TaxTMI Updates e-Newsletter
Oct 09,2019

Classification of automatic data processing machines (ADP) and constituent units - Single supply of a machine consisting of component units - Composite supply and principal supply concept - Tariff-heading-based rate determination under the Central/State GST rate notification - Chapter and Section Notes (Section XVI; Chapter 84) application to classification

Classification of automatic data processing machines (ADP) and constituent units - Single supply of a machine consisting of component units - Tariff-heading-based rate determination under the Central/State GST rate notification - Whether a desktop supplied together as CPU with monitor, keyboard and mouse is classifiable under CTH 8471 and liable to GST at the rate specified for that heading. - HELD THAT: - Having examined the Chapter and Section Notes to Section XVI and Chapter 84, the Authority found that heading 8471 covers automatic data processing machines which may consist of a variable number of separate units. Chapter Note 5A defines ADP machines and 5B and 5C treat separately presented units as part of the ADP system where they fulfil the connectivity and data-exchange conditions. Section Note 4 further provides that a machine consisting of individual components intended to contribute together to a clearly defined function falls to be classified in the heading appropriate to that function. The applicant's invoices, purchase orders and marketing describe the product as a single "Desktop Computer" supplied with CPU and peripheral units for a consolidated price; the processing unit (CPU) gives the essential character to the product. Applying these notes and the descriptive entries for CTH 8471, the Authority held that desktops supplied together (CPU with monitor, keyboard and mouse) are classifiable under CTH 8471. As CTH 8471 appears at Sl. No. 360 of Schedule III to Notification No. 01/2017-C.T.(Rate) dated 28.06.2017, the applicable rate is the rate notified against that entry. [Paras 4]

Desktops consisting together of CPU, monitor, keyboard and mouse supplied as a single supply are classifiable under CTH 8471 and taxable at the rate notified for that heading.

Classification of automatic data processing machines (ADP) and constituent units - Chapter and Section Notes (Section XVI; Chapter 84) application to classification - Whether component units supplied separately (in particular monitors) fall to be classified under CTH 8471 when not supplied together with the CPU. - HELD THAT: - The Authority applied Chapter Note 5(C) and Note 5(D) to Chapter 84 and observed that while keyboards and certain input units presented separately are classifiable under heading 8471 if they meet the conditions, Note 5(D) expressly excludes monitors and projectors presented separately from heading 8471. Therefore, where monitors are supplied separately (by separate purchase order, invoice or line item) they do not fall under CTH 8471 and must be classified under the headings appropriate to monitors (CTH 8528) depending on their characteristics. [Paras 4]

Monitors presented separately do not fall under CTH 8471 and should be classified under the appropriate monitor heading (CTH 8528) when not supplied together as part of a single desktop supply.

Final Conclusion: The Authority ruled that where the applicant supplies desktops consisting of CPU together with monitor, keyboard and mouse in a single supply, they are classifiable under CTH 8471 and taxable at the rate specified at Sl. No. 360 of Schedule III to Notification No. 01/2017-C.T.(Rate) (9% CGST and 9% SGST). Monitors supplied separately must be classified under the appropriate monitor heading (CTH 8528) and not under 8471.

Classification of goods for levy of compensation cess - applicability of Compensation Cess Notification No.01/2017 - admissibility under the first proviso to Section 98(2) of the CGST/TNGST Act, 2017 - bar arising from pending proceedings before the jurisdictional authority

Admissibility under the first proviso to Section 98(2) of the CGST/TNGST Act, 2017 - bar arising from pending proceedings before the jurisdictional authority - Application for advance ruling rejected because identical question was pending in proceedings before the jurisdictional authority at the time of filing. - HELD THAT: - The Authority examined the applicant's request on classification of their chewing tobacco and the applicability of the Compensation Cess Notification. The jurisdictional Commissioner furnished comments showing that adjudicatory and offence proceedings concerning the same question had been initiated prior to the filing of the advance ruling application. Under the first proviso to Section 98(2) of the CGST/TNGST Act 2017 the Authority is precluded from admitting an application where the question raised is already pending in any proceedings in the case of the applicant. As the proceedings were pending when the application was filed, the Authority was obliged to refuse admission and refrain from adjudicating the merits. [Paras 5, 6]

Application rejected under the first proviso to Section 98(2) of the CGST/TNGST Act, 2017 on the ground that the question raised was already pending before the appropriate authority.

Final Conclusion: The advance ruling application is refused and not adjudicated on merits because the same question was already the subject of pending proceedings before the jurisdictional authority at the time of filing; the applicant may challenge the order before the State Appellate Authority for Advance Ruling within the statutory period.

Summary order. The application for Advance Ruling filed by the applicant is disposed of as withdrawn.

Classification of goods - Advance Ruling - Withdrawal of application - Provisional assessment

Advance Ruling - Classification of goods - Withdrawal of application - Provisional assessment - Application for advance ruling on classification of "Dried Coconut (Shelled & Peeled)" disposed as withdrawn. - HELD THAT: - The applicant sought an advance ruling on the classification of dried coconut (shelled & peeled). Prior to the personal hearing, the applicant informed the Authority that the application was being withdrawn because a provisional assessment had been applied for. The Authority recorded the withdrawal and did not adjudicate the substantive classification question. Consequently, no determination was made on whether the product falls under the contested tariff entries.

The application is disposed of as withdrawn; no substantive ruling on classification was given.

Final Conclusion: The AAR disposed the applicant's request for an advance ruling as withdrawn following the applicant's withdrawal in view of provisional assessment; no substantive classification determination was made.

Eway bill requirement for intra-state/inter-state movement of goods - valuation of second hand goods under Rule 32(5) of the Central Goods and Services Tax Rules, 2017 - confiscation proceedings under section 130 of the Central Goods and Services Tax Act, 2017 - interim release of goods on furnishing undertaking

Eway bill requirement for intra-state/inter-state movement of goods - valuation of second hand goods under Rule 32(5) of the Central Goods and Services Tax Rules, 2017 - confiscation proceedings under section 130 of the Central Goods and Services Tax Act, 2017 - interim release of goods on furnishing undertaking - Grant of ad-interim relief directing release of vehicle and goods subject to undertaking where goods transported without invoice/e-way bill but claimed to be second-hand and valued under Rule 32(5) - HELD THAT: - The petitioner contended that although the goods were not accompanied by an invoice or eway bill during transport, their value was below the threshold requiring an eway bill and, being second hand goods, their taxable value is determinable under Rule 32(5) of the CGST Rules, 2017 (difference between selling and purchase price), and that tax and penalty computed under Rule 32(5) have already been deposited. Having considered these submissions and the petitioner's explanation, the High Court issued notice and granted ad interim relief. The court directed the respondents to release the vehicle and goods subject to the petitioner furnishing an undertaking to pay any balance ultimately found payable, without prejudice to the petitioner's right to challenge any adverse order in the proceedings under section 130. The order is interlocutory and does not decide the merits of the confiscation proceedings. [Paras 1, 2]

Vehicle RJ09GA6703 and goods to be released on petitioner's undertaking to deposit any balance payable if unsuccessful in the proceedings; notice issued returnable 23.10.2019.

Final Conclusion: Interim relief granted: respondents directed to release the vehicle and goods on the petitioner's undertaking; substantive issues (including applicability of Rule 32(5) and section 130 confiscation) are reserved for adjudication on merits after notice.

Release of seized goods and conveyance on furnishing undertaking - perishability of goods and accompanying valid invoice and e-way bill as ground for release - conditional liability under notice issued under section 130 of the Central Goods and Services Tax Act, 2017

Release of seized goods and conveyance on furnishing undertaking - perishability of goods and accompanying valid invoice and e-way bill as ground for release - conditional liability under notice issued under section 130 of the Central Goods and Services Tax Act, 2017 - Petitioner was entitled to immediate release of the seized vehicle and perishable goods subject to filing an undertaking to pay the amount computed under the impugned notice dated 21.9.2019. - HELD THAT: - The Court directed immediate release of the vehicle and the goods because the seized items were perishable and, during transit, were accompanied by a valid invoice and an e-way bill. Balancing the risk of loss to perishable goods against enforcement, the Court conditioned release on the petitioner executing an undertaking that, if the petition ultimately fails, the petitioner will pay the amount computed by the respondents under the impugned notice dated 21.9.2019 issued under section 130 of the Central Goods and Services Tax Act, 2017. No broader adjudication on the merits of the notice was undertaken; the order is a protective, provisional relief to preserve the perishable goods while securing the State's claim through the undertaking.

Vehicle RJ-19-GE-1765 and the goods therein to be released forthwith on the petitioner filing the specified undertaking to pay the amount as computed under the impugned notice dated 21.9.2019.

Final Conclusion: The High Court ordered immediate conditional release of the seized perishable goods and conveyance on the petitioner executing an undertaking to pay the amount computed under the impugned notice dated 21.9.2019; matter was kept for further consideration on 17th October 2019.

Interim release of detained goods and conveyance - deposit as condition for interim release - proceedings under section 130 of the CGST Act and liability to pay differential - undertaking to pay differential in case of adverse outcome - obligation to cooperate in statutory proceedings - waiver of service of rule

Interim release of detained goods and conveyance - deposit as condition for interim release - proceedings under section 130 of the CGST Act and liability to pay differential - undertaking to pay differential in case of adverse outcome - obligation to cooperate in statutory proceedings - Interim release of the detained truck and goods subject to specified conditions - HELD THAT: - The High Court directed interim relief by ordering release of the Truck No. MH18BG6450 together with the goods on the petitioner depositing a sum of Rs.1,50,000 with the concerned authority. The release was made conditional upon the petitioner filing an undertaking before the Court by 10.10.2019 that, if the petitioner is unsuccessful in the proceedings under section 130 of the CGST Act, the petitioner will pay the differential amount in accordance with law. The petitioner was further directed to cooperate in the proceedings under section 130. The Court issued rule returnable on 17.10.2019 and recorded that service of the rule was waived by the respondents.

Truck and goods to be released on deposit of Rs.1,50,000 and filing of the specified undertaking by 10.10.2019; petitioner to cooperate in the section 130 proceedings; rule issued returnable on 17.10.2019.

Final Conclusion: Interim relief granted: the detained truck and its goods are ordered released on deposit and filing of an undertaking to pay any differential found due in proceedings under section 130 of the CGST Act; the petition is directed to be listed on 17.10.2019.

Limitation under Section 25(1) of the Kerala Value Added Tax Act, 2003 - assessment beyond period of limitation - remand for fresh adjudication - revival of interim stay - validity of Section 174 of the Kerala State Goods and Service Tax Act, 2017

Limitation under Section 25(1) of the Kerala Value Added Tax Act, 2003 - assessment beyond period of limitation - remand for fresh adjudication - Impugned assessments to be examined for bar of limitation under Section 25(1) of the Kerala Value Added Tax Act, 2003 - HELD THAT: - The Single Judge's dismissal did not address the appellant's contention that the assessment proceedings reflected in Exts.P1 to P8 were initiated beyond the limitation period prescribed by Section 25(1) KVAT Act. The Division Bench found that the writ petition must be restored for fresh disposal because the question of limitation was not considered and requires adjudication. Although the validity of Section 174 of the KSGST Act had been the subject of earlier proceedings and is not being pursued by the appellant in this appeal, that matter was not a ground for final disposal of the limitation challenge. Accordingly, the matter is remanded to the Single Judge for determination on whether the impugned assessments are hit by Section 25(1), with directions to decide the limitation issue afresh in accordance with law.

Writ petition restored and remitted to the Single Judge for fresh adjudication on whether the impugned assessments are barred by limitation under Section 25(1) KVAT Act.

Final Conclusion: The appeal is allowed; the impugned judgment is set aside, the writ petition is restored for fresh disposal on the limitation issue by the Single Judge as per roster, and any interim order of stay in existence at the date of dismissal is revived and shall continue in force.

Treatment of interest and rent in cost of production when interest income is not treated as business income - sale of goods to sister concern at an agreed consistent rate vis-a -vis fluctuating market rate - remand/restoration to Assessing Officer of issues relating to excess levy sugar price and additional cane price - deletion of addition on account of Molasses Reserve Fund - allowance of depreciation on tubewell as plant used for purposes of business - deduction of extra sale price realised on sale of levy sugar in open market - treatment of depreciation booked in profit and loss account where asset is revalued for computation of book profit under section 115J

Withdrawal of interlocutory oral order - effect of administrative circular on tax litigation - coverage of CBDT Circular No.17/2019 dated 08.08.2019 - non-applicability of CBDT Circular No.3/2018 - HELD THAT:- The Court noted a letter dated 10.12.2018 from the Deputy Director, Income Tax (SCC) indicating that the matters do not fall within the ambit of CBDT Circular No.3/2018. In light of that communication the Court concluded that the earlier order, which had been dictated in open court on 25.09.2019, should not be acted upon. The Court therefore set aside the effect of the previously dictated order rather than permitting its implementation.

The earlier order dated 25.09.2019 shall not be given effect to.

Having declined to give effect to the prior oral order in view of the communication about Circular No.3/2018, the Court directed that all matters be placed for further hearing on the merits so that the applicability and consequences of the relevant CBDT circular(s) can be fully examined and adjudicated.

All matters are listed for further hearing on merits on 23.10.2019 at 2:00 p.m. for determination of the applicability and effect of the relevant CBDT circular(s).

Withholding of refund for TDS mismatch - manual processing of refund subject to withholding - recall or modification of judicial order - refund not to be withheld in respect of demands quashed or stayed - reconciliation of TDS mismatch

Recall or modification of judicial order - withholding of refund for TDS mismatch - reconciliation of TDS mismatch - Whether the earlier order directing manual processing and release of refund subject to withholding of the reported TRACES mismatch should be recalled or modified in view of a subsequently reported larger TDS mismatch - HELD THAT: - The department sought recall on the ground that the TDS mismatch recorded earlier (Rs. 49,30,180/-) had subsequently been shown to be much larger. The Court examined the factual matrix relied upon when the earlier order was passed and the contentions of the petitioner that the mismatch within the Pune jurisdiction had been reconciled to a much smaller figure (now Rs. 1,99,970/-). The Court declined to recall or modify its earlier order which was passed on the basis of the facts and material then placed before it. The Court noted that it would keep open the larger legal question of whether one unit of the Department may withhold a refund on account of TDS mismatches arising across the country, but that question was not decided in the present recall application. [Paras 2, 4]

Motion to recall/modify the earlier order refused; the earlier directions for manual processing and release of refund subject to withholding as ordered remain undisturbed.

Refund not to be withheld in respect of demands quashed or stayed - Whether any part of the refund directed to be released can be withheld on account of income-tax demands which are quashed by appellate authority/tribunal or stayed - HELD THAT: - The Court recorded a clear principle in the context of this matter that no part of the refund ordered to be released can be withheld in relation to income-tax demands which have been quashed by an appellate authority or tribunal or which are the subject of a stay. This recording forms part of the operative protection afforded to the petitioner in the disposal of the Motion. [Paras 4]

No part of the refund may be withheld in respect of demands that are quashed or stayed.

Final Conclusion: The application to recall or modify the earlier order was dismissed; the earlier directions for manual processing and release of the refund for assessment years 2007-08 to 2013-2014, subject to withholding as specified in that order, remain in force, and the Court observed that refunds may not be withheld in respect of demands quashed or stayed, while reserving the broader question of cross-jurisdictional withholding for future consideration.

Maintainability of appeal to Commissioner of Income Tax (Appeals) - Appeal under section 246A - Application under section 220(6) for stay of recovery - Interim protection against coercive proceedings - Extraordinary writ jurisdiction

Maintainability of appeal to Commissioner of Income Tax (Appeals) - Appeal under section 246A - The question whether an appeal lies to the Commissioner of Income Tax (Appeals) against the order dated 14 March 2019. - HELD THAT: - The Court recorded that the Commissioner of Income Tax (Appeals) by order dated 19 September 2019 held the appeal against the Assessing Officer's order dated 14 March 2019 (passed under section 115Q read with section 115O) to be maintainable. In those circumstances the petitioner elected to withdraw the writ petition and prosecute the statutory appeal before the CIT(A). The High Court treated the availability of the appeal as an effective alternate remedy and proceeded on that footing.

Appeal to the Commissioner of Income Tax (Appeals) is available and the petitioner was permitted to withdraw the writ and prosecute that appeal.

Application under section 220(6) for stay of recovery - Interim protection against coercive proceedings - Stay of recovery of tax demand - Whether the Court would grant a blanket stay on recovery of the tax demand until final disposal of the appeal. - HELD THAT: - The Court declined to grant the broad stay sought by the petitioner. It observed that, once an appeal is maintainable, the petitioner has the statutory remedy of applying to the Authorities under section 220(6) of the Act for a stay of recovery pending the appeal. Having regard to the magnitude of the demand and the Revenue's stance, the Court directed that the petitioner may make the statutory application within two weeks; if the statutory application is decided adversely, the Revenue shall refrain from adopting coercive proceedings for a further period of two weeks thereafter. This protection is conditional on the petitioner filing the necessary application within the prescribed two week period.

No blanket stay granted; petitioner to seek stay under section 220(6); limited interim protection granted (no coercive steps for two weeks after an adverse order) subject to timely application.

Interim protection against coercive proceedings - Whether the Court would direct the CIT(A) to dispose of the appeal within a stipulated period. - HELD THAT: - The Additional Solicitor General stated that the CIT(A) would endeavour to dispose of the appeal as expeditiously as possible and preferably within six months. The Court declined to issue a mandatory time bound direction in view of that assurance and the statutory appellate process, leaving the matter to the CIT(A)'s endeavour to expedite disposal.

No specific mandatory time limit was imposed; the Court accepted the Revenue's assurance that the CIT(A) would endeavour to dispose of the appeal expeditiously (preferably within six months).

Final Conclusion: The writ petition was disposed of as withdrawn after the CIT(A) held the appeal to be maintainable; no blanket stay of recovery was granted, petitioner permitted to seek stay under section 220(6) with limited interim protection, and the Court refrained from imposing a mandatory time bound direction on the CIT(A) beyond the Revenue's undertaking to expedite disposal.

Power to set off refunds under Section 245 subject to prior written intimation - Discretionary nature of adjustment of refunds - Requirement of prior intimation before adjustment of refund - Assessee's prior correspondence does not oust statutory requirement of notice under Section 245 - Quashing of adjustment made without prior intimation - Central Board of Direct Taxes Instruction No.1989 reiterating requirement of prior intimation

Power to set off refunds under Section 245 subject to prior written intimation - Requirement of prior intimation before adjustment of refund - Central Board of Direct Taxes Instruction No.1989 reiterating requirement of prior intimation - Adjustment of the refund for Assessment Year 2016-17 without prior written intimation under Section 245 was unlawful and the adjustment communication was quashed. - HELD THAT: - The Court held that Section 245 permits the revenue to set off refunds against outstanding tax, but the power is discretionary and conditioned on prior written intimation to the assessee. The Division Bench's precedent in Hindustan Unilever Ltd. and CBIT Instruction No.1989 were relied upon to show the settled mandate that prior intimation must be given so the assessee may point out factual errors or reasons why adjustment should not be made. As no intimation was given before the impugned adjustment, the requirement of Section 245 was breached and the adjustment could not stand. [Paras 13, 14, 16]

Impugned adjustment of Rs. 58,07,58,796/- out of the refund for AY 2016-17 was quashed for lack of prior intimation under Section 245.

Assessee's prior correspondence does not oust statutory requirement of notice under Section 245 - Discretionary nature of adjustment of refunds - The letter dated 19 February 2018 from the petitioner did not constitute a standing, unconditional waiver permitting future adjustments without notice, and could not be treated as dispensing with the statutory requirement of prior intimation. - HELD THAT: - The 19 February 2018 letter requested release of long-pending refunds and stated that the petitioner had 'agreed' to adjustment of an identified sum against refunds then due, but the communication did not convey an unconditional, perpetual consent to adjust future refunds without notice. The letter was sent about one and a half years before the adjustment and subsequent events could alter circumstances; earlier non-objection could not be converted into a permanent waiver of the statutory right to prior intimation under Section 245. [Paras 15]

The 19 February 2018 communication cannot be used as a basis to dispense with the requirement of prior intimation under Section 245.

Quashing of adjustment made without prior intimation - Remand for fresh notice under Section 245 - The communication effecting adjustment and the subsequent intimation dated 31 July 2019 were set aside, with liberty to the Deputy Commissioner to issue a fresh notice under Section 245. - HELD THAT: - Having found the adjustment unlawful for want of prior intimation and that the earlier letter did not amount to waiver, the Court quashed the impugned adjustment communication and set aside the intimation. The Court expressly permitted the revenue to take further steps in law and to issue a fresh notice under Section 245 so that the matter may be considered afresh with the assessee given an opportunity to respond. [Paras 16, 17]

Impugned adjustment communication and the Section 245 intimation dated 31 July 2019 set aside; liberty granted to issue fresh Section 245 notice for fresh consideration.

Final Conclusion: Writ petition allowed: the adjustment of the refund for AY 2016-17 made without prior written intimation was quashed; the 19 February 2018 letter did not constitute a waiver of the statutory requirement; the impugned communications are set aside with liberty to the revenue to issue a fresh notice under Section 245 and proceed in accordance with law.

Double Taxation Avoidance Agreement applicability - Tax deduction at source obligations under Section 195 - Disallowance for non-deduction of tax at source under Section 40(a)(ia) / 40(a)(i) - Deemed income under Section 9(1)(vii) and the Explanation thereto - Retrospective amendment and inability to cast retrospective obligation to perform an impossible act

Double Taxation Avoidance Agreement applicability - Disallowance for non-deduction of tax at source under Section 40(a)(ia) / 40(a)(i) - Tax deduction at source obligations under Section 195 - Whether disallowance under Section 40(a)(ia) / 40(a)(i) for non-deduction of tax could be sustained where payments to non-resident service providers are governed by the DTAA - HELD THAT: - The Court recorded that Revenue has not challenged the Tribunal's finding that payments to the foreign service providers were governed by the applicable DTAAs and consequently did not give rise to taxable income in India. In terms of Section 90(2) the assessee may adopt the DTAA where beneficial. Because the DTAA application resulted in no income taxable in India for the service providers, there was no occasion to deduct tax under Section 195 and thus no basis for disallowance under Section 40(a)(ia) / 40(a)(i). The Tribunal's conclusion that the payments fell outside Indian taxation by reason of the DTAA stands unchallenged and is dispositive of the issue. [Paras 9, 10]

Disallowance under Section 40(a)(ia) / 40(a)(i) cannot be sustained as the DTAA application results in no income taxable in India and therefore no obligation to deduct tax arose.

Deemed income under Section 9(1)(vii) and the Explanation thereto - Retrospective amendment and inability to cast retrospective obligation to perform an impossible act - Tax deduction at source obligations under Section 195 - Whether a retrospective amendment (Explanation to Section 9(1)(vii)) can create an obligation to deduct tax at source in respect of payments made earlier when no such obligation existed - HELD THAT: - The Court noted that the Explanation to Section 9(1)(vii) was introduced by a retrospective amendment. However, it held that a retrospective amendment cannot be employed to impose an obligation to deduct tax at a time when that obligation was not in force, i.e., to require performance of an act that was impossible at the relevant time. The Court relied on the principle that a party cannot be called upon to comply with a statutory provision which was not in force when the payments were made. Given also that DTAA application negated taxable income in India, the question of retrospective creation of a deduction obligation was academic in the facts of the case. [Paras 7, 11, 12]

Retrospective amendment cannot be used to impose a past obligation to deduct tax where no such obligation existed at the time of payment; in any event the question is academic as DTAA precluded Indian taxation.

Final Conclusion: Revenue's appeal is dismissed: Tribunal's finding that the payments to foreign service providers were not taxable in India under the DTAAs (and hence no occasion to deduct tax arose) is unchallenged and dispositive; a retrospective amendment cannot impose an obligation to deduct tax with respect to payments made before such obligation existed.

Maintainability of writ petition against notice under Section 148 before compliance with the procedure in GKN Drive Shafts - validity of notice issued in the name of a deceased person represented by legal heirs - duty to furnish reasons for reopening and to pass a speaking order on objections

Maintainability of writ petition against notice under Section 148 before compliance with the procedure in GKN Drive Shafts - The writ petition challenging the Section 148 notice at the initial stage is not maintainable without following the procedure laid down in GKN Drive Shafts. - HELD THAT: - The Court applied the procedure explained by the Supreme Court in GKN Drive Shafts and held that when a notice under Section 148 is issued the assessee must first follow the statutory/constitutional remedy by filing the return, seeking the reasons for reopening and, after receipt of reasons and filing objections, obtain a speaking order before challenging the reopening. The petition filed straightaway against the notice without availing the procedural steps is therefore not maintainable at this stage. The court accordingly declined to adjudicate the factual merits of the reopening at this interlocutory stage and granted liberty to follow the GKN procedure. [Paras 4, 7, 8]

Writ petition not maintainable at the initial stage; petitioner directed to follow the procedure in GKN Drive Shafts (file return, ask for reasons, file objections and obtain speaking order).

Validity of notice issued in the name of a deceased person represented by legal heirs - A notice under Section 148 that names the deceased and expressly states it is issued 'represented by legal heirs' naming the heirs is not ipso facto a nullity as in cases where the notice is issued only in the name of the deceased. - HELD THAT: - The Court distinguished the earlier decision relied upon by the petitioner in which the notice had been issued solely in the name of the deceased and was held unsustainable. In the present case the impugned notice did not merely name the dead person; it proceeded to indicate that it was issued in the name of V. Maruthachalam represented by his legal heirs and specifically identified the heirs (including the petitioner). On that basis the notice could not be treated as issued only in the name of the deceased and therefore was not declared a nullity at this stage. The Court nonetheless left open factual examination to the statutory process required under GKN Drive Shafts. [Paras 6]

Notice not struck down as void merely for naming the deceased where it also identifies legal heirs; distinguishable from cases where notice was only in the name of the deceased.

Final Conclusion: Writ petition dismissed; petitioner granted liberty to file the return called for by the Section 148 notice within 15 days, to seek reasons for reopening, to file objections and obtain a speaking order in accordance with the procedure in GKN Drive Shafts before seeking any further judicial relief.

Penalty under Section 271(1)(c) for furnishing inaccurate particulars of income - mere claim unsustainable in law not amounting to furnishing inaccurate particulars - consistent past practice as defence to penalty - claim under project completion method

Penalty under Section 271(1)(c) for furnishing inaccurate particulars of income - mere claim unsustainable in law not amounting to furnishing inaccurate particulars - consistent past practice as defence to penalty - claim under project completion method - Whether claiming expenditure under section 37 while following the project completion method, though disallowed in assessment, amounts to furnishing inaccurate particulars of income attracting penalty under Section 271(1)(c). - HELD THAT: - The Tribunal and this Court applied the rule that a taxpayer's mere claim, even if ultimately unsustainable in law, does not by itself constitute furnishing of inaccurate particulars of income under Section 271(1)(c). The respondent had consistently claimed advertisement and sales-promotion expenses in the year of incurrence from Assessment Year 1990-91 up to the subject year while adopting the project completion method; the Assessing Officer first questioned that practice in Assessment Year 2006-07 and again in the subject year. Given the longstanding and uniformly followed practice and the principle in Commissioner of Income Tax v. Reliance Petroproducts Pvt. Ltd. that mere disallowance in quantum proceedings is not a sufficient basis for penalty under Section 271(1)(c), the imposition of penalty could not be sustained. The Tribunal properly took these considerations into account and set aside the penalty imposed by the Assessing Officer and the order of the Commissioner (Appeals). [Paras 6, 7]

Penalty under Section 271(1)(c) deleted; the claim did not amount to furnishing inaccurate particulars of income.

Final Conclusion: The appeal is dismissed; the Tribunal correctly deleted the penalty levied under Section 271(1)(c) for Assessment Year 2007-08, holding that a merely unsustainable claim, particularly when supported by long-standing practice, does not amount to furnishing inaccurate particulars of income.

Taxation of unexplained cash credits under Section 68 - onus on the assessee to prove genuineness and creditworthiness of claimed receipts - characterisation of ancestral/HUF property after family settlement - long term capital gain assessed in reassessment proceedings - concurrent findings of fact and appellate interference

Taxation of unexplained cash credits under Section 68 - onus on the assessee to prove genuineness and creditworthiness of claimed receipts - Validity of the addition of unexplained cash credits brought to tax under Section 68. - HELD THAT: - The Court upheld the concurrent findings of the authorities that the assessee failed to discharge the primary onus to establish that the credited amounts represented genuine borrowings from existing, creditworthy parties. The assessing officer and the appellate authorities examined the affidavits and other material produced and found them insufficient in respect of the required ingredients; consequently the addition was sustained. The High Court found no substantial question of law in the factual conclusions drawn by the revenue authorities. [Paras 4]

The addition under Section 68 was sustained; no question of law arises and interference is refused.

Characterisation of ancestral/HUF property after family settlement - long term capital gain assessed in reassessment proceedings - concurrent findings of fact and appellate interference - Whether the properties claimed as HUF/ancestral remained HUF properties after the family settlement and whether the long term capital gain addition was sustainable. - HELD THAT: - The Court accepted the view that upon the family settlement the share which fell to the assessee became his individual property, having regard to the authority relied upon by the lower authorities. The High Court found the inference drawn by the lower appellate authorities on this factual and legal premise to be sustainable and not per se illegal. As the findings were concurrent, the Court refused to interfere with the assessment of long term capital gain in the reassessment proceedings. [Paras 5]

The addition relating to the property transactions (long term capital gain) was upheld; the inference that the property became the assessee's individual property on family settlement is sustained and no interference is called for.

Final Conclusion: The appeal is dismissed; the High Court declined to interfere with the concurrent factual and legal findings sustaining the additions under Section 68 and the assessment of long term capital gain following family settlement.

Functional comparability - arms length price determination - role of Transfer Pricing Officer as a fact-finding/collaborative authority - comparability of entities for transfer pricing benchmarking - treatment of refundable security/deposit as part of cost of acquisition of leasehold rights for capital gains computation

Functional comparability - comparability of entities for transfer pricing benchmarking - arms length price determination - role of Transfer Pricing Officer as a fact-finding/collaborative authority - Whether M/s. Alphageo (India) Ltd. was rightly held by the Tribunal to be not comparable for determining the Arms Length Price of the assessee's research and technical services. - HELD THAT: - The Court considered whether the Tribunal erred in excluding M/s. Alphageo as a comparable. The record shows the TPO had applied a functional test and rejected other comparables as functionally different; the assessee had taken a consistent position challenging functional dissimilarities. Alphageo carried on research in seismic data in the oil sector, whereas the assessee conducted chemical and agro-chemical research, and on the face of the material the functions differed. The Tribunal reached a factual conclusion that Alphageo was not functionally comparable and restored the matter to the Assessing Officer / TPO to rework the ALP. The High Court recognised that determining comparability and selecting comparables is within the TPO/Tribunal's fact-based exercise, which is collaborative rather than strictly adversarial, and that divergent factual conclusions by tribunals on comparability do not necessarily raise a substantial question of law. A contrary decision from another Bench/tribunal holding Alphageo comparable depended on different factual findings and therefore did not require interference. [Paras 11, 12, 13]

The Tribunal's finding that M/s. Alphageo is not a comparable is a possible view on the evidence and does not give rise to a substantial question of law; questions (a), (b) and (c) are not entertained.

Treatment of refundable security/deposit as part of cost of acquisition of leasehold rights for capital gains computation - capital gains computation - Whether the refundable deposit made by the assessee with SIPCOT is to be treated as part of the cost of acquisition of the leasehold rights (and thus allowable against sale consideration) or as part of the sale consideration assessable as capital gains. - HELD THAT: - The Assessing Officer had included the refundable deposit as part of the sale consideration while computing capital gains. The Tribunal held that the refundable deposit paid to SIPCOT at the time of obtaining the leasehold right is allowable as cost of acquisition of that leasehold right and, if treated as sale consideration, the assessee would equally be entitled to treat it as cost of acquisition, rendering the transaction revenue neutral. The High Court found no error in the Tribunal's view that the deposit forms part of the cost base for the leasehold rights and that the net effect is neutral for revenue; accordingly the matter did not raise a substantial question of law warranting interference. [Paras 15, 16]

The refundable deposit with SIPCOT is allowable towards the cost of acquisition of the leasehold rights (or, if treated as sale consideration, is correspondingly allowable as cost), and the Tribunal's view is upheld; question (d) is not entertained.

Final Conclusion: The High Court dismissed the Revenue's appeal; the Tribunal's factual conclusion excluding M/s. Alphageo as a comparable for transfer pricing purposes and its treatment of the SIPCOT refundable deposit as cost of acquisition are not interfered with, and the appeal is dismissed.

Deemed registration under section 12AA(2) - entitlement to exemption under section 11 - processing of return and scope of intimation under section 143(1) - duty to refer to Assessing Officer for verification before making substantive adjustments

Deemed registration under section 12AA(2) - entitlement to exemption under section 11 - Effect of non-consideration of an application for registration under section 12A/12AA within the statutory six months and consequent entitlement to exemption under section 11 for the assessment year 2013-14. - HELD THAT: - The Tribunal held that where a trust filed an application for registration under section 12A on 06/08/1990 and the appropriate authority did not refuse registration within the six-month period prescribed by section 12AA(2), the application is to be treated as deemed registration. The Tribunal followed the view of the Hon'ble Allahabad High Court and the Hon'ble Supreme Court in Society for the Promotion of Education , which held that non-consideration within the six-month period results in deemed registration and that such registration takes effect from the date six months after the application. Applying that principle, and noting that the revenue had been allowing exemptions under section 11 in earlier years, the Tribunal found that the assessee was entitled to claim exemption for the assessment year 2013-14. [Paras 8]

The claim of exemption under section 11 was allowed by treating the pending registration as deemed granted under section 12AA(2).

Processing of return and scope of intimation under section 143(1) - duty to refer to Assessing Officer for verification before making substantive adjustments - Validity of CPC's processing of the assessee's return under section 143(1) to deny exemption where the registration number was not mentioned and whether such processing could substitute for assessment-stage verification. - HELD THAT: - The Tribunal held that the CPC, while processing the return under section 143(1), could not unilaterally withdraw the exemption claimed under section 11 merely because the registration number was not mentioned in the return. Section 143(1) permits adjustments that are apparent from the record (arithmetical errors or incorrect claims apparent from the return). The Tribunal noted that the adjustment made by CPC was debatable and required examination of assessment records and the status of the registration application; therefore the matter should have been referred to the Assessing Officer for verification rather than being decided at the 143(1) stage. The Tribunal relied on a coordinate bench decision in Andhra School of Preaching which set aside similar intimation adjustments as beyond the scope of section 143(1) when verification was necessary and there was no evidence of rejection or cancellation of registration. [Paras 8]

The intimation issued by CPC under section 143(1) withdrawing the exemption was held to be beyond the scope of that provision and could not stand; the addition was set aside and the matter treated for relief to the assessee.

Final Conclusion: Following the binding view that non-consideration of a registration application within six months results in deemed registration and that CPC cannot, under section 143(1), effect substantive withdrawal of exemption without assessment-stage verification, the appeal filed by the Revenue and the assessee's cross-objection were dismissed; the assessee's claim for exemption for AY 2013-14 stands allowed.

Revisionary jurisdiction under section 263 of the Income Tax Act - Erroneous and prejudicial to the interests of the Revenue - Change of opinion not sufficient for exercise of revisionary power - Requirement of reasons to justify exercise of revisionary power - Deduction under section 36(1)(viia) - dual components (7.5% of total income and 10% of aggregate average rural advances) - Taxability of NPA interest on receipt basis

Revisionary jurisdiction under section 263 of the Income Tax Act - Change of opinion not sufficient for exercise of revisionary power - Requirement of reasons to justify exercise of revisionary power - Erroneous and prejudicial to the interests of the Revenue - Validity of the Pr. Commissioner's exercise of revisionary jurisdiction under section 263 where the Assessing Officer had conducted enquiries on the same issues. - HELD THAT: - The Tribunal examined whether specific enquiries were conducted by the Assessing Officer on the issues relied upon by the Pr. Commissioner and whether the Pr. Commissioner recorded reasons showing the assessment order to be not only erroneous but prejudicial to the revenue. Documentary evidence on record (including the assessee's reply dated 17.11.2015) established that the AO had raised specific queries and received detailed replies; the Pr. Commissioner's statement that such material was not on record was incorrect and arbitrary. The Court recalled the governing principle that mere difference of opinion between the AO and the Commissioner does not sustain exercise of revisionary power; the Commissioner must record reasons demonstrating that enhancement, modification, cancellation or fresh assessment was called for and that the AO's order was irresistibly erroneous and prejudicial to revenue. On the facts, the Tribunal found no adequate reasoning by the Pr. Commissioner and concluded that his assumption of jurisdiction under section 263 was not justified. Decision therefore to quash the section 263 orders allowed the appeals. [Paras 9, 10, 11, 21, 22]

Section 263 orders of the Pr. Commissioner quashed; revisionary jurisdiction was not validly exercised.

Deduction under section 36(1)(viia) - dual components (7.5% of total income and 10% of aggregate average rural advances) - Erroneous and prejudicial to the interests of the Revenue - Whether the assessment was erroneous and prejudicial to revenue in allowing deduction under section 36(1)(viia) given the manner of computing the 7.5% component and the computation of the 10% rural-advances component. - HELD THAT: - The Tribunal accepted that the AO's computation of the 7.5% component erred by excluding depreciation when computing total income (a defect noted by the Pr. Commissioner). However, the Tribunal analysed the second component (10% of aggregate average rural advances) and relied on judicial authority upholding the assessee's method of aggregating rural advances (the aggregate including advances of preceding years). When both components are correctly computed (i.e., 7.5% after reducing depreciation and 10% of the aggregate average rural advances), the maximum qualifying deduction far exceeded the amount actually claimed and allowed (the provision claimed by the assessee was much lower). Consequently, although the AO's computation on the first component was erroneous, the error did not render the assessment prejudicial to revenue in aggregate, and therefore did not justify exercise of section 263 on this issue. [Paras 12, 13, 14, 16, 17]

The finding of error in the 7.5% computation did not make the assessment prejudicial to revenue overall; section 263 could not be sustained on this ground.

Taxability of NPA interest on receipt basis - Erroneous and prejudicial to the interests of the Revenue - Whether the assessment order was erroneous and prejudicial to revenue for having allowed provision for NPA interest without enquiry, and whether the NPA interest was taxable on accrual or receipt basis. - HELD THAT: - The Tribunal found on record that the AO had made specific enquiries regarding NPA interest and that the assessee had responded; thus the Pr. Commissioner's conclusion that no enquiry was made was incorrect. On the merits, the Tribunal applied settled law that NPA interest is taxable on receipt basis. The facts showed that only the amount actually recovered in the year had been credited to profit and loss and that the accrued but unrecovered NPA interest was not rightly credited. Therefore there was no infirmity in the AO's view and the Pr. Commissioner was not justified in treating the assessment as erroneous and prejudicial to revenue on this ground. [Paras 18, 19, 20]

Section 263 could not be sustained on the NPA interest issue; the assessment was not erroneous and prejudicial to revenue on this score.

Final Conclusion: The Tribunal quashed the section 263 orders for assessment years 2013-14 and 2014-15, holding that the Pr. Commissioner had not validly exercised revisionary jurisdiction: enquiries had been made by the Assessing Officer, the Commissioner failed to record sufficient reasons showing the assessment to be both erroneous and prejudicial to revenue, and the substantive points on section 36(1)(viia) deduction and NPA interest did not sustain a view of prejudice to revenue.

Undisclosed income discovered during search - loans evidenced by cheques as security - evidence of cash loans by receipts - telescoping of undisclosed income - taxation in the hands of the right person - remand for fresh adjudication

Remand for fresh adjudication - loans evidenced by cheques as security - Deletion of addition of Rs. 8.00 lakh from the assessee and examination of the same in the hands of Mr. Mohinder T. Kalani - HELD THAT: - Cheques of Rs. 22.00 lakh relating to M/s. Govind Ram & Sons were found during search. The material shows that the loan to M/s. Govind Ram & Sons was given by Mr. Mohinder T. Kalani and not by the assessee; cheques of Rs. 14.00 lakh were in the son's name while cheques of Rs. 8.00 lakh were payable to self and were not in the assessee's name. The Tribunal restored the related issue in the son's case to the Assessing Officer for fresh adjudication and, on the common consent of parties, deleted the Rs. 8.00 lakh addition in the assessee's hands, directing that the matter be examined in the hands of Mr. Mohinder T. Kalani. [Paras 5, 7]

Addition of Rs. 8.00 lakh deleted in the hands of the assessee and directed to be examined in the hands of Mr. Mohinder T. Kalani (remanded).

Undisclosed income discovered during search - telescoping of undisclosed income - Validity of addition based on cheques issued by M/s. Karda Constructions and application of telescoping - HELD THAT: - Cheques amounting to Rs. 1.08 crore issued by M/s. Karda Constructions were found at the assessee's premises and the assessee failed to correlate certain cheques with recorded loan transactions. The assessee had admitted that he made cash loans against cheques as security; accordingly the cheques represented security for unrecorded loans and the addition was warranted. Following the Tribunal's earlier approach in the assessee's assessment for A.Y. 2010-11, the principle of telescoping of undisclosed income was applied. An amount of Rs. 22,06,750/- previously suo motu offered (and not allowed as telescoping benefit for the preceding year) was held available to be adjusted against the present addition, reducing the addition from Rs. 1.08 crore to Rs. 85,93,250/-. [Paras 8, 11]

Addition sustained, subject to telescoping: net addition of Rs. 85,93,250/- sustained for A.Y. 2011-12.

Incriminating documents found during search - undisclosed income discovered during search - Additions of Rs. 10.00 lakh and Rs. 5.00 lakh on account of cheques found from the assessee's premises (issued by Mr. Manohar B. Sadhwani and Mr. Baldeva respectively) - HELD THAT: - Cheques issued by Mr. Manohar B. Sadhwani and by Mr. Baldeva were found at the assessee's premises and the assessee had no explanation for these amounts. The authorised authorities made additions on the basis of the incriminating documents discovered during search and the assessee's concession that no explanation was available supports sustaining the additions. [Paras 12, 13]

Additions of Rs. 10.00 lakh and Rs. 5.00 lakh sustained.

Evidence of cash loans by receipts - taxation in the hands of the right person - Addition of Rs. 41.00 lakh made on account of alleged unrecorded cash loans to Mr. Pradip D. Kalani; rejection of plea of deletion on ground of double taxation - HELD THAT: - Receipts found during search, signed by Mr. Pradip D. Kalani on behalf of Deejay Distilleries P. Ltd., acknowledge receipt of cash loans totalling Rs. 41.00 lakh which were not recorded in the assessee's books. Such direct documentary evidence establishes that the assessee advanced cash loans from undisclosed income and, therefore, the amounts are taxable in the assessee's hands. The contention that Rs. 5.00 lakh should be deleted because Mr. Pradip D. Kalani offered it in his return was repelled: the determinative question is taxability of the assessee's undisclosed income; taxation must be in the hands of the person who derived the undisclosed income, though the recipient (Mr. Pradip D. Kalani) may pursue his legal remedies to avoid wrongful taxation. [Paras 16, 18, 19]

Addition of Rs. 41.00 lakh sustained in the hands of the assessee; plea of double taxation rejected (recipient may seek remedies).

Final Conclusion: The Tribunal partly allowed the appeal: deletion of the Rs. 8.00 lakh addition in the assessee's hands and remand for examination in the hands of Mr. Mohinder T. Kalani; sustainment of the net addition of Rs. 85,93,250/- (after telescoping) in respect of Karda cheques; sustainment of additions of Rs. 10.00 lakh and Rs. 5.00 lakh; and sustainment of the addition of Rs. 41.00 lakh relating to cash loans to Mr. Pradip D. Kalani.

Deemed registration under Rule 11AA/Section 80G - time limit for passing order under Rule 11AA - effect of delay - deemed grant of approval - application of the ratio of registration under Section 12AA to Section 80G - eligibility for exemption under Section 11 and disqualification under Section 13(3)(e)

Deemed registration under Rule 11AA/Section 80G - time limit for passing order under Rule 11AA - effect of delay - deemed grant of approval - application of the ratio of registration under Section 12AA to Section 80G - Deemed grant of recognition under section 80G by reason of the Commissioner failing to pass an order within the six month period prescribed by Rule 11AA. - HELD THAT: - The Tribunal in the earlier round held that the Commissioner passed the order beyond the six month period (taking into account a 19 day delay attributable to the applicant) and consequently the certificate under section 80G(5) stood deemed to have been granted. The High Court, on appeal, confined its consideration to merits and restored the matter for fresh consideration; it did not disturb the Tribunal's finding on limitation. The Tribunal in the present order held that the limitation finding in favour of the assessee has attained finality and that the Supreme Court's reasoning in the context of section 12AA (registration deemed where no order is passed within six months) is applicable by parity to registration under section 80G. Therefore, even if the merits were subsequently decided against the assessee, the deemed registration arising from the belated order survives unless set aside on appropriate proceedings; the Tribunal accordingly upheld the deemed registration previously held to have been granted.

The Tribunal upheld the earlier finding that the certificate under section 80G(5) is deemed to have been granted because the Commissioner did not pass the order within the prescribed six month period; that deemed registration remains effective.

Eligibility for exemption under Section 11 and disqualification under Section 13(3)(e) - Merits concerning the assessee's compliance with conditions for exemption (maintenance of accounts, misutilisation of grants, loans attracting section 13(3)(e)) were not finally decided and were remanded for reconsideration. - HELD THAT: - The Revenue's appeal to the High Court raised questions on factual and legal aspects of the assessee's conduct - separate accounting for project funds, accounting of Government grants, utilisation to the extent required by section 11(2), and alleged disqualifying transactions under section 13(3)(e). The High Court restored the matter for fresh consideration on these merits. Consequently, the Tribunal did not finally adjudicate these merit issues in the present order; they remain subject to fresh examination as directed by the High Court. The Tribunal noted that a Review Petition on the deemed registration point was pending before the High Court and observed that parties remained at liberty to seek recall of the instant order depending on the High Court's eventual decision on deemed registration.

Merit issues relating to compliance with section 11 and disqualification under section 13(3)(e) were remanded for fresh consideration; no final decision on merits was recorded.

Final Conclusion: The appeal is allowed on the ground that the certificate under section 80G(5) is deemed to have been granted due to the Commissioner's failure to pass an order within the six month period under Rule 11AA; merits questions concerning eligibility and disqualification were remanded for fresh consideration and remain undecided.

Approval for reopening under section 151(2) - reopening of assessment - deemed dividend under section 2(22)(e) - trade advances as exclusion from deemed dividend - current account transactions - registration of memorandum of understanding - CBDT Circular No.19/2017

Approval for reopening under section 151(2) - reopening of assessment - Validity of reopening of assessment on the ground that competent approval under section 151(2) was not obtained. - HELD THAT: - The original assessment was completed under section 143(1) and therefore section 151(2) is applicable. The assessment record shows that the Learned Joint Commissioner granted approval for reopening after satisfying himself with the reasons recorded. The Tribunal examined the record and found the requisite approval and satisfaction on file. The assessee's additional grounds challenging the validity of reopening on this basis were therefore rejected. [Paras 2]

Assessee's challenge to reopening of assessment on grounds of absence of competent approval dismissed; reopening held valid.

Deemed dividend under section 2(22)(e) - trade advances as exclusion from deemed dividend - current account transactions - registration of memorandum of understanding - CBDT Circular No.19/2017 - Whether amounts advanced by M/s DEPL to the assessee constitute deemed dividend under section 2(22)(e) or are trade advances/current account transactions excluded from deemed dividend. - HELD THAT: - The assessee, a 20% shareholder in DEPL (a closely held company), produced a notarized Memorandum of Understanding dated 2.5.2006 showing the assessee as an 'aggregator' procuring lands for DEPL and setting out the business nexus for periodical advances. The ledger evidence demonstrated frequent advances and repayments and an operated current account between the parties. The Tribunal held that the substance of transactions-advances made in the ordinary course of business pursuant to the MOU and operated as current account-was sufficient to characterise them as trade advances/commercial transactions. An unregistered MOU, though not enforceable in the same way as a registered document, cannot be summarily discarded where it is notarized and supported by books of account; absence of registration does not render transactions sham. Reliance was placed on the CBDT Circular No.19/2017 and judicial pronouncements recognising that trade advances/commercial transactions do not fall within the scope of section 2(22)(e). On these facts the Tribunal concluded that the additions under section 2(22)(e) were not justified and directed deletion. [Paras 3, 4, 5]

Addition under section 2(22)(e) deleted; advances held to be trade advances/current account transactions and not deemed dividend.

Deemed dividend under section 2(22)(e) - Whether accumulated profits should be taken as at the end of the earlier previous year or up to the date of advancing the loan for computing deemed dividend - left open. - HELD THAT: - The Tribunal found it unnecessary to adjudicate the question of computation of accumulated profits for the purpose of working out deemed dividend because it had decided the matter on the ground that the advances were trade advances/current account transactions and hence not exigible to section 2(22)(e). Accordingly, the dispute as to whether accumulated profits should be taken as at the end of the earlier previous year or up to the date of the advance was left undecided. [Paras 5]

Question of choice of period for computing accumulated profits left open for future determination; not decided by the Tribunal.

Final Conclusion: Reopening of assessments upheld as valid. Additions made under section 2(22)(e) for A.Y. 2008-09 and 2009-10 deleted on findings that the transactions were trade advances/current account transactions supported by a notarized MOU and books of account; computation issue as to accumulated profits left open.

Tax Collection at Source (TCS) obligation under section 206C(1C) - Ignorance of law not a defence for statutory compliance - Deemed assessee in default under section 206C(6A) - first proviso - Retrospective/curative operation of statutory proviso and verification of payers' returns

Condonation of delay in filing appeals - Condonation of identical 341 days delay in filing all five appeals. - HELD THAT: - The tribunal considered the assessee's explanation (administrative approvals, election schedule, rule amendments, transfers, vacations) supported by affidavits and press notes and, applying the principle that substantial justice should prevail over technicalities, found the delay attributable to circumstances beyond the assessee's control. Accordingly the tribunal condoned the identical delay of 341 days and admitted the appeals for adjudication on merits. [Paras 2]

Delay of 341 days in filing all five appeals is condoned and the appeals are admitted for adjudication.

Tax Collection at Source (TCS) obligation under section 206C(1C) - Ignorance of law not a defence - Whether the District Land & Land Reforms Officer, acting as licensor collecting royalty and cess on short-term quarry permits, was liable to collect TCS and whether his plea of ignorance or absence of departmental instructions absolved him from liability. - HELD THAT: - The tribunal concurred with the Assessing Officer and the CIT(A) that the assessee, being the administrative licensor collecting royalty and cess from quarry lessees, fell within the class of persons required to collect TCS under the statutory scheme. The assessee's failure to file Form 27EQ and to collect TCS could not be excused by claimed ignorance or by absence of departmental circulars: a government agency performing commercial functions has an obligation to be aware of applicable tax provisions. The tribunal therefore upheld the raising of TCS demands and interest by the lower authorities. [Paras 3, 4, 5]

The Assessing Officer's and CIT(A)'s action raising TCS demands against the assessee is upheld; ignorance of law or lack of departmental instructions is not a defence.

Deemed assessee in default under section 206C(6A) - first proviso - Retrospective/curative operation of statutory proviso and verification of payers' returns - Whether the first proviso to section 206C(6A) (inserted by Finance Act, 2012 with effect from 01.07.2012) could relieve the assessee from being treated as an assessee in default for earlier years by reference to payers having filed returns, taken the amount into account and paid tax. - HELD THAT: - The tribunal observed that the Assessing Officer and the CIT(A) had not examined the effect of the proviso. Rejecting the Revenue's technical contention that the proviso applied only prospectively, the tribunal accepted the view that the proviso is curative/retrospective in effect (analogous to the proviso inserted in section 201(1) by the same Finance Act) and directed verification of the factual matrix: whether the payers (buyers/licensees/lessees) had furnished returns, taken the amounts into account and paid tax, and whether certificates from accountants were available. The matter was remitted to the Assessing Officer for consequential proceedings and verification, with directions to the assessee to place necessary documents within three effective opportunities of hearing. [Paras 6, 7, 8]

The proviso to section 206C(6A) is held to warrant consideration for retrospective/curative effect; issue remanded to the Assessing Officer to verify payers' returns, tax payments and requisite certificates, and to proceed consequentially.

Final Conclusion: The tribunal condoned delay and admitted the appeals. It upheld the liability of the District Land & Land Reforms Officer to collect TCS and confirmed the raising of demands by the lower authorities, but directed remand for verification of the applicability of the first proviso to section 206C(6A) (Finance Act, 2012) and ordered consequential proceedings to determine whether payers' compliance exempts the assessee from being an assessee in default; appeals are partly allowed for this limited purpose.

Benami transaction - known sources - pleading requirement under Prohibition of Benami Property Transactions Act, 1988 - exemption for property held in name of spouse - mandatory injunction - interim injunction restraining alienation

Benami transaction - known sources - pleading requirement under Prohibition of Benami Property Transactions Act, 1988 - Plaintiff must specifically plead that the consideration for the property was provided out of his known sources to claim exemption from the benami law. - HELD THAT: - The plaint admitted the property stood in joint names of the plaintiff and defendant but did not specifically aver that the consideration was paid out of the plaintiff's known sources. The Court noted that the statutory exemption for property held in the name of a spouse is conditional on demonstration that the consideration was provided from the known sources of the claimant. Absent a specific plea in the plaint conforming to that statutory requirement, the claim in declaration in contravention of the benami law cannot be entertained; evidence alone, without the requisite pleaded case, is insufficient to cure the deficiency. [Paras 6, 8, 9, 10, 12]

The declaration claim is not maintainable in the absence of a specific plea that the consideration was from the plaintiff's known sources; such pleading is essential to seek exemption from the benami provisions.

Exemption for property held in name of spouse - benami transaction - Plaintiff's entitlement to continue the suit was conditioned on withdrawing the declaration relief and confining the suit to injunctive relief. - HELD THAT: - When confronted with the absence of the required statutory plea, the plaintiff's senior counsel, under instructions, abandoned the relief of declaration and confined the suit to claims for prohibitory and mandatory injunction. On that basis the Court deemed it appropriate to entertain the suit insofar as injunctive relief was sought, while noting that the benami contention required a proper pleaded case for any declaration to be adjudicated. [Paras 11, 16, 17, 18]

Suit is entertained only to the extent of prohibitory and mandatory injunctions after the plaintiff relinquished the declaration claim.

Interim injunction restraining alienation - mandatory injunction - Interim restraint was granted on both parties from dealing with the specified property and title deeds until further orders, and summons/notice directed to be issued. - HELD THAT: - Having confined the suit to injunctive relief and found it appropriate to proceed on that basis, the Court issued directions for summons and notice by all permissible modes returnable on the listed date. Pending further orders, both plaintiff and defendant were restrained from alienating, encumbering, parting with possession of the property or the title deeds. The Court also directed compliance with the requirements of Order XXXIX Rule 3 CPC within the time specified. [Paras 19, 20, 21]

Interim injunction restraining both parties from dealing with the property and title deeds granted until further orders; summons and notice to defendant ordered.

Final Conclusion: The Court held that, absent a specific plea that the consideration for the property was from the plaintiff's known sources, a declaration in the face of the benami provisions cannot be entertained; the plaintiff thereupon abandoned the declaration relief, the suit was retained for injunctive relief, and an interim injunction was granted restraining both parties from dealing with the property until further orders.

Mandatory pre-deposit requirement under Section 129E - dismissal for non-compliance of pre-deposit - power to waive or reduce pre-deposit - applicability of precedent involving departmental officer - exercise of High Court's extraordinary writ jurisdiction in rare cases

Mandatory pre-deposit requirement under Section 129E - dismissal for non-compliance of pre-deposit - Validity of dismissal of the appeal by the Tribunal for failure to comply with the mandatory pre-deposit requirement - HELD THAT: - The Tribunal dismissed the appeal filed under Section 129A for non-compliance with the statutory requirement to make the prescribed pre-deposit. The High Court examined the Tribunal's procedural communications and the appellant's failure to deposit or to take effective steps over several months. The Court held that Section 129E mandates deposit of the specified percentage before the Tribunal entertains the appeal and that non-compliance justified dismissal. In the circumstances of this case, where no deposit was made and no adequate steps were shown to be taken to comply, interference with the Tribunal's dismissal was not warranted.

Tribunal's dismissal for non-compliance with the pre-deposit requirement upheld; no interference.

Applicability of precedent involving departmental officer - Whether an order of the Tribunal in a separate appeal filed by a departmental officer is binding or entitles the appellant to relief in the present case - HELD THAT: - The Court considered an earlier Tribunal order in which relief was granted in an appeal filed by a departmental officer concerning applicability of certain benefits. The High Court found that the factual and party matrix in that decision differed materially from the present case because the earlier appellant was a departmental officer while the present appellant is not. Consequently, the earlier order could not be relied upon to excuse the present appellant from the statutory pre-deposit requirement.

Earlier Tribunal order in a matter involving a departmental officer held not to entitle the present appellant to relief; reliance on that order rejected.

Power to waive or reduce pre-deposit - exercise of High Court's extraordinary writ jurisdiction in rare cases - Whether the Tribunal or the High Court has power to waive or reduce the pre-deposit mandated by Section 129E - HELD THAT: - The Court reviewed authorities and statutory amendments which, in the Court's view, do not confer a power on the Tribunal or on the appellate authority to waive or reduce the pre-deposit prescribed by Section 129E. While acknowledging that the High Court's writ jurisdiction under Article 226 remains available in exceptional circumstances, the Court observed that such power should be exercised only in rare and deserving cases. Having considered the facts and precedents relied upon by the appellant, the Court found no justification to invoke extraordinary relief to waive or reduce the statutory deposit in the present matter.

No power to waive or reduce the statutory pre-deposit in the present circumstances; petition for such relief denied.

Final Conclusion: The High Court dismissed the petition and upheld the Tribunal's order dismissing the appeal for non-compliance with the mandatory pre-deposit requirement under Section 129E; precedents for waiver were held inapplicable and no exercise of extraordinary writ relief was warranted.

Ultra vires - customs valuation - inclusion of demurrage in transaction value - rule making power under Section 156 - scope of Section 14 - transaction value and costs of transportation - post importation charges excluded from assessable value - demurrage as penal/liquidated damages - limits on delegated legislation in taxing statutes

Inclusion of demurrage in transaction value - scope of Section 14 - transaction value and costs of transportation - ultra vires - rule making power under Section 156 - post importation charges excluded from assessable value - demurrage as penal/liquidated damages - limits on delegated legislation in taxing statutes - The Explanation to sub rule (2) of Rule 10 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, insofar as it seeks to include ship demurrage charges in the cost of transport for determination of assessable value under Section 14 of the Customs Act, 1962, is ultra vires Section 14 and is invalid. - HELD THAT: - The Court examined the amended Section 14 and the corresponding Rules and held that the statutory provision for transaction value includes costs of transportation to the place of importation only to the extent authorised by the Act; it does not authorise inclusion of demurrage charges. Demurrage, being in essence a penalty or liquidated damages payable for delay and constituting a post importation consequence, is not a component of the price actually paid or payable for the goods at the time of importation. The Court relied on and applied the reasoning of earlier Supreme Court decisions which treat post importation charges and demurrage as not includible for valuation under the Customs Act. Further, the Court observed that rule making power under Section 156 must be exercised within the scope and purpose of the principal Act and must not widen the statutory scheme; a delegate cannot, by rule, legislate beyond the policy and limits set by the Legislature in a taxing statute. For these reasons the Explanation to Rule 10(2), which explicitly seeks to include ship demurrage charges in the cost of transport, travels beyond the scope of Section 14 and is therefore struck down. [Paras 5, 13]

The Explanation to sub rule (2) of Rule 10 of the Valuation Rules, 2007 is declared ultra vires Section 14 of the Customs Act, 1962 and is struck down.

Final Conclusion: The writ petition is allowed to the extent indicated: the Explanation to Rule 10(2) of the Customs Valuation Rules, 2007 - insofar as it includes ship demurrage charges in assessable value under Section 14 - is held invalid and struck down.

Abatement of appeal on death - continuance of proceedings by successor-in-interest - failure to apply within prescribed period under Rule 22 - Rule 22 of Customs Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982

Abatement of appeal on death - continuance of proceedings by successor-in-interest - Rule 22 of Customs Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982 - Whether the appeal abates on account of the appellant's death for non-initiation of proceedings by his successor-in-interest or legal representative under Rule 22. - HELD THAT: - Rule 22 provides that where an appellant dies the appeal shall abate unless an application for continuance is made by or against the successor-in-interest, executor, administrator or other legal representative within sixty days of the occurrence. The appellant here died on 24.10.2007 and no application for continuance by any successor-in-interest or legal representative has been filed to date. No claim of sufficient cause for delay in filing such an application was made or established before the Tribunal. In these circumstances the statutory mechanism for continuation of proceedings was not invoked and the appeal must therefore abate in terms of the rule. [Paras 3, 4]

Appeal abates for non-compliance with Rule 22; proceedings not continued by successor-in-interest or legal representative.

Final Conclusion: The appeal is held to have abated under Rule 22 of the CESTAT (Procedure) Rules, 1982 for failure to seek continuance of proceedings by the successor-in-interest or legal representative within the prescribed period; the appeal is therefore dismissed as abated.

Limitation Act, Article 137 - Commencement of the Insolvency and Bankruptcy Code not a trigger for limitation - Section 7 IBC as an application by a financial creditor (not an action to enforce a mortgage) - Irrelevance of Article 62 / mortgage-enforcement provisions to Section 7 proceedings - Binding force of Supreme Court precedents under Article 141 of the Constitution

Limitation Act, Article 137 - Commencement of the Insolvency and Bankruptcy Code not a trigger for limitation - Section 7 IBC as an application by a financial creditor (not an action to enforce a mortgage) - Date of the IBC's commencement does not determine the limitation period for applications under Section 7; Article 137 of the Limitation Act governs such applications. - HELD THAT: - The Court reiterated that the coming into force of the Insolvency and Bankruptcy Code on 01.12.2016 cannot be treated as the triggering event for limitation in respect of applications under Section 7. Applications under Section 7 are petitions by financial creditors alleging a defined default and are not proceedings to enforce mortgage liabilities; therefore provisions dealing with enforcement of mortgages (invoked by the impugned court under Article 62, erroneously referred to as Article 61) are inapposite. Consistently with this Court's prior ruling in B.K. Educational Services Pvt. Ltd. v. Parag Gupta and Associates, Article 137 of the Limitation Act applies to Section 7 applications and must be applied in determining limitation questions in such proceedings. The Court invoked the binding character of its precedents under Article 141 in support of this legal position. [Paras 1, 2, 3]

The conclusion that the IBC commencement date triggers limitation was rejected; Article 137 of the Limitation Act governs limitation for Section 7 applications.

Remand for fresh adjudication on limitation applying Article 137 - Whether the impugned judgment should be set aside and the matter reconsidered applying Article 137. - HELD THAT: - Having identified the legal error in treating the IBC commencement date or mortgage-enforcement provisions as determinative of limitation, the Court set aside the impugned judgment and directed that the matter be determined afresh. The parties are permitted to argue the factual and legal merits before the adjudicating forum on the sole footing that Article 137 of the Limitation Act applies to the Section 7 application. [Paras 4]

Impugned judgment set aside and the matter remanded for fresh consideration applying Article 137.

Interim stay of adjudicatory order - Whether the NCLT order dated 29.01.2019 should remain stayed pending further orders from the NCLAT. - HELD THAT: - As part of its directions consequent to setting aside the impugned judgment and remanding the matter, the Court ordered that the existing NCLT order shall remain stayed. This interim measure preserves the status quo while the higher forum considers the matter further. [Paras 6]

The NCLT order dated 29.01.2019 is stayed until further orders of the NCLAT.

Final Conclusion: The appeal is allowed; the impugned judgment is set aside because Article 137 of the Limitation Act, and not the IBC commencement date or mortgage-enforcement provisions, governs limitation for Section 7 applications. The matter is remanded for fresh consideration on that footing, and the NCLT order dated 29.01.2019 is stayed pending further orders of the NCLAT.

Applicability of the Limitation Act to applications under the Insolvency and Bankruptcy Code - time-bar under Article 137 of the Limitation Act - acknowledgement of debt under Section 18 of the Limitation Act - effect of pending DRT/SARFAESI proceedings on limitation

Applicability of the Limitation Act to applications under the Insolvency and Bankruptcy Code - effect of pending DRT/SARFAESI proceedings on limitation - Whether the Limitation Act applies to petitions filed under Section 7 of the Code and whether pendency of proceedings before DRT/SARFAESI tolLs or excludes the period of limitation for filing a Section 7 petition. - HELD THAT: - The Tribunal applied the Supreme Court's reasoning in BK Educational to hold that the Limitation Act applies to applications under Sections 7 and 9 of the Code from the inception of the Code. The Tribunal observed that there is no bar to filing an application under Section 7 while DRT/SARFAESI proceedings are pending, but expressly held that pendency of such proceedings does not operate to exempt or toll the limitation period. Reliance was also placed on the principle that retrospective application of the amendment to Section 238A is necessary to prevent revival of time-barred claims. Accordingly, the time consumed in DRT/SARFAESI proceedings cannot be treated as extending the period of limitation for the Section 7 petition. [Paras 12, 13]

The Limitation Act applies to Section 7 petitions and the pendency of DRT/SARFAESI proceedings does not extend or exempt the limitation period.

Time-bar under Article 137 of the Limitation Act - acknowledgement of debt under Section 18 of the Limitation Act - Whether the Section 7 petition was barred by limitation on the facts of the case and whether any acknowledgement extended the limitation period. - HELD THAT: - The Tribunal found that the default is recorded as having occurred on 30.06.2009 and that any acknowledgement relied upon by the petitioner capable of extending limitation had to be within three years of the date of filing (i.e., before 11.07.2015). Although the petitioner relied on a legal notice dated 10.04.2012 and pleaded earlier proceedings before the DRT, the Tribunal noted that no acknowledgement within the meaning of Section 18 of the Limitation Act was placed on record prior to the expiry of the three-year period. The Tribunal therefore applied Article 137, concluding that the right to sue accrued on default and, in absence of timely acknowledgement or invocation of Section 5, the petition filed on 11.07.2018 was time-barred. [Paras 15, 16]

On the facts, the petition was barred by limitation under Article 137 and was dismissed for want of limitation as no timely acknowledgement extending the period was proved.

Final Conclusion: The petition under Section 7 is dismissed as time-barred: the Limitation Act applies to Section 7 petitions, pendency of DRT/SARFAESI does not extend limitation, and no timely acknowledgement was shown to extend the limitation period.

Withdrawal of application under section 12A of the Insolvency and Bankruptcy Code - approval by ninety per cent voting share of the Committee of Creditors - compliance with Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - power of the Adjudicating Authority/Tribunal to approve withdrawal under section 12A - cessation of moratorium and closure of corporate insolvency resolution process on approval of withdrawal

Withdrawal of application under section 12A of the Insolvency and Bankruptcy Code - approval by ninety per cent voting share of the Committee of Creditors - Application for withdrawal of the company petition following approval by the Committee of Creditors - HELD THAT: - The Tribunal considered an application under section 12A filed on behalf of the applicant/RP seeking approval to withdraw the company petition admitted under section 9. Section 12A permits withdrawal of an application admitted under section 7, 9 or 10 where the applicant obtains approval of ninety per cent voting share of the Committee of Creditors. The minutes placed on record show that the Committee of Creditors approved the withdrawal with 100% voting share. The Tribunal accepted that where the requisite voting share is secured, the Adjudicating Authority may permit withdrawal and therefore the prerequisite approval by the Committee was satisfied in this case. [Paras 12, 13, 17, 18]

The Tribunal allowed the withdrawal application as the Committee of Creditors had approved withdrawal with the requisite voting share.

Compliance with Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - Whether the procedural requirements under Regulation 30A for filing a withdrawal application were complied with - HELD THAT: - Regulation 30A prescribes submission of the withdrawal application in Form FA to the IRP/RP before issue of invitation for expression of interest and requires accompanying bank guarantee towards estimated costs, as well as timelines for consideration by the Committee and submission to the Adjudicating Authority upon approval. The record shows that the withdrawal application in Form FA was filed on 08.07.2019, was considered by the Committee, and approved; the Tribunal found that the requirements of Regulation 30A were observed in the present case. [Paras 14, 15, 16, 19]

The Tribunal held that the application complied with Regulation 30A.

Power of the Adjudicating Authority/Tribunal to approve withdrawal under section 12A - cessation of moratorium and closure of corporate insolvency resolution process on approval of withdrawal - Effect of Tribunal's approval under section 12A and consequent status of moratorium and CIRP - HELD THAT: - The Tribunal examined its statutory power under section 12A to approve a withdrawal application which has been authorised by the Committee of Creditors, and concluded that it is empowered to grant such approval. Upon allowing the withdrawal, the moratorium imposed under section 14 ceases and the corporate insolvency resolution process terminates. Applying these legal consequences to the facts, the Tribunal directed that the moratorium shall cease to exist and the CIRP is closed. [Paras 20, 21, 22, 23]

The Tribunal approved the withdrawal, directed cessation of the moratorium and declared the CIRP closed.

Final Conclusion: The Tribunal, finding that the Committee of Creditors approved the withdrawal with the requisite voting share and that Regulation 30A was complied with, allowed the section 12A application, approved withdrawal of CP(IB) No. 671/9/HDB/2018, ordered that the moratorium cease, and directed closure of the CIRP.

Maintainability of an application under Section 7 of the I&B Code during pendency of Joint Lenders Forum/corrective action plan - applicability of the Limitation Act, 1963 to applications under the I&B Code (Part II of Third Division) - accrual of right to apply under the I&B Code on commencement of the statute - limitation in respect of suits relating to immovable property and rights of assignees (Article 61, First Division, Limitation Act)

Maintainability of an application under Section 7 of the I&B Code during pendency of Joint Lenders Forum/corrective action plan - Petition under Section 7 of the I&B Code is maintainable even when a Joint Lenders Forum or corrective action plan is under consideration. - HELD THAT: - The Tribunal addressed the contention that a Section 7 petition could not be entertained while lenders were engaged in a Joint Lenders Forum and finalizing a corrective action plan. Observing that there is no statutory bar to filing under Section 7 except as provided in Section 11(c) of the I&B Code, the Tribunal held that the pendency of a Joint Lenders Forum or the process of agreeing a corrective action plan does not preclude the Financial Creditor from filing a Section 7 application. The court therefore proceeded to hear the petition on merits notwithstanding ongoing lender deliberations. [Paras 4]

Section 7 petition is maintainable during the pendency of Joint Lenders Forum/corrective action plan.

Applicability of the Limitation Act, 1963 to applications under the I&B Code (Part II of Third Division) - accrual of right to apply under the I&B Code on commencement of the statute - Applications under Section 7 are governed by Part II (Other Applications) of the Third Division of the Limitation Act, 1963, and the limitation period of three years runs from when the right to apply accrues, which for existing causes of action accrued on commencement of the I&B Code. - HELD THAT: - The Tribunal accepted that the Limitation Act, 1963 applies to applications under the I&B Code and identified Part II - 'Other Applications' of the Third Division as applicable, providing a three-year limitation period from when the right to apply accrues. Given that the I&B Code came into force on 1 December 2016, the Tribunal held that the right to apply in respect of extant debts accrued on that date and therefore the Section 7 application filed thereafter was not barred by limitation. [Paras 12, 13]

Section 7 application was not barred by limitation; the right to apply accrued on 1 December 2016 and the three-year period in Part II applies.

Limitation in respect of suits relating to immovable property and rights of assignees (Article 61, First Division, Limitation Act) - The Financial Creditor's claim founded on mortgage/assignment of immovable property was not barred by the period of limitation applicable to suits relating to immovable property as the assignee inherits the remedy and Article 61 prescribes a 12-year period. - HELD THAT: - On facts, the Corporate Debtor had mortgaged immovable property to the original lender and the debt was subsequently assigned to the respondent. The Tribunal noted that a financial creditor who acquires rights in immovable property by assignment may enforce those rights and that Article 61 of the First Division (suits relating to immovable property) prescribes a 12-year limitation period. Applying this principle, the Tribunal concluded that the assignee's claim based on the mortgage/assignment was not time-barred. [Paras 14, 15]

Claim based on mortgage and subsequent assignment is not barred by limitation under Article 61.

Final Conclusion: The appeal is dismissed on merits. The Section 7 petition admitted by the Adjudicating Authority was maintainable and not time-barred; the Financial Creditor's claim based on mortgage and assignment was within the applicable limitation. No costs.

Entertainment of writ after participation in adjudication - appellate forum (CESTAT) as appropriate forum for mixed questions of fact and law - extended period of limitation in service-tax proceedings - assessability to service tax of mixed activities - pre-deposit requirement and condonation of delay in departmental appeals

Entertainment of writ after participation in adjudication - appellate forum (CESTAT) as appropriate forum for mixed questions of fact and law - The learned single judge erred in entertaining the writ petition after the respondent had participated in the assessment proceedings; the statutory appellate forum was the appropriate forum to decide the dispute. - HELD THAT: - The court found that the respondent had taken part in the departmental assessment proceedings before invoking writ jurisdiction; in such circumstances the remedy before the statutory appellate authority is the appropriate course for adjudicating disputed mixed questions of fact and law. The single judge's exercise of writ jurisdiction in the face of prior participation in adjudication was therefore held to be incorrect and beyond proper exercise of writ jurisdiction in that factual matrix. The High Court set aside the impugned writ order on this ground and directed that the dispute be referred to the appellate tribunal for adjudication.

Impugned writ order set aside; High Court held that writ should not have been entertained and referred the matter to the statutory appellate forum.

Extended period of limitation in service-tax proceedings - assessability to service tax of mixed activities - pre-deposit requirement and condonation of delay in departmental appeals - The contested issues-whether the show-cause notice was issued within the extended period of limitation and whether the respondent's non-playing activities were assessable to service tax-were not finally decided on merits but remitted to the CESTAT for fresh consideration. - HELD THAT: - The High Court characterised the question of limitation and the question of assessability of the respondent's activities (playing cricket versus advertising/endorsement) as mixed questions of fact and law more appropriately determined by the statutory appellate tribunal. The court therefore remitted these matters to the CESTAT for hearing and decision on merits. The High Court framed procedural directions for admission of the appeal: if the respondent files an appeal before the CESTAT by the specified date with an application for condonation of delay, the tribunal is directed to admit the appeal, condoning delay; the respondent must comply with pre-deposit requirements in accordance with law, and upon proof of such pre-deposit the Court-ordered interim deposit shall be refunded by the Registrar General with accrued interest. The tribunal is to decide the appeal by a reasoned order within four months of communication of this order and is not bound by the observations made by the High Court, all points remaining open for the tribunal's adjudication.

Issues as to extended limitation and assessability remitted to the CESTAT for fresh adjudication with directions on admission, condonation, pre-deposit, refund of interim deposit, and a four-month hearing timetable; tribunal not bound by the High Court's prima facie observations.

Final Conclusion: The High Court set aside the single judge's writ order, held that writ jurisdiction should not have been exercised after participation in assessment proceedings, and remitted the questions of extended limitation and assessability to the statutory appellate tribunal (CESTAT) with directions for admission, condonation of delay, pre-deposit, refund of interim deposit and a time-bound, reasoned hearing; all observations were declared prima facie and the tribunal was left free to decide the issues on merits.

Input service - exclusion from input service (Clause (c) of Rule 2(l)) - cenvat credit entitlement - extended period of limitation - penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC(1)(c) of the Central Excise Act, 1944 - re-quantification / remand for computation of demand for normal period

Input service - exclusion from input service (Clause (c) of Rule 2(l)) - cenvat credit entitlement - Cenvat credit on Group Medical Insurance Service - HELD THAT: - The Tribunal followed its earlier decision in Bharat Fritz Werner Ltd., which relied on the Larger Bench decision in Wipro Ltd., and held that Group Medical Insurance falls within the exclusion contained in Clause (c) of Rule 2(l) of the Cenvat Credit Rules as applicable w.e.f. 01.04.2011. The High Court decision in M/s. Ganesan Builders Ltd. was distinguished by the Tribunal in Bharat Fritz Werner Ltd. Applying that ratio, the appellant is not entitled to cenvat credit on Group Medical Insurance Service.

Cenvat credit on Group Medical Insurance Service denied.

Input service - exclusion from input service (Clause (c) of Rule 2(l)) - Outdoor Catering Service - cenvat credit entitlement - Cenvat credit on Catering Service - HELD THAT: - Relying on the Larger Bench decision in Wipro Ltd., which considered the exclusion in Clause (c) of Rule 2(l) w.e.f. 01.04.2011, the Tribunal held that Outdoor Catering Service is not eligible for input service credit post the amendment. Applying that ratio, the Commissioner was held to be correct in denying cenvat credit on Catering Service.

Cenvat credit on Catering Service denied.

Input service - personal consumption exception - cenvat credit entitlement - Cenvat credit on Transportation of Employees - HELD THAT: - Examining the nature of the transportation provided (conveyance between factory and employees' residences), the Tribunal concluded that the service is directly related to employee productivity and not mere personal consumption. Relying on the Tribunal's reasoning in Reliance Industries, the exclusion was held inapplicable to this service, and the appellant was found entitled to cenvat credit of service tax on Transportation of Employees.

Cenvat credit on Transportation of Employees allowed.

Extended period of limitation - penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC(1)(c) of the Central Excise Act, 1944 - re-quantification / remand for computation of demand for normal period - Invocation of extended period and imposition of penalties; remand for re quantification - HELD THAT: - The Tribunal held that the controversy turned on interpretation of the definition of 'input service'; consequently invocation of the extended period was not tenable. Penalties imposed under the cited provisions were set aside. The matter was remanded to the original authority to re-quantify the demand for the normal period with respect to those impugned services for which the appellant is liable to pay.

Extended period cannot be invoked; penalties set aside; matter remanded for re-quantification of demand for the normal period.

Final Conclusion: The appeal is partly allowed: cenvat credit on Group Medical Insurance and Catering Service denied; cenvat credit on Transportation of Employees allowed; extended period disallowed and penalties set aside; matter remanded to the original authority for re-quantification of demand for the normal period for the impugned services.

Rent-a-cab service - taxability of hiring versus renting - characterisation of cab services based on consideration scheme - service tax liability for per-kilometre contracts - distinction between provision of transport service and renting of vehicles

Rent-a-cab service - service tax liability for per-kilometre contracts - characterisation of cab services based on consideration scheme - Whether the activities of M/s Raviraj Tours & Travels Ltd. for the period November 2003 to September 2007 amounted to rendering 'rent-a-cab service' taxable under the Finance Act. - HELD THAT: - The Tribunal held that classification as a rent-a-cab service depends on the purpose for which vehicles are provided and the scheme of consideration agreed between parties. Contracts that charge on actual usage (per kilometre) and outsource the responsibility of picking up and dropping employees, without transferring control of vehicles on a lump-sum rent basis, are distinguishable from typical rent-a-cab arrangements where a fixed monthly rent and minimum kilometre obligation operate irrespective of actual usage. The decision relied on precedents (including R.S. Travels, Sachin Malhotra, Bangalore Metropolitan Transport Corporation and Rahul Travels) which recognise that payment strictly on the basis of actual usage does not attract classification as rent-a-cab service and that the legislative intent was not to tax contracts for procurement of rides measured by usage. The Tribunal observed that the Allahabad High Court decision in Anil Kumar Agnihotri turned on different factual features (hybrid consideration with threshold fixed charge plus variable charge) and therefore did not govern the present case. Applying these principles to the contractual scheme in dispute, the Tribunal concluded that the services provided by the appellant were not rent-a-cab services liable to service tax.

Impugned order holding the appellant to have rendered 'rent-a-cab service' is set aside and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the appellant's per-kilometre outsourcing arrangement for pickup and drop of employees during November 2003 to September 2007 did not constitute a taxable 'rent-a-cab service', and set aside the order-in-appeal.

Utilisation of Cenvat credit for manufacture of a final product different from that for which inputs were taken - scope of money-credit under Notification No. 45/89-CE dated 11.10.1989 - right to utilise accumulated credit across different manufacturing units of the same manufacturer - indefeasibility of validly taken input credit - remand for fresh consideration and decision after hearing

Utilisation of Cenvat credit for manufacture of a final product different from that for which inputs were taken - scope of money-credit under Notification No. 45/89-CE dated 11.10.1989 - remand for fresh consideration and decision after hearing - Whether the respondents ought to reconsider the appellants' request to utilise accumulated money/Cenvat credit for manufacture of final products other than those for which the inputs were originally intended, and related entitlement issues. - HELD THAT: - The court noted that the Supreme Court, in Collector of Central Excise, Pune v. Dai Ichi Karkaria Ltd., interpreted the Rules to hold that credit validly taken is available to the manufacturer without temporal or product-specific limitation, a view later approved in Commissioner of Central Excise, Patna v. New Swadeshi Sugar Mills. This High Court had earlier held in Rasoi Ltd. v. Union of India that money-credit granted under Notification No. 45/89-CE is not confined to utilisation at the same manufacturing unit and passes with the asset of the manufacturer. The present dispute, however, involves the specific terms of Notification No. 45/89-CE which contains a clause restricting refund or utilisation beyond specified limits. Given these intersecting authorities and the departmental reply, the court declined to adjudicate the substantive entitlement on the papers. Instead, the court directed the respondents to constitute a proper proceeding, hear the appellants and departmental representatives, take into account the cited decisions and submissions, and pass a reasoned order on the request within four months. The court expressly kept all questions, including the nature and scope of the credit available to the appellants, open for that proceeding.

Impugned order dated 20th June, 2018 set aside; matter remitted to respondents to decide the appellants' request in a reasoned hearing within four months, leaving substantive points open.

Final Conclusion: The writ appeal is disposed of by setting aside the earlier order and directing the respondents to reconsider the appellants' application to utilise the accumulated money/Cenvat credit in a proper, reasoned proceeding after hearing the parties within four months; all substantive questions as to the scope and nature of the credit are reserved for that proceeding.

Constitutional invalidity of the requirement to pay duty without utilizing CENVAT credit under Rule 8(3A) - use of CENVAT credit to discharge delayed excise liability with payment of interest - penalty for delayed payment of excise duty

Constitutional invalidity of the requirement to pay duty without utilizing CENVAT credit under Rule 8(3A) - use of CENVAT credit to discharge delayed excise liability with payment of interest - penalty for delayed payment of excise duty - Whether the demand and penalty confirmed for delayed payment of excise duty under proceedings invoking Rule 8(3A) were sustainable where the assessee subsequently discharged the duty by utilizing CENVAT credit along with payment of interest and Rule 8(3A) had been held to the extent indicated by several High Courts to be unconstitutional. - HELD THAT: - The Tribunal examined that the demand was premised solely on default in payment of excise duty. It was not disputed that the appellant subsequently discharged the duty by utilizing CENVAT credit and paid interest. The Tribunal noted consistent decisions of various High Courts and this Tribunal holding the phrase requiring payment "without utilizing the CENVAT credit" in Rule 8(3A) to be ultra vires. The Division Bench of this Tribunal in GEI Industrial Systems Ltd. and the line of High Court authorities were regarded as binding on the facts, and it was observed that where the default amount has been fully discharged (even by utilizing CENVAT credit with interest), treating subsequent clearances as non-duty-paid or sustaining a demand/penalty on that basis is not legally sustainable. Applying that ratio to the present facts, the Tribunal found no basis to uphold the demand and penalty confirmed by the lower authority.

Impugned order set aside and the appellant's appeal allowed; the demand and penalty confirmed under the impugned order quashed insofar as they relied on the discredited requirement in Rule 8(3A), the duty having been discharged by utilization of CENVAT credit with payment of interest.

Final Conclusion: Appeal allowed; impugned order dated 24/10/2017 set aside and demand and penalty not sustained as the requirement to pay duty without utilizing CENVAT credit under Rule 8(3A) has been held unconstitutional in the cited precedents and the assessee discharged the liability by using CENVAT credit with interest.

Admissibility of CENVAT credit on input services - Entitlement to CENVAT credit - Documentary evidence and Chartered Accountant's certificate as supporting proof - Remand for de-novo consideration - Timely completion of adjudication on remand

Admissibility of CENVAT credit on input services - Documentary evidence and Chartered Accountant's certificate as supporting proof - Remand for de-novo consideration - Timely completion of adjudication on remand - Entitlement to CENVAT credit on input services for the period 2008-09 to 2011-12 remanded for fresh adjudication. - HELD THAT: - The Tribunal identified the limited controversy as whether the appellants were entitled to CENVAT credit on various input services for the stated period. The appellants produced communications indicating that the relevant invoices and supporting documents had been filed during audit and adjudication, whereas the adjudicating authority recorded a contrary finding of non-production. Given these conflicting records, the Tribunal did not decide the admissibility on merits but directed a de-novo adjudication. The adjudicating authority is to consider the documents already purportedly produced and any further documents the appellants may place on record during the de-novo proceedings, including the Chartered Accountant's certificate tendered as supporting evidence. To prevent prolonged delay, the Tribunal directed that, insofar as practicable, the de-novo proceedings be completed within two months from communication of the order.

Matter remanded to the adjudicating authority for de-novo consideration of the admissibility of the CENVAT credit for 2008-09 to 2011-12, with directions to consider existing and additional documents (including the CA certificate) and to complete proceedings within two months.

Final Conclusion: The appeal is allowed by way of remand; the adjudicating authority is directed to reconsider the admissibility of the claimed CENVAT credit on a de-novo basis, taking into account the documents already filed and any further evidence (including the Chartered Accountant's certificate), and to conclude the proceedings within two months from communication of this order.

Eligibility of CENVAT credit on GTA services - place of removal for FOR sales - remand for determination of place of removal - Board circular dated 8.6.2018 - precedent of Ultra Tech Cement Ltd. - precedent of Roofit Industries Ltd.

Eligibility of CENVAT credit on GTA services - place of removal for FOR sales - Board circular dated 8.6.2018 - Remand to adjudicating authority to determine place of removal for FOR sales and thereafter reconsider eligibility of CENVAT credit on GTA (outward freight) service. - HELD THAT: - The Tribunal noted that eligibility of credit on GTA service turns on the place of removal. While Ultra Tech Cement Ltd. held that credit is eligible up to the buyer's premises, Roofit Industries Ltd. establishes that where sale is on FOR basis the place of removal is the buyer's premises and costs including freight form part of assessable value. The Board's circular dated 8.6.2018 clarifies that in FOR transactions the place of removal is the buyer's premises. The Tribunal observed that the adjudicating authority had denied credit without determining the place of removal and without applying the Board circular and relevant precedents. Given these interlinked questions of fact and law, the matter must be examined afresh: the adjudicating authority is to determine whether the transactions were FOR sales and, if so, treat the place of removal as the buyer's premises and then decide the eligibility of CENVAT credit on GTA services in light of the circular and the cited decisions, including the Tribunal's earlier order in the Ultra Tech matter. The appellant must produce documentary evidence to establish the place of removal as may be necessary for that determination. [Paras 5]

Impugned order set aside; appeal allowed by way of remand to the adjudicating authority to determine place of removal and then decide eligibility of credit on GTA service, taking into account the Board circular and relevant precedent.

Final Conclusion: The appeal is allowed by remand: the adjudicating authority shall determine whether the sales were on FOR basis (place of removal at buyer's premises) and thereafter reconsider grant/denial of CENVAT credit on outward freight (GTA) in accordance with the Board's circular dated 8.6.2018 and applicable judicial precedents; the impugned order is set aside for that purpose.

Presumption under Sections 118 and 139 of the Negotiable Instruments Act - rebuttable presumption and standard of preponderance of probabilities - offence under Section 138 of the Negotiable Instruments Act - statutory demand notice and failure to make payment - dishonour of cheque for insufficiency of funds - probable defence - requirement to produce best evidence - adverse inference for withholding best evidence

Offence under Section 138 of the Negotiable Instruments Act - dishonour of cheque for insufficiency of funds - statutory demand notice and failure to make payment - presumption under Sections 118 and 139 of the Negotiable Instruments Act - rebuttable presumption and standard of preponderance of probabilities - probable defence - requirement to produce best evidence - adverse inference for withholding best evidence - Whether the convictions and sentences under Section 138 of the Negotiable Instruments Act recorded by the trial Court and confirmed on appeal are sustainable. - HELD THAT: - The Court found that the cheque (Ex.CW1/A) was issued by the accused, was presented and returned with memo citing 'insufficient funds', and that the complainant served the statutory demand notice but the drawer did not make payment. The accused admitted issuance and signatures on the cheque in his Section 313 statement. Given these facts, the statutory presumption under Sections 118 and 139 arose that the cheque was issued for discharge of a legally enforceable debt or liability. The accused attempted to raise a defence that the cheque was a security and that part payment had been made, but failed to place on record the receipts he claimed to possess; the defence witness likewise did not produce corroborative receipts. The Court drew an adverse inference for withholding best evidence and held that the accused did not rebut the presumption by the standard of preponderance of probabilities. Reliance was placed on the settled principles in Hiten P. Dalal and subsequent decisions cited by the Court that (i) Section 139 creates a rebuttable presumption, (ii) the accused must raise a probable defence on preponderance of probabilities, and (iii) the accused may rely on materials on record but here did not do so effectively. All ingredients of Section 138 were held to be proved and there was no illegality or infirmity in the concurrent findings of conviction and sentence by the Courts below. [Paras 13, 15, 16, 17, 21]

Concurrent convictions and sentences under Section 138 of the Negotiable Instruments Act are upheld; the revision petition is dismissed and the accused directed to surrender to serve the sentence.

Final Conclusion: The High Court dismissed the criminal revision petition, upheld the convictions and sentences under Section 138 of the Negotiable Instruments Act on the grounds that the cheque was issued and dishonoured, statutory notice was served, and the accused failed to rebut the presumptions under Sections 118 and 139; the accused is directed to surrender and pending bail bonds are cancelled.

Quashing of E-Auction sale notice - one time settlement (OTS) - alternative remedy under the SARFAESI Act - extraordinary writ relief - interim stay in recovery proceedings by banks - public interest in timely recovery of public funds

Quashing of E-Auction sale notice - one time settlement (OTS) - alternative remedy under the SARFAESI Act - Whether the writ petition seeking quashing of the E-Auction sale notice and extension of time to pay the balance OTS amount is maintainable. - HELD THAT: - The petitioner had availed loan facilities, defaulted, obtained an OTS acceptance from the bank with six months' time to pay, but failed to comply with the terms. Consequently the bank issued the impugned auction sale notice under the SARFAESI Act. The Court noted that the SARFAESI Act provides an alternative and efficacious remedy (under Section 17 of the Act) and, in the absence of any extraordinary ground justifying departure from the statutory remedy, it is not appropriate to exercise writ jurisdiction. Reliance was placed on the principles in the cited Supreme Court authority emphasizing caution in granting interim relief in recovery matters and the public interest in ensuring recovery of public funds and financial stability. The petitioner's mere plea that additional time would enable payment did not constitute an extraordinary ground to invoke writ jurisdiction in place of the statutory forum. Accordingly, the writ petition was not entertained.

Writ petition dismissed; liberty granted to the petitioner to seek relief from the appropriate forum under the SARFAESI Act.

Final Conclusion: The High Court declined to interfere with the bank's recovery proceedings by quashing the auction sale notice and dismissed the writ petition for want of extraordinary grounds, leaving the petitioner free to pursue remedies under the SARFAESI Act.