TaxTMI Updates e-Newsletter
Sep 19,2020

Treatment or process applied to another person's goods is a supply of services - composite supply and principal supply determines taxability - job work - classification under SAC 9988 - Manufacturing services on physical inputs (goods) owned by others - classification under SAC 9987 - Maintenance and repair services - CBIC Circular No. 52/26/2018-GST para 12.2(b) - fabrication on chassis provided by the principal attracts 18% GST

Treatment or process applied to another person's goods is a supply of services - job work - composite supply and principal supply determines taxability - Whether body building by fabrication on a chassis owned by another amounts to a supply of services or goods. - HELD THAT: - The Authority examined the nature of the activity of building and mounting a body on a chassis supplied by the owner and applied para 3 of Schedule II which treats any treatment or process applied to another person's goods as supply of services. Where the chassis is received from the principal on delivery/job-work challan, the activity of fabrication and mounting is a job work-style treatment and the principal supply is the fabrication service. Conversely, if the body builder owns the chassis and builds and supplies the completed vehicle, the predominant element is supply of goods. The composite-supply concept (Sections 2(30), 2(90) and Section 8) was applied to determine that taxability depends on the predominant element of the composite transaction. [Paras 26, 27, 28, 32, 36]

If the chassis is provided by the principal on job-work/delivery challan and ownership is not transferred, the activity is a supply of services; if the applicant owns the chassis and supplies the completed vehicle, it is a supply of goods.

CBIC Circular No. 52/26/2018-GST para 12.2(b) - fabrication on chassis provided by the principal attracts 18% GST - composite supply and principal supply determines taxability - Applicable GST rate where body building is treated as supply of services or, alternatively, as supply of goods. - HELD THAT: - The Authority followed CBIC Circular No. 52/26/2018 (paras 12.2(a) and 12.2(b)) which distinguishes two situations: (a) where the body builder works on a chassis owned by him and supplies the built vehicle, the supply is of goods and attracts 28% GST; (b) where the body is fabricated on a chassis provided by the principal and fabrication charges are levied, the activity merits classification as service and attracts 18% GST. The composite-supply principle confirms that tax treatment depends on whether goods or services form the predominant element. [Paras 28, 32, 36]

Where treated as service (chassis provided by principal), GST 18% (9% CGST + 9% SGST); where supply is of the complete vehicle (builder owns chassis), GST 28% (14% CGST + 14% SGST).

Classification under SAC 9988 - Manufacturing services on physical inputs (goods) owned by others - job work - Service Accounting Code/tariff for body building carried out on another person's chassis. - HELD THAT: - Having held that fabrication on a chassis supplied by the principal is a service, the Authority referred to the Annexure to Notification No. 11/2017-CT (Rate) and classified the activity under SAC 9988 (Manufacturing services on physical inputs (goods) owned by others). More specifically, body fabrication on chassis supplied by the owner is classifiable under SAC 998881 as "Motor vehicle and trailer manufacturing services" when the chassis remains the property of the principal. [Paras 31, 32, 36]

Body building on a chassis supplied by another is classifiable under SAC 9988 (specifically SAC 998881 for motor vehicle and trailer manufacturing services); where the builder supplies a complete vehicle on its own chassis, classification is under Chapter/HSN 87 as applicable.

Treatment or process applied to another person's goods is a supply of services - classification under SAC 9987 - Maintenance and repair services - composite supply and principal supply determines taxability - Classification and rate for accident repairing jobs on vehicles supplied by the owner for a lump-sum price including materials and labour. - HELD THAT: - The Authority applied para 3 of Schedule II to conclude that repair work carried out on a vehicle supplied by its owner is a treatment/process on another's goods and thus a service. The transaction is a composite supply where repair (service) is the principal element. Reference to the Annexure to Notification No. 11/2017-CT (Rate) led to classification under SAC 9987 (maintenance, repair and installation services) and Sr. No. 25 of the Notification prescribes a tax rate of 18% for such services. [Paras 35, 36]

Accident repair services on vehicles supplied by the owner are classifiable under SAC 9987 and taxable at 18% (9% CGST + 9% SGST).

Composite supply and principal supply determines taxability - classification under SAC 9988 - Manufacturing services on physical inputs (goods) owned by others - CBIC Circular No. 52/26/2018-GST para 12.2(a) and (b) - Alternate characterisation and treatment if body building is not treated as supply of services. - HELD THAT: - The Authority noted that when the body builder owns the chassis and supplies the completed vehicle, the transaction is primarily a supply of goods. Relying on CBIC clarifications and the composite-supply test, such supplies of complete built-up vehicles merit classification under the relevant HSN headings of Chapter 87 and attract the higher rate of 28%. This alternative was expressly distinguished from the situation where the chassis is supplied by the principal. [Paras 30, 32, 36]

If body building is not a service (i.e., the builder supplies a completed vehicle on its own chassis), the nature of supply is goods classified under HSN 87 as applicable and taxable at 28%.

Final Conclusion: The Authority ruled that fabrication and mounting of a body on a chassis provided by the owner is a supply of services (job work) classifiable under SAC 9988 and taxable at 18% (9% CGST + 9% SGST); where the body builder owns the chassis and supplies the completed vehicle the supply is of goods (HSN Chapter 87) taxable at 28%; accident repair work on vehicles supplied by their owner is a service under SAC 9987 and taxable at 18%.

Classification of goods by tariff item - Interpretation of notification for GST rates - Distinction between 'bran' and 'cattle feed' for exemption - Application of First Schedule to the Customs Tariff Act to GST classification - Inapplicability of pre-GST tariff treatment to post-GST classification

Classification of goods by tariff item - Distinction between 'bran' and 'cattle feed' for exemption - Interpretation of notification for GST rates - Whether the Maize Bran supplied by the applicant is taxable at 5% as 'Bran' under Entry Sr.No.103A of Notification No.1/2017-Central Tax (Rate) or is exempt as 'cattle feed' under Sr.No.102 of Notification No.2/2017-Central Tax (Rate). - HELD THAT: - The Authority examined the First Schedule to the Customs Tariff Act and found Maize Bran specifically covered by tariff item 23021010 within heading 2302 (Bran, sharps and other residues). The Notification No.01/2017-Central Tax (Rate), as amended, places 'Bran' under Sr.No.103A attracting the GST rate in Schedule I (2.5% CGST + 2.5% SGST). Sr.No.102 of Notification No.02/2017-Central Tax (Rate) grants NIL rate to specified products described as aquatic feed, poultry feed and cattle feed, etc., but those items are distinguishable from 'Bran' left within Sr.No.103A. The Authority analysed the definition and commercial usage of 'Maize Bran', noting that it is a by-product and a 'supplement' or major ingredient used in manufacture of cattle feed rather than being cattle feed per se; the applicant's own submissions and sample invoice referred to the product as 'Wet Bran' and classified it under tariff item 23021010. The Authority held that the applicant's reliance on pre-GST Central Excise classification and the cited jurisprudence did not alter the statutory classification under the GST regime, because GST classification must be determined with reference to the First Schedule to the Customs Tariff Act and the GST Notifications. Applying these interpretative conclusions, the Authority ruled that Maize Bran does not qualify as 'cattle feed' for the purpose of Sr.No.102 and is correctly classifiable under Sr.No.103A of Notification No.01/2017-Central Tax (Rate), making the taxable rate 5% (2.5% CGST + 2.5% SGST). [Paras 15, 16, 17, 18, 19]

Maize Bran manufactured and supplied by M/s Sayaji Industries Ltd. is covered by Entry Sr.No.103A of Notification No.1/2017-Central Tax (Rate) and is taxable at 5% (2.5% CGST + 2.5% SGST).

Final Conclusion: Advance ruling: Maize Bran is classifiable as 'Bran' under tariff item 23021010 and falls under Sr.No.103A of Notification No.1/2017-Central Tax (Rate); it is not covered by the exemption at Sr.No.102 of Notification No.2/2017-Central Tax (Rate), and is therefore taxable at 5% (2.5% CGST + 2.5% SGST).

Compulsory registration for persons supplying goods or services on behalf of another taxable person - aggregate turnover threshold for registration - liability to pay GST upon registration

Compulsory registration for persons supplying goods or services on behalf of another taxable person - aggregate turnover threshold for registration - PATRATOR is required to obtain GST registration. - HELD THAT: - The Authority examined the franchise agreement and found the applicant constrained to operate exclusively under the franchisor's brand, use only company-supplied course material, issue receipts printed by the company, remit specified registration fees to the company, allow company audits/spot checks, follow company-set infrastructure, staffing and performance targets and collect fees as directed. These contractual clauses show that the applicant supplies goods and services on behalf of the franchisor. Clause (vii) of the categories listed in Section 24 (compulsory registration) therefore applies irrespective of the applicant's own aggregate turnover. On that basis the applicant is held to be mandatorily liable for registration under the Act. [Paras 9, 10]

Applicant is liable to take GST registration under the category of persons supplying goods or services on behalf of another taxable person.

Liability to pay GST upon registration - compulsory registration for persons supplying goods or services on behalf of another taxable person - PATRATOR is required to pay GST on the supplies made. - HELD THAT: - Because the Authority concluded that the applicant falls within the compulsory registration category (supply on behalf of the taxable franchisor), the applicant is liable to be registered and, consequent to such registration, to discharge GST on the taxable supplies made under the arrangement. The applicant's claim of aggregate turnover below the statutory threshold does not negate mandatory registration and tax liability where Section 24's categories apply. [Paras 9, 10]

Applicant is liable to pay GST on the supplies made under the franchise arrangement.

Final Conclusion: The Authority rules that the franchisee (PATRATOR) is mandatorily required to obtain GST registration as a person supplying goods or services on behalf of another taxable person and is accordingly liable to pay GST on such supplies.

Principles of natural justice - supply of copies/extracts of seized documents - discretion under Section 67(5) of the Central Goods and Services Tax Act, 2017 - withholding copies where disclosure may prejudice investigation - availability of alternative statutory remedy of appeal

Principles of natural justice - supply of copies/extracts of seized documents - Denial of supply of copies/extracts of seized documents did not constitute denial of reasonable opportunity or breach of principles of natural justice in the facts of these petitions. - HELD THAT: - The court examined the factual matrix from the order sheets and found that the petitioner was repeatedly given opportunities to produce missing books and records that were not seized during search operations. The authority recorded that some account books were maintained in computer and that on earlier dates the petitioner and tax consultant had perused the scrutiny report and been asked to produce specific records. The competent authority formed a reasonable apprehension that supplying copies/extracts of seized documents could enable interpolation of the records still retained by the petitioner and thereby prejudice the investigation. On this foundation the court held that withholding supply of copies/extracts did not amount to denial of the opportunity to defend, because adequate chances to produce the remaining records were afforded and the refusal was grounded in a prima facie reasonable apprehension of prejudice to investigation. [Paras 3, 4]

The denial of copies/extracts under the circumstances did not violate principles of natural justice.

Discretion under Section 67(5) of the Central Goods and Services Tax Act, 2017 - withholding copies where disclosure may prejudice investigation - The competent authority lawfully and judiciously exercised its discretion under Section 67(5) to withhold supply of copies/extracts of seized documents. - HELD THAT: - The court evaluated whether the authority exceeded its jurisdiction in refusing the request. It found that the authority's exercise of discretion was supported by cogent and convincing reasons recorded in the order sheet, namely the apprehension that supply of copies/extracts could facilitate interpolation of books still in the petitioner's possession and thereby adversely affect the investigation. On the face of the record the formation of opinion by the authority was founded on reasonable grounds and thus fell within the permissible scope of its statutory discretion under Section 67(5). [Paras 3, 4]

The refusal to supply copies/extracts was a proper exercise of the discretion conferred by Section 67(5).

Availability of alternative statutory remedy of appeal - Writ interference was not warranted in view of absence of jurisdictional error and the availability of alternative statutory remedy of appeal. - HELD THAT: - Having concluded that the authority acted within its jurisdiction and that its discretion was reasonably exercised, the court observed there was no jurisdictional error requiring intervention under Article 226. In these circumstances, particularly where a statutory appellate remedy remained available to the petitioner, the court declined to entertain the petitions at the admission stage. [Paras 4, 5]

No interference under writ jurisdiction; petitions dismissed at admission stage.

Final Conclusion: The High Court dismissed the three writ petitions at the admission stage, holding that the competent authority reasonably exercised its discretion under Section 67(5) CGST to withhold copies/extracts of seized documents, that there was no breach of natural justice or jurisdictional error, and that the petitioner had an alternative statutory remedy of appeal.

Profiteering under GST - passing on benefit of reduction in input tax credit - binding undertaking to the Court - direction to verify passing of benefit - stay of penalty and investigation proceedings

Profiteering under GST - passing on benefit of reduction in input tax credit - Validity of the finding that the petitioner profiteered for the period 1st July, 2017 to 31st December, 2018 and the petitioner's claim of having passed on the benefit to buyers. - HELD THAT: - The Court recorded that respondent no.3-NAPA had held the petitioner to have profiteered to the extent quantified for the period 1st July, 2017 to 31st December, 2018 and noted the petitioner's earlier admission by letter dated 3rd July, 2019 and subsequent assertions that substantial benefit has been passed to flat buyers and the remainder deposited in a bank account. The petitioner furnished and reiterated an undertaking that it has given, and will give, the benefit of Section 171 as quantified by it in respect of other ongoing projects. The Court accepted these undertakings and treated them as binding on the petitioner.

The petitioner's undertaking regarding passing on of the quantified benefit is accepted and held to be binding; the petitioner is not entitled to a stay of payment.

Direction to verify passing of benefit - Scope of verification to be carried out by respondent no.3 regarding the petitioner's claim of having passed on the commensurate benefit. - HELD THAT: - Noting the petitioner's admission/undertaking and the factual assertions about payments, the Court directed respondent no.3 to verify the petitioner's claims concerning the passing on of the commensurate benefit amounting to the quantified sum for the specified period. The direction contemplates verification of the petitioner's documentary and factual claims to ascertain compliance with the requirement to pass on the benefit.

Respondent no.3 is directed to verify the petitioner's claim of having passed on the commensurate benefit for the period 1st July, 2017 to 31st December, 2018.

Stay of penalty and investigation proceedings - binding undertaking to the Court - Whether ancillary penalty, investigation and the notices/summons issued by DGAP should proceed pending verification and further orders. - HELD THAT: - Having accepted the petitioner's undertaking and in view of the petitioner's assertions that the benefit has been passed or set aside for distribution, the Court found no ground to stay the payment obligation but observed that continuing with penalty, broader investigation into other projects and enforcement steps pending verification may be premature. Therefore, the Court stayed directions to impose penalty and to continue investigation in respect of other projects, and stayed the notices and summons issued by respondent no.4-DGAP until further orders.

Directions for imposition of penalty and investigation with regard to other projects, and the notices and summons issued by respondent no.4-DGAP, are stayed until further orders.

Final Conclusion: The Court accepted and made binding the petitioner's undertaking to pass on the quantified benefit for the period 1st July, 2017 to 31st December, 2018, refused to stay the payment obligation, directed respondent no.3 to verify the petitioner's claims of having passed on the benefit, and stayed penalty, investigation and DGAP notices/summons relating to other projects until further orders.

Withdrawal of writ petition - liberty to institute fresh proceedings / to pursue alternate forum - public policy constraint on withdrawal (Order XXIII Rule 1) - bench hunting and forum shopping - power to impose costs on withdrawal - advance ruling as alternative remedy

Withdrawal of writ petition - advance ruling as alternative remedy - public policy constraint on withdrawal (Order XXIII Rule 1) - Appellant's entitlement to withdraw W.P.No.24412 of 2019 and pursue the application before the Advance Ruling Authority - HELD THAT: - The Court held that the appellant had a prima facie right to withdraw the writ petition as a bona fide course was shown - the appellant had sought an advance ruling on the applicability of GST which constituted a separate remedy and the endorsement permitting withdrawal had been made in open court. The court applied the principles underlying Order XXIII Rule 1 and related precedents, observing that the public policy constraint against withdrawal (to prevent bench hunting) is subject to exceptions where withdrawal is bona fide and not intended for forum shopping. The High Court found no unrepresented third party interests or other contingencies that would bar permitting withdrawal, and noted that the Advance Ruling Authority had left the application pending in consequence of the writ petition, justifying the appellant's course. Consequently, the Court concluded that the appellant was entitled to have the writ petition treated as withdrawn with liberty to pursue the advance ruling. [Paras 25]

Writ petition W.P.No.24412 of 2019 stands dismissed as withdrawn and the appellant is permitted to pursue the application before the Advance Ruling Authority.

Power to impose costs on withdrawal - bench hunting and forum shopping - Validity of observations in paragraphs 41 and 42 of the impugned judgment imposing costs and refusing liberty to the appellant - HELD THAT: - The Court examined the Single Judge's adverse observations and the Rs.5,00,000 cost directed to be paid to the Chief Justice Relief Fund, treating the appellant's conduct as speculative and intended to frustrate the tender. Applying authorities on withdrawal and its limits, the Court found that on the peculiar facts the appellant's withdrawal was bona fide and there was no justification to refuse permission or to impose costs. The High Court noted that the learned Single Judge had not given weight to the fact that the Advance Ruling Authority had kept the advance ruling application pending and that no unrepresented party would be prejudiced. For these reasons, the adverse observations and the cost direction insofar as they related to the present appellant were held to be unjustified and not supported in law. [Paras 25]

Observations and directions in paragraphs (41) and (42) of the impugned judgment are set aside insofar as they relate to the appellant; no costs are imposed on the appellant.

Final Conclusion: Appeal allowed in part: paragraphs (41) and (42) of the impugned judgment are set aside insofar as they concern the appellant; W.P.No.24412 of 2019 is dismissed as withdrawn without prejudice to the appellant's right to pursue the application before the Advance Ruling Authority; no costs are awarded against the appellant.

Detention of goods without issuance of a detention order - release of goods and conveyance on bank guarantee pending adjudication - compliance with transportation requirements under CGST and SGST Rules - expeditious completion of adjudication proceedings

Detention of goods without issuance of a detention order - compliance with transportation requirements under CGST and SGST Rules - Whether the goods could be retained by the respondent in the absence of a formal detention order where the petitioner had complied with transportation requirements and no inspection or order of detention had been served. - HELD THAT: - The Court noted that the consignment was unloaded at the destination stated in the invoices and that, although the transport driver was prevented from leaving and Form GST MOV-01 was issued, no inspection was conducted and no formal detention order has been served despite detention from 09.09.2020. The petitioner asserted compliance with the CGST and SGST transportation requirements. In these circumstances the Court found it inequitable to permit continued retention of goods without a formal detention order and without completion of the statutory adjudicatory process. To balance the interests of both parties and to prevent irreparable injury to the petitioner, the Court directed release of the goods and conveyance subject to the provision of a bank guarantee for the amount specified by the respondent, instead of permitting continued oral or informal detention. [Paras 1, 2, 5]

Goods and conveyance released to the petitioner on deposit of a bank guarantee for the amount indicated by the respondent.

Release of goods and conveyance on bank guarantee pending adjudication - expeditious completion of adjudication proceedings - Whether the adjudication proceedings should be expedited and the timeframe for completing adjudication after release on bank guarantee. - HELD THAT: - The respondent indicated that detention arose because the goods were unloaded at a place other than the recorded destination and stated intention to proceed with adjudication. The Court accepted that substantive adjudication remained pending but emphasised that, having ordered release on bank guarantee to protect the petitioner's commercial interests, the respondent must not delay the statutory process. Consequently the Court directed that the adjudication proceedings be completed and concluded within one week from receipt of a copy of the judgment, thereby imposing a clear and short timeline for final determination. [Paras 4, 5]

Respondent to complete and conclude adjudication within one week from receipt of a copy of the judgment.

Final Conclusion: Writ petition disposed of: goods and conveyance ordered released on petitioner furnishing a bank guarantee for the amount stated by the respondent; respondent directed to conclude adjudication within one week from receipt of this judgment.

Availability of writ remedy against confiscation order under Section 130 of the GST Act - Requirement to prefer statutory appeal under Section 107 before seeking alternative relief - Provisional release of goods and conveyance under Section 67(6) of the GST Act - Obligation of adjudicating authority to decide provisional release application within a specified short period

Availability of writ remedy against confiscation order under Section 130 of the GST Act - Requirement to prefer statutory appeal under Section 107 before seeking alternative relief - Writ relief against the final confiscation order was refused in the absence of the statutory appeal; the petitioner ought to prefer an appeal under Section 107 of the Act. - HELD THAT: - The Court declined to grant the substantive relief sought by way of writ against an order of confiscation already passed under Section 130, observing that the appropriate course is to invoke the statutory appellate remedy under Section 107. The court recorded that it would not accede to the request for release of perishable goods by writ because the petitioner has available the statutory appeal and should pursue that remedy. The Court expressly did not examine the merits of the confiscation order.

Writ relief refused; petitioner directed to prefer statutory appeal under Section 107.

Provisional release of goods and conveyance under Section 67(6) of the GST Act - Obligation of adjudicating authority to decide provisional release application within a specified short period - Application for provisional release under Section 67(6) is to be considered by the authority after filing of the statutory appeal; the authority must decide such application expeditiously within eight days of filing of the appeal. - HELD THAT: - Although the Court observed that the application for provisional release ideally ought to follow the filing of the appeal under Section 107, it directed that if the petitioner files the statutory appeal, the concerned authority shall immediately take up the pending application under Section 67(6) and pass an appropriate order in accordance with law within eight days thereafter. The Court clarified that it has not gone into the merits of the provisional release request and limited its direction to prompt consideration by the statutory authority.

Application under Section 67(6) to be considered afresh by the authority and decided within eight days after the appeal is filed.

Final Conclusion: Writ petition disposed of: petitioner to file statutory appeal under Section 107; upon filing, the authority shall promptly consider the pending application under Section 67(6) and pass a reasoned order within eight days; no expression of opinion on the merits of confiscation or provisional release.

Power to set aside assessment orders under Section 62 of the GST Act - 30-day period to file returns for setting aside an assessment under Section 62 - suspension of recovery to enable exercise of appellate remedy

Power to set aside assessment orders under Section 62 of the GST Act - 30-day period to file returns for setting aside an assessment under Section 62 - Entitlement to have Ext.P2 series of assessment orders set aside under Section 62 was forfeited by filing returns after the 30-day period. - HELD THAT: - The assessment orders under Section 62 were served on the petitioner on 04.10.2019. The statutory mechanism for obtaining the benefit of having such orders set aside requires filing returns within 30 days of receipt of the order. The returns in the present case were filed on 21.11.2019, which is beyond the 30-day period. In view of the delayed filing, the petitioner cannot properly claim entitlement to have Ext.P2 series of orders set aside under Section 62, and the writ challenge to those orders cannot succeed on that ground.

Writ petition insofar as it seeks setting aside of Ext.P2 series of assessment orders is dismissed.

Suspension of recovery to enable exercise of appellate remedy - Whether recovery action on amounts confirmed by Ext.P2 series of assessment orders should be stayed to permit the petitioner to pursue appellate remedy. - HELD THAT: - Although the writ challenge to the assessment orders is dismissed, the Court exercised its discretion to temporarily restrain recovery steps to afford the petitioner a limited opportunity to pursue statutory appellate remedies. Recovery is ordered to be kept in abeyance for a period of three weeks from receipt of this judgment to enable the petitioner to institute proceedings before the appellate authority under the GST Act.

Recovery steps are kept in abeyance for three weeks from receipt of the judgment to enable the petitioner to file an appeal; otherwise recovery may proceed.

Final Conclusion: Writ petition challenging Ext.P2 series of assessment orders dismissed on the ground of non-compliance with the 30-day filing requirement for seeking setting aside under Section 62; recovery stayed for three weeks to enable the petitioner to file an appeal under the GST Act.

Statutory appeal under Section 107 - confiscation under Section 130 - provisional release under Section 67(6) - perishable goods - writ jurisdiction under Article 226

Statutory appeal under Section 107 - writ jurisdiction under Article 226 - confiscation under Section 130 - Whether the writ petition can be entertained in place of the statutory remedy of appeal against an order of confiscation under Section 130. - HELD THAT: - The Court declined to entertain the writ challenge to the final order of confiscation and held that the appropriate remedy is to prefer the statutory appeal under Section 107 of the Act. The Court observed that a final order of confiscation under Section 130 has already been passed and, therefore, the remedy of appeal is the proper forum for challenging that order. The Court did not decide the merits of the confiscation but directed that the statutory route be pursued. [Paras 4]

Writ petition not entertained in lieu of statutory appeal; the petitioner should prefer an appeal under Section 107.

Provisional release under Section 67(6) - perishable goods - Direction regarding the application for provisional release of perishable goods filed under Section 67(6). - HELD THAT: - Although the Court noted that the application for provisional release under Section 67(6) could have been filed only after preferring the appeal, it nonetheless directed that if an appeal is filed, the authority concerned shall immediately take up the application for provisional release and pass an appropriate order in accordance with law. The Court clarified that it has not gone into the merits of the application or the confiscation order and imposed a timeline for decision to prevent undue delay. [Paras 5, 6]

If an appeal under Section 107 is filed, the authority shall decide the pending application under Section 67(6) for provisional release of goods and conveyance within eight days; merits not adjudicated by this Court.

Final Conclusion: Writ petition disposed of by directing the petitioner to pursue the statutory appeal under Section 107; upon filing of the appeal the authority is directed to decide the application for provisional release under Section 67(6) within eight days, the Court not having considered the merits of confiscation under Section 130.

Writ of mandamus under Article 226 - Input Tax Credit - power to block the Input Tax Credit - invocation of Rule 86A of Central Goods and Services Tax Rules, 2017 - GSTR-3B filing omission - draft amendment allowed - notice to respondents

Draft amendment allowed - writ of mandamus under Article 226 - Draft amendment to the writ petition was permitted and directed to be carried out at the earliest. - HELD THAT: - The Court, after hearing learned counsel and perusal of the material on record, allowed the proposed draft amendment to the petition and directed that the amendment be effected without delay. This order permits the petitioner to amend its pleadings to include the contested reliefs as framed in the draft amendment for adjudication in the proceedings under Article 226.

Draft amendment allowed and to be carried out at the earliest.

Input Tax Credit - power to block the Input Tax Credit - invocation of Rule 86A of Central Goods and Services Tax Rules, 2017 - GSTR-3B filing omission - notice to respondents - Notice issued to respondents to address whether omission by the supplier to file GSTR-3B suffices to block the petitioner's Input Tax Credit and whether Rule 86A has been invoked for such action. - HELD THAT: - The Court declined to adjudicate the substantive legal question at this stage and instead issued notice to the respondents returnable on 14 September 2020, specifically asking them to clarify (a) whether non-filing of GSTR-3B by the supplier is sufficient to justify blocking the recipient's Input Tax Credit and (b) whether the Department has acted by invoking Rule 86A of the CGST Rules, 2017. The petitioner was directed to furnish a complete paper book, including the draft amendment, to the learned Additional Solicitor General to facilitate the respondents' response.

Notice to respondents issued returnable on 14th September 2020; respondents to answer the stated questions and petitioner to supply paper book to the Additional Solicitor General.

Final Conclusion: The Court permitted the petitioner's draft amendment and issued notice to the respondents on specified questions concerning the blocking of Input Tax Credit and the invocation of Rule 86A, fixing the matter for further hearing on 14 September 2020.

Refund of input tax credit under Section 54 of the CGST Act, 2017 - zero-rated supply - non-speaking order - duty to record reasons - opportunity of personal hearing - remand for fresh consideration

Refund of input tax credit under Section 54 of the CGST Act, 2017 - zero-rated supply - non-speaking order - duty to record reasons - Validity of the respondent's rejection orders of the petitioner's refund claims for zero-rated supplies on the ground that the orders are non-speaking and do not adequately record reasons. - HELD THAT: - The Court found that the respondent rejected the petitioner's refund claims in a cryptic manner, merely stating inadmissibility as per the statutory provision without dealing with the detailed objections filed by the petitioner. It is a settled legal requirement that authorities considering refund applications under the statute must examine the claim and the replies to notices and pass reasoned orders addressing the objections raised. The impugned orders failed to consider and record findings on the petitioner's objections and therefore constitute non-speaking orders. In the interests of justice, the Court concluded that the appropriate relief is to set aside the defective orders and remit the matter for fresh consideration so that the authority may deal with the objections and afford an opportunity of personal hearing before passing a reasoned order. [Paras 4, 5, 6]

Impugned rejection orders set aside as non speaking; matter remanded to the respondent to consider petitioner's objections, afford personal hearing and pass fresh reasoned orders in accordance with law within the prescribed timelines.

Remand for fresh consideration - opportunity of personal hearing - Scope and directions on remand for adjudication of the refund claims. - HELD THAT: - The Court directed that the petitioner may file fresh objections within 15 days of receipt of the order. On receipt, the respondent is to consider all objections, extend due opportunity of personal hearing and thereafter pass appropriate orders in accordance with law. The Court imposed a timeline of 60 days from receipt of the petitioner's objections for disposal of the matter to ensure expeditious resolution. [Paras 6]

Remand directed with specific timelines: petitioner to file objections within 15 days; respondent to consider objections, afford personal hearing and pass reasoned orders within 60 days of receipt of objections.

Final Conclusion: The High Court set aside the cryptic rejection orders of the petitioner's refund claims for zero rated supplies as non speaking, remitted the matters for fresh consideration and directed the authority to consider the petitioner's objections, afford a personal hearing and pass reasoned orders within the specified timelines; writ petitions disposed of with no costs.

Provisional attachment to protect Government revenue under Section 83 of the GGST Act - formation of subjective opinion supported by credible material - provisional attachment as a drastic power to be exercised sparingly - bogus billing and generation of E-Way bills without physical movement - balancing protection of revenue and prevention of harassment of the assessee

Provisional attachment to protect Government revenue under Section 83 of the GGST Act - formation of subjective opinion supported by credible material - provisional attachment as a drastic power to be exercised sparingly - bogus billing and generation of E-Way bills without physical movement - Validity of provisional attachment of the petitioners' bank accounts under Section 83 of the GGST Act. - HELD THAT: - The Court applied the principles laid down in Valerius Industries and earlier decisions, recognising that provisional attachment under Section 83 is a drastic power that must be exercised sparingly and only upon formation of a subjective satisfaction supported by credible materials. On the record there was prima facie material indicating repeated generation of E-Way bills and large paper transactions between associated entities without physical movement of goods, denial of knowledge of those transactions by the proprietor, and investigative reports and statements leading the authorities to conclude involvement in bogus billing. The Court held that, having regard to those materials and the need to protect revenue from being thwarted by disposal or secretion of assets before completion of assessment, the authorities were justified in forming the requisite opinion and in provisionally attaching the bank accounts. The Court also observed that attachment should not be used to harass an assessee, but on the facts before it there was no basis to conclude that the power was exercised for harassment or would cause an irreversible detriment to the business such as to vitiate the order.

The provisional attachments were held lawful on the prima facie materials; no interference with the orders under Section 83 was warranted.

Final Conclusion: The petition challenging the provisional attachment of the bank accounts is dismissed; the impugned orders under Section 83 of the GGST Act are upheld and notice is discharged with no order as to costs.

Deduction under Section 80IB - built-up area excludes common areas (including car parking) - application of the definition of built-up area in Section 80IB(14)(a) from 01.04.2005 - reliance on Tamil Nadu Apartment Ownership Act definition of common areas

Deduction under Section 80IB - built-up area excludes common areas (including car parking) - reliance on Tamil Nadu Apartment Ownership Act definition of common areas - application of the definition of built-up area in Section 80IB(14)(a) from 01.04.2005 - Assessee entitled to deduction under Section 80IB for Assessment Year 2005-2006 because car parking/common areas are excluded from the built-up area. - HELD THAT: - The Court held that the appeal is squarely covered by a co ordinate Bench decision in the assessee's own case for the preceding year. The Tribunal and the lower authority correctly treated car parking as a common area and not part of the living or residential built-up area. Reliance on the Tamil Nadu Apartment Ownership Act, which classifies parking areas as common areas, supports excluding such areas from the built-up area calculation. The subsequent statutory definition of "built-up area" in Section 80IB(14)(a) (effective 01.04.2005) - which confines built-up area to the inner measurements of the residential unit and expressly excludes common areas shared with other units - corroborates that car parking should not be included for determining the maximum built-up area under Section 80IB(10). On these bases the Tribunal's allowance of the deduction was upheld and the Revenue's challenge dismissed. [Paras 3, 7]

Appeal dismissed; question of law answered in favour of the assessee and against the Revenue.

Final Conclusion: The Revenue's appeal is dismissed and the assessee is held entitled to the deduction under Section 80IB for Assessment Year 2005-2006, on the ground that car parking/common areas are excluded from the built-up area for the purpose of the statutory ceiling.

Disallowance of expenditure in relation to exempt income - application of Section 14A principles - Assessing Officer's satisfaction and application of prescribed method under Section 14A - allowability of interest expenditure attributable to earning exempt income as business expenditure - proximate cause test for disallowance

Disallowance of expenditure in relation to exempt income - proximate cause test for disallowance - The Tribunal correctly did not sustain a disallowance on the basis that the assessee had incurred interest and made investments exceeding reserves and surplus. - HELD THAT: - The High Court applied the principle that disallowance under s.14A must be founded on a proximate relationship between the expenditure and income which does not form part of the total income; the Assessing Officer must first be objectively satisfied, on the accounts, that the assessee's claim about such expenditure is incorrect before invoking any prescribed method. The Tribunal's approach in declining to make a disallowance on the facts of the assessee's case was consistent with that principle and with the earlier appellate decision relied upon by the Court. [Paras 2]

Finding against Revenue; Tribunal rightly refused disallowance on the stated basis.

Application of Section 14A principles - Assessing Officer's satisfaction and application of prescribed method under Section 14A - allowability of interest expenditure attributable to earning exempt income as business expenditure - The Tribunal was correct in holding that interest expenditure incurred in relation to earning exempt income could be allowed as business expenditure where the Assessing Officer is not satisfied on the accounts to disallow it under the prescribed method. - HELD THAT: - Relying on the reasoning in the cited appellate decision, the Court reiterated that sub section (2) of s.14A permits the Assessing Officer to apply a prescribed method only when he is not satisfied with the assessee's claim; absent such satisfaction, expenditure genuinely attributable to earning exempt income may be allowable. The Tribunal applied this legal test and answered the substantial question against Revenue. [Paras 2, 3]

Answered against Revenue; Tribunal correctly allowed the claim on the stated legal basis.

Final Conclusion: Appeal dismissed; the Substantial Questions of Law framed were answered against the Revenue and in favour of the assessee, following the established principles governing s.14A disallowances.

Exemption under Section 11 of the Income Tax Act - salary excessive and unreasonable under Section 13(2)(c) of the Income Tax Act - charitable purpose and exclusion under Section 2(15) of the Income Tax Act - public policy bar on tax benefit for expenditure in violation of another statute - violation of Foreign Contribution Regulation Rules affecting tax treatment - remand to Commissioner of Income Tax (Appeals) for fresh adjudication

Exemption under Section 11 of the Income Tax Act - charitable purpose and exclusion under Section 2(15) of the Income Tax Act - Whether any substantial question of law arises from factual findings that the Society's micro finance and related activities fall within the exclusion in Section 2(15) and the consequent denial of exemption under Section 11. - HELD THAT: - The High Court examined the material recorded by the Assessing Officer, the CIT(A) and the Tribunal, including findings that the Society engaged in micro credit activities, received service charges and interest, set up a Section 25 company for distribution/collection of loans, and earned receipts above the statutory threshold. Those findings underpin the conclusion that the activities fell within the commercial exclusion in Section 2(15) and that exemption under Section 11 was accordingly denied. The Court emphasised that the controversy is predominantly factual: the Assessing Officer made detailed factual findings, the CIT(A) and Tribunal re examined facts, and the Tribunal remanded limited issues to the CIT(A) for further adjudication. As these appellate proceedings under Section 260A require a substantial question of law, the Court found no such question arising out of the principally factual record and declined to act as a third tier reappraisal of facts. [Paras 11, 14, 19, 30]

No substantial question of law arises from the factual determinations on micro finance activity and denial of exemption under Section 11; appeal dismissed on this ground.

Salary excessive and unreasonable under Section 13(2)(c) of the Income Tax Act - exemption under Section 11 of the Income Tax Act - Whether the Tribunal's affirmation of the partial disallowance (50%) of the salary paid to the Secretary gave rise to a substantial question of law. - HELD THAT: - The Assessing Officer disallowed the entire salary claimed, the CIT(A) allowed part relief by sustaining only 50% without assigning detailed reasons, and the Tribunal affirmed the CIT(A)'s conclusion. The Court noted that the CIT(A) had not explained why only 50% was sustained but observed that the Department did not appeal against the partial relief granted by the CIT(A). The High Court reiterated its limited function on appeals under Section 260A and that the correctness of primary factual findings and the appellate factual balancing conducted below do not, in the present record, raise a substantial legal question warranting interference. The Court also observed that documents now sought to be relied upon before it were not placed before the lower authorities in proper form and could not be entertained to convert factual disputes into questions of law. [Paras 26, 27, 28, 29, 30]

No substantial question of law arises from the Tribunal's affirmation of the 50% disallowance of salary; appeal dismissed on this ground.

Violation of Foreign Contribution Regulation Rules affecting tax treatment - public policy bar on tax benefit for expenditure in violation of another statute - Whether the Tribunal's conclusion that the Society violated the FCR Rules and its application of the public policy principle from Maddi Venkatraman to refuse tax benefit raised a substantial question of law. - HELD THAT: - The Assessing Officer concluded that administrative expenses funded by a particular foreign grant exceeded the percentage permitted under the FCR Rules; the CIT(A) held that infringement of the FCR Rules did not necessarily affect income tax computation; the Tribunal relied on the Supreme Court principle that public policy may preclude tax benefits for expenditure in violation of another statute (Maddi Venkatraman) and upheld the disallowance to that extent. The High Court recorded these rival findings but held that the dispute is essentially factual and that the Tribunal's application of the cited public policy principle to the facts did not raise a substantial question of law for its intervention in an appeal under Section 260A. [Paras 8, 9, 15, 16, 30]

No substantial question of law arises from the Tribunal's finding on FCR Rules violation and its reliance on the public policy principle; appeal dismissed on this ground.

Remand to Commissioner of Income Tax (Appeals) for fresh adjudication - exemption under Section 11 of the Income Tax Act - Remand by the Tribunal of the question whether the appellant is eligible for exemption under Section 11 in view of purported micro finance activity and the scope of consideration to be undertaken by the CIT(A). - HELD THAT: - The Tribunal found that the CIT(A) had not given detailed findings on whether the Society remained eligible for exemption under Section 11 in light of the micro finance activity and accordingly remanded the matter to the CIT(A) for a speaking order, directing that the CIT(A) consider the submissions and evidence and the decisions relied upon by the departmental representative. The High Court noted this remand and observed that such matters were left for fresh adjudication by the CIT(A); the High Court declined to convert the remand or the underlying factual disputes into a substantial question of law for its own determination under Section 260A. [Paras 14, 30]

Issue remanded by the Tribunal to the Commissioner of Income Tax (Appeals) for fresh, detailed adjudication; High Court declined to re examine the remanded factual matters in the present appeals.

Final Conclusion: The appeals under Section 260A are dismissed; the High Court finds no substantial question of law arising from the factual findings and appellate determinations below, and the Tribunal's remand to the CIT(A) for fresh consideration remains in place. No costs.

Reopening of assessment under Section 147 - change of opinion - classification of land as agricultural land vis-a -vis capital asset - effect of Government/Gazette notification annexing village to municipal limits - eligibility for deduction under Section 54F - relevance of municipal classification and building plan/usage for determining residential character - incongruity between Wealth-Tax return classification and Income-tax claim

Reopening of assessment under Section 147 - change of opinion - classification of land as agricultural land vis-a -vis capital asset - effect of Government/Gazette notification annexing village to municipal limits - Reopening of assessment under Section 147 was not justified and was a mere change of opinion; the land sold was agricultural land. - HELD THAT: - The Tribunal's quashing of the reassessment was upheld on factual and legal grounds. The assessing officer's primary reason for reopening was that the land fell within the limits of the Corporation of Chennai by virtue of a Government order; however, the Tribunal found on the material before it that the Gazette notification relied upon did not establish a factual basis predating the transfer and that the annexation relied upon was not operative for the relevant time. The Tribunal also relied on a co-ordinate decision and on the undisturbed assessment of the assessee's spouse (co-owner) where the land was accepted as agricultural land; these factors showed absence of new tangible material warranting reopening and demonstrated that the reassessment amounted to a change of opinion. Reliance on Raymond Woollen Mills Ltd. (supra) as to prima facie material was considered, but on facts no fresh material existed to justify reopening. The High Court agreed with the Tribunal's view and dismissed the revenue's challenge to reopening and classification. [Paras 11, 12, 13, 14]

Reopening under Section 147 quashed as a change of opinion; the land sold was held to be agricultural land.

Eligibility for deduction under Section 54F - relevance of municipal classification and building plan/usage for determining residential character - incongruity between Wealth-Tax return classification and Income-tax claim - Assessee entitled to deduction under Section 54F in respect of the residential portion of the property purchased; subsequent leasing for commercial use did not deprive the property of residential character for the purpose of Section 54F. - HELD THAT: - The Tribunal's allowance of deduction under Section 54F (restricted to the residential portion) was sustained. The Court noted the Executive Engineer's certificate and sanctioned building plan indicating the property was in a primary residential zone and sanctioned for residential use. The fact that the property was let out for commercial purposes shortly after purchase and that Wealth-Tax returns disclosed the property as commercial on the relevant date did not, in the Court's view, alter the property's residential character at the time of acquisition for the purpose of claiming Section 54F relief. The Tribunal had reasonably restricted relief to the residential portion, and the assessing officer's objection that conversion to commercial use shortly after purchase negated entitlement was rejected. [Paras 15, 16]

Deduction under Section 54F allowed to the extent of the residential portion of the acquired property; the assessee's claim sustained in part.

Final Conclusion: Appeal dismissed; substantial questions answered against the revenue: reassessment quashed as a change of opinion and the assessee entitled to Section 54F relief limited to the residential portion of the acquired property.

Application of Section 80IA(10) to Section 80IB(10) - burden of proof on Revenue to show abnormal profits - device to divert profit to avoid tax - exercise of powers under Section 263 - guideline value/circle rate as prima facie indicator

Application of Section 80IA(10) to Section 80IB(10) - burden of proof on Revenue to show abnormal profits - Tribunal correctly held that the provisions of Section 80IA(10) could not be applied to deny deduction under Section 80IB(10) in the absence of material showing the business was arranged to produce more than ordinary profits. - HELD THAT: - The Court accepted the Tribunal's factual re-examination that there was no material to demonstrate the partnership business was so arranged as to generate abnormal profits attracting Section 80IA(10) and thereby disqualify Section 80IB(10) deduction. The Tribunal's finding that the Revenue had not established a methodology or evidentiary basis to conclude the firm produced more than ordinary profits was upheld. The Court emphasised that the issue was predominantly factual and that the Revenue bore the burden of adducing material to justify treating the profits as excessive and ineligible for deduction. [Paras 9, 10, 11]

The Tribunal's conclusion that Section 80IA(10) does not apply to deny Section 80IB(10) deduction on the facts of the case is upheld.

Guideline value/circle rate as prima facie indicator - burden of proof on Revenue to show abnormal profits - PCIT's conclusion that sale consideration was understated because land was transferred at guideline value was not sustained for want of material evidence showing guideline value was 'ridiculously low' or that actual consideration was higher. - HELD THAT: - The Court noted the accepted legal position that guideline value is only an indicator and not conclusive; however, the PCIT produced no contemporaneous material to show the guideline value was unrepresentative of true value. The assessment of profit was based on sales effected years after the Joint Development Agreement and after the partnership was constituted; absent concrete evidence to the contrary, assumptions about undervaluation could not justify revocation of the assessment. The PCIT's reliance on hypothetical normal practices without evidential foundation was held insufficient. [Paras 5, 10, 11]

PCIT's finding that sale consideration was understated despite guideline value being adopted was rejected for lack of material proof.

Device to divert profit to avoid tax - exercise of powers under Section 263 - The exercise of power under Section 263 to set aside the assessment on the ground that the partnership was a device to divert profits to the landowners' sons was unfounded and rightly reversed by the Tribunal. - HELD THAT: - The Court observed that the Partnership Firm was constituted after the Joint Development Agreement was executed, undermining the PCIT's hypothesis that the firm was pre-arranged as a device. Section 263 requires satisfaction founded on material showing an assessment order to be erroneous and prejudicial; here the PCIT's order was based on presumptions and hypothetical scenarios rather than established facts. In absence of material establishing the partnership as a contrivance to avoid tax, there was no justification to interfere with the assessment order under Section 143(3). The Tribunal's detailed factual finding in favour of the assessee was affirmed. [Paras 10, 11]

The PCIT's invocation of Section 263 was unjustified; the Tribunal's reversal of the Section 263 order is upheld.

Final Conclusion: The High Court finds no substantial question of law; the Tribunal's factual findings that the Revenue failed to prove abnormal profits, understatement of consideration, or that the partnership was a device to avoid tax are upheld, and the Revenue's appeal is dismissed.

Deduction under section 10AA - definition of "entrepreneur" under the SEZ Act - trading as import for the purpose of re export - services as defined in SEZ Rules (Rule 76) - SEZ Act non obstante principle prevailing over inconsistent provisions - binding effect of coordinate bench Tribunal precedent - opportunity to be heard / natural justice

Deduction under section 10AA - trading as import for the purpose of re export - services as defined in SEZ Rules (Rule 76) - definition of "entrepreneur" under the SEZ Act - binding effect of coordinate bench Tribunal precedent - Assessee engaged in import and re export (trading) through an SEZ unit entitled to deduction under section 10AA for AY 2014 15. - HELD THAT: - The Tribunal examined whether profits from an SEZ unit engaged in trading in the nature of import and re export qualify as income from "services" for the purpose of section 10AA. The unit held a letter of approval and was authorised to undertake trading/warehouse activities. Rule 76 of the SEZ Rules treats "trading" for the Second Schedule as import for the purpose of re export and includes trading within the list of "services". The Tribunal observed that the term "services" in section 10AA must be understood with reference to the SEZ Act and Rules. In the absence of any contrary binding precedent, the coordinate bench decisions holding that import for re export trading by an SEZ unit falls within "services" and therefore qualifies for section 10AA exemption are binding and squarely cover the facts of the present case. Following those decisions and the statutory scheme (including the non obstante character of SEZ Act provisions), the Tribunal allowed the deduction under section 10AA. [Paras 9, 10, 11]

Ground No.1 allowed; deduction under section 10AA granted for the SEZ unit's import and re export trading activity for AY 2014 15.

Opportunity to be heard / natural justice - Whether the assessee was denied adequate opportunity of being heard by the lower authorities. - HELD THAT: - The Tribunal reviewed the assessment order and the DRP order regarding the assessee's complaint of violation of natural justice. On perusal of the relevant passages in the assessment and DRP orders, the Tribunal found no merit in the grievance that adequate opportunity was not afforded and therefore rejected the contention. [Paras 12]

Ground No.2 dismissed; no violation of the principle of natural justice established.

Final Conclusion: Appeal partly allowed: deduction under section 10AA granted to the assessee for AY 2014 15 in respect of SEZ unit's import for re export trading activity; the plea of denial of opportunity to be heard rejected.

Deduction under section 80P(2)(a)(i) - classification as primary agricultural credit society - scope of inquiry under subsection (4) of section 80P - binding effect of registrar's certificate - separate assessment year principle

Deduction under section 80P(2)(a)(i) - classification as primary agricultural credit society - binding effect of registrar's certificate - Whether the CIT(A) was justified in upholding the Assessing Officer's denial of deduction under section 80P(2)(a)(i) without a detailed inquiry into the nature and purpose of loan disbursements. - HELD THAT: - The Tribunal analysed the competing High Court precedents and the factual record. The Assessing Officer disallowed the deduction on the basis that the assessee was essentially carrying on banking business and that agricultural credit disbursements were minuscule. The Tribunal held that the ledger/loan narration in the audit report, by itself, is not conclusive to determine whether individual loans were for agricultural purposes. In light of the Full Bench decision in The Mavilayi Service Co-operative Bank Ltd. v. CIT, the Assessing Officer is not bound by the Registrar's classification alone and must conduct an enquiry into the factual activities of the society for each assessment year to ascertain eligibility under subsection (4) of section 80P. Because such detailed examination of the purpose of each loan disbursement was not undertaken at assessment, the Tribunal concluded that the matter required fresh consideration by the Assessing Officer following the Full Bench dictum and the principle that each assessment year is to be examined separately. [Paras 7]

The confirmation by the CIT(A) is set aside for reconsideration; the issue is remanded to the Assessing Officer to examine, year-wise, the nature and purpose of loan disbursements and to decide eligibility for deduction under section 80P(2)(a)(i) in accordance with the Full Bench ruling.

Final Conclusion: Appeals allowed for statistical purposes by remanding the claim of deduction under section 80P(2)(a)(i) to the Assessing Officer for fresh, year wise enquiry into the nature of loan disbursements; stay applications dismissed as infructuous.

Penalty under section 271(1)(c) - penalty unsustainable where primary addition is deleted - debatable claim / bona fide claim not constituting concealment - absence of mens rea for imposition of penalty - followed precedent of coordinate bench and earlier Tribunal orders

Penalty under section 271(1)(c) - penalty unsustainable where primary addition is deleted - Deletion of penalty levied on disallowance of depreciation on leased assets - HELD THAT: - The Tribunal noted that the quantum addition on account of depreciation on leased assets had been set aside and restored to the file of the Assessing Officer by a coordinate bench (ITA No.1475/Mum/2005). Further, penalty on the identical issue had been deleted in the assessee's earlier year (ITA No.5821/Mum/2007). Following these authorities, since the addition on the basis of which penalty was levied does not survive, the penalty is not sustainable and deletion is confirmed even though on different grounds than the first appellate order. [Paras 5]

Penalty deleted

Penalty under section 271(1)(c) - penalty unsustainable where primary addition is deleted - Deletion of penalty levied on disallowance arising from sale and leaseback transaction - HELD THAT: - The Tribunal recorded that the quantum addition in respect of the sale and leaseback transaction had been deleted by the Tribunal (ITA No.1475/Mum/2005). As the underlying addition no longer survives, the penalty founded on that addition cannot be sustained. Consequently, the appellate order deleting the penalty is upheld. [Paras 5]

Penalty deleted

Penalty under section 271(1)(c) - debatable claim / bona fide claim not constituting concealment - Deletion of penalty levied on disallowance of deduction under section 80M - HELD THAT: - The Tribunal relied on its earlier order in ICICI Limited (ITA No.1112/Mum/2008) where penalty on the identical issue was deleted. Treating the claim as debatable and following the precedent, the Tribunal confirmed deletion of the penalty. [Paras 5]

Penalty deleted

Penalty under section 271(1)(c) - penalty unsustainable where primary addition is deleted - Deletion of penalty levied on premium on redemption of debentures - HELD THAT: - The Tribunal observed that the addition in respect of premium on redemption of debentures had been set aside and remanded to the Assessing Officer for re-adjudication (ITA No.1475/Mum/2005). As the quantum addition does not presently survive, the penalty founded on it cannot be sustained; deletion is therefore confirmed. [Paras 5]

Penalty deleted

Penalty under section 271(1)(c) - debatable claim / bona fide claim not constituting concealment - Deletion of penalty levied on disallowance of expenditure relating to increase in share capital - HELD THAT: - The Tribunal followed its earlier decision in the assessee's own case for AY 1993-94 (ITA No.1417/Mum/2007) where the issue was held to be debatable and not amounting to concealment or furnishing inaccurate particulars. Respecting that precedent, the Tribunal held that the disputed nature of the claim precludes levy of penalty and confirmed deletion. [Paras 5]

Penalty deleted

Penalty under section 271(1)(c) - absence of mens rea for imposition of penalty - debatable claim / bona fide claim not constituting concealment - Deletion of penalty levied on disallowance of deduction under section 35D - HELD THAT: - The Tribunal considered that the assessee made a bona fide claim for deduction under section 35D which was rejected by reference to a Madras High Court decision. Citing the Supreme Court's recognition that mere rejection of a claim does not necessarily imply concealment or furnishing inaccurate particulars, the Tribunal concluded that absent any demonstration of mens rea or deliberate concealment the penalty could not be sustained, and confirmed deletion. [Paras 5]

Penalty deleted

Final Conclusion: All impugned penalties levied under section 271(1)(c) for AY 1997-98 are confirmed deleted by the Tribunal-either because the underlying additions have been set aside or remanded, or because the claims were debatable/bona fide or lacked mens rea-and the revenue appeal is dismissed.

Fees for technical services - taxability in India of fees for technical services under Section 9(1)(vii) - deduction of tax at source under Section 195 - commission for procurement of orders - permanent establishment / business connection

Fees for technical services - taxability in India of fees for technical services under Section 9(1)(vii) - deduction of tax at source under Section 195 - commission for procurement of orders - permanent establishment / business connection - Whether amounts paid to the non-resident M/s System Integration Inc., USA were fees for technical services taxable in India and therefore liable to deduction of tax at source under Section 195. - HELD THAT: - The Tribunal examined the written service agreement, the invoices and an explicit certification from the non-resident that it acted only as a liaison and procurement agent and had not provided technical or managerial services. The agreement described the integrator's duties broadly as "consulting services, project work, procurement and any other task," and invoices described the supplies as "Onsite Project Management and Procurement," but the contemporaneous evidence and the certificate established that all substantive software work was performed by the assessee's team by connecting to clients' networks using VPN/VDI. Applying the statutory definition in Section 9(1)(vii) (which treats "fees for technical services" as consideration for rendering managerial, technical or consultancy services), the Tribunal found that the non-resident did not render such managerial or technical services but only procured orders and received commission and incidental reimbursements. There was no permanent establishment or business connection in India of the non-resident bringing the receipts within chargeability under Section 9. Reliance on the decision cited by the assessee supported the proposition that promotion/procurement fees are not necessarily "fees for technical services." On these findings, the payments did not constitute fees for technical services chargeable to tax in India and consequently were not subject to withholding under Section 195. [Paras 13, 14, 15, 16, 17]

Payments to M/s System Integration Inc., USA were for procurement of orders and reimbursement of incidental expenses, not fees for technical services; therefore they do not fall within Section 9(1)(vii) and Section 195 withholding was not applicable.

Final Conclusion: Both appeals are allowed; the Tribunal set aside the orders sustaining TDS default and interest and directed deletion of the demand in respect of the payments made to the non-resident for Financial Year 2014-15 and Financial Year 2015-16.

Sales tax subsidy as capital receipt - nature of subsidy determined by the object of the scheme - purposive test for characterisation of subsidy - admission of additional ground based on facts on record - restoration to Assessing Officer for fresh adjudication

Sales tax subsidy as capital receipt - purposive test for characterisation of subsidy - nature of subsidy determined by the object of the scheme - Characterisation of sales tax incentive received under the Uttar Pradesh subsidy scheme as capital or revenue receipt. - HELD THAT: - The Tribunal affirmed the Commissioner (Appeals) finding that the sales tax incentive under the U.P. Government scheme is a capital receipt. Applying the purposive test, the Court examined the subsidy scheme and found it applicable only to notified areas, available to units making specified additional fixed capital investment, and the exemption quantum was linked to fixed capital investment. On the factual material (eligibility certificate and evidence of additional fixed capital investment) the assessee met the scheme's conditions, demonstrating the subsidy was granted to enable expansion/modernization of the existing unit. Following the ratio in Ponni Sugars and the coordinate Bench's earlier decision in the assessee's case for AY 1995-96, the Tribunal held that where the object of the subsidy is to set up or expand capital assets the receipt is capital in nature and not taxable as revenue. The Tribunal therefore allowed the assessee's claim and directed exclusion of the sales tax subsidy from sales turnover in computing total income. [Paras 7, 8, 9]

Sales tax subsidy under the U.P. scheme is a capital receipt and is to be excluded from sales turnover for the relevant assessment years.

Final Conclusion: The revenue's appeals are dismissed; the Tribunal upholds the Commissioner (Appeals) conclusion that the sales tax incentive under the U.P. scheme is a capital receipt and not taxable for the assessment years in question.

Principle of mutuality - income of a branch vis-a -vis head office - disallowance under section 14A for expenditure relating to income not forming part of total income - deduction disallowance under section 40(a)(i) for payments to non-residents - allowability of expenses under section 37 for head office expenses incurred specifically for Indian branch

Principle of mutuality - income of a branch vis-a -vis head office - Deletion of interest income credited by the Indian branch as received from head office on the ground that such receipts represent income to self and are not taxable in India. - HELD THAT: - The Tribunal affirmed the appellate authority's conclusion that interest credited by the Indian branch from its head office does not give rise to taxable income of the branch because the branch and head office transactions are to be treated as dealings with self and governed by the principle of mutuality. The Tribunal noted that coordinate-bench and higher appellate precedent in the assessee's own cases treat the Indian branch as not a separate taxable person for such intra-entity interest receipts, and therefore upheld deletion of the addition made by the AO. [Paras 16, 17]

Addition of interest income from head office deleted.

Disallowance under section 14A for expenditure relating to income not forming part of total income - Whether expenditure relating to the interest receipts from head office (which are not part of the branch's total income) is liable to disallowance under section 14A, and the quantification procedure for such disallowance. - HELD THAT: - The Tribunal held that section 14A applies to expenditure in relation to income which does not form part of the total income and is not confined to statutory 'exempt income' that nevertheless figures in total income. Given that interest receipts from the head office are excluded from the branch's total income, related expenditures must be identified and disallowed under section 14A. The Tribunal observed that in the year under appeal the branch had net interest income after eliminating intra-entity receipts/payments in computation, but that this factual position may vary across years. Following coordinate-bench directions in earlier years, the Tribunal remitted the matter to the AO for determination/quantification of the disallowance, instructing that the AO identify and eliminate expenditures relevant to earning the excluded income (including administrative and other non-interest expenses) and ensure that any disallowance does not exceed the income so excluded. [Paras 18]

Applicability of section 14A upheld in principle; matter remitted to AO for quantification of disallowance after identifying expenditures relating to the excluded head-office interest.

Deduction disallowance under section 40(a)(i) for payments to non-residents - Deletion of addition made under section 40(a)(i) on account of transaction charges paid on Nostro accounts (claimed as payments to non-resident banks for bank charges). - HELD THAT: - The Tribunal accepted the coordinate-bench precedents in the assessee's own case that transaction charges on Nostro accounts are bank charges for maintaining overseas accounts, represent business income of overseas banks that accrue outside India, and therefore were not subject to tax deduction at source under section 195. Following prior consistent Tribunal decisions for the assessee, the Tribunal declined to interfere with the CIT(A)'s deletion of the section 40(a)(i) disallowance made by the AO. [Paras 16]

Disallowance under section 40(a)(i) in respect of Nostro transaction charges deleted.

Allowability of expenses under section 37 for head office expenses incurred specifically for Indian branch - Allowability under section 37 of travel and certification expenses incurred by the head office specifically for the Indian branch (and deletion of AO's disallowance on the ground of section 44C applicability). - HELD THAT: - Relying on consistent coordinate-bench and High Court authority, the Tribunal agreed with the CIT(A) that travel expenses of head office staff incurred directly for the Indian branch and service fees paid for certificates are expenses specifically incurred for the branch and are allowable under section 37, with section 44C not operating to deny such deduction. Accordingly, the Tribunal upheld the deletion of the AO's disallowance. [Paras 16]

Disallowance under section 37 in respect of specified head office expenses deleted.

Final Conclusion: The revenue appeal is dismissed; the assessee's appeal is partly allowed - deletions of additions under mutuality, section 40(a)(i) and section 37 are upheld, while the question of disallowance under section 14A is sustained in principle and remitted to the Assessing Officer for quantification in accordance with the Tribunal's directions and earlier coordinate-bench orders.

Reimbursement of expenses - deduction of tax at source under section 195 - disallowance under section 40(a)(i) - fees for technical services under section 9(1)(vii) - business connection / permanent establishment - characterisation of payments as income or non income - agency / export commission payments

Disallowance under section 40(a)(i) - reimbursement of expenses - Deletion of disallowance of reimbursement of sales promotion expenses under section 40(a)(i) was justified - HELD THAT: - The tribunal upheld the CIT(A)'s finding that the payments made to M/s Pharmark Consulting FZE, UAE were reimbursements of expenses incurred by the agent in Russia on behalf of the assessee and were made without any markup. The agreement and surrounding facts showed that Pharmark implemented marketing and promotion strategies devised and controlled by the assessee and incurred expenses on its behalf. As such the payments did not have the character of income in the hands of the payee and were not subject to withholding; therefore the Assessing Officer's disallowance under section 40(a)(i) for non deduction of tax was not sustainable. The tribunal accepted the considered precedent based reasoning of the CIT(A) and declined to interfere. [Paras 7, 13]

Addition of Rs. 2,16,41,556/- disallowed by AO under section 40(a)(i) deleted

Deduction of tax at source under section 195 - characterisation of payments as income or non income - Section 195 did not require withholding on the payments to the foreign agent - HELD THAT: - Applying the statutory test that tax under section 195 is attracted only where the sum is 'chargeable under the provisions of this Act', the tribunal agreed with the CIT(A) that the payments lacked any income element chargeable to tax in India. The payee had no business connection or PE in India and services were rendered outside India; reimbursement of actual expenses without markup does not constitute taxable income. Reliance was placed on the reasoning in G.E. India Technology and other authorities that a payer need not withhold under section 195 where the payment is not chargeable to tax in India. Consequently no withholding obligation arose and the AO's conclusion to the contrary was set aside. [Paras 7, 13]

Payments to M/s Pharmark Consulting FZE were not exigible to TDS under section 195

Fees for technical services under section 9(1)(vii) - agency / export commission payments - business connection / permanent establishment - Payments were not fees for technical services under section 9(1)(vii) and thus not taxable as FTS in India - HELD THAT: - The tribunal accepted the CIT(A)'s analysis that the scope of services in the agreement amounted to marketing/support and commission agency functions, not managerial, technical or consultancy services as contemplated by Explanation 2 to section 9(1)(vii). The agreement showed the agent acted under directions and implemented the assessee's strategies; there was no material to demonstrate that Pharmark rendered managerial/technical services that would attract taxation in India. In view of absence of business connection/PE in India and the nature of services being performed outside India, the payments could not be characterized as FTS chargeable to tax under section 9(1)(vii). [Paras 7, 13]

Payments did not constitute 'fees for technical services' under section 9(1)(vii) and were not taxable as such in India

Reimbursement of expenses - adequacy of documentary evidence - Assessee's documentation and submissions were adequate to establish reimbursement and the nature of the payments - HELD THAT: - The tribunal noted that the assessee had furnished the agreement, detailed schedules of expenses, and repeated submissions during assessment and on appeal. The CIT(A) examined the evidence and judicial precedents and concluded that the payments were reimbursements of actual expenses incurred without markup. The tribunal found no merit in the Revenue's contention that relevant documentary evidence was not produced and agreed with the appellate finding that the material on record sufficiently supported deletion of the addition. [Paras 6, 7, 13]

Findings record that the assessee had furnished adequate documentary evidence; AO's adverse inference rejected

Final Conclusion: The tribunal dismissed both revenue appeals against the CIT(A)'s deletion of the disallowance; payments to M/s Pharmark Consulting FZE were held to be reimbursements/agency/commission payments not chargeable to tax in India, not exigible to TDS under section 195, and not taxable as fees for technical services under section 9(1)(vii).

Valuation of property for income computation under section 56(2)(vii) - reference to DVO for determination of fair market value under section 55A - reliance on comparable sales to fix fair market value - remand for computation of addition where valuation is re-determined

Valuation of property for income computation under section 56(2)(vii) - reference to DVO for determination of fair market value under section 55A - reliance on comparable sales to fix fair market value - remand for computation of addition where valuation is re-determined - Whether the DVO's final valuation rate could be accepted for computing the addition under section 56(2)(vii) and what valuation rate should be adopted for computation. - HELD THAT: - The Tribunal found that the rate of Rs. 77,640 per sq. metre adopted in the DVO's final report was unsupported by any basis in that report. The Preliminary valuation report accompanying the DVO's material, however, recorded seven comparable sale instances with per sq. metre rates, and no coherent explanation linked the final adopted rate to those comparables. In the absence of any elaboration or justification for the DVO's final rate, the Tribunal considered it reasonable to adopt the average of the seven comparable sale rates recorded in the Preliminary report as the fair market rate. The Tribunal therefore set aside the impugned valuation to the extent it relied on the unsupported final rate and directed the Assessing Officer to adopt the average rate indicated in the Preliminary report as the per sq. metre fair market value and thereupon compute any addition, if leviable, under section 56(2)(vii). The matter was remitted to the Assessing Officer for computation in accordance with this direction. [Paras 3]

DVO's final per sq. metre rate rejected for lack of basis; Tribunal adopted average of comparables from the Preliminary report as fair market rate and remitted the matter to the Assessing Officer to compute the addition under section 56(2)(vii) accordingly.

Final Conclusion: The appeal is partly allowed: the DVO's unsupported valuation rate is set aside for the purpose of computing income under section 56(2)(vii); the Tribunal directed adoption of the average of the comparables in the DVO's Preliminary report as the fair market rate and remitted the matter to the Assessing Officer for computation and consequential assessment.

Re-opening of assessment on information of bogus purchases - Onus to prove purchases - Estimation of income by applying profit percentage on alleged bogus purchases - Application of coordinate-bench precedent for quantification of addition

Estimation of income by applying profit percentage on alleged bogus purchases - Onus to prove purchases - Application of coordinate-bench precedent for quantification of addition - Addition on account of alleged bogus purchases to be estimated at 3% of the alleged purchases and the AO directed to recompute income accordingly. - HELD THAT: - The Tribunal examined the material including the assessee's declared gross profit ratios from identified suppliers (9.68% and 14.63%, average about 9.5%) and the failure of the assessee to produce parties to confirm transactions, with investigative information casting doubt on the reality of purchases. Applying the reasoning in the coordinate-bench decision in Heeramaneck & Son v. ACIT (reproduced in the order), the Tribunal held that where purchases are under grave doubt and the onus to prove purchases remains undischarged, an addition may be made by estimating the profit element embedded in alleged bogus purchases. Although the assessee had declared a higher GP, the Tribunal considered the earlier coordinate-bench reduction and, by way of quantification, restricted the estimate to 3% of the alleged bogus purchases and directed the AO to recompute the income accordingly. The Tribunal thereby modified the quantum of addition while leaving the assessment process for computation in terms of its direction. [Paras 7, 8, 9]

Appeal partly allowed; AO directed to estimate income at 3% of alleged bogus purchases and recompute the assessment.

Final Conclusion: The appeal is partly allowed: the addition on account of alleged bogus purchases is restricted to 3% of the alleged purchases and the AO is directed to recompute the assessee's income in accordance with this direction.

Indexed cost of acquisition - Cost of acquisition under Section 49(1) - Deductibility of transfer expenses under section 48 - Prevailing commission rates of real estate agents - Admissibility of additional evidence and new grounds on appeal - Computation of long term capital gains

Indexed cost of acquisition - Cost of acquisition under Section 49(1) - Computation of long term capital gains - Whether indexation for computing indexed cost of acquisition must be taken from the year of acquisition by the previous owner (donor) when property is received by gift and Section 49(1) applies. - HELD THAT: - The Tribunal held that Section 49(1) correctly requires that the cost of acquisition in the hands of the previous owner be treated as the assessee's cost. While the assessing officer and the Commissioner (Appeals) correctly applied Section 49(1) to identify the previous owner's acquisition cost, they erred in applying indexation beginning from the year of the gift (2008) instead of from the year the donor originally acquired the property (1988). This was found to be a gross error affecting the computation of indexed cost and hence the Long Term Capital Gain. The Tribunal directed the assessing officer to compute the cost of acquisition by taking the year of acquisition as 1988 when the property was acquired by the previous owner and not the year of the gift. [Paras 3]

Allowed the ground; directed AO to compute indexed cost taking 1988 (year of donor's acquisition) for indexation.

Deductibility of transfer expenses under section 48 - Prevailing commission rates of real estate agents - Whether commission claimed as expenditure in connection with transfer of the property is allowable and, if documentary evidence is lacking, what amount is to be allowed. - HELD THAT: - The Tribunal accepted that in high-value property transactions the services of a real estate agent are ordinarily availed, that such agents perform substantive functions (finding buyer, documentation, ensuring title), and that a customary market practice exists of charging around 2% of sale consideration. Noting absence of documentary proof beyond an affidavit, the Tribunal nonetheless found it reasonable in the facts of this case to allow expenditure on account of commission at the prevailing rate and directed the AO to allow 2% of the sale consideration as expenditure while computing Long Term Capital Gain. The claim for the specific sum claimed by the assessee was not accepted in full for want of supporting receipts, but a quantified allowance at 2% was granted. [Paras 6]

Partly allowed; directed AO to allow 2% of sale consideration as commission expenditure.

Admissibility of additional evidence and new grounds on appeal - Whether a new plea and supporting evidence (payment for furniture and fixtures claimed as part of investment for section 54 relief) raised first before the Tribunal can be admitted. - HELD THAT: - The Tribunal observed that the alleged payment towards furniture and fixtures and the related agreement were not raised before the assessing officer or the Commissioner (Appeals). The plea and evidence constitute a new case requiring investigation of fresh facts which were not put on record earlier. In view of the settled position that new grounds and evidence not presented to the authorities below cannot be entertained at the appellate stage without prior opportunity for verification, the Tribunal refused to admit this new plea and rejected the application to admit additional evidence. [Paras 9]

Rejected the new plea and refused to admit additional evidence; not entertained at Tribunal stage.

Final Conclusion: Appeal partly allowed: indexation to be computed from 1988 (donor's year of acquisition); commission expenditure allowed at 2% of sale consideration; application to admit new evidence/claim regarding furniture rejected.

Rejection of transaction value and adoption of alternative valuation under Customs Valuation Rules - Valuation of second hand machinery based on Chartered Engineer's certificate - Application of CBEC circular on valuation of second hand machinery/capital goods - Import of restricted goods without specific DGFT authorisation and confiscation under Customs law - Requirement of prior licence/permission under Foreign Trade Policy for restricted imports - Reduction of redemption fine and penalty to prescribed percentage of assessable value

Rejection of transaction value and adoption of alternative valuation under Customs Valuation Rules - Valuation of second hand machinery based on Chartered Engineer's certificate - Application of CBEC circular on valuation of second hand machinery/capital goods - Whether the transaction value declared by the importer could be rejected and substituted by the value determined on the basis of the Chartered Engineer's certificate. - HELD THAT: - The Tribunal examined whether the proper officer had followed the statutory process before rejecting the declared transaction value. While acknowledging the reliance placed by the authorities on the Chartered Engineer's certificate and the CBEC circular dealing with second hand machinery, the Tribunal found that Rule 3 read with Rules 9 and 12 requires that the proper officer must first ask for further information and documents where there is reason to doubt the declared value and only upon continued reasonable doubt may the transaction value be deemed not determinable. In the present case the Tribunal held that no such exercise was carried out by the proper officer before arriving at a notional/enhanced value. Consequently the rejection of the transaction value and enhancement based on the Chartered Engineer's figure was held to be arbitrary and set aside, and the declared transaction value was restored for assessment purposes. [Paras 21, 22]

Rejection of the declared transaction value set aside; declared value restored for assessment.

Import of restricted goods without specific DGFT authorisation and confiscation under Customs law - Requirement of prior licence/permission under Foreign Trade Policy for restricted imports - Whether confiscation of the imported second hand digital multifunctional devices for import without DGFT authorisation was justified. - HELD THAT: - The Tribunal noted that the imported goods fell squarely within the restricted category under the applicable Import Policy and that the importer failed to produce the specific DGFT licence/authorisation required under the Foreign Trade Policy. Although the importer had prior permission from the Ministry of Environment & Forest subject to conditions (including residual life certification and production of invoice/contract), the statutory requirement of obtaining DGFT authorisation remained unfulfilled. On that basis the Tribunal upheld the finding of confiscation under the Customs law. [Paras 11, 23]

Confiscation upheld for import of restricted goods without required DGFT authorisation.

Reduction of redemption fine and penalty to prescribed percentage of assessable value - Whether the redemption fine and penalty imposed should be reduced and, if so, to what extent. - HELD THAT: - Applying the Tribunal's precedent and exercising its discretion, the Tribunal reduced the redemption fine and the penalty imposed by the authorities. Consistent with the ratio in Omex International (as followed by the Tribunal), the redemption fine was reduced to 10% and the penalty under the relevant Customs provision was reduced to 5% of the assessable value. The Tribunal therefore modified the monetary reliefs while upholding the confiscation. [Paras 12, 24]

Redemption fine reduced to 10% and penalty reduced to 5% of the assessable value.

Final Conclusion: Appeal allowed in part: the rejection of the declared transaction value was set aside and the declared value restored for assessment; confiscation for import without DGFT authorisation was upheld; redemption fine and penalty were reduced to 10% and 5% respectively of the assessable value, with consequential benefits to the appellant.

Clearances by 100% EOU treated at par with imports - eligibility for concessional rate of duty under EPCG on DTA clearances from EOUs - application of DGFT and CBEC clarifications/circulars to EOU clearances - legal fiction under Section 3A treating EOU clearances as import for duty computation - denial of exemption Notification No. 53/97-Cus on factual non-compliance

Eligibility for concessional rate of duty under EPCG on DTA clearances from EOUs - application of DGFT and CBEC clarifications/circulars to EOU clearances - clearances by 100% EOU treated at par with imports - Entitlement of the assessee (100% EOU) to claim concessional duty under the EPCG scheme on clearance of imported capital goods to an EPCG License holder in DTA. - HELD THAT: - The Tribunal accepted the finding of the Commissioner (Appeals) that the Development Commissioner, SEEPZ had granted permission for DTA clearance of the two imported DG sets subject to conditions of maintaining export obligation/NFE and payment of applicable duty. The Tribunal applied the Board and DGFT clarifications which state that clearances from EOUs are placed at par with imports and that end use notifications (such as EPCG) and the concessional rates available under them apply to such clearances. The Tribunal relied on the legal fiction created by Section 3A (as explained in earlier precedent) that treats EOU clearances as imports for the purpose of quantifying duty, so that the customs concessional notifications implementing EPCG are applicable. The Commissioner (Appeals)'s findings that the assessee fulfilled the conditions and paid duty at the concessional rate on the undisputed assessable value were not controverted by the Revenue. The Tribunal also followed the reasoning in Sahajanand (as approved by the Supreme Court) holding that EOUs can clear goods to EPCG units at the concessional rate and that no penalty or further demand arises where there is no evasion. [Paras 6, 7, 8]

The assessee is entitled to the concessional rate of duty under the EPCG scheme for the DTA clearances made to an EPCG License holder; the adjudication denying benefit of the exemption notification is set aside.

Denial of exemption Notification No. 53/97-Cus on factual non-compliance - Validity of the adjudicating authority's denial of benefit of Notification No. 53/97-Cus dated 3.6.1997 in respect of the two imported DG sets cleared to DTA. - HELD THAT: - The Tribunal found that the adjudicating authority's denial rested on a premise that permission from the Development Commissioner to clear the goods to DTA under EPCG terms was not obtained. The Commissioner (Appeals) recorded and the Tribunal accepted that permission was in fact granted and that conditions attached thereto (maintenance of export obligation/NFE and payment of duty on assessed value) were complied with. No contrary evidence was produced by the Revenue to rebut these factual findings. In law, given the Board and DGFT clarifications and the precedent treating EOU clearances as equivalent to imports for end use notifications, denial of benefit of the concession was unwarranted. [Paras 7, 8]

The demand and denial of benefit of Notification No. 53/97-Cus are unsustainable and are set aside.

Final Conclusion: The Tribunal upheld the Commissioner (Appeals) order allowing the assessee's appeal: the 100% EOU having obtained permission and complied with conditions, clearances of the imported DG sets to an EPCG License holder attract the concessional rate available under the EPCG scheme and the Revenue's appeal is dismissed.

Provisional release of export goods on execution of bond and security - security to cover redemption fine and penalty - Board instructions to facilitate export and prevent undue detention - treatment of IGST refund in determination of security for provisional release - duty of the exporter to cooperate with investigation

Provisional release of export goods on execution of bond and security - Board instructions to facilitate export and prevent undue detention - Whether the conditions imposed for provisional release of seized export goods were unreasonable in the facts of the case - HELD THAT: - The Tribunal examined the communication of the Competent Authority allowing provisional release on execution of a bond equivalent to the FOB value and furnishing a bank guarantee, noting that the Competent Authority's reasons and the basis for the quantum of security were not recorded in the communicating letter. Having regard to Board Circulars directing facilitation of exports and avoidance of undue detention, and the fact that the goods remained seized for over 18 months, the Tribunal held that the conditions imposed by the Revenue were harsh and not justified in the circumstances. The Tribunal therefore exercised its supervisory power to moderate the conditions of provisional release to conform to the spirit of the Board instructions which require prompt facilitation of genuine exports and minimisation of detention. [Paras 5]

Conditions for provisional release as originally imposed were excessive and have been modified

Treatment of IGST refund in determination of security for provisional release - security to cover redemption fine and penalty - Whether the amount of IGST paid/refundable could be included while determining the quantum of bank guarantee for provisional release - HELD THAT: - The Tribunal noted the Revenue's prima facie case of overvaluation but observed that any overvaluation would have resulted in higher IGST having been paid at clearance. The Tribunal held there was no merit in including the IGST amount expected to be refunded in the calculation of the bank guarantee; the revenue can safeguard itself by withholding or determining the refund through the pending investigation and adjudication. Deducting the IGST element reduced the alleged undue benefit to the quantum of drawback only, thereby undermining the Revenue's basis for a very large bank guarantee. [Paras 5]

Inclusion of the IGST refund amount in computing the bank guarantee was not justified

Duty of the exporter to cooperate with investigation - Whether the appellant's alleged non-cooperation with investigating authorities justified refusal to moderate the provisional release conditions - HELD THAT: - While the Tribunal observed that exporters must cooperate with investigations and that such cooperation is necessary for speedy disposal, it distinguished cooperation with investigating authorities from the requirement of being heard before an adjudicating authority. The Tribunal found that non-appearance before the investigating officer did not supply a sufficient reason to maintain unduly onerous provisional-release conditions, although it admonished the appellant to cooperate henceforth. [Paras 5]

Appellant must cooperate with investigations, but alleged past non-cooperation did not justify refusal to reduce the conditions of provisional release

Provisional release of export goods on execution of bond and security - Relief to be granted in modification of the provisional-release conditions - HELD THAT: - Applying the Board Circulars and deducting the IGST component from the Revenue's asserted export benefit, the Tribunal concluded that a materially reduced bank guarantee would be adequate to protect the revenue pending completion of investigation and adjudication. The Tribunal therefore modified the communicating letter to require execution of a bond equivalent to the value of goods and furnishing of a bank guarantee of a reduced quantum, while making clear that its observations were prima facie and not binding on the investigating or adjudicating authorities. [Paras 5, 6]

Provisional release conditions modified: bond equivalent to value to be executed and bank guarantee reduced

Final Conclusion: Appeal disposed of in part: the letter dated 02.05.2019 is modified so that the appellant shall execute a bond equivalent to the value of the seized goods and furnish a bank guarantee of Rs. 5,00,000; appellant directed to fully cooperate with investigation and the observations are prima facie, not binding on the adjudicating authority.

Deposit of duty and interest prior to initiation of proceedings - entitlement to reduced penalty - Show cause notice under Section 28 of the Customs Act - scope and quantum of penalty where duty and interest already paid - Final assessment under sub-section (1) of Section 17 of the Customs Act - effect on subsequent recovery proceedings - Invalid confirmation of enhanced (100%) penalty where statutory precondition for reduced penalty is satisfied

Deposit of duty and interest prior to initiation of proceedings - entitlement to reduced penalty - Show cause notice under Section 28 of the Customs Act - scope and quantum of penalty where duty and interest already paid - Whether the appellant, having deposited the adjudged anti-dumping duty and interest before issuance of the show cause notice, was liable only for the reduced penalty of 15% and not for the 100% penalty confirmed by the adjudicating authorities. - HELD THAT: - The Tribunal accepted the factual finding recorded in the show cause notice that the appellant had deposited the entire anti-dumping duty along with interest before initiation of the show cause proceedings. Applying the statutory scheme governing recovery proceedings, the Tribunal held that where duty and interest have been paid prior to institution of proceedings, the department's proceedings ought to have been limited to recovery of the statutory reduced penalty (15%) mandated by the relevant provision. The department, however, proceeded to confirm a 100% penalty despite the admitted prior deposit of duty and interest. There is no ambiguity in the statutory provision prescribing the quantum in such circumstances and, accordingly, the higher penalty could not be sustained. The Tribunal also noted that the decision relied upon by the appellant was distinguishable on its facts because it involved a case of incorrect declaration of country of origin and allegations of suppression or fraud, which justified different treatment; those circumstances are not present in the present matter.

The adjudged confirmation of penalty is set aside to the extent it imposes 100% penalty; the appellant is liable to pay penalty of 15% of the adjudged duty which was confirmed/paid prior to initiation of proceedings.

Final Conclusion: The appeal is allowed in part: the confirmation of penalty is modified so that the appellant shall be liable only for a 15% penalty of the adjudged duty paid before initiation of the show cause proceedings; other demands as adjudged remain undisturbed.

Dissolution of the company - transfer to undistributed companies' liquidation account - filing final accounts without audit - official liquidator's report taken on record - power of Official Liquidator to wind up where funds are meagre

Official liquidator's report taken on record - Report of the Official Liquidator dated 05.09.2018 taken on record - HELD THAT: - The Official Liquidator filed a report outlining the steps taken in provisional liquidation, the non-availability of realizable assets at the registered office, the pendency and subsequent disposal of C.A.No.390/2013, and the small balance remaining in the company account. The Court noted and accepted the contents of the report as placed on record and relied upon it in forming its view on the propriety of dissolution. [Paras 5, 6, 8, 9]

Report dated 05.09.2018 is taken on record.

Dissolution of the company - power of Official Liquidator to wind up where funds are meagre - Order for dissolution of M/s. Hex Cargo Mover Private Limited as just and reasonable - HELD THAT: - The Court evaluated the factual report that the registered office assets had been sold under SARFAESI, that ex-directors had not filed Statements of Affairs, no realizable claims remained and only a meagre sum remained in the Official Liquidator's hands. In view of these circumstances the Company Court concluded that it was just and reasonable to dissolve the company and that the liquidator could not proceed further with the winding up. [Paras 6, 7, 8, 9]

Company is ordered to be dissolved.

Transfer to undistributed companies' liquidation account - Permission to transfer the remaining balance to the undistributed assets of the companies' liquidation account under Section 555 of the Companies Act, 1956 - HELD THAT: - The Official Liquidator reported that only a small balance remained in the company's account and that no claims were pending for recovery. Having found dissolution appropriate, the Court permitted the Official Liquidator to transfer the balance to the undistributed companies' liquidation account in accordance with the statutory framework, subject to meeting incidental expenses of the winding up. [Paras 6, 7, 8, 9]

Official Liquidator permitted to transfer the remaining funds to the undistributed companies' liquidation account.

Filing final accounts without audit - Permission to file final accounts without audit - HELD THAT: - Given that there would be no further transactions in the company's account and the winding up could not proceed further due to lack of funds, the Court allowed the Official Liquidator to file the final accounts without audit. [Paras 6, 8, 9]

Official Liquidator permitted to file final accounts without audit.

Final Conclusion: The Official Liquidator's report is taken on record; the Company is dissolved as just and reasonable; the small remaining balance is to be transferred to the undistributed companies' liquidation account; and the Official Liquidator is permitted to file the final accounts without audit. No order as to costs.

Sanction of scheme of arrangement - sections 230 to 232 of the Companies Act, 2013 - Appointed date and effectiveness of scheme - Compliance with Registrar of Companies filing and procedural formalities - Undertakings in response to Regional Director's report - Accounting entries and applicable Accounting Standards - Stamp duty adjudication and consequential statutory steps

Sanction of scheme of arrangement - sections 230 to 232 of the Companies Act, 2013 - Sanction under sections 230-232 was granted to the Scheme of Arrangement between the Demerged Company and the Resulting Company. - HELD THAT: - The Tribunal examined the petition filed under sections 230 to 232 and the material on record, including board resolutions approving the Scheme and filings made pursuant to the Tribunal's earlier directions. No objector appeared and the Regional Director's report was considered. The Tribunal concluded that the Scheme is fair and reasonable, does not contravene law or public policy and that requisite statutory compliances have been fulfilled. Accordingly, the Company Petition CP(CAA) No.965/MB-I/2020 was made absolute and the Scheme was sanctioned, subject to the conditions in the order. [Paras 6, 8, 9, 12, 13]

The Scheme is sanctioned and CP(CAA) No.965/MB-I/2020 is made absolute.

Appointed date and effectiveness of scheme - The appointed date of the Scheme was fixed as 1st April 2020 and the Scheme was declared effective from that appointed date. - HELD THAT: - The Scheme expressly fixed the appointed date as 1st April 2020 (as recorded in the Scheme and the petition). The Tribunal noted the appointed date in the Scheme and sanctioned the Scheme with that appointed date. The petitioners also undertook to comply with the Ministry of Corporate Affairs circular referenced by the Regional Director insofar as procedural requirements are concerned. [Paras 6, 10]

Appointed date fixed as 1st April 2020 and the Scheme is effective from that date.

Undertakings in response to Regional Director's report - Compliance with Registrar of Companies filing and procedural formalities - The observations of the Regional Director were considered and the clarifications and undertakings furnished by the Petitioner Companies were accepted. - HELD THAT: - The Regional Director's report raised multiple observations relating to accounting entries, appointed date, ROC filings, requirement of shareholder/creditor meetings, statutory notices, identity of schemes, and pricing for non-resident shareholders under FEMA. The Petitioner Companies responded with specific undertakings and explanations - including undertaking to pass requisite accounting entries, to comply with the MCA circular, to have filed pending annual filings, to have dispensed with meetings where permitted, to serve required notices, to ensure identical Schemes in the pleadings, and to follow FEMA pricing requirements for non-resident shareholders. The Tribunal accepted these clarifications and undertakings and proceeded to sanction the Scheme subject to compliance with those undertakings and directions. [Paras 10, 11]

Regional Director's observations accepted; petitioners' undertakings taken on record and must be complied with.

Registrar of Companies filing - Filing of certified copy of order and E form INC 28 - Adjudication of stamp duty - Post-sanction compliance directions were issued requiring filing of the certified order and Scheme with the Registrar of Companies, stamp duty adjudication, newspaper publication and other consequential steps. - HELD THAT: - The Tribunal directed the Registrar to issue the certified copy of the order and required the Petitioner Companies to file the certified order and Scheme with the Registrar of Companies electronically in E form INC 28 within 30 days of receipt. The petitioners were directed to lodge the order and Scheme with the Superintendent of Stamps for adjudication within 60 days, to publish notices in newspapers as previously done, and to take all consequential and statutory steps under the Companies Act in pursuance of the Scheme. The Tribunal also stated that all concerned authorities may act on the authenticated copy and that interested persons remain at liberty to apply to the Tribunal for directions.

Petitioner Companies must comply with the filing, stamp duty adjudication, publication and consequential statutory steps as directed.

Accounting entries and applicable Accounting Standards - Petitioner Companies undertook to make necessary accounting entries to comply with applicable Accounting Standards including those referenced by the Regional Director, and the Tribunal accepted the undertaking. - HELD THAT: - The Regional Director observed that, in addition to AS 14 (Ind AS 103), other applicable accounting standards such as AS 5 (Ind AS 8) may require entries. The petitioners undertook to pass such necessary accounting entries in connection with the Scheme. The Tribunal accepted this clarification and the undertaking as part of its sanction of the Scheme. [Paras 10, 11]

Undertaking to make necessary accounting entries in compliance with applicable Accounting Standards accepted and must be complied with.

Final Conclusion: The Tribunal sanctioned the Scheme of Arrangement between Nielsen (India) Private Limited and Neurofocus Systems & Services Private Limited (now Nielsen Media India Private Limited) with appointed date 1st April 2020, accepted the undertakings given in response to the Regional Director's report, and directed the petitioner companies to complete prescribed filings, stamp duty adjudication, publications and other consequential statutory steps.

Scheme of Amalgamation - Sanction under Sections 230-232 of the Companies Act, 2013 - Appointed Date - Acceptance of Regional Director's observations and undertakings - Official Liquidator's report on affairs of transferor company - Filing and registration requirements with Registrar of Companies and Stamp Authorities

Sanction under Sections 230-232 of the Companies Act, 2013 - Scheme of Amalgamation - Sanction of the Scheme of Amalgamation of the transferor companies with the transferee company. - HELD THAT: - The Tribunal, after hearing counsel, noting absence of any objector and on perusal of material on record including statutory compliances and reports, held that the Scheme is fair and reasonable, not violative of law and not contrary to public policy. The petition has satisfied the requirements under Sections 230 to 232 and the Company Scheme Petition is made absolute in terms of its principal prayers. The Tribunal accordingly sanctioned the Scheme by its order. [Paras 23, 24, 29]

Scheme sanctioned and Company Scheme Petition C.P.(CAA)3217/MB/2019 made absolute.

Appointed Date - Scheme of Amalgamation - Fixation of the Appointed Dates for the transferor companies under the Scheme. - HELD THAT: - The appointed date for Transferor Company 1 is fixed as 1st April, 2019 and for Transferor Company 2 as 1st June, 2019. The Tribunal accepted the petitioners' confirmations and undertakings that upon approval by the respective Benches the Scheme shall take effect from the appointed dates in terms of Section 232(6). [Paras 8, 16, 29]

Appointed date fixed as 1st April, 2019 for Transferor Company 1 and 1st June, 2019 for Transferor Company 2.

Acceptance of Regional Director's observations and undertakings - Compliance with applicable accounting standards - Treatment of the Regional Director's report and the petitioners' replies and undertakings. - HELD THAT: - The Regional Director's report raised observations and requested compliance with accounting standards and statutory clarifications. The petitioners filed replies and undertook to make necessary accounting entries in conformity with applicable accounting standards and to comply with the statutory provisions and MCA circulars. The Regional Director filed a supplementary report noting the petitioners' replies to be satisfactory and the Tribunal accepted the clarifications and undertakings. [Paras 16, 17, 18, 19, 21]

Regional Director's observations noted; petitioners' clarifications and undertakings accepted.

Official Liquidator's report on affairs of transferor company - Finding on whether affairs of Transferor Company 1 were conducted prejudicially to members or public. - HELD THAT: - The Official Liquidator reported that the affairs of Transferor Company 1 were not conducted in a manner prejudicial to the interests of members or the public, and recommended dissolution of the transferor company without winding up. The Tribunal recorded and accepted that report in support of the Scheme. [Paras 22]

Official Liquidator's report accepted that affairs were not prejudicial and supports dissolution under the Scheme.

Filing and registration requirements with Registrar of Companies and Stamp Authorities - Directions for lodging certified copies of the order and Scheme with Stamp Authorities and Registrar of Companies. - HELD THAT: - The Tribunal directed the petitioners to lodge certified copies of the order and the Scheme with the concerned Superintendent of Stamps for adjudication of stamp duty within 60 working days of receipt of the certified copy. It further directed filing of the order and Scheme with the concerned Registrar of Companies electronically through e-form INC-28 and physically within 30 days of issuance of the certified copy. Regulatory authorities were directed to act on certified copies. [Paras 25, 26, 27]

Petitioners directed to lodge certified copies with Stamp Authorities and Registrar of Companies and regulatory authorities to act on certified copies.

Final Conclusion: The Tribunal sanctioned the Scheme of Amalgamation, fixed the appointed dates for the transferor companies as 1st April, 2019 and 1st June, 2019 respectively, accepted the Regional Director's observations subject to petitioners' undertakings, recorded the Official Liquidator's favourable report, made the petition absolute, and directed lodging of certified copies with the Stamp Authorities and Registrar of Companies as specified.

Scheme of Amalgamation - Merger by Absorption - Dispensing with convening of shareholders' meetings - Declaration of no secured creditors - Notice to unsecured creditors - Publication and hosting of notice under Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - Service of notice on Regional Director, Registrar of Companies, Income Tax Authority and Official Liquidator - Appointed Date

Dispensing with convening of shareholders' meetings - Convening and holding of meetings of equity shareholders of Applicant Company No.1 and Applicant Company No.2 dispensed with on the basis of consent affidavits. - HELD THAT: - The Tribunal examined the consent affidavits filed by all equity shareholders of Applicant Company No.1 and by the equity shareholders of Applicant Company No.2 (annexed as Exhibits L-O) and found them sufficient to dispense with convening and holding of the respective shareholders' meetings for consideration of the proposed Scheme of Amalgamation. Accordingly, the statutory requirement to convene such meetings was dispensed with. [Paras 4, 5]

Dispensed with the convening and holding of the shareholders' meetings for both applicant companies based on filed consent affidavits.

Declaration of no secured creditors - There are no secured creditors in Applicant Company No.1 and Applicant Company No.2 as certified by the respective Chartered Accountants. - HELD THAT: - The Tribunal noted the Chartered Accountant certificates dated 31st December, 2019 (Applicant Company No.1) and 28th December, 2019 (Applicant Company No.2), confirming absence of secured creditors as on 30th November, 2019, and recorded that no secured creditors exist in either company for the purpose of the Scheme. [Paras 6, 7]

Recorded that no secured creditors exist in either applicant company as per the filed CA certificates.

Notice to unsecured creditors - Applicant Company No.1 and Applicant Company No.2 directed to serve notice on their unsecured creditors and invite representations to the Tribunal. - HELD THAT: - Having regard to the positive net-worth of both companies and the lists and CA certificates of unsecured creditors filed (Exhibits Q-R for Company No.1 and S-T for Company No.2), the Tribunal treated the Scheme as an arrangement primarily between the companies and their shareholders but nonetheless directed Company No.1 to issue notice to its 476 unsecured creditors and Company No.2 to issue notice to its sole unsecured creditor in accordance with the Companies Act, 2013, allowing such creditors to submit representations to the Tribunal and serve copies on the respective applicant companies. [Paras 8, 9]

Directed issuance of statutory notices to unsecured creditors of both companies and invited representations to the Tribunal.

Publication and hosting of notice under Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - Service of notice on Regional Director, Registrar of Companies, Income Tax Authority and Official Liquidator - Applicant companies directed to publish and host statutory notices and to serve notices on specified regulatory and tax authorities and the Official Liquidator with prescribed presumptions if no response is received. - HELD THAT: - The Tribunal ordered publication of the Scheme advertisement in prescribed newspapers and hosting of the advertisement and notices on the applicant companies' websites. It directed service of notices upon the Regional Director (Western Region), Registrar of Companies Mumbai, the concerned Income Tax Authorities for each company, and the Official Liquidator, High Court, Bombay, in terms of Section 230(5) and Rules 8 and 15 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. The Tribunal recorded that if no response is received within 30 days from these authorities, it may be presumed that they have no objection. The companies were further directed to file an affidavit of service within 10 days of compliance. [Paras 11, 12, 13, 14, 15]

Directed publication, hosting and service of statutory notices on the listed authorities and filing of affidavit of service, with 30 day presumptions as specified.

Appointed Date - Appointed Date for the Scheme fixed and timeline for filing connected company petition directed. - HELD THAT: - The Tribunal recorded the appointed date for the Scheme as 14th August, 2019 and directed that the connected company petition be filed on or before 24.02.2020, thereby fixing the temporal reference and procedural timetable relevant to completion of further steps in the Scheme process. [Paras 16, 17]

Appointed Date fixed as 14th August, 2019 and connected company petition to be filed by 24.02.2020.

Final Conclusion: The Tribunal admitted the Company Scheme Application for consideration, dispensed with convening shareholders' meetings on the basis of consent affidavits, recorded absence of secured creditors, directed statutory notices to unsecured creditors and specified authorities, ordered publication and hosting of notices and filing of proof of service, fixed the appointed date as 14th August, 2019 and set a deadline for filing the connected company petition.

Scheme of Merger by Absorption - sanction under Sections 230 to 232 of the Companies Act, 2013 - Appointed Date and Effective Date - Pooling of interests under AS-14 (IND AS-103) - compliance with applicable accounting standards - compliance with Circular No. F.No. 7/12/2019/CL-1 - notices under section 230(5) - stamp duty adjudication in relation to the scheme - filing with Registrar of Companies and E Form INC-28 - fair and reasonable and not contrary to public policy

Scheme of Merger by Absorption - sanction under Sections 230 to 232 of the Companies Act, 2013 - fair and reasonable and not contrary to public policy - Sanction of the Scheme of Merger by Absorption - HELD THAT: - The Tribunal considered the petitions, noted that no objector appeared and that statutory compliances, affidavits and board approvals had been filed. The Regional Director's observations were addressed by the petitioners and corresponding undertakings and clarifications were accepted. On the material on record the Tribunal held that the Scheme appears fair and reasonable and is not contrary to public policy, and therefore made the petition absolute in terms of the reliefs sought. [Paras 5, 14, 16, 17]

The Scheme of Merger by Absorption is sanctioned and CSP No. 2987 of 2019 is made absolute in terms of the prayers.

Appointed Date and Effective Date - Pooling of interests under AS-14 (IND AS-103) - compliance with applicable accounting standards - compliance with Circular No. F.No. 7/12/2019/CL-1 - Acceptability of the appointed date, effective date and accounting undertakings - HELD THAT: - The petitioners undertook that the Appointed Date shall be 1st April, 2018 as stipulated in the Scheme and that the Effective Date shall be the date on which certified copies of the Tribunal orders are filed with the respective Registrars of Companies after obtaining necessary approvals. The Transferee Company also undertook to account for the amalgamation as a pooling of interests in terms of AS-14 (IND AS-103) and to pass such entries as necessary to comply with other applicable accounting standards; the petitioners further undertook compliance with the Ministry of Corporate Affairs Circular cited. These undertakings were accepted by the Tribunal. [Paras 6, 8, 9]

The Tribunal accepted the appointed date, effective date formulation and the undertaking to comply with the applicable accounting standards and the MCA circular.

Jurisdictional approvals for transferor companies - notices under section 230(5) - stamp duty adjudication in relation to the scheme - Compliance with Regional Director observations on jurisdiction, notices and stamp duty - HELD THAT: - The Regional Director observed that certain transferor companies had registered offices outside the Mumbai Bench's territorial jurisdiction and recommended similar approvals from the NCLT at New Delhi; the petitioners produced the order dated 27th September, 2019 indicating such approval. The petitioners also confirmed service of notices as required under section 230(5) and undertook that stamp duty and fees payable by the Transferee Company shall be in accordance with law and subject to the statutory provision noted. The Tribunal accepted these explanations and undertakings. [Paras 10, 11, 13]

The Tribunal accepted the jurisdictional approvals, the compliance with notice requirements and the undertaking on stamp duty; stamp duty is to be adjudicated in accordance with law.

Filing with Registrar of Companies and E Form INC-28 - authentication for regulatory authorities - Directions as to filings and authentication of the order and scheme - HELD THAT: - Having sanctioned the Scheme, the Tribunal directed the petitioners to lodge a copy of the order along with the Scheme, electronically by filing E Form INC 28 and also in physical form with the concerned Registrars of Companies. The petitioners were further directed to file the certified order and Scheme with the Superintendent of Stamps for adjudication within a stipulated period and the Tribunal directed that all concerned regulatory authorities may act on authenticated copies of the order and Scheme. [Paras 18, 19, 20]

Petitioners directed to file the sanctioned Scheme and certified order with the Registrars of Companies via E Form INC 28, to seek stamp duty adjudication and to provide authenticated copies for regulatory authorities to act upon.

Final Conclusion: The Tribunal sanctioned the Scheme of Merger by Absorption after accepting the petitioners' undertakings and clarifications to the Regional Director's report, held the Scheme fair and reasonable and not contrary to public policy, made the petition absolute, and directed statutory filings (including E Form INC 28), stamp duty adjudication and authentication for regulatory authorities.

Liquidation under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - appointment of liquidator - public announcement of liquidation - cessation of moratorium - vesting of management and board powers in the liquidator - liquidator's powers and duties under Sections 35 to 50 and 52 to 54 of the Code and the IBBI (Liquidation Process) Regulations, 2016 - liquidator's fees as specified by the Board under Section 34(8) of the Code - discharge of officers, employees and workmen on liquidation

Liquidation under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - public announcement of liquidation - Application under Section 33(2) of the Code for liquidation of the Corporate Debtor was allowed. - HELD THAT: - The Tribunal, on the Resolution Professional's application under Section 33(2), held that the Corporate Insolvency Resolution Process should be brought to liquidation. The Committee of Creditors had considered issuing Form-G and inviting EoIs but no resolution plan materialised; ultimately the CoC adopted a resolution for liquidation (by requisite majority as recorded). The RP had issued public announcement in Form G with no EoI received and, after adjournment and subsequent virtual meeting, the CoC adopted the liquidation resolution and authorised the RP to apply for liquidation. Having considered the submissions and the material regarding lack of assets, non-viability of revival and the CoC resolution, the Tribunal found the statutory threshold for passing an order of liquidation under Section 33(2) satisfied and directed that the Corporate Debtor be liquidated in accordance with Chapter III of the Code.

Application allowed and Corporate Debtor ordered to be liquidated; RP authorised to make public announcement that the Corporate Debtor is in liquidation.

Appointment of liquidator - liquidator's fees as specified by the Board under Section 34(8) of the Code - liquidator's powers and duties under Sections 35 to 50 and 52 to 54 of the Code and the IBBI (Liquidation Process) Regulations, 2016 - The Resolution Professional was appointed as Liquidator and shall exercise the powers and perform duties of a liquidator; entitlement to fees governed by the Board and Section 34(8). - HELD THAT: - The Tribunal appointed the present Resolution Professional as Liquidator and recorded his consent to act as Liquidator. Although the CoC had not accepted the proposed fee, the RP indicated willingness to act on fees as provided under the IBBI Regulations. The order vests in the Liquidator all powers of the Board, directors and KMP and directs exercise of statutory functions envisaged under Sections 35 to 50 and 52 to 54 of the Code, read with the IBBI (Liquidation Process) Regulations, 2016. The Liquidator's entitlement to fees is to be as specified by the Board in terms of Section 34(8) of the Code.

Mr. Hemant Mehta, the Resolution Professional, is appointed Liquidator; he shall exercise statutory powers and be entitled to fees as specified by the Board under Section 34(8).

Cessation of moratorium - vesting of management and board powers in the liquidator - discharge of officers, employees and workmen on liquidation - Consequential legal effects of liquidation were declared: moratorium ceases, management powers vest in the Liquidator, and the order operates as notice of discharge to employees (subject to continuance of business during liquidation). - HELD THAT: - The Tribunal directed that the moratorium declared under Section 14 of the Code shall cease to operate from the date of the liquidation order. All powers of the Board of Directors, Key Managerial Personnel and partners of the Corporate Debtor shall cease and be vested in the Liquidator. The order is to be deemed a notice of discharge to officers, employees and workmen of the Corporate Debtor, except where the Liquidator continues the business during the liquidation process. The order further directed cooperation of personnel with the Liquidator and required furnishing copies of the order to the IBBI, Regional Director, Registrar of Companies & Official Liquidator, the registered office and the Liquidator.

Moratorium ceases; management powers vest in the Liquidator; officers, employees and workmen are deemed discharged subject to exceptions; concerned authorities to be furnished a copy of the order.

Final Conclusion: The Tribunal allowed the RP's application under Section 33(2) and ordered liquidation of the Corporate Debtor; the RP was appointed Liquidator, directed to make the public announcement and to perform statutory liquidation functions with entitlement to fees as specified by the Board, the moratorium was terminated and management powers vested in the Liquidator, and the order operates as notice of discharge to employees with copies to statutory authorities.

Transportation of Goods through Pipelines / Conduit Services - place of delivery / custody transfer point - service provider-service recipient relationship - inclusion of transportation charges in sale consideration - sale on FOR destination basis - self-service / service to oneself

Transportation of Goods through Pipelines / Conduit Services - place of delivery / custody transfer point - service provider-service recipient relationship - inclusion of transportation charges in sale consideration - Whether transportation of crude oil by pipelines, with transportation charges separately recovered from buyers, amounts to a taxable service or forms part of the sale transaction by the seller. - HELD THAT: - The Tribunal found on the material on record and the sample MOUs that the pipeline transportation was undertaken solely to effectuate the sale of crude oil to specified buyers and not as an independent service. The sale agreements predetermined delivery at the buyers' custody transfer point and the appellant owned and operated the pipelines to deliver crude to that delivery point; risk and reward in the goods remained with the appellant until delivery. The transportation activity therefore formed part of the seller's obligation to deliver under the contract and the transportation charges represented consideration for the sale rather than a distinct service. The Tribunal further noted that sales tax / VAT had been paid on the transportation component and relied on precedents holding that where goods continue to be owned by the seller until delivery and the transportation is undertaken in the seller's account to discharge the sale contract, there is no service provider-service recipient relationship for levy of service tax. Applying these principles, the Tribunal held there was no legal basis to sustain service tax, interest or penalty on the transportation charges. [Paras 6, 9]

Transportation by the appellant was in the capacity of seller to effect the sale and not a taxable service; demand of service tax, interest and penalty set aside.

Final Conclusion: Appeals allowed; impugned demands of service tax, together with interest and penalty, are set aside for the period April 2011 to June 2017 as the transportation by pipeline constituted part of the sale transaction and there was no service provider-service recipient relationship.

Classification of promotion and marketing services as Business Auxiliary Service - Business Auxiliary Service - service tax liability for promotion/marketing of financial products - failure to discharge service tax and contravention of statutory provisions

Classification of promotion and marketing services as Business Auxiliary Service - service tax liability for promotion/marketing of financial products - Whether the appellants' services of promoting or marketing loans and related services for banks, NBFCs and insurers are classifiable as Business Auxiliary Service and therefore taxable, and whether the adjudication and penalties for non-payment are sustainable. - HELD THAT: - The Tribunal accepted the Revenue's reliance on earlier consistent decisions of the Tribunal holding that promotion and marketing of loans and finance on behalf of banking and non-banking financial institutions fall within the scope of Business Auxiliary Service and attract service tax. Having found that the appellants rendered such promotional/marketing services and admittedly did not discharge the service tax for the disputed period, the Tribunal concluded that the appellants contravened the statutory provisions. There was no reason to reopen the issue in view of the binding precedents relied upon and the material on record, and accordingly no infirmity was found in the impugned appellate order which had upheld the adjudication and penalties. [Paras 4, 5]

The classification of the services as Business Auxiliary Service and the consequent service tax liability and penalties for the period 2010-11 are upheld; the appeals are dismissed.

Final Conclusion: Appeals dismissed; Tribunal upheld that the appellants' promotion/marketing services for banks/NBFCs/insurers are taxable as Business Auxiliary Service and sustained the adjudication and penalties for 2010-11.

Condonation of delay - inordinate delay - sufficient cause - pre-deposit requirement - dismissal for non-prosecution - service of registry communications

Condonation of delay - inordinate delay - sufficient cause - service of registry communications - Application for condonation of delay of 180 days was rejected and the appeal dismissed. - HELD THAT: - The appeal was filed with a delay of 180 days and accompanied by an application seeking condonation. The Registry's communications requiring removal of defects, including the requirement of pre-deposit, were sent by registered post and the tracking report shows service on the appellant and on its counsel. The Tribunal noted repeated non-appearances by the appellant or its counsel on listed dates to press the delay condonation application, despite adjournments granted to permit compliance. Although the pre-deposit requirement was ultimately satisfied, subsequent notices about the listing of the delay application were also served, yet no one appeared to prosecute the application. The condonation application contained only casual, unsupported statements (relating to an accountant purportedly being on leave and a change of counsel) without particulars or supporting documents and did not explain when or how the appellant became aware that the appeal had not been filed. The absence of adequate explanation or documentary support meant the appellant failed to establish sufficient cause for the delay. For these reasons the application for condonation of delay was refused and, consequent thereto, the appeal was dismissed. [Paras 5, 6, 7, 8, 9]

The condonation application is rejected for failure to demonstrate sufficient cause; the appeal is dismissed.

Final Conclusion: The Tribunal refused to condone the inordinate delay for lack of sufficient cause and dismissed the appeal for non-prosecution following repeated non-appearances and unsupported, casual averments in the delay application.

Stay of implementation, operation and/or execution - deposit of 25% of the demand as condition for interim stay - awaiting decision of a superior court as ground to defer final hearing - interim relief granted without further reasoned order

Awaiting decision of a superior court as ground to defer final hearing - stay of implementation, operation and/or execution - Whether the Tax Appeals should be fixed for final hearing despite a substantial question of law being pending before the Supreme Court and an earlier interim order staying implementation subject to deposit. - HELD THAT: - The Court recorded that the appeals have been admitted on substantial questions of law and that a coordinate Bench had earlier granted interim relief by staying the implementation of the impugned order subject to deposit of 25% of the demand with interest. It was noted that the 25% deposit has been made by the original appellant and that the larger question of law is pending consideration by the Supreme Court. In view of the pendency of that decision and for better adjudication of the substantial questions raised in these Tax Appeals, the Court concluded that it would not be appropriate to fix the appeals for final hearing at this stage and that the pronouncement of the Supreme Court should be awaited.

The applications for listing the Tax Appeals for final hearing are declined and disposed of; the appeals will not be fixed for final hearing until the Supreme Court's decision is pronounced.

Final Conclusion: Applications disposed of; Tax Appeals not fixed for final hearing and the parties directed to await the decision of the Supreme Court.

Extended period of limitation - suppression of facts - valuation under Rule 8 (CAS-4) versus transactional value under Rule 4 - reliance on departmental communication / estoppel by departmental conduct - show cause notice limitation under Section 11A

Extended period of limitation - suppression of facts - valuation under Rule 8 (CAS-4) versus transactional value under Rule 4 - reliance on departmental communication / estoppel by departmental conduct - show cause notice limitation under Section 11A - Whether the extended period of limitation under Section 11A could be invoked against the assessee for the period 2007-2008 to 2009-2010 by reason of alleged suppression of facts regarding valuation and transfers to sister concerns. - HELD THAT: - The Court accepted the Tribunal's finding that the Department was aware of the valuation methodology adopted by the assessee for transfers to sister concerns from October 2007, including the communication dated 17.1.2008 which advised adoption of CAS-4 (Rule 8) valuation (110% of cost) for captively consumed or related party transfers. The show cause notice was issued on 19.8.2010. In view of the departmental audit, the internal audit, and the specific departmental communication-records which were available to the adjudicating authority and to which the assessee had responded-the allegation of suppression or misstatement by the assessee was not established. The Court held that the Revenue could not, without addressing or distinguishing the departmental communication, invoke the extended five year period; only the normal one year period prior to the show cause notice could be relied upon. The Court emphasised that the Revenue cannot adopt inconsistent positions by ignoring its earlier communication that led the assessee to change its valuation method, and that such departmental knowledge precludes invocation of the extended limitation on the ground of suppression. [Paras 9, 10, 11, 12]

Extended period of limitation cannot be invoked for the claimed period because suppression of facts was not established in view of departmental knowledge and the communication of 17.1.2008; consequence, the demand is hit by limitation except for the one year prior to the show cause notice.

Final Conclusion: The Revenue's appeal is dismissed; no question of law is found to arise and the Tribunal's allowance of the assessee's appeal insofar as the extended period of limitation is concerned is upheld.

Admissibility of computer printouts under Section 36B - Relevancy and admissibility of statements and requirement of cross-examination under Section 9D and principles of natural justice - Burden on Revenue to prove clandestine manufacture and removal by cogent, corroborative evidence - Consequences for imposition of penalties when foundational demand is unsustainable - Application of proviso to Section 11AC for reduced penalty on re-determined duty

Admissibility of computer printouts under Section 36B - Computer printouts relied upon by Revenue are not admissible evidence in the absence of compliance with the conditions of Section 36B(2) and related requirements. - HELD THAT: - The Tribunal examined whether the printed material produced by a computer satisfied the statutory conditions in Section 36B(2). The seized CPU did not contain the data purportedly produced during the material period; the department's case was that the printouts were from backup data originating on a different computer whose hard disk was allegedly destroyed. The conditions in clauses (a) to (d) of Section 36B(2) - that the printout be produced by a computer regularly used for the activity during the material period, that information was regularly supplied to it, that the computer was operating properly, and that the information reproduces information supplied in the ordinary course - were not shown to be satisfied. The Tribunal applied earlier precedent (including Premium Packaging) and concluded that, on the facts, the computer printouts could not be accepted as admissible evidence. [Paras 19, 21, 22, 26]

Computer printouts forming the primary basis for the major demand are inadmissible and cannot sustain the charge of clandestine removal.

Relevancy and admissibility of statements and requirement of cross-examination under Section 9D and principles of natural justice - Statements recorded during investigation relied upon by Revenue were not admissible where the assessee's request for cross-examination was denied and copies of statements were supplied only with the show cause notice. - HELD THAT: - The Tribunal reviewed statutory requirement in Section 9D and principles of natural justice. Many third party statements were supplied only with the show cause notice and were later retracted in the reply; despite specific requests, the adjudicating authority refused cross examination. The Tribunal held that where statements of third parties are relied upon in adjudication, it is incumbent on the authority to permit cross examination to test veracity. Absent that opportunity and given retractions/disputed circumstances, such statements cannot be accepted as evidence. The Tribunal also noted authorities holding confessional or third party statements are not conclusive without corroboration. [Paras 23, 24, 25, 26]

All impugned statements which were not subjected to cross examination and which were retracted or disputed are discarded as inadmissible evidence.

Burden on Revenue to prove clandestine manufacture and removal by cogent, corroborative evidence - Revenue failed to discharge the burden of proving clandestine manufacture and removal by cogent corroborative evidence (such as evidence of physical manufacture, transportation, receipt of sale proceeds, surreptitious procurement of raw material or excess capacity/utilisation). - HELD THAT: - The Tribunal emphasised that clandestine removal is a positive fact which must be established by tangible, corroborative material. On the facts, apart from the now-discarded computer printouts and statements, there was no independent evidence of physical manufacture of the alleged unaccounted quantity, no evidence of transportation of finished goods, no demonstrated receipt of sale proceeds, no proof of surreptitious procurement of raw material, and plant capacity evidence supported that such large unaccounted production was beyond installed capacity. Shortage found on stock comparison was not independently verified by weighment and constituted an insignificant percentage relative to capacity. Citing consistent precedents, the Tribunal found the charge rested on conjecture and was not proved on the requisite evidence. [Paras 26, 30, 31]

Charge of clandestine manufacture and removal is not established; major demand based on such a charge is unsustainable.

Consequences for imposition of penalties when foundational demand is unsustainable - Application of proviso to Section 11AC for reduced penalty on re-determined duty - Because the major demand was set aside, consequential penalties on co appellants and directors arising from that demand could not be sustained; a limited demand based on packing/dispatch slips was upheld and the proviso to Section 11AC was applied to reduce penalty to 25% for the re determined duty. - HELD THAT: - Having held the principal evidential bases inadmissible and the clandestine removal unproven, the Tribunal set aside the large part of the confirmed demand and held that penalties consequential to that unsustainable demand must also fall. Separately, the Tribunal examined a smaller demand founded on packing/dispatch slips (relating to alleged clandestine removal of a specified lesser quantity) and found that portion supported by admissible material; that demand, together with a reduced penalty (25% under the proviso to Section 11AC) and interest, was confirmed. The Tribunal noted the appellant had already made a lump sum payment during investigation and accordingly confirmed the reduced duty, penalty and interest as payable. [Paras 33, 34]

Major demand and consequential penalties set aside; a limited demand based on packing/dispatch slips is sustained and penalty reduced to 25% under the proviso to Section 11AC.

Final Conclusion: The Tribunal held that the primary evidential foundations relied upon by Revenue - computer printouts and investigation statements not subjected to cross examination - were inadmissible; consequently, the charge of large scale clandestine manufacture and removal for April, 2009 to July, 2012 was not established and the major portion of the duty demand and related penalties were set aside. A limited demand founded on packing/dispatch slips was upheld and a reduced penalty under the proviso to Section 11AC confirmed; appeals were partly allowed in the terms stated.

Fraudulent cenvat credit - admissibility of statements recorded during inquiry under Section 9D of the Central Excise Act - right to cross-examination under Section 9D - reliance on un-cross examined statements for proving fraudulent credit - availability of cenvat credit upon receipt of inputs with duty-paying documents - recovery of export rebate where input credit is irregular

Admissibility of statements recorded during inquiry under Section 9D of the Central Excise Act - right to cross-examination under Section 9D - reliance on un-cross examined statements for proving fraudulent credit - Whether the statements recorded during investigation could be relied upon without affording cross-examination as mandated by Section 9D. - HELD THAT: - The Tribunal found that the adjudicating authority arbitrarily refused the appellants' repeated and specific requests for cross-examination of witnesses whose statements formed the main basis of the Revenue's case. Reliance was placed on the Punjab & Haryana High Court ruling in Jindal Drugs and the Supreme Court in Andaman Timber requiring that statements recorded during inquiry be subjected to the prescribed procedure, including offering the witnesses for cross-examination where admissibility is contested. Given that those statements were the primary evidence against the appellants and that important corroborative witnesses (including transporters and officers who supervised factory stuffing) were not examined, the Tribunal held that none of those un-cross examined statements could be relied upon to prove the allegations. The Tribunal thus concluded that refusal to permit cross examination amounted to a miscarriage of justice and vitiated the reliance placed on such statements. [Paras 88, 89, 91]

Statements recorded during investigation, which were not subjected to cross-examination despite specific requests, could not be relied upon and were to be discarded.

Fraudulent cenvat credit - availability of cenvat credit upon receipt of inputs with duty-paying documents - recovery of export rebate where input credit is irregular - Whether JIJI/KPPL, MSAPL and related entities had fraudulently availed cenvat credit on the basis of forged invoices and whether rebate sanctioned on export clearances was recoverable. - HELD THAT: - After discarding the un-cross examined statements relied upon by Revenue, the Tribunal found no cogent or corroborative evidence to establish that the appellants had not received the inputs or that cenvat credit was fraudulently availed. The appellants had produced evidence of manufacture and clearance of finished goods (many exports factory stuffed under departmental/customs supervision), had made payments through banking channels, and had explanations (including clerical errors, loss of records by fire or in transit, and routing of supplies through related concerns to enhance drawing power). The Tribunal rejected Revenue's bald inferences about inflated input consumption, inflated export values, or alternative undisclosed sources of raw material, observing that such contentions were not supported by standard input output norms or convincing evidence. The Tribunal therefore held that the appellants satisfied the statutory scheme for claiming cenvat credit and that the demand for credit and disallowance of rebate were not substantiated on the record. [Paras 93, 94, 95, 96]

The demands for alleged fraudulent cenvat credit and the consequential disallowance/recovery of export rebate were not sustained; the cenvat credit taken was held to be admissible and the rebate disallowance unsupportable.

Reliance on un-cross examined statements for proving fraudulent credit - penalty liability where primary demand fails - Whether penalties and other consequential demands imposed on the appellants and their principals could be sustained. - HELD THAT: - The Tribunal observed that the penalties and equal amount demands flowed from the primary findings of irregular cenvat credit and erroneous rebate claims. Having set aside the primary findings for lack of reliable evidence (after excluding the un-cross examined statements) and having accepted that inputs were received with duty paying documents, the Tribunal held that the basis for imposing penalties and equal amount demands was negated. The Tribunal also noted absence of proof of any unlawful flow back of funds or hawala in export realisations, and that the role of verifying officers (Range Officers) who had certified duty payment particulars was not questioned in the adjudication. [Paras 91, 95, 97]

Penalties and consequential demands imposed on the appellants and connected persons were unsustainable and were set aside along with the substantive demands.

Final Conclusion: The impugned orders disallowing cenvat credit, demanding recovery of rebate and imposing equal penalties were set aside in all appeals after the Tribunal held that the Revenue's case rested on un-cross examined statements which could not be relied upon; having discarded those statements, there was no cogent corroborative evidence to sustain demands or penalties, and the appeals were allowed while the Revenue's cross-objection was dismissed.

Excisable goods - goods attached to the earth / immovable property - marketability and moveability - extended period of limitation - elements and notice in show cause notice - penalty under Section 11AC - cum duty valuation (price taken as cum duty) - CENVAT credit entitlement - valuation by cost construction method under Rule 8 read with Rule 11 of the Central Excise Valuation Rules - remand for limited purpose of computation

Excisable goods - goods attached to the earth / immovable property - marketability and moveability - Whether the fabricated steel tanks are goods exigible to Central Excise duty - HELD THAT: - The majority held that the cylindrical tanks fabricated by the appellants, though incomplete when they leave the factory (with certain end pieces and fittings attached at site), are products classifiable as tanks and are exigible to Central Excise duty. The Tribunal applied the statutory concept of "goods" and the meaning of "attached to the earth" (as explained in the Transfer of Property Act), and relied on precedent which treats products removable from the factory and marketed to customers as dutiable. The Division Bench found the ratio of the decision in V.D. Engineering (storage tanks fabricated from steel sheets) directly applicable: liability for excise is determined by the activity in the factory and not by subsequent site installation; marketability was established by supply to oil companies; therefore duty is leviable for the normal period on the fabricated tanks. [Paras 14, 40, 41, 43]

The fabricated tanks are excisable goods and Central Excise demand on merits is sustainable for the normal period of limitation.

Extended period of limitation - elements and notice in show cause notice - Whether the Department validly invoked the extended period of limitation - HELD THAT: - The Tribunal found that the show cause notices, while proposing extended period demands, did not specifically allege or evidence the requisite elements (fraud, collusion, wilful mis statement or suppression of facts with intent to evade duty). The appellants were therefore not put on notice to meet those elements. On this procedural and substantive deficiency the extended period demand was held unsustainable. [Paras 15, 30, 31, 43]

Demands for the extended period of limitation are set aside.

Penalty under Section 11AC - extended period of limitation - notice requirements - Whether penalties under Section 11AC are sustainable - HELD THAT: - Because the extended period invocation was defective for want of specific allegations required to attract extended limitation, and having regard to the appellants' asserted bona fide belief regarding non exigibility, the Tribunal (majority) held that penalties under Section 11AC do not survive and must be set aside. [Paras 16, 31, 43]

All penalties under Section 11AC are set aside.

Cum duty valuation (price taken as cum duty) - CENVAT credit entitlement - Whether the prices received by appellants should be taken as cum duty prices and whether CENVAT credit is available - HELD THAT: - Relying on binding precedent (Maruti Udyog Ltd.) and the facts that duty had not been paid and the appellants had dealt with customers on contract terms, the Tribunal held that the price received may be taken as inclusive of duty (cum duty) for computation and that CENVAT credit on inputs cannot be denied if duty is found payable. Consequently, the appellants are entitled to CENVAT credit and the original authorities should compute duty treating realized prices as cum duty where applicable. [Paras 17, 19, 43]

Prices received may be treated as cum duty prices for valuation and CENVAT credit is available to the appellants.

Valuation by cost construction method under Rule 8 read with Rule 11 of the Central Excise Valuation Rules - remand for limited purpose of computation - Appropriate mode of computation/valuation and remand for calculation - HELD THAT: - The Tribunal observed that valuation issues (application of Rule 8 read with Rule 11 - cost construction / reasonable means) had not been properly invoked or worked out by the Revenue in the adjudication. The Majority directed that appeals be remanded to the original authority for limited purpose of computation consistent with the findings (duty leviable for normal period, prices to be treated cum duty where applicable and CENVAT entitlement). The remand is for computation and application of the correct valuation principles. [Paras 21, 23, 26, 43]

Matters remitted to the original authority for limited purpose of computation and valuation in accordance with the Tribunal's findings.

Final Conclusion: Majority decision: Central Excise demand is sustainable on merits for the normal period only; demands for extended period are set aside; all penalties are set aside; appellants are entitled to have prices treated as cum duty and to CENVAT credit; matter remanded to the original authority for limited purpose of computation.

Duties of excise collected from the buyer to be deposited under Section 11D - manufacture within the meaning of Section 2(f) - short levy and non-levy remedy under Section 11A - requirement of separate recovery/mention of duty in the invoice for attraction of Section 11D - inclusive price not amounting to collection as representing duty

Manufacture within the meaning of Section 2(f) - short levy and non-levy remedy under Section 11A - Whether blending 5% ethanol with 95% motor spirit, if held to be manufacture, attracts recovery under Section 11D or should be treated as short levy/non levy recoverable under Section 11A. - HELD THAT: - The Tribunal accepted that blending may be regarded as manufacture under Section 2(f) so that ethanol loses its separate identity in the resultant Ethanol Blended Petrol (EBP). Once the process is treated as manufacture and the resultant EBP is the excisable product, any duty short paid or not deposited on that excisable product falls for recovery under the provisions governing short levy/non levy (Section 11A) and not by theoretically apportioning duty to the raw material and invoking Section 11D. The approach of computing a theoretical duty attributable to the ethanol portion of the blend and recovering that amount under Section 11D is inconsistent with the statutory scheme where the manufactured product is the chargeable goods. [Paras 6]

Blending that amounts to manufacture cannot be the basis for recovery under Section 11D; such short levy/non payment must be pursued under Section 11A.

Requirement of separate recovery/mention of duty in the invoice for attraction of Section 11D - inclusive price not amounting to collection as representing duty - duties of excise collected from the buyer to be deposited under Section 11D - Whether Section 11D is attracted where the sale invoices showed a composite price inclusive of duty and there was no separate collection or mention of duty attributable to the ethanol component. - HELD THAT: - Section 11D applies only where an amount has been collected from the buyer 'as representing duty of excise'. The Tribunal held that Revenue failed to demonstrate that any amount representing duty on the ethanol portion was separately shown or recovered in the invoices during the disputed period. Where the price is shown inclusive of duty and no separate duty element attributable to ethanol is indicated or collected as such, the proviso for depositing an amount 'collected as representing duty' is not made out. The statements of the depot manager, which suggest a theoretical apportionment of duty, do not cure the absence of any distinct collection or invoice entry representing duty on ethanol, and therefore cannot sustain recovery under Section 11D. [Paras 6]

Section 11D is not attracted because no amount representing duty on the ethanol was shown or collected separately in the invoices; an inclusive price without separate duty attribution is insufficient to invoke Section 11D.

Final Conclusion: The Tribunal set aside the adjudicating order and allowed the appeal: recovery under Section 11D is unsustainable both if blending is treated as manufacture (where short levy must be pursued under Section 11A) and where no separate collection/mention of duty on ethanol appears in invoices (so Section 11D is not attracted).

Entry tax on imported vehicles - penalty under Section 15(1) of the Entry Tax Act, 1990 - bona fide belief - discretionary imposition of penalty - precedential protection where law was unsettled

Penalty under Section 15(1) of the Entry Tax Act, 1990 - bona fide belief - discretionary imposition of penalty - precedential protection where law was unsettled - Whether the proposal to levy penalty at twice the amount of tax under Section 15(1) was justified despite the petitioner having not paid entry tax at the time of import in light of the prevailing law and subsequent payment on being pointed out. - HELD THAT: - The Court found that at the time of import (2004/2005) the settled position of law, as reflected in the then-authority, exempted imported vehicles from entry tax and therefore the petitioner acted under a bona fide belief that no entry tax was payable. When the Enforcement Wing pointed out the omission, the petitioner promptly paid the entry tax. Applying the principles laid down by the Apex Court in E.I.D. Parry and Hindustan Steel - that penalty in quasi criminal tax proceedings should not ordinarily be imposed where the default arises from bona fide belief, uncertainty in the law, or non deliberate conduct, and that imposition of penalty is discretionary and must be exercised judicially - the Court held that the proposed levy of penalty was unjustified. The Court emphasised that although the authority has power to impose penalty, exercise of that power in the present facts, where the petitioner relied on the then-prevailing law and remedied the omission on being informed, would be contrary to the guiding precedents; accordingly the notice proposing penalty was set aside. [Paras 6, 9]

The notice proposing penalty under Section 15(1) is set aside and the writ petition is allowed.

Final Conclusion: The petition succeeds: the Court set aside the penalty notice issued under Section 15(1) insofar as it proposed levy of penalty for non payment of entry tax on the three imported vehicles imported in 2004/2005, on the ground of bona fide belief arising from the then-prevailing law and prompt payment when the omission was pointed out.

Assessing Officer's independent application of mind - proposals of Enforcement Wing/ISIC authorities not binding - Circular empowering Assessing Authority to deviate from proposals - remand for fresh consideration by Assessing Officer

Assessing Officer's independent application of mind - proposals of Enforcement Wing/ISIC authorities not binding - Whether assessment proceedings initiated on the basis of Audit Reports/Inspection Proposals of the Enforcement Wing/ISIC can be finalized by the Assessing Officer merely by adopting those proposals without independent application of mind. - HELD THAT: - The Court held that the Assessing Officer, being a quasi judicial authority, must independently consider and apply his mind to audit reports or inspection proposals received from the Enforcement Wing/ISIC and cannot be guided solely by those proposals. The Court reaffirmed its earlier rulings to this effect and accepted that such proposals are not determinative of the assessment unless the Assessing Officer independently evaluates and records reasons for accepting them. In consequence, proceedings founded only on adoption of Enforcement/ISIC proposals without independent adjudication by the Assessing Officer cannot stand. [Paras 2, 3]

Proceedings based solely on Enforcement Wing/ISIC proposals are set aside; the Assessing Officer must independently consider the matter and cannot be guided solely by those proposals.

Circular empowering Assessing Authority to deviate from proposals - remand for fresh consideration by Assessing Officer - What remedial directions should follow where assessments proceeded on the basis of Enforcement/ISIC proposals without independent consideration by the Assessing Officer. - HELD THAT: - Having noted Circular No.3 dated 18.01.2019 issued by the Commissioner of State Tax Chennai, which authorises Assessing Authorities to deviate from Enforcement/ISIC proposals and to record reasons when doing so, the Court remanded the impugned matters to the Assessing Officer for fresh disposal. Assessees were granted liberty to file objections with supporting documents within 30 days of receipt of the order. The Assessing Officer is required to afford personal hearing (including by Video Conferencing if necessary), to consider objections independently and conclude the proceedings without being influenced by Enforcement/ISIC proposals. The Court directed that the exercise be completed within 12 weeks from receipt of objections and provided for commencement of proceedings after the 30 day window if objections are not filed. [Paras 4, 5]

Matters remanded to the Assessing Officer for fresh independent adjudication in accordance with Circular No.3/18.01.2019; assessees to file objections within 30 days and Assessing Officer to conclude proceedings within 12 weeks.

Final Conclusion: Writ Petitions allowed; impugned proceedings set aside and remanded to the Assessing Officer for independent disposal in accordance with Circular No.3 dated 18.01.2019, with liberty to assessees to file objections within 30 days and a direction to conclude the reassessment exercise within 12 weeks; no costs.

Restriction of Input Tax Credit - Prior sufferance of taxes - Reversal of Input Tax Credit on wastage - Ineligible claim of Input Tax Credit on goods - Duty of assessing officer to conduct fact finding and inspection - Prohibition on adoption of uniform or ad hoc percentage for invisible/visible loss - Right to personal hearing before adjudication

Restriction of Input Tax Credit - Prior sufferance of taxes - Right to personal hearing before adjudication - Validity of disallowing Input Tax Credit on the ground that certain suppliers had not paid tax to the Government. - HELD THAT: - The Court held that restriction of ITC on the ground of non payment of tax by sellers cannot be sustained where the purchaser proves that the seller collected tax and issued invoices to the purchaser. Reference to the principle as applied in the cited authority indicates that mere non payment by the seller to Government is not a ground to disallow the purchaser's ITC if invoices and tax collection by the seller are established. The matter relating to this head is remitted to the Assessing Officer for fresh consideration; before any final decision is taken the Assessing Officer must afford the petitioner an opportunity of personal hearing and proceed in accordance with law. [Paras 3, 7]

Impugned restriction on ITC on the ground of prior sufferance of taxes set aside and remanded to the Assessing Officer for fresh consideration after affording personal hearing.

Reversal of Input Tax Credit on wastage - Duty of assessing officer to conduct fact finding and inspection - Prohibition on adoption of uniform or ad hoc percentage for invisible/visible loss - Legality of reversing ITC by adopting uniform percentages for invisible and visible wastage/loss. - HELD THAT: - Relying on this Court's prior decision, the assessing authority is not justified in adopting a uniform or ad hoc percentage to determine invisible or visible loss and call upon dealers to reverse ITC accordingly. To determine the quantum of loss, the Assessing Officer must embark upon a fact finding exercise, which may include inspection of the place of business and examination of the manufacturing process, rather than applying blanket percentages. The Court therefore set aside the impugned orders that adopted uniform percentages and permitted the Assessing Officer to issue show cause notices and invite objections for fresh consideration in accordance with law. [Paras 4, 8]

Orders reversing ITC on the basis of uniform percentages for wastage are set aside; Assessing Officer may issue show cause notices and reconsider the claim after fact finding and affording opportunity to the petitioner.

Ineligible claim of Input Tax Credit on goods - Restriction of Input Tax Credit - Right to personal hearing before adjudication - Whether certain purchases are ineligible for ITC on the ground that the commodities were not exported or not used in manufacture of exported goods. - HELD THAT: - The Court observed that the petitioner's contention that the goods were used in manufacture of exported products (and thus eligible under the statute) required opportunity to be placed before the authority. The matter was not finally adjudicated on merits by this order; instead, consistent with earlier directions, the Assessing Officer may issue appropriate show cause notices calling for the petitioner's objections and proceed to determine eligibility after hearing and fact finding. [Paras 5, 8]

Denial of ITC on the ground of ineligibility set aside for reconsideration; Assessing Officer may issue show cause notices and decide after inviting objections and hearing the petitioner.

Final Conclusion: Impugned orders restricting Input Tax Credit for the months of June to September 2014 are set aside. The matter relating to alleged non payment by suppliers is remanded to the Assessing Officer for fresh consideration with an obligation to afford personal hearing and endeavour to complete proceedings within twelve weeks; the Assessing Officer is also permitted to issue show cause notices and reconsider claims relating to reversal on wastage and alleged ineligible goods after inviting objections and conducting necessary fact finding.

Sale of bought-in land under Kerala Revenue Recovery Act - Restitution and re-conveyance of bought-in land - Proprietary estoppel - Effect of payment under an Amnesty Scheme - Delay and laches as a bar to equitable relief

Restitution and re-conveyance of bought-in land - Effect of payment under an Amnesty Scheme - Proprietary estoppel - The undivided share of the petitioner purchased by the State as bought-in land is liable to be cancelled and restituted to the petitioner on the basis of payment made under the Amnesty Scheme and principles of equity/proprietary estoppel. - HELD THAT: - The Court found that the State's purchase in 2008 related only to the petitioner's undivided share and that the State never obtained actual exclusive possession nor proceeded to demarcate or take possession by suit. Subsequently the respondents permitted the petitioner to participate in an Amnesty Scheme and intimated the amount payable to settle the sales tax arrears, which the petitioner paid. Relying on precedents where payment accepted by the Government and the erosion of the basis of sale justified reconveyance, the Court held that equity and the doctrine of proprietary estoppel operate when the defaulter is encouraged to make payment and the basis of sale is thereby removed; accordingly restitution (return of the undivided share) is warranted and the sale and confirmation orders must be cancelled and the property returned to the petitioner. [Paras 8, 9, 10, 11, 12]

The respondents are directed to cancel the sale and any confirmation and take action to return the property covered by Ext.P1 to the petitioner.

Delay and laches as a bar to equitable relief - The plea of delay and laches by the State did not preclude the petitioner from obtaining reconveyance where the petitioner had made representations, was permitted to participate in the Amnesty Scheme, and paid the amount intimated by the State. - HELD THAT: - Although the sale occurred in 2008 and the petition was filed after several years, the Court noted the petitioner's continuous attempts to raise funds, representations made to authorities, and the subsequent conduct of the State in inviting participation in the Amnesty Scheme and accepting payment. In these circumstances the mere lapse of time did not oust equitable relief; the circumstances showing State encouragement to settle the dues and absence of State possession or steps to enforce segregation weighed against dismissal on grounds of laches. [Paras 6, 8, 9, 10, 11]

The contention of delay and laches is not a bar to granting reconveyance in the facts of this case.

Final Conclusion: Writ petition allowed; respondents directed to cancel the sale and any confirmation relating to Ext.P1 and to take immediate steps to return the property to the petitioner, the competent authority to complete this process within two months from receipt of the judgment.

Presumption as to consideration and execution of cheque under Sections 118 and 139 of the Negotiable Instruments Act - rebuttal of statutory presumption by suspicious circumstances and documentary manipulation - maintainability of recovery suit under Section 3 of the Himachal Pradesh Registration of Money Lenders Act, 1976 - definition of "loan" and exceptions thereto including advances based on negotiable instruments - who is a "money-lender" for purposes of registration and licensing under the Act

Presumption as to consideration and execution of cheque under Sections 118 and 139 of the Negotiable Instruments Act - rebuttal of statutory presumption by suspicious circumstances and documentary manipulation - Whether the statutory presumption attaching to an admittedly signed cheque under Sections 118 and 139 of the Negotiable Instruments Act required acceptance of the plaintiff's claim or could be rebutted by the defendant's explanation and apparent manipulations on the cheque. - HELD THAT: - The Court held that although the defendant did not dispute his signature on the cheque, the due execution and enforceability of the cheque was open to challenge because the trial Court had examined the original instrument and noted material inconsistencies. The learned trial Court observed use of different inks for signature, account number, name, amount and date and an apparent addition of a zero to alter the amount from Rs. 30,000 to Rs. 3,00,000. The defendant gave a consistent explanation that a blank signed cheque had been given earlier by his father as security for a distinct loan which was subsequently repaid, and that the cheque was misused. In these facts the Court found the presumption under Sections 118 and 139 effectively rebutted: where suspicious circumstances concerning the instrument are proved, mere admission of signature does not dispense with proof of the underlying legally enforceable liability. The Court also noted that the criminal complaint under Section 138 based on the same cheque had resulted in acquittal and no successful challenge to that judgment was shown, reinforcing doubts about the claimed transaction. On this basis the concurrent findings of the Courts below dismissing the suit on merits were held to be legally sustainable. [Paras 5, 7]

Statutory presumption under Sections 118 and 139 was rebutted by suspicious circumstances and the defendant's explanation; the plaintiff failed to prove the claimed debt and the suit was rightly dismissed on merits.

Maintainability of recovery suit under Section 3 of the Himachal Pradesh Registration of Money Lenders Act, 1976 - definition of "loan" and exceptions thereto including advances based on negotiable instruments - who is a "money-lender" for purposes of registration and licensing under the Act - Whether the suit was barred under Section 3 of the Himachal Pradesh Registration of Money Lenders Act, 1976 for want of registration and licence of the plaintiff as a money lender. - HELD THAT: - The Court examined the pleadings and evidence and held that the defendant bore the onus to prove that the plaintiff fell within the statutory definition of a "money-lender" and that the recovery suits instituted by the plaintiff related to loans within the scope of the Act. Although the plaintiff had admitted filing numerous recovery proceedings, there was no specific evidence that those suits involved loans falling within the definition of "loan" under Section 2(8) of the Act rather than being of the categories excluded by exceptions (a)-(g). Crucially, advances made on the basis of negotiable instruments (including cheques) are excluded by exception (g). Given the instant claim arose from a cheque, the Court concluded that the H.P. Registration of Money Lenders Act did not automatically render the suit non maintainable and that the concurrent findings holding the suit barred under Section 3 were unsustainable for want of proof that the plaintiff was a registered money lender or that the loans involved were within the Act's scope. [Paras 6, 7]

Suit is not barred under Section 3 of the Act because the defendant failed to prove that the plaintiff was a "money lender" within the Act and failed to show the loans fell within the Act's definition; the finding of non maintainability is quashed.

Final Conclusion: The appeal is partly allowed: concurrent findings that the suit was barred under the H.P. Registration of Money Lenders Act are set aside for want of proof that the plaintiff was a registered money lender or that the loans fell within the Act, but the concurrent dismissals of the suit on merits are upheld because the plaintiff failed to prove the alleged loan and the cheque's presumption was successfully rebutted; the second appeal is disposed accordingly.

Presumption under Section 139 of the Negotiable Instruments Act - legally enforceable debt - rebuttable presumption - authority of company representative to give evidence - statutory notice requirement under Section 138 of the Negotiable Instruments Act - dishonour of cheque due to closure of account - conviction under Section 138 of the Negotiable Instruments Act

Presumption under Section 139 of the Negotiable Instruments Act - legally enforceable debt - rebuttable presumption - authority of company representative to give evidence - statutory notice requirement under Section 138 of the Negotiable Instruments Act - dishonour of cheque due to closure of account - conviction under Section 138 of the Negotiable Instruments Act - Whether the complainant proved beyond reasonable doubt the offence punishable under Section 138 of the Negotiable Instruments Act and whether the trial court's acquittal required interference. - HELD THAT: - The Court examined whether the complainant had established issuance and dishonour of the cheques, existence of a legally enforceable debt, compliance with the statutory notice requirement and the authority of the witness to give evidence for the company. The complainant produced the cheques (Exs.P-3, P-4), bank endorsements showing dishonour on account closure (Exs.P-5, P-6), the statutory legal notice and postal proofs (Exs.P-7 to P-10) and the ledger extract (Ex.P-11) evidencing supplies and outstanding balance. The witness PW-1's authority to represent the company was supported by a board resolution (Ex.P-1) authorising him to sign papers and give evidence; the defence did not persuasively rebut that authority. The trial court relied on an earlier Supreme Court decision to hold that legal enforceability of the debt was not presumed, but subsequent authority clarified that Section 139 presumption extends to existence of a legally enforceable debt while remaining rebuttable. Here, apart from the statutory presumption, the complainant independently proved supply of goods and outstanding liability; the accused's bare suggestion of misuse of blank cheques was not substantiated nor was any explanation offered for how blank cheques were issued. The complainant complied with the notice requirement within time. Applying the rebuttable presumption under Section 139 together with the admissible oral and documentary evidence, the Court found the trial court's conclusion that legally recoverable debt was not proved to be erroneous and that the ingredients of the offence under Section 138 were established. [Paras 13, 15, 16, 17, 18]

The appeal is allowed; the trial court's acquittal is set aside and the accused is convicted for the offence punishable under Section 138 of the Negotiable Instruments Act.

Final Conclusion: The appeal is allowed. The judgment of acquittal is set aside; the accused is convicted under Section 138 of the Negotiable Instruments Act and sentenced to pay a fine, with a portion of the fine directed to be paid to the complainant as compensation and the residue forfeited to the State.

Application under Section 311 Cr.P.C. - recall of witness for further cross-examination - use of Section 311 Cr.P.C. to fill lacunae or delay trial - relevance of documents produced at defence stage for further cross-examination - delay tactics and adjournment abuse - prior dismissed criminal complaint's bearing on present proceedings - defence pleaded at the time of framing of notice under section 251 Cr.P.C.

Application under Section 311 Cr.P.C. - recall of witness for further cross-examination - relevance of documents produced at defence stage for further cross-examination - defence pleaded at the time of framing of notice under section 251 Cr.P.C. - use of Section 311 Cr.P.C. to fill lacunae or delay trial - Validity of the Trial Court's order dismissing the accused's application under Section 311 Cr.P.C. for recall of the complainant for further cross-examination. - HELD THAT: - The High Court examined whether the Trial Court erred in refusing to recall the complainant for further cross-examination after various documents were produced by the complainant at the stage of defence evidence. The Trial Court found that the accused failed to specify which documents needed to be put to the complainant and how they would substantiate the defence pleaded earlier under Section 251 Cr.P.C.; many documents were either admitted by defence witnesses or related to the company's records and thus did not plainly require further questioning of the complainant. The Trial Court also noted the belated nature of the application and that an earlier complaint (CT Cases 8423/2017) had been filed and dismissed in 2017 and, in any event, its dismissal did not impinge on the merits of the present Section 138 proceeding. Applying the settled principle that Section 311 Cr.P.C. cannot be used to fill lacunae in the trial or to cause undue delay, the Trial Court treated the application as vague, speculative and a potential delay tactic and therefore dismissed it. The High Court, on review of the impugned order and surrounding circumstances (including the accused's consistent defence as recorded at framing and the Trial Court's assessment of relevance and prejudice), found no illegality or perversity in the reasoning and outcome and upheld the dismissal. [Paras 16, 17, 19, 21, 22]

The Trial Court's dismissal of the application under Section 311 Cr.P.C. to recall the complainant for further cross-examination is upheld; the petition is dismissed.

Final Conclusion: The High Court found no illegality or perversity in the Trial Court's order dismissing the accused's application under Section 311 Cr.P.C., treated the application as vague and belated (amounting to delay tactics), and accordingly dismissed the petition and upheld the impugned order; pending application disposed of.

Anticipatory bail - forgery and fabrication of electronic evidence - forged E-way bill - GST deposit and its evidentiary significance - rejection of E-way bill - criminal fraud and forgery offences (allegations under Sections 420, 467 & 471 IPC)

Anticipatory bail - forged E-way bill - GST deposit and its evidentiary significance - rejection of E-way bill - forgery and fabrication of electronic evidence - Whether the petitioners were entitled to grant of anticipatory bail in view of allegations that they fabricated a forged E-way bill and filed GST returns to create false evidence. - HELD THAT: - The petition under Section 438 CrPC was dismissed on the basis of prima facie material. The State's status report averred that GST was paid by the petitioner purportedly to create false evidence, and that the complaint had been investigated by the Economic Offences Wing before registration of the FIR. The statement of the driver attached to the State's reply indicated non-delivery of the alleged goods. The electronically generated document (Annexure R-2/5) shows the E-way bill dated 04.01.2020 was rejected by the complainant on 05.01.2020. The petitioner was unable to explain the necessity of depositing GST on a bill which stood rejected the next day. On these materials the Court found a prima facie case of fabrication of the E-way bill and filing of GST returns on a bill already rejected by the complainant, and accordingly refused anticipatory bail.

Petition for anticipatory bail dismissed on prima facie finding of fabrication of E-way bill and related GST filings; no expression of opinion on merits.

Final Conclusion: The High Court dismissed the petition for anticipatory bail on prima facie materials indicating fabrication of a forged E-way bill and attendant GST filings; the order records that the observations are not an expression on the merits of the case.