TaxTMI Updates e-Newsletter
Sep 24,2018

Classification of goods for GST - Distinction between Chapter 39 (Plastics) and Chapter 63 (Textiles) - Width of strips or tapes used in woven fabrics (5 mm threshold) - Exclusion by impregnation, coating, covering or lamination with plastics - Interpretation of Section/Chapter Notes and Explanatory Notes for tariff classification - Use of BIS specification (IS 16187:2014) as technical criterion

Classification of goods for GST - Width of strips or tapes used in woven fabrics (5 mm threshold) - Exclusion by impregnation, coating, covering or lamination with plastics - Distinction between Chapter 39 (Plastics) and Chapter 63 (Textiles) - Use of BIS specification (IS 16187:2014) as technical criterion - Classification of Polypropylene Leno Bags manufactured from woven PP tapes as either plastics articles or textile sacks and bags for purposes of GST tariff heading - HELD THAT: - The Authority examined the Chapter and Section Notes, Explanatory Notes and the technical specification IS 16187:2014. Note 1(g) to Section XI excludes from textiles monofilament or strip of plastics of apparent width exceeding 5 mm, and Note 1(h) excludes fabrics impregnated, coated, covered or laminated with plastics (chapter 39). The relevant determinative factors are the width of the strips/tapes used in weaving and the absence or presence of impregnation/coating/lamination. The Applicant's PP Leno Bags are produced from strips or tapes not exceeding 5 mm in width and are not impregnated, coated, covered or laminated with plastics. Taking these tariff notes and the BIS range for PP Leno woven sacks (2.0-2.5 mm) into account, the product falls within the description of sacks and bags of manmade textile materials of a kind used for packing of goods and not within the plastics articles heading. The Authority accepted the Applicant's interpretation and applied these criteria to conclude the appropriate classification.

Polypropylene Leno Bags made from woven PP strips or the like of width not exceeding 5 mm and without impregnation, coating, covering or lamination with plastics are classifiable under Tariff Sub Heading 63053300.

Final Conclusion: The Advance Ruling holds that the Applicant's PP Leno Bags, produced from woven polypropylene strips not exceeding 5 mm and not impregnated/coated/covered/laminated with plastics, are classifiable under Tariff Sub Heading 63053300; the Ruling remains subject to statutory provisions governing its validity.

Non-taxable supplies - zero rated supply - input tax credit - distinct persons (section 25(4) of the GST Act) - place of supply - export of goods (section 2(5) of the IGST Act) - movement inextricably linked to export - re-warehousing at export warehouse

Export of goods (section 2(5) of the IGST Act) - movement inextricably linked to export - re-warehousing at export warehouse - place of supply - Classification of movement from Haldia Refinery to Raxaul Depot as export or as a domestic transfer to the Bihar Unit - HELD THAT: - The Authority examined whether the movement of ATF and other petroleum products from the Haldia Refinery to the Raxaul export warehouse terminates at Raxaul or continues as part of an export to Nepal. The Agreement with the Nepal buyer is an umbrella arrangement under which specific Product Delivery Orders (PDOs) are placed at supply points; no specific export orders were shown for the contested movements. The statutory excise procedure permits duty free removal to an export warehouse subject to later clearance as export (ARE 1) or home consumption, and the Raxaul warehouse is authorised to store goods that may be diverted for home consumption. Consequently, re warehousing under ARE 3 evidences duty free storage and not automatic export. Because the final determination (export or home clearance) occurs at the export warehouse, movement to Raxaul is not necessarily inextricably linked to an export outside India and does not, on the material before the Authority, qualify as an export under section 2(5) of the IGST Act. Where movement terminates at Raxaul, the supply is to a recipient in India and the place of supply rules apply accordingly. [Paras 12, 14, 16, 17, 18]

Movement from Haldia to Raxaul is not export under section 2(5) IGST; Raxaul functions as storage/point of final clearance and movement terminates there unless a specific export order links it to export.

Non-taxable supplies - distinct persons (section 25(4) of the GST Act) - zero rated supply - input tax credit - Whether the supplies from the West Bengal Unit to the Raxaul warehouse/Bihar Unit are zero rated or non taxable/exempt supplies and whether input tax credit on railway freight paid by the West Bengal Unit is admissible - HELD THAT: - Petroleum products (HSD, ATF, etc.) are presently non taxable under the GST scheme and therefore counted within turnover as exempt/non taxable supplies. The West Bengal Unit and the Bihar Unit are separately registered and therefore constitute distinct persons under section 25(4) of the GST Act. Because the movement to Raxaul is not shown to be export and may be cleared for home consumption from the export warehouse, the supplies from the West Bengal Unit to the Bihar Unit amount to non taxable/exempt inter state supplies to a distinct person rather than zero rated exports by the West Bengal Unit. Sections 16(1)(a) and 16(2) of the IGST Act (input tax credit in relation to zero rated supplies) are thus inapplicable to the West Bengal Unit's payment of GST on railway freight for these movements. The Bihar Unit, which reports exports and effects final export clearance, may claim credits as applicable, but the West Bengal Unit cannot claim ITC on the freight charged and billed to it for the transport to Raxaul. [Paras 9, 10, 20, 21]

Supplies from Haldia to Raxaul are non taxable/exempt supplies to the Bihar Unit (distinct person) and not zero rated exports by the West Bengal Unit; the West Bengal Unit cannot claim input tax credit on the railway freight.

Final Conclusion: The Authority ruled that transfers of ATF and other petroleum products from the Haldia Refinery to the Raxaul export warehouse are non taxable/exempt supplies to a distinct Bihar Unit and not zero rated exports by the West Bengal Unit; accordingly, the West Bengal Unit is not entitled to claim input tax credit on GST paid for the railway freight for those movements.

Composite supply - natural bundling - principal supply - free issue equipment - high sea sale - tax liability on composite supply determined by dominant nature - concessional rate for solar power generating system and parts - sub-contractor supplies independent

Composite supply - natural bundling - free issue equipment - high sea sale - Supply of the PV module is naturally bundled with the supply of the remaining components and services of the solar power plant - HELD THAT: - The contract expressly treats Photovoltaic (PV) modules as "Free Issue Equipment" supplied by the project owner, and records transfer of title to the owner on High Sea Sale with subsequent import and delivery to the plant site. These terms divide the overall transaction into distinct stages: (i) transfer of PV modules to the owner on High Sea Sale, (ii) free issue of those modules by the owner to the contractor, and (iii) the contractor's supply of remaining goods and services. The second stage (free issue without consideration) is not a taxable "supply" under the CGST scheme except as provided in Schedule I. As the PV modules are separated in time, consideration and legal character from the contractor's supplies, they are not "naturally bundled" with the contractor's supply of other components and erection/installation services. The contract itself excludes Free Issue Equipment from the definition of the contractor's "Equipment", confirming the independent nature of that transaction. On these facts the PV module transaction cannot be regarded as a component of a single composite supply with the remaining works. [Paras 23, 24, 25, 26, 27]

The supply of the PV module is a distinct transaction and is not naturally bundled with the supply of remaining components and services of the solar power plant.

Composite supply - principal supply - tax liability on composite supply determined by dominant nature - Whether the remaining portion of the contract (excluding PV modules) constitutes a composite supply and how its tax liability is to be determined - HELD THAT: - Having separated out the PV modules, the balance of the contract - comprising supply of remaining components and the services of design, erection, installation and commissioning - can be characterised as a "composite supply" because those goods and services are naturally bundled in the ordinary course of business. The tax liability on this composite portion must therefore be determined by identifying the dominant or principal nature of that supply and applying the rate applicable to that principal supply in accordance with the statutory rule governing composite supplies. [Paras 28, 30]

The remaining portion of the contract is a composite supply and its tax liability will be determined by the dominant nature of that portion (i.e., the rate applicable to the principal supply of that composite supply).

Concessional rate for solar power generating system and parts - sub-contractor supplies independent - Whether the concessional 5% GST rate on solar power generating systems and parts applies to sub-contractors - HELD THAT: - Supplies made by subcontractors to the appellant are independent supplies. If a subcontractor supplies goods that qualify as parts of a solar power generating system, those goods will be chargeable at the concessional 5% rate in terms of the relevant notification. If the subcontractor's supply is itself a composite supply, the rate applicable to the dominant nature of that subcontracted supply will determine taxability. Thus eligibility for the concessional rate depends on the character of the subcontractor's supply, not merely on their contractual position. [Paras 29]

Subcontractor supplies are independent; parts of SPGS supplied by subcontractors attract the 5% concessional rate, while composite supplies by subcontractors are taxed according to their dominant nature.

Final Conclusion: The impugned AAR order is modified: the PV module supply is distinct and not naturally bundled with the contractor's supplies; the contractor's remaining supplies constitute a composite supply whose tax is to be assessed by reference to the dominant/principal nature of that portion; and supplies by subcontractors are independent, with parts of SPGS eligible for the concessional 5% rate while composite subcontracted supplies attract the rate of their dominant element. The appeal is disposed accordingly.

Levy of GST on renting of immovable property - Exemption of healthcare services from GST - Input Tax Credit on exempt supplies - Refund of accumulated input tax credit under Rule 89 - Scope of the Appellate Authority for Advance Ruling under section 101 - Advance Ruling procedure under section 98/97

Levy of GST on renting of immovable property - Exemption of healthcare services from GST - GST is leviable on the rent paid/payable for premises taken on lease by the hospital for running its services. - HELD THAT: - The Appellate Authority examined the nature of the appellant's outward supplies and the notifications specifying the taxability of renting of immovable property. The healthcare services provided by the appellant are exempt under the relevant exemption notification. Independently, renting/letting of immovable property for use (including premises taken on lease to run the hospital) falls within the taxable entry for Real Estate Services in the rate notifications, attracting GST at the prescribed rate. Consequently, the AAR's conclusion that GST is leviable on the rent paid/payable for the leased premises was legally sustainable and is upheld. [Paras 7, 9, 10, 11]

AAR ruling that GST is leviable on rent of the leased premises is upheld.

Input Tax Credit on exempt supplies - Refund of accumulated input tax credit under Rule 89 - Scope of the Appellate Authority for Advance Ruling under section 101 - Advance Ruling procedure under section 98/97 - The appellant's plea seeking a ruling on availability/refund of input tax credit and applicability of Rule 89 was not entertained as the matter was not raised before the AAR and lies outside the scope of the appeal. - HELD THAT: - The Appellate Authority noted that no question regarding ITC on inputs used for exempt supplies or refund under Rule 89 was placed before the AAR and that the Appellate Authority's jurisdiction under the statute is limited to confirming or modifying the ruling appealed against. Issues raised for the first time in the appeal which were not the subject-matter of the AAR's ruling cannot be adjudicated in the appeal. Therefore the appellant's submissions on non-availability of ITC set-off, claim for refund of accumulated ITC and a specific ruling on Rule 89 are outside the realm of the present appeal and are not maintainable before this forum. [Paras 12]

Plea on ITC/refund and applicability of Rule 89 dismissed as not sustainable for want of prior consideration by the AAR.

Final Conclusion: The impugned Advance Ruling that GST is leviable on the rent paid/payable for premises taken on lease to run the hospital is affirmed; the additional plea on input tax credit/refund (Rule 89) raised for the first time in appeal is dismissed. The appeal is dismissed and the AAR order is upheld.

Composite supply - works contract - immovable property - principal supply - taxability of goods and services - rate of tax

Works contract - composite supply - immovable property - taxability of goods and services - rate of tax - Whether separate contracts for supply of goods and services for a solar power plant are to be treated as a single composite/works contract and taxed as a works contract (service) at 18% (9% CGST + 9% SGST) or whether they attract separate taxability of goods at 5% and services at 18%. - HELD THAT: - The Appellate Authority examined the two agreements (Supply of SPGS and Engineering & Construction) and found that, despite being drafted as separate documents, they constitute one indivisible turnkey contract for setting up the solar photovoltaic plant. The terms show that supply of goods and erection/commissioning services are inextricably linked: risk and liability remain with the supplier till plant completion; payment milestones (including retention of a percentage until completion) and contractual obligations (design, procurement, erection, testing and final acceptance) demonstrate a single unified purpose. Applying the statutory definitions, the Authority held the transaction satisfies the conditions of a composite supply and, on the facts, amounts to a contract in the nature of a works contract for erection/installation of an immovable solar power generating system. The Authority applied the tests of annexation and object of annexation from the precedents - mode and purpose of fixation, extent of site works, civil foundations, bespoke design and permanence of installation - and concluded the plant, as arranged under the contracts, is in the nature of immovable property for the purposes of the works contract definition. Accordingly, the composite/turnkey transaction is to be treated as a works contract and taxable as a supply of services at the applicable works-contract rate (18% IGST or 9% CGST + 9% SGST). [Paras 47, 49, 50, 54, 67]

The agreements collectively constitute a composite turnkey contract in the nature of a works contract for erection/installation of a solar power generating system (immovable property) and are taxable as a works contract at the rate of 18% (9% CGST + 9% SGST).

Parts of solar power generating system - classification of parts - concessional rate - Whether other parts and components supplied by the contractor (excluding PV modules supplied separately) are eligible for the concessional 5% rate as parts of solar power generating system. - HELD THAT: - The Appellate Authority recorded that the Advance Ruling Authority had not ruled on this question because no factual documents or specific contracts addressing such standalone supplies were placed before it. As the appellate body, AAAR confined itself to issues decided by the AAR and did not make a fresh determination in absence of the requisite documents and specific factual matrix. Therefore the question remains undetermined by the Authority in this appeal for want of underlying documentation and because it was not decided by the AAR. [Paras 61, 62, 68]

No decision rendered on eligibility of standalone parts/components for the 5% concessional rate; matter not decided for want of documents and because AAR had not adjudicated it.

Sub-contractors - concessional rate - eligibility of suppliers - Whether the benefit of concessional 5% rate on SPGS and its parts is available to sub-contractors. - HELD THAT: - The Authority observed that the AAR did not decide this question due to absence of documents delineating the role and contracts of sub-contractors. As an appellate authority it limited itself to issues decided by the AAR and accordingly refrained from deciding this factual/contractual question in the appeal. The Authority therefore left the matter undecided in the present proceedings. [Paras 63, 65, 69]

No decision rendered on availability of the 5% concessional rate to sub-contractors; issue remains undecided for lack of documents and because it was not decided by the AAR.

Final Conclusion: The Appellate Authority upheld the AAR's conclusion that, on the facts and contractual terms before it, the separate supply and services agreements together constitute an indivisible turnkey transaction in the nature of a works contract for erection/installation of a solar power generating system and are taxable as a works contract (supply of services) at 18% (9% CGST + 9% SGST). Questions regarding concessional 5% treatment of standalone parts/components and the availability of that benefit to sub-contractors were not decided for want of specific documents and because those questions were not adjudicated by the AAR.

Summary order. The application for advance ruling is dismissed as withdrawn.

Classification of goods - Mounted brake linings exclusion - Parts of motor vehicles (Heading 8708) - Friction material not mounted (Heading 6813) - Application of HSN Explanatory Notes and rules for interpretation of the First Schedule to the Customs Tariff Act - Tariff classification determining GST rate

Classification of goods - Mounted brake linings exclusion - Friction material not mounted (Heading 6813) - Application of HSN Explanatory Notes and rules for interpretation of the First Schedule to the Customs Tariff Act - Classification of 'Disc Brake Pads' as either under Heading 6813 or Heading 8708. - HELD THAT: - The Authority applied the rules for interpretation of the First Schedule to the Customs Tariff Act and the HSN Explanatory Notes. Heading 6813 covers friction material not mounted (for example, sheets, discs, pads) but expressly excludes mounted brake linings, including friction material fixed to a metal plate provided with circular cavities or similar fittings for disc brakes. The product before the Authority is an integrated assembly comprising friction material bonded to a steel backing plate; the manufacturing process produces an integrated mounted component used in vehicle brake assemblies. Given the express exclusion in Heading 6813 for mounted linings and the explanatory coverage in Heading 8708 for brakes and parts thereof (including mounted linings and plates), the correct classification is as parts of motor vehicles under Heading 8708. The Authority therefore rejected classification under Heading 6813 and accepted classification under Heading 8708. [Paras 5, 6]

Disc Brake Pads are not classifiable under Heading 6813 but are classifiable as parts of motor vehicles under Heading 8708.

Parts of motor vehicles (Heading 8708) - Tariff classification determining GST rate - Applicable GST rate on 'Disc Brake Pads' once classified under Heading 8708. - HELD THAT: - Having classified the product under Heading 87083000 as brakes and parts thereof, the Authority applied Notification No. 01/2017 (Central Tax Rate) read with the corresponding State notification schedules. The product falls within the entry at Sl. No. 170 of Schedule IV of Notification No. 01/2017 (CT Rate) and the corresponding State schedule, which prescribes the intra-state central and state tax rates applicable to goods classifiable in that entry. Consequently, the Authority determined the GST incidence corresponding to the heading under the notified schedule. [Paras 6, 7]

Disc Brake Pads classified under Heading 87083000 attract 14% CGST and 14% SGST as per the entries at Sl. No. 170 of the relevant notifications.

Final Conclusion: The Authority ruled that 'Disc Brake Pads' manufactured and supplied by the applicant are classifiable under Heading 87083000 as parts of motor vehicles and attract 14% CGST and 14% SGST under the relevant entries of Notification No. 01/2017 (CT Rate) and the corresponding State notification.

Classification by reference to the General Rules for interpretation of the Customs Tariff - preparations of a kind used in animal feeding - oil-cake and other solid residues resulting from extraction of oil - loss of essential characteristics of the original material - exemption under Notification No. 2/2017 - Central Tax (Rate)

Classification by reference to the General Rules for interpretation of the Customs Tariff - preparations of a kind used in animal feeding - oil-cake and other solid residues resulting from extraction of oil - loss of essential characteristics of the original material - Classification of the product 'Cattle Feed in Cake Form' as falling under Chapter Heading 2309 or Chapter Heading 2305 of the GST Tariff. - HELD THAT: - The Authority examined the product composition, manufacturing process, test reports and invoices supplied by the applicant. Heading 2305 covers oil-cake and other solid residues resulting from extraction of groundnut oil, whereas heading 2309 covers preparations of a kind used in animal feeding obtained by processing materials to such an extent that they have lost the essential characteristics of the original material. The applicant's product is manufactured by combining groundnut oil cake with broken rice, jaggery, salt and water, mixing, condensing and steaming, and the test reports show differences in composition between the groundnut oil cake raw material and the finished product. The product is marketed and invoiced as 'Cattle feed' rather than as 'groundnut oil cake'. Applying the General Rules for interpretation of the Customs Tariff and the Explanatory Notes, the Authority concluded that the finished product has undergone processing such that it is a preparation used in animal feeding and not merely an oil-cake residue. [Paras 6]

The product 'Cattle Feed in Cake Form' is classifiable under Chapter Heading 2309 (compounded animal feed).

Exemption under Notification No. 2/2017 - Central Tax (Rate) - classification by reference to the General Rules for interpretation of the Customs Tariff - Whether the classified product is exempt from tax under the relevant GST notifications. - HELD THAT: - Having held that the product is classifiable under Chapter Heading 2309 as a 'Preparation of a kind used in animal feeding' (compounded animal feed), the Authority examined the notifications applicable to supplies of goods within that heading. The Authority found that compounded animal feed falling under the relevant tariff item is covered by the exemption at Sl. No. 102 of Notification No. 2/2017-Central Tax (Rate) dated 28th June 2017 (as amended) for intrastate supplies and corresponding entries in the State and Integrated Tax notifications. Consequently, the product, as classified, attracts the stated exemption for intra-state and inter-state supplies as per the cited notifications. [Paras 6, 7]

The product, classified under Chapter Heading 23099010, is exempt from tax under Sl. No. 102 of Notification No. 2/2017-Central Tax (Rate) (and corresponding State and Integrated Tax notifications) as amended.

Final Conclusion: The Advance Ruling holds that the applicant's 'Cattle Feed in Cake Form' is classifiable under CTH 23099010 as a compounded animal feed and that such intra-state and inter-state supplies are exempt under the relevant entries of Notification No. 2/2017 (Central Tax Rate) and the corresponding State and Integrated Tax notifications.

Classification of catering services - outdoor catering - restaurant supply - supply of food and beverages on premises of service recipient - applicability of Notification No. 46/2017-C.T. (Rate) - inclusion of institutional canteens within restaurant entry by Explanation 1 - input tax credit

Classification of catering services - outdoor catering - supply of food and beverages on premises of service recipient - Tax treatment of the applicant's supply for the period up to 26.07.2018 - HELD THAT: - The applicant prepared and served food on the premises of client companies, collected coupons on behalf of the client and was remunerated by the client monthly; consumers did not pay the applicant directly. The GST Council's deliberations and Notification No. 46/2017 reflect that supplies made on the premises of the service recipient and managed as part of the recipient's canteen arrangements fall within the description of outdoor catering as understood prior to the amendment. The Council distinguished standalone restaurants (eligible for a lower rate) from outdoor caterers and retained higher rate treatment for outdoor catering. Applying that classification to the contractual facts, the Authority holds that the applicant's supplies up to 26.07.2018 fall under Sl. No. 7(v) (outdoor catering) and attract the rates prescribed thereunder.

For the period upto 26.07.2018 the applicant's supplies are covered by Sl. No. 7(v) and liable to tax at 9% CGST and 9% SGST.

Inclusion of institutional canteens within restaurant entry by Explanation 1 - applicability of Notification No. 46/2017-C.T. (Rate) - input tax credit - Tax treatment of the applicant's supply from 27.07.2018 onwards after amendment by Notification No. 13/2018 - HELD THAT: - Notification No. 13/2018 (effective 27.07.2018) amended the entries so that supplies at a canteen, mess, cafeteria or dining space of an institution by the institution or by any other person under contract are included within Sl. No. 7(i). The legislative intent recorded in GST Council minutes was to restrict Sl. No. 7(v) to event-based/occasional outdoor catering and to bring institutional contractual supplies within the lower-rated restaurant category. Consequently, identical contractual arrangements as that of the applicant fall within Sl. No. 7(i) post-amendment, subject to the statutory condition that input tax credit on goods and services used in supplying the service has not been taken, as provided in the Explanation to the entry.

From 27.07.2018 onwards the applicant's supplies are covered by Sl. No. 7(i) and liable to tax at 2.5% CGST and 2.5% SGST (subject to the condition that input tax credit has not been taken).

Final Conclusion: The Authority rules that the applicant's contractual canteen services are taxable as outdoor catering under Sl. No. 7(v) for the period upto 26.07.2018 (9% CGST + 9% SGST) and, following the 27.07.2018 amendment, are taxable under Sl. No. 7(i) as institutional canteen supplies at the concessional rate (2.5% CGST + 2.5% SGST) subject to the condition regarding non-availability of input tax credit.

Classification under SAC 9983 (Other professional, technical and business services) - definition of "Governmental Authority" for GST purposes - exemption for "pure services" to governmental authorities relating to functions entrusted under Article 243G

Classification under SAC 9983 (Other professional, technical and business services) - PMC services provided by M/s PDCOR Ltd. are classifiable under SAC Code 9983. - HELD THAT: - The Authority examined the GST tariff entries and found that the services rendered by the applicant fall within Heading 9983, which covers other professional, technical and business services. The scope of work described by the applicant-project management consultancy, review and finalisation of contractor submissions, design review, project management and related professional activities-matches the description of services captured under Heading 9983. On this basis the Authority held the services are correctly classifiable under SAC 9983. [Paras 8]

PMC services of M/s PDCOR Ltd. are classifiable under SAC 9983.

Definition of "Governmental Authority" for GST purposes - Jaipur Development Authority (JDA) is a "Governmental Authority" within the meaning adopted for GST. - HELD THAT: - The Authority applied the definition of "Governmental Authority" as incorporated in notification No.12/2017 and the Explanation to clause (16) of Section 2 of the IGST Act. JDA was found to be constituted by the Jaipur Development Authority Act, 1982, established as a statutory body to execute urban development functions and to carry out functions entrusted under Article 243G. The composition of the Authority, statutory control by the State Government (including sections evidencing control and compliance with State directions), and prior advance-ruling recognition were relied upon to conclude that JDA satisfies the statutory definition of a governmental authority. [Paras 8]

Jaipur Development Authority is a Governmental Authority for the purposes of GST.

Exemption for "pure services" to governmental authorities relating to functions entrusted under Article 243G - classification of "pure services" exclusion of works contract or composite supplies - The PMC services provided by M/s PDCOR Ltd. to JDA are "pure services" and are exempt under Sl. No. 3 of Notification No.12/2017 (as amended) insofar as they relate to functions entrusted under Article 243G. - HELD THAT: - The Authority considered the scope of services furnished by the applicant and observed they constitute "pure services" (excluding works contract or composite supplies involving supply of goods). Given the earlier finding that JDA is a governmental authority and that the services relate to a function entrusted to a Panchayat/Municipal authority under Article 243G, the services fall within Sl. No.3 of Notification No.12/2017 (Central Tax (Rate)) and the corresponding State notification. The jurisdictional officer's comments and the factual scope of the PMC assignment supported the conclusion that the exemption applies. [Paras 8]

The PMC services rendered by M/s PDCOR Ltd. to JDA are exempt from GST under Sl. No. 3 of Notification No.12/2017 (as amended).

Final Conclusion: The Authority ruled that the applicant's PMC services are classifiable under SAC 9983, that Jaipur Development Authority is a governmental authority for GST purposes, and that the PMC services provided to JDA for the Dravyavati River project are "pure services" exempt from GST under Sl. No. 3 of Notification No.12/2017 (as amended).

Works contract as supply of services - composite supply - principal supply - immovable property versus movable property - permanency and marketability test - classification under notification for Solar Power Generating System - severability / splitting of a single contract

Composite supply - principal supply - classification under notification for Solar Power Generating System - Whether the supply, installation, commissioning and maintenance of Solar Photovoltaic (SPV) water pumping systems is a composite supply with the principal supply being goods taxable at the concessional rate for Solar Power Generating System. - HELD THAT: - The Authority found that the parties intended and contracted for a single, end-to-end deliverable - a functional Solar Photovoltaic (SPV) water pumping system - comprising procurement, development, testing, commissioning and long-term maintenance, to be situated at a specified location. The contract provides for a single lump-sum price, final payment only after inspection and final acceptance, and an obligation of maintenance for a prolonged period; civil works and site development are part of the scope. These facts demonstrate that the transaction is not a mere supply of goods with ancillary services but a single integrated contract. Consequently, the question of identifying a principal supply for the purpose of treating the entire transaction as a composite supply governed by the tax rate of the principal supply does not arise because the transaction falls within the definition of a works contract under the GST law and is therefore to be treated as a supply of services rather than as a supply of goods under the notification entry for Solar Power Generating System.

The transaction is not a composite supply taxable under the concessional entry for Solar Power Generating System.

Severability / splitting of a single contract - works contract as supply of services - Whether the single contract can be bifurcated into separate contracts and separate bills issued for supply of goods and for supply of services. - HELD THAT: - On the facts and the contractual terms submitted, the contract is a single integrated contract covering supply, installation, commissioning and maintenance with a single lump-sum consideration and post-commissioning obligations (including warranty/maintenance). The terms indicate that liability and risk remain with the contractor until final acceptance. Given the integrated nature and contractual linkage of the various components, the contract cannot be legitimately split into two independent contracts for supply of goods and supply of services for tax treatment.

Separate bills for supply of goods and for supply of services cannot be issued; the contract cannot be split into two separate contracts.

Works contract as supply of services - immovable property versus movable property - permanency and marketability test - Whether the contract amounts to a works contract (i.e., a supply of services) and, if so, the applicable rate of tax. - HELD THAT: - Applying established tests from precedent - including permanence, inability to market or sell 'as is', and requirement of dismantling before relocation - the Authority observed that the SPV water pumping system is tailored to a specific site, involves civil works and foundations, cannot be shifted without dismantling, and is delivered as a functional facility with long-term maintenance obligations. These facts indicate an element of permanency and that the output is not marketable as a chattel. Therefore the transaction falls within the definition of 'works contract' under the GST law and must be treated as a supply of services. As a works contract, the transaction does not qualify for classification under the concessional notification entry applicable to Solar Power Generating Systems or Solar Power Based Devices which apply to goods supplied as such.

The contract is a works contract treated as a supply of services and attracts the tax rate applicable to works contract services.

Final Conclusion: The Authority ruled that the contract for supply, installation, commissioning and maintenance of Solar Photovoltaic (SPV) water pumping systems constitutes a works contract (supply of services), cannot be split into separate supply and service bills, is not covered by the concessional notification entry for Solar Power Generating System or Solar Power Based Devices, and therefore is taxable as a works contract under the GST law.

Exemption for services by way of extending deposits, loans or advances where the consideration is represented by way of interest or discount - definition of 'interest' excluding any service fee or other charge - classification of borrowing cost/service charge as 'interest' or as a separate service fee - taxability of services by way of extending loans or advances which are not for interest - advance ruling on characterization of consideration

Classification of borrowing cost/service charge as 'interest' or as a separate service fee - definition of 'interest' excluding any service fee or other charge - exemption for services by way of extending deposits, loans or advances where the consideration is represented by way of interest or discount - taxability of services by way of extending loans or advances which are not for interest - Borrowing cost/service charge levied by the cooperative from members for providing loans does not amount to 'interest' within the notification and is not covered by the exemption; the supply is taxable under GST. - HELD THAT: - The advance ruling examined notification No. 12/2017-Rate, entry 27, which exempts services by way of extending deposits, loans or advances to the extent the consideration is represented by interest or discount. The notification's definition (ZK) expressly excludes any service fee or other charge from the meaning of 'interest'. The society's bye-laws affirm that no interest per se is leviable and that loans are recovered by way of service charges (Borrowing cost), which include processing fees and other operational costs. Since the fee charged by the society is a service charge and not interest as defined in the notification, the supply of loan-related services against such service charges does not fall within entry 27's exemption. Consequently, such supplies attract GST in accordance with law. [Paras 8, 9, 10, 11, 12]

Supply of loans/advances by the society against service charges/borrowing cost is not exempt under entry 27 of notification No. 12/2017 and is taxable under the GST law.

Final Conclusion: Advance ruling: Borrowing cost or service charges collected by the cooperative from members for grant of loans do not qualify as 'interest' for the purpose of the notified exemption and therefore the services are taxable under GST.

Grant of installment facility - stay of coercive recovery - exercise of administrative discretion in granting installments - requirement of reasons for administrative orders

Grant of installment facility - exercise of administrative discretion in granting installments - requirement of reasons for administrative orders - stay of coercive recovery - Interim stay against coercive recovery was granted subject to specified deposits and instalments pending further orders. - HELD THAT: - The petitioner had applied for payment of its GST dues by instalments on account of financial difficulty; the impugned order refusing instalments did not assign reasons. The Court observed that the departmental circular permits the authority to exercise discretion to grant suitable instalments when financial hardship is shown. In the exercise of its supervisory jurisdiction the Court granted an interim stay of coercive recoveries until the returnable date, on the condition that the petitioner deposits 20% of the outstanding amount before that date and thereafter deposits 5% of the outstanding amount between the 1st and 5th of every month until further order. Direct service of the order was permitted.

Stay of coercive recovery granted until the returnable date on the stated conditional deposit regime; matter listed on 17.10.2018.

Final Conclusion: Conditional interim stay granted against coercive recovery on compliance with deposit conditions; matter posted for hearing on 17.10.2018.

Summary order. Petition listed; notice issued returnable on 11.10.2018 and direct service permitted.

Transitional credit under Section 140 - validity of Rule 117(1) of the CGST Rules - extension of time for filing declaration under Rule 117(1A) - rule making power to prescribe time limits for transitional declarations

Validity of Rule 117(1) of the CGST Rules - rule making power to prescribe time limits for transitional declarations - Challenge to the vires of Sub Rule (1) of Rule 117 of the CGST Rules as impermissibly adding a time limit to entitlement under Section 140 was rejected. - HELD THAT: - The court recorded that Section 140 provides for transitional credit but rule making was challenged for prescribing a 90 day time limit (extended subsequently) for filing the requisite declaration under Rule 117. The court, referring to its separate elaborate judgment delivered the same day, rejected the contention that the rule making authority lacked power to prescribe the time limit and upheld the validity of Sub Rule (1). [Paras 2]

Challenge to the vires of Sub Rule (1) of Rule 117 dismissed.

Extension of time for filing declaration under Rule 117(1A) - transitional credit under Section 140 - Petitioner's claim that an incomplete timely declaration should be covered by Sub Rule (1A) and that omission deprived it of benefit was not entertained on merits in this order. - HELD THAT: - The petitioner alleged that although the declaration was filed within the prescribed period it lacked certain details and therefore could not benefit from the later insertion of Sub Rule (1A) which permits limited extension for technical defects up to a specified date. The court declined to separately adjudicate this contention in the present petitions, noting that reasons have been given in the separate judgment and accordingly did not entertain the distinct challenge to Sub Rule (1A) in these petitions. [Paras 3]

Challenge relating to Sub Rule (1A) not entertained in this order; petition dismissed.

Final Conclusion: Both petitions are dismissed.

Summary order. Special Leave Petition dismissed; delay condoned.

Rejection of books of account under Section 145(3) - best judgment assessment - findings of fact - substantial question of law under Section 260A - cogent reasons for rejecting books

Rejection of books of account under Section 145(3) - cogent reasons for rejecting books - Validity of the Assessing Officer's rejection of the assessee's books of account under Section 145(3) - HELD THAT: - The Court accepted the factual findings recorded by the Assessing Officer that numerous purchases and expenses were from unregistered dealers, supported by hand made vouchers which could not be verified, and that various vouchers and explanations for expenses were not produced. In the absence of any material placed by the appellant to dispel these findings, the Court held that cogent reasons existed for rejecting the books of account and that there was no ground to interfere with that factual conclusion.

The rejection of books of account under Section 145(3) was upheld.

Best judgment assessment - findings of fact - Validity of the best judgment assessment framed by the Assessing Officer - HELD THAT: - The Court noted that best judgment assessments necessarily involve an element of estimation and that having rejected the books on cogent factual grounds the Assessing Officer applied a net profit rate to compute income. As the appellant failed to produce verifiable accounts or to rebut the factual basis for the assessment, the Court found no arbitrariness or illegality in the best judgment assessment and declined to interfere with the assessment made.

The best judgment assessment was sustained.

Substantial question of law under Section 260A - findings of fact - Whether a substantial question of law arises for admission of an appeal under Section 260A - HELD THAT: - Applying the settled tests for a 'substantial question of law' in appeals under Section 260A, the Court observed that the controversy turned on appreciation of facts and on findings of fact recorded by the revenue authorities. Since no arguable legal question capable of affecting substantial rights or requiring authoritative pronouncement was shown, and no material was produced to challenge the factual findings, the appeal did not raise any substantial question of law warranting interference.

No substantial question of law arises; the appeal under Section 260A is not maintainable on the proposed questions.

Final Conclusion: The High Court dismissed the appeal under Section 260A, upholding the rejection of the assessee's books under Section 145(3) and the consequent best judgment assessment, and holding that no substantial question of law was made out.

Rejection of book results under section 145 of the Income tax Act - reliance on excise show cause notices as conclusive evidence in income tax assessment - requirement of independent material by the Assessing Officer to make additions - use of statements recorded during search for assessing suppressed sales - assessment proceedings not to be deferred awaiting excise adjudication where assessment may become time barred

Rejection of book results under section 145 of the Income tax Act - requirement of independent material by the Assessing Officer to make additions - Whether the Assessing Officer was justified in rejecting the assessee's book results and framing assessment on the basis of the material placed on record. - HELD THAT: - The Court found that the Assessing Officer had not brought any independent material on record beyond the material collected by the Excise department and the show cause notices. Merely confronting the assessee with the contents of the excise show cause notices and accompanying witness statements and inviting a reply did not establish the veracity of those materials or furnish a basis to reject the books of account. Where additions are to be made, the Assessing Officer must have material of his own satisfying him about incompleteness or incorrectness of accounts; shifting the burden to the assessee to disprove the excise material is impermissible. In absence of such independent material, the assessment could not be sustained and the question of proportional quantification of sales for additions did not arise. [Paras 11, 13, 14]

Assessing Officer did not have sufficient independent material to reject book results; additions could not be sustained and are against the Revenue.

Reliance on excise show cause notices as conclusive evidence in income tax assessment - use of statements recorded during search for assessing suppressed sales - assessment proceedings not to be deferred awaiting excise adjudication where assessment may become time barred - Whether material collected by the Excise department, including show cause notices and witness statements recorded during search, could be used by the Assessing Officer to make additions in income tax assessment, and whether assessment had to be deferred pending excise adjudication. - HELD THAT: - The Court observed that excise show cause notices, being preliminary and not yet adjudicated, represent the stand of the Excise department until tested in adjudication; they do not automatically attain finality for income tax assessment. While it is not obligatory for the Assessing Officer to await completion of excise adjudication (given differing limitation regimes and potential time bar), he must still have independent and admissible material to form a belief of evasion before making additions. The mere production of excise collected documents and statements without verification or independent corroboration is insufficient to sustain additions in income tax assessment. [Paras 6, 8, 9, 11]

Excise show cause notices and accompanying materials cannot be treated as conclusive; Assessing Officer may not defer assessment merely because excise adjudication is pending, but must possess independent material before making additions.

Final Conclusion: The High Court dismissed the Revenue's appeals for Assessment Year 2005 06, holding that the Assessing Officer lacked independent material to reject books or to sustain additions based solely on excise show cause notices and related materials; while assessment need not be deferred pending excise adjudication, reliance on unverified excise material was impermissible.

Treatment of receipt as security deposit v. sale consideration - search and seizure material throwing new light for block assessment - undisclosed income in block assessment - presumption arising from material seized during search - reconciliation of seized cash slips with cash books and bank statements - onus on revenue to prove undisclosed income in block assessment - allowability of claimed commission disclosed in returns - remand for verification and quantification

Treatment of receipt as security deposit v. sale consideration - search and seizure material throwing new light for block assessment - undisclosed income in block assessment - Whether Rs. 42 crores received under the agreement dated 01.04.1995 was a security deposit or constituted undisclosed income taxable in the block assessment. - HELD THAT: - The Court examined the agreement terms, the 'Note' seized during search, statements recorded during post-search investigation and VIPL's treatment of the amount in its books. The seized confidential note indicated the arrangement was designed to defer tax liability and recorded that 95.23% of the consideration was non refundable and taxable when received. The Court accepted the Assessing Officer's conclusion that the so called security deposit operated as a device to postpone tax liability because VIPL could not claim refund and had assumed the development obligations; VIPL treated the sum as stock in trade and the parties' conduct and documentary material supported characterization as consideration. The Court held that search seized material which throws new light on prior assessments may justify bringing amounts into block assessment and that the AO was entitled to lift the veil to ascertain the transaction's true nature. On this basis the ITAT's contrary factual appraisal was set aside and the addition was restored to Revenue. [Paras 15, 16, 17, 18]

Answered for the Revenue and against the assessee; Rs. 42 crores held to be taxable (not merely a security deposit).

Presumption arising from material seized during search - onus on revenue to prove undisclosed income in block assessment - Validity of addition of Rs. 30 crores alleged to be undisclosed cash payment to Sh. S.K. Jatia for acquisition of land in Village Tigra. - HELD THAT: - The Court agreed with the CIT(A) and ITAT that the seized diary entry, not recovered from the assessee's premises, and subsequent enquiries did not provide cogent material to sustain an addition of Rs. 30 crores in the assessee's hands. The tribunal correctly held that the burden to prove undisclosed income in block assessment remained on the AO and that the diary notation and ancillary inquiries were insufficient to establish that the figure represented cash paid by the assessee. The factual findings of the lower authorities that the alleged '30' represented development charges and that independent corroboration was lacking were held to be reasonable and not to be interfered with. [Paras 22, 23, 24]

Answered against the Revenue and in favour of the assessee; addition of Rs. 30 crores deleted.

Reconciliation of seized cash slips with cash books and bank statements - remand for verification and quantification - onus on revenue to prove undisclosed income in block assessment - Correctness of additions based on seven seized cash slips totalling the amounts claimed as unaccounted cash and the scope of remand directed by the ITAT. - HELD THAT: - The Court found this to be essentially a question of fact: the CIT(A) and ITAT accepted the assessee's reconciliation of seized slips with cash balances in the company's cash book and bank statements, reducing the addition substantially. The ITAT remitted the matter for verification of the precise figure to be added after upholding the CIT(A)'s approach. Given the factual nature and the limited remand by the ITAT, the Court declined to interfere with the conclusions that most of the amounts were explained but acknowledged the remand for quantification. [Paras 26, 27, 28]

Answered in favour of the assessee on merits; remitted to the Assessing Officer in terms of the ITAT's limited remand for verification/quantification of the residual addition.

Allowability of claimed commission disclosed in returns - onus on revenue to prove undisclosed income in block assessment - Sustainability of addition of Rs. 92 lakhs disallowed as commission paid to M/s Televista Electronics Limited on sale of plot in Sushant Lok when such commission was claimed in the returns. - HELD THAT: - The Court noted that the commission was claimed in the original returns and documentary evidence (invoices) was available and that the block assessment did not unearth any fresh material to contradict the claimed expense. The AO's reliance on familial relationship and Section 40A(2) considerations did not override the documentary claim and prior consistent reporting. The lower authorities' decision to delete the addition was supported by the record and accepted as not vitiated by perversity. [Paras 29, 30]

Answered against the Revenue and in favour of the assessee; addition of Rs. 92 lakhs deleted.

Perversity review limited to factual findings - remand for verification and quantification - Whether the ITAT's overall order is perverse on law or facts in respect of the items considered. - HELD THAT: - The Court held that except for Question No.1 (where it found the ITAT's conclusion erroneous and restored the addition), there was no perversity or unreasonableness in the ITAT's factual findings on the other questions. The Court therefore partly allowed the Revenue's appeal (on Q.1) and upheld the ITAT's conclusions on Q.2 and Q.4 and the factual approach on Q.3 subject to the remand for quantification directed by the ITAT. The Court directed consequential proceedings to give effect to its answers and the limited remand. [Paras 31, 32]

Partly for the Revenue (as to Question No.1); otherwise no perversity found and other findings upheld; remand on Question No.3 to be worked out.

Final Conclusion: The Revenue's appeal is partly allowed: the Court holds that Rs. 42 crores received under the 1995 agreement constituted consideration taxable in the block assessment (answering Question No.1 for Revenue), while additions in respect of the cash payment alleged to S.K. Jatia (Question No.2) and the commission to Televista (Question No.4) are deleted in favour of the assessee; the finding on seized cash slips (Question No.3) is accepted largely for the assessee but remitted to the Assessing Officer for verification and quantification as directed by the ITAT; consequential adjustments are to follow and there is no order as to costs.

Penalty under section 271AAA of the Income Tax Act - recording of statement under section 132(4) of the Income Tax Act - substantial compliance with requirement to specify the manner of deriving undisclosed income - assessee's obligation to substantiate the manner of deriving undisclosed income - immunity from penalty on disclosure of undisclosed income

Penalty under section 271AAA of the Income Tax Act - substantial compliance with requirement to specify the manner of deriving undisclosed income - recording of statement under section 132(4) of the Income Tax Act - Whether the penalty levied under section 271AAA could be deleted on the ground that the assessee had satisfied the requirement of specifying the manner in which the undisclosed income was derived. - HELD THAT: - The Court held that the partner's recorded answer identified that the undisclosed amount was earned out of land related transactions not recorded in the books and thus amounted to specific compliance with the requirement to state the manner in which the income was earned. The inability at that stage to furnish a person wise or firm wise breakup because of sealing of a bank locker did not vitiate the disclosure. Applying the principle that statements recorded under section 132(4) are in question and answer form and that substantial compliance suffices (as explained in Commissioner of Income Tax v. Mahendra C. Shah and followed in Principal Commissioner of Income Tax v. Mukesh Ramanlal Prajapati), the Court concluded there was substantial compliance with the statutory condition entitling the assessee to immunity from the penalty. The Tribunal's deletion of the penalty was sustained, albeit for reasons slightly different from those given below by the Tribunal. [Paras 6, 7]

Penalty under section 271AAA deleted as there was substantial compliance in specifying the manner of deriving the undisclosed income.

Additions beyond disclosed amounts - impact of additional assessment on penalty deletion - Whether additions made by the Assessing Officer beyond the amounts admitted and disclosed by the assessee affected the deletion of the penalty. - HELD THAT: - The Court noted that the Assessing Officer had made additions taxing the admitted amounts in respective hands and observed that the additions outside the disclosures were not significant. The Court therefore did not find it necessary to disturb the Tribunal's order on the penalty for the present facts. However, recognising the limited nature and quantum of such additional component, the Court left open the question insofar as penalty related to that additional component is concerned. [Paras 7]

Additions beyond disclosures were not significant for the purpose of disturbing the deletion of penalty; the question in relation to penalty on that additional component is left open.

Final Conclusion: The tax appeal is dismissed. The deletion of the penalty under section 271AAA is upheld on the ground of substantial compliance in specifying the manner of deriving the undisclosed income; additions made by the Assessing Officer are not significant and the question of penalty in respect of that additional component is left open.

Revisionary power under Section 263 - erroneous and prejudicial to revenue - appeal bars to revision (Explanation 1(c) to subsection (1) of Section 263) - best judgment assessment / estimation of income - rejection of books of account - verification of statutory liabilities and applicability of Section 43B - scope of inquiry in exercise of revisional jurisdiction

Revisionary power under Section 263 - appeal bars to revision (Explanation 1(c) to subsection (1) of Section 263) - best judgment assessment / estimation of income - rejection of books of account - Validity of the Commissioner's exercise of revisional powers under Section 263 to revisit the Assessing Officer's estimation of net profit where that issue was the subject matter of appeal. - HELD THAT: - The Commissioner sought to revise the assessment on the ground that the Assessing Officer had adopted an incorrect net profit rate (15%) whereas the assessee had allegedly offered a higher rate. The court observed that the Assessing Officer, after detailed inquiry, had rejected the assessee's book results and independently estimated net profit at 15%, a conclusion that was challenged by the assessee before the appellate authority. Explanation 1(c) to subsection (1) of Section 263 confines the Commissioner's revisional power in respect of matters that have not been considered and decided in an appeal arising out of the assessment. Since the rate of net profit was the subject matter of appeal and had been considered by the Appellate Commissioner, the Commissioner exercising revisional jurisdiction could not reopen that issue. The court therefore held that the Commissioner could not validly invoke Section 263 to revisit an issue already decided in appeal. [Paras 8]

Commissioner's revision on the ground of incorrect net profit rate was not sustainable because the matter had been the subject of appeal and was beyond the scope of Section 263 revision.

Verification of statutory liabilities and applicability of Section 43B - scope of inquiry in exercise of revisional jurisdiction - erroneous and prejudicial to revenue - Whether the Commissioner could direct further inquiry into statutory liabilities (TDS, VAT, service tax) and possible disallowance under Section 43B when the Assessing Officer had estimated profit after examining payments and TDS issues but had not separately inquired into proof of deposit with government. - HELD THAT: - The Commissioner contended that statutory liabilities required verification and that disallowances under provisions such as Section 43B could not be ruled out without checking actual deposit. The court found that the Assessing Officer had taken a holistic view in arriving at the estimated net profit and had examined payments and TDS aspects while rejecting the books and estimating income. Although there was no separate inquiry or express finding in the assessment order specifically on non-deposit under Section 43B, the Commissioner only referred to a possibility of non-allowability without having formed a prima facie conclusion. The court held that mere speculative reference to potential disallowance and directing a fresh fishing inquiry was not sustainable in revision. The court nevertheless clarified that it was not expressing unconditional acceptance of the broader contention that once book results are rejected and profit is estimated, no disallowance can ever be made; that question was left open for determination in an appropriate case. [Paras 9]

Commissioner's direction for further inquiry into statutory liabilities and possible Section 43B disallowance could not be sustained because the Assessing Officer had already considered the payments in arriving at the estimated profit and the Commissioner did not record a prima facie conclusion justifying revision.

Final Conclusion: The tax appeal is dismissed: the Tribunal's reversal of the Commissioner's Section 263 revision is upheld - the Commissioner could not validly revisit an issue already decided in appeal nor sustain revision based on speculative need for further inquiry into statutory liabilities when the Assessing Officer had considered those aspects in estimating profit.

Compounding of offence under section 276C(1) - Interpretation of the expression "amount sought to be evaded" in compounding guidelines - Application of CBDT compounding guideline para 12.2 - Compounding fees computed as 100% of the tax sought to be evaded

Interpretation of the expression "amount sought to be evaded" - Application of section 276C(1) to compounding fee calculation - Whether the phrase "amount sought to be evaded" in CBDT para 12.2 refers to the tax sought to be evaded or to the income (amount of income) sought to be evaded - HELD THAT: - Para 12.2 of the CBDT compounding guidelines prescribes compounding fees for offences under section 276C(1) at "100% of the amount sought to be evaded." Section 276C(1) penalises willful attempts to evade any tax, penalty or interest and prescribes differing punishments linked to the quantum of the amount sought to be evaded. The court held that the phrase must be understood in light of section 276C(1) and relates to the attempt to evade tax, penalty or interest. Consequently, when the circular prescribes 100% of the amount sought to be evaded, that percentage applies to the tax sought to be evaded (i.e., the tax consequence of the addition), not to the gross amount of income in respect of which an addition was made. Applying that principle to the present case yields basic compounding fees equal to 100% of the tax sought to be evaded rather than 100% of the income added in assessment. [Paras 11, 12]

The expression "amount sought to be evaded" in para 12.2 must be read as referring to the tax sought to be evaded; basic compounding fees are 100% of that tax.

Compounding computation and refund on fresh calculation - Validity of departmental computation under compounding guidelines - Whether the departmental computation treating the compounding fee as 100% of the income addition was valid, and the consequence of the court's conclusion on computation/payment/ refund - HELD THAT: - The departmental annexure computed the basic compounding fee as 100% of the income addition and added consequential components to arrive at the demanded sum. The court found that computation incorrect because the basic fee must be 100% of the tax sought to be evaded. The impugned communication demanding the higher amount was set aside. The respondent was directed to carry out a fresh computation of the petitioner's liability in accordance with the correct legal interpretation and to refund any excess amount paid by the petitioner. The court recorded that the petitioner had paid the demanded amount under protest and gave a timeline for refund of the excess. [Paras 12]

The departmental computation is set aside; fresh computation to be undertaken applying 100% of the tax sought to be evaded as basic compounding fee and any excess paid shall be refunded.

Final Conclusion: The communication demanding compounding fees on the basis of 100% of the income addition is quashed; compounding fees shall be recalculated with the basic fee equal to 100% of the tax sought to be evaded, the departmental computation set aside and any excess amount already paid to be refunded pursuant to fresh computation.

Giving effect order under Section 144C(13) - remand to Dispute Resolution Panel - interpretation of Tribunal order regarding setting aside assessment order - maintainability of writ against assessment proceedings - right to statutory appeal to the Income Tax Appellate Tribunal

Giving effect order under Section 144C(13) - maintainability of writ against assessment proceedings - right to statutory appeal to the Income Tax Appellate Tribunal - Validity and justiciability of the impugned order dated 31.12.2017 and appropriate forum for adjudication - HELD THAT: - The Court considered rival contentions whether the impugned proceedings of 31.12.2017 amount to a valid assessment order given in consequence of directions by the Dispute Resolution Panel and whether the writ petitions challenging that order are maintainable. Noting that the respondent contends the order was passed under Section 144C(13) and that the petitioner has a statutory remedy of appeal to the Income Tax Appellate Tribunal, the Court declined to adjudicate the substantive merits. The Court observed that the Tribunal's earlier order of 29.07.2016 remitted issues to the Dispute Resolution Panel and that the effect of that order on the status of the assessment dated 21.01.2016 requires clarification by the Tribunal. Rather than entertain the writ petitions, the Court granted liberty to the petitioner to file a statutory appeal against the impugned order before the Tribunal, directing the Tribunal to consider the appeal on merits and in accordance with law, uninfluenced by the High Court's observations and without reference to limitation.

Writ petitions disposed by directing petitioner to file statutory appeal before the Income Tax Appellate Tribunal within four weeks; Tribunal to decide on merits and in accordance with law.

Interpretation of Tribunal order regarding setting aside assessment order - remand to Dispute Resolution Panel - Whether the Tribunal's order dated 29.07.2016 set aside the assessment order dated 21.01.2016 or merely remitted issues for speaking directions - HELD THAT: - The Court examined the Tribunal's order and found it recorded an inclination to remit issues to the Dispute Resolution Panel and noted the appeal was 'partly allowed for statistical purposes.' The Court declined to resolve the competing interpretations of the Tribunal's effect on the assessment order, observing that such clarification should be sought from the Tribunal itself. Consequently, the Court refrained from expressing any view on the merits of the contention and left it open for determination by the Tribunal when the statutory appeal against the impugned order is filed.

Question as to the effect of the Tribunal's 29.07.2016 order on the assessment dated 21.01.2016 is left for the Tribunal to clarify; remitted to Tribunal by permitting statutory appeal.

Final Conclusion: Writ petitions disposed of by granting liberty to the petitioner to file a statutory appeal against the order dated 31.12.2017 before the Income Tax Appellate Tribunal within four weeks; the Tribunal is directed to decide the appeal on merits and in accordance with law, uninfluenced by observations in these petitions and without regard to limitation.

Comparability in transfer pricing - not-for-profit entities as comparables - functional dissimilarity - related party transactions affecting comparability - Transactional Net Margin Method (TNMM) - arm's length price - Rule 10B(2) comparability filters

Comparability in transfer pricing - not-for-profit entities as comparables - functional dissimilarity - related party transactions affecting comparability - Rule 10B(2) comparability filters - Transactional Net Margin Method (TNMM) - Exclusion of Media Research Users Council (MRUC) from the comparable set for benchmarking the international transaction in respect of market support services. - HELD THAT: - The Tribunal excluded MRUC from the comparable set on multiple and cumulative grounds which the High Court upheld. The Tribunal's findings-adopted by the Court-emphasised functional dissimilarity: MRUC is a not-for-profit body which does not assume commercial risk, operates to serve its members (advertisers, publishers, agencies and media), and does not distribute surplus to members. Under TNMM the net profit margin and profit-seeking character are material; a not-for-profit entity that does not aim to make and distribute profits is therefore functionally dissimilar to a profit-oriented taxpayer. The Tribunal further found that MRUC outsourced the bulk of its operations to a third-party research agency (constituting a high proportion of expenses), a business model divergent from the taxpayer's operations. MRUC also failed the turnover filter applied by the Transfer Pricing Officer and had substantial revenues arising from membership/subscription fees (constituting related party transactions), undermining the independence of its prices. These features rendered MRUC unsuitable as a comparable under the criteria in Rule 10B(2) and the arm's-length analysis under TNMM. The High Court considered these factual and legal determinations sufficient to justify exclusion and declined to interfere. [Paras 5, 6, 7]

MRUC excluded from the list of comparables; the Tribunal's decision in this respect is upheld.

Final Conclusion: The Revenue's appeal is dismissed in limine; the Tribunal was justified in excluding MRUC from the comparable set and no notice on the condonation application is to be issued.

Provision for warranty deduction - Provision recognition criteria - Accrual concept - Matching concept - Scientific basis / historical trend for provisioning - Non-speaking order

Provision for warranty deduction - Provision recognition criteria - Accrual concept - Matching concept - Scientific basis / historical trend for provisioning - Entitlement to deduction for provision made for warranty where provision is computed on a scientific basis and based on past experience - HELD THAT: - The Court applied the principles explained by the Hon'ble Supreme Court in Rotork Controls India (P) Ltd. regarding when a provision may be recognised: a present obligation from a past event, probability of outflow, and a reliable estimate. The Tribunal's reliance on an earlier Division Bench decision was misplaced because that decision was subsequently reversed by the Supreme Court. The Assessing Officer's insistence on accounting for warranty expenses only when actually incurred was rejected as inconsistent with the accrual and matching concepts and with applicable accounting standards. The assessee produced movement of provision and supporting details showing provisioning from 2001 onwards, computation based on turnover of the last three years and expected repair expenses under sale agreements; the CIT(A) correctly accepted that the provision was not ad hoc but based on a scientific method and past experience. On these grounds the Court held the provision deductible. [Paras 6, 11, 12, 13, 15]

Provision for warranty computed on a scientific basis and satisfying the recognised criteria for provisioning is allowable as a deduction; the assessee succeeds on this issue.

Non-speaking order - Reasoned order requirement - Validity of the Tribunal's order which reversed the CIT(A) without reasons and without considering material on record - HELD THAT: - The High Court observed that the impugned Tribunal order was bereft of particulars and constituted a non-speaking order by failing to apply its mind to the materials placed before it, including the detailed explanations and documents furnished by the assessee. Although such a defect could justify remand, the Court proceeded to decide the substantive questions on merit given the lapse of time and available material. Having examined the record and applicable precedent, the Court held that the Tribunal erred in reversing the CIT(A) and that the CIT(A)'s reasoned acceptance of the provision should be restored. [Paras 5, 6, 16, 17]

The Tribunal's non-speaking reversal of the CIT(A) was erroneous; the Tribunal order is set aside and the order of the CIT(A) is restored.

Final Conclusion: The appeal is allowed: the Tribunal's order is set aside and the order of the CIT(A), which had allowed the provision for warranty as an allowable deduction on a scientific basis, is restored; the substantial questions of law are answered in favour of the assessee and against the Revenue.

Exemption under Section 10(23C)(iiiad) - Revision under Section 264 of the Income Tax Act - Service of notice under Sections 148, 142(1) and 144 - Jurisdiction of assessing authority - Remand for fresh consideration and hearing

Revision under Section 264 of the Income Tax Act - Service of notice under Sections 148, 142(1) and 144 - Exemption under Section 10(23C)(iiiad) - Jurisdiction of assessing authority - Remand for fresh consideration and hearing - Impugned revisional order set aside and matter remitted to Principal Commissioner for fresh consideration of the revision, including all grounds raised by the petitioner. - HELD THAT: - The Revisional Authority dismissed the revision on merits without addressing a pleaded ground that notices under Sections 148, 142(1) and 144 were not served and other contentions including jurisdiction of the assessing authority and claim to exemption under Section 10(23C)(iiiad). Respondents accepted that the non-service ground was not considered. In view of the omission to deal with all issues raised in the revision, the High Court concluded that the correct course is to set aside the impugned order and remit the matter to the Principal Commissioner of Income Tax, Gwalior, to decide the revision afresh after affording the petitioner an opportunity of hearing and addressing all contentions raised in the revision. No adjudication was made on the merits of the exemption claim or on jurisdiction; those questions are to be examined by the Revisional Authority on reconsideration.

Impugned order dated 19/03/2018 set aside; matter remitted to the Principal Commissioner of Income Tax, Gwalior, to decide the revision afresh after hearing and considering all grounds raised.

Final Conclusion: The petition is allowed in part: the revisional order is set aside and the matter is remitted to the Principal Commissioner of Income Tax, Gwalior, to reconsider the revision and decide all issues raised after hearing the petitioner, to be completed expeditiously and in any event within 30 days from communication of this order. No costs.

Ad-hoc disallowance for personal expenses - disallowance under section 14A read with Rule 8D - attribution of personal expenses to corporate/HUF assessee - notice under section 153A treated as not pressed

Ad-hoc disallowance for personal expenses - attribution of personal expenses to corporate/HUF assessee - Sustainability of 10% ad-hoc disallowance on account of personal use of telephone, car and related expenses. - HELD THAT: - The Tribunal found that neither the Assessing Officer nor the Commissioner (Appeals) had pointed to any specific instance of inflation, capital nature of claimed expenditure, or other material defect in the books, vouchers and bank statements produced by the assessee. For the company-assessee the Tribunal emphasised that a corporate entity is legally distinct and personal expenses of directors cannot be attributed without supporting evidence. For the HUF-assessee the Tribunal noted that while some personal use by the Karta may be possible, the AO made no specific findings or factual determinations to justify a blanket, generalized ad-hoc disallowance. In both instances the authorities below sustained the addition by general observation rather than on recorded, particularised findings; the AO could and should have raised specific objections at assessment if dissatisfied with the particulars furnished. [Paras 5, 12]

Ad-hoc disallowance at 10% on account of personal use deleted for the years under consideration; ground allowed.

Disallowance under section 14A read with Rule 8D - Validity of disallowance under section 14A read with Rule 8D where no exempt income was earned in the relevant assessment years. - HELD THAT: - The Tribunal observed that the assessee had not earned any exempt income in the years under consideration. Applying the precedents of the Delhi and Madras High Courts (and noting the Supreme Court's dismissal of SLP in the Madras High Court matter), the Tribunal held that the authorities could not sustain a section 14A disallowance computed under Rule 8D in the absence of any exempt income for the assessment year. The Tribunal treated the view in Cheminvest Ltd. and the Madras High Court decisions (as approved by the Supreme Court by dismissal of SLP) as squarely applicable and binding on the facts before it, and rejected the Revenue's reliance on Circular No.5/2014 as a basis to sustain the disallowance in the absence of exempt income. [Paras 6, 15]

Disallowance computed under section 14A read with Rule 8D deleted for the years under consideration; ground allowed.

Notice under section 153A treated as not pressed - Contestation of issuance of notice under section 153A. - HELD THAT: - The assessee did not press the ground challenging the issuance of notice under section 153A before the Tribunal; accordingly the ground was treated as not pressed and dismissed without adjudication on merits.

Ground challenging issuance of notice under section 153A dismissed as not pressed.

Final Conclusion: Appeals partly allowed: the Tribunal deleted the 10% ad-hoc disallowance for personal use and set aside the disallowance under section 14A read with Rule 8D for the assessment years 2008-09 to 2011-12; the challenge to issuance of notice under section 153A was not pressed and stands dismissed.

Disallowance under section 40A(3) of the Income Tax Act for cash payments exceeding prescribed limit - assessment of household withdrawals by estimation - remand for fresh verification and cross verification with supplier's books - opportunity of being heard on re examination

Assessment of household withdrawals by estimation - estimation of unexplained withdrawals as income - Confirmation of addition on account of low household withdrawals - HELD THAT: - The Assessing Officer estimated household withdrawals because no withdrawals were shown in the audited capital account and the assessee contended that her husband met household expenses. The Commissioner (Appeals) reduced the AO's estimated addition and confirmed a part of it. The Tribunal found that disclosure of a modest total income against a large turnover, together with absence of any claimed household withdrawals in the books, did not render the appellate authority's conclusion unreasonable. The Tribunal therefore saw no infirmity in confirming the reduced estimated addition for household withdrawals. [Paras 5, 6]

Addition of Rs. 1,00,000 as estimated low household withdrawals confirmed; assessee's challenge dismissed.

Disallowance under section 40A(3) of the Income Tax Act for cash payments exceeding prescribed limit - remand for fresh verification and cross verification with supplier's books - opportunity of being heard on re examination - Validity of disallowance under section 40A(3) in respect of alleged cash payments of Rs. 1,00,72,000 - HELD THAT: - The ledger of the trading counterparty showed large opening and closing credit balances, substantial aggregate purchases and exclusively cash payments, with individual payments below Rs. 20,000 but aggregating beyond the prescribed limit on various dates. The Tribunal observed that the factual matrix and modus operandi required detailed verification, including cross checking whether the supplier's books record corresponding cash receipts and consideration of authorities relied upon by the assessee. Both parties agreed to remand and the Revenue raised no objection to re examination. The Tribunal therefore set aside the disallowance to the file of the Assessing Officer for fresh verification, application of section 40A(3) in light of the facts and relevant judgments, and after affording the assessee an opportunity of being heard. [Paras 7, 9, 10]

Disallowance under section 40A(3) set aside to the file of the Assessing Officer for fresh verification and decision; matter remanded for reconsideration.

Final Conclusion: Appeal partly allowed for statistical purposes: addition for low household withdrawals of Rs. 1,00,000 confirmed; disallowance under section 40A(3) set aside and remanded to the Assessing Officer for fresh verification and decision after affording opportunity to the assessee.

Disallowance of commission as bogus expenditure - genuineness of commission payments and proof of services - shift of income / tax arbitrage - assessability of remuneration or commission purportedly of HUF where no detriment to HUF assets - requirement of deployment of family assets or infrastructure for HUF to earn commission income

Disallowance of commission as bogus expenditure - genuineness of commission payments and proof of services - shift of income / tax arbitrage - Addition of Rs. 3,39,253/- paid to Smt. Ginnidevi Palaria as commission was upheld. - HELD THAT: - The Tribunal upheld the appellate authority's finding that the assessee failed to furnish evidence of services, infrastructure or capital deployed by Smt. Ginnidevi Palaria to justify the commission payment. The appellate authority noted that the alleged third party engagement was with a family concern operating from the same address and that the payee's advanced age (about 92 years) cast doubt on her capacity to provide active services. In those circumstances, and given that the arrangement resulted in tax benefit to the assessee (tax arbitrage), the payment was treated as not representing genuine expenditure and the disallowance was sustained. [Paras 4]

Addition of Rs. 3,39,253/- on account of commission paid to Smt. Ginnidevi Palaria is upheld.

Assessability of remuneration or commission purportedly of HUF where no detriment to HUF assets - requirement of deployment of family assets or infrastructure for HUF to earn commission income - shift of income / tax arbitrage - Addition of Rs. 6,89,891/- paid to Sanjay Palaria HUF as commission was upheld. - HELD THAT: - The Tribunal agreed with the appellate authority that the HUF had not deployed any assets, resources, infrastructure or personnel for earning the commission income and that particulars produced (ITR showing only the commission and nominal expenses) did not demonstrate that the remuneration was an accretion to HUF assets. Applying the principles that where remuneration is not earned by detriment to joint family assets it is assessable to the individual who actually rendered the services, and noting the substantial tax advantage to the assessee-firm, the payment to the HUF was held not allowable. The appellate authority also observed that allowance of similar payment to the individual karta did not validate payment to the HUF where no HUF resources were used. [Paras 4]

Addition of Rs. 6,89,891/- on account of commission paid to Sanjay Palaria HUF is upheld.

Final Conclusion: Both disallowances totalling Rs. 10,29,144/- (commission payments to Smt. Ginnidevi Palaria and to Sanjay Palaria HUF) were upheld and the assessee's appeal is dismissed.

Revision under section 263 - change of opinion - opinion of audit party - disallowance under Section 14A - remand for verification

Revision under section 263 - change of opinion - opinion of audit party - Validity of the Principal Commissioner's exercise of revisional power under section 263 in relation to the assessment for AY 2010-11. - HELD THAT: - The Tribunal found that the assessing officer had not examined or verified the specific issues later taken up by the Pr. CIT in the revisional order. The assessee admitted an erroneous depreciation claim during the reassessment proceedings, and there was no material to show that the AO had made requisite enquiries on the disputed points. Relying on the reasoning in CIT v. Amitabh Bachchan, the Court held that where the revisional authority considered matters overlooked in the assessment and afforded opportunity to the assessee in the revisional process, exercise of power under section 263 was justified. On the facts, the revisional authority was entitled to direct the AO to re-examine the issues and re-do the assessment on merits; therefore the revision was not vitiated as merely founded on audit objection or as amounting to an impermissible change of opinion. [Paras 8]

Assessee's challenge to the order under section 263 is dismissed; the revisional order is upheld.

Disallowance under Section 14A - opinion of audit party - Validity of disallowance under Section 14A where no exempt income is earned in the relevant year. - HELD THAT: - The Tribunal observed that coordinate bench decisions and the Delhi High Court in Cheminvest Ltd. support that section 14A does not apply where no exempt income is received or receivable in the relevant year. Subject to verification that the assessee had not earned any exempt income during the relevant previous year, the Tribunal treated the grounds challenging the Section 14A disallowance as allowable in favour of the assessee. The Tribunal declined to enter into further adjudication as it would be academic absent verification of exempt income. [Paras 11]

Grounds challenging the Section 14A disallowance are treated as allowed subject to verification that no exempt income was earned in AY 2010-11.

Remand for verification - Whether interest relating to capital work-in-progress should be capitalized or can be held to have been financed from internal accruals. - HELD THAT: - The assessee claimed that the capital work-in-progress was funded from internal accruals and not from interest-bearing funds; however, it did not furnish supporting evidence before the CIT(A). Financial statements showed interest expenses, but the link to specific borrowings was not established. The Tribunal considered it appropriate to remit the matter to the assessing officer to verify the assessee's contention and the source of funds for the capital work-in-progress rather than decide the issue on the material then on record. [Paras 12]

Issue remanded to the AO for verification of the source of funds for the capital work-in-progress; treated as allowed for statistical purposes pending verification.

Final Conclusion: The revision under section 263 is upheld and the assessee's appeal against the revisional order is dismissed; the challenge to the Section 14A disallowance is allowed subject to verification that no exempt income arose in AY 2010-11; the question of capitalization of interest in respect of capital work-in-progress is remanded to the assessing officer for verification.

Order of determination - appeal under Section 9C - negative final finding / termination of investigation - quasi judicial determination - Designated Authority acting for and on behalf of the Central Government - Rule 14 termination - Rule 17 final findings - Rule 18 notification imposing anti dumping duty - alternative efficacious remedy - wholly without jurisdiction

Order of determination - negative final finding / termination of investigation - appeal under Section 9C - Designated Authority acting for and on behalf of the Central Government - quasi judicial determination - Rule 17 final findings - Rule 18 notification imposing anti dumping duty - Termination/negative final finding by the Designated Authority under the Rules is an "order of determination" appealable under Section 9C of the Customs Tariff Act, 1975. - HELD THAT: - Section 9C provides an appeal against an "order of determination" regarding existence, degree and effect of dumping. The Designated Authority, though appointed under the Rules, performs a quasi judicial investigation into existence, degree and effect of dumping and acts for and on behalf of the Central Government when performing those functions. Where the Designated Authority issues a negative final finding or terminates an investigation under Rule 14, that finding is final and binding on the Central Government and does not require a subsequent notification under Rule 18. Such negative final finding therefore constitutes a determinative "order of determination" within the meaning of Section 9C and is amenable to appeal. Conversely, where the Designated Authority issues a positive recommendation, the Central Government's subsequent notification under Rule 18 may alter or conclude the determination; but that factual distinction does not exclude negative findings from being appealable. The statutory scheme and purpose of Section 9C must be given a practical and liberal construction to afford an efficacious appellate remedy against quasi judicial determinations of the Designated Authority. [Paras 31, 36, 37, 38, 40]

A termination/negative final finding by the Designated Authority is an "order of determination" and is appealable to the Appellate Tribunal under Section 9C.

Alternative efficacious remedy - appeal under Section 9C - wholly without jurisdiction - Whether the writ petition should be entertained despite availability of the statutory appellate remedy or whether the petitioner should be relegated to appeal under Section 9C. - HELD THAT: - The court examined whether the impugned order was "wholly without jurisdiction" such that alternative remedy could be bypassed. The alleged procedural errors and statutory violations raised by the petitioner do not establish that the Designated Authority acted wholly without jurisdiction. The statutory appellate remedy under Section 9C is efficacious and more appropriate for adjudication of the merits and procedural challenges, since the Appellate Tribunal has broad powers to examine both facts and law. Consequently, the High Court should not exercise discretionary writ jurisdiction to entertain the petition where a competent, efficacious statutory appeal exists. [Paras 41, 42]

Writ petition not entertained; petitioner is relegated to file appeal under Section 9C before the Appellate Tribunal (with liberty to seek limitation related relief if necessary).

Final Conclusion: Preliminary objection upheld. The writ petition is declined for non entertainment because an efficacious alternative remedy exists by way of appeal under Section 9C of the Customs Tariff Act, 1975 against the Designated Authority's termination/negative final finding; petitioner is granted liberty to file such appeal (and, if necessary, an application in respect of limitation).

Validity of public notices issued under Regulations made under the Customs Act - Know Your Customer (KYC) norms for Customs Cargo Service Providers - scope of 'customs cargo service provider' under the Handling of Cargo in Customs Areas Regulations, 2009 - authority of the Commissioner to specify conditions for Customs Cargo Service Providers - penalty under Section 114 of the Customs Act, 1962

Validity of public notices issued under Regulations made under the Customs Act - Know Your Customer (KYC) norms for Customs Cargo Service Providers - scope of 'customs cargo service provider' under the Handling of Cargo in Customs Areas Regulations, 2009 - authority of the Commissioner to specify conditions for Customs Cargo Service Providers - Public Notice No.17 of 2012 is effective insofar as it requires Freight Forwarders to follow KYC norms because it is issued pursuant to powers under the Handling of Cargo in Customs Areas Regulations, 2009. - HELD THAT: - The Regulations, promulgated under the Customs Act, apply to 'customs cargo service provider' defined to include any person engaged in handling imported and exported goods. Regulation 5 empowers the Commissioner of Customs to require such providers to meet conditions, including in relation to export cargo. The Central Board's Circular No.9 of 2010 recommended KYC norms for Customs House Agents and directed Commissioners to bring the request to trade notice by suitable public notice. The Public Notice impugned here, extending the KYC requirement to Freight Forwarders, thus finds its source in the Regulations read with the Board's circular and the Commissioner's power to specify conditions for customs cargo service providers. Accordingly, the question challenging the legal basis of the Public Notice does not disclose a substantial question of law requiring admission. [Paras 3]

Question challenging the Public Notice's legal basis not entertained; Public Notice held to be within statutory framework and binding on the appellants.

Penalty under Section 114 of the Customs Act, 1962 - Whether imposition of penalty under Section 114 was justified despite the Tribunal recording that the appellant was not involved in smuggling of Red Sanders. - HELD THAT: - The High Court entertained this substantial question of law and admitted the appeals on this point for consideration. The order records admission of the appeals on the re-framed question concerning the Tribunal's imposition of penalty after recording the absence of involvement in smuggling, but does not decide the merits of that question in the present order. [Paras 3]

Appeals admitted and placed for adjudication on the substantial question whether penalty under Section 114 was rightly imposed despite a finding of no involvement in smuggling.

Final Conclusion: The challenge to the Public Notice was rejected as the Notice was held to rest on powers conferred by the Handling of Cargo in Customs Areas Regulations, 2009 and related Board directions; the appeals were admitted for decision on the separate substantial question whether imposition of penalty under Section 114 was justified after the Tribunal found no involvement in smuggling.

Discretionary power to impose penalty under Section 117 of the Customs Act, 1962 - ineligibility for duty exemption under Notification No.12/2012-Cus - re-export of imported goods with waiver of show-cause notice - allegation of arbitrary or mala fide exercise of discretion - related-party transaction and non-registration with Special Valuation Branch

Ineligibility for duty exemption under Notification No.12/2012-Cus - The findings that the imported gold bars were not eligible for duty exemption under Notification No.12/2012-Cus were upheld. - HELD THAT: - The authority examined the material and found that the gold bars lacked the required engraving of weight in metric units and therefore did not satisfy the conditions of Notification No.12/2012-Cus. On that factual and legal basis the Bill of Entry was not entitled to the claimed exemption, which formed the basis for returning the Bill of Entry and initiating provisional steps leading to re-export permission.

The determination of ineligibility for exemption was upheld.

Discretionary power to impose penalty under Section 117 of the Customs Act, 1962 - re-export of imported goods with waiver of show-cause notice - related-party transaction and non-registration with Special Valuation Branch - The imposition of penalty of Rs. 1,00,000/- under Section 117 while permitting re-export was sustainable and not interfered with by the Court. - HELD THAT: - Section 117 confers a discretionary power to impose a penalty not exceeding one lakh rupees for contraventions where no express penalty is provided. The Principal Commissioner, upon finding the goods ineligible for exemption and noting relevant facts including related-party relationship with the supplier and absence of prior registration with the Special Valuation Branch, exercised that discretion and imposed the maximum penalty while allowing re-export and waiving further show-cause proceedings. The Court found no allegation or material establishing that the discretion was exercised arbitrarily or mala fide, and in the absence of such a challenge there was no legal infirmity warranting interference with the exercise of discretion.

The imposition of penalty under Section 117 in the circumstances was sustained.

Allegation of arbitrary or mala fide exercise of discretion - No question of law arose from the appellant's contention that the Tribunal confirmed the orders without assigning reasons or that the penalty was contrary to law. - HELD THAT: - The appellant's contentions that the Tribunal failed to assign reasons and that the penalty was contrary to circulars or law were considered but not supported by any pleading or material alleging arbitrariness or mala fides in the exercise of discretion. Where discretionary action is challenged, interference by the Court is limited to cases of arbitrary or mala fide exercise; absent such a case, the appellate and judicial bodies will not substitute their view. The High Court therefore found no sustainable legal question to entertain.

The challenge to the Tribunal's confirmation and the broader contentions on legality were rejected for want of a demonstrable arbitrary or mala fide exercise of discretion.

Final Conclusion: The appeal is dismissed; the Tribunal's order upholding the Principal Commissioner's decision permitting re-export and imposing penalty under Section 117 is sustained, no arbitrariness or mala fide exercise of discretion having been shown.

Concessional rate of customs duty - use in manufacture - Customs (Import of Goods under Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 - Rule 8 - Recovery of duty - jurisdiction of Central Excise authorities - remand for fresh consideration

Rule 8 - Recovery of duty - use in manufacture - concessional rate of customs duty - Whether the Tribunal's allowance of the assessee's appeal was sustainable in the absence of any finding on whether the imported batteries were used in the manufacture of excisable goods and without application of Rule 8 of the 1996 Rules. - HELD THAT: - The High Court found that the Tribunal allowed the assessee's appeal without addressing the central statutory provision - Rule 8 of the Customs (IGCRDMEG) Rules, 1996 - which requires the proper officer to ensure that imported goods are used for the intended manufacture and empowers recovery where that condition is not fulfilled. The Tribunal's reasoning did not contain any finding on how the batteries were actually used in manufacture of mobile handsets, nor did it consider the effect of Rule 8 and related rules which go to the entitlement to the concessional rate. The Tribunal also recorded, in effect, a view that questions of whether batteries are part of handsets fall outside Central Excise adjudication, but did not apply Rule 8 or decide the factual question of use. Because the determinative legal and factual issues were neither examined nor decided by the Tribunal, its order could not stand on the record before the Court. [Paras 8, 9]

Tribunal's order set aside and matter remanded for fresh adjudication on merits with specific consideration of Rule 8 and a finding on whether the imported batteries were used in manufacture of excisable goods.

Jurisdiction of Central Excise authorities - remand for fresh consideration - Whether the appeal requires remand to the Tribunal for fresh decision on merits. - HELD THAT: - The High Court concluded that because the Tribunal failed to address the crucial statutory provision and omitted any finding on factual use of the imported batteries, the proper course is to remit the matter. The Court observed that the Tribunal misconstrued the purpose and effect of the 1996 Rules and did not examine whether the imported goods met the conditions for concession. Accordingly, the High Court restored the matter to the Tribunal to be decided afresh in accordance with law, allowing the Revenue's appeal against the Tribunal's order. [Paras 10, 11]

Appeal allowed; impugned CESTAT order set aside and the matter remanded to the Tribunal for fresh decision on merits.

Final Conclusion: The Revenue's appeal is allowed; the CESTAT order dated 23.06.2014 is set aside and the matter is restored to the Tribunal for fresh adjudication on the merits, with directions to consider and apply Rule 8 of the Customs (IGCRDMEG) Rules, 1996 and to record findings on whether the imported batteries were used in the manufacture of excisable goods.

Advance authorization / actual user condition under FTP - transfer to job worker for processing under para 4.35 of HBP - non-transferability and prohibition on sale of materials under Notification 18/2015-Cus. - confiscation under section 111(d) and 111(o) of the Customs Act - penalty under section 114A and section 112(b) of the Customs Act - transfer of ownership versus mere transfer of possession (sale under the Sale of Goods Act, 1930)

Advance authorization / actual user condition under FTP - non-transferability and prohibition on sale of materials under Notification 18/2015-Cus. - confiscation under section 111(d) and 111(o) of the Customs Act - penalty under section 114A and section 112(b) of the Customs Act - transfer of ownership versus mere transfer of possession (sale under the Sale of Goods Act, 1930) - Whether the imported raw cashew nuts (RCN) were diverted or sold in breach of the conditions of the advance authorizations and Notification 18/2015-Cus., thereby justifying demand of duty foregone, confiscation and penalties. - HELD THAT: - The Tribunal examined the material relied upon by the Department and the appellants' evidence and statements. The Show Cause Notice alleged diversion/sale of 2801.47 MTs of imported RCN, but the record lacked direct evidence of sale, such as invoices, challans or sales tax documents evidencing transfer of ownership. The seized Mahazar and witness statements indicated that imported RCN were dispatched to multiple processing units under transport documents (form KK) for job work and that ownership was retained by the importer. The statutory provision and the Handbook of Procedures permit transfer to a job worker for processing subject to conditions, and the mere dispatch to processing units not endorsed on the licence, without evidence of transfer of ownership, does not ipso facto establish sale. The appellants produced proof of exports and realisation of foreign exchange corresponding to the SION requirements. The Tribunal found the non-inclusion of all supporting manufacturers in the authorisations to be a procedural lapse, not evidence of substantive diversion or sale causing loss of the raison d'e tre of duty-free import. On this basis the Tribunal held that the demand, confiscation and penalties founded on alleged diversion/sale could not be sustained. [Paras 8, 9, 10, 11]

Findings of diversion/sale and consequent demand of duty, confiscation and penalties set aside; allegations of sale unsupported and demand/penalties unsustainable.

Transfer to job worker for processing under para 4.35 of HBP - advance authorization / actual user condition under FTP - non-transferability and prohibition on sale of materials under Notification 18/2015-Cus. - Whether failure to endorse all job workers/supporting manufacturers in the advance authorizations (para 4.35 HBP) amounted to a substantive breach disentitling the importer to exemption. - HELD THAT: - The Tribunal considered that para 4.35 provides for addition/endorsement of supporting manufacturers but that the provision also contemplates transfer to job workers subject to compliance with prescribed conditions. The factual matrix showed widespread use of multiple job workers prior to the levy of customs duty and that the appellants continued that practice; there was no evidence of misuse prior to March 2016. Given the absence of transfer of ownership and the appellants' proof of fulfilment of export obligations and foreign exchange realization, the omission to endorse every processing unit was treated as a curable procedural irregularity rather than a substantive violation that defeats the actual user condition. The Tribunal observed that the purpose of exemption-to enable export of value-added product and realization of foreign exchange-had been met. [Paras 9]

Non-endorsement of all job workers is a procedural lapse; exemption retained as actual user condition and export obligations were satisfied.

Final Conclusion: The appeals are allowed. The adjudicating authority's demand of duty foregone, order of confiscation and imposition of penalties based on alleged diversion/sale of imported RCN are set aside; procedural lapses in not endorsing all job workers are held to be curable and not a ground for denial of exemption where export obligations and ownership retention are established. Consequential relief, if any, to follow as per law.

Refund of additional countervailing duty - interpretation of conditions in a notification - limitations on executive circulars imposing additional conditions - consignment agent payment of VAT satisfying notification condition - certificate by a Chartered Accountant

Refund of additional countervailing duty - consignment agent payment of VAT satisfying notification condition - certificate by a Chartered Accountant - Entitlement to refund of 4% additional duty (CVD) where imported goods were sold through a consignment agent who paid VAT and a Chartered Accountant certified that the importer reimbursed the VAT and correlated the VAT payment with the CVD. - HELD THAT: - The Original Adjudicating Authority recorded that the Chartered Accountant certified that the consignment agent had paid VAT on the resale of the imported goods and that the importer had reimbursed that VAT, with correlation between the VAT paid and the 4% CVD paid at import. The Commissioner (Appeals) set aside the refund on the ground that the VAT must be paid by the importer himself and relied on the Board's Circular introducing conditions for cases involving consignment agents. The Tribunal held that the notification's sole substantive condition is payment of appropriate sales tax/VAT on resale, which was satisfied as VAT was paid on the imported goods. A circular cannot introduce extraneous conditions inconsistent with the notification; therefore the requirement (as framed in the circular) that VAT must be paid directly from the importer's pocket was an impermissible enhancement of the notification's conditions. Further, the factual finding that the importer reimbursed the consignment agent (as certified by the Chartered Accountant) stood unrebutted by Revenue. In these circumstances there was no justification to deny the refund and the Original Adjudicating Authority's order granting refund was restored. [Paras 6, 7, 8]

Refund of the 4% CVD allowed; the Commissioner (Appeals) order set aside and the Original Adjudicating Authority's order restored.

Final Conclusion: The appeal is allowed: the Tribunal restores the Original Adjudicating Authority's grant of refund of the additional duty (4% CVD) because VAT on resale was paid (by the consignment agent), the importer was certified to have reimbursed that VAT, and a Board circular could not lawfully add conditions beyond the notification.

Enhancement of assessable value - use of NIDB data for valuation - classification of heavy melting scrap versus re-rollable scrap - confiscation for mis-declaration of quantity - redemption fine and penalty reduction

Enhancement of assessable value - use of NIDB data for valuation - Enhancement of the value of imported Heavy Melting Scrap by reference to NIDB data was not justified. - HELD THAT: - The Tribunal found that the Revenue enhanced the assessable value by adopting NIDB data for material alleged to be re-rollable scrap. The finding that part of the consignment consisted of re-rollable material rested on visual examination by customs officers without any expert evidence to establish reclassification beyond doubt. The Tribunal noted that reliance on NIDB data for enhancement has been held impermissible in earlier decisions of the Tribunal and, on the facts before it, there was no justification for enhancing the value of the goods. [Paras 3]

Enhancement of value by reference to NIDB data set aside and benefit of declared value extended to the appellant.

Classification of heavy melting scrap versus re-rollable scrap - The allegation that the consignment was partially re-rollable scrap was not established on the material on record. - HELD THAT: - The Tribunal recorded that the determination that the consignment partially consisted of re-rollable scrap was based on visual examination by the Customs Officer and there was virtually no expert evidence to establish that the goods were not Heavy Melting Scrap. The appellant's explanation that the so-called re-rollable material comprised old, used or defective items imported for furnace use as Heavy Melting Scrap was accepted in view of the lack of conclusive expert evidence. [Paras 3]

Reclassification to re-rollable scrap was not upheld.

Confiscation for mis-declaration of quantity - Confiscation of excess quantity found over declared weight and payment of duty for clearance of excess goods at declared value were upheld. - HELD THAT: - The Tribunal found mis-declaration as to quantity: excess weight amounted to a substantial portion (approximately one third) of the declared weight. On that basis the Tribunal upheld confiscation of only the excess goods found and directed that those excess goods may be cleared by the appellant on payment of duty leviable thereon adopting the declared value. The confiscation was thus limited to the excess quantity and not the entire consignment. [Paras 4]

Confiscation of only the excess goods affirmed; excess to be cleared on payment of duty at the declared value.

Redemption fine and penalty reduction - Redemption fine and penalty imposed by the Commissioner were reduced. - HELD THAT: - The Commissioner had confiscated the entire consignment on findings of undervaluation and imposed a redemption fine and penalty. Having rejected the valuation enhancement and limited confiscation to the excess goods, the Tribunal exercised its discretion to reduce the redemption fine and penalty. The redemption fine imposed by the Commissioner was reduced from the amount earlier fixed to a lower sum, and the penalty was correspondingly reduced. [Paras 5]

Redemption fine reduced to a lesser amount and penalty reduced; appeal partially allowed to that extent.

Final Conclusion: The appeal is partially allowed: enhancement of value by reference to NIDB set aside; reclassification to re-rollable scrap not upheld; confiscation limited to excess quantity which may be cleared on payment of duty at declared value; redemption fine and penalty reduced.

Mis-declaration of goods - assessable value based on transaction value/price actually paid - confiscation and redemption fine - penalty under section 112 of the Customs Act - visual examination by customs officers and expert determination - mutilation of goods as verification

Mis-declaration of goods - assessable value based on transaction value/price actually paid - confiscation and redemption fine - penalty under section 112 of the Customs Act - visual examination by customs officers and expert determination - mutilation of goods as verification - Whether the impugned findings of mis-declaration of description and value, enhancement of assessable value, confiscation with redemption fine and penalty under section 112 were justified - HELD THAT: - The Tribunal accepted that the Bills of Entry described the imports as scrap and the declared value was based on documents issued by the foreign supplier, supported by pre-shipment inspection certificate and Bill of Lading. The adjudicating authorities' view that part of the consignment comprised slabs of prime aluminium rested on visual examination; the Tribunal held that there was no evidence of intention to mis-declare since declarations followed supplier documents and the appellant offered to mutilate the goods when challenged. Further, the Tribunal noted that enhancement of value requires application of the statutory assessable-value exercise (transaction value and, where relevant, inquiry under section 14 to reject transaction value between related persons), which was not undertaken. In an identical earlier order in the same assessee's case the Tribunal set aside charges of mis-declaration and enhancement for these reasons. Following that decision, the Tribunal found no merit in the impugned order and set it aside, restoring the declared description and value and granting consequential relief to the appellant. [Paras 4, 5]

Impugned order enhancing value, confiscating goods with redemption fine and imposing penalty set aside; appeal allowed and declared description and value restored with consequential relief.

Final Conclusion: The Tribunal, following an earlier identical decision in the same assessee's matter, set aside the adjudicating authorities' findings of mis-declaration and value enhancement, quashed confiscation and penalty imposition, restored the declared description and value and allowed the appeal with consequential relief.

Classification as scrap - transaction value principle for assessable value - enhancement of assessable value - confiscation and redemption fine and penalty - chartered engineer's visual examination - mutilation to establish nature of goods - precedent of the Tribunal in identical case

Classification as scrap - chartered engineer's visual examination - mutilation to establish nature of goods - precedent of the Tribunal in identical case - Whether the imported belt buckles were correctly classified and declared as "zinc scrap" and whether such declaration amounted to mis-declaration. - HELD THAT: - The Tribunal examined the record including the invoice and pre-shipment documents furnished by the foreign supplier and noted the appellant's consistent description of the goods as scrap in the bills of entry. The findings recorded by the revenue were based on the visual examination by a chartered engineer who reported presence of assorted belt buckles; however, the appellants contended that such buckles were of spoiled quality and imported for zinc content and offered to mutilate the goods to demonstrate their scrap character. The Tribunal relied on its earlier final order in an identical case involving the same assessee, which had held there was no intention to mis-declare and had restored the declared description where the declaration accorded with supplier documents and no proper exercise had been undertaken to rebut the transaction value. Applying that precedent, the Tribunal found the impugned finding of mis-declaration not sustainable on the record before it. [Paras 4, 5]

Impugned finding of mis-declaration set aside; declared description as "zinc scrap" restored and appeal allowed with consequential relief.

Transaction value principle for assessable value - enhancement of assessable value - precedent of the Tribunal in identical case - Whether the enhancement of the assessable value of the imported goods was justified. - HELD THAT: - The Tribunal applied the principle that assessable value is to be determined on the basis of the price actually paid (transaction value) unless the transaction value is shown not to be the sole consideration and a proper exercise is undertaken to reject it. The adjudicating authority enhanced the value on the basis of the chartered engineer's observations without demonstrating that the declared invoice price did not represent the true transaction value or that any additional payments were made to the foreign supplier. Following the Tribunal's earlier decision in the identical case of the same assessee, where enhancement was set aside for lack of requisite exercise to reject transaction value, the Tribunal found the enhancement unjustified. [Paras 4, 5]

Enhancement of assessable value set aside and the value declared in the bills of entry restored.

Confiscation and redemption fine and penalty - precedent of the Tribunal in identical case - Whether confiscation of the goods and imposition of redemption fine and penalty were sustainable. - HELD THAT: - The order of confiscation and the imposition of redemption fine and penalty flowed from the findings of mis-declaration and enhanced valuation. Since the Tribunal set aside those foundational findings by following its prior decision in an identical case, the consequential measures of confiscation, redemption fine and penalty could not stand. The Tribunal therefore quashed the impugned order and granted consequential relief to the appellant. [Paras 4, 5]

Confiscation, redemption fine and penalty set aside; consequential relief granted to the appellant.

Final Conclusion: Following its earlier decision in an identical matter involving the same assessee, the Tribunal set aside the adjudicating authority's findings of mis-declaration, enhancement of assessable value and the consequential confiscation, redemption fine and penalty, restored the declared description and value, and allowed the appeal with consequential relief.

Customs valuation - transaction value - rejection of transaction value by independent evidence - application of Rule 5 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - use of departmental Alert Circulars for valuation - statement recorded under Section 108 of the Customs Act

Transaction value - rejection of transaction value by independent evidence - customs valuation - Enhancement of assessable value based on departmental material without first rejecting the declared transaction value - HELD THAT: - The Tribunal found that the Revenue did not produce any independent evidence to disprove or reject the transaction value declared by the importer. It reiterated the settled principle that the transaction value admitted by the importer must be accepted as the assessable value unless the Revenue first adduces sufficient evidence to reject that transaction value. The impugned enhancement, which proceeded without such rejection, was therefore unsustainable. The Tribunal also relied on earlier Tribunal precedent reproduced in the judgment to the effect that transaction value cannot be discarded in absence of independent proof to the contrary. [Paras 7]

Enhancement of value was set aside for want of independent evidence to reject the declared transaction value.

Use of departmental Alert Circulars for valuation - application of Rule 5 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - statement recorded under Section 108 of the Customs Act - Validity of enhancing value by relying on Alert Circulars and acceptance of an assessee's statement under Section 108 as sufficient basis for enhancement - HELD THAT: - The Tribunal held that Alert Circulars issued by meetings of Commissioners/Chief Commissioners do not possess independent legal validity sufficient to override the transaction value declared by the importer. Although the director's statement under Section 108 included an admission of undervaluation, the Revenue's reliance on the Alert Circular and that statement, without independently rejecting the transaction value, was inadequate. The Tribunal therefore rejected the contention that Rule 5 application supported enhancement in these circumstances where the statutory transaction value had not been displaced by evidence. [Paras 6, 7]

Enhancement founded on Alert Circulars and the recorded statement was held unsustainable; such material did not justify rejecting the transaction value.

Final Conclusion: The impugned orders enhancing value, confirming demand of duty and imposing penalties were set aside and the appeals were allowed.

Financial creditor - Financial debt - Consideration for the time value of money - Onus of proof to establish financial debt - Maintainability of Section 7 application

Financial creditor - Financial debt - Consideration for the time value of money - Onus of proof to establish financial debt - Whether the applicant is a 'financial creditor' and the claimed amounts constitute a 'financial debt' entitling him to maintain an application under Section 7 of the Code. - HELD THAT: - The Tribunal examined whether the loan and the claimed interest were disbursed against the consideration for the time value of money, a necessary condition for constituting a 'financial debt' and for the creditor to qualify as a 'financial creditor'. The applicant asserted a principal loan and interest at 18% but did not produce any loan agreement or documentary evidence of an agreed interest term. The corporate debtor disputed liability for interest and pointed to subsequent balance sheets showing a reduction in the loan amount and absence of accrued interest. Reliance was placed on precedents holding that, in the absence of evidence that funds were advanced against the time value of money or that interest was payable, the creditor cannot be treated as a 'financial creditor'. Applying these principles, the Tribunal concluded that the applicant failed to discharge the onus to prove that the disbursement had the commercial effect of a borrowing or that interest was payable; consequently the claim did not qualify as a 'financial debt' and the applicant was not a 'financial creditor'. [Paras 21, 25, 28, 29]

Application dismissed as not maintainable because the applicant is not a 'financial creditor' and the claim does not amount to a 'financial debt'.

Final Conclusion: The Section 7 application is dismissed as not maintainable for want of standing of the applicant as a 'financial creditor' since the claimed debt was not demonstrated to be a 'financial debt' arising from consideration for the time value of money.

Meaning of "Financial Creditor" and "Financial Debt" under Section 5(7) and Section 5(8) - counter indemnity obligation in respect of a guarantee as financial debt - treatment of unmatured claims and invocation of guarantee in CIRP - duty of the Resolution Professional to receive and collate claims on initiation of CIRP - membership of Committee of Creditors where claim qualifies as financial debt

Meaning of "Financial Creditor" and "Financial Debt" under Section 5(7) and Section 5(8) - counter indemnity obligation in respect of a guarantee as financial debt - Whether Export Import Bank of India, having invoked a counter corporate guarantee furnished by JEKPL, is a "Financial Creditor" of JEKPL under Section 5(7) read with Section 5(8) of the I&B Code. - HELD THAT: - The Court examined the security structure and the Deeds of Guarantee and Counter Guarantee executed on 01.08.2011 and concluded that JEKPL's counter corporate guarantee amounted to a guarantee/counter indemnity obligation falling within clause (h) of Section 5(8). The provision was interpreted to include a counter indemnity obligation in respect of a guarantee where the underlying loan to the principal borrower was disbursed against consideration for the time value of money. The fact that the counter guarantor is a company (and not a bank or RBI regulated entity) does not exclude the counter indemnity from clause (h); the focus is on the existence of a counter indemnity obligation in respect of a guarantee securing a financial debt. Applying these principles to the admitted facts (loan disbursed to the principal borrower; corporate guarantee by JEPL; counter guarantee by JEKPL; admitted default and NPA status; acknowledgement of liability in JEKPL's annual report), the Court held that EXIM Bank's claim arose as a financial debt owed by the corporate debtor JEKPL and that EXIM Bank is therefore a "Financial Creditor" of JEKPL. [Paras 22, 23, 57, 58, 59]

EXIM Bank is a Financial Creditor of JEKPL by virtue of the counter corporate guarantee; the order rejecting its claim is set aside and EXIM Bank must be treated as a member of the Committee of Creditors.

Treatment of unmatured claims and invocation of guarantee in CIRP - duty of the Resolution Professional to receive and collate claims on initiation of CIRP - membership of Committee of Creditors where claim qualifies as financial debt - Whether Axis Bank Ltd., as a lender under the restructuring arrangements and in respect of a corporate guarantee furnished by Edu Smart Services Pvt. Ltd., is a "Financial Creditor" and whether non invocation/maturity of a guarantee or moratorium precludes filing and admission of the claim in the CIRP. - HELD THAT: - The Court analysed the statutory definitions of "claim", "debt", "default", and the procedural scheme under Sections 13, 15, 18 and 25 concerning public announcement, submission and collation of claims. It held that a "claim" includes rights to payment whether matured or unmatured and that the duty of the (Interim) Resolution Professional is to receive and collate all claims submitted pursuant to the public announcement. Maturity of a claim, invocation of a guarantee or actual default are not preconditions for filing a claim in response to the public announcement; therefore an unmatured or contingent claim arising under a guarantee is not a ground for summary rejection at the claims collation stage. Applying the contractual terms of the Corporate Guarantee dated 03.06.2015 (and associated restructuring and security trustee arrangements), the Court found that Axis Bank was shown as a lender and, under the guarantee terms, could treat the guarantor as principal debtor; accordingly Axis Bank qualifies as a Financial Creditor of Edu Smart Services Pvt. Ltd. The Adjudicating Authority's rejection on the ground of non maturity/need to invoke during moratorium was set aside. [Paras 56, 61, 62, 63, 64]

Axis Bank qualifies as a Financial Creditor of Edu Smart Services Pvt. Ltd.; the order rejecting its claim is set aside and Axis Bank is to be treated as a member of the Committee of Creditors, with directions to reconsider the resolution plans.

Final Conclusion: The appeals are allowed: EXIM Bank and Axis Bank are held to be Financial Creditors of the respective corporate debtors by virtue of guarantees/counter indemnity obligations and must be admitted to the Committees of Creditors; the impugned orders rejecting their claims are set aside and the respective resolution professionals and adjudicating authorities are directed to treat the banks as COC members and reconsider the resolution plans in accordance with law. No order as to costs.

Information available in public domain - information 'held' or 'under the control of' a public authority - Right to Information Act, 2005 - scope of information accessible - voluntary dissemination excludes RTI applicability

Information available in public domain - information 'held' or 'under the control of' a public authority - voluntary dissemination excludes RTI applicability - Information regarding the appellant's marks and the cut off marks already published on the Board's website is not 'held' by the public authority for the purposes of the RTI Act and therefore is not accessible under the Act. - HELD THAT: - The FAA examined the RTI request for marks obtained by the appellant and the cut off marks for the Officer Grade A recruitment (2018) and found that the same information has been placed on the Insolvency and Bankruptcy Board of India's website (www.ibbi.gov.in) and is publicly accessible. Relying on the principle that information voluntarily disseminated in the public domain ceases to be information 'held' or 'under the control of' a public authority for the purposes of the RTI Act, and citing the reasoning in Shri K. Lall v. Shri M.K. Bagri (Order dated April 12, 2007), the FAA concluded that such published information falls outside the scope of information that can be furnished under the RTI Act. Accordingly, no further obligation to furnish the requested material under the RTI Act was found to arise.

Appeal dismissed on the ground that the requested information is already in the public domain and therefore not accessible under the RTI Act.

Final Conclusion: The First Appellate Authority disposed of the appeal by holding that the marks and cut off marks sought were already available on the Board's website and, being voluntarily disseminated, are not 'held' by the public authority for disclosure under the RTI Act; the appeal was therefore disposed of.

Effect of concession before an appellate forum - challenge to a consent order and availability of rectification - waiver of penalty in exercise of appellate discretion - existence of a substantial question of law for appellate consideration

Effect of concession before an appellate forum - challenge to a consent order and availability of rectification - Whether an appeal lies where the appellant conceded liability before the Tribunal and obtained a consent-type order, without seeking earlier rectification. - HELD THAT: - The Tribunal's order records that the appellant Municipality expressly conceded that it was not contesting the demand for service tax and interest, and sought only waiver of penalty and time to deposit the amounts. The High Court held that, having made such a concession before the Tribunal and having not sought rectification of that order, the Municipality cannot turn around and contest the same by way of this appeal. The Court treated the impugned order as a consent/consented outcome insofar as liability and interest were concerned and observed that the proper remedy, if any, would have been rectification before the Tribunal rather than an appeal inconsistent with the earlier concession. In those circumstances the appeal lacked a substantive foundation and was not maintainable on the grounds urged.

Appeal dismissed as not maintainable because the appellant conceded liability before the Tribunal and did not seek rectification; it cannot now challenge the consent order.

Waiver of penalty in exercise of appellate discretion - existence of a substantial question of law for appellate consideration - Whether any substantial question of law arose from the Tribunal's decision to set aside penalties while upholding demand and interest. - HELD THAT: - The Tribunal accepted the Municipalities' plea and set aside penalties while upholding the demand for service tax and interest. Before this Court the appellant raised contentions regarding prospective/retrospective amendment, retrospective operation as to interest and penalty, and limitation for the demand notice. The High Court observed that these contentions are inconsistent with the concession recorded before the Tribunal and noted that the appellant had, in effect, accepted liability and interest. The Court therefore found that no substantial question of law survived for its consideration, particularly given that the appellant had not preserved those issues at the Tribunal or sought rectification of the record there.

No substantial question of law arose for adjudication in the appeal; appeal dismissed.

Final Conclusion: The appeal is dismissed: the appellant had conceded liability and interest before the Tribunal and did not seek rectification; consequently the Court found no substantial question of law warranting interference and dismissed the appeal and pending petitions without costs.

Classification of taxable service - temporary transfer of right to use software - Intellectual Property Services - Information Technology Software Services - most specific description rule for classification of services - inclusion of value of goods used in provision of taxable services (valuation) - abatement under Notification No.12/2003 ST - exemption for supplies to SEZ - refund route - services rendered outside taxable territory (Jammu & Kashmir) - limitation and suppression - extended period - penalty under Sections 76 and 78

Classification of taxable service - temporary transfer of right to use software - Intellectual Property Services - Information Technology Software Services - most specific description rule for classification of services - Classification of transactions involving supply of software as 'Intellectual Property Services' prior to 16.05.2008 and as 'Information Technology Software Services' with effect from 16.05.2008 - HELD THAT: - The Tribunal upheld the Commissioner's finding that where the supplier temporarily transfers the right to use software (including by license/EULA) the transaction is a transfer of a right in intellectual property and prima facie classifiable under Intellectual Property Services prior to 16.05.2008 and under the separately carved out Information Technology Software Services with effect from 16.05.2008. The adjudicating authority examined agreements, invoices and licence terms (including distribution and end user licence conditions) and concluded that ownership of the underlying IP remained with developers (e.g., Oracle) and that what was transferred to end users was the right to use under licence; accordingly such transactions do not amount to a transfer of entire property in the software and fall within the stated service heads. The Tribunal also relied on statutory classification principles that prefer the more specific description when a service can prima facie fall under two or more entries, and on CBEC clarifications and international treatment to support the classification adopted by the Commissioner. [Paras 46, 47, 51, 52, 53]

Demand on software transactions is sustainable as charged under 'Intellectual Property Services' prior to 16.05.2008 and under 'Information Technology Software Services' from 16.05.2008; classification in the adjudication is not vitiated for the period from 16.05.2008.

Whether adjudicating authority travelled beyond scope of remand - classification of taxable service - Whether the Commissioner exceeded the scope of this Tribunal's remand - HELD THAT: - The Tribunal observed that its remand directed the Commissioner to examine agreements, invoices and documentary evidence afresh to determine correct service tax liability. The Commissioner did so and reached conclusions on classification after examining the documents. The remand did not preclude the adjudicating authority from re classifying services in light of documentary evidence. Therefore the Commissioner did not exceed the remand by holding the services to be Intellectual Property Services/ITSS where such classification was supported by the documents. [Paras 10]

Commissioner did not travel beyond the scope of remand in confirming demands under the appropriate service heads, at least from 16.05.2008.

Inclusion of value of goods used in provision of taxable services (valuation) - abatement under Notification No.12/2003 ST - Treatment and valuation of hardware supplied in the course of providing software/IT solutions - HELD THAT: - The Commissioner found that hardware supplied formed part of comprehensive and indivisible solution contracts (installation, customization, implementation) and were consumed in providing the taxable services; accordingly their value must be included in taxable value under Section 67. However the Tribunal noted that the Commissioner must consider whether any abatement available under the applicable notification/rules should be applied when goods are shown separately and to requantify value accordingly. The party's payment of VAT on such goods does not preclude inclusion of their value in service valuation. [Paras 10, 36, 37]

Hardware supplied as part of integrated solutions is includible in taxable value; Commissioner to reconsider valuation with regard to admissibility of abatement under relevant notifications/rules.

Exemption for supplies to SEZ - refund route - Entitlement to exemption (or refund) for services supplied to SEZ units/developers - HELD THAT: - Invoices for services supplied to an SEZ unit were in relation to software services. The Tribunal recorded that exemption notifications required service tax to be paid by the supplier and claimed back by the SEZ unit/developer by way of refund (i.e. first stage exemption not available to the supplier). The appellants produced no evidence to show services were consumed within SEZ or to support direct exemption. The Commissioner did not examine the matter fully; therefore the Tribunal remanded the issue to the Commissioner for consideration of exemption/refund entitlement on the evidence adduced. [Paras 10]

Issue remanded to the Commissioner for fresh consideration of exemption/refund in respect of supplies to SEZ unit/developer.

Octroi charges - Whether octroi charges form part of taxable service value - HELD THAT: - The Tribunal observed that octroi is a levy on movement/entry of goods and is not by itself consideration for any service. The Commissioner did not examine the appellants' documentary evidence on octroi; the Tribunal therefore directed remand so that the Commissioner may reconsider whether amounts shown as octroi were in fact paid for octroi and whether they form part of taxable value. [Paras 10]

Issue remanded to the Commissioner for reconsideration of octroi charges in light of evidence.

Services rendered outside taxable territory (Jammu & Kashmir) - Liability to service tax in respect of services rendered in Jammu & Kashmir - HELD THAT: - The Tribunal noted that the Finance Act, 1994 excludes services rendered in Jammu & Kashmir from service tax. Certain invoices indicated services performed in J&K; Commissioner should requantify demand after excluding such services. The point was directed to be adjusted in computation of demand. [Paras 10]

Demand qua services rendered in Jammu & Kashmir cannot be sustained and Commissioner to requantify demand excluding such services.

Limitation and suppression - extended period - bonafide belief - Extended period invocation and contention of bonafide belief to resist limitation - HELD THAT: - The Tribunal rejected the appellants' contention of bona fide belief as a ground to bar extended period, noting the assessee was aware of leviability and did not seek clarification; non disclosure in returns supported invocation of extended period. However, because the Tribunal held that demands for periods prior to 16.05.2008 (to the extent classification was altered from that in the show cause notice) were not maintainable, the limitation argument loses practical relevance for those earlier periods. For post 16.05.2008 periods the appellants remain liable and interest flows from tax liability not paid in time. [Paras 10]

Bonafide belief defence rejected; extended period invocation upheld where suppression/non disclosure established, and interest payable for post 16.05.2008 liabilities; earlier period contentions attenuated by remit on classification notice issue.

Penalty under Sections 76 and 78 - Imposition of penalties and simultaneous levy under Sections 76 and 78 - HELD THAT: - The Tribunal observed that penalties under Sections 76 and 78 are civil statutory penalties and may both arise from same transactions since the ingredients differ. Nonetheless, the Commissioner must reconsider whether penalties should be imposed under Section 78 and/or Section 76 in light of the Tribunal's findings (including that certain classification/notice defects affect pre 16.05.2008 demands). The Tribunal directed the Commissioner to re examine penalty imposition and quantify afresh. [Paras 10, 11]

Penalties are not per se barred; matter remitted to Commissioner to reconsider and determine appropriate penalties under Sections 76 and/or 78 in light of the Tribunal's observations.

Final Conclusion: Appeal allowed in part. The Tribunal upholds the Commissioner's classification of software transactions as Intellectual Property Services prior to 16.05.2008 and as Information Technology Software Services from 16.05.2008 and affirms inclusion of hardware value in taxable value subject to admissible abatement; interest on post 16.05.2008 liabilities is payable. Matters relating to SEZ exemption/refund, octroi charges, quantification for Jammu & Kashmir services, and re determination of valuation/abatement and penalties are remanded to the adjudicating authority for fresh consideration and computation in accordance with the Tribunal's directions.

Refund under SEZ scheme - Notification No.12/2013-ST - condonation of delay - principles of natural justice - non-speaking order - remand for fresh consideration - SEZ Act's overriding effect on other laws

Principles of natural justice - non-speaking order - refund under SEZ scheme - Notification No.12/2013-ST - Impugned order's legality in view of failure to afford hearing, misapplication of legal provision and absence of reasoned consideration of the appellant's case. - HELD THAT: - The Tribunal found that the Commissioner (Appeals) rejected the refund claims without affording the appellant an opportunity to explain delays or to be heard, and recorded adverse observations without material. The Commissioner (Appeals) treated the claims under provisions different from those invoked by the appellant, failing to consider Notification No.12/2013-ST under which the SEZ unit filed its claims. The Tribunal held that such omission amounted to a non speaking order in breach of natural justice and contrary to the requirement that adjudicatory orders state cogent reasons correlated to facts and law. In these circumstances the impugned order could not stand and the matter required remand to the original authority for de novo consideration after following principles of natural justice and passing a reasoned order.

Impugned order set aside and appeals allowed by way of remand to the original authority to decide the refund claims afresh after affording opportunity of hearing and passing a reasoned order.

Condonation of delay - refund under SEZ scheme - Notification No.12/2013-ST - remand for fresh consideration - Whether delay in filing refund claims should be considered and whether a liberal approach to condonation is warranted under the relevant notification and tribunal precedents. - HELD THAT: - The Tribunal noted that Notification No.12/2013-ST empowers the refund authority to condone delay if satisfied with the reasons. The lower authorities had not considered the appellant's justifications for delay nor exercised the condonation power. Relying on earlier Tribunal decisions emphasising a liberal approach to condonation in the context of SEZ refund claims and the spirit of the notification, the Tribunal directed that the original authority shall consider the reasons for delay, the prayer for extension (which may be made in the refund application), and apply tribunal precedents where appropriate when adjudicating the refund claims on remand.

Matter remitted to the original authority to examine and decide the question of condoning delay in accordance with Notification No.12/2013-ST and relevant Tribunal precedents, within three months.

Final Conclusion: The Commissioner (Appeals) order rejecting the SEZ unit's refund claims is set aside for failure to afford hearing, misapplication of the governing notification and absence of reasoned findings; all appeals are allowed by way of remand to the original authority to decide the refund claims and any application for condonation of delay afresh, following the principles of natural justice and relevant tribunal decisions, within three months.

Lease of tangible goods - service tax liability - retrospective application of taxable service - one-time agreement principle - longer period of limitation

Lease of tangible goods - retrospective application of taxable service - one-time agreement principle - service tax liability - Whether service tax could be demanded on lease receipts under the category of supply of tangible goods when lease agreements were entered into prior to 16.05.2008. - HELD THAT: - The Tribunal accepted the appellants' position that the determinative legal point was the temporal scope of the taxable category introduced w.e.f. 16.05.2008. Relying on the reasoning in Petronet LNG Ltd. v. Commissioner of Service Tax and the Board's letter dated 09.07.2001, the Tribunal treated the lease agreements as one-time antecedent transactions executed before the category of service 'supply of tangible goods' was introduced. As the contracts for leasing wagons were entered substantially prior to 16.05.2008 (up to the year 2000) and the taxable service category did not exist at the time of agreement, no service tax liability could be sustained on that basis. The Tribunal therefore disposed of the appeals on this temporal ground without engaging the alternative contention concerning effective possession and control of the wagons.

Impugned orders confirming service tax demand set aside and appeals allowed on the ground that the lease agreements pre-dated the introduction of the taxable service w.e.f. 16.05.2008, with consequential relief.

Final Conclusion: Appeals allowed; the service tax demands confirmed by the impugned orders are set aside because the lease agreements for wagons were entered prior to the introduction of the taxable category w.e.f. 16.05.2008, and consequential relief is granted.

Business auxiliary services - service tax demand - penalty for bona fide dispute - comparison of ST-3 figures with balance sheet - onus of evidence for income characterization

Business auxiliary services - penalty for bona fide dispute - Whether penalties should be sustained for receipt of commissions treated as consideration for providing business auxiliary services where the question was a bona fide matter of interpretation and the assessee did not contest the demand. - HELD THAT: - The Tribunal noted that the appellant did not dispute the liability to pay the confirmed service tax demand for commissions treated as consideration for business auxiliary services, but contested the imposition of penalty of equivalent amount. Relying on precedent where identical activities gave rise to a bona fide question of law, the Tribunal held that where the issue was genuinely debatable and decisions existed on both sides, no suppression, misstatement or mala fide conduct was established to attract penal consequences. Consequently, penalties imposed for the disputed characterization of receipts were inappropriate and were set aside while the demand was confirmed.

Penalties set aside on the ground that the issue was a bona fide question of interpretation and mala fide or suppression was not established.

Comparison of ST-3 figures with balance sheet - onus of evidence for income characterization - Whether a demand can be confirmed solely by comparing ST-3 returns with amounts in the balance sheet in the absence of evidence establishing that the amounts in the balance sheet represented income from taxable services. - HELD THAT: - The Tribunal observed that the Revenue confirmed a further demand by comparing ST-3 figures with balance-sheet entries but produced no evidence to substantiate that the balance-sheet amounts were on account of services rendered by the assessee. It reiterated that mere arithmetic or reconciliation between returns and financial statements cannot establish taxable income unless the Revenue adduces supporting evidence to characterise those receipts as consideration for services. In the absence of such evidence, the comparison could not sustain a demand or associated penalties.

Demand (and associated penalties) based on comparison of ST-3 and balance-sheet figures set aside for lack of evidence proving the nature of the receipts.

Final Conclusion: Service tax demand of Rs. 2,24,120/- confirmed but penalties of identical amount set aside as the issue was a bona fide question of interpretation; additional demand of Rs. 1,29,460/- based on ST-3 vs balance-sheet comparison set aside for want of evidence, and associated penalties set aside. Appeal disposed accordingly.

Penalty for short payment of service tax - Bona fide belief and absence of mala fide - Confirmation of service tax demand with interest - Reliance on return reconciliation (ST-3 v. books of account) - Penalty under Section 77 and Section 78 as applicable to service tax

Penalty for short payment of service tax - Bona fide belief and absence of mala fide - Public sector undertaking and absence of intent to evade - Penalty under Section 77 and Section 78 as applicable to service tax - Whether the penalty imposed on the appellant under the penal provisions should be sustained. - HELD THAT: - The Tribunal accepted the appellant's explanation that the non-payment arose from a bona fide belief that services provided to State undertakings were not taxable. The appellant promptly admitted liability on being confronted and deposited the tax within thirty days of the show cause notice. There was no material on record to indicate any mala fide or intent to evade duty; the appellant being a public sector undertaking was held to have no such motive. In these circumstances the Tribunal found that invocation of penal provisions was not justified and therefore set aside the penalties imposed under the relevant provisions. [Paras 5]

Penalty imposed under the relevant penal provisions set aside.

Confirmation of service tax demand with interest - Reliance on return reconciliation (ST-3 v. books of account) - Whether the service tax demand found by comparing ST-3 returns with profit and loss account and balance sheet is sustainable. - HELD THAT: - The Tribunal recorded the factual finding that the Revenue detected non-payment by reconciling the ST-3 return figures with entries in the profit and loss account and balance sheet, showing service tax attributable to services rendered to the State power utility. The appellant admitted the liability and paid the tax; notwithstanding the absence of penalty the underlying demand for service tax and the interest thereon was held to be proper and was accordingly confirmed. [Paras 3, 5]

Service tax demand and interest confirmed.

Final Conclusion: The appeal succeeds insofar as the penalties under the penal provisions are set aside for lack of mala fide and on the basis of a bona fide belief; the service tax demand and interest, as found by reconciliation of returns with books of account, are confirmed.

Recovery of tax collected from clients - assessable value of services - interest on confirmed demand - penalty-absence of mala fide / bona fide belief

Recovery of tax collected from clients - assessable value of services - The appellant is liable to pay the differential Service Tax collected from clients where tax was collected on gross value but paid on a reduced assessable value. - HELD THAT: - The Tribunal noted that the appellant did not dispute having collected excess Service Tax from clients. The impugned order confirmed a demand corresponding to the differential amount collected but not paid to the revenue. In view of the undisputed collection of extra tax, the Tribunal held that the collected amount must be paid to the revenue and accordingly sustained the demand. [Paras 2]

Demand for the differential Service Tax to be paid is confirmed.

Interest on confirmed demand - Interest on the confirmed differential Service Tax demand is payable and is sustained. - HELD THAT: - Having confirmed the demand for the tax collected but not remitted, the Tribunal also confirmed the interest charged on the outstanding differential. The reasoning follows from the confirmation of liability to pay the collected tax. [Paras 2]

Interest on the confirmed demand is upheld.

Penalty-absence of mala fide / bona fide belief - The penalty imposed is set aside because there was a bona fide belief regarding tax liability and no evidence of mala fide on the part of the assessee. - HELD THAT: - The Tribunal observed that the assessee may have held a bona fide belief that Service Tax was payable only on the reduced assessable value and that there was no material to demonstrate any malicious intent or mala fide conduct. In the absence of such evidence, the Tribunal found no justification for imposing penalty and therefore annulled the penalty while leaving the tax and interest intact. [Paras 3]

Penalty is set aside for want of evidence of mala fide; demand and interest remain confirmed.

Final Conclusion: The appeal results in confirmation of the demand for the differential Service Tax collected and the interest thereon, while the penalty imposed is quashed on the finding of bona fide belief and absence of mala fide.

Valuation of taxable services - Inclusion of cost of goods in service value - Maintenance and Repair services-taxable value - Reliance on precedent - Setting aside demand, interest and penalty

Inclusion of cost of goods in service value - Maintenance and Repair services-taxable value - Reliance on precedent - Whether the value of goods used in repair of transformers forms part of the taxable value of 'Maintenance and Repair' services for service tax purposes. - HELD THAT: - The Tribunal accepted that the question is settled by the decision of the Hon'ble Allahabad High Court in Commissioner of Customs And Central Excice v. J.P. Transformers, 2014 (36) S.T.R. 961 (All.), which holds that the value of goods used in providing repair of transformers is not includible in the value of the services. Applying that precedent, the Tribunal concluded that the Department's view to include the cost of goods in the service value was incorrect. On that basis the demand, interest and mirror penalty confirmed by the Commissioner cannot stand.

Impugned order set aside; appeal allowed and stay petition disposed of.

Final Conclusion: The Tribunal allowed the appeal following the Allahabad High Court decision in J.P. Transformers, holding that the cost of goods used in repair of transformers is not includible in the taxable value of 'Maintenance and Repair' services; the demand, interest and penalty confirmed by the Commissioner were set aside.

Goods Transport Agency (GTA) service - reverse charge mechanism - consignment note - penalty under Section 78 of the Finance Act, 1994

Goods Transport Agency (GTA) service - reverse charge mechanism - consignment note - penalty under Section 78 of the Finance Act, 1994 - Payments made to individual labourers for transportation did not constitute GTA service and were not taxable under reverse charge. - HELD THAT: - The Tribunal examined the nature of payments and the material on record and found that payments were made to individual labourers and not to any Goods Transport Agency. There was no issue of any consignment note in any form. In the absence of a contract or evidentiary indicia attracting the definition of GTA service, the transactions do not fall within the scope of GTA services liable to service tax under the reverse charge mechanism. The finding of the Original Authority and the upholding by the Commissioner (Appeals) that the amounts constituted GTA service was not sustained. Consequentially, the imposition of tax demand and the penalty confirmed under Section 78 of the Finance Act, 1994 cannot be sustained once the foundational conclusion of taxable GTA service is negatived.

Impugned order confirming demand was set aside, the appeal was allowed and the appellant entitled to consequential relief; the transactions were held not to be GTA services and thus not taxable under reverse charge.

Final Conclusion: The Tribunal allowed the appeal, holding that payments made to individual labourers were not GTA services (no consignment note or agency contract) and accordingly set aside the demand and related penalty, granting consequential relief to the appellant.

Business Auxiliary Service - Information Technology Service - system networking - procurement of goods or services which are inputs for the client - service tax levy - services rendered to a Government department not engaged in business

Business Auxiliary Service - Information Technology Service - system networking - procurement of goods or services which are inputs for the client - service tax levy - Whether the services rendered by the appellant (computerization of Sales Tax System and outsourced setting up of WAN) fall within the definition of "Business Auxiliary Service" and attract service tax for the period 2010-11 to 2011-12. - HELD THAT: - The Tribunal examined the definition of Business Auxiliary Service and the Explanation excluding Information Technology Service, which expressly includes activities such as "designing, developing or maintaining of computer software, or computerization, data processing or system networking". The activity outsourced to HSCL - establishment and operation of a Wide Area Network interconnecting computer systems at multiple sites - is by its nature system networking and therefore an Information Technology Service. Because the definition of Business Auxiliary Service excludes Information Technology Service, the procurement and sub-contracting of the WAN service cannot be recast as "procurement of goods or services which are inputs for the client" so as to attract service tax under BAS. The Tribunal also relied on its earlier decision in the appellant's own case for an earlier period, which held that similar activities did not attract service tax. Applying that precedent and the statutory Explanation, the Tribunal concluded that the services in question do not qualify as BAS and thus do not sustain the demand of service tax levy for the impugned period.

Demand of service tax under the category of Business Auxiliary Service for 2010-11 to 2011-12 is set aside; the services do not qualify as BAS.

Service tax levy - Disposition of the demand confirmed by lower authorities against the appellant for the impugned period. - HELD THAT: - Having found that the impugned activities are excluded from the definition of Business Auxiliary Service by virtue of being Information Technology Service, the Tribunal reversed the confirmed demands recorded in the impugned orders for the period 2010-11 to 2011-12 and set aside those orders.

Impugned orders confirming service tax demand are set aside and the appeals are allowed with consequential relief.

Service tax levy - Miscellaneous Application for change of cause title following merger of the original appellant entity. - HELD THAT: - The appellant filed an application to change the cause title from the earlier corporate name to M/s Tata Consultancy Services Ltd. The Tribunal considered the merger and the order of the Hon'ble High Court, Bombay effecting the name change, and allowed the application.

Miscellaneous Application for change of cause title is allowed.

Final Conclusion: The Tribunal allowed the appeals, set aside the service tax demands confirmed under the category of Business Auxiliary Service for 2010-11 to 2011-12 (holding the activities to be excluded as Information Technology Service), and permitted the change of cause title to M/s Tata Consultancy Services Ltd.; consequential relief, if any, to follow.

Commercial or Industrial Construction Services - taxability of construction of Toll Plaza and lanes - statutory exclusion of construction services in respect of roads - application of tribunal precedent

Commercial or Industrial Construction Services - taxability of construction of Toll Plaza and lanes - statutory exclusion of construction services in respect of roads - Construction of Toll Plaza and lanes does not qualify as taxable "Commercial or Industrial Construction Services" for the period in question. - HELD THAT: - The Tribunal applied its earlier decision in Jagdish Prasad Agarwal v. CCE, which held that services relating to roads were excluded from levy by the statutory provision that no service tax shall be levied on management, maintenance or repair of roads and that "Commercial or Industrial Construction Service" provided in respect of roads is specifically excluded. The phrase "in respect of roads" was construed broadly to mean "for the provision of" roads, and the demand challenged in that earlier decision-being for construction of Toll Plaza and lanes related to roads-was held unsustainable. Guided by that reasoning, the Tribunal concluded that construction of Toll Plaza and lanes in the present case is an activity in respect of the construction of roads and therefore not taxable under the impugned category.

Impugned orders confirming service tax demand for construction of Toll Plaza and lanes under "Commercial or Industrial Construction Services" are set aside and the appeal is allowed with consequential relief.

Final Conclusion: The Tribunal allowed the appeal, setting aside the service tax demand for construction of Toll Plaza and lanes for October, 2007 to October, 2009, on the ground that such construction is in respect of roads and therefore excluded from the levy of service tax under the impugned category.

Extended period of limitation - show cause notice - service tax demand - double adjudication on same facts - consulting engineering services - erection, commissioning and installation services - Nizam Sugar Factory precedent

Extended period of limitation - show cause notice - double adjudication on same facts - Nizam Sugar Factory precedent - Validity of the second show cause notice dated 21.10.2010 invoking extended limitation where an earlier show cause notice based on the same agreement had already been issued - HELD THAT: - The Tribunal found that both the show cause notices (dated 05.02.2009 and 21.10.2010) arose from the same agreement between the appellant and NOIDA Authority for laying water and sewerage lines. The second notice sought to invoke the proviso permitting extended limitation for a later period, but was based on the same set of facts that formed the basis of the earlier notice. Applying the legal principle in Nizam Sugar Factory, the second show cause notice could not sustain invocation of the extended period where the matter had already been subject of an earlier notice arising from the same agreement and facts. Consequently, the demand confirmed by the adjudicating authority pursuant to the second notice and the penalties imposed thereunder were held to be unsustainable.

Second show cause notice dated 21.10.2010 invoking extended limitation is not sustainable; impugned order set aside and the appeal allowed.

Final Conclusion: The Tribunal set aside the impugned order confirming demand and penalty based on the second show cause notice dated 21.10.2010 (period 2005-06 to 2009-10), holding it unsustainable in view of the earlier show cause notice arising from the same agreement and the ratio of Nizam Sugar Factory; appeal allowed.

Reverse charge mechanism - service tax on services received from outside India - requirement of a finding of receipt of service - reliance on bank certificates to establish taxable remittances - cryptic and vague adjudication - entitlement to consequential benefits

Reverse charge mechanism - service tax on services received from outside India - requirement of a finding of receipt of service - Validity of demanding service tax under reverse charge where no finding was recorded that services were received from outside India - HELD THAT: - The Tribunal found that the adjudicating authority confirmed a reduced service-tax demand without recording any finding or averment that the appellant had received any taxable service from outside India. The impugned demand under the reverse charge mechanism was therefore made in the absence of the primary factual and legal conclusion (receipt of service) necessary to sustain a service-tax liability. The Tribunal treated the lack of any such finding as rendering the adjudication cryptic and vague, and unsuitable to uphold a demand confirmed on that basis. [Paras 5]

Demand set aside because no finding was recorded that services were received from outside India; confirmed demand could not be sustained.

Reliance on bank certificates to establish taxable remittances - cryptic and vague adjudication - Whether a confirmed demand can be sustained solely on discrepant bank certificate entries where the bank could not explain the differential - HELD THAT: - The adjudicating authority relied on bank certificates and a subsequent unexplained revision in certificates to sustain a portion of the demand. The Tribunal noted that while a difference in certificate amounts was recorded, there was no finding that such remittances represented receipt of taxable services. On that basis the Tribunal held that confirming a demand merely because the bank could not explain a differential, without establishing receipt of service or linking the remittance to a taxable service, rendered the order cryptic and inadequate to uphold the liability. [Paras 3, 5]

Portion of demand based on unexplained discrepancy in bank certificates set aside for lack of adequate finding and linkage to receipt of taxable service.

Final Conclusion: The impugned adjudication is set aside as cryptic and vague for failing to record a finding of receipt of service from outside India and for relying on unexplained discrepancies in bank certificates; the appeal is allowed and the appellant is entitled to consequential benefits in accordance with law.

Pre-deposit requirement - entertainment of appeal - condonable period - parimateria application of provisions - remittance for disposal on merits

Pre-deposit requirement - entertainment of appeal - condonable period - Whether an appeal presented within the prescribed period can be dismissed solely because the mandatory pre-deposit was made belatedly beyond the condonable period. - HELD THAT: - The Division Bench decision in W.A.Nos.342-347 of 2017 was held to be binding and persuasive: a memorandum of appeal presented within time cannot be dismissed merely because the mandatory pre-deposit was made after the period of limitation (including any condonable period). The Court distinguished the Full Bench decision cited by the respondents on the basis of differing statutory language, and found the ratio of the Supreme Court in M/s. Ranjit Impex supportive of the proposition that non-deposit at presentation affects entertainability on merits but does not authorize summary rejection of an appeal that was lodged within time. As Section 35F of the Central Excise Act, 1944 is pari materia with the provision considered by the Division Bench, the same principle applies here; consequently the second respondent ought not to have dismissed the appeal solely for belated pre-deposit and is bound to consider the appeal on merits. [Paras 7, 8, 9, 31, 32]

The appeal could not be dismissed solely on the ground that the prescribed pre-deposit was made beyond the condonable period; the appellant's timely presentation precludes summary rejection for belated pre-deposit.

Remittance for disposal on merits - parimateria application of provisions - Remedy to be afforded where an appeal was dismissed for belated pre-deposit although presented within time. - HELD THAT: - Having set aside the order of dismissal, the High Court directed that the matter be remitted to the second respondent for fresh adjudication on merits. The Court required the appeal to be taken up and disposed of in accordance with law, allowing consideration of the cross appeal filed by the Revenue, and mandated a timeline for such disposal. This remand follows from the conclusion that dismissal for belated pre-deposit was impermissible where the appeal was lodged within the prescribed period. [Paras 10]

The order dismissing the appeal is set aside and the matter is remitted to the second respondent to take up and decide the appeal and the Revenue's cross appeal on merits and in accordance with law within six weeks.

Final Conclusion: Writ petition allowed; the order dismissing the appeal for belated pre-deposit set aside and the matter remitted to the appellate authority to decide the appeal and the Revenue's cross appeal on merits in accordance with law within six weeks.

Opportunity of hearing - remand for fresh consideration - cryptic order - refund of duty paid - benefit of expansion under exemption notification - limitation barring refund claim

Opportunity of hearing - cryptic order - remand for fresh consideration - Impugned Tribunal order set aside and matter remitted for fresh decision on merits after affording appellants an opportunity of hearing. - HELD THAT: - The Tribunal dismissed Excise Appeal No.571/2007 in the absence of the appellants and by a brief, cryptic order. Having regard to the substantive legal questions raised and the substantial amount involved, the Tribunal ought not to have decided the matter on merits without giving the appellants a proper opportunity to be heard. For these reasons the impugned order is set aside and the matter is remanded to the Tribunal to decide the appeal afresh on merits after hearing the parties. The appellants are directed to ensure representation before the Tribunal on the date of hearing fixed for the rehearing. [Paras 5, 6]

Impugned order dated 24.8.2017 is set aside and the appeal remitted to the Tribunal for fresh adjudication on merits after giving the appellants an opportunity of hearing; appellants to ensure representation; costs awarded.

Final Conclusion: The appeal is allowed to the extent that the Tribunal's order dated 24.8.2017 is set aside and the matter remitted for fresh adjudication on merits after affording the appellants an opportunity of hearing; appellants directed to be represented and costs of Rs. 3,000 awarded.

Clandestine removal / clandestine clearance - third party documentary evidence - corroborative evidence - reliance on statement of third party without cross examination - penalty for clandestine clearance

Clandestine removal / clandestine clearance - third party documentary evidence - corroborative evidence - reliance on statement of third party without cross examination - Whether a demand for excise duty and penalty for clandestine clearance can be sustained solely on the basis of third party diary entries and the third party's statement, in the absence of corroborative evidence and admissions by the assessee. - HELD THAT: - The adjudicating authority based the demand and penalty on diary entries recovered from a consignment agent and on that agent's statement; the directors of the appellant did not admit the alleged clandestine clearances and the third party did not undergo cross examination before the authority. Established precedent, relied upon by the Tribunal, holds that findings of clandestine removal cannot be upheld solely on third party documents unless there is clinching, corroborative evidence of clandestine manufacture or removal. In the facts of this case there is no independent corroboration of the diary entries or the third party's statement, and the assessee's representatives did not admit the charge. On that basis the Tribunal followed earlier decisions and concluded that the demand and penalty could not be sustained. [Paras 7, 9]

Impugned order set aside and appeal allowed insofar as the demand and penalty for clandestine clearance are concerned.

Final Conclusion: The Tribunal allowed the appeals, set aside the impugned adjudication confirming demand and imposing penalty based solely on third party diary entries and statement in the absence of corroborative evidence and requisite admissions.

Condonation of delay - application of Section 14 of the Limitation Act, 1963 - bonafide belief in seeking remedy before the High Court - reliance on a prior High Court decision - precedential value of earlier Tribunal decisions

Condonation of delay - application of Section 14 of the Limitation Act, 1963 - bonafide belief in seeking remedy before the High Court - reliance on a prior High Court decision - Application for condonation of delay of 610 days in filing the appeal before the Tribunal allowed. - HELD THAT: - The appellant received the adjudication order on 10.06.2016 and filed a writ petition before the High Court on 29.06.2016 relying on an earlier High Court decision in M/s Ambika International. The Tribunal found this reliance to constitute a bona fide belief that relief could be obtained from the High Court, thereby bringing the case within the scope of Section 14 of the Limitation Act, 1963. The Tribunal noted that although the Revenue relied on a contrary view in Team Global Logistics P Ltd, this Tribunal had earlier considered that position in M/s Ncectar Lifescience Ltd & Ors. and nonetheless condoned delay in similar circumstances. Applying that consistent Tribunal approach and the admitted facts of reliance on the High Court decision, the Tribunal held that the appellant was entitled to the benefit of Section 14 and condoned the delay in filing the appeal. [Paras 4]

Delay of 610 days in filing the appeal is condoned and the application for condonation is allowed.

Final Conclusion: The Tribunal allowed the application for condonation of delay, holding that the appellant's bona fide reliance on a prior High Court decision entitled it to the benefit of Section 14 of the Limitation Act, 1963, and therefore condoned the 610-day delay in filing the appeal.

Refund of education cess and higher education cess as continuation of duty - Entitlement to refund/self-credit through PLA - Invalidity of restrictive notifications and their inapplicability to refund claims - Notification No. 56/2002-CE as basis for refund/self-credit

Refund of education cess and higher education cess as continuation of duty - Entitlement to refund/self-credit through PLA - Whether the appellants are entitled to refund or self-credit of education cess and higher education cess paid by them. - HELD THAT: - The Tribunal applied the principle laid down by the Hon'ble Apex Court in the case of M/s. SRD Nutrients Pvt. Limited vs. CCE, Guwahati , holding that education cess and higher education cess constitute a continuation of the duty paid by the assessee. Consequently, where an assessee is entitled to refund of duty paid through PLA, the same entitlement extends to the education cess and higher education cess paid. On this basis the Tribunal concluded that the appellants are entitled to claim refund or self-credit of the education cess and higher education cess paid through PLA under the governing refund framework.

Appellants entitled to claim refund/self-credit of education cess and higher education cess paid through PLA.

Invalidity of restrictive notifications and their inapplicability to refund claims - Notification No. 56/2002-CE as basis for refund/self-credit - Whether Notification Nos. 19/2008-CE dated 27.03.2008 and 34/2008-CE dated 10.06.2008 restrict or preclude the appellants from claiming refund/self-credit under Notification No. 56/2002-CE dated 14.11.2002. - HELD THAT: - The Tribunal noted that the notifications in question were examined and quashed by the Hon'ble J & K High Court in Reckit Benckiser vs. UOI . Relying on that decision and the Tribunal's earlier decision in M/s. Biostadt India Limited & others , the Tribunal held that the restrictive prescriptions of Notification Nos. 19/2008-CE and 34/2008-CE cannot be applied to deny refund or self-credit where Notification No. 56/2002-CE permits claim of refund/self-credit of duty paid through PLA. Accordingly, the Tribunal found that the appellants' entitlement under Notification No. 56/2002-CE remains intact and cannot be curtailed by the later notifications.

Notifications 19/2008-CE and 34/2008-CE cannot restrict the appellants' right to refund/self-credit under Notification No. 56/2002-CE; appellants entitled to claim refund/self-credit through PLA.

Final Conclusion: Appeals allowed; appellants entitled to refund/self-credit of education cess and higher education cess paid through PLA under Notification No. 56/2002-CE, and the restrictive effect of Notification Nos. 19/2008-CE and 34/2008-CE is not sustained.

Includibility of third party inspection charges in assessable value - optional inspection at buyer's instance - reimbursement of customer-directed inspection charges - limitation for raising demand by show cause notice

Includibility of third party inspection charges in assessable value - optional inspection at buyer's instance - reimbursement of customer-directed inspection charges - Third party inspection charges reimbursed to the assessee at the insistence of customers are not includible in the assessable value. - HELD THAT: - The Tribunal found that the extra inspections in question were carried out only under the directions of the buyers and were optional in nature, whereas the appellant carried out its regular inspection through in-house facilities which were not in dispute. Relying on the principle that inspection charges not mandated and undertaken at the buyer's option do not form part of the assessable value, the confirmation of duty demand in respect of such third party inspection charges was held unsustainable. [Paras 1, 2]

The demand of duty insofar as it seeks to include third party inspection charges (undertaken at customers' insistence and reimbursed) in the assessable value is set aside.

Limitation for raising demand by show cause notice - The demand raised by the show cause notice dated 10.01.2007 for the period 01.04.2002 to 31.10.2006 is barred by limitation. - HELD THAT: - The Tribunal accepted the appellant's contention that the Revenue failed to furnish justifiable reasons for invoking an extended period for raising demand. In absence of any valid explanation to extend limitation, the demand for the specified period was found to be time-barred. [Paras 3]

The demand in respect of the period 01.04.2002 to 31.10.2006 is barred by limitation and cannot be sustained.

Final Conclusion: The impugned order is set aside; the appeal is allowed and the demands confirmed therein are annulled with consequential relief to the appellants.

Summary order. Delay in filing condoned; permission granted to file additional documents; exemption from filing official translation allowed; Special Leave Petitions dismissed for want of merit.

Offence under Section 138 of the Negotiable Instruments Act - dishonour of cheque for insufficiency of funds / exceeds arrangement - appellate reappraisal of acquittal for perversity or misappreciation of evidence - probative value of cheque and bank account evidence

Offence under Section 138 of the Negotiable Instruments Act - dishonour of cheque for insufficiency of funds / exceeds arrangement - probative value of cheque and bank account evidence - Whether the trial Court's acquittal of the accused for an offence under Section 138 of the Negotiable Instruments Act was vitiated by misappreciation of evidence and liable to be set aside - HELD THAT: - The High Court examined the complainant's evidence that the accused signed and handed over two cheques (Ex.CW1/A and Ex.CW1/B) to discharge part of a legally recoverable debt, the consequent dishonour marked 'Exceeds Arrangement', and the absence of effective contradiction in cross-examination to the complainant's account. The trial Court relied on documentary material (Ex.DW2/A and Ex.DW2/B) suggesting the proprietary concern was owned by another person; the High Court concluded that reliance thereon was misplaced because the bank account against which the cheques were drawn uncontrovertedly stood in the name of the accused (testimony of DW-1) and the documents relied upon did not pertain to the paying bank. The Court held that the trial Court failed to appraise the evidence in a wholesome and harmonious manner and that its conclusion suffered from gross perversity or misappreciation. Applying the statutory evidentiary presumption in the context of dishonoured cheques and the unrebuffed testimony and documentary proof linking the cheques to the accused, the High Court found that the complainant had discharged the requisite onus and that conviction was warranted. [Paras 8, 9, 10]

Trial Court's acquittal quashed; accused convicted for the offence under Section 138 of the Negotiable Instruments Act.

Appellate reappraisal of acquittal for perversity or misappreciation of evidence - Direction as to further procedure after conviction - HELD THAT: - Having set aside the acquittal and recorded a conviction, the High Court directed that the accused be produced before the Court on a specified date for hearing on the quantum of sentence. The conviction was therefore concluded by the Court, while the question of appropriate sentence was left for hearing on the notified date. [Paras 13]

Accused to be produced before the Court on the specified date for hearing on quantum of sentence.

Final Conclusion: The High Court allowed the appeal, quashed and set aside the trial Court's acquittal, convicted the accused for the offence punishable under Section 138 of the Negotiable Instruments Act and directed his production on the notified date for hearing on sentence.

Double jeopardy / autrefois convict or acquit - Same offence test - Mens rea requirement distinguishing Section 138 NI Act and offences under IPC - Inherent power under Section 482 Cr.P.C. - to be exercised sparingly - Early stage of investigation as a factor against quashment

Double jeopardy / autrefois convict or acquit - Same offence test - Mens rea requirement distinguishing Section 138 NI Act and offences under IPC - Plea of double jeopardy founded on pendency of proceedings under Section 138 NI Act cannot oust prosecution under Sections 420, 406 and 120-B IPC at this stage. - HELD THAT: - The Court held that Article 20(2) and Section 300 Cr.P.C. are not attracted merely because proceedings under Section 138 NI Act are pending. The correct test is whether the earlier and the later offences constitute the "same offence" in the sense that the facts constituting one are sufficient to justify conviction for the other. Proceedings under Section 138 NI Act concern dishonour of cheque and do not require proof of fraudulent or dishonest intention (mens rea) in the manner required for offences like cheating or criminal breach of trust under the IPC. Consequently, the pendency of NI Act proceedings does not operate as an automatic bar to criminal proceedings for offences where mens rea and different ingredients are alleged; the plea of double jeopardy was therefore rejected on the material before the Court.

Plea of double jeopardy was repelled and does not justify quashment of the FIR on the facts as alleged.

Inherent power under Section 482 Cr.P.C. - to be exercised sparingly - Early stage of investigation as a factor against quashment - Quashment of the FIR under Section 482 Cr.P.C. is not warranted at the present infant stage of investigation. - HELD THAT: - Relying on the mandate that inherent jurisdiction be exercised with restraint, the Court observed the investigation was at an early stage, statements/interrogation of the petitioners were yet to be recorded, and the investigating officer remains entitled to take decisions (including in relation to arrest) in accordance with law and authoritative guidance. Given the existence of allegations of criminal breach of trust, cheating and conspiracy and the nascent stage of enquiry, the Court found no basis to interfere by quashing the FIR under Section 482 Cr.P.C.

The Court declined to quash the FIR and dismissed the petition.

Final Conclusion: Because the offences under the NI Act and the IPC involve different ingredients-particularly the mens rea element-and the investigation into the alleged criminal breach, cheating and conspiracy is at an early stage, the plea of double jeopardy was rejected and the petition for quashment under Section 482 Cr.P.C. was dismissed; no directions were given to the police regarding arrest or investigation at this juncture.