TaxTMI Updates e-Newsletter
Oct 13,2023

Cancellation of GST registration for non-filing of returns - restoration of GST registration upon deposit and instalment payments - installment facility for payment of admitted tax - exercise of discretionary relief under Article 226 of the Constitution - writ jurisdiction where statutory tribunal is non-functional

Cancellation of GST registration for non-filing of returns - writ jurisdiction where statutory tribunal is non-functional - Validity of cancellation of the petitioner's GST registration and exercise of writ jurisdiction by the High Court - HELD THAT: - The Court considered the cancellation of the petitioner's GST registration which was effected on account of non-filing of GSTR-01 and GSTR-3B for a continuous period exceeding six months. Noting that the GST Tribunal in the State was non-functional pursuant to the Central Government notification, the Court entertained the writ petition under Article 226. On the facts, the petitioner's proprietor had suffered bereavements and the petitioner did not dispute the tax liability and expressed willingness to pay dues. Having regard to these circumstances and the admitted liability, the Court found it appropriate to grant equitable relief rather than sustain the cancellation without any opportunity for payment, applying the Court's discretionary jurisdiction in writ proceedings where alternative statutory remedy was presently inaccessible in practice. [Paras 2, 3, 4, 9, 12]

Writ jurisdiction was exercised and cancellation not permitted to remain operative without affording the petitioner an opportunity to regularise the liability.

Installment facility for payment of admitted tax - restoration of GST registration upon deposit and instalment payments - exercise of discretionary relief under Article 226 of the Constitution - Whether the petitioner's registration should be restored subject to an initial deposit and payment of the balance in instalments and on what terms - HELD THAT: - Relying upon precedents where courts granted relief by permitting belated returns and instalment payment of admitted tax, the Court directed restoration of registration on terms tailored to the facts: the petitioner's willingness to pay, the peculiar hardships suffered, and the public interest in enabling continuance of business and recovery of tax. The Court mandated an initial deposit upon restoration and directed the department to communicate the outstanding amount with interest to be paid in fixed monthly instalments. The relief is conditional and subject to compliance with the schedule, reflecting the principle that equitable instalment relief may be granted in writ proceedings when liability is admitted and tribunal remedies are practically unavailable. [Paras 10, 11, 12, 13]

Registration restored subject to an initial deposit and payment of the remaining admitted liability with interest by way of monthly instalments as directed.

Final Conclusion: Writ petition allowed: having entertained the petition because the GST Tribunal was non-functional, the Court restored the petitioner's GST registration on conditions - an initial deposit upon restoration and payment of the remaining admitted tax with interest by way of monthly instalments - and dismissed the challenge to cancellation only on the terms directed; no order as to costs.

Hearing requirement under Section 75(4) of the GST Act - assessment under Section 73 of the GST Act - principles of natural justice - condonation of delay in filing appeal - judicial review under Article 226 concerning condonation of delay

Hearing requirement under Section 75(4) of the GST Act - assessment under Section 73 of the GST Act - principles of natural justice - Validity of the assessment order dated 20.02.2023 passed under Section 73 in the absence of a hearing as required by Section 75(4) and natural justice. - HELD THAT: - Record shows that the petitioner was issued a notice under Section 73 read with Rule 142(5) and a reminder indicating a last date for reply, but the reminder recorded 'NA' against date, time and venue of personal hearing and no hearing was granted. The Court found that the mandatory requirement to grant an opportunity of hearing under Section 75(4) was not complied with and that passing the assessment order without affording such opportunity violated the principles of natural justice. As the absence of any hearing or recorded application of mind on the point is evident from the records, the assessment order cannot stand and requires reconsideration after affording the statutory hearing. [Paras 5, 6, 9]

The assessment order dated 20.02.2023 is quashed and the matter is remanded to the assessing authority to pass fresh orders after giving the petitioner an opportunity of hearing.

Condonation of delay in filing appeal - judicial review under Article 226 concerning condonation of delay - Validity of the appellate order dated 31.07.2023 which dismissed the delay condonation application and the appeal without apparent application of mind. - HELD THAT: - The appellate order dismissing the delay application and the appeal was recorded without any material in the file demonstrating that the appellate authority applied its mind to the condonation request. Reliance placed on the Supreme Court's approach permitting Article 226 courts to examine factual circumstances in condonation cases underscores that the appellate remedy is valuable and merits considered adjudication. Given the absence of reasons or any demonstrable consideration, the impugned appellate order was held to be vitiated and therefore liable to be set aside and remanded for fresh decision on the condonation application and appeal after due consideration and, if appropriate, hearing. [Paras 5, 7, 8, 9]

The appellate order dated 31.07.2023 is quashed and the matter is remanded to the appellate authority to decide the delay condonation application and the appeal afresh with application of mind and after affording opportunity to the petitioner as may be appropriate.

Final Conclusion: Writ petition allowed: both the assessment order dated 20.02.2023 and the appellate order dated 31.07.2023 are quashed and the matters are remanded for fresh adjudication after affording the petitioner an opportunity of hearing; record handed over to Standing Counsel.

Requirement to record reasons in administrative and judicial orders - Principles of natural justice - Cancellation of GST registration without recording reasons - Right to know reasons for appellate decision - Remand for fresh speaking order

Cancellation of GST registration without recording reasons - Requirement to record reasons in administrative and judicial orders - Principles of natural justice - Impugned orders cancelling the petitioner's GST registration and dismissing the appeal were passed without recording cogent reasons and are unsustainable. - HELD THAT: - The Court found on perusal of the impugned orders that neither the authority which cancelled the GST registration nor the appellate authority recorded reasons for their respective decisions. The judgment reiterates the settled proposition that administrative and judicial orders must be supported by reasons as an essential facet of principles of natural justice, enabling transparency, demonstrating application of mind and making appellate remedy meaningful. Relying on the authorities cited in the judgment, the Court held that absence of reasons renders an order indefensible and may indicate arbitrary exercise of discretion. Applying these principles to the facts, the Court concluded that the cancellation and the summary dismissal of the appeal could not be sustained in the absence of recorded reasons. [Paras 8, 9, 13, 14, 15]

The writ petition is allowed and the impugned orders cancelling the GST registration and dismissing the appeal are set aside for want of reasons.

Remand for fresh speaking order - Right to know reasons for appellate decision - The matter is remitted for fresh consideration by the first appellate authority with directions to pass a reasoned and speaking order after affording opportunity of hearing. - HELD THAT: - Given the setting aside of the impugned orders for non-recording of reasons, the Court directed that the matter be remitted to the first appellate authority. The appellate authority is to examine the matter afresh, record reasons for its conclusions sufficient to show application of mind, and afford reasonable opportunities of hearing to the parties. The Court indicated a timetable for expedition, instructing the appellate authority to decide preferably within two months from production of a certified copy of the order. [Paras 16]

The matter is remitted to the first appellate authority to pass a fresh, reasoned and speaking order in accordance with law, after affording reasonable opportunity of hearing, preferably within two months from production of a certified copy of this order.

Final Conclusion: The writ petition succeeds: the orders cancelling the GST registration and dismissing the appeal are set aside for failure to record reasons; the matter is remitted to the first appellate authority to decide afresh by a reasoned and speaking order after hearing the parties, preferably within two months.

Regular bail under Section 439 Cr.P.C. - Exercise of judicial discretion in grant of bail - Relevance of charge-sheet and completion of investigation - Absence of parallel GST departmental proceedings as material for bail - Gravity of offence and protection of public interest - Conditions of bail - Preliminary observations not binding at trial

Regular bail under Section 439 Cr.P.C. - Exercise of judicial discretion in grant of bail - Relevance of charge-sheet and completion of investigation - Absence of parallel GST departmental proceedings as material for bail - Application for regular bail was allowed and the applicant was enlarged on bail subject to specified conditions. - HELD THAT: - The Court exercised its discretionary power to grant regular bail under Section 439 Cr.P.C. after considering the nature of allegations and relevant facts. The Court noted that the applicant has been in custody since 21.01.2023 and that investigation is complete with filing of the charge-sheet. The absence of any proceedings initiated by the GST authority against the applicant under the GST enactments was treated as a material circumstance weighing in favour of bail. The Court also observed that co-accused had been released by coordinate benches and applied the guiding principles in Sanjay Chandra v. CBI for exercising discretion in bail applications. Balancing the gravity of the offences alleged against the above factors, the Court concluded that bail should be granted with conditions to prevent misuse of liberty and to protect the prosecution's interest. The Court made clear that its preliminary observations regarding evidence are not binding on the trial court.

Bail allowed on execution of personal bond and one surety with enumerated conditions including surrender of passport, restriction on travel abroad, furnishing address, monthly station reporting and standard protective terms; preliminary observations not to influence trial.

Final Conclusion: The petition for regular bail under Section 439 Cr.P.C. was allowed: the applicant was directed to be released on bail on specified personal bond and surety subject to enumerated conditions; the trial court remains free to proceed and to alter bail conditions as appropriate, and the Court's preliminary observations shall not influence the trial.

Retrospective cancellation of GST registration - Validity and sufficiency of a show cause notice for cancellation - Requirement of a reasoned order and particulars in an adjudicatory notice - Right to opportunity of hearing before retrospective adverse action - Power to recover tax, interest and penalty notwithstanding procedural set-aside

Retrospective cancellation of GST registration - Validity and sufficiency of a show cause notice for cancellation - Requirement of a reasoned order and particulars in an adjudicatory notice - The impugned retrospective cancellation of the petitioner's GST registration was set aside and re-fixed to take effect from April, 2021. - HELD THAT: - The Court found the show cause notice to be devoid of particulars as to offending invoices or the quantum of alleged wrongful availment of input tax credit, and noted that the impugned order contained no reasons for retrospective cancellation beyond non-response to the SCN. Because the SCN did not indicate that cancellation would be retrospective, the petitioner had no opportunity to object to retrospective effect. For these reasons the Court set aside the retrospective operation of the cancellation and directed that the cancellation shall take effect from April, 2021, the month following the petitioner's stated cessation of business in March, 2021. The Court therefore remedied the procedural and reasoned-order defects by limiting the retrospective operation while leaving open lawful action by the respondents if taken after affording proper notice and opportunity to be heard. [Paras 10, 11]

The retrospective cancellation insofar as effective from 01.07.2017 was set aside; cancellation shall take effect from April, 2021.

Right to opportunity of hearing before retrospective adverse action - Requirement of a reasoned order and particulars in an adjudicatory notice - Power to recover tax, interest and penalty notwithstanding procedural set-aside - Respondents may re-initiate action for retrospective cancellation or recovery, but only after issuing a proper SCN and affording a reasonable opportunity to be heard; recovery proceedings are not precluded by this order. - HELD THAT: - The Court clarified that its setting aside of retrospective effect was without prejudice to the respondents' statutory powers. If the respondents propose retrospective cancellation, they must follow the law by issuing a proper show cause notice containing requisite particulars and then pass an appropriate reasoned order after affording the petitioner a reasonable opportunity of hearing. Separately, steps for recovery of any tax, penalty or interest due are not barred by this order. [Paras 12, 13]

Respondents may re-open or pursue retrospective cancellation or recovery, provided they issue a proper SCN, afford hearing, and decide in accordance with law; recovery of tax, penalty or interest is permitted.

Final Conclusion: The petition is disposed by setting aside the retrospective cancellation of GST registration and directing that cancellation shall operate from April, 2021; the respondents remain free to proceed afresh (including for retrospective cancellation or recovery) only after issuing a proper show cause notice and affording the petitioner a reasonable opportunity of hearing.

Mandated opportunity of hearing under Section 75(4) of the GST Act - violation of principles of natural justice - limitation for filing appeal under Section 107 of the GST Act - remand for fresh consideration after hearing

Mandated opportunity of hearing under Section 75(4) of the GST Act - violation of principles of natural justice - Validity of the order dated 29.08.2022 (order under Section 73(9) of the GST Act) in view of absence of opportunity of personal hearing. - HELD THAT: - The show-cause notice and reminder recorded the last date for reply but the columns for date, time and venue of personal hearing were marked "NA". The record and the impugned order establish that no personal hearing was granted. Section 75(4) requires that an opportunity of hearing be afforded where an adverse decision is contemplated; compliance is mandatory. The Court relied on its earlier view that non-compliance with Section 75(4) and the absence of an opportunity of hearing render the order contrary to the mandate of the provision and violative of principles of natural justice. Consequently, the original order confirming demand under Section 73(9) was quashed for want of the mandated hearing. [Paras 4, 6, 9]

Order dated 29.08.2022 is quashed for failure to grant the opportunity of hearing in terms of Section 75(4) and as violative of principles of natural justice.

Limitation for filing appeal under Section 107 of the GST Act - Fate of the appeal order dated 02.09.2023 dismissing the petitioner's appeal as beyond limitation. - HELD THAT: - The appellate order was dismissed on the ground of being time-barred. Having quashed the original order (dated 29.08.2022) on grounds of denial of hearing, the Court found it appropriate to set aside the appellate order as consequential. The Court did not adjudicate the substantive question of limitation on its merits but quashed the appeal order because the impugned original order no longer stands. [Paras 10]

Order dated 02.09.2023 is quashed as consequential to the quashing of the original order.

Remand for fresh consideration after hearing - Direction as to further proceedings following quashing of the original order. - HELD THAT: - The matter is remitted to the authority which passed the original order with a direction to afford the petitioner an opportunity of hearing and to permit filing of a reply to the show-cause notice. Fresh orders are to be passed in accordance with law after compliance with the requirement of hearing prescribed by Section 75(4). The remand is for fresh consideration and adjudication after procedural fairness is observed. [Paras 11]

Matter remanded to respondent no.3 for fresh orders after giving opportunity of hearing and permitting the petitioner to file a reply, in accordance with law.

Final Conclusion: The petition is allowed: the order dated 29.08.2022 (confirming demand) and the appellate order dated 02.09.2023 are quashed; the matter is remitted to respondent no.3 to decide afresh after granting the petitioner an opportunity of hearing and permitting a reply to the show cause notice.

Blocking of Input Tax Credit under Rule 86A of CGST Rules, 2017 - unblocking of electronic credit ledger - pre-deposit requirement for filing appeal against adjudication - retention of 10% of penalty as pre-deposit - risk of cancellation of registration for non-filing of returns due to blocked credit

Blocking of Input Tax Credit under Rule 86A of CGST Rules, 2017 - unblocking of electronic credit ledger - retention of 10% of penalty as pre-deposit - pre-deposit requirement for filing appeal against adjudication - Validity of orders blocking the petitioner's Input Tax Credit and the extent to which the electronic credit ledger should remain blocked pending adjudication. - HELD THAT: - The court noted that respondent had passed orders blocking the petitioner's Input Tax Credit and subsequently issued show cause notices; adjudication on the notices is pending. Considering that the petitioner has the statutory remedy of appeal after adjudication and that the pre-deposit required on filing an appeal is limited to 10% of the penalty assessed, the court held that the petitioner's electronic credit ledger should not remain fully blocked during the interim. To balance the enforcement interest and the petitioner's ability to file returns (and avoid risk of cancellation of registration), the orders of blocking were set aside and the account ordered to be unblocked forthwith subject to retention of 10% of the penalty amount assessed as the effective pre-deposit required for pursuing appellate remedy. [Paras 3, 5, 6]

Orders dated 10.08.2023 and 25.08.2023 blocking the petitioner's Input Tax Credit are set aside; the petitioner's electronic credit ledger shall be unblocked forthwith after retaining 10% of the penalty amount assessed as pre-deposit.

Final Conclusion: Writ petition allowed; blocking orders quashed and electronic credit ledger to be unblocked immediately subject to retention of 10% of the penalty amount assessed to satisfy the pre-deposit requirement for filing an appeal.

Disbursement of refund directed by appellate authority - binding effect of an appellate authority's order pending further statutory remedy - requirement of a competent court or authority's stay before non-compliance with an appellate order - extension of limitation by Central Government under powers to remove difficulties - Alex Tour and Travel Private Limited v. Assistant Commissioner, CGST, Division-Janakpuri

Disbursement of refund directed by appellate authority - binding effect of an appellate authority's order pending further statutory remedy - requirement of a competent court or authority's stay before non-compliance with an appellate order - Respondents must forthwith disburse the refund amount sanctioned by the Appellate Authority by order dated 07.04.2021 in respect of March, 2020. - HELD THAT: - The Court observed that although the respondents assert a right to seek further appellate remedy before the Appellate Tribunal and rely on the Central Government's Removal of Difficulties order extending limitation, they cannot, without a stay by a competent authority or court, refuse to comply with the Appellate Authority's order directing refund. The Court declined to adjudicate the broader controversy regarding the Central Government's power to extend limitation, noting that the present controversy concerns the respondents' reluctance to implement a favourable appellate order. The Court also relied on the earlier decision in Alex Tour and Travel Private Limited v. Assistant Commissioner, CGST, Division-Janakpuri as covering the issue. Accordingly, the respondents were directed to disburse the refund forthwith, while retaining their statutory remedies and the respondents' right to seek recovery of the disbursed amount if they succeed in subsequent proceedings. [Paras 7, 8, 9]

Direction issued to respondents to immediately disburse the refund as sanctioned by the Appellate Authority's order dated 07.04.2021; respondents' statutory remedies and rights to recover amounts if successful in further proceedings preserved.

Final Conclusion: Petition allowed; respondents directed to forthwith disburse the refund sanctioned by the Appellate Authority for March, 2020, without prejudice to the respondents' right to pursue statutory remedies or to seek recovery if those remedies succeed.

Writ petition under Article 226 - Cancellation and suspension of GST registration - Administrative adjudication of registration under the CGST/MGST Acts - Disputed questions of fact not to be decided in writ proceedings - Direction to submit representation to the designated officer and time bound decision

Cancellation and suspension of GST registration - Disputed questions of fact not to be decided in writ proceedings - Direction to submit representation to the designated officer and time bound decision - Petition seeking cancellation/suspension of respondent No.3's GST registration on the petitioner's premises was not adjudicated by the High Court and was directed to be considered by the designated officer on representation. - HELD THAT: - The Court found that the controversy between the parties concerning rights in the premises and the entitlement to use the address for GST registration involved disputed questions of fact arising from pending civil proceedings; such factual disputes are not appropriate for final adjudication in writ proceedings under Article 226. The petitioner was therefore directed to file a detailed representation to the designated officer (respondent No.1) specifying the reliefs sought under the CGST/MGST Acts. A copy of the representation must be served on respondent No.3, who is permitted to file a reply within one week of service. The designated officer is required to hear the parties and pass appropriate orders in accordance with law on the matters relating to registration within four weeks of receipt of the representation. All contentions of the parties have been kept open for the administrative authority to decide strictly on issues arising under the GST statutes. [Paras 5, 6, 7, 8]

Petition dismissed insofar as the Court would not adjudicate the cancellation/suspension request; petitioner to file representation within two weeks, respondent No.3 may reply within one week, and the designated officer to decide on the representation within four weeks; all contentions kept open; no costs.

Final Conclusion: Writ petition seeking cancellation/suspension of GST registration was not entertained on merits; petitioner directed to pursue a detailed representation to the designated officer who must decide the registration related issues under the CGST/MGST Acts in a time bound manner, with liberty for respondent to reply and without prejudice to either party's contentions.

Cancellation and revival of GST registration for non-filing of returns - Conditional quashing of administrative order subject to payment of arrears and interest - Equitable relief by writ despite availability of alternate statutory remedy of appeal - Power to recover tax under Sections 73 and 74 of the Act - Maintaining taxable persons within the GST regime

Cancellation and revival of GST registration for non-filing of returns - Equitable relief by writ despite availability of alternate statutory remedy of appeal - Validity of the impugned cancellation order in Form GST REG-19 and maintainability of writ relief despite alternate statutory remedies - HELD THAT: - The Court noted that the petitioner had failed to file returns for a period of six months and had belatedly filed some returns and made a partial payment. Although the respondent pointed to alternate remedies under the GST statute, including appeal provisions, the Court held that relegation to appeal would leave the petitioner outside the GST regime while continuing business and would not serve a useful purpose. Having considered precedents and the facts, the Court exercised writ jurisdiction to quash the impugned cancellation order, subject to conditions imposed to protect revenue interests. The Court declined to follow the approach of relegating the petitioner solely to statutory appeal in the circumstances of this case and granted relief on equitable terms.

Impugned cancellation order quashed, while reserving a conditional mechanism for revival of registration.

Conditional quashing of administrative order subject to payment of arrears and interest - Power to recover tax under Sections 73 and 74 of the Act - Maintaining taxable persons within the GST regime - Consequences and conditions for revival of GST registration and protection of revenue recovery rights - HELD THAT: - The Court directed that the quashing of the cancellation order is subject to the petitioner depositing all tax due for the period April 2022 to July 2023 together with interest; upon such payment the petitioner's GST registration shall stand revived. Simultaneously, the Court made clear that the respondent is at liberty to initiate appropriate proceedings under Sections 73 and 74 of the Act to recover any tax that remains unpaid, thereby preserving the revenue's right to adjudicate and recover arrears notwithstanding the order of quashment.

Registration to be revived on payment of all arrears and interest; respondent permitted to pursue recovery proceedings under Sections 73 and 74.

Final Conclusion: Writ petition allowed in part: the cancellation order in Form GST REG-19 is quashed on condition that the petitioner deposits all tax due for April 2022 to July 2023 with interest, upon which GST registration shall be revived; respondent retains liberty to initiate recovery proceedings under Sections 73 and 74. No costs.

Setting aside order passed under Section 74 of the TNGST Act, 2017 - Remand for de novo consideration on merits - Blocking of electronic credit ledger under Rule 86-A(1) of the TNGST Rules, 2017 - Genuineness of supplier and entitlement to input tax credit - Payment of disputed tax and interim appropriation

Setting aside order passed under Section 74 of the TNGST Act, 2017 - Remand for de novo consideration on merits - Genuineness of supplier and entitlement to input tax credit - Blocking of electronic credit ledger under Rule 86-A(1) of the TNGST Rules, 2017 - Impugned order dated 10.02.2023 set aside and matter remitted to respondent for fresh decision on merits. - HELD THAT: - The Court found that the petitioner produced tax invoices and collateral evidence indicating that the supplier had supplied goods and that the supplier's registration was valid on the date of supply; these factual and legal contentions require detailed consideration by the Authority. In view of these materials and the fact that the petitioner has responded to notices and paid the disputed tax, the High Court held that the impugned order could not be sustained without fresh examination. Consequently the impugned order is set aside and the matter is remitted to the respondent to pass fresh orders on merits and in accordance with law within eight weeks from receipt of the copy of this order. The observations as to limitation and availability of appellate remedy were noted in argument but the Court proceeded to order de novo consideration rather than decide the challenge on limitation or alternate remedy grounds. [Paras 10, 11]

Impugned order quashed; matter remitted for fresh adjudication on merits within eight weeks.

Payment of disputed tax and interim appropriation - Remand for de novo consideration on merits - Amount paid by the petitioner is to remain subject to final appropriation after disposal of the de novo proceedings. - HELD THAT: - The Court recorded that the petitioner has paid the disputed tax as confirmed in the impugned order and directed that the amount so paid shall be subject to final appropriation in accordance with the outcome of the fresh proceedings to be conducted by the Authority pursuant to this order. This preserves the petitioner's payment while ensuring final disposition is governed by the remanded adjudication. [Paras 11]

Amount paid will be held subject to final appropriation after disposal of the de novo proceedings.

Final Conclusion: The writ petition is allowed to the extent that the impugned order dated 10.02.2023 is quashed and the matter is remitted for fresh adjudication on merits within eight weeks; the amount already paid by the petitioner shall remain subject to final appropriation pursuant to the de novo proceedings. No costs.

Input tax credit - blocked credits under Section 17(5)(c) - blocked credits under Section 17(5)(d) - works contract services and construction of immovable property - plant and machinery - permanency/assimilation test - capitalisation and accounting treatment of professional fees

Input tax credit - works contract services and construction of immovable property - plant and machinery - permanency/assimilation test - blocked credits under Section 17(5)(c) - ITC on supply and installation of Central Air Conditioning Plant - HELD THAT: - The advance ruling that ITC on the central air-conditioning plant is blocked was upheld. The authority examined the nature and installation of a central AC system and relied on administrative guidance and precedent holding that such systems, once assembled and fixed, become part of the building and constitute immovable property. Consequently, where the supply comprises supply and erection (works contract), it falls within the prohibition in Section 17(5)(c) and ceases to be plant and machinery for purposes of ITC. [Paras 15]

ITC on Central Air Conditioning Plant is blocked under Section 17(5)(c).

Input tax credit - works contract services and construction of immovable property - plant and machinery - permanency/assimilation test - blocked credits under Section 17(5)(c) - ITC on supply and installation of Lift/Elevator - HELD THAT: - The supply and installation agreement for the lift was held to constitute a works contract. The authority relied on case law recognising that lifts, when erected and installed as part of a building, become integral to the immovable property. Once so assimilated, the item ceases to qualify as plant and machinery for ITC purposes and falls within the exclusion in Section 17(5)(c). [Paras 16]

ITC on Lift/Elevator is blocked under Section 17(5)(c).

Input tax credit - works contract services and construction of immovable property - blocked credits under Section 17(5)(c) - ITC on electrical fittings (cables, switches, NCB and other electrical consumables) installed in the building - HELD THAT: - The authority found that the supply of electrical fittings involves installation and becomes concealed within or fixed to the building structure. That installation renders the fittings part of the immovable property; the supply thus falls within works contract services for construction of immovable property and credit is excluded by Section 17(5)(c). The appellant's reservation of ITC only for fittings not used in civil construction did not alter this conclusion. [Paras 17]

ITC on the electrical fittings as installed is blocked under Section 17(5)(c).

Input tax credit - plant and machinery - permanency/assimilation test - ITC on Roof Solar Plant - HELD THAT: - On review of the installation details and proposal, the authority concluded that the roof solar plant is mounted on foundations using nuts and bolts with no permanent welding, is not permanently fastened to the building and retains the character of plant and machinery. It was capitalised in accounts and intended for captive consumption in supplying taxable services. Therefore it does not qualify as immovable property and is not hit by the blocked credit provisions. [Paras 18]

ITC on Roof Solar Plant is admissible.

Input tax credit - works contract services and construction of immovable property - plant and machinery - permanency/assimilation test - blocked credits under Section 17(5)(c) - ITC on supply and installation of Fire Safety Extinguishers - HELD THAT: - The authority found the fire safety installations to be an integral and mandatory part of the building under the Gujarat Fire Prevention and Life Safety Measures Act, 2013 and concluded there is an intention for permanent installation. Relying on precedent that items permanently fixed to a structure lose their movable character, the supply and installation were held to result in immovable property and thereby fall within the exclusion in Section 17(5)(c). [Paras 19]

ITC on Fire Safety Extinguishers is blocked under Section 17(5)(c).

Input tax credit - capitalisation and accounting treatment of professional fees - blocked credits under Section 17(5)(d) - ITC on Architect service fees and Interior Designing fees - HELD THAT: - The authority observed that services of architects and interior designers relate to construction of the appellant's immovable property. Accounting Standard AS 10 identifies professional fees as directly attributable costs that are ordinarily capitalised as part of property, plant and equipment. Accordingly, the mere booking to profit and loss account does not alter the legal character of these services. As services received for construction of immovable property, they are excluded from ITC under Section 17(5)(d). [Paras 20]

ITC on Architect and Interior Designer fees is blocked under Section 17(5)(d).

Final Conclusion: The appeal is dismissed and the Advance Ruling is upheld except in respect of the roof solar plant: ITC is allowed for the roof solar plant, while ITC is disallowed under Section 17(5)(c) for central air-conditioning plant, lift, electrical fittings and fire safety extinguishers, and disallowed under Section 17(5)(d) for architect and interior designer fees.

Supply in exchange for consideration including monetary value of an act - goods disposed of by way of gift (restriction of ITC) - permanent transfer or disposal of business assets (Schedule I, Sl. No.1) - blocked credit under Section 17(5)(h) - consideration as inclusive definition under Section 2(31) (monetary value of act or forbearance) - course or furtherance of business / promotional inducement - determination of value under Section 15 read with Rule 30

Goods disposed of by way of gift (restriction of ITC) - blocked credit under Section 17(5)(h) - course or furtherance of business / promotional inducement - Whether issuance of gold coins and white goods to dealers under the incentive schemes is a 'gift' attracting disallowance of ITC under Section 17(5)(h). - HELD THAT: - The Authority found that the incentive goods are distributed pursuant to a points based promotional scheme which induces dealers to attain specified sales thresholds. The transfer is not a voluntary gratuitous transfer unconnected with any reciprocal expectation; rather it is made in return for the dealer's act of achieving sales targets. The monitory value of that act constitutes consideration for the transfer and the supplies are in the course or furtherance of business. Therefore the transfers cannot be characterised as 'gifts' so as to attract the ITC blockage under Section 17(5)(h). [Paras 7, 8]

The transfers are not 'gifts' and ITC on procurement of the incentive goods is not disallowed under Section 17(5)(h).

Permanent transfer or disposal of business assets (Schedule I, Sl. No.1) - business assets as items of balance sheet - Whether issuance of gold coins and white goods to dealers amounts to a permanent transfer or disposal of business assets (where ITC has been availed) attracting deemed supply under Schedule I Sl. No.1. - HELD THAT: - The Authority examined the scope of Schedule I Sl. No.1 and the concept of 'business assets'. While Schedule I targets permanent transfers of items forming part of the balance sheet, the promotional transfers in the present scheme arise as incentives tied to sales performance and are not characterised as a permanent disposal of capital or balance sheet assets. Moreover, treating all such promotional issues as business asset disposals would render Section 7 redundant. On the facts, the transfers are taxable as supplies for consideration and do not fall within the Schedule I entry as permanent transfer of business assets. [Paras 7, 8]

The transactions are not 'permanent transfer or disposal of business assets' under Schedule I Sl. No.1 and are not taxable as such; they are taxable as supplies (on the basis of inducement/consideration).

Supply in exchange for consideration including monetary value of an act - consideration as inclusive definition under Section 2(31) (monetary value of act or forbearance) - determination of value under Section 15 read with Rule 30 - Whether issuance of gold coins and white goods to dealers under the scheme is a supply under Section 7 of the CGST Act, 2017. - HELD THAT: - The Authority applied the statutory definition of 'consideration' which includes the monetary value of any act done in respect of, in response to, or for the inducement of a supply. The incentive goods are supplied in return for the dealer attaining specified sales thresholds; that act is the inducement and gives rise to a reciprocal relationship constituting consideration. Consequently the transfers qualify as supplies in the course or furtherance of business. The value of such supplies is to be determined under Section 15 read with Rule 30 of the CGST Rules. [Paras 7, 8]

Yes; the transfers constitute taxable supplies under Section 7, the dealers' act of achieving the stipulated targets amounting to consideration.

Final Conclusion: The Authority ruled that the issuance of gold coins and white goods to dealers under the promotional schemes constitutes taxable supplies in return for the dealers' act of achieving stipulated sales targets (consideration), is not a 'gift' attracting disallowance of ITC under Section 17(5)(h), and does not amount to a 'permanent transfer or disposal of business assets' under Schedule I Sl. No.1.

Time of supply as date on which consideration is received - issue of supplementary invoice or debit note within thirty days - such supplementary invoice or debit note deemed to be issued in respect of an outward supply - price revision pursuant to a contract entered into prior to the appointed day (Section 142(2)(a) of the CGST Act)

Time of supply as date on which consideration is received - price revision pursuant to a contract entered into prior to the appointed day (Section 142(2)(a) of the CGST Act) - Time of supply in respect of the differential payments due to upward revision of rates for work executed from September 2010 to June 2017. - HELD THAT: - The Authority held that the amounts received by the applicant on account of upward revision of price pursuant to a contract entered into prior to the appointed day fall within clause (a) of sub section (2) of Section 142 of the CGST Act. Applying the stated provision, the time of supply for such consideration is the date on which the consideration/payment is received. The Authority therefore treated the differential payments arising from the post appointed day price revision for works executed during the period from September 2010 to June 2017 as having their time of supply on receipt of payment. [Paras 7, 8]

The time of supply for the differential amounts is the date on which such consideration/payment is received.

Issue of supplementary invoice or debit note within thirty days - such supplementary invoice or debit note deemed to be issued in respect of an outward supply - price revision pursuant to a contract entered into prior to the appointed day (Section 142(2)(a) of the CGST Act) - Form and timing of tax invoice to be issued for the differential amount arising from the upward price revision. - HELD THAT: - Relying on the mandate of sub section (2) of Section 142, the Authority directed that the registered person who had provided the services shall issue to the recipient a supplementary invoice or debit note containing the prescribed particulars within thirty days of such price revision. Further, for the purposes of the Act, such supplementary invoice or debit note shall be deemed to have been issued in respect of an outward supply made under the CGST/SGST Acts. The Authority therefore clarified both the document to be issued and the statutory consequence of issuance. [Paras 7, 8]

The applicant shall issue a supplementary invoice or debit note within thirty days of the price revision, which shall be deemed to be issued in respect of an outward supply under the CGST/SGST Acts.

Final Conclusion: The Authority ruled that amounts received pursuant to upward revision of rates under a contract entered into prior to the appointed day (covering work from September 2010 to June 2017) have their time of supply on receipt of payment, and the applicant must issue a supplementary invoice or debit note within thirty days of the price revision, such document being deemed an outward supply under the CGST/SGST Acts.

Definition of "Government Entity" for GST rate notifications - Applicability of concessional GST rate to works contract executed for a Government Entity - Advance ruling procedure - requirement of production of material evidence to enable determination - Admission and disposal of application under Section 98(4) - dismissal for non production of requisite documents

Definition of "Government Entity" for GST rate notifications - Applicability of concessional GST rate to works contract executed for a Government Entity - Advance ruling procedure - requirement of production of material evidence to enable determination - Application for advance ruling dismissed because the applicant failed to produce the documents necessary to determine whether CGEWHO qualifies as a "Government Entity" and thereby the applicability of the concessional 12% tax rate to the works contract. - HELD THAT: - The Authority identified that deciding the questions posed required specific material: the notification constituting CGEWHO, evidence of the Central Government's percentage participation/control, and communications or directions from the Central Government relevant to the contracts. The applicant was asked to furnish these documents and was given a final hearing notice. The applicant did not file the requested information. In absence of these essential documents the Authority held it was not in a position to form a view on whether CGEWHO falls within the definition of "Government Entity" under the notifications relied upon or on the consequent applicability of the concessional tax rate to the contracts. Accordingly, rather than adjudicating the substantive questions on merits, the Authority dismissed the application for want of the required material necessary for a determination.

Application dismissed for failure to produce requisite documents; substantive questions left undecided.

Final Conclusion: The Advance Ruling Authority dismissed the application because the applicant did not furnish the documents necessary for the Authority to determine whether CGEWHO is a "Government Entity" and whether the concessional 12% GST rate applies; the substantive questions were not decided.

Renovation and refurbishment - revenue expenditure - capital expenditure - substantial question of law - mutatis mutandis application of precedent

Renovation and refurbishment - revenue expenditure - capital expenditure - Whether the expenditure incurred on renovation, refurbishment and repairs constituted capital expenditure or was allowable as revenue expenditure - HELD THAT: - The Court applied the view adopted in the lead matter (ITA No.1398/2006) to the present appeal. Relying on that determination, the Court held that the amounts incurred by the assessee for renovation, refurbishment and repairs are in the nature of revenue expenditure. Consequently, the expenditure so incurred is deductible and not to be treated as capital outlay. The Tribunal's conclusion to the contrary was set aside insofar as AY 1996-97, and the assessee was permitted to claim the specified deduction. [Paras 8, 9]

The expenditure on renovation, refurbishment and repairs is revenue expenditure; the assessee is entitled to claim deduction of the amount sustained by the Court.

Final Conclusion: The substantial question of law is answered in favour of the assessee; the renovation, refurbishment and repair expenses for AY 1996-97 are revenue expenditure and deductible, and the appeal is disposed of accordingly.

Revenue expenditure admissible under Section 37 - renovation, refurbishment and repair expenses - professional/consultancy fees for interior de cor as revenue expenditure - remand to Assessing Officer for examination of expenses raised for the first time before Tribunal

Revenue expenditure admissible under Section 37 - renovation, refurbishment and repair expenses - remand to Assessing Officer for examination of expenses raised for the first time before Tribunal - Treatability of expenses on renovation, refurbishment and repairs as revenue expenditure for AY 1995-96 - HELD THAT: - The court applied the reasoning adopted in the lead matter (ITA No.1398/2006) and held that the expenditure incurred on renovation, refurbishment and repairs is in the nature of revenue expenditure and deductible. The assessment officer's disallowance of Rs.2,41,99,144 was set aside and the appellant is entitled to claim that amount as a deduction. However, amounts which had been initially capitalised in the books but were sought to be treated as revenue expenditure for the first time before the Tribunal (notably the sum forming part of Rs.10,44,24,000) were not finally adjudicated on merits; those items were remanded to the Assessing Officer for examination of their character and nature in light of the principles articulated in the lead judgment. The court therefore answered the substantial question in favour of the assessee while preserving the Assessing Officer's jurisdiction to determine the nature of items raised as additional grounds before the Tribunal. [Paras 9, 10]

The appellant is entitled to deduction of the renovation, refurbishment and repair expenses of Rs.2,41,99,144, while the items that were capitalised and first claimed as revenue before the Tribunal are remanded to the AO for fresh examination.

Professional/consultancy fees for interior de cor as revenue expenditure - revenue expenditure admissible under Section 37 - Characterisation of fees paid to Gherzi Eastern Ltd. for consultancy and supervision of interior de cor - HELD THAT: - Following the approach in the lead matter, the court disagreed with the Revenue's view and held that the fee of Rs.2,85,170 paid to the interior architect was in the nature of revenue expenditure and therefore deductible. The Tribunal and lower authorities' disallowance of this professional fee was reversed and the appellant was held entitled to the deduction. [Paras 6, 7, 11]

Payment of professional fees to Gherzi Eastern Ltd. of Rs.2,85,170 is revenue expenditure and allowable to the assessee.

Final Conclusion: Appeal allowed in part: deductions of Rs.2,41,99,144 for renovation/repairs and Rs.2,85,170 for consultancy fees are permitted; amounts which were capitalised and first sought to be treated as revenue expenditure before the Tribunal are remitted to the Assessing Officer for fresh examination in accordance with the principles in the lead judgment.

Revenue expenditure - capital expenditure - renovation and refurbishment - repairs and repairs versus capitalisation - professional fees for consultancy and supervision - remand to Assessing Officer for characterisation of expenditure - mutatis mutandis application of a lead judgment

Revenue expenditure - renovation and refurbishment - repairs and repairs versus capitalisation - remand to Assessing Officer for characterisation of expenditure - Whether the expenditure incurred on renovation, refurbishment and repairs is revenue expenditure admissible as deduction. - HELD THAT: - The Court applied the reasoning in the lead matter (ITA No.1398/2006) and held that the expenditure claimed as "renovation, refurbishment and repairs" qualifies as revenue expenditure and is allowable as a deduction. However, amounts which were initially capitalised in the books and were claimed as revenue expenditure for the first time before the Tribunal (forming part of additional grounds) were not finally adjudicated on merits; those amounts are remanded to the Assessing Officer for examination of their character and nature in accordance with the principles set out in the lead judgment. The Court therefore allowed the claim in part while directing a limited remand for verification of the specific items originally capitalised and newly advanced before the Tribunal. [Paras 8, 9, 10]

Expenditure on renovation, refurbishment and repairs is held to be revenue expenditure and deductible; amounts initially capitalised but sought to be treated as revenue expenditure for the first time before the Tribunal are remanded to the AO for fresh examination.

Professional fees for consultancy and supervision - capital expenditure - revenue expenditure - mutatis mutandis application of a lead judgment - Whether the payment of fees to Gherzi Eastern Ltd. for consultancy and supervision of interior de cor (paid under "renovation and refurbishment") is capital expenditure. - HELD THAT: - Relying on the reasoning adopted in the lead decision, the Court concluded that the fee paid to the consultant (Gherzi Eastern Ltd.) is not capital expenditure and is allowable as revenue expenditure. The Tribunal's disallowance of the professional fee was set aside and the deduction allowed. [Paras 9, 11]

Payment of fees to the interior architect/consultant is held to be revenue expenditure and deductible; the Tribunal's disallowance in respect of that fee is set aside.

Final Conclusion: The appeal is allowed in respect of AY 1994-95: deduction is permitted for the renovation, refurbishment and repair expenditure and for the professional fees paid to the consultant; amounts that were originally capitalised but raised as additional grounds before the Tribunal are remanded to the Assessing Officer for fresh examination in accordance with the lead judgment.

Revenue expenditure - capital expenditure - renovation and refurbishment - professional fees for consultancy and supervision - remand to assessing officer for examination of nature of expenses

Revenue expenditure - renovation and refurbishment - Deductibility as revenue expenditure of amounts incurred on renovation, refurbishment and repairs. - HELD THAT: - Relying on the reasoning adopted in the lead matter (ITA No.1398/2006), the Court held that the amounts disallowed by the Tribunal which related to renovation, refurbishment and repairs are in the nature of revenue expenditure and are deductible. The Court specifically restored allowance of the disallowed sum earlier sustained by the AO/Tribunal in respect of renovation, refurbishment and repairs, subject to the limited caveat in relation to amounts claimed for the first time before the Tribunal (see remand). [Paras 9, 10]

The deductions in respect of renovation, refurbishment and repairs are allowed as revenue expenditure in favour of the assessee.

Professional fees for consultancy and supervision - capital expenditure - Whether fee paid to an interior architect (Gherzi Eastern Ltd.) for consultancy and supervision of interior de cor is capital expenditure or deductible as revenue expenditure. - HELD THAT: - Following the approach in the lead judgment, the Court answered this question in favour of the assessee and against the revenue, holding that the fee paid to GEL (Rs.2,81,525/- in this assessment year) is deductible as revenue expenditure. The Tribunal's and revenue authorities' disallowance of this fee was set aside insofar as this assessment year is concerned. [Paras 9, 11]

The professional fee to GEL is to be treated as revenue expenditure and is allowed as a deduction for the assessee.

Remand to assessing officer for examination of nature of expenses - Treatment of amounts initially capitalised and claimed as revenue expenditure for the first time before the Tribunal. - HELD THAT: - The Court distinguished between expenditures already considered and those which were initially capitalised and raised as additional grounds for the first time before the Tribunal. The latter category (specifically the amount earlier capitalised and now claimed as revenue expenditure) was not finally adjudicated on merits by the Court but was remanded to the Assessing Officer for examination of character and nature of such expenses in accordance with the principles set out in the lead judgment (ITA No.1398/2006). [Paras 9]

The amount initially capitalised and claimed as revenue expenditure for the first time before the Tribunal is remanded to the AO for fresh examination on merits.

Final Conclusion: The appeal is allowed: the Court applied the reasoning of the lead matter to permit deduction of the renovation, refurbishment and repair expenditures and the professional fee paid to GEL for AY 1993-94, while remanding for AO examination the expenses that were initially capitalised and first raised before the Tribunal.

Revenue expenditure - capital expenditure - renovation and repair - deduction under Section 37 - professional/technical fees for consultancy and supervision - treatment of refurbishment expenditure on existing hotel

Revenue expenditure - renovation and repair - professional/technical fees for consultancy and supervision - deduction under Section 37 - Whether the fees of Rs.11,00,000 paid to Gherzi Eastern Ltd. for consultancy and supervision of interior de cor of the existing hotel are revenue expenditure admissible as a deduction. - HELD THAT: - The High Court applied the reasoning adopted in the lead matter (ITA No.1398/2006) to the present appeal concerning AY 1991-92. The Assessing Officer disallowed the sum as capital in nature, a view upheld by the Commissioner (Appeals) and the Tribunal. Having regard to the decision in the lead matter, the court held that the expenditure incurred for consultancy and supervision in relation to renovation/refurbishment of the existing hotel is in the nature of revenue expenditure and therefore deductible. The court directed that the appellant/assessee is entitled to claim the deduction of the said fees, treating the payment as revenue expenditure rather than capital outlay. [Paras 7, 8, 9]

The Rs.11,00,000 paid to Gherzi Eastern Ltd. is revenue expenditure and allowable as a deduction.

Final Conclusion: Appeal allowed; substantial questions answered in favour of the assessee and against the revenue, permitting deduction of Rs.11,00,000 as revenue expenditure for AY 1991-92.

Disallowance under section 14A read with Rule 8D - Exempt income as precondition for section 14A - Prospective operation of statutory amendment - Retrospective application of a 'for removal of doubt' amendment

Prospective operation of statutory amendment - Retrospective application of a 'for removal of doubt' amendment - Whether the explanation inserted into section 14A by the Finance Act, 2022 applies to the assessment year 2013-14. - HELD THAT: - The Tribunal, following the reasoning of the Hon'ble Delhi High Court in Era Infrastructure (India) Ltd., held that an amendment framed 'for removal of doubt' cannot be presumed retrospective where it alters the law as it earlier stood. Applying the principle that a clarificatory or non-obstante amendment which changes existing legal position is not to be given retrospective effect, the Tribunal concluded that the explanation to section 14A introduced by the Finance Act, 2022 operates prospectively and is not applicable to the assessment year under consideration. [Paras 5, 6]

Amendment to section 14A by Finance Act, 2022 is prospective and does not apply to assessment year 2013-14.

Disallowance under section 14A read with Rule 8D - Exempt income as precondition for section 14A - Whether any disallowance under section 14A read with Rule 8D can be made where the assessee did not earn any exempt income during the year. - HELD THAT: - Relying on Cheminvest Ltd. and treating the position that section 14A and Rule 8D operate only in relation to exempt income, the Tribunal observed that where there is no exempt income (no dividend or similar income) in the relevant previous year, no disallowance under section 14A read with Rule 8D can be made. Having found as an undisputed fact that the assessee earned no exempt income for the year, the Tribunal answered the issue in favour of the assessee and rejected Revenue's contention that disallowance is warranted despite absence of exempt income. [Paras 7]

No disallowance under section 14A read with Rule 8D can be made in absence of any exempt income for the year.

Final Conclusion: Revenue's appeal dismissed: the 2022 amendment to section 14A is prospective and, in any event, no disallowance under section 14A read with Rule 8D could be made for assessment year 2013-14 since the assessee earned no exempt income.

Interest under s.201(1A) paid on delayed TDS not assuming character of business expenditure - Employee stock option compensation as business expenditure under section 37(1) - Broken period interest on loans as deductible business expenditure - CIT(A)'s jurisdiction to remand issues under section 251

Interest under s.201(1A) paid on delayed TDS not assuming character of business expenditure - Interest paid on delayed payment of TDS to Central Government is not allowable as business expenditure. - HELD THAT: - The assessee treated interest for delayed payment of TDS as a business deduction but the AO disallowed the claim and the CIT(A) confirmed. The Tribunal placed reliance on the decision of the High Court of Madras holding that interest paid under section 201(1A) does not assume the character of business expenditure and cannot be regarded as compensatory payment. The assessee did not dispute that reliance. Having accepted that precedent and the statutory character of the payment, the Tribunal held the deduction was not allowable and affirmed the CIT(A)'s conclusion. [Paras 5]

Assessee's ground challenging denial of deduction for interest on delayed TDS is dismissed.

CIT(A)'s jurisdiction to remand issues under section 251 - Whether the CIT(A) could remit the question of allowability of penalty paid to RBI back to the AO or was required to decide the issue. - HELD THAT: - The assessee claimed a penalty paid to the RBI as business expenditure; the AO disallowed it. The CIT(A) remanded the matter to the AO to examine whether the payment related to a first default and to allow penal interest if so. The Tribunal observed that the statutory scheme does not confer jurisdiction on the CIT(A) to remit an appeal to the AO under section 251; the CIT(A) must dispose of the appeal by confirming, reducing, enhancing or annulling the assessment. As the CIT(A) did not decide the issue on merits, the Tribunal considered the remand impermissible and directed that the matter be remitted to the CIT(A) for fresh adjudication in accordance with law. [Paras 7]

Assessee's ground regarding penalty to RBI is allowed for statistical purpose by remanding the issue to the CIT(A) for fresh adjudication.

Employee stock option compensation as business expenditure under section 37(1) - Discount on issue of equity shares under ESOP held to be allowable as business expenditure. - HELD THAT: - The AO disallowed the ESOP discount for want of documentary evidence and by following prior years' assessments pending before the High Court. The CIT(A) relied on precedents including the Special Bench of ITAT in Biocon Ltd. and the Madras High Court in SSI Capital Ltd. and held the ESOP expense to be allowable under section 37(1). The Revenue did not place any conflicting precedent before the Tribunal. On consideration of the authorities relied upon by the CIT(A) and the assessee, the Tribunal found no infirmity in the appellate finding and dismissed the Revenue's grounds challenging the allowability of the ESOP expense. [Paras 10]

Revenue's grounds contesting allowability of ESOP expense are dismissed.

Broken period interest on loans as deductible business expenditure - Broken period interest paid on loans (HTM) is allowable as business expenditure. - HELD THAT: - The AO treated broken period interest (interest for the interval between disbursal and commencement of EMIs) as not allowable and disallowed the claim. The CIT(A) followed the Pune Bench's decision in Prathamik Shikshan Sahara Bank Ltd., which in turn relied on Bombay High Court precedents in HDFC Bank Ltd. and American Express, and allowed the deduction. The Tribunal examined the authorities placed on record by the assessee and found the reasoning of the CIT(A) to be justified, accordingly dismissing the Revenue's challenge. [Paras 12]

Revenue's grounds disputing allowability of broken period interest are dismissed.

Final Conclusion: Appeal of the assessee is partly allowed for statistical purpose (penalty to RBI remanded to CIT(A)); appeals of the Revenue for A.Y. 2017-18 and 2018-19 are dismissed, with the CIT(A)'s findings on ESOP expense and broken period interest upheld and the denial of deduction for interest on delayed TDS affirmed.

Penalty under section 271(1)(c) - estimated gross profit addition - genuineness of purchases - proof of transactions by bank payments and delivery challans - penalty requires concealment or furnishing inaccurate particulars of income - distinction between assessment and penalty proceedings

Penalty under section 271(1)(c) - estimated gross profit addition - genuineness of purchases - proof of transactions by bank payments and delivery challans - penalty requires concealment or furnishing inaccurate particulars of income - distinction between assessment and penalty proceedings - Validity of levy of penalty under section 271(1)(c) on an estimated gross profit of 5% of alleged unproved purchases for the assessment years 2004-05, 2005-06, 2007-08, 2008-09 and 2009-10. - HELD THAT: - The Tribunal found that the assessee had produced detailed documentary evidence during penalty proceedings - particulars of purchases and sales, opening and closing stock statements, delivery challans and purchase bills, ledger confirmations from parties, bank statements and banker certificates evidencing payments, and quantitative reconciliation of purchases with corresponding sales. These materials were neither rebutted nor found to be incorrect, the trading results and quantitative details remained undisturbed, and there was no finding that transactions were denied by the parties or conducted outside books. The addition in quantum had been made by estimate of gross profit; however, an estimated addition of suppressed profit arising from such purchases, without independent proof of concealment or furnishing of inaccurate particulars, does not sustain a penalty under section 271(1)(c). The Tribunal rejected reliance on authorities cited by the department as not being factually or legally on point. Applying the principle that penalty proceedings are separate and the assessee is entitled to explain using the same material, the Tribunal held that mere estimation of profit on accepted quantitative purchases cannot by itself justify levy of penalty. [Paras 8, 9]

Penalty levied under section 271(1)(c) on estimated gross profit of 5% of the disputed purchases is deleted for the stated assessment years.

Final Conclusion: The appeals are allowed and the penalties imposed under section 271(1)(c) for AYs 2004-05, 2005-06, 2007-08, 2008-09 and 2009-10, being based on an estimated gross profit on purchases which were substantiated by un-rebutted records, are set aside.

Revenue expenditure - capital expenditure - advantage of enduring benefit - aim and object test - business expediency test - deduction under Section 37 - treatment of consultancy fees linked to a project - parity principle (treatment in books not decisive) - recharacterisation as mixed question of fact and law - remand to Assessing Officer

Revenue expenditure - capital expenditure - advantage of enduring benefit - aim and object test - business expediency test - deduction under Section 37 - Whether expenditure on renovation, refurbishment and repairs incurred by the assessee in AY 1992-93 is revenue expenditure admissible under Section 37. - HELD THAT: - The Court held that the Tribunal misapplied the legal tests and unduly relied on aggregate quantum of expenditure, the director's report and the fact that parts had been capitalised in the books. Applying established principles - whether an expense creates or brings into existence an asset or confers an advantage of an enduring nature from a commercial/business point of view and the aim and object of the expenditure - the expenses in question were incurred in an ongoing hospitality business to preserve, maintain or restore existing assets and to enable the profit-making structure to work more efficiently. No statutory authority found acquisition of a new asset; the enhancement in room tariffs or occupancy did not convert the expenses into capital where the fixed capital remained intact. The Court therefore sustained the CIT(A)'s view that specified amounts spent on renovation, refurbishment and repairs are revenue in nature and allowable under Section 37, overruling the Tribunal's contrary conclusion. [Paras 28, 29, 30, 42, 44]

Sustained in favour of the assessee - specified renovation, refurbishment and repair expenditures are revenue expenditure and admissible.

Treatment of consultancy fees linked to a project - revenue expenditure - capital expenditure - parity principle (treatment in books not decisive) - Whether fees paid to the consultant GEL for conceptualising, planning and supervising the renovation project are capital or revenue in AY 1992-93. - HELD THAT: - The Tribunal treated GEL's fees as capital because of their linkage to the overall project which it considered capital. The Court held that since the underlying renovation, refurbishment and repairs have been characterised as revenue expenditure, fees paid to GEL for planning and supervision of those works are inextricably linked and must likewise be treated as revenue expenditure. Further, the Court reiterated that accounting treatment or past capitalisation by the assessee is not determinative; the true legal character is to be ascertained by application of the statutory tests. [Paras 31, 32, 33, 42, 45]

Answered in favour of the assessee - GEL fees are revenue expenditure and allowable.

Recharacterisation as mixed question of fact and law - remand to Assessing Officer - parity principle (treatment in books not decisive) - Whether amounts earlier capitalised in the books (claimed for the first time before the Tribunal as revenue expenditure) should be treated as revenue expenditure. - HELD THAT: - The Court found that the claim to recharacterise previously capitalised expenditure (quantified in the record for AY 1992-93) raises a mixed question of fact and law which requires fresh examination by the Assessing Officer in light of the legal principles governing capital/revenue classification. The assessee had been permitted to plead these additional grounds before the Tribunal; the Court agreed the matter was not finally amenable to the Tribunal's summary determination and remanded the issue to the AO for detailed scrutiny and decision on merits. [Paras 35, 36, 37, 43]

Remanded to the Assessing Officer for fresh examination of the character and nature of the previously capitalised expenditures.

Final Conclusion: The appeal is allowed in part for AY 1992-93: the Court holds that specified sums spent on renovation, refurbishment and repairs, and the consultancy fees paid to GEL, are revenue expenditure and admissible; the claim to recharacterise certain amounts earlier capitalised is remanded to the Assessing Officer for fresh examination. The Tribunal's contrary findings are set aside to the extent indicated.

Violation of principles of natural justice - writ jurisdiction under Article 226 - alternate efficacious remedy - relegation to statutory remedy under Section 253 - Faceless Appeal Scheme - stay of demand

Violation of principles of natural justice - Faceless Appeal Scheme - Whether the impugned NFAC order suffers from a breach of principles of natural justice requiring interference by the High Court under Article 226. - HELD THAT: - The Court found that the petitioner was issued successive notices under the Faceless Appeal Scheme, was afforded time to upload written submissions and documents (initially till 31.07.2023, extended to 18.08.2023), and had itself sought further adjournments but failed to file the materials within the extended timeline. The authority proceeded to decide the appeal on merits after the final deadline; the grievance that no opportunity was afforded is thus unsustainable. The Court applied the exception principles in M/S Radha Krishan Industries regarding when a writ may be entertained despite an alternate remedy and concluded that the facts do not disclose a denial of hearing or novel infringement of fundamental rights warranting exercise of writ jurisdiction. [Paras 8, 9]

No violation of the principles of natural justice is made out and the impugned order will not be set aside on that ground.

Writ jurisdiction under Article 226 - alternate efficacious remedy - relegation to statutory remedy under Section 253 - stay of demand - Whether the writ petition should be entertained despite existence of the statutory appellate remedy and what directions, if any, should be given. - HELD THAT: - Having held that no breach of natural justice occurred and noting that the Income Tax Appellate Tribunal under the statutory second appeal mechanism can consider all grounds and evidence not placed before the assessing or first appellate authority, the Court exercised its discretion to decline writ relief and directed the petitioner to pursue the statutory remedy. The petitioner was given a time-frame to file the appeal and permitted to raise all available grounds and place all evidence before the Tribunal. The Court additionally directed prompt consideration of any stay application by the first appellate authority and provided a procedural timeline for decision where the petitioner deposits a portion of the assessed tax. [Paras 9, 10]

Writ petition declined; petitioner relegated to file a second appeal under Section 253 before the ITAT within one month, with directions for expeditious consideration and specified procedure for stay applications.

Final Conclusion: Writ petition dismissed: the impugned NFAC order is not vitiated by denial of natural justice and the petitioner is directed to approach the Income Tax Appellate Tribunal under Section 253 within one month; the Tribunal and the appellate authority are directed to consider the appeal, evidence and any stay application expeditiously in accordance with law, with the prescribed procedure for interim relief where deposit is made.

Business promotion expenses - allowability under section 37 of the Act - disallowance on an adhoc basis - requirement of supporting vouchers for expenditure - reliance on preceding assessment year for factual consistency

Business promotion expenses - allowability under section 37 of the Act - reliance on preceding assessment year for factual consistency - disallowance on an adhoc basis - Deletion of adhoc disallowance of business promotion expenses was justified and upheld - HELD THAT: - The Tribunal affirmed the reasoning of the Commissioner (Appeals) that the nature of the assessee's multi level FMCG/distribution business necessitates incentives and gifts to agents/distributors and that such expenditures fall within business expediency. The AO made a blanket 25% disallowance without identifying specific unsupported items or parties, and failed to bring material showing that the expenditures were not incurred for business purposes. The CIT(A)'s reliance on the assessee's audited books, comparative charts of turnover and expenses, and the findings in A.Y. 2013 14 showing consistent treatment and business impact (increase in turnover and net profit) justified deletion of the adhoc addition; adhoc disallowance cannot be sustained in absence of specific contrary material. [Paras 7, 8, 9]

Addition made by AO on account of business promotion expenses deleted; ground dismissed.

Requirement of supporting vouchers for expenditure - disallowance on an adhoc basis - Disallowances made for packing and office expenses due to alleged lack of vouchers were unjustified and deleted - HELD THAT: - The Tribunal agreed with the CIT(A) that the AO did not specify the particular items or amounts which were unsupported and made adhoc additions. The assessee produced audited books and vouchers; in the nature of the business certain petty expenses may be supported by self made vouchers and cash payments. Absent specific identification of unsupported entries by the AO, an adhoc disallowance is not warranted. The CIT(A)'s deletion of such adhoc additions was reasonable and required no interference. [Paras 10, 11]

Additions for packing and office expenses deleted; grounds decided in favour of the assessee.

Final Conclusion: The Revenue's appeal is dismissed; the CIT(A)'s deletions of the additions relating to business promotion, packing and office expenses are upheld.

Addition as unexplained income/expenditure under section 69C - bogus purchases/accommodation entries - validity of reassessment notice founded on reasons to believe under section 148/147 - denial of cross-examination and admissibility of evidence collected/placed on record

Addition as unexplained income/expenditure under section 69C - bogus purchases/accommodation entries - Addition of Rs. 21,89,190 on account of alleged bogus purchases treated as unexplained expenditure under section 69C was sustained. - HELD THAT: - The Tribunal noted that the Assessing Officer, supported by information from the investigating wing and statements of persons associated with the supplier companies, recorded that the assessee had received the amount from two companies controlled by the same operator and that those companies were used to provide accommodation entries. The AO carried out inquiries including issuing notices, field enquiry reports showing the supplier addresses were not functioning commercial entities, and placed statements on record. The CIT(A) considered the AO's reasoning, the documentary material and the statements, held there was no merit in the assessee's explanations and confirmed the AO's conclusion that the transactions were not genuine. On appeal, the Tribunal found no reason to interfere with the concurrent findings of fact recorded by the authorities below and therefore upheld the addition under section 69C treating the impugned receipts as accommodation entries/bogus purchases. [Paras 6, 7, 8]

Addition of Rs. 21,89,190 as unexplained income/expenditure under section 69C confirmed and appeal dismissed on this ground.

Commission as unexplained expenditure - accommodation entries/bogus purchases - Addition of 1% amounting to Rs. 21,890 as commission for arranging accommodation entries was sustained. - HELD THAT: - The AO added a further amount as commission payable/received for arranging the accommodation entries in connection with the same bogus purchase transactions. The CIT(A) after considering the material and the assessee's submissions found no merit in the challenge and confirmed the addition. The Tribunal found the confirmation to be reasonable in light of the concurrent findings that the purchases were not genuine and that commission was linked to the arrangement of those accommodation entries. [Paras 7, 8]

Addition on account of commission for arranging accommodation entries confirmed and appeal dismissed on this ground.

Validity of reassessment notice founded on reasons to believe under section 148/147 - denial of cross-examination and admissibility of evidence collected/placed on record - Reopening of assessment by issuance of notice under section 148 (based on reasons to believe) and the procedure for confronting the assessee with evidence (without permitting cross-examination of third-party declarants) were held to be valid. - HELD THAT: - The CIT(A) found, and the Tribunal accepted, that the AO had applied his mind to specific information received from the investigation unit, obtained requisite approvals, and recorded reasons to believe that income had escaped assessment. The authorities below treated the sufficiency of the reasons as a matter for reassessment proceedings and held that the AO was not acting on borrowed belief. Further, the Tribunal noted the legal position that where the AO places statements and other material collected in investigation before the assessee and affords opportunity to rebut, denial of cross-examination of third-party declarants does not vitiate the assessment; the AO had supplied statements and bank details to the assessee and carried out enquiries which the assessee failed to rebut. The Tribunal found no infirmity in the procedural steps taken by the AO and the CIT(A)'s conclusions thereon. [Paras 7]

Reassessment notice under section 148 upheld as valid and the procedural handling of evidence, including refusal to grant cross-examination of third-party witnesses, did not render the assessment invalid.

Final Conclusion: The Tribunal dismissed the assessee's appeal; the additions on account of alleged bogus purchases under section 69C and the related commission were confirmed, and the reopening under section 148 and related procedural steps were upheld.

Unexplained cash credit and onus to prove creditworthiness of creditors under section 68 - Disallowance of interest linked to loans held to be bogus - Allegation of double addition/disallowance and applicability of section 40(a)(ia)

Unexplained cash credit and onus to prove creditworthiness of creditors under section 68 - Disallowance of interest linked to loans held to be bogus - Addition of unsecured loan to income under section 68 and consequent disallowance of interest claimed by the assessee. - HELD THAT: - The Assessing Officer treated receipt of unsecured loan as unexplained cash credit after concluding that the assessee failed to discharge the onus of proving the creditworthiness of the alleged lender and the genuineness of transactions. The CIT(A) examined the documents produced by the lender and the assessee, noted doubtful sources of funds and absence of adequate proof of the creditor's creditworthiness, and upheld the addition under section 68 and the consequent disallowance of interest on the ground that once the loan is treated as bogus the interest claim cannot be allowed. The Tribunal found no infirmity in the reasoning or the reliance placed by the CIT(A) on precedents emphasising that creditworthiness and source of funds are relevant inquiries and therefore declined to interfere with the concurrent findings of the authorities below. [Paras 6, 7]

Addition of the unsecured loan under section 68 and disallowance of the interest claimed are upheld; grounds challenging these additions are dismissed.

Allegation of double addition/disallowance and applicability of section 40(a)(ia) - Claim that interest was doubly disallowed because it had already been disallowed under section 40(a)(ia). - HELD THAT: - The assessee contended that interest had already been subjected to disallowance under section 40(a)(ia) and that the AO's addition amounted to double disallowance. On scrutiny of the assessment and appellate records, the Tribunal observed that neither the Assessing Officer nor the CIT(A) had made any disallowance or addition under section 40(a)(ia). Consequently the plea of double addition was misplaced and unsustainable. [Paras 10]

Grounds alleging double disallowance under section 40(a)(ia) are without merit and are dismissed.

Final Conclusion: The appeal is dismissed; the additions made by the Assessing Officer and confirmed by the CIT(A) - being the unsecured loan treated as unexplained cash credit and the consequential disallowance of interest - are upheld, and the contention of double disallowance under section 40(a)(ia) is rejected.

Unexplained investment deemed income u/s.69 - bank OD used as conduit for unaccounted cash - unexplained investment in immovable property - share sale consideration treated as income under section 56(2)(vii)(c) - capital gains accrual under section 45 - deemed cost u/s.49(4) - use of company loan account as conduit for receipt of sale consideration

Unexplained investment deemed income u/s.69 - bank OD used as conduit for unaccounted cash - Confirmation of addition of Rs. 70.50 lakhs as unexplained investment by way of unsecured loan in Manko treated as income under section 69 - HELD THAT: - The Tribunal upheld the Assessing Officer's finding that the assessee's OD account showed cash deposits of Rs. 97.64 lakhs which were unexplained and that the OD account was used as a conduit to route unaccounted cash into the company as unsecured loans. On that basis the investment in Manko was held to be unexplained and taxable under section 69. The Tribunal examined the pattern of cash deposits and corresponding transfers to the company, observed no satisfactory explanation or production of bank records improving the assessee's case, and therefore confirmed the addition of Rs. 70.50 lakhs as unexplained investment. The Tribunal noted that, although a larger quantum (the full cash deposits) could have been made the subject of substantive addition, the AO and appellate process had operated on the figure of Rs. 70.50 lakhs which the Tribunal confirmed. [Paras 4, 5]

Addition of Rs. 70.50 lakhs under section 69 confirmed; OD account held to have been used as a conduit for unaccounted cash.

Unexplained investment in immovable property - Confirmation of addition toward unexplained investment in immovable property (balance Rs. 35,72,056) after granting relief for Rs. 16,00,000 - HELD THAT: - The Tribunal found no satisfactory evidence on record to substantiate the assessee's claimed sources for payments towards immovable property. The first appellate authority had allowed relief of Rs. 16,00,000 being linked to a receipt of Rs. 50,00,000; the balance was left unexplained. Given the surrounding findings that the assessee's bank accounts were used to channel unaccounted money and the absence of corroborative material, the Tribunal found no infirmity in the CIT(A)'s partial relief and confirmed the remaining addition. [Paras 6, 7]

Addition of Rs. 35,72,056 toward unexplained investment in immovable property confirmed; relief of Rs. 16,00,000 upheld.

Share sale consideration treated as income under section 56(2)(vii)(c) - capital gains accrual under section 45 - deemed cost u/s.49(4) - use of company loan account as conduit for receipt of sale consideration - Determination of sale consideration for shares at Rs. 6.75 crores; tax consequences held to be assessable under section 56(2)(vii)(c) (income from other sources) with consequential treatment under sections 45 and 49(4); allowance or adjustment relating to the earlier section 69 addition - HELD THAT: - The Tribunal held that the share sale agreement dated 20.02.2014, corroborated by Manko's letter, established the sale consideration for the entire share capital at Rs. 6.75 crores (Rs. 803.57 per share). The Tribunal rejected the assessee's contention that only Rs. 1 crore reached the shareholders and that the balance paid to Manko reduced the share consideration, observing no contractual stipulation to that effect and that the mode of application of sale proceeds does not alter accrual of income. Applying section 56(2)(vii)(c), the Tribunal treated the difference between fair market value and acquisition cost on the shares acquired during the year as income from other sources, and held that the FMV so determined would be the deemed cost under section 49(4) for computing any capital gain on subsequent sale, resulting in no short-term capital gain on sale of the 42,000 shares. The Tribunal also found that the assessee had used the unsecured loan account in the company as a conduit for receipt/withdrawal of sale proceeds; to avoid double taxation it allowed that the earlier addition of Rs. 70.50 lakhs under section 69 may be set off or, alternatively, deleted if seen as overlapping, and directed the assessee to explain an unexplained difference of Rs. 5 lakhs in the loan account failing which it would be assessable under section 69. [Paras 9, 10]

Sale consideration for shares accepted at Rs. 6.75 crores; assessee chargeable under section 56(2)(vii)(c) at Rs. 337.50 lakhs (50% share) less acquisition cost; no short term or long term capital gain arises on 42,000 shares by reason of deemed cost u/s.49(4); allowance made to avoid double taxation by adjusting or deleting the Rs. 70.50 lakhs addition under section 69; assessee to explain Rs. 5 lakhs discrepancy in loan account.

Final Conclusion: Both the assessee's and the Revenue's appeals are partly allowed. The Tribunal confirmed the addition of Rs. 70.50 lakhs as unexplained investment under section 69 (subject to adjustment/offset in respect of share transaction taxation), confirmed the balance addition towards unexplained immovable property investment, and accepted the sale consideration for shares at Rs. 6.75 crores treating the differential as income under section 56(2)(vii)(c) with consequential application of section 49(4) and directions to avoid double taxation and to explain a remaining loan account discrepancy.

Deduction under section 10AA - computation under subsection (7) of section 10AA - profits of the undertaking - nexus between incidental income and export business - interest income as part of business profits - incidental receipts from manufacturing by-product

Deduction under section 10AA - profits of the undertaking - Assessee entitled to deduction under section 10AA for A.Y. 2012-13 - HELD THAT: - The Tribunal examined the factual matrix including earlier assessments and the order giving effect for prior years, and applied the settled proposition that once eligibility for deduction under section 10A/10B/10AA is accepted in the initial assessment year it cannot be withdrawn in subsequent years on the same factual basis. Having noted that the Assessing Officer in the order giving effect for earlier years had allowed section 10AA and that the year under consideration was not the first year of claim, the Tribunal held that the assessee satisfied the conditions for section 10AA and therefore is entitled to the deduction. [Paras 10]

Deduction under section 10AA is allowed for the assessee for A.Y. 2012-13.

Interest income as part of business profits - nexus between incidental income and export business - computation under subsection (7) of section 10AA - Interest income from fixed deposits (margin money) is includible for computing deduction under section 10AA - HELD THAT: - Relying on the reasoning of coordinate decisions and applying a purposive interpretation of exemption provisions, the Tribunal held that incidental income such as interest on temporarily parked funds or margin money, where a nexus with the export business exists, forms part of the profits of the undertaking. Subsection (7) requires that profits of the business be apportioned in the ratio of export turnover to total turnover; since interest was accepted as business income and earned from margin money held for business purposes, it must be included in the computation of profits eligible for deduction under section 10AA. [Paras 15]

Interest income from fixed deposits held as margin money is eligible for deduction under section 10AA.

Incidental receipts from manufacturing by-product - computation under subsection (7) of section 10AA - Receipts from sale of gold dust to be included in profits for computation of deduction under section 10AA - HELD THAT: - Subsection (7) mandates taking the profits of the business for apportionment. The Assessing Officer had treated the sale proceeds of gold dust as part of the assessee's business income in the assessment order. Given that the gold dust was generated as a by-product of the manufacturing activity and accepted as business income, the Tribunal held it must be included when computing profits of the undertaking for the purpose of determining the portion eligible for deduction under section 10AA, and directed recomputation accordingly. [Paras 20]

Income from sale of gold dust is to be included for computing the profits eligible for deduction under section 10AA; Assessing Officer to recompute deduction.

Final Conclusion: The Tribunal allowed the appeal of the assessee for A.Y. 2012-13: the assessee is entitled to deduction under section 10AA; interest on fixed deposits held as margin money is includible for that deduction; and receipts from sale of gold dust, being business income, must be included in the computation of profits eligible for deduction under section 10AA, with recomputation directed.

Transaction value principle - Re-determination of import value under Rule 9 of the Customs Valuation Rules, 2007 - Comparability of contemporaneous imports - Admissibility of comparable values and opportunity to rebut - Inapplicability of alternative valuation methods under Rules 4-8 due to non-quantifiable variable factors

Transaction value principle - Comparability of contemporaneous imports - Admissibility of comparable values and opportunity to rebut - Re-determination of import value under Rule 9 of the Customs Valuation Rules, 2007 - Inapplicability of alternative valuation methods under Rules 4-8 due to non-quantifiable variable factors - Validity of the authorities' re-determination of the import value declared by the appellant - HELD THAT: - The Tribunal examined whether the assessing authorities were justified in rejecting the declared transaction value and re-determining import value under Rule 9. The adjudicating authority relied on a table of alleged contemporaneous imports as comparables but did not put those entries to the appellant for rebuttal. The contemporaneous imports relied upon were of variable and distinguishing descriptions (different types, grades, country of origin, place of exportation/importation and differing quantities), casting doubt on their admissibility as true comparables. The assessing officer himself recorded that valuation under Rules 4 and 5 could not be applied due to such variable factors and that Rules 7 and 8 could not be applied for want of quantifiable data, thereby undermining the consistency of his approach in treating the contemporaneous imports as reliable comparables. The quantity disparity between the appellant's import and the alleged comparables further reinforced incomparability. For these reasons the re-determination lacked a proper legal basis, was not in accordance with the valuation regime's requirements for comparability and opportunity to rebut, and therefore could not stand. [Paras 7, 8]

The re-determination of the import value by the Revenue is set aside and the appeal is allowed.

Final Conclusion: The Tribunal held that the Revenue's re-determination of the declared import value was unsupported by admissible comparables and proceeded without affording the appellant an opportunity to rebut; consequently the reassessment under Rule 9 was set aside and the appeal allowed.

Related persons under the Customs Valuation Rules, 2007 - transaction value accepted where relationship did not influence price (Rule 3(3)(a) of CVR, 2007) - burden on revenue to prove that relationship influenced the price - long term off take agreement (UOTA) and long term pricing (LTP) as determinative of price

Related persons under the Customs Valuation Rules, 2007 - transaction value accepted where relationship did not influence price (Rule 3(3)(a) of CVR, 2007) - burden on revenue to prove that relationship influenced the price - long term off take agreement (UOTA) and long term pricing (LTP) as determinative of price - Validity of the impugned orders dropping proceedings rejecting declared transaction value on account of alleged related party influence - HELD THAT: - The Tribunal examined the Commissioner's orders which dropped proceedings initiated to reject the declared import values of urea on the ground that the importer and the foreign supplier were related and that such relationship had influenced the price. Having considered the impugned orders and the consistent decisions of the Ahmedabad and Chennai Benches, the Tribunal held that the Revenue failed to establish that the relationship influenced the price. Rule 2(2) of the Customs Valuation Rules, 2007 lists specific modes by which persons may be deemed related; the authority did not prove that those criteria were satisfied so as to establish a legally cognisable relationship that affected price. Even if a relationship were to be deemed to exist, Rule 3(3)(a) requires acceptance of the transaction value where examination indicates the relationship did not influence the price. The long term Urea Off Take Agreement (UOTA) and related JV arrangements and long term pricing (LTP) showed pre determined pricing (including market price based mechanisms and a fixed LTP for 15 years), contemporaneous consideration of international market trends, and governmental involvement and acceptance (including a government notification recognising the UOTA price framework). On these facts, and in the absence of evidence of any flow back or manipulation, the Revenue did not discharge the onus to rebut the transaction value. The impugned proposals for re determination, differential duty, interest and penalties therefore lacked legal foundation and were unsustainable. [Paras 9, 10, 11, 12]

The appeals filed by the Department are dismissed; the impugned orders dropping the proceedings are upheld and demands, interest and penalties premised on rejection of the declared value are set aside; cross objections disposed in support of the respondent.

Final Conclusion: The Tribunal upheld the Commissioners' orders dropping proceedings because the Revenue failed to prove that any relationship between the importer, the Government/agents and the foreign supplier influenced the transaction price; the declared transaction value is therefore accepted and the appeals by the Department are dismissed.

Transaction value as the primary basis of customs valuation - rejection of declared value under Rule 12 of the Customs (Determination of Value of Imported Goods) Rules, 2007 - requirement of recording and communicating reasons for reasonable doubt - obligation to seek further information and afford opportunity of hearing before rejecting declared value - use of NIDB data for valuation and limits on reliance without disclosure - sequential application of Rule 3 and then Rules 4 to 9 in valuation - re-assessment under Section 17(4) of the Customs Act, 1962

Rejection of declared value under Rule 12 of the Customs (Determination of Value of Imported Goods) Rules, 2007 - requirement of recording and communicating reasons for reasonable doubt - obligation to seek further information and afford opportunity of hearing before rejecting declared value - use of NIDB data for valuation and limits on reliance without disclosure - sequential application of Rule 3 and then Rules 4 to 9 in valuation - Validity of rejection of declared transaction value and consequent re-assessment where the proper officer relied on NIDB data but did not record reasons, seek further information, or afford opportunity of hearing as required by Rule 12 and settled law. - HELD THAT: - The Tribunal held that rejection of declared invoice value cannot be sustained where the proper officer failed to comply with the procedural and substantive safeguards mandated by Rule 12 and clarified by the Supreme Court in CENTURY METAL RECYCLING PVT. LTD. The requirements include: existence of a reasonable doubt, asking the importer for further information and documents, applying mind to any response (or absence thereof), recording and communicating reasons for doubt when requested, and affording opportunity of hearing before determining value under Rules 4 to 9. Mere reliance on NIDB data without disclosing the specific data, confronting it to the importer for rebuttal, and providing cogent reasons for preferring that data over the declared transaction value is inadequate. The Tribunal observed that the Commissioner (Appeals) erred in accepting the departmental appeal without addressing these legal requirements and that the Assistant Commissioner had correctly noted absence of inquiry and disclosure. In consequence, rejection of transaction value without the material disclosures, specific reasons and procedural compliance is invalid and such re-assessment must be set aside. [Paras 9, 10, 11, 12]

Impugned appellate orders allowing the department's appeal were set aside; the Order-in-Original restoring assessment on declared transaction value (or remand outcome favourable to importers) was restored and the departmental appeals were dismissed.

Final Conclusion: The Tribunal allowed the appellants' appeals, set aside the Commissioner (Appeals) orders which had accepted the departmental challenge, and restored the original orders favourable to the importers because the department had not complied with Rule 12 and settled judicial requirements before rejecting declared transaction value.

Penalty for abetting import offence under Section 112(a) of the Customs Act, 1962 - De facto Customs House Agent liability - Misuse of CHA name, stamp and signature - Abetment of smuggling by facilitating clearance - Reasonableness of penalty

Penalty for abetting import offence under Section 112(a) of the Customs Act, 1962 - De facto Customs House Agent liability - Misuse of CHA name, stamp and signature - Abetment of smuggling by facilitating clearance - Reasonableness of penalty - Whether the personal penalty imposed on the appellant under Section 112(a) for abetting the clearance of a misdeclared consignment is sustainable and whether the quantum of penalty is reasonable. - HELD THAT: - The adjudicating authority found that the appellant acted as a de facto CHA: he sourced the work, paid a licensed CHA to sign documents, deployed his own employees to handle the import and facilitated clearance while his own CHA licence remained suspended (reproduced in para 47 of the Order-in-Original and placed on record in the appeal). The appellant admitted assisting the CHA in the clearance of the consignment which concealed cigarettes of Indonesian origin. On these findings the Tribunal held that the appellant's acts amounted to abetment of the offence by facilitating clearance and misusing CHA credentials, thereby attracting penalty under Section 112(a). The Tribunal also examined the quantum and recorded that the personal penalty of Rs.1,00,000/- imposed by the adjudicating authority is reasonable and commensurate with the offence. In the absence of any demonstrable error in the findings or perversity in the exercise of discretion, there is no reason to interfere with the imposition or quantum of penalty. [Paras 6, 7]

Penalty under Section 112(a) upheld; penalty of Rs.1,00,000/- found reasonable and appeal rejected.

Final Conclusion: The Tribunal affirms the imposition of a personal penalty on the appellant for abetting the clearance of a misdeclared consignment by acting as a de facto CHA and misusing CHA credentials; the imposed penalty is upheld and the appeal is dismissed.

Jurisdiction of the Appellate Tribunal over orders under Section 137 - scope of appeals under Section 129-A - definition of "adjudicating authority" - compounding of offences under Section 137(3)

Jurisdiction of the Appellate Tribunal over orders under Section 137 - scope of appeals under Section 129-A - definition of "adjudicating authority" - compounding of offences under Section 137(3) - Whether the Customs, Excise & Service Tax Appellate Tribunal had jurisdiction to entertain an appeal against an order passed by the Chief Commissioner under Section 137 of the Customs Act, 1962, and remit the matter for fresh decision. - HELD THAT: - The Court examined Section 137(3), which prescribes that applications for compounding offences under that Chapter are to be placed before the Chief Commissioner, and Section 129-A(1)(a), which permits appeals to the Appellate Tribunal from a decision or order passed by the Principal Commissioner or Commissioner "as an adjudicating authority." The definition of "adjudicating authority" in Section 2(1) - "any authority competent to pass any order or decision under this Act" - was read liberally. The Court observed that any authority vested by the Act with power to pass an order or decide an application falls within the term "adjudicating authority." Applying that definition, a decision under Section 137(3) by the Chief Commissioner is a decision by an authority competent to pass an order under the Act and therefore falls within the class of orders against which an appeal lies under Section 129-A(1)(a). The Court rejected the contention that a compounding order under Section 137 is non-appealable and that the only remedy was by writ, noting that nothing in the Act excludes a Section 137 decision from being an appealable adjudicatory order. Having found jurisdiction, the Court also noted that the Tribunal's direction to remit the matter to the Chief Commissioner for fresh consideration after affording opportunity to the appellant was not prejudicial to the Department and did not exhibit any legal infirmity. [Paras 11, 12, 13, 14, 15]

The Appellate Tribunal had jurisdiction to entertain the appeal against the order passed under Section 137; the Tribunal's order remanding the matter to the Chief Commissioner for fresh consideration is unimpeachable and the appeal is rejected.

Final Conclusion: The appeal is dismissed; the Tribunal correctly held that an order under Section 137, being a decision by an adjudicating authority, is appealable under Section 129-A(1)(a), and its remand for fresh consideration to the Chief Commissioner is sustained.

Advance Licence Scheme - Duty Drawback Scheme - All Industry Rate (AIR) of duty drawback - Prohibition on drawback where goods are produced using duty free inputs - Proportionate drawback entitlement where mixed duty paid and duty free inputs are used - CBEC Circular No.19/2005 on admissibility of AIR where some inputs are non duty paid

Prohibition on drawback where goods are produced using duty free inputs - Advance Licence Scheme - Drawback admissibility where inputs are duty free - Whether goods manufactured using inputs imported duty free under Advance Licence are ineligible for duty drawback under the Drawback Rules - HELD THAT: - Rule 3 of the Drawback Rules, 1995 provides that no drawback shall be allowed if goods are produced using imported materials in respect of which duties have not been paid. That rule, read literally, precludes allowance of drawback where inputs have been imported duty free. However, the Foreign Trade Policy (FTP 2004 09) and subsequent administrative guidance modify this absolute position. Clause 4.1.14 of the FTP recognises that where both duty paid and duty free inputs are used, drawback shall be available in respect of duty paid materials only and be restricted accordingly. The Board's Circular No.19/2005 explicitly addresses cases involving All Industry Rates, explaining that AIRs are determined as weighted averages and are not to be adjusted by field officers on a consignment by consignment basis merely because some exempt inputs were used. Taken together, these provisions and the Circular temper the literal prohibition in Rule 3 by permitting drawback in respect of duty paid inputs when duty free inputs form only a part of inputs used, subject to restriction to the duty paid component. [Paras 19, 20, 21, 23, 25]

The absolute bar in Rule 3 is qualified by FTP Clause 4.1.14 and CBEC Circular No.19/2005; drawback may be admissible pro tanto where mixed duty paid and duty free inputs are used.

All Industry Rate (AIR) of duty drawback - Proportionate drawback entitlement where mixed duty paid and duty free inputs are used - CBEC Circular No.19/2005 on admissibility of AIR where some inputs are non duty paid - Whether the assessee could avail All Industry Rate drawback for export consignments where a fractional quantity of duty free indigo blue (imported under ALS) was used in manufacture - HELD THAT: - AIR is a presumptive, consolidated rate computed as a weighted average of duties and input consumption across the industry; it does not reflect the precise duty incidence on inputs of an individual exporter. Circular No.19/2005 clarifies that field officers should not seek to disallow or reduce AIR for individual consignments on the ground that some exempt inputs were used, because AIR already embodies average incidence and is not amenable to per consignment bifurcation. The Tribunal found as a fact that the duty free indigo blue used in the products claiming drawback constituted only a fractional portion and was wholly consumed in manufacture; that factual finding was not challenged as perverse. Applying the Circular and FTP guidance, where exempt inputs are only a fraction, AIR is admissible and there is no obligation to apportion or bifurcate AIR for such consignments. [Paras 13, 16, 23, 26, 27]

AIR drawback was properly allowed by the Tribunal where the duty free input formed only a fraction of overall inputs; no apportionment was required and the assessee was entitled to drawback on the facts found.

Final Conclusion: The substantial questions of law are answered in favour of the assessee: Rule 3's literal prohibition on drawback where duty free inputs are used is qualified by FTP Clause 4.1.14 and CBEC Circular No.19/2005, and AIR may be allowed where exempt inputs are only a fraction of inputs used. The Tribunal's factual finding that the duty free indigo constituted a fractional portion (not challenged as perverse) supports allowance of the drawback; the appeal is dismissed.

Confiscation under Section 111(d) and 111(i) of the Customs Act, 1962 - Prohibited goods as including restricted imports where conditions are not complied with - Discretion under Section 125 to allow or refuse redemption of prohibited goods; mandatory redemption for non-prohibited goods - Penalty under Section 112 for acts rendering goods liable to confiscation - Penalty under Section 114AA for use of false or incorrect declaration - Smuggling and modus operandi evidence as basis for confiscation

Confiscation under Section 111(d) and 111(i) of the Customs Act, 1962 - Prohibited goods as including restricted imports where conditions are not complied with - Smuggling and modus operandi evidence as basis for confiscation - Discretion under Section 125 to allow or refuse redemption of prohibited goods - Absolute confiscation of 4000 grams of gold under Section 111(d) and 111(i) of the Customs Act, 1962 is legal and proper. - HELD THAT: - The Tribunal found that import of gold in the appellant's case was subject to statutory restrictions and, since the appellant did not satisfy those conditions, the gold amounted to prohibited goods within the meaning of Section 2(33) and was liable to confiscation under Section 111(d) and 111(i). The appellant had admitted in a handwriting statement that he carried the gold for consideration and described the modus operandi of delivery in Dubai and intended delivery in the airport toilet, conduct consistent with smuggling. He was not an eligible passenger, was carrying 4 kg when even an eligible passenger could import only 1 kg on payment of duty in convertible foreign currency, and lacked foreign exchange to pay duty on 4 kg. The Tribunal held that these facts, the undisputed statement under Section 108 and the intercepted circumstances justified absolute confiscation; the adjudicating authority exercised its permissible discretion under Section 125 in declining redemption given the factual background of deliberate smuggling. Reliance on decisions allowing redemption in distinguishable facts did not warrant interference. [Paras 7, 8]

Absolute confiscation of the 4000 grams of gold is upheld.

Penalty under Section 112 for acts rendering goods liable to confiscation - Penalty under Section 114AA for use of false or incorrect declaration - Imposition of penalties under Section 112 (a) & (b) and under Section 114AA of the Customs Act, 1962 is justified, but quantum is excessive and liable to reduction. - HELD THAT: - Once the goods were held liable for confiscation, penalty under Section 112 for improper importation was imposable as the appellant either did or omitted acts rendering the goods liable for confiscation and/or was concerned in carrying the goods. The declaration form showing 'nothing' against total value supported imposition of penalty under Section 114AA for use of a false or incorrect declaration. There is no statutory bar to imposing both penalties concurrently. Considering the appellant's admitted conduct (carrying gold for consideration, frequent travel, no evidence of lawful purchase or entitlement), penalties were sustainable on law and facts. However, in view of mitigating circumstances (appellant accepted he acted for a small consideration), the Tribunal reduced the penalty under Section 112 to Rs.2,00,000 and under Section 114AA to Rs.1,00,000. [Paras 9, 10]

Penalties sustained but reduced to Rs.2,00,000 under Section 112 and Rs.1,00,000 under Section 114AA.

Final Conclusion: The appeal is partly allowed: the absolute confiscation of the 4 kg of gold is upheld; penalties under Sections 112 and 114AA are sustained but reduced to the amounts specified by the Tribunal; consequential relief, if any, to follow as per law.

Condonation of delay by excluding period spent in obtaining certified copy - Exclusion of time in computing limitation for appeals under Section 12(2) of the Limitation Act - Due diligence in applying for certified copy - Time bound nature of CIRP and finality of approved resolution plan - Rejection of belated claims in CIRP to prevent derailment of the resolution process

Condonation of delay by excluding period spent in obtaining certified copy - Exclusion of time in computing limitation for appeals under Section 12(2) of the Limitation Act - Due diligence in applying for certified copy - Delay in filing the Comp. App. (AT) (Ins.) Nos.856 & 857/2023 was condoned by excluding the period spent in obtaining the paid certified copy of the impugned order. - HELD THAT: - The Tribunal applied Section 12(2) of the Limitation Act to exclude the time taken to obtain the certified copy from computation of the limitation period for filing the appeal. The appellants had applied for a certified copy on 17.04.2023 and received it on 03.05.2023; excluding that interval, the appeal was e-filed within 30 days. The Tribunal relied on the Supreme Court's observation in Sanket Kumar Agarwal & Anr. Vs. APG Logistics Private Limited that where an applicant exercises due diligence in applying for a certified copy, the period taken by the court to supply the copy must be excluded. Applying that principle and Section 12(2), the Tribunal allowed the application for condonation of delay and granted the benefit of exclusion of time spent in obtaining the paid certified copy. [Paras 6]

I.A. No.2916/2023 allowed; delay in filing Comp. App. (AT) (Ins.) Nos.856 & 857/2023 condoned by excluding time taken to obtain the certified copy.

Time bound nature of CIRP and finality of approved resolution plan - Rejection of belated claims in CIRP to prevent derailment of the resolution process - The Appellants' claims, filed after an inordinate delay of 1270 days and after the CoC had approved the resolution plan, were rightly rejected and the appeal against that rejection was dismissed. - HELD THAT: - The Tribunal held that the CIRP is a time bound process requiring urgency and discipline from stakeholders; permitting a claim after 1270 days and after Committee of Creditors had approved the resolution plan would reopen settled issues and derail the process. The Tribunal followed the Supreme Court's reasoning in M/s. RPS Infrastructure Ltd. Vs. Mukul Kumar & Anr. , which cautioned against allowing belated claims once a plan is accepted by the CoC, and observed that reopening the matter would create uncertainty and invite similar late claims. Given the inordinate delay and the CoC's approval of the resolution plan, the Adjudicating Authority's rejection of the delayed claims was not interfered with. [Paras 19, 20]

Comp. App. (AT) (Ins.) Nos.586 & 587/2023 dismissed; rejection of belated claims upheld to preserve finality and time bound nature of CIRP.

Final Conclusion: The Tribunal allowed condonation of delay in filing two appeals by excluding the period spent in obtaining the certified copy of the impugned order; separately, the Tribunal dismissed the appeals challenging rejection of belated claims filed after 1270 days, upholding the Adjudicating Authority's decision to refuse such claims to protect the time bound resolution process and finality of the approved resolution plan.

Binding nature of departmental circulars and instructions - requirement to communicate adjudication order within one month after conclusion of personal hearing - separate notice for each personal hearing / validity of personal hearing - exercise of statutory power only in prescribed manner renders action illegal - remand for fresh adjudication where departmental procedure has been violated

Service of show cause notice - typographical error in notice reference - Whether the show cause notice adjudicated upon was not served to the petitioner and whether the adjudicated notice was non-existent - HELD THAT: - The Court examined the record and found that the petitioner had received a show cause notice dated 23.10.2019 (bearing reference F. No. 34 / DGCEI / JRU / ST / SCM/ Gr.B/ 2018/3006) and had replied to notices for fixing personal hearings and submitted defence replies. The adjudication was in relation to a notice bearing a different reference number (F. No. 34/ DGCEI/ JRU/ ST/ SCM/ Gr.B/2018/3005), which the Court treated as a typographical error in numbering rather than absence of service. Given that the petitioner had engaged with the proceedings and responded to hearings, the Court declined to interfere on the ground that the adjudicated SCN was not served. [Paras 9]

The contention that the adjudicated SCN was not served is rejected; the discrepancy in reference numbers is treated as typographical and not a ground for interference.

Period of limitation / extended period under Section 73(4B) - jurisdictional facts for invoking extended limitation - Validity of adjudication vis-a -vis limitation and existence of jurisdictional facts for invoking the extended period - HELD THAT: - The Court observed that the question of limitation and the jurisdictional facts necessary to invoke the extended period involve factual interpretation. The Court refrained from adjudicating these contentions on merits and held that they are matters for the adjudicating authority to decide after appropriate consideration of facts and law. The petitioner was left at liberty to raise these issues before the authority. [Paras 10]

The Court does not decide the limitation/jurisdiction issue on merits and allows the adjudicating authority to examine it afresh; petitioner may raise the contention before that authority.

Requirement to communicate adjudication order within one month after personal hearing - separate notice for each personal hearing - binding nature of departmental circulars and instructions - remand for fresh adjudication where procedure violated - Whether the impugned adjudication order violated the CBIC Master Circular and Instruction (communication within one month and requirement for separate notices for personal hearings) and the consequence thereof - HELD THAT: - The Court reviewed Clause 14.10 of Master Circular No. 1053/02/2017-CX dated 10.03.2017 and Clause 4.3 of the Instructions dated 18.11.2021, both of which require communication of the adjudication order expeditiously and within one month of conclusion of personal hearing, and mandate separate notice for each personal hearing. It found that the impugned order was not communicated within one month after the last valid personal hearing and that alleged personal hearings on 20.01.2022 and 08.03.2022 were without prior notice and therefore invalid; the last valid personal hearing was 23.12.2021. No reasons were recorded to justify delay as required by the Instruction. The Court emphasized that departmental circulars and instructions are binding on the Revenue and that exercise of power contrary to the prescribed manner renders the action illegal. In view of the procedural violation, the Court held that the interest of justice requires setting aside the impugned order and remitting the matter to the adjudicating authority for fresh decision after giving a valid opportunity of personal hearing and complying with the prescribed timelines and recording of reasons where delay is unavoidable. [Paras 11, 12, 13, 15]

Impugned adjudication order quashed for violation of the Master Circular and Instruction; matter remitted to respondent No.4 to afford fresh personal hearing and pass fresh adjudication in accordance with the circulars and instructions.

Final Conclusion: Writ petition allowed to the extent that the impugned adjudication order is quashed for non-compliance with CBIC circulars and instructions concerning notice for personal hearings and communication of order; the matter is remitted to the adjudicating authority to afford fresh personal hearing and pass a fresh order in accordance with the prescribed procedure. Other factual and limitation issues remain open for consideration by the authority.

Quantification of duty - eligibility under Sabka Vishvas (Legacy Dispute Resolution) Scheme, 2019 - disqualification under Section 125(1)(e) of the Finance (No. 2), 2019 - written communication of duty payable - enquiry/investigation pending

Quantification of duty - written communication of duty payable - eligibility under Sabka Vishvas (Legacy Dispute Resolution) Scheme, 2019 - Petitioner was eligible to file a declaration under the Sabka Vishvas (Legacy Dispute Resolution) Scheme, 2019 because the duty liability was quantified by 13.05.2019. - HELD THAT: - The Court found that the amount of duty for the period 01.04.2017 to 30.06.2017 was communicated to the petitioner by letter dated 13.05.2019. The scheme and the explanatory circular construe "quantified" as a written communication of the amount of duty payable, which includes a letter intimating duty demand during enquiry. Since the demand was so communicated on 13.05.2019 - i.e., before 30.06.2019 - the petitioner fell within the class eligible to avail the amnesty scheme and could not be disqualified on the ground that an investigation was pending or that the duty had not been quantified by the cut off date.

Order declaring the petitioner ineligible under Section 125(1)(e) was unsustainable insofar as it ignored the letter dated 13.05.2019 quantifying the duty; the petitioner is to be treated as eligible under the scheme.

Remand for fresh order - eligibility under Sabka Vishvas (Legacy Dispute Resolution) Scheme, 2019 - The matter was remanded for fresh decision by the competent authority treating the letter dated 13.05.2019 as making the petitioner eligible under the Scheme. - HELD THAT: - The High Court set aside the impugned order dated 10.01.2020 and directed respondent No.4 to pass a fresh order under the Sabka Vishvas (Legacy Dispute Resolution) Scheme, 2019, taking into account the communication of duty dated 13.05.2019 and the consequent eligibility of the petitioner. The remand is for fresh consideration and disposal in accordance with law, having regard to the Court's finding on quantification and eligibility.

Impugned order dated 10.01.2020 set aside; matter remitted to respondent No.4 to pass fresh order treating the petitioner as eligible under the Scheme in light of the letter dated 13.05.2019.

Final Conclusion: Writ petition allowed; order dated 10.01.2020 quashed and matter remanded to respondent No.4 to decide afresh under the Sabka Vishvas (Legacy Dispute Resolution) Scheme, 2019, treating the petitioner as eligible in view of the duty quantified by letter dated 13.05.2019.

Supply of electricity and water as sale of goods not taxable as service - Management, Maintenance and Repair Service (MMRS) - Reimbursement / pure agent principle - Exemption of services within Airport including supply of water and electricity - Exclusion of value of goods from taxable service value - Cenvat credit admissibility for business-related input services

Supply of electricity and water as sale of goods not taxable as service - Management, Maintenance and Repair Service (MMRS) - Reimbursement / pure agent principle - Exemption of services within Airport including supply of water and electricity - Exclusion of value of goods from taxable service value - Whether service tax was rightly demanded on electricity and water charges recovered from concessionaires for the period 2008-09 to 30.06.2010 - HELD THAT: - The Tribunal found that the amounts recovered by the appellant for electricity and water were essentially sales of goods and could not be treated as services under MMRS. The concessionaire agreements showed separate utility invoicing on the basis of actual consumption and the supplies were independent activities within the airport premises. The Department's reliance on classification as MMRS was not sustained when the contract is viewed in entirety. The Tribunal further noted the Government's subsequent exemption of supply of water and electricity within airports and the DO letter reflecting intent to exclude such activities from service tax, and observed that Notification No.12/2003 providing exclusion of value of goods from taxable service value would also preclude service tax on these supplies. Having considered the admitted facts and authorities, the Tribunal held there was no service tax liability on the electricity and water charges (including the markup collected) for the period in question. [Paras 14, 15, 16, 17, 18]

No service tax is leviable on electricity and water charges recovered from concessionaires for the period 2008-09 to 30.06.2010; the demand is set aside.

Cenvat credit admissibility for business-related input services - Whether Cenvat credit on Outdoor Catering services and Club Membership was admissible for the relevant period - HELD THAT: - The Tribunal held that Outdoor Catering services qualify as input services relating to business for the period prior to 01.07.2011 and are not excluded; hence Cenvat credit was allowable. The Club Memberships in question were corporate memberships with professional associations and not individual recreational memberships, and thus similarly related to business and eligible for credit. The Tribunal followed the cited authorities recognising such claims as admissible input credit. [Paras 19]

Cenvat credit on Outdoor Catering services and on the company's Club/association memberships is admissible for the relevant period.

Final Conclusion: Appeal allowed; the impugned order is set aside on merits-no service tax is payable on electricity and water charges for 2008-09 to 30.06.2010 and Cenvat credit on Outdoor Catering and corporate Club/association memberships is allowable; appellant entitled to consequential benefits; question of limitation kept open.

Export of services - place of provision of services - intermediary - receipt of consideration as essential element of service - refund of wrongly paid service tax subject to production of foreign inward remittance certificates

Export of services - receipt of consideration as essential element of service - Whether the appellant's activity of guiding prospective students amounted to a service provided to those students or constituted export of services to foreign universities - HELD THAT: - The Tribunal found that the appellant did not charge or receive any consideration from prospective students and therefore, having regard to the definition of service, was not providing a service to the students in India. The consideration was received from foreign universities which engaged the appellant and paid commission to it. On this basis the Tribunal held that the services in question were services provided to the foreign universities and, accordingly, qualified as export of services. [Paras 5]

Appellant was not providing service to prospective students; the services are export of services to foreign universities.

Place of provision of services - intermediary - Whether the appellant could be treated as an intermediary under Rule 2(f) of the Place of Provision of Services Rules, 2012 - HELD THAT: - Having examined the nature of the appellant's activities and having regard to the Tribunal's earlier decision in Sunrise Immigrations Consultants Pvt. Ltd., the Tribunal held that organisations undertaking similar activities could not be treated as intermediaries under Rule 2(f). The Revenue's contention that the appellant functioned as an intermediary was rejected as not being in accordance with law. [Paras 5]

Appellant is not an intermediary under Rule 2(f); the revenue's intermediary contention is rejected.

Refund of wrongly paid service tax subject to production of foreign inward remittance certificates - Adjudication of the appellant's refund claim after partial waiver and requirement for proof of foreign receipts - HELD THAT: - The appellant voluntarily chose not to press the refund claim for the period(s) they identified (forfeiting a specified portion of the claim). As to the remaining refund claim, the Tribunal observed that the appellant had not produced all foreign inward remittance certificates (FIRCs) for the transactions corresponding to the balance refund amount. The Tribunal therefore remanded the matter to the original authority with a narrowly confined direction: the authority must not raise other issues but should collect the FIRCs from the appellant in respect of the transactions comprising the remaining refund claim and allow refund only where FIRCs are produced. [Paras 4, 5, 6]

Appeal allowed by remand: original order set aside and matter remitted to the original authority to verify FIRCs and grant refund insofar as FIRCs are produced for the remaining claim.

Final Conclusion: The Tribunal held that the appellant's activities were exports of services to foreign universities and not services to Indian students, rejected the Revenue's intermediary contention, recorded the appellant's waiver of part of the claim, set aside the impugned order and remanded the matter to the original authority to verify foreign inward remittance certificates and allow the balance refund only in respect of transactions where such evidence is produced.

Claim for refund under Section 11B - time limitation for refund - reckoning from original application - person who has borne the incidence of tax entitled to refund - treatment of builder's payment vis a vis buyer's right to refund

Time limitation for refund - reckoning from original application - claim for refund under Section 11B - The refund application was not time barred because time limitation under Section 11B is to be reckoned from the date of the original application filed on 18.03.2011. - HELD THAT: - The Tribunal accepted the appellant's submission and the authorities relied upon holding that when an original refund application is filed within the statutory period, subsequent re presentation in correct form relates back to the original filing. The Tribunal noted that the refund claim was originally filed by registered post on 18.03.2011 and later re submitted after rectification, and relied on precedent holding that such continuous attempts to seek rebate relate back to the original filing. The Department's later objection to limitation therefore could not be sustained and the impugned orders rejecting the claim on time bar grounds had to be set aside. [Paras 10]

Time bar defence rejected; refund claim is within time as the limitation runs from the original application.

Person who has borne the incidence of tax entitled to refund - treatment of builder's payment vis a vis buyer's right to refund - claim for refund under Section 11B - The appellant, having borne the incidence of Service Tax (as admitted by the builder), is entitled to claim refund under Section 11B and the rejection of the claim on the ground that the builder had properly paid the tax was unsustainable. - HELD THAT: - The Tribunal examined Section 11B which permits 'any person' who establishes that the duty was collected from or paid by him and the incidence was not passed on to another person to claim refund. The record showed the builder had remitted the tax but admitted that the tax element was included in the consideration paid by the appellant and certified the same. The Tribunal held that such a person falls within 'any person' in Section 11B and is entitled to refund. The adjudicating authorities' reasoning that denial was justified because the builder had discharged Service Tax for self use was rejected as devoid of logic where the buyer had in fact borne the tax and the Department had accepted remittance; accordingly the impugned orders were set aside. [Paras 11, 12]

Merits of refund claim accepted; appellant entitled to refund and impugned order set aside.

Final Conclusion: The appeal is allowed; the impugned order rejecting the refund claim is set aside and the appellant is entitled to refund with consequential benefits as per law.

Limitation under Section 73 proviso - suppression of facts as exception to normal limitation - auxiliary educational services exemption - inclusive meaning of 'includes' in statutory definition - binding effect of departmental order not appealed

Limitation under Section 73 proviso - suppression of facts as exception to normal limitation - Whether show cause proceedings for the period 2006-2007 to 2010-2011 were barred by limitation. - HELD THAT: - The Tribunal held that the normal 18-month limitation under the provision applies unless the department establishes the exceptional ingredients in the proviso (fraud, collusion, wilful mis-statement or suppression of facts) to invoke the extended five year period. The department was aware of the assessee's activities and the contract terms from correspondence dating back to 2008 and did not rely on any additional material to justify the extended period. Reliance was placed on the Supreme Court decisions on the narrow construction of 'suppression of facts' (Pushpam Pharmaceutical Company and Anand Nishikawa Co. Ltd. ) to the effect that mere non-declaration or omission does not amount to deliberate suppression where facts were known to both parties. In these circumstances the Tribunal agreed with the Commissioner (Appeals) that the show cause proceedings for the earlier period were time barred and dismissed the Revenue's appeal on this ground. [Paras 6]

Show cause proceedings for 2006-2007 to 2010-2011 are barred by limitation and the Revenue's appeal is dismissed on this ground.

Auxiliary educational services exemption - inclusive meaning of 'includes' in statutory definition - Whether catering services provided by the appellant for the period 01.07.2012 to 31.03.2013 were exempt as 'auxiliary educational services'. - HELD THAT: - The Tribunal upheld the Commissioner (Appeals)'s finding that Notification No.25/2012 ST exempts services provided to educational institutions that fall within the definition of 'auxiliary educational services', and that the CBEC Circular clarifies that catering services to students are covered. The Tribunal interpreted the use of the word 'includes' in the circular as enlarging the scope to cover such catering services, and found no infirmity in allowing the appeal and dropping the adjudged demands for 01.07.2012 to 31.03.2013. [Paras 7]

Adjudged demands for 01.07.2012 to 31.03.2013 are dropped as covered by the exemption for auxiliary educational services; Revenue's appeal is dismissed on this ground.

Binding effect of departmental order not appealed - limitation under Section 73 proviso - Whether the adjudged demand for the period 01.04.2012 to 30.06.2012 could be sustained. - HELD THAT: - The Tribunal accepted the assessee's submission that an earlier adjudication (Order dated 07.10.2013) in favour of a similarly placed caterer (not appealed by the department) had attained finality and, by settled law, the department cannot take a contrary stand thereafter. In view of that binding departmental position and the absence of change in statutory provisions, the Tribunal set aside the impugned order insofar as it upheld liability for 01.04.2012 to 30.06.2012 and allowed the assessee's appeal rather than remanding for fresh quantification. [Paras 8]

Adjudged demand for 01.04.2012 to 30.06.2012 is set aside and the appeal is allowed in favour of the assessee.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and allowed the assessee's appeal: earlier show cause proceedings for 2006-2007 to 2010-2011 are time barred; demands for 01.07.2012 to 31.03.2013 are dropped as exempt auxiliary educational services; and the liability for 01.04.2012 to 30.06.2012 is set aside in favour of the assessee.

Extended period of limitation - change of opinion - invocation of extended limitation for tax demands - duty to act on contemporaneous audit findings and requisitions

Extended period of limitation - change of opinion - Whether the show cause notice invoking the extended period of limitation in respect of F.Y.2014-15 and F.Y.2015-16 was rightly issued - HELD THAT: - The Tribunal found that Revenue had adequate notice of the appellant's affairs: the appellant was registered, filed regular returns and produced records when requisitioned. An audit by Revenue in February 2016 raised no objection as to classification or the quantum of abatement, and the appellant furnished detailed documents in June and September 2016. The subsequent issuance of the show cause notice in 2019 reflected a change of opinion by Revenue rather than a case of collusion, fraud, or suppression warranting invocation of the extended period. Reliance was placed on established precedent that mere non-payment or a change of opinion does not justify extending limitation. On these facts the extended period was held not invokable and the demand based on it could not be sustained. [Paras 9, 14, 15]

Extended period of limitation is not invokable for F.Y.2014-15 and F.Y.2015-16; the demand insofar as founded on such extension is set aside.

Admission of liability - suo moto discharge of tax - The effect of the appellant's payment for the period April, 2016 to June, 2017 on the demands raised - HELD THAT: - The record shows that the appellant had admitted and suo moto discharged the tax alleged to be short paid for April, 2016 to June, 2017. The Commissioner (Appeals) recognised that the appellant had discharged the liability for this period. The Tribunal noted this fact in the course of its consideration of limitation and, having set aside the impugned order on limitation grounds, recognized that the admitted payment for April, 2016 to June, 2017 distinguished that period from the disputed earlier years. [Paras 9, 13, 14]

The tax for April, 2016 to June, 2017 having been admitted and discharged by the appellant, no further demand is sustained for that period in the course of this order.

Final Conclusion: Appeal allowed; impugned order set aside on the ground that the extended period of limitation was wrongly invoked (with consequent benefits to the appellant), and the admitted payment for April 2016-June 2017 is recognised accordingly.

Reimbursed expenses not part of assessable value - service tax leviable only on the gross amount charged for rendering services - reimbursement of expenses not consideration for services - periodical show-cause notice challenging reimbursements - precedential effect of identical earlier Tribunal order

Reimbursed expenses not part of assessable value - service tax leviable only on the gross amount charged for rendering services - reimbursement of expenses not consideration for services - precedential effect of identical earlier Tribunal order - Whether amounts reimbursed by the principal to the appellant during October, 2009 to March, 2010 constitute taxable consideration and form part of the assessable value for levy of service tax. - HELD THAT: - The Tribunal examined the character of the amounts received by the appellant and held that they are reimbursements of expenses incurred pursuant to the contractual arrangement with the principal and are not consideration for services rendered by the appellant. The Tribunal relied on its earlier final order in favour of the appellant on the same issue, which applied the principle that service tax can only be levied on the gross amount charged for rendering services and that reimbursable expenses, being mere pass-through recoveries, do not form part of the assessable value. The Tribunal distinguished authorities dealing with disallowance of deductions for expenses incurred by service providers, noting those cases were on a different footing, and concluded that the show-cause notice seeking tax on reimbursed expenses was not sustainable. Applying the precedent and the determinative legal principle, the Tribunal allowed the appeal. [Paras 5, 6]

Appeal allowed; impugned adjudication and appellate orders set aside and appellant entitled to consequential relief in accordance with law.

Final Conclusion: The Tribunal allowed the appeal, holding that reimbursements of expenses received by the clearing and forwarding agent during October, 2009 to March, 2010 are not taxable consideration and do not form part of the assessable value; the impugned orders are set aside and consequential benefits granted.

Consideration for taxable service - notional interest on security deposit - value of taxable service under section 67 of the Finance Act - security deposit not constituting consideration - inclusion of amounts received before, during or after provision of service

Notional interest on security deposit - consideration for taxable service - value of taxable service under section 67 of the Finance Act - Whether service tax could be levied on notional interest computed on interest-free refundable security deposits taken against renting of safe deposit lockers. - HELD THAT: - The Tribunal examined section 67 of the Finance Act (as in force for the relevant period) which defines value of taxable service with reference to the consideration received for the service and expressly includes amounts received towards the taxable service before, during or after provision of such service. However, the Tribunal held - following the Division Bench decision in Murli Realtors - that the security deposit taken to secure performance or against damage is for a purpose distinct from the rent (the agreed consideration for leasing) and does not constitute consideration for the leasing service. In the absence of any statutory provision deeming notional interest on such deposits to be consideration, notional interest cannot be added to the taxable value merely by departmental computation. The Tribunal therefore concluded that service tax cannot be levied on notional interest on interest-free refundable security deposits collected in relation to leasing of lockers; only the rent charged (the agreed consideration) is taxable. [Paras 10, 11, 12, 13]

Service tax cannot be imposed on notional interest on the refundable security deposits; the demands confirmed by the Commissioner (Appeals) are set aside and the appeals are allowed.

Final Conclusion: The Tribunal allowed the appeals, holding that notional interest on interest-free refundable security deposits collected for renting lockers does not constitute consideration for the leasing service and thus cannot be included in the taxable value under section 67; the impugned orders confirming the demands were set aside.

Exemption for services provided to Special Economic Zone (SEZ) units/developers - Procedural non-compliance (non-obtainment of Form A1/A2) vis-a -vis entitlement to exemption - Overriding effect of the SEZ Act on other taxing statutes - Procedural infirmities for part of the disputed period not defeating substantive exemption

Exemption for services provided to Special Economic Zone (SEZ) units/developers - Procedural non-compliance (non-obtainment of Form A1/A2) vis-a -vis entitlement to exemption - Procedural infirmities for part of the disputed period not defeating substantive exemption - Overriding effect of the SEZ Act on other taxing statutes - Whether denial of service tax exemption on the ground that prescribed Form A1/A2 was not obtained prior to provision of service can defeat the exemption claim for services rendered to SEZ units/developers for the periods in dispute. - HELD THAT: - The Tribunal found as an admitted fact that the appellant rendered services to units within the SEZ and that the SEZ Act provides exemption for taxable services provided to a Developer or Unit for authorised operations, with the SEZ law having overriding effect. Reliance was placed on the Andhra Pradesh High Court decision in GMR Aero Space Engineering Ltd., and the dismissal of the Revenue's SLP by the Supreme Court, as well as on a coordinate Bench decision in ECLERX Services Ltd., which held that procedural non-compliance limited to portions of the disputed period did not obliterate the substantive exemption where eligibility otherwise existed. Applying these authorities, the Tribunal held that mere non-compliance with the procedural requirement of obtaining Form A1/A2 prior to provision of service, particularly when eligibility for exemption existed for parts of the period, did not deprive the appellant of the exemption granted under the SEZ regime. Consequently, the demand and penalty confirmed by the Commissioner were set aside and the appellant was held entitled to exemption and consequential reliefs in accordance with law.

Demand and penalty confirmed by the Commissioner set aside; appellant entitled to exemption for services to SEZ units/developer for the disputed period and to consequential benefits in accordance with law.

Final Conclusion: Appeal allowed; confirmed demand, interest and penalty set aside as the appellant, having rendered services to SEZ units/developer, is entitled to the exemption notwithstanding the asserted procedural non-compliance limited to parts of the disputed period; consequential reliefs granted in accordance with law.

CENVAT credit admissibility - definition of input service excluding construction of a building or civil structure - Rule 4(7) CENVAT Credit Rules, 2004 - date of payment/invoice as material date for availing credit - temporal applicability of amended definition of input service

CENVAT credit admissibility - Rule 4(7) CENVAT Credit Rules, 2004 - date of payment/invoice as material date for availing credit - temporal applicability of amended definition of input service - definition of input service excluding construction of a building or civil structure - Whether CENVAT credit on service tax paid for construction and repair of a water reservoir is admissible where the work, invoices and payments were completed prior to 01.04.2011 though the credit entry in the assessee's ledger was made later. - HELD THAT: - The Tribunal found on the documents that the construction of the water storage reservoir and the subsequent repair work, the issuance of invoices and the payments therefor were completed prior to 01.04.2011. Under Rule 4(7) of the CENVAT Credit Rules, 2004, as it stood prior to 01.04.2011, CENVAT credit in respect of an input service is allowable on or after the date on which payment is made for the value of the input service and the service tax is paid, as indicated in the invoice. The date of entry in the assessee's ledger is not the material date for determining admissibility. Consequently, the amendment to the definition of "input service" enacted with effect from 01.03.2011, which excluded credit for specified construction-related services, does not apply to services that were received and paid for before 01.04.2011. The Commissioner (Appeals)'s finding that the work was executed and invoices were raised after 01.04.2011 was held to be perverse and not supported by the record; hence the exclusionary amendment could not be invoked to deny credit. [Paras 10, 11, 12, 13]

The Commissioner (Appeals)'s order is set aside and the appeal is allowed; CENVAT credit is admissible since the service, invoices and payments were completed prior to 01.04.2011 and the pre-amendment Rule 4(7) governs admissibility.

Final Conclusion: The Tribunal allowed the appeal, set aside the Commissioner (Appeals)'s order, and held that CENVAT credit was admissible because the reservoir construction and repair services were received and paid for prior to 01.04.2011, making the pre-amendment rule applicable and rendering the subsequent exclusion inapplicable.

Self-service - service tax liability of members' clubs/incorporated clubs - taxability of letting out space for advertisement/hoardings - taxability of rental income from leasing of immovable property - remission of penalty where primary dispute is interpretation of tax liability

Self-service - service tax liability of members' clubs/incorporated clubs - Services provided by the club exclusively to its own members do not attract Service Tax as they amount to self-service and the confirmed demand was liable to be set aside. - HELD THAT: - The Tribunal accepted the Appellant's submission that services rendered only to its members constitute self-service and relied on the decision of the Hon'ble Supreme Court in State of West Bengal v. Calcutta Club Ltd to hold that incorporated clubs/associations constituted under their respective Acts are not liable to Service Tax on members' services. Given that the Club had no shareholders, did not distribute profits and functioned as an association of members, the demand relating to members' services was set aside. [Paras 4]

Confirmed demand relating to services provided to members set aside.

Taxability of letting out space for advertisement/hoardings - The confirmed demand for letting out space for advertisement/hoardings was upheld and the appeal in respect of that demand was rejected. - HELD THAT: - The Appellant failed to produce evidence or legal authority to controvert the finding of the Lower Authorities that income from letting out space for advertisement and hoardings constituted a taxable service. The Tribunal therefore rejected the Appellant's challenge to the confirmed demand in respect of hoarding/advertisement services and directed payment with interest. [Paras 5]

Appeal rejected insofar as demand for advertisement/hoarding services is upheld and payable with interest.

Taxability of rental income from leasing of immovable property - The confirmed demand in respect of rental income from a shop leased out for commercial purposes was upheld and the appeal in that respect was rejected. - HELD THAT: - On the facts, the Appellant did not establish that the rental income from the shop fell outside the taxable ambit. The Tribunal found no merit in the challenge to the demand made by the Lower Authorities for renting of immovable property services and directed that the amount be paid along with interest. [Paras 5]

Appeal rejected insofar as demand for renting of immovable property is upheld and payable with interest.

Remission of penalty where primary dispute is interpretation of tax liability - All penalties imposed were set aside on account of the central controversy being interpretation of applicability of Service Tax to a club. - HELD THAT: - Although demands (other than those set aside in respect of members' services) were confirmed, the Tribunal exercised its discretion to remit all penalties because the core issue related to a question of interpretation-whether clubs are liable to Service Tax on members' services. In view of that interpretative controversy, the penalties were quashed. [Paras 6]

Penalties set aside.

Final Conclusion: The appeal is partly allowed: the demand relating to services rendered exclusively to members is set aside; demands in respect of advertisement/hoarding and renting of immovable property are upheld and payable with interest; all penalties are quashed. Appeal disposed of.

Delay in adjudication and requirement of completion within a reasonable time - interpretation of the expression "where it is possible to do so" in Section 73(4B) of Chapter V of the Finance Act, 1994 - legislative intent and strict construction of limitation provisions in fiscal statutes - prejudice caused by inordinate delay and breach of Article 14 of the Constitution of India - quashing of show cause notices as corrective remedy for unreasonable delay - limited applicability of alternative remedies where effective defence is rendered impossible by delay

Delay in adjudication and requirement of completion within a reasonable time - interpretation of the expression "where it is possible to do so" in Section 73(4B) of Chapter V of the Finance Act, 1994 - prejudice caused by inordinate delay and breach of Article 14 of the Constitution of India - quashing of show cause notices as corrective remedy for unreasonable delay - limited applicability of alternative remedies where effective defence is rendered impossible by delay - Impugned show cause notice dated 24.12.2014 and personal hearing notice dated 06.06.2022 were quashed on account of inordinate and unexplained delay in adjudication which violated the statutory temporal limits and Article 14, and remittance was inappropriate as it would cause prejudice to the petitioner. - HELD THAT: - The Court examined Section 73(4B) of Chapter V of the Finance Act, 1994, holding that the phrase "where it is possible to do so" permits extension of the statutory time-limits only for reasonable grounds beyond the control of the adjudicating authority and not as a licence to keep proceedings pending indefinitely. The insertion of sub-section (4B) manifests a legislative intent to ensure adjudication within the specified outer limits unless extraordinary circumstances are shown. Fiscal limitation provisions must receive strict construction to secure certainty and finality. Where no adequate explanation exists for delay, elasticity in the time-limit is not available. The Court accepted authorities holding that the reasonable period may be measured by the maximum period prescribed under the statute (five years under Section 73(1)/73(4)), and that delay beyond such period without justification causes prejudice to the party and may offend Article 14. Administrative measures (including virtual hearings) and instructions issued by the Board to expedite adjudication were noted as means available to the Department to avoid undue delay. Given that the show cause notice dated 24.12.2014 remained pending and in suspended animation for over seven years without satisfactory reason, and that the petitioner would be prejudiced in mounting an effective defence at this belated stage, the Court held that quashing the show cause notice and the subsequent hearing notice was warranted. The Court further held that the availability of alternative statutory remedies does not preclude relief where exceptional circumstances (here, substantial prejudice from delay) justify writ jurisdiction. [Paras 13, 14, 15, 16, 17]

Impugned Show Cause Notice dated 24.12.2014 and notice dated 06.06.2022 quashed; writ petition allowed.

Final Conclusion: The High Court quashed the demand cum show cause notice dated 24.12.2014 and the personal hearing notice dated 06.06.2022 due to inordinate and unexplained delay in adjudication which breached the statutory temporal limits and caused prejudice; the writ petition was allowed.

Applicability of concessional rate of duty for cement cleared for self-consumption and free issue - Distinction between retail sale and industrial/institutional consumption for notification benefits - Scope of notification benefit where cement bags bear MRP but are not sold through retail channels - Binding effect of a coordinate Bench's ratio in similar fact situation

Applicability of concessional rate of duty for cement cleared for self-consumption and free issue - Distinction between retail sale and industrial/institutional consumption for notification benefits - Whether the appellant was eligible for the concessional rate of duty on cement cleared for self-consumption and free issue to the contractor for construction works. - HELD THAT: - The Tribunal considered whether clearances of cement for the appellant's own use and free issue to a contractor fall within the ambit of retail sales provisions such that concessional benefit under the notification would be excluded. Relying on the ratio of the Mumbai Bench in ACC Ltd. (reproduced and applied in the appellant's earlier period), the Tribunal observed that sales or transfers to manufacturers, builders, infrastructure projects, institutions and for self-consumption for construction inside the factory do not constitute "retail sale" and therefore do not fall within the Chapter II provisions applicable to packages intended for retail sale. Applying that ratio by judicial discipline to the facts of the present period (January 2010 to June 2010), the Tribunal found that the clearances in question were to industrial/institutional users or for self-consumption related to construction and hence the concessional rate could not be denied on the ground that the packages bore an MRP. The Tribunal accordingly held that the departmental demand could not be sustained and set aside the demand, following the earlier coordinate-Bench decision. [Paras 5, 6]

Demand for differential duty on cement cleared for self-use and free issue is unsustainable; appeal allowed and demand set aside.

Final Conclusion: The Tribunal, following the ratio of a coordinate Bench, held that clearances of cement for self-consumption and free issue to a contractor are not retail sales and the appellants were entitled to the concessional rate under the notification for the period January 2010 to June 2010; the departmental demand was set aside and the appeal allowed with consequential reliefs.

Exclusion of "plain glass panes" from a residuary declaration - scope of the expression "all goods and wares made of glass" in Entry No.IV of Notification No.5784 dated 07.09.1981 - residuary clause of Section 3A - popular/common parlance test for construction of taxing statutes - burden on assessee to prove applicability of residuary classification - strict construction of exemption or exclusion in fiscal notifications

Exclusion of "plain glass panes" from a residuary declaration - scope of the expression "all goods and wares made of glass" in Entry No.IV of Notification No.5784 dated 07.09.1981 - popular/common parlance test for construction of taxing statutes - burden on assessee to prove applicability of residuary classification - Whether "tinted glass sheets" manufactured by the assessee are excluded as "plain glass panes" and therefore taxable under the residuary rate, or fall within Entry No.IV ("all goods and wares made of glass") attracting the declared rate. - HELD THAT: - The Court examined the language of Entry No.IV of Notification No.5784 (07.09.1981), the scheme of Section 3A and established principles of construction in fiscal statutes, including the market or common parlance test. The notification expressly covers "all goods and wares made of glass" but excludes specifically listed items including "plain glass panes." The Court applied authority that terms in taxing statutes are to be given their commercial or popular meaning and that an exemption or exclusion must be construed strictly. The factual findings recorded by the authorities and accepted by the High Court - that tinted glass is manufactured in a distinct process, uses different raw materials, differs in transparency, density and solar absorption, and is not treated as plain/uncoloured sheet glass in the market - were treated as determinative. On those findings the tinted product could not be equated with plain glass panes; the product had undergone a change in character and in commercial identification. The Court rejected reliance on decisions where the product retained its primary identity after processing (e.g., galvanized tubes or edible salts), distinguishing them on facts. The appellant, asserting entitlement to residuary treatment, bore the burden of proof which was not discharged in view of the survey and inquiry findings. Consequently the tinted glass falls within Entry No.IV and attracts the declared rate. [Paras 16, 21, 22, 26, 30]

Tinted glass sheets are not covered by the exclusion "plain glass panes" and fall within Entry No.IV ("all goods and wares made of glass"), attracting the declared tax rate; the appeals on this ground are dismissed.

Residuary clause of Section 3A - notice for reassessment - strict construction of exemption or exclusion in fiscal notifications - Whether the reassessment notice dated 08.02.2001 (for assessment years 1992-93 to 1996-97) challenging taxation of the goods at the declared rate was sustainable. - HELD THAT: - The Court upheld the reassessment notice in light of the substantive conclusion that tinted glass does not fall within the excluded category of plain glass panes and therefore is exigible under the declared entry. Given the affirmed legal characterisation of the goods as falling under Entry No.IV and the factual findings supporting distinct manufacture and commercial identity, the reassessment proceedings for the stated years were sustained. [Paras 5, 15, 31]

The reassessment notice dated 08.02.2001 for the assessment years 1992-93 to 1996-97 is upheld.

Final Conclusion: The appeals are dismissed: tinted glass sheets are not "plain glass panes" excluded from Entry No.IV of Notification No.5784 and therefore attract the declared rate; the reassessment notice for 1992-93 to 1996-97 is upheld. No order as to costs.

Best judgment assessment - Burden of proof as to non-sale and stock transfers - Inter-State sale under Section 3 of the CST Act - Rebuttal by declaration in Form F under Section 6A of the CST Act - Non-supply of seized documents and procedural prejudice

Best judgment assessment - Burden of proof as to non-sale and stock transfers - Validity of enhancement of sales by 10% of net GTO and levy of local tax under the DST Act on account of unexplained variations in physical stock and alleged suppression of sales. - HELD THAT: - The Court reviewed the reasons recorded by the Assessing Authority, including unaccounted entries in seized diaries, unexplained loose papers, variation between physical stock and books, and absence of stock reconciliation or certified auditor reconciliations. The burden to prove that sales were not effected lay on the appellant; no satisfactory explanations, corroborative documents or production of certain parties were furnished. In those circumstances the Assessing Authority's exercise of best judgment to enhance sales by 10% of net GTO after deducting stock transfer was held to be a fair and reasonable view, not perverse or illegal. The High Court found no ground to interfere with levy of local tax with interest arising from that enhancement. [Paras 12, 13, 14]

The demand for local tax under the DST Act based on enhancement of sales by 10% of net GTO is sustained.

Inter-State sale under Section 3 of the CST Act - Rebuttal by declaration in Form F under Section 6A of the CST Act - Sustainability of the assessment treating certain stock transfers as inter-State sales and levy of Central Sales Tax based primarily on five seized gate passes. - HELD THAT: - The Court analysed the definition of 'sale' and the tests in Section 3 of the CST Act and Section 6A regarding burden of proof when movement is claimed to be otherwise than by sale. It held that mere movement of goods to depots/warehouses outside the State, supported only by five gate passes, did not satisfactorily establish that the movement was pursuant to a prior contract of sale with buyers outside Delhi. There was no material evidencing invoices, delivery dates, or purchase orders to show that the transfers were effected to meet external buyers' orders; consequently the presumption under Section 3(a) could not be invoked on the limited material available. The Court therefore concluded that the findings sustaining CST liability could not be sustained on the existing record. [Paras 15, 16, 17, 18, 20]

The demand under the CST Act based on treating the transfers as inter-State sales is set aside and the matter is remanded to the DVATT for fresh consideration after affording opportunity to the parties to produce evidence.

Non-supply of seized documents and procedural prejudice - Validity of dismissal of the appellant's application under Section 73(8) read with Section 75 of the DVAT Act (seeking supply of seized documents / relief) as belated and lacking due diligence. - HELD THAT: - The Court found that objections regarding non-supply of seized documents were not taken at the appropriate time before the Assessing Authority, and no prejudice was shown to have been caused to the appellant during assessment proceedings. The DVATT's conclusion that the application was belated and that the appellant failed to avail certified copies despite time being available was held to be justified. Accordingly, there was no interference with the appellate tribunal's dismissal of the application. [Paras 8, 9, 20]

The dismissal of the application under Section 73(8) read with Section 75 of the DVAT Act is upheld.

Final Conclusion: Appeal partly dismissed: the local tax demand under the DST Act (enhancement for unexplained stock/suppression) and dismissal of the application for supply of documents are sustained; the CST demand treating certain transfers as inter State sales is set aside and remitted to the DVATT for fresh adjudication after fresh opportunity to the parties to file and lead evidence.

Commencement of limitation under Section 27 - deemed assessment under Section 22(2) - best judgment/regular assessment under Section 22(4) - re-assessment/revision and finality of assessment - coexistence of limitation periods under Sections 22 and 27

Commencement of limitation under Section 27 - deemed assessment under Section 22(2) - Whether the six-year limitation for revision under Section 27 begins from the deemed assessment under Section 22(2). - HELD THAT: - The Court held that a deemed assessment under Section 22(2) - including the statutory deeming-date (31st October of the succeeding year or the special deeming-date inserted for earlier years) - constitutes a valid point of initiation for computing the six-year period under Section 27. Section 22(2) produces an assessment by deeming the return accepted; such deemed assessment can therefore be the date from which the authority may initiate proceedings under Section 27 within six years. The Court treated the statutory scheme and amendments (including the definition of "assessment" in Section 2(4-A)) as permitting a deemed assessment to operate as the commencement point for limitation under Section 27 (see paras. 14, 15, 19, 27, 30, 50). [Paras 15, 19, 27, 30, 50]

A deemed assessment under Section 22(2) can serve as the commencement date for the six-year limitation under Section 27.

Best judgment/regular assessment under Section 22(4) - coexistence of limitation periods under Sections 22 and 27 - Whether an assessment framed under Section 22(4) can be treated as the commencement of the six-year period under Section 27 and whether the power under Section 22(4) lapses on expiry of the deeming-date under Section 22(2). - HELD THAT: - The Court found that an order under Section 22(4) - being a speaking, best-judgment assessment framed after enquiry and hearing - is a distinct form of assessment from the deemed acceptance under Section 22(2). An assessment under Section 22(4) framed after the end of the year is a regular assessment and itself constitutes a valid point of initiation for revision under Section 27. Further, limitation for initiation of proceedings under Section 22(4) does not automatically lapse on expiry of the deeming-date under Section 22(2); the periods under Sections 22(4) and 27 are capable of co-existing. However, the Court emphasised that allowing unbounded re-openings based on successive assessments would undermine finality; reassessment must relate to issues not previously addressed (paras. 21, 43-49, 50). [Paras 46, 47, 48, 49, 50]

An assessment under Section 22(4) is a valid commencement point for the six-year period under Section 27 and the limitation periods under Sections 22(4) and 27 co-exist; Section 22(4) does not automatically lapse on expiry of the deeming-date under Section 22(2).

Re-assessment/revision and finality of assessment - Whether repeated re-assessments may be used to indefinitely extend the period for revision under Section 27. - HELD THAT: - The Court rejected the submission that unlimited re-assessments may be resorted to so as to perpetually restart the limitation period under Section 27. Although there is no explicit numeric bar on the number of reassessments, allowing the limitation under Section 27 to be computed afresh from each subsequent assessment on the same issue would negate finality of assessment. Every fresh re-assessment must therefore concern issues not previously addressed; escapement of turnover cannot be reopened repeatedly on the same issue (paras. 6, 46, 49, 50). [Paras 6, 46, 49, 50]

Re-assessments cannot be used to indefinitely defeat finality; limitation under Section 27 cannot be repeatedly restarted on the same issue by successive reassessments and each reassessment must relate to issues not earlier adjudicated.

Final Conclusion: The Court concluded that the six-year limitation under Section 27 may commence from a deemed assessment under Section 22(2), from a speaking/written assessment under Section 22(2), from a best-judgment assessment under Section 22(4), or from a reassessment under Section 27 where it deals with matters different from prior assessments; the limitation periods under Sections 22 and 27 co-exist, but repeated re-opening of the same issue to perpetually restart limitation is impermissible. Consequentially, penalties imposed in the batch of petitions were set aside.

Priority of charge - security interest realised under SARFAESI Act, 2002 - registration of security under Section 26B of the SARFAESI Act, 2002 - priority contemplated by Section 26E of the SARFAESI Act, 2002 - crown debt including Sales Tax, Commercial Tax and Income Tax - power of Registering Authority to register sale certificates notwithstanding attachment - remittance of surplus proceeds from auction sale to tax departments

Priority of charge - security interest realised under SARFAESI Act, 2002 - priority contemplated by Section 26E of the SARFAESI Act, 2002 - Priority of secured creditors' charge vis-a -vis claims of Sales Tax, Commercial Tax and Income Tax - HELD THAT: - Having considered prior Full Bench authority of this Court and decisions of other High Courts, the Court holds that the rights of secured creditors to realise secured debts by sale of assets over which security interest is created enjoy priority and shall be paid in priority over all other debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or Local Authority. The Court treats the priority contemplated by Section 26E of the SARFAESI Act, 2002 as giving primacy to the secured creditor's claim where the security is realised in accordance with the Act. [Paras 5, 7]

Secured creditors have priority charge over the claims of Sales Tax, Commercial Tax and Income Tax.

Registration of security under Section 26B of the SARFAESI Act, 2002 - priority contemplated by Section 26E of the SARFAESI Act, 2002 - Effect of registration under Section 26B on the secured creditor's priority - HELD THAT: - The Court notes the view of the Bombay High Court that the priority under Section 26E is engaged where the security is registered under Section 26B. The petitions before this Court assert that the securities are registered under Section 26B; in the light of the Full Bench and allied decisions, registration under Section 26B brings the security within the protective scheme of Section 26E, thereby supporting the secured creditor's priority. [Paras 6, 7]

Where the security is registered under Section 26B, the priority contemplated by Section 26E applies in favour of the secured creditor.

Power of Registering Authority to register sale certificates notwithstanding attachment - Whether the Registering Authority may register sale certificates issued by secured creditors despite attachments by tax departments - HELD THAT: - The Court holds that if an auction is held by secured creditors and sale certificates are not placed and/or registered, the Registering Authority may register such sale certificates notwithstanding attachment by Sales Tax, Income Tax or Commercial Tax authorities. This recognises the practical effect of the secured creditor's priority in enabling registration to proceed despite departmental attachments. [Paras 8]

Registering Authority may register sale certificates issued by secured creditors notwithstanding attachment by tax departments.

Remittance of surplus proceeds from auction sale to tax departments - Liability to remit excess sale proceeds to tax departments and prosecution for non-remittance - HELD THAT: - The Court directs that where the auction conducted by the secured creditor yields an amount in excess of the secured creditor's dues, the secured creditor is liable to remit the excess to the tax Departments. Conversely, if no amount in excess of the secured creditor's dues is received, the secured creditor is not required to remit any amount to the Departments, and the Departments cannot sustain prosecution against the Authorised Officer or officers of the secured creditor for non-remittance of proceeds which do not exist. [Paras 9]

Excess sale proceeds must be remitted to tax Departments; absent any excess, no remittance or prosecution lies against the secured creditor or Authorised Officer.

Final Conclusion: The petitions are disposed by holding that secured creditors (where security is within the SARFAESI scheme and, where applicable, registered under Section 26B) enjoy priority of charge over Sales Tax, Commercial Tax and Income Tax; the Registering Authority may register sale certificates notwithstanding departmental attachments; excess proceeds from auction must be remitted to the tax Departments, and no remittance or prosecution can be imposed where no excess proceeds exist. No order as to costs.

Rectification - error apparent on the face of the record - discretionary power coupled with a duty - statutory remedy under Section 84 of the TNVAT Act - substitution of statutory discretion by the Court - judicial review under Article 226

Rectification - Error apparent on the face of the record - substitution of statutory discretion by the Court - Validity of the High Court order dismissing writ petitions and rejecting the rectification petition on merits. - HELD THAT: - The Court held that the remedy of rectification is a statutory discretion which the assessing authority must exercise where circumstances warrant; the High Court erred by examining and rejecting the rectification petition itself thereby substituting its view for that of the assessing authority. The power of judicial review under Article 226 permits the Court to command a statutory authority to perform its duty by exercising discretion according to law but does not permit the Court to direct the substance of that discretion or to supplant the assessing authority's role. By rejecting the rectification petition on the merits, the learned Judge effectively deprived the appellant of the statutory remedy available under Section 84 of the TNVAT Act, which was impermissible. [Paras 6, 7, 8]

Order of the learned Judge dismissing the writ petitions and rejecting the rectification petition on merits is set aside.

Statutory remedy under Section 84 of the TNVAT Act - discretionary power coupled with a duty - rectification - Remedial direction to the assessing authority on the pending rectification petition filed by the appellant. - HELD THAT: - The Court directed that the respondent shall consider and decide the rectification petition dated 30.01.2014 on merits and in accordance with law after affording the appellant an opportunity of personal hearing. The Court emphasised that the assessing authority must exercise its discretion independently and shall not be influenced by observations made by the learned Judge. The exercise of decision on the rectification petition is remitted to the assessing authority for fresh consideration within a stipulated period. [Paras 9]

Respondent directed to decide the rectification petition on merits after personal hearing within six weeks from receipt of copy of this judgment.

Final Conclusion: The High Court order dismissing the writ petitions and rejecting the rectification petition is set aside; the assessing authority is directed to decide the rectification petition under Section 84 of the TNVAT Act on merits after granting personal hearing within six weeks.

Limitation for tax assessments - Validity of retrospective extension of limitation - Legislative competence post-constitutional amendment introducing GST - Legislative competence must be traceable to the Constitution - Invalidity of State amendment extending limitation as inconsistent with the Constitution Amendment Act

Limitation for tax assessments - Validity of retrospective extension of limitation - Invalidity of State amendment extending limitation as inconsistent with the Constitution Amendment Act - Impugned assessment notice dated 21.06.2023 issued for the period 01.04.2016 to 31.03.2017 was beyond the four-year limitation and could not be sustained on the basis of the retrospective six-year extension effected by the Telangana Value Added Tax (Second Amendment) Act, 2017 (Act 26 of 2017). - HELD THAT: - The Court examined the impugned notice and found it sought assessment for the period 01.04.2016 to 31.03.2017 after the four-year limitation had expired, and that respondent had relied on the extended six-year limitation resulting from Act 26 of 2017. This Second Amendment Act (retrospectively effective from the date of the Ordinance) had earlier been declared unconstitutional by this Court in M/s. Sri Sri Engineering Works v. Deputy Commissioner (CT), on the ground that legislative competence to amend limitation could not be derived from the Ordinance and, after constitutional amendment introducing GST and substitution of Entry 54 of List II, the State lacked competence to enact such retrospective extensions inconsistent with the scheme of the Constitution Amendment Act. Applying that decision, the Court held the extended limitation could not be invoked to sustain fresh assessment proceedings which had become time barred under the four year rule, and therefore the notice based on the invalid extension was unsustainable. [Paras 6, 7]

Impugned notice dated 21.06.2023 set aside and writ petition allowed.

Final Conclusion: The assessment notice issued after the four year limitation period, premised on the retrospective six year extension effected by the invalidated State amendment, is quashed; the petition is allowed and the impugned notice set aside.

Vicarious liability under Section 141(1) of the Negotiable Instruments Act - requirement of specific averments in complaint for prosecution under Section 141(1) - conjunctive reading of 'was in charge of' and 'was responsible to' in Section 141(1) - power of High Court under Section 482 of the Code of Criminal Procedure to quash criminal complaint

Vicarious liability under Section 141(1) of the Negotiable Instruments Act - requirement of specific averments in complaint for prosecution under Section 141(1) - power of High Court under Section 482 of the Code of Criminal Procedure to quash criminal complaint - Whether the averments in the complaint are sufficient to fasten vicarious liability on accused No.4 under Section 141(1) of the Negotiable Instruments Act and, if not, whether the complaint against him should be quashed under Section 482 CrPC. - HELD THAT: - The Court found that the complaint nowhere specifically averred that accused No.4 was "in charge of, and responsible to" the partnership for the conduct of its business at the relevant time, a conjunctive requirement under Section 141(1). The complaint only alleged generally that accused Nos.2 to 6, as partners, were responsible for day-to-day conduct, and made no clear or specific averment of the role of accused No.4. Reliance on precedents (including Gunmala Sales, S.P. Mani, Anita Malhotra and Ashok Shewakramani) establishes that bare or bald statements that a person was managing or was generally responsible are inadequate to attract vicarious liability under Section 141(1); the complainant must make specific allegations showing that the person was in charge of and responsible to the firm/company at the time of the offence. Although the appellant also pleaded retirement prior to issuance of the cheque - a matter of evidence - the primary defect is the absence of mandatory averments required by Section 141(1). In these circumstances the High Court's refusal to quash at the initial stage was reversed and the complaint was quashed insofar as accused No.4 is concerned by exercising the court's power under Section 482 CrPC. [Paras 8, 11, 16, 17]

The complaint is quashed insofar as accused No.4; he cannot be prosecuted under Section 141(1)/138 on the present averments and the criminal complaint is set aside against him under Section 482 CrPC.

Final Conclusion: Appeal allowed; impugned order set aside and the criminal complaint quashed only as regards accused No.4 (the appellant). There will be no order as to costs.

Conversion of foreign currency - date of conversion - payments in foreign currency - enforcement of arbitral award - primacy of contract terms

Payments in foreign currency - conversion of foreign currency - date of conversion - primacy of contract terms - enforcement of arbitral award - Whether the agreement, the arbitral award and this Court's earlier judgment provided for payment of the awarded sum in Indian currency or required fixation of a date for conversion of US dollars into Indian rupees. - HELD THAT: - The Court examined the contract provisions (paras. 31-32) and the operative terms of the award. The agreement expressly provided that monthly payments would be in Iraqi Dinars and US Dollars (65% in US$ and 35% in ID) and specified the exchange rate for conversion of Iraqi Dinars to US Dollars; it contained no stipulation for payment in Indian Rupees. The award directed payment in Iraqi Dinars and further mandated conversion of the Iraqi Dinar amount into US Dollars as per the original agreement; it did not permit conversion into Indian currency. This Court's prior judgment of 24.02.2015 reaffirmed that the date of conversion would be as per the original agreement and that directions in the award govern the field. Because the award and contract permit conversion only into US Dollars and contain no obligation to pay in INR (other than the separate bank-guarantee amount in rupees), there is no contractual or award-based basis to determine or fix any date for conversion into Indian Rupees. Consequently, the question referred by the Division Bench as to the relevant date for conversion of the awarded sum from US Dollars to Indian Rupees does not arise for adjudication by this Court. [Paras 8, 10, 12, 13, 14]

The awarded amount (except the Rs.20 lakh bank-guarantee component) is payable in the foreign currency as per the award and the contract; there is no occasion to fix a date for conversion into Indian Rupees and the execution may proceed in accordance with law.

Final Conclusion: The reference is answered: the contract and the award contemplate payment in foreign currency (Iraqi Dinars convertible into US Dollars) and do not provide for payment in Indian Rupees (except the bank-guarantee sum); therefore no date for conversion into INR is required to be fixed and the appeals are disposed of with liberty to continue execution proceedings.

Principles of natural justice under section 36 - one who hears must decide - coram for hearings - signature and authentication of orders by members - opportunity of oral hearing on supplementary investigation report - opportunity of oral hearing on quantum of penalty - delay in pronouncement of judgment and its effect on validity - remand for fresh hearing

Principles of natural justice under section 36 - one who hears must decide - coram for hearings - signature and authentication of orders by members - delay in pronouncement of judgment and its effect on validity - Validity of the Impugned Order in light of variation in the coram that heard the matter, fewer members signing the final order and the long delay in pronouncement. - HELD THAT: - The Tribunal examined whether the same body of members who heard the final arguments should have been the body to decide and sign the final order and whether the 13 month delay in pronouncement vitiated the Impugned Order. Relying on statutory scheme (Sections 22 and 36) and regulations governing meetings and final orders, and considering precedent emphasizing that ''one who hears must decide'', the Tribunal held that the combination of (a) a larger body having conducted hearings but a smaller body signing the order, and (b) an inordinate delay between reservation and pronouncement, produced a serious infirmity. The Tribunal observed that retirement of members in the intervening period made it impossible for all who had heard the case to sign, and that this gave rise to legitimate doubt about whether the collective deliberation of those who heard had been reflected in the final order. The cumulative effect offended the spirit of natural justice as envisaged by section 36 and the applicable regulations and authorities, and therefore the Impugned Order could not be permitted to stand. [Paras 72, 78, 79]

Impugned Order set aside insofar as it was pronounced by a smaller body after an inordinate delay without the same coram that had heard the matter; the order is invalid for non adherence to the principles of natural justice.

Opportunity of oral hearing on supplementary investigation report - opportunity of oral hearing on quantum of penalty - remand for fresh hearing - Whether the parties were entitled to an oral hearing after the Director General's Supplementary Investigation Report was placed before the Commission and whether they were entitled to opportunity of oral hearing on the quantum of penalty. - HELD THAT: - The Tribunal analysed section 26(5)-(7), Regulation 21 and Regulation 29 (manner of making submissions) and Regulation 48 (procedure for imposition of penalty). It concluded that once the CCI directed a supplementary investigation and received the Supplementary Investigation Report, the statutory and regulatory scheme required that objections/suggestions be invited and, in light of section 36, parties should have been afforded an opportunity to address the Commission orally on the Supplementary Investigation Report. Further, where penalty is to be imposed, Regulation 48 contemplates a show cause process including opportunity to make representations and, if oral hearing is granted, it must be afforded before determining quantum. Because these opportunities were not provided, the Tribunal found the procedural defect serious and material. [Paras 75, 76, 78]

Matter remanded to CCI for fresh hearing by an appropriate coram; CCI to afford oral hearings on the Supplementary Investigation Report and on the question of penalty and its quantum, keeping all contentions open.

Final Conclusion: The Impugned Order dated 18.09.2018 is set aside for failure to comply with principles of natural justice - the coram that heard the matter did not deliver and authenticate the final order and the pronouncement was inordinately delayed; the matter is remitted to the Competition Commission of India for rehearing by an appropriate coram (including oral hearings on the Supplementary Investigation Report and on penalty/quantum). The deposits furnished pursuant to the earlier direction are to be released to the appellants.