TaxTMI Updates e-Newsletter
Sep 13,2019

Refund of IGST on zero-rated supplies - Rule 96 CGST Rules deeming fiction - voluntary or erroneous payment of IGST - adjustment of IGST refund against higher rate duty drawback availed - interest on delayed refund - zero-rated supplies under Section 16 of IGST Act - constitutional prohibition on taxation without law (Article 265)

Refund of IGST on zero-rated supplies - Rule 96 CGST Rules deeming fiction - zero-rated supplies under Section 16 of IGST Act - voluntary or erroneous payment of IGST - constitutional prohibition on taxation without law (Article 265) - Petitioner entitled to refund of IGST paid in respect of exports which are zero-rated supplies during the transition period. - HELD THAT: - The Court accepted that the subject transactions fall under Section 16 of the IGST Act and are zero-rated with effect from 01.07.2017, and that voluntary or erroneous payment of IGST is refundable. The judgment in M/s. Amit Cotton Industries was noted for the proposition that Rule 96 of the CGST Rules creates a deeming fiction treating the shipping bill as an application for refund and restricts withholding of refund to the contingencies specified in Rule 96(4). The Court held that the department's reliance on a later circular cannot defeat the statutory regime applicable at the time of export and that Rule 96 is clear in conferring a refund right in such circumstances. Having regard to these principles, the petitioner was held entitled to claim refund of the IGST paid on the zero-rated exports. [Paras 3, 4]

Refund of IGST paid in respect of the zero-rated exports is permissible and the petitioner is entitled to such refund.

Adjustment of IGST refund against higher rate duty drawback availed - interest on delayed refund - Respondents may adjust the IGST refund against any higher rate duty drawback already availed by the petitioner; if respondents default in paying the balance, interest is payable. - HELD THAT: - The department contended that because the petitioner had availed higher rate duty drawback, any IGST refund should be subject to refund/adjustment of that drawback. The Court, after hearing parties, permitted the respondents to effect such adjustment and to pay the balance within six weeks. The Court further provided that if the respondents default in payment of the balance as directed, they would be liable to pay interest at the rate specified by the Court from the date of the petitioner's refund request until actual payment. The Court also recorded that if the respondents insist upon recovery of higher drawback with interest, they must correspondingly account for interest on the IGST refund from the date of the petitioner's request. [Paras 4]

Respondents may adjust the amount of higher rate duty drawback availed against the IGST refund and pay the balance within six weeks; on default, respondents to pay interest on the balance from the date of the refund request until payment.

Final Conclusion: Writ petitions allowed on consent terms: petitioner entitled to IGST refund on zero-rated exports; respondents permitted to adjust refund against higher duty drawback already availed and to pay the remaining balance within six weeks, failing which interest is payable on the balance from the date of the refund request until actual payment.

Exemption under Sl No. 3/3A of the Exemption Notification - scope of "sanitation and similar services" under SAC 99945 - supply to Government by a private service provider - activity "in relation to any function" entrusted under Articles 243G/243W - composite supply test where supply of goods does not exceed 25% of value

Exemption under Sl No. 3/3A of the Exemption Notification - scope of "sanitation and similar services" under SAC 99945 - activity "in relation to any function" entrusted under Articles 243G/243W - Whether mechanised/manual cleaning and sweeping of hospital premises supplied to a State Government hospital by the Applicant is exempt under Sl No. 3/3A of the Exemption Notification. - HELD THAT: - The Authority accepted that services supplied to a State Government hospital are supplies to the Government and noted the Central Government's Circular explaining that Sl Nos. 3/3A continue the exemption in substance for activities "in relation to any function" entrusted to Panchayats/Municipalities (e.g., public health, sanitation). However, the applicability of the Exemption Notification depends on whether the specific service falls within the Scheme of Classification of Services. SAC 99945 "sanitation and similar services" was interpreted with reference to its classification scope, which the Authority found limited to sweeping and cleaning of roads and streets. Applying that classification, cleaning of hospital premises (including dusting, mopping, disinfecting and toilet cleaning) does not fall within SAC 99945 as envisaged for the exemption. Although the supply is to a governmental entity and the exemption phrase is wide, the determinative test is whether the service is an activity relatable to a function listed in the Eleventh/Twelfth Schedule and correctly classifiable under the relevant SAC; on the material before the Authority the hospital-cleaning services cannot be so classified and therefore do not qualify for exemption under Sl No. 3/3A.

Cleaning and sweeping of hospital premises supplied by the Applicant to the State Government hospital is not exempt under Sl No. 3/3A of the Exemption Notification.

Exemption under Sl No. 3/3A of the Exemption Notification - activity "in relation to any function" entrusted under Articles 243G/243W - Whether security services supplied to Government hospitals by the Applicant are exempt under Sl No. 3/3A of the Exemption Notification. - HELD THAT: - The Authority examined the functions listed in the Eleventh and Twelfth Schedules and observed that security services are not included within the enumerated functions for purposes of the exemption. Given that the exemption under Sl Nos. 3/3A applies only to services that are activities relatable to functions entrusted to Panchayats or Municipalities under Articles 243G/243W and that security services are not so listed or classifiable as such a function, the Applicant's supply of security services to the Government hospital does not attract the exemption.

Security services supplied by the Applicant to the Government hospital are not exempt under Sl No. 3/3A of the Exemption Notification.

Final Conclusion: The Advance Ruling holds that the Applicant's supplies of cleaning and sweeping services and security services to the State Government hospital do not qualify for exemption under Notification No.12/2017-CT(Rate) and the corresponding State notification (Sl Nos. 3/3A), and GST is not exempt on those supplies under the stated notifications.

Advance ruling on applicability of exemption notifications - Definition of governmental authority under the exemption notification - Activity relatable to functions in the Eleventh Schedule / Article 243G - Exemption for supply of any service including composite supplies in relation to establishment and maintenance of hospitals - Admissibility of questions on rate/exemption under section 97(2)(b) of the GST Act

Admissibility of advance ruling on applicability of exemption notifications - Admissibility of questions on rate/exemption under section 97(2)(b) of the GST Act - Application admitted for advance ruling on the applicability of the Exemption Notification to the Applicant's services. - HELD THAT: - The Authority held that section 97(2)(b) empowers it to pronounce a ruling on the applicability of notifications issued under the GST Act. A question on exemption necessarily involves ascertaining the applicability of specific entries in the Exemption Notification. The Revenue's objection that advance rulings do not include questions on rate of tax was rejected and the Application was admitted after noting no other preclusive proceedings. [Paras 1]

Application admitted as a valid subject for advance ruling under section 97(2)(b).

Definition of governmental authority under the exemption notification - Establishment by government with requisite participation/control - The Applicant is a governmental authority as defined in para 2(zf) of the Exemption Notification. - HELD THAT: - Para 2(zf) defines a governmental authority to include bodies set up by a State Government with 90% or more participation to carry out functions entrusted to Panchayats under Article 243G. The Applicant was established by a State Government notification as a fully owned body to manage procurement and construction/maintenance of health facilities. Those activities fall within Sl No. 23 of the Eleventh Schedule (health and sanitation) and, read with the West Bengal Panchayat Act, 1973, are powers entrusted to Panchayats. On this basis the Applicant meets the statutory definition and is a governmental authority. [Paras 4]

Applicant is a governmental authority within the meaning of para 2(zf) of the Exemption Notification.

Activity relatable to functions in the Eleventh Schedule / Article 243G - Exemption for supply of any service including composite supplies in relation to establishment and maintenance of hospitals - The Applicant's management/administrative services for procurement and maintenance of medical facilities are eligible for exemption under Sl No. 5 of the Exemption Notification. - HELD THAT: - The Authority examined the substance of the services supplied and the scope of entries in the Eleventh Schedule. Managing procurement of drugs/equipment and construction/maintenance of health facilities are activities in relation to establishment and maintenance of hospitals and dispensaries captured by Sl No. 23. The Exemption Notification (Sl Nos. 3/3A/4/5) covers supplies of services by governmental authorities where the service is relatable to functions entrusted to Panchayats/Municipalities; Sl No. 5 expressly covers supply of any service, including composite supplies, in relation to establishment and maintenance of hospitals irrespective of the proportion of goods involved. Although specific invoices were not produced, the Authority concluded that the Applicant is eligible for exemption on supply of such services. [Paras 2, 4]

Administrative/management services supplied by the Applicant in relation to establishment and maintenance of hospitals are exempt under Sl No. 5 of the Exemption Notification.

Final Conclusion: The Authority admitted the application for advance ruling, held that the applicant is a governmental authority as defined in the Exemption Notification, and ruled that its supply of management/administrative services relating to establishment and maintenance of hospitals is exempt under Sl No. 5 of the Exemption Notification.

Mandamus - correction of bona fide error in TRAN-1 - availment of input tax credit - representation to Nodal Officer for administrative redress - judicial direction to appropriate forum without adjudication on merits

Correction of bona fide error in TRAN-1 - availment of input tax credit - representation to Nodal Officer for administrative redress - Liberty granted to the petitioner to approach the appropriate Nodal Officer for consideration of representation seeking correction in TRAN-1 to carry forward input tax credit and direction issued to the Nodal Officer to decide the representation on merits and in accordance with law within a specified time-frame. - HELD THAT: - The petitioner alleges a bona fide clerical error in filing TRAN-1 (reporting opening stock under column 7(d) instead of 7(b)), resulting in loss of input tax credit. Respondents pointed out the availability of a statutory/administrative remedy by way of representation to the designated Nodal Officer. The Court declined to entertain the matter on merits at the admission stage and instead directed the petitioner to pursue the existing administrative remedy. The petitioner was given two weeks from receipt of the order to submit the representation to the identified Nodal Officer (Nodal Officer (North), Mahatma Gandhi Road, Nungambakkam, Chennai). On receipt, the Nodal Officer is directed to consider the representation and pass appropriate orders on merits and in accordance with law within three weeks thereafter. The Court did not adjudicate the correctness of the claimed input tax credit or the merits of the request for correction; it confined its role to directing presentation and timely disposal of the representation by the proper authority.

Petitioner permitted to file representation with the appropriate Nodal Officer within two weeks; Nodal Officer to decide on merits in accordance with law within three weeks of receipt.

Dispensing notice - judicial direction to appropriate forum without joinder of all respondents - Notice to the second respondent dispensed with insofar as the writ petition is disposed at the admission stage by directing the petitioner to approach the Nodal Officer. - HELD THAT: - Having disposed of the petition by granting the petitioner liberty to make a representation to the designated Nodal Officer, the Court found it unnecessary to require formal service or notice on the second respondent. This procedural dispensation is confined to the present disposal and does not determine any substantive right against the second respondent.

Notice to the second respondent dispensed with for the limited purpose of this disposal.

Final Conclusion: Writ petition disposed at the admission stage by granting the petitioner liberty to approach the designated Nodal Officer within two weeks; the Nodal Officer to consider and decide the representation on merits and in accordance with law within three weeks of receipt; no costs.

Contempt of court - wilful disobedience - liberty to file representation - disposal in terms of earlier order - infructuous petition - rule discharged

Contempt of court - wilful disobedience - liberty to file representation - Contempt petition alleging wilful disobedience of the order granting liberty to file representation. - HELD THAT: - The respondents filed an affidavit and produced minutes/decision dated 27.05.2019 showing that the representation granted liberty by the earlier order had been considered and rejected. On production of that record in court and after hearing, the petitioner's counsel accepted that no cause of action survives for pursuing contempt proceedings and sought liberty to pursue remedies otherwise available in law. In these circumstances the contempt petition was treated as infructuous and no adjudication on wilful disobedience was required.

Contempt petition disposed of as infructuous; rule issued against the respondents discharged; petitioner granted liberty to pursue available remedies.

Final Conclusion: The contempt petition alleging wilful disobedience was disposed of as infructuous on production of affidavit and minutes showing action on the representation; the rule against the respondents is discharged and the petitioner is granted liberty to seek appropriate remedies in accordance with law.

Infructuous petition - illegal detention - notice and attendance before authority - liberty to pursue alternative remedies

Infructuous petition - illegal detention - notice and attendance before authority - liberty to pursue alternative remedies - Disposition of public law petition challenging alleged detention by departmental officers where the department states the person was called by notice and permitted to go home. - HELD THAT: - The Court recorded the departmental case that the individual was summoned by written notice in connection with alleged bogus billing and GST evasion and, after attendance on 22.08.2019 and 23.08.2019, was permitted to go home. The petitioner alleged that despite being allowed to go home he was kept under detention for two days. Accepting the departmental position that the person had been called by notice and allowed to leave, the Court declined to adjudicate the contention of illegal detention on the merits and disposed of the petition as rendered infructuous. The Court expressly left the petitioner at liberty to pursue any other legal remedies available to challenge the alleged detention or related grievances.

Petition disposed of as rendered infructuous; petitioner permitted to pursue other legal remedies concerning the alleged detention.

Final Conclusion: The petition was disposed of as having become infructuous on the departmental assertion that the person was summoned by notice and allowed to go home; the petitioner is left free to seek other appropriate remedies regarding the allegation of detention.

Cancellation of GST registration - Revocation of GST registration - Writ in the nature of mandamus - Mootness / Infructuous petition

Cancellation of GST registration - Revocation of GST registration - Writ in the nature of mandamus - Mootness / Infructuous petition - Petition seeking mandamus for revocation of GST registration disposed as infructuous after administrative acceptance of revocation. - HELD THAT: - The petitioner alleged cancellation of its GST registration without notice and sought a writ in the nature of mandamus directing respondents to revoke the cancellation. At the hearing, counsel for the petitioner informed the Court that the request for revocation had been accepted; this statement was uncontroverted by respondents' counsel. Given that the relief sought - revocation of the cancellation - has been granted administratively, the writ petition no longer presents a live controversy and is rendered moot. The Court therefore disposed of the petition as infructuous.

Petition disposed of as infructuous because the revocation of GST registration sought by the petitioner had been accepted and the claim was no longer live.

Final Conclusion: The writ petition praying for direction to revoke cancellation of GST registration was disposed of as infructuous after petitioner conceded that the revocation had been accepted and the respondents did not controvert that position.

Quashing of recovery notice - exercise of writ jurisdiction under Article 226 - admission of tax liability - no warrant for interference in admitted liability - scope for grant of installment schedule for tax recovery

Quashing of recovery notice - exercise of writ jurisdiction under Article 226 - admission of tax liability - Petition seeking quashing of the recovery notice issued for deposit of GST was liable to be dismissed where the petitioner did not dispute the underlying tax liability. - HELD THAT: - The petitioner challenged the recovery notice issued by the Garrison Engineer (MES) in respect of GST payable on a contract. The petitioner's counsel expressly did not dispute the liability to deposit GST pertaining to the work that was executed and for which the final bill was paid. In such circumstances the High Court found no justiciable ground to exercise writ jurisdiction under Article 226 to quash the recovery notice: where liability is admitted, there is no warrant for interference with the recovery process.

Writ petition for quashing the recovery notice dismissed for want of merit on the ground of admitted liability.

Scope for grant of installment schedule for tax recovery - no warrant for interference in admitted liability - Prayer for an indulgence in the form of an installment schedule for payment of the GST amount was refused for want of any legal provision or authority cited in support of such relief. - HELD THAT: - Counsel sought an installment schedule to afford the petitioner time to deposit the admitted GST liability. The Court recorded that no statutory provision or legal basis was placed before it to support such a request and therefore declined to accede to the prayer. The refusal was founded on the absence of any cited provision empowering the Court to grant the requested indulgence in the circumstances of admitted liability.

Request for grant of installment schedule denied for lack of legal basis.

Final Conclusion: The petition under Article 226 challenging the recovery notice dated 12.06.2019 is dismissed: the Court declined to quash the notice as the GST liability was not disputed and refused to grant an instalment schedule in the absence of any legal provision authorising such relief.

Deemed registration under Section 12A - directory or mandatory provision - HELD THAT:- Additional Solicitor General has submitted that the issue as to whether the provisions of Section 12AA of the Income Tax Act, 1961 are directory or mandatory need to be considered.

Delay condoned.

Issue notice. Tag with SLP(C) [2019 (4) TMI 1750 - SC ORDER]

Exemption u/s 11 - employment facilitation as charitable activity u/s 2(15) - application u/s 12AA - The primary object of the Trust is to conduct work in area of research, studies, training, education, health etc. on a non-profit basis, only for charitable purposes - Tribunal's order setting aside the DIT (Exemptions) and directing grant of registration to the assessee is upheld by HC [2019 (1) TMI 1619 - BOMBAY HIGH COURT] - HELD THAT:- SLP dismissed.

Addition u/s 69A - source of cash deposits - entries made in the cash flow charts were not substantiated by any evidence - contention raised by learned counsel for the appellant that the authorities have not considered the figure of purchase and closing stock as per the VAT return deserves rejection - HELD THAT:- SLP rejected.

Application of section 14A of the Income-tax Act to disallow interest on borrowed funds - rule 8D of the Income-tax Rules and computation of disallowance - availability of interest-free funds as determinative for disallowance under section 14A - No notice served on the respondent in the appeal filed by the Department against the applicant (who was respondent in the appeal) - HELD THAT:- Taking into consideration the fact that the applicant was not served in the appeal, ends of justice be served in recalling judgment . We do so accordingly. The miscellaneous application is disposed of. Let the appeal be listed for consideration.

Interest deduction - commercial expediency - diversion of funds - attribution in case of mixed funds - business purpose - adequacy of security and guarantor liability - perverse finding

Interest deduction - commercial expediency - diversion of funds - business purpose - adequacy of security and guarantor liability - perverse finding - Whether interest paid on borrowed funds is disallowable where the assessee advanced interest-free funds to her husband's dhall mill as a measure of commercial expediency and whether the Tribunal and CIT(A) were justified in treating such advances as diversion of borrowed funds. - HELD THAT: - The Court examined whether the disallowance of interest could be sustained where the assessee had advanced funds to her husband's dhall mill but derived commercial advantage in timely delivery, assured quality processing and discounted processing rates, and where the husband stood as guarantor for the assessee's cash credit facility. Reliance was placed on precedents recognising that interest on borrowed capital is not to be disallowed if advances to related concerns are from the assessee's own funds or are made for commercial expediency and there is a business purpose in the advancement. The Court found no material on record to support the conclusion of the CIT(A) and Tribunal that processing of dhall did not require substantial working capital or technical skill, or that there was diversion of borrowed funds. The adequacy of collateral was held to be a matter for the bank and the husband's guarantor liability was not disbelieved. The Court characterised the findings of the lower authorities as based on personal opinion and therefore perverse, noting that authorities must decide on the basis of material and return of income rather than conjecture. [Paras 10, 11, 12, 13, 14]

Findings of CIT(A) and the Tribunal that disallowed interest as diversion of funds and that the husband's milling activity did not justify the advances were perverse; appeal allowed and substantial questions answered in favour of the assessee.

Final Conclusion: The High Court allowed the appeal, holding that the disallowance of interest by the CIT(A) and the Tribunal was perverse for want of material and that interest on borrowed funds could not be disallowed where advances to the husband's mill were made as a commercial expedient with a business purpose and the husband stood as guarantor; appeal allowed.

Right of cross-examination - use of statements recorded during search and seizure as evidence in assessment proceedings - proceedings before income-tax authorities treated as judicial proceedings under Section 136 - enforcement of attendance and examination under Section 131 - remand for fresh cross-examination and re-adjudication

Right of cross-examination - use of statements recorded during search and seizure as evidence in assessment proceedings - Denial of opportunity to cross-examine Mr. Gopal Kondawar and the effect of relying on his recorded statements without affording cross-examination. - HELD THAT: - The Court found that the assessee had specifically raised the grievance about denial of an opportunity to cross-examine the director whose statements were relied upon. The record shows an asserted willingness to cross-examine and that the statements of the witness formed the foundation for the inclusion in the assessee's income. The Court held that materials (statements) recorded during investigation and relied upon in assessment cannot be used against the assessee without affording an opportunity to challenge their contents by cross-examination. Applying the principle that proceedings before income-tax authorities are equated to judicial proceedings and having regard to the powers to secure attendance and examine witnesses, the Court concluded that the failure to afford cross-examination was prejudicial and amounted to a serious flaw requiring setting aside of the impugned orders and remand for cross-examination. [Paras 8, 10, 12, 13]

Grievance about denial of opportunity to cross-examine was accepted; impugned orders set aside and matter remanded to the Assistant Commissioner to secure the presence of Mr. Gopal Kondawar for cross-examination and to pass fresh orders on merits.

Supply of documents during appellate proceedings - Allegation of non-supply of documents, including statements, to the assessee during appellate proceedings. - HELD THAT: - The Court observed that the allegation of non-supply of documents was not pressed before it and, on perusal of the record, found that the Commissioner (Appeals) had furnished copies of the witness statements to the assessee during appellate proceedings. The appellate order contains an explicit observation that copies were given, and thus the complaint on this ground was not sustained. [Paras 7, 9]

Complaint of non-supply of documents was rejected; records show statements were supplied to the assessee during appellate proceedings.

Final Conclusion: The appeals are partly allowed: the orders dated 27th March 2015, 30th November 2016 and 29th June 2017 are set aside. The matter is remanded to the Assistant Commissioner of Income Tax, Central Circle 2(1), Nagpur to secure the presence of Mr. Gopal Kondawar for cross-examination, permit the assessee to file any additional documents or explanations, and to pass appropriate orders on merits; parties to bear their own costs.

Liability to deduct tax at source - definition of royalty and fees for technical services - make available clause in DTAA - application of DTAA over domestic law (section 90(2)) - treatment of cross border training and reimbursement payments - grossing up under section 195A - section 206AA and treaty override

Liability to deduct tax at source - definition of royalty and fees for technical services - application of DTAA over domestic law (section 90(2)) - TDS liability on purchase of copyrighted software and related IT support charges - HELD THAT: - The Tribunal applied its decision in John Deere India Pvt. Ltd. and held that purchase of a copyrighted article (software licence) where no copyright was transferred is not 'royalty' under the DTAA; the retrospective amendment to the domestic definition of 'royalty' cannot be extended to alter the unamended DTAA definition. IT support/backup/data storage charges were held not to constitute royalty/FTS where no technology was 'made available' to the Indian recipient. Consequently, where the DTAA definition does not cover the payment as royalty/FTS, the more beneficial treaty position governs and the assessee cannot be treated as in default for non deduction of tax.

No requirement to deduct TDS on purchase of copyrighted software licences and on the connected IT support charges where DTAA and factual matrix show absence of 'royalty' or 'make available' of technology; demands under ss.201(1)/201(1A) cancelled in respect of such payments.

Treatment of cross border training and reimbursement payments - make available clause in DTAA - definition of royalty and fees for technical services - TDS liability on training fees and reimbursements to non residents - HELD THAT: - Tribunal classified payees into three categories: (I) jurisdictions whose DTAAs contain no FTS article (e.g. Malaysia, Thailand, Indonesia, UAE, Saudi Arabia) - where treaty is silent on FTS and recipients have no PE in India, treaty prevails and amounts are not taxable in India; (II) jurisdictions whose DTAAs contain an FTS article without a 'make available' condition (e.g. China, Denmark, Italy, Germany) - such receipts are taxable under the treaty even without PE and TDS obligation exists; (III) jurisdictions whose DTAAs contain an FTS article with 'make available' condition (e.g. Singapore, USA, Switzerland, Sweden) - amounts are taxable only if the service results in transfer/making available of technology, and in absence of evidence of 'make available' there is no TDS obligation. The onus to establish transfer/making available of technology lies on the Revenue.

TDS not required on training/reimbursement payments to category I and to category III recipients where 'make available' is not satisfied; TDS required for payments to category II recipients; Assessing Officer to recompute/determine accordingly.

Liability to deduct tax at source - make available clause in DTAA - TDS on design services and technical consultancy to recipients in Switzerland and Singapore - HELD THAT: - CIT(A)'s finding that services did not satisfy the 'make available' requirement under the respective DTAAs for Switzerland and Singapore was accepted. The Department did not controvert the finding that no technology was made available to the assessee, and therefore the payments could not be taxed under the FTS/royalty articles of those treaties.

Demand for tax and interest in respect of design and technical consultancy payments to recipients in Switzerland and Singapore deleted.

Liability to deduct tax at source - application of DTAA over domestic law (section 90(2)) - TDS on payments to payees in jurisdictions lacking an FTS article (no DTAA provision) or where domestic law governs - HELD THAT: - For payments to residents of countries with no specific FTS article in the DTAA (e.g. Indonesia, Philippines), the CIT(A) and Tribunal held domestic law applies and such receipts may be taxable in India; CIT(A) directed the Assessing Officer to verify factual claims where payments related to material purchase, freight or machinery parts to ascertain non taxable character.

Payments to jurisdictions without FTS article are taxable under domestic law subject to verification; Assessing Officer directed to examine character of particular payments (e.g., material purchases) and act accordingly.

Grossing up under section 195A - Grossing up payments where the assessee allegedly bore foreign payee's tax liability - HELD THAT: - AO had grossed up payments under s.195A on the premise that the assessee bore the TDS liability. CIT(A) found no material on record showing an agreement by the assessee to bear the foreign payee's tax liability and directed that provisions of s.195A should not have been applied absent such proof. Revenue did not successfully challenge this finding.

Grossing up reversed where no evidence was produced that the assessee agreed to bear tax; AO to apply s.195A only where agreement/obligation to bear tax is established.

Section 206AA and treaty override - application of DTAA over domestic law (section 90(2)) - Applicability of s.206AA higher withholding rates where DTAA rates are lower - HELD THAT: - Tribunal held that beneficial provisions of the DTAA override domestic provisions like s.206AA; where treaty rates apply to the assessee/deductee, s.206AA cannot be invoked to impose higher withholding rates merely because PAN was not furnished, consistent with precedents relied upon by the Tribunal.

Provisions of s.206AA not applied where DTAA rates are more beneficial; demands/interest based solely on s.206AA computation deleted.

Liability to deduct tax at source - Remand to CIT(A) for verification of certain items and service charge claim - HELD THAT: - Certain issues were not finally decided on merits and were remitted: (i) service charges for assessment year 2010 11 where CIT(A) had not decided the matter; (ii) Assessing Officer directed to verify whether particular payments were for material purchase or machinery parts (which would negate TDS liability) and to verify whether TDS had already been deducted and paid in some instances. These matters require fact finding and fresh consideration by CIT(A) or AO with opportunity to the assessee.

Issues remitted for fresh adjudication and verification by CIT(A)/AO with opportunity to the assessee; final tax consequences to be determined thereafter.

Final Conclusion: Applying treaty provisions and settled precedents, the Tribunal held that (a) purchases of copyrighted software licences and related IT support did not attract TDS where DTAA definitions exclude 'royalty' or no technology was 'made available'; (b) cross border training/reimbursement payments require treaty specific analysis - not taxable where DTAA is silent on FTS and recipient has no PE, taxable where DTAA has FTS without 'make available', and taxable only upon proof of 'make available' where the clause exists; (c) grossing up under s.195A was not leviable in absence of an agreement to bear tax; (d) s.206AA cannot override more beneficial DTAA rates; consequential demands were cancelled or remitted for verification as directed and, on that basis, the assessee appeals were partly allowed and revenue appeals dismissed.

Validity of assessment under section 143(3) r.w.s. 147 - Requirement of notice under section 143(2) - Assessment to the best of judgment under section 144 where no return is filed - Non-curability of mandatory notice requirement by section 292B

Validity of assessment under section 143(3) r.w.s. 147 - Requirement of notice under section 143(2) - Assessment to the best of judgment under section 144 where no return is filed - Non-curability of mandatory notice requirement by section 292B - Assessment framed under section 143(3) r.w.s. 147 in the absence of a notice under section 143(2) and without any return filed was valid or otherwise, and whether section 292B could cure the defect - HELD THAT: - The Tribunal held that section 143(3) expressly contemplates completion of assessment after issuance of the notice under sub section (2); where no return has been furnished under section 139 or in response to notice under section 142(1), the precondition for issuing a notice under section 143(2) does not exist and consequently no valid assessment can be made under section 143(3) (paragraph 15). In such circumstances the statutory alternative is section 144, which empowers the Assessing Officer to make a best judgment assessment after giving an opportunity of hearing where the assessee has failed to file a return or comply with notices (paragraphs 16-18). The Tribunal applied the reasoning of earlier coordinate decisions including S. Kumar Enterprises (Synfabs) Ltd. and the Special Bench view in Raj Kumar Chawla that procedures post section 139 must be followed on reopening and that reopening does not create an independent species of assessment under section 147; rather, the AO must follow the procedural routes of sections 142, 143 or 144 as applicable (paragraph 20). On these facts, because no valid return existed and no notice under section 143(2) was issued, the reassessment under section 143(3) r.w.s. 147 was vitiated (paragraphs 15, 18). The Tribunal further held that section 292B cannot be invoked to validate or cure the fundamental illegality arising from non issuance of the mandatory notice under section 143(2) (paragraph 21). The additional ground challenging jurisdiction was therefore allowed and other grounds were left undecided. [Paras 15, 18, 21]

Assessment for AY 2006-07 framed under section 143(3) r.w.s. 147 without a notice under section 143(2) and without a return was invalid; section 144 was the correct route and section 292B could not cure the defect

Final Conclusion: The additional ground challenging the validity of the assessment was allowed and the assessment order for assessment year 2006-07 framed under section 143(3) r.w.s. 147 was set aside as invalid; other grounds were not adjudicated.

Allowability of expenditure wholly and exclusively for business - Onus on Assessing Officer to prove excessiveness or non-genuineness of claimed expenses - Mercantile system of accounting and accrual of liabilities - Ad hoc disallowance without supporting adverse material - Admissibility of evidence and Rule 46A of the Income tax Rules

Allowability of expenditure wholly and exclusively for business - Onus on Assessing Officer to prove excessiveness or non-genuineness of claimed expenses - Ad hoc disallowance without supporting adverse material - Deletion of addition made by Assessing Officer of Rs. 62,70,485/- in respect of operating expenses of toll business - HELD THAT: - The Tribunal found that the Assessing Officer made the disallowance by mechanically applying the operating cost percentage of the earlier year as directed by the Addl. CIT without independent examination or material establishing that the expenses were not incurred wholly and exclusively for business. The onus to show that the expenditure was excessive or not genuine lay on the Assessing Officer; no adverse material was placed on record to justify the ad hoc addition. Having regard to section 37 principles and the absence of any finding rejecting the books of account, the appellate authority's conclusion that the disallowance was unjustified was upheld. [Paras 4, 5, 7]

Addition of Rs. 62,70,485/- deleted; Revenue appeal dismissed on this issue.

Mercantile system of accounting and accrual of liabilities - Admissibility of evidence and Rule 46A of the Income tax Rules - Deletion of addition of Rs. 1,27,07,644/- treated by Assessing Officer as not deductible because actually paid in April 2014 - HELD THAT: - The appellate authority held and the Tribunal agreed that the assessee followed mercantile accounting and had accounted for the last week's toll receipts in the year; the corresponding toll plaza liability under the NHAI contract had therefore accrued in the year and was allowable. The Tribunal also noted that the documents relied upon by the CIT(A) originated from a letter furnished to the Assessing Officer during assessment proceedings, and no fresh evidence was admitted in breach of Rule 46A. On these findings the disallowance was unjustified and deleted. [Paras 4]

Addition of Rs. 1,27,07,644/- deleted; Revenue appeal dismissed on this issue.

Onus on Assessing Officer to prove excessiveness or non-genuineness of claimed expenses - Ad hoc disallowance without supporting adverse material - Deletion of ad hoc disallowance of 20% of salary and wages (Rs. 2,21,02,473/-) imposed by the Assessing Officer - HELD THAT: - The Tribunal accepted the CIT(A)'s finding that the Assessing Officer made an adhoc 20% disallowance without producing material to demonstrate that salary and wages were excessive or not genuine. The assessee's audited books and comparative salary details were on record and the AO had not rejected the books under section 145(3). Reasonableness of business expenses must be viewed from a commercial standpoint and cannot be reduced by conjecture. In absence of contrary material, the ad hoc disallowance was unwarranted and was therefore deleted. [Paras 4]

Ad hoc disallowance of salary and wages deleted; Revenue appeal dismissed on this issue.

Final Conclusion: The Revenue's appeals are dismissed and the assessee's cross objections are dismissed as supportive; the additions/disallowances in relation to toll operating expenses, toll plaza payable, and ad hoc salary disallowance were held unjustified and deleted.

Infrastructure facility - deduction under section 80IA(4) - Container Freight Station (CFS) as part of port / inland port - CBDT clarifications on ICD/CFS and port - meaning of statutory term not to be imported from other enactments

Deduction under section 80IA(4) - Container Freight Station (CFS) as part of port / inland port - CBDT clarifications on ICD/CFS and port - Whether income of the assessee from operation of a Container Freight Station (CFS) is eligible for deduction under section 80IA(4) for Assessment Year 2014-15 - HELD THAT: - The Tribunal examined the Assessing Officer's conclusion that the CFS was not located within port precincts and therefore did not qualify as an "infrastructure facility" for the purposes of section 80IA(4). The AO relied upon CBDT Circulars and the literal requirement that the structure form part of the port; the AO found the assessee's CFS to be an "extended arm" away from port premises and not within the port. On appeal the CIT(A) followed coordinate bench decisions in the assessee's own earlier years and High Court precedents treating ICDs/CFSs as falling within the ambit of "inland port"/infrastructure where factual and regulatory approvals warranted. The Tribunal considered the authorities relied upon, including the decision of the Hon'ble Supreme Court in Container Corporation of India Ltd., and the CBDT/CBEC clarifications and case law which recognise that ICDs and, in appropriate circumstances, CFSs may be treated as inland ports or part of port-related infrastructure. Weighing the coordinate-bench precedents in the assessee's own cases and the judicial authorities which have upheld eligibility where regulatory approvals/notifications and the nature of activity satisfy the statutory scheme, the Tribunal found no infirmity in the CIT(A)'s direction to allow the claim. The Tribunal therefore followed the earlier decisions in the assessee's own cases and the authoritative pronouncements permitting deduction where the factual and regulatory matrix support characterisation as an infrastructure facility.

Appeal dismissed; Assessing Officer directed to allow the deduction claimed under section 80IA(4).

Final Conclusion: Revenue's appeal is dismissed; the Tribunal, following coordinate-bench precedents and judicial authority, upholds the CIT(A)'s direction to allow the assessee's deduction under section 80IA(4) for Assessment Year 2014-15.

Unexplained expenditure under section 69C - Peak credit theory - Evidentiary value of seized documents and period relevance - Burden of proof and onus to prove genuineness of transactions - Opportunity for cross-examination and principles of natural justice

Unexplained expenditure under section 69C - Peak credit theory - Evidentiary value of seized documents and period relevance - Burden of proof and onus to prove genuineness of transactions - Deletion of addition under section 69C made by the AO for A.Y.2007-08 in respect of disputed purchases and related commission - HELD THAT: - The Tribunal held that the seized document on which the AO heavily relied related to the period 1.1.2008 to 31.12.2008 and therefore could not be used to sustain an addition for A.Y.2007-08. The assessee produced purchase invoices, ledger entries, bank payments by account-payee cheques, stock register, export invoices certified by customs, and the suppliers appeared before the AO and confirmed supplies; these transactions were reflected in the books. The Tribunal found that the AO's application of the peak-credit theory was inappropriate where transactions are recorded in regular books and payments are made through banking channels. Further, an addition under section 69C presupposes incurrence of expenditure but dispute as to source; since the source was explained from books and bank payments, section 69C could not be invoked. Having considered these determinative points, the Tribunal upheld the CIT(A)'s deletion of the addition and the corresponding commission disallowance. [Paras 8]

Addition of Rs. 1,31,99,794/- made under section 69C for A.Y.2007-08 and corresponding commission addition deleted

Unexplained expenditure under section 69C - Peak credit theory - Evidentiary value of seized documents and period relevance - Burden of proof and onus to prove genuineness of transactions - Opportunity for cross-examination and principles of natural justice - Deletion of addition under section 69C made by the AO for A.Y.2009-10 in respect of disputed purchases and related commission - HELD THAT: - For A.Y.2009-10 the Tribunal found that the assessee furnished comprehensive documentary evidence - purchase invoices, ledgers, bank statements, stock register, export invoices, quantitative tallies, affidavits and the suppliers' statements recorded before the AO - establishing purchase and corresponding export sales. The AO's reliance on a seized paper and pen-drive entries was held to be misplaced because the seized paper could not be correlated to the assessee's transactions and the pen-drive entries did not establish that the assessee received cash back or that the suppliers provided accommodation entries to the assessee. The Tribunal reiterated that peak-credit methodology is inapplicable where transactions are in books and payments are by account-payee cheques, and that section 69C cannot be invoked when the source is explained from regular books. The Tribunal also observed that the AO had not afforded opportunity to the assessee to cross-examine the deponents whose statements formed the basis for reassessment, a factor that independently undermined the reassessment; applying these reasons, the CIT(A)'s deletion of the addition and the commission was affirmed. [Paras 9]

Addition of Rs. 3,29,30,159/- made under section 69C for A.Y.2009-10 and corresponding commission addition deleted

Final Conclusion: Revenue appeals dismissed; additions made by the AO under section 69C for A.Y.2007-08 and A.Y.2009-10 and corresponding commission additions deleted; cross objections by the assessee dismissed as not pressed.

Accrual of income - bonafide change in method of accounting - matching of revenue and cost - realisation/probability of realisation in accrual accounting - deductibility of royalty linked to assessability of advance billing - verification of AIR/TDS mismatches in accordance with CBDT Instruction No.05/2013 - remand for verification by Assessing Officer

Accrual of income - bonafide change in method of accounting - matching of revenue and cost - Deletion of addition on account of advance billings of Rs. 6,09,38,321 on the ground that the amount had not accrued as income in the year - HELD THAT: - The Tribunal applied the coordinate-bench decision in the assessee's own case for an earlier year, which held that accrual must be real and income is taxable when it has truly accrued. Spreading software sale proceeds over the licence period was rejected where receipt and accrual occurred on receipt; there was no demonstrated future committed expenditure to justify deferral and the changed accounting method that perpetually deferred a large part of revenue was not bona fide and tended to distort taxable income. On identical facts the Tribunal followed that precedent and affirmed the addition. [Paras 2]

Grounds 1.1 and 1.2 dismissed and the addition on account of advance billings upheld.

Deductibility of royalty linked to assessability of advance billing - Allowability of deduction for royalty attributable to the advance billing of Rs. 6,09,38,321 - HELD THAT: - The Tribunal followed a coordinate-bench decision for the immediately succeeding assessment year which held that if the assessee accepts assessability of entire billing as revenue in the current year, the corresponding royalty payable under the agreement is allowable in that year (the DRP had indicated entitlement to 30% deduction by way of royalty if assessability is accepted). Applying that ratio on identical facts, the Tribunal directed the Assessing Officer to allow the royalty deduction accordingly. [Paras 3]

Ground 1.3 allowed for statistical purposes and the AO directed to allow the royalty deduction in the year in accordance with law.

Verification of AIR/TDS mismatches in accordance with CBDT Instruction No.05/2013 - remand for verification by Assessing Officer - Addition of Rs. 14,31,988 based on alleged unreconciled AIR entries - HELD THAT: - There was a factual dispute whether the amounts reported in AIR had been accounted for and offered to tax. Having regard to CBDT Instruction No.05/2013 (requiring verification of TDS/TDS-certificate mismatches and credit where deductor has deposited TDS), the Tribunal held that the factual reconciliation must be undertaken by the Assessing Officer. The matter was therefore restored to the file of the AO for fresh verification and decision after giving the assessee an opportunity and allowing it to produce relevant evidence. [Paras 4]

Second ground allowed for statistical purposes by restoring the issue to the AO for fresh verification in accordance with CBDT Instruction No.05/2013.

Final Conclusion: The appeal is partly allowed: additions for advance billings were affirmed on the merits; the claim for royalty deduction was allowed for statistical purposes with direction to the AO to grant the deduction if the billing is taxed in the year; and the disputed AIR/TDS entries were remitted to the AO for verification in accordance with CBDT Instruction No.05/2013.

Commission on accommodation entries - Determination of reasonable rate of commission in clandestine transactions - Exclusion of intra-group transactions in computation - Adoption of coordinate Bench precedent in group cases - Remand for fresh segregation and computation

Commission on accommodation entries - Determination of reasonable rate of commission in clandestine transactions - Adoption of coordinate Bench precedent in group cases - Rate of commission to be adopted for amounts found to be accommodation entries - HELD THAT: - The Tribunal followed the coordinate Bench decisions in the Tarun Goyal group of cases which, having considered prior group precedents and the nature of such clandestine activities, fixed a reasonable rate of commission at 0.50%. The Tribunal directed that the Assessing Officer should adopt that rate in the present case for computation of commission income, treating the present matter consistently with the group decisions. The Tribunal observed that, although rates in earlier orders varied, for the purpose of finality and fairness 0.50% should be applied. [Paras 6, 7]

Assessing Officer to determine commission income by adopting the rate of 0.50% as per the coordinate Bench precedent.

Exclusion of intra-group transactions in computation - Remand for fresh segregation and computation - Whether intra-group entries are to be excluded and the matter remanded for fresh computation after segregation - HELD THAT: - The Tribunal recalled earlier directions in the group cases that inter group (intra group) entries must be excluded from the computation of commission on accommodation entries. Noting that the assessee had not furnished segregation between amounts representing accommodation entries to outside parties and intra group transfers, the Tribunal remanded the issue to the Assessing Officer for fresh adjudication. The AO was directed to provide the assessee an opportunity of being heard, exclude intra group entries as guided by the group decisions, and then compute the commission income applying the 0.50% rate. [Paras 6, 7]

Matter remanded to the Assessing Officer to exclude intra group entries, afford the assessee opportunity of hearing, and compute commission income afresh applying 0.50%.

Final Conclusion: Appeal allowed for statistical purposes; AO directed to exclude intra group entries, adopt commission rate of 0.50% in accordance with the coordinate Bench precedents in the Tarun Goyal group, and recompute the commission income for AY 2010-11 after providing the assessee an opportunity of being heard.

Deductibility of penalties and fines as business expenditure in international air transport (Explanation to sub section (1) of Section 37 considered) - Direct and proximate nexus between business operations and loss (business loss under Section 28 / business expenditure doctrine) - Interest on short term deposits to be treated as business income where deposits arise from business receipts and are used for business purposes - Application of Section 14A to dividend income where no exempt income is received in the relevant previous year - Deductibility of provision for Frequent Flyer Programme as an accrued business liability (not contingent) - Remand for fresh verification of revenue recognition where accounting treatment was provisional and facts crystallised later - Tax treatment of write back/credit to Profit & Loss Account on transfer from provision for obsolescence

Deductibility of penalties and fines as business expenditure in international air transport (Explanation to sub section (1) of Section 37 considered) - Direct and proximate nexus between business operations and loss (business loss under Section 28 / business expenditure doctrine) - Allowability of penalties/fines paid at foreign airports as deduction in computing business income - HELD THAT: - The Tribunal found that the penalties and fines paid at foreign airports arose on account of passengers' deficiency of travel documents and not by any illegal act or infraction committed by the assessee. The liability to pay such amounts arises in the ordinary course of international air transport business by operation of applicable international/regulatory obligations and commercial expediency to avoid seizure or reputational loss. Since the assessee carried on its business lawfully, exercised due care in document checks, and the payments have a direct and proximate nexus to its business operations, the amounts are incidental to and incurred for the purpose of business and are allowable as business expenditure and, alternatively, as business loss under Section 28. The Explanation to Section 37(1) excluding expenditure for an unlawful or prohibited purpose does not apply where the expenditure is not in itself prohibited or the assessee has not committed the offence. [Paras 11, 12, 15, 16, 17]

Penalty/fine paid at foreign airports allowed as deductible business expenditure / business loss; disallowance deleted.

Interest on short term deposits to be treated as business income where deposits arise from business receipts and are used for business purposes - Characterisation of interest on short term deposits as business income rather than income from other sources - HELD THAT: - On the facts, the Tribunal found (following its earlier decisions affirmed by the High Court) that the funds generating the interest were proceeds of the assessee's business abroad and were retained and deployed for day to day administration and business purposes (short term/current deposits) with permission where required. Because the deposits were used in the course of business and not surplus funds unrelated to business needs, the interest thereon bore a direct business nexus and was taxable as business income. [Paras 20, 22]

Interest on short term deposits to be treated as business income; AO's classification under 'other sources' reversed.

Application of Section 14A to dividend income where no exempt income is received in the relevant previous year - Whether Section 14A disallowance applies to dividends on trade investments where no exempt income was received in the year - HELD THAT: - The Tribunal followed the principle that Section 14A is triggered only when exempt income has been actually received (or is includible in total income but exempt) in the relevant previous year. The authorities had recorded that no exempt income was earned by the assessee in the year; consequently, expenditure could not be disallowed under Section 14A in respect of dividends where no exempt income formed part of the total income for that year. [Paras 25]

Provisions of Section 14A not attracted; disallowance on account of dividend on trade investments deleted.

Deductibility of provision for Frequent Flyer Programme as an accrued business liability (not contingent) - Allowability of the provision made for the Frequent Flyer Programme - HELD THAT: - The Tribunal accepted that liability in respect of Frequent Flyer Programme miles accrues simultaneously with a passenger undertaking travel on a fare paying ticket and therefore is not a contingent liability. Following consistent precedents of the Tribunal in airline cases, the provision represents an accrued business obligation incidental to the conduct of the airline's business and is allowable. [Paras 27, 28]

Disallowance of provision for Frequent Flyer Programme deleted; provision treated as allowable business liability.

Remand for fresh verification of revenue recognition where accounting treatment was provisional and facts crystallised later - Treatment of disputed bills/invoices raised for reimbursement pending resolution and whether amount accrued in the year - HELD THAT: - The Tribunal noted that the invoices related to reimbursement claims against lessors and that accounting crystallised subsequently (settlement in October 2008). In view of factual developments and the parties' agreement, the Tribunal remanded the issue to the Assessing Officer for fresh verification and adjudication in accordance with law to determine the correct year of recognition. [Paras 32]

Matter remanded to the Assessing Officer for fresh verification and adjudication; issue treated as allowed for statistical purposes.

Tax treatment of write back/credit to Profit & Loss Account on transfer from provision for obsolescence - Whether excess provision for obsolescence credited to Profit & Loss Account and excluded in computation should be added back to income - HELD THAT: - The Tribunal followed the earlier appellate decisions in the assessee's own case for preceding years where similar transfers from provision for obsolescence were never allowed as deduction in computation of income. Given identical facts and consistent past treatment (where AO had not added back such credits in earlier years and Revenue did not prosecute appeals), the Tribunal held that amounts transferred to P&L from provision for obsolescence could not be treated as income and added back in the assessment year under consideration. [Paras 34, 35, 36]

Addition on account of excess provision for obsolescence deleted; AO directed to delete the addition.

Final Conclusion: For AY 2007 08 the Tribunal: allowed deduction of foreign airport penalties/fines as business expenditure; treated interest on short term deposits as business income; held Section 14A inapplicable where no exempt income was received; allowed the Frequent Flyer Programme provision; remanded the disputed bills matter to the AO for verification; and deleted the addition relating to write back of obsolescence provision. The Revenue appeal is dismissed and the assessee's appeal is partly allowed.

Penalty under section 271(1)(c) r.w. section 274 - Furnishing inaccurate particulars of income - Concealment of income - Disclosure of particulars in the return - Bonafide belief in claim - Allowability of interest under section 36(1)(iii) - Precedent that non-acceptance of a disclosed claim does not automatically attract penalty

Penalty under section 271(1)(c) r.w. section 274 - Furnishing inaccurate particulars of income - Disclosure of particulars in the return - Bonafide belief in claim - Precedent that non-acceptance of a disclosed claim does not automatically attract penalty - Whether penalty under section 271(1)(c) r.w. section 274 can be sustained where interest expenditure was disclosed in the return and claimed bona fide though later disallowed by the Assessing Officer - HELD THAT: - The Tribunal found that the assessee had filed complete particulars of income and audited accounts disclosing the claimed interest expenditure. The interest related to funds borrowed from a director and invested (out of mixed own and borrowed funds) in shares of a group company for long term business prospects. The assessee consistently explained the nature of the transactions before the AO, CIT(A) and the Tribunal and maintained a bona fide belief in the claim under section 36(1)(iii). Reliance was placed on the principle that mere non acceptance of a disclosed claim by the Assessing Officer does not, by itself, justify imposition of penalty under section 271(1)(c); only nondisclosure or furnishing of inaccurate particulars or concealment would attract penalty. On the facts the Tribunal concluded there was no concealment or furnishing of inaccurate particulars and the explanation was bonafide, hence penalty was not exigible.

Penalty under section 271(1)(c) r.w. section 274 deleted and the assessee's appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, deleted the penalty imposed under section 271(1)(c) r.w. section 274 for A.Y. 2008-09, holding that the interest claim was disclosed and bona fide and mere non-acceptance by the revenue did not warrant penalty.

Writ jurisdiction under Article 226 - Alternative remedy by statutory appeal - Appellate adjudication by CESTAT - Remand for adjudication of disputed facts (forgery/market inquiry) - Limitation not to be raised

Writ jurisdiction under Article 226 - Alternative remedy by statutory appeal - Appropriateness of exercise of writ jurisdiction when an alternative statutory appeal remedy is available - HELD THAT: - The High Court observed that although the petitioners challenged the adjudication and the Appellate Authority's order, the factual controversies (including the authenticity of the Market Inquiry Report) are matters within the competence of the appellate forum. The court found it inappropriate to decide the disputed factual and evidentiary questions while exercising jurisdiction under Article 226 and therefore declined to adjudicate the merits of those factual disputes in writ proceedings. The petitioners were relegated to pursue the available statutory remedy of appeal before the CESTAT, which the court noted is competent to examine all issues raised by the petitioners. [Paras 10]

Writ petition not entertained on merits; petitioners relegated to statutory appeal before the CESTAT.

Appellate adjudication by CESTAT - Remand for adjudication of disputed facts (forgery/market inquiry) - Limitation not to be raised - Admission of parties and consent to relief - Directions to the CESTAT regarding filing and expeditious disposal of appeals and treatment of limitation and contested factual issues - HELD THAT: - The Court directed that the petitioners be permitted to file their appeals before the CESTAT, Chandigarh Bench, within one month from receipt of certified copy of the order. The Tribunal was directed to preferablly decide the appeals within six months in accordance with law. The Court expressly left the contentious factual questions-including the asserted forgery of the Market Inquiry Report-for adjudication by the Tribunal and indicated that the Tribunal should deal with all issues raised. The Court further directed that the appeals be decided without going into the question of limitation, and recorded that the parties conceded and did not object to these directions. [Paras 9, 10, 11]

Petitioners permitted to file appeals before CESTAT within prescribed time; CESTAT directed to decide appeals preferably within six months on merits (including alleged forgery) and not to raise limitation.

Final Conclusion: Writ petition disposed of by relegating petitioners to file appeals before the CESTAT, Chandigarh Bench within one month; the Tribunal directed to decide the appeals preferably within six months on merits (including the authenticity of the Market Inquiry Report) and without going into the question of limitation; no adjudication on merits was made by the High Court.

Restoration of company name to the Register of Companies - striking off from the Register of Companies - procedural compliance under Section 248 of the Act - status of a Dormant Company - corporate misconduct affecting company operations - restoration subject to compliance with statutory requirements and payment of fees and penalties - effect of removal from register on realization of dues and prosecution of remedies

Striking off from the Register of Companies - procedural compliance under Section 248 of the Act - Whether the Registrar of Companies complied with the statutory procedure in striking off the Company's name and whether any procedural lapse vitiated the action. - HELD THAT: - The Tribunal's finding that the Company's name appeared in the Gazette Notification and that the ROC struck off the Company w.e.f. 21st August, 2017 was examined against the record, including the Gazette publication. The appellate forum found that there was no procedural lapse going to the root of the ROC's action; accordingly, objections premised on non-issuance of prior notices or breach of the strike-off procedure under the Act were overruled. The Court therefore upheld the lawfulness of the ROC's striking off action as a matter of procedure, while treating procedural objections as insufficient to impugn the removal. [Paras 6]

Procedural challenge to the striking off was rejected; ROC's removal of the Company's name was not vitiated by any material procedural lapse.

Restoration of company name to the Register of Companies - status of a Dormant Company - corporate misconduct affecting company operations - effect of removal from register on realization of dues and prosecution of remedies - restoration subject to compliance with statutory requirements and payment of fees and penalties - Whether the Company's name should be restored despite its long period of inactivity, having regard to the theft of assets by a director, acquisition proceedings, frozen accounts and impediments to realisation of dues. - HELD THAT: - Although the Tribunal had treated the prolonged inactivity and failure to apply for dormant status, and the 19 year delay, as grounds for refusing restoration, the appellate court accepted the appellants' evidence of two causative events that effectively terminated operations: (i) clandestine removal/theft of machinery, raw material and finished goods by a director (criminal proceedings and seizure having been recorded), and (ii) acquisition of the Company's land with attendant compensation proceedings and a pending execution petition. The court noted that removal of the Company's name impeded recovery and realization of awarded compensation and other deposits because bank accounts were frozen and proceedings could not be effectively pursued. In those circumstances it was held to be unjust to deny restoration solely for failure to seek dormant status. Balancing the circumstances, the court set aside the Tribunal's order and directed restoration, while conditioning relief on the appellants' compliance with statutory formalities for the defaulting period and payment of fees and penalties as determined by the ROC within one month. [Paras 7, 8]

Appeal allowed; Company's name to be restored to the Register of Companies subject to compliance with statutory requirements for the defaulting period and payment of fees and penalties as determined by the Registrar within one month.

Final Conclusion: The Tribunal's dismissal of the appeal was set aside; although the ROC's procedural strike-off was not vitiated, the Court ordered restoration of the Company's name in view of the theft of assets by a director and acquisition-related impediments to realization of dues, directing restoration subject to fulfilment of statutory filing requirements and payment of fees and penalties within one month.

Debt payable in law - continuous cause of action - enforcement of payment secured by a mortgage - limitation for suits relating to immovable property (Article 62, Part V) - effect of pending recovery proceedings on limitation - admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - claim to MSME status and consequence for insolvency proceedings - benefit under Section 29A of the Insolvency and Bankruptcy Code, 2016

Debt payable in law - continuous cause of action - enforcement of payment secured by a mortgage - effect of pending recovery proceedings on limitation - admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Whether the Section 7 application by the Financial Creditor was barred by limitation and whether the debt was payable in law. - HELD THAT: - The Tribunal applied the principle that the IBC is triggered when a default of the requisite amount occurs and that the adjudicating authority must examine whether the debt is payable in law. Reliance on the reasoning in M/s. Innoventive Industries Ltd. emphasises that a disputed claim may nonetheless found a financial debt. Given that the loan obligations were secured by an equitable mortgage, Article 62 (Part V, First Division) of the Limitation Act prescribing a twelve year period to enforce payment secured by immovable property applies; accordingly the debt could not be characterised as time barred when the Section 7 Application was filed. The fact that recovery proceedings before the DRT were pending and that the Financial Creditor invoked remedies under SARFAESI and later IBC did not render the claim barred: pursuing earlier remedies did not negate a continuing cause of action nor preclude resort to the additional remedy under the IBC once it became available. On these premises the admission under Section 7 was properly sustained and the limitation plea rejected. [Paras 7, 8, 9, 10]

Limitation defence rejected; Section 7 admission sustained as the debt was not barred and was payable in law.

Claim to MSME status and consequence for insolvency proceedings - benefit under Section 29A of the Insolvency and Bankruptcy Code, 2016 - Whether the Corporate Debtor's claimed MSME status and any consequence under Section 29A are to be decided at the admission stage. - HELD THAT: - The Tribunal noted that the allegation about MSME status was raised during arguments and that the Financial Creditor disputed the timing and veracity of the claimed status. The point was not addressed on merits at the admission stage. The Tribunal observed that issues relating to the Corporate Debtor's entitlement to any benefit (including questions touching Section 29A) would have to be considered at the appropriate stage of the proceedings and not at the Section 7 admission stage. [Paras 11]

MSME status and any consequences under Section 29A not decided at this stage; reserved for determination at the appropriate forum/stage.

Final Conclusion: The appeal is dismissed; the admission of the Section 7 application is upheld on the ground that the debt was not time barred and was payable in law, while the claim of MSME status and related consequences are left open for consideration at the appropriate stage.

Condonation of delay - limitation for appeals under the proviso to Section 61(2) of the Insolvency and Bankruptcy Code, 2016 - NCLAT's jurisdiction to admit time barred appeals only within the maximum extended period of fifteen days

Condonation of delay - limitation for appeals under the proviso to Section 61(2) of the Insolvency and Bankruptcy Code, 2016 - NCLAT's jurisdiction to admit time barred appeals only within the maximum extended period of fifteen days - Application for condonation of delay in filing the appeal under the proviso to Section 61(2) I&B Code and the consequent maintainability of the appeal. - HELD THAT: - The proviso to Section 61(2) permits the National Company Law Appellate Tribunal to allow an appeal to be filed after the thirty day period only if satisfied that there was sufficient cause, but such extension shall not exceed fifteen days. The Tribunal examined the dates pleaded by the appellant: the impugned order (recorded as 15th May 2018), knowledge of the order by the appellant on 1st February 2019, and filing of the appeal on 3rd May 2019. The delay thus far exceeds the maximum fifteen day extension permissible under the proviso. Because the statutory proviso confines the Tribunal's power to condone delay to not more than fifteen days, the Tribunal is without jurisdiction to admit an appeal filed beyond that permissible extended period. Consequently, the application for condonation of delay was rejected and the appeal held to be time barred.

Application for condonation of delay is rejected; appeal dismissed as time barred for want of jurisdiction to extend limitation beyond the fifteen day period permitted by the proviso to Section 61(2).

Final Conclusion: The Tribunal held that it had no jurisdiction to condone the delay beyond the fifteen days permitted by the proviso to Section 61(2) of the I&B Code; the condonation application was rejected and the appeal was disposed of as time barred.

Voluntary liquidation - dissolution of the corporate person - declaration of solvency - public announcement for claims - compliance with Section 59 of the Insolvency and Bankruptcy Code, 2016 - final report of the liquidator - report of the Registrar of Companies

Compliance with Section 59 of the Insolvency and Bankruptcy Code, 2016 - declaration of solvency - public announcement for claims - final report of the liquidator - report of the Registrar of Companies - Whether the voluntary liquidator complied with the statutory requirements under Section 59 of the IB Code, 2016 read with the Voluntary Liquidation Regulations and whether the company should be dissolved. - HELD THAT: - The Adjudicating Authority examined the liquidator's compliance with the requirements for voluntary liquidation, including board resolution and members' special resolution authorising liquidation, filing of the Declaration of Solvency by directors, filing of requisite forms with the Registrar of Companies, publication of the public announcement in prescribed forms seeking claims, submission of the preliminary and final reports by the liquidator, discharge of creditors for liquidation expenses, and obtaining statutory 'No Objection' intimations from tax authorities. The Registrar of Companies' report recorded the filing and approval of the special resolution, the Declaration of Solvency, and the final report and noted no charges and no adverse auditor remarks for the relevant financial statements. The Authority found on the record that there were no secured or unsecured creditor claims in response to the public announcement and that liquidation receipts and payments were accounted for in the liquidator's reports. Having regard to the statutory pre-conditions and the ROC report, the Authority concluded that the liquidator had complied with the provisions of Section 59 and the Regulations and that the prerequisites for dissolution were satisfied. [Paras 9, 10, 11, 12, 13]

The company is ordered to be dissolved under Section 59 of the Code; the petition is disposed of and the voluntary liquidator is directed to file a copy of this order with the concerned ROC within 14 days.

Final Conclusion: The Tribunal, having found that the liquidator complied with the requirements of Section 59 of the Insolvency and Bankruptcy Code, 2016 and the relevant Regulations and having taken into account the ROC report and the liquidator's final report, ordered Cognistreamer Consulting India Private Limited to be dissolved with effect from the date of the order and directed the liquidator to file the order with the Registrar of Companies.

Non-consideration of binding judicial precedents - non-speaking order - error apparent on the face of the record - rectification of manifest/rectifiable mistakes - recall and rehearing of order - review not permissible in place of recall

Non-consideration of binding judicial precedents - non-speaking order - error apparent on the face of the record - Impugned final order suffers from rectifiable mistakes by omission of consideration of authorities and documentary material, rendering it non-speaking and containing error apparent on the face of the record. - HELD THAT: - The Bench examined the appeal record, the synopsis and the paper compilation and found no mention or discussion in the impugned final order of several judicial decisions relied on by the appellant, including a decision of the jurisdictional High Court, nor of documentary material (invoices and agreements) submitted in the compilation. The Bench noted that omission to consider a judgment of the jurisdictional High Court or Supreme Court constitutes an error apparent on the face of the record and that non-consideration of material documents results in a non-speaking order, referring to established authority to that effect. The Tribunal therefore concluded that the impugned order contained rectifiable mistakes requiring recall and rehearing rather than being a matter for review. [Paras 4]

Impugned final order recalled on ground of omission to consider judicial precedents and documentary material; order found to be non-speaking and containing error apparent on the face of the record.

Rectification of manifest/rectifiable mistakes - recall and rehearing of order - review not permissible in place of recall - Appropriate remedy is recall of the impugned final order and relisting of the appeal for fresh hearing. - HELD THAT: - Having formed a prima facie view that the impugned order required rectification for reasons stated, the Bench exercised its power to recall the final order and directed the Registry to relist the appeal for fresh hearing. The Bench expressly rejected the suggestion that interference would amount to a prohibited review of its earlier order, treating the present step as recall and rehearing to enable fresh adjudication after considering the relied authorities and documents. [Paras 5]

Impugned final order recalled and appeal directed to be relisted for fresh hearing; Registry to list the matter in due course.

Final Conclusion: The Tribunal recalled its earlier final order on the ground of omission to consider relevant judicial authorities and documents, held the order to be non-speaking and containing error apparent on the face of the record, and directed that the appeal be relisted for fresh hearing.

Settled audit objection - Limitation - Abatement in erection, commissioning and installation service

Settled audit objection - Limitation - A show cause notice could not be sustained on the same audit objection after that objection had already been settled by the department. - HELD THAT: - The Tribunal found from the record that the very objection regarding availment of abatement had been raised in audit and was settled by the department. Once that objection stood settled, a subsequent show cause notice founded on the same objection was not legally sustainable. On that basis, the Tribunal held that the demand raised through the later notice was also barred by time. [Paras 7]

The demand founded on the earlier settled audit objection was held unsustainable and time-barred.

Abatement in erection, commissioning and installation service - Supply of material under contract - The appellant was entitled to the benefit of the notifications granting abatement where the agreement required supply of material along with the services. - HELD THAT: - On examining the agreement with the service recipient, the Tribunal found that the appellant was required to provide material while rendering the services. The denial of the notification benefit on the premise that no material had been supplied was therefore not justified. The appellant was consequently held to have rightly availed the benefit under Notification No. 19/2003 and Notification No. 1/2006-ST, and the service tax demand could not survive. [Paras 8]

The benefit of the notifications was held admissible; the service tax demand was set aside and no penalty was imposable.

Final Conclusion: The Tribunal set aside the impugned order and allowed the appeal with consequential relief, holding both that the notice based on an already settled audit objection was unsustainable and time-barred, and that the appellant was otherwise entitled to the claimed abatement.

Commercial or Industrial Construction Service - Work Contract Service - effect of payment of VAT on service tax liability in works contracts - service tax payable on 33% of gross value in construction services - short payment of service tax

Work Contract Service - Commercial or Industrial Construction Service - effect of payment of VAT on service tax liability in works contracts - Whether the appellant, having paid VAT on the works contract amount and service tax at the rate applicable to works contracts, was liable to additional service tax as Commercial or Industrial Construction Service assessed on 33% of gross value. - HELD THAT: - The Tribunal examined the contract for construction of a factory and the VAT challans produced by the appellant showing payment of VAT on the works contract amount. The adjudicating authority had held that the contract did not involve transfer of property and therefore fell under Commercial or Industrial Construction Service attracting service tax on 33% of gross value, resulting in a demand for differential service tax. The Tribunal, however, found on the record that the appellant had paid VAT on the works contract value and had discharged service tax at the rate applicable to works contracts. In view of the VAT payment and the challans produced and examined, the Tribunal concluded that the appellant's liability was correctly discharged by payment of service tax at the works contract rate and that no further service tax was exigible under the construction service classification.

The demand for differential service tax was set aside and the appeal allowed; the appellant is not required to pay further service tax and is entitled to consequential relief, if any.

Final Conclusion: The Tribunal allowed the appeal, set aside the impugned demand for differential service tax, and held that payment of VAT on the works contract and service tax paid at the works contract rate discharged the appellant's service tax liability; no further service tax was payable.

Business support services - infrastructural support services - health care services exemption - negative list regime for services - distinction between profession and business - revenue sharing arrangements between hospitals and consultants - penalty under Sections 76,77 and 78 of the Finance Act, 1994

Business support services - infrastructural support services - revenue sharing arrangements between hospitals and consultants - distinction between profession and business - health care services exemption - Whether the portion of consultants' fees retained by the appellant constituted a taxable service under the category of business support services. - HELD THAT: - The Tribunal held that the agreements between the hospitals and consulting doctors reflected a revenue sharing contractual arrangement for provision of health care services, not a contract under which the hospital provided a separate infrastructural support service to doctors as part of a commercial business. Examination of the terms showed shared obligations and mutual benefits, with doctors engaged to provide professional medical services and hospitals managing patient care; the retained share was part of the consideration for health care services provided to patients. The Tribunal applied the statutory scope of business support services and the embedded concept of infrastructural support services, and concluded that to tax the hospital's share as BSS would require treating doctors as carrying on a business or commerce to whom infrastructural support was being supplied. Relying on the distinction between profession and business, the Tribunal found that doctors were engaged in the profession of medicine and the impugned inference by Revenue was not borne out by the contracts. Further, under the negative list regime and Notification exempting clinical establishments, health care services rendered by clinical establishments are exempt; taxing the hospital's share as BSS would defeat that exemption. For these reasons the demand under the head of business support service was held unsustainable and set aside. [Paras 6, 7, 8, 9, 11]

The retained portion of consultants' fees did not amount to a taxable business support service; the demand confirmed on that basis is set aside.

Health care services exemption - negative list regime for services - penalty under Sections 76,77 and 78 of the Finance Act, 1994 - Whether the consequential demand of service tax, interest and penalties confirmed against the appellant could be sustained after negation of the underlying service classification. - HELD THAT: - Because the Tribunal concluded there was no taxable business support service, the underlying demand of service tax could not survive. In consequence, interest and penalties premised on the demand likewise could not be sustained. The Tribunal observed that allowing classification as BSS would, in effect, nullify the statutory exemption accorded to clinical establishments for health care services under the negative list regime; hence the impugned orders confirming demand, interest and penalties were devoid of merit and liable to be set aside. [Paras 8]

Impugned order confirming demand of service tax with interest and imposition of penalties is set aside; appeal allowed with consequential relief.

Final Conclusion: The appeal is allowed: the Tribunal set aside the adjudicating authority's demand of service tax, interest and penalties on the ground that the hospitals' retention of a share of consultants' fees did not constitute a taxable business support service and that such treatment would conflict with the exemption available to clinical establishments for health care services; consequential relief, if any, to follow.

Maintainability of statutory appeals in view of administrative monetary threshold - withdrawal of appeal with liberty to keep substantial questions of law open - application for condonation of delay rendered infructuous by withdrawal

Maintainability of statutory appeals in view of administrative monetary threshold - withdrawal of appeal with liberty to keep substantial questions of law open - Whether the present appeal was maintainable before this Court in view of administrative instructions fixing a monetary threshold and the consequence of the appellant's admission leading to withdrawal of the appeal. - HELD THAT: - The appellant's counsel expressly conceded that in light of the instructions dated 22.8.2019 issued by the Ministry of Finance (Department of Revenue, CBIC Judicial Cell) the appeal was not maintainable before the High Court because the demand sought to be recovered (Rs. 62,30,807/-) fell below the monetary limit of Rs. 1 crore. Relying on that concession, the appellant sought withdrawal of the appeal while expressly reserving the right to keep the substantial questions of law open. The Court accepted the withdrawal request and dismissed the appeal as withdrawn, while noting that the questions of law raised in the memo of appeal would remain open for future consideration. Because the main appeal was withdrawn, the Court did not adjudicate the merits, limitation contentions, or the applicant's prayer for condonation of delay and accordingly passed no orders on the condonation application.

Appeal dismissed as withdrawn with liberty to keep the substantial questions of law open; no orders on the condonation application.

Final Conclusion: The High Court accepted the appellant's concession that the appeal was not maintainable under the administrative monetary threshold and dismissed the appeal as withdrawn while leaving the substantial questions of law undecided and refraining from passing any order on the pending condonation application.

Exigibility of excise duty - territorial jurisdiction - writ jurisdiction - exceptional circumstances - statutory appeal - limitation - condonation for filing appeal

Territorial jurisdiction - exigibility of excise duty - statutory appeal - writ jurisdiction - exceptional circumstances - Whether the writ petition could be entertained instead of relegating the appellant to the statutory appeal, including consideration of territorial jurisdiction and exigibility of excise duty. - HELD THAT: - The Court upheld the learned Single Judge's decision to refuse relief in writ jurisdiction and to grant liberty to the appellant to file a statutory appeal. The court found no exceptional circumstances justifying departure from the alternative remedy under the statute. Consequently, issues raised before the Adjudicating Authority - including lack of territorial jurisdiction of the authority and the question of exigibility of excise duty on signages - were to be agitated and adjudicated in the appellate proceedings before the Commissioner (Appeals). The appellate authority was expected to decide all questions and objections raised by the appellant on their merits and in accordance with law.

Writ appeal dismissed; appellant relegated to file statutory appeal where territorial jurisdiction and exigibility objections may be raised and decided on merits.

Limitation - condonation for filing appeal - statutory appeal - Whether the appellate authority may be precluded from raising a limitation objection if an appeal is filed belatedly. - HELD THAT: - Recognising that the time limit for filing the statutory appeal may have expired, the Court exercised its supervisory discretion to remove the limitation obstacle conditionally. The Court directed that if the appellant files the statutory appeal within six weeks from the date of the order, the appellate authority shall not raise any objection as to limitation. This waiver of limitation objection is subject to the appellant complying with other usual conditions and does not preclude the appellate authority from deciding the appeal on merits and in accordance with law.

If the statutory appeal is filed within six weeks, the appellate authority shall not object on the ground of limitation; the appeal shall be considered on merits subject to other usual requirements.

Final Conclusion: The intra-court appeal is dismissed; the appellant is permitted to pursue the statutory appeal (without limitation objection if filed within six weeks) where all contested issues, including territorial jurisdiction and exigibility of excise duty, are to be considered and decided on merits.

Offences and penalties under the Central Excise Act - Proviso to Section 9(1) - minimum sentence and special and adequate reasons - Special and adequate reasons excluding first conviction, prior penalty/confiscation, secondary party role, and age - Sentencing discretion of trial court - Medical grounds as mitigating factor - Enhancement of fine as alternative to imprisonment - Deposit to complainant and non-refundability pending appeal

Proviso to Section 9(1) - minimum sentence and special and adequate reasons - Sentencing discretion of trial court - Special and adequate reasons excluding first conviction, prior penalty/confiscation, secondary party role, and age - Medical grounds as mitigating factor - Whether the reasons recorded by the trial Magistrate justified sentencing the accused to a term of less than the statutory minimum prescribed by the proviso to Section 9(1) of the Central Excise Act, 1944, and whether interference was warranted. - HELD THAT: - The Court noted that the accused had admitted guilt and were convicted under Section 9(1). The proviso to Section 9(1) prescribes a minimum term of six months unless special and adequate reasons are shown, and Section 9(3) lists matters that shall not be treated as such reasons. The Special Public Prosecutor submitted that the trial Court's reasons did not constitute special and adequate reasons. The High Court agreed that the reasons before the trial Court could not be characterized as special and adequate. However, having regard to the long lapse of time since the alleged offences, the advanced age of the accused and their medical ailments (which were placed on record before the trial Court), the High Court exercised restraint and declined to alter the sentence to immediate imprisonment. The Court treated the medical condition and substantial delay as factors warranting non-interference with the trial Court's order on imprisonment, while observing that age alone is not per se a permissible special reason under Section 9(3). [Paras 3, 4, 5]

Though the reasons at trial did not amount to 'special and adequate reasons' under the proviso to Section 9(1), the High Court refrained from directing imprisonment in view of the long delay, advanced age and medical condition of the accused.

Enhancement of fine as alternative to imprisonment - Deposit to complainant and non-refundability pending appeal - Without prejudice to pending appeal - Whether, and to what extent, the fines imposed by the trial Court should be enhanced as a consequence of the Court's exercise of discretion in sentencing. - HELD THAT: - While declining to order imprisonment, the High Court directed enhancement of the nominal fines previously imposed by the trial Magistrate. The accused in several matters tendered, without prejudice to their contentions in pending appeals, undertakings to pay additional amounts; the Court fixed specified enhanced fines to be paid to the credit of the respective criminal cases within twelve weeks. The Court ordered that the amounts so deposited would be disbursed to the complainant but clarified that such deposits would be without prejudice to the accused's contentions in their pending appeals and that the sums would not be refundable even if the accused succeed in those appeals. [Paras 7, 8, 9, 10, 11]

Directed payment of enhanced fines as specified, permitted disbursement to the complainant upon deposit, and held that such deposits are without prejudice to pending appeals but will not be refunded.

Final Conclusion: Criminal appeals partly allowed: the High Court declined to order imprisonment despite finding the trial Court's reasons insufficient as 'special and adequate reasons' under the proviso to Section 9(1), taking note of delay, age and medical condition; instead the Court enhanced the nominal fines, directed payment to the respective case-credits and authorised disbursement to the complainant, with the deposits being non-refundable though without prejudice to pending appeals.

Eligibility of credit of service tax on outward transportation of goods (GTA services) - place of removal - F.O.R. Destination basis - application of Roofit Industries - application of Genau Extrusions Ltd. Vs CGST & Central Excise - remand for de novo consideration

Place of removal - F.O.R. Destination basis - eligibility of credit of service tax on outward transportation of goods (GTA services) - application of Roofit Industries - application of Genau Extrusions Ltd. Vs CGST & Central Excise - remand for de novo consideration - Determination of place of removal for sales claimed to be on F.O.R. Destination basis and consequent eligibility for credit of service tax paid on outward transportation of goods for the specified periods, remanded for fresh adjudication. - HELD THAT: - The Tribunal found that the appellants contended the sales were on F.O.R. Destination basis and relied on the Roofit Industries decision and an administrative circular to contend that the place of removal was the buyer's premises, which would, in turn, affect eligibility for input credit of service tax on outward transportation. The Tribunal observed that the record before it did not contain sufficient evidence to establish that the sales were on F.O.R. Destination basis or to conclusively determine the place of removal. In view of the absence of conclusive material, the Tribunal did not decide the merits of credit eligibility but directed that the adjudicating authority should verify and determine the place of removal after appreciating the facts and documents produced by the appellant. The adjudicating authority was instructed to apply and decide the applicability of the Roofit Industries principle and the Tribunal's decision in Genau Extrusions Ltd. in its de novo consideration. The Tribunal therefore remitted the matter for fresh adjudication limited to these determinations. [Paras 54]

The appeals are allowed by way of remand to the adjudicating authority for de novo determination of the place of removal and consequent decision on eligibility of credit of service tax on outward transportation of goods, including consideration of the Roofit Industries and Genau Extrusions authorities.

Final Conclusion: The Tribunal remitted the appeals to the adjudicating authority for fresh consideration to determine the place of removal for the sales in dispute and, on that basis, to decide the applicability of the Roofit Industries and Genau Extrusions decisions and the appellants' entitlement to credit of service tax on outward transportation of goods for the periods May 2016 to November 2016 and December 2016 to June 2017.

Place of removal - F.O.R. sale / F.O.B. destination - Eligibility for Cenvat/credit on outward freight - Inclusion of freight in assessable value - Application of Board Circular No.1065/4/2018-Cx.

Place of removal - F.O.R. sale / F.O.B. destination - Eligibility for Cenvat/credit on outward freight - Inclusion of freight in assessable value - Application of Board Circular No.1065/4/2018-Cx. - The appellant is eligible to avail Cenvat/credit of service tax paid on freight for outward transportation where the sale is on F.O.R. basis and freight is included in the assessable value. - HELD THAT: - The sale documents and transaction terms show goods were sold on F.O.R. basis (F.O.B. destination/free house delivery) imposing on the appellant the obligation to deliver at the buyer's premises. The appellant included freight charges in the assessable value while discharging excise duty. Applying the Board's Circular dated 08.06.2018 and the reasoning in Commissioner of Customs & Central Excise, Aurangabad v. M/s. Roofit Industries Ltd. , the place of removal is the buyer's premises when freight is included in assessable value under F.O.R. terms. The Tribunal also followed M/s. Genau Extrusions Ltd., Vs Commissioner of GST & Central Excise, Salem reported in 2019 (7) TMI 325 CESTAT CHENNAI which supports allowing credit in such circumstances. The contrary authority invoked by revenue was distinguished on facts. Consequently, the disallowance of credit for the specified periods was held to be unjustified and liable to be set aside.

Impugned orders disallowing credit are set aside and the appeals are allowed with consequential reliefs, if any.

Final Conclusion: Where sale is on F.O.R. (F.O.B. destination) and freight is included in assessable value, the place of removal is the buyer's premises and the assessee is entitled to Cenvat/credit of service tax paid on outward freight for the periods in dispute; impugned orders are set aside and appeals allowed.

Input service - Cenvat credit - outward transportation upto the place of removal - interpretation of 'up to' as terminating point for transport services - Rule 3(1) of Cenvat Credit Rules, 2004

Input service - outward transportation upto the place of removal - Cenvat credit - interpretation of 'up to' as terminating point for transport services - Whether cenvat credit for service tax paid on outward freight beyond the place of removal is admissible to the manufacturer for the period October, 2010 to March, 2014. - HELD THAT: - The Tribunal applied the definition of input service as amended to include services used by the manufacturer in relation to manufacture and clearance of final products "upto the place of removal", and observed that the amended wording circumscribes transport-related input credit to the terminating point of the transport journey. The reasoning, following the Apex Court in Ultra Tech Cement, treats the words 'up to' as indicating the terminating point and distinguishes the pre-amendment position when 'from place of removal' had been used. Read together, the general and the specific clauses in the definition limit credit for transport services to transportation that ends at the place of removal; services used beyond that point do not qualify as input service and therefore are not eligible for Cenvat credit under Rule 3(1) of Cenvat Credit Rules, 2004. The Tribunal found that the appellant admittedly availed credit on outward freight extending beyond the place of removal, which is not permissible in view of the amended definition and applicable precedent, and accordingly upheld the recovery and rejection of the appeal. [Paras 3, 4, 5]

The impugned credit on outward freight beyond the place of removal is not admissible; the order confirming recovery is upheld and the appeal is dismissed.

Final Conclusion: The Tribunal, applying the amended definition of input service and relevant precedent, held that service tax on outward transportation beyond the place of removal does not qualify for Cenvat credit; the adjudicating authority's order confirming recovery for the period October, 2010 to March, 2014 is upheld and the appeal is dismissed.

Treatment of pre GST tax incentives after subsumption into GST - refund of SGST in lieu of erstwhile luxury/entertainment tax waiver - equal application of policy to similarly situated parties - implementation of high level committee recommendation by State - judicial direction for executive decision within fixed time - consolidation of petitions for common adjudication

Treatment of pre GST tax incentives after subsumption into GST - refund of SGST in lieu of erstwhile luxury/entertainment tax waiver - implementation of high level committee recommendation by State - equal application of policy to similarly situated parties - State to consider and decide on the High Level Committee's recommendation to refund SGST paid in respect of incentives granted under the pre GST regime and whether to extend such relief across similarly situated parties - HELD THAT: - The Court recorded that the petitions raise identical factual and legal questions arising from pre GST incentives (luxury tax/entertainment duty waivers) that were subsumed into the GST regime. The High Level Committee constituted by the State recommended refunding the SGST paid during the incentive period in lieu of continuing the erstwhile statutory exemption, and suggested implementation across eligible units by the Tourism Department on the lines of an existing Industrial Promotion Subsidy scheme. The Court observed that the State has not disputed the similarity of facts and, in the interest of certainty and uniform treatment, directed the State to take a policy decision on the Committee's recommendations. The order did not itself adjudicate the merits of granting refund or extension, but required the executive to decide whether to accept the Committee's proposal and whether any accepted relief should be extended to all similarly situated parties so as to ensure equal application of the decision. [Paras 3, 4]

The matter was remanded to the State for executive decision on the High Level Committee's recommendations, including consideration of a scheme to refund SGST and of extending any accepted relief uniformly to similarly situated parties.

Consolidation of petitions for common adjudication - judicial direction for executive decision within fixed time - Writ petitions to be listed and heard together and State directed to take decision within a specified period - HELD THAT: - Having noted the similarity between the petitions (one concerning luxury tax waiver and the other entertainment tax waiver), the Court ordered that Writ Petition No.1800 of 2019 be heard along with Writ Petition No.3027 of 2018. The Court accepted the State's request for time to obtain instructions and recorded an expectation that a decision would be taken within the time sought; the hearing was adjourned to enable the State to decide upon the Committee's recommendations so that the issue could be addressed collectively and uniformly. [Paras 5, 6]

Petitions were directed to be listed together and the State given time to take a decision; matter adjourned for further listing to enable collective adjudication after the executive decision.

Final Conclusion: The Court did not decide the substantive entitlement to refund or extension of pre GST incentives on the merits; instead the matter was remitted to the State to consider the High Level Committee's recommendations and to decide, within the time sought, whether to implement a refund scheme and extend any accepted relief uniformly to similarly situated parties, with the petitions directed to be heard together thereafter.

Availability of alternative statutory remedy before tribunal - maintainability of writ petition in presence of efficacious alternative remedy - disposal of writ petition as infructuous - effect of tribunal becoming functional on parallel judicial proceedings

Availability of alternative statutory remedy before tribunal - maintainability of writ petition in presence of efficacious alternative remedy - effect of tribunal becoming functional on parallel judicial proceedings - Whether the writ petition could be maintained after the statutory tribunal became functional, when an appeal before the tribunal in respect of Assessment Year 2010-11 had already been filed. - HELD THAT: - The petitioner's challenge arose from an assessment order and tax demand dated 20.11.2017 for Assessment Year 2010-11, against which an appeal under the statutory provision was maintainable before the Punjab Value Added Tax Tribunal and had been filed. Although the Tribunal was not functioning earlier due to the absence of its Chairperson, the Court noted that the Tribunal had since been constituted and was fully functional. In these circumstances the petitioner was directed to pursue the remedy already available and instituted before the Tribunal. The Court held that continuation of parallel writ proceedings was not appropriate once the efficacious statutory forum was available, rendering the writ petition infructuous.

Writ petition not maintainable in view of the available appeal before the now-functional Tribunal; petition disposed of as infructuous and the petitioner permitted to prosecute the appeal already filed before the Tribunal.

Final Conclusion: The writ petition was disposed of as infructuous because an appeal in respect of the assessment for 2010-11 lay and had been filed before the Punjab Value Added Tax Tribunal, which had become functional; the petitioner was at liberty to pursue that statutory remedy.

Cheating under Section 420 IPC - Deception and inducement - Dishonest concealment of material fact - Summoning order and cognizance - Role of company officer and vicarious liability - Application of Section 34 IPC

Cheating under Section 420 IPC - Deception and inducement - Dishonest concealment of material fact - Validity of the summoning order under Sections 420/34 IPC against the petitioner in view of the alleged concealment of winding up proceedings and the petitioner's role in procuring the loan. - HELD THAT: - The Court examined whether there were sufficient grounds to proceed against the petitioner for cheating by deception, inducement and dishonest concealment of the company's financial position. The complaint, the statement of CW1 (the complainant's authorized representative) and documentary material were considered by the Magistrate. The petitioner had signed a letter dated 12.06.1996 as President of the company, sent to the complainant shortly after the meeting in which the loan was sought, and the record showed representation to the complainant that the company was financially sound and a post-dated cheque would be honoured. On that basis the Magistrate concluded there were prima facie grounds to take cognizance under Sections 420 and 34 IPC. The High Court found that the petitioner's submission that he was not a director at the relevant time was without weight in light of his role as President and the documentary evidence; accordingly the High Court held that the lower court did not err in summoning the petitioner. Reliance on authorities cited by the petitioner was rejected as misplaced where, on the material before the Magistrate, a prima facie case was made out to proceed to trial. [Paras 15, 16, 18]

Summoning order dated 26.04.2003 is upheld and the petition challenging it is dismissed.

Final Conclusion: The High Court dismissed the petition under Section 482 Cr.P.C., finding no ground to interfere with the Magistrate's summoning order under Sections 420/34 IPC against the petitioner; the accused is to appear before the trial court as directed.