TaxTMI Updates e-Newsletter
Aug 20,2021

Job work - Services by way of job work - Entry 'id' of Heading 9988 at Sl. No. 26 of Notification No. 11/2017-CT (Rate) - Manufacturing services on physical inputs (goods) owned by others - GST rate on job-work services - CBIC clarification on job work

Job work - Services by way of job work - GST rate on job-work services - Entry 'id' of Heading 9988 at Sl. No. 26 of Notification No. 11/2017-CT (Rate) - Rate of tax applicable to services by way of job work on Diphenylmethoxy 'N, N- diethylaminethanol HCl supplied by the applicant - HELD THAT: - The Authority examined the nature of the applicant's activity and found that it involves provision of services by way of job work on goods belonging to another registered person. The activity therefore falls within the description contained in entry 'id' under Heading 9988 at Sl. No. 26 of Notification No. 11/2017-CT (Rate), as amended. Having classified the service under that entry, the Authority applied the rate provided thereunder and concluded that the applicable GST rate is 12%. The finding rests on the matching of the subject service to the notified entry for job-work services on goods owned by others and the representation that the goods are received from registered persons. [Paras 5]

GST is leviable at 12% on the job-work services in question

Final Conclusion: The Authority ruled that the applicant's job-work service on Diphenylmethoxy 'N, N- diethylaminethanol HCl falls under entry 'id' of Heading 9988 at Sl. No. 26 of Notification No. 11/2017-CT (Rate) and is taxable at 12% GST.

Definition of "local authority" under Section 2(69)(c) of the CGST Act - scope of notification-based exemption for services "in relation to" functions entrusted to a Municipality under Article 243W - reverse charge mechanism for services supplied by local authorities to business entities - compulsory registration as TDS deductor under Section 24 read with Section 51 of the CGST Act - criteria for "Government Entity" and "Governmental Authority" under Notification No.12/2017

Definition of "local authority" under Section 2(69)(c) of the CGST Act - Ahmedabad Janmarg Limited (AJL) is not a "local authority" under the CGST Act. - HELD THAT: - The Authority examined the statutory wording of Section 2(69)(c) and concluded that AJL cannot be treated as a local authority because its funds have not been notified as local/municipal funds by the competent State legislature or under Gujarat Treasury Rules, and AJL is a distinct legal person incorporated as a private limited company. Grants or revenues received by AJL become its revenues/grants in law and do not, without a competent notification, qualify as "local or municipal fund". The clear and unambiguous statutory language must be given effect to, and reliance on precedents from a pre GST era or decisions concerning differently constituted statutory bodies was found inapplicable. [Paras 18, 19, 22, 23]

AJL is not a Local Authority.

Scope of notification-based exemption for services "in relation to" functions entrusted to a Municipality under Article 243W - AJL is not eligible for the notification exemption for services received "in relation to" municipal functions because it does not qualify as Central/State/local authority or as a Governmental Authority/Government Entity. - HELD THAT: - The Authority held that the exemption at Sl. No.3 of Notification No.12/2017 applies only where the recipient is Central Government, State Government, Union territory, local authority or a governmental entity/authority as defined. Since AJL does not qualify as any of these categories, the question of applying the wide construction of the phrase "in relation to" to exempt services (such as security) does not arise. Consequently, earlier advance rulings and judicial interpretations concerning the phrase "in relation to" were not attracted to AJL's facts. [Paras 8, 10, 20, 23]

AJL is liable to pay GST on security services under the reverse charge mechanism; the notification exemption is not available to AJL.

Reverse charge mechanism for services supplied by local authorities to business entities - AJL is liable to pay GST on advertisement services supplied by it; the reverse charge mechanism does not apply in favor of AJL as a local authority. - HELD THAT: - Notification No.13/2017 contemplates reverse charge on services supplied by Central/State/Union/local authorities to business entities. Because AJL does not qualify as a local authority (nor as a governmental authority/entity), it cannot claim the status contemplated by the notification. The Authority therefore ruled that AJL is liable for GST consequences on advertisement services supplied by it and cannot treat recipients as governed by the reverse charge exemption applicable to local authorities. [Paras 11, 23]

AJL is liable to pay GST on advertisement services supplied by it; recipients cannot invoke reverse charge treatment on account of AJL being a local authority.

Compulsory registration as TDS deductor under Section 24 read with Section 51 of the CGST Act - AJL is not required to obtain registration as a TDS deductor under GST. - HELD THAT: - Section 24(vi) requires compulsory registration for persons required to deduct tax under Section 51. The Authority examined Section 51 and the Notification No.50/2018 which specifies categories of deductors. AJL did not fall within clauses (a)/(b)/(c)/(d) of Section 51(1) or the notification's specified categories (which include bodies set up by statute or with specified government participation). Given AJL's constitution and that it is not covered by the notified categories, the Authority held there is no obligation on AJL to be registered as a deductor under GST. [Paras 12, 21, 23]

AJL is not required to be registered as a Deductor under GST.

Criteria for "Government Entity" and "Governmental Authority" under Notification No.12/2017 - AJL is neither a "Government Entity" nor a "Governmental Authority" as per Notification No.12/2017. - HELD THAT: - The Authority applied the definitions in Notification No.12/2017 which require (inter alia) establishment by government or statutory creation, and 90% or more participation by way of equity or control where relevant. AJL was not shown to be set up by an Act of the State Legislature or established by the Government; AMC is not the State Government, and AJL is a privately incorporated company. CBIC sectoral FAQs and earlier advance rulings distinguishing corporations and companies from "Government" bodies were relied upon to conclude that AJL does not meet the threshold criteria for being a government entity/authority. [Paras 13, 20, 22, 23]

AJL is not a Government Entity or Governmental Authority.

Final Conclusion: The Authority ruled that Ahmedabad Janmarg Limited is not a local authority, governmental authority or government entity; accordingly AJL cannot claim the notification exemption for services "in relation to" municipal functions, is liable to pay GST on security services under reverse charge, is liable for GST on advertisement services supplied by it, and is not required to register as a TDS deductor under GST.

Classification of goods as fermented milk product - Interpretation of Heading 0403 of the HSN - Exemption under Notification No.2/2017-Central Tax (Rate) - Product description versus trade name

Classification of goods as fermented milk product - Product description versus trade name - Interpretation of Heading 0403 of the HSN - Exemption under Notification No.2/2017-Central Tax (Rate) - Product sold as 'Laban' but made and labelled as described is to be classified as Lassi and its tax treatment determined accordingly. - HELD THAT: - The Authority examined the manufacturing process submitted by the applicant and the ingredient declaration on the product bottle, which described the goods as a "Dairy based fermented Drink" and listed pasteurised toned milk, active culture, spices, flavour and stabilizer. Heading 0403 covers buttermilk, curdled milk and all fermented or acidified milk and cream, whether or not flavoured or containing added sugar, and the Explanatory Notes confirm inclusion of fermented milk drinks. Applying the HSN description and the product composition and manufacturing steps, the goods fall within the scope of Lassi. Sr. No.26 of Notification No.2/2017-Central Tax (Rate) dated 28-6-17 specifically lists Curds; Lassi; Butter milk, bringing the classified product within the exemption entry.

Product is classified as Lassi under HSN 040390 and is exempt from GST under the cited notification.

Final Conclusion: The Advance Ruling holds that the product marketed as 'Laban', given its composition and manufacture, is Lassi classifiable under HSN 040390 and is exempt from GST under Notification No.2/2017-Central Tax (Rate) dated 28-6-17.

Composite supply of works contract as defined in Section 2(119) of the CGST Act, 2017 - inclusive definition of "business" under Section 2(17) of the CGST Act, 2017 - interpretation and scope of Entry 3(vi)(a) of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 - meaning of "Governmental Authority" for the purposes of Notification No.11/2017 - application of the exception in the Explanation to Entry 3(vi) regarding activities of Central/State/local authorities

Composite supply of works contract as defined in Section 2(119) of the CGST Act, 2017 - Classification of the subject contract as a composite supply of works contract. - HELD THAT: - The Authority found that the subject contract involves construction of immovable property wherein transfer of property in goods is involved in execution of the contract. Having regard to the nature of the contract (labour plus materials and supply of goods like cement, bricks, TMT, sanitary wares etc.), the supply was held to satisfy the definition of a composite supply of works contract under Section 2(119) of the CGST Act, 2017. The finding records that the subject supply is a composite works contract service. [Paras 16]

The subject supply is a composite supply of works contract service.

Meaning of "Governmental Authority" for the purposes of Notification No.11/2017 - application of the exception in the Explanation to Entry 3(vi) regarding activities of Central/State/local authorities - Whether the Ahmedabad Urban Development Authority (AUDA) qualifies as a "local authority" or as a "Governmental Authority" for the purposes of Entry 3(vi) of Notification No.11/2017. - HELD THAT: - The Authority examined the nature and constitution of AUDA under the Gujarat Town Planning and Urban Development Act, 1976. It rejected the contention that AUDA is a "local authority" under Section 2(69) of the CGST Act, observing that AUDA's funds are not notified as local/municipal funds and that developmental authorities under town-planning enactments are not automatically "local authorities" for GST purposes. However, applying the definition of "Governmental Authority" in paragraph 4(ix) of Notification No.11/2017, the Authority concluded that AUDA, being set up by state legislation and entrusted with functions akin to municipalities under Article 243W, falls within the definition of a "Governmental Authority" under the Notification. [Paras 17, 18]

AUDA is not a "local authority" for the purposes of Section 2(69) CGST Act, but does qualify as a "Governmental Authority" under Notification No.11/2017.

Inclusive definition of "business" under Section 2(17) of the CGST Act, 2017 - interpretation and scope of Entry 3(vi)(a) of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 - Whether the proposed sports complex is "predominantly meant for use other than for commerce, industry, or any other business or profession" and thus eligible under Entry 3(vi)(a). - HELD THAT: - The Authority noted that a prerequisite of Entry 3(vi)(a) is that the civil structure be predominantly for non-commercial use. It analysed the inclusive definition of "business" in Section 2(17) and examined factual material, including AUDA's own website showing online paid bookings and tariffed usage of an existing sports complex. Relying on the plain language of the Notification and the inclusive statutory definition, the Authority held that the proposed sports complex cannot be regarded as predominantly for non-commercial use given the clear illustrations of commercial usage (bookings for consideration, published rates and terms). The Authority emphasised strict textual interpretation of the Notification and the absence of the Explanation's protection for "Governmental Authority" in respect of the term "business." [Paras 19, 20]

The proposed sports complex is not predominantly meant for non-commercial use; Entry 3(vi)(a) of Notification No.11/2017 is therefore not attracted.

Final Conclusion: The Authority ruled that, although the subject contract is a composite works contract and AUDA qualifies as a "Governmental Authority" under the Notification, the sports complex is not predominantly for non-commercial use; consequently the supply does not qualify under Entry 3(vi)(a) of Notification No.11/2017 and the applicant's claim for classification under that entry is rejected.

Classification of goods by HSN - distinction between hand tools and agricultural machinery - interpretation of HSN notes - classification under Chapter Heading 8436 and tariff item 84368090 - taxability under Schedule II to Notification No. 01/2017-CT [R] dated 28-6-17

Distinction between hand tools and agricultural machinery - classification of goods by HSN - Whether the 'Agricultural manually hand operated Seed dressing, Coating and Treating drum' is classifiable under HSN 8201 as a hand tool. - HELD THAT: - The Authority examined the HSN entry at 8201 and the accompanying HSN notes which describe hand tools as instruments used in the hand, often operable with one hand and designed for cutting or similar powerful manual action. The applicant's product is a drum-type machine used to coat and treat seeds with chemicals and is not a hand tool used independently in hand. The descriptive characteristics and functional use of the applicant's machine do not correspond to the items enumerated under HSN 8201. On this basis the Authority rejected classification under HSN 8201. [Paras 5]

The product is not classifiable under HSN 8201.

Interpretation of HSN notes - classification under Chapter Heading 8436 and tariff item 84368090 - classification of goods by HSN - Whether the 'Seed dressing, coating and treating drum' is classifiable under Chapter Heading 8436, specifically tariff item 84368090. - HELD THAT: - The Authority referred to HSN Chapter 8436 and its notes, which expressly include seed dusting machines and machinery consisting of hoppers feeding a revolving drum for coating seeds with powders. The functional description in the HSN notes corresponds to the applicant's drum machine used to coat and treat seeds before sowing. The Chapter makes no distinction between manual and power-driven machines for this description. Consequently, the Authority held that the appropriate classification is within Chapter Heading 8436, subheading 843680 and tariff item 84368090, and found no need to consider heading 8437 which deals with different machinery. [Paras 6]

The product is classifiable under Chapter Heading 8436, subheading 843680, tariff item 84368090.

Taxability under Schedule II to Notification No. 01/2017-CT [R] dated 28-6-17 - classification of goods by HSN - The applicable GST rate on the product following its HSN classification. - HELD THAT: - Having determined the correct HSN classification as 84368090, the Authority noted that this HSN appears at entry 199 of Schedule II to Notification No. 01/2017-CT [R] dated 28-6-17. Applying the tariff entry, the Authority determined the applicable GST rate on the classified item. [Paras 7, 8]

The item is liable to GST at 12% (6% CGST + 6% SGST).

Final Conclusion: The Advance Ruling holds that the 'Agricultural manually hand operated Seed dressing, Coating and Treating drum' is not a hand tool under HSN 8201 but is machinery classifiable under Chapter Heading 8436, tariff item 84368090, and is liable to GST at 12% (6% CGST + 6% SGST).

Place of supply of services - services in respect of goods physically made available to the supplier - export of services / zero-rated supply - intra-state supply treated as levy of CGST and SGST - non-applicability of Place of Provision of Services (POPS) Rules in GST regime

Place of supply of services - services in respect of goods physically made available to the supplier - Place of supply of the applicant's R&D/testing services - HELD THAT: - On the terms of the service contract and the undisputed factual position, the recipient sent sample goods which had to be physically made available to the applicant so that tests and R&D activities could be performed and results supplied. This situation falls within the scope of the provision that the place of supply of services supplied in respect of goods required to be made physically available to the supplier is the location where the services are actually performed. Consequently the place of supply is the applicant's location in Gujarat. [Paras 11]

The place of supply is the location where the services are actually performed (Gujarat); the services are not covered by Section 13(2).

Export of services / zero-rated supply - intra-state supply treated as levy of CGST and SGST - non-applicability of Place of Provision of Services (POPS) Rules in GST regime - Whether the R&D/testing services qualify as export of services / zero-rated supply or are taxable as IGST, or as CGST and SGST - HELD THAT: - Because the place of supply is in India (the supplier's location), the statutory condition for export of services that the place of supply be outside India is not satisfied. Where the supplier and place of supply are in the same State, the supply is to be treated as intra-state and therefore subject to CGST and SGST. Reliance on Service Tax-era POPS Rules and earlier decisions under that regime was rejected as inapplicable to determination of place of supply under the IGST Act enacted for the GST regime. [Paras 11, 12, 14]

The services do not qualify as export/zero-rated supply; they are liable to CGST and SGST.

Final Conclusion: The Authority rules that the applicant's R&D/testing services performed on sample goods physically provided by the foreign recipient have their place of supply at the supplier's location in Gujarat and, therefore, do not qualify as export/zero-rated supply; such services are taxable as intra-state supplies and liable to CGST and SGST.

Provisional attachment under Section 83 - Expiry of provisional attachment under Section 83(2) - Interference in intra court appeal - Liberty to seek appropriate relief before the Single Judge

Provisional attachment under Section 83 - Expiry of provisional attachment under Section 83(2) - Validity of the learned Single Judge's interim direction staying the requirement to furnish a bank guarantee and restoration of bank accounts in light of the expiry of provisional attachment orders. - HELD THAT: - The Court examined the dates of the provisional attachment orders produced in the writ petition and noted that, by operation of Section 83(2) of the CGST Act, the provisional attachment orders issued on 15.07.2020 had expired before the Single Judge's interim order dated 24.03.2021. Having regard to the statutory expiry and the reasons relied on by the Single Judge, the Court was not persuaded to interfere with the interim order which stayed the direction to furnish a bank guarantee and substituted an undertaking limiting alienation of fixed assets until disposal of the writ petition. The Court treated the expiry of the provisional attachment as a material circumstance militating against disturbing the Single Judge's interim direction.

The intra court appeal challenging the Single Judge's interim order was not interfered with.

Interference in intra court appeal - Liberty to seek appropriate relief before the Single Judge - Whether any further relief was available to the appellant given the interim order and the factual circumstances. - HELD THAT: - While declining to interfere in the intra court appeal, the Court recognised the appellant's concerns arising from the interim order and granted liberty to the respondents in the writ petition to move appropriate applications before the learned Single Judge in accordance with law. This preserves the parties' right to seek such relief as may be legally available in the facts and circumstances without the appellate court otherwise altering the interim disposition.

Liberty granted to the respondents to move appropriate applications before the Single Judge; writ appeal disposed of.

Final Conclusion: The intra court appeal is disposed of with no interference in the Single Judge's interim order staying the direction to furnish a bank guarantee in view of the expiry of the provisional attachment; liberty granted to the respondents to approach the Single Judge for any appropriate relief in accordance with law.

Reopening of assessment - change of opinion - reasons to believe - tangible new material - survey under Section 133A - notice under Section 148

Reopening of assessment - change of opinion - survey under Section 133A - tangible new material - Validity of reopening the assessment for Assessment Year 2008-09 on the basis of survey findings and whether the reopening amounted to a mere change of opinion. - HELD THAT: - The Court found that although a survey under Section 133A was conducted prior to the original assessment, the assessment order contains no reference to the survey report and no findings indicating that the survey material had been considered. The reasons for reopening stated that substantial cash payments identified during the survey had not been accounted for and were not considered in the scrutiny assessment. Where the assessing officer identifies tangible new material that was not taken into account when the original assessment was framed, he has reasons to believe that income chargeable to tax has escaped assessment and is entitled to initiate reopening under the procedure invoked. The Court held that the petitioner's assertion that the reopening was a mere change of opinion is presumptive and unsupported by the assessment record which lacks any reference to the survey; consequently the reopening was not a change of opinion but founded on unconsidered material discovered through the survey. [Paras 11, 12, 13, 14]

Reopening for Assessment Year 2008-09 was validly initiated on identification of tangible survey material not considered in the original assessment; the contention of mere change of opinion is rejected.

Reopening of assessment - notice under Section 148 - Whether reliance on an inapplicable precedent in the order disposing of objections vitiates the reopening proceedings. - HELD THAT: - The Court held that citation of an inapplicable judgment in the disposal order does not vitiate the reopening itself where the assessing officer legitimately has reasons to believe that income escaped assessment based on identifiable material. The validity of reopening is to be judged by the existence of tangible material and proper reasons for belief; an erroneous or inapt citation does not nullify the statutory power exercised when the substantive threshold for reopening is met. [Paras 11]

Erroneous reliance on a precedent in disposing objections does not invalidate the reopening where the assessing officer had reasons to believe that income had escaped assessment.

Final Conclusion: Writ petition dismissed; the reassessment proceedings and the order rejecting objections are sustained, and the assessee is directed to cooperate so that the reopening proceedings are completed expeditiously.

Re-opening of assessment under Section 148 - jurisdictional defect in notice issued to a non-existent assessee - effect of sanctioned scheme of amalgamation: amalgamating entity ceases to exist - clerical error and correction under Section 292B

Re-opening of assessment under Section 148 - jurisdictional defect in notice issued to a non-existent assessee - effect of sanctioned scheme of amalgamation: amalgamating entity ceases to exist - clerical error and correction under Section 292B - Validity of the notice dated 30th March 2019 issued under Section 148 in the name of Niraj Realtors & Shares Pvt. Ltd. for AY 2012-2013 where Niraj Realtors had ceased to exist pursuant to a sanctioned scheme of amalgamation. - HELD THAT: - The Court found on the material before it that Niraj Realtors had merged into Alok Knit Exports Pvt. Ltd. with an appointed date of 1st April 2012 and that the Revenue was aware of the amalgamation (including issuance of a notice for AY 2011-2012 in the name of the successor company). A jurisdictional notice under Section 148 must be founded on the correct legal facts about the identity of the assessee; where the amalgamating entity has ceased to exist pursuant to a sanctioned scheme of amalgamation, invoking jurisdiction by issuing a notice in the name of that non-existent entity is fundamentally at odds with that legal principle. The respondents' reliance on the PAN database showing the PAN as active and the submission that the mistake was a mere clerical error curable under Section 292B was rejected. The Court observed that the Apex Court has confined the applicability of Section 292B to cases of bona fide clerical mistakes in their peculiar facts; where jurisdiction is invoked on a basis contrary to the settled legal position that the amalgamating company ceases to exist, the notice is bad in law. Given that the respondents were on notice of the amalgamation and had earlier acted in proceedings recognising the successor company, the impugned notice could not be sustained. [Paras 4, 6, 7, 9, 10]

The notice dated 30th March 2019 and the subsequent order rejecting objections were quashed and set aside.

Final Conclusion: Writ petition allowed; the Section 148 notice dated 30th March 2019 and the order dated 5th September 2019 were quashed on the ground that the jurisdictional notice was issued in the name of an entity that had ceased to exist pursuant to a sanctioned amalgamation.

Limitation for filing miscellaneous application under Section 254(2) - retrospective application of procedural amendment - absence of saving clause in amended provision - reasonable period doctrine to avoid nugatory effect of amendment - non-vested procedural rights of the assessee - power to condone delay under Section 253(5) not available for applications under Section 254(2)

Limitation for filing miscellaneous application under Section 254(2) - retrospective application of procedural amendment - absence of saving clause in amended provision - reasonable period doctrine to avoid nugatory effect of amendment - non-vested procedural rights of the assessee - power to condone delay under Section 253(5) not available for applications under Section 254(2) - Maintainability of the miscellaneous application filed on 20.01.2017 for rectification under Section 254(2) in respect of the tribunal order dated 02.02.2016. - HELD THAT: - The appellate order sought to be rectified was passed on 02.02.2016 when the then applicable limitation for filing a miscellaneous application under Section 254(2) was four years. Finance Act, 2016 amended Section 254(2) w.e.f. 01.06.2016 reducing the limitation to six months and no saving clause was provided. Procedural amendments operate retrospectively unless statute provides otherwise, and the assessee has no vested right in procedure. The Tribunal noted that where the amended shorter period would operate so as to make the provision nugatory, a reasonable period must be afforded by interpretation; accordingly, if on the date of amendment the unexpired period under the old law exceeded six months, the new six month period is to be reckoned from the date the amendment came into effect. Applying that principle to the facts, the Tribunal held that the assessee should have filed the MA within six months from 01.06.2016, and the MA filed on 20.01.2017 was beyond the permissible period. The Tribunal further observed that the condonation power under Section 253(5) does not extend to MA under Section 254(2). Since maintainability was negatived on limitation grounds, the MA was not adjudicated on merits. [Paras 3, 4]

The miscellaneous application was held time barred and dismissed as not maintainable.

Final Conclusion: The Tribunal dismissed M.A. No. 02/Alld/2017 arising out of ITA No. 280/Alld/2015 (AY: 2008-09) as time barred, applying the amended six month limitation under Section 254(2) (Finance Act, 2016 w.e.f. 01.06.2016) with the reasonable period interpretation; the application was not decided on merits.

Assessment of unexplained cash deposits as income (unexplained investment) - Burden of proof on the assessee to explain source of deposits - Appellate deletion where source is satisfactorily explained - Use of AIR information to trigger inquiry into cash deposits

Assessment of unexplained cash deposits as income (unexplained investment) - Burden of proof on the assessee to explain source of deposits - Appellate deletion where source is satisfactorily explained - Whether the addition of Rs. 11,47,000/- as unexplained cash deposit should be sustained where the assessee furnished explanation of source - HELD THAT: - The Tribunal examined the bank-deposit information relied upon by the AO, the assessee's explanation that he received cash salary as a Railway Guard and the Form 16 figures for the relevant year. Although the AO treated aggregate cash deposits shown in AIR as unexplained and invoked treatment as unexplained investment, the assessee advanced a consistent explanation that the deposits represented accumulated cash receipts from salary (received in cash until February 2015) and other family circumstances which reduced outgoings (no rent, grown children, and contribution by a child in service). The record contained no material contradicting the assessee's explanation. On the totality of these facts, the Tribunal concluded that the source of the contested cash deposits was satisfactorily explained and that sustaining the addition merely on surmise was unjustified. Accordingly the addition of Rs. 11,47,000/- was deleted.

Addition of Rs. 11,47,000/- as unexplained cash deposit deleted; appeal allowed.

Final Conclusion: The Tribunal deleted the addition of Rs. 11,47,000/- treated as unexplained cash deposit for AY 2014-15, finding that the assessee had satisfactorily explained the source and there was no material to the contrary.

Classification of shares as investment or trading - treatment of bonus shares and cost computation - recomputation of capital gains and set-off of capital losses - distinction between legitimate tax planning and colourable device

Classification of shares as investment or trading - distinction between legitimate tax planning and colourable device - Assessee's dealings in shares of HCL Technologies Ltd. are to be treated as investment transactions and not as trading activity. - HELD THAT: - The Tribunal found that the assessee, a whole time managing partner in an industrial concern, was not carrying on an organized business of dealing in shares and there was no organisational apparatus or record indicating trading in shares. The transactions in HCL shares, though effected shortly before and after the record date for bonus issue, were genuine and not held to be colourable or non genuine by the Assessing Officer. Prior and subsequent assessments treated sales of shares and mutual fund units as capital gains, and the factual matrix aligned with precedent where bonus shares issued proportionately to shareholding are treated as capital in nature. On these findings the Tribunal held the AO's conclusion that the assessee was a trader was not justifiable and reversed that classification. [Paras 8, 9]

Assessee is an investor in relation to the HCL Technologies Ltd. shares and not a trader; the AO's classification as trading is set aside.

Treatment of bonus shares and cost computation - recomputation of capital gains and set-off of capital losses - The loss on sale of HCL Technologies Ltd. shares is to be assessed under the head 'capital gains' and the Assessing Officer is directed to recompute capital gain/loss accordingly. - HELD THAT: - Having held the transactions to be of an investment character, the Tribunal directed that the loss arising on sale of the original shares, which followed receipt of bonus shares, be taken into account under the head capital gains in accordance with law. The Tribunal noted the assessee had adjusted the loss against capital gains from other equity shares and mutual funds and that the AO had not impugned the genuineness of the transactions. Consequently, the matter of quantification and computation of capital gain/loss, including consequences of bonus shares, was entrusted back to the Assessing Officer for recomputation in accordance with the legal position. [Paras 8, 9]

AO to recompute the capital gain/loss on sale of HCL Technologies Ltd. shares treating the transactions as assessable under the head capital gains and allow set off as per law.

Final Conclusion: Appeal allowed: classification of the HCL Technologies Ltd. transactions as investments is upheld and the Assessing Officer directed to recompute capital gain/loss on those sales, treating them as capital gains and permitting set off as applicable.

Allowability of ESOP expense - Employees Stock Option Plan governed by SEBI guidelines - Ascertained liability versus notional/contingent liability - Binding effect of precedent of the Hon'ble Delhi High Court

Allowability of ESOP expense - Employees Stock Option Plan governed by SEBI guidelines - Ascertained liability versus notional/contingent liability - Deletion of addition of ESOP-related expenditure of Rs. 1,18,59,997/- made by the Assessing Officer was upheld. - HELD THAT: - The Tribunal considered whether the expenditure debited by the assessee on account of Employees Stock Option (ESOP) scheme was allowable. The Tribunal noted that the allotment and accounting treatment were made in strict compliance with SEBI guidelines which require that the difference between market price and exercise price be debited to the Profit & Loss Account. On that basis the liability was held to be an ascertained liability and not a mere notional or contingent loss. The Tribunal further observed that the issue is covered in favour of the assessee by the decision of the Hon'ble Delhi High Court in Lemon Tree Hotels Ltd., which had concurred with the Special Bench view in Biacon Ltd. The Revenue could not place any contrary binding authority before the Tribunal. In view of the binding precedent and the fact-finding that the ESOP expenditure arose in accordance with SEBI directions and constituted an ascertained liability, there was no infirmity in the order of the Commissioner (Appeals) deleting the addition. [Paras 7, 8]

Order of Ld. CIT(A) deleting the addition on account of ESOP expenses is affirmed and the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal for AY 2014-15, holding that ESOP expenditure debited in conformity with SEBI guidelines constituted an ascertained liability and was allowable; the CIT(A)'s deletion of the addition is sustained.

Condonation of delay for sufficient cause - Disallowance for expenditure relating to exempt income under section 14A read with Rule 8D - Allowance of deduction for employees' contribution - section 36(1)(va) - requirement of credit to relevant fund on or before due date - Allocation of expenses between eligible and non eligible units for deduction under section 80IC - Treatment of expenses incurred to earn exempt income for computation of book profit under section 115JB - Mandatory levy of interest under sections 234A/234B/234C

Condonation of delay for sufficient cause - Condonation of 105 days' delay in filing the appeal. - HELD THAT: - The assessee explained non receipt/misdelivery of the order of the ld. CIT(A) (speed post envelope addressed incorrectly) as the cause for delay. Applying the principle that "sufficient cause" should be interpreted to secure even handed justice on merits, the Tribunal found the explanation reasonable and condoned the delay. [Paras 2]

Delay of 105 days in filing the appeal is condoned.

Disallowance for expenditure relating to exempt income under section 14A read with Rule 8D - Allowance of suo moto disallowance made by the assessee - Extent of disallowance under section 14A read with Rule 8D for AY 2013 14 (ITA 1528/Ahd/2017). - HELD THAT: - Assessing Officer applied Rule 8D to compute a large disallowance. The assessee relied on earlier Co ordinate Bench decision in its own case for AY 2010 11 where administrative expenditure disallowance was restricted to Rs. 7 lakhs considering the nature of investments (tax free bonds/securities) and availability of interest free funds. Applying that precedent and the comparable facts, the Tribunal held that a restricted disallowance was appropriate and directed that the Assessing Officer allow deduction for the suo moto disallowance already made by the assessee. [Paras 4, 6, 7]

Disallowance under section 14A is restricted and adjusted (Assessing Officer to allow deduction of the suo moto disallowance); the ground is partly allowed.

Disallowance for expenditure relating to exempt income under section 14A read with Rule 8D - Extent of disallowance under section 14A read with Rule 8D for AY 2014 15 (ITA 2870/Ahd/2017). - HELD THAT: - Following the reasoning applied for AY 2013 14 and the Co ordinate Bench precedent in the assessee's own earlier year, the Tribunal held that a restricted disallowance for administrative expenses was appropriate given the nature of investments and sufficiency of interest free funds. The Assessing Officer was directed to allow the deduction of the suo moto disallowance already made by the assessee. [Paras 15, 17, 18]

Disallowance under section 14A is restricted and the ground is allowed (Assessing Officer to allow the suo moto disallowance).

Disallowance for expenditure relating to exempt income under section 14A read with Rule 8D - Extent of disallowance under section 14A read with Rule 8D for AY 2015 16 (ITA 1788/Ahd/2017). - HELD THAT: - On facts similar to the earlier years and in absence of specific reasons from the Assessing Officer to reject the assessee's claim of sufficient interest free funds and nature of investments, the Tribunal applied the earlier finding and restricted the administrative expenses disallowance. The Assessing Officer was directed to allow deduction for the suo moto disallowance recorded by the assessee. [Paras 23, 25, 26]

Disallowance under section 14A is restricted and this ground is partly allowed (Assessing Officer to permit deduction of the suo moto disallowance).

Allocation of expenses between eligible and non eligible units for deduction under section 80IC - Disallowance of deduction under section 80IC for AY 2013 14 (ITA 1528/Ahd/2017) by allocating financial expenses to the 80IC eligible unit. - HELD THAT: - The Assessing Officer applied an allocation ratio to financial expenses and reduced the section 80IC deduction. The assessee did not furnish material before the Tribunal to displace the Assessing Officer's factual findings regarding allocation. In absence of contrary material, the Tribunal found no merit in the ground of appeal. [Paras 8, 9, 10]

Disallowance by allocation to the 80IC unit is sustained; the ground of appeal is dismissed.

Allowance of deduction for employees' contribution - section 36(1)(va) - requirement of credit to relevant fund on or before due date - Disallowance of employees' contribution not credited to ESIC/PF on or before due date for AYs 2013 14, 2014 15 and 2015 16. - HELD THAT: - Assessing Officer disallowed employees' contributions which were not credited to the relevant fund within the due date. The Tribunal, applying binding jurisdictional authority, held that where the employer has not credited employees' contribution to the employees' account in the relevant fund by the prescribed due date, deduction is not allowable. The assessee's reliance on an out of jurisdiction decision was not held persuasive. [Paras 13, 19, 21, 27, 29]

Disallowance under section 36(1)(va) is sustained for failure to credit employees' contributions by the due date; the grounds are dismissed.

Mandatory levy of interest under sections 234A/234B/234C - Challenges to levy of interest under sections 234A (AY 2014 15), 234B and 234C (AY 2015 16). - HELD THAT: - The Tribunal noted that levy of interest under the cited provisions is mandatory as prescribed by law and there was no basis to interfere with the imposition of interest. [Paras 22, 30]

Contentions against the levy of interest under sections 234A/234B/234C are dismissed.

Treatment of expenses incurred to earn exempt income for computation of book profit under section 115JB - Whether disallowance under section 14A should be added back to compute book profit for section 115JB for AYs 2013 14 and 2014 15 (additional grounds). - HELD THAT: - Relying on the Special Bench decision in ACIT vs. Vineet Investment Pvt. Ltd., the Tribunal accepted that expenses incurred to earn exempt income are not to be added back while computing book profit under section 115JB. The Revenue did not contest the assessee's reliance, and the Tribunal allowed the additional grounds accordingly. [Paras 31, 33]

Disallowance under section 14A is not to be added for computing book profit under section 115JB; the additional grounds are allowed.

Final Conclusion: All three appeals are partly allowed: delays are condoned; disallowances under section 14A for the three assessment years are restricted (with directions to give effect to the suo moto disallowances made by the assessee); disallowances under section 36(1)(va) and interest and the section 80IC allocation were sustained where appropriate; and the Tribunal held that expenses incurred to earn exempt income need not be added back for computation of book profit under section 115JB.

Section 56(2)(viib) - taxation where consideration for issue of shares exceeds fair market value - Rule 11UA - prescribed method for determination of fair market value of unquoted equity shares - Requirement to follow statutory valuation procedure - Section 68 - onus on assessee to prove identity, creditworthiness and genuineness of share subscribers - Remand for fresh consideration and verification of identity and creditworthiness

Section 56(2)(viib) - taxation where consideration for issue of shares exceeds fair market value - Rule 11UA - prescribed method for determination of fair market value of unquoted equity shares - Requirement to follow statutory valuation procedure - Validity of addition under section 56(2)(viib) based on rejection of the assessee's valuation under Rule 11UA - HELD THAT: - The Tribunal held that section 56(2)(viib) must be read with Rule 11UA and that fair market value of unquoted equity shares for the clause is to be determined under clause (a) or (b) of Rule 11UA at the option of the assessee. The Assessing Officer rejected the assessee's valuation certificate and treated shares at face value without applying the Rule 11UA formula; the CIT(A) upheld that view by relying on a decision where facts were distinguishable. The Tribunal applied the principle that where statute prescribes a method the authority must follow that method and observed that the AO ignored balance-sheet assets which the assessee used in computing value under Rule 11UA(a). Because no fault was found in the method applied by the assessee and lower authorities acted on presumptions and surmises without applying the prescribed statutory procedure, the addition under section 56(2)(viib) was not sustainable. [Paras 18, 19]

Order of the CIT(A) sustaining the addition under section 56(2)(viib) is set aside and the AO is directed to delete the addition made under that provision.

Section 68 - onus on assessee to prove identity, creditworthiness and genuineness of share subscribers - Remand for fresh consideration and verification of identity and creditworthiness - Sustainability of addition under section 68 in respect of share capital and share premium received from certain subscribers - HELD THAT: - The Tribunal examined receipts totaling the share capital and premium. It agreed with deletion of amounts attributable to earlier years but considered amounts received during the relevant year separately. For one subscriber (Palani Builders Pvt. Ltd.) the company had responded to the AO's notice under section 133(6) and furnished details proving identity and creditworthiness; the Tribunal found the addition in respect of Palani was based on presumption and directed deletion. For two subscribers (Best Buildmart Pvt. Ltd. and Shri Lekh Nath Pandey) there was no response to the AO's notice and the assessee failed to place adequate contemporaneous evidence before the AO; accordingly the Tribunal did not finally affirm additions but restored those items to the file of the AO, directing the AO to give the assessee one more opportunity to substantiate identity, creditworthiness and genuineness and to decide the matter afresh in accordance with law. [Paras 22, 24]

Addition of Rs. 6,00,000 in respect of Palani Builders Pvt. Ltd. is deleted; issues relating to Best Buildmart Pvt. Ltd. and Shri Lekh Nath Pandey are remanded to the Assessing Officer for fresh consideration after giving opportunity to the assessee.

Final Conclusion: The appeal is partly allowed: the addition under section 56(2)(viib) is deleted; the addition under section 68 in respect of one subscriber (Palani Builders Pvt. Ltd.) is deleted; matters relating to two other subscribers are remitted to the Assessing Officer for fresh adjudication after affording the assessee an opportunity to substantiate identity, creditworthiness and genuineness.

Deduction under section 80-IA(4)(iii) - Eligibility of industrial park notification by the Central Government - Non-automatic approval route under the Industrial Park Scheme, 2002 - Requirement of CBDT notification pursuant to DIPP approval - Meaning of "unit" as a separate and distinct entity for the purpose of State or Central tax laws - Effect of High Court interim and final orders on entitlement to tax exemption

Deduction under section 80-IA(4)(iii) - Eligibility of industrial park notification by the Central Government - Non-automatic approval route under the Industrial Park Scheme, 2002 - Meaning of "unit" as a separate and distinct entity for the purpose of State or Central tax laws - Effect of High Court interim and final orders on entitlement to tax exemption - Whether the assessee was entitled to deduction under section 80-IA(4)(iii) for the stated assessment years in view of restoration of DIPP approval, the High Court findings on independence of the 16 units, and subsequent CBDT notification. - HELD THAT: - The Tribunal examined the sequence of administrative and judicial events. The Hon'ble Karnataka High Court (single judge) quashed the DIPP order withdrawing approval and found no violation of conditions applicable to the non-automatic route, and accepted that the 16 units let to TCS were separate and distinct taxable units supported by documentary certificates. The Division Bench affirmed that decision and the interim order recorded that the respondent shall be entitled to tax exemption subject to outcome of the writ appeal. Pursuant to those directions and the High Court's final decision, the Empowered Committee revoked the withdrawal and the CBDT issued the notification dated 01/03/2018 notifying the undertaking as an industrial park for the purposes of clause (iii) of sub-section (4) of section 80-IA. Given the High Court's categorical findings that there was no contravention of conditions applicable to the non-automatic route and that the requisite independent units existed, and in view of the subsequent notification by the Central Government, the CIT(A)'s direction to the Assessing Officer to allow deduction under section 80-IA(4)(iii) for the years in issue was held to be legally sustainable. The Tribunal therefore upheld the appellate authority's reliance on the High Court's findings and on the notification as completing the statutory eligibility for the tax benefit. [Paras 6, 10, 11]

The CIT(A)'s order allowing deduction under section 80-IA(4)(iii) for the assessment years in question is upheld and the Revenue's appeals are dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeals and upheld the CIT(A)'s direction to grant deduction under section 80-IA(4)(iii) for the stated assessment years, relying on the Karnataka High Court's restoration of DIPP approval, its findings that the 16 units were independent taxable units, and the subsequent CBDT notification.

Registration under section 12AA - charitable purpose within section 2(15) - proposed activities - predominant object test - incidental business activity and franchise arrangements - separate books of account for business activities

Registration under section 12AA - charitable purpose within section 2(15) - incidental business activity and franchise arrangements - proposed activities - predominant object test - Whether denial of registration under section 12AA on the ground that the society had entered into a franchise agreement rendered its activities non-charitable - HELD THAT: - The Tribunal found that the CIT(Exemption) rejected the application solely on the basis of the franchise agreement with Zee Learn Ltd., without disputing that the society runs an affiliated CBSE school. Applying the principle that section 12AA is concerned with registration of trusts/institutions whose objects and proposed activities are genuine, the Tribunal relied on established authority holding that a commissioner must satisfy himself as to genuineness of objects and proposed activities and that proposed activities fall within the concept of 'activities' under the provision. The Tribunal held that entering into a franchise agreement does not, by itself, convert educational activity into non-charitable activity. The predominant object test governs: if the institution's primary purpose is education (and not profit-making), incidental commercial arrangements (such as franchise arrangements) do not disentitle it to registration, subject to conditions (including the assessment-stage scrutiny of permissibility of franchise fees and compliance with requirements relating to incidental business activities). The Tribunal therefore directed that registration be granted from the date of application while noting that the assessing officer remains competent to examine the permissibility of franchise fees and related compliance at assessment. [Paras 15, 16, 20, 21]

The denial of registration was set aside and the CIT(E) was directed to grant registration under section 12AA from the date of application, with the caveat that the assessing officer may examine the permissibility of the franchise fees and related compliance at assessment.

Final Conclusion: The appeal is allowed; registration under section 12AA is to be granted from the date of application, subject to assessment-stage examination of franchise fees and compliance with law.

Registration under section 12AA - genuineness of activities - objects of a charitable educational institution - scope of inquiry for grant of registration - claiming exemption under section 10(23C)(iiiab) - substantially financed by the Government

Registration under section 12AA - genuineness of activities - objects of a charitable educational institution - The refusal by the Commissioner (Exemption) to register the appellant society under section 12AA was unsustainable and registration was to be granted. - HELD THAT: - The Tribunal found that the appellate authority's rejection of the application for registration u/s 12AA was based on observations that did not properly engage with the statutory test. Section 12AA requires enquiry into the objects of the society and satisfaction as to the genuineness of its activities. The assessee's objects of imparting education and the affiliations to Panjab University and Punjab School Education Board were accepted on record. The Commissioner's emphasis on the timing of the application (after many years of existence) and on the assessee's prior filing position was held to be an inadequate basis, by itself, to deny registration where the application was made in the prescribed form and requisite queries had been complied with. Applying the settled principle that registration is not a mere formality but must be refused only when activities are not genuine or not in consonance with objects, the Tribunal concluded that the factual record supported granting registration and reversed the refusal. [Paras 11, 15]

Registration under section 12AA is to be granted to the appellant; the CIT(E)'s order rejecting registration is set aside.

Claiming exemption under section 10(23C)(iiiab) - substantially financed by the Government - scope of inquiry for grant of registration - The Commissioner erred in treating issues relating to substantial government financing under section 10(23C)(iiiab) as determinative of the registrability under section 12AA. - HELD THAT: - The Tribunal observed that the statutory test for registration u/s 12AA is distinct and limited to whether the objects are charitable and activities genuine and in consonance with those objects. While questions of whether the institution is 'substantially financed by the Government' for the purpose of section 10(23C)(iiiab) and the application of Rule 2BBB are relevant to claims under section 10(23C), they do not automatically bear adverse on the question of registration under section 12AA. The CIT(E)'s reference to the fact that government grants exceeded fifty per cent in only one financial year and related commentary were held to be unwarranted at the registration stage and not a valid ground to refuse registration where the applicant had filed required particulars and complied with inquiries. [Paras 8, 13]

Enquiry into whether the appellant was 'substantially financed' within the meaning of section 10(23C)(iiiab) was not a proper basis to refuse registration under section 12AA; such questions can be examined in appropriate proceedings but do not negate registrability.

Final Conclusion: The Tribunal set aside the CIT(E)'s order rejecting registration under section 12AA and directed that registration be granted to the appellant forthwith, observing that the registration enquiry is confined to objects and genuineness of activities and that questions relating to section 10(23C)(iiiab) financing do not, by themselves, justify refusal of registration.

Section 40A(2) - excessive or unreasonable expenditure having regard to the fair market value - burden on the Assessing Officer to establish fair market value - disallowance on estimation/adhoc basis - payments to related party/sister concern

Section 40A(2) - excessive or unreasonable expenditure having regard to the fair market value - burden on the Assessing Officer to establish fair market value - payments to related party/sister concern - disallowance on estimation/adhoc basis - Whether the disallowance of payments made to the sister concern under Section 40A(2) can be sustained in absence of any material establishing that the expenditure was excessive or exceeded fair market value, and whether an adhoc pro rata disallowance is permissible. - HELD THAT: - The Tribunal examined Section 40A(2) and held that disallowance is permissible only to the extent that the Assessing Officer is satisfied an expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities. It is essential that the Assessing Officer bring on record material demonstrating that the payment exceeded fair market value or was otherwise unreasonable. In the present cases the Assessing Officer and the CIT(A) failed to produce any comparable instances or evidence of prevailing market rates; the books of account were not rejected and the service-provider was an identifiable assessee who charged service tax and attracted TDS. The CIT(A)'s pro rata restriction to 20% was held to be an unsupported adhoc estimation because no basis for fixing 20% was shown. Taking into account the absence of any comparables, the acceptance of similar payments in subsequent assessment years, and the need to avoid penalising the assessee without market-value proof, the Tribunal exercised its corrective discretion and reduced the adhoc disallowance further by granting an additional benefit to the assessee. The Tribunal therefore restricted the disallowance to 10% of the expenses paid to the sister concern for each assessment year. [Paras 9, 10, 11]

Disallowance under Section 40A(2) cannot be sustained on mere suspicion or without evidence of excess over fair market value; adhoc pro rata disallowance of 20% by lower authorities is not justified and is accordingly reduced to 10% for both assessment years.

Final Conclusion: Both appeals are partly allowed insofar as the disallowance of payments made to the sister concern under Section 40A(2) is concerned; the disallowance is restricted to 10% of the expenses paid to M/s Oxbridge International Pvt. Ltd. for assessment years 2013-14 and 2014-15.

Registration under section 12AA - principles of natural justice - jurisdiction under section 127 - transfer of proceedings and opportunity to be heard - verification of objects and activities for registration

Registration under section 12AA - jurisdiction under section 127 - principles of natural justice - transfer of proceedings and opportunity to be heard - verification of objects and activities for registration - Whether the CIT(Exemptions) was justified in treating the application for registration under section 12AA as invalid on the ground of being filed out of jurisdiction without affording the assessee an opportunity to rebut the AO's report and any order under section 127, and whether the matter should be restored for fresh consideration on merits. - HELD THAT: - The Tribunal found that the CIT(Exemptions) rejected the Form 10A application as invalid on the basis of a report that the assessee was part of a group transferred/centralised following search proceedings, without confronting that information to the assessee or affording an opportunity of rebuttal. The assessee disputed that a search had been conducted (asserting only a survey) and no objection had been raised to the objects or activities of the society in the impugned order. Relying on the requirement that principles of natural justice be observed before effecting transfer/centralisation or deciding jurisdictional questions, the Tribunal held that the CIT should have given the assessee adequate opportunity to meet the AO's report and to produce material on the merits. In consequence, the Tribunal restored the matter to the CIT(Exemptions) for fresh consideration of the registration application under section 12AA (as per the amended law), directing the CIT to (i) ascertain and record jurisdictional facts after seeking rebuttal to the AO's report and any section 127 order, (ii) if jurisdiction lies elsewhere, transfer the application to the competent authority, (iii) verify the veracity of earlier evidence, (iv) verify prima facie genuineness of the society's objectives and activities for the year under consideration, and (v) afford the assessee full opportunity to cooperate and advance all pleas available under law. [Paras 4, 5, 10, 11]

Matter remitted to the CIT(Exemptions) for fresh adjudication of the application for registration under section 12AA after affording the assessee opportunity of rebuttal and on verification of jurisdiction, evidence and genuineness of objects and activities; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal set aside the CIT(Exemptions) order treating the application as invalid for want of jurisdictional competence and non hearing, and restored the matter to the CIT(Exemptions) for fresh consideration of registration under section 12AA in accordance with the directions stated, after affording the assessee an opportunity to rebut the AO's report and adduce evidence on objects and activities.

Charitable purpose - the institution or fund is not expressed to be for the benefit of any particular religious community or caste - dominant object / dominant purpose - Explanation 3 to section 80G - section 80G(5B) - five per cent tolerance for expenditure of a religious nature - registration under section 80G - distinction between management of religious property and performance of religious activities

The institution or fund is not expressed to be for the benefit of any particular religious community or caste - charitable purpose - registration under section 80G - Assessee (SGPC) was entitled to registration under section 80G(5) because its activities were charitable and not exclusively for the benefit of a particular religious community. - HELD THAT: - The Tribunal found that the SGPC carried out extensive charitable activities (educational institutions, hospitals, langar, sarais, disaster and pandemic relief) open to the public without discrimination and that the financial accounts showed only a fraction of expenditure on religious activities. The character of an institution for the purposes of section 80G is to be determined by the use of its funds and the substance of its activities rather than by descriptive language in its constituting statute. Applying these principles, the Tribunal concluded that SGPC's activities were not confined to benefit a particular religious community and therefore it was entitled to registration under section 80G(5). [Paras 31, 35, 38, 39, 43]

Allowance of SGPC's appeal and grant of registration under section 80G(5) from date of application.

Dominant object / dominant purpose - distinction between management of religious property and performance of religious activities - Explanation 3 to section 80G - The Lower Authority erred in treating SGPC's dominant object as religious merely because the statute empowers it to manage gurdwaras; management of gurdwara property is distinct from performing religious activities so as to attract Explanation 3. - HELD THAT: - The Tribunal analysed the Sikh Gurdwaras Act, 1925 and observed that the Board (SGPC) and local Committees are distinct legal entities with different roles. While Committees perform religious ceremonies and day-to-day worship, the Board's functions include administration and management of properties, income and endowments and supervising committees. The Tribunal held that management functions akin to those performed by other statutory bodies do not automatically convert the Board into an institution 'for the benefit of a particular religious community' under Explanation 3. The Tribunal therefore rejected the CIT's reliance on the Act's preamble and operative provisions as determinative of dominant religious purpose. [Paras 17, 18, 20, 21, 31]

Rejection of the CIT's conclusion that SGPC's dominant object is religious in the sense of excluding section 80G benefits.

Section 80G(5B) - five per cent tolerance for expenditure of a religious nature - Explanation 3 to section 80G - charitable purpose - Section 80G(5B) applies and operates to deem an institution to which section 80G applies if religious expenditure does not exceed five percent of total income, thereby limiting the operation of Explanation 3 in such cases. - HELD THAT: - The Tribunal noted the statutory amendment by Finance Act, 1999 inserting section 80G(5B) which provides that where expenditure of a religious nature does not exceed five per cent of total income in a previous year, the institution shall be deemed to be covered by section 80G notwithstanding clause (ii) of sub section (5) and Explanation 3. The Tribunal observed that the SGPC's accounts showed religious expenditure below the five per cent threshold and that the amendment was intended to accommodate institutions which undertake charitable work yet incur limited religious expenditure. Applying section 80G(5B), the Tribunal held that SGPC could not be denied registration on the ground of Explanation 3. [Paras 30, 31, 39, 43]

Section 80G(5B) is applicable and supports grant of registration where religious expenditure is within the five per cent tolerance.

Final Conclusion: The Tribunal allowed the appeal, holding that SGPC's activities were charitable and open to the public, that the Board's management functions do not render it an institution for the exclusive benefit of a particular religious community, and that section 80G(5B)'s five per cent tolerance applies; SGPC was therefore entitled to registration under section 80G(5) from the date of application.

Registration under section 12AA - charitable purpose versus commercial/profit motive - requirement of cogent documentary evidence to substantiate profit motive finding - pending adjudication under alternative exemption code not a prerequisite for 12AA - remand for fresh consideration with opportunity of hearing

Charitable purpose versus commercial/profit motive - requirement of cogent documentary evidence to substantiate profit motive finding - The finding of the CIT(E) that the trust's activities do not qualify as charitable and are run on commercial/profit motives was not upheld without substantiation and required fresh examination. - HELD THAT: - The Tribunal held that the CIT(E)'s conclusion that the trust operated on commercial principles (relying on asserted high net surpluses) could not be approved without cogent documentary evidence. The CIT(E) had made factual assertions about surplus and about the claim of exemptions without necessary approvals, but those assertions were factually contestable on record and required verification. The Tribunal recorded that the CIT must substantiate such findings with supporting documents and examine gross receipts, expenditure and utilisation of surplus before drawing a conclusion that activities are not charitable. [Paras 6, 8, 11]

CIT(E)'s adverse finding on charitable nature/profit motive cannot be sustained without further verification; matter requires fresh examination.

Pending adjudication under alternative exemption code not a prerequisite for 12AA - registration under section 12AA - The existence of pending proceedings or earlier application under section 10(23C) is not a valid ground to refuse registration under section 12AA. - HELD THAT: - The Tribunal observed that although there may be no grounds for seeking registration under a different code when another application is pending, there is no statutory bar preventing an applicant from availing registration under section 12AA while proceedings under section 10(23C) remain pending. The CIT(E)'s refusal to grant 12AA on the sole basis that earlier proceedings under a different code were pending was held to be impermissible. [Paras 7, 9]

Refusal of registration under section 12AA on the ground that proceedings under section 10(23C) are pending is not sustainable.

Remand for fresh consideration with opportunity of hearing - registration under section 12AA - The application for registration under section 12AA was remitted to the CIT(E) for fresh consideration with directions to examine the evidence and grant opportunity of hearing. - HELD THAT: - In the interest of justice the Tribunal remanded the matter to the CIT(E) to examine afresh the documents already on record and any additional material the assessee may file. The CIT(E) is directed to verify the veracity of the evidence, assess the charitable nature of the trust's objectives for the years under consideration, and afford the assessee a reasonable opportunity to be heard. The Tribunal clarified that its directions do not constitute an expression on the merits and the CIT(E) shall decide the matter independently. [Paras 10]

Matter remanded to CIT(E) for fresh examination of registration application under section 12AA with directions to verify evidence and afford opportunity of hearing.

Final Conclusion: The Tribunal set aside the CIT(E)'s rejection of registration under section 12AA for being inadequately substantiated and not sustainable as a matter of law where pending 10(23C) proceedings were relied upon; the matter is remanded to the CIT(E) for fresh, independent consideration of the evidence and to afford the assessee a hearing.

Refund of Extra Duty Deposit - Extra Duty Deposit not being a duty - inapplicability of Section 27 of the Customs Act, 1962 to EDD - automatic refund upon final assessment - evidentiary requirement for refund - challans, indemnity bond and Chartered Accountant certificate - binding nature of CBEC Circulars/Notifications for processing refunds

Refund of Extra Duty Deposit - Extra Duty Deposit not being a duty - automatic refund upon final assessment - Refund of EDD in respect of 56 finalized Bills-of-Entry was allowable and should be granted with interest. - HELD THAT: - The Tribunal recorded that 56 out of 58 Bills-of-Entry were finally assessed after investigation by the Special Valuation Branch and that EDDs were deposited between 2011 and 2013 as reflected in the adjudicating authority's own table. The EDD is not a duty and therefore the provisions of Section 27 of the Customs Act, 1962 do not apply to deny refund. Established legal position and instructive decisions of higher fora require that refund of EDD be made upon conclusion of final assessment without awaiting a refund application. Where the final assessments were concluded without objection to the deposits, the recorded challan numbers and dates cannot subsequently be disputed to deny refund. Accordingly the appellant is entitled to refund with interest insofar as the 56 finalized Bills-of-Entry are concerned. [Paras 5, 6]

Allowed: refund of EDD for the 56 finalized Bills-of-Entry to be sanctioned with interest.

Evidentiary requirement for refund - challans, indemnity bond and Chartered Accountant certificate - binding nature of CBEC Circulars/Notifications for processing refunds - Refund claims relating to 16 Bills-of-Entry (serial nos. 43 to 58 in the adjudicating authority's table) were not finally adjudicated and are remanded for reconsideration with an opportunity to produce prescribed supporting documents. - HELD THAT: - The adjudicating authority denied refund for these 16 Bills-of-Entry on the ground that RD challans were not furnished. The record shows the appellant filed an indemnity bond and it is not the Revenue's case that no EDD payments were ever made for these entries. CBEC Circulars/Notifications prescribe documents that may be accepted while processing refunds and, where an indemnity bond along with a Chartered Accountant's certificate is offered, those can be treated as valid supporting evidence. In view of this, the Tribunal directed a fresh examination by the Adjudicating Authority, directing it to afford the appellant reasonable opportunity to furnish all documentary evidence as prescribed under CBEC guidance and then pass an appropriate order in accordance with law. [Paras 7, 8, 9]

Remanded: matter of refund for the 16 Bills-of-Entry to be reconsidered by the Adjudicating Authority after permitting the appellant to furnish prescribed supporting documents and thereafter pass orders in accordance with law.

Final Conclusion: The appeal is allowed in part: refund of EDD for the 56 finally assessed Bills-of-Entry is to be granted with interest; claims in respect of the remaining 16 Bills-of-Entry are remanded for fresh consideration in light of CBEC Circulars/Notifications and allowing the appellant to produce prescribed supporting documents.

Scheme of Arrangement - sanction under Sections 230 to 232 of the Companies Act, 2013 - compliance with Accounting Standards prescribed under Section 133 - no waiver of statutory liabilities by sanction of scheme - statutory authorities' right to initiate proceedings notwithstanding sanction - undertakings and compliance with observations of Registrar/Regional Director - shareholder and creditor approval for scheme

Scheme of Arrangement - sanction under Sections 230 to 232 of the Companies Act, 2013 - shareholder and creditor approval for scheme - compliance with Accounting Standards prescribed under Section 133 - Provisionally sanctioning the Scheme of Arrangement between the Demerged Company and the Resulting Company. - HELD THAT: - The Tribunal examined whether the scheme, after having been approved by the requisite meetings of shareholders and creditors and accompanied by auditors' certificates confirming conformity of the accounting treatment with the applicable Accounting Standards, satisfies the requirements of Sections 230-232 and the Rules thereunder. The Tribunal found that the scheme is comprehensive, deals with continuation of contracts and liabilities, and prima facie complies with statutory requirements. It noted there are no pending investigations under Section 210 and that requisite notices and filings were effected. Consequently the Tribunal was inclined to sanction the scheme subject to compliance with the undertakings and observations recorded by statutory authorities. [Paras 11, 13, 14]

The Scheme of Arrangement is provisionally sanctioned with effect from 1st April 2021, subject to fulfillment of the specified undertakings and compliance with statutory provisions.

No waiver of statutory liabilities by sanction of scheme - statutory authorities' right to initiate proceedings notwithstanding sanction - undertakings and compliance with observations of Registrar/Regional Director - Whether sanction of the scheme extinguishes liabilities or bars statutory authorities from initiating proceedings against the companies. - HELD THAT: - The Tribunal reiterated the settled principle that sanctioning a scheme of arrangement does not operate to waive or extinguish any statutory liability or prevent initiation of actions for alleged violations of law. In light of the Registrar's and Regional Director's observations, the Tribunal emphasised that statutory authorities remain free to take appropriate action in accordance with law and may approach the Tribunal by filing applications for necessary directions. The Tribunal therefore imposed conditions that the petitioners comply with the undertakings and observations made by the statutory authorities and file requisite undertakings where indicated. [Paras 12, 14]

Sanction will not waive any prior violation or liability; statutory authorities retain the right to initiate proceedings and seek directions from the Tribunal.

Final Conclusion: The Tribunal provisionally sanctioned the Scheme of Arrangement between the Demerged Company and the Resulting Company effective 1st April 2021, subject to compliance with auditors' certifications, statutory undertakings and the observations of Registrar/Regional Director; and clarified that sanction does not absolve either company of prior liabilities nor bar statutory authorities from initiating appropriate proceedings.

Scheme of Amalgamation - dispensation of meetings of shareholders and unsecured creditors - no secured creditors - territorial jurisdiction - continuity of staff, workmen and employees on amalgamation - continuance of pending legal proceedings by transferee - statutory auditor's certificate confirming accounting treatment in conformity with Section 133 - second motion requirements and notice to statutory authorities

Dispensation of meetings of shareholders and unsecured creditors - no secured creditors - Meetings of the equity shareholders and unsecured creditors of all Applicant Companies are dispensed with; no meetings of secured creditors are required. - HELD THAT: - The Tribunal recorded that affidavits of consent from the shareholders and unsecured creditors of the Applicant Companies have been filed and there are no secured creditors in any of the Applicant Companies. On that basis and after perusal of the supporting documents and the Scheme, the Tribunal exercised its power to dispense with the calling, convening and holding of the meetings of equity shareholders and unsecured creditors. As there are no secured creditors, no meeting of secured creditors is required to be convened. [Paras 41, 42, 43, 44, 53]

Dispensation of meetings of equity shareholders and unsecured creditors allowed; no meetings required for secured creditors.

Second motion requirements and notice to statutory authorities - disclosure of PAN numbers to Income Tax Authorities - Liberty granted to file the Second Motion with specific prayer to issue notices to statutory authorities and requirement to disclose PAN numbers in the Second Motion title. - HELD THAT: - While dispensing with meetings under Rule 8, the Tribunal noted that the Rules nevertheless require that notices in Form CAA 3 be sent to statutory authorities. Consequently, the First Motion was allowed subject to a direction that the Applicant Companies, when moving the Second Motion, must make a specific prayer for sending notices to the Central Government, Registrar of Companies, Income Tax Authorities, Competition Commission of India and Official Liquidator. The Tribunal further directed disclosure of the PAN numbers of all Applicant Companies in the title of the Second Motion Petition to enable the Income Tax Department to respond, together with filing of an affidavit confirming absence of any sectoral regulator. [Paras 53, 54]

Liberty to file Second Motion granted with directions to seek issuance of statutory notices and to disclose PANs and file the specified affidavit.

Continuity of staff, workmen and employees on amalgamation - Employees of the Transferor Companies will become employees of the Transferee Company on the Scheme taking effect, on terms not less favourable than existing terms. - HELD THAT: - The Tribunal recorded Clause 11 of the Scheme which provides that upon the Scheme coming into effect, staff, workmen and employees of the Transferor Companies in employment immediately prior to the Appointed Date shall become the employees of the Transferee Company without break and on terms and conditions not less favourable than those on which they were employed by the Transferor Companies. The Tribunal accepted this provision as part of the Scheme's treatment of employee interests. [Paras 50]

Clause providing continuity of employment accepted and noted in the order.

Continuance of pending legal proceedings by transferee - Pending suits, writs, appeals or other proceedings by or against the Transferor Companies shall not abate and may be continued by or against the Transferee Company. - HELD THAT: - The Tribunal noted Clause 12.1 of the Scheme which preserves the right to continue, prosecute and enforce any proceedings by or against the Transferor Companies as proceedings by or against the Transferee Company, and records that the Transferee Company may, if required, initiate proceedings on behalf of the Transferor Companies. The Tribunal recorded this provision as the mechanism for protection of rights and liabilities in relation to pending proceedings. [Paras 51]

Provision preserving and permitting continuation of pending proceedings by or against the Transferee Company recorded and accepted.

Statutory auditor's certificate confirming accounting treatment in conformity with Section 133 - The statutory auditor's certificate confirming that the accounting treatment under the Scheme conforms with the provisions of Section 133 has been filed and taken on record. - HELD THAT: - The Tribunal noted filing of the statutory auditor's certificate which states that the accounting treatment under the Scheme conforms to the provisions prescribed under Section 133 of the Companies Act, 2013. This certificate was placed on record as required in support of the Scheme's accounting treatment. [Paras 52]

Statutory auditor's certificate taken on record.

Final Conclusion: First Motion application allowed. Meetings of equity shareholders and unsecured creditors dispensed with (no secured creditors exist). Liberty granted to file Second Motion subject to specific prayer for issuance of statutory notices, disclosure of PAN numbers in the Second Motion title and filing of an affidavit regarding sectoral regulators; other Scheme provisions regarding employee continuity, continuance of pending proceedings and statutory auditor's certificate recorded.

Dispensing with meetings under Section 230(1) read with Section 232(1) - Service of notice under Section 230(5) with right to represent - Form No. CAA3 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 with necessary variations - Affidavit proving service and compliance before meetings

Dispensing with meetings under Section 230(1) read with Section 232(1) - Whether meetings of specified classes of shareholders and creditors should be dispensed with for the Scheme of Amalgamation. - HELD THAT: - The Tribunal considered the affidavits of consent filed by the parties and the composition of shareholders and creditors of the three applicant companies. A substantial majority of equity shareholders of Applicant No. 1 (98%), Applicant No. 2 (99.99%), and all equity shareholders of Applicant No. 3, together with 100% in value of unsecured creditors of Applicants No. 2 and 3, had executed affidavits consenting to the Scheme. On that basis and having perused the records and submissions, the Tribunal exercised its power under Section 230(1) read with Section 232(1) to dispense with the meetings of the identified classes of shareholders and unsecured creditors who had already given their consent. [Paras 5]

Meetings of the Equity Shareholders of Applicant No. 1, and Meetings of the Equity Shareholders and Unsecured Creditors of Applicant Nos. 2 and 3 are dispensed with.

Service of notice under Section 230(5) with right to represent - Form No. CAA3 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 with necessary variations - Directions for service of statutory notices and opportunity to statutory authorities to file representation under Section 230(5). - HELD THAT: - The Tribunal directed that notice under Section 230(5) along with the Scheme and accompanying statement be served on the Regional Director (Eastern Region), Registrar of Companies, Official Liquidator and the Income Tax Department having jurisdiction. Service was to be effected by hand delivery, post or email within two weeks of receipt of the order. The notice must specify that any representation by these authorities be filed before the Tribunal within 30 days of receipt, with a copy simultaneously served on the applicants' advocates/authorized representatives. The notice is to be issued pursuant to Section 230(5) read with Rule 8(2) and Form No. CAA3 with necessary variations, incorporating the Tribunal's directions. [Paras 6]

Statutory authorities to be served within two weeks and given 30 days to file representations; notice to follow Form No. CAA3 with necessary variations.

Affidavit proving service and compliance - Requirement to file proof of service and compliance prior to meetings. - HELD THAT: - The Tribunal required the applicants to file an affidavit proving service of the notices and compliance with the directions contained in the order at least one week before any meeting(s) to be held. This ensures the record of statutory service and compliance is placed before the Tribunal prior to further proceedings on the Scheme. [Paras 7]

Applicants must file an affidavit proving service and compliance at least one week before the meeting(s).

Disposal of Company Application - Final disposition of the instant company application at the first stage. - HELD THAT: - Having granted the relief to dispense with specified meetings and having given directions for statutory service and proof of compliance, the Tribunal disposed of Company Application (CAA) No. 120/KB/2021 by recording the orders made in the earlier paragraphs. [Paras 8]

CAA No. 120/KB/2021 disposed of.

Final Conclusion: The Tribunal allowed the application to dispense with specified meetings of shareholders and unsecured creditors for the Scheme of Amalgamation, directed service of statutory notices to prescribed authorities in Form No. CAA3 with necessary variations and fixed timelines for representations and proof of service, and disposed of CAA No. 120/KB/2021.

Scheme of Amalgamation - Dispensing with meetings of shareholders and creditors - Consent by affidavits of shareholders and unsecured creditors - No requirement of meeting of secured creditors where none exist - Service of notice under Section 230(5) with right to represent

Dispensing with meetings of shareholders and creditors - Consent by affidavits of shareholders and unsecured creditors - Meetings of equity shareholders and unsecured creditors of the applicant companies in respect of the Scheme are dispensed with. - HELD THAT: - The Tribunal recorded that all equity shareholders of the applicant companies had given their consent to the Scheme by affidavits and that over 90% in value of the unsecured creditors had likewise consented by affidavits. On that basis and having perused the records and documents, the Tribunal exercised its power to dispense with holding meetings for the equity shareholders and the unsecured creditors and made an order accordingly. [Paras 7]

Meetings of equity shareholders and unsecured creditors are dispensed with as they have given their consent by affidavits (over 90% in value for unsecured creditors).

No requirement of meeting of secured creditors where none exist - Whether meetings of secured creditors are required to be held. - HELD THAT: - The auditors' certificates filed in the proceedings verified that there were no secured creditors for the applicant companies. In view of the absence of any secured creditors, the Tribunal held that there was no requirement to convene or hold meetings of secured creditors. [Paras 7]

No meeting of secured creditors required as auditors' certificates show NIL secured creditors.

Service of notice under Section 230(5) with right to represent - Requirement and manner of service of notice and accompanying documents under Section 230(5) and the timeline for representations by statutory authorities. - HELD THAT: - The Tribunal directed that notice under Section 230(5) of the Companies Act, 2013 along with all accompanying documents, including the Scheme and statement, be served on the Regional Director (Eastern Region), the Registrar of Companies, the Official Liquidator, High Court Calcutta, and the Income Tax Department having jurisdiction. Service was to be effected by hand delivery through special messenger, by speed post or by email within two weeks from receipt of the order. The notice must specify that any representation should be filed before the Tribunal within 30 days of receipt and a copy of such representation simultaneously be sent to the authorised representative of the applicants. The Tribunal further required filing of an affidavit proving service and compliance at least one week before any meeting(s). [Paras 8, 9]

Directed service of notice and documents on specified authorities within two weeks, with a 30 day period for representations and an affidavit of service/compliance to be filed at least one week before meetings.

Final Conclusion: The application under Sections 230(1) and 232(1) is allowed: meetings of equity shareholders and unsecured creditors are dispensed with (having given requisite consents by affidavit), no meetings of secured creditors are required (none exist), and statutory notices and documents are to be served on specified authorities with the prescribed timelines and filing of proof of service; the application C.A.(CAA) No.122/KB/2021 is disposed of.

Persons authorised to investigate - Assistance by subordinate officer under direct supervision of the Investigating Officer - Interpretation of Section 17 of the Prevention of Corruption Act, 1988 - Invalidity of investigation not vitiating result unless miscarriage of justice caused

Persons authorised to investigate - Assistance by subordinate officer under direct supervision of the Investigating Officer - Interpretation of Section 17 of the Prevention of Corruption Act, 1988 - A police officer below the rank of Inspector may assist the main Investigating Officer in conducting investigation under the Prevention of Corruption Act, 1988, provided the assistance is rendered under the direct supervision and control of the Investigating Officer who remains responsible for all steps taken. - HELD THAT: - The Court examined Section 17 of the Prevention of Corruption Act, 1988 and the consistent exposition in earlier decisions that, while the statute prescribes a minimum rank for officers who may investigate offences under the Act, it does not preclude the officer of the requisite rank from taking assistance of subordinate officers so long as the senior officer remains in charge, supervises the steps taken and remains responsible for the investigation. The judgment relies on the settled principle that not every step in an investigation must be personally carried out by the officer of the prescribed rank; deputies or subordinates may perform tasks under his control. The Court noted authority applying the same principle and observed that a Magistrate or competent authority may permit an officer below the prescribed rank to investigate or assist in investigation where appropriate; the critical requirement is that the supervising officer retains control and responsibility. The Trial Court's order declining permission failed to apply this principle. Given that the respondents raised no objection to the application and in view of the controlling supervisory requirement, the Court held that the Special Judge was empowered to permit the subordinate officer to assist the Investigating Officer and that refusal to do so did not correctly interpret Section 17. [Paras 7, 11, 12]

The petition is allowed and the Trial Court's refusal to permit the Sub-Inspector to assist the Investigating Officer was set aside, the Court holding that assistance by a subordinate officer is permissible provided the Investigating Officer remains in direct supervision and responsible for the investigation.

Final Conclusion: The High Court allowed the petition under Section 482 Cr.P.C., holding that an officer below the rank of Inspector may assist the main Investigating Officer in investigation under Section 17 of the Prevention of Corruption Act, 1988, so long as the Investigating Officer retains control and responsibility; the Trial Court's refusal was set aside.

Pre-existing dispute - operational debt - maintainability of petition under Section 9(3)(b) affidavit requirement - entitlement to brokerage under contractual cancellation and payment-threshold clause - demand notice

Pre-existing dispute - operational debt - entitlement to brokerage under contractual cancellation and payment-threshold clause - demand notice - Existence of a pre-existing dispute raised by the Corporate Debtor and its effect on the maintainability of the petition under Section 9 of the Code. - HELD THAT: - The Tribunal found that material placed on record by the Corporate Debtor, including an Excel sheet identifying source of bookings and call recordings, demonstrated that several customers had booked units through channels other than the Petitioner. The contract between the parties contained a clause providing that brokerage would not be payable where a purchaser cancelled or failed to pay specified minimum instalments (40% for self-funded; 20% for financed customers), and that any brokerage paid could be adjusted in specified circumstances. The Tribunal also noted discrepancies in the amounts claimed across Part-IV of the petition, the invoices annexed, and the demand notice, which undermined clarity of the claimed debt. Crucially, the Corporate Debtor had communicated the dispute (by email dated 01.03.2017) prior to or contemporaneous with the demand notice, thereby constituting a pre-existing dispute. On this basis the Tribunal concluded that the dispute was not a patently spurious or hypothetical objection but a real dispute going to entitlement to the claimed brokerage, and that the presence of such a pre-existing dispute rendered the petition not maintainable under Section 9. The petition was therefore dismissed. [Paras 10, 11, 12, 13, 14]

The petition filed under Section 9 is dismissed on account of a pre-existing dispute regarding entitlement to the claimed brokerage and discrepancies in the claimed amount.

Final Conclusion: The Tribunal dismissed the Section 9 petition, holding that a pre-existing dispute as to entitlement to brokerage (and inconsistencies in the claimed amounts) rendered the petition not maintainable; registry to communicate the order to parties.

Corporate Insolvency Resolution Process (CIRP) initiation - debt and default requirement under Section 7 - Financial Debt - standing of debenture holders where debenture trustee/majority decision is relied upon as a pre-condition - moratorium upon admission - appointment of Interim Resolution Professional

Debt and default requirement under Section 7 - Financial Debt - The petitioners' claims as debenture holders constitute a financial debt and both debt and default are established for the purpose of admitting a petition under Section 7. - HELD THAT: - The Tribunal found that the petitioners, as debenture holders, made investments pursuant to the NCD subscription and that payments due under the subscription (interest and principal) were not made as scheduled. The Corporate Debtor did not dispute the existence of the debt or the default; rather its contentions related to available remedies and settlement offers. Having found debt and default within limitation and that the petition otherwise complied with the formal requirements (including proposal of an IRP and Form 2 consent), the Bench held that it was obliged to admit the Section 7 petition and initiate CIRP. [Paras 4, 6]

Company petition admitted; CIRP ordered to be initiated against the corporate debtor.

Standing of debenture holders where debenture trustee/majority decision is relied upon as a pre-condition - Corporate Insolvency Resolution Process (CIRP) initiation - The contention that initiation of proceedings under the Debenture Trust cum Mortgage Deed (by majority debenture holders or the debenture trustee) is a pre condition to filing a Section 7 petition was rejected. - HELD THAT: - The Corporate Debtor argued that the Debenture Trustee or a majority decision of debenture holders was a contractual pre condition to initiating recovery proceedings, and that the petitioners therefore lacked authority. The Tribunal observed that these contentions go beyond the scope of a Section 7 petition where debt and default are established. The Corporate Debtor did not dispute the debt substantively and had earlier indicated willingness to accept automatic admission if settlement failed. On that basis the Tribunal concluded that lack of debenture trustee action or absence of a majority decision did not preclude admission of the petition under the Code. [Paras 3, 4, 5]

The objection based on the Debenture Trust deed and absence of a majority decision/debenture trustee filing is not a valid ground to reject the Section 7 petition.

Appointment of Interim Resolution Professional - moratorium upon admission - Consequential reliefs upon admission were granted, including appointment of an Interim Resolution Professional and imposition of moratorium as specified in the order. - HELD THAT: - Upon admitting the petition, the Tribunal appointed the named Insolvency Professional as Interim Resolution Professional and directed the financial creditor to deposit initial CIRP costs. The Bench promulgated the statutory moratorium provisions, directed public announcement of CIRP, and specified vesting of management in the IRP/RP and related administrative steps as necessary consequences of admission.

IRP appointed and moratorium declared; directions issued for initiation and administration of CIRP.

Final Conclusion: The Tribunal admitted the Section 7 petition filed by the debenture holders, holding that the debt and default were established and that contractual provisions concerning debenture trustees or majority debenture holder decisions did not bar admission; an Interim Resolution Professional was appointed and moratorium and ancillary directions were imposed to commence CIRP.

Attachment under the Prevention of Money Laundering Act - Right of enjoyment of immovable property despite attachment - Legitimate interest and restoration by Special Court - Locus standi of interested persons to challenge attachment - Interaction between RERA orders and PMLA attachment

Locus standi of interested persons to challenge attachment - Attachment under the Prevention of Money Laundering Act - Maintainability of a writ petition filed by an association of prospective/allottee purchasers to challenge the Directorate of Enforcement's provisional attachment order under PMLA. - HELD THAT: - The Court held that Section 5 of the PMLA vests the Directorate of Enforcement with power to provisionally attach property alleged to be proceeds of crime and that Section 5(4) preserves only the right of enjoyment for a "person interested" in the immovable property; it does not confer a right to challenge the attachment itself. Allowing interested persons who are not registered purchasers to challenge an attachment may invite chaotic litigation and enable subterfuge by the accused. Consequently, the petition by the association of allottees, who are not registered purchasers and therefore have no locus to challenge the provisional attachment, is not maintainable; however, if their right of enjoyment is affected they retain the statutory route for restoration of rights before the appropriate authority or the Special Court as provided under the statute. [Paras 6, 9, 10, 11]

The writ petition is not maintainable insofar as it seeks to set aside the provisional attachment order, and the petition is dismissed on that ground.

Interaction between RERA orders and PMLA attachment - Legitimate interest and restoration by Special Court - Whether the Enforcement Directorate's provisional attachment operates so as to nullify or interfere with the RERA order approving a scheme for completion of the project and protecting allottees. - HELD THAT: - The Court observed that the RERA order approving the scheme for completion of the project had attained finality and was not challenged; nevertheless, the statutory scheme under PMLA contemplates attachment directed against properties alleged to be proceeds of crime while preserving enjoyment rights of interested persons. The Court found that mere provisional attachment by the ED does not, by itself, amount to interference with the RERA order such as to render the RERA directions ineffective; the petitioners may, if aggrieved in their enjoyment, pursue appropriate statutory remedies (including claim for restoration before the Special Court) or seek implementation of the RERA order before competent authorities. The court therefore declined to set aside the ED's attachment on the basis of the RERA order in these proceedings. [Paras 3, 6, 8, 11]

The RERA order is not treated as having been interfered with merely by the provisional attachment; petitioners must pursue appropriate forums to implement RERA directions or seek restoration of enjoyment.

Final Conclusion: Writ petition dismissed as not maintainable insofar as it challenges the provisional attachment dated 25.06.2021; the association and other interested persons, if their right of enjoyment is affected, may pursue statutory remedies for restoration or seek implementation of the RERA order before the appropriate forum.

Includability of freight in assessable value - separate contract for transportation - delivery to carrier deemed delivery to buyer under Section 39 of the Sale of Goods Act - appropriation of goods to contract

Includability of freight in assessable value - separate contract for transportation - delivery to carrier deemed delivery to buyer under Section 39 of the Sale of Goods Act - Whether amounts collected as freight in excess of the actual transportation cost are includable in the assessable value of goods for Central Excise where the contract separately stipulates prices for goods and for transportation and goods are subject to buyer's inspections and dispatch clearance. - HELD THAT: - The Tribunal examined the contractual scheme and factual matrix and held that the contracts manifested separate clauses for the price of goods and for transportation, with appropriation to the contract occurring upon completion of prescribed tests and dispatch clearance by the buyer. Relying on the ratio of the Apex Court in Accurate Meters Limited, the Tribunal applied the principle that where the seller delivers goods to a carrier in pursuance of a contract of sale and the terms show that property and risk are appropriated to the buyer (including buyer's inspection and dispatch approval), delivery to the carrier is to be treated as delivery to the buyer and transportation charges arranged by the seller do not operate to retain ownership or render the freight component part of the assessable value. The demand under appeal was raised by selectively relying on instances where contractual freight exceeded actual transport cost; the Tribunal found this approach inconsistent with the contractual allocation and the settled principle that separately agreed transportation charges, in the factual circumstances found here, are not includable in the assessable value.

Appeals allowed; impugned order set aside and demand deleted insofar as it sought to include excess freight collected over actual transportation cost in assessable value.

Final Conclusion: The Tribunal allowed the appeals, holding that where contracts separately stipulate price of goods and transportation and goods are appropriated to the contract with buyer's inspection and dispatch clearance, transportation charges collected (including any excess over actual transport cost) are not includable in the assessable value; the impugned demand was set aside.

Cenvat credit of input services - input services used in or in relation to manufacture - extended arm/job worker treated as part of manufacturer - permission under Rule 4(6) of the Cenvat Credit Rules, 2004 - physical receipt of service at factory not necessary

Cenvat credit of input services - extended arm/job worker treated as part of manufacturer - permission under Rule 4(6) of the Cenvat Credit Rules, 2004 - physical receipt of service at factory not necessary - Whether the appellant is entitled to take Cenvat credit of service tax paid by Unit-II (job worker) on renting of immovable property and on repair and maintenance when Unit-II manufactured goods for Unit-I and permission under Rule 4(6) was granted for removal of final products from Unit-II. - HELD THAT: - The Tribunal found that the input services (rent and repair/maintenance) were availed and received in Unit-II, which functioned as a job worker manufacturing goods exclusively for Unit-I. The Assistant Commissioner had granted permission under Rule 4(6) of the Cenvat Credit Rules, 2004 allowing removal of final products from the job-worker's premises, thereby treating Unit-II as an extended arm of Unit-I. On this basis, the Tribunal held that the services consumed at Unit-II were in relation to the manufacture of the final products for which duty was paid by Unit-I, and consequently the appellant was eligible to take Cenvat credit of the service tax paid by Unit-II. The Tribunal also relied on the principle, as applied by the High Court in Endurance Technology Pvt. Ltd., that input services need not be physically received at the manufacturer's factory to qualify for credit where the services are used in or in relation to manufacture. The Tribunal therefore concluded that the invoices being in the name of Unit-II and the services being availed at Unit-II did not preclude Unit-I from claiming credit where Unit-II was an extended arm and proper permission under Rule 4(6) existed. [Paras 8]

The appellant is entitled to take Cenvat credit of the service tax paid by Unit-II on rent and repair/maintenance, since Unit-II operated as an extended arm of Unit-I pursuant to permission under Rule 4(6) and the services were used in relation to manufacture.

Final Conclusion: The appeal is allowed; the impugned order is set aside and the appellant is entitled to consequential benefits for claiming Cenvat credit of the service tax paid by Unit-II on the impugned input services.

Refund of pre-deposit - pre-deposit under Section 35F of the Central Excise Act - interest on delayed refund under Section 35FF of the Central Excise Act - rate of interest on refund - effect of Board circular vis-a -vis statutory provisions - interest at 12% per annum on pre-deposit

Refund of pre-deposit - pre-deposit under Section 35F of the Central Excise Act - effect of Board circular vis-a -vis statutory provisions - Full amount of pre-deposit in excess of the minimum prescribed under Section 35F is refundable when the appellant succeeds in appeal. - HELD THAT: - The Tribunal held that Section 35F and Section 35FF read together admit no ambiguity: the statutory scheme contemplates refund of the actual pre-deposit made by the appellant when the appeal is allowed. A Board circular which treats only the minimum stipulated pre-deposit as the operative deposit for refund purposes cannot override the explicit statutory entitlement. Consequently, the departmental reliance on the circular to limit refund to the minimum (or to treat excess pre-deposit differently) was rejected and the appellant is entitled to refund of the balance pre-deposit amount subject to adjustments noted by the Tribunal. [Paras 10]

The appeal is allowed insofar as the Department must refund the full amount of pre-deposit made in excess of the minimum prescribed under Section 35F.

Interest on delayed refund under Section 35FF of the Central Excise Act - rate of interest on refund - interest at 12% per annum on pre-deposit - Interest on the refunded pre-deposit is payable from the date of deposit until the date of refund and is to be awarded at 12% per annum. - HELD THAT: - The Tribunal held that Section 35FF mandates interest on delayed refund of pre-deposit from the date of deposit till the date of refund. Relying on the Division Bench precedent cited (Parle Agro), the appropriate rate to be applied is 12% per annum. The Tribunal directed that the revenue grant further refund of the balance amount along with interest at 12% p.a. from the date of deposit to the date of grant of refund, after adjusting any interest already allowed by the Department. [Paras 10, 11]

Department to pay interest on the refunded pre-deposit from date of deposit to date of refund at 12% per annum, with adjustment for interest already granted.

Final Conclusion: The appeal is allowed: the Department must refund the full pre-deposit (including amounts in excess of the statutory minimum) and pay interest thereon from the date of deposit to the date of refund at 12% per annum, with adjustments for interest already paid; the impugned order is set aside.