TaxTMI Updates e-Newsletter
Oct 18,2019

Inter-State supply - place of supply - specific provision prevailing over general provision - zero-rated supply - authorized operation of SEZ Unit

Inter-State supply - place of supply - specific provision prevailing over general provision - Supply of accommodation services to a SEZ Unit is to be treated as an inter-State supply even where the immovable property is located outside the SEZ zone. - HELD THAT: - The Authority found that supplies made to a SEZ Unit fall squarely under clause (b) of sub section (5) of section 7 of the IGST Act and are to be treated as supplies in the course of inter State trade or commerce. Circular No.48/22/2018 GST was applied to hold that, insofar as there is an apparent conflict between section 7(5)(b) (specific provision dealing with supplies to SEZs) and section 12(3)(c) (place of supply for accommodation services), the specific provision prevails. Consequently, the transaction of providing accommodation to employees of an SEZ Unit-where the SEZ Unit is the recipient and pays consideration-is an inter State supply despite the location of the immovable property. [Paras 5]

Supply of accommodation services to a SEZ Unit is an inter State supply under clause (b) of sub section (5) of section 7 of the IGST Act.

Zero-rated supply - authorized operation of SEZ Unit - Tax treatment of accommodation services supplied to a SEZ Unit depends on whether the supply is for the SEZ Unit's authorized operations. - HELD THAT: - The Authority examined whether supplies to the SEZ Unit qualify as 'zero rated supplies' under section 16(1) of the IGST Act. Applying the Development Commissioner's communication and the Circular, it held that where the SEZ Unit procures accommodation services for its authorized operations, such supplies are treated as supplies to SEZ Units and qualify as zero rated supplies. Conversely, where the services are not for authorized operations, they do not qualify as zero rated supplies; they remain liable to IGST at the applicable rate with the place of supply being the provision of the service. [Paras 5]

If the accommodation services to the SEZ Unit are for authorized operations, they are zero rated under section 16(1) IGST; if not, they are taxable under IGST (at the applicable rate) with place of supply being the provision of the service.

Final Conclusion: The Authority ruled that accommodation services supplied to SEZ Units are inter State supplies under section 7(5)(b) IGST; such supplies are zero rated under section 16(1) IGST when made for authorized operations of the SEZ Unit, and if not for authorized operations they are taxable under IGST at the applicable rate.

Classification of waste from the manufacture of iron or steel - distinction between by-product/slag and fuel manufactured from coal - application of tariff headings 2621 and 2701 to char/dolochar - rule of specific description in tariff classification - applicability of IGST rate under Schedule III for goods classifiable under tariff heading 2619/2621

Classification of waste from the manufacture of iron or steel - distinction between by-product/slag and fuel manufactured from coal - application of tariff headings 2621 and 2701 to char/dolochar - Char-Dolochar/Dolochar arising during manufacture of sponge iron is classifiable under Tariff Item 26190090 (Chapter 26) and not under heading 2701, and therefore attracts IGST at 18% under the relevant Schedule. - HELD THAT: - The Authority found that dolochar is a by-product/cinder emerging during the manufacture of sponge iron and is not a fuel "manufactured from coal" such as briquettes or ovoids under heading 2701. The physico-chemical characteristics of the material (described as semi-coke/cinder with limited combustible capacity) and its emergence as waste in the iron-making process support its characterisation as slag/dross/other waste falling within the scope of Chapter 26 (tariff heading 2619/2621). Applying the tariff classification principles, the entry covering slag, dross and other waste from the manufacture of iron or steel provides the more specific description for the impugned goods and is therefore determinative. The Authority relied on prior judicial and quasi-judicial decisions holding that partly burnt/unburnt coal residues (cinder/dolochar) are classifiable under Chapter 26 and are not fuels under Chapter 27. For these reasons the product was held to be classifiable under Tariff Item 26190090 and to attract the IGST rate applicable to goods so classified under the Schedule. [Paras 7, 8]

Char-Dolochar/Dolochar is classifiable under Tariff Item 26190090 and attracts IGST at 18%; intra-State supply attracts CGST and KGST at 9% each.

Final Conclusion: The Advance Ruling held that the dolochar/char-dolochar produced in the manufacture of sponge iron is a waste/by-product classifiable under Tariff Item 26190090 (Chapter 26) and subject to IGST at 18% (and corresponding CGST/KGST at 9% each for intra-State supply).

Service Accounting Code classification - Information Technology Consulting and Support Services - Information Technology Infrastructure and Network Management Services - Heading 9983 - Other Professional, Technical and Business Services - specific entry prevailing over general entry in classification

Service Accounting Code classification - Information Technology Consulting and Support Services - specific entry prevailing over general entry in classification - Classification of the applicant's IT Support services under the notified Service Accounting Codes - HELD THAT: - The Authority examined the nature of the applicant's Support services, which include remote support, part-only support, on-site support and mission-critical support, and also pro-active support comprising asset tracking, proactive problem support and IT service integration. Although the support covers both hardware and software maintenance and includes packages for maintenance of the recipient's infrastructure, these services principally provide technical assistance, troubleshooting, upgrades, patches, data recovery and other customer support functions rather than participating in production by the recipient. Under the grouping scheme, such technical support activities fall within Group 99831 relating to information technology services. Applying the descriptive scope of Service Code 998313, which expressly includes technical expertise to solve problems in using software, hardware or computer systems and other IT technical support services not elsewhere classified, the Authority held that the applicant's Support services squarely fall within 998313 rather than under alternative codes relied upon by the applicant. The Authority noted the general principle that a specific entry is preferred over a general entry in classification but reached the conclusion on the basis of the descriptive scope of 998313 matching the applicant's service activities. [Paras 6, 7]

IT Support services of the applicant are covered under Service Code 998313.

Service Accounting Code classification - Information Technology Infrastructure and Network Management Services - Heading 9983 - Other Professional, Technical and Business Services - Classification of the applicant's IT Managed services under the notified Service Accounting Codes - HELD THAT: - The Authority analysed the managed services described by the applicant, which include management of data centres, storage, enterprise networks, unified communications and managed network services encompassing monitoring, troubleshooting and capacity/capability administration. These activities are within the scope of Group 99831 (information technology services). Service Code 998316 specifically covers managing and monitoring a client's IT infrastructure including hardware, software and networks and managing and monitoring communication networks and connected hardware for administration and fine-tuning of network traffic, as well as day-to-day management and operation of a client's computer system. The applicant's managed-service offerings were found to involve management of IT infrastructure and networks and therefore to fall squarely within Service Code 998316. [Paras 6, 7]

IT Managed services of the applicant are covered under Service Code 998316.

Final Conclusion: The Authority ruled that the applicant's IT Support services are classifiable under SAC 998313 and its IT Managed services under SAC 998316, both falling within Group 99831 of Heading 9983.

Liability of electronic commerce operator under section 9(5) - deemed supplier status of e-commerce operator for notified services - classification of driver services as manpower/driving services and not transport services notified under section 9(5) - collection of tax at source by e-commerce operator under section 52 - net value of taxable supplies for TCS computation

Liability of electronic commerce operator under section 9(5) - classification of driver services as manpower/driving services and not transport services notified under section 9(5) - deemed supplier status of e-commerce operator for notified services - Whether the applicant is liable to pay GST for services rendered by drivers through its e commerce platform under section 9(5) of the CGST Act, 2017. - HELD THAT: - The Authority analysed the nature of three distinct supplies in the transactions and held that drivers are independent suppliers providing manpower services (driving the customer's vehicle) on a principal to principal basis while the applicant acts only as a facilitator and e commerce platform provider. Notification No. 17/2017 Central Tax (Rate) lists specified services which, when supplied through an e commerce operator, render the operator liable as deemed supplier under section 9(5). The Authority found that the drivers are not supplying transportation services in the sense of item (i) of the Notification but are supplying "driving a motor vehicle" as manpower services, and therefore their services do not fall within the notified categories under section 9(5). Consequently the statutory deeming in section 9(5) does not shift tax liability from the drivers to the applicant in respect of those driver services. [Paras 9, 11]

Applicant is not liable to pay GST for the supply of services by the drivers through its e commerce platform under section 9(5).

Collection of tax at source by e-commerce operator under section 52 - net value of taxable supplies for TCS computation - Whether the applicant is required to collect tax at source under section 52 of the CGST Act, 2017 on payments collected by it for drivers' services. - HELD THAT: - Section 52 mandates that an e commerce operator (not being an agent) collect TCS at a prescribed rate on the net value of taxable supplies made through it by other suppliers where consideration is collected by the operator. The Authority observed that where the applicant collects consideration from customers on behalf of the drivers and remits proceeds to them, those amounts fall within the scope of section 52 and attract TCS. The Authority also noted that section 52 came into force from 1 October 2018 and that suppliers whose supplies are effected through an operator required to collect TCS are mandatorily required to register under the Act. Amounts paid directly by customers to drivers do not attract the operator's TCS obligation. [Paras 10, 11]

Applicant is liable to collect tax at source under section 52 on the net value of taxable supplies made by the drivers through its platform where the consideration is collected by the applicant; amounts paid directly to drivers are not subject to the applicant's TCS obligation.

Final Conclusion: The Authority ruled that Humble Mobile Solutions Pvt. Ltd. is not liable to pay GST as deemed supplier under section 9(5) for services supplied by drivers through its platform, but the applicant must collect tax at source under section 52 on taxable supplies made through it where consideration is collected by the applicant, and remains liable to pay GST on the e commerce services it supplies to the drivers.

Principal-agent supply treated as supply under Schedule I - agent carrying authority to pass or receive title - liability to registration for persons making taxable supply - compulsory registration where agent supplies on behalf of other taxable persons - exemption of services by APMC and services by commission agents for sale or purchase of agricultural produce - definition of agricultural produce for exemption purposes - classification of dry chillies under Tariff Heading 0904 and taxable at 5%

Principal-agent supply treated as supply under Schedule I - agent carrying authority to pass or receive title - liability to registration for persons making taxable supply - compulsory registration where agent supplies on behalf of other taxable persons - Whether the applicant, a commission agent, is required to be registered under the GST law and under which provision. - HELD THAT: - The Authority found that the applicant qualifies as an "agent" because it sells goods (dry chillies) on behalf of the principal, issues invoices in its own name and thus has authority to pass title on behalf of the principal, engaging the principal-agent supply provisions of Schedule I. While Section 24(vii) makes persons who make taxable supplies on behalf of other taxable persons compulsorily registrable, the instant principal (the farmer) is not a taxable person. That aside, the applicant makes taxable supplies of goods to buyers (raising invoice in its own name) and therefore is liable to be registered under the general registration mandate. The Authority therefore directed registration in terms of Section 22(1). [Paras 6, 7]

The applicant qualifies as an agent under Schedule I and is required to be registered under Section 22(1) of the CGST Act.

Exemption of services by APMC and services by commission agents for sale or purchase of agricultural produce - definition of agricultural produce for exemption purposes - Whether Notification No.12/2017 (entry 54(g)) exempting services by APMC and services provided by commission agents for sale or purchase of agricultural produce is applicable to the applicant. - HELD THAT: - The Authority examined the notification entry exempting "services provided by a commission agent for sale or purchase of agricultural produce" and applied it to the applicant's activity of providing services to the farmer for sale of dry chillies. The Authority relied on the CBIC Circular (Scenario 4) explaining that where an agent issues the invoice to the buyer and performs commission-agent functions under the APMC framework, the services so provided are exempt. Consequently, the services rendered by the applicant to the principal for sale of agricultural produce are held to be exempt under entry 54(g) of Notification No.12/2017. [Paras 6, 7]

The exemption in entry 54(g) of Notification No.12/2017 applies to the applicant's services as a commission agent; those services are exempt from GST.

Definition of agricultural produce for exemption purposes - classification of dry chillies under Tariff Heading 0904 and taxable at 5% - Whether dry chillies qualify as "agricultural produce" for the purpose of the exemption and what is the tax treatment of dry chillies when supplied under the applicant's invoice. - HELD THAT: - The Authority held that dry chillies are produced out of cultivation, are used for food/raw material, and when sun dried to make them marketable undergo processing that does not alter essential characteristics; thus they fall within the notification's definition of "agricultural produce" and are so recognised by the APMC. However, where the applicant raises invoice and supplies dry chillies to the trader under its own name, that supply of goods is a taxable supply classified under Tariff Heading 0904 and attracts the rate specified in the notifications (5%). [Paras 6, 7]

Dry chillies qualify as "agricultural produce"; the applicant's services for sale of such produce are exempt, but the supply of dry chillies billed by the applicant to traders is taxable (classified under Tariff Heading 0904 at the prescribed rate).

Final Conclusion: The Authority ruled that the applicant, being a commission agent who issues invoices and transfers title on behalf of farmers, qualifies as an agent and must obtain registration under Section 22(1). The services rendered by the applicant to the farmers for sale of dry chillies are exempt under entry 54(g) of Notification No.12/2017, dry chillies are agricultural produce within the notification's definition, but supplies of dry chillies invoiced by the applicant to traders constitute taxable supplies (Tariff Heading 0904) and attract the notified rate.

Summary order. The advance ruling application filed by M/s. Chadha Sugars and Industries Limited is disposed of as withdrawn at the applicant's request under section 98(2) of the CGST Act, 2017 and section 98(2) of the Punjab GST Act, 2017.

Advance ruling application - withdrawal of advance ruling application under section 98(2) - classification of goods (HSN/tariff heading)

Withdrawal of advance ruling application under section 98(2) - advance ruling application - Disposition of the applicant's advance ruling application as withdrawn following the applicant's request for withdrawal - HELD THAT: - The applicant, M/s. Machine Tools Corporation, had filed an application seeking classification and the applicable GST rate for a bicycle frame lock. Subsequently, by letter signed by the applicant's partner, the applicant expressly stated that it did not wish to pursue the advance ruling application and prayed that the application be treated as withdrawn. The Authority accepted the applicant's communication and disposed of the application as withdrawn under section 98(2) of the CGST Act, 2017 and section 98(2) of the Punjab GST Act, 2017. No adjudication on the classification or applicable rate was undertaken because the applicant withdrew the proceeding.

Application disposed of as withdrawn; no ruling on classification or GST rate was made.

Final Conclusion: The Authority accepted the applicant's request to withdraw the advance ruling application and disposed of the matter as withdrawn under the statutory provision permitting withdrawal; no substantive determination on HSN classification or GST rate was rendered.

Summons under section 70 of the Central Goods and Services Tax Act, 2017 - Appearance in response to statutory summons - Protection from arrest under section 69 read with section 132(5) of the CGST Act - Ad interim relief restraining arrest

Summons under section 70 of the Central Goods and Services Tax Act, 2017 - Protection from arrest under section 69 read with section 132(5) of the CGST Act - Ad interim relief restraining arrest - Whether the petitioner may appear in response to the summons dated 7.10.2019 and claim protection from arrest under section 69 read with section 132(5) of the CGST Act. - HELD THAT: - The High Court, on the petitioner's assurance of willingness to appear before the second respondent in compliance with the summons dated 7.10.2019, issued notice and granted ad interim relief. The court directed that the petitioner may appear in response to the summons and, as an interim measure, shall not be arrested under section 69 read with section 132(5) of the CGST Act when so appearing. The order is interlocutory, issued pending further proceedings, and confines the protection to the circumstance of appearance pursuant to the specified summons. [Paras 2]

Notice issued returnable on 23.10.2019; petitioner permitted to appear in response to the summons and shall not be arrested under section 69 read with section 132(5) of the CGST Act while so appearing.

Final Conclusion: The High Court granted ad interim protection from arrest to the petitioner when appearing in response to the summons dated 7.10.2019 and issued notice returnable on 23.10.2019.

Regular bail under Section 439 CrPC - offences under the Central Goods and Services Tax Act, 2017 - GST input tax evasion through fake firms and invoices - custodial detention and period of custody - seriousness of allegations

Regular bail under Section 439 CrPC - offences under the Central Goods and Services Tax Act, 2017 - GST input tax evasion through fake firms and invoices - seriousness of allegations - Application for regular bail by the petitioner in Criminal Complaint No. 35/2018 alleging offences under the Central Goods and Services Tax Act, 2017 was refused. - HELD THAT: - The petitioner, who has been in custody since 03.08.2018, sought regular bail under Section 439 CrPC. The prosecution case, as recorded by the Court, alleges that the accused created 35 fake firms across multiple States and issued fictitious invoices to evade GST input tax involving a substantial tax amount. The Court treated these allegations as serious and material to the custody decision. Having considered the gravity and nationwide character of the alleged offence and the misuse of fabricated entities for tax evasion, the Court found no ground to grant bail to the petitioner.

Petition for regular bail dismissed; no bail granted to the petitioner.

Final Conclusion: Bail application under Section 439 CrPC was dismissed by the High Court on account of the serious nature of the allegations of large scale GST evasion through creation and misuse of fake firms and invoices.

Interim bail under Section 439 Cr.P.C. - interim bail on humanitarian grounds - conditional release pending trial - surrender of passport as condition of bail

Interim bail under Section 439 Cr.P.C. - interim bail on humanitarian grounds - conditional release pending trial - surrender of passport as condition of bail - Grant of interim bail to the accused on humanitarian grounds and the conditions annexed to such bail. - HELD THAT: - The Court considered the petitioner's plea for interim bail on humanitarian grounds, namely that the petitioner's wife was imminently due to deliver and had no local support. The prosecution opposed release noting the gravity of alleged CGST offences and prior rejections of regular bail. Having weighed the competing contentions and humanitarian circumstances, the Court found it proper to grant temporary relief. The grant was limited in duration and made subject to specific conditions to secure the accused's presence at trial and to allay prosecution concerns. Reliance on earlier authority recognizing humanitarian release in similar circumstances was noted but the order tailors relief by imposing conditions and a fixed return date. [Paras 7, 8]

Interim bail granted for fifteen days on humanitarian grounds subject to surrender of passport to the Jail Superintendent, furnishing a personal bond of Rs. 10,00,000 with two sureties of Rs. 5,00,000 each to the satisfaction of the trial court, and the petitioner's surrender upon expiry of interim bail on 09.10.2019.

Final Conclusion: Interim bail application allowed for fifteen days on humanitarian grounds with specified conditions including passport surrender, bond and sureties, and a fixed date for surrender after the interim period.

Disallowance of depreciation on alleged sham lease transactions - assessee could not substantiate its claim and also could not substantiate the existence of assets on which such depreciation was claimed - as per HC [2019 (1) TMI 1647 - BOMBAY HIGH COURT] Revenue's appeal is dismissed; the Tribunal's factual finding that the depreciation claim could not be held bogus and the consequent direction to delete the disallowance are sustained, and no question of law is made out

HELD THAT:- Special leave petition is dismissed.

As a sequel to the above, pending interlocutory applications, if any, stand disposed of.

Charitable trust - benefit under Section 10(23C)(iv) - proof of charitable activities - Definition of "charitable purpose" under Section 2(15) of the Income-tax Act, 1961 - registration under Section 12AA(1) of the Income-tax Act, 1961 -

Revenue's appeal is dismissed by HC [2018 (3) TMI 1601 - DELHI HIGH COURT] relying on earlier concurrent judgments in favour of the assessee, the court concluded there is no substantial question of law and affirmed entitlement to exemption and registration for A.Y. 2011-12.

HELD THAT:- Delay condoned. Leave granted.

Penalty for acceptance of cash deposits in contravention of prohibition on accepting cash deposits exceeding Rs. 20,000 - penalty under Sections 271D and 271E - stay of recovery pending disposal of statutory appeals - writ jurisdiction under Article 226 exercised for supervisory relief where statutory appeal remains pending - direction to appellate authority to decide appeals expeditiously

Direction to appellate authority to decide appeals expeditiously - writ jurisdiction under Article 226 exercised for supervisory relief where statutory appeal remains pending - Disposal of writ petitions by directing the Commissioner of Income Tax (Appeals) to decide the statutory appeals preferred against penalty orders expeditiously. - HELD THAT: - The Court noted that the petitioners had preferred statutory appeals against penalty orders imposed under the Income Tax Act and that those appeals had been heard but not disposed because these writ petitions were pending. Although the Court observed that, in normal circumstances, the Joint Commissioner's orders would not be seen as unreasonable so as to require interference under Article 226, the pendency of the statutory appeals and an existing interim stay led the Court to decline to adjudicate the petitions on merits. Instead, the Court disposed the writ petitions by directing the Commissioner of Income Tax (Appeals) to consider and pass orders in the pending appeals after hearing the petitioners, expeditiously and in any event within three months from receipt of this judgment. [Paras 4]

The Commissioner of Income Tax (Appeals) is directed to decide the pending appeals expeditiously, and in any event within three months from receipt of this judgment.

Stay of recovery pending disposal of statutory appeals - penalty under Sections 271D and 271E - Continuation of the interim stay on recovery of penalty amounts until disposal of the statutory appeals and communication of appellate orders to the petitioners. - HELD THAT: - The Court recorded that it had earlier granted an interim stay of recovery of the penalty amounts and that the petitions had been pending for over six months. In view of its direction that the statutory appeals be disposed of expeditiously, the Court ordered that the interim stay against recovery shall continue to operate until the Commissioner of Income Tax (Appeals) disposes the appeals and the appellate orders are communicated to the petitioners. [Paras 4]

The interim stay against recovery of the penalty amounts shall continue to operate pending disposal of the appeals by the Commissioner of Income Tax (Appeals) and communication of the appellate orders to the petitioners.

Final Conclusion: Writ petitions disposed by directing the Commissioner of Income Tax (Appeals) to decide the pending appeals against penalties expeditiously (within three months); the interim stay on recovery of penalty amounts shall continue until disposal and communication of the appellate orders.

Non-speaking order - Duty to consider merits in revision proceedings - Revision under the Income Tax Act - Availability of alternative remedy (appeal) not a bar to revision - Remand for fresh disposal

Non-speaking order - Duty to consider merits in revision proceedings - Remand for fresh disposal - Impugned revisional order set aside for failure to consider the merits of the revision application and matter remitted for fresh disposal. - HELD THAT: - The Commissioner's order did not deal with the petitioner's substantive contention that deductions for stamp duty and related transfer expenses, though not claimed in the return, could be urged in the revision application; instead the Commissioner treated non-claim in the return as foreclosing consideration by the revisional authority. The High Court found that the Commissioner failed to consider the petitioner's merits-based submissions and therefore rendered a non-speaking order. The Court set aside the impugned order and restored the revision proceedings to the Commissioner for fresh decision on merits, directing the Commissioner to decide in accordance with law uninfluenced by the observations in the judgment. The petitioner had drawn attention to the decision in Hindustan Diamond Company Pvt. Ltd. v. Commissioner of Income-tax in support of his contention, which the Court noted in the context of considering whether the revisional authority should have examined the merit of the claim. [Paras 5, 6, 8]

Impugned order dated 8 March 2019 set aside; revision application restored to the Commissioner for fresh disposal on merits.

Revision under the Income Tax Act - Availability of alternative remedy (appeal) not a bar to revision - The Revenue's objection that the petitioner should have preferred an appeal rather than a revision under the Act is without merit. - HELD THAT: - The Court observed that the statute itself provides the remedy of revision from an assessment order and an assessee's election to seek revision cannot be faulted by the Revenue. The Commissioner had not dismissed the revision on the ground that an appeal lay; instead the revision was dismissed on merits. Consequently, the High Court rejected the Revenue's contention that the petitioner's choice of remedy precluded consideration of the revision application. [Paras 7]

Revenue's objection dismissed; choice to seek revision under the Act not a valid ground to refuse merits consideration.

Final Conclusion: The writ petition is allowed; the Commissioner's order dated 8 March 2019 is set aside and the revision application is restored to the Commissioner of Income Tax for fresh disposal on merits in accordance with law.

Penalty under Section 271(1)(c) for concealment of income - Concealment of material fact - Furnishing inaccurate particulars - Obligation on Assessing Officer to specify grounds for penalty - Factual findings by Commissioner (Appeals) and Tribunal

Penalty under Section 271(1)(c) for concealment of income - Concealment of material fact - Furnishing inaccurate particulars - Obligation on Assessing Officer to specify grounds for penalty - Whether the penalty under Section 271(1)(c) could be sustained in the absence of any specific finding or disclosure by the Assessing Officer of concealment of material fact or furnishing of inaccurate particulars. - HELD THAT: - The Tribunal and the Commissioner (Appeals) recorded that the Assessing Officer's order did not disclose what specific concealment or inaccurate particulars were said to have been furnished by the assessee. The mere fact that certain additions were made by the Assessing Officer, and were only partially upheld on appeal, does not by itself demonstrate concealment or inaccurate particulars required to invoke Section 271(1)(c). In the absence of any material or finding establishing concealment of material fact or furnishing of inaccurate particulars, the penalty could not be sustained. The CIT(A) therefore rightly set aside the penalty and the Tribunal affirmed that factual conclusion.

Penalty under Section 271(1)(c) not sustained as Assessing Officer failed to establish or specify concealment of material fact or furnishing of inaccurate particulars; penalty set aside and affirmed on appeal.

Factual findings by Commissioner (Appeals) and Tribunal - Whether any question of law arises from the contestation of the penalty order. - HELD THAT: - The court observed that the controversy turns wholly on findings of fact - namely whether concealment or furnishing of inaccurate particulars was established - and that the lower authorities' conclusions were factual. Consequently, there is no substantial question of law arising for adjudication by the High Court.

No question of law arises; the appeal is dismissed.

Final Conclusion: The High Court dismissed the Revenue's appeal; the Tribunal's and CIT(A)'s factual finding that the Assessing Officer did not establish concealment of material fact or furnishing of inaccurate particulars was upheld and the penalty under Section 271(1)(c) could not be sustained.

Invalidity of show cause notice for not specifying limb of Section 271(1)(c) - penalty under section 271(1)(c) for concealment of particulars of income or for furnishing inaccurate particulars of income - vitiation of penalty proceedings where statutory limb is not specified - application of precedents of higher courts to set aside penalty

Invalidity of show cause notice for not specifying limb of Section 271(1)(c) - vitiation of penalty proceedings where statutory limb is not specified - application of precedents of higher courts to set aside penalty - Whether the penalty under section 271(1)(c) is liable to be cancelled because the show cause notices failed to specify whether proceedings were initiated for concealment of particulars of income or for furnishing inaccurate particulars of income. - HELD THAT: - The Tribunal found that the show cause notices and the assessment order referred generically to concealment of particulars of income or furnishing inaccurate particulars, without specifying which limb of Section 271(1)(c) had been invoked. Relying on the decisions of higher courts applied in earlier Tribunal precedents, the Tribunal held that a notice which does not specify the precise limb under Section 271(1)(c) is bad in law. Since the impugned notices were vitiated on this ground, the entire penalty proceedings stood invalidated. The Tribunal rejected the Revenue's contention that the matter was factual and not admissible on this ground, noting that the assessee had specifically raised the defect and that the point engages a legal principle settled by authoritative precedents, which required cancellation of the penalty. [Paras 5, 6]

Impugned show cause notices are bad in law for not specifying the limb of Section 271(1)(c); penalty proceedings are vitiated and penalty cancelled.

Final Conclusion: Appeal allowed; penalty under section 271(1)(c) for A.Y. 2012-2013 cancelled because the show cause notices failed to specify whether proceedings were for concealment of particulars of income or for furnishing inaccurate particulars of income, rendering the penalty proceedings invalid.

Valuation of closing stock - market value or cost whichever is lower - average realisation value - adoption of average rate for stock valuation - treatment of closing stock as opening stock of subsequent year - disallowance under section 40A(2)(b) of the Act - double taxation principle where payer and recipient are taxed at same rate

Valuation of closing stock - market value or cost whichever is lower - average realisation value - adoption of average rate for stock valuation - treatment of closing stock as opening stock of subsequent year - Whether the addition on account of under-valuation of closing stock of guar seeds for A.Y. 2010-11 was justified and the correct rate to be adopted for valuation of closing stock (and consequentially as opening stock of the next year). - HELD THAT: - The Tribunal noted that the assessee declared opening stock at Rs. 19.15 per kg and valued closing stock at Rs. 9.49 per kg while average realisation from sales (including mixture with purchases) worked out to approximately Rs. 17.65 per kg. No documentary evidence (correspondence with warehouse owner or insurance claim) was produced to substantiate alleged deterioration by water. The AO had assumed LIFO and taken cost at Rs. 19.15 per kg to compute addition. Considering the nature of goods, the absence of corroborative evidence of deterioration, the actual average realisation, and precedents recognising reduction in value for perishable/obsolete items where justification is shown, the Tribunal found it reasonable to adopt an average of opening rate, declared closing rate and average realisation ((19.15 + 9.49 + 17.15)/3 = Rs.15.83 per kg) for valuation of closing stock. The Tribunal directed the AO to re-compute closing stock using Rs.15.83 per kg and ordered that the resultant figure be taken as the opening stock for the next financial year. [Paras 7]

Addition partly deleted; AO directed to re-calculate closing stock at Rs.15.83 per kg and to adopt that valuation as opening stock of the next year.

Disallowance under section 40A(2)(b) of the Act - double taxation principle where payer and recipient are taxed at same rate - Whether payments made to persons specified under section 40A(2)(b) are disallowable where those recipients have been assessed to tax at the maximum marginal rate. - HELD THAT: - The Tribunal recorded that the assessee furnished particulars showing the recipients' qualifications and nature of services, and that the AO accepted a part of the remuneration as reasonable. The acknowledgements of returns indicated that both recipients were assessed at the maximum marginal rate. Applying the principle endorsed by the Gujarat High Court and followed by the Tribunal-that where the payer and the specified recipient are taxed at the same (maximum marginal) rate and the payment is bona fide, disallowance under section 40A(2)(b) would result in impermissible double taxation-the Tribunal held that the disallowance was not justified. In these circumstances and on the record that services were rendered and recipients were taxed at the maximum marginal rate, the entire disallowance was deleted. [Paras 13]

Disallowance under section 40A(2)(b) deleted; ground allowed.

Final Conclusion: The appeal is partly allowed: the addition for under-valuation of closing stock is modified by directing recomputation using Rs.15.83 per kg (with that figure to be adopted as opening stock of the next year), and the disallowance under section 40A(2)(b) is deleted.

Amortisation of preliminary expenses - treatment of unutilised CENVAT credit in closing stock - inclusive versus exclusive method for CENVAT under section 145A - disallowance under section 14A and computation under Rule 8D - deduction of employer's contribution to Provident Fund and ESI conditioned on deposit by the due date - precedential effect of coordinate-bench decision

Amortisation of preliminary expenses - precedential effect of coordinate-bench decision - Validity of deletion of disallowance of claim for amortisation of preliminary/public issue expenses. - HELD THAT: - The Tribunal upheld the CIT(A)'s allowance of the claim for amortisation of preliminary/public issue expenses. The Tribunal applied the coordinate-bench decision in the assessee's own earlier appeal which had allowed the amortisation and observed that the same relief had previously been granted in an earlier assessment year and attained finality; consequently the present disallowance was overturned. Having regard to the identical facts and the earlier ITAT ruling, the Revenue's ground was rejected. [Paras 11]

Revenue's challenge to disallow amortisation of preliminary expenses dismissed; the deletion by CIT(A) is affirmed.

Disallowance under section 14A and computation under Rule 8D - precedential effect of coordinate-bench decision - Sustenance of disallowance under section 14A (Rule 8D) in respect of exempt dividend income. - HELD THAT: - The Tribunal affirmed the deletion made by the CIT(A). It noted that on the facts the assessee had substantial interest-free funds relative to the minor investment yielding exempt dividend and that a coordinate-bench decision in the assessee's own case had found no justification for the Revenue's stand; accordingly the limited administrative disallowance imposed by the CIT(A) was accepted and the Revenue's appeal on this point was dismissed. [Paras 12]

Revenue's appeal against deletion/reduction of section 14A disallowance dismissed.

Treatment of unutilised CENVAT credit in closing stock - inclusive versus exclusive method for CENVAT under section 145A - precedential effect of coordinate-bench decision - Lawfulness of addition of unutilised CENVAT credit to total income by adjusting closing stock under section 145A. - HELD THAT: - The Tribunal followed the coordinate-bench decision in the assessee's earlier appeal which held that the adjustment is revenue-neutral (an increase in closing stock would result in a corresponding adjustment in the succeeding year's opening stock) and that there was no revenue effect either way between adopting inclusive or exclusive accounting for CENVAT credit. On identical facts, the Tribunal found no merit in the Revenue's addition and affirmed the CIT(A)'s deletion. [Paras 13]

Addition of unutilised CENVAT credit to income under section 145A rejected; Revenue's ground dismissed.

Deduction of employer's contribution to Provident Fund and ESI conditioned on deposit by the due date - Allowability of deduction for employees' Provident Fund and ESI contributions where contributions were deposited after the statutory due date. - HELD THAT: - The Tribunal sustained the disallowance upheld by the CIT(A). Following the Hon'ble Gujarat High Court authority cited by the Tribunal, the assessee is not entitled to deduction for such contributions unless they are credited by the assessee to the employees' accounts or relevant funds on or before the due date prescribed in the respective enactments. The assessee's appeal on this ground was therefore dismissed. [Paras 16]

Assessee's appeal against disallowance of late-deposited PF/ESI contributions dismissed.

Final Conclusion: Both the Revenue's appeal and the assessee's appeal for A.Y. 2010-11 are dismissed: the Tribunal affirmed the CIT(A) on the issues of amortisation of preliminary expenses, section 14A disallowance, and treatment of unutilised CENVAT credit, and dismissed the assessee's challenge to disallowance for late deposit of employer's PF/ESI contributions.

Fair market value as on 1-4-1981 - approved valuer's report - option under section 55(2)(b) - depreciable asset - computation under section 50 - charging of tax under section 112

Fair market value as on 1-4-1981 - approved valuer's report - option under section 55(2)(b) - Validity of the Assessing Officer's rejection of the assessee's approved valuer's report for determining the cost of acquisition of land as on 01-04-1981. - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that the assessee was entitled to avail the option to adopt the fair market value as on 1-4-1981 by producing a valuation from an approved valuer. The AO had rejected the valuation report without placing any evidence on record to show that the valuer's conclusion was incorrect or that prevailing rates on that date for similar property were lower. The provision permitting the option is beneficial to the assessee and the AO cannot refuse the reported FMV unless he adduces contrary material. No evidence was produced to show that the land sold was acquired after 1-4-1981. In these circumstances the AO's rejection of the approved valuer's report was not justified and the CIT(A)'s allowance of the valuation was sustained. [Paras 9, 15]

Rejection of the approved valuer's report by the AO is not justified; the assessee's adoption of FMV as on 01-04-1981 stands.

Depreciable asset - computation under section 50 - charging of tax under section 112 - Whether the short-term capital gain arising from transfer of depreciable asset (building) computed under section 50 precludes taxation under concessional provisions applicable to long-term capital gains. - HELD THAT: - The Tribunal agreed with the CIT(A) and followed the ratio of the Supreme Court in Commissioner of Income Tax v. V.S. Dempo Co. Ltd., holding that section 50 is a special provision limited to computing capital gain where a depreciable asset is transferred and does not determine the charging provision or exemptions under other provisions. The CIT(A) had treated the computation under section 50 as applicable for computing gain but held that taxability could be determined under the concessional charging provisions (section 112) as held in precedent. The Department could not point to any legal infirmity in that approach. Accordingly, the AO's contention did not succeed. [Paras 10, 16]

The CIT(A)'s treatment is sustained: computation under section 50 does not preclude taxation as per the concessional provisions relied upon by the CIT(A); the AO's ground is dismissed.

Final Conclusion: The appeal of the department is dismissed; the CIT(A)'s order is upheld - the approved valuer's FMV as on 01-04-1981 is accepted for the land and the CIT(A)'s treatment of capital gain on the depreciable building (consistent with the Dempo ratio) is sustained.

Validity of notice under section 148 - Reopening of assessment and formation of belief - Unexplained source of investment - Taxability as capital gains - Reassessment proceedings

Validity of notice under section 148 - Reopening of assessment and formation of belief - Unexplained source of investment - Notice issued under section 148 was valid and reassessment could be initiated. - HELD THAT: - The AO reopened the assessment after noting deposits of Rs.31 lakhs in the assessee's bank account-amounts which the AO believed arose from sale proceeds of agricultural land that the assessee had not offered to tax. Although the reasons recorded described the amounts as an "unexplained source of investment," the underlying transaction (sale proceeds not offered to tax) was the same subject matter that had escaped assessment. The Tribunal found that mere difference in nomenclature between the reason recorded and the eventual heads under which income is assessed does not vitiate the belief recorded or the reopening where there is a live nexus between the information before the AO and the suspected escapement. Prior decisions relied upon by the assessee were found distinguishable because here no new, unrelated issue surfaced after issuance of notice; the AO's belief related directly to the unaccounted sale proceeds. Consequently the notice under section 148 was not rendered invalid merely because the AO characterised the escapement as unexplained investment while the addition was ultimately made as capital gains. [Paras 6]

Notice issued under section 148 held valid; reassessment proceedings sustained.

Taxability as capital gains - Reassessment proceedings - Sale of the agricultural land attracted capital gains and the addition on merits was upheld. - HELD THAT: - On merits, the CIT(A) and the Tribunal accepted that the land was sold for non-agricultural purpose and lay within municipal limits (GVMC), and the purchaser was a non-agriculturist; consequently the sale consideration was liable to capital gains tax. The assessee did not press substantive arguments before the Tribunal on this aspect. Given the factual finding about the nature and location of the land and the character of the buyer, the Tribunal upheld the assessment on capital gains. [Paras 6]

Addition as capital gains upheld and appeal dismissed on merits.

Final Conclusion: The Tribunal admitted the additional legal ground, held the notice under section 148 valid since the AO's belief about unassessed sale proceeds was supported by material, upheld the reassessment and the capital gains addition, and dismissed the assessee's appeal for A.Y.2007-08.

Reopening of assessment under section 147/148 - Tangible material to form belief for escapement of income - Unexplained bank deposits as income - Onus on assessee to prove deposits belong to third party - Reliance on AIR/third party banking information

Reopening of assessment under section 147/148 - Tangible material to form belief for escapement of income - Reliance on AIR/third party banking information - Validity of initiation of proceedings under section 147/148 of the Income tax Act. - HELD THAT: - The Assessing Officer received AIR information about substantial cash deposits in the assessee's bank account and the assessee had not filed a return for the year. On that basis the AO formed belief that income chargeable to tax had escaped assessment and issued notice under section 148. The assessee did not produce any material before the AO or CIT(A) to controvert the factual information of deposits or to rebut the AO's belief. In the absence of contrary material, the information regarding bank deposits coupled with non filing of return constituted tangible material to justify reopening the assessment; the reopening was accordingly upheld. [Paras 3, 4]

Reopening under section 147/148 sustained and held valid.

Unexplained bank deposits as income - Onus on assessee to prove deposits belong to third party - Sustainability of addition of total bank deposits as unexplained income under the unexplained credits doctrine. - HELD THAT: - The AO found total cash and cheque deposits in two bank accounts aggregating the impugned amount. The assessee's explanation that accounts were operated by another person (Shri Amit Goyal) was supported only by submissions and an affidavit; no documentary evidence was produced to establish that the deposits belonged to that third party or were offered to tax in the third party's hands. Where the bank accounts are owned by the assessee and no convincing documentary proof is furnished to attribute the receipts to another person, the deposits can be treated as unexplained income. For want of corroborative material the CIT(A)'s upholding of the addition was justified. [Paras 4, 6]

Addition on account of unexplained deposits sustained; assessee's explanation rejected for lack of evidentiary support.

Final Conclusion: The Tribunal dismissed the assessee's appeal: the reassessment under section 147/148 was validly initiated on available banking information and non filing of return, and the addition of the deposits as unexplained income was sustained for lack of documentary proof attributing the deposits to a third party.

Admission of additional evidence - relevance of evidence going to the root of the matter - remand for fresh adjudication - reassessment proceedings - direction to adjudicating authority to decide afresh in light of precedent

Admission of additional evidence - relevance of evidence going to the root of the matter - Additional documentary evidence filed by the assessee was admissible and should be admitted for adjudication. - HELD THAT: - The Tribunal examined the nature of the documents the assessee sought to produce (certificates and maps intended to establish that the lands sold were beyond municipal limits and hence agricultural), and compared the factual matrix with co-ordinate matters where identical evidence had been admitted. Noting that the evidence "goes to the root of the matter" and is material to determine the tax liability, the Tribunal found no prejudice in admitting such evidence. Reliance was placed on earlier orders in related matters and on the principle that authorities under the Income-tax Act ought to reach the correct tax liability. In these circumstances the Tribunal exercised its discretion in favour of admission so that the merits could be fully and fairly considered.

Additional evidence admitted and directed to be considered.

Remand for fresh adjudication - direction to adjudicating authority to decide afresh in light of precedent - reassessment proceedings - Matter remanded to the Assessing Officer for de novo adjudication taking into account the additional evidence and the directions in the cited precedent. - HELD THAT: - The Tribunal set aside the impugned order and remitted the issue to the file of the Assessing Officer with directions to dispose of the matter afresh after considering the newly admitted evidence and following the guidance given in the earlier decision referred to by the Tribunal. The remand was ordered because the additional evidence directly affected the determination of tax liability and required fresh appreciation by the AO with an opportunity of hearing to the assessee.

Order set aside and matter remanded to the Assessing Officer for fresh adjudication in the light of the admitted evidence and applicable precedent.

Final Conclusion: The appeal is allowed for statistical purposes; additional evidence is admitted and the assessment is set aside and remanded to the Assessing Officer for fresh disposal after hearing the assessee and taking into account the admitted evidence in accordance with the directions in the cited precedent.

Confiscation of goods - redemption on payment of fine - Kimberley Process Certificate - penalty under Section 112(a) of the Customs Act, 1962 - re-export subject to payment under protest - condonation of delay for filing appeal

Kimberley Process Certificate - confiscation of goods - redemption on payment of fine - re-export subject to payment under protest - Permission to re-export the imported uncut diamonds on production of the Kimberley Process Certificate subject to payment of the redemption fine and penalty under protest. - HELD THAT: - The High Court, noting that delay in adjudication would prejudice the petitioner and that the petitioner has produced the Kimberley Process Certificate (Ext.P10), permitted re-export of the imported uncut diamonds on the strength of that certificate. The court allowed the petitioner to pay the redemption fine and the penalty under protest to the respondents; upon such payment the respondents were directed to permit re-export without any further delay. This relief was granted without prejudice to the petitioner's right to challenge the confiscation order and the imposition of the fine and penalty before the appropriate appellate authority.

Petitioner permitted to re-export on production of the Kimberley Process Certificate and on payment of the redemption fine and penalty under protest, with respondents to allow re-export immediately on such payment.

Condonation of delay for filing appeal - Extension/condonation for filing appeal to the Customs, Excise and Service Tax Appellate Tribunal to treat the appeal as filed within time if instituted within one month from receipt of the judgment copy. - HELD THAT: - The court directed that if the petitioner files an appeal before the Tribunal within one month from receipt of a copy of this judgment and complies with the requisite formalities, the Tribunal shall consider the appeal as having been filed within time and proceed to adjudicate the matter expeditiously. This direction was given to prevent prejudice to the petitioner occasioned by the interim permission to re-export and the pendency of adjudication.

Tribunal to treat an appeal filed within one month from receipt of this judgment as within time and to decide the appeal expeditiously.

Final Conclusion: Writ petition disposed by permitting re-export of the subject diamonds on production of the Kimberley Process Certificate and payment of redemption fine and penalty under protest, and by directing that an appeal filed within one month from receipt of this judgment be treated as within time and decided expeditiously.

Refund of customs duty - entitlement to refund despite absence of challan - proof of payment by banker's cheque - payment realized by Revenue / deposit in Government account - pre-deposit made during investigation

Refund of customs duty - entitlement to refund despite absence of challan - proof of payment by banker's cheque - Whether the appellants are entitled to refund where payment of customs duty was admitted and realised by the Revenue but the appellants do not possess and thus could not produce challans. - HELD THAT: - The Tribunal found on record (reproduced in Para 6.2 of the order in original and accepted by the appellate order) that the appellant deposited the claimed amount by two banker's cheques during the course of DRI investigation, and that those banker's cheques were forwarded to the Customs office and deposited in the Government account. Documentary references on file, including the banker's cheque copies, correspondence from DRI/Joint Director and the challan corresponding to one of the cheques, establish that the payment was received and realised by the Revenue. The sole ground for rejection was the appellant's inability to produce a challan which the appellant did not possess because payment was made by banker's cheque to the investigating agency and not by producing a challan directly. Given the admitted and evidenced receipt of payment by Revenue, the absence of a challan in the appellant's possession does not defeat the claim for refund. The Tribunal therefore held that the appellant has discharged the burden of proof as to payment and is entitled to the refund, which should be processed according to law. [Paras 4, 5]

Appellants entitled to refund; rejection solely for non production of challans is unsustainable where payment by banker's cheques was admitted and realised by the Revenue; refund to be processed in accordance with law.

Final Conclusion: The appeal is allowed: the refund claim is upheld because the payment was made by banker's cheques and received/realised by the Revenue; non production of challans held not to be a valid ground for rejection and refund is to be processed in accordance with law.

Confidentiality of committee of creditors' minutes - duty of the resolution professional to maintain confidentiality - confidentiality of liquidation value and fair market value - information memorandum as the means of furnishing relevant information to resolution applicants - refusal to share minutes to prevent prejudice to the insolvency resolution process - service of pleadings and parties entitled to receive pleadings

Confidentiality of committee of creditors' minutes - confidentiality of liquidation value and fair market value - duty of the resolution professional to maintain confidentiality - information memorandum as the means of furnishing relevant information to resolution applicants - Whether the unsuccessful resolution applicant is entitled to a copy of the minutes of the Committee of Creditors' meetings. - HELD THAT: - The Tribunal held that the minutes of CoC meetings, which include the liquidation value and fair market value and the reasoning for approval of a plan, are subject to confidentiality obligations. Regulation 35(2) requires the resolution professional to provide fair value and liquidation value to each CoC member only on obtaining undertakings of confidentiality. Regulation 7(2)(h) and the First Schedule bind the resolution professional to maintain confidentiality of CIRP-related information. The resolution professional had already supplied relevant information through the information memorandum to enable filing of resolution plans. Allowing the unsuccessful applicant access to the CoC minutes would risk prejudicing the fair conduct of the CIRP and would amount to using the demand for pleadings as a means to enhance its objections. On these grounds the Tribunal refused the request to furnish copies of the CoC minutes and dismissed the inspection/application seeking them. [Paras 15, 16]

Request for copies of CoC minutes by the unsuccessful resolution applicant is rejected; confidentiality obligations under the Regulations and provision of the information memorandum justify refusal.

Service of pleadings and parties entitled to receive pleadings - refusal to share minutes to prevent prejudice to the insolvency resolution process - Whether the operational creditor must serve its Miscellaneous Application No. 1770/2019 on the unsuccessful resolution applicant (SSG Group). - HELD THAT: - The Tribunal clarified that the operational creditor need not serve its application challenging the resolution plan on the unsuccessful resolution applicant. The objections of the operational creditor and those of the unsuccessful resolution applicant will be heard separately, and the denial to share CoC minutes reinforces that separate hearings and non-service to the unsuccessful applicant are appropriate in the circumstances to protect the process. [Paras 17]

The operational creditor is not required to serve its Miscellaneous Application No. 1770/2019 on the unsuccessful resolution applicant; respective objections will be heard separately.

Final Conclusion: The Tribunal dismissed the applications seeking inspection or copies of CoC minutes, holding that confidentiality obligations under the insolvency regulations and provision of information via the information memorandum bar disclosure; it also held that the operational creditor need not serve its challenge to the resolution plan on the unsuccessful resolution applicant and directed that the respective objections be heard separately.

Operational debt and default under the Insolvency and Bankruptcy Code - Admission of application under Section 9 of the IBC - Demand notice and absence of a contested dispute - Moratorium and its prohibitions under the IBC - Public announcement and submission of claims - Appointment of Interim Resolution Professional and advance fee - Committee of Creditors meeting and timeline for identification of resolution applicant

Operational debt and default under the Insolvency and Bankruptcy Code - Admission of application under Section 9 of the IBC - Demand notice and absence of a contested dispute - Application under Section 9 of the Insolvency & Bankruptcy Code admitted on the ground that the Operational Creditor proved existence of an operational debt, issuance of demand notice and that the Corporate Debtor committed default with no admissible dispute preventing admission. - HELD THAT: - The Tribunal found that the Operational Creditor supplied goods, raised invoices and issued a demand notice dated 26.03.2018 under Section 8; the Corporate Debtor replied admitting dues but did not pay. The Operational Creditor filed the required affidavit under Section 9(3)(b) asserting no notice of dispute by the Corporate Debtor. Having considered the documents tendered (waybills, tax invoices, ledger, demand notice and reply) and the parties' pleadings, the Tribunal held that the ingredients of Section 9(5)(i) were established and therefore admission was warranted. The Corporate Debtor's averment that it was unable to pay due to circumstances beyond its control did not negate the admitted default or a valid demand, and no substantive disputed claim was shown to bar admission. [Paras 7, 8, 9, 10, 11]

The Section 9 application is admitted and CIRP is initiated against the Corporate Debtor.

Moratorium and its prohibitions under the IBC - Public announcement and submission of claims - Moratorium declared and public announcement directed to be made with prohibition of specified actions during the insolvency period. - HELD THAT: - Upon admission, the Tribunal declared a moratorium with immediate effect and directed public announcement in accordance with the Code. The moratorium was specified to prohibit institution or continuation of suits or proceedings, transfer or disposal of assets by the corporate debtor, actions to enforce security interests (including under SARFAESI), and recovery of property from possession of the corporate debtor. The Tribunal directed the Interim Resolution Professional to cause the public announcement and call for submission of claims as mandated by the statutory scheme. [Paras 11]

Moratorium declared; public announcement and claim submission instructed to be effected immediately.

Appointment of Interim Resolution Professional and advance fee - Committee of Creditors meeting and timeline for identification of resolution applicant - Interim Resolution Professional appointed, advance fee directed to be paid by the Operational Creditor, and timelines set for convening the Committee of Creditors and identification of prospective resolution applicant. - HELD THAT: - The Tribunal appointed a named Insolvency Professional as Interim Resolution Professional to ascertain particulars of creditors and to convene the Committee of Creditors. The Operational Creditor was directed to pay an advance fee to the IRP as per the applicable regulation, to be adjusted against total fees. The IRP was directed to convene the CoC and identify prospective resolution applicants and submit the CoC's resolution within the statutory timeframe of 105 days from the insolvency commencement date. [Paras 11]

IRP appointed; advance fee to be paid by the Operational Creditor; IRP to convene CoC and complete actions within the prescribed period.

Final Conclusion: The Tribunal admitted the Section 9 application, declared moratorium with its statutory prohibitions, directed immediate public announcement and claim submission, appointed an Interim Resolution Professional with an advance fee payable by the Operational Creditor, and directed the IRP to convene the Committee of Creditors and identify resolution applicants within the stipulated timeline.

Direction restraining travel - impounding of passport - jurisdiction of passport authorities under the Passport Act - liberty to apply to passport authorities under Section 10/10A of the Passport Act, 1967

Direction restraining travel - Committee of Creditors' apprehension - The non-applicant respondents are restrained from leaving the country without prior permission of the Tribunal. - HELD THAT: - The Tribunal found that there are substantial allegations of under-value, wrongful and fraudulent transactions against the ex-directors/promoters and that the Committee of Creditors had, by unanimous resolution, expressed apprehension that the directors might flee in the face of a forensic audit. The Tribunal held that the existence of cooperation with the Resolution Professional or social roots does not obviate the risk warranting restraint. Accordingly, the interim direction dated 23.04.2019 preventing the named respondents from leaving the country without prior permission of the Tribunal was made absolute. [Paras 10, 13]

Direction that the named non-applicant respondents shall not leave the country without prior permission of the Tribunal is made absolute.

Impounding of passport - jurisdiction of passport authorities under the Passport Act - liberty to apply to passport authorities under Section 10/10A of the Passport Act, 1967 - The Tribunal cannot impound passports; the jurisdiction to impound or retain passports vests with passport authorities under the Passport Act, though the Resolution Professional may approach those authorities. - HELD THAT: - Relying on the Supreme Court's authority that retention or impounding of a passport is a function of the passport authority under the Passport Act (and that retention by other authorities is subject to statutory limits), the Tribunal accepted that it lacks jurisdiction to impound passports. The Tribunal therefore declined to order impounding but expressly granted the Resolution Professional liberty to move the passport authorities under Section 10 or Section 10A of the Passport Act, 1967 for such relief; rejection by passport authorities would not bar the Resolution Professional from making the application. [Paras 11, 12, 13]

Prayer for impounding passports refused by this Tribunal; Resolution Professional granted liberty to apply to passport authorities under the Passport Act.

Final Conclusion: The Tribunal made absolute its prior order restraining the named ex-directors/promoters from leaving India without prior permission of the Tribunal, but refused to impound their passports because that power vests with the passport authorities; the Resolution Professional was given liberty to approach the passport authorities under Section 10/10A of the Passport Act, 1967.

Adjudicatory limitation in Section 7 proceedings - fraudulent initiation under Section 65 of the I&B Code - genuineness of an assignment agreement - relevance of NPA under SARFAESI to the I&B Code

Adjudicatory limitation in Section 7 proceedings - genuineness of an assignment agreement - The Adjudicating Authority and this Appellate Tribunal cannot examine the genuineness of the Assignment Agreement in proceedings under Section 7 unless fraud is specifically alleged and raised under Section 65 of the I&B Code. - HELD THAT: - The Tribunal noted two Assignment Agreements existed but the Corporate Debtor did not dispute the existence of debt or default. It held that the question of whether the Assignment Agreement dated 17th April, 2015 is genuine is not to be gone into in a Section 7 application or on appeal, unless the Corporate Debtor invokes Section 65 alleging fraud by the Financial Creditor. No such plea under Section 65 was taken before the Adjudicating Authority in the initiation proceedings; accordingly the Tribunal could not entertain allegations of fraud as a basis to negate the assignment in the Section 7 process. [Paras 5, 6]

The challenge to the genuineness of the Assignment Agreement cannot be adjudicated in Section 7 proceedings in the absence of a specific Section 65 allegation.

Relevance of NPA under SARFAESI to the I&B Code - The provision of NPA under the SARFAESI Act has no bearing on the proceedings under the I&B Code in the context of initiation under Section 7. - HELD THAT: - The Tribunal observed that the concept of NPA, which pertains to the SARFAESI Act, is unrelated to the Code and therefore cannot be relied upon as a ground within the Section 7 or related appellate proceedings to challenge initiation of the Corporate Insolvency Resolution Process. [Paras 7]

NPA under SARFAESI is not relevant to the Code for purposes of challenging Section 7 initiation.

Fraudulent initiation under Section 65 of the I&B Code - The Adjudicating Authority rejected the appellant's subsequent application under Section 65 alleging that the insolvency resolution process was initiated fraudulently or with malicious intent. - HELD THAT: - The Tribunal recorded that the appellant filed an application under Section 65 alleging malicious or fraudulent initiation, which the Adjudicating Authority rejected by the impugned order dated 15th January, 2019. The Tribunal reiterated that the validity of the Assignment Agreement could not be decided by the Adjudicating Authority in the Section 7 process and thus the same contention could not be reiterated in the appeal before this Tribunal. Thereafter the appellant sought and was granted permission to withdraw the appeal subject to a stipulation. [Paras 2, 3]

The Section 65 allegation was rejected by the Adjudicating Authority and the Tribunal declined to re-adjudicate the validity of the Assignment Agreement in this appeal; the appeal was disposed of as withdrawn with a stipulation.

Final Conclusion: The appeal is dismissed/treated as withdrawn with permission granted to withdraw subject to a clear stipulation that the appellant will not raise the matter again; the Tribunal declined to examine the genuineness of the Assignment Agreement in Section 7 proceedings absent a Section 65 fraud plea and held that NPA under SARFAESI is not relevant to the I&B Code in this context.

Refund of Service Tax - Credit Note as evidence of reversal - Confirmation by recipient of non-payment and non-availment of input credit - Bona fide payment / payment by mistake - Denial of refund on account of delay

Credit Note as evidence of reversal - Confirmation by recipient of non-payment and non-availment of input credit - Entitlement to refund where assessee issued credit note and recipient confirmed non-payment and non-availment of input credit. - HELD THAT: - The Tribunal found on the record that the assessee had issued a credit note in favour of M/s. CIFCL which was acknowledged by that party, and that M/s. CIFCL confirmed receipt of the invoices, non-payment against them and non-availment of Service Tax input credit. The Mumbai Bench decision in M/s. Edelweiss Securities Ltd. was applied to hold that issuance of a credit note manifests reversal of the taxable transaction and its attendant tax; where authenticity of the credit note is not disputed by Revenue, the credit note and recipient's confirmation suffice to establish entitlement to refund. The Adjudicating Authority's observations about alleged contradictions were noted but did not lead to a finding that the refund claim was legally ineligible. [Paras 7]

The assessee is entitled to refund on the basis of the issued credit note coupled with the recipient's confirmation; the Revenue did not establish legal ineligibility.

Bona fide payment / payment by mistake - Denial of refund on account of delay - Whether refund can be denied for delay where Service Tax was paid by mistake. - HELD THAT: - Relying on the dictum of the Hon'ble Madras High Court in M/s. 3E Infotech, the Tribunal held that where Service Tax has been paid by mistake, a claim for refund cannot be rejected on the ground of delay. Applying that principle to the facts, the Tribunal concluded there was no room for suspicion as to the bona fides of the claim and that denial of refund on delay grounds was not permissible. [Paras 8]

Refund cannot be refused on account of delay where tax was paid by mistake; the assessee's refund claim cannot be rejected for delay.

Final Conclusion: Impugned order set aside; appeal allowed and refund of Service Tax granted to the assessee with consequential benefits as per law.

Refund of tax paid by mistake / erroneous payment - limitation and exclusionary effect of the refund code under Section 11B - bar on jurisdiction of civil courts in refund claims under the statutory refund regime - jurisdiction of adjudicating authorities to entertain refund claims where payment was accepted

Refund of tax paid by mistake / erroneous payment - limitation and exclusionary effect of the refund code under Section 11B - Whether the refund claim filed after the statutory time-limit is barred by limitation where the tax/service tax was paid by mistake. - HELD THAT: - The Tribunal examined the impugned orders which rejected the refund solely on the ground of delay in filing the claim. Relying on the binding decision of the jurisdictional High Court in M/s. 3E Infotech, the Tribunal held that where service tax (or analogous duty) has been paid by mistake or in excess and accepted by the Revenue, a claim for refund cannot be defeated merely by the expiry of the statutory limitation under the refund code. The Tribunal observed that the Revenue did not dispute the assessee's eligibility for refund and, applying the principle in the cited High Court decision, concluded that limitation under the refund provisions could not operate to bar recovery of an erroneously paid tax. For these reasons the rejection of the refund on limitation alone was set aside and the appeal allowed with consequential relief. [Paras 7, 8, 9]

Refund claim filed after the statutory period cannot be rejected on limitation alone where the tax was paid by mistake; the impugned rejection on limitation is set aside and appeal allowed.

Bar on jurisdiction of civil courts in refund claims under the statutory refund regime - jurisdiction of adjudicating authorities to entertain refund claims where payment was accepted - Whether the assessee must approach a civil court because the authorities lack jurisdiction to entertain the refund claim. - HELD THAT: - The Tribunal considered the Revenue's contention (relying on a contrary Bench) that the matter is purely civil and not triable by the statutory authorities. Applying the majority reasoning of the Supreme Court (as discussed in the judgment reproduced at paragraph 7.2.2) and the binding jurisdictional High Court authority, the Tribunal held that the statutory refund regime is exclusive and bars resort to civil courts for refund claims arising under the Act. The Tribunal further noted the practical inconsistency of treating acceptance of payment by Revenue as conferring jurisdiction to collect but not to refund; where Revenue has accepted payment, the statutory machinery must govern both collection and refund. Consequently the plea that the assessee must proceed to a civil court was rejected. [Paras 7]

Civil court jurisdiction is excluded for refund claims falling within the statutory refund code; the adjudicating authorities have jurisdiction to entertain the refund claim and the Revenue's contention to the contrary is rejected.

Final Conclusion: The appeal is allowed: the rejection of the refund application solely on the ground of limitation is set aside insofar as the refund relates to tax paid by mistake/excess and accepted by the Revenue; the statutory authorities have jurisdiction to entertain the refund claim and the assessee is entitled to consequential relief as per law.

Cenvat credit on outward transportation of goods - definition of input service - place of removal - entitlement to credit up to 31.03.2008 - export: place of removal is the port - remand for factual verification of FOR basis and freight being integral to sale

Cenvat credit on outward transportation of goods - definition of input service - entitlement to credit up to 31.03.2008 - Appellant's entitlement to avail cenvat credit of service tax paid on outward transportation from the place of removal for the period up to 31.03.2008. - HELD THAT: - The Tribunal applied the ratio of the decisions of the Hon'ble Apex Court and the Karnataka High Court which construed the definition of input service as containing both an exhaustive and an inclusive part; the exhaustive portion must be read restrictively while the inclusive portion is to be read broadly. The Courts held that the exhaustive part expressly includes 'clearance of final products from the place of removal' and, until the amendment effective 01.04.2008, this expression covered transportation charges from the place of removal to the destination. On that basis the Tribunal held that services received by the manufacturer from the place of removal until the goods reached the purchaser fell within the definition of input service, entitling the appellant to credit for the period up to 31.03.2008. Consequentially the demand insofar as it related to the period up to 31.03.2008 was set aside. [Paras 6, 7]

Credit availed on outward transportation from the place of removal is allowable up to 31.03.2008 and the demand for that period is set aside.

Export: place of removal is the port - cenvat credit on transportation up to the port - Whether, in cases of export, the port is the place of removal and whether credit of service tax on transportation up to the port is allowable. - HELD THAT: - Relying on tribunal and High Court decisions cited by the appellant, the Tribunal accepted that for exports the place of removal is the port. Applying that principle, the Tribunal found that cenvat credit availed on transportation of goods up to the port (in respect of exported goods) falls within the ambit of allowable credit for the period in question and therefore set aside the denial of such credit. [Paras 6, 7]

For exported goods the port is the place of removal and credit of service tax on transportation up to the port is allowed; denial of such credit is set aside.

Remand for factual verification of FOR basis and freight being integral to sale - place of removal - Adjudication of appellant's claim to cenvat credit of service tax on transportation to customers' premises for the period April 2008 requires remand for factual verification. - HELD THAT: - The Tribunal noted subsequent decisions of the Tribunal and the Madras High Court and Board Circular No. 1065/4/2018-CX dated 08.06.2018 which require examination of factual aspects such as whether sales were on FOR basis, whether freight formed an integral part of the sale price, and related customs valuation treatment. As the eligibility for credit for the period w.e.f. 01.04.2008 depends on these factual determinations, the Tribunal did not decide the substantive claim for April 2008 on merits but remanded the matter to the adjudicating authority to examine the documents and facts and pass a fresh order for April 2008. [Paras 6, 7]

Matter remanded to the original authority to verify factual aspects (FOR basis, freight integral to sale, customs treatment) and pass a fresh order for April 2008.

Final Conclusion: Appeal partly allowed: cenvat credit on outward transportation from the place of removal allowed and demand set aside for period up to 31.03.2008; credit up to export port allowed for exported goods; claims for April 2008 remanded to the original authority for factual verification and fresh adjudication.

Payment in wrong registration number - No Objection Certificate - treatment of tax payment as discharge of liability - penalty under Section 77 of the Finance Act, 1994

Payment in wrong registration number - No Objection Certificate - treatment of tax payment as discharge of liability - Whether service tax deposited by the assessee under another registrant's Service Tax Registration Number can be treated as discharge of tax liability where the registrant in whose code the amount was deposited issues a No Objection Certificate. - HELD THAT: - The Appellant admittedly deposited the service tax for the period specified, but specified the Service Tax Registration Number of a Director's proprietary concern instead of the company's own registration. The Director (the registrant in whose code the payment was made) furnished a No Objection Certificate for taking credit of the amount. The Tribunal found that, in the absence of any dispute about the fact of payment and having regard to the registrant's concurrence by way of No Objection Certificate, the deposit must be treated as having been made in the Appellant's own registration for the purposes of discharging tax liability. The Commissioner (Appeals)'s view that the payment should be treated as non-payment (relying on a narrow reading of the Board circular as applicable only to wrong accounting head) was not accepted; the Tribunal emphasised the dispositive effect of the registrant's No Objection Certificate and the absence of any real dispute on payment.

Impugned order of the Commissioner (Appeals) reversed; the order of the original adjudicating authority restored and the Appeal allowed with consequential relief.

Penalty under Section 77 of the Finance Act, 1994 - Whether the penalty imposed by the original adjudicating authority in the circumstances should stand. - HELD THAT: - The original adjudicating authority had vacated the show cause proceedings (treating the payment as discharged) and nonetheless imposed a penalty under Section 77. The Tribunal, having held that the deposit discharged the tax liability in view of the No Objection Certificate and absence of dispute as to payment, restored the original order of the adjudicating authority. By restoration, the adjudicator's concurrent orders, including imposition of penalty under Section 77, stand subsisting as recorded in that order.

Order of the original adjudicating authority, including imposition of penalty, restored; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, set aside the Commissioner (Appeals) order, and restored the adjudicating authority's order treating the tax deposited under the Director's registration (with a No Objection Certificate) as discharge of the Appellant's liability, with consequential relief; the original order (including the penalty imposed) therefore stands restored.

Service Tax liability - service to self - independent service provider - extended period of limitation - suppression with intent to evade tax - normal period of limitation - remand for computation

Service Tax liability - service to self - independent service provider - Whether the services provided by the appellant to Tata Steel Ltd. constituted a taxable service by an independent service provider or a service for self not liable to Service Tax. - HELD THAT: - The Adjudicating Authority examined the contract, statements and documentary record and found that the appellant entered into a contract through open tendering, received purchase orders, allotted vendor codes and treated Tata Steel Ltd. as a customer; the appellant also subcontracted work and availed service credit on amounts charged. The appellant pleaded that the services were for self but produced no documentary evidence to substantiate that contention. The Tribunal accepted the Adjudicating Authority's factual findings that there was a service provider, a service recipient and consideration, and accordingly rejected the 'service to self' plea and upheld liability for Service Tax on the services rendered. [Paras 5, 6]

The services were rendered by an independent service provider to Tata Steel Ltd. and are liable to Service Tax; the 'service to self' plea is rejected.

Extended period of limitation - suppression with intent to evade tax - normal period of limitation - remand for computation - Whether the extended period of limitation could be invoked for the period in dispute and the consequent scope of the demand. - HELD THAT: - The Tribunal observed that the Revenue's information arose from checking the appellant's own records by the Preventive Team and not from an independent source demonstrating concealment; there was no specific finding of suppression, fraud or intent to evade tax to justify invoking the extended period. In view of that, the Tribunal held that demands can only be sustained for the normal period of limitation. The Tribunal remanded the matter to the Adjudicating Authority to work out liability, if any, confined to the normal period. [Paras 3, 6, 7]

Extended period of limitation is not invokable; demand is sustainable only for the normal period and the matter is remanded for computation of liability for that period.

Final Conclusion: Appeal partly allowed: the Tribunal upheld that taxable service was rendered by the appellant but held that the extended period of limitation could not be invoked; the matter is remanded to the Adjudicating Authority to compute liability, if any, for the normal limitation period only.

Admissibility of Cenvat Credit on input services - Input service nexus with output service - Credit admissible despite invoice not mentioning service provider registration number - Presumption of business use where mobile phones provided and bills paid by assessee - Sale of spare parts treated as sale (VAT) - not leviable to service tax - Leviability of service tax on warranty reimbursements - Classification of receipts as Business Auxiliary Service versus Authorised Service Station Service/Insurance Auxiliary Service - Demand cannot be confirmed under a category different from that proposed in the show cause notice - Interest and penalty fall away if primary demands are set aside

Admissibility of Cenvat Credit on input services - Input service nexus with output service - Credit admissible despite invoice not mentioning service provider registration number - Presumption of business use where mobile phones provided and bills paid by assessee - Entitlement to Cenvat Credit on various input services used in the business of authorised service station and dealership. - HELD THAT: - The Tribunal found that the various input services on which credit was denied (including repair and maintenance of audio systems, pollution equipment, SMS campaign, courier services, mobile phone services, security, chartered accountant services, consultancy, advertising and other listed services) were availed in the course of the appellant's business and thus qualify as input services. The decision in the appellant's earlier common order dated 27 December 2018 was treated as binding precedent for several of these services, holding that services availed during the course of the business entitle the assessee to credit and that receiving services outside the unit is not a ground for denial. The denial merely because invoices did not state the provider's service tax registration number was held impermissible where receipt, utilisation and payment were established. With regard to mobile phone services, where bills were raised in the appellant's name, paid by the appellant and phones supplied to employees, a prima facie presumption of business use arises; the department produced no evidence to rebut this presumption and credit was allowed. Overall, the Tribunal applied these principles service-wise and held that credit must be permitted. [Paras 11, 12, 13, 14, 15]

Cenvat Credit on the listed input services is admissible and the denials in the impugned orders are set aside.

Sale of spare parts treated as sale (VAT) - not leviable to service tax - Inclusion of spare parts value in gross value for service tax - Whether value of spare parts sold in the course of providing authorised service station service is includible in taxable value for service tax. - HELD THAT: - The Tribunal held that where spare parts are sold as part of the servicing transaction and VAT is charged (sale of goods), the value attributable to spare parts cannot be subjected to service tax. The conclusion follows departmental circular clarification (23 August 2007) and earlier decisions including the appellant's own appeal decided on 27 December 2018 and relevant Allahabad decisions cited by the appellant. Invoices showing separate values for parts and labour and levy of VAT on parts support the conclusion that the parts component is a sale and not a taxable service component. [Paras 17]

Service tax cannot be levied on the value of spare parts sold; the inclusion of spare parts value in the demand is set aside.

Leviability of service tax on warranty reimbursements - Classification of receipts as Business Auxiliary Service versus Authorised Service Station Service - Levy of service tax on amounts recovered from manufacturer under warranty claims for free services rendered by the authorised service station. - HELD THAT: - The Tribunal accepted the appellant's submission (and the departmental circular relied upon) that amounts reimbursed by the manufacturer for warranty work carried out by the authorised service station are not leviable to service tax as Business Auxiliary Service. At most such activity could fall within Authorised Service Station Service, and in any event the earlier decision in the appellant's own appeal dated 27 December 2018 precluded imposition of service tax on these warranty receipts. Consequently, the demand confirmed on this head was set aside. [Paras 19]

Service tax demand on amounts received under warranty claims is not sustainable and is set aside.

Classification of receipts as Business Auxiliary Service versus Authorised Service Station Service - Demand cannot be confirmed under a category different from that proposed in the show cause notice - Levy of service tax on commission/'pay out' received from banks (alleged business auxiliary service or insurance auxiliary service). - HELD THAT: - The Tribunal found that the appellant did not provide services of promoting or marketing on behalf of banks but merely performed clerical/processing tasks (collecting and forwarding loan papers) for which banks paid amounts. The issue had already been decided in the appellant's favour in its own appeal dated 27 December 2018, and additionally the adjudicating authority could not confirm a demand under a different service category than that specified in the show cause notice. On these bases, the confirmed demand was held unsustainable. [Paras 21]

Service tax demand on commission received from banks is set aside.

Interest and penalty fall away if primary demands are set aside - Imposition of interest and penalties consequential to the primary service tax demands. - HELD THAT: - Because the Tribunal set aside the primary demands on the substantive issues (Cenvat credit denials, inclusion of spare parts, warranty receipts, and commission from banks), the orders imposing interest and penalties could not be sustained. The Tribunal therefore held that interest and penalty do not survive once the underlying demands are quashed. [Paras 23]

Interest and penalties imposed in consequence of the set-aside demands are not leviable.

Final Conclusion: All impugned orders confirming service tax demands and denying Cenvat credit were set aside; the appeals are allowed, with the consequence that the confirmed demands, interest and penalties stand quashed.

Classification of loading and transportation services as "Goods Transport Agency Services" - Non-taxability under "Cargo Handling Services" for loading and transport within mines - Taxable service provided by a Goods Transport Agency in relation to transport of goods by road in a goods carriage - Irrelevance of distance (short haul v. long haul) for classification as Goods Transport Agency Services

Classification of loading and transportation services as "Goods Transport Agency Services" - Non-taxability under "Cargo Handling Services" for loading and transport within mines - Irrelevance of distance (short haul v. long haul) for classification as Goods Transport Agency Services - Whether the services of loading and transportation of coal within the mines fall taxable under the category of "Cargo Handling Services" or are to be treated as services of a "Goods Transport Agency" and thus not chargeable as Cargo Handling Services. - HELD THAT: - The Tribunal examined the contracts and held that the character of the service is governed by the statutory definition of a taxable service provided by a "Goods Transport Agency" in relation to transport of goods by road in a goods carriage. The Tribunal rejected the conclusion that short-distance transport incidental to loading within mines converts the service into "Cargo Handling Services." It was held that the length of haul is not a relevant criterion for classification; where the statutory requirements for "Goods Transport Agency Services" are satisfied the service falls under that category. The Tribunal observed that this conclusion is consistent with earlier decisions of the same Tribunal in CCE v. Sainik Mining Allied Services Ltd. (reported) and the cited Final Order, which held that loading and transportation of coal within mines are not taxable as Cargo Handling Services. Applying that reasoning to the contracts before it, the Tribunal set aside the impugned order of the Appellate Commissioner. [Paras 6, 7]

Impugned order upholding demand as "Cargo Handling Services" set aside and appeal allowed; the services are to be treated as Goods Transport Agency Services and not taxable as Cargo Handling Services.

Final Conclusion: The Tribunal allowed the appeal, holding that the appellant's loading and transportation of coal within the mines qualify as services of a Goods Transport Agency and are not taxable as Cargo Handling Services for the period in dispute; the impugned order demanding service tax was set aside with consequential relief.

Mandatory penalty cannot be reduced or waived - payment of tax prior to issuance of show cause notice does not absolve penalty liability - imposition of penalty under sections 77 and 78 of the Finance Act, 1994 - inapplicability of waiver under Section 80 for the relevant period

Mandatory penalty cannot be reduced or waived - payment of tax prior to issuance of show cause notice does not absolve penalty liability - imposition of penalty under sections 77 and 78 of the Finance Act, 1994 - Validity of imposition of penalties under sections 77 and 78 where service tax and interest were paid prior to issuance of show cause notice - HELD THAT: - The Tribunal examined whether the appellant's prior payment of service tax and interest during investigation absolved it from penalties imposed under mandatory provisions. Relying on the principle that where the statutory provision mandates imposition of penalty, the adjudicating authority has no jurisdiction to remit, reduce or waive such penalty, the Tribunal upheld the mandatory operation of the penalty provisions. The Tribunal noted authority relied upon by the Revenue holding that payment of duty before issuance of show cause notice does not extinguish liability for penalty and accepted the Revenue's submission that mandatory penalty provisions must be given effect to. The appellant's reliance on earlier decisions was considered but not found to negate the settled legal position that payment before notice does not by itself preclude imposition of mandatory penalties. Consequently, the penalties under sections 77 and 78 were held to have been validly imposed. [Paras 6, 7]

Penalties under sections 77 and 78 were validly imposed despite payment of service tax and interest prior to the show cause notice.

Inapplicability of waiver under Section 80 for the relevant period - Whether Section 80 (waiver of penalties for reasonable cause) applied to relieve the appellant from penalties - HELD THAT: - The Tribunal considered whether the appellant could invoke Section 80 for waiver of penalties. Having examined the statutory position for the period in question, the Tribunal found that Section 80 did not apply for the relevant period and therefore could not operate to mitigate or extinguish the penalties imposed. On that basis, no relief under Section 80 was available to the appellant. [Paras 6]

Section 80 was not applicable for the relevant period and could not be invoked to waive the penalties.

Final Conclusion: The appeal is rejected; the impugned order confirming demand, interest and imposition of penalties under sections 77 and 78 is upheld, and no waiver under Section 80 is available for the relevant period.

Cash refund of accumulated CENVAT Credit - unutilized credit due to closure of the factory - judicial precedent - remand for fresh consideration

Cash refund of accumulated CENVAT Credit - unutilized credit due to closure of the factory - judicial precedent - remand for fresh consideration - Matter remitted to the Adjudicating Authority for fresh adjudication of the appellant's claim for cash refund of accumulated CENVAT credit lying unutilized on account of closure of the factory. - HELD THAT: - The Tribunal noted that subsequent to the impugned order a series of judicial decisions were rendered in favour of assessees on the question of entitlement to refund of unutilized CENVAT credit where factories had closed. In view of the evolved law and the judgments cited by the appellant, the Tribunal found it appropriate to set aside the impugned order and direct fresh consideration. The Adjudicating Authority is required to consider the judgments relied upon by the appellant, compare the factual matrices of those decisions with the facts of the present case, and pass a reasoned fresh order on the refund claim.

Impugned order set aside and matter remanded to the Adjudicating Authority to decide the refund claim afresh after considering the cited judgments and comparing their facts with the present case.

Final Conclusion: Appeal allowed by way of remand: the impugned order is set aside and the matter is remitted to the Adjudicating Authority for fresh adjudication of the refund claim in light of subsequently decided judicial authorities.

Refund / rebate of excise duty - claim under Section 11B - refund under Rule 18 of the Central Excise Rules, 2002 - export without payment of duty - Notification No. 45/2001-C.E.(N.T.) and Rule 19 procedure - distinction between Rule 18 and Rule 19 - Article 265 of the Constitution (no tax except by authority of law)

Refund / rebate of excise duty - refund under Rule 18 of the Central Excise Rules, 2002 - Notification No. 45/2001-C.E.(N.T.) and Rule 19 procedure - distinction between Rule 18 and Rule 19 - Whether Notification No. 45/2001 (governing exports without payment of duty) was correctly applied to reject a refund claim where duty had been paid and refund was claimed under Rule 18. - HELD THAT: - The Tribunal found as an undisputed fact that the appellant exported after paying appropriate excise duty and claimed refund under Rule 18. Notification No. 45/2001 is issued under Rule 19 and prescribes procedure for exports made without payment of duty. Rule 19 is distinct from Rule 18 which deals with rebate/refund where duty has been paid. On the facts of this case the Notification and the Rule 19 procedure were not applicable and could not be blindly applied to deny a Rule 18 refund claim. Consequently, the rejection of the refund on the basis of Notification No. 45/2001 was not justified. [Paras 4, 6]

Notification No. 45/2001 / Rule 19 procedure not applicable; refund claim under Rule 18 cannot be rejected on that basis.

Claim under Section 11B - refund / rebate of excise duty - Article 265 of the Constitution (no tax except by authority of law) - Whether the appellant was entitled to the refund/rebate claimed and whether procedural limitations or other conditions prevented refund. - HELD THAT: - The Tribunal noted the law that a rebate of duty exported is encompassed within refund jurisprudence and claims of rebate may fall under Section 11B, as explained by the Apex Court. In the present case the Revenue did not dispute that duty was correctly paid nor did it challenge the appellant's fulfilment of other conditions for refund under Section 11B. The tribunal also relied on the High Court reasoning that retaining tax paid contrary to law would violate Article 265 and that claims for mistaken or excess payments must be considered. Given absence of challenge to eligibility and the distinct treatment of rebate/refund, the appellant was held entitled to the refund claimed. [Paras 4, 5, 6]

Entitlement to refund established; claim cannot be denied on the grounds advanced and must be allowed in accordance with law.

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

Cenvat credit reversal under Rule 6(3) of the Cenvat Credit Rules, 2004 - separate entity test for independent manufacture / contract manufacture - mis-utilisation of Cenvat credit - evidentiary burden to prove independent manufacture - probative value of entries in RG-1/ER-1 and statutory books - treatment of drug manufacturing licence vis-a -vis excise registration for determination of manufacturer - penalty and interest under Central Excise law for failure to reverse credit

Separate entity test for independent manufacture / contract manufacture - evidentiary burden to prove independent manufacture - probative value of entries in RG-1/ER-1 and statutory books - Whether M/s Panheber/Panera Biotec Pvt. Ltd. was an independent manufacturer of the vaccine during the relevant period or the appellant manufactured the vaccine and thus could not claim exemption treatment. - HELD THAT: - The Tribunal examined records called for by the Adjudicating Authority and the report of the Jurisdictional Assistant Commissioner. Though a drug manufacturing licence in the name of M/s Panera Biotec Ltd. existed, central excise records show that Panera applied for central excise registration only in 2011 and was registered in 2011, whereas the contested manufacture/clearances relate to April 2008 to April 2009. The Assistant Commissioner reported absence of evidence of Panera's independent existence on the ground plan prior to 2011 and noted that Panera's financial statements for 2008-09 did not disclose supplies of vaccine to the appellant. The appellant failed to produce evidence of independent infrastructure or utilities (such as separate power connection or sub-metering), of contractual payments for use of plant and machinery as per the alleged contract, or of independent production returns. The statutory records of the appellant (RG-1/ER-1 and VAT returns) recorded production and clearances of the vaccine from the appellant's unit. On these facts the Tribunal found that the appellant did not discharge the evidentiary burden of proving that Panheber/Panera was an independent manufacturer during the relevant period and accepted the Department's conclusion that the vaccine was manufactured by the appellant in the name of Panheber/Panera. [Paras 13, 14, 15, 16, 17]

Findings of the Department that the appellant manufactured the vaccine and that Panheber/Panera did not operate as an independent manufacturer during the relevant period are upheld.

Cenvat credit reversal under Rule 6(3) of the Cenvat Credit Rules, 2004 - mis-utilisation of Cenvat credit - penalty and interest under Central Excise law for failure to reverse credit - Whether, having concluded that the appellant manufactured the exempted vaccine, the demand for reversal of Cenvat credit and imposition of interest and penalty was sustainable. - HELD THAT: - The Tribunal applied the factual conclusion that the appellant was the effective manufacturer of the vaccine to the statutory scheme governing reversal of credit. Given the appellant's failure to establish independent manufacture by Panheber/Panera and the presence of production and clearance entries in the appellant's statutory records, the Tribunal found no infirmity in the Adjudicating Authority's invocation of Rule 6(3) for reversal of credit and the consequential imposition of interest and penalty under the Central Excise provisions as adjudicated. The earlier remand was satisfied by the Adjudicating Authority's verification steps and report; the subsequent adjudication re-affirmed the demand on the basis of the material noted above. [Paras 11, 12, 16, 17, 18]

Demand for reversal of Cenvat credit, and imposition of interest and penalty as confirmed by the Adjudicating Authority, is sustained and the impugned order is upheld.

Final Conclusion: On the facts and documentary record for April 2008 to April 2009 the Tribunal finds that the appellant failed to prove that an independent entity manufactured the vaccine; the Department's conclusion of manufacture by the appellant is upheld and the demand for reversal of Cenvat credit with interest and penalty is sustained; the appeal is dismissed.

Cenvat credit on input services - input services not used in relation to the output service - prohibition of credit for Goods Transport Agency service - Cenvat Credit Rules applicable only to provider of taxable output service - extended period of limitation under Rule 14 read with Section 73

Prohibition of credit for Goods Transport Agency service - Cenvat Credit Rules applicable only to provider of taxable output service - Whether Cenvat credit on input services is admissible in respect of GTA service for the period in issue - HELD THAT: - The Tribunal upheld the finding that credit in respect of input services for GTA is not admissible. It relied on the explanation proviso to Rule 2(v) of the Service Tax Rules, 1994 (w.e.f. 19.04.2006) which clarifies that input services in respect of GTA services are not admissible even for periods prior to 19.04.2006. The Tribunal further noted that Cenvat Credit Rules apply only to a manufacturer of excisable goods or a provider of taxable output service, and that a person providing GTA is not the provider of the output service for purposes of those Rules; consequently a recipient who pays tax under reverse charge cannot claim Cenvat under the Rules. The Tribunal found no scope to allow credit for GTA-related input services for the period under consideration. [Paras 7]

Credit on input services in respect of GTA services is not admissible for the period in issue.

Cenvat credit on input services - input services not used in relation to the output service - Whether the assessee was entitled to Cenvat credit for input services claimed as used for Maintenance & Repair of Immovable Property and Renting of Immovable Property - HELD THAT: - The Tribunal sustained the adjudicating authority's factual finding that the input services, on the basis of which credit was claimed, were not used in providing the registered output services (Maintenance & Repair and Renting) but were utilised for construction of a building on SEZ land and for other purposes. The Tribunal observed that the building at A-45 was already constructed and occupied before the service tax liability arose for Maintenance & Repair (16.06.2005) and that Renting of immovable property became taxable only from 01.07.2007; thus services like erection, installation, fabrication and architect could not sensibly have been used afterwards for those output services. The Tribunal also noted that some invoices were in the name of other legal entities, undermining the claim. On these factual and legal foundations the claim to Cenvat credit was held unsustainable. [Paras 8, 9, 10, 11]

Cenvat credit claimed for the impugned input services is not admissible because the services were not used in relation to the assessee's registered output services.

Extended period of limitation under Rule 14 read with Section 73 - Cenvat credit on input services - Whether the service tax demands for the short period in June 2005 and the related appropriations and interest were correctly confirmed - HELD THAT: - The Tribunal recorded that the assessee did not contest the legal basis for the short-period service tax demands for Maintenance & Repair (16.06.2005 to 30.06.2005) and GTA, and that the assessee had deposited the demanded amounts along with interest during the course of proceedings. The adjudicating authority had confirmed the demands (while not imposing certain penalties that were originally sought), and the Tribunal found no ground to interfere with that confirmation. [Paras 7, 11]

Service tax demands for the June 2005 period and related appropriations/interest as confirmed by the order-in-original stand upheld; the amounts were deposited by the assessee.

Cenvat credit on input services - input services not used in relation to the output service - Final disposition of the appeals filed by the assessee and by the department against the Order-in-Original No. 87/CE/CHDI/2010 dated 30.07.2010 - HELD THAT: - After considering the legal and factual findings of the adjudicating authority and the submissions of both parties, the Tribunal found the order-in-original to be lawful and correct. The Tribunal did not find merit in the assessee's challenge to the disallowance of Cenvat credit and similarly found no merit in the Revenue's appeal. [Paras 12, 13]

Both the assessee's and the department's appeals are dismissed; the order-in-original is upheld.

Final Conclusion: The Tribunal upheld the adjudicating authority's order: Cenvat credit in respect of GTA services is not admissible for the period in issue; the claimed credits for input services used in construction/SEZ/residential purposes were rightly disallowed as not being used in relation to the assessee's registered output services; the short-period service tax demands were confirmed and were deposited by the assessee; both appeals are dismissed.

Transfer of CENVAT credit on conversion of 100% EOU to DTA unit - admissibility of CENVAT credit lying in balance on date of de-bonding - binding effect of Tribunal precedents

Transfer of CENVAT credit on conversion of 100% EOU to DTA unit - admissibility of CENVAT credit lying in balance on date of de-bonding - CENVAT credit lying in balance in the accounts of a 100% EOU as on the date of de-bonding could be transferred to and utilised by the DTA unit after conversion. - HELD THAT: - The Tribunal examined whether the CENVAT credit balance on the books of a 100% EOU on the date of de-bonding is admissible for transfer to the DTA unit. It noted that this question has been considered repeatedly by the Tribunal in a series of decisions which consistently held that such credit standing in the accounts on the date of de-bonding may be transferred to the DTA unit and utilised by it. Applying that consistent precedent, the Tribunal found the impugned order contrary to those authorities and, following the principle laid down in the cited decisions, set aside the order under challenge. The decision rests on adherence to the Tribunal's established view that credit lying in balance on debonding is transferable to the DTA unit.

Impugned order set aside; CENVAT credit standing in balance as on de-bonding is transferable to the DTA unit.

Final Conclusion: The appeal is allowed; the order confirming recovery of the CENVAT credit (with interest and penalty) is set aside and consequential relief, if any, shall follow as per law.

CENVAT credit transfer between units of the same manufacturer - Self-contained scheme of the Chewing Tobacco Rules - Interpretation of 'manufacturer' under the Chewing Tobacco Rules - Prior permission under Rule 10 of the CENVAT Credit Rules - Retrospective withdrawal of administrative permission

CENVAT credit transfer between units of the same manufacturer - Interpretation of 'manufacturer' under the Chewing Tobacco Rules - Self-contained scheme of the Chewing Tobacco Rules - Entitlement of the manufacturer to transfer and utilise CENVAT credit from one unit to another under the Chewing Tobacco Rules. - HELD THAT: - The Tribunal found that Rule 16 of the Chewing Tobacco Rules contemplates availment and utilisation of CENVAT credit by the manufacturer and does not refer to a unit, unlike the CENVAT Credit Rules which specifically mention 'unit'. The scheme under the Chewing Tobacco Rules is self-contained and prescribes admissibility and utilisation of credit for manufacturers of chewing tobacco and scented zarda. Accordingly, where the manufacturing establishments belong to the same manufacturer, transfer of unutilised credit from one factory to another is permissible under the Chewing Tobacco Rules and need not be confined by the unit-based restriction of the CENVAT Credit Rules. [Paras 6]

The appellant was entitled to transfer and utilise the unutilised CENVAT credit from the erstwhile Manakapur unit to the Hubballi unit under the Chewing Tobacco Rules.

Prior permission under Rule 10 of the CENVAT Credit Rules - CENVAT credit transfer between units of the same manufacturer - Whether prior permission under Rule 10 of the CENVAT Credit Rules was necessary for transferring CENVAT credit between units in the facts of this case. - HELD THAT: - The Tribunal noted that although the Assistant Commissioner initially examined records and granted permission under Rule 10 of the CENVAT Credit Rules, the transfer in the present case fell within the self-contained regime of the Chewing Tobacco Rules where credit is availed and utilised by the manufacturer. Relying on precedent that prior permission under Rule 10 is not required for such transfers, the Tribunal held that seeking prior permission under Rule 10 was unnecessary and that the permission already granted did not determine the appellant's entitlement under the Chewing Tobacco Rules. [Paras 6]

Prior permission under Rule 10 CCR was not required for the transfer; the appellant's transfer was permissible under the Chewing Tobacco Rules.

Retrospective withdrawal of administrative permission - Prior permission under Rule 10 of the CENVAT Credit Rules - Whether the Department could withdraw the permission already granted for transfer of credit with retrospective effect after the appellant had recorded and utilised the credit. - HELD THAT: - The Tribunal observed that the ACCE had granted permission after examination and the appellant had recorded the transferred credit in its return and utilised it for payment of duty in the same month. In these circumstances, and having regard to decisions holding that withdrawal of a license or approval cannot operate retrospectively to invalidate actions lawfully taken pursuant to that permission, the Tribunal held that the Department could not retrospectively withdraw the permission so as to affect the appellant's utilisation of the credit. [Paras 6]

The subsequent withdrawal of the earlier permission could not be given retrospective effect to invalidate the appellant's recorded and utilised credit.

Final Conclusion: The appeal is allowed; the impugned order rejecting the appellant's claim is set aside and the transfer and utilisation of the CENVAT credit by the appellant under the Chewing Tobacco Rules is upheld; the Department's retrospective withdrawal of permission is not sustained.

Cenvat credit admissibility - denial of credit for non-scrap inputs - scope of show cause notice - adjudicating authority must not travel beyond show cause notice - requirement of evidence to prove diversion of inputs - necessity of corroborative investigation including factory visit and expert opinion - penalty imposability in absence of cogent evidence

Cenvat credit admissibility - denial of credit for non-scrap inputs - requirement of evidence to prove diversion of inputs - necessity of corroborative investigation including factory visit and expert opinion - Whether Cenvat credit could be denied on the goods in question on the ground that they were not scrap/inputs for the manufacturer. - HELD THAT: - The Tribunal found that the show cause notice did not allege non-receipt or diversion of the goods to the manufacturer. Revenue produced no evidence that the goods could not be used by the appellant-manufacturer, no expert opinion disputing meltability, no factory visit to verify manufacturing process, and no investigation of the transporter to establish diversion. Reliance was placed on the Tribunal's earlier decision in Sharman Strips where denial of credit was held unsustainable in similar circumstances where suppliers admitted supply and payment, and Revenue failed to bring cogent evidence of substitution or diversion. Absent corroborative evidence, the Revenue cannot technologically or factually determine what inputs a manufacturer may use; mere assumption or presumption is insufficient to deny credit which was recorded in statutory books and used in manufacture and clearance of final products on payment of duty. [Paras 9, 10]

Cenvat credit cannot be denied on the goods in question for want of evidence that they were not inputs or were diverted; the denial on merits is unsustainable.

Scope of show cause notice - adjudicating authority must not travel beyond show cause notice - penalty imposability in absence of cogent evidence - Whether the adjudicating authority exceeded the scope of the show cause notice by alleging diversion/non-receipt and whether penalties could be sustained. - HELD THAT: - The Tribunal observed that the show cause notice challenged only the character of the goods as inputs (i.e., whether they were scrap usable as inputs) and did not allege diversion or non-receipt by the manufacturer. Notwithstanding that, the adjudicating authority recorded findings of diversion and non-receipt without those allegations being put in the notice and without evidence such as transporter statements or inquiries to substantiate diversion. Such findings, being beyond the scope of the notice and unsupported by cogent evidence, are legally unsustainable. Consequently, penalties predicated on those findings also cannot be sustained. [Paras 11]

Adjudicating authority erred in going beyond the show cause notice to find diversion/non-receipt; those findings and the consequent penalties are unsustainable.

Final Conclusion: The impugned adjudication is set aside: Cenvat credit claimed by the manufacturer is allowed for want of cogent evidence to deny it, and penalties imposed on the parties are not sustainable; the appeals are allowed with consequential relief.

Manufacture - refilling and relabelling - character or end-use test - deeming provision - classification not determinative of manufacture - reversal of CENVAT/CVD credit

Manufacture - refilling and relabelling - character or end-use test - classification not determinative of manufacture - deeming provision - Whether refilling of imported ink into third party containers and relabelling those containers amounts to manufacture liable to excise duty. - HELD THAT: - The Tribunal applied the settled tests of manufacture, emphasising that manufacture requires transformation resulting in a new commodity having a different name, character or end use. The activity undertaken by the appellant consisted of procuring empty containers, filling them with imported ink and affixing labels; neither the ink nor the containers were manufactured by the appellant and the essential character and end use of the ink remained unchanged after refilling/relabelling. The Tribunal noted absence of any specific deeming provision or chapter note (Chapter 32 Note 7 does not cover heading 3215) that would treat repacking/refilling/relabeling as manufacture for the impugned goods. Classification of the filled containers under a particular sub heading does not, by itself, satisfy the test of manufacture where there is no transformation in character or end use. Applying precedents on the character/end use test, the Tribunal held that refilling and relabelling in the facts did not amount to manufacture. [Paras 10, 11]

Refilling of ink into containers and relabelling does not amount to manufacture and no excise duty can be imposed on that ground.

Reversal of CENVAT/CVD credit - refilling and relabelling - Consequences for CVD credit availed on imported ink/containers where refilling/relabeling does not amount to manufacture. - HELD THAT: - Although the Tribunal observed that the activity, if held not to be manufacture, would ordinarily mean that the appellant was not eligible to claim CVD credit as an input for manufacture, the Tribunal relied on authority holding that where goods are cleared on payment of duty (and the department accepts that duty), the duty paid on such clearance operates as a reversal of any credit availed at import stage. Admittedly the appellant cleared the imported goods after refilling on payment of duty. On that basis the Tribunal held that the duty paid on clearance amounts to reversal of the CVD credit and the appellant is not required to reverse the credit of CVD availed at the time of import. [Paras 11]

Appellant is not required to reverse the CVD credit availed at import because the goods were cleared on payment of duty, which operates as reversal of credit.

Penalty - sustainability of demand - Whether the demands and penalties confirmed against the appellant are sustainable in view of the findings. - HELD THAT: - Having held that refilling/relabeling does not amount to manufacture and that the duty paid on clearance operates as reversal of any credit, the Tribunal concluded that demands founded on the premise of manufacture are not sustainable. Consequentially, penalties predicated on those demands cannot be imposed. [Paras 12, 13]

Demands and penalties confirmed against the appellant are not sustainable and are set aside.

Final Conclusion: The appeals are allowed: refilling and relabelling of imported ink in third party containers does not amount to manufacture; the duty paid on clearance operates as reversal of CVD credit so the appellant need not reverse the credit; accordingly the confirmed demands and penalties are set aside.

Burden of proof - taxable event - rejection of explanation based on suspicion - requirement of inquiry from relevant sources - adverse finding

Rejection of explanation based on suspicion - requirement of inquiry from relevant sources - taxable event - Whether the revenue could reject the assessee's claim of return of goods and confirm assessment without making inquiries or producing evidence establishing the taxable event. - HELD THAT: - The Court held that mere suspicion, however strong, cannot be the basis for creating a tax liability; the revenue must establish the taxable event. Once the assessee specifically pleaded that the goods were never stocked and were returned to the sellers, it was incumbent on the revenue authorities to make proper inquiries from the selling dealers and other relevant sources to verify that plea. In the absence of any inquiry or other evidence on record showing that the assessee had actually received or dealt with the goods, the Tribunal and assessing authorities could not rest an adverse finding on conjecture or commercial speculation about normal trade practices. Findings of tax liability must be grounded on existing evidence, including results of inquiries from relevant parties; speculation or undocumented suspicion does not suffice to uphold an assessment. [Paras 9, 10, 11, 12]

The rejection of the assessee's explanation and confirmation of assessment without inquiry or evidence establishing receipt or dealing of goods was impermissible; the revision is allowed.

Final Conclusion: Revision allowed; the Tribunal's order confirming assessment is set aside because the revenue failed to establish the taxable event or make requisite inquiries to displace the assessee's specific plea of return of goods.

Leasehold rights - auction purchaser takes title subject to subsisting impediments - coercive recovery of tax dues - right to resist eviction

Leasehold rights - auction purchaser takes title subject to subsisting impediments - Effect of auction sale of lessor's land on the subsisting lease in favour of HPCL - HELD THAT: - The Court held that a sale by public auction of the lessor's immovable property does not abridge or terminate a subsisting lease. An auction purchaser obtains title subject to any existing leasehold or other impediments. The Court declined to make a final declaration on the ultimate rights of the parties in rem, noting that no eviction notice had been served on HPCL; if an attempt to evict is made in future, HPCL would be entitled to resist it as permissible in law. [Paras 7, 8]

Auction sale will not, by itself, terminate HPCL's subsisting lease; any purchaser takes subject to that lease and HPCL may resist any future eviction.

Coercive recovery of tax dues - right to resist eviction - Maintainability of challenge by HPCL to the VAT authorities' auction proceedings in absence of an eviction or complaint by the lessee - HELD THAT: - The Court observed that the VAT authorities were authorised to initiate coercive recovery for unpaid tax dues of the landowner and that the dispute over unpaid dues was between the owner and the tax authorities. HPCL, which had no lis with the VAT authorities regarding the tax dues, could not, at this stage, strike down the auction proceedings merely because it objected to the sale; the authorities were within their rights to proceed. However, this observation was qualified by recognition of HPCL's leasehold protections and its right to legally oppose any eviction attempt arising from the auction. [Paras 6, 7, 8]

HPCL cannot presently invalidate the auction on the ground of the owner's unpaid VAT dues; the tax authorities may proceed with recovery, subject to HPCL's entitlement to defend any eviction based on its lease.

Final Conclusion: The petition is disposed of with the clarification that the auction does not ipso facto terminate HPCL's subsisting lease; the VAT authorities may pursue coercive recovery and auction proceedings, and HPCL remains entitled to resist any future eviction or steps affecting its leasehold rights.

Acquittal upon settlement between parties - compounding of offence under negotiable instruments law - requirement of deposit to Legal Services Authority as condition for compounding (Damodar S. Prabhu principle) - waiver of costs - release of convict on acquittal

Acquittal upon settlement between parties - release of convict on acquittal - Allowance of petition and setting aside of trial and appellate judgments following settlement between the parties resulting in acquittal and immediate release of the petitioner. - HELD THAT: - The Court recorded that the parties have settled the dispute and that the complainant has accepted payment towards the loan without protest. Taking into account the settlement and the poor financial condition of the petitioner, the petition was allowed and the impugned trial and appellate judgments and the sentence order were set aside. Consequentially the petitioner was acquitted of the offence alleged in complaint no.179/2016 under section 138 of the Negotiable Instruments Act and the Jail Superintendent was directed to release the petitioner forthwith. [Paras 9, 12, 13, 14]

Petition allowed; judgments and sentence set aside; petitioner acquitted and directed to be released forthwith.

Compounding of offence under negotiable instruments law - requirement of deposit to Legal Services Authority as condition for compounding (Damodar S. Prabhu principle) - waiver of costs - Application of the Damodar S. Prabhu guideline requiring deposit of 10% of the cheque amount to the Legal Services Authority as condition of compounding, and the Court's treatment of costs in view of the petitioner's financial condition. - HELD THAT: - The Court noted the guideline in Damodar S. Prabhu that petitioners are required to deposit 10% of the cheque amount with the Legal Services Authority as a condition for compounding. While recording that requirement, the Court also observed the poor financial condition of the petitioner and, in that context, expressly waived the cost. The order therefore preserves the Damodar principle as the normative condition but relieves the petitioner of the costs imposed by the Court in view of his financial position. [Paras 10, 11]

Damodar S. Prabhu deposit requirement noted; costs waived in view of petitioner's poor financial condition.

Final Conclusion: The petition is allowed on the basis of the settlement between the parties; the trial and appellate judgments and sentence are set aside, the petitioner is acquitted and directed to be released forthwith. The Damodar S. Prabhu guideline on deposit to the Legal Services Authority is noted, and the Court has waived costs in light of the petitioner's financial condition.