TaxTMI Updates e-Newsletter
Aug 06,2018

E-way bill requirement for intra-state movement - classification of goods under HSN 2401 (unmanufactured tobacco) - scope of notification issued under Rule 138(14)(d) of the Madhya Pradesh GST Rules - exclusion of goods not specified in the notification table

E-way bill requirement for intra-state movement - classification of goods under HSN 2401 (unmanufactured tobacco) - scope of notification issued under Rule 138(14)(d) of the Madhya Pradesh GST Rules - Whether MPGST Notification No. F-A-3-08-2018-1-V(43) dated 24-4-2018 applies to "unmanufactured tobacco" classifiable under HSN 2401 and thereby mandates generation of an intra-state e-way bill for such goods. - HELD THAT: - The Authority examined the notification issued under the powers conferred by clause (d) of sub-rule (14) of Rule 138 which exempts generation of e-way bills for intra-state movement of goods except those goods specified by Chapter/Heading/Sub heading/ Tariff item in the notification table. The table lists tobacco-related items under serial no. 7 with tariff entries 2402 and 2403, which pertain to manufactured tobacco products (eg. cigars, cigarettes and other manufactured tobacco). The description and tariff items specified in the notification do not include HSN 2401. "Unmanufactured tobacco" is classifiable under HSN 2401. Because the notification mandates e-way bills only for goods expressly identified by their chapter/heading/tariff item in the table, goods falling under HSN 2401 are not covered by the exception set out in the table and therefore remain within the general exemption provided by the notification. Accordingly, the notification does not make generation of an intra-state e-way bill mandatory for "unmanufactured tobacco" described under HSN 2401, subject to the conditions of the notification. [Paras 5, 6]

Notification No. F-A-3-08-2018-1-V(43) dated 24-4-2018 is not applicable to "unmanufactured tobacco" under HSN 2401; generation of an intra-state e-way bill for such goods is not required as per the notification.

Final Conclusion: The Advance Ruling holds that the MPGST notification dated 24-4-2018, which prescribes exceptions to the requirement of intra-state e-way bills, does not cover "unmanufactured tobacco" under HSN 2401; consequently, an e-way bill for intra-state movement of such unmanufactured tobacco is not required under that notification.

Advance ruling jurisdiction under Section 97(2) of the CGST Act, 2017 - Scope of authority to rule on applicability of policy or procedural guidelines - Applicability of a notification under the Act - Deemed export supplies and Advance Authorisation procurement

Advance ruling jurisdiction under Section 97(2) of the CGST Act, 2017 - Applicability of a notification under the Act - Whether the Authority may specify the complete procedure under Notification 48/2017-Central Tax dated 18.10.2017 for supplies by DTA to Advance Authorization holders in an advance ruling application. - HELD THAT: - Section 97(2) of the CGST Act, 2017 circumscribes the subject-matter on which an advance ruling may be sought. While clause (b) permits rulings on the applicability of a notification, it does not empower the Authority to frame or specify procedural instructions issued under a notification. The applicant sought the Authority to "specify the complete procedure" under Notification 48/2017; however the applicant expressly accepted the applicability of the notification and did not question its applicability. The Authority is not mandated by the Act to articulate or restate procedural steps contained in a notification where the question posed does not concern the notification's applicability but merely seeks procedural specification. For these reasons the question falls outside the categories enumerated in Section 97(2) and is not admissible for advance ruling. [Paras 5]

Question seeking specification of procedure under Notification 48/2017 is beyond the scope of matters admissible under Section 97(2) and is not admitted.

Advance ruling jurisdiction under Section 97(2) of the CGST Act, 2017 - Scope of authority to rule on applicability of policy or procedural guidelines - Deemed export supplies and Advance Authorisation procurement - Whether the Authority may rule on the applicability and procedure of the Foreign Trade Policy 2015-2020 Mid Term Review for procuring goods from DTA against Advance Authorisation. - HELD THAT: - The applicant requested a determination of the applicability of an external policy instrument (the Foreign Trade Policy 2015-2020 Mid Term Review) and the related procurement procedure. Such matters pertain to the applicability and implementation of a policy framed outside the CGST statute and do not correspond to any of the categories listed in Section 97(2). The Authority therefore lacks jurisdiction to adjudicate on the applicability of the Foreign Trade Policy or to specify its procedural implementation in the context of an advance ruling under the CGST/MPGST Acts. Consequently the question is not admissible for an advance ruling. [Paras 5]

Question concerning applicability and procedural application of the Foreign Trade Policy is beyond the Authority's jurisdiction under Section 97(2) and is not admitted.

Advance ruling jurisdiction under Section 97(2) of the CGST Act, 2017 - Whether the application as a whole is liable to be rejected at the stage of admission. - HELD THAT: - Both questions framed by the applicant were found to fall outside the scope of issues on which an advance ruling can be sought under Section 97(2). Where the application seeks rulings on matters beyond the statutory scope, the Authority is entitled to reject the application at the admission stage under the procedural provisions governing advance rulings. Having determined non-admissibility of both questions, the Authority declined to proceed to merits and disposed of the application accordingly. [Paras 5, 6]

The application is rejected at the admission stage under Section 98(2) of the CGST Act/MPGST Act.

Final Conclusion: The Authority declined to admit the advance ruling application because the questions posed-seeking specification of procedural steps under a notification and the applicability/procedure under the Foreign Trade Policy-fall outside the categories of questions on which advance rulings may be sought under Section 97(2); the application is therefore rejected under Section 98(2).

Composite Supply - Principal Supply - Predominant Element in a Composite Supply - Classification of composite supply as supply of the principal supply under Section 8(a) - Job work

Composite Supply - Job work - Activity of body building on chassis supplied by the principal is a composite supply - HELD THAT: - The Authority applied the clarification in Circular No.34/08/2018-GST (reproduced in the order) and the statutory definition of Composite Supply to the facts. The fabrication of a bus body on a chassis supplied by the principal involves both goods (body components) and services (fabrication work) that are naturally bundled and supplied in conjunction with each other. The Authority therefore concluded that the activity falls within the statutory concept of a Composite Supply, as defined under Section 2(30) of the CGST Act, 2017 (and the corresponding provision in the MPGST Act, 2017). [Paras 6, 7]

The body building activity carried out by the applicant on chassis supplied by the principal amounts to a Composite Supply.

Predominant Element in a Composite Supply - Principal Supply - Classification of composite supply as supply of the principal supply under Section 8(a) - Tax treatment and rate of the composite supply to be determined by the predominant (principal) component; factual determination not made for this applicant - HELD THAT: - Relying on the statutory treatment that a composite supply shall be treated as a supply of its Principal Supply, the Authority held that the rate of tax depends on which component - goods or services - is predominant. If the goods component predominates, the composite supply will be governed by the relevant entries (e.g., Chapter 87 as applicable to the nature of the body). If the services component predominates, the principal supply would fall under Heading No.9988. The Authority rejected the applicant's submission that classification should be based on the 'predominant intention' of the buyer, holding that the statute looks to the predominant element, not the buyer's intention. Because the applicant did not furnish detailed particulars quantifying or distinguishing the goods and services components, the Authority abstained from making a definitive factual classification or fixing the applicable rate in the applicant's case. [Paras 6, 7]

The rate applicable to the composite supply will be determined by the predominant element (the Principal Supply); no final factual determination of the predominant element or rate was made for the applicant due to incomplete information.

Final Conclusion: The Authority ruled that body building performed on a principal supplied chassis is a Composite Supply; the applicable rate must be determined by identifying the predominant element (the Principal Supply) - goods predominance would attract classification under the chapter for vehicles/bodies, whereas services predominance would attract Heading No.9988 - but no factual determination of predominance or specific rate was given for the applicant due to incomplete information.

Functions entrusted to Panchayats and Municipalities under Article 243 G and Article 243 W of the Constitution - pure service excluding works contract service or other composite supplies involving supply of any goods - exemption under Serial No. 3 of Notification No. 12/2017 Central Tax (Rate) (as amended)

Functions entrusted to Panchayats and Municipalities under Article 243 G and Article 243 W of the Constitution - Whether the PDMC/PMC services rendered under AMRUT and PMAY are activities in relation to functions entrusted to Panchayats or Municipalities under Article 243 G/243 W of the Constitution - HELD THAT: - The Authority examined the objectives and components of the AMRUT and PMAY schemes (water supply, sewerage, sanitation, parks, housing, urban transport and related civic amenities) and found that these objectives fall within multiple entries of the Eleventh and Twelfth Schedules to the Constitution. On that basis, the consultancy services provided by the applicant for implementation of AMRUT and PMAY were held to be in relation to functions entrusted to Municipalities under Article 243 W and to Panchayats under Article 243 G. [Paras 5, 6]

The PDMC/PMC services qualify as activities in relation to functions entrusted to Panchayats or Municipalities under Article 243 G and Article 243 W.

Pure service excluding works contract service or other composite supplies involving supply of any goods - exemption under Serial No. 3 of Notification No. 12/2017 Central Tax (Rate) (as amended) - Whether the consultancy contracts, which include reimbursement of costs of goods procured (e.g., laptops, furniture, equipment) for rendering the services, remain 'pure services' eligible for exemption under Serial No. 3 of Notification No. 12/2017 Central Tax (Rate) - HELD THAT: - The Authority found the contracts to be pure service contracts and not covered by the exclusions for works contracts or composite supplies involving supply of goods. The agreements expressly required the applicant to purchase specified items with employer approval, obtain reimbursement of actual cost, and transfer or dispose of such items as directed by the employer after contract completion. The items (laptops, computers, refrigerators, furniture etc.) were not naturally bundled with the consultancy service and were separately reimbursed over and above the contract price. Consequently, procurement and reimbursement of such goods did not convert the consultancy into a works contract or composite supply, and did not affect eligibility for the nil/zero rate exemption under the specified notification. The Authority observed, without adjudicating (since not applied for), that disposal of such tangible goods at contract end would be governed by the GST statutes as applicable. [Paras 5, 6]

The consultancy services, notwithstanding reimbursement of costs of goods procured for rendering the services, qualify as 'pure services' and are eligible for exemption under Serial No. 3 of Notification No. 12/2017 Central Tax (Rate); disposal of the goods at contract end is subject to GST as per law.

Final Conclusion: The Authority ruled that the applicant's PDMC/PMC services for AMRUT and PMAY are services in relation to functions entrusted to Panchayats/Municipalities under Articles 243 G/243 W and that, despite reimbursement of procured goods used to render the services, the contracts remain 'pure services' eligible for exemption under Serial No. 3 of Notification No. 12/2017 Central Tax (Rate), subject to GST law governing any subsequent disposal of the tangible goods.

Composite supply - works contract - classification of services - HSN 9954/995423 - applicable tax rate under Notification No. 11/2017 - Central Tax (Rates)

Composite supply - works contract - classification of services - HSN 9954/995423 - Classification of the contracts for construction of 33/220 kV pooling substations, associated 220 kV transmission lines and feeder bay work entered into with RUMS. - HELD THAT: - On examination of the agreements and the scope of work, the supplies comprise both goods and services bundled together and fall within the definition of a "works contract" under the GST Act. The Authority held that the contracts constitute a composite supply and, in terms of the Scheme of Classification of Services, are classifiable as construction services of electric power lines and transformer/related works. Consequently, the HSN/service code assigned to the composite supply under all three agreements is 9954/995423. [Paras 6, 7]

The three agreements are composite supplies in the nature of works contracts and are classifiable under HSN/service code 9954/995423.

Applicable tax rate under Notification No. 11/2017 - Central Tax (Rates) - rate of tax on composite supply of works contract - Applicable rate of GST (CGST and MPGST) on the supply under the contracts. - HELD THAT: - The Authority noted that the 5% GST rate referenced by the applicant and RUMS pertains to the rate on specified goods (renewable energy devices) and not to services in the nature of works contracts. It observed that there is no provision exempting or prescribing a reduced rate for works contracts forming part of solar-park evacuation infrastructure. Applying Notification No. 11/2017 (Services), the Authority recorded that the relevant entry for composite supply of works contract under Heading 9954 attracts 9% central tax (i.e., 9% CGST) and an equal rate under the corresponding MPGST notification, resulting in 18% total GST equivalent under the combined heads; the Authority, however, specifies the Central and State components as 9% each for the supply. [Paras 6, 7]

CGST at 9% and MPGST (state component) at 9% are applicable on the supplies under the contracts.

Final Conclusion: The Advance Ruling holds that the three turnkey contracts with RUMS are composite supplies in the nature of works contracts classifiable under HSN/service code 9954/995423, and the applicable tax rate is CGST 9% and MPGST 9% as per the relevant entries in Notification No. 11/2017 - Central Tax (Rates) and its corresponding MPGST notification.

Seizure and detention of goods under UP GST regime - E-way bill compliance and part-B download - inter-state supply and forum competence for seizure - appeal under Section 112 of the CGST Act and non-establishment of Appellate Tribunal - release of seized goods on furnishing indemnity bond limited to tax

Seizure and detention of goods under UP GST regime - E-way bill compliance and part-B download - inter-state supply and forum competence for seizure - Validity of the seizure, detention and penalty demand where the E-way bill Part-B was not produced at time of detention but the E-way bill had been generated and Part-B was downloaded subsequently during the same day and the consignment was an inter-state supply to a Government of India enterprise. - HELD THAT: - The Court found substance in the petitioner's explanation that the E-way bill had been generated on 21.05.2018 and that the omission to produce Part-B at the time of detention on 22.05.2018 was plausibly a human error by the transporter; the driver produced tax invoice and other documents at the time of detention and subsequently downloaded Part-B on 22.05.2018 at 10:56 am. The petitioner explained there was no mala fide intention and the consignment was destined outside U.P. to a Government of India enterprise; no discrepancy was noted by the detaining authority before passing the order under the seizure provision relied upon. In view of these facts and the public interest in protecting a registered company and a Government enterprise buyer, the Court exercised its equitable jurisdiction to relieve the petitioner from the consequences of seizure and the penalty demand to the extent indicated below, while preserving the revenue's entitlement to tax.

Goods and vehicle released forthwith; release subject to petitioner furnishing an indemnity bond to the extent of the value of tax only (penalty not required for release); petitioner permitted to download a fresh E-way bill after release and to proceed on delivery, with statutory delivery certificate to be furnished thereafter.

Appeal under Section 112 of the CGST Act and non-establishment of Appellate Tribunal - Consequences of non-establishment of the statutory Appellate Tribunal and administrative compliance with prior Court directions to constitute the Tribunal. - HELD THAT: - The Court noted that Section 113 and Section 114 (procedural and administrative framework for the Appellate Tribunal) and Section 117 (right of appeal from the Appellate Tribunal to the High Court) provide the statutory appellate architecture, but observed that no Appellate Tribunal has been constituted despite earlier orders of this Court and the resulting diversion of aggrieved parties to writ jurisdiction. The Court directed the newly impleaded Union of India and GST Council to explain within two weeks why previous Court orders regarding constitution of the Tribunal were not complied with and why the statutory Tribunal is not set up so far, thereby requiring administrative action and a response.

Notice issued to Union of India and GST Council to explain non-establishment of the Appellate Tribunal within two weeks; Court directed respondents to proceed forthwith to constitute the Tribunal.

Final Conclusion: Writ petition allowed in part: seized goods and vehicle ordered released immediately on furnishing an indemnity bond limited to the tax amount; petitioner permitted to download fresh E-way bill and complete delivery formalities; Union of India and GST Council directed to explain non-establishment of the Appellate Tribunal and to take steps to constitute it.

Registration under Section 12AA - temporal applicability of amendment to definition of 'charitable purpose' - withdrawal of registration with retrospective effect - application of proviso to Section 2(15) regarding activities of general public utility

Application of proviso to Section 2(15) regarding activities of general public utility - registration under Section 12AA - withdrawal of registration with retrospective effect - Registration under Section 12AA could not be withdrawn with effect from 1-4-2008 on the ground that the proviso to Section 2(15) had been added to the Act. - HELD THAT: - The Tribunal held, and this Court agrees, that although the proviso to Section 2(15) was inserted by the Finance Act, 2008, its applicability was made effective from 1-4-2009. Consequently, the Commissioner could not validly withdraw the respondent's registration under Section 12AA with effect from 1-4-2008 on the basis of that proviso. There is no dispute of fact and the determinative legal point is the temporal applicability of the amendment; since the proviso was not in force w.e.f. 1-4-2008, withdrawal backdated to that date was unjustified. The Tribunal's conclusion on this legal question is affirmed. [Paras 8, 9]

The Tribunal's finding that the registration could not be withdrawn w.e.f. 1-4-2008 is affirmed; the question of law is answered in favour of the assessee.

Final Conclusion: The appeal is dismissed; the Court affirms the Tribunal's decision that the proviso to Section 2(15) became applicable w.e.f. 1-4-2009 and therefore the registration under Section 12AA could not be withdrawn with effect from 1-4-2008.

Explanation to Section 251 of the Income Tax Act - scope of powers of Commissioner (Appeals) in penalty appeals - "any matter arising out of the proceedings in which the order appealed against was passed" - separate appeals arising out of assessment orders and penalty orders

Explanation to Section 251 of the Income Tax Act - scope of powers of Commissioner (Appeals) in penalty appeals - "any matter arising out of the proceedings in which the order appealed against was passed" - Whether, in an appeal filed against an order imposing penalty, the Commissioner (Appeals) may direct the Assessing Officer to reopen or reassess issues relating to escaped income arising out of the underlying assessment proceedings. - HELD THAT: - The Explanation to Section 251 permits the Commissioner (Appeals) to consider and decide any matter arising out of the proceedings in which the order appealed against was passed. Appeals under Section 251(1) arise independently from orders of assessment and from orders imposing penalty. Where the appeal before the Commissioner (Appeals) is confined to an order imposing penalty, the scope of the Commissioner (Appeals)'s authority is limited to matters arising out of those penalty proceedings. A direction by the Commissioner (Appeals) in a penalty appeal to the Assessing Officer to reopen or reassess whether income had escaped assessment would only be justifiable if the assessment order itself were the subject of the appeal before the Commissioner (Appeals). In the present case the appeal was against the penalty order (and not the assessment order), and therefore the Commissioner (Appeals) lacked the jurisdiction in that appeal to issue a direction to reopen the assessment for determination of escaped income. The Appellate Tribunal correctly held that the Commissioner (Appeals)'s direction to reopen the matter was unwarranted in the limited context of the penalty appeal, and the Tribunal rightly did not interfere with the penalty itself while setting aside the reopening direction.

Direction by the Commissioner (Appeals) to the Assessing Officer to reopen or reassess escaped income was outside the scope of his authority in an appeal confined to an order imposing penalty and therefore unwarranted; the Appellate Tribunal's contrary conclusion on that limited point is upheld.

Final Conclusion: The Appellate Tribunal's dismissal of the Commissioner's direction to reopen assessment in the course of adjudicating an appeal against a penalty order is affirmed; the penalty itself was not disturbed and the appeals are dismissed.

Recording of satisfaction for initiating proceedings under Section 153C - Proceedings under Section 153C read with Section 153A - Rectification application before the Tribunal - Limitation not to bar rectification application filed within prescribed time

Recording of satisfaction for initiating proceedings under Section 153C - Proceedings under Section 153C read with Section 153A - Rectification application before the Tribunal - Whether the question of existence of recorded satisfaction and consequent initiation of proceedings under Section 153C requires reconsideration by the Tribunal and whether the Department may seek rectification of the Tribunal's order on that ground. - HELD THAT: - The High Court declined to decide the factual and substantive controversy whether satisfaction was recorded and whether proceedings under Section 153C were validly initiated. Instead the Court directed the revenue to approach the Tribunal by way of rectification application, supported by the material on record, if it contends that the Tribunal proceeded on erroneous facts or that relevant satisfaction notes exist. The Tribunal is directed to consider such rectification application(s) on the file and on its own merits by examining the available records and material and to decide the matter in accordance with law. The High Court expressly refrained from entering into merits at this stage and confined itself to mandating the procedural course of rectification before the Tribunal. [Paras 4]

Department permitted to file rectification application(s) before the Tribunal within four weeks; Tribunal directed to decide such application(s) on merits after examining the record; Court did not adjudicate the existence or validity of any recorded satisfaction or the substantive correctness of the Tribunal's decision.

Final Conclusion: The appeals are disposed of by relegating the revenue to seek rectification before the Income Tax Appellate Tribunal within four weeks; the Tribunal is directed to examine the record and decide the rectification application(s) on merits, and the High Court does not enter into the substantive merits in this order.

Undisclosed receipt - cash system of accounting - interest on PPF as exempt income - disallowance under section 14A - confirmation of addition - restoration to Assessing Officer for fresh consideration - verification by Assessing Officer

Undisclosed receipt - cash system of accounting - verification by Assessing Officer - Addition of Rs.1,04,000 treated as undisclosed receipt and claimed to be taxable in AY 2014-15 - HELD THAT: - The assessee asserted he follows cash system of accounting and that the receipt (net of TDS) was actually received and offered to tax in AY 2014-15. The Revenue did not oppose verification. The Tribunal directed the Assessing Officer to verify the assessee's claim and, upon such verification, allow the appropriate relief. The direction contemplates factual scrutiny by the AO rather than an immediate adjudication on merits by the Tribunal. [Paras 4]

Matter restored to the file of the AO for verification and appropriate relief; issue treated as partly allowed for statistical purposes.

Confirmation of addition - Addition of Rs.44,420 confirmed by the Tribunal - HELD THAT: - The assessee did not advance any contention before the Tribunal in respect of the addition of Rs.44,420. In absence of submissions, the Tribunal upheld the addition made by the Assessing Officer and confirmed the same as reflected in the appellate record. [Paras 4]

Addition of Rs.44,420 confirmed; grounds relating thereto dismissed.

Disallowance under section 14A - Claim challenging disallowance under section 14A not pressed before the Tribunal - HELD THAT: - Counsel for the assessee did not press the ground challenging the disallowance under section 14A. Following the concession/non-press, the Tribunal declined to consider the issue further and dismissed the ground as not pressed. [Paras 5]

Ground relating to disallowance under section 14A dismissed as not pressed.

Interest on PPF as exempt income - verification by Assessing Officer - Credit of interest on PPF (claimed to relate to earlier years) restored to AO for verification - HELD THAT: - The assessee claimed that interest of Rs.52,820 represented exempt PPF interest earned in earlier years but credited to profit and loss account in the year under consideration. The Revenue raised no objection to verification. The Tribunal therefore remitted the issue to the Assessing Officer to verify the factual claim and decide afresh whether the amount is exempt and not taxable in the year under appeal. [Paras 6]

Issue restored to the file of the AO for verification and fresh decision; treated as allowed for statistical purposes.

Restoration to Assessing Officer for fresh consideration - foreign remittance - confirmation of prior Tribunal directions - Addition on account of foreign remittance restored to AO for fresh adjudication in line with Tribunal's earlier order in assessee's AY 2010-11 - HELD THAT: - Both parties agreed a similar issue had been remitted in the assessee's own case for AY 2010-11, in which the Tribunal set aside an ex parte appellate order and restored the matter to the AO after imposing costs for noncompliance. Following and applying those directions, the Tribunal set aside the impugned appellate order for the year under consideration and restored the foreign remittance issue to the AO for fresh decision and opportunity to the assessee to produce documentary evidence. [Paras 7, 8]

Impugned appellate order set aside on this issue and matter restored to the AO for fresh adjudication as per directions; treated as allowed for statistical purposes.

Final Conclusion: The appeal is partly allowed for statistical purposes: certain additions were confirmed, while specific contested receipts and the PPF interest claim are remitted to the Assessing Officer for verification and fresh decision in accordance with the Tribunal's directions; the ground under section 14A was dismissed as not pressed.

Long Term Capital Gains exemption under section 10(38) - Accommodation entry - Burden of proof under section 68 - Principles of natural justice - confrontation and cross-examination - Test of human probabilities - Sale on recognized stock exchange and payment of STT

Long Term Capital Gains exemption under section 10(38) - Sale on recognized stock exchange and payment of STT - Exemption claimed under section 10(38) for long term capital gains on sale of shares held for more than 12 months and sold on a recognised stock exchange after payment of STT is allowable where the assessee proves the purchase and sale through documentary evidence and such evidence is not successfully rebutted by the Department. - HELD THAT: - The Tribunal examined the documentary record (share certificates/transfer forms, broker notes, Demat statements, broker ledger, bank statements showing payment and receipt and STT evidence) and found that the assessee had established purchase of shares through banking channel, dematerialisation and sale on recognised exchange with STT paid. The authorities below relied on generalized investigation reports and the modus operandi of accommodation-entry schemes but did not bring any specific adverse material against the assessee to rebut the documentary proof. In the absence of any rebuttal to the contemporaneous documents and where twin conditions of section 10(38) (transfer of long term equity shares and chargeability to STT) are satisfied, the long term capital gains claim cannot be treated as unexplained income. The Tribunal followed precedents of the jurisdictional High Court and the SMC-Bench which have held similarly where documentary proof is cogent and unexplained material against the assessee is lacking. [Paras 6]

Addition treated as unexplained income is deleted and exemption under section 10(38) is allowed; appeal allowed.

Accommodation entry - Burden of proof under section 68 - Principles of natural justice - confrontation and cross-examination - Test of human probabilities - Findings based on statements and investigation material which were not confronted to the assessee and where no opportunity of cross examination was given cannot be read against the assessee; general investigation into accommodation entry schemes is not a substitute for specific evidence linking the assessee to the scheme. - HELD THAT: - The Tribunal recorded that the Assessing Officer and CIT(A) relied on investigation reports and statements of persons recorded in other proceedings to characterize the transactions as accommodation entries. However, those statements and SEBI material were not confronted to the assessee during proceedings, and the assessee was not afforded the chance to cross examine the deponents. The Tribunal held that such material, when not specifically tied to the assessee and not subject to confrontation/cross examination, cannot supply the requisite proof to displace the assessee's documentary evidence. While the test of human probabilities may justify scrutiny of extraordinary gains, that principle cannot be invoked to negate clear, unrebutted documentary proofs without specific and confronted adverse material. [Paras 8]

Reliance on un confronted investigation statements and generic SEBI/Investigation reports rejected; such material cannot sustain an addition in the absence of specific, confronted evidence.

Final Conclusion: The Tribunal set aside the orders of the authorities below and deleted the additions, holding that the assessee proved genuine purchase and sale of shares satisfying the conditions of section 10(38), and that un confronted investigation/SEBI material could not be relied upon to treat the LTCG as unexplained income; appeal allowed for A.Y. 2014-2015.

Assessment under section 144 - rejection of books of account under section 145 - addition on account of suppressed sales - treatment of VAT-sales discrepancy - disallowance under section 184/185 for payments to partners - estimation of income after rejection based on past accepted results - deduction for PF/ESI conditional on actual payment (Section 43B principle)

Addition on account of suppressed sales - treatment of VAT-sales discrepancy - income vs turnover - add only profit element - Whether entire difference between sales shown in VAT return and sales declared in income-tax return could be treated as assessee's income or only the profit element embedded in such sales. - HELD THAT: - The Assessing Officer treated the full difference of Rs. 73,09,872 between sales in the VAT return and sales in the audited accounts as suppressed income and added the entire amount. The assessee contended there was a mistake in the VAT return but did not substantiate the nature of the mistake. The Tribunal accepted the legal proposition that the whole sales figure cannot be treated as income and only the income element (gross/net profit margin) embedded in the excess sales can be taxed. Having regard to the audited accounts, the Tribunal observed gross profit for the year was 2.54% and directed the Assessing Officer to restrict the addition to 2.54% of the said sales difference, following precedents relied upon by it. [Paras 10, 12, 13]

Addition on account of suppressed sales reduced and directed to be computed at 2.54% of the disputed sales figure; ground partly allowed.

Disallowance under section 184/185 - assessment under section 144 - compliance with notice under section 142(1) - Whether partner's interest and remuneration debited in books could be disallowed under section 184/185 on the basis that assessment was made under section 144 for non-compliance with notices. - HELD THAT: - The Assessing Officer disallowed partner's interest and remuneration relying on section 185 read with section 184 as assessment was completed under section 144. The assessment order itself, however, records that representatives of the assessee appeared and produced various audit reports, ledger copies, reconciliations and other documents in response to notices under sections 142(1) and 143(2). The Tribunal found the AO's general statement of non-compliance to be vague and contrary to the specific record of compliance. It was also not in dispute that payments to partners were in accordance with the partnership deed and within limits of section 40(b). Accordingly the disallowance was not sustainable. [Paras 21, 22, 23]

Disallowance of partner's interest and remuneration deleted; ground allowed.

Rejection of books of account under section 145 - estimation of income after rejection based on past accepted results - net profit rate applied after rejection - Whether books of account could be rejected for A.Y. 2012-13 and, after such rejection, at what net profit rate the income should be estimated. - HELD THAT: - The Assessing Officer issued inquiries to alleged creditors/advance-from-customers; non-service of letters in many instances and a mismatch in one confirmation led the AO to reject the books under section 145. The AO estimated net profit at 1% of turnover; the CIT(A) reduced the rate to 0.5% after considering earlier years. The Tribunal examined the assessee's preceding five years' accepted net profit percentages (ranging 0.17%-0.25%) and held that estimations after rejection must be guided by past accepted results rather than an arbitrary higher rate. Since the highest accepted net profit in earlier years was 0.25%, the Tribunal directed computation of income at 0.25% of turnover. [Paras 28, 30, 36]

Books rejection sustained but net profit rate for computation of income fixed at 0.25% of turnover; ground partly allowed.

Deduction for PF/ESI conditional on actual payment (Section 43B principle) - allowability where deposited before filing return - Whether employees' contribution to ESI and EPF deposited before filing of return is allowable as deduction despite not being deposited within the statutory due date under the respective Acts. - HELD THAT: - The Assessing Officer disallowed employee contributions to ESI and EPF on the ground they were not deposited within the due date prescribed under the respective statutes. The CIT(A) followed a High Court decision in disallowing. The Tribunal noted the assessee had deposited the contributions before filing the return under section 139(1). Relying on the Supreme Court's decision in Rajasthan Beverage Corporation (cited in the order) which held that deposits made on or before filing of the return are to be allowed, the Tribunal deleted the additions relating to employee's contributions to ESI and EPF. [Paras 42, 45]

Additions for employee's ESI and EPF contributions deleted as contributions were deposited before filing of return; ground allowed.

Final Conclusion: The appeals are partly allowed: for AY 2013-14 the addition for suppressed sales is restricted to 2.54% of the disputed sales and the disallowance of partner's interest and remuneration is deleted; for AY 2012-13 the books rejection is sustained but income is to be computed at 0.25% of turnover and additions for employee PF/ESI contributions deposited before filing the return are deleted.

Application of Rule 8D to assessment year 2008-09 - computation of disallowance under rule 8D(2)(iii) by reference to average value of investments - restriction of average value to investments yielding exempt income - apportionment of interest disallowance under rule 8D(2)(ii) - onus on Assessing Officer to establish use of interest-bearing funds for investments - effect of earlier year acceptance on disallowance under Rule 8D - limitation of total disallowance under Section 14A to amount of exempt income

Computation of average value of investments for Rule 8D(2)(iii) - restricted to investments yielding exempt income - Disallowance under Rule 8D(2)(iii) to be recomputed by considering only investments which yielded exempt income during the year. - HELD THAT: - The Tribunal held that for the purpose of Rule 8D(2)(iii) the average value of investments must be confined to those securities in respect of which exempt income was actually earned during the year. The Assessing Officer had adopted the average of total investments appearing in the balance sheet including securities which did not yield exempt dividend; that approach was not supported by binding precedents of the jurisdictional High Court and the Special Bench which confine the base to investments yielding exempt income. Consequently the matter is set aside and remitted to the Assessing Officer for recomputation of disallowance under Rule 8D(2)(iii) after considering only those investments that produced exempt income in the year. [Paras 5, 6]

Impugned disallowance under Rule 8D(2)(iii) set aside and remitted to AO to recompute using only investments yielding exempt income.

Apportionment of interest disallowance under Rule 8D(2)(ii) - onus on Assessing Officer to prove use of borrowed funds - effect of earlier assessment acceptance on later disallowance - Disallowance of interest under Rule 8D(2)(ii) is not sustained; matter remitted to the Assessing Officer for de novo adjudication on the source and application of funds used for investments, notwithstanding earlier years' treatment. - HELD THAT: - The Tribunal found that the authorities below had mechanically apportioned interest as per the figure in the profit & loss account without adequately considering material facts such as sales realizations and the actual source of funds for investments. The Assessing Officer bears the onus of demonstrating that investments were made out of interest-bearing borrowed funds. Further, acceptance or treatment in prior assessment years cannot preclude the AO from examining and disallowing interest under Rule 8D for the first year of its applicability (AY 2008-09). In view of incomplete consideration of facts, the Tribunal set aside the order and restored the issue to the AO for fresh adjudication after determining the source of funds and after giving the assessee opportunity of being heard. [Paras 7, 8, 10]

Disallowance of interest under Rule 8D(2)(ii) set aside and remitted to AO for de novo adjudication on the source and application of borrowed funds; AO to hear the assessee.

Cap of disallowance u/s 14A to amount of exempt income - Any disallowance computed under Section 14A read with Rule 8D shall not exceed the amount of exempt dividend income earned during the year. - HELD THAT: - Relying on jurisdictional authorities, the Tribunal recorded that where exempt income is limited, the disallowance under Section 14A must similarly be restricted and cannot exceed the exempt income itself. Having regard to the assessee's exempt dividend income for the year, the Tribunal directed that the disallowance computed by the Assessing Officer in the fresh proceedings should not cross that amount. [Paras 11]

Disallowance under Section 14A/Rule 8D to be capped at the amount of exempt dividend income earned in the year.

Final Conclusion: Appeal partly allowed: Rule 8D was correctly invoked for AY 2008-09; disallowance under Rule 8D(2)(iii) remitted for recomputation limited to investments yielding exempt income; disallowance under Rule 8D(2)(ii) (interest) set aside and remitted for de novo adjudication on source of funds; any disallowance ultimately computed shall not exceed the exempt dividend income for the year.

Deduction under section 80P(2) read with subsection (4) - Principle of mutuality - Definition of 'member' under the State Cooperative Societies Act - Distinguishability of precedent on facts

Deduction under section 80P(2) read with subsection (4) - Principle of mutuality - Definition of 'member' under the State Cooperative Societies Act - Distinguishability of precedent on facts - Entitlement of the assessee (a primary agricultural credit society) to deduction under section 80P(2) read with subsection (4) where credit facilities were extended to nominal members who outnumbered regular members. - HELD THAT: - The Tribunal found as undisputed that the assessee is a primary agricultural credit society registered under the Gujarat Cooperative Societies Act, 1961, engaged in providing credit and agricultural-related facilities to farmer-members. The Income-tax Act does not define "member" nor distinguish between regular and nominal members; the meaning must therefore be understood in light of the State Act. Section 2(13) of the Gujarat Act includes nominal, associate or sympathizer members within the definition of "member." On that basis, loans to and deposits from nominal members cannot be treated as transactions with non-members or the public so as to convert the society's activities into banking business and break the principle of mutuality. Subsection (4) to section 80P renders primary agricultural credit societies eligible for the deduction under section 80P(2). The Tribunal held the Supreme Court decision in Citizens Co-operative Society Ltd. distinguishable: there the society's activities violated the statutory framework under the Multi State Co-operative Societies Act and involved a carved-out category of persons and regulatory non-compliance. Those factual and statutory distinctions meant that the precedent did not apply to the present assessee. Applying these conclusions, the Tribunal concluded that denial of the claim by the Assessing Officer was not justified and directed recomputation allowing the deduction. [Paras 7, 8]

Assessee entitled to deduction under section 80P(2) read with subsection (4); appeal allowed and AO directed to recompute income accordingly.

Final Conclusion: Tribunal allows the assessee's appeal for AY 2015-16, holding that as a primary agricultural credit society recognised under the State Act the assessee is eligible for deduction under section 80P(2) read with subsection (4); transactions with nominal members are within the statutory concept of 'member' and the Supreme Court decision relied on by the Revenue is distinguishable on facts, hence the AO is directed to recompute income allowing the deduction.

Power to condone delay on 'sufficient cause' basis - liberal construction of 'sufficient cause' - condonation of delay in appellate proceedings - dismissal of appeals as time-barred

Power to condone delay on 'sufficient cause' basis - liberal construction of 'sufficient cause' - condonation of delay in appellate proceedings - Application for condonation of delay in filing appeals was rejected for lack of sufficient cause. - HELD THAT: - The Tribunal examined the condonation applications filed by the Official Liquidator which were verbatim and unaccompanied by any affidavit. The applications offered a vague explanation that the Official Liquidator was occupied with duties assigned by the High Court and therefore could not decide on filing appeals within the prescribed period. The Tribunal observed that the explanation did not demonstrate why the Official Liquidator could not apply his mind for periods ranging from 95 to 316 days, nor was any supporting material produced to show that it was practically impossible to attend to the matters in time. Applying the settled approach that the expression 'sufficient cause' is to be liberally construed but nonetheless requires a plausible explanation, the Tribunal found the reasons to be neither convincing nor sufficient and held that the delay was unexplained. Consequently the condonation applications failed. [Paras 6]

Applications for condonation of delay dismissed for want of sufficient cause.

Dismissal of appeals as time-barred - condonation of delay in appellate proceedings - Appeals were dismissed as time-barred following rejection of condonation applications. - HELD THAT: - As the condonation applications were dismissed for failure to establish sufficient cause for the delay, the appeals could not be admitted out of time. The Tribunal proceeded ex parte qua the assessee after notice and non-appearance, reviewed the record with assistance of the Departmental Representative, and concluded that there was no merit in admitting the appeals which were delayed by 316, 315 and 94 days respectively. The Tribunal therefore dismissed all three appeals being time-barred. [Paras 6, 7]

All three appeals dismissed as time-barred.

Final Conclusion: The condonation applications filed by the Official Liquidator were rejected for failure to establish sufficient cause, and consequently the three appeals for assessment years 2007-08, 2010-11 and 2012-13 were dismissed as time-barred.

Accommodation entries - Satisfaction under Section 68 and burden on assessee to prove identity, creditworthiness and genuineness of creditors - Duty of Assessing Officer to make independent inquiry and confront assessee with incriminating material - Reliance on third party investigation material without independent verification or opportunity of rebuttal is impermissible - Deletion of addition where loans are satisfactorily explained

Satisfaction under Section 68 and burden on assessee to prove identity, creditworthiness and genuineness of creditors - Duty of Assessing Officer to make independent inquiry and confront assessee with incriminating material - Reliance on third party investigation material without independent verification or opportunity of rebuttal is impermissible - Deletion of addition where loans are satisfactorily explained - Validity of addition of unsecured loans of Rs. 3,35,00,000/- as unexplained credit in the hands of the assessee - HELD THAT: - The assessee furnished before the Assessing Officer PAN details of creditors, constitution and addresses, income tax return particulars, confirmatory letters, audited financial accounts and bank statements showing banking channels of payment and repayment. The Assessing Officer did not issue any further notices, did not confront the assessee with the investigation material relied upon, nor made independent enquiries (for example, by issuing notice to creditors) to rebut the documentary evidence produced. The Tribunal accepted the Commissioner (Appeals)'s view that once the assessee has discharged the onus by producing evidence establishing identity, creditworthiness and genuineness of the loans, the burden shifts to the revenue to rebut such explanation. Reliance solely on the investigation wing's findings, without bringing those materials to the assessee's notice or undertaking independent verification, amounted to a failure to apply mind and violated principles of fair inquiry. In those circumstances the Assessing Officer's addition could not be sustained and deletion by the Commissioner (Appeals) was upheld. [Paras 22, 23, 24, 25]

Addition of Rs. 3,35,00,000/- treated as unexplained credit deleted; order of CIT(A) upheld and Revenue's appeal dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal for assessment year 2012-13, upholding the CIT(A)'s deletion of the addition where the assessee had satisfactorily explained the unsecured loans and the Assessing Officer failed to make independent enquiries or confront the assessee with the investigation material relied upon.

Installation Permanent Establishment - Attribution of profits to a Permanent Establishment - Activity through PE necessary for attribution of income - Offshore supply of goods and offshore provision of services not attributable to PE - Maintenance/Annual Maintenance Contract post-installation does not constitute Installation PE - Fees for Technical Services (FTS) - requirement of making available technical knowledge - DTAA India Netherlands - Article 5(3) (Installation PE) - Judicial consistency and following prior tribunal findings

Installation Permanent Establishment - Offshore supply of goods and offshore provision of services not attributable to PE - Activity through PE necessary for attribution of income - DTAA India Netherlands - Article 5(3) (Installation PE) - Whether an Installation PE existed in India in relation to the Gulf of Kuchchh (GOK) Project and whether receipts from offshore supply of equipment and offshore services could be attributed to such PE. - HELD THAT: - The Tribunal followed its earlier decisions in the assessee's own cases for preceding assessment years and the ratio in Ishikawajima Harima that income can be attributed to a PE only where there is activity through that PE. Applying those authorities, the Tribunal held that the offshore supplies were effected as high sea sales and offshore services were performed outside India; the alleged Installation PE in India was not involved in such offshore transactions. Consequently, profits from offshore supply of equipment and offshore provision of services could not be attributed to any Installation PE in India. The Tribunal therefore declined to include such offshore receipts for attribution to PE, applying established precedents and maintaining judicial consistency. [Paras 3]

Grounds 2.1, 2.2 and 2.3 are allowed; offshore receipts and profits from offshore services are not attributable to the Installation PE in India.

Installation Permanent Establishment - Maintenance/Annual Maintenance Contract post-installation does not constitute Installation PE - Virtual presence through independent subcontractor does not create PE - Fees for Technical Services (FTS) - requirement of making available technical knowledge - DTAA India Netherlands - Article 5(3) (Installation PE) - Whether the assessee's provision of AMC (maintenance) services for the ONGC VATMS project during the year constituted an Installation PE in India, whether the presence of an Indian subcontractor created a virtual presence/PE, and whether AMC fees amounted to FTS. - HELD THAT: - Relying on its earlier findings in the assessee's own cases for prior years, the Tribunal held that AMC services rendered after completion and handing over of the installation do not amount to installation activities for the purpose of constituting an Installation PE. The Tribunal further held that the performance of the AMC through an independent local contractor on a principal to principal basis does not create a virtual presence of the foreign enterprise in India and therefore does not give rise to a PE. On the characterisation issue, the Tribunal held that the AMC services did not make available technical know how or knowledge to the customer's personnel and therefore did not amount to FTS under the applicable DTAA provision. Applying those conclusions to the facts of the year, the contested grounds were disposed of in favour of the assessee. [Paras 4]

Grounds 3.1 to 3.5 are allowed; AMC fees are not taxable in India as business profits attributable to an Installation PE nor as FTS.

Final Conclusion: The Tribunal, following its prior decisions and relevant precedents, held for Asst Year 2014 15 that offshore receipts and offshore services relating to the GOK Project are not attributable to any Installation PE in India, and that post installation AMC services for the ONGC VATMS project do not constitute an Installation PE nor FTS; the assessee's appeal is partly allowed for statistical purposes.

Deduction under section 80P(2)(a)(i) for primary agricultural credit societies - primary agricultural credit society - classification under State Cooperative Societies Act - non-applicability of section 80P(4) to societies classified as primary agricultural credit societies - precedential effect of High Court decision

Deduction under section 80P(2)(a)(i) for primary agricultural credit societies - non-applicability of section 80P(4) to societies classified as primary agricultural credit societies - precedential effect of High Court decision - Entitlement of primary agricultural credit societies registered under the Kerala Cooperative Societies Act to deduction under section 80P(2)(a)(i). - HELD THAT: - The Tribunal held that the assessee-societies, being primary agricultural credit societies as classified under the Kerala Cooperative Societies Act, are entitled to the deduction under section 80P(2). The CIT(A) had followed the Kerala High Court decision in Chirakkal Service Co-operative Bank Ltd., which concluded that societies so classified have their principal object of undertaking agricultural credit activities recognised by the State law and that income tax authorities cannot probe that classification. Applying that precedent, the Tribunal found section 80P(4) (inserted w.e.f. 01.04.2007) does not exclude such societies from the benefit of section 80P(2), and thus the Assessing Officer's denial was not tenable. The Tribunal therefore directed allowance of the deduction in accordance with the High Court ruling and the CIT(A)'s order. [Paras 6]

The assessee-societies are entitled to deduction under section 80P(2)(a)(i); the Revenue appeals are dismissed.

Final Conclusion: Appeals dismissed; primary agricultural credit societies registered under the Kerala Cooperative Societies Act are entitled to deduction under section 80P(2)(a)(i) for AY 2013-2014 in accordance with the Kerala High Court precedent.

Deduction under section 80IB - Filing of return under section 139(1) and section 139(4) - Revisionary jurisdiction under section 263 - Two views doctrine and reasonableness of Assessing Officer's view - Acceptance of declaration made during survey under section 133A - Corroboration requirement for statements obtained during survey

Deduction under section 80IB - Filing of return under section 139(1) and section 139(4) - Revisionary jurisdiction under section 263 - Two views doctrine and reasonableness of Assessing Officer's view - Validity of the Pr. CIT's direction under section 263 to examine allowability of deduction under section 80IB where returns were filed within the time permitted by section 139(4). - HELD THAT: - The Tribunal held that subsection (4) of section 139 must be read with subsection (1), and a return filed within the time permitted by section 139(4) constitutes compliance for the purpose of claiming deduction under section 80IB. The decision of the jurisdictional High Court in Trustees of Tulsidas Gopalji Charitable & Chaleshwar Temple Trust following the Apex Court in Kulu Valley Transport Co. P. Ltd. supports this reading. Further, where the Assessing Officer has adopted a view - permissibly open on the facts and law - that view cannot be upset by the Commissioner under section 263 merely because the Commissioner prefers a different view; the principle explained in Malabar Industrial Co. Ltd. applies. Applying these principles, the Tribunal found no infirmity in the AO's allowance of deduction under section 80IB and quashed the Pr. CIT's direction to re-examine the claim under section 263. [Paras 12, 13, 14, 15]

Pr. CIT's direction under section 263 to re-examine allowability of deduction under section 80IB is quashed; AO's allowance stands.

Acceptance of declaration made during survey under section 133A - Corroboration requirement for statements obtained during survey - Deduction under section 80IB affecting taxation of additional income - Revisionary jurisdiction under section 263 - Whether the Pr. CIT was justified in directing re-examination of the assessing officer's acceptance of the assessee's offer to tax a portion of additional income declared during a survey and the alleged double claim of partners' remuneration. - HELD THAT: - The Tribunal noted that the assessee had declared additional income during a survey but contended that a substantial part of that income was eligible for deduction under section 80IB; nonetheless the assessee offered a portion for taxation which the AO accepted. There was no independent corroborative material to support the full addition based solely on the survey statement, and the law disallows addition founded only on uncorroborated survey statements (as explained with reference to S kader Khan ). In these circumstances the AO's acceptance of the amount offered for taxation could not be characterised as an erroneous exercise of jurisdiction prejudicial to revenue such as would justify exercise of power under section 263. The Tribunal therefore found the Pr. CIT's direction concerning alleged double allowance of partners' remuneration to be unsustainable. [Paras 16, 17, 18]

Pr. CIT's direction under section 263 to re-open the AO's acceptance arising from the survey declaration is quashed; AO's action is not found to be erroneous or prejudicial to revenue.

Final Conclusion: Both orders passed under section 263 directing re-examination of the Assessing Officer's allowance of deduction under section 80IB and the acceptance of the amount offered after a survey are quashed; the appeals are allowed and the Assessing Officer's conclusions for assessment years 2011-12 and 2012-13 are restored.

Power of suo motu revision - erroneous and prejudicial to the interests of revenue - deduction under section 80IB(11C) - precedent of prior assessment year binding - no material on record to warrant revision

Power of suo motu revision - erroneous and prejudicial to the interests of revenue - no material on record to warrant revision - Assumption of jurisdiction by the Commissioner under section 263 in respect of assessment year 2012-13 - HELD THAT: - The Tribunal held that exercise of section 263 is supervisory and can be invoked only if the order sought to be revised is both erroneous and prejudicial to revenue. Applying the principles explained in the jurisdictional High Court and Supreme Court authorities, the Tribunal found no material on record to prima facie show that the assessment order for 2012-13 was not in accordance with law. The Commissioner merely disagreed with the Assessing Officer's conclusion without demonstrating that the AO's order deviated from law or was passed without any enquiry; consequently the CIT's setting aside of the assessment was unsustainable. Where the AO has exercised quasi-judicial power after examination of records and enquiries, the Commissioner cannot substitute his own judgment absent a showing of error affecting revenue. [Paras 8, 9, 13, 15]

Order passed by the Commissioner under section 263 quashed; assumption of jurisdiction was not sustainable.

Deduction under section 80IB(11C) - precedent of prior assessment year binding - Whether the Assessing Officer failed to make necessary enquiries and whether items of receipt (referral income, rental, interest, nursing college receipts) were verified for eligibility of deduction under section 80IB(11C) - HELD THAT: - The Tribunal recorded that the AO had carried out scrutiny for the preceding year (2011-12) and allowed deduction under section 80IB(11C) in respect of the same categories of receipts after examination and inspection; there was no material to show any change in facts for 2012-13. The assessee produced questionnaires, responses and summons compliance (including section 131 attendance) and explained nexus of the receipts with hospital operations. The Tribunal found the Commissioner gave no cogent reason why those explanations were unacceptable and erred in concluding that no verification was done. As the present year was not the initial year for grant of the deduction and the AO's view was one of the possible views, the deduction could not be disturbed on the basis offered by the Commissioner. [Paras 10, 11, 12, 14]

Findings that the AO had not made necessary enquiries were rejected; the questioned receipts were held to be inextricably linked to hospital business and there was no basis to withhold deduction under section 80IB(11C).

Final Conclusion: The Commissioner's order under section 263 for AY 2012-13 is quashed; the revision jurisdiction was improperly exercised as there was no material to show the assessment was erroneous and prejudicial to revenue and the Assessing Officer had, on the material before him and by reference to the preceding year 2011-12, validly allowed the deduction under section 80IB(11C).

Reopening of assessment under Section 147/148 of the Income-tax Act, 1961 - Reasons to believe - Application of mind by the Assessing Officer - Tangible material / independent satisfaction versus borrowed satisfaction - AIR information and verification - Jurisdiction to reassess and consequences of defective reopening

Reopening of assessment under Section 147/148 of the Income-tax Act, 1961 - Reasons to believe - Application of mind by the Assessing Officer - AIR information and verification - Validity of reopening assessment for A.Y. 2009-2010 where reasons recorded relied on AIR information and absence of a reply, and whether the Assessing Officer had reason to believe that income had escaped assessment. - HELD THAT: - The Tribunal examined the reasons recorded and the material placed on record and found that the Assessing Officer had not applied his mind to the tangible material before him. The reasons reproduced the AIR information and noted the assessee's non-response, but did not independently demonstrate a nexus between any tangible material and a prima facie belief that income chargeable to tax had escaped assessment. The AO erroneously treated absence of a reply (when no assessment proceedings were pending) as establishing willful concealment and did not verify departmental records or otherwise analyze the material before recording reasons. Reliance on unexamined AIR information without independent application of mind amounts to a 'borrowed satisfaction' and is insufficient to constitute the mandatory jurisdictional satisfaction for reopening. In these circumstances the reassessment assumption of jurisdiction under section 147/148 was held to be legally defective and liable to be quashed; consequential additions based on the reopened proceedings were deleted. [Paras 7, 8]

Reopening of assessment for A.Y. 2009-2010 quashed for lack of independent reasons to believe; consequential additions deleted.

Final Conclusion: The reopening under section 147/148 was set aside because the Assessing Officer failed to form an independent, material-based reason to believe that income had escaped assessment; appeal allowed and consequential additions deleted.

Provisional release of seized goods pending adjudication - Competence of adjudicating authority under Section 110A - Application of CBEC guidelines for provisional release

Competence of adjudicating authority under Section 110A - Provisional release of seized goods pending adjudication - Impugned provisional-release order by the Commissioner is not sustainable because the show cause notice was issued by the Joint Commissioner who is the competent adjudicating authority under Section 110A. - HELD THAT: - The Court examined Section 110A which contemplates provisional release to be decided by the adjudicating authority competent to hear the show cause notice. In the present case the Show Cause Notice was issued by the Joint Commissioner who is the adjudicating authority under the SCN. The provisional release was, however, granted by the Commissioner who was not the adjudicating authority in respect of that SCN. For that reason the action of the Commissioner in granting provisional release is unsustainable and had to be set aside. [Paras 7, 8]

Impugned provisional-release order set aside and held not sustainable for want of competence.

Application of CBEC guidelines for provisional release - Provisional release of seized goods pending adjudication - Direction to the competent adjudicating authority to order provisional release of the seized goods in conformity with CBEC guidelines. - HELD THAT: - Having set aside the Commissioner's order, the Court directed the competent adjudicating authority to proceed with provisional release in accordance with the applicable CBEC guidelines. The Court specifically referred to the directions in CBEC Circular No. 81/2011-NT and Circular No. 35/2017-Cus. and required adherence to those guidelines, giving a limited timeline for compliance. [Paras 9]

Appeal allowed; adjudicating authority directed to release the goods in terms of CBEC Circular No. 81/2011-NT and Circular No. 35/2017-Cus. within ten days of receipt of the order.

Final Conclusion: The provisional-release order passed by the Commissioner was quashed for lack of competence; the competent adjudicating authority is directed to decide and, if appropriate, release the seized goods strictly in accordance with the CBEC guidelines cited, within ten days.

Penalty under Section 117 of the Customs Act, 1962 - Penalty under Section 114AA of the Customs Act, 1962 - Customs House Agents Licensing Regulations, 2004 - mens rea - failure of due diligence by Custom House Agent - confiscation and attempted illicit export

Penalty under Section 117 of the Customs Act, 1962 - Customs House Agents Licensing Regulations, 2004 - mens rea - failure of due diligence by Custom House Agent - Sustainability of penalties under Section 117 imposed on Custom House Agents and their employees where adjudicating authority found no mens rea and the infractions arose from failure to discharge CHALR obligations. - HELD THAT: - The Tribunal held that where the adjudicating authority has found absence of mens rea and no positive evidence of abetment in the attempted fraudulent export, failures attributable to the CHA in discharging duties fall within the regulatory regime of the CHALR and attract disciplinary/penal consequences under those Regulations rather than penal provisions of the Customs Act. The show cause notice had proposed penalty under Section 114AA and Section 117; the adjudicating authority dropped Section 114AA having found no mens rea but nevertheless imposed penalties under Section 117. Applying the precedents cited and earlier decisions of this Tribunal and the High Court, the Bench concluded that in such circumstances imposition of penalties under Section 117 is unwarranted and cannot be sustained, and therefore set aside the penalties imposed under Section 117 on the appellants (except the appellant dismissed for non-prosecution). [Paras 6]

Penalties imposed under Section 117 on Shri M.K.M. Manthiram, Shri C. Gunasekaran, M/s. Smile Shipping Services and Shri B. Jawahar set aside; appeals allowed with consequential benefits.

Non-prosecution - dismissal for non-prosecution - Disposition of Appeal C/104/2011 filed by Shri A.P.T. Mahadevan for want of prosecution. - HELD THAT: - The Bench recorded that the appellant (Shri A.P.T. Mahadevan) did not appear or obtain representation at multiple hearings and was not represented on the hearing date. The only permissible inference is lack of interest in pursuing the appeal. In view of the appellant's continued non-appearance, the Tribunal dismissed the appeal for non-prosecution. [Paras 6]

Appeal C/104/2011 dismissed for non-prosecution.

Final Conclusion: Appeal C/104/2011 dismissed for non-prosecution; Appeal Nos. C/141/2011, C/66/2011, C/139/2011 and C/140/2011 allowed, and the penalties under Section 117 imposed on the said appellants set aside, with consequential benefits as per law.

Condonation of delay - oppression and mismanagement - setting aside of sale deed - bona fide purchaser for value - duty to verify title / due diligence - disqualified director - protection under Section 176 of the Companies Act, 2013

Condonation of delay - Condonation of delay in presentation of the appeal - HELD THAT: - The application for condonation of delay (IA No.12 of 2018) was considered on the basis of the date of the impugned order, the date of presentation of the appeal and the reasons stated in the application. The Tribunal examined those materials and the reasons given and exercised its discretion to condone the delay in presenting the appeal. [Paras 2]

Delay in presentation of the appeal is condoned.

Oppression and mismanagement - setting aside of sale deed - disqualified director - Validity of sale deed dated 03.11.2015 executed by respondent purportedly as Managing Director and whether NCLT rightly found oppression and mismanagement and set aside that sale deed - HELD THAT: - The Tribunal examined the NCLT's findings that the Company had done no major business except purchase of two lands and that the alleged sale of the Company's prime property was a major transaction requiring disclosure to and decision by shareholders. The sale deed dated 03.11.2015 was executed by Respondent No.2 while he was shown to have tendered resignation and was otherwise a disqualified director; therefore he lacked authority to validly transfer title. Given the familial relationships among respondents and contradictory pleadings (exchange claimed versus sale deed reciting payment), the Tribunal found the NCLT's assessment of suspicious transfer without authority and its conclusion of oppression and mismanagement to be unassailable on the material before it. [Paras 15, 16]

The finding of oppression and mismanagement is upheld and the sale deed dated 03.11.2015 is liable to be set aside.

Setting aside of sale deed - bona fide purchaser for value - duty to verify title / due diligence - Validity of subsequent sale deed dated 04.11.2016 in favour of Respondent No.8 and claim of Respondent No.8 to be a bona fide purchaser for value - HELD THAT: - The Tribunal considered documents and submissions relied upon by Respondent No.8 to show due diligence. Documents now placed on record in appeal either post date the sale deed or were not shown to have been procured or relied upon prior to the purchase; the extract downloaded from the Registrar's master data did not disclose when it was obtained. On that basis Respondent No.8 failed to demonstrate that it had made the requisite verification of its vendor's title prior to purchase. As the vendor (Respondent No.7) lacked valid title because the prior transfer by Respondent No.2 was void, Respondent No.8 could not acquire good title and could not establish bona fides. [Paras 10, 14, 15]

The subsequent sale deed dated 04.11.2016 is also liable to be set aside; Respondent No.8's plea of bona fide purchaser for value is rejected for want of due diligence.

Protection under Section 176 of the Companies Act, 2013 - disqualified director - Whether acts of Respondent No.2 are protected under Section 176 of the Companies Act, 2013 - HELD THAT: - Section 176 preserves validity of acts of a person as director notwithstanding later discovery of invalid appointment in certain circumstances. The Tribunal held that where Respondent No.2 had incurred disqualification and had tendered resignation, his subsequent holding out and execution of the sale deed could not be protected by Section 176; such conduct falls outside the protective ambit and may attract criminal liability. Accordingly the Section 176 defence could not be accepted to validate the impugned transaction. [Paras 16]

Protection under Section 176 cannot be invoked to validate the sale executed by a disqualified and resigned director; the defence is rejected.

Oppression and mismanagement - Other allegations of oppression and mismanagement raised in the Company Petition - HELD THAT: - NCLT examined multiple other averments in the petition but found them without merit. On appeal no sufficient material was pointed out to persuade the Tribunal to re open or interfere with those findings. The Tribunal therefore confined its interference to the aspects concerning the impugned sale deeds which were supported by the record and reasoning. [Paras 17]

The NCLT's rejection of other reliefs and allegations in the Company Petition is affirmed.

Final Conclusion: The Tribunal condoned the delay in filing the appeal, upheld the NCLT's finding of oppression and mismanagement, affirmed the setting aside of the sale deeds dated 03.11.2015 and 04.11.2016, rejected the bona fide purchaser defence of Respondent No.8 for want of due diligence, refused protection under Section 176 for the acts of the disqualified/resigned director, and declined interference with other findings of the NCLT; both appeals are dismissed with no order as to costs.

Co-loader not liable to service tax - Applicability of earlier Board Circular vis-a -vis later departmental clarification - Reverse charge and territoriality under Rule 3 of the Taxation of Service (Provided From Outside India and Received In India) Rules, 2006

Co-loader not liable to service tax - Applicability of earlier Board Circular vis-a -vis later departmental clarification - Demand of service tax on amounts realized as a co-courier (co-loader) by the appellant for the period 01.05.2006 to 22.08.2007. - HELD THAT: - The Tribunal examined the Board Circular dated 01.11.1996 which expressly clarified that co-loaders provide service to the courier agency and not directly to the customer, and therefore charges by co-loaders to courier agencies are not chargeable to service tax. That Circular remained in force for the disputed period and the later Circular dated 23.08.2007 cannot be given retrospective application to impose liability for the earlier period. The Tribunal followed the precedent in United Business Xpress India P. Ltd. (considering the applicability of both circulars) and found no compelling reason to depart from that view. Consequently the demand in respect of co-loader services for the period in question was held unsustainable and was set aside. [Paras 5]

Demand raised in respect of co-loader services is set aside.

Reverse charge and territoriality under Rule 3 of the Taxation of Service (Provided From Outside India and Received In India) Rules, 2006 - Demand of service tax under reverse charge on commission paid to foreign agents for delivery of parcels abroad for the periods 2006-07 and 2007-08. - HELD THAT: - The Tribunal applied the reasoning in First Flight Couriers Ltd., which held that the overseas entities' role commences upon landing at the destination and their performance is completed beyond India; therefore no portion of the service is rendered in India and Rule 3 does not make such services taxable in India. On the same basis the Tribunal concluded that the commission paid to foreign agents for overseas delivery did not attract service tax under the reverse charge mechanism and the demand could not be sustained. [Paras 5]

Demand under reverse charge for commission paid to foreign agents is set aside.

Final Conclusion: The impugned order confirming demands and penalties is set aside; the appeal is allowed. The Department's application to amend the cause title is allowed and registry directed to effect the change; consequential reliefs, if any, to follow.

Principle of mutuality - Renting of immovable property - levy of service tax - Threshold exemption for taxable services under Notification No. 08/2008 - Rs.10 lakhs

Principle of mutuality - Renting of immovable property - levy of service tax - Rent collected from members of the association is not liable to service tax by virtue of the principle of mutuality. - HELD THAT: - The Tribunal accepted the appellant's case that the Association is a voluntary organization incorporated to facilitate its members and that portions of the premises were let to its members for that purpose. Applying the principle of mutuality as recognised in earlier High Court decisions relied upon by the appellant, the Tribunal held that amounts collected from members do not attract the levy of service tax. The Tribunal expressly followed the reasoning in the decisions cited by the appellant, including Saturday Club Ltd. , Ranchi Club Ltd. and Sports Club of Gujarat Ltd. , and earlier Tribunal precedent referred to in the appeal, and concluded that rent received from members falls outside the taxable service.

Demand in respect of rent collected from members set aside.

Threshold exemption for taxable services under Notification No. 08/2008 - Rs.10 lakhs - Renting of immovable property - taxable value from non-members and vacant land - Amounts collected from non-members and from vacant land during the relevant period fall below the threshold specified in Notification No. 08/2008 and therefore do not attract service tax liability. - HELD THAT: - The Tribunal examined the taxable receipts from non-members and vacant land for the period 01.06.2007 to 31.03.2011 and compared them with the threshold in Notification No. 06/2005 (as amended by Notification No. 08/2008 which raised the limit to Rs. 10 lakhs). For 2007-08, when the earlier threshold was Rs. 8 lakhs, the rent from non-members was found to be Rs. 3,36,180; for 2008-09 to 2010-11 the receipts from non-members were each below Rs. 5 lakhs. On this basis the Tribunal concluded that the taxable value attributable to non-members and vacant land did not exceed the threshold and thus no service tax demand could be sustained on that account.

Demand in respect of amounts collected from non-members and vacant land disallowed on the ground of threshold exemption.

Final Conclusion: The appeal is allowed; the confirmed demand of service tax, interest and penalties for the period 01.06.2007 to 31.03.2011 is set aside insofar as it relates to rent from members (by application of mutuality) and insofar as it relates to amounts from non-members and vacant land (being below the threshold in Notification No. 08/2008), with consequential reliefs as may be applicable.

Manufacture - business auxiliary service - incidental or ancillary to the completion of a manufactured product - customisation of raw material into parts for final product - exemption Notification No.06/2005 - exemption Notification No.08/2005

Manufacture - business auxiliary service - incidental or ancillary to the completion of a manufactured product - customisation of raw material into parts for final product - Whether the appellants' activities constitute manufacture or fall within the definition of business auxiliary service. - HELD THAT: - The Tribunal examined the statutory definitions and precedents and found that simple processes such as cutting, drilling, punching, notching, bending and numbering, when performed to customise raw materials (angles, plates, sections) to a particular shape, size and location of holes as per design for incorporation into a transmission tower, amount to processes incidental or ancillary to completion of a manufactured product. Relying on the reasoning in Mahindra & Mahindra and Brakes India, it was held that where the objective of the processes is to convert raw material into distinct, marketable parts tailored for the final product - here CKD parts cleared for final assembly at site - the activities are manufacture and not merely BAS. Processes undertaken on L&T premises to produce semi-finished customised parts that retain a distinct identity and are cleared in unassembled form before final erection indicate manufacture rather than mere business auxiliary services. The Tribunal therefore concluded that the adjudicating authority's classification of the activities as business auxiliary service was incorrect and set aside that part of the orders. [Paras 10, 11]

Activities of the appellants are manufacture; the findings treating them as business auxiliary service are set aside.

Exemption Notification No.06/2005 - exemption Notification No.08/2005 - Whether appellants are entitled to benefit of Notification No.06/2005 and Notification No.08/2005. - HELD THAT: - The Tribunal noted that Notification No.06/2005 provides a limited exemption subject to proof of aggregate value of taxable services. The appellants failed to produce evidence of the aggregate value of taxable services before the adjudicating and appellate authorities. The Tribunal therefore upheld the denial of benefit under Notification No.06/2005. With respect to Notification No.08/2005, the Tribunal found no infirmity in the impugned orders granting its benefit and confirmed the extension of Notification No.08/2005 in favour of the appellants. Consequential benefits were to follow accordingly. [Paras 12, 13]

Benefit of Notification No.06/2005 denied for lack of evidence; benefit of Notification No.08/2005 confirmed.

Final Conclusion: Appeals partly allowed: impugned orders are set aside insofar as they classify the appellants' processes as business auxiliary services and confirm demand; the processes are held to be manufacture. Benefit under Notification No.08/2005 is confirmed; benefit under Notification No.06/2005 is denied for want of proof of aggregate taxable value. Consequential relief to follow.

Supply of Tangible Goods Service - Transport of Passengers by Air - charter hire - right of possession and effective control - classification of service for levy of service tax - extended period of limitation - C.B.E.&C. Circular No. 20/2009

Supply of Tangible Goods Service - Transport of Passengers by Air - charter hire - right of possession and effective control - classification of service for levy of service tax - Classification of the appellant's helicopter charter services as taxable service - HELD THAT: - The Tribunal examined the contracts, invoices and operational practice and found that whole helicopters were chartered to clients along with crew and maintenance obligations remained with the appellant, no individual seats were sold, no tickets issued and consideration was on flying time. Applying the statutory definition of supply of tangible goods for use and the principle that a contract must be read as a whole, the Tribunal held that the service conferred only the right to use the aircraft without transfer of right of possession and effective control. The Tribunal relied on precedent considering identical facts and C.B.E. & C. Circular No. 20/2009 which treats charter-hire where effective control is not transferred (particularly where crew is supplied by owner) as taxable under the entry for supply of tangible goods for use. The characteristics of the agreements (exclusive use by charterer for periods, charges not linked to individual passengers, lack of public openness) distinguish the transactions from transport of passengers by air and preclude treatment as non-scheduled passenger air transport. [Paras 6, 7, 8]

Services were held to be classifiable under the category of Supply of Tangible Goods Service and not under Transport of Passengers by Air, and the demand on merits upheld.

Extended period of limitation - Validity of invocation of extended limitation for the first show cause notice and limitation for the second show cause notice - HELD THAT: - The Tribunal considered the authorities' reasoning on invocation of the extended time limit for the show cause notice dated 21.03.2011 (covering May, 2008 to March, 2010) and approved the original and appellate authorities' findings that the extended period under Section 73 was rightly invoked for that notice. As to the second show cause notice dated 24.04.2012, the Tribunal noted that the normal limitation period then applicable was one year; demands falling beyond one year under that second notice could not be sustained and were set aside. [Paras 9, 10]

Invocation of extended limitation for the show cause notice dated 21.03.2011 upheld; demands in the show cause notice dated 24.04.2012 restricted to the one-year period and amounts beyond one year set aside.

Final Conclusion: Following earlier tribunal and Board guidance on identical facts, the appeal is partly allowed: the service is held to be taxable as Supply of Tangible Goods Service (charter hire) and demands on merits are upheld, but limitation is sustained for the first show cause notice and the demand in the second notice is restricted to the one-year period; appeal disposed accordingly.

Limitation for filing appeal before Commissioner (Appeals) - service by ordinary post and validity under Section 37C - condonation of delay and mandatory time-limits under Section 85 of the Finance Act, 1994 - duty of due diligence in prosecuting appellate remedies - non-application of the Limitation Act, 1963 by virtue of statutory bar

Limitation for filing appeal before Commissioner (Appeals) - condonation of delay and mandatory time-limits under Section 85 of the Finance Act, 1994 - duty of due diligence in prosecuting appellate remedies - Whether the Commissioner (Appeals) was correct in dismissing the appellant's appeal as time-barred. - HELD THAT: - The Tribunal affirmed that appeals to the Commissioner (Appeals) must be presented within the statutory period and that the Commissioner has no power to condone delay beyond the period prescribed by Section 85 of the Finance Act, 1994. The adjudicating authority's order record showed repeated opportunities afforded to the appellant and contradictions in the appellant's account of service and receipt of notices. The appellant did not satisfactorily explain the delay in seeking a copy of the order or why he did not inquire about the outcome for a prolonged period; the conduct was held to demonstrate lack of due diligence. Reliance on Supreme Court precedents noting strict adherence to limitation and that Section 5 of the Limitation Act is inapplicable by virtue of the statutory bar was accepted. In these circumstances the Tribunal found no infirmity in the Commissioner (Appeals) dismissing the appeal as barred by time. [Paras 5, 6, 7]

The appeal was rightly dismissed as time-barred and the dismissal on limitation grounds is upheld.

Service by ordinary post and validity under Section 37C - limitation for filing appeal before Commissioner (Appeals) - Whether service of the Order-in-Original by ordinary post, contrary to the prescribed mode under Section 37C of the Central Excise Act, vitiated the limitation calculation and entitled the appellant to relief. - HELD THAT: - The Tribunal acknowledged that service by ordinary post is not the prescribed mode under Section 37C of the Central Excise Act. However, it treated that factual/legal infirmity in the mode of service as insufficient to relieve the appellant from the obligation to act with due diligence. The appellant had participated in proceedings and appeared before the Commissioner (Appeals); moreover, there was no credible explanation for the long delay in seeking a copy of the order after becoming aware through a recovery notice. Given the appellant's conduct and absence of a timely, reasonable explanation, the irregularity in mode of service did not justify condonation of the delay or invalidate the limitation bar in this case. [Paras 5, 7]

Irregular service by ordinary post did not excuse the appellant's delay or overturn the time-barred dismissal.

Final Conclusion: The Tribunal dismissed the appeal, holding that the Commissioner (Appeals) correctly rejected the appeal as time-barred; the appellant's lack of due diligence and failure to provide a satisfactory explanation for the delay precluded relief, and the irregularity in mode of service did not justify condonation.

Availability of Cenvat credit for input services received at unregistered premises - no requirement that input services be received at premises listed in centralised registration - Cenvat credit admissible where input services are used for providing output taxable services

Availability of Cenvat credit for input services received at unregistered premises - no requirement that input services be received at premises listed in centralised registration - Cenvat credit admissible where input services are used for providing output taxable services - Whether Cenvat credit of service tax paid on renting of immovable property can be denied because the rented premises were not included in the assessee's centralised registration at the time rent was paid. - HELD THAT: - The Tribunal followed its decision in CCE & ST v. Samsung India Electronics Pvt. Ltd., holding that Rule 3 of the Cenvat Credit Rules, 2004 does not impose a condition that input services must be received only at premises entered in the centralised registration. The Tribunal noted that a provider of output taxable services may avail credit of service tax paid on input services so long as those services are used for providing the output taxable services. The decision in Samsung was further upheld by the Hon'ble Allahabad High Court, and the lower authorities' concurrent conclusion that credit could not be denied on the ground relied upon by Revenue was sustained. [Paras 6, 7]

The appeal is rejected and the impugned order allowing the Cenvat credit is sustained.

Final Conclusion: The Tribunal upheld the lower authorities' allowance of Cenvat credit for rent paid on premises not yet included in centralised registration, holding that inclusion in the registration is not a precondition for availing credit where the input services are used for providing output taxable services; Revenue's appeal is dismissed.

Business Support Service - infrastructural support services - consideration for services - Maintenance, Management and Repair Service - Renting of Immovable Property Services - interest and penalty for evasion

Business Support Service - infrastructural support services - consideration for services - Whether the revenue share retained by the hospital from diagnostic centres amounts to consideration for providing Business Support Service and is liable to service tax. - HELD THAT: - The agreements show diagnostic centres installed and operated their own equipment within the hospital premises, created necessary infrastructure at their cost, reimbursed electricity and water on actuals, while the hospital employed staff to bill and collect payments and then remit a share of revenue to the diagnostic centres. The hospital did not provide diagnostic health services; the diagnostic centres performed scans and issued reports through their own doctors. The element of rent was absent. The hospital's activity of facilitating collection, providing infrastructural facilitation and customer-relationship related services falls within the outsourcing nature captured by the definition of support services of business or commerce, including "infrastructural support services." Consequently, the share of revenue retained by the hospital is consideration for activities enumerated under Business Support Service and taxable as such. Prior decisions concerning arrangements with visiting doctors were distinguished on the basis that doctors are individuals (not business entities) while diagnostic centres are business entities, making the BSS entry applicable here. The Notification dated 20.06.2012 and Circular relied on by the appellant were held inapplicable to the retained revenue by the hospital. [Paras 8, 9, 10, 11, 14]

Demand for service tax on the revenue share retained by the hospital from diagnostic centres is confirmed as Business Support Service; related demand is upheld.

Maintenance, Management and Repair Service - Renting of Immovable Property Services - Whether the consideration received from food courts amounts to Maintenance, Management and Repair (MMR) service or to Renting of Immovable Property Services. - HELD THAT: - The agreements with the food courts show the hospital provided basic amenities such as water, electricity, air-conditioning and power back-up and received a fixed amount plus a percentage of sales. The activity does not fall within the definition of MMR. It is an admitted fact that with effect from 01.06.2007 the hospital was discharging liability as Renting of Immovable Property Services qua consideration received from the food courts. The earlier authority relied upon by the appellant (Aravali Construction Co. Pvt. Ltd.) was held applicable. Therefore the demand characterised as MMR was unsustainable. [Paras 12, 14]

Demand for service tax as MMR for the amount relating to food courts is set aside; treated as Renting of Immovable Property Services and the MMR demand is held not sustainable.

Interest and penalty for evasion - Whether interest and penalties imposed on the appellant are sustainable. - HELD THAT: - The Tribunal found no infirmity in imposition of interest and penalties. The appellant, being a large health service provider, cannot be presumed ignorant of law; non-deposit of tax relying on exemption for health services was treated as a positive act with intent to evade tax. Accordingly, interest and penalties relating to the confirmed BSS demand were held valid. [Paras 13, 14]

Interest and penalties confirmed in respect of the upheld Business Support Service demand are sustained.

Final Conclusion: The appeal is partly allowed: the demand for Business Support Service (revenue share retained from diagnostic centres) and consequential interest and penalties are upheld; the demand of service tax characterised as Maintenance, Management & Repair Services in relation to food courts is set aside.

Eligibility for small scale exemption under Notification No. 6/2005-ST - services provided under the brand of the principal - admissibility of fresh grounds of taxability on appeal - service tax liability under Business Auxiliary Service - taxability of installation and maintenance services

Eligibility for small scale exemption under Notification No. 6/2005-ST - services provided under the brand of the principal - Entitlement of the appellant to benefit of Notification No. 6/2005-ST for services rendered during 2007-08 to 2011-2012 - HELD THAT: - The Tribunal examined the Commissioner (Appeals) finding that the appellant rendered installation and maintenance services on behalf of M/s Voltas and under the Voltas brand as per agreement. The lower authority rejected the appellant's claim to the SSI exemption under Notification No.6/2005-ST on the basis that services were provided under the principal's brand. The Tribunal found no reason to interfere with that conclusion, endorsing the view that services performed under the brand/name of M/s Voltas do not attract the benefit of the Notification to the appellant. [Paras 8]

The appellant is not entitled to the benefit of Notification No.6/2005-ST; the finding of the lower authority is sustained.

Admissibility of fresh grounds of taxability on appeal - service tax liability under Business Auxiliary Service - taxability of installation and maintenance services - Permissibility of raising fresh arguments on the merits of taxability before the Tribunal - HELD THAT: - The Tribunal noted that the appellant's substantive challenge to taxability under Business Auxiliary Service and to service tax on installation/maintenance was not raised before the Commissioner (Appeals). The impugned order records that taxability was not contested below. The Tribunal declined to admit fresh arguments on merit at the appellate stage and therefore did not decide on the substantive question of taxability. [Paras 7]

Fresh arguments on the merits of taxability are not admissible at this stage and are not considered by the Tribunal.

Final Conclusion: The Tribunal upheld the Commissioner (Appeals) order denying SSI exemption under Notification No.6/2005-ST and refused to entertain fresh arguments on taxability; the appeal is rejected and the impugned order is sustained.

Renting of Immovable Property - notional interest on interest-free security deposit - valuation of consideration under Explanation to Section 67 of the Finance Act, 1994 - service tax liability on advance/adjustable deposits

Renting of Immovable Property - valuation of consideration under Explanation to Section 67 of the Finance Act, 1994 - service tax liability on advance/adjustable deposits - Whether the lumpsum amount of Rs. 41,00,000 payable/adjustable under para 4 of the lease agreement constitutes consideration for taxable service of renting of immovable property. - HELD THAT: - The Tribunal examined the lease agreement and noted that paragraph 4 crystallises the transaction by stipulating an interest-free deposit of Rs. 49,20,000 of which Rs. 41,00,000 is to be adjusted towards rent payable for the last five months of the lease. Such adjustment converts that portion into consideration for the renting service and brings it within the scope of the Explanation to Section 67. The appellant had in any event paid service tax on that amount as per its letter to the Department. On these findings, the amount of Rs. 41,00,000 is correctly treated as consideration liable to service tax. [Paras 5]

The amount of Rs. 41,00,000 to be adjusted towards rent is consideration for renting of immovable property and is liable to service tax.

Notional interest on interest-free security deposit - valuation of consideration under Explanation to Section 67 of the Finance Act, 1994 - Whether notional interest on the interest-free lump sum deposit can be included as part of consideration for levy of service tax on renting of immovable property. - HELD THAT: - The Tribunal followed earlier authority in Murli Realtors Pvt. Ltd. which held that absent any evidence that the security deposit influenced the agreed rent, notional interest cannot be added to the rent. The Department produced no material to show that the deposit affected the price (rent) or to justify adopting an arbitrary interest rate. Therefore, inclusion of notional interest is unjustified and contrary to the valuation concept applied by the Tribunal in the cited decision. Applying that reasoning, the Appellate Tribunal held the Department's claim for notional interest to be without merit. [Paras 6, 7]

Notional interest on the interest-free security deposit cannot be included in the consideration for service tax on renting of immovable property; the claim for such notional interest is rejected.

Final Conclusion: Impugned order set aside; appeal allowed insofar as inclusion of notional interest is concerned. The adjustable lump-sum amount specified in the lease is chargeable as consideration for renting and service tax thereon is recognised (and, as noted, already paid by the appellant).

Supply of Tangible Goods service - deemed sale and VAT precluding service tax - inclusion of free supplies in taxable value - site preparation service - temporal applicability of newly introduced service

Supply of Tangible Goods service - deemed sale and VAT precluding service tax - Leasing of drilling machines to M/s ASI for the period 2009-10 to 2010-11 is not liable to Service Tax under the Supply of Tangible Goods service. - HELD THAT: - The Adjudicating Authority found that the terms of the lease amounted to a deemed sale and appropriate VAT had been discharged. The Tribunal agreed that where the arrangement between parties constitutes a deemed sale on which VAT has been paid, the leasing transaction cannot be characterized as a taxable rendition under the Supply of Tangible Goods service for the period in question. On that basis the demand originally raised under that service-head was correctly dropped. [Paras 7]

Demand for Service Tax on leasing of machines for 2009-10 and 2010-11 under Supply of Tangible Goods upheld as rightly dropped.

Inclusion of free supplies in taxable value - Value of diesel supplied free by the service recipient is not includible in the gross consideration for levy of Service Tax. - HELD THAT: - The Tribunal held that the issue is no longer res integra and relied on binding precedent which determined that free supplies (such as diesel provided by the recipient) are not to be included in the gross consideration received by the service provider for a taxable service. Consequently the demand premised on inclusion of the diesel's value in the taxable lease/lease-related charges cannot be sustained. [Paras 8]

Demand based on inclusion of diesel value in taxable consideration rejected.

Site preparation service - temporal applicability of newly introduced service - Charges for supply of machines used in mining for the period 2006-07 and 2007-08 cannot be taxed as Site Preparation service. - HELD THAT: - The Tribunal noted that the Supply of Tangible Goods service (and related taxability) was introduced w.e.f. 16/05/2008. Prior to that date the activity characterized as Supply of Tangible Goods could not be subsumed under Site Preparation or any other newly introduced service. Therefore the Adjudicating Authority was correct in not including the consideration for those machine supplies within Site Preparation service for 2006-07 and 2007-08. [Paras 9]

Demand for Service Tax on machine-supply charges for 2006-07 and 2007-08 as Site Preparation service rightly dropped.

Final Conclusion: The appeal by Revenue is dismissed and the Order-in-Original dated 30/08/2012 is upheld.

Service Tax liability on supply of temporary manpower - Manpower recruitment or supply agency service - Taxable service - Reimbursement of expenses not taxable as consideration - Proportionate imposition of penalty

Service Tax liability on supply of temporary manpower - Manpower recruitment or supply agency service - Taxable service - Appellant is liable to discharge Service Tax in respect of amounts received for supplying temporary manpower. - HELD THAT: - The Tribunal noted the appellant's admission and account entries showing consideration received for supply of temporary labour to various companies. The statutory definitions of a taxable service and of a "manpower recruitment or supply agency" encompass supply of manpower temporarily. The invoices and materials produced by the appellant did not establish that the transactions were lump sum contracts for an independent works/service (as in decisions where demands were set aside), nor did they show that the appellant was engaged in storage activities relied upon in some invoices. On these facts, the demand for Service Tax on amounts charged for supply of temporary manpower was held sustainable. [Paras 5, 6, 7, 8]

Service Tax demand in respect of supply of temporary manpower is upheld.

Reimbursement of expenses not taxable as consideration - Intercontinental precedent - Service Tax demand on reimbursable expenses disallowed. - HELD THAT: - A portion of the demand related to amounts claimed as reimbursements of expenses (such as travelling). Applying the decision of the Hon'ble Supreme Court in Intercontinental Pvt. Ltd., the Tribunal held that such reimbursable expenses could not be subjected to Service Tax as consideration for taxable service. Accordingly, that part of the demand was set aside. [Paras 9, 10]

Demand of Service Tax on reimbursable expenses is set aside.

Proportionate imposition of penalty - Penalties to be imposed only in proportion to the sustained demand. - HELD THAT: - Having upheld Service Tax only on amounts relating to supply of temporary manpower and having set aside the demand on reimbursable expenses, the Tribunal directed that penalties, if any, shall be levied proportionately corresponding to the portion of the demand which is sustained. [Paras 10, 11]

Penalties will be chargeable proportionately.

Final Conclusion: Appeal partly allowed: Service Tax demand sustained for supply of temporary manpower; demand on reimbursable expenses set aside; penalties to be imposed proportionately to the sustained demand.

Service Tax demand - Extended period of limitation under Section 73 of the Finance Act, 1994 - Payment of tax and interest prior to issuance of show cause notice as defence to penalty - Imposition of penalty where tax and interest already paid

Service Tax demand - Extended period of limitation under Section 73 of the Finance Act, 1994 - Confirmation of Service Tax demand for the period 01/10/2004 - 30/05/2007 - HELD THAT: - The Adjudicating Authority examined the assessee's accounts and confirmed the total Service Tax demand. The Revenue justified invocation of the extended period of limitation and the Tribunal observed that the demand in the show cause notice fell within the period permissible under the proviso to Section 73, thereby upholding the adjudication of demand. No interference was made with the finding that Service Tax was leviable for the disputed period.

The Service Tax demand for 01/10/2004 - 30/05/2007 is upheld.

Payment of tax and interest prior to issuance of show cause notice as defence to penalty - Imposition of penalty where tax and interest already paid - Validity of penalties imposed despite payment of Service Tax and interest before issuance of show cause notice - HELD THAT: - The Tribunal noted that the entire Service Tax liability, together with applicable interest, had been deposited by the appellant prior to issuance of the show cause notice. Applying precedents relied upon by the Tribunal-Commissioner of Central Excise, Customs & Service Tax V/s M/s Stumpp Schuele & Somappa Pvt. Ltd. and M/s SRM Engineering Construction Ltd. V/s Commissioner of Service Tax -the Tribunal found no justification for imposing penalties where tax and interest had already been paid before initiation of proceedings and therefore set aside the penalties.

Penalties imposed by the Adjudicating Authority are set aside.

Final Conclusion: The appeal is allowed in part: the Service Tax demand for the period 01/10/2004 - 30/05/2007 is sustained, but the penalties are quashed because the tax and interest had been paid prior to issuance of the show cause notice.

Value of taxable service provided from outside India - actual consideration charged for services - inclusion of withholding tax in taxable value - reverse charge liability for cross border technical/scientific services - application of Service Tax Valuation Rules (Rule 7) with Section 67

Value of taxable service provided from outside India - actual consideration charged for services - inclusion of withholding tax in taxable value - application of Service Tax Valuation Rules (Rule 7) - Whether the amount paid as withholding tax in addition to invoice amounts paid to a foreign service provider is includible in the taxable value for service tax on services received from outside India. - HELD THAT: - The Tribunal applied the statutory valuation principle that for services provided from outside India the taxable value is equal to the actual consideration charged by the service provider. Rule 7 of the Service Tax Valuation Rules (pre amendment) read with Section 67 restricts the value to the amount billed by the foreign service provider. The amount paid by the appellant as withholding tax was an additional payment made under domestic income tax obligations and was not shown to have been charged or recovered by the foreign consultant as consideration for the services. On the material placed, the appellant had already discharged service tax on the invoice amounts and there was no evidence that the withholding tax formed part of the consideration charged by the service provider. Following the earlier Tribunal precedent on identical facts, the Tribunal held that withholding tax paid over and above the billed consideration is not part of the taxable value of the service received from outside India. [Paras 4, 10, 11]

Withholding tax paid in addition to the invoice amounts is not includible in the taxable value of services received from outside India; the impugned order demanding service tax on such withheld amounts is set aside and the appeal is allowed.

Final Conclusion: The appeal is allowed; the order-in-original demanding service tax on amounts paid as withholding tax (over and above the billed consideration) is set aside, the Tribunal following Rule 7/Section 67 reasoning that taxable value is the actual consideration charged by the foreign service provider.

Cargo Handling Service - scope of "cargo" and "cargo handling" - service tax liability for cargo handling - activities within factory premises not taxable as cargo handling

Cargo Handling Service - scope of "cargo" and "cargo handling" - activities within factory premises not taxable as cargo handling - Whether the labour contractors' activities of loading, unloading, stacking and shifting of materials carried out within the factory premises constitute taxable "Cargo Handling Service" attracting service tax. - HELD THAT: - The Tribunal examined the settled legal meaning of "cargo" and the parameters of Entry 23 (Cargo Handling Service) as expounded by the High Court of Allahabad and the Hon'ble Supreme Court in Dy. Commissioner, Central Excise & Anr. vs. Sushil & Company. The authorities establish that cargo handling service applies where there is a cargo accepted by a transporter/carrier for carriage from one destination to another and where loading/unloading at a freight terminal is connected with transport by ship, aircraft, rail or truck; mere internal movement or handling of goods within factory premises, not related to transportation outside by a carrier, does not meet these conditions. Applying that principle to the present facts, the appellants performed handling and shifting of materials entirely within the factory, with no element of cargo being accepted for carriage to another destination; hence their activities do not fall within the definition of "Cargo Handling Service" and are not exigible to service tax under that category. [Paras 5, 6, 7, 8]

The impugned orders holding the appellants liable to service tax as providers of "Cargo Handling Service" are set aside and the appeals are allowed.

Final Conclusion: Applying the authoritative interpretations of the definition of "cargo" and "cargo handling", the Tribunal held that the appellants' intra-factory handling activities are not taxable as Cargo Handling Service; the impugned demands, interest and penalties founded on that categorisation were set aside and the appeals allowed.

Franchisee services - cumulative conditions in the definition of franchisee service - condition (d) - obligation not to engage in selling or providing similar goods or services identified with any other person - effect of amendment removing cumulative requirement w.e.f. 16.06.2005 - recomputation and recovery with interest - cum-duty benefit under Section 67

Franchisee services - cumulative conditions in the definition of franchisee service - condition (d) - obligation not to engage in selling or providing similar goods or services identified with any other person - Whether the appellant was liable to service tax as a franchisee for the period 01.04.2004 to 15.06.2005. - HELD THAT: - The Tribunal examined the pre-amendment definition of franchisee service which required satisfaction of conditions (a) to (d) cumulatively. While the appellant undisputedly met conditions (a) to (c), the license agreements expressly showed that condition (d) - an obligation on the franchisee not to engage in or provide similar goods or services identified with any other person - was not imposed. Specific clauses in the license agreements confirmed that the licensee was under no such restriction and that the trade name owner had granted similar licenses to others. Applying the cumulative test mandated by the pre-16.06.2005 definition, the Tribunal held that the fourth condition was not satisfied and therefore the transactions did not fall within the definition of franchisee services for the period 01.04.2004 to 15.06.2005. The Tribunal followed its earlier decision in the case of Saanj and Savera Educational Welfare Trust on identical facts and set aside the demand for that period. [Paras 7, 8, 9, 10]

Demand for service tax for the period 01.04.2004 to 15.06.2005 set aside for want of satisfaction of condition (d) of the franchisee service definition.

Effect of amendment removing cumulative requirement w.e.f. 16.06.2005 - recomputation and recovery with interest - cum-duty benefit under Section 67 - Liability of the appellant for service tax as a franchisee w.e.f. 16.06.2005 and the consequent adjudication steps. - HELD THAT: - The appellant admitted liability for service tax under the franchisee category from 16.06.2005, the date when the definition was amended and the cumulative requirement was dispensed with. The Tribunal did not decide the quantum afresh on merits for this later period; instead it directed the adjudicating authority to recompute and recover the liability for the period from 16.06.2005 to 31.03.2008 along with interest. The Tribunal also noted the appellant's claim for cum-duty benefit and directed that such benefit may be extended in terms of Section 67 when computing the liability. [Paras 11]

Liability from 16.06.2005 to 31.03.2008 to be recomputed and recovered with interest; adjudicating authority to consider extension of cum-duty benefit under Section 67.

Final Conclusion: The appeal is disposed of by setting aside the service tax demand for 01.04.2004 to 15.06.2005 for non-fulfilment of condition (d) of the pre-amendment franchisee definition; liability from 16.06.2005 to 31.03.2008 remains admissible and is remitted to the adjudicating authority for recomputation and recovery with interest, with consideration of cum-duty benefit under Section 67.

Definition of manufacture - galvanization not amounting to manufacture - CENVAT credit eligibility - change in tariff heading not determinative of manufacture - inapplicability of Circular No. 314/30/97-CX

Galvanization not amounting to manufacture - definition of manufacture - CENVAT credit eligibility - change in tariff heading not determinative of manufacture - Whether galvanization carried out by the assessee amounts to 'manufacture' so as to make the galvanized product an excisable good and permit availment of CENVAT credit on inputs used in the process - HELD THAT: - The Tribunal affirmed the Commissioner (Appeals) finding that galvanization does not amount to manufacture within the meaning of Section 2(f) of the Central Excise Act and, therefore, the products subjected to galvanization cannot be treated as excisable goods for the purpose of allowing CENVAT credit on inputs used in the galvanization process. The Tribunal relied upon earlier decisions holding that galvanization is not manufacture and rejected the contention that a post-process change in chapter heading or enhancement in value alone converts the operation into manufacture. Consequently, inputs consumed in galvanization are not inputs used in the manufacture of excisable goods and CENVAT credit in respect thereof is not admissible under the CENVAT Credit Rules, 2004. [Paras 5, 6]

Galvanization does not amount to manufacture; CENVAT credit on inputs used in galvanization is not available and the addition was rightly confirmed.

Inapplicability of Circular No. 314/30/97-CX - Whether CBEC Circular No. 314/30/97-CX dated 06.05.1997, which treats galvanization as manufacture, applies to the appellants' case - HELD THAT: - The Tribunal observed that having found galvanization not to be manufacture on facts and precedent, the Circular No. 314/30/97-CX is not applicable to the facts of the present case and therefore does not warrant interference with the orders confirming denial of credit. The Tribunal relied on the applicable CBEC Circular which holds otherwise and on judicial precedent distinguishing the circumstances where galvanization has been treated as manufacture. [Paras 6]

Circular No. 314/30/97-CX is not applicable to the appellants' case and does not alter the conclusion that credit was not admissible.

Final Conclusion: The appeals are rejected; the orders confirming demand equivalent to the CENVAT credit availed in respect of inputs used in galvanization are affirmed.

Manufacture - identity, character and use - marketability - regeneration of catalyst - conversion into colloidal platinum catalyst - job work

Regeneration of catalyst - manufacture - identity, character and use - Regeneration of spent platinum catalyst into reactivated/regenerated platinum catalyst amounts to manufacture for the purposes of central excise. - HELD THAT: - Applying the settled tests of the Supreme Court, manufacture requires that as a result of the process a new and commercially distinct article emerge having a different name, character or use. A catalyst by its nature facilitates chemical reactions and the spent platinum catalyst, even after regeneration, remains platinum catalyst and does not acquire a new identity, character or use. The Tribunal, following authorities which hold that mere improvement or restoration of a commodity does not convert it into a new article, concluded that conversion of spent platinum catalyst into regenerated/activated platinum catalyst does not result in emergence of a new product and therefore does not constitute manufacture under Section 2(f). [Paras 5]

Demand in respect of regeneration of catalyst set aside.

Conversion into colloidal platinum catalyst - manufacture - identity, character and use - marketability - Conversion of metallic platinum into colloidal platinum catalyst amounts to manufacture and is exigible to duty. - HELD THAT: - The appellants admitted in their agreement and replies that metallic platinum was supplied to CIL for conversion into colloidal platinum catalyst. Applying the Supreme Court tests, metallic platinum and colloidal platinum are commercially distinct: colloidal platinum has a different name, character and use and is specifically covered under the tariff heading for colloidal precious metals. The Tribunal accepted that the metallic platinum cannot serve the required catalytic purpose and that the process effects a change in name, character and use sufficient to constitute manufacture under Section 2(f). The Tribunal also noted that the appellants had advanced differing process-descriptions before authorities, which weighed against their contention that only job work was involved. [Paras 6]

Demand in respect of conversion of platinum into colloidal platinum catalyst upheld.

Job work - manufacture - Whether penalties should be sustained where the dispute concerns interpretation of whether processes amount to manufacture. - HELD THAT: - Given that the controversy turned on the legal question whether the processes constituted manufacture, and in view of the differing conclusions reached on the two activities (one held not to be manufacture and the other held to be manufacture), the Tribunal held that imposition of penalties was not appropriate where the matter involved bona fide or arguable interpretations of law. Accordingly, penalties imposed on both Catazyme India Ltd. and Malladi Drugs & Pharmaceuticals Ltd. were set aside. [Paras 7, 8]

Penalties on CIL and MDPL set aside.

Final Conclusion: Part of the impugned order confirming duty on regeneration of catalyst is set aside; duty confirmed on conversion of metallic platinum into colloidal platinum catalyst; penalties imposed on both parties are quashed; appeals disposed accordingly.

Cenvat Credit on supplementary invoices - Exclusion clause of Rule 9(1)(b) of Cenvat Credit Rules, 2004 - Suppression and collusion - Recurring issue and sub judice proceedings before the Supreme Court - Presumption against suppression in respect of government undertakings

Cenvat Credit on supplementary invoices - Exclusion clause of Rule 9(1)(b) of Cenvat Credit Rules, 2004 - Suppression and collusion - Presumption against suppression in respect of government undertakings - Recurring issue and sub judice proceedings before the Supreme Court - Entitlement of the appellant to avail Cenvat credit on the basis of supplementary invoices issued by coal companies and whether Rule 9(1)(b) CCR 2004 or alleged suppression/collusion bars such credit. - HELD THAT: - The Tribunal examined whether supplementary invoices issued by the coal companies (government undertakings) could be the basis for taking Cenvat credit and whether the exclusion in Rule 9(1)(b) or allegations of suppression/collusion preclude such credit. Having considered the parties' contentions and earlier Tribunal decisions in connected matters, the Tribunal noted that the issue is recurring and presently sub judice before the Hon'ble Supreme Court, creating an element of confusion. In these circumstances, mere failure by the appellant to ascertain applicability of the exclusion in Rule 9(1)(b) does not amount to suppression or collusion absent a positive, apparent act on record. Further, supplementary invoices issued by government undertakings cannot be presumed to be the product of suppression or collusion unless rebutted. Applying these principles and following the connected Tribunal decisions, the Tribunal held that Rule 9(1)(b) could not be invoked to deny the credit on the facts before it and that there was no evidence of suppression or collusion to disentitle the appellant from credit. [Paras 6, 7]

The order under challenge is set aside and the appeal is allowed; the appellant is entitled to take Cenvat credit on the supplementary invoices.

Final Conclusion: Appeal allowed; impugned order denying Cenvat credit on supplementary invoices is set aside and the appellant permitted to avail the credit, the Tribunal relying on absence of suppression/collusion and the recurring, sub judice nature of the issue.

Suppression of production and clandestine removal - excess electricity consumption as basis for excise demand - penalty under Rule 26 of the Central Excise Rules, 2002 - requirement of corroborative evidence to connect consignor with clandestine clearances - consignment/commission agent liability

Excess electricity consumption as basis for excise demand - suppression of production and clandestine removal - Validity of the main demand for alleged excess electricity consumption and clandestine removals insofar as it was set aside by the adjudicating authority. - HELD THAT: - The Tribunal noted that the major part of the original demand had already been dropped by the adjudicating authority relying upon the Apex Court decision in RA Castings Pvt. Ltd. The Tribunal found no infirmity in that approach and recorded that the similar issue is no longer res-integra. Consequently, the order dropping the major portion of the demand was upheld. [Paras 5]

The setting aside of the major part of the demand was upheld.

Penalty under Rule 26 of the Central Excise Rules, 2002 - consignment/commission agent liability - requirement of corroborative evidence to connect consignor with clandestine clearances - Sustainability of the confirmed penalty of Rs. 50,000/- on the appellant, a consignment/commission agent, in absence of cogent corroborative evidence linking him to clandestine clearances by the manufacturer. - HELD THAT: - The Tribunal observed that the appellant acted merely as a consignment agent supplying raw material to the manufacturer. The alleged clandestine removal by the manufacturer had no direct bearing on the appellant unless supported by corroborative, cogent evidence proving supply without discharge of liability. The record lacked such corroboration. The Tribunal applied the reasoning of earlier Final Orders which held that entries in the consignor's records, without independent corroboration of actual supply and transportation to the manufacturer, do not justify imposing penalty. On that basis the penalty was set aside. [Paras 6, 7, 8]

The penalty of Rs. 50,000/- imposed on the appellant was set aside for lack of corroborative evidence.

Final Conclusion: The appeal is allowed: the Tribunal upheld the dropping of the major part of the excise demand and set aside the confirmed penalty on the appellant for want of cogent corroborative evidence linking the consignment agent to clandestine clearances.

Entitlement to Cenvat credit on supplementary invoices issued by input suppliers - obligation to ascertain absence of suppression under Rule 9(1)(b) of Cenvat Credit Rules - distinction between suppression and confusion - relevance of pendency of related proceedings before the Hon'ble Supreme Court

Entitlement to Cenvat credit on supplementary invoices issued by input suppliers - reliance on pendency of related proceedings before the Hon'ble Supreme Court - Appellant's entitlement to avail Cenvat credit on supplementary invoices issued by M/s. SECL for the audit period February, 2014 to November, 2015. - HELD THAT: - The Tribunal considered whether the appellants could take Cenvat credit on supplementary invoices issued by the Coal Company. Noting that the connected adjudication against M/s. SECL on the valuation/duty demand was pending before the Hon'ble Supreme Court, the Tribunal found that the matter remained debatable and sub judice. In light of the pendency and earlier Tribunal decisions in connected matters granting relief or liberty pending the Supreme Court outcome, the appellants' claim to take credit on those supplementary invoices was held to be maintainable. The Tribunal accepted that the invoices were issued by Government undertakings and that the controversy was recurring and not settled against the suppliers.

Appeal allowed and appellants held entitled to avail Cenvat credit on the supplementary invoices for the specified period.

Obligation to ascertain absence of suppression under Rule 9(1)(b) of Cenvat Credit Rules - distinction between suppression and confusion - Whether the appellants' failure to ascertain the exclusion under Rule 9(1)(b) constitutes suppression or collusion disentitling them from Cenvat credit. - HELD THAT: - The Tribunal examined the scope of Rule 9(1)(b) which requires the recipient to ensure absence of any misconduct or suppression. It held that mere failure to ascertain the exclusionary aspect, in circumstances where the underlying liability of the supplier was itself sub judice and where no positive act of concealment by the appellant was shown, cannot be equated with 'suppression' or 'collusion'. The Tribunal emphasised that 'confusion' arising from pending adjudication is distinct from deliberate suppression and, absent an apparent positive act on record, the provision could not be invoked to deny credit. The fact that the supplementary invoices emanated from Government undertakings weighed against presuming collusion.

Failure to ascertain the exclusion under Rule 9(1)(b) was not held to be suppression; denial of credit on that ground was rejected.

Final Conclusion: The appeal is allowed: the appellants are entitled to take Cenvat credit on the supplementary invoices issued by M/s. SECL for February, 2014 to November, 2015, and their failure to ascertain exclusion under Rule 9(1)(b) does not amount to suppression or collusion in the facts of the case.

Cenvat credit premature availment and actual utilization - prohibition on denial of substantive benefit for mere procedural or technical lapse - invoice and documentary particulars under Rule 9(2) proviso of the Cenvat Credit Rules, 2004 - recovery under Rule 14 of Cenvat Credit Rules and interest under Section 11AB

Cenvat credit premature availment and actual utilization - recovery under Rule 14 of Cenvat Credit Rules and interest under Section 11AB - Legality of denying Cenvat credit availed in books prior to payment of service tax where the credits remained unutilized until after service tax was paid - HELD THAT: - The Tribunal found as a matter of record that the appellant had availed Cenvat credit for business support services in June 2007, that the credit balances in subsequent months remained at or above the disputed amount (with only a shortfall in August which was minimal), and that the service tax on those services was paid by the appellant between August and October 2007. The court held that mere book-entry of credit before actual payment does not amount to utilization; utilization commenced only after October 2007 when the credits were first applied. Applying Rule 14 and the principles in the cited authorities (including India Cement Ltd. and Bill Forge Pvt. Ltd.), the Tribunal concluded that Rule 14 attracts recovery only where credit has been taken or utilized wrongly, and interest under Section 11AB is compensatory and arises on delayed payment of duty, not from the date of a book entry. On these facts there was no wrongful utilization prior to payment of service tax and therefore no basis to deny the credit or to treat it as a wrongful availment attracting recovery or interest. [Paras 11, 12, 13, 14, 15]

Cenvat credit of Rs. 3,03,35,302/- availed in June 2007 cannot be denied on the ground that payment of service tax was made subsequently; no wrongful utilization was established and denial/recovery on that basis is not justified.

Invoice and documentary particulars under Rule 9(2) proviso of the Cenvat Credit Rules, 2004 - prohibition on denial of substantive benefit for mere procedural or technical lapse - Validity of Cenvat credit claimed on the basis of documents not in the specific formats listed in Rule 9(1) but containing requisite particulars - HELD THAT: - The Tribunal examined the documents on which credit of Rs. 1,24,80,608/- was taken and found they contained the relevant particulars (name and address of provider and recipient, description and value of taxable service, service tax payable). The Tribunal relied on the proviso to Rule 9(2) which permits allowance of credit where the document, though not of the prescribed nomenclature, contains the prescribed particulars and the Deputy/Assistant Commissioner is satisfied that goods or services were received and accounted for. Noting established authority that substantive benefit of Cenvat cannot be denied on mere formality, the Tribunal held the departmental objection based solely on non conformity with a particular format was not a valid ground for denial. [Paras 16, 17]

Cenvat credit of Rs. 1,24,80,608/- cannot be denied merely because the supporting documents are not in the precise format of Rule 9(1); they contained the required particulars and therefore the credit is admissible.

Final Conclusion: The Tribunal set aside the adjudicating authority's order and allowed the appeal: the disputed Cenvat credits were held to be admissible (both the amount availed prior to payment of service tax and the amount supported by non standard but complete documents); consequential demands, interest and penalties based on denial of those credits were negated by these findings.

Inclusion of amounts received from principal by way of credit notes in dealer's turnover - taxability of spare parts supplied/replaced under manufacturer's warranty - application of precedential ratio in Mohammed Ekram & Sons regarding warranty replacement transactions

Inclusion of amounts received from principal by way of credit notes in dealer's turnover - taxability of spare parts supplied/replaced under manufacturer's warranty - Whether amounts received by the dealer from the manufacturer by way of credit notes towards cost of parts replaced during warranty period are includible in the dealer's turnover and liable to tax - HELD THAT: - The Court applied the ratio of Mohammed Ekram & Sons, which held that where a dealer supplies parts to customers in pursuance of warranty and receives payment from the manufacturer (here by credit notes), the dealer has in fact received the price for the parts supplied and such transaction is subject to sales tax. The decision in Premier Automobiles and related authorities was distinguished on facts and not treated as applicable. The appellate authorities' factual finding that the dealer received consideration from the manufacturer for replacement parts was accepted and, following the Apex Court's reasoning, such consideration represents the sale price of the replaced parts and must be included in turnover and taxed accordingly.

Amounts received by the appellant from the manufacturer by way of credit notes for parts replaced during the warranty period are includible in the appellant's turnover and liable to tax.

Final Conclusion: The appeal is dismissed; the orders of the assessing and appellate authorities affirming levy of tax on warranty replacement receipts are upheld in view of the ratio in Mohammed Ekram & Sons.

Special Leave Petition - exemption from filing certified copy - dismissal for want of merit

Special Leave Petition - dismissal for want of merit - Whether the Special Leave Petitions filed by M/s. Milano Ice Cream Pvt. Ltd. should be entertained - HELD THAT: - The Court heard learned counsel for the petitioner, considered the material on record and granted exemption from filing the certified copy of the impugned order. Having considered the submissions and the record, the Court found no merit in the Special Leave Petitions and concluded that they did not warrant interference by this Court.

Special Leave Petitions dismissed for want of merit; exemption from filing certified copy granted.

Final Conclusion: The Special Leave Petitions are dismissed and exemption from filing the certified copy of the impugned order is granted.

Summary order. Civil Appeals dismissed as withdrawn.

Summary order. Special leave petition dismissed; pending applications, if any, disposed of.

Summary order. Special Leave Petition dismissed on the ground of delay; pending application disposed of.

Condonation of delay - dismissal for delay - refusal to condone delay - special leave petition - reference application - decision on merits

Condonation of delay - special leave petition - dismissal for delay - Whether the delay in filing the Special Leave Petitions should be condoned - HELD THAT: - The Court recorded that it was not satisfied that the delay in filing the present Special Leave Petitions warranted condonation. The absence of sufficient cause for the delay led the Court to conclude that the petitions could not be entertained on that ground. No further factual or procedural justification for extending time was accepted by the Court.

The delay in filing the Special Leave Petitions is not condoned and the petitions are dismissed on the ground of delay.

Refusal to condone delay - reference application - decision on merits - Whether the High Court erred in refusing to condone the 448 day delay in filing the Reference Application(s) and whether the petitions could be entertained on merits - HELD THAT: - The Court upheld the High Court's refusal to condone the 448 day delay in filing the Reference Application(s), stating that the High Court's grounds for refusal were good. Having affirmed the correctness of that refusal, the Supreme Court also determined that the Special Leave Petitions could not be allowed either on the procedural ground of inordinate delay or on the merits, and therefore declined to admit the matters for consideration of merits.

The refusal to condone the 448 day delay was upheld and, consequently, the Special Leave Petitions are dismissed both on the ground of delay and on merits.

Final Conclusion: The Special Leave Petitions are dismissed: the Supreme Court declined to condone the delay in filing the SLPs, upheld the High Court's refusal to condone the 448 day delay in filing the Reference Application(s), and dismissed the petitions on grounds of delay as well as on merits.

Summary order. Special Leave Petition dismissed as withdrawn; permission to withdraw granted.

Summary order. Special leave petition dismissed as withdrawn.

Summary order. Special Leave Petitions dismissed; delay condoned.

Summary order. Special Leave Petition dismissed; delay condoned.

Summary order. Special Leave Petitions dismissed; application for exemption from filing official translation allowed.

Summary order. Delay condoned; notice issued; interim stay of operation of the impugned order granted.

Summary order. Special Leave Petition dismissed on the ground of delay; pending applications disposed of.

Summary order. Special Leave to Appeal dismissed; leave granted; stay vacated; delay condoned; pending applications disposed of.