TaxTMI Updates e-Newsletter
Oct 21,2019

Classification of packed food products as supply of goods - inapplicability of restaurant-service rate under Notification No.11/2017 to sale of packaged goods - applicability of Notification No.1/2017-Central Tax (Rate) to taxable supplies of goods - admissibility of input tax credit on inputs attributable to sale of goods

Classification of packed food products as supply of goods - inapplicability of restaurant-service rate under Notification No.11/2017 to sale of packaged goods - applicability of Notification No.1/2017-Central Tax (Rate) to taxable supplies of goods - Packed ready-to-eat and packaged food products sold by the applicant are supplies of goods and therefore taxable at the rates applicable to goods under Notification No.1/2017-Central Tax (Rate) rather than under the restaurant/service rates in Notification No.11/2017. - HELD THAT: - The Authority examined the nature of the packed products (loose leaf tea, packaged tea bags, bottled chai, packaged bakery and confectionery sold as purchased) and concluded they are goods, not services. Entry 7 of Notification No.11/2017-Central (Rate) applies to supplies in the context of services provided by restaurants/eating joints; the notification is directed to taxation of services. Since the applicant's packed products are goods supplied (including where supplied by a restaurant), the service-specific Notification No.11/2017 does not apply. Consequently the rate applicable to these supplies is determined by Notification No.1/2017-Central Tax (Rate) (and its amendments), which governs rates for goods. [Paras 4]

The packed food products sold by the applicant are taxable as goods at the rates specified in Notification No.1/2017-Central Tax (Rate) and are not subject to the restaurant/service rate under Notification No.11/2017.

Admissibility of input tax credit on inputs attributable to sale of goods - eligibility to claim input tax credit under GST laws - The applicant is eligible to claim input tax credit attributable to the supply of such packaged goods. - HELD THAT: - Having held that the packed products are taxable supplies of goods and output tax is payable thereon, the Authority observed that input tax credit in respect of inputs, input services and common input tax (including allocated credits for warehouses, offices and other services used in the business) is admissible under the GST law. The ruling affirms entitlement to claim applicable input tax credit relatable to the supply of those goods. [Paras 5]

The applicant may avail input tax credit of the applicable tax paid on inputs and services attributable to the sale of the packaged goods.

Final Conclusion: The Authority ruled that the packed food products sold by the applicant are taxable as goods under Notification No.1/2017-Central Tax (Rate) (and not under the restaurant-service rates of Notification No.11/2017) and that the applicant is entitled to claim input tax credit attributable to such supplies.

Pure agent - value of supply - exclusion from taxable value - Rule 33 of the CGST Rules, 2017 - educational services (coaching) taxable

Pure agent - Rule 33 of the CGST Rules, 2017 - value of supply - exclusion from taxable value - Collection of exam fee from students and remittance to the university/institution without any value addition is excluded from the taxable value as a pure agent. - HELD THAT: - The applicant collects the exact exam fee from students on their authorisation and remits the same to the respective institute/college/university (third party) without any addition or profit, and separately indicates this payment in the invoice issued to the student. The arrangement is in addition to the applicant's own coaching services. These facts satisfy the requirements of a "pure agent" under Rule 33: payment made on authorisation of the recipient; payment separately indicated in the invoice; supplies procured as pure agent are in addition to supplies on the agent's own account; the agent does not hold title nor use the supplies for its own interest and receives only the actual amount incurred. Accordingly the amount collected as exam fee and remitted to the institute is excluded from the value of supply for the applicant. [Paras 8]

Amount of exam fee collected and remitted by the applicant as pure agent is excluded from the taxable value under Rule 33 of the CGST Rules, 2017.

Educational services (coaching) taxable - educational institution - The applicant does not qualify as an "educational institution" under the notification and its coaching services attract GST. - HELD THAT: - The applicant conducts coaching/training to prepare students for examinations of other institutes but does not follow a specific curriculum, does not conduct examinations, nor award qualifications; therefore it does not fall within the definition of an "educational institution" as set out in the notification. The fees charged by the applicant for coaching/training are taxable and attract GST at the applicable rate (noted as 18%), which is distinct from the excluded exam fee remitted as a pure agent. [Paras 7]

Applicant is not an educational institution and the coaching/training services provided by it are taxable.

Final Conclusion: The advance ruling holds that (i) collection of exam fees from students and remittance to the concerned university/institution without any value addition qualifies the applicant as a "pure agent" and such amounts are excluded from the applicant's taxable value under Rule 33, and (ii) the applicant itself is not an "educational institution" and its coaching services are taxable.

Activity in relation to any function entrusted to a Municipality under Article 243W - activity in relation to any function entrusted to a Panchayat under Article 243G - Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to a Governmental Authority - exemption under SI. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28th June, 2017 - definition of "Governmental Authority" for clause (16) of section 2 of the IGST Act as amended by Notification No. 32/2017 - services falling under serial no. 6 of the 12th Schedule to Article 243W (public health, sanitation, conservancy and solid waste management)

Services falling under serial no. 6 of the 12th Schedule to Article 243W - activity in relation to any function entrusted to a Municipality under Article 243W - Whether the project management and related supervisory services provided by the applicant fall within activities entrusted to a Municipality under Article 243W (12th Schedule) of the Constitution. - HELD THAT: - The applicant's scope of work-project management, planning, survey, feasibility, detailed design, bidding and contract management, construction supervision and related tasks-relates to implementation and management of sewerage projects. Such services are connected to public health, sanitation and conservancy, which are enumerated at serial no. 6 of the 12th Schedule to Article 243W. The Authority concluded that the nature of the applicant's services corresponds to the activities listed under serial no. 6 and therefore satisfy the admissibility criterion of being an activity in relation to a function entrusted to a Municipality under Article 243W.

The services provided by the applicant fall within the activities enumerated under serial no. 6 of the 12th Schedule to Article 243W and thus qualify as activities in relation to functions entrusted to a Municipality.

Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to a Governmental Authority - exemption under SI. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28th June, 2017 - Whether the supervision fees received by the applicant for such services qualify as pure services provided to a Governmental Authority and are exempt from GST under SI. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28th June, 2017 (as amended). - HELD THAT: - The Authority examined the nature of the supervision fees and the character of the supply. The supervision fees relate to services of project management and construction supervision and do not involve supply of goods or constitute works contract or other composite supplies involving goods. Given that those services are rendered in relation to a function entrusted to a Municipality under Article 243W and are supplied to a Governmental Authority as defined under the notifications, the supplies qualify as "Pure services" covered by SI. No. 3 of Notification No. 12/2017 (as amended). Consequently, such supplies are exempt from CGST and, correspondingly, from SGST under the stated notifications.

Supervision fees for the services rendered by the applicant qualify as pure services provided to a Governmental Authority in relation to functions entrusted to a Municipality and are exempt from CGST and SGST under the cited notifications.

Definition of "Governmental Authority" for clause (16) of section 2 of the IGST Act as amended by Notification No. 32/2017 - established by any Government, with 90 per cent or more participation by way of equity or control - Whether the applicant qualifies as a Governmental Authority or Government entity within the meaning of clause (16) of section 2 of the IGST Act as amended by Notification No. 32/2017. - HELD THAT: - The applicant was incorporated as a company with 100% equity participation by the State Government and has been appointed the state-level nodal agency for sewerage projects. The amended definition of "Governmental Authority" includes bodies established by any Government with 90% or more participation by way of equity or control to carry out functions entrusted to a Municipality or Panchayat. On the facts presented, the applicant meets the participatory threshold and function-related criterion in the amended definition and thus falls within the scope of a Governmental Authority.

The applicant qualifies as a Governmental Authority or Government entity within the meaning of clause (16) of section 2 of the IGST Act as amended by Notification No. 32/2017.

Final Conclusion: The Authority ruled that the applicant's project management and supervision services are activities falling under serial no. 6 of the 12th Schedule to Article 243W; the supervision fees constitute pure services supplied to a Governmental Authority and are exempt from CGST and SGST under SI. No. 3 of Notification No. 12/2017 (as amended); and the applicant qualifies as a Governmental Authority under the amended definition in clause (16) of section 2 of the IGST Act.

Exclusion of government subsidy from consideration under section 2(31) of the CGST Act - definition of consideration - value of supply and taxable turnover - treatment of amounts collected inclusive of tax - deduction of tax fraction

Exclusion of government subsidy from consideration under section 2(31) of the CGST Act - definition of consideration - Subsidy received from the State Government for supplies made under the Indira Canteen scheme forms part of consideration for GST purposes or is excluded. - HELD THAT: - The Authority examined clause (31) of section 2 of the Central Goods and Services Tax Act which expressly states that any subsidy given by the Central Government or a State Government is not included within the definition of "consideration." Applying that provision to the contractual scheme under which the applicant supplies subsidised meals, the Authority held that the subsidy provided by the Government of Karnataka is a government incentive aimed at social policy and therefore falls within the statutory exclusion. The Authority further noted that consequently such subsidy does not form part of turnover for levy of GST on the applicant's supplies. [Paras 5, 6]

The subsidy received from the Government of Karnataka is excluded from the definition of consideration and does not form part of the taxable turnover.

Value of supply and taxable turnover - treatment of amounts collected inclusive of tax - deduction of tax fraction - Whether the amount collected from beneficiaries constitutes consideration liable to GST and how it is to be computed when the price charged is inclusive of tax. - HELD THAT: - The Authority found that the price collected from beneficiaries (the notified fixed amount for breakfast, lunch and dinner) constitutes consideration for the supply of food and beverages and therefore forms part of taxable turnover. Where the amount collected is inclusive of tax, the taxable value must be computed after deducting the appropriate tax fraction so that GST is levied on the correct consideration net of the embedded tax. This interpretation follows from the statutory definition of consideration and the practical effect of collections being inclusive of tax. [Paras 5, 6]

The consideration collected from beneficiaries is taxable; where the collected price is inclusive of tax, the tax liability is computed after deducting the tax fraction from the collected amount.

Final Conclusion: The Authority ruled that (a) government subsidy paid for supplies under the Indira Canteen scheme is excluded from "consideration" under section 2(31) and does not form part of taxable turnover; and (b) the amounts collected from beneficiaries constitute consideration chargeable to GST, with tax to be computed after deducting the tax fraction where prices are inclusive of tax.

Eligibility to claim input tax credit - effective date of registration - entitlement to input tax credit for inputs held in stock on the day preceding the effective date of registration - definition of registered person - time limit for claiming input tax credit under section 16(4)

Eligibility to claim input tax credit - effective date of registration - definition of registered person - Whether a registered person can claim input tax credit of GST charged on invoices for goods or services procured or availed before the effective date of registration under GST. - HELD THAT: - The Authority examined the scheme of the GST Act and noted that the entitlement to take input tax credit is available to a "registered person" and the statutory definition makes clear that registration must be effective for the person to be treated as a registered person. The applicant was an unregistered person for the period July 1, 2017 to March 31, 2018 and obtained registration with effect from 01.04.2018. The Authority held that the provisions cited by the applicant apply to a person whose registration is effective and do not entitle a person to claim credit for supplies of goods or services availed in the period when the person was not a registered person. On this basis the Authority ruled that input tax credit on invoices issued prior to the effective date of registration is not available to the applicant. [Paras 5, 6]

The applicant is not eligible to claim input tax credit on invoices for goods or services procured or availed before its effective date of registration.

Entitlement to input tax credit for inputs held in stock on the day preceding the effective date of registration - special circumstances under section 18(1) - conditions for claiming ITC on inputs in stock - Whether input tax credit can be claimed in respect of goods (inputs) held in stock on the day immediately preceding the effective date of registration where registration is applied for within thirty days of becoming liable. - HELD THAT: - The Authority referred to the special provision dealing with credits on inputs where registration is applied for within thirty days of becoming liable. It noted that section 18(1) permits a person who applied for registration within the prescribed period and is granted registration to take credit of input tax in respect of inputs held in stock and inputs contained in semi finished or finished goods held in stock on the day immediately preceding the date from which the person becomes liable to pay tax. Therefore, where the statutory conditions are fulfilled (application within thirty days, inputs physically in stock on the day prior to the effective date, intended for use in the course or furtherance of business), the person may claim ITC subject to other conditions and restrictions in the Act and Rule 40 of the CGST Rules. [Paras 5, 6]

Input tax credit is allowable for goods (inputs) lying in stock on the day previous to the effective date of registration, if the application for registration was filed within thirty days of becoming liable and other prescribed conditions and restrictions are satisfied.

Final Conclusion: The Authority ruled that the applicant cannot claim ITC on invoices for supplies of goods or services procured before its effective date of registration; however, ITC is admissible for inputs in the form of goods lying in stock on the day preceding the effective date of registration where the application for registration was filed within thirty days of becoming liable and other statutory conditions are met.

Supply - Scope of supply - Activities to be treated as supply even if made without consideration - Transfer of business assets - Consideration - Open market value - Rule 27 of the CGST Rules - Value of taxable supply

Supply - Scope of supply - Activities to be treated as supply even if made without consideration - Transfer of business assets - Consideration - Transfer of fixtures and other assets fastened to leased premises handed over to the lessor for no monetary consideration constitutes a supply under the CGST Act. - HELD THAT: - The authority found it is admitted that the applicant permanently transfers business assets capitalised as office equipment, furniture and fittings and that these assets will no longer form part of the applicant's business assets on handing over to the lessor. Schedule I's entry treating as supply only those permanent transfers where input tax credit was availed does not cover the present facts because no input tax credit was taken under the earlier law or under GST. Entry 4(a) of Schedule II treats transfer or disposal of goods forming part of business assets, whether or not for a consideration, as a supply of goods. Further, the definition of "consideration" includes the monetary value of any act or forbearance related to the transfer; writing off the book value was held to amount to a monetary act constituting consideration. Applying section 7(1)(a) and Schedule II read with the definition of consideration, the transfer in the course or furtherance of business for the monetary value attributable to the act of transfer constitutes a supply of goods chargeable to GST. [Paras 8]

The transfer of assets fastened to the building on delivering possession to the lessor free amounts to a supply within section 7 of the CGST Act and is chargeable to tax.

Value of taxable supply - Open market value - Rule 27 of the CGST Rules - Where the transfer is a supply but no price is paid, the value of the supply is to be determined in the manner prescribed by Rule 27 of the CGST Rules. - HELD THAT: - Section 15(1) (transaction value) does not apply because there is no price actually paid or payable; hence section 15(4) applies and valuation must follow the rules. Rule 27 prescribes, in order, (a) open market value, (b) if not available, value of goods of like kind and quality, (c) if not determinable under (a) or (b), 110% of the book value in the accounts, and (d) if none of these are possible, determination under Rule 31. The authority applied this sequence to the facts and ruled that valuation must follow Rule 27 in the stated order. [Paras 9, 10, 11]

The value of such supply shall be determined as (a) open market value; (b) value of goods of like kind and quality; (c) 110% of the book value in the accounts; and failing these, as per Rule 31.

Final Conclusion: The Authority ruled that handing over fixtures and other fastened business assets to the lessor without monetary consideration amounts to a taxable supply under the CGST Act, and where no price is paid the value of such supply must be determined in the order prescribed by Rule 27 of the CGST Rules (open market value; like-kind value; 110% of book value; otherwise Rule 31).

Classification of site preparation services as construction services - composite supply and principal supply - works contract - site formation and clearance services (SAC 995432) - determination of liability to pay tax on services

Site formation and clearance services (SAC 995432) - works contract - composite supply and principal supply - Rate of GST on the applicant's subcontracted earthwork for construction of the expressway. - HELD THAT: - The activity performed by the applicant is confined to earthwork - excavation in soil and hard rock, embankment, sub-grade, shoulder and median fill - and is carried out by deployment and operation of the applicant's own machinery and manpower under the subcontract. There is no transfer of property in goods in the execution of the subcontract and no supply of goods; the activity is therefore a pure service. Consequently it does not qualify as a works contract (which requires transfer of property in goods) nor as a composite or mixed supply with a principal supply other than the site-preparation service. The activity is classifiable as a construction service of site preparation falling within the description "Site formation and clearance services including preparation services to make sites ready for subsequent construction work," i.e., SAC 995432 in the Annexure to Notification No. 11/2017 - Central Tax (Rate). Under the notification the said service attracts GST at the rate applicable to construction services other than specified exceptions, namely 18% (CGST 9% + SGST 9%).

The earthwork service supplied by the applicant is classifiable as site preparation construction service (SAC 995432) and attracts GST at 18% (CGST 9% + SGST 9%).

Final Conclusion: Advance ruling: subcontracted earthwork for the expressway is a site preparation construction service (SAC 995432) and is taxable at 18% (CGST 9% + SGST 9%).

Export of services - qualification for export of services under IGST - place of supply of services - services supplied in respect of goods physically made available by the recipient - temporary importation exemption for repairs or for other treatment or process - zero-rated supply - liability to pay CGST and SGST

Export of services - place of supply of services - services supplied in respect of goods physically made available by the recipient - temporary importation exemption for repairs or for other treatment or process - zero-rated supply - The activity of technical testing services carried out by the applicant is not a zero-rated export of services. - HELD THAT: - The IGST definition of export of services requires five cumulative conditions, including that the place of supply be outside India. The place of supply is determined under the place of supply rules which, for services in respect of goods that are physically made available by the recipient, make the place of supply the location where the services are actually performed. The exclusion for goods temporarily imported into India for repairs or treatment (where they are exported after such process without being put to any other use) does not apply because the goods in this case remain in India and are not exported back to the recipient. The technical testing is therefore performed in Goa and the place of supply is in India. Because the place of supply is not outside India, the condition for export of services is not satisfied and the activity cannot be treated as a zero rated export of service.

The service provided by the applicant does not fall within the definition of export of service and is not zero rated.

Place of supply of services - liability to pay CGST and SGST - qualification for export of services under IGST - Whether the applicant is liable to pay IGST or CGST and SGST on the technical testing services. - HELD THAT: - Because the supplier is located in Goa and the place of supply of the technical testing services is determined to be Goa, the transaction does not qualify as export under the IGST rules. Consequently, IGST is not applicable; instead, the supply is taxable within the State and subject to Central and State GST. The applicant is therefore liable to discharge CGST and SGST on the supply of the said services.

The applicant is liable to pay CGST and SGST on the supply of technical testing services.

Final Conclusion: The Authority rules that the applicant's technical testing services are not export (not zero rated) because the place of supply is in India, and the applicant is accordingly liable to pay CGST and SGST on those services.

Works contract - composite supply - taxation of composite works contracts at 18% (9% CGST + 9% SGST) - rate for hiring of vehicles as services of goods transport agency / transport of passengers

Works contract - The supply, erection, testing and commissioning, civil and maintenance activities undertaken by the applicant amount to a works contract and are taxable under GST. - HELD THAT: - The Authority examined the defined meaning of works contract in Sub section (119) of Section 2 and applied it to the activities listed by the applicant. The supply, erection, testing and commissioning of overhead lines, cables, circuit breakers, transformers, sub station structures, panels, distribution boxes, ring main units, associated civil works for installation, preventive and breakdown maintenance, street light poles and earthing involve transfer of property in goods in the execution of the contract and therefore fall within the scope of a works contract. Consequently, these activities are taxable supplies under the GST framework and subject to GST levy.

The listed activities are a works contract and are taxable under GST.

Composite supply - taxation of composite works contracts at 18% (9% CGST + 9% SGST) - The works contract qualifies as a composite supply and is taxable at the rate of 18% (9% CGST + 9% SGST) as per the notified rate for such contracts. - HELD THAT: - Relying on the definition of composite supply in Sub section (30) of Section 2, the Authority held that the works contract consists of two or more taxable supplies which are naturally bundled with a principal supply. Having classified the transaction as a composite supply of works contract, the Authority applied the relevant rate notification and concluded that such composite works contracts attract tax at 18%, apportioned as 9% CGST and 9% SGST, in terms of the applicable Notification.

The composite works contract is taxable at 18% (9% CGST + 9% SGST).

Rate for hiring of vehicles as services of goods transport agency / transport of passengers - Hiring of vehicles is not covered by the works contract rate and is taxable according to the nature of vehicle hiring as per the vehicle hiring notifications. - HELD THAT: - The Authority distinguished hiring of vehicles from the works contract activities and referred to the Notification governing vehicle hiring services. It observed that different GST rates apply depending on whether the hiring is in relation to transportation of goods (services of a goods transport agency) or transport of passengers by motor cab where fuel cost is included. The applicable tax rates and conditions are those specified in the relevant Notification, including the conditional lower rate where input tax credit has not been availed and the alternative higher rate when opted under the Notification.

Hiring of vehicles is taxable separately and attracts the rates and conditions specified in the vehicle hiring notification (e.g., 2.5% CGST + 2.5% SGST subject to condition or 6% CGST + 6% SGST as applicable).

Final Conclusion: The Authority held that the applicant's listed supply, erection, testing, commissioning, civil and maintenance activities constitute a works contract and, being a composite supply, attract GST at 18% (9% CGST + 9% SGST); hiring of vehicles is taxable separately and attracts the rates and conditions specified in the vehicle hiring notification.

Writ of mandamus - extension of time for filing GST TRAN-1 - reopening of electronic portal - manual filing and verification of TRAN-1 - maintenance of electronic system for claiming input tax credit

Writ of mandamus - reopening of electronic portal - manual filing and verification of TRAN-1 - maintenance of electronic system for claiming input tax credit - Direction to respondents to reopen the GST TRAN-1 portal or, failing that, to entertain the petitioner's GST TRAN-1 application manually and facilitate electronic payment for claimed credits. - HELD THAT: - The petitioner alleged inability to submit GST TRAN-1 on the last date due to non-responsive electronic system, risking loss of entitled input tax credit. The Court directed the respondents to reopen the portal within two weeks to enable electronic filing. If the portal is not reopened, the respondents are required to entertain the petitioner's GST TRAN-1 manually, verify the credits claimed and pass orders after due verification. The respondents must also ensure that the petitioner is permitted to remit taxes through the regular electronic system in respect of credits that may be considered. The Court's directions are remedial, aimed at preventing prejudice to the petitioner arising from alleged failure of the electronic filing system, while preserving the respondents' duty to verify claimed credits before admitting them.

Respondents directed to reopen the portal within two weeks or otherwise accept and decide the petitioner's GST TRAN-1 manually after verification, and to ensure availability of the electronic tax payment system for the petitioner.

Final Conclusion: Writ petition disposed by directing respondents to reopen the TRAN-1 portal within two weeks, or otherwise to entertain and decide the petitioner's TRAN-1 application manually after due verification, and to allow electronic payment for any credits admitted; respondents permitted to file a counter-affidavit within one month and matter listed on 21.11.2019.

Summary order. Notice issued returnable on 22nd October 2019 and direct service permitted.

Writ of mandamus - extension of time for filing GST TRAN-1 - reopening of electronic portal for filing - manual acceptance of GST TRAN-1 - verification of claimed transitional credit - direction to permit electronic payment notwithstanding portal issues

Writ of mandamus - extension of time for filing GST TRAN-1 - reopening of electronic portal for filing - manual acceptance of GST TRAN-1 - Petition for direction to reopen the portal or to permit manual filing and consideration of the petitioner's GST TRAN-1 despite non-availability of the electronic system on the last date. - HELD THAT: - The petitioner contended that on the last date for filing GST TRAN-1 the electronic portal failed to respond despite repeated attempts, thus preventing filing and risking loss of transitional credit. The court, exercising its supervisory jurisdiction by way of writ of mandamus, directed the respondents to reopen the portal within two weeks. Failing that, the respondents were ordered to entertain the petitioner's GST TRAN-1 manually and to pass orders thereon after due verification of the credits claimed. The court also ensured that the petitioner would be permitted to pay its taxes through the regular electronic system maintained for utilisation of such credit. The respondents were permitted to file a counter-affidavit within one month and the matter was listed for further hearing.

Respondents directed to reopen the portal within two weeks or, if they do not, to accept and adjudicate the petitioner's GST TRAN-1 manually after due verification, and to allow electronic payment for utilisation of any admitted credit.

Final Conclusion: Writ petition allowed to the extent of directing respondents to reopen the GST TRAN-1 portal within two weeks or alternatively to entertain and decide the petitioner's GST TRAN-1 manually after verification; respondents to permit electronic payment for utilisation of any credited amounts and may file a counter-affidavit within one month.

Summary order. Court recorded that the petitioners tendered the Division Bench decision of the Madras High Court as binding on constitutionality issues; respondents to obtain instructions whether to challenge that decision before the Supreme Court and on other aspects; matter adjourned to 19.11.2019.

Amendment of authorised signatory on GST portal - role of GSTN in effecting portal amendments - impleadment of necessary party for effective relief - interim protection from coercive action - service of process on newly impleaded respondent

Amendment of authorised signatory on GST portal - role of GSTN in effecting portal amendments - impleadment of necessary party for effective relief - service of process on newly impleaded respondent - Direction to implead the GST Network (GSTN) as a party and mechanism for service. - HELD THAT: - The Court recorded that the petitioner had followed the prescribed procedure for seeking amendment of its authorised signatory and that the respondents' authorised officer had forwarded the request to GSTN, but GSTN declined to process the request and advised the taxpayer to approach GSTN directly. The Court held that presence of GSTN is essential to resolve the petitioner's grievance and therefore directed that GSTN be impleaded as a respondent. The petitioner was directed to file an amended memo of parties within one week and to pay process fee for service on the newly impleaded respondent, with the matter returnable on the specified date. The Court also ordered notice to be served through GSTN's nominated counsel together with a copy of the order. [Paras 6, 7, 8]

GSTN to be impleaded as a respondent; amended memo of parties to be filed with process fee and notice to be served on GSTN's nominated counsel.

Interim protection from coercive action - Grant of interim protection restraining coercive action against the petitioner for inability to file returns arising from the portal amendment issue. - HELD THAT: - Having found that the petitioner was unable to effect the authorised-signatory amendment on the GST portal despite following prescribed procedure and that resolution required GSTN's involvement, the Court directed that no coercive steps be taken against the petitioner in respect of its failure to file returns for the stated reasons until the matter is further considered. [Paras 9]

No coercive action shall be taken against the petitioner for inability to file returns due to the portal amendment issue until further orders.

Final Conclusion: The Court impleaded GSTN as a necessary party, ordered procedural steps for service and amendment of the memo of parties, and granted interim protection by restraining coercive action against the petitioner arising from its inability to file returns due to the portal-authorised-signatory amendment issue.

Condonation of delay - filing of Form No.10 under Section 11(2) - retrospective registration under Section 12AA - accumulated income for subsequent years - onus to prove utilisation for the trust's object

Condonation of delay - filing of Form No.10 under Section 11(2) - retrospective registration under Section 12AA - Whether the petitioner satisfactorily explained the delay in filing Form No.10 for the Assessment Year 1998-99 and whether the rejection of the condonation petition was justified. - HELD THAT: - The Trust was formed on 10.12.1997 and registration under Section 12AA, though not available on the statutory due date for filing Form No.10 (31.10.1998), was later granted retrospectively with effect from 10.12.1997 by order dated 02.02.2005. Filing of Form No.10 is triggered by the Trust enjoying the benefit of registration under Section 12AA. The Court found that, in the factual matrix where registration was ultimately held to be retrospective, the petitioner has satisfactorily explained the delay in filing Form No.10 and therefore the first respondent was not justified in rejecting the condonation petition merely on the ground that the delay was not satisfactorily explained. The Court accordingly set aside the impugned order rejecting the condonation petition and directed that Form No.10 be taken on file for further enquiry. [Paras 7, 8]

The rejection of the petition for condonation of delay is set aside; the first respondent shall take Form No.10 on file.

Accumulated income for subsequent years - onus to prove utilisation for the trust's object - Whether the accumulated income claimed to have been filed in Form No.10 was duly applied in subsequent years for the purpose of the Trust. - HELD THAT: - The Court accepted the Revenue's submission that condonation of delay does not automatically entitle the petitioner to the benefits of accumulation under Form No.10. The factual question whether the accumulated income was utilised in succeeding years for the objects of the Trust must be examined by the first respondent. Accordingly, the matter was remitted to the first respondent to conduct an enquiry into utilisation of the accumulated income and to determine entitlement to the benefit, with the petitioner required to place supporting material before the authority. [Paras 8, 9]

Remitted to the first respondent to enquire, within eight weeks, whether the accumulated income was utilised in subsequent years for the Trust's objects; petitioner to cooperate and produce evidence.

Final Conclusion: Writ petition allowed; impugned order rejecting condonation of delay set aside and matter remitted to the first respondent to take Form No.10 on file and to investigate whether the accumulated income was applied in succeeding years for the Trust's objects, within eight weeks; no costs.

Reopening of assessment - sham transactions - borrowed satisfaction - application of mind - change of opinion - assumption of jurisdiction under section 147 of the Income Tax Act, 1961 - proceedings under section 148 of the Income Tax Act, 1961

Amendment of petition - Amendment to the petition was permitted in terms of the draft tendered. - HELD THAT: - The learned advocate for the petitioner tendered a draft amendment and the Court allowed the amendment to be carried out forthwith. The order records the Court's express grant of leave to amend the pleadings as presented by counsel. [Paras 1]

Amendment allowed in terms of the draft.

Reopening of assessment - sham transactions - borrowed satisfaction - application of mind - change of opinion - proceedings under section 148 of the Income Tax Act, 1961 - assumption of jurisdiction under section 147 of the Income Tax Act, 1961 - Interim relief stayed further proceedings under the impugned notice issued under section 148 for Assessment Year 2012-13 and notice was ordered to be issued returnable on a specified date. - HELD THAT: - The petitioner challenged the reopening of assessment on grounds that the Assessing Officer relied upon information from investigation without applying his own mind, relied on allegedly incorrect factual assertions (including mistaken identification of directors), treated transactions as sham without stating reasons, and that the notice dated 28.03.2019 is beyond four years absent failure to disclose material facts, rendering assumption of jurisdiction under section 147 without authority. Having considered these submissions, the Court did not decide the merits of the challenge; instead it issued notice returnable on 25th November 2019 and granted ad-interim relief by staying further proceedings pursuant to the impugned notice under section 148 for AY 2012-13. [Paras 2, 3, 4]

Proceedings pursuant to the notice dated 28.03.2019 under section 148 for Assessment Year 2012-13 are stayed; notice issued returnable on 25th November 2019.

Service of process - direct service - Permission for direct service of process was granted. - HELD THAT: - The Court expressly permitted direct service of court processes in the matter as part of the order granting interim relief and issuing notice. This facilitation of service was recorded as part of the ad-interim directions. [Paras 4]

Direct service is permitted.

Final Conclusion: The petition was amended as prayed; the Court issued notice on the challenge to reopening for Assessment Year 2012-13, granted ad-interim stay of further proceedings under the impugned section 148 notice, and permitted direct service.

Penalty under Section 271D and 271E of the Income Tax Act - stay of recovery - deposit condition for grant of stay by appellate authority - judicial review of appellate stay conditions - direction to decide appeals within fixed time

Deposit condition for grant of stay by appellate authority - judicial review of appellate stay conditions - Validity of the First Appellate Authority's requirement that the petitioner remit specified amounts as condition for stay of recovery of penalties - HELD THAT: - The Court observed that, on the face of it, directing the petitioner to remit Rs. 2.5 crores in each appeal as a condition for stay against recovery of much larger penalty demands would ordinarily be a reasonable exercise of appellate discretion not warranting interference under Article 226. However, having regard to the petitioner's projected weak financial position, the pendency of the appeals for over eight months, and the interim stay previously granted by this Court, the High Court declined to quash the impugned orders outright. Instead, the Court exercised its remedial powers to direct the appellate authority to consider and dispose of the pending appeals after hearing the petitioner within a stipulated period, thereby addressing both the propriety and the consequences of the deposit condition without substituting its own factual evaluation for that of the Appellate Authority.

The appellate condition was not quashed; the First Appellate Authority was directed to consider and pass orders on the appeals after hearing the petitioner within three months.

Stay of recovery - direction to decide appeals within fixed time - Interim stay granted by this Court pending challenge to the deposit-condition orders and its continuance status - HELD THAT: - The Court noted that it had earlier granted interim protection against recovery pursuant to the penalty orders. In view of the direction for expeditious disposal of the appeals by the Appellate Authority, the Court ordered that the interim stay previously granted shall be kept in abeyance until the Appellate Authority passes and communicates its orders on the appeals. The petitioner was required to place a copy of the writ petition and this judgment before the Appellate Authority to facilitate prompt hearing and decision.

The interim stay previously granted is kept in abeyance until the Appellate Authority decides the appeals and communicates its orders.

Final Conclusion: Writ petition disposed by directing the First Appellate Authority to hear the petitioner and decide the appeals against the penalty orders within three months; interim stay of recovery granted earlier by this Court is kept in abeyance until the Appellate Authority communicates its decision.

Exemption under Section 10(23C)(iiiab) - proviso to Section 10(23C) - non-application where Section 10(23C)(iiiab) applies - first proviso to Section 12A - retrospective effect of registration to pending assessments - quashing of assessment order for failure to apply mind

Exemption under Section 10(23C)(iiiab) - proviso to Section 10(23C) - non-application where Section 10(23C)(iiiab) applies - Assessment order failed to consider the petitioner's claim of exemption under Section 10(23C)(iiiab) and misapplied the proviso to Section 10(23C). - HELD THAT: - The court found that the Assessing Officer rejected the exemption claim on the ground that the petitioner did not produce an approval contemplated by the proviso to Section 10(23C). The court held that the proviso to Section 10(23C) had no application to an assessee covered by Section 10(23C)(iiiab), the category under which the petitioner claimed exemption. The assessment order therefore did not reflect application of mind to the legal scope of Section 10(23C)(iiiab) and the inapplicability of the proviso, rendering the order unsustainable.

Ext.P2 is quashed insofar as it rejects the claim under Section 10(23C)(iiiab); the matter is remitted for fresh consideration after hearing the petitioner.

First proviso to Section 12A - retrospective effect of registration to pending assessments - quashing of assessment order for failure to apply mind - Assessing Officer did not consider the impact of the first proviso to Section 12A which makes Sections 11 and 12 applicable to income for assessment years where registration under Section 12AA was granted while assessment proceedings were pending. - HELD THAT: - The court noted that the petitioner obtained registration in assessment year 2017-2018 and that the first proviso to Section 12A requires that the benefit of registration extend to any assessment year for which proceedings were pending at the time of grant of registration. The Assessing Officer overlooked this proviso in finalizing Ext.P2. Because the assessment order failed to consider the statutory effect of registration on pending assessments, the order could not be sustained and requires fresh adjudication with due application of law.

Ext.P2 is quashed insofar as it failed to apply the first proviso to Section 12A; the matter is remitted for fresh assessment after hearing the petitioner.

Final Conclusion: The assessment order for AY 2016-2017 is quashed for failure to apply mind to the petitioner's entitlement under Section 10(23C)(iiiab) and the first proviso to Section 12A; the matter is remitted to the Assessing Officer for fresh assessment after hearing the petitioner, to be completed within the time directed by the Court.

Reopening of assessment - Change of opinion as invalid ground for reopening assessments - Assessee's failure to disclose material facts affecting jurisdiction under section 147 of the Income Tax Act, 1961 - Sanction under section 151 granted without application of mind - Interim restraint against reassessment proceedings

Reopening of assessment - Change of opinion as invalid ground for reopening assessments - Assessee's failure to disclose material facts affecting jurisdiction under section 147 of the Income Tax Act, 1961 - Sanction under section 151 granted without application of mind - Interim restraint against reassessment proceedings - Whether the respondent could proceed under the notice dated 31.3.2018 to reopen the assessment for Assessment Year 2012-2013 when the reassessment is founded on verification of records and an alleged change of opinion, and whether the sanction for reopening was granted with application of mind. - HELD THAT: - The petitioner challenged the reopening on the ground that the Assessing Officer relied solely on material already on record and sought to take a different view from that adopted at the scrutiny assessment when deduction under section 80IB(10) had earlier been allowed. It was urged that the superior officer's sanction under section 151 was given mechanically and without application of mind. The Court, having regard to the submissions and the nature of the grounds relied upon (verification of existing records and change of opinion), issued notice and granted ad interim relief restraining the respondent from proceeding further pursuant to the impugned notice dated 31.3.2018. The order records that the reopening concerned an assessment beyond four years and that, in the absence of any pleaded failure by the petitioner to disclose fully and truly all material facts, the assumption of jurisdiction under section 147 was impugned as without authority of law; these contentions were sufficient at the interlocutory stage to grant the interim restraint. The Court did not decide the merits of the reopening on final basis but confined itself to entertaining the petition, issuing notice returnable on 21.10.2019, and granting the interim protection sought by the petitioner.

Notice issued returnable on 21.10.2019; ad interim restraint granted preventing the respondent from proceeding pursuant to the notice dated 31.3.2018 to reopen the assessment for Assessment Year 2012-2013; matter to be heard with Special Civil Application No.15209 of 2018; direct service permitted.

Final Conclusion: The High Court issued notice and granted interim relief restraining the Revenue from acting on the reassessment notice dated 31.3.2018 in respect of Assessment Year 2012-2013, the petition being returnable on 21.10.2019; no final adjudication on the merits of reopening was made in this order.

Reopening of assessment - reasons for reopening - principles in GKN Driveshafts - natural justice - reasoned order on objections - notice under Section 148 - remand for fresh consideration

Reopening of assessment - reasons for reopening - principles in GKN Driveshafts - natural justice - reasoned order on objections - Validity of the reassessment order dated 29.11.2018 (assessment under Section 143(3) read with Section 147) in view of the adequacy of reasons furnished and compliance with the procedure laid down in GKN Driveshafts (India) Ltd. - HELD THAT: - The Court found that the reasons communicated on 06.07.2018, though containing a tabular summary of aggregate TDS entries, did not furnish party wise or other material details necessary for the petitioner to reconcile records and to file effective objections. The Assessing Officer received the petitioner's requests for such details (communications dated 29.08.2018 and 17.09.2018) but proceeded to pass the assessment order without furnishing the requested particulars and without passing a reasoned order on any objections. Applying the procedure mandated by the Apex Court in GKN Driveshafts, the Court held that the Assessing Officer ought to have supplied the material particulars enabling meaningful objections and thereafter issued a speaking order dealing with those objections before finalising reassessment. For these reasons the impugned assessment order could not be sustained and was set aside, with the matter remitted to the Assessing Officer to furnish the requested details, invite objections within prescribed time, and pass a speaking order before proceeding further. [Paras 11, 12, 13, 14]

Impugned assessment order dated 29.11.2018 set aside; matter remitted to the Assessing Officer with directions to furnish the material details sought by the petitioner, permit filing of objections, and pass a reasoned order thereon in accordance with GKN Driveshafts.

Notice under Section 148 - remand for fresh consideration - Challenge to the notice issued under Section 148 dated 31.03.2018 (W.P.No.1923 of 2019) in the light of the Court's order setting aside the assessment. - HELD THAT: - Because the Court has set aside the assessment order and remitted the matter for fresh consideration in accordance with the directions given, the petition challenging the Section 148 notice was kept closed for the present. The Court expressly left open all substantive issues raised in that petition, including any contentions on limitation, for adjudication during the further proceedings directed to be taken by the Assessing Officer. [Paras 13]

W.P.No.1923 of 2019 closed for the present; issues raised therein left open for adjudication during the remand proceedings.

Final Conclusion: The reassessment order dated 29.11.2018 is set aside and the matter is remitted to the Assessing Officer to furnish the material details requested by the assessee, allow time for objections, and pass a reasoned order on those objections in accordance with the procedure in GKN Driveshafts; the writ challenging the Section 148 notice is closed for the present with all issues left open for determination during the remand.

Interest under section 28 of the Land Acquisition Act forms part of enhanced compensation - taxability of enhanced compensation as capital gain versus income from other sources - exemption for capital gains on transfer of agricultural land under section 10(37) - binding effect of higher judicial precedent on characterisation of receipts under the Income-tax Act

Interest under section 28 of the Land Acquisition Act forms part of enhanced compensation - taxability of enhanced compensation as capital gain versus income from other sources - exemption for capital gains on transfer of agricultural land under section 10(37) - Assessibility of amount received under section 28 of the Land Acquisition Act in assessment year 2013-14. - HELD THAT: - The Tribunal considered whether amounts received under section 28 of the Land Acquisition Act (characterised by Revenue as interest) are to be treated as interest taxable as income from other sources or form part of enhanced compensation and are taxable as capital gains (subject to any exemption). Relying on the ratio of the higher judicial decisions cited in the record and following earlier Tribunal orders in connected matters, the Tribunal accepted that the receipt under section 28 assumes the character of enhanced compensation. The Tribunal further noted the settled position that, where the compensation relates to agricultural land, exemption under section 10(37) of the Income-tax Act may apply and the Assessing Officer is required to examine the factual nature of the land before determining tax liability. Applying this parity of reasoning to the present facts, the Tribunal held that the amount received under section 28 is part of compensation and allowed the assessee's claim in accordance with the precedent and guidance that the AO should consider applicability of the agricultural-land exemption where relevant.

Appeal allowed: amount received under section 28 held to be part of enhanced compensation and claim allowed, with direction to apply the law on exemption for agricultural land where applicable.

Final Conclusion: The Tribunal allowed the assessee's appeal for assessment year 2013-14, holding that the receipts under section 28 of the Land Acquisition Act form part of enhanced compensation; the Assessing Officer should apply the law on capital gains and consider exemption under section 10(37) where the compensation relates to agricultural land.

Arm's length price - comparability of comparable companies - functional comparability - upper limit of turnover filter - related party transaction filter - Transaction Net Margin Method - profit level indicator - remand for recomputation of ALP

Comparability of comparable companies - functional comparability - arm's length price - Infosys BPO Limited excluded from the list of comparable companies - HELD THAT: - The Tribunal applied established comparability principles and, following earlier coordinate bench decisions concerning entities rendering ITES, held that Infosys BPO Ltd. is functionally not comparable with the assessee. The Tribunal noted Infosys BPO's niche service profile, brand-related expenditures and an extraordinary acquisition event which rendered its commercial and functional profile distinct and outside the TPO's own filters, and therefore directed exclusion of Infosys BPO Ltd. from the comparable set for computing the ALP. [Paras 7]

Infosys BPO Ltd. is to be excluded from the list of comparable companies for computation of ALP.

Comparability of comparable companies - related party transaction filter - functional comparability - BNR Udyog Ltd. excluded from the list of comparable companies - HELD THAT: - On consideration of preceding Tribunal authority and the material on record, the Bench found that BNR Udyog Ltd. was not functionally comparable with the assessee rendering ITES. The Tribunal accepted contentions that the company had a much smaller turnover, carried out different services (medical transcription, billing and coding) and involved related party transactions exceeding the prescribed threshold, and that the earlier order had not properly examined functional comparability; consequently the Tribunal directed exclusion of BNR Udyog Ltd. [Paras 7]

BNR Udyog Ltd. is to be excluded from the list of comparable companies for computation of ALP.

Comparability of comparable companies - functional comparability - remand for recomputation of ALP - TCS E-Serve Ltd. excluded from comparables and matter remanded for recomputation of ALP after exclusion of directed comparables with opportunity to the assessee - HELD THAT: - Relying on coordinate-bench decisions treating TCS E-Serve Ltd. as primarily a KPO/BPO engaged in higher-end services and therefore functionally different from the assessee's low-end ITES profile, the Tribunal directed exclusion of TCS E-Serve Ltd. The Tribunal then directed the TPO to recompute the arm's length price in light of the directed exclusions, affording the assessee an opportunity of being heard, thus remitting the limited computation and consequential adjustment to the TPO/assessing officer. [Paras 9]

TCS E-Serve Ltd. is to be excluded; the TPO is to recompute ALP after giving the assessee an opportunity of being heard.

Final Conclusion: The appeal is partly allowed: Infosys BPO Ltd., BNR Udyog Ltd. and TCS E-Serve Ltd. are excluded from the comparable set; the Transfer Pricing Officer is directed to recompute the arm's length price in accordance with these directions after affording the assessee an opportunity of being heard.

Reopening of assessment - Approval under section 151 of the Income Tax Act - Notice under section 148 of the Income Tax Act - Mechanical satisfaction / lack of application of mind - Recording of reasons for initiation of reassessment - Quashing of reassessment

Approval under section 151 of the Income Tax Act - Mechanical satisfaction / lack of application of mind - Notice under section 148 of the Income Tax Act - Quashing of reassessment - Approval granted by the Addl. CIT under section 151 was mechanical and without application of mind; the notice issued under section 148 was therefore invalid and the reassessment was quashed. - HELD THAT: - The Tribunal examined the approval proforma and observed that the Addl. CIT's endorsement merely recorded: "Yes, I am satisfied on the reasons recorded by AO that it is a fit case for issue of notice u/s. 148 of the I.T. Act, 1961." There was no indication of which material, information or documents were considered by the Addl. CIT or any application of mind to the reasons placed before him. Following precedents including United Electrical Company (P) Ltd. and CIT v. S. Goyanka Lime & Chemical Ltd., the Tribunal held that sanction under section 151 must reflect that the approving authority applied his mind to the material relied upon by the Assessing Officer and cannot be a routine or mechanical endorsement. Because the approval was given in a mechanical manner and the Assessing Officer thereafter issued notice under section 148, the reopening was held to be invalid and the reassessment proceedings were quashed. The Tribunal therefore allowed the ground challenging the validity of the approval and notice; other grounds were not pressed and were dismissed as such. [Paras 5]

Approval under section 151 was mechanical and without application of mind; notice under section 148 invalid; reopening quashed.

Final Conclusion: The appeal is partly allowed: the reassessment initiated by notice under section 148 is quashed for want of valid approval under section 151; other grounds not pressed are dismissed.

Reopening of assessment - sanction for issue of notice under section 151 read with section 148 - mechanical approval without application of mind - jurisdictional validity of notice under section 148

Sanction for issue of notice under section 151 read with section 148 - mechanical approval without application of mind - jurisdictional validity of notice under section 148 - Validity of the approval given by the Pr. CIT under section 151 and consequential validity of the notice issued under section 148 for reassessment. - HELD THAT: - The Tribunal examined the reasons, the approval form and the record of the Principal Chief Commissioner (Pr. CIT) which merely stated: "I am satisfied that it is a fit case for issue of notice u/s. 148 of the Act." The Pr. CIT's endorsement did not identify the material, information or documents considered or explain the application of mind to the proposal put up for approval. Following the precedents cited, the Tribunal held that approval under section 151 must reflect an application of mind to the material relied upon by the Assessing Officer and cannot be given in a routine or mechanical manner. Because the Pr. CIT's remarks did not disclose which aspects were examined and the approval was therefore mechanical, the sanction required by section 151 was vitiated. Consequentially, the notice issued under section 148 was found to be invalid and the reopening was quashed. The Tribunal allowed the ground challenging the approval and dismissed other grounds which were not pressed by the assessee. [Paras 5]

Approval under section 151 was mechanical and without application of mind; notice under section 148 is invalid and reopening is quashed; ground no. 2 allowed and other unpressed grounds dismissed.

Final Conclusion: Reassessment proceedings for Assessment Year 2010-11 quashed as the Pr. CIT's approval under section 151 was mechanical and did not constitute valid sanction for issuance of notice under section 148; appeal partly allowed.

Adjustment under section 143(1)(a)(vi) for income appearing in Form 26AS - Scope of processing under section 143(1)(a) - Presumptive taxation under section 44AD - Presumptive taxation under section 44ADA - CBDT Instruction No.10/2017 dated 15-11-2017

Adjustment under section 143(1)(a)(vi) for income appearing in Form 26AS - CBDT Instruction No.10/2017 dated 15-11-2017 - Scope of processing under section 143(1)(a) - Whether the CPC was justified in making an addition under section 143(1)(a)(vi) on the ground that amounts shown in Form 26AS were not included in computing total income in the return - HELD THAT: - The Tribunal found as a fact that the gross receipts of Rs. 15,00,000 were included in the return of income (offered under presumptive scheme). Section 143(1)(a)(vi) permits adjustment only where income shown in Form 26AS/Form 16/Form 16A has not been included in the return. The CBDT Instruction No.10/2017 clarifies that an intimation proposing adjustment under section 143(1)(a)(vi) is proper only where receipts are omitted in the return and that differences arising from reporting of presumptive incomes in different schedules must be excluded from the scope of such automatic adjustment. The CPC's show cause proceeded on the basis that the receipts ought to have been declared under a different presumptive head rather than on a finding that the receipts were omitted; accordingly the essential precondition for invoking section 143(1)(a)(vi) was absent. For these reasons the Tribunal held that the adjustment under section 143(1)(a)(vi) was not permissible and ought to be deleted. [Paras 13]

The addition made by CPC under section 143(1)(a)(vi) is deleted; CPC ought not to have made the impugned adjustment.

Presumptive taxation under section 44AD - Presumptive taxation under section 44ADA - Whether the assessee's receipts are assessable under section 44AD or under section 44ADA - HELD THAT: - The Tribunal expressly refrained from deciding the question whether the receipts should be taxed under section 44AD or section 44ADA. It recorded that the question of applicability of section 44AD versus section 44ADA cannot be resolved in summary processing under section 143(1)(a) and therefore left that issue open for determination by the appropriate forum in proper proceedings. [Paras 13]

Left open without any decision; not adjudicated in this order.

Final Conclusion: The appeal is allowed: the automatic adjustment made by CPC under section 143(1)(a)(vi) is deleted because the receipts were included in the return and the precondition for that provision was not satisfied; the substantive question whether the receipts are taxable under section 44AD or section 44ADA is left open for determination in appropriate proceedings.

Admission of additional evidence - relevance of evidence going to the root of the matter - remand to the Assessing Officer for fresh adjudication - reopening of assessment under section 147/148 of the Income-tax Act - capital gains on transfer of agricultural land within municipal limits - application of precedent in admitting evidence

Admission of additional evidence - relevance of evidence going to the root of the matter - application of precedent in admitting evidence - Additional evidence filed by the assessee is admissible and should be admitted. - HELD THAT: - The Tribunal examined the nature of the documents tendered (Tehsildar certificates, PWD letters, notification, area map and Google maps) and concluded that they bear directly upon the central question of taxable character of the land. Noting that identical evidence was admitted in the co-owner's matter and that earlier Tribunal orders accepted like evidence as going to the root of the controversy, the Bench held that admitting the additional evidence would assist in arriving at the correct tax liability and would not prejudice the parties. The Revenue raised no objection to admission. In these circumstances the Tribunal exercised its discretion to admit the additional evidence and to follow the course adopted in the co-owner's order. [Paras 6]

Admitted the additional evidence and permitted it to be considered in the adjudication.

Remand to the Assessing Officer for fresh adjudication - reopening of assessment under section 147/148 of the Income-tax Act - capital gains on transfer of agricultural land within municipal limits - The matter is to be restored to the file of the Assessing Officer for fresh decision in the light of the admitted additional evidence. - HELD THAT: - Because the Assessing Officer had not had the opportunity to examine the newly admitted material, and given that the evidence materially affects the question whether the land fell within municipal limits (and hence the treatment as capital asset for capital gains), the Tribunal set aside the orders of the authorities below and remitted the case to the Assessing Officer for fresh adjudication. The AO is to consider the admitted documents and other material on record, following the directions and precedent applied in the co-owner's case, and after giving the assessee reasonable opportunity of being heard. The Tribunal did not decide on the merits of the capital gains computation or the claimed exemptions, leaving those issues to be decided afresh by the AO. [Paras 6, 7]

Order set aside and matter remanded to the Assessing Officer for fresh decision after considering the additional evidence and affording opportunity of hearing.

Final Conclusion: Appeal allowed for statistical purposes; additional evidence admitted and the matter remitted to the Assessing Officer for fresh adjudication in accordance with the admitted evidence and the directions given in the co-owner's Tribunal order, after affording the assessee a reasonable opportunity of being heard.

Classification of income between salary and professional income - nature of receipt determines head of income - absence of employer control as indicium against salary character - scope and correctness of exercise of power under section 263 - remand for verification of allowability of expenses under income from profession

Classification of income between salary and professional income - nature of receipt determines head of income - absence of employer control as indicium against salary character - Whether amounts received by the assessee from hospital were taxable as salary or as professional income. - HELD THAT: - The Tribunal found on the material on record - the letter of reappointment, Form Nos.16 and 16A and the terms of engagement - that the assessee was reappointed on a consolidated salary for teaching duties but was not restricted from carrying on consultancy work at the hospital. The hospital did not exercise control over the assessee as to hours of work, number of patients or fees; patient fees were collected by the hospital and remitted to the assessee after deductions for hospital charges and TDS. Applying the principle that the character of income is determined by the nature of the receipt and the terms governing the service, the Tribunal held that amounts attributable to consultancy were not traceable to obligations under the employment contract and therefore were correctly classifiable as income from profession rather than salary. The Tribunal relied on coordinate decisions to the same effect and rejected the CIT's conclusion that the assessee could not simultaneously earn under different heads merely because he received salary for teaching. [Paras 7, 8]

Amounts received for consultancy services were assessable as income from profession and not as salary.

Scope and correctness of exercise of power under section 263 - remand for verification of allowability of expenses under income from profession - Whether the Commissioner was justified in invoking section 263 to set aside the assessment and directing disallowance of expenses claimed against professional income. - HELD THAT: - The Tribunal concluded that the CIT's direction to treat the entire receipts as salary and to disallow expenses claimed from professional income was not sustainable in view of the factual record demonstrating consultancy separate from employment. Consequently, the Tribunal set aside the CIT's order passed under section 263. However, the Tribunal did not decide the allowability of the expenses on merits; instead it directed that the Assessing Officer should re-examine the claim of deduction of the expenses under the head 'income from business or profession' and determine their allowability in accordance with law. Thus the correctness of the expenses claim was remitted for fresh consideration by the Assessing Officer. [Paras 8]

Order under section 263 setting aside assessment is set aside; issue of allowability of claimed professional expenses is remanded to the Assessing Officer for fresh examination.

Final Conclusion: The Tribunal allowed the appeal, holding that the consultancy receipts were income from profession (not salary), set aside the CIT's order under section 263, and restored the matter to the Assessing Officer to examine the allowability of the expenses claimed under the head 'income from business or profession' for AY 2004-2005.

Allowability of business expenditure under section 37(1) - Explanation to section 37(1) - expense prohibited by law - applicability of Indian Medical Council regulations to pharmaceutical companies - validity and retrospective effect of CBDT Circular No.5/2012 - business purpose test - wholly and exclusively for business

Validity and retrospective effect of CBDT Circular No.5/2012 - CBDT Circular No.5/2012 cannot be applied retrospectively to disallow expenditures incurred in assessment year 2010-11. - HELD THAT: - The Tribunal noted that the CBDT circular dated 01.08.2012 post-dates the assessment year in issue (2010-11) and, following coordinate Bench decisions of the Tribunal and the principle that a circular imposing a new burden should operate prospectively, held that the circular cannot be relied upon to disallow expenditure for earlier years. The Bench observed that while beneficial circulars may be applied retrospectively, a circular that creates or enlarges liability must be prospective, and therefore the AO/CIT(A) could not invoke the 2012 circular to disallow expenses in respect of AY 2010-11. [Paras 11, 12]

The CBDT Circular No.5/2012 is not applicable with retrospective effect to disallow expenditure for AY 2010-11.

Applicability of Indian Medical Council regulations to pharmaceutical companies - Explanation to section 37(1) - expense prohibited by law - Regulations framed by the Medical Council of India govern medical practitioners and do not, by themselves, render expenditures incurred by pharmaceutical companies prohibited by law for the purposes of Explanation to section 37(1). - HELD THAT: - The Tribunal examined the scope of the Indian Medical Council regulations and noted that they prescribe conduct for registered medical practitioners; the MCI itself conceded before the High Court that its jurisdiction is limited to registered medical professionals. In the absence of any provision in the MCI regulations or the Income tax law expressly making those regulations applicable to pharmaceutical companies, the Tribunal held that the Explanation to section 37(1) (which forbids deduction of expenditures incurred for a purpose that is an offence or prohibited by law) cannot be invoked against pharmaceutical companies on the basis of MCI regulations alone. The Bench further observed that the CBDT could not, by administrative circular, enlarge the scope of MCI regulations to create a statutory disqualification of expenditure where no enabling provision exists. [Paras 22, 23]

MCI regulations do not, by themselves, make the assessee's expenditures illegal or prohibited by law for the purpose of disallowance under Explanation to section 37(1).

Allowability of business expenditure under section 37(1) - business purpose test - wholly and exclusively for business - The disallowances confirmed by the authorities in respect of the claimed expenditures (freebies and related items) were deleted because the expenditures were incurred wholly and exclusively for the purpose of business and were not shown to be illegal or prohibited by law for AY 2010-11. - HELD THAT: - Applying the statutory test under section 37(1) - existence of expenditure, not being covered by sections 30-36, not capital or personal, and laid out wholly and exclusively for business - the Tribunal accepted that the impugned items (business conventions, CME/MCM expenses, promotional material, sales promotion and related expenses) served commercial purposes of the assessee. In view of its conclusions that MCI regulations do not render those expenses unlawful as against the assessee and that the CBDT circular could not be applied retrospectively, the Tribunal followed coordinate Bench precedents (including Aristo Pharmaceuticals) and held that the AO/CIT(A) erred in disallowing those amounts. [Paras 13, 14, 15]

The disallowances made by the AO and confirmed by the CIT(A) are deleted and the claimed expenditures are allowable under section 37(1) for AY 2010-11.

Final Conclusion: Following precedent and applying the statutory test under section 37(1), the Tribunal held that the MCI regulations do not, by themselves, render the assessee's promotional and related expenditures unlawful; CBDT Circular No.5/2012 cannot be applied retrospectively to AY 2010-11; consequently the disallowances confirmed by the CIT(A) were deleted and the appeal was allowed.

Revisional jurisdiction under section 263 - Erroneous and prejudicial to the interests of Revenue - Eligibility of deduction under section 54F - Meaning of "a residential house" for section 54/54F - Deference to a plausible view of the Assessing Officer - Inadequacy of inquiry as ground for revision

Revisional jurisdiction under section 263 - Eligibility of deduction under section 54F - Meaning of "a residential house" for section 54/54F - Deference to a plausible view of the Assessing Officer - Inadequacy of inquiry as ground for revision - Validity of exercise of revisional jurisdiction under section 263 to set aside assessment for allowing deduction under section 54F where AO allowed deduction for purchase of an entire block comprising three residential units - HELD THAT: - The Tribunal held that invocation of section 263 requires coexistence of two pre-conditions: the assessment order must be erroneous and such error must be prejudicial to the interests of the Revenue. An order is not rendered erroneous merely because the Revisional Commissioner prefers a different view. Where the Assessing Officer, after making enquiries (including issuing questionnaire under section 142(1) and considering documents such as the conveyance deed), adopts a view that is legally plausible in light of prevailing judicial precedents construing the expression "a residential house" to include multiple residential units in the same structure, that view cannot be dislodged under section 263. Revision is permissible only in cases of gross inadequacy of inquiry or where omission to inquire results in a substantive error or visible abnormality causing loss of revenue. On the facts, the AO had the issue of eligibility of section 54F before him, relevant documents were on record, and decisions of various Courts supported a wider construction of "a residential house"; accordingly the AO adopted a plausible view in favour of the assessee. The limited or lesser degree of inquiry by the AO did not produce an error of the magnitude contemplated by section 263 and therefore the Pr.CIT was not justified in setting aside the assessment. [Paras 9, 10]

Revisional order under section 263 set aside; assessment upheld insofar as claim under section 54F is concerned and appeal allowed.

Final Conclusion: The Tribunal quashed the Pr.CIT's order under section 263 and restored the assessment because the Assessing Officer's allowance of deduction under section 54F was a plausible view supported by judicial precedents and the inquiries made were not so inadequate as to render the assessment order erroneous and prejudicial to the Revenue.

Interest on delayed refunds under Section 27A of the Customs Act, 1962 - distinction between 'duty' and 'deposit' for refund and interest purposes - pari materia relationship between Section 27A of the Customs Act and Section 11BB of the Central Excise Act - maintainability of writ petition despite availability of alternate statutory remedy

Maintainability of writ petition despite alternate remedy - Writ petition under Article 226 is maintainable despite availability of a statutory appellate remedy. - HELD THAT: - The Court exercised its discretionary jurisdiction under Article 226 because the controversy primarily concerned the legal characterisation of the amount collected (whether it was a 'duty' or a 'deposit'), a question of law susceptible of final determination by this Court. There were no material factual disputes requiring further fact-finding by the appellate authority; accordingly, the existence of an alternative statutory remedy did not operate as an absolute bar to entertain the writ petition. [Paras 8]

Writ petition held maintainable and entertained.

Distinction between 'duty' and 'deposit' for refund and interest purposes - wrongful or excessive collection does not transmute a determined duty into a deposit - The amount collected pursuant to Bill of Entry No.000649 dated 04.07.2011 was a 'duty' and not a 'deposit'. - HELD THAT: - The Court contrasted the legal characters: a 'deposit' is an interim safeguard pending adjudication, whereas a 'duty' is a statutory liability payable to Revenue upon assessment. The Bill of Entry and assessment manifested the collection as duty; subsequent finding that the collection was unsustainable does not retrospectively convert that collection into a mere 'deposit'. Revenue cannot characterize an assessed and collected sum as a 'deposit' to escape the statutory regime governing refunds and interest. The Appellate Authority's order treating the collection as duty and permitting refund corroborated this characterisation. [Paras 12, 13, 18, 19]

Collection held to be a 'duty' and not a 'deposit'; Revenue's contention to the contrary rejected.

Interest on delayed refunds under Section 27A of the Customs Act, 1962 - interpretation of temporal commencement of interest - from expiry of three months from receipt of refund application - application of Ranbaxy (Section 11BB) principle to Section 27A - Interest under Section 27A is payable from the date immediately after expiry of three months from receipt of the refund application, and petitioner is entitled to interest computed from that date on the refunded duty. - HELD THAT: - Section 27A mandates payment of interest where a duty ordered to be refunded is not refunded within three months from receipt of the refund application; the legislative intent is that interest accrues from expiry of that three month period, not from the date of the order granting refund. The Court held that the Supreme Court's interpretation of the pari materia provision (Section 11BB of the Central Excise Act in Ranbaxy) applies equally to Section 27A. Consequently, although the refund was ultimately sanctioned following remand and adjudication, the entitlement to interest dates back to three months after the original refund application (filed on 20.09.2012) and is not negated by intermediate adverse orders or by the timing of the final refund order. [Paras 16, 18, 20, 21, 22]

Petitioner entitled to interest under Section 27A from the date immediately after expiry of three months from 20.09.2012 until date of refund; impugned order rejecting interest set aside.

Final Conclusion: Writ petition allowed; impugned order rejecting interest set aside. Respondent directed to pay interest at the permissible rate under law from the date immediately after expiry of three months from receipt of the refund application dated 20.09.2012, calculated until the date of refund, and to complete the computation and payment within four weeks of receipt of this order.

Provisional release of detained goods - Interim order - Payment of disputed amount in cash to the competent authority - Duty on enhanced value determined by a Chartered Engineer - Waiver of demurrage charges until release

Provisional release of detained goods - Payment of disputed amount in cash to the competent authority - Duty on enhanced value determined by a Chartered Engineer - Waiver of demurrage charges until release - Provisional release of goods detained by customs subject to payment conditions and release timeframe - HELD THAT: - The Division Bench's interim direction for provisional release of goods detained by Customs has been applied to these petitions. The petitioners are directed to pay the disputed amount in cash to the competent authority and to pay the duty applicable on the enhanced value as determined by the Chartered Engineer. Upon such payment the detained goods are to be released by the respondents. Until the date of release, demurrage charges are to be waived. The court disposed of the writ petitions which sought provisional release on this basis without deciding the substantive challenges to the policy provision.

Petitions disposed by directing payment of the disputed amount in cash to the competent authority and payment of duty on enhanced value as determined by the Chartered Engineer; goods to be released within seven days of payment; demurrage waived until release.

Interim order - Validity of Para 2.31 of the Foreign Trade Policy (2015-2020) insofar as it requires authorization for import clearance of secondhand digital multifunction print and copying machines - HELD THAT: - Some accompanying writ petitions seek a declaration that Para 2.31 of the Foreign Trade Policy (2015-2020) is ultravires and without jurisdiction. Those substantive challenges remain pending before the Division Bench and were not decided in these petitions; the Court granted only provisional relief for release of goods subject to the conditions above. The order accordingly confines itself to interim relief and does not adjudicate the constitutional or jurisdictional validity of the policy provision.

Substantive challenge to Para 2.31 not decided and remains pending for adjudication in the parent proceedings.

Final Conclusion: Writ petitions filed solely for provisional release of goods are disposed by directing cash payment of the disputed amount to the competent authority and payment of duty on the enhanced value as determined by the Chartered Engineer; detained goods to be released within seven days of payment and demurrage waived until release, while substantive challenges to the policy provision remain pending.

Evidentiary linkage between import documentation and seized goods - burden of proof that seized goods are smuggled - appellate tribunal's duty to consider and decide contentions - preservation and trade practice regarding perishable/processed agricultural produce - remand for fresh consideration - confiscation and penalty under the Customs Act

Evidentiary linkage between import documentation and seized goods - preservation and trade practice regarding perishable/processed agricultural produce - Whether the seized dry betel nuts were the same as those shown in the bills of entry and whether the passage of time between purported import and sale negated that linkage - HELD THAT: - The Court observed that the adjudicating authority found discrepancies between the description of goods in the bills of entry and the seized consignments (two trucks containing whole nuts and two containing split nuts), and relied on a one-year gap between import and alleged sale to question linkage. The Court noted that the Tribunal did not examine trade practice or the question whether dry betel nuts, after proper treatment, could be preserved or processed into split form, and therefore did not address a determinative factual and commercial issue. Because these matters were not properly considered, the Court declined to decide the factual linkage on the record before it and directed that the question be reconsidered by the Tribunal afresh, applying appropriate appreciation of trade practice and the preservation/processing evidence. [Paras 6, 8, 10, 11]

Remanded to the Tribunal for fresh consideration of whether the seized goods correspond to the goods in the bills of entry, including inquiry into trade practice and preservation/processing of dry betel nuts.

Appellate tribunal's duty to consider and decide contentions - burden of proof that seized goods are smuggled - confiscation and penalty under the Customs Act - remand for fresh consideration - Whether the Tribunal adequately considered the appellant's documentary and affidavit evidence and whether its order could stand - HELD THAT: - The Court found that the Tribunal failed to address important contentions raised by the appellant, misstated the number of bills of entry produced, and did not give logical reasons for accepting the findings recorded by the adjudicating authority. The Court further noted that affidavits from suppliers admitting sale were not examined and that the Tribunal did not properly grapple with the onus-related and evidentiary issues arising under the Customs Act in relation to confiscation and penalties. Given these deficiencies in judicial appraisal, the Tribunal's order could not be allowed to stand and required fresh adjudication after giving the parties a reasonable opportunity of hearing. [Paras 7, 9, 11]

Order of the Tribunal dated 23-03-2018 is set aside and the appeal is remitted to the Tribunal for fresh decision after full consideration of the appellant's documentary and affidavit evidence and after affording opportunity of hearing.

Final Conclusion: The Tribunal's order dated 23-03-2018 is set aside and the matter is remanded to the Tribunal for fresh adjudication of the appellant's appeal after considering trade practice, preservation/processing evidence and the documentary and affidavit material, with liberty to the parties to be heard; parties to appear before the Tribunal on 06-06-2019.

Provisional release of seized goods - bond of full value as security - bank guarantee as condition for release - deposit of duty, interest and penalty treated as security - reduction of bank guarantee to 25% of bond value - safeguarding interests of the Revenue

Provisional release of seized goods - bank guarantee as condition for release - deposit of duty, interest and penalty treated as security - reduction of bank guarantee to 25% of bond value - Whether the condition of furnishing a bank guarantee for provisional release was justified despite deposit of the entire duty, interest and penalty, and if not, what security should be directed. - HELD THAT: - The Principal Commissioner directed provisional release on furnishing a bond of full value and a bank guarantee of Rs. 85 Lakh, but did not take into account that the appellant had already deposited duty, interest and penalty aggregating an amount exceeding the bank guarantee demanded. The Tribunal noted that the appellant itself had proposed, in its request for reconsideration, to furnish a bank guarantee equal to 25% of the bond amount, relying on the substantial deposit already made. Balancing the Department's interest in adequate security with the fact of the existing deposit, the Tribunal found the deposited amount to be sufficient as security and that a reduced bank guarantee would adequately safeguard the Revenue. Applying this reasoning, the Tribunal reduced the bank guarantee requirement from Rs. 85 Lakh to 25% of the bond value while leaving the bond requirement intact. [Paras 4, 5]

Impugned order modified so that, in lieu of the bank guarantee of Rs. 85 Lakh, the appellant shall furnish a bank guarantee equal to 25% of the bond amount; the appeal is partly allowed.

Final Conclusion: The Tribunal modified the provisional release condition by reducing the bank guarantee demanded from Rs. 85 Lakh to a bank guarantee equal to 25% of the bond value, holding that the duty, interest and penalty already deposited by the appellant are sufficient security; appeal partly allowed and the impugned order modified accordingly.

Classification of imported goods - reliability of laboratory test reports - admissibility of scientific evidence - exemption under notification - confiscation and penalty for mis-declaration - capacity of testing laboratory

Reliability of laboratory test reports - capacity of testing laboratory - admissibility of scientific evidence - Whether the departmental/CRCL test reports could be relied upon when the report omitted determination of particle size and the testing laboratory lacked capacity to perform that test. - HELD THAT: - The Tribunal found that the departmental test reports did not include determination of particle size, a parameter admitted to be critical for distinguishing the imported material from precipitated calcium carbonate. The record and reliance on Circular No. 43/2017-Cus establish that the relevant laboratory facilities were deficient and that certain items, including natural calcite powder, could not be tested at CRCL. In these circumstances the test result was held to be faulty and therefore unreliable for the purpose of classification and denial of exemption. The Tribunal applied its earlier decisions (including those cited in the judgment) holding that where a material omitted critical tests and the laboratory capacity is lacking, the scientific report cannot form a valid basis to revise the importer's declared classification. [Paras 4, 5]

The departmental test reports were unreliable and could not be admitted as a basis for denying the exemption or altering classification.

Classification of imported goods - exemption under notification - confiscation and penalty for mis-declaration - Whether the denial of classification under heading claimed by the importer, the consequent denial of exemption, and the orders of differential duty, confiscation and penalties could be sustained in view of the defective testing. - HELD THAT: - Because the determinative laboratory tests to differentiate natural calcite powder from precipitated calcium carbonate were not carried out and the available report was unreliable, the Tribunal held that the lower authorities should not have revised the importer's declared classification or denied the exemption based on those reports. Reliance upon faulty scientific evidence to classify the goods and to impose confiscation, differential duty and penalties was therefore unsustainable. Applying the principles in the cited precedents, the Tribunal set aside the impugned order and allowed the appeals. [Paras 4, 5]

Impugned order denying the claimed classification and exemption and imposing differential duty, confiscation and penalties was set aside; the appeals were allowed.

Final Conclusion: The Tribunal set aside the impugned order and allowed the appeals on the ground that the departmental test reports were defective for want of particle size determination and the testing laboratory lacked capacity to perform that test; consequently the revision of the importer's declared classification, denial of exemption, confiscation, duty and penalties could not be sustained.

Provisional release on payment of duty - enhanced value determined by chartered engineer - modification of interim order under Order XLVII CPC - restriction under Paragraph 2.31 of the Foreign Trade Policy

Provisional release on payment of duty - enhanced value determined by chartered engineer - restriction under Paragraph 2.31 of the Foreign Trade Policy - Provisional release of imported secondhand digital multifunction print and copying machines pending disposal of the writ petitions. - HELD THAT: - The Court, having regard to earlier orders in W.P.Nos.15621 to 15623 of 2018 and subsequent dismissal of the department's petition to modify that order, directed provisional release of the detained goods on payment of the applicable customs duty assessed on the enhanced value as determined by the Chartered Engineer. The Court noted competing contentions on the validity and applicability of Paragraph 2.31 of the Foreign Trade Policy and other statutory requirements but, without adjudicating those substantive questions or resolving allegations of suppression, exercised its discretion to maintain consistency with prior interim relief. The procedural objections regarding service of rejection orders and maintainability were not finally decided; instead, the interim relief was granted to avoid prolonging detention, subject to payment of duty and without prejudice to the ultimate adjudication of the writ petitions.

Goods to be provisionally released on payment of applicable duty assessed on the enhanced value as determined by the Chartered Engineer; demurrage waived until release; other disputes to be decided on merits.

Modification of interim order under Order XLVII CPC - provisional release on payment of duty - Application for modification of the earlier interim order was not entertained as a ground for review and was dismissed. - HELD THAT: - The Court applied the principles governing review and modification under Order XLVII CPC and observed that a petition for modification is not a substitute for a review petition. Having considered the statutory provisions and the scope for review, the Court concluded that the department's attempt to modify the earlier order did not satisfy the requirements for review or modification and therefore refused to modify the prior interim directions. The decision to dismiss modification petitions was a determinative step leading to continuation of the earlier provisional-release regime.

Modification petitions dismissed; the earlier interim order directing provisional release (subject to conditions) remains operative.

Final Conclusion: Without adjudicating the substantive validity of Paragraph 2.31 of the FTP or resolving disputed factual matters relating to service of rejection orders, the High Court directed provisional release of the detained secondhand multifunction machines on payment of applicable duty assessed on the enhanced value by a Chartered Engineer, dismissed the department's modification petitions, and preserved adjudication of the remaining issues for final hearing.

Admission of a Section 10 application - requirement of corporate approval for insolvency filing - misuse of the insolvency process / malicious intent under Section 65 - setting aside moratorium and interim orders - dismissal and closure of CIRP proceedings - assessment and payment of Interim Resolution Professional's fees and costs

Admission of a Section 10 application - requirement of corporate approval for insolvency filing - misuse of the insolvency process / malicious intent under Section 65 - The admission of the Section 10 petition was invalid because the corporate applicant had not obtained requisite shareholder approval and the filing was tainted by malicious intent contrary to the I&B Code. - HELD THAT: - The Tribunal found that the Section 10 application was filed without approval of the Annual General Meeting or Extra-Ordinary General Meeting of the corporate debtor. The Court recorded that a plan was presented contemporaneously with the Section 10 filing and that the circumstances indicated the petition was made for purposes other than genuine resolution of insolvency, engaging the principle of malicious use addressed by the Code. On these grounds the impugned admission order was held to be contrary to law and unsustainable, and the Section 10 petition was dismissed. [Paras 5, 6]

Impugned order admitting the Section 10 application set aside and the Section 10 petition dismissed.

Setting aside moratorium and interim orders - dismissal and closure of CIRP proceedings - All consequential orders passed pursuant to the impugned admission - including appointment of Interim Resolution Professional, declaration of moratorium, freezing of accounts, advertisements and actions by the Resolution Professional - were illegal and were set aside, and the adjudicating authority was directed to close the proceedings. - HELD THAT: - Having annulled the admission, the Tribunal declared that all orders and actions arising from that admission lacked legal validity. The order expressly set aside the appointment of the Interim Resolution Professional, the moratorium, freezing of accounts, the advertisement calling for applications, and other consequent steps, and directed closure of the insolvency proceedings, with immediate restoration of the company's management to the Board of Directors. [Paras 6, 7]

All orders and actions pursuant to the impugned admission declared illegal and set aside; proceedings ordered closed and corporate debtor released to its Board.

Assessment and payment of Interim Resolution Professional's fees and costs - The Tribunal assessed and allowed fees and costs for the Interim Resolution Professional for services rendered during the period the IRP functioned, to be borne by the corporate debtor. - HELD THAT: - Recognising that the Interim Resolution Professional had worked for approximately six months, the Tribunal fixed the total remuneration and costs for the IRP's services and associated expenses and directed payment by the corporate debtor within the stipulated time. The acceptance of the assessed amount by the IRP was recorded and counsel for the shareholders/corporate debtor agreed that the corporate debtor would meet the liability. [Paras 8, 9]

IRP's fees and costs assessed and directed to be paid by the corporate debtor within the time specified.

Final Conclusion: The admission of the Section 10 petition was set aside as unlawful for want of corporate approval and on findings of malicious intent; all consequential insolvency orders were quashed, the CIRP proceedings closed and the corporate debtor restored to its Board, with the Interim Resolution Professional's fees and costs assessed and ordered to be paid by the corporate debtor.

Corporate Insolvency Resolution Process - existence of debt and default as on 31.03.2019 - moratorium under Section 14 of the Insolvency and Bankruptcy Code - appointment of Interim Resolution Professional - public announcement of corporate insolvency resolution process

Existence of debt and default as on 31.03.2019 - admission of application under Section 7 of the IBC - The Company Petition under Section 7 was admitted on the ground that the Financial Creditor proved the existence of debt and default of the claimed amount as on 31.03.2019. - HELD THAT: - The Tribunal examined the petition, the history of sanction, restructuring, classification as NPA, the DRT-I, Chennai decree dated 25.09.2017 in favour of the Financial Creditor and the material placed by the parties. Having considered the financial creditor's claim and the corporate debtor's plea about a pending One Time Settlement proposal, the Bench was satisfied that the financial creditor had established both the existence of the debt and the default as on 31.03.2019. The consent letter in Form-2 given by the Insolvency Resolution Professional was on file. On this basis the petition under Section 7 was admitted. [Paras 7, 8]

Company Petition under Section 7 admitted; debt and default established as on 31.03.2019.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code - scope and effect of moratorium - A moratorium was declared prohibiting specified suits, proceedings, transfers, enforcement of security, and recovery for the period of the CIRP starting from 24.07.2019. - HELD THAT: - Upon admission of the petition, the Tribunal ordered invocation of the moratorium provisions applicable on admission, setting out the prohibitions on institution or continuation of suits or proceedings, transfer or disposition of assets, enforcement of security including under SARFAESI, and recovery of properties occupied by the corporate debtor. The Bench also directed that supply of essential goods or services not be interrupted and noted exceptions notified by the Central Government. The moratorium's temporal effect was fixed to run from 24.07.2019 until completion of the CIRP or until approval of a resolution plan or an order for liquidation. [Paras 7]

Moratorium declared with specified prohibitions, effective from 24.07.2019 until completion of CIRP or further order.

Appointment of Interim Resolution Professional - public announcement of corporate insolvency resolution process - An Interim Resolution Professional was appointed and a public announcement of the CIRP was directed to be made immediately. - HELD THAT: - The Bench appointed Mr. Mathur Sabhapathy Viswanathan as Interim Resolution Professional to carry out functions under the Code and specified that fees be in compliance with IBBI regulations. The Bench further directed that the public announcement required under the Code be made immediately. Administrative directions were given to communicate the order to the financial creditor, corporate debtor and IRP by email or WhatsApp. [Paras 7, 9]

IRP appointed and public announcement of CIRP directed; registry to communicate the order to parties.

Final Conclusion: The Tribunal admitted the Section 7 petition, having found existence of debt and default as on 31.03.2019, declared the moratorium effective from 24.07.2019, appointed an Interim Resolution Professional and directed immediate public announcement and communication of the order.

Scope of inherent jurisdiction under Section 482 Cr.P.C. - quashing of F.I.R. and proceedings on merits - assessment of defence and requirement of trial to appreciate evidence - requirement of notice in revisional proceedings - remand for fresh consideration by Revisional Court

Scope of inherent jurisdiction under Section 482 Cr.P.C. - quashing of F.I.R. and proceedings on merits - assessment of defence and requirement of trial to appreciate evidence - Whether the High Court, in exercise of its inherent jurisdiction under Section 482 Cr.P.C., was justified in quashing the F.I.R., charge-sheet and all proceedings by recording findings on disputed facts and accepting the defence without trial. - HELD THAT: - The Court held that the High Court exceeded its jurisdiction under Section 482 Cr.P.C. by traversing disputed factual territory and adjudicating the merits of the defence at the quash stage. The correctness of the respondent's defence that the amounts were gifts from his father and were held overseas on his father's account is a serious factual dispute to be tested by appreciation of evidence at trial. The High Court erred by treating alleged statements and tax authority orders as sufficient to negate the need for trial and by recording findings in favour of the respondent instead of leaving such factual determinations to the competent trial forum. Accordingly, the High Court's order quashing the FIR and related proceedings is unsustainable. [Paras 20, 21, 22, 23, 26]

Impugned order of the High Court quashing the FIR and all proceedings is set aside; trial court permitted to proceed uninfluenced by the observations of the High Court or this Court.

Requirement of notice in revisional proceedings - remand for fresh consideration by Revisional Court - Whether the Revisional Court's order allowing the CBI's revision without issuing notice to the respondent was sustainable and what relief should follow. - HELD THAT: - The Court observed that where a revisional court passes an adverse order without issuing notice, the High Court may set aside and remit for fresh consideration, but it is not appropriate to allow a complete quashing of proceedings on that basis. Applying this principle, the Court quashed the order dated 20.08.2011 passed by the Revisional Court and remitted the matter to the Revisional Court for fresh consideration after issuing notice to the respondent. The respondent was directed to appear within four weeks and the Revisional Court was to fix a hearing and decide on merits thereafter. [Paras 24, 25, 26]

Order of the Revisional Court dated 20.08.2011 is quashed and the matter is remitted to the Revisional Court for fresh consideration after issuing notice to the respondent; directions issued for respondent's appearance and fresh hearing.

Final Conclusion: The appeal is allowed; the High Court's order quashing the FIR and proceedings is set aside and the trial court is permitted to proceed; the Revisional Court's order is quashed and the matter remitted for fresh consideration after issuing notice to the respondent, who is directed to appear within four weeks.

Summary order. Civil Appeal dismissed; delay condoned.

Liability to service tax on government business - agency of Reserve Bank of India - demand of interest under Section 11AA of the Central Excise Act - payment in compliance with direction of principal and Section 73A(2) - precedential effect of Larger Bench decision in CCE v. State Bank of Patiala - when main tax demand is unsustainable interest cannot be sustained

Liability to service tax on government business - agency of Reserve Bank of India - demand of interest under Section 11AA of the Central Excise Act - payment in compliance with direction of principal and Section 73A(2) - Validity of the demand of interest imposed on the bank for the period April 2015 to March 2016 - HELD THAT: - The Tribunal applied the Larger Bench reasoning in CCE v. State Bank of Patiala that a bank acting as agent of the RBI transacts government business of a sovereign character and is not liable to Service Tax. The appellant had, nevertheless, remitted Service Tax in compliance with the RBI's direction dated 04.11.2016 and Section 73A(2). Because the principal tax demand was held not sustainable on the authority cited, a demand for interest under Section 11AA of the Central Excise Act (as applied) could not be sustained. The Tribunal relied on its earlier Final Order No. 20268/2019 (Vijaya Bank) where identical facts led to setting aside the interest demand, and on the Tribunal's reasoning in Shree Infra Tech that when the main amount is not legally due, interest demand must be set aside. Applying that ratio to the present facts, the impugned order confirming interest was set aside. [Paras 6, 7]

Set aside the impugned order insofar as it confirms the demand of interest; appeal allowed with consequential relief.

Final Conclusion: The appeal is allowed; the demand of interest confirmed by the Commissioner (Appeals) for April 2015 to March 2016 is set aside following the Larger Bench precedent that a bank acting as RBI's agent is not liable to Service Tax, with consequential relief as applicable.

Eligibility of CENVAT credit for input services - CENVAT credit on errors and omissions insurance - CENVAT credit on transit insurance - Input service for output service provider

CENVAT credit on errors and omissions insurance - Eligibility of CENVAT credit for input services - Disallowance of CENVAT credit in respect of premiums paid under errors and omissions insurance policy was unjustified and was to be set aside. - HELD THAT: - The Tribunal applied the appellant's earlier decision reported in 2019 (3) T.M.I. 345 (CESTAT Chennai) which analysed the nature of errors and omissions insurance as covering loss arising from failure to perform or shortages in services provided. Such insurance premium was treated as an input service eligible for CENVAT credit. The Bench found no contrary binding decision placed by the Revenue and, following the appellant's own precedents of the Tribunal, concluded that the disallowance by the lower authorities was not sustainable. [Paras 5, 6]

Disallowance of credit on errors and omissions insurance set aside; credit allowed.

CENVAT credit on transit insurance - Input service for output service provider - Eligibility of CENVAT credit for input services - Disallowance of CENVAT credit in respect of transit insurance premium was unjustified and was to be set aside. - HELD THAT: - The Tribunal considered the nature of transit insurance taken to cover risk of accident or damage to goods (such as computers, routers) transported to customers' premises. It held that the appellant, being an output service provider, is entitled to credit of input services used in providing output services; the definition of input service applicable to manufacturers does not preclude an output service provider from claiming such credit. The Revenue failed to place any contrary authority, and the Bench, following the appellant's precedent, found the disallowance unsustainable. [Paras 5, 6]

Disallowance of credit on transit insurance set aside; credit allowed.

Final Conclusion: Impugned order set aside; appeal allowed and credits in respect of errors and omissions insurance and transit insurance granted with consequential benefits as per law.

Input service - Cenvat Credit - nexus with output service - business purpose - inclusive definition under Rule 2(l) of the Cenvat Credit Rules, 2004 - rent-a-cab exclusion (w.e.f. 1.4.2011) - circular clarification on rent-a-cab (Circular No.943/04/2011-CX dated 29.4.2011)

Input service - Cenvat Credit - nexus with output service - business purpose - Cenvat credit on outdoor catering service availed during April, 2007 to March, 2010 is admissible. - HELD THAT: - The definition of input service in Rule 2(l) is wide and covers services used in relation to the business. The appellant produced invoice details and accounted the outdoor catering expenditure to its profit & loss account, showing the service was used during office hours for business meetings and not as a personal/welfare perquisite to employees. The tribunal found that the service bore a sufficient nexus with the appellant's business activity of providing advertising services and was not for personal use or recovered from employees. On these facts the outdoor catering service falls within the ambit of input service and the appellant is entitled to Cenvat Credit for the period in dispute.

Credit allowed on outdoor catering service for the period April, 2007 to March, 2010.

Rent-a-cab exclusion (w.e.f. 1.4.2011) - Cenvat Credit - circular clarification on rent-a-cab (Circular No.943/04/2011-CX dated 29.4.2011) - input service - business purpose - Cenvat credit on rent-a-cab service availed during April, 2007 to March, 2010 is admissible. - HELD THAT: - Although rent-a-cab services were excluded from the definition of input service by amendment effective 1.4.2011, the exclusion does not affect services provided before that date. The departmental circular (Circular No.943/04/2011-CX) clarifies that credit on rent-a-cab is available if the service provision was completed before 1.4.2011. The appellant furnished numerous invoices showing that cabs were hired for employees to attend client locations for business purposes and the expenditure was incurred for efficient running of the business rather than personal use. The tribunal held that these facts establish the requisite nexus with the business activity and entitle the appellant to Cenvat Credit for the period in dispute.

Credit allowed on rent-a-cab service for the period April, 2007 to March, 2010.

Final Conclusion: The appeal is allowed; Cenvat credit is granted in respect of outdoor catering and rent-a-cab services for April, 2007 to March, 2010, with consequential relief as applicable.

Taxability of reimbursed material costs - determination of value for taxable services - service tax under Section 67 - precedential effect of Supreme Court decision in Intercontinental Consultants and Technocrafts Pvt. Ltd.

Taxability of reimbursed material costs - determination of value for taxable services - precedential effect of Supreme Court decision in Intercontinental Consultants and Technocrafts Pvt. Ltd. - Whether the cost of materials reimbursed to the appellant by the manufacturer is includible in the taxable value of the service and liable to service tax. - HELD THAT: - The Tribunal noted that on identical facts for an earlier period it had allowed the appellant's appeal by order dated 13.12.2018, holding that material costs reimbursed by the manufacturer cannot be subjected to service tax under Section 67. That earlier decision placed reliance on the Hon'ble Supreme Court's judgment in Union of India v. Intercontinental Consultants and Technocrafts Pvt. Ltd., which excluded such reimbursed material costs from the taxable value of services. Applying the same principle to the present appeal and observing no distinguishing circumstance, the Tribunal found no justification for upholding the adjudged demand. The impugned appellate order confirming tax, interest and penalty was therefore unsustainable in view of the binding precedential effect of the Supreme Court decision and the Tribunal's earlier ruling on identical facts.

Impugned order set aside; appeal allowed and service tax demand (and attendant interest/penalty) relating to reimbursed material costs not upheld.

Final Conclusion: The Tribunal allowed the appeal, set aside the Commissioner (Appeals) order, and held that material costs reimbursed by the manufacturer are not includible in the taxable value of the service in view of the Tribunal's earlier order and the Supreme Court's decision in Intercontinental Consultants and Technocrafts Pvt. Ltd.

Reverse charge mechanism - revenue neutrality as defence to penalty and limitation - invocation of extended period of limitation requiring intention to evade - waiver of penalty under Section 80 of the Finance Act, 1994 - penalties under Sections 77 and 78 of the Finance Act, 1994 - no show cause notice where tax already paid under Section 73(3) - effect of insertion of Section 66A on pre 18.04.2006 import of services

Waiver of penalty under Section 80 of the Finance Act, 1994 - revenue neutrality as defence to penalty - penalties under Sections 77 and 78 of the Finance Act, 1994 - Whether penalties imposed on the appellant can be waived under Section 80 in view of revenue neutrality and absence of motive to evade payment of service tax - HELD THAT: - The Tribunal found on the material on record that the entire service tax demand along with interest had already been paid by the appellant and that the appellant had availed CENVAT credit of the service tax so paid. Given this revenue neutrality, the Tribunal concluded there was no evident motive on the part of the appellant to evade payment of service tax. In the absence of intention to evade, the criteria for invoking the extended period as based on fraud, collusion or wilful misstatement and for sustaining penalties under the provisions invoked are not made out. Applying Section 80, which empowers waiver of penalty where reasonable grounds for failure to pay exist, the Tribunal held that a reasonable ground existed to waive the penalties imposed by the lower authority and that the penalties should therefore be set aside. The Tribunal explicitly set aside the penalties imposed under the impugned order for these reasons. [Paras 5, 6]

Penalties imposed on the appellant are set aside by invoking Section 80 on the basis of revenue neutrality and absence of motive to evade payment.

Final Conclusion: The appeal is partly allowed: the penalties imposed under the impugned order are set aside under Section 80 of the Finance Act, 1994 on the ground of revenue neutrality and lack of intention to evade; the demand for service tax was not disturbed in the proceedings before the Tribunal.

Utilisation of CENVAT credit for pre-deposit - interpretation of Rule 3(4) of the CENVAT Credit Rules, 2004 - mandatory pre-deposit under Section 35F of the Central Excise Act, 1944 - CENVAT credit as duty already suffered - CESTAT Circular permitting adjustment from CENVAT account - finality of unappealed High Court precedents

Utilisation of CENVAT credit for pre-deposit - interpretation of Rule 3(4) of the CENVAT Credit Rules, 2004 - mandatory pre-deposit under Section 35F of the Central Excise Act, 1944 - CENVAT credit as duty already suffered - Permissibility of utilising CENVAT credit for payment of the mandatory pre-deposit required under Section 35F of the Central Excise Act, 1944. - HELD THAT: - Rule 3(4) of the CENVAT Credit Rules, 2004 allows utilisation of CENVAT credit for specified payments and does not contain an express prohibition against using CENVAT credit to make the statutory pre-deposit under Section 35F. The court agreed with the view that CENVAT credit in the assessee's account represents duty already suffered and therefore may be applied for the purpose of satisfying the pre-deposit requirement. This conclusion is supported by consistent decisions of appellate fora and High Courts which have held that the 2004 Rules do not prohibit such adjustment and by CESTAT's practice (including its circular) permitting registration of appeals where the mandatory deposit is made from the CENVAT account and evidence is produced. The court accepted those determinations as dispositive of the legal question in the present appeal.

Utilisation of CENVAT credit to meet the mandatory pre-deposit under Section 35F is permissible under Rule 3(4) of the CENVAT Credit Rules, 2004.

CESTAT Circular permitting adjustment from CENVAT account - finality of unappealed High Court precedents - Whether the appeal should be admitted notwithstanding existing unchallenged High Court precedents and the Department's revised litigation policy including monetary threshold for High Court appeals. - HELD THAT: - The court noted that the relevant High Court decisions (Akshay Steel Works Pvt. Ltd. and Cadila Health Care Pvt. Ltd.) upholding the permissibility of CENVAT adjustment had not been brought before the Supreme Court. In addition, the Department's litigation policy (and an instruction raising the monetary threshold for High Court appeals) limits filing of appeals where the disputed value is below the enhanced threshold. Given those factors and the existence of consistent appellate practice and a CESTAT circular on the subject, the court found no good ground to admit the present appeal which concerns an amount below the stated threshold.

The appeal was not admitted and was disposed of on the basis of the unchallenged precedents and the Department's litigation policy/monetary threshold.

Final Conclusion: The High Court declined to admit the appeal. It held that Rule 3(4) of the CENVAT Credit Rules, 2004 does not prohibit utilisation of CENVAT credit for the mandatory pre-deposit under Section 35F of the Central Excise Act, 1944, and, in view of unappealed High Court precedents and the Department's litigation policy including the monetary threshold, found no reason to entertain the present appeal.

Non-cooperation - true and full disclosure - rejection of settlement application for delay - remand for fresh consideration

Non-cooperation - true and full disclosure - rejection of settlement application for delay - remand for fresh consideration - Whether the Settlement Commission was justified in rejecting the petitioner's settlement application as a consequence of 'non-cooperation' where the Revenue had not supplied all annexures sought by the petitioner - HELD THAT: - The Settlement Commission recorded that the petitioner failed to respond for over three months despite having been supplied all annexures and, on that basis, rejected the application for settlement as amounting to 'non-cooperation'. The High Court held that the Commission's conclusion was erroneous because the petitioner had not, in fact, been furnished with all the annexures it had sought; therefore the failure to submit a response under such circumstances does not amount to 'non-cooperation' as understood in the context of settlement proceedings. The Court relied on the principle, as explained by the Division Bench in ANIL RE-ROLLING MILLS V/s. COMMISSIONER OF CENTRAL EXCISE 2013 (320) ELT 397, that 'cooperation' in settlement proceedings means making a true and full disclosure of facts and that 'non-cooperation' denotes the opposite. Applying that principle, the Court found that non-submission of a response when necessary material remains withheld by the Revenue cannot be equated with non-cooperation. The order of the Settlement Commission was therefore set aside and the matter remitted to the Commission for fresh consideration. The Court directed that the petitioner shall submit its response within three weeks from the date the remaining annexures are provided; if any document is not traceable, the Commission may proceed eschewing that document but must put the petitioner on notice and grant sufficient time to respond before doing so. [Paras 2, 5, 6, 7]

Order dated 16.03.2018 rejecting the application for settlement on the ground of 'non-cooperation' set aside; matter remitted to the Settlement Commission for fresh consideration in accordance with the directions given.

Final Conclusion: Writ petition allowed; impugned order set aside and the matter remitted to the Settlement Commission with directions to allow the petitioner to file its response after remaining annexures are provided, and if any documents are untraceable to proceed after giving notice and sufficient time to the petitioner.

Admissibility of Cenvat credit on service tax paid on sales commission - sales promotion vs commission agent distinction - interpretation of contract terms to determine nature of services - admissibility of credit for business auxiliary services - audit objection and invocation of extended period

Admissibility of Cenvat credit on service tax paid on sales commission - sales promotion vs commission agent distinction - interpretation of contract terms to determine nature of services - admissibility of credit for business auxiliary services - audit objection and invocation of extended period - Cenvat credit claimed on service tax paid to the sales promotion/commission agency was admissible and the demand, interest and penalty confirmed by the authorities were unsustainable. - HELD THAT: - The Tribunal examined the terms of the agreement (Exhibit B) which provided that the manufacturer would supply free samples for trial while the sales promotion agency would bear and undertake advertising, travelling, additional discounts, gifts and exhibition expenses, and that commission was payable on selling price. The Tribunal noted the distinction drawn in authorities between expenditure on sales promotion and commission paid to agents, but found on facts that the agency performed sales promotion activities and had documents to substantiate such activities. The CBEC circular (943/4/2011 CX) and subsequent clarifications recognising credit for business auxiliary services were held to support admissibility of the credit. The Tribunal further observed that reliance on an audit objection alone does not sustain invocation of extended period for demand. Applying these determinations to the material on record, the Tribunal concluded that the appellant had availed eligible Cenvat credit on the service tax paid and that the adjudicated demand, interest and 50% penalty as confirmed by the Commissioner (Appeals) could not be sustained. [Paras 5, 6, 7]

Appeal allowed; the order of the Commissioner (Appeals) confirming the demand, interest and penalty is set aside and the credit is held admissible.

Final Conclusion: The Tribunal allowed the appeal, held the Cenvat credit on service tax paid to the sales promotion/commission agency admissible on the facts and contract terms, and set aside the order confirming demand, interest and penalty.

Deemed export - chargeability under Section 3 of the Central Excise Act, 1944 - exemption notification no. 125/84-CE - applicability when not sold in India - benefits under the Export Import Policy and Letter of Permission - limited scope of customs/notification relief for inputs vis-a -vis finished goods - remand for computation after applying eligible notifications and scrutinising assessable value

Deemed export - chargeability under Section 3 of the Central Excise Act, 1944 - benefits under the Export Import Policy and Letter of Permission - Whether clearances made pursuant to paragraph 103 of the Export Import Policy, with permission of the Development Commissioner and under a Letter of Permission, but effected into the domestic tariff area to a project awarded through international competitive bidding, are not sales in India and thus avoid liability under Section 3 of the Central Excise Act, 1944. - HELD THAT: - The Tribunal found that although the appellant is a 100% export oriented unit and the supplies were to a project funded/awarded through international competitive bidding, such clearances effected into the domestic tariff area cannot be characterised other than as sales in India. Entitlements and incentives under the Export Import Policy and the Letter of Permission are confined to the incentives enumerated therein and do not, by themselves, displace the fiscal charge under the Central Excise Act. Consequently, exigibility under Section 3 arises upon manufacture and clearance that are not exports or otherwise covered by an applicable exemption notification; communications from the Development Commissioner or Ministry of Commerce do not alter the chargeability under central excise law. [Paras 5, 6, 7]

Clearances in the facts of this case are sales in India and liable to duty under Section 3 of the Central Excise Act, 1944; the Export Import Policy/LoP does not by itself eliminate central excise liability.

Exemption notification no. 125/84-CE - applicability when not sold in India - limited scope of customs/notification relief for inputs vis-a -vis finished goods - Whether exemption notification no. 125/84-CE or other notifications relied upon by the appellant (including customs notifications for inputs or notifications for specified agencies/projects) apply to avoid the duty liability on the finished goods cleared to the specified project. - HELD THAT: - The Tribunal held that notification no. 125/84-CE is directed to finished products not sold in India and therefore does not cover finished goods cleared as sales in India. Notifications and customs relief directed to inputs or to supplies made under specific licensing/ project conditions are limited in scope and contingent on the factual matrix applicable at the time of import/clearance. The appellant did not establish that the conditions of the customs/notification relief (as distinct from policy entitlements under the LoP) were fulfilled at the time of import or that such notifications could be permissibly substituted for the policy benefits. Accordingly, the lower authorities were right in rejecting the broad contention that the Export Import Policy entitlements automatically displace central excise notifications applicable to finished goods cleared as sales in India. [Paras 6, 8]

Notification no. 125/84-CE and the other notifications relied upon do not operate to exempt the finished goods cleared as sales in India; customs/notification relief for inputs cannot be equated with exemption for finished goods unless its conditions are satisfied.

Remand for computation after applying eligible notifications - scrutinising assessable value - Whether the matter should be remanded for quantification of duty liability and examination of the appellant's computation and claim to a lesser assessable value after applying any eligible notifications. - HELD THAT: - The Tribunal observed that the impugned order had not examined the appellant's worksheet and computation showing a claimed duty liability lower than that confirmed by the original authority. While upholding the applicability of Section 3 to the clearances, the Tribunal directed that the proviso to Section 3(1) applies and therefore remanded the matter to the original authority for computation of duty liability after applying any notifications for which the appellant is eligible and for scrutiny of the appellant's claim to a lesser assessable value. [Paras 9]

Matter remanded to the original authority to compute duty liability applying eligible notifications and to examine the claim for a reduced assessable value.

Final Conclusion: The Tribunal held that clearances under the facts (LoP/Export Import Policy but effected into the domestic tariff area) are sales in India and liable to central excise under Section 3; exemptions under notification no.125/84-CE and other customs/notification pleas do not apply unless their conditions are satisfied. The matter is remanded for fresh computation of duty after applying any eligible notifications and scrutinising the appellant's claim to a lesser assessable value.

Whether cutting, slitting and printing of PVC sheets amounts to manufacture - assessable value and inclusion of subsequent processing charges only if manufacture exists - invocation of extended period of limitation where facts were within departmental knowledge - reliability of third party seized documents and uncross examined statements as sole basis for demand - obligation to afford opportunity of cross examination and effect of inordinate delay on witness availability

Whether cutting, slitting and printing of PVC sheets amounts to manufacture - assessable value and inclusion of subsequent processing charges only if manufacture exists - Activity of cutting/slitting and printing of PVC jumbo rolls at the Daman unit does not amount to manufacture and therefore printing charges cannot be included in assessable value. - HELD THAT: - Tribunal found no dispute of fact that Daman unit received duty paid plain PVC sheets from Thane and carried out checking/inspection, cutting/slitting and printing. Applying precedent (including Raj Purohit GMP and Caprihans and decisions followed in Bombay Kunststoff) the Tribunal held that printing/cutting/slitting did not produce a new or distinct product and therefore did not amount to manufacture. Since manufacture is a precondition to invoke the charging provisions and valuation provisions for inclusion of subsequent processing costs, the question of adding printing charges to assessable value does not arise. Reliance by the adjudicating authority on Laminated Packaging and Siddhartha Tubes was held inapposite on facts: Laminated Packaging turned on market distinction shown by evidence of distinct product, and Siddhartha Tubes concerned processing within same factory leading to completion of manufacture; those factual predicates are absent here. [Paras 4]

Demand based on printing charges dropped as the activity did not amount to manufacture and therefore could not be included in assessable value.

Reliability of third party seized documents and uncross examined statements as sole basis for demand - obligation to afford opportunity of cross examination and effect of inordinate delay on witness availability - Documents seized from a third party and statements of witnesses who could not be cross examined after inordinate delay cannot, without independent corroboration, sustain a demand for undervaluation or clandestine receipts. - HELD THAT: - SCN relied upon price lists seized from the residence of a third party and statements of various persons. The Tribunal observed contradictions in the record regarding existence/filing of those price lists and recorded that several witnesses could not be cross examined due to age, ill health or being untraceable after a delay of about 20 years. Applying authorities (Saakeen Alloys, Rutvi Steel and Andaman Timber Industries), the Tribunal held that serious allegations of clandestine receipts or undervaluation require cogent and positive evidence and cannot rest solely on uncross examined third party materials. Granting and facilitation of cross examination was material; the long delay prejudiced the appellant and undermined the evidentiary value of the seized documents and statements. [Paras 4]

Evidence based on third party seized price lists and uncross examined witness statements is insufficient to confirm the allegation of receipt of cash or undervaluation; such evidence cannot sustain the demand.

Invocation of extended period of limitation where facts were within departmental knowledge - Extended period of limitation could not be invoked; the demand was barred because the facts were within the knowledge of the department and the matter had been the subject of earlier proceedings. - HELD THAT: - The Tribunal noted that Thane unit had been issued multiple SCNs for the same period and the department was aware of the factual matrix; many of those notices were dropped or litigated and ultimately set aside. Given that the issues were litigated over years and the question of excisability of printing was ultimately settled in favour of the assessees by higher authorities, the Tribunal held that invoking the extended period was not permissible under the principles in Nizam Sugar Factory and subsequent jurisprudence. Further, excessive delay (show cause dated 12.01.1999 adjudicated in 2019) with long periods in call book without explanation militated against invoking extended limitation. [Paras 1, 4, 6]

Extended period of limitation cannot be invoked and the demand is time barred as to the extended period.

Final Conclusion: Impugned order confirming duty, interest and penalty is set aside: on merits because cutting/slitting/printing at the Daman unit did not amount to manufacture and thus printing charges could not be included in assessable value; evidentiary basis of third party documents and uncross examined statements was inadequate to prove clandestine receipts; and on limitation because extended period could not be invoked. Appeal allowed with consequential reliefs.

SSI exemption - rural area for exemption - development area notification under Gujarat Town Planning and Urban Development Act, 1976 - jurisdiction of area development authority not ipso facto converting rural land into urban - onus of proof to show change of area status - penalty not sustainable when demand is unsustainable

SSI exemption - rural area for exemption - development area notification under Gujarat Town Planning and Urban Development Act, 1976 - jurisdiction of area development authority not ipso facto converting rural land into urban - onus of proof to show change of area status - Exemption under Notification No. 8/2003-CE was available to the appellant unit as the factory was situated in a rural area despite falling within the jurisdiction of the Jamnagar Area Development Authority (JADA). - HELD THAT: - The Tribunal accepted the revenue records and certificate of the Revenue Officer (Mamlatdar) showing the unit was located in a village and hence in rural area as defined in Para 5H of the notification. Reliance on the existence of Jamnagar Area Development Authority was held insufficient to convert the status of the land to urban, since the Area Development Authority is constituted under Section 3 of the Gujarat Town Planning and Urban Development Act, 1976 for planned development and does not ipso facto change village status. No evidence was produced to rebut the appellants' position that the area was rural at the material time; a later State Government notification (dated after the impugned period) incorporating the survey number into Jamnagar Municipal Corporation further supported that the area was rural during the relevant period. The Tribunal also followed precedent where similar facts led to extension of the notification benefit. [Paras 4, 5, 6]

Grant exemption under Notification No. 8/2003-CE to the appellant unit for the relevant period.

Penalty not sustainable when demand is unsustainable - Demand of duty and penalty imposed on the appellant unit and co-appellants was set aside. - HELD THAT: - Having held that the SSI exemption benefit was rightly available and that there was no sustainable demand of duty, the Tribunal found no basis to impose penalty on the appellant unit or on co-appellants (the brand owner and the raw-material supplier) who had no involvement in the alleged duty-evading clearance. In absence of a sustainable demand on merits, penalty could not be sustained. [Paras 6]

Set aside demand and penalties against the appellant unit and co-appellants.

Final Conclusion: The Tribunal allowed the appeals, held that the unit was entitled to SSI exemption as it was situated in a rural area notwithstanding its inclusion within the jurisdiction of the Jamnagar Area Development Authority, and set aside the demands and penalties against the appellants and co-appellants, with consequential reliefs.

Clandestine manufacture and clandestine removal - confiscation of seized goods - liability to pay duty on alleged clandestine clearances - reliance on private records/loose slips - corroboration of statements and evidence - admissibility/weight of proprietor's statement in light of mental health - redemption of seized goods on payment of fine

Confiscation of seized goods - corroboration of statements and evidence - Whether the seized biris are liable to be confiscated. - HELD THAT: - The Tribunal examined the material relied upon by Revenue and found that apart from 18,800 biris which were found properly labelled and packed in finished form, there was no cogent corroborative evidence to support confiscation of the remainder of the seized stock. The stock recovered from the adjoining premises was not shown to be branded goods of the appellant and the appellant's explanation that such stock comprised unbranded purchased biris for trading was not found to be untrue. Further, Revenue's case rested on loose slips and statements without independent corroboration of clandestine manufacture or removal. The proprietor's admissions in recorded statements were given limited weight in view of his poor mental health and treatment. For these reasons confiscation was upheld only in respect of the 18,800 labelled and packed biris; confiscation of the balance was not sustained. [Paras 6]

Confiscation confirmed in respect of 18,800 labelled and packed biris; confiscation of the remaining seized biris set aside for lack of corroborative evidence.

Liability to pay duty on alleged clandestine clearances - reliance on private records/loose slips - corroboration of statements and evidence - Whether the appellant is liable to pay duty (and penalty) on the alleged clandestine removal of biris as quantified in the private records. - HELD THAT: - The Tribunal considered the show cause notice, private loose sheets and statements relied upon by Revenue. It found that except for the 18,800 finished and labelled biris, there was no satisfactory evidence to establish clandestine clearances or production of the large quantity alleged in the loose records. The purported loose receipts and uncorroborated statements did not establish that the appellant received or cleared the goods as its own branded production. Given the absence of independent corroboration, the demand based on the private records could not be sustained except insofar as it related to the 18,800 labelled biris which were accepted as finished stock. Accordingly duty, interest and equal penalty were confirmed only for the 18,800 biris; the remainder of the demand was set aside. [Paras 6]

Duty (with interest) and equal penalty confirmed only for 18,800 labelled biris; demand based on private records for the remaining alleged quantity is not sustained.

Final Conclusion: Appeal allowed in part: confiscation and consequential duty with interest and equal penalty upheld only for 18,800 nos. of labelled and packed biris; all other confiscation and demands based on alleged clandestine manufacture/clearances are set aside for want of corroborative evidence.

Retrospective effect of a substituted/amending provision to cure an obvious omission - availability of CENVAT credit on inputs where final product is dutiable - correction of inadvertent omission by legislative substitution - prohibition of double recovery by simultaneously reversing CENVAT credit and recovering duty paid from that credit - no penalty where credit availed bona fide and disclosure made in statutory returns

Availability of CENVAT credit on inputs where final product is dutiable - correction of inadvertent omission by legislative substitution - Substitution of Rule 16 to include Zarda Scented Tobacco must be read as intended to permit CENVAT credit retrospectively when the Chewing Tobacco Rules were applied to Zarda Scented Tobacco. - HELD THAT: - When Zarda Scented Tobacco was brought within the ambit of the Chewing Tobacco and Unmanufactured Tobacco Packaging Machines (Capacity Determination & Collection of Duty) Rules w.e.f. 13.04.2010, the legislative purpose was to treat Zarda Scented Tobacco on the same footing as chewing tobacco in respect of duty liability and availment of credit. The subsequent substitution of Rule 16 to expressly include Zarda Scented Tobacco corrected an obvious omission and, applying established authority, must be construed as relating back so as to give effect to the legislature's intent that credit available for chewing tobacco would be available for Zarda Scented Tobacco used in pouch manufacture and clearance on payment of duty. On that basis demands predicated on ineligibility of such credit are unsustainable. [Paras 5]

Substitution of Rule 16 is to be given retrospective effect and the appellant was entitled to CENVAT credit on bulk Zarda Scented Tobacco used in manufacture of pouch-packed product.

Prohibition of double recovery by simultaneously reversing CENVAT credit and recovering duty paid from that credit - Demand which simultaneously reverses CENVAT credit and also recovers excise duty paid out of that credit is illegal. - HELD THAT: - The authorities sought reversal of credit and recovery of central excise duty paid from the same CENVAT credit account for the period May to August'2010. Once an assessee reverses CENVAT credit, the duty effectively paid from such credit stands validated; pursuing both reversals and recovery results in double recovery and lacks rationale. The Tribunal finds such mode of demand to be illegal and not sustainable, and notes that amounts already reversed/paid by the appellant need not be further demanded. [Paras 6]

Demands framed in the impugned orders by reversing credit and also recovering duty are illegal; amounts already reversed/paid by the appellant cannot be further demanded.

No penalty where credit availed bona fide and disclosure made in statutory returns - Penalty is not imposable where CENVAT credit was availed under bona fide belief, disclosed in statutory returns and there is no deliberate suppression or mala fide conduct. - HELD THAT: - The appellant had openly disclosed the availment of CENVAT credit in monthly excise returns and made representations to the department seeking clarification; the goods were subsequently held eligible by amendment. In these circumstances there is no evidence of deliberate evasion, suppression or mala fide intent. Established precedent supports denial of penalty where the assessee acted under bona fide belief and disclosed the transactions; accordingly imposition of penalty is unwarranted. [Paras 7]

Penalty imposed by the authorities is not sustainable and is set aside.

Final Conclusion: The impugned orders confirming demands and penalties are set aside: the substitution of Rule 16 is to be read retrospectively entitling the appellant to CENVAT credit on bulk Zarda Scented Tobacco; the mode of demanding both reversal of credit and recovery of duty is illegal; and no penalty is leviable given the appellant's bona fide disclosure and conduct. All appeals are allowed with consequential reliefs.

Admissibility of cenvat credit on the basis of amended/altered invoices - evidentiary value of RG 23A/RG 23 (Part I & II) register - inadmissibility of documents alleged to be fabricated - time bar/limitation of show cause notice - remand for fresh adjudication to permit production of material evidence

Admissibility of cenvat credit on the basis of amended/altered invoices - evidentiary value of RG 23A/RG 23 (Part I & II) register - time bar/limitation of show cause notice - remand for fresh adjudication to permit production of material evidence - Remand to the original adjudicating authority for fresh adjudication of the claim of cenvat credit, associated penalties and the plea of the show cause notice being time barred, permitting the appellant to produce RG 23 (Part I & II) and other relevant records. - HELD THAT: - The Tribunal found that the denial of cenvat credit in the impugned order rested primarily on (a) a presumption about the improbability of transporting the stated quantities by a single vehicle, and (b) the absence of the RG 23A (RG 23 Part I & II) entries and related transport payment evidence. The Tribunal held that the presumption about transportation alone cannot be the sole basis for rejecting the claim and that the RG 23/RG 23A register is a relevant piece of evidence whose production is determinative. Given that these were the principal grounds for rejection and that the appellant sought time to produce the register, the Tribunal directed that the matter be remanded for fresh adjudication. On remand the original authority is to allow the appellant to file all relevant records, including RG 23 (Part I & II), within 15 days of notice and thereafter reconsider the admissibility of the cenvat credit, the question of penalties and the appellant's contention that the show cause notice is barred by time.

Appeal allowed by way of remand with directions to permit production of RG 23 (Part I & II) and other relevant records and for fresh adjudication on cenvat credit, penalties and limitation plea.

Final Conclusion: The Tribunal allowed the appeal by remanding the matter to the original adjudicating authority with directions to accept relevant records including RG 23 (Part I & II) within 15 days and to decide afresh the issues of admissibility of the cenvat credit, the penalty and the plea of the show cause notice being time barred.

Condonation of delay - limitation bar to appeal - compliance with interlocutory deposit directions - finality of tribunal order - pre-deposit requirement under Section 35F

Condonation of delay - limitation bar to appeal - The application for condonation of delay of 1174 days in presenting the appeal before the Tribunal is not maintainable and the appeal is barred by limitation. - HELD THAT: - The Tribunal found an unexplained delay of 1174 days in filing the appeal. The appellant did not advance any justifiable or reasonable cause for such delay. Given the magnitude of the delay and the absence of sufficient explanation, the Tribunal exercised its discretion to refuse condonation. The Tribunal additionally observed that the appeal lacked merit and, on that basis, the huge delay could not be condoned. [Paras 2, 6, 7]

Condonation of delay refused and the appeal dismissed as barred by limitation.

Compliance with interlocutory deposit directions - finality of tribunal order - pre-deposit requirement under Section 35F - Failure to comply with the Tribunal's earlier direction to deposit 75% of the penalty (which had attained finality) justified dismissal of the appeal by Commissioner (Appeals); partial deposit under amended Section 35F was insufficient to save the appeal. - HELD THAT: - The Tribunal's earlier order directing deposit of 75% of the penalty had attained finality as it was not challenged by the appellant. The Commissioner (Appeals) dismissed the appellant's appeal for non-compliance with that binding direction. Although the appellant had deposited 10% of the penalty pursuant to amended provisions of Section 35F, the Tribunal held that this did not discharge the obligation under the Tribunal's final order to deposit 75%. Consequently, the appeal before the Commissioner (Appeals) was rightly rejected for non-compliance, and nothing substantive survived for adjudication. [Paras 3, 4, 5, 7]

Appeal rejected for non-compliance with the Tribunal's binding deposit direction; partial deposit under amended Section 35F insufficient.

Final Conclusion: The appeal is dismissed: condonation of delay for 1174 days is refused and, independently, the appeal was rightly rejected for non-compliance with the Tribunal's final direction to deposit 75% of the penalty; the COD application is disposed of.

Turnover tax - crystallisation of tax liability - prospective withdrawal of legislation - administrative non-recovery decision - unjust enrichment

Turnover tax - crystallisation of tax liability - prospective withdrawal of legislation - Whether the assessee was entitled to refund of turnover tax deposited for the period 24.01.2005 to 31.01.2005 in view of subsequent withdrawal of the ordinance imposing the turnover tax. - HELD THAT: - The Court held that the tax liability for the period 24.01.2005 to 31.01.2005 had crystallised on 31.01.2005 while the ordinance imposing turnover tax remained enforced until 23.02.2005. The subsequent withdrawal of the ordinance operated prospectively and was not expressed to be retrospective; therefore the withdrawal did not extinguish a liability which had already arisen under the law in force during the relevant period. The fact that the assessee deposited the amount after withdrawal of the ordinance did not alter the date on which the liability arose, and consequently the prospective withdrawal had no effect on the already crystallised liability. [Paras 8, 9]

Refund claim denied on the ground that the turnover tax liability had crystallised prior to the withdrawal and the withdrawal was prospective.

Administrative non-recovery decision - turnover tax - Whether the administrative communication of 26.07.2005 directing no recovery for certain periods entitled the assessee to refund of an amount already recovered for 24.01.2005 to 31.01.2005. - HELD THAT: - The Court observed that the administrative decision communicated on 26.07.2005 comprised two parts: no recovery for the period post 03.02.2005 and no fresh or further recovery for the period 24.01.2005 to 03.02.2005 unless the amount had already been recovered. The communication therefore did not mandate refund where recovery had already taken place. The assessee's case fell within the latter category since the turnover tax for 24.01.2005 to 31.01.2005 had already been realised; accordingly the administrative instruction did not create a right to refund. [Paras 5, 10, 11]

No refund under the administrative communication because the amount had already been recovered prior to the decision not to make further recoveries.

Unjust enrichment - turnover tax - Whether the doctrine of unjust enrichment entitled the assessee to refund where it had not passed on the turnover tax to customers and had paid from its own funds. - HELD THAT: - The Court accepted the submission that the assessee had not passed on the tax and therefore the principle of unjust enrichment might not strictly apply in the assessee's factual position. However, the Court held that even if unjust enrichment were applicable, that alone would not override the legal position that the liability had crystallised under the law in force and that neither the statutory position nor the administrative instruction entitled the assessee to a refund in the circumstances of the case. [Paras 7, 12]

Doctrine of unjust enrichment did not entitle the assessee to refund given the crystallised liability and the scope of the administrative decision.

Final Conclusion: The revision is dismissed: the turnover tax liability for 24.01.2005 to 31.01.2005 had crystallised prior to the ordinance's prospective withdrawal, the administrative communication did not mandate refund where recovery had already been made, and the assessee was therefore not entitled to refund despite paying the amount from its own funds.

Classification of goods for entry tax as insecticide or repellent - incidence of entry tax on goods specified in Schedule II - commercial/trade understanding and statutory labelling under the Insecticides Act - construction of competing or specific entries in a schedule - specific entry prevails

Classification of goods for entry tax as insecticide or repellent - incidence of entry tax on goods specified in Schedule II - Appellate Board was justified in holding that mosquito repellent (including mats and coils) is taxable under Entry 20 of Schedule II as an insecticide/pesticide within the meaning of Section 3(1)(b) of the Madhya Pradesh Entry Tax Act, 1976. - HELD THAT: - The Court held that the mosquito repellent contains insecticidal chemicals (notably allethrin) and is capable not only of repelling but also of killing mosquitoes; accordingly the product falls within the description 'Insecticide & Pesticides' in Serial No.20 of Schedule II. The reasoning relied on trade/statutory labelling and the nature of the chemical composition, and concurred with earlier High Court precedents which treated mosquito mats/repellents containing allethrin as insecticides. In the absence of any specific exclusion or separate entry for mosquito repellent under the Madhya Pradesh Schedule, the product is to be classified under the generic entry for insecticides and pesticides and taxed accordingly under Section 3(1)(b). [Paras 6, 7, 11]

Upheld - the Appellate Board correctly classified and taxed the mosquito repellent under Entry 20, Schedule II.

Construction of competing or specific entries in a schedule - specific entry prevails - commercial/trade understanding and statutory labelling under the Insecticides Act - Appellate Board was justified in treating mosquito repellent as taxable under Schedule II despite earlier decisions characterising mats/coils as 'repellent' rather than a distinct class of 'insecticide', because no specific entry for 'mosquito repellent' exists in the Madhya Pradesh Schedule. - HELD THAT: - The Court distinguished the Supreme Court decision in Sonic Electrochem (where a specific scheduled entry for 'mosquito repellent' existed) and observed that when a schedule contains a specific entry for a commodity that entry governs classification. Here, by contrast, Madhya Pradesh Schedule II contains no separate entry for mosquito repellent; therefore the generic entry for 'Insecticide & Pesticides' applies. The Court also relied on statutory labelling and trade understanding as supporting classification under insecticides where the product contains insecticidal chemical(s). The Board's conclusion was therefore consistent with statutory construction and relevant precedents interpreted in context. [Paras 8, 9, 10, 11]

Upheld - Sonic Electrochem is distinguishable; absence of a specific entry for mosquito repellent in the Madhya Pradesh Schedule mandates classification under the insecticide/pesticide entry.

Final Conclusion: Both reference questions answered in favour of the revenue: mosquito repellent (including mats and coils) containing insecticidal chemical(s) is covered by Entry 20, Schedule II of the Madhya Pradesh Entry Tax Act, 1976 and is liable to entry tax; the Supreme Court authority relied upon is distinguishable where a specific scheduled entry exists, which is not the case in Madhya Pradesh.

Rectification of clerical mistake - opportunity of personal hearing - remand for fresh assessment - exercise of writ jurisdiction to grant indulgence subject to conditions - no expression of view on merits

Rectification of clerical mistake - opportunity of personal hearing - remand for fresh assessment - exercise of writ jurisdiction to grant indulgence subject to conditions - Writ petition allowed; impugned revisional order set aside and matter remitted to the Assessing Officer for redoing the assessment with a final opportunity subject to specified conditions. - HELD THAT: - The petitioner contended that figures for sale of products (VAT-liable) and sale of services (service-tax-liable) were inadvertently interchanged in the balance sheet and that this clerical mistake came to light only after receipt of the notice of proposal. The Assessing Officer had proceeded to revise the assessment after recording that material documents were not furnished despite several opportunities. While the Assessing Officer had given opportunities, the High Court accepted that, having regard to the petitioner's plea of a genuine interchange of figures and the nature of the petitioner's activities (providing maintenance service for sophisticated cancer equipment at Government hospitals), an indulgence in the form of one final opportunity was appropriate. The Court, exercising its writ jurisdiction, set aside the impugned order and remitted the matter for fresh assessment on terms designed to balance the need for finality and the petitioner's claim: (a) payment of 15% of the tax liability within three weeks; (b) filing of supporting documents along with the payment; (c) on receipt, the Assessing Officer to fix a date for personal hearing; and (d) after hearing, the Assessing Officer to pass a fresh assessment order on merits and in accordance with law within four weeks. The Court expressly refrained from expressing any view on the merits of the petitioner's claim, leaving the substantive adjudication to the Assessing Officer on the material to be produced. [Paras 8, 9]

Impugned order set aside; matter remitted to Assessing Officer for fresh assessment on the stated conditions, without expressing any view on merits.

Final Conclusion: The writ petition is allowed; the revisional order dated 30.07.2019 is set aside and the matter is remitted to the Assessing Officer to redo the assessment after the petitioner deposits 15% of the tax liability and files supporting documents, the Assessing Officer to hold a personal hearing and pass a fresh order within the stipulated time; no view expressed on the merits.

Illegal termination of contract - Termination procedure under contract/GCC - Arbitral award interference under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 - Arbitral Tribunal as master of evidence - Concurrent findings of fact - Scope of judicial review in arbitration

Illegal termination of contract - Termination procedure under contract/GCC - The termination of the consultancy contract was illegal and was not in accordance with the contractual procedure. - HELD THAT: - On appreciation of the evidence and the relevant contractual clauses, the Arbitral Tribunal found that the termination notice dated 09.02.2012 (effective 12.03.2012) was issued without following the procedure required by the contract. That factual conclusion, reached after examining the material and interpreting the relevant clauses of the General Conditions of Contract, was affirmed by the First Appellate Court and the High Court. The Supreme Court accepted these concurrent findings of fact, holding that the termination was illegal and contrary to the contractual procedure. [Paras 2, 6]

Findings that the termination was illegal and procedurally improper are upheld.

Arbitral award interference under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 - Arbitral Tribunal as master of evidence - Concurrent findings of fact - Scope of judicial review in arbitration - The courts below rightly refused to interfere with the arbitral award; the award is not perverse or contrary to the evidence and therefore must stand. - HELD THAT: - The Court reiterated that where an Arbitral Tribunal's findings are based on appreciation of evidence and represent a tenable view, interference under Sections 34 and 37 is unwarranted. Citing settled precedents, the Court observed that the arbitral tribunal is the master of evidence and that concurrent factual findings across the tribunal and appellate fora cannot be re-examined as if on appeal unless they are perverse or contrary to record or public policy. The Arbitral Tribunal had applied its mind to the claims, allowing some claims partly and disallowing others with cogent reasons; those conclusions were neither perverse nor against the evidence. Consequent rejection of the petitioners' counterclaim was therefore justified. [Paras 6, 7]

The award was not to be interfered with; the concurrent factual findings and the Arbitral Tribunal's allowance/rejection of claims (and dismissal of the counterclaim) are sustained.

Final Conclusion: The special leave petition is dismissed; the arbitral award, as confirmed by the courts below, stands affirmed, and there will be no order as to costs.

Entitlement to refund of licence fee and differential amount for period of unlawful closure - requirement of show-cause notice before suspension or cancellation of licence - lawfulness of sealing, suspension and cancellation orders under licence/tender conditions - effect of prior adjudication setting aside administrative closure orders - availability of refund where licence suspension/cancellation is punitive

Entitlement to refund of licence fee and differential amount for period of unlawful closure - requirement of show-cause notice before suspension or cancellation of licence - Respondent (M/s Riga Sugar Co. Ltd.) entitled to refund for closure period, including suspension period, where sealing was set aside and no show-cause was given before suspension. - HELD THAT: - The closure of the manufacturing unit between 13.12.2015 and 04.02.2016 was the subject of adjudication in CWJC No.1364 of 2016 which set aside the sealing order; that judgment is final. The Court held that the Respondent is therefore entitled to refund of licence fee and the differential amount for the period covered by the sealing order. Further, the licence suspension of 20.01.2016 to 04.02.2016 was treated as punitive and was imposed without prior opportunity; absent issuance of a show-cause notice before suspension, principles of natural justice required that opportunity be given. Accordingly refund was allowed for the suspension period as well. The High Court's order directing refund and consideration of compensation for raw material losses stands affirmed for the period in question. [Paras 10]

Appeal dismissed; Respondent entitled to refund for period of closure and suspension as sealing was set aside and no show-cause preceded suspension.

Lawfulness of sealing, suspension and cancellation orders under licence/tender conditions - entitlement to refund of licence fee and differential amount for period of unlawful closure - High Court erred in granting refund to M/s Welcome Distilleries where closure and suspension arose from violations of licence/tender conditions and show-cause notices were issued. - HELD THAT: - The Court found that the repeated sealing and suspension of the unit resulted from non-payment of differential instalments and manufacture of substandard liquor, matters for which show-cause notices had been issued and replied to. There was no prior adjudication setting aside the sealing/suspension in favour of the respondent; on the contrary the Board of Revenue stayed one suspension and the State's actions (including temporary unsealing and later justified closures for non-payment or short supply) were supported by the record. The High Court's reliance on a supposed prior adjudication and on absence of notice was incorrect. Accordingly the High Court's direction for refund could not be sustained and was set aside. [Paras 15]

High Court judgment set aside; no entitlement to refund for the periods where closure/suspension resulted from breach of licence/tender conditions and where notice was given.

Effect of prior adjudication setting aside administrative closure orders - entitlement to refund of licence fee and differential amount for period of unlawful closure - Respondent (M/s Shipra Beverage Pvt. Ltd.) entitled to refund for period of closure where suspension and cancellation were declared illegal by the High Court. - HELD THAT: - The licence suspension (02.02.2016) and subsequent cancellation (13.02.2016) were set aside by the High Court in CWJC No.2704 of 2016. Because those administrative orders were adjudged illegal, the manufacturing unit's closure between 02.02.2016 and 31.03.2016 was attributable to unlawful administrative action, entitling the respondent to refund of licence fee and differential amounts for that period. The Supreme Court affirmed the High Court's grant of relief on this basis. [Paras 18]

Appeal dismissed; respondent entitled to refund for closure period as suspension and cancellation were declared illegal.

Lawfulness of sealing, suspension and cancellation orders under licence/tender conditions - entitlement to refund of licence fee and differential amount for period of unlawful closure - High Court erred in ordering refund to M/s K.M. Sugar Mills where the licence was suspended/sealed following prior show-cause, penalty imposition and failure to pay, and there was no antecedent adjudication in the respondent's favour. - HELD THAT: - Inspections disclosed non-compliance (manufacturing below prescribed strength, illegal excess manufacture); the respondent received notices and explanations were considered before imposition of a substantial penalty under Section 42(g)(i). The premises were sealed after failure to pay the penalty. The High Court failed to recognise that there was no prior adjudication setting aside the administrative action and that opportunity had been afforded; sealing followed due process in view of the penalty default. On these grounds the Supreme Court allowed the appeal and set aside the High Court's direction for refund. [Paras 20]

Civil Appeal allowed; High Court order set aside and no refund ordered where sealing and penalty followed prior opportunity and adjudication against the licensee.

Final Conclusion: The appeals are disposed of as follows: in M/s Riga Sugar Co. Ltd. and M/s Shipra Beverage Pvt. Ltd. the High Court's grants of refund for periods during which sealing/suspension/cancellation were set aside are affirmed; in M/s Welcome Distilleries Pvt. Ltd. and M/s K.M. Sugar Mills Ltd. the High Court's orders directing refund are set aside because closures resulted from licence/tender condition breaches where notice/opportunity had been given or penalty/default justified administrative action.