TaxTMI Updates e-Newsletter
Oct 04,2021

Application not admissible where question raised is already pending in any proceedings - scope of the term 'proceedings' in proviso to section 98(2) includes proceedings under any provision of the Act - no discretion to admit application where proviso to section 98(2) applies - suppression of material facts or misrepresentation - advance ruling void ab initio under section 104

Application not admissible where question raised is already pending in any proceedings - scope of the term 'proceedings' in proviso to section 98(2) includes proceedings under any provision of the Act - no discretion to admit application where proviso to section 98(2) applies - Admissibility of the appellant's application for advance ruling in view of pending DGGI proceedings - HELD THAT: - The Authority applied the first proviso to sub-section (2) of section 98 and found that an application for advance ruling shall not be admitted where the question raised is already pending in any proceedings in the applicant's case under any provision of the Act. The word 'any' renders the proviso wide enough to cover proceedings under Chapter XIV (section 67) as much as under other chapters, provided the proceedings relate to the question in the application and are in the case of the applicant. The record shows DGGI search proceedings and recorded statements on 17.02.2020 addressing the same question later raised in the application filed on 04.03.2020; the applicant had, in the Form GST ARA-01, ticked that no proceedings were pending and did not disclose the DGGI proceedings in the application or in the personal hearing record. Once it was established that the question was already the subject of pending proceedings in the applicant's case, neither GAAR nor AAAR had discretion to admit the application under the statutory proviso. [Paras 14, 15, 16, 17, 19]

Application was not admissible and should not have been admitted by GAAR because proceedings on the same question were pending when the application was filed.

Suppression of material facts or misrepresentation - advance ruling void ab initio under section 104 - Whether the Advance Ruling should be declared void ab initio on account of suppression of material facts or misrepresentation - HELD THAT: - Having found that the applicant failed to disclose the pending DGGI proceedings and thereby obtained the advance ruling without informing the Authority of a material fact, the Appellate Authority invoked section 104. That provision empowers the Authority to declare an advance ruling void ab initio where it was obtained by fraud, suppression of material facts or misrepresentation, subject to opportunity of hearing. On the material on record the AAAR concluded that the advance ruling had been obtained by suppression/misrepresentation and accordingly the ruling was liable to be declared void ab initio. The Appellate Authority did not adjudicate the underlying classification or evidentiary merits (statements/affidavits), as those matters were beyond the scope once inadmissibility and suppression were established. [Paras 20, 21, 22, 23]

Advance Ruling No. GUJ/GAAR/R/77/2020 dated 17.09.2020 is declared void ab initio under section 104 for suppression of material facts/misrepresentation.

Final Conclusion: The appeal succeeds to the extent that the Advance Ruling is modified and declared void ab initio: the application was not admissible because the same question was pending in DGGI proceedings when filed, and the advance ruling was obtained by suppression of material facts, entitling the Appellate Authority to set it aside under section 104.

Classification of mixed or composite goods - essential character - General Rules for the interpretation of Customs Tariff - Rule 3(b) - classification under Chapter sub-heading 31059090 (mineral or chemical fertilisers) - classification under Chapter sub-heading 30029030 (cultures of micro organisms) - binding nature of Advance Ruling (Section 103, CGST Act, 2017)

Classification of mixed or composite goods - essential character - General Rules for the interpretation of Customs Tariff - Rule 3(b) - classification under Chapter sub-heading 31059090 (mineral or chemical fertilisers) - Proper classification and GST rate of the appellant's products 'Phosphate Solubilising Bacteria' and 'Potassium mobilising Bio-fertilizers'. - HELD THAT: - The products in question are mixtures comprising various inputs in which 'organic manure' constitutes 50% while bio culture is only 2%. Where goods are mixtures, Rule 3(b) of the General Rules for interpretation of the Customs Tariff requires classification according to the material or component which gives them their essential character. On the appellant's own composition statements the organic manure is the dominant component and imparts the essential character to the final product. The Gujarat Advance Ruling previously classified the appellant's 'organic manure' under Chapter sub heading 31059090 and that classification was not challenged by the appellant. Applying Rule 3(b) and having regard to the unchallenged classification of the constituent 'organic manure', the two specified bio fertilizer products are classifiable under Chapter sub heading 31059090 (mineral or chemical fertilisers containing two or three fertilising elements). The Appellate Authority therefore modifies the GAAR ruling insofar as it classified the appellant's bio fertilizers under Chapter 3002, and holds that, on the composition furnished by the appellant, the products attract the GST rate applicable to Chapter sub heading 31059090. The classification is expressly based on the composition as declared by the appellant and any change in that composition may lead to a different classification. [Paras 16, 17, 18, 19, 21]

The products 'Phosphate Solubilising Bacteria' and 'Potassium mobilising Bio fertilizers' manufactured and supplied by the appellant are classifiable under Chapter sub heading 31059090 and liable to GST at the rate applicable thereto (5%), the classification being based on the composition of inputs furnished by the appellant; any change in composition may alter classification.

Final Conclusion: The Appellate Authority modifies the GAAR ruling and holds that, on the composition declared by the appellant, the two specified bio fertilizer products are classifiable under Chapter sub heading 31059090 and attract GST at the rate applicable to that entry (5%); the determination is composition specific and may change if the composition changes.

Suppression of material facts - advance ruling void ab-initio - proviso to section 98(2) - inadmissibility of application where question is pending in proceedings - Section 104 - power to declare advance ruling void for fraud or misrepresentation - common parlance / classification test

Suppression of material facts - proviso to section 98(2) - inadmissibility of application where question is pending in proceedings - Section 104 - power to declare advance ruling void for fraud or misrepresentation - Whether the advance ruling issued to the appellant is liable to be declared void ab-initio on account of suppression of material facts and misrepresentation such that the application was not admissible under the proviso to section 98(2). - HELD THAT: - The Appellate Authority examined the application form (Form GST ARA-01) and the record of personal hearing and found that the appellant had indicated in Column 17 that the question was not already pending in any proceedings, and had not disclosed that DGGI proceedings were initiated prior to filing. The personal hearing record does not show any disclosure of the DGGI visit or pending proceedings. Had the pending proceedings before DGGI been brought to the GAAR's notice, the proviso to sub section (2) of section 98 would have barred admission of the application. Section 104 authorises declaring an advance ruling void ab initio where it is obtained by fraud, suppression of material facts, or misrepresentation, subject to providing an opportunity of hearing. On the basis of the materials and hearing, the Authority concluded that the appellant wilfully suppressed the material fact of pending proceedings and thereby obtained the advance ruling which was not admissible; consequently the ruling falls within Section 104 and must be set aside. [Paras 15, 16, 17, 19, 21]

The advance ruling is declared void ab initio and the Advance Ruling No. GUJ/GAAR/R/76/2020 dated 17.09.2020 is modified to be void ab initio.

Final Conclusion: The appeal succeeds to the extent that the advance ruling is held to have been obtained by suppression of material facts and is declared void ab initio; the impugned advance ruling is set aside and rendered of no effect.

Classification under Chapter Heading 3824 (Tariff Item 3824 99 90) - classification under Chapter Heading 3105 as "other fertilisers" - Chapter Note 6 of Chapter 31 (essential constituent test for "other fertilisers") - HSN Explanatory Notes on exclusion of micronutrient preparations from Chapter 31 - essential character doctrine for tariff classification - coverage under Sl. No. 56 of Schedule-II of Notification No.1/2017 (GST @12%) - non-applicability of Sr. No. 182D of Schedule-I (GST @5%) - condonation of delay in filing appeal

Classification under Chapter Heading 3824 (Tariff Item 3824 99 90) - classification under Chapter Heading 3105 as "other fertilisers" - Chapter Note 6 of Chapter 31 (essential constituent test for "other fertilisers") - HSN Explanatory Notes on exclusion of micronutrient preparations from Chapter 31 - essential character doctrine for tariff classification - The products 'Zn EDTA' and 'Fe EDTA' are not classifiable under Chapter Heading 3105 as "other fertilisers" and are classifiable under Tariff Item 3824 99 90. - HELD THAT: - The authority applied Chapter Note 6 of Chapter 31 which confines heading 3105 "other fertilisers" to products of a kind used as fertilisers that contain, as an essential constituent, at least one of the fertilising elements nitrogen, phosphorus or potassium. The Fertilizer (Control) Order, 1985 specifications for Zn-EDTA and Fe-EDTA require minimum zinc and iron content respectively and do not require nitrogen, phosphorus or potassium as essential constituents. The HSN Explanatory Notes further exclude micronutrient preparations from Chapter 31 where N/P/K, if present, are not essential constituents. Applying the essential-character test and the explanatory notes, and having regard to CBEC clarifications, the products' essential character is given by their micronutrient (Zn/Fe) content and not by N/P/K; accordingly they fall under chemical products not elsewhere specified or included and are classifiable under heading 3824 (Tariff Item 3824 99 90). [Paras 10, 11]

Products 'Zn EDTA' and 'Fe EDTA' are classifiable under Tariff Item 3824 99 90 and do not fall within Chapter Heading 3105 as "other fertilisers".

Coverage under Sl. No. 56 of Schedule-II of Notification No.1/2017 (GST @12%) - non-applicability of Sr. No. 182D of Schedule-I (GST @5%) - registration under the Fertilizer (Control) Order, 1985 - The supplies of 'Zn EDTA' and 'Fe EDTA' by the appellant are covered by Sl. No. 56 of Schedule-II of Notification No.1/2017 (attracting GST @ 12%) and are not covered by Sr. No. 182D of Schedule-I. - HELD THAT: - Having held that the products are micronutrients classifiable under Tariff Item 3824 99 90, the authority examined the GST Notifications. Sl. No. 56 of Schedule-II applies to micronutrients covered under serial no. 1(g) of Part-A Schedule-I of the Fertilizer (Control) Order, 1985 manufactured by manufacturers registered under that Order. The products in question are listed at entries 7 and 8 of serial no. 1(g) and the appellant is registered under the Fertilizer (Control) Order. Conversely, Sr. No. 182D of Schedule-I pertains to goods classifiable under Chapter 3105; since the products are not classifiable under Chapter 31, Sr. No. 182D does not apply. Therefore the correct applicable entry is Sl. No. 56 of Schedule-II, attracting the prescribed 12% GST rate. [Paras 13, 14]

Supplies of 'Zn EDTA' and 'Fe EDTA' are covered under Sl. No. 56 of Schedule-II of Notification No.1/2017 and attract GST at the rate applicable to that entry (12%); they are not covered by Sr. No. 182D of Schedule-I.

Condonation of delay in filing appeal - Delay in filing the appeal was condoned. - HELD THAT: - The authority considered the appellant's explanation that it was initially unaware of the statutory appellate remedy and that filing was delayed due to the COVID-19 pandemic and festival-related reasons. Taking into account the newness of the GST regime, bona fide mistake, and the Apex Court's directions extending limitation periods in Suo Motu Writ Petition (Civil) No. 3/2020, the authority exercised the proviso to subsection (2) of Section 100 of the CGST Act, 2017 (and corresponding GGST provision) to condone the delay and admit the appeal for adjudication on merits. [Paras 7]

Delay in filing the appeal is condoned and the appeal is admitted for hearing.

Final Conclusion: The advance ruling of the Gujarat Authority for Advance Ruling is confirmed in the respects appealed: 'Zn EDTA' and 'Fe EDTA' are classifiable under Tariff Item 3824 99 90 (Chapter 38) and, being micronutrients covered by serial no. 1(g) of Part-A Schedule-I of the Fertilizer (Control) Order, 1985 and manufactured by a registered manufacturer, are covered by Sl. No. 56 of Schedule-II of Notification No.1/2017 (as amended) and attract GST at the rate specified therein (12%). Delay in filing the appeal has been condoned.

Classification under the Customs Tariff Act, 1975 (HSN/CTH) - common parlance test - predominant ingredient/content test - rule preferring specific heading over general heading (GRI/Rule 3(a)) - noscitur a sociis - residuary heading for food preparations not elsewhere specified (CTH 2106) - specific heading for papad (CTH 1905 90 40) - exemption entry: "Papad, by whatever name it is known" (Notification No. 02/2017-CT (Rate))

Classification under the Customs Tariff Act, 1975 (HSN/CTH) - specific heading for papad (CTH 1905 90 40) - residuary heading for food preparations not elsewhere specified (CTH 2106) - common parlance test - predominant ingredient/content test - rule preferring specific heading over general heading (GRI/Rule 3(a)) - exemption entry: "Papad, by whatever name it is known" (Notification No. 02/2017-CT (Rate)) - noscitur a sociis - Classification of the appellant's product described as "different shapes and sizes Papad" and the applicable rate of GST. - HELD THAT: - The appellate authority examined composition, manufacturing process and market identity of the impugned products and applied the Customs Tariff/HSN classification principles. The goods are produced from cereal and pulse flours by preparing a dough, passing it through dies to form thin wafer-like items which are dried and require roasting or frying before consumption. The predominant-ingredient/content test and Chapter 19 HSN notes indicate such products fall within CTH 1905. The authority applied the common parlance test, noting that although the term "Fryums" is used in trade and may be a brand name, that nomenclature does not alter the basic character of the product where ingredients, process, use and consumer perception align with papad. The principle noscitur a sociis and Rule 3(a) (preference for the more specific heading over a general residuary heading) were applied to interpret the exemption entry "Papad, by whatever name it is known" in Notification No. 02/2017-CT (Rate). Given the similarity in ingredients, manufacture and use between traditional round papad and the appellant's differently-shaped products, they are papad for tariff purposes and not to be classified under the residuary food preparations heading (CTH 2106 90 99). Consequently the product is classifiable under Tariff Item 1905 90 40 and falls within the exemption entry for papad in Notification No. 02/2017-CT (Rate). [Paras 42, 45, 48, 49]

The product "different shapes and sizes Papad" is classifiable under Tariff heading 1905 90 40 of the Customs Tariff Act, 1975 and is chargeable to NIL rate of GST as per Sl. No. 96 of Notification No. 02/2017-CT (Rate) dated 28.06.2017.

Final Conclusion: The Advance Ruling of the Gujarat AAR is modified: the appellant's products described as different shapes and sizes of papad are held to be papad classifiable under CTH 1905 90 40 and exempt (NIL rate) under Notification No. 02/2017-CT (Rate).

Classification of goods under the Customs Tariff/HSN for GST - Common parlance (market identity) test for classification - Predominant ingredients / composition test - Rule preferring specific heading over general/residual heading (General Rule 3(a)) - Noscitur a sociis applied to description 'by whatever name it is known' - Application of Chapter and HSN explanatory notes (Chapter 19 and headings 1905, 2106) - Advance Ruling - modification of earlier AAR/GAAR ruling

Classification of goods under the Customs Tariff/HSN for GST - Common parlance (market identity) test for classification - Predominant ingredients / composition test - Application of Chapter and HSN explanatory notes (Chapter 19 and heading 1905) - Rule preferring specific heading over general/residual heading (General Rule 3(a)) - Noscitur a sociis applied to description 'by whatever name it is known' - The product described as 'different shapes and sizes Papad' is classifiable as Papad under Tariff Item 1905 90 40 and eligible for NIL rate under entry No.96 of Notification No.02/2017-CT (Rate). - HELD THAT: - The authority examined ingredients, manufacturing process, use and market perception. The impugned products are made from cereal/pulse flours and similar ingredients and are produced by preparing dough, shaping (by dies), drying and thereafter require roasting or frying before consumption. These characteristics align with the ordinary characteristics of 'Papad' as a thin wafer-like product made from flour-based dough and consumed after frying/roasting. In classification, the Customs Tariff/HSN rules, chapter and explanatory notes (Chapter 19 and headings under 1905) apply; the predominant ingredients/composition and chapter notes support classification under CTH 1905. The common parlance test is decisive where statutory definition is absent: how the average consumer/trade understands the product indicates it is a variety of papad (even if known colloquially or by brand names such as 'Fryums'). The description in the Notification - "Papad, by whatever name it is known" - must be read with noscitur a sociis so that products similar in ingredients, manufacture and use are covered irrespective of shape or local nomenclature. Rule 3(a) of interpretation (prefer specific over general) mandates classification under the specific heading 1905 90 40 rather than the residual heading 2106 90 99. Applying these principles, the appellant's different-shaped papad are papad within CTH 1905 90 40 and fall under entry No.96 of Notification No.02/2017-CT (Rate) attracting NIL GST. [Paras 42, 45, 48, 49]

The products 'different shapes and sizes Papad' are classifiable under Tariff Item 1905 90 40 and chargeable to NIL rate as per Sl. No. 96 of Notification No.02/2017-CT (Rate).

Final Conclusion: The AAAR modified the Gujarat Authority for Advance Ruling by holding that the appellant's products, described as different shapes and sizes of papad, are papad for tariff classification purposes (CTH 1905 90 40) and are exempt (NIL rate) under entry No.96 of Notification No.02/2017-CT (Rate).

Classification under Chapter Heading 21.06 (Food preparations not elsewhere specified or included) - Exclusion from Chapter 11 where substances are added with a view to use as food preparations - Residuary entry Tariff Item 2106 90 99 - General Rules for the Interpretation of CTA, 1975 (Rule 1 and Rule 3) - Explanatory Notes of HSN - Applicability of Schedule entries of Notification No.1/2017-Central Tax (Rate) (Sr. No. 23 of Schedule III)

Classification under Chapter Heading 21.06 (Food preparations not elsewhere specified or included) - Exclusion from Chapter 11 where substances are added with a view to use as food preparations - Residuary entry Tariff Item 2106 90 99 - Explanatory Notes of HSN - Classification of the 17 Instant Mix / Ready Mix Flour products supplied by the applicant - HELD THAT: - The Authority examined the composition and stated use of the products and applied the HSN Explanatory Notes and Rules of Interpretation. The Explanatory Notes to Chapter 11 permit only very small quantities of certain additives to be added to flours while retaining classification under Chapter 11; additives or substances added with a view to use as food preparations exclude the product from Headings 11.01-11.04 and 11.06. The instant mix products contain spices and other ingredients (beyond the limited additives contemplated by Chapter 11) in proportions ranging from low to substantial, and are prepared for use in making specific food preparations (khaman, dhokla, idli, dosa, etc.). Consequently they are not covered by Chapter 11 or Chapter 23 headings relied upon by GAAR. Applying the Explanatory Notes to Chapter 21.06, these mixes are preparations for use, either directly or after processing, and preparations consisting wholly or partly of foodstuffs used in making food preparations; being not specifically covered elsewhere, they fall within the residuary description and are classifiable under Tariff Item 2106 90 99. [Paras 13, 15]

All 17 Instant Mix / Ready Mix Flour products are classifiable under Tariff Item 2106 90 99 of the First Schedule to the Customs Tariff Act, 1975.

Applicability of Schedule entries of Notification No.1/2017-Central Tax (Rate) (Sr. No. 23 of Schedule III) - Ad-valorem GST rate on residuary food preparations - Applicable GST rate on the 17 Instant Mix / Ready Mix Flour products classified under Tariff Item 2106 90 99 - HELD THAT: - Having held the products to be classifiable under Chapter Heading 21.06 and Tariff Item 2106 90 99, the Authority examined the rate notifications. Entry at Sr. No. 23 of Schedule III to Notification No.1/2017-Central Tax (Rate) covers 'Food preparations not elsewhere specified or included' under Chapter 2106, attracting the ad valorem rate specified therein. None of the 17 products fall within the specific exclusions or entries attracting other rates. Therefore the goods classified under Tariff Item 2106 90 99 are leviable to GST as per the Schedule III entry. [Paras 16]

The 17 Instant Mix / Ready Mix Flour products are covered by Sr. No. 23 of Schedule III of Notification No.1/2017-Central Tax (Rate) and are leviable to Goods and Services Tax at the rate specified therein (18% ad valorem).

Final Conclusion: The appeal is allowed in part: the Advance Ruling of GAAR is modified by holding that the 17 Instant Mix / Ready Mix Flour products are classifiable under Tariff Item 2106 90 99 (Chapter 21.06) and attract GST under Sr. No. 23 of Schedule III of Notification No.1/2017-Central Tax (Rate) at the applicable ad valorem rate. The earlier classification under Chapter 11 or Chapter 23 is set aside. The GAAR ruling on Chutney Powder was not challenged and stands unaffected.

Interpretation of "Waste to energy plants/devices" in Entry 234 of Schedule I of Notification No. 1/2017-Central Tax (Rate) - eligibility for concessional GST rate under Entry 234 for renewable energy devices and parts for their manufacture - distinction between "renewable energy devices" covered by Entry 234 and other plants/devices using renewable fuel - application of Circular No. 80/54/2018-GST on documentary satisfaction for claiming concession under Entry 234 - classification of boilers under the First Schedule to the Customs Tariff Act, 1975 (Chapter 84) - applicability of Sr. No. 310 of Schedule III of Notification No. 1/2017-Central Tax (Rate) and corresponding GST rate

Interpretation of "Waste to energy plants/devices" in Entry 234 of Schedule I of Notification No. 1/2017-Central Tax (Rate) - eligibility for concessional GST rate under Entry 234 for renewable energy devices and parts for their manufacture - application of Circular No. 80/54/2018-GST on documentary satisfaction for claiming concession under Entry 234 - Whether the appellant's Biomass Fired (Steam) Boilers and Agro Waste Thermic Fluid Heaters are "Waste to energy plants/devices" within the meaning of clause (e) of Entry 234 of Schedule I and thus eligible for the concessional GST rate of 5% - HELD THAT: - Entry 234 of Schedule I identifies specified "renewable energy devices & parts for their manufacture" and uses the composite phrase "Waste to energy plants/devices" as denoting a particular class of renewable energy plants which recover energy (e.g. Biogas, BioCNG, power) from municipal, industrial or agricultural wastes. The appellate authority relied on statutory rules, central ministry publications and state policy to show that "Waste to Energy" is understood as specific grid-connected or power/energy recovery projects (including MSW-based, gasification or biomass gasifier power plants) rather than any boiler or device that merely uses biomass or agro-waste as fuel. The CBIC Circular clarifies that the concession in Entry 234 applies only to goods falling in Chapters 84, 85 or 94 when used in the initial setting up of renewable energy plants (including WTEP), and a supplier claiming the concession must satisfy himself by requisite documents (supply contracts/orders) that the goods will be used in such WTEP. The appellant's products, as manufactured and supplied, are not shown to be "Waste to Energy Plants" in the specific sense employed in Entry 234, nor has the appellant produced evidence that the boilers/heaters are being supplied for use in the initial setting up of a WTEP. Reliance on dictionary meanings of individual words "waste", "energy" and "plant" is not the correct approach to interpret the composite phrase used in the notification. Consequently, the appellant's boilers/heaters do not qualify under clause (e) of Entry 234 on the facts and evidence before the authority. [Paras 9, 10]

The products are not covered by Entry 234 of Schedule I and therefore not eligible for the concessional GST rate of 5% under that entry.

Classification of boilers under the First Schedule to the Customs Tariff Act, 1975 (Chapter 84) - applicability of Sr. No. 310 of Schedule III of Notification No. 1/2017-Central Tax (Rate) and corresponding GST rate - Classification of the appellant's Biomass Fired (Steam) Boilers and Agro Waste Thermic Fluid Heaters and the applicable GST rate when Entry 234 benefit is inapplicable - HELD THAT: - The parties do not dispute tariff classification under Chapter 84. The GAAR had classified the products under the relevant tariff item in Chapter 84 (Tariff Item 8402 19 90) and held them to fall within Sr. No. 310 of Schedule III of Notification No. 1/2017-Central Tax (Rate). Having determined that the products do not satisfy the specific meaning of "Waste to Energy Plants" in Entry 234 and absent any claim or evidence that these goods are being supplied for the initial setting up of a WTEP with requisite contractual documentation, the proper rate is governed by the entry applicable to boilers under Schedule III. Therefore the products attract the rate specified at Sr. No. 310 of Schedule III. [Paras 11, 12, 13]

The products are classifiable under the relevant tariff item in Chapter 84 and are covered by Sr. No. 310 of Schedule III of Notification No. 1/2017-Central Tax (Rate), attracting GST at 18% (CGST 9% + SGST 9%).

Final Conclusion: The appeal is rejected. The Advance Ruling of the Gujarat Authority for Advance Ruling is confirmed: the appellant's Biomass Fired (Steam) Boilers and Agro Waste Thermic Fluid Heaters are not "Waste to energy plants/devices" under Entry 234 of Schedule I and do not qualify for the 5% concessional rate; they are classifiable under Chapter 84 and attract GST at 18% in terms of Sr. No. 310 of Schedule III of Notification No. 1/2017-Central Tax (Rate).

Pure services - Works contract service - Composite supply involving supply of goods - Exemption under Notification No. 12/2017-Central Tax (Rate) - entry at Sl. No. 3 - Activity in relation to functions entrusted to a Panchayat under Article 243G or to a Municipality under Article 243W - Temporary transfer of right to use goods / hiring of equipment

Pure services - Works contract service - Composite supply involving supply of goods - Temporary transfer of right to use goods / hiring of equipment - Whether the appellant's activity of erecting, installing, operating and subsequently dismantling equipment for live videography is a 'pure service' or a 'works contract' / composite supply involving supply of goods. - HELD THAT: - The authority examined the nature of the appellant's activities, noting temporary erection and installation of LED/LCD screens and associated fixtures, operation of equipment during events, and subsequent dismantling and removal for reuse. The apparatus and temporary structures do not create immovable infrastructure, ownership of goods is not transferred to the recipient, and the goods are deployed only to enable provision of the service. Consequently, the use of goods by the appellant to supply live videography does not convert the supply into a works contract or a composite supply involving transfer of goods; it remains a pure service falling outside the definition of works contract or composite supply involving supply of goods. [Paras 12]

The appellant's activity is a 'pure service' and not a 'works contract' or other composite supply involving supply of goods.

Exemption under Notification No. 12/2017-Central Tax (Rate) - entry at Sl. No. 3 - Activity in relation to functions entrusted to a Panchayat under Article 243G or to a Municipality under Article 243W - Whether the appellant's provision of equipment on hire for live videography to State Government departments or government entities is exempt under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) as a 'pure service' provided in relation to functions entrusted to Panchayats or Municipalities. - HELD THAT: - The exemption applies only to pure services provided by way of any activity in relation to functions entrusted to a Panchayat under Article 243G or to a Municipality under Article 243W read with the Eleventh and Twelfth Schedules. The authority clarified that the phrase 'in relation to any function' refers to the nature of the service supplied, not the nature of the recipient's activities or the events organized. While most work orders were issued by a State Government department or a governmental agency, the specific service of providing equipment on hire and live videography does not have a direct and proximate relationship with any activity enumerated in Article 243G or Article 243W read with the Schedules. Therefore the service does not fall within the scope of the exemption at Sl. No. 3. [Paras 13, 14]

The appellant's service of providing equipment on hire for live videography is not covered by the exemption at Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate).

Final Conclusion: The appeal is rejected. The authority confirmed the Advance Ruling inasmuch as it held that the supplies are pure services but are not exempt under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) for services 'in relation to' functions entrusted to Panchayats or Municipalities.

Definition of "governmental authority" under the Notification - applicability of 90% participation by way of equity or control - exemption for services by a governmental authority (Sr. No. 4 of Notification No.12/2017-Central Tax (Rate)) - exemption for legal services to Government/Governmental Authority/Government entity (Sr. No. 45 of Notification No.12/2017-Central Tax (Rate)) - contemporaneaexpositio as an aid to statutory interpretation

Definition of "governmental authority" under the Notification - applicability of 90% participation by way of equity or control - contemporaneaexpositio as an aid to statutory interpretation - Whether Nirma University qualifies as a "Governmental Authority" for purposes of Notification No.12/2017-Central Tax (Rate). - HELD THAT: - The definition in clause (zf) of para 2 describes a "Governmental Authority" as an authority, board or other body (i) set up by an Act of Parliament or a State Legislature; or (ii) established by Government with 90% or more participation by way of equity or control, to carry out functions entrusted to a municipality or Panchayat. The Authority examined punctuation and placement of the qualifying phrase and held that the long line of text following the introductory words is applicable to both items (i) and (ii). Reliance was placed on principles that punctuation is an aid but not controlling, the Kerala High Court's reasoning that a semi-colon does not create an absolute disjunction, and on contemporaneaexpositio - including CBIC clarification on analogous wording in another notification - to construe the condition of participation as applicable to both limbs. Applying that interpretation, an entity even if set up by State legislation must also meet the participation/control criterion to be a "Governmental Authority" under the Notification. The appellant (Nirma University) is established by a State enactment but does not claim or establish 90% or more government participation by way of equity or control; relevant statutory provisions about funds and composition of the Board do not demonstrate the required government participation. [Paras 9, 10]

Nirma University does not qualify as a "Governmental Authority" under clause (zf) of para 2 of Notification No.12/2017-Central Tax (Rate) because it does not satisfy the requirement of 90% or more government participation by way of equity or control.

Exemption for services by a governmental authority (Sr. No. 4 of Notification No.12/2017-Central Tax (Rate)) - exemption for legal services to Government/Governmental Authority/Government entity (Sr. No. 45 of Notification No.12/2017-Central Tax (Rate)) - definition of "Government entity" and its 90% participation condition - Whether Nirma University is eligible for exemptions under Sr. No. 4 and Sr. No. 45 of Notification No.12/2017-Central Tax (Rate). - HELD THAT: - Sr. No. 4 grants nil rate to services by a "governmental authority" in relation to municipal functions; Sr. No. 45 grants nil rate to specified legal services provided to Central/State/Union Territory/local authority/"Governmental Authority" or "Government entity." The Authority has already held that Nirma University is not a "Governmental Authority" as per the Notification because it lacks the 90% government participation. The appellant does not fall within Central/State/Union Territory or local authority categories, and has not claimed to be a "Government entity." The definition of "Government entity" also carries a 90% participation requirement which the appellant does not satisfy. Thus the factual and definitional criteria for both exemptions are not met. [Paras 11, 12, 13]

Nirma University is not eligible for exemption under Sr. No. 4 and not eligible for exemption under Sr. No. 45 of Notification No.12/2017-Central Tax (Rate) (and corresponding State Notification).

Final Conclusion: The appeal is rejected and the Advance Ruling GUJ/GAAR/R/38/2020 dated 03.07.2020 is confirmed to the extent appealed: Nirma University is not a "Governmental Authority" under the Notification and therefore is not entitled to the exemptions under Sr. No. 4 and Sr. No. 45 of Notification No.12/2017-Central Tax (Rate) (and corresponding State Notification).

Classification under Heading 3002 (cultures of micro organisms for technical purposes) - classification under Heading 3101 (animal or vegetable fertilisers) - biofertilisers as cultures of micro organisms - Rule 3 of the General Rules for interpretation of the First Schedule to the Customs Tariff Act (preference for the most specific heading) - binding effect of advance rulings on other applicants

Delay condonation in filing appeal - Condonation of delay of 10 days in filing the appeal against the AAR order. - HELD THAT: - The appeal was filed after the extended limitation period granted by Notifications No.35/2020 and No.55/2020 had expired, creating a delay of ten days. The Authority took into account the novelty of the Goods and Services Tax regime, the appellants' explanation regarding working from home and delayed receipt of the order, and relevant precedents on condonation in high stake revenue matters. Exercising the proviso to sub section (2) of Section 100 of the CGST Act, 2017 and the corresponding Gujarat Act, the Authority condoned the delay and admitted the appeal for adjudication on merits. [Paras 9]

Delay of 10 days in filing the appeal is condoned and the appeal is admitted for consideration on merits.

Biofertilisers as cultures of micro organisms - classification under Heading 3002 (cultures of micro organisms) - classification under Heading 3101 (animal or vegetable fertilisers) - Rule 3 of the General Rules for interpretation of the First Schedule to the Customs Tariff Act (preference for the most specific heading) - Whether RhizoMyx and RhizoMyco are classifiable under Sub heading 3101 or under Tariff item 30029030 of Heading 3002. - HELD THAT: - The Authority examined definitions and usages of biofertilisers (including Vikaspedia and other explanatory material) and compared those with the HSN explanatory notes. The products' composition and mode of application (presence of endo and ectomycorrhizae, i.e., cultured microorganisms; no chemicals) demonstrate that they are cultures of micro organisms intended to aid plant growth. Sub heading 30029030 expressly covers 'cultures of micro organisms (excluding yeasts)' and the explanatory notes to Heading 3002 include 'cultures of micro organisms for technical purposes (e.g., for aiding plant growth)'. Applying Rule 3(a) of the General Rules for interpretation, the Authority held that the more specific description in Heading 3002 prevails over the more general description in Heading 3101, which pertains to animal or vegetable fertilizers derived from animal or vegetable matter (composts, manures, etc.). The Authority further distinguished the appellant's reliance on earlier decisions and on Heading 3101 by reference to the specific product composition and the HSN notes. [Paras 14, 15, 16, 17, 19]

RhizoMyx and RhizoMyco are classifiable under Tariff item No.30029030 (cultures of micro organisms) of the First Schedule to the Customs Tariff Act, 1975 and not under Sub heading 3101.

Binding effect of advance rulings on other applicants - Whether the appellant could rely on another State AAR as precedent to support classification under Heading 3101. - HELD THAT: - The Authority noted that decisions of Advance Ruling Authorities are binding only on the applicant who sought the ruling and the concerned officers in respect of that applicant. Therefore, the appellant cannot rely upon the Rajasthan AAR decision to bind the Authority in the present matter. The Rajasthan AAR's contrary view was not binding and did not alter the interpretative exercise based on HSN notes and the General Rules for interpretation. [Paras 18]

The Rajasthan AAR decision is not binding on the appellant or on this Authority and cannot determine classification in the present case.

Final Conclusion: The appeal is dismissed on merits: the delay in filing is condoned; the products RhizoMyx and Rhizomyco are held to be 'cultures of micro organisms' classifiable under Tariff item 30029030 of Heading 3002 and hence chargeable to GST at 12% (6% SGST + 6% CGST); reliance on another AAR is not binding.

Adjudication under Section 74(3) of the U.P. GST Act - proceedings under Section 127 of the U.P. GST Act - remedy by statutory appeal - withdrawal of erroneously issued notice and liberty to reissue for correct tax period - judicial restraint where alternative remedy is available

Adjudication under Section 74(3) of the U.P. GST Act - remedy by statutory appeal - judicial restraint where alternative remedy is available - Challenge to adjudication order dated 29.05.2021 under Section 74(3) for the period July, 2017 - HELD THAT: - The Court recorded that adjudication proceedings under Section 74(3) for July, 2017 have been concluded by the order dated 29.05.2021. As an adequate statutory remedy by way of appeal is available against that adjudication, the writ petition will not be entertained to disturb the adjudication. The appropriate course is to prosecute the remedy of appeal before the designated forum.

Writ challenge to the adjudication order dated 29.05.2021 is declined; petitioner directed to file appeal.

Proceedings under Section 127 of the U.P. GST Act - leave to raise objections in pending proceedings - Validity of the notice dated 09.04.2021 issued under Section 127 for the period July 2017 to March 2018 - HELD THAT: - The State's written instructions indicated that no prior adjudication exists in respect of the Section 127 proceedings and the petitioner has already filed a written reply. Given the absence of prior adjudication, the Court refrained from interfering with the issuance of the notice and left all statutory and procedural remedies open to the petitioner to raise objections and defend the proceedings on merits before the appropriate authority.

Interference with the notice dated 09.04.2021 is declined and the petitioner is permitted to raise objections in the pending proceedings.

Withdrawal of erroneously issued notice and liberty to reissue for correct tax period - Notice dated 23.12.2020 for the period July 2017 to March 2018 issued under Section 74(3) - HELD THAT: - The State conceded that the notice dated 23.12.2020 was apparently issued mistakenly because adjudication for July, 2017 had already been completed. The Court granted the State liberty to withdraw the impugned notice and expressly left open the power of the appropriate authority to issue a fresh notice in accordance with law for the corrected period, namely August 2017 to March 2018.

Liberty granted to the State to withdraw the notice dated 23.12.2020 and to issue further notice lawfully for August 2017 to March 2018.

Final Conclusion: Writ petition disposed: challenge to the adjudication order declined in view of alternative appeal remedy; challenge to the Section 127 notice declined while preserving objections in the pending proceedings; erroneous notice permitted to be withdrawn with liberty to reissue for the corrected period; petitioner given two weeks to file appeal which shall be decided expeditiously.

Summary order. Notice issued returnable on 08.10.2021; direct service on respondent No.2 permitted.

Constitutional validity of Explanation 1(ii) to Section 74 of the CGST Act, 2017 and the Delhi GST Act, 2017 - interpretation of Explanation 1(ii) to Section 74 in relation to conclusion of penalty proceedings under Sections 122, 125, 129 and 130 - liberty to agitate relief in statutory appeal - service of notice and filing of counter-affidavits

Constitutional validity of Explanation 1(ii) to Section 74 of the CGST Act, 2017 and the Delhi GST Act, 2017 - interpretation of Explanation 1(ii) to Section 74 in relation to conclusion of penalty proceedings under Sections 122, 125, 129 and 130 - Petition challenging Explanation 1(ii) to Section 74 was taken on file and notice issued; substantive challenge not adjudicated. - HELD THAT: - The writ petition seeking declarations that Explanation 1(ii) to Section 74 of the CGST Act, 2017 and the Delhi GST Act, 2017 is unconstitutional and that it should be read to treat penalty proceedings as concluded where tax, interest and penalty have been paid under the specified sub sections, was entertained by the Court and notice was issued to the respondents. No final determination on the constitutional or interpretative contentions was made in this order; the matter was kept pending for adjudication after pleadings are filed.

Notice issued on the writ petition; substantive reliefs were not decided.

Service of notice and filing of counter-affidavits - Respondents were directed to file counter-affidavits within six weeks and rejoinders, if any, before the next date of hearing. - HELD THAT: - The Court recorded acceptance of notice by counsel for the respondents and granted time for filing counter affidavits within six weeks. Rejoinder affidavits, if any, were directed to be filed before the next listed date. These directions relate to the interlocutory conduct of the proceedings and timetable for pleadings.

Directions issued for service and filing of pleadings with specified timelines.

Liberty to agitate relief in statutory appeal - Application for withdrawal was permitted with liberty to pursue identical relief in the statutory appeal. - HELD THAT: - The applicant sought to withdraw the present application and the Court permitted withdrawal while expressly granting liberty to agitate the same relief in any statutory appeal the petitioner may file. The interlocutory application (C.M. No.33451/2021) was accordingly disposed of.

Withdrawal allowed with liberty to raise the same contentions in the statutory appeal; the application disposed.

Final Conclusion: The Court permitted interim procedural reliefs: notice issued in the writ petition challenging Explanation 1(ii) to Section 74, respondents granted time to file counter affidavits and rejoinders, and an application was allowed to be withdrawn with liberty to pursue the same relief in a statutory appeal; no substantive adjudication on the constitutional or interpretative questions was made.

Provisional release of goods - goods in transit - detention and confiscation - Section 67(6) of the GST Act - speaking order - power to confiscate

Provisional release of goods - goods in transit - Section 67(6) of the GST Act - detention and confiscation - speaking order - Authority to consider and decide the petitioner's application for provisional release of detained goods and vehicle under the provisions applicable to goods in transit. - HELD THAT: - The Court refrained from entering into the merits of the detention or allegations relating to registration status and valuation, observing that the matter was at the stage of GST MOV 10. The petitioner had applied for provisional release under the statutory provision governing goods in transit and sought relief before any final confiscation order. The Court directed respondent authority to consider the petitioner's application for provisional release in accordance with law (including the provisions of Section 67(6) of the GST Act) and to pass a reasoned speaking order enabling the petitioner to challenge it if necessary. The authority was also directed to have regard to the Court's earlier guidance in similarly decided matters. The Court further directed that a period of two weeks shall be allowed before any order of confiscation in the form of GST MOV 11 is passed, and that the application for release be considered first on the next scheduled date.

Respondent authority directed to consider the application for provisional release of the goods and vehicle under the law, pass a speaking order, regard earlier judicial directions, and allow two weeks before issuing any confiscation order.

Final Conclusion: Writ petition disposed by directing the respondent authority to consider and decide the petitioner's application for provisional release of the detained goods and vehicle in accordance with law (including Section 67(6)), to pass a speaking order, to have regard to the Court's earlier directions, and to allow two weeks before passing any confiscation order; the Court did not decide the merits of detention.

Natural justice - transfer of income-tax assessment under Section 127(2) of the Income Tax Act, 1961 - requirement to consider and dispose representations/objections before transfer - requirement to afford opportunity of hearing before passing transfer order - requirement to communicate order of transfer - quashing of administrative order for failure to follow statutory procedure

Transfer of income-tax assessment under Section 127(2) of the Income Tax Act, 1961 - requirement to consider and dispose representations/objections before transfer - requirement to afford opportunity of hearing before passing transfer order - natural justice - quashing of administrative order for failure to follow statutory procedure - Impugned order transferring the petitioner's income-tax case was passed without consideration of the petitioner's representations and without affording opportunity of hearing, and whether such transfer is valid. - HELD THAT: - The Court found on the material placed by the respondents that the petitioner's representations dated 18th September, 2019 and 3rd October, 2019 against the proposed transfer were received by the department but were not considered or disposed of. The transfer order under Section 127(2) was passed without giving the petitioner an opportunity of hearing, and the reason for not giving such opportunity was not recorded; the transfer order was also not communicated to the petitioner before the departmental portal reflected the change. These deficiencies amounted to violation of the principles of natural justice and statutory requirements attendant to a valid transfer under Section 127(2). In consequence the impugned order of transfer was held to be illegal and unsustainable in law. The Court nonetheless noted that the department is not precluded from effecting a future transfer if cogent material is found and the statutory requirements, including consideration of representations and observance of opportunity of hearing, are complied with.

Impugned transfer order under Section 127(2) of the Income Tax Act, 1961 quashed; respondents directed to restore the petitioner's case to the original jurisdiction and may effect any future transfer only after observing statutory requirements and principles of natural justice.

Final Conclusion: Writ petition allowed; transfer order dated 18th February, 2021 under Section 127(2) quashed for failure to consider petitioner's representations and to afford opportunity of hearing, respondents directed to send the file back to Kolkata; department free to transfer in future only upon compliance with statutory requirements and natural justice.

Deeming of loan or advance as dividend under Section 2(22)(e) of the Income Tax Act, 1961 - trade/business advance exception to deeming provisions - concurrent findings of fact and standard for appellate interference - summary dismissal of Special Leave Petition not amounting to approval by the Supreme Court - distinguishing precedent on the basis of peculiar facts

Deeming of loan or advance as dividend under Section 2(22)(e) of the Income Tax Act, 1961 - trade/business advance exception to deeming provisions - concurrent findings of fact and standard for appellate interference - Whether the receipts from the company fell within the deeming fiction of Section 2(22)(e) or were business/trade advances exempting them from that provision. - HELD THAT: - The High Court upheld the concurrent factual findings of the CIT(A) and the Tribunal that the amounts received by the assessee were advances against sale of commercial space (trade/business advances) and not loans or advances falling within the scope of the deeming provision. The appellate authorities recorded that the assessee's ledger and account balances showed that the company owed money to the assessee rather than vice versa, that similar outside-party transactions had been accepted by the AO as genuine, and that there was no factual basis to treat the impugned transaction as a disguised loan. Applying the principle that concurrent findings of fact reached by lower appellate authorities should not be lightly disturbed, the Court declined to interfere with deletion of the addition made by the AO under Section 2(22)(e). [Paras 6, 12, 13, 17, 19]

The receipts were held to be business/trade advances against sale of commercial space and not exigible to Section 2(22)(e); the High Court refused to disturb the concurrent findings and dismissed the appeal on this issue.

Summary dismissal of Special Leave Petition not amounting to approval by the Supreme Court - distinguishing precedent on the basis of peculiar facts - Whether the Tribunal's decision was in contravention of the decision in Vikram Krishna (where a SLP was summarily dismissed) and whether that precedent compelled interference. - HELD THAT: - The Court observed that the Special Leave Petition against the High Court's decision in Vikram Krishna was dismissed in limine, but that a summary dismissal of an SLP does not constitute approval of the High Court's view by the Supreme Court. Further, the High Court noted that Vikram Krishna proceeded on peculiar facts - namely, that the agreement and its cancellation were a camouflage to give a loan and avoid Section 2(22)(e) - facts which are not present in the instant case. Consequently, the impugned orders could not be said to be in contravention of Vikram Krishna. [Paras 4, 5, 7]

The Tribunal's order was not in contravention of Vikram Krishna; the SLP dismissal did not operate as approval and the present case was distinguishable on facts.

Final Conclusion: The appeal is dismissed. The High Court declined to interfere with the concurrent factual findings that the receipts were business advances outside the scope of the deeming provision and held that the precedent relied upon did not mandate a different result.

Disputed tax - tax arrear - amount payable under Section 3 of the VSV Act - Explanation to Section 7 of the VSV Act - interest under Section 244A of the Income-tax Act, 1961

Disputed tax - tax arrear - Explanation to Section 7 of the VSV Act - interest under Section 244A of the Income-tax Act, 1961 - amount payable under Section 3 of the VSV Act - Status of interest previously paid under Section 244A where a declarant files under the VSV Act and whether Form No.3 could require repayment of such interest as part of the amount payable under the VSV Act. - HELD THAT: - The court analysed the statutory definitions and scheme of the VSV Act. 'Disputed tax' is the tax that would be payable if the pending appeal were decided against the appellant, and 'tax arrear' aggregates disputed tax, disputed interest and disputed penalty. Section 3(a) makes the amount payable under the VSV Act the amount of the disputed tax (subject to temporal increases). The Explanation to Section 7 restricts payment of interest under Section 244A only where the declarant had, before filing the declaration, paid any amount in respect of his tax arrear in excess of the amount payable under Section 3; in that situation the excess is refundable but without interest. In the present case the interest under Section 244A was paid pursuant to the assessment order well before the declaration and related to the undisputed component of a refund determined by the Department, not to any payment made towards the disputed tax after the assessment. Consequently the interest paid did not fall within the scope of amounts 'in respect of tax arrear' which the Explanation to Section 7 addresses, and could not be treated as part of the disputed tax or as an amount refundable under the VSV Act without interest. The Form No.3's demand for return of the previously paid interest was therefore not sustainable under the VSV Act scheme (paras 10-11). [Paras 10, 11, 12]

Form No.3 dated 11th December 2020 was set aside and respondents were directed to issue a revised/fresh Form No.3 consistent with the court's interpretation that the disputed tax does not include the interest under Section 244A paid earlier.

Final Conclusion: Form No.3 dated 11th December 2020 was quashed insofar as it required repayment of interest paid under Section 244A; respondents directed to issue a revised Form No.3 within the time directed by the court, reflecting that the amount payable under the VSV Act is the disputed tax and does not include the previously paid interest.

Validity of assessment framed under section 153A r.w.s. 143(3) - Use of statement recorded under section 132(4) as basis for addition - Prior approval under section 153D - Provision saving proceedings from invalidity for mistake, defect or omission (section 292B) - Quashing of assessment order

Validity of assessment framed under section 153A r.w.s. 143(3) - Provision saving proceedings from invalidity for mistake, defect or omission (section 292B) - Prior approval under section 153D - Whether the assessment order framed in the present case is legally valid or is vitiated and liable to be quashed. - HELD THAT: - The assessment order on its face records that a search and seizure was conducted on 15.09.2009, that prior approval under section 153D was obtained, and that the addition of the surrendered amount was made on the basis of a statement recorded during the search. These are deliberate recitals in the assessment order and not inadvertent clerical mistakes. The Revenue's contention that such recitals are mere mistakes and can be saved by the proviso in section 292B was negatived on the facts: section 292B protects proceedings from being invalid merely by reason of mistakes, defects or omissions where the proceeding is in substance and effect in conformity with the intent of the Act, but it cannot be invoked where the assessment itself consciously purports to have been framed under the search provisions and with prior sanction under section 153D. Because the impugned order was expressly framed under the search regime and relied upon statements recorded during search, the order does not satisfy the protection envisaged by section 292B and is therefore legally unsustainable. On that basis the Tribunal quashed the impugned assessment order. [Paras 10, 11, 12]

Impugned assessment order is quashed.

Final Conclusion: The appeal is partly allowed: the assessment order for Assessment Year 2010-11 is quashed; the remaining grounds contesting the addition were not adjudicated as they have become academic.

Permanent Establishment - Fixed Place Permanent Establishment - Service Permanent Establishment - Installation Permanent Establishment - Threshold period for Project Office - Attribution of Business Profits - Attribution under Article 7 of DTAA - FOB supply and place of acceptance

Permanent Establishment - Fixed Place Permanent Establishment - Service Permanent Establishment - Installation Permanent Establishment - Threshold period for Project Office - FOB supply and place of acceptance - Attribution under Article 7 of DTAA - The assessee did not have any fixed place PE, service PE or installation PE in India for AY 2012-13 and profits from offshore supply were not attributable to a PE in India. - HELD THAT: - The DRP found as a factual conclusion that the assessee opened a project office only on 01.02.2011 and prior thereto had no branch, sales office or factory site in India. Documentary evidence established that supply of equipment and chemicals was on FOB terms and acceptance testing was to be carried out at the assessee's premises outside India. Short visits by employees for contract negotiation, signing or site inspection were held insufficient to constitute a fixed place of business. The Indo-Japan DTAA did not provide for a service PE in the circumstances pleaded, and the threshold period required to establish an installation/project PE was not satisfied. In view of these findings, the DRP concluded that no PE existed in India and that attribution of offshore supply profits to a PE in India under Article 7 and section 9(1) principles was not warranted. The Tribunal noted that the Revenue did not rebut the DRP's factual findings and accordingly affirmed the conclusion. [Paras 7]

DRP's finding that the assessee had no fixed place PE/service PE/installation PE in India for AY 2012-13 is affirmed; the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal affirmed the DRP's factual and legal conclusion that the assessee did not have a permanent establishment in India for Assessment Year 2012-13; consequently, the appeal by the Revenue is dismissed.

Exemption under sections 11 and 12 - Charitable purpose in educational institutions - Admission under NRI quota and compliance with AICTE regulations - Effect of procedural non compliance on charitable status - Applicability of AICTE regulations to private university - Use of fees for scholarships and cross subsidisation

Exemption under sections 11 and 12 - Charitable purpose in educational institutions - Admission under NRI quota and compliance with AICTE regulations - Effect of procedural non compliance on charitable status - Applicability of AICTE regulations to private university - Use of fees for scholarships and cross subsidisation - Whether denial of exemption under sections 11 and 12 was justified on account of admissions made under the NRI quota contrary to AICTE regulations. - HELD THAT: - The Tribunal affirmed the finding of the Commissioner (Appeals) that mere non compliance with AICTE admission regulations did not by itself strip the assessee university of its character as an institution existing for educational charitable purposes. The Assessing Officer's conclusion that admissions under the NRI quota were illegal and demonstrated an absence of charitable intent was examined in light of (a) the fact that AICTE regulations did not apply to the appellant university, (b) there was no finding that education was not imparted or that admitted students were fictitious, and (c) details on scholarships and fee concessions were on record and no adverse inference was drawn. The Tribunal accepted the appellate authority's reliance on precedent holding that procedural irregularities in admissions do not necessarily convert an educational institution into a profit seeking entity where substantive charitable activity continues. On these grounds the denial of exemption under sections 11 and 12 was held unsustainable and the Assessing Officer was directed to allow the exemptions with consequential relief. [Paras 7, 8, 10]

Denial of exemption under sections 11 and 12 on account of alleged breach of AICTE NRI admission norms is not sustainable; exemption allowed with consequential benefits.

Procedural amendment of grounds of appeal - Whether leave to add, alter or amend grounds of appeal should be granted to the Revenue when no such leave was sought at hearing. - HELD THAT: - The Revenue's second ground was a general prayer to add, alter or amend grounds of appeal. No application for such leave was pressed during hearing. The Tribunal therefore dismissed this ground for want of any request or supporting application being made in the course of proceedings. [Paras 9, 10]

Prayer to add, alter or amend grounds of appeal dismissed for absence of any leave sought at hearing.

Final Conclusion: The Revenue's appeal is dismissed: the exemption under sections 11 and 12 for assessment year 2013-14 is to be allowed as directed by the Commissioner (Appeals), and the Revenue's procedural prayer to amend grounds is rejected.

Explanation of cash deposits - proof of oral lease between relatives - acceptance of affidavit evidence - estimation of household expenditure - rejection of addition in absence of contrary evidence

Explanation of cash deposits - proof of oral lease between relatives - acceptance of affidavit evidence - rejection of addition in absence of contrary evidence - Addition of Rs. 5,70,000/- by treating cash bank deposits as income from undisclosed sources was deleted. - HELD THAT: - The Tribunal accepted the assessee's case that the cash deposits consisted of lease rent received from his real brother for cultivation of the assessee's agricultural land. The agricultural nature of the land, undisputed cultivation activity, the brother's affidavit confirming payment and the familial relationship meant the absence of a written lease did not render the oral arrangement inherently implausible. The Revenue produced no evidence to discredit the explanation or the affidavit. In these circumstances the source of the cash deposits was held to be satisfactorily explained and the addition was not justified. [Paras 8]

Addition of Rs. 5,70,000/- deleted and AO directed to give effect.

Estimation of household expenditure - rejection of addition in absence of contrary evidence - Addition of Rs. 1,00,000/- by estimating household expenses at a higher amount was deleted. - HELD THAT: - The assessee stated he resided in a village with his wife and two minor children and met basic requirements from his own agricultural produce and cattle. The AO's estimate of higher monthly household expenses was not supported by any contrary evidence brought on record by the Revenue. Given the uncontroverted factual position about self-sufficiency from farm produce and lack of evidence to rebut the claimed expenses, the AO's estimation was held to be unjustified and therefore deleted. [Paras 13]

Estimation of household expenses deleted and corresponding addition set aside.

Final Conclusion: The assessee's appeal is partly allowed: the additions of Rs. 5,70,000/- and Rs. 1,00,000/- are deleted; the AO is directed to give effect to these deletions.

Unexplained cash credit u/s.68 - identity, creditworthiness and genuineness of creditors - admission of additional evidence under rule 46A - commission u/s.131(1)(d) enquiries - deletion of additions and interest consequent upon acceptance of creditors

Unexplained cash credit u/s.68 - identity, creditworthiness and genuineness of creditors - Addition treating unsecured loans of Rs. 1,50,00,000/- as unexplained cash credit was unsustainable. - HELD THAT: - The Assessing Officer treated loans received from Achiever Commotrade Pvt. Ltd. and Excellent Infrabuild Pvt. Ltd. as unexplained cash credit after enquiries at the addresses produced on MCA-21 returned unserved and a commission enquiry reported the companies were not found at those addresses. On remand the assessee furnished confirmations, bank statements, income-tax returns and ledger copies. The CIT(A) examined the audited balance sheets and returns of the creditor companies and observed significant reserves and surplus and disclosed income, concluding their creditworthiness and genuineness were not doubtful. The Tribunal found no specific defect in the CIT(A)'s reasoning, noted that the alleged entry operator was not a director of the three creditor companies and that mere association with an entry provider did not establish routing of funds to the assessee. In those circumstances the addition made u/s.68 was deleted and the CIT(A)'s order was confirmed. [Paras 4, 9]

Deletion of the addition of Rs. 1,50,00,000/- treated as unexplained cash credit is upheld.

Deletion of additions and interest consequent upon acceptance of creditors - Addition in respect of interest payments of Rs. 14,08,759/- paid to the three creditors does not survive. - HELD THAT: - The Assessing Officer had disallowed interest paid on the ground that the underlying loans were unexplained. Since the CIT(A) accepted the genuineness and creditworthiness of the creditor companies and deleted the additions in respect of the loans, the consequential addition of interest paid to those creditors was also deleted. The Tribunal agreed with this approach and confirmed deletion of the addition of interest. [Paras 4, 5, 9]

Addition of Rs. 14,08,759/- as unexplained interest is deleted.

Admission of additional evidence under rule 46A - commission u/s.131(1)(d) enquiries - Additional evidence filed by the assessee on remand was admissible and remand enquiries properly permitted the assessee to furnish corroborative documents. - HELD THAT: - The Assessing Officer had contended that the assessee's application for admission of additional evidence under rule 46A should be rejected for delay. The CIT(A) found that the assessee had not been left sufficient time during assessment proceedings because initial enquiries were conducted at addresses taken from MCA-21 and therefore allowed remand inquiries and admission of documents. The Tribunal upheld the CIT(A)'s conclusion that the remand procedure and subsequent replies and documents furnished by the creditor companies warranted acceptance of the evidence and supported the finding on creditworthiness. [Paras 4]

Remand enquiries and admission of additional evidence were appropriately allowed and relied upon in reaching the decision.

Final Conclusion: The Tribunal confirms the CIT(A)'s deletion of additions treating the loans and consequential interest as unexplained under u/s.68 for AY 2013-14, upholding the creditors' creditworthiness on the materials produced and dismissing the revenue's appeal.

Addition on account of unexplained cash payment/donation - reassessment initiated on basis of documents impounded during survey - use of loose/pencilled notations seized from third persons as evidence - requirement of incriminating/seized corroborative material to support statements under search/survey - addition based on presumption, surmise or uncorroborated admissions

Use of loose/pencilled notations seized from third persons as evidence - requirement of incriminating/seized corroborative material to support statements under search/survey - addition on account of unexplained cash payment/donation - addition based on presumption, surmise or uncorroborated admissions - Whether the addition of Rs. 3,50,000 to the assessee's income, based on a pencilled entry impounded from a third party during a survey and uncorroborated admissions in respect of other students, was sustainable. - HELD THAT: - The Tribunal held that a pencilled entry found among loose papers seized from a third person during survey cannot, by itself, constitute incriminating material sufficient to fasten liability on the assessee. The order reasons that where the assessee specifically denies the payment and there is no direct seized or corroborative documentary evidence linking the assessee to the alleged cash donation, the AO cannot treat the pencilled notation as proof of undisclosed income. Reliance was placed on earlier precedents of this Bench and ITAT Chennai which emphasise that statements or notings recorded after verification, ambiguous entries, or admissions of other students do not constitute independent incriminating evidence against an assessee unless corroborated by seized material. Additions founded on conjecture, surmise or uncorroborated entries therefore lack evidentiary basis and cannot be sustained. [Paras 7, 8]

Addition of Rs. 3,50,000 made by the AO and confirmed by the CIT(A) deleted; appeal allowed.

Final Conclusion: The Tribunal deleted the addition of Rs. 3,50,000 made in the reassessment for AY 2006-07, holding that a pencilled notation seized from a third party and uncorroborated admissions of others did not constitute sufficient incriminating evidence to tax the assessee; appeal allowed.

Disallowance under section 14A - application of Rule 8D - no exempt income - no disallowance under section 14A - deduction under section 37(1) - deduction under section 80G - allowability under section 43B - timing of deduction and final crystallization of liability - Section 153(3) power to give effect to tribunal order

Disallowance under section 14A - no exempt income - no disallowance under section 14A - application of Rule 8D - Validity of deletion of the section 14A disallowance and retention of the assessee's suo motu ad hoc disallowance. - HELD THAT: - The Tribunal held that where the assessee earned no exempt income in the year there could be no disallowance under section 14A, following the mandate of the Delhi High Court. The assessing officer's large disallowance under section 14A (computed under Rule 8D) was therefore not sustained and the Revenue's appeal against deletion was dismissed. The Tribunal examined the assessee's contention to delete the Rs. 2,00,000 suo motu disallowance and distinguished the precedents relied upon by the assessee; noting the assessee had offered the Rs. 2,00,000 without furnishing any breakup or nexus and had itself stated no expenditure was incurred in relation to exempt income, the Tribunal found no infirmity in the CIT(A)'s retention of that amount. [Paras 12, 13, 14]

Revenue appeal dismissed; section 14A disallowance deleted; the assessee's suo motu disallowance of Rs. 2,00,000 retained.

Deduction under section 37(1) - deduction under section 80G - Allowability of amounts paid as corporate social responsibility - whether deductible under section 37(1) or allowable under section 80G. - HELD THAT: - The Tribunal upheld the disallowance under section 37(1) because the assessee failed to establish that the donations were incurred wholly and exclusively for business purposes. However, as the assessee produced receipt certificates evidencing registration under section 80G, the Tribunal directed the assessing officer to allow the donations as deduction under section 80G to the extent supported by the receipts. [Paras 16, 17]

Disallowance under section 37(1) confirmed; deduction under section 80G to be allowed based on the donation receipts.

Timing of deduction and final crystallization of liability - Section 153(3) power to give effect to tribunal order - Treatment of sales-tax liability (1971-72 demand) crystallised on appellate order - whether deductible in AY 2010-11 or earlier year. - HELD THAT: - The Tribunal found that the original sales-tax demand related to FY 1971-72 and payment was made in 1978 as a deposit pending appeal; the appellate authority's finalisation in 2008 crystallised the liability in the year relevant to assessment (2008-09), so the claim should have been made for AY 2009-10. The Tribunal therefore confirmed disallowance for AY 2010-11 but, following binding precedents interpreting section 153(3), directed the assessing officer to give effect to the tribunal's order by allowing the deduction in AY 2009-10. [Paras 18, 21]

Disallowance for AY 2010-11 confirmed; assessing officer directed to allow the deduction in AY 2009-10 under section 153(3).

Allowability under section 43B - payment during year - deduction allowed - Allowability of statutory taxes paid and claimed as deduction in the year where payment was made. - HELD THAT: - The Tribunal examined payments claimed as deduction (municipal/sales tax demands) and found that the amounts in question were paid during the year under reference and were not mere provisions in books. As there was no finding that the sums related to another year, the Tribunal held the disallowance was not justified and directed deletion of the addition, thereby allowing the claim. [Paras 22, 23]

Disallowance deleted; the payments made during the year are allowable as deduction.

Final Conclusion: The Revenue's appeal against deletion of the section 14A disallowance is dismissed; the assessee's appeal is partly allowed - CSR donations disallowed under section 37(1) but to be allowed under section 80G on production of receipts, the sales-tax liability issue stands disallowed for AY 2010-11 but is to be allowed in AY 2009-10 under section 153(3), and statutory tax payments made during the year are allowed; overall the assessing officer's appeal is dismissed and the assessee's appeal is partly allowed.

Invocation of Section 153C and requirement to frame assessment under Section 153C where documents seized belong to person other than person searched - assessment framed under section 143(3) read with section 147 based on seized third-party documents - use of seized material belonging to third party in regular assessment proceedings - consequences of quashing assessment for imposition of penalty under section 271(1)(c)

Invocation of Section 153C and requirement to frame assessment under Section 153C where documents seized belong to person other than person searched - assessment framed under section 143(3) read with section 147 based on seized third-party documents - Validity of assessment framed under section 143(3) read with section 147 where additions were based on documents, copies of which were found in premises of third parties during a search. - HELD THAT: - The Tribunal examined whether documents relied upon by the Assessing Officer for making additions in the assessee's hands were documents belonging to the assessee but seized from premises searched under section 132 in respect of other group companies. Applying the reasoning of the coordinate Bench in Glitz Builders & Promoters Pvt. Ltd., the Tribunal held that where incriminating material belonging to a person is found during a search of a third party, the Assessing Officer is obliged to proceed under section 153C and frame assessment in accordance with chapter XIV; he cannot validly make an assessment under section 143(3) read with section 147 by directly utilising such seized material. The Tribunal found no distinguishing feature in the present facts and no contrary order affecting the coordinate decision; accordingly the impugned assessments for the years under consideration were held to be without jurisdiction and quashed. [Paras 10, 11, 12]

Assessments for AYs 2006-07 and 2007-08 framed under section 143(3) read with section 147 by relying on documents seized from third parties are quashed for failure to invoke and proceed under section 153C.

Consequences of quashing assessment for imposition of penalty under section 271(1)(c) - Effect of quashing the assessments on the penalty proceedings under section 271(1)(c). - HELD THAT: - The Tribunal held that once the assessments for the relevant years are quashed as being without jurisdiction, the consequential levy of penalty founded upon those assessments cannot survive. The penalty orders levied by the Assessing Officer in respect of the quantum additions for AYs 2006-07 and 2007-08 were therefore set aside as the foundational assessments had been quashed. [Paras 12]

Penalties for the said assessment years are set aside consequent to quashing of the assessments.

Use of seized material belonging to third party in regular assessment proceedings - Merits-based grounds advanced by the assessee became academic following quashment of assessment. - HELD THAT: - Having quashed the assessments for lack of jurisdiction in not proceeding under section 153C, the Tribunal observed that the other substantive grounds raised by the assessee on merits need not be adjudicated. Likewise, the Revenue's appeal against the CIT(A)'s order for AY 2007-08 did not survive once the assessment was quashed and was dismissed. [Paras 11, 13]

Other merits issues were left undecided as academic; Revenue's appeal for AY 2007-08 dismissed consequent to quashing of assessment.

Final Conclusion: The Tribunal quashed the assessments for AY 2006-07 and AY 2007-08 as the Assessing Officer erred in framing assessments under section 143(3) read with section 147 by relying on documents belonging to the assessee seized during search of third parties instead of invoking section 153C; consequential penalties were set aside and the Revenue's appeal for AY 2007-08 was dismissed.

Validity of reopening of assessment - Reopening of assessment under Section 147 - Objections to reopening and requirement of disposal before completion of assessment - Procedure laid down in GKN Driveshafts (India) Ltd. - Vitiation of assessment order for non-compliance with mandatory procedure

Objections to reopening and requirement of disposal before completion of assessment - Vitiation of assessment order for non-compliance with mandatory procedure - Procedure laid down in GKN Driveshafts (India) Ltd. - Non-disposal of objections to the notice for reopening before completion of the assessment vitiates the reassessment and warrants quashing of the assessment order. - HELD THAT: - The Tribunal examined the facts that reasons for reopening were supplied to the assessee, objections were raised thereafter, but the Assessing Officer completed the assessment without disposing of those objections. Relying on the decision of the jurisdictional High Court in Deepak Extrusions Pvt. Ltd. and the coordinate-bench decision in Shri Lakshmana, the Tribunal held that the procedure mandated by the Supreme Court in GKN Driveshafts requires disposal of objections before proceeding with assessment. Failure to follow that mandatory procedure is not a mere procedural irregularity susceptible only to cure, but vitiates the exercise of power and renders the assessment order unsustainable. Applying those principles to the present case, the Tribunal concluded that the impugned assessment was vitiated and therefore quashed it. [Paras 12, 13, 14]

Assessment order under Section 147 for AY 2011-12 quashed for non-disposal of objections prior to completion of assessment; cross-objection allowed and revenue appeal dismissed.

Final Conclusion: The Tribunal allowed the assessee's cross-objection, held the reassessment for AY 2011-12 to be vitiated for non-compliance with the requirement to dispose of objections before completion of assessment, quashed the assessment order and dismissed the revenue's appeal.

Unexplained money, bullion, jewellery or other valuable article deemed income under section 69A - Exemption of long term capital gains on sale of shares under section 10(38) - Treatment of sale consideration of an asset forming part of a block of assets and adjustment to written down value for depreciation - Power of appellate authority to make enquiries or direct further enquiries while disposing appeals under section 250(4) - Remand to Assessing Officer for verification under Rule 46A

Unexplained money, bullion, jewellery or other valuable article deemed income under section 69A - Deletion of addition made u/s 69A in respect of cash deposits during demonetisation period - HELD THAT: - The Assessing Officer had added the cash deposits on the ground that the assessee did not explain the source. The assessee produced the cash book and bank statements before the Commissioner (Appeals) showing opening cash balance and the cash deposits into the bank account. The Tribunal noted that the documents were placed on record, the department did not challenge the correctness of those entries nor seek verification, and the CIT(A) examined the material and accepted the explanation that deposits were from recorded cash balance. In view of the statutory scheme of section 69A, which operates where money is not recorded in books and no satisfactory explanation is furnished, the Tribunal found no infirmity in the CIT(A)'s finding that the deposits were reflected in the books and the source was explained, and therefore declined to interfere with the deletion. [Paras 7]

Order of the CIT(A) deleting the addition in respect of cash deposits is upheld; revenue's appeal on this ground dismissed.

Exemption of long term capital gains on sale of shares under section 10(38) - Unexplained money, bullion, jewellery or other valuable article deemed income under section 69A - Deletion of addition u/s 69A in respect of long term capital gains on sale of shares claimed as exempt under section 10(38) - HELD THAT: - The Assessing Officer invoked section 69A after the assessee failed to furnish details and treated the receipts as unexplained. The assessee produced before the CIT(A) the DEMAT sale particulars, cash book and financial statements showing sale proceeds of shares and claim of exemption under section 10(38). The Tribunal held that where the sale of shares and receipt of consideration is recorded in books and the source is thus explained, invoking section 69A is not warranted; any contest over allowance of exemption under section 10(38) is a different substantive issue but does not render the receipt unexplained for purposes of section 69A. Having found that the transactions were recorded and the source explained, the Tribunal saw no reason to disturb the CIT(A)'s deletion of the addition. [Paras 12]

Order of the CIT(A) deleting the addition in respect of long term capital gains is upheld; revenue's appeal on this ground dismissed.

Treatment of sale consideration of an asset forming part of a block of assets and adjustment to written down value for depreciation - Deletion of addition claimed as unexplained in respect of profit on sale of car where car formed part of a block of assets - HELD THAT: - The Assessing Officer added the profit on sale of car under section 69A because the assessee had not offered details. The CIT(A) examined the computation and depreciation working and found that the sale proceeds of the old car had been reduced from the block of assets and depreciation was correctly computed on the written down value. The Tribunal agreed that where the asset is part of a block, sale consideration is to be adjusted against the block and appropriate depreciation claimed; since the assessee had adjusted the sale in the block and claimed correct depreciation, there was no justification for treating the amount as unexplained and making an addition. [Paras 17]

Order of the CIT(A) deleting the addition in respect of profit on sale of car is upheld; revenue's appeal on this ground dismissed.

Power of appellate authority to make enquiries or direct further enquiries while disposing appeals under section 250(4) - Remand to Assessing Officer for verification under Rule 46A - Whether the CIT(A) was required to remit the matters back to the Assessing Officer for verification under Rule 46A when additional information was filed before the CIT(A) - HELD THAT: - The department contended that the CIT(A) should have given opportunity to the AO under Rule 46A and remitted the matter. The Tribunal observed that section 250(4) empowers the CIT(A) to make further enquiries or direct the AO to do so. The assessee had placed detailed paper book material (cash book, bank statements, computation, financial statements, DEMAT sale proof) before the CIT(A), and the CIT(A) examined and verified the material. The department did not demonstrate defects in the information nor take steps to verify it earlier. The Tribunal held that remand was unnecessary where the appellate authority has verified the material and the issues were simple; remand for the sake of prolonging litigation was unwarranted. [Paras 20]

No remand required; CIT(A)'s disposal after verification is valid and the revenue's plea for remand is dismissed.

Consequences of dismissal of revenue appeal on cross objections - Disposition of the assessee's cross objections filed in support of the CIT(A)'s order - HELD THAT: - The assessee filed cross objections supporting the CIT(A)'s order. The Tribunal dismissed the revenue's appeals on all grounds, and accordingly held that the cross objections became infructuous. [Paras 21]

Cross objections are dismissed as infructuous.

Final Conclusion: The Tribunal upheld the Commissioner (Appeals)'s deletions of additions made under section 69A in respect of cash deposits, long term capital gains on sale of shares, and profit on sale of car; it also declined to remit the matters to the Assessing Officer after finding that the CIT(A) had verified the material placed before him. Revenue's appeals are dismissed and the assessee's cross objections are held to be infructuous.

Exercise of jurisdiction under section 263 of the Income Tax Act - error and prejudice to the interests of revenue - scope of revision where assessing officer has called for and verified material in scrutiny assessment - difference of opinion between revenue authorities not a ground for revision - computation of capital gains on undivided share transferred under development agreement - taxability of only the share of land transferred to developer when land is given on 50:50 development basis

Exercise of jurisdiction under section 263 of the Income Tax Act - scope of revision where assessing officer has called for and verified material in scrutiny assessment - difference of opinion between revenue authorities not a ground for revision - Whether the Principal Commissioner of Income Tax was justified in invoking revision under section 263 by setting aside the assessment which had been completed after scrutiny and verification of capital gains by the Assessing Officer. - HELD THAT: - The Tribunal found that the Assessing Officer had called for the assessee's return, computation, ownership details, sale deed and reconciliations and had verified the information before completing the assessment under section 143(3), as evidenced from paras.5 and 6 of the assessment order quoted in the record. Where the AO has examined and verified the claim and taken a view, mere disagreement by the Pr.CIT does not constitute an infirmity of the assessment order. The Pr.CIT's action under section 263 was based on taking a different view on valuation and treating the entire land value as exigible to tax; however, the Tribunal held that a difference of opinion between officers is not a ground for invoking revision. Applying these principles, the Tribunal concluded that the AO's order was neither erroneous nor prejudicial to the interests of the revenue and that the exercise of revisional jurisdiction was unwarranted in the facts of the case. [Paras 5, 6]

Order under section 263 set aside and assessment order upheld; appeals of the assessee allowed.

Computation of capital gains on undivided share transferred under development agreement - taxability of only the share of land transferred to developer when land is given on 50:50 development basis - Whether capital gains are to be computed on the entire land value or only on the undivided share transferred to the developer where land was given for development on a 50:50 basis. - HELD THAT: - On the facts, the assessee (one of five co-owners) had transferred the land for development on a 50:50 basis, retaining a portion corresponding to the agreed share; as on the date of transfer there was no constructed super built-up area. The Tribunal relied on its earlier decisions (cited in the order) holding that where land is given for development on a 50:50 arrangement the capital gains are exigible only on the proportionate undivided share of land that is effectively transferred to the developer. Applying that principle, the Tribunal held that the AO rightly taxed only the assessee's share (50% of the land attributable to the transfer) and not the entire land or hypothetical constructed area which did not exist at the time of transfer. [Paras 5]

Capital gains to be computed only on the proportionate share of land transferred to the developer on the 50:50 development agreement; AO's computation upheld.

Final Conclusion: The revisional orders passed by the Principal Commissioner under section 263 were set aside; the assessment completed by the AO after scrutiny and verification is sustained and the appeals of the assessees are allowed.

Addition under section 69C for unexplained expenditure - burden of proof on source of funds and explanation of expenditure - estimation of income by Assessing Officer by reference to comparative costs - depreciation on capital assets including staff quarters - allowability of maintenance expenses in books of account - upholding decision of Commissioner of Income Tax (Appeals)

Addition under section 69C for unexplained expenditure - burden of proof on source of funds and explanation of expenditure - estimation of income by Assessing Officer by reference to comparative costs - Validity of addition made by AO disallowing part of alleged capital expenditure on staff quarters as unexplained income - HELD THAT: - The AO disbelieved the assessee's claim as to cost of staff quarters after an inspection at a different unit and, by comparing the number of new electricity connections and prior year construction cost, estimated a lower reasonable cost and added the balance as unexplained income. The assessee produced detailed capitalisation particulars showing staff quarters cost and separate amounts for other infrastructure/amenities, and demonstrated finance by banks/financial institutions for the construction. The CIT(A) accepted the explanation of source and the breakup of expenditure and deleted the addition. The Tribunal found that the AO had not considered the other infrastructure and amenities included in the capitalisation and that the assessee had explained both the source of funds and the nature of expenditure; the department produced no material to controvert these particulars. Accordingly the Tribunal upheld the CIT(A)'s deletion of the addition and dismissed the revenue appeal on this point. [Paras 3, 4, 6, 7]

Addition under section 69C held unwarranted; order of CIT(A) deleting the addition upheld and revenue appeal dismissed.

Depreciation on capital assets including staff quarters - upholding decision of Commissioner of Income Tax (Appeals) - Whether depreciation claimed by the assessee on the staff quarters is allowable - HELD THAT: - The AO disallowed depreciation to the extent he treated part of the capital expenditure as unexplained. The CIT(A) largely allowed depreciation except a small amount relating to a temple. Having held the AO's addition to be unwarranted and accepted the assessee's capitalisation, the Tribunal concluded that the assessee is eligible for depreciation on the staff quarters as claimed. The Tribunal noted the rate of depreciation claimed in the return/statement and found no error in the CIT(A)'s order. [Paras 8, 9, 11]

Depreciation on staff quarters upheld; revenue appeal dismissed.

Allowability of maintenance expenses in books of account - upholding decision of Commissioner of Income Tax (Appeals) - Sustainability of AO's disallowance of staff quarters maintenance expenditure by proportionate estimation - HELD THAT: - The AO compared prior year maintenance expenditure and number of electricity connections to estimate and disallow a large portion of the maintenance expense. The assessee produced audited books and furnished details of the various heads comprising maintenance. The CIT(A) found the AO's comparative and connection-based estimate unsustainable. The Tribunal agreed that the AO made the disallowance without adequate basis or material, noted verification of particulars by the AO, and upheld the deletion made by the CIT(A). [Paras 12, 13, 15]

Disallowance of maintenance expenses set aside; CIT(A)'s deletion upheld and revenue appeal dismissed.

Procedural dismissal for delay in filing cross objections - Maintainability of assessee's cross objections filed with delay of 32 days without condonation petition - HELD THAT: - The assessee filed cross objections beyond the prescribed period by 32 days and did not file any petition for condonation of delay. The Tribunal dismissed the cross objections as barred by non-compliance with limitation without considering their merits. [Paras 16]

Cross objections dismissed in limine for delay.

Final Conclusion: The Tribunal upheld the CIT(A)'s decisions: the addition treating part of the capital expenditure on staff quarters as unexplained income was deleted; depreciation claimed on the staff quarters was allowed; the disallowance of maintenance expenses was set aside; and the assessee's delayed cross objections were dismissed. Revenue's appeals are dismissed.

Seizure of goods - return of seized goods after six months - show cause notice before confiscation - provisional release under Section 110A - distinction between seized "goods" and seized "documents or things" - extension of six months by the Commissioner on reasons recorded - power to search and seize for proceedings under the Customs Act - definition of "goods" as any other kind of movable property

Show cause notice before confiscation - provisional release under Section 110A - extension of six months by the Commissioner on reasons recorded - Whether the respondents may continue to retain the petitioners' provisionally released consignments indefinitely without issuing show cause notice and whether show cause notice(s) must be issued within the extended period. - HELD THAT: - The court held that where goods have been seized and provisionally released under the Act, the statutory scheme in Sections 110 and 124 requires that a notice in writing specifying grounds for proposed confiscation must be given and that if no such notice is given within six months of seizure the goods shall be returned unless an extension of up to six months is granted by the Commissioner for reasons recorded in writing. The respondents were permitted to complete the investigative process and issue show cause notice(s) but were directed to do so on or before December 6, 2021 (the end of the extended period), failing which legal consequences for continued detention would follow. The court expressly left all adjudicatory contentions open for decision on the show cause notice(s). [Paras 9, 11, 12, 15]

Respondents to issue show cause notice(s) to the petitioners on or before December 6, 2021 and adjudicate them in accordance with law; adjudicatory contentions kept open.

Seizure of goods - definition of "goods" as any other kind of movable property - return of seized goods after six months - Whether the 53 carpets retained as samples for forensic purposes may be lawfully detained beyond the statutory period and whether they must be returned at the end of the extended period. - HELD THAT: - The court analysed Sections 110(1) and (2) read with Section 124 and observed that the legislature distinguishes between seizure of goods (which attract the six month rule and the proviso permitting a Commissioner to extend the period for reasons recorded) and seizure of documents or things. The detained carpets formed part of the goods seized and, although retained as samples for forensic purposes, partake the character of "goods" within the statutory definition. Consequently they could not be lawfully detained beyond the extended period under Section 110(2). The court therefore directed that the 53 sample carpets (and the seized cash) be appropriately dealt with by the respondents on or before December 6, 2021. [Paras 10, 11, 12, 13, 14]

Respondents to take an appropriate decision regarding the 53 sample carpets and the seized cash on or before December 6, 2021; the carpets are not entitled to be retained beyond the extended period without compliance with statutory requirements.

Final Conclusion: Petitions disposed directing the respondents to issue show cause notice(s) and adjudicate them by December 6, 2021, and to decide on the fate of the 53 sample carpets and seized cash by the same date; all contentions in adjudication kept open and consequences prescribed if the directed notices are not issued.

Liquidation under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - decision of the committee of creditors by requisite voting share - appointment and duties of the liquidator - public announcement and communication of liquidation - cessation of moratorium and commencement of moratorium under Section 33(5) - notice of discharge to officers, employees and workmen under Section 33(7) - preliminary report by the liquidator under the Liquidation Process Regulations

Liquidation under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - decision of the committee of creditors by requisite voting share - Order for liquidation of the corporate debtor 'M/s. Awsum Proteins Limited' was passed under Section 33(2) of the Code based on the Committee of Creditors' decision. - HELD THAT: - The Resolution Professional filed the application under Section 33(2) after the Committee of Creditors, constituted following public announcement and claim submission, resolved in its meeting held on 27.01.2021 that continuing the CIRP was not feasible owing to non-availability of assets and prolonged cessation of operations. The CoC voted in favour of liquidation with 98.2% voting share. In accordance with Section 33(2), the Adjudicating Authority was satisfied to pass a liquidation order directing that the corporate debtor be liquidated and that liquidation incidence follow from the date of the order. The Tribunal recorded these facts and applied the statutory mandate in Section 33(2) to pass the liquidation order. [Paras 4, 5, 6, 7]

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

Appointment and duties of the liquidator - consent of liquidator under Section 34 - Mr. Manik Goyal was appointed as Liquidator, having given consent, and was directed to carry out liquidation in accordance with the Code and regulations. - HELD THAT: - The CoC had proposed Mr. Manik Goyal as liquidator with a fixed fee, and the Tribunal, noting his written consent dated 31.12.2020 and his registration as an insolvency professional, formally appointed him under the provisions governing appointment of liquidators. The Tribunal directed the liquidator to proceed with the liquidation process in the manner laid down in Chapter III of Part II of the Code and in accordance with applicable liquidation regulations, and to issue the requisite public announcement under the Liquidation Process Regulations. [Paras 5, 7]

Mr. Manik Goyal appointed as Liquidator and directed to conduct liquidation in accordance with the Code and regulations.

Public announcement and communication of liquidation - communication to Registrar of Companies and Insolvency and Bankruptcy Board of India - Directions were issued for the liquidator to publish the public announcement and for the Registry to communicate the liquidation order to statutory authorities. - HELD THAT: - The Tribunal directed the liquidator to issue a public announcement stating that the corporate debtor is in liquidation in terms of the Insolvency and Bankruptcy (Liquidation Process) Regulations. The Registry was also directed to communicate the order to the Registrar of Companies, NCT of Delhi & Haryana, and to the Insolvency and Bankruptcy Board of India. These directions implement the statutory requirements for notifying stakeholders and regulatory authorities about commencement of liquidation. [Paras 7]

The liquidator to issue public announcement and the Registry to communicate the order to ROC and IBBI.

Cessation of moratorium and commencement of moratorium under Section 33(5) - notice of discharge to officers, employees and workmen under Section 33(7) - The earlier moratorium under Section 14 was declared to cease and a fresh moratorium under Section 33(5) commenced; the order is deemed to be a notice of discharge to officers, employees and workmen under Section 33(7). - HELD THAT: - On passing the liquidation order, the Tribunal recorded that the prior moratorium under Section 14 shall cease to have effect and that a fresh moratorium as contemplated by Section 33(5) of the Code shall commence. The Tribunal further held that the liquidation order itself operates as notice of discharge to the officers, employees and workmen of the corporate debtor as provided by Section 33(7). These pronouncements effect the statutory transitions attendant on commencement of liquidation. [Paras 7]

Section 14 moratorium ceases; fresh moratorium under Section 33(5) commences and the order serves as notice of discharge under Section 33(7).

Preliminary report by the liquidator under the Liquidation Process Regulations - intimation to fiscal and regulatory authorities - The Liquidator was directed to intimate relevant fiscal and regulatory authorities and to submit a Preliminary Report to the Adjudicating Authority within seventy-five days from the liquidation commencement date. - HELD THAT: - The Tribunal directed compliance with statutory liaison obligations, including intimation to the Income Tax Department as per Section 178 of the Income Tax Act and similar intimations to other fiscal and regulatory authorities governing the corporate debtor. Further, in line with the Insolvency and Bankruptcy (Liquidation Process) Regulations, the liquidator was ordered to submit a Preliminary Report to the Adjudicating Authority within seventy-five days from the liquidation commencement date, thereby mandating the initial steps and timeline for the liquidation process. [Paras 7]

Liquidator to notify fiscal/regulatory authorities and to file Preliminary Report within seventy-five days.

Final Conclusion: The Tribunal allowed the Resolution Professional's application and ordered liquidation of M/s. Awsum Proteins Limited under Section 33(2) of the Code; Mr. Manik Goyal was appointed liquidator with directions to make statutory announcements, notify authorities, commence the liquidation process under the Code and regulations, treat the order as notice of discharge to employees, and file a Preliminary Report within seventy-five days.

PMLA Adjudicating Authority staffing - vacancy of statutory posts - efficient functioning of Adjudicating Authority - direction to executive to fill vacancies - temporary deployment/secondment to meet exigency - status report and judicial monitoring

PMLA Adjudicating Authority staffing - vacancy of statutory posts - efficient functioning of Adjudicating Authority - Existence of acute vacancies at the Adjudicating Authority under the PMLA and the need to augment manpower for efficient functioning. - HELD THAT: - The Court recorded the affidavited position showing prolonged vacancies at senior and essential posts including Chairperson, Members (Administration and Law), Administrative Officer, Registrar and Court Master, together with reliance on the substantial quantum of cases pending before the Authority. In view of the benches holding hearings and the workload, the Court found that merely filling existing vacancies would be insufficient and that additional staff strength may be required to enable efficient functioning of the Adjudicating Authority. The Court therefore required the executive to consider increase in staff strength in light of the quantum of cases. [Paras 6, 7]

The Court directed that steps be taken to fill existing vacancies and to consider increasing overall staff strength to ensure efficient functioning of the Adjudicating Authority.

Direction to executive to fill vacancies - temporary deployment/secondment to meet exigency - Timelines and modes for filling specified vacancies at the Adjudicating Authority. - HELD THAT: - The Court recorded the Government's position on the Chairperson selection being underway. For Member (Administration) and Member (Law), the Court directed issuance of vacancy circulars and ordered the Government to take steps to fill those posts within three months. For Administrative Officer, Registrar, Court Masters and other working staff where recruitment has not yielded appointments, the Court directed the Ministry to explore alternate means, including posting officials from other departments or temporary deployment/secondment, to fill vacancies within one month. The Court emphasised that stenographers and court masters are essential for the Authority's functioning and must be ensured. [Paras 7]

Selection for Chairperson to be concluded; Member (Administration) and Member (Law) to be filled within three months; remaining vacancies to be filled by alternate means within one month.

Status report and judicial monitoring - direction to executive to fill vacancies - Obligation to file periodic status reports on steps taken to fill vacancies and further judicial monitoring. - HELD THAT: - The Court directed that a fresh status report be filed within two months setting out steps taken for appointments and filling vacancies. It ordered that subsequent status reports concerning appointments and vacancies at the Adjudicating Authority under the PMLA shall be filed in W.P.(C) 4680/2021 to enable ongoing judicial oversight of remedial measures taken by the executive. [Paras 8]

A fresh status report to be filed within two months and further status reports to be filed in W.P.(C) 4680/2021.

Status report and judicial monitoring - Procedural directions relating to exchange of affidavits between parties and listing for conclusion. - HELD THAT: - The Court observed that certain affidavits filed by the parties had not been exchanged and directed that copies be exchanged between counsel. The Court listed the matters for conclusion of submissions on 30th September, 2021 at 3:30 pm and directed listing of W.P.(C) 4680/2021 on 30th November, 2021 to receive the directed status report. These are part-heard matters. [Paras 9, 10]

Affidavits to be exchanged between parties; matters listed for conclusion and for receipt of status report on the specified dates.

Final Conclusion: The Court directed the executive to fill longstanding vacancies and consider augmenting staff strength at the Adjudicating Authority under the PMLA, imposed specific timelines and interim measures for filling posts, required filing of a status report within two months for judicial monitoring, and gave procedural directions including exchange of affidavits and listing dates for conclusion.

CENVAT credit - eligibility for credit of CVD on imported goods - distinction between Customs Notification and Central Excise Notification - proviso to Rule 3(1)(i) of the CENVAT Credit Rules, 2004 - applicability of Notification No.12/2012-Cus. vis-a -vis Notification No.12/2012-CE

CENVAT credit - eligibility for credit of CVD on imported goods - distinction between Customs Notification and Central Excise Notification - proviso to Rule 3(1)(i) of the CENVAT Credit Rules, 2004 - Cenvat credit of the Countervailing Duty (CVD) paid on imported steam coal under Customs Notification No.12/2012-Cus. is admissible despite a proviso in Rule 3(1)(i) which denies credit where benefit of specified Central Excise notifications is availed. - HELD THAT: - The Tribunal held that the proviso in Rule 3(1)(i) of the CENVAT Credit Rules, 2004 operates to deny credit only where the benefit of the Central Excise notification (Notification No.12/2012-CE dated 17-3-2012) is availed in respect of goods specified therein. The appellants had imported coal and availed concessional CVD under Customs Notification No.12/2012-Cus., which is distinct and applicable to imports. The decision relied on the coordinate Bench ruling in Hindustan Zinc Ltd. which concluded that the Excise notification applies to domestically manufactured coal and does not impose the proviso's bar on imported coal taxed under the Customs notification; the Tribunal also noted supporting clarification in Board Circular No.41/2013-Cus. and the Regional Advisory Committee minutes. Applying that reasoning, the Tribunal found the department's reliance upon the Excise notification misplaced and held that CVD paid on imported coal under the Customs notification was eligible for Cenvat credit under Rule 3(1), thereby invalidating the demand, interest and penalties confirmed by the adjudicating authority. [Paras 5, 10, 11]

The demand, interest and penalties insofar as they deny Cenvat credit of CVD paid on imported steam coal under Customs Notification No.12/2012-Cus. are set aside and the appeals are allowed.

Final Conclusion: The Tribunal allowed the appeals, holding that the proviso to Rule 3(1)(i) CCR, 2004 does not bar Cenvat credit of CVD paid on imported coal where concessional duty was availed under Customs Notification No.12/2012-Cus.; the impugned demands, interest and penalties were set aside with consequential relief as per law.

Condonation of delay in filing appeal - dismissal for non-prosecution under Rule 20 of the CESTAT (Procedure) Rules, 1982 - maintainability of revision before Central Government vis-a -vis remedy of appeal to the Tribunal

Maintainability of revision before Central Government vis-a -vis remedy of appeal to the Tribunal - Appeal competency where the Revisionary Authority held the revision application to Central Government to be beyond jurisdiction and directed the appellant to file an appeal under Section 35E. - HELD THAT: - The Revisionary Authority recorded that a revision to the Central Government under the Central Excise Act was beyond jurisdiction and dismissed the revision application as non-maintainable, observing that the applicant was at liberty to file an appeal under the appropriate provision. The Tribunal noted that no appeal lies to it against the order of the Revisionary Authority in the present context and treated the Revisionary Authority's conclusion as determinative of the appropriate remedy being an appeal rather than a revision to the Central Government. [Paras 2, 3]

The Tribunal treated the Revisionary Authority's order as outside the jurisdiction for revision to Central Government and that the proper remedy is an appeal; accordingly no appeal to the Tribunal lay against the Revisionary Authority's disposition in the circumstances.

Condonation of delay in filing appeal - dismissal for non-prosecution under Rule 20 of the CESTAT (Procedure) Rules, 1982 - Whether the appeal before the Tribunal should be permitted to proceed despite delay in filing and the appellant's non-appearance. - HELD THAT: - The appeal was filed on 14.01.2019 against a communication dated 16.10.2017 after a considerable delay and without any application for condonation of delay. On the hearing date no one appeared for the appellant. In view of the appellant's continued non-appearance and absence of any prayer for condonation, the Tribunal applied Rule 20 of the CESTAT (Procedure) Rules, 1982 and found the appeal liable to be dismissed for non-prosecution; the Tribunal also noted that the appeal was filed well beyond the statutory time limit for filing the appeal. [Paras 3]

The appeal was dismissed for non-prosecution under Rule 20 and for being filed beyond the time limit, there being no application for condonation of delay.

Final Conclusion: The appeal was dismissed: the Revisionary Authority's view that revision to the Central Government was beyond jurisdiction pointed to the remedy of an appeal, and independently the Tribunal dismissed the instant appeal for non-prosecution under Rule 20 and for inordinate delay without any application for condonation.

Refund of tax - interest under Section 42 of the Delhi Value Added Tax Act - law of limitation for refund - principle of unjust enrichment - decision on evidence on record - expeditious decision by tax authority

Refund of tax - decision on evidence on record - expeditious decision by tax authority - Direction to the respondent authority to decide the petitioner's refund claims for the specified tax periods in accordance with law, rules and regulations. - HELD THAT: - The High Court directed the concerned Respondent Authority to adjudicate the refund claims advanced by the petitioner for the tax periods stated in the petition, taking into account the applicable law, rules, regulations and Government policies and on the basis of the evidence on record. The authority is required to decide the claim as and when it is preferred by the petitioner and to do so as expeditiously as possible and practicable. The Court did not adjudicate the merits of entitlement but mandated a fresh decision by the competent authority in accordance with legal and evidentiary standards. [Paras 3]

The refund claims for the stated periods are to be decided afresh by the concerned Respondent Authority in accordance with law and on the basis of evidence, expeditiously.

Interest under Section 42 of the Delhi Value Added Tax Act - law of limitation for refund - principle of unjust enrichment - Consideration of claimed interest and limitations and application of the principle of unjust enrichment to the refund claims remitted to the authority. - HELD THAT: - The Court directed that while deciding the refund claim the authority must keep in mind the law of limitation for obtaining refunds and the principle of "unjust enrichment" as enunciated by the Supreme Court in Mafatlal Industries Ltd. & Ors. vs. Union of India & Ors. The petitioner's claim for interest under Section 42 of the DVAT Act and any limitation-related objections or unjust enrichment concerns were not decided on merits by the Court but were remitted to the authority for determination in accordance with law and on the basis of materials presented by the petitioner. [Paras 2, 3]

Claims for interest, limitation issues and potential application of unjust enrichment are to be considered and decided by the Respondent Authority in the course of adjudicating the refund claims.

Final Conclusion: Writ petition disposed of by directing the concerned Respondent Authority to decide the petitioner's refund claims for 4th Quarter 2013-2014 and 1st Quarter 2017-2018, including any claim for interest and issues of limitation and unjust enrichment, in accordance with law and on the basis of evidence, expeditiously.

Infructuousness of challenge where direction of revisional authority has been complied with - revisional power under Section 64(1) of the KVAT Act - reassessment under Section 39(1) of the KVAT Act - exhaustion of statutory remedy of appeal - alternative statutory remedy by appeal to the appropriate authority

Infructuousness of challenge where direction of revisional authority has been complied with - exhaustion of statutory remedy of appeal - Whether the appeal under Section 66(1) of the KVAT Act against the revisional orders dated 02.11.2020 is maintainable after the Prescribed Authority complied with the revisional directions and passed reassessment orders. - HELD THAT: - The Court noted that pursuant to the revisional orders the Prescribed Authority completed reassessment for A.Y. 2013-14 and 2014-15 and passed consequential orders on 05.07.2021, and that the appellant participated in and furnished information during the reassessment. Given that the direction of the Revisional Authority was carried into effect, the Court held that the challenge to the revisional orders had become infructuous. The Court further applied the principle that where a statutory appeal remedy exists an aggrieved person must exhaust that remedy (relying on the Apex Court authority cited in the judgment) and observed that the appellant has an alternate statutory remedy of appeal against the reassessment orders before the appropriate authority under the KVAT Act. In these circumstances the Court declined to entertain the present appeal against the revisional orders and reserved liberty to the appellant to file the statutory appeal against the reassessment orders dated 05.07.2021. [Paras 7, 9, 11]

Appeal against the revisional orders dismissed as infructuous; liberty granted to prefer statutory appeal against the reassessment orders dated 05.07.2021.

Final Conclusion: The appeal under Section 66(1) challenging the revisional orders dated 02.11.2020 is disposed of as infructuous because the Prescribed Authority has complied with the revisional directions by passing reassessment orders; appellant is granted liberty to challenge the reassessment orders of 05.07.2021 by availing the statutory appeal in accordance with law.

Vicarious liability - summoning of accused - prima facie case - requirement of specific allegations - Magistrate's duty to apply mind at summoning stage - conspiracy and common intention

Summoning of accused - prima facie case - requirement of specific allegations - vicarious liability - Magistrate's duty to apply mind at summoning stage - Whether the order of the Magistrate issuing process/summons against original accused nos. 1 to 8 for offences under Sections 427, 447, 506 and 120B read with Section 34 IPC was sustainable. - HELD THAT: - The Court examined the complaint and the material placed before the Magistrate and found that, beyond bald averments that accused nos. 2 to 5 and 7 & 8 conspired to lay the pipeline and committed trespass, there were no specific allegations as to any individual act, presence at the scene, command, or role attributable to those persons. The Court reiterated the settled principle that summoning an accused is a serious step and the Magistrate must record satisfaction of a prima facie case after applying his mind to the nature of allegations and the evidence. Where the accused are officers or directors of a company, vicarious liability cannot be imputed automatically; specific allegations establishing personal participation, direction, or criminal intent are required. Applying these principles, the Court concluded that the Magistrate had not recorded satisfaction as to a prima facie case against accused nos. 1 to 8 and that mere official positions (Chairman, Managing Director, Executive Director, Deputy General Manager, Planner/Executor) without particulars of individual conduct were insufficient to sustain the summons. Consequently, the Sessions Court and High Court were correct in quashing the summoning order insofar as it related to those accused. [Paras 7, 8, 9]

The summons/order issuing process against original accused nos. 1 to 8 was rightly quashed for want of specific allegations and failure to establish a prima facie case against them; vicarious liability could not be inferred merely from their official positions.

Conspiracy and common intention - requirement of specific allegations - Direction as to continuance of proceedings against original accused nos. 9 to 13. - HELD THAT: - The Court observed that the learned Magistrate had issued process against accused nos. 9 to 13 and that the Sessions Court had confirmed the summoning insofar as accused no. 9. Having quashed the summons only in respect of accused nos. 1 to 8, the Court left intact the Magistrate's order as regards the remaining accused and directed that the learned Magistrate proceed with the complaint against original accused nos. 9 to 13 on merits and in accordance with law. [Paras 3, 9, 10]

Proceedings against original accused nos. 9 to 13 shall continue; the learned Magistrate shall proceed with the complaint against them on its merits in accordance with law.

Final Conclusion: Appeals dismissed. The orders quashing the Magistrate's summons insofar as original accused nos. 1 to 8 are concerned are upheld for lack of specific allegations and absence of a recorded prima facie case; proceedings shall continue against original accused nos. 9 to 13 in accordance with law.

Power under Section 482 CrPC to quash criminal proceedings - Prima facie case requirement for continuation of criminal prosecution - Demand and acceptance as sine qua non for bribery offences under the Prevention of Corruption regime - Mere recovery of money insufficient without evidence of demand or voluntary acceptance - Legal presumption under Section 20 of the Prevention of Corruption Act and need for foundational facts before its invocation - Abuse of process/mala fide institution of criminal proceedings

Prima facie case requirement for continuation of criminal prosecution - Demand and acceptance as sine qua non for bribery offences under the Prevention of Corruption regime - Mere recovery of money insufficient without evidence of demand or voluntary acceptance - Power under Section 482 CrPC to quash criminal proceedings - Legal presumption under Section 20 of the Prevention of Corruption Act and need for foundational facts before its invocation - Whether the FIR and the material on record disclose a prima facie case against the petitioner warranting continuation of criminal proceedings - HELD THAT: - The court examined the statutory scheme and settled precedents establishing that demand and acceptance of illegal gratification are the essential ingredients of offences under the Prevention of Corruption regime and that mere recovery of money, without evidence of demand or voluntary acceptance, is insufficient to fasten criminal liability. Applying the principles governing exercise of inherent jurisdiction under Section 482 CrPC, the court considered whether the factual foundation for invoking the legal presumption under Section 20 of the Act was made out. The record shows that the trust's First Statute assigned day-to-day financial and GST responsibilities to the CEO and CFO, that the petitioner as a founding trustee had only an advisory/oversight role and was absent from India during the audit process, and that the CFO and GST consultant were the primary interlocutors with the GST audit team. The prosecution's case hinges largely on a purported telephonic WhatsApp call and recovery, but forensic reports were inconclusive, and foundational facts to demonstrate demand and acceptance by the petitioner are absent. The audit was at a nascent stage with tentative observations and an aggregate tax implication that made the alleged demand inherently improbable. In that factual matrix the necessary preconditions for shifting the evidential burden under Section 20 were not established; consequently the allegations, even if taken at face value, do not prima facie constitute the bribery-related offences as against the petitioner and continuation of proceedings would amount to an abuse of process. [Paras 39, 40, 41, 42, 43]

The FIR and proceedings insofar as they relate to the petitioner are quashed.

Final Conclusion: The criminal proceedings arising from FIR No.RC-10(A)/2020-(RC0152020A0010) dated 29.12.2020 are quashed insofar as they concern the petitioner; proceedings against other accused may continue unimpaired.

Compulsory retirement under Rule 56(j) of Fundamental Rules - Subjective satisfaction of the Review Committee - Doctrine of Pleasure under Article 310 - No application of principles of natural justice in compulsory retirement - Judicial review limited to mala fides, arbitrariness or want of evidence - Consideration of entire service record - Quashing of departmental/criminal proceedings not an absolute bar to compulsory retirement - Executive guidelines as administrative aids and not fetters on Rule 56(j)

Compulsory retirement under Rule 56(j) of Fundamental Rules - Subjective satisfaction of the Review Committee - Doctrine of Pleasure under Article 310 - No application of principles of natural justice in compulsory retirement - Consideration of entire service record - Validity of the order of compulsory retirement dated 10.06.2019 passed under Rule 56(j) of Fundamental Rules - HELD THAT: - The court upheld the order of compulsory retirement. It reiterated that Rule 56(j) flows from the 'doctrine of pleasure' and permits the appropriate authority, acting on subjective satisfaction formed after considering the entire service record, to retire an officer in public interest. Compulsory retirement is not punitive, attracts no stigma or civil forfeiture of accrued rights, and principles of natural justice are not required to be observed in such proceedings. The Review Committee had before it the complete service record, adverse/confidential entries, litigation history and other material; it formed a bona fide subjective opinion that the petitioner's continuance was not in public interest and recommended retirement, which the Union accepted. The court declined to sit in appeal over that subjective satisfaction, noting no evidence of personal malice, perversity or arbitrariness in the Committee's decision. [Paras 16, 22, 30, 31, 46]

Order of compulsory retirement dated 10.06.2019 is valid and does not suffer from mala fides, arbitrariness or want of evidence; the Tribunal correctly declined interference.

Judicial review limited to mala fides, arbitrariness or want of evidence - Consideration of entire service record - Quashing of departmental/criminal proceedings not an absolute bar to compulsory retirement - Whether quashing of departmental or criminal proceedings, or success in prior litigations, precluded exercise of power under Rule 56(j) - HELD THAT: - The court held that quashing of departmental charge sheets or criminal sanction does not ipso facto prevent the Government from invoking Rule 56(j). What matters is the Review Committee's overall assessment of the entire service record and whether a reasonable authority could form the requisite opinion in public interest. Past litigation victories or technical quashings do not render an officer 'compulsory-retirement-proof'; the power may be exercised if the competent authority, on available material (including adverse entries, litigation history, non compliance with administrative requirements), reasonably forms the subjective view to retire the officer. [Paras 23, 25, 38, 40, 56]

Quashing of charges or success in litigation did not preclude the Review Committee or Government from exercising the power to compulsorily retire the petitioner.

Executive guidelines as administrative aids and not fetters on Rule 56(j) - Timing/guidelines for exercising Rule 56(j) - Judicial review limited to mala fides, arbitrariness or want of evidence - Whether delay in initiating compulsory retirement or breach of administrative guidelines/undertaking (DoPT OM and court assurance) invalidated the retirement order - HELD THAT: - The court found no requirement that the Government must act immediately upon an officer attaining the relevant age; Rule 56(j) permits retirement at any time thereafter in public interest. Administrative instructions (DoPT OMs) are internal guidelines and do not constrain the statutory/Rule power; an alleged breach of such guidelines or of an assurance given in separate court proceedings did not bar the independent exercise of Rule 56(j) in distinct proceedings. The Review Committee's action, taken after considering the record, was not vitiated by delay or by the departmental undertaking relied upon by the petitioner. [Paras 49, 50, 58, 60, 61]

Delay or non compliance with administrative timing guidelines and the noted court undertaking did not invalidate the compulsory retirement order.

Judicial review limited to mala fides, arbitrariness or want of evidence - Consideration of entire service record - Whether the Central Administrative Tribunal erred in dismissing O.A. No.1835/2020 challenging the retirement order - HELD THAT: - The High Court agreed with the Tribunal's reasoning that the Review Committee had considered the entire service record and formed a bona fide subjective opinion. Given the narrow scope of judicial review in compulsory retirement matters-interference only for mala fides, absence of evidence or perversity-the Tribunal correctly declined to interfere. The High Court found no ground to disturb the Tribunal's findings. [Paras 8, 57, 64, 65]

The Tribunal did not err in dismissing O.A. No.1835/2020; its judgment is affirmed.

Final Conclusion: The writ petition challenging the compulsory retirement order, the rejection of the petitioner's representation and the Tribunal's dismissal of O.A. No.1835/2020 is dismissed. The Review Committee's subjective satisfaction under Rule 56(j) after considering the entire service record was lawful; there is no proven mala fide, arbitrariness or want of evidence to warrant judicial interference.

Penalty for wilful disobedience of execution order - Obligation of a deductor to furnish TDS certificates or remit deducted tax - Delay in challenging execution orders and its consequences - Article 227 of the Constitution of India

Obligation of a deductor to furnish TDS certificates or remit deducted tax - Penalty for wilful disobedience of execution order - Whether the petitioner could avoid the penalty and obligation to pay the amounts ordered in execution by relying on an alleged dispute with the Income Tax Department. - HELD THAT: - The Court found that the petitioner deducted TDS (or at least claimed such deduction) but failed to furnish any proof that the amounts were deposited with the Income Tax Department or to provide TDS certificates to the respondents. The respondents are not privy to, nor affected by, the petitioner's dispute with the Income Tax Department; therefore, the petitioner could not withhold payment to the decree-holders on that ground. The impugned execution orders directing payment of the principal sums and imposing a weekly penalty were lawfully made and the petitioner, having delayed challenging those orders for over two years, cannot now avoid the consequences of non-payment. The Court noted that the petitioner only paid the principal amounts after directions from this Court and that the magnification of the penalty was a direct consequence of the petitioner's failure to make timely payments. The Court also recorded that if the petitioner produces proof of deposit of the deducted amounts to the credit of the respondents and/or furnishes the required TDS certificates, the respondents undertook to refund those amounts to the petitioner. [Paras 3, 9, 10, 11, 12]

Petitions dismissed; petitioner cannot avoid payment of the penalty or the sums ordered in execution for the reasons stated, subject to refund by respondents if petitioner proves deposit of TDS or furnishes TDS certificates.

Delay in challenging execution orders and its consequences - Article 227 of the Constitution of India - Whether the petitioner's long delay in impugning the execution court's orders justified relief under Article 227. - HELD THAT: - The Court emphasised the timing and conduct of the petitioner: the impugned orders were passed on 1st August, 2019, but were challenged only on 21st September, 2021 after directions from this Court created imminent timelines for payment. The petitioner's pattern of filing applications and seeking extensions, and its withdrawal when asked to provide affidavits by directors, demonstrated an attempt to delay execution proceedings. Given this conduct and the failure to promptly challenge the execution orders, the Court found no merit in invoking Article 227 to overturn or relieve the petitioner from the execution court's orders. [Paras 6, 7, 8, 10, 12]

Delay and conduct of the petitioner disentitled it to relief under Article 227; the petitions were dismissed.

Final Conclusion: The petitions under Article 227 are dismissed. The execution court's orders directing payment and imposing penalty stand; however, if the petitioner establishes that the TDS was duly deposited to the credit of the respondents and/or furnishes TDS certificates, the respondents shall refund the corresponding amounts to the petitioner.

Presumption under Section 139 of the Negotiable Instruments Act - onus to rebut by preponderance of probability - probabilising the defence case - complainant's burden to prove source of funds - complainant not coming to court with clean hands - appellate interference only for perversity or illegality

Presumption under Section 139 of the Negotiable Instruments Act - onus to rebut by preponderance of probability - Presumption of existence of debt under Section 139 arises but may be rebutted by the accused on preponderance of probability. - HELD THAT: - The complaint established issuance, presentation and dishonour of the cheque, thereby attracting the statutory presumption under Section 139. However, the Court applied the settled principle that once the presumption arises the accused may rebut it on the basis of preponderance of probability (as recognised in the cited Supreme Court precedents). The appellate court examined the defence evidence and the cross-examination of the complainant and found that the accused adduced material - including sale agreements and related notices - and elicited admissions from the complainant which rendered the defence case probable. On that factual matrix the accused succeeded in rebutting the initial presumption to the requisite standard. [Paras 8, 9, 17, 18]

Though the presumption under Section 139 arose, the accused successfully rebutted it by preponderance of probability and the presumption did not sustain conviction.

Probabilising the defence case - complainant not coming to court with clean hands - complainant's burden to prove source of funds - Whether the defence case that the cheque was a blank/signed security for earlier transactions was satisfactorily probabilised and whether the complainant proved he had source of funds for the alleged loan. - HELD THAT: - The Court analysed the defence evidence (sale agreements and legal notices) together with the complainant's cross-examination which contained inconsistent and evasive answers about dates, earlier transactions and the source of large cash sums. The appellate court accepted that sale agreements and admissions showed earlier security transactions and payments which had been honoured by cheque, thereby supporting the defence suggestion that the contested cheque related to earlier dealings and not a fresh loan of the pleaded amount. The complainant also failed to produce documentation or plausible explanation to demonstrate how he possessed the large sum alleged to have been lent, and admitted non-disclosure in income tax returns. These deficiencies led the Court to conclude that the complainant had not come to court with clean hands and had failed to prove the source of funds, strengthening the defence case on preponderance of probability. [Paras 12, 16, 17, 19, 20]

The defence was probabilised and the complainant failed to prove the source and genuineness of the alleged loan, which undermined the prosecution case.

Appellate interference only for perversity or illegality - Whether the lower appellate court's acquittal was perverse or suffered from irregularity or illegality warranting interference. - HELD THAT: - Having reviewed the evidence and the reasons recorded by the lower appellate court - including factual findings on admissions, documentary supports for the defence, and the complainant's inability to account for the alleged loan - this Court found that the appellate court's conclusion was based on material and permissible inferences. There was no demonstration of perversity, misappreciation or legal error of such a nature as to call for interference in the present appeal. [Paras 17, 21]

The acquittal by the lower appellate court is not perverse or illegal and does not warrant interference.

Final Conclusion: The criminal appeal is dismissed. The appellate court correctly held that, although the statutory presumption under Section 139 arose, the accused rebutted it on preponderance of probability by probabilising the defence; the complainant failed to prove source of the alleged loan and did not come to court with clean hands, and the acquittal does not suffer from perversity or illegality.

Offence under Section 138 of the Negotiable Instruments Act - deemed service of demand notice - cause of action arising after 15 days of service - premature complaint under Section 138 - presumption under Section 139 of the Negotiable Instruments Act - compensation under Section 357 of the Code of Criminal Procedure

Deemed service of demand notice - cause of action arising after 15 days of service - premature complaint under Section 138 - Maintainability of the complaint under Section 138 of the Negotiable Instruments Act in the absence of proof of actual service of the demand notice sent by registered post - HELD THAT: - The Court examined whether the Complaint filed on 17.03.2006 was maintainable where a demand notice was dispatched by registered post on 17.02.2006 but there was no evidence of the actual date of service. Relying on the principle that deemed service of a notice sent by registered cover may be presumed only after expiry of 30 days from dispatch, the Court held that the notice dated 17.02.2006 must be deemed served on 18.03.2006. The cause of action for instituting a complaint under Section 138 arises only after the drawer fails to make payment within 15 days of receipt of the notice. Therefore the earliest date on which the cause of action could accrue was 02.04.2006, and any Complaint filed before that date is premature and not a complaint in law. The Complaint in this case was filed on 17.03.2006, i.e., prior to the expiry of the statutory 15-day period following deemed service, and hence was legally unsustainable. The Court concluded that both trial and appellate courts erred in holding the Complaint maintainable for want of consideration of the deemed-service timeline, and quashed the conviction on the ground of prematurity. The Court observed that the complainant remains at liberty to file a fresh complaint in accordance with law as noted in the Supreme Court authority relied upon. [Paras 27, 28, 29, 30, 31]

The complaint was premature and not maintainable; convictions set aside and the petitioner acquitted; complainant free to file a fresh complaint in accordance with law.

Final Conclusion: The High Court set aside the convictions recorded by the lower courts on the ground that the complaint under Section 138 N.I. Act was filed before expiry of the statutory period arising from deemed service of the demand notice; the petitioner was acquitted and discharged from bail, while the complainant was permitted to pursue remedies afresh in accordance with law.

Quashing of complaint under inherent powers of the High Court - abuse of the process of court - exercise of Section 482 Cr.P.C. sparingly and with caution - ingredients of offence under Section 138 of the Negotiable Instruments Act - joinder of offences arising out of the same transaction - cognizance and issuance of process by Magistrate

Ingredients of offence under Section 138 of the Negotiable Instruments Act - cognizance and issuance of process by Magistrate - Whether the complaint and the process disclose prima facie commission of offence under Section 138 Negotiable Instruments Act and justify continuance of criminal proceedings. - HELD THAT: - The complaint alleges issuance of a cheque, presentation within validity, dishonour on grounds of insufficient funds, and service of demand notice followed by failure to pay. The Trial Court recorded the complainant's statement and took cognizance. On the materials before the High Court, these allegations, if accepted at face value, prima facie disclose the ingredients of the offence under Section 138 of the Negotiable Instruments Act. The High Court held that where the factual foundation for an offence is laid in the complaint, it should not be hastily quashed and that the role of assessing evidence primarily lies with the trial court. Consequently, there was no basis to quash the complaint or set aside the process issued by the Magistrate in respect of Section 138. [Paras 11, 12, 13]

The complaint and process in respect of the offence under Section 138 NI Act are not liable to be quashed.

Joinder of offences arising out of the same transaction - exercise of Section 482 Cr.P.C. sparingly and with caution - abuse of the process of court - Whether the Trial Court erred in taking cognizance and issuing process for offences under Sections 420, 323 and 506 Ranbir Penal Code along with Section 138 NI Act, and whether continuance of proceedings amounts to abuse of process justifying quashment under Section 482 Cr.P.C. - HELD THAT: - The complaint alleges that, following the cheque's dishonour and demand, the accused participated in acts of beating and threats as part of the same transaction. The High Court applied the principle that offences committed in the course of the same transaction may be tried together under Section 227 Cr.P.C., and reiterated that inherent jurisdiction under Section 482 must be exercised only in rare cases to prevent abuse of process. Having evaluated the allegations and the Trial Court's cognizance, the High Court found no illegality, mala fide or absurdity warranting exercise of inherent powers to quash the proceedings. The Court emphasised established precedents that the mere presence of a civil dispute or contested facts does not justify quashment where prima facie offences are disclosed. [Paras 5, 7, 8, 13]

The joinder of offences and the continuance of proceedings do not amount to abuse of process; cognizance and issuance of process for Sections 420, 323 and 506 RPC alongside Section 138 NI Act are upheld.

Final Conclusion: The petition for quashment under Section 482 Cr.P.C. is dismissed; the High Court declines to interfere with the Trial Court's cognizance and issuance of process in respect of the offences alleged under Section 138 of the Negotiable Instruments Act and Sections 420, 323 and 506 Ranbir Penal Code.

Interpretation and application of Section 170 CrPC - Effect of non-arrest during investigation on entitlement to bail - Obligation of Magistrate upon filing of charge-sheet to accept charge-sheet and proceed under Section 173 CrPC and issue summons - Requirement to record reasons before issuing warrant of arrest as contemplated by Section 87 CrPC

Effect of non-arrest during investigation on entitlement to bail - Interpretation and application of Section 170 CrPC - Accused who was not arrested or produced in custody during investigation and against whom a charge-sheet has been filed is ordinarily entitled to be released on bail when tried for non-bailable offences, absent circumstances justifying denial of bail. - HELD THAT: - The Court held that where an accused has not been arrested during investigation and has been at large, sudden incarceration merely because a charge-sheet is filed would be contrary to the principles governing grant of bail. The observations in the Delhi High Court judgment (para 26) and this Court's decision in Siddharth v. State of Uttar Pradesh were applied to conclude that the circumstance of non-arrest during investigation itself is sufficient to entitle the accused to be released on bail in appropriate cases. Applying these principles to the facts, the Court found the appellant was never taken into custody during investigation and accordingly the trial Court should grant bail on such terms as it deems fit; the interim protection granted by this Court was to continue until the trial Court passed the appropriate order. [Paras 11, 12, 13]

The appellant, not arrested during investigation and charge-sheeted, should be released on bail by the trial Court; interim protection continues until that order is passed.

Obligation of Magistrate upon filing of charge-sheet to accept charge-sheet and proceed under Section 173 CrPC and issue summons - Requirement to record reasons before issuing warrant of arrest as contemplated by Section 87 CrPC - On taking cognizance of a charge-sheet where the accused was not arrested during investigation, the Magistrate/Court should ordinarily issue process of summons and not a warrant; if a warrant is issued, reasons must be recorded as required by law. - HELD THAT: - The Court reproduced and endorsed the High Court's directions that when an investigating agency files a charge-sheet without arresting the accused, the Magistrate or Court must accept the charge-sheet and proceed under Section 173 CrPC and 'invariably' issue summons rather than warrants. If a warrant of arrest is to be issued, the exercise of discretion must be accompanied by written reasons as contemplated under Section 87 CrPC, such as proof of absconding or refusal to obey summons. The Court observed these principles are guiding and supplement its earlier decision in Siddharth (supra), and applied them to the present case where issuance of non-bailable warrants was inappropriate given the appellant's non-custodial status during investigation. [Paras 9, 10]

Magistrates must ordinarily issue summons, not warrants, on a charge-sheet where the accused was not arrested during investigation; any warrant must be justified by recorded reasons.

Final Conclusion: The appeal is allowed; applying the principles governing Section 170 CrPC and the entitlement to bail of an accused not arrested during investigation, the trial Court is directed to grant bail to the appellant on appropriate terms and the interim protection granted by this Court shall continue until the trial Court passes its order. Parties to bear their own costs.