TaxTMI Updates e-Newsletter
Oct 22,2018

Agent - supplier - taxable person - exemption for services in relation to functions entrusted to a municipality under Article 243W - definition of "governmental authority" for exemption - Clause 5(b) of Schedule II (construction as supply of service) - Paragraph 5 of Schedule III (sale of land/building not supply) - transitional provisions in Section 142(10) and Section 142(11)(b)

Agent - supplier - taxable person - Liability of NBCC to pay GST when acting as executing/implementing agency and conducting sale of commercial built-up area on behalf of MoHUA - HELD THAT: - The Authority found that NBCC performs the construction and sale of commercial built-up area on behalf of MoHUA and thus falls within the statutory meaning of an "agent". The definition of "supplier" in the CGST Act expressly includes an agent acting on behalf of a supplier, and a "taxable person" includes persons required to be registered under sections 22/24; Explanation to Section 22 and clause (vii) of Section 24 bring agents supplying on behalf of other taxable persons within compulsory registration. On the combined reading of Sections 2(5), 2(105), 2(107), 22 and 24, NBCC is an agent, a supplier for the purposes of the Act and a taxable person required to be registered; accordingly, NBCC is liable to pay GST under Section 9(1) and to collect/deposit tax in respect of the taxable supplies it effects as agent even if it has no proprietary interest in the project. [Paras 77, 79, 82, 85, 88]

NBCC is liable to pay GST as it is an agent included in the definitions of "supplier" and "taxable person" and must discharge tax obligations under the CGST Act.

Exemption for services in relation to functions entrusted to a municipality under Article 243W - definition of "governmental authority" for exemption - Whether MoHUA is exempt from GST on sale of commercial built-up space as activity in relation to functions entrusted to a municipality under Article 243W - HELD THAT: - The Authority examined Notification No.12/2017 and its amendment (Notification No.14/2018) and the definition of "governmental authority" in the IGST Act. It concluded that the exemption at Sl. No.4 applied only where services are by entities carrying out functions entrusted to municipalities and, after amendment, limited to "governmental authority" as defined. MoHUA is not a Municipality under Articles 243P/243Q nor is it a "governmental authority" set up/established specifically to carry out functions entrusted to a municipality; the construction and sale of large commercial built-up areas for sale to business entities do not fall within the Twelfth Schedule entrustable functions for which the exemption is intended. Accordingly, the sale of commercial built-up space by MoHUA is not covered by Sl. No.4 (or Sl. No.6) of Notification No.12/2017 and is not exempted from GST. [Paras 91, 93, 95, 96, 114]

MoHUA is not exempt from GST in respect of the sale of the commercial built-up space; the Notification exemptions relied upon do not apply to MoHUA's activities in this project.

Transitional provisions in Section 142(10) and Section 142(11)(b) - Whether GST is payable on commercial built-up units where part consideration was received prior to 01.07.2017 and part on or after 01.07.2017 - HELD THAT: - The Authority noted Section 142(10) and the saving in Section 142(11)(b) which preserves liability to the extent tax was leviable/paid under the earlier Service Tax regime. Reliance on pre-GST service tax case law was found misplaced for determination under GST; the statutory transitional scheme and clarifications (FAQs) indicate that amounts on which service tax was leviable/paid prior to 01.07.2017 are not subject to GST, but remaining consideration relating to ongoing projects falling on or after 01.07.2017 attracts GST in accordance with the transitional provisions and point of taxation rules. Consequently, where service tax had been paid or was payable prior to the appointed day, GST will not be leviable to that extent; otherwise GST applies wef 01.07.2017. [Paras 115, 118, 121, 125]

Commercial built-up units are subject to GST wef 01.07.2017 except to the extent service tax was leviable/paid prior to that date as preserved by Section 142(11)(b).

Clause 5(b) of Schedule II (construction as supply of service) - Paragraph 5 of Schedule III (sale of land/building not supply) - Whether sale of constructed units in a building under construction is a supply attracting GST - HELD THAT: - The Authority analysed Schedule II(5)(b) which treats construction of a building/complex intended for sale as a supply of service except where entire consideration is received after issuance of completion certificate or after first occupation. The sale of built-up units in the present project is covered by Clause 5(b) because consideration is not received only after completion/first occupation; hence the activity constitutes a supply of service under GST. The Authority rejected the argument that Paragraph 5 of Schedule III (sale of land and sale of building in specified circumstances) renders the transaction outside GST: the exclusion in Schedule III applies where the entire consideration is received post-completion/first occupation, which is not the factual position here. [Paras 126, 128, 131, 132]

Sale of constructed units in the building under construction is a taxable supply of service under Clause 5(b) of Schedule II and attracts GST.

Final Conclusion: NBCC (India) Limited, acting as executing/implementing agent for MoHUA, is a taxable person and is liable to collect and pay GST on sale of commercial built-up area effected on behalf of MoHUA; MoHUA is not exempt from GST under the municipality related exemptions relied upon; supplies in respect of ongoing projects attract GST wef 01.07.2017 except to the extent service tax was leviable/paid prior to that date under the transitional provisions; and sale of units in the under construction commercial complex is a taxable service under Clause 5(b) of Schedule II of the CGST Act.

Classification under HSN 85443000 - HSN Explanatory Notes application for classification - Note 2 to Section XVII - exclusion of electrical machinery from "parts and accessories" of Chapter 87 - tariff entry allocation between Schedule III and Schedule IV of Notification No. 1/2017 - Central Tax (Rate) - temporal application of amended tariff entries on date of notification

Classification under HSN 85443000 - HSN Explanatory Notes application for classification - Note 2 to Section XVII - exclusion of electrical machinery from "parts and accessories" of Chapter 87 - Electrical Wiring Harness manufactured by the Applicant falls under HSN tariff item 85443000. - HELD THAT: - The Authority applied the rules for interpretation of the First Schedule to the Customs Tariff Act including the HSN Explanatory Notes. Chapter 85 covers insulated electric wire and assemblies and the Explanatory Notes state that wires remain classified in that heading even when cut to length or fitted with connectors at one or both ends and include wiring sets made up in sets for motor vehicles. Note 2 to Section XVII excludes electrical machinery or equipment (Chapter 85) from the expression "parts and accessories" of Chapter 87; accordingly, wiring sets of a kind used in vehicles are specifically classifiable under 85443000. The Authority also noted CBEC Circular 25/88 recognizing classification of wiring harnesses under 8544. Applying these principles to the Applicant's insulated wires, connectors and related components used in vehicle ABS, the product is classifiable under 85443000. [Paras 5]

Electrical Wiring Harness is classifiable under HSN 85443000.

Tariff entry allocation between Schedule III and Schedule IV of Notification No. 1/2017 - Central Tax (Rate) - temporal application of amended tariff entries on date of notification - Applicable rate: 14% CGST/14% SGST for the period 01.07.2017 to 14.11.2017; 9% CGST/9% SGST with effect from 15.11.2017. - HELD THAT: - Having fixed classification under 85443000, the Authority examined Notification No. 1/2017 entries. The description covering insulated wires and other insulated electric conductors fitted with connectors appeared at Sl. No.161 of Schedule IV of the Notification, attracting 14% CGST (and corresponding SGST), and thus applied to the Applicant's product for the period from 01.07.2017 to 14.11.2017. Notification No. 41/2017 (effective 15.11.2017) omitted the Schedule IV entry and modified Sl. No.395 of Schedule III to include insulated wire, cable and other insulated electric conductors (whether or not fitted with connectors), thereby attracting the reduced rate of 9% CGST (and corresponding SGST) from 15.11.2017 onward. The Authority therefore applied the rates to the product according to the effective dates of the respective notifications. [Paras 5, 6]

Product liable to 14% CGST/14% SGST from 01.07.2017 to 14.11.2017 and to 9% CGST/9% SGST with effect from 15.11.2017.

Final Conclusion: The Advance Ruling: the Applicant's Electrical Wiring Harness is classifiable under HSN 85443000; it was taxable at 14% CGST (and 14% SGST) for 01.07.2017 to 14.11.2017 and at 9% CGST (and 9% SGST) with effect from 15.11.2017.

Summary order. The application for advance ruling filed by M/s. Sodexo Food Solutions India Private Limited is dismissed as withdrawn.

Classification of sacks and bags used for packing of goods under Chapter 63 - HSN 63053300 (sacks and bags of man-made textile materials of polyethylene or polypropylene strip or the like) - application of First Schedule to the Customs Tariff Act for tariff interpretation - rate of tax for made-up textile articles of sale value not exceeding Rs. 1000 per piece - application of Notification No. 1/2017-C.T.(Rate) to determine GST rate

Classification of sacks and bags used for packing of goods under Chapter 63 - HSN 63053300 (sacks and bags of man-made textile materials of polyethylene or polypropylene strip or the like) - application of First Schedule to the Customs Tariff Act for tariff interpretation - Non woven fabric rice bags manufactured by the applicant are classifiable under HSN 63053300. - HELD THAT: - Applying the rules for interpretation of the First Schedule to the Customs Tariff Act, including chapter and heading notes and the Explanatory Notes to Chapter 63, the product falls within the description of "sacks and bags, of a kind used for the packing of goods" and, being made of polypropylene non woven fabric, is classifiable as "of polyethylene or polypropylene strip or the like" under the tariff item corresponding to 63053300. The finding is based on the material composition (100% polypropylene non woven fabric), the manufacturing process (cutting, printing and stitching into packing bags) and the intended use (packing rice and food products), which bring the goods squarely within the heading 63.05 and the sub heading applicable to man made textile materials. [Paras 4]

The non woven fabric rice bags are classifiable under HSN 63053300.

Rate of tax for made-up textile articles of sale value not exceeding Rs. 1000 per piece - application of Notification No. 1/2017-C.T.(Rate) to determine GST rate - The applicable GST rate for the applicant's non woven rice bags (each of sale value not exceeding Rs. 1000) is 2.5% CGST and 2.5% SGST. - HELD THAT: - Having classified the goods under Chapter/Heading 63 as "Other made up textile articles," the provisions of Notification No. 1/2017 C.T.(Rate) (Schedule I, Sl. No. 224) apply. That item prescribes a concessional rate for "other made up textile articles" where the sale value does not exceed Rs. 1000 per piece. The applicant has produced invoices and stated that the goods are sold below Rs. 1000 each; accordingly the concessional rate in Schedule I applies and results in 2.5% CGST and 2.5% SGST as the respective central and state components. [Paras 4, 5]

For pieces of value not exceeding Rs. 1000 each, the applicable rate is 2.5% CGST and 2.5% SGST.

Final Conclusion: The Authority rules that the applicant's non woven rice/packing bags are classifiable under HSN 63053300 and, since each piece is sold for less than Rs. 1000, the applicable tax is 2.5% CGST and 2.5% SGST in terms of Schedule I of Notification No. 1/2017 C.T.(Rate) and the corresponding State notification.

Input tax credit - Eligibility and conditions for taking input tax credit under Section 16 - Restrictions on input tax credit under Section 17(5) - Time limit for availing credit under Section 16(4) - Supply - Real estate brokerage services as input to renting of immovable property

Input tax credit - Eligibility and conditions for taking input tax credit under Section 16 - Restrictions on input tax credit under Section 17(5) - Real estate brokerage services as input to renting of immovable property - Admissibility of input tax credit of CGST and SGST charged by M/s. Catalyst Consulting for brokerage services relating to letting out the applicant's property. - HELD THAT: - The advance ruling authority recorded that Catalyst Consulting rendered brokerage services for identifying a lessee, charged GST on the invoice and the inward supply is reflected in the applicant's GSTR-2A. Brokerage for arranging rent is a supply and constitutes real estate brokerage services which facilitated the applicant's outward supply of renting of immovable property. Under the definition of "input tax" and subject to statutory conditions, input tax credit is available where the inward supply is used in the course or furtherance of business. The Authority found that the brokerage service is not covered by the exceptions listed in Section 17(5) and therefore is not per se ineligible. Availability of credit remains subject to the conditions and restrictions contained in Sections 16, 17 and 18 (including possession of tax invoice, receipt of supply, tax having been paid by the supplier, return filing and time limits prescribed under Section 16(4)), which the applicant must satisfy before availing the credit.

The applicant is eligible to take input tax credit of CGST and SGST charged by M/s. Catalyst Consulting for the brokerage invoice dated 20.12.2017, subject to compliance with the conditions and restrictions in Sections 16, 17 and 18 of the CGST and SGST Acts.

Final Conclusion: The Authority ruled that input tax credit on the brokerage charges paid to Catalyst Consulting is admissible, provided the applicant meets the statutory conditions and time limits under Sections 16, 17 and 18 of the CGST and SGST Acts.

Classification of goods - interpretation of HSN Chapter 5305 - application of Notification No. 01/2017 - C.T. (Rate) - exemption under Notification No. 02/2017-C.T. (Rate)

Classification of goods - interpretation of HSN Chapter 5305 - application of Notification No. 01/2017 - C.T. (Rate) - exemption under Notification No. 02/2017-C.T. (Rate) - Taxability and classification of raw coir pith supplied in loose powder or compressed blocks by the applicant. - HELD THAT: - The Authority examined the nature and commercial form of the product supplied by the applicant and the First Schedule to the Customs Tariff (Chapter Heading 5305). Coir pith as produced by the applicant is the non-fibrous, spongy material separated from coconut husk and supplied either as loose dust or compressed into blocks/briquettes without addition of chemicals. This product is distinct from coir fibre and corresponds to the description in Heading 53050040. The applicable GST rates and exemptions are governed by Notification No. 01/2017 - C.T. (Rate) and Notification No. 02/2017-C.T. (Rate) as amended. The exemption list initially covered only "coir fibre"; subsequently, an exemption was inserted for "coir pith compost" subject to conditions (brand/packaging). The coir pith supplied by the applicant is not composted nor subject to the brand/packaging conditions for exemption. Therefore it does not fall within the exempt entries and is covered by Sl. No. 215 of Schedule I to Notification No. 01/2017 - C.T. (Rate) (Chapter 5305 to 5308), attracting the concessional rate provided therein. [Paras 4, 5]

Coir pith in raw form (loose powder or compressed blocks/briquettes) supplied by the applicant is classifiable under Heading 53050040 and taxable at 2.5% CGST and 2.5% SGST as per Sl. No. 215 of Schedule I to Notification No. 01/2017 - C.T. (Rate) dated 28.06.2017, as amended.

Final Conclusion: The advance ruling holds that coir pith in its raw form supplied by the applicant is not exempt and is taxable at 2.5% CGST and 2.5% SGST, being classifiable under Heading 53050040.

Classification of goods - Interpretation of tariff headings, chapter notes and Section Notes of the First Schedule to the Customs Tariff Act - Articles of plastics not elsewhere specified - Agricultural implements - Applicability of GST rate based on tariff classification

Classification of goods - Articles of plastics not elsewhere specified - Agricultural implements - Interpretation of tariff headings, chapter notes and Section Notes of the First Schedule to the Customs Tariff Act - Applicability of GST rate based on tariff classification - Agricultural Seedling Trays made of plastic are classifiable under CTH 39269099 and attract 9% CGST and 9% SGST. - HELD THAT: - The trays are made wholly of plastic (polypropylene) and do not possess any working edge, blade or other working part of base metal or metal carbides required for classification in Chapter 82 (Section XV). Section and Chapter Notes show Chapter 82 applies to articles of base metal, and 'base metals' do not include plastics. The trays are used for growing and transporting seedlings but are not parts or accessories of agricultural machinery and are not integral to machine functioning. Chapter 39 covers plastics and articles thereof; heading 3926 covers other articles of plastics not elsewhere specified. On the product description and catalogue evidence the trays fall within tariff heading 3926 and are properly classified under CTH 39269099 as "other articles of plastics". Schedule entries to the Notification on rates then apply to that classification, bringing the product within the entry providing 9% CGST and 9% SGST.

Agricultural Seedling Trays made of plastic are classifiable under CTH 39269099 and taxable at 9% CGST and 9% SGST.

Final Conclusion: The Advance Ruling holds that the Applicant's plastic Agricultural Seedling Trays are "other articles of plastics" classifiable under CTH 39269099 and the applicable tax rate is 9% CGST and 9% SGST as per the relevant entries in the Notifications on rates.

Place of supply of services under Section 12(7) of the IGST Act - place of supply to a registered person is location of the recipient - inter-state supply of services - applicability of IGST - services ancillary to organisation of events - advance ruling on place of supply

Place of supply of services under Section 12(7) of the IGST Act - place of supply to a registered person is location of the recipient - inter-state supply of services - applicability of IGST - Event management support services provided in Goa to a recipient registered in Maharashtra fall under Section 12(7)(i) of the IGST Act and are taxable as inter-state supplies with IGST applicable. - HELD THAT: - The applicant supplies event management services and related ancillary services for film shootings in Goa to a recipient registered in Maharashtra. Section 12(7) treats services by way of organisation of events and services ancillary thereto such that, when supplied to a registered person, the place of supply is the location of that person. Applying this provision, the place of supply is the recipient's location in Maharashtra despite the services being performed in Goa. Consequently, the supply is to be treated as an inter-state supply and taxable under IGST. The Authority, exercising its power to give an advance ruling on the place of supply, applied Section 12(7)(i) and concluded IGST is attracted.

The services are governed by Section 12(7)(i) of the IGST Act, constitute inter-state supply and IGST at the applicable rate is chargeable.

Final Conclusion: Advance Ruling: Event management support services provided in Goa to a registered person in Maharashtra are governed by Section 12(7)(i) of the IGST Act, treated as inter-state supply and subject to IGST.

Composite supply - principal supply - works contract - immovable property - permanence test - marketability test - classification under Entry 234 of Schedule I of Notification No.1/2017 - Integrated Tax (Rate)

Composite supply - principal supply - Entry 234 of Schedule I of Notification No.1/2017 - Integrated Tax (Rate) - Whether the turnkey EPC contract for setting up a solar power generating system is a composite supply with PV modules as the principal supply and therefore taxable at 5% under Entry 234. - HELD THAT: - The Authority examined the factual and contractual matrix and held that the applicant's transactions are composite turnkey EPC contracts involving planning, design, procurement, civil works, erection, testing, commissioning and final acceptance for a functional solar power plant for onward supply of electricity. Such contracts have a single lump-sum consideration and the contractor retains responsibility and risk until successful testing and final acceptance. Entry 234 is an entry in the rate notification dealing with goods; it applies where the transaction is purely supply of goods. Given the comprehensive nature of the turnkey EPC contract and the attendant civil works and site-specific installation that create an element of permanency, the contract is not merely a bundled supply of goods with ancillary services but a works contract service. Accordingly, the concept of a principal supply in a composite goods supply does not arise to attract the goods rate under Entry 234. The Authority applied the permanence/immovability and marketability considerations relied upon in precedents to conclude that the completed plant and the nature of obligations under the EPC contract impart an inherent element of permanency and preclude classification as mere supply of goods covered by Entry 234.

Turnkey EPC contract is a works contract (supply of services) and not a composite supply with PV modules as principal supply; Entry 234 is not applicable.

Works contract - immovable property - permanence test - marketability test - Whether the EPC contract falls within the definition of 'works contract' and thereby attracts tax as a supply of services at the rates applicable to works contract services. - HELD THAT: - Having found that the contract requires site-specific civil works, erection, testing and commissioning and results in a tailor-made functional solar power plant that cannot be shifted without dismantling, the Authority concluded that the transaction results in a works contract for purposes of the GST law. The Authority relied on the permanence/immovability and marketability tests from judicial precedents to determine that the nature of the deliverable and contractual obligations point to a service classified as a works contract. Consequently the contract is taxable under the works contract service entry (SAC 9954) and not under goods rate entries.

EPC turnkey contract is a works contract service and taxable as such under SAC 9954.

Applicable tax rate - Notification No.11/2017 Central Tax (Rate) - Applicable rate of tax on the EPC turnkey works contract. - HELD THAT: - Since the EPC turnkey contract has been held to be a works contract (supply of services) and Entry 234 (goods rate) is inapplicable, the Authority applied the notifications governing works contract services. The contract therefore attracts the rate prescribed for works contract services under the relevant notifications, namely IGST at 18% (corresponding to CGST and SGST at 9% each).

Turnkey EPC works contract attracts tax at 18% IGST (or 9% CGST + 9% SGST) under the works contract service entry.

Final Conclusion: The Advance Ruling holds that the turnkey EPC contract for setting up a solar power generating system is a works contract (supply of services) and not a composite supply with PV modules as the principal supply; Entry 234 of Notification No.1/2017 (goods at 5%) does not apply. The contract is taxable as works contract services (SAC 9954) at 18% IGST (9% CGST + 9% SGST).

Classification of refractory materials - HSN 3816 - preparations for refractory linings containing refractory binder - Classification of crushed quartz/powder - Application of GST rates by tariff classification

Classification of refractory materials - HSN 3816 - preparations for refractory linings containing refractory binder - Application of GST rates by tariff classification - Classification and applicable GST rate on Ramming Mass used in lining of induction furnaces. - HELD THAT: - The Authority found that the applicant manufactures Ramming Mass by mixing quartz granules with a minor proportion of boric acid (approximately 0.8% to 2%), the boric acid acting as a binding/refractory binder to produce a refractory material for furnace linings. On these facts the product qualifies as a refractory preparation containing a refractory binder and is therefore classifiable under HSN 3816. The Authority noted consistent industry practice and relied upon the explanatory scope of heading 3816 and relevant CBEC tariff conference discussion dealing with silica ramming mass to support classification. Consequently the applicable GST rate follows the tariff classification under HSN 3816.

Ramming Mass is classifiable under HSN 3816 and attracts 18% GST (9% CGST + 9% SGST).

Classification of crushed quartz/powder - Application of GST rates by tariff classification - Classification and applicable GST rate on crushed quartz stones (quartz powder) when not containing boric acid or other refractory binder. - HELD THAT: - The Authority held that crushed or powdered quartz obtained by crushing quartz stones, when supplied without addition of a refractory binder, does not qualify as a refractory preparation under heading 3816. Such crushed quartz/powder is therefore classifiable under the appropriate mineral goods heading and taxed according to that classification. The Authority recorded the CBEC conference position distinguishing unbound quartz/quartzite powders from ramming masses that contain refractory binders.

Crushed quartz powder falls under HSN 2806 and attracts 5% GST (2.5% CGST + 2.5% SGST).

Final Conclusion: The Advance Ruling admits the applicant's facts and rules that Ramming Mass containing boric acid as refractory binder is classifiable under HSN 3816 attracting 18% GST, whereas crushed quartz powder without binder is classifiable under HSN 2806 and attracts 5% GST.

Treatment or process applied to another person's goods - job work - classification of supply as goods or services - HSN 8707 vs HSN 9988 - applicability of 18% GST to fabrication as service

Treatment or process applied to another person's goods - job work - classification of supply as goods or services - HSN 9988 - applicability of 18% GST to fabrication as service - Whether building and mounting of bus body on chassis supplied by the principal under FOC challan is a supply of service liable to GST under HSN 9988 at 18% - HELD THAT: - The chassis are owned by the principal and are sent to the applicant under FOC delivery challans. Sectional definitions treat any treatment or process undertaken on another person's goods as job work and Schedule II (para 3) specifies that such treatment or process is a supply of service. Reliance on the principle in Prestige Engineering that additions by a job worker do not alter the character of the principal's goods supports treating the activity as service where the principal retains ownership of the chassis. The fact that the job worker uses some of its own inputs does not change the nature of the transaction into a supply of goods; GST law recognises inputs and intermediate goods without distinguishing raw, semi-finished or finished goods for this purpose. The Authority distinguished two situations: (a) where the body builder uses its own chassis and supplies a complete bus (a supply of goods, taxable at 28%); and (b) where the builder fabricates on chassis provided by the principal, charging fabrication/fabrication-plus-materials as job work (a supply of service). Applying these principles to the facts where the chassis remain the principal's property and are returned after body building, the activity is a supply of service under HSN 9988 and attracts 18% GST.

Building and mounting of the body on chassis provided by the principal under FOC challan is a supply of service under HSN 9988 and is taxable at 18% GST.

Final Conclusion: The Authority rules that where the chassis remain the property of the principal and are provided under FOC challan for fabrication, the applicant's activity of building and mounting the body is a job-work/service falling under HSN 9988 and attracts GST at 18%; distinct factual situations where the builder supplies a complete bus using its own chassis would be treated as supply of goods.

Vires of rules prescribing time limit for filing revised Form GST TRAN-1 - allowing filing of revised Form GST TRAN-1 to carry forward CENVAT credit - technical portal glitches affecting filing on GST portal - discretion of Commissioner to grant extension for filing TRAN-1

Vires of rules prescribing time limit for filing revised Form GST TRAN-1 - Challenge to the validity of the provisions prescribing the time limit for filing revised Form GST TRAN-1 insofar as they are said to be ultra vires Section 140 of the CGST Act. - HELD THAT: - The petitioners' challenge to the vires of the statutory provisions prescribing the time limit for filing revised TRAN-1 was terminated by this Court in view of the detailed earlier judgment delivered in Willowood Chemicals Pvt. Ltd. & another v. Union of India and others dated 12/19.09.2018. The Court rejected the challenge to the validity of those provisions in the context of the time limits provided therein, and accordingly the present challenge to the vires stood concluded.

The challenge to the vires of the time-limit provisions for filing revised Form TRAN-1 is rejected in accordance with the earlier decision.

Allowing filing of revised Form GST TRAN-1 to carry forward CENVAT credit - technical portal glitches affecting filing on GST portal - discretion of Commissioner to grant extension for filing TRAN-1 - Request for direction permitting the petitioners to file a revised TRAN-1 to carry forward the leftover CENVAT credit allegedly omitted due to typographical error and unsuccessful correction attempts caused by portal issues. - HELD THAT: - The Court examined the factual contention that the petitioners filed TRAN-1 showing leftover CENVAT credit but, by oversight, entered 'Nil' in the field for CENVAT credit admissible as ITC and that attempts to correct the declaration before the extended deadline of 27.12.2017 were unsuccessful due to system/portal issues despite contacting the GST helpdesk. The Court observed that the extended time up to 27.12.2017 would prima facie cover typographical corrections to an already filed declaration and that the facts may fall within situations where an assessee was unable to file the correct declaration owing to technical glitches on the official portal. The Court further noted that Commissioners are empowered to grant extensions up to 31.03.2019 for such purposes. Given these observations and the factual aspects requiring further consideration, the Court did not finally adjudicate the prayer for allowing revised filing but issued notice and directed further proceedings.

Matter is not finally decided; notice issued and the factual/legal claim for permitting revised filing in view of typographical error and portal failures is to be considered further by the respondents (proceedings directed).

Final Conclusion: The challenge to the validity of the time-limit provisions for filing revised TRAN-1 is rejected in view of the earlier decision; the petitioners' claim for permission to file a revised TRAN-1 on grounds of a typographical error and unsuccessful correction attempts due to portal glitches is not finally decided and is directed to be considered after notice.

Reopening of assessment - Change of opinion - Section 145A-valuation of inventory and inclusion of unutilized CENVAT credit - Section 147-income escaping assessment - Explanation 1 to section 147-failure to disclose material facts - Notice under section 148

Section 145A-valuation of inventory and inclusion of unutilized CENVAT credit - Reopening of assessment - Change of opinion - Section 147-income escaping assessment - Notice under section 148 - Explanation 1 to section 147-failure to disclose material facts - Validity of the notice issued under section 148 read with section 147 to reopen assessment on the ground that unutilized CENVAT credit should have been included in closing stock under section 145A. - HELD THAT: - The Assessing Officer sought reopening on the basis that unutilized CENVAT credit was not included in closing stock and that, therefore, income had escaped assessment under section 147; reasons recorded relied on section 145A. The record shows the valuation methodology and the treatment of unutilized CENVAT credit were examined during original assessment: multiple specific queries were raised, the assessee replied, and the Assessing Officer passed the assessment order making only limited disallowance in respect of unutilized CENVAT credit. In these circumstances a re-examination of the same issue would amount to a mere change of opinion, which the courts have held is not a permissible basis for reopening. Separately, the Assessing Officer issued the notice after the four-year period and relied on the material already available on record; there was no sufficient finding that material facts were not truly and fully disclosed such as would invoke Explanation 1 to section 147. For these reasons the reassessment notice was held to be unsustainable and liable to be quashed. [Paras 7, 8, 9, 10, 11]

Impugned notice under section 148 read with section 147 is quashed and the petition is allowed.

Final Conclusion: The High Court set aside the reopening notice issued for AY 2011-12-holding that the issue of inclusion of unutilized CENVAT credit in closing stock had been considered in the original assessment so that reopening would amount to change of opinion, and that there was no valid failure of disclosure warranting reassessment; petition allowed.

Disallowance under Section 14A in relation to income not includable in total income - application of Rule 8D formula subject to Assessing Officer's satisfaction - mixed funds principle - availability of surplus interest-free funds - incidental receipt of tax-free dividend versus dominant commercial purpose (Maxopp)

Disallowance under Section 14A in relation to income not includable in total income - application of Rule 8D formula subject to Assessing Officer's satisfaction - mixed funds principle - availability of surplus interest-free funds - Whether the disallowance under Section 14A read with Rule 8D rightly limited to the amount attributable to earning tax free income in assessment year 2008-09. - HELD THAT: - The Tribunal's finding that the assessee had not diverted interest bearing funds for making the tax free investments and that sufficient surplus interest free funds were available was a factual conclusion justified on the record. Rule 8D(2)'s formula may be applied only after the Assessing Officer is not satisfied with the correctness of the assessee's claim under Rule 8D(1); the requirement of the Assessing Officer's satisfaction is a precondition to automatic application of the formula. Prior decisions applying the principle that availability of surplus interest free funds negates disallowance under Section 14A were correctly followed. On these bases the Tribunal's restriction of disallowance to the amount attributable to such activity was upheld. [Paras 10, 11, 12, 13]

Tribunal's restriction of the disallowance to the attributable amount was upheld and the Revenue's appeal dismissed.

Incidental receipt of tax-free dividend versus dominant commercial purpose (Maxopp) - application of Rule 8D formula subject to Assessing Officer's satisfaction - Whether the Supreme Court decision in Maxopp Investment Ltd. mandates automatic application of Rule 8D where mixed funds exist or otherwise alters the requirement of Assessing Officer's satisfaction. - HELD THAT: - The Supreme Court in Maxopp addressed primarily the situation where shares were acquired to gain control and generated tax free dividends; it held that purpose being control did not avoid Section 14A disallowance where exempt income was generated. However, the judgment does not obliterate the prerequisite in Rule 8D(1) that the Assessing Officer must be dissatisfied with the assessee's claim before invoking the formula in Rule 8D(2). Maxopp therefore does not fundamentally change the Court's prior approach that mixed funds alone do not automatically trigger disallowance where factual findings show availability of surplus interest free funds. [Paras 16, 17]

Maxopp does not remove the Assessing Officer's satisfaction requirement under Rule 8D; it does not change the established approach in the present facts.

Final Conclusion: The Tax Appeals are dismissed; the Tribunal's restriction of disallowance under Section 14A read with Rule 8D for assessment year 2008-09 is affirmed and the Revenue's reliance on Maxopp Investment Ltd. does not warrant a different result.

Mandamus to extend due date for filing income-tax returns - extension of due date for filing Income Tax Return of tax-audit cases - levy of interest under Section 234-A for delayed filing of income-tax returns

Mandamus to extend due date for filing income-tax returns - extension of due date for filing Income Tax Return of tax-audit cases - Prayer for a mandamus directing respondents to extend the due date for filing income-tax returns in tax-audit cases - HELD THAT: - The petitioner sought a writ of mandamus compelling respondents to extend the due date for filing income-tax returns in tax-audit cases from 15.10.2018 to at least 31.10.2018. The Court recorded that the Central Board of Direct Taxes had already issued an order on 08.10.2018 extending the filing date up to 31.10.2018, thereby rendering the first prayer of the petitioner infructuous. Consequently, there is no longer any live relief for the Court to grant in respect of that specific prayer.

Prayer for mandamus to extend the due date is dismissed as having lost efficacy in view of the CBDT order dated 08.10.2018 extending the filing date to 31.10.2018.

Levy of interest under Section 234-A for delayed filing of income-tax returns - Claim that interest under Section 234-A continues to be levied despite the extension of the filing date - HELD THAT: - The petitioner submitted that although the due date for filing returns was extended, the impugned order dated 24.09.2018 had not been amended to relax or withdraw the levy of interest under Section 234-A, causing prejudice. The Court did not adjudicate this contention on the merits. Instead, the Court directed respondents to file a counter-affidavit addressing the grievance and permitted the petitioner to file a rejoinder, thereby leaving the substantive question of the applicability or waiver of interest under Section 234-A open for determination after pleadings are filed.

Respondents granted four weeks to file a counter-affidavit on the question of levy/continuance of interest under Section 234-A; rejoinder, if any, to be filed within two weeks thereafter; matter listed thereafter for further consideration.

Final Conclusion: The petitioner's primary prayer for extension of the return-filing date is rendered academic by the CBDT order of 08.10.2018; the separate grievance regarding levy of interest under Section 234-A remains undecided and has been directed to be addressed by respondents in a counter-affidavit, with opportunity for rejoinder and further listing.

Approval under Section 10(23C)(vi) - genuineness of activities - effect of defective dissolution clause on charitable status - relevance of Section 13(3) for Section 10(23C)(vi) - judicial review of Tribunal's direction to grant approval

Approval under Section 10(23C)(vi) - genuineness of activities - Whether the Tribunal was justified in directing grant of approval under Section 10(23C)(vi) to the society. - HELD THAT: - The Court held that the Tribunal correctly allowed the appeal and directed grant of approval because the Chief Commissioner did not take any adverse view on the genuineness of the society's educational activities. The objects and functioning, including running an affiliated nursing college, brought the society within clause (vi) and nothing on record showed any change in facts since the assessment in A.Y. 2012-13 where the Assessing Officer had found the society to exist solely for educational purposes. The second proviso to Section 10(23C) permits the prescribed authority to call for documents to satisfy itself about genuineness, and there was no finding of lack of genuineness here; consequently the Tribunal's direction was in consonance with Section 10(23C)(vi). [Paras 15, 16, 18, 20]

Tribunal's direction to grant approval under Section 10(23C)(vi) was sustained and not interfered with.

Effect of defective dissolution clause on charitable status - relevance of Section 13(3) for Section 10(23C)(vi) - Whether the presence of clause 18 (dissolution clause vesting properties with office-bearers) justified denial of approval on the ground that funds might be misutilised and office-bearers would benefit within Section 13(3). - HELD THAT: - The Court agreed with the Tribunal that speculative future benefit to persons covered by Section 13(3) does not impugn the genuineness of the society's activities and therefore is not a ground to deny approval under Section 10(23C)(vi). The Court observed that Section 13 is relevant to exemption under Section 11 and is not directly relevant for grant of exemption under Section 10(23C)(vi). The CCIT's conclusion was based on surmise without any definite basis that misuse would occur; such eventuality could not justify rejecting approval where activities are bona fide educational. [Paras 7, 8, 15, 17, 18]

Defective dissolution clause and possible benefit to office-bearers under Section 13(3) did not justify denial of approval under Section 10(23C)(vi).

Judicial review of Tribunal's direction to grant approval - Whether the Tribunal's order was contrary to the evidence or perverse, warranting interference by the High Court. - HELD THAT: - The Court found no perversity or error in the Tribunal's conclusions. The Tribunal had examined the materials, including the assessment record for A.Y. 2012-13, noted absence of any adverse finding on genuineness, and concluded that the CCIT's reason for refusal could not be sustained. Reliance on an unrelated proposition from IILM Foundation Academy did not assist the revenue because that case concerned whether ancillary non-charitable objects could negate an otherwise charitable institution-a question not arising here. Consequently, the High Court declined to interfere with the Tribunal's factual and legal conclusion. [Paras 16, 19, 20, 21, 22]

No interference with the Tribunal's order; appeal dismissed as no substantial question of law arises.

Final Conclusion: The High Court dismissed the revenue's appeal, upholding the Tribunal's direction to grant approval under Section 10(23C)(vi) because there was no adverse finding on the genuineness of the society's educational activities, speculative consequences of the dissolution clause could not defeat approval, and Section 13(3) considerations are not determinative for Section 10(23C)(vi).

Disallowance of business expenditure - deduction under Section 37(1) r.w. Section 40A(2)(b) - proof of genuineness of expenditure - burden of proof on the assessee - reliability of books of account - independent verification from third parties - tax deduction at source (TDS) and payment by cheque not conclusive - absence of substantial question of law

Disallowance of business expenditure - deduction under Section 37(1) r.w. Section 40A(2)(b) - proof of genuineness of expenditure - burden of proof on the assessee - reliability of books of account - tax deduction at source (TDS) and payment by cheque not conclusive - independent verification from third parties - Whether the disallowance of 50% of commission payments claimed as business expenditure was sustainable. - HELD THAT: - The Court upheld the concurrent factual findings of the Assessing Officer, the Commissioner (Appeals) and the Tribunal that the assessee failed to establish the genuineness and business purpose of the commission payments. The assessee could not produce comprehensive records of students (claiming a crashed hard disk), produced only 21 of 43 payees for verification, and the payees who appeared could not identify even a single student they had referred. Given the absence of necessary details (such as students' names and addresses), independent verification by the A.O. was not practicable. The authorities also noted payments to close relatives and multiple members of the same families, which, together with the lack of corroborative contemporaneous entries, cast doubt on the expenditure. The Court further observed that mere payment by cheque and deduction of TDS did not, without more, discharge the assessee's obligation to prove that the payments were incurred for business considerations; reliance on TDS/cheque evidence alone is insufficient where prima facie the business purpose is unproved. In these circumstances, the limited disallowance of 50% of the commission claimed was not shown to be perverse or contrary to law and did not warrant interference. [Paras 11, 12, 13, 15, 16]

Concurrent factual findings upholding disallowance of 50% of commission payments are sustained; appeal dismissed on merits.

Final Conclusion: The High Court dismissed the appeal, holding that the revenue authorities' concurrent findings that the assessee failed to prove the genuineness and business purpose of the commission payments were unimpeachable; no substantial question of law arises.

Expenditure incurred in relation to income not includible in total income - Applicability of Section 14A in absence of exempt income - Disallowance under Section 14A - Binding effect of CBDT circulars vis-a -vis judicial pronouncements

Applicability of Section 14A in absence of exempt income - Disallowance under Section 14A - Section 14A cannot be invoked for disallowance in a year in which no exempt income has been earned. - HELD THAT: - The Tribunal and this High Court followed the view in Lakhani Marketing and other High Court decisions that Section 14A is not attracted where there is no receipt of exempt income in the relevant assessment year. The court observed that the revenue relied on a CBDT circular to contend otherwise but the factual matrix showed no exempt income for the year and the Tribunal rightly deleted the disallowance. The High Court found no illegality or perversity in the Tribunal's conclusion and upheld the deletion of the Section 14A disallowance. [Paras 11, 12, 13]

Deletion of disallowance under Section 14A was upheld; Section 14A not attracted in the year when no exempt income was earned.

Binding effect of CBDT circulars vis-a -vis judicial pronouncements - Expenditure incurred in relation to income not includible in total income - CBDT Circular No.5/2014 cannot be applied to override judicial decisions holding that Section 14A is not attracted in the absence of exempt income. - HELD THAT: - Relying on the Supreme Court's dictum that executive circulars represent administrative understanding and are not binding on courts, the High Court noted precedent that a circular inconsistent with judicial interpretation cannot displace the court's declaration of law. The Tribunal correctly rejected the submission that the CBDT circular compelled disallowance in a year with no exempt income. The High Court found no error in the Tribunal declining to give effect to the circular to reach a result contrary to judicial decisions. [Paras 10, 11, 13]

The CBDT circular could not be used to sustain a Section 14A disallowance in the absence of exempt income; the Tribunal's reliance on judicial precedent was justified.

Final Conclusion: The appeal is dismissed. The High Court upheld the Tribunal's deletion of the Section 14A disallowance on the ground that Section 14A is not attracted in a year where no exempt income was earned and rejected the contention that the CBDT circular could override that judicial position.

Exclusive method of accounting and tax neutrality under Section 145A - reimbursement payments and non deduction of TDS vis a vis Section 40(a)(ia) - allowability of amortisation/depreciation of leasehold land as deductible expense - deduction under Section 80G in case of demerged division and verification of prior claim - deduction of preliminary/pre incorporation expenses under Section 35D - depreciation on goodwill arising on demerger and effect of appointed date - application of CBDT circular on monetary threshold for Revenue appeals - computation of disallowance for exempt income under Section 14A and Rule 8D - disallowance of employees' statutory contributions in light of jurisdictional High Court precedents

Exclusive method of accounting and tax neutrality under Section 145A - Whether unutilised CENVAT/excise element must be included in closing stock under Section 145A despite assessee following exclusive method of accounting - HELD THAT: - The Tribunal accepted the CIT(A)'s conclusion that where the assessee follows an exclusive method of accounting consistently so that taxes and duties embedded in purchases and sales are accounted for separately and the method is revenue neutral, enhancement of closing stock by adding unutilised CENVAT/excise element under Section 145A is not warranted. In parity with binding precedents relied upon by the assessee and on facts showing that a substantial part of the disputed CENVAT related to capital goods and input services not caught by Section 145A, the addition was deleted and the Revenue's appeals on this point were dismissed. [Paras 7, 8, 34, 35, 60]

Addition under Section 145A deleted; Revenue's appeals on this issue dismissed.

Reimbursement payments and non deduction of TDS vis a vis Section 40(a)(ia) - Whether payments characterised as reimbursements to a related party attract disallowance under Section 40(a)(ia) for failure to deduct TDS - HELD THAT: - The Tribunal upheld the CIT(A)'s deletion of the addition under Section 40(a)(ia) on the ground that the payments to the third party were reimbursements of actual expenses without any income element; therefore, there was no obligation to deduct tax at source. The Tribunal relied on jurisdictional decisions holding that mere reimbursements do not attract TDS obligation and declined to interfere with the deletion. [Paras 9, 10]

Addition under Section 40(a)(ia) deleted; Revenue's ground dismissed.

Allowability of amortisation/depreciation of leasehold land as deductible expense - Whether amortisation written off in respect of long term leasehold land is allowable as deduction - HELD THAT: - Treating amortisation as the allocation of asset cost over time (akin to depreciation), the Tribunal sustained the CIT(A)'s deletion of the disallowance in favour of the assessee. The Tribunal accepted the approach adopted by the CIT(A) and followed the relevant High Court decision relied upon by the assessee, finding no infirmity in allowing amortisation/depreciation of leasehold land. [Paras 13, 36, 37, 58, 76]

Disallowance of amortisation/depreciation of leasehold land deleted; Revenue's grounds dismissed.

Deduction under Section 80G in case of demerged division and verification of prior claim - Whether a resulting (post demerger) company can claim Section 80G deduction for a donation paid prior to merger by a division of the transferor company - HELD THAT: - The Tribunal found no rationale for denying the deduction solely because Adani Energy Ltd. continued to exist and only a division had merged into the assessee. The Tribunal allowed the assessee's claim subject to verification by the AO whether the demerged entity has already availed the deduction; if the assessee proves to the AO's satisfaction that no deduction was claimed earlier, the AO shall allow the deduction after verifying receipts in accordance with law. [Paras 16, 17]

Cross objection allowed for statistical purposes; deduction to be allowed by AO after verification whether the demerged company has claimed the deduction.

Deduction of preliminary/pre incorporation expenses under Section 35D - Whether preliminary/pre incorporation expenses are allowable under Section 35D by amortisation - HELD THAT: - The Tribunal, following orders in the assessee's earlier years and coordinate bench decisions, allowed the claims for deduction under Section 35D across the assessment years in question. Where the identical issue had been decided in favour of the assessee for earlier years, subsequent years were adjudicated consistently in the assessee's favour and the disallowances were deleted. [Paras 19, 29, 50, 64, 65]

Disallowances under Section 35D deleted; assessee entitled to deduction by amortisation as held in earlier years.

Depreciation on goodwill arising on demerger and effect of appointed date - Whether depreciation on goodwill arising on sanctioned demerger is allowable from the appointed date or from the effective/sanction date and the quantification thereof - HELD THAT: - The Tribunal accepted that the demerger scheme had an appointed date earlier than sanction, but held that the assessee could raise additional claims in appeal/cross objection and that the claim for depreciation ought to be admitted. The Tribunal allowed the assessee to claim depreciation to the extent worked out by the AO for AY 2009 10 (as an additional ground) and directed recalculation consistent with admitted facts; for later years the Tribunal adjusted outcomes - some excess claims became infructuous where relief had been granted in earlier years and the net quantification was settled by applying the AO's computations and admissions. The Tribunal therefore allowed the additional ground and granted relief to the assessee to the extent quantified by the Tribunal's reasoning. [Paras 22, 27, 28, 54, 55]

Additional ground on depreciation of goodwill allowed; entitlement to depreciation recognised and quantification to be given effect as per Tribunal's directions and admitted computations.

Application of CBDT circular on monetary threshold for Revenue appeals - Whether Revenue's appeal is required to be dismissed in limine under the CBDT circular revising monetary thresholds for preferring appeals - HELD THAT: - The Tribunal accepted the assessee's submission about applicability of CBDT Circular No.3 of 2018 revising thresholds and the Revenue's concession on applicability. Consequently, the Revenue's appeal for the relevant year was dismissed as not maintainable subject to restoration if the Revenue could show inapplicability of the circular. [Paras 40, 41, 42]

Revenue's appeal dismissed as not maintainable under the CBDT circular; liberty to Revenue to seek restoration on showing inapplicability.

Computation of disallowance for exempt income under Section 14A and Rule 8D - disallowance of employees' statutory contributions in light of jurisdictional High Court precedents - Validity of disallowance under Section 14A r.w. Rule 8D and disallowance of employees' statutory contributions (ESI/Provident Fund) - HELD THAT: - On Section 14A/Rule 8D, the Tribunal upheld the CIT(A)'s deletion of proportionate interest disallowance after accounting for interest free funds and interest income, but sustained the confirmed disallowance of administrative expenditure under Rule 8D(2)(iii). As to employees' statutory contributions, the Tribunal followed the jurisdictional High Court precedent (CIT v. GSRTC) and decided the issue against the assessee where applicable. [Paras 66, 69, 70, 71, 72]

Proportionate interest disallowance under Rule 8D deleted; administrative expenditure disallowance under Rule 8D(2)(iii) upheld; disallowance of certain employees' statutory contributions upheld in accordance with jurisdictional precedent.

Final Conclusion: All Revenue appeals across AYs 2009 10 to 2013 14 were dismissed. The assessee's appeals and cross objections were partly allowed: deductions for preliminary expenses under Section 35D and amortisation of leasehold land were allowed; additional grounds permitting depreciation on goodwill arising from the demerger were admitted and relief granted subject to quantification as directed; Section 80G deduction claimed for a donation by a demerged division was allowed subject to AO's verification that the demerged entity did not earlier claim the deduction; certain disallowances under Rule 8D(2)(iii) and statutory employee contributions were sustained as indicated.

Condonation of delay - sufficient cause - discretion of the appellate authority to admit a belated appeal - reckoning limitation from actual receipt of certified copy of order - preferment of substantial justice over technicalities

Condonation of delay - sufficient cause - discretion of the appellate authority to admit a belated appeal - reckoning limitation from actual receipt of certified copy of order - preferment of substantial justice over technicalities - Whether the CIT(A) was justified in refusing to condone the delay in filing appeals and in dismissing the appeals in limine - HELD THAT: - The Tribunal held that Section 249(3) vests the CIT(A) with discretion to admit an appeal after the prescribed period if satisfied that the assessee had sufficient cause for not presenting it within the period specified under Section 249(2). The assessee's case was that it had undergone acute financial distress, had practically closed down business, had properties taken over by the lender and power disconnected, and that the assessment/penalty orders were not in its possession until certified copies were obtained from the AO on 07.04.2015; the appeals were filed on 23.04.2015. The Tribunal found no mala fides or culpable negligence on the part of the assessee and accepted that the circumstances explained the delay. Applying the established principles that a rigid, pedantic approach is to be avoided and that substantial justice should be preferred to technicalities, and having regard to authorities relied upon in the order [Improvement Trust Vs. Ujagar Singh], [Bombay Mercantile Co-op. Bank vs. CBDT], [Vithhal Dhondiba Chawan vs. Madhav Rao] and the guiding principles in Collector of Land Acquisition vs. Mst. Katiji , the Tribunal concluded that the assessee had sufficiently discharged the burden to show sufficient cause. The Tribunal therefore directed that the CIT(A) should condone the delay and admit the appeals for adjudication on merits and remanded the matters to the CIT(A) for de novo adjudication after giving the assessee a fair opportunity. [Paras 7, 8, 10]

Delay in filing the appeals is condoned; the appeals are restored to the file of the CIT(A) for de novo adjudication on merits.

Final Conclusion: The appeals are allowed for statistical purposes; the CIT(A) is directed to condone the delay and to decide the appeals afresh on merits after affording the assessee a fair opportunity.

Unexplained investment - source of funds - agricultural income as source - cash deposits in bank account - short term advances / loans - interest income on loans - addition to income

Unexplained investment - source of funds - agricultural income as source - cash deposits in bank account - Deletion of addition treated as undisclosed investment amounting to Rs. 4,65,024/- - HELD THAT: - Tribunal found that the assessee had an opening bank balance and declared agricultural income for the year and had been regularly earning agricultural income in preceding years. There was no material on record to show receipt of cash from unexplained sources other than agriculture income. Given the opening balance, current year agricultural receipts and accumulated funds, the cash deposits and alleged undisclosed investment of Rs. 4,65,024/- were satisfactorily explained as having source in agricultural income and existing funds. Accordingly the addition on account of undisclosed investment was deleted. [Paras 8, 9]

Addition of Rs. 4,65,024/- as undisclosed investment deleted.

Short term advances / loans - interest income on loans - addition to income - Confirmation of addition of interest income of Rs. 55,803/- on alleged money lending activity - HELD THAT: - Records showed multiple short term advances to about 19 persons for periods up to 12 months. The assessee did not offer a plausible explanation for advancing amounts without charging interest. On this basis the Assessing Officer's computation of interest income on the alleged unaccounted advances was upheld. The Tribunal found no reason to interfere with the lower authorities' finding on interest income. [Paras 9]

Addition of interest income of Rs. 55,803/- confirmed.

Final Conclusion: Appeal partly allowed: addition on account of undisclosed investment deleted while the addition on account of interest income is confirmed; appeal otherwise dismissed.

Additions on account of unrecorded sales - search under section 132 and notice under section 153C - credit for amounts reflected in books by cheque - presumption of unrecorded purchases to explain unrecorded sales - burden of proof to establish unaccounted purchases

Additions on account of unrecorded sales - credit for amounts reflected in books by cheque - burden of proof to establish unaccounted purchases - Validity of addition of Rs. 24,18,393/- (balance of seized sale of Rs. 49,18,393/-) for AY 2012-13 after allowing credit for cheque receipt of Rs. 25,00,000/-. - HELD THAT: - Seized material showed sales of Rs. 49,18,393/- to M/s. Sri Lakshmi Constructions, of which Rs. 25,00,000/- was reflected by cheque in the assessee's books and accepted by the CIT(A). The assessee claimed the balance as cash receipts corresponding to unrecorded purchases paid to suppliers and sought computation by applying gross profit rate. The Assessing Officer disbelieved the explanation and made addition of the entire amount. The Tribunal upheld the CIT(A)'s allowance of the cheque amount but rejected the assessee's contention in respect of the cash portion because the assessee failed to furnish details or evidence of unaccounted purchases or their sources and did not prove that purchases corresponding to the unrecorded sales were made outside the books. In absence of proof, the method of allowing only a GP-based computation was not acceptable and the addition in respect of the unrecorded cash sales was sustained. [Paras 8]

Addition of Rs. 24,18,393/- sustained for AY 2012-13 and the appeal is dismissed.

Additions on account of unrecorded sales - presumption of unrecorded purchases to explain unrecorded sales - reliance on earlier identical decision - Validity of addition of Rs. 9,31,737/- for AY 2014-15 where facts and explanation mirrored AY 2012-13. - HELD THAT: - The facts and the assessee's explanation for AY 2014-15 were similar to those considered and decided in AY 2012-13. Having dismissed the assessee's contention in the earlier year for failure to substantiate unaccounted purchases, the Tribunal applied the same reasoning and concluded that no fresh basis existed to disturb the addition for AY 2014-15. Accordingly, the appeal for this year was dismissed following the decision in the earlier assessment year. [Paras 9]

Addition of Rs. 9,31,737/- sustained for AY 2014-15 and the appeal is dismissed.

Final Conclusion: Both appeals are dismissed: the CIT(A)'s credit to the cheque receipt was maintained but the additions in respect of unrecorded cash sales were upheld for Assessment Years 2012-13 and 2014-15.

Treatment of long term capital gains as bogus - addition under section 68 as unexplained cash credit - addition under section 69C as unexplained expenditure - genuineness of share transactions arising from court approved amalgamation - inadmissibility of adverse inference based solely on surrounding circumstances without legal evidence - reliance on tribunal precedent for deletion of additions

Treatment of long term capital gains as bogus - addition under section 68 as unexplained cash credit - addition under section 69C as unexplained expenditure - genuineness of share transactions arising from court approved amalgamation - Deletion of additions made by the Assessing Officer under section 68 and section 69C in respect of long term capital gains claimed on sale of shares. - HELD THAT: - The Tribunal found that the Assessing Officer's rejection of the assessees' claim of exemption for long term capital gain was based on conjecture, surrounding circumstances and third party statements which were not supported by legal evidence or cross examination. The shares in question were received pursuant to a scheme of amalgamation approved by the High Court and were held in dematerialised form. The assessees produced bills, contract notes, demat statements and bank account records to substantiate the purchase and sale transactions. The material relied upon by the AO and upheld by the CIT(A), including SEBI orders and investigation wing statements, did not name or directly implicate the assessees or their broker and therefore did not constitute direct evidence against them. Following the Division Bench decision in Manish Kumar Baid & Mahendra Kumar Baid, where similar additions were deleted for lack of direct evidence and for impermissible reliance on surrounding circumstances, the Tribunal held that there was no basis to assess the sale proceeds as unexplained income under section 68 or to treat alleged commission payments as unexplained expenditure under section 69C. Consequential additions were therefore deleted. [Paras 4, 5, 6]

Additions under section 68 and section 69C were deleted and the appeals allowed.

Final Conclusion: Following the Division Bench precedent and on the facts that the transactions were supported by documentary evidence and arose from a court approved amalgamation, the Tribunal deleted the additions made under section 68 and section 69C and allowed the appeals.

Deduction under section 80IB(10) - Requirement of project completion certificate - Prospective operation of amendment to clause (d) w.e.f. 01-04-2005 - Vested rights - Deemed grant of occupancy under municipal law

Deduction under section 80IB(10) - Prospective operation of amendment to clause (d) w.e.f. 01-04-2005 - Vested rights - Claim for deduction under section 80IB(10) for A.Y 2007-08 cannot be denied merely because the project completion certificate was not furnished where the housing project was approved before the amendment and work commenced prior to 01-04-2005. - HELD THAT: - The Tribunal applied the principle that the amendment introducing clause (d) with effect from 01-04-2005 operates prospectively and cannot deprive developers of benefits they had a right to expect when projects were sanctioned and commenced under the law prevailing prior to that date. Following the reasoning in the cited Supreme Court authority approving the High Court, the assessee's planning and commencement in accordance with pre-amendment approvals gave rise to vested rights which cannot be negatived by the subsequent amendment. The coordinate-bench decision in the assessee's own earlier years (paras 10-15) was held to be directly applicable and persuasive for the assessment year before the Tribunal. [Paras 5]

Deduction under section 80IB(10) is allowable for A.Y 2007-08 despite non-production of the project completion certificate, on the stated factual and legal footing.

Requirement of project completion certificate - Deemed grant of occupancy under municipal law - Non-issuance of a formal completion certificate by local authorities does not disentitle the assessee to deduction where municipal law provides for deemed grant of occupancy/permission on lapse of statutory time and the assessee had completed the project. - HELD THAT: - The Tribunal examined the municipal provision and observed that under the relevant municipal statute the Commissioner's failure to refuse permission within the stipulated period operates as deemed grant of permission/occupancy. Given the factual finding that the project was completed by 31-03-2008 and that the assessee had sought necessary approvals, the absence of a physical completion certificate issued by local authorities could not be made a ground to deny the statutory deduction. This municipal-law consequence reinforced the conclusion drawn from vested-rights and prospective-amendment principles. [Paras 6, 7]

Deemed grant of occupancy under municipal law and the factual completion of the project sustain the assessee's entitlement to deduction under section 80IB(10).

Final Conclusion: The Tribunal allowed the appeal and granted the deduction under section 80IB(10) for A.Y 2007-08, holding that the post-2005 amendment cannot defeat vested rights of projects approved and commenced earlier and that the municipal law consequences of deemed occupancy substantiate the assessee's entitlement.

Rectification/recall of Tribunal order for apparent mistake - Disallowance under section 36(1)(iii) - interest on borrowed capital - Balance-sheet test / utilization of own funds vis-a -vis advances - Deletion of addition where own funds exceed non-business advances - Binding precedent of the jurisdictional High Court

Rectification/recall of Tribunal order for apparent mistake - Whether the Tribunal's order should be rectified/ recalled for failure to adjudicate Grounds No.2 and No.3. - HELD THAT: - The miscellaneous application challenged an apparent omission in the Tribunal's order whereby Grounds No.2 and No.3 of the revenue's appeal were not adjudicated. The assessee's representative conceded the omission and both parties agreed the omitted grounds related to the same common issue. The Tribunal examined the record and proceeded to rectify the order by deciding the omitted grounds in the MA itself, treating the omission as an apparent mistake warranting rectification. [Paras 2, 3, 5, 6]

The omission was an apparent mistake; the Tribunal rectified its order by adjudicating Grounds No.2 and No.3 in the MA and modified the earlier order accordingly.

Disallowance under section 36(1)(iii) - interest on borrowed capital - Balance-sheet test / utilization of own funds vis-a -vis advances - Deletion of addition where own funds exceed non-business advances - Binding precedent of the jurisdictional High Court - Whether the addition made by the AO under section 36(1)(iii) in respect of interest on interest-free advances to staff was justified. - HELD THAT: - On the merits the Tribunal considered the balance sheet and loan & advances and observed that the assessee's own funds exceeded the advances made to staff. Applying the principle that interest paid on borrowed capital is deductible only when borrowed funds are utilized for business (and continue to be so), the Tribunal found no justification for disallowance in respect of staff advances which were covered by the assessee's own funds. The Tribunal respectfully followed the ratio of the jurisdictional High Court as laid down in the cited decisions and held that the addition was not sustainable. [Paras 4, 5, 6]

Grounds No.2 and No.3 are decided against the revenue; the disallowance under section 36(1)(iii) in respect of staff advances is deleted.

Final Conclusion: The miscellaneous application is dismissed; the Tribunal's order in ITA No.365/Mum/2016 for assessment year 2011-12 is modified to adjudicate and decide Grounds No.2 and No.3 in favour of the assessee, deleting the disallowance under section 36(1)(iii).

Penalty under section 272A(2)(k) for delayed filing of TDS returns - reasonable cause for delay - teething problems in transition to e-filing / technological glitches - no penalty where TDS was deposited timely

Penalty under section 272A(2)(k) for delayed filing of TDS returns - reasonable cause for delay - teething problems in transition to e-filing / technological glitches - no penalty where TDS was deposited timely - Whether penalty under section 272A(2)(k) could be levied for late filing of quarterly TDS returns when TDS was deposited on time but returns were delayed due to difficulties in the newly introduced e-filing system. - HELD THAT: - The Tribunal found as a fact that there was no delay in deposit of TDS but there was delay in filing quarterly TDS returns. The relevant period coincided with the transitional phase when filing of TDS returns moved from paper to mandatory e-filing by amendment to the Rules, and assessees faced difficulties in e-filing. The Tribunal noted consistent judicial and quasi-judicial recognition of initial technological glitches in the e-filing software, including observations of High Courts and coordinate benches, which had held that such hardships could constitute reasonable cause and preclude levy of penalty. Applying those authorities and the facts that the assessee deposited TDS timely and experienced e-filing problems, the Tribunal concluded that the delay was attributable to reasonable cause and that penalty under section 272A(2)(k) should not have been imposed. [Paras 7, 8, 9]

Penalty levied for late filing of quarterly TDS returns deleted; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, deleted the penalty imposed under section 272A(2)(k) for late filing of the specified quarterly TDS returns (relating to 2009-10), holding that difficulties in the transition to e-filing and timely deposit of TDS constituted reasonable cause against imposition of penalty.

Deduction under section 80P(2) - registration under Karnataka Souharda Sahakari Act versus Karnataka Co-operative Societies Act - entitlement to deduction dependent on statutory registration as a co-operative society - conversion between a co-operative and a co-operative society

Deduction under section 80P(2) - registration under Karnataka Souharda Sahakari Act versus Karnataka Co-operative Societies Act - entitlement to deduction dependent on statutory registration as a co-operative society - Whether the assessee is entitled to deduction under section 80P(2) in view of its registration under the Karnataka Souharda Sahakari Act - HELD THAT: - The Tribunal held that the question of eligibility for deduction under section 80P(2) turns on whether the assessee is a "co-operative society" as contemplated by section 80P, which in turn depends on its statutory registration. The Tribunal observed that the Karnataka Souharda Sahakari Act and the Karnataka Co-operative Societies Act are distinct statutes that separately define and register "co-operatives" and "co-operative societies", although conversion between the two is possible under statutory provisions. The argument that the assessee is registered only under the Souharda Act and not under the Co-operative Societies Act was a legal point going to the root of entitlement and could not be ignored despite being raised at a late stage. In view of a recent Tribunal order in a similar matter (Udaya Souharda Credit Co-operative Society Limited), the Tribunal found it necessary to remit the matter to the Assessing Officer for verification of the registration status and the consequences thereof, and for a reasoned adjudication on whether the assessee qualifies for deduction under section 80P(2). The Tribunal therefore set aside the order of the CIT(A) and directed the AO to re-examine and decide the claim after necessary enquiry and investigation, rather than deciding the claim on merits at the Tribunal stage. [Paras 7, 8]

Order of CIT(A) set aside and matter restored to the Assessing Officer to determine, after verification and enquiry, whether the assessee is entitled to deduction under section 80P(2).

Final Conclusion: Appeal allowed for statistical purposes; matter remitted to the Assessing Officer for fresh adjudication on eligibility for deduction under section 80P(2) in light of registration under the Karnataka Souharda Sahakari Act and the distinctions with the Karnataka Co-operative Societies Act.

Classification of imported goods - maintainability of writ petition - remedy under the Customs Act - show-cause notice and personal hearing - speaking order - adjudication on merits - levy of IGST under SI.No.453 of Schedule III of Notification No.01/2017

Classification of imported goods - maintainability of writ petition - remedy under the Customs Act - The classification dispute raised by the petitioner is not amenable to adjudication in a writ petition and must be pursued under the statutory remedy provided by the Customs Act. - HELD THAT: - The court recorded that the petitioner challenged the assessment of Bills of Entry on the ground of classification of goods but held that such classification disputes cannot be decided in a writ petition. The petitioner was directed to seek relief by invoking the remedy available under the Customs Act rather than by writ jurisdiction. This conclusion follows the court's view that the appropriate forum and procedure for contesting classification and related assessments is the statutory adjudicatory mechanism prescribed under customs law. [Paras 2, 3]

Writ petition on the classification dispute is not maintainable; petitioner must pursue remedy under the Customs Act.

Show-cause notice and personal hearing - speaking order - adjudication on merits - levy of IGST under SI.No.453 of Schedule III of Notification No.01/2017 - Direction to respondents to issue a show-cause notice, afford personal hearing and pass a speaking order on the levy of IGST under the specified entry, with stipulated timelines for notice and adjudication. - HELD THAT: - Noting the written instruction that the Bills of Entry were assessed to impose IGST under the specified entry, the court held that the petitioner must be given an opportunity to contest that decision and that a speaking order is necessary for effective contest. The court directed the second respondent to issue a show-cause notice within two weeks from receipt of the order, afford personal hearing to the petitioner, and complete adjudication on merits as early as possible and in any event within four weeks from the date the petitioner files its reply to the notice. The direction was given in view of the high value and nature of the imported medical and diagnostic equipment and to ensure timely adjudication. [Paras 4, 5]

Respondent directed to issue show-cause notice, afford personal hearing and pass a speaking order on merits within the prescribed timelines.

Final Conclusion: Writ petitions disposed: classification challenge is not maintainable in writ jurisdiction and must be pursued under the Customs Act; respondents directed to issue show-cause notice, grant personal hearing and pass a speaking order on the IGST levy within specified short timelines; no costs.

Classification of separate chemically defined organic compounds versus pesticides - exclusion from Chapter 29 by virtue of goods "put up" as described in Heading 38.08 - interpretive weight of Chapter and HSN Notes in tariff classification - classification of technical/bulk pesticide concentrates under Heading 3808 - precedential application of Union of India v. Pesticides Mfg. & Formulators Association of India

Classification of separate chemically defined organic compounds versus pesticides - exclusion from Chapter 29 by virtue of goods "put up" as described in Heading 38.08 - classification of technical/bulk pesticide concentrates under Heading 3808 - interpretive weight of Chapter and HSN Notes in tariff classification - precedential application of Union of India v. Pesticides Mfg. & Formulators Association of India - Imported Rynaxypyr Tech (Chlorantraniliprole, technical, ~93% purity) is not classifiable under Chapter 29 but is covered by Heading 3808 of Chapter 38. - HELD THAT: - The Tribunal considered the Chapter 29 and Chapter 38 Notes and corresponding HSN notes and examined expert reports identifying the imported material as chlorantraniliprole technical. The core question was whether a chemically defined organic compound in bulk technical/concentrate form falls within Chapter 29 or is excluded and classifiable under Heading 3808. The Tribunal applied the interpretive scheme of chapter and HSN notes and relied on the decision of the Apex Court in Union of India v. Pesticides Mfg. & Formulators Association of India, which held that insecticides and pesticides in concentrated/bulk form are includible within Heading 38.08 and that Chapter Notes and HSN usage support coverage of bulk concentrates by 38.08. The Tribunal noted that the Apex Court examined chapter notes, rules of interpretation and HSN entries and found that Chapter 38 encompasses pesticides in concentrated/bulk forms for classification purposes. The absence of an identical Note 2 in the Customs Tariff did not warrant departing from the Apex Court's reasoning, and the ordinary/chemical definitions of "compound" did not create an error in that precedent. Applying that ratio, the product imported in bulk technical form is classifiable under Heading 3808 and not under Chapter 29.

Appeal dismissed; classification under Heading 3808 upheld and demand sustained.

Final Conclusion: The Tribunal affirmed that Rynaxypyr Tech (chlorantraniliprole technical) imported in bulk/concentrate form is classifiable under Heading 3808 (Chapter 38) and not under Chapter 29; relying on the Apex Court's decision in Pesticides Mfg. & Formulators Association of India, the appeal is dismissed.

Validity of share transfer under the Articles of Association - coercion and undue influence in execution of share transfer forms - compliance with presentation and stamping requirements under Section 108(1A) of the Companies Act, 1956 - evidentiary value of minutes and statutory minute-keeping requirements - qualification shares for continuance as director - locus to maintain a company petition

Validity of share transfer under the Articles of Association - compliance with presentation and stamping requirements under Section 108(1A) of the Companies Act, 1956 - coercion and undue influence in execution of share transfer forms - The purported transfers of the petitioner's shares (dated 27.04.2011) were invalid and were set aside. - HELD THAT: - The Tribunal accepted that the transfer forms had presentation dates stamped in November 2010 but were acted upon much later and thus did not meet the temporal requirements of Section 108(1A) for delivery/acceptance. The impugned minutes and other records relied upon to validate the transfers were shown to be unreliable, unsatisfactory and prima facie recorded by bodies that were not lawfully constituted. The pleadings and the affidavit filed in the civil suit disclosed an atmosphere of pressure and intervention by an outsider which, taken with the inconsistent and suspicious documentary trail, supported the finding of coercion/undue influence in obtaining the petitioner's signature on the transfer forms. On these bases the NCLT's conclusion that the transfers were contrary to the Articles and the Companies Act and were to be set aside was affirmed. [Paras 16, 17, 18, 19, 20]

Transfers of the petitioner's shares were declared invalid and set aside.

Locus to maintain a company petition - qualification shares for continuance as director - The petitioner retained locus to maintain the company petition and was entitled to relief. - HELD THAT: - The Court accepted the NCLT's approach that the question whether the petitioner had ceased to be a shareholder was a mixed question of fact and law requiring examination of original minutes and statutory records. Given the deficiencies and suspicions surrounding the minutes and filings relied upon by respondents, the High Court's and NCLT's view that the petitioner's locus required fresh consideration was upheld. The conclusion that petitioner satisfied the threshold under the Companies Act and Articles (including the requirement of holding qualification shares) for maintaining the petition was affirmed. [Paras 9, 13, 19, 20]

Petitioner has locus to maintain the company petition and relief was rightly granted.

Evidentiary value of minutes and statutory minute-keeping requirements - The minutes and records produced by respondents lacked requisite authenticity and evidentiary value and could not be relied upon to validate transfers or managerial decisions. - HELD THAT: - Consistent with earlier High Court observations, the minutes were casually maintained (e.g., on unnumbered 'Classmate' notebook pages) and did not meet the statutory safeguards for minute-keeping; further, the minutes exhibited internal inconsistencies and shifting stands by respondents about the nature of meetings (Meezan Group meetings versus company board meetings). On this basis the Tribunal and this Court found the minutes unreliable and insufficient to support the asserted transfers and changes in management. [Paras 6, 16, 17, 18, 19]

The minutes and records were held to be unreliable and insufficiently authentic for the respondents' case.

Effect of invalid filings under company's digital signature - Filings made under the digital signature of Respondent No.2 after 27.04.2011 were declared null and void and ROC was directed to examine records. - HELD THAT: - The NCLT had declared the documents filed under Respondent No.2's digital signature after 27.04.2011 null and void, and this Court found no reason to interfere. The Court additionally directed the Registrar of Companies to verify whether statutory records and returns were being properly maintained and to take suitable action if deficiencies were found. [Paras 7, 20, 21]

Post-27.04.2011 filings under Respondent No.2's digital signature were set aside and ROC directed to verify records.

Final Conclusion: The appeal is dismissed; the NCLT's order setting aside the share transfers, restoring the petitioner as Managing Director and declaring the post-transfer filings under Respondent No.2's digital signature null and void is affirmed. Registrar of Companies is directed to verify statutory records; each appellant is ordered to pay costs to the petitioner.

Operability of Section 127J bar on reopening settled matters - requirement of specific and intelligible show cause notice - need for independent investigation under FEMA before initiating proceedings - burden to corroborate allegations of unauthorised foreign exchange transactions - legal effect of settlement by the Settlement Commission on subsequent proceedings

Legal effect of settlement by the Settlement Commission on subsequent proceedings - operability of Section 127J bar on reopening settled matters - Whether initiation of enforcement proceedings under FEMA based solely on the DRI case, after the matter had been settled and closed by the Settlement Commission, was permissible. - HELD THAT: - The Tribunal held that once the Customs matter was finally settled by the Settlement Commission and the order attained finality, the same subject-matter could not be reopened in proceedings under another enactment. Proceeding on the basis of the DRI record without independent inquiry was impermissible because the Settlement Commission's order closed the question and bars reopening under the statutory mandate embodied in the provision preventing relitigation of matters covered by such orders. Reliance by the Enforcement Directorate exclusively on documents and findings from the DRI proceeding, which had been the subject of settlement, rendered the FEMA adjudication wrongful and vulnerable to being set aside. [Paras 16, 17]

Proceedings under FEMA initiated on the basis of the settled Customs case were barred and such proceedings could not be sustained; the penalty order was set aside.

Requirement of specific and intelligible show cause notice - need for independent investigation under FEMA before initiating proceedings - burden to corroborate allegations of unauthorised foreign exchange transactions - Whether the show cause notice and the material relied upon discharged the initial burden of specifying intelligible charges and providing independent corroborative evidence to sustain penalties under FEMA. - HELD THAT: - The Tribunal found the show cause notice to be lacking in clarity and specificity as to the alleged contraventions and the evidence relied upon. It emphasised that mere reliance on presumptions, third party documents from the DRI record and prior custodial statements (some of which were retracted) did not satisfy the requirement to plead and prove unauthorised foreign exchange transactions. In absence of cogent, independent evidence and an intelligible notice enabling the appellants to meet the case, the adjudication could not stand. [Paras 11, 12, 13, 15]

The show cause notice and material before the Authority failed to discharge the initial burden of specification and corroboration; the adjudication was unsustainable.

Final Conclusion: Both appeals are allowed; the impugned penalty order dated 06.01.2014 is set aside because the FEMA proceedings were initiated without independent investigation and in respect of matters finally settled by the Settlement Commission, and the show cause notice lacked requisite clarity and corroborative material.

Provisional attachment under PMLA - confirmation of provisional attachment - effect of acquittal or discharge of accused on attachment proceedings - partnership retirement and cessation of proprietary interest - release of attached properties

Provisional attachment under PMLA - confirmation of provisional attachment - effect of acquittal or discharge of accused on attachment proceedings - partnership retirement and cessation of proprietary interest - Validity of the provisional attachment and its subsequent confirmation in respect of the appellant's property where the appellant pleaded cessation of partnership interest and the main accused and his wife were discharged. - HELD THAT: - The Tribunal examined whether the impugned confirmation of the provisional attachment could be sustained in view of the appellant's assertion that he had ceased to be a partner by a retirement deed executed on 31.03.1998 and thereby became absolute owner of the business, and in view of the fact that the main accused and his wife had been discharged in the underlying proceedings. The Court accepted the appellant's submissions and noted that there was no challenge by the respondent to the judgments acquitting or discharging the main accused and his wife in the PMLA proceedings. On that basis the Tribunal found that the foundation for continued attachment of the appellant's properties had collapsed and there was no justification for maintaining the confirmed attachment order. [Paras 7, 8]

The impugned order confirming the provisional attachment dated 22.09.2016 is set aside, the provisional attachment order is quashed and the attached properties are released forthwith.

Final Conclusion: The appeal succeeds: the confirmation of provisional attachment is quashed and the attached properties are ordered to be released immediately in view of the appellant's asserted cessation of partnership interest and the discharge/acquittal of the principal accused and his wife.

Acquittal attained finality - discharge under Section 227 of the Criminal Procedure Code - effect of final criminal adjudication on proceedings under the PMLA - provisional attachment quashed - release of attached property - absence of challenge to final judgment

Acquittal attained finality - absence of challenge to final judgment - effect of final criminal adjudication on proceedings under the PMLA - Final acquittal of the principal accused and the absence of any appeal against that acquittal render further proceedings unnecessary and decisive for the instant appeals. - HELD THAT: - The court recorded that the principal accused, Sri Syed Mobin, was acquitted on 1st April, 2017 by the Special Judge after trial and that no appeal was preferred by the State against that acquittal. That acquittal therefore attained finality between the parties. Where the main accused has been finally acquitted and the final judgment has not been challenged in a higher court, the basis for continuation of ancillary proceedings in respect of the same scheduled offence is undermined. Having regard to the finality of the acquittal and the lack of any challenge thereto, the Tribunal held that there was no need to proceed to examine the merits of the PMLA complaint against the appellants. [Paras 1, 2]

The final acquittal and the absence of any challenge thereto dispose of the controversy and justify allowing the appeals.

Discharge under Section 227 of the Criminal Procedure Code - provisional attachment quashed - release of attached property - Effect of the discharge of the appellants in the PMLA complaint on the provisional attachment and the impugned order. - HELD THAT: - The Tribunal noted that both the husband and wife were arrayed as respondents in the PMLA complaint and that the trial court (III Addl. District and Sessions Judge, D.K., Mangaluru) by order dated 10th August, 2018 allowed their application under Section 227 CrPC and discharged them of the offence punishable under the Prevention of Money Laundering Act. Given that the main accused was acquitted and the appellants were discharged and those orders stand unchallenged, the Tribunal found that the impugned order sustaining provisional attachment could not stand. Consequently, the Tribunal set aside the impugned order, quashed the provisional attachment order and directed release of the attached properties forthwith. [Paras 3, 5, 6]

Impugned order set aside; provisional attachment quashed and attached properties released.

Final Conclusion: Both appeals are allowed: in view of the final acquittal of the principal accused and the discharge of the appellants in the PMLA complaint (orders unchallenged), the impugned order is set aside, the provisional attachment is quashed and the attached properties are ordered to be released forthwith.

Provisional attachment under PMLA - Opportunity of hearing under the proviso to Section 8(2) of the PMLA - Requirement to serve notice under Section 8(1) of the PMLA before confirmation - Priority of secured creditors under amended Section 31B of the Recovery of Debts Due to Banks and Financial Institutions Act and Section 26E of the SARFAESI Act - Victim/secured creditor rights under Section 8(8) of the PMLA - Interim status quo and restraint on dealing with attached properties

Condonation of delay - Impleadment of secured creditors - Application for condonation of delay in filing the appeals by the banks was allowed - HELD THAT: - The Tribunal found that the Enforcement Directorate had failed to implead the banks (secured creditors) despite knowledge of their interest, and the banks demonstrated sufficient cause for delay in filing the appeals after receipt of the impugned orders. In view of these facts and the failure of the ED to perform the duty of impleading the lenders, the Tribunal exercised its discretion to condone the delay and disposed of the miscellaneous petition accordingly. [Paras 6, 7, 10]

Condonation of delay granted; miscellaneous petition disposed of.

Opportunity of hearing under the proviso to Section 8(2) of the PMLA - Requirement to serve notice under Section 8(1) of the PMLA before confirmation - Persons claiming rights in attached property (including banks) must be afforded an opportunity of hearing before confirmation of provisional attachment - HELD THAT: - Relying on the Tribunal's earlier reasoning in Amanpreet Singh Gandhi, the Tribunal reiterated that the proviso to Section 8(2) obliges the Adjudicating Authority to hear any person who claims a right in the property before passing a final order of confirmation under Section 8(3). A post-decisional hearing would be ineffectual; therefore notices and hearings to claimants must precede confirmation. The record showed no notice under Section 8(1) was issued to the appellants, and the ED had not impleaded the banks despite their recognised interest. [Paras 7, 8, 9]

Requirement of prior notice/hearing to claimants upheld; absence of notice recorded and relied upon.

Priority of secured creditors under amended Section 31B of the RDB Act / Section 26E of SARFAESI - Victim/secured creditor rights under Section 8(8) of the PMLA - Interim status quo and restraint on dealing with attached properties - Secured creditors holding a decree have prima facie priority to realise secured debts and are entitled to interim protection; ED has no prima facie lien to preclude enforcement by banks pending trial - HELD THAT: - The Tribunal observed the 2016 amendments (Section 31B of the RDB Act and Section 26E of SARFAESI) grant secured creditors priority to realise secured debts over other claims, including government attachments, and noted judicial authority upholding application to pending lis. Applying these principles, and noting that the banks are decree-holders and victim parties under the PMLA, the Tribunal concluded prima facie that the banks have priority rights and that there is no nexus making the banks proceeds of crime. Accordingly, the ED cannot retain or dispose of the properties to the prejudice of the banks' rights pending further hearing. As an interim measure, the Tribunal restrained Vijay Mallya from dealing with the specified movable and immovable properties and directed the respondent (ED) to maintain status quo until the next date. [Paras 34, 35, 36, 38, 39]

Prima facie priority of secured creditors recognised; interim status quo and restraint on dealing with listed properties granted until next hearing.

Final Conclusion: The Tribunal allowed condonation of delay, upheld that affected claimants (the banks) must be given prior notice and an opportunity to be heard before confirmation of provisional attachment, recognised the prima facie priority of decree holding secured creditors under the amended recovery statutes, and granted interim relief by restraining dealing with the specified properties and directing maintenance of status quo until the next date of hearing.

Priority of secured creditors under amended SARFAESI/Recovery enactments - Provisional attachment as "value thereof" under PMLA - Innocent secured creditor / bona fide mortgagee entitled to protection - Non obstante clause and later enactment prevailing where conflict exists - Adjudicating Authority's jurisdiction to test bonafides under Section 8

Priority of secured creditors under amended SARFAESI/Recovery enactments - Non obstante clause and later enactment prevailing where conflict exists - Whether amendments to the SARFAESI Act and the Recovery of Debts and Bankruptcy Act, 1993 (introducing priority to secured creditors) override attachment under PMLA so as to protect the rights of secured creditors in respect of mortgaged properties - HELD THAT: - The Tribunal examined the effect of the 2016 amendments which introduced express "priority to secured creditors" provisions in SARFAESI (Section 26E) and RDDB Act (Section 31B) effective from 01.09.2016. Applying the settled principle that where special statutes with non-obstante clauses conflict the later enactment ordinarily prevails, the Tribunal nevertheless emphasised that the Parliament specifically left the 2016 amendments applicable and did not exclude their operation vis-a -vis PMLA. Considering legislative purpose and subsequent judicial pronouncements (including this Tribunal's and High Courts' decisions construing the amendments), the Tribunal held that the amended provisions give secured creditors priority over competing claims including attachments under PMLA insofar as the secured creditors seek to realize secured debts. The Tribunal therefore concluded that the non-obstante effect of the amended SARFAESI/RDDB provisions governs the present dispute and must be given effect in a manner harmonious with PMLA's objectives. [Paras 12, 16, 33, 36]

Amendments to SARFAESI Act and RDDB Act (2016) confer priority to secured creditors which, on the facts of this case, displaces the provisional attachment under PMLA in respect of the mortgaged properties

Provisional attachment as "value thereof" under PMLA - Innocent secured creditor / bona fide mortgagee entitled to protection - Adjudicating Authority's jurisdiction to test bonafides under Section 8 - Whether provisional attachment under PMLA of immovable properties mortgaged to the appellants (banks/financial institutions) was sustainable where the properties were acquired before the alleged scheduled offences and the banks are innocent third parties seeking recovery - HELD THAT: - The Tribunal found as admitted on record that the properties were acquired prior to the alleged offences, were mortgaged to the appellants and that the appellants were not accused in the scheduled offences. The ED had attached the properties as "value thereof" equivalent to alleged proceeds of crime, not on a finding that the properties were purchased with proceeds of crime. Applying the statutory scheme (including the Adjudicating Authority's power under Section 8 to test claims of innocence and bona fides) and having regard to the priority now accorded to secured creditors by the 2016 amendments, the Tribunal held that no prima facie case of money laundering had been made out against the appellants in respect of those mortgaged properties. The Tribunal further observed that depriving secured creditors of their pre existing rights without satisfactory material linking the properties to proceeds of crime would be unjustified. On these grounds the provisional attachment insofar as it affected the mortgaged properties was held unsustainable. [Paras 11, 12, 22, 24, 28]

Provisional attachment confirmed by the Adjudicating Authority in respect of the mortgaged properties is set aside and the mortgaged properties are released from attachment as against the appellants

Final Conclusion: The Tribunal set aside the Adjudicating Authority's order confirming the provisional attachment dated 19.03.2014 insofar as it affected the mortgaged immovable properties held by or charged in favour of the appellants, finding that (i) the 2016 amendments to SARFAESI/RDDB Act accord priority to secured creditors which must be given effect, and (ii) on the material before it no prima facie case of money laundering was made out against the appellants in respect of those properties; the attached properties are therefore released from attachment forthwith.

Validity of Rule 5A of the Service Tax Rules, 1994 - Power of the Comptroller and Auditor General to conduct Service Tax audit - Saving clause in Section 174 of the Central Goods and Services Tax Act, 2017 - Interim stay of administrative action

Validity of Rule 5A of the Service Tax Rules, 1994 - Power of the Comptroller and Auditor General to conduct Service Tax audit - Saving clause in Section 174 of the Central Goods and Services Tax Act, 2017 - Interim stay of administrative action - The petitioner was granted interim relief staying the CAG's communication dated 09.10.2018 requiring a Service Tax audit; the Court recorded prima facie doubts on the CAG's power under Rule 5A and on whether Section 174(2)(e) of the CGST Act preserves a power to initiate fresh audits under the repealed Service Tax Rules. - HELD THAT: - The Court noted prior judicial decisions striking down Rule 5A in the Delhi High Court and interim treatment in this High Court's earlier order in Sadbhav Engineering Ltd., and observed conflicting proceedings in different fora including a stay by the Supreme Court in related matters. The Court examined Section 173 and the saving clause in Section 174(2)(e) of the CGST Act and concluded prima facie that the saving clause does not plainly preserve a power to initiate fresh audits under Rule 5A after the repeal/amendment consequent to GST. In view of these legal controversies and the petitioner's objections, the Court found it appropriate to issue notice and grant ad interim protection against further conduct of the Service Tax audit by the CAG, until the next date of hearing.

Notice issued returnable 28.11.2018; the impugned communication dated 09.10.2018 is stayed and the CAG is restrained from carrying out any further Service Tax audit of the petitioner in the meantime; direct service permitted.

Final Conclusion: Interim relief granted: the CAG's communication directing Service Tax audit of the petitioner is stayed; the High Court issued notice and listed the matter for further consideration on 28.11.2018 after recording prima facie doubts on the applicability of Rule 5A and the saving provision in Section 174(2)(e) of the CGST Act.

Grant-in-aid received by a project implementing agency not consideration for taxable service - no service-receiver/service-provider relationship where contribution not linked to specific services - exemption of services to Special Economic Zone units by virtue of SEZ enactment - requirement to identify specific taxable service when treating unexplained receipts as consideration - services rendered to International Financial Corporation not leviable to service tax (precedent)

Grant-in-aid received by a project implementing agency not consideration for taxable service - no service-receiver/service-provider relationship where contribution not linked to specific services - Leviability of service tax on amounts received by the appellant for implementation of the Skill Development Programme (grant-in-aid from Government and contributions from non-governmental organizations). - HELD THAT: - The Tribunal followed its earlier decision in Apitco Ltd. as affirmed by the Supreme Court and held that amounts received from the Central Government as grant-in-aid for implementation of a welfare/skill development scheme, which are wholly utilised for the scheme and do not result in any over-and-above benefit to the implementing agency, do not constitute consideration for a taxable service. The Tribunal further found that contributions from non-governmental organizations were not linked to specific services rendered to those contributors nor proportionate to recruitment or placement, and thus did not establish a service-provider/service-receiver relationship that would attract service tax. Applying these principles to the facts, the confirmed demand on the grant-in-aid and contributions was set aside along with interest and penalty.

Demand of Rs. 23,44,07,478/- (service tax on grant-in-aid and contributions) set aside with interest and equal penalty.

Exemption of services to Special Economic Zone units by virtue of SEZ enactment - Leviability of service tax on consideration received for services rendered to SEZ units. - HELD THAT: - Relying on the statutory scheme that confers exemption to developers and units in a Special Economic Zone and the primacy of SEZ Act provisions, the Tribunal accepted the appellant's contention that taxable services provided to SEZ developers/units are exempt under the SEZ enactment. Applying that principle, the Tribunal found the demand confirmed by the Original Authority for services to SEZ units unsustainable and set aside the corresponding demand.

Demand of Rs. 30,21,221/- (service tax on services to SEZ units) set aside with interest and equal penalty.

Requirement to identify specific taxable service when treating unexplained receipts as consideration - Sustainability of service tax demand raised on unexplained difference between income in ST-3 returns and balance sheets treated as consideration without specifying taxable service. - HELD THAT: - The Tribunal followed its precedent in Shubham Electricals , observing that neither the show cause notice nor the adjudication order specified which particular taxable service was rendered in respect of the unexplained receipts. Absent an allegation identifying a specific taxable service, treating the difference as consideration and confirming a demand cannot be sustained. Applying that reasoning, the Tribunal held the demand based on the unexplained amount to be unsustainable.

Demand of Rs. 5,61,455/- based on unexplained receipts set aside with interest and equal penalty.

Services rendered to International Financial Corporation not leviable to service tax (precedent) - Leviability of service tax on amounts received for services rendered to the International Financial Corporation (IFC). - HELD THAT: - Having regard to this Tribunal's earlier decision in Coastal Gujarat Power Ltd. , which concluded that service tax does not attract on consideration received for services rendered to the International Financial Corporation, the Tribunal held the issue to be no longer res integra. Applying that precedent to the admitted receipt for services to IFC, the Tribunal set aside the demand confirmed by the Original Authority.

Demand of Rs. 3,30,011/- (service tax on services to IFC) set aside with interest and equal penalty.

Whether the appellant pressed its claim for refund/relief of the amount of Rs. 71,734/-. - HELD THAT: - The appellant informed the Tribunal that the amount of Rs. 71,734/- had already been paid and that relief in respect of this sum was not pressed in the appeal. Consequently the Tribunal did not grant relief for this component and left it as payable.

Amount of Rs. 71,734/- left intact (payable) along with interest.

Final Conclusion: The appeal is allowed insofar as demands confirmed by the Original Authority standing at service tax demands on the grant-in-aid/contributions, services to SEZ units, unexplained receipts, and services to IFC are set aside with interest and equal penalty; the sum of Rs. 71,734/- remains payable. The impugned Order-in-Original is set aside except as to that amount.

Applicability of Rule 9 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - Application of Rule 10 and Rule 8 of the Valuation Rules - Related persons as "inter-connected undertakings" under Section 4(3)(b)(i) of the Central Excise Act, 1944 - Exclusion of clause (i) from proviso in Rule 9 and consequent inapplicability of Rule 9's proviso - Use of normal transaction value versus cost-construction method for assessable value

Applicability of Rule 9 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - Application of Rule 10 and Rule 8 of the Valuation Rules - Related persons as "inter-connected undertakings" under Section 4(3)(b)(i) of the Central Excise Act, 1944 - Exclusion of clause (i) from proviso in Rule 9 and consequent inapplicability of Rule 9's proviso - Valuation of clearances to the sister concern could not be made under Rule 9/read with Rule 8 because the supplier and recipient were related only as "inter-connected undertakings" under clause (i) of Section 4(3)(b), and therefore Rule 9 is not attracted. - HELD THAT: - The Tribunal found as an undisputed fact that the assessee cleared goods to an interconnected unit as well as to independent buyers and that the two firms were "inter-connected undertakings" within the meaning of clause (i) of Section 4(3)(b). Rule 9, by its plain wording, applies only where the relatedness is in the manner specified in sub-clauses (ii), (iii) or (iv) of Section 4(3)(b). Clause (i) (inter-connected undertakings) is not included in the operative part of Rule 9 and its proviso; consequently the proviso cannot be invoked to bring Rule 8 into play where the relationship is only under clause (i). The Tribunal relied on precedents including decisions of this Tribunal and the Supreme Court which held that when relatedness is confined to clause (i) Rule 9 is not attracted and the valuation cannot be fixed under the proviso to Rule 9 (or by invoking Rule 8) but must be governed by the rule applicable in the circumstances (including Rule 10 or the residuary rule as applicable). Applying these principles to the facts (82% sales to independent buyers; 18% to sister concern; relationship established as clause (i) inter-connected undertaking), the Tribunal concluded that the lower authorities erred in invoking Rule 9/read with Rule 8 for valuation of the clearances to the sister concern. [Paras 5]

The decision of the Commissioner (Appeals) and the adjudicating authority to value the clearances under Rule 9/read with Rule 8 is set aside; Rule 9 is not attracted where the relatedness is only under clause (i) of Section 4(3)(b).

Final Conclusion: The appeal is allowed; the orders of the authorities below insofar as they invoked Rule 9/proviso and Rule 8 for valuation of clearances to the interconnected unit are not sustainable and have been set aside, with consequential reliefs, if any.

Demand of central excise duty based on surrendered income - Reliance on income-surrender as sole evidence - Burden of proof to establish manufacture and undervaluation - Penalty imposability in absence of evidentiary basis

Demand of central excise duty based on surrendered income - Burden of proof to establish manufacture and undervaluation - Reliance on income-surrender as sole evidence - Demand of central excise duty could not be sustained where the revenue relied solely on income surrendered to the Income Tax Department without independent evidence of manufacture or undervaluation. - HELD THAT: - The Tribunal held that central excise duty is leviable only on goods manufactured by the assessee and the Revenue must produce evidence to show how the goods were manufactured, how inputs were procured and how final goods were sold by the appellants. A mere record of income surrendered to the Income Tax Department, without supporting evidence linking that income to undervaluation or undisclosed manufacture, is insufficient to establish the liability for central excise duty. The Tribunal applied its earlier conclusion in Thakur Steel and Agro Industries and placed reliance on similar pronouncements in Kipps Education Centre, Bathinda and M/s Godawari Spherocast Ltd. to hold that the demand founded solely on surrendered income is not sustainable.

Demand confirmed by adjudicating authority set aside and quashed for lack of evidentiary foundation.

Penalty imposability in absence of evidentiary basis - Penalty imposed on the appellants was not sustainable when the underlying duty demand was unsupported by evidence and based solely on income surrendered to the Income Tax Department. - HELD THAT: - Because the demand for duty itself could not be sustained in the absence of independent evidence of manufacture or undervaluation, the ancillary penalties imposed on the appellants could not stand. The Tribunal found no basis for imposing penalties where the foundational factual and legal predicate for the demand was lacking.

Penalties imposed by the adjudicating authority are set aside.

Final Conclusion: The appeals are allowed; the impugned order confirming duty and imposing penalties is set aside and quashed, with consequential relief to the appellants.

Determination of disputed questions - Binding effect of the Commissioner's determination - Classification of goods - Residuary entry versus specific entry - Estoppel of Revenue by unchallenged determination

Determination of disputed questions - Binding effect of the Commissioner's determination - Estoppel of Revenue by unchallenged determination - Whether the Assessing Officer could ignore and take a different view from the determination order passed by the Commissioner under Section 80 of the VAT Act - HELD THAT: - Section 80(1) empowers the Commissioner to determine questions including whether tax is payable or the rate thereof. A determination by the Commissioner binds the parties before him, which includes the assessee who sought the determination and the Department unless either side challenges the determination in appeal or revision. Judicial decisions establish that an Assessing Officer in another proceeding cannot disregard or adopt an interpretation contrary to that placed by the Commissioner on an identical question or identical facts, unless there is material change or the Commissioner's order has been challenged. In the present case the Commissioner had determined that the product is classifiable as Mehendi and the Department did not challenge that determination; the Assessing Officer recorded reasons to distinguish but did not point to any material change warranting a contrary view. The Assessing Officer therefore erred in discarding the Commissioner's determination.

Assessing Officer was not justified in ignoring the Commissioner's determination; the assessment order was tainted for that reason.

Classification of goods - Residuary entry versus specific entry - Estoppel of Revenue by unchallenged determination - Whether the product 'Godrej Nupur Mehendi' should be classified under Entry 34 of Schedule I (Mehendi) rather than the residuary entry of Schedule II - HELD THAT: - The Commissioner's determination held that the product, though containing small additions, retained the character of Mehendi and fell under Entry 34 of Schedule I. The Assessing Officer classified the product under the residuary entry relying on its marketed use in various colours and asserted predominant use as hair dye/tonic. Given the Commissioner's finding that small additions do not change the character and that the Department did not challenge that determination, permitting a conflicting classification in the hands of the manufacturer would lead to incongruent tax treatment vis-a -vis distributors and undermine the credit mechanism. Absent any material change or successful challenge to the determination, the product must be treated in accordance with the Commissioner's order as Mehendi under Entry 34.

Impugned order classifying the product under the residuary entry is set aside and the product is to be treated as classifiable under Entry 34 of Schedule I as Mehendi.

Final Conclusion: The assessment order dated 31st March 2013 is set aside; the Commissioner's unchallenged determination that the product is classifiable as Mehendi under Entry 34 of Schedule I binds the Department and the product must be treated accordingly for the period in question.

Change of option before issuance of Eligibility Certificate - tax remission versus tax deferment - continuation of tax incentives under transitional Chapter IV-A of the Rules, 2006 - no automatic transposition of exemption into remission on introduction of VAT rules - interpretative authority of State Level Committee versus statutory rules

Change of option before issuance of Eligibility Certificate - tax remission versus tax deferment - Petitioners were entitled to change their earlier option from sales tax deferment to sales tax remission because the one-time opportunity to change option under Clause 4.4 of the Scheme had not been lost prior to the issuance of a final eligibility certificate. - HELD THAT: - Clause 4.4 of the Scheme expressly permitted a one-time change of the option by an eligible unit prior to the issuance of the Eligibility Certificate by the Sales Tax Department. The petitioners had only been issued a provisional eligibility certificate and the final certificate had not been issued when the VAT Rules came into force; accordingly, the right to change the option under Clause 4.4 remained available. The court applied this contractual/administrative term of the Scheme and held that the respondents erred in treating the earlier provisional certificate as extinguishing the petitioners' opportunity to change option. [Paras 17, 24]

The petitioners' request to switch from tax deferment to tax remission was allowable because the prescribed one-time change under Clause 4.4 had not been foreclosed.

Continuation of tax incentives under transitional Chapter IV-A of the Rules, 2006 - no automatic transposition of exemption into remission on introduction of VAT rules - The Rules of 2006 (Chapter IV-A) did not automatically preclude eligible units from changing their earlier option nor did they automatically convert prior tax exemption into tax remission; units had to apply afresh and the Rules did not eliminate the option where not expressly provided. - HELD THAT: - Chapter IV-A modified and subsumed the earlier scheme but did not uniformly extinguish prior choices. Rule 18A required application for continuation and set out options, while Rule 18C permitted units availing deferment to continue deferment. However, the Rules do not unambiguously mandate that every unit's earlier choice be mechanically fixed or that exemption be automatically treated as remission. The court emphasized the substantive difference between tax exemption (no tax collected or paid on sales) and tax remission (tax collected but remitted by Government) and concluded that absent explicit statutory language removing the opportunity to choose, the introduction of the VAT Rules did not obliterate the petitioners' entitlement to exercise the option available under the Scheme and the transitional rules. [Paras 18, 22, 23]

The VAT Rules did not bar the petitioners from switching options; the Rules required fresh application but did not automatically convert prior exemption/deferment choices into a single fixed outcome.

Interpretative authority of State Level Committee versus statutory rules - The recommendation or opinion of the State Level Committee was not binding on the Government insofar as interpretation or application of the statutory Rules introduced by the VAT Act. - HELD THAT: - The Scheme had conferred an interpretative and dispute-resolution role on the State Level Committee under the original administrative scheme. However, upon enactment of the VAT Act and framing of Rules, 2006, the statutory framework supplanted the administrative Scheme. The Committee therefore ceased to have authority to determine questions of statutory interpretation under the Rules; its recommendations could not override or bind the statutory authorities charged with implementing the Rules. [Paras 25]

State Level Committee's recommendation was not final or binding in relation to the interpretation and application of the statutory Rules introduced by the VAT Act.

Final Conclusion: Impugned order dated 28.04.2014 is set aside; respondents directed to allow the petitioners to switch to the sales tax remission scheme under Chapter IV-A of the Rules, 2006 from the date of application, issue eligibility and entitlement certificates accordingly, and compute and grant benefits in terms of those Rules.

Principles of natural justice - right to personal hearing - mandatory opportunity of personal hearing before assessment - remand for fresh consideration - hearing required even in absence of specific statutory provision

Principles of natural justice - right to personal hearing - hearing required even in absence of specific statutory provision - Denial of personal hearing to the petitioner resulted in violation of principles of natural justice. - HELD THAT: - The Court found that the petitioner submitted objections on 20.03.2018 and disputed the respondent's assertion that a personal hearing was held the same day. Given the short interval between the stated hearing/objection date and the impugned order dated 28.03.2018, it was improbable that a meaningful personal hearing had occurred. The Court relied on established authority and administrative instructions emphasising that an opportunity of personal hearing must be afforded and that such hearing is required even where no specific statutory provision prescribes it. Absence of an opportunity to be heard before passing the assessment orders amounted to a breach of the principles of natural justice and vitiated the impugned orders. [Paras 4, 5, 6, 7]

Impugned assessment orders are vitiated for denial of personal hearing and constitute a breach of natural justice.

Remand for fresh consideration - mandatory opportunity of personal hearing before assessment - Whether the impugned orders should be set aside and the matters remanded for fresh consideration with direction to afford personal hearing. - HELD THAT: - Having held that the assessments were passed in breach of natural justice by denying a personal hearing, the Court set aside the impugned orders dated 28.03.2018 and remanded the matters to the assessing authority for fresh consideration. The respondent is directed to afford the petitioner an opportunity of personal hearing and to pass fresh orders after such hearing within one month from receipt of the copy of this order. [Paras 8]

Orders dated 28.03.2018 set aside; matters remitted for fresh consideration with direction to grant personal hearing and pass orders within one month.

Final Conclusion: The assessment orders dated 28.03.2018 for the listed assessment years are set aside for breach of natural justice; the matters are remanded to the assessing authority to afford a personal hearing and to pass fresh orders within one month.

Summary judgment under Order XIII-A of the Code of Civil Procedure, 1908 - summary suit under Order XXXVII of the Code of Civil Procedure, 1908 - leave to defend under sub Rule (5) of Rule 3 of Order XXXVII - entitlement to judgment forthwith under clause (a) of sub Rule (6) of Rule 3 of Order XXXVII - contractual rate of interest - award of costs

Summary suit under Order XXXVII of the Code of Civil Procedure, 1908 - leave to defend under sub Rule (5) of Rule 3 of Order XXXVII - entitlement to judgment forthwith under clause (a) of sub Rule (6) of Rule 3 of Order XXXVII - Plaintiff's entitlement to judgment forthwith under clause (a) of sub Rule (6) of Rule 3 of Order XXXVII in view of defendant's failure to apply for leave to defend and admissions of liability. - HELD THAT: - The suit was originally filed as a summary suit under Order XXXVII. The defendant, though served, did not enter appearance within ten days and did not apply under sub Rule (5) of Rule 3 for leave to defend. Correspondence and replies placed on record (including e mail, letters and the defendant's reply to the legal notice) amounted to admissions of liability. In these circumstances the Court, construing the application under Order XIII A in light of the unamended provisions of Order XXXVII, treated the plaintiff's application as a prayer under clause (a) of sub Rule (6) of Rule 3 of Order XXXVII and held that the plaintiff was entitled to judgment forthwith without recording oral evidence. [Paras 6, 9, 19, 25]

Application treated as one under Order XXXVII Rule 3(6)(a); plaintiff entitled to judgment forthwith as defendant did not seek leave to defend and had admitted liability.

Contractual rate of interest - summary judgment under Order XIII-A of the Code of Civil Procedure, 1908 - Rate of interest payable under the contract between the parties. - HELD THAT: - Invoices placed on record contained a contractual term providing for penalty/interest at 0.375% per week on delayed payment. The Court examined the existence of a contract between the parties and, finding such a contractual term, held that the agreed weekly rate converts to 18% per annum. Although the plaint prayed for a higher rate, the entitlement is confined to the contractual rate proved in the invoices. [Paras 21, 22, 23]

Plaintiff entitled to interest at 0.375% per week (18% per annum) as per the contractual term in the invoices.

Award of costs - Whether plaintiff is entitled to costs. - HELD THAT: - The defendant's conduct - non appearance after service, failure to apply for leave to defend and protraction of proceedings for over a year and a half - justified an award of costs. The Court took into account that the plaintiff was compelled to pursue the suit to obtain relief. [Paras 24, 26]

Suit decreed with costs in favour of the plaintiff.

Final Conclusion: The application was treated as one under Order XXXVII Rule 3(6)(a); the suit is decreed forthwith as the defendant admitted liability and did not seek leave to defend; plaintiff awarded interest at the contractual rate of 0.375% per week (18% p.a.) and costs.

Joint and several liability of partners - liability of a partner for acts of the firm - creditor's right to recover firm debt from any partner - power to pass order under Section 14 of the SARFAESI Act - bona fide requirement in writ petitions - writ jurisdiction under Article 226 of the Constitution

Joint and several liability of partners - liability of a partner for acts of the firm - creditor's right to recover firm debt from any partner - Whether the petitioner, being a partner of the firm which took the loan, can avoid liability for the firm's debt or claim release of his mortgaged share by paying only his alleged share of the liability. - HELD THAT: - The Court held that the loan was taken by the partnership firm and the petitioner and the co-partner were partners; under the Partnership Act every partner is jointly and severally liable for the acts of the firm. Consequently a creditor may recover the firm's debt from any one or more partners and a partner cannot contend that his liability is restricted to his share so as to prevent recovery against him personally. Reliance was placed on precedent affirming that under Section 25 of the Indian Partnership Act the liability of partners is joint and several, and therefore the bank's right to recover is not affected by the internal share percentage between partners. The petitioner's contention that payment of half the liability should entitle him to release of his mortgaged share was rejected on this legal basis. [Paras 11, 12, 13, 14, 15]

Petitioner cannot limit his liability to his share nor claim release of his mortgaged property by paying only half the firm's debt; he remains jointly and severally liable.

Power to pass order under Section 14 of the SARFAESI Act - writ jurisdiction under Article 226 of the Constitution - Whether interference with the order passed under Section 14 of the SARFAESI Act by the Deputy Commissioner-cum-District Magistrate was warranted in exercise of writ jurisdiction. - HELD THAT: - The Court considered the challenge to the impugned order under Section 14 of the Act and found no ground to interfere. The petitioner's challenge premised on internal dispute between partners and a claim to have paid only his share did not affect the bank's statutory right of recovery under the Act given the partners' joint and several liability. In these circumstances and having regard to the absence of any infirmity warranting exercise of extraordinary writ jurisdiction, the Court refused to set aside the order impugned under the SARFAESI regime. [Paras 4, 5, 18]

No interference with the order passed under Section 14 of the Act; writ petition not maintainable on the grounds urged.

Bona fide requirement in writ petitions - Whether the petition demonstrated bona fides and compliance with undertakings given to the Court so as to merit equitable relief. - HELD THAT: - The Court found that the petitioner initially undertook to deposit specified amounts to protect the mortgaged property and subsequently changed his stance to contend he would pay only his share. An undertaking given on 16.01.2018 to pay a further sum within two months was not complied with and the petitioner later admitted inability to make the payment. The Court concluded that the petition lacked bona fide and the dispute between partners was being used to impede the bank's recovery; accordingly equitable relief was denied. [Paras 6, 7, 16, 17]

Petition lacks bona fide; petitioner's failure to honour undertakings and use of partner-dispute as a shield justified refusal of relief.

Final Conclusion: The writ petition challenging the order under Section 14 of the SARFAESI Act was dismissed: the partners are jointly and severally liable for the firm's debt, the petitioner cannot secure release of his mortgaged share by paying only his alleged share, the petition was found not bona fide due to non-compliance with undertakings, and there was no ground for interference under Article 226.