TaxTMI Updates e-Newsletter
Sep 25,2021

HSN classification - Classification under Heading 40.04 (waste, parings and scrap of rubber and powders and granules obtained therefrom) - Scope and Explanatory Notes to Chapter 40 - Tariff treatment of powders and granules obtained from waste rubber - GST rate applicable to goods classified under Heading 4004

HSN classification - Classification under Heading 40.04 (waste, parings and scrap of rubber and powders and granules obtained therefrom) - Tariff treatment of powders and granules obtained from waste rubber - GST rate applicable to goods classified under Heading 4004 - Scope and Explanatory Notes to Chapter 40 - Crumb rubber/granules produced from used tyres are classifiable under Heading 4004 of the GST Tariff and attract GST at 18% - HELD THAT: - The Authority considered the applicant's contention that the product falls under Heading 40.02 but found that 40.02 deals with synthetic rubber and factice in primary forms such as plates, sheets or strip and mixtures in similar forms, which does not cover crumb/granules. The Explanatory Notes and the specific description of Heading 40.04 cover waste, parings and scrap of rubber (other than hard rubber) and "powders and granules obtained therefrom," expressly including powders and granules derived from worn-out tyres and ground waste of vulcanised rubber. Note 6 to Chapter 40 defines "waste, parings and scrap" for the purpose of heading 4004 as rubber waste from manufacture and working and goods not usable as such because of cutting up, wear or other reasons. The applicant admitted producing crumb rubber/granules from used/waste tyres which are worn out and not usable as such; invoices on record also refer to the goods as classified under 4004. The MOEF clarifications relied upon by the applicant were considered but do not support classification under 4002 in the present facts and were not determinative. Applying the chapter scope and notes, the Authority concluded the impugned goods are powders/granules obtained from waste tyres and thus fall within Heading 4004, attracting the GST rate provided for that heading. [Paras 5]

Crumb rubber/granules derived from used tyres are classifiable under Heading 4004 and liable to GST @18% (9% CGST + 9% SGST or 18% IGST).

Final Conclusion: The Advance Ruling answers that crumb rubber/granules produced from used/waste tyres are classifiable under Heading 4004 of the GST Tariff and are liable to GST at 18%.

Pure services - Exemption under Notification No. 12/2017-C.T.(Rate) - Government Entity (definition in Notification No. 31/2017) - Functions entrusted under Article 243W of the Constitution - Registration threshold under Section 22 and exclusion from registration under Section 23(1)(a)

Pure services - Exemption under Notification No. 12/2017-C.T.(Rate) - Government Entity (definition in Notification No. 31/2017) - Functions entrusted under Article 243W of the Constitution - Whether the services to be provided by M/s. Mekorot Development & Enterprise Ltd. (MDE) to Maharashtra Jeevan Pradhikaran (MJP) qualify for exemption under Notification No. 12/2017-C.T.(Rate) dated 28.06.2017. - HELD THAT: - The Authority found that the contract envisages only consultancy deliverables (study, survey, design and drafting of a Water Supply Master Plan) and does not include supply of goods; accordingly the supply is a pure service. The definition of "Government Entity" in Notification No. 31/2017 was applied to MJP, and on the material before the Authority (statutory origin of MJP, its constitution under the Maharashtra Jeevan Pradhikaran Act and its functions and composition) MJP was held to fall within that definition as an entity established by the State Government with full participation/control to carry out functions entrusted by the State. The services to be provided relate to water supply planning and management that fall within the functions entrusted to a Municipality under Article 243W. Applying these conclusions to Entry No. 3 of Notification No. 12/2017, the Authority held that the three pre conditions (pure services; supply to Central/State/local authority or Government Entity; activity in relation to a function entrusted under Article 243G/243W) are satisfied and therefore the impugned services are exempt from GST under Notification No. 12/2017-C.T.(Rate). [Paras 5]

The work to be carried out by MDE under the contract with MJP qualifies for exemption under Notification No. 12/2017-C.T.(Rate) dated 28.06.2017.

Registration threshold under Section 22 and exclusion from registration under Section 23(1)(a) - Exemption under Notification No. 12/2017-C.T.(Rate) - Whether MDE is required to obtain GST registration given that the supplies to MJP are held to be exempt. - HELD THAT: - The Authority noted the statutory scheme: Section 22(1) requires registration for persons making taxable supplies upon crossing the prescribed turnover threshold, while Section 23(1)(a) exempts from registration persons exclusively engaged in supplies that are not liable to tax or wholly exempt. Applying these provisions, the Authority held that where the applicant's only supplies are the exempt services under the impugned contract with MJP, the applicant is not required to obtain GST registration. The Authority qualified this conclusion by observing that if the applicant undertakes any taxable supplies of goods or services (outside the exempt contract) and crosses the threshold under Section 22, registration would become mandatory. [Paras 5]

If the impugned supplies to MJP are the only supplies undertaken by MDE, registration under GST is not required; if MDE undertakes any taxable supplies and crosses the turnover threshold, registration will be required under Section 22.

Final Conclusion: The Authority declined to answer question 1 (withdrawn). It held that the consulting services to be provided by MDE to MJP are pure services to a Government Entity relating to functions under Article 243W and are therefore exempt under Notification No. 12/2017-C.T.(Rate). Consequentially, MDE need not obtain GST registration if those exempt supplies are its only supplies; however, registration would be required if MDE makes any taxable supplies and exceeds the statutory turnover threshold.

Electronic commerce operator - tax liability under Section 9(5) of the CGST Act - value of supply - transaction value under Section 15(1) - discount exclusion under Section 15(3)(a) - classification and rate for passenger transport by radio taxi under Notification No.11/2017 (Entry 8(ii)) - Service Accounting Code 996412

Electronic commerce operator - tax liability under Section 9(5) of the CGST Act - Whether the applicant is an electronic commerce operator and liable to be registered and treated as the supplier for GST purposes under Section 9(5) of the CGST Act. - HELD THAT: - The Authority applied the statutory definitions of "electronic commerce" and "electronic commerce operator" and examined Notification No.17/2017 which notifies certain services for payment of tax by the electronic commerce operator. The applicant's platform connects customers with drivers and collects consideration, raises invoice and remits amounts to drivers after deducting commission. Under Section 9(5), where services are supplied through an electronic commerce operator and notified, the operator is treated as the supplier liable to pay tax. The Authority agreed with the applicant's submission that, on a strict reading of Section 9(5) and the notification, the applicant steps into the shoes of the driver and is liable to discharge GST obligations and therefore must obtain registration as an electronic commerce operator. [Paras 9]

M/s. Gensol is an e-commerce operator, liable to be registered and to pay GST as if it were the supplier under Section 9(5) of the CGST Act.

Value of supply - transaction value under Section 15(1) - discount exclusion under Section 15(3)(a) - Whether GST payable by the applicant on passenger transportation services is to be computed on the net amount after deduction of discounts. - HELD THAT: - The Authority examined Section 15(1) which defines transaction value and Section 15(3)(a) which excludes discounts given before or at the time of supply if duly recorded in the invoice. The applicant offers discounts to customers, records them as marketing expenditure and invoices the customer for the net amount. Applying these provisions, the Authority held that the taxable value is the transaction value determined under Section 15(1) and that discounts given at or before supply and recorded in the invoice are excludable under Section 15(3)(a). The Authority further observed that the marketing contribution by the applicant to the driver does not constitute a supply by the driver and hence is not taxable as part of the driver's consideration. [Paras 9]

The value of supply for passenger transportation services is the gross charge less the discount (i.e., taxable net amount) where the discount is given at or before supply and recorded in the invoice.

Classification and rate for passenger transport by radio taxi under Notification No.11/2017 (Entry 8(ii)) - Service Accounting Code 996412 - What is the rate of GST and the Service Accounting Code applicable to the passenger transportation services supplied through the applicant's electronic platform? - HELD THAT: - The Authority considered Notification No.11/2017 which prescribes rates and descriptions for passenger transport services and includes a specific entry for "transport of passengers by radio taxi" attracting 2.5% CGST + 2.5% SGST (total 5%) subject to conditions set out in the notification. The Authority noted that the applicant's platform enables tracking and two-way communication consistent with the definition of "radio taxi" in the notification. On this basis, and subject to the stated conditions in Entry 8(ii), the Authority accepted the applicant's proposed classification and rate. [Paras 9]

The Service Accounting Code is 996412 and GST is leviable at 5% (2.5% CGST + 2.5% SGST) on the subject supply, subject to fulfilment of the condition in Entry 8(ii) of Notification No.11/2017.

Final Conclusion: The Authority ruled that M/s. Gensol is an e commerce operator required to register and, under Section 9(5), is liable to pay GST as if it were the supplier; taxable value is the transaction value net of discounts recorded in the invoice; and the supply is classifiable under SAC 996412 with GST leviable at 5% (2.5% CGST + 2.5% SGST) subject to the notification condition.

Transfer of going concern - Supply under Section 7 CGST Act - Services by way of transfer of a going concern - Notification No.12/2017-Central Tax (Rate) - Schedule II(4) - transfer of business assets - Consideration - concession fee as part of consideration - Reimbursement connected to an exempt supply

Transfer of going concern - Supply under Section 7 CGST Act - Classification of the transaction between AAI and the SPV as a supply under Section 7 of the CGST Act - HELD THAT: - The Authority examined the concession agreement and applied the statutory definitions of 'goods', 'services' and 'business'. Business is not movable property and therefore not goods; the statutory scheme and Notification No.12/2017 indicate that transfer of a going concern is to be treated as a service. The Agreement transfers the airport operations, assets, revenues and liabilities to the SPV for a foreseeable period (50 years), includes steps to ensure continuity (novation of contracts, insurance, transfer of assets and employees) and involves consideration payable by the SPV. Taking these factors together and construing the CGST Act and the exemption notification, the Authority held that the arrangement is a transfer of a going concern and that such transfer constitutes a supply of service under Section 7 CGST Act. [Paras 22, 23, 24, 25]

The transaction is a supply of service under Section 7 CGST Act because it is a transfer of a going concern.

Schedule II(4) - transfer of business assets - Transfer of going concern - Whether Schedule II(4) (transfer of business assets) governs classification of the subject transaction - HELD THAT: - Schedule II(4) deals with treatment of transfers of business assets as supply of goods or services and with consequences where a taxable person ceases to be such. In the present case AAI has not ceased to be a taxable person and the substance of the contract is a transfer of a going concern (an independent part) to the SPV. The Authority declined to dissect the contract into individual asset transfers and held that vivisecting the contract would be contrary to its substance; therefore Schedule II(4) need not be further applied to override the classification of the entire arrangement as a transfer of going concern service. [Paras 26, 27]

No need to apply Schedule II(4) to treat the subject transaction as anything other than a transfer of going concern service.

Services by way of transfer of a going concern - Notification No.12/2017-Central Tax (Rate) - Exemption under Section 11(1) CGST Act - Whether the transfer of the going concern is covered by Entry No.2 of Notification No.12/2017 and thus exempt - HELD THAT: - The Authority took its cue from the exemption power under Section 11(1) CGST Act and noted that Notification No.12/2017 expressly describes as a taxable description 'services by way of transfer of a going concern, as a whole or an independent part thereof'. Having held that the transaction is a transfer of a going concern service, the Authority concluded that the subject supply falls within Entry No.2 of Notification No.12/2017 and is therefore exempt from GST. [Paras 24, 29]

The transfer of the going concern is covered by Entry No.2 of Notification No.12/2017 and is exempt from GST.

Consideration - concession fee as part of consideration - Supply under Section 7 CGST Act - Whether concession fees paid by the SPV to AAI form part of the consideration for the supply - HELD THAT: - The Agreement provides for various payments by the SPV to AAI (upfront amounts, payments relating to deemed RAB, and monthly concession fees calculated by a passenger-based formula). The Authority found that such payments constitute consideration for the transfer of the business rights and obligations and therefore form part of the consideration for the supply (transfer of going concern service). [Paras 25, 27]

Concession fees are part of the consideration for the transfer of the going concern service.

Reimbursement connected to an exempt supply - Transfer of going concern - scope of exemption - GST treatment of reimbursements (staff cost and municipal/property/water charges) arising under the contract - HELD THAT: - The Authority observed that the contract is for transfer of a going concern service which it has held to be exempt under Notification No.12/2017. The invoices raised by AAI for recovery/reimbursement of select employees' emoluments and for municipal/property/water charges arise pursuant to the same contract and the supply in question has been held to be an exempt transfer of a going concern. Accordingly the Authority ruled that such consideration/reimbursements are covered by the exemption applicable to the underlying supply. [Paras 28, 29]

Reimbursements of staff cost and municipal/property/water charges arising under the contract are covered by the exemption applicable to the transfer of going concern service.

Supply of spares and consumables - Outside-scope supplies - taxable as per law - GST applicability on proposed future supplies of spares and consumables by AAI to SPV which are outside the concession agreement - HELD THAT: - The applicant withdrew seeking the tax rate for specific items and stated details were not available; the Authority noted the proposed supplies of spares and consumables fall outside the subject contract and were not sufficiently specified for a rate ruling. Consequently, the Authority declined to pronounce a rate and held that such supplies, being outside the contract, are leviable to tax as per law when made, and any rate/assessment must be determined on the facts and law applicable to those specific supplies. [Paras 28, 29]

Proposed supplies of spares and consumables outside the contract are taxable as per law; no specific rate ruling is given.

Final Conclusion: The Authority ruled that the transaction between AAI and the SPV constitutes a transfer of a going concern and is a supply of service under Section 7 CGST Act; that such supply falls within Entry No.2 of Notification No.12/2017 and is therefore exempt from GST; concession fees form part of the consideration and reimbursements arising under the contract are covered by the exemption; supplies of spares and consumables outside the contract are taxable as per law and no specific rate was ruled.

Classification under HSN 5903 - Textile fabrics impregnated, coated, covered or laminated with plastics - Explanatory Notes to HSN 5903 - Visible impregnation or coating discernible to the naked eye - Non-rigid test (bendable around 7 mm cylinder at 15-30 C) - Textile partially coated or spattered with thermoplastic particles capable of bonding by heat and pressure - Application of Chapter Notes and General Rules for the Interpretation of the Customs Tariff - Fusible interlining

Classification under HSN 5903 - Textile fabrics impregnated, coated, covered or laminated with plastics - Explanatory Notes to HSN 5903 - Visible impregnation or coating discernible to the naked eye - Non-rigid test (bendable around 7 mm cylinder at 15-30 C) - Textile partially coated or spattered with thermoplastic particles capable of bonding by heat and pressure - Fusible interlining - Application of Chapter Notes and General Rules for the Interpretation of the Customs Tariff - Whether the partially coated polyester fabric used as fusible interlining falls for classification under HSN 5903. - HELD THAT: - The Authority examined the description of HSN 5903 and its Explanatory Notes and applied the General Rules for Interpretation and Chapter Notes. The material facts found from inspection and submissions were that the fabric bears visible scattered micro-dot plastic coating, is bendable without fracturing around a 7 mm cylinder at 15-30 C, the coating is present on one side only, and the thermoplastic dots are capable of providing a bond to other fabrics on application of heat and pressure. These findings satisfy the conditions set out in the Explanatory Notes to HSN 5903 (visible coating, non-rigidity, not coated both sides or completely embedded, and spattered thermoplastic particles capable of bonding). The Authority held that chapter notes and explanatory guidance are part of the applicable tariff interpretation and applied them accordingly. The Authority also noted that it reached this conclusion without relying on the Board Circular cited by the applicant and that prior advance rulings are not binding except on parties who sought them. [Paras 15, 16, 17, 18, 21]

The subject partially coated polyester fusible interlining fabric is classifiable under HSN 5903.

Final Conclusion: Advance Ruling: The partially coated polyester fabric supplied as fusible interlining is classifiable under HSN 5903; the Authority applied HSN text, Chapter Notes and Explanatory Notes and recorded factual findings (visible dot coating, non-rigidity, one-sided spattered thermoplastic capable of bonding) to reach the classification.

Maintainability of advance ruling in presence of pending investigation - mis-declaration in advance ruling application - deeming of inquiry under Section 70(1) as a judicial proceeding - scope of the proviso to Section 98(2) - inclusion of investigation proceedings - advance ruling cannot be used to frustrate ongoing inquiry

Maintainability of advance ruling in presence of pending investigation - deeming of inquiry under Section 70(1) as a judicial proceeding - scope of the proviso to Section 98(2) - inclusion of investigation proceedings - Whether the Advance Ruling application was maintainable when an investigation/summons under Section 70(1) and search under Section 67(2) had been initiated against the applicant on the same question. - HELD THAT: - The Authority found that DGGI had initiated search and summons proceedings against the applicant prior to filing of the GST-ARA-01 application and that proceedings under Section 70(1) are to be treated as judicial proceedings by virtue of the deeming provision. The Authority held that the words "any proceeding" in the proviso to Section 98(2) encompass investigation proceedings launched under Section 70 of the CGST Act; consequently an application for an Advance Ruling on an issue already the subject of such investigation is not maintainable. The Authority further observed that the investigation related to the same classification issue for which the applicant sought a Ruling, and therefore the application was barred by the pendency of those proceedings. [Paras 6, 9, 11, 13, 14]

Application was non-maintainable because identical investigation/summons proceedings under Section 70(1) had been initiated prior to filing of the Advance Ruling application.

Mis-declaration in advance ruling application - advance ruling cannot be used to frustrate ongoing inquiry - Whether the applicant's declaration in Sr. No.17 of Form GST ARA-01 (that no proceedings were pending) was false and whether that mis-declaration affected admissibility. - HELD THAT: - On examining the application form and hearing the parties, the Authority found that the applicant had declared there were no proceedings pending on the question raised, notwithstanding that search authorisation and summons had been issued and a combined statement recorded. The Authority held that the applicant suppressed this material fact both in the declaration and during oral enquiry, thereby contravening the requirement in the application and attempting to obtain a Ruling to frustrate the ongoing inquiry. This mis-declaration was treated as a sufficient ground to reject the application as inadmissible. [Paras 8, 10, 13]

The applicant mis-declared the existence of pending proceedings; the suppression of material facts rendered the application inadmissible and justified its rejection.

Final Conclusion: The Advance Ruling application was rejected as non-maintainable and inadmissible: the same issue was already the subject of DGGI search and summons proceedings which are judicial proceedings within the meaning of the statute, and the applicant had mis-declared the non-existence of such proceedings in its application.

Course and furtherance of business - input tax credit entitlement under Section 16(1) of the CGST Act - inputs or input services used or intended to be used in the course or furtherance of business - Corporate Social Responsibility (CSR) activities excluded from normal course of business under Companies (CSR Policy) Rules - pre-GST authorities and decisions not determinative under GST scheme

Course and furtherance of business - Corporate Social Responsibility (CSR) activities excluded from normal course of business under Companies (CSR Policy) Rules - input tax credit entitlement under Section 16(1) of the CGST Act - inputs or input services used or intended to be used in the course or furtherance of business - Whether inputs and input services procured for mandatory CSR activities qualify as being in the course or furtherance of business and hence eligible for input tax credit under Section 16(1) of the CGST Act - HELD THAT: - The Companies (CSR Policy) Rules, 2014 (and the amended definition w.e.f. 23-1-2021) exclude CSR activities from activities undertaken in pursuance of a company's normal course of business. Section 16(1) CGST permits input tax credit only where inputs or input services are used or intended to be used in the course or furtherance of business. Applying the statutory scheme, CSR activities-being excluded from the normal course of business by the Companies Rules-do not fall within the 'course or furtherance of business' for the purposes of Section 16(1). Reliance placed on pre GST decisions and on an Advance Ruling of another State AAR was held to be inapposite: pre GST precedent under the Cenvat regime and Income tax authority decisions do not govern the GST entitlement under Section 16(1), and an AAR decision is binding only on the applicant to whom it was rendered. In view of the statutory exclusion and the foregoing, CSR expenditure cannot be treated as eligible ITC under Section 16(1), and therefore item wise consideration under Section 17(5) was not undertaken. [Paras 13, 14, 15]

CSR activities are excluded from the company's normal course of business and hence inputs and input services procured for mandatory CSR activities are not eligible for input tax credit under Section 16(1) of the CGST Act.

Final Conclusion: The Advance Ruling holds that CSR activities, as excluded from the normal course of business by the Companies (CSR Policy) Rules, do not qualify as activities in the course or furtherance of business; accordingly, input tax credit on inputs and input services procured for mandatory CSR activities is not admissible under Section 16(1) of the CGST Act.

Government Entity - Governmental Authority - functions entrusted under Article 243G and Article 243W of the Constitution - exemption for pure service provided to Governmental Authority or Government Entity

Government Entity - exemption for pure service provided to Government Entity - Whether GSRDC qualifies as a Government Entity. - HELD THAT: - The Authority examined the Government of Gujarat resolution establishing GSRDC and noted that GSRDC is a wholly owned company of the State of Gujarat, incorporated to undertake development of roads and bridges and to facilitate, regulate and assist the Roads & Buildings Department. The Authority found that GSRDC is established by the Government and is 100% owned and controlled by the State, and that its functions are carried out pursuant to entrustment by the State. On these facts, GSRDC satisfies the definition of a Government Entity as envisaged in the relevant notification relied upon by the applicant. [Paras 9]

GSRDC is a Government Entity.

Governmental Authority - functions entrusted under Article 243G and Article 243W of the Constitution - exemption for pure service provided to Governmental Authority - Whether GSRDC qualifies as a Governmental Authority when it constructs municipal or village roads/bridges. - HELD THAT: - The Authority noted that roads and bridges are activities entrusted to municipalities under Article 243W and to Panchayats under Article 243G. It was recorded that, in the course of its projects, GSRDC constructs roads, bridges and related works on land falling within municipal or panchayat jurisdiction. Where GSRDC performs construction of municipal roads/bridges or village roads/bridges - i.e., activities entrusted to those local bodies under the Constitution - it meets the criteria of a Governmental Authority for the purpose of the notification and related exemption analysis. [Paras 10]

GSRDC is, in addition to being a Government Entity, a Governmental Authority in cases where it constructs municipal roads/bridges or village roads/bridges.

Final Conclusion: The Authority ruled that GSRDC is a Government Entity and, additionally, when it undertakes construction of municipal or village roads/bridges (activities entrusted to municipalities or panchayats under Articles 243W/243G), it also qualifies as a Governmental Authority for the purposes of the notification relied upon by the applicant.

Classification at HSN 310221 - HSN Explanatory Notes - GST at concessional rate for fertilizers - GST at standard rate for non-fertilizer use - Circular No.54/28/2018-GST

Classification at HSN 310221 - HSN Explanatory Notes - Classification of Ammonium Sulphate - HELD THAT: - The Authority found a specific tariff entry for 'Ammonium Sulphate' at CTH 310221 and relied on the HSN Explanatory Notes which state that Ammonium Sulphate, whether used as fertiliser or not, is classifiable at CTH 310221. Having examined the product description and the relevant tariff provision, the Authority concluded that Ammonium Sulphate falls under HSN 310221. [Paras 10, 11]

Ammonium Sulphate is classifiable at HSN 310221.

GST at concessional rate for fertilizers - Circular No.54/28/2018-GST - Levy of GST at 5% on supplies of Ammonium Sulphate for agricultural use - HELD THAT: - The Authority considered Notification No.1/2017-Central Tax (Rate) and CBIC Circular No.54/28/2018-GST which clarifies that fertilizers supplied for direct use as fertilizers, or supplied for use in manufacturing other complex fertilizers for agricultural use, attract the concessional rate. Applying that clarification to the subject classification, the Authority held that supplies of Ammonium Sulphate for direct use as fertilizer or for use in manufacturing complex agricultural fertilizers are leviable to GST at 5%. [Paras 10, 11]

GST at 5% is leviable on Ammonium Sulphate supplied for direct use as fertilizers or for use in manufacturing complex fertilizers for agricultural use.

GST at standard rate for non-fertilizer use - Levy of GST at 18% on supplies of Ammonium Sulphate for non-agricultural use - HELD THAT: - Having classified Ammonium Sulphate at HSN 310221 and distinguished its agricultural uses from other uses, the Authority held that supplies of the product for purposes other than as a fertilizer do not fall within the concessional treatment and therefore attract the standard rate. The ruling accordingly specifies that supplies for non-fertilizer use are leviable to GST at the higher rate. [Paras 10, 11]

GST at 18% is leviable on Ammonium Sulphate supplied for purposes other than fertilizer use.

Final Conclusion: The Authority ruled that Ammonium Sulphate is classifiable at HSN 310221; supplies for direct agricultural use or for manufacture of complex agricultural fertilizers attract GST at 5%, whereas supplies for other non-fertilizer uses attract GST at 18%.

Job work - Services by way of job work - Manufacturing services on physical inputs owned by others - Classification under Heading 9988 - Applicability of concessional rate for job work (entry (id))

Job work - Services by way of job work - Whether the applicant's activity of converting LNG owned by its customers into RLNG amounts to rendering of service by way of job work within the meaning of Section 2(68) of the CGST Act, 2017. - HELD THAT: - The Authority noted the statutory definition of job work as any treatment or process undertaken by a person on goods belonging to another registered person. The subject activity-re-gasification of LNG into RLNG-is a process performed by the applicant on LNG owned by its customers who are GST-registered. The Authority recorded that LNG is goods classified at HSN 2711 and identified specific customers who are registered persons. Applying the statutory definition to these facts, the Authority concluded that the conversion of LNG into RLNG is a treatment/processing of goods belonging to another registered person and therefore falls within the definition of job work. [Paras 7, 8]

The re-gasification activity amounts to rendering of service by way of job work.

Classification under Heading 9988 - Services by way of job work - Applicability of concessional rate for job work (entry (id)) - Whether the service of re-gasification by way of job work is classifiable under entry (id) of Heading No. 9988 at Sl. No. 26 of Notification No. 11/2017-CT (Rate) as amended and chargeable to CGST at 6%. - HELD THAT: - Having held the activity to be job work, the Authority examined the entries under Heading 9988 and the Government Circular clarifying the scope of item (id) which prescribes the GST rate for job work services. The Authority observed a demarcation between item (id) covering job work services and item (iv) covering manufacturing services on physical inputs owned by others, and relied on Circular No.126/45/2019-GST which clarified that entry (id) covers job work services. Applying that clarification to the facts that the applicant performs re-gasification on LNG owned by registered customers, the Authority held that the activity merits coverage under entry (id) of Heading 9988. [Paras 8, 9, 10]

The service of re-gasification by way of job work is classifiable under entry (id) of Heading 9988 and is liable to CGST at 6%.

Final Conclusion: Petronet's re-gasification of LNG owned by its GST-registered customers constitutes job work and is classifiable under entry (id) of Heading 9988 at Sl. No. 26 of Notification No. 11/2017-CT (Rate) as amended, liable to CGST at 6%.

Constitutional validity of Section 16(2)(c) of the Central Goods and Services Tax Act, 2017 - transfer petitions under Article 139A read with Article 142 of the Constitution of India

Constitutional validity of Section 16(2)(c) of the Central Goods and Services Tax Act, 2017 - transfer petitions under Article 139A read with Article 142 of the Constitution of India - Transfer petitions by the Union seeking transfer to this Court of writ petitions challenging the constitutional validity of Section 16(2)(c) CGST Act were considered. - HELD THAT: - The Court considered the request to transfer multiple writ petitions to the Supreme Court for common adjudication. Having noted that several High Courts are already seized of the matters and that in particular the Writ Petition before the High Court of Madhya Pradesh, Indore Bench has a counter-affidavit on record, the Court declined to exercise its power to transfer the matters to this Court. The Court observed that the existence of proceedings and pleadings before the concerned High Courts militates against transfer and that expeditious disposal by those High Courts is appropriate. The Court therefore directed the High Court of Madhya Pradesh, Indore Bench to dispose of Writ Petition No. 9443/2020 preferably within two months from communication of the Order, granted parties liberty to advance their arguments there, and left it open to parties in other pending writ petitions to bring this Order to the attention of the respective High Courts to seek expedited disposal.

Transfer petitions refused; High Court of Madhya Pradesh, Indore Bench directed to dispose of Writ Petition No. 9443/2020 preferably within two months and parties permitted to pursue expeditious disposal in other High Courts.

Final Conclusion: Transfer petitions dismissed on the ground that various High Courts are already seized of the matters; the Supreme Court declined central transfer and directed expeditious disposal by the concerned High Courts, with a specific two month timeline given to the Indore Bench for Writ Petition No. 9443/2020.

Mistake apparent from the record - provisional GSTIN generation under Rule 24 of the UP GST Rules, 2017 - correction of registration data on verification with erstwhile VAT Assessing Authority - deemed correction of invoices, declarations and returns - entitlement to transition input tax credit (ITC)

Mistake apparent from the record - provisional GSTIN generation under Rule 24 of the UP GST Rules, 2017 - Liability for incorrect PAN recorded in the provisional GSTIN and petitioner's diligence in notifying the error. - HELD THAT: - The Court found that the provisional GSTIN was generated by the GST Network pursuant to enrolment under Rule 24 and that the incorrect middle ten characters (PAN) in the provisional GSTIN arose from an error at the end of the GST portal/GSTN. The petitioner had notified the assessing authority and the GST portal helpdesk prior to enforcement of GST and thereafter applied for fresh registration; thus the petitioner had acted with due diligence. The mistake in data collection is attributable to the GSTN and not to the petitioner, and is a mistake apparent from the record.

The petitioner was not at fault for the incorrect PAN in the provisional GSTIN and the error is attributable to the GSTN.

Correction of registration data on verification with erstwhile VAT Assessing Authority - deemed correction of invoices, declarations and returns - entitlement to transition input tax credit (ITC) - Direction to respondent no. 6 to verify the petitioner's VAT registration and, if verified, to correct the provisional GSTIN and give consequential reliefs. - HELD THAT: - The Court directed respondent no. 6 to verify from the Assessing Authority/erstwhile Assessment Authority under the UP VAT Act, 2008 whether the petitioner's VAT registration had been amended to record the petitioner as proprietor as on 13.06.2017. On such verification, if the VAT record shows the petitioner as proprietor on that date, respondent no. 6 shall correct the provisional GSTIN (effective 01.07.2017) to record the petitioner's PAN. The Court ordered completion of this exercise within one month from production of the order. The Court further clarified that, if corrected, all invoices, declarations and returns bearing the wrong provisional GSTIN shall stand corrected on a deemed basis, and the petitioner shall be entitled to the benefit of the Court's earlier decision in Writ Tax No. 477 of 2021, dated 15.09.2021, including relevant transitional ITC consequences for the period 01.07.2017 to 23.08.2017.

Respondent no. 6 to verify VAT registration and, if verified, correct the provisional GSTIN and apply deemed corrections and consequential benefits, within one month of production of the order.

Final Conclusion: Writ petition disposed directing respondent no. 6 to verify the petitioner's VAT registration and, upon verification that the petitioner was proprietor as on 13.06.2017, to correct the provisional GSTIN (effective 01.07.2017) to record the petitioner's PAN; such correction will operate to deem invoices, declarations and returns corrected and to permit consequential benefits including transitional ITC in respect of 01.07.2017 to 23.08.2017, within the time directed.

Opportunity of hearing under Section 75(4) of TN Goods ST Act - personal hearing - natural justice - statutory imperative - remand for de novo consideration

Opportunity of hearing under Section 75(4) of TN Goods ST Act - personal hearing - natural justice - statutory imperative - Impugned order set aside for failure to grant a personal hearing which Section 75(4) mandates where an adverse decision is contemplated. - HELD THAT: - The Court found that Section 75(4) of the TN Goods ST Act requires that an opportunity of hearing be granted where an adverse decision is contemplated against the person chargeable. There was no dispute before the Court that the impugned order was adverse to the writ petitioner and that no personal hearing had been given. For that reason alone the impugned order was held vitiated for breach of the mandatory procedural requirement of natural justice. The Court expressly did not express any view on the merits of the underlying tax determination; the order was set aside solely on the ground of non-compliance with the statutory right to be heard. The respondent was directed to redo the exercise de novo, with liberty to issue an additional show cause notice and to take into account the petitioner's post-order communications on merits while deciding afresh. [Paras 8, 9, 10, 11]

Impugned order set aside for failure to grant the statutorily mandated personal hearing; matter remanded for de novo consideration with directions to give hearing and complete the exercise within twelve weeks.

Final Conclusion: Writ petition allowed: the impugned order dated 16.09.2020 is quashed solely for non compliance with Section 75(4)'s requirement of a personal hearing; the respondent to decide the matter afresh in accordance with law within the time directed.

Transition arrangements for input tax credit under Section 140 - electronic submission and revision of FORM GST TRAN-1 and FORM GST TRAN-2 under Rule 117 - Power to extend time limit in special circumstances under Section 168A - technical glitches on the GST Portal as a ground for equitable relief and extension - requirement of time and manner as condition precedent to carry forward CENVAT/ITC - rule of law and Article 14-arbitrariness in enforcing procedural timelines where performance is physically impossible

Transition arrangements for input tax credit under Section 140 - requirement of time and manner as condition precedent to carry forward CENVAT/ITC - Whether the right to carry forward CENVAT/ITC as on 30.06.2017 vested on filing returns under the pre existing laws or remained subject to compliance with the GST regime procedure - HELD THAT: - The Court held that Section 140 is a transition provision intended to allow migration of credits from the pre existing indirect tax regime to GST, but the entitlement to have such credits credited to the electronic credit ledger was made subject to two conditions: (a) the pre existing return or requisite documents evidencing the credit must have been filed or be in possession, and (b) compliance with the time and manner prescribed under the GST enactments. The phrase 'within such time and in such manner as may be prescribed' must be read as referring to acts required under the CGST/UPGST law (including electronic submission of FORM GST TRAN 1/TRAN 2), not the timelines under the repealed statutes. Consequently, the mere filing of returns under the erstwhile laws did not vest a stand alone right to carry forward ITC without performing the further procedural step mandated by the GST law. [Paras 25, 28, 30, 31, 32]

ITC as on 30.06.2017 is not an automatically vested right upon filing under the old laws; entitlement to carry it into the electronic credit ledger is subject to compliance with the time and manner prescribed under the CGST/UPGST regime.

Electronic submission and revision of FORM GST TRAN-1 and FORM GST TRAN-2 under Rule 117 - Power to extend time limit in special circumstances under Section 168A - Whether the time for electronic submission/revision of FORM GST TRAN 1/TRAN 2 could be validly extended and, if so, the extent of such extension - HELD THAT: - The Court found that Rule 117 prescribes electronic filing/revision of TRAN 1/TRAN 2 within the period stipulated thereunder and that the Commissioner and the Central Government (on recommendation of the Council) possessed power to grant extensions. In view of the orders, rules and notifications (including Order No.01/2020, Notification No.35/2020 and Notification No.55/2020) read with Section 168A, the time limit to submit TRAN 1/TRAN 2 was validly extended in accordance with law and stood extended up to 31.08.2020. No provision was shown that invalidated exercise of those powers in the facts before the Court. [Paras 37, 39, 40, 41, 43]

Extension of time to submit/revise TRAN 1/TRAN 2 up to 31.08.2020 was validly effected under the rules and notifications relied upon.

Technical glitches on the GST Portal as a ground for equitable relief and extension - rule of law and Article 14-arbitrariness in enforcing procedural timelines where performance is physically impossible - Whether generic/identifiable technical glitches on the GST Portal justified relief to taxpayers prevented from electronically submitting/revising TRAN 1/TRAN 2 and the nature of relief - HELD THAT: - The Court recorded that the CBIC itself had recognised pervasive IT glitches (Circular No.39/13/2018) and promulgated an IT grievance mechanism to identify affected classes and permit remediation. Given the pan India and prolonged nature of the difficulties, the obligation to provide a reliable portal lay on the State; enforcing strict timelines despite physical impossibility would be arbitrary and offend Article 14. The Court therefore held that taxpayers generally obstructed by such systemic glitches could not reasonably be burdened to produce contemporaneous proof of every failed attempt and that relief in the form of allowing a one time physical filing followed by administrative uploading was warranted. [Paras 45, 51, 60, 61, 68]

Generic technical glitches on the GST Portal justify equitable relief; affected taxpayers shall be given a reasonable one time opportunity to transition credits notwithstanding strict timelines.

Administrative verification of eligibility and Rule 117 procedure - IT grievance redressal mechanism and role of nodal officers - How relief shall be implemented and whether factual verifications are required before allowing electronic uploading of forms - HELD THAT: - The Court directed a structured administrative process: petitioners to file physical FORM GST TRAN 1/TRAN 2 before jurisdictional authorities who shall report on compliance under Section 140 and Rule 117; authorities to afford one limited opportunity to correct physical forms if objections arise; thereafter authorities to forward the forms to GSTN for uploading or permit the petitioner to upload. The Court made clear this exercise is a one time affair and that uploaded details shall not be open to further revision. The directions implement the CBIC's recognised grievance mechanism and balance the need for verification of eligibility with relief against systemic obstruction. [Paras 73, 74, 75]

Implementation is entrusted to jurisdictional authorities for verification and to GSTN for uploading; physical filing followed by administrative verification and a one time electronic transition is ordered.

Final Conclusion: Writ petitions allowed. The Court held that entitlement to transition CENVAT/ITC as on 30.06.2017 is subject to compliance with the time and manner prescribed under the CGST/UPGST regime (including electronic filing of FORM GST TRAN 1/TRAN 2), that extensions effected (up to 31.08.2020) were valid, and that pervasive technical glitches on the GST Portal justified equitable, one time relief. Directions were issued for physical filing before jurisdictional authorities, administrative verification under Section 140/Rule 117 and subsequent uploading by GSTN; the exercise is final and not open to further revision.

Alternate remedy - writ jurisdiction - statutory appeal - Input Tax Credit - natural justice - alternate remedy rule in fiscal statutes - application of Sections 42(3) and 42(5) of the CGST Act regarding discrepancy in ITC

Alternate remedy - statutory appeal - writ jurisdiction - natural justice - alternate remedy rule in fiscal statutes - Maintainability of the writ petition in view of the availability of a statutory appeal and whether any exception to the alternate remedy rule applies. - HELD THAT: - The Court found that a statutory appeal against the impugned order is available to the petitioner and recorded the appellate remedy in the impugned order itself. The petitioner was given a personal hearing and the reply was considered, negating any asserted breach of principles of natural justice. Reliance on orders of other High Courts was held to be inapposite where the alternate remedy principle was not canvassed in those decisions. Applying settled Supreme Court jurisprudence emphasizing strict enforcement of the alternate remedy rule in fiscal matters, and recognizing only narrow exceptions (breach of fundamental rights, failure of natural justice, excess of jurisdiction, or challenge to vires), the Court concluded that none of those exceptions were established on the material before it. For these reasons the writ petition was not entertained and was dismissed, the Court expressly refraining from expressing any opinion on merits so as not to prejudice the statutory appellate proceedings, which the appellate authority must decide on merits and in accordance with law. [Paras 13, 15, 18, 19, 20]

Writ petition dismissed as not maintainable because an effective statutory appeal is available and no exception to the alternate remedy rule is made out; liberty granted to pursue the statutory appeal which shall be heard on merits.

Final Conclusion: The writ petition challenging the recovery relating to alleged wrong availment of Input Tax Credit is dismissed on the ground that an effective statutory appeal is available and no exception to the alternate remedy rule applies; the petitioner is permitted to pursue the statutory appeal which shall be adjudicated on its merits.

Addition under section 69C as unexplained expenditure - evidentiary value of statement recorded under section 131(1A) - requirement of corroborative material for post-search disclosures - retraction of disclosure and burden of proof - search and seizure proceedings and subsequent verification of disclosures

Addition under section 69C as unexplained expenditure - evidentiary value of statement recorded under section 131(1A) - requirement of corroborative material for post-search disclosures - timing and attribution of disclosed income to the assessment year - retraction of disclosure and burden of proof - Addition of Rs. 25 lakhs to the assessee's income for Assessment Year 2017-18 under section 69C based solely on a statement recorded under section 131(1A) was not sustainable in absence of corroborative material and proper attribution to the relevant assessment year. - HELD THAT: - The Tribunal found that apart from the partner's statement under section 131(1A) surrendering Rs. 25 lakhs for the period 01.04.2010 to 14.12.2016, no corroborative material-cash, bullion, jewellery, documents or identified assets-was found during the search or placed on record to justify an addition under section 69C. Reliance on precedents (including the Supreme Court and High Court decisions noted in the order) establishes that a mere post-search statement, unsupported by incriminating material or other evidence, is insufficient to make an addition; admissions recorded in such statements have evidentiary weight but are not conclusive and may be explained or retracted, subject to proof. The Tribunal also observed that the disclosed amount related to a period spanning multiple years and was not specifically attributable to the impugned assessment year; the Assessing Officer made the entire addition in AY 2017-18 without any material establishing that the amount pertained to that year. In these circumstances, and following precedents which required corroborative evidence for additions based on post-search disclosures, the addition could not be sustained. The Tribunal therefore set aside the addition and directed deletion. [Paras 11, 13]

The addition of Rs. 25 lakhs under section 69C was deleted for Assessment Year 2017-18 and the appeal was allowed.

Final Conclusion: In absence of any corroborative material to support the partner's post search statement and without proof that the disclosed amount related to the impugned assessment year, the addition under section 69C was unsustainable; the Tribunal deleted the addition and allowed the appeal for Assessment Year 2017-18.

Exemption under section 11 - definition of 'income' under section 2(24) - 'total income' under section 2(45) - capital receipt v. income - Form No.10 for accumulation under section 11(2) - filing Form No.10 before completion of assessment - condonation of delay in filing Form No.10

Capital receipt v. income - definition of 'income' under section 2(24) - exemption under section 11 - Assessment of maturity proceeds of fixed deposit as income of the assessee - HELD THAT: - The Tribunal held that section 11 prescribes exemptions and does not alter the statutory or commercial notion of 'income'. The definition of 'income' must be understood in the light of section 2(24) and other provisions of the Act; receipts that are capital in nature cannot be treated as income unless the Act expressly so provides. Maturity proceeds of a fixed deposit represent the return of capital (the invested sum) and not income; only interest earned on the deposit constitutes income. The Assessing Officer's approach of treating 'gross receipts excluding corpus donation' as income was contrary to the scheme of the Act and the definitions relied upon by the Tribunal. [Paras 7]

Addition of Rs. 50.00 lakhs being maturity proceeds of fixed deposit deleted and the orders confirming that addition set aside.

Exemption under section 11 - Claim of certain expenditures as application of income by way of acquisition of fixed assets - HELD THAT: - The AO had allowed certain amounts as application of income but disallowed additional claimed items either because they were already charged to the Income and Expenditure account or because the assessee failed to furnish particulars or prove that such payments were capital in nature. The Tribunal found no infirmity in the CIT(A)'s conclusion that the amount already debited in the Income and Expenditure account could not be allowed again as application of income and that unsupported items could not be admitted as capital expenditure. [Paras 9]

CIT(A)'s rejection of the additional claims for application of income confirmed.

Form No.10 for accumulation under section 11(2) - filing Form No.10 before completion of assessment - condonation of delay in filing Form No.10 - Entitlement to have Form No.10 and resolution considered for accumulation of income under section 11(2) - HELD THAT: - For the year under consideration (prior to the 2016 amendment prescribing a statutory time-limit), the Tribunal observed that Form No.10 and the requisite resolution, if filed before completion of assessment proceedings, ought to be entertained by the Assessing Officer. Although the assessee's Form No.10 had been filed belatedly in original proceedings and a condonation petition was rejected by the CIT, during the reopened/second-round assessment the assessee produced the Form No.10 and the petition before the AO. The Tribunal relied on co-ordinate decisions holding that where Form No.10 and particulars are available before completion of assessment, the AO should consider the claim; consequently the matter requires fresh consideration by the AO. [Paras 16]

Order of CIT(A) on this issue set aside and matter remitted to the Assessing Officer to consider the Form No.10 and resolution and examine the claim under section 11(2) in accordance with law.

Final Conclusion: The appeal is partly allowed: the addition of the maturity proceeds of the fixed deposit is deleted, the rejection of certain claimed capital applications is upheld, and the claim under section 11(2) based on Form No.10 is restored to the Assessing Officer for fresh consideration.

Allowability of prior period expenditure as revenue deduction under section 37 of the Act - allowance of miscellaneous/preliminary expenditure by amortisation under section 35D - deduction of statutory liabilities where payment is made before the due date of filing return - application of section 43B - disallowance under section 40(a)(ia) and the effect of provisos treating assessee as not in default where recipient has filed return and paid tax - allowability of employer/employee provident fund contribution where payment is made before due date of filing return - application of section 36(1)(va) - treatment of amounts shown as 'investment written off' and scope for allowance as business bad debt under section 36(1)(vii) - capital work in progress adjustments and requirement of factual re examination by Assessing Officer

Allowability of prior period expenditure as revenue deduction under section 37 of the Act - revenue neutral crystalisation of prior period items - Deletion of addition made by AO in respect of prior period expenses debited to P&L account - HELD THAT: - The Tribunal, following the coordinate decision in Ocimum Bio Solutions India Ltd., held that where the contention is that the expenditure crystallised and is revenue neutral (i.e., previously reflected/assessed in earlier years), the disallowance cannot be sustained. The coordinate bench's reasoning that such prior period expenditure being revenue neutral ought not to be disallowed was followed and the AO was directed to delete the addition.

Addition disallowing prior period expenditure of Rs. 3,09,306/- deleted; grounds 3 to 8 allowed.

Deduction of statutory liabilities where payment is made before the due date of filing return - application of section 43B - burden to substantiate payment before due date by documentary evidence - Whether disallowance under section 43B for unpaid statutory liabilities is sustainable without proof of payment before the due date of filing return - HELD THAT: - The Tribunal recorded the settled proposition that statutory liabilities which are paid before the due date of filing the return under section 139(1) are not liable to be disallowed under section 43B. As the assessee asserted payment before the due date, the matter was remitted to the AO to examine documentary evidence of timely payment and allow the claim if supported.

Issue remitted to AO for verification of documentary proof of payment; grounds 9 to 12 treated as allowed for statistical purposes if verified.

Allowance of miscellaneous/preliminary expenditure by amortisation under section 35D - claim of amortisation of product development/intangible expenditure incurred in earlier years - Allowability of miscellaneous expenses claimed as amortisation of intangible assets (product development) under section 35D - HELD THAT: - On review of financial statements and Note No.13 showing balances indicating earlier year expenditure, and on the assessee's submission that the amount related to product development expenditure allowable under section 35D, the Tribunal accepted the claim and held that once such an earlier year expenditure/deduction is accepted, it cannot be denied in a subsequent year. Relying on coordinate bench precedent, the AO was directed to delete the addition.

Addition of Rs. 56,55,787/- deleted; grounds 13 to 19 allowed.

Disallowance under section 40(a)(ia) and the effect of provisos treating assessee as not in default where recipient has filed return and paid tax - requirement of treating assessee as assessee in default before making disallowance - Validity of additions under section 40(a)(ia) where TDS was not deducted but corresponding recipients have filed returns and paid tax - HELD THAT: - Following the coordinate bench and the reasoning in the cited precedents, the Tribunal held that the second proviso to section 40(a)(ia) (and related proviso to section 201(1)) operates to avoid disallowance where there is no revenue loss because the payee has disclosed and paid tax on the receipt. Consequently, without treating the assessee as an assessee in default, disallowance under section 40(a)(ia) should not be made. The Tribunal set aside the lower authorities' orders and directed deletion of the additions.

Additions under section 40(a)(ia) deleted; grounds 20-31 and 36-42 allowed.

Allowability of employer/employee provident fund contribution where payment is made before due date of filing return - application of section 36(1)(va) - obligation to furnish proof of payment before due date to claim deduction - Disallowance of employee provident fund contribution where payment before due date of filing return was not proven - HELD THAT: - The Tribunal reiterated the settled position that contributions paid before the due date of filing return under section 139(1) are not liable to disallowance. Since the authorities disallowed the claim for want of proof, the matter was directed back to the AO to allow the claim upon production and verification of documentary evidence of payment made before the due date.

Grounds 32 to 35 treated as allowed for statistical purposes; AO to verify proof of timely payment and allow if established.

Treatment of amounts shown as 'investment written off' and scope for allowance as business bad debt under section 36(1)(vii) - requirement of factual examination where amounts were earlier offered to tax and subsequently written off - Whether amount shown as 'investment written off' is allowable as business bad debt or revenue deduction - HELD THAT: - The Tribunal examined the books and noted the diminution in non current investments corresponding to the write off and referred to the assessee's earlier proceedings where the matter required factual re examination (conversion of receivables to equity, RBI/FEMA compliance and subsequent write off). Without deciding on merits, the Tribunal restored the issue to the AO for factual scrutiny and determination whether the write off qualifies as an allowable revenue expenditure under the Act.

Matter remitted to AO for factual examination and decision on allowability; grounds 43 to 47 considered allowed for statistical purposes pending AO's examination.

Capital work in progress adjustments and requirement of factual re examination by Assessing Officer - allowability of write off of capital work in progress claimed in computation - Validity of disallowance of amounts claimed as capital work in progress written off - HELD THAT: - Relying on the Tribunal's earlier direction in the assessee's own case, the Tribunal found that the capital work in progress claim had not been properly examined by the AO and required re computation and factual inquiry. Accordingly, the issue was remitted to the AO to determine the exact claim on basis of revised computation and evidence and to decide allowability under the Act.

Issue remitted to AO for fresh examination; grounds 48 to 50 treated as allowed for statistical purposes pending AO's determination.

Final Conclusion: The appeal was allowed in part: several additions were deleted (prior period expenditure, miscellaneous amortisation under section 35D, disallowances under section 40(a)(ia)), and other contested deductions (statutory liabilities under section 43B, PF contribution under section 36(1)(va), investment written off, and capital WIP adjustments) were remitted to the Assessing Officer for verification of documentary evidence and factual examination, with directions to allow the claims if substantiated.

Transfer pricing adjustment - brand development services / AMP expenses not an international transaction - Spearman's Rank Correlation method invalid for attributing brand value - disallowance under section 14A read with Rule 8D restricted to exempt income - capital subsidy treated as capital receipt - section 43B(c) applicability to performance rewards as bonus/commission - remand for fresh consideration of taxability of subsidy/refund - education cess deductible as business expenditure under section 37(1) - Focus Market Scheme incentives are revenue in nature

Transfer pricing adjustment - brand development services / AMP expenses not an international transaction - Spearman's Rank Correlation method invalid for attributing brand value - Deletion of transfer pricing adjustment made towards brand development charges. - HELD THAT: - The Tribunal held that the TPO's upward adjustment towards deemed brand development services for AY 2015-16 was unsustainable. The Tribunal applied its earlier coordinate-bench reasoning in the assessee's own cases for prior years and found no mutually agreed arrangement between the assessee and its AEs for allocation or contribution towards brand promotion; mere accretion in the parent's global brand value could not be converted into an international transaction. The Tribunal also rejected the use of Spearman's Rank Correlation method to attribute incremental brand value to the assessee, concluding that the TPO/DRP erred both in characterising the AMP activity as an international transaction and in the methodology adopted for valuation; accordingly the AO/TPO was directed to delete the transfer pricing adjustment.

Transfer pricing adjustment for brand development services deleted and AO/TPO directed to give effect to deletion.

Disallowance under section 14A read with Rule 8D restricted to exempt income - Restriction of disallowance under section 14A r.w. Rule 8D to the amount of exempt income earned during the year. - HELD THAT: - Following earlier Tribunal decisions in the assessee's own case and higher-court precedents, the Tribunal held that disallowance under section 14A (as computed under Rule 8D) cannot exceed the exempt income for the relevant assessment year. In the facts of AY 2015-16 the exempt dividend income was minimal; the AO's larger disallowance was contrary to settled principles and therefore the AO was directed to restrict the disallowance to the exempt income actually earned in the year.

Disallowance under section 14A r.w. Rule 8D to be restricted to the amount of exempt income for AY 2015-16.

Capital subsidy treated as capital receipt - Deletion of adjustment disallowing depreciation to the extent of subsidy received from SIPCOT. - HELD THAT: - The Tribunal accepted the assessee's contention, following coordinate-bench precedent in the assessee's own earlier years, that the SIPCOT subsidy was a capital receipt and not required to be deducted from the asset cost for depreciation purposes. The AO's reduction of the asset cost and consequent disallowance of depreciation for AY 2015-16 was therefore set aside and the addition deleted.

Addition for disallowance of depreciation on account of SIPCOT subsidy deleted.

Section 43B(c) applicability to performance rewards as bonus/commission - Upholding disallowance under section 43B(c) of performance rewards paid after the due date for filing the return. - HELD THAT: - The Tribunal, following its earlier decisions in the assessee's own case, held that payments characterised as performance rewards which are paid for services rendered fall within the scope of section 36(1)(ii) (bonus or commission) and therefore the non-obstante provision of section 43B(c) applies. Since the payments in question were not actually paid on or before the due date for filing the return for the year, the deduction was correctly disallowed under section 43B(c). The Tribunal rejected the contention that nomenclature or non-coverage under the Payment of Bonus Act alters the statutory character.

Disallowance under section 43B(c) in respect of performance rewards upheld.

Remand for fresh consideration of taxability of subsidy/refund - Remand of claim treating VAT refund (Sate VAT incentive) from Government of Tamil Nadu as capital receipt to the Assessing Officer for fresh adjudication. - HELD THAT: - The Tribunal observed that identical issues in the assessee's earlier years had been remanded to the AO for de novo consideration on merits. Given the parity of facts for AY 2015-16, the Tribunal set aside the DRP's rejection and remitted the matter to the AO to examine the assessee's fresh claim that the VAT refund should be treated as a capital receipt, directing reconsideration in accordance with law.

Issue remanded to the file of the Assessing Officer for fresh consideration and decision.

Education cess deductible as business expenditure under section 37(1) - Set aside to Assessing Officer for examination the claim that education cess and secondary & higher education cess are deductible under section 37(1). - HELD THAT: - Relying on higher-court authority and coordinate-bench precedent, the Tribunal held there is merit in the assessee's contention that cess payments are deductible under section 37(1). However, because the claim arose from additional grounds filed for the first time and the AO had not had occasion to examine the matter, the Tribunal set aside the issue to the AO to re-examine the claim in light of the cited jurisprudence.

Issue directed back to the Assessing Officer for re-examination and adjudication in accordance with law.

Focus Market Scheme incentives are revenue in nature - Rejection of the assessee's claim that incentives under the Focus Market Scheme are capital receipts; held to be revenue in nature. - HELD THAT: - Applying the purpose test endorsed by the Supreme Court, the Tribunal examined the objective of the Focus Market Scheme-offsetting high freight cost and other recurring disadvantages to enhance export competitiveness-and concluded that duty credit scrips are intended to meet recurring costs of exporting and are therefore revenue in nature. The Tribunal rejected reliance on contrary authorities where facts differed and declined to treat the incentives as capital receipts.

Claim that Focus Market Scheme incentives are capital receipts rejected; incentives held to be revenue in nature.

Final Conclusion: The appeal is partly allowed: transfer pricing adjustment for brand development charges and the disallowance of depreciation on the SIPCOT subsidy are deleted; disallowance under section 14A is restricted to exempt income; disallowance under section 43B(c) in respect of performance rewards is upheld; claims on the VAT refund (SIPCOT/VAT incentive) and education cess are remitted to the Assessing Officer for fresh consideration; Focus Market Scheme incentives upheld as revenue receipts. Appeal disposed of accordingly.

Annual Lettable Value (ALV) of unsold flats held as stock-in-trade - taxation as income from house property - relief under sub-section (5) of section 23 (post Finance Act, 2017) - disallowance under section 36(1)(iii) for diversion of borrowed funds - presumption of utilisation of own/non interest funds in mixed funds (Reliance Utilities principle) - verification of availability of sufficient interest free/own funds

Annual Lettable Value (ALV) of unsold flats held as stock-in-trade - taxation as income from house property - relief under sub-section (5) of section 23 (post Finance Act, 2017) - Deletion of addition of deemed ALV made on unsold flats held as stock-in-trade - HELD THAT: - The Tribunal held that the question whether unsold flats held as stock-in-trade of a developer can be assessed under the head 'Income from House Property' was decided in the assessee's earlier orders. The Tribunal relied on the legislative amendment (sub section (5) of section 23 inserted by the Finance Act, 2017 w.e.f. 01.04.2018) which treats the annual value of such stock in trade as nil for a limited period after completion certificate; having regard to the same and the identical facts in the earlier decisions in the assessee's own case, the view taken by the CIT(A) in vacating the ALV addition was upheld. The Tribunal found no infirmity in the CIT(A)'s order deleting the addition and followed its prior decisions disposing the identical issue in the assessee's earlier years. [Paras 8]

The deletion of the ALV addition is upheld; Ground No.1 dismissed.

Disallowance under section 36(1)(iii) for diversion of borrowed funds - presumption of utilisation of own/non interest funds in mixed funds (Reliance Utilities principle) - verification of availability of sufficient interest free/own funds - Deletion of disallowance of interest claimed u/s 36(1)(iii) on the ground of diversion of borrowed funds - HELD THAT: - The Tribunal examined the factual finding in the set aside assessment proceedings that the interest free advances in question were old loans advanced in earlier years and that the assessee had sufficient own funds and non interest bearing funds to source those advances. The AO, while giving effect to earlier directions, accepted the assessee's evidence (including balance sheets and the loan movement chart) showing the advances originated in prior years and that own/non interest funds exceeded the interest free advances. Applying the principle in Reliance Utilities (on loss of presumption where mixed funds exist) and the Tribunal's earlier directions, the Tribunal found no justification to sustain any part of the disallowance and therefore upheld the CIT(A)'s vacating of the interest disallowance. [Paras 9, 10]

The deletion of the disallowance of interest u/s 36(1)(iii) is upheld; Grounds Nos.2 & 3 dismissed.

Final Conclusion: The revenue's appeal is dismissed: the Tribunal upholds the CIT(A)'s deletion of (i) the ALV addition on unsold flats held as stock in trade and (ii) the disallowance of interest under section 36(1)(iii), on the facts and authorities relied upon.

Prior approval under section 153D for assessments in search cases - application of mind by approving authority - mechanical approval vitiating assessment - year-wise ("each" assessment year) approval requirement under sections 153A-153D - quasi judicial nature of approval

Prior approval under section 153D for assessments in search cases - application of mind by approving authority - mechanical approval vitiating assessment - year-wise ("each" assessment year) approval requirement under sections 153A-153D - Validity of the prior approval granted by the Additional Commissioner under section 153D and its consequence for assessments framed under section 153A - HELD THAT: - The Tribunal held that section 153D mandates prior approval by the Joint/Additional Commissioner before an Assessing Officer below that rank passes assessment orders in search cases, and that the word "each" assessment year requires separate, year-wise application of mind. Approval is not a mere formality but a quasi-judicial supervisory act requiring the superior authority to examine the material on which the draft assessment is based, including seized material, appraisal report, enquiries and the assessee's explanations. The Tribunal relied on authoritative statements of law (including principles applied in Sahara India and various Tribunal and High Court decisions) that approval must reflect application of mind and cannot be given mechanically. On the facts, the draft orders and approval were placed before the Additional Commissioner and the approval granted on the same day for a large batch of cases (67 assessees) involving many thousands of seized pages, making it humanly impossible that the approving authority examined records and applied independent mind to each assessment year for each assessee. The Tribunal concluded that the approval was granted in a mechanical manner without requisite application of mind; consequently the statutory prerequisite under section 153D was not satisfied and the assessments framed under section 153A/143(3) based on that approval were vitiated. The Tribunal therefore annulled the impugned assessment orders. The remaining grounds were not pressed and were dismissed as not pressed. [Paras 9, 11, 12]

Approval under section 153D was mechanically granted without application of mind; ground allowed and assessments annulled; other grounds dismissed as not pressed.

Final Conclusion: Ground No.5 succeeds: the prior approval under section 153D was held to be mechanically granted without application of mind, vitiating the assessments framed under section 153A; accordingly the Tribunal partly allowed the appeals by annulling the impugned assessment orders and dismissed the unpressed grounds.

Exemption u/s 10(23C)(via) - hospital existing solely for philanthropic purposes - approval by the prescribed authority - remuneration shared with doctors from IPD receipts - commercial rate charges affecting charitable character

HELD THAT: - The Court examined the material and observed that the appellant's own pleadings (paragraphs 3(x) and 3(xi) of the writ petition) admitted a scheme under which member doctors received 20% to 30% of net IPD collections, after certain deductions, and that such shares were paid to member doctors generally, not confined to doctors personally performing the IPD services.

The Court treated this admission as fatal to the appellant's claim that the hospital operated solely for philanthropic purposes. The Court further noted a separate contention that the appellant charged rates comparable to commercial hospitals, but observed that even if information on that point was deficient, the sharing of IPD receipts with doctors independently sufficed to deny the exemption. On this factual foundation the decision of the income-tax authorities, affirmed by the High Court, was held to be neither perverse nor irrational, and therefore not amenable to interference. [Paras 3]

The claim for exemption under Section 10(23C)(via) for AYs 1999-2000 to 2002-2003 was correctly denied on the basis that IPD receipts were distributed to member doctors generally, thereby undermining the character of the hospital as existing solely for philanthropic purposes.

Final Conclusion: Civil appeal dismissed; exemption under Section 10(23C)(via) for the assessment years 1999-2000 to 2002-2003 denied on the recorded factual findings, with liberty to the appellant to rectify its position and seek exemption for subsequent years.

Notice u/s 153C against deceased person - liability of legal heir of late assessee - impugned notice being invalid as held by HC [2021 (3) TMI 892 - GUJARAT HIGH COURT] - HELD THAT:- Special Leave Petition is, accordingly, dismissed. Pending application, if any, stands disposed of.

Re-opening of assessment under Section 147 - Permanent Establishment and business connection - Taxability of non-resident on income deemed to accrue or arise in India - Effect of subsequent higher court decision on pending proceedings / infructuous litigation

Re-opening of assessment under Section 147 - Permanent Establishment and business connection - Whether reassessment proceedings initiated against the assessee remained valid in view of subsequent findings that the associated enterprises did not have a PE in India. - HELD THAT: - The Court recorded that reassessment proceedings were initiated by notice dated 30th March, 2011 on the premise that the assessee (an AE of LG Korea) had a PE in India in the form of L.G. Electronics India Ltd. Subsequent appellate and judicial developments, including the consolidated CIT(A) order and the Supreme Court's decision in Civil Appeal No.781/2018, established that the associated enterprises did not have a PE in India. The High Court observed that the departmental stance accepting in one proceeding that there was no PE for the AEs (as per the unappealed CIT(A) order and Supreme Court disposal) could not be taken to a contrary conclusion for the present reassessment. In view of these subsequent authoritative findings, the proceedings initiated against the assessee had become infructuous and the underlying premise for reopening (existence of PE/business connection) no longer survived. [Paras 6, 7, 8, 11]

Reassessment proceedings became infructuous as later appellate and Supreme Court findings established absence of PE/business connection; the basis for reopening therefore did not subsist.

Effect of subsequent higher court decision on pending proceedings / infructuous litigation - Taxability of non-resident on income deemed to accrue or arise in India - Whether the present appeal raises any substantial question of law and the appropriate disposition in view of the intervening higher court decisions. - HELD THAT: - The Court held that entertaining the appeal would amount to effectively reviewing or sitting in appeal over the Supreme Court's decision in Civil Appeal No.781/2018 which had dispensed with the question of PE for the associated enterprises. Given that the subsequent events rendered the reassessment proceedings infructuous, the High Court concluded that no substantial question of law remained for determination. The Court invoked the duty to dispose of infructuous litigation in the interest of justice and accordingly refused to reopen the controversy. [Paras 10, 11, 12]

Appeal raises no substantial question of law and is dismissed as bereft of merit; proceedings are treated as infructuous in light of subsequent higher court findings.

Final Conclusion: The appeal is dismissed; subsequent appellate and Supreme Court findings that the associated enterprises did not have a PE in India rendered the reassessment proceedings infructuous, leaving no substantial question of law for determination.

Stay of assessment proceedings - Application of AAR ruling - principle of consistency - deposit of tax pending adjudication - Explanation 1(ii) of Section 153

Stay of assessment proceedings - deposit of tax pending adjudication - Stay of passing final/draft assessment orders for the Assessment Years 2018-19, 2019-20 and 2020-21 during the pendency of the writ petition - HELD THAT: - The Court granted interim relief restraining the passing of final assessment orders pursuant to the AAR Ruling dated 6th June, 2018 for the specified Assessment Years while the writ petition remains pending. The Court recorded that the petitioner has fully deposited the tax and concluded that it would not be appropriate to permit the Assessing Officer to pass assessment orders in the face of the ongoing proceedings. On that basis the stay sought in CM Appl. No. 32748/2021 was allowed and the application disposed of subject to the Court's observations.

Stay granted of passing final/draft assessment orders for AYs 2018-19, 2019-20 and 2020-21 until disposal of the writ petition.

Principle of consistency - Application of AAR ruling - Explanation 1(ii) of Section 153 - Whether the earlier interim orders operating in favour of the petitioner should be extended to assessments consequent to the AAR Ruling and the effect of such extension - HELD THAT: - Applying the principle of consistency, the Court clarified that the interim order dated 12th October, 2018, as made absolute on 5th October, 2019, extends to all assessments of the petitioner consequent to AAR Ruling No.1573/2014 dated 6th June, 2018 until the writ petition is disposed. The Court further clarified that by virtue of the interim order the respondents shall be entitled to the benefit of Explanation 1(ii) of Section 153 of the Income Tax Act, thereby specifying the legal consequence of the stay during the pendency of proceedings.

The earlier stay is extended to all assessments consequent to the AAR Ruling till disposal of the writ petition; respondents entitled to benefit of Explanation 1(ii) of Section 153.

Final Conclusion: The Court restrained the passing of final assessment orders pursuant to the AAR Ruling dated 6th June, 2018 for AYs 2018-19, 2019-20 and 2020-21 until the writ petition is disposed, extended the earlier stay by application of the principle of consistency to all assessments consequent to that AAR Ruling, and clarified that respondents shall have the benefit of Explanation 1(ii) of Section 153 during the pendency.

Disallowance under Section 14A of the Income tax Act - Application of Rule 8D of the Income tax Rules - No disallowance where no exempt income was earned in the relevant year - Follow the binding precedent of the jurisdictional High Court - Power to recall or restore order if contrary material is found

Disallowance under Section 14A of the Income tax Act - Application of Rule 8D of the Income tax Rules - No disallowance where no exempt income was earned in the relevant year - Follow the binding precedent of the jurisdictional High Court - Deletion of the disallowance of Rs. 26,61,443 made under Section 14A read with Rule 8D for AY 2014-15 where the assessee did not earn exempt income in the relevant year. - HELD THAT: - The Tribunal found on the record that the assessee consistently maintained - and the Assessing Officer and the CIT(A) did not dispute - that no exempt income (such as dividend) was earned in the relevant previous year. In these circumstances the Tribunal held that the case is governed by the decisions of the Hon'ble Delhi High Court in Cheminvest Ltd. and CIT v. Holcim India Pvt. Ltd., which the Tribunal respectfully followed. Applying that precedent, a disallowance under Section 14A read with Rule 8D is not attracted where no exempt income was earned during the year; accordingly the confirmed disallowance was not sustainable and was set aside. The Tribunal added a cautionary provision that if Revenue demonstrates that exempt income was in fact earned, it may seek recall or restoration of the appeal, to be considered in accordance with law.

Order of the CIT(A) confirming the disallowance under Section 14A read with Rule 8D is set aside and the disallowance of Rs. 26,61,443 is directed to be deleted.

Final Conclusion: The appeal is allowed: the disallowance under Section 14A of the Income tax Act read with Rule 8D for Assessment Year 2014-15 is deleted on the ground that no exempt income was earned in the relevant year; Revenue may apply for recall or restoration if contrary material is subsequently found.

Deductibility under Section 37(1) of the Income tax Act - Revenue expenditure versus capital expenditure - Board and Central Government approval for waiver of recovery - Consequential adjudication of interest and penalty

Deductibility under Section 37(1) of the Income tax Act - Board and Central Government approval for waiver of recovery - Revenue expenditure versus capital expenditure - Addition disallowing advance written off/remuneration to the Managing Director was not sustainable and is to be deleted. - HELD THAT: - The Tribunal found that the advance/write off of excess remuneration to the Managing Director was approved by the Board of Directors and by the Central Government, and those approvals were on record before the Assessing Officer and the Commissioner (Appeals). Applying the principle embodied in Section 37(1), once proper approvals have been obtained the write off cannot be treated as an inadmissible expenditure. The Tribunal further held that the payment/write off did not give rise to any enduring benefit to the assessee and therefore could not be classified as capital expenditure; it had the character of revenue expenditure incurred wholly and exclusively for the purpose of business and hence deductible. On these conclusions, the additions made by the Assessing Officer and confirmed by the CIT(A) were held to be erroneous and were deleted. [Paras 7]

Grounds 2, 2.1, 2.2 and 2.3 are allowed and the addition is deleted.

Consequential adjudication of interest and penalty - Levy/ computation of interest under Section 234B and initiation of penalty under Section 271(1)(c) were not adjudicated as they are consequential. - HELD THAT: - The Tribunal explicitly recorded that the questions regarding interest under Section 234B and initiation of penalty proceedings under Section 271(1)(c) are consequential upon the assessment adjustment and were not decided at this stage. Those matters therefore remain for consideration in consequence of the decision on the primary issue (deletion of the addition). [Paras 7, 8]

Grounds 3, 3.1 and 4, 4.1 are not adjudicated at this juncture and follow consequentially from the primary decision.

Final Conclusion: The appeal is partly allowed: the addition disallowing the advance/write off of excess remuneration to the Managing Director is deleted; the questions of interest and penalty were left undecided as consequential matters for further consideration.

Exemption under section 11/12 - Restoration of registration under section 12AA - Entitlement to exemption despite belated revised return - First appellate power to consider entitlement consequent to restored registration

Exemption under section 11/12 - Restoration of registration under section 12AA - Entitlement to exemption despite belated revised return - Whether the assessee is entitled to exemption under section 11/12 for the assessment years in question following restoration of registration under section 12AA, notwithstanding that the exemption was claimed by a belatedly filed revised return. - HELD THAT: - The Tribunal recorded that registration under section 12AA had been restored to the assessee by a prior order of the ITAT w.e.f. 30/04/2008 and that this restoration was pointed out to the CIT(A) but not considered. On that basis the Tribunal held that the assessee's claim for exemption under section 11 for A.Y. 2012-13 and A.Y. 2013-14 was a valid claim consequent to the restored registration. The Tribunal considered the parties' reliance on Supreme Court decisions (including Goetz India Ltd. and Dalmia Power) and the contention regarding the time of filing the revised return, but treated the restoration of registration as determinative of the entitlement to exemption for the years under appeal and allowed the appeals. The Tribunal therefore accepted the assessee's claim arising from the restored registration and set aside the denial by the Assessing Officer and the CIT(A) to that extent. [Paras 7, 9]

Appeals allowed; the assessee is entitled to exemption under section 11/12 for A.Y. 2012-13 and A.Y. 2013-14 in view of restoration of registration under section 12AA.

Final Conclusion: Both appeals are allowed and the assessee's claims for exemption under section 11/12 for A.Y. 2012-13 and A.Y. 2013-14 are accepted on the ground that registration under section 12AA had been restored with retrospective effect.

Unexplained cash credit u/s 68 - genuineness of share transaction - proof of transaction by banking channels and documentary evidence - postal non-service of inquiry not conclusive of non existence

Unexplained cash credit u/s 68 - genuineness of share transaction - proof of transaction by banking channels and documentary evidence - postal non-service of inquiry not conclusive of non existence - Addition of sale proceeds of 45,000 shares amounting to the credited sum as unexplained cash credit under section 68 and the genuineness of the share sale transaction. - HELD THAT: - The Tribunal examined documentary and banking evidence and found the sale transaction to be genuine. The assessee had purchased 45,000 shares by banking channel, produced the cheque evidencing payment, and disclosed the investment in audited balance sheet; physical share certificates dated 31.03.2011 showed ownership. The assessee produced a sale bill for sale of the same 45,000 shares and the sale consideration was credited to the assessee's bank account by RTGS on the stated date; a confirmation from the purchaser was also on record. The Tribunal held that discrepancy between the claimed sale price and the market price on BSE, and the AO's inability to effect service by speed post on the purchaser, were insufficient to displace the contemporaneous documentary and banking records. In absence of any material showing the purchaser to be non existent or that the assessee received an unaccounted benefit, the AO's conclusion that the transaction was a sham and the amount an unexplained cash credit was not justified. Applying these findings, the addition made under section 68 was deleted. [Paras 6, 7, 9]

Addition under section 68 treated as unexplained cash credit held not sustainable; addition deleted and sale transaction accepted as genuine.

Final Conclusion: The appeal is allowed: the Tribunal deleted the addition treating the sale proceeds as unexplained cash credit under section 68, accepting the sale as genuine on the basis of banking records, share certificates, audited disclosures and purchaser confirmation; other departmental contentions based on market price disparity and returned postal communication were held insufficient to sustain the addition.

Allowability of interest under section 36(1)(iii) when borrowed funds are advanced to wholly-owned subsidiary for business purposes - nexus between expenditure and purpose of business - diversion of interest-bearing funds towards interest-free advances to related concerns - commercial expediency as a justification for business expenditure

Allowability of interest under section 36(1)(iii) when borrowed funds are advanced to wholly-owned subsidiary for business purposes - diversion of interest-bearing funds towards interest-free advances to related concerns - nexus between expenditure and purpose of business - commercial expediency as a justification for business expenditure - Whether disallowance of interest expenses under section 36(1)(iii) is justified where the assessee advanced interest free loans to its wholly owned subsidiary for purposes connected with its business. - HELD THAT: - The Tribunal accepted the assessee's contention that the advances to the wholly owned subsidiary were made in furtherance of the assessee's business and in the commercial interest of the company. Reliance was placed on the decisions of the Delhi High Court in Tulip Star Hotels Ltd. and the Bombay High Court in Reliance Communications Infrastructure Ltd., and on the Supreme Court's statement in Hero Cycle that once a nexus between the expenditure and business purpose is established, Revenue cannot substitute its view for that of management. Having regard to those precedents and the admitted fact that funds were extended to a wholly owned subsidiary for business purposes, the Tribunal held that interest paid on borrowed funds could not be disallowed under section 36(1)(iii) merely because the advances were interest free or because funds were diverted to a related concern. On that basis the Tribunal set aside the CIT(A)'s order and directed deletion of the disallowance made by the Assessing Officer. [Paras 12, 13, 14]

The disallowance of interest of Rs. 10,88,438 under section 36(1)(iii) is deleted and the appeal of the assessee is allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that interest on borrowed funds used to advance interest free loans to a wholly owned subsidiary for business purposes is allowable under section 36(1)(iii), and set aside the orders of the AO and CIT(A) deleting the disallowance for Assessment Year 2016-17.

Classification as cellular telephones - exemption under Notification No.6/2002-CE and Notification No.21/2002-Cus and Notification No.21/2005-Cus - application of precedent in Tata Teleservices Ltd. v. Commissioner of Customs

Classification as cellular telephones - exemption under Notification No.6/2002-CE and Notification No.21/2002-Cus and Notification No.21/2005-Cus - application of precedent in Tata Teleservices Ltd. v. Commissioner of Customs - CDMA-WLL telephones manufactured by M/s Teracom Pvt. Ltd. are cellular phones and are eligible for the exemption under the cited notifications. - HELD THAT: - The Tribunal had held that the CDMA-WLL telephones manufactured by the respondent are cellular phones and therefore entitled to the benefit of the exemptions contained in serial no. 264 of the table to Notification No.6/2002-CE dated 1.3.2002 and the corresponding entries in Notification No.21/2002-Cus and Notification No.21/2005-Cus. This Court, having regard to and applying the decision in Tata Teleservices Ltd. v. Commissioner of Customs, noted that the question is governed by that precedent and that no contrary decision was placed before the Court. The Department did not dispute the applicability of the precedent. On that basis the Court held that the Tribunal did not err in treating the CDMA-WLL telephones as cellular telephones and in allowing the benefit of the notifications to the respondents. [Paras 3, 6, 7]

The Tribunal's allowance of the respondents' appeals is upheld; the respondents are entitled to the claimed exemption and the appeals are dismissed with no order as to costs.

Final Conclusion: The Supreme Court dismissed the appeals, affirming the Tribunal's decision that the CDMA-WLL telephones manufactured by the respondents qualify as cellular telephones and are entitled to the exemptions under the cited notifications, relying on the decision in Tata Teleservices Ltd.; no order as to costs.

Direction to pass assessment order under Section 17 of the Customs Act, 1962 - assessment of goods imported by way of Bill of Entry - warehousing of imported goods pending assessment

Direction to pass assessment order under Section 17 of the Customs Act, 1962 - assessment of goods imported by way of Bill of Entry - warehousing of imported goods pending assessment - Respondent directed to pass an assessment order under Section 17 of the Customs Act, 1962 in respect of Bill of Entry No. 5043522 dated 13.08.2021 and the petitioner to cooperate in the process. - HELD THAT: - The Court noted that no order under Section 17 had been passed for assessment of the goods imported by the petitioner under the specified Bill of Entry, while the respondent had accepted the petitioner's request for warehousing. In view of these facts and the limited submissions, the Court directed the respondent to pass the assessment order under Section 17 of the Customs Act, 1962 in accordance with law and on the basis of evidence on record. The direction requires the respondent to act expeditiously and practicably. The Court further recorded that the petitioner must cooperate with the respondent while the assessment is being decided. [Paras 2, 3, 4]

Writ petition disposed with a direction to the respondent to pass the assessment order under Section 17 for the specified Bill of Entry expeditiously and the petitioner to cooperate.

Final Conclusion: The writ petition is disposed of by directing the Commissioner to pass an order under Section 17 of the Customs Act, 1962 for Bill of Entry No. 5043522 dated 13.08.2021 expeditiously and on the basis of the record; the petitioner is directed to cooperate.

Embargo under Section 37 of the NDPS Act - reasonable grounds for believing accused not guilty - commercial quantity - parity with co-accused - exercise of bail jurisdiction under Section 439 Cr.P.C. subject to NDPS limitations

Commercial quantity - Embargo under Section 37 of the NDPS Act - exercise of bail jurisdiction under Section 439 Cr.P.C. subject to NDPS limitations - Whether the petitioner is entitled to grant of bail despite recovery of psychotropic substance in commercial quantity and the non-obstante embargo in Section 37 of the NDPS Act. - HELD THAT: - The court recorded that 1,26,700 tablets of Alprazolam were recovered concealed in the consignment and that the recovered substance falls within the commercial quantity. The scheme of Section 37, which begins with a non-obstante clause, curtails the ordinary bail jurisdiction by requiring (i) opportunity to the prosecution to oppose bail and (ii) satisfaction of the court that there are reasonable grounds for believing the accused is not guilty. "Reasonable grounds" must be more than prima facie and require facts and circumstances sufficient to justify belief in the accused's innocence. Applying these principles, and having regard to the classification of the recovered quantity as commercial, the court found the embargo of Section 37 applicable and that the twin conditions for enlargement on bail were not satisfied in the present case. [Paras 8, 9, 10]

Embargo of Section 37 applies on the facts; petitioner not entitled to bail on this ground.

Parity with co-accused - Embargo under Section 37 of the NDPS Act - Whether the petitioner is entitled to parity with co-accused who was granted bail. - HELD THAT: - The court noted that the co-accused's bail order had been granted by the trial court but observed that the circumstances justifying bail to a co-accused do not automatically entitle another accused to parity where Section 37 applies. The trial court's grant of bail to the co-accused was held to have overlooked the underlying object of Section 37. Reliance was placed on the Apex Court's statement that non-challenge by prosecution to co-accused's bail does not absolve the accused from rigours of Section 37. Given the applicability of Section 37 and absence of demonstrable "reasonable grounds" regarding the petitioner's innocence, parity was refused. [Paras 11, 12]

Parity with the co-accused is not available to the petitioner; the petitioner's plea for parity is rejected.

Involvement in another similar case - reasonable grounds for believing accused not guilty - Whether the petitioner's involvement in another pending NDPS case affects entitlement to bail. - HELD THAT: - The court noted that the petitioner is involved in another case of similar nature pending trial. This multiplicity of involvement was taken into account in evaluating the absence of reasonable grounds to believe in the petitioner's innocence. The court treated the other pending proceedings as a relevant factor militating against grant of bail in the present matter. [Paras 7, 13]

Petitioner's involvement in another similar NDPS case weighs against grant of bail.

Final Conclusion: The bail application is dismissed as Section 37 of the NDPS Act applies on the facts (recovery in commercial quantity), the requisite "reasonable grounds" for believing the petitioner not guilty are absent, parity with a co-accused is not available, and the petitioner's involvement in another similar case further disfavors enlargement on bail.

Pre-arrest interim protection - powers under Section 19 of the Prevention of Money Laundering Act, 2002 - person aggrieved - cooperation with investigation - premature challenge to investigation

Pre-arrest interim protection - powers under Section 19 of the Prevention of Money Laundering Act, 2002 - person aggrieved - cooperation with investigation - Interim restraint against taking coercive steps/arrest was to be granted at the nascent stage of investigation subject to conditions. - HELD THAT: - The Court found the proceedings to be at a nascent stage and noted the respondents had issued only summonses; the Additional Solicitor General conceded that the petition was premature and that an arrest could still be effected under Section 19 of the Act of 2002. The Court declined to enter into the merits so as not to prejudice either party, but recognised that apprehension of arrest would hamper the petitioner's ability to answer summons and cooperate. In view of absence of material on record justifying arrest so far, the Court disposed of the stay petition by directing the petitioner to appear personally and cooperate with the investigation and, in balance, restrained the respondents from taking any coercive steps/arrest in connection with ECIR/10/HIU/2020. The restraint is conditional: it does not impede the investigation and may be vacated if the petitioner refuses to cooperate or fails to honour summonses, whereupon the respondents may apply for vacation of the interim order. [Paras 16, 17, 18, 19]

Petition disposed of by granting interim protection from arrest while directing immediate personal appearance and cooperation with investigation; protection liable to be vacated if petitioner does not comply with summons or obstructs investigation.

Final Conclusion: The writ petition was disposed of at the interim stage: the petitioner was directed to appear and cooperate with the investigation and respondents were restrained from making any coercive move or arrest in respect of ECIR/10/HIU/2020, subject to the condition that the protection may be withdrawn if the petitioner fails to honour summonses or obstructs the investigation.

Mandamus to dispose representation - direction for expeditious disposal - judicial non-interference with merits - personal hearing at administrative discretion

Mandamus to dispose representation - direction for expeditious disposal - judicial non-interference with merits - personal hearing at administrative discretion - Petition seeking a writ directing the respondent to consider and dispose of the representation dated 20.03.2020 was granted in limited terms by issuing a mandate for expeditious disposal without expressing any view on merits. - HELD THAT: - The writ petitioner narrowed the relief sought to a simple mandate that the respondent dispose of the representation dated 20.03.2020. The High Court, finding the abridged prayer innocuous, directed the respondent to decide the representation on its own merits and in accordance with law within five weeks from the date of the order and to communicate the disposal to the petitioner within five working days thereafter. The Court explicitly refrained from opining on the merits of the underlying claim and left it open to the respondent, in his discretion, to grant a personal hearing if he considers it necessary for the decision. The order contains no award of costs.

Writ petition disposed by directing respondent to decide the representation dated 20.03.2020 on merits and in accordance with law within five weeks and to communicate the decision within five working days; no comment on merits; personal hearing left to respondent's discretion; no costs.

Final Conclusion: The petition was disposed by issuing a limited mandamus directing the respondent to expeditiously decide the representation dated 20.03.2020 within the specified time-frame and communicate the decision, with the Court declining to express any view on the merits and leaving any personal hearing to the respondent's discretion.

Amendment of pleadings at a belated stage - challenge to conduct of CIRP and validity of Committee of Creditors' meetings - admissibility of financial creditor's claim (limitation and FORM C) - power of the Committee of Creditors to decide liquidation under Section 33(2) of the I&B Code - standing of a shareholder/suspended director to challenge CoC proceedings - alleged misstatement in provisional financials and Section 71 consequences - imposition of costs for frivolous or belated challenges

Amendment of pleadings at a belated stage - IA(IBC) 101/KOB/2021 seeking amendment of MA/207/KOB/2020 dismissed. - HELD THAT: - The amendment application was filed after pleadings were complete and at a belated stage. The proposed amendments sought to introduce new facts which would alter the character of the original application. The Tribunal held that such an amendment could not be permitted when the matter was ripe for hearing and when liquidation proceedings require adherence to stipulated timelines. Consequently the amendment petition was dismissed. [Paras 3]

IA(IBC) 101/KOB/2021 dismissed.

Challenge to conduct of CIRP and validity of Committee of Creditors' meetings - standing of a shareholder/suspended director to challenge CoC proceedings - power of the Committee of Creditors to decide liquidation under Section 33(2) of the I&B Code - admissibility of financial creditor's claim (limitation and FORM C) - alleged misstatement in provisional financials and Section 71 consequences - imposition of costs for frivolous or belated challenges - MA/207/KOB/2020 filed by a shareholder/suspended Managing Director challenging admission, CoC meetings, admission of bank guarantee claim, conduct of CIRP and the order for liquidation dismissed and costs imposed. - HELD THAT: - The Tribunal examined the sequence of proceedings including admission under Section 7, the appellate orders of NCLAT and Supreme Court, the conduct of the IRP/RP and the CoC resolutions culminating in the decision to move for liquidation under Section 33(2). The petitioner, a shareholder and suspended director, had not participated in CoC meetings and had unsuccessfully challenged admission and related orders before higher fora. The Tribunal held that a shareholder is not entitled to challenge the wisdom of the CoC or the conduct of CIRP in the manner attempted; the CIRP had proceeded, the CoC had taken a considered commercial decision not to reissue Form G and to recommend liquidation, and the Tribunal's liquidation order followed that decision. Allegations of time-barred claims, absence of FORM C, unauthorized representatives at meetings, misstatements in provisional financials and other procedural irregularities were found to be raised belatedly and without sufficient cause to reopen the concluded process. Given the prior appellate dismissals and the lack of co-operation by the suspended directors during CIRP, the MA was held to be unsustainable and liable to be dismissed with exemplary costs. [Paras 8, 9, 10, 11, 12]

MA/207/KOB/2020 dismissed; costs of Rs.25,000 awarded to the Liquidator to be paid within two weeks.

Final Conclusion: The application to amend the main petition was dismissed as belated; the substantive petition by the shareholder/suspended director challenging the CIRP, CoC decisions, admission of claims and the liquidation order was dismissed on merits (and for being belated and inappropriate by a shareholder), and costs were awarded to the Liquidator.

Provisions of this Code to override other laws - Moratorium under the Insolvency and Bankruptcy Code - Jurisdiction of Adjudicating Authority under Section 60(5) - Duty of Interim Resolution Professional / Liquidator to take custody and control of assets - Section 32A immunity for property and liability for prior offences - Conflict between central insolvency legislation and State attachment statutes

Provisions of this Code to override other laws - Conflict between central insolvency legislation and State attachment statutes - Whether provisions of the IBC override attachment orders made under the MPID Act insofar as they are inconsistent with the objectives and operation of the IBC. - HELD THAT: - The Tribunal held that Section 238 of the IBC gives the Code overriding effect over other laws to the extent of any inconsistency. While Section 14 of the MPID Act contains a non obstante clause, a subsequent special enactment like the IBC, which provides a comprehensive scheme for corporate insolvency and liquidation, must prevail where there is inconsistency affecting the insolvency process. The MPID attachment regime, insofar as it obstructs time bound duties under the IBC (including preservation, valuation and realisation of corporate assets), must yield to the IBC. The court relied on constitutional distribution principles and prior authorities to conclude that the IBC's purpose of value maximisation and balanced stakeholder interests requires removal of obstructions created by attachments under the MPID Act when they impede insolvency resolution or liquidation. [Paras 28, 29, 36, 38]

Section 238 of the IBC applies and attachments under the MPID Act that are inconsistent with the IBC's insolvency or liquidation processes must give way to the Code.

Moratorium under the Insolvency and Bankruptcy Code - Jurisdiction of Adjudicating Authority under Section 60(5) - Duty of Interim Resolution Professional / Liquidator to take custody and control of assets - Whether the Adjudicating Authority (NCLT) has jurisdiction under Section 60(5) to adjudicate and remove attachments/seizures that obstruct the CIRP or liquidation and to direct handover of assets to the liquidator. - HELD THAT: - The Tribunal rejected the submission that the Resolution Professional/Liquidator must always pursue remedies exclusively before the State designated court under the MPID Act. Applying the legal scheme of the IBC and precedents, the Tribunal held that questions of priority and obstructions affecting insolvency resolution or liquidation fall within Section 60(5)(c). The moratorium under Section 14 and duties on the IRP/RP/liquidator (including taking custody and control of assets and preserving value) mean that active attachments or seizures which impede those duties can be removed by the Adjudicating Authority. The Tribunal distinguished the facts of authority relied upon by the appellants and followed earlier decisions where attachment regimes (e.g., under PMLA) were held to be subject to the IBC where they obstructed the insolvency process. [Paras 31, 32, 33, 36, 41]

The Adjudicating Authority has jurisdiction to decide and remove attachments or seizures that obstruct CIRP or liquidation and to direct handover of assets to the liquidator in furtherance of the IBC process.

Section 32A immunity for property and liability for prior offences - Duty of Interim Resolution Professional / Liquidator to take custody and control of assets - Whether Section 32A of the IBC (as inserted) can protect property of the corporate debtor from actions in relation to offences committed prior to CIRP, and whether its protection can be relevant when liquidation commences or a resolution plan results in change of control. - HELD THAT: - The Tribunal observed that Section 32A, including its Explanation, contemplates protection of the corporate debtor's property (including attachments, seizures or retention) once the conditions in Section 32A are satisfied (approval of a resolution plan resulting in change of control or sale of liquidation assets to a bona fide buyer). The court rejected the argument that Section 32A is inapplicable until liquidation assets are sold, noting that the liquidator is obliged under the Code to take custody of assets and that the prospect of Section 32A protection is relevant to ensure access to and realisation of assets. The Tribunal relied on legislative purpose and prior appellate discussion upholding Section 32A to conclude that the availability of its protection cannot be preempted by continuing attachment obstructing the insolvency or liquidation process. [Paras 33, 34, 35]

Section 32A can be relevant and its protection of property contemplated by the Code; attachments that prevent the liquidator from taking custody and realising assets cannot be permitted to obstruct the insolvency/liquidation process.

Jurisdiction of Adjudicating Authority under Section 60(5) - Whether the Adjudicating Authority erred in the impugned order by reading the attachment letter dated 22.10.2018 together with the earlier notification dated 31.03.2017 and thereby directing handover in relation to the earlier notification. - HELD THAT: - The Tribunal found that the Resolution Professional's application had sought removal of the attachment of bank accounts under the letter dated 22.10.2018 and had not prayed for removal of attachments made by notification dated 31.03.2017 (which related to certain persons' immovable properties). The Adjudicating Authority had wrongly read the 22.10.2018 letter 'read with notification dated 31.03.2017'. The Tribunal held that that portion of the impugned order was incorrect and required correction. [Paras 39, 40, 41]

The phrase 'read with notification dated 31.03.2017' in paragraph 6 of the impugned order is expunged; the Adjudicating Authority's directions are modified to the extent they were premised on combining the two instruments.

Final Conclusion: Both appeals are partly allowed: the Tribunal affirmed that the IBC (including Section 238 and the moratorium) prevails over state attachment measures to the extent they obstruct insolvency resolution or liquidation; the Adjudicating Authority has jurisdiction under Section 60(5) to remove such obstructions and direct handover of assets to the liquidator; Section 32A's protective scheme is relevant to the liquidation/resolution process; and the impugned order is modified by deleting the words 'read with notification dated 31.03.2017' while the remainder of the impugned order stands affirmed. No order as to costs.

Liquidation under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - Committee of Creditors' decision to liquidate - Failure to receive a resolution plan within the CIRP period - Appointment of Liquidator under Section 34 - Commencement of fresh moratorium under Section 33(5) - Notice of discharge to officers, employees and workmen under Section 33(7) - Public announcement of liquidation and duties of the Liquidator - Obligation to intimate fiscal and regulatory authorities

Liquidation under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - Committee of Creditors' decision to liquidate - Failure to receive a resolution plan within the CIRP period - Order for liquidation of the corporate debtor under the Insolvency and Bankruptcy Code, 2016. - HELD THAT: - The Resolution Professional informed the Committee of Creditors (CoC) that no resolution plan had been received despite inviting expressions of interest and conducting the CIRP. At the 6th CoC meeting the CoC, with 100% voting, resolved to initiate liquidation. The Tribunal, having considered the materials and the statutory scheme in Section 33 (including sub-sections (1) and (2)), found the statutory condition for passing a liquidation order satisfied and therefore directed that the corporate debtor be put into liquidation in accordance with Chapter III of the Code and the Liquidation Process Regulations.

The Tribunal ordered liquidation of the corporate debtor under Section 33(2) of the IBC.

Appointment of Liquidator under Section 34 - Public announcement of liquidation and duties of the Liquidator - Appointment of the Liquidator and directions relating to public announcement and conduct of liquidation. - HELD THAT: - The Tribunal accepted the consent of Mr. Punit Handa to act as Liquidator and appointed him under Section 34 of the Code read with the Liquidation Process Regulations. The Liquidator was directed to issue the public announcement stating that the corporate debtor is in liquidation in terms of the Regulations and to carry out the liquidation process in accordance with Chapter III of the Code and relevant regulations. The order sets out the Liquidator's mandate to proceed with liquidation in the prescribed manner.

Mr. Punit Handa was appointed as Liquidator and directed to issue the statutory public announcement and to conduct the liquidation in accordance with the Code and regulations.

Obligation to intimate fiscal and regulatory authorities - Commencement of fresh moratorium under Section 33(5) - Statutory notifications and effect on moratorium following the liquidation order. - HELD THAT: - The Tribunal directed that the Registry communicate the order to the Registrar of Companies and the Insolvency and Bankruptcy Board of India. It further directed the Liquidator to intimate the Income Tax Department and other fiscal and regulatory authorities as required. The order declared that the earlier moratorium under Section 14 would cease and that a fresh moratorium under Section 33(5) shall commence from the date of the liquidation order, in accordance with the Code.

Directions issued for statutory intimation to authorities and for cessation of the earlier moratorium with commencement of the fresh moratorium under Section 33(5).

Notice of discharge to officers, employees and workmen under Section 33(7) - Effect of the liquidation order on employment - deemed notice of discharge. - HELD THAT: - Relying on the statutory scheme, the Tribunal held that the liquidation order operates as a notice of discharge to the officers, employees and workmen of the corporate debtor as contemplated by Section 33(7) of the Code. The order therefore deems such persons discharged from their employment from the date of the liquidation order.

The liquidation order is deemed to be a notice of discharge to the officers, employees and workmen under Section 33(7).

Liquidator's reporting obligations under the Liquidation Process Regulations - Obligation of the Liquidator to submit a Preliminary Report within the time specified by the Regulations. - HELD THAT: - The Tribunal directed the Liquidator to submit a Preliminary Report to the Adjudicating Authority within seventy-five days from the liquidation commencement date as required by Regulation 13 of the Insolvency and Bankruptcy (Liquidation Process) Regulations, 2016, thereby fixing the reporting timeline and confirming the Liquidator's statutory reporting responsibilities.

The Liquidator is directed to submit the Preliminary Report within seventy-five days from the liquidation commencement date.

Final Conclusion: The Tribunal, on the basis of the CoC's unanimous decision and the absence of any resolution plan, ordered liquidation of the corporate debtor, appointed the consenting Liquidator, and issued ancillary directions (statutory intimation, public announcement, moratorium adjustments, deemed discharge of employees and Liquidator's reporting obligations) necessary to give effect to the liquidation under the Code and relevant regulations.

Dispensation of convening meetings under sections 230-232 - waiver of meeting where 100% consent of a class is on record - no necessity to convene meeting where class does not exist - service of statutory authorities under section 230(5) and Rule 8

Dispensation of convening meetings under sections 230-232 - waiver of meeting where 100% consent of a class is on record - Dispensation of convening meetings of Equity Shareholders and Unsecured Creditor of Applicant/Transferor Company No. 1. - HELD THAT: - The Tribunal recorded that Transferor Company No. 1 has three Equity Shareholders and the sole Unsecured Creditor, and that all such members and the unsecured creditor have executed affidavits constituting 100% in number and value in support of the Scheme on record. On this basis the Tribunal dispensed with holding separate meetings of the Equity Shareholders and of the Unsecured Creditors of Transferor Company No. 1. The Tribunal also noted that there are no Preference Shareholders or Secured Creditors in the company, and therefore convening meetings for those classes does not arise. [Paras 17]

Necessity of convening meetings of Equity Shareholders and Unsecured Creditor of Transferor Company No. 1 is dispensed with; meetings for Preference Shareholders and Secured Creditors do not arise.

Dispensation of convening meetings under sections 230-232 - waiver of meeting where 100% consent of a class is on record - no necessity to convene meeting where class does not exist - Dispensation of convening meetings of Equity Shareholders and Unsecured Creditor of Applicant/Transferor Company No. 2. - HELD THAT: - The Tribunal recorded that Transferor Company No. 2 is wholly held by Transferor Company No. 1 whose board and nominee have given affidavits constituting 100% in number and value as equity shareholder consent; there are no Preference Shareholders or Secured Creditors, and the sole Unsecured Creditor has given an affidavit constituting 100% in value. On that basis the Tribunal dispensed with holding separate meetings of the Equity Shareholders and of the Unsecured Creditors; meetings for Preference Shareholders and Secured Creditors do not arise. [Paras 17]

Necessity of convening meetings of Equity Shareholders and Unsecured Creditor of Transferor Company No. 2 is dispensed with; meetings for Preference Shareholders and Secured Creditors do not arise.

Dispensation of convening meetings under sections 230-232 - waiver of meeting where 100% consent of a class is on record - Dispensation of convening meetings of Equity Shareholders, Preference Shareholders and Unsecured Creditors of Applicant/Transferor Company No. 3. - HELD THAT: - The Tribunal recorded that Transferor Company No. 3 is a wholly-owned subsidiary of Transferor Company No. 1 and that affidavits on record show 100% in number and value consent from its Equity Shareholder (the holding company) and from both Preference Shareholders; its two Unsecured Creditors have given affidavits constituting 100% in value. There are no Secured Creditors. On that basis the Tribunal dispensed with holding separate meetings of the Equity Shareholders, Preference Shareholders and Unsecured Creditors; a meeting of Secured Creditors does not arise. [Paras 17]

Necessity of convening meetings of Equity Shareholders, Preference Shareholders and Unsecured Creditors of Transferor Company No. 3 is dispensed with; meeting for Secured Creditors does not arise.

Dispensation of convening meetings under sections 230-232 - waiver of meeting where 100% consent of a class is on record - Dispensation of convening meetings of Equity Shareholders, Preference Shareholders and Unsecured Creditors of Applicant/Transferee Company. - HELD THAT: - The Tribunal recorded that the Transferee Company is a subsidiary of Transferor Company No. 3 whose board and nominee have given affidavits constituting 100% consent as Equity Shareholder; all seven Preference Shareholders and all five Unsecured Creditors have filed affidavits amounting to 100% in number and value in support of the Scheme. There are no Secured Creditors. Accordingly the Tribunal dispensed with convening separate meetings of the Equity Shareholders, Preference Shareholders and Unsecured Creditors; meeting for Secured Creditors does not arise. [Paras 17]

Necessity of convening meetings of Equity Shareholders, Preference Shareholders and Unsecured Creditors of the Transferee Company is dispensed with; meeting for Secured Creditors does not arise.

Service of statutory authorities under section 230(5) and Rule 8 - Directions for service of the Application and related documents on statutory authorities and filing of affidavit of service. - HELD THAT: - The Tribunal directed service of the Application, Scheme and related documents on the Central Government through the Regional Director (Northern Region), Registrar of Companies, Official Liquidator and the Income-Tax Department having jurisdiction, and on other relevant sectoral regulators by hand delivery or registered/speed post within seven days of receipt of certified copy of the order, enabling those authorities to file representations within thirty days. The Tribunal further directed that the Applicant Companies shall file an affidavit of service within seven days thereafter, and it recorded that absence of any representation within the prescribed period shall be presumed to indicate no objection by those authorities. [Paras 18, 19, 20]

Application, Scheme and related documents to be served on statutory authorities within seven days; affidavit of service to be filed within seven days thereafter; absence of representation within thirty days shall be taken as no objection.

Final Conclusion: The Tribunal allowed C.A. No. 17/ALD/2021, dispensed with convening the class meetings of Equity Shareholders, Preference Shareholders and Unsecured Creditors where 100% consents are on record (and noted where particular classes do not exist), and directed service of the Application and Scheme on prescribed statutory authorities with filing of affidavit of service; in default of representations within the stipulated period, no objections will be presumed.

Principles of natural justice - audi alteram partem - remand for de novo adjudication - expression of findings in a remand order

Principles of natural justice - expression of findings in a remand order - audi alteram partem - The Commissioner (Appeals) erred in expressing findings on the merits while remanding the matter for fresh adjudication after recording that principles of natural justice had not been followed by the Adjudicating Authority. - HELD THAT: - The Tribunal found that once the Commissioner (Appeals) concluded that the Adjudicating Authority had failed to follow the principles of natural justice and remanded the case for re-examination, he ought not to have expressed any merits-based conclusions which could influence the fresh adjudication. Such expression of findings in the remand order was inconsistent with the remedial purpose of remand and risked prejudicing the de novo proceedings. The appellate forum's function when directing a remand is limited to identifying procedural infirmity and ordering fresh consideration; it must avoid articulating conclusions that may bind or colour the Adjudicating Authority's re-hearing, particularly where the right to be heard (audi alteram partem) was found to have been denied. [Paras 4]

Findings expressed by the Commissioner (Appeals) while remanding the matter were set aside.

Remand for de novo adjudication - principles of natural justice - The matter was remanded to the Adjudicating Authority for fresh adjudication to be conducted de novo after affording the appellant reasonable opportunity to be heard and to produce evidence. - HELD THAT: - The Tribunal ordered that the impugned portion of the appellate order be set aside and directed that the Adjudicating Authority conduct a de novo adjudication without being influenced by the appellate findings. The Adjudicating Authority was instructed to follow the principles of natural justice, afford reasonable opportunities to the appellant to present defence and documentary evidence, and decide the issue afresh on eligibility and merits. The remand is for full re-hearing and fresh decision-making by the original authority. [Paras 5, 6]

Cases remanded to the Adjudicating Authority for de novo adjudication after complying with principles of natural justice; appeals allowed by way of remand.

Final Conclusion: The appeals were allowed by setting aside the appellate findings that prejudiced a fresh hearing and remanding the matters to the Adjudicating Authority to decide de novo after affording the appellant reasonable opportunity to be heard in accordance with principles of natural justice.

Option to apply for fixation of a special rate representing actual value addition - validity and applicability of amended exemption notifications pending interim orders - time-limit for claiming special rate (application by 30th September of the relevant financial year) - effect of interim orders and final Supreme Court decision on entitlement to exemption - constructive res judicata as a bar to raising procedural non-compliance

Option to apply for fixation of a special rate representing actual value addition - time-limit for claiming special rate (application by 30th September of the relevant financial year) - Whether the amended notifications confer a legal right on manufacturers to opt out of the tabled rates and seek fixation of a special rate based on actual value addition, and the legal character of the 30th September filing requirement. - HELD THAT: - The Court held that the amended notifications indeed grant a substantive legal right to the manufacturer to forgo the notified rates and apply to the Commissioner for fixation of a special rate reflecting actual value addition. The provision requiring applications to be filed by 30th September of the relevant financial year is a procedural mechanism intended to streamline filings and avoid perpetual claims. The Court, however, declined to categorically characterise the 30th September provision as strictly mandatory in all circumstances; instead it recognised the provision's regulatory purpose while acknowledging that, in the peculiar factual matrix of this case, the occasion to apply arose only after the final decision of the Supreme Court. Given that temporal context, the petitioner could not be wholly precluded from claiming the special rate merely because the application was not lodged before the specified date. [Paras 15, 16, 17, 18]

The notifications confer a right to seek fixation of a special rate; the 30th September filing requirement is a procedural provision for streamlining claims but does not automatically bar the petitioner in the factual circumstances of this case.

Effect of interim orders and final Supreme Court decision on entitlement to exemption - constructive res judicata as a bar to raising procedural non-compliance - Whether the petitioner's belated application (dated 28.09.2020) should be summarily rejected as time barred in view of the interim orders and earlier proceedings, and what further action is required. - HELD THAT: - The Court noted that while interim orders and the pendency of appeals affected the practical operation of the notifications earlier, once the Supreme Court rendered its final judgment on 22.04.2020 the occasion arose for assessees to seek fixation of special rates. The petitioner filed the application within five months thereafter. The Court observed that the respondents, by agreeing in earlier writ proceedings to consider the application, did not raise the temporal objection then; on that basis and on the principle of constructive res judicata the respondent may be precluded from rejecting the application solely for not being filed by 30th September. Consequently, the matter is not summarily amenable to rejection on time bar grounds and requires fresh consideration on merits by the competent authority. [Paras 18, 19, 20, 21]

The ground of time bar cannot be automatically relied upon to reject the petitioner's application in the circumstances; the Principal Commissioner is directed to decide the application on merits.

Final Conclusion: Writ petition allowed. The Court declared that the notifications grant a right to seek fixation of a special rate based on actual value addition, recognised the procedural purpose of the 30th September filing requirement but declined to treat it as an absolute bar in the peculiar facts, and directed the Principal Commissioner, GST, Guwahati to consider and decide the petitioner's application dated 28.09.2020 on its merits; no coercive action to be taken until decision.

Exemption under Notification No. 1/95-CE - supply to 100% EOU under CT-3 certificates - deemed exports - MODVAT/CENVAT credit availed on inputs removed as such - treatment of inputs as 'manufactured' in the factory for purposes of clearance under bond

Exemption under Notification No. 1/95-CE - supply to 100% EOU under CT-3 certificates - MODVAT/CENVAT credit availed on inputs removed as such - deemed exports - Liability to pay excise duty, interest and penalties on inputs for which MODVAT/CENVAT credit was availed and which were thereafter removed as such to a 100% EOU under CT-3 certificates. - HELD THAT: - The Tribunal examined whether the condition in Notification No. 1/95 requiring the user industry to bring excisable goods "directly from the factory of manufacture" precluded the appellant from claiming exemption when inputs (including bought-out spares) on which MODVAT/CENVAT credit had been taken were removed as such to a 100% EOU under CT-3. The Court treated supplies to 100% EOUs as "deemed exports" and applied the reasoning in Solectron Centum Electronics Ltd. (approved by the High Court), together with CBEC Circular No. 283/117/93-CX, which recognises that inputs cleared under bond for export may be treated as if manufactured in the factory. Once such inputs are treated as "manufactured" for the purpose of removal under bond/CT-3, the condition in Notification No. 1/95 is satisfied and the denial of exemption on the ground that the inputs were bought out would be contrary to the object of the benevolent notification. Applying these principles, and following prior Tribunal and High Court directions to reconsider in light of Solectron, the Tribunal held that the demand of duty (and attendant interest and penalties) on inputs removed as such to 100% EOUs cannot be sustained. [Paras 10, 14, 15, 16]

Demand of duty, interest and penalties confirmed by the lower authority in respect of inputs removed as such to 100% EOU is set aside; appeals of the assessee allowed and departmental appeals dismissed.

Final Conclusion: The Tribunal, applying the decision in Solectron Centum Electronics Ltd. and relevant administrative clarification, held that inputs on which MODVAT/CENVAT credit was availed and which were removed as such to a 100% EOU under CT-3 are not liable to the demand of duty, interest and penalties; the impugned orders confirming the demand are set aside and the assessee's appeals are allowed while the department's appeals are dismissed.

Independent application of mind - Narasus principle - mechanical acceptance of Enforcement Wing's revision proposal - deemed assessment under Section 22(2) of TNVAT Act - assessment and penalty proceedings under Section 27 of TNVAT Act - discretion to grant personal hearing or call for documents - remand for de novo revisional assessment in accordance with administrative circular

Narasus principle - mechanical acceptance of Enforcement Wing's revision proposal - independent application of mind - Impugned orders were quashed because the Assessing Officer proceeded by merely adopting the revision proposed by the Enforcement Wing without independent application of mind as required by Narasus principle. - HELD THAT: - The Court examined the impugned orders and found that after noting the deemed assessment under Section 22(2) of the TNVAT Act and the defects reported by Enforcement Officers, the Assessing Officer accepted the Enforcement Wing's revised turnover proposal without independently analysing the material before him. The Court applied the Narasus principle - that in assessments under Section 27 (post deemed assessment under Section 22(2)), the Assessing Officer must independently apply his mind and not be guided solely by the Enforcement Authorities' proposal - and concluded that the impugned orders suffer from infraction of that principle. Consequently, the impugned orders were set aside to enable a fresh revisional assessment undertaken with independent application of mind. [Paras 8, 10, 13, 14]

Impugned orders set aside as they reflected blind adoption of the Enforcement Wing's proposal; Assessing Officer directed to redo the revisional assessment applying independent mind in accordance with Narasus principle.

Discretion to grant personal hearing or call for documents - assessment and penalty proceedings under Section 27 of TNVAT Act - Personal hearing is not statutorily imperative under Section 27 proceedings; the Assessing Officer has discretion to call for documents or grant hearing. - HELD THAT: - The Court noted the petitioner's request for a personal hearing to produce documents but observed that such a hearing is not a statutory requirement for proceedings under Section 27 of the TNVAT Act. The Court referenced its earlier decision (and its confirmation by a Division Bench) to the effect that personal hearing is not mandatory in these proceedings. Nonetheless, the Court left it open for the respondent to call for documents or grant an opportunity before redoing the assessment, as a matter of administrative discretion. [Paras 12, 14]

No legal requirement for a personal hearing under Section 27; respondent may in its discretion call for supporting documents or grant hearing before recompleting the assessment.

Remand for de novo revisional assessment in accordance with administrative circular - independent application of mind - The impugned orders were set aside and remanded for de novo revisional assessment to be completed afresh in accordance with the Narasus principle and Circular No.3/2019 of the Commissioner of State Tax. - HELD THAT: - Having found that the prior orders were issued without independent application of mind, the Court ordered that the respondent redo the revisional assessment by following the Narasus principle and the directives in Circular No.3/2019 Q1/39643/2018. The Court directed that the respondent may call for supporting documents before redoing the assessment, that the exercise be commenced forthwith and completed expeditiously, and prescribed a timeline of eight weeks from the date of the order for completion. The Court further directed service of the revised assessment orders on the petitioner under due acknowledgement. [Paras 14]

Matters remanded: impugned orders set aside and respondent directed to undertake de novo revisional assessment in accordance with Narasus principle and Circular No.3/2019, to be completed within eight weeks and communicated to the petitioner.

Final Conclusion: The writ petitions were allowed to the extent that the impugned revisional assessment orders for the specified assessment years were set aside; the Assessing Officer is directed to redo the revisional assessments de novo, applying independent mind in accordance with the Narasus principle and Circular No.3/2019, with liberty to call for documents, to be completed within eight weeks and served on the petitioner.

Grant of bail under Section 37 of the NDPS Act - reasonable grounds to believe (standard for bail under Section 37(1)(b)(ii)) - conscious possession - compliance with Section 42 of the NDPS Act - inadmissibility of statement under Section 67 of the NDPS Act - commercial quantity and its relevance to bail

Grant of bail under Section 37 of the NDPS Act - reasonable grounds to believe (standard for bail under Section 37(1)(b)(ii)) - commercial quantity and its relevance to bail - conscious possession - Correctness of the High Court's grant of bail to the respondent in light of the requirements of Section 37 of the NDPS Act and the material on record - HELD THAT: - The Court applied the Section 37(1)(b)(ii) standard of whether there exist reasonable grounds to believe that the accused is not guilty and is not likely to commit an offence on bail, having regard to the seriousness of NDPS offences. It held that the High Court unduly relied on (i) absence of recovery from the person of the respondent and (ii) a mistaken name in the translation endorsement, while neglecting material circumstances that are critical under Section 37. Those circumstances include that the respondent travelled from Dimapur to Rampur in the vehicle in which a concealed commercial quantity of narcotic substance was found; the CDRs show regular contact with co-accused; and the contraband was concealed in the vehicle in which he was travelling. The Court observed that a mere finding that contraband was not recovered from the person does not satisfy the scrutiny mandated by Section 37(1)(b)(ii), citing precedent where bail granted on similar narrow reasoning was set aside. The High Court's treatment of the relevant factors was therefore a non-application or improper application of mind to the statutory test, rendering the bail order unsustainable. Consequently, the High Court order granting bail was set aside and the bail application dismissed. [Paras 30, 31, 32, 33, 34]

High Court's order granting bail set aside; bail dismissed and respondent directed to surrender forthwith.

Compliance with Section 42 of the NDPS Act - inadmissibility of statement under Section 67 of the NDPS Act - Validity of reliance on alleged non-compliance of Section 42 and on the Section 67 statement as grounds for bail - HELD THAT: - The Court treated the contentions concerning Section 42 and the Section 67 statement as matters primarily for trial. With respect to Section 67, the Court noted the binding decision that a statement under Section 67 is inadmissible and the ASG did not rely on it. As to Section 42, the Court reiterated that compliance is ordinarily required to precede action but that delayed compliance with acceptable explanation is permissible in exigent circumstances; whether Section 42 was complied with is a question of fact for trial. The complaint averred that the information was immediately reduced to writing, and the Court held that the contention of non-compliance was prima facie misplaced at the bail stage and should be raised at trial. [Paras 26, 27, 28, 29]

Challenges based on alleged non-compliance of Section 42 and on the Section 67 statement do not, at this stage, justify grant of bail; these issues are to be examined at trial.

Final Conclusion: The appeal is allowed: the High Court's order of 1 October 2020 granting bail is set aside, the respondent's bail application is dismissed and the respondent is directed to surrender forthwith.

Arbitrable dispute - arbitration agreement in writing - prima facie review under Section 11 - Kompetenz-Kompetenz - seat and venue of arbitration - international commercial arbitration - condition precedent - consolidation of arbitral proceedings / single arbitrator to avoid multiplicity

Arbitrable dispute - arbitration agreement in writing - prima facie review under Section 11 - seat and venue of arbitration - condition precedent - Whether the disputes between the parties fall within the arbitration clauses of the RCMA and SCMA and are referable to arbitration under the Arbitration and Conciliation Act, 1996 (with seat New Delhi), or whether they must be referred only under the Share Purchase Agreements to SIAC (seat Singapore). - HELD THAT: - The Court examined the four relevant agreements in pari materia and held that the Share Purchase Agreements and the Construction Management Agreements have distinct objects and fields of operation. The Share Purchase Agreements primarily effectuated change of ownership and contained obligations to be performed "in accordance with the terms of the Construction Agreement"; the RCMA/SCMA operationalised how the construction obligations were to be performed and separately provided for payment of the "Fee" to DHDL upon completion. On a prima facie review under Section 11, the petition satisfied the twin test of existence of a written arbitration agreement and a prima facie arbitrable dispute. The Court observed that whether the Petitioner had fulfilled conditions precedent and become entitled to the Fee is a question of fact and law for the Arbitral Tribunal to decide, and that the mere existence of an arbitration clause in the Share Purchase Agreements did not oust the Clause 11 arbitration mechanism in the RCMA/SCMA. The Court therefore concluded that the disputes as framed by the petitioner are referable to arbitration under Clause 11 of the RCMA/SCMA governed by the Act (seat New Delhi), while noting that the arbitrator remains free to determine if the "real dispute" stems from the Share Purchase Agreements and, if so, to wind up proceedings with liberty to seek SIAC remedy. [Paras 27, 30, 31, 32, 33]

The petitions are maintainable and the disputes as framed may be adjudicated under Clause 11 of the RCMA and SCMA (Arbitration and Conciliation Act, 1996; seat New Delhi); factual questions about fulfillment of conditions precedent are for the arbitrator, who may, if warranted, permit recourse under the Share Purchase Agreements.

Consolidation of arbitral proceedings / single arbitrator to avoid multiplicity - Kompetenz-Kompetenz - Whether the disputes under the two Construction Management Agreements should be referred to a consolidated composite tribunal or to separate arbitral tribunals. - HELD THAT: - The Court recognised that RCMA and SCMA are separate agreements and that, ordinarily, disputes arising from distinct contracts should not be consolidated absent agreement of the parties. However, having regard to the interlinked nature of the Fee computation (the Fee Agreement requires consideration of financial components of both projects) and the need to avoid multiplicity and conflicting awards, the Court exercised its discretion to appoint a single sole arbitrator to resolve all disputes in both petitions. The Court left it to the appointed sole arbitrator to decide whether the two sets of disputes should be consolidated into one composite award or otherwise, and to determine the modalities of any proceedings, consistent with the principle that issues of arbitrability and scope are for the tribunal to decide. [Paras 34, 35, 36]

A sole arbitrator is to be appointed to adjudicate the disputes in both petitions; the arbitrator shall decide whether to consolidate the proceedings and determine procedural modalities.

Final Conclusion: Arbitration Petition Nos. 16 and 17 of 2020 are allowed. Mr. Justice (Retd.) R.V. Raveendran is appointed as sole arbitrator to resolve all disputes between the parties under the RCMA and SCMA; the arbitrator will decide on any question of consolidation, the applicability of the Share Purchase Agreements if raised, and procedural modalities, and shall be paid fees as per the Fourth Schedule of the Act.