TaxTMI Updates e-Newsletter
Oct 11,2022

Refund of IGST on zero-rated supplies - drawback claimed under Column A versus Column B of the Drawback Schedule - ultra vires challenge to conditions restricting IGST refund in presence of drawback claim - transitional period (July-September, 2017) - deduction of differential duty drawback from IGST refund - verification and adjustment by Jurisdictional Commissionerates - interest at the rate of 7% p.a. on delayed refund

Refund of IGST on zero-rated supplies - drawback claimed under Column A versus Column B of the Drawback Schedule - ultra vires challenge to conditions restricting IGST refund in presence of drawback claim - Petitioners entitled to refund of IGST paid on export of goods during the Transitional Period even where higher drawback was claimed under Column A. - HELD THAT: - The Court accepted the petitioners' case that the impugned administrative instruments could not lawfully withhold IGST refunds paid on exports during the transitional phase merely because the exporter had claimed drawback at the higher rates in Column A. The Court treated the matter as covered by the Gujarat High Court decision in M/s Amit Cotton Industries (reproduced at paragraph 6) and noted that the Special Leave Petition against that decision was dismissed by the Supreme Court (paragraph 7). Applying those precedents, the Court held that refund of IGST on zero-rated supplies must be granted, subject to the limited financial adjustments specified by the Court, and that the circular relied upon by the respondents did not justify denial of the refund for exports that took place during the transitional period (paragraphs 6-8). [Paras 6, 7, 8]

Writ petitions allowed directing refund of IGST paid on exports during the Transitional Period, after permissible adjustments, with interest.

Deduction of differential duty drawback from IGST refund - verification and adjustment by Jurisdictional Commissionerates - interest at the rate of 7% p.a. on delayed refund - Refund to be granted after deducting differential duty drawback (if not already returned) and subject to verification/adjustment by Jurisdictional Commissionerates; interest at 7% p.a. payable from date of shipping bill till actual refund. - HELD THAT: - The Court directed that the refund of IGST shall be made after deducting the differential amount of duty drawback, where applicable, and ordered payment of interest at 7% per annum from the date of the shipping bill until actual refund (paragraph 8). The Court further empowered the respective Jurisdictional Commissionerates to verify the extent of drawback availed and whether CENVAT Credit/Central Excise & Service Tax components were claimed, and to make any necessary adjustments (paragraph 9). This constitutes a limited verification/adjustment mandate rather than denial of the substantive right to refund. [Paras 8, 9]

Respondents directed to sanction IGST refunds within twelve weeks after deducting differential drawback, with 7% interest, and Jurisdictional Commissionerates permitted to verify and adjust claims.

Final Conclusion: Writ petitions allowed: petitioners entitled to IGST refund on exports during the Transitional Period (July-September, 2017), subject to deduction of any differential drawback and verification/adjustment by the Jurisdictional Commissionerates; refunds to be paid within twelve weeks with interest at 7% p.a. from the date of the shipping bill.

Anti-profiteering under Section 171 - suo motu power of the National Anti-Profiteering Authority - obligation to pass on benefit of tax rate reduction on each supply - prohibition of netting off benefits across supplies (SKU-wise pass-on) - commensurate reduction in prices as the prescribed mode of passing benefit - post-sale discounts not substituting for commensurate price reduction - prima facie deposit of profiteered amount pending final adjudication

Suo motu power of the National Anti-Profiteering Authority - Validity of initiation of proceedings by the Secretary, NAA, and the existence of suo motu power in the NAA to examine alleged contraventions under Section 171 - HELD THAT: - The Court held prima facie that Section 171 and the Rules thereunder empower the NAA to examine "any supply" and that the procedure in the Rules (including applications by Commissioners or other persons) does not curtail the original legislative power of the Authority. Rule 127 and the methodology provision permitting inquiry on the Authority's own motion indicate that NAA possesses suo motu powers to initiate proceedings in the public/consumer interest. The Court noted Rule 128 permits 'any other person' to make an application, so the Secretary, NAA, would prima facie qualify to institute proceedings. [Paras 7, 8, 14]

Prima facie upheld NAA's suo motu power and validated initiation by the Secretary for the present proceedings.

Obligation to pass on benefit of tax rate reduction on each supply - prohibition of netting off benefits across supplies (SKU-wise pass-on) - Whether a supplier may net off benefits across supplies or need pass on the benefit of tax reduction on each supply/SKU to each recipient - HELD THAT: - The Court expressed a prima facie view that Section 171 casts an obligation on every supplier to pass on the benefit of tax rate reduction or ITC on every supply. The statutory phrase "any supply" indicates benefit must be reflected at the level of each taxable supply to each recipient, and a supplier cannot offset greater benefit given on some supplies against lesser or no benefit on others. The provision is a consumer-welfare measure and must be liberally construed to further consumer and public interest. [Paras 9, 13, 15]

Prima facie held that netting off across SKUs is not permissible; benefit must be passed on supply-wise.

Commensurate reduction in prices as the prescribed mode of passing benefit - post-sale discounts not substituting for commensurate price reduction - Whether post-sale discounts or increase in grammage can constitute the commensurate reduction in prices mandated by Section 171 - HELD THAT: - The Court observed prima facie that Section 171 contemplates passing the benefit by way of commensurate reduction in prices. Post-sale discounts given by the petitioner were held prima facie not to have been granted on account of GST rate reduction and therefore do not qualify as the required commensurate price reduction. Similarly, a supplier cannot choose to pass the benefit by increasing grammage instead of reducing the price when the statute prescribes price reduction as the mode of passing on the benefit. [Paras 3, 4, 16, 18]

Prima facie held that post-sale discounts and increased grammage do not satisfy the statutory requirement of commensurate price reduction.

Examination of alleged impact of increase in Customs Duty - Admissibility at this stage of the petitioner's plea that increase in Customs Duty justified the non-passage of benefit - HELD THAT: - The Court examined the materials produced regarding customs duty and found the spreadsheets lacking essential particulars (bills of entry, dates, values, description, or indication whether imports were raw materials or finished goods). The Court observed that assessing the impact of changed customs duty would require detailed examination of manufacturing composition and consumption of inputs; consequently, such a claim cannot be satisfactorily examined at the prima facie stage on the present record. [Paras 17]

Prima facie the asserted effect of increased Customs Duty cannot be examined at this stage.

Prima facie deposit of profiteered amount pending final adjudication - Interim treatment of the alleged profiteered amount and ancillary proceedings pending final hearing - HELD THAT: - Relying on its prima facie conclusions, and having regard to earlier orders in similar cases, the Court directed the petitioner to deposit the principal profiteered amount (after deducting GST already deposited with the Department) in six equal instalments starting 10 October 2022. The Court stayed the interest amount, penalty proceedings and further investigation by NAA in respect of other products until further orders. The Court emphasised these views were prima facie and without prejudice to final adjudication. [Paras 19]

Directed interim deposit of the principal profiteered amount in six instalments; stayed interest, penalty and further investigation pending final hearing.

Final Conclusion: The High Court, on prima facie consideration, upheld that NAA has suo motu power, that Section 171 requires pass-on of tax reduction on each supply by way of commensurate price reduction (disallowing netting across SKUs and excluding post-sale discounts or increased grammage as substitutes), held that alleged customs-duty-based adjustments cannot be assessed at this stage, and ordered interim deposit of the principal profiteered amount (with specified deductions and instalments) while staying interest, penalty and further investigation until final adjudication.

Regular bail under Section 439 Cr.P.C. - offence under section 132(1)(c) of the CGST/GGST Acts (fraudulent availment of input tax credit) - pre-charge evidence and scope of investigation in economic offence cases - provisional attachment under section 83 of the CGST/GGST Acts - compounding of offences under section 138 of the CGST/GGST Acts - gravity of economic offences in bail jurisprudence

Regular bail under Section 439 Cr.P.C. - offence under section 132(1)(c) of the CGST/GGST Acts (fraudulent availment of input tax credit) - pre-charge evidence and scope of investigation in economic offence cases - provisional attachment under section 83 of the CGST/GGST Acts - compounding of offences under section 138 of the CGST/GGST Acts - Whether the applicant should be released on regular bail in respect of the arrest dated 28.07.2022 for alleged fraudulent availment of input tax credit - HELD THAT: - The Court applied established bail principles recognising that while offences under section 132(1)(c) are serious and may constitute grave economic offences, grant of bail is not precluded as a rule and remains a fact sensitive exercise. The Court noted that substantial investigation had been carried out during the period of custody and that documentary material collected (including documents produced through the applicant) had been filed with the complaint before the trial court. Given that pre charge evidence had been recorded and the department had taken time to investigate and attach property under the enactment, the Court concluded that continued custody was not necessary for further investigation. The Court observed that the statutory scheme permits compounding of offences under section 138 upon payment of tax, interest and penalty and that provisional attachment under section 83 had been effected, which, together with the investigative steps already taken, reduced the necessity for custodial interrogation. Balancing the gravity of the allegation against the progress of investigation and the accused's ability to defend, the Court held that the ends of justice would be met by releasing the applicant on conditions rather than by continued detention. [Paras 5, 6]

Applicant granted regular bail on executing a personal bond with one surety and subject to specified conditions including surrender of passport, restriction on travel abroad, furnishing residence details and adherence to other conditions; Rule made absolute to this extent.

Final Conclusion: Bail granted: the High Court allowed the regular bail application, concluding that investigation and pre charge evidence collected were sufficient and continued custody was not necessary; release is subject to bond, surety and enumerated conditions.

Place of supply - export of services - zero-rated supply - change of facts affecting validity of advance ruling - advance ruling invalidity under Section 103(2) and 104(1) of the CGST Act, 2017 - remand for fresh consideration - principles of natural justice

Change of facts affecting validity of advance ruling - advance ruling invalidity under Section 103(2) and 104(1) of the CGST Act, 2017 - remand for fresh consideration - principles of natural justice - Whether the advance ruling rendered by the Gujarat Authority for Advance Ruling is vitiated by a subsequent change in facts and whether the matter ought to be remanded to GAAR for fresh adjudication. - HELD THAT: - The appellant, in its advance ruling application before GAAR, stated that product samples were sent by the foreign principal for R&D testing in India. Subsequently before this authority the appellant asserted that this factual position was incorrect and that the goods on which R&D was performed were manufactured in India by the appellant. The AAAR found that the facts now placed before it constitute a significant change from the facts on which GAAR acted. Because the earlier advance ruling was made on a different factual matrix, the ruling cannot stand in view of the statutory scheme and is tainted under the provisions identified by the AAAR. In consequence, the AAAR concluded that the appropriate course is to set aside the impugned advance ruling and remit the matter to GAAR to decide afresh after giving the appellant an opportunity to place correct facts and be heard, with GAAR required to consider all aspects in accordance with the principles of natural justice. [Paras 9, 10, 11, 12]

The advance ruling dated 09.07.2021 is set aside and the matter is remanded to the Gujarat Authority for Advance Ruling for fresh consideration and decision after affording the appellant an opportunity of hearing.

Final Conclusion: The AAAR set aside the impugned advance ruling on account of a material change in facts and remitted the matter to GAAR for fresh adjudication in accordance with the principles of natural justice.

Services - supply in the course or furtherance of business - consideration excludes subsidy - subsidy (grant) as dictionary meaning of government grant - reimbursement of expenses

Services - Activities undertaken by the Appellant under the One Stop Crisis Centre Scheme constitute "services" under the CGST Act, 2017. - HELD THAT: - The term "services" under Section 2(102) of the CGST Act has a wide connotation covering any activities other than goods, money and securities. The activities performed by the trust - providing shelter, food, medical assistance, counselling and legal facilitation to destitute women as implementing agency of the Government - do not involve supply of goods, money or securities to the Government and therefore fall within the statutory meaning of "services." The Appellate Authority so concludes on the facts of the case and the statutory definition. [Paras 16]

The impugned activities are services.

Supply in the course or furtherance of business - consideration excludes subsidy - subsidy (grant) as dictionary meaning of government grant - reimbursement of expenses - Reimbursement received by the Appellant from the Government under the Scheme is a subsidy and not "consideration," and therefore the activities do not constitute "supply" under Section 7(1)(a) of the CGST Act, 2017. - HELD THAT: - For a transaction to qualify as "supply" under Section 7(1)(a), it must be made for a consideration and in the course or furtherance of business. Section 2(31) expressly excludes any subsidy given by Central or State Government from the definition of "consideration." The Authority examined the nature of the grant paid under the One Stop Crisis Centre Scheme and, applying recognised dictionary meanings of "subsidy," held that the amounts reimbursed by the Government to the trust are grants/subsidies made for activities advantageous to the public. As such, those payments do not amount to consideration. In absence of consideration, the statutory pre-condition for "supply" under Section 7(1)(a) is not satisfied; accordingly the impugned transactions are not liable to GST. [Paras 20, 21, 22, 23, 26]

The reimbursement is a subsidy (not consideration); hence there is no "supply" under Section 7(1)(a) and the amounts are not subject to GST.

Final Conclusion: The Advance Ruling of the MAAR is set aside: the activities of the trust are services but the reimbursements received from the Government under the One Stop Crisis Centre Scheme are subsidies (not consideration), and therefore the transactions do not constitute "supply" under Section 7(1)(a) of the CGST Act, 2017 and are not taxable under GST.

Classification under Heading 1905 vs Heading 2106 - Rule 3(b) predominance test of classification - Residual entry and Rule 3(c) - End-use not determinative of classification - Applicability of concessional tariff entry

Classification under Heading 1905 vs Heading 2106 - Rule 3(b) predominance test of classification - Residual entry and Rule 3(c) - Classification of the appellant's packaged frozen Parathas for tariff purposes. - HELD THAT: - The Appellate Authority examined composition, mode of supply (packed and frozen) and the cooking instructions showing a required 3-4 minutes heating until golden brown. HSN Chapter 19 (heading 1905) and its explanatory notes cover bakers' wares that are completely cooked and ready for consumption. The Parathas supplied by the appellant differ materially from plain roti/chapatti in composition (wheat flour 36-62% plus other substantive ingredients) and require cooking before consumption. Accordingly Rule 3(b) (classification by material giving essential character) was held inapplicable because the products are not essentially the same as plain roti/chapatti; the composition and preparation distinguish them. Having found that classification under heading 1905 is not appropriate, Rule 3(c) and the supplementary/explanatory notes to Chapter 21 were applied: heading 2106 covers preparations for use either directly or after processing (such as cooking) and is a proper residual heading for such food preparations. The Authority therefore concluded that the correct classification is under Chapter 21, tariff item 2106 90 99. [Paras 13, 14, 15]

Parathas supplied by the appellant are classifiable under Chapter heading 2106 (tariff item 2106 90 99) and not under Chapter heading 1905.

Applicability of concessional tariff entry - End-use not determinative of classification - Whether the appellant's Parathas are eligible for the concessional 5% GST under Entry No. 99A (Khakhra, plain chapatti or roti). - HELD THAT: - Entry No. 99A applies to khakhra, plain chapatti or roti that fall within the category covered by the concessional notification. The Authority found that the appellant's Parathas are compositionally and functionally different from plain roti/chapatti and require additional cooking, so they do not fall within the goods described in Entry No. 99A. The Appellate Authority also relied on the principle that end-use alone cannot determine classification but, on the facts, the Parathas differ materially and thus are not eligible for the concessional rate. Conflicting advance rulings were noted, but the Authority followed the classification under heading 2106 and the consequential inapplicability of Entry No. 99A. [Paras 6, 14, 15, 16]

The Parathas are not eligible for the concessional 5% GST under Entry No. 99A and therefore do not attract the concessional rate applicable to plain chapatti or roti.

Final Conclusion: The appeal is rejected and the Gujarat Authority for Advance Ruling's order is upheld: the appellant's packaged frozen Parathas are classified under heading 2106 90 99 and are not entitled to the concessional 5% GST under Entry No. 99A.

Classification as 'parts' for concessional GST - Applicability of Entry No. 252 of Schedule I for parts of goods of heading 8902 - Essential or integral part test for 'parts' (component/constituent test) - Use-versus-part distinction in classification - Precedential weight of Advance Rulings and applicability to facts

Classification as 'parts' for concessional GST - Essential or integral part test for 'parts' (component/constituent test) - Use-versus-part distinction in classification - Applicability of Entry No. 252 of Schedule I for parts of goods of heading 8902 - Whether Combined Wire Rope supplied by the applicant qualifies as 'parts of the goods of heading 8902' and thus attracts the concessional GST rate under Entry No. 252 of Schedule I to Notification No. 1/2017-Central Tax (Rate). - HELD THAT: - The Authority examined the nature and ordinary use of Combined Wire Rope and relevant technical standards showing its use across multiple fields (mines, haulage, general engineering, lifts, shipping), and noted absence of any specific use in fishing vessel manufacture. The Authority applied the component/parts test as articulated by the Supreme Court - whether the article's primary or ordinary use is as a component of the completed article and whether it is integral to the constitution of that article. The factual material supplied by the applicant showed the ropes were used to tie fishing nets to vessels, and supporting documents (registry, licence, invoices) established that purchasers were fishermen; however, this demonstrated use by fishermen rather than that the rope is an integral or constituent part of the vessel itself. The Authority further observed that boat fittings (for example cleats) are the vessel part to which ropes are attached, indicating that the rope serves the net rather than forming part of the vessel's manufacture or essential structure. Circulars and prior AARs relied upon (e.g., on marine engines, propellers, batteries) were considered distinguishable because those items were found to be integral parts of vessels or fitted in vessels at manufacture; the circular regarding marine engines was inapplicable since engines are essential for vessel operation whereas Combined Wire Rope is not essential to the vessel's constitution. On these findings of use and function, the Authority concluded that the Combined Wire Rope is not a 'part' of goods of heading 8902 within Entry No. 252 and therefore does not attract the concessional rate under that entry. [Paras 26, 27, 28, 29, 30]

Combined Wire Rope is not a part of fishing vessels and does not fall within Entry No. 252 of Schedule I to Notification No. 1/2017-Central Tax (Rate); it is not eligible for the concessional GST rate under that entry.

Final Conclusion: Advance ruling: Combined Wire Rope supplied by the applicant does not qualify as 'parts of goods of heading 8902' under Entry No. 252 of Schedule I; the concessional GST rate under that entry is not available for such supplies.

Classification under HSN 8424 89 90 - Mechanical appliances for projecting, dispersing or spraying liquids or powders - GST rate 18% under Entry No. 325 of Schedule-III to Notification No. 1/2017-Central Tax (Rate) - Scope of 'mechanical sprayers' as considered in CBIC Circular - Application of First Schedule to the Customs Tariff Act and HSN explanatory notes in tariff classification

Classification under HSN 8424 89 90 - Mechanical appliances for projecting, dispersing or spraying liquids or powders - Application of HSN explanatory notes - Classification of 'HTP kirloskar Power Sprayer' under the Customs Tariff / HSN. - HELD THAT: - The Authority examined the product description, components and the applicant's website and found the device to be a petrol-engine driven mechanical appliance that develops pressure to spray water and other liquids. The product falls within the scope of Heading 8424 as an appliance for projecting, dispersing or spraying liquids. Applying the HSN explanatory notes and the First Schedule to the Customs Tariff Act, the Authority concluded that on its use-merits the product is classifiable under sub-heading 8424 89 90 (other appliances). The Authority noted the applicant's admission that the product is classifiable under Chapter Heading 8424 and relied on the explanatory notes showing inclusion of appliances used for spraying in agriculture, horticulture and other fields. [Paras 10]

HTP kirloskar Power Sprayer is classifiable under 8-digit HSN 8424 89 90.

GST rate 18% under Entry No. 325 of Schedule-III to Notification No. 1/2017-Central Tax (Rate) - Scope of 'mechanical sprayers' as considered in CBIC Circular - Interpretation of notification schedules and amendments - Applicable GST rate on 'HTP kirloskar Power Sprayer'. - HELD THAT: - The Authority considered the entries and amendments in Notification No. 1/2017-Central Tax (Rate) and subsequent notifications that initially placed goods of Heading 8424 in Schedule-III (18%). Although Notification No. 6/2018 inserted a separate entry for 'Sprinklers; drip irrigation system including laterals; mechanical sprayers' into Schedule-II (12%), the Authority examined the product's characteristics and the CBIC Circular clarifying the scope of 'mechanical sprayers'. On the facts, the product was found to merit classification under Entry No. 325 of Schedule-III (other appliances of Heading 8424). Applying the notification, its amendments and the CBIC clarification, the Authority held that the impugned product attracts GST at 18% (9% CGST + 9% SGST; IGST 18%). [Paras 10, 11, 12]

The GST rate applicable to HTP kirloskar Power Sprayer is 18% (9% CGST + 9% SGST; IGST 18%).

Final Conclusion: The Advance Ruling concludes that the HTP kirloskar Power Sprayer is classifiable under 8-digit HSN 8424 89 90 and attracts GST at the rate of 18% (9% CGST + 9% SGST; IGST 18%).

Supply in the course or furtherance of business - services by employee to the employer (Schedule III) - outsourced third party provision of canteen and transport services - employer as mere collector/mediator for employees' share - statutory obligation under Section 46 of the Factories Act, 1948

Supply in the course or furtherance of business - outsourced third party provision of canteen and transport services - employer as mere collector/mediator for employees' share - services by employee to the employer (Schedule III) - GST liability on recoveries made by the applicant from employees towards subsidised canteen charges collected and paid to a third party canteen service provider - HELD THAT: - The Authority examined the contractual arrangement under which a third party canteen service provider supplies meals at the applicant's premises and issues invoices to the applicant. The applicant collects only the employees' portion and pays the consolidated amount to the third party vendor without retaining any margin or charging mark up. Applying the requirement that a 'supply' must be in the course or furtherance of business, the Authority found that providing canteen facility in the facts of this case is a welfare/mandated measure (Section 46, Factories Act) and not an activity integrally connected with or advancing the applicant's principal business. The arrangement makes the applicant a receiver of the third party service and a mere mediator for collection of employees' share. Further, Schedule III (services by an employee to the employer in relation to employment) and the CBIC clarification were held to support that perquisites or contractual employee entitlements are not taxable as supply by the employer. The Authority also relied on prior advance rulings with comparable facts holding that collection of employees' portion, where the employer does not supply the service nor earn a margin, is not a taxable supply by the employer. On these bases the Authority concluded that GST is not leviable on the employees' portion collected by the applicant for canteen services.

GST is not leviable on the amount representing the employees' portion of canteen charges collected by the applicant and paid to the canteen service provider.

Supply in the course or furtherance of business - outsourced third party provision of canteen and transport services - employer as mere collector/mediator for employees' share - services by employee to the employer (Schedule III) - GST liability on recoveries made by the applicant from employees towards subsidised bus transportation charges collected and paid to third party transporters - HELD THAT: - The Authority assessed the contracts with transporters showing that transport services are provided by third parties who bill the applicant and discharge GST. The applicant recovers a nominal subsidised amount from employees as per its HR policy and bears the balance. The transport facility was held to be a welfare/contractual employment entitlement and not an activity in furtherance of the applicant's core business; the applicant neither supplies transport services nor retains any margin on amounts collected. Relying on Schedule III, CBIC clarification, and consistent prior rulings, the Authority treated the employer as a mediator collecting employees' share for a service actually supplied by third parties; therefore no taxable supply arises from the applicant's collection of the employees' portion.

GST is not leviable on the amount representing the employees' portion of bus transportation charges collected by the applicant and paid to the transport service providers.

Final Conclusion: The Authority ruled that GST is not leviable on the subsidised recoveries collected by the applicant from its employees for canteen and bus transportation facilities where (i) the services are supplied by third party vendors who invoice and discharge GST, (ii) the applicant merely collects the employees' portion without margin and pays the vendors, and (iii) the facilities are contractual/welfare employee entitlements not in the course or furtherance of the applicant's commercial business.

Supply - Consideration - In the course or furtherance of business - Services by an employee to the employer in the course of or in relation to his employment - Subsidised canteen facility / employer-provided perquisites - Schedule III exemption (services under employment) - CBIC Circular No. 172/04/2022-GST - perquisites under contract of employment

Supply - Services by an employee to the employer in the course of or in relation to his employment - Schedule III exemption (services under employment) - CBIC Circular No. 172/04/2022-GST - perquisites under contract of employment - Whether the subsidised deduction recovered by the applicant from employees for canteen food constitutes a supply by the applicant under Section 7 of the CGST Act and GGST Act. - HELD THAT: - The Authority found that the applicant provides canteen services for its permanent employees pursuant to the employer-employee contractual relationship and statutory obligation under the Factories Act, utilises a third party Canteen Service Provider and collects only the employees' portion without any profit margin. Schedule III and the CBIC clarification (Circular No. 172/04/2022 GST) exclude from GST perquisites provided by an employer to its employees in terms of the contract of employment, treating such benefits as in lieu of services rendered by the employee. Applying these principles, the collection of subsidised canteen charges by the employer and payment to the Canteen Service Provider does not amount to the employer making a taxable supply - there is no independent supply by the employer for consideration in the course or furtherance of business, and the activity falls within the Schedule III exclusion. The Authority therefore concluded that GST is not leviable on the amounts recovered from employees in this arrangement. [Paras 11, 12]

The subsidised deductions recovered from employees for canteen food are not a supply by the applicant under Section 7 of the CGST Act, 2017 and the corresponding GGST Act, and hence are not liable to GST.

Final Conclusion: Advance ruling: the applicant's recovery of subsidised canteen charges from employees for food supplied through a third party Canteen Service Provider, made pursuant to the employer-employee contract and without profit, does not constitute a taxable supply under Section 7 CGST/GGST and is excluded by Schedule III and the CBIC clarification; GST is therefore not leviable on such recoveries.

Input tax credit - blocked credits under Section 17(5)(c) and (d) - plant and machinery - supply of exempted goods (electrical energy) - apportionment of credit where supplies are partly for taxable and partly for exempt supplies (Section 17(2)) - reversal of credit in respect of capital goods used exclusively for exempt supplies (Rule 43(a))

Input tax credit - supply of exempted goods (electrical energy) - apportionment of credit where supplies are partly for taxable and partly for exempt supplies (Section 17(2)) - reversal of credit in respect of capital goods used exclusively for exempt supplies (Rule 43(a)) - blocked credits under Section 17(5)(c) and (d) - Eligibility to claim input tax credit on solar power panels and related installation where the electricity generated is wheeled and the applicant recovers gross units from tenants. - HELD THAT: - The Authority examined the contractual and documentary matrix and factual position showing that solar energy generated at the applicant's additional place of business was wheeled through TANGEDCO and the applicant invoiced tenants for gross energy units consumed. Electrical energy is classified under HSN 2706 and is exempted by the governing notification. Because the electricity so generated and supplied to tenants constitutes exempt supplies, the capital goods (solar panels) and related services used exclusively for that exempt supply cannot attract input tax credit. Consequently Section 17(2) (restriction of credit attributable to taxable supplies) read with Rule 43(a) (non creditability of input tax in respect of capital goods used exclusively for effecting exempt supplies) renders the input tax credit ineligible. Having reached this conclusion on ineligibility under Section 17(2) read with Rule 43(a), it was unnecessary to decide the question whether the solar panels fall within the prohibition in Section 17(5)(c)/(d). The Authority therefore denied the claim for credit on the goods/services used in installation of the solar panels. [Paras 10, 11]

Input tax credit on solar panels and their installation is not admissible under Section 17(2) read with Rule 43(a) because the electricity generated is an exempt supply.

Final Conclusion: The Advance Ruling holds that the applicant is not entitled to claim input tax credit on the solar power panels and related installation, the credit being ineligible under Section 17(2) read with Rule 43(a) since the electricity generated is treated as exempt supply; consequently the question of blocked credit under Section 17(5)(c)/(d) need not be adjudicated.

Affordable Residential Apartment as defined in Notification No.11/2017 (as amended) - Metropolitan city / Chennai Metropolitan Area and CMDA planning jurisdiction - Determination of metropolitan area by planning authority and collection of development charges - Value of land excluded from value of supply for applicability of concessional rate

Affordable Residential Apartment as defined in Notification No.11/2017 (as amended) - Metropolitan city / Chennai Metropolitan Area and CMDA planning jurisdiction - Determination of metropolitan area by planning authority and collection of development charges - Whether the impugned project falls within the meaning of a city or town "other than metropolitan cities" for the purpose of Notification No.11/2017 - Central Tax (Rate) as amended, and hence whether units with carpet area up to 90 sq. m. and value up to Rs.45 lakhs qualify as Affordable Residential Apartments under that notification. - HELD THAT: - The notification distinguishes metropolitan cities from other cities or towns for determining the carpet-area threshold for "Affordable Residential Apartment." The Chennai Metropolitan Development Authority (CMDA) is the statutory planning authority for the Chennai Metropolitan Region and regulates land use and development within that region. Although the Sembakkam Municipality issued building approvals and collected certain local receipts, the record shows that development/regularisation charges and scrutiny fees were payable to and authorised by CMDA, and the impugned project required CMDA-related regularisation and scrutiny. On this basis the Authority concluded that CMDA is the planning authority for the project and that the project lies within the Chennai Metropolitan Area. Because the project falls within the Chennai Metropolitan Area, it cannot be treated as located in a city or town "other than metropolitan cities" for the purposes of Notification No.11/2017 (as amended), and the higher carpet-area threshold applicable to non-metropolitan cities (90 sq. m.) is inapplicable. [Paras 5]

The units in the impugned project are within the Chennai Metropolitan area and therefore are not located in a city or town "other than Metropolitan Cities" for the purpose of Notification No.11/2017 (as amended).

Final Conclusion: Advance Ruling: the impugned project falls within the Chennai Metropolitan Area under CMDA jurisdiction and thus the units cannot be treated as situated in a non-metropolitan city for the concessional "Affordable Residential Apartment" rates under Notification No.11/2017 (as amended).

Treatment of share application money as unexplained cash credit under section 68 - onus on assessee to prove identity, genuineness of transaction and creditworthiness of investor - requirement to prove source of source of investment - remand for fresh adjudication and calling of remand report

Additional grounds dismissed as not pressed - Additional grounds challenging jurisdiction under section 147 were not pressed before the Tribunal and are dismissed as not pressed. - HELD THAT: - The assessee filed additional grounds challenging jurisdiction under section 147 but, during appellate proceedings before the Tribunal, the counsel for the assessee stated that those additional grounds were not pressed. The Tribunal recorded that the additional grounds are accordingly dismissed as not pressed. [Paras 3]

Additional grounds challenging jurisdiction dismissed as not pressed.

Treatment of share application money as unexplained cash credit under section 68 - onus on assessee to prove identity, genuineness of transaction and creditworthiness of investor - requirement to prove source of source of investment - remand for fresh adjudication and calling of remand report - The addition of Rs.10,00,000 received as share capital/share premium was not finally adjudicated on merits; the matter is set aside to the file of the CIT(A) for fresh adjudication after requisite enquiries and a remand report, with opportunity to the assessee to substantiate its claim. - HELD THAT: - The Assessing Officer added the amount to income as unexplained cash credit after noting non-compliance with enquiries (notably non-cooperation by the investor company to notices/summons) and absence of corroborative material proving the three basic parameters - identity, genuineness of the transaction and creditworthiness - and the source of source. The CIT(A) took a view that amended law places onus on the assessee to establish source of source, and sustained the addition. The Tribunal observed that neither the assessing officer nor the first appellate authority undertook detailed, relevant enquiries to establish those three parameters and that the assessee sought leave to make further submissions. In the interest of justice and fair play, the Tribunal directed that the matter be remitted to the file of the CIT(A) for a speaking order after calling a remand report from the Assessing Officer, conducting such enquiries/investigation as may be necessary, and giving the assessee a reasonable opportunity to be heard and to produce further submissions or documents. The Tribunal expressly refrained from expressing any view on the merits so as not to pre-empt fresh adjudication. [Paras 9, 10, 11]

Matter set aside and remanded to the file of the CIT(A) for fresh adjudication in accordance with the Tribunal's directions; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal dismissed additional jurisdictional grounds as not pressed and set aside the assessment on the disputed share capital/share premium receipt for fresh adjudication by the CIT(A) after calling a remand report and permitting the assessee to substantiate its claim; appeal disposed of for statistical purposes.

Employee's contribution to employee welfare funds - deductibility under section 36(1)(va) - tax treatment under section 43B(b) - deeming under section 2(24)(x) - adjustment under section 143(1) - limited scope of assessment adjustment under section 143(1) - retrospective operation of explanatory amendments - requirement of jurisdictional High Court decision for sustaining section 143(1) adjustment

Employee's contribution to employee welfare funds - adjustment under section 143(1) - limited scope of assessment adjustment under section 143(1) - requirement of jurisdictional High Court decision for sustaining section 143(1) adjustment - retrospective operation of explanatory amendments - Validity of the addition under the processing assessment rejecting deduction of employees' contribution deposited after statutory deposit due date but before filing the return, effected under section 143(1). - HELD THAT: - The Tribunal found the question debatable in view of conflicting judicial opinions and therefore outside the limited scope of an adjustment under section 143(1). Reliance placed on decisions taking contrary views and on this Bench's decision in Nikhil Mohine established that where judicial opinion is divided no substantive merits-based adjustment should be made in a summary processing assessment. The Revenue's contention invoking the explanatory amendments (to clarify that employee contributions fall within the ambit of section 43B(b)) was examined; the Tribunal agreed such Explanations are clarificatory in substance but noted the legislative documents (Notes on Clauses and Memorandum explaining the Finance Bill, 2021) show the amendments were proposed to operate prospectively from AY 2021-22. Consequently the Explanations could not be read as operating retrospectively to validate additions for the relevant period. In absence of any binding decision of the jurisdictional High Court to the contrary, and given the limited competence of a section 143(1) adjustment where controversy exists, the impugned additions could not be sustained and were directed to be deleted. The Tribunal left open the contingency that a subsequent jurisdictional High Court decision could justify rectification under section 154 or otherwise and such a decision, if produced later, could lead to amendment of the order after affording the assessee an opportunity of hearing. [Paras 3, 4]

The additions made under section 143(1) disallowing the employees' contribution were deleted and the assessee's appeal was allowed.

Final Conclusion: The Tribunal allowed the appeal for AY 2019-20, deleted the additions made in the processing assessment under section 143(1) disallowing employees' contributions, holding that the disputed question was not amenable to summary adjustment in view of conflicting judicial authorities and that the explanatory amendments could not be given retrospective effect for the relevant year; liberty was reserved for any later jurisdictional High Court decision to operate by rectification after hearing the assessee.

Taxability of interest on fixed deposit pending determination of ownership - crystallisation of income - effect of arbitral tribunal's custodial order on income recognition - taxability under Section 5(1) of the Income Tax Act, 1961

Taxability of interest on fixed deposit pending determination of ownership - crystallisation of income - effect of arbitral tribunal's custodial order on income recognition - taxability under Section 5(1) of the Income Tax Act, 1961 - Deletion by the ITAT of additions made by the Assessing Officer treating interest on the FDR as income of the assessee - HELD THAT: - The Court agreed with the appellate authorities that although the FDR was in the name of the respondent-assessee and interest accrued/was credited in its name, an intervening consensual custodial order of the Arbitral Tribunal converting the bank amount into an FDR and placing restrictions on its release prevented definitive ownership of the deposit and its interest from being recognised. Until the Arbitral Tribunal passed the final award determining ownership of the fixed deposit and interest, the interest income could not be said to have crystallised in the assessee's hands and therefore could not be held to be income of the assessee for the purposes of taxability under Section 5(1) of the Income Tax Act, 1961. In that factual and legal backdrop, the ITAT's deletion of the additions was upheld and no substantial question of law arose. [Paras 9, 10]

ITAT's deletion of the additions was upheld; no substantial question of law arises and the appeals are dismissed.

Final Conclusion: The High Court upheld the ITAT's finding that interest on the FDR did not crystallise as the assessee's income prior to the Arbitral Tribunal's determination of ownership; the appeals are dismissed.

Disallowance under Section 14A in relation to expenditure incurred for earning exempt income - requirement of actual receipt or receivable of exempt income for application of Section 14A - interpretation of 'does not form part of the total income' - retrospective effect of an amendment enacted 'for removal of doubts'

Disallowance under Section 14A in relation to expenditure incurred for earning exempt income - requirement of actual receipt or receivable of exempt income for application of Section 14A - interpretation of 'does not form part of the total income' - Whether disallowance under Section 14A was warranted where the assessee did not earn any exempt income in the relevant year - HELD THAT: - The Tribunal and lower authorities found as a concurrent fact that the assessee did not earn any dividend or other exempt income during the relevant year. This Court followed the Division Bench precedent in Cheminvest Ltd. which interprets the phrase 'does not form part of the total income' in Section 14A to require actual receipt or receipt becoming receivable of exempt income in the relevant previous year before any expenditure can be disallowed under Section 14A. Applying that principle to the facts-where no exempt income was received or receivable-the Court held that Section 14A did not apply and the disallowance made by the Assessing Officer could not be sustained. [Paras 7, 8]

Disallowance under Section 14A deleted as no exempt income was received or receivable in Assessment Year 2010-11.

Retrospective effect of an amendment enacted 'for removal of doubts' - Whether the amendment to Section 14A (described as 'for removal of doubts') can be given retrospective effect to alter the law as it earlier stood - HELD THAT: - This Court referred to its earlier decision in Pr. Commissioner of Income Tax (Central)-2 v. M/s Era Infrastructure (India) Ltd., which held that an amendment characterized as being 'for removal of doubts' cannot be presumed retrospective if it alters or changes the prior legal position. The Court applied that legal principle in considering the relevance of the post-enactment amendment and concluded that the amendment could not be assumed to operate retrospectively to change the legal test applicable to the year under consideration. [Paras 9]

Amendment described as 'for removal of doubts' cannot be presumed to have retrospective effect where it alters the earlier law.

Final Conclusion: Finding no substantial question of law-since no exempt income was received or receivable in Assessment Year 2010-11 and the post-enactment amendment cannot be presumed retrospective-the appeal is dismissed and the disallowance under Section 14A is not sustained.

Reassessment proceedings under Section 148 - non-filing of return - production and inspection of seized material and sworn statements - personal hearing and supply of materials relied upon - incriminating admissions and evidentiary weight of explanations - validity of assessment on procedural and substantive grounds - dismissal of writ petition challenging assessment

Production and inspection of seized material and sworn statements - personal hearing and supply of materials relied upon - reassessment proceedings under Section 148 - Whether the Assessing Authority erred in refusing the petitioner's requests for copies of sworn statements and for personal hearing of third parties in the reassessment proceedings. - HELD THAT: - The Court noted that the petitioner repeatedly sought documents and personal hearings but that the Assessing Authority had drawn attention to the fact that none of the sworn statements recorded during the search nor any seized material had been relied upon in the ongoing reassessment proceedings. The bank statements sought by the petitioner were supplied and acknowledged. In these circumstances the authority's refusal to accede to requests for materials and personal hearings not shown to be relied upon in the proceedings was not improper. The Court treated the requests for such material as ancillary to the reassessment and upheld the authority's decision to deny them where they were not material to the assessment as framed. [Paras 3, 4]

Request for copies of sworn statements and for personal hearing of persons not relied upon in reassessment proceedings was properly refused.

Non-filing of return - incriminating admissions and evidentiary weight of explanations - validity of assessment on procedural and substantive grounds - Whether the reassessment order is vitiated on merits or procedure given the petitioner's non-filing of return and the explanations furnished. - HELD THAT: - The Court recorded that the petitioner was a non-filer and had not filed any return either initially or after notice under Section 148. The petitioner's communications, including those attributing substantial cash deposits to transactions concerning a property, were held to be 'especially incriminating' and, absent any return, could not be accepted as a defence of ordinary business transactions. Having regard to the supply of bank statements and the petitioner's own explanations, the Court found no infirmity in the impugned assessment order either in procedure or in the conclusions reached by the authority. [Paras 5, 6]

Assessment is sustainable; neither procedural infirmity nor substantive flaw is established in the reassessment order.

Final Conclusion: Writ petition dismissed; the High Court upheld the reassessment proceedings and the assessment order, finding no procedural or substantive infirmity in the authority's action and declining the petitioner's challenges.

Order under Section 148A(d) of the Income Tax Act - notice under Section 148 of the Income Tax Act - duty to record a finding on a petitioner's rebuttal of non-filing - remand for fresh decision by Assessing Officer - reporting obligation under Section 285BA(1) of the Income Tax Act

Order under Section 148A(d) of the Income Tax Act - notice under Section 148 of the Income Tax Act - duty to record a finding on a petitioner's rebuttal of non-filing - remand for fresh decision by Assessing Officer - Validity of the order passed under Section 148A(d) and the notice issued under Section 148 in light of the petitioner's rebuttal that the return of income for the assessment year 2018-19 was filed and disclosed the questioned transactions. - HELD THAT: - The Court found that the primary allegation in the notice under Section 148A(b) was non-filing of the return for AY 2018-19, which the petitioner rebutted by stating that the return had been filed and that the high-value transactions were disclosed. The Assessing Officer was required to record a finding on that factual contention in the order under Section 148A(d); failure to do so vitiated the impugned order. Given the petitioner's willingness to supply the sale/purchase deed and to explain the lone disputed transaction allegedly totalling Rs.3,79,08,575/-, the appropriate course is to set aside the impugned order and remand the matter to the Assessing Officer for fresh consideration in accordance with law. The Court authorised the Assessing Officer to issue a supplementary notice explaining the alleged unreported transactions and directed timelines for the petitioner to file the sale/purchase deed and a supplementary reply, and for the Assessing Officer to pass a fresh order thereafter.

Impugned order under Section 148A(d) and the notice under Section 148 set aside; matter remanded to the Assessing Officer for fresh decision with directions to issue a supplementary notice within two weeks, petitioner to file the sale/purchase deed and supplementary reply within four weeks, and Assessing Officer to pass a fresh order within four weeks thereafter.

Reporting obligation under Section 285BA(1) of the Income Tax Act - Characterisation of the 'statement of reportable account under Section 285BA(1)' and its role in shifting any burden of proof regarding the transaction alleged to be unreported. - HELD THAT: - The petitioner asserted that the statement under Section 285BA(1) is a reporting obligation cast on financial institutions or banks and is not itself a transaction attributable to the petitioner. The Court recognised this position in context and directed that factual issues, including production of the sale/purchase deed and explanation of the alleged transaction, be examined afresh by the Assessing Officer. The Court did not decide substantive merits on whether the Section 285BA(1) statement establishes escapement of income, leaving factual and legal determination to the Assessing Officer on remand.

The Court declined to adjudicate the substantive effect of the Section 285BA(1) statement and remanded factual and legal determinations relating to the alleged unreported transaction to the Assessing Officer for fresh consideration.

Final Conclusion: The writ petition is allowed to the extent that the order passed under Section 148A(d) and the notice under Section 148 are set aside and the matter is remanded to the Assessing Officer to consider the petitioner's rebuttal and documentary explanation afresh in accordance with law within the timelines directed; other rights and contentions are left open.

Reopening of assessment under Section 148 - Order under Section 148A(d) - Time-bar and limitation for reassessment - Monetary threshold for reassessment - Unexplained cash credit under Section 68 - Scope of writ jurisdiction in tax proceedings - Effect of prior scrutiny assessment on reassessment

Time-bar and limitation for reassessment - Reopening of assessment under Section 148 - Validity of the notice dated 23rd July, 2022 under Section 148 and the order under Section 148A(d) for Assessment Year 2018-19 as time-barred or within limitation. - HELD THAT: - The Court found that the notice under Section 148A(b) had been issued on 17th March, 2022, which was within three years of the assessment year 2018-19, and that the subsequent order under Section 148A(d) and the Section 148 notice dated 23rd July, 2022 were issued within the time granted by the Court on remand. Consequently, the impugned Section 148 notice could not be impugned as time-barred. The court relied on the chronology of earlier proceedings (including an earlier order dated 27th May, 2022 which had set aside a prior notice and remanded the matter) to hold that the present notice was within the prescribed time. [Paras 5]

The Section 148 notice dated 23rd July, 2022 and the order under Section 148A(d) are not time-barred.

Monetary threshold for reassessment - Time-bar and limitation for reassessment - Applicability of the asserted monetary requirement (Rs.50 lakhs) as a condition precedent to reopening the assessment in the present case. - HELD THAT: - The Court observed that the asserted monetary threshold was not attracted because the procedural steps under Section 148A were initiated within three years of the assessment year and the later proceedings were within the time permitted by the Court. Thus the contention that reopening required satisfaction of the monetary requirement was not accepted in the context of these factual and temporal circumstances. [Paras 2, 5]

The monetary threshold relied upon by the petitioner does not preclude the reassessment proceedings in the present case.

Scope of writ jurisdiction in tax proceedings - Whether disputed factual controversies regarding identity of the buyer and the nature of transactions can be adjudicated in writ proceedings while assessment is pending. - HELD THAT: - The Court held that the question whether the transactions were with Nitin Trading Company proprietorship of Mr. Aman Bhalla or of Mr. Dev Narayan is a factual dispute unsuitable for decision in writ proceedings when assessment proceedings are pending. The appropriate forum to examine and decide such factual and evidentiary questions is the assessing authority during the assessment/reassessment process. [Paras 6]

Factual disputes concerning identity of parties and transaction particulars cannot be adjudicated in the writ; they must be considered in the pending assessment proceedings.

Unexplained cash credit under Section 68 - Effect of prior scrutiny assessment on reassessment - Whether prior scrutiny assessment acceptance precludes treating the sale proceeds as unexplained cash credit under Section 68 when new information emerges. - HELD THAT: - The Court held that even though the assessee's sales and records were earlier scrutinised and accepted, subsequent receipt of information that a counterparty was an alleged entry operator can justify reopening. If the allegations in the Section 148A(d) order are correct, amounts treated as sale proceeds may be regarded as unexplained cash credit under Section 68 and hence liable to tax despite earlier scrutiny. Therefore a prior scrutiny assessment does not bar reassessment where new material or information is received. [Paras 4, 7, 8]

Earlier scrutiny acceptance does not prevent reassessment if fresh information indicates the transactions may be fabricated and attract Section 68 treatment.

Final Conclusion: Writ petition dismissed. The petitioner is granted liberty to raise all contentions before the Assessing Officer, who shall decide the matter on its own merits in accordance with law.

Right to adequate time to respond under Section 148A(b) of the Income-tax Act, 1961 - Obligation to consider the assessee's reply under Section 148A(c) before passing order under Section 148A(d) - Violation of principles of natural justice by non-consideration of reply - Remand for fresh decision after consideration of reply

Right to adequate time to respond under Section 148A(b) of the Income-tax Act, 1961 - Obligation to consider the assessee's reply under Section 148A(c) - Violation of principles of natural justice by non-consideration of reply - Remand for fresh decision after consideration of reply - Whether the Assessing Officer complied with the mandate of Section 148A by affording adequate time to the assessee and considering the reply filed before passing order under Section 148A(d), and consequence of any non-compliance. - HELD THAT: - The Court held that an assessee is entitled to adequate time under Section 148A(b) to respond to the notice, noting that the Assessing Officer may suo motu grant up to thirty days and extend that period on application. Section 148A(c) casts a duty on the Assessing Officer to consider the assessee's reply before making an order under Section 148A(d). In this case the material forming the basis of the notice was served shortly before the impugned order and the petitioner filed a reply on 26th July, 2022 (after seeking additional time) which was not taken into account. The non-consideration of that reply amounted to a breach of the statutory mandate and principles of natural justice. Accordingly, the order and notice dated 29th July, 2022 were set aside and the matter remanded to the Assessing Officer to decide afresh after considering the reply within a stipulated time. [Paras 5, 6, 7]

Impugned order and notice dated 29th July, 2022 for AY 2017-18 set aside; matter remanded to the Assessing Officer to reconsider and decide afresh after taking into account the reply dated 26th July, 2022 within four weeks.

Final Conclusion: Writ petition allowed; order and notice dated 29th July, 2022 set aside and matter remanded to the Assessing Officer for fresh decision after considering the assessee's reply within four weeks; rights and contentions of parties left open.

Application of Section 50C of the Income tax Act to determine sale consideration - effect of objection to stamp valuation under Section 50C(2) - adoption of Stamp Duty/Jantri value as deemed consideration - relevance of registered valuer's report in contesting stamp valuation - availability of exemption under Section 54

Application of Section 50C of the Income tax Act to determine sale consideration - effect of objection to stamp valuation under Section 50C(2) - adoption of Stamp Duty/Jantri value as deemed consideration - relevance of registered valuer's report in contesting stamp valuation - Whether the Jantri (stamp duty) value determined by the Sub Registrar could be adopted as the deemed sale consideration under Section 50C and whether the assessee's objections/registered valuer's report precluded such adoption. - HELD THAT: - The Tribunal found that the Assessing Officer had noted a substantial difference between the sale consideration stated in the sale deed and the Jantri value fixed by the Sub Registrar, and proceeded to apply the Jantri value as the deemed consideration. The assessee relied on a registered valuer's report and contemporaneous objections to the Sub Registrar's valuation, but those submissions were not accepted by the Assessing Officer or found to displace the Stamp Duty Valuation Authority's determination. The Tribunal observed inconsistent stand by the assessee regarding applicability of Section 50C and noted that the assessee had filed objections to the Sub Registrar; consequently Section 50C(2) did not operate to negate the adoption of the Jantri value. Given these findings, the Tribunal upheld the CIT(A)'s conclusion that the Jantri value should be adopted as the deemed consideration and declined to accept the registered valuer's report as sufficient to rebut the stamp valuation. [Paras 3, 7]

The adoption of the Jantri value as deemed consideration under Section 50C was upheld and the assessee's challenge to that adoption was dismissed.

Availability of exemption under Section 54 - Whether the assessee was entitled to exemption under Section 54 for the long term capital gain arising on sale of the property. - HELD THAT: - The Tribunal noted that the CIT(A) had examined the claim for exemption under Section 54 and had allowed the said claim. As the appellate authority had given relief on the Section 54 contention, there was no occasion for the Tribunal to interfere with that finding. The Tribunal therefore left the CIT(A)'s allowance of the Section 54 exemption undisturbed. [Paras 7]

The allowance of exemption under Section 54 by the CIT(A) was sustained.

Final Conclusion: Both the Cross Objection No. 122/Ahd/2016 and ITA No. 156/Ahd/2020 were dismissed; the Jantri value was upheld as the deemed consideration under Section 50C while the CIT(A)'s allowance of exemption under Section 54 was left undisturbed.

Principle of mutuality - deduction under Section 57(iii) - nexus between interest income and interest expenditure - inapplicability of Section 40(ba) to registered societies - taxability of interest in the hands of apartment owners

Principle of mutuality - deduction under Section 57(iii) - nexus between interest income and interest expenditure - inapplicability of Section 40(ba) to registered societies - taxability of interest in the hands of apartment owners - Whether the addition of interest income of Rs.23,67,508 is unsustainable because interest paid to members can be set off against interest earned on bank deposits under Section 57(iii), and the income is not excluded by the principle of mutuality or barred by Section 40(ba). - HELD THAT: - The Tribunal applied the reasoning in Belaire Condominium Association and found that the association had received interest-bearing security deposits from members pursuant to the apartment buyers agreement and had placed those funds in bank deposits from which interest was earned. There is a direct nexus between the interest earned on bank deposits and the interest payable to members: the expenditure of paying interest to members was incurred wholly and exclusively in relation to earning the interest income. Consequently, the interest paid to members is allowable as a deduction against the interest income under Section 57(iii) while computing income from other sources. Further, Section 40(ba) does not apply to registered societies and, in any event, relates to computation of business income; it does not prohibit the deduction under Section 57(iii). The interest payable to members is taxable in their hands, and therefore the association cannot claim the interest income as exempt on the basis of mutuality. Applying these principles, the addition was held to be unjustified and deleted. [Paras 8, 9]

Addition of interest income of Rs.23,67,508 deleted; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal and deleted the addition of interest income for AY 2014-15, holding that interest paid to members is deductible against interest earned on bank deposits under Section 57(iii), the income is not saved by the principle of mutuality, and Section 40(ba) is inapplicable to the registered society.

Disallowance under section 36(1)(va) - employees' share of EPF and ESI - deposit before due date under section 139(1) - non-application of section 43B for determining due date under section 36(1)(va) (Finance Act, 2021 Explanation 2) - prospective application of statutory amendment to assessment years from 2021-22

Disallowance under section 36(1)(va) - employees' share of EPF and ESI - deposit before due date under section 139(1) - Whether the employees' share of statutory contributions, deposited after the due date under the respective labour enactments but before the due date for filing return under section 139(1), is allowable as a deduction for AY 2019-20 or liable to be disallowed under section 36(1)(va). - HELD THAT: - The Tribunal noted it was admitted that the assessee deducted the employees' share of EPF and ESI and deposited the same after the due dates under the respective enactments but before the due date for filing return under section 139(1). Relying on precedents of High Courts, including CIT v. Nipso Polyfabriks Ltd., the Tribunal held there is no difference between employees' and employer's contributions for the purpose of deduction and that deposits made before the due date of filing the return are to be allowed. The Tribunal further observed that the Finance Act, 2021 inserted an Explanation clarifying that section 43B shall not apply for determining the due date under section 36(1)(va) w.e.f. 01.04.2021, and that the amendment will apply to assessment years 2021-22 onwards. Since the assessment year before the Tribunal is 2019-20, the 2021 amendment is not applicable; consequently the pre-amendment position allowing deduction where payment is made before the due date of filing the return governs the case. On this basis the disallowance confirmed by the AO and the CIT(A) was directed to be deleted. [Paras 5, 6]

Deletion of the addition: the employees' share deposited before the due date of filing return under section 139(1) is allowable for AY 2019-20; the Finance Act, 2021 amendment is prospective and does not apply.

Final Conclusion: Appeal allowed; disallowance confirmed by the authorities deleted for AY 2019-20 as the employees' contributions were deposited before the due date for filing the return and the 2021 amendment is not applicable to the year under consideration.

Certificate of Origin - Preferential tariff treatment under ASEAN-India FTA - Verification and authentication of Certificate of Origin - Obligation to return Certificate of Origin and notify issuing authority when certificate is not accepted - Denial of exemption on mere procedural lapse or assumptions - Burden on Customs to verify authenticity before rejecting preferential treatment

Certificate of Origin - Verification and authentication of Certificate of Origin - Obligation to return Certificate of Origin and notify issuing authority when certificate is not accepted - Denial of exemption on mere procedural lapse or assumptions - Whether denial of preferential duty exemption on the ground that the importer did not fully answer a departmental questionnaire and without following the procedure for challenging a Certificate of Origin was sustainable. - HELD THAT: - The Tribunal held that the Customs authority, having doubted the Certificate of Origin, was obliged under the Operational Certification Procedures (Annexure III) to mark and return the original Certificate to the issuing authority within a reasonable period and to communicate the grounds for denial so that the issuing authority could provide detailed clarification. The department did not follow this mandated procedure; the importer had furnished the original Certificate of Origin and the departmental verifying officers neither established inconsistency in the information nor sought verification from the issuing authority. In these circumstances, denial of the exemption solely because some questionnaire entries could not be answered-information which was not feasibly available to the importer-was not a sustainable basis to refuse preferential tariff treatment. The Tribunal further noted that the Notification grants benefit subject to proof of origin to the satisfaction of the designated customs officer, but where documents required by the Notification are produced and their authenticity is not challenged or verified as inconsistent, the adjudicating authority cannot, on assumptions or presumptions, go beyond the Notification to deny the concession. Reliance was placed on the reasoning in Commissioner of Customs, Hyderabad vs Riddi Siddhi Bullions Ltd. as supportive of this principle. The Tribunal observed that refusing exemption on mere procedural grounds, contrary to the verification mechanism in the Rules, would frustrate the object of the preferential trade arrangement between ASEAN states and India. [Paras 8, 9, 10]

The denial of duty exemption was unsustainable because the prescribed procedure for challenging a Certificate of Origin was not followed and the authenticity of the certificate was not established to be false or inconsistent.

Final Conclusion: The order denying the benefit of Notification No. 046/2011-Cus was set aside and the appeal allowed, on the ground that the Certificate of Origin was not properly challenged in accordance with the Rules and the exemption could not be refused on mere procedural lapses or assumptions.

Refund of late fee - waiver of late fee by competent authority - liability for late filing where electronic system error prevents electronic uploading - effect of judicial arrest/detention of vessel on filing time

Refund of late fee - liability for late filing where electronic system error prevents electronic uploading - effect of judicial arrest/detention of vessel on filing time - waiver of late fee by competent authority - Entitlement to refund of late fee paid where initial presentation of Bill of Entry could not be uploaded due to Indian Customs EDI system error and the vessel was subsequently arrested by court order, and effect of the Joint Commissioner's waiver and Assistant Commissioner's sanction of refund. - HELD THAT: - The Tribunal found established facts that the appellant had presented the Bill of Entry but it could not be uploaded because of an Indian Customs EDI system error, and that the vessel was thereafter arrested by order of the High Court, with filing occurring only after the vessel's release. In these circumstances the period from initial presentation up to the subsequent filing ought to be excluded from the prescribed filing period so as to avoid penalising the appellant for events beyond its control. The Joint Commissioner had exercised jurisdiction to waive the late fee; the Assistant Commissioner sanctioned the refund consequent to that waiver; and the revenue did not dispute the waiver. Given these findings, there was no error in the Assistant Commissioner granting the refund. The Commissioner (Appeals) order upholding the department's appeal was therefore unsustainable and was set aside. [Paras 4, 5]

Refund of late fee upheld; Assistant Commissioner's sanction of refund sustained and Commissioner (Appeals) order set aside.

Final Conclusion: The appeal is allowed: the refund of the late fee sanctioned by the Assistant Commissioner (following the Joint Commissioner's waiver) is upheld and the Commissioner (Appeals) order allowing the department's appeal is set aside.

Contract of guarantee - financial debt under Section 5(8) of the Insolvency and Bankruptcy Code - disbursal against consideration for the time value of money - commercial effect of borrowing - indemnity vis-a -vis financial debt

Contract of guarantee - financial debt under Section 5(8) of the Insolvency and Bankruptcy Code - The Obligor Undertaking does not constitute a guarantee attracting the definition of financial debt. - HELD THAT: - The Tribunal applied the definition of 'contract of guarantee' under Section 126 of the Indian Contract Act, 1872, which requires a promise to perform or discharge the liability of a third person in the event of that third party's default. The Obligor Undertaking was held to be a contingent undertaking to utilise proceeds from a stake sale to purchase Commercial Papers or infuse funds into RHFL; it was not a promise to perform or discharge RHFL's obligation upon RHFL's default. Reliance on Phoenix ARC v. Ketulbhai R. Patel was noted to emphasize that absence of a covenant to perform on the borrower's default precludes characterization as a guarantee. Consequently, the essential ingredient of performance upon default is lacking and the Undertaking cannot be treated as a guarantee within the meaning of Section 126, and therefore does not attract the definition of 'financial debt' under Section 5(8) of the Code on that basis. [Paras 31, 32, 33, 34, 35]

The Obligor Undertaking is not a guarantee and does not constitute financial debt under Section 5(8) of the Code on the guarantee limb.

Financial debt under Section 5(8) of the Insolvency and Bankruptcy Code - disbursal against consideration for the time value of money - commercial effect of borrowing - indemnity vis-a -vis financial debt - The Applicant's claim that the Obligor Undertaking and the Commercial Papers, read together, give rise to a financial debt under Section 5(8) is not sustainable. - HELD THAT: - The Tribunal applied the test from Anuj Jain and Pioneer Urban Land to conclude that a sine qua non of 'financial debt' is a disbursal of money to the corporate debtor against consideration for the time value of money or a transaction having the commercial effect of borrowing by the corporate debtor. Here, the Commercial Papers monies were disbursed to RHFL and not to the Corporate Debtor; there was no disbursal to the Corporate Debtor, no borrowing by the Corporate Debtor for temporary use, and no commercial interest of the Corporate Debtor in the funds. The Applicant's earlier commercial position (first Form C) treating RHFL as principal borrower was noted. The indemnity clause in the Obligor Undertaking was held to relate only to breach of that agreement and not to operate as an indemnity creating a financial debt under Section 5(8). Reliance on precedents requiring proof of disbursement was applied to reject the contention that any obligation under the Undertaking or its indemnity clause constitutes financial debt. [Paras 43, 44, 45, 46, 47]

The Obligor Undertaking and the Commercial Papers, even if read together, do not create a financial debt under Section 5(8) because there was no disbursal to the Corporate Debtor nor a commercial borrowing by it; the indemnity does not convert the obligation into financial debt.

Final Conclusion: The application under Section 60(5) of the IBC by the applicant to be admitted as a financial creditor was rejected; the Obligor Undertaking is neither a guarantee nor otherwise a financial debt under Section 5(8) of the Code, and the interlocutory application is disposed as rejected.

Maintainability of petition under section 9 of the Insolvency and Bankruptcy Code, 2016 - bar of limitation on money claim - requirement to place contract terms on record to seek benefit of contractual extensions or interim acknowledgements - initiation of Corporate Insolvency Resolution Process (CIRP)

Maintainability of petition under section 9 of the Insolvency and Bankruptcy Code, 2016 - bar of limitation on money claim - requirement to place contract terms on record to seek benefit of contractual extensions or interim acknowledgements - Whether the company petition under section 9 of the IBC was maintainable where the invoice/default date was beyond three years and no contract was placed on record to demonstrate any contractual provision or acknowledgement extending the limitation period. - HELD THAT: - The Tribunal observed that the invoice dated 11.06.2015 was treated as the date of default and the petition was filed on 13.03.2019, which falls beyond the three-year period urged as constituting limitation. The Operational Creditor relied on terms said to be in the contract to rebut the limitation plea, but failed to annex any copy of the contract to the petition to establish such terms or any contractual basis for extending or postponing the limitation. In the absence of the contract or documentary material demonstrating a contractual extension or an acknowledgement sufficient to revive the claim, the petition was held to be barred by limitation. The Tribunal therefore declined to examine merits and concluded that the petition was misconceived and non-maintainable on the limitation ground. [Paras 32, 33]

Petition under section 9 IBC rejected as barred by limitation and non-maintainable for failure to place the contract on record.

Final Conclusion: The Company Petition filed under section 9 IBC by the Operational Creditor is rejected as time-barred and non-maintainable because the claim arose on 11.06.2015, the petition was filed beyond three years, and no contract was produced to demonstrate any contractual provision or acknowledgement extending limitation; consequently CIRP initiation was refused.

Approval of a resolution plan under section 30(6) read with section 30(2) - committee of creditors approval by requisite voting share under section 30(4) - limited judicial scrutiny of the Adjudicating Authority under section 31 - non contravention of section 29A - extinguishment of claims not part of the approved resolution plan (Ghanshyam Mishra principle) - comparison with liquidation value as a justification for approval - performance guarantee / security for implementation of the plan - cessation of moratorium on approval - post approval implementation and monitoring by a committee

Approval of a resolution plan under section 30(6) read with section 30(2) - committee of creditors approval by requisite voting share under section 30(4) - limited judicial scrutiny of the Adjudicating Authority under section 31 - The Resolution Plan submitted by the Viraki Consortium satisfies the requirements of Section 30(2) and was validly approved by the Committee of Creditors; the Adjudicating Authority must satisfy itself of compliance but cannot re open commercial decisions of the CoC. - HELD THAT: - The Tribunal examined the plan and related documents and concluded that the plan meets the statutory requirements enumerated in Section 30(2) (payment of CIRP costs, treatment of operational and financial creditors, management and implementation provisions) and the applicable Regulations. The CoC approved the plan with 87.15% voting share in accordance with Section 30(4). Following the principle in K. Sashidhar and the limited scope of review reiterated in CoC of Essar Steel, the Adjudicating Authority's role is confined to scrutiny under Section 30(2) and it cannot substitute its commercial judgment for that of the CoC. On that basis the Tribunal was satisfied and approved the plan. [Paras 27, 28, 29, 31, 32]

Resolution Plan approved and held to satisfy Section 30(2); approval of the CoC is binding and the Adjudicating Authority's scrutiny was limited to the statutory requirements.

Non contravention of section 29A - The Resolution Plan does not contravene Section 29A of the Code. - HELD THAT: - The Tribunal considered the eligibility requirements under Section 29A and expressly recorded that the plan is not in contravention of those provisions. On the material before it, no disqualifying grounds under Section 29A were found, and that conclusion formed part of the basis for approval. [Paras 32]

No disqualification under Section 29A; plan compliant with eligibility requirements.

Comparison with liquidation value as a justification for approval - The amount offered under the Resolution Plan exceeds the liquidation value, which is a relevant justification supporting approval. - HELD THAT: - Valuation exercise under Regulation 27 produced averages of Fair Value and Liquidation Value. The Tribunal noted the RP's reliance on the fact that the proposed realisation under the plan is higher than the liquidation value and treated this as one justification for approval, while observing the RP's compliance with valuation and regulatory requirements. [Paras 25, 26]

Plan's realisation being higher than liquidation value weighed in favour of approval.

Performance guarantee / security for implementation of the plan - The Resolution Applicant furnished the required performance guarantee and the RP called for an unconditional and irrevocable performance guarantee as part of implementation requirements. - HELD THAT: - The Tribunal recorded that the Resolution Applicant submitted a performance bank guarantee of the required sum into the designated account and that the RP had called for such guarantee by Letter of Intent. The presence of the performance security formed part of the compliance demonstration under the Code and Regulations. [Paras 15, 20]

Performance guarantee furnished and accepted as part of compliance with the plan's implementation requirements.

Extinguishment of claims not part of the approved resolution plan (Ghanshyam Mishra principle) - cessation of moratorium on approval - post approval implementation and monitoring by a committee - On approval, claims not included in the approved Resolution Plan stand extinguished; the moratorium ceases and implementation will be overseen by a monitoring committee with specified composition and the corporate records and statutory filings are to be completed. - HELD THAT: - Relying on the precedent that on approval by the Adjudicating Authority claims not part of the plan are extinguished, the Tribunal made consequential orders: the plan becomes effective and binding on all stakeholders; claims not included in the plan stand extinguished; the moratorium under Section 14 ceases; the MoA/AoA amendments must be filed with the RoC and necessary approvals obtained; and a three member Monitoring Committee comprising a representative of the Resolution Applicant, a CoC representative and the RP is to oversee implementation. The RP was also directed to forward CIRP records to the IBBI and to provide certified copies of the order to CoC and the Resolution Applicant. [Paras 32]

Claims not part of the approved plan extinguished; moratorium lifted; implementation supervised by a three member Monitoring Committee and statutory/filing obligations directed.

Final Conclusion: The Tribunal allowed IA No.1057 of 2022 and approved the Resolution Plan of the Viraki Consortium as meeting the requirements of Section 30(2) read with Section 30(4) and the CIRP Regulations; the plan is declared effective and binding, claims not included in the plan are extinguished, the moratorium ceases, implementation and statutory compliance are ordered with oversight by a Monitoring Committee.

Commercial Training or Coaching Service - small scale exemption under Notification No. 6/2005 ST - provision of service under the brand name / franchisee disqualifying exemption - exclusion of Computer Education from Vocational Training service - invocation of extended period for service tax - imposability of penalty under section 78

Commercial Training or Coaching Service - small scale exemption under Notification No. 6/2005 ST - provision of service under the brand name / franchisee disqualifying exemption - exclusion of Computer Education from Vocational Training service - Appellant liable to service tax as Commercial Training or Coaching Service and not entitled to small scale or vocational training exemption for the period 21.06.2006 to 30.11.2009. - HELD THAT: - The Tribunal accepted the Revenue's case that the appellant provided computer training under the brand name of SITD as a franchisee; consequently the appellant could not claim the small scale exemption under Notification No. 6/2005 ST. The appellant's alternate contention that the services fell within vocational training was negatived by the express exclusion of Computer Education from Vocational Training service by Notification No. 19/2005 ST dated 07.06.2005. The period in dispute (21.06.2006 to 30.11.2009) therefore does not attract the vocational training exemption and the appellant is liable to service tax for the normal period. [Paras 3]

Liability to service tax sustained for the normal period; exemptions under Notification No. 6/2005 ST and vocational training exclusion disallowed.

Invocation of extended period for service tax - imposability of penalty under section 78 - Demand based on extended period set aside and penalty under section 78 held not imposable. - HELD THAT: - The show cause notice dated 03.06.2010 invoked the extended period. The Tribunal treated the controversy as a question of law concerning classification and interpretation of notifications and noted the appellant's bona fide belief that, being a very small service provider with low taxable value, they were entitled to small scale exemption. Transactions were disclosed in records and not concealed. Considering these facts and that the matter involved interpretation of the notification, the invocation of the extended period was held unsustainable. Consequentially, the penalty under section 78 was also held not imposable. [Paras 4]

Demand under extended period quashed and penalty under section 78 set aside.

Final Conclusion: The appeal is partly allowed: service tax liability for the normal period is upheld, while the demand based on extended period and the penalty under section 78 are set aside.

Input service - hotel accommodation service - Rule 2(l) of the CENVAT Credit Rules, 2004 - Erection, Commissioning and Installation service - CENVAT credit admissibility

Input service - hotel accommodation service - Rule 2(l) of the CENVAT Credit Rules, 2004 - Erection, Commissioning and Installation service - CENVAT credit admissibility - Whether service tax paid on hotel accommodation availed for staff deployed to render the output service of Erection, Commissioning and Installation is an eligible input service under Rule 2(l) of the CENVAT Credit Rules, 2004. - HELD THAT: - The Tribunal found that the appellant, being both manufacturer of excisable goods and provider of the taxable output service of Erection, Commissioning and Installation, was required to send staff to outstation sites and necessarily provide accommodation in nearby hotels for completion of the installation work. The accommodation service was thus used for rendering the taxable output service and was not excluded by the exclusion clause in the definition of input service. The inclusive part of the definition could not be read to exclude from the main definition a service that is expressly covered by it. The Tribunal accepted that accommodation was integral and necessary for provision of the output service and therefore held that service tax paid on hotel accommodation qualified as admissible CENVAT credit under Rule 2(l). [Paras 12, 13]

Hotel accommodation service used by employees to render the Erection, Commissioning and Installation service is an eligible input service under Rule 2(l); the appeal is allowed and the impugned order is set aside.

Final Conclusion: The Tribunal allowed the appeal, holding that service tax on hotel accommodation availed for staff deployed to render the Erection, Commissioning and Installation service is admissible as CENVAT credit under Rule 2(l) of the CENVAT Credit Rules, 2004, and set aside the impugned order with consequential benefits.

Cenvat credit - Clean Energy Cess - inapplicability of Cenvat Credit Rules to Clean Energy Cess - utilisation restriction under proviso to Rule 3(4) of CCR, 2004 - Polluter pays principle - interpretation of fiscal statute

Cenvat credit - Clean Energy Cess - inapplicability of Cenvat Credit Rules to Clean Energy Cess - utilisation restriction under proviso to Rule 3(4) of CCR, 2004 - Polluter pays principle - interpretation of fiscal statute - Whether Cenvat credit is available in respect of Clean Energy Cess paid on coal (including imported coal) and whether the Cenvat Credit Rules, 2004 (and Section 37 of the Central Excise Act) apply to Clean Energy Cess. - HELD THAT: - A plain reading of Rule 3 of the Cenvat Credit Rules, 2004 shows that Cenvat credit is admissible only in respect of duties and cesses specifically listed therein, and Clean Energy Cess (CEC) is not included. The Tribunal applied the settled principle that fiscal statutes must be interpreted literally; no ambiguity exists in Rule 3 that would permit extension of credit to unlisted cesses. The statutory scheme for CEC, including the Clean Energy Cess Rules and the notifications made under Section 83 of the Finance Act, 2010, indicates that only certain provisions of the Central Excise Act were made applicable to CEC; by implication the full machinery under Section 37 and the Cenvat Credit Rules is not applicable to CEC. Further, the proviso to Rule 3(4) of the Cenvat Credit Rules expressly disallows utilisation of the Cenvat credit account for payment of Clean Energy Cess, and the CEC rules themselves require payment through cash/PLA rather than debit to the Cenvat account. Allowing credit of CEC would frustrate the legislative purpose of the levy, which embodies the 'polluter pays' principle by creating a dedicated fund to discourage use of polluting fuels; permitting Cenvat credit would effectively return the cess to the assessees and defeat that purpose. It is not within the Tribunal's remit to enlarge or modify the scope of the rules; therefore precedents that expanded credit to other cesses were not followed where the statutory text and scheme preclude credit. On these grounds the Tribunal held that credit of CEC is not available, whether on imported coal paid as additional customs duty or otherwise, and sustained the demand and associated consequences under the contested orders. [Paras 36, 37, 38, 40, 41]

Cenvat credit of Clean Energy Cess is not admissible; the Cenvat Credit Rules, 2004 do not apply to Clean Energy Cess for the purpose of granting credit, and the demand (and related penalties) confirmed by the Department is upheld.

Final Conclusion: Appeal of the assessee rejected and Revenue appeal allowed: Cenvat credit of Clean Energy Cess (for the periods in dispute) is not admissible under Rule 3 of the Cenvat Credit Rules, 2004; the demand and penalties were sustained and the assessee's cross-objections dismissed.