HELD THAT: - The Court accepted the Tribunal's conclusion that the Assessing Officer's initial reference to the obsolete provision was a bona fide, technical error which was corrected by issuance of a corrigendum and a subsequent notice under the correct provision before final penalty. The circumstances invoking the penalty for both provisions were found to be broadly identical and the quantification difference did not affect the jurisdictional substrate for initiating proceedings. Consequently the mistake in citing the wrong provision did not vitiate the proceedings and was capable of being cured under the statutory mechanism for technical defects. The assessee had notice, participated in proceedings and answered the show-cause material; no prejudice to the substratum of jurisdiction was shown. [Paras 11, 12, 13, 16, 19]

The corrigendum / subsequent notice cured the defective reference and the penalty proceedings under Section 271AAB were not invalidated.

Formation of satisfaction for penalty post-assessment - penalty under Section 271AAB - Whether the Assessing Officer could form or modify the requisite 'satisfaction' for initiating penalty under Section 271AAB after completion of assessment. - HELD THAT: - Relying on the distinction between ordinary penal provisions and the special search-related provisions, the Court accepted the Tribunal's reasoning that there is no statutory bar preventing formation or modification of the satisfaction for applicability of Sections 271AAA/271AAB after assessment. Section 271(1B)'s requirement (pertaining to section 271(1)(c) type penalties) was held not to fetter the timing of satisfaction in respect of the special search-related penalty provisions. Hence forming or revising satisfaction post-assessment for invoking Section 271AAB was held permissible, and there was no denial of natural justice where a proper show-cause was issued and opportunity to be heard was afforded. [Paras 13, 14, 19]

Formation or modification of the satisfaction for invoking Section 271AAB post-assessment is permissible and does not vitiate the penalty proceedings.

Approval of penalty order by superior authority - penalty under Section 271AAB - Whether the penalty order was rendered infirm for lack of prior approval by the superior authority or whether such approval was required for issuance of notice or for validity of the penalty order. - HELD THAT: - The Court examined the record and accepted the Revenue's production of draft orders and the approval by the Joint Commissioner. It further held that no statutory requirement was shown that approval of the superior authority was necessary for mere issuance of a notice under Section 271AAB; the penalty order itself, in the present case, was approved by the Joint Commissioner as required under the relevant provision. In view of the approval on record and absence of any legal prohibition, lack of prior approval did not vitiate the proceedings. [Paras 13, 15, 19]

The penalty order was approved by the competent authority and lack of prior approval for issuance of notice did not invalidate the penalty proceedings.

Final Conclusion: The High Court dismissed the Tax Appeal, upholding the Tribunal's decision that the corrigendum and subsequent notice cured the initial erroneous statutory reference, that satisfaction for invoking Section 271AAB could be formed post-assessment, and that the penalty order (approved by the Joint Commissioner) was valid; no interference with the confirmed penalty was warranted.

Recomputation of Long Term Capital Gains - cost of acquisition as fair market value on 1.4.1981 - valuation adopted in Wealth Tax Assessment - distinction between purpose of Wealth Tax and Capital Gains taxation - remand for recomputation

Valuation adopted in Wealth Tax Assessment - cost of acquisition as fair market value on 1.4.1981 - distinction between purpose of Wealth Tax and Capital Gains taxation - Whether the valuation adopted by the assessee in the Wealth Tax Assessment should be taken into account for determining cost of acquisition for computing long term capital gains - HELD THAT: - The Court examined the assessee's attempt to rely on a subsequent notification (2007) classifying the property as heritage and the Revenue's contention that market value as on 01.04.1981 could not be affected by later events. The assessee had earlier accepted before the Assessing Officer that the Wealth Tax Assessment valuation could be considered, but the Assessing Officer did not adopt that valuation. The Tribunal's conclusion that the assessee could not maintain two different values for the same asset under different fiscal statutes was held to be legally sound. In view of that principle and the factual position, the Court held that the reasonable approach was to adopt the valuation in the Wealth Tax Assessment for the purpose of computing capital gains and that the assessee was entitled to relief to that extent. [Paras 6, 7, 8]

Assessee entitled to have the Wealth Tax Assessment valuation taken into account for computing cost of acquisition for long term capital gains.

Recomputation of Long Term Capital Gains - remand for recomputation - Direction to remand the assessment for recomputation of capital gains using specified values - HELD THAT: - Having concluded that the Wealth Tax Assessment valuation should be adopted, the Court directed remand to the Assessing Officer for recomputation of the capital gains. The Court specified the values to be used for recomputation-value of land and value of building-and instructed the Assessing Officer to redo the assessment to that extent. The remand is therefore limited to computation in accordance with the adopted valuation; substantive questions of law were left open. [Paras 9]

Matter remanded to the Assessing Officer to compute capital gain using the Wealth Tax Assessment values (land at Rs. 1,65,600 and building at Rs. 80,000) and to redo the assessment to that extent.

Final Conclusion: Appeal partly allowed; Tribunal's reasoning accepting the principle that the assessee could not use differing valuations was upheld, the Wealth Tax Assessment valuation was directed to be adopted for capital gains purposes, and the assessment is remanded to the Assessing Officer for recomputation using the specified values; substantial questions of law left open.

Dispose of the appeal on merits - recall of ex parte order - substantial justice over technicalities - failure of appellant to appear - restoration of appeal for hearing on merits - appeal under Section 260-A of the Income Tax Act, 1961

Dispose of the appeal on merits - failure of appellant to appear - recall of ex parte order - substantial justice over technicalities - Whether the Tribunal was justified in affirming the orders below without adverting to the grounds urged in the memorandum of appeal and in refusing to recall the ex parte order - HELD THAT: - The Tribunal recorded that the appellant and his authorised representative did not appear on the adjourned hearing dates and proceeded to hear the Revenue. Rule 24 of the Rules framed under Section 255(5) permits disposal on merits where an appellant does not appear, but imposes a duty on the Tribunal to adjudicate the claim on merits and to give reasons. The impugned Tribunal order lacks supporting reasons addressing the grounds urged in the memorandum of appeal and merely states that the CIT(A) was properly adjudicated without indicating why the appellant's grounds were rejected. The appellant filed an application to recall the ex parte order explaining a bona fide mistake in noting the hearing date. The Court held that technical mistakes by an authorised representative should not defeat substantial justice where no prejudice to Revenue is shown and an opportunity to be heard would permit adjudication on merits. Accordingly the Tribunal's ex parte disposal and refusal to set aside that order were held unjustified; the ex parte order and the order rejecting the recall application were set aside and the appeal was restored for hearing on merits. [Paras 6, 7, 8]

Impugned ex parte order and denial of recall were set aside; appeal restored to the Tribunal for fresh hearing on merits and the appellant (or authorised representative) directed to appear on the specified date.

Restoration of appeal for hearing on merits - dispose of the appeal on merits - Whether the question of entitlement to deduction under Section 54B should be adjudicated by this Court or remitted to the Tribunal - HELD THAT: - Since the Court answered the first substantial question of law in favour of the appellant by setting aside the ex parte order and restoring the appeal, it did not examine the merits of the claim under Section 54B. The Court directed that the restored appeal be heard and disposed of on merits by the Tribunal and therefore the question whether the authorities were justified in rejecting the Section 54B deduction was left for adjudication by the Tribunal on rehearing. [Paras 7, 8]

Substantive question as to eligibility for Section 54B deduction was not decided and the matter was remitted to the Tribunal to be heard and determined on merits.

Final Conclusion: Partly allowed: the Tribunal's ex parte order dated 31.03.2017 and the order rejecting the recall application were set aside; the appeal in I.T.A. No.828/BANG/2016 is restored to the Income Tax Appellate Tribunal, Bengaluru for fresh hearing and disposal on merits, and the question of entitlement to deduction under Section 54B is to be decided by the Tribunal on rehearing.

Classification of expenditure as capital or revenue - capital expenditure - revenue expenditure - enduring benefit - upgradation of existing asset

Classification of expenditure as capital or revenue - enduring benefit - upgradation of existing asset - Expenditure incurred on renovation, upgradation and installation works at the stadium whether capital in nature or revenue expenditure. - HELD THAT: - The Tribunal's finding that the expenditure related to renovation and upgradation of the existing stadium facilities (including training and warm up areas, passages, walkways, staircases, media facilities, electronic scoreboard, security and car parking improvements) established that no new asset was created and no separate source of enduring benefit was brought into existence. The works amounted to improving existing facilities to meet event standards rather than creation of a distinct capital asset. On that basis the expenditure was held to be revenue in nature and not capital expenditure.

The expenditure is revenue in nature and not capital expenditure.

Final Conclusion: Revenue's appeal is dismissed; the Tribunal was correct in holding the upgradation and renovation expenditure to be revenue expenditure as it did not create a new asset or a source of enduring benefit.

Arm's length price - transactional net margin method (TNMM) - benefit and necessity test - combined/closely linked transactions and aggregation - recharacterisation of receivables - depreciation on goodwill arising on amalgamation - taxability under India-US DTAA - fees for included services - obligation to deduct tax at source under section 195 - remand for fresh verification of evidences

Arm's length price - transactional net margin method (TNMM) - combined/closely linked transactions and aggregation - Validity of transfer pricing adjustment on payment of corporate charges and appropriate TP method - HELD THAT: - The Tribunal held that TNMM was the most appropriate method for benchmarking the corporate charges which were inter-linked with the assessee's core business. Since the assessee's operating profit margin exceeded that of comparables, the ALP determination by TPO/DRP treating the charges separately and applying a 'benefit/necessity' test was incorrect. The Tribunal relied on OECD guidance and precedents holding that closely linked transactions may be benchmarked on an aggregate/entity level and that once TNMM is satisfied at entity level no separate compensation is warranted for such inter-linked expenses. The addition on account of corporate charges was therefore deleted and the appeal on these grounds was allowed. [Paras 73, 81, 85, 86, 89]

TP adjustment on corporate charges deleted; TNMM accepted as the appropriate method

Arm's length price - remand for fresh verification of evidences - Transfer pricing adjustment on account of reimbursement of expenses - whether addition sustainable without opportunity to verify evidence - HELD THAT: - The Tribunal observed that certain evidences produced by the assessee in support of reimbursement transactions were not from independent third parties and that the TPO made adjustments without offering the assessee an opportunity to produce/clarify evidence. Accordingly, the issue was restored to the TPO for fresh examination: the assessee to furnish related evidences and the TPO to examine and decide afresh in accordance with law. [Paras 79, 80, 91]

Issue remanded to TPO for verification and fresh adjudication

CUP method - arm's length price - Transfer pricing adjustment on interest income from foreign currency loans - correct benchmarking rate - HELD THAT: - Considering the loan agreements which stipulated interest at LIBOR + 1.5% and the subsequent DRP decision in the next assessment year applying the same principle, the Tribunal accepted LIBOR + 1.5% as the appropriate rate for the transactions in US dollars. Given that the assessee had charged interest at LIBOR + 1.5%, the TP adjustment on interest income was deleted. [Paras 13, 16, 19]

TP adjustment on interest on foreign currency loan deleted; LIBOR + 1.5% accepted

Capital versus revenue expenditure - Disallowance of project expenses as capital expenditure - HELD THAT: - The Tribunal examined the nature of expenditures incurred on software projects and noted consistent past appellate findings in favour of the assessee where similar expenses were held to be revenue in nature. In view of the assessee's appraisal and the cited precedents in earlier assessment years, the Tribunal directed deletion of the disallowance and allowed the expenses as revenue in nature. [Paras 20, 21, 23, 24]

Disallowance deleted; project expenses treated as revenue expenditure

Taxability under India-US DTAA - fees for included services - obligation to deduct tax at source under section 195 - Disallowance under section 40(a) for failure to deduct tax on corporate charges paid to Aricent USA - HELD THAT: - Examining the nature of services and Article 12 of the India-US DTAA, the Tribunal held that the payments to Aricent USA did not constitute 'making available' technical knowledge or services that would render them taxable in India as royalties/fees for included services. Since the payments were not taxable in India under the DTAA, no TDS obligation arose under section 195, and the disallowance under section 40(a) was to be deleted. [Paras 28, 30, 31, 32, 33]

Disallowance under section 40(a) deleted; no TDS obligation on payments to Aricent USA under DTAA

Interest u/s. 234B and 234C - Levy of interest under sections 234B and 234C - HELD THAT: - The Tribunal observed that levy of interest under sections 234B and 234C is mandatory and consequential to adjustments in assessment. It directed the Assessing Officer to compute and charge interest as per statutory provisions, with interest under section 234C to be calculated on returned income. [Paras 33, 107]

Assessing Officer to levy interest as per law

Depreciation on goodwill arising on amalgamation - actual cost and written down value on amalgamation - Admissibility of depreciation on goodwill arising from court sanctioned amalgamation and admission of additional ground - HELD THAT: - The Tribunal admitted the additional ground invoking settled Supreme Court precedent permitting the Tribunal to consider a question of law arising on facts on record. On merits, having examined the scheme of amalgamation sanctioned by the High Court and the valuation/consideration shown as goodwill in the assessee's books, the Tribunal held that the excess consideration over net asset value constituted goodwill and was eligible for depreciation. The Tribunal rejected the Revenue's contention that the written down value rules or Explanation 7/2 to section 43 would render the cost nil in the hands of amalgamated company, noting the scheme and High Court sanction created the goodwill entry. Depreciation on goodwill was directed to be allowed at the applicable rates. [Paras 53, 56, 58, 63, 64]

Additional ground admitted; depreciation on goodwill arising on amalgamation allowed

Credit for prepaid taxes, TDS and MAT credit - Computation and grant of credits in A.Y. 2009-10 - HELD THAT: - The Tribunal directed the Assessing Officer to compute the correct tax liability for A.Y. 2009-10 and to adjust and give all credits of prepaid taxes including TDS and MAT credit as per law. [Paras 66, 67]

Assessing Officer to compute tax and grant all eligible tax credits

Recharacterisation of receivables - Explanation (1)(c) to section 92B - TPO's recharacterisation of overdue receivables as unsecured loans and imputation of notional interest - HELD THAT: - The Tribunal held that not every overdue receivable can be recharacterised as a loan giving rise to interest; each case requires a fact specific inquiry. Where the assessee did not charge interest on overdue receipts from unrelated parties and similar delays occurred across parties, recharacterisation as interest bearing loans was inappropriate. The Tribunal relied on Supreme Court and High Court authorities and directed deletion of the notional interest adjustment under Explanation (1)(c) to section 92B. [Paras 102, 103, 104, 105, 106]

Recharacterisation and notional interest deleted; TP adjustment on receivables removed

Final Conclusion: The Tribunal allowed substantial parts of the assessee's appeals: it accepted TNMM for benchmarking corporate charges and deleted related TP additions; accepted LIBOR + 1.5% for interest on foreign loans and deleted interest adjustments; treated project expenses as revenue and deleted their disallowance; held that payments to Aricent USA were not taxable in India under the India-US DTAA and deleted the 40(a) disallowance; admitted and allowed depreciation on goodwill arising on amalgamation; directed grant of tax credits for A.Y. 2009-10; deleted recharacterisation/notional interest on receivables. One issue (reimbursement evidences) was remanded to the TPO for fresh verification and adjudication, and statutory interest under sections 234B/C was directed to be computed and charged by the Assessing Officer as applicable.

Disallowance of interest under section 36(1)(iii) - commercial expediency of advances - notional interest on advances - presumption of application of own interest-free funds - admission of additional evidence under Rule 46A - requirement to confront additional evidence to the Assessing Officer - remand for verification and re-adjudication

Disallowance of interest under section 36(1)(iii) - commercial expediency of advances - notional interest on advances - presumption of application of own interest-free funds - Deletion of the AO's disallowance of interest of Rs. 10,79,275/- under section 36(1)(iii) in respect of interest-free advances to a sister concern. - HELD THAT: - The Tribunal upheld the CIT(A)'s factual finding that the advances to the sister concern were made for commercial expediency - principally for setting up and thereafter for purchase of medicines used in the assessee's business - on the basis of the agreement, ledger accounts and purchase bills placed on record. The Revenue failed to controvert that factual conclusion. The CIT(A) also noted availability of substantial interest-free funds (share capital and reserves) and drew the presumption that advances were made out of such own funds, negating the inference that borrowings bearing interest were diverted for non-business purpose. The Tribunal distinguished the High Court decision relied upon by Revenue on the ground that that ratio applied where the advance was for non-business purpose; where commercial expediency is established, no disallowance under section 36(1)(iii) arises. The Tribunal further accepted the assessee's explanation for earlier years when interest had been charged, finding no contradiction or rebuttal by Revenue. For these reasons the CIT(A)'s deletion of the disallowance was sustained. [Paras 10]

Order deleting the disallowance of interest upheld and Revenue's grounds 1-3 dismissed.

Admission of additional evidence under Rule 46A - requirement to confront additional evidence to the Assessing Officer - remand for verification and re-adjudication - Whether the CIT(A) could admit and decide on additional evidence (ESI/PF returns, signed salary vouchers) without confronting the Assessing Officer as required by Rule 46A. - HELD THAT: - The Tribunal held that the materials filed before the CIT(A) were not merely clarificatory but amounted to additional evidence because the salary register placed before the AO lacked signatures against certain payments and thus was not itself proof of payment. Under Rule 46A such additional evidence, once admitted, must be forwarded to the AO for opportunity to examine and comment. Reliance on the Delhi High Court decision was noted to the effect that CIT(A) must confront admitted additional evidence to the AO. The CIT(A)'s acceptance and adjudication of the additional evidence without affording the AO that opportunity was held to be contrary to Rule 46A. Accordingly the Tribunal remanded the issue to the CIT(A) with directions to confront the additional evidence to the AO, obtain his comments and re-adjudicate in accordance with law. [Paras 16, 17]

Issue restored to the CIT(A) for reconsideration after confronting the additional evidence to the Assessing Officer; grounds 4-6 allowed for statistical purposes.

Final Conclusion: The Tribunal dismissed Revenue's challenge to the deletion of interest disallowance (grounds 1-3) and upheld the CIT(A)'s finding of commercial expediency; however, the Tribunal set aside the CIT(A)'s admission and decision on subsequently filed evidences (grounds 4-6) for non-compliance with Rule 46A and remanded that issue to the CIT(A) for fresh adjudication after obtaining the AO's comments; the appeal is partly allowed for statistical purposes.

Disallowance under section 36(1)(iii) - interest on capital borrowed for acquisition prior to asset being put to business use - rule of consistency - mixed funds presumption - addition under section 68 - onus of proof under section 68 - identity and creditworthiness of lenders - genuineness of transaction - subsequent acceptance in a later assessment year

Disallowance under section 36(1)(iii) - interest on capital borrowed for acquisition prior to asset being put to business use - rule of consistency - mixed funds presumption - Whether interest disallowance under section 36(1)(iii) in respect of funds from an overdraft used to acquire an industrial plot (not put to business use) was sustainable - HELD THAT: - The Tribunal examined the Assessing Officer's disallowance and the CIT(A)'s enhancement and found that earlier and subsequent assessments did not treat the purchase of the same industrial plot as attracting disallowance under section 36(1)(iii). The assessee's bank account was a mixed account and the assessee had own capital and reserves far in excess of the investment in the plot, and the income for the year was substantial. Applying the presumption that where mixed funds exist and own funds are sufficient the investment is to be regarded as made from interest-free funds, and having regard to the consistency of treatment in other assessment years (and the absence of contrary action in subsequent assessments), the Tribunal concluded that no disallowance under section 36(1)(iii) was warranted in the impugned year. The Tribunal relied on the accepted principle that each year is separate but held that the Revenue's departure from its prior approach was not permissible here given the factual matrix and availability of own funds. [Paras 14]

Disallowance under section 36(1)(iii) deleted; grounds 1 and 2 allowed.

Addition under section 68 - onus of proof under section 68 - identity and creditworthiness of lenders - genuineness of transaction - subsequent acceptance in a later assessment year - Whether additions made under section 68 in respect of advances from Mahesh Finsec Pvt. Ltd. and Indian Probuild Pvt. Ltd. were justified - HELD THAT: - For the advance of Rs. 29,50,000 from Indian Probuild Pvt. Ltd., the assessee produced confirmations, bank statements, ITRs and audited financial statements; the assessee also received a further advance of Rs. 1 crore from the same party which the Assessing Officer accepted in the subsequent assessment year without making any section 68 addition, and the larger amount was repaid over time. Given these facts and the documents filed, the Tribunal held the assessee discharged the onus under section 68 and directed deletion of the addition of Rs. 29,50,000. As to Mahesh Finsec Pvt. Ltd. (Rs. 5 lakhs), the assessee produced ITRs, audited financials, bank statements and confirmation and the lender's balance sheet showed substantial capital and free reserves; the Tribunal held the assessee had discharged the onus in respect of identity, creditworthiness and genuineness and directed deletion of that addition as well. [Paras 26, 27]

Additions under section 68 in respect of both advances deleted; grounds 4 and 5 allowed.

Final Conclusion: Appeal partly allowed: the Tribunal deleted the disallowance made under section 36(1)(iii) in respect of the industrial plot and set aside the additions made under section 68 in respect of advances from Indian Probuild Pvt. Ltd. and Mahesh Finsec Pvt. Ltd., directing the Assessing Officer to delete those additions.

Extension of detention under the proviso to Section 110(2) of the Customs Act - requirement of notice / opportunity to be heard before extension of time - recording of reasons in writing as condition for extension - provisional release under Section 110A affecting applicability of six month limit - interaction between Section 110(2) and Section 124 (show cause notice)

Extension of detention under the proviso to Section 110(2) of the Customs Act - requirement of notice / opportunity to be heard before extension of time - recording of reasons in writing as condition for extension - provisional release under Section 110A affecting applicability of six month limit - Validity of CESTAT's direction to release seized goods on ground that no notice preceded the Commissioner's extension of the six month detention period under the amended proviso to Section 110(2). - HELD THAT: - The court analysed the pre amendment and post amendment text of the proviso to Section 110(2) and the effect of subsequent legislative changes (including insertion of Section 110A). Under the pre amended provision the power to extend was conditioned on "sufficient cause being shown", a formulation the Supreme Court in I.J. Rao treated as requiring the Collector to apply his mind and ordinarily to issue notice of the proposal to extend before expiry of the six months (subject to post decisional hearing where service was evaded). The Finance Act, 2018 substituted the phrase "on sufficient cause being shown" with a requirement that the Principal Commissioner/Commissioner "for reasons to be recorded in writing, extend such period ... and inform the person from whom such goods were seized before the expiry of the period so specified". The court held this change to be deliberate and significant: Parliament, aware of the earlier jurisprudence, altered the statutory test to require (i) recording of reasons in writing and (ii) informing the affected person before the expiry of the specified period. Those two conditions constitute the pre requisites for valid exercise of the extension power under the amended proviso. The availability of provisional release under Section 110A and the prospective character of the amendment were also noted as bearing on the changed regime. Accordingly, the court concluded that the amendment removed the requirement that a show cause notice (or pre extension personal hearing) must be issued before an order extending the detention period is made, provided the authority records reasons in writing and informs the person concerned within the time prescribed by the proviso. [Paras 16, 17, 18, 19, 20]

CESTAT's order directing release of the seized goods for want of a pre extension show cause notice was unsustainable; the amended proviso to Section 110(2) does not require issuance of a show cause notice before extension so long as reasons are recorded in writing and the person is informed before expiry of the specified period; impugned order set aside and appeals allowed.

Final Conclusion: The appeals are allowed: the High Court held that the 2018 amendment to the proviso to Section 110(2) substituted the prior "sufficient cause" test with a requirement that the Commissioner record reasons in writing and inform the person from whom goods were seized before the expiry of the period; consequently a pre extension show cause notice or hearing is not mandated by the amended proviso, and the CESTAT order directing release for failure to issue such notice was set aside.

Maintainability of writ petition where statutory remedy exists - jurisdictional bar against parallel proceedings - relegation to statutory appellate forum

Maintainability of writ petition where statutory remedy exists - jurisdictional bar against parallel proceedings - Appropriate forum for adjudication where the impugned show cause notice has been adjudicated and a statutory appeal has been filed. - HELD THAT: - The Court observed that the impugned show cause notice had already been adjudicated by the Commissioner of Customs by order dated 11.3.2019 and that the petitioners had availed the statutory appellate remedy by filing an appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh in June 2019. In these circumstances the Court held that two parallel proceedings - continuation of the present writ petition and prosecution of the statutory appeal - cannot be permitted. The petitioners did not dispute the existence of the statutory appeal. Having regard to the availability of the alternative statutory remedy and the adjudication already completed, the Court declined to adjudicate the prayers in the writ petition and directed the petitioners to pursue the remedy of appeal already filed before the CESTAT, thereby relegating them to the appellate forum.

Writ petition not entertained; petitioners relegated to pursue the statutory appeal before the CESTAT and the writ petition disposed accordingly.

Final Conclusion: The writ petition was disposed of on the ground that the matter has been adjudicated and a statutory appeal is pending; the petitioners were directed to pursue their remedy before the CESTAT, and the Court did not decide the substantive challenge to the legislation or the show cause notice.

Writ jurisdiction - Statutory appeal - Doctrine of availability of alternative remedy - Parallel proceedings - Maintainability of writ petition where appeal lies

Writ jurisdiction - Statutory appeal - Parallel proceedings - Doctrine of availability of alternative remedy - Maintainability of the writ petition in view of an adjudication and statutory appeal already filed before the CESTAT - HELD THAT: - The Court noted that the impugned show cause notice had been adjudicated by the Commissioner of Customs by order dated 11.3.2019 and that the petitioners had availed the statutory remedy of appeal before the CESTAT, Chandigarh in June 2019. In these circumstances the Court held that two parallel proceedings could not be permitted to continue and that the availability and institution of the statutory appeal disentitled the petitioners to seek relief by way of writ in this forum. Consequently the writ petition was disposed of by relegating the petitioners to pursue their remedy before the CESTAT.

Writ petition disposed; petitioners relegated to prosecute the appeal pending before the CESTAT, Chandigarh.

Constitutional challenge to statutory provision - Maintainability of challenge in writ jurisdiction where alternative remedy exists - Challenge to Section 28(11) of the Customs Act (as inserted by the Customs (Amendment and Validation) Act, 2011) and the contention of violation of Article 14 not adjudicated on merits - HELD THAT: - Petitioners sought to quash the show cause notice and to strike down the amendment inserting sub-section (11) to Section 28 of the Customs Act as violative of Article 14. The Court did not undertake any adjudication on the merits of the constitutional challenge. Instead, having found that the statutory appeal had been filed and was pending before the CESTAT, the Court declined to entertain the writ petition and did not decide the substantive constitutional issues, leaving those contentions to be raised and considered in the appeal proceedings.

Constitutional challenge and contention regarding Section 28(11) not decided; left open for consideration in the pending statutory appeal.

Final Conclusion: The writ petition was disposed of on the ground that the subject matter has been adjudicated and a statutory appeal is pending before the CESTAT; petitioners were relegated to pursue the remedy of appeal, and the substantive challenge to Section 28(11) of the Customs Act and the Article 14 plea were not decided by the Court.

Competence of issuing authority to initiate show-cause notice - equivalence of rank and powers of Directorate officers with Commissioners - appellability and availability of alternative statutory remedy - judicial review limited where effective alternative remedy exists - compliance with principles of natural justice in adjudication

Competence of issuing authority to initiate show-cause notice - equivalence of rank and powers of Directorate officers with Commissioners - The show-cause notices were issued by a competent authority and the officer issuing and adjudicating the matters possessed requisite powers. - HELD THAT: - The Court examined the two show-cause notices issued by the Additional Director General, DGCEI, and the notifications which declare the comparative status and powers of DGCEI officers vis-a -vis Central Excise and Customs officers. The notification enumerating officers and ranks was relied upon to establish that an Additional Director General is equivalent in status to an Additional Commissioner/Commissioner for purposes of exercising powers under the Customs and Central Excise regime. On that basis the Court held that the show-cause notices and the subsequent adjudication were issued and passed by authorities competent to do so. The Court expressly declined to go into the merits of the claims raised in the notices, restricting its conclusion to competence of the issuing and adjudicating authorities. [Paras 23, 24, 25, 26]

Show-cause notices and the impugned adjudication were issued/passed by authorities competent under the statutory scheme.

Compliance with principles of natural justice in adjudication - The adjudication complied with the requirements of natural justice and fair play. - HELD THAT: - The Court reviewed the procedural history and the record showing that the petitioner was served with the show-cause notices, was granted opportunity of hearing, and that a detailed and exhaustive order was passed by the competent authority. The Court found no material to conclude that principles of natural justice were violated, noting that the petitioner had opportunities provided by the authorities and that the adjudicating officer considered the facts on record before passing the order. [Paras 9, 21, 22, 38]

The impugned adjudication was passed after affording opportunity and observing principles of natural justice.

Appellability and availability of alternative statutory remedy - judicial review limited where effective alternative remedy exists - Writ jurisdiction was declined because an effective alternative remedy by way of appeal was available and the petition was premature; consequently the writ petition was dismissed. - HELD THAT: - Relying on the statutory scheme (appeal to Commissioner (Appeals) under the Customs Act) and precedent recognizing that High Court ordinarily should not entertain challenges to show-cause notices or appealable orders where an efficacious alternative remedy exists, the Court held that the petitioner had an adequate statutory remedy. The Court referred to earlier decisions and similar writ petitions where appeal was held to be the proper remedy, and observed that the present case involved recovery proceedings pending since 2004 which the petitioner could contest by appeal. The Court therefore declined to entertain the petition and dismissed it without adjudicating the substantive claims on merits. [Paras 31, 32, 35, 41, 42]

Writ petition dismissed as the petitioner has an effective alternative remedy of appeal; interference by High Court not warranted.

Effect of transfer of adjudicating officer on validity of order - The adjudication could not be impeached as mala fide merely because the officer was transferred shortly after passing the order. - HELD THAT: - The petitioner contended the officer who passed the impugned order had been transferred and relieved one day after the order, asserting malafide. The Court observed that the officer was still posted as Additional Commissioner at Indore when the order was passed and that transfer or subsequent relief from post does not, by itself, render the order mala fide. Absent specific evidence of malafide or procedural infirmity, the mere fact of transfer did not invalidate the adjudication. [Paras 10, 22]

Transfer/relief of the adjudicating officer shortly after passing the order does not, without more, vitiate the order as mala fide.

Final Conclusion: The High Court held that the show-cause notices and the impugned adjudication were issued and passed by authorities competent under the statutory scheme, that procedural fairness was observed, and that an effective alternative remedy by appeal was available; accordingly the writ petition was dismissed.

Quashing of order - penalty imposed - disposal in terms of earlier order - direction to appear before the Settlement Commission

Disposal in terms of earlier order - Writ petition disposed of by adopting the reasoning and directions contained in an earlier order passed in CWP-19567-2017 (M/s Gupta G & Company Vs. Union of India and Others). - HELD THAT: - Counsel for the parties agreed that the present writ petition should be disposed of in view of the earlier order dated 8.7.2019 passed in CWP-19567-2017. Relying on that agreed stand, the Court disposed of the petition by applying the same terms and directions as recorded in the said earlier order.

Petition disposed of in terms of the order dated 8.7.2019 passed in CWP-19567-2017.

Direction to appear before the Settlement Commission - Petitioners directed to appear before the Customs, Central Excise and Service Tax Settlement Commission on a specified date. - HELD THAT: - As part of the disposal in terms of the earlier order, the Court directed the petitioners to appear before the Settlement Commission. The direction fixes the date for appearance and implements the procedural step required under the terms adopted from the earlier order.

Petitioners to appear before the Settlement Commission on 7.8.2019.

Final Conclusion: The writ petition is disposed of by adopting the terms of the earlier order dated 8.7.2019 in CWP-19567-2017; petitioners are directed to appear before the Settlement Commission on 7.8.2019.

Oppression and mismanagement under the Companies Act - Rectification of register of members and share transfer reliefs - Limitation - continuing cause of action and accrual of right to apply - Forfeiture of right to file defence and consequences of non compliance with settlement - Unrebutted admissions and evidentiary effect of failure to file a reply - Effect of refund of consideration on validity of share transfer

Oppression and mismanagement under the Companies Act - Unrebutted admissions and evidentiary effect of failure to file a reply - Tribunal's finding that the respondents conducted the company's affairs in a manner oppressive to and mismanaging of the petitioner and issuance of consequential directions - HELD THAT: - The Tribunal's finding that the respondents received consideration for 25,500 shares, represented approval of the transfer by the board on 4 February 2013, handed over endorsed share certificates but failed to record the transfer in statutory records, remained unrebutted as respondents did not file a defence. The Appellate Tribunal held that these undisputed facts, together with subsequent filings suppressing the petitioner's majority stake and holding of meetings without notice, justified the conclusion that respondents deprived the petitioner of his legal rights and engaged in acts prejudicial to the petitioner and the company. In view of the foregoing, the directions for rectification of records, effecting transfer, appointment of the petitioner as director and other incidental reliefs were appropriate to safeguard the petitioner's interests. [Paras 4, 11]

Tribunal's findings of oppression and mismanagement and the remedial directions are upheld.

Limitation - continuing cause of action and accrual of right to apply - Limitation - duty of court to consider limitation sua sponte - Whether the Company Petition was barred by limitation - HELD THAT: - The Appellate Tribunal recognised that limitation is a mixed question of law and fact and that Section 3 of the Limitation Act requires the court to consider limitation even if not pleaded. Applying Article 137 (three years) to proceedings under Sections 241-242, the court held that successive fraudulent filings and omissions to disclose the petitioner's majority shareholding constituted continuing causes of action. The petitioner's asserted knowledge of the suppression on 2 February 2016 (and from the annual report for FY ending March 2016) rendered the petition, filed on 19 September 2016, within limitation. Alternatively, computing limitation from the AGM of 30 September 2013 would also keep the petition within three years. Given that the allegations were unrebutted, the petition could not be held time barred. [Paras 12, 13]

Company Petition is not barred by limitation.

Effect of refund of consideration on validity of share transfer - Whether refund of the consideration (as later asserted by appellants) invalidates the share transfer or defeats the petitioner's claim - HELD THAT: - The appellants' contention that the consideration was refunded was not raised before the Tribunal and is unsupported by the record. The Appellate Tribunal held that a bald, unsupported assertion raised for the first time on appeal must be rejected. Further, the court observed that even if a refund were shown, refund of consideration after completion of a transfer would not, without more, invalidate the transfer in the circumstances pleaded. Consequently the alleged refund did not by itself negate the transfer or the petitioner's entitlement to relief. [Paras 10]

Assertion of refund is rejected; it does not invalidate the transfer or defeat the petitioner's claim.

Forfeiture of right to file defence and consequences of non compliance with settlement - Unrebutted admissions and evidentiary effect of failure to file a reply - Whether the appellants' forfeiture of the right to file a reply and their conduct under the settlement affected the Tribunal's ability to decide the petition - HELD THAT: - Record shows a mutual settlement and payment undertaking which respondents breached by issuing cheques that bounced and failing to honour extended timelines; as a result the Tribunal forfeited their right to file a reply. The Appellate Tribunal noted that the forfeiture left the petition's allegations unrebutted and admitted by omission. While limitation may be raised notwithstanding forfeiture, the factual matrix including the failed settlement reinforced the findings of oppression and mismanagement. The appellants' procedural default therefore weighed against them and did not vitiate the Tribunal's order. [Paras 10, 14]

Forfeiture of defence stands; respondents' breach of settlement and failure to file reply support upholding the Tribunal's order.

Final Conclusion: The appeal is dismissed: the Tribunal's findings of oppression and mismanagement are upheld, the Company Petition is not barred by limitation, the appellants' belated assertion of refund is rejected, and costs are imposed on the appellants.

Maintainability of an application under Section 9 of the Insolvency and Bankruptcy Code despite a disputed claim - pre-existing dispute under Section 8(2) of the Insolvency and Bankruptcy Code - limitation for filing Section 9 application governed by Article 137 of the Limitation Act, 1963 - definition of "claim" and "default" for triggering the IBC insolvency process - remand to Adjudicating Authority for fresh consideration in light of Innoventive Industries

Pre-existing dispute under Section 8(2) of the Insolvency and Bankruptcy Code - maintainability of an application under Section 9 of the Insolvency and Bankruptcy Code despite a disputed claim - definition of "claim" and "default" for triggering the IBC insolvency process - Existence of a pre existing dispute which would bar admission of the Section 9 application and whether a disputed claim (exceeding the monetary threshold) prevents admission. - HELD THAT: - The Tribunal held that the Respondent did not produce any contemporaneous communication showing a dispute prior to receipt of the Demand Notice dated 24.10.2017; the first time the specific allegations of dispute were raised was in correspondence written in reply to the earlier legal notice. Applying the principle in Innoventive Industries Ltd. v. ICICI Bank that a "claim" under the Code includes disputed claims and that the IBC is triggered when default of the prescribed amount occurs, the Bench concluded that mere disputation after receipt of the statutory notice does not oust maintainability. The Adjudicating Authority's finding of a pre existing dispute was erroneous because there was no evidence of dispute antecedent to the demand notice/invoice receipt that would attract Section 8(2). [Paras 11, 12, 13, 15, 19]

There was no pre existing dispute shown to bar the Section 9 application; a disputed claim above the statutory threshold does not automatically preclude admission under Section 9.

Limitation for filing Section 9 application governed by Article 137 of the Limitation Act, 1963 - maintainability of an application under Section 9 of the Insolvency and Bankruptcy Code despite a disputed claim - Whether the Section 9 application was barred by limitation. - HELD THAT: - The Tribunal applied Article 137 (Part II, Third Division) of the Limitation Act, 1963, which provides a three year period for applications not otherwise provided for, and held that the right to apply accrues when the default occurs. Noting that the Code came into force on 1 December 2016, and having regard to the dates of default and notices issued by the Appellant, the Bench concluded that the petition filed in January 2018 was within the three year limitation period and therefore not time barred. The Adjudicating Authority's contrary conclusion on limitation was set aside. [Paras 16, 17, 18, 19]

The Section 9 application is not barred by limitation under Article 137 and is maintainable.

Remand to Adjudicating Authority for fresh consideration in light of Innoventive Industries - Whether the Adjudicating Authority's order should be set aside and the matter remitted for fresh adjudication. - HELD THAT: - Having found that the Adjudicating Authority erred in concluding existence of a pre existing dispute and in holding the petition barred by limitation, the Tribunal set aside the impugned order and remitted the matter to the Adjudicating Authority. The Adjudicating Authority was directed to reconsider the record and pass an appropriate order after notice and hearing, applying the principles laid down in Innoventive Industries. Meanwhile, the corporate debtor was permitted to negotiate a settlement with the operational creditor. [Paras 19, 20]

Impugned order set aside and the matter remitted to the Adjudicating Authority for fresh consideration in accordance with Innoventive Industries; liberty to parties to settle in the interim.

Final Conclusion: The appeal is allowed: the NCLT order rejecting the Section 9 petition for alleged pre existing dispute and limitation is set aside; the matter is remitted to the Adjudicating Authority to reconsider and decide the Section 9 application in light of Innoventive Industries after notice and hearing. Parties remain free to settle; no costs.

Claim during Corporate Insolvency Resolution Process - filing of individual claims before the Liquidator - jurisdiction of Adjudicating Authority vis-a -vis Liquidator on disputed factual claims - treatment of gratuity and provident fund vis-a -vis assets of the corporate debtor

Claim during Corporate Insolvency Resolution Process - filing of individual claims before the Liquidator - jurisdiction of Adjudicating Authority vis-a -vis Liquidator on disputed factual claims - Claims for unpaid salary for the period during the Corporate Insolvency Resolution Process and earlier period must be filed and determined by the Liquidator; the Appellate Tribunal will not interfere with the Adjudicating Authority's order and disputed facts are to be addressed by the Liquidator. - HELD THAT: - The Tribunal observed that an order of liquidation has been passed and that the factual controversy whether the workmen actually performed duties during the Corporate Insolvency Resolution Process or the earlier period cannot be resolved by the Adjudicating Authority without information from the Resolution Professional or without the claim being decided by the Liquidator. Accordingly, all 272 workmen and employees are permitted to file individual claims before the Liquidator, who is to examine the record and the pleadings and determine each claim. Where a claim is rejected by the Liquidator, the concerned workman/employee remains entitled to approach the Adjudicating Authority for decision in accordance with law. The Tribunal declined to interfere with the impugned order dated 25th April, 2019, while directing this course of action.

Allowed to file individual claims before the Liquidator who shall determine the claims; if rejected, remedy before the Adjudicating Authority remains open; impugned order not interfered with.

Treatment of gratuity and provident fund vis-a -vis assets of the corporate debtor - Gratuity and provident funds are not assets of the corporate debtor and must be disbursed to eligible employees/workmen. - HELD THAT: - The Tribunal held that gratuity and provident funds cannot be treated as assets of the corporate debtor for the purposes of liquidation. These funds are to be disbursed to the employees or workmen who are entitled to them and therefore are to be dealt with separately from the corporate debtor's assets during the liquidation process.

Gratuity and provident funds are not assets of the corporate debtor and shall be disbursed to entitled employees/workmen.

Final Conclusion: Appeal disposed: claimants permitted to file individual claims before the Liquidator for determination; disputed factual claims not decided by the Tribunal but to be addressed by the Liquidator (with recourse to the Adjudicating Authority if claims are rejected); gratuity and provident funds held not to be assets of the corporate debtor and to be disbursed to eligible employees.

Exclusion of period from CIRP under section 60(5) of the Insolvency and Bankruptcy Code, 2016 - revival of mining leases under Rule 20(6) of Minerals (other than Atomic & Hydro Carbons Energy Minerals) Rules, 2016 - role and decision-making power of the Committee of Creditors under section 28 of the Insolvency and Bankruptcy Code, 2016 - judicial discretion to exclude time from CIRP in exceptional circumstances

Exclusion of period from CIRP under section 60(5) of the Insolvency and Bankruptcy Code, 2016 - role and decision-making power of the Committee of Creditors under section 28 of the Insolvency and Bankruptcy Code, 2016 - revival of mining leases under Rule 20(6) of Minerals (other than Atomic & Hydro Carbons Energy Minerals) Rules, 2016 - judicial discretion to exclude time from CIRP in exceptional circumstances - Applicant financial creditor cannot seek exclusion of a period from the CIRP in the absence of a decision by the Committee of Creditors; revival of mining leases and pendency of related applications did not justify exclusion. - HELD THAT: - The application under section 60(5) sought exclusion of specified periods from the 270-day CIRP on grounds that revival of the corporate debtor's mining leases was pending and that proceedings challenging admission of certain financial creditor claims were sub judice. The Tribunal found that the Committee of Creditors had not passed any resolution authorising the applicant to move for exclusion and that section 28 vests decision-making on specified actions with the CoC. The Tribunal observed that the state G.O.s reviving the leases were issued on 08.01.2019 and that the CIRP period had been extended to 270 days; despite the extended period no resolution plan was submitted. Pendency of IA No.551/2018 (challenge to claim admissions) and the delay in revival orders were held insufficient to demonstrate exceptional circumstances justifying judicial exclusion of time at the instance of a single financial creditor. Accordingly, in the absence of CoC approval and any substantive attempt by prospective resolution applicants after the extension, there were no justifiable grounds to exclude the period from CIRP.

Application seeking exclusion of specified periods from the CIRP is dismissed for want of CoC authorisation and for lack of justifiable exceptional circumstances.

Final Conclusion: The interlocutory application under section 60(5) seeking exclusion of specified periods from the CIRP is dismissed; exclusion cannot be granted at the instance of a financial creditor without a CoC decision and the material relied upon did not establish circumstances warranting judicial exclusion.

Closure of CIRP and cessation of moratorium - withdrawal/settlement of petition under Rule 11 of NCLT Rules, 2016 - inherent powers of the Tribunal under Rule 11 - absence/non-constitution of Committee of Creditors - effect of settlement between operational creditor and corporate debtor - application of Swiss Ribbons principle allowing withdrawal before CoC formation

Closure of CIRP and cessation of moratorium - withdrawal/settlement of petition under Rule 11 of NCLT Rules, 2016 - absence/non-constitution of Committee of Creditors - application of Swiss Ribbons principle allowing withdrawal before CoC formation - Whether the Adjudicating Authority may close the CIRP and cease the moratorium where the Operational Creditor and Corporate Debtor have reached a settlement and the Committee of Creditors has not been constituted. - HELD THAT: - The Tribunal applied the authority in Swiss Ribbons to hold that when the Committee of Creditors is not yet constituted, a party may approach the Tribunal for withdrawal or settlement and the Tribunal, exercising inherent powers under Rule 11 of the NCLT Rules, 2016, may permit or decline such an application after hearing parties and considering relevant facts. In the present case the parties submitted that the Operational Creditor's dues have been amicably settled and no CoC meetings have been convened or CoC formed. Considering the consent terms between the parties, the non-formation of the CoC and the guidance in Swiss Ribbons, the Tribunal found it just and appropriate to allow the application under Rule 11 and to close the CIRP and cease the moratorium. [Paras 6, 8]

The CIRP against the Corporate Debtor is closed and the order of moratorium is ceased.

Effect of settlement between operational creditor and corporate debtor - fees of Interim Resolution Professional - application of consent terms - Whether the fees of the Interim Resolution Professional are to be dealt with following the settlement between the parties. - HELD THAT: - The Tribunal recorded that the parties had agreed terms dealing with settlement and expressly directed that the fees of the Interim Resolution Professional shall be paid by the Corporate Debtor in accordance with the terms agreed between the parties. This direction implements the parties' consent and ensures IRP remuneration is addressed as part of closure of the proceedings. [Paras 7]

The fees of the Interim Resolution Professional shall be paid by the Corporate Debtor as per the agreed terms.

Final Conclusion: IA No.333/2019 and CP(IB) No.73/9/HDB/2019 are closed: the Tribunal, exercising its inherent jurisdiction under Rule 11 and applying Swiss Ribbons, permitted withdrawal by consent prior to constitution of the CoC, directed payment of IRP fees as agreed, and ordered cessation of the moratorium.

Invocation of the extended period of limitation - suppression of facts - knowledge of authorities - show cause notice - service tax liability for renting of immovable property

Invocation of the extended period of limitation - suppression of facts - knowledge of authorities - show cause notice - Whether the second show cause notice dated 22/04/2013 invoking the extended period of limitation was legally sustainable where an earlier show cause notice dated 08/10/2010 on the same/similar facts had already been issued and the department was aware of the alleged non-payment. - HELD THAT: - The Tribunal accepted the appellants' submission that the department, having issued an earlier show cause notice dated 08/10/2010 covering the intervening period, was aware of the alleged non-payment of service tax by the appellants. Reliance was placed on Nizam Sugar Factory (and the line of Supreme Court authorities cited therein) which holds that when relevant facts are already in the knowledge of the authorities as a result of an earlier show cause notice, the same or similar facts cannot later be treated as suppression to justify invocation of the extended period of limitation. The impugned second show cause notice covered October 2008 to March 2009 and September 2009 to October 2009; the earlier notice covered April 2009 to August 2009, thereby bringing the relevant facts within departmental knowledge. In these circumstances the extended period could not be invoked and the demand was barred by limitation. The Tribunal therefore decided the appeal on the point of limitation without going into other aspects. [Paras 4]

The second show cause notice invoking the extended period of limitation was not sustainable and the appeal is allowed on the ground of limitation.

Final Conclusion: The appeal is allowed on the question of limitation and the demand raised in the second show cause notice invoking the extended period is set aside with consequential relief, parties to bear their own costs as applicable.

Abatement of taxable service - cenvat credit on input services - reversal of proportionate credit - entitlement to benefit of abatement Notification No. 1/2006 - remand for verification

Abatement of taxable service - cenvat credit on input services - reversal of proportionate credit - entitlement to benefit of abatement Notification No. 1/2006 - remand for verification - Whether the appellants are entitled to the benefit of abatement under Notification No. 1/2006 in respect of Tour Operator Service and Rent a Cab Service where cenvat credit on common input services was availed but subsequently reversed. - HELD THAT: - The Tribunal noted that on identical facts in the appellant's own subsequent cases it had remanded matters to the original authority to verify whether proportionate credit attributable to the services on which abatement was claimed had been reversed, and, if so, to extend the benefit of the abatement. The appellants contend that common input service credits were subsequently reversed by journal voucher and that once reversed it is as if no credit was taken and the abatement cannot be denied. The Tribunal accepted the approach in the earlier decisions and observed that the question requires factual verification by the original authority whether the proportionate credit was in fact reversed; the appellants must be given an opportunity to produce documents and substantiate the reversal. Guided by its prior orders in the appellant's own cases, the Tribunal held that the present appeal should be remanded for such verification rather than decided against the appellants on the papers. [Paras 5, 6]

Appeal allowed by way of remand to the original authority to verify whether the proportionate input service credit attributable to Tour Operator Service and Rent a Cab Service has been reversed, and if found reversed, to extend the benefit of abatement under Notification No. 1/2006 after affording the appellants a reasonable opportunity to produce evidence.

Final Conclusion: The Tribunal allowed the appeal by remanding the matter to the original authority for verification of reversal of proportionate input service credit and directed that, if reversal is established, the benefit of the abatement under Notification No. 1/2006 be extended after giving the appellant an opportunity to produce evidence.

Export of service - Business Auxiliary Service - Export of Service Rules, 2005 - benefit of the service accruing outside India - Category III services - CBEC Circular No.111/05/2009

Export of service - Business Auxiliary Service - Export of Service Rules, 2005 - benefit of the service accruing outside India - CBEC Circular No.111/05/2009 - Whether the Business Auxiliary Service rendered by the assessee, for which consideration was received in convertible foreign exchange, qualified as export of service and thus was not liable to service tax for the period 01/02/2006 to 31/03/2008. - HELD THAT: - The Commissioner found that the assessee, a wholly owned subsidiary of a foreign company, rendered the stated Business Auxiliary Service from India but delivered it to and for the benefit of the foreign parent company, and received consideration in convertible foreign exchange. Applying the Export of Service Rules, 2005 (Category III), and in particular the test that the "benefit of the service should accrue outside India," the Commissioner concluded that such services satisfied the conditions of export of service. The Commissioner expressly relied on CBEC Circular No.111/05/2009 which clarifies that for Category III services the location of the service receiver and accrual of benefit outside India are the relevant factors and that export may be established even if activities occur wholly within India provided the benefit accrues abroad. The Tribunal, upon review, found no infirmity in the Commissioner's reasoning or conclusion and accepted that the impugned demand pertained to services qualifying as export and was therefore correctly dropped. [Paras 6, 48]

The Commissioner's finding that the stated Business Auxiliary Service constituted export of service was upheld and the appeals by the Revenue are dismissed; the demand was rightly dropped.

Final Conclusion: The Tribunal upheld the Commissioner's order dropping the service tax demand on Business Auxiliary Service for the period 01/02/2006 to 31/03/2008, concluding that the services met the Export of Service Rules, 2005 test (benefit accruing outside India) and reliance on CBEC Circular No.111/05/2009 was appropriate.

Summary order. Special Leave Petition dismissed in view of the low tax effect; delay condoned; question of law left open; pending interlocutory application(s), if any, disposed of.

Export of services - benefit of service accruing outside India - nexus between input services and output service - refund of accumulated Cenvat credit under Rule 5 of Cenvat Credit Rules, 2004 - documentary evidence for export (utilisation certificate / declaration / FIRC) - procedural deficiencies in invoices/forms not to defeat substantive refund claims - remand for fresh consideration of evidence and application of precedents

Export of services - benefit of service accruing outside India - documentary evidence for export (utilisation certificate / declaration / FIRC) - Whether the services rendered by the appellant qualify as export of service - HELD THAT: - The Tribunal examined the Development Agreement and ancillary records and found that the appellants designed, developed and delivered software deliverables for Samsung Korea, the recipient being located outside India and remuneration received in foreign exchange. The Tribunal held that the nature of the contract and STPI validation establish that the appellant's activity amounts to export of services and that the benefit of the service accrues outside India. However, since certain declarations (for example the certificate from the overseas recipient) were not placed before the Commissioner (Appeals), the Tribunal directed remand to enable the lower authority to appreciate the evidence now submitted by the appellant. [Paras 6]

The services prima facie qualify as export of services, but the matter is remitted to the Commissioner (Appeals) to appreciate the documentary evidence submitted by the appellant.

Nexus between input services and output service - refund of accumulated Cenvat credit under Rule 5 of Cenvat Credit Rules, 2004 - remand for fresh consideration of evidence and application of precedents - Whether the disputed input services have requisite nexus with the exported output service so as to attract refund of accumulated Cenvat credit - HELD THAT: - The Tribunal reviewed the appellants' submissions and relevant precedents relied upon by the parties, noting decisions in which various input services (renting of immovable property, cafeteria and car parking, business support services, cleaning/pest control, clearing and forwarding, rent-a-cab, among others) were held to be eligible input services. The Bench observed that nexus for each input service must be examined in the light of Tribunal and High Court rulings and CBEC circulars, and that some disputes require factual appreciation and application of those ratios. The appellants conceded that Event Management Services lacked nexus. Because the determination of nexus involves application of precedent to the evidence in each claim, the Tribunal remanded the issue to the original authority for fresh consideration. [Paras 7]

The question of nexus is not finally adjudicated by this Bench and is remitted to the original authority for re-examination in accordance with the law and relevant precedents; Event Management Services are conceded by the appellant as non-nexus.

Procedural deficiencies in invoices/forms not to defeat substantive refund claims - documentary evidence for export (utilisation certificate / declaration / FIRC) - Whether minor procedural discrepancies in invoices, forms or differences in figures will bar grant of refund - HELD THAT: - The Tribunal held that where the refund claim is otherwise in order and eligibility of the service is not in dispute, minor discrepancies in format of invoices, omission of registration numbers or differences between forms and auditor certificates should not defeat the substantive claim for refund. The Tribunal noted that where necessary the lower authority may verify original documents, but minor procedural lapses alone cannot justify denial of refund. [Paras 8]

Minor procedural defects shall not be a bar to refund where eligibility is established; verification of originals may be undertaken by the authority if required.

Remand for fresh consideration of evidence and application of precedents - refund of accumulated Cenvat credit under Rule 5 of Cenvat Credit Rules, 2004 - Disposition of the impugned orders and the appropriate remedy - HELD THAT: - Having found that the appellants' services prima facie qualify as export and that nexus and certain documentary aspects require re-examination in the light of precedents and board circulars, the Tribunal set aside the impugned orders and remitted all appeals to the original authority. The Tribunal directed the appellants to furnish requisite information within four weeks and directed the original authority to examine all evidence and decide the refund claims as far as practicable within four weeks of such submission. [Paras 9]

Impugned orders set aside and matters remitted to the original authority with specified timelines for submission and disposal.

Final Conclusion: The Tribunal set aside the impugned orders in the appeals, held that the appellants' services prima facie qualify as export and that the question of nexus and certain documentary issues require fresh application of law and facts; all matters are remanded to the original authority for re-examination and decision within the timelines directed by the Tribunal.

Proceedings against deceased assessee - voidness of adjudication issued to deceased person - absence of machinery provisions for recovery post-death - recovery of tax dues against legal heirs under Section 87(c) of the Finance Act

Proceedings against deceased assessee - voidness of adjudication issued to deceased person - Show cause notice issued in the name of a deceased proprietor and the consequent adjudication are void and have no legal sanctity. - HELD THAT: - The Tribunal applied the principle that proceedings initiated in the name of a deceased person are impermissible and, in the absence of statutory machinery to continue adjudication against a dead person, such proceedings are ab initio void. The Tribunal relied upon the controlling authority cited by the appellant to the effect that assessment or other adjudicatory proceedings cannot be continued in the name of a deceased proprietor. On the facts, the show cause notices and the orders confirming demand against late Shri Jata Shankar Singh were therefore without legal validity and could not be sustained. [Paras 11]

Appeals allowed; impugned adjudication orders in the name of the deceased proprietor set aside.

Recovery of tax dues against legal heirs under Section 87(c) of the Finance Act - absence of machinery provisions for recovery post-death - Section 87(c) of the Finance Act is not attracted to sustain the recovery and adjudication made in the name of the deceased proprietor in the facts of this case. - HELD THAT: - The Tribunal examined the contention that Section 87(c) permits recovery from legal heirs and observed that, on the facts of this case, there is no statutory machinery to continue or complete adjudication against a deceased person. The Tribunal found that Section 87(c) could not be invoked to validate proceedings and demands purportedly adjudicated in the name of the deceased proprietor and accordingly held that the provision is not applicable to sustain the impugned orders. [Paras 11]

Section 87(c) not applicable to uphold the demands and adjudications made in the name of the deceased proprietor; impugned orders set aside on this ground.

Proceedings against deceased assessee - Revenue is granted liberty to initiate fresh proceedings against the legal heir in respect of services provided by him, if any tax liability has escaped assessment. - HELD THAT: - While setting aside the adjudications made in the name of the deceased proprietor, the Tribunal expressly left open the Revenue's right to proceed against Sanjay Singh in his own capacity for services actually provided by him and not assessed, subject to law. This is a direction permitting fresh proceedings rather than an affirmation of the prior adjudications. [Paras 12]

Liberty granted to Revenue to proceed against Sanjay Singh for any escaped liability in accordance with law.

Final Conclusion: The appeals are allowed; adjudication and demands made in the name of the deceased proprietor are void and set aside. Section 87(c) cannot be invoked to validate those proceedings. Revenue retains the statutory right to initiate fresh proceedings against the legal heir in his own capacity for any services rendered by him that may have escaped tax.

Refund of service tax - limitation period for refund - interpretation of Section 104(3) of the Finance Act - application for refund where intermediary/service provider collected tax - exclusion of time taken by third party for computing limitation - mandatory nature of statutory limitation

Refund of service tax - limitation period for refund - interpretation of Section 104(3) of the Finance Act - application for refund where intermediary/service provider collected tax - exclusion of time taken by third party for computing limitation - Whether the refund claim filed on 16.11.2017 was time barred under Section 104(3) and whether the period consumed in obtaining documents and information from SIPCOT should be excluded in computing the six month limitation. - HELD THAT: - Section 104(3) prescribes that an application for refund shall be made within six months from the date on which the Finance Bill, 2017 received the President's assent (31.03.2017), which prima facie fixed the last date for filing as 30.09.2017. The appellants, however, had paid development charges to SIPCOT (the service provider) who collected and deposited the tax; the appellants could file a refund application only after obtaining from SIPCOT confirmation that the tax was deposited and documentary proof (duty paid challans) and a certificate that SIPCOT had not itself claimed refund. The section does not specify who must make the refund application, and where the service provider has collected the tax, the recipient may be prevented from meeting the statutory time limit by delay beyond its control in securing requisite documents. The Tribunal accepted the reasoning of the Bombay High Court in M/s. JSW Dharmatar Port Pvt. Ltd., that time consumed by a third party (here, SIPCOT) in providing statutorily required documentation can be ignored for computing limitation because no person can be expected to perform a task beyond his control. While statutory limitation is generally mandatory, where compliance within the prescribed period is rendered impracticable by the need to obtain essential documents from the collector/intermediary, the period consumed in obtaining such documents is to be excluded for computing the six month period. Applying that principle, the delay caused by SIPCOT in informing the appellants and providing documents justified excluding that interval and rendered the refund application of 16.11.2017 not liable to be rejected as time barred.

The rejection of the refund claim as time barred was set aside and the appeal allowed; the time taken by SIPCOT in providing necessary information and documents was excluded for computing the limitation.

Final Conclusion: The Tribunal held that the refund claim filed on 16.11.2017 could not be summarily rejected as time barred under Section 104(3) because the appellants were prevented from filing within six months by delay on the part of the service provider (SIPCOT) in furnishing essential documents; the impugned order rejecting the refund is set aside and the appeal is allowed with consequential reliefs.

Extended period of limitation under proviso to Section 73(1) read with Rule 14 of the Cenvat Credit Rules - disallowance of cenvat credit for defective or improper documents - requirement of suppression/falsification or contumacious conduct to invoke extended limitation - effect of audit objections and departmental reminders on limitation

Extended period of limitation under proviso to Section 73(1) read with Rule 14 of the Cenvat Credit Rules - requirement of suppression/falsification or contumacious conduct to invoke extended limitation - effect of audit objections and departmental reminders on limitation - Validity of the show cause notice dated 02.05.2013 invoking the extended period of limitation to disallow cenvat credit taken in financial year 2009-2010 - HELD THAT: - The Tribunal found that although audit objections were raised and three reminders were issued, the Revenue did not issue the show cause notice within the normal period of limitation (18 months) and offered no explanation for the delay. The appellant had maintained proper documents and filed ST-3 returns regularly; there was no finding of falsification of records, suppression or contumacious conduct by the appellant. In these circumstances the factual precondition for invoking the extended period-namely conduct amounting to suppression/falsification or sufficient culpability-was not established. Consequently the proviso to Section 73(1) read with Rule 14, permitting issuance of notice beyond the normal period, was not available to the Revenue and the showcause notice issued after about 24 months was held invalid. [Paras 7]

Show cause notice issued after the expiry of the normal limitation period could not be sustained as extended limitation was not attracted; impugned order set aside and appeal allowed with consequential benefit to the appellant.

Final Conclusion: The appeal is allowed: the Tribunal held that in absence of suppression, falsification or contumacious conduct and without any explanation for delay by the Revenue, the extended period of limitation could not be invoked and the showcause notice dated 02.05.2013 is invalid; the impugned order is set aside and the appellant is entitled to consequential relief.

Claim for refund of service tax - procedure for refund applications - modification of court order - direction to tax authorities to consider refund

Claim for refund of service tax - procedure for refund applications - direction to tax authorities to consider refund - Petitioner-contractor to file a fresh application for refund of service tax collected from him and deposited by the Housing Board; authorities to consider and release admissible refund within a stipulated time. - HELD THAT: - Respondent No.4 (Union of India) sought modification of the Court's earlier order on the ground that, as per the procedure followed in previous cases, the contractor (and not the Housing Board) is required to make the application for refund of service tax deposited. The Court accepted that an inadvertent error had occurred in the earlier order and modified it accordingly. The modification directs the petitioner-contractor to submit a fresh application claiming refund within three weeks, and mandates that the concerned tax authorities shall consider that application within one month and release any admissible refund in accordance with law. The Court's direction is procedural and confined to correcting the party required to invoke the refund remedy and imposing a timetable for adjudication and disbursement by the authorities.

Order dated 7.3.2019 modified so that the petitioner-contractor shall file the refund application within three weeks and the authorities shall decide and release any admissible refund within one month.

Final Conclusion: Application for modification allowed; earlier order corrected to require the petitioner-contractor to file the refund claim within three weeks and for the tax authorities to consider and release the admissible refund within one month in accordance with law.

Revival of adjudication proceedings after long unexplained delay - violation of principles of natural justice by keeping show cause notice in cold storage - validity of CBEC circular and concept of call book as justification for delay - availability of alternative statutory remedy and maintainability of writ under Article 226 - requirement to decide adjudicatory proceedings within a reasonable time / legislative time-frame

Revival of adjudication proceedings after long unexplained delay - violation of principles of natural justice by keeping show cause notice in cold storage - requirement to decide adjudicatory proceedings within a reasonable time / legislative time-frame - Revival of the show cause proceedings after about thirteen years without satisfactory explanation vitiates the adjudication and amounts to breach of principles of natural justice. - HELD THAT: - The Court held that prolonged unexplained dormancy of a show cause notice and its subsequent revival causes grave prejudice to the assessee and vitiates proceedings. The legislative intent embodied in the statutory time-frame for determining duty (as reflected in the amendments to section 11A and subsection (11)) indicates that, as far as possible, adjudication should be completed within prescribed periods; keeping a matter in cold storage for years is not a permissible extension of that duty. In the present case the explanation for the long delay was not convincing and the appellate order failed to address the prejudice and absence of reasons for revival; consequently the adjudication and appellate confirmation were quashed. [Paras 13, 14, 15]

Impugned adjudication and the appellate confirmation founded on revival after about thirteen years without adequate explanation are unlawful and set aside.

Validity of CBEC circular and concept of call book as justification for delay - power of CBEC to issue instructions under section 37B and rule 31 - The circular creating the practice of consigning matters to a 'call book' cannot lawfully justify indefinite delay in adjudication and is not a permissible exercise of powers under section 37B or as incidental instructions under rule 31. - HELD THAT: - The Court analysed the scope of section 37B and rule 31 and concluded that neither provision authorises the Board to direct transfer of adjudicatory matters to a call book so as to keep them in cold storage awaiting other decisions. The call book practice does not relate to uniformity in classification or levy of duties nor to incidental or supplemental matters consistent with the Act; therefore relying on the circular to justify prolonged non-adjudication is contrary to the statutory mandate and cannot validate revival after long delay. [Paras 21, 22, 23, 24]

The call book circular cannot be treated as a lawful justification for indefinite delay; the respondents' reliance on it is not a plausible explanation for non-adjudication.

Availability of alternative statutory remedy and maintainability of writ under Article 226 - Writ jurisdiction under Article 226 is maintainable despite the availability of an alternative statutory remedy where the challenge is that the authority acted without jurisdiction by reviving long-dormant proceedings and breached principles of natural justice. - HELD THAT: - Relying on precedent and reasoning in this Court's earlier decision, the Court observed that where the complaint is that the authority has acted beyond a reasonable period and in violation of natural justice or has exercised jurisdiction in excess, the High Court may entertain writ relief notwithstanding alternative statutory routes. The present petition was founded on such jurisdictional and fundamental fairness grounds, thus justifying invocation of Article 226. [Paras 13]

The writ petition was maintainable and properly entertained on grounds of jurisdictional excess and breach of natural justice.

Final Conclusion: Writ allowed. The order of the Commissioner (Appeals) dated 29/10/2018 confirming the adjudication order dated 27/12/2017 was quashed and set aside on the ground that revival of the long dormant proceedings after about thirteen years, without adequate explanation and thereby causing prejudice, violated principles of natural justice; the respondents' reliance on the call book circular was held impermissible and the High Court's writ jurisdiction to grant relief was upheld.

Availing of CENVAT credit on input services - Eligibility of credit where invoices are addressed to head office - Receipt and utilisation of input services at specific manufacturing unit - Proof of place of service by purchase orders and matching invoice description

Availing of CENVAT credit on input services - Eligibility of credit where invoices are addressed to head office - Receipt and utilisation of input services at specific manufacturing unit - Proof of place of service by purchase orders and matching invoice description - Whether CENVAT credit on input services is admissible when invoices were addressed to the assessee's head office but the services were rendered to and utilised at the Nasik manufacturing unit. - HELD THAT: - The Tribunal found as a matter of fact that the appellants had issued purchase orders instructing the service provider to render the services at the Nasik factory and to raise bills in favour of the Nasik unit, and that the description of services in those purchase orders matched the services shown in the invoices addressed to the head office. On that basis the Tribunal concluded that the services were received at and utilised by the Nasik unit in the manufacture of excisable goods. Mere addressing of invoices to the head office, where contrary documentary instructions and matching descriptions establish receipt and use at the manufacturing unit, does not disentitle the assessee from availing CENVAT credit on those input services. [Paras 6, 7, 8]

Impugned order set aside and credit allowed as the services were established to have been received and utilised at the Nasik unit despite invoices being addressed to the head office.

Final Conclusion: Appeal allowed; CENVAT credit amounting to the claimed sum for the period 2013-2014 granted because purchase orders and matching invoice descriptions established receipt and utilisation of input services at the Nasik manufacturing unit notwithstanding invoices addressed to the head office.

Recredit of CENVAT credit under CENVAT Credit Rules, 2004 - entitlement to recredit after double payment of duty - validity of challan as document for taking CENVAT credit under Rule 9 - payment of duty in cash at department's direction and consequential recredit

Recredit of CENVAT credit under CENVAT Credit Rules, 2004 - entitlement to recredit after double payment of duty - payment of duty in cash at department's direction and consequential recredit - validity of challan as document for taking CENVAT credit under Rule 9 - Appellant entitled to take recredit of CENVAT credit after having paid duty in cash (following departmental direction) despite earlier having utilized CENVAT credit. - HELD THAT: - The Tribunal found on the materials that the appellant had initially cleared goods in the disputed period by utilising CENVAT credit and that the Department thereafter directed reversal by payment in cash. The appellant paid the duty and interest in cash on the directions of the Superintendent and subsequently took recredit of the amount in its CENVAT account. The authorities were incorrect in treating the recredit as impermissible on the basis that it was taken on the footing of a challan which alone is not a valid document under Rule 9; the factual sequence establishes that duty was in fact paid twice (once by availing CENVAT credit and again in cash) and the law permits recredit in such circumstances so that the assessee is not made to pay duty twice. The Tribunal relied on identical precedent and held that once payment in cash (with interest) is proved to have been made at departmental instance after initial utilisation of credit, recredit is permissible in law. [Paras 6]

Impugned order denying recredit set aside and appeal allowed; appellant entitled to recredit of the CENVAT credit.

Final Conclusion: The appeal is allowed; the order of the Commissioner(Appeals) rejecting the appellant's claim to recredit is set aside and the appellant is entitled to recredit the CENVAT credit after having paid the duty and interest in cash on the direction of the Department.

Clandestine manufacture and clandestine removal - excess burning loss as basis for demand - admissibility and weight of statements recorded during inquiry - Panchnama and agreed methodology of stock verification - Cenvat credit reversal for short receipt of inputs - undervaluation / mis-declaration as old, rejected and pitted goods - penalty under Section 11AC and Rule 15(2) of Cenvat Credit Rules - personal penalty under Rule 26(1) of Central Excise Rules - interest under Section 11AB

Excess burning loss as basis for demand - clandestine manufacture and clandestine removal - Demand of duty based on alleged clandestine manufacture and clearance by claiming excess burning losses (10259.730 M.T.) - HELD THAT: - The Tribunal examined the Department's case which rested primarily on comparison of burning losses claimed by the appellant with statements of third parties indicating normal losses of 2%-4%. The appellant produced contemporaneous technical reports and a report of National Institute of Secondary Steel Technology indicating defective reheating/rolling facilities and higher genuine burning losses. The Department did not produce tangible corroborative evidence of manufacture, clearance or transportation of the alleged clandestine quantity nor undertake an empirical exercise to establish actual burning loss (for example, a panchnama-run manufacturing test). Reliance solely on third party statements without affirmative direct evidence of clandestine production and removal was held insufficient. Accordingly the demand founded on excess burning losses was not established and the duty on this count was dropped. [Paras 18, 19, 20, 21, 31]

Demand of Rs. 4,24,70,378/- for clandestine manufacture/clearance on account of excess burning losses is not sustainable and is dropped.

Panchnama and agreed methodology of stock verification - Panchnama and agreed methodology of stock verification - Demand of duty for shortage of finished goods (MS bars 1932.015 M.T.) and shortfall of raw material (MS ingots 714.480 M.T.) based on Panchnama weighment - HELD THAT: - The Panchnama recorded that officers and the appellant's representative mutually agreed the practical method of ascertaining stock by weighing representative bundles and multiplying by counted bundles. The weighbridge slips, presence of panchas and the authorized representative during the proceedings, absence of any cogent contrary evidence, and corroborative statements recorded during investigation supported the Panchnama findings. The Tribunal held the methodology to be a practical, accepted trade practice and refused to permit after the fact challenge that every individual bar or ingot was not weighed. [Paras 22, 23, 24, 25, 31]

Demand of Rs. 83,57,897/- for shortage of MS bars (1932.015 M.T.) and endorsement of shortfall of MS ingots (714.480 M.T.) and attendant duty are confirmed.

Cenvat credit reversal for short receipt of inputs - penalty under Section 11AC and Rule 15(2) of Cenvat Credit Rules - Reversal of Cenvat credit and penalty for inputs found short (MS ingots) as recorded in Panchnama - HELD THAT: - Having upheld the shortfall of raw material as recorded in the Panchnama and observing that the appellant did not adduce evidence to rebut those findings, the Tribunal endorsed the adjudicating authority's reversal of Cenvat credit and confirmed imposition of penalty under the Cenvat Credit Rules read with Section 11AC. [Paras 22, 24, 25, 31]

Reversal of Cenvat credit amounting to Rs. 24,72,672/- and penalty under Rule 15(2) read with Section 11AC are endorsed and confirmed.

Undervaluation / mis-declaration as old, rejected and pitted goods - Demand of duty for alleged fake cash sales declared as old, rejected and pitted steel (under valuation) is sustainable - HELD THAT: - Records showed no production/clearance entries for old/rejected/pitted steel in statutory returns. Enquiries of transporters and statements of the appellant's authorized signatory and drivers indicated no transportation of such goods as per invoices; admissions and absence of contemporaneous evidence to justify the claimed lower valuation led the Tribunal to conclude that the sales had been misdeclared to cover shortages. The Department's findings on undervaluation were therefore sustained. [Paras 26, 27, 28, 31]

Demand of Rs. 35,72,980/- on account of declared sales as old/rejected/pitted steel is confirmed.

Admissibility and weight of statements recorded during inquiry - Extent to which statements recorded during inquiry and third party statements can sustain adjudication without cross examination - HELD THAT: - The Tribunal reviewed authorities and observed that while cross examination is a valuable right, in adjudicatory proceedings statements recorded in inquiry may be admissible and relied upon where circumstances show voluntariness, corroboration and proximity of witnesses to the trade; nevertheless, reliance solely on third party statements without corroborative tangible evidence is inadequate to establish clandestine manufacture/clearance. The Department's case on burning losses failed for want of corroborative direct evidence despite third party statements. [Paras 19, 21]

Statements recorded during inquiry may be admissible, but third party statements alone cannot sustain a demand for clandestine manufacture/clearance without corroborative tangible evidence; this principle influenced the outcome on burning losses.

Interest under Section 11AB - Levy of interest on confirmed amounts - HELD THAT: - In respect of the demands affirmed by the Tribunal (shortage of finished goods, undervaluation, and reversal of Cenvat credit), the Tribunal endorsed levy of interest as per the statutory provision relied on by the adjudicating authority. [Paras 31]

Levy of interest under Section 11AB on the confirmed amounts is endorsed.

Penalty under Section 11AC and Rule 15(2) of Cenvat Credit Rules - personal penalty under Rule 26(1) of Central Excise Rules - Assessment and quantum of penalties imposed on the appellant firm and on Shri Shrivats Rathi - HELD THAT: - While confirming imposition of penalties in respect of the confirmed demands (including reversal of Cenvat credit and fake sales), the Tribunal applied mitigating consideration in quantification. The aggregated penalty confirmed under Section 11AC was reduced from the amount imposed in original order to the lesser sum stated by the Tribunal. The personal penalty on Shri Shrivats Rathi under Rule 26(1) was held sustainable given directions alleged to have been given by him, but reduced in amount as a lenient measure. The penalty earlier confirmed by the Tribunal for a separate count (Rs. 5,92,419/-) remained undisturbed as per earlier final order. [Paras 30, 31]

Aggregate penalty under Section 11AC reduced to the stated reduced amount; penalty under Rule 15(2) for short inputs confirmed; personal penalty under Rule 26(1) against Shri Shrivats Rathi is confirmed but reduced to Rs. 50 lakhs; earlier confirmed demand of Rs. 5,92,419/- remains confirmed.

Final Conclusion: The Tribunal dismissed the demand founded on alleged clandestine manufacture by claiming excess burning losses and dropped that duty demand; it confirmed demands arising from Panchnama stock shortfalls (finished goods and inputs), reversal of Cenvat credit, and demands for mis declared sales, endorsed interest on confirmed sums, upheld penalties relating to the confirmed demands while exercising reduction in the quantum of aggregate and personal penalties as indicated.

Cenvat credit - Input Service - exclusion clause in the definition of inputs - fabrication, erection and commissioning as input services - civil structure/support structure exclusion - direct nexus to manufacture

Cenvat credit - Input Service - fabrication, erection and commissioning as input services - direct nexus to manufacture - Admissibility of cenvat credit on services described as fabrication, erection, commissioning, dismantling, renovation, maintenance and modernisation for the period after 01.04.2011 where such services relate to repair, maintenance, renovation or modernisation of plant and machinery or premises used in manufacturing. - HELD THAT: - The Tribunal examined the amended definition of "Input Service" w.e.f. 01.04.2011 and held that activities of fabrication, erection, commissioning and dismantling fall within the inclusive part of the definition so long as they are for renovation, repair, maintenance or modernization of the factory, premises or office of the manufacturer and have a direct nexus to the manufacturing process. The Jurisdictional Range Officer's verification of Annual Maintenance Contracts and invoices expressly found that the impugned services were for renovation and modernisation of machinery directly used in manufacturing and thus did not fall within the exclusion clause. The Commissioner's doubts about whether some fabrication constituted structures to support capital goods were not substantiated: the Commissioner did not identify what specific fabrication amounted to support structures, and the Tribunal held that demand cannot be confirmed on conjecture. On these findings the Tribunal set aside the denial of cenvat credit insofar as the impugned services related to repair, maintenance, renovation or modernization with a direct nexus to manufacture. [Paras 5, 6, 7, 9]

Denial of cenvat credit in respect of fabrication, erection, commissioning and related services used for repair, maintenance, renovation or modernization with direct nexus to manufacturing is set aside.

Cenvat credit - exclusion clause in the definition of inputs - civil structure/support structure exclusion - Whether cenvat credit availed on fabrication/dismantling that amounts to civil works or erection of support structures is liable to be denied for the period covered by the show cause notice dated 02.09.2011. - HELD THAT: - The Tribunal accepted the Commissioner's bifurcation distinguishing fabrication/dismantling forming part of civil works or support structures from fabrication/dismantling that is part of repair and maintenance of existing structures. For the specific subject matter of the show cause notice dated 02.09.2011 (April 2011 to May 2011), the Tribunal found no infirmity in confirming the denial where the work amounted to civil works falling within the exclusion in the amended definition of input services. Accordingly, that portion of the demand was upheld. [Paras 8]

Denial of cenvat credit in respect of fabrication/dismantling amounting to civil works/support structures for the period April 2011 to May 2011 is confirmed.

Final Conclusion: The appeal is partly allowed: cenvat credit denial is confirmed only insofar as the services constituted fabrication/dismantling for civil works or support structures (period April 2011 to May 2011); the denial in respect of other fabrication, erection, commissioning, dismantling and similar services used for repair, maintenance, renovation or modernization with direct nexus to manufacture (April 2011 to June 2017) is set aside.

Prohibition on use of cenvat credit during period of default - Rule 8(3A) of Central Excise Rules, 2002 - penalty for default - Rule 25 of Central Excise Rules, 2002 - Article 14 of the Constitution - effect of interim stay on the reasoning of a judgment

Rule 8(3A) of Central Excise Rules, 2002 - prohibition on use of cenvat credit during period of default - Article 14 of the Constitution - effect of interim stay on the reasoning of a judgment - Validity of demand under Rule 8(3A) for alleged short payment and disallowance of cenvat credit. - HELD THAT: - The Tribunal examined the demand raised under Rule 8(3A) which prevents utilisation of cenvat credit for payment of duty where there is a default. Reliance was placed on the reasoning accepted by the Hon'ble Delhi High Court in Principle Commissioner v. Space Telelink Ltd., that an interim stay of a higher court does not negate the underlying reasoning of the judgment being stayed. Applying that principle, and having regard to the conclusion that there was no tax in arrear on the date of issuance of the show cause notice, the Tribunal held that the Commissioner (Appeals) erred in confirming the demand under Rule 8(3A). The Tribunal therefore set aside the confirmation of demand which sought to disallow cenvat credit for the periods in question. [Paras 8]

Demand confirmed under Rule 8(3A) set aside; confirmation of disallowance of cenvat credit quashed.

Rule 25 of Central Excise Rules, 2002 - penalty for default - effect of interim stay on the reasoning of a judgment - Sustainability of penalty imposed under Rule 25 in consequence of alleged default. - HELD THAT: - The Tribunal held that in view of the conclusion that the demand under Rule 8(3A) was unsustainable and on application of the precedent addressing the effect of interim stays, the Commissioner (Appeals) erred in confirming the penalty under Rule 25. The Tribunal also observed that there was no default or tax in arrear on the date of the show cause notice, removing the foundation for the penalty confirmation. [Paras 8]

Penalty confirmed under Rule 25 set aside.

Final Conclusion: Appeal allowed; impugned order of the Commissioner (Appeals) confirming demand under Rule 8(3A) and penalty under Rule 25 is set aside. No default or tax in arrear was found on the date of the show cause notice; appellant entitled to consequential relief in accordance with law.

Packing of different RSPs on same machine - deeming clause in proviso to Rule 8 - pro-rata duty under proviso to Rule 9 - retrospective amendment to Rule 8 - abatement under Rule 10

Packing of different RSPs on same machine - deeming clause in proviso to Rule 8 - pro-rata duty under proviso to Rule 9 - retrospective amendment to Rule 8 - Whether duty should be determined on pro-rata basis for days a machine packs a particular RSP or the retrospective amendment to Rule 8 requires duty at highest RSP for whole month (i.e. deeming of a single machine as multiple machines) and its effect on the impugned orders - HELD THAT: - The Tribunal recognised the core controversy as the interplay between the substantive deeming provision in the 1st proviso to Rule 8 (treating an operating machine used for different RSPs in a month as liable to duty at the highest RSP for the whole month) and the procedural/methodological provisions in Rule 9 (pro-rata calculation). The Tribunal noted that a proviso was retrospectively inserted into Rule 8 w.e.f. 13.04.2010 by Finance Act, 2014 and that the impugned adjudication pre-dated that enactment. Given the retrospective operation of the amendment and its direct bearing on the determinative legal basis for levy, the Tribunal declined to decide the question itself and, with the parties' consent, remanded the matter to the Adjudicating authority to examine and decide the issue afresh in light of the retrospective amendment and the contentions advanced by the parties. [Paras 9, 10]

Remanded to the Adjudicating authority for fresh determination in the light of the retrospective amendment to Rule 8 (w.e.f. 13.04.2010).

Abatement under Rule 10 - packing of different RSPs on same machine - Whether abatement is admissible where only one packing machine is sealed/non-functional while other machines in the factory remain operational - HELD THAT: - The Tribunal examined Rule 10 which grants abatement where a factory did not produce the notified goods during any continuous period of fifteen days or more, subject to sealing of all packing machines in the factory and other conditions. On a plain reading the Tribunal observed that abatement is contingent on sealing of all packing machines and a complete closure of the factory for the relevant period; abatement is not available merely because a single machine is sealed while other machines remain functional. As the adjudication on the main issue is being remanded, the Tribunal directed that the Adjudicating authority should also consider the question of abatement in light of these observations when it re-examines the matter. [Paras 11]

Remanded to the Adjudicating authority to decide the claim for abatement, having regard to the requirement in Rule 10 that all packing machines be sealed and the factory remain closed for the claimed period.

Final Conclusion: All impugned orders are set aside and the appeals are disposed of by remanding the matters to the Adjudicating authority for fresh consideration of (i) the effect of the retrospective amendment to Rule 8 (w.e.f. 13.04.2010) on duty liability and (ii) the claim for abatement under Rule 10, in accordance with the observations in this order.

Entitlement to invoke extended period of limitation - limitation and time-bar of show cause notice - proof of clandestine removal - reliability of inventory prepared during search - reliance on statements recorded by Income Tax authorities - absence of independent corroborative evidence

Limitation and time-bar of show cause notice - entitlement to invoke extended period of limitation - Show cause notice issued in February 2014 was time barred and the Department was not entitled to invoke the extended period of limitation. - HELD THAT: - The demand rested solely on information received from the Income Tax Department on 4 December 2009 and no investigation was conducted by the Central Excise Department thereafter except recording a statement in January 2014. There was no explanation for the almost five year delay in acting on information already in the Department's possession. Applying the precedent relied upon in the judgment of Anand Nishikawa Co. Ltd. , where the Court held that when the Department had full knowledge of relevant facts earlier, extended limitation could not be invoked, the Tribunal concluded that the show cause notice should have been issued within the normal period available at the relevant time. Regular audits conducted by the Department up to 2012 13 without noticing the alleged discrepancy, and the absence of any further departmental inquiry, reinforced that extended limitation could not be invoked. Consequently, the Commissioner (Appeals) rightly held the notice to be barred by time. [Paras 8, 9]

The show cause notice dated February 2014 is time barred; the Department was not entitled to invoke the extended period of limitation.

Proof of clandestine removal - reliability of inventory prepared during search - reliance on statements recorded by Income Tax authorities - absence of independent corroborative evidence - On the merits there was no reliable or independent evidence to establish clandestine manufacture/clearance by the assessee and the appeal was rightly allowed on merits. - HELD THAT: - Beyond the statements recorded by Income Tax authorities, the Revenue produced no independent corroborative material to substantiate clandestine removal. The Commissioner (Appeals) relied on the subsequent finding of the Income Tax Appellate Tribunal which held the inventory prepared by the Income Tax Department to be defective, thereby undermining the sole documentary basis for the demand. In these circumstances, and having regard to decisions cited in the impugned order that require corroborative evidence before inferring clandestine removal, the Tribunal concluded that the Department had no reliable evidence and that the Commissioner (Appeals) correctly appreciated the merits in allowing the appeal. [Paras 10, 11]

There is no reliable evidence of clandestine manufacture/clearance; the Commissioner (Appeals) correctly allowed the appeal on merits.

Final Conclusion: The Tribunal upholds the order of the Commissioner (Appeals): the show cause notice was time barred and, additionally, the Department lacked reliable, independent evidence to prove clandestine removal; the departmental appeal is rejected.

Option to reverse CENVAT credit under Rule 6(3A) - procedural nature of Rule 6(3A) - reversal of proportionate credit under Rule 6(3) - penalty not leviable for bona fide belief/no suppression

Option to reverse CENVAT credit under Rule 6(3A) - procedural nature of Rule 6(3A) - assessee may exercise the option to reverse credit under Rule 6(3A) even if no prior intimation was given to the Department - HELD THAT: - The Tribunal held that sub rule (3A) prescribes a procedure for exercising the option under Rule 6(3) but does not extinguish the substantive right to opt for proportionate reversal where intimation was not given earlier. Reliance was placed on earlier Division Bench and Tribunal decisions which treated the intimation requirement as procedural and condonable; consequently failure to intimate cannot be used to compel the assessee to adopt the other mode of discharge prescribed in Rule 6(3). Applying that settled view to the facts, the Tribunal accepted that the appellant could exercise the option subsequently and that the demand could not be sustained insofar as it rejected the alternative remedy of proportionate reversal solely for want of prior intimation.

The appellant is entitled to exercise the option under Rule 6(3A) and the demand cannot be sustained for non intimation alone

Reversal of proportionate credit under Rule 6(3) - the appellant was directed to reverse the proportionate CENVAT credit and the matter was remanded to the original authority for verification of the credit availed - HELD THAT: - Having accepted that the appellant could avail the option to reverse proportionate credit, the Tribunal directed the appellant to reverse the credit as worked out by it (subject to verification) and remitted the record to the original authority to verify the fact and extent of credit availed and reversal made. The order thus limits the demand to the extent of credit actually availed and requires verification and mechanical computation by the original authority in accordance with the option available under Rule 6(3A)/6(3).

Appellant directed to reverse proportionate credit with interest; original authority to verify extent of credit availed and reversal

Penalty not leviable for bona fide belief/no suppression - penalty was set aside as there was no suppression with intent to evade duty and non reversal arose from bona fide belief in eligibility - HELD THAT: - On the material and submissions, including authorities holding that bona fide belief and absence of suppression preclude imposition of penalty, the Tribunal found that the non reversal resulted from a bona fide view regarding entitlement to credit and there was no intention to evade duty. In those circumstances and in view of the precedents relied upon, the Tribunal concluded that penalty could not be sustained and therefore remitted only the quantification/verification of credit reversal, not the penalty.

Penalty is not leviable and is set aside

Final Conclusion: The appeal is allowed in part: the appellant may exercise the option to reverse proportionate CENVAT credit under Rule 6(3A), is directed to reverse the proportionate credit with interest (to be verified by the original authority), and the penalty is set aside.

Inclusion of freight in turnover - sale in transit by endorsement - commission agent / agency - appraisal of evidence and findings of fact - turnover under U.P. Trade Tax Act, 1948

Inclusion of freight in turnover - turnover under U.P. Trade Tax Act, 1948 - Freight charges paid to bring goods to the place of business are part of the assessee's turnover only if the factual and legal prerequisites for including such freight are established; on the facts, freight was not includible in the assessee's turnover. - HELD THAT: - The Tribunal's appraisal of the material on record shows that the freight charges in question were not paid by the assessee but by the coal depot holders, and the documentation produced did not establish that the freight formed part of the assessee's receipts or was chargeable to the assessee's turnover under the definition in the U.P. Trade Tax Act, 1948. The High Court examined the Tribunal's findings of fact and concurrent application of law and found them consistent with the principles applied by the Supreme Court in M/s. India Meters Limited Vs. State of Tamil Nadu and other authorities relied upon by the Tribunal. There is no error of law in the Tribunal's conclusion that, on the evidence, the freight could not be included in the assessee's turnover. [Paras 3, 6, 9, 11, 12]

Tribunal's conclusion excluding the freight from the assessee's turnover is upheld; revision dismissed.

Sale in transit by endorsement - commission agent / agency - appraisal of evidence and findings of fact - Whether the assessee effected sale in transit by endorsement or acted as a commission agent; both contentions were not established on the material and were rightly rejected by the Tribunal. - HELD THAT: - This Court had earlier remitted the matter to the Tribunal to determine if sales were effected by endorsement while goods were in transit and whether the assessee acted as a commission agent. On reconsideration, the Tribunal found no documentary or evidentiary basis to support either the claim of sale by endorsement or the existence of a commission agency. The High Court reviewed the Tribunal's factual findings and the record and found that the assessee had not led evidence sufficient to establish either mode of transaction; the Tribunal's factual conclusions are supported by the record and do not suffer from legal error. [Paras 4, 6, 7, 9]

Findings that there was no sale in transit by endorsement and no commission agency are maintained; no interference with Tribunal's findings.

Final Conclusion: The High Court dismissed the revision, upholding the Tribunal's factual findings that the freight charges were not includible in the assessee's turnover and that neither sale in transit by endorsement nor commission agency was established for A.Y. 1989-90.

Discrepancy between returns filed by the assessee - mismatch between departmental data and returns - statutory appeal under Section 51 of the TNVAT Act - alternate remedy in fiscal matters - application of Satyawati Tondon principle

Discrepancy between returns filed by the assessee - mismatch between departmental data and returns - Challenge to revisional notice and revised assessment order predicated on reliance upon JKM Graphics principle - HELD THAT: - The Court held that JKM Graphics concerns reversal of input tax credit based on a mismatch between returns filed by dealers and departmental data. In the present case the alleged discrepancy was between two returns both filed by the writ petitioner (monthly returns and the annual return in Form WW). Consequently, the JKM Graphics principle is factually distinguishable and does not assist the petitioner. Since the lone ground of challenge founded on that precedent fails, the impugned revisional notice and revised assessment order cannot be sustained on the basis advanced before this Court. [Paras 11, 12]

Submission based on JKM Graphics is distinguishable on facts and fails; the ground of challenge founded thereon is rejected.

Statutory appeal under Section 51 of the TNVAT Act - alternate remedy in fiscal matters - application of Satyawati Tondon principle - Availability and application of alternate statutory remedy against the revised assessment order - HELD THAT: - The Court reiterated that the rule of alternate remedy is discretionary but must be applied with greater rigour in fiscal matters, following Satyawati Tondon and its reiteration. The petitioner has an effective statutory remedy by way of appeal to the jurisdictional Appellate Deputy Commissioner under Section 51 of the TNVAT Act against the revised assessment order. The Court therefore dismissed the writ petition while preserving the petitioner's right to file the statutory appeal; it observed that conditions of pre-deposit and other statutory conditions will operate and that any application for condonation of delay or exclusion of time (including reliance on Section 14 of the Limitation Act) must be considered by the Appellate Authority on merits. [Paras 14, 15, 16, 17, 18]

Writ petition dismissed; petitioner may pursue statutory appeal under Section 51, with pre-deposit and other conditions to apply and any delay/condonation issues to be decided by the Appellate Authority.

Final Conclusion: Writ petition dismissed on merits insofar as the precedent relied upon was found distinguishable; petitioner's remedy by appeal under Section 51 of the TNVAT Act is preserved and remains open for consideration by the Appellate Deputy Commissioner, including any applications for pre-deposit, condonation of delay or exclusion of time.

Revised assessment under Section 27 of the TNVAT Act - non-response to revisional notice not being the sole ground for confirmation of assessment - alternative statutory remedy by appeal to the Appellate Deputy Commissioner under Section 51 of the TNVAT Act - rule of alternate remedy in fiscal matters (Satyawati Tandon principle)

Revised assessment under Section 27 of the TNVAT Act - non-response to revisional notice not being the sole ground for confirmation of assessment - Whether the revised assessment confirmed under Section 27 could be sustained solely on the ground that the assessee did not respond to the revisional notice. - HELD THAT: - The Court examined the impugned revised assessment order passed under Section 27 and the precedents relied upon by the petitioner. It distinguished the cited decisions on their factual matrices, noting that in each relied-on case the assessee had replied to the notice or other material facts (such as cash-credit explanation, production of objections, or payment of tax and penalty) made those decisions inapplicable. The Court found that in the present case the assessing authority did record that the dealer did not file objections to the revisional notice, but that non-response was not the sole basis for confirming the proposal: the impugned order contained additional reasons justifying confirmation. Accordingly, the fact of non-response alone could not sustain the contention that the revised assessment was invalid on that ground. [Paras 8, 22]

The revised assessment is not vitiated merely because the assessee did not respond to the revisional notice; non-response was not the sole basis for the impugned order and the order cannot be set aside on that ground alone.

Alternative statutory remedy by appeal to the Appellate Deputy Commissioner under Section 51 of the TNVAT Act - rule of alternate remedy in fiscal matters (Satyawati Tandon principle) - Whether the High Court should exercise writ jurisdiction to interfere with the impugned revised assessment when an alternate statutory appeal remedy is available. - HELD THAT: - Applying the well-settled principle that writ jurisdiction is discretionary and that alternate statutory remedies must be applied with particular rigour in fiscal matters (as explained in Satyawati Tandon and affirmed thereafter), the Court concluded that the petitioner should be relegated to the alternate remedy of filing an appeal to the jurisdictional Appellate Deputy Commissioner under Section 51 of the TNVAT Act. The Court observed that the petitioner may seek condonation of delay and exclusion of time spent in the writ petition (including reliance on Section 14 of the Limitation Act), and directed the Appellate Deputy Commissioner to decide such applications on merits. In these circumstances the High Court declined to interfere with the impugned order in exercise of writ jurisdiction. [Paras 23, 24, 25]

The writ petition is dismissed by way of exercise of discretion; the petitioner is relegated to file an appeal before the Appellate Deputy Commissioner with liberty to seek condonation of delay and exclusion of time, and the High Court will not interfere with the impugned order.

Final Conclusion: The Court declined to set aside the revised assessment on the sole ground of non-response to the revisional notice, distinguished the precedents relied upon, and, applying the principle that alternate remedies in fiscal matters must be enforced with rigour, relegated the petitioner to appeal before the Appellate Deputy Commissioner under Section 51 of the TNVAT Act; the writ petition is disposed of accordingly.

Deviation proposal - personal hearing - treating assessment orders as further revisional notices - de novo revisional assessment

Deviation proposal - Existence of a deviation proposal sent by the predecessor officer in respect of the Enforcement Wing's proposal. - HELD THAT: - The Court, on the basis of instructions and inspection of intra-office file communications placed before it, found that a deviation proposal had in fact been sent by the predecessor of the incumbent officer who passed the impugned assessment orders. The Court declined to reproduce the internal communications in the order but recorded the factual finding that the deviation proposal existed and that there was no reference to that proposal in the impugned orders. [Paras 7, 8]

Found that a deviation proposal was sent by the predecessor and that the impugned orders do not refer to that proposal.

Treating assessment orders as further revisional notices - de novo revisional assessment - personal hearing - Appropriate remedial course in light of the undisclosed deviation proposal and directions for further proceedings. - HELD THAT: - Having found that a deviation proposal existed and was not considered in the impugned orders, the Court directed that the impugned assessment orders be treated as further revisional notices to facilitate a de novo revisional assessment. As part of that course the writ petitioners were directed to pay 15% of the disputed tax (tax liability excluding penalty) within a fortnight; upon such payment the assessing authority was to communicate a date, time and venue for personal hearing within a further fortnight. If the petitioner avails the hearing, the authority must consider all objections in the light of the predecessor's deviation proposal and redo the revisional assessment afresh expeditiously and in any event within twelve weeks of the personal hearing. If the petitioner does not avail the hearing, the impugned orders will retain the character of revised assessment orders without further reference to the Court. The Court made clear this course was adopted without expressing any view on the merits. [Paras 11, 12]

Impugned orders to be treated as further revisional notices; conditional directions for payment, personal hearing and de novo revisional assessment to be complied with as specified.

Final Conclusion: The writ petitions are disposed of by treating the impugned assessment orders for the listed years as further revisional notices; a deviation proposal sent by the predecessor was found to exist, and the assessing authority is directed to afford personal hearing and redo the revisional assessment de novo in accordance with the Court's directions after compliance with the conditional requisites; no order on merits and no costs.

Revisional assessment - opportunity of personal hearing - failure to file objections - confirmation of proposal on available records - deemed assessment - compounding of offence - statutory appeal under Section 51 of TNVAT Act

Revisional assessment - failure to file objections - opportunity of personal hearing - confirmation of proposal on available records - Validity of the revisional assessment order passed under Section 27 of the TNVAT Act in the light of the dealer's written reply and non-availment of personal hearing. - HELD THAT: - The Court found that the revisional authority proceeded on the basis of available records and confirmed the proposal because the dealer had, by its reply dated 30.10.2017, stated it had no objections to the proposal and indicated that it would seek remedy before the Court if a revised assessment were passed. The dealer was afforded a specific date for personal hearing but did not appear. In these circumstances the revisional authority's course of confirming the proposal and passing the revised assessment under Section 27 was held to be unimpeachable; the challenge mounted in the writ petition was essentially factual and related to merits, which did not warrant interference. The Court therefore dismissed the writ petition on merits and upheld the impugned revisional order. [Paras 11, 12, 15, 16, 17]

Revisional assessment confirmed; writ petition dismissed as lacking merit.

Statutory appeal under Section 51 of TNVAT Act - Whether the dealer may pursue remedy by way of statutory appeal against the revisional order. - HELD THAT: - While the writ petition was dismissed, the Court expressly preserved the dealer's statutory remedy by permitting filing of an appeal under Section 51 of the TNVAT Act. The Court noted that such an appeal would be subject to statutory limitation and any pre-deposit requirement, and that the appellate authority is free to adjudicate the matter on merits. [Paras 18, 19, 20]

Right to file statutory appeal under Section 51 preserved, subject to limitation and pre-deposit conditions.

Final Conclusion: Writ petition dismissed for lack of merit; the revisional assessment under Section 27 is sustained in view of the dealer's no-objection reply and non-availment of personal hearing, and the dealer's right to file a statutory appeal under Section 51 of the TNVAT Act is preserved subject to limitation and pre-deposit conditions.

Final return - input tax credit - adjustment of input tax credit between VAT and Central Sales Tax - carry forward of input tax credit on migration to GST - ultra vires challenge to a prescribed form - mootness arising from administrative clarification

Final return - input tax credit - adjustment of input tax credit between VAT and Central Sales Tax - mootness arising from administrative clarification - ultra vires challenge to a prescribed form - Writ-application disposed without adjudication on the vires of clause 12.5(c) of Part IV of Form 205B because the respondents' clarification removed the petitioners' grievance. - HELD THAT: - The petitioners challenged clause 12.5(c) of Part IV of Form 205B and Annexure V as being ultravires for requiring reduction of admissible input tax credit on account of outstanding statutory declaration forms before adjustment against VAT liability. The Advocate General and the respondent's affidavit clarified that input tax credit shown in monthly returns for April-June 2017 (Form 201) will first be allowed against admitted output tax as per those monthly returns; only any remaining input tax credit would be taken into account under Annexure V to Form 205B. The respondents further explained the mechanism (including reference to relevant GST transitional rules and Form GST TRAN-1 mechanics) and stated that where non-submission of declaration forms results in a negative balance, that negative amount would be treated as nil for computing net input tax credit and considered at the time of assessment. In view of these clarifications and the petitioners' acceptance that no further grievance survives, the Court declined to decide the legal validity of the contested clause and disposed of the petition accordingly. The Court expressly refrained from ruling on the ultra vires challenge. [Paras 10, 11, 12]

Petition disposed of without adjudicating the validity of the impugned clause, in view of the respondents' clarification which removed the petitioners' grievance.

Final Conclusion: The writ petition was disposed of as the State's clarified stance-that monthly returns' ITC will be allowed first and Annexure V/Form 205B would be applied thereafter-left the petitioners with no live grievance; the Court did not rule on the validity of clause 12.5(c) of Part IV of Form 205B.

Writ under Article 226 - judicial review of tender process - policy decision to scrap tender - interim relief vacated - injunctive relief against disqualification of bid

Policy decision to scrap tender - judicial review of tender process - Whether the writ petition required adjudication after the Corporation decided to scrap the tender process. - HELD THAT: - The Court recorded the Corporation's clear statement that it had taken a policy decision not to proceed further with Tender Notice No.1 of 2018-19 and that a fresh tender may be issued in future. In view of this development the Court declined to adjudicate the merits of the writ petition which challenged an amendment to eligibility criteria, treating the writ as rendered infructuous. The Court therefore disposed of the writ-application without deciding the substantive contention raised by the petitioner and observed that the petitioner would be free to participate in any future tender if otherwise qualified under its terms. [Paras 7]

Writ petition disposed as infructuous in view of the Corporation's decision to scrap the tender; merits not adjudicated.

Interim relief vacated - injunctive relief against disqualification of bid - Effect of the interim order previously granted restraining rejection/disqualification of the petitioner's bid. - HELD THAT: - The Court noted its earlier interim order and, having taken up the main matter on account of subsequent developments, discharged the notice and vacated the interim relief. The earlier protection against rejection or disqualification of the petitioner's bid on the specific amended clause was withdrawn because the underlying tender process was abandoned by the Corporation. [Paras 1, 8]

Earlier interim protection is vacated and notice discharged.

Final Conclusion: The writ petition was disposed of as infructuous because the Corporation scrapped Tender Notice No.1 of 2018-19; the interim order previously protecting the petitioner's bid was vacated and the petitioner remains free to participate in any future tender if otherwise qualified.