TaxTMI Updates e-Newsletter
Oct 21,2021

Constitution of the Appellate Tribunal in the State under Section 109 of the CGST/U.P. GST Act - Appellate Tribunal as the last fact-finding authority - deprivation of statutory right due to non-availability of appellate forum - compliance with Division Bench directions in Torque Pharmaceuticals - directions to state compliance and identify authorities liable for implementation

Constitution of the Appellate Tribunal in the State under Section 109 of the CGST/U.P. GST Act - compliance with Division Bench directions in Torque Pharmaceuticals - Respondents were directed to file counter affidavits stating action taken to constitute and make functional the State Bench and Area Benches of the GST Appellate Tribunal in Uttar Pradesh in accordance with prior Division Bench directions. - HELD THAT: - The Court, observing that no Tribunal has been constituted as envisaged under Section 109 and referring to the Division Bench directions in Torque Pharmaceuticals, granted the respondents three weeks to file counter affidavits. The counter affidavits must specifically state what action has been taken in compliance with the Division Bench directions and must specify the names and designations of the authorities responsible for compliance. The Court made clear that inadequate or unsatisfactory responses may invite further steps, including summoning the concerned authorities.

Counter affidavits to be filed within three weeks specifying compliance with the Division Bench directions and naming officials responsible; list after three weeks.

Appellate Tribunal as the last fact-finding authority - deprivation of statutory right due to non-availability of appellate forum - directions to state compliance and identify authorities liable for implementation - The Court recognised that the Appellate Tribunal is the last fact-finding authority and that its non-availability causes prejudice by depriving aggrieved persons of their statutory right; accordingly, the Court required respondents to address this deprivation in their affidavits and warned of further action if compliance is not satisfactorily shown. - HELD THAT: - The Court recorded that the Appellate Tribunal is the final fact-finding forum and that absence of constituted benches in the State results in denial of the statutory appellate remedy. This legal position underpins the Court's order requiring respondents to demonstrate steps taken to remedy the situation and to identify officials responsible for implementation. The Court warned that, failing satisfactory compliance, it may summon the concerned authorities to ensure enforcement of the prior directions.

Court recorded the legal consequence of non-constitution of the Tribunal and directed respondents to show compliance; warned of coercive procedural follow-up if responses are unsatisfactory.

Final Conclusion: The petition raises the non-constitution of the GST Appellate Tribunal; respondents are directed to file detailed counter affidavits within three weeks stating steps taken to implement the Division Bench directions and naming responsible authorities, failing which the Court may take further action; matter listed after three weeks.

Stay of payment of tax - GST on royalty for grant of mining lease - Interim relief pending decision of higher court - Effect of Supreme Court proceedings on subordinate adjudication - Non-refund of statutory deposit under sub-section (6) of Section 107 of the U.P. GST Act, 2017

GST on royalty for grant of mining lease - Interim relief pending decision of higher court - Effect of Supreme Court proceedings on subordinate adjudication - Interim stay of payment of GST by the petitioner in respect of the demand challenged in the appeal. - HELD THAT: - The High Court granted an interim stay on the petitioner's obligation to pay GST pending further orders, noting that the question of levy of GST on royalty/grant of mining lease is under consideration before the Supreme Court and that the outcome of those proceedings would have direct bearing on the present petition. The Court did not decide the substantive question on the merits but recorded that the matter requires consideration and directed the respondents to file a counter affidavit within three weeks to enable adjudication on merits at a later date.

Payment of GST by the petitioner shall remain stayed until further orders of the Court.

Non-refund of statutory deposit under sub-section (6) of Section 107 of the U.P. GST Act, 2017 - Stay of payment of tax - Whether any statutory deposit already made by the petitioner in compliance with sub-section (6) of Section 107 of the U.P. GST Act, 2017 should be refunded during the interim period. - HELD THAT: - While staying the petitioner's obligation to make further GST payment, the Court expressly provided that any statutory deposit previously made under the specified provision is not required to be refunded during the pendency of the petition. This preserves the respondents' statutory interest in deposits already secured while the interim relief remains in force.

Statutory deposit made by the petitioner pursuant to sub-section (6) of Section 107 of the U.P. GST Act, 2017 shall not be refunded until disposal of the case.

Final Conclusion: The petition is listed for further consideration; in the interim the petitioner is stayed from paying the challenged GST demand, but any statutory deposit already made under sub-section (6) of Section 107 of the U.P. GST Act, 2017 shall not be refunded pending disposal.

Transitional credit of the eligible duties - filing of declaration in Form GST TRAN-1 and GST TRAN-2 - procedural nature of the due date under Rule 117 - claiming transitional credit in terms of Section 140(3) - compliance with judicial directions

Filing of declaration in Form GST TRAN-1 and GST TRAN-2 - transitional credit of the eligible duties - claiming transitional credit in terms of Section 140(3) - compliance with judicial directions - Directions of the Court to permit the writ-applicants to file declarations in Forms GST TRAN-1 and GST TRAN-2 to claim transitional credit in respect of inputs held in stock on the appointed day. - HELD THAT: - The Court noted its earlier common judgment dated 06.09.2019 (reproduced at para 43) allowing the writ-applications and directing respondents to permit filing of Form GST TRAN-1 and GST TRAN-2 so as to enable claim of transitional credit under Section 140(3). The Court observed that review applications filed thereafter were rejected and that, notwithstanding the judgment and two years having elapsed, the directions have not been given effect to. Having regard to the clearance of the substantive judgment and the absence of compliance, the Court ordered direct enforcement measures by summoning the responsible Nodal Officer to ensure that the portal be opened and the declarations permitted to be filed, so that the writ-applicants may claim the transitional credit as directed earlier. [Paras 3, 7, 8]

Respondents must permit filing of declarations in Form GST TRAN-1 and GST TRAN-2 to enable claim of transitional credit; the Nodal Officer is directed to appear personally before the Court to ensure compliance.

Procedural nature of the due date under Rule 117 - transitional credit of the eligible duties - Characterisation of the due date under Rule 117 of the CGST Rules as procedural and not mandatory for claiming transitional credit. - HELD THAT: - The Court reproduced its earlier declaration that the due date contemplated under Rule 117 is procedural in nature and therefore should not be construed as mandatory for purposes of claiming transitional credit. That legal conclusion formed part of the operative directions in the earlier judgment which the Court relied upon in directing compliance. The present order enforces that declaration by requiring the respondents to permit filing notwithstanding any procedural time stipulation in Rule 117. [Paras 3, 7]

The due date under Rule 117 is procedural and must not be treated as a mandatory bar to filing TRAN-1/TRAN-2 for claiming transitional credit; respondents must permit filing accordingly.

Final Conclusion: The Court, noting non-compliance with its earlier operative directions allowing filing of Form GST TRAN-1 and TRAN-2 to claim transitional credit and its declaration that the Rule 117 due date is procedural, directed the Nodal Officer to appear personally on 27.10.2021 to ensure that the portal is opened and the mandated filings are permitted; matters are posted to that date.

Refund of amount deposited under section 129(3) of the State Goods and Services Tax Act - refund of tax paid under State Goods and Services Tax and Central Goods and Services Tax - temporary account during transition to CGST regime - time bound direction to refund - sanctity of the scheme of section 129

Refund of amount deposited under section 129(3) of the State Goods and Services Tax Act - temporary account during transition to CGST regime - time bound direction to refund - Petitioner's entitlement to refund of the amount deposited under section 129(3) despite absence of remittance details in the records due to payment through a temporary account in the transition to the CGST regime. - HELD THAT: - The Court considered the Appellate Authority's order which quashed the demand under section 129(3) and thereby established the petitioner's entitlement to refund of the amount deposited for release of goods. Although the respondents relied on technical difficulties arising from payments made through a temporary account during the transition to the CGST regime and on absence of remittance details, the learned Government Pleader conceded that the petitioner is entitled to refund and that steps are being taken to effect the refund. Taking into account the transitional glitches but emphasizing that such technical problems must not defeat the substantive right to refund or impair the confidence in the statutory scheme under section 129, the Court directed the respondents to refund the deposited amount in a time bound manner and set aside the impugned communication refusing the refund. [Paras 5, 6, 7]

Ext.P9 is set aside and respondents 2 and 3 are directed to refund the amount deposited under section 129(3) to the petitioner within 30 days; technical transition glitches shall not impede the refund.

Final Conclusion: Writ petition allowed; the impugned refusal to grant refund is set aside and the respondents are directed to refund the amount deposited under section 129(3) within 30 days, notwithstanding transitional technical difficulties.

Summary of show cause in Form GST-DRC-01 under Rule 142(1) - service by electronic upload through the web portal - opportunity of personal hearing under Section 75(4) of the Tamil Nadu Goods and Services Tax Act, 2017 - mandatory procedural requirement for issuance of summary notice before assessment - quashing and remand for fresh consideration for procedural non-compliance

Summary of show cause in Form GST-DRC-01 under Rule 142(1) - service by electronic upload through the web portal - mandatory procedural requirement for issuance of summary notice before assessment - Validity of the assessment order passed on the same day the Form GST-DRC-01 summary was uploaded without affording the assessee any opportunity to respond. - HELD THAT: - The Court held that generation or electronic upload of the summary of show cause in Form GST-DRC-01 under Rule 142(1) is not a mere formality but a mandated procedural step intended to give the assessee an opportunity to respond. Where the summary was uploaded on 04.06.2020 and, on that very date, the assessment order was passed without giving the assessee any breathing time to reply, the procedural requirement was not complied with. Such non-compliance with the mandatory procedure vitiates the assessment order and renders it unsustainable. The Court therefore quashed the impugned order on this ground and directed reconsideration. [Paras 2, 3, 4, 5]

Impugned assessment order quashed for failure to afford opportunity to respond to the Form GST-DRC-01 summary; matter remitted for fresh consideration.

Opportunity of personal hearing under Section 75(4) of the Tamil Nadu Goods and Services Tax Act, 2017 - quashing and remand for fresh consideration for procedural non-compliance - Scope of directions on remand concerning issuance of fresh summary notice, provision of breathing time, and opportunity of hearing before passing a fresh assessment order. - HELD THAT: - On remand the respondent is required to freshly upload the summary of show cause in Form GST-DRC-01 if a notice has already been issued, ensure that the assessee is given a reasonable breathing time to respond electronically with available records, and afford an opportunity of being heard as contemplated under Section 75(4) before passing any fresh assessment order. The Court emphasised that the reassessment must be conducted in the manner known to law, after giving the assessee the procedural opportunities mandated by the statute and rules. [Paras 5]

Matter remitted to respondent with directions to freshly upload the Form GST-DRC-01, allow time to respond and afford hearing, then pass fresh assessment order in accordance with law.

Final Conclusion: Impugned assessment order of 04.06.2020 is quashed for procedural non-compliance; matter is remitted to the respondent to issue or re-upload the Form GST-DRC-01, give the assessee reasonable time to respond and an opportunity of hearing under Section 75(4), and thereafter pass a fresh assessment order in accordance with law.

Regular bail under Section 439 Cr.P.C. - mere implication on basis of disclosure statements - absence of link evidence connecting accused with alleged GST evasion - recovery from other accused as relevant to culpability - offences under the CGST Act bailable where amount of tax evaded is less than five crores - custodial period and trial delay as grounds for bail - inadmissibility/limited value of confessional statements made to police

Regular bail under Section 439 Cr.P.C. - mere implication on basis of disclosure statements - absence of link evidence connecting accused with alleged GST evasion - recovery from other accused as relevant to culpability - offences under the CGST Act bailable where amount of tax evaded is less than five crores - custodial period and trial delay as grounds for bail - Grant of regular bail to the petitioner in FIR No.42 dated 06.01.2019. - HELD THAT: - The Court found that the petitioner was not named in the FIR and was implicated only by disclosure statements of co-accused, which, on the material on record, were hearsay and did not furnish direct link evidence connecting the petitioner to registration, issuance of invoices, receipt of GST refunds or siphoning of input tax credit. The principal amount said to be evaded was already deposited by other persons from whom recovery was effected; only a nominal sum was recovered from the petitioner. The Court observed that the core allegation relates to GST evasion governed by the CGST Act and, as per Section 132 conceptually applied in the reasoning, where the tax evaded is less than five crores the offence is bailable. Considerations that weighed in favour of bail included absence of forensic or documentary evidence tying the petitioner to forgery, the petitioner having been in custody since 27.11.2020, many witnesses remaining unexamined and a likely protracted trial. The Court treated competing authorities and jurisprudence as supportive of the proposition that mere implication by co-accused statements, without link evidence, would not bar grant of bail. The Court emphasised that these observations were for the purpose of deciding the bail application and would not constitute any expression on merits; the trial Court was directed to proceed independently.

Petition allowed; petitioner released on bail subject to furnishing bail/surety bonds to the satisfaction of the trial Court/Duty Magistrate and subject to not being required in any other cases.

Final Conclusion: Regular bail granted: petitioner, not named in the FIR and implicated only by co-accused disclosures without link evidence, having been in custody for a long period and with the amount of alleged GST evasion recovered from others and the offence falling in the bailable category, is ordered to be released on bail; observations are confined to the bail context and do not adjudicate merits.

Release of goods under Section 130(2) of the Central Goods and Services Tax Act, 2017 - ownership determined by invoice - confiscation and payment in lieu - officer's discretion where invoice accompanies consignment

Release of goods under Section 130(2) of the Central Goods and Services Tax Act, 2017 - ownership determined by invoice - confiscation and payment in lieu - officer's discretion where invoice accompanies consignment - Whether the petitioner, being the consignor named in the invoice found accompanying the intercepted consignment and having paid the amounts in lieu of confiscation, is entitled to immediate release of the goods despite the department's assertion that another party is the true owner. - HELD THAT: - The Court held that the term 'owner' under the CGST Act is of wide import but, in the context of goods intercepted in transit, ownership may be established by an invoice accompanying the consignment. Ext.P2 is the invoice generated by the petitioner immediately prior to interception and names the petitioner as consignor; therefore the petitioner must be deemed to be the owner of the goods at the time of interception. The Ministry of Finance Circular No.76/50/2018-GST clarifies that where an invoice accompanies the consignment, either the consignor or consignee should be deemed owner and the proper officer has no discretion to adjudicate ownership in such cases. Even if the department alleges a prior undisclosed transaction between the petitioner and the 5th respondent, any such transaction would have preceded Ext.P2; after issuance of Ext.P2 (in which IGST is reflected) there is no basis for suspecting evasion in the transaction evidenced by that invoice. As the petitioner has tendered the full penalty, fine and tax in lieu of confiscation, continued retention of the goods and vehicle is unjustified and would frustrate the statutory mandate of Section 130 to permit release on payment in lieu of confiscation. [Paras 8, 9, 11, 12, 13]

Petitioner is entitled to release of the goods covered by the confiscation order; the 4th respondent is directed to release the goods forthwith, and in any event within 24 hours of receipt of this order.

Final Conclusion: Writ petition allowed insofar as it directs release of the detained goods to the petitioner (the consignor named in the invoice) upon payment already made in lieu of confiscation; counter-affidavit to be filed and matter posted for further proceedings.

Personal hearing - show cause notice - treatment of communication as response to show cause notice - setting aside administrative order for fresh consideration - de novo consideration

Show cause notice - treatment of communication as response to show cause notice - personal hearing - Whether the writ petitioner's letter dated 14.12.2018 (addressed to the Executive Engineer and copied to the fourth respondent) ought to be treated as a response to the show cause notice and whether the petitioner should be granted the personal hearing contemplated by the show cause notice. - HELD THAT: - The Court found that although the writ petitioner did not file a direct written objection to the fourth respondent, the letter dated 14.12.2018 addressed to the Executive Engineer of Public Works Department and marked to the fourth respondent constituted a response to the show cause notice. The impugned order proceeded on the basis that no objections/explanations had been filed, but the record shows the letter was cited in the impugned order (Reference No.10). The fourth respondent, having himself opted in the show cause notice to afford a personal hearing, could not decline to give that hearing when the petitioner had, by copying the fourth respondent, communicated his explanation. In view of these facts and the respondents' concession that a direct response would have avoided difficulty, the Court concluded that the impugned order's premise that there was no response was not sustainable and that the petitioner is entitled to the personal hearing which the show cause notice envisaged. [Paras 7, 9, 10, 11]

Impugned order set aside insofar as it proceeded on the basis that no objections/explanation had been filed; the letter dated 14.12.2018 shall be treated as the petitioner's objection/explanation and the petitioner shall be granted the personal hearing contemplated by the show cause notice.

Setting aside administrative order for fresh consideration - de novo consideration - Whether the matter should be remitted for fresh consideration and what directions should govern the fresh exercise of authority by the fourth respondent. - HELD THAT: - The Court, while not expressing any view on the merits, set aside the impugned order to permit the fourth respondent to conduct a de novo exercise of mind. The petitioner was to be heard in person on the basis of the explanation already on record. The Court fixed a date for personal hearing by agreement of the parties and gave specific timelines for completion of the fresh adjudication and communication of the order to the petitioner. These directions were issued to ensure that the fourth respondent reconsiders the matter after affording the hearing which the show cause notice itself contemplated, leaving all substantive questions open for determination afresh. [Paras 11]

Matter remitted to the fourth respondent for de novo consideration after affording the petitioner a personal hearing on the recorded explanation; fresh orders to be passed and communicated within the timelines directed by the Court.

Final Conclusion: The impugned order dated 09.01.2019 is set aside; the petitioner's letter of 14.12.2018 is to be treated as his response to the show cause notice and the petitioner shall be given a personal hearing; the fourth respondent is directed to decide the matter afresh in accordance with the directions and timelines fixed by the Court, with no expression of opinion on the merits.

Regular bail - role of accused as accountant - bailable offences under GST - trial triable by Magistrate - risk of influencing the trial - impact of COVID-19 on trial delay

Regular bail - role of accused as accountant - bailable offences under GST - trial triable by Magistrate - impact of COVID-19 on trial delay - Grant of regular bail to the petitioner who worked as an accountant in the accused firm - HELD THAT: - The Court found that the petitioner was merely an accountant engaged in preparation of account books and that no specific role in the commission of the alleged offences was attributed to him. The offences alleged arise in the context of GST embezzlement but are bailable and triable by the Magistrate. The Court noted that similarly placed co-accused had been granted regular bail by other courts. Having regard to the prolonged period of incarceration and the adverse impact of the COVID-19 pandemic on the timely completion of trial, the court concluded that bail should be granted. The State's contention that the petitioner might influence the trial was considered but did not outweigh the other factors favouring release. The petitioner was therefore ordered to be released on regular bail to the satisfaction of the Chief Judicial Magistrate/Duty Magistrate concerned. Any observations made were expressly not to be treated as an expression on the merits of the case.

Petitioner released on regular bail to the satisfaction of the Chief Judicial Magistrate/Duty Magistrate, concerned.

Final Conclusion: Bail allowed: the petitioner, being an accountant with no specific role alleged, was granted regular bail in view of the bailable nature of the offences, trial being triable by the Magistrate, pretrial detention period and delays caused by the COVID-19 pandemic; release subject to satisfaction of the Chief Judicial Magistrate/Duty Magistrate.

Time limit under Section 153(2) of the Income Tax Act - service of notice under Section 148 and modes of service under Section 282 - subsistence and continuing effect of a first notice - limitation and invalidity of reassessment completed beyond prescribed period

Time limit under Section 153(2) of the Income Tax Act - service of notice under Section 148 and modes of service under Section 282 - subsistence and continuing effect of a first notice - limitation and invalidity of reassessment completed beyond prescribed period - Whether the re assessment proceedings were time barred because the time for completion had to be reckoned from the date of service of the first notice served on 25.03.2011 and that the first notice continued to subsist, rendering the completion beyond nine months invalid. - HELD THAT: - The court examined the dates of service recorded in the assessment order and communications, noting that a notice under Section 148 was issued on 22.03.2011 and was served on the assessee on 25.03.2011, while a second service of a notice dated 22.03.2011 occurred on 06.04.2011. Section 282 identifies permissible modes of service, and service is complete if effected in person. Where a notice under Section 148 was served on 25.03.2011 (i.e., within the prescribed period antecedent to 01.04.2011), the nine month period for completion of reassessment under Section 153(2) was triggered and expired on 31.12.2011. The assessment was, however, completed on 28.02.2013, which is beyond the statutory nine month period. The first notice served on 25.03.2011 remained in existence and was not withdrawn; consequently the tribunal's conclusion that the Assessing Officer could issue two notices such that the later service governed the reckoning of time was perverse. The reassessment therefore stood completed after the limitation period and was invalid. [Paras 10]

The court held that time for completion had to be reckoned from the first service on 25.03.2011, the reassessment was completed beyond the nine month period prescribed by Section 153(2), the tribunal's finding that the Assessing Officer could treat the later service as governing time was perverse, and the reassessment was invalid.

Final Conclusion: Substantial question answered in favour of the assessee; the tribunal's order dated 17.06.2016 is quashed and the appeal is allowed as reassessments for Assessment Years 2004 05 and 2005 06 were completed beyond the statutory period and are invalid.

Comparable Uncontrolled Price (CUP) method as the most appropriate method - Transactional Net Margin Method (TNMM) as an alternative method of last resort - Reliability and admissibility of TIPS/customs database for transfer pricing benchmarking - Preference of traditional transaction methods over transactional profit methods where both are reasonably applicable - Remand to Transfer Pricing Officer for fresh determination of arm's-length price under CUP - Admission of additional legal ground without need for fresh facts - Prematurity of penalty initiation under Section 271(1)(c)

Comparable Uncontrolled Price (CUP) method as the most appropriate method - Transactional Net Margin Method (TNMM) as an alternative method of last resort - Reliability and admissibility of TIPS/customs database for transfer pricing benchmarking - Preference of traditional transaction methods over transactional profit methods where both are reasonably applicable - CUP is the most appropriate method for benchmarking the assessee's export transactions of rice; the TPO's and DRP's adoption of TNMM is reversed. - HELD THAT: - The Tribunal found that the coordinate bench decision in the assessee's own earlier year establishes that the TIPS compilation of customs export data is admissible and can be a reliable source for applying the CUP method. The Tribunal accepted the reasoning that Rule 10D(3) is illustrative and does not exclude private databases that compile public customs data; doubts about the database could be addressed by calling for further information rather than summarily rejecting it. The Tribunal observed that product comparability in commodities like basmati rice can be established by reasonable generic categorization and that averaging (quarterly averages) is an acceptable device to mitigate day to day price fluctuations. While recognising OECD guidance and margins of application, the Tribunal held that traditional transaction methods (and particularly CUP) have an inherent edge and must be preferred where they can be reasonably and reliably applied; accordingly, TNMM, adopted by the TPO and DRP in this case, was not held to be the most appropriate method on the facts. The Tribunal therefore reversed the transfer pricing adjustment made under Chapter X based on TNMM and directed reassessment under CUP. [Paras 16, 18]

The orders of the Transfer Pricing Officer and the Dispute Resolution Panel adopting TNMM are reversed; CUP is held to be the most appropriate method and the matter is set aside for ALP determination under CUP.

Admission of additional legal ground without need for fresh facts - Remand to Transfer Pricing Officer for fresh determination of arm's-length price under CUP - The assessee's additional legal ground seeking set-off (benefit where certain transactions exceed ALP) is admitted and remitted to the TPO for examination during fresh ALP determination under CUP. - HELD THAT: - The Tribunal admitted the additional ground as it raised a point of law not requiring fresh facts. Although the coordinate bench had earlier noted limits on averaging and exclusion of extreme prices and had remitted certain determinations to the AO for reconsideration, the Tribunal here allowed the additional ground for consideration by the Transfer Pricing Officer. The question of set-off or aggregation/segregation of transactions is to be examined by the TPO with opportunity to the assessee, and the matter is restored to the file for reconsideration in the CUP exercise. [Paras 16, 22]

The additional ground is admitted; the issue is remitted to the Transfer Pricing Officer for determination in the course of ALP computation under CUP with opportunity of hearing.

Remand to Transfer Pricing Officer for fresh determination of arm's-length price under CUP - The transfer pricing adjustments in both AY 2012-13 and AY 2013-14 are set aside and remitted to the TPO to determine ALP adopting CUP; both appeals are allowed for statistical purposes. - HELD THAT: - Having held CUP to be the appropriate method and having admitted the additional ground, the Tribunal set aside the adjustments made by the TPO/DRP for the impugned years and remitted the matters to the TPO to determine arm's-length price under CUP, permitting the assessee to raise all computation and adjustment issues (including capacity utilisation and other adjustments) before the TPO with proper hearing. The appeals for AY 2012-13 and AY 2013-14 were allowed for statistical purposes and the matter restored for fresh exercise consistent with the Tribunal's directions. [Paras 18, 22, 25, 26, 27]

Both appeals are allowed for statistical purposes and the ALP determinations are remitted to the Transfer Pricing Officer to be undertaken under the CUP method.

Prematurity of penalty initiation - The assessee's ground challenging initiation of penalty proceedings under Section 271(1)(c) is dismissed as premature. - HELD THAT: - The Tribunal noted that proposals to initiate penalty proceedings were premature in the context of the disputes remitted for fresh determination under transfer pricing provisions; accordingly, the challenge to the proposed penalty was not upheld at this stage. [Paras 19]

Ground challenging proposed initiation of penalty proceedings is dismissed as premature.

Final Conclusion: Following the coordinate bench precedents concerning admissibility of the TIPS/customs data and the preference for CUP where it can be reliably applied, the Tribunal held CUP to be the most appropriate method, reversed the TNMM based adjustments, admitted an additional legal ground and remitted the matters to the Transfer Pricing Officer for fresh ALP determination under CUP for AY 2012 13 and AY 2013 14; appeals allowed for statistical purposes, and the penalty challenge was dismissed as premature.

Treatment of development fund receipts taken directly to the balance sheet - entitlement to exemption under sections 11 and 12 for charitable institutions - allowance of depreciation for charitable or religious institutions - precedential application of earlier High Court and Supreme Court decisions

Treatment of development fund receipts taken directly to the balance sheet - entitlement to exemption under sections 11 and 12 for charitable institutions - Whether development fund receipts taken directly to the balance sheet could be brought to tax by disallowing exemption under sections 11 and 12. - HELD THAT: - The Tribunal noted that the development fund receipts of Rs. 88,15,915 were recorded as a liability in the balance sheet and added back by the Assessing Officer. It observed that the school was entitled, as per directions of the Directorate of Education, to collect development fee up to a specified percentage of tuition fee. The Tribunal held that this controversy on treatment of the development fund and entitlement to exemption was squarely covered by the assessee's own earlier decision for Assessment Year 2012-13 by the Hon'ble High Court and, on that basis, dismissed the Revenue's grounds challenging the CIT(A)'s allowance. [Paras 7]

Grounds 1 to 3 dismissed; addition in respect of development fund receipts not sustained.

Allowance of depreciation for charitable or religious institutions - precedential application of earlier High Court and Supreme Court decisions - Whether depreciation claimed by the assessee on capital assets used for charitable purposes is allowable despite application of income under section 11. - HELD THAT: - The Tribunal examined the CIT(A)'s reliance on the Delhi High Court decision in Indraprastha Cancer Society and the Supreme Court ruling in Rajasthani & Gujarati Charitable Foundation Poona. It observed that the Supreme Court has held that depreciation in respect of the cost of assets allowed to the assessee as expenditure is allowable. The Tribunal also noted the amendment to section 11 effective from Assessment Year 2015-16 and subsequent years but found the present assessment year to be governed by the earlier jurisprudence. In view of the binding precedent, the Tribunal held that depreciation in the hands of charitable institutions is allowable and dismissed Revenue's challenge to the CIT(A)'s allowance of depreciation. [Paras 7]

Ground No. 4 dismissed; depreciation allowed.

Final Conclusion: The Revenue's appeal is dismissed and the CIT(A)'s order for Assessment Year 2013-14 is upheld.

Reassessment under section 147 - notice under section 148 - notice under section 143(2) - mandatoriness of service of notice under section 143(2) - deemed validity of notice under section 292BB - quashing of reassessment for absence of mandatory notice

Reassessment under section 147 - notice under section 148 - notice under section 143(2) - mandatoriness of service of notice under section 143(2) - deemed validity of notice under section 292BB - quashing of reassessment for absence of mandatory notice - Assessment framed under section 147 read with section 143(3) is invalid where the mandatory notice under section 143(2) was not served in the reassessment proceedings initiated under section 148. - HELD THAT: - The Court examined the statutory scheme under which a notice under section 148 triggers a requirement that a return filed in response is to be treated as a return under section 139(1), thereby attracting the procedural mandate to serve notice under section 143(2) before completion of assessment. The revenue's file did not contain any notice under section 143(2); the DCIT's letter on record confirms absence of such mandatory notice. Reliance on deeming provisions in section 292BB was rejected because those provisions do not validate a situation where no notice at all was served to initiate proceedings; section 292BB protects against non-service or irregular service only where the assessee has appeared or cooperated, and in any event cannot cure the complete omission of issuing a mandatory notice. The Tribunal drew support from precedents holding that service of notice under section 143(2) within the statutory time-limit is mandatory and omission is not a curable procedural irregularity. Applying these principles to the facts, the reassessment under section 147 was held to be bad in law and liable to be quashed. As the technical ground succeeded, the Tribunal did not adjudicate the merits of the additions. [Paras 6]

Assessment framed under section 147 read with section 143(3) is quashed for non-issuance of the mandatory notice under section 143(2); the assessee's appeal is partly allowed and the revenue's cross-appeal is dismissed.

Final Conclusion: The reassessment for Assessment Year 2000-2001 under section 147 read with section 143(3) was quashed because the mandatory notice under section 143(2) was not served; consequentially the assessee's appeal is partly allowed and the Revenue's appeal is dismissed.

Genuineness of purchases - estimation of profit element in non-genuine purchases - application of comparable gross profit ratio from preceding years - addition based on estimated profit element

Genuineness of purchases - estimation of profit element in non-genuine purchases - application of comparable gross profit ratio from preceding years - Whether the profit element in purchases treated as non-genuine should be estimated and, if so, at what rate for A.Y. 2009-10. - HELD THAT: - The Tribunal accepted that the Assessing Officer was not satisfied about the genuineness of certain purchases and that the assessee had not produced confirmations from the alleged suppliers. However, relying on the principle that where purchased goods are subsequently sold genuine sales negate treating the entire purchase turnover as taxable, only the profit element embedded in such purchases is exigible, the Tribunal held that an estimation of profit element was warranted rather than treating entire purchases as bogus. The Tribunal noted precedents relied upon by the lower authorities and itself - Bholanath Polyfab Pvt. Ltd , CIT v. Simit P. Seth and CIT v. Nikunj Eximp - to the effect that when purchased goods are sold as a natural corollary, taxability is confined to the profit margin and not the entire purchase. Having examined the assessee's audited gross profit ratios for the three preceding assessment years and the current year (showing an average around 9.19% and current year GP of 9.17%), the Tribunal found it reasonable to apply a proximate industry/assessee-specific margin. Balancing the inability of the assessee to conclusively prove purchases against the accepted sales and the consistent historical GP ratios, the Tribunal concluded that estimating the profit element at 9.5% was justified and directed the Assessing Officer to restrict disallowance to that profit element for computation of income for the year under appeal. [Paras 6, 7]

Disallowance on account of alleged non-genuine purchases restricted to the profit element estimated at 9.5%; Assessing Officer directed to compute income for A.Y. 2009-10 accordingly.

Final Conclusion: Appeal partly allowed; the addition sustained by the authorities is modified and restricted to an estimated profit element of 9.5% on the purchases in question for A.Y. 2009-10, with consequential computation to be made by the Assessing Officer.

Disallowance under section 14A - Computation of disallowance under rule 8D(2)(ii) - No exempt income - no disallowance under section 14A - Ad-hoc disallowance of expenses for inadequately vouched claims - Books of account not rejected - inadmissibility of ad-hoc disallowance - Relevance of audited accounts and absence of specific defects in vouchers

Disallowance under section 14A - Computation of disallowance under rule 8D(2)(ii) - No exempt income - no disallowance under section 14A - Deletion of additional disallowance of interest computed under rule 8D(2)(ii) in respect of investments - HELD THAT: - The assessee had offered a suo-moto disallowance but the Assessing Officer computed an additional interest disallowance under rule 8D(2)(ii). The Tribunal noted it was undisputed that the assessee did not earn any exempt income during the year and that the assessee's own funds (share capital and reserves) exceeded the investments, giving rise to a presumption that investments were funded out of own funds. In view of these facts and the cited judicial authorities, the additional interest disallowance could not be sustained and was deleted. [Paras 4]

Additional interest disallowance of Rs. 4.60 Lacs under rule 8D(2)(ii) deleted; ground allowed.

Ad-hoc disallowance of expenses for inadequately vouched claims - Books of account not rejected - inadmissibility of ad-hoc disallowance - Relevance of audited accounts and absence of specific defects in vouchers - Validity of 10% ad-hoc disallowance of labour/assortment charges - HELD THAT: - The Assessing Officer made a 10% ad-hoc disallowance after observing verification difficulties in sampled bills and documents. The Tribunal found that the books of account were not rejected, were audited under the Companies Act and the Income-tax Act without adverse findings, and that the assessee had produced ledgers and vouchers with no specific defect identified by the AO. The assessee also explained the increase in expenditure (change in manufacturing pattern) and comparable prior years' assessments accepted similar expenses. In these circumstances and having regard to precedent disfavoring adhoc disallowances where books are intact and explanations are furnished, the adhoc 10% disallowance was held unsustainable and deleted. [Paras 5]

Ad-hoc 10% disallowance of labour/assortment charges deleted; ground allowed.

Final Conclusion: Appeal partly allowed: the additional disallowance under rule 8D(2)(ii) in respect of investments is deleted and the adhoc 10% disallowance of labour/assortment charges is deleted; appeal disposed accordingly.

Reopening of assessment - change of opinion - tangible material / reason to believe - taxability of interest on income tax refund - year of accrual / year of grant - demerger and exemption under section 47(vib) read with section 2(19AA) - requirement of separate assessment order for second notice - doctrine of acquiescence and estoppel where scheme sanctioned by Court - admission of additional ground raising pure question of law

Reopening of assessment - change of opinion - tangible material / reason to believe - Validity of reopening assessment under section 147/148 insofar as it was based on interest on income tax refund - HELD THAT: - The Tribunal found the Assessing Officer had the relevant financial statements and had specifically queried and received a reply on interest on refund during the original assessment; no new tangible material emerged thereafter. Reopening on the same set of facts amounted to a prohibited change of opinion and was therefore void. The Tribunal relied on the principles in Asian Paints and Jet Speed Audio that reassessment cannot be used to review an original order where no fresh information is received and the reasons recorded did not disclose any tangible new material to justify reopening. [Paras 24, 26]

Reopening pursuant to the first notice dated 08.03.2013 is invalid and void ab initio.

Taxability of interest on income tax refund - year of accrual / year of grant - Whether interest on income tax refund credited in the accounts is taxable in AY 2008-09 (year under consideration) or in AY 2007-08 - HELD THAT: - The Tribunal applied the ratio of the Special Bench in Avada Trading and followed Hindustan Unilever, holding that interest under section 244A accrues when the refund is granted and an enforceable debt is created. The refund and interest were granted on 12.03.2007 (AY 2007-08), hence the interest income, if any, pertains to AY 2007-08 and not AY 2008-09. Accordingly, there was no escapement of income for AY 2008-09 on this account. [Paras 27, 28, 29]

Interest on income tax refund is taxable in AY 2007-08 and not in AY 2008-09; no basis to reopen AY 2008-09 on this ground.

Demerger and exemption under section 47(vib) read with section 2(19AA) - requirement of separate assessment order for second notice - doctrine of acquiescence and estoppel where scheme sanctioned by Court - Validity of the second reopening notice and the Assessing Officer's denial of exemption under section 47(vib)/section 2(19AA) on account of demerger - HELD THAT: - The Tribunal noted the facts relating to demerger (scheme approved by Bombay High Court, disclosures in financial statements and tax audit, and submissions during original assessment) were already before the AO at original assessment. No fresh tangible material was shown. The second notice issued while proceedings under the first were pending was unnecessary because Explanation 3 to section 147 permits additions on other grounds during reassessment; moreover, no separate assessment order was passed pursuant to the second notice as required by section 153. The Tribunal also observed that the Department had not objected to the scheme before the Court and invoked the doctrine of acquiescence/estoppel; following these considerations and authorities, the second reopening and any addition made thereunder are invalid. The Tribunal further treated the departmental challenge to CIT(A)'s acceptance of demerger as infructuous in view of the invalidity of reopening. [Paras 31, 32, 33, 36, 37]

Second reopening notice and additions made on that ground are invalid; the addition rejecting exemption under section 47(vib)/2(19AA) does not survive; departmental appeal is treated as infructuous.

Admission of additional ground - Admit and decide additional ground raised by assessee that education cess and higher/secondary education cess paid is deductible under PGBP - HELD THAT: - The Tribunal accepted the assessee's request to admit the additional ground as it raises a pure question of law and cited the Bombay High Court decision in Sesa Goa which favours the assessee's contention. Considering prevailing authority, the Tribunal allowed the additional ground in favour of the assessee. [Paras 38]

Additional ground that education cess and higher/secondary education cess are deductible under PGBP is allowed.

Demerger and exemption under section 47(vib) read with section 2(19AA) - Assessee's without-prejudice contention that, if demerger is not treated as valid under section 2(19AA), the assessee in fact suffered a capital loss (requiring factual enquiry) - HELD THAT: - The Tribunal observed that the contention involves detailed factual and accounting questions not fully dealt with on record and that adjudication would require reference to the Assessing Officer for fresh consideration and verification. Since the Tribunal had already held reopening invalid, it declined to pursue multiplicity of proceedings and treated the departmental challenge as infructuous; however, it recognised that the assessee's alternative claim would, if pursued, require remand and factual enquiry. [Paras 40, 41]

Alternative contention that a capital loss arose (if demerger not held valid) was not adjudicated and requires remand/verification; treated as not decided on merits in these proceedings.

Final Conclusion: The reassessment proceedings initiated for AY 2008-09 are invalid: the reopening based on interest on income tax refund is void as a change of opinion, the interest relates to AY 2007-08 and not AY 2008-09, and the second reopening and additions regarding the demerger are invalid (no separate assessment order was passed and the AO had no fresh tangible material). The additional ground on deduction of education cess under PGBP is allowed. The alternative factual contention on capital loss arising from the demerger was not adjudicated and would require remand for fresh consideration, but in this appeal the departmental challenge is treated as infructuous and the assessee's appeal is allowed.

Penalty under section 271(1)(c) for concealment or furnishing inaccurate particulars - Deletion of penalty where assessment is based on ad hoc/estimation additions - Ad hoc estimation of profit element on purchases - Onus on Revenue to prove positive concealment - Third-party information insufficient without independent verification

Penalty under section 271(1)(c) for concealment or furnishing inaccurate particulars - Ad hoc estimation of profit element on purchases - Deletion of penalty where assessment is based on ad hoc/estimation additions - Onus on Revenue to prove positive concealment - Whether penalty under section 271(1)(c) could be sustained when additions were made by the Assessing Officer by ad hoc estimation of the profit element on purchases. - HELD THAT: - The Assessing Officer reopened assessment and, relying on third party information, treated certain purchases as non genuine and estimated the profit element at 17.8%, bringing an amount to tax. Penalty proceedings under section 271(1)(c) were initiated on the ground of concealment/furnishing inaccurate particulars. The Tribunal held that where the disallowance or addition is founded on an ad hoc estimation of profit element, such estimation does not, without more, establish positive concealment or inaccurate particulars by the assessee. The decision relies on consistent precedent of Coordinate Benches and High Courts which recognise that penalties under section 271(1)(c) cannot be imposed merely because a claim is disallowed or an addition is made on estimate basis; the Department must prove actual concealment. The Assessing Officer had not produced conclusive proof of concealment nor conducted independent verification beyond third party information, and the first appellate authority deleted the penalty. Following these authorities and the settled legal position, the Tribunal found no infirmity in deletion of penalty. [Paras 5, 6, 7, 8, 9]

Penalty levied under section 271(1)(c) is deleted because the impugned addition was based on ad hoc estimation of profit on purchases and there is no proof of positive concealment or furnishing of inaccurate particulars.

Final Conclusion: The revenue's appeal is dismissed; the penalty under section 271(1)(c) for A.Y.2009-10 is not sustainable where the Assessing Officer's addition was an ad hoc estimation of profit on purchases and no positive concealment was established.

Penalty under section 271(1)(c) for concealment of particulars or furnishing inaccurate particulars - validity of notice under section 274 read with section 271(1)(c) - non-application of mind in framing penalty notice - omnibus notice and vagueness - strict construction of penal provisions

Penalty under section 271(1)(c) for concealment of particulars or furnishing inaccurate particulars - validity of notice under section 274 read with section 271(1)(c) - non-application of mind in framing penalty notice - omnibus notice and vagueness - strict construction of penal provisions - Whether penalty proceedings under section 271(1)(c) are vitiated where the statutory notice under section 274 does not specify which limb of section 271(1)(c) (concealment of particulars of income or furnishing inaccurate particulars) is invoked - HELD THAT: - The Tribunal held that the two limbs of section 271(1)(c) carry distinct meanings and it is incumbent on the Assessing Officer to make clear, in the statutory notice, which limb is being invoked so that the assessee can respond appropriately. A standard omnibus proforma which fails to strike off the inapplicable limb demonstrates non-application of mind and leads to vagueness in the charge. The assessment order cannot cure a defective statutory notice because penalty proceedings are distinct and must stand on their own; the primary burden to inform the assessee of the grounds of penalty lies on the Revenue through the notice. The Tribunal relied on precedents holding that penal provisions must be construed strictly and ambiguity resolved in favour of the assessee, and concluded that the AO's notice was defective for not specifying the limb, thereby vitiating the penalty proceedings. [Paras 9, 10, 11, 12]

Penalty proceedings quashed for defective notice; penalty order set aside.

Final Conclusion: The cross objection of the assessee is allowed by quashing the penalty proceedings for defective notice; the Revenue appeal is rendered infructuous and is dismissed.

Disallowance under Section 14A of the Income-tax Act read with Rule 8D of the Income-tax Rules - exempt income in the form of share of profit from a partnership firm - cap on disallowance by the amount of exempt income received during the year - disallowance to be computed with reference to investments which yielded exempt income during the year - recording of objective satisfaction by the Assessing Officer before rejecting an offered disallowance

Exempt income in the form of share of profit from a partnership firm - disallowance under Section 14A of the Income-tax Act read with Rule 8D of the Income-tax Rules - Whether share of profit received from a partnership firm is income exempt for purposes of attracting disallowance under Section 14A read with Rule 8D. - HELD THAT: - The Tribunal rejected the assessee's contention that share of profit retained the character of the firm's taxed income and therefore could not be treated as exempt income for Section 14A. Relying on the reasoning in the Supreme Court decision in Godrej & Boyce and consistent Tribunals' precedents, the Tribunal held that where an amount is not includible in the recipient's total income by virtue of the relevant exemption, expenditure incurred in relation to earning such income is liable for disallowance under Section 14A. The same logic applies to share of profit exempt under Section 10(2A), and therefore disallowance under Section 14A is permissible in respect thereof. [Paras 7]

Claim that Section 14A does not apply to share of profit from a partnership firm is rejected; Section 14A applies to such exempt share of profit.

Recording of objective satisfaction by the Assessing Officer before rejecting an offered disallowance - disallowance under Section 14A read with Rule 8D - Whether the Assessing Officer recorded requisite objective satisfaction before dislodging the disallowance amount offered by the assessee and applying Rule 8D. - HELD THAT: - The assessee contended that the AO failed to record objective satisfaction before rejecting the sui generis disallowance offered. The Tribunal examined the AO's reasons and found that cogent reasons had been given (notably, absence of details supporting the offered amount), and therefore the AO's action in computing disallowance under Rule 8D was sustainable. The Tribunal did not accept the submission that there was a jurisdictional failure for want of recorded satisfaction. [Paras 8, 9]

AO had furnished objective reasons; there was no failure to record satisfaction and the AO's invocation of Rule 8D was valid.

Disallowance to be computed with reference to investments which yielded exempt income during the year - cap on disallowance by the amount of exempt income received during the year - disallowance under Section 14A of the Income-tax Act read with Rule 8D - Extent and quantification of disallowance under Section 14A r.w. Rule 8D: whether (a) Rule 8D(2)(iii) disallowance must be confined to investments that yielded exempt income during the year and (b) disallowance cannot exceed the amount of exempt income received during the year. - HELD THAT: - The Tribunal accepted the proposition that the calculation under Rule 8D(2)(iii) must, in principle, be confined to the "average value" of those investments which actually yielded exempt income during the year, relying on High Court and Special Bench precedents. However, the Tribunal directed that the A.O. verify the factual basis for the assessee's quantification (the average value computation) and accordingly remitted the matter for factual verification and recomputation. Separately, the Tribunal held as a settled legal position that the total disallowance under Section 14A cannot exceed the amount of exempt income actually received by the assessee in the year, and upheld the CIT(A)'s restriction of disallowance to that extent. [Paras 11, 12]

Rule 8D(2)(iii) disallowance should be computed with reference only to investments that yielded exempt income and the A.O. is directed to verify the assessee's quantification; additionally, in law the disallowance cannot exceed the exempt income received during the year.

Final Conclusion: The assessee's appeal is partly allowed and the revenue's appeal is dismissed: Section 14A applies to exempt share of profit from a partnership firm; the AO validly applied Rule 8D after recording reasons; quantification under Rule 8D must be confined to investments yielding exempt income and is remitted to the AO for verification; in any event disallowance cannot exceed the exempt income received in A.Y. 2016-17.

Arm's length price - internal comparable uncontrolled price (internal CUP) - corporate guarantee fee - transfer pricing adjustment - disallowance under section 14A read with Rule 8D - use of AIR/Form-26AS for making additions - interest under section 234B - low tax effect

Arm's length price - internal comparable uncontrolled price (internal CUP) - corporate guarantee fee - transfer pricing adjustment - Whether the corporate guarantee commission determined by the assessee by applying an internal CUP is at arm's length and whether the upward transfer pricing adjustment made by the TPO/AO is sustainable. - HELD THAT: - The Tribunal examined precedents in the assessee's own case for adjacent assessment years where identical facts were considered and where the internal CUP - being the guarantee commission actually paid by the assessee to banks for standing guarantees on its behalf - was accepted as the benchmark for determining ALP of corporate guarantees granted to Associated Enterprises abroad. The Tribunal relied on the distinction drawn by the Bombay High Court in CIT v. Everest Kanto Cylinders Ltd. that bank guarantees and corporate guarantees are not comparable for benchmarking and found the TPO's approach of benchmarking against bond-raising or bank-guarantee scenarios to be inconsistent with that ratio. Considering the parity of facts and prior coordinate-bench decisions approving rates around 0.43%-0.55% (and the assessee's computed rate of 0.41% for the year under appeal), the Tribunal found the assessee's benchmarking reasonable and the TPO/AO's higher rate unjustified. [Paras 4, 5]

Corporate guarantee commission as determined by the assessee by applying internal CUP is at arm's length; the upward transfer pricing adjustment made by the AO/TPO is vacated and grounds 1 to 7 are allowed.

Disallowance under section 14A read with Rule 8D - satisfaction of assessing officer - Whether the Assessing Officer validly made an additional disallowance under section 14A read with Rule 8D without recording satisfaction in the manner required by section 14A(2). - HELD THAT: - Section 14A(2) requires the AO to record satisfaction, having regard to the assessee's accounts, before rejecting the assessee's computation and determining disallowance under Rule 8D. The AO in the draft assessment order set out general principles and case law but did not address or record any objective dissatisfaction with the assessee's specific computation; the AO did not examine the computation furnished by the assessee. In these circumstances the Tribunal held that the statutory mandate was not complied with and the additional disallowance cannot be sustained. [Paras 6]

Additional disallowance under section 14A read with Rule 8D is deleted and grounds 8 and 9 are allowed.

Use of AIR/Form-26AS for making additions - reconciliation of receipts - Whether additions based on mismatch between the assessee's books and Form-26AS/AIR can be sustained where the assessee has furnished reconciliation and reconciled the substantial part of the discrepancy. - HELD THAT: - The AO initially proposed additions based on AIR/Form-26AS information. The assessee furnished party-wise and receipt-wise reconciliations, reducing the discrepancy substantially. The Tribunal referred to precedents holding that additions made solely on AIR information, especially where details in AIR are incomplete and where the assessee's declared receipts exceed the AIR figures, are not sustainable. Given the shipping business context (tonnage and non-tonnage receipts) and the substantial reconciliation achieved by the assessee leaving only a minuscule difference, the Tribunal held that making additions merely on the basis of AIR/Form-26AS was unjustified. [Paras 7]

Addition on account of mismatch in Form-26AS is deleted and ground 10 is allowed.

Interest under section 234B - Whether the challenge to charging interest under section 234B can be sustained. - HELD THAT: - Interest under section 234B is consequential and mandatory where its conditions are met. The Tribunal observed that the charging of such interest was a mandatory consequential step and did not find merit in the assessee's challenge to it. [Paras 8]

Ground 11 is dismissed; charging of interest under section 234B is upheld as consequential and mandatory.

Low tax effect - interest on cross-border loans to Associated Enterprises - Whether the Revenue's appeal against the interest rate charged by the assessee on foreign currency loans to Associated Enterprises should be entertained and allowed. - HELD THAT: - Both parties agreed that the tax effect of the Revenue's appeal was below the monetary threshold prescribed by the Board's Circular No. 17/2019 for filing appeals by the Revenue; accordingly the appeal was liable to be dismissed on that ground. On merits, the Tribunal noted that coordinate-bench decisions in the assessee's own case for adjacent years had upheld the interest rate charged by the assessee (LIBOR+ mark-up), and thus the Revenue's case was also covered on merits in favour of the assessee. [Paras 13, 14, 15]

Revenue's appeal is dismissed on account of low tax effect and, alternatively, on merits.

Final Conclusion: For AY 2011-12 the Tribunal partly allowed the assessee's appeal by (i) deleting the transfer pricing adjustment in respect of corporate guarantee commission (accepting the assessee's internal CUP benchmark), (ii) deleting the additional disallowance under section 14A read with Rule 8D for lack of recorded satisfaction by the AO, and (iii) deleting the addition based on Form-26AS mismatch after reconciliation; the challenge to interest under section 234B was dismissed. The Revenue's cross-appeal was dismissed for low tax effect and on merits.

Allowability of depreciation on exchange fluctuation attributable to domestic assets - non-applicability of section 43A to assets acquired in India - treatment under Accounting Standard-11 for foreign exchange differences - rule of consistency in following earlier appellate orders - capitalisation of foreign exchange loss into cost of depreciable asset

Allowability of depreciation on exchange fluctuation attributable to domestic assets - treatment under Accounting Standard-11 for foreign exchange differences - non-applicability of section 43A to assets acquired in India - rule of consistency in following earlier appellate orders - capitalisation of foreign exchange loss into cost of depreciable asset - Whether depreciation attributable to exchange fluctuation loss capitalised into the cost of assets acquired in India from foreign currency funds is allowable for A.Y. 2011-12 - HELD THAT: - The Tribunal found that the issue had already been considered and decided in the assessee's own earlier appeals for A.Y.2009-10 and A.Y.2010-11, where it was held that exchange loss attributable to acquisition of domestic depreciable assets could be added to the cost of such assets and depreciated. The Tribunal relied on the reasoning in those earlier decisions and on authorities and principles applied there: that section 43A is not applicable to assets acquired in India from foreign funds, that Accounting Standard-11 and applicable company rules permit capitalisation of long-term foreign currency monetary item differences into asset cost and subsequent depreciation, and that the rule of consistency required the AO/CIT(A) to follow the Tribunal's earlier conclusions. No distinguishing decision was furnished by the Department; accordingly the Tribunal directed deletion of the disallowance relating to enhanced depreciation claimed on account of exchange fluctuation. [Paras 6, 7, 8]

The disallowance of depreciation of Rs. 54,29,216/- was deleted and the appeal was allowed.

Final Conclusion: Following its earlier decisions for A.Y.2009-10 and A.Y.2010-11 and applying AS-11 and the rule of consistency, the Tribunal allowed the assessee's claim to depreciation on exchange fluctuation capitalised into the cost of domestic assets for A.Y.2011-12 and directed deletion of the addition.

Classification of imported goods - Rejection of transaction value and determination under Customs Valuation Rules (Rule 6) - Enhancement of value based on contemporaneous imports of similar goods - Mis-declaration to evade customs duty - Confiscation and redemption on payment of fine - Imposition of penalties under section 114A and section 112(a) of the Customs Act, 1962 - Jurisdiction of DRI to issue show cause notice for demand of duty under section 28 of the Customs Act, 1962

Enhancement of value based on contemporaneous imports of similar goods - Rejection of transaction value and determination under Customs Valuation Rules (Rule 6) - Enhancement of assessable value and re-determination of duty based on the table of contemporaneous imports without supplying supporting bills of entry - HELD THAT: - The Tribunal found that the department itself admitted the absence of identical imports and proceeded to enhance value on the basis of contemporaneous price of similar goods shown only as figures in a table. Despite an earlier remand directing production of the bills of entry relied upon, the department failed to furnish supporting documents or to explain how the referenced imports were similar to the appellant's goods. The Tribunal held that enhancement of value merely on the basis of the figures in the show cause notice, without disclosure of the underlying contemporaneous import documents or material showing similarity, has no legal basis and cannot be sustained. The enhancement of value and the re determination of duty were therefore set aside. [Paras 13, 14]

Enhancement of value and re-determination of duty based on the undisclosed contemporaneous import figures set aside.

Confiscation and redemption on payment of fine - Imposition of penalties under section 114A and section 112(a) of the Customs Act, 1962 - Mis-declaration to evade customs duty - Validity of confiscation orders, redemption fines and penalties imposed consequential to the enhanced valuation and duty demand - HELD THAT: - The Tribunal observed that the orders of confiscation, the redemption fines and the penalties were consequential upon the enhanced assessable value and the resultant duty demands. Having held that the enhancement of value and the duty demand cannot be sustained, the Tribunal concluded that the confiscation, redemption fines and penalties which flow from that determination likewise cannot stand. On the merits, therefore, the confiscation orders, redemption fine and penalties were set aside and the appellant was held to have succeeded. [Paras 15]

Confiscation orders, redemption fines and penalties consequential to the quashed valuation and duty demand set aside.

Jurisdiction of DRI to issue show cause notice for demand of duty under section 28 of the Customs Act, 1962 - Whether the DRI had jurisdiction to issue the show cause notice for re assessment/demand of duty in respect of goods already cleared for home consumption - HELD THAT: - Relying on the principle in the cited Apex Court decisions, the Tribunal held that where goods have already been cleared for home consumption after payment of duty, a show cause notice issued by DRI proposing re classification and re assessment of duty is hit by that principle and is not maintainable. However, the Tribunal noted that the principle does not apply to the live consignment not yet assessed; the challenge to DRI's jurisdiction therefore invalidated the notice insofar as it sought re assessment of already cleared consignments but did not affect the live consignment which remained outside the scope of that jurisdictional bar. [Paras 16]

DRI's show cause notice is not maintainable for consignments already cleared for home consumption; the live consignment not yet assessed is not covered by that bar.

Final Conclusion: The impugned adjudication is set aside: the enhancement of value and duty demand based on undisclosed contemporaneous import figures is quashed; consequential confiscation orders, redemption fines and penalties are set aside; the DRI's jurisdictional objection invalidates the show cause notice insofar as it seeks re assessment of goods already cleared for home consumption. Appeal allowed with consequential reliefs, if any.

Maintainability - pending appeal before the Supreme Court - prematurity of relief - moratorium on proceedings and enforcement - forum shopping - dismissal in limine

Pending appeal before the Supreme Court - prematurity of relief - Prayer for expeditious disposal of CA/32/2010 (prayer (b)) was premature and therefore rejected. - HELD THAT: - The Tribunal recorded that an appeal arising from earlier orders connected with CA/32/2010 was pending adjudication before the Hon'ble Supreme Court of India and that the Supreme Court was yet to pass final orders in CA/47/2011 and CA/101/2011 which are interconnected with CA/32/2010. In those circumstances the Applicant's request for early disposal of CA/32/2010 was found to be premature and accordingly refused without embarking on the merits of the underlying dispute. [Paras 7]

Prayer (b) rejected as premature because the Supreme Court is seized of the connected matters.

Moratorium on proceedings and enforcement - forum shopping - maintainability - dismissal in limine - Application seeking exemption from servicing loans to IL&FS (prayer (a)) was not maintainable and was dismissed in limine. - HELD THAT: - The Tribunal relied on the NCLAT order imposing a moratorium on IL&FS and its group, observing that the moratorium restrained institution or continuation of proceedings and enforcement actions against IL&FS and its group companies; thus, prima facie the relief sought against the 5th respondent was not maintainable. The Tribunal also noted that a substantially similar application was pending before the NCLT, Mumbai Bench, and held that filing identical applications before different fora amounted to forum shopping which is deprecated. In view of these factors the Tribunal declined to consider the merits and dismissed the application on maintainability grounds. [Paras 8, 9, 10, 11]

Prayer (a) not maintainable in view of the extant NCLAT moratorium and the Applicant's forum shopping; application dismissed in limine.

Final Conclusion: The miscellaneous application was dismissed in limine: the prayer for early disposal of CA/32/2010 was refused as premature since the Supreme Court is seized of connected matters, and the prayer seeking exemption from servicing loans was held not maintainable in light of the NCLAT-imposed moratorium and the Applicant's filing of parallel proceedings, so the Tribunal declined to decide the merits.

Binding effect of adjudicatory findings in regulatory proceedings - exoneration on merits as a bar to criminal prosecution - concurrent initiation of adjudication and criminal prosecution - stay of criminal proceedings pending determination of appellate challenge to adjudicatory order

Binding effect of adjudicatory findings in regulatory proceedings - exoneration on merits as a bar to criminal prosecution - concurrent initiation of adjudication and criminal prosecution - Whether the exoneration of the applicants in SEBI adjudication/SAT proceedings on merits precludes continuation of the criminal prosecution arising from the same allegations. - HELD THAT: - The Court examined authorities establishing that findings in adjudication proceedings may be binding and conclusive such that criminal prosecution on the same facts cannot be sustained where the adjudicatory exoneration is on merits and not on a technical ground. Applying that principle to the facts, the Court found that the applicants had been exonerated on merits by the Securities Appellate Tribunal on the allegations which form the basis of the criminal complaint. The Court therefore held that a prosecution based on identical allegations could not be permitted to continue while that exoneration stands, subject to the contingency that a higher forum may upset the adjudicatory order. The Court relied on the distinction between merit-based exoneration and technical/ procedural exoneration and applied the governing precedent to conclude that merit-based exoneration operates as a bar to the criminal proceedings so long as it remains unannulled by a superior court. [Paras 9, 10]

Applicants' adjudicatory exoneration on merits operates as a bar to the continuation of prosecution arising from the same allegations while the adjudicatory order remains in force.

Stay of criminal proceedings pending determination of appellate challenge to adjudicatory order - Whether the criminal proceedings should be stayed pending the decision of the Supreme Court in the appeal preferred by SEBI against the SAT order. - HELD THAT: - Although the adjudicatory exoneration would ordinarily preclude prosecution, the Court recognised that SEBI had preferred an appeal to the Supreme Court against the SAT decision and that the outcome of that appeal could revive the viability of the prosecution. In view of this, the Court exercised its discretion to preserve the status quo by directing that the criminal proceedings remain stayed until the Supreme Court decides the appeal instituted by SEBI. The stay was therefore temporal and conditional upon the appellate outcome. [Paras 10, 11]

Criminal proceedings are stayed until the Supreme Court decides the appeal filed by SEBI against the SAT order.

Final Conclusion: The revision is admitted; the court held that the applicants' adjudicatory exoneration on merits precludes continuation of prosecution based on the same allegations so long as that order stands, and directed a stay of the criminal proceedings until the Supreme Court determines SEBI's appeal against the SAT decision.

Voluntary liquidation under Section 59 of the Insolvency and Bankruptcy Code, 2016 - declaration of solvency and board resolution - special resolution of members for voluntary winding up - compliance with IBBI (Voluntary Liquidation Process) Regulations, 2017 - public announcement and claim process - final report and audited accounts of liquidation - dissolution upon completion of voluntary liquidation

Voluntary liquidation under Section 59 of the Insolvency and Bankruptcy Code, 2016 - declaration of solvency and board resolution - special resolution of members for voluntary winding up - compliance with IBBI (Voluntary Liquidation Process) Regulations, 2017 - public announcement and claim process - final report and audited accounts of liquidation - dissolution upon completion of voluntary liquidation - Whether the corporate person has completed voluntary liquidation in compliance with the Code and IBBI Regulations and is fit to be dissolved under Section 59(7) of the Code. - HELD THAT: - The Tribunal found that the Board of Directors passed a resolution and filed a declaration of solvency and Form GNL-2 as required. A Special Resolution of members approving voluntary winding up and appointment of the liquidator was passed. The liquidator notified the Registrar of Companies and the IBBI, made the statutory public announcement calling for claims under the IBBI Regulations, opened and later closed a liquidation bank account, filed preliminary and final reports and audited accounts of liquidation, and intimated the Income-tax Department which conveyed no objection. No claims or creditors emerged and the liquidation accounts showed no assets remaining. On these findings the Tribunal concluded that the voluntary liquidation process was carried out in accordance with Section 59 and the IBBI Regulations and that the company's affairs have been wound up and its assets liquidated. [Paras 11, 12, 13, 14, 15]

The petition under Section 59(7) is allowed; the corporate person is dissolved and the liquidator is directed to file the order with the Registrar of Companies and the IBBI.

Final Conclusion: The Tribunal allowed the petition and dissolved Vidarbha Tannaries Limited after recording that the voluntary liquidation process prescribed by the Code and relevant IBBI Regulations had been complied with and that the company's affairs were fully wound up.

Pre-existing dispute - debt and default - relevance of TDS and post-dated cheques as admission - Mobilox principle on pre-existing dispute - admission of company petition under IBC - initiation of Corporate Insolvency Resolution Process - moratorium

Pre-existing dispute - Mobilox principle on pre-existing dispute - Existence of a pre-existing dispute between the Operational Creditor and the Corporate Debtor. - HELD THAT: - The Tribunal rejected the Corporate Debtor's contention that a pre-existing dispute barred initiation of CIRP. The plea that reconciliation and verification of accounts created a pre-existing dispute was held to be untenable because there was no contemporaneous correspondence disputing quantity or quality of any unpaid invoice prior to the Demand Notice. The Tribunal applied the principle in Mobilox Innovation Pvt. Ltd. and found that the correspondence relied upon by the Corporate Debtor did not establish a pre-existing dispute capable of preventing invocation of the Code; the expression "payable when able" was construed as reflecting inability to pay rather than an admitted dispute as to liability. Consequently the Tribunal held that no pre-existing dispute existed which would bar the petition. [Paras 51, 52, 53]

The contention of a pre-existing dispute is rejected and is not a bar to admission of the company petition.

Relevance of TDS and post-dated cheques as admission - debt and default - Whether the conduct of the Corporate Debtor (deduction of TDS on invoices and issuance/clearance of post-dated cheques) prima facie establishes debt and default. - HELD THAT: - The Tribunal found that the Corporate Debtor handed over twenty post-dated cheques and that ten cheques were honoured while two were dishonoured and eight were returned; this conduct was treated as indicative of acknowledgment of liability. Further, deduction of TDS on all invoices, including unpaid invoices, was held to demonstrate that the amounts were credited or otherwise acknowledged and thus supported the Operational Creditor's claim that the debt was due and payable. The Tribunal found the reconciliation plea to be a weak answer in view of these facts and concluded that debt and default were established on the record. [Paras 49, 50, 51, 53]

The issuance/part-clearance of post-dated cheques and deduction of TDS furnish prima facie evidence of debt and default in favour of the Operational Creditor.

Admission of company petition under IBC - initiation of Corporate Insolvency Resolution Process - moratorium - Whether the Company Petition is to be admitted and CIRP initiated against the Corporate Debtor, and related consequential orders. - HELD THAT: - Having found that no pre-existing dispute prevented recovery and that debt and default were established by the Operational Creditor's material, the Tribunal admitted the company petition. It directed initiation of the Corporate Insolvency Resolution Process, appointed an Interim Resolution Professional, ordered the Operational Creditor to deposit initial CIRP costs, and declared the statutory moratorium with the usual prohibitions and protections, including public announcement and vesting of management in the IRP/RP during CIRP. [Paras 53, 55, 56, 57, 58]

The company petition is admitted; CIRP is initiated, IRP is appointed, and moratorium and ancillary directions are imposed.

Final Conclusion: The Tribunal dismissed the Corporate Debtor's defence of a pre-existing dispute, held that prima facie debt and default were established (relying on TDS deduction and conduct relating to post dated cheques), and accordingly admitted the company petition, directed initiation of CIRP, appointed an Interim Resolution Professional, and imposed the statutory moratorium with consequential directions.

Filing of claim with the Liquidator during liquidation is mandatory - CIRP and liquidation are distinct stages requiring separate proof of claim - no relaxation for Operational Creditors akin to Regulation 19(4) for workmen - Liquidator's duty to verify claims within time and to record reasons for rejection - appeal against rejection by Liquidator must be filed within the 14-day window - time-bound liquidation process and one-year limit under Regulation 44 - limitation principle: no equity about limitation

Filing of claim with the Liquidator during liquidation is mandatory - CIRP and liquidation are distinct stages requiring separate proof of claim - no relaxation for Operational Creditors akin to Regulation 19(4) for workmen - Liquidator's duty to verify claims within time and to record reasons for rejection - appeal against rejection by Liquidator must be filed within the 14-day window - time-bound liquidation process and one-year limit under Regulation 44 - limitation principle: no equity about limitation - Whether the Applicant's claim filed during CIRP but not submitted to the Liquidator during liquidation could be admitted and whether the delayed appeal against the Liquidator's rejection should be entertained. - HELD THAT: - The Tribunal held that the IBC treats CIRP and liquidation as separate stages and requires claimants to file proof of claim afresh with the Liquidator after commencement of liquidation; mere entry of debt in the corporate debtor's books during CIRP does not suffice for admission in liquidation. Regulation 30 and Section 40 impose an obligation on the Liquidator to verify claims within prescribed time and to record reasons for rejection and communicate the decision; Section 42 provides a 14-day window for appeal against rejection. Regulation 19(4) affords a specific, limited exception for workmen and employees which is not available to Operational Creditors, and thus no analogous relaxation applies to the Applicants. The liquidation process is time-bound under Regulation 44, with the Liquidator accountable to complete liquidation within one year or seek extension; this temporal imperative militates against entertaining delayed submissions or appeals that disrupt the liquidation timeline. Applying the well-established limitation principle endorsed by the Supreme Court that "there is no equity about limitation," the Tribunal found no cogent explanation for the Applicant's failure to submit the claim during liquidation or for the delay in preferring the statutory appeal, and concluded that the delayed appeal cannot be entertained. [Paras 6, 7, 8, 9, 10]

The claim not filed with the Liquidator during the liquidation process could not be admitted and the delayed appeal against the Liquidator's rejection was dismissed; IA/496/IB/2020 stands dismissed (without costs).

Final Conclusion: The Tribunal dismissed the appeal against the Liquidator's rejection on the ground that the Applicant failed to file the claim during the liquidation process (CIRP filing did not substitute for filing with the Liquidator), there was no applicable relaxation for Operational Creditors, and the delayed appeal could not be entertained in view of the time bound liquidation regime and the settled rule that limitation admits no equity.

Exclusion of CIRP period - extension of CIRP under section 12(2) of the Insolvency and Bankruptcy Code, 2016 - Regulation 40C of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - Committee of Creditors' consideration and approval of a resolution plan

Exclusion of CIRP period - Committee of Creditors' consideration and approval of a resolution plan - Exclusion of the CIRP period from 10.05.2021 to 14.06.2021 was granted. - HELD THAT: - The Tribunal noted that the resolution plan submitted on 03.03.2021 remained under active consideration by the Committee of Creditors and that pandemic-related disruptions had earlier justified an exclusion of the lockdown period. Having regard to the totality of circumstances and the need to enable the CoC to deliberate and take a final call on the resolution plan, the Tribunal found it necessary to exclude the CIRP period claimed by the Resolution Professional. For these reasons and in view of the case record, the Tribunal allowed exclusion of the CIRP period from 10.05.2021 to 14.06.2021. [Paras 9]

Exclusion of CIRP period from 10.05.2021 to 14.06.2021 granted.

Extension of CIRP under section 12(2) of the Insolvency and Bankruptcy Code, 2016 - Regulation 40C of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - Extension of the CIRP period was granted, but for 60 days (total additional period resulting in CIRP ending on 20.09.2021). - HELD THAT: - Although the Resolution Professional sought a 90-day extension, the Tribunal exercised its power under section 12(2) of the IBC read with Regulation 40C to extend the CIRP. Balancing the need to permit the CoC sufficient time to consider the resolution plan against the statutory timelines, the Tribunal granted an extension of 60 days from 17.06.2021 (aggregating the exclusion granted and the extension), thereby fixing the new CIRP end date. The Tribunal also directed the Applicant to endeavour to complete the CIRP within the timelines prescribed under the Code. [Paras 9]

CIRP extended by 60 days from 17.06.2021, with the CIRP now to end on 20.09.2021.

Final Conclusion: Application allowed: exclusion of CIRP period from 10.05.2021 to 14.06.2021 was granted and the CIRP was extended by 60 days from 17.06.2021, so that the CIRP will end on 20.09.2021; the Resolution Professional directed to endeavour to complete the process within statutory timelines.

Application of Section 18 of the Limitation Act, 1963 to proceedings under the Insolvency and Bankruptcy Code - acknowledgement in writing as fresh commencement of limitation - establishment of debt and default for admission under Section 9 of the IBC - ex parte admission due to non-appearance and failure to file reply - jurisdiction of Adjudicating Authority based on registered office - initiation of Corporate Insolvency Resolution Process and imposition of moratorium

Application of Section 18 of the Limitation Act, 1963 to proceedings under the Insolvency and Bankruptcy Code - acknowledgement in writing as fresh commencement of limitation - Section 18 of the Limitation Act is available to the Operational Creditor and fresh periods of limitation are to be computed from the dates on which the Corporate Debtor acknowledged its liability in writing. - HELD THAT: - The Bench examined whether the petition filed on 28.08.2019 was barred by limitation in respect of invoices dating to 2015-2016. It accepted the Operational Creditor's submissions that the Corporate Debtor had signed minutes of meetings (12.11.2016 and 13.09.2017) in which liabilities were reconciled and acknowledged, and had made payments thereafter up to 23.03.2019. Relying on binding exposition that the IBC does not exclude the effect of Section 18, the Bench held that such written acknowledgements restart the period of limitation and therefore the petition falls within the fresh limitation computed from those acknowledgements and payments. The factual acknowledgment and subsequent payments thus satisfy the requirement for applying Section 18. [Paras 10, 11]

Held that Section 18 applies and the petition is not barred by limitation.

Establishment of debt and default for admission under Section 9 of the IBC - initiation of Corporate Insolvency Resolution Process and imposition of moratorium - The debt and default stood established and the Company Petition under Section 9 of the IBC was admitted, with CIRP initiated and moratorium imposed. - HELD THAT: - The Bench found that the petition complied with the statutory requirements, relying on invoices, ledger entries and the acknowledged minutes of meetings. The date of default was recorded as 23.03.2019. Having found unequivocal admission of liability by the Corporate Debtor and that the default exceeded the statutory minimum threshold, the Adjudicating Authority concluded there was no reason to deny admission. Consequently, the Bench admitted the petition, directed initiation of CIRP, appointed the Interim Resolution Professional proposed by the Operational Creditor, and ordered the statutory moratorium and ancillary directions as mandated by the Code. [Paras 13, 14]

Petition admitted; CIRP initiated and moratorium placed on the Corporate Debtor.

Ex parte admission due to non-appearance and failure to file reply - jurisdiction of Adjudicating Authority based on registered office - The Adjudicating Authority had jurisdiction to hear the petition and proceeded ex parte after the Corporate Debtor failed to file a reply or attend the final hearing. - HELD THAT: - Jurisdiction was affirmed by reference to the Corporate Debtor's registered office in Mumbai, giving this Bench competence to adjudicate the petition. The record shows repeated opportunities were afforded to the Corporate Debtor, which either did not appear or failed to file a reply and, on occasions where it appeared, sought time for settlement but did not advance rebuttal. In view of the Corporate Debtor's non-appearance and omission to file reply or consent terms despite opportunities, the Bench proceeded ex parte and relied on the Operational Creditor's material to decide the petition. [Paras 2, 12]

Bench had jurisdiction; proceedings were conducted ex parte on account of the Corporate Debtor's non-appearance and failure to file reply.

Final Conclusion: The Tribunal held that acknowledgements in the minutes of meetings and subsequent payments revived limitation under Section 18 of the Limitation Act, the debt and default were established, and the Company Petition under Section 9 of the IBC was admitted; CIRP was ordered, an IRP appointed and moratorium imposed, the proceedings having been conducted ex parte due to the Corporate Debtor's failure to contest.

Exclusion of time from CIRP period - Covid-19 lockdowns and restrictions - bona fide exclusion - replacement and confirmation of Resolution Professional and Form G time not excluded

Exclusion of time from CIRP period - Covid-19 lockdowns and restrictions - bona fide exclusion - Exclusion of specified periods of restrictions and lockdown from the Corporate Insolvency Resolution Process (CIRP) period. - HELD THAT: - The Tribunal examined the dates and nature of restrictions imposed by the Noida Police, the Government of Uttar Pradesh and the Government of the NCT of Delhi arising from the Covid-19 pandemic, and the applicant's submission that such restrictions impeded the conduct of the resolution process. Having considered the factual matrix, including the timings of restrictions and overlap between different orders, the Bench found the exclusion sought to be bona fide. Accordingly, the Tribunal excluded the periods 06.12.2020 to 02.01.2021 (27 days), 17.03.2021 to 30.04.2021 (44 days), 01.05.2021 to 31.05.2021 (30 days), and an additional non-overlapping portion 01.07.2021 to 05.07.2021 (5 days), from the CIRP period of the corporate debtor on account of the restrictions imposed during the Covid-19 pandemic. [Paras 9]

The specified lockdown/restriction periods are excluded from the CIRP period.

Replacement and confirmation of Resolution Professional and Form G time not excluded - Whether the intervening time taken for confirmation/replacement of the Resolution Professional and for extension of time for filing Form G is to be excluded from the CIRP period. - HELD THAT: - The Tribunal considered the applicant's request to exclude the time consumed in the process of replacement/confirmation of the Resolution Professional and the period associated with extension of time for filing Form G. The Bench held that such intervening time forms part of the statutory CIRP timeline and cannot be excluded merely on account of internal process-related events or extensions for Form G. Therefore, the exclusion sought for these specific intervals was rejected. [Paras 10]

Time taken for confirmation/replacement of the Resolution Professional and for extension of time for Form G is not excluded from the CIRP period.

Final Conclusion: The application is allowed in part: specified Covid-19 lockdown/restriction periods are excluded from the CIRP period as bona fide delays, while time taken for confirmation/replacement of the Resolution Professional and for extension of time for Form G is not excluded; I.A. 2824/2021 is disposed of accordingly.

Treatment of job work as exempted service - application of Rule 6(3) of the Cenvat Credit Rules, 2004 - liability of job worker versus ultimate manufacturer under Notification No. 214/86-CE (NT) - reversal/quantification of Cenvat credit on exempted services

Treatment of job work as exempted service - application of Rule 6(3) of the Cenvat Credit Rules, 2004 - liability of job worker versus ultimate manufacturer under Notification No. 214/86-CE (NT) - Whether the job work performed by the appellant is to be treated as an exempted service attracting reversal under Rule 6(3) and liability to pay 6% of the value of exempted service, or forms part of the manufacturing process such that the appellant is not liable to reverse Cenvat credit. - HELD THAT: - The Tribunal examined the effect of Notification No. 214/86-CE (NT) as amended and the proviso to Rule 6 of the Cenvat Credit Rules introduced by Notification No.13/2005. The notification regime excluded job workers from excise liability where the ultimate manufacturer discharges duty, and the 2005 amendment fixed responsibility on the manufacturer to comply with Rule 6; the proviso extending Cenvat benefits to job workers was not drafted so as to subject job workers to the obligations of Rule 6(3). The adjudicating authority's unappealed finding in a related case (M/s. Indus Ferro Tech Ltd.) that the processes undertaken by the job worker amounted to manufacture was noted and accepted. In that factual and legal matrix the Tribunal held that the appellant's activities formed part of the manufacturing process and were not services offered to the manufacturer; reliance placed by the Commissioner (Appeals) on precedents treating similar activity as exempted service (e.g., Hema Engineering) was distinguishable on the applicable notifications and factual picture. Having regard to consistent tribunal precedents cited and the department's non-appeal to the contrary finding, the demand under Rule 6(3) for reversal/quantification of credit, interest and penalty was unsustainable.

Appeal allowed; the order of the Commissioner (Appeals) confirming demand under Rule 6(3) is set aside and the appellant is exempted from liability to pay the amount, interest and penalty.

Final Conclusion: The Tribunal allowed the appeal, holding that the job work constituted part of the manufacturing process and not an exempted service under the facts and notifications considered, and accordingly set aside the demand, interest and penalty confirmed by the Commissioner (Appeals).

Admissibility of Cenvat credit on sales commission - right to claim refund within one year under section 11B of Central Excise Act, 1944 - reversal of Cenvat credit not under protest does not bar refund - finality of payment by reversal on audit objection

Right to claim refund within one year under section 11B of Central Excise Act, 1944 - reversal of Cenvat credit not under protest does not bar refund - Entitlement to refund of Cenvat credit reversed pursuant to audit objection where reversal was not made under protest - HELD THAT: - The Tribunal found that the appellant reversed Cenvat credit on the audit party's objection but did not record the reversal as being under protest. The Tribunal held that non recording of a protest at the time of reversal does not deprive the appellant of the statutory right to file a refund claim within the one year period prescribed by section 11B of the Central Excise Act, 1944. Consequently, the absence of an under protest notation alone is not a valid ground to reject a refund claim when the claim is otherwise filed within the statutory time limit. This reasoning is set out in the Tribunal's consideration of the entitlement and procedural requirements, reflecting that finality of a payment by reversal does not automatically preclude a timely statutory refund remedy. [Paras 4]

Refund claim could not be rejected solely because the reversal was not made under protest; appellant retained the right to file refund within one year under section 11B.

Admissibility of Cenvat credit on sales commission - finality of payment by reversal on audit objection - Whether Cenvat credit on sales commission is admissible - HELD THAT: - The Tribunal observed that the substantive question whether sales commission constitutes an admissible input service is presently sub judice before higher courts (the Gujarat High Court in Essar Steel India Ltd. and the Supreme Court in Cadila HealthCare Ltd.). Given those pending proceedings, the Tribunal refrained from deciding the merit of admissibility. Instead, it set aside the impugned order and remanded the matter to the adjudicating authority for fresh disposal after the higher courts have settled the legal position on admissibility of Cenvat credit on sales commission. The remand is therefore for the adjudicating authority to pass orders in accordance with the authoritative rulings to follow. [Paras 4, 5]

Merit on admissibility of Cenvat credit on sales commission is not decided and the matter is remanded to the adjudicating authority for fresh consideration after higher court decisions.

Final Conclusion: Impugned order set aside; appeal allowed by way of remand to the adjudicating authority to decide the refund claim in accordance with the law as settled by the Gujarat High Court and the Supreme Court on admissibility of Cenvat credit on sales commission, and with recognition that non protest reversal does not bar a timely refund under section 11B.

Attachment of personal property for company's tax liability - director's personal liability for company sales tax dues - criminal liability of directors for offences by companies - lifting the corporate veil - power to collect revenue as arrears by earmarking lien on land

Attachment of personal property for company's tax liability - director's personal liability for company sales tax dues - criminal liability of directors for offences by companies - lifting the corporate veil - Personal property of a director of a private limited company cannot be attached for recovery of sales tax dues of the company in the absence of any order fixing personal liability or factual foundation for lifting the corporate veil. - HELD THAT: - The Court held that the State did not contend that the property in question ever belonged to the company. Reliance on provisions creating criminal liability of directors for offences by companies does not, by itself, create personal civil liability to pay the company's sales tax dues or empower authorities to attach directors' personal properties. The doctrine of lifting the corporate veil is to be invoked only on a strong factual foundation and cannot be used lightly; where there is no specific order fastening liability on the directors nor factual findings warranting piercing the corporate veil, attachment of a director's private property for company's tax arrears is unsustainable. The Court placed reliance on earlier decisions of this High Court which reached the same conclusion and therefore found the respondents' reliance on criminal-liability provisions to be misconceived. [Paras 8]

Attachment of the petitioner's personal property for recovery of the company's sales tax dues was held to be contrary to law and illegal.

Power to collect revenue as arrears by earmarking lien on land - attachment of personal property for company's tax liability - The specific actions dated 17.05.2019 and 21.05.2019 by which respondents earmarked a lien on the petitioner's property and issued the show-cause notice were quashed and set aside. - HELD THAT: - Applying the legal principle that a director's personal property cannot be attached for company dues absent a finding fixing personal liability or grounds to lift the corporate veil, the Court concluded that the impugned orders were without foundation. Consequently, the administrative steps taken to earmark a lien and to proceed against the petitioner's property were set aside as contrary to the settled law relied upon by the Court.

The impugned order dated 17.05.2019 and the action dated 21.05.2019 were quashed and set aside.

Final Conclusion: The petition was allowed; the actions by respondents attaching a lien on the petitioner's personal property and the related show-cause notice were quashed and set aside, and the petition disposed of with no order as to costs.

Reasoned order - taxability of commodity - fact-based determination of classification - principles of precedence - alternate remedy rule - relegation to statutory appeal - Whirlpool exceptions

Reasoned order - taxability of commodity - fact-based determination of classification - Validity of the revisional order assessing tax on the sale described as 'Hans Chap Khaini' for the year 2010-11 - HELD THAT: - The High Court examined the impugned revision order and held that it is a reasoned order which went into the ingredients, processing and commercial character of the product sold under the brand name 'Hans Chap Khaini'. The court noted that whether the product qualifies as taxable tobacco turns on facts and that the revisional authority had considered precedent material and explained why the product is distinguishable from exempt items. Consequently, the court declined to interfere with the impugned order in writ jurisdiction since the order contains considered reasons and factual findings relevant to classification and taxability. [Paras 6, 8, 9]

Impugned revisional order upheld; no interference in writ jurisdiction with the factual classification and tax assessment for 2010-11.

Principles of precedence - fact-based determination of classification - Whether orders of higher authorities were disregarded by the revisional authority - HELD THAT: - The Court considered the contention that earlier orders were ignored and found that the revisional authority had adverted to higher court and tribunal decisions (including extraction from Kesarwani Zarda Bhandar) and had applied the legal principles to the material facts, distinguishing earlier orders to the extent they did not deal specifically with the branded product. The High Court held that higher authorities' principles were considered and appropriately distinguished on factual grounds rather than being disregarded. [Paras 8, 9, 11]

Earlier decisions were considered and distinguished; no merit in the contention that higher authorities were disregarded.

Alternate remedy rule - relegation to statutory appeal - Whirlpool exceptions - Maintainability of the writ petition in view of the availability of statutory appeal under the TNVAT Act - HELD THAT: - The Court applied the settled principle that availability of an effective statutory remedy in fiscal matters ordinarily bars exercise of writ jurisdiction unless exceptional circumstances exist (such as breach of fundamental rights, violation of natural justice, excess of jurisdiction or challenge to vires). After surveying binding authorities and recent precedents, the Court found that none of the Whirlpool exceptions were made out on the facts; personal hearings had been given and no breach of natural justice or jurisdictional excess was established. The matter being heavily fact-based, the Court held that the appropriate course is to relegate the petitioner to the appellate remedy under the statute. [Paras 13, 14, 16, 18]

Writ not maintainable; petition dismissed and petitioner relegated to file appeal under the statutory remedy for 2010-11.

Final Conclusion: Captioned writ petition dismissed; the revisional order for 2010-11 is not interfered with by the High Court on writ jurisdiction grounds and the petitioner is relegated to the statutory appeal remedy (Section 51) to challenge the assessment, the Appellate Authority to decide the appeal on merits uninfluenced by this order; no order as to costs.

Power to grant stay of collection of tax pending appeal - stay pending second appeal and jurisdictional limitation of subordinate authority - stay under Sub section (3) of Section 31 of the Andhra Pradesh Value Added Tax Act, 2005 - stay under Section 33(6) of the Andhra Pradesh Value Added Tax Act, 2005 - extraordinary writ jurisdiction under Article 226 of the Constitution of India to grant interim relief - interpretation of lease agreement and the control/dominion test for tax liability

Stay under Section 33(6) of the Andhra Pradesh Value Added Tax Act, 2005 - stay pending second appeal and jurisdictional limitation of subordinate authority - Whether the 2nd respondent had jurisdiction under Section 33(6) of the Act to order stay of collection of disputed tax where a second appeal is preferred against an order of the first appellate authority. - HELD THAT: - A plain reading of Section 33(6) shows that the power to order stay of collection of tax by the Additional Commissioner or Joint Commissioner is confined to appeals preferred against orders or proceedings recorded by a Deputy Commissioner under Section 21 or 32. In the present case the appeal before the Tribunal is a second appeal against an order passed by the first appellate authority under Section 31, and therefore the 2nd respondent did not have jurisdiction under Section 33(6) to entertain the stay application. The statutory scheme restricts the exercise of that specific power to the situations expressly contemplated in Section 33(6).

The 2nd respondent lacked jurisdiction under Section 33(6) to grant stay of collection of the disputed tax in respect of a second appeal against an order of the first appellate authority.

Stay under Sub section (3) of Section 31 of the Andhra Pradesh Value Added Tax Act, 2005 - extraordinary writ jurisdiction under Article 226 of the Constitution of India to grant interim relief - Whether the High Court, in exercise of its writ jurisdiction under Article 226, may order suspension of collection of the remainder of disputed tax pending disposal of a second appeal where no stay was granted in the first appeal and the appellant makes out a strong arguable case. - HELD THAT: - Sub section (3)(a)-(c) of Section 31 contemplates stays granted by the appellate authority and continuation of such stays where affirmed by the Additional Commissioner or Joint Commissioner; the Act is silent about cases where no stay was granted at first appeal or where stay was refused. There is no express prohibition against a court granting interim suspension of tax collection pending a second appeal. Where a litigant has a right to prefer a second appeal, denial of any effective interim relief could render that remedy infructuous and cause extreme prejudice. Accordingly, in suitable cases where a strong arguable case is shown, the High Court may, by exercise of its extraordinary writ jurisdiction under Article 226, direct suspension of collection of the remainder of the disputed tax subject to such terms and conditions as it considers appropriate.

The High Court may grant an interim suspension of collection of the remainder of disputed tax pending a second appeal where no stay was granted earlier and the appellant demonstrates a strong arguable case; such power is available under Article 226.

Interpretation of lease agreement and the control/dominion test for tax liability - power to grant stay of collection of tax pending appeal - Whether, on the facts of the present petition, the petitioner made out a strong arguable case warranting suspension of collection of the remainder of the disputed tax pending disposal of the second appeal. - HELD THAT: - The Court examined the factual matrix and found that interpretation of the lease agreement - specifically whether control and dominion over the buses lay with the petitioner so as to exclude liability under the relevant tax provision - required consideration in the second appeal. The correctness of tests applied in earlier decisions, relied upon by the revenue, was a matter to be examined on the merits by the Tribunal. On the material placed before it the Court was satisfied that the petitioner had shown a strong arguable case in appeal and that balance of equities favoured grant of interim relief.

Petitioner demonstrated a strong arguable case; the Court stayed collection of the remainder of the disputed tax pending disposal of the appeal.

Final Conclusion: The writ petition is disposed of by directing suspension of collection of the remainder of the disputed tax pending disposal of the second appeal: the 2nd respondent had no jurisdiction under Section 33(6) to grant stay in a second appeal, but the High Court under Article 226 may, in appropriate cases where a strong arguable case is shown, order suspension of collection; on the present facts such a stay was granted until the appeal is disposed of.

Pre-deposit for admission of appeal - high seas sale / sale in the course of import - re-verification of documents by assessing authority - exercise of discretion by tribunal in ordering pre-deposit - reduction of pre-deposit in view of bona fide transactions

Pre-deposit for admission of appeal - reduction of pre-deposit in view of bona fide transactions - exercise of discretion by tribunal in ordering pre-deposit - Validity and quantum of pre-deposit imposed by the VAT Tribunal for admission of the second appeal. - HELD THAT: - The Court examined the VAT Tribunal's insistence on a 20% pre-deposit for admission of the second appeal in light of the petitioner's contention that the transactions were high seas sales (sales in the course of import) and that documentary evidence had been produced or accepted in related assessment years. The Court noted that the First Appellate Authority had earlier directed re-verification of documents which had not been complied with by the Assessing Authority, and that the petitioner had presented justifiable grounds and bona fide transactions. In these circumstances the Tribunal ought to have taken those aspects into account before requiring a higher pre-deposit. Applying its discretion, the Court held that a reduced pre-deposit would be appropriate given the bona fide nature of the transactions and the need for verification rather than summary rejection. [Paras 5, 6, 7]

Pre-deposit for admission of the appeal reduced from 20% to 5%; petitioner directed to deposit the reduced amount within two weeks and the First Appellate Authority to proceed with the matter in accordance with law without being influenced by the impugned order.

Re-verification of documents by assessing authority - high seas sale / sale in the course of import - Direction as to further proceedings on verification of documents and continuation of appeal proceedings. - HELD THAT: - The Court directed that after the reduced pre-deposit is made, the First Appellate Authority shall proceed with the matter in accordance with law and carry out the required verification of documents, noting that the Assessing Authority had not complied with the earlier direction for re-verification. The order emphasizes that the appellate forum should consider the verification and not be influenced by the Tribunal's prior insistence on a higher pre-deposit. [Paras 6, 7]

First Appellate Authority to proceed with verification and hearing after the petitioner deposits the reduced pre-deposit; matter remitted for adjudication in accordance with law.

Final Conclusion: Writ petition disposed of by reducing the Tribunal's pre-deposit requirement to 5% in view of bona fide high seas sale transactions and non-compliance with earlier re-verification directions; petitioner directed to deposit the reduced amount within two weeks and the First Appellate Authority directed to proceed with verification and adjudication.

Concessional rate of tax - proviso to Section 6(1) - Rule 12C requirements - declaration in Form No.42 - shipping bill or similar document attested by port authorities - literal construction / golden rule of statutory interpretation

Proviso to Section 6(1) - Rule 12C requirements - concessional rate of tax - literal construction / golden rule of statutory interpretation - Interpretation and enforceability of the proviso to Section 6(1) read with Rule 12C - whether compliance with both Form No.42 and shipping-document requirements is mandatory for claiming the concessional rate of tax. - HELD THAT: - The Court held that the proviso to Section 6(1) grants a concessional rate of tax subject to conditions to be prescribed, and Rule 12C prescribes those conditions. Rule 12C requires (i) a declaration in Form No.42 signed and sealed by the buyer and (ii) a copy of the shipping bill or similar document duly attested by the port authorities, filed with the return, originals retained for verification. Applying the golden rule of literal construction, the Court refused to dilute or disregard express statutory and rule-based requirements merely on grounds of practical difficulty. The dealer's voluntary choice to sell at the concessional rate imports an obligation to establish entitlement by complying with the Rule's documentary prescriptions; non-production of the shipping document along with Form No.42 disentitles the dealer to the concession. The Court declined to follow the contrary view in the earlier Al Mahamood judgment to the extent it allowed the concession without the Rule 12C documentary requirements, and set aside the judgment under appeal for being inconsistent with the statutory text and Rule 12C's clear mandate. [Paras 6]

Rule 12C's requirements, including production of the shipping bill or similar document attested by port authorities together with Form No.42, are mandatory for claiming the concessional rate under the proviso to Section 6(1); the judgment under appeal is set aside to that extent.

Shipping bill or similar document attested by port authorities - declaration in Form No.42 - Procedure to be followed where requisite shipping documents were not produced before the Assessing Officer - availability of remedy and reassessment on production of evidence. - HELD THAT: - Recognising practical difficulties faced by dealers in obtaining port-attested shipping documents after assessment, the Court granted a limited remedial mechanism. Dealers who have furnished Form No.42 but lack the shipping-document proof are permitted to request the Administrator or buyer (enclosing a copy of this judgment) to furnish copies of shipping bills or best available evidence of shipment within specified timeframes. On receipt the dealer may place such proof before the Assessing Officer who is directed to reassess and pass orders in accordance with law having regard to the newly produced documents. Where dealers have already produced Form No.42 and utilisation certificates from the Union Territory authority, those documents may be considered under Rule 12C in reassessment. [Paras 6]

Dealers are granted liberty to obtain shipping documents from the Administrator/buyer and to place them before the Assessing Officer for reassessment; Assessing Officer to reassess in accordance with law on production of such documents.

Final Conclusion: The writ appeals are allowed: the proviso to Section 6(1) read with Rule 12C requires production of both Form No.42 and the shipping bill or similar port-attested document to claim the concessional rate; the contrary view in the judgment under appeal is set aside and dealers are given a limited remedy to procure and place shipping evidence for reassessment.

Genuineness of documentary evidence - rejection of photocopy in absence of original - assessment on the basis of rejected Form VAT 250 - availability of alternative efficacious remedy by appeal - direction to appellate authority to decide disputed facts afresh

Availability of alternative efficacious remedy by appeal - Maintainability of writ petitions in view of the statutory remedy of appeal. - HELD THAT: - The High Court held that the factual controversy - whether the photocopy of Form VAT 250 produced by the petitioner was genuine or fake - requires examination of evidence and cannot be finally resolved in writ proceedings. Because an appellate remedy before the Deputy Commissioner is available and is the appropriate forum to test the genuineness of the document and other attendant facts, the writ petitions were not the proper vehicle for adjudication on merits. The court therefore directed invocation of the statutory appellate process rather than deciding the disputed factual issue in exercise of writ jurisdiction. [Paras 6]

Writ petitions are not maintainable for adjudication of the disputed factual question and the petitioner must be relegated to the statutory appeal.

Genuineness of documentary evidence - rejection of photocopy in absence of original - direction to appellate authority to decide disputed facts afresh - Whether the assessment and consequential penalty orders should be set aside and the matter remitted for fresh consideration by the appellate authority to determine the genuineness of Form VAT 250. - HELD THAT: - The court observed that the assessing authority rejected the photocopy of Form VAT 250 on the ground that the seal and date did not belong to its office and that the original was not produced. Given that identical forms had been accepted for earlier assessment years, and because a conclusive factual determination on genuineness cannot be undertaken in writ jurisdiction, the court set aside the impugned assessment and penalty orders and directed the petitioner to file an appeal. The appellate Deputy Commissioner was directed to admit the appeal, afford the petitioner an opportunity to establish the genuineness of Form VAT 250, hear both parties and decide the matter in accordance with law expeditiously, within the time prescribed by the court. [Paras 6, 7]

Impugned assessment and penalty orders set aside; matter remitted to appellate authority to decide genuineness of Form VAT 250 after hearing, subject to the petitioner filing the statutory appeal within the time directed.

Final Conclusion: Writ petitions allowed; impugned assessment and penalty orders set aside. The petitioner is directed to file appeal before the appellate Deputy Commissioner within four weeks; the appellate authority shall admit the appeal, afford opportunity to prove the genuineness of Form VAT 250 and decide the appeal expeditiously but not later than three months from filing.