TaxTMI Updates e-Newsletter
Oct 09,2018

Advance Ruling - Classification of goods - Rate of tax - Coir products (except coir mattresses) - Mattress supports; articles of bedding and similar furnishing - Insufficiency of information to decide

Classification of goods - Rate of tax - Coir products (except coir mattresses) - Mattress supports; articles of bedding and similar furnishing - Insufficiency of information to decide - Application for advance ruling on classification and applicable rate of tax for Coir Sheets / Rubberised Coir sheets or Blocks could not be decided for want of necessary information supplied by the applicant. - HELD THAT: - The applicant described the product composition and manufacturing process and contended that the product falls under HSN heading 9404. The Authority noted that coir products (except coir mattresses) are listed under the lower rate schedule while mattress supports and similar bedding articles (including certain mattress layers) are covered under a different schedule attracting a different rate. Because the applicant indicated end-uses including mattress layers, the correct classification and rate depended on further particulars (for example, product catalogue and specification) to determine whether the goods fall within the coir products entry or within the mattress/bedding entry. The applicant was asked at personal hearing and thereafter in writing to produce the catalogue and further information but failed to do so. In absence of that material the Authority found the information insufficient and hence declined to pronounce an advance ruling on the classification or rate.

Application disposed; advance ruling cannot be given for want of information from the applicant.

Final Conclusion: The application for advance ruling regarding the classification and applicable rate of tax on the referred coir products is disposed of without a substantive ruling because the applicant did not furnish the information requested; no advance ruling is issued.

Summary order. Respondents directed to file reply by 11.10.2018.

Exempted services under Notification No.12/2017-Central Tax(Rate) - reverse charge mechanism (RCM) under Notification No.13/2017-Central Tax(Rate) - input tax credit restriction under Section 17(5) - treat as supply under Schedule II clause 5(e) - toll charges versus consideration for service

Toll charges versus consideration for service - reverse charge mechanism (RCM) under Notification No.13/2017-Central Tax(Rate) - Characterisation and GST liability of 'Abhivahan Shulk'. - HELD THAT: - The Authority found that 'Abhivahan Shulk' is charged as consideration for carrying forest produce and is not a toll for access to a road. As it is a consideration for services provided to persons for carrying forest produce, it falls within the definition of 'services' and does not appear in the list of exempted government/local authority services under Notification No.12/2017. Consequently it is to be treated as 'other services' under Service Code 9997 and is taxable at the applicable rate. In view of Serial No.5 of Notification No.13/2017 (Central Tax (Rate)), the liability to pay GST on such services is to be discharged under the reverse charge mechanism by the recipient business entity.

'Abhivahan Shulk' is a taxable service (Service Code 9997) and GST is payable by the applicant under reverse charge.

Exempted services under Notification No.12/2017-Central Tax(Rate) - services by local authority in relation to Article 243W functions - GST liability on fee for ambient air monitoring paid to Uttarakhand Environment Protection and Pollution Control Board (UEPPCB). - HELD THAT: - UEPPCB was held to be a 'local authority' within the statutory definition. Its function of protection of the environment falls within the activities entrusted to municipalities under Article 243W of the Constitution. Services by a local authority in relation to any function under Article 243W are exempt under Serial No.4 of Notification No.12/2017-Central Tax(Rate). Hence the fee collected by UEPPCB for ambient air monitoring, being an activity connected to environmental protection, is an exempt service and not liable to GST.

Fee collected by UEPPCB for ambient air monitoring is an exempt service and not subject to GST.

Treat as supply under Schedule II clause 5(e) - reverse charge mechanism (RCM) under Notification No.13/2017-Central Tax(Rate) - Characterisation and GST liability of 'Khanij Sampada Sulk'. - HELD THAT: - The Authority held that 'Khanij Sampada Sulk' (environmental and mining property fee) charged on transportation/release of river bed material constitutes consideration received by the State department for services of carrying/release and thus falls within the definition of 'service'. The service does not appear among the limited government/local authority exemptions under Notification No.12/2017; therefore it is taxable as 'other services' at the applicable rate. Liability to pay GST on such services is to be discharged by the recipient under Serial No.5 of Notification No.13/2017 (RCM).

'Khanij Sampada Sulk' is a taxable service and GST is payable by the applicant under reverse charge.

Exempted services under Notification No.12/2017-Central Tax(Rate) - GST treatment of registration/registration fee charged by Regional Transport Office (State Transport Office). - HELD THAT: - The Regional Transport Office is a State Government authority and the registration fee required under law is a service rendered by a State Government/local authority. Notification No.12/2017-Central Tax(Rate) exempts services by Central/State/Union Territory/local authority by way of registration required under any law for the time being in force (Serial No.47). Therefore the registration fee charged by the State Transport Office is an exempted service and not subject to GST.

Registration fees charged by the State Transport Office are exempt and no GST is payable.

Treat as supply under Schedule II clause 5(e) - reverse charge mechanism (RCM) under Notification No.13/2017-Central Tax(Rate) - GST liability on penalty imposed for unaccounted stock of river bed material (RBM). - HELD THAT: - Applying Schedule II clause 5(e), the Authority reasoned that amounts charged as penal consideration for tolerating or agreeing to an obligation (including penalties for non-performance) constitute a supply of service where consideration is involved. Thus the penalty imposed by authorities is to be treated as a supply of service and taxable as 'other services'. Liability to discharge GST on such penalty falls on the business recipient under Serial No.5 of Notification No.13/2017 (RCM).

Penalty imposed is a taxable service and GST is payable by the applicant under reverse charge.

Input tax credit restriction under Section 17(5) - Admissibility of Input Tax Credit (ITC) on GST paid for purchase/repairs/spares of earth moving machinery (Pokland, JCB, dumper, tipper). - HELD THAT: - Section 17(5) restricts ITC on motor vehicles except where used for specified purposes (including transportation of goods). The Act adopts the definition of 'motor vehicle' as in the Motor Vehicles Act, 1988, which does not include certain mining equipment. The Authority accepted the reasoning in GST FAQs and observed that earth moving machinery used in mining (JCBs, tippers, dumpers, Pokland) are mining equipment not falling within the Motor Vehicles Act definition of 'motor vehicle' for these purposes. As such GST paid on purchase or repairs of these machines used for transportation of goods in the course of the applicant's business is eligible as input tax credit.

Input Tax Credit is admissible on GST paid for purchase/repairs/spares of Pokland, JCB, dumper and tipper used for movement of goods in the applicant's business.

Final Conclusion: The Authority ruled that: 'Abhivahan Shulk' and 'Khanij Sampada Sulk' are taxable services treatable as 'other services' and GST on them is payable by the applicant under reverse charge; the ambient air monitoring fee charged by UEPPCB and registration fees by the State Transport Office are exempt under Notification No.12/2017; penalties for unaccounted RBM are taxable as services and covered by reverse charge; and ITC is available on GST paid for earth moving machinery used for transportation of goods.

Export of services - place of supply - zero rated supply - scope of advance ruling under Section 97(2) of the CGST Act, 2017 - jurisdiction of Advance Ruling Authority

Export of services - place of supply - scope of advance ruling under Section 97(2) of the CGST Act, 2017 - jurisdiction of Advance Ruling Authority - Whether the Advance Ruling Authority has jurisdiction to determine if the consideration received for conducting tests is an export of service (i.e., whether the place of supply is outside India) and thereby answer the applicant's question on tax liability. - HELD THAT: - The Authority examined the statutory scope of matters that an Advance Ruling Authority may decide under Section 97(2) of the CGST Act, 2017, which is limited to specified topics such as classification, applicability of notifications, time and value of supply, admissibility of input tax credit, determination of liability to pay tax, registration, and whether an activity amounts to a supply. Determination of the place of supply is a distinct statutory exercise governed by the provisions of the IGST Act, including the definition of export of services and the rules in Section 13. Since the question posed by the applicant necessarily required a determination of the place of supply (a prerequisite for treating a service as an export of services and hence a zero rated supply), the matter fell outside the enumerated subjects which the Authority is empowered to decide. The Authority therefore concluded that it was without jurisdiction to adjudicate the submitted question and could not proceed to decide the merits.

Application rejected for lack of jurisdiction to rule on the place of supply/export characterisation; matter not decided on merits.

Final Conclusion: The application for advance ruling is rejected under sub-section (2) of Section 98 of the CGST Act, 2017 and the corresponding provision of the GGST Act, 2017 for want of jurisdiction, because the question requires determination of the place of supply/export characterisation which is not within the matters enumerated in Section 97(2).

Classification of goods under GST Tariff - Application of Customs Tariff interpretation rules to GST Tariff - Classification under heading 0505 - GST rate determination (CGST and SGST)

Classification of goods under GST Tariff - Classification under heading 0505 - Application of Customs Tariff interpretation rules to GST Tariff - GST rate determination (CGST and SGST) - The HSN code and applicable GST rate for 'Chicken intestine waste'. - HELD THAT: - The Authority examined the nature of the goods collected and processed by the applicant and applied the rules of interpretation of the Customs Tariff Act, 1975 which are made applicable to the GST Tariff. Having regard to the scope of heading 0505 of the Customs Tariff, which the Authority records as covering 'Skins and other parts of birds... and powder and waste of feathers or parts of feathers', the Authority held that 'Chicken intestine waste' falls within heading 0505 of the GST Tariff. Consequent to this classification, the appropriate tax rate under GST was determined in accordance with the tariff entry applicable to that heading.

HSN Code 0505 applies to 'Chicken intestine waste', and the applicable tax is 2.5% CGST + 2.5% SGST.

Final Conclusion: Advance Ruling: 'Chicken intestine waste' is classifiable under HSN 0505 and taxed at 2.5% CGST and 2.5% SGST; the applicant's request is disposed accordingly.

Advance ruling - HSN classification of goods - recipient's standing before Advance Ruling Authority - scope of decision under advance ruling mechanism

Advance ruling - recipient's standing before Advance Ruling Authority - HSN classification of goods - Whether the applicant, being a recipient of sacks and bags, is entitled to seek an advance ruling on the classification of those goods. - HELD THAT: - The Authority examined the statutory definition and scope of an "advance ruling" and observed that such a ruling must be directly related to the applicant in respect of a supply of goods or services undertaken or proposed to be undertaken by the applicant. The applicant in the present matter is only a recipient of the sacks and bags and not the supplier or manufacturer; the classification dispute raised pertains to the supplier's classification of the product under different HSN entries. Because the question relates to the supplier's classification and the applicant does not fall within the class of persons entitled to seek an advance ruling in relation to supplies made by others, the Authority held that the advance ruling mechanism is not applicable to the applicant's request. [Paras 6, 8]

Application for advance ruling is not maintainable as the applicant is a recipient and not the supplier or manufacturer of the goods whose classification is sought to be determined.

Final Conclusion: The Authority declined to decide the classification dispute because the applicant, being only the recipient of the sacks and bags and not the supplier or manufacturer, is not entitled to seek an advance ruling on that matter.

Classification of wood waste and scrap - Distinction between wood in the rough and wood waste - Applicable GST rate on wood waste supplied for pulping

Classification of wood waste and scrap - Wood in the rough - GST rate - Logs or heaps of wood which cannot be used as timber, electric or telephone poles, , match splints, veneer or woodware fall within wood waste and scrap and not wood in the rough. - HELD THAT: - The Authority examined the rate notification entry for Heading 4401 and the corresponding tariff headings and explanatory notes. It noted that wood waste and scrap covers material not usable as timber and specifically includes bark and similar waste used, inter alia, for pulping, whereas Heading 4403 covers wood in the rough such as timber for sawing, poles, props and logs usable for specified wood products. On that basis, wood logs or heaps which are not capable of use as timber, poles, veneer, match manufacture or woodware are classifiable as wood waste and scrap covered by Entry 198 of Schedule I, attracting 2.5% CGST and 2.5% SGST. [Paras 11, 12]

Such goods are classifiable under wood waste and scrap under Heading 4401 and taxable at 2.5% CGST and 2.5% SGST.

Final Conclusion: The Authority ruled that wood logs or heaps not usable as timber or for other specified commercial wood uses are classifiable as wood waste and scrap under Heading 4401. Such supplies are covered by Entry 198 of Schedule I and attract GST at 5% in aggregate.

Exemption under Notification No. 12/2017-Central Tax (Rate) as amended by Notification No. 32/2017 - upfront amount payable in respect of service by way of granting of long term lease of thirty years or more - industrial plots or plots for development of infrastructure - ownership threshold of fifty per cent or more by Central/State/Union territory - GST exemption on premium/salami/development charges subject to fulfilment of notification conditions

Upfront amount payable in respect of service by way of granting of long term lease of thirty years or more - exemption under Notification No. 12/2017-Central Tax (Rate) as amended by Notification No. 32/2017 - GST applicability on upfront amount (premium/salami) payable for grant of long term lease of thirty years or more for plots (including those catering to public health care) where the lessor meets the ownership criterion - HELD THAT: - The advance ruling examined Sl. No. 41 of Notification No. 12/2017 Central Tax (Rate), dated 28 6 2017, as amended by Notification No. 32/2017. A plain reading of the notification shows that an upfront amount described as premium, salami, cost, price, development charges or by any other name, paid for the service of granting a long term lease of thirty years or more of industrial plots or plots for development of infrastructure for financial business, is exempt from GST provided the lessor is a State Government Industrial Development Corporation/Undertaking or any other entity with fifty per cent or more ownership by the Central Government, State Government or Union territory, and all other conditions of the notification are satisfied. Applying this statutory text to the applicant's request, the Authority concluded that the applicant's contention is correct and the upfront amount falls within the exemption when the notification's conditions are fulfilled. [Paras 5, 7]

GST is not applicable on the upfront amount where the conditions of Sl. No. 41 of Notification No. 12/2017, as amended by Notification No. 32/2017, are satisfied.

Final Conclusion: The Authority rules that the upfront amount (premium/salami) payable for grant of a long term lease of thirty years or more is exempt from GST if all conditions specified in Sl. No. 41 of Notification No. 12/2017 Central Tax (Rate), as amended by Notification No. 32/2017, are met.

Summary order. The Special Leave Petition is dismissed.

Summary order. Special Leave Petition dismissed; delay condoned; pending application disposed of.

Summary order. Delay condoned; Special Leave Petition dismissed; question of law left open; pending application disposed of.

Summary order. Delay condoned and Special Leave Petition dismissed; the question of law is left open.

Summary order. Special Leave Petition dismissed and delay condoned.

Reopening of assessment - failure to disclose fully and truly all material facts - first proviso to Section 147 - time limit for notice under Section 149 - escapement of income - tangible/new material - change of opinion - treating original return as return in response to notice under section 148

First proviso to Section 147 - time limit for notice under Section 149 - escapement of income - Validity of reopening the assessment beyond four years under the first proviso to Section 147 and limitation under Section 149 for assessment year 2009-10 - HELD THAT: - The Court examined whether the impugned notice dated 15.03.2016 (issued within six years from the end of AY 2009-10) was barred by limitation. The Court noted that where escapement of income exceeds the statutory threshold, reopening within six years is permissible under Section 149(1)(b). Because the end of AY 2009-10 was 31.03.2010, the impugned notice issued on 15.03.2016 fell within six years and therefore was not time-barred. The Court applied the proviso to Section 147 and Section 149(1)(b) to hold that issuance of notice within six years was legally sustainable in the facts of the case. [Paras 8, 11, 12]

Impugned reopening is not barred by limitation and is within the period permitted by Section 149(1)(b).

Failure to disclose fully and truly all material facts - tangible/new material - reopening of assessment - treating original return as return in response to notice under section 148 - Whether the advance of Rs. 2.75 crores to S. Nagarajan constituted a failure to disclose fully and truly all material facts in the original return such as to justify reopening after four years - HELD THAT: - The Court found that the advance to S. Nagarajan was not reflected in the original return filed on 30.07.2009. Although that transaction was later placed before the Assessing Officer during earlier reassessment proceedings (initiated for a different issue relating to cash deposits), the assessee did not file a fresh return in response to the first Section 148 notice but sought to treat the original return as the return in response to the notice. The Court held that materials produced during the earlier reassessment, if not part of the original return and not relatable to the issue for which the earlier reopening was undertaken, amount to new tangible material for the Assessing Officer. Thus, non-disclosure in the original return of the subject transaction amounted to failure to disclose fully and truly all material facts, permitting reopening beyond four years under the proviso to Section 147. [Paras 7, 9, 10]

The advance was not disclosed in the original return and its subsequent production during an earlier reassessment (on a different issue) did not amount to full and true disclosure; therefore reopening after four years is permissible on this ground.

Change of opinion - reopening of assessment - Whether the impugned reopening amounted to an impermissible change of opinion by the Assessing Officer - HELD THAT: - The Court considered the contention that reopening was a mere change of opinion. It observed that the subject matter income (advance to Nagarajan) was never shown in the original return, and hence the Assessing Officer is not taking a different view on an already disclosed issue but is acting on a transaction that was not part of the original return. Given that the transaction was new to the original assessment, the Court found the change-of-opinion principle inapplicable and held that the reopening was not a disguised change of opinion. [Paras 10, 15]

Reopening does not constitute a change of opinion as the subject transaction was not disclosed in the original return.

Reopening of assessment - Sufficiency of the notice under Section 148 when the notice did not expressly aver failure to disclose fully and truly all material facts - HELD THAT: - The Court rejected the contention that the Section 148 notice was bad for not specifically alleging failure to disclose fully and truly all material facts. It relied on the fact that the reasons furnished for reopening explicitly stated failure to disclose fully and truly all material details necessary for assessment, and therefore the challenge to the notice on that ground was unsustainable. [Paras 13]

Notice and the reasons furnished were sufficient; absence of an express averment in the notice itself did not invalidate the reopening where reasons recorded alleged non-disclosure.

Final Conclusion: The writ petition challenging the respondent's rejection of objections to reopening the assessment for AY 2009-10 was dismissed. The Court held that the impugned reopening was within the statutory limitation, was supported by the assessee's failure to disclose material facts in the original return, did not amount to change of opinion, and the notice with reasons was sufficient; petitioner may furnish relevant details for completion of assessment.

Cancellation of registration under section 12AA(3) - distinction between breach of section 11/13 and grounds for cancellation under section 12AA(3) - scope of proviso to the definition of "charitable purpose" in section 2(15) - self financed educational institution and retention of surplus not negating charitable character

Cancellation of registration under section 12AA(3) - distinction between breach of section 11/13 and grounds for cancellation under section 12AA(3) - Registration under section 12AA(3) can be cancelled only if the Commissioner is satisfied that the activities of the trust are not genuine or are not being carried out in accordance with the objects of the trust; mere breach of section 11(1)(d) or section 13(1)(c) does not by itself constitute a ground for cancellation under section 12AA(3). - HELD THAT: - Sub section (3) of section 12AA authorises cancellation only where the Commissioner is satisfied that the activities of the trust are not genuine or are not being carried out in accordance with its objects. A mere contravention of the provisions in section 11(1)(d) or section 13(1)(c) does not automatically bring the case within either of these two specific satisfaction based grounds. The Tribunal examined the record and correctly concluded that the allegations concerning violations of section 11(1)(d) or section 13(1)(c) did not demonstrate that the trust's activities were not genuine or that they were not being carried out in accordance with its objects, and therefore cancellation under section 12AA(3) was not warranted. [Paras 15, 17, 19]

The Tribunal was correct in holding that the Commissioner could not cancel the registration on the basis of alleged breaches of section 11(1)(d) or section 13(1)(c) alone.

Scope of proviso to the definition of "charitable purpose" in section 2(15) - The proviso to section 2(15) (introduced w.e.f. 01.04.2009) excludes from 'charitable purpose' only those activities that amount to advancement of any other object of general public utility when carried on in the nature of trade, commerce or business for fee or other consideration; it does not apply to activities which are expressly enumerated in section 2(15) such as education. - HELD THAT: - Section 2(15) lists various categories of charitable purpose including education and the advancement of any other object of general public utility. The proviso added by the Finance Act, 2010 restricts the 'advancement of any other object of general public utility' by excluding from charitable purpose those activities involving trade, commerce or business for fee or consideration. The proviso, however, was not enacted to attach the same restriction to the other specifically enumerated heads such as education. Consequently, the proviso does not operate to convert bona fide educational activities into non charitable activities merely because they involve fees or are self financed. [Paras 20, 21]

The amended proviso to section 2(15) does not apply to the educational activities of the trust; revenue's reliance on that proviso is misplaced.

Self financed educational institution and retention of surplus not negating charitable character - Transfers to a trustee in the circumstances and advance payments for land acquisition, together with receipt of fees from students, did not establish that the trust was conducting activities on commercial lines or diverting funds such as to warrant cancellation of registration. - HELD THAT: - The Tribunal found on the record that the trust had been engaged in educational activities for decades and that payments described as advances for land were reflected in the trust's accounts as such; the managing trustee did not retain title or benefit. Collection of fees by a self financed educational institution and the retention of a reasonable surplus, so long as it is utilized for the object's trust, does not convert the institution into a commercial enterprise. The Commissioner's extrapolation that payments to trustees and student receipts evidenced commercial profiteering or diversion of funds was not supported by the material and was thereby incorrect. [Paras 19]

The Tribunal correctly concluded that the material does not establish that the trust's activities were commercial or that funds were diverted, and cancellation was therefore unjustified.

Final Conclusion: All substantial questions of law raised by the Revenue are answered against it; the Tribunal's decision upholding the trust's registration is affirmed and the Tax Appeal is dismissed.

Special audit - power to direct accounts to be audited under Section 142(2A) - exercise of discretionary power in the interest of revenue - assessment pursuant to notice under Section 148 - quashing of impugned administrative approval

Special audit - power to direct accounts to be audited under Section 142(2A) - exercise of discretionary power in the interest of revenue - quashing of impugned administrative approval - Validity and propriety of the approval and notice directing a special audit under Section 142(2A) in the facts of this case - HELD THAT: - The Court examined the exercise of power to direct a special audit in the particular factual matrix where the petitioner had already undergone statutory and company audits, a special audit report by PWC was on record, and assessment proceedings under Section 148 were pending. Having invited submissions from both sides and in view of the fact that the material sought to be covered by the special audit was already available to the Assessing Officer (including the PWC report) and the assessment process provided an opportunity to the petitioner to raise objections, the Court concluded that directing a fresh special audit would serve no useful purpose and would only delay pending proceedings. In these circumstances, the Court quashed the impugned notice and the administrative approval for the special audit and declined to permit its further implementation. [Paras 15, 16]

Impugned notice and approval for special audit quashed; special audit need not be undertaken in the peculiar facts of this case.

Assessment pursuant to notice under Section 148 - return filed under protest - Procedure to be followed in the ongoing assessment under Section 148 when the Assessing Officer intends to rely on the PWC report or other materials said to justify a special audit - HELD THAT: - The Court directed that, in lieu of ordering a special audit, the Assessing Officer shall proceed with the assessment arising from the return filed under protest and, if the Assessing Officer proposes to rely on the PWC report or other materials, the petitioner shall be permitted to raise all contentions in relation to those materials during the assessment proceedings. After hearing the petitioner on such contentions, the Assessing Officer shall pass orders in accordance with law. The Court framed this procedural course to avoid delay and to ensure that the petitioner's rights to raise objections are preserved within the statutory assessment process. [Paras 15]

Assessing Officer to allow petitioner to raise objections during the assessment under Section 148 and thereafter pass orders in accordance with law.

Final Conclusion: Writ petitions disposed; impugned notice and approval for a special audit quashed, and assessment to proceed under Section 148 with liberty to the petitioner to raise objections to the PWC report and other materials, after which the Assessing Officer shall pass orders in accordance with law; no order as to costs.

Speaking order - non-application of mind - directions by Dispute Resolution Panel under Section 144C(5) - discharge of duties under Section 144C(6) and (7) - requirement of apparent reasons on the face of the order - remand for fresh consideration

Speaking order - non-application of mind - discharge of duties under Section 144C(6) and (7) - requirement of apparent reasons on the face of the order - remand for fresh consideration - Validity of the Dispute Resolution Panel's order confirming the Transfer Pricing Officer's findings where the DRP recorded agreement without independent discussion or reasons. - HELD THAT: - The court concluded that Section 144C requires the Dispute Resolution Panel to consider specified materials (including the draft order, the assessee's objections and evidence, reports of tax authorities, and any enquiry the Panel makes) before issuing directions under Section 144C(5). That consideration must be apparent from the DRP's order by way of discussion of facts and independent findings. In the present case the DRP reproduced the objections and portions of the TPO's order but disposed of each objection with a one-line statement of agreement with the TPO. Such mechanical endorsement, lacking independent reasoning or discussion, amounts to a cryptic order and demonstrates non-application of mind. Consequently the DRP did not fulfil the procedural and statutory duties envisaged by Sections 144C(6) and (7), and its directions cannot stand without a speaking order showing how the objections were considered and why they were rejected. The court therefore set aside the DRP's order and remitted the matter to the DRP to decide the objections on merits with reasons and independent findings, to enable the Assessing Officer to pass consequential assessment. [Paras 7, 8, 9, 10]

The DRP's order is set aside as cryptic and passed with non-application of mind; the matter is remitted to the DRP for fresh consideration and a reasoned speaking order.

Final Conclusion: Both writ petitions allowed; the impugned DRP order and the consequential assessment order are set aside and the matter is remitted to the Dispute Resolution Panel to decide the objections on merits with independent reasons and findings within eight weeks.

Exemption for allowances wholly, necessarily and exclusively incurred in the performance of duties - allowance as reimbursement and not income - prescribed allowances under Rule 2BB - employer's commercial decision in fixing lump sum/reimbursement allowances - TDS liability of the deductor vis a vis refund to individual assessee - application of Section 89 for spreading relief

Exemption for allowances wholly, necessarily and exclusively incurred in the performance of duties - prescribed allowances under Rule 2BB - allowance as reimbursement and not income - Conveyance allowance, additional conveyance allowance and reimbursements paid to LIC Development Officers were not to be treated as income to the extent they met expenses wholly, necessarily and exclusively incurred in performance of duties and fell within the ambit of exemptions envisaged by Section 10(14)(i) read with Rule 2BB. - HELD THAT: - The Court examined the nature of Development Officers' duties, the terms of employment and LIC circulars and held that extensive travel and field work are integral to the role so that payments characterized as fixed conveyance allowance, additional conveyance allowance and specified reimbursements may operate as reimbursements, not income, if actually incurred for performance of duties. The Court rejected the DCIT's stereotyped comparison with the chart under clause (ii) and its mechanical treatment as income, observing that an employer's decision to pay by verified reimbursement or by a commercially devised lump sum formula is a business decision and cannot be equated with allowances prescribed for government employees. Reliance was placed on the reasoning of the Rajasthan High Court in Life Insurance Corporation of India (reported) which concluded that such allowances, when shown to be spent wholly, necessarily and exclusively in performance of duties, are exempt under Section 10(14) and Rule 2BB; the ultimate burden to claim and prove exemption remains on the individual assessee. The Court therefore held that the DCIT's approach was not warranted and that the petitioners are entitled to have the permissible allowances excluded from income subject to individual proof and the limits/instructions applicable from time to time. [Paras 11, 12]

Allow exemption treatment for the specified conveyance and reimbursement items to the extent they satisfy the test of being wholly, necessarily and exclusively incurred in performance of duties and fall within Rule 2BB; relief to be worked out on individual facts.

TDS liability of the deductor vis a vis refund to individual assessee - employer's commercial decision in fixing lump sum/reimbursement allowances - Finality of the LIC's unsuccessful appeal against the Assessing Authority's order does not preclude individual employees/assessees from claiming relief in respect of amounts wrongly subjected to TDS where those amounts are found to be exempt under Section 10(14) and Rule 2BB. - HELD THAT: - The Court held that the fact that the deductor (LIC) carried the matter in appeal and lost does not prevent individual employees from obtaining relief where TDS was deducted on amounts that are properly exempt. The deduction having been made by the employer and adjusted in assessments does not bar employees from seeking correction and refund to the extent permissible; the deduction by the employer and its appeal outcome cannot be allowed to 'come back to haunt' employees. The Rajasthan High Court's conclusion that entitlement to exemption and the onus to prove it rests on the employee was endorsed, and the Court directed that adjustments and refunds be worked out in accordance with individual facts. [Paras 13]

Rejection of LIC's appeal does not bind individual employees; employees are entitled to relief and appropriate working out of refunds/adjustments.

TDS liability of the deductor vis a vis refund to individual assessee - application of Section 89 for spreading relief - Administrative and consequential directions: Assessing Officers are to facilitate reversal/working out of TDS deductions in respect of the specified allowances; LIC must cooperate in computation and reimburse amounts withheld in fixed deposits; TDS amounts may be afforded benefit of spread under Section 89 as appropriate. - HELD THAT: - In implementation of the legal conclusions, the Court directed the Assessing Officers (DCIT and concerned AOs) to facilitate computation and reversal of TDS in light of LIC circulars (notably the circular of 18.03.1991) concerning reimbursement of fixed conveyance allowance, additional conveyance allowance and expenses under the reimbursement scheme. The LIC was ordered to cooperate in working out amounts so that appropriate orders for refund/adjustment may be made by AOs. Amounts withheld by LIC and retained in fixed deposits are to be reimbursed to employees in accordance with AO orders, and where applicable the benefit of spreading under Section 89 shall be given in relation to such reimbursements. [Paras 14, 15, 16]

Assessing Officers to work out and implement reversal/adjustments; LIC to cooperate and reimburse amounts held; TDS impact to be adjusted, permitting spread under Section 89 where applicable.

Final Conclusion: Writ petitions allowed; petitioners entitled to exclusion of specified conveyance and reimbursement amounts from income to the extent they satisfy the statutory test under Section 10(14)(i) read with Rule 2BB, Assessing Officers directed to effect reversal/working out of TDS, LIC to cooperate and reimburse withheld amounts, and TDS consequences to be addressed including spread under Section 89 where applicable.

Reopening of assessment - reason to believe - change of opinion - failure to disclose fully and truly material facts - deemed dividend under Section 2(22)(e) - computation of deemed dividend year-wise - adjustment of accumulated profits for prior year deemed dividend

Reopening of assessment - reason to believe - change of opinion - failure to disclose fully and truly material facts - Validity of reopening the assessment for AY 1998-99 under Section 147 in light of alleged change of opinion and non-disclosure of material facts - HELD THAT: - The Court examined whether the Assessing Officer had 'reason to believe' that income had escaped assessment or whether the reopening amounted to a mere change of opinion. The factual findings of the Assessing Officer and the CIT(A) establish that the assessee did not furnish vital particulars at the time of original scrutiny assessment - notably the partners' shareholdings in Pallava Granites Industries (India) Ltd. and the target company's accumulated profits - and that detailed information which triggered the reopening was received only by letter dated 28.2.2005. The CIT(A) recorded that the returns and tax audit report filed at the time of assessment lacked the necessary particulars and that the Assessing Officer obtained requisite approval before issuing the notice. The Tribunal independently reviewed these facts and affirmed that there was no prior material before the Assessing Officer that would have led him to examine applicability of Section 2(22)(e). Given the absence of full and true disclosure of material facts at the time of original assessment, the Court held that reopening was founded on tangible new information giving rise to a reason to believe, and was not simply a change of opinion. [Paras 15, 16, 20, 21, 22]

Reopening of assessment for AY 1998-99 was valid; the action was not a mere change of opinion and is sustained.

Deemed dividend under Section 2(22)(e) - computation of deemed dividend year-wise - adjustment of accumulated profits for prior year deemed dividend - Whether advances received from the company constituted 'deemed dividend' for AYs 1998-99 and 1999-2000 and whether deemed dividend for an earlier year must be set off against accumulated profits when computing deemed dividend in a subsequent year - HELD THAT: - On the facts, the Assessing Officer and the authorities below concluded that advances were not bona fide business transactions supported by implemented agreements and that the amounts received were taxable as deemed dividend under Section 2(22)(e) to the extent of the lending company's accumulated profits. The CIT(A) held that Explanation (2) to Section 2(22)(e) does not provide for setting off amounts previously assessed as deemed dividend against accumulated profits of a later year and therefore the provision must be applied year by year; accordingly, for AY 1998-99 the advances of that year were held to be deemed dividend to the extent of accumulated profits then available. The Tribunal agreed with the authorities for AY 1998-99 and further directed that for AY 1999-2000 the deemed dividend be computed by limiting it to the accumulated profits available after adjusting the deemed dividend attributable to AY 1998-99, following the approach in G. Narasimhan and related precedents as applied to the facts. The High Court affirmed the Tribunal's determinations and its direction for computation in AY 1999-2000. [Paras 31, 33, 34, 35]

Findings that the advances are taxable as deemed dividend for AY 1998-99 are sustained; for AY 1999-2000 the deemed dividend is to be computed with regard to accumulated profits remaining after adjustment for the prior year's deemed dividend, as directed by the Tribunal, and these conclusions are upheld.

Final Conclusion: The appeals are dismissed. The reopening of assessment for AY 1998-99 was valid because material facts were not fully and truly disclosed; the assessments treating the advances as deemed dividend under Section 2(22)(e) were upheld, and the Tribunal's direction on year-wise computation and adjustment for AY 1999-2000 is affirmed.

Adjustment of refund against outstanding demand under section 245 of the Income-tax Act - proof of service of notice of demand as prerequisite for adjustment - quashing of administrative communication for lack of procedural compliance - entitlement to refund with interest where no lawful adjustment is permissible - judicial imposition of costs for departmental lapses and disciplinary noting of officers - duty of revenue officials to verify statutory and procedural prerequisites before taking coercive steps

Proof of service of notice of demand as prerequisite for adjustment - quashing of administrative communication for lack of procedural compliance - Impugned communication purporting to adjust petitioner's refund against departmental demands was quashed because there was no proof that the notices of demand were served on the petitioner and the departmental records did not establish knowledge of the demand. - HELD THAT: - The Court examined the impugned communication and the departmental records and found that although demands for certain assessment years were reflected in office records, there was no evidence of service of the notices of demand on the petitioner. The respondents conceded absence of proof of service in the official records and accepted that proof of service was necessary before any adjustment of refund could be validly effected. In these circumstances the communication seeking to effect adjustment without establishing lawful service was quashed. [Paras 4, 6, 7, 16]

Impugned communication dated 11th April, 2018 quashed for lack of proof of service and absence of procedural compliance for adjustment.

Entitlement to refund with interest where no lawful adjustment is permissible - adjustment of refund against outstanding demand under section 245 of the Income-tax Act - Petitioner entitled to the refund determined for Assessment Years 1993-1994 and 1995-1996 together with applicable interest, and the respondents were directed to grant the refund since no lawful basis existed to adjust it against demands. - HELD THAT: - Having found that the respondents could not justify adjustment of the refund in the absence of proof of service of demand notices and other procedural prerequisites, the Court held there was nothing in law to prevent the petitioner from claiming the refund. The respondents were directed to release the refund for the specified assessment years with applicable interest within three months from communication of the order. [Paras 16]

Refunds for AY 1993-1994 and AY 1995-1996 to be granted with interest within three months.

Judicial imposition of costs for departmental lapses and disciplinary noting of officers - duty of revenue officials to verify statutory and procedural prerequisites before taking coercive steps - Court imposed costs on the respondents for the departmental lapses that occasioned the litigation and directed that the costs be apportioned and recovered from the two officers, and that the superiors record the lapses in annual confidential reports and take appropriate disciplinary steps. - HELD THAT: - The Court observed systemic lapses in record-keeping, failure to produce proof of service, and lack of discipline in the department. To mark its displeasure and to deter recurrence, the Court quantified costs, ordered payment within four weeks, directed initial payment by the respondents with recovery from the two officers' salaries, and recorded that superiors should note the lapses in service records and initiate appropriate administrative action in accordance with law. [Paras 17, 19]

Costs of Rs. 1.5 Lakhs imposed on respondents, to be paid within four weeks and recovered from the two officers; superiors to note lapses and take appropriate administrative action.

Final Conclusion: Writ petition allowed: impugned communication quashed; refunds for AY 1993-1994 and 1995-1996 to be released with interest within three months; costs imposed on the respondents with directions for recovery from the concerned officers and for noting of lapses in their service records.

Levy of penalty under Section 158BFA(2) - Application of the Second Proviso to Section 158BFA for determination of penalty - Computation of undisclosed income based on seized materials and post search disclosures - Concurrent appreciation of facts by Assessing Officer, Commissioner (Appeals) and Tribunal

Levy of penalty under Section 158BFA(2) - Computation of undisclosed income based on seized materials and post search disclosures - Concurrent appreciation of facts by Assessing Officer, Commissioner (Appeals) and Tribunal - Confirmation of penalty under Section 158BFA(2) on the basis that undisclosed income for the block period was properly computed from seized materials and disclosures made after search. - HELD THAT: - The Assessing Officer recorded that the block assessment under Chapter XIVB had been finalised after considering seized materials, details furnished by the assessee and inquiries, and the assessment order contains full particulars. The record shows numerous hearings and abundant references in the assessment order demonstrating how undisclosed income was computed. The assessee's contention that computation rested solely on a voluntary letter was rejected on the factual basis that the determination was founded on materials available at the time of search and information furnished thereafter. The Commissioner (Appeals) independently examined the contention and held the computation proper; the Tribunal re examined the factual position, noted particulars of undisclosed income and confirmed the orders below. Given the concurrent findings of the three authorities that the undisclosed income was determined from seized documents and other materials, interference with the Tribunal's order was not warranted. [Paras 10, 11, 12, 13, 14]

Penalty under Section 158BFA(2) confirmed as the undisclosed income was properly computed from seized materials and post search disclosures; appeal dismissed.

Final Conclusion: The substantial question of law is answered against the assessee; the Tribunal's confirmation of penalty under Section 158BFA(2) is upheld and the appeal is dismissed.

Short term capital gains under Section 50 - transfer of depreciable assets - capital gains arising on sale of land as non-depreciable asset - treatment of share-sale loss as speculative loss - actual delivery and speculative transaction for income-tax purposes - set off of speculation loss against other capital gains

Short term capital gains under Section 50 - transfer of depreciable assets - capital gains arising on sale of land as non-depreciable asset - Whether the provisions of Section 50 apply to the sale of the property where land (a non-depreciable asset) formed part of the undertaking and the building had been demolished under the joint development agreement. - HELD THAT: - The Court found that the assessee consistently maintained that no depreciation was claimed on the land and that the building alone was described for depreciation purposes; further, the building had been demolished in terms of the joint development agreement. Applying the settled principle that Section 50 applies only to transfer of depreciable assets and that land is not depreciable, the Court relied on precedent which held that where the sale is effectively of the undertaking or of land (with the building having no value or demolished) it is not possible to bifurcate consideration so as to invoke Section 50. The Court held that the Tribunal and authorities below mis-construed the factual explanation and that on the facts (including demolition under the development agreement) Section 50 was not attracted. [Paras 15, 16, 17, 18, 21]

Substantial question of law No.1 answered in favour of the assessee: Section 50 does not apply and the gains are not short-term capital gains under that provision.

Treatment of share-sale loss as speculative loss - actual delivery and speculative transaction for income-tax purposes - set off of speculation loss against other capital gains - Whether the long term capital loss claimed on sale of shares could be accepted and set off, or was rightly treated as a speculative loss by the revenue authorities. - HELD THAT: - The Assessing Officer, as confirmed by the CIT(A) and the Tribunal, recorded that the assessee failed to produce verifiable contract-wise details, contract notes and that the depository participant name did not match the assessee. Reliance was placed on the statutory concept of 'actual delivery' and the established meaning of speculative transactions for income-tax purposes. In the absence of evidence proving genuine purchase and sale in the assessee's name and verifiable records, the authorities rightly characterised the transactions as speculative and disallowed set off except as permitted under the provisions governing speculative losses. [Paras 22, 23, 24, 25]

Substantial question of law No.2 answered in favour of the Revenue: the loss on sale of shares is to be treated as speculative and not allowable for set off as claimed.

Final Conclusion: The tax case appeal is partly allowed: Question No.1 is decided for the assessee (Section 50 not attracted on the facts); Question No.2 is decided for the Revenue (share-sale loss treated as speculative loss).

Penal interest/additional finance charges - interest on loans and advances - definition of interest under Section 2(7) of the Interest Tax Act - chargeability under the Interest Tax Act - distinction between discounts and loans/advances - narrow taxable event requirement under Interest Tax Act

Penal interest/additional finance charges - definition of interest under Section 2(7) of the Interest Tax Act - interest on loans and advances - distinction between discounts and loans/advances - chargeability under the Interest Tax Act - Additional finance charges/penal interest collected by the assessee are not exigible to tax under the Interest Tax Act as interest on loans and advances within the meaning of Section 2(7). - HELD THAT: - The Court accepted the appellant's contention in the light of the Supreme Court decision in State Bank of Patiala (supra) that the Interest Tax Act taxes a narrow event - interest arising directly "on" loans or advances. Amounts charged as additional discount/penal charges arise from default on discounted bills or delayed payments and are not synonymous with interest on loans or advances. The word "on" in Section 2(7) indicates a direct nexus with loans or advances, distinguishing the Interest Tax Act's scope from the broader definition of interest under the Income-tax law. Earlier contrary views were considered and, insofar as they conflicted with the Supreme Court's reasoning, rejected. Applying that principle, the Tribunal's conclusion that the additional finance charges fell within the chargeable interest under the Interest Tax Act was incorrect, and the Tribunal's order was set aside with restoration of the CIT(A)'s order in favour of the assessee. [Paras 11, 16, 17, 18, 19]

Substantial questions answered for the assessee; additional finance charges/penal interest not taxable as interest on loans and advances under Section 2(7) of the Interest Tax Act.

Final Conclusion: The appeal is allowed; the Tribunal's order is set aside and the decision restoring the CIT(A)'s order in favour of the assessee is affirmed - additional/penal finance charges do not fall within taxable "interest" under the Interest Tax Act for AY 1998-99.

Jurisdiction of Director General of Foreign Trade - limitations under Section 6(3) of the Foreign Trade (Development and Regulation) Act, 1992 - power to amend Foreign Trade Policy - distinction between amendment and clarification of trade policy - requirement to lay rules and Orders before Parliament under Section 19(3) - effect of non-publication in the Official Gazette

Jurisdiction of Director General of Foreign Trade - limitations under Section 6(3) of the Foreign Trade (Development and Regulation) Act, 1992 - effect of non-publication in the Official Gazette - Validity of a notification issued by the Director General of Foreign Trade purporting to exercise powers under Section 3 (or Section 5) of the Foreign Trade (Development and Regulation) Act, 1992. - HELD THAT: - Section 6(3) of the Act disallows the Central Government from empowering the Director General to exercise powers under Sections 3 and 5. An administrative Order of 24.3.1993 purporting to enable the Director General to authenticate Orders/Notifications must itself be an Order under Section 6(3) and published in the Official Gazette to have effect. No publication in the Official Gazette has been shown. Consequently, the Director General, on the facts of this case, had no jurisdiction to issue a notification claiming to be made under Section 3 or, alternatively, under Section 5. Even if the impugned instrument were read as an exercise of Section 5 powers, Section 6(3) prevents its issuance by the Director General in the absence of a valid enabling Order published in the Official Gazette.

The notification issued by the Director General of Foreign Trade purporting to exercise powers under Section 3 (or Section 5) is without jurisdiction and is quashed.

Power to amend Foreign Trade Policy - distinction between amendment and clarification of trade policy - Whether the impugned notification was a permissible clarification or an impermissible amendment of the Foreign Trade Policy by the Director General of Foreign Trade. - HELD THAT: - The power to amend the Import and Export (Foreign Trade) Policy is vested exclusively in the Central Government. Precedent establishes that the Director General may issue clarifications but does not possess power to amend the policy. The impugned notification effects a change in the policy rather than being merely clarificatory in nature and therefore cannot be validly issued by the Director General.

The impugned notification operates as an amendment to the Foreign Trade Policy which the Director General was not empowered to make; it is therefore invalid.

Requirement to lay rules and Orders before Parliament under Section 19(3) - Whether the impugned Order/notification was laid before Parliament in compliance with Section 19(3) of the Act of 1992 and the consequence of non-compliance. - HELD THAT: - Section 19(3) requires every rule and every Order made by the Central Government under the Act to be laid before each House of Parliament for the prescribed period. The impugned notification, insofar as it was said to be made under Section 3 (or Section 5 as contended by respondents), has not been shown to have been placed before Parliament under Section 19(3). Non-production of any material to demonstrate compliance renders the notification vulnerable to invalidation on this ground as well.

The impugned notification has not been shown to have been laid before Parliament as required by Section 19(3) and is therefore non est.

Final Conclusion: The impugned notification dated June 3, 2016 issued by the Director General of Foreign Trade is quashed on the grounds that the Director General lacked jurisdiction under Section 6(3) to issue Orders under Sections 3 or 5, the instrument represents an unauthorised amendment (not a mere clarification) of the Foreign Trade Policy, and it has not been shown to have been laid before Parliament as required by Section 19(3). Writ petition and connected matters are disposed of accordingly; no order as to costs.

Relaxation of export obligation - policy relaxation under paragraph 2.5 of the Foreign Trade Policy - supplies to SEZ units - assessed bill of export - ARE-1 as proof of export - Export Obligation Discharge Certificate - redemption of Advance Authorization

Relaxation of export obligation - assessed bill of export - ARE-1 as proof of export - Export Obligation Discharge Certificate - redemption of Advance Authorization - Impugned refusal to relax export obligations and consequent non-issuance of Export Obligation Discharge Certificates where petitioner failed to produce an assessed copy of bill of export for supplies made to SEZ units. - HELD THAT: - The Court held that refusals recorded in the minutes/orders dated 29th August, 2016 and 6th July, 2017 were based solely on the petitioner's inability to produce assessed copies of bills of export for supplies to SEZ units. Relying on this Court's earlier decisions in Larsen and Tubro Ltd. and Rochem Separation Systems India Pvt. Ltd., the Court accepted that failure to produce an assessed bill of export would not necessarily demonstrate failure to discharge the export obligation where supplies to SEZ units can be established by production of ARE-1 copies. In the present case the petitioner produced evidence showing supplies to SEZ units (M/s. Pipavav Shipyard Ltd. and M/s. Hansen Drives Ltd.), and the respondents were unable to demonstrate any distinguishing feature to take a different view. For these reasons the Court set aside the impugned minutes/orders and directed issuance of Export Obligation Discharge Certificates and redemption of the Advance Authorizations identified in the petition. [Paras 4, 5, 6, 7]

Impugned minutes/orders dated 29-08-2016 and 06-07-2017 set aside; respondent no.3 to issue Export Obligation Discharge Certificate and respondent no.4 to redeem the Advance Authorizations dated 21-01-2008, 09-04-2008, 09-05-2008 and 03-02-2009.

Final Conclusion: Petition allowed; orders declining relaxation solely for non-production of assessed bills of export set aside and directions issued for issuance of Export Obligation Discharge Certificate and redemption of the specified Advance Authorizations.

Re-export of goods - bank guarantee for customs liability - customs duty on redetermined value - interim relief permitting re-export - undertaking to furnish security - adjudication on misdeclaration and penalty under Section 112 of the Customs Act

Re-export of goods - interim relief permitting re-export - undertaking to furnish security - Petitioner permitted to reexport the impugned consignment subject to filing an undertaking to furnish the remaining bank guarantee if the Court does not accept the petitioner's contention - HELD THAT: - The Court, while issuing notice, granted ad interim relief by directing respondents to permit reexport of the goods on condition that the Director of the petitioner company files an undertaking by the date specified that, in the event the petitioner's contention is not accepted, the petitioner will furnish the remaining bank guarantee. The order preserves the respondents' right to proceed in adjudication and conditions the interim permission on the specified personal undertaking as security for eventual liability. [Paras 4]

Reexport allowed subject to filing of the specified undertaking by the Director; notice issued.

Bank guarantee for customs liability - customs duty on redetermined value - adjudication on misdeclaration and penalty under Section 112 of the Customs Act - Adequacy and computation of the bank guarantee vis-a -vis customs duty (including the claim on IGST) left for adjudication; respondents asked to justify demand for additional guarantee - HELD THAT: - The Court did not adjudicate the substantive controversy over the computation of customs duty on the redetermined value or the claim that IGST should not apply due to SEZ status. The Deputy Commissioner considered the petitioner's earlier bank guarantee insufficient and directed additional security. The petitioner raised the point that IGST ought not to have been included. The Court has issued notice and permitted reexport subject to an undertaking, while preserving the petitioner's liberty to defend its contentions in the pending adjudication. The substantive question of duty computation and related penalties under Section 112 remains to be decided in the adjudicatory proceedings. [Paras 2, 3, 4]

Computation and adequacy of the bank guarantee and the contention regarding IGST were not finally decided and are to be addressed in the adjudication; notice issued.

Final Conclusion: The High Court granted ad interim permission to reexport the consign ment subject to a director's undertaking to furnish the remaining bank guarantee if the petitioner's contentions are not accepted, issued notice returnable on the listed date, and left the substantive questions of customs duty computation (including the IGST contention) and any penalties for determination in the adjudicatory process.

Refund of Special Additional Duty of Customs - limitation for refund - application of one-year limitation period for refund - amendment to Notification No.102 of 2007 by Notification No.93 of 2008 - precedential effect of High Court decisions

Refund of Special Additional Duty of Customs - application of one-year limitation period for refund - amendment to Notification No.102 of 2007 by Notification No.93 of 2008 - Whether refund claims for Special Additional Duty made after the amendment by Notification No.93 of 2008 are barred if not filed within one year of payment. - HELD THAT: - The Tribunal had allowed the respondent's appeal by following the Delhi High Court decision in Sony India Pvt. Ltd., holding that the refund of Special Additional Duty was not hit by the limitation in the amended notification. This Court found the facts and law identical to those in Customs Appeal No. 23 of 2016 and applied its prior reasoning in DSM Sinochem Pharmaceuticals (allowing appeal on 4th October, 2017) and the decision in CMS Info Systems Ltd. The Court held that Sony India Pvt. Ltd. is inapplicable because it concerned imports prior to the amendment. Consequentially, after amendment by Notification No.93/2008 (dated 1st August, 2008) the statutory regime provides for a one-year limitation for refund of additional duty of customs measured from the date of payment, and a refund claim made beyond that period cannot be granted. [Paras 6, 7]

Tribunal's order set aside; refund claims for Special Additional Duty made after the amendment are barred unless made within one year of payment.

Precedential effect of High Court decisions - limitation for refund - Whether the decision in Sony India Pvt. Ltd. is a binding precedent for the present facts and whether the Tribunal's judgments are perverse for allowing demands from 2010 onwards. - HELD THAT: - The Court held that the Delhi High Court decision in Sony India Pvt. Ltd. does not apply to cases dealing with imports after the amendment effected by Notification No.93/2008. Having followed its prior decision in CMS Info Systems Ltd. and the reasoning in DSM Sinochem Pharmaceuticals, the Court concluded that the Tribunal's reliance on Sony was misplaced. The Court answered the substantial questions of law accordingly, finding in favour of the Revenue and against the respondent-assessee, and that the Tribunal's allowance of refund claims (including those pertaining to the period from 2010 onwards) was not sustainable. [Paras 5, 6, 7]

Sony India Pvt. Ltd. held not applicable to post-amendment cases; Tribunal's reliance on it reversed; appeals allowed in favour of the Revenue.

Final Conclusion: Appeal allowed; the Tribunal's order dated 15th June, 2015 is set aside and it is held that following the amendment by Notification No.93/2008 a refund claim for Special Additional Duty cannot be granted if not made within one year of payment; no order as to costs.

Quashing of criminal proceedings under Section 482 Cr.P.C. - independence of adjudication proceedings and criminal prosecution - effect of appellate setting aside with remand and subsequent de novo confirmation on maintainability of prosecution - availability of alternative remedy of revision and limitation on exercise of inherent jurisdiction - pre-deposit condition for interim relief and consequence of non-compliance

Effect of appellate setting aside with remand and subsequent de novo confirmation on maintainability of prosecution - pre-deposit condition for interim relief and consequence of non-compliance - Continuation of criminal prosecution after the Appellate Tribunal set aside the adjudicating authority's order and remanded the matter, whereupon the adjudicating authority passed a de novo order confirming confiscation and the Appellate Tribunal dismissed the subsequent appeal for non-compliance with pre-deposit direction. - HELD THAT: - The court found that although the Adjudicating Authority's original order was set aside and remanded by the Appellate Tribunal, the Adjudicating Authority thereafter issued a de novo adjudication confirming confiscation and imposing penalties. The petitioner's appeal was directed to be admitted subject to a pre-deposit condition which was modified by this Court, but the petitioner failed to comply and the Appellate Tribunal dismissed the appeal. On this factual matrix the earlier adjudication order stands restored by the subsequent de novo adjudication and dismissal of the appeal for non-compliance. Applying the principle that adjudication and criminal prosecution are independent, and having regard to the restoration of the confiscation order, there is no bar to continuation of the criminal prosecution against the petitioner. [Paras 7, 11]

Prosecution is maintainable and the petition to quash proceedings is not tenable on the ground of the earlier appellate setting aside and remand.

Independence of adjudication proceedings and criminal prosecution - Whether a decision in adjudication proceedings necessarily precludes criminal prosecution on the same facts. - HELD THAT: - Relying on the exposition of law in the cited Supreme Court authority, the court reiterated that adjudication proceedings and criminal prosecution are independent; a decision in adjudication is not a prerequisite for initiating or continuing criminal prosecution. Where exoneration in adjudication is on technical grounds, prosecution may continue; only exoneration on merits that establishes innocence ordinarily precludes criminal prosecution. Applying that principle to the present case, and given the subsequent de novo confirmation of confiscation, the independence principle does not operate to quash the prosecution. [Paras 12]

The independence principle does not bar continuation of the criminal prosecution in the facts of this case.

Availability of alternative remedy of revision and limitation on exercise of inherent jurisdiction - Whether the petitioner could invoke the inherent jurisdiction of this Court under Section 482 Cr.P.C. without first availing the statutory revisional remedy against the trial court's dismissal of his discharge petition under Section 245 Cr.P.C. - HELD THAT: - The court observed that the order dismissing the petition for discharge was not interlocutory but revisable, and no revision was filed by the petitioner. Citing the settled principle that inherent jurisdiction under Section 482 Cr.P.C. should not ordinarily be exercised where an alternative statutory remedy of appeal or revision is available, the court held that the petitioner was obliged to resort to the revisional remedy. Reliance on precedents establishing the limited scope of inherent powers led to the conclusion that this petition was not maintainable for that reason. [Paras 13, 18, 19]

Petition under Section 482 Cr.P.C. is not maintainable because the petitioner failed to avail the available revisional remedy against the dismissal of his discharge petition.

Final Conclusion: The petition under Section 482 Cr.P.C. is dismissed; the criminal proceedings against the petitioner may continue.

Customs Valuation Rule 5 - enhancement of assessable value - transaction value of identical goods - use of lowest contemporaneous transaction value - remand for redetermination

Customs Valuation Rule 5 - enhancement of assessable value - transaction value of identical goods - use of lowest contemporaneous transaction value - Validity of rejecting declared transaction value and determining assessable value by reference to contemporaneous import prices under Customs Valuation Rule 5, and the correct manner of selecting the contemporaneous price for enhancement. - HELD THAT: - The Tribunal found that the department had valid reasons to reject the declared value under section 14 as the declared price was substantially lower than contemporaneous prices of identical/similar goods and that substantial evidence supported application of Customs Valuation Rule 5 to determine value. Although the importer had earlier agreed to enhance the value and waived show cause and hearing, the Tribunal held that where multiple transaction values of identical goods exist, the lowest such value must be used for valuation in accordance with the principle endorsed by the Supreme Court in Paul Industries (India) Ltd. The department had taken an average (Rs. 220/- per kg) from a contemporaneous range, but the Tribunal concluded the lower side of the contemporaneous range (Rs. 180/- per kg) ought to have been adopted for enhancement. Consequently, the matter was remanded to the original adjudicating authority for redetermination of duty using the lowest contemporaneous transaction value. [Paras 5, 6, 7]

Application of Rule 5 upheld but selection of price for enhancement was incorrect; reassessment to be carried out using the lowest contemporaneous transaction value (Rs. 180/- per kg) and matter remanded to the original adjudicating authority.

Final Conclusion: Appeal allowed by way of remand: the determination of customs duty is set aside and the matter is remitted for recomputation adopting the lowest contemporaneous transaction value for the imported cooling pads.

Classification as second hand capital goods - ad hoc exemption for charitable imports - confiscation with option to redeem - valuation by Government authorised surveyor

Classification as second hand capital goods - ad hoc exemption for charitable imports - confiscation with option to redeem - valuation by Government authorised surveyor - Whether imposition of redemption fine and penalty on the appellant was warranted in respect of imported used clinical equipment donated to a charitable trust, where the goods were held to be second hand capital goods and an ad hoc exemption was subsequently granted by the Government of India. - HELD THAT: - The Tribunal found on the material on record that the imported items were used clinical equipments which fall within the category of capital goods under para 2.17 of the Exim Policy. The goods were unsolicited gifts donated for charitable use and their declared consolidated value was confirmed as fair and correct by an independent Government authorised surveyor; split up values of individual items were also found to be correct. Although the original adjudicating authority had confiscated the goods with an option to redeem on payment of a fine, and imposed a penalty on the appellant, the Commissioner(Appeals) heard the matter before the Government of India had decided the appellant's pending application for ad hoc exemption. The Government of India subsequently granted the ad hoc exemption (letter dated 24/02/2011), which is on record. In light of the classification of the goods as second hand capital goods, the charitable purpose of the import, the surveyor's valuation, and the subsequent grant of ad hoc exemption, the Tribunal held that continuation of confiscation derived redemption fine and the imposed penalty was not justified.

Imposition of redemption fine and penalty set aside; appeal allowed and consequential relief granted.

Final Conclusion: The Tribunal allowed the appeal, set aside the redemption fine and penalty imposed on the charitable trust in respect of the imported used clinical equipments, and granted consequential relief in view of the goods being second hand capital goods and the subsequent grant of ad hoc exemption by the Government of India.

Prejudicial to public interest - jurisdiction under Section 241(2) and reconstitution power under Section 242(1) of the Companies Act, 2013 - suspension and replacement of board of directors as interim relief - protecting financial stability of a systemically important entity

Prejudicial to public interest - jurisdiction under Section 241(2) and reconstitution power under Section 242(1) of the Companies Act, 2013 - Affairs of the respondent company were being conducted in a manner prejudicial to public interest and the Tribunal's jurisdiction under Chapter XVI was rightly invoked. - HELD THAT: - On the material placed before it - including the systemic role of the company as a core investment NBFC, evidence of severe liquidity mismatch, defaults on short-term borrowings and commercial paper, auditor's emphasis on material uncertainty as to going concern, and concerns recorded by the Department of Economic Affairs - the Tribunal concluded that the affairs of the company were being conducted in a manner prejudicial to public interest. In light of these findings and the systemic implications for financial stability, the Tribunal considered it judicious to invoke the remedial jurisdiction under Section 241(2) and the consequential powers under Section 242(1) of the Companies Act, 2013 to issue appropriate orders for the protection of the company and public interest.

Tribunal held that the affairs of the company were being conducted in a manner prejudicial to public interest and exercise of jurisdiction under Section 241(2) and Section 242(1) was warranted.

Suspension and replacement of board of directors as interim relief - protecting financial stability of a systemically important entity - Interim suspension of the existing board and constitution of a new board of six persons nominated by the Union of India was ordered, together with directions governing their immediate functioning. - HELD THAT: - As an interim measure justified by the Tribunal's finding on prejudicial conduct and public interest, the existing Board of Directors was suspended with immediate effect and six persons named by the Union of India were appointed to take over management. The newly constituted Board was directed to meet on or before 8 October 2018, to conduct business in accordance with the Memorandum and Articles of Association and the Companies Act, 2013, to select a Chairman from among themselves, and to report a roadmap to the Tribunal at the earliest and not later than the next hearing. The suspended directors were restrained from representing or exercising any powers as directors before any authority until further orders.

Interim prayer granted: present board suspended, six proposed directors appointed to take immediate charge, with directions as to conduct of business and reporting; suspended directors restrained from acting.

Final Conclusion: The Tribunal, finding mismanagement with systemic consequences and that the company's affairs were being conducted in a manner prejudicial to public interest, granted interim relief by suspending the existing board and appointing a six member board nominated by the Union of India to take immediate charge and report back to the Tribunal.

Power to direct investigation into affairs of a company - investigation under clause (b) of Section 213/Section 237 - business conducted with intent to defraud creditors - mismanagement, diversion and siphoning of funds - prima facie satisfaction to order investigation - maintainability of creditor's petition for investigation - delay and laches in filing petition - effect of SICA/BIFR proceedings and forum shopping

Maintainability of creditor's petition for investigation - power to direct investigation into affairs of a company - Petition filed by a creditor under Section 237(b) of the Companies Act, 1956 (pari materia to Section 213(b) of the Companies Act, 2013) is maintainable. - HELD THAT: - The Tribunal observed that Section 213 permits applications for investigation to be made by 'any other person' such as a creditor. The petition by the Central Bank of India seeking direction to the Central Government for appointment of an inspector is therefore maintainable. The Tribunal noted that the statutory scheme requires satisfaction that circumstances suggest fraud, misfeasance, mismanagement or non-disclosure as per clause (b), but the threshold for entertaining the petition is the Tribunal's prima facie satisfaction on the materials on record rather than an exhaustive objective determination at admission stage. [Paras 33, 34, 35, 36, 37]

Petition by the creditor is maintainable and the Tribunal may entertain an application under Section 213/237(b).

Delay and laches in filing petition - prima facie satisfaction to order investigation - Objection of inordinate delay/laches in filing the petition is rejected. - HELD THAT: - The Tribunal examined the filing date and the financial statements relied upon by the petitioner. The petition, filed on 20.07.2015, was within three years of the balance sheet for the financial year ending 31.03.2013, and therefore the objection based on delay and laches does not succeed. The Tribunal emphasised that the petitioner relied on scrutiny of balance sheets for the stated financial years, and the filing timeline fell within the period asserted in the petition. [Paras 40, 41]

Objection on grounds of delay/laches is without merit and rejected.

Effect of SICA/BIFR proceedings and forum shopping - maintainability of parallel proceedings - Objections based on Section 22 of SICA, pendency before BIFR and alleged forum shopping are rejected. - HELD THAT: - The Tribunal held that with repeal of SICA the prohibition under Section 22 is not applicable to the present case and any proceeding before BIFR has abated. It further observed that secured creditors may pursue remedies under various statutes (including recovery proceedings) and that instituting parallel or alternative proceedings does not automatically amount to impermissible forum shopping to defeat an investigation petition. In the facts, no bar was shown to maintain the instant petition. [Paras 30, 42, 43, 44, 45]

Objections based on SICA/BIFR and forum shopping are not tenable; they do not bar the petition.

Business conducted with intent to defraud creditors - mismanagement, diversion and siphoning of funds - prima facie satisfaction to order investigation - On the materials placed before it the Tribunal is prima facie satisfied that circumstances suggesting diversion of funds, mismanagement and possible intent to defraud creditors exist, warranting an inquiry by inspectors appointed by the Central Government. - HELD THAT: - The Tribunal reviewed allegations and materials including audited balance sheets for the stated financial years, evidence of substantial interest-free loans/advances to group companies, diversion of short-term funds to long-term assets, reduction in stocks without corresponding reduction in working capital limits, suspicious reciprocal sale-purchase transactions, and adverse audit comments (defaults in statutory compliances, non-functioning audit systems and non-filing of audited accounts). The Tribunal emphasized that it need only be satisfied on the basis of prima facie material that there are good grounds to order an investigation, not to reach a final objective conclusion. The aggregate of these materials permitted an adverse prima facie inference that the company's affairs may have been conducted to the detriment of creditors and that a deeper probe is necessary. [Paras 48, 49, 50, 51, 52]

There are sufficient prima facie grounds to direct the Central Government to appoint inspectors to investigate the affairs of the respondent company.

Final Conclusion: The petition is allowed: the Tribunal, being prima facie satisfied on the materials that the affairs of the respondent company merit deeper inquiry (including diversion of funds and mismanagement prejudicial to creditors), directed the Central Government to take steps to appoint inspectors to investigate the affairs of M/s. Surya Pharmaceutical Limited; objections on maintainability, delay and applicability of SICA/BIFR are rejected.

Rectification of register of members - Summary jurisdiction under Section 59 of the Companies Act, 2013 - Sufficient cause to enter a name in the register of members - Conversion of compulsory convertible debentures by election of the holder - Incorporation of contractual terms into the Articles of Association

Summary jurisdiction under Section 59 of the Companies Act, 2013 - Rectification of register of members - Sufficient cause to enter a name in the register of members - Whether the Tribunal has jurisdiction under Section 59 to decide all contentious questions raised and whether there is sufficient cause to enter the petitioner as a member in the register of Respondent No.2 - HELD THAT: - Section 59 confers a summary jurisdiction to examine whether a name has been entered or omitted from the register of members without sufficient cause; it does not permit adjudication of broad, contested questions of fact or contractual construction. Applying the principles in Ammonia Supplies (supra), the Tribunal may not try peripheral or substantial contentious issues that require detailed enquiry. The petition raised multiple substantial and disputed questions (validity of board resolution, interpretation of Investment Agreement and Articles, arbitration, estoppel, alleged oppression/mismanagement, rights to revoke election to convert CCDs), which cannot be resolved in summary proceedings under Section 59. However, Section 59 permits limited inquiry into whether there was sufficient cause to record the petitioner as a shareholder following conversion. On the material, the petitioner had initiated the conversion process (letter dated 05.09.2017), steps were taken by the debenture trustee to convene meetings and notices were issued, and the Articles/Investment Agreement granted the petitioner the election to convert CCDs on occurrence of defaults. Given these facts, there was sufficient cause to enter the petitioner in the register as a shareholder; but challenges to the validity of the board resolution and other collateral disputes fall outside the scope of Section 59 and require fuller forum(s) (e.g., Section 241, arbitration or appropriate proceedings). [Paras 110, 112, 113, 140, 145]

Tribunal lacks jurisdiction under Section 59 to decide the wide-ranging contentious issues; it may only examine whether there is sufficient cause to enter the petitioner as a shareholder, and on that limited inquiry held there was sufficient cause to record the petitioner as member.

Conversion of compulsory convertible debentures by election of the holder - Incorporation of contractual terms into the Articles of Association - Whether the conversion of 9,06,599 CCDs into equity in favour of the petitioner was in accordance with the Articles of Association and the Investment Agreement for purposes of rectification under Section 59 - HELD THAT: - The Investment Agreement and the Articles (Articles 65.8 and 77.4) incorporate the CCD terms and provide that conversion occurs at the election of the CCD holders and pursuant to a conversion notice; the petitioner had made the election and the conversion process was set in motion by notices and actions of the debenture trustee. Although multiple substantive disputes surround the conversion (including whether the petitioner later attempted to revoke its election, compliance with timelines, alleged misuse to circumvent statutory restrictions, and alleged misinterpretation of earlier tribunal orders), those are contested questions beyond the summary scope of Section 59. For the limited purpose of rectification inquiry, the Tribunal found that the conversion was not shown to be without sufficient cause and therefore the register could not be ordered to be rectified while the Board resolution remained unchallenged in a forum competent to try the substantive disputes. [Paras 123, 124, 129, 133, 140]

For the limited Section 59 inquiry, the conversion was sufficiently supported by the Articles and Investment Agreement and there is sufficient cause to have the petitioner recorded as shareholder; consequently the prayer for rectification (to remove the petitioner from the register) is not maintainable while the impugned board resolution stands and the substantive validity of that resolution remains to be determined in a proper forum.

Final Conclusion: The petition under Section 59 is dismissed. The Tribunal held that Section 59 confers only a limited, summary jurisdiction to determine whether there is sufficient cause to enter or omit a name in the register; it cannot adjudicate the broader contested questions about the validity of the board resolution, contractual interpretation, arbitration or alleged oppression. On the limited inquiry, there was sufficient cause to record the petitioner as a shareholder and the rectification relief sought could not be granted; the petitioner remains at liberty to pursue appropriate remedies (including under Section 241 or arbitration) for the substantive disputes.

Disqualification under Section 29A(c) attaches at the time of submission of the resolution plan - see-through / piercing the corporate veil for persons acting jointly or in concert - meaning of "control", "management" and "promoter" for Section 29A - scope of persons acting jointly or in concert (including SEBI Takeover Regulations deeming provisions) - proviso to Section 29A(c) - cure only by payment of all overdue amounts before submission of resolution plan - effect of foreign restrictions vis-a -vis Section 29A(f)/(i) - role and function of the resolution professional and Committee of Creditors under Section 30 - remand to Resolution Professional / Committee of Creditors for procedural compliance

Disqualification under Section 29A(c) attaches at the time of submission of the resolution plan - proviso to Section 29A(c) - cure only by payment of all overdue amounts before submission of resolution plan - Temporal point for application of Section 29A(c) and scope of the proviso to cure ineligibility - HELD THAT: - The Court held that the disqualification in Section 29A(c) attaches when a person 'submits a resolution plan' and not at an earlier procedural stage; the date of submission of the resolution plan is therefore the relevant time for determining eligibility under clause (c). The amendment in 2018 inserting the words "at the time of submission of the resolution plan" is clarificatory of this pre-existing correct interpretation. The ingredients of clause (c) are disjunctive: the person (or any person acting jointly/in concert with him) must (i) have an account, or (ii) have an account of a corporate debtor under his management or control, or (iii) be a promoter of such corporate debtor, whose account was classified as NPA for at least one year prior to the insolvency commencement date. The proviso permits removal of ineligibility only by actual payment of all overdue amounts with interest and charges before submission of the resolution plan; the Court refused to read into the proviso any commercial alternative that would allow payment after submission or contingent payment as part of an accepted plan. The Court emphasized that antecedent facts proximate to submission may be examined to determine whether transactions were arranged to avoid the proviso. [Paras 43, 44, 54, 55]

Section 29A(c) operates as on the date of submission of the resolution plan; the proviso is strictly complied with only by payment of all overdue amounts before submission, and the 2018 amendment is clarificatory.

See-through / piercing the corporate veil for persons acting jointly or in concert - meaning of "control", "management" and "promoter" for Section 29A - scope of persons acting jointly or in concert (including SEBI Takeover Regulations deeming provisions) - Scope of "persons acting jointly or in concert", and the meaning of "control", "management" and "promoter" for Section 29A - HELD THAT: - Section 29A is a see-through provision; the opening words and the Explanation concentrate on substantive (de facto) relationships so as to capture persons who in reality control, manage or act in concert with the resolution applicant. "Management" refers to de jure management (board/officers); "control" denotes positive, proactive control (de jure or de facto influence over management or policy decisions), not mere negative or blocking rights; and "promoter" may be de jure (named in prospectus/annual return) or de facto (having control or directing the board). The Court held that the definitions and the SEBI Takeover Regulations (Regulation 2(1)(q)) inform the concept of persons acting in concert; deeming presumptions in those regulations are relevant and rebuttable. Where a corporate vehicle is used as a platform to submit a resolution plan, the veil may be pierced to discover the real persons acting jointly or in concert, particularly where the corporate structure or contemporaneous transactions are reasonably proximate and arranged to avoid Section 29A. Persons who, on facts, act jointly or in concert with the applicant must satisfy Section 29A. [Paras 30, 35, 36, 46, 50]

The Court construes Section 29A to reach persons who, in substance, are promoters, in management or in positive control, and permits looking through corporate structures to identify persons acting jointly or in concert.

Effect of foreign restrictions vis-a -vis Section 29A(f)/(i) - Whether political or foreign sanctions correspond to SEBI prohibition for disqualification under Section 29A(f)/(i) - HELD THAT: - The Court held that disabilities abroad corresponding to SEBI prohibition on trading or accessing securities markets must correspond to regulatory prohibitions grounded in securities-market misconduct; political sanctions imposed by foreign authorities for geopolitical reasons do not, without more, constitute a "corresponding" disability under clause (i). In the facts, (a) EU and US sanctions imposed for geopolitical reasons did not amount to a foreign regulator prohibiting the bank from accessing securities markets for the kind of securities-market misconduct contemplated by Section 29A(f); and (b) the US CFTC consent/settlement order (cease-and-desist and a monetary penalty with certain transactional undertakings) did not equate to a prohibition from trading or accessing securities markets that would trigger Section 29A. Consequently, Crinium Bay / VTB were not held disqualified under Section 29A(f)/(i) on the basis of the foreign measures discussed. [Paras 101, 105, 106]

Foreign political sanctions do not automatically correspond to SEBI prohibition for Section 29A(f)/(i); on the facts the alleged foreign measures did not disqualify the entity under those clauses.

Role and function of the resolution professional and Committee of Creditors under Section 30 - remand to Resolution Professional / Committee of Creditors for procedural compliance - Procedural obligations of the Resolution Professional (RP) and Committee of Creditors (CoC) and the effect of failure to follow procedure - HELD THAT: - The Court explained that the RP's function is to examine and conduct due diligence to ensure resolution plans are complete and to present them to the CoC; the RP's assessment as to legal contraventions is prima facie and the RP is not the final adjudicator of eligibility. The CoC is the decision-making body to approve or reject plans within statutory parameters. Where the RP failed to place plans before the CoC along with his comments on eligibility (as required for Committee consideration and for affording applicants an opportunity in relation to Section 29A/Section 30), the Adjudicating Authority rightly found procedural infirmity and remanded the matter to the RP/CoC for reconsideration. The Court recognised the limited scope for interim judicial challenges to RP decisions at the pre-Committee stage but held that administrative/procedural non-compliance by the RP/CoC vitiates the process and may warrant remand for reconsideration. [Paras 27, 76, 77, 78]

RP must present all resolution plans to the CoC after due diligence; failure to follow prescribed procedure vitiates the process and justifies remand for reconsideration.

Final Conclusion: The Court interpreted Section 29A(c) to operate as on the date of submission of the resolution plan (the 2018 amendment is clarificatory); Section 29A is a see-through provision permitting piercing of corporate veils to identify persons acting jointly or in concert, and "control", "management" and "promoter" include positive de facto attributes as explained. Foreign political sanctions do not automatically correspond to SEBI prohibitions for disqualification under Section 29A(f)/(i). Procedural duties of the Resolution Professional and the Committee of Creditors must be observed; where procedure was deficient the matter was remanded. Applying these principles to the facts, both ArcelorMittal India and Numetal were found to be hit by Section 29A(c) on the material before the Court; however, in the exercise of its remedial discretion the Court afforded both applicants a limited opportunity to cure ineligibility by payment of the overdue NPA amounts within a specified period and permitted resubmission for consideration by the Committee of Creditors, failing which the corporate debtor will face liquidation.

Provisional attachment under Section 5(1) of the PMLA - show-cause notice and adjudication under Section 8(1) and Section 24 of the PMLA - maintainability of writ petitions at show-cause / provisional attachment stage - availability and exhaustion of statutory remedies before Adjudicating Authority and Appellate Tribunal - burden of proof and presumptions under Section 24 of the PMLA - retrospectivity / Article 20(1) and scheduled offences - separation of powers and limited judicial review of quasi administrative proceedings

Maintainability of writ petitions at show-cause / provisional attachment stage - availability and exhaustion of statutory remedies before Adjudicating Authority and Appellate Tribunal - separation of powers and limited judicial review of quasi administrative proceedings - Writ petitions challenging provisional attachment and show-cause notice at the initial stage are premature and not maintainable; petitioners must avail the statutory adjudicatory and appellate remedies under the PMLA. - HELD THAT: - The Court held that when a statutory scheme provides a self-contained mechanism of adjudication and appeal, interference by way of writ petition at the provisional attachment/show-cause stage is ordinarily impermissible. Mixed questions of fact and law involved in provisional attachment and adjudication under Chapter III of the PMLA must be examined by the Adjudicating Authority and, if necessary, the Appellate Tribunal; only in exceptional circumstances (lack of jurisdiction, mala fides, or breach of statutory procedure) will the High Court entertain writ relief. The initiation of proceedings under the PMLA is administrative in nature at the initial stage and the petitioners must present their sources and documents before the Adjudicating Authority under Section 8(1) and avail appeals under Section 26 and Section 42 as applicable. The Court emphasised institutional comity and separation of powers, and declined to reopen disputed factual inquiries that fall within the statutory process. [Paras 24, 61, 66, 69, 70]

Writ petitions dismissed as premature; petitioners directed to participate in the PMLA adjudication and exhaust statutory remedies.

Provisional attachment under Section 5(1) of the PMLA - show-cause notice and adjudication under Section 8(1) and Section 24 of the PMLA - burden of proof and presumptions under Section 24 of the PMLA - Provisional attachment and the show-cause notice were issued in accordance with the statutory scheme and do not, on their face, preclude the petitioners from discharging their burden before the Adjudicating Authority. - HELD THAT: - The Court observed that provisional attachment is an urgency mechanism to prevent disposal or transfer of property that may frustrate proceedings and that the show-cause notice follows the procedure contemplated by Chapter III. The legislative scheme places the onus on the person against whom proceedings are initiated to show that the property is not proceeds of crime; the show-cause notice therefore does not amount to prejudging the matter. The petitioners were afforded an opportunity to place documents and explanations before the Adjudicating Authority, which is better placed to adjudicate disputed factual veracity. The Court noted the authorities and principles that attachments must be supported by material and reasons to form a 'reason to believe', but reiterated that factual verification belongs to the statutory process. [Paras 15, 24, 25, 61, 64]

Show-cause notice and provisional attachment stand; petitioners must produce evidence and explanations before the Adjudicating Authority and pursue statutory remedies.

Retrospectivity / Article 20(1) and scheduled offences - proceeds of crime and inclusion of scheduled offences - Contentions that PMLA proceedings are invalid because the alleged predicate offences pre dated their inclusion as scheduled offences were not accepted at the interlocutory stage; such questions involve mixed issues of law and fact and require adjudication by competent authorities. - HELD THAT: - The Court reviewed conflicting authorities and noted that while retrospective penalisation is constitutionally impermissible in general, the question whether laundering occurred post-enactment or after inclusion of an offence in the Schedule is a mixed question requiring factual inquiry. Consequently, allegations of violation of Article 20(1) or that the case is non est in law were not grounds for quashing provisional proceedings at this stage. The Court emphasised that definitive resolution of retrospectivity issues must follow through the statutory adjudicatory process and, where appropriate, appellate review. [Paras 17, 18, 22, 61]

Retrospectivity and Article 20(1) challenges not sustained at interlocutory stage; to be examined in the statutory adjudication/appeal process.

Final Conclusion: The writ petitions challenging the provisional attachment and show-cause notice were dismissed as premature; the petitioners must present their explanations and supporting documents before the Adjudicating Authority under the PMLA and, if aggrieved, exhaust the statutory appellate remedies. No order as to costs.

Power of Appellate Tribunal to regulate its own procedure - substitution of property provisionally attached - second proviso to Section 5(1) of the PMLA - reasons to believe and urgency requirement - provisional attachment under the PMLA and mandatory compliance with first proviso - acceptance of alternative security pending adjudication

Power of Appellate Tribunal to regulate its own procedure - substitution of property provisionally attached - acceptance of alternative security pending adjudication - Tribunal's competence to permit substitution of an alternative property and to direct release of the provisionally attached property pending disposal of the appeal. - HELD THAT: - The Tribunal held that under the statutory power to regulate its own procedure the Appellate Tribunal possesses incidental and ancillary powers necessary to make effective the statutory grant, and that nothing in the PMLA expressly forbids the Tribunal from permitting substitution of property provisionally attached by the Enforcement Directorate. Applying that power in the facts of the case, and prima facie finding that the attached property was not purchased from proceeds of crime, the Tribunal exercised its discretion under Section 35(1) to direct respondent no.1 to accept the alternative land offered by the appellant and to release the provisionally attached Guindy property forthwith, subject to the respondent's right to point out any encumbrances on the offered land and without prejudice to the continuation of statutory proceedings. [Paras 9, 10, 11, 12, 35]

Prayer for substitution of alternative property allowed; respondent directed to accept alternative land and the provisional attachment modified to that extent pending final disposal of the appeal.

Second proviso to Section 5(1) of the PMLA - reasons to believe and urgency requirement - provisional attachment under the PMLA and mandatory compliance with first proviso - Whether the Enforcement Directorate complied with the mandatory conditions of the second proviso to Section 5(1) when passing the provisional attachment order is to be examined. - HELD THAT: - The Tribunal emphasised that the first proviso to Section 5(1) is mandatory (requiring a report under Section 173 Cr.P.C. or a complaint) and that the second proviso-permitting immediate attachment despite non-filing of such report-is conditional and must be invoked only when the record shows that non-attachment is likely to frustrate proceedings and the reasons to believe are recorded in writing on the basis of material. Noting that no report under Section 173 was filed when the provisional attachment was made and that the ED did not produce the requisite reasons to believe, the Tribunal reserved the question for re-examination at the hearing of the appeal, directed production of the trial record and the sealed reasons to believe, and indicated that non-compliance would render the provisional attachment (and consequent confirmation) vulnerable to being set aside. [Paras 23, 26, 31, 32, 33]

Compliance with the second proviso of Section 5(1) was not finally decided on merits and will be re-examined; Registry directed to obtain and place on record the reasons to believe and trial record for the Tribunal's consideration.

Final Conclusion: The Tribunal, relying on its power to regulate procedure, permitted substitution of the alternative land offered by the appellant and directed release of the provisionally attached Guindy property pending the appeal, while reserving and remanding for re-examination the question whether the ED complied with the conditional requirements of the second proviso to Section 5(1); the Registry was directed to produce the reasons to believe and trial record for that purpose.

Summary order. The appeal is dismissed and delay is condoned.

Voluntary Compliance Encouragement Scheme, 2013 (VCES) - bar on making declaration where a notice or order has been issued in respect of any period on any issue (Second Proviso to Section 106) - recovery of service tax under Section 73 - deposit of wrongly collected service tax under Section 73A - immunity from penalty and prosecution on payment under VCES

Bar on making declaration where a notice or order has been issued in respect of any period on any issue (Second Proviso to Section 106) - Voluntary Compliance Encouragement Scheme, 2013 (VCES) - immunity from penalty and prosecution on payment under VCES - Whether the petitioner could make a Declaration under VCES, 2013 for the period April 2012 to December 2012 while a dispute on the same issue for an earlier period was pending adjudication - HELD THAT: - The Court held that the Second Proviso to Section 106 of the VCES operates as a clear bar: where a notice or an order of determination has been issued in respect of any period on any issue, no declaration shall be made of tax dues on the same issue for any subsequent period. The proviso makes no distinction based on whether the tax is characterised as recoverable under Section 73 or as amounts required to be deposited under Section 73A. The purpose of VCES is to end litigation by affording immunity from penalty and prosecution in return for payment; allowing an assessee to keep a related lis alive for an earlier period while claiming VCES benefit for a later period would defeat the Scheme's objective and create multiplicity of litigation. Accordingly, the pendency of the assessee's appeal before the CESTAT in respect of an earlier period (October-2004 to March-2009) precludes acceptance of the Declaration for April 2012 to December 2012.

Declaration under VCES for April 2012 to December 2012 was rightly rejected because a dispute on the same issue for an earlier period was pending, and the Second Proviso to Section 106 therefore barred the declaration.

Recovery of service tax under Section 73 - deposit of wrongly collected service tax under Section 73A - Voluntary Compliance Encouragement Scheme, 2013 (VCES) - Whether the legal distinction between liabilities under Section 73 and amounts covered by Section 73A permits separate treatment for VCES purposes - HELD THAT: - The Court concluded there is no watertight compartmentalisation between Section 73 and Section 73A for purposes of the VCES. Section 73 deals with recovery of unpaid or short-paid service tax while Section 73A addresses amounts wrongly collected and required to be deposited; both are included within the Scheme's definition of 'tax dues'. The legislative insertion of Section 73A was to plug a loophole and prevent unjust enrichment, and the Scheme must be read to cover both kinds of liabilities so as to prevent assessees from segregating issues across periods to obtain immunity while keeping related litigation pending.

Distinction between Section 73 and Section 73A does not permit acceptance of a VCES declaration for a subsequent period if the same issue is the subject of pending proceedings for an earlier period; both provisions operate together for purposes of the Scheme.

Final Conclusion: Writ petition dismissed; the assessee's Declaration under VCES for April 2012 to December 2012 was validly rejected because a related dispute for an earlier period was pending, and the Second Proviso to Section 106 bars acceptance of such a declaration.

Vires of subordinate legislation - ultra vires - delegation of legislative power - interim stay of proceedings - application of Service Tax Rules, 1994 - notice issued under impugned provision

Ultra vires - vires of subordinate legislation - application of Service Tax Rules, 1994 - interim stay of proceedings - Interim relief in view of earlier decision striking down the impugned sub-rule. - HELD THAT: - The High Court granted an interim stay of proceedings in the writ petition because sub-rule (2) of Rule 5A of the Service Tax Rules, 1994 (as substituted by notification dated December 25, 2014) had earlier been declared ultra vires by the Delhi High Court in Mega Cabs Pvt. Ltd. (supra). In light of that prior judicial determination on the vires of the same provision, the court considered it appropriate to preserve the parties' positions by staying the proceedings pending further orders. [Paras 4]

Proceedings under the impugned provision are stayed until November 30, 2018 or until further orders, whichever is earlier.

Affidavit-in-opposition - listing for hearing - Procedural directions for filing affidavits and listing the matter for hearing. - HELD THAT: - The court directed the respondent to file an affidavit-in-opposition within four weeks from the date of the order and permitted the petitioner to file a reply within two weeks thereafter. Further, the matter was directed to be listed for hearing in the monthly list for November 2018. The directions preserve orderly adjudication while the interim stay remains in force. [Paras 5, 6]

Affidavit-in-opposition to be filed within four weeks; reply, if any, within two weeks thereafter; matter to be listed for hearing in the November 2018 monthly list.

Final Conclusion: Interim stay of proceedings granted in view of earlier decision declaring the impugned sub-rule ultra vires; procedural directions issued for filing affidavits and listing the writ petition for hearing in November 2018.

Extended period of limitation - CENVAT credit reversal for trading activity - suppression of facts with intent to evade - penalty under CENVAT Credit Rules - retrospective amendment to Rule 2(e) of CCR

Extended period of limitation - suppression of facts with intent to evade - retrospective amendment to Rule 2(e) of CCR - Whether the Department could invoke the extended period of limitation for demands of CENVAT credit attributable to trading activity. - HELD THAT: - The Tribunal found that the Department was aware of the assessee's trading activity because trading details were available in the assessee's balance sheet during the relevant period and formed the basis for the demand. There was therefore no suppression of facts with intent to evade payment of tax. The periods in issue pre dated the amendment to Rule 2(e) of the CENVAT Credit Rules, 2004. Having considered precedents and earlier favourable Final Orders in the assessee's own cases, the Tribunal held that the extended period of limitation could not be invoked and set aside demands for the longer period. [Paras 6]

Demand for the extended period of limitation set aside; invoked longer period not sustainable.

CENVAT credit reversal for trading activity - Extent of CENVAT credit reversal to be sustained against the appellant. - HELD THAT: - While the extended period demands were set aside, the Tribunal upheld that the appellant is liable to reverse CENVAT credit attributable to trading activity for the normal (non extended) limitation period. The Tribunal thus confined the recoverable credit to the period within limitation and directed reversal with interest for that normal period. [Paras 6]

CENVAT credit reversal sustained only for the normal period; recovery confined to amounts within limitation with interest.

Penalty under CENVAT Credit Rules - Whether penalties imposed under the impugned orders should be sustained. - HELD THAT: - Having held that there was no suppression with intent to evade and noting that the question of entitlement to credit in respect of trading activities was subject to confusion and litigation during the relevant period, the Tribunal exercised its discretion to set aside the penalties imposed on the appellants. [Paras 6, 7]

Penalties imposed in the impugned orders are set aside.

Final Conclusion: Appeals disposed of by setting aside demands for the extended period, directing reversal of CENVAT credit with interest only for the normal limitation period, and setting aside the penalties.

CENVAT credit utilisation for payment of tax under reverse charge - deemed service provider - temporal effect of Explanation to Rule 3(4) of the CENVAT Credit Rules - limitation under Section 73 - payment of service tax for services provided from outside India

CENVAT credit utilisation for payment of tax under reverse charge - deemed service provider - Whether CENVAT credit could be utilised to discharge service tax liability arising under the reverse charge mechanism in respect of services received from abroad where the recipient is a deemed service provider. - HELD THAT: - The Tribunal held that a person treated as a deemed service provider is liable to pay service tax in law and, for discharge of that liability, is entitled to use available CENVAT credit. Rule 5 of the Taxation of Services (Provided from outside India and received in India) Rules refers to availing credit but does not prohibit utilisation. Prior to the insertion of the Explanation to Rule 3(4) by Notification No.28/2012-CE(NT) dated 20/06/2012 there was no rule barring utilisation of CENVAT credit to meet reverse charge liabilities. The Tribunal followed earlier decisions (including the Division Bench decision in Toyota Kirloskar Motor Pvt. Ltd. and other Tribunal precedents) which held that utilisation of CENVAT credit for payment of tax under reverse charge is permissible where the recipient is treated as service provider.

CENVAT credit could be utilised to pay service tax payable under the reverse charge mechanism for services received from abroad by a deemed service provider.

Temporal effect of Explanation to Rule 3(4) of the CENVAT Credit Rules - Whether the restriction that CENVAT credit cannot be used for payment of service tax where the service recipient is liable applied to the transactions in question. - HELD THAT: - The Tribunal observed that the Explanation to Rule 3(4), which prohibits utilisation of credit for payment of service tax where the recipient is liable, was introduced by Notification No.28/2012-CE(NT) dated 20/06/2012. Transactions in the present case occurred between 30/09/2011 and 31/07/2012; therefore, for the portion of the period prior to 20/06/2012 there was no restriction on utilisation. Following precedents that treated the recipient as entitled to use credit to discharge the tax, the Tribunal held that the post-20/06/2012 restriction could not be retroactively applied to negate the right to utilise credit for liabilities arising before the amendment took effect.

The restriction contained in the Explanation to Rule 3(4) (introduced on 20/06/2012) did not operate to deny utilisation of CENVAT credit for the transactions that preceded the amendment.

Limitation under Section 73 - Whether the demand for service tax in respect of the period 30/09/2011 to 31/07/2012 was time-barred. - HELD THAT: - The Tribunal noted that the show-cause notice was issued on 22/05/2014 in respect of the period 30/09/2011 to 31/07/2012. The Commissioner(Appeals) had recorded that there was no suppression of facts or intention to evade tax. Applying the limitation provisions, the Tribunal held that, in absence of suppression or evasion, the extended period could not be invoked and the demand issued on 22/05/2014 was beyond the normal period prescribed under Section 73. Consequently, the demand was held to be time-barred.

The demand in respect of the period 30/09/2011 to 31/07/2012 was time-barred and could not be sustained.

Final Conclusion: The appeal is allowed; on merits and limitation the impugned order confirming the demand is set aside.

Business Auxiliary Service - visa facilitation not taxable as service - export of services - Rule 3(3) of Export of Service Rules, 2005 - unauthorised review of own order - remand for fresh consideration

Visa facilitation not taxable as service - Business Auxiliary Service - Demand of service tax in respect of visa facilitation services rendered by the appellants is not sustainable and is set aside. - HELD THAT: - The Tribunal accepted that the appellants' activities in relation to processing visa applications fall within the scope of services described in the CBEC Circular cited by the appellants, which clarifies that visa facilitators who assist individuals to obtain visas do not render taxable services under the charging provisions relied upon by the Department. The Tribunal noted that identical matters have been decided in favour of assessees on the basis of that Circular and, applying that exposition, concluded that the demand insofar as visa services is concerned does not sustain and must be set aside. [Paras 4]

Demand relating to visa services set aside.

Export of services - Rule 3(3) of Export of Service Rules, 2005 - remand for fresh consideration - Liability of the appellants for service tax in respect of cargo handling / cargo GSA services was not finally decided and is remanded to the original authority for determination whether such services qualify as export of services under Rule 3(3). - HELD THAT: - The appellants contended that ground handling and related GSA services amounted to export of services and hence were not taxable under the impugned charging provisions, invoking Rule 3(3) of the Export of Service Rules, 2005 and prior authorities interpreting the location of benefit and receiver. The Tribunal found that the appellants' counsel could not demonstrate whether the services were rendered exclusively in relation to export cargo or produce the agreements on record, and therefore the factual and documentary basis to adjudicate export status was lacking. For that reason the Tribunal did not decide the merits on record but remanded the matter to the original authority to consider the claim afresh on the basis of evidence to be submitted and to pass an appropriate order. [Paras 4, 5]

Order in so far as cargo handling/GSA services is set aside and remanded to original authority for fresh consideration on evidence whether the services qualify as export under Rule 3(3).

Unauthorised review of own order - Subsequent issuance of an order increasing penalty per day by the Commissioner amounted to an impermissible review and is without authority of law and therefore set aside. - HELD THAT: - The Commissioner issued a second show-cause notice and confirmed an increased penalty rate, treating the earlier order as containing a mistake on its face. The Tribunal held that such action by the Commissioner amounted to a review of his own order without jurisdictional basis; if the Department considered the earlier order erroneous, the proper course was to appeal to the appropriate forum rather than to re-open by administrative fiat. Accordingly, the subsequent order increasing the penalty was set aside. [Paras 4, 5]

Order increasing the penalty set aside as being issued without authority of law.

Final Conclusion: The appeal is allowed in part: the service-tax demand relating to visa facilitation is set aside; the demand in respect of cargo handling/GSA services is set aside and remitted to the original authority for fresh adjudication on whether those services qualify as export under Rule 3(3) of the Export of Service Rules, 2005; and the subsequent order increasing the penalty is set aside as an unauthorised review.

Non-taxability of services rendered for public water supply and civic amenities - Distinction between commercial/industrial construction and government/civic construction - Construction of long-distance pipelines excluded from levy - Works contract service versus construction/erection services - Remand for fresh adjudication where nature and value of services are not established

Non-taxability of services rendered for public water supply and civic amenities - Distinction between commercial/industrial construction and government/civic construction - Construction of long-distance pipelines excluded from levy - Whether the services rendered by the appellant as sub-contractor in respect of work for the Delhi Jal Board are taxable under the service tax levy. - HELD THAT: - The Tribunal applied earlier CESTAT precedent and Board circular guidance to conclude that works carried out for public water supply and similar civic amenities do not fall within taxable commercial or industrial construction services. Having considered certificates and work orders produced at the appellate stage showing that the appellant executed civil works for Water Treatment Plant, storm water drainage and water pipelines for the Delhi Jal Board and other public authorities, the Tribunal found those activities outside the ambit of taxable "Construction of Commercial or Industrial Construction Services" and held the demand insofar as it relates to services provided to Jal Boards unsustainable. [Paras 2]

Demand of service tax confirmed insofar as relatable to services rendered to the Delhi Jal Board and similar public authorities is not sustainable.

Works contract service versus construction/erection services - Remand for fresh adjudication where nature and value of services are not established - Whether the remaining portion of the demand (other than services to Jal Boards) is correctly sustained and what statutory characterisation applies. - HELD THAT: - The Tribunal found the nature and valuation of the remaining services unclear on the record. The appellant did not furnish requisite information called for by the Department, leading earlier authorities to apply best judgment assessment. The Tribunal observed that if the services relate to road construction they must be treated as per the relevant construction service provisions, and if not, the demand may require consideration under the law governing work contracts as interpreted by the Supreme Court. Because the material and the precise nature of services were not established on the record, the Tribunal has set aside the impugned order and remanded the matter to the original adjudicating authority for fresh decision after considering the entire evidence and applying the appropriate statutory characterisation and precedents. [Paras 4, 5]

Impugned order set aside and the matter remanded to the original adjudicating authority for fresh adjudication on the remaining portion of the demand.

Final Conclusion: Part of the demand relating to services rendered to the Delhi Jal Board and similar public bodies quashed as non-taxable; the remainder of the demand set aside and remitted to the original adjudicating authority for fresh decision after consideration of evidence and correct statutory characterisation.

Entitlement to Cenvat credit on input services - utilisation of Cenvat credit against output service tax - registration as acknowledgment of taxable service - relevance of payment of service tax on output services to sustain Cenvat credit - distinction between refund and demand proceedings

Entitlement to Cenvat credit on input services - utilisation of Cenvat credit against output service tax - relevance of payment of service tax on output services to sustain Cenvat credit - Whether respondent was entitled to retain and utilise Cenvat credit for the period July, 2012 to March, 2014 despite Revenue's contention that no output service was provided in India. - HELD THAT: - The Tribunal found on facts that the authorities had incorrectly treated the Singapore entity and the Indian office as two distinct entities, whereas the respondent was a single entity with registration to pay service tax on broadcasting services and had discharged tax on output services through its Indian office. The Tribunal relied on the principle that registration under the Finance Act, 1994 constitutes acknowledgment of transacting in a taxable service and, having registered and complied by discharging tax and filing returns, the registrant falls within the ambit of the Cenvat Credit Rules, 2004. The High Court observed that the substance of the dispute is entitlement to take Cenvat credit on input services when tax on the output services had been collected and paid to Revenue; the Revenue accepted the Tribunal's reliance on the Coordinate Bench decision in Infosys Technologies Ltd. The Court held that the distinction urged by Revenue (that Infosys was a refund case while the present matter is a demand case) was immaterial to the core question of entitlement to credit, and therefore there was no substantial question of law warranting interference with the Tribunal's conclusion. [Paras 7, 8, 9, 10, 11]

Tribunal's grant of Cenvat credit for July, 2012 to March, 2014 upheld; no substantial question of law made out and the appeal is dismissed.

Distinction between refund and demand proceedings - registration as acknowledgment of taxable service - Whether the fact that an earlier coordinating decision arose in the context of a refund proceeding negates its applicability to a demand/reversal proceeding such as the present one. - HELD THAT: - Revenue sought to distinguish the Coordinate Bench decision relied upon by the Tribunal on the ground that that decision dealt with a refund application whereas the present matter is a demand for reversal of credit. The High Court held that this procedural difference does not affect the substantive legal principle: registration and compliance (including payment of service tax on output services) determine entitlement to Cenvat credit. Consequently, the Court treated the procedural distinction as of no consequence for deciding the entitlement issue and declined to treat it as raising a substantial question of law. [Paras 9, 10]

Procedural distinction between refund and demand proceedings irrelevant; Coordinate Bench authority applies and does not warrant interference.

Final Conclusion: The appeal is dismissed; the Tribunal's order dated 31st March, 2017 upholding the respondent's entitlement to retain and utilise Cenvat credit for July, 2012 to March, 2014 is affirmed. No order as to costs.

Compliance with Section 35F of the Central Excise Act, 1944 - pre-deposit requirement for prosecution of appeals - extension of time for compliance - restoration of appeal on compliance - Tribunal's satisfaction as condition precedent to restoration

Extension of time for compliance - pre-deposit requirement for prosecution of appeals - Time for making the pre-deposit under the Court's earlier order was extended till 2nd June, 2018. - HELD THAT: - The Court, having previously dismissed the appeal for failure to comply with the pre-deposit mandate, granted a limited extension of time to make the deposit. The affidavit filed in support asserted that the amount equivalent to 7.5% of the service tax liability, as required, had been deposited on or before 1st June, 2018. In view of that statement and the explanation of financial difficulty, the Court extended the time for compliance until 2nd June, 2018 and allowed the present motion praying for such extension. [Paras 3]

Motion allowed; time to make the pre-deposit extended till 2nd June, 2018.

Compliance with Section 35F of the Central Excise Act, 1944 - Tribunal's satisfaction as condition precedent to restoration - restoration of appeal on compliance - Whether the appeal should be restored upon verification of compliance with Section 35F by the Tribunal. - HELD THAT: - The Court expressly left it to the Tribunal to satisfy itself that the applicant had complied with the provisions of Section 35F. The effect of the Court's order is that, upon the Tribunal's finding that the required pre-deposit has been made and the provisions complied with, the appeal would be restored for consideration on merits. The Court did not itself adjudicate the Tribunal's satisfaction or restore the appeal; it confined itself to extending time and directing that restoration be contingent on the Tribunal's verification. [Paras 4]

Tribunal to verify compliance with Section 35F; on satisfaction, the appeal shall be restored for consideration on merits.

Final Conclusion: The motion for extension of time to make the pre-deposit is allowed and time is extended till 2nd June, 2018; the Tribunal is directed to verify compliance with Section 35F and, if satisfied, to restore the appeal for consideration on merits.

Jurisdiction of a single member of the Appellate Tribunal - Division Bench requirement under section 35D(3) of the Central Excise Act, 1944 - penalty/fine threshold of fifty lakh rupees - revival of appeal and remand to Division Bench for fresh hearing

Jurisdiction of a single member of the Appellate Tribunal - penalty/fine threshold of fifty lakh rupees - Single member of the Appellate Tribunal lacked jurisdiction to decide the appeal where the penalty involved exceeded fifty lakh rupees. - HELD THAT: - The Court examined subsection (3) of section 35D of the Central Excise Act, 1944, which restricts a single member sitting singly to dispose of cases where the amount of fine or penalty involved does not exceed fifty lakh rupees. The appeal before the Tribunal involved a challenge to a penalty valuation which, on the department's own pleadings, was in excess of the fifty lakh rupees threshold. Consequently, the single-member order was rendered without jurisdiction. The absence of jurisdiction vitiates the impugned decision and mandates its setting aside. [Paras 3]

Impugned order by the single member is set aside for lack of jurisdiction as the penalty involved exceeds fifty lakh rupees.

Division Bench requirement under section 35D(3) of the Central Excise Act, 1944 - revival of appeal and remand to Division Bench for fresh hearing - The appeal is to be revived before the Tribunal and heard by a Division Bench competent to decide matters where the penalty exceeds fifty lakh rupees. - HELD THAT: - Having set aside the single-member order for want of jurisdiction, the Court directed revival of the appeal before the Tribunal and ordered that it be heard by a Division Bench in accordance with the statutory provision which reserves such matters to a Bench other than a single member. The direction is procedural and requires fresh adjudication by the appropriately constituted Bench. [Paras 4]

Appeal revived before the Tribunal and remitted for hearing by a Division Bench.

Final Conclusion: Impugned Tribunal order rendered by a single member is set aside for want of jurisdiction because the penalty involved exceeds Rs. 50 lakhs; the appeal is revived and remitted to the Tribunal to be heard by a Division Bench.

Recovery of Cenvat credit where inputs not received - imposition of penalty under Section 11AC for fraud, suppression or willful misstatement - proceedings under Rules 14 and 15 of the Cenvat Credit Rules, 2004 - concurrent finding of fact by Tribunal and appellate interference - after thought defence to admitted shortage - precedential scope where Tribunal finds bona fide belief (Sunrise Zinc)

Recovery of Cenvat credit where inputs not received - proceedings under Rules 14 and 15 of the Cenvat Credit Rules, 2004 - after thought defence to admitted shortage - concurrent finding of fact by Tribunal and appellate interference - Validity of demand for recovery of Cenvat credit on inputs found short by stocktaking and whether the proviso to Section 11A precluded such action in absence of allegation of fraud or clandestine removal. - HELD THAT: - The Tribunal and appellate authorities found on facts that a shortage of inputs (200.278 MT) was detected at the time of stocktaking, recorded in a panchnama and accepted by the assessee's partners/manager, and duties thereon were paid thereafter. The Court held that the defence now urged - that physical stocktaking was not done or that the proviso to Section 11A should preclude proceedings in absence of fraud - was raised belatedly and amounted to an after thought. Given the concurrent factual finding that the shortage was discovered and admitted at the time of inspection, proceedings under Rules 14 and 15 read with Sections 11A (for recovery) were justified. The factual view taken by the Tribunal was a possible view of the evidence and not open to interference by this Court. Consequently the question whether the proviso to Section 11A applied did not give rise to a substantial question of law in these facts. [Paras 5, 6, 8]

Demand for recovery of Cenvat credit on inputs found short at stocktaking was sustainable; proviso to Section 11A did not bar proceedings on the facts found by the Tribunal.

Imposition of penalty under Section 11AC for fraud, suppression or willful misstatement - precedential scope where Tribunal finds bona fide belief (Sunrise Zinc) - concurrent finding of fact by Tribunal and appellate interference - Whether penalty under Section 11AC was impermissible in the absence of fraud, suppression or willful misstatement, where the shortage was detected by visual inspection and estimated by average weight. - HELD THAT: - The Court accepted the factual finding of the Tribunal that Cenvat credit had been taken on inputs not received; this factual finding distinguished the present case from Sunrise Zinc where the Tribunal had found a bona fide belief that no duty was payable. Because the Tribunal here found absence of bona fide belief and acceptance of shortage by the assessee, the doctrine in Sunrise Zinc was held inapplicable. On these facts, the initiation of penalty proceedings under Section 11AC in conjunction with Rules 14 and 15 was not precluded. The Court observed that the questions framed by Revenue, which presumed the absence of fraud or suppression, did not disclose a substantial question of law given the concurrent factual findings against the assessee. [Paras 6, 7, 8]

Penalty proceedings under Section 11AC were not barred on the facts found by the Tribunal; the Sunrise Zinc decision did not apply where the Tribunal found no bona fide belief in non levy.

Final Conclusion: Concurrent findings of fact by the Tribunal - that a shortage was detected, recorded and accepted by the assessee and that Cenvat credit was taken on inputs not received - were a possible view of the evidence; the legal questions urged did not raise substantial questions of law and the appeal is dismissed.

Availability of alternative statutory remedy - writ jurisdiction in fiscal matters - resort to appellate remedy before fact-finding authority - condonation of delay in filing appeal - liberty to file appellate remedy without reference to limitation

Availability of alternative statutory remedy - writ jurisdiction in fiscal matters - resort to appellate remedy before fact-finding authority - Maintainability of the writ petition in view of the availability of a statutory appellate remedy against the adjudicating authority's order. - HELD THAT: - The Court recorded that the impugned order was a reasoned adjudication on classification, demand, penalty and interest, and that the petitioner had been served with a show cause notice and had filed a reply. Since a statutory appeal lies to the Commissioner (Appeals) as indicated in the impugned order, the High Court declined to entertain the writ petition on merits. The Court reiterated the settled principle that in fiscal matters an aggrieved party should ordinarily pursue the alternative appellate remedy before the competent fact-finding appellate authority, unless the order is shown to be without jurisdiction, violative of principles of natural justice, or plainly erroneous on its face so as to justify exercise of writ jurisdiction. [Paras 5, 6]

Writ petition not entertained and dismissed at admission stage for non-exhaustion of the statutory appellate remedy.

Condonation of delay in filing appeal - liberty to file appellate remedy without reference to limitation - Direction permitting the petitioner to file the statutory appeal and instruction to the Appellate Authority to consider the appeal on merits irrespective of limitation. - HELD THAT: - The petitioner, through counsel, offered to prefer the statutory appeal and contended that service of the impugned order may have been defective causing delay. The Court granted the petitioner two weeks from receipt of the order to file the appeal, and directed that if the appeal is so filed the Appellate Authority shall consider and decide it on merits and in accordance with law, without taking the period of limitation into account. The Court expressly disclaimed any view on the merits of the impugned order and confined its direction to procedural liberty to prosecute the appeal and for the appellate authority to entertain it despite any delay. [Paras 7, 8]

Liberty granted to file appeal within two weeks; appellate authority to consider and decide the appeal on merits and in accordance with law, without reference to limitation.

Final Conclusion: Writ petition disposed of at admission stage for failure to exhaust the statutory appellate remedy; petitioner permitted to file the statutory appeal within two weeks and the Appellate Authority directed to entertain and decide the appeal on merits notwithstanding any delay, with no expression of opinion on the merits.

Demand based on normative electricity consumption - Clandestine removal and need for corroborative/concurrent evidence - Precedent and finality of tribunal orders

Demand based on normative electricity consumption - Precedent and finality of tribunal orders - Sustainability of excise duty demand computed on the basis of estimated electricity units per metric tonne of cement for the period February 2006 to March 2007 - HELD THAT: - The Tribunal found that the learned Commissioner's confirmation of duty based on electricity consumption was contrary to this Tribunal's earlier final findings in the assessee's own matters where demands founded on power-consumption norms had been held not sustainable. The impugned adjudication failed to give effect to the Tribunal's prior conclusions and proceeded to confirm a demand on the same basis which had previously been set aside. Having regard to the inconsistency with the Tribunal's earlier final order and the absence of independent corroborative evidence to sustain a clandestine removal finding founded solely on electricity-consumption estimates, the impugned order was held to be bad in law and unsustainable. [Paras 5, 6]

Impugned order setting aside (confirming) demand is set aside; demand based on electricity-consumption norm for the stated period is not sustainable and appellants entitled to consequential relief.

Final Conclusion: Appeals allowed; the order-in-original confirming demand on the basis of estimated electricity consumption for February 2006 to March 2007 is set aside and the appellants are entitled to consequential benefits.

Transfer of CENVAT credit on shifting of premises - compliance with Rule 10 of the CENVAT Credit Rules - requirement of prior permission for transfer of credit - audit verification of availment of CENVAT credit - availment of CENVAT credit in ER-1 returns

Transfer of CENVAT credit on shifting of premises - requirement of prior permission for transfer of credit - compliance with Rule 10 of the CENVAT Credit Rules - audit verification of availment of CENVAT credit - availment of CENVAT credit in ER-1 returns - Validity of transfer and availment of CENVAT credit by the assessee on shifting premises without prior departmental permission and whether sufficient evidence was placed on record to justify the credit availed in February 2014 returns. - HELD THAT: - The Tribunal found that the assessee had intimated the Range Superintendent about shifting premises by letter dated 16.7.2012 and that the department had itself acknowledged the communication. The original authority examined the factum of shifting and, considering the audit conducted for the period August 2012 to November 2014 which raised no objection, allowed the credit. The Commissioner(A) had set aside that finding solely on the ground that there was no independent proof that inputs, WIP and capital goods were moved to the new premises. The Tribunal recorded that the department had not expressed doubt about the movement of goods, and the audit verification did not object to the availment of credit in the new premises' ER-1 returns. Reliance was placed on earlier decisions to the effect that prior permission for transfer of credit is not a prerequisite where the facts establish shifting and availment at the new registration. On this material, the Tribunal concluded there was no diversion of inputs or credit and no infirmity in the original authority's allowance of the claim.

The Tribunal set aside the Commissioner(A)'s order and allowed the appellant's appeal, holding that the transfer and availment of CENVAT credit on shifting premises was valid and adequately supported by intimation and audit verification.

Final Conclusion: The appeal is allowed; the impugned order of the Commissioner(A) is set aside and the original authority's allowance of the CENVAT credit (availed in February 2014 ER-1 returns) is restored as valid in view of the intimation of shifting and absence of objection in departmental audit.

Clandestine removal - Corroborative evidence - Evidentiary value of loose sheets

Clandestine removal - Corroborative evidence - Loose sheets - Statement of director - The charge of clandestine removal could not be sustained merely on the basis of loose sheets recovered from the residence of the director and his statement, in the absence of corroborative evidence. - HELD THAT: - The Tribunal found that no incriminating material was recovered from the factory and the stock of raw materials as well as finished goods tallied with the statutory records. The case rested only on certain loose sheets recovered from the director's residence, but the Revenue had not investigated the entries appearing therein or established, by independent evidence, procurement of raw materials, transportation of goods, or consumption of electricity to support any unaccounted production and clearance. It was held that clandestine removal cannot be established on such loose sheets alone, and the director's statement by itself could not substitute for the required corroboration. [Paras 7, 8, 9]

The charge of clandestine removal was held to remain unproved, and the demand, interest, and penalties were set aside.

Final Conclusion: The Tribunal held that the allegation of clandestine removal was not proved for want of corroborative evidence beyond the loose sheets and the director's statement. The impugned order confirming duty, interest, and penalties was therefore set aside and the appeal was allowed with consequential relief.

Revision of assessment - notice of proposal - principles of natural justice - exemption under Section 3B(2)(b) of the TNGST Act, 1959 - interstate sale - remand for fresh consideration

Notice of proposal - principles of natural justice - revision of assessment - Validity of the revisional order insofar as it disallowed an exemption previously granted, having regard to adequacy of the notice of proposal and observance of principles of natural justice. - HELD THAT: - The Assessing Officer had earlier allowed exemption for interstate purchases in the original assessment. The revisional notice dated 11.06.2008 merely stated that turnover representing interstate purchases was wrongly allowed exemption but did not disclose material details or particulars indicating the basis on which the exemption was proposed to be disallowed. Effective reply by the assessee required such particulars; the Assessing Officer introduced additional reasons in the revisional order which were not the subject of the notice of proposal. A reasoned revision order must emerge from the grounds articulated in the proposal; an assessee cannot be taken by surprise by fresh grounds first raised in the order. For these procedural deficiencies, the revisional order cannot be sustained and is liable to be set aside for failure to follow the principles of natural justice. [Paras 7, 8, 9]

Impugned revisional order set aside for procedural non-compliance with natural justice due to absence of material particulars in the notice of proposal.

Remand for fresh consideration - exemption under Section 3B(2)(b) of the TNGST Act, 1959 - revision of assessment - Procedure to be followed on remand for redetermination of the revisional proposal regarding disallowance of exemption. - HELD THAT: - The Court did not adjudicate the correctness of the Assessing Officer's substantive reasons for disallowing the exemption on merits. Instead, the matter is remitted to the Assessing Officer to redo the revision in accordance with law. Directions were given to issue a fresh notice of proposal containing material details and particulars within three weeks; the assessee to file reply with documents within two weeks of receipt; the Assessing Officer to fix personal hearing and thereafter pass a fresh order on merits within four weeks of the hearing. Amounts deposited pursuant to interim orders are to be kept in the account of the respondent and taken into consideration while passing the fresh order. [Paras 10]

Matter remitted to the Assessing Officer for fresh notice of proposal and redoing the revisional assessment on merits in accordance with law, subject to the Court's timetable directions.

Final Conclusion: Writ petition allowed; revisional order disallowing the exemption set aside on procedural grounds and the matter remitted to the Assessing Officer for fresh revision in accordance with law and the timetable prescribed by the Court.

Pre-deposit requirement under Section 26(6B) of the MVAT Act - statutory bar to maintainability of appeal - condonation of delay under Section 81 of the MVAT Act

Pre-deposit requirement under Section 26(6B) of the MVAT Act - statutory bar to maintainability of appeal - Whether the Tribunal was justified in rejecting the petitioner's application to dispense with the statutory pre-deposit and in treating the appeal as not maintainable for want of the deposit required by Section 26(6B) of the MVAT Act. - HELD THAT: - The Court found that Section 26(6B) mandates payment of the specified amount (10% of the tax dues) as a condition precedent to filing an appeal before the Tribunal. The provision operates as a statutory bar to maintainability where the pre-deposit is not made. The petitioner's non-deposit, including the admitted failure to pay the 10% pre-deposit, rendered the appeal incompetent and the Tribunal did not err in rejecting the application to dispense with deposit. Financial difficulty or freezing of bank accounts does not create an exception to the statutory requirement, and therefore the impugned order of the Tribunal was unimpeachable on the present facts. [Paras 2, 4]

Tribunal's rejection of the petitioner's application to dispense with the deposit and its treatment of the appeal as not maintainable for want of the Section 26(6B) pre-deposit is upheld.

Condonation of delay under Section 81 of the MVAT Act - Whether the petitioner has any remedy after complying with the pre-deposit requirement. - HELD THAT: - The Court observed that upon making the requisite deposit as required by Section 26(6B), the petitioner may file an appeal accompanied by an application for condonation of delay. In terms of Section 81 of the MVAT Act the Tribunal retains jurisdiction to consider such an application on its merits; if condonation is allowed, the Tribunal would proceed to decide the appeal on merits. This observation affords a prospective remedy but does not affect the correctness of the impugned order rejecting dispensation of the pre-deposit. [Paras 5]

Petitioner may file a fresh appeal after fulfilling the pre-deposit requirement and seek condonation of delay, which the Tribunal may consider on merits; no interference with the impugned order at this stage.

Final Conclusion: The writ petition is dismissed. The Tribunal's order refusing to dispense with the statutory pre-deposit under Section 26(6B) of the MVAT Act is upheld; the petitioner remains at liberty to make the required deposit, file an appeal and apply for condonation of delay under Section 81, whereupon the Tribunal may consider the application and the appeal on merits.

Summary order. Special Leave Petition dismissed; delay condoned; question of law left open.