TaxTMI Updates e-Newsletter
Oct 23,2020

Refund of accumulated input tax credit on export of goods and services without payment of IGST - principle of natural justice - non-speaking order - requirement to issue notice in FORM GST RFD-08 and afford opportunity of hearing under Rule 92(3) of the CGST Rules, 2017 - reconsideration and passing of a speaking order

Requirement to issue notice in FORM GST RFD-08 and afford opportunity of hearing under Rule 92(3) of the CGST Rules, 2017 - non-speaking order - principle of natural justice - reconsideration and passing of a speaking order - Rejection of part of the refund claim without issuing FORM GST RFD-08, without affording hearing and by passing a non-speaking order was procedurally improper and requires reconsideration. - HELD THAT: - The adjudicating authority rejected part of the refund claim without issuing the show cause notice in FORM GST RFD-08 and without granting an opportunity of hearing, and the order did not state reasons. Rule 92(3) of the CGST Rules, 2017 mandates that where the proper officer is satisfied that whole or any part of a refund is not admissible, a notice in FORM GST RFD-08 must be issued requiring a reply in FORM GST RFD-09 and, after considering the reply, an order in FORM GST RFD-06 be made; the proviso expressly provides that no refund application shall be rejected without giving the applicant an opportunity of being heard. The absence of a speaking order and of the statutorily required notice/hearing amounts to violation of the principle of natural justice. Consequently the rejection cannot stand without reconsideration and the adjudicating authority is directed to re-examine the claim and pass a proper speaking order after affording the required opportunity. [Paras 5, 6, 7, 8]

The matter is remitted to the adjudicating authority for reconsideration and for passing a speaking order after issuing FORM GST RFD-08 and affording opportunity of hearing, in accordance with Rule 92(3) of the CGST Rules, 2017.

Final Conclusion: The appeal is disposed of by setting aside the impugned non-speaking rejection insofar as it violated Rule 92(3) and the principles of natural justice; the adjudicating authority is directed to re-consider the rejected portion of the refund claim and pass a reasoned order after issuing the prescribed notice and affording an opportunity of hearing.

Compounding scheme - registration cancellation and re registration delay - prejudice from administrative delay - waiver of late fee for system delay - direction to update GST portal for filing returns - availment of input tax credit

Compounding scheme - registration cancellation and re registration delay - prejudice from administrative delay - waiver of late fee for system delay - availment of input tax credit - direction to update GST portal for filing returns - Whether the petitioner should be permitted to avail benefits of the compounding scheme and file returns for specified periods without payment of late fee or other charges arising from delayed processing of cancellation and fresh registration by the respondents, and whether respondents must update the portal to enable such filing and availment of input tax credit. - HELD THAT: - The Court noted that the petitioner had applied for cancellation of its earlier registration and for a fresh registration opting for the compounding scheme, but the respondents delayed processing those applications. The delayed administrative processing prevented the petitioner from uploading composition returns because the portal continued to recognise the earlier registration. The Court held that the respondents' delay in processing the applications cannot be allowed to deprive the petitioner of the statutory benefit claimed by its application. Accordingly, the respondents were directed to make necessary changes in the GST portal to enable filing of returns for the listed periods without charging late fee or other charges attributable to the respondents' delay, and to facilitate uploading of such returns and the availment of applicable input tax credit within one month from receipt of the judgment. The Court required the petitioner to produce a copy of the judgment and the writ petition to the respondents to enable compliance. [Paras 3]

Petition allowed; respondents directed to update the portal to permit filing of the specified composition returns and availment of input tax credit without late fee or other charges attributable to the administrative delay, to be completed within one month of receipt of the judgment.

Final Conclusion: Writ petition allowed; respondents directed to facilitate uploading of the petitioner's composition returns for the specified periods and permit availment of input tax credit without levy of late fee or other charges attributable to the respondents' delay, to be effected within one month from receipt of this judgment.

Limitation for filing statutory appeal - condonation of delay - service of order and communication of demand - jurisdictional bar on extending statutory limitation - Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019

Limitation for filing statutory appeal - condonation of delay - jurisdictional bar on extending statutory limitation - Whether the first Appellate Authority was correct in rejecting the appeal as time-barred and refusing to condone the delay. - HELD THAT: - The Court found that the penalty order dated 14.08.2018 was served (the memo of appeal itself records communication on 14.08.2018) and the petitioner deposited the demanded amount on the same date, accepted by the authorities. The petitioner did not, either in the memo of appeal or in the application for condonation of delay, state that the order was not communicated to him or that inability to file an offline appeal caused the delay; the ground raised before the Court (non-availability on web-portal and ignorance of offline filing) was not pleaded before the Appellate Authority. Reliance on precedents permitting condonation was held distinguishable on facts, and binding decisions were noted that the statutory period for filing an appeal is a creature of statute which cannot be extended by the High Court where the appellate authority has no power to allow appeal beyond prescribed period. Given these conclusions, no ground was shown to interfere with the first Appellate Authority's rejection of the appeal as time-barred. [Paras 11, 12, 13, 15, 17]

The rejection of the appeal by the Appellate Authority as time-barred and refusal to condone the delay is upheld; the writ petition is dismissed on this ground.

Service of order and communication of demand - Whether service of the penalty order on the driver of the vehicle absolved the departmental requirement of communication to the petitioner so as to commence limitation. - HELD THAT: - The Court observed that the memo of appeal itself records the date of communication as 14.08.2018 and that the petitioner deposited the entire demanded amount on that date leading to release of goods and vehicle. The petitioner did not specifically plead before the Appellate Authority that service on the driver did not amount to service on the petitioner. In these circumstances the contention that service on the driver prevented commencement of limitation was rejected. [Paras 11, 15]

Service effected (and acceptance by deposition of demand) sufficed to treat the order as communicated to the petitioner; the plea that service on the driver did not amount to communication to the petitioner is not accepted.

Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 - Whether the petitioner should be afforded an opportunity to file an appeal before the Appellate Tribunal in light of the Ninth Removal of Difficulties Order, 2019. - HELD THAT: - Noting the Gazette notification of 03.12.2019 which provides that where the Tribunal/Benches are yet to be constituted the three months' period for filing certain appeals shall be computed from the later of date of communication or the date the President/State President of the Tribunal enters office, the Court granted the petitioner the limited indulgence of availing remedy under the said Order. Coordinate decisions were noted in which relief in similar circumstances was allowed to enable filing before the Tribunal when constituted. [Paras 18, 19, 20]

The petitioner is permitted to avail the remedy of filing an appeal before the Appellate Tribunal in terms of the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019.

Final Conclusion: Writ petition dismissed as devoid of merit insofar as challenge to the Appellate Authority's rejection of the appeal as time-barred is concerned; however, petitioner is granted the limited indulgence of availing remedy by filing appeal before the Appellate Tribunal in terms of the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019.

Confiscation under GST - seizure under Section 129 of the GST Act, 2017 - show-cause notice under Section 130 of the GST Act, 2017 - provisional release under Section 67(6) of the GST Act, 2017 - interim relief in writ petition

Interim relief in writ petition - provisional release under Section 67(6) of the GST Act, 2017 - confiscation under GST - Prayer for interim release of goods and vehicle pending confiscation proceedings - HELD THAT: - The Court declined to grant the writ applicant's prayer for interim release of the seized goods and vehicle while confiscation proceedings under Section 130 are pending. The Court observed that it would not go into the merits at this stage and expected the applicant to participate in the ongoing confiscation proceedings and make out his defence. The Court further indicated that if the applicant seeks provisional release, he may apply to the competent authority under Section 67(6) of the Act, and directed that such application be considered at the earliest in accordance with law. [Paras 6]

Interim relief refused; applicant may seek provisional release under Section 67(6) before the concerned authority which shall decide the application at the earliest in accordance with law.

Show-cause notice under Section 130 of the GST Act, 2017 - seizure under Section 129 of the GST Act, 2017 - Adjudication on the merits of confiscation and related allegations - HELD THAT: - The Court expressly refrained from adjudicating the merits of the confiscation proceedings or the factual contentions recorded in Form GST MOV-06 and the show-cause proceedings under Form GST MOV-10. The writ petition was disposed of on the short ground of refusal to grant interim relief, with the observation that the Court has not gone into the substantive merits of the case. [Paras 7]

Merits left open; writ disposed without adjudication on confiscation merits.

Final Conclusion: Writ petition disposed of by refusing interim relief for release of goods and vehicle; applicant directed to participate in confiscation proceedings and may seek provisional release under Section 67(6) before the appropriate authority, which must decide the application promptly; merits of confiscation not considered by the Court.

Refund of unutilized input tax credit on account of exports without payment of tax - Refund under Section 54 of the CGST Act, 2017 - Requirement of online filing of refund claims on the common portal - Condition (b) of CBIC Circular No.110/29/2019-GST regarding re application after filing a NIL refund - Prohibition on re application where a refund claim under the same category has been filed for a subsequent period - Validity of manually filed revised refund claim where online refund claims have been previously filed

Refund of unutilized input tax credit on account of exports without payment of tax - Requirement of online filing of refund claims on the common portal - Condition (b) of CBIC Circular No.110/29/2019-GST regarding re application after filing a NIL refund - Validity of manually filed revised refund claim where online refund claims have been previously filed - Whether the appellant was entitled to the revised/manual refund claim for unutilized ITC for October to December 2017 despite having earlier filed online refund claims (one NIL and one for December 2017) and without complying with the online filing requirement and condition (b) of Circular No.110/29/2019 GST. - HELD THAT: - The adjudicatory findings record that the appellant had earlier filed online refund claims for the same period (ARN No.AA0811176066919 for October 2017 to November 2017 showing NIL and ARN No.AA081217780023B for December 2017) and thereafter submitted a manually prepared revised refund application. The CBIC Circular No.110/29/2019 GST (dated 03.10.2019) sets out that a registered person who has filed a NIL refund claim may re apply for refund for that period only if two conditions are satisfied, including that no refund claims under the same category have been filed for any subsequent period (condition (b)). The procedural instructions in earlier circulars required refund claims to be filed online on the common portal. The appellant did not file the revised claim online and failed to satisfy condition (b) because refund claims under the same category had been filed for subsequent period(s). Consequently, the appellant was not eligible to re apply under the terms of the circulars and the manually filed revised claim could not be admitted. [Paras 8, 9]

Appeal dismissed; revised/manual refund claim rejected for non compliance with online filing requirements and condition (b) of Circular No.110/29/2019 GST.

Final Conclusion: The appeal is dismissed and the impugned order rejecting the refund claim is upheld on the ground that the appellant had earlier filed online refund claims for the period and failed to satisfy the re application condition in the CBIC circular, in addition to not complying with the mandatory online filing procedure.

Refund under Section 54 of the CGST Act - person who has paid the tax is entitled to refund - requirement of payment to Government for claiming refund - Rule 89 refund application procedure - evidence that the incidence of tax had not been passed on

Refund under Section 54 of the CGST Act - person who has paid the tax is entitled to refund - requirement of payment to Government for claiming refund - Rule 89 refund application procedure - evidence that the incidence of tax had not been passed on - Appellant's entitlement to refund claimed for alleged excess GST paid on canteen services - HELD THAT: - The statutory scheme of Section 54(1) of the CGST Act and Rule 89(1) requires that refund applications be made by a person who has paid the tax to the Government (the words "paid by him" in Section 54(1)). Section 54(4) further contemplates documentary evidence to establish that a refund is due and that the tax was paid by the applicant and its incidence had not been passed on. Where the statute expressly provides alternative filing provisions (for example, in the case of certain deemed exports under Rule 89), it does so; no such option is provided for ordinary supplies. In the present case the tax for the period November-2017 to July-2018 was deposited into Government accounts by the service providers and not by the appellant. On that factual and legal basis the appellant did not qualify as a person who had paid the tax and therefore was not entitled to file a refund claim under Section 54 read with Rule 89. The appellant's contentions regarding vagueness of the show cause notice and reliance on cited authorities were considered but do not alter the statutory requirement that only the person who has paid tax to the Government may claim the refund.

Refund claim rejected because the appellant did not pay the tax to the Government and therefore was not entitled to claim refund under Section 54 read with Rule 89.

Final Conclusion: The appeal is dismissed; the impugned order rejecting the refund claim is upheld on the ground that the appellant was not the person who paid the tax to the Government and therefore was not eligible to claim refund under Section 54 of the CGST Act read with Rule 89.

Summary order. Appeal allowed to be withdrawn at the request of the appellant and accordingly dismissed as withdrawn.

Withdrawal of appeal - dismissal as withdrawn - revocation of cancellation of registration - cancellation of GST registration for non-filing of returns - activation of GST registration

Withdrawal of appeal - dismissal as withdrawn - Whether the appeal filed against cancellation of GST registration may be withdrawn and the appeal dismissed as withdrawn. - HELD THAT: - The appellant, having been aggrieved by the order cancelling its GST registration and rejecting the application for revocation, sought restoration of registration and filed the present appeal. Subsequently the appellant's authorised representative communicated that they had applied for revocation in the system and requested withdrawal of the appeal. The appellate authority considered the request and, in view of the appellant's explicit prayer to withdraw the appeal, permitted withdrawal. No substantive adjudication on the merits of the cancellation or revocation was undertaken in this order.

The appellant's request to withdraw the appeal was allowed and the appeal was dismissed as withdrawn.

Final Conclusion: The appeal against the order cancelling GST registration was allowed to be withdrawn at the instance of the appellant and is dismissed as withdrawn; no adjudication on the merits of the cancellation or revocation is recorded in this order.

Summary order. Appeal permitted to be withdrawn; appeal dismissed as withdrawn.

Scope of supply - transfer of business assets treated as supply of goods - transfer of going concern - requirement of E-way Bill for movement of goods under Section 68/Rule 138A - detention and penalty for non-production of documents under Section 129

Scope of supply - transfer of business assets treated as supply of goods - transfer of going concern - Whether the transfer of used fixed assets from one branch to another branch of the same GSTIN constitutes a supply attracting GST. - HELD THAT: - The adjudicating authority analysed the statutory meaning of 'supply' and the related entries in Schedule II. While Section 7(1) requires activities to be in the course or furtherance of business to qualify as supply, the use of the word 'includes' broadens the scope. The Court noted that transfer of a going concern or transfer of business assets can qualify as supply even if the act is not in the regular course of business. Schedule II treats transfer of business assets as supply of goods. On the facts, the goods moved (used computer systems, tube lights, fans) were accompanied by a delivery challan which showed taxable value and tax, and did not indicate a stock transfer. Consequently, the transfer was held to be a supply of goods rather than a mere intra-entity stock transfer, and therefore liable to GST.

Transfer of the specified fixed assets between branches was held to be a supply (transfer of business assets) attracting GST.

Requirement of E-way Bill for movement of goods under Section 68/Rule 138A - detention and penalty for non-production of documents under Section 129 - Whether non-production of a valid E-way Bill justified detention of goods and imposition of penalty equal to 100% of tax. - HELD THAT: - The authority applied the statutory scheme requiring the person-in-charge of a conveyance carrying goods above the prescribed value to carry documents including a valid E-way Bill. Non-production of the requisite documents amounts to contravention of the provisions and authorises detention under the relevant provisions. Given the Court's conclusion that the movement constituted a supply, the statutory requirement to carry an E-way Bill applied. The adjudicating authority's action of detaining the goods and imposing tax and a penalty equal to the tax under the detention provisions was upheld on that basis.

Detention of goods and imposition of penalty for non-production of E-way Bill were held to be justified.

Final Conclusion: The appeal was rejected: the inter-branch transfer of used fixed assets was held to be a supply of goods (transfer of business assets) attracting GST and, consequently, the requirement of an E-way Bill applied; detention and penalty for non-production of the E-way Bill were sustained.

Refund under inverted duty structure - meaning of "Net ITC" in Rule 89(5) - exclusion of input services and capital goods from "inputs" under Section 2(59) - alignment of Rule 89(5) with Section 54(3)(ii) and related notification - demand for recovery under Section 74(1) - interest under Section 50 - penalty beyond scope of show cause notice - penalty under Section 122(2)(b)

Refund under inverted duty structure - meaning of "Net ITC" in Rule 89(5) - exclusion of input services and capital goods from "inputs" under Section 2(59) - alignment of Rule 89(5) with Section 54(3)(ii) and related notification - Net ITC for computing refund under the inverted duty structure does not include input tax on input services or capital goods. - HELD THAT: - The appellate authority examined the formula in Rule 89(5) read with Section 54(3)(ii) and the definition of "inputs" in Section 2(59). Section 2(59) defines "inputs" as goods other than capital goods used in the course or furtherance of business and therefore excludes services and capital goods. The authority noted the intent of the statute to restrict refund of unutilised ITC under inverted duty to credit on inputs (goods) only, and relied on the issuance of notification to align Rule 89(5) with the CGST Act clarifying that "Net ITC" excludes input tax credit availed for which refund is claimed under sub-rules (4A) or (4B). Applying these principles to the facts, the inclusion by the appellant of ITC on capital goods and input services in the Net ITC was not permissible, and the excess refund claimed on that basis was correctly disallowed. [Paras 5, 6]

Claim to include input services and capital goods in Net ITC for refund under inverted duty structure rejected; excess refund disallowed.

Refund on deemed exports - Claim that the refund ought to be allowed as refund arising from receipts under deemed exports was not allowable in the present proceedings. - HELD THAT: - The authority observed that entitlement to refund under the deemed export provisions arises under separate provisions and the appellant ought to have filed the claim under the relevant deemed export scheme. The adjudicator held that procedural mis filing of the claim under the inverted duty route could not be remedied at this stage by treating the application as one made under deemed export provisions where no such rule provision was invoked in the refund application now under scrutiny. [Paras 7]

Appellant's contention that refund should be allowed as a deemed export refund rejected; appellant should have filed under the appropriate provisions.

Penalty beyond scope of show cause notice - penalty under Section 122(2)(b) - Penalty confirmed under Section 122(2)(b) was set aside as it was beyond the scope of the show cause notice. - HELD THAT: - The appellate authority found that the show cause notice had proposed penalty under a different provision and that the adjudicating authority exceeded the scope of that notice by confirming penalty under Section 122(2)(b). Relying on the principle that adjudication must be confined to matters canvassed in the show cause notice, the authority held that imposing a penalty not proposed in the SCN was unlawful and therefore set aside the penalty under Section 122(2)(b). [Paras 8]

Penalty under Section 122(2)(b) set aside for being beyond the scope of the show cause notice.

Final Conclusion: Appeal disposed: refund claim under inverted duty structure was correctly restricted to Net ITC excluding input services and capital goods and the demand and interest were upheld to that extent; the appellant's plea for treatment as a deemed export refund was rejected; the penalty imposed under Section 122(2)(b) was set aside as beyond the scope of the show cause notice.

Jurisdiction of appellate authority - forum competence between CGST and SGST authorities - bar on entertaining appeals before wrong GST forum - appeal filed before wrong forum - dismissal for lack of jurisdiction

Jurisdiction of appellate authority - forum competence between CGST and SGST authorities - bar on entertaining appeals before wrong GST forum - Whether the Commissioner (Appeals) CGST, Jaipur had jurisdiction to entertain the appeal against the order passed by the State Tax Officer, Circle-III, Bhilwara. - HELD THAT: - The appellate authority examined the record and the submissions and found that the impugned order was passed by an officer of the State Tax (SGST) department. The appeal was presented before the Commissioner (Appeals) under CGST at Jaipur, which is not the forum competent to decide appeals against orders passed by a State Tax Officer. The authority relied on the statutory scheme that prevents cross-vesting of appellate or rectification proceedings between CGST and SGST/UTGST authorities (noting that Section 6(3) of the CGST Act precludes proceedings under one Act before officers appointed under the other and that corresponding provisions exist in the SGST/UTGST legislation). In view of this bar and the appellant's own admission that the appeal was filed before the wrong appellate forum, the Commissioner (Appeals) concluded that he lacked jurisdiction to adjudicate the appeal and therefore could not entertain it on merits. [Paras 5]

Appeal dismissed for being filed before a forum lacking jurisdiction; appellant to approach the jurisdictional SGST appellate authority.

Final Conclusion: The appeal was dismissed by the Commissioner (Appeals) CGST, Jaipur for want of jurisdiction because the impugned order was passed by a State Tax Officer and the appeal must be pursued before the competent SGST appellate authority.

Valid e-way bill - detention under Section 129 - penalty under Section 125 - Part B vehicle details of the E-way Bill - technical breach versus evasion of tax

Valid e-way bill - Part B vehicle details of the E-way Bill - detention under Section 129 - technical breach versus evasion of tax - Whether detention of the goods and conveyance and confirmation of the demand under the impugned order was sustainable where the e-way bill had been generated prior to movement but vehicle details were updated later - HELD THAT: - The Commissioner (Appeals) found that an e-way bill was generated at 04:38 PM before commencement of movement and contained invoice, consignee and other requisite particulars. The vehicle number initially entered in Part B reflected the transporter's original vehicle (RJ-14-GF-9189) and, because of an unforeseen change of truck, the goods were actually moved in RJ-14-GF-6831; the vehicle detail was updated thereafter. The authority accepted that the mistake related to vehicle number was rectified soon after it came to notice and that there was no evidence of any intention to evade tax. Given that the statutory requirements as to documents accompanying the consignment were substantially satisfied and the omission was a mere technical error in Part B, the Commissioner (Appeals) concluded that detention and confirmation of demand under the impugned order were not justified and the adjudicating authority's coercive measure could not be sustained.

Impugned order detaining goods and confirming demand set aside; appeal allowed on this ground.

Penalty under Section 125 - technical breach versus evasion of tax - Whether any penalty was leviable for the admitted error in vehicle number and, if so, its quantum - HELD THAT: - Although the error in vehicle number was treated as a technical mistake corrected shortly after detection and not indicative of tax evasion, the appellant admitted the omission to update the vehicle number before interception. The Commissioner (Appeals) held that that admission rendered the appellant liable to a penalty under Section 125 of the CGST Act. Exercising appellate power, the Commissioner (Appeals) reduced the consequence of the original order (which had imposed penalty equal to 100% of tax) to a fixed penalty to reflect the non-malicious nature of the breach.

Penalty under Section 125 imposed in reduced amount of Rs. 10,000; rest of the penalties and tax demand set aside.

Final Conclusion: The appeal is allowed insofar as the detention of goods, release conditions and the tax/penalty confirmed in the impugned order are set aside; a reduced penalty of Rs. 10,000 is imposed under Section 125 and the appeal is disposed accordingly.

Validity of e-way bill and requirement to furnish Part B - exception in Rule 138(3) for consignor-to-transporter movement within fifty kilometres - detention and seizure under Section 129 of the CGST Act, 2017 - penalty under Section 125 of the CGST Act, 2017 - requirement of a reasoned adjudicatory order - intention to evade tax and revenue loss test

Validity of e-way bill and requirement to furnish Part B - exception in Rule 138(3) for consignor-to-transporter movement within fifty kilometres - detention and seizure under Section 129 of the CGST Act, 2017 - penalty under Section 125 of the CGST Act, 2017 - intention to evade tax and revenue loss test - requirement of a reasoned adjudicatory order - Whether detention and confirmation of tax and penalty for movement of goods were justified where Part B of the e-way bill carried an incorrect vehicle number but the movement fell within the Rule 138(3) proviso and there was no finding of intention to evade or revenue loss; and whether a penalty under Section 125 could be imposed despite defects in the adjudicating order. - HELD THAT: - The adjudicating authority detained the goods and confirmed tax and penalty on the basis that some material lacked invoices and that the e-way bill had an incorrect vehicle number. The Commissioner (Appeals) found that the impugned order did not specify quantities or particularize which goods lacked invoices or E-way bills and that the authority had made inconsistent entries as to conveyance, indicating lack of attention and absence of reasoning. The movement at issue involved delivery from the consignor's premises to the transporter within the State for a distance of less than fifty kilometres. Under Rule 138(3) (third proviso), furnishing details of the conveyance in Part B is not mandatory for such consignor-to-transporter movements; consequently the non-correction of the vehicle number in Part B was a technical omission not amounting to an offence of evasion or to revenue loss. Nevertheless, the appellant admitted that the vehicle number in Part B was not corrected and the goods were accompanied by the e-way bill bearing the incorrect vehicle number. On these facts the Commissioner (Appeals) concluded that while seizure and confirmation on the grounds of evasion were not justified and the impugned order was to be set aside for lack of proper reasoning, a penalty under Section 125 was nevertheless appropriate for the admitted procedural omission. The appeal was therefore allowed, the impugned order set aside, and a penalty imposed while recording that there was no finding of intent to evade or of revenue loss. [Paras 6, 8, 9, 10]

Impugned detention and confirmation of tax set aside for lack of proper reasoning and because the incorrect vehicle number in Part B was a technical omission covered by the Rule 138(3) proviso (movement to transporter within fifty kilometres) that did not show intent to evade or revenue loss; appeal allowed but penalty of Rs.25,000 imposed under Section 125.

Final Conclusion: The appeal was allowed, the adjudicating authority's order of detention and confirmation of tax was set aside for want of proper reasoning and because the vehicle-number defect fell within the Rule 138(3) proviso and did not demonstrate intent to evade or revenue loss; a penalty of Rs.25,000 under Section 125 of the CGST Act, 2017 was imposed on the appellant.

Deduction under section 80IA of the Income-tax Act - material detected in course of survey affecting eligibility - withdrawal of revised return and its effect on assessment - restoration of assessing officer's order - binding effect of earlier Bench decision

Material detected in course of survey affecting eligibility - deduction under section 80IA of the Income-tax Act - Whether material detected during a prior survey showing that the Tumkur unit was not a new unit warranted denial of the claim of deduction under section 80IA. - HELD THAT: - The Court accepted the revenue's submission that the substantial questions framed in the appeal have already been answered in favour of the revenue by a previous Bench order dated 03.06.2014 in ITA No.205/2008 and applied the reasoning recorded therein. For the reasons assigned in that earlier order, the Court concluded that the material detected during the survey was determinative of the unit's ineligibility as a "new unit" and accordingly affected the assessee's entitlement to the claimed deduction under section 80IA. The Court therefore answered the question in favour of the revenue and restored the assessing officer's position. [Paras 4]

Answered in favour of the revenue; the survey material's effect on the unit's eligibility sustained and the claim under section 80IA rejected.

Deduction under section 80IA of the Income-tax Act - entitlement after consideration of entire evidence - Whether the assessee was entitled to claim deduction under section 80IA in respect of the Tumkur unit after taking into account the entire evidence recorded by the Assessing Officer. - HELD THAT: - Relying on and applying the earlier Bench decision referred to by the revenue, the Court held that on a consideration of the material placed before the Assessing Officer, the assessee was not entitled to the deduction claimed for the Tumkur unit. The Court indicated that the earlier reasoning disposed of the contention that the full evidence supported the deduction, and answered the substantial question against the assessee. [Paras 4]

Claim for deduction under section 80IA in respect of the Tumkur unit denied; substantial question answered for the revenue.

Withdrawal of revised return and its effect on assessment - restoration of assessing officer's order - Whether the finding that, in view of withdrawal of the revised return, the assessment order cannot be sustained was correct. - HELD THAT: - The Court, following the earlier Bench order of 03.06.2014, agreed with the revenue that the withdrawal of the revised return did not preclude the assessment being restored in accordance with the Assessing Officer's findings. Applying the determinative reasoning of the prior decision, the Court concluded that the ITAT's order could not stand and that the Assessing Officer's order should be restored. [Paras 4, 5]

Finding that the assessment could not be sustained on account of withdrawal of the revised return rejected; Assessing Officer's order restored.

Final Conclusion: The substantial questions of law framed in the appeal are answered in favour of the revenue in view of and for the reasons recorded in the earlier Bench order dated 03.06.2014 (ITA No.205/2008); the Income Tax Appellate Tribunal's order is quashed and the Assessing Authority's order is restored, disposing of the appeal.

Application of Section 194J to composite payments - bifurcation of composite payments - interest under Section 201(1A) - Explanation to Section 194J and Explanation 2 to Section 9(i)(vii) - burden of verification of tax payment by the deductee

Bifurcation of composite payments - application of Section 194J to composite payments - The Tribunal's direction to bifurcate payments made by the assessee with reference to medical services only - HELD THAT: - The Court, after hearing parties, adopted the reasoning recorded in I.T.A.No.323/2013 and held that the Tribunal's direction to bifurcate the composite payments (separating amounts as 'medical services' subject to TDS under the provision relied upon) could not be sustained. For the reasons stated in the order in I.T.A.No.323/2013, the particular direction of the Tribunal requiring bifurcation of the payments made by the assessee with reference to the medical services alone was quashed.

Tribunal's direction to bifurcate payments with reference to medical services quashed; that part of the Tribunal's order set aside.

Interest under Section 201(1A) - Explanation to Section 194J and Explanation 2 to Section 9(i)(vii) - burden of verification of tax payment by the deductee - The remaining substantial questions of law framed on admission in this appeal - HELD THAT: - The Court recorded that the admitted substantial questions of law (as listed in the order admitting the appeal) have been answered by reference to and in the manner indicated in I.T.A.No.323/2013. No independent re examination of those questions was undertaken in this order; the Court expressly adopted the determinations made in I.T.A.No.323/2013 as dispositive of those questions in this appeal.

Substantial questions of law (other than the bifurcation direction) answered as answered in I.T.A.No.323/2013 and accordingly applied in this appeal.

Final Conclusion: The appeal is partly allowed: the Tribunal's direction to bifurcate payments in respect of medical services is quashed, and the other admitted substantial questions of law are disposed of by adopting the answers recorded in I.T.A.No.323/2013.

Deduction under Section 80IA - aggregation and set off of profit and loss units for eligible business - unit wise versus eligible business wise computation under Section 80IA - disallowance of expenditure attributable to exempt income under Section 14A - Assessing Officer's satisfaction for invoking Section 14A - remand to Assessing Officer for verification - tribunal as fact finding authority and scope of interference - perversity standard for interference with findings of fact

Deduction under Section 80IA - aggregation and set off of profit and loss units for eligible business - unit wise versus eligible business wise computation under Section 80IA - Whether deduction under Section 80IA must be computed by aggregating profit making and loss making units of the eligible business or may be restricted to profit making units / computed unit wise. - HELD THAT: - The Court held that substantial questions of law Nos.1 and 2 are identical to those decided in an earlier bench (I.T.A.No.23/2013) which answered the points against the revenue relying on this Court's precedent in SWARNAGIRI WIRE INSULATIONS (P.) LTD. The revenue did not dispute that identity. Consequently, the contention that all units must be aggregated for computing deduction under Section 80IA, or that computation must be done business wise rather than windmill wise, is answered against the revenue in accordance with the earlier decision. [Paras 7]

Substantial questions of law Nos.1 and 2 are answered against the revenue and in favour of the assessee.

Disallowance of expenditure attributable to exempt income under Section 14A - Assessing Officer's satisfaction for invoking Section 14A - remand to Assessing Officer for verification - tribunal as fact finding authority and scope of interference - perversity standard for interference with findings of fact - Whether the Tribunal was correct in holding that the Assessing Officer had not satisfied the requirement for invoking Section 14A and whether the finding on investment out of own capital and the remand in respect of part claim were sustainable. - HELD THAT: - The Court applied the well established principle that the Tribunal is the fact finding authority and that the High Court will interfere only if findings are perverse or based on no evidence. The Commissioner (Appeals) and the Tribunal recorded concurrent findings that a specified sum was invested out of the assessee's own capital and that part of the claim (specified amount) should be remitted to the Assessing Officer for adjudication. Those concurrent findings of fact were held not to be perverse or unsupported by evidence. Consequently, there was no need to answer the third substantial question on merits; the Tribunal's approach including the remand was sustained. [Paras 9]

Concurrent factual findings that investment was from own capital and the remand of a part claim to the Assessing Officer are upheld; no interference with the Tribunal's factual conclusions.

Final Conclusion: The appeal is dismissed. Substantial questions of law Nos.1 and 2 are answered against the revenue (in favour of the assessee) following this Court's earlier decision; the Tribunal's concurrent factual findings on Section 14A and the limited remand to the Assessing Officer are sustained and not interfered with.

Exist solely for educational purposes and not for purposes of profit - exemption under Section 10(23C)(vi) of the Income tax Act - Association of Persons (AOP) recognised as a "person" under the Income tax Act - absence of independent juristic registration does not preclude entitlement to exemption - approval by the prescribed authority

Exemption under Section 10(23C)(vi) of the Income tax Act - exist solely for educational purposes and not for purposes of profit - Association of Persons (AOP) recognised as a "person" under the Income tax Act - Whether the assessee school, being an AOP, was entitled to exemption under Section 10(23C)(vi) for Assessment Year 2014-2015 - HELD THAT: - The Court accepted the Tribunal's conclusion that the school, though an AOP managed by the Sengunthar Education Board and lacking a separate memorandum or trust deed, qualified as an "institution" engaged solely for educational purposes and not for profit. The definition of "person" in Section 2(31) includes an Association of Persons, and Section 10(23C)(vi) grants exemption to a university or other educational institution existing solely for educational purposes and not for purposes of profit. The Court rejected the Revenue's contention that independent juristic registration or separate constitution was a precondition for claiming exemption, holding that nothing in Section 10(23C) requires the applicant to be a separately registered body; entitlement depends on meeting the substantive parameters of the provision. Absent findings of fact (based on evidence) that the assessee did not meet those parameters, denial of exemption on the ground of absence of independent memorandum, bye laws, or separate registration was unsustainable. The Tribunal's reasoning that an institution may exist as an AOP and still qualify for exemption was affirmed. [Paras 9, 10, 11, 12]

The Tribunal's direction to grant exemption under Section 10(23C)(vi) to the assessee for Assessment Year 2014-2015 was correct and is upheld.

Final Conclusion: The Revenue's appeal is dismissed. The Tribunal's order directing the Chief Commissioner to grant exemption under Section 10(23C)(vi) in respect of the assessee for Assessment Year 2014-2015 is affirmed; no substantial question of law arises.

Addition under section 69 of the Income Tax Act - unexplained investment / unexplained asset - concurrent findings of fact - substantial question of law - appellate scrutiny of factual findings

Addition under section 69 of the Income Tax Act - unexplained investment / unexplained asset - concurrent findings of fact - substantial question of law - Validity of the Appellate Tribunal's affirmation of CIT(A)'s deletion of the addition made by the Assessing Officer under section 69 on account of alleged unexplained investment in purchase of land, and whether the question raised amounts to a substantial question of law. - HELD THAT: - The Tribunal and the CIT(A) recorded concurrent factual findings that there was no material on the record proving conclusively that any investment was made by the assessee which had not been reflected in the books of account. The authorities examined the chain of documentary evidence, agreements, civil suits and the resolution of disputes and concluded that no asset in the name of the assessee came into existence in the year under assessment that required disclosure in the books. The Assessing Officer's addition rested on assumptions of fact and on an assumed existence of an unexplained asset. Given the concurrence of factual findings by the lower appellate authority and the Tribunal, the question framed by the Revenue could not be treated as a substantial question of law warranting interference by this Court.

The Tribunal did not err in upholding the deletion of the addition; the proposed question is not a substantial question of law and the Revenue's appeal is dismissed.

Final Conclusion: The appeal is dismissed: concurrent findings of fact by the CIT(A) and the ITAT that no unexplained investment/asset was established preclude framing a substantial question of law in respect of the addition under section 69 for Assessment Year 2012-2013.

Taxability of interest under section 28 of the Land Acquisition Act as part of enhanced compensation / capital gains - exemption of capital gains on transfer of agricultural land under section 10(37) - scope of limited scrutiny under CASS - remand for verification of genuineness of cash loans and repayment through banking channels

Scope of limited scrutiny under CASS - Whether the Assessing Officer exceeded the scope of limited scrutiny under CASS in examining the receipt of interest on enhanced compensation and other details. - HELD THAT: - The case was selected for limited scrutiny with reasons including "low income from other source as compared to large value fixed deposits and a large cash deposits in saving bank account and assessee has also transferred one or more properties during the year." The Assessing Officer examined income from other sources, specifically the receipt of interest on enhanced compensation, which fell within the stated reason for limited scrutiny. The Tribunal held that scrutiny of income from other sources was within the ambit of the stated CASS reasons and therefore the Assessing Officer did not step beyond the scope of the limited scrutiny. [Paras 12]

Assessment under limited scrutiny was within scope; Assessing Officer did not exceed his jurisdiction.

Taxability of interest under section 28 of the Land Acquisition Act as part of enhanced compensation / capital gains - exemption of capital gains on transfer of agricultural land under section 10(37) - Whether interest received under section 28 of the Land Acquisition Act is taxable as capital gains or is exempt being accretion to compensation for agricultural land. - HELD THAT: - The Tribunal applied the settled position in Ghanshyam (315 ITR 1 (SC)) that additional amount, solatium and interest under section 28 form part of enhanced compensation and fall within the scope of capital gains under section 45(5). The Tribunal further noted that section 45(5) concerns the category of capital assets, while section 10(37) specifically exempts capital gains arising from transfer of agricultural land; and that the Supreme Court in Hari Singh directed AO to examine whether compensation related to agricultural land and to refund tax if so. On this basis, and in the absence of any dispute that the amount was interest under section 28, the Tribunal found no reason to sustain the addition and directed deletion of the addition made on account of interest on enhanced compensation. [Paras 13]

Addition of interest under section 28 treated as part of capital gains/ enhanced compensation and deleted (to the extent applicable to agricultural land as considered).

Remand for verification of genuineness of cash loans and repayment through banking channels - Whether the addition of Rs. 85 Lacs as unexplained cash deposit/loan is sustainable on the record before the authorities. - HELD THAT: - Creditors' bank statements produced by the assessee (showing withdrawals) were not disputed, but the authorities below did not consider the assessee's contention that cash loans were taken through ignorance of tax implications nor was any bank evidence of repayment produced by the assessee before the authorities. The Tribunal observed that no opportunity had been given to verify repayment through banking channels and that the assessee sought to produce bank statements to show repayment. In these circumstances the Tribunal set aside the findings on this aspect and remanded the issue to the Assessing Officer for fresh consideration and verification in light of the material the assessee may produce. [Paras 14, 15]

Findings on the addition of Rs. 85 Lacs set aside; issue remanded to the Assessing Officer for verification and fresh consideration on production of bank statements and related material.

Final Conclusion: The Tribunal held that the Assessing Officer acted within the scope of limited scrutiny; directed deletion of the addition made for interest under section 28 of the Land Acquisition Act (as part of enhanced compensation/capital gains, with attention to exemption for agricultural land); and set aside the addition of Rs. 85 Lacs as unexplained cash loans, remanding that issue to the Assessing Officer for verification on production of repayment evidence by the assessee.

Depreciation on intangible assets - Goodwill as an intangible asset eligible for depreciation - Depreciation on customer contracts - Intangible assets under Explanation 3 to Section 32(1) and eligibility for depreciation - Acquisition of running business and transfer of goodwill/customer contracts - Valuation report and business transfer agreement as evidence for classification of assets

Depreciation on intangible assets - Goodwill as an intangible asset eligible for depreciation - Valuation report and business transfer agreement as evidence for classification of assets - Disallowance of depreciation on goodwill capitalised on acquisition of business was unjustified and deleted by the appellate authority. - HELD THAT: - Assessing Officer disallowed depreciation claimed on goodwill capitalised on acquisition of the BFSI business from M/s. KPIT Cummins Infosystems Ltd., treating the classification as a device to reduce tax liability. The assessee produced a valuation report and the Business Transfer Agreement detailing the assets, target customers and other components of the running business; the appellate authority accepted that goodwill so recorded in the audited financials arises from the acquisition of a running business. The Tribunal applied the settled precedent that goodwill is an asset eligible for depreciation and held that the AO's disallowance based on surmise was unsustainable. Finding no perversity in the CIT(A)'s reasoning, the Tribunal upheld deletion of the disallowance. [Paras 7, 8, 10, 14, 15]

Disallowance of depreciation on goodwill deleted and the CIT(A) order upheld.

Depreciation on customer contracts - Intangible assets under Explanation 3 to Section 32(1) and eligibility for depreciation - Acquisition of running business and transfer of goodwill/customer contracts - Depreciation on customer contracts capitalised on acquisition of the running business is allowable and the disallowance by the AO was deleted. - HELD THAT: - The Tribunal considered authorities recognizing that acquisition of a running business may include intangible elements such as customer contracts which, when reflected in audited books and supported by a valuation and the business transfer documentation, constitute intangible assets for depreciation purposes. Reliance was placed on the decision of the Delhi High Court accepting depreciation on customer contracts purchased as part of a going concern. On the facts - purchase of the BFSI business, accompanying valuation allocating consideration to customer contracts, and specific contractual details in the business transfer agreement - the Tribunal found the AO's rejection to be based on conjecture and sustained the CIT(A)'s allowance of depreciation on customer contracts. [Paras 10, 12, 13, 14, 15]

Depreciation on customer contracts allowed and the CIT(A) order upheld.

Final Conclusion: Revenue appeals dismissed; orders of the Commissioner of Income-tax (Appeals) deleting disallowance of depreciation on goodwill and customer contracts capitalised on acquisition of the running business are upheld.

Inclusive vs exclusive method of accounting under section 145A - treatment of unutilized CENVAT/MODVAT credit in valuation of closing stock - revenue neutrality of accounting adjustment - consistency of accounting method - unavailed MODVAT/CENVAT credit not taxable as income

Inclusive vs exclusive method of accounting under section 145A - treatment of unutilized CENVAT/MODVAT credit in valuation of closing stock - revenue neutrality of accounting adjustment - consistency of accounting method - Whether the addition of unutilized CENVAT credit to the closing stock under section 145A was justified where the assessee follows the exclusive method of accounting and has not debited/claimed the CENVAT in the Profit & Loss account - HELD THAT: - The Tribunal accepted that section 145A prescribes valuation principles which require recording purchases, sales and stocks on an inclusive or exclusive basis as the prescribed method; however, on the facts the assessee followed an exclusive method consistently and had not debited the unutilized CENVAT/MODVAT to the Profit & Loss account. Inclusion of the unutilized CENVAT in closing stock would merely increase closing (and next year's opening) stock and correspondingly reduce profit in the subsequent year, producing a tax neutral effect. The assessee placed a comparative chart showing no material difference in profit under the two methods (a negligible variance of Rs. 5,091). The Tribunal noted and followed prior decisions (including the reasoning that unavailed MODVAT/CENVAT credit cannot be treated as income) and found no infirmity in the CIT(A)'s deletion of the addition. On these determinative facts and legal position the addition was not justified and was rightly deleted. [Paras 6]

Addition of unutilized CENVAT credit to closing stock was deleted; Revenue's appeal dismissed.

Final Conclusion: The order of the Commissioner of Income Tax (Appeals) deleting the addition of unutilized CENVAT credit in respect of closing stock for AY 2006-2007 is affirmed and the Revenue's appeal is dismissed.

Deduction under section 80P(2)(a)(i) - principle of mutuality - exercise of powers under section 263 - roving and fishing enquiry - de novo assessment limited to the ratio in Citizen Co operative Society Ltd.

Deduction under section 80P(2)(a)(i) - principle of mutuality - Validity of allowing deduction claimed under section 80P(2)(a)(i) in light of the Supreme Court decision in Citizen Co operative Society Ltd., and whether the assessee's receipts satisfy the principle of mutuality. - HELD THAT: - The Tribunal accepted that the Supreme Court in Citizen Co operative Society Ltd. restricted deduction under section 80P(2)(a)(i) to income derived from providing credit facilities to primary (regular) members and not to nominal/associate members. The assessee had placed on record bye laws and member details asserting only regular membership and contended that the principle of mutuality is not violated. The Pr.CIT, however, did not record any finding rejecting the assessee's claim of only regular members but set aside the assessment to direct enquiries. The Tribunal held that invoking section 263 to revisit the claim was justified because of the subsequent Supreme Court decision, but the enquiry mandated must be confined to verification of the nature of membership as per the bye laws and whether the income on which deduction was claimed is attributable to business of providing credit facilities to members consistent with the Supreme Court ratio. [Paras 8, 9]

The set aside of the assessment under section 263 was upheld to the extent of directing fresh verification confined to membership nature and attribution of income to credit facilities to members; the AO shall decide the claim de novo in accordance with the Supreme Court's ratio.

Exercise of powers under section 263 - roving and fishing enquiry - Whether the additional directions in paragraph 3.3 of the Pr.CIT's order (directing broad enquiries into all financial transactions) were justified and binding on the Assessing Officer. - HELD THAT: - The Tribunal noted that while the Pr.CIT was entitled to set aside the assessment under section 263 for lack of necessary enquiry in view of the Supreme Court decision, the impugned order contained directions (para 3.3) that went beyond the necessary verification and amounted to authorising a roving and fishing enquiry. The Pr.CIT had not addressed or negatived the assessee's documentary claims (bye laws, member lists) and had not examined applicability of the Tumkur Merchants decision before issuing wide directions. The Tribunal found those broad directions uncalled for and liable to influence the AO unduly. [Paras 8, 9]

The impugned directions in paragraph 3.3 are set aside; the AO shall not be influenced by those directions and shall conduct a limited, de novo assessment confined to the Supreme Court ratio.

De novo assessment limited to the ratio in Citizen Co operative Society Ltd. - Scope and manner of the reassessment to be conducted by the Assessing Officer after the order under section 263. - HELD THAT: - The Tribunal clarified that the reopened assessment will be a de novo exercise but restricted in scope. The AO is free to adopt his line of enquiry while completing the set aside assessment, provided such enquiries are limited to determining whether the society's membership and transactions satisfy the conditions for deduction under section 80P(2)(a)(i) as laid down by the Supreme Court. The AO must afford the assessee an opportunity of being heard before concluding the reassessment and must not give effect to the Pr.CIT's extraneous directions. [Paras 9, 10]

Assessment to be redone de novo by the AO limited to verification required by the Supreme Court's ratio; assessee to be heard and AO not to follow the Pr.CIT's para 3.3 directions.

Final Conclusion: The Tribunal partly allows the appeal: the section 263 set aside is sustained to the extent that reassessment is necessary in light of the Supreme Court decision, but extraneous directions authorising a roving and fishing enquiry are vacated; the AO shall redo the assessment de novo limited to verifying membership and attribution of income consistent with the Supreme Court ratio and after affording the assessee an opportunity of being heard.

Genuineness of purchases - re-opening of assessment on basis of information from Sales Tax authorities - disallowance of purchases as unexplained expenditure - proportionate disallowance limited to profit element - verification through notices issued to third parties - ex parte disposal where assessee absent

Genuineness of purchases - disallowance of purchases as unexplained expenditure - verification through notices issued to third parties - proportionate disallowance limited to profit element - Whether the Assessing Officer was justified in disallowing the purchases as non genuine and in full, or whether disallowance should be restricted. - HELD THAT: - The Assessing Officer relied on information from the Sales Tax Department and non response/return of notices to treat certain purchases as accommodation/bogus and disallowed them in full. The Commissioner (Appeals) examined the material and found that the assessee had produced purchase bills, delivery challans, ledger copies and bank evidence in response to queries, and that for at least one supplier the sales were confirmed with supporting documents. The Tribunal observed that where the sale transactions themselves were not disproved and documentary evidence (including confirmations from a selling dealer) supported purchases, it was not permissible to disallow the entire purchase amount. Instead, a limited addition reflecting the embedded profit element in such purchases was appropriate. Applying this principle, the Tribunal affirmed the Commissioner (Appeals) in restricting disallowance to 12.5% of the alleged non genuine purchases and in excluding from disallowance those purchases proved by the third party's confirmation and supporting documents. The Tribunal therefore dismissed Revenue's grounds attacking the restriction imposed by the first appellate authority. [Paras 5, 6]

Tribunal upheld the Commissioner (Appeals) in restricting the disallowance to the profit element (12.5%) and in not treating purchases proved by third party confirmation as bogus.

Final Conclusion: Revenue's appeal dismissed; the Tribunal upholds the first appellate authority's restriction of disallowance to 12.5% of the alleged non genuine purchases and confirms that purchases supported by third party confirmation and documentary evidence are not to be treated as bogus.

Addition for bogus purchases - reassessment under notice u/s.148 - estimation of profit on disputed purchases - duty of Assessing Officer to verify documents - reliance on judicial precedent for quantification

Addition for bogus purchases - estimation of profit on disputed purchases - duty of Assessing Officer to verify documents - reliance on judicial precedent for quantification - Whether the Assessing Officer was justified in making a full addition of Rs. 5,37,112 for alleged bogus purchases, or whether the CIT(A)'s direction to estimate profit at 12.5% on the disputed purchases was proper. - HELD THAT: - The Tribunal noted that the assessee had produced bank statements, ledger accounts, purchase invoices and corresponding sale invoices during reassessment proceedings. Despite these documentary submissions, the Assessing Officer proceeded to make the full addition without carrying out further verifications or enquiries (such as examination of stock registers, delivery challans or transport confirmations) that could have tested the authenticity of transactions. The CIT(A) applied the ratio of the Gujarat High Court in Bholanath Poly Fab (P.) Ltd. and instead directed that profit be estimated at 12.5% on the disputed purchases. The Tribunal observed that, in the circumstances where primary documentary evidence was filed and no further verification was undertaken by the AO, the CIT(A)'s approach of estimating profit rather than confirming the full addition was justified. Consequently, the Tribunal upheld the CIT(A)'s order directing estimation of profit at 12.5% embedded in the disputed purchases and dismissed the revenue's appeal. [Paras 5, 6]

The Tribunal upheld the CIT(A)'s direction to estimate profit at 12.5% on the disputed purchases of Rs. 5,37,112 and dismissed the revenue's appeal.

Final Conclusion: Revenue's appeal is dismissed; the order of the CIT(A) directing estimation of profit at 12.5% on the disputed purchases is upheld.

Reopening of assessment - Notice under section 148 - Notice under section 143(2) - Jurisdiction to assess on return filed in response to notice under section 148 - Ex-parte assessment - Speaking order - Opportunity of being heard - Remand for fresh adjudication

Notice under section 143(2) - Jurisdiction to assess on return filed in response to notice under section 148 - Opportunity of being heard - Validity of the assessment in light of non-issuance of notice under section 143(2) after reopening under section 147/notice under section 148 - HELD THAT: - The Bench found that the First Appellate Authority (Ld. CIT(A)) had not decided the assessee's contention that no notice under section 143(2) was issued in response to notice under section 148 and that this issue was material to the validity and jurisdiction of the assessment. The Tribunal recorded that the Ld. CIT(A) rejected the plea on procedural grounds (no additional ground filed and absence of evidence before the CIT(A)) but did not examine the assessment records on this specific allegation. On the consent of both parties and in the interest of justice the Tribunal directed that the matter (ground no. 5) be sent back to the Ld. CIT(A) for fresh decision after examining the assessment records and after giving the assessee full opportunity of being heard, thereby remanding the question of whether the absence of a notice under section 143(2) vitiates the assessment for further consideration. [Paras 3, 4]

Ground no. 5 (non-issuance of notice under section 143(2)) is set aside and remanded to the Ld. CIT(A) for fresh decision after examination of assessment records and after giving full opportunity of being heard to the assessee.

Ex-parte assessment - Speaking order - Remand for fresh adjudication - Opportunity of being heard - Need for fresh adjudication on merits where assessments were completed ex parte and first appellate order was summary - HELD THAT: - On perusal of the appellate and assessment records the Tribunal noted that the revenue authorities had decided issues against the assessee ex parte and that the Ld. CIT(A) did not pass an elaborated speaking order on merits nor adequately considered the evidences filed by the assessee. In view of these deficiencies and in the interest of justice, and with the consent of parties, the Tribunal directed that the Ld. CIT(A) should re-adjudicate the assessee's grounds on merits afresh, examine the evidences filed, and afford the assessee full opportunity to substantiate its claims. [Paras 4, 5]

The matters decided ex parte by the revenue authorities and summarily by the Ld. CIT(A) are remitted to the Ld. CIT(A) for fresh adjudication on merits after examining evidences and giving the assessee full opportunity of being heard.

Final Conclusion: The appeal is allowed for statistical purposes; the Tribunal has set aside the relevant parts of the impugned order and remitted (a) the question of non-issuance of notice under section 143(2) (ground no. 5) and (b) the merits of the assessment for fresh adjudication by the Ld. CIT(A) after examination of the assessment records and after affording the assessee full opportunity of being heard.

Unexplained deposit - gift between relatives - definition of relatives under section 56 - burden of proof for source of deposit - admission of additional evidence - remand for fresh consideration

Admission of additional evidence - remand for fresh consideration - Whether the documents sought to be produced afresh constitute additional evidence warranting remand to the Assessing Officer. - HELD THAT: - The Tribunal held that the passport copy showing the daughter settled in the USA and the bank statement evidencing the cheque transaction did not qualify as additional evidence because those facts and the banking transfer were already on the record and were not controverted by the Revenue. Having examined the material proposed to be admitted, the Tribunal found that remanding the matter would not serve any useful purpose and therefore declined the request for remand. [Paras 5]

The application to admit additional evidence was refused and the request for remand was declined as unnecessary.

Unexplained deposit - gift between relatives - definition of relatives under section 56 - burden of proof for source of deposit - Whether the sum deposited in the assessee's account was rightly added as unexplained income despite the claim that it was a gift from his daughter. - HELD THAT: - The Tribunal observed that the CIT(A) rejected the gift claim on an assumption that a father would not accept a gift from his daughter. It noted that under the statutory definition in section 56 the relationship of father and daughter falls within "relatives" and there is no prohibition on gifts inter se. The amount was transferred to the assessee's account from the daughter's bank account through the banking channel, a fact not disputed by the Revenue. The daughter's inability to be produced for a statement was explained by her being settled abroad, and the assessee had also stated the source of the daughter's funds. The Tribunal concluded that the CIT(A)'s disbelief was founded on conjecture rather than evidence and that the assessee had satisfactorily proved the source of the deposit. [Paras 6, 7]

The addition of the amount as unexplained income was deleted and the appeal was allowed.

Final Conclusion: The Tribunal declined to admit the proffered additional documents or to remand the matter, and on merits set aside the CIT(A)'s disallowance of the gift claim-holding that the transfer from the daughter through banking channel and the relationship as "relatives" under section 56 sufficiently established the source-thereby deleting the addition and allowing the appeal.

Reopening of assessment under section 147 - Change of opinion - Fresh information / information to form reason to believe - Reopening based on audit objection - Assessing Officer's application of mind - CBDT Circular No. 17 of 2019 - threshold for filing departmental appeals

Reopening of assessment under section 147 - Change of opinion - Fresh information / information to form reason to believe - Assessing Officer's application of mind - Validity of reopening assessment under section 147 of the Act to make addition for suppressed purchases - HELD THAT: - The Tribunal examined the reasons recorded for reopening and the material on record. It found that VAT returns and details of purchases were already available to the Assessing Officer at the time of the original assessment under section 143(3), and the reasons recorded do not indicate any new material or that the reopening was occasioned by information not previously available. The order of reopening did not show that the Assessing Officer applied his mind to fresh information; the reassessment instead amounted to a mere change of opinion. The Tribunal also observed that, contrary to the Departmental representative's later reliance on audit objections, the recorded reasons did not state that reopening was founded on such audit objections, and an application of mind must be apparent from the material placed on record. Applying these considerations, the Tribunal held that the proceedings under section 147 were null and void and the addition was unsustainable. [Paras 7]

Reopening under section 147 quashed as a mere change of opinion; addition on account of suppressed purchases set aside.

Reopening based on audit objection - Fresh information / information to form reason to believe - Whether reopening could be sustained on the basis that an audit objection constituted fresh information - HELD THAT: - The Tribunal noted the Department's contention that audit objections amount to fresh information permitting reassessment, and the Department relied on several precedents. However, on scrutiny of the reasons recorded it was not indicated that reopening was undertaken on the basis of any audit objection. The Tribunal emphasised that if reopening is based on audit-objection material, that basis must be reflected in the reasons recorded; absent such indication and where the material was already before the Assessing Officer at the time of original assessment, the reopening could not be sustained as founded on fresh information. [Paras 7]

Reopening could not be upheld on the asserted basis of audit objections because the reasons do not record such a basis and no new information was shown to have come to the Assessing Officer's notice.

CBDT Circular No. 17 of 2019 - threshold for filing departmental appeals - Whether the Revenue's appeal should be dismissed on account of the tax effect being below the threshold prescribed by CBDT Circular No. 17 of 2019 - HELD THAT: - The Tribunal recorded that the tax effect in dispute falls below the monetary limit fixed by the CBDT Circular No. 17 of 2019. While the Department urged that reopening was on account of audit objection and so the threshold should not be decisive, the Tribunal observed the low tax effect and observed that the Department should not have filed the appeal on this count. This consideration reinforced the conclusion to dismiss the Revenue's appeal. [Paras 3, 7]

Revenue's appeal dismissed in view of the low tax effect under the CBDT circular; appeal not to have been filed by the Department on this count.

Final Conclusion: The Tribunal upheld the Commissioner (Appeals) and quashed reassessment proceedings under section 147 as a mere change of opinion (no new information), set aside the addition for suppressed purchases, and dismissed the Revenue's appeal (also noting the tax effect fell below the CBDT-prescribed threshold); the assessee's cross-objection became infructuous and was dismissed.

Registration under section 12A - charitable purpose - sufficiency of material to satisfy genuineness of activities - opportunity of hearing

Registration under section 12A - sufficiency of material to satisfy genuineness of activities - charitable purpose - opportunity of hearing - Validity of the refusal of registration under section 12A on the ground that only the memorandum of association was submitted and no material was provided to demonstrate the applicant's activities and charitable character. - HELD THAT: - The Tribunal found that the ld. CIT (Exemptions) had rejected the assessee's application on the basis that only the MOA was submitted and there was no material to form satisfaction as to genuineness of activities. The assessee, however, had filed before the CIT(A) a letter dated 13/5/2019 enclosing the balance sheet for the year ended 31/3/2019, details of tuition fees received for assessment year 2019-20, the bank statement for the financial year ended 31/3/2019, details of students of Mission Nursing School and receipt books for assessment years 2018-19 and 2019-20. In view of these documents on record, the Tribunal concluded that the ld. CIT (Exemptions)'s observation was not correct insofar as it recorded lack of any material beyond the MOA. The Tribunal therefore set aside the CIT (Exemptions)'s order and remitted the matter to the file of the ld. CIT (Exemptions) for fresh adjudication. The remand directs the ld. CIT (Exemptions) to decide the application afresh, after affording the assessee a reasonable opportunity of hearing and preferably within two months from receipt of the order. [Paras 5, 6]

Order of rejection under section 12A set aside and matter restored to the file of the ld. CIT (Exemptions) for fresh decision after giving the assessee opportunity of hearing.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes by setting aside the rejection of registration under section 12A and remitting the matter to the ld. CIT (Exemptions) for fresh decision on the merits after affording a reasonable opportunity of hearing, to be preferably completed within two months.

Early hearing - live consignment - jurisdiction under Section 129C(4)(b) of the Customs Act, 1962 - classification not affecting rate or value - requirement of BIS certificate for release of goods

Early hearing - live consignment - jurisdiction under Section 129C(4)(b) of the Customs Act, 1962 - classification not affecting rate or value - requirement of BIS certificate for release of goods - Application for early hearing allowed and Single Member Bench competent to hear the appeal as the controversy does not concern rate of duty or value but the requirement of a BIS certificate for release of the consignment. - HELD THAT: - The appellant sought out-of-turn hearing on the ground that the consignment is a live electronic shipment which would become obsolete if not released early, and that the Commissioner (Appeals) had held the goods liable for confiscation and imposed a penalty. The department submitted that the issue pertains to classification, and thus a Single Member Bench lacks jurisdiction. On perusal, the Tribunal found prima facie that the question before it relates to the requirement of production of a certificate from the BIS Authority for release of the goods and is not connected with determination of rate of duty or value for assessment. Consequently, the restriction in Section 129C(4)(b) of the Customs Act, 1962 barring Single Member adjudication where rate or value is in question is not attracted. Having regard to the nature of the consignment as live and the need for the earliest possible hearing, the early hearing application was allowed and the appeal was listed for hearing on the earliest date practicable. [Paras 2, 3, 4]

Early hearing application allowed; Single Member Bench may hear the appeal as the issue does not involve rate of duty or value but concerns BIS certification; appeal listed for hearing on 13th October 2020.

Final Conclusion: The Tribunal allowed the appellant's application for early/out of turn hearing, holding that the matter concerns the requirement of a BIS certificate for release of a live consignment and not classification affecting duty rate or value under Section 129C(4)(b), and listed the appeal for hearing on 13 October 2020.

Interim relief under Section 9 of the Arbitration and Conciliation Act, 1996 - deposit of holdback amount pursuant to contractual obligation - court's discretionary power to grant interim measures "as may appear to the court to be just and convenient" - guidance from procedural principles (Order 38/Order 39) without strict mechanical application - no double jeopardy in ordering deposit into court pending resolution - deductor's contractual obligation to remit withheld tax amounts irrespective of revenue's claim

Interim relief under Section 9 of the Arbitration and Conciliation Act, 1996 - deposit of holdback amount pursuant to contractual obligation - guidance from procedural principles (Order 38/Order 39) without strict mechanical application - The validity of the High Court's exercise of power under Section 9 in directing deposit into court of the Holdback Amount withheld under the SDPA. - HELD THAT: - The Court held that the obligation to deposit the Holdback Amount into the treasury is primarily a matter of the parties' contract (clause 4.5.1 of the SDPA) and that the purchaser's liability to remit the withheld sum to the revenue cannot defeat the contractual obligation to deposit the amount for the seller's entitlement. The scope of Section 9 is broad and confers a discretion to grant interim measures "as may appear to the court to be just and convenient," guided but not strictly bound by the procedural text of Order 38 Rule 5 or Order 39 Rules. Where there is practically no defence on the merits to the payability of the amount and it forms part of the subject matter of the proposed arbitration, the court may order suitable interim protection (including deposit into court) even if the strict letter of Order 38 Rule 5 is not invoked. The Court noted that the amount either must be deposited in the treasury in accordance with the contract or, if not payable to revenue, paid to the seller as part of the price; no third option existed and the appellants could not point to any case for retaining the sum. The Court also observed allegations of risk of dissipation of assets which supported invocation of interim protection. The High Court therefore found no fault with the Single Judge's order directing deposit of the Holdback Amount into court. [Paras 3, 5, 6, 8]

The order under Section 9 directing deposit of the Holdback Amount into court was validly made and sustained.

No double jeopardy in ordering deposit into court pending resolution - deductor's contractual obligation to remit withheld tax amounts irrespective of revenue's claim - Whether the appellants would suffer impermissible double liability or the respondent had already obtained tax benefit so as to disentitle it from seeking deposit into court. - HELD THAT: - The Court rejected the contention of double jeopardy: directing deposit into court does not itself amount to double liability because, if the revenue ultimately establishes entitlement, the court can order payment into the treasury; if not, the amount will be available to the seller. The Court further rejected the submission that the respondent had already obtained tax benefit in respect of the Holdback Amount. If the deductor has not deposited the amount into the treasury the assessee cannot obtain credit; if no tax is payable the assessee would be entitled to a refund. In either scenario the deductor cannot retain the Holdback Amount contrary to the contractual obligation. Accordingly, neither the risk of double payment nor an alleged prior tax benefit barred the respondent's prayer for deposit into court. [Paras 7, 9]

The contentions of double jeopardy and prior tax benefit are without merit and do not preclude ordering deposit into court.

Final Conclusion: Appeals dismissed; the High Court's Section 9 order directing deposit of the Holdback Amount into court is upheld and the interim applications do not survive.

Moratorium under Insolvency and Bankruptcy Code, 2016 - supply of essential goods or services during moratorium - jurisdiction and sub judice rule - state subsidy reimbursement conditional on advance payment to licensee - requirement of regulatory/Commission approval for tariff variation - no injunction against statutory tariff collection by licensee during CIRP

Jurisdiction and sub judice rule - moratorium under Insolvency and Bankruptcy Code, 2016 - Maintainability of the interlocutory application before the Tribunal when the same subject matter is sub judice before the High Court and whether the Tribunal may entertain reliefs conflicting with proceedings pending in writ jurisdiction. - HELD THAT: - The Tribunal found that the Corporate Debtor had already instituted Writ Petition No. 38107/2014 in the High Court prior to initiation of CIRP. Given that the same controversy (entitlement to reimbursements/concessions under the policy and G.O.) is pending before the High Court, the Adjudicating Authority held it was not open to the Corporate Debtor to re litigate the same issue before the Tribunal. Consequently, the application was held to be maintainable before the High Court and not before the Tribunal; the Tribunal declined to enter the domain of the writ jurisdiction by adjudicating the identical subject matter while it remains sub judice. [Paras 9]

Application dismissed as not maintainable before the Tribunal because the subject matter is sub judice before the High Court.

Supply of essential goods or services during moratorium - no injunction against statutory tariff collection by licensee during CIRP - state subsidy reimbursement conditional on advance payment to licensee - requirement of regulatory/Commission approval for tariff variation - Whether the Tribunal can direct the distribution licensee to keep electricity bills of the Corporate Debtor in abeyance during the moratorium or direct grant of concession/reimbursement in absence of State deposit and regulatory approval. - HELD THAT: - The Tribunal observed that the moratorium under the IBC does not permit preventing a distribution licensee from collecting electricity charges for current consumption; the CIRP order itself preserves supply of essential goods/services but does not stay payment obligations. The 3rd Respondent (distributor) is bound to collect tariff as approved by the State Regulatory Commission and cannot unilaterally vary tariff or grant concession unless the Commission has approved such variation or the State Government deposits the subsidy amount in advance as prescribed by law. Reference to the statutory scheme underlying subsidies (including the requirement of advance payment by the State Government) led the Tribunal to conclude that, in the absence of deposit by the State Government and requisite regulatory action, it could not direct the distributor to adjust or withhold current electricity bills or to extend the claimed reimbursement during CIRP. The Tribunal therefore refused the prayer to keep monthly bills in abeyance and to direct adjustments in the distributor's billing. [Paras 10, 11, 13]

Relief to keep electricity bills in abeyance or to direct the distributor to grant reimbursement/adjustments refused; Corporate Debtor remains liable to pay current electricity charges and any subsidy/reimbursement requires State deposit and regulatory compliance.

Final Conclusion: IA No. 486 of 2019 dismissed. The Tribunal declined to entertain the reliefs sought because the dispute on entitlement to concessions and reimbursement is pending before the High Court and, independently, the distributor cannot be directed to withhold or adjust statutory tariff bills in the absence of State deposit and regulatory approval; the Corporate Debtor must continue to pay current electricity charges during CIRP.

Operational debt - Operational creditor - Licence fee for use of immovable property as supply of service - Distinction between lease and licence - Filtration test for operational debt under Sections 3(6), 3(11) and 5(21) of the IBC - Dismissal of Section 9 application under Section 9(5)(ii) of the IBC

Operational debt - Operational creditor - Licence fee for use of immovable property as supply of service - Filtration test for operational debt under Sections 3(6), 3(11) and 5(21) of the IBC - Distinction between lease and licence - Claim arising from licence fee for permissive use of immovable property is not an operational debt within the meaning of Section 5(21) of the Insolvency and Bankruptcy Code, 2016. - HELD THAT: - The Tribunal applied the statutory 'filtration' approach: the asserted claim must first qualify as a 'claim' under Section 3(6), then as a 'debt' under Section 3(11), and finally as an 'operational debt' under Section 5(21). Having examined the nature of the agreement (a licence granting permissive use of immovable property) and the authorities relied upon, the Tribunal held that a licence for use of immovable property, in the absence of any pleading or material showing that the immovable property formed part of the corporate debtor's input-output operations or was integral to its business operations, does not fall within the scope of 'provision of goods or services' contemplated by Section 5(21). The Tribunal noted precedents and reasoning that lease or licence transactions in relation to immovable property do not ipso facto constitute operational debt unless a direct nexus to the corporate debtor's operational activity is shown. On the facts before it no such nexus or other statutory category (such as dues payable to government/local authority) was established, and therefore the claimed licence fee could not be treated as an operational debt. [Paras 21, 22, 23, 24, 25]

The amount claimed under the licence agreement is not an unpaid operational debt as defined in Section 5(21) of the IBC, 2016.

Dismissal of Section 9 application under Section 9(5)(ii) of the IBC - Whether the Section 9 application filed by the claimant should be dismissed. - HELD THAT: - Having concluded that the claim does not constitute an operational debt, the Tribunal proceeded to the consequential relief. Section 9 permits initiation of CIRP by an operational creditor where an operational debt is due and in default. Since the applicant's claim did not meet the statutory definition of 'operational debt', the statutory threshold for initiating proceedings under Section 9 was not satisfied. The Tribunal therefore dismissed the application pursuant to the provision permitting rejection where the application is not maintainable on the stated grounds, while observing that the order is confined to the facts and pleadings before it and does not prejudice any proceedings in other fora. [Paras 25, 26]

Application under Section 9 is dismissed under Section 9(5)(ii) of the IBC for want of an operational debt.

Final Conclusion: The Tribunal held that licence fees for permissive use of immovable property, on the facts before it, do not constitute an 'operational debt' under Section 5(21) of the IBC and consequently dismissed the Section 9 application under Section 9(5)(ii) of the Code; the order is confined to the pleadings and facts before the Tribunal and does not prejudice other proceedings between the parties.

Pre-existing dispute - maintainability of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Mobilox Innoventive test on notice of dispute - summary adjudication and requirement of a plausible contention - withholding of documents and allegation of deficiency of service

Pre-existing dispute - maintainability of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Mobilox Innoventive test on notice of dispute - Application under Section 9 seeking initiation of CIRP was not maintainable because a pre-existing dispute existed between the operational creditor and the corporate debtor. - HELD THAT: - Applying the law laid down in Mobilox Innoventive, the Tribunal examined whether the corporate debtor had brought to the operational creditor's notice a plausible dispute that was not a patently feeble or spurious defence. The material on record showed that the corporate debtor disputed the quantum of the claimed operational debt and asserted deficiency of services and exorbitant charges, pointing to specific discrepancies between actual statutory submissions and invoiced amounts. The corporate debtor also produced contemporaneous police and criminal proceedings started prior to the demand notice alleging that the operational creditor had withheld vital documents, with an FIR ordered by the Magistrate and investigation pending. These facts established a real and extant controversy going to the existence and amount of the debt and the performance of the services, which required thorough inquiry beyond the scope of the summary Section 9 process. As the dispute was not illusory or merely bluster, the Tribunal was obliged to reject the Section 9 application at the admission stage. [Paras 7, 8, 9, 10]

Application under Section 9 was rejected as not maintainable for the existence of a pre-existing dispute requiring further investigation.

Final Conclusion: The Tribunal, applying the Mobilox Innoventive principle, found a genuine pre-existing dispute (including contested quantum, alleged deficiency of service and pending criminal/police proceedings concerning withheld documents) and accordingly rejected the Section 9 application seeking initiation of CIRP.

Take control and custody of any asset over which the corporate debtor has ownership rights (Section 18(1)(f) of the IBC) - overriding effect of the Insolvency and Bankruptcy Code over other enactments (Section 238) - continuing/sovereign bank guarantee - claim of customs authorities as an operational creditor - release of corporate debtor's funds to the resolution professional for completion of CIRP

Take control and custody of any asset over which the corporate debtor has ownership rights (Section 18(1)(f) of the IBC) - overriding effect of the Insolvency and Bankruptcy Code over other enactments (Section 238) - continuing/sovereign bank guarantee - Whether the Resolution Professional is entitled to the release of fixed deposits of the corporate debtor held with the bank notwithstanding the bank's contention of continuing sovereign bank guarantees. - HELD THAT: - The Tribunal recorded that the fixed deposits are assets of the corporate debtor and, upon initiation of CIRP, the Resolution Professional is obliged to take control and custody of assets as recorded in the balance sheet under Section 18(1)(f) of the IBC. The Tribunal relied on the principle that the IBC has an overriding effect over other statutes under Section 238, and accordingly rejected the bank's contention that the existence of continuing/sovereign bank guarantees prevents release of the fixed deposits. The bank's statement that the guarantees are continuing and will not be revoked without consent of the President of India does not negate the RP's statutory entitlement to custody and use of assets for completing the CIRP. On that basis the Tribunal directed release of the fixed deposit amount and accrued interest to the corporate debtor's account or the RP's CIRP pool account to enable completion of the CIRP.

Direct the bank to release the fixed deposit amount and accrued interest to the corporate debtor's account and/or the RP's CIRP pool account to complete the CIRP.

Claim of customs authorities as an operational creditor - release of corporate debtor's funds to the resolution professional for completion of CIRP - Extent to which the rights of the Commissioner/Assistant Commissioner of Customs to claim dues affect the direction to release funds. - HELD THAT: - While directing release of the fixed deposit, the Tribunal clarified that the Commissioner of Customs, Mumbai/Assistant Commissioner of Customs may still claim their dues and, if they do so, such claims are to be treated as claims of an "Operational Creditor" and placed before the Resolution Professional for consideration in the CIRP. The order thus releases the funds for CIRP purposes but preserves the statutory right of the customs authorities to submit and prosecute their claims through the RP and the CIRP process.

Commissioner/Assistant Commissioner of Customs may claim their dues as operational creditor and place such claim before the Resolution Professional for consideration.

Final Conclusion: The application is disposed of by directing the respondent bank to release the fixed deposit amount with accrued interest to the corporate debtor's account and/or the RP's CIRP pool account for completion of the CIRP; rights of the customs authorities to claim dues are preserved and such claims are to be presented to the RP as operational creditor claims.

Operational Debt - Operational Creditor - Financial Creditor - Overriding effect of the Insolvency and Bankruptcy Code (Section 238) - Secured Creditor claim under State VAT incompatible with IBC regime

Operational Debt - Operational Creditor - Whether dues payable to government authorities fall within the definition of "Operational Debt" and the claimants qualify as "Operational Creditor" under the IBC. - HELD THAT: - The Tribunal analysed the statutory definitions of "Operational Debt" and "Operational Creditor" and relevant Supreme Court pronouncements which have held that statutory dues payable to the Central Government, State Government or local authorities constitute operational debt and that such government dues have a direct nexus with the corporate debtor where they arise. Applying these authorities and the definitions, the Tribunal concluded that the State Tax Officer's dues fall within the category of operational debt and the State Tax Officer must be treated as an operational creditor. Consequently, the IA seeking recognition as a secured creditor on that basis cannot succeed insofar as the contention rests on re-characterising government dues outside the operational creditor framework. [Paras 4, 7, 8]

The dues of the Government are operational debt and the Applicant is to be treated as an operational creditor; the principal object of the IA (to be treated otherwise) cannot succeed on that basis.

Secured Creditor claim under State VAT incompatible with IBC regime - Overriding effect of the Insolvency and Bankruptcy Code (Section 238) - Whether the Applicant's reliance on a provision of the Gujarat Value Added Tax Act to claim the status of a secured creditor is maintainable in view of Section 238 of the IBC and settled judicial authority. - HELD THAT: - The Tribunal considered the Applicant's claim under the VAT statute for secured status and examined Section 238 of the IBC together with Supreme Court decisions cited in the order which recognise the non obstante/overriding effect of the IBC over inconsistent provisions of other statutes. The Tribunal held that a provision of the State VAT statute cannot override or defeat the Code's regime, and that allowing such a claim would frustrate the object of time bound corporate insolvency resolution. On that basis the contention that the Applicant should be treated as a secured creditor by virtue of the VAT provision was rejected. [Paras 4, 5, 6, 8, 9]

The contention that the Applicant is a secured creditor by virtue of the Gujarat VAT provision is not maintainable in view of Section 238 of the IBC and relevant Supreme Court authorities; the claim is therefore rejected.

Final Conclusion: The application for restoration and condonation of delay is dismissed as lacking merit; the Tribunal held the Government dues to be operational debt and rejected the claim to secured creditor status under the State VAT statute in view of the overriding effect of the IBC, while granting the Applicant liberty to present its claim as an operational creditor to the Resolution Professional.

Resolution Professional has no adjudicatory power - vet, verify and collate claims - Section 60(6) - right to file suit or application after moratorium - approval of resolution plan by Committee of Creditors pending Section 31 order - claims to be filed before Liquidator under Section 40 if liquidation follows

Resolution Professional has no adjudicatory power - vet, verify and collate claims - Whether the Resolution Professional could reject the applicant's claim on merits in the CIRP. - HELD THAT: - Relying on the reasoning in Swiss Ribbons and the NCLAT decision in M/s. Prasad Gempex, the Tribunal held that the Resolution Professional does not possess adjudicatory power to finally decide or reject disputed claims. The RP's role is limited to vetting, verification and collating claims; it cannot determine contested liability on merits. Given that a resolution plan has been approved by the Committee of Creditors and approval under Section 31 is pending, the Tribunal found the NCLAT precedent squarely applicable and declined to exercise a merits-based rejection of the applicant's claim by the RP. [Paras 10]

The RP's rejection of the claim cannot stand as a final adjudication; RP lacks power to decide disputed claims on merits.

Section 60(6) - right to file suit or application after moratorium - approval of resolution plan by Committee of Creditors pending Section 31 order - claims to be filed before Liquidator under Section 40 if liquidation follows - Remedial route available to the applicant following the RP's rejection when a resolution plan has been approved by the COC but not yet sanctioned. - HELD THAT: - The Tribunal directed that, in view of the COC's approval of a resolution plan and the pending Section 31 sanction, the applicant is permitted to pursue its claim in terms of Section 60(6) by filing suit or appropriate application before the competent court if the resolution plan is sanctioned but does not protect the applicant. Alternatively, if the resolution plan is not sanctioned and liquidation ensues, the applicant may present its claim to the Liquidator who will decide it under Section 40. The direction follows the approach in M/s. Prasad Gempex which implements the procedural remedies available where RP has declined to admit a claim. [Paras 12]

Applicant allowed to file claim under Section 60(6) before appropriate court or, if liquidation follows, to file claim before the Liquidator under Section 40.

Final Conclusion: Application disposed by permitting the applicant to seek adjudication of its disputed claim before the appropriate court in terms of Section 60(6) pending Section 31 approval of the resolution plan, or, if liquidation occurs, to file the claim before the Liquidator for decision under Section 40; RP's rejection is not a final adjudication on merits.

Limitation - time barred - extended period of limitation - Cenvat credit - suppression of facts - bonafide availment - interpretation of Cenvat Credit Rules

Limitation - time barred - suppression of facts - Cenvat credit - interpretation of Cenvat Credit Rules - The demand in respect of Cenvat credit on Dumpers/trippers for May, 2008 to March, 2009 is time-barred. - HELD THAT: - The Tribunal found that the appellant had disclosed and declared the Cenvat credit on Dumpers/trippers in its periodical ST-3 returns and had furnished invoice-wise details in response to a Range Officer's query prior to the audit. There was no finding of suppression or wilful misstatement by the appellant. The issue also involved interpretation of the Cenvat Credit Rules and had given rise to conflicting Tribunal decisions permitting credit on similar goods. In that factual and jurisprudential context the extended period of limitation could not be invoked against the appellant. The Tribunal therefore disposed of the appeal on the ground of limitation without adjudicating the merits concerning whether the goods qualified as inputs or capital goods.

Impugned order set aside as the demand beyond the normal period is time-barred; appeal allowed on limitation ground.

Final Conclusion: The appeal was allowed and the impugned order set aside on the ground that the demand in respect of Cenvat credit on Dumpers/trippers for the period May, 2008 to March, 2009 is time-barred; merits were not decided.

Curable mistake - inadvertent omission in declaration - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - correction of SVLDRS-1 form - rejection for incorrect declaration - reasoned speaking order

Inadvertent omission in declaration - curable mistake - rejection for incorrect declaration - Whether an inadvertent failure to disclose the amount of penalty in Form SVLDRS-1 warrants rejection of the claimant's application under the Scheme 2019 or is a curable mistake. - HELD THAT: - The Court applied the reasoning in its earlier decision in WP(C) No.2149/2020 and held that non-disclosure of the penalty in Form SVLDRS-1, where such omission is inadvertent and does not operate to secure an undue advantage, is not an incurable or fatal defect disentitling the petitioner to the benefit under Scheme 2019. The Court observed that the Scheme does not preclude a person on whom a penalty has been imposed from claiming benefits and that omission of the penalty could, if anything, reduce rather than create an undue benefit. Accordingly, the mistake was treated as curable and not an automatic ground for rejection. [Paras 4]

The omission was held to be curable and not a ground for automatic rejection of the claim under the Scheme 2019.

Correction of SVLDRS-1 form - reasoned speaking order - Procedure to be followed for rectification and decision-making where an inadvertent omission has occurred in Form SVLDRS-1. - HELD THAT: - The Court directed that the petitioner be permitted to submit an application for correction of the information in the originally filed Form SVLDRS-1 and required the respondent authorities to consider such application and pass a reasoned and speaking order. The petitioner must make the application within 15 days from obtaining the certified copy of this order, and the respondents shall pass an order within two months from receipt of the application. The Court further clarified that the prior rejection of a subsequently filed Form SVLDRS-1 as not maintainable does not preclude the petitioner from seeking correction under the procedure ordered. [Paras 6, 7]

Petitioner permitted to apply for correction within 15 days; respondents to decide by a reasoned speaking order within two months of receipt.

Final Conclusion: Writ petition disposed of by holding the omission to be a curable mistake; petitioner directed to apply for correction of the SVLDRS-1 entry within 15 days and authorities directed to pass a reasoned speaking order within two months of receipt.

Refund of duty under Notification No. 33/99-CE - limitation / delay defence to refund claims - substantial compliance with procedural requirement - beneficent construction of exemption notifications

Refund of duty under Notification No. 33/99-CE - limitation / delay defence to refund claims - substantial compliance with procedural requirement - Whether refund can be denied on the ground of delay when the substantive eligibility (increase in installed capacity) under Notification No. 33/99-CE is established and statements of duty paid were submitted in RT-12 returns. - HELD THAT: - The Tribunal held that once the assessee has conclusively established the substantive eligibility for refund under the Notification by proving the requisite increase in installed capacity, denial of refund on the sole ground of delay would cause grave injustice and is not justified. The Tribunal followed the decision of the Hon'ble Gauhati High Court in Vernerpur Tea Estate v. CCE which found that the Notification does not mandate filing a separate refund claim and that submission of monthly statements of duty paid in RT-12 returns amounted to substantial compliance with the procedural requirement. The Tribunal rejected the Revenue's reliance on Neeldhara Weaving Factory (P&H) as factually distinguishable, noting that Neeldhara concerned a different statutory context and penalty proceedings after a long lapse; accordingly it did not govern the present entitlement to refund under Notification No. 33/99-CE. Applying the principle that procedural non-compliance should not defeat a substantive beneficent exemption, and that exemption notifications are to be liberally construed, the Tribunal concluded that refund could not be withheld merely for delay when the substantive condition was satisfied and RT-12 submissions constituted substantial compliance.

Impugned orders set aside; appeals allowed and refunds to be granted with consequential relief.

Final Conclusion: The Tribunal allowed the appeals, following the Gauhati High Court's construction of Notification No. 33/99-CE that substantive eligibility and submission of RT-12 statements constitute substantial compliance and that refund cannot be denied solely on the ground of delay; impugned orders were set aside and consequential relief granted.

Extraordinary jurisdiction under Article 226 - maintainability of writ where statutory remedy available - recall/review of court order - finality of assessment and recovery under the Revenue Recovery Act - laches and delay defeating equity

Extraordinary jurisdiction under Article 226 - recall/review of court order - maintainability of writ where statutory remedy available - laches and delay defeating equity - finality of assessment and recovery under the Revenue Recovery Act - Entitlement to interim relief against sale notices issued for recovery where a recall petition has been filed challenging an earlier order dismissing a writ as withdrawn. - HELD THAT: - The petition challenged sale notices issued for recovery pursuant to an assessment and subsequent penalty orders which became final. The petitioner had earlier filed a writ petition against the assessment but withdrew it and the writ was dismissed as withdrawn on 19.10.2016. The petitioner later produced a recall petition allegedly filed on 05.03.2019, but the material shows the petition was verified on 07.05.2018 and was not assigned any number; no explanation was offered for the delay. In the interregnum penalty proceedings concluded and recovery steps under the Andhra Pradesh Revenue Recovery Act (including attachment and sale notice) were taken. Having regard to the settled principle that statutory remedies should ordinarily be availed of and that delay and laches disentitle a party to equitable relief, the Court found no merit in staying or setting aside the sale notices merely because of the belated and unparticularised recall petition. Consequently, the assessment and penalty orders having attained finality, and recovery proceedings being in regular course, interference with the sale notices was not warranted.

Writ petition dismissed; no interference with sale notices issued for recovery.

Final Conclusion: The writ petition seeking to stay sale notices issued in furtherance of recovery under the Revenue Recovery Act was dismissed on merits: the assessment and penalty orders had attained finality, the recall application was belated and unexplained, statutory remedies were available and delay/laches precluded equitable relief; no costs.

Assessing Officer's independent application of mind - Proposals of Enforcement Wing/ISIC not binding on assessment - Power of Assessing Authority to deviate from enforcement proposals on recording reasons - Remand for fresh consideration of assessment - Opportunity of hearing and filing of objections with supporting documents

Assessing Officer's independent application of mind - Proposals of Enforcement Wing/ISIC not binding on assessment - Whether an Assessing Officer may merely adopt proposals of the Enforcement Wing/ISIC without independent consideration. - HELD THAT: - The Court reaffirmed its earlier decisions that an Assessing Officer, being a quasi judicial authority, must independently consider audit reports or inspection proposals and cannot be solely guided by proposals of the Enforcement Wing/ISIC. The judgments of this Court cited in para 3 support the principle that the Assessing Officer must apply his own mind and not mechanistically adopt higher authorities' proposals. [Paras 3]

Assessing Officers cannot be solely guided by Enforcement Wing/ISIC proposals and must independently consider and decide assessments.

Power of Assessing Authority to deviate from enforcement proposals on recording reasons - Remand for fresh consideration of assessment - Effect of Circular No.3 dated 18.01.2019 empowering Assessing Authorities to deviate from Enforcement/ISIC proposals and the remedial consequence for impugned proceedings founded on those proposals. - HELD THAT: - The Court noted that Circular No.3 (reproduced in para 4) authorises Assessing Authorities to finalize assessment or revision after deviating, partly or wholly, from Enforcement/ISIC proposals if such proposals are not in conformity with law or established judicial principles, provided reasons are recorded. Applying that Circular, the Court set aside impugned proceedings which proceeded solely on Enforcement/ISIC proposals and remanded the matters to the Assessing Officer for fresh consideration in accordance with the Circular and the requirement of independent application of mind. [Paras 4, 6]

Impugned proceedings founded on Enforcement/ISIC proposals are set aside and remitted to the Assessing Officer to be decided afresh in accordance with Circular No.3 and the requirement of independent consideration.

Opportunity of hearing and filing of objections with supporting documents - Procedural directions governing the remand: timeline for filing objections, hearing, and conclusion of assessment proceedings. - HELD THAT: - The Court granted the assessees liberty to file objections with supporting documents within 30 days of receipt of the order. On receipt of objections the Assessing Officer must afford due opportunity of personal hearing (including via Video Conferencing) and endeavour to conclude the assessment proceedings within 12 weeks from receipt of objections. If no objections are filed within 30 days, the Assessing Officer may commence proceedings after that period. These directions implement the remand and ensure procedural fairness and expedition. [Paras 6]

Assessees to file objections within 30 days; Assessing Officer to grant hearing and endeavour to conclude proceedings within 12 weeks; if no objections, proceedings may commence after 30 days.

Interim remittance treated in subsequent assessment - Treatment of the 10% interim payment previously made pursuant to the Court's interim orders. - HELD THAT: - The Court recorded that pursuant to earlier interim orders the petitioner had paid 10% of the tax demand and clarified that such remittance shall form part of the outcome of the proceedings to be taken by the Assessing Officer upon remand. This indicates the remittance is to be considered in the fresh assessment proceedings. [Paras 5]

The earlier remittance of 10% will be treated as part of the outcome of the assessment proceedings on remand.

Final Conclusion: Writ petitions allowed: impugned proceedings based on Enforcement Wing/ISIC proposals set aside and remanded to the Assessing Officer for independent reconsideration in terms of Circular No.3 (18.01.2019); assessees given 30 days to file objections and Assessing Officer directed to afford hearing and endeavour to conclude assessment within 12 weeks; prior 10% remittance to be accounted for in the proceedings; no costs.

Validity of reopening of assessment and service of reasons - Exemption under section 5(vi) of the Wealth-tax Act - one house or part of a house or a plot of land - Proviso to section 5(vi) as qualifying the main provision and not an independent enactment - Incompatibility of claiming exemption for both one house and a plot of land in respect of the same asset - Chargeability of construction-in-progress for wealth-tax

Validity of reopening of assessment and service of reasons - The reopening of assessment and the adequacy of service of reasons recorded by the Assessing Officer were valid. - HELD THAT: - The Assessing Officer recorded in the assessment order that reasons for reopening were recorded and served. The assessee produced no material to displace that recitation. On the record before the Tribunal there was no contrary evidence to show non-service or procedural irregularity. In these circumstances the appellate forum was correct in treating the AO's statement as true and holding that the procedure for reopening under the Wealth-tax Act was complied with. [Paras 6]

Reopening upheld; no illegality or failure of service established.

Exemption under section 5(vi) of the Wealth-tax Act - one house or part of a house or a plot of land - Proviso to section 5(vi) as qualifying the main provision and not an independent enactment - Incompatibility of claiming exemption for both one house and a plot of land in respect of the same asset - Chargeability of construction-in-progress for wealth-tax - Where an assessee has claimed exemption under section 5(vi) in respect of one house, the assessee cannot separately claim exemption for the plot on which that house stands under the proviso to section 5(vi); the proviso must be read with and as qualifying the main clause. - HELD THAT: - Section 5(vi) exempts "one house or part of a house or a plot of land" from wealth-tax and contains a proviso that a plot of land of 500 square metres or less is exempt. The proviso is not an independent enactment; it qualifies the principal provision and must be read together therewith so as to give meaning to the exception envisaged by Parliament. Consequently, exemption is available in respect of any one of the items mentioned (one house, part of a house, or a plot of land) in accordance with the main clause and the proviso; an assessee who has already availed exemption in respect of one house cannot additionally claim exemption for the plot. The Tribunal also accepted that value attributable to construction-in-progress was not exigible as a residential house, and the principal taxability question therefore turned on whether the plot could be separately exempted after the house exemption had been claimed. [Paras 12, 13, 15, 16, 17]

Assessees not entitled to separate exemption for the plot (even if under 500 sq. metres) after claiming exemption for one house; appeals on merits dismissed.

Final Conclusion: The Tribunal upheld the validity of reopening and, on merits, held that an assessee who has availed exemption under section 5(vi) in respect of one house cannot separately claim exemption for the plot under the proviso; consequently the appeals are dismissed.