TaxTMI Updates e-Newsletter
Sep 18,2014

Conversion of partnership assets into capital assets by agreement on dissolution - characterisation of property as stock-in-trade versus capital asset - treatment of gains as business income as opposed to capital gains - effect of dissolution deed on partners' title and nature of assets - distinction between trading stock and capital asset for immovable property

Characterisation of property as stock-in-trade versus capital asset - effect of dissolution deed on partners' title and nature of assets - Whether there was material to hold that the land sold by the assessee was stock-in-trade - HELD THAT: - The dissolution deed expressly recorded that the parties agreed to take over the two plots as co-owners and to treat them as their personal capital assets. The recitals and clause (3) of the deed show an agreed conversion of the partnership assets into capital assets. The partnership's business was that of builders/contractors and not of buying and selling land; no construction or exploitation of the land was carried out by the partners such as to preserve its character as stock-in-trade. In these circumstances, and applying the principle that stock-in-trade can be converted into capital assets by agreement of the parties, the Tribunal had no material to sustain its conclusion that the lands continued to be stock-in-trade and that the gains were business income. The decision in Khatau Vallabhdas was distinguished on facts (grocery stock-in-trade) and the non-registration of the dissolution deed did not preclude effect being given to the conversion. [Paras 19, 24, 25, 26]

There was no material to treat the land as stock-in-trade; the Tribunal was not justified in assessing the gains as business income.

Treatment of gains as business income as opposed to capital gains - distinction between trading stock and capital asset for immovable property - Whether the Tribunal was justified in treating the gains on sale of the land as business income rather than capital gains - HELD THAT: - Given the deed of dissolution which converted partnership assets into personal capital assets of the partners and the absence of evidence that the partners continued the partnership business or treated the land as held for trading, the Tribunal's conclusion treating the gains as business income could not be supported. The Court held that immovable property may be traded but, on the facts, the lands underwent a change of character by agreement at dissolution and were not stock-in-trade at the time of sale. Accordingly, the Tribunal's classification of the gains as business income was reversed. However, the Court expressly did not decide whether the gains are to be treated as long-term or short-term capital gains and left that question to the department for determination. [Paras 24, 25, 26]

The Tribunal was not justified in treating the gains as business income; classification as capital gains was open but the question of long-term versus short-term capital gains is left to the department.

Final Conclusion: Reference answered in favour of the assessee: the Tribunal had no material to hold the lands were stock-in-trade and was not justified in treating the gains as business income; the department is left to determine whether the amounts are long-term or short-term capital gains.

Section 263 jurisdiction - Erroneous order prejudicial to the interests of the Revenue - Two views doctrine - Prospective application of tax amendments - Section 36(1)(viii) - special reserve created and maintained - Section 41(4A) - withdrawal treated as business income

Section 263 jurisdiction - Erroneous order prejudicial to the interests of the Revenue - Two views doctrine - Validity of exercise of powers under section 263 in quashing the assessing officer's order upheld by the Tribunal - HELD THAT: - The Court held that section 263 can be invoked only where the assessing officer's order is erroneous and prejudicial to the interests of the Revenue. Where two views are reasonably possible, adoption by the assessing officer or the Tribunal of one such view does not render the order erroneous or prejudicial. Applying the principle in Malabar Industrial Co. Ltd. and subsequent decisions of this Court, the Tribunal's acceptance of one of two possible views and upholding the assessment did not justify revision under section 263. The order impugned was not shown to be without application of mind or violative of natural justice and therefore was not amenable to revision under section 263. [Paras 10, 13, 14]

Section 263 was not rightly invoked; the Tribunal's order upholding the assessment cannot be set aside under section 263.

Section 36(1)(viii) - special reserve created and maintained - Section 41(4A) - withdrawal treated as business income - Prospective application of tax amendments - Two views doctrine - Whether the amended requirement to 'maintain' the special reserve and the deeming charge under section 41(4A) apply to amounts transferred to special reserve prior to the amendment (effective 1.4.1998) - HELD THAT: - The Court interpreted the pre-amendment and post-amendment text and concluded that originally clause (viii) required only creation of the reserve and did not obligate maintenance; the words 'and maintained' were inserted prospectively by the Finance Act, 1997 with effect from 1.4.1998. Section 41(4A), introduced contemporaneously, likewise applies prospectively. Following precedents, including the Kerala High Court and decisions approved by the Delhi High Court, the Court held that withdrawals from special reserves created prior to 1.4.1998 are not taxable under the amended provisions. The Tribunal's view that the amended provisions did not apply to reserves created before the amendment is a tenable view and hence sustainable in law. [Paras 4, 11, 12, 14]

The amendment (inserting 'and maintained') and section 41(4A) operate prospectively from 1.4.1998; withdrawals from special reserves created before that date are not chargeable under the amended provisions.

Final Conclusion: The appeals are dismissed. The Tribunal correctly held that section 263 could not be invoked where two views were possible and that the amendments to section 36(1)(viii) and section 41(4A) operate prospectively with effect from 1.4.1998; withdrawals from reserves created prior thereto are not taxable under the amended provisions. No order as to costs.

Penalty for concealment of chargeable interest - Consequence of bona fide difference of opinion on imposition of penalty - Definition of "interest" under the Interest Tax Act - Scope of "credit institution" and exemption under Section 2(5A)(1) - Inclusion of bill discounting within interest

Penalty for concealment of chargeable interest - Consequence of bona fide difference of opinion on imposition of penalty - Deletion of penalty imposed under Section 13 of the Interest Tax Act was justified and is to be upheld. - HELD THAT: - The Court affirmed that Section 13 penalises concealment of particulars of chargeable interest or furnishing of inaccurate particulars, and that absence of an explanatory deeming provision means the onus does not automatically shift to the assessee. Where an assessee advances a reasonably arguable, bona fide interpretation of the statute and discloses full facts, imposition of penalty is inappropriate. The Tribunal and Commissioner (Appeals) found that the respondent-assessee had advanced a plausible contention regarding the nature of the amounts (call money and bills re-discounting) and relied upon Section 2(5A)(1) and related administrative clarifications; having regard to settled principles that penal liability should not be imposed when a bona fide difference of opinion exists on legal interpretation, the appellate authorities correctly deleted the penalty. The court applied established jurisprudence distinguishing civil tax penalties from criminal mens rea requirements and held that the facts showed a bona fide alternative view which disentitles the Revenue to levy penalty under Section 13. [Paras 10, 11, 13, 14, 15]

Order deleting penalty was rightly affirmed and the penalty imposed under Section 13 is quashed.

Final Conclusion: The appeal is dismissed; the Tribunal's order affirming deletion of penalty under Section 13 of the Interest Tax Act for Assessment Year 1992-93 is upheld.

Stay pending appeal - Condition for grant of stay - Financial hardship as ground to modify stay condition - Public charitable trust status in stay considerations - Deposit and bank guarantee as security for stay

Stay pending appeal - Condition for grant of stay - Financial hardship as ground to modify stay condition - Public charitable trust status in stay considerations - Deposit and bank guarantee as security for stay - Validity of the condition requiring payment of 25% of the demand as a precondition for grant of interim stay pending disposal of the appeal - HELD THAT: - The Assessing Officer originally rejected stay and on reconsideration imposed a condition of payment of 50% of the demand. The appellate authority (second respondent) granted stay but reduced the condition to payment of 25% after noting the petitioner's financial difficulty. The High Court found that the assessment did not amount to an unreasonably inflated assessment that would vitiate the requirement for security, and that the appellate authority had properly taken financial hardship into account. However, having regard to the petitioner's status as a public charitable trust and the bank statement showing inability to pay 25%, the Court concluded that the 25% payment condition should be further moderated. In exercise of its supervisory jurisdiction the Court modified the stay conditions to require a 10% deposit and a bank guarantee for the remaining 15%, and ordered that upon compliance an interim stay would continue pending disposal of the appeal. [Paras 6, 7, 8]

The condition for stay was modified: the petitioner shall deposit 10% of the demand by 30.9.2014 and furnish a bank guarantee for the remaining 15%; on compliance interim stay shall continue pending disposal of the appeal.

Final Conclusion: Writ petition allowed in part; the impugned stay condition reduced from 25% to a composite security of 10% cash deposit and bank guarantee for 15%, and an interim stay was directed to continue on compliance.

Depreciation under Section 32 - demerger as a going concern - vesting under Section 18(6A) of the SICA - revised return and valuation of assets for depreciation - remand to Tribunal for fresh decision

Revised return and valuation of assets for depreciation - depreciation under Section 32 - demerger as a going concern - Whether the Tribunal erred in disposing of the Revenue's appeal by restoring the Assessing Officer's order without adjudicating the assessee's substantive claim for additional depreciation arising from allocation of consideration (issue of shares/goodwill) and whether the matter should be reopened for determination on merits. - HELD THAT: - The High Court found that the Tribunal's order under Section 254(2) proceeded solely on the premise that the post-acquisition fixed assets shown in the balance sheet (Rs. 567.62 crores) could not be increased for depreciation purposes and did not apply its mind to the substantive legal and factual questions raised by the assessee regarding (i) allocation of the share-issue consideration to the cost of fixed/intangible assets; (ii) entitlement to depreciation under Section 32 including on intangible assets such as goodwill/brands acquired as part of a demerger/going concern sanctioned by AAIFR; and (iii) the correctness of allowing enhanced depreciation in the revised return. Both parties conceded, and the Court observed, that the Tribunal had not dealt with these merits. Given the absence of a considered factual and legal determination by the Tribunal on those contested points, the High Court refrained from expressing any view on the substantive contentions and held that those issues require primary determination by the Tribunal after hearing the parties afresh.

Proceedings restored to the Income Tax Appellate Tribunal for fresh decision on the merits of the appeals for AYs 2005-06 and 2006-07 after hearing the parties; the Tribunal to reconsider the assessee's claim for additional depreciation and related contentions.

Writ petitions rendered infructuous - Whether the writ petitions filed under Article 226 challenging the Tribunal's order under Section 254(2) are maintainable or require determination in the circumstances of the case. - HELD THAT: - Because the High Court restored the matter to the Tribunal for fresh adjudication on the merits, the writ petitions challenging the Tribunal's order stood rendered infructuous. The Court expressly declined to decide the preliminary contention on maintainability of the writ petitions or the alternative contention as to availability of an appeal under Section 260A, as those questions were unnecessary in view of the remand.

Writ petitions dismissed as infructuous; no determination made on the maintainability objection.

Final Conclusion: The appeals are disposed by restoring the appeals to the Income Tax Appellate Tribunal for fresh adjudication on the merits in respect of AYs 2005-06 and 2006-07 after hearing the parties; the writ petitions are dismissed as infructuous and no order as to costs.

Genuineness of purchases - bogus purchases - rejection of books of account - addition on estimate basis - dummy vendor / jugglery of book entries - adequacy of evidentiary proof for claimed purchases

Genuineness of purchases - bogus purchases - rejection of books of account - addition on estimate basis - dummy vendor / jugglery of book entries - Liabilities/purchases shown as made to M/s Gopal Enterprises are genuine or are bogus for the purposes of assessment - HELD THAT: - The proprietor of M/s Gopal Enterprises, Sri Ram Gopal Sharma, stated in recorded proceedings that he had not been carrying on business for about one year, had no vouchers, had made only limited receipts (admitting receipt of a specific payment for an earlier year) and disclaimed any ongoing liability to the assessee. He stated that he purchased from the local market without bills and denied connection with the assessee in respect of the larger claimed liabilities. The Tribunal's deletion of the additions was examined in light of these statements and the material on record. The Court found that the factual matrix showed jugglery in book entries and that the vendor was effectively a dummy with no supporting documents to substantiate the claimed purchases. In those circumstances the Assessing Officer's rejection of the assessee's books and his making of additions on an estimate basis were held to be reasonable and justified. The decision relied upon by the assessee was found inapplicable on the facts. Accordingly the Tribunal's orders deleting the additions were set aside and the Assessing Officer's orders restored.

Tribunal orders deleting additions set aside; orders of the Assessing Officer restored and additions held to be justified as relating to bogus purchases.

Final Conclusion: Appeals by the department allowed; the Assessing Officer's findings that the purchases from M/s Gopal Enterprises were bogus and the consequent additions sustained, and the Tribunal's contrary deletions set aside for assessment years 2008-09 and 2009-10.

Liability to deduct tax at source under Section 194-I - definition of 'rent' in the Explanation to Section 194-I - distinction between payment for hire of plant and machinery and rent for use of land and building - non-applicability of TDS where payments are for hiring plant and machinery

Liability to deduct tax at source under Section 194-I - definition of 'rent' in the Explanation to Section 194-I - distinction between payment for hire of plant and machinery and rent for use of land and building - Assessee was not liable to deduct tax at source under Section 194-I on amounts paid as hiring charges for plant and machinery. - HELD THAT: - The agreement between the assessee and the owner recorded that the assessee would carry out re-rolling in the owner's factory and would pay a stipulated rate per metric ton for the work, and that the assessee would not utilize the building along with the plant and machinery. The Explanation to Section 194-I defines 'rent' as payments for the use of land or any building (including factory building) together with furniture, fittings and appurtenant land. Applying that statutory definition to the facts, the Tribunal found on the basis of the agreement that the payments were hiring charges for plant and machinery computed on production and were not payments for use of land or factory building. Consequently Section 194-I, which requires deduction of tax where payments are made by way of rent for land or buildings, did not apply to the amounts paid as plant and machinery hire. The appellate finding that the payments were not rent but hiring charges was accepted and upheld.

Findings of the Tribunal upheld; assessee not required to deduct tax under Section 194-I on the hiring charges paid for plant and machinery, and no penalty is leviable.

Final Conclusion: Questions of law are answered against the Revenue and in favour of the assessee; the appeal is dismissed and the Tribunal's order deleting the addition is upheld for Assessment Year 1998-99.

Availability of rebate under Section 88E against tax computed under Section 115JB (minimum alternate tax) - application of Sections 87 and 88E to total income computed under the book-profit method - reduction of tax payable under both normal provisions and Section 115JB by Securities Transaction Tax rebate

Availability of rebate under Section 88E against tax computed under Section 115JB (minimum alternate tax) - application of Sections 87 and 88E to total income computed under the book-profit method - Whether remission/rebate of tax under Section 88E (read with Section 87) must be taken into account when computing tax payable under Section 115JB and when comparing tax payable under normal provisions with tax under Section 115JB for invoking Section 115JB. - HELD THAT: - The Tribunal correctly followed earlier High Court decisions holding that the rebate under Section 88E is a statutory remission of tax payable and, being a rebate on tax, applies equally to tax computed under the alternative computation prescribed by Section 115JB. The Court accepted that both the normal provisions and Section 115JB provide machinery for computing the total income exigible to tax and that there is no rationale to confine the plain words of Section 88E to tax determined only under the normal provisions. Applying Sections 87 and 88E to the tax computed under Section 115JB avoids double taxation (tax paid as STT being rebated at final computation) and ensures that the STT rebate is deducted from the tax payable under both methods; where giving this benefit under both methods reduces the difference between the two tax computations (and the difference falls below the statutory threshold), Section 115JB would not be attracted. The Court therefore upheld the Tribunal's approach and found no substantial question of law warranting interference. [Paras 3, 11]

Sections 87 and 88E apply to tax computed under Section 115JB; the STT rebate must be taken into account in computing tax under both the normal provisions and Section 115JB, and the appeal is dismissed.

Final Conclusion: The High Court affirmed the Tribunal: the Securities Transaction Tax rebate under Section 88E (read with Section 87) is available against tax computed under Section 115JB as well as under the normal provisions, and the appeal is dismissed.

Disallowance under section 14A - allowability of expenditure under section 36(1)(iii) - application of precedent in M/s S.A. Builders Ltd. - substantial question of law

Disallowance under section 14A - substantial question of law - Validity of the Tribunal's remand to the Assessing Officer to compute disallowance under section 14A and whether that question amounts to a substantial question of law. - HELD THAT: - The Court observed that the Revenue relied on a Division Bench order of this Court dated 12th January 2012 and accordingly the matter could not be treated as raising a substantial question of law. The point concerning computation/disallowance under section 14A was not accepted as a substantial question because the earlier judicial treatment precluded treating the point as raising a substantial question of law for the present appeal. No separate or novel legal principle was shown to arise in the present assessment year warranting elevation to a substantial question of law.

The contention was not held to be a substantial question of law and does not sustain the appeal.

Allowability of expenditure under section 36(1)(iii) - application of precedent in M/s S.A. Builders Ltd. - substantial question of law - Whether the Tribunal was correct in allowing expenditure under section 36(1)(iii) in respect of interest-free advances and whether that raises a substantial question of law. - HELD THAT: - The Court examined the Tribunal's reasoning and noted that it did not rest solely on the Supreme Court's decision in M/s S.A. Builders Ltd., but also on uncontested factual findings: the assessee had advanced loans to group concerns and interest on such advances had been disallowed in earlier assessment years in the assessee's own case. The Tribunal had applied the same factual findings in earlier orders (including its own orders in the assessee's case) and reached a consistent conclusion for the assessment years under challenge. The Court held that the Tribunal's view was a possible view on the facts and not perverse or vitiated by any apparent error of law. The fact that the Supreme Court had observed that S.A. Builders required reconsideration in another proceeding did not, by itself, convert the question into a substantial question of law in the present appeal, particularly where the Tribunal's decision rested on factual determinations applied consistently.

The question was not a substantial question of law; the Tribunal's allowance was not disturbed and the appeal fails on this point.

Final Conclusion: The appeal is dismissed for lack of merit: neither the challenge to the remand/compute of disallowance under section 14A nor the challenge to the Tribunal's allowance under section 36(1)(iii) raises a substantial question of law warranting interference.

Penalty under section 271FA - reasonable cause and relief under section 273B - time bar and limitation under section 275(1)(c) - principles of natural justice - Annual Information Return obligation under section 285BA and Rule 114E

Penalty under section 271FA - reasonable cause and relief under section 273B - Annual Information Return obligation under section 285BA and Rule 114E - Validity of levy of penalty under section 271FA in view of claimed bonafides, lack of infrastructure and delay in furnishing AIR - HELD THAT: - The Court considered the appellant's contention that delay in filing the Annual Information Return was due to lack of infrastructure and bonafide ignorance of the statutory obligation and that such circumstances constituted a reasonable cause attracting relief under section 273B. The Court recorded that the controversy on identical facts had been earlier considered in connected matters (order dated 21.7.2014) and, on that basis, this appeal was dismissed on merits. Having regard to the earlier decision and the appellant's factual position as placed before the authorities, the Court did not sustain the challenge to the penalty and dismissed the appeal in the same terms as the connected matters. [Paras 5, 6]

Appeal dismissed; penalty sustained on merits in accordance with the earlier decision in connected matters.

Time bar and limitation under section 275(1)(c) - Whether the penalty was sustained beyond the time limitation prescribed under section 275(1)(c) - HELD THAT: - Although raised as a substantial question of law, the Court disposed of the appeal by reference to its earlier decision in connected matters and dismissed the appeal on merits. The order therefore implicitly rejects the contention that the penalty was barred by limitation, by affirming the impugned tribunal order in the same terms. [Paras 5, 6]

Contention of time bar not accepted; appeal dismissed in terms of the earlier ruling.

Principles of natural justice - Allegation that the Tribunal violated principles of natural justice by disposing of consolidated appeals without dealing with appellant's specific grounds - HELD THAT: - The Court noted the grievance that the Tribunal referred to the facts of another consolidated matter while dismissing multiple appeals. Having regard to the determinative effect of the earlier decision in connected matters, the High Court dismissed the present appeals on the same terms, thereby upholding the Tribunal's disposal insofar as it produced the same outcome; no separate interference was made with regard to the alleged breach of natural justice. [Paras 5, 6]

Allegation of breach of natural justice not sustained; appeal dismissed.

Penalty under section 271FA - Whether levy of penalty was based on premature observations, findings and investigations - HELD THAT: - The appellant's plea that the penalty rested on premature observations and investigations was considered along with other substantive pleas. The Court, applying the precedent from connected appeals, declined to uphold that challenge and dismissed the appeal on merits, leaving the contested factual and investigatory contentions as resolved by the earlier ruling. [Paras 5, 6]

Challenge that penalty was founded on premature findings rejected; appeal dismissed.

Final Conclusion: The High Court dismissed the appeals on merits by applying its earlier decision in connected matters; the penalty under section 271FA as imposed was upheld and no order was made on condonation applications, which were left open.

Service provided from India - Export of taxable service - Reverse charge mechanism - Deeming under Section 66A - Refund under Section 11B

Service provided from India - Export of taxable service - Onsite services performed by the assessee's overseas subsidiaries for foreign customers do not satisfy the requirement of 'service provided from India' in Rule 3(2)(a) of the Export of Service Rules, 2005 for the period up to 27.02.2010 and therefore do not qualify as export of taxable service for that period. - HELD THAT: - The Court accepted the Tribunal's factual and legal conclusion that portions of the output service were performed on site at the overseas customers' premises by the assessee's subsidiaries and branches, and that such onsite activities were not provided from India. Under the Export of Service Rules as they stood prior to omission of the first limb of Rule 3(2)(a) (i.e. before 27.02.2010), export required that the service be provided from India and used outside India (along with receipt of payment in convertible foreign exchange). The Tribunal correctly categorised the rule's classes and applied the then-existing requirement that the service be provided from India; since the situs and provision of the onsite work were abroad, the first limb was not satisfied and the services could not be treated as export of taxable service for the relevant period. The Court found this conclusion not vitiated by error of law or perversity in view of the contractual arrangements and the material on record, and declined to engage in broader questions rendered unnecessary by this finding. [Paras 50, 51, 62]

Onsite services by overseas subsidiaries do not qualify as export of service under Rule 3(2)(a) for the period up to 27.02.2010.

Deeming under Section 66A - Reverse charge mechanism - The deeming provision in Section 66A (treating services received from outside India as if provided in India) does not assist the assessee to convert onsite services performed abroad into services 'provided from India' for the purpose of the Export of Service Rules prior to omission of Rule 3(2)(a). - HELD THAT: - Section 66A creates a charging provision for services provided from outside India and received in India by treating such services as if the recipient had provided them in India for applying Chapter V provisions. The Court held that this statutory fiction operates in the context of taxing imported services received in India and does not alter the situs-based requirement in the Export of Service Rules as they existed prior to 27.02.2010. Accordingly, Section 66A could not be invoked to treat onsite services actually performed abroad by subsidiaries as services provided from India for the purpose of qualifying as export of service under the earlier Rule 3(2)(a). [Paras 51, 52]

Section 66A cannot be used to treat services actually provided abroad as 'provided from India' for export qualification under the pre-27.02.2010 Export Rules.

Refund under Section 11B - The alternate claim for refund of service tax paid (on the footing that the tax was not payable under Section 66A) could not be entertained because no proper application was filed in the prescribed format and within the statutory time; the CESTAT was correct in refusing to grant relief on that alternate ground. - HELD THAT: - The Court agreed with the Tribunal that a claim for refund under Section 11B of the Central Excise Act requires a specific application in the prescribed format within the limitation period. The assessee had not invoked the statutory provision by making the required application, and the Tribunal rightly declined to adjudicate an alternative refund claim in the appellate proceedings absent compliance with the procedural and temporal requirements. The Court therefore refused to entertain the alternate contention for refund in the appellate forum and left open the assessee's remedy to pursue statutory procedures. [Paras 44, 64]

Alternate refund claim dismissed for want of a proper, timely application under the statutory refund procedure.

Final Conclusion: The substantial legal questions were answered against the assessee: onsite services performed by overseas subsidiaries did not qualify as export of service under Rule 3(2)(a) for the period up to 27.02.2010; Section 66A could not be used to treat such services as provided from India for that purpose; and the alternative refund plea was not maintainable for lack of a proper, timely application. The appeals are dismissed.

Export of service - payment in convertible foreign exchange as sole condition for export - Export of Service Rules, 2005 - Rule 3 - effect of amendment by Notification No.6/2010-ST dated 27.02.2010 - onsite services rendered abroad - refund claims for exported services - condonation of delay

Export of service - Export of Service Rules, 2005 - Rule 3 - payment in convertible foreign exchange as sole condition for export - effect of amendment by Notification No.6/2010-ST dated 27.02.2010 - onsite services rendered abroad - refund claims for exported services - Tribunal correctly held that the assessees satisfied the condition in Rule 3 of the Export of Service Rules, 2005 for onsite services rendered abroad for the period from 27.02.2010 onwards and thus refund claims could not have been rejected. - HELD THAT: - By Notification No.6/2010-ST dated 27.02.2010 clause (a) of sub rule (2) of Rule 3 was omitted and the words "provided outside India" were removed from clause (b), leaving receipt of payment in convertible foreign exchange as the only condition for treating the specified taxable service as export. The explanation relied upon by the appellant only clarifies the meaning of "India" for the Rule and does not negate application of Rule 3 where the statutory ingredients are otherwise satisfied. If the taxable service specified in sub rule (1) is provided and payment for such service is received in convertible foreign exchange, it qualifies as export of service. The Tribunal's conclusion that the onsite services rendered abroad met these requirements is supported by the amendments and the material on record and is not perverse or vitiated by any error of law apparent on the face of the record. [Paras 3, 4, 5]

Appeals dismissed; Tribunal's finding that the services qualified as export for the period from 27.02.2010 onwards upheld.

Final Conclusion: Delay in filing condoned; on the substantive question the Tribunal was right to treat onsite services as export where payment was received in convertible foreign exchange after the amendments of 27.02.2010, and the appeals are dismissed.

Jurisdiction of High Court under Section 35G of the Central Excise Act, 1944 - appeal to the Supreme Court under Section 35L of the Central Excise Act, 1944 - question whether activity amounts to manufacture as determinative of levy of duty - levy of duty as a question relating to rate of duty

Jurisdiction of High Court under Section 35G of the Central Excise Act, 1944 - appeal to the Supreme Court under Section 35L of the Central Excise Act, 1944 - High Court lacks jurisdiction to entertain these appeals under Section 35G and the appeals are not maintainable before the High Court. - HELD THAT: - The Court held that the question whether the respondent-assessee's activity amounts to manufacture pertains to levy of duty and, as held in CEAC No.12/2013 (Commissioner of Service Tax v. Ernst & Young Pvt. Ltd. and connected cases), such issues are questions relating to rate of duty. The tribunal's decision on these merits does not determine the forum for appeal; jurisdiction under Section 35G (High Court) or Section 35L (Supreme Court) is a separate question decided by the language of those provisions. Allowing appeals to both fora depending on how parties frame their appeals would produce unacceptable results, including potential denial of the right to file cross-objections. Consequently, appeals before the High Court under Section 35G are not maintainable in the present matters; the proper course for the Revenue, if so advised, is to prefer an appeal under Section 35L to the Supreme Court in accordance with law.

Appeals returned as not maintainable before the High Court; appellant may file an appeal under Section 35L of the Central Excise Act, 1944, if so advised and in accordance with law.

Final Conclusion: The High Court returned the appeals as not maintainable under Section 35G; the Revenue may pursue an appeal to the Supreme Court under Section 35L in accordance with law.

Imposition of penalty under Section 11AB - extended period under Section 11A(4) - requirement of proof of fraud, collusion, willful misstatement or suppression of facts - availability of exemption on bona fide reliance on customer purchase order/advice - concurrent findings of fact and appellate interference

Imposition of penalty under Section 11AB - extended period under Section 11A(4) - requirement of proof of fraud, collusion, willful misstatement or suppression of facts - concurrent findings of fact and appellate interference - Whether invocation of the extended period under Section 11A(4) dispenses with the need to prove fraud, collusion, willful misstatement or suppression of facts before imposing penalty under Section 11AB. - HELD THAT: - The Court explained that Section 11A(4) authorises issuance of a notice within five years where duty has not been levied or paid, or has been short levied/paid or erroneously refunded by reason of fraud, collusion, willful misstatement or suppression of facts or contravention of the Act/Rules with intent to evade duty. While such satisfaction enables issuance of a notice, imposition of penalty under Section 11AB ultimately requires proof of those ingredients on the material produced. In the present case the assessee manufactured galvanized transmission towers and claimed exemption on invoices, acted on the advice/purchase order of the customer and later, when the relevant condition of the Notification was found unfulfilled, discharged the duty with interest. There was no material pointing to fraud, collusion, willful misstatement or suppression of facts or deliberate contravention with intent to evade duty. The Commissioner (Appeals) and the Tribunal concurrently found the assessee's conduct to be bona fide and hence set aside the penalty. Those concurrent findings were not perverse or vitiated so as to warrant interference. Consequently, no substantial question of law arises from those findings and the Revenue's challenge failed.

Penalty under Section 11AB cannot be sustained in absence of material proving fraud, collusion, willful misstatement or suppression of facts; concurrent factual findings exonerating the assessee are not interfered with and the appeal is dismissed.

Final Conclusion: The appeal is dismissed; the concurrent findings that the assessee acted bona fide, paid duty with interest when deficiency was pointed out and that there was no material to establish the ingredients for penalty under Section 11AB are upheld, and no substantial question of law arises.

Limitation period - service/issuance of order - right to certified copy and communication under Regulation 15 - entitlement to condonation of delay - violation of principles of natural justice

Limitation period - service/issuance of order - right to certified copy and communication under Regulation 15 - entitlement to condonation of delay - Whether the period of limitation for preferring an appeal to the AAIFR begins from the date an aggrieved party becomes aware of the BIFR order by informal means or from the date on which a certified copy of the BIFR order is formally issued/served under the statutory scheme. - HELD THAT: - The Court upheld AAIFR's approach that where a party was not a party to BIFR proceedings and the authenticated order was not communicated under the signature of the Secretary or an empowered officer as required by Regulation 15, the starting point of limitation is the date on which the certified copy was handed over/served. The Division Bench decision in Director-General of Income Tax v. BIFR was held to be factually analogous and determinative: informal receipt of a photocopy or knowledge of proceedings antecedent to formal communication is not the event which triggers the statutory limitation period. The Court distinguished earlier authorities where the appellant was present at the BIFR hearing or otherwise clearly aware of the order and therefore could not rely on delayed application for certified copy. Applying these principles, the Court found AAIFR was correct to treat limitation as commencing from formal issuance of the certified copy, and not from earlier informal communications.

AAIFR's view that the limitation period commences on receipt of the certified copy (formal communication) was upheld and the challenge on limitation grounds fails.

Violation of principles of natural justice - Whether BIFR's sanction of the modified rehabilitation scheme without providing the Revenue an opportunity of hearing on the question of waiver of interest and penalty involved violation of natural justice and required further consideration. - HELD THAT: - The Court recorded that BIFR sanctioned a scheme providing for waiver of interest and penalty and installmental payment of principal without issuing notice to or hearing the Revenue, and that the certified order was not formally communicated to the Revenue as required. The Court observed that the procedure adopted amounted to a breach of principles of natural justice and that the question whether interest or penalty should be levied could not be finally resolved without affording the Revenue an opportunity to be heard and examining relevant guidelines and policies. Accordingly, while dismissing the writ, the Court directed that the matter be placed before AAIFR for hearing so that the Revenue may have the contentions examined on merits.

The BIFR's order was found to have violated principles of natural justice and the matter was directed to be placed before AAIFR for hearing and fresh consideration of the merits regarding waiver of interest and penalty.

Final Conclusion: Writ petition dismissed; High Court upheld AAIFR's approach on commencement of limitation (starting from formal receipt of certified copy) and found that BIFR's sanction without hearing the Revenue violated natural justice; parties directed to appear before AAIFR for further hearing on merits regarding interest and penalty.

Maintainability of appeal - jurisdiction of High Court as appellate forum - classification under Central Excise Tariff - extended period of limitation under Section 11A - rate of duty / abatement dispute

Jurisdiction of High Court as appellate forum - classification under Central Excise Tariff - rate of duty / abatement dispute - maintainability of appeal - Whether the present appeal is maintainable before the High Court in view of matters adjudicated in the Order in Original. - HELD THAT: - The Court recorded that the Order in Original dated 13.01.2010 did more than decide questions of limitation and penalty; it also adjudicated classification of the product 'Nestle Tea Premix' under Chapter sub heading 2101.20 of the Central Excise Tariff and decided the dispute relating to the applicable tariff entry and rate (including the contention as to entry 2108.99 and the resultant abatement). Because the appellate jurisdiction of the High Court depends on the issues actually decided in the order in original, and since the Order in Original resolved classification and rate of duty, the present appeal is not maintainable before the High Court as the proper appellate forum is thereby displaced.

Appeal returned as not maintainable before the High Court; liberty given to the appellant to move the Supreme Court if so advised.

Final Conclusion: The High Court returned the appeal as not maintainable because the Order in Original had decided classification and the rate of duty; the appellant may, if advised, file an appeal before the Supreme Court in accordance with law.

Condonation of delay - dismissal for delay - opportunity to explain delay - substantial question of law - reinstatement and remand for fresh consideration

Condonation of delay - dismissal for delay - substantial question of law - Whether the Revenue's appeal could be dismissed by the Tribunal solely on the ground of delay where no adequate explanation was furnished despite substantial questions of law being involved. - HELD THAT: - The High Court held that dismissal of an appeal merely on the ground of delay is not appropriate where substantial questions of law and a prima facie case are raised; such considerations are relevant but cannot substitute for a proper explanation for delay. The Court observed that if the application for condonation did not satisfy the Tribunal, an opportunity should have been given to the Revenue to furnish explanation, and noted that the Tribunal had in fact permitted filing of an additional statement which, on its face, was inadequate. In view of the absence of any satisfactory explanation, the Court concluded that the matter required further opportunity to be afforded to the Revenue rather than outright dismissal on delay alone. [Paras 2, 3]

Dismissal for delay was inappropriate in the circumstances; the matter requires opportunity to be given to the Revenue to explain delay and be adjudicated afresh.

Opportunity to explain delay - reinstatement and remand for fresh consideration - What remedial directions should follow where the Tribunal dismissed the appeal for delay without affording adequate opportunity to the Revenue to file explanatory affidavit. - HELD THAT: - The Court set aside the impugned order and directed that the proceedings be revived before the Tribunal. It permitted the Revenue to file an additional affidavit in support of its condonation application by a specified date, and directed the Tribunal to reconsider the entire issue afresh after allowing the Revenue that opportunity. The High Court thereby required the Tribunal to reassess the condonation application on the basis of the additional material and the substantive questions raised, rather than leaving the appeal dismissed on the procedural ground alone. [Paras 3, 4]

Impugned order set aside; proceedings remitted to the Tribunal, with liberty to the Revenue to file an additional affidavit by the specified date and for the Tribunal to reconsider the matter afresh.

Final Conclusion: The High Court set aside the Tribunal's dismissal for delay, remitted the matter for fresh consideration after granting the Revenue a limited opportunity to file an additional affidavit in support of condonation of delay, and directed the Tribunal to reconsider the issue; costs awarded to the respondent.

Interim relief pending disposal of interlocutory applications - condonation of delay in filing appeal - stay application against assessment order - abeyance of coercive recovery proceedings - judicial direction to dispose interlocutory applications within fixed time

Condonation of delay in filing appeal - stay application against assessment order - judicial direction to dispose interlocutory applications within fixed time - Third respondent directed to consider and decide the petition for stay and the petition for condonation of delay in filing the appeal within a fixed time. - HELD THAT: - The Court disposed of the writ petition by mandating that the third respondent shall consider and pass appropriate orders on the petition for stay (Ext.P4) and the petition for condoning the delay in filing the appeal (Ext.P5) in respect of the assessment orders challenged by the petitioner. The direction requires disposal at the earliest and, in any event, within one month from receipt of a copy of this judgment. The Court granted this relief to secure timely adjudication of the interlocutory applications which bear directly on the effectiveness of the appellate remedy already invoked by the petitioner. [Paras 5]

Orders on Ext.P4 and Ext.P5 to be considered and passed by the third respondent within one month from receipt of the judgment.

Interim relief pending disposal of interlocutory applications - abeyance of coercive recovery proceedings - judicial direction to dispose interlocutory applications within fixed time - Fourth respondent directed to decide interlocutory applications and coercive proceedings under the RR to be kept in abeyance until such orders are passed. - HELD THAT: - The Court directed the fourth respondent to consider and pass appropriate orders on the interlocutory applications (Exts.P8 to P10) at the earliest and, in any event, within one month from receipt of a copy of this judgment. Pending disposal of those interlocutory applications, further coercive proceedings pursuant to the RR notice (Ext.P11) are to be kept in abeyance. The petitioner was ordered to place a copy of this judgment and the writ petition before the third and fourth respondents to enable compliance with the directions. [Paras 5]

Orders on Exts.P8 to P10 to be considered and passed by the fourth respondent within one month; coercive proceedings under Ext.P11 to remain in abeyance until such interlocutory orders are passed.

Final Conclusion: Writ petition disposed by directing the appellate authorities to decide the pending interlocutory applications (stay and condonation petitions) within one month and by keeping further coercive recovery proceedings in abeyance until those applications are disposed of; petitioner to produce copies of the judgment and writ petition to the concerned authorities.

Departmental instructions limiting appeals based on tax effect - Dismissal of departmental appeal pursuant to internal instructions - Tax effect threshold for preferring appeals

Departmental instructions limiting appeals based on tax effect - Dismissal of departmental appeal pursuant to internal instructions - Appeal by the Commissioner of Central Excise was liable to be dismissed in view of departmental instructions because the tax effect was below the prescribed threshold. - HELD THAT: - The first respondent informed the Court that, in light of instructions issued by the Department, appeals would not be pursued where the tax effect was less than Rs. 4,00,000/-. The Department's Senior Standing Counsel did not dispute this concession. Having regard to the undisputed application of the Department's own instructions and the conceded tax-effect threshold, the Court concluded there was no basis to entertain the appeal and disposed of the matter accordingly. [Paras 3, 4, 5]

Appeal dismissed on the ground that departmental instructions precluded pursuing the appeal since the tax effect was below the stated threshold; no costs.

Final Conclusion: The High Court dismissed the departmental appeal because the Department, by concession and in accordance with its instructions, would not pursue appeals where the tax effect is less than Rs. 4,00,000; the appeal was therefore dismissed and no costs were ordered.

Prematurity of writ petition - restoration of appeal - COD clearance for public sector undertakings - direction for expeditious disposal by appellate authority - refusal of interim stay of revenue demand

Prematurity of writ petition - restoration of appeal - Writ petition was premature insofar as the restoration application remained pending before the Tribunal and therefore intervention by the High Court was not warranted. - HELD THAT: - The petitioner had an application for restoration of S.T. Appeal No. 134 of 2008 pending before the Customs, Excise and Service Tax Appellate Tribunal. Where an appellate authority has before it an application for restoration and has not finally disposed of that application, the High Court will not entertain a writ petition challenging an earlier dismissal of the appeal; the remedy and forum for seeking relief in the first instance is the appellate authority itself. Given that the Tribunal had not finally adjudicated the pending restoration application, the writ petition was held to be premature and liable to be rejected on that ground. [Paras 4]

Writ petition dismissed as premature; petitioner must pursue restoration before the Tribunal.

Direction for expeditious disposal by appellate authority - Tribunal was directed to decide the pending restoration application expeditiously in accordance with law and its workload. - HELD THAT: - Although the High Court declined to entertain the writ petition, it recorded that the restoration application had been pending for a prolonged period and that the petitioner had earlier suffered dismissals. In these circumstances the Court directed the Customs, Excise and Service Tax Appellate Tribunal to consider and decide the restoration application in accordance with law and having regard to its workload, so that the matter is not kept pending indefinitely. [Paras 5, 6]

CESTAT directed to decide the restoration application expeditiously and in accordance with law.

COD clearance for public sector undertakings - refusal of interim stay of revenue demand - Interim relief in the form of stay of revenue recovery was refused; public sector undertaking status does not place the petitioner above recovery and the revenue may proceed to recover amounts due since the appeal was dismissed in 2008. - HELD THAT: - The Court noted that the appeal was dismissed on 19-12-2008 and, in the absence of any interim order staying recovery, it was the duty of the revenue to effect recovery. The petitioner relied on subsequent Supreme Court jurisprudence on COD clearance for public sector undertakings, but the High Court observed that public sector undertakings are not above the law and that the existence of a pending restoration application did not justify an interim stay of the demand. Given the long pendency and earlier dismissals of restoration applications, the Court found no reason to grant interim relief and refused to stay recovery. [Paras 8, 9]

Prayer for interim stay of demand rejected; revenue entitled to proceed with recovery.

Final Conclusion: Writ petition dismissed as premature; petitioner directed to pursue restoration before the Tribunal, which is ordered to decide the restoration application expeditiously and in accordance with law; interim stay of revenue demand refused and revenue may proceed with recovery.

Remand for de novo consideration - Rule 7(2) of Cenvat Credit Rules, 2002 - reasonable steps - Rule 7(1)(e) - supplier/merchant distinction - extended period of limitation under proviso to Section 11A(1) - treatment under Rule 12B vis-a -vis registration under Rule 9

Remand for de novo consideration - Whether the Tribunal was justified in remanding the matter to the original adjudicating authority after recording conclusive findings on the issues. - HELD THAT: - The High Court held that the Tribunal's order remanding the proceedings for fresh consideration, while at the same time recording conclusive findings on the matters in dispute, was not sustained. The Court followed the Division Bench decision rendered in Tax Appeal No. 1153/2011 and connected matters (judgment dated 28-9-2012), which addressed identical questions and answered the majority in favour of the assessee. Applying that precedent, the High Court reversed the Tribunal's order and did not endorse remand coupled with determinative findings.

Tribunal's remand order recording conclusive findings was set aside and the Tribunal's judgment reversed.

Rule 7(2) of Cenvat Credit Rules, 2002 - reasonable steps - Rule 7(1)(e) - supplier/merchant distinction - Whether the Tribunal rightly held that the appellant did not comply with the 'reasonable steps' requirement under Rule 7(2) and whether the Tribunal permissibly distinguished between 'supplier' and merchants/traders under Rule 7(1)(e). - HELD THAT: - Relying on the Division Bench precedent cited by the appellant, the High Court accepted the view favourable to the assessee on the questions framed in the appeals. The Court concluded that the Tribunal's adverse findings on possession/receipt and on non-compliance with the reasonable steps requirement under Rule 7(2) (including its treatment of supplier versus merchant/trader under Rule 7(1)(e)) were not to be maintained. The High Court, without separate extended reasoning in this order, allowed the appeal along the same lines as its earlier decision, thereby reversing the Tribunal's conclusions.

Tribunal's findings that the appellant failed to take reasonable steps under Rule 7(2) and its distinction between 'supplier' and merchant/trader under Rule 7(1)(e) were not upheld; appeal allowed on these contentions.

Extended period of limitation under proviso to Section 11A(1) - Whether the extended period of limitation could be invoked against the appellant in the present case. - HELD THAT: - The High Court followed its earlier Division Bench ruling which answered this question in favour of the assessee, holding that the larger/extended period of limitation could not be applied to the appellant's case. The Tribunal's application of a longer limitation period (by reliance on precedents it had invoked) was therefore reversed in consequence of the Court's acceptance of the Division Bench view.

Extended period of limitation held not applicable; Tribunal's invocation of extended limitation reversed.

Treatment under Rule 12B vis-a -vis registration under Rule 9 - Whether the Tribunal was justified in treating the appellant on par with persons falling under Rule 12B when the appellant was registered under Rule 9 prior to the introduction of the new textile scheme. - HELD THAT: - The Court, following the reasoning and conclusions in the earlier Division Bench decision, allowed the appeal and rejected the Tribunal's approach of equating the appellant with entities under Rule 12B. The judgment indicates that the Tribunal's differential treatment was not sustained, and the appellant's earlier registration status under Rule 9 was material to the decision in the assessee's favour.

Tribunal's equating of the appellant with persons under Rule 12B was not sustained; appeal allowed on this point.

Final Conclusion: The High Court allowed the tax appeal, reversed the Tribunal's judgment dated 28-2-2011, and disposed of the appeal in line with the Division Bench decision dated 28-9-2012 which answered the majority of contested questions in favour of the assessee; consequential application (CA) did not survive and was disposed of.

Classification of goods by tariff heading - Interpretation of notification vis-a -vis Central Excise Tariff - Commercial or popular meaning test for classification - Effect of the words 'not elsewhere specified or included' - Eligibility for reduced tax rate under Schedule-III (IT products)

Classification of goods by tariff heading - Interpretation of notification vis-a -vis Central Excise Tariff - Commercial or popular meaning test for classification - Effect of the words 'not elsewhere specified or included' - Eligibility for reduced tax rate under Schedule-III (IT products) - Portable hand held electronic ticketing machines are not IT products falling under heading/sub-heading 8471 and therefore are not eligible for the 4% rate under Schedule-III. - HELD THAT: - The notification dated 31.3.2006 classifies certain Central Excise Tariff headings as IT products; its explanatory clauses require that where the description in the notification differs from the corresponding tariff description only the notification description will govern, and where it matches fully the tariff coverage applies. The Central Excise Tariff expressly includes 'ticket-issuing machines' under heading 8470, while heading 8471 is described in the tariff as 'Automatic data processing machines' and carries the qualifier 'not elsewhere specified or included'. The portable handheld device sold by the assessee is commercially and technically described and marketed as a ticketing/ticket-issuing machine, and the commercial/popular meaning is the appropriate test of classification. Because ticket-issuing machines are specifically covered by 8470 (which is not included in the notification) and 8471 expressly excludes goods 'elsewhere specified', the device cannot be classified under 8471 for the purpose of the IT products notification. The concurrent findings of the assessing, appellate and tribunal authorities that the product does not attract the Schedule-III 4% rate are therefore legally sustainable. [Paras 9, 10, 11]

The claim that the portable hand held electronic ticketing machine falls under heading 8471 and is eligible for tax at 4% is rejected; the courts answer the question in favour of the revenue.

Final Conclusion: Revision petitions dismissed; authorities correctly classified the product as not covered by heading 8471 and denied benefit of the Schedule-III 4% IT product rate.

Violation of principles of natural justice - Opportunity of personal hearing - Requirement of speaking/reasoned order on objections - Revision of assessment

Violation of principles of natural justice - Opportunity of personal hearing - Requirement of speaking/reasoned order on objections - Whether the assessment orders for the stated assessment years suffer from breach of natural justice for failing to consider objections item wise and for not affording/requesting personal hearing and hence are liable to be set aside and remanded. - HELD THAT: - The assessing authority issued pre revision notices containing multiple, distinct allegations for each assessment year but finalized assessment by a brief order without dealing with the objections item wise or granting the requested opportunity of personal hearing. The court held that when a dealer files specific objections to each allegation and requests hearing or production of records, the Assessing Officer has the duty to consider those objections, pass a speaking order accepting, rejecting or partially accepting them, and, where factual disputes are complex or a personal hearing is sought, to afford such hearing before revising assessment. The court relied on the principle that revision must be based on definite material and that assumption without material cannot sustain revision; further, where fairness requires, personal hearing forms part of a reasonable opportunity to show cause. Because the orders did not deal with objections item wise, did not grant or refuse personal hearing, and amounted to a non speaking exercise of revision, they violated principles of natural justice and were liable to be quashed and remitted for fresh consideration. [Paras 4, 7, 8, 9, 10]

Impugned assessment orders quashed and matters remanded to respondent to afford personal hearing, consider objections item wise, and pass fresh speaking orders in accordance with law.

Final Conclusion: Writ petitions allowed; impugned assessment orders for the assessment years 2006 07 to 2011 12 set aside and remanded for fresh consideration with directions to afford personal hearing, consider objections item wise, and pass speaking orders expeditiously (preferably within two months).

Exemption under Section 5(3) of the Central Sales Tax Act - sale in the course of export - in-severable link / inextricable link between local sale and export - same goods theory - Form-H - remand for fresh consideration

Exemption under Section 5(3) of the Central Sales Tax Act - sale in the course of export - in-severable link / inextricable link between local sale and export - same goods theory - Form-H - Whether the claim for exemption under Section 5(3) deserved to be allowed where the local seller furnished Form H and the purchaser/exporter used the goods in export, notwithstanding that the goods were not exported in the identical form in which purchased. - HELD THAT: - The Court recorded that Section 5(3) requires (i) a sale, (ii) actual export of goods and (iii) that the sale be part and parcel of the export. Relying on the Constitution Bench decision in State of Karnataka v. Azad Coach Builders Pvt. Ltd., the Court explained that the correct test is whether there is an in severable (inextricable) link between the local sale and the export; where such link is established the 'same goods' theory does not apply. On the admitted facts the applicant sold toughened glass to an exporter who used it in the export of completed goods and the applicant had produced Form H and shipping bills. The authorities below and the Tribunal denied exemption solely on the ground that the identical goods were not exported; they failed to apply the Azad Coach Builders test. The Court held that the Tribunal ought to have considered whether the local sale was inextricably connected with the export and therefore eligible for exemption under Section 5(3). [Paras 9, 10, 11, 12, 13]

The denial of exemption solely on the basis that the goods were not exported in the same form was legally unsound; the Azad Coach Builders test of in severable link governs eligibility under Section 5(3).

Remand for fresh consideration - exemption under Section 5(3) of the Central Sales Tax Act - Remedial consequence: whether the matter should be remitted to the Tribunal for fresh decision applying the correct legal test. - HELD THAT: - The Court observed that the Tribunal and lower authorities did not consider the Constitution Bench judgment and therefore did not apply the determinative legal test. In view of that omission and the admitted factual matrix (sale to an exporter, use in export, production of Form H and shipping bills), the Court allowed the revision, restored the tribunal file to its original number and directed that the Second Appeal be decided afresh in accordance with the law laid down by the Supreme Court in Azad Coach Builders, expeditiously and preferably within three months from production of the certified copy of the order. [Paras 2, 11, 14]

Revision allowed; impugned tribunal order set aside and the Second Appeal remitted to the Tribunal to be decided afresh in accordance with Azad Coach Builders (supra).

Final Conclusion: Revision allowed. Impugned order of the Tribunal is set aside and the matter remanded to the Tribunal to decide the Second Appeal afresh applying the Constitution Bench test from Azad Coach Builders regarding the in severable link between the local sale and export; decision to be rendered expeditiously, preferably within three months of production of the certified copy of this order.