TaxTMI Updates e-Newsletter
Sep 13,2022

Extension of time - GST Common Portal - Section 140 of the Central Goods and Services Tax Act, 2017 - questions of law kept open - application for extension allowed

Extension of time - GST Common Portal - application for extension allowed - Extension of time for opening the GST Common Portal - HELD THAT: - The Court granted the applicant a further extension of time of four weeks from the date of the order for opening the GST Common Portal. The application seeking extension of time was allowed and the miscellaneous applications were disposed of. No substantive adjudication on other legal questions was undertaken in relation to the portal opening timeline.

Time for opening the GST Common Portal extended for four weeks; application for extension allowed and miscellaneous applications disposed of.

Section 140 of the Central Goods and Services Tax Act, 2017 - questions of law kept open - Status of legal challenges under Section 140 CGST Act - HELD THAT: - The Court expressly left open all questions of law previously decided by the respective High Courts concerning Section 140 of the Central Goods and Services Tax Act, 2017 read with the corresponding rules, notifications or directions. No determination was made on those legal issues in this order; they remain undecided for future adjudication.

All questions of law relating to Section 140 CGST Act, as decided by the High Courts, are kept open and not finally adjudicated in this order.

Final Conclusion: The Court allowed the application and extended the time for opening the GST Common Portal by four weeks, while refraining from deciding substantive questions of law under Section 140 of the CGST Act, which are left open for future consideration.

Condonation of delay - limitation period under Section 100(2) of the CGST Act - proviso limiting condonation to thirty days - effect of Supreme Court suo motu extension of limitation (10-01-2022) - non-application of Section 5 of the Limitation Act where a special statute provides a complete code - appeal dismissed as barred by limitation

Condonation of delay - limitation period under Section 100(2) of the CGST Act - proviso limiting condonation to thirty days - effect of Supreme Court suo motu extension of limitation (10-01-2022) - non-application of Section 5 of the Limitation Act where a special statute provides a complete code - appeal dismissed as barred by limitation - Whether the appeal filed beyond the statutory period could be entertained by condoning the delay. - HELD THAT: - The Authority analysed the date of communication (19-02-2022), the statutory 30-day period under Section 100(2) and the further 30-day condonable period in the proviso, and applied the Supreme Court's final order dated 10-01-2022 to compute limitation. The Supreme Court order excluded 15-03-2020 to 28-02-2022 for computation but para 5(III) (granting 90 days from 01-03-2022 where limitation expired during the excluded period) was held inapplicable because the statutory period in this case expired after the excluded period. The Authority held that the proviso to Section 100(2) permits condonation only up to thirty days and that it is not empowered to extend beyond that limit. Reliance was placed on settled precedents and principles that where a special statute prescribes a complete code for limitation and condonation, Section 5 of the Limitation Act cannot be invoked to override that special regime. Since the appeal was filed beyond the condonable period, the Authority found it time barred and declined to admit it for adjudication on merits. [Paras 15, 16, 17, 18, 19]

The Authority refused to condone the delay and held the appeal barred by limitation, therefore it was not entertained on merits.

Final Conclusion: The appeal was dismissed on the ground of time limitation: the Appellate Authority held it had no power to condone delay beyond the thirty days permitted by the proviso to Section 100(2) of the CGST Act and therefore the appeal was time barred and not decided on merits.

Composite supply - principal supply - works contract - natural bundling / supplied in conjunction - definition of Local Authority under the CGST Act - eligibility under Notification No. 11/2017-CT (Rate) Entry 3(iii) and 3(iv) - tax rate applicability on composite supply determined by principal supply

Composite supply - natural bundling / supplied in conjunction - Whether the supply of design and construction of roads and utility services of TP-1 Area constitutes a composite supply. - HELD THAT: - The Authority examined whether the multiple supplies under the EPC contract are "naturally bundled" and supplied in conjunction with each other so as to qualify as a composite supply under the statutory definition. The contract covers distinct works - construction of TP roads and a range of utility services (potable water, recycled water, sewerage, industrial effluent collection, storm water, SCADA, etc.) - each involving components of goods and services. The Authority found these services to be independent work contract services and not naturally bundled or supplied in conjunction; hence they do not form a composite supply under Section 2(30) of the CGST/ GGST Acts. The reasoning emphasises the independence of each utility service from the road construction and rejects reliance on weightage/proportion of contract price to convert separate works into a composite supply. [Paras 14, 16]

The supply of design and construction of roads and utility services of TP-1 Area does not constitute a composite supply.

Works contract - eligibility under Notification No. 11/2017-CT (Rate) Entry 3(iv) - construction of road as work contract - Whether the construction of roads component qualifies as a works contract covered by Entry 3(iv) of Notification No. 11/2017-CT (Rate) and the applicable GST rate for that component. - HELD THAT: - The Authority held that the construction of TP-1 roads involves supply of goods and services and falls within the definition of "works contract". Entry 3(iv) applies only to work contract services by way of construction of a road (among other listed infrastructure) for use by the general public. The Authority found that the road-construction component satisfies the criteria of Entry 3(iv) and, therefore, was liable to the concessional rate prescribed by that entry for the period when the entry was in force. The Authority further noted the amendment that omitted Entry 3(iv) with effect from 18-7-2022, and accordingly treated the post-omission rate as the general rate. [Paras 13, 16]

The construction of roads is a works contract covered by Entry 3(iv) and attracted the concessional GST rate while Entry 3(iv) was in force; after omission of that entry (effective 18-7-22) the road-construction supply attracts the standard rate of GST.

Definition of Local Authority under the CGST Act - eligibility under Notification No. 11/2017-CT (Rate) Entry 3(iii) - Whether Mandal Becharaji Special Investment Regional Development Authority (MBSIRDA) is a "local authority" for the purpose of Entry 3(iii) and whether Entry 3(iii) applies to the contract's utility-service components. - HELD THAT: - The Authority examined statutory definitions and the nature of MBSIRDA's constitution. MBSIRDA was constituted under the Gujarat Special Investment Region Act, 2009 as a Regional Development Authority and is a body corporate; the Special Investment Region is declared to be out of local authority jurisdiction. The applicant's limited documentary materials (TAN/GSTIN entries) were insufficient to establish MBSIRDA as a local authority under Section 2(69) of the CGST Act. Because MBSIRDA does not fall within the statutory definition of "local authority," the condition in Entry 3(iii) (supply to a local authority) is not satisfied and Entry 3(iii) cannot be invoked for concessional rate purposes for the utility services in this contract. [Paras 15]

MBSIRDA is not a "local authority" under the CGST Act for the purposes of Entry 3(iii); Entry 3(iii) is therefore not applicable to the applicant's supply to MBSIRDA.

Works contract - applicability of standard rate after omission - The tax treatment and applicable GST rate for the utility-service components and overall contract following the findings on composite supply and notification amendments. - HELD THAT: - Having found that the various utility services are independent works contract services (and not a composite supply led by road construction), the Authority held that those utility-service components qualify as work contract services. While Entry 3(iii)/(iv) provided concessional rates when their conditions were satisfied and in force, the omission of Entry 3(iv) effective 18-7-2022 (by Notification No. 3/2022-CT (Rate)) meant that supplies of the construction of roads and, independently, the utility services attract the general GST rate thereafter. Accordingly, the Authority applied the concessional rate for road construction only for the period Entry 3(iv) was in force, and applied the standard rate thereafter; all utility-service components attract GST at the standard rate. [Paras 16, 17]

Utility-service components are works contract services and attract GST at the standard rate post-omission; road-construction attracted the concessional rate while Entry 3(iv) was in force and the standard rate thereafter.

Final Conclusion: The Authority ruled that the EPC supply of design and construction of roads and utility services for TP-1 is not a composite supply; the road-construction component is a works contract eligible for Entry 3(iv)'s concessional rate while that entry was in force (1-7-2017 to 17-7-22) but attracts the standard rate from 18-7-22 after the entry's omission; MBSIRDA is not a "local authority" for Entry 3(iii) purposes, and the utility-service components are independent works contract services liable to the standard GST rate thereafter.

Permanent Establishment - Preparatory and auxiliary activities - Attribution of profits to Permanent Establishment - Double Taxation Avoidance Agreement - Interest under section 234B

Permanent Establishment - Preparatory and auxiliary activities - Double Taxation Avoidance Agreement - Whether the liaison office of the assessee in Mumbai constituted a Permanent Establishment in India for the assessment year and was therefore taxable under the India-Japan DTAA. - HELD THAT: - The Tribunal examined only the impounded documents relevant to the assessment year and applied Article 5 and Article 7 of the DTAA together with the principle that a fixed place maintained solely for preparatory or auxiliary activities does not constitute a PE. The coordinate-bench precedents in the assessee's own cases were reviewed but the Tribunal reiterated that PE status must be determined year-wise on the facts of each assessment year. For the years under consideration the material before the AO consisted of correspondence, emails and agent communications which, on close scrutiny, were consistent with the liaison office acting as a communication channel and providing support services to the head office. There was no independent written sales agreement, no records of the RBI finding non-compliance with the liaison-permission, no recorded statements of employees or agents under section 133(6) nor other conclusive evidence of the liaison office negotiating and concluding contracts on behalf of the head office. On that factual matrix the Tribunal concluded that the liaison office performed preparatory/auxiliary functions only and did not carry on core business activities constituting a PE in India. [Paras 8, 14, 23, 24, 25]

Liaison office did not constitute a Permanent Establishment in India; ground allowing assessee's challenge is allowed.

Attribution of profits to Permanent Establishment - Double Taxation Avoidance Agreement - Whether profits attributable to an alleged Permanent Establishment should be computed and whether the methods adopted by the lower authorities were correct (as raised in assessee's grounds 2 and 3 for the assessment year). - HELD THAT: - Because the Tribunal held that no PE existed for the assessment year, the questions of computing profits attributable to a PE, applying Article 7(1) and 7(2) of the DTAA, adopting commission rates or other profit-allocation methods, and the related adjustments became academic. The Tribunal therefore did not decide the substantive methods of attribution on merits and treated those grounds as infructuous. [Paras 26]

Grounds on attribution and computation of PE profits dismissed as infructuous.

Interest under section 234B - Whether interest under section 234B was leviable on the assessee for the assessment year. - HELD THAT: - Applying the legal position in the cited Supreme Court authority relied upon by the Tribunal, the Tribunal allowed the assessee's ground challenging the levy of interest under section 234B. The Tribunal accepted the assessee's contention in the light of the binding precedent and set aside the levy of interest for the assessment year. [Paras 27]

Levy of interest under section 234B set aside; assessee's ground allowed.

Permanent Establishment - Whether the Revenue's grounds challenging the CIT(A)'s directions on computation (profit rate and expenditure allowance) remain maintainable after the Tribunal's finding on PE for the assessment year. - HELD THAT: - Since the Tribunal concluded that the liaison office did not constitute a PE for the assessment year, the Revenue's appeals that sought to restore the AO's estimation of profits and disallowance of certain expenditures were rendered academic. The Tribunal therefore dismissed the Revenue's appeals as infructuous without deciding the contested estimate methods on merits. [Paras 30]

Revenue's appeals dismissed as infructuous.

Permanent Establishment - Preparatory and auxiliary activities - Whether the liaison office constituted a Permanent Establishment in India for A.Y. 2001-02. - HELD THAT: - On the facts relevant to A.Y. 2001-02 the Tribunal examined the impounded documents for that year (performance reviews, letters, PVA report, minutes, emails) and found they evidenced communications and support tasks rather than independent commercial activity. The PVA report's suggestions and internal performance targets were not shown to have been implemented; absence of RBI action and absence of written sales agreements, statements under section 133(6) or other conclusive proof led the Tribunal to hold the liaison office performed preparatory/auxiliary functions and did not amount to a PE for that year. [Paras 37, 41, 47, 48]

Liaison office did not constitute a Permanent Establishment in India for A.Y. 2001-02; assessee's grounds allowed.

Attribution of profits to Permanent Establishment - Whether the ancillary grounds on gross profit rates, global profit ratios and attribution methods for A.Y. 2001-02 required adjudication. - HELD THAT: - Having held that no PE existed for A.Y. 2001-02, the Tribunal treated the related grounds on adoption of global operating profit ratio, the use of Rule 10 estimates, and the question of attributing gross profits to a PE as academic and therefore did not decide them on merits. [Paras 49]

Grounds on profit attribution and computation dismissed as infructuous.

Permanent Establishment - Whether the Revenue's grounds in the A.Y. 2001-02 appeals against the CIT(A)'s directions on sales figures, gross profit rate and interest were maintainable after the Tribunal's PE finding. - HELD THAT: - Because the Tribunal found no PE for A.Y. 2001-02, the Revenue's challenges to the appellate directions on adopting sales figures, gross profit rate and expenditure allowance were rendered academic. The Tribunal therefore dismissed the Revenue's grounds as infructuous. [Paras 52]

Revenue's appeals dismissed as infructuous.

Procedural effect - Whether the appeal against the order giving effect to the CIT(A)'s decision (order giving effect) remained live. - HELD THAT: - The Tribunal observed that the appeal arising from the order giving effect was consequential on the appellate decision; having decided the principal issues in the connected appeal (ITA No. 118/Mum/2006) in favour of the assessee, the appeal against the order giving effect became infructuous and was dismissed. [Paras 54, 55]

Appeal against the order giving effect dismissed as infructuous.

Final Conclusion: The Tribunal held, for A.Y. 2003-04 and A.Y. 2001-02, that the Mumbai liaison office did not constitute a Permanent Establishment in India (relief to the assessee); consequential issues of profit attribution and AO estimations were treated as academic and dismissed as infructuous; the levy of interest under section 234B was set aside in the assessee's favour; Revenue appeals directed to restore AO's estimates were dismissed.

Time-barred assessment in pursuance of Section 254 - limitation under section 153(3) - interaction between section 144C and section 153 - non-obstante clause in section 144C(13) - jurisdictional bar due to limitation

Time-barred assessment in pursuance of Section 254 - limitation under section 153(3) - interaction between section 144C and section 153 - jurisdictional bar due to limitation - Validity of assessment order dated 15-03-2019 as barred by limitation under section 153(3) when the ITAT's order under section 254 was received on 06-06-2017. - HELD THAT: - The Tribunal examined the statutory scheme and timelines in section 144C and section 153. Section 144C contains specific timelines for DRP directions in original assessments, including limits in sub-sections (12) and (13), and a non-obstante clause in sub-section (13) for completion of assessment pursuant to DRP directions. However, where an assessment is set aside by the ITAT under section 254 and remitted for fresh adjudication, the Tribunal held that the fresh assessment must be completed within the period prescribed by section 153(3) - namely, before the expiry of nine months from the end of the financial year in which the ITAT's order is received by the Principal Commissioner. To interpret section 144C(13) as allowing an unlimited extension would defeat the statutory intent to confine remand proceedings within a specified period. The Tribunal relied on the decision of the Madras High Court in CIT v. Roca Bathroom Products (P.) Ltd., which treated sections 144C and 153 as interdependent and emphasized that timelines in section 153(3) apply on remand and that DRP/Assessing Officer cannot extend time indefinitely. Applying these principles to the facts, since the ITAT order was received on 06-06-2017, the assessing officer was required to pass the fresh assessment on or before 31-12-2018 (nine months from the end of the financial year in which the order was received). The assessment order dated 15-03-2019 therefore exceeded the statutory period and is void for want of jurisdiction. As the appeal was allowed on this jurisdictional ground, the Tribunal did not adjudicate the merits of the other grounds raised by the assessee. [Paras 7, 8]

Assessment order dated 15-03-2019 is time-barred under section 153(3) and is set aside for want of jurisdiction; appeal allowed on that ground without adjudication on merits.

Final Conclusion: The appeal is allowed on the ground that the assessment passed on 15-03-2019 was barred by limitation under section 153(3) as the ITAT's order under section 254 was received on 06-06-2017; the Tribunal set aside the assessment as void for want of jurisdiction and did not decide the merits of other grounds.

Arm's-length price - Comparable Uncontrolled Price (CUP) method - basket (aggregate/portfolio) transactions approach - benchmarking of notional interest on interest-free advances - LIBOR plus basis points as appropriate comparable - quasi equity / capital infusion vs loan for transfer pricing - deduction of profits of eligible industrial undertaking under Sections 80IB / 80IC - sale of empty containers as part of business profits - additional depreciation under Section 32(1)(iia) - Employees Stock Option Scheme (ESOP) expense - deduction under Section 37(1)

Arm's-length price - Comparable Uncontrolled Price (CUP) method - basket (aggregate/portfolio) transactions approach - Whether CUP comparability may be performed by aggregating multiple distinct products into a single 'basket' for benchmarking exports to an associated enterprise. - HELD THAT: - The Tribunal held that while aggregation of closely linked transactions may be permissible in limited circumstances, CUP analysis ordinarily requires product by product comparability unless the taxpayer demonstrates that the items in the basket are inextricably linked or marketed as a commercial whole so that separate pricing is impracticable. The assessee failed to show that antimalarial products and other pharmaceutical products were interdependent or marketed such that individual comparability was impracticable. Reliance on invoices showing combined billing and market penetration strategy was insufficient without rational evidence of interdependence or unified commercial treatment of the items. Consequently, the transfer pricing adjustment based on product wise comparison was upheld. [Paras 24, 27, 28, 93, 112]

Basket approach rejected; CUP comparison must be product by product in the facts of these cases; transfer pricing adjustments to exports to IPCA Pharma Nigeria Ltd. confirmed.

Benchmarking of notional interest on interest-free advances - LIBOR plus basis points as appropriate comparable - quasi equity / capital infusion vs loan for transfer pricing - Appropriate basis and rate for imputing interest on interest free advances to foreign wholly owned subsidiaries. - HELD THAT: - The Tribunal held that advances to associated enterprises constitute international transactions requiring benchmarking against comparable rates. Internal cost of borrowings of the Indian parent is not an appropriate internal CUP where comparable external rates are available for the recipient jurisdictions. Where comparable market rates exist for cross border lending, LIBOR (appropriate to currency/market) with an upward adjustment is the accepted benchmark. On the facts, the Tribunal directed application of LIBOR plus an appropriate margin (consistently adopting LIBOR + 200 basis points in the relevant appeals) and that interest be computed only for the actual period the advances were outstanding. Where earlier officers had applied higher margins (e.g., Libor+300 or other computed blends), those were reduced in accordance with this benchmark. [Paras 59, 61, 95, 100, 113]

Interest to be benchmarked using LIBOR + 200 basis points and computed pro rata for the period of advances; earlier higher rates rejected to that extent.

Deduction of profits of eligible industrial undertaking under Sections 80IB / 80IC - sale of empty containers as part of business profits - Whether receipts from sale of empty containers by eligible manufacturing units form part of 'profits and gains' of the industrial undertaking eligible for deduction under Sections 80IB / 80IC. - HELD THAT: - The Tribunal observed that receipts from the sale of empty containers arise from the business operations of the eligible industrial undertakings and are not a separate business. Citing favourable High Court and Tribunal precedents, the Tribunal held such receipts form part of the profits of the industrial undertaking and are eligible for the respective statutory deductions. The Assessing Officer's reliance on other High Court decisions was distinguished on facts; earlier decisions in the assessee's own matters and coordinate benches were noted. Consequently, disallowances relating to empty container sales were directed to be deleted and deductions granted. [Paras 34, 37, 76, 97, 114]

Sale proceeds of empty containers held to be part of business profits of eligible undertakings and allowable for deduction under Sections 80IB / 80IC; disallowances to be deleted.

Additional depreciation under Section 32(1)(iia) - Whether balance additional depreciation (50%) claimed in the year following the year of acquisition/use (where asset was put to use for less than 180 days) is allowable. - HELD THAT: - The Tribunal followed coordinate and High Court authority holding that where assets qualifying for additional depreciation were put to use for less than 180 days in the previous year and 50% was allowed in that year, the balance 50% is claimable in the subsequent year. The Tribunal found the assessee's claim covered by precedent (including Cosmo Films and Madras High Court decisions) and directed allowance of the balance additional depreciation. [Paras 44, 45, 98]

Balance additional depreciation allowable; disallowance by AO deleted.

Employees Stock Option Scheme (ESOP) expense - deduction under Section 37(1) - Whether the discount on ESOPs (difference between market price and exercise/offer price) is an allowable deduction under Section 37(1) as a business expenditure. - HELD THAT: - The Tribunal applied binding and persuasive High Court and Special Bench authority holding that the ESOP discount represents a business expenditure incurred to secure employee services, is a quantifiable legal liability on vesting/exercise, and is allowable under Section 37(1) (subject to conditions). The Tribunal noted that Section 37(1) does not require actual cash outflow at the time of recognition and that classification as short receipt of share premium does not convert it into impermissible capital receipt for the employer. Earlier contrary revenue contentions (including reliance on TDS jurisprudence) were held not to undermine the deduction. Accordingly, the CIT(A)'s allowance of ESOP expense was upheld. [Paras 12, 48, 101, 116]

Discount on ESOPs held deductible under Section 37(1); AO's challenge dismissed.

Final Conclusion: Across assessment years 2005 06 to 2010 11 the Tribunal upheld the product by product application of the CUP method and confirmed transfer pricing adjustments to certain exports where the assessee failed to justify a basket approach; directed benchmarking of notional interest on interest free advances by reference to LIBOR plus an appropriate margin (adopted as LIBOR +200 basis points on the facts) computed pro rata for the period of advances; held that proceeds from sale of empty containers form part of the profits of eligible industrial undertakings and are eligible for deduction under Sections 80IB/80IC; allowed balance additional depreciation under Section 32(1)(iia) where applicable; and upheld the allowability of ESOP discount as a deduction under Section 37(1). Appeals of the assessing officer were largely dismissed; several of the assessee's appeals were partly allowed in accordance with these conclusions.

Characterisation of payment for computer software as sale of goods and not royalty - Liability to deduct tax at source under section 195 linked to income chargeable under section 9 - Taxability of non-resident in India dependent on existence of Permanent Establishment - Assessee in default under section 201 for failure to deduct TDS

Characterisation of payment for computer software as sale of goods and not royalty - Application of Engineering Analysis Centre for Excellence (Apex Court) on EULAs/distribution agreements - Payments made by the assessee to Mentor Graphics (Ireland) Ltd. under the distribution agreement do not constitute "royalty" but are in the nature of sale of goods/distributorship transactions. - HELD THAT: - Applying the ratio of the Hon'ble Supreme Court in Engineering Analysis Centre for Excellence (as reproduced and followed), the Tribunal found that the distribution agreement granted only non exclusive distributorship rights while expressly reserving all intellectual property rights with the foreign supplier and prohibiting reproduction or transfer of copyright. The Apex Court held that EULAs/distribution agreements of this character do not transfer any interest in the copyright (Section 30 of the Copyright Act) and that what is supplied is effectively a physical object containing embedded software - a sale of goods - not a licence conferring rights to reproduce or exploit copyright. In view of those principles and the specific clauses of the agreement (reservation of rights, prohibition on alteration/assignment, limited promotional use, licence for evaluation copies), the Tribunal concluded that the payments could not be characterised as "royalty" chargeable under section 9(1)(vi) read with the applicable DTAA, and therefore the assessment treating such payments as royalty was deleted. [Paras 10, 11]

Addition treating the payments as royalty deleted; transactions held to be sale/distribution and not royalty.

Liability to deduct tax at source under section 195 linked to income chargeable under section 9 - Taxability of non-resident in India dependent on existence of Permanent Establishment - Assessee in default under section 201 for failure to deduct TDS - Assessee was not liable to deduct tax at source under section 195 in respect of payments to the non-resident supplier absent taxability of the non-resident in India (no PE), and therefore could not be treated as an assessee in default under section 201 for those payments. - HELD THAT: - The Tribunal followed the Supreme Court's exposition that the machinery provision in section 195 is linked to the charging provision in section 9 read with section 4 and the DTAA: a person in India is required to deduct TDS only if the non-resident payee is liable to tax in India. The Apex Court categorised and answered that in cases of distributors/resellers (second category), amounts paid for resale/use of software under distribution agreements do not constitute royalty and do not give rise to income taxable in India; consequently, persons liable under section 195 were not obliged to deduct TDS. Applying that reasoning to the facts - the supplier had no PE in India and the payments were not chargeable as royalty - the Tribunal held that the assessee was not under an obligation to deduct tax and therefore the order treating it as an assessee in default under section 201 could not be sustained. [Paras 11]

Liability to deduct TDS under section 195 disallowed; assessment treating the assessee as an assessee in default under section 201 set aside.

Final Conclusion: Following and applying the Supreme Court's decision in Engineering Analysis Centre for Excellence, the Tribunal held that the payments under the distribution agreement were not royalty but sale/distribution, and that no obligation to deduct tax under section 195 arose (the non-resident supplier had no PE and no India taxable income); accordingly the additions and the treatment of the assessee as an assessee in default under section 201 were deleted and all appeals allowed.

Capital receipt versus revenue receipt (subsidy) - admission of substantial question of law for hearing - remand for fresh consideration to Assessing Officer - disallowance under Section 14A and Rule 8D - carry forward of additional depreciation - proviso to Section 80IA(8) - determination of profits of eligible unit

Admission of substantial question of law for hearing - Substantial question of law (a) - whether additions under section 153A can be made only on evidence found in search in respect of assessments which have become final - admitted for hearing. - HELD THAT: - The Court recorded that substantial question of law (a) is admitted for consideration along with similar questions pending in other appeals (including ITAT/22/2020). No merit determination on the question was made in this order; the question is admitted to be heard on its merits before this Court.

Question (a) admitted for hearing before the High Court.

Admission of substantial question of law for hearing - Substantial question of law (b) - reliance on All Carbo Special Bench decision vis-a -vis contrary decisions - admitted for hearing. - HELD THAT: - The Court recorded that substantial question (b) is admitted for consideration, noting that similar issues are being entertained in other appeals; the Court did not decide the substantive conflict of authorities at this stage but placed the question on the admitted list for adjudication.

Question (b) admitted for hearing before the High Court.

Proviso to Section 80IA(8) - determination of profits of eligible unit - remand for fresh consideration to Assessing Officer - Substantial question of law (c) - direction to Assessing Officer to determine profits and gains of the eligible unit on a reasonable basis under the proviso to Section 80IA(8) - remanded. - HELD THAT: - The Court observed that the learned Tribunal had remanded the matter back to the Assessing Officer for fresh consideration under the proviso to Section 80IA(8). Consequently, there is no substantial question arising for this Court to decide on the merits in the present appeal; the matter stands for fresh adjudication before the Assessing Officer as per the Tribunal's order.

Question (c) not admitted for hearing by this Court; matter remanded back to Assessing Officer for fresh consideration as directed by the Tribunal.

Capital receipt versus revenue receipt (subsidy) - Substantial question of law (d) - whether Sales Tax subsidy and Industrial Promotion Assistance are capital receipts not chargeable to tax - answered in favour of the assessee. - HELD THAT: - Relying on this Court's decision in Principal Commissioner of Income Tax Vs. M/s. Budge Budge Refineries, the Court held that the question must be answered in favour of the respondent/assessee. On that basis the substantial question (d) was not admitted for further hearing since the Court found the precedent dispositive in favour of the assessee.

Question (d) decided in favour of the respondent; not admitted for further hearing.

Carry forward of additional depreciation - Substantial question of law (l) - entitlement to carry forward balance additional depreciation - admitted for hearing. - HELD THAT: - The Court recorded admission of substantial question (l) for consideration along with other similar appeals. No substantive adjudication on entitlement or applicability was undertaken in this order; the question will be heard on merits before the Court.

Question (l) admitted for hearing before the High Court.

Disallowance under Section 14A and Rule 8D - Substantial questions of law (h) and (i) - relating to disallowance under Section 14A read with Rule 8D(2)(ii) and Rule 8D(2)(iii) - admitted for hearing. - HELD THAT: - The Court specifically admitted the questions on whether interest and other expenses are to be disallowed under Section 14A and Rule 8D in the factual matrix of this case. The respondent was granted liberty to file cross-objections in view of these admissions. No merits determination was made in this order; the matters will proceed to be heard on their substantive legal and factual contentions.

Questions (h) and (i) admitted for hearing before the High Court; respondent permitted to file cross-objection.

Final Conclusion: The High Court admitted substantial questions (a), (b), (h), (i) and (l) for hearing; question (c) was left for fresh consideration by the Assessing Officer pursuant to the Tribunal's remand; question (d) was answered in favour of the assessee on authority of this Court's precedent and therefore not admitted for further hearing. Other raised questions were not admitted in this order. The revenue was directed to file the informal paper book and the respondent allowed to file cross-objection in accordance with law.

Principles of natural justice - opportunity to file/upload documents - compliance with tribunal direction on remand to produce contemporaneous, primary and secondary evidence - assessment for Assessment Year 2009-2010 - filing of statutory appeal under Section 246A - application for stay of recovery under Section 220(6)

Principles of natural justice - opportunity to file/upload documents - compliance with tribunal direction on remand to produce contemporaneous, primary and secondary evidence - assessment for Assessment Year 2009-2010 - Validity of the assessment order dated 25.09.2021 on the ground that it was passed without adequate opportunity to upload documents and in violation of principles of natural justice. - HELD THAT: - The Tribunal's remand order of 07.08.2020 required the petitioner to file all contemporaneous, primary and secondary evidence before the Assessing Officer for appropriate consideration. The petitioner contended inability to upload evidence due to technical glitches in the Income Tax Web Portal and relied on communications made on 14.09.2021 and an undertaking to upload by 23.09.2021 after a show cause/draft assessment notice dated 17.09.2021. The High Court examined the chronology and found no records to substantiate the asserted portal failure; notices under Section 142(1) dated 20.02.2021 and a reminder dated 17.08.2021 remained incompletely complied with. The Court observed that nothing precluded the petitioner from furnishing the required material earlier pursuant to the Tribunal's directions and that the impugned order was passed after non-compliance with the information calls. On these findings, the Court concluded that the petitioner's grievance of denial of opportunity was not established and that principles of natural justice were not shown to be violated. [Paras 16, 17, 18, 19]

Writ petition dismissed on merits; impugned assessment order upheld as there was no demonstration of denial of adequate opportunity to upload documents.

Filing of statutory appeal under Section 246A - application for stay of recovery under Section 220(6) - Availability of alternate remedies and consequential directions following dismissal of the writ petition. - HELD THAT: - Noting the existence of efficacious statutory remedies, the Court granted the petitioner liberty to file a statutory appeal before the Appellate Commissioner under Section 246A within thirty days from receipt of the order and directed that any such appeal be entertained and disposed of on merits within three months. The Court also permitted the petitioner to file an application under Section 220(6) for stay of recovery and directed that if the petitioner demonstrates it had no earlier opportunity to upload documents immediately after the Tribunal's remand order, the respondent shall consider such application while passing appropriate orders. The Court referred to the Supreme Court decision relied upon and left the determination to the competent authority in accordance with law. [Paras 20, 21]

Liberty granted to file statutory appeal within thirty days and to move under Section 220(6) for stay of recovery; appellate authority to decide expeditiously as directed.

Final Conclusion: Writ petition dismissed on merits for Assessment Year 2009-2010; petitioner granted liberty to file a statutory appeal under Section 246A within thirty days and to apply under Section 220(6) for stay of recovery, both to be considered and disposed of by the appropriate authorities in accordance with law.

Reopening of assessment - first proviso to section 147 - failure to disclose fully and truly all material facts - reasons recorded for reopening must disclose the Assessing Officer's mind - reassessment invalid if conditions of proviso are not satisfied

Reopening of assessment - first proviso to section 147 - failure to disclose fully and truly all material facts - reasons recorded for reopening must disclose the Assessing Officer's mind - Validity of reassessment proceedings initiated after four years under section 147 on the ground of alleged failure to disclose fully and truly all material facts - HELD THAT: - The Tribunal examined whether the conditions of the first proviso to section 147 were satisfied where assessment had been completed under section 143(3) and a notice under section 148 was issued beyond four years. The AO's recorded reasons relied on information from DDIT (Inv.), Kolkata alleging the assessee benefited from layering of funds through certain entities. However, the assessee had furnished details of sundry debtors (including Silverson Logistics Pvt. Ltd., Highland Transport Pvt. Ltd. and Neelanchal Roadways Pvt. Ltd.) in response to notices issued under section 142(1) during the original scrutiny; those details were considered and accepted in the section 143(3) assessment. The AO accepted, during disposal of objections to reopening, that the assessee had no transaction with Kalyani Vincom Pvt. Ltd. and yet later raised new allegations in reassessment which were not part of the reasons originally recorded. Relying on the settled principle that reasons for reopening must be read as recorded and cannot be supplemented, and that the reasons must disclose what material fact was not disclosed by the assessee, the Tribunal concluded that the assessee did not fail to disclose fully and truly all material facts necessary for assessment. Accordingly the statutory condition in the proviso to section 147 for reopening after four years was not met and the reopening was held invalid. [Paras 12, 14, 15, 16]

Reassessment proceedings under section 147/148 set aside as bad in law for non-satisfaction of the first proviso to section 147; ground No.1 of assessee's appeal allowed.

Final Conclusion: The Tribunal allowed the appeal by setting aside the reassessment initiated under section 147/148 for AY 2012-13 as the conditions for reopening after four years were not satisfied; other grounds were rendered academic.

Deduction under section 54B - allowability of capital gains deductions - admission of additional evidence - admissibility of additional evidence under Rule 46A - remand for verification of documentary evidence - unexplained cash deposits - proportionate restriction of deductions to taxable consideration

Deduction under section 54B - allowability of capital gains deductions - Claim for deduction under section 54B in respect of land purchased prior to the date of sale - HELD THAT: - Section 54B requires that the new agricultural land be purchased within two years after the date of transfer of the original agricultural land. The assessee purchased the land claimed as the new asset on 23.5.2013, which predates the sale of 50% share on 14.2.2014. On a plain reading of the statutory provision the claim is not tenable where the purchase precedes the sale. The Tribunal finds no reason to interfere with the conclusions of the lower authorities on this legal test and upholds denial of the section 54B deduction for the land purchased prior to the sale. [Paras 12]

Deduction under section 54B disallowed as the replacement land was purchased prior to the date of transfer.

Admission of additional evidence - admissibility of additional evidence under Rule 46A - remand for verification of documentary evidence - Admissibility of confirmations and other documents in support of purchase-related expenses and landscaping/other expenses and remand for verification - HELD THAT: - The assessee produced confirmations from three parties and further documents supporting landscaping and other expenses which the lower authorities had excluded on technical grounds under Rule 46A. The Tribunal holds that the CIT(A) has power to admit additional evidence that goes to the root of the issue and that reasonable cause was shown for non-production earlier (illness of counsel). The Tribunal admits the additional evidence and remits the matters to the Assessing Officer for verification of the confirmations and the newly produced documents, directing that the AO decide the allowability after giving the assessee opportunity of being heard. [Paras 14, 15, 16]

Additional evidence admitted; issues remitted to the AO for verification and fresh decision in accordance with law after giving opportunity to the assessee.

Proportionate restriction of deductions to taxable consideration - allowability of capital gains deductions - Extent of allowable deductions claimed against capital gains where only part of sale consideration is offered to tax in the year - HELD THAT: - The assessee offered only 50% of the total sale consideration in the current year. The Tribunal reasons that deductions related to the sale proceeds (purchase-time expenses, landscaping and other expenses) must be restricted pro rata to the portion of the consideration recognized for taxation in the year. Accordingly, the Tribunal directs the AO to allow only 50% of eligible deductions after verification of evidence. [Paras 17]

Allow only 50% of eligible deductions relating to the sale proceeds for the year, subject to verification.

Unexplained cash deposits - remand for verification of documentary evidence - Addition on account of alleged unexplained cash deposits in bank accounts - HELD THAT: - The AO disallowed deposits as unexplained relying on a month-wise analysis of bank entries and rejected the cash book produced by the assessee as prepared to suit bank entries. The Tribunal notes absence of reconciliation by revenue between the cash book and bank statements and that the cash book and the summary submitted require examination. In the interests of justice, the Tribunal remits the issue to the AO for fresh verification of the cash book, reconciliation with bank statements and other relevant details, and directs the assessee to furnish supporting documents and cooperate in proceedings. [Paras 18, 20]

Addition set aside for now; matter remitted to the AO for fresh verification and decision in accordance with law.

Final Conclusion: The appeal is partly allowed: the claim under section 54B is disallowed as the replacement land was purchased prior to the transfer; additional evidence on purchase-related and landscaping expenses is admitted and those issues are remitted to the AO for verification; deductions relating to expenses are directed to be restricted to 50% (reflecting the portion of consideration taxed) after verification; the addition for unexplained cash deposits is remitted to the AO for fresh examination. The appeal is disposed of accordingly for statistical purposes.

Identity, creditworthiness and genuineness under section 68 of the Income tax Act - Admissibility and evidentiary value of statements recorded during survey proceedings under section 133A - Retraction affidavits and requirement of corroborative evidence - Prospective operation of proviso to section 68 introduced by Finance Act, 2012 - Onus of proof and shifting of burden upon Revenue once assessee furnishes prima facie documentary evidence - Violation of principles of natural justice by non supply of third party statement - Reliance on documentary evidence - share applications, bank entries and valuer's report - to establish genuineness

Identity, creditworthiness and genuineness under section 68 of the Income tax Act - Onus of proof and shifting of burden upon Revenue once assessee furnishes prima facie documentary evidence - Prospective operation of proviso to section 68 introduced by Finance Act, 2012 - Reliance on documentary evidence - share applications, bank entries and valuer's report - to establish genuineness - Deletion of addition made under section 68 in respect of share capital and share premium received by the assessee - HELD THAT: - The Tribunal upheld the order of the CIT(A) deleting the addition under section 68. The assessee had filed extensive documentary material - share application forms, board resolutions, PAN/CIN details, audited financials of subscriber companies, bank statements showing payment through banking channels and a registered valuer's report supporting the premium - which, on the facts, established the identity, creditworthiness and genuineness of the transactions and discharged the primary onus. The AO had not independently dislodged or disproved these documents by carrying out verifications of the share subscribers, but instead drew adverse inferences relying upon statements recorded during survey/search and certain digital material which was not linked to the assessee. The Tribunal (following the decision in Hemadri Machine Tools Pvt. Ltd. on the same facts) held that where the assessee places substantial documentary evidence proving the three ingredients under pre proviso section 68, the burden shifts to the Revenue to produce corroborative material; further the proviso to section 68 (introduced w.e.f. 01.04.2013) is prospective and not applicable to the assessment year under consideration. In the absence of independent corroboration by the AO, the share premium could not be treated as unexplained cash credit.

Addition under section 68 in respect of share capital and share premium for A.Y.2012 13 deleted; CIT(A)'s order upheld.

Admissibility and evidentiary value of statements recorded during survey proceedings under section 133A - Retraction affidavits and requirement of corroborative evidence - Violation of principles of natural justice by non supply of third party statement - Validity of AO's reliance on statements recorded during survey/search and effect of subsequent retraction affidavits on the assessment - HELD THAT: - The Tribunal held that statements recorded in the course of survey proceedings under section 133A do not possess evidentiary value for making additions, and that several third party statements relied upon by the AO had subsequently been retracted by the declarants. Once retracted and relied upon in cross examination, those statements lose probative value unless the AO produces independent corroborative material. The AO failed to produce any incriminating documents directly linking the seized material to the assessee's share receipts; further, one key statement relied upon (of Shri Shirish Shah) was not furnished to the assessee, causing a breach of natural justice. In these circumstances the Tribunal found it impermissible to base an addition on such statements without independent corroboration.

Reliance on survey/search statements and retracted statements rejected; AO's reliance thereon held unsustainable.

Final Conclusion: The Revenue's appeal is dismissed; the Tribunal upholds the CIT(A)'s deletion of the addition under section 68 for A.Y.2012 13, finding that the assessee had discharged the onus by documentary evidence and that the AO's reliance on survey/search statements and uncorroborated material was unjustified.

Section 50C and reference to District Valuation Officer (DVO) - Revision under section 263 of the Income tax Act - Doctrine of merger of assessment order in appellate order - Audit objection as basis for exercise of revisional jurisdiction - Distinction between inadequate inquiry and lack of inquiry

Section 50C and reference to District Valuation Officer (DVO) - Whether the Assessing Officer was legally obliged to refer valuation to the DVO under section 50C(2) so as to render the assessment order erroneous and prejudicial to revenue. - HELD THAT: - The Bench examined whether the word 'may' in section 50C(2) mandates a reference to the DVO or admits a discretionary approach. The revenue did not produce binding precedent construing 'may' as 'shall'. The Tribunal noted conflicting decisions on the point and observed that where two reasonable views exist about the legal import of 'may', the view taken by the AO does not ipso facto make the assessment order erroneous or prejudicial to the revenue for the purposes of section 263. Reliance was placed on the principle that differing but possible views taken by the AO preclude interference under section 263, including the authorities discussed by the parties. Accordingly, absence of a mandatory judicial or statutory requirement to construe 'may' as 'shall' meant the Revisional Authority's conclusion that the AO was bound to refer to the DVO was unsustainable. [Paras 6, 7]

The Tribunal held that section 50C(2) does not mandatorily require a reference to the DVO in all cases and the mere non referral did not render the assessment order per se erroneous and prejudicial to revenue.

Revision under section 263 of the Income tax Act - Audit objection as basis for exercise of revisional jurisdiction - Distinction between inadequate inquiry and lack of inquiry - Whether the revisional order under section 263 was sustainable where it was founded substantially on audit objections and where the AO had in fact considered the assessee's submissions during limited scrutiny. - HELD THAT: - The Tribunal analysed the record and found that the assessee had furnished detailed submissions, valuation report and comparable sale deeds during the limited scrutiny, and the AO had considered those submissions while framing the assessment. Although the assessment order did not explicitly recite examination under section 50C, authorities establish that absence of specific mention in the order does not mean no application of mind where the query was raised and answered during assessment. The Revisional Authority's notice and order largely reproduced audit objections and proceeded to set aside the assessment without independent examination beyond those objections. The Bench held that exercising revisional power merely to pursue audit objections, without demonstrable independent application of mind or a finding of lack of inquiry (as distinct from inadequate recording), is impermissible. [Paras 9, 10, 11, 12, 13]

The Tribunal concluded that the exercise of powers under section 263 based substantially on audit objections and without independent appraisal of the records was unsustainable and set aside the revisional order on this ground.

Doctrine of merger of assessment order in appellate order - Whether the assessment order stood merged in the order of the first appellate authority (CIT(A)) and consequently prevented exercise of revisional jurisdiction under section 263 in respect of the same subject matter. - HELD THAT: - The Tribunal observed that the assessee had appealed the assessment and the CIT(A) examined the disallowance under section 54 (including quantum) and allowed the appeal. Section 50C is a facet relevant to computation of capital gains and the availability/quantum of deduction under section 54; thus the issue was within the scope of the appellate proceedings. Where the first appellate authority has decided the issue on merits, the original assessment order merges in the appellate order. The record also showed that the AO acknowledged pendency and outcome of the appeal and had itself proposed revision; the Revenue had remedies by appeal to the Tribunal. Given the merger and the availability of alternate remedy, the Revisional Authority was not justified in reopening the matter under section 263. [Paras 15, 16, 17]

The Tribunal held that the assessment order stood merged in the CIT(A)'s order and, in view of the doctrine of merger and existence of appellate remedy, the revisional order under section 263 could not be sustained.

Final Conclusion: The appeal is allowed. The impugned order under section 263 dated 30.03.2021 is set aside because (a) section 50C(2) does not mandate an automatic reference to the DVO in all cases and differing views are possible; (b) the revisional proceedings were founded largely on audit objections without independent application of mind; and (c) the assessment order had merged in the CIT(A)'s order, rendering exercise of section 263 in the circumstances unsustainable.

Rectification under section 154 - mistake apparent on the record - difference of opinion in valuation - reference to DVO under section 55A - fair market value as on 1.4.1981

Rectification under section 154 - mistake apparent on the record - difference of opinion in valuation - fair market value as on 1.4.1981 - reference to DVO under section 55A - Validity of the Assessing Officer's rectification order u/s 154 which recomputed long term capital gains based on a subsequent DVO valuation - HELD THAT: - The Tribunal examined whether the Assessing Officer could invoke rectification proceedings under section 154 to reopen and re-determine the disputed FMV/cost of construction on which long term capital gain was computed. The assessee had submitted a Government approved valuer's report relying on FMV as on 01.04.1981 under the proviso to section 55(2)(b); subsequently a reference was made to the DVO under section 55A and, after completion of the assessment accepting the returned income subject to the DVO report, the DVO's later report prompted the AO to pass a rectification order under section 154 to enhance the capital gain. The Tribunal applied the settled principle that a rectification under section 154 is confined to correcting an obvious and patent mistake apparent on the record and cannot be used to decide a debatable question of fact or law which may admit of two opinions. Relying on the Coordinate Bench decision in Kirit Thakker v. ITO on similar facts, the Tribunal held that determination of FMV/cost of construction as on 1.4.1981 is a debatable, fact sensitive exercise involving estimates and subjective considerations, and therefore does not amount to a mistake apparent on the face of the record amenable to rectification under section 154. Consequently the AO travelled beyond jurisdiction in re determining valuation by invoking section 154; the rectification order and the CIT(A)'s confirmation were set aside. The Tribunal admitted the additional grounds raising these legal contentions and, as the rectification was quashed, declined to adjudicate the main grounds as infructuous at that stage. [Paras 16, 18, 20, 21, 22]

Order passed u/s 154 and the order of the Ld.CIT(A) confirming the enhancement were set aside; the additional grounds were allowed and the appeal was partly allowed.

Final Conclusion: The Tribunal held that the AO could not, by exercise of rectification power under section 154, re determine the disputed valuation/FMV which was a debatable question of fact and opinion; the rectification order and the appellate confirmation were quashed and the appeal was partly allowed, leaving main grounds unadjudicated as infructuous.

Transfer pricing - management fees to associated enterprise - arm's length price - provision for obsolete inventory - valuation of closing stock - consistency in accounting method - scientific basis for provision - set off of losses of 100% EOU against other business income

Transfer pricing - management fees to associated enterprise - arm's length price - Adjustment in the hands of the assessee on account of payment of management fees to the Associated Enterprise was not warranted. - HELD THAT: - The Tribunal and this Court accepted the assessee's case that management services were in fact rendered to it by members of the Sandvik group acting on behalf of Sandvik AB pursuant to the service agreement. The TPO's conclusion that no services were received was displaced by the additional evidence and the terms of the agreement showing that the 'providing parties' could include group companies performing services on behalf of Sandvik AB. Furthermore, the management service fees received by Sandvik AB were taxed in Sweden, reinforcing that services were provided and consideration was not to be treated as entirely at nil. In these circumstances the Tribunal correctly upheld the CIT(A)'s deletion of the transfer pricing addition and the Court found no error in that conclusion. [Paras 4, 5, 6, 7, 8]

Addition on account of management fees (transfer pricing adjustment) deleted; no further adjustment warranted.

Provision for obsolete inventory - valuation of closing stock - consistency in accounting method - scientific basis for provision - Addition made by A.O. by disallowing provision for obsolete finished goods was not sustainable and was rightly deleted. - HELD THAT: - The Tribunal followed its earlier finding in the respondent's appeal for AY 2004-05 that the assessee had consistently followed a method of accounting for obsolete stock and that provision made on a scientific basis could not be disturbed in the absence of evidence to disbelieve that method. The Court declined to take a different view for AY 2005-06 where there was no change in the factual or legal matrix and where prior acceptance by the Revenue of the consistent method was noted. The Tribunal's reliance on the principle of consistency and on the applicability of the decision in Rotork Controls (to the extent of upholding scientifically based provisions) was held to be appropriate. [Paras 9, 10, 11]

Addition of Rs.19,52,000 to closing stock (provision for obsolete inventory) deleted.

Set off of losses of 100% EOU against other business income - Losses sustained by a 100% Export Oriented Unit (EOU) are allowable to be set off against other business income of the assessee. - HELD THAT: - The Court held that Section 10B (as substituted) provides for a deduction and does not introduce a prohibition on setting off losses of an eligible unit against income from other units. The decision in Hindustan Lever Ltd. (and subsequent consistent authority) was followed to conclude that where the statute does not create a bar, the normal entitlement under Section 70 to set off losses applies. Thus the Assessing Officer's approach of disallowing the set-off on the ground of exemption was erroneous. [Paras 3, 12]

Set-off of losses of the 100% EOU against other business income is permissible; Assessing Officer's disallowance set aside.

Final Conclusion: The appeal is dismissed. The High Court upheld the Tribunal's deletion of the transfer pricing addition in respect of management fees, sustained deletion of the addition relating to provision for obsolete inventory, and confirmed that losses of a 100% EOU may be set off against other business income.

Faceless Assessment - Principles of Natural Justice - Draft assessment order to be based on all relevant material on record - Reopening of assessment under Section 147

Faceless Assessment - Draft assessment order to be based on all relevant material on record - Principles of Natural Justice - Whether the faceless draft and final assessment orders were passed without taking into account material uploaded by the petitioner and thereby in breach of the procedure under Section 144B and principles of natural justice. - HELD THAT: - The Court examined the show cause notice, draft assessment order and final assessment order and noted that the petitioner's response and documents uploaded on 5th March 2022 were not considered; the draft and final orders expressly recorded that no replies had been furnished by the assessee-trust. Section 144B requires that the assessment unit, after taking into account all relevant material on record, make a draft assessment order. Since the impugned orders were issued without considering the material uploaded earlier and afforded only two days for response, the procedure mandated by Section 144B and the requirements of fair opportunity to be heard were not complied with. The Court therefore found the impugned assessment order to be in breach of the prescribed faceless assessment procedure and of natural justice. [Paras 13, 15]

Impugned assessment and related notices quashed insofar as they reflect failure to consider the petitioner's uploaded response and thereby breach Section 144B and natural justice.

Reopening of assessment under Section 147 - Faceless Assessment - Whether the matter should be remitted for fresh consideration by the jurisdictional assessing officer after compliance with the faceless procedure and giving the assessee an opportunity of hearing. - HELD THAT: - Having held that the faceless assessment procedure and the requirement to take into account all relevant material were not followed, the Court invoked its constitutional jurisdiction to set aside the impugned orders and restore the matter to the file of the jurisdictional assessing officer (JAO). The Court directed the JAO to pass a fresh assessment order in accordance with law, within a specified period, after giving the petitioner an opportunity of hearing. The Court left all contentions open for fresh adjudication in accordance with the statutory procedure. [Paras 16, 17]

Assessment order, demand notice and penalty show cause notice set aside and matter remitted to the JAO for fresh consideration in accordance with law and after affording opportunity of hearing.

Final Conclusion: The petition is allowed: the assessment order dated 29th March 2022, the consequent demand notice and the show cause notice initiating penalty proceedings are quashed and set aside; the matter is restored to the file of the JAO for fresh assessment in accordance with Section 144B and after giving the petitioner an opportunity of hearing, with liberty to raise all contentions.

Deletion of unexplained addition to capital account - burden on assessee to explain source of credit - verification of documentary evidence by Assessing Officer on remand - admission of additional evidence under Rule 46A - opening balances not exigible to current year addition - appellate interference limited to perversity in findings of fact

Deletion of unexplained addition to capital account - burden on assessee to explain source of credit - verification of documentary evidence by Assessing Officer on remand - opening balances not exigible to current year addition - appellate interference limited to perversity in findings of fact - Deletion of the addition of Rs.24,50,91,663/- to the assessee's capital account in AY 2012-13 was justified. - HELD THAT: - The Tribunal found that the assessee had explained the composition of the additions: (a) amounts introduced from income surrendered and taxed in the previous year which were deposited and introduced into capital in the year under appeal; (b) unsecured loans evidenced by creditor confirmations, their balance-sheets and bank statements; and (c) opening balances carried forward from earlier years. The record shows the Assessing Officer received and verified the documents through remand reports dated 18th April, 2018 and 14th December, 2018 and did not draw adverse inferences in those reports. The Tribunal, after perusing the evidentiary material and the AO's remand reports, concluded the sources for the deposits and capital additions were satisfactorily explained and therefore the addition could not be sustained. The Revenue did not point to any perversity in the factual findings of the Tribunal or identify any material error in the appreciation of evidence. [Paras 9, 10, 11, 12, 13]

The Tribunal's deletion of the addition was upheld and the addition cannot be sustained.

Admission of additional evidence under Rule 46A - verification of documentary evidence by Assessing Officer on remand - Admission of additional evidence by the CIT(A) and its subsequent verification by the AO was proper and not a ground for interference. - HELD THAT: - The Court noted the conditions for admitting additional evidence under Rule 46A were engaged by the CIT(A) and, importantly, the Assessing Officer examined the documents and furnished remand reports which the Tribunal considered. There is no record of the Revenue having objected to the admission of the additional evidence before the CIT(A) or having cross objected before the Tribunal. The AO's remand reports did not record adverse comments on the documentary evidence; accordingly the objection to admission of the evidence at this stage was belated and no error was shown in the Tribunal's appreciation of the remand reports. [Paras 14]

The admission of additional evidence and the reliance upon AO's remand reports was not impermissible and does not warrant interference.

Final Conclusion: The Revenue's appeal is dismissed. The Tribunal's factual findings that the assessee satisfactorily explained the sources of the capital additions and that the additional evidence was properly admitted and verified are unimpeached; no substantial question of law requiring interference is made out.

Application of Section 41(1) of the Income Tax Act - bogus or non-genuine transactions and taxability on cessation/remission of liability - reliance on an administrative order subsequently set aside by appellate authority - repayment of liability and non-transfer to profit & loss account - concurrent findings of fact - no substantial question of law

Application of Section 41(1) of the Income Tax Act - bogus or non-genuine transactions and taxability on cessation/remission of liability - repayment of liability and non-transfer to profit & loss account - reliance on an administrative order subsequently set aside by appellate authority - concurrent findings of fact - Whether the addition made by the Assessing Officer under Section 41(1) in respect of the alleged unsecured loan (converted from trading liability) was justified. - HELD THAT: - The Court upheld the factual findings of the CIT(A) and the ITAT that the trading credit balance in the books of the assessee, which had been converted to an unsecured loan, was not shown to be bogus or remitted but was subsequently repaid. The Assessing Officer's primary basis for treating the transactions as non-genuine was an order of the Commissioner, Central Excise & Customs finding the purchases to be bogus; that order, however, has been set aside by the CESTAT and thus the AO's foundational conclusion lacked support. The ITAT's reliance on the principle that a previously-allowed trading liability can be brought to tax under Section 41(1) only if there is evidence that the liability ceased or was remitted was considered apposite, but here evidence showed repayment and no transfer of the amount to profit and loss. The Revenue did not challenge the concurrent findings of fact that the parties had long-standing running accounts and that the liability was repaid. In those circumstances Section 41(1) was not attracted and no further enquiry was warranted. [Paras 9, 10]

Addition under Section 41(1) deleted; ITAT order sustaining deletion affirmed and no substantial question of law arises.

Final Conclusion: In view of the CESTAT having set aside the excise order relied upon by the AO, the concurrent factual findings that the liability was genuine, converted to a loan and subsequently repaid were unchallenged; the addition under Section 41(1) was therefore not sustainable and the Revenue's appeal is dismissed.

Prospective application of punitive forfeiture provisions - prohibition on retrospective confiscation for transactions prior to commencement of an amending Act - in rem forfeiture declared unconstitutional as manifestly arbitrary - quashing of proceedings initiated pursuant to the Benami Transactions (Prohibition) Amendment Act, 2016 for pre commencement transactions - declaration under Article 20(1) concerning retrospective penal liability

Quashing of proceedings initiated pursuant to the Benami Transactions (Prohibition) Amendment Act, 2016 for pre commencement transactions - prospective application of punitive forfeiture provisions - Impugned attachment order passed under Section 24(3) of the Benami Transactions (Prohibition) Amendment Act, 2016 and consequential proceedings were quashed insofar as they relate to transactions entered into prior to 25.10.2016. - HELD THAT: - The High Court applied the authoritative conclusion of the Hon'ble Supreme Court in Civil Appeal No.5783 of 2022 (paragraph 18(e)) that authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to the coming into force of the 2016 Amendment (25.10.2016) and that, as a consequence, such prosecutions or confiscation proceedings stand quashed. On that basis the Court held that the attachment order under Section 24(3) issued pursuant to the Amendment Act in the instant proceedings falls within the class of measures which cannot be applied retrospectively and therefore must be set aside. The Court noted that the Supreme Court had declared the in rem forfeiture provision manifestly arbitrary and that the 2016 Amendment introduced substantive punitive provisions which can only operate prospectively.

Impugned attachment order and all consequential proceedings initiated thereunder are quashed insofar as they pertain to transactions prior to 25.10.2016.

Declaration left open for adjudication in appropriate proceedings - questions reserved by the Supreme Court under paragraph 18.1(f) - Matters which the Supreme Court expressly left open in paragraph 18.1(f) were not decided and remain for consideration in appropriate proceedings. - HELD THAT: - The High Court recorded that certain constitutional and legal questions concerning the independent forfeiture proceedings under the 2016 Amendment were left open by the Supreme Court (paragraph 18.1(f) of its judgment). The High Court expressly refrained from adjudicating those questions and indicated that they would be applicable to the facts on hand but must be addressed in suitable proceedings, leaving their resolution to the competent forum.

Questions reserved by the Supreme Court remain open for adjudication in appropriate proceedings and were not decided in this petition.

Final Conclusion: The petition was allowed: the attachment order under Section 24(3) of the 2016 Amendment and all consequential proceedings were quashed insofar as they concern transactions entered into before 25.10.2016; other questions left open by the Supreme Court remain for determination in appropriate proceedings.

Revocation of licence - forfeiture of security - failure to consider representation - opportunity to be heard - remand for fresh consideration - liberty to file written submissions

Failure to consider representation - opportunity to be heard - remand for fresh consideration - Whether the order revoking the customs broker licence and forfeiting the security must be set aside for failure to consider the appellant's representation and remitted for fresh consideration - HELD THAT: - The Tribunal found that the Commissioner's order recorded that the appellant did not file a representation despite being granted 30 days, whereas the appellant contends and produced evidence that a representation dated 20.9.2021 was submitted on 21.9.2021. The Tribunal concluded that the Commissioner failed to take that representation into account. In view of that failure and in the interest of affording an effective opportunity to be heard, the Tribunal set aside the order dated 08.11.2021 and remitted the matter to the Commissioner for passing a fresh order after considering the representation said to have been submitted. The Tribunal also granted the appellant liberty to file written submissions within two weeks and requested the Commissioner to decide the matter within two months from receipt of the Tribunal's order. [Paras 5]

Order dated 08.11.2021 set aside; matter remitted to the Commissioner for fresh consideration after taking into account the representation dated 20.9.2021 (submitted 21.9.2021) and with liberty to file written submissions within two weeks; fresh order to be passed within two months.

Final Conclusion: The appeal is allowed to the extent that the Commissioner's order revoking the customs broker licence, forfeiting the security and imposing a fine is set aside and the matter is remitted for fresh consideration after due consideration of the representation and written submissions within the timelines directed by the Tribunal.

Directorial attribution based on statutory filings - Issuance of warrant after cognizance - Summons-first guideline of Satender Kumar Antil - Categorisation of offences for arrest and bail - Economic offences distinct from Category-A summons rule

Directorial attribution based on statutory filings - The petitioner was a director of the company during the relevant financial years stated in the complaint. - HELD THAT: - The Court accepted the document uploaded on the Ministry of Corporate Affairs portal submitted by the petitioner which records appointment of the petitioner as a director on 4th November, 2013 and his continuance until 23rd August, 2014. On that basis the Court found that the petitioner was a director during the financial years 2012-13 and 2013-14 and therefore properly arrayed as an accused on the allegation of issuance of non-convertible debentures by the company during those years. [Paras 9]

Petitioner held to have been a director during the financial years 2012-13 and 2013-14.

Issuance of warrant after cognizance - Summons-first guideline of Satender Kumar Antil - Categorisation of offences for arrest and bail - Economic offences distinct from Category-A summons rule - The order issuing warrant of arrest against the petitioner after cognizance was not vitiated by the Supreme Court's summons-first guideline in Satender Kumar Antil. - HELD THAT: - The Court examined the classification of offences in Satender Kumar Antil and noted that the obligation to issue summons at the first instance applies to offences falling in Category-A (punishable with imprisonment of seven years or less and not in Categories B or D). The Court observed that offences under the SEBI Act in the present case are punishable with imprisonment up to ten years and fall within the categories where the Category-A guideline does not apply, particularly being economic offences. Applying this categorisation, the Court concluded there was no illegality or material irregularity in the Trial Judge issuing warrants of arrest following cognizance and rightly rejecting the petitioner's application under Section 70(2) CrPC to recall the warrant. [Paras 10, 11, 12, 13, 14]

Impugned order issuing warrant and rejecting recall under Section 70(2) CrPC was not illegal; the summons-first guideline of Satender Kumar Antil did not apply to the offences charged.

Final Conclusion: Criminal revision dismissed; the petitioner was a director during the relevant years and the Trial Judge did not err in issuing warrant of arrest as the summons-first rule in Satender Kumar Antil is inapplicable to the economic/SEBI offences charged.

Settlement under Regulation 26 - SEBI Settlement Scheme, 2022 - reversal trades in the stock option segment - acceptance of settlement application in pending proceeding

Settlement under Regulation 26 - SEBI Settlement Scheme, 2022 - reversal trades in the stock option segment - Disposal of the appeal by directing the appellant to seek settlement under the SEBI Settlement Scheme, 2022 for reversal trades executed during the specified period. - HELD THAT: - The Tribunal recorded that the respondent has issued the SEBI Settlement Scheme, 2022 framed in terms of settlement under Regulation 26, which affords an opportunity for settlement to entities that executed reversal trades in the stock option segment of the Bombay Stock Exchange during the period April 1, 2014 to September 30, 2015. In view of the settlement scheme, the Tribunal disposed of the appeal and directed the appellant to file an appropriate settlement application before the authority concerned within two weeks. The Tribunal further directed that if such application is filed, the authority shall accept it as an application filed in a pending proceeding and pass appropriate orders in terms of the SEBI Settlement Scheme, 2022. [Paras 1, 2]

Appeal disposed by directing the appellant to file a settlement application within two weeks and directing the authority to accept the application in the pending proceeding and pass appropriate orders under the SEBI Settlement Scheme, 2022.

Final Conclusion: The appeal is disposed of with a direction to the appellant to file a settlement application within two weeks; on filing, the authority shall treat it as an application in a pending proceeding and decide it in accordance with the SEBI Settlement Scheme, 2022.

Financial debt - financial creditor - disbursal against consideration for the time value of money - commercial effect of a borrowing - liquidated damages / penal interest - directory nature of procedural timelines (Regulation 13)

Financial debt - financial creditor - disbursal against consideration for the time value of money - commercial effect of a borrowing - liquidated damages / penal interest - Claimed interest/penalty under the Project Agreements is not a 'financial debt' and the appellant is not a 'financial creditor'. - HELD THAT: - The Tribunal upheld the Adjudicating Authority's finding that a mere right to payment or entitlement arising from breach of contract qualifies as an operational debt and does not become a financial debt unless it satisfies the essential element of a disbursal against consideration for the time value of money. The appellant's claim was an accretion of penal interest/liquidated damages under Clause 4 of the 20.03.2012 Supplemental Agreement and arose from reciprocal development obligations rather than a borrowing. Applying the principles in the cited precedents, the essential character of the transaction must be borrowing (or have the commercial effect of borrowing) - a feature absent here - and penal/compensatory interest cannot, by itself, convert such business obligations into a financial debt. On that basis the Tribunal affirmed that the claim did not fall within Section 5(8) and the appellant could not be treated as a financial creditor. [Paras 7, 8, 13, 14]

The claim is not a financial debt; the appellant is not a financial creditor; the Adjudicating Authority's rejection of the claim on this ground is sustained.

Directory nature of procedural timelines (Regulation 13) - Delay in verification by the Interim/Resolution Professional did not invalidate the verification process because Regulation 13's 7 day timeline is directory. - HELD THAT: - The Tribunal agreed with the Adjudicating Authority that Regulation 13 requires verification of claims within seven days but that the provision is directory and not mandatory where no consequence for non compliance is prescribed. The RP commenced verification after the appellant filed late and the COVID 19 pandemic further delayed the process; these facts did not amount to illegality in the RP's conduct. The Tribunal therefore found no infirmity in the RP's verification and rejection of the claim on the merits. [Paras 9, 10]

The delay did not render the RP's verification unlawful; no illegality or irregularity is found in the RP's conduct.

Commercial effect of a borrowing - financial creditor - No interim relief to stay CIRP/CoC actions was warranted; the CoC was free to proceed after dismissal of the application. - HELD THAT: - The Tribunal observed that the Adjudicating Authority, while earlier giving an oral direction to the CoC to defer liquidation agenda, subsequently decided the appellant's application against it. Considering the advanced stage of the CIRP and the policy objectives of the Code, the Tribunal found no prima facie case to stay the progress of the CIRP or fetter the CoC from taking decisions (including on liquidation) as permitted by law. Consequently, the request for interim suspension of CoC action was refused and any interim direction previously in place was vacated. [Paras 15, 16, 17, 18, 19]

No interim stay of CIRP or CoC proceedings; CoC at liberty to take decisions in accordance with law.

Final Conclusion: The appeal is dismissed; the order of the Adjudicating Authority rejecting the appellant's claim as a financial debt is sustained. Interim directions, if any, are vacated and the CoC/RP may proceed in accordance with law. No order as to costs.

Effect of consent terms on pre-existing claim - admissibility of claim by resolution professional after verification - extinguishment of security interest upon receipt of agreed consideration - partial acceptance/rejection of claims under the Insolvency and Bankruptcy Code during CIRP - finality of claim adjudication where resolution plan is approved

Effect of consent terms on pre-existing claim - admissibility of claim by resolution professional after verification - partial acceptance/rejection of claims under the Insolvency and Bankruptcy Code during CIRP - The Resolution Professional rightly partially accepted the appellant's claim and reduced it to the admitted balance of Rs.1 crore in light of the Consent Terms and payments made thereunder. - HELD THAT: - The Tribunal examined the Consent Terms dated 19.07.2018 and the payments that flowed pursuant thereto. It is undisputed that at the time of execution of the Consent Terms the principal sum of Rs.10,00,00,000/- was handed over to the appellant and that subsequently an amount of Rs.90,00,000/- (net after TDS) was received towards the agreed interest settlement. The RP, after verification of the claim and accompanying documents, accepted the claim to the extent of the remaining admitted amount of Rs.1,00,00,000/-, and rejected the balance of the appellant's Form C claim as inconsistent with the Consent Terms and the receipts on record. The Tribunal found that the RP acted in accordance with the provisions of the Code and applied an appropriate verification exercise, and there was no reason to interfere with the impugned order which reduced the claim to Rs.1 crore. The Tribunal therefore dismissed the challenge to the RP's partial rejection/acceptance of the claim as devoid of merit (paras 19, 22). [Paras 19, 22]

Application challenging the RP's partial acceptance/rejection of the claim was dismissed; the claim stands reduced to Rs.1 crore as accepted by the RP.

Extinguishment of security interest upon receipt of agreed consideration - admissibility of claim by resolution professional after verification - The appellant was not entitled to assert the alleged security interest in the 15 flats after having received the principal amount under the Consent Terms. - HELD THAT: - Clause 1(b) of the Consent Terms required the appellant to give up rights arising out of deeds, agreements and other documents upon receipt of the principal amount. The Tribunal accepted the RP's finding that the principal was duly paid and that the documents relied upon by the appellant to establish any security interest were deficient (unsigned, undated, lacking stamp/registration or necessary particulars) and therefore were not treated by the RP for establishing a security interest. On this basis the Tribunal upheld the RP's conclusion that the appellant could not claim the purported security interest and there was no infirmity in the RP's approach (paras 16, 20). [Paras 16, 20]

The appellant's claim to security interest in the specified flats is not tenable and the RP correctly declined to recognise such security.

Finality of claim adjudication where resolution plan is approved - No interference was warranted in the impugned order particularly in view of the approval of the resolution plan and the stage of proceedings. - HELD THAT: - The Tribunal noted that the CIRP had proceeded and the Adjudicating Authority had approved the resolution plan. Given that the RP's claim adjudication followed verification and the Resolution Plan had been sanctioned, the Tribunal found the appeal to be an abuse of process and lacking merit. Consequently, there was no ground to pass a different order impugning the RP's determination (paras 21, final observations). [Paras 21]

The appeal is dismissed as there is no reason to interfere with the Adjudicating Authority's approval of the RP's decision and the sanctioned resolution plan.

Final Conclusion: The Tribunal upheld the Adjudicating Authority's order dismissing the interlocutory petition: the RP's partial acceptance of the appellant's claim (reduced to Rs.1 crore) and rejection of asserted security interest were held to be justified after verification in terms of the Consent Terms, and no interference was warranted; the appeal is dismissed.

Refund of Cenvat credit in respect of exported services - Centralized registration / centralized billing and registration of premises - Requirement of registration of premises under Rule 4 of Service Tax Rules, 1994 - Refund under Rule 5 of Cenvat Credit Rules, 2004 - Export of services - conditions under Rule 6A of Service Tax Rules, 1994 (clause (f) and establishments of a distinct person) - Scope of show cause notice and adjudication beyond show cause notice - Benefit of export determined by location of recipient and accrual of benefit outside India

Centralized registration / centralized billing and registration of premises - Requirement of registration of premises under Rule 4 of Service Tax Rules, 1994 - Refund under Rule 5 of Cenvat Credit Rules, 2004 - Scope of show cause notice and adjudication beyond show cause notice - Rejection of refund claim on the ground that export invoices were issued from an unregistered Noida premises and that each office must be separately registered. - HELD THAT: - The Tribunal held that sub rules (2) and (3) of Rule 4 of the Service Tax Rules, 1994 permit a person having centralized billing or accounting to register the premises where centralized systems are located and do not impose a condition that every office/premise must be separately registered for claiming refund of unutilized Cenvat credit. Rule 5 of the Cenvat Credit Rules, 2004, which prescribes the formula and entitlement for refund where an output service is exported without payment of service tax, does not make registration of each premise a prerequisite for claiming refund. Notification No.27/2012 CE(NT) fixes the competent officer by reference to the location of the registered premises but does not operate to extinguish the substantive right to refund where premises are not separately registered. The adjudicating authority's reliance on lack of registration of the Noida premises and its exercise of jurisdiction on that basis was contrary to these statutory provisions and the authorities which have taken the same view. Further, the Tribunal applied the principle that a show cause notice is the foundation of adjudication and held that the adjudication on jurisdiction and registration traveled beyond the scope of the show cause notice issued; accordingly that limb of rejection was unsustainable. [Paras 5, 6, 7, 12, 13]

The rejection of the refund claim on the ground that the Noida premises were unregistered is set aside; centralized registration suffices and refund cannot be denied for lack of separate registration or by adjudication beyond the show cause notice.

Export of services - conditions under Rule 6A of Service Tax Rules, 1994 (clause (f) and establishments of a distinct person) - Benefit of export determined by location of recipient and accrual of benefit outside India - Whether services provided by the appellant to group companies located outside India are hit by clause (f) of Rule 6A (i.e., are the provider and recipient 'merely establishments of a distinct person'). - HELD THAT: - The Tribunal analysed Rule 6A and Explanation 3(b) to clause (44) of Section 65B and concluded that an establishment in the taxable territory and another establishment in a non taxable territory cannot be treated as 'establishments of distinct persons' so as to deny export status. The conditions for export under Rule 6A - provider located in taxable territory, recipient located outside India, place of provision outside India, payment in convertible foreign exchange, and that the service is not a specified service - were satisfied on the facts: services were provided from India, used outside India, and payment was received in convertible foreign exchange. Clause (f) of Rule 6A was held not to be attracted on the facts because the recipient foreign company cannot be treated as an establishment of a distinct person vis a vis the Indian provider for the purpose of disqualifying export. The Tribunal relied on and followed the reasoning in relevant judicial decisions which reach the same conclusion that services to related foreign entities qualify as export where the statutory conditions are met. [Paras 8, 9, 11, 12]

The services rendered to the group companies outside India qualify as export of services and clause (f) of Rule 6A does not apply; this ground of rejection is accordingly unsustainable.

Final Conclusion: The impugned Order in Appeal is set aside. The adjudication rejecting the refund was based on incorrect interpretation of the relevant rules and travelled beyond the scope of the show cause notice; consequent thereto the appeal is allowed and the refund claim cannot be denied on the grounds upheld below.

Strict compliance of conditions in an exemption notification - statement of duty paid under Clause 2 of Notification No.33/99 CE - RT 12 return versus prescribed statement for refund - procedure for claiming exemption cannot be waived unilaterally by beneficiary - limitation under Section 11B not applicable to claims under the exemption notification - strict construction of exemption provisions - finality of factual findings by the Tribunal in appeals under Section 35G

RT 12 return versus prescribed statement for refund - statement of duty paid under Clause 2 of Notification No.33/99 CE - Submission of RT 12 returns alone does not satisfy the requirement of filing the statement of duty paid prescribed under Clause 2(a) of Notification No.33/99 CE and therefore cannot be treated as the statement for refund under the notification. - HELD THAT: - The notification prescribes a specific procedure under Clause 2(a) that the manufacturer must submit a statement of duty paid from the account current to the Assistant/Deputy Commissioner by the 7th of the next month and the authority must verify and refund accordingly. The Court found that the appellant did not aver or prove that the RT 12 returns filed complied with or amounted to the prescribed statement. Mere filing of RT 12 returns, in the absence of proof that they fulfilled the formulation and timing required by Clause 2(a), cannot be equated with the statement mandated by the notification. The Tribunal's factual finding that the RT 12 returns did not disclose the expansion and therefore did not satisfy the notification was upheld. [Paras 18, 25, 29]

RT 12 returns are not sufficient to meet the Clause 2(a) statement requirement of Notification No.33/99 CE.

Strict compliance of conditions in an exemption notification - strict construction of exemption provisions - The expansion details and documentary evidence produced by the appellant were insufficient to establish compliance with the conditions of Notification No.33/99 CE, and therefore the exemption/refund claim could be rejected on that basis. - HELD THAT: - The notification grants exemption subject to fulfilment of specified conditions; a beneficiary claiming the exemption must establish that the case squarely falls within the notification. The adjudicating authorities and the Tribunal recorded that the appellant failed to produce the materials required to substantiate that the installed capacity had increased and that the Range Officer had been informed. In view of those factual findings, which were not shown to be unsupported by record, the Court declined to interfere. The Court reiterated that where the statutory words are plain, conditions for exemption must be strictly complied with and that evidentiary insufficiency justifies rejection of the claim. [Paras 20, 23, 29, 30]

The documentary evidence and RT 12 returns did not satisfactorily prove the expansion or compliance with the notification; the exemption claim was rightly rejected on that factual basis.

Limitation under Section 11B not applicable to claims under the exemption notification - procedure for claiming exemption cannot be waived unilaterally by beneficiary - Although limitation under Section 11B does not apply to refund claims under Notification No.33/99 CE, that does not dispense with the mandatory procedural requirement in the notification (filing the statement by the 7th of the next month); failure to comply with that procedure cannot be cured by invoking absence of Section 11B limitation. - HELD THAT: - The Court accepted the settled position that Section 11B limitation is not attracted to claims under the exemption notification, as recognised by earlier decisions. However, it held that the notification itself prescribes time bound procedural steps which are mandatory and cannot be waived by the claimant. The appellant's contention that absence of Section 11B precludes any limitation was rejected because the notification prescribes its own procedure and timing which must be followed for entitlement to refund. [Paras 19, 23, 30]

Absence of Section 11B limitation in respect of the notification does not relieve the claimant from complying with the notification's procedural requirements; those must be strictly observed.

Finality of factual findings by the Tribunal in appeals under Section 35G - The CESTAT's factual findings that the appellant did not produce evidence of having informed the Range Officer or of satisfying the notification's conditions were valid and are final for purposes of an appeal under Section 35G; the High Court will not disturb such findings unless shown to be unsupported or perverse. - HELD THAT: - The Court applied the principle that the Tribunal is the final fact finding authority in adjudicatory appeals and that a High Court exercising jurisdiction under Section 35G should not ordinarily go behind the factual conclusions of the Tribunal. The impugned orders recorded that despite opportunities the appellant did not produce the specified documents or the particular RT 12 returns relied upon; those findings are factual and were not shown to be without evidence or legally erroneous. Consequently, the Tribunal's decision to reject the claim on those factual grounds was upheld. [Paras 20, 21, 22, 30]

The Tribunal's factual conclusions that the appellant failed to substantiate compliance with the notification are final and were rightly upheld; no interference under Section 35G was warranted.

Final Conclusion: The appeal is dismissed. The Court upheld the Tribunal's factual findings that the appellant failed to comply with the procedural and evidentiary conditions of Notification No.33/99 CE; RT 12 returns alone do not meet the Clause 2(a) requirement, absence of Section 11B limitation does not excuse non compliance with the notification's procedure, and the Tribunal's findings of fact are final for the purposes of the Section 35G appeal.

Transitional transfer of CENVAT credit under Rule 15 of the Cenvat Credit Rules, 2017 - entitlement to take CENVAT credit in electronic credit ledger under Section 140 of the CGST Act, 2017 - admissibility limitation on transfer of credit (credit admissible as input tax credit) - apportionment/quantification of transitional credit between GST and Central Excise regimes

Transitional transfer of CENVAT credit under Rule 15 of the Cenvat Credit Rules, 2017 - entitlement to take CENVAT credit in electronic credit ledger under Section 140 of the CGST Act, 2017 - admissibility limitation on transfer of credit (credit admissible as input tax credit) - Whether the assessee was mandatorily required to transfer the entire CENVAT credit balance existing immediately before 01.07.2017 into the electronic credit ledger under GST. - HELD THAT: - Rule 15(1) requires transfer of the CENVAT credit available under the earlier Rules relating to the period ending with the day immediately preceding 1st July, 2017 into the electronic credit ledger, but qualifies that "any CENVAT credit which is not eligible for such transfer shall not be retained as CENVAT credit unless eligible under these rules." Section 140 of the CGST Act imposes further substantive limitations by allowing transfer only of credit that is admissible as input tax credit under the CGST Act and subject to other specified conditions and provisos. Accordingly, the obligation to transfer is constrained by the admissibility provisions in Section 140; credits relating to goods or services which continue to be covered under Central Excise and are not admissible as ITC under CGST cannot validly be taken into the electronic credit ledger. The Tribunal placed weight on these provisos and limitations in concluding that a literal demand to transfer the entire CENVAT balance without regard to admissibility under Section 140 is incorrect. [Paras 6, 7, 8]

The demand that the appellant must transfer the entire CENVAT balance into the electronic credit ledger is incorrect insofar as it ignores the admissibility limitations in Section 140; transfer is permissible only to the extent the credit is admissible as input tax credit under the CGST Act.

Apportionment/quantification of transitional credit between GST and Central Excise regimes - judicial review of Commissioner's quantification - Whether the Commissioner's apportionment of the respondent's CENVAT credit between GST-eligible and Central Excise items was unsustainable and required interference. - HELD THAT: - The Tribunal noted that the appellant apportioned the transitional credit between GST and non-GST products and that the Commissioner examined and accepted the method and quantum of apportionment adopted by the respondent. The Revenue did not point out any specific error in the Commissioner's quantification before the Tribunal. Given that Section 140 and its provisos restrict transferability and that the Commissioner's apportionment was found acceptable on the material before him, there was no basis shown to the Tribunal to upset that factual and quantificatory conclusion. [Paras 7, 8, 9]

No interference with the Commissioner's apportionment; the Revenue's appeal against the quantification was dismissed for want of substantiated error.

Final Conclusion: Revenue's appeal dismissed; order of the Commissioner upholding the respondent's transitional apportionment of CENVAT credit sustained and the cross-objection disposed of.