TaxTMI Updates e-Newsletter
Sep 11,2018

Summary order. The application filed by M/s. ICA Pidilite Private Limited (GST ARA form No. 01, ARA No. 42 dated 20.06.2018) is disposed of as withdrawn unconditionally.

Advance ruling - Admission and rejection of application under section 98(2) - Proviso to section 98(2) - application not to be admitted where question is pending in other proceedings - Classification of goods - Provisional assessment under Customs Act

Admission and rejection of application under section 98(2) - Proviso to section 98(2) - application not to be admitted where question is pending in other proceedings - Provisional assessment under Customs Act - Whether the advance ruling application could be admitted when the same question of classification was pending in other proceedings and the applicant's consignments were provisionally assessed under the Customs Act - HELD THAT: - The Authority examined the application and the submissions of the parties and noted that the applicant had itself admitted at personal hearing that the classification of the subject goods was the subject matter of provisional assessment under the Customs Act and that similar disputes were pending in departmental forums under earlier Central Excise and Customs regimes. Applying the proviso to section 98(2) of the CGST Act - which precludes admission of an application where the question raised is already pending in any proceedings in the case of the applicant - the Authority concluded that the application could not be admitted. The Authority therefore rejected the application after affording the applicant an opportunity of hearing and specifying reasons for rejection in the order. [Paras 5]

Application rejected under sub-section 2 of section 98 of the CGST Act as the question raised was already pending in other proceedings and the applicant had admitted provisional assessment under the Customs Act.

Final Conclusion: The Advance Ruling Authority rejected the applicant's request for an advance ruling under section 98(2) of the CGST Act on the ground that the classification question was already pending in other proceedings and the applicant's consignments were provisionally assessed under the Customs Act; the application therefore could not be admitted.

Summary order. Notice issued and matter posted for consideration on 05.10.2018.

Summary order. The application in GST ARA Form No. 01 (ARA No. 37 dated 13.06.2018) filed by JAIDEEP METALLICS & ALLOYS PRIVATE LIMITED is disposed of as withdrawn unconditionally.

Summary order. The application (ARA No. 49 dated 30.06.2018) filed by AF GARMENTS PRIVATE LIMITED is allowed to be withdrawn voluntarily and unconditionally and is disposed of as withdrawn.

Summary order. The application filed by Brink's India Private Limited is allowed to be withdrawn unconditionally and is disposed of as withdrawn.

Summary order. The advance ruling application filed by Brink's India Private Limited (ARA No. 60 dated 01.08.2018) is allowed to be withdrawn and is disposed of as withdrawn unconditionally.

Summary order. The applicant's advance ruling application was allowed to be withdrawn voluntarily and unconditionally and is disposed of as withdrawn.

Summary order. Application for advance ruling withdrawn voluntarily and unconditionally and disposed of.

Summary order. The advance ruling application filed by M/s. Magarpatta Club And Resorts Pvt. Ltd. (ARA No. 39 dated 15.06.2018) is allowed to be withdrawn voluntarily and unconditionally and is disposed of as withdrawn.

Summary order. The application for advance ruling by the applicant is allowed to be withdrawn voluntarily and unconditionally and is disposed of as withdrawn.

Summary order. The application in GST ARA Form No. 01 filed by M/s. Sampada Caterers (ARA No. 45 dated 25.06.2018) is disposed of as withdrawn unconditionally and without admission on merits.

Summary order. Application disposed of as withdrawn unconditionally.

Summary order. Application by M/s. Lions Club of Kothrud Pune Charitable Trust under section 97 for advance ruling disposed of as withdrawn unconditionally.

Summary order. Application in GST ARA form No. 01 of M/s. HIFIELD AG CHEM (INDIA) PRIVATE LIMITED (ARA No. 27 dated 22.05.2018) disposed of as withdrawn unconditionally.

Reopening of assessment - Sanction to issue notice under Section 147 of the Income-tax Act - Validity of reasons for reopening under Section 148 - Ante-dating of departmental approval - Interim stay of assessment proceedings

Interim stay of assessment proceedings - Sanction to issue notice under Section 147 of the Income-tax Act - Validity of reasons for reopening under Section 148 - Ante-dating of departmental approval - Grant of interim relief and issuance of notice in challenge to reopening of assessment - HELD THAT: - The Court, on the petitioner's challenge to the departmental action reopening assessment, noted the contention that the departmental approval letter dated 21.03.2014 appears to be ante-dated because the reasons for issuing notice under Section 148 are dated 21.03.2014 and thus could not have been forwarded to or received by the Additional Commissioner on 20.03.2014. In view of the contention and in the interest of adjudicating the grievance on notice, the Court issued notice and directed that further proceedings in the assessment matter be stayed pending service and return of the notice. No final adjudication on the merits of the validity of the reopening, the sanction, or the alleged ante-dating was undertaken at this stage.

Notice issued returnable in four weeks; further proceedings stayed in the meantime.

Final Conclusion: The petition was admitted for consideration: notice was issued to the respondent returnable in four weeks, and further proceedings in the assessment matter were stayed until further orders.

Remand - capital receipt vs revenue receipt - fact finding function of the Tribunal - exercise of remand jurisdiction sparingly - non-compete fee characterization - employer-employee relationship and profit in lieu of salary - comparative factual assessment

Remand - fact finding function of the Tribunal - exercise of remand jurisdiction sparingly - Whether the Tribunal erred in remanding the matter back to the Commissioner of Income Tax (Appeals) for a second time when no fresh material was produced. - HELD THAT: - The Court held that remand is an exceptional power of the Tribunal and must be exercised with circumspection, particularly where the materials before the Tribunal are no different from those considered below. The Tribunal remanded the matter earlier by reference to decisions in respect of other directors who had produced documents; however, in the present case no new material was placed either before the CIT(A) or before the Tribunal. The appellate remand in the first instance arose from comparison with other directors, but the legal representative of the deceased assessee did not contest the remand and thereafter participated in de novo proceedings. Having examined the sequence, the Court found that there was no sufficient fresh material to justify the subsequent remand and that some reasons given by the Tribunal reflected personal views not supported by record. Accordingly, the second remand was held to be unjustified. [Paras 9, 11, 13, 15, 19]

The Tribunal erred in remanding the matter for the second time in the absence of any new material; the remand was unjustified.

Capital receipt vs revenue receipt - non-compete fee characterization - employer-employee relationship and profit in lieu of salary - comparative factual assessment - Whether the sum received/receivable as non-compete fee was a capital receipt and whether the CIT(A)'s deletion of the addition should be upheld. - HELD THAT: - On remand the CIT(A) examined the covenants in the agreement and the factual distinctions between the assessee and other directors. The CIT(A) recorded that the assessee was not an employee of the payer company, the payment arose under a restraint-of-trade covenant for ten years, and the receipt was contractual and capital in nature rather than profit in lieu of salary. The agreement expressly imposed restraint obligations in consideration of the payment and conferred contractual rights enforceable by the assessee. The Tribunal did not dispute the agreement's terms nor did the Department produce evidence to rebut them. Given the absence of fresh material and the cogent factual distinctions identified by the CIT(A), the Court found no basis to upset the conclusion that the amount was a capital receipt and that the addition ought to be deleted. [Paras 16, 17, 18, 19, 20]

The CIT(A)'s finding that the non-compete fee was a capital receipt (and deletion of the addition) is sustained and is restored.

Final Conclusion: The Tribunal's order dated 16.6.2017 is set aside; the CIT(A)'s order dated 28.10.2016 deleting the addition in respect of the non-compete fee is restored. The substantial questions of law are answered in favour of the assessee and against the Revenue.

Extinguishment of rights as transfer under section 2(47) - exemption under section 54 for reinvestment in residential property - admissibility of unregistered agreement as evidence in suit for specific performance under Section 49 of the Registration Act

Extinguishment of rights as transfer under section 2(47) - exemption under section 54 for reinvestment in residential property - Date of transfer for computation of eligibility under section 54 is the date on which rights in the old residential property were extinguished by the agreement to sell (16.09.2011), not the later date of registered conveyance. - HELD THAT: - The Tribunal examined the facts that an agreement to sell was executed on 16.09.2011, earnest money of Rs.1 lac was paid (cheque encashed on 21.11.2011 and not dishonoured), and the registered sale deed was executed on 27.12.2011. Applying the inclusive definition of 'transfer' under section 2(47) which covers 'the extinguishment of any rights therein', the Tribunal held that execution of the agreement to sell created a right in personam in favour of the vendee and extinguished certain rights of the vendor. Relying on the ratio of the Supreme Court in Sanjeev Lal, the Tribunal concluded that the capital asset was transferred on 16.09.2011 for the purposes of the Income-tax Act. Since the assessee had purchased a new residential flat on 04.10.2010 (within one year before the deemed date of transfer), the conditions for exemption under section 54 were satisfied. The Tribunal found that the Assessing Officer and the CIT(A) erred in treating the date of registration as the date of transfer and allowed the assessee's claim accordingly. [Paras 5, 6]

Appeal allowed on this ground; purchase of new residential property on 04.10.2010 falls within one year of deemed transfer on 16.09.2011 and exemption under section 54 is to be granted.

Admissibility of unregistered agreement as evidence in suit for specific performance under Section 49 of the Registration Act - An unregistered agreement to sell can be admitted as evidence of a contract in a suit for specific performance and thus can found a claim for transfer of rights, notwithstanding that such agreement may not be admissible for part performance under section 53A. - HELD THAT: - The Tribunal noted that although an unregistered agreement cannot be used for part performance under the amended section 53A, the proviso to section 49 of the Registration Act permits reception of an unregistered document as evidence of a contract in a suit for specific performance. Citing authoritative exposition of Section 49 and related principles (as reiterated by higher courts), the Tribunal observed that an unregistered agreement, tendered not as evidence of a completed sale but as proof of an agreement of sale, may be admitted with an endorsement and can support a suit for specific performance. On that basis the executed but unregistered agreement to sell could create enforceable rights in favour of the vendee and underpin the finding of transfer for income-tax purposes. [Paras 7, 8, 9]

The unregistered agreement to sell is admissible as evidence of a contract in a suit for specific performance and supports the conclusion that rights were extinguished on 16.09.2011.

Final Conclusion: The assessee's appeal is allowed for AY 2012-13; the Tribunal holds that the agreement to sell dated 16.09.2011 constituted transfer under section 2(47), the purchase on 04.10.2010 meets the time condition under section 54, and the AO is directed to grant exemption under section 54 in accordance with law.

Foreign tour expenditure incurred wholly and exclusively for business - business nexus between deputation of research manager and increase in export turnover - physician samples as legitimate publicity/marketing expenditure - manufacture on principal-to-principal basis not falling within the definition of 'work' for tax deduction at source under explanation (iv)(e) of section 194C - non-attraction of section 40(a)(ia) where payment is not exigible to deduction under section 194C - repairs to leased premises deductible under section 30(a)(i) where no new capital asset is created - distinction between revenue expenditure facilitating business and capital expenditure creating enduring asset

Foreign tour expenditure incurred wholly and exclusively for business - business nexus between deputation of research manager and increase in export turnover - Claim for foreign tour expenses of the research manager was allowable as business expenditure and the revenue's appeal against the partial relief granted to the assessee was dismissed. - HELD THAT: - The Tribunal followed a coordinate-bench finding in the assessee's own case for AY 2011-12 that the Research Manager's visits to foreign countries were undertaken wholly and exclusively for promoting exports, exploring sources of raw materials and machinery, and up grading technology. Documentary material and subsequent growth in export turnover were held to establish the requisite business nexus. In the absence of contrary material, the present bench concurred with that factual conclusion and declined to interfere with the order of the CIT(A) which had granted relief to the assessee. [Paras 4, 5]

Revenue's ground challenging disallowance of foreign tour expenses dismissed; CIT(A)'s relief to the assessee upheld.

Physician samples as legitimate publicity/marketing expenditure - manufacture on principal-to-principal basis not falling within the definition of 'work' for tax deduction at source under explanation (iv)(e) of section 194C - non-attraction of section 40(a)(ia) where payment is not exigible to deduction under section 194C - Expenditure on physician samples purchased from a third-party manufacturer and sold to the assessee on a principal to principal basis was allowable as publicity expense and not hit by TDS disallowance under section 40(a)(ia) on account of section 194C. - HELD THAT: - The Tribunal examined the manufacturing agreement and found it to be on a 'principal to principal' basis, with the third party manufacturer sourcing materials from persons other than the assessee. Explanation (iv)(e) to section 194C excludes such manufacture/supply from the definition of 'work' attracting section 194C. On the facts, distribution of physician samples constituted a promotional strategy that boosted sales and the expenditure was held to be wholly and exclusively for business. Consequently, the AO's disallowance based on alleged failure to deduct TDS under section 194C (and hence section 40(a)(ia)) was held to be erroneous and the CIT(A)'s allowance was confirmed. [Paras 8, 9]

Revenue's ground challenging allowance of publicity expenses dismissed; CIT(A)'s order allowing the expenditure confirmed.

Repairs to leased premises deductible under section 30(a)(i) where no new capital asset is created - distinction between revenue expenditure facilitating business and capital expenditure creating enduring asset - Expenditure on renovation and repair of the leased factory premises was revenue in nature and allowable under section 30(a)(i); the AO's classification as capital expenditure was reversed. - HELD THAT: - The lease of the factory premises was for a fixed term and the lease deed permitted lessee's additions and alterations for business purposes. The works undertaken (civil, carpentry, electrical, fabrication, painting) did not result in acquisition of a capital asset for the assessee and the benefits were in the nature of facilitating the assessee's business operations (including meeting international standards for production). Reliance was placed on precedents distinguishing expenditure that creates a capital asset from expenditure that merely improves efficiency; where no enduring proprietary asset vests in the lessee, the expenditure is revenue. Applying these principles, the Tribunal agreed with the CIT(A) that the repairs are deductible under section 30(a)(i). [Paras 12, 13, 17, 20]

Revenue's ground treating repair works as capital expenditure dismissed; CIT(A)'s allowance of repairs as revenue expenditure confirmed.

Final Conclusion: All three grounds of the revenue appeal are dismissed: the tribunal upheld the CIT(A)'s allowance of foreign tour expenses, publicity (physician sample) expenses (finding no attraction of section 194C/40(a)(ia) on the facts), and repair/renovation expenses on the leased factory as revenue expenditure deductible under section 30(a)(i).

Penalty under section 271(1)(c) - disallowance under section 40(a)(ia) - ad-hoc disallowance of Advertisement, Marketing and Promotion expenses - void ab initio - penalty deleted where quantum addition deleted - restoration to Assessing Officer/Transfer Pricing Officer for fresh adjudication

Penalty under section 271(1)(c) - disallowance under section 40(a)(ia) - void ab initio - penalty deleted where quantum addition deleted - Whether penalties under section 271(1)(c) levied on enhancements made by the CIT(A) by disallowance under section 40(a)(ia) survive where the Tribunal has deleted the corresponding quantum additions as void ab initio. - HELD THAT: - The Tribunal noted that in ITA Nos. 3612 and 3613/Del/2017 the quantum additions made by the CIT(A) by invoking section 40(a)(ia) were held to be void ab initio and consequently deleted. Since the impugned penalty was levied in respect of those very enhancements, the penalty cannot survive independently once the foundational quantum addition has been annulled by the Tribunal. The appellate bench accordingly set aside the penalties related to the section 40(a)(ia) disallowances for both assessment years. [Paras 4]

Penalties under section 271(1)(c) in respect of enhancements by way of disallowance under section 40(a)(ia) for AY 2005-06 and 2006-07 are deleted.

Penalty under section 271(1)(c) - ad-hoc disallowance of Advertisement, Marketing and Promotion expenses - restoration to Assessing Officer/Transfer Pricing Officer for fresh adjudication - Whether penalties under section 271(1)(c) levied on enhancements made by the CIT(A) in respect of Advertisement, Marketing and Promotion (AMP) expenses should be sustained, deleted, or remanded. - HELD THAT: - The Tribunal observed that the issue relating to AMP expenses had been restored by the Tribunal (Delhi Bench) to the file of the AO/TPO for readjudication in light of the Special Bench decision in the assessee's own case for AY 2007-08. Although the assessee urged deletion of the penalties arguing modification of the basis for the quantum addition, the Tribunal held that in the interest of justice the penalties corresponding to the AMP-related enhancements should be remitted to the AO/TPO for fresh adjudication consistent with the directions given on quantum. [Paras 4]

Penalties under section 271(1)(c) relating to enhancements on account of Advertisement, Marketing and Promotion expenses are restored to the file of the AO/TPO for fresh adjudication.

Final Conclusion: Both appeals are allowed: penalties linked to disallowances under section 40(a)(ia) for AY 2005-06 and 2006-07 are deleted, while penalties relating to Advertisement, Marketing and Promotion expense enhancements are remanded to the AO/TPO for fresh adjudication.

Estimation of income from undisclosed turnover - treatment of suppressed turnover as income - search-based assessment under Section 132/153C - deletion of unexplained investment where sources are reflected in balance sheet

Treatment of suppressed turnover as income - estimation of income from undisclosed turnover - Whether suppressed turnover should be computed as the difference between turnover in seized documents and turnover declared in the return, and whether the declared turnover must be taken into account - HELD THAT: - The Tribunal found that the diary and seized documents showed a higher turnover than that declared in the return. The assessee had filed returns declaring sales and contract receipts and paid tax thereon. The Assessing Officer adopted values from registration agreements and did not accept the declared turnover. The Tribunal held that turnover already declared in the return constitutes declared turnover and that suppressed turnover is the difference between the turnover evidenced in seized material and the turnover declared in the return. Accordingly the Tribunal allowed the assessee's ground and computed suppressed turnover as that difference. [Paras 7]

Suppressed turnover is the difference between turnover found in seized documents and turnover declared in the return; ground allowed.

Estimation of income from undisclosed turnover - estimation based on industry trend and realistic profit rate - Quantum of income to be estimated from the suppressed turnover and whether the whole suppressed turnover can be treated as income - HELD THAT: - The Tribunal agreed with the CIT(A) that the entire suppressed turnover cannot be treated as income. While the Assessing Officer treated the entire suppressed receipts as income and CIT(A) adopted 40%, the Tribunal emphasised that income estimation must be realistic and informed by industry trends and the assessee's declared profit rate. Noting that the assessee declared profit at about 5.12% and that coordinate decisions indicate higher normative rates for large contracts, the Tribunal exercised its discretion to set a reasonable estimation at 10% of the undisclosed turnover for the real estate villa projects, directing the AO to compute income accordingly. [Paras 7]

Only income (not entire suppressed turnover) to be taxed; income from suppressed turnover to be estimated at 10%.

Deletion of unexplained investment where sources are reflected in balance sheet - requirement of seized material to justify additions in search-affected assessments - Validity of addition on account of unexplained investment in land where land is reflected in the assessee's balance sheet and no incriminating seized material related to the land was found - HELD THAT: - The Assessing Officer treated land purchase consideration as unexplained investment because sources were allegedly not explained. The CIT(A) deleted the addition observing that the land is reflected in the balance sheet forming part of the return, making sources self-evident, and that the assessment record did not show that the issue was confronted during assessment. The Tribunal noted that no incriminating material regarding the land purchase was unearthed during search and that additions could not be made without reference to seized material in respect of assessments already final. Relying on these findings, the Tribunal upheld the CIT(A)'s deletion of the addition. [Paras 14]

Addition on account of unexplained investment in land deleted; CIT(A) order upheld and revenue's grounds dismissed.

Final Conclusion: The cross appeals are disposed of by allowing the assessee's challenge to the quantum of suppressed turnover (computed as the difference between seized-document turnover and declared turnover) and by directing income estimation at 10% of the undisclosed turnover; the deletion of the addition for unexplained investment in land is upheld. Appeals accordingly partly allowed for the assessee and dismissed for the revenue.

Set-off of undisclosed income against ad hoc disclosure - block assessment - statements recorded u/s. 132(4) in search and seizure proceedings - relevance of previous year for unexplained cash credits

Set-off of undisclosed income against ad hoc disclosure - block assessment - relevance of previous year for unexplained cash credits - Whether the unexplained entry of Rs. 1,99,25,000 discovered during the block assessment proceedings (pertaining to A.Y. 2006-07) could be set off against the ad hoc disclosure made in the block return for A.Y. 2012-13 with a rider permitting set-off against any undisclosed entry found during assessment proceedings. - HELD THAT: - The Tribunal recorded that the appellant and his group had made disclosures in the course of search and seizure (statements recorded u/s. 132(4)) and filed block returns showing aggregate disclosure with a residual ad hoc disclosure of Rs. 2.52 crores in A.Y. 2012-13 that was expressly made subject to a rider that any undisclosed income/transaction/entry found during block assessment proceedings would be set off against that ad hoc disclosure. During verification the Assessing Officer noticed an unexplained entry of Rs. 1.99,25,000 on seized paper which the appellant claimed should be set off against the ad hoc disclosure. The Tribunal observed that the seized paper does not contain any date and accepted the assessee's legal position following the rule that the disclosure made in the block return with an explicit rider is available for set-off against undisclosed entries worked out in the block assessment. The Tribunal relied on earlier judicial authority to hold that the relevant assessment year for an unexplained credit must be identified in accordance with the material and that, where a rider in the block disclosure contemplates such adjustments, the ad hoc disclosure can legitimately be applied to the unexplained entry discovered in the block proceedings. On that basis the Tribunal allowed the set-off claim of the assessee. [Paras 8, 10, 11]

The unexplained entry of Rs. 1,99,25,000 discovered in the block assessment is to be set off against the ad hoc disclosure shown in the block return for A.Y. 2012-13 made with a rider; appeal allowed.

Final Conclusion: The appeal is allowed: the Tribunal directed that the unexplained entry discovered during block assessment be set off against the ad hoc disclosure made in the block return for A.Y. 2012-13 (filed with a rider permitting such set-off), and allowed the assessee's claim.

Taxability of surplus transferred between Policyholders' Account and Shareholders' Account - consolidation of surplus for computation of taxable surplus - treatment of negative actuarial reserve in computation of taxable surplus - exemption of dividend income under section 10(34) for an insurer assessed under section 44 - exemption of pension fund income under section 10(23AAB) vis-a -vis special computation under section 44 - applicability of section 14A to income computed under section 44 - precedent and stare decisis of Tribunal orders

Taxability of surplus transferred between Policyholders' Account and Shareholders' Account - consolidation of surplus for computation of taxable surplus - Surplus transfers between the Policyholders' Account and the Shareholders' Account are to be considered in the manner adopted by the Tribunal in earlier years and the net surplus is not separately taxable as business income distinct from insurance business for the impugned year. - HELD THAT: - The Tribunal noted that the assessee maintains separate Policyholders' Account (technical) and Shareholders' Account (non-technical) as per regulatory requirements and that the CIT(A) deleted additions by following this Tribunal's earlier orders in the assessee's own case for earlier assessment years. Having perused those earlier orders and the reasoning relied upon by the CIT(A), the Tribunal concurred that the issues concerning classification and consolidation of surplus were already adjudicated in the assessee's favour and, therefore, sustained the approach that only the net surplus as determined in accordance with the precedents is to be treated for tax purposes. [Paras 3, 5]

Held for the assessee; appeal dismissed insofar as the revenue challenged the treatment and taxation of surplus transfers between PHA and SHA.

Treatment of negative actuarial reserve in computation of taxable surplus - The addition made on account of incremental negative reserves as per the actuarial report was deleted following the Tribunal's earlier conclusions in the assessee's own case. - HELD THAT: - The Tribunal observed that the CIT(A) deleted the addition of incremental negative reserves by following its earlier decisions in the assessee's own cases. No contrary precedent was placed before the Tribunal and, on that basis, the Tribunal concurred with the deletion of the addition made by the AO. [Paras 3, 5]

Addition on account of negative reserve deleted; revenue's challenge dismissed.

Exemption of dividend income under section 10(34) for an insurer assessed under section 44 - The CIT(A)'s allowance of the assessee's claim that dividend income is exempt under section 10(34) was upheld by following the Tribunal's earlier orders. - HELD THAT: - The Tribunal noted that the CIT(A) sustained the assessee's claim of exemption of dividend income under section 10(34) by relying on this Tribunal's prior rulings in the assessee's own case and other similar decisions. In the absence of any contrary binding decision placed on record by the revenue, the Tribunal followed those precedents and agreed with the CIT(A)'s conclusion. [Paras 2, 5]

Dividend exemption under section 10(34) upheld; revenue's appeal dismissed on this point.

Exemption of pension fund income under section 10(23AAB) vis-a -vis special computation under section 44 - The deletion of the addition relating to pension fund income claimed exempt under section 10(23AAB) was sustained by applying the Tribunal's earlier rulings relied upon by the CIT(A). - HELD THAT: - The Tribunal recorded that the CIT(A) deleted the denial of exemption under section 10(23AAB) by following the Tribunal's prior orders in the assessee's earlier years. The revenue did not place any contrary authority before the Tribunal; accordingly, the Tribunal adhered to the precedents and concurred with the CIT(A)'s deletion of the addition. [Paras 2, 3, 5]

Exemption under section 10(23AAB) upheld; related addition deleted and revenue's appeal dismissed on this point.

Applicability of section 14A to income computed under section 44 - The CIT(A)'s conclusion that section 14A is not applicable to income of insurance business computed under section 44 was maintained in accordance with prior Tribunal decisions relied upon in the impugned order. - HELD THAT: - The Tribunal observed that the question of section 14A's applicability had been considered and decided in the assessee's favour in earlier Tribunal orders which the CIT(A) followed. With no contrary decision produced by the revenue, the Tribunal accepted the CIT(A)'s reasoning and concluded that section 14A does not apply to the income computed under section 44 in the circumstances of this case. [Paras 3, 5]

Section 14A held not applicable to the income computed under section 44 in this case; revenue's grievance rejected.

Final Conclusion: The Tribunal, applying and following its earlier decisions in the assessee's own case and similar precedents, concurred with the CIT(A) and dismissed the revenue's appeal for AY 2011-12, upholding the deletions and exemptions allowed by the CIT(A).

Penalty under section 271(1)(c) of the Income-tax Act - Application of Explanation 1 to Section 37 (expenditure on business promotion and prohibition by law) - Rejection of books of account under section 145(3) of the Income-tax Act - Estimate-based disallowance and levy of penalty - Condo nation of delay for filing appeal

Condo nation of delay for filing appeal - Condonation of the nine days' delay in filing the appeal was allowed. - HELD THAT: - The assessee explained delay by reference to the illness of its Managing Director and produced a medical certificate. Having considered the explanation and rival submissions, the Tribunal concluded that the assessee was prevented by sufficient cause from filing the appeal within time and therefore condoned the nominal delay. [Paras 3]

Delay of nine days in filing the appeal is condoned.

Penalty under section 271(1)(c) of the Income-tax Act - Application of Explanation 1 to Section 37 (expenditure on business promotion and prohibition by law) - Estimate-based disallowance and levy of penalty - Rejection of books of account under section 145(3) of the Income-tax Act - Levy of penalty under section 271(1)(c) on the disallowance of business promotion expenses was held not sustainable and was cancelled. - HELD THAT: - The Assessing Officer had noted cash payments exceeding Rs.20,000, and had initially rejected the books under section 145(3), leading to an estimate-based disallowance which included business promotion expenses. The Commissioner (Appeals) upheld a disallowance applying Explanation 1 to Section 37 in part, but the Tribunal found that the material accepted by the authorities also showed that the majority of the expenses were incurred for business purposes, were consistently claimed in earlier years, and supported by bills and vouchers. The Tribunal observed that the record did not disclose that any specific unlawful payment was made or that any prohibition of law applied to render the expenditure non-deductible; the small amount pointed out for tender follow-up did not establish illegal payments. Given these facts, the disallowance was a part-quantification adjustment and there was no evidence of concealment of income or filing of inaccurate particulars warranting penalty. The Tribunal emphasised that penalty is not automatic on estimate disallowances and depends on facts and circumstances, and therefore found no justification to sustain penalty under section 271(1)(c). [Paras 9]

Penalty imposed under section 271(1)(c) in respect of business promotion expenses is cancelled and the appeal is allowed on this ground.

Final Conclusion: The Tribunal condoned the short delay in filing the appeal and, on merits, set aside the penalty under section 271(1)(c) relating to disallowance of business promotion expenses (A.Y. 2008-2009), holding that the record did not establish concealment or that Explanation 1 to Section 37 rendered the expenditure non-deductible.

Allowability of deduction for employees' provident fund on actual payment and compliance with payment deadline - application of Supreme Court precedent on payment-based disallowance under section 43B read with section 36(1)(va) - addition under section 68 for unexplained cash credits and burden to prove source of funds - remand for fresh adjudication and opportunity to produce evidence

Allowability of deduction for employees' provident fund on actual payment and compliance with payment deadline - application of Supreme Court precedent on payment-based disallowance under section 43B read with section 36(1)(va) - remand for fresh adjudication and opportunity to produce evidence - Assessee's claim against disallowance of employees' EPF contribution was not adjudicated by the CIT(A) and was restored for decision in accordance with higher judicial precedent. - HELD THAT: - The assessee deposited the employees' EPF contribution before the due date of filing the return and within the statutory grace period under the EPF Act. The AO had disallowed the claim under the provision dealing with payment-linked disallowance, treating the deposit as not made within the time prescribed under the PF Act. The Tribunal noted the decision of the Supreme Court holding that amounts deposited on or before the due date of filing the return cannot be disallowed under the provision which permits deduction only on actual payment. As the CIT(A) had not adjudicated this ground, the Tribunal restored the issue to the file of the CIT(A) to decide the claim in accordance with the Supreme Court decision. [Paras 8, 9]

Disallowance of employees' EPF contribution remitted to the CIT(A) for fresh adjudication in accordance with the Supreme Court precedent; allowed for statistical purposes.

Addition under section 68 for unexplained cash credits and burden to prove source of funds - remand for fresh adjudication and opportunity to produce evidence - Addition made by the AO treating cash introductions as unexplained under section 68 was sustained by the CIT(A) for want of evidence, but the Tribunal granted the assessee one further opportunity to substantiate the sources before the CIT(A). - HELD THAT: - The AO treated cash introductions as capital and, finding the assessee unable to satisfactorily substantiate the sources with documentary evidence, made an addition under the provision relating to unexplained cash credits. The CIT(A) considered the appellate submissions and restricted the addition to a specified amount but confirmed the addition for want of evidence. The Tribunal, upon review of the record, concluded that the assessee had not satisfied the CIT(A) but, in the interest of substantial justice, directed that the assessee be given one more opportunity to produce documentary evidence before the CIT(A), who must consider the evidence and pass a speaking order. [Paras 11, 14]

Addition under section 68 remitted to the CIT(A) to admit and consider fresh evidence and pass a speaking order; appellant granted opportunity and matter allowed for statistical purposes.

Final Conclusion: Both contested issues - the disallowance of employees' EPF contribution and the addition under section 68 for unexplained cash credits - are remitted to the CIT(A) for fresh adjudication (the EPF claim to be decided in accordance with the Supreme Court precedent); the appeal is disposed of as allowed for statistical purposes.

Service of notice under Section 148 as a condition precedent to reassessment - distinction between issue of notice within limitation and service of notice - onus on the Revenue to prove service of notice - applicability of Section 292BB to validate reassessment where the assessee has cooperated - jurisdictional validity of reassessment under Section 147 r.w.s. 143(3)/144

Service of notice under Section 148 as a condition precedent to reassessment - onus on the Revenue to prove service of notice - jurisdictional validity of reassessment under Section 147 r.w.s. 143(3)/144 - Reassessment order dated 29.3.2016 is invalid for want of service of notice under Section 148 and, therefore, the Assessing Officer lacked jurisdiction to complete reassessment under Section 147 r.w.s. 143(3)/144. - HELD THAT: - The Tribunal found as undisputed fact that the notice purportedly issued under Section 148 was not served on the assessee. Service of the Section 148 notice is a condition precedent for making a reassessment order; absent service the Assessing Officer cannot assume jurisdiction to finalize reassessment. The record showed the notice was returned unserved with the remark 'Left' and the Revenue failed to discharge the onus of proving proper service. Because no valid service was established, the reassessment completed ex parte could not stand and was without jurisdiction. [Paras 10]

Reassessment order set aside for want of jurisdiction.

Applicability of Section 292BB to validate reassessment where the assessee has cooperated - distinction between issue of notice within limitation and service of notice - Section 292BB is not applicable to validate the reassessment because the assessee did not cooperate in proceedings initiated under Section 148 and did not appear or file return in those proceedings. - HELD THAT: - The Tribunal held that the benefit of Section 292BB can apply only where the assessee has co-operated with the Assessing Officer in proceedings under Section 148. In the present facts the assessee neither appeared pursuant to the Section 148 proceedings nor filed a return; the assessment was completed under Section 144 r.w.s.147 ex parte. Consequently Section 292BB could not be invoked to cure the defect of non-service. The Tribunal also noted the legal distinction between issuance of a notice within the limitation period (which vests power to proceed) and actual service (which is prerequisite to making the reassessment), but found that even this distinction did not assist the Revenue given the absence of service and of any cooperation by the assessee. [Paras 10]

Section 292BB held inapplicable; reassessment cannot be validated on that ground.

Final Conclusion: The reassessment order dated 29.03.2016 for AY 2008-09 is quashed as the Section 148 notice was not served and the Assessing Officer therefore lacked jurisdiction; Section 292BB cannot validate the order because the assessee did not participate in the Section 148 proceedings. The appeal is allowed.

Reopening of assessment under section 147 - income from house property-determination of annual value - cogent and satisfactory material to reject declared rent - comparative enquiry and disclosure of material by Assessing Officer - remand for recomputation in light of precedent

Reopening of assessment under section 147 - Ground challenging reopening of assessment was not pressed at hearing and therefore not entertained. - HELD THAT: - The assessee did not pursue the challenge to the reopening before the Tribunal. The Tribunal recorded that the ground was not pressed during arguments and accordingly decided the issue against the assessee on that procedural basis without delving into merits. [Paras 5]

Reopening challenge not pressed; decided in favour of the revenue.

Income from house property-determination of annual value - cogent and satisfactory material to reject declared rent - comparative enquiry and disclosure of material by Assessing Officer - remand for recomputation in light of precedent - Addition treating rent as income from house property was set aside and the matter remitted to the Assessing Officer for recomputation in accordance with the Tribunal's prior directions and the principles in Tip Top Typography. - HELD THAT: - The Assessing Officer rejected the assessee's declared rent and made an estimation based on external instances and investigatory material (magazine report and inspector's report). The Tribunal applied the principle that before disbelieving declared rent the AO must possess cogent, positive material indicating concealment or suppression of prevailing rates and must disclose and test such material; mere conjecture or non-comparable transactions are insufficient. The Tribunal found the facts squarely covered by its earlier decision in the assessee's own cases and by the High Court's observations in Tip Top Typography, and concluded that the AO's estimation could not be sustained. Consequently, the Tribunal set aside the CIT(A)'s confirmation and remitted the matter to the AO to recompute the income from house property in accordance with the directions laid down by the Tribunal and relevant precedent. [Paras 6, 7, 8]

Addition under income from house property set aside; matter remanded to AO for recomputation in terms of the Tribunal's directions and applicable precedent.

Final Conclusion: Both appeals were partly allowed: the reopening ground was not pressed and decided for the revenue; the addition assessed as income from house property was set aside and remitted to the Assessing Officer for recomputation in accordance with the Tribunal's earlier directions and governing precedent.

Penalty for non-compliance with summons - exercise of powers under section 131(1A) read with section 131(1) - willful/non bona fide refusal to comply with summons - applicability of section 272A(1)(c)

Penalty for non-compliance with summons - exercise of powers under section 131(1A) read with section 131(1) - applicability of section 272A(1)(c) - Legality of levying penalty under section 272A(1)(c) for alleged non-compliance with summons issued under section 131(1A). - HELD THAT: - The Tribunal held that section 131(1A) authorises the officer to exercise the powers conferred by section 131(1) for the purpose of making any enquiry or investigation. Accordingly, the consequences of non compliance are to be read along with section 131(1). It would be improbable that the legislature intended to leave section 131(1A) without any penal consequence for wilful non compliance. The Tribunal concurred with the view of the authorities below that non compliance with a summons under section 131(1A) attracts the penal provision contained in section 272A(1)(c) as applicable to non compliance under section 131(1). The Tribunal found the decisions relied on by the assessee distinguishable on facts and not applicable to the issue of levy of penalty under section 272A for non compliance of summons under section 131(1A). [Paras 25, 26]

Penalty under section 272A(1)(c) can be levied for non compliance with summons issued under section 131(1A) as the powers and consequences under section 131(1) apply.

Willful/non bona fide refusal to comply with summons - relevance of information and reasonable cause - Whether the assessee had a reasonable cause or bona fide grounds for non compliance so as to negate the levy of penalty. - HELD THAT: - On the facts, the Tribunal found that the assessee persistently refused to furnish the information called for by the ADIT despite repeated notices, explanations and opportunities. The assessee's contention that the information was already available with the Department or on public records, or that the summons were a 'witch hunt' linked to external litigation, was rejected. The Tribunal held that providing copies of already available records would not have prejudiced the assessee and that the conduct was not bona fide but amounted to deliberate defiance of the summons. The Tribunal therefore agreed with the conclusions in the penalty order and the CIT(A)'s reasoning confirming willful non compliance. [Paras 31]

The assessee's refusal was willful and not supported by reasonable cause; penalty is justified and confirmed.

Final Conclusion: The Tribunal upheld the levy of penalty under section 272A(1)(c) for non compliance with the summons dated 23.09.2014 issued under section 131(1A), finding that the powers and penal consequences of section 131(1) apply to summons issued under section 131(1A), and that the assessee's refusal to comply was deliberate and not bona fide; the appeal is dismissed.

Condonation of delay - settlement applications - opportunity of hearing - remand for fresh consideration - interim restraint on precipitative action - administrative direction to a quasi judicial authority

Condonation of delay - settlement applications - opportunity of hearing - remand for fresh consideration - Application for condonation of delay in payment of interest placed before the Settlement Commission for consideration with an opportunity of hearing. - HELD THAT: - The High Court directed that the petitioner's application for condonation of delay, which was rejected by the respondent-Commissioner (Investigation) on the ground that the Bench could not take up the matter, be placed before the Bench of the Customs, Central Excise and Service Tax Settlement Commission, Chennai. The Commission is required to provide the petitioner an opportunity of hearing and thereafter pass appropriate orders on the application. The Court declined to keep the writ petition pending and instead remitted the matter to the Commission for fresh consideration and decision within a time bound period. The petitioner was directed to appear before the Settlement Commission on 19-2-2018 to enable disposal of the application. [Paras 4, 5]

The application for condonation of delay shall be placed before the Bench of the Settlement Commission, the petitioner given an opportunity of hearing, and the Commission shall pass appropriate orders.

Interim restraint on precipitative action - administrative direction to a quasi judicial authority - Whether respondents are restrained from taking precipitative action pending disposal of the condonation application. - HELD THAT: - The Court granted interim protection by directing that, until the Settlement Commission passes the order as directed, the respondents shall not take any precipitative action against the petitioner without the specific leave of the Court. This interim restraint is limited in duration to the period until the Commission delivers its decision pursuant to the Court's directions. [Paras 6]

Respondents shall not take any precipitative action against the petitioner, without specific leave of the Court, until the Settlement Commission passes orders on the condonation application.

Final Conclusion: Writ petition disposed of by remitting the condonation application to the Settlement Commission for hearing and determination within a fixed period; interim restraint granted against precipitative action until the Commission's order.

Investigation into ineligible drawback - protection of revenue during investigation - bank account embargo and its withdrawal upon security - bank guarantee and bond as protective measures - requirement of formal demand before recovery - cooperation with investigative authorities

Bank account embargo and its withdrawal upon security - bank guarantee and bond as protective measures - protection of revenue during investigation - cooperation with investigative authorities - Whether the petitioner could be permitted to operate its bank account despite the embargo imposed by the first respondent while the Directorate of Revenue Intelligence investigation continued, and on what conditions - HELD THAT: - The Court found that although the petitioner presently was not eligible to retain the drawback availed (claimed in 2013) and an investigation into the quantum and non realisation of foreign exchange was underway, the Revenue's interest could be protected while permitting the petitioner to operate its current account. The Court observed that no demand had been raised to the petitioner to date. Balancing the competing interests, the Court directed that the petitioner furnish a bank guarantee for 25% of the drawback availed and execute a bond in proper format for the balance, to the satisfaction of the appropriate Customs authority, within two weeks of receiving the order. On production of proof of compliance, the first respondent was directed to withdraw the embargo on outward transactions communicated to the bank on 29 11 2017. The petitioner was further mandated to cooperate fully with the Directorate of Revenue Intelligence and appear when called. [Paras 6, 8]

Petitioner permitted to operate bank account upon furnishing a bank guarantee for 25% of the drawback and executing a bond for the differential amount; on compliance the embargo is to be withdrawn, and investigation shall continue with the petitioner's cooperation.

Investigation into ineligible drawback - requirement of formal demand before recovery - Whether a formal demand had been issued to the petitioner prior to steps to restrain account transactions - HELD THAT: - The Court recorded that although the petitioner had availed drawback in 2013 and foreign remittances were not realised within the permitted time, the matter remained under investigation as to the eligible quantum and the fact of non remittance. The Court noted that, notwithstanding the investigation and asserted ineligibility, a formal demand seeking recovery had not been issued to the petitioner as on the date of the order. [Paras 6]

It was noted that no demand had been issued to the petitioner to date; this fact informed the Court's direction to allow conditional operation of the bank account while protecting the Revenue.

Final Conclusion: Writ petition disposed by permitting the petitioner to operate its bank account subject to furnishing a bank guarantee (25% of the drawback claimed) and executing a bond for the balance within two weeks; on proof of compliance the embargo dated 29 11 2017 shall be withdrawn, investigation by the Directorate of Revenue Intelligence to continue and the petitioner must cooperate.

Confiscation under Section 113(d) of the Customs Act - definition of 'goods' to include currency and negotiable instruments - prohibited goods as including items subject to prohibition or restrain - prohibition under FEMA on export of Indian currency without prior permission - prohibition includes 'restrain' - judicial restraint on re-appreciation of concurrent factual findings under Article 226

Confiscation under Section 113(d) of the Customs Act - definition of 'goods' to include currency and negotiable instruments - prohibition under FEMA on export of Indian currency without prior permission - prohibited goods as including items subject to prohibition or restrain - Validity of invoking confiscation provision for Indian currency carried out of India without prior permission - HELD THAT: - The Court held that the term 'goods' as defined in the Act includes currency and negotiable instruments, and that 'prohibited goods' covers items the import or export of which is subject to prohibition or restrain under the Act or any other law. Regulations under FEMA impose a prohibition (understood to include a restrain) on taking Indian currency abroad beyond the prescribed threshold without prior permission. The petitioner admitted carrying Indian currency well above that limit without permission. In those circumstances, Section 113, which deals with confiscation of goods attempted to be improperly exported, was properly invoked and the confiscation order was valid. The appellate authority's reduction of the redemption fine did not undermine the validity of the confiscation where the factual finding of improper export without permission was concurrently affirmed. [Paras 4, 6, 7, 8]

Confiscation of the seized Indian currency for attempted improper export without prior FEMA permission was validly upheld.

Judicial restraint on re-appreciation of concurrent factual findings under Article 226 - Scope of court's interference with concurrent findings of fact in writ jurisdiction under Article 226 - HELD THAT: - The Court observed that the second respondent (Appellate Authority) had re appreciated facts and the first respondent (Revisional Authority) had affirmed those findings. Given the concurrent factual conclusions on the attempt to improperly export currency, the Court exercising writ jurisdiction would not re examine those factual findings. The scope for interference in such appeals is limited, and the petitioner had not made out a case warranting interference with the concurrent factual determinations. [Paras 8]

The writ petition cannot re-open the concurrently affirmed factual findings; interference is declined and the petition is dismissed.

Final Conclusion: The petitions challenging the confiscation and related orders were dismissed; the confiscation for attempted improper export without FEMA permission was upheld and the court declined to re-examine concurrent factual findings.

Additional duty of customs - Exemptions under the Customs Act applying to additional duties - Benefit of exemption under Notification 94/96-Customs - Section 116(3) of the Finance Act, 1999 - application of Customs Act provisions

Benefit of exemption under Notification 94/96-Customs - Additional duty of customs - Section 116(3) of the Finance Act, 1999 - application of Customs Act provisions - Whether goods eligible for exemption under Notification No. 94/96-Customs are also entitled to exemption from the additional duty of customs levied under Section 116(1) of the Finance Act, 1999. - HELD THAT: - The Tribunal held that Sub section (3) of Section 116 expressly makes the provisions of the Customs Act, including those relating to refunds and exemptions, applicable to the levy and collection of the additional duty of customs under Section 116. Applying that provision, and drawing on the reasoning in Toyota Kirloskar Motor P. Ltd., the court concluded that where goods are granted exemption under Notification No. 94/96 Customs, the same exemption must be extended to the additional duty leviable under Section 116(1). The decisions relied upon by the Revenue (including Essar Oil and the ex parte S.J.L.T. Textile decision) were found not to be applicable: Essar Oil did not consider Section 116(3), and the S.J.L.T. decision was ex parte. An administrative instruction contrary to this ratio was treated as an unsupported direction and not persuasive. Consequently, the exemption under Notification 94/96 must be allowed in respect of the additional duty under Section 116(1).

Goods entitled to exemption under Notification No. 94/96 Customs are also exempt from the additional duty under Section 116(1) of the Finance Act, 1999; appeals allowed.

Final Conclusion: The Tribunal allowed the appeals and directed that the exemption under Notification No. 94/96 Customs be extended to the additional duty of customs leviable under Section 116(1) of the Finance Act, 1999.

Securities Transaction Tax - derivative contracts settled by physical delivery treated as delivery-based equity transactions - applicability of STT rates to derivative transactions - binding clarification by CBDT

Securities Transaction Tax - derivative contracts settled by physical delivery treated as delivery-based equity transactions - applicability of STT rates to derivative transactions - STT rate applicable to futures contracts settled by physical delivery is the same as the rate applicable to delivery based equity transactions. - HELD THAT: - The Court recorded and relied upon the communication dated 27th August, 2018 from the CBDT (extracted at para 4 of that communication) which states that a derivative contract settled by physical delivery is not different from an equity share transaction settled by actual delivery or transfer and that the rates of STT applicable to delivery based equity transactions shall apply to such derivative transactions. The Court found that this clarification resolves the alleged anomaly and places all stakeholders, including the stock exchange and the Association's members, on notice as to the STT payable on the transactions in question. The Court noted a contention as to possible difficulty in respect of past transactions but held that it was unnecessary to adjudicate that submission in view of the CBDT clarification, and disposed of the petition accordingly. [Paras 5, 6, 7, 9, 10]

Petition disposed of in view of CBDT's clarification that STT rates for delivery based equity transactions apply equally to derivative contracts settled by physical delivery.

Final Conclusion: The High Court disposed of the petition after accepting the CBDT's clarification that physically delivered derivative contracts attract the same STT rates as delivery based equity transactions, leaving stakeholders bound by that position.

Oppression and mismanagement - quashing of resolutions increasing share capital - compliance with Section 62(1)(c) of the Companies Act, 2013 for preferential allotment - compliance with Section 42 (private placement) of the Companies Act, 2013 - disclosures required by Rule 13 of the Companies (Share Capital and Debentures) Rules, 2014 - requirement of valuation report by a registered valuer for pricing in preferential allotment - Companies (Acceptance of Deposits) Rules, 2014 proviso regarding allotment or refund by 1 June 2015

Substitution of shareholding and laches - Validity of transfer/substitution of 10 shares in 2005-2006 in favour of Respondent No.3 and whether the challenge was maintainable after delay - HELD THAT: - The Tribunal found that the 2005 Board resolution recording transfer of 10 shares to Respondent No.3 is on record and that the Appellant, who was a full time director, did not challenge that transfer for many years. The court treated the claim as hopelessly delayed, noting absence of any earlier complaint by the transferor and that the Appellant had participated in company affairs and signed related records. On these grounds the challenge to the 2005 substitution was not entertained. [Paras 5]

The challenge to the 2005 substitution of shares in favour of Respondent No.3 is rejected as belated and not maintainable.

Allotment against share application money and Companies (Acceptance of Deposits) Rules, 2014 proviso - Validity of increase of authorised/share capital from Rs.5 lakhs to Rs.15 lakhs and allotments made on 30.09.2015 against share application money - HELD THAT: - The Tribunal recorded that the notice and explanatory statement for the AGM of 30.09.2015 expressly referenced share application money pending allotment and that minutes and balance sheet entries (signed by the Appellant) reflected the allotments. The court noted the Notification to the Deposit Rules (requiring allotment or refund by 1 June 2015) but observed that the company elected to allot shares against the pending application money. Given the Appellant's participation and benefit from those resolutions and the availability of Registrar of Companies remedy for any contravention of deposit rules, the Tribunal found no ground to interfere with the NCLT's dismissal of the challenge to the 30.09.2015 allotments. [Paras 10, 11, 12, 13, 14]

The allotments made on 30.09.2015 against share application money and the increase of authorised capital to Rs.15 lakhs are upheld; the Appellant cannot impugn those allotments.

Non compliance with Section 62(1)(c) of the Companies Act, 2013 and Rule 13 disclosures for preferential allotment - non compliance with Section 42 private placement procedure - absence of valuation report by a registered valuer for pricing - Legality of the increase of authorised capital from Rs.15 lakhs to Rs.40 lakhs and the allotments made by resolutions dated 31.10.2016 (board), 25.11.2016 (EOGM) and 26.11.2016 (board) - including preferential allotment to Respondent No.2 and private placement to Respondent No.4 - and whether such acts constituted oppression and mismanagement - HELD THAT: - The Tribunal examined the statutory scheme: Section 62(1)(c) permits allotment to persons outside existing shareholders only if pricing is determined by a registered valuer and subject to prescribed conditions; Rule 13 of the Companies (Share Capital and Debentures) Rules, 2014 mandates specific disclosures in the explanatory statement (including basis of price with valuer's report) and compliance with Section 42; Section 42 prescribes private placement procedure and records, payment by banking channels and filing of returns. The record did not show service of the mandatory notice with Rule 13 disclosures, no valuation report was produced, and there is no material demonstrating compliance with Section 42 (selection of invitees, manner of receipt of money, or filing obligations). On these grounds the Tribunal held that the later resolutions and allotments were procured in breach of statutory procedure, effected by the majority to shore up control, and amounted to oppressive conduct and mismanagement. [Paras 31, 32, 33, 35, 36]

The resolutions dated 31.10.2016, 25.11.2016 and 26.11.2016, the increase of authorised capital to Rs.40 lakhs and the subsequent allotments to Respondent Nos.2 and 4 are quashed and set aside; consequent acts (induction of Respondent No.4 as director and resolution to remove the Appellant) are also quashed; Respondents 2 and 3 directed to refrain from oppressive acts.

Final Conclusion: The appeal is partly allowed. The Tribunal upholds the 2015 allotments against share application money but quashes the 2016 increase of authorised capital to Rs.40 lakhs, the preferential and private allotments made pursuant thereto, and consequential steps including induction of Respondent No.4 and the resolution to remove the Appellant; Respondents 2 and 3 are restrained from further oppressive conduct and ordered to pay costs to the Appellant.

Corporate Insolvency Resolution Process - default - debt due and payable - service by deemed delivery - dispensing with bank certificate under Section 9(3)(c) of the IBC, 2016 - limitation - territorial jurisdiction - appointment of Interim Resolution Professional - moratorium under Section 14

Default - debt due and payable - Existence of debt and occurrence of default in favour of the applicant established - HELD THAT: - The Tribunal accepted the applicant's case that the corporate debtor ordered and received alloy steel blocks and invoices totalling the claimed amount were raised. Part payment was admitted and the balance remained unpaid despite demands. Having considered the invoices, demands, and the undisputed non-payment, the Tribunal found that a default has occurred and that a debt is due and payable to the applicant. [Paras 5, 6, 7, 16]

The Tribunal held that default is established and a debt is due to the applicant.

Service by deemed delivery - Service of the application on the corporate debtor treated as complete despite refusal to accept dasti service - HELD THAT: - The applicant attempted personal (dasti) service on the corporate debtor and filed an affidavit stating that acceptance was refused by the corporate debtor's staff/security. In light of that affidavit and the refusal to accept or provide written acknowledgement, the Tribunal treated service as complete for purposes of proceeding. [Paras 12]

Service on the corporate debtor was deemed complete.

Dispensing with bank certificate under Section 9(3)(c) of the IBC, 2016 - Requirement of bank certificate under Section 9(3)(c) dispensed with on the materials placed before the Tribunal - HELD THAT: - Although the applicant did not file the bank certificate mandated by Section 9(3)(c), the applicant produced a certified bank statement and informed the Tribunal that the bank had not issued the certificate despite requests. Relying on the precedent urged by the applicant, the Tribunal treated the certified bank statement as adequate and dispensed with the formal bank certificate requirement for admission of the application. [Paras 11]

Tribunal dispensed with the requirement of filing the bank certificate under Section 9(3)(c) on the materials produced.

Limitation - Application held to be within the period of limitation - HELD THAT: - The Tribunal noted the date of default as 22.11.2016 and recorded that the application was filed within the prescribed limitation period. On this basis, the Tribunal found there was no bar of limitation to entertain the Section 9 application. [Paras 14]

The Tribunal held the application to be within limitation.

Territorial jurisdiction - Adjudicating Authority has territorial jurisdiction to entertain the application - HELD THAT: - The Tribunal recorded that the registered office of the corporate debtor is situated within the territorial jurisdiction of this Tribunal and therefore it was the proper forum to adjudicate the application under the IBC. [Paras 15]

The Tribunal found that territorial jurisdiction is satisfied.

Corporate Insolvency Resolution Process - appointment of Interim Resolution Professional - moratorium under Section 14 - Section 9 application admitted; CIRP initiated; Interim Resolution Professional appointed and moratorium imposed - HELD THAT: - Having found that a debt and default existed, that service was complete, that limitation and territorial jurisdiction were satisfied, and having dispensed with the bank certificate requirement, the Tribunal admitted the Section 9 application. The Tribunal appointed the named registered insolvency professional as Interim Resolution Professional and directed that the moratorium under Section 14 operate from the date of the order, specifying the prohibitions and the duration in accordance with the Code. Directions were given for communication of the order to the applicant, corporate debtor and IBBI and to furnish the IRP with a copy. [Paras 16, 17, 18, 19]

The Tribunal admitted the application under Section 9(5), appointed the Interim Resolution Professional, and directed that moratorium under Section 14 operate with consequential directions.

Final Conclusion: The Section 9 application was admitted; the Tribunal found debt and default established, treated service as complete, dispensed with the formal bank certificate, held the application within limitation and within its territorial jurisdiction, appointed the named Interim Resolution Professional and directed that moratorium under Section 14 operate; registry to communicate the order and inform IBBI.

Cognizance and issuance of summons - prima facie case - mens rea / culpable knowledge - offence of money laundering under Section 3 PMLA - burden of proof and presumption under Section 24 PMLA - revisional jurisdiction under Section 397 CrPC - binding effect and parity of coordinate-bench decisions

Revisional jurisdiction under Section 397 CrPC - cognizance and issuance of summons - Availability of revisional jurisdiction to challenge the Special Court's order taking cognizance and issuing summons. - HELD THAT: - The Court applied settled precedent (including the Supreme Court's analysis in Urmila Devi and related authorities reproduced in the record) and held that an order by a trial court taking cognizance and directing issuance of process is an intermediate or quasi-final order which can be challenged in revision under Section 397 CrPC or under the High Court's inherent jurisdiction under Section 482 CrPC. The Court therefore proceeded to exercise revisional jurisdiction to examine whether the Special Court had applied its mind and whether a prima facie case was made out before issuing summons. [Paras 30, 31]

Revisional jurisdiction is available and properly invoked to test legality of the impugned cognizance/order issuing summons.

Offence of money laundering under Section 3 PMLA - prima facie case - mens rea / culpable knowledge - burden of proof and presumption under Section 24 PMLA - Legality of the Special Court's order dated 18-7-2014 taking cognizance and issuing summons under Section 3 PMLA against the applicants. - HELD THAT: - Applying the statutory tests in Section 3 PMLA and the interpretative guidance reproduced from earlier decisions, the Court concluded that conviction under Section 3 requires (i) an attempt/knowing assistance/actual involvement in activity connected with proceeds of crime and (ii) projection or claiming of such property as untainted. The Court found no material or circumstantial evidence on record to prima facie establish either the requisite mens rea/knowledge or actual involvement of the applicants in the scheduled offences or in projecting proceeds as untainted. The Court examined the scope of Section 24 and held that while it creates a presumption in proceedings relating to proceeds of crime for attachment/confiscation, it does not dispense with the requirement of prima facie satisfaction of the ingredients of Section 3 necessary to take cognizance of the offence. The impugned order was held to be mechanically passed without due application of mind to these prerequisites; reliance on uncorroborated statements of co-accused recorded after cognizance was also rejected as insufficient to supply the missing prima facie material. [Paras 40, 41, 42]

Impugned order dated 18-7-2014 taking cognizance and issuing summons qua the applicants is illegal, was passed mechanically and is set aside.

Binding effect and parity of coordinate-bench decisions - cognizance and issuance of summons - Whether the coordinate-bench judgment dated 16-2-2017 (quashing cognizance and summons for certain co-accused) is applicable to the present applicants and whether its having not been successfully challenged renders it binding. - HELD THAT: - The Court noted that the coordinate-bench order in Criminal Revision No. 926 of 2016 quashed the cognizance and summons against certain co-accused on grounds identical or substantially similar to those raised by the present applicants. The investigating agency had not succeeded in obtaining stay or reversal of that coordinate-bench order and had not filed a Special Leave Petition within the period since that order was passed. Given the absence of any stay or successful challenge, the coordinate-bench decision remains in force and, by virtue of judicial discipline and parity, is applicable to similarly situated co-accused whose facts and allegations are substantially common. The Court accepted the applicants' reliance on that decision as a persuasive and binding precedent for the purpose of these petitions. [Paras 8, 13, 15]

The coordinate-bench judgment dated 16-2-2017 applies to similarly situated co-accused; its unchallenged status supports quashing of the impugned order against the applicants.

Final Conclusion: The revision petitions are allowed. The Special Court's order dated 18-7-2014 taking cognizance and issuing summons against the applicants under Section 3 PMLA is set aside as having been passed mechanically without prima facie material of mens rea/culpable knowledge or projection of proceeds as untainted; the Court clarified that it has not decided correctness of provisional attachment or adjudication orders, and observed that the coordinate-bench decision relied upon by the applicants, not having been successfully challenged, is applicable to similarly situated co-accused.

Registration of complaint under Section 5(5) of the Prevention of Money Laundering Act, 2002 - Offence of money laundering under Section 3 of the Prevention of Money Laundering Act, 2002 - Proceeds of crime - Summons and opportunity under Section 50(2) and 50(3) of the Prevention of Money Laundering Act, 2002 - Provisional attachment and filing complaint before the Adjudicating Authority

Registration of complaint under Section 5(5) of the Prevention of Money Laundering Act, 2002 - Offence of money laundering under Section 3 of the Prevention of Money Laundering Act, 2002 - Proceeds of crime - Summons and opportunity under Section 50(2) and 50(3) of the Prevention of Money Laundering Act, 2002 - Validity of registration of complaint and continuation of proceedings against the petitioners under the PML Act and appropriateness of quashing the complaint - HELD THAT: - The Court noted that the authorities issued summons under Section 50(2) and 50(3) of the PML Act and, after affording the opportunity thereby mandated, were satisfied that prima facie material existed and that there was reason to believe the petitioners were in possession of proceeds of crime. On that basis a complaint under Section 5(5) was registered and investigation and adjudication for attachment are proceeding. The Court held that where the authorities have, after giving the statutory opportunity, formed a prima facie belief of involvement with proceeds of crime and proceeded to register a complaint and investigate, it cannot be said they lacked power to do so or that the complaint was devoid of material. The petitioners were required to participate in the inquiry/investigation, and remedies, if any, remain open on conclusion of investigation. Applying these principles to the facts, the Court found no ground to quash the complaint at this stage. [Paras 3, 4]

Petition to quash the complaint under Section 5(5) of the PML Act dismissed; petitioners must participate in the ongoing enquiry/investigation and may seek appropriate relief after investigation.

Final Conclusion: The writ petition seeking quashment of the complaint registered under Section 5(5) of the PML Act was dismissed for want of merit; the authorities were held to have acted within their powers after affording statutory opportunity, and the petitioners remain entitled to seek remedies after completion of investigation.

Extended period of limitation under Proviso to Section 11A(1) - clandestine removal - suppression of facts, willful mis-statement, fraud or collusion with intention to evade duty - burden of proof and requirement of satisfactory/positive evidence - penalty under Section 11AC

Extended period of limitation under Proviso to Section 11A(1) - suppression of facts, willful mis-statement, fraud or collusion with intention to evade duty - Whether the extended period of limitation under the Proviso to Section 11A(1) could be invoked on the material before the Department. - HELD THAT: - The Court held that the Proviso to Section 11A(1) is invocable only where there is prima facie material establishing that duty has not been paid or was short paid by reason of fraud, collusion, willful mis-statement or suppression of facts with an intention to evade duty. The show cause notice relied solely on an extract from the assessee's annual report disclosing inventory discrepancy which had been adjusted in the books; there was no allegation or supporting material of clandestine removal, fraud, collusion, willful mis-statement or suppression of facts. In the absence of reasonable material to prima facie establish such intentional conduct, the extended period could not be invoked and the Commissioner (Appeals) was correct in holding that the extended period and consequent imposition of penalty under Section 11AC were not sustainable. [Paras 8, 9, 10]

Extended period under the Proviso to Section 11A(1) is not invocable on the material before the Department; findings for the assessee.

Clandestine removal - burden of proof and requirement of satisfactory/positive evidence - Whether the Tribunal was justified in reversing the Commissioner (Appeals) by treating the disclosed stock discrepancy as clandestine removal without recording findings or giving reasons. - HELD THAT: - The Court found that the Tribunal's order was cryptic and reversed the reasoned order of the Commissioner (Appeals) on the presumption that shortage equated to clandestine removal. The Tribunal did not record any positive or satisfactory evidence to establish clandestine removal and proceeded on assumptions and presumptions. As the requirement to prove clandestine removal or suppression with intention to evade duty rests on the Revenue and was not met, the Tribunal's finding was perverse and liable to be interfered with by the Court. [Paras 11, 12, 13, 14]

Tribunal's reversal was unsustainable for lack of findings and material; impugned order set aside in favour of the assessee.

Final Conclusion: Civil miscellaneous appeal allowed; impugned order of the Tribunal set aside; substantial questions of law Nos. 1 and 2 answered in favour of the assessee and against the Revenue; remaining substantial questions left open.

Transfers (decalcomanias) - Heat Transfers - Classification under the HSN / Central Excise Tariff - Rule 3(c) of the General Rules for the Interpretation of the Schedule - ejusdem generis - limitation / time-bar

Transfers (decalcomanias) - Heat Transfers - Classification under the HSN / Central Excise Tariff - ejusdem generis - Classification of the appellants' printed heat transfers under the Tariff - HELD THAT: - The appellants had initially claimed classification under heading 49011020 but conceded that pamphlets and similar printed matter did not describe the impugned goods. The Tribunal examined HSN notes for headings 4908 and 4911. Heading 4911 (other printed matter) does not encompass the heat-transfer products, which are not typical printed pictures or photographs as envisaged by 4911. HSN Explanatory Notes to heading 4908 describe 'Transfers (decalcomanias)' including papers coated to transfer pictures/designs to permanent surfaces and expressly include articles such as embroidery or hosier transfers transferred to textiles by heat/pressure. Lab and expert reports establish that the impugned articles are coated papers from which designs are transferred to textile surfaces by application of heat and pressure. Applying the ejusdem generis principle to the grouping in 4908 and construing the relevant HSN notes, the Tribunal found the impugned goods to fit within the description of transfers (decalcomanias) and thus classifiable under the residuary entry 4908.90 (49089000) rather than under 49011020 or 49119100. [Paras 5]

The impugned printed heat transfers are classifiable as Transfers (decalcomanias) under 4908.90 (49089000).

Limitation / time-bar - suppression of facts - Allegation of suppression and the temporal scope of the demand - HELD THAT: - The appellants had declared manufacture of 'Heat Transfers' and regularly filed ER-1 returns. The Tribunal found that belated departmental scrutiny does not by itself establish suppression or fraud. Consequently, while classification was held against the appellants, the Tribunal limited the revenue's claim to the normal period, rejecting an extended or time-barred demand based on alleged suppression. [Paras 6, 7]

Allegation of suppression not sustained; revenue's demand restricted to the normal period.

Final Conclusion: The appeal is allowed in part: the printed heat transfers are held classifiable under 4908.90 (49089000) and not under 49011020 or 49119100, and the revenue's demand is restricted to the normal period (allegations of suppression not sustained).

Extended period of limitation - knowledge of Revenue - declaration under Notification No. 214/1986-CE - cenvat credit of input services - demand of interest and penalty challenged on limitation ground

Extended period of limitation - knowledge of Revenue - declaration under Notification No. 214/1986-CE - demand of interest and penalty challenged on limitation ground - Whether the demand of service tax credit reversal along with interest and penalty could be sustained by invoking the extended period of limitation - HELD THAT: - The appellant had, by letter dated 11.12.2006, informed the Department about use of an additional premises (Unit II) and later placed on record a declaration dated 29.01.2010 purportedly made in terms of Notification No. 214/1986 CE. The adjudicating authority did not record any finding that these communications were false, nor was there any formal refusal of the appellant's request/permission on file. The show cause notice was issued on 20.12.2013, nearly seven years after the initial intimation. In absence of any positive finding of concealment or suppression and given that the Revenue was demonstrably within knowledge of the additional unit and the declaration, the case for invoking the extended period of limitation was not made out. Reliance was placed on the principle in CCE, Jalandhar v. Royal Enterprises, that mere delay without proof of suppression or conscious concealment cannot sustain action under the extended limitation. Because the extended period could not be validly invoked, the impugned demand - including interest and penalty sought to be sustained by that extended limitation - could not stand. The Tribunal therefore did not decide the merits on entitlement to cenvat credit but set aside the demand on limitation/technical grounds.

Impugned Order in Original set aside and the appeal allowed on the ground that the extended period of limitation was not invokable; consequential benefits to the appellant to follow; merits left academic.

Final Conclusion: The appeal is allowed on limitation/technical grounds: because the Revenue had prior knowledge of the additional unit and the declaration under Notification No. 214/1986 CE was on record and not shown to be false, invocation of the extended period was unsustainable and the impugned demand (including interest and penalty) is set aside; merits were not adjudicated.

Penalty under Rule 26 of the Central Excise Rules, 2002 - Confiscation of excisable goods - Possession by transporter and liability for undeclared excisable goods - Obligation to produce documents evidencing payment of duty

Penalty under Rule 26 of the Central Excise Rules, 2002 - Possession by transporter and liability for undeclared excisable goods - Obligation to produce documents evidencing payment of duty - Applicability of penalty under Rule 26 to the appellant-transporter who had possession of fully manufactured excisable goods for which no invoices or waybills evidencing duty payment were produced - HELD THAT: - The Tribunal found as an established fact that fully manufactured fans, packed in cartons, were found in the appellant's premises and loaded for dispatch with consignment notes; the appellant failed to produce any invoice, waybills, or other documents showing that appropriate central excise duty had been paid. The show cause notice had expressly required production of such documents, but none were furnished. Rule 26 applies to any person who acquires possession of or is in any way concerned in transporting, removing, depositing, keeping or otherwise dealing with excisable goods which he knows or has reason to believe are liable to confiscation. Applying that provision, the Tribunal held that the appellant, being in possession and concerned in transporting the goods without discharge of duty, was liable to penalty under Rule 26. [Paras 5, 6]

Penalty under Rule 26 is attracted against the appellant-transporter and the imposition of penalty is sustainable.

Proportionality of penalty - Judicial modification of excessive penalty - Whether the penalty of Rs. 10,00,000/- imposed on the appellant was excessive and required modification - HELD THAT: - While upholding the applicability of Rule 26, the Tribunal considered proportionality between the duty liability on the seized stock and the penalty imposed. The record showed duty liability of approximately Rs. 17,11,090/-. The Tribunal concluded that the penalty of Rs. 10,00,000/- on the appellant was excessive in relation to the duty liability and, in the exercise of its corrective jurisdiction, reduced the penalty to Rs. 5,00,000/-. The adjudicatory conclusion thus preserves liability but moderates the quantum of penalty on proportionality grounds. [Paras 7]

Penalty imposed on the appellant is confirmed in principle but modified in quantum to Rs. 5,00,000/-.

Final Conclusion: The appeal is disposed of by upholding the imposition of penalty under Rule 26 on the appellant-transporter for possession and transport of excisable goods without documents proving duty payment, but the Tribunal reduces the penalty imposed on the appellant from Rs. 10,00,000/- to Rs. 5,00,000/-.

Limitation - time-barred demand - penalty under Rule 25 and Rule 26 of the Central Excise Rules, 2002 - clandestine removal - requirement of corroborative evidence for imposition of penalty - surrender during Income Tax survey

Limitation - time-barred demand - surrender during Income Tax survey - Show cause notice and proposed penalties were time-barred and liable to be set aside. - HELD THAT: - The facts show the cash and stock were surrendered during an Income Tax survey on 01.09.2006 and this was reflected in the Profit and Loss account for the year ending 31st March, 2007. The Department issued the show cause notice proposing penal action more than five years after detection. No demand for duty was raised and no additional investigative steps were taken to extend or justify limitation. Applying the principle in Nagpur Alloys Castings Ltd. (supra) the imposition of penalty where the demand is time-barred and the extended period of limitation is unavailable is impermissible. The adjudicating authority failed to decide the plea of limitation; the Tribunal finds the notice issued after more than five years to be time-barred and hence unsustainable. [Paras 6, 7]

The impugned order is set aside on the ground of limitation; the penalties are unsustainable as time barred.

Clandestine removal - requirement of corroborative evidence for imposition of penalty - penalty under Rule 25 and Rule 26 of the Central Excise Rules, 2002 - Penalties imposed for alleged clandestine removal are not sustainable for lack of corroborative evidence. - HELD THAT: - The Department's case rests on information disclosed to Income Tax authorities without any independent investigation or corroborative evidence of clandestine removal or suppression of production. The show cause notice was based on assumptions and presumptions, with only a request for clarification from the appellants and no further probative inquiry. In these circumstances, imposing penalties under Rule 25 and Rule 26 without evidence to corroborate clandestine removal is not permissible; the Tribunal applied the reasoning of earlier decisions holding that penalties cannot be sustained in absence of supporting evidence of evasion. [Paras 6]

The penalties imposed for alleged clandestine removal are set aside for lack of corroborative evidence and on merits.

Final Conclusion: The appeal is allowed; the impugned order confirming penalties under Rule 25 and Rule 26 is set aside both as time barred and on merits for lack of corroborative evidence.

Excisability of by-products - treatment of non-excisable goods as exempted goods for reversal of CENVAT credit under Rule 6 - withdrawal of administrative circulars - application of CBEC Circular No. 1027/15/2016-CX

Excisability of by-products - Rule 6 of CENVAT Credit Rules - reversal for exempted/non-excisable goods - application of CBEC Circular No. 1027/15/2016-CX - withdrawal of administrative circulars - Whether Hydro Carbon Ferro Chrome (HCFC) slag removed for consideration is to be treated as non-excisable/exempted goods for the purpose of reversal of CENVAT credit under Rule 6 and whether earlier administrative guidance relied upon by the Adjudicating Authority survives after issuance of CBEC Circular No.1027/15/2016-CX. - HELD THAT: - The Tribunal examined the adjudicating authority's reliance on CBEC Circular No.904/24/2009-CX and held that the issue is no longer res integra in view of CBEC Circular No.1027/15/2016-CX which rescinded earlier circulars on the excisability of by-products. The Board, having considered the Supreme Court decision in Union of India v. DSCL Sugar Ltd. and decisions such as Hindalco, concluded that by-products or wastes which are non-excisable and cleared for a consideration from the factory are to be treated as exempted goods for the purpose of reversal of input and input service credit under Rule 6. In consequence, the earlier circular relied upon by the Adjudicating Authority stood withdrawn and could not sustain the demands and penalties imposed for non-reversal under Rule 6. Applying Circular No.1027/15/2016-CX to the facts, the Tribunal found no reason to interfere with the Commissioner (Appeals) order which had set aside the adjudication and allowed the appeals. [Paras 7, 8, 9, 10]

The appeals are dismissed and the impugned adjudication orders setting demands and penalties are not sustained in view of CBEC Circular No.1027/15/2016-CX treating such by-products as exempted/non-excisable goods for the purpose of Rule 6.

Final Conclusion: In view of CBEC Circular No.1027/15/2016-CX which rescinded earlier circulars and treated non-excisable by-products cleared for consideration as exempted goods for Rule 6 purposes, the Tribunal dismissed the revenue appeals and sustained the Commissioner (Appeals) orders.

Taxability of LPG at differential rates - evidentiary value of purchaser certificates - burden of proof on supplier - Input Tax Credit on transportation fuel - deduction for discount on turnover sales - limitation - rectification and section 14 of the Limitation Act, 1963

Taxability of LPG at differential rates - evidentiary value of purchaser certificates - burden of proof on supplier - Whether LPG supplies by GAIL could be taxed at 4% (domestic use) on the basis of certificates issued by Oil Marketing Companies. - HELD THAT: - The Court upheld the Tribunal's conclusion that GAIL, as the gas supplier, was entitled to rely on certification from the purchasing OMCs (which were Government Corporations) that specified the portion consumed for domestic use. Given the regulatory framework and differing price regimes for domestic and non-domestic LPG, and absent any prima facie material to doubt the veracity of those certificates, it was not permissible to shift the onus to GAIL to disprove the certificates. The Court emphasised that had the Assessing Authority possessed prima facie material suggesting incorrectness of the certificates, the matter would require different treatment, but no such material existed on the record. [Paras 4]

Tribunal rightly allowed taxation at 4% based on OMC certificates; no question of law arises.

Input Tax Credit on transportation fuel - limitation - rectification and section 14 of the Limitation Act, 1963 - Claim of Input Tax Credit on purchase of gas used in transportation of the gas was not decided by the Tribunal and is directed for fresh consideration. - HELD THAT: - The Tribunal did not adjudicate the Revenue's appeal against the Appellate Authority's adverse decision on the ITC claim. The High Court therefore left the matter to be pursued before the Tribunal by way of rectification. Although the statutory two year limitation for rectification under the Gujarat VAT Act had lapsed, the Court permitted the Government to file a rectification application invoking section 14 of the Limitation Act, 1963, on the ground that the Government had been prosecuting its remedy before the High Court. The Government was permitted to file the rectification application before the Tribunal by 31.10.2018, after which the Tribunal is to examine the claim on merits. [Paras 5]

Issue remanded for fresh consideration by the Tribunal; Government permitted to file rectification application by 31.10.2018.

Deduction for discount on turnover sales - Whether the respondent could claim deduction of discounts granted to OMCs on turnover sales. - HELD THAT: - The High Court held that this question was governed by the Court's earlier decision in ONGC Ltd v. State of Gujarat (2018 (3) SCC 648), which favoured the assessee. Applying that precedent, the Court decided the matter in favour of GAIL. [Paras 6]

Claim for deduction of discount on turnover sales allowed in favour of the assessee in view of the cited precedent.

Final Conclusion: Tax Appeal disposed: (i) Tribunal's allowance of 4% tax on LPG supplies based on OMC certificates is upheld; (ii) ITC issue remitted to the Tribunal for fresh consideration - Government permitted to file rectification by 31.10.2018; (iii) deduction for discounts on turnover sales allowed to the assessee in view of ONGC precedent.

Substitution of statutory provision - prospective application versus retrospective operation of amendment - purposive interpretation in legislative amendment - vested right to continue in office upon amendment - distinction between incumbents and past office-holders

Substitution of statutory provision - vested right to continue in office upon amendment - distinction between incumbents and past office-holders - Whether Presiding Officers appointed before September 1, 2016 are entitled to the benefit of the substituted Section 6 and may continue in office until attaining the age of 65 years or until completion of five years, whichever is earlier. - HELD THAT: - The Court held that the word 'substituted' ordinarily effects the deletion of the old provision and brings the new provision into existence in its place, thereby replacing the earlier provision. Applying that principle and having regard to the objective and context of the amendment (notably the Parliamentary materials and Statement of Objects and Reasons which aimed to reduce pendency by enhancing the age of Presiding Officers), the Court concluded that Parliament intended the amended Section 6 to govern those incumbents who were holding the post on the date the amendment came into force. Consequently, incumbents who had not completed their five-year term as on September 1, 2016 are entitled to continue as Presiding Officers until they attain 65 years of age or complete five years' term before that age. The Court observed that the amendment was not being pressed as retrospective to benefit persons who had demitted office prior to the amendment; rather it was intended to cover serving incumbents as of the effective date. [Paras 12, 14, 15, 16, 21]

Amended Section 6 applies to Presiding Officers in office on September 1, 2016; they are entitled to continue until attaining 65 years or until completion of five years, whichever is earlier.

Prospective application versus retrospective operation of amendment - purposive interpretation in legislative amendment - Whether the substituted Section 6 must be read as prospective only and not to operate so as to provide benefit retrospectively to persons who had already demitted office. - HELD THAT: - The Court rejected the contention that the amendment should be treated as retrospective in a manner to benefit past office-holders who had already vacated their posts before September 1, 2016. It explained that the question of retrospective operation did not arise in the present context because the petitioners sought the benefit only insofar as they were incumbents on the effective date. The Court relied on contextual and purposive interpretation - including parliamentary materials showing the object of reducing pendency - to read the substitution as operative for incumbents from the date of commencement, while noting that had Parliament intended wider retrospectivity to benefit those who had already left office, such a case was not made and would have different consequences. [Paras 15, 16, 17, 18, 19]

The substituted provision is not to be given retrospective effect to benefit past office-holders; it operates on incumbents as of the amendment's commencement date and is to be construed purposively to advance the legislative objective.

Final Conclusion: Writ petitions allowed: incumbents appointed before September 1, 2016 who had not completed five years as Presiding Officers on that date are entitled to the benefit of the substituted Section 6 and may continue in office until attaining 65 years of age or until completion of five years, whichever is earlier; those who had demitted office prior to the amendment are not covered.