TaxTMI Updates e-Newsletter
Oct 31,2018

Transitional provisions - input tax credit - capital goods - inputs in transit - reasonable classification - presumption of constitutionality in economic legislation - no vested right in concessionary tax credit - strict compliance with conditions for concessional benefits - Article 14 - Article 19(1)(g)

Transitional provisions - input tax credit - capital goods - inputs in transit - reasonable classification - presumption of constitutionality in economic legislation - no vested right in concessionary tax credit - Validity of subsection (5) of section 140 of the CGST Act insofar as it permits transitional credit for inputs in transit but does not permit credit for capital goods in transit - HELD THAT: - The Court held that Chapter XX contains transitional provisions which distinguish between unutilized CENVAT credit in respect of inputs and capital goods. While subsection (5) of section 140 permits credit for inputs or input services received on or after the appointed day though duty was paid earlier, no corresponding provision was made for capital goods in transit received after the appointed day. The legislature consciously and reasonably treated capital goods and inputs differently in the context of transit credits; such differentiation is consistent with prior statutory schemes (including rule 57Q and the CENVAT Credit Rules, 2004) which have historically treated capital goods and inputs differently. In an economic and fiscal statute the presumption of constitutionality applies and the legislature is afforded greater latitude; differences in treatment will not be struck down unless shown to be arbitrary or without nexus to the statute's object. The petitioner failed to discharge the burden to show that the classification was artificial or discriminatory: capital goods may be slow-moving, require longer delivery and installation, and leaving transitional claims open indefinitely would be unworkable. Concessions of tax credit are subject to conditions and time limits and do not create a vested right that prevents the legislature from prescribing different transitional rules for capital goods. Reliance on authorities was considered and the Court found them supportive of upholding concessional conditions and temporal limits in tax statutes. [Paras 17, 18, 19, 20, 25]

Subsection (5) of section 140 insofar as it does not permit credit for capital goods in transit is not violative of Article 14 or Article 19(1)(g); the distinction is a permissible legislative classification and does not deprive the petitioner of a vested right.

Final Conclusion: Petition dismissed; the challenged provision of the CGST Act sustaining different transitional treatment for inputs and capital goods in transit is upheld as constitutionally permissible and not arbitrary.

Extension of time for filing GST TRAN-1 - power of Commissioner to extend time - recommendation of the Council - opportunity of hearing

Extension of time for filing GST TRAN-1 - power of Commissioner to extend time - recommendation of the Council - opportunity of hearing - Petition for extension of time to file GST TRAN-1 and the manner in which the relief should be considered by the competent authority. - HELD THAT: - The Court noted the petitioner's plea that technical problems prevented timely upload of the GST TRAN-1 declaration. Respondents informed the Court that Notification No.48 dated September 10, 2018 empowers the Commissioner to extend the time for submission of GST TRAN-1 up to March 31, 2019, and that such power is to be exercised on the recommendation of the Council. Respondents further undertook that if the petitioner makes a representation to the Council, the competent authority will consider the grievance, afford the petitioner an opportunity of hearing, and decide the matter by November 30, 2018. Having recorded this stand, the Court disposed of the petition by directing the petitioner to represent to the Council and by requiring the competent authority to consider and redress the grievance after hearing within the timeline offered by respondents.

Petition disposed of with direction that the petitioner may represent to the Council and the competent authority shall consider and decide the request for extension after affording an opportunity of hearing by November 30, 2018; respondents' undertakings recorded.

Final Conclusion: The petition seeking extension for filing GST TRAN-1 was disposed of after recording respondents' statement that the Commissioner (on Council recommendation) may extend the time up to March 31, 2019 and that the petitioner's representation will be considered after hearing and decided by November 30, 2018.

Bank guarantee - invocation of bank guarantee restrained pending exhaustion of statutory remedy - statutory appeal under Section 107(1) of the CGST/SGST Act - adjudication and penalty - limitation for filing appeal - interim restraint by High Court - release of detained goods on furnishing security

Bank guarantee - invocation of bank guarantee restrained pending exhaustion of statutory remedy - statutory appeal under Section 107(1) of the CGST/SGST Act - limitation for filing appeal - Whether the authorities could invoke the bank guarantee furnished by the petitioner after completion of adjudication (Ext.P5) while the petitioner proposes to file a statutory appeal within limitation. - HELD THAT: - The petitioner, having earlier obtained release of detained goods by furnishing a bank guarantee for the tax and penalty, faces an adverse adjudication recorded in Ext.P5 and intends to prefer the statutory appeal within the prescribed period. The Court noted that the appellate authority has already been constituted under the statutory provision referred to by the respondents and that the petitioner may file the appeal in time. In the circumstances, and to preserve the petitioner's right to pursue the appellate remedy, the Court exercised its discretion to grant interim relief restraining the respondents from encashing or invoking the bank guarantee supplied earlier, until the petitioner exhausts the statutory remedy by filing and prosecuting the appeal or until the period for filing the appeal becomes barred by limitation. The restraint is limited in duration and tied to the procedural opportunity to file the appeal or the expiry of the limitation period.

Respondents are restrained from invoking or encashing the bank guarantee furnished by the petitioner under Ext.P5 until the petitioner exhausts the statutory appeal remedy or until the appeal period is barred by limitation.

Final Conclusion: Writ petition disposed by granting interim restraint on invocation of the bank guarantee furnished for tax and penalty; respondents barred from encashment until the petitioner exhausts the statutory appeal remedy or the appeal period lapses.

Adjudication under Section 129 of the CGST Act - release of detained goods on compliance with Rule 140(1) of the Kerala Goods and Service Tax Rules, 2017 - bank guarantee not to be encashed pending statutory appeal - recall of judgment - statutory appeal under the CGST/SGST Acts

Recall of judgment - bank guarantee not to be encashed pending statutory appeal - Recall of the Court's earlier order dated 19.07.2018 and direction restraining encashment of the bank guarantee until the petitioner's statutory appeal is considered on merits. - HELD THAT: - The Court recalled its earlier order of 19.07.2018 in WP(C) No.13980 of 2018 in view of the subsequent events and submissions. The petitioner had obtained release of the detained goods by furnishing a bank guarantee and has filed the statutory appeal under the CGST/SGST Acts. The learned Government Pleader stated that respondent authorities would keep the bank guarantee intact pending disposal of the appeal. In light of these facts and the parties' positions, the Court set aside the operative direction in the earlier judgment insofar as it might permit encashment of the bank guarantee, and directed that the respondents shall not encash the bank guarantee until the petitioner's statutory appeal is considered on merit.

The earlier judgment dated 19.07.2018 is recalled and the respondents are directed not to encash the bank guarantee until the petitioner's statutory appeal is disposed of on merits.

Final Conclusion: Review petition disposed of by recalling the prior order and directing that the bank guarantee furnished by the petitioner shall not be encashed until the statutory appeal filed by the petitioner under the CGST/SGST Acts is decided on merits.

Composite supply - principal supply - intermediary service - classification of services - Service Accounting Code (SAC) - place of supply

Composite supply - principal supply - Characterisation of Marine Consultancy Services (MCS) supplied by the appellant - whether MCS is a composite supply with consultancy as the principal supply. - HELD THAT: - The Appellate Authority examined the contractual terms, the nature and sequence of activities and industry practice but concluded that the totality of services performed by the appellant are not to be characterised as consultancy (principal) bundled with ancillary support. Applying the definition of composite supply, the Authority found that the appellant's activities in fact facilitate the supply of the main service (chartering of vessels) by the foreign ship owners to charterers and therefore do not amount to consultancy as the principal element of MCS. The Authority analysed market practice, the agreement terms and the functional role of the appellant and held that the dominant element is facilitation of the chartering transaction rather than provision of consultancy as principal supply. [Paras 70, 71]

MCS is not a composite supply with consultancy as the principal supply; the appellant's activities are to be viewed as facilitating the chartering service rather than consultancy as the principal element.

Intermediary service - Whether the support/related activities performed by the appellant qualify as an "intermediary service" under the statutory definition. - HELD THAT: - Having applied the statutory definition of intermediary (a person who arranges or facilitates the supply of goods or services between two or more persons), the Authority found that the appellant introduces foreign ship owners to potential charterers, facilitates the fixing of charters and undertakes post-fixture administrative and voyage-monitoring functions that assist in consummation and execution of the chartering contract. The presence of three parties (FSO, charterer and appellant), and the appellant's role in arranging and facilitating the chartering supply, led the Authority to conclude that the appellant is acting as an intermediary. [Paras 64, 65, 70]

The support and facilitation activities qualify as "intermediary service" and the appellant is acting as an intermediary in relation to the chartering supply.

Classification of services - Service Accounting Code (SAC) - Classification of the gamut of services performed by the appellant under the Notification/Annexure (SAC). - HELD THAT: - On the factual matrix and functional characterisation of the appellant's activities as intermediary and associated administrative services, the Authority held that the services should be classified primarily as intermediary activities and incidental accounting/administrative services. The Authority indicated the appropriate SAC heads for these activities rather than treating them as business consultancy or business support services relied upon by the appellant. [Paras 68, 70, 71]

The services are a composite supply of intermediary services (principal) classified under SAC 999799 (Other Miscellaneous Services) together with accounting/administrative services under SAC 998222.

Final Conclusion: The appeal is disposed by holding that the appellant's entire gamut of activities constitutes a composite supply whose principal element is intermediary services (facilitating chartering of vessels) with incidental accounting services; the services are classified under SAC 999799 (intermediary/other miscellaneous services) and SAC 998222 (accounting services), and the individual questions framed in the advance ruling application are rendered academic in view of this characterisation.

Job work as treatment or process on goods belonging to another - principal and job worker relationship - manufacturing services on physical inputs owned by others (job work may amount to manufacture) - movement of inputs and return of processed goods without payment of GST under job work procedure in Section 143 of GST - minor or ancillary supplies by job worker not altering job work character - taxable supply not constituted by mere sending and return of inputs under job work

Job work as treatment or process on goods belonging to another - principal and job worker relationship - movement of inputs and return of processed goods without payment of GST under job work procedure in Section 143 of GST - Sending RLNG, DM water, Hydrogen-rich off-gas and raw water by the applicant to M/s. Prodair Air Products Pvt. Ltd. free of cost for processing qualifies as job work and is not a taxable supply when sent under the job work procedure. - HELD THAT: - The goods were supplied by the applicant (principal) to M/s. Prodair (job worker) for treatment or processing while continuing to belong to the applicant. Job work, as defined, requires treatment or process undertaken by one person on goods belonging to another. The processing performed by the job worker converts the supplied inputs into industrial gases, but ownership of inputs and resultant gases remains with the principal. The use of minor or ancillary materials by the job worker to complete the process does not change the character of the transaction from job work to a distinct taxable supply. In view of Section 143's procedure permitting a registered person to send inputs to a job worker without payment of tax and to bring back inputs or goods after job work within the stipulated period, the movement of inputs through pipelines for processing and their return cannot be treated as a taxable supply.

The sending of the specified inputs to the job worker free of cost for processing amounts to job work and is not a taxable supply under the job work procedure.

Manufacturing services on physical inputs owned by others (job work may amount to manufacture) - taxable supply not constituted by mere sending and return of inputs under job work - minor or ancillary supplies by job worker not altering job work character - The return to the applicant of Hydrogen, Nitrogen and Steam produced by the job worker from the applicant's inputs can be taken back without payment of GST under the job work provisions. - HELD THAT: - The industrial gases produced by M/s. Prodair arise from the major inputs supplied by the applicant and are treated as goods manufactured on behalf of the principal by the job worker. Jurisprudence and the statutory definition recognise that job work may include manufacture; where the job worker processes goods belonging to another and charges only job-work consideration, the tax liability (if any) is on the job worker's job-work charges. Because the applicant retains ownership and the processing falls within the job work regime, the buy-back/receipt of processed industrial gases by the principal pursuant to the job work arrangement does not attract a separate GST charge on the movement of goods back to the principal under the procedure in Section 143.

The applicant may take back the industrial gases produced by the job worker without payment of GST under the job work provisions.

Final Conclusion: The Authority ruled that the supply of specified inputs by the applicant to M/s. Prodair for processing, and the return/take-back of the industrial gases so produced, constitute job work under the GST job-work procedure and are not taxable supplies when effected in accordance with that procedure.

Mixed supply - composite supply - continuous supply of goods - time of supply - value of supply - transaction value

Mixed supply - composite supply - principal supply - Classification of ElectroInk supplied with consumables under GST - HELD THAT: - The Authority examined whether the bundled sale of ElectroInk and ancillary consumables qualifies as a composite supply or a mixed supply. It applied the statutory tests for composite supply - existence of two or more taxable supplies, whether they are naturally bundled, supplied in conjunction in the ordinary course of business, and whether one is a principal supply. While the transaction involves multiple goods supplied in conjunction and billed for a single price, the Authority found that the supplies can be procured and consumed independently (each has a separate lifespan and may be replaced at different intervals) and the recipient has contractual options under the agreement. Consequently, the 'naturally bundled' requirement for a composite supply is not satisfied. Having failed the composite supply test, the bundle falls within the definition of a mixed supply. The Authority therefore classified the supply as a mixed supply and also noted its character as a continuous supply of goods (addressed separately). [Paras 5]

Supply of ElectroInk with consumables is a mixed supply (not a composite supply) and is treated as such under the GST Act.

Continuous supply of goods - time of supply - value of supply - transaction value - Determination of time and value of supply of ElectroInk with consumables under the Indigo press contract - HELD THAT: - The Authority found that the contractual and billing model (per-click invoicing on a periodic basis, supplies remaining the supplier's property until invoiced/paid, and successive statements issued monthly) satisfies the statutory definition of continuous supply of goods. Applying section 12(2) and section 31(4) principles, the time of supply for such continuous supplies is the earlier of the date of issue of the invoice (or the last date it is required to be issued) and the date on which payment is received. As for value, because the transaction is a single-price continuous supply, the value of supply is the transaction value reflected in the invoice issued under the provisions applicable to continuous supplies (section 31(4) and section 15 principles). [Paras 5]

Time of supply is the earlier of invoice date or receipt of payment; value of supply is the transaction value as reflected in the invoice issued for continuous supplies.

Final Conclusion: The Authority ruled that the bundled supply of ElectroInk with consumables is a mixed supply (not a composite supply) and is a continuous supply of goods; the time of supply is the earlier of invoice date or receipt of payment, and the value is the transaction value as reflected in the invoice.

Transfer of income where there is no transfer of assets - owner taxable under income from house property - revocable transfer / charge of income - rectification under section 254(2) - camouflage or arrangement to avoid incidence of tax

Transfer of income where there is no transfer of assets - owner taxable under income from house property - revocable transfer / charge of income - Characterisation and chargeability of lease/rental income arising from specified retail spaces for A.Y.2008-09 - HELD THAT: - The court upheld the concurrent conclusion of the revenue authorities that the agreement between the hotel owner and the developer created an arrangement by which the income from the retail spaces alone was diverted without transfer of the underlying assets. The agreement was finite and revocable (refund of deposit after initial period and maximum tenure), and clause 4 deemed the tenants to be tenants of the developer for the currency of the agreement. Applying the principle embodied in the rule that where income alone is transferred without transfer of the asset it remains chargeable to the transferor, and having regard to the statutory scheme for taxation of income from house property, the authorities rightly treated the receipts as assessable in the hands of the owner. The tribunal and appellate commissioner examined the case law relied upon by the assessees and distinguished decisions on their facts (including Dalmia, Rungamatee and Poddar) where, on the particular terms, rights to possession or an anterior effective date operated to transfer the income or profits; those factual distinctions were found to be determinative here. The lower authorities also noted contemporaneous commercial circumstances (developer showing the income but declaring loss while owner declared profits) supporting the conclusion that the arrangement had the character of an attempt to avoid tax in the owner's hands. On these findings the assessment of the rental income in the hands of the owner was sustained. [Paras 14, 16, 20]

The rental income was correctly assessed in the hands of the owner (AHR) and not in the hands of the developer (ADI); the findings of the authorities on this issue are unimpeachable.

Rectification under section 254(2) - camouflage or arrangement to avoid incidence of tax - Whether the ITAT's order rejecting the appeals contained a mistake apparent on the record warranting exercise of power under section 254(2) - HELD THAT: - The petitioners relied on Honda Siel to contend that the Tribunal must rectify a decision when it has overlooked material on record or binding authorities. The court examined the ITAT's reasons, the agreement, the appellate findings and the authorities placed before the ITAT and concluded that the tribunal did consider the submissions and the case law; it did not overlook binding precedent in a manner amounting to a mistake apparent on the record. The ITAT's use of the term 'camouflage' was held to be part of its factual discussion and not a ground for rectification. Given the factual nature of the dispute and the concurrent findings of the lower authorities distinguishing the petitioners' precedents, there was no basis to treat the ITAT's order as vitiated by a mistake calling for rectification under section 254(2). [Paras 6, 17, 25]

The ITAT rightly dismissed the rectification/miscellaneous applications; no mistake apparent on the record was shown that would justify relief under section 254(2).

Final Conclusion: The writ petitions fail. The impugned orders of the ITAT dated 07.07.2017 and 13.08.2018 are upheld and the petitions are dismissed without costs.

Unexplained cash credit under section 68 - identity, creditworthiness and genuineness of the cash creditor - subsequent repayment as corroborative evidence - concurrent finding of fact and appellate interference

Unexplained cash credit under section 68 - identity, creditworthiness and genuineness of the cash creditor - Whether the additions made by the Assessing Officer treating certain advances as unexplained cash credits under section 68 were sustainable. - HELD THAT: - The Commissioner on review examined the record, including bank statements, confirmations and an affidavit, and concluded that the identity of the creditors, their creditworthiness and the genuineness of the transactions were established; the Assessing Officer's doubts as to creditworthiness were held to be dispelled (see Commissioner's reasoning reproduced at para. 2.4.16 of his order). The Tribunal endorsed the Commissioner's detailed factual findings and applied the correct legal principles, holding that the transactions were genuine. The High Court found these concurrent findings of fact not demonstrably perverse and unsuitable for re-appreciation on appeal, hence the additions under section 68 could not be sustained. [Paras 6]

The Commissioner's and Tribunal's acceptance that the identity, creditworthiness and genuineness of the creditors were established is upheld and the additions under section 68 are not sustained.

Subsequent repayment as corroborative evidence - concurrent finding of fact and appellate interference - Whether the Tribunal erred in remanding the matter to the Assessing Officer to verify repayment of the advances. - HELD THAT: - The Tribunal, while endorsing the Commissioner's findings, directed verification of subsequent repayment as an additional, corroborative step to be satisfied of the reality of the creditors and transactions. The High Court held that this procedural step did not amount to legal error or perversity: where the Tribunal is satisfied on essential ingredients but seeks confirmation by verification of repayment, such a remand is permissible and not vitiating of its endorsement of the factual findings. The Court also declined to re-appreciate the factual findings itself, noting that reliance on subsequent repayment as corroboration was fact-dependent and legitimately considered by the authorities below. [Paras 7]

The Tribunal's remand for verification of repayment is not erroneous and is upheld.

Final Conclusion: The Revenue's appeal is dismissed; the concurrent factual findings of the Commissioner and the Tribunal that the advances were genuine and that the prerequisites of section 68 were satisfied are upheld, and the Tribunal's remand to verify repayment is not vitiated by legal error.

Power of revision under Section 263 - Requirement of prior show cause notice - Principles of natural justice - Satisfaction that an order is erroneous and prejudicial to the interest of the Revenue

Requirement of prior show cause notice - Power of revision under Section 263 - Whether a specific prior show cause notice detailing grounds is a precondition to exercise of revisional powers under Section 263. - HELD THAT: - The Court applied the ratio of the decision of the Hon'ble Supreme Court in Amitabh Bachchan, holding that the basic precondition for exercise of jurisdiction under Section 263 is the satisfaction that an order is erroneous and prejudicial to the interest of the Revenue. Once such satisfaction is reached, jurisdiction to exercise the power is available subject to observance of the principles of natural justice. Section 263 does not mandate issuance of a prior show cause notice detailing the specific grounds tentatively proposed; what is required is that the assessee be afforded an opportunity of hearing. Failure to give such an opportunity renders the revisional order vulnerable for breach of natural justice but does not, by itself, strip the Commissioner of jurisdiction to invoke Section 263.

A prior show cause notice detailing the specific grounds is not a statutory precondition for exercise of power under Section 263; the requirement is to afford the assessee an opportunity of hearing.

Principles of natural justice - Satisfaction that an order is erroneous and prejudicial to the interest of the Revenue - Whether the Commissioner was divested of jurisdiction by passing an order under Section 263 on grounds different from those mentioned in the earlier show cause notice and whether remand by the Tribunal was justified. - HELD THAT: - The Court found that where an order under Section 263 is based on the Commissioner's satisfaction that the assessment order is erroneous and prejudicial to revenue, the absence of a prior detailed show cause notice does not, ipso facto, oust jurisdiction. The critical safeguard is observance of natural justice by affording the assessee an opportunity to be heard. The decision in Ashish Rajpal relied upon by the assessee was factually distinguishable because that case involved a finding of violation of natural justice; therefore it did not assist the assessee here. In the present case the Commissioner's remand and subsequent order were within jurisdictional competence, subject to compliance with natural justice in the proceedings that followed.

The Commissioner was not divested of jurisdiction by issuing an order on grounds not contained in the earlier notice; remand for fresh consideration was not impermissible so long as principles of natural justice are observed.

Final Conclusion: The appeal is dismissed. The substantial questions of law are answered against the assessee: issuance of a prior detailed show cause notice is not a prerequisite to exercise the revisional power under Section 263, but observance of principles of natural justice (an opportunity of hearing) is required. No costs.

Unexplained investment addition under Section 69 - admissibility of documents and statements seized during search under Section 132(4) - loose sheets as documents under the Indian Evidence Act - retraction of statements and their evidentiary value - on-money payments in purchase of immovable property

Unexplained investment addition under Section 69 - on-money payments in purchase of immovable property - Addition under Section 69 upheld on the basis of entries in loose slips and statements accepting on-money payment. - HELD THAT: - The Court affirmed the factual conclusion reached by the Assessing Officer, CIT(A) and Tribunal that the loose slips recovered during search contained clear, legible entries recording cash and cheque payments relating to purchase of the immovable property and that the assessee had, in earlier statements, accepted on-money payments. The retraction made much later was held to be a vague afterthought; the Tribunal's and CIT(A)'s appraisal of the notings and the multiple statements of the assessee justified treating the unaccounted amounts as unexplained investments liable to be added under Section 69. The Court found no error in the concurrent factual findings and declined to interfere. [Paras 3, 7, 11, 12]

The addition under Section 69 was rightly sustained; the Tribunal's order is not interfered with.

Admissibility of documents and statements seized during search under Section 132(4) - loose sheets as documents under the Indian Evidence Act - retraction of statements and their evidentiary value - Loose sheets seized during search are admissible as documents and prior statements recorded under Section 132(4) retain evidentiary value despite subsequent retraction. - HELD THAT: - Relying on the reasoning accepted by the authorities below and on precedent, the Court held that loose sheets satisfy the definition of 'document' in the Indian Evidence Act and are admissible in terms of Section 132(4) and its Explanation. The earlier clear statements made by the assessee during the search may be used in evidence; a belated retraction made after considerable time was properly rejected as an afterthought. The Court also observed that the departmental circular cited by the assessee does not advance his case where multiple cogent statements and supporting notings were on record. [Paras 8, 10]

Loose sheets and the statements recorded during the search were admissible and the retraction was rightly rejected.

Final Conclusion: The appeal is dismissed; the Substantial Question of Law is answered against the assessee and the additions under Section 69 and the admissibility of seized loose sheets/statements were correctly upheld by the authorities.

Deduction under Section 80HHB - foreign project - assembly or installation of machinery or plant - ancillary and incidental activities to a foreign project - liberal construction of fiscal incentive provisions - reappreciation of evidence by appellate tribunal - ejusdem generis

Deduction under Section 80HHB - foreign project - assembly or installation of machinery or plant - ancillary and incidental activities to a foreign project - liberal construction of fiscal incentive provisions - reappreciation of evidence by appellate tribunal - Whether the activities carried out by the assessee in its Abu Dhabi project fall within the definition of 'foreign project' in Section 80HHB and entitle the assessee to deduction. - HELD THAT: - The Court accepted the factual finding of the Commissioner of Income Tax (Appeals) that the nature of the assessee's work as a sub-contractor in the refinery shut down involved assembly/installation and technical erection activities and thus falls within the expression 'foreign project' as defined in Section 80HHB(2)(b)(ii). The Tribunal erred in substituting a dictionary-based, narrow meaning of 'assembly' and 'installation' without reappreciating the materials, drawings and contract terms considered by the CIT(A). The Supreme Court's decision in Continental Construction Limited requires that Section 80HHB be construed not pedantically but to include all activities, commitments and obligations ancillary and incidental to the execution of a foreign project, including utilization of technical knowledge and rendering of technical services necessary to bring about construction, assembly and installation. The term 'shut down' was industry specific and did not automatically denote mere repair or maintenance; this factual matrix was examined by the CIT(A) and ought not to have been ignored. Reliance on the principle of strict literalism in Dilip Kumar and Company was inapplicable in the facts, and did not override the established approach to interpret incentive provisions liberally where Parliament has circumscribed qualifying projects. For these reasons the Tribunal's reversal of the CIT(A)'s finding was unsustainable. [Paras 10, 11, 16, 17, 20]

The appraisal and conclusion of the CIT(A) that the Abu Dhabi work qualified as a 'foreign project' under Section 80HHB are upheld; the Tribunal's order is set aside and the CIT(A) order restored.

Final Conclusion: The tax appeal is allowed; the Tribunal's order is set aside and the order of the Commissioner of Income Tax (Appeals) dated 27.3.2006 is restored, answering the substantial questions of law in favour of the assessee.

Addition for interest on non-performing assets - acceptance of assessee's accounting treatment for accrued interest on NPAs - reassessment by reopening of assessment - precedential effect of earlier High Court decision

Addition for interest on non-performing assets - acceptance of assessee's accounting treatment for accrued interest on NPAs - precedential effect of earlier High Court decision - Whether the addition of Rs. 2,67,88,000 on account of interest accrued on non-performing assets, made by the Assessing Officer and deleted by the CIT(A) and the Tribunal, could be sustained by the revenue. - HELD THAT: - The Court noted that the Tribunal upheld the deletion made by the CIT(A) of the addition relating to accrued interest on NPAs and that identical questions had earlier arisen and been considered by this Court in ITA-349-2017 and connected appeals, where the revenue's appeal was dismissed. In view of the prior dismissal on substantially similar issues, the Court found no merit in the revenue's contention and declined to interfere with the Tribunal's decision deleting the addition. The Court thereby applied the precedential effect of its earlier order to the present appeal and did not entertain a fresh departure on the same controversy. [Paras 3, 4]

Revenue's appeal dismissed and the Tribunal's order deleting the addition upheld.

Final Conclusion: The appeal is dismissed; the deletion of the addition relating to accrued interest on non-performing assets, as upheld by the Tribunal and previously by this Court in a similar matter, stands affirmed.

Failure to furnish return of income - willful failure to furnish return (mens rea for prosecution) - sanction for prosecution by superior officer under proviso to Section 279(1) of the Income tax Act - independence of criminal prosecution from assessment proceedings - Assessing Officer's discretion in imposing penalty for non furnishing of return - presumption as to culpable mental state - deemed liability of directors where company commits offence - verification of return by managing director and liability of other directors

Sanction for prosecution by superior officer under proviso to Section 279(1) of the Income tax Act - prosecutor not disqualified for being in hierarchy - Validity of show cause notice and sanction for prosecution issued by the Commissioner of Income Tax and consequent filing of criminal complaint. - HELD THAT: - The proviso to Section 279(1) permits initiation of prosecution at the instance of authorities superior to the assessing authority, including the Commissioner of Income Tax, and such superior officer may issue directions or instructions for institution of proceedings. The Court held that there was no impropriety in the CIT issuing the show cause notice and subsequently sanctioning prosecution, and the fact that the assessing authority had passed the assessment order did not render the sanction invalid. The petitioners' contention that the prosecutor was effectively the judge of his own cause was rejected. [Paras 5]

Sanction by the CIT and filing of the criminal complaint were valid; no ground to quash sanction.

Failure to furnish return of income - independence of criminal prosecution from assessment proceedings - failure to file return as basis of offence under Section 276 CC - Whether the subsequent filing of return and completion of assessment preclude criminal prosecution for failure to furnish return. - HELD THAT: - The offence of non furnishing of return is attracted by the failure to file within the statutory time or in response to notice; subsequent filing of return and completion of assessment do not prevent initiation or continuation of criminal prosecution. Whether the default was justified is a defence to be raised at trial; assessment proceedings are independent and do not bar criminal proceedings, consistent with the reasoning in Sasi Enterprises. [Paras 6, 7]

Subsequent filing of return and scrutiny assessment do not bar prosecution for failure to furnish return; the question of justification is for trial.

Assessing Officer's discretion in imposing penalty for non furnishing of return - willful failure to furnish return (mens rea for prosecution) - presumption as to culpable mental state - Whether omission by the Assessing Officer to impose penalty under the provision for failure to furnish return negatives willful default required for criminal prosecution. - HELD THAT: - The provision relating to penalty for failure to furnish return confers discretion on the Assessing Officer to direct payment of penalty; omission to impose such penalty does not ipso facto indicate absence of willfulness. Determination of whether default was willful requires consideration of explanations given (e.g. in reply to show cause notice) and is a question of fact for trial. The statutory scheme also permits raising presumption as to culpable mental state where applicable. [Paras 9, 10, 11]

Non imposition of penalty by the Assessing Officer does not negate mens rea; the issue of willfulness is for trial.

Deemed liability of directors where company commits offence - verification of return by managing director and liability of other directors - Liability of the managing director and other directors of the company for the offence committed by the company. - HELD THAT: - Where a company commits an offence, persons in charge and responsible for the conduct of the business at the relevant time are deemed guilty and may be proceeded against. Although the return verification provision places primary responsibility on the managing director to verify the company's return, that provision contemplates alternate verification by any director where the managing director is unable to do so. It is not correct to treat the managing director as the sole person ever responsible; other directors can be held responsible and must be given opportunity at trial to explain any 'unavoidable' inability of the managing director to verify or submit the return. [Paras 13, 14, 16, 17]

Directors, including the managing director and other directors, can be proceeded against for the offence committed by the company; their responsibility is a matter for trial.

Final Conclusion: The petitions challenging cognizance and process issued in the criminal complaint were dismissed; the court found no legal infirmity in sanction or in proceeding against the company and its directors, and left factual defenses and the question of willfulness to be adjudicated at trial.

Interest under Sections 234B and 234C - Minimum Alternate Tax (MAT) under Section 115JA - Advance tax liability of MAT companies - Section 115JB as a self-contained code and applicability of advance tax provisions

Interest under Sections 234B and 234C - Minimum Alternate Tax (MAT) under Section 115JA - Advance tax liability of MAT companies - Applicability of interest under Sections 234B and 234C where tax liability arises under Section 115JA (MAT). - HELD THAT: - The Court held that the question is no longer open in view of the Supreme Court's decision in Joint Commissioner of Income Tax v. Rolta India Ltd., which concluded that companies taxable under the MAT provisions (Section 115JA/115JB) are liable to pay advance tax in respect of tax payable under those provisions and, on failure to do so, are liable to pay interest under Sections 234B and 234C. The judgment in Rolta affirms that Section 115JB constitutes a self-contained code imposing advance tax liability on MAT companies and attracting the interest provisions for default; consequential administrative circulars purporting to the contrary (e.g., Circular No.13/2001) do not negate this obligation. Having regard to that precedent, the Tribunal's conclusion that interest under Sections 234B and 234C is chargeable even though income is computed under Section 115JA is upheld. [Paras 3, 4]

Interest under Sections 234B and 234C is payable on failure to pay advance tax in respect of tax payable under Section 115JA; the Tribunal's view is sustained.

Final Conclusion: The appeal is dismissed; the substantial questions of law are answered in favour of the Revenue and against the assessee, confirming that interest under Sections 234B and 234C is chargeable where tax is payable under the MAT provisions (Section 115JA).

Business income - deduction under Section 80I of the Income Tax Act, 1961 - consistency of treatment across assessment years - acceptance by Revenue before the Tribunal

Business income - deduction under Section 80I of the Income Tax Act, 1961 - consistency of treatment across assessment years - acceptance by Revenue before the Tribunal - Interest and other miscellaneous receipts shown as 'other income' were to be treated as business income for the purpose of claiming deduction under Section 80I for assessment year 1992-1993, and the substantial question of law admitted does not arise for consideration. - HELD THAT: - The Tribunal found, and the Appellate Commissioner had recorded, that amounts appearing under the head 'other income' were in substance business receipts and had been so treated in earlier assessment years. The departmental representative before the Tribunal accepted that these receipts qualified as business receipts and were to be treated as derived from the industrial undertaking. Given the Revenue's acceptance and the need to maintain consistency with prior years' treatment, the High Court held there was no live legal controversy warranting consideration of the substantial question of law; the Tribunal therefore correctly declined to deviate from the consistent factual and legal treatment adopted by the lower authorities. [Paras 4, 5, 6, 7]

Appeal dismissed; the substantial question of law does not arise as the receipts were accepted as business income and treated consistently with earlier years.

Final Conclusion: The Revenue's appeal is dismissed; the Court held that, in view of the Revenue's acceptance before the Tribunal and consistent treatment in earlier years, interest and miscellaneous receipts shown as 'other income' are to be treated as business income for the purpose of deduction under Section 80I for AY 1992-1993, and the substantial question of law need not be decided.

Special rate of tax for winnings from betting and gambling - set-off of business losses against winnings from betting and gambling - Section 115BB as a standalone special provision - proviso to Section 58(4) not applicable - primacy of specific statutory mechanism over administrative circulars

Special rate of tax for winnings from betting and gambling - set-off of business losses against winnings from betting and gambling - Section 115BB as a standalone special provision - proviso to Section 58(4) not applicable - primacy of specific statutory mechanism over administrative circulars - Losses sustained in business cannot be set off against winnings from betting and gambling; total winnings are taxable at the special rate under Section 115BB. - HELD THAT: - The Court followed the Division Bench decision in the assessee's own case and held that Section 115BB is a self-contained special provision governing taxation of winnings from betting and gambling. The legislative scheme manifests an intent to tax such winnings at the special rate, and that special rate applies to the winnings in their entirety. Consequently, the proviso to Section 58(4) does not operate to permit set-off of business losses against such winnings in the facts of this case, and reliance on the CBDT circular invoked by the assessee (and accepted below) is misplaced because computation must be strictly in accordance with the special statutory provision. In view of the authoritative precedent in the assessee's own earlier proceedings and the determinative statutory construction, the Tribunal's contrary conclusion was set aside and the substantial question of law answered in favour of the Revenue. [Paras 5, 7]

Appeal allowed; substantial question answered for the Revenue directing that winnings from betting are to be taxed at the special rate under Section 115BB and business losses cannot be set off against such winnings.

Final Conclusion: The appeal is allowed; the Tribunal's order is set aside and the substantial question of law is answered in favour of the Revenue, holding that winnings from betting are taxable at the special rate under Section 115BB and cannot be reduced by set-off of business losses.

Transfer Pricing adjustment - Arm's Length Price - Intra-group services - Comparable Uncontrolled Price (CUP) method - Composite contract / unbundling of services - Burden of proof by assessee through contemporaneous evidence - Commercial prudence not to be second guessed by Transfer Pricing Officer

Transfer Pricing adjustment - Arm's Length Price - Intra-group services - Comparable Uncontrolled Price (CUP) method - Composite contract / unbundling of services - Burden of proof by assessee through contemporaneous evidence - Commercial prudence not to be second guessed by Transfer Pricing Officer - Validity of the Transfer Pricing addition of Rs. 32,75,08,872/ by treating the Arm's Length Price of certain intra group services as NIL by application of CUP. - HELD THAT: - The TPO treated several intra group service payments as having ALP nil by applying the CUP method, concluding services lacked demonstrable benefit and could be duplicated by the assessee. The Tribunal examined prior assessment history, the written agreements and the contemporaneous documentary evidence (including emails and correspondences) furnished by the assessee and the coordinate decisions in earlier years where these services were treated as part of a composite agreement that could not be unbundled. The Tribunal held that (a) commercial prudence of the assessee in procuring such services cannot be second guessed by the TPO when making a transfer pricing adjustment; (b) where payments are made pursuant to written agreements and supported by contemporaneous evidence, intangible services rendered through emails and electronic communication cannot be rejected merely because they are general in nature; and (c) an agreement should not be disregarded without cogent reasons. Applying these principles to the facts, and having found the assessee's documentary proof satisfactory and consistent with earlier accepted positions, the Tribunal concluded that the TP adjustment lacked merit and directed deletion of the addition. [Paras 25]

Transfer Pricing adjustment of Rs. 32,75,08,872/ deleted; substantive grievance on TP allowed.

Interest under sections 234B and 234C - Claim for direction regarding levy of interest under sections 234B and 234C of the Act. - HELD THAT: - The Tribunal addressed the assessee's ancillary grievance regarding interest and directed the Assessing Officer to levy interest in accordance with the provisions of law. No alteration or detailed computation of interest was undertaken by the Tribunal; the direction is limited to statutory compliance by the AO. [Paras 26, 27]

Assessing Officer directed to levy interest as per law under sections 234B and 234C.

Final Conclusion: The appeal is allowed: the Transfer Pricing adjustment treating the ALP of specified intra group services as nil is set aside and deleted; the Assessing Officer is directed to levy interest under the relevant provisions as per law.

Presumptive taxation under section 44BB - inclusion of reimbursements in gross receipts - taxability of mobilization/demobilization charges - territorial nexus and accrual under sections 5(2) and 9 - precedential effect of jurisdictional High Court and coordinate Bench decisions

Taxability of mobilization/demobilization charges - presumptive taxation under section 44BB - territorial nexus and accrual under sections 5(2) and 9 - precedential effect of jurisdictional High Court and coordinate Bench decisions - Inclusion of mobilization/demobilization fees received for rig movement in gross receipts for computation of income under the presumptive scheme of section 44BB. - HELD THAT: - The Tribunal held that the question is covered against the assessee by earlier decisions of the coordinate Bench of the Tribunal following the Hon'ble Uttarakhand High Court in Sedco Forex International Drilling Ltd., which recorded that mobilization charges paid by ONGC were not reimbursements tied to actual expenditure but fixed contractual payments. Such mobilization receipts therefore fall within the aggregate amounts to be taken into account under the fictional/procedural code of section 44BB for determining deemed profits. On identical facts, and respectfully following the jurisdictional High Court and coordinate Bench, the Tribunal dismissed the assessee's challenge to inclusion of the mobilization/demobilization receipts in gross receipts. [Paras 5]

Assessee's ground challenging inclusion of mobilization/demobilization fees in gross receipts under section 44BB dismissed.

Inclusion of reimbursements in gross receipts - presumptive taxation under section 44BB - precedential effect of jurisdictional High Court and coordinate Bench decisions - Inclusion of reimbursements for material and fuel expenses received from customers in the gross receipts for computation of income under section 44BB. - HELD THAT: - The Tribunal found the issue to be governed by earlier coordinate Bench decisions which followed the Hon'ble Uttarakhand High Court in CIT v. Halliburton Offshore Services Inc. Section 44BB operates as a self-contained code and the aggregate amounts payable or paid (whether in or out of India) form the basis for determining deemed profits at the prescribed rate. Reimbursements received by the assessee were held to be business receipts forming part of the aggregate amount for section 44BB; under the presumptive scheme no separate deduction for corresponding expenses is permissible. Following the precedent and on identical facts, the Tribunal dismissed the challenge to excluding reimbursements from gross receipts. [Paras 5]

Assessee's ground challenging inclusion of material and fuel reimbursements in gross receipts under section 44BB dismissed.

Final Conclusion: Following coordinate Bench and jurisdictional High Court precedents, the Tribunal dismissed both grounds of appeal and upheld the inclusion of mobilization charges and expense reimbursements in the aggregate receipts for computation of income under section 44BB; the appeal is dismissed.

Arm's length price - transfer pricing adjustment - transaction-by-transaction method - re-adjudication by Transfer Pricing Officer - judicial consistency - condonation of delay for advocate's error

Arm's length price - transfer pricing adjustment - judicial consistency - Validity of the arm's length price adjustment in the assessment order for Assessment Year 2013-14 and its adjudication - HELD THAT: - The Tribunal found that the core controversy concerning the ALP determination in AY 2013-14 is the same recurring issue already before the Transfer Pricing Officer and adjudicated in the contiguous assessment years. In the circumstances the Tribunal invoked judicial consistency and observed that the consequential adjudication in earlier years would carry ramifications for the impugned year. Even though the assessee did not file additional evidence specifically for AY 2013-14, the Tribunal rejected the plea that facts were altogether different and held that the ALP issue should be restored to the TPO for simultaneous consideration across the assessment years rather than deciding the adjustment finally at this stage. [Paras 3]

The ALP adjustment issue in AY 2013-14 is set aside and restored to the Transfer Pricing Officer for fresh and simultaneous adjudication with the related assessment years.

Transaction-by-transaction method - re-adjudication by Transfer Pricing Officer - condonation of delay for advocate's error - Scope and manner of re-adjudication to be undertaken by the TPO and treatment of additional evidence and changed approach - HELD THAT: - The Tribunal recorded that earlier coordinate-bench directions for the related years had allowed the assessee to adopt a transaction-by-transaction method and had directed re-adjudication by the TPO after taking into account specified additional evidence filed before the Tribunal/DRP in those years. Relying on the principle that an assessee should not be penalised for prior erroneous legal advice and by reference to condonation principles applied in precedent, the Tribunal directed that the TPO shall re-adjudicate afresh the issue on which non-arm's-length finding was recorded, taking into consideration the documents and submissions already placed before the Tribunal and DRP in the connected assessment years. [Paras 3, 4]

The matter is remitted to the TPO to re-adjudicate the ALP issue afresh, considering the additional documents and the transaction-by-transaction approach previously submitted in the related assessment years.

Final Conclusion: The appeal for Assessment Year 2013-14 is allowed for statistical purposes by setting aside the transfer pricing adjustment and restoring the ALP issue to the Transfer Pricing Officer for fresh and simultaneous adjudication with the connected assessment years, taking into account the documents and approaches earlier placed before the Tribunal and DRP.

Revision under section 263 - registration under section 12AA - exemption under sections 11 and 12 - application of section 13(1)(c) and section 13(2) - requirement of enquiry into fair market rent - genuineness of activities for charitable registration

Revision under section 263 - registration under section 12AA - Validity of the ld. CIT(E)'s revision order under section 263 setting aside the assessment for A.Y. 2014-15. - HELD THAT: - The Tribunal held that the ld. CIT(E) issued the section 263 show-cause and passed the revision order by relying on grounds which had already been considered and disposed of in the separate proceedings relating to registration under section 12AA. This Tribunal had earlier directed grant of registration under section 12AA in appeal dated 28/09/2018, and once registration is directed to be granted the Assessing Officer is required to consider exemptions under sections 11 and 12 while giving effect. The ld. CIT(E) declined to afford adequate opportunity and proceeded to set aside the assessment without necessary enquiry or basis. Consequently the impugned revision order under section 263 could not be sustained.

Impugned order under section 263 is set aside and the appeal allowed on this ground.

Income of medical agency - genuineness of activities for charitable registration - application of section 13(1)(c) - Whether income of M/s Getwell Medical Agency for the year under consideration was a valid ground for revision. - HELD THAT: - The Tribunal found that the medical shop ceased to operate in 2011 and its medicine stock was donated to the society on 30/11/2011; therefore there was no income from that shop in the year under consideration. The issue had been one of the reasons for refusal of registration under section 12AA but was factually non-existent for A.Y. 2014-15. There was no allegation of preferential pricing or diversion of benefit in the year under consideration, and hence mere historical association of a specified person with a shop does not ipso facto amount to diversion under section 13.

The objection on account of income from the medical shop is unfounded for the year and cannot sustain the revision.

Application of section 13(1)(c) - requirement of enquiry into fair market rent - exemption under sections 11 and 12 - Whether payment of rent to related persons amounted to a violation of section 13 and justified setting aside the assessment without further enquiry. - HELD THAT: - The Tribunal emphasised that section 13(2) prescribes specific tests (adequate rent, adequate consideration, etc.) before income can be deemed diverted to specified persons; mere payment of rent to persons falling under section 13(3) does not automatically establish violation. The ld. CIT(E) assumed that rent paid was in violation without ascertaining the fair market rent or obtaining requisite enquiry/report. Determination of whether the rent was excessive is a matter of assessment and requires proper investigation of constructed area and market rent. Repeated scrutiny assessments had not doubted the rent; in absence of any factual finding or enquiry by the ld. CIT(E), the conclusion of violation was based on conjecture.

The objection based on alleged bogus rent payment cannot sustain revision in absence of enquiry; the ld. CIT(E)'s conclusion is not approved.

Final Conclusion: The Tribunal set aside the revision order passed by the ld. CIT(E) under section 263 for A.Y. 2014-15, holding that the medical shop issue did not arise for the year and that the allegation of violation of section 13 by payment of rent could not be sustained without enquiry into fair market rent; appeal allowed.

Income from House Property vs Business Income - Stock-in-trade of immovable property - Notional annual value / deemed rent - Preferential construction in favour of taxpayer where two reasonable constructions exist - Section 23(5) - annual value nil for stock-in-trade (amendment w.e.f. 01.04.2018)

Income from House Property vs Business Income - Stock-in-trade of immovable property - Notional annual value / deemed rent - Notional rental income of unsold completed units held as stock-in-trade is not taxable under the head Income from House Property and is to be treated as business income; the addition made by the Assessing Officer was deleted. - HELD THAT: - The Tribunal accepted the factual position that the unsold flats and shops were held as stock-in-trade and formed part of the assessee's trading operations. Faced with conflicting precedents (Delhi High Court favouring taxation under house property and Gujarat High Court favouring the assessee), the Tribunal followed co-ordinate bench decisions and the principle that where two reasonable constructions are possible the one favourable to the taxpayer should be adopted. Applying that approach, and having regard to consistent Tribunal decisions on the issue, the notional annual value estimated by the AO (computed at 8.5% of cost of construction and reduced by the statutory 30% deduction) was held to be inapplicable because income arising from property held as stock-in-trade is business income and not income from house property. The Tribunal therefore deleted the impugned additions confirmed by the first appellate authority. The later statutory amendment to section 23(5) (w.e.f. 01.04.2018) recognizing relief for developers was noted as contextual but not necessary for the decision on the impugned year. [Paras 4, 5]

Impugned additions of notional rental income confirmed by the CIT(A) deleted and appeal allowed.

Final Conclusion: The Tribunal allowed the assessee's appeal for AY 2012-13, holding that unsold completed units held as stock-in-trade yield business income and not income from house property, and accordingly deleted the notional rental addition.

Drawback - conversion of shipping bills into Drawback shipping bills - requirement of No Dues/Final Exit for entitlement to Drawback - exemption under proviso to Rule 12(1)(a) of the Drawback Rules, 1995 - non-speaking order - principles of natural justice and opportunity to be heard - independent decision-making by adjudicating officer without being influenced by internal directions - mandamus not grantable pending fresh adjudication

Non-speaking order - Drawback - The communication dated 05.05.2009 of the Central Board of Excise and Customs (Technical Officer (Drawback)) is a non-speaking order and is set aside; CBEC directed to decide the petitioner's claim afresh after issuing notice and considering the petitioner's case in accordance with law. - HELD THAT: - The Court found that the letter dated 05.05.2009 did not contain a proper consideration of the petitioner's case nor a detailed order explaining reasons for refusal. As the communication was non speaking and lacked adjudicatory reasoning, it could not be sustained. The Board (3rd respondent) is therefore directed to issue notice to the petitioner, receive their reply and pass a reasoned and detailed order on the Drawback claim in accordance with law. [Paras 9]

Communication dated 05.05.2009 set aside; 3rd respondent to decide afresh after issuing notice and passing a detailed order.

Independent decision-making by adjudicating officer without being influenced by internal directions - principles of natural justice and opportunity to be heard - Drawback - The demand cum show cause notice dated 31.07.2009 must be decided by the Commissioner of Customs (Airport) independently, on the basis of the petitioner's reply and documents, without being influenced by directions of the Board. - HELD THAT: - The demand cum show cause notice was founded on the earlier rejection communicated by the Commissioner of Customs (Exports). The petitioner has already replied to the demand and alleged denial of opportunity to produce documents. The Court directed that the Commissioner of Customs (Airport) should consider the petitioner's reply (dated 24.08.2009), afford the petitioner opportunity to produce all documents and decide the case on merits without being pre influenced by the Board's directions. [Paras 9]

Demand cum show cause notice dated 31.07.2009 to be decided afresh by the Commissioner of Customs (Airport) independently after affording opportunity to the petitioner.

Internal communication - Drawback - The writ challenging the internal communication dated 16.10.2008 is dismissed; there is no necessity to interfere with that internal communication as the adjudicating authority is to decide the matter independently. - HELD THAT: - The communication dated 16.10.2008 is an internal communication between the Commissioner of Customs (Exports) and the Technical Officer (DBK) and was not served on the petitioner. Since the Court has directed fresh independent adjudication by the Commissioner of Customs (Airport) and set aside the Board's non speaking order, interference with the internal communication is unnecessary and the petition challenging it is dismissed. [Paras 9]

Writ petition challenging the communication dated 16.10.2008 dismissed; no interference with the internal communication.

Mandamus not grantable pending fresh adjudication - Drawback - Prayer for a writ of mandamus to grant Drawback is refused because respondents have been directed to decide the matters afresh. - HELD THAT: - As the Board's communication has been set aside and the adjudicating officer directed to reconsider the demand after affording opportunity and passing a reasoned order, it is not appropriate to grant mandatory relief for payment of Drawback at this stage. The claim requires fresh adjudication in accordance with law before any mandamus can be considered. [Paras 9]

Writ petition seeking mandamus to grant Drawback closed; mandamus not granted pending fresh adjudication.

Final Conclusion: The Board's communication dated 05.05.2009 is set aside and remanded for fresh adjudication with notice; the Commissioner of Customs (Airport) must decide the demand cum show cause notice independently after giving the petitioner opportunity and considering their reply and documents; the challenge to the internal communication dated 16.10.2008 is dismissed; prayer for mandamus to grant Drawback is refused pending the fresh decisions. No costs.

Transferable Duty Free Import Authorization (DFIA) - transferability endorsement - actual user condition / actual use requirement - entitlement under DFIA as per description, quantity and CIF value (SION) - applicability of post-issuance amendments and notifications to existing DFIAs

Transferable Duty Free Import Authorization (DFIA) - transferability endorsement - entitlement under DFIA as per description, quantity and CIF value (SION) - A DFIA transferee is entitled to import goods covered by the DFIA and claim duty-free benefits where the imported goods fall within the description, quantity and overall CIF value specified in the DFIA without having to prove fresh 'actual use' in the export product. - HELD THAT: - The Court applied the reasoning of the Division Bench in M/s. Global Exim (paras 2-42 reproduced) and the Punjab & Haryana High Court in Pushpanjali Floriculture (held binding for present purposes) to hold that once transferability has been endorsed, the authorization holder and subsequent transferees may import goods covered by the description and limits in the DFIA. The transferability endorsement makes the licence and goods freely transferable (except items specifically excluded by DGFT), and a bona fide transferee need not re-establish actual use in the export product so long as the imports conform to the DFIA's endorsed description, quantity and CIF value. The insistence that transferees must demonstrate actual use would conflict with the scheme of para 4.2.6 and render the DFIA transferable regime impracticable. [Paras 6]

DFIA transferee entitled to import and claim exemption when imports match the DFIA description, quantity and CIF value; no fresh proof of actual use required.

Actual user condition / actual use requirement - applicability of post-issuance amendments and notifications to existing DFIAs - The requirement introduced by para 4.1.15 (and related notifications/public notices) that only inputs actually used in the manufacture of the exported product may be imported does not apply to transferees of DFIAs after export obligations have been discharged and transferability endorsed. - HELD THAT: - Relying on the ratio in Pushpanjali Floriculture and the Division Bench's earlier reasoning, the Court held that para 4.1.15 is directed at original DFIA holders at the stage of import/redemption and cannot be read to restrict transferees post-endorsement. The provision's practical operation would be absurd and impossible to comply with for transferees who acquire DFIAs after export obligation completion. Therefore the post-issuance imposition of the 'actual use' condition cannot be applied to transferees whose DFIAs were issued prior to such notifications, and the entitlement must be determined by the SION as it existed on the date of issuance/endorsement. [Paras 6]

Para 4.1.15 and related notifications cannot be applied to DFIA transferees after transferability endorsement; transferees are not bound by the 'actual use' restriction.

Applicability of post-issuance amendments and notifications to existing DFIAs - entitlement under DFIA as per description, quantity and CIF value (SION) - Precedential rulings (including Pushpanjali Floriculture) operate to protect holders/transferees of DFIAs issued prior to impugned notifications; pending special leave petitions do not automatically preclude relief in identical matters before this Court. - HELD THAT: - The Court noted that respondents did not dispute the applicable precedents and observed that the Division Bench's prior decision in M/s. Global Exim followed Pushpanjali Floriculture. Given those precedents and the absence of a stay from the Supreme Court, the High Court applied the binding precedent to allow the writ petition. The Court therefore granted relief in terms consistent with the earlier decisions without remanding the matter for fresh consideration. [Paras 6, 7]

Relief granted in accordance with binding precedents; pending SLP before the Supreme Court (without a stay) did not preclude grant of relief.

Final Conclusion: Writ petition allowed in line with the Division Bench's earlier decision and the Punjab & Haryana High Court's ruling in Pushpanjali Floriculture: transferees of transferable DFIAs are entitled to import goods and claim duty-free exemption where imports conform to the DFIA's endorsed description, quantity and CIF value, and post-issuance 'actual use' conditions do not apply to such transferees.

Refund of additional duty under Section 3(5) of the Customs Tariff Act - time limit for filing refund claims under Notification No. 93/2008-Cus and Section 27 of the Customs Act - power of the Central Government to grant exemption by notification under Section 25 of the Customs Act - strict construction of exemption notifications

Time limit for filing refund claims under Notification No. 93/2008-Cus and Section 27 of the Customs Act - refund of additional duty under Section 3(5) of the Customs Tariff Act - Applicability of a one-year limitation for filing refund claims of the special additional duty (SAD) under the exemption Notification No. 102/2007 as amended by Notification No. 93/2008-Cus and/or Section 27 of the Customs Act. - HELD THAT: - The Tribunal examined whether any time limit is prescribed for claiming refund of additional duty paid under the exemption scheme. The exemption Notification required payment of the additional duty at importation and permitted filing of a refund claim thereafter; the amended Notification No. 93/2008 introduced a one-year time-bar from date of payment. Even if the original exemption Notification was silent on limitation, Section 27 of the Customs Act prescribes that applications for refund of any duty or interest must be made before expiry of one year from the date of payment. The Tribunal held that the statutory provision and the amending Notification operate to impose a one-year limitation for claiming the refund of SAD; the nature and scheme of the statute do not exclude the operation of the limitation. The Tribunal further noted that the obligation to pay duty at importation and the importer's contemporaneous knowledge of entitlement to refund distinguishes this case from Sony India (as relied on below by the Commissioner(Appeals)) and supports the applicability of the one-year period. [Paras 5, 6, 7]

The refund claim was time-barred; a one-year limitation applies and the claim filed beyond that period is not maintainable.

Power of the Central Government to grant exemption by notification under Section 25 of the Customs Act - strict construction of exemption notifications - Validity of the Commissioner (Appeals) finding that the amendment by Notification No. 93/2008 (introducing the one-year period) was unsustainable because it was effected by notification rather than statutory amendment. - HELD THAT: - The Tribunal considered whether an amendment by notification standing on statutory power was permissible. Notification No. 93/2008 was issued pursuant to statutory provisions (Sections 25(2A) and 25(4) of the Customs Act) and aligned the exemption Notification with the statutory regime. The Tribunal rejected the Commissioner(Appeals)'s conclusion that the amendment could not prevail because it was by notification; instead it held that the amending notification is valid and operative. The Tribunal also applied the principle that exemption notifications are to be strictly construed, so a valid time limit introduced by the amending notification and reflected in Section 27 must be given effect. [Paras 6, 7, 8]

The Commissioner(Appeals) erred in holding the amending notification invalid; the amendment is valid and supports applying the one-year limitation.

Final Conclusion: The Department's appeal is allowed. The Commissioner (Appeals) order granting the refund is set aside and the refund claim is rejected as barred by the one-year limitation introduced by Notification No. 93/2008-Cus and supported by Section 27 of the Customs Act.

Levy and refund of special additional duty under Section 3(5) of the Customs Tariff Act - statutory limitation for refund claims - validity and effect of an amending notification prescribing a time limit for refund - interpretation of an exemption notification - application of Section 27 of the Customs Act to refund claims

Validity and effect of an amending notification prescribing a time limit for refund - interpretation of an exemption notification - Whether Notification No. 93/2008 introducing a one year time limit for filing refund claims under Notification No. 102/2007 is operative and bars the refund claimed by the assessee. - HELD THAT: - The Tribunal examined Notification No. 102/2007 which exempts certain imported goods from the special additional duty leviable under Section 3(5) of the Customs Tariff Act but requires payment of the duty at import and filing of a refund claim. Notification No. 93/2008 amended the earlier notification by expressly introducing a one year time limit from the date of payment for filing refund claims. The Commissioner(Appeals) had held that introducing such a time limit by notification (without statutory amendment) could not prevail; the Tribunal rejected that view. The Tribunal found that the amendment by Notification No. 93/2008 is made in exercise of powers under the Customs Act and came into force w.e.f. 01.08.2008, and therefore it is operative. Given the notification's terms and the obligation on the importer to pay duty at import and then claim refund, the Tribunal held the one year limit prescribed by the amending notification applies and bars the belated refund filed by the assessee. [Paras 5, 6, 7, 8]

Notification No. 93/2008 is operative and the one year limitation introduced thereby applies to refund claims under Notification No. 102/2007; the impugned refund filed beyond that period is barred.

Application of Section 27 of the Customs Act to refund claims - statutory limitation for refund claims - Whether Section 27 of the Customs Act prescribes a one year limitation for refund of duty and thus independently requires dismissal of the belated refund claim. - HELD THAT: - The Tribunal considered Section 27 of the Customs Act, which prescribes that any person claiming refund of any duty or interest must apply before the Assistant/Deputy Commissioner of Customs before the expiry of one year from the date of payment. The Tribunal observed that Section 27 does not distinguish between types of duty and therefore the limitation applies to refunds of additional duty claimed under the exemption notification. Even if Notification No. 102/2007 had been silent, Section 27 supplies the statutory one year limitation. Reliance was placed on established principles that special statutory remedies and their limitations must be followed and that exemption notifications are to be strictly construed. Accordingly, Section 27 supports the conclusion that the refund claim filed long after one year is time barred. [Paras 7, 8]

Section 27 of the Customs Act prescribes a one year limitation for refund claims which applies to the refund of the additional duty in question; the belated claim is barred under Section 27.

Final Conclusion: The Tribunal held that the refund claim for special additional duty under Notification No. 102/2007 is time barred: Notification No. 93/2008 validly introduced a one year limitation and, independently, Section 27 of the Customs Act prescribes the same one year period; the Commissioner(Appeals) order allowing the refund was set aside and the departmental appeal allowed, rejecting the refund claim.

Inclusion of royalty/know-how in assessable value - customs valuation - Rule 10(1)(c) - license to use technology versus sale of goods - technology embedded in capital goods - implicit condition for use of imported goods

License to use technology versus sale of goods - technology embedded in capital goods - Characterisation of the payment for know how: whether it is merely for import of documents/goods or a licence to use proprietary technology embedded in the imported machinery. - HELD THAT: - The Tribunal examined the Know How License Agreement and related equipment purchase agreement and found the contracting parties described as Licensor and Licensee, not buyer and seller. The agreement grants a perpetual, irrevocable, non transferable licence to use Licensor's Know How (including technical documentation, basic design, process parameters and floor plans) to operate the Spool Technology (VFY) at the specified site. The machinery imported uses proprietary Spool Technology and cannot be operated without the licence. On these facts the arrangement is a grant of a right to use technology, not a mere sale of documents or goods; the licence is integral to making the imported capital goods operable. [Paras 5, 6, 7, 8]

The payment is for a licence to use the technology embedded in the imported plant and not merely payment for imported documents/goods.

Inclusion of royalty/know-how in assessable value - customs valuation - Rule 10(1)(c) - implicit condition for use of imported goods - Whether the fee paid for the know how/licence is includible in the customs assessable value under the valuation rules (Rule 10(1)(c)) despite absence of an express contractual condition linking payment to sale of goods. - HELD THAT: - Applying the legal principle in Essar Gujarat Ltd., the Tribunal held that where imported capital goods embody proprietary technology that cannot be lawfully or practically used without payment for a licence to use that technology, the licence fee is effectively a condition precedent to the use of the goods and is accordingly includible in the assessable value. Although there may be no express term in the sale agreement making payment a condition of sale, an implicit condition exists because the plant cannot be made operational without the licence. The Tribunal distinguished decisions cited by the appellant as factually different and observed that allowing Cenvat/CVD/SAD credit over time does not render the inclusion revenue neutral, since credits arise only after commissioning and use. [Paras 10, 11]

The licence/royalty payment is includible in the assessable value under the valuation rules; the appeal fails on merits.

Final Conclusion: The Tribunal dismissed the appeal, holding that the payment constituted a licence to use proprietary Spool Technology embedded in the imported plant and that the licence/royalty payment is includible in the customs assessable value; the appellant's reliance on differing authorities was rejected as factually distinguishable.

Rectification of mistake - error apparent on the face of the record - remand for fresh adjudication - no new facts emerged - discretion of the Department to waive or recover charges

Rectification of mistake - error apparent on the face of the record - Application for rectification of the Tribunal's Final Order was dismissed for lack of any error apparent on the face of the record. - HELD THAT: - The application contended that the Final Order dated 16.05.2018 contained mistakes apparent on the record arising from findings about entitlement to exemption and regularisation/encadrement of posts. The Tribunal examined whether the impugned order involved an error that could be corrected by rectification. Relying on the principle that an error apparent on the face of the record must be such that it is manifest without re examination of the entire record, the Tribunal held that the matters raised required re examination of facts and correctness of the earlier view and therefore did not amount to an error apparent on the record. The court noted precedent that rectification cannot be used to revisit or review conclusions which call for reassessment of evidence or reasoning; permitting such would amount to an impermissible review. In consequence, the application to rectify was held to be without merit and dismissed.

Application for rectification dismissed; no error apparent on the face of the record.

Remand for fresh adjudication - no new facts emerged - discretion of the Department to waive or recover charges - The Tribunal's earlier remand and the impugned finding that no new facts had emerged were upheld, leaving to the Department the discretion to waive or recover cost recovery charges. - HELD THAT: - The Tribunal recalled that the matter had earlier been remanded for fresh adjudication because the original authority had not properly considered guidelines and the appellant's claimed exemption. After re adjudication, the Tribunal found that no new facts had emerged to alter the legal position and that, accordingly, whether cost recovery charges are to be waived or recovered remains a discretionary decision for the Department/Board. The observation that it made no difference whether officers were cadre or outsourced was held not to be an apparent error warranting rectification, as that question involved evaluative assessment rather than a manifest mistake on the face of the record.

Earlier remand and the impugned conclusion that no new facts emerged sustained; Department retains discretion on waiver or recovery of charges.

Final Conclusion: The application for rectification of Final Order No. 51848/2018 dated 16.05.2018 is dismissed for lack of any error apparent on the face of the record; the Tribunal's remand and subsequent findings are upheld and the Department's discretionary power to waive or recover cost recovery charges for the period w.e.f. 01.04.2009 to 31.12.2012 remains intact.

Cost Recovery Charges - Contractual obligation to meet performance targets - Discretion of administrative authority to waive charges - Judicial restraint in interference with departmental discretion

Cost Recovery Charges - Contractual obligation to meet performance targets - Judicial restraint in interference with departmental discretion - Validity of demand for Cost Recovery Charges and whether the Tribunal should interfere with the departmental/Board decision refusing waiver - HELD THAT: - The assessee, appointed custodian of an ICD, was contractually obliged to meet a specified TEU target and, under the agreement, to pay Cost Recovery Charges (CRC) if the target was not met. The assessee had previously paid CRC in 2009-10 and thereafter sought waiver from the Board. The Board rejected the waiver application. The Tribunal on remand examined the matter and found no new facts warranting interference. The appellate forum recognised that acceptance or waiver of CRC lies within the discretion of the Department/Board and that the mere fact that officers posted at the ICD were from cadre or outsourced does not alter the contractual liability. Given the absence of fresh facts or legal error in the impugned order, the Tribunal exercised judicial restraint and declined to substitute its view for the administratively vested discretion of the Board, while permitting the assessee liberty to seek reconsideration by the Board. [Paras 4, 5, 6]

Impugned order upholding recovery of Cost Recovery Charges sustained; no interference with the Board's exercise of discretion.

Final Conclusion: The appeal is dismissed; the demand for Cost Recovery Charges as sustained in the impugned order is upheld, subject only to the assessee's liberty to approach the Board for reconsideration.

Transfer of winding-up proceedings to NCLT - discretionary power under proviso to section 434(1)(c) - priority of the Insolvency and Bankruptcy Code in revival/resolution proceedings - appointment of SFIO for investigation under section 212 - effect of provisional liquidation and powers of the Official Liquidator

Transfer of winding-up proceedings to NCLT - priority of the Insolvency and Bankruptcy Code in revival/resolution proceedings - effect of provisional liquidation and powers of the Official Liquidator - Application to transfer the pending winding-up petition before the High Court to the National Company Law Tribunal (NCLT). - HELD THAT: - The Court considered the competing contentions that revival/resolution proceedings before NCLT would have precedence (as urged relying on the Bombay High Court decision in Jotun India Pvt. Ltd. v. PSL Ltd.) and the factual position that this Court had admitted the winding-up petition on 17.01.2017 and appointed the Official Liquidator (OL) as Provisional Liquidator who had taken custody of assets and initiated valuation. The Court observed that the proviso to section 434(1)(c) confers a discretionary power on the court to transfer winding-up proceedings to the Tribunal and that the facts and stage of the winding-up proceedings are relevant to exercise of that discretion. Having regard to the advanced stage of liquidation, the ongoing actions (including sealing/taking custody of assets, valuation, and criminal proceedings against ex-directors), and the fact that the applicant was not a party to the winding-up proceedings before this Court, the Court found no ground to transfer the petition to NCLT and dismissed the application. The Court also noted that the NCLT order appointing an IRP did not refer to the pendency of the proceedings in this Court. The question whether NCLT may initiate insolvency proceedings when winding-up has been directed by a High Court is pending before the Supreme Court in State Bank of India v. Shakti Bhog Foods Ltd. and was not finally determined in this matter. [Paras 14, 15, 16, 17, 18]

Application to transfer the petition to NCLT is dismissed.

Discretionary power under proviso to section 434(1)(c) - interpretation of the word 'may' in conferment of power - Whether the word 'may' in the proviso to section 434(1)(c) is mandatory or discretionary and how the Court should exercise the power to transfer winding-up proceedings to the Tribunal. - HELD THAT: - Relying on the Supreme Court's decision in The Official Liquidator v. Dharti Dhan (P) Ltd., the Court held that the word 'may' in the proviso to section 434(1)(c) confers a discretionary power to be exercised having regard to the legal and factual context. The Court observed that there are no legally prescribed conditions in the proviso that would render the power obligatory; thus the power remains directory and its exercise depends on the circumstances of the case, including the stage of the winding-up proceedings and the interests of justice. [Paras 6, 7, 9]

The word 'may' in the proviso to section 434(1)(c) is to be read as conferring a discretionary power on the Court to transfer proceedings; it is not mandatory.

Appointment of SFIO for investigation under section 212 - public interest and investigation into alleged siphoning of funds - Whether appointment of the Serious Fraud Investigation Office (SFIO) to investigate alleged fraud and siphoning of company funds was warranted. - HELD THAT: - On consideration of the chargesheet allegations and related averments indicating prima facie siphoning off of funds to associated entities, the Court found that the matter warranted further examination by SFIO in the interest of investors and public interest. The Court noted earlier orders directing SFIO investigation and observed that criminal proceedings against ex-directors were pending with several FIRs and chargesheets filed. Given these facts and the public interest element, the Court directed SFIO to investigate under section 212 and expeditiously file its report. [Paras 12, 13, 14]

SFIO is to be directed to carry out investigations under section 212 and file its report expeditiously.

Leave to withdraw consumer proceedings with liberty to file claim before Official Liquidator - Applications by some flat buyers seeking to continue proceedings before the Consumer Court were disposed of on withdrawal with liberty to file claims before the Official Liquidator. - HELD THAT: - Applicants sought withdrawal of their consumer-court proceedings and were granted leave to withdraw with liberty to present their claims before the Official Liquidator in the ongoing winding-up process. The Court allowed withdrawal and recorded leave and liberty.

Present applications disposed of on grant of leave to withdraw with liberty to file claim before the Official Liquidator.

Final Conclusion: The application to transfer the High Court winding-up petition to NCLT is dismissed; the Court held that the proviso to section 434(1)(c) confers a discretionary power to transfer which must be exercised in the facts and circumstances of each case, directed SFIO to investigate allegations of siphoning under section 212, and allowed certain flat buyers to withdraw their consumer proceedings with liberty to file claims before the Official Liquidator.

Winding up petition - acknowledgement of liability / admission of debt - bona fide dispute - Company Court's discretion where debt is disputed - appointment of provisional liquidator - opportunity to pay to avoid winding up

Acknowledgement of liability / admission of debt - bona fide dispute - Company Court's discretion where debt is disputed - Existence of an unpaid admitted debt in respect of the Singur project and whether a bona fide dispute was raised by the respondent. - HELD THAT: - The petition pleads, and the respondent did not categorically deny, that a balance remained unpaid for the Singur project as set out in paragraph 12 of the petition. The respondent's reply referred to preliminary objections and communications but did not directly traverse the specific averment in paragraph 12. Contemporaneous statements of account dated 05.12.2009 admitted an outstanding balance for the Singur project which, on a conjoint reading of that admission and the pleadings, prima facie established that an amount remained due. Subsequent email correspondence relied upon by the respondent concerned alleged defects only in relation to the Jamshedpur project and contained no complaint about the Singur work. Applying the settled principle that a winding up petition should be dismissed only where a dispute as to liability is bona fide and substantial, the court found that the respondent's asserted dispute in relation to Singur lacked bona fides and was not a substantial defence to the admitted debt. [Paras 8, 9, 11, 12, 13]

The court held that an admitted outstanding debt exists in respect of the Singur project and that no bona fide dispute was shown; the petition succeeds insofar as that claim is concerned.

Winding up petition - appointment of provisional liquidator - opportunity to pay to avoid winding up - Whether the winding up petition should be admitted and the Official Liquidator appointed as provisional liquidator, and whether relief should be kept in abeyance to permit payment. - HELD THAT: - On the finding that the Singur claim was admitted and not bona fide disputed, the court exercised its discretion to admit the winding up petition. The Official Liquidator attached to the Court was appointed as Provisional Liquidator with directions to take possession of assets, books and records, prepare inventory, value assets and take necessary protective steps including sealing premises and seizing bank accounts; publication of citations in specified newspapers and the Gazette was directed. In the interest of justice, the court kept the order appointing the Official Liquidator in abeyance for four weeks and granted the respondent an opportunity to avert winding up by paying the outstanding Singur amount within that period; specific directions were given for deposit towards publication costs and other steps to be taken by the Official Liquidator. [Paras 14, 15, 16]

The petition is admitted; the Official Liquidator is appointed as Provisional Liquidator subject to the order being kept in abeyance for four weeks on condition that the respondent pays the stated Singur amount within that period; ancillary directions for publication, deposit towards publication costs and protective steps by the Official Liquidator were given.

Bona fide dispute - Winding up petition - Adjudication of the dues claimed in respect of the Jamshedpur project. - HELD THAT: - Although there were acknowledgements by the respondent of certain dues earlier, subsequent communications and emails referred to performance deficiencies and defects specific to the Jamshedpur project. The petitioner fairly conceded that the Jamshedpur dues would not be gone into for determination in the present winding up petition. The court therefore refrained from adjudicating the Jamshedpur claim on the merits in these proceedings. [Paras 4, 10]

The dues relating to the Jamshedpur project are not adjudicated in this petition and remain undetermined in the present proceedings.

Final Conclusion: The winding up petition is admitted insofar as the Singur claim; the Official Liquidator is appointed as Provisional Liquidator with directions for possession, inventory, valuation, publication and protective measures, but the appointment is kept in abeyance for four weeks on condition that the respondent pays Rs. 25,30,656/- to the petitioner within that period (subject to the stated deposit towards publication costs); the Jamshedpur claim is not adjudicated in these proceedings.

Voluntary liquidation - solvency requirement for voluntary liquidation - suspension of voluntary liquidation under Regulation 40(2) of the Voluntary Liquidation Regulations, 2017 - final report obligation under Regulation 38(1) of the Voluntary Liquidation Regulations, 2017 - conversion to winding up under section 271 of the Companies Act, 2013 - compulsory liquidation under section 10 of the Insolvency and Bankruptcy Code, 2016

Voluntary liquidation - solvency requirement for voluntary liquidation - final report obligation under Regulation 38(1) of the Voluntary Liquidation Regulations, 2017 - suspension of voluntary liquidation under Regulation 40(2) of the Voluntary Liquidation Regulations, 2017 - Suspension of the voluntary liquidation of Central Inland Water Transport Corporation Ltd. was permitted. - HELD THAT: - The Liquidator, after commencement of the voluntary liquidation, found that pending litigation and claims exceeded the value of assets and that the pre requisite of solvency was doubtful. He was unable to prepare the final report required by Regulation 38(1) because assets could not be realised to the satisfaction of creditors and liabilities remained. As voluntary liquidation requires satisfaction of the solvency condition and absence of pending litigation, the Tribunal held that continuation of voluntary liquidation was not appropriate and that the process should be suspended under Regulation 40(2) to enable the company or stakeholders to explore alternative recourse. [Paras 8, 10]

Voluntary liquidation of the company is suspended under Regulation 40(2) of the Voluntary Liquidation Regulations, 2017.

Conversion to winding up under section 271 of the Companies Act, 2013 - compulsory liquidation under section 10 of the Insolvency and Bankruptcy Code, 2016 - Prayer to convert the application into one for winding up under section 271 of the Companies Act, 2013 (or for compulsory liquidation) was rejected. - HELD THAT: - The Tribunal distinguished voluntary liquidation from winding up/compulsory liquidation, noting that the processes and requirements differ. The resolution of the members related only to voluntary liquidation and, on the facts, a compulsory winding up order under section 271(1)(a) could not be appropriately made. The Tribunal therefore declined to convert the liquidation suspension application into a petition for winding up and rejected the alternative prayer for compulsory liquidation, while noting that the company may pursue remedies under section 271 or file for compulsory liquidation under section 10 of the IBC if appropriate. [Paras 9, 10]

Conversion to an application under section 271 of the Companies Act, 2013 for winding up and the prayer for compulsory liquidation are rejected.

Final Conclusion: The Tribunal allowed suspension of the voluntary liquidation under Regulation 40(2) of the Voluntary Liquidation Regulations, 2017 because solvency and final report prerequisites were not satisfied, but refused to convert the application into a winding up or compulsory liquidation petition under section 271 of the Companies Act, 2013 or section 10 of the IBC.

Construction of Complex Service - Works Contract Service - transfer of property in goods - show cause notice - abatement of material component under Notification No.15/2004 ST as amended by Notification No.1/2006 ST

Works Contract Service - show cause notice - Confirmation of demand for the period after 1.6.2007 under the category of Works Contract Service - HELD THAT: - The impugned order confirmed a demand post 1.6.2007 treating the contracts as taxable under the category of Works Contract Service. However, the show cause notice, as admitted in the record, raised demand only under the category of Construction of Complex Service. The Commissioner's subsequent conclusion that w.e.f. 1.6.2007 the activity would be appropriately taxable as Works Contract Service (on the ground of transfer of property in goods and allowance of abatement) cannot cure the absence of any proposal in the show cause notice for tax under that category. The Tribunal held that confirmation of a demand in a category not proposed in the show cause notice is impermissible and therefore bad. [Paras 5, 6]

The confirmation of demand for the period post 1.6.2007 under the category of Works Contract Service is invalid for want of a proposal in the show cause notice.

Final Conclusion: Appeal allowed; impugned order set aside. The appellant is entitled to consequential benefits in accordance with law.

Works contract service - Interior decorator's service - Extended period of limitation under proviso to Section 73 - Suppression or mis-representation with intent to evade tax

Works contract service - Interior decorator's service - Whether the services rendered by the appellant are works contract services or interior decorator's services. - HELD THAT: - The Tribunal examined the statutory definitions and the appellant's contracts. The definition of interior decorator's service covers advice, consultancy, technical assistance or similar services related to planning, design or beautification. The appellant's contract (for example with CHC Constructions Ltd.) required execution of construction and affiliated works strictly as per technical specifications approved by the client's architect, and did not envisage provision of design, technical consultancy or advisory services by the appellant. That factual and contractual matrix removes the activity from the ambit of interior decorator's service. The Department itself had earlier acknowledged the appellant's services for OC-CWG to be works contract services, and there was no basis to differentiate the same activities for other clients. The adjudicating authority's classification of the services as interior decorator's service was therefore incorrect and the demand founded on that classification is unsustainable. [Paras 5, 6]

Services held to be works contract services; classification as interior decorator's services set aside and demand unsustainable.

Extended period of limitation under proviso to Section 73 - Suppression or mis-representation with intent to evade tax - Whether the extended period of limitation under the proviso to Section 73 could be invoked against the appellant. - HELD THAT: - The Show Cause Notice dated 19.01.2011 sought liabilities for the period w.e.f. 2006-07 to 2011-12 and invoked the extended limitation under the proviso to Section 73. The Tribunal found no evidence of suppression or mis-representation by the appellant with intent to evade tax. On the contrary, the appellant had discharged tax on the basis that the services were works contract services. Because the activity was held to be a works contract service and there was no proof of intentional evasion, the extended period of limitation could not be invoked and the show cause notice is time-barred. [Paras 7]

Extended period of limitation not invocable; Show Cause Notice held to be barred by time.

Final Conclusion: The impugned order is set aside; appeal allowed as the services are held to be works contract services and the demand (including invocation of extended limitation) is unsustainable/time barred.

Appeal barred by limitation - presumption of dispatch and burden of proof to rebut dispatch - power to condone delay under statutory time-limit - mandatory nature of statutory timeline (60 days + 30 days) for filing appeals - exclusion of Section 5 of the Limitation Act for condonation beyond statutory period

Appeal barred by limitation - presumption of dispatch and burden of proof to rebut dispatch - power to condone delay under statutory time-limit - exclusion of Section 5 of the Limitation Act for condonation beyond statutory period - Whether the appeal was rightly dismissed as barred by limitation and whether the Commissioner (Appeals) or Tribunal could condone the delay beyond the statutory period. - HELD THAT: - The Tribunal found that the Order-in-Original dated 31.01.2011 was dispatched immediately thereafter and the appellant failed to produce evidence to rebut the presumption of dispatch. The appeal filed on 15.03.2013 was delayed by over two years; the appellant relied only on a letter of 31.12.2012 and a subsequent letter of 2013, which the Tribunal treated as insufficient and possibly an afterthought. The Tribunal applied the statutory scheme governing condonation of delay, observing that the Commissioner(Appeals) has jurisdiction to condone delay only within the further period of 30 days beyond the primary 60-day period, and that the statutory use of "shall" precludes condonation beyond that 60+30 day window. The Tribunal relied on the principle in Singh Enterprises (as cited in the order) that Section 5 of the Limitation Act cannot be invoked to extend the condonation power beyond the statutorily prescribed period. In view of the absence of satisfactory justification to rebut dispatch and the statutory bar on condonation beyond the prescribed period, there was no infirmity in the Commissioner(Appeals) dismissing the appeal in limine for delay. [Paras 4, 5]

Appeal dismissed as time-barred; Commissioner(Appeals) and Tribunal lacked power to condone delay beyond the statutory 60+30 day period.

Final Conclusion: The Tribunal affirmed dismissal of the appeal for want of limitation: the appellant failed to rebut dispatch and offered no sufficient cause for the more than two-year delay, and statutory limits precluded condonation beyond the prescribed 60+30 day period.

Sovereign function - Business Auxiliary Service - Business Support Service - service tax on collection of statutory levies - scope of show cause notice - limitation and extended period

Sovereign function - Business Auxiliary Service - service tax on collection of statutory levies - Whether the activity of collecting tolls by the appellant as contractor of Municipal Corporation of Delhi is taxable as Business Auxiliary Service. - HELD THAT: - The Tribunal held that collection of tolls by or on behalf of the Municipal Corporation of Delhi is a sovereign function of a statutory body empowered to levy tolls and retains that character even when delegated to an authorised contractor. The Finance Act concept of Business Auxiliary Service requires that the service be rendered in relation to the business or commerce of the service recipient; where the recipient (MCD) is performing statutory/municipal functions and not engaged in business or commerce, services rendered to it do not qualify as auxiliary to its business. The Tribunal applied this principle, noting Sec. 65(19)(vi) (as incorporated w.e.f. 10/09/2004) and earlier Tribunal precedents which held that collection of statutory levies by contractors of statutory authorities is not liable to service tax. Consequently the activity of the appellant did not constitute a taxable Business Auxiliary Service.

Activity of toll collection delegated by MCD is not taxable as Business Auxiliary Service; demand under that head is unsustainable.

Business Support Service - scope of show cause notice - Whether the adjudicating authority acted beyond the scope of the show cause notice by confirming demand under Business Auxiliary Service when the notice primarily alleged Business Support Service. - HELD THAT: - The show cause notice throughout discussed features of Business Support Service though its final paragraph referred to Business Auxiliary Service; the Tribunal regarded that final reference as a typographical error. It reiterated the settled principle that an adjudicating authority cannot travel beyond the scope of the show cause notice and relied on Tribunal precedent to that effect. The authority below confirmed demand under Business Auxiliary Service notwithstanding the notice's primary framing; that approach was held to be erroneous.

Adjudicating Authority erred in treating the case as one of Business Auxiliary Service beyond the scope of the show cause notice; such error vitiates the impugned order.

Limitation and extended period - Whether the demand is barred by limitation or requires invocation of the extended period for assessment. - HELD THAT: - The Tribunal found that, on the merits, the appellant was not liable to service tax for the alleged Business Auxiliary Service and was under a bona fide belief of no tax liability. The Department failed to point to any positive act of suppression by the appellant that would justify invocation of the extended limitation period. The show cause notice dated 30/11/2010 covered the period w.e.f. 01/04/2008 to 15/07/2010, and some of the period claimed lay beyond the statutory limitation; for the period within one year of the notice the demand was held non-sustainable on merits.

Extended period not invocable; demand barred for periods beyond limitation and, in any event, held non-sustainable for the period within one year of the show cause notice.

Final Conclusion: The appeal is allowed; the adjudicating authority's order confirming service-tax demand as Business Auxiliary Service is set aside since toll collection delegated by MCD is a sovereign function not constituting Business Auxiliary Service, the authority exceeded the scope of the show cause notice, and extended limitation is not attracted.

Remand for de novo adjudication - set aside Order-in-Original - failure to appreciate written submissions and oral submissions - opportunity of hearing - re-adjudication by original authority

Remand for de novo adjudication - failure to appreciate written submissions and oral submissions - opportunity of hearing - re-adjudication by original authority - Impugned Order-in-Original was set aside and the matter remanded to the original adjudicating authority for fresh adjudication. - HELD THAT: - The Tribunal found that the adjudicating authority did not properly appreciate or deal with the written submissions and oral representations made by the appellant; the demand was confirmed essentially on the basis of figures from annual financial statements without due consideration of the appellant's contentions. In view of an earlier remand in a similar matter and the respondent's concession that the earlier matter was remitted for fresh consideration, the Tribunal concluded that the proper course is to remand the impugned order for de novo adjudication. The appellant is directed to furnish all requisite documents to the original adjudicating authority and the authority is expected to afford proper opportunity to the appellant and to consider the submissions legally and factually when passing a fresh decision. [Paras 6, 7]

Order-in-Original set aside and matter remanded to the original adjudicating authority for fresh adjudication with directions to receive documents and afford proper opportunity to the appellant.

Final Conclusion: The adjudicating authority's Order-in-Original is set aside and the matter is remitted for de novo adjudication; the appellant shall submit required documents and shall be given proper opportunity to present its case.

Clarificatory amendment by substitution - retrospective effect of statutory substitution - application of Rule 6(6)(i) of the CENVAT Credit Rules to SEZ developers - liability to pay 10% under Rule 6(3)(b)/6(3)(i) where separate accounts are not maintained - treatment of supplies to SEZ units and developers as exports

Clarificatory amendment by substitution - retrospective effect of statutory substitution - Amendment by substitution of clause (i) of sub-rule (6) of Rule 6 of the CENVAT Credit Rules, 2004, effected by Notification No.50/2008 dated 31.12.2008, is clarificatory and has retrospective effect. - HELD THAT: - The Court examined the nature of the 2008 substitution and concluded that the substitution corrected an inadvertent omission by placing the words referring to a "developer of a special economic zone" in place of the earlier text that mentioned only a "unit". Relying on principles distinguishing "substitution" from mere prospective enactment and on the conceptual framework that supplies to SEZ units/developers are to be treated as exports, the amendment was held to clarify existing law rather than create a new right. The Court placed respectful reliance on earlier High Court decisions which construed the substitution as remedial/clarificatory and therefore operative from the inception of the Rules, observing that prospective enforcement would perpetuate discrimination and raise equal protection concerns. The reasoning treats the substituted provision as intended to give the same treatment to developers as to units from the date the Rules originally came into force. [Paras 18, 19, 20, 21, 22]

The substituted clause (i) of sub-rule (6) is clarificatory and to be read as having effect from the date the 2004 Rules came into force.

Application of Rule 6(6)(i) of the CENVAT Credit Rules to SEZ developers - liability to pay 10% under Rule 6(3)(b)/6(3)(i) where separate accounts are not maintained - treatment of supplies to SEZ units and developers as exports - No obligation to pay 10% under Rule 6(3)(b)/6(3)(i) arose for goods cleared to SEZ developers for their authorized operations for the periods in question, despite absence of separate accounts, because Rule 6(6)(i) applies to developers retrospectively. - HELD THAT: - Applying the conclusion that the 2008 substitution is clarificatory and retrospective, the Court held that clearances to SEZ developers are covered by the exception in Rule 6(6)(i) from the operation of sub-rules (1)-(4). Consequently, the contention that the assessee must pay 10% of the value of exempted clearances for lack of separate accounting was rejected insofar as the clearances were to SEZ developers for authorized operations. The Court followed prior High Court and Tribunal authorities which interpreted the SEZ statutory scheme and CENVAT Rules to treat supplies to developers as exports and to afford developers the same benefits as units; accordingly the demand for amounts equivalent to 10% of transaction value on such clearances was not sustained. [Paras 5, 6, 8, 22, 23]

The assessee is not liable to pay the claimed 10% on goods cleared to SEZ developers for the periods in issue because Rule 6(6)(i), as substituted in 2008, operates retrospectively to cover developers.

Final Conclusion: The appeal by the Revenue is dismissed; the substantial questions of law are answered in favour of the assessee by holding the 2008 substitution to be clarificatory and retrospective and by applying Rule 6(6)(i) to SEZ developers so as to negate the Revenue's claim for 10% for the periods in issue, subject to the liberty granted to the Revenue in the event the Supreme Court takes a different view in pending proceedings.

Revenue neutrality - suppression of facts with intent to evade payment of duty - adoption of transaction value - CENVAT Credit of Special Additional Duty (SAD) - differential duty under Rule 14(ii) of the CENVAT Credit Rules - penalty and interest - larger period of limitation

Revenue neutrality - suppression of facts with intent to evade payment of duty - CENVAT Credit of Special Additional Duty (SAD) - adoption of transaction value - penalty and interest - Sustainability of demand, interest and penalty where inputs were cleared to the assessee's ancillary manufacturer, differential SAD was not initially accounted for but was subsequently made good, and revenue neutrality was asserted. - HELD THAT: - The Tribunal found that the short payment arose from the appellant's adoption of transaction value which omitted the 4% SAD, but the appellant rectified the lacuna by making good the differential CENVAT Credit even before issuance of the Show Cause Notice. The lower authorities did not dispute that the inputs were cleared to the appellant's ancillary manufacturer, that those inputs were used exclusively to produce components for the appellant, that the ancillary manufacturer was eligible to avail CENVAT Credit of the duty paid, or that such removals were declared in ER-1 returns of the assessee and were known to Revenue. In these circumstances the Tribunal held there was no loss to the revenue and that the factual matrix did not disclose suppression with intent to evade duty. Accordingly, the demand including interest and penalty founded on an allegation of suppression was held to be unsustainable. [Paras 5, 6]

Demand, interest and penalty set aside as unsustainable in view of revenue neutrality and rectification of differential duty.

Larger period of limitation - revenue neutrality - Validity of invoking the larger period of limitation for issuance of the Show Cause Notice in the absence of revenue loss. - HELD THAT: - The Tribunal observed that the Show Cause Notice dated 07.10.2015 was issued after invoking the larger period of limitation. Given that there was no dispute on revenue neutrality, that differential duty had been made good, and Revenue had been aware of the removals through ER-1 returns, the Tribunal concluded that extending the limitation was unjustified and amounted to a needless invocation of the larger period for no resultant revenue recovery. [Paras 7]

Invocation of the larger period of limitation held unjustified; impugned order and demand set aside on this ground as well.

Final Conclusion: The appeal is allowed; the impugned demand, including interest and penalty, and the invocation of the larger period of limitation are set aside in view of revenue neutrality and the fact that the differential duty was made good.

CENVAT credit on capital goods taken on lease - Modvat/Modvat credit for job workers - effect of Board clarification dated 12-8-1999 - precedent and stare decisis

CENVAT credit on capital goods taken on lease - effect of Board clarification dated 12-8-1999 - precedent and stare decisis - Assessee lessee of capital goods was eligible to avail CENVAT credit. - HELD THAT: - The Tribunal examined whether the assessee, being a lessee of capital goods received under a leave and licence agreement, could avail CENVAT credit. The First Appellate Authority had allowed the claim relying on the Delhi Bench decision in M/s. General Fabricators and the Madras High Court decision in Commissioner of Central Excise, Chennai-IV v. Ilgin Automotive (which itself relied on a Central Board clarification dated 12-8-1999 recognizing credit in respect of moulds/dies and entitling job workers to claim Modvat credit where procedure under the Modvat scheme was followed). No contrary binding precedent was produced by the Revenue. In view of the Board's clarificatory note and the consistent tribunal/high court decisions, the Tribunal found no ground to interfere with the impugned order allowing the assessee's claim. [Paras 5, 6]

Departmental appeal dismissed; impugned order allowing CENVAT credit upheld and cross-appeal treated as disposed of.

Final Conclusion: The appeal by the Revenue is dismissed and the order of the Commissioner (Appeals) allowing the assessee to avail CENVAT credit on capital goods taken on lease is upheld in view of the Board clarification and consistent tribunal/high court precedents.

Exceeding the scope of the Show Cause Notice - limits of remand order - de novo adjudication - onus of production of invoices - reliance on statutory returns as evidence - unsustainability of demand raised beyond alleged grounds

Exceeding the scope of the Show Cause Notice - limits of remand order - unsustainability of demand raised beyond alleged grounds - reliance on statutory returns as evidence - Whether the adjudicating authority and the Commissioner (Appeals) exceeded the scope of the Show Cause Notice and the remand order by sustaining a demand on grounds not put forth in the Show Cause Notice, rendering the demand unsustainable. - HELD THAT: - The Show Cause Notice (paragraph 4(ii)) complained only of non-production of certain invoices and that photocopies alone were produced; it did not allege insertions or corrections. This Bench earlier remitted the matter for de novo adjudication after considering additional evidence including RG-23 return, monthly ER-1 return and RG-1 register which accounted for the invoices. In the de novo proceedings the adjudicating authority confirmed the demand on a ground alleging insertions/corrections which was neither the subject of the Show Cause Notice nor of the remand. The Tribunal finds that raising and sustaining a demand on such expanded grounds amounted to travelling beyond the Show Cause Notice and the remand order. The Commissioner (Appeals) erred in upholding that demand. Consequently the impugned order sustaining the demand is unsustainable and is set aside, allowing the appeal with consequential benefits. [Paras 6, 7, 8]

Impugned order set aside; demand sustained by lower authorities quashed and appeal allowed with consequential benefits.

Final Conclusion: The Tribunal held that the adjudicating authority travelled beyond the Show Cause Notice and the remand order by sustaining a demand on unpleaded grounds; the Commissioner (Appeals) erred in upholding it. The impugned order is set aside and the appeal is allowed with consequential benefits.

Valuation under Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - determination of cost of production - administrative overheads in valuation - transfer to sister unit / stock transfer - revenue-neutrality - availability of cenvat credit - precedential application of Nirlon principle

Valuation under Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - administrative overheads in valuation - transfer to sister unit / stock transfer - revenue-neutrality - availability of cenvat credit - Sustainability of demand for differential duty on account of not adopting higher administrative overheads where clearances were to sister units and cenvat credit would be available - HELD THAT: - The appellants recalculated valuation for stock transfers using administrative overheads based on the preceding finalised balance sheet. The Department confirmed demand and penalty for not adopting increased overheads. The Tribunal examined that the clearances were to the assessee's sister units and any differential duty, if paid, would be eligible for cenvat credit at the receiving units, producing a revenue-neutral outcome with no loss to Government and no gain to the appellants. Relying on the ratio in the controlling precedents (including the Nirlon principle as applied by the jurisdictional High Court in Tenneco), the Tribunal held that where the exercise is revenue-neutral and there is no intent to evade duty, the demand cannot be sustained. Applying that principle to the facts, the Tribunal set aside the impugned order and allowed the appeal.

Impugned demand and penalty set aside; appeal allowed with consequential reliefs as per law.

Final Conclusion: The Tribunal allowed the appeal, holding that the demand for differential duty arising from the adoption of particular administrative overheads for valuation of stock transfers to sister units could not be sustained because the transactions were revenue-neutral (cenvat credit being available), and accordingly set aside the impugned order.

Cenvat credit entitlement - Input service credit - Notification No. 30/2012-ST and 75:25 allocation of service tax liability - Rule 3 of the Cenvat Credit Rules, 2004 - Tax discharged by service recipient as basis for credit

Cenvat credit entitlement - Notification No. 30/2012-ST and 75:25 allocation of service tax liability - Rule 3 of the Cenvat Credit Rules, 2004 - Tax discharged by service recipient as basis for credit - Whether appellant is entitled to avail Cenvat credit of input service tax where service provider discharged only 25% of service tax as per Notification No.30/2012 ST but the service tax liability was in fact discharged in full and passed on to the service recipient - HELD THAT: - The Tribunal applied the ratio in M/s. Superfil Products Pvt. Ltd. (supra) and held that Notification No.30/2012 ST, which prescribes a 75:25 split of liability between service recipient and service provider, governs allocation of liability but does not prohibit availment of Cenvat credit where the tax leviable has in fact been paid and suffered by the service recipient. Rule 3 of the Cenvat Credit Rules, 2004 permits a manufacturer or provider of output service to take credit of duties/taxes specified therein provided such duty/tax has been paid on the input service received. As there was no dispute that the service tax was fully discharged and the liability was passed on to the appellant, the conditionalities of Rule 3 were satisfied and denial of credit could not be sustained. The Revenue did not produce any contrary decision distinguishing the earlier Bench ruling relied upon. Accordingly the impugned orders confirming recovery and penalty were set aside and the appeal allowed with consequential benefits. [Paras 7, 8, 9]

Impugned order confirming recovery and penalty set aside; appeal allowed and appellant entitled to Cenvat credit with consequential benefits.

Final Conclusion: Applying the ratio in M/s. Superfil Products Pvt. Ltd., the Tribunal held that where service tax leviable on input services has been fully paid and passed on to the service recipient, Notification No.30/2012 ST does not bar availment of Cenvat credit; the impugned orders were set aside and the appeal allowed with consequential benefits.

Cenvat credit - user test - supporting structures for capital goods - capital goods vs inputs

Cenvat credit - supporting structures for capital goods - user test - Entitlement of the appellant to avail cenvat credit on steel structural items used in fabrication of support structures for capital goods. - HELD THAT: - The Tribunal found that the steel items (such as MS angles, channels, TMT bars) were used in fabrication of support structures for various capital goods and that the case is governed by the user test as applied by the Apex Court in Jawahar Mills Ltd. and followed by the Division Bench in Singhal Enterprises Pvt. Ltd. Vs. CCE, Raipur. Applying that ratio, where such steel items are actually used in supporting capital goods which are employed in manufacture, they qualify for cenvat credit. The Commissioner (Appeals) was held to have erred in rejecting the claim for want of documentary proof when the Tribunal found the appellant's case squarely covered by the cited precedent and accepted the factual use as fabrication of supporting structures.

Appeal allowed and the impugned order set aside; appellant entitled to cenvat credit on the steel structural items by application of the user test.

Final Conclusion: The Tribunal allowed the appeal, holding that steel items used in fabrication of support structures for capital goods qualify for cenvat credit under the user test, and set aside the Commissioner (Appeals) order for the period January 2013 to November 2016 with consequential relief.

Clandestine removal - seizure under Section 110 of the Customs Act, 1964 in Central Excise matters - demand under Central Excise Act and penalty under Central Excise Rules - corroboration by third-party admissions - cash transactions evidenced by kacchi parchies - retraction of admissions and afterthought - failure to procure attendance for cross-examination of panch witnesses - meticulous appreciation of documentary and oral evidence

Clandestine removal - seizure under Section 110 of the Customs Act, 1964 in Central Excise matters - cash transactions evidenced by kacchi parchies - Validity of the search, seizure and recovered records as evidence establishing clandestine removal of goods - HELD THAT: - The Tribunal found that the panchnama of 08.08.2011 recorded recovery of loose kacha parchis, gutkas and books showing clearances of bare copper wire. Third party records and admissions, notably those of M/s Reliance Cable Industries and its proprietor Shri Lalit Jain, corroborated the values and existence of unaccounted sales and admission of purchasing both accounted and unaccounted wire. Transport and related records were also examined and found to corroborate clandestine removals. The appellant's plea that pucca invoices were not raised due to market competition was rejected as unsustainable. The appellant's initial admissions regarding recovery of documents from factory and residence, and subsequent partial retractions without evidence of coercion, were held not to undermine the authenticity of the recovered records. On this basis the Tribunal upheld the seized evidence as sufficient to establish clandestine removal on the basis of kacchi parchies and cash transactions. [Paras 7, 8]

Seizure and recovered records validly proved clandestine removal and support the demand.

Corroboration by third-party admissions - meticulous appreciation of documentary and oral evidence - Reliability of departmental corroboration by investigation of customers and transporters - HELD THAT: - The Tribunal accepted the Department's corroborative inquiries into customers (including M/s Reliance Cable Industries) and transporters, observing that records recovered from customers' premises matched values and transactions shown in the appellant's recovered records. The admission by the customer that both accounted and unaccounted purchases were made from the appellant reinforced the Department's case. The adjudicating authority's detailed scrutiny of voluminous evidence was held to be a meticulous appreciation warranting upholding the demand. [Paras 7]

Departmental corroboration by third party records and admissions is reliable and supports the findings.

Failure to procure attendance for cross-examination of panch witnesses - retraction of admissions and afterthought - Whether the appellant was denied opportunity to cross examine prosecution witnesses and whether retractions vitiate earlier admissions - HELD THAT: - Record shows the appellant sought cross examination of three panch witnesses; the adjudicating authority issued letters on three occasions but the addressees did not appear or letters were returned undelivered. The appellant's counsel agreed to proceed without awaiting cross examination. No grievance was pressed before the Tribunal that the authority denied cross examination despite the witnesses being present. Multiple subsequent statements by the proprietor containing similar admissions, and absence of any evidence of coercion, led the Tribunal to treat later retractions as afterthoughts and not sufficient to displace earlier admissions. [Paras 8, 9]

No denial of opportunity to cross examine; retractions do not negate earlier admissions in absence of evidence of coercion.

Demand under Central Excise Act and penalty under Central Excise Rules - meticulous appreciation of documentary and oral evidence - Whether the impugned order confirming demand and penalty could be set aside relying on other orders or decisions involving third party evidence - HELD THAT: - The Tribunal distinguished the Final Order relied upon by the appellant as concerning cases dependent on third party evidence, whereas the present matter involved first hand recoveries from the appellant's premises corroborated by admissions and records. The Tribunal also noted a related appeal by the major customer had been dismissed on the same search, reinforcing the Department's case. Given the comprehensive appreciation of evidence and distinction from the relied authority, the Tribunal found no ground to interfere with the confirmed demand and penalty. [Paras 10]

Impugned order confirming demand and penalty is not liable to be set aside on the basis of other orders.

Final Conclusion: The Tribunal upheld the adjudicating authority's order confirming demand and penalty after finding the search seizure recoveries, corroborative third party admissions and documentary evidence sufficient; the appellant's grounds regarding invalid search, denial of cross examination and reliance on other orders were rejected, and the appeal is dismissed.

Definition of "input" - Cenvat credit eligibility - no relationship whatsoever with the manufacture of a final product - statutory requirement under Metalliferous Mines Regulations (Reg. 107) - integral process doctrine - Circular No. 943/4/2011-CX clarification on "no relationship whatsoever"

Definition of "input" - no relationship whatsoever with the manufacture of a final product - statutory requirement under Metalliferous Mines Regulations (Reg. 107) - Cenvat credit eligibility - Circular No. 943/4/2011-CX clarification on "no relationship whatsoever" - integral process doctrine - Whether cement used to fill stopped-out ore pits prior to extraction is an "input" eligible for Cenvat credit - HELD THAT: - The Tribunal applied the definition of "input" in Rule 2(k) and its exclusion of goods having "no relationship whatsoever with the manufacture of a final product." The statutory permission and Regulation 107(3) of the Metalliferous Mines Regulations made filling and consolidation of stopped-out ore blocks a mandatory pre requisite for commencing extraction; the record showed the appellant was permitted to use cement for that prescribed filling and extraction by VRM stoping method. Precedents of the Supreme Court and this Tribunal establish that processes or goods integrally connected, directly or indirectly, with the manufacture of the final product fall within "in the manufacture of goods" and are eligible for credit. Circular No. 943/4/2011-CX was held to clarify that the phrase "no relationship whatsoever" must be strictly interpreted and does not exclude goods used in or in relation to manufacture whether directly or indirectly. Applying these principles, the Tribunal found that without filling the pits the appellant could not extract ore; therefore the cement had a relation to the extraction (the manufacture) and did not fall within the exclusion. Reliance on earlier High Court decisions predating the amendment and other non-speaking orders was held inapplicable to prevent the appellant from claiming credit. Consequently the adjudicating authority's denial of credit was set aside. [Paras 10, 11, 14, 15, 16]

Impugned orders denying Cenvat credit on cement used for filling pits are set aside and the appeals are allowed.

Final Conclusion: The Tribunal allowed the appeals, holding that cement used for mandatory filling of stopped-out ore blocks prior to extraction is an "input" within the definition and eligible for Cenvat credit; the orders denying credit are set aside.

Application of Rule 6 of the Cenvat Credit Rules, 2004 - Explanation 1 to Rule 6 - treatment of non excisable goods cleared for a consideration - definition of manufacture for levy of central excise - reversal of proportionate Cenvat credit on clearance of non excisable goods - classification of bagasse as agricultural waste / non manufacture

Application of Rule 6 of the Cenvat Credit Rules, 2004 - Explanation 1 to Rule 6 - treatment of non excisable goods cleared for a consideration - definition of manufacture for levy of central excise - classification of bagasse as agricultural waste / non manufacture - Whether, after insertion of Explanation 1 to Rule 6 w.e.f. 01.03.2015, the clearance of bagasse for a consideration attracts the obligation to reverse credit under Rule 6 as if bagasse were an exempted or final product. - HELD THAT: - The Tribunal observed that levy of central excise is predicated on the taxable event of manufacture and removal. The authorities below and the Tribunal found that bagasse is an agricultural residue/waste and not the result of any manufacturing process; accordingly there is no 'manufacture' attracting central excise. In that factual and legal matrix, the insertion of Explanation 1 to Rule 6 does not extend the reversal obligation to disposals of non manufactured agricultural waste such as bagasse. The Tribunal relied on earlier decisions cited in the record which were held to be squarely in favour of the assessee and concluded that, on the admitted facts and settled law, Rule 6 does not require reversal of the deemed 6% in respect of bagasse cleared from the factory.

Explanation 1 to Rule 6 does not render the clearance of bagasse a case of exempted/final product for purposes of reversal; bagasse being non manufactured agricultural waste does not attract reversal under Rule 6.

Reversal of proportionate Cenvat credit on clearance of non excisable goods - application of settled precedents in departmental appeals - Whether the adjudicating authority and Commissioner (Appeals) were correct in upholding recovery of the proportionate Cenvat credit attributable to inputs and input services used in respect of the clearance of bagasse. - HELD THAT: - The Tribunal noted that, although Rule 6 did not oblige reversal of the full deemed amount, the assessee had reversed the proportionate Cenvat credit attributable to inputs and input services used in relation to the cleared bagasse and both lower authorities had confirmed limited recovery and imposed a modest penalty. Having regard to the legal conclusion that bagasse is not a manufactured excisable product and to the authorities relied upon, the Tribunal found no infirmity in the conclusion reached by the adjudicating authority and Commissioner (Appeals) in sustaining the limited reversal and penalty.

The limited reversal of proportionate Cenvat credit and the confirmatory orders of the lower authorities were upheld.

Final Conclusion: Revenue's appeal dismissed; impugned order upholding the Order in Original is affirmed.

Renewal of warehousing licence - automatic extension of bonded warehousing period - applicability of CBEC Circular No.7/2005-Cus. dated 14.2.2005 - demand of duty and imposition of penalty for breach of warehousing period under Section 72(b) of the Customs Act, 1962

Renewal of warehousing licence - automatic extension of bonded warehousing period - applicability of CBEC Circular No.7/2005-Cus. dated 14.2.2005 - demand of duty and imposition of penalty for breach of warehousing period under Section 72(b) of the Customs Act, 1962 - Whether demand of duty and imposition of penalty for de-bonding of indigenous capital goods and raw materials was sustainable where the warehousing licence had been renewed and CBEC Circular No.7/2005-Cus. applied - HELD THAT: - The Tribunal accepted the appellants' production of the renewed warehousing licence extended up to July 2014 and examined CBEC Circular No.7/2005-Cus. dated 14.2.2005 which adopts a liberal approach towards procedures for 100% EOUs and states that where the warehouse licence has been extended the warehousing period is to be treated as extended. Applying that Circular, the Tribunal held that the bonded warehousing period stood automatically extended concomitant with the licence renewal, and that at the time of de-bonding the licences were valid. On that basis the demand of duty and the penalty confirmed by the original authority under the alleged violation of warehousing period were found not sustainable in law. The Tribunal therefore set aside the impugned order and allowed the appeals.

Impugned order set aside; appeals allowed as demand of duty and penalty unsustainable where warehousing licence renewal operated to extend the bonded warehousing period in terms of CBEC Circular No.7/2005-Cus.

Final Conclusion: The Tribunal allowed the appeals, holding that renewal of the warehousing licence extended the bonded warehousing period in terms of CBEC Circular No.7/2005-Cus. dated 14.2.2005, and consequently the demand of duty and imposition of penalty were not sustainable and the impugned order was set aside.

Onus of proof for availment of cenvat credit lies on Revenue - goods not excisable if not manufactured by the assessee and no cenvat credit availed - clearing goods without excise invoice under gate pass cum challan does not ipso facto establish clandestine removal - job-work exemption under Notification No. 214/86 - EPCG capital goods sent for repair on returnable basis - special audit under Section 14AA

Goods not excisable if not manufactured by the assessee and no cenvat credit availed - onus of proof for availment of cenvat credit lies on Revenue - clearing goods without excise invoice under gate pass cum challan does not ipso facto establish clandestine removal - Demand confirmed in respect of MS angles, MS beams and similar items removed after dismantling civil structures - HELD THAT: - The Tribunal found an apparent admission on record that MS angles, MS beams and similar items were used in construction of civil structures and removed after dismantling; there was also a Chartered Accountant's certificate on record and no evidence that the appellant had availed cenvat credit on those items or that such items were manufactured by the appellant. Applying the principle that the Revenue bears the onus of proving availment of credit, the Tribunal held that the Department failed to discharge that onus and that note 8(a) of Section XV of the Central Excise Tariff and Sections 2(f)/3 of the Central Excise Act do not render such items excisable in these circumstances. The finding was that clearance on gate pass cum challan, without positive evidence of manufacture or credit availed, does not sustain the demand. [Paras 7]

Demand in respect of MS angles, MS beams and similar items set aside.

Job-work exemption under Notification No. 214/86 - clearing goods without excise invoice under gate pass cum challan does not ipso facto establish clandestine removal - Demand confirmed for goods sent/received for job-work where department alleged non-return within 180 days - HELD THAT: - The Tribunal examined challans and the Chartered Accountant's certificate on record and found evidence that goods were received back within 180 days after job-work. For goods received from principal manufacturers for job-work, Notification No. 214/86 applies to relieve the appellant from duty liability. The documents on record were held sufficient to rebut the Department's case and to establish that no clandestine clearance liable to duty had occurred. [Paras 7]

Demand in respect of goods sent/received for job-work set aside.

EPCG capital goods sent for repair on returnable basis - clearing goods without excise invoice under gate pass cum challan does not ipso facto establish clandestine removal - Demand confirmed for imported capital goods under EPCG licences sent out for repairs on returnable basis - HELD THAT: - The record contained challans for clearance, the EPCG licence and the Chartered Accountant's certificate verifying returnable repair transactions. The Tribunal held that these documents, which were not properly appreciated by the adjudicating authority, demonstrated that the imported capital goods were on returnable repair and that no cenvat credit was availed which would render them liable to duty. In the absence of contrary evidence, the Department's confirmation of demand was unsustainable. [Paras 7]

Demand in respect of EPCG-imported capital goods sent for repair set aside.

Goods not excisable if not manufactured by the assessee and no cenvat credit availed - onus of proof for availment of cenvat credit lies on Revenue - Demand confirmed for goods returned to suppliers due to discrepancy or defect where no cenvat credit was availed - HELD THAT: - The Tribunal noted the presence of the Chartered Accountant's certificate and other record evidence proving return of goods to suppliers and non-availment of cenvat credit. There was no evidence from the Department to show that such goods were excisable in the appellant's hands. Given the Revenue's failure to discharge the onus of proof and the cogent evidence produced by the appellant, the confirmation of demand was held to be erroneous. [Paras 7]

Demand in respect of goods returned to suppliers on account of defect or discrepancy set aside.

Final Conclusion: The adjudicating order confirming demand for clearances made on gate pass cum challan is set aside in the respects identified; the appeal is allowed and the impugned demand, interest and penalty confirmed by the lower authority are vacated to the extent indicated.

CENVAT credit - classification of inputs and capital goods - definition of capital goods under Rule 2(a) of CENVAT Credit Rules, 2004 - definition of inputs under Rule 2(k) of CENVAT Credit Rules, 2004 - admissibility and consideration of Chartered Engineer certificate as evidence - remand for verification - principles of natural justice

CENVAT credit - classification of inputs and capital goods - definition of capital goods under Rule 2(a) of CENVAT Credit Rules, 2004 - definition of inputs under Rule 2(k) of CENVAT Credit Rules, 2004 - admissibility and consideration of Chartered Engineer certificate as evidence - remand for verification - principles of natural justice - Whether the usage of the impugned items as capital goods or as inputs/parts/components of capital goods should be verified by the original authority and the appeals remanded for such verification. - HELD THAT: - Revenue had disallowed CENVAT credit on MS angles, joists, channels, MS plates/sheets used in fabrication of supporting structures, holding such resultant structures were not capital goods. Appellants produced Chartered Engineer certificates, photographs and drawings before the Commissioner (A), but the Commissioner (A) declined to consider the certificates on the ground they were not produced before the original authority and therefore treated them as additional evidence. The appellate record shows the Revenue had no objection to verification of usage. Given the factual controversy as to whether the impugned goods were fabricated into capital goods or into parts/components of capital goods (and thus eligible as inputs or capital goods under the cited Rules), it was necessary that the original authority examine and verify the usage after affording opportunity to the parties. The Tribunal directed that the original authority consider the Chartered Engineer certificates and any other documents the appellants may produce, comply with the principles of natural justice, afford an opportunity of hearing, and pass a reasoned order on the factual question of usage.

All appeals allowed by way of remand to the original authority to verify usage of the impugned goods on the basis of the Chartered Engineer certificate and other documents, after complying with principles of natural justice and passing a reasoned order.

Final Conclusion: The Tribunal remanded all six appeals to the original adjudicating authority for fresh verification of the usage of the impugned items (having regard to Chartered Engineer certificates, photographs, drawings and other documents), directing compliance with principles of natural justice and issuance of a reasoned order; appeals are allowed to that extent.

Confirmation of excise duty based solely on investigation by another agency - need for independent investigation by Central Excise authorities - clandestine removal of goods - corroborative evidence requirement for clandestine manufacture/clearance - inadmissibility of Income Tax stock-verification as sole basis for excise demand

Confirmation of excise duty based solely on investigation by another agency - need for independent investigation by Central Excise authorities - corroborative evidence requirement for clandestine manufacture/clearance - Whether a demand for excise duty based exclusively on an Income Tax Department investigation and stock verification, without independent verification or corroborative evidence by Central Excise authorities, is sustainable. - HELD THAT: - The Tribunal found that the adjudication below rested entirely on the investigation and materials produced by the Income Tax authorities, while the Central Excise officers did not conduct any independent stock verification or further inquiry to establish clandestine clearance. The Tribunal applied settled precedent holding that allegations of clandestine manufacture or removal must be supported by positive, corroborative evidence and that information from another agency cannot by itself sustain an excise demand where the excise department has not carried out independent verification. Reliance was placed on earlier decisions of the Tribunal which held that stock verifications or admissions recorded by the Income Tax Department cannot be accepted as the sole basis for confirming excise duty in the absence of corroborative material (including verification of manufacturing records, inputs/outputs, buyer verification, transporter identity, or other independent enquiries). Following these authorities and on the facts that no independent enquiries were made and no corroborative evidence was produced, the Tribunal concluded that the confirmation of duty could not be sustained.

Impugned confirmation of excise duty set aside and appeals allowed.

Final Conclusion: The Tribunal allowed the appeals and set aside the impugned order because the excise demand was confirmed solely on the basis of Income Tax investigation without any independent verification or corroborative evidence by the Central Excise authorities; such confirmation is unsustainable.

Double penalisation - ineligible cenvat credit - availment and reversal of cenvat credit - revenue-neutral transaction - extended period of limitation - principles of natural justice - remand for de novo adjudication

Double penalisation - Imposition of penalty on the firm as well as on its partner - HELD THAT: - The Tribunal found that the firm and its partner cannot be treated as distinct entities for purposes of imposing penalty so as to result in double punishment. Having noted precedent relied upon by the appellant, the Tribunal held that imposing penalty on both the firm and the partner amounts to impermissible double penalisation and is not sustainable in law. The Tribunal recorded this legal conclusion while setting aside the impugned order and directing fresh adjudication. [Paras 5]

Penalty on the partner and on the firm simultaneously is not permissible as it results in double penalisation.

Ineligible cenvat credit - availment and reversal of cenvat credit - revenue-neutral transaction - extended period of limitation - principles of natural justice - remand for de novo adjudication - Whether the impugned adjudication properly considered the appellant's grounds (limitation, revenue-neutrality, bona fide belief, and non-supply of evidential statements) and the adequacy of the reasoning in the orders below - HELD THAT: - The Tribunal found that both the original adjudicating authority and the Commissioner (Appeals) had largely reiterated the earlier order without adequately addressing the grounds advanced by the appellant, including contention of a revenue neutral transaction between two units of the same firm, reversal of credit and payment of differential duty with interest, invocation of extended limitation, and the appellant's plea of bona fide/error without intent to evade. The Tribunal also noted that statements recorded by the Department during investigation had not been furnished to the appellant. In view of these deficiencies and the need to apply the principles of natural justice, the Tribunal did not decide the merits on these issues but set aside the impugned order and remanded the matter to the original authority to consider all grounds afresh, to allow production of evidence by the appellant, to examine relevant decisions of the Tribunal, and to pass a de novo order after following proper procedures. [Paras 5]

Impugned order set aside and matter remanded to the original authority for de novo adjudication, with directions to consider limitation, revenue neutrality, reversal/payment of credit, furnish investigation statements, apply principles of natural justice and decide afresh.

Final Conclusion: The impugned order is set aside and both appeals are allowed by way of remand; the matter is remitted to the original authority for de novo adjudication after affording the appellant opportunity to produce evidence, considering the grounds raised (including limitation, revenue neutrality and bona fide reversal/payment of credit), and applying the principles of natural justice; simultaneous penalties on the firm and its partner are not permissible as constituting double penalisation.

Compromise Memo - Mediation and Conciliation - Settlement as Full and Final - Dismissing Writ Petitions on Settlement - Writs of Certiorari and Mandamus

Compromise Memo - Mediation and Conciliation - Settlement as Full and Final - Dismissing Writ Petitions on Settlement - Taking the compromise memo arising from mediation on record and dismissal of the writ petitions as settled between the parties. - HELD THAT: - The court recorded that the matters had been referred to the Mediation and Conciliation Centre where conciliation succeeded and a settlement was reached on 12.10.2018 between the petitioner and the fourth respondent. The settlement, reduced to a written compromise memo and placed on record, provided that the fourth respondent paid a sum in full and final settlement of the chit amounts which underlay the three impugned government orders. Given that the dispute between the petitioner and the contesting fourth respondent was completely resolved by the settlement, there remained no live controversy for adjudication in these writ petitions. On that basis the court took the compromise memo on record and dismissed the petitions. [Paras 3, 4, 5, 6]

Compromise memo dated 12.10.2018 taken on record; writ petitions dismissed as settled; no order as to costs.

Final Conclusion: The court recorded the mediated compromise reached between the parties, placed the compromise memo on the record, and dismissed the three writ petitions as fully and finally settled between the petitioner and the fourth respondent, while making no order as to costs.

Voidability of transfers intended to defraud Government revenue - provisional attachment to protect Government revenue - post-sale creation of revenue charge against purchaser at bank auction - intention to defraud and timing of transfer relative to tax becoming due - purchaser bona fide under SARFAESI auction

Post-sale creation of revenue charge against purchaser at bank auction - voidability of transfers intended to defraud Government revenue - provisional attachment to protect Government revenue - purchaser bona fide under SARFAESI auction - Validity of the charge entered by the VAT department on the property after the bank's SARFAESI auction and sale to the petitioner - HELD THAT: - The Court found that at the dates of notice, auction and completion of sale the only departmental dues outstanding against the defaulting dealer were a nominal sum which the petitioner paid. The charge impugned was created after the auction and sale had been effected by the lending bank and was recorded as being for possible dues arising on completion of pending assessments rather than for an existing assessed tax. The statutory principle that transfers made with intent to defraud revenue are void was considered inapplicable on the facts because the sale was a compulsory bank auction for recovery of loan and not a voluntary transfer by the dealer, and there was doubt that the transfer was made with intent to defraud. Further, the power available to the revenue to protect its interest is by provisional attachment prior to or during such proceedings; no provisional attachment was in fact made before the auction or sale. In these circumstances the department could not sustain the post-sale entry of charge against a bona fide purchaser who had deposited the sale price and paid the nominal outstanding amount, and the creation of the charge was held to be unlawful. [Paras 5, 6, 7, 8]

The charge created by the respondents over the property after the bank auction is illegal and shall be removed.

Final Conclusion: The petition succeeds; the charge entered by the VAT department after the SARFAESI auction is set aside and ordered to be removed; petition disposed of.

Principles of natural justice - opportunity of personal hearing - failure to consider reasons for non-filing of reply - assessment set aside for procedural infirmity - remand for fresh consideration

Principles of natural justice - failure to consider reasons for non-filing of reply - opportunity of personal hearing - assessment set aside for procedural infirmity - Impugned assessment order set aside for violation of principles of natural justice as Assessing Officer passed the order without considering the petitioner's reasons for non-filing of reply to the second notice and without affording a personal hearing. - HELD THAT: - The Assessing Officer issued a first notice to which the petitioner replied, and thereafter issued a second notice seeking further particulars. The petitioner did not file a reply to the second notice; however, the petitioner explained, by affidavit and supportive medical record, that non-filing was due to the Managing Director's advanced cancer and the other director's preoccupation with her treatment, which reasonably prevented timely compliance. The Court held that where non-filing is shown to be for a justifiable cause, passing an adverse assessment without considering that explanation and without providing personal hearing is a breach of principles of natural justice. In consequence, the impugned order was quashed and the matter was remitted to the Assessing Officer to permit the petitioner to furnish the reply, to afford personal hearing, and to pass fresh orders on merits and in accordance with law; the Court expressly declined to express any view on the merits of the assessment. [Paras 5, 6]

Writ petition allowed; impugned assessment order set aside and matter remitted for fresh assessment after furnishing reply and personal hearing.

Final Conclusion: The High Court allowed the petition on procedural grounds, set aside the assessment order for breach of natural justice, and remitted the matter to the Assessing Officer to receive the petitioner's reply to the second notice, afford personal hearing, and pass fresh orders on merits in accordance with law within the timelines specified by the Court.

Estoppel - reopening of assessment within limitation period - slump sale versus sale of plant and machinery - requirement of a speaking order and consideration of material - Enforcement Wing jurisdiction to collect cheques - fresh notice before basing decision on cancellation of registration

Estoppel - requirement of a speaking order and consideration of material - Admission before an enforcement officer does not estop the petitioner from challenging the assessment order and the assessing authority must record findings on material transactions. - HELD THAT: - The Court held that any alleged admission recorded during inspection cannot oust the petitioner's right to challenge the impugned Assessment Order in its entirety. The Assessing Officer was required to consider the Memorandum of Understanding and the sworn statement and to record a reasoned finding whether the transaction was akin to a slump sale or a sale of plant and machinery. By failing to render such a finding and by not passing a speaking order on these materials, the impugned assessment could not stand. [Paras 2, 4]

The petitioner's challenge to the assessment is entertained; the impugned order is quashed and the matter remanded for fresh consideration with directions to consider the Memorandum of Understanding and the sworn statement and to record reasoned findings.

Enforcement Wing jurisdiction to collect cheques - Collection of cheques by the Enforcement Wing during inspection was improper and cannot strengthen the Assessing Officer's case. - HELD THAT: - The Court observed that the Enforcement Wing has no jurisdiction to collect cheques as if collecting advance tax; such collection is illegal and cannot be used to bolster the assessment. This illegality was noted as a factor undermining reliance on amounts collected during inspection. [Paras 4]

The collection of cheques by the Enforcement Wing is unlawful and cannot strengthen the assessment; the assessment must be redone without relying on such collection.

Reopening of assessment within limitation period - fresh notice before basing decision on cancellation of registration - Questions as to limitation for reopening the assessment and the effect of cancellation of the registration certificate were not decided on merits and must be considered afresh on remand with opportunity for hearing and, if required, issuance of a fresh notice. - HELD THAT: - The Court noted that the respondents contend that the registration certificate was cancelled on 31.03.2005 and that reopening must be examined in the light of limitation under the Act. The impugned order did not deal with the effect of cancellation of registration. Accordingly, these points were left open for the assessing authority to decide after affording personal hearing; if the authority intends to act on the cancellation it must issue a proper fresh notice before taking any decision. [Paras 5]

Limitation and the effect of registration cancellation are remanded for fresh consideration; the respondent must afford personal hearing and, if relying on cancellation, issue a fresh notice before proceeding.

Final Conclusion: Writ petition allowed; the impugned Assessment Order dated 21.01.2016 for Assessment year 2005-06 is quashed and the matter is remanded to the first respondent to afford personal hearing, consider the Memorandum of Understanding dated 10.03.2006 and the sworn statement, examine the plea of limitation and the effect of registration cancellation, and redo the assessment in accordance with law; if relying on cancellation a fresh notice must be issued.