TaxTMI Updates e-Newsletter
Oct 11,2019

Article 286 of the Constitution - sale in the course of import/export - export/zero-rated supply under the IGST Act - customs frontier/customs area - input tax credit under section 16(1) of the CGST Act - refund of ITC under Rule 89 - Schedule-III entry 8(a) to the CGST Act (sale of warehoused goods before clearance for home consumption) - property passing under the Sale of Goods Act, 1930

Export/zero-rated supply under the IGST Act - sale in the course of import/export - Article 286 of the Constitution - customs frontier/customs area - property passing under the Sale of Goods Act, 1930 - Whether sales by the duty free shops to departing (outbound) international passengers constitute exports / zero-rated supplies under the IGST Act and are outside State taxation under Article 286. - HELD THAT: - The Court found that goods sold by the DFS to departing passengers are sold while the goods remain within the customs area and before crossing the customs frontier; the invoices and contractual terms (specifying that property passes to the passenger only on arrival at foreign destination) show the outbound passenger acts as carrier for export. Applying the test in J. V. Gokal and the Supreme Court's decision in Hotel Ashoka, the Court held such transactions occur in the course of export and therefore fall outside the taxing power of the State under Article 286 and qualify as zero-rated supplies under the IGST Act. The Court rejected the State's submission that sale by passenger (and not by DFS) constitutes export, holding the contractual intention and customs supervision demonstrate the DFS effects export. [Paras 20, 21, 22, 26, 28]

Sales to departing passengers are exports / zero-rated supplies; State taxation is barred and such supplies qualify for zero-rated treatment under the IGST Act.

Export/zero-rated supply under the IGST Act - customs frontier/customs area - Schedule-III entry 8(a) to the CGST Act (sale of warehoused goods before clearance for home consumption) - refund of ITC under Rule 89 - Whether supplies from arrival DFSs are export/zero-rated and the effect of the CGST Amendment (effective 1 February 2019) on such supplies and on eligibility for ITC refund. - HELD THAT: - The Court held that for the period up to 31 January 2019, the Central Government's order treating supplies from arrival DFSs as export (affirmed by the Supreme Court) makes those supplies exports and thus zero-rated, entitling the DFS to refund of ITC. With effect from 1 February 2019, sale of warehoused goods before clearance for home consumption was classified under Schedule-III (entry 8(a)) and section 17(2) was amended so that reversal is not required; consequently, arrival-DFS supplies are not treated as taxable supplies for GST purposes and ITC relating to such activity is eligible, and refund of ITC (departure and arrival) follows the formula in Rule 89. [Paras 22, 23, 31]

Arrival-DFS supplies are to be treated as export/zero-rated up to 31 January 2019 and, from 1 February 2019, fall under Schedule-III entry 8(a) making related ITC eligible; refund of ITC is accordingly available as per Rule 89.

Input tax credit under section 16(1) of the CGST Act - refund of ITC under Rule 89 - Whether the petitioner is entitled to claim input tax credit in respect of GST paid on input services used in the duty free business and to seek refund of such ITC. - HELD THAT: - The Court observed that input services (rent, maintenance, CHA, professional services etc.) are used in the course or furtherance of the petitioner's business and therefore, under section 16(1) of the CGST Act, the petitioner is entitled to take credit of the GST paid on such input services. Given the zero-rated character of departure supplies (and treatment/classification of arrival supplies as above), the petitioner is eligible for refund of entire ITC pertaining to the relevant supplies in accordance with the refund mechanism prescribed (Rule 89). The Court also noted consistency with refunds allowed to the petitioner at other airports and emphasised uniform treatment. [Paras 6, 23, 24]

The petitioner is entitled to input tax credit on GST paid for input services and to claim refund of the ITC relating to zero-rated (and appropriately classified) supplies under the refund rules.

Article 286 of the Constitution - sale in the course of import/export - export/zero-rated supply under the IGST Act - Validity of the adjudication order dated 10th January 2019 and the show cause notices denying refund and treating supplies as taxable in Maharashtra. - HELD THAT: - Applying the constitutional and statutory principles discussed (including binding precedents J. V. Gokal and Hotel Ashoka), the Court found the impugned adjudication order and show cause notices to be arbitrary and contrary to Article 286 and the GST and Customs statutes as they related to sales from the DFS. The Court held that the Revenue's view denying export/zero-rated character and refusing ITC refund was erroneous on the facts and law. [Paras 36, 37]

The adjudication order dated 10th January 2019 and the accompanying show cause notices are quashed and set aside.

Final Conclusion: The High Court allowed the petitions: sales by the duty free shop to departing passengers are exports / zero-rated supplies outside State taxation and eligible for ITC refund; arrival-DFS supplies were treated as export up to 31 January 2019 and, from 1 February 2019, fall under Schedule-III entry 8(a) making related ITC eligible; input tax credit on input services is available and refund of ITC (departure and arrival) is permissible under Rule 89. The impugned adjudication order and show cause notices dated 10th January 2019 were quashed; related criminal application rendered infructuous and dismissed.

Summary order. Notice issued returnable on 9th October, 2019; direct service permitted.

Revocation of cancellation of registration - cancellation of registration - infructuousness of writ petition - appeal under Section 107 of the CGST Act, 2017 - alternative statutory remedy

Revocation of cancellation of registration - infructuousness of writ petition - appeal under Section 107 of the CGST Act, 2017 - Whether the writ petition challenging delay in deciding the application for revocation of cancellation of GST registration remained maintainable after the competent authority decided the application and an appellate remedy lay under Section 107. - HELD THAT: - The petitioner had applied for revocation of the cancellation of its GST registration and filed this petition alleging non-decision of that application. During hearing the competent authority had by order dated 01.10.2019 rejected the petitioner's application for revocation. The Court noted that the statutory remedy against that order is by way of appeal under Section 107 of the CGST Act, 2017. Having become academic by the subsequent decision on the very relief sought in the petition and with an existing statutory appellate remedy available, the petition could not be maintained and stood rendered infructuous.

The writ petition is dismissed as infructuous in view of the authority's decision on the revocation application and the availability of an appeal under Section 107 of the CGST Act, 2017.

Final Conclusion: The petition is dismissed as infructuous because the application for revocation of cancellation of registration was decided on 01.10.2019 and the petitioner's remedy lies by way of appeal under Section 107 of the CGST Act, 2017.

Provisional attachment of bank accounts under Section 83 of the CGST Act, 2017 - restriction on debit operations of bank accounts - Rule 159(5) of the CGST Rules, 2017 - post-decisional hearing - decision after opportunity of hearing

Rule 159(5) of the CGST Rules, 2017 - post-decisional hearing - decision after opportunity of hearing - Leave to withdraw petitions granted with liberty to file objection under Rule 159(5) and direction to respondent to decide such objection after giving an opportunity of hearing. - HELD THAT: - The Court permitted the petitioners to withdraw the writ petitions while granting them liberty to press objections available under clause (5) of Rule 159 of the CGST Rules, 2017. The Court recorded that if the petitioners file an objection under Rule 159(5), respondent No.1 is obliged to decide that objection after affording the petitioners an opportunity of hearing. The decision is to be taken expeditiously and in accordance with the CGST Rules, 2017. The order leaves open the petitioners' remedy under the statutory procedure rather than adjudicating the merits of the provisional attachment or the vires of the orders impugned in these petitions. [Paras 5, 6]

Petitions disposed of as withdrawn with liberty to file objections under Rule 159(5); respondent No.1 to decide any such objection after hearing expeditiously and in accordance with the CGST Rules, 2017.

Final Conclusion: The petitions were permitted to be withdrawn; petitioners have liberty to file objections under Rule 159(5) and respondent No.1 is directed to decide any such objection after providing an opportunity of hearing, expeditiously and in accordance with the CGST Rules, 2017.

Deduction under section 80P(2)(a)(i) - Co-operative society distinct from co-operative bank - Nominal/associate members as 'members' for cooperative purposes - Binding effect of coordinate-bench Tribunal precedents - Remand for fresh adjudication to appellate authority

Deduction under section 80P(2)(a)(i) - Co-operative society distinct from co-operative bank - Nominal/associate members as 'members' for cooperative purposes - Binding effect of coordinate-bench Tribunal precedents - Whether the assessee is entitled to deduction under section 80P(2)(a)(i) in respect of interest income on loans given to nominal members and interest on investments - HELD THAT: - The Tribunal examined the denial of deduction under section 80P(2)(a)(i) where the Assessing Officer treated the society as acting like a co-operative bank and characterised receipts as income from other sources. The Tribunal found the issue to be covered by a coordinate-bench decision (Jankalyan Nagri Sahakari Pat Sanstha Ltd. and related orders) which distinguished a co-operative credit society from a co-operative bank and held such societies eligible for deduction. The Tribunal noted differences between the facts and statutory definitions relied on by the Supreme Court in Citizen Co-operative Society Ltd., and accepted the assessee's contention that the definitions of "member" under the Maharashtra Act include nominal/associate members (following the Bombay High Court and Madras High Court reasoning cited). In view of the identical issue having been decided in favour of assessees by the coordinate bench and no binding contrary decision placed by Revenue, the Tribunal treated the matter as covered in favour of the assessee and accepted the assessee's contention that the ratio of Citizen Co-operative Society (supra) did not apply on the facts and statutory scheme here. [Paras 9, 11]

The Tribunal treated the claim as covered by favourable Tribunal and High Court precedents and held that the assessee is not to be treated as a co-operative bank for the purpose of s.80P; the grounds challenging denial of deduction are allowed for statistical purposes.

Remand for fresh adjudication - Remand for fresh adjudication to appellate authority - Whether the matter should be remanded to the CIT(A) for fresh consideration in light of the Tribunal's view and precedents - HELD THAT: - Although the Tribunal noted the issue was settled in favour of the assessee by its coordinate-bench decision, the Tribunal accepted the assessee's alternate prayer for remand and directed that the CIT(A) re-adjudicate the issue by passing a speaking order after considering the Tribunal view and granting the assessee a reasonable opportunity of being heard. The Tribunal expressly directed the CIT(A) to follow and consider the cited Tribunal order while deciding afresh. [Paras 9]

The appeal is remanded to the CIT(A) with a direction to decide the issue afresh by passing a speaking order after affording opportunity to the assessee; grounds are allowed for statistical purposes.

Final Conclusion: The Tribunal found the dispute on entitlement to deduction under s.80P(2)(a)(i) to be covered in favour of the assessee by coordinate-bench and High Court decisions, accepted the assessee's alternate prayer and remitted the matter to the CIT(A) for fresh speaking adjudication after affording hearing; the appeal is allowed for statistical purposes.

Penalty under section 271(1)(c) for concealment of particulars of income or furnishing inaccurate particulars - invalidity of penalty notice for failure to specify the limb of section 271(1)(c) - requirement to strike off irrelevant limb in show-cause notice issued under section 274 - non-application of mind where standard proforma notice is issued without deletion of inappropriate words - distinct meanings of 'concealment of particulars' and 'furnishing inaccurate particulars'

Invalidity of penalty notice for failure to specify the limb of section 271(1)(c) - requirement to strike off irrelevant limb in show-cause notice issued under section 274 - non-application of mind where standard proforma notice is issued without deletion of inappropriate words - Penalty under section 271(1)(c) cancelled because the notice issued under section 274 did not specify whether proceedings were initiated for concealment of particulars of income or for furnishing inaccurate particulars of income. - HELD THAT: - The Tribunal found that the notice issued under section 274 read with section 271(1)(c) was in a standard proforma and failed to indicate which limb of section 271(1)(c) was invoked, leaving the charge unspecified. The authorities relied upon in the order establish that the two limbs in section 271(1)(c) have different meanings and that it is incumbent on the Assessing Officer to make the charge clear by striking off the irrelevant portion of the printed show cause notice so that the assessee is apprised of the case to meet. The Tribunal followed prior decisions including Manjunath Cotton & Ginning , SSA's Emerald Meadows (whose SLP was dismissed), and the reasoning in Dilip N. Shroff that the failure to delete inappropriate words in a proforma notice indicates non application of mind and renders the proceedings unsustainable. Applying these principles to the facts, and noting that the notice here left the limb unspecified, the Tribunal held that the penalty proceedings suffered from non application of mind and were invalid, and accordingly cancelled the penalty upheld by the CIT(A). [Paras 9, 10, 12]

Penalty levied under section 271(1)(c) set aside as the section 274 notice did not specify the limb of section 271(1)(c) invoked; penalty cancelled.

Final Conclusion: The appeal is allowed: the penalty under section 271(1)(c) for A. Y. 2014-15 is cancelled because the show cause notice under section 274 failed to specify whether the proceedings were for concealment of particulars or for furnishing inaccurate particulars, resulting in non application of mind.

Liability to deduct tax at source on lease rentals under section 194I - characterisation of transmission and SLDC charges as rent, royalty or contract for TDS purposes - binding effect of a lower deduction certificate issued under section 197 - assessee in default and interest consequences under sections 201(1) and 201(1A) - point of credit as decisive for TDS liability (timing of credit/payment) - remand for verification of account entries to determine point of credit

Liability to deduct tax at source on lease rentals under section 194I - point of credit as decisive for TDS liability (timing of credit/payment) - remand for verification of account entries to determine point of credit - Whether payments made to M/s Klenn & Marshall attracted TDS under section 194I and whether the assessee is an assessee in default for the relevant years - HELD THAT: - The Bench examined the assessee's plea that payments were made pursuant to DRT orders and that the underlying liability related to earlier years and had been accounted for by AP Transco. The DRT order did not direct non-deduction of TDS; hence payments made pursuant to the DRT did not by themselves absolve the payer from TDS obligations. However, the Tribunal found that the question whether the expenditure had been debited and the payee's account credited in earlier years (i.e., prior to the operative TDS amendment) was not established on record. Since no credit entry was shown to have been made prior to 01.06.2007, the point of credit requires verification. In the interest of justice the Tribunal set aside the findings of the lower authorities and remitted the matter to the AO for fresh consideration to examine whether the expenditure was debited in earlier years; if so, the TDS provisions would not apply as the point of credit would pre-date the amendment. [Paras 17, 18]

Matter remitted to the AO for de novo verification and decision on whether the liability was earlier debited/credited; appeals allowed for statistical purposes in respect of the assessee on this ground.

Characterisation of transmission and SLDC charges as rent, royalty or contract for TDS purposes - liability to deduct tax at source on lease rentals under section 194I - liability to deduct tax at source on fees/royalty under section 194J - Whether transmission and SLDC charges paid to A.P. Transco attract TDS under section 194J (royalty/fees) or under section 194I (rent) or are payments covered by section 194C/are non-TDS reimbursements - HELD THAT: - The Tribunal considered prior coordinate bench decisions and authorities but distinguished them on facts. Both payer and payee had, by conduct and agreement, treated the payments as falling within the category of rent; the payee had accepted the receipts as income in that category before the assessing officer and obtained a certificate for lower deduction in respect of the year in question. The Tribunal held that on these facts the payments are income in the hands of the payee and fall for TDS under section 194I rather than as royalty or fees under section 194J or as contracts under section 194C. The Tribunal therefore upheld the CIT(A)'s conclusion that section 194I applies to the transmission and SLDC charges paid to A.P. Transco. [Paras 21, 22]

Payments to A.P. Transco are held to be rent for TDS purposes and qualify for deduction under section 194I; the CIT(A)'s finding in favour of the assessee on this classification is upheld.

Binding effect of a lower deduction certificate issued under section 197 - assessee in default and interest consequences under sections 201(1) and 201(1A) - Whether the assessee defaulted in deducting TDS in view of a lower deduction certificate issued to the payee and whether any demand/interest under sections 201(1)/201(1A) could be sustained for the year 2009-10 / A.Y.2010-11 and earlier years - HELD THAT: - The AO of the payee had issued a certificate under section 197 authorising lower deduction at 1.75% for the whole year; such a certificate, being issued by the appropriate AO after estimating tax liability, is binding on the department and the payer is entitled to deduct TDS at the authorised lower rate. The Tribunal observed that collection of tax in excess of the actual liability is not required and would cause undue hardship. Accordingly, where the assessee deducted tax at the rate authorised by the section 197 certificate, there was no default to the extent of excess deduction over that certificate. Further, the AO had not raised any demand under section 201(1A) in respect of the earlier years and the department did not press interest as a ground in appeal; consequently the departmental appeals in respect of those years were held to be infructuous/dismissed. [Paras 23, 24]

Deduction of TDS at the rate specified in the section 197 certificate is held adequate and not a default; departmental appeals dismissed and no demand sustained where no interest/demand under section 201(1A) was raised.

Assessee in default and interest consequences under sections 201(1) and 201(1A) - Maintainability and disposition of the assessee's and revenue's appeals for the specified assessment years - HELD THAT: - The Tribunal condoned the delay in filing corrected appeals where defects were rectified. It held that appeals by the assessee for A.Y.2008-09 and A.Y.2009-10 are allowed for statistical purposes (in view of the remand on the Klenn & Marshall issue) and the appeal for A.Y.2010-11 by the assessee is dismissed as infructuous where no demand under section 201(1) was raised. Departmental appeals for A.Y.2008-09, A.Y.2009-10 and A.Y.2010-11 were dismissed (including those challenging classification and the quantum) where the Tribunal upheld the CIT(A) on classification and accepted the section 197 certificate reasoning. [Paras 13, 19, 24]

Assessee's appeals allowed for A.Y.2008-09 and A.Y.2009-10 for statistical purposes, A.Y.2010-11 dismissed as infructuous; revenue appeals dismissed.

Final Conclusion: The Tribunal remitted the question of TDS liability on payments to M/s Klenn & Marshall to the AO for fresh verification of whether the expenditure was debited/credited in earlier years (thereby affecting the point of credit and TDS applicability). On the classification dispute, payments to A.P. Transco (transmission and SLDC charges) were held to be rent falling under section 194I; the assessee's reliance on a lower deduction certificate under section 197 was accepted and the revenue's appeals were dismissed. Consequential appeals were either allowed for statistical purposes or dismissed as infructuous as recorded.

Computation of book profit under section 115JB - exclusion of capital receipts/subsidies from book profit where such receipts are not in the nature of income - limited power of Assessing Officer to alter profit and loss account for MAT purposes - non-application of section 14A in the absence of exempt dividend income - remand for fresh consideration pending final decision of a higher court

Remand for fresh consideration pending final decision of a higher court - treatment of leave encashment under provisions analogous to section 43B(f) pending Supreme Court decision - Addition on account of leave encashment remitted to the Assessing Officer for fresh consideration. - HELD THAT: - The Tribunal found the matter covered by its earlier orders in the assessee's own cases and observed that the Supreme Court's orders in Exide Industries required awaiting final adjudication. Following consistent precedent in the assessee's series of appeals, the Tribunal remanded the issue to the Assessing Officer for fresh decision taking into account the final order of the Supreme Court. The remand was allowed for statistical purposes. [Paras 5, 6]

Allowed for statistical purposes and remitted to the Assessing Officer for fresh consideration pending final judicial determination.

Exclusion of capital receipts/subsidies from book profit where such receipts are not in the nature of income - computation of book profit under section 115JB - consistency with Tribunal and Supreme Court precedents on nature of receipts and MAT computation - Industrial Promotion Assistance and Sales Tax Incentive credited to profit and loss account held not to be part of book profit under section 115JB as they are not in the nature of income. - HELD THAT: - Relying on earlier Coordinate Bench decisions and relevant Supreme Court and Tribunal precedents, the Tribunal held that subsidies given to promote industry are not in the nature of income and therefore cannot be brought to tax under the MAT mechanism. The statutory scheme of section 115JB and its Explanation forms a separate code for computing book profit; where a receipt is not income at all, it need not be included in book profit even if credited to the profit and loss account. Applying these principles, the Tribunal set aside the CIT(A)'s confirmation of the addition and directed deletion. [Paras 8]

Allowed; CIT(A)'s order set aside and the addition deleted.

Non-application of section 14A in the absence of exempt income - no disallowance under section 14A without exempt dividend - Disallowance under section 14A deleted because the assessee earned no exempt dividend income in the year. - HELD THAT: - Following the Coordinate Bench decisions and the Supreme Court's confirmation of the reasoning in Cheminvest (as applied in Oil Industries Development Board), the Tribunal accepted that section 14A is not invokable where no exempt income has been earned in the relevant year. The CIT(A)'s deletion of the AO's disallowance was therefore upheld. [Paras 13, 15]

Revenue's challenge dismissed; CIT(A)'s deletion of the section 14A disallowance upheld.

Section 14A disallowance cannot be imported into clause (f) of the Explanation to section 115JB - limited power of Assessing Officer to alter profit and loss account for MAT purposes - Addition to book profit under section 115JB on account of section 14A disallowance is not sustainable. - HELD THAT: - The Tribunal followed its coordinate decisions which limit the AO's power to rewrite the profit and loss account for MAT purposes and held that the notional disallowance under section 14A cannot be imported into clause (f) of the Explanation to section 115JB. Applying those precedents, the Tribunal found no infirmity in the CIT(A)'s deletion of the addition and dismissed the Revenue's ground. [Paras 16, 17]

Revenue's ground dismissed; addition to book profit on account of section 14A disallowance deleted.

Final Conclusion: The Tribunal partly allowed the assessee's appeal for AY 2012-13: the addition relating to leave encashment was remanded to the Assessing Officer for fresh consideration pending final judicial decision; the disallowance relating to Industrial Promotion Assistance and Sales Tax Incentive was deleted for computation of book profit under section 115JB; the Revenue's challenges on disallowances under section 14A and on adding such disallowances to MAT book profit were dismissed.

Interpretation of "general reserves" in proviso to Section 36(1)(viii) - treatment of Profit & Loss balance vis-a -vis general reserves - character of amounts transferred to special reserve for the purposes of proviso to Section 36(1)(viii) - interaction between Section 43D and Rule 6EB having regard to NHB guidelines - taxability of interest on non performing assets under Section 43D - doctrine of literal interpretation - real income theory

Interpretation of "general reserves" in proviso to Section 36(1)(viii) - treatment of Profit & Loss balance vis-a -vis general reserves - doctrine of literal interpretation - Whether the balance standing in the Profit & Loss Account is includible within the expression "general reserves" for computing the limit under the proviso to Section 36(1)(viii) (AY 2004-05). - HELD THAT: - The proviso to Section 36(1)(viii) refers specifically to "the general reserves" in the plural and, on a plain word (literal) reading, denotes general reserves alone and not other appropriations or balances. Reserves are appropriations out of the Profit & Loss Account and the terms "Profit & Loss Account" and "general reserves" are distinct in commercial and statutory context. Reliance on an administrative circular of the Department of Company Affairs to equate surplus/Profit & Loss balance with a free or general reserve is limited to the context in which that circular was issued and cannot override the clear statutory language. Coordinate Tribunal authority on identical facts excluding share premium, Profit & Loss balance and specific reserves from "general reserves" was followed. Accordingly the Profit & Loss balance was not included as part of general reserves for the proviso computation. [Paras 2]

Profit & Loss balance is not includible in "general reserves" for the proviso to Section 36(1)(viii); ground dismissed.

Character of amounts transferred to special reserve for the purposes of proviso to Section 36(1)(viii) - Whether amounts carried in an earlier year to special reserve (claimed as excess in AY 2004-05) amount to double disallowance in AY 2005-06 and should be treated as part of general reserves for computing the proviso (AY 2005-06, Ground 2(d)). - HELD THAT: - Creation and maintenance of the special reserve is an accounting decision of the assessee and transfers to or from that reserve may be made by the assessee at its discretion. The proviso's disallowance is to be worked out year by year with reference to closing balances shown in the financial statements for the relevant year; an earlier year's disallowance does not preclude the AO from applying the proviso afresh in a subsequent year. Thus an excess carried earlier does not automatically lose the character of special reserve for the purposes of the proviso in a later year and the plea of double disallowance is unsustainable. [Paras 3]

Argument of double disallowance and treating prior-year excess as general reserve rejected; ground dismissed.

Interaction between Section 43D and Rule 6EB having regard to NHB guidelines - taxability of interest on non performing assets under Section 43D - real income theory - Whether revised NHB prudential norms (recognition at 90 days) override Rule 6EB (which prescribes 6 months) so as to permit the assessee to defer recognition of interest on NPAs in conformity with NHB guidelines rather than Rule 6EB; and whether the addition under Section 43D read with Rule 6EB is sustainable (AY 2005-06, Ground 4). - HELD THAT: - Section 43D(b) prescribes that rules regarding categories of bad or doubtful debts shall be made "having regard to" NHB guidelines, leaving the rule making authority discretion whether and how to follow those guidelines. Rule 6EB, enacted by the rule making authority, prescribes the periods (six months/180 days) and was not automatically amended on NHB altering prudential norms to 90 days. Judicial precedent of the Tribunal (GIC Housing Finance Ltd.) applying the principle that NHB guidelines do not automatically alter Rule 6EB was followed. The concept of "real income" cannot be applied so as to defeat the statutory limits laid down by Section 43D and its Rules; accrual under mercantile accounting depends on legal right to receive, but Section 43D and Rule 6EB set the statutory bounds for recognition. Some interest may have been taxed in subsequent years, but the amounts were unquantified in the assessment records and therefore did not afford relief. [Paras 4]

NHB revised guidelines do not automatically amend or override Rule 6EB; addition under Section 43D read with Rule 6EB confirmed and ground dismissed.

Final Conclusion: For AY 2004-05 the Tribunal held that the Profit & Loss balance is not part of "general reserves" for the proviso to Section 36(1)(viii) and dismissed the assessee's ground. For AY 2005-06 the Tribunal applied the same conclusion on "general reserves", rejected the plea of double disallowance, and upheld the addition under Section 43D read with Rule 6EB (holding that NHB guideline changes do not automatically amend the rule); both appeals remain partly allowed.

Indirect expenses as period costs - allocation of administrative and general expenses under AS-7 - capitalization of project-specific expenses to work in progress - directly identifiable commission and loan processing fees as project costs - treatment of surrendered amount as income from undisclosed sources - proportionate deduction under section 80IB linked to built-up area and territorial limits

Indirect expenses as period costs - allocation of administrative and general expenses under AS-7 - capitalization of project-specific expenses to work in progress - Whether indirect/administrative expenses claimed by the assessee are deductible as period costs or required to be capitalized to work in progress - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that administrative and other indirect expenses which are not allocable to a specific contract are to be treated as period costs and allowed as revenue expenditure. The CIT(A) relied on Accounting Standard (AS) 7 and the assessee's disclosed accounting policy; the change in benchmarking for recognition of revenue (from 30% to 10%) was held to be a permissible change in accounting policy disclosed in the financial statements. The AO was held to have erred in accepting revenue arising from the changed policy while disallowing indirect expenses. The Tribunal agreed that except where expenses are directly identifiable and attributable to a specific project, they should not be loaded to contract cost; accordingly substantial part of the AO's additions were deleted. The Tribunal found no infirmity in the CIT(A)'s approach of admitting indirect expenses as period costs while isolating those items which, by the assessee's own accounting practice, were capitalized to specific projects. [Paras 9, 10]

Indirect and administrative expenses not attributable to a specific project are allowable as period costs; the CIT(A)'s deletion of most of the AO's additions is upheld.

Directly identifiable commission and loan processing fees as project costs - capitalization of project-specific expenses to work in progress - Whether certain commission expenses and the loan processing fee are project-specific and therefore not allowable as period expenses - HELD THAT: - The CIT(A) accepted that while most indirect expenses are period costs, certain expenses were directly identifiable to particular projects and thus required capitalization. The processing fee of the loan from India Bulls relating to the Corporate Park project was held to have been capitalized by the assessee itself and therefore could not be claimed as an indirect expense. Similarly, commission paid for bookings in projects (notably Palwal and Corporate Park, for which revenue recognition had not occurred) were held to be directly attributable to those projects and disallowed as period expenses. The Tribunal found no error in confining the disallowance to the directly identifiable items and confirmed the limited addition. [Paras 9, 10]

Disallowance limited to the processing fee and commission expenditure directly attributable to specific projects; the CIT(A)'s restriction of the AO's addition to those items is confirmed.

Treatment of surrendered amount as income from undisclosed sources - Whether the assessee's surrender of Rs. 9 crores during search should be treated as income from undisclosed sources or as voluntary disclosure - HELD THAT: - The Tribunal held this ground to be premature for affecting total income computation but recorded that the CIT(A)'s finding on the matter was correct. The view of the CIT(A), as reproduced in the order, was affirmed and the assessee's challenge to the CIT(A)'s treatment of the surrender as undisclosed income was dismissed. [Paras 11]

The CIT(A)'s finding treating the surrendered amount as income from undisclosed sources is confirmed; the assessee's ground is dismissed.

Proportionate deduction under section 80IB linked to built-up area and territorial limits - Whether the assessee (Piyush Buildwell India Limited) is entitled to deduction under section 80IB in respect of residential units given the built-up area and territorial limits - HELD THAT: - For the sister assessee, the CIT(A) directed verification of factual aspects concerning built-up area of units (noting contradictions in the assessee's submissions) and allowed proportionate deduction consistent with coordinate decisions. The Tribunal found the direction to verify facts and to grant proportionate deduction to be reasonable, observed that the assessee had not substantiated eligibility for full relief (including territorial limit arguments), and declined to interfere with the CIT(A)'s order. The Tribunal therefore dismissed the revenue's and assessee's appeals on these points. [Paras 22, 23, 24, 25]

The CIT(A)'s direction to verify unit areas and to grant proportionate deduction under section 80IB as appropriate is upheld; appeals on the 80IB issue are dismissed.

Final Conclusion: For AY 2008-09, the Tribunal upholds the CIT(A)'s approach: most indirect and administrative expenses not attributable to specific projects are allowable as period costs under AS-7 and are to be deducted in the year incurred; however, expenses directly identifiable with particular projects (notably certain commission payments and the loan processing fee capitalized by the assessee) are not allowable as period expenses and the limited disallowance on those items is confirmed. The CIT(A)'s treatment of the surrendered amount and the directions regarding proportionate deduction under section 80IB (after factual verification) are also sustained. All appeals and cross-objections before the Tribunal for the stated matters are dismissed.

Jurisdiction under section 153C read with section 153A - Satisfaction requirement for handing over seized documents - Incriminating material requirement for invoking section 153C - Date of handing over as triggering the limitation period under section 153C/153A - Presumption that documents found on search belong to the searched person and necessity to rebut

Jurisdiction under section 153C read with section 153A - Satisfaction requirement for handing over seized documents - Incriminating material requirement for invoking section 153C - Presumption that documents found on search belong to the searched person and necessity to rebut - Validity of assessments framed under section 153C read with section 153A for AYs 2009-10, 2010-11 and 2011-12 - HELD THAT: - The Tribunal examined the satisfaction notes prepared by the Assessing Officer of the searched person and by the Assessing Officer in respect of the assessee and found them to be identical and mechanically recorded. The statutory scheme requires the AO of the searched person to arrive at a clear, reasoned satisfaction that a seized document does not belong to the searched person but to some other person and to hand that document over; mere recitation of the words "I am satisfied" is inadequate. The satisfaction notes in the record do not explain how the presumptions (that documents found on search belong to the searched person) were rebutted, nor do they indicate how the seized material was incriminating with respect to the assessee's income. In the absence of such recorded reasoning and incriminating material, the statutory preconditions for invoking section 153C were not met and the AO lacked jurisdiction to proceed under section 153C/153A. Reliance on post-search enquiries or statements does not cure the jurisdictional defect when the initial satisfaction and handing-over requirements are not properly recorded. [Paras 16, 19, 22, 25, 27]

Assessments framed under section 153C read with section 153A for AYs 2009-10, 2010-11 and 2011-12 are bad in law for want of jurisdiction and are quashed.

Date of handing over as triggering the limitation period under section 153C/153A - Jurisdiction under section 153C read with section 153A - Validity of assessment framed under section 143(3) for AY 2012-13 when seized documents were handed over on 20.01.2014 - HELD THAT: - The Tribunal accepted that the date of handing over seized material to the AO of the assessee (20.01.2014) must be treated as the operative date for the purposes of the proviso to section 153C and the second proviso to section 153A. Consequently, the period for issuing notices under section 153C/153A must be reckoned from that handing-over date. The assessment for AY 2012-13 was framed under section 143(3) instead of under section 153C, whereas the facts required proceedings under section 153C to be invoked; this amounted to a jurisdictional error. Further, no incriminating material linking the seized documents to the assessee for the relevant year was shown to exist in the satisfaction note, reinforcing the finding of lack of jurisdiction. [Paras 11, 25, 26, 27]

Assessment for AY 2012-13 framed under section 143(3) is not sustainable for jurisdictional error and is quashed.

Final Conclusion: Without adjudicating the merits, the Tribunal quashed the assessments for AYs 2009-10, 2010-11 and 2011-12 framed under section 153C read with section 153A, and quashed the assessment for AY 2012-13 framed under section 143(3), concluding that the statutory satisfaction/handing-over requirements and related jurisdictional prerequisites were not satisfied; consequently, all appeals filed by the assessee are allowed.

Proportionate disallowance of interest on borrowed funds used to make interest-free advances to related concerns - commercial expediency and nexus between expenditure and business purpose - ad hoc disallowance of subscription expenses - characterisation of interest on service tax as revenue expenditure akin to service tax - payments to retired partners - diversion of income at source versus allowable deduction where recipient declares income

Proportionate disallowance of interest on borrowed funds used to make interest-free advances to related concerns - commercial expediency and nexus between expenditure and business purpose - Deletion of proportionate disallowance of interest on advances made to related concern DTTIPL in AYs 2013-14 and 2014-15. - HELD THAT: - The assessing officer disallowed interest on the basis that interest-bearing funds were used to provide interest-free advances and that commercial expediency and business nexus were not established. The CIT(A) recorded that the assessee and DTTIPL are members of a global professional network, that advances were adjusted by subsequent debit notes for services rendered, that a continuous business relationship existed, and that the assessee had sufficient own funds. Applying the principle that commercial expediency is to be judged from the businessman's standpoint and that once nexus with business is established revenue cannot second-guess the reasonableness of such expenditure (as in SA Builders), the Tribunal finds no perversity in the factual findings of the CIT(A). The assessing officer failed to show any demonstration of diversion or personal benefit, and no contrary authorities were placed before the Tribunal. The deletion of the disallowance is therefore upheld for both years. [Paras 5]

Grounds relating to disallowance of interest in both years dismissed and deletions upheld.

Ad hoc disallowance of subscription expenses - nexus between subscription payments and business referrals within a global professional network - Deletion of 25% ad hoc disallowance from subscription expenses in AYs 2013-14 and 2014-15. - HELD THAT: - The assessing officer treated subscription payments as excessive and disallowed 25% for want of specific details of services received. The CIT(A) accepted that subscription fees were paid to entities within the global Deloitte network, that membership (and use of the 'Deloitte' name) brings professional work by reference from other members, and noted prior deletions in earlier years and co-ordinate bench decisions in related concerns. The Tribunal found the disallowance to be ad hoc, observed the absence of any contrary judicial authority produced by revenue, and, following co-ordinate orders, upheld the CIT(A)'s deletion of the disallowance. [Paras 5]

Grounds relating to subscription-disallowance dismissed and deletions upheld.

Characterisation of interest on service tax as revenue expenditure akin to service tax - Deletion of disallowance of interest on delayed payment of service tax in AY 2013-14. - HELD THAT: - The CIT(A) relied on judicial precedents holding that interest on service tax is of the same character as the service tax itself and thus deductible. The Tribunal agreed with the application of those precedents and noted that revenue did not place any contrary authority before it. Accordingly, the CIT(A)'s deletion was sustained. [Paras 5]

Ground relating to interest on service tax dismissed and deletion upheld.

Payments to retired partners - diversion of income at source versus allowable deduction where recipient declares income - Deletion of disallowance of payments made to retired partners, deducted from professional receipts in AY 2014-15. - HELD THAT: - The assessing officer characterized payments to retired partners as capital outgo and disallowed deduction on the ground that such payments should be made only out of partners' capital. The CIT(A) relied on co-ordinate decisions (including ITAT Mumbai and Chennai benches) and on the Bombay High Court's observation that payments to partners in similar circumstances amount to diversion of income at source by overriding title and may be allowable where the recipient partner has offered the amount to tax. The Tribunal found no contrary authority from revenue, noted confirmations that retired partners declared the income, and accepted the CIT(A)'s conclusion on identical facts. [Paras 5]

Ground relating to payments to retired partners dismissed and deletion upheld.

Final Conclusion: All departmental appeals dismissed; the Tribunal affirms the CIT(A)'s deletions of the disallowances relating to interest on advances, subscription expenses, interest on service tax, and payments to retired partners for the assessment years 2013-14 and 2014-15.

Assessment of undisclosed capitation fee / management quota donations - taxation in hands of trustees versus trust - assessment on actual receipt versus receipt plus receivable - consideration for relinquishment of trusteeship as capital receipt - chargeability as capital gains where cost of acquisition is indeterminable - income from contract/construction - estimation of taxable profit - application of CBDT Circular No. 03/2018 on tax effect threshold - denial of exemption u/s.11 by reason of section 13(1)(c)(ii) - misapplication - protective assessments and prevention of double addition - treatment of unaccounted receipts of a trust - taxation at maximum marginal rate

Assessment of undisclosed capitation fee / management quota donations - taxation in hands of trustees versus trust - Whether undisclosed extra fees/donations collected from students were correctly taxed in the hands of the trustees (family heads) rather than being equally allocated among all trustees or assessed in the hands of the Trust. - HELD THAT: - The Tribunal upheld the CIT(A)'s reliance on seized records and sworn statements showing that governing body members collected amounts in excess of prescribed fees, kept them separately and utilised/appropriated them personally. The material on record (seized accounts and sworn statements) supported treating the sums as receipts of the trustees and not as undoubted receipts of the Trust. The assessee's contention that collections should be equally allocated among all trustees or treated as income of the Trust was rejected where seized material and admissions established individual receipt/appropriation. Accordingly, the assessments of the trustees were sustained and the appeals on these grounds dismissed.

Findings of CIT(A) confirming assessment of extra fees in hands of the trustees are upheld; assessee appeals on this point dismissed.

Assessment on actual receipt versus receipt plus receivable - Whether, for AY 2009-10, the Assessing Officer/CIT(A) could tax both actual amounts received and amounts receivable (i.e. assessable share shown as payable) rather than only sums actually received in that year. - HELD THAT: - The Tribunal noted that in earlier years the Assessing Officer had taxed only the extra fees actually received and that the CIT(A) had followed the same approach for other years but for AY 2009 10 directed taxation of both received and receivable amounts. The Tribunal found it impermissible to adopt inconsistent yardsticks across assessment years and directed assessment only on actual extra fees received by the assessee in AY 2009 10, while allowing the appeals partly.

CIT(A)'s direction to include receivables for AY 2009 10 set aside; AO to assess only actual extra fees received.

Application of CBDT Circular No. 03/2018 on tax effect threshold - Maintainability of revenue appeals before the Tribunal where tax effect is below the monetary threshold specified in CBDT Circular No. 03/2018. - HELD THAT: - The Tribunal applied CBDT Circular No. 03/2018 which advises that revenue appeals with tax effect not exceeding Rs.20 lakhs should not be filed before the ITAT. Observing the tax effect in the instant revenue appeals to be below that threshold, the Tribunal dismissed the revenue appeals as not maintainable and left the substantive issues open for re examination in appropriate proceedings if necessary.

Revenue appeals dismissed as not maintainable under CBDT Circular No. 03/2018.

Consideration for relinquishment of trusteeship as capital receipt - chargeability as capital gains where cost of acquisition is indeterminable - Whether amounts received (directly or by device) in connection with surrender/relinquishment of trusteeship are taxable as income from other sources, or are capital receipts/subject to capital gains tax. - HELD THAT: - The Tribunal held that the right of trusteeship in a public charitable trust, when relinquished, amounts to a capital asset and consideration received for relinquishment is a capital receipt. However, applying the principle in CIT v. B.C. Srinivasa Shetty, where the cost of acquisition of such an asset is indeterminable the capital gains computation under section 48 cannot be applied and therefore such receipt cannot be taxed as capital gains. The Tribunal thus concluded that the capital receipt arising from relinquishment (AY 2009 10) could not be brought to tax as capital gains and allowed the assessee's ground on that basis.

Consideration for relinquishment of trusteeship treated as capital receipt; not taxable as capital gains where cost of acquisition is indeterminable, and accordingly addition under 'other sources' disallowed.

Income from contract/construction - estimation of taxable profit - Whether amounts received purportedly for civil/construction work constituted consideration for relinquishment of trusteeship (taxable as other income) or payments for construction activity, and if construction receipts are taxable, on what basis should taxable profit be estimated. - HELD THAT: - The Tribunal examined the agreements (including the deed dated 01/06/2010) and the Balance Sheet of the acquirer (Believers Church) which disclosed the construction payments and work in progress. It concluded that construction work had in fact been undertaken and the payments to the trustees were contract receipts rather than consideration for relinquishment. Given the evidentiary record and absence of detailed contractors' accounts, the Tribunal directed that taxable income from the construction receipts be estimated at 8% (as a reasonable proxy for profit) for the relevant assessment years. The same 8% estimate was directed to be applied to the TDS amount credit.

Construction receipts were not to be treated wholly as consideration for relinquishment; income from such contract receipts to be estimated at 8% for taxation.

Treatment of unaccounted receipts of a trust - taxation at maximum marginal rate - denial of exemption u/s.11 by reason of section 13(1)(c)(ii) - misapplication - Whether the Carmel Educational Trust's exemption under section 11 could be wholly denied because some trustees collected and appropriated excess fees, and if not, how unaccounted sums handed to the Trust should be taxed. - HELD THAT: - The Tribunal found that the Trust continued bona fide charitable activities, maintained audited accounts and was a distinct juristic entity; misdeeds of certain trustees who collected excess fees in their personal capacity could not, by themselves, strip the Trust of exemption. Where unaccounted amounts were received by the Trust from trustees and not applied for charitable purposes, those specific amounts could be treated as applicable to purposes other than charitable objects and taxed at the maximum marginal rate under the statutory machinery dealing with indeterminate beneficiaries. The Tribunal accordingly rejected total denial of exemption but directed taxation of unaccounted receipts of the Trust at the maximum marginal rate and ordered recomputation.

Total denial of exemption u/s.11 overturned; only the unaccounted portion attributable to trustees is taxable (at maximum marginal rate); other income retains exemption and recomputation directed.

Protective assessments and prevention of double addition - Whether enhancement of Trust's income by adding amounts already assessed in hands of trustees (protective addition) was permissible. - HELD THAT: - The Tribunal held that amounts retained by trustees had been assessed substantively in their hands; enhancing the Trust's income to include the same sums would result in double addition. Moreover, the CIT(A)'s enhancement was made without affording the Trust an opportunity of hearing. Accordingly, the Tribunal set aside the enhancement to avoid double taxation and for breach of natural justice.

Enhancement set aside - no double addition; protective enhancement cancelled and reassessment directions modified.

Set off of excess application of earlier years - Whether carry forward of deficits / excess application of earlier years can be set off after recomputation where the Trust retains exemption under section 11. - HELD THAT: - Having held that the Trust retains exemption in part, the Tribunal directed that excess application from earlier years be allowed to be set off against deficits in subsequent years and that the Assessing Officer recompute income accordingly. The Tribunal relied on established precedents recognising adjustment of prior years' charitable application against subsequent year income where exemption is available.

Carry forward of earlier years' excess application to be allowed and set off on recomputation; appeals in part allowed.

Receipt by a donee charitable trust - benefit to trustee - Whether donations received by St. Thomas Educational Society (a donee trust) could be treated as income of earlier trustees who were not the recipients of those amounts. - HELD THAT: - The Tribunal accepted CIT(A)'s finding that the sum was received by St. Thomas Educational Society and not by the individual trustees, and that no benefit had accrued to the trustees from that donation. Because the donation was paid into an exempt charitable trust and no benefit to the trustees was shown, the addition in the hands of the trustees was not sustainable. The Tribunal therefore dismissed the revenue appeals on this point.

Donation to St. Thomas Educational Society not assessable as income of the individual trustees; revenue appeals dismissed.

Final Conclusion: The Tribunal delivered a consolidated disposition: assessments of undisclosed management quota collections in the hands of trustees were sustained where seized material and admissions supported individual appropriation; for AY 2009 10 only actual receipts (not receivables) are to be taxed; revenue appeals below the CBDT monetary threshold were dismissed as not maintainable; consideration for relinquishment of trusteeship held to be a capital receipt that could not be taxed as capital gains where cost of acquisition was indeterminable; amounts genuinely referable to construction contracts were to be treated as contract receipts with taxable profit estimated at 8%; the Carmel Educational Trust was not disentitled to exemption in toto - only unaccounted sums attributable to trustees were taxable (at maximum marginal rate) and carry forwards were to be allowed on recomputation; protective double additions were disallowed. Appeals were accordingly allowed, partly allowed or dismissed as set out in the order.

Application of section 68 to share application money (identity, creditworthiness and genuineness) - Burden of proof on assessee to establish identity, creditworthiness and genuineness of investors - Adverse inference where addresses are bogus and statutory notices are returned unserved - Use of connected/shell companies and rotation of funds as indicia of accommodation entries

Application of section 68 to share application money (identity, creditworthiness and genuineness) - Burden of proof on assessee to establish identity, creditworthiness and genuineness of investors - Adverse inference where addresses are bogus and statutory notices are returned unserved - Use of connected/shell companies and rotation of funds as indicia of accommodation entries - Whether the amount of Rs. 79,00,000 received as share application money could be treated as unexplained cash credit under section 68 and added to the assessee's income. - HELD THAT: - The Assessing Officer conducted enquiries, issued notices including under section 133(6), and obtained local inquiry reports which showed that the addresses provided for the share applicants were incorrect or the concerns were not in existence at those addresses; statutory notices were returned unserved and principal officers were not produced despite opportunities. Bank records and enquiry revealed patterns of cash deposits and inter company transfers establishing rotation of funds and common linkages among numerous concerns. Documentary material later filed by the assessee (ITRs, confirmations, ROC records, balance sheets, share applications) were held incapable of prevailing over the concrete adverse evidence gathered and confronted by the revenue. On these facts the Tribunal held that the assessee failed to discharge the primary onus to prove the identity, creditworthiness and genuineness of the transactions, and that the amounts were susceptible to being regarded as accommodation entries advanced through connected/shell entities. [Paras 14, 20, 23]

Addition of Rs. 79,00,000 received as share application money was confirmed as undisclosed income under section 68 since the assessee failed to establish identity, creditworthiness and genuineness of the investors.

Final Conclusion: On the material on record - bogus/incorrect addresses, returned statutory notices, inability to produce principal officers, evidence of rotation of funds and common control among the applicant entities - the Tribunal upheld the addition under section 68 treating the share application money as unexplained and not proved to be genuine investment.

Unexplained cash credit - presumptive taxation under Section 44AF - recycling of cash withdrawals corroborating business receipts - assessment reopened under section 147/notice under section 148

Unexplained cash credit - presumptive taxation under Section 44AF - recycling of cash withdrawals corroborating business receipts - Whether aggregate cash deposits in the assessee's bank account are exigible to be treated as unexplained cash credit or are attributable to retail trading and assessable by invoking the presumptive scheme under Section 44AF. - HELD THAT: - The Tribunal examined the pattern of transactions and evidentiary material produced by the assessee. While aggregate cash deposits were recorded, nearly similar aggregate cash withdrawals were also shown for the year, the assessee produced day-to-day cash books, month-wise quantitative and value summaries of purchases and sales in retail trading of agricultural produce, confirmations of suppliers/farmers and Form Nos. 7/12 and 8A, and a statement recorded under section 132(4) indicating use of the bank account for trading in wheat, cumin seeds and coriander. Having regard to the continuity of deposits and withdrawals, the simultaneous recycling of cash through deposits and withdrawals, the cash book and corroborative documents, the Tribunal found that the cash deposits were attributable to retail business activity rather than unexplained income. Applying the presumptive taxation machinery available to persons engaged in retail trade, the Tribunal directed that business income be estimated under Section 44AF by applying 5% to the aggregate cash deposits, thereby restricting any addition to that computed amount. The Tribunal applied the same conclusion mutatis mutandis to the earlier assessment year on identical facts. [Paras 10, 12, 13, 15, 16]

Cash deposits accepted as arising from retail trade; AO directed to estimate business income at 5% of aggregate cash deposits under Section 44AF and restrict additions accordingly; appeals partly allowed.

Final Conclusion: On the facts and documentary material produced, the Tribunal held the cash deposits to be attributable to retail trading activity and directed the Assessing Officer to compute income at 5% of aggregate cash deposits under Section 44AF for AY 2010-11 and AY 2009-10, thereby partly allowing the appeals.

Monetary limits for filing appeals by the Department - Maintainability of Revenue appeal for low tax effect - Retrospective applicability of CBDT Circular - Calculation of tax effect separately for every assessment year

Retrospective applicability of CBDT Circular - Monetary limits for filing appeals by the Department - Applicability of CBDT Circular No.17/2019 (monetary limits) to the pending Revenue appeal before the Tribunal. - HELD THAT: - The Tribunal noted that CBDT Circular No.17/2019 enhances monetary limits for departmental appeals and that a coordinate Bench has held the Circular to have retrospective effect for pending appeals. Having perused the Circular and the precedent, the Tribunal accepted that the Circular applies to the present appeal pending before it and that the enhanced monetary limits govern whether the Department may prosecute the appeal. [Paras 4]

The Circular is applicable to the pending appeal before the Tribunal.

Maintainability of Revenue appeal for low tax effect - Calculation of tax effect separately for every assessment year - Whether the Revenue's appeal is maintainable in view of the tax effect being below the monetary threshold specified in the Circular. - HELD THAT: - Applying the Circular's rule that tax effect must be calculated separately for each assessment year and that appeals shall not be filed where the tax effect is below the prescribed limit for the Tribunal (Rs. 50,00,000), the Tribunal observed that the tax effect in respect of assessment year 2012-13 is less than the threshold. In consequence, and since the Circular was held applicable to pending matters, the appeal could not be maintained and was rendered infructuous. The Tribunal, however, left open the procedural possibility that if the appeal is found maintainable at a later stage for technical reasons the Department may seek recall under the law. [Paras 2, 4]

The Revenue's appeal is not maintainable and is dismissed as infructuous for having tax effect below the monetary limit; liberty granted to the Department to seek recall if the appeal is later found maintainable.

Final Conclusion: The Tribunal dismissed the Revenue's appeal against the CIT(A)'s order for assessment year 2012-13 as not maintainable under CBDT Circular No.17/2019 since the tax effect is below the prescribed monetary limit; the Department may seek recall if the appeal is subsequently held maintainable for technical reasons.

Jurisdiction of Assessing Officer - transfer of case under section 127 - concurrent territorial jurisdiction - requirement of notice under section 143(2) - absence of notice under section 143(2) as a non-curable defect - saving under section 124(5) vis-a -vis transfer under section 127 - functus officio of transferring authority - limitation on section 292BB - does not cure complete absence of notice

Transfer of case under section 127 - concurrent territorial jurisdiction - jurisdiction of Assessing Officer - functus officio - saving under section 124(5) vis-a -vis transfer under section 127 - ACIT, Circle-21(1), New Delhi did not have jurisdiction to issue notice u/s.143(2) for AY 2015-16 after the case had been transferred to DCIT, Central Circle-1, Ranchi by order u/s.127 dated 08.10.2008. - HELD THAT: - The Tribunal examined the statutory scheme governing conferment and transfer of jurisdiction (sections 120 and 124 read with section 127) and the Explanation to section 127 which defines 'case' to include pending and future proceedings. The 08.10.2008 order under section 127 transferred the appellant's case absolutely to the charge of DCIT, Central Circle-1, Ranchi and did not reserve concurrent jurisdiction for the New Delhi AO. Once such transfer was made, the transferring authority and its subordinate officers became functus officio in respect of that case and were divested of jurisdiction. Section 124(5)'s saving is limited to overriding provisions within section 124 and directions under section 120 and does not preserve the power of an AO who has been divested of jurisdiction by a section 127 transfer. On these legal and factual bases the Tribunal held that the notice dated 28.07.2016 issued by ACIT, Circle-21(1), New Delhi was issued without jurisdiction and was a nullity. [Paras 16, 17, 18, 19, 29]

ACIT, Circle-21(1), New Delhi lacked concurrent jurisdiction and its notice u/s.143(2) dated 28.07.2016 was invalid.

Requirement of notice under section 143(2) - absence of notice under section 143(2) as a non-curable defect - limitation on section 292BB - does not cure complete absence of notice - jurisdiction of Assessing Officer - Assessment order u/s.143(3) dated 29.12.2017 framed by ACIT, Central Circle-3(1), Kolkata was invalid because no valid notice u/s.143(2) had been issued by the AO who legitimately held jurisdiction. - HELD THAT: - The Tribunal applied the settled principle that issuance of a legally valid notice under section 143(2) is a mandatory prerequisite for assuming jurisdiction to make a scrutiny assessment under section 143(3). Because the only section 143(2) notice on record was issued by an officer who had been divested of jurisdiction by the earlier section 127 transfer, there was in effect no valid 143(2) notice issued by the officer who then legitimately held the 'case'. Section 127(4) permits continuation of proceedings without re-issuance only where the earlier notice was issued by a valid predecessor AO; it does not validate a notice issued by an officer who had been divested of jurisdiction. Further, section 292BB cures infirmities of service but does not cure the complete absence of a notice emanating from a competent AO. Relying on binding precedent that absence of a valid 143(2) notice is not a curable defect, the Tribunal concluded the assessment was coram non judice and therefore quashed the assessment order. [Paras 11, 35, 36]

The assessment framed u/s.143(3) on 29.12.2017 is void for want of a valid notice u/s.143(2) and is quashed.

Final Conclusion: The appeal is allowed. The assessment order dated 29.12.2017 framed under section 143(3) for Assessment Year 2015-16 is quashed because no valid notice under section 143(2) was issued by the officer who lawfully held jurisdiction after the transfer under section 127.

Transfer within the meaning of section 2(47) - part performance under section 53A of the Transfer of Property Act - permissive possession - capital gains chargeability under section 45

Transfer within the meaning of section 2(47) - part performance under section 53A of the Transfer of Property Act - permissive possession - capital gains chargeability under section 45 - Whether entering into the Joint Development Agreement dated 10.09.2008 effected a 'transfer' attracting capital gains tax in A. Y. 2009 - 10. - HELD THAT: - The Tribunal examined the JDA and held that the agreement granted only a permission to the developer to enter and develop the land and expressly negatived delivery of possession for the purposes of Section 53A of the Transfer of Property Act. The JDA deferred transfer of possession and contemplated conveyance of the developer's undivided share only upon delivery of the Owners' Area and completion certificates. Receipt of an interest free refundable deposit was held not to be consideration; the developer did not obtain complete control or general control of the property during the relevant previous year and was not ready and willing to perform in a manner constituting part performance. The Tribunal applied the test of factual possession (control, use and enjoyment) as explained in Dwarka Das Kapadia and found that the circumstances did not demonstrate possession in part performance. The Tribunal further noted that, by the commencement certificate dated 24.08.2009, the builder could not have entered the land prior to that date and therefore no permissive possession was available in the relevant previous year 2008 09. Reliance on the tribunal decision in Smt. Lakshmi Swarupa was assessed as persuasive on similar facts and the decision in Dr. T. K. Dayalu was distinguished on the ground that in that case there was a non refundable advance and factual finding of possession. In view of the absence of delivery of possession and absence of consideration in the relevant year, the conditions for invocation of Section 53A r.w.s. 2(47)(v) were not satisfied and capital gains could not be brought to tax in A. Y. 2009 10. [Paras 5, 6, 10, 11]

No transfer took place in the previous year 2008 09; capital gains are not chargeable in A. Y. 2009 10 and the additions are deleted.

Final Conclusion: The Tribunal partly allowed the appeals: holding that entry into the JDA did not amount to a transfer under section 2(47) read with Section 53A of the Transfer of Property Act in the relevant previous year, the capital gains addition for A. Y. 2009 10 was set aside.

Admission of additional evidence under Rule 46A - reliance on remand report - deduction under section 54F - deduction under section 54B - allowability of cost of improvement - allowability of transfer expenses - reopening of assessment under section 147/148 - burden of proof for expenditure claims

Admission of additional evidence under Rule 46A - reliance on remand report - deduction under section 54F - burden of proof for expenditure claims - Whether the deduction claimed under section 54F could be allowed by the adjudicating authority after admitting additional evidence at the appellate stage and relying on the Assessing Officer's remand report. - HELD THAT: - The assessee produced various documents and a valuation report before the first appellate authority along with an application under Rule 46A. The CIT(A) directed verification and obtained a remand report in which the AO recorded examination of the documents, statements and affidavits of contractors and suppliers and did not record any adverse comment on their genuineness. The Tribunal found that the AO, on verification, had not disputed the evidentiary material and that the CIT(A)'s allowance of the section 54F claim was based on that remand report and the additional evidence. In the absence of any contrary material from the department, the appellate authority's decision to admit the evidence under Rule 46A and to accept the claim, having been verified by the AO in the remand report, could not be interfered with. [Paras 5]

Deduction under section 54F allowed; CIT(A)'s admission of additional evidence and reliance on the AO's remand report upheld.

Deduction under section 54B - Whether the claim of deduction under section 54B was allowable where the assessee had sold the subject land after it had been converted to non-agricultural use and had purchased agricultural land (allegedly) in the names of family members. - HELD THAT: - The Tribunal examined the threshold condition for section 54B that the land transferred must have been used for agricultural purposes by the assessee (or specified persons) during the two years immediately preceding the transfer. The sale deed recorded that the land was converted to non-agricultural use on 23.08.2010, about nine months before the transfer. That conversion meant the land was not used for agricultural purposes in the two years preceding the sale. The Tribunal therefore held that the condition precedent for section 54B was not satisfied and that the CIT(A)'s conclusion to the contrary was based on mistaken reliance on documents pertaining to the land purchased rather than the land sold. On this basis the Tribunal set aside the CIT(A)'s allowance and restored the AO's disallowance. [Paras 8]

Deduction under section 54B disallowed; CIT(A)'s allowance set aside and AO's order restored.

Allowability of cost of improvement - burden of proof for expenditure claims - Whether the assessee's claim for indexed cost of improvements (cost of construction of boundary wall) could be accepted on the basis of vouchers filed at the appellate stage and verified in remand proceedings. - HELD THAT: - The assessee produced payment vouchers and identity documents in support of the expenditure on the boundary wall before the CIT(A), which were forwarded to the AO for verification. The AO's remand report did not criticize or discredit those vouchers. The CIT(A) examined the vouchers, observed corroborative particulars (recipient's signature, identity proofs) and held that the assessee discharged the onus of proof. The Tribunal found no contrary material in the record and therefore upheld the deletion of the addition relating to the cost of improvement. [Paras 11]

Cost of improvement allowed; CIT(A)'s deletion of addition sustained.

Allowability of transfer expenses - burden of proof for expenditure claims - Whether brokerage/transfer expenses paid by the assessee in respect of the sale could be allowed where supporting payment vouchers were produced before the CIT(A) and forwarded for remand verification. - HELD THAT: - The assessee produced payment vouchers and identity proofs for brokerage payments at the appellate stage; these were sent to the AO who did not record any adverse comments in the remand report. The CIT(A) examined the vouchers and found the prerequisites for proving payment satisfied (recipient signatures, identity documents). The Tribunal found no infirmity in the CIT(A)'s conclusion and declined to disturb the allowance in the absence of contrary material from the department. [Paras 12]

Transfer expenses (brokerage) allowed; CIT(A)'s deletion of the AO's addition sustained.

Reopening of assessment under section 147/148 - Whether the reopening of assessment under section 147/148 was invalid and liable to be quashed because the assessee's return was sought to be examined for correctness of claimed deductions. - HELD THAT: - The AO recorded reasons showing that information indicated large deductions claimed in the return (including section 54F/54B) which were not substantiated during pre-initiation enquiry and that cash deposits in bank remained unexplained. The Tribunal observed that the enquiry produced tangible material from which the AO could form a prima facie belief that income had escaped assessment. The fact that the assessee supplied documentary evidence only at the appellate stage did not vitiate the reopening. The Tribunal held that initiation of proceedings under section 147/148 was justified on the facts of the case and that the AO had conducted reasonable enquiries before reopening. [Paras 16]

Reopening under section 147/148 upheld; cross objection seeking quashment of reassessment dismissed.

Final Conclusion: The Tribunal upheld the CIT(A)'s acceptance of additional evidence and allowance of the section 54F deduction, and sustained the deletions of additions relating to cost of improvement and transfer expenses; it reversed the CIT(A) on the section 54B claim, holding that the land sold had been converted to non agricultural use and therefore section 54B was not available; the reopening under section 147/148 was held valid and the assessee's cross objection was dismissed.

Confiscation of imported goods - provisional release on bond - relevance and weight of laboratory test reports - remand for fresh consideration - laches and negligence of authorities

Relevance and weight of laboratory test reports - The Division Bench's observation that the respondents had been 'knocked out' by the Ghaziabad laboratory report was prima facie and not a final finding on the facts of the writ petition. - HELD THAT: - The Division Bench had directed testing by the Referral Food Laboratory, Ghaziabad, and observed that the Ghaziabad report had 'knocked out' the Customs case; it also directed exchange of affidavits and allowed the appellant to take exceptions to that report. Those directions demonstrate that the observation was provisional and part of interlocutory treatment of evidence. The learned single judge treated that observation as a final factual finding and proceeded to confirm confiscation and dismiss the writ, which misconstrued the Division Bench's order. The High Court therefore held that no point in the writ petition had been finally closed by the Division Bench and that the observation was not a conclusive adjudication on the merits.

The court held that the Division Bench's remark was prima facie and not final, and that the learned single judge erred in treating it as a conclusive finding.

Confiscation of imported goods - provisional release on bond - remand for fresh consideration - laches and negligence of authorities - The adjudication confirming confiscation and dismissal of the writ was set aside and the writ petition remanded for fresh consideration of all points on affidavits, with directions for expeditious disposal. - HELD THAT: - Given conflicting laboratory reports (initial government-accredited laboratory finding fitness for human consumption, Mysore laboratory finding unfitness, Kolkata Referral Laboratory finding fitness, and Ghaziabad Referral Laboratory reporting non-conformity) and the procedural history including provisional release on bond and directions for testing, the court found that the writ remained undecided on its merits. Considering the passage of six years since importation and allegations that any deterioration may be attributable to laches or negligence of authorities, the court deemed it appropriate to set aside the impugned order and remit the matter to the first court for determination after exchange of affidavits and consideration of exceptions to reports. All points raised in the writ petition were kept open for fresh adjudication.

Impugned order dated 8th April 2016 set aside; writ remanded to the first court for fresh and expeditious consideration of all issues on affidavits, with all points kept open.

Final Conclusion: The appeal is allowed to the extent that the impugned judgment is set aside and the writ petition is remanded to the first court for fresh, expeditious adjudication of all issues (including consideration of competing laboratory reports and any claim of laches by authorities); all points in the writ are kept open.

Discharge and return of bank guarantee - undertaking restraining removal of vessel beyond customs jurisdiction - extension of bank guarantee pending appellate disposal - effect of departmental circulars on coercive recovery pending appeal - pre deposit in appeal and attendant protection

Discharge and return of bank guarantee - undertaking restraining removal of vessel beyond customs jurisdiction - Bank guarantee furnished by the respondent to secure return of the vessel is to be discharged and returned subject to a formal undertaking that the vessel will not be taken out of the Customs jurisdiction without leave of the appellate authority. - HELD THAT: - The court found that the bank guarantee was furnished only because the respondent sought permission to take the vessel beyond the jurisdictional limits of Customs and was intended to operate until the vessel was returned. The vessel has since been returned (any marginal delay deemed condoned) and the seizure was quashed. Given that the purpose for which the bank guarantee was furnished has been accomplished and that protection against coercive recovery during appeal is governed by departmental circulars, it is unnecessary to require continued maintenance of the bank guarantee. Consequently, the court ordered discharge and return of the bank guarantee on filing of a formal undertaking by a responsible officer of the respondent that the vessel will not be taken out of the Customs jurisdiction in Goa without seeking leave from the CESTAT. [Paras 20, 21, 22, 23]

M.C.A. No.739 of 2019 allowed; bank guarantee dated 26.07.2019 to be returned on filing of the specified undertaking by the respondent.

Extension of bank guarantee pending appellate disposal - effect of departmental circulars on coercive recovery pending appeal - pre deposit in appeal and attendant protection - Application by Customs for extension of the bank guarantee until disposal of the appeal is rejected. - HELD THAT: - The court observed that the Customs' request to extend the bank guarantee was linked to a confirmed demand which is the subject of appeal. However, in view of the respondent having made the requisite pre deposit in the appeal and in light of the Central Government circulars disallowing coercive recovery pending appeals, it would be inappropriate to compel continued maintenance of the bank guarantee as a precondition for protection from coercive recovery. The earlier interim directions to extend the guarantee were either for limited protective purposes or were linked to specific timelines; they do not justify an indefinite extension now that the vessel has been returned and the seizure quashed. [Paras 17, 18, 22, 23]

M.C.A. No.667 of 2019 dismissed; no further renewal of the bank guarantee is required.

Final Conclusion: The Customs' application for extension of the bank guarantee is dismissed and the respondent's application for discharge and return of the bank guarantee is allowed, subject to a formal undertaking that the vessel shall not leave the Customs' jurisdiction in Goa without leave of the CESTAT; registry to return the bank guarantee upon filing of the undertaking.

Inclusion of demurrage charges in assessable value - application of Section 14 of the Customs Act to transaction value - post-importation expenses not includable in transaction value - ultra vires of the Explanation to Rule 10(2) of the Customs Valuation Rules

Inclusion of demurrage charges in assessable value - post-importation expenses not includable in transaction value - ultra vires of the Explanation to Rule 10(2) of the Customs Valuation Rules - application of Section 14 of the Customs Act to transaction value - Whether ship demurrage charges are includable in the assessable value of imported goods for Customs duty under Section 14 read with the Valuation Rules, and whether the Explanation to Rule 10(2) enabling such inclusion is valid. - HELD THAT: - The Tribunal held that demurrage charges are post importation in character and constitute a kind of penalty, and therefore are not part of the cost envisaged by Section 14 of the Customs Act for determining transaction value. The impugned demand rested on the Explanation to sub rule (2) of Rule 10 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 which sought to include demurrage. The Tribunal accepted the decision of the Hon'ble High Court of Orissa in Tata Steels, which declared the Explanation to Rule 10(2) ultra vires and held that demurrage cannot be included for valuation under the Customs Act. Revenue did not produce any contrary binding ruling to displace that decision. In view of the High Court's pronouncement, the Tribunal concluded that the Adjudicating Authority's confirmation of demand based on the Explanation was unsustainable and liable to be set aside. [Paras 8, 9, 10]

The demand and consequential penalties and interest confirmed by the Adjudicating Authority insofar as they are based on inclusion of demurrage charges are set aside.

Final Conclusion: The appeal is allowed; the impugned order confirming demand on ship demurrage charges is set aside in view of the High Court of Orissa's decision declaring the Explanation to Rule 10(2) ultra vires, with consequential benefits if any.

Rejection of transaction value - redetermination of value under Rule 8 and Rule 12 of the Customs Valuation Rules - requirement to consider contemporaneous imports for valuation comparison - insufficiency of statements under Section 108 as sole basis for value enhancement - necessity of evidential basis (testing/samples) to establish composition and raw material basis for valuation

Rejection of transaction value - redetermination of value under Rule 8 and Rule 12 of the Customs Valuation Rules - insufficiency of statements under Section 108 as sole basis for value enhancement - necessity of evidential basis (testing/samples) to establish composition and raw material basis for valuation - requirement to consider contemporaneous imports for valuation comparison - Impugned orders rejecting declared transaction value and redetermining value were unsustainable and set aside. - HELD THAT: - The Tribunal held that the adjudicating authorities rejected the declared transaction value and redetermined value on the basis of presumed raw material composition and LME/scrap prices without any supporting evidence such as sample testing or contemporaneous import comparisons. Reliance only on statements recorded under Section 108 and on assumed percentages of constituent metals, without laboratory analysis or other evidentiary foundation, amounted to reasoning based on presumption and surmise. The authorities also failed to address or record findings on contemporaneous imports produced by the appellants, contrary to the expectation that such material be considered before discarding transaction value. In these circumstances the methodology adopted for enhancement did not satisfy the legal requirements for rejecting transaction value and applying valuation rules, and the impugned demands (including interest and penalties confirmed on that basis) were therefore unsustainable.

Impugned orders rejecting transaction value and redetermining value set aside; appeals allowed with consequential relief.

Final Conclusion: The Tribunal allowed the appeals, set aside the impugned orders holding that rejection of declared transaction value and the method of redetermination were without adequate evidential basis, and granted consequential relief.

Penalty under Section 112(a) of the Customs Act - abetment liability of customs broker - necessity of cogent tangible evidence for imposing penalty - mere filing of Bill of Entry insufficient for penalty - knowledge of contents/burden to prove culpable knowledge

Penalty under Section 112(a) of the Customs Act - abetment liability of customs broker - mere filing of Bill of Entry insufficient for penalty - necessity of cogent tangible evidence for imposing penalty - knowledge of contents/burden to prove culpable knowledge - Whether penalties under Section 112(a) can be imposed on the appellant (customs broker) merely for filing Bills of Entry where there is no evidence of abetment, knowledge or culpable participation in the illegal importation - HELD THAT: - The Court held that Section 112(a) penalises a person who abets an act or omission rendering goods liable to confiscation, and therefore imposition of penalty requires clear, cogent, tangible and reliable evidence that the broker by specific act or omission abetted the illegal importation. Mere filing of the Bill of Entry, without evidence of knowledge of the contents of the cargo or other culpable conduct, is not sufficient to attract liability. The impugned orders contained no such evidence of abetment or knowledge. The Tribunal's earlier decision in the appellant's own case on identical allegations, wherein penalty under Section 112(a) was dropped, was followed. Reliance was placed on precedents holding that absence of evidence regarding knowledge or participation precludes imposition of penalty and that penalties on alleged abettors cannot rest on assumptions or presumptions. [Paras 6]

Penalties imposed under Section 112(a) on the appellant in all six appeals set aside and the appeals allowed.

Final Conclusion: The Tribunal allowed the six appeals and set aside the penalties under Section 112(a) imposed on the customs broker, holding that in the absence of cogent evidence of abetment or knowledge, mere filing of Bills of Entry does not sustain penalty liability.

Condonation of delay - confiscation for violation of Import Trade Control restrictions - enhancement of declared value by importer's concurrence - reduction of redemption fine and personal penalty - application of binding bench precedent for quantification of fines

Condonation of delay - The Miscellaneous Application for condonation of delay in filing the appeal was allowed. - HELD THAT: - The Appellate Tribunal considered the reasons furnished in the Miscellaneous Application and, on that basis, exercised its discretion to condone the delay in filing the appeal. The application for condonation was allowed, enabling the appeal to be taken up for final hearing. [Paras 2]

Delay in filing the appeal is condoned and the Miscellaneous Application is allowed.

Reduction of redemption fine and personal penalty - application of binding bench precedent for quantification of fines - enhancement of declared value by importer's concurrence - confiscation for violation of Import Trade Control restrictions - The reduction by the First Appellate Authority of the redemption fine to 10% and the personal penalty to 5% was upheld and the Revenue's challenge to those reductions was rejected. - HELD THAT: - The Tribunal noted that the enhancement of declared value had been made with the concurrence of the importer and that there was no challenge to the order of confiscation. The Revenue's appeal attacked only the quantum of the redemption fine and penalty which had been reduced by the Commissioner (Appeals). The Commissioner (Appeals) had applied the ratio of the Three Member Bench of the CESTAT, Delhi in Omex International v. Commissioner of Customs, which held that a redemption fine of 10% and a penalty of 5% of the value are appropriate in cases of import violating Exim Policy provisions. Applying that binding precedent, the Tribunal found no reason to interfere with the reductions made by the First Appellate Authority. [Paras 7, 8, 9]

The impugned order reducing the redemption fine and personal penalty is upheld; the Revenue's appeal is rejected and its stay petition is disposed of.

Final Conclusion: Condonation of delay was allowed; on the merits the Tribunal upheld the Commissioner (Appeals)'s reduction of the redemption fine and personal penalty (to 10% and 5% respectively) applying the Three Member Bench precedent, dismissed the Revenue's appeal, and disposed of the stay petition.

Admissibility of Section 7 application - Corporate guarantee as admissible evidence - Scope of adjudicating authority under Section 7 - limited inquiry into existence of default - Pre existing dispute not a ground to reject Section 7 application - Allegations of fraud/forgery not to be gone into at admission stage

Corporate guarantee as admissible evidence - Allegations of fraud/forgery not to be gone into at admission stage - The Adjudicating Authority rightly admitted the Section 7 application on the basis of the Corporate Guarantee and Undertaking dated 7th April, 2017 (e Stamp) despite its absence from Registrar of Companies records and allegations of fraud by an erstwhile director. - HELD THAT: - The Tribunal held that the 'Corporate Guarantee and Undertaking' dated 7th April, 2017 is on record and bears an e Stamp purchased by Marigold Overseas Ltd. The fact that the appellant became a director only in May 2017, and that the agreement is not reflected in the Registrar of Companies' records, does not permit a subsequent director to contend that the document is a fraud for the purpose of defeating admission under Section 7. If the management executed the corporate guarantee but failed to file or disclose it to the Registrar, that omission does not negate the documentary proof placed before the Adjudicating Authority. The Adjudicating Authority, having been satisfied on the basis of the records that a debt and default exist, was not required to undertake a forensic inquiry into alleged forgery or fraud at the admission stage. [Paras 4, 5, 7]

Admission of the Section 7 application was proper; allegations of fraud/forgery could not be examined at the admission stage.

Admissibility of Section 7 application - Scope of adjudicating authority under Section 7 - limited inquiry into existence of default - Pre existing dispute not a ground to reject Section 7 application - A pending civil suit and pleaded pre existing disputes did not warrant rejection of the Section 7 application once the Adjudicating Authority was satisfied that a financial debt and default existed. - HELD THAT: - Relying on the principles enunciated in Innoventive Industries Ltd. v. ICICI Bank, the Tribunal reiterated that upon being satisfied from the records that a default in respect of a financial debt has occurred, the Adjudicating Authority must admit the application under Section 7 unless the application is incomplete. The Explanation to Section 7(1) and the procedural rules require only a limited enquiry into existence of default; pre existing disputes, while potentially relevant under Section 9, do not provide a ground for rejection of a Section 7 application. The mere existence of a pending suit by the appellant did not permit the Adjudicating Authority to refuse admission. [Paras 6, 7]

Pending suit or asserted pre existing dispute did not preclude admission of the Section 7 application once default was established from the records.

Final Conclusion: The appeal is dismissed. The Adjudicating Authority correctly admitted the Section 7 application on the basis of the corporate guarantee evidenced by the e Stamped document and the existence of default; allegations of fraud or a pending civil suit cannot be examined at the admission stage and do not justify rejection of the Section 7 application. The Tribunal's and Adjudicating Authority's observations are not to be treated as determinative of the merits of any pending suit.

Interim relief - Status quo - Disposal or alienation of goods by Customs - Adjournment for filing reply and rejoinder - Judicial restraint where matter pending before Adjudicating Authority

Interim relief - Status quo - Disposal or alienation of goods by Customs - Judicial restraint where matter pending before Adjudicating Authority - Whether the Appellate Tribunal should intervene in the Adjudicating Authority's interim proceedings or direct a status quo, and what interim treatment should be accorded to the goods in Customs custody. - HELD THAT: - The Tribunal noted that the application for interim relief is pending before the Adjudicating Authority and recorded that it would not express any opinion on the merits of the interim relief sought, leaving the determination to the Adjudicating Authority after hearing the parties. The Adjudicating Authority had recorded appearances and directed service and time for filing reply and rejoinder; the Tribunal observed that the status quo as on that day was uncertain and therefore declined to pass the status quo order sought. While declining to decide the interim relief, the Tribunal expressed an expectation that the Deputy Commissioner of Customs would not sell or otherwise alienate the property (if not already sold or alienated) so as to render the interim application infructuous pending consideration by the Adjudicating Authority. The Tribunal's remarks were permissive and not a substantive ruling on the merits; the primary duty to decide interim relief remains with the Adjudicating Authority in accordance with its directions for service and filing of pleadings.

Appeal disposed of by declining to interfere with the Adjudicating Authority's interim proceedings; no opinion expressed on the interim relief sought; expectation recorded that Customs will refrain from selling or alienating the goods pending the Adjudicating Authority's decision.

Final Conclusion: The Tribunal declined to adjudicate the interim relief and disposed the appeal, leaving the question of interim protection to the Adjudicating Authority while recording an expectation that the Customs authorities will not sell or alienate the goods pending adjudication.

Implementation of earlier order - provisional fixation of admitted interest amount - calculation of instalments in terms of earlier order - payment schedule for instalments - default clause operative on non-payment - leave to seek additional reliefs subject to maintainability

Provisional fixation of admitted interest amount - calculation of instalments in terms of earlier order - payment schedule for instalments - Provisional quantum of interest to be taken as the admitted amount and instalments to be calculated and paid in accordance with the earlier order dated 25th February, 2019. - HELD THAT: - The Court directed that, without prejudice to the respondents' rights and contentions, the interest payable shall be provisionally taken to be the admitted amount. The respondent service tax authority is directed to calculate outstanding instalments on that basis in terms of the order dated 25th February, 2019, commencing from June 2019, within one week of service of this order. The appellant/applicant is required to pay the tentative revised instalments punctually by the 7th of each month after June 2019, with the instalment for June 2019 to be paid by 20th June 2019. These directions implement the earlier order for the limited purpose of provisional computation and payment pending final adjudication.

Provisional interest fixed as admitted amount; authority to compute instalments per the 25th February, 2019 order; appellant to pay instalments on specified monthly schedule.

Default clause operative on non-payment - Consequences of failure to make the stipulated instalment payments. - HELD THAT: - The Court made clear that if the appellant/applicant fails to pay the instalments as directed, the default clause in the order dated 25th February, 2019 shall become operative. This preserves the contractual or judicial mechanism previously ordained for dealing with defaults under that order, thereby enforcing the consequence already agreed or adjudicated.

Default clause in the earlier order will operate upon failure to pay the instalments as directed.

Implementation of earlier order - maintainability of implementation application - Maintainability and the merits of the present application as one for implementation of the order dated 25th February, 2019. - HELD THAT: - The Court treated the present application as an application for implementation of the order dated 25th February, 2019 but did not decide the merits or the maintainability at this stage. Those questions are reserved for the returnable date of the application and will be decided thereafter. The present directions are interlocutory and without prejudice to final determination on maintainability and merits.

Merits and maintainability of the implementation application are reserved for decision on the returnable date.

Leave to seek additional reliefs subject to maintainability - Permission to pursue any additional causes of action raised in the application before an appropriate forum. - HELD THAT: - The Court clarified that this order concerns only the subject matter of the prior writ disposed by the order dated 20th December, 2018 and does not adjudicate any other claims or dues. For any additional causes of action introduced in the application, the appellant/applicant is granted leave to approach an appropriate forum for the reliefs sought, while preserving the respondents' right to raise maintainability objections in respect of those additional claims.

Appellant given leave to approach appropriate forum for additional causes of action; respondents may raise maintainability objections.

Final Conclusion: Interlocutory directions issued for provisional fixation of the admitted interest amount and computation and punctual payment of instalments in terms of the earlier order; consequences of default preserved; merits and maintainability of the implementation application reserved for the returnable date; leave granted to pursue any additional causes of action subject to maintainability objections.

CENVAT credit of input services - exclusion of life insurance and health insurance from input services - eligibility of credit where insurance is mandated by statute or under Central Excise Act - reference to Larger Bench for resolving conflicting Tribunal precedents

CENVAT credit of input services - exclusion of life insurance and health insurance from input services - eligibility of credit where insurance is mandated by statute or under Central Excise Act - Question whether CENVAT credit of service tax paid on employee insurance policies post 01.04.2011 is admissible despite the exclusion of life and health insurance from the definition of input services, when such insurance is in pursuance of the Central Excise Act or related statutory obligation. - HELD THAT: - The Tribunal noted two directly conflicting coordinate-Bench decisions: Hydus Technologies India Pvt. Ltd. (holding that CENVAT credit is allowable post 01.04.2011 where the insurance is in pursuance of the Central Excise Act or related statutory duty) and Ganesan Builders Ltd. (holding that credit cannot be allowed under the same statutory clause interpreting the exclusion). Given that both Benches are of equal strength and the views are diagonally opposite, the Tribunal did not resolve the legal question on merits but recorded that the conflict requires authoritative determination by a Larger Bench. Consequently the matter is referred for constitution of a Larger Bench to authoritatively decide which view should prevail.

The question is referred to the President, CESTAT for constitution of a Larger Bench to decide the disputed admissibility of CENVAT credit on the said insurance services.

Final Conclusion: The appeal raises a legal conflict between coordinate Benches on admissibility of CENVAT credit for employee insurance services post 01.04.2011; the matter is referred to the President, CESTAT for constitution of a Larger Bench for definitive adjudication.

Refund of service tax on services used for export - reverse charge mechanism - person liable to pay service tax - strict interpretation of exemption/notification - limitation period for refund claims

Refund of service tax on services used for export - reverse charge mechanism - person liable to pay service tax - strict interpretation of exemption/notification - Claim for refund under Notification No. 41/2012-ST is admissible where service tax was discharged by the recipient under the reverse charge mechanism and the services were used for export of goods. - HELD THAT: - The Tribunal accepted the principle that the notification granting rebate by way of refund of service tax on services used for export must be interpreted so as to effectuate its object. A literal reading of condition (b) that would deny refund where tax is discharged under reverse charge would defeat the notification's purpose and render it ineffective in reverse-charge cases. Reliance was placed on the Tribunal's reasoning in Bharat Heavy Electricals Ltd and the Supreme Court's approach in Malwa Industries that beneficiaries entitled to a statutory exemption should not be deprived by narrow literalism. It was held to be inconceivable that a special provision for discharge of tax by the recipient should prevent refunds that protect the value of exports from tax incidence; accordingly the appellant was held eligible for refund in respect of taxes paid under reverse charge on services used in export. [Paras 4]

Refund claim in respect of service tax paid under reverse charge for services used in export granted.

Limitation period for refund claims - Claim for enhancement filed after the prescribed period of limitation is barred and not admissible. - HELD THAT: - The Tribunal held that the limitation provision for refund claims admits no latitude. The decisions cited by the appellant were distinguished as relating to cases where a subsequent revised application did not effect an enhancement of the claim or arose from rectification of deficiencies; those authorities could not be applied to advance the filing date of an enhanced claim so as to bring it within the limitation period. Consequently the portion of the claim representing the enhancement filed beyond the limitation period was held to be time-barred. [Paras 5, 6]

Enhanced portion of the refund claim filed beyond the limitation period rejected.

Final Conclusion: Impugned order modified: refund allowed to the extent found admissible for service tax paid under reverse charge on services used for export; the enhanced portion of the claim filed beyond the prescribed limitation period is rejected.

Export of Services - Business Auxiliary Service - place of consumption/use of service - receipt of payment in convertible foreign exchange - interpretation of Export of Services Rules, 2005 - refund under Section 11B - reference to Larger Bench for conflicting tribunal precedents

Export of Services - Business Auxiliary Service - place of consumption/use of service - receipt of payment in convertible foreign exchange - refund under Section 11B - Whether commission-agent services rendered by the appellant to its foreign principal qualify as export of services and whether the refund claimed (including interest) is payable. - HELD THAT: - The Tribunal accepted that the services rendered by the appellant are classifiable as Business Auxiliary Service. The determinative question was whether those services qualified as Export of Services under the Export of Services Rules, 2005. The Tribunal examined the rule-conditions and amendments and found that, although the recipient was located outside India and payment was in convertible foreign exchange, the services were used by the foreign principal to develop business in India (procurement and booking of orders in India for sale in the assigned territories). Applying the principle in GVK Industries (as discussed in the judgment) and having regard to the source/nexus concept, the Tribunal held that services consumed for development of the foreign principal's business in India are effectively used/consumed in India and therefore do not satisfy the requirement of being used outside India for the purpose of export-of-service exemption. On that basis the appellant was not entitled to the claimed refund (including interest under Section 11B) of the service tax paid. [Paras 5]

Claim for refund of service tax (and interest) was rejected on the ground that the services were used/consumed in India and therefore did not qualify as export of services.

Interpretation of Export of Services Rules, 2005 - place of consumption/use of service - reference to Larger Bench for conflicting tribunal precedents - Whether the divergent approaches of coordinate Tribunal benches on interpretation of various phased formulations of Rule 3 of the Export of Services Rules, 2005 require reference to a Larger Bench and the specific questions to be resolved. - HELD THAT: - The Tribunal noted substantial conflict between its view and several earlier Tribunal decisions (and some Single Member orders and circulars) which had treated similar commission-agent services as exportable on the basis that the recipient was located outside India and payment was in foreign exchange. Given the contrary precedents and the significance of differing wordings of rule-phrases across amendment periods, the Bench concluded that judicial propriety required a reference to the President for constitution of a Larger Bench. The Tribunal formulated four specific questions of law concerning the scope of the relevant phrases in Rule 3 for the distinct amendment periods and whether services rendered to a foreign entity for development of its business in India qualify as export of service in light of the Apex Court decision in GVK Industries. [Paras 5, 6]

Matter referred to the Hon'ble President for constitution of a Larger Bench to decide specified questions on the interpretation and scope of Rule 3 of the Export of Services Rules, 2005 across the relevant amendment periods and the effect of GVK Industries on services rendered to foreign entities for business development in India.

Final Conclusion: The Tribunal held that the appellant's commission-agent services were used in India and therefore did not qualify as export of services; the refund claim (including interest) was rejected. Because of conflicting Tribunal decisions on the interpretation of the phased formulations of Rule 3 of the Export of Services Rules, 2005, the matter was referred to the President for constitution of a Larger Bench to decide the specified questions of law.

Exemption from payment of service tax on GTA for transportation of foodstuffs - scope of the term "foodstuff" - interpretation of an inclusive illustrative entry in an exemption notification

Exemption from payment of service tax on GTA for transportation of foodstuffs - scope of the term "foodstuff" - interpretation of an inclusive illustrative entry in an exemption notification - Whether GTA services for transportation of edible biscuits are covered by the exemption granted for transportation of foodstuffs under the notification. - HELD THAT: - The Tribunal accepted the reasoning of the Commissioner (Appeals) that biscuits, being edible and consumed by human beings, fall within the category of "foodstuff" for the purpose of the exemption. The Tribunal rejected Revenue's narrow contention that "foodstuff" is confined only to raw materials requiring further processing and does not include ready-to-eat items such as biscuits. The Tribunal observed that the exemption entry is illustrative and not exhaustive, and that the inclusive language extends exemption to materials that can be consumed by humans directly or after further processing. There was no satisfactory reason advanced by Revenue to treat edible biscuits as distinct from foodstuffs for the notification's purpose.

The GTA services for transportation of the edible biscuits are covered by the exemption for transportation of foodstuffs; Revenue's appeal is rejected.

Final Conclusion: The appeal filed by Revenue challenging the grant of exemption for transportation of edible biscuits was dismissed; the Tribunal upheld the Commissioner (Appeals) finding that "foodstuff" in the exemption notification includes ready-to-eat biscuits and that the illustrative list is not exhaustive.

Levy of service tax on reimbursed transaction charges - Taxability of SEBI turnover fee and exchange transaction charges - Reimbursement principle for pass through charges - Precedent value of consistent tribunal decisions

Levy of service tax on reimbursed transaction charges - Taxability of SEBI turnover fee and exchange transaction charges - Reimbursement principle for pass through charges - NSE/BSE transaction charges and SEBI turnover fee recovered from clients, over and above brokerage, are not liable to service tax where they represent actual payments made on behalf of clients. - HELD THAT: - The Tribunal held that the question is no longer res integra and has been consistently decided in favour of assessee in earlier decisions including the decision relied upon by the appellant. Those precedents establish that amounts representing actual charges payable to the stock exchanges or SEBI, when merely recovered from clients as reimbursements, do not constitute a taxable service. Applying that principle to the facts, the impugned finding of tax liability on NSE/BSE transaction charges and SEBI turnover fee was incorrect. In view of the settled position of law and the decision cited by the appellant, the impugned order was set aside. [Paras 4]

Impugned order set aside; appeal allowed and the reimbursed NSE/BSE transaction charges and SEBI turnover fee held not taxable as service tax.

Final Conclusion: The Tribunal allowed the appeal, holding that transaction charges of the exchanges and SEBI turnover fee recovered as reimbursements from clients do not attract service tax, and set aside the impugned order.

Business Auxiliary Service under section 65(19) of the Finance Act, 1994 - agency (collection on behalf of principal) - absence of consideration as determinative of taxable service - service tax liability on amounts collected for manufacturer

Business Auxiliary Service under section 65(19) of the Finance Act, 1994 - agency (collection on behalf of principal) - absence of consideration as determinative of taxable service - Whether collection of amounts by the authorised dealers on behalf of the manufacturer under the Passport Bonus Card Scheme amounted to a taxable Business Auxiliary Service under section 65(19). - HELD THAT: - The appellants acted as authorised dealers collecting amounts from customers on behalf of the manufacturer and transmitted the sums to the manufacturer. The appellants did not receive any commission, incentive or other consideration for this activity, and there is no evidence that they retained any portion of the amounts collected. The Tribunal applied the principle that where an alleged service provider receives no inflow or consideration for the activity, the activity does not fall within the definition of a taxable service such as Business Auxiliary Service. In the absence of consideration or retention of funds by the appellants, the essential element of a taxable service under the provision relied upon is missing. Accordingly the findings of the authorities below confirming demand and penalties on the basis that the collections constituted a taxable Business Auxiliary Service could not be sustained.

Impugned orders confirming demand and penalties were set aside and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that collections made by the authorised dealers on behalf of the manufacturer without any commission or other consideration did not constitute a taxable Business Auxiliary Service under section 65(19); the orders confirming demand and penalties were set aside with consequential reliefs as per law.

Classification of service as manpower recruitment or supply agency (service under Section 65(105)(k) of the Finance Act, 1994) - classification as business auxiliary service (BAS) (Section 65(19) of the Finance Act, 1994) - devolution of tax liability under Finance Act, 1994 - intermediary/agent role in procurement of inputs

Classification of service as manpower recruitment or supply agency (service under Section 65(105)(k) of the Finance Act, 1994) - classification as business auxiliary service (BAS) (Section 65(19) of the Finance Act, 1994) - intermediary/agent role in procurement of inputs - Whether the amounts received by the appellant from its sister concern for harvesting and transporting sugarcane are taxable as manpower recruitment or supply agency services or fall outside that category and are instead covered by business auxiliary service / intermediary activity. - HELD THAT: - The Tribunal accepted the reasoning in Satara Sahakari Sheth Audyogik Oos Todani Vahtook Society v. Commissioner of Central Excise, Kolhapur that the appellant did not recruit or supply manpower to the sugar factory but engaged labour/transport contractors to perform harvesting and transportation. The consideration was paid on the basis of quantity of sugarcane delivered (tonnage) and not for supply of manpower; mere use of labour in rendering a service does not convert the activity into manpower supply. The essential nature of the service rendered by the appellant was harvesting and delivery of sugarcane, not provision of manpower. Further, the activity was held to fall within the scope of business auxiliary service, particularly as incidental/auxiliary to procurement of inputs for the client under sub-clause (vii) of Section 65(19), because sugarcane is an input for the sugar factory and the appellant's role was ancillary to its procurement (harvesting and transport). The Tribunal found that the adjudicating authority proceeded without applying the said precedent and that the appellant functioned as an intermediary/agent between constituents and labour contractors to secure efficient supply and ensure handover of produce, therefore the classification as a manpower recruitment or supply agency was unsustainable. In consequence, the impugned demand based on classification under manpower supply services was set aside. [Paras 5, 6]

Impugned order set aside; demand sustained by classifying the activity as manpower supply rejected and appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the appellant's activities of harvesting and transporting sugarcane (undertaken through contractors) did not constitute a manpower recruitment or supply agency service but fell within business auxiliary / intermediary activity; the impugned tax demand was set aside.

Refund of excise duty on export - erroneous payment of excise duty - utilisation of Cenvat credit for payment of excise duty - remand for fresh consideration and evidence - reasoned order by revisional authority - interim restraint on alienation of assets

Refund of excise duty on export - erroneous payment of excise duty - Entitlement to refund of excise duty paid on goods subsequently exported, where notification provided nil rate subject to condition and the condition was not fulfilled at manufacture - HELD THAT: - The High Court found that the revisional authority had not examined, in proper perspective, whether the appellant became entitled to refund of the excise duty paid upon export of the manufactured goods. The court observed that the question whether the duty was 'erroneously paid' and thus refundable upon export requires threadbare consideration of the evidence and submissions. Rather than deciding these substantive questions on merits, the court set aside the impugned order and remanded the matter for fresh adjudication by the revisional authority after permitting the parties to place on record further evidence by affidavit and be heard.

Remanded to the revisional authority for fresh consideration of entitlement to refund and whether the excise duty paid was erroneous, with leave to the parties to file further evidence and be heard.

Utilisation of Cenvat credit for payment of excise duty - Lawfulness of utilisation of Cenvat input credit to pay the excise duty in the circumstances of this case - HELD THAT: - The court noted the contention that the excise duty had been paid out of Cenvat input credit and that such utilisation may have been impermissible if the credit could only be adjusted against finally manufactured excisable goods. The revisional authority had not examined these contentions in detail. The High Court therefore directed that the revisional authority consider, on evidence and submissions, whether the availment and utilisation of Cenvat credit for payment of the duty was erroneous and its effect on any refund claim.

Remanded for the revisional authority to determine, on fresh evidence and reasons, the propriety of the utilisation of Cenvat credit for payment of the duty and its consequence for refund claims.

Remand for fresh consideration and evidence - reasoned order by revisional authority - Procedural course to be followed by the revisional authority on remand - HELD THAT: - The High Court directed that the appellant be permitted to file an affidavit adducing further evidence within four weeks and that the respondents be given a similar opportunity within four weeks thereafter. The revisional authority is to examine the matter upon notice to and after hearing the parties and to pass a reasoned order within six months from the date of the court's order. The court set aside the impugned judgment and order and imposed this timetable to ensure thorough adjudication on merits.

Directed remand with express opportunity for additional evidence and submissions and timeline of six months for a reasoned decision by the revisional authority.

Interim restraint on alienation of assets - Interim protective measure regarding the appellant's assets pending determination - HELD THAT: - As an interim protective measure pending the revisional authority's fresh determination, the High Court restrained the appellant from transferring, alienating or otherwise dealing with its fixed assets so as to reduce their value below the amount corresponding to the refund ordered, thereby preserving the revenue's ability to effect recovery if required. This interim restraint remains in force until the revisional authority's determination.

Interim restraint imposed on the appellant's alienation or dealing with fixed assets to keep their value above the specified amount until the revisional authority decides the matter.

Final Conclusion: The High Court set aside the impugned judgment and remanded the matter to the revisional authority for fresh, reasoned adjudication on entitlement to refund, the question of erroneous payment and the propriety of Cenvat credit utilisation, after allowing both parties to file additional evidence; an interim restraint on alienation of specified assets was imposed pending that determination.

Principle of audi alteram partem - natural justice - right to be heard - ex parte adjudication - service of notice - rehearing on account of non-service - setting aside adjudication order - remand for fresh consideration - bank guarantee as condition for interim relief

Natural justice - right to be heard - service of notice - ex parte adjudication - Whether the adjudication order dated 24th January 2018, passed ex parte, was vitiated for want of opportunity to be heard due to non-service of personal hearing notices at the assessee's new address. - HELD THAT: - The Court found substantial evidence that the assessee had not received the notices fixing personal hearings - the assessee had replied to the original show cause notice in October 2007, the department's joint inspection report of April 2013 recorded the change of factory premises, and postal attempts to serve the adjudication order at the old address were returned with the remark "Not known." Given these facts, the conclusion that the adjudication was rendered without affording the assessee an opportunity to be heard engages the constitutional principle embodied in audi alteram partem. The Court held that an ex parte order imposing liability for duty, interest and penalty in such circumstances substantially impairs the assessee's rights and cannot stand.

The ex parte adjudication dated 24th January 2018 was set aside as violative of the right to be heard.

Setting aside adjudication order - remand for fresh consideration - bank guarantee as condition for interim relief - Relief to be granted and directions following setting aside of the ex parte adjudication. - HELD THAT: - The Court exercised its supervisory jurisdiction to set aside both the adjudication order and the impugned High Court judgment which had rejected the natural justice contention. The matter was remitted to the Commissioner for a re-hearing on the show cause notice, with a requirement that the Commissioner pass a reasoned order within four months of communication of this order. As a condition of this relief, the Court directed the assessee to furnish a bank guarantee for security pending fresh adjudication. The Court clarified that it did not adjudicate the merits of the departmental demand, and any observations on merits were tentative only.

Impugned High Court order and the adjudication order dated 24th January 2018 were set aside; matter remitted for re-hearing with a direction to pass a reasoned order within four months, conditional upon the assessee furnishing a bank guarantee by the specified date, failing which the original adjudication order would revive.

Final Conclusion: The Court set aside the ex parte adjudication and the impugned High Court order for failure to afford the assessee an opportunity of hearing, remitted the matter for fresh hearing and reasoned decision within four months, and granted relief subject to the assessee furnishing a bank guarantee as directed; the Court did not decide the merits of the departmental demand.

Attachment of bank account - proportionate withdrawal for business expenditure - reasoned order - implementation of earlier court order - compliance with court directions by banks

Proportionate withdrawal for business expenditure - reasoned order - Direction to the Commissioner to determine what proportion of receipts in the attached account the appellant may retain for business expenditure and to record that determination in a reasoned order. - HELD THAT: - The Court observed that its earlier order had required the respondent authority to pass a reasoned order specifying what proportion of receipts into the attached account could be retained by the appellant for business expenditure without affecting payment of installments. The Commissioner's order dated 18th April, 2019, though granting instalment concessions, did not make this specific determination. In the absence of that determination, the bank has rightly restrained withdrawals. The Court therefore directed the Commissioner to make the additional determination and pass a reasoned order within three weeks of communication of the Court's order. Depending on that determination, HDFC Bank is to permit withdrawals authorised by the Commissioner, while any remaining sums continue to be attached.

Commissioner directed to decide and record within three weeks the proportion of receipts that may be withdrawn for business expenditure; HDFC Bank to allow withdrawals consistent with that determination; remaining balance to remain attached.

Implementation of earlier court order - compliance with court directions by banks - attachment of bank account - Warning and directive to the fifteen banks to comply with the Court's earlier order dated 3rd April, 2019 by not permitting deposits into the specified accounts and by transferring any irregular deposits into the attached HDFC account. - HELD THAT: - The Court reiterated and reinforced its prior directions by warning the fifteen banks named in the earlier order to strictly comply with that order. They were directed not to permit any deposit into those accounts and, if any deposit is irregularly made, to transfer it to the appellant's attached HDFC account. The directive is accompanied by a warning that the order is without prejudice to any action the Court may take for violation of its order.

Fifteen banks warned to strictly comply with the earlier order; no deposits to be permitted into the specified accounts and any irregular deposits to be transferred to the attached HDFC account; non-compliance may attract action by the Court.

Final Conclusion: Application treated as one for implementation of earlier orders; Commissioner directed to make the required additional reasoned determination within three weeks and banks directed to comply with the earlier order, with the application disposed of.

Prohibition on double recovery - CENVAT credit admissibility - effect of prior appellate determination on subsequent demands

Prohibition on double recovery - effect of prior appellate determination on subsequent demands - CENVAT credit admissibility - Whether Revenue could sustain a fresh demand and disallow CENVAT credit on the same services after the Tribunal had earlier allowed the appellant's challenge to an identical demand - HELD THAT: - The Tribunal found that the appellant had earlier challenged a demand in respect of the same services in appeal No.E/21183/2018 and that the Tribunal had allowed that appeal by Final Order dated 11/02/2019. The impugned disallowance in the present proceedings arose from a subsequent show-cause notice issued by a Division Officer based on the Range Officer's observation, seeking to deny the same credit already the subject of the earlier appellate determination. Having regard to the settled consequence that Revenue cannot demand tax twice in respect of the same services and that an identical contention had been decided in favour of the appellant by the Tribunal, the impugned order could not be sustained. The Tribunal therefore set aside the impugned order and allowed the appeal. [Paras 6]

Impugned order set aside and appeal allowed as Revenue cannot demand service tax/CENVAT credit twice on the same services where an appellate determination in favour of the appellant exists

Final Conclusion: The Tribunal set aside the Commissioner(Appeals) order and allowed the appellant's appeal, holding that Revenue cannot sustain a second demand for service tax/CENVAT credit on the same services after the Tribunal had earlier allowed the appellant's challenge.

Admissibility of CENVAT credit on input services - definition of "input service" under CENVAT Credit Rules, 2004 - scope of "civil structure" in relation to mining works - construction for support of capital goods - distinction between mine support/roofing works and civil structures

Admissibility of CENVAT credit on input services - definition of "input service" under CENVAT Credit Rules, 2004 - scope of "civil structure" in relation to mining works - distinction between mine support/roofing works and civil structures - Whether CENVAT credit availed on services relating to ventilation stopping area and isolation stopping area within the mines is admissible and cannot be denied as construction of a civil structure. - HELD THAT: - The Tribunal applied its earlier reasoning that roofing or support structures within mines, which offer protection from mud shifting and are integral to mining operations, do not fall within the ordinary meaning of a "civil structure" contemplated by the amended definition of "input service". By analogy, the construction works for ventilation stopping area and isolation stopping area inside the mine cannot be regarded as construction of a building or civil structure or part thereof for the purposes of denying CENVAT credit. The impugned denial was therefore unsustainable to the extent it disallowed credit on these mining-specific support works. [Paras 5]

CENVAT credit availed on input services for ventilation stopping area and isolation stopping area within the mines is admissible; the impugned order is modified accordingly and the appeal is allowed to that extent.

Final Conclusion: The Tribunal modified the impugned order and allowed the appeal to the extent of permitting CENVAT credit claimed in respect of the ventilation stopping area and isolation stopping area within the mines (credit of Rs. 4,21,267/-).