TaxTMI Updates e-Newsletter
Nov 02,2013

Jurisdiction to initiate proceedings under section 153C read with section 153A - condition precedent of seized books/documents belonging to the other person - ownership or limited proprietary interest in seized documents - handing over seized books/documents to the assessing officer of the other person - distinction between section 153C and section 158BD

Jurisdiction to initiate proceedings under section 153C read with section 153A - condition precedent of seized books/documents belonging to the other person - ownership or limited proprietary interest in seized documents - handing over seized books/documents to the assessing officer of the other person - distinction between section 153C and section 158BD - Assessing officer was not within his jurisdiction to issue notices and proceed under section 153A read with section 153C in respect of the assessee where no books of account or documents belonging to the assessee were seized or handed over. - HELD THAT: - The Bench held that section 153C can be resorted to only when the AO of the searched person is satisfied that money, bullion, jewellery, other valuable articles or books of account or documents seized belong to a person other than the searched person and such seized material is handed over to the AO having jurisdiction over that other person. In the present case no books of account or incriminating documents pertaining to the assessee were seized from the premises searched; only copies were made available and no seized material belonging to the assessee was handed over to its AO. Reliance was placed upon the reasoning in P Srinivasa Nayak which emphasises that the expression 'belonging' implies more than casual association and requires some proprietary or limited ownership/interest in the seized material, and upon the view expressed by the jurisdictional Bench and the Hon'ble Gujarat High Court in Vijaybhai N. Chandrani that the condition precedent for invoking section 153C is satisfaction that the seized items belong to the person against whom proceedings are sought. Applying these principles, the Bench concluded that the primary condition for issuance of notices under section 153C read with section 153A was not satisfied and therefore the AO was not justified in initiating reassessment proceedings against the assessee for the assessment years under challenge. [Paras 8, 9]

Revenue's appeals dismissed; initiation of proceedings under section 153A read with section 153C was not justified for the assessment years before the Tribunal.

Final Conclusion: Where no books of account or documents belonging to the assessee were seized or handed over following a search in a third party's premises, notices and reassessment proceedings under section 153A read with section 153C cannot be validly initiated; Revenue's appeals for AYs 2002-03 to 2005-06 are dismissed.

Reopening of assessment under section 147 - validity of notice under section 148 - valuation for computation of capital gains as on 01.04.1981 - weight of valuation made for wealth-tax vis-a -vis valuation for income-tax/capital gains - reference to Valuation Officer/DVO for determination of fair market value under section 50C/section 55A - requirement of tangible material to sustain reopening - remand for fresh consideration to the Assessing Officer

Reopening of assessment under section 147 - validity of notice under section 148 - requirement of tangible material to sustain reopening - Validity of reopening of assessment and notice under section 148 - HELD THAT: - The Tribunal examined whether the reopening of assessment was justified where only processing under the relevant provision had been completed and the return had been processed under section 143(1). Noting that action had been taken in respect of other co-owners and that the Assessing Officer proceeded on the basis of material developed in group proceedings, the Tribunal held that the reopening was sustainable. The action was assessed in the light of authoritative principles applicable to reopening in group or related cases and found not to be vitiated for lack of tangible material in the facts of this case. [Paras 5]

Ground No.1 rejected; reopening and notice under section 148 upheld.

Valuation for computation of capital gains as on 01.04.1981 - weight of valuation made for wealth-tax vis-a -vis valuation for income-tax/capital gains - reference to Valuation Officer/DVO for determination of fair market value under section 50C/section 55A - remand for fresh consideration to the Assessing Officer - Appropriate value to be adopted as cost of acquisition on 01.04.1981 and the propriety of relying on a wealth-tax valuation report vis-a -vis registered valuer's report - HELD THAT: - The Tribunal accepted that the cost of acquisition as on 01.04.1981 must be determined but held that the question which valuation should be adopted required fresh enquiry. Although the CIT(A) relied on an earlier report prepared by Mr. Umrigar (May 1981) used for wealth-tax, the Tribunal observed that wealth-tax valuation and capital-gains valuation may employ different methods and that a wealth-tax valuation does not estop the assessee from contesting value for capital gains (following the principle explained in Indira Bai). The Tribunal also noted that the CIT(A) relied on material not considered by the AO and that additional evidence (including departmental valuation reports and a subsequent order in a co-owner's case) had been placed on record. For these reasons the Tribunal found it was inappropriate for the CIT(A) to determine the issue without giving the Assessing Officer an opportunity to examine all relevant valuation reports (registered valuer's report, wealth-tax report and departmental valuations) and the decisions in co-owner cases, and to apply the legal principles governing valuation under section 50C/related provisions. [Paras 8]

Ground No.2 allowed for statistical purposes; the matter is set aside and restored to the file of the Assessing Officer for fresh consideration of sale consideration under section 50C(2) and cost of acquisition as on 01.04.1981, with opportunity to the assessee and keeping in view co-owner decisions and applicable legal principles.

Final Conclusion: The appeal is partly allowed: the reopening/notice under section 148 was upheld and Ground No.1 rejected, while the valuation/cost-of-acquisition issue (Ground No.2) is remitted to the Assessing Officer for fresh adjudication after considering all valuation reports and giving the assessee an opportunity to be heard.

Validity of notice under Section 148 - reopening of assessment under Section 147 - effect of non-existence of original assessment order on reassessment - proviso to Section 139(9) - removal of defects - annulment of assessment

Validity of notice under Section 148 - reopening of assessment under Section 147 - effect of non-existence of original assessment order on reassessment - proviso to Section 139(9) - removal of defects - Whether the reassessment proceedings and additions under Section 147 were valid when no original assessment order under Sections 142(1)(a), 143(3) or 144 had been passed and defects under Section 139(9) had been the subject of communications between the assessee and the Assessing Officer. - HELD THAT: - The assessee had filed a voluntary return and a notice under Section 139(9) for removal of defects was issued; although defects were ultimately removed, the assessment order does not refer to that fact. A notice under Section 148 was thereafter issued and the Assessing Officer made additions invoking Section 147. The Court applied the principle in U.P. Rajya Viddyut Utpadan Nigam v. Deputy CIT, 202 ITR 93 (All), holding that in absence of any prior assessment order under Sections 142(1)(a), 143(3) or 144 there was no occasion to initiate reassessment under Section 147. The Court therefore found the reassessment invalid on that foundation and upheld the appellate authorities' conclusion annulling the assessment.

Reassessment and additions made under Section 147 are invalid when no original assessment order under Sections 142(1)(a), 143(3) or 144 existed; the appellate orders annulling the assessment are sustained and the substantial questions of law are answered in favour of the assessee.

Final Conclusion: The departmental appeal is dismissed; the appellate authorities' orders are upheld and the substantial questions of law are answered in favour of the assessee.

Disallowance under section 40(a)(ia) of the Income Tax Act - mandatory requirement of section 200(1) and section 194(c) - precedential effect of Special Bench decision in M/s. Merilyn Shipping & Transports Vs. ACIT - remand for fresh consideration

Disallowance under section 40(a)(ia) of the Income Tax Act - mandatory requirement of section 200(1) and section 194(c) - precedential effect of Special Bench decision in M/s. Merilyn Shipping & Transports Vs. ACIT - Impugned ITAT order restricting the addition under section 40(a)(ia) was quashed and set aside and the matter remanded to the Tribunal for fresh consideration of other issues regarding disallowance under section 40(a)(ia). - HELD THAT: - The Division Bench of this Court in Tax Appeal No.905 of 2012 and other allied appeals dated 2/5/2013 held that the Special Bench decision in M/s. Merilyn Shipping & Transports Vs. ACIT does not lay down the correct law. Relying on that precedent and on the uncontested position of the respondent, the Court allowed the revenue appeal, quashed and set aside the ITAT judgment dated 5/10/2012, and remitted the matter to the Tribunal to reconsider any remaining questions concerning disallowance under section 40(a)(ia), including those founded on the obligations under sections 200(1) and 194(c), if such issues subsist. [Paras 5]

Appeal allowed; ITAT order dated 5/10/2012 quashed and set aside; matter remanded to the Tribunal for fresh consideration of other issues regarding disallowance under section 40(a)(ia).

Final Conclusion: The revenue appeal is allowed; the Income Tax Appellate Tribunal's order is quashed and set aside and the case is remitted to the Tribunal for fresh consideration of remaining issues relating to disallowance under section 40(a)(ia) for AY 2005-2006 in light of the Division Bench's decision.

Characterisation of construction activity as a work contract - deduction under section 80IB(10) read with section 80IB(1) - treatment of income from sale of unutilised FSI in computation of profit eligible for deduction - effect of disallowance under section 40(a)(ia) on entitlement to a beneficial deduction - binding precedent in Radhe Developers on characterisation of developer transactions

Characterisation of construction activity as a work contract - binding precedent in Radhe Developers on characterisation of developer transactions - Whether the relationship between the assessee firm and end users was to be treated as a work contract for denying deduction under section 80IB(10). - HELD THAT: - The Court declined the revenue's challenge on this question, holding that the matter is covered against the revenue by this Court's earlier decision in Radhe Developers. Consequently the appeal insofar as this contention is concerned is dismissed and the decision of the Tribunal upholding the CIT(A)'s view stands affirmed. [Paras 2]

Appeal dismissed on this point; ITAT/CIT(A) decision upheld in view of the cited precedent.

Effect of disallowance under section 40(a)(ia) on entitlement to a beneficial deduction - Whether deduction under section 80IB(10) could be disallowed on account of expenditures disallowed under section 40(a)(ia). - HELD THAT: - The Court observed that this specific question was not pleaded before or considered by the Tribunal as per the grounds in the memo of appeal to the ITAT. Because the issue was not raised before the Tribunal, the Court declined to entertain the challenge and dismissed the appeal insofar as this contention is concerned. [Paras 3]

Appeal dismissed on this point for want of consideration below.

Deduction under section 80IB(10) read with section 80IB(1) - treatment of income from sale of unutilised FSI in computation of profit eligible for deduction - Whether profit from sale of unutilised FSI forms part of business profit eligible for deduction under section 80IB(10) read with section 80IB(1). - HELD THAT: - The Court has admitted the appeal limited to this question and directed that it be heard along with other connected Tax Appeals raising the same point. The substantive question has therefore been reserved for determination in the admitted appeals and is not decided in the instant order. [Paras 4]

Issue admitted for hearing with connected appeals; reserved for adjudication.

Final Conclusion: The revenue's appeal is dismissed in part: (i) dismissed on the characterisation point in view of this Court's precedent; (ii) dismissed insofar as the contention based on section 40(a)(ia) was not raised below; and (iii) admitted and ordered to be heard with connected appeals on the question whether income from sale of unutilised FSI is eligible for deduction under section 80IB(10) read with section 80IB(1).

Full and true disclosure of all material facts necessary for assessment - change of opinion doctrine in reassessment - proviso to section 147 requiring disclosure of material facts for reopening beyond four years - Explanation 1 to section 147 - production of books not necessarily amounting to disclosure - speaking order requirement for disposal of objections to notice under section 148 - reopening not permissible to rectify Assessing Officer's computational error - remedy under correction under section 154

Full and true disclosure of all material facts necessary for assessment - proviso to section 147 requiring disclosure of material facts for reopening beyond four years - Validity of reopening assessment after four years where proviso to section 147 applies - HELD THAT: - The court held that the proviso to section 147 bars reopening after four years unless income escaped assessment by reason of the assessee's failure to disclose fully and truly all material facts. On the facts, the Assessing Officer had raised specific queries during the original scrutiny assessment, the assessee furnished detailed replies (including annexure showing the items later challenged), and the tax audit report items were examined in the original proceedings. For items challenged as revenue v. capital (recorded reasons Nos.1,5 and 6) and the gratuity provision (No.3), the court found there was full and true disclosure during the assessment proceedings and therefore the statutory condition for reopening beyond four years was not satisfied. Consequently, the notice under section 148 and the reopening were held invalid insofar as they relied on lack of disclosure. [Paras 16, 17, 18, 20]

Reopening after four years quashed because there was full and true disclosure in the original assessment proceedings; proviso to section 147 not satisfied.

Change of opinion doctrine in reassessment - Whether reassessment proceeded from a mere change of opinion - HELD THAT: - The court applied settled principles that where the Assessing Officer raised specific queries in the original assessment, received replies and thereafter allowed claims, subsequently treating the same facts as requiring addition amounts to a change of opinion. The details for advertising, market research, website/design and related items were specifically sought and furnished and had been allowed as revenue expenditure in the original assessment; treating them thereafter as capital expenditure in recorded reasons was a mere change of opinion and impermissible. [Paras 15, 16, 26, 27]

Reopening was impermissible as it amounted to a mere change of opinion by the Department.

Explanation 1 to section 147 - production of books not necessarily amounting to disclosure - Applicability of Explanation 1 where tax audit report and documents were on record - HELD THAT: - The court examined whether the mere presence of the tax audit report and annexures meant the assessee had not 'disclosed' within the meaning of the proviso. It concluded Explanation 1 does not assist the Revenue where the Assessing Officer had been diligent: here the AO had examined the tax audit report, raised queries and obtained answers. Because the AO actively considered and sought clarification on the material, the situation was not one where material was merely producible and discoverable with due diligence; the assessee had in fact disclosed the relevant material in the assessment proceedings. [Paras 11, 12, 17, 24]

Explanation 1 in favour of reopening was inapplicable because the Assessing Officer had examined the tax audit report and had been diligent; the assessee had disclosed the material facts.

Reopening not permissible to rectify Assessing Officer's computational error - remedy under correction under section 154 - Whether reopening could be resorted to for an Assessing Officer's computational mistake in original assessment - HELD THAT: - Recorded reason No.4 related to a computational error in allowable depreciation. The court observed that such a mistake made by the Assessing Officer could and should have been corrected under the statutory correction mechanism (section 154) rather than by reopening the assessment. The Assessing Officer had initiated but not pursued section 154 proceedings; since the error was his, reopening the assessment was not permissible. [Paras 19]

Reopening could not be sustained to rectify the Assessing Officer's own computational error; correction under section 154 was the appropriate remedy.

Speaking order requirement for disposal of objections to notice under section 148 - Adequacy of the Assessing Officer's order disposing of objections to the reopening notice - HELD THAT: - The court noted the jurisprudence (GKN Driveshafts and related authorities) obliging the Assessing Officer to dispose of objections to a notice under section 148 by a speaking order explaining why objections are rejected. The impugned order reproduced reasons and tersely rejected objections stating Explanation 1 and facts were considered but did not address the petitioner's specific contentions in a reasoned manner. While the court decided the matter on the merits (full disclosure and change of opinion), it recorded that the Assessing Officer's brief rejection was inadequate in light of the requirement to pass a speaking order when objections are raised. [Paras 4, 5, 6]

The Assessing Officer's short, non specific rejection of objections did not meet the requirement of a speaking order; however, the petition succeeds on merits (full disclosure/change of opinion).

Final Conclusion: The notice dated 26-3-2012 under section 148 and all proceedings pursuant thereto (including the order dated 12-11-2012) were set aside: the court found full and true disclosure in the original assessment proceedings and that the reopening amounted to a mere change of opinion; the computational error by the Assessing Officer could not justify reassessment; additionally the Assessing Officer's brief disposal of objections did not constitute the required speaking order.

Manufacture - processing as manufacture - marketability test for manufacture - fitness test (process renders article fit for use) - industrial undertaking - evidentiary value of excise classification

Manufacture - processing as manufacture - fitness test (process renders article fit for use) - Whether coating titanium substrates with noble metal oxides by the assessee amounted to manufacture/production of an article or thing within the meaning of section 80-IA of the Income-tax Act - HELD THAT: - The Court examined expert evidence, authoritative technical extracts and the flow-chart of the coating process placed on record and applied the judicial tests for manufacture - transformation into a new and distinct article having a distinctive character or use and the 'fitness' test recently applied by the Supreme Court. The material, including opinions of two IIT experts and technical literature, showed that bare titanium is not a functional anode and that coating with noble metal oxides produces a distinct, dimensionally stable anode with altered surface characteristics and catalytic properties necessary for electrolytic chlorine-caustic production. The Court held that the process effected a transformation resulting in a useful commercial commodity and rendered the supplied material fit for use as an anode in industry. The Court also observed that no contrary expert material was produced by the Department to rebut the technical evidence relied upon by the assessee. [Paras 11, 12, 14, 16]

Coating process undertaken by the assessee constitutes manufacture/production within the meaning of section 80-IA and therefore attracts the statutory deduction.

Marketability test for manufacture - evidentiary value of excise classification - industrial undertaking - Whether the Tribunal was justified in denying the deduction on the ground that no distinct marketable article emerged and whether factors such as excise registration and the contractual purchase by a single buyer were relevant - HELD THAT: - The Court held that the Tribunal misapplied the test by focusing on subsequent fabrication requirements and the fact that the coated articles were sent for further work, rather than on whether a distinct, marketable article was produced by the assessee's process. The Court emphasised that marketability does not require multiple buyers and that a single purchaser does not negate marketability. Further, the Court found significance in the fact that the excise authorities had treated the activity as manufacture (excise registration and levy), which the Tribunal failed to give appropriate weight to. The Tribunal's rejection of the assessee's evidence of marketability and its reliance on its own interpretation of technical material without adducing counter-expert evidence was held to be flawed. [Paras 12, 13, 14, 16]

Tribunal's conclusion that no distinct marketable product emerged is unsustainable; excise classification and the contractual evidence support that the coated articles were a distinct, marketable product and the denial of deduction on that basis was overturned.

Final Conclusion: Both questions of law framed at admission are answered in favour of the assessee: the coating process produced a distinct, marketable article amounting to 'manufacture' under section 80-IA, and the Tribunal's contrary conclusion is set aside; parties to bear their own costs.

Arm's Length Price - Cost Contribution Arrangement and allocation of global sponsorship cost - Reimbursement of advertising expenses treated as an international transaction - Provision for warranty expenses as an accrued deductible liability under mercantile system - Jurisdiction of the TPO to examine non referred international transactions and retrospective operation of provisions empowering TPO

Arm's Length Price - Cost Contribution Arrangement and allocation of global sponsorship cost - Whether the TPO's apportionment of the assessee's contribution towards ICC World Cup sponsorship was correct and whether the CIT(A) was right in deleting the TPO/Assessing Officer's adjustment. - HELD THAT: - The Tribunal held that the assessee's allocation of 40% of the global sponsorship cost to the Indian entity was supported by commercial considerations and evidence of likely benefit to LGEIL (higher visibility, expected sales growth, population/viewership data and empirical studies). The Tribunal agreed with the CIT(A) that using global group sales as the sole apportionment key was inappropriate and that benefits accrue mainly to entities present in cricket playing markets; thus LGEIL's share was reasonable. The Tribunal followed its earlier decision for assessment year 2003-04 and affirmed deletion of the TPO/Assessing Officer's adjustment. [Paras 7]

TPO/Assessing Officer's adjustment disallowing part of the ICC World Cup sponsorship (as determined by TPO) is deleted; CIT(A)'s order in favor of the assessee is affirmed.

Reimbursement of advertising expenses treated as an international transaction - Jurisdiction of the TPO to examine non referred international transactions and retrospective operation of provisions empowering TPO - Whether the reimbursement of advertising expenses received by the assessee from associated enterprises was to be treated and benchmarked as an international transaction by the TPO and whether the matter should be adjudicated afresh in light of Special Bench guidance. - HELD THAT: - The Tribunal found that the question of characterization and benchmarking of the reimbursement requires reconsideration in the light of the Special Bench's detailed exposition on TPO jurisdiction, scope to re characterise AMP transactions and factors to be applied when determining ALP. The Tribunal rejected the assessee's contention that TPO lacked jurisdiction, relying on the Special Bench's reasoning that where a reference under section 92CA(1) is made, the TPO may examine related non referred international transactions and that sub section (2B) (as interpreted by the Special Bench) supports such exercise. Given the Special Bench's criteria and guidelines, the Tribunal remitted the issue to the TPO for fresh adjudication with opportunity to the assessee to be heard. [Paras 18]

Issue remitted to the TPO for de novo examination in light of the Special Bench decision; matter to be adjudicated afresh with opportunity to the assessee.

Provision for warranty expenses as an accrued deductible liability under mercantile system - Whether the provision made by the assessee for warranty expenses is allowable as a deduction (revenue expense) where the liability is provided on mercantile basis though not fully incurred in the year. - HELD THAT: - The Tribunal followed its earlier decision in the assessee's own case and relevant judicial precedents to hold that a warranty obligation arising from the terms of sale gives rise to an accrued liability under the mercantile system. Where the provision is calculated on a consistent methodology based on past experience and not shown to be excessive or motivated by tax avoidance, it constitutes an allowable business deduction. The Tribunal found no change in facts from the earlier year and upheld the CIT(A)'s deletion of the Assessing Officer's disallowance. [Paras 23, 24]

Disallowance of provision for warranty expenses is deleted; CIT(A)'s order in favour of the assessee is upheld.

Final Conclusion: The appeal is partly allowed: (i) the TPO/Assessing Officer's adjustment relating to ICC World Cup sponsorship is deleted and the CIT(A)'s order affirmed; (ii) the challenge to reimbursement of advertising expenses is remitted to the TPO for fresh consideration in light of the Special Bench guidance; and (iii) the disallowance of the warranty provision is deleted and the CIT(A)'s order upheld.

Exemption under section 11 of the Income-tax Act - charitable trust - mutuality principle - incidental business activity held for charitable object - income from social functions and facilities not in furtherance of charitable object

Exemption under section 11 of the Income-tax Act - charitable trust - incidental business activity held for charitable object - Entitlement of the assessee (a club registered as a public charitable trust and under section 12A) to exemption under section 11 for its income except income from providing facilities for playing cards. - HELD THAT: - The Tribunal examined earlier decisions in the assessee's own case and the Special Bench decision in Breach Candy Swimming Bath Trust, holding that activities such as bar, restaurant and provision of sporting facilities are incidental to the main charitable object of providing sports/swimming facilities to members and therefore constitute property held for a charitable object within the meaning of section 11(4). Applying those precedents and following its coordinated orders for multiple assessment years, the Tribunal concluded that the assessee is entitled to exemption under section 11 for all its income except income from providing facilities of playing cards. The Tribunal rejected the Revenue's contention that the club's activities render it a mutual association so as to deny section 11 relief in respect of interest and other income, observing that the dominant object remains charitable as previously adjudicated. [Paras 9]

Assessee entitled to exemption under section 11 for its income except income from providing facilities for playing cards; Revenue's grounds in this respect rejected.

Income from social functions and facilities not in furtherance of charitable object - exemption under section 11 of the Income-tax Act - Whether receipts from social functions, pavilion, board room and open terrace qualify for exemption under section 11. - HELD THAT: - Following the Tribunal's earlier order for AY 2003-04, the Tribunal held that activities relating to social functions, pavilion, board room and terrace are for personal purposes and are not for the object of the club, except for functions like Independence Day, Republic Day and Diwali. Those receipts therefore do not qualify for exemption under section 11. The Tribunal directed that the assessing officer allow expenses in respect of such activities as per the directions in the earlier order. [Paras 15]

Receipts from social functions, pavilion, board room and terrace are not eligible for exemption under section 11 except limited specified celebrations; AO to allow expenses as directed by the Tribunal.

Mutuality principle - exemption under section 11 of the Income-tax Act - Assessee's contention that disallowance of part of expenditure from interest income (and that net interest would not be taxable even if treated as mutual association) is rendered infructuous by grant of section 11 exemption. - HELD THAT: - The assessee's grounds challenging the disallowance of expenditure against interest income and arguing that net interest would not be taxable if treated as a mutual association were considered; since the Tribunal upheld entitlement to exemption under section 11 for the relevant income (except card-room receipts), those grounds were held to be moot and rejected. [Paras 12, 13]

Assessee's grounds on disallowance of expenditure relating to interest income are rejected as infructuous in view of the grant of exemption under section 11.

Final Conclusion: Both the Revenue's appeal and the assessee's appeal are dismissed; the assessee is held entitled to exemption under section 11 for its income except income from providing facilities for playing cards and except receipts from specified social/pavilion/board-room/terrace activities (other than certain national celebrations), with the AO to allow expenses in respect of those non qualifying activities as directed by the Tribunal.

Survey under section 133A - assessment under section 144 read with section 147 - best judgment assessment - ex parte assessment and ex parte appeal - remand for fresh consideration and speaking order

Ex parte assessment and ex parte appeal - best judgment assessment - remand for fresh consideration and speaking order - Whether the addition of Rs. 28,41,556/- recorded on the basis of survey material and treated as business income should be re-considered by the Commissioner (Appeals) after affording opportunity to the assessee. - HELD THAT: - The Tribunal noted that the assessment was completed ex parte under Section 144 read with Section 147 consequent to non-appearance of the assessee and that CIT(A) had likewise proceeded ex parte after fixing hearings on multiple occasions. Although written submissions were filed before the Tribunal, no representative appeared at hearing. In the interest of justice the Tribunal held that the matters raised in the assessee's written submissions and the factual contentions relating to bifurcation of receipts, classification as capital gain or business income, impounded documents and alleged lack of statements recorded of the assessee or her authorised representative require fresh consideration. The Tribunal therefore set aside the orders and remanded the matter to the file of CIT(A) with directions to give the assessee a reasonable opportunity of hearing, permit filing of relevant information and documents, and thereafter pass a speaking order after considering the submissions and material on record. [Paras 9, 10]

Order of the assessing officer and CIT(A) set aside and the matter remanded to CIT(A) for fresh consideration and a speaking order after giving the assessee opportunity of hearing.

Final Conclusion: The appeal is allowed for statistical purposes; the assessment and appellate orders are set aside and remitted to the CIT(A) to reconsider the addition after affording the assessee an opportunity to be heard and to file supporting material, and to pass a speaking order.

Capacity under-utilization adjustment - transfer pricing adjustments - arm's length price - gestation/start-up phase adjustments - remand to Assessing Officer

Capacity under-utilization adjustment - gestation/start-up phase adjustments - transfer pricing adjustments - arm's length price - Whether under-utilization of capacity and start-up/gestation phase merits an economic adjustment while determining transfer-pricing/ALP and whether the matter should be remitted for fresh consideration. - HELD THAT: - The Tribunal accepted that economic adjustment for under-utilisation of capacity in the assessee's first/full year of operations is a permissible consideration when working out transfer-pricing adjustments and ALP, observing that the question requires factual appreciation. The Tribunal noted precedent support for capacity adjustments and that the lower authorities had not given due effect to the assessee's pleaded under-utilisation. Consequently, rather than deciding the adjustment on merits, the Tribunal set aside the issue and restored it to the file of the Assessing Officer/TPO for fresh adjudication after giving the assessee opportunity to file evidence (including the additional material sought to be admitted) and for the AO/TPO to pass a proper speaking order in accordance with law. The Tribunal directed that the Assessing Officer/TPO consider capacity under-utilisation while determining ALP and work out any TP adjustments on that basis. [Paras 10, 11, 12]

Issue remitted to the Assessing Officer/TPO to decide afresh on capacity under-utilisation and any consequential transfer-pricing/ALP adjustment after hearing the assessee and considering the additional evidence; a speaking order to be passed.

Final Conclusion: The appeal is partly allowed: all other grounds not pressed are dismissed; the issue of under-utilisation of capacity/gestation-phase adjustment for transfer-pricing/ALP is set aside and remanded to the Assessing Officer/TPO for fresh consideration with opportunity to the assessee to file evidence and be heard.

Lease equalization reserve - deductibility for computing total income - accounting treatment prescribed by ICAI and guidance note - matching of cost with revenue - interaction between book depreciation and depreciation allowable under the Income Tax Act - prevention of double deduction - remand for verification of computation based on depreciation allowed under Income Tax Act

Lease equalization reserve - deductibility for computing total income - accounting treatment prescribed by ICAI and guidance note - interaction between book depreciation and depreciation allowable under the Income Tax Act - prevention of double deduction - remand for verification of computation based on depreciation allowed under Income Tax Act - Whether lease equalization charges debited to profit and loss account are allowable as deduction while computing the assessee's total income and, if so, on what basis they should be quantified - HELD THAT: - The Tribunal observed that lease equalization reserve is essentially an accounting concept recognized by the ICAI guidance note to effect the matching of cost with revenue in finance lease transactions by splitting lease rentals into finance income and annual lease charge and adjusting the difference between annual lease charge and depreciation in the profit and loss account. The court accepted that such accounting adjustment may be relevant for computing taxable income as held in earlier decisions, but cautioned that allowing deduction based on book lease equalization without regard to depreciation actually allowable under the Income Tax Act can produce absurd results and lead to double deduction. Where a transaction is a finance lease and the assessee is allowed depreciation under the Income Tax Act (potentially at rates or timing different from those in company books), the proper comparator for lease equalization is the depreciation allowed under the Income Tax Act and not the depreciation claimed in the books under the Companies Act. To avoid giving deduction in excess of the cost of the asset (for example permitting total deductions exceeding 100% of asset value in a year), the Tribunal directed that the difference between annual lease charge and the depreciation allowed under the Income Tax Act should be taken into account. Consequently, the Tribunal did not finally disallow the concept of lease equalization but remanded the matter to the Assessing Officer for verification and fresh decision: the assessee is to furnish workings of lease equalization computed using the figures of depreciation actually allowed under the Income Tax Act, and the AO is to verify and allow the deduction, if any, in accordance with law.

Concept of lease equalization is an accounting device which may be considered for tax purposes, but deduction must be quantified after adjusting for depreciation allowable under the Income Tax Act; matter remanded to the Assessing Officer for verification of workings based on depreciation as per the Income Tax Act.

Final Conclusion: Appeals treated as allowed for statistical purposes; issue remanded to the Assessing Officer to verify and decide the claim for lease equalization deduction on the basis of computations furnished by the assessee that use depreciation figures allowable under the Income Tax Act, and to allow or disallow the claim in accordance with law.

Allowability of discount on issue of debentures as revenue expenditure - wholly and exclusively for business purpose - commercial expediency of inter corporate advances - treatment of convertible debentures-debt character until redemption - disallowance under section 14A read with Rule 8D in relation to expenditure on investments yielding exempt income

Allowability of discount on issue of debentures as revenue expenditure - wholly and exclusively for business purpose - commercial expediency of inter corporate advances - treatment of convertible debentures-debt character until redemption - Whether the amortised discount on zero coupon optionally convertible redeemable debentures is allowable as business expenditure where proceeds were advanced interest free to group concerns - HELD THAT: - The Tribunal held that the discount on issue of debentures represents a liability incurred for raising loan and, following the decisions of the Hon'ble Supreme Court and applicable High Court authority, such liability may be spread over the period of the debentures and is in principle a revenue expenditure incurred for business. The Court noted the memorandum object permitting lending and investment, that the sister concerns are in the same line of business and that the debentures in question were redeemed (not converted), so they retained the character of loan until redemption. The Tribunal rejected the CIT(A)'s conclusion that the expenditure was not wholly and exclusively for business because the proceeds were advanced interest free to sister concerns, applying the principle that inter company advances for commercial expediency in the same line of business do not convert borrowing costs into non business expenditure. On that basis the amortised discount claimed by the assessee was held allowable as business expenditure. [Paras 7, 8, 13]

The amortised discount on the debentures is allowable as business expenditure; the advance of proceeds to sister concerns in the same line of business constituted commercial expediency and did not disentitle the assessee to the deduction.

Disallowance under section 14A read with Rule 8D in relation to expenditure on investments yielding exempt income - Whether disallowance under section 14A read with Rule 8D can be made in respect of expenditure where proceeds were given as Zero Coupon Optionally Convertible Loans to sister concerns - HELD THAT: - The Tribunal found Rule 8D inapplicable to the assessment year in question (relying on High Court precedent) and observed that invocation of section 14A could not rest on the mere presumption that advances might be convertible into shares and might thereafter yield exempt dividend income. The assessee produced evidence that the loans were repaid and there was no conversion; applying the principle that convertibility does not alter the loan character for these purposes, the Tribunal held there was no justification to apply section 14A or Rule 8D to disallow the expenditure. [Paras 14]

Disallowance under section 14A and Rule 8D set aside; no disallowance called for in the facts of the case.

Final Conclusion: The appeal is allowed: the amortised discount on the debentures issued by the assessee is held to be allowable as revenue expenditure; and the disallowance under section 14A read with Rule 8D is set aside for the assessment year 2007 08.

Presumptive taxation under Section 44AF - rejection of return and assessment under Section 144 - addition determined on the basis of peak bank balance - nexus between cash deposits and alleged business sales - unverifiable cash credits and rotation of undisclosed funds - production and maintenance of books of account

Presumptive taxation under Section 44AF - nexus between cash deposits and alleged business sales - production and maintenance of books of account - Entitlement to compute income under the presumptive scheme of Section 44AF in presence of large cash deposits and failure to establish nexus with business sales - HELD THAT: - The Tribunal upheld the findings of the Assessing Officer and the CIT(A) that the assessees failed to establish that cash deposits in their bank accounts represented genuine sale proceeds of their purported retail saree business. The lower authorities recorded that summons issued to alleged suppliers produced only one confirmation, that the pattern of cash deposits was erratic and inconsistent with claimed sales, and that the assessees did not produce corroborative books of account despite filing returns under the presumptive scheme. The CIT(A) found the returned particulars incomplete and unreliable for the mandatory particulars required for a valid return under Section 44AF. In view of absence of a demonstrable nexus between deposits and trading receipts and lack of reliable bookkeeping, the Tribunal agreed that Section 44AF could not be applied to accept the returned income.

Claim to compute income under Section 44AF rejected and the conclusion recorded by the CIT(A) affirmed.

Addition determined on the basis of peak bank balance - unverifiable cash credits and rotation of undisclosed funds - Validity of making additions as 'undisclosed income' by applying peak bank balance method where deposits were not substantiated as business receipts - HELD THAT: - The Assessing Officer made additions by applying the peak-credit (peak bank balance) method, treating the unexplained peak of cash and cheque credits as undisclosed funds, and the CIT(A) sustained this approach after concluding that there was no way to ascertain the nature of the deposits. The Tribunal recorded that the assessees failed to substantiate the deposits as genuine business sales, that several lender parties had themselves shown cash deposits before advancing loans, and that the transactions with alleged suppliers remained largely unverified. Given these findings of unverifiable cash credits and indications of rotation of undisclosed funds, the Tribunal affirmed the additions based on peak balance as justified.

Additions made on the basis of peak bank balance upheld.

Final Conclusion: The appeals of all three assessees are dismissed; the rejection of returns under the presumptive scheme and the additions made on peak bank balance were affirmed by the Tribunal.

Deduction under section 80IB(10) - Developer versus works contractor - Dominant control and allocation of cost, risk and reward - Deemed owner concept under section 2(47) - Requirement of legal title for eligibility

Deduction under section 80IB(10) - Developer versus works contractor - Dominant control and allocation of cost, risk and reward - Deemed owner concept under section 2(47) - Requirement of legal title for eligibility - Whether the assessee was entitled to deduction under section 80IB(10) for the housing project notwithstanding that the land was in the name of co-operative societies and the assessee executed the development under agreement. - HELD THAT: - The Tribunal examined the development agreements and factual matrix and found that the assessee had assumed full responsibility for execution of the project, including possession of land for construction, payment of land cost (including stamp duty) to the societies, engagement of professionals, enrollment of buyers and collection of consideration, and bearing of construction costs and risks. On these facts the assessee was held to have exercised dominant control and to have borne the cost, reward and risk of development, thereby functioning as a developer and builder rather than merely as a works contractor. The Tribunal applied the principle in Radhe Developers that legal title is not a prerequisite for claiming benefits under section 80IB(10) and noted that the assessee was deemed owner under section 2(47) for the purposes of the claim. For these reasons the Tribunal upheld the CIT(A)'s finding allowing the deduction. [Paras 6]

Claim for deduction under section 80IB(10) allowed; revenue's appeal dismissed.

Deduction under section 80IB(10) - Validity and consequence of the assessee's cross objection supporting the CIT(A)'s order. - HELD THAT: - The assessee's cross objection merely supported the CIT(A)'s allowance of the deduction. Having upheld the CIT(A)'s order on the merits, the Tribunal held the cross objection redundant and dismissed it accordingly. [Paras 7, 8]

Assessee's cross objection dismissed as redundant.

Final Conclusion: On the facts the Tribunal upheld the CIT(A)'s allowance of the deduction under section 80IB(10) for Assessment Year 2007-08, finding the assessee to be the developer (not a mere contractor) and dismissing the revenue's appeal; the assessee's cross objection was dismissed as redundant.

Drawback claim under the Drawback Rules - jurisdiction of the Appellate Tribunal under the proviso to sub section (1) of Section 129A of the Customs Act, 1962 - waiver of pre deposit of duty and penalty - non maintainability of appeal to the Tribunal in respect of Commissioner (Appeals) orders on drawback

Jurisdiction of the Appellate Tribunal under the proviso to sub section (1) of Section 129A of the Customs Act, 1962 - drawback claim under the Drawback Rules - non maintainability of appeal to the Tribunal in respect of Commissioner (Appeals) orders on drawback - Whether the Appellate Tribunal has jurisdiction to entertain the appeal against the Commissioner (Appeals) order confirming duty drawback demand and imposing penalty. - HELD THAT: - The original authority confirmed a demand of duty drawback under Rule 16A(2) of the Drawback Rules read with Section 75A(2) of the Customs Act, and imposed penalty. The first proviso to sub section (1) of Section 129A of the Customs Act bars appeals to the Appellate Tribunal against orders passed by the Commissioner (Appeals) under Section 128A insofar as they relate to payment of drawback under the Chapter and the Rules. Because the impugned order by the Commissioner (Appeals) concerns a drawback claim, the proviso operates to deprive this Tribunal of jurisdiction to decide the appeal. The appellant was accordingly given liberty to approach the competent authority instead. [Paras 2, 3]

Appeal and stay application dismissed as non maintainable for want of jurisdiction; liberty granted to file appeal before the competent authority.

Waiver of pre deposit of duty and penalty - Whether the application for waiver of pre deposit should be granted by this Tribunal. - HELD THAT: - An application for waiver of pre deposit was filed, but because the Tribunal lacks jurisdiction to decide the underlying appeal (which relates to a drawback claim), the Tribunal could not entertain or grant relief on the waiver application. No independent consideration of the waiver was undertaken in view of the threshold jurisdictional bar; the appellant was permitted to pursue appropriate remedy before the competent authority. [Paras 1, 3]

Waiver application not entertained; appeals dismissed as non maintainable and appellant given liberty to proceed before the competent authority.

Final Conclusion: The Tribunal held that it has no jurisdiction to entertain appeals against Commissioner (Appeals) orders on drawback claims under the proviso to sub section (1) of Section 129A, and accordingly dismissed the appeal and the stay/waiver application as non maintainable while granting liberty to the appellant to file before the competent authority.

Pre-deposit - stay of recovery - conditional waiver - proportionate pre-deposit - interim stay by High Court

Pre-deposit - proportionate pre-deposit - interim stay by High Court - stay of recovery - conditional waiver - Waiver of further pre-deposit and grant of stay of recovery of the balance dues, subject to a specified conditional pre-deposit by the appellant. - HELD THAT: - The appellant sought waiver of further pre-deposit and a stay of recovery in respect of contested duty demands. The appellant had already had specific sums appropriated by the adjudicating authority against two challenged demands and had previously deposited a sum pursuant to an interim stay granted by the High Court in related appeals. The appellant offered to pre-deposit Rs.1.6 crores in the same proportion as ordered by the High Court. The Tribunal accepted that proposal as a condition for granting relief. The Tribunal directed the appellant to make the specified pre-deposit within six weeks and report compliance; upon due compliance the Tribunal granted waiver of further pre-deposit and ordered stay of recovery in respect of the remaining dues, including penalties and interest.

Appellant to pre-deposit Rs.1,60,00,000/- within six weeks and report compliance; subject to such compliance, waiver of further pre-deposit and stay of recovery of the balance dues including penalties and interest is granted.

Final Conclusion: The Tribunal accepted the appellant's offer to make a conditional pre-deposit of Rs.1.6 crores within six weeks and, upon compliance, granted waiver of further pre-deposit obligations and a stay of recovery of the remaining duty, penalties and interest.

Review of appellate order - rectification of apparent error - restoration of appeals - dismissal for default - scope of review, recall and restoration

Review of appellate order - scope of review, recall and restoration - Bench cannot review or recall its final order where the order is appealable. - HELD THAT: - The applications sought recall/rectification of Final Orders Nos. 338 to 340/2012 dated 31.05.2012. The Bench recorded that the detailed final order on merits is an appealable order and therefore not amenable to review by the same Bench. Because the order was disposed of on merits and is subject to appeal, the remedy of review/recall by the adjudicating Bench is not available in the circumstances described in the application. [Paras 2]

Applications challenging the final order on the ground that it should be reviewed or recalled are not maintainable and are dismissed.

Restoration of appeals - dismissal for default - Restoration of the appeals is not permissible because the final order was not a dismissal for default and there was no request for adjournment or representation on the date of disposal. - HELD THAT: - The Bench noted that on the date of disposal there was no representation for the appellants despite notice, and no request for adjournment was made. The final orders were not orders dismissing the appeals for default; consequently, the applicants cannot seek restoration. As the factual basis for restoration (dismissal for default) is absent, restoration cannot be granted. [Paras 2]

Prayer for restoration of the appeals is rejected.

Rectification of apparent error - scope of review, recall and restoration - Rectification/rectification of the final order cannot be granted because no apparent mistake of fact or law has been demonstrated. - HELD THAT: - The applicants also sought rectification of alleged errors in the final orders. The Bench observed that no apparent mistake of fact or law in the final order has been pointed out by the appellants. In the absence of any demonstrated palpable or prima facie error warranting rectification, there is no basis to exercise power to rectify the earlier order. [Paras 2]

Prayer for rectification of the final order is refused.

Final Conclusion: Applications seeking review/recall, restoration and rectification of the final orders are not maintainable on the facts and law stated; the applications are dismissed.

Pre-packaged commodity - declaration of quantity in unit of mass for solids and semi-solids - exemption from declaring retail sale price under Rule 26 of the Legal Metrology Rules, 2011 - assessment of countervailing duty on transaction value and not on declared retail sale price (MRP) - commodity sold by number versus sold by weight

Pre-packaged commodity - declaration of quantity in unit of mass for solids and semi-solids - exemption from declaring retail sale price under Rule 26 of the Legal Metrology Rules, 2011 - assessment of countervailing duty on transaction value - commodity sold by number versus sold by weight - Whether adhesives imported in 5g/8g pre-packaged sticks, bearing net weight, are exempt from declaration of retail sale price under Rule 26 and hence liable to CVD assessment on transaction value and not on MRP. - HELD THAT: - The Tribunal found that the imported adhesives are pre-packaged and in semi-solid form with net weight (5g/8g) declared on the packages and in the commercial documents. As semi-solid commodities, the quantity requirement is expressed in units of mass and the packages therefore fall within the scope of the Legal Metrology regime applicable to pre-packaged goods. Rule 26 exempts packages containing net weight less than 10g from the requirement of declaring the retail sale price (RSP). Because the packages here are statutorily exempt from declaring RSP, there is no requirement to assess countervailing duty on the basis of declared RSP; instead, CVD must be assessed on the transaction value. The Tribunal relied on earlier decisions dealing with small pre-packaged cosmetics and adhesives where similar exemptions from declaring MRP were held to apply and to govern valuation for duty purposes. The Revenue's contention that the goods are sold by number and not by weight was rejected in view of the pre-determined net weight shown on each package and the statutory scheme treating such commodities by mass.

The appellants' imports being pre-packaged semi-solid adhesives with net weight below 10g are exempt from declaring RSP under Rule 26 and CVD is to be assessed on transaction value; the appeals are allowed.

Final Conclusion: Appeals allowed: imported pre-packaged adhesives of 5g/8g bearing net weight are exempt from RSP declaration under Rule 26, and countervailing duty must be assessed on transaction value rather than on MRP.

Service of order-in-original - presumption under Section 153 of the Customs Act - rectification for mistake apparent on the record under Section 129B(2) of the Customs Act - condonation of delay under Section 128 of the Customs Act

Service of order-in-original - condonation of delay under Section 128 of the Customs Act - Date of communication of the order in original and its effect on the maintainability of the appeal. - HELD THAT: - The Tribunal examined original departmental records and the postal acknowledgment card and found that a certified copy of the order in original was received by the assessee on 17.2.2004. At the final hearing the appellant's counsel fairly acknowledged receipt on that date. Applying that date as communication, the Tribunal upheld the Commissioner (Appeals) conclusion that the appeal against the order in original was filed after a delay far beyond the condonable period under Section 128, and therefore the appeal was rightly dismissed as time barred. [Paras 1, 4]

The order in original was communicated to the appellant on 17.2.2004 and the appeal was properly held to be time barred; the impugned dismissal was upheld.

Presumption under Section 153 of the Customs Act - rebuttal of statutory presumption - Whether the appellant rebutted the statutory presumption of service under Section 153. - HELD THAT: - The Tribunal recognised that any presumption under Section 153 is rebuttable, but found that the appellant failed to furnish documentary proof of later receipt (19.1.2009) either before the Commissioner (Appeals) or before this Bench. The records and the appellant's acknowledgment at hearing established receipt on 17.2.2004. The appellant's affidavits and additional materials filed with the ROM application did not constitute record evidence capable of rebutting the presumption in the context of Section 129B(2). [Paras 4, 5]

The statutory presumption of service was not rebutted; the finding of communication on 17.2.2004 stands.

Rectification for mistake apparent on the record under Section 129B(2) of the Customs Act - admissibility of additional evidence on ROM - Whether the final order contained a mistake apparent on the record warranting rectification under Section 129B(2), and whether additional affidavits filed on review could be considered. - HELD THAT: - The Tribunal reiterated that a mistake apparent on the record must be immediately discernible from the record as it existed when the final order was passed and must be capable of easy disclosure without protracted argument. The applicant attempted to introduce new facts and affidavits via the ROM application; such additional evidence is not part of the record for the purpose of Section 129B(2) and cannot be taken into account to demonstrate an apparent mistake. The Tribunal found no such apparent mistake in its final order and characterised the ROM application as an attempt to add evidence and reargue merits, which is impermissible in exercise of Section 129B(2). [Paras 5]

No mistake apparent on the record was shown; the ROM application was dismissed and additional affidavits/evidence could not be considered for rectification under Section 129B(2).

Final Conclusion: The application under Section 129B(2) to rectify an alleged apparent mistake is dismissed: the Tribunal confirmed communication of the order in original on 17.2.2004, held that the presumption under Section 153 was not rebutted, and ruled that additional affidavits filed on review cannot be considered as record to show an apparent mistake.

Mis-declaration - stay application - penalty - deposit and reduction - contumacious conduct - redemption fine - enhancement of penalty under section 112A of the Customs Act - application of mind by adjudicating authority

Mis-declaration - stay application - application of mind by adjudicating authority - penalty - deposit and reduction - Stay application dismissed and direction to deposit the penalty maintained; plea for reduction of penalty rejected. - HELD THAT: - The Tribunal found no merit in the stay application in view of a clear mis-declaration of cigarette filter rods as sketch pen ink filler, observing that the adjudicating authority had applied its mind (para 13 of the adjudication order) and the evidence before it, including an admission of mis-declaration, supported the penalty (para 14 of the adjudication order). Given the contumacious conduct of the appellant, the request for reduction of penalty despite deposit of the duty element was not accepted. Consequently, the stay application was dismissed and the appellant was directed to deposit the entire penalty within the stipulated time. [Paras 1, 2, 3]

Stay dismissed; appellant directed to deposit the penalty of Rs.85,000 within four weeks; request for reduction refused.

Enhancement of penalty under section 112A of the Customs Act - redemption fine - penalty - deposit and reduction - Show cause issued for possible enhancement of penalty under section 112A; appellant to explain why penalty should not be enhanced to the extent of the duty element. - HELD THAT: - Noting the relationship between the penalty imposed, the redemption fine, and the duty element, the Tribunal expressed surprise at the leniency of the adjudicating authority and accordingly issued a notice to the appellant to show cause why the penalty under section 112A should not be enhanced to the extent of the duty element. The appellant was directed to file its explanation by the date of compliance and to serve a copy on Revenue for the Tribunal's consideration. [Paras 4]

Notice issued to appellant to show cause on enhancement of penalty under section 112A; explanation to be filed and served as directed.

Final Conclusion: The Tribunal dismissed the stay application, directed deposit of the imposed penalty within four weeks, refused reduction of penalty, and issued a show-cause notice under section 112A of the Customs Act for possible enhancement of the penalty to the extent of the duty element.

Abatement of duty on damaged or deteriorated goods - proportionate charging of duty on damaged goods - ascertainment of value of damaged goods by the proper officer - sale proceeds deemed value on public auction or tender - refund of duty paid on re-import after repair

Abatement of duty on damaged or deteriorated goods - ascertainment of value of damaged goods by the proper officer - refund of duty paid on re-import after repair - Whether refund of duty paid on re-import after repair and payment of duty on repair and freight charges is permissible where value of damaged goods was not ascertained by the proper officer and auction sale procedure under Section 22(3) was not resorted to. - HELD THAT: - Section 22 provides for abatement of duty on damaged or deteriorated goods by charging duty proportionately to the value of the damaged goods as compared to their pre-damage value. Section 22(3) prescribes two modes of ascertaining the value of damaged goods - ascertainment by the proper officer, or, alternatively, treating gross sale proceeds where the goods are sold by public auction/tender or with the owner's consent. In the present case the department did not follow the auction/tender route and the proper officer did not originally ascertain the value of the damaged goods. The goods were exported for repair and re-imported upon payment of duty assessed on the repair charges and to-and-fro freight. The lower appellate authority treated the repair charges plus transportation (including insurance) as representing the extent of damage and allowed refund of the duty paid a second time on those repair and freight charges. That approach amounts to an ascertainment of the extent of damage post-repair and is not unreasonable where the statutory alternatives in Section 22(3) were not otherwise employed. Because Revenue received duty on the full value at import without any abatement for damage, it has no valid grievance against refunding the duty paid again on the repair and freight to the extent that such charges represent the diminution in value arising from damage. The appellate authority's finding that the repair and freight costs reflect the extent of damage is sustainable. [Paras 6]

The departmental appeal is dismissed and the refund allowed by the lower appellate authority, being based on ascertainment of damage by reference to repair and freight charges where neither auction nor initial ascertainment by the proper officer was made, is upheld.

Final Conclusion: Appeal dismissed; the impugned order allowing refund of duty paid on repair and freight charges is upheld because the extent of damage could be ascertained by reference to the repair and transportation costs in the absence of auction proceeds or prior ascertainment by the proper officer.

Sanction of scheme of amalgamation under Sections 391 to 394 of the Companies Act, 1956 - Transfer and vesting of undertaking, assets and liabilities as a going concern - Dispensation from convening meetings of shareholders and creditors - Obligation to comply with statutory requirements including Foreign Exchange Management Act (FEMA) formalities - No exemption from payment of stamp duty, taxes or other statutory charges

Sanction of scheme of amalgamation under Sections 391 to 394 of the Companies Act, 1956 - Dispensation from convening meetings of shareholders and creditors - Sanction of the Scheme of Amalgamation between the Petitioner Transferor Company and the Transferee Company was granted by the Court. - HELD THAT: - The Court reviewed the Scheme, the board resolutions of both companies, the affidavits of service and publication, the reports/representations filed by the Regional Director and the Official Liquidator, and the petitioner's replies. The Court noted that the Petitioner Transferor Company is a wholly-owned subsidiary of the Transferee Company, that shareholders of both companies had given written consent, and that the Court had earlier dispensed with convening meetings of the shareholders and creditors of the Transferor Company. No objections were received pursuant to publication. Having considered the RD's and OL's reports and the petitioner's replies, the Court found no impediment to sanctioning the Scheme and accordingly granted sanction under Sections 391 and 394 of the Act. [Paras 16]

Scheme sanctioned and petition allowed.

Transfer and vesting of undertaking, assets and liabilities as a going concern - Obligation to comply with statutory requirements including Foreign Exchange Management Act (FEMA) formalities - No exemption from payment of stamp duty, taxes or other statutory charges - On sanction, the whole undertaking, business, properties, assets, rights and powers of the Transferor Company shall transfer to and vest in the Transferee Company as a going concern and all liabilities shall vest in the Transferee Company; the petitioner must comply with statutory requirements including FEMA formalities and is not exempted from stamp duty, taxes or other charges. - HELD THAT: - The Court directed that in terms of the Scheme and Sections 391 and 394 of the Act, transfer and vesting of the Transferor Company's undertaking, assets and liabilities in the Transferee Company shall occur without any further act or deed and that upon the Scheme coming into effect the Transferor Company shall stand dissolved without winding up. The RD's report that foreign shareholding required attention prompted the petitioner to furnish and the Court to record an undertaking that all FEMA compliances have been and will be duly made; the Court accepted that undertaking. The Court expressly clarified that its order does not grant any exemption from payment of stamp duty, taxes or any other charges or relieve the parties from obtaining permissions or complying with any other statutory requirements. [Paras 12, 13, 17, 18]

Assets and liabilities to vest in Transferee Company; petitioner to comply with FEMA and other statutory formalities; no exemption from stamp duty or taxes.

Final Conclusion: The High Court granted sanction to the Scheme of Amalgamation under Sections 391-394 of the Companies Act, 1956, ordered transfer and vesting of the Transferor Company's undertaking, assets and liabilities in the Transferee Company as a going concern and recorded the petitioner's undertaking regarding FEMA compliance, while clarifying that no exemption from stamp duty, taxes or other statutory obligations is conferred by the order.

Goods Transport Agency Service - Person liable to pay service tax - Service recipient treated as service provider under Rule 2(1)(d)(v) of the Service Tax Rules, 1994 - Imposition of penalty under Section 76 and 78 - Simultaneous imposition of penalties where ingredients are distinct

Goods Transport Agency Service - Person liable to pay service tax - Service recipient treated as service provider under Rule 2(1)(d)(v) of the Service Tax Rules, 1994 - Appellant liable to pay service tax on freight paid to transporters for the stated period. - HELD THAT: - The Tribunal found no dispute as to the existence of the liability. Rule 2(1)(d)(v) of the Service Tax Rules, 1994 defines the person who pays or is liable to pay freight as liable to pay the service tax. The appellant, a private company, admitted paying freight to transporters for the period in question and also accepted and deposited the service tax. On these facts and the statutory definition, the adjudicating authority's finding of liability was affirmed and the Commissioner (Appeals) did not interfere with that conclusion. [Paras 7]

Liability to pay service tax on freight upheld and the adjudicating authority's finding affirmed.

Imposition of penalty under Section 76 and 78 - Simultaneous imposition of penalties where ingredients are distinct - Penalties under Section 76 and Section 78 were rightly imposed and sustained. - HELD THAT: - The Commissioner (Appeals) considered that the appellant had not disclosed the relevant facts and that the short payment would not have been detected but for the investigation, concluding suppression with intent to evade tax. The impugned order observed that, where the statutory ingredients are separate, penalties under both provisions can be imposed. The Tribunal found no reason to interfere with that conclusion and relied on the reasoning reproduced in the impugned order which cites authority supporting simultaneous imposition where offences are distinct. [Paras 8]

Penalties under Section 76 and 78 sustained; no interference with the impugned order.

Final Conclusion: The appeal is dismissed: the respondent's liability to pay service tax for the stated period is affirmed and the imposition of penalties under the cited provisions is sustained.

CENVAT credit utilization for payment of service tax - Common CENVAT pool and cross-utilisation - Prima facie case for waiver of pre-deposit - Stay of recovery pending appeal

CENVAT credit utilization for payment of service tax - Common CENVAT pool and cross-utilisation - Prima facie case for waiver of pre-deposit - Entitlement of the appellant to utilize CENVAT credit availed on inputs, capital goods and input services for discharge of service tax liability on Business Auxiliary Service and consequent waiver of pre-deposit and stay of recovery. - HELD THAT: - The Tribunal examined whether credit availed on inputs, capital goods and input services from a common CENVAT account could be utilized to discharge service tax on Business Auxiliary Service. Relying on the Tribunal's earlier decision in Instrumentation Ltd., the Bench observed that the Cenvat Credit Rules do not mandate maintenance of separate CENVAT accounts where an assessee is engaged in both manufacture and provision of services, and that prima facie availing or utilization of such credit cannot be denied. Applying that precedent, the Tribunal found that the appellant had made out a prima facie case for waiver of pre-deposit of the adjudged dues and for staying recovery during the pendency of the appeal. [Paras 4]

Pre-deposit of all dues adjudged waived and recovery stayed during the pendency of the appeal; stay petition allowed.

Final Conclusion: The Tribunal granted the appellant a stay by waiving the pre-deposit of the adjudged CENVAT credit demand and stayed its recovery pending the appeal, on the finding that a prima facie case existed for cross-utilisation of credit from a common CENVAT pool.

Waiver of pre-deposit - stay of recovery - eligibility for abatement under Notification No.34/2004-ST - CENVAT Credit dispute - penalty under Sections 76 and 77 of the Finance Act, 1994

Waiver of pre-deposit - eligibility for abatement under Notification No.34/2004-ST - CENVAT Credit dispute - stay of recovery - Application for waiver of pre-deposit and stay of recovery in relation to demand arising from denial of 75% abatement and alleged CENVAT credit irregularity. - HELD THAT: - The Tribunal considered whether the applicant made out a prima facie case to warrant waiver of the balance pre-deposit and a stay of recovery. The appellant had claimed benefit of 75% abatement under Notification No.34/2004-ST and discharged service tax on 25% of the gross value; the department denied the benefit on grounds relating to consignment-note evidence and alleged multiple transporters. The appellant produced a certificate, vouchers and made a categorical statement that services were received from a single GTA service provider (M/s. Ashok Parivahan). The appellant had already deposited 25% of the assessed service tax and paid a part of the adjudged amount during proceedings. On these materials the Tribunal found that a prima facie case was made out in favour of the appellant and that the balance pre-deposit could be waived while the appeal is pending. [Paras 4]

Balance pre-deposit waived and recovery stayed during the pendency of the appeal; stay petition allowed.

Final Conclusion: The Tribunal allowed the application for waiver of the balance pre-deposit and granted a stay of recovery on finding a prima facie case based on the appellant's documentary material, statement of a single GTA provider and partial deposit already made; the appeal will proceed with recovery stayed.

Waiver of pre-deposit on furnishing undertaking - Non-utilization of Cenvat credit as condition for interim relief - Nexus between service tax paid and manufacturing for Cenvat eligibility - Attributability of commission paid to foreign agents

Waiver of pre-deposit on furnishing undertaking - Non-utilization of Cenvat credit as condition for interim relief - Grant of interim waiver of pre-deposit subject to the appellant's undertaking not to utilize certain unutilized Cenvat credit until disposal of the appeal. - HELD THAT: - The Tribunal considered the appellant's representation that approximately Rs. 1.25 crore of Cenvat credit (relating to commission paid to foreign agents and accounted for by reverse charge) has remained unutilized for the last two years and accepted the appellant's undertaking not to utilize that credit until the appeal is disposed. Having perused the adjudicating authority's findings and the submissions of the parties, the Tribunal found the appellant's conduct satisfactory for interim relief. On that basis, the Tribunal ordered waiver of the pre-deposit obligation until 31st January, 2014, conditional on the stated undertaking and directed the appellant to appear on that date for issuance of notice for hearing.

Pre-deposit waived till 31st January, 2014 subject to the appellant's undertaking not to utilize the specified unutilized Cenvat credit and to mention on that date for further hearing.

Nexus between service tax paid and manufacturing for Cenvat eligibility - Attributability of commission paid to foreign agents - Adjudicatory determination of whether certain Cenvat credits (including amounts relating to bank guarantees, commission and other services) are attributable to manufacture and hence admissible. - HELD THAT: - The Tribunal recorded the Revenue's contention that credits claimed (notably about Rs. 75 lakhs said to relate to bank guarantee and commission, and approximately Rs. 10 lakhs relating to C&F, telephone, etc.) require examination to determine relevancy and whether the services and taxes paid are attributable to the manufacture. The order notes that these aspects need to be tested by the adjudicating authority and does not decide the admissibility of these credits on merits in the interim order.

Leave to the adjudicating authority to test and determine the nexus/attributability of the disputed Cenvat credits; no final decision on admissibility in the interim order.

Final Conclusion: The Tribunal granted interim relief by waiving the pre-deposit until 31st January, 2014 on the appellant's undertaking not to utilize the unutilized Cenvat credit, while leaving the question of admissibility and nexus of the disputed credits to be tested and finally decided by the adjudicating authority.

Speaking order - pre-deposit for grant of stay under Section 35F of the Central Excise Act, 1944 - mechanical pre-deposit orders - recording of financial hardship findings - remand for fresh consideration

Speaking order - pre-deposit for grant of stay under Section 35F of the Central Excise Act, 1944 - mechanical pre-deposit orders - recording of financial hardship findings - Validity of an appellate order dismissing appeal for non-compliance with a pre-deposit direction where the order did not record reasons for directing pre-deposit. - HELD THAT: - The Tribunal examined the miscellaneous order directing the appellant to make pre-deposit of the entire confirmed service tax and interest and found that the order did not record reasons for directing the pre-deposit other than noting absence of evidence of financial hardship. Reliance was placed on the requirement, as reflected in the CBE&C Circular dated 06/04/2000 and the decisions of the High Court of Bombay in CEAT Ltd. and Velcord Textiles, that the Commissioner (Appeals) must pass a speaking order when considering stay applications and record findings on whether pre-deposit would cause financial hardship. The appellate direction for pre-deposit was treated as having been passed without adequate application of mind (mechanically), contrary to the cited principles. In view of this failure to follow the prescribed practice of recording reasons, the Tribunal concluded that the matter could not be upheld and required the lower appellate authority to reconsider the question either by passing a speaking order on pre-deposit or by disposing of the appeal on merits. [Paras 5]

Pre-deposit direction unsustainable for want of reasons; matter remanded to the Commissioner (Appeals) to pass a speaking order on pre-deposit or decide the appeal on merits.

Final Conclusion: The appeal is allowed by way of remand; the matter is remitted to the Commissioner (Appeals) for fresh consideration to record reasons for any pre-deposit or to decide the appeal on merits.

Retrospective exemption - security agency service - service tax liability - condonation of delay - ad-hoc exemption

Condonation of delay - government department requiring prior approval - Delay in filing the appeal was condoned. - HELD THAT: - The appeal was filed after a delay of 826 days. The appellant, a government department, explained the delay on the ground that prior approval from higher authorities and consideration by the Ministry of Home Affairs were required. The Tribunal accepted that the grant of a retrospective exemption by the Government would be rendered ineffectual if the delay were not condoned and, in the circumstances, exercised its discretion to condone the delay and admit the appeal. [Paras 3, 4, 6]

Delay of 826 days condoned and appeal admitted.

Retrospective exemption - security agency service - service tax liability - ad-hoc exemption - The service tax demand was set aside by applying the retrospective exemption granted to the appellant for the relevant period. - HELD THAT: - The appellant relied on Government Order No. 1/1/2011 dated 01/07/2011 which exempted taxable services provided by CISF in relation to security agency service for the period 16/10/1998 to 31/03/2009. The confirmed demand in the impugned order related to May 2006 to November 2008, which falls within the exempted period. The Revenue's representative conceded that the activity had been retrospectively exempted for the period 1998 to 2009. In view of the Government's ad-hoc retrospective exemption, the Tribunal held there was no tax liability on the appellant for the stated period and allowed the appeal by extending the benefit of that exemption; the stay application was disposed of accordingly. [Paras 4, 5, 6]

Confirmed demand set aside by applying the retrospective exemption; appeal allowed and stay application disposed of.

Final Conclusion: Delay in filing the appeal was condoned and, on the basis of the Government's retrospective exemption of CISF's security agency services for 16/10/1998 to 31/03/2009 (covering May 2006 to November 2008), the confirmed service tax demand was held not leviable; the appeal was allowed and the stay application disposed of.

Waiver of pre-deposit - Stay of recovery - Balance of convenience in grant of interim relief - Service tax liability of person paying freight under Notification No. 35/2004-ST

Waiver of pre-deposit - Stay of recovery - Balance of convenience in grant of interim relief - Waiver of pre-deposit of dues and stay of recovery during pendency of the appeal was granted. - HELD THAT: - The Tribunal noted that the amount involved was small and that it did not wish to depart from an earlier stay order passed by the Tribunal. Applying the balance of convenience in the grant of interim relief, the Tribunal exercised its discretion to waive the requirement of pre-deposit of the confirmed dues and to stay their collection for the period the appeal remains pending. The Tribunal did not adjudicate the substantive controversy regarding which party is ultimately liable for service tax under Notification No.35/2004-ST, but confined its order to granting interim relief. [Paras 4]

Waiver of pre-deposit granted and collection of the impugned dues stayed during the pendency of the appeal.

Final Conclusion: The Tribunal granted waiver of pre-deposit and stayed recovery of the confirmed service tax demand during the pendency of the appeal, without deciding the substantive question of liability under Notification No.35/2004-ST.

Claiming the exemption under Notification No. 32/2004-ST dated 03.12.2004 - failure to furnish prescribed consignment notes and declarations - prima facie absence of case for exemption - pre-deposit conditional stay of recovery - payment of service tax from Cenvat account treated as disallowance

Claiming the exemption under Notification No. 32/2004-ST dated 03.12.2004 - failure to furnish prescribed consignment notes and declarations - prima facie absence of case for exemption - Entitlement to exemption under Notification No. 32/2004-ST in absence of prescribed consignment notes and declarations - HELD THAT: - The Tribunal recorded that on the available record the applicant had twice sought adjournments and did not press the matter; on perusal it was found prima facie that the applicant failed to furnish consignment notes with the prescribed declarations necessary to claim the exemption under Notification No. 32/2004-ST dated 03.12.2004. In view of that prima facie finding the applicant had not made out a case to deny the demand of service tax, and therefore was liable to pay the tax along with interest and penalty. [Paras 2, 3]

Prima facie the exemption claim fails for want of prescribed consignment notes and declarations; the applicant is liable to pay service tax with interest and penalty.

Pre-deposit conditional stay of recovery - payment of service tax from Cenvat account treated as disallowance - Conditions for pre-deposit and stay of recovery of the demand - HELD THAT: - Having found no prima facie case, the Tribunal nonetheless directed a conditional pre-deposit to secure the appeal process: the applicants were directed to deposit a specified sum within six weeks. Upon compliance by depositing the specified amount, the Tribunal ordered that pre-deposit of the balance of tax, penalty and interest would be waived and recovery of that balance stayed until disposal of the appeal. The record also notes that a portion of the demand arose from disallowance attributable to payment of service tax from the Cenvat account. [Paras 3]

Applicants to deposit the directed amount within six weeks; upon deposit, pre-deposit of the balance is waived and recovery stayed pending disposal of the appeal.

Final Conclusion: The Tribunal found prima facie that the exemption claimed under Notification No. 32/2004-ST was not established for want of prescribed consignment notes and declarations, directed a conditional pre-deposit to be made within six weeks and, upon such deposit, granted waiver of further pre-deposit and stayed recovery of the balance until the appeal is disposed.

Classification of taxable service - commercial or industrial construction service - service tax liability - prima facie case - waiver of pre-deposit - stay against recovery

Prima facie case - classification of taxable service - commercial or industrial construction service - Appellant has made out a prima facie case that the trenching and laying of PLB pipes and cables is not classifiable as a 'commercial or industrial construction service'. - HELD THAT: - The Tribunal examined the appellant's contention and materials, including reliance on a Board circular, and found that on merits the appellant has a strong case that the activities undertaken do not fall within the impugned category of service. On the limited question of interim relief, the Tribunal considered that a prima facie case existed in favour of the appellant warranting protection during the appeal. The Court limited its examination to the existence of a prima facie case for grant of interim relief and did not decide the ultimate classification on merits. [Paras 4]

A prima facie case was held in favour of the appellant that the activity is not classifiable as 'commercial or industrial construction service'.

Service tax liability - waiver of pre-deposit - stay against recovery - Whether pre-deposit should be waived and stay against recovery granted pending appeal despite both parties having previously accepted liability. - HELD THAT: - The Tribunal observed that acceptance of liability between the parties does not preclude the adjudicating authority or an appellate forum from independently examining classification and liability. Given the prima facie case in favour of the appellant on classification, the Tribunal found it appropriate to waive the statutory requirement of pre-deposit as a condition for interim relief and to stay recovery of the disputed dues during the pendency of the appeal. [Paras 4]

Requirement of pre-deposit waived and stay against recovery of all dues granted during the pendency of the appeal.

Final Conclusion: The Tribunal found a prima facie case that the work of trenching and laying cables/pipes is not classifiable as 'commercial or industrial construction service', and accordingly waived the pre-deposit requirement and stayed recovery of disputed service tax dues pending disposal of the appeal.

Waiver of pre-deposit - stay of recovery - prima facie case - service tax liability in manpower supply/contract labour supply - contractual allocation of tax liability - deposit condition for interim relief

Waiver of pre-deposit - prima facie case - contractual allocation of tax liability - deposit condition for interim relief - stay of recovery - Application for waiver of pre-deposit of confirmed service tax, interest and penalties arising from manpower supply services - HELD THAT: - The Tribunal examined the agreement between the appellant and the service recipient and found the contract to expressly contemplate supply of skilled, semi-skilled and unskilled workers on contract basis and to allocate liabilities such as service tax and professional tax on the contractor. The appellant's contention that it merely collected salary amounts and reimbursed salary expenses, and that it discharged service tax only on the service charges, was rejected as insufficient to establish a prima facie case for complete waiver of the pre-deposit. In view of the contractual allocation of tax liability and the absence of a prima facie case warranting full relief, the Tribunal directed conditional interim relief by requiring deposit of the entire amount of service tax liability confirmed by the adjudicating authority within twelve weeks, with compliance to be reported; subject to such deposit and compliance, recovery of the balance amounts was stayed pending disposal of the appeal.

Application for complete waiver of pre-deposit refused; conditional interim relief granted on deposit of the entire confirmed service tax within twelve weeks, and stay of recovery of balance amounts subject to compliance.

Final Conclusion: The Tribunal found no prima facie case for complete waiver of the pre-deposit, directed the appellant to deposit the full confirmed service tax within twelve weeks and, upon compliance being reported, stayed recovery of the remaining amounts pending disposal of the appeal.

Pre-deposit - extended period of limitation - cenvat credit reversal - place of removal - FOR destination contract - stay of recovery - interest and equivalent penalty

Extended period of limitation - cenvat credit reversal - Invocation of the extended period of limitation to demand reversal of cenvat credit in the show cause notice dated 06.09.2011 - HELD THAT: - The Tribunal found, prima facie, that invocation of the extended period in the 06.09.2011 notice is unsustainable because the Revenue had earlier issued a show cause notice on 08.09.2009 raising an identical contention for the period 2005-06. On that basis the appellants' contention regarding limitation was regarded as being on strong grounds and requiring closer scrutiny at the final hearing. The Tribunal did not finally adjudicate the question on merits but treated the prior notice as materially weakening the Revenue's case for invoking the extended period in the later notice.

Prima facie finding that invocation of the extended period is unsustainable and that the appellant has strong grounds on the limitation point; requires detailed consideration at final disposal.

Place of removal - FOR destination contract - cenvat credit reversal - Responsibility for goods and the place of removal under the FOR destination contract insofar as it affects entitlement to cenvat credit - HELD THAT: - The Tribunal observed that the question whether the appellant remained responsible for goods cleared to purchasers and consequently what constituted the place of removal under the contract falls within the limitation period and raises substantive issues of fact and law. These questions were not finally decided; the Tribunal held that they require deeper consideration and detailed adjudication at the time of final disposal of the appeal.

Issue left open for detailed consideration at final disposal of the appeal (remanded for fresh consideration of the place of removal and related liability).

Pre-deposit - stay of recovery - interest and equivalent penalty - Application for complete waiver of pre-deposit of the confirmed amounts, interest and equivalent penalty and stay of recovery - HELD THAT: - Balancing the prima facie findings on limitation and the unresolved questions on place of removal, the Tribunal declined complete waiver of the pre-deposit because part of the demand falls within the period of limitation and remains contestable. The Tribunal directed a conditional order: the appellant must deposit a specified portion of the amount as an interim pre-deposit within a fixed period, failing which the conditional stay would not follow. Upon reporting compliance, the Tribunal stayed recovery of the balance of the amounts until final disposal of the appeal.

Application allowed partially: appellant directed to deposit a specified sum within eight weeks; upon compliance, recovery of the balance stayed until disposal of the appeal.

Final Conclusion: The Tribunal granted conditional relief: finding the extended-period invocation prima facie unsustainable and leaving questions of place of removal for detailed adjudication, it directed a specified partial pre-deposit within eight weeks and, subject to compliance, ordered stay of recovery of the remaining confirmed amounts, interest and penalty until final disposal of the appeal.

Availability of CENVAT credit on plastic crates used in or in relation to manufacture of beverages - CENVAT Credit on input containers and articles used in manufacture - precedential application of Tribunal/Larger Bench decisions - waiver of adjudged CENVAT credit and penalty and stay of recovery pending appeal - penalty under Rule 13/15 of the CENVAT Credit Rules, 2002/2004

Availability of CENVAT credit on plastic crates used in or in relation to manufacture of beverages - CENVAT Credit on input containers and articles used in manufacture - precedential application of Tribunal/Larger Bench decisions - Admissibility of CENVAT credit availed on plastic crates used in or in relation to the manufacture of beverages - HELD THAT: - The Tribunal considered whether CENVAT credit on plastic crates, used in or in relation to the manufacture of beverages, was admissible. The Bench recorded that this Tribunal had earlier held in Lumbini Beverages Pvt. Ltd. that such credit is admissible and that that decision follows the Larger Bench ruling in Banco Products (India) Ltd. The Revenue did not place any contrary judicial authority. Applying those precedents, the Tribunal found the appellant made out a prima facie case that credit on plastic crates is allowable and accepted the appellant's contention on the narrow issue presented.

CENVAT credit on plastic crates used in or in relation to the manufacture of beverages held to be admissible for the purposes of the appeals before the Tribunal.

Waiver of adjudged CENVAT credit and penalty and stay of recovery pending appeal - penalty under Rule 13/15 of the CENVAT Credit Rules, 2002/2004 - Application for waiver of the adjudged CENVAT credit and equal penalty and for stay of recovery during pendency of the appeals - HELD THAT: - Having found a prima facie case in favour of the appellant on the admissibility of credit and noting the absence of contrary authority from the Revenue, the Tribunal exercised its power to stay recovery and to waive the adjudged dues. The waiver covered the total CENVAT credit demand and the corresponding penalty imposed under the specified rules, and recovery was stayed for the period during which the appeals remain pending.

Applications allowed; adjudged dues and corresponding penalty waived and recovery stayed during pendency of the appeals.

Final Conclusion: The Tribunal, following its earlier precedent and the Larger Bench authority, held that CENVAT credit on plastic crates used in or in relation to manufacture of beverages is admissible and, on that basis and in the absence of contrary authority, allowed the applications by waiving the adjudged credit and equal penalty and staying recovery pending the appeals.

Rectification of mistake in order - error apparent on the face of the record - power of Tribunal to review its own order - no power to review orders in absence of error apparent - SSI exemption entitlement - benefit of exemption for entire financial year where registration granted on last date

Rectification of mistake in order - error apparent on the face of the record - power of Tribunal to review its own order - Miscellaneous application for rectification dismissed on ground that the alleged mistake is not an error apparent on the face of the record and would require re deciding the matter. - HELD THAT: - The Tribunal recorded that the original appeal was heard at length and the order was dictated in open Court after hearing both parties. The applicant contended that a settled legal point entitled it to SSI exemption from 01.04.1987 and that omission in the earlier order was a mistake apparent on the face of the record. The Tribunal held that entertaining the contention would necessitate re examining the issues and effectively reviewing the merits of its earlier order. Relying on the principle that the Tribunal does not have power to review its own orders in the absence of an error apparent on the face of the record (as indicated by the cited Supreme Court authority), the application did not disclose a correctible mistake and therefore could not be rectified. [Paras 4]

Application for rectification dismissed as the alleged omission is not an error apparent on the face of the record and amounts to an impermissible review of the Tribunal's order.

Final Conclusion: The miscellaneous application for rectification is dismissed for lack of merit because the point raised does not constitute an error apparent on the face of the record and would require the Tribunal to review and re decide its earlier order.

Rectification of clerical/technical mistakes in a final order - resolution of difference of opinion by a third Member and majority order - remand for fresh computation of clearances - confirmation of duty and imposition of penalty for clandestine removal - confiscation upheld and confiscation set aside

Rectification of clerical/technical mistakes in a final order - resolution of difference of opinion by a third Member and majority order - Rectification of inaccuracies in the Final Order No. A/1319-1321/2012 EX(Br) dated 22.11.12 and allowance of the Review/Rectification (ROM) application filed by the Revenue. - HELD THAT: - The Bench examined mistakes in the Final Order which arose from an earlier difference of opinion between two Members subsequently resolved by a third Member; the identified errors were technical and not affecting merits and were accepted by counsel for the appellant. The Tribunal accordingly corrected the textual and consequential mistakes in the Final Order rather than re-adjudicating merits, and allowed the ROM application to record the corrected dispositions. [Paras 2, 3]

Mistakes in the Final Order are rectified and the ROM application of the Revenue is allowed.

Remand for fresh computation of clearances - Disposition of the confirmation of duty earlier recorded at para (ii)(a) of the Final Order. - HELD THAT: - Although the Final Order had earlier set aside the confirmation of duty of Rs.12,80,542.50, the majority view of the Members - after declaration of law on the point - required remand to the lower authorities for recomputation of clearances. The Tribunal rectified the Final Order to reflect that the confirmation of duty is set aside and the matter is remanded for fresh computation in light of the Tribunal's observations. [Paras 2]

Confirmation of duty of Rs.12,80,542.50 is set aside and the matter is remanded for fresh computation of clearances.

Confiscation set aside - Correction of the confiscation recorded in para (ii)(b) of the Final Order relating to seizure of airconditioners, fans and deep freezers. - HELD THAT: - The Final Order initially recorded confiscation of 60 airconditioners, 4 fans and 4 deep freezers with redemption fine and duty payment set aside; on scrutiny it became clear that confiscation of 36 airconditioners (out of total seizure) was required to be set aside while 24 were upheld by the majority. The Tribunal therefore rectified the Final Order to set aside confiscation of 36 airconditioners, 4 fans and 4 deep freezers with the previously recorded redemption fine and duty payment set aside. [Paras 2]

Confiscation of 36 airconditioners, 4 fans and 4 deep freezers is set aside.

Confirmation of duty and imposition of penalty for clandestine removal - Validation of demand and penalty recorded in para (ii)(c) concerning clandestine removal of 606 airconditioners. - HELD THAT: - The Tribunal upheld the finding of clandestine removal in respect of 606 airconditioners, and accordingly confirmed the demand of duty and the imposition of penalty as recorded in the Final Order; this part of the order was not affected by the rectification of technical mistakes. [Paras 2]

Demand of duty of Rs.58,44,825/- and imposition of penalty in respect of clandestine removal of 606 airconditioners is confirmed.

Confiscation upheld - penalty under Rule 173 Q - Validity of confiscation and related duty and penalty recorded in para (ii)(d) concerning 24 airconditioners seized from a residential premises. - HELD THAT: - The Tribunal upheld the confiscation of 24 airconditioners seized from the residential premises of Shri Pradeep Khanna, retained the duty demand and upheld imposition of penalty under Rule 173 Q; this finding of the majority was left intact by the rectification. [Paras 2]

Confiscation of 24 airconditioners from the residential premises is upheld along with the duty demand and penalty under Rule 173 Q.

Final Conclusion: The Tribunal allowed the Revenue's ROM application and rectified clerical/technical errors in the Final Order dated 22.11.2012, remanding the matter for fresh computation of clearances in respect of the set aside duty, setting aside confiscation of specified goods as corrected, and affirming the confirmation of duty and penalties in respect of clandestine removals and the confiscation and penalty upheld for the 24 airconditioners.

Confiscation of vehicle carrying unaccounted goods - redemption fine assessment and quantification - penalty on proprietary concern and personal penalty on proprietor - knowledge of carrier/innocence of carrier - fictitious billing and carriage of unaccounted goods

Knowledge of carrier/innocence of carrier - fictitious billing and carriage of unaccounted goods - Whether the carrier and its proprietor could be treated as innocent and absolved of liability for carrying 15,000 kgs of unaccounted polyester chips despite accompanying documents showing 3,000 kgs. - HELD THAT: - The Tribunal affirmed the adjudicating authority's factual conclusions that the offending vehicle carried 15,000 kgs while the accompanying document showed 3,000 kgs, that the carrier received transport charges for 15,000 kgs, and that the vehicle was involved in carrying goods with two sets of bilties on multiple occasions. In addition, fictitious bills were found to have been issued in the names of several concerns which denied receipt of consignments. On these findings the appellant carrier's plea of innocence was rejected and it was held that the owner could not be regarded as unaware of the movement of the extra unaccounted goods.

Carrier's plea of innocence rejected; factual findings of carriage of unaccounted goods and fictitious billing upheld.

Confiscation of vehicle carrying unaccounted goods - redemption fine assessment and quantification - Whether the truck should be confiscated and, if so, whether the redemption fine as imposed should be interfered with. - HELD THAT: - The Tribunal sustained the confiscation of the truck as rightly adjudged by the lower authority given the carriage of unaccounted goods. However, the Tribunal found the earlier imposition of a redemption fine of Rs. 87,500 to be mechanically fixed without reference to the life and year of manufacture of the vehicle. Applying a proportional assessment to the truck's recorded value, the Tribunal reduced the redemption fine to Rs. 56,000, reasoning that the higher amount could not be justified in the absence of valuation particulars and that a reduced fine (nearly 15% of the truck's value as recorded) was more appropriate.

Confiscation upheld; redemption fine reduced to Rs. 56,000.

Penalty on proprietary concern and personal penalty on proprietor - Whether the penalty imposed on the proprietory concern and the separate penalty on the proprietor should be sustained. - HELD THAT: - The Tribunal held that the penalty on M/s. Baba Devpuri Road Carriers should be moderated and reduced from Rs. 40,000 to Rs. 30,000. As the assessee is a proprietory concern, the Tribunal found it inappropriate to impose a separate personal penalty of Rs. 10,000 on the proprietor, Shri Tapeshwar Singh, and accordingly waived the penalty that had been levied on him.

Penalty on the concern reduced to Rs. 30,000; personal penalty on the proprietor waived.

Final Conclusion: Appeal partly allowed: confiscation of truck sustained; redemption fine reduced to Rs. 56,000; penalty on M/s. Baba Devpuri Road Carriers reduced to Rs. 30,000; penalty on proprietor waived.

Clandestine removal of goods - waiver of pre-deposit - appreciation of evidence - stay of recovery during pendency of appeal - deposit as condition for grant of stay

Waiver of pre-deposit - clandestine removal of goods - appreciation of evidence - deposit as condition for grant of stay - stay of recovery during pendency of appeal - Application for complete waiver of pre-deposit and for staying recovery of confirmed duty and penalty - HELD THAT: - The applications sought waiver of pre-deposit of the total confirmed duty and penalty arising from findings of clandestine removal of goods. The adjudicating authority had initially framed a larger demand of about Rs.12 crores which, after consideration of the evidence produced by the appellant, was reduced to Rs.3.1 crores; in the impugned order the Commissioner recorded item wise findings, in some instances confirming demand and in others dropping it. The Tribunal noted that the Commissioner recorded reasons while confirming clandestine removal and that the controversy principally involves appreciation of evidence and credibility of seized private records and supplier statements - matters fit for adjudication at the appeal stage. On the material before it, the Tribunal held that the appellants had not established a prima facie case for complete waiver of pre-deposit. Balancing the interests of Revenue and the financial hardship asserted by the appellant, the Tribunal directed a conditional stay: the principal appellant was to deposit a specified sum within the time directed, and on compliance the balance dues would be waived for the period of appeal and recovery stayed; non compliance would entail dismissal of the appeals. The order thus applies the principle that where appreciation of evidence is involved and no clear prima facie case is shown, a conditional deposit may be required as a precondition for stay of recovery pending appeal.

Applications for total waiver of pre-deposit refused; M/s Nampa Steel directed to deposit the specified amount within the time fixed, on which compliance the balance adjudged dues to be stayed during pendency of appeals; failure to deposit to result in dismissal of the appeals.

Final Conclusion: The Tribunal refused total waiver of pre-deposit, directed conditional deposit by the appellant within the time specified, and granted stay of recovery of the balance dues during the pendency of the appeals subject to compliance; failure to comply would lead to dismissal of the appeals.

Waiver of pre-deposit - pre-deposit directed pending appeal - stay of recovery during pendency of appeal - suppression of production - clandestine removal of goods - admission of clandestine removal by partners/officials

Waiver of pre-deposit - pre-deposit directed pending appeal - suppression of production - clandestine removal of goods - Pre-deposit payable by the appellant firm (Applicant No.1) for maintaining the appeal and waiver of balance pre-deposit on deposit of the directed amount. - HELD THAT: - The Tribunal noted the Commissioner (Appeals) finding that the firm had suppressed production and clandestinely removed mechanized dipped bundles without payment of duty. In view of these findings and the appellant's part deposit, the Tribunal exercised its discretion to require a partial pre-deposit rather than full pre-deposit. Applicant No.1 is directed to pre-deposit Rs.2,00,000 within six weeks, upon which the balance pre-deposit is waived and recovery of the balance stayed during the pendency of the appeals. The appellant's counsel's submission regarding an earlier deposit of Rs.8 lakhs was recorded for consideration at the hearing of the appeals but did not alter the interim direction for the specified pre-deposit.

Applicant No.1 directed to pre-deposit Rs.2,00,000 within six weeks; balance pre-deposit waived and recovery stayed during pendency of appeal.

Waiver of pre-deposit - pre-deposit directed pending appeal - admission of clandestine removal by partners/officials - Pre-deposit payable by the partners/official in respect of penalty pre-deposit applications and waiver of the balance pre-deposit on deposit of the directed amounts. - HELD THAT: - The Tribunal observed that the partner (Applicant No.2) and the head-office in-charge (Applicant No.3) had admitted clandestine removal of goods. Taking this into account, the Tribunal directed each of Applicant Nos.2 and 3 to pre-deposit Rs.25,000 within six weeks. Upon such deposit, the balance pre-deposit in respect of the penalties stands waived and recovery is stayed during the pendency of the appeals.

Applicant Nos.2 and 3 directed to pre-deposit Rs.25,000 each within six weeks; balance pre-deposits waived and recovery stayed during pendency of appeals.

Final Conclusion: Interim directions issued: Applicant No.1 to pre-deposit Rs.2,00,000 and Applicant Nos.2 and 3 to pre-deposit Rs.25,000 each within six weeks; on such deposits the balance pre-deposits are waived and recovery is stayed pending disposal of the appeals.

Rectification of mistake in judicial order - Review of a final tribunal order - Penalty not leviable where error arises from question of interpretation - Restoration of Order-in-Original - Alternate remedy by writ/appeal to the High Court

Rectification of mistake in judicial order - Review of a final tribunal order - Penalty not leviable where error arises from question of interpretation - Application for rectification of the Tribunal's final order was not maintainable and was rejected. - HELD THAT: - The Tribunal examined the prayer in the rectification application and the circumstances under which the original order was passed. The Department's plea was simply to allow its appeal; the assessee was represented, submissions were heard in court and the order was dictated in open court with no cross-objection filed by the assessee. The Tribunal found no demonstrable clerical or arithmetical error in the final order requiring rectification. The contention that the Tribunal failed to address the question of penalty (on the ground that the issue involved a question of interpretation where penalty may not be warranted) did not disclose a correctable mistake but amounted to a substantive challenge to the order. To entertain the rectification would effectively be a review of the Tribunal's decision, which the Tribunal stated it had no power to undertake. The Tribunal also observed that had it considered penalty inappropriate it would have so held in the order. Consequently, the application for rectification was refused, with the direction that the assessee's remedy lies by way of appeal to the High Court. [Paras 3]

Rectification application dismissed; no mistake found in the Tribunal's final order and the matter, if contested, must be pursued by appeal to the High Court.

Final Conclusion: The application for rectification of the Tribunal's Final Order No.685/2012 dated 12/10/2012 is rejected: no correctable mistake was shown, rectification would amount to an impermissible review, and the aggrieved party's remedy is by appeal to the High Court.

Pre-deposit - interest on wrongful credit - re-credit on filing revised income-tax return - waiver of penalty - stay of recovery pending appeal

Pre-deposit - interest on wrongful credit - re-credit on filing revised income-tax return - stay of recovery pending appeal - Application for waiver of pre-deposit of interest and penalty arising from disallowance and subsequent re-credit of input tax credit following filing of a revised Income Tax return. - HELD THAT: - The applicant had availed credit on capital goods and thereafter claimed depreciation under the Income Tax Act for the same period; an audit led to detection of the irregularity and the applicant filed a revised Income Tax return on 23.2.2011. The original authority initially disallowed the credit and subsequently allowed re-credit on 23.2.2011 upon production of the revised return. On the material before the Tribunal a prima facie view is taken that interest is payable for the period from the date of availment of credit until filing of the revised return. Balancing that prima facie finding with the pendency of the appeal, the Tribunal directed a conditional partial pre-deposit: Rs.30,000 to be deposited within four weeks and compliance to be reported. Upon such deposit, the pre-deposit of the balance of interest and the penalty is waived and recovery thereof is stayed during the appeal. [Paras 3, 6]

Applicant directed to deposit Rs.30,000 within four weeks and report compliance; upon such deposit the balance interest pre-deposit and penalty are waived and recovery stayed pending appeal.

Final Conclusion: Conditional waiver granted: a part pre-deposit of interest (Rs.30,000) ordered within four weeks; upon deposit, balance pre-deposit of interest and penalty waived and recovery stayed during the pendency of the appeal.

Waiver of pre-deposit - stay of recovery - cenvat credit of Education Cess and Secondary and Higher Education Cess - ineligible cenvat credit - prima facie case for waiver of pre-deposit - Rule 3(7) of Cenvat Credit Rules - proviso not altering CVD discharge formula

Waiver of pre-deposit - stay of recovery - cenvat credit of Education Cess and Secondary and Higher Education Cess - ineligible cenvat credit - prima facie case for waiver of pre-deposit - Rule 3(7) of Cenvat Credit Rules - proviso not altering CVD discharge formula - Whether pre-deposit and recovery should be stayed where cenvat credit was availed of Education Cess and Secondary and Higher Education Cess paid by a 100% EOU - HELD THAT: - The Tribunal found it undisputed that the appellant availed cenvat credit of the Education Cess and Secondary and Higher Education Cess which were paid by the 100% EOU while clearing goods to the appellant. Noting that a coordinate bench had granted an unconditional stay in an identical issue (Turbo Energy Limited) for the prior period, the Tribunal observed that the insertion of the proviso in Rule 3(7) of the Cenvat Credit Rules did not alter the formula for discharge of CVD under those Rules. In light of the identical controversy and the earlier stay by a coordinate bench, the Tribunal concluded that the appellant had made out a prima facie case for waiver of the pre-deposit and for staying recovery pending disposal of the appeal. The Tribunal therefore followed the coordinate bench's view and allowed the application for waiver of pre-deposit and stayed recovery. [Paras 5, 6]

Application for waiver of pre-deposit is allowed; recovery of the confirmed amounts stayed till disposal of the appeal.

Final Conclusion: The Tribunal allowed the stay petition, held that the appellant had made out a prima facie case, followed the coordinate-bench view on the identical issue and granted waiver of the pre-deposit with recovery stayed until the appeal is finally disposed of.

Waiver of pre-deposit - stay of recovery - prima facie case - admissibility of Cenvat Credit on capital goods - bill of entry versus invoice evidence

Waiver of pre-deposit - stay of recovery - prima facie case - bill of entry versus invoice evidence - Waiver of pre-deposit of the disputed Cenvat Credit and stay of its recovery during the pendency of the appeal. - HELD THAT: - The Tribunal examined the record and the parties' submissions and found that the admissibility of Cenvat Credit on the capital goods (Continuous Mixture and Thermostat) had been earlier considered by the Tribunal and the matter was remanded for verification as to the precise amount of credit claimed on Thermostat. In the present proceedings the appellant produced a Bill of Entry showing 54 items with Thermostat at Sl. No.54 involving a duty of Rs.11,198, and the appellant's counsel categorically stated there is no Invoice No.133 dated 19.04.1995 upon which the Revenue relied in Annexure A to the show cause notice. The Tribunal, after perusal of records, did not find any Invoice No.133 dated 19.04.1995 placed by the Revenue; consequently, on a prima facie view, the appellant made out a case for relief. In view of this prima facie finding and the factual dispute as to whether the impugned credit arose from the Bill of Entry or from a separate invoice, the Tribunal allowed total waiver of the pre-deposit and stayed recovery of the Cenvat Credit during the appeal. The Tribunal made clear that if the department subsequently locates and places before the Tribunal an Invoice No.133 dated 19.04.1995 contradicting the appellant's claim, the department may approach the Tribunal for appropriate directions.

Pre-deposit of the disputed Cenvat Credit is waived and recovery stayed during the pendency of the appeal; department may seek further directions if it produces the referred invoice.

Final Conclusion: The Tribunal allowed the stay petition, waiving pre-deposit of the claimed Cenvat Credit and staying its recovery on a prima facie finding in favour of the appellant, while permitting the department to seek appropriate relief if it subsequently produces the contested invoice.

Categorisation of industrial unit for incentive based on date of intimation for expansion/diversification/modernization - entitlement to capital investment subsidy for loss making existing functional mega unit - incentive admissibility on final product (cement) as against intermediate product (clinker) - limitation of subsidy to units undertaking expansion/diversification/modernization - promissory estoppel and legitimate expectation against a promise contrary to policy

Categorisation of industrial unit for incentive based on date of intimation for expansion/diversification/modernization - entitlement to capital investment subsidy for loss making existing functional mega unit - Petitioner's unit is to be categorised and entitled to incentives as a loss making existing and functional mega industrial unit (Category III) based on facts at the date of intimation for modernization. - HELD THAT: - The Court held that the determinative date for classifying a unit as Category II or Category III is the date on which prior intimation for expansion/diversification/modernization is given to the Industry Department. Clause 8 of Annexure 1 and Memo No.1885 require prior intimation and processing of the proposal on that basis. The petitioner's representations showed it was a loss making unit on the date of intimation (having incurred cash losses for several years) and the State's subsequent re classification based on post modernisation profitability (date of commercial production) was incorrect and rendered the Category III protections and incentives unworkable. Accordingly, the petitioner's unit is entitled to capital investment subsidy as a Category III mega unit. [Paras 26]

Petitioner's unit is entitled to be treated as a loss making existing and functional mega industrial unit and to the capital investment subsidy applicable to Category III.

Incentive admissibility on final product (cement) as against intermediate product (clinker) - Petitioner is entitled to capital investment subsidy calculated with reference to incremental sales tax on the sale of both clinker and cement produced by the Chaibasa unit. - HELD THAT: - The sanction letter (Annexure 6) and the Cabinet proposal related to ACC Cement Jhinkpani's modernisation generally; there was no explicit limitation confining incentives to clinker alone. The final product of the Chaibasa unit is cement manufactured from clinker. On that basis the Court rejected the State's contention that subsidy would be limited to sales of clinker and held that capital investment subsidy is payable on incremental sales tax on sales of clinker and cement produced by Chaibasa. [Paras 27]

State's contention that incentive is payable only on sale of clinker is rejected; subsidy is payable on incremental sales tax on clinker and cement from Chaibasa unit.

Limitation of subsidy to units undertaking expansion/diversification/modernization - promissory estoppel and legitimate expectation against a promise contrary to policy - Petitioner is not entitled to capital investment subsidy on incremental sales tax paid by the Sindri unit because no expansion/diversification/modernization took place at Sindri and any promise to that effect would be contrary to the Industrial Policy. - HELD THAT: - Clause 22 provides incentives only to units that undertake expansion/diversification/modernization; Sindri unit did not undergo such works. Although Annexure 6 mentioned Chaibasa and Sindri in relation to incremental sales tax, the Court held that a promise inconsistent with the Industrial Policy cannot be enforced by promissory estoppel. The petitioner had opportunity to be heard (per Annexure 9) and legitimate expectation remedies do not permit compelling the State to act contrary to policy or law; thus subsidy for Sindri is not payable. [Paras 36]

No capital investment subsidy on incremental sales tax paid by the Sindri unit; subsidy confined to Chaibasa unit which underwent modernization.

Final Conclusion: Writ petitions partly allowed: State directed to pay capital investment subsidy treating the petitioner as a loss making existing and functional mega unit and to grant subsidy on incremental sales tax paid on cement and clinker sold by the Chaibasa unit; claim for subsidy on sales by Sindri unit rejected. Petitioner to file prescribed application and State to disburse the incentive within three months thereafter.

Works contract - deemed sale of goods in works contract - taxation of materials incorporated in construction - Article 366(29-A)(b) - maintainability of writ petition against assessment - remedy by statutory appeal

Works contract - deemed sale of goods in works contract - taxation of materials incorporated in construction - Article 366(29-A)(b) - The legal position on levy of tax on goods involved in building/works contracts as affirmed by the Supreme Court and its application in proceedings before this Court. - HELD THAT: - The Court records that the larger Bench of the Supreme Court has held that transfers of property in goods involved in execution of a works contract are to be treated as a deemed sale under Article 366(29-A)(b), thereby permitting States to levy tax on the value of materials incorporated in construction. The High Court reproduces the summarised legal position in paras 101, 107, 114, 115, 116 and 118 of the reference decision, including that (i) three conditions must be fulfilled for sustaining levy on goods in a works contract, (ii) building contracts constitute a species of works contract, (iii) the dominant-nature test is inapplicable to transactions covered by Article 366(29-A), and (iv) tax may be directed to the value of goods at the time of incorporation even if property passes later. Having noted that the larger Bench approved the view in K. Raheja Development Corporation, the Court declines to re-adjudicate factual disputes in writ petitions on merits in view of the settled legal position and consequent appellate/assessment remedies available under the statutory scheme. [Paras 4]

The Court accepts and records the legal position as stated by the Supreme Court concerning works contracts and deemed sale of goods, and refrains from adjudicating the factual merits of the assessments at the writ petition stage.

Maintainability of writ petition against assessment - remedy by statutory appeal - Whether the writ petitions challenging assessment orders are maintainable and the appropriate forum for contesting such assessments. - HELD THAT: - Relying on the Supreme Court's disposal in State of U.P. v. Assotech Realty Pvt. Ltd., the Court notes that a writ petition against an assessment order is not the appropriate remedy where thorough adjudication on facts and law is required. The Supreme Court set aside this Court's earlier order and directed the assessee to file the statutory appeal before the Appellate Authority, permitting filing within thirty days and protecting limitation. In the light of that higher court direction and the settled law on works contracts, this Court is not inclined to traverse and decide contested factual and evidentiary issues in the writ jurisdiction; petitioners are to pursue statutory remedies before the tax authorities and in appeal. [Paras 6, 7, 8]

Writ petitions challenging assessment orders are not entertained on merits; petitioners are relegated to statutory appeal remedies and the Court permits withdrawal of the writ petitions to enable such proceedings.

Final Conclusion: All writ petitions are dismissed as withdrawn with liberty to the petitioners to seek remedies under the relevant statutory appeal provisions in accordance with law; the Court has recorded and followed the Supreme Court's rulings on works contracts and the non maintainability of writs against assessment orders.

Territorial jurisdiction - offence under Section 138 of the Negotiable Instruments Act - components of the offence under Section 138 - jurisdiction where the dishonoured cheque was presented - failure to make payment within 15 days of receipt of notice - wide amplitude of territorial jurisdiction under Sections 178 and 179 of the Code

Territorial jurisdiction - jurisdiction where the dishonoured cheque was presented - components of the offence under Section 138 - Whether the Courts at Delhi had territorial jurisdiction to try the complaint under Section 138 of the Negotiable Instruments Act on the factual position taken by the High Court (paragraph 13 of the impugned order). - HELD THAT: - The Court applied the principles expounded in K. Bhaskaran and subsequent decisions (including Nishant Aggarwal and Harman Electronics), observing that the offence under Section 138 comprises a concatenation of five acts and that any one locality where any of those acts occurs may furnish territorial jurisdiction to try the complaint. On the factual position recorded by the High Court (that the cheque was presented for encashment at Delhi), the Court held that the High Court erred in concluding that the Delhi courts lacked jurisdiction. The Court therefore set aside the impugned order. The Court emphasised that its determination is confined to the factual finding relied upon by the High Court (paragraph 13 of the impugned order) and that if a different factual contention (for example, that presentation occurred at Faridabad) is raised by the respondent, that disputed question of fact must be entertained and decided in accordance with law. [Paras 5, 7, 8]

The High Court's order refusing jurisdiction to the Courts at Delhi is set aside and the appeal is allowed on the factual basis recorded by the High Court; the respondent remains free to raise any alternate factual plea as to where the cheque was presented.

Final Conclusion: The High Court's order dated 27.4.2012 is set aside; on the factual finding relied upon by that court (that the cheque was presented at Delhi) the Delhi courts have territorial jurisdiction to try the complaint under Section 138 of the Negotiable Instruments Act, subject to any contrary factual claim being raised and decided in due course.