TaxTMI Updates e-Newsletter
Nov 02,2021

Validity of seizure and penalty for transport without e-way bill during transitional period - Enforceability of e-way bill requirement under the U.P. Goods and Services Tax Act during 01.02.2018 to 31.03.2018 - Application of U.P. Goods and Services Tax Act to e-way bill obligations - Rejection of appeal on ground of limitation and effect of non-communication of impugned order

Validity of seizure and penalty for transport without e-way bill during transitional period - Enforceability of e-way bill requirement under the U.P. Goods and Services Tax Act during 01.02.2018 to 31.03.2018 - Seizure of goods and penalty under Section 129(3) of the UPGST Act for transport without e-way bill on 29.03.2018 was not justified because the e-way bill requirement under the UPGST Act was unenforceable for the period 01.02.2018 to 31.03.2018. - HELD THAT: - The Court accepted the petitioner's contention that, for the period 01.02.2018 to 31.03.2018, the obligation to carry an e-way bill under the UPGST Act read with the rules was unenforceable. Relying on earlier Division Bench decisions of this Court (M/s Godrej and Boyce Manufacturing Co. Ltd and M/s Varun Beverages Ltd.), the Court held that the impugned seizure and the consequential penalty founded on absence of an e-way bill could not be sustained. On that basis the order of seizure dated 29.03.2018 was quashed and the relief granted to the petitioner was confined to the legal invalidity of enforcement of the e-way bill requirement for the specified transitional period.

Order of seizure dated 29.03.2018 quashed; penalty imposed on that basis set aside.

Rejection of appeal on ground of limitation and effect of non-communication of impugned order - Application of appellate remedy under Section 107 of the UPGST Act - The appellate order of 03.09.2020 rejecting the petitioner's appeal as time-barred was quashed. - HELD THAT: - The petitioner asserted non-communication of the order dated 29.03.2018 and explained delay in pursuing the appeal; the appellate authority rejected the appeal on limitation. Having found the substantive order unsustainable in law (and the matter squarely covered by the cited Division Bench precedents), the High Court allowed the writ petition and quashed the appellate rejection. The Court also directed refund of any amount deposited by the petitioner in accordance with law within one month.

Order dated 03.09.2020 rejecting the appeal on limitation quashed; deposited amount to be refunded in accordance with law within one month.

Final Conclusion: Writ petition allowed; impugned orders dated 29.03.2018 and 03.09.2020 quashed; any amount deposited by the petitioner to be refunded in accordance with law within one month.

Refund of tax - interest on delayed refund - duty to decide refund application within sixty days - disposal of representations in accordance with law - undertaking by respondents accepted by the Court

Refund of tax - duty to decide refund application within sixty days - interest on delayed refund - Petition seeking refund, interest for delay and exemplary damages in respect of withheld GST refund - HELD THAT: - The petitioner sought direction for release of the claimed GST refund and interest, asserting that under the statutory scheme the proper officer is obliged to issue the refund order within sixty days of receipt of a complete refund application and that delay attracts interest. The respondents, through their counsel, gave an express undertaking that the petitioner's representations dated 22nd September, 2021 and 05th October, 2021 would be disposed of in accordance with law within three weeks. The Court accepted that undertaking, held the respondents bound by it and disposed of the writ petition accordingly. The petition was therefore not decided on merits as to the quantum or entitlement but was disposed by securing the respondents' commitment to expeditious statutory disposal and by directing a compliance listing. [Paras 5, 6, 7]

Respondents to dispose of the petitioner's representations in accordance with law within three weeks; undertaking accepted and writ petition disposed of with a compliance listing.

Final Conclusion: The Court accepted the respondents' undertaking to dispose of the petitioner's representations in accordance with law within three weeks, held them bound by that undertaking, and disposed of the writ petition while listing the matter for compliance.

Cancellation of registration without prior show cause notice - first proviso to Section 29(2) of the UPGST Act, 2017 - ex parte cancellation - service of statutory notice - lifting bar of alternative remedy for state attributable delay - remand for fresh hearing and compliance with principles of natural justice

Cancellation of registration without prior show cause notice - service of statutory notice - ex parte cancellation - first proviso to Section 29(2) of the UPGST Act, 2017 - Validity of the order dated 30.6.2018 cancelling the petitioner's GST registration in view of the unintelligible uploaded notice and absence of proved service of the physical show cause notice. - HELD THAT: - The Court found that the notice uploaded on the GST Portal dated 5.4.2018 was unintelligible and that the written instructions relied upon by the State do not contain any firm assertion or proof that a physical copy of the show cause notice or the order dated 30.6.2018 was served on the petitioner. The first proviso to Section 29(2) requires issuance of a prior notice and affording of opportunity before cancellation of registration; in the absence of a proved, intelligible notice and service, the cancellation operates ex parte and is contrary to that mandatory requirement. The Court also noted that the order of 30.6.2018 was not given effect on the GST Portal and remained unserved until 15.7.2020, underscoring that the petitioner was not afforded the required prior opportunity to defend.

Order dated 30.6.2018 cancelling the petitioner's registration was set aside as ex parte and contrary to the first proviso to Section 29(2) of the Act.

Lifting bar of alternative remedy for state attributable delay - remand for fresh hearing and compliance with principles of natural justice - Whether the court should remit the matter for fresh consideration despite existence of alternative statutory remedies, and the directions to be given on remand. - HELD THAT: - The Court observed that cancellation of registration has grave consequences and that delay in the petitioner seeking relief was largely due to conduct attributable to the State, specifically failure to update the GST Portal which prevented the petitioner from knowing or seeking redress earlier. In these peculiar facts the Court lifted the bar of alternative remedy and remitted the matter to respondent no.3 for fresh consideration. The Court directed that the petitioner, having now been served with copies, shall file a reply within two weeks; respondent no.3 shall fix a hearing date within fifteen days thereafter and pass appropriate orders within one month, ensuring compliance with principles of natural justice.

Bar of alternative remedy lifted; matter remitted to respondent no.3 to afford fresh hearing and pass orders in accordance with law within the stipulated timelines.

Final Conclusion: Writ petition allowed: the order of cancellation dated 30.6.2018 is set aside as having been passed ex parte in breach of the first proviso to Section 29(2) of the UPGST Act, 2017; the matter is remitted to the cancelling authority to afford a fresh opportunity and decide afresh in accordance with law within the time limits directed by the Court. No order as to costs.

Upload of Form GST TRAN-1/TRAN-2 outside the statutory electronic timeline - physical filing of Form GST TRAN-1/TRAN-2 to be regularised electronically - compliance with Section 140 of the CGST Act and Rule 117 of the CGST Rules - no rejection of forms filed in compliance of court order on ground of delay

Physical filing of Form GST TRAN-1/TRAN-2 to be regularised electronically - compliance with Section 140 of the CGST Act and Rule 117 of the CGST Rules - no rejection of forms filed in compliance of court order on ground of delay - Direction to accept physical filing of Form GST TRAN-1/TRAN-2 and to have the jurisdictional authority and GST Network effect electronic upload notwithstanding the expired electronic timeline - HELD THAT: - The Court, following the reasoning and directions recorded in Writ Tax No. 477 of 2021 dated 15.09.2021, permitted petitioners to first file physical copies of Form GST TRAN-1/TRAN-2 with their jurisdictional authority and directed that the authority examine compliance under Section 140 of the CGST Act and Rule 117 of the CGST Rules and report in writing. Where no objection arises the authority is to initiate electronic submission/revision; where objections arise a single limited opportunity to correct the physical form is to be afforded. Upon completion the jurisdictional authority must forward the physical forms and its report to the GST Network, which shall either upload the forms itself or allow the petitioner to do so. The Court further directed that any form submitted in compliance with this order shall not be rejected solely on the ground of being filed after the statutory electronic timeline. The present petition was allowed on identical terms, with petitioner directed to comply within one week.

Writ allowed; directions in Writ Tax No. 477 of 2021 (15.09.2021) applied mutatis mutandis and petitioner permitted to file physical Form GST TRAN-1/TRAN-2 for subsequent electronic upload without being rejected for delay.

Final Conclusion: The petition is allowed on the same terms as the earlier order dated 15.09.2021: physical filing of Form GST TRAN-1/TRAN-2 shall be accepted, jurisdictional authorities shall verify compliance and forward reports and forms to the GST Network for electronic upload, and no form filed in compliance with this order shall be rejected for having been filed after the electronic timeline; petitioner to comply within one week.

Provisional attachment under Rule 129(1) read with Section 83 - operation of law - expiry of provisional attachment - bank's obligation to act on attachment communication

Provisional attachment under Rule 129(1) read with Section 83 - expiry of provisional attachment - operation of law - Provisional attachment effected by communication dated 11.05.2020 does not survive beyond 10.05.2021 and the bank must not continue to treat the petitioner's account as provisionally attached under that communication. - HELD THAT: - The petitioner challenged continuation of restraint on its bank account which had been provisionally attached by communication dated 11.05.2020 under Rule 129(1) read with Section 83. The petitioner submitted that by virtue of the operation of law the attachment could not be continued beyond 10.05.2021. The Court found no contrary legal position or any subsequent action by the revenue authorities justifying continuation of the attachment. In those circumstances the Court held that the communication of 11.05.2020 had outlived its life and utility and could not be enforced further.

Writ petition disposed with observation that the provisional attachment under the communication dated 11.05.2020 has ceased to subsist beyond 10.05.2021 and the bank shall not treat the petitioner's account as provisionally attached under that communication.

Final Conclusion: The High Court allowed the petition to the extent of declaring that the provisional attachment by communication dated 11.05.2020 has expired and directed the bank not to treat the petitioner's account as under provisional attachment pursuant to that communication.

Bail - Fundamental right to personal liberty - Balancing pre-trial incarceration against severity of punishment - Absence of reasonable apprehension of tampering with evidence or fleeing justice - Grant of bail where charge-sheet filed and trial yet to test evidence - Application of guidelines in Dataram v. State of U.P.

Bail - Fundamental right to personal liberty - Absence of reasonable apprehension of tampering with evidence or fleeing justice - Grant of bail where charge-sheet filed and trial yet to test evidence - Application of guidelines in Dataram v. State of U.P. - Applicant entitled to be released on bail subject to conditions - HELD THAT: - The Court found that material on record indicates the applicant was an employee of a different entity (Stellar Capital Services Limited) and there is no material showing he was connected with the Cooperative Company Ltd. save for incriminating statements by co-accused. The charge-sheet has been filed, and there is no allegation or material demonstrating a real risk that the applicant would tamper with evidence, influence witnesses, or flee justice. No specific electronic evidence implicating the applicant was pointed out; the relevance of such material remains to be tested at trial. The applicant has no prior criminal history. Having regard to the guidelines in Dataram v. State of U.P. and the need to balance the precious fundamental right to personal liberty against the gravity of the allegations and possible punishment, the Court concluded that, without expressing any opinion on merits, the applicant should be released on bail. Release was made conditional on furnishing personal bond with two sureties and compliance with specified conditions safeguarding the trial process, including attendance requirements and prohibitions against influencing witnesses or tampering with evidence.

Applicant Ashwani Upadhyay is directed to be released on bail on furnishing personal bond with two reliable sureties and subject to enumerated conditions.

Final Conclusion: Bail granted to the applicant on conditions: personal bond with two sureties, undertakings and mandatory attendance obligations; liberty granted balancing fundamental right against allegations while leaving merits to trial.

Reopening of assessment under Section 147/148 - change of opinion - failure to disclose fully and truly all material facts (proviso to Section 147) - assessment deemed to have accepted explanation where material was before the Assessing Officer

Reopening of assessment under Section 147/148 - change of opinion - failure to disclose fully and truly all material facts (proviso to Section 147) - assessment deemed to have accepted explanation where material was before the Assessing Officer - Validity of notice under Section 148 read with Section 147 for AY 2012-13 on the ground that income had escaped assessment. - HELD THAT: - The court held that the reasons for reopening rested solely on material (the balance-sheet showing an opening reserve in Bad and Doubtful Debts and the claim of deduction) which had been furnished and was available to the Assessing Officer at the time of the original assessment. The Assessing Officer, having had the particulars of the bad debts written off including party details, AGM resolution and auditor's certificate, had applied his mind and completed the assessment. The subsequent invocation of the balance-sheet to deny the deduction amounted to a mere change of opinion, which is not a permissible ground for reopening an assessment. The proviso to Section 147 requires a failure by the assessee to disclose fully and truly all material facts; here there was no such failure because the materials were before the Assessing Officer and non-discussion of an item in the assessment order does not establish concealment but is deemed acceptance when the material is on record. On these conclusions the court found no valid foundation for reopening the assessment under Section 147/148 and therefore the notice and consequential orders were unsustainable. [Paras 2, 3, 4, 5]

Impugned notice dated 31/03/2019, order dated 30/11/2019 and further notice dated 30/11/2019 set aside for AY 2012-13.

Final Conclusion: The petition is allowed; the reopening notice and consequential orders are quashed and the petition disposed of.

Reopening of assessment - mere change of opinion - reason to believe - tangible material - disclosure of material facts - query during assessment and application of mind - acceptance of assessee's response - reassessment jurisdiction

Reopening of assessment - mere change of opinion - tangible material - query during assessment and application of mind - acceptance of assessee's response - Validity of reassessment under Section 143 read with Section 147 in respect of waiver of loan where the matter was queried during original assessment and the assessee had furnished detailed submissions. - HELD THAT: - The Court held that while the Assessing Officer has jurisdiction to reopen an assessment if he has reason to believe that income has escaped assessment, such belief must rest on some tangible material and not merely on a change of opinion. The tribunal's finding that the issue of waiver of loan was specifically raised during the original assessment proceedings and that the assessee had furnished detailed submissions meant that the Assessing Officer had applied his mind and effectively formed an opinion during the assessment. Where queries are raised in assessment proceedings and the assessee's responses are on record, non-discussion of those responses in the assessment order is to be treated as formation of an opinion accepting the assessee's view, which precludes reopening merely because the department later takes a different view. The Court relied on the legal principle that reopening requires fresh tangible material and that mere absence of mention in the assessment order does not imply lack of application of mind when queries and replies are in the record (see Commissioner of Income Tax vs. Kelvinator of India Limited , Aroni Commercials Ltd. vs. Assistant Commissioner of Income Tax , and Marico Ltd. vs. Assistant Commissioner of Income -tax ). Applying these principles to the facts, the Court concluded that no new tangible material justified reopening and that the reassessment was therefore invalid. [Paras 9, 10, 11, 12]

Reassessment was bad in law as it amounted to a mere change of opinion in respect of the waiver of loan matter which had been queried and responded to in the original assessment; ITAT's decision setting aside the reassessment upheld.

Final Conclusion: Appeal dismissed. The reassessment under Section 143 read with Section 147 for Assessment Year 2007-2008 was invalid as it rested on a mere change of opinion despite the issue having been raised and answered in the original assessment proceedings; no substantial question of law is made out.

Reason to believe - reopening of assessment - reasons for issuance of notice under Section 148 - jurisdiction under Section 147 - tangible material - failure to disclose fully and truly all material facts - reasons cannot be supplemented by affidavit or oral submissions - safeguard against arbitrary reopening of concluded assessment

Reasons for issuance of notice under Section 148 - reason to believe - tangible material - failure to disclose fully and truly all material facts - reasons cannot be supplemented by affidavit or oral submissions - Sufficiency and test of reasons recorded for reopening an assessment under Section 148/147. - HELD THAT: - The Court applied settled law that the validity of reopening must be tested solely on the reasons recorded at the time the Section 148 notice is issued and such reasons cannot be improved, supplemented or substituted by affidavit or oral submissions. While under the substituted provision of Section 147 the existence of a 'reason to believe' that income has escaped suffices to confer jurisdiction, the reasons recorded must disclose the Assessing Officer's mind, be clear and unambiguous, provide a link between conclusion and the evidence and, where more than four years have elapsed, identify the material fact that was not fully and truly disclosed by the assessee. Reasons that merely refer to information received in general terms without stating how that material connects to the assessee or without identifying the undisclosed fact are inadequate. The Court emphasised that the tangible material relied upon may originate from any source, but the reasons must clearly state the connection and the specific undisclosed material fact relied upon; absent such disclosure, the reasons fail to sustain jurisdiction to reopen. [Paras 2, 3, 4, 5, 6]

Reasons recorded in the impugned notice are inadequate because they do not disclose the Assessing Officer's mind, do not identify the material fact allegedly not disclosed by the assessee, and cannot be supplemented by affidavit or oral pleadings.

Reopening of assessment - jurisdiction under Section 147 - tangible material - safeguard against arbitrary reopening of concluded assessment - Whether the impugned notice dated 30th March 2019 and the assessment order dated 5th September 2019 were issued with jurisdiction. - HELD THAT: - Applying the requirement that, particularly after the four-year period, the Assessing Officer must disclose the tangible material and the specific undisclosed fact which led to the belief that income had escaped assessment, the Court examined the recorded reasons. The reasons referred to information from a search and survey in the case of M/s Evergreen Enterprises and statements regarding alleged cash lending but did not state how the persons or documents referred to were connected to the petitioner nor did they state that Bharat Sanghavi was an employee of the petitioner; crucial links and the timing of the search relative to the assessment order were not disclosed. Because the reasons lacked any explanation of the connection between the material relied upon and the petitioner and failed to identify the material fact not disclosed, the Assessing Officer lacked jurisdiction to reopen the assessment in this case. [Paras 7, 8, 9]

Impugned notice and the subsequent assessment order were issued without jurisdiction and are quashed and set aside; any consequent notices or demands also stand quashed and set aside.

Final Conclusion: The petition succeeds: the notice dated 30th March 2019 and the assessment order dated 5th September 2019 were quashed and set aside for want of jurisdiction for reopening; petition disposed of with no order as to costs.

Maintainability of writ petitions - statutory appeal under Section 260A - CBDT monetary limit policy and its application - exceptions to CBDT monetary limit (cascading effect doctrine) - exercise of writ jurisdiction under Article 226 - exceptions to the rule of alternate remedy - binding effect of CBDT directions issued under Section 268A(4) - Surya Herbal Ltd. caveats on application of Circulars

Maintainability of writ petitions - statutory appeal under Section 260A - CBDT monetary limit policy and its application - exceptions to CBDT monetary limit (cascading effect doctrine) - Whether writ petitions under Article 226 are maintainable when an appeal under Section 260A is available and the CBDT Circular limits filing of appeals because the tax effect is below the prescribed monetary threshold, where the matter does not fall within the exceptions in the Circular. - HELD THAT: - The Court held that an effective statutory remedy in the form of an appeal under Section 260A existed and, in the facts of these cases, the tax effect was below the monetary limit prescribed by the CBDT Circular dated 8 August 2019. The subject-matter did not fall within the exceptions enumerated in paragraph 10 of the CBDT Circular as amended, and the petitioners did not invoke the statutory remedy to demonstrate that the Circular should not apply ipso facto on account of a cascading effect. Paragraph 7 of the Circular was noted to preclude any presumption of departmental acquiescence where an appeal is not filed for monetary-limit reasons, but it does not substitute the statutory remedy. Reliance on the Supreme Court's decisions (including Surya Herbal Ltd. and the principles summarized in Radha Krishan Industries) led the Court to conclude that none of the established exceptions to decline the alternate remedy rule were attracted. In these circumstances the High Court declined to exercise its discretionary writ jurisdiction under Article 226 to direct departure from the statutory appellate route and the CBDT policy, and dismissed the petitions. [Paras 9, 11, 12, 13, 14]

Writ petitions dismissed; High Court declines to exercise jurisdiction under Article 226 where appeal under Section 260A was available and the matters did not fall within the Circular's exceptions.

Final Conclusion: The petitions are dismissed because an effective statutory appeal under Section 260A was available, the tax effect fell below the CBDT monetary threshold and the matters did not qualify for the Circular's exceptions; the High Court therefore declined to exercise extraordinary writ jurisdiction under Article 226.

Reopening of assessment - change of opinion - new tangible material as jurisdictional fact - assumption of jurisdiction under Section 147 of the Income Tax Act - income escaping assessment - taxability under Section 56(2)(viib) of the Income Tax Act - valuation of shares as per Rule 11UA(2)(a)

Reopening of assessment - change of opinion - new tangible material as jurisdictional fact - assumption of jurisdiction under Section 147 of the Income Tax Act - Validity of reopening assessment under Section 147 where no new tangible material has come to the notice of the Assessing Officer and reopening amounts to a change of opinion. - HELD THAT: - The Court agreed with the Single Bench that the reasons for reopening did not disclose any fresh or tangible material newly discovered in 2018 which would justify exercise of jurisdiction under Section 147. Reliance on the principles in Kelvinator India Limited and Parashuram Pottery Works was noted to the effect that existence of new tangible material is a jurisdictional fact and without it assumption of jurisdiction is impermissible. The court observed that permitting reopening on the same set of materials would allow successive officers to reapply their minds and reach different conclusions, which is not permissible. Consequently, the reopening was held to be in substance a change of opinion and not sustainable.

Reopening quashed as invalid because no new tangible material justified reassessment and the action amounted to a change of opinion.

Valuation of shares as per Rule 11UA(2)(a) - taxability under Section 56(2)(viib) of the Income Tax Act - income escaping assessment - Whether the alleged omission of consideration received on issue of preference shares for assessment (chargeable under Section 56(2)(viib)) constituted income escaping assessment warranting reassessment. - HELD THAT: - On the facts the Court noted that the return and annexed financials disclosed two lots of shares and their valuation; the Assessing Officer had considered and adjusted valuation of the first lot and left the second lot unaltered. The Single Bench found no material indicating that the second lot had escaped the original assessment or that relevant information was newly discovered after completion of assessment. In absence of any fresh material or omission of which the Assessing Officer was unaware, there was no basis to treat the matter as income escaping assessment requiring reassessment under Section 147.

No addition could be sustained as the share issue and its valuation were already on record and there was no material to show income had escaped assessment.

Final Conclusion: The Single Bench's order quashing the reassessment proceedings was upheld: the reopening was held to be a case of change of opinion lacking new tangible material and there was no justification for treating the share issue as income escaping assessment under Section 147; the writ appeal is dismissed.

Remand for fresh adjudication - burden of proof for unexplained cash deposits - taxability of capital gain in hands of person other than registered owner

Burden of proof for unexplained cash deposits - remand for fresh adjudication - Whether the addition of Rs. 5,75,000 as unexplained cash should be sustained or whether the assessee should be given opportunity to substantiate the source. - HELD THAT: - The Tribunal noted that the assessee had during assessment explained that Rs. 5,75,000 was given by his son after sale of livestock and trees, but that the A.O. had rejected the explanation without examining the son or confronting corroborative evidence. The assessee's counsel offered to produce the son for examination and to furnish cogent evidence. Considering the totality of facts and in the interest of justice, the Tribunal found it appropriate to restore the issue to the file of the A.O. with a direction to afford the assessee an opportunity to substantiate the cash deposit and to examine Mr. Tinku Chaudhary; the A.O. is to decide the matter on facts and law after hearing the assessee. [Paras 7]

Addition of Rs. 5,75,000 remanded to the A.O. for fresh adjudication after giving the assessee opportunity to produce evidence and to have the son examined.

Taxability of capital gain in hands of person other than registered owner - remand for fresh adjudication - Whether the long term capital gain arising from sale of the land (claimed to be in the name of the assessee's wife) is taxable in the hands of the assessee. - HELD THAT: - The Tribunal observed that the assessment recorded capital gain on the basis that the assessee had treated the property as his own, whereas the assessee contends the asset belonged to his wife and the sale proceeds were her own. Given the factual dispute as to ownership and the manner in which the lower authorities have dealt with the matter, the Tribunal found it appropriate in the interest of justice to remit the issue to the A.O. for fresh adjudication on facts and law after giving the assessee an opportunity of being heard. [Paras 8]

Addition of long term capital gains remanded to the A.O. for fresh adjudication as per facts and law after affording the assessee opportunity to be heard.

Final Conclusion: Appeal partly allowed for statistical purposes by remanding the additions of Rs. 5,75,000 (unexplained cash) and Rs. 7,80,851 (long term capital gains) to the file of the Assessing Officer for fresh adjudication after affording the assessee appropriate opportunity to produce evidence and be heard.

Presumptive taxation under Section 44AE - adequacy of explanation for cash deposits - addition as unexplained cash credit under Section 68 - estimation of income on preponderance of probability - remand for de novo quantification and verification - penalty proceedings to await outcome of reassessment

Presumptive taxation under Section 44AE - acceptance of declared business receipts - Acceptance of the assessee's declared grocery/potato/onion business receipts and related presumptive income. - HELD THAT: - The Tribunal accepted the assessee's contention that gross receipts from the grocery/potato/onion business at the level declared in the return (resulting in presumptive income of Rs. 1,45,410) should be accepted, noting consistency with earlier assessment years and thereby upholding the declared figure rather than the AO's estimate. This conclusion adopts the assessment that the declared gross receipt from that business is credible and should be reflected in the assessment. [Paras 7]

Declared gross receipts from the grocery/potato/onion business and the resultant presumptive income of Rs. 1,45,410 are accepted.

Presumptive taxation under Section 44AE - estimation of income on preponderance of probability - Genuineness of claimed gross freight receipts from the mini truck and the entitlement to presumptive income under Section 44AE. - HELD THAT: - The Tribunal concurred with the view of the authorities below that the claimed gross freight receipts of Rs. 75,81,840 from a mini truck were not believable on the preponderance of probabilities given the monthly average implied. However, the Tribunal also noted that both AO and CIT(A) had accepted the assessee's entitlement to presumptive taxation under Section 44AE and the presumptive income offered at Rs. 90,000; that acceptance is affirmed. Thus while the claimed high gross receipts are disbelieved, the assessee's eligibility for presumptive taxation and the accepted presumptive income are sustained. [Paras 8]

Claimed large gross freight receipts from the mini truck are not accepted as genuine; entitlement to presumptive taxation under Section 44AE and the presumptive income declared (Rs. 90,000) are affirmed.

Adequacy of explanation for cash deposits - addition as unexplained cash credit under Section 68 - remand for de novo quantification and verification - Whether the cash deposits in the assessee's bank account are to be treated as unexplained cash credit and quantum of addition under Section 68. - HELD THAT: - The Tribunal held that the matter of cash deposits requires fresh consideration. It set aside the CIT(A)'s enhancement treating the entire credits as unexplained under Section 68 and remanded the matter to the AO for estimation of income. The AO is directed to consider both deposits and withdrawals, allocate reasonable gross receipts between the mini-truck and the grocery business (accepting Rs. 18,17,625 from grocery and the presumptive treatment for the truck), and compute a reasonable estimate of income in accordance with law. The assessee was directed to file written submissions and documents; the AO must afford an opportunity of hearing if sought. The Tribunal noted contradictions in the assessment record and the absence of a paper book, which justified remand rather than final adjudication. [Paras 6, 9]

Impugned enhancement under Section 68 set aside; matter remanded to the AO for limited de novo estimation of income after considering withdrawals, reasonable allocation of receipts, and allowing the assessee to substantiate claims.

Penalty proceedings to await outcome of reassessment - remand for de novo quantification and verification - Validity of penalty imposed under Section 271(1)(c) in light of remand on quantum. - HELD THAT: - Given the Tribunal's remand on quantum for fresh estimation and verification, it set aside the CIT(A)'s penalty order and directed the AO to proceed afresh in accordance with law after hearing the assessee. The penalty decision is therefore not finally adjudicated by the Tribunal but remitted for reconsideration consistent with the outcome of the reassessment exercise. [Paras 10]

Penalty order under Section 271(1)(c) set aside and remitted to the AO to proceed de novo after hearing the assessee.

Final Conclusion: Quantum appeal is partly allowed inasmuch as the grocery income and presumptive truck income are accepted, but the enhancement treating bank credits as unexplained is set aside and remanded to the AO for limited recomputation; penalty order is set aside and remitted for de novo consideration.

Deduction under section 80P(2) of the Income-tax Act for co-operative societies engaged in the business of banking or providing credit facilities to members - interest income from investment of surplus funds or deposits as profits and gains of business attributable to banking activity - treatment of consequential penal interest/interest under sections 234A/234B where primary addition is set aside

Deduction under section 80P(2) of the Income-tax Act for co-operative societies engaged in the business of banking or providing credit facilities to members - interest income from investment of surplus funds or deposits as profits and gains of business attributable to banking activity - Whether interest earned by the assessee-society from investment of surplus funds/deposits with scheduled banks is eligible for deduction under section 80P(2) as profits and gains of business attributable to its banking/credit activity. - HELD THAT: - The Tribunal noted that the assessee is a primary agricultural credit society carrying on the business of banking and providing credit facilities to members and also accepts deposits from farmer members. The Tribunal held that in the banking/credit business of a co-operative society, acceptance of deposits and the subsequent investment of those deposits or surplus funds form part of the business activity. Consequently, interest earned from investing such surplus/deposits in scheduled banks is income attributable to the banking/credit activities referred to in section 80P(2) and is therefore deductible under that provision. On this basis the Tribunal set aside the CIT(A)'s view and directed the Assessing Officer to allow the deduction in respect of the interest income from such investments. [Paras 9]

Addition of Rs. 878,270 relating to interest from Axis Bank and IDBI Bank set aside; deduction under section 80P(2) to be allowed and Assessing Officer directed to give effect.

Treatment of consequential penal interest/interest under sections 234A/234B where primary addition is set aside - Whether the charging of interest under sections 234A and 234B survives after the main addition is set aside. - HELD THAT: - The Tribunal treated the challenge to the imposition of interest under sections 234A and 234B as consequential. Having set aside the primary addition relating to the interest income, the Tribunal dismissed the ground against charging of interest as consequential in nature. [Paras 10]

Ground challenging interest under sections 234A and 234B dismissed as consequential.

Final Conclusion: The appeal is partly allowed: the Tribunal allowed deduction under section 80P(2) in respect of interest earned on investment of surplus/deposits with scheduled banks and set aside the addition; the challenge to interest under sections 234A/234B was dismissed as consequential.

Protective assessment - substantive assessment - protective assessment cannot precede substantive assessment - protective addition

Protective assessment - protective addition - substantive assessment - protective assessment cannot precede substantive assessment - Validity of deletion of the protective addition made by the Assessing Officer in the assessee's hands when no substantive addition had been made in the case of the M/s. Society of Education. - HELD THAT: - The CIT(A) held that in absence of any prior substantive addition in the case of M/s. Society of Education a protective assessment could not be sustained in the hands of the assessee and therefore deleted the protective addition. The Tribunal noted that the Revenue did not controvert or challenge the CIT(A)'s factual finding that no substantive addition had been made in the Society's case. In law, protective assessment is ancillary to and successive upon a substantive assessment: there must first be a substantive assessment/addition in the person in whose hands the AO prima facie considers the income taxable before a protective assessment can be validly made in another person's hands. Absent such prior substantive assessment, the AO's protective addition in the assessee's hands was not sustainable. Having regard to the unchallenged factual finding and the settled principle that a protective assessment cannot precede a substantive assessment, the Tribunal found no infirmity in the deletion of the protective addition by the CIT(A) and confirmed that deletion. [Paras 6, 8, 9]

Deletion of the protective addition by the CIT(A) is confirmed and the protective assessment in the hands of the assessee is held to be unsustainable where there was no substantive addition in the case of M/s. Society of Education.

Final Conclusion: The Revenue's appeal is dismissed; the order of the CIT(A) deleting the protective addition is confirmed because protective assessment cannot be sustained in the absence of a prior substantive assessment in the relevant taxpayer's case.

Treatment of gross profit versus net profit - apportionment of common/administrative expenses among multiple activities - deduction under section 80P(2)(c)(ii) of the Act - scope of section 80P(2)(c) for activities not covered by clauses (a) or (b)

Treatment of gross profit versus net profit - apportionment of common/administrative expenses among multiple activities - Whether the gross profit arising from sale of ghee could be treated as the taxable income or whether the net profit after apportionment of common expenses declared by the assessee must be adopted. - HELD THAT: - The Tribunal held that the assessee, a cooperative society carrying out multiple activities and maintaining common books, infrastructure and manpower, necessarily incurs establishment and administrative expenses which must be apportioned to respective activities. It was not permissible for the revenue to treat gross profit as taxable income without pointing out any cogent infirmity in the assessee's apportionment. Where indirect/administrative expenses legitimately relate to the trading activity, they cannot be ignored merely because they are common; the correct approach is to allow net profit attributable to the activity after reasonable apportionment. Accordingly the Tribunal set aside the findings of the assessing officer and the CIT(A) and directed the AO to accept the net profit declared by the assessee from sale of ghee as taxable income.

Net profit declared by the assessee from sale of ghee to be taken as taxable income; addition treating gross profit as income deleted.

Deduction under section 80P(2)(c)(ii) of the Act - scope of section 80P(2)(c) for activities not covered by clauses (a) or (b) - Whether the assessee was entitled to claim Rs. 50,000 deduction under section 80P(2)(c)(ii) in addition to relief under clause (b). - HELD THAT: - The Tribunal examined the statutory scheme of section 80P(2)(c) which grants a specified deduction in respect of profits and gains attributable to activities other than those covered by clauses (a) or (b). Following the reasoning of precedents applying the expression 'profits and gains' broadly to income from activities (including rental, investment, trading etc.), the Tribunal held that incomes from activities not covered by clause (b) are eligible for the basic deduction under clause (c)(ii). The assessing officer and CIT(A) were therefore in error in disallowing the Rs. 50,000 deduction on the ground that clause (b) applied. The matter was allowed and the AO directed to grant the deduction under section 80P(2)(c)(ii).

Deduction of Rs. 50,000 under section 80P(2)(c)(ii) to be allowed.

Final Conclusion: The appeal is allowed: the net profit declared by the assessee from sale of ghee is to be adopted as taxable income instead of treating gross profit as income, and the deduction of Rs. 50,000 under section 80P(2)(c)(ii) is to be granted; the AO is directed to give effect accordingly.

Arm's length price - Comparable Uncontrolled Price (CUP) method - arithmetical mean - weighted average mean - proviso to Section 92C(2) - tolerance band of +/-3% - remedy before the Dispute Resolution Panel (DRP) versus appeal to the Commissioner (Appeals) - purpose test for characterisation of subsidy - capital receipt versus revenue receipt - Casus omissus

Comparable Uncontrolled Price (CUP) method - arithmetical mean - proviso to Section 92C(2) - weighted average mean - Validity of TPO's benchmarking by selecting the lowest comparable price instead of taking the arithmetical mean for determining Arm's Length Price of domestic specified transactions - HELD THAT: - The Tribunal held that the CUP method was the most appropriate method and that where more than one comparable price exists the proviso to Section 92C(2) mandates taking the arithmetical mean as the arm's length price. The TPO's approach of cherry-picking the minimum price from among comparables, ignoring other available comparable prices, was prima facie perverse and contrary to the statutory proviso. The Tribunal rejected the Revenue's alternative plea to apply a weighted average, noting that the statute expressly requires arithmetical mean and that judicially supplying a 'weighted mean' would amount to importing a casus omissus which courts cannot do. Consequently the transfer pricing adjustment based on the TPO's benchmarking was deleted. [Paras 15, 16, 17, 19, 20]

TPO's benchmarking by taking the lowest comparable price rejected; arithmetic mean (as per proviso to Section 92C(2)) governs determination of ALP and the CIT(A)'s deletion of the TP adjustment is upheld.

Remedy before the Dispute Resolution Panel (DRP) versus appeal to the Commissioner (Appeals) - Whether the assessee's failure to object to the draft assessment order before the DRP amounted to acceptance of the TPO's adjustment - HELD THAT: - The Tribunal observed that the statute provides alternate remedies where a taxpayer disagrees with a draft assessment containing TP adjustments: (a) object to the draft before the DRP, or (b) after final assessment, prefer an appeal to the Commissioner (Appeals). The assessee availed the latter remedy. Choosing to challenge the TP adjustment before the CIT(A) rather than filing objections with the DRP does not amount to automatic acceptance of the draft assessment order and cannot be impugned by the AO/Revenue. [Paras 21, 22]

Assessee's election to appeal to the CIT(A) in lieu of filing objections before the DRP does not constitute acceptance of the draft assessment order; Revenue's contention rejected.

Purpose test for characterisation of subsidy - capital receipt versus revenue receipt - capital incentives under State Industrial Scheme - Characterisation of power subsidy and VAT subsidy received under the State Industrial Policy Scheme - whether capital or revenue in nature - HELD THAT: - Applying the purpose test, the Tribunal (following binding Supreme Court and jurisdictional High Court authorities) examined the State of West Bengal's Industrial Promotion Assistance scheme and concluded that the subsidies were granted to attract investment, set up new units or expand existing units and to promote industrialisation and employment. The object and intent of the scheme were capital in nature; the form or mode of payment was held irrelevant. The Tribunal therefore upheld the CIT(A)'s finding that both power subsidy and VAT subsidy were capital receipts not exigible to income-tax for the relevant year. [Paras 31, 32, 33, 34, 36]

Power subsidy and VAT subsidy under the State Industrial Scheme are capital receipts under the purpose test and not taxable as income for AY 2013-14; CIT(A)'s decision upheld.

Final Conclusion: Revenue's appeal is dismissed; the transfer pricing downward adjustment is deleted for want of correct benchmarking under the proviso to Section 92C(2), the assessee's choice to appeal to the CIT(A) does not amount to acceptance of the draft assessment order, and the State Industrial Scheme subsidies are held to be capital receipts not exigible to income-tax for AY 2013-14.

Deductibility of employees' contribution to PF/ESI where deposited after statutory due date but before filing of return - operation and scope of section 36(1)(va) read with section 43B in relation to employees' contribution - effect of Finance Act, 2021 amendment and its prospective application from 1 April 2021 - prima facie adjustments under section 143(1)(a)(iv) by CPC

Deductibility of employees' contribution to PF/ESI where deposited after statutory due date but before filing of return - operation and scope of section 36(1)(va) read with section 43B in relation to employees' contribution - Employees' contribution to PF/ESI paid after the due dates under the respective enactments but before the due date for filing the return under section 139(1) is not liable to be disallowed under section 36(1)(va) read with section 43B for the impugned assessment year. - HELD THAT: - The Tribunal examined binding decisions of the jurisdictional High Court and consistent appellate pronouncements which hold that where employees' contributions collected by the assessee are deposited before the due date of filing the return under section 139(1), such payments cannot be disallowed under section 43B read with section 36(1)(va). The Tribunal recorded that the amounts in issue were deposited before the return filing due date and that the amendment by the Finance Act, 2021 does not alter the position for assessment years prior to its stated effective date. Given the jurisdictional precedent and the admitted facts that deposit preceded filing of the return, the adjustment made during processing could not be sustained and had to be deleted. [Paras 6, 7]

Addition made by CPC disallowing employees' contribution to PF/ESI was deleted.

Effect of Finance Act, 2021 amendment and its prospective application from 1 April 2021 - prima facie adjustments under section 143(1)(a)(iv) by CPC - The amendment by the Finance Act, 2021 (explanation to section 36(1)(va) and amendment to section 43B) takes effect from 1 April 2021 and does not apply to assessment year 2019-20; consequently, the CPC's processing adjustment under section 143(1) could not rely on that amendment for the impugned year. - HELD THAT: - The Tribunal noted the explanatory memorandum to the Finance Act, 2021 expressly stating the amendments apply from 1 April 2021 and thereby to assessment year 2021-22 and subsequent years. In the absence of any express retrospective enactment, the Tribunal declined to give retrospective effect to the amendment. While the CPC's adjustment was characterised as a prima facie adjustment under section 143(1)(a)(iv), reliance on the 2021 amendment for the 2019-20 assessment year was not permissible and could not uphold the disallowance. [Paras 6]

Amendment of Finance Act, 2021 is prospective and inapplicable to AY 2019-20; CPC could not sustain the disallowance for that year on that basis.

Final Conclusion: Following jurisdictional and consistent Tribunal precedents, and on the admitted facts that employees' PF/ESI contributions were deposited before filing of the return for AY 2019-20, the addition made by CPC under section 143(1) was deleted; the Finance Act, 2021 amendment applies prospectively from 1 April 2021 and does not affect the impugned assessment year. The assessee's appeal is allowed.

Service of notice under section 143(2) as a sine qua non for an assessment under section 143(3) - pecuniary jurisdiction of the Income-tax Officer - CBDT Instruction No. 1/2011 fixing monetary limits in mofussil areas - jurisdictional defect rendering assessment order null and void

Service of notice under section 143(2) as a sine qua non for an assessment under section 143(3) - pecuniary jurisdiction of the Income-tax Officer - CBDT Instruction No. 1/2011 fixing monetary limits in mofussil areas - jurisdictional defect rendering assessment order null and void - Validity of the assessment framed for Assessment year 2015-16 in view of issuance of notice by an ITO lacking pecuniary jurisdiction and non-issuance of the statutory notice by the DCIT within the prescribed time. - HELD THAT: - The CBDT Instruction No. 1/2011 increased monetary limits for assignment of cases in mofussil areas, conferring on ITOs jurisdiction over non-corporate returns only up to the specified limit (upto Rs. 15 lakhs). The assessee, a non-corporate individual, declared income above that limit. Nevertheless, ITO, Ward-4(3) issued notice under section 143(2) and later transferred the file to DCIT, Circle-4. The DCIT issued a notice under section 142(1) but did not issue the statutory notice under section 143(2) within the time prescribed. The Tribunal applied the settled principle that issuance of a valid notice under section 143(2) is a sine qua non to confer jurisdiction to make an assessment under section 143(3). Because the ITO who issued the 143(2) notice lacked pecuniary jurisdiction under the CBDT instruction, that notice could not validly confer jurisdiction; and the DCIT, having taken over after the statutory time for issuing a 143(2) notice had expired, could not cure the defect. The jurisdictional omission went to the root of the assessment proceeding, rendering the assessment order coram non judice and legally unsustainable. Consequent to this finding, the Tribunal quashed the assessment order without adjudicating other grounds, as they became academic. [Paras 6]

The assessment for Assessment year 2015-16 is void for want of jurisdiction and is quashed; the assessee's appeal is allowed.

Final Conclusion: The Tribunal allowed the additional legal ground, holding that because the ITO lacked pecuniary jurisdiction under CBDT Instruction No. 1/2011 and the DCIT did not issue the mandatory 143(2) notice within the statutory time, the assessment for Assessment year 2015-16 is null and void and is quashed; other grounds were left undecided as academic.

Revisionary jurisdiction under Section 263 - Lack of inquiry / inadequate verification - Acceptance of assessee's explanation without verification - Difference of opinion between Assessing Officer and Commissioner - Explanation-2 to Section 263 (Finance Act, 2015)

Revisionary jurisdiction under Section 263 - Lack of inquiry / inadequate verification - Acceptance of assessee's explanation without verification - Whether the Principal Commissioner of Income Tax validly exercised revisionary jurisdiction under Section 263 by holding the assessment to be erroneous and prejudicial to revenue on account of lack of enquiry into the source of cash deposits claimed to be received as lease consideration. - HELD THAT: - The Tribunal examined the assessment record and the PCIT's findings that the AO accepted the assessee's explanation that cash was received as lease consideration from Shri Pradeep Singh without making required inquiries. The PCIT noted a contradiction between the affidavit (stating the land was leased to Shri Pradeep Singh) and the nakal jamabandi (which recorded the assessee as cultivator), and observed that the AO did not seek girdawari report, did not verify the affidavit's veracity, nor inquire into the alleged lease deed or the stated source of cash. The Tribunal agreed that these conflicting documents should have prompted further inquiry and that mere acceptance of the documents filed by the assessee did not amount to adequate verification. Distinguishing precedents relied upon by the assessee as being factually different (where the AO had carried out inquiries and applied his mind), the Tribunal held that this was not merely a difference of opinion but a case where the AO's acceptance was not justified by the material on record. Applying the principle in Explanation-2 (as inserted by the Finance Act, 2015) that an assessment completed without inquiries or verification which ought to have been made may be erroneous and prejudicial to revenue, the Tribunal upheld the PCIT's exercise of revisionary jurisdiction under Section 263. [Paras 3, 10, 14]

The PCIT's order under Section 263 setting aside the assessment for lack of required inquiry is upheld and the assessee's challenge is dismissed.

Final Conclusion: The appeal is dismissed; the order passed by the Principal Commissioner of Income Tax under Section 263 is upheld on the ground that the Assessing Officer accepted the assessee's explanation without conducting necessary inquiries or verifications, rendering the assessment erroneous and prejudicial to revenue.

Qualification for exemption under section 54F of the Income-tax Act - characterisation of multiple residential units in a single building as one residential house - effect of amendment by Finance (No.2) Act, 2014 substituting "a residential house" with "one residential house" in proviso to section 54F(1) - ownership of more than one residential house

Qualification for exemption under section 54F of the Income-tax Act - characterisation of multiple residential units in a single building as one residential house - ownership of more than one residential house - Whether the assessee, who purchased a single building comprising two vertical units (ground floor self-occupied and first floor let out) and holding a single Khata/PID, is entitled to deduction under section 54F for AY 2016-17 or is excluded on the ground of owning more than one residential house. - HELD THAT: - The Tribunal examined the nature of the property purchased and concluded that a building which is residential in character does not cease to be "one residential house" merely because it contains multiple independent units or separate entrances for different floors. The decision relied on co-ordinate tribunal and High Court reasoning that the expression "a residential house" (and, by necessary application, the amended phrase "one residential house") is to be construed so as to recognise that a single building may contain several units without losing its character as one residential house. The Tribunal noted earlier consistent rulings of its benches treating vertically divided units in the same building as a single residential house for the purpose of sections 54/54F and observed that those decisions had been considered post-amendment where similar facts arose. In the present case the building had a single municipal/Khata/PID number and constituted one independent building though comprising two units; that factual finding led to the legal conclusion that the assessee did not own more than one residential house on the date of transfer and therefore met the requirement for claiming deduction under section 54F. The Tribunal directed the AO to allow the deduction in conformity with the stated view and past coordinate decisions. [Paras 16, 17, 18]

Assessee entitled to deduction under section 54F for AY 2016-17 as the purchased property is "one residential house" despite comprising two units; appeal allowed and matter remitted to AO for compliance.

Final Conclusion: The Tribunal allowed the appeal, holding that a single residential building containing two units (ground and first floor) with a single Khata/PID is to be treated as one residential house for the purposes of section 54F and directed the AO to grant the deduction for AY 2016-17.

Amendment of Bills of Entry - administrative inaction - opportunity of personal hearing - interim protection from coercive action - judicial direction to decide pending representations

Amendment of Bills of Entry - judicial direction to decide pending representations - opportunity of personal hearing - interim protection from coercive action - Respondents are directed to consider and decide the petitioner's letters requesting amendment of 35 Bills of Entry and to refrain from coercive action until such decision is taken. - HELD THAT: - The High Court, on the limited prayer made by the petitioner, ordered that the letters/applications filed by the petitioner seeking substitution of GSTIN and address in 35 Bills of Entry be decided by Respondent Nos.5, 6, 8 and 10 within twelve weeks. The respondents are directed to afford the petitioner an opportunity of personal hearing before deciding the requests. The court granted interim protection by prohibiting any coercive action against the petitioner until the said letters are disposed of. The order is procedural and does not adjudicate the substantive merits of entitlement to IGST credit or the correctness of the amendments sought; it mandates expeditious administrative consideration in accordance with law.

Respondents Nos.5, 6, 8 and 10 to decide the petitioner's letters seeking amendment of the 35 Bills of Entry within twelve weeks after giving personal hearing; no coercive action to be taken against the petitioner until disposal of those letters.

Final Conclusion: Writ petition disposed by directing the specified respondents to decide the petitioner's requests to amend the 35 Bills of Entry within twelve weeks, after personal hearing, with interim protection against coercive measures until such decision is rendered.

Absolute confiscation - CDSCO Registration Certificate - restricted goods (not registered with Licensing Authority) - discretion to impose fine in lieu of confiscation - mis declaration of goods and manufacturer details - admissions as evidence of intent to evade customs duty

Absolute confiscation - CDSCO Registration Certificate - restricted goods (not registered with Licensing Authority) - discretion to impose fine in lieu of confiscation - admissions as evidence of intent to evade customs duty - Absolute confiscation of goods not declared in the CDSCO Registration Certificate was permissible in the facts of the case. - HELD THAT: - The Tribunal examined the legal effect of CDSCO registration and accepted that cosmetic imports not mentioned in the CDSCO Registration Certificate qualify as restricted goods. The statutory scheme for cosmetic imports requires registration by the Central Licensing Authority; goods not included therein are therefore subject to restriction. While the law affords the confiscating authority discretion to impose a fine instead of confiscation, that discretion does not oust the authority's power to order absolute confiscation. On the facts the appellant had admitted mis declaration of the goods and incorrect manufacturer details and also lacked the requisite CDSCO registration for the items absolutely confiscated. The Tribunal treated those admissions as voluntary and sufficient evidence, supporting an inference of intent to evade customs duty. In view of these admissions and the status of the goods as unregistered/restricted, the Tribunal found no infirmity in the adjudicating authority's exercise of discretion to order absolute confiscation, confirm the re determined assessable value and duty, and impose penalty.

The absolute confiscation of the goods not declared in the CDSCO Registration Certificate is upheld; the duty demand, interest and penalty are sustained.

Final Conclusion: The appeal is dismissed; the adjudicating authority's order upholding absolute confiscation of the unregistered cosmetic items, the re determined assessable value and the consequential demand and penalty is affirmed.

Refund of Special Additional Duty of Customs (SAD) - limitation for refund claims under a notification prescribing period for filing - conditional exemption under Notification No.102/2007-Cus (refund subject to subsequent sale and compliance with conditions) - amendment prescribing one-year period for refund under Notification No.93/2008-Cus - failure to comply with deficiency memos and show-cause proceedings as ground for rejection

Refund of Special Additional Duty of Customs (SAD) - limitation for refund claims under a notification prescribing period for filing - conditional exemption under Notification No.102/2007-Cus (refund subject to subsequent sale and compliance with conditions) - amendment prescribing one-year period for refund under Notification No.93/2008-Cus - Applicability of limitation prescribed by Notification No.93/2008 to refund claims made under Notification No.102/2007 for SAD - HELD THAT: - The Tribunal held that the refund scheme under Notification No.102/2007 is conditional upon completion of subsequent sale and compliance with the specified conditions (payment of SAD at import, invoicing indicating non-admissibility of credit, filing refund claim, payment of sales tax/VAT, and submission of documents evidencing payment and invoices). Because the entitlement to refund arises only after the sale is complete, a rigid one-year limitation measured from the date of payment of SAD as introduced by Notification No.93/2008 is inapposite to the statutory scheme. The Tribunal relied on the decision of the High Court of Delhi in Sony India (as relied upon by the appellant) and observed that, in the facts of this case and within the territorial jurisdiction of that High Court, the limitation rule could not be invoked to bar the refund claim calculated simply from the date of payment of SAD. The Tribunal therefore concluded that the refund claims could not be held barred by limitation on the ground of counting one year from payment of SAD.

The limitation period prescribed by Notification No.93/2008 (one year from date of payment of SAD) was held not to bar the refund claims under Notification No.102/2007 because entitlement to refund arises only after subsequent sale and compliance with the notification's conditions.

Failure to comply with deficiency memos and show-cause proceedings as ground for rejection - procedural compliance and evidentiary requirements for refund - upholding rejection on alternative grounds - Validity of rejection of the refund claims on account of observed discrepancies and non compliance with deficiency memos and proceedings - HELD THAT: - Independent of the limitation question, the Tribunal found that the Department had pointed out multiple substantive deficiencies in the refund applications: alleged time bar for three claims, sale invoices not being self certified, invoices showing NIL VAT/CST, and absence of VAT returns for the relevant period. The appellants failed to respond to deficiency memos, did not furnish satisfactory explanations or documents, and did not appear before investigating or adjudicating authorities despite opportunity. On that basis the Tribunal held that the adjudicating authority was justified in rejecting the refund claims for these deficiencies. Consequently, although the Tribunal rejected the limitation bar, it upheld the order of rejection on these alternative and substantive grounds.

Rejection of the refund claims was upheld on grounds of substantive discrepancies and non compliance with deficiency memos and proceedings, notwithstanding that limitation was held inapplicable.

Final Conclusion: The Tribunal held that the one year limitation prescribed by Notification No.93/2008, measured from date of payment of SAD, does not per se bar refund claims under Notification No.102/2007 because entitlement arises only after subsequent sale and fulfillment of conditions; nevertheless, the refund claims in the present appeals were upheld as rightly rejected on account of multiple deficiencies and the appellants' failure to comply with deficiency memos and proceedings, and the appeals were dismissed.

Rectification of Tribunal Order - Mistake apparent on the face of record - Rectification under Section 420(2) of the Companies Act, 2013 and Rule 154 of the NCLT Rules, 2016 - Limitation on review power of the Tribunal - Quorum for meetings - Mode of service of notices - Venue fixation for meetings - Remuneration of Chairman, Alternate Chairman and Scrutinizer

Rectification of Tribunal Order - Mistake apparent on the face of record - Rectification under Section 420(2) of the Companies Act, 2013 and Rule 154 of the NCLT Rules, 2016 - Whether the Tribunal may rectify or amend its order and the scope of such rectification under Section 420(2) Companies Act, 2013 read with Rule 154 NCLT Rules, 2016. - HELD THAT: - The Tribunal's jurisdiction to amend its order is confined to correcting mistakes apparent on the face of the record or clerical/arithmetical errors arising from accidental slip or omission. A conjunct reading of Section 420(2) and Rule 154 shows rectification power is limited to such evident errors and does not extend to re-opening or reviewing substantive directions previously issued. Consequently, reliefs that amount to review of the merits of an order are not permissible under these provisions. [Paras 6, 7, 8]

Rectification power is limited to mistakes apparent on the face of record; substantive review is not permissible under Section 420(2) and Rule 154.

Venue fixation for meetings - Fixation of the venue for the meetings of equity shareholders and unsecured creditors. - HELD THAT: - The order dated 31.08.2021 omitted a venue; the Applicants had proposed Lakshmipat Singhania Auditorium, PHD House, Opposite Asian Games Village, New Delhi-110016. The omission is an apparent slip amenable to rectification. The Tribunal accordingly fixes that venue for both the shareholders' and unsecured creditors' meetings and rectifies the earlier order to this extent. [Paras 9, 10]

Venue of the meetings fixed at Lakshmipat Singhania Auditorium, PHD House, Opposite Asian Games Village, New Delhi-110016; the earlier order is rectified accordingly.

Mode of service of notices - Whether the phrase prescribing the mode of issuing notices should use 'and' or 'or'. - HELD THAT: - Given the large number of shareholders, the use of 'and' in the phrase regarding dispatch of notices could impose an undue requirement. The wording is an apparent omission/clerical error vis-a -vis the intended meaning. The Tribunal replaces 'and' with 'or' so that notices may be sent by Courier or Registered Post or Speed Post or E-mail, and addressed to the last known address or email as per records. [Paras 11]

The word 'and' in the mode of service clause is replaced with 'or'.

Quorum for meetings - Limitation on review power of the Tribunal - Whether the Tribunal's prescribed minimum quorum for the shareholders' meeting (440 where initial quorum 4,400 not attained) is a corrigible mistake or a deliberate direction and whether it should be modified. - HELD THAT: - The Tribunal noted there are 44,001 shareholders and that a minimum quorum of 440 represents 10% of total strength. The Bench consciously fixed a minimum quorum of 440 when the higher initial quorum is not attained within 30 minutes. This is not a clerical or apparent mistake but a substantive direction; seeking its alteration would amount to a review of the order which the Tribunal has no power to undertake under the Companies Act. Therefore, the request to delete the minimum quorum or otherwise alter it is refused. [Paras 12, 13]

The minimum quorum of 440 shareholders stands; modification sought is refused as review is impermissible.

Quorum for meetings - Request to modify the quorum for the meeting of unsecured creditors. - HELD THAT: - By parity with the refusal to modify the shareholders' quorum, the Tribunal is not inclined to change the direction previously issued regarding the quorum for unsecured creditors. The prayer for modification is therefore declined. [Paras 14]

Prayer to modify the quorum of unsecured creditors' meeting is refused.

Rectification of Tribunal Order - Correction of references to 'Secured Creditors' to 'Unsecured Creditors' and omission of secured creditors where meetings are not to be convened. - HELD THAT: - The earlier order referred to 'Secured Creditors' in certain paragraphs where, in fact, meetings were to be convened only for equity shareholders and unsecured creditors. This is an apparent slip in terminology amenable to rectification. The Tribunal replaces 'Secured Creditors' with 'Unsecured Creditors' in the specified paragraph and omits references to secured creditors in Paragraph 18 since no directions were issued to convene secured creditors' meetings. [Paras 15]

References to 'Secured Creditors' are corrected to 'Unsecured Creditors' and references to secured creditors in Paragraph 18 are omitted.

Remuneration of Chairman, Alternate Chairman and Scrutinizer - Fixation of remuneration for the Chairman, Alternate Chairman and Scrutinizer for each meeting. - HELD THAT: - The Tribunal fixes the remuneration of the Chairman, Alternate Chairman and Scrutinizer of each of the meetings at a specified amount each, noting the large number of shareholders and directing that the chairman and alternate chairman shall cooperate in facilitating the conduct of the meeting. [Paras 16]

Remuneration of Chairman, Alternate Chairman and Scrutinizer for each meeting is fixed as prayed; chairman and alternate chairman to work together.

Venue fixation for meetings - Modification of the dates of the shareholders' and unsecured creditors' meetings. - HELD THAT: - The Tribunal modifies the date of the shareholders' meeting and the meeting of unsecured creditors of the Transferee Company to 16.12.2021 at the time mentioned in the earlier order and at the venue fixed by this rectification order. [Paras 17]

Dates of the shareholders' and unsecured creditors' meetings are modified to 16.12.2021 at the specified time and venue.

Final Conclusion: The application under Section 420 read with Rule 154 is allowed partially: clerical omissions and slips in the order of 31.08.2021 are rectified (venue fixed, service wording amended, secured/unsecured creditor references corrected, remuneration fixed, and meeting dates modified), whereas substantive directions concerning quorum are retained and requests to modify them are refused as impermissible review.

Scheme of Merger by Absorption - Appointed Date - Share Entitlement Ratio - Dispensing with meetings of creditors - Notice and publication requirements under Section 230(3) of the Companies Act, 2013 read with Rule 6 - Convening of shareholders' meetings and chairman's powers - Quorum and proxy provisions - Appointment of Scrutinizer - Appointment of expert to assist Official Liquidator for books scrutiny - Service on regulatory authorities and filing of affidavit of service

Scheme of Merger by Absorption - Appointed Date - Approval of convening shareholders' meetings for consideration of the Scheme of Merger by Absorption and fixation of the Appointed Date. - HELD THAT: - The Tribunal recorded that the scheme is a Scheme of Merger by Absorption between Medibios Laboratories Limited (Transferor) and Emil Pharmaceuticals Industries Private Limited (Transferee). The Board resolutions approving the Scheme were noted and the Appointed Date for the scheme was fixed as 1 April 2020. Accordingly, the Tribunal directed that meetings of equity shareholders of both applicant companies be convened on the specified dates for considering and, if thought fit, approving the Scheme with or without modifications. [Paras 2, 4, 5, 9, 10]

Meetings of equity shareholders to be convened as directed and the Appointed Date fixed as 1 April 2020.

Share Entitlement Ratio - Share swap ratio to be applied upon the Scheme becoming effective. - HELD THAT: - The Tribunal recorded the proposed share entitlement ratio for the allotment of shares in the Transferee Company to shareholders of the Transferor Company. The ratio stated in the application - for every 1000 shares of the Transferor, 672 shares of the Transferee - was accepted as the Share Entitlement Ratio to be implemented upon effectiveness of the Scheme. [Paras 8]

The recorded share entitlement ratio is accepted for implementation upon the Scheme becoming effective.

Dispensing with meetings of creditors - Notice and publication requirements under Section 230(3) of the Companies Act, 2013 read with Rule 6 - Dispensation of meetings of secured creditors and unsecured creditors, subject to notices and opportunity to make representations. - HELD THAT: - On the basis that the Scheme is an arrangement between each company and its shareholders under Section 230(1)(b) and that no compromise or arrangement with creditors or sacrifice is called for, the Tribunal dispensed with holding meetings of secured creditors and of unsecured creditors for both applicant companies. The Tribunal directed that the respective companies issue notices to their unsecured creditors by Registered Post/Speed Post and by email where available, inviting representations to be filed with the Tribunal within 30 days; and that notice to secured creditors' written consents be obtained and submitted before filing the company petition. [Paras 21, 22, 23, 24, 25]

Meetings of secured and unsecured creditors dispensed with, subject to issuance of notices and receipt of representations or consents as directed.

Notice and publication requirements under Section 230(3) of the Companies Act, 2013 read with Rule 6 - Directions as to dispatch and publication of notices, statement of material facts and availability of Scheme documents to shareholders. - HELD THAT: - The Tribunal directed that at least 30 days prior to the shareholders' meetings, notices convening the meetings together with the Scheme, the statement disclosing material facts as required under Section 230(3) read with Rule 6, and the prescribed form of proxy be sent to equity shareholders by Hand delivery/Registered Post/Speed Post and by email where registered. The Tribunal also directed publication of the meeting notices in specified local newspapers not less than 30 days before the meetings and ordered that copies of the Scheme and statement be made available free of charge at the registered office. [Paras 11, 12, 13]

Notices, statement and Scheme to be dispatched and published as directed at least 30 days before the meetings.

Convening of shareholders' meetings and chairman's powers - Quorum and proxy provisions - Appointment of chairmen for the respective meetings, quorum and proxy rules for conduct of meetings. - HELD THAT: - The Tribunal appointed specific directors of the respective applicant companies to act as Chairmen of the shareholders' meetings and vested them with powers under the Articles and the Companies Act to conduct the meetings, decide procedural questions, address adjournments and consider proposed amendments. The quorum for the meetings was directed to be as prescribed under Section 103 of the Companies Act, 2013. The Tribunal also permitted voting by proxy or authorised representative of body corporates provided proxies/authorisations in prescribed form are filed with the companies not later than 48 hours before the meetings. [Paras 15, 16, 18, 19, 20]

Chairmen appointed, quorum as per statute, and proxy/representation procedure ordered.

Appointment of Scrutinizer - Appointment and remuneration of the Scrutinizer for the shareholders' meetings. - HELD THAT: - The Tribunal appointed CS Pooja Gandhi as Scrutinizer for the meetings and fixed the remuneration per meeting for the services to be rendered by the Scrutinizer. [Paras 17]

CS Pooja Gandhi appointed as Scrutinizer with the stated fees for each meeting.

Appointment of expert to assist Official Liquidator for books scrutiny - Appointment of a chartered accountant to assist the Official Liquidator in scrutinising the Transferor Company's books for five years and payment of consolidated fees. - HELD THAT: - The Tribunal appointed M/s. CA Hemant K. Shah of Hemant K. Shah & Associates to assist the Official Liquidator in scrutinising the Transferor Company's books of accounts for the last five years, and authorised payment of a consolidated fee for that purpose. The Official Liquidator was given liberty to submit representations within thirty days of receipt of notice. [Paras 27]

Chartered accountant appointed to assist Official Liquidator with fees as fixed; Official Liquidator permitted to submit representations within 30 days.

Service on regulatory authorities and filing of affidavit of service - Directions for service of the petition and enclosures on specified regulatory authorities and for filing affidavit of service. - HELD THAT: - Pursuant to Section 230(5) and rule 8, the Tribunal directed the Transferor and Transferee companies to serve the application with enclosures on the Regional Director (Western Region), Registrar of Companies, Official Liquidator (where directed), Income Tax Authority within whose jurisdiction the companies are assessed, and concerned GST authorities. The Tribunal specified that absence of response within 30 days will be presumed as no objection. The companies were directed to host the notices on their websites, if any, and to file affidavits of service with the Registry proving dispatch of notices to creditors and regulatory authorities and to report compliance to the Tribunal. [Paras 26, 28, 29, 30]

Service on regulatory authorities ordered and affidavit of service to be filed as directed; lack of reply within 30 days to be treated as no objection.

Final Conclusion: The Tribunal directed convening of shareholders' meetings for both companies to consider the Scheme of Merger by Absorption (Appointed Date 1 April 2020), accepted the recorded share entitlement ratio, dispensed with creditors' meetings subject to prescribed notices and consents, appointed chairmen and a scrutinizer, authorised scrutiny assistance to the Official Liquidator, directed service on statutory authorities and publication of notices, and ordered filing of affidavits proving compliance.

Exclusion of time for CIRP - extension of CIRP under Section 12 - application under Section 19(2) - Regulation 40-C - COVID-19 lockdown exclusion - duty of the resolution professional

Exclusion of time for CIRP - Regulation 40-C - COVID-19 lockdown exclusion - application under Section 19(2) - duty of the resolution professional - extension of CIRP under Section 12 - Whether the Resolution Professional was entitled to exclusion of the period from commencement of CIRP till disposal of his Section 19(2) application (and lockdown-related delays) instead of seeking extension under Section 12. - HELD THAT: - The Tribunal held that Section 12 prescribes a time-bound CIRP of 180 days with a possible judicial extension of up to 90 days; an application under Section 19(2) for non-cooperation is not an application for exclusion or for extension of the CIRP. The RP did not secure CoC approval to file for an extension under Section 12 after the expiry of 180 days, nor did he file any application seeking statutory extension; instead he relied on exclusion of time including the period prior to decision on his Section 19(2) application. The CoC's note leaving the decision to the RP did not amount to an approval for exclusion, and the RP failed in his duty to actively pursue extension as required by the Code. Regulation 40-C permits exclusion of time lost specifically due to lockdown for activities that could not be completed for that reason, but the RP did not furnish sufficient and satisfactory justification to treat the entire period from commencement to disposal of the Section 19(2) application as excluded. Consequently the plea to exclude that period (and thereby extend the CIRP) was rejected as an impermissible attempt to obtain extension without following the statutory procedure under Section 12 and without CoC approval. [Paras 11, 13, 14, 16, 17]

The request for exclusion of the period from commencement of CIRP until disposal of the Section 19(2) application (and related lockdown delays) is refused; the RP should have sought CoC approval and a formal extension under Section 12, and the appeal is dismissed.

Final Conclusion: The appeal is dismissed at the admission stage for failure of the Resolution Professional to provide satisfactory justification for exclusion of the claimed time and for not following the statutory procedure under Section 12 (with CoC approval) to obtain an extension of the CIRP.

Void ab initio - affirmative vote under Articles of Association - maintainability of an application under Section 10 of IBC - limitation and legal non existence of void orders - material irregularity in CIRP - regulation 36 A of CIRP Regulations - publication of invitation - powers and contract effect of Articles of Association

Affirmative vote under Articles of Association - void ab initio - powers and contract effect of Articles of Association - Board resolution dated 30.03.2017 was passed without securing the affirmative vote of the nominee director of NSL and whether that resolution is void ab initio. - HELD THAT: - The Articles of Association (clauses 106-108 and particularly clause 107) require certain specified matters, including dissolution or voluntary liquidation, to be taken only by an affirmative vote of three or more directors and must include at least one director nominated by NSL. The presence or mere consent of the nominee director is distinguishable from the required affirmative vote intended to protect minority shareholder rights. Applying established principles that Articles form a binding contract between company and members, the Tribunal finds that the board resolution of 30.03.2017 was adopted without the affirmative vote mandated by the AoA and therefore the resolution authorising filing under Section 10 IBC was not passed in accordance with the AoA and is void ab initio. Consequently the application filed pursuant to that resolution was not maintainable. [Paras 37]

Resolution dated 30.03.2017 is void ab initio for want of the affirmative vote of the nominee director; the Section 10 application filed pursuant thereto was not maintainable.

Limitation and legal non existence of void orders - maintainability of an application under Section 10 of IBC - Whether the appeal against the order of admission dated 20.09.2017 is barred by limitation. - HELD THAT: - Although the appeal was filed after considerable delay and the Tribunal had previously permitted challenge to the admission order within ten days, the Court has held that where an order is void for breach of mandatory requirements it has no legal existence. Reliance on precedent establishes that a wholly invalid order need not be set aside by time barred proceedings before it can be treated as non existent. Since the admission order flowed from a resolution that the Tribunal has held to be void ab initio, the admission order lacked legal existence and therefore the limitation defence cannot sustain the admission order's validity. [Paras 44, 45]

Limitation defence is not available to uphold the impugned admission order once the underlying Section 10 application and authorising resolution are held void; the admission order can be challenged notwithstanding delay.

Material irregularity in CIRP - regulation 36 A of CIRP Regulations - publication of invitation - Whether the Resolution Professional committed material irregularity in conducting the CIRP of the Corporate Debtor. - HELD THAT: - The Tribunal examined allegations that the RP published EOI in newspapers with limited circulation, failed to seek resolution seriously, improperly sought State intervention at a late stage, and misallocated CIRP costs. Prior to the amendment of Regulation 36 A (effective 04.07.2018) there was no mandate to publish Form G in newspapers with wide circulation; publication on 16.05.2018 therefore did not contravene then applicable rules. The record demonstrates multiple CoC meetings, communications by the RP to the State, and that the Appellants had notice and participated (including filing a claim). No persuasive material was produced to show the RP acted in concert with private management to frustrate resolution or that the conduct amounted to material irregularity within the meaning that would permit setting aside liquidation on that ground. Section 61(4) permits setting aside a liquidation order only for material irregularity or fraud, which is not established here. [Paras 63, 64]

Allegations do not establish material irregularity by the RP; however, because the underlying Section 10 application is void, the consequent admission, moratorium and liquidation orders are set aside on that basis.

Final Conclusion: The appeals are allowed on the ground that the board resolution authorising the Section 10 application was void ab initio for want of the requisite affirmative vote, rendering the Section 10 application and the consequent orders of admission, moratorium and liquidation legally non existent; the Section 10 application is dismissed, the impugned orders are set aside, the Corporate Debtor is released to function through its Board, and the Adjudicating Authority shall fix the RP/liquidator fees which the Corporate Debtor will pay. No order as to costs.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Unauthorised transactions during corporate insolvency resolution process - Preservation of the corporate debtor as a going concern - Supply of goods and services critical to protect and preserve value during CIRP - Burden of proof for diversion of corporate debtor funds to personal account

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Unauthorised transactions during corporate insolvency resolution process - Preservation of the corporate debtor as a going concern - Burden of proof for diversion of corporate debtor funds to personal account - Whether the withdrawals from the corporate debtor's bank accounts by the respondent during the CIRP period amounted to unauthorised transactions in violation of the moratorium and whether funds were diverted to the respondent's personal account - HELD THAT: - The Tribunal noted that moratorium under Section 14 IBC prohibits transfer or disposal of the corporate debtor's assets after commencement of CIRP and that the moratorium aims to ensure orderly completion of the process and preservation of the corporate debtor as a going concern (paras 6-7). The respondent contended that payments from the accounts were made in good faith to maintain hospital operations (doctors' fees, staff salaries, vendor payments) and relied on existing operational arrangements and authorities recorded with the banks (paras 3, 8). The Tribunal examined bank statements and observed both debits and corresponding credits from related sources (including transfers from 'Karanya' and other receipts), indicating transactions to keep the corporate debtor running rather than an intention to misappropriate funds (paras 9-10). The Tribunal further observed absence of direct evidence of transfers to the respondent's personal account and noted that the applicant did not provide details of any such personal account to establish diversion (para 11). In the exceptional context of the COVID-19 pandemic and given that persons with bank-authority signatures had to incur expenditures to maintain operations, the Tribunal found no satisfactory proof of diversion or that the respondent acted with intent to withdraw funds for personal gain (paras 9-11). [Paras 7, 9, 10, 11, 12]

Application dismissed for want of proof that withdrawals during the CIRP were unauthorised or that funds were diverted to the respondent's personal account; prayers rejected.

Final Conclusion: The Tribunal dismissed the application under Section 60(5)(b) read with relevant provisions of the IBC, holding that the applicant failed to prove that the respondent committed unauthorised diversion of the corporate debtor's funds during the moratorium and that the transactions appeared directed to preserve the corporate debtor as a going concern.

Initiation of liquidation - appointment of liquidator - vesting of management powers in liquidator - cessation of moratorium upon commencement of liquidation - liquidator's duty to realise liquidation estate and recover receivables - liquidator's fees payable from liquidation estate

Initiation of liquidation - Order for initiation of liquidation of the Corporate Guarantors, viz., M/s. Utility Agrotech Industries Private Limited and M/s. Supreme Finefab Private Limited, was passed. - HELD THAT: - The Adjudicating Authority examined the material on record including the CoC resolutions and the paucity of financial and tangible assets of the Corporate Guarantors. The CoC, in its first meeting, recorded that a 180-day CIRP would cause additional costs and that the Corporate Guarantors had no viable assets; subsequent CoC resolutions supported liquidation and contribution arrangements for liquidation costs. On this basis the Tribunal held there was no prospect of successful resolution and directed initiation of the liquidation process under the Code and Regulations, and disposed of the applications accordingly.

Applications under the Code were allowed and orders initiating liquidation of the Corporate Guarantors were passed.

Appointment of liquidator - vesting of management powers in liquidator - The Resolution Professional, Mr. Vikas Prakash Gupta, was appointed and approved as Liquidator of the Corporate Guarantor and all powers of the board and KMP stand vested in him. - HELD THAT: - The CoC had, with requisite voting share, proposed and approved the RP as Liquidator and the RP gave his consent. Pursuant to the statutory scheme, the Tribunal approved the CoC resolution and formally appointed the RP as Liquidator. Consequential to the appointment, the Tribunal recorded that the powers of the board, directors and key managerial personnel cease and vest with the Liquidator who is to carry out the liquidation process.

Appointment of the RP as Liquidator was approved and management powers were declared to vest in the Liquidator.

Cessation of moratorium upon commencement of liquidation - The moratorium earlier declared during CIRP was held to cease on initiation of the liquidation process. - HELD THAT: - The Tribunal recorded that once liquidation is initiated the moratorium declared at CIRP stage stands terminated. The order also treated the liquidation order as a deemed notice of discharge to officers, employees and workmen of the Corporate Guarantor subject to continuation of any business by the Liquidator during liquidation.

Moratorium ceased upon commencement of liquidation and the liquidation order operates as deemed notice of discharge to personnel, subject to continuance provisions.

Liquidator's duty to realise liquidation estate and recover receivables - liquidator's fees payable from liquidation estate - Directions were issued regarding the Liquidator's powers and duties, including recovery of receivables, coordination with authorities, and entitlement to fees payable from the liquidation estate. - HELD THAT: - The Tribunal directed the Liquidator to take necessary legal action to recover trade receivables, loans and advances reflected in the latest balance sheet, to coordinate with governmental and other authorities, and to seek directions from the Tribunal if required. It also prescribed that the Liquidator's fees shall be charged in proportion to the value of liquidation estate assets as specified by the IBBI and paid from the proceeds of the liquidation estate in accordance with the statutory priority scheme.

Liquidator empowered and directed to realise assets and recover receivables, to coordinate with authorities, to seek Tribunal directions if necessary, and to be paid fees from the liquidation estate.

Final Conclusion: The Tribunal allowed the applications and ordered initiation of liquidation of the two Corporate Guarantors, approved the RP as Liquidator, vested management powers in him, held the moratorium to cease on liquidation, and issued ancillary directions concerning recovery of assets, coordination with authorities and payment of the Liquidator's fees from the liquidation estate.

Powers under Section 50 of the PMLA regarding summons, production of documents and examination - scope of High Court's inherent jurisdiction under Section 482 Cr.P.C. in relation to ongoing investigation - no coercive steps / interim protection during pendency of investigation - standard for proving mala fides or malice in law and fact - investigation as defined under Section 2(na) of the PMLA - presence of advocate during interrogation at visible but beyond audible distance

Powers under Section 50 of the PMLA regarding summons, production of documents and examination - investigation as defined under Section 2(na) of the PMLA - Validity of summonses issued under Section 50 of the PMLA to the Applicant - HELD THAT: - The Court analysed the statutory scheme of the PMLA (including definition of 'investigation' under Section 2(na)) and the scope of Section 50 which empowers Authorities to summon persons, compel attendance, examine on oath and require production of documents. Applying established principles that courts should not ordinarily interfere with ongoing investigations, the Bench examined the facts and chronology of searches, recorded statements and successive summonses. The Court found no jurisdictional error or legal illegality in issuance of the summonses, and that the Directorate acted within its investigatory remit. The Applicant's non-supply contention (non-provision of ECIR) and the timing of summonses were considered but found insufficient, both individually and cumulatively, to establish that the summonses were vitiated by malafides or beyond the scope of the predicate offence. The Court emphasised that absent a restraint order, Authorities are under a duty to pursue investigation and that calling a person for questioning under Section 50 is part of that investigatory process. [Paras 26, 27, 31, 33, 35]

Application to quash the summonses issued under Section 50 of the PMLA is rejected; no jurisdictional error or proven mala fide in issuance of summonses.

Scope of High Court's inherent jurisdiction under Section 482 Cr.P.C. in relation to ongoing investigation - no coercive steps / interim protection during pendency of investigation - standard for proving mala fides or malice in law and fact - Whether the High Court should restrain the Enforcement Directorate from taking penal/coercive action (grant 'no coercive steps' protection) - HELD THAT: - The Court applied the principles laid down by the Supreme Court (notably Neeharika Infrastructure and its progeny) that interference under Section 482 Cr.P.C. at the investigation stage is exceptional and must be exercised sparingly; ordinarily courts should refrain from passing blanket 'no coercive steps' orders while investigation is in progress and facts/material are hazy. Having considered the Applicant's pleadings and conduct (including repeated non-attendance to summons), and finding no established malice or illegality in the investigation, the Court concluded that exceptional circumstances for a restraint order do not exist. The Bench noted that the Supreme Court in the Applicant's connected matter left open remedies under Cr.P.C. and that anticipatory bail under Section 438 Cr.P.C. remains available to the Applicant. [Paras 40, 41, 42, 44, 45]

Prayer for a direction restraining the Directorate from taking penal/coercive action is rejected; statutory remedy under Section 438 Cr.P.C. remains open.

Powers under Section 50 of the PMLA regarding summons, production of documents and examination - scope of High Court's inherent jurisdiction under Section 482 Cr.P.C. in relation to ongoing investigation - Whether the Court should direct the Directorate to permit appearance through authorised representative or electronic mode and not compel personal presence - HELD THAT: - The Court observed that the mode of interrogation and whether personal attendance is required falls within the discretion of the investigating agency and that courts should not ordinarily micromanage investigative procedure so long as lawful. Relying on precedent that courts must not monitor every stage of investigation, and having found no abuse of discretion by the Directorate in calling for personal attendance, the Court held that it would be inappropriate to dictate the mode of appearance (electronic or by representative) at this investigatory stage. [Paras 14, 24, 46]

Prayer to compel electronic appearance or to restrain the Directorate from requiring personal attendance is rejected; mode of investigation is left to the Directorate's discretion.

Presence of advocate during interrogation at visible but beyond audible distance - powers under Section 50 of the PMLA regarding summons, production of documents and examination - Whether the Applicant's lawyer may be permitted to be present during questioning at a visible distance beyond audible range - HELD THAT: - The Court considered Supreme Court and High Court precedents dealing with presence of counsel during interrogation (including Poolpandi, Jugal Kishore Samra and Birendra Kumar Pandey) and noted consistent practice in cases under the PMLA permitting counsel to be present at a visible distance beyond hearing range. While cognizant of arguments that some authorities may treat earlier directions as per incuriam, the Bench found no reason to depart from the established direction permitting an advocate to observe the interrogation from a visible but beyond-audible distance, and that such presence does not impede lawful investigation. [Paras 48, 49, 50, 51, 52]

Granted in part: if requested, the Directorate shall permit the Applicant's lawyer to be present during questioning at a visible distance but beyond audible range.

Standard for proving mala fides or malice in law and fact - scope of High Court's inherent jurisdiction under Section 482 Cr.P.C. in relation to ongoing investigation - Whether the Applicant has established mala fides or political vendetta sufficient to quash investigation or obtain other extraordinary reliefs - HELD THAT: - The Court reviewed the pleadings and evidence and applied the principle that the burden to prove mala fides is heavy and must be established on facts pleaded on oath. The Bench found the Applicant's pleadings lacked particulars, did not join responsible officers to substantiate allegations of malice, and failed to demonstrate material facts from which malice in law or fact could be inferred. Authorities and international object and purpose of PMLA were noted; absent proof of abuse of power, mere assertions of political vendetta or coincidence in timings of procedural steps are insufficient to warrant quashing or transfer of investigation. [Paras 28, 30, 31, 32, 33]

Applicant has not discharged burden to prove mala fides or political vendetta; allegations of malice are rejected and do not justify quashing or extraordinary reliefs.

Final Conclusion: The petition is dismissed insofar as it seeks quashing of summonses, directions to permit representation/electronic appearance, restraint against coercive action, and other incidental reliefs; the statutory remedy under Section 438 Cr.P.C. remains available. Only the limited relief permitting the Applicant's lawyer to be present during questioning at a visible distance but beyond audible range is granted.

Fresh consideration of freezing orders under Section 60 of the Prevention of Money Laundering Act, 2002 - application of Section 32A of the Insolvency and Bankruptcy Code, 2016 to successor management - remand for reconsideration by the Enforcement Directorate

Fresh consideration of freezing orders under Section 60 of the Prevention of Money Laundering Act, 2002 - remand for reconsideration by the Enforcement Directorate - ED to re-examine freezing orders and any subsequent proceedings in the light of the averments made in the writ petitions. - HELD THAT: - The Court recorded on the basis of statements made by the Enforcement Directorate's counsel that, as these matters are among the first arising under Section 60 of the PMLA, the ED would take a fresh look at the freezing orders and any other proceedings arising therefrom having regard to the averments pleaded in the writ petitions and the peculiar facts of each case. The Court took that statement on record but did not adjudicate the merits of the freezing orders or the underlying factual contentions in the petitions. The undertaking constitutes a direction for reconsideration rather than a decision on the validity of the impugned orders. [Paras 4]

The ED is to re-examine and, if appropriate, pass fresh orders in respect of the freezing orders and related proceedings in each case on the basis of the petitions' averments; the Court recorded the ED's statement and remanded the matters for fresh consideration.

Application of Section 32A of the Insolvency and Bankruptcy Code, 2016 to successor management - remand for reconsideration by the Enforcement Directorate - Whether the petitioner M/s Alok Industries, now under new management after insolvency resolution, satisfies the pre-conditions of Section 32A IBC and whether the ED will reconsider its position accordingly. - HELD THAT: - The petitioners contended that alleged offences predated the commencement of the Corporate Insolvency Resolution Process and that, after approval of resolution plans and takeover by a new management, the company should be considered under Section 32A of the IBC. The ED, through its counsel, stated it would take a fresh look at whether the petitioner satisfies the pre-conditions of Section 32A and, if satisfied on the facts pleaded and submissions, would pass fresh orders. The Court recorded this undertaking and directed that such fresh consideration be completed within three months. The Court did not decide the substantive question of applicability of Section 32A on merits. [Paras 5, 6, 9]

ED to reassess whether the petitioner fulfils the pre-conditions of Section 32A IBC and, if so, to pass fresh orders within three months; WP(C) 4680/2021 to be listed on 30th November 2021 for receipt of the status report and treated as part-heard for that limited purpose.

Final Conclusion: The Court recorded the Enforcement Directorate's undertaking to re-examine the freezing orders and related proceedings in the group of writ petitions (including specific reassessment under Section 32A IBC in the Alok Industries matter), remanded those matters for fresh consideration with timelines, and listed WP(C) 4680/2021 for a status report on 30 November 2021.

Intermediary - Place of Provision of Services - Export of Services - Effect of amendment to Rule 2(f) of the Place of Provision of Service Rules, 2012 - Rule 6A of the Service Tax Rules, 1994 - Rule 9 of the Place of Provision of Service Rules, 2012

Intermediary - Effect of amendment to Rule 2(f) of the Place of Provision of Service Rules, 2012 - Facilitation of supply of goods versus facilitation of provision of service - Export of Services - Rule 6A of the Service Tax Rules, 1994 - Rule 9 of the Place of Provision of Service Rules, 2012 - Whether the appellant falls within the definition of 'Intermediary' and whether its activities amounted to facilitation of supply of goods or facilitation of provision of services in light of the amendment to Rule 2(f) of the Rules, 2012, thereby affecting treatment as export of service. - HELD THAT: - The authorities and the Tribunal had concluded from the agreement clauses that the appellant was an 'intermediary' under Rule 2(f) and therefore its activities could not be treated as export of service under Rule 6A(d) read with Rule 9. The High Court found that neither the authorities nor the Tribunal had adequately considered the scope and effect of the amendment to Rule 2(f) effected on 01.10.2014, particularly insofar as the amended definition expressly includes facilitation of a 'supply of goods'. The Court observed that there is no clear finding whether the appellant's role related to facilitating supply of goods or facilitating provision of services, and that the Tribunal's reasoning confirming concurrent findings below was cryptic and did not address the amended provision or its application to the specific contractual arrangements and their implementation. Because this aspect was not examined or decided on the merits in the impugned orders, the Court concluded that re-examination was necessary. The Court therefore set aside the Tribunal's order without answering the substantial question of law, and remitted the matter to the Tribunal to reconsider the clauses of the agreement, their implementation and the applicability of the pre- and post-amendment definition of 'Intermediary', and to determine whether the appellant's activities constitute intermediary services (thus precluding export treatment) or fall outside that definition, in accordance with the Rules and law. [Paras 15, 16]

Order of the Tribunal set aside and matter remanded to the Tribunal for fresh consideration of whether the appellant's activities fall within the definition of 'Intermediary' (including effect of the 01.10.2014 amendment) and whether the services qualify as export, with all rights and contentions left open.

Final Conclusion: The High Court set aside the Tribunal's order and remanded the matter to the Tribunal for fresh consideration of whether the appellant is an 'intermediary'-including the effect of the amendment to Rule 2(f) of the Place of Provision of Service Rules, 2012-and whether the appellant's activities amount to export of service; no opinion was expressed on the merits and all rights and contentions were left open.

Reverse charge mechanism - payment of service tax by service provider - verification of tax payment - penalties under Sections 76, 77 and 78 - waiver of penalties under Section 80 - revenue neutral position

Reverse charge mechanism - payment of service tax by service provider - verification of tax payment - revenue neutral position - Whether demand under the reverse charge mechanism could be sustained where the service provider charged and paid service tax and the assessee claimed to have discharged the liability for the period 01.07.2012 to 31.10.2012. - HELD THAT: - The Tribunal observed that the show cause notice itself records that the service provider charged service tax on the invoices and collected it from the appellant and that the service provider paid tax into Government account. The appellant consistently claimed to have discharged the service tax liability for the relevant period. Given these facts, the Tribunal held that a demand under reverse charge cannot be sustained without a proper verification of the appellant's claim. The Tribunal therefore remanded the matter to the original adjudicating authority to verify whether the tax for the period 01.07.2012 to 31.10.2012 was in fact paid either by the appellant under reverse charge or by the service provider; if verification establishes payment, the proceedings must be dropped, otherwise the amount with interest may be recovered. The Tribunal also directed that verification be completed within two months and after observance of the principles of natural justice. [Paras 4, 5]

Matter remanded to the original authority for verification of payment for 01.07.2012 to 31.10.2012 and consequent action: if payment is established, proceedings to be dropped; if not, recover amount with interest.

Penalties under Sections 76, 77 and 78 - waiver of penalties under Section 80 - Whether penalties under Sections 76, 77 and 78 should be imposed in respect of the transactions for the period in question. - HELD THAT: - The Tribunal noted that the relevant provisions were newly introduced and, irrespective of the outcome of the verification of payment, directed that penalties under Sections 76, 77 and 78 should not be imposed and should be waived in terms of Section 80. This reflects the Tribunal's exercise of discretion in mitigation given the novelty of the provision and the small amount involved. [Paras 4, 5]

Penalties under Sections 76, 77 and 78 are not to be imposed and are to be waived under Section 80.

Final Conclusion: The appeal is allowed in part: the matter is remanded for verification whether service tax for 01.07.2012 to 31.10.2012 was paid by the appellant or the service provider, with consequential withdrawal or recovery as appropriate; irrespective of verification outcome, penalties under Sections 76-78 are to be waived under Section 80, and verification is to be completed within two months after observing natural justice.

Erection, commissioning or installation services - works contract service (excluded in respect of railways) - service tax under reverse charge mechanism (Sec 66A) - composite/turnkey (indivisible) contract - segregation of service component in a composite works contract

Erection, commissioning or installation services - service tax under reverse charge mechanism (Sec 66A) - Classification and taxability of services provided by foreign suppliers as erection, commissioning or installation services and liability of the appellant to discharge service tax under reverse charge. - HELD THAT: - The Tribunal examined the contract terms, the scope of work and invoices and concurred with the adjudicating authority that the foreign suppliers were engaged for commissioning, testing and supervision of EMU rakes, and that consideration for such services was paid in foreign currency. However, on a holistic reading of the contract and applicable law the Tribunal concluded that the services fell to be seen in the context of the composite turnkey engagement with the purchaser (MRVC). Applying the contract terms and precedents it found against sustaining the demand as a standalone levy of erection, commissioning or installation services where the contract as a whole is a composite turnkey agreement in relation to railways. For these reasons the Tribunal held that the impugned demand under reverse charge could not be sustained. [Paras 4]

Demand treating the services as erection, commissioning or installation taxable under reverse charge was not sustained; the impugned order is set aside in favour of the appellant.

Composite/turnkey (indivisible) contract - segregation of service component in a composite works contract - Whether the contract is divisible so as to permit segregation of a service element liable to service tax, or whether it is an indivisible composite/turnkey contract. - HELD THAT: - The Tribunal analysed the contract language (scope, price schedule, GCC and SCC), the breakdown in the price schedule and payment stages, and authoritative principles on divisible versus indivisible contracts. Relying on the contract as a whole and precedents including Sentinel/Kone and the Supreme Court's reasoning in Larsen & Toubro, the Tribunal held that the agreement was a composite turnkey contract for supply, testing and commissioning and could not be vivisected to treat the supervision/commissioning portion as a separate taxable service for the period in question. The Tribunal rejected the revenue's contention that the contract was divisible merely because certain activities and price heads were listed separately. [Paras 4]

The contract is an indivisible composite/turnkey contract and cannot be segregated for levying service tax on a discrete supervision/commissioning component.

Works contract service (excluded in respect of railways) - segregation of service component in a composite works contract - Whether, from 1 June 2007, the services could be taxed as 'works contract service' or whether works contract services in respect of railways are excluded from the taxable category. - HELD THAT: - The Tribunal considered the post-1.6.2007 definition of 'works contract service' and the specific exclusion for works contracts in respect of railways. Applying the definition and the settled principle from Larsen & Toubro and subsequent tribunal decisions, the Tribunal held that works contract service for railways is excluded from the taxable category and therefore the appellant could not be made liable under that head even for the post-1.6.2007 period. The Tribunal therefore found no merit in sustaining the demand on the alternative basis that service tax could be levied as works contract service from June 2007 onwards. [Paras 4]

Works contract service exclusion in respect of railways applies; the demand cannot be sustained on that basis for the period after 1.6.2007.

Final Conclusion: The appeal is allowed. The impugned order confirming service tax, interest and related demand in respect of services from the foreign suppliers for the period 2005 to 2010 is set aside following the finding that the contracts are composite/turnkey and, having regard to the exclusion of works contract services in respect of railways, the service tax demand cannot be sustained.

Revisionary power of Commissioner under Section 84 of the Finance Act, 1994 - Substitution of revisionary power by power to review w.e.f. 19-08-2009 - Jurisdictional competence to pass revisionary orders after statutory amendment - Validity of revision order passed after substitution of Section 84

Revisionary power of Commissioner under Section 84 of the Finance Act, 1994 - Substitution of revisionary power by power to review w.e.f. 19-08-2009 - Jurisdictional competence to pass revisionary orders after statutory amendment - Whether the Commissioner enjoyed jurisdiction to exercise revisionary powers when he set aside the Assistant Commissioner's order on 06/12/2010 - HELD THAT: - Section 84 of the Finance Act, 1994 was substituted with effect from 19-08-2009 replacing the earlier power of revision with the power to review. Prior decisions of the Tribunal, including Bhawani Corporation and Securitrans India (P) Ltd., hold that no order in revision can validly be passed after the substitution. In Securitrans the Tribunal observed that where the Show Cause Notice or revision action was initiated after 19-08-2009 the Commissioner did not possess revisionary jurisdiction. In the present case the impugned revision was exercised on 06/12/2010, i.e., after the substitution of Section 84, and therefore was beyond the Commissioner's statutory competence. Consequently the impugned order in revision is without jurisdiction and cannot be sustained. [Paras 4, 5]

Impugned revision order passed on 06/12/2010 is without jurisdiction and is set aside; appeal allowed.

Final Conclusion: The Commissioner had no power to exercise revision after substitution of Section 84 w.e.f. 19-08-2009; the revision order dated 06/12/2010 is quashed and the appeal is allowed.

Limitation for refund under Section 11B - relevant date where duty becomes refundable as consequence of judgment or order - test of unjust enrichment - refund consequent to appellate order without express direction for payment - interest on delayed refund under Section 11BB - mistake of fact versus mistake of law in refund claims - Mafatlal principle on retrospective claims and its inapplicability where order directly benefits claimant

Limitation for refund under Section 11B - relevant date where duty becomes refundable as consequence of judgment or order - refund consequent to appellate order without express direction for payment - Refund application filed on 14.10.2013 was within the one-year limitation period as the relevant date for computing limitation was the date of the appellate order holding the duty was not leviable. - HELD THAT: - The Tribunal held that the Explanation to Section 11B, specifically the clause dealing with cases where duty becomes refundable as a consequence of a judgment, decree, order or direction of an appellate authority, establishes the date of such order as the "relevant date" for computation of the one-year limitation. The appellate order holding that no service tax was leviable in respect of the services received prior to 18.04.2006 was passed on 31.10.2012; consequently a refund application filed on 14.10.2013 fell within one year of that relevant date. The Tribunal rejected the adjudicating authority's and Commissioner (Appeals)'s conclusion that the claim was time-barred, observing that an express direction for payment of refund is not a precondition where the duty becomes refundable by virtue of such an order. [Paras 5]

Refund application dated 14.10.2013 is within limitation and the finding of time-barred claim is set aside.

Test of unjust enrichment - mistake of fact versus mistake of law in refund claims - Mafatlal principle on retrospective claims and its inapplicability where order directly benefits claimant - Appellant was not disentitled from refund on the ground of unjust enrichment and the Commissioner (Appeals) erred in holding that the appellant failed to satisfy the test of unjust enrichment. - HELD THAT: - The Tribunal noted that the adjudicating authority had itself recorded that there was no unjust enrichment. The Commissioner (Appeals) went beyond that finding and held that unjust enrichment was not satisfied; the Tribunal rejected that approach. The Tribunal also observed that the appellant paid service tax possibly under a mistake of fact and that the appellate order specifically in respect of the appellant declared the duty not leviable. In that factual and legal setting the Mafatlal principle-preventing long-delayed claims by others after a declaration of illegality-was inapplicable insofar as the order directly benefited the appellant. Consequently, the appellant was entitled to refund. [Paras 2, 3]

Commissioner (Appeals)'s finding that the appellant failed to satisfy the unjust enrichment test is set aside and the appellant is entitled to refund.

Final Conclusion: Appeal allowed. The order of the Commissioner (Appeals) dated 09.07.2015 is set aside; appellant is entitled to refund of the service tax held not leviable for services received between November 2005 and July 2006, together with interest under Section 11BB effective after three months from filing of the refund application, and the department is directed to pay the same within three months of communication of this order.

Reversal of Cenvat credit treated as not availed ab initio - proportionate reversal under Rule 6(3) and procedure under Rule 6(3A) of the Cenvat Credit Rules, 2004 - inapplicability of payment of 5%/10% under Rule 6(3)(i) where proportionate reversal with interest is made - procedural non-intimation under Rule 6(3A) does not deprive assessee of substantive right to proportionate reversal - limitation and consequential penalty unsustainable where reversal with interest negates mala fide suppression

Proportionate reversal under Rule 6(3) and procedure under Rule 6(3A) of the Cenvat Credit Rules, 2004 - inapplicability of payment of 5%/10% under Rule 6(3)(i) where proportionate reversal with interest is made - reversal of Cenvat credit treated as not availed ab initio - Whether demand for payment equal to 5%/10% of value of exempted goods under Rule 6(3)(i) is sustainable where the assessee has reversed the proportionate Cenvat credit for inputs/input services attributable to exempted goods and paid interest. - HELD THAT: - The Tribunal found as an admitted fact that the appellant, albeit belatedly, reversed the proportionate Cenvat credit attributable to exempted goods and paid interest for the delayed period. Following settled precedents, the reversal with interest is to be treated as if the credit was not availed ab initio. Rule 6(3) offers an option to pay a fixed percentage under clause (i) or to reverse credit as per sub-rule (3A); the payment of interest and reversal operates to place the assessee in the position of not having taken the credit. Procedural non-compliance with the intimation requirement in Rule 6(3A) does not automatically oust the substantive right to proportionate reversal. On these grounds, invocation of the alternative fixed-percentage levy under Rule 6(3)(i) is not sustainable where proportionate reversal with interest has been effected.

Demand under Rule 6(3)(i) for payment equal to 5%/10% of value of exempted goods is not sustainable and is set aside.

Limitation and consequential penalty unsustainable where reversal with interest negates mala fide suppression - Whether extended-period demand and penalties can be sustained where the assessee reversed proportionate credit with interest and there is no evidence of mala fide suppression. - HELD THAT: - The Tribunal observed that the facts concerning availment and subsequent reversal of credit (with interest) were on record and the reversal negated any finding of deliberate suppression or mala fide intent to evade duty. Given that the controversy on Rule 6(3) was contentious with conflicting authorities, and the assessee had disclosed the facts in returns and paid interest when reversing the credit, the extended-period demand could not be sustained. Consequentially, penalties founded on that demand were also unsustainable.

Extended-period demand and the penalties imposed are set aside.

Final Conclusion: The appeal is allowed: the demand for payment under Rule 6(3)(i) (5%/10%) is quashed as the assessee reversed the proportionate Cenvat credit with interest (treated as not availed), and the extended-period demand and related penalties are set aside.

Interpretation of "Total Cenvat Credit" under Rule 6(3A) of the CENVAT Credit Rules, 2004 - availability of CENVAT credit for inputs/input services used in manufacture of dutiable goods - propriety of demand under Rule 6(3) for common input services used for trading/exempted supplies - effect of delay in exercising the option under Rule 6(3A)

Interpretation of "Total Cenvat Credit" under Rule 6(3A) of the CENVAT Credit Rules, 2004 - availability of CENVAT credit for inputs/input services used in manufacture of dutiable goods - propriety of demand under Rule 6(3) for common input services - The demand under Rule 6(3) based on an interpretation that "total Cenvat credit" includes credit exclusively attributable to manufacture of dutiable goods is unsustainable; credit exclusively used for dutiable goods cannot be disallowed by applying the formula in Rule 6(3A) to common input services. - HELD THAT: - The Bench followed the ratio in the cited decision which held that Rule 6, read as a whole, allows CENVAT credit for inputs and input services used in the manufacture of dutiable goods and taxable services, and that the term "total Cenvat credit" in the formula under Rule 6(3A) must be understood as referring only to the total credit of common input services. Accepting the revenue's interpretation would lead to disallowance of credit on inputs/input services legitimately used for dutiable goods, which is not contemplated by the Rules. Applying that principle to the facts, the demand premised on treating the assessee's credit on inputs/input services for dutiable manufacture as part of the "total Cenvat credit" subject to pro rata expungement was erroneous, and therefore the impugned demand cannot be sustained.

Demand raised by treating credit for dutiable-goods usage as includible within "total Cenvat credit" under Rule 6(3A) is set aside.

Effect of delay in exercising the option under Rule 6(3A) - proportionality of demand for procedural irregularity - A demand raised solely on account of delay in exercising the option under Rule 6(3A) was not justified in the circumstances; the delay amounted, at most, to an irregularity attracting interest rather than a substantial demand. - HELD THAT: - The adjudicating authority relied on the contention that the assessee had exercised the option after the due date. The Bench observed that the direction to exercise the option had earlier been a matter for the authority itself and that mere delay, given the factual matrix and the assessee's reversal of credit, did not warrant confirmation of the demand as imposed. The demand qua procedural delay was therefore disproportionate; any consequence of delay, if appropriate, would be limited to interest, not the substantial demand imposed by the authority.

Demand confirmed on account of mere delay in exercising the option is set aside; irregularity may at most attract interest.

Final Conclusion: The impugned order confirming the demand was set aside; the appeal is allowed and the demand framed under Rule 6(3)/application of Rule 6(3A) is quashed, with consequential benefits, and the charge for mere delay in exercising the option was held disproportionate and not a ground to sustain the demand.

Cenvat credit on works contract services - Cenvat credit on services used for construction within factory premises (including road) - Cenvat credit on services used for setting up of plant/new mill house - Cenvat credit on structuring materials - services used in or in relation to manufacture - nexus between services and manufacture

Cenvat credit on works contract services - services used in or in relation to manufacture - Denial of cenvat credit availed on works contract services - HELD THAT: - The Tribunal held that denial of credit on works contract services was not sustainable. Relying on the reasoning in M/s. Kellogg India Pvt. Ltd. and subsequent similar authorities, the Tribunal observed that the definition of input service insofar as it permits credit for services "used in or in relation to manufacture" is wide enough to cover services such as works contract services where a direct nexus with manufacture is established. Since such services are neither specifically excluded for the relevant period and bear a sufficient nexus to manufacture, the denial of cenvat credit was overturned. [Paras 3, 4]

Denial of cenvat credit on works contract services set aside; credit allowed.

Cenvat credit on services used for construction within factory premises (including road) - nexus between services and manufacture - Denial of cenvat credit availed in respect of services used for construction of road within factory premises - HELD THAT: - Applying the same ratio from the cited precedents, the Tribunal found that services used for construction within the factory premises (including road) fall within services "used in or in relation to manufacture" and are not specifically excluded for the relevant period. The authorities below erred in disallowing credit where the requisite connection between the service and manufacturing activity exists; therefore the disallowance could not be sustained. [Paras 3, 4]

Denial of cenvat credit for services used in construction of road within factory premises set aside; credit allowed.

Cenvat credit on services used for setting up of plant/new mill house - services used in or in relation to manufacture - Denial of cenvat credit availed on services used for setting up of new mill house - HELD THAT: - The Tribunal followed the reasoning in Kellogg and subsequent decisions that services used for "setting up" a plant (including obtaining land on lease and works related to establishing the plant) have a direct nexus to manufacture and are covered by the phrase "used in or in relation to manufacture". Even though certain words (like "setting up") were deleted later, for the relevant period the definition remains broad enough to permit credit. Consequently, the disallowance was incorrect. [Paras 3, 4]

Denial of cenvat credit for services used in setting up new mill house set aside; credit allowed.

Cenvat credit on structuring materials - services used in or in relation to manufacture - Denial of cenvat credit availed on structuring materials (Channels, Angles, Joists, HR Coil/sheet, etc.) - HELD THAT: - The Tribunal held that the ratio of the cited authorities equally applies to structuring materials used in relation to the manufacturing activity. It relied on a consistent view of co-ordinate Benches (including the Mumbai Bench in M/s. JSW Steel Coated Products Ltd.) that such inputs, when used in relation to manufacture and not specifically excluded, are eligible for cenvat credit. The adjudicating authorities' disallowance was therefore unsustainable. [Paras 3, 4]

Denial of cenvat credit on structuring materials set aside; credit allowed.

Final Conclusion: Impugned order set aside to the extent of the disallowances; appeal allowed and cenvat credit granted on the disputed items with consequential benefits as per law.

Entitlement to refund of duty paid on destruction of duty free imported raw materials - post importation destruction subject to intimation to Customs authorities - interpretation and application of substituted Condition No.8 of Notification No.52/2003 - relevance of Foreign Trade Policy paragraph on disposal/destruction of unutilized material - jurisdiction of Single Member Bench of CESTAT to hear appeals

Jurisdiction of Single Member Bench of CESTAT - Single Member Bench of the CESTAT has jurisdiction to dispose of these appeals. - HELD THAT: - The respondent contended that interpretation of Notifications required Division Bench hearing. The appellant relied on its pleadings and a Miscellaneous Order of this Bench directing listing before the Single Member Bench. Having regard to the pleadings and the earlier Miscellaneous Order, the Single Member Bench was found to have been conferred jurisdiction to adjudicate these appeals and proceed to decide the substantive controversy. [Paras 2]

Appeals are maintainable before the Single Member Bench which may hear and decide the matter.

Entitlement to refund of duty paid on destruction of duty free imported raw materials - post importation destruction subject to intimation to Customs authorities - interpretation and application of substituted Condition No.8 of Notification No.52/2003 - relevance of Foreign Trade Policy paragraph on disposal/destruction of unutilized material - Appellant entitled to refund of duties paid where duty free raw materials, imported for manufacture and export, were destroyed after intimation/with requisite permission and export obligations were fulfilled. - HELD THAT: - The appellant, an EOU, imported inputs duty free and later destroyed certain obsolete/unusable quantities. The substituted Condition No.8 of Notification No.52/2003 (as amended) provides that duty shall not be leviable where goods including raw material are destroyed within the unit after intimation to Customs authorities (subject to the officer's satisfaction). The Tribunal found no dispute on fulfillment of export obligations. Reliance was placed on this Bench's earlier decision in Saint Gobin Crystals where, on similar facts and having regard to the Foreign Trade Policy provision permitting destruction under intimation to Customs, the matter was remitted for fresh consideration and the impugned order set aside. A conjoint reading of the amended Notification and the precedent led to the conclusion that Revenue erred in demanding duty; the refund claims were therefore allowed. The Tribunal set aside the orders of the lower authorities and allowed the appeals with consequential reliefs. [Paras 6, 9, 10, 11]

Impugned orders rejecting the refund claims set aside; appeals allowed and appellant entitled to refund with consequential benefits as per law.

Final Conclusion: The Single Member Bench was held competent to decide the appeals; on merits the Tribunal allowed the appeals, holding that under the substituted Condition No.8 of Notification No.52/2003 and the relevant Foreign Trade Policy provisions an EOU which fulfilled export obligations and destroyed obsolete duty free raw materials after intimation/with permission is entitled to refund of duties wrongly paid, and the impugned orders were set aside with consequential relief.

Input service - Cenvat credit - services used in relation to sales promotion - place of removal - exclusion for services used primarily for personal use or consumption of any employee

Input service - Cenvat credit - services used in relation to sales promotion - exclusion for services used primarily for personal use or consumption of any employee - Air-travel agency service used by the appellant is eligible for Cenvat credit under the amended definition of "input service" in Rule 2(l) of the Cenvat Credit Rules, 2004 w.e.f. 01.04.2011. - HELD THAT: - The amended definition of "input service" covers services used by a manufacturer directly or indirectly in or in relation to manufacture and clearance up to the place of removal and expressly includes services such as advertisement or sales promotion, market research, auditing and similar activities. The inclusive part of the definition is to be given a wide meaning so that services used in relation to the listed activities qualify as input services without requiring a direct nexus to the manufacturing process. The exclusion in Rule 2(l) applies only to services used primarily for personal use or consumption of any employee. In the present case the air-travel agency service was used for business purposes-promotion of sales, auditing, inspection and related activities-and was not used primarily for personal consumption by employees. The service is not specified in the exclusion clause. The Department has not pointed out any discrepancy in the ISD invoices or distributions that would disentitle the appellant from credit, and the Department itself has allowed credit for air-travel services in the appellant's case on some occasions. Applying the amended definition and the exclusion provision, the Tribunal finds the air-travel agency service to be an eligible input service and thus the Cenvat credit taken is justified. [Paras 8, 9, 10, 11, 12]

Impugned denial of Cenvat credit is set aside; air-travel agency service held eligible for credit and the appeal is allowed.

Final Conclusion: The Tribunal allows the appeal, holding that air-travel agency services used by the appellant for business purposes qualify as "input service" under Rule 2(l) (w.e.f. 01.04.2011) and that the denial of Cenvat credit was not justified; the order denying credit is set aside.

Interest on refund - reversal of Cenvat credit - payment under protest - refund sanction within three months under Section 11B/11BB of the Central Excise Act, 1944

Interest on refund - payment under protest - reversal of Cenvat credit - Entitlement to interest from date of payment where the amount refunded arose from reversal of Cenvat credit and there is no record of payment made 'under protest'. - HELD THAT: - The Tribunal found that the amount sought to be refunded arose from a reversal of Cenvat credit effected by the assessee pursuant to audit directions. There is nothing on the record to show that that reversal was made under protest; consequently it could not be treated as a deposit made under protest for the purposes of claiming interest. Although this Tribunal earlier set aside the reversal, the payment/adjustment itself was not shown to have been made under protest, and therefore the claim for interest from the date of that reversal/payment is not maintainable.

No interest awarded from the date of payment/reversal because the amount was not shown to have been paid under protest.

Refund sanction within three months under Section 11B/11BB of the Central Excise Act, 1944 - interest on refund - Whether interest is payable from the date of the refund application where the refund was sanctioned within three months of the application. - HELD THAT: - The refund application was filed and the refund was subsequently sanctioned within the statutory three-month period as contemplated under the refund provisions. Because the refund was allowed within the three-month period, there is no obligation to award interest from the date of the refund application. The Tribunal therefore upheld the view that interest from the date of application was not payable.

No interest awarded from the date of the refund application since the refund was sanctioned within three months of the application.

Final Conclusion: The appellate order upholding the rejection of interest was affirmed and the appeal dismissed.

Penalty in escaped turnover assessment - best judgment assessment - Sri Ram Packages principle - assessment of escaped turnover - Ashok Leyland principle - alternate remedy rule - statutory appeal - excess of jurisdiction

Sri Ram Packages principle - penalty in escaped turnover assessment - best judgment assessment - excess of jurisdiction - Validity of the penalty imposed in the Section 16 assessment (paragraph 7 of the impugned order). - HELD THAT: - The Court examined Section 16(2) of the TNGST Act in light of the Division Bench decision in Sri Ram Packages and concluded that penalty in escaped turnover assessments is permissible only where the best judgment method has been adopted. In the present case the Assessing Officer relied upon alleged incriminating material rather than having adopted a best judgment assessment. Applying the Sri Ram Packages principle, imposition of penalty in these circumstances is contrary to law and amounts to excess of jurisdiction to the extent of levy of penalty. Consequently paragraph 7 of the impugned order (captioned 'Penalty') is set aside. [Paras 13, 21]

Paragraph 7 of the impugned order is set aside; the penalty levied is quashed.

Ashok Leyland principle - assessment of escaped turnover - alternate remedy rule - statutory appeal - Validity of reopening/assessment under Section 16 of the TNGST Act in relation to claimed stock transfers for assessment year 2000-2001 and the scope for adjudication of the tax-demand portion of the impugned order. - HELD THAT: - The impugned order records that proforma invoices and sale invoices recovered at inspection show a close correlation in quantities and values, observations which the Assessing Officer treated as incriminating material and suppression. The High Court declined to re-examine those factual findings in writ jurisdiction, observing that whether the material is truly incriminating requires scrutiny of records and is a matter for the appellate authority. Applying the alternate remedy rule, and having regard to the limited exception doctrine as expounded in recent precedent, the Court held that except for the penalty aspect (set aside), the remainder of the impugned order assessing tax due is to be sustained for the purpose of this judgment and the writ petitioner must pursue the statutory appeal under Section 31 of the TNGST Act (subject to pre-deposit and limitation). The appellate authority is to decide the tax-demand portion on merits uninfluenced by this Court's observations. [Paras 9, 10, 20, 21]

The tax-demand portion of the impugned order is sustained; the writ petition is dismissed insofar as it challenges the tax due portion and the petitioner is relegated to file a statutory appeal under Section 31.

Final Conclusion: Writ petition partly allowed and partly dismissed: penalty (paragraph 7) is quashed; the balance of the impugned order (tax demand for 2000-2001) is sustained and the petitioner is relegated to the statutory appeal under Section 31 of the TNGST Act, to be decided on merits subject to applicable pre-deposit and limitation.

Principles of natural justice - remand for fresh consideration - reconciliation of seized records with books of accounts - opportunity of personal hearing - alternate remedy under the Act - assessment revision pursuant to inspection

Principles of natural justice - alternate remedy under the Act - Whether the writ petitions filed by the assessee should be entertained or the assessee should be left to the alternate remedy under the Act, having regard to the conduct in seeking reconciliation and earlier directions issued by the Court. - HELD THAT: - The Court observed that the assessment orders under challenge arose from a revision pursuant to an inspection and that earlier writ petitions had been disposed by reason of violation of principles of natural justice, with directions to treat the impugned orders as show cause notices and to provide copies of documents where permissible. The High Court found that the assessee had been granted time on several occasions and had sought further time for arduous reconciliation of voluminous D7 recovery slips with ledger entries. Rather than foreclose the assessee's remedy by refusing relief in writ jurisdiction, the Court concluded that it was appropriate to permit the assessee to pursue the statutory/alternate remedy under the Act; however, in view of the circumstances one final opportunity should be afforded to reconcile and tender objections before the Assessing Officer. [Paras 8]

Writ petitions were allowed to the extent of setting aside the dismissal order and the matter remanded for fresh consideration, leaving open the alternate remedy under the Act but granting one final opportunity to the appellant.

Remand for fresh consideration - reconciliation of seized records with books of accounts - opportunity of personal hearing - The scope and directions of the remand, including the obligation on the assessee to produce D7 records, the verification process, timetable for personal hearing and consequence of non-cooperation. - HELD THAT: - The Court directed that the assessment be remanded to the respondent for fresh consideration limited to verification of the D7 records (Sl. Nos.1 to 15 contained in Books A to O) by reconciling the seized slips with the assessee's books of account. The respondent was directed to fix a date for personal hearing during the second week of November, 2021; the assessee must appear on that date, produce the necessary slips and records, and give particulars in respect of the D7 records for verification. No adjournment was to be granted. The Court warned that if the assessee refused to cooperate, the benefit of the remand would not enure and the writ appeals would be dismissed automatically, thereby reviving the order passed in the writ petitions. The directions were limited in scope to verification and completion of assessment in accordance with law. [Paras 9]

Matter remanded for fresh consideration with specific directions: personal hearing in second week of November, 2021; reconciliation and verification of D7 records with books of account; no adjournments; non-cooperation to entail automatic dismissal of the writ appeals and revival of the earlier order.

Final Conclusion: The High Court allowed the writ appeals, set aside the dismissal order, and remanded the assessments for fresh consideration limited to reconciliation and verification of the recovered D7 records with the assessee's books; a single, final opportunity for personal hearing was directed (second week of November, 2021), with no adjournments and specified consequences for non-cooperation.

Entry tax applicability - Classification of petroleum products under executive notification - Strict construction of taxing statutes - Validity of administrative clarification without stated reasons

Entry tax applicability - Classification of petroleum products under executive notification - Strict construction of taxing statutes - Rubber processing oil is not liable to entry tax as a petroleum product under the Notification dated 30.03.2002. - HELD THAT: - The Court applied the well established principle that taxing statutes must be construed strictly and that a subject cannot be taxed unless clearly covered by the statutory language. The Notification dated 30.03.2002 listing petroleum products was examined and rubber processing oil is not mentioned in the extract relied upon by the State. In view of the omission of rubber processing oil from the specified entries, it cannot be subjected to entry tax merely by administrative classification or presumption that it is a petroleum product. The decision in Carl Bechem Lubricants (DB) was noted for the proposition that a product not falling within the entry cannot be taxed under that entry. [Paras 7, 8]

The levy of entry tax on rubber processing oil for Assessment Years 2009-10 and 2010-11 cannot be sustained.

Validity of administrative clarification without stated reasons - Strict construction of taxing statutes - The clarification dated 05.12.2012 issued by the Commissioner, having no reasons, is not a valid basis to levy entry tax on rubber processing oil. - HELD THAT: - The Court held that administrative clarification relied upon by the Assistant Commissioner did not furnish reasons for classifying rubber processing oil as liable to entry tax. Given the requirement that taxation must rest on clear language and not on unexplained administrative pronouncements, the lack of stated reasons rendered the clarification inadequate to support the reassessment and levy. The Single Judge's quashing of the clarification in so far as it pertained to rubber processing oil was affirmed. [Paras 6, 9]

The clarification dated 05.12.2012 is quashed insofar as it purports to subject rubber processing oil to entry tax.

Final Conclusion: The Single Judge's order quashing the assessment insofar as it imposed entry tax and interest on rubber processing oil, and quashing the clarification dated 05.12.2012 to that extent, is upheld; the intra court appeal is dismissed.

Service of notice under Rule 53 of the Karnataka Sales Tax Rules, 1957 - married daughter remains a member of the family for purposes of service - service by registered post suffices under Rule 53 - burden of proof for deduction lies on the dealer under Section 6-A of the Karnataka Sales Tax Act, 1957 - tax authorities not competent to adjudicate validity of partnership deed - assessment may be proceeded against any continuing partner or his representative

Service of notice under Rule 53 of the Karnataka Sales Tax Rules, 1957 - married daughter remains a member of the family for purposes of service - service by registered post suffices under Rule 53 - Validity of service of assessment orders dated 27.05.2010 - HELD THAT: - The Court held that Rule 53 prescribes alternative modes of service including delivery to the dealer, his manager or agent, leaving it at his last known place of business or residence with some adult member of his family, or sending by registered post to an address known to the authority. The contention that the notice served on Smt. Mamatha was invalid because she had married and ceased to be an adult member of her father's family was rejected. Ordinarily a married daughter does not cease to be a family member for these purposes and, in any event, service by registered post to the known address would suffice. Moreover, the assessee suffered no prejudice because appeals were filed within limitation and the matter was considered on merits by the First Appellate Authority and later by the Tribunal. [Paras 6, 7, 8]

Service of the assessment orders was valid; the challenge based on defective service is untenable.

Tax authorities not competent to adjudicate validity of partnership deed - assessment may be proceeded against any continuing partner or his representative - Whether the Assessing Authority could proceed with assessment relying on the partnership deed and against Sri N. Ajith despite challenge to the deed and death of a partner - HELD THAT: - The Court observed that the partnership deed submitted to the authorities constituted a reconstitution of the firm and that the tax authorities exercising functions under the KST Act are not competent to try the legal validity of a partnership deed. The assessee, having furnished the deed, cannot later disown it before the tax authority. It was also noted that assessments can be proceeded with against any one of the partners and that retired partners need not be treated as necessary parties where proceedings are not in the nature of execution/recovery. The record showed that N. Ajith continued as partner and had authorised his brother to receive correspondence, and no objection to service or to the partnership deed was raised before the Assessing Authority. [Paras 9, 10, 11, 12]

Proceeding with the assessment against Sri N. Ajith based on the partnership deed was permissible; challenge to the deed before the tax authority is not a valid ground to invalidate the assessment.

Burden of proof for deduction lies on the dealer under Section 6-A of the Karnataka Sales Tax Act, 1957 - Allowability of deductions claimed for tax collected and paid for certain assessment years - HELD THAT: - The Tribunal found, and the Court upheld, that the assessee failed to produce books of account and relevant documents to substantiate claims of deduction for tax collected and paid (returns in Form-4 not filed for the years in question and claims shown only in monthly statements). The statutory burden to justify such deductions rests on the dealer under Section 6-A, and in the absence of proof and opportunity availed to dispel proposed additions, the determinations against the assessee became final. [Paras 13, 14]

Claims for deduction of tax collected and paid were rightly disallowed for want of proof; the Tribunal's affirmative answer for the revenue is upheld.

Final Conclusion: The High Court answered the substantial questions of law in favour of the Revenue and against the assessee, holding the service of the assessment orders valid, the assessment proceedings against the continuing partner permissible (the tax authority not being the forum to adjudicate partnership deed validity), and the denial of deductions for tax collected and paid justified for want of proof; the revision petitions are dismissed.

Determination of taxable turnover - deduction for labour and like charges under Rule 3(2)(m) of the KVAT Rules - value of the contract includes tax collected - deduction of amounts collected by way of tax under Rule 3(2)(h) - total consideration of contract inclusive of tax for composition scheme

Deduction for labour and like charges under Rule 3(2)(m) of the KVAT Rules - value of the contract includes tax collected - determination of taxable turnover - Whether the standard rate of deduction under Rule 3(2)(m) is to be applied on the value of the contract inclusive of tax collected from customers - HELD THAT: - The Court examined Rule 3(2) which prescribes deductions from total turnover to arrive at taxable turnover and noted that Rule 3(2)(h) expressly permits deduction of amounts collected by way of tax. Clause (l) treats the entire amount paid or payable to the dealer as the contract value for works contracts. Rule 3(2)(m) applies a standard rate towards labour and like charges where such charges are not ascertainable from books and the Table refers to the "value of the contract". Read together, these provisions show that the value of the contract for the purpose of applying the standard deduction includes all amounts received under the contract, whether constituting tax or other components. The Tribunal's interpretation that the standard rate is to be applied on the contract value inclusive of tax collected is consistent with the scheme of Rule 3(2) and Section definitions governing total and taxable turnover, and there is no perversity or illegality in that conclusion. [Paras 13, 14, 15]

The standard rate deduction under Rule 3(2)(m) is to be applied on the value of the contract inclusive of tax collected; the Tribunal's order allowing the assessee is upheld.

Final Conclusion: Revision petition dismissed; question of law answered in favour of the assessee and against the revenue, confirming that the standard deduction for labour under Rule 3(2)(m) is to be computed on the contract value inclusive of tax collected.

Sand and grits - classification of goods for taxation - common parlance test - marketability/popular meaning test - residuary entry - burden of proof on taxing authority - clarificatory notification

Sand and grits - common parlance test - classification of goods for taxation - clarificatory notification - burden of proof on taxing authority - Manufactured sand (M sand) falls within Entry 83 ('Sand and grits') of the Third Schedule to the KVAT Act and is taxable at the rate specified therein for the tax periods in question. - HELD THAT: - The Court applied the common parlance/marketability/popular meaning tests to classification and held that the ordinary understanding of the term 'sand' includes manufactured sand. Material on record (including an institutional report and comparative technical evidence) established that M sand has similar physical properties and identical end use in construction as river sand. The Government Notification dated 31.03.2015 reducing the rate for M sand was treated as clarificatory and not as excluding M sand from Entry 83 for the relevant period. The Court reiterated the principle that the burden lies on the taxing authority to bring material to show that a commodity falls outside a specific tariff entry and may properly be taxed under the residuary entry; the revenue did not discharge that burden apart from reliance on the Notification. Applying precedents that classification must follow popular meaning and that residuary entries are for goods not covered by specific entries, the Court concluded M sand is covered by Entry 83 and ordered recomputation of tax accordingly. [Paras 16, 18, 19, 20, 21]

Answered in favour of the assessee; M sand is covered by Entry 83 of the Third Schedule and taxed at the rate specified therein for the relevant periods, and the Tribunal's order is set aside.

Final Conclusion: Revision petition allowed; Tribunal judgment set aside for tax periods April 2014 to March 2015 and assessing authority directed to recompute tax treating M sand as falling under Entry 83 of the Third Schedule to the KVAT Act.