TaxTMI Updates e-Newsletter
Nov 02,2022

Invocation of bank guarantee pending constitution of Appellate Tribunal - Condition for maintaining appeal under Section 112(8)(b) of the CGST/SGST Act - Stay of enforcement measures under Section 129 of the CGST/SGST Act - Treatment of interim deposit as compliance when Tribunal is later constituted - Obligation to keep bank guarantee alive and consequence of non-renewal

Invocation of bank guarantee pending constitution of Appellate Tribunal - Stay of enforcement measures under Section 129 of the CGST/SGST Act - Condition for maintaining appeal under Section 112(8)(b) of the CGST/SGST Act - Whether the authorities may invoke the bank guarantee furnished in proceedings under Section 129 of the CGST/SGST Act pending constitution of the Appellate Tribunal, and on what condition a direction restraining such invocation can be issued. - HELD THAT: - The Court held that a direction restraining invocation of the bank guarantee can be issued only if the petitioner complies with the condition that Section 112(8)(b) of the CGST/SGST Act requires for maintaining an appeal before the Appellate Tribunal. Although the Appellate Tribunal is yet to be constituted and the appeal period has not commenced, the petitioner must remit an amount equivalent to the deposit mandated by Section 112(8)(b) (20% of the tax in dispute) as a condition for stay of invocation of the bank guarantee. This interim payment is required notwithstanding the non-constitution of the Tribunal in order to secure a stay of enforcement measures while preserving the statutory prerequisite for pursuing an appeal when the Tribunal is constituted. [Paras 4, 5]

Petitioner directed to remit the amount payable under Section 112(8)(b) (20% of tax in dispute) within two weeks; on such remittance, any bank guarantee furnished in proceedings under Section 129 shall not be invoked pending constitution of the Appellate Tribunal.

Treatment of interim deposit as compliance when Tribunal is later constituted - Obligation to keep bank guarantee alive and consequence of non-renewal - Whether the interim payment made by the petitioner in terms of the Court's direction will be treated as sufficient compliance of Section 112(8)(b) once the Appellate Tribunal is constituted, and the consequence if the bank guarantee is not kept alive. - HELD THAT: - The Court directed that the amount remitted by the petitioner pursuant to the order shall be treated as sufficient compliance with Section 112(8)(b) when the Appellate Tribunal is constituted, and the petitioner will not be required to deposit any further amount under that provision for maintaining an appeal. The petitioner is also required to keep the bank guarantee alive; failure to renew the bank guarantee in time will permit the officer to invoke the bank guarantee notwithstanding the Court's directions. [Paras 5]

Interim payment to be treated as compliance of Section 112(8)(b) once Tribunal is constituted; petitioner must keep bank guarantee alive and failure to renew permits invocation despite this order.

Final Conclusion: Writ petition disposed of: petitioner to deposit the amount required by Section 112(8)(b) within two weeks to restrain invocation of the bank guarantee in Section 129 proceedings; such deposit will stand as compliance when the Appellate Tribunal is constituted, subject to the petitioner keeping the bank guarantee alive, failing which the officer may invoke it.

Bail under Section 439 CrPC - prima facie evidence - tampering with prosecution evidence - risk of absconding - cyber fraud - forgery of documents - fraudulent GST registrations

Bail under Section 439 CrPC - prima facie evidence - risk of absconding - tampering with prosecution evidence - fraudulent GST registrations - cyber fraud - forgery of documents - Application for grant of regular bail to the applicant is rejected. - HELD THAT: - The court considered the prosecution material and the case diary and found prima facie that the applicant, along with a named co-accused, had operated forged firms used to obtain fraudulent GST registrations and to pass on fake input tax credit. Several co-accused remain absconding. Having regard to the nature and gravity of the allegations, the documentary and investigative material placed before the court, and the fact that offences involve cyber-enabled fraud and document forgery, the court concluded there is a strong apprehension that the applicant, if released on bail, may tamper with prosecution evidence or abscond. In view of these considerations the court was not inclined to exercise its discretion in favour of bail.

Bail under Section 439 CrPC refused and the bail application is dismissed.

Final Conclusion: The first bail application under Section 439 CrPC is dismissed on the ground of prima facie material implicating the applicant in cyber-enabled forgery and fraudulent GST registrations, coupled with risk of tampering with evidence and absconding by the accused.

Validity of communication issued without Document Identification Number (DIN) under CBDT Circular No.19/2019 - Consequences of non-conformity with mandatory procedural requirements - communication deemed to have never been issued - Binding nature of CBDT circulars in administration of the Income-tax Act - Revisionary power under section 263 - procedural validity of the revision order

Validity of communication issued without Document Identification Number (DIN) under CBDT Circular No.19/2019 - Consequences of non-conformity with mandatory procedural requirements - communication deemed to have never been issued - Revisionary power under section 263 - procedural validity of the revision order - Binding nature of CBDT circulars in administration of the Income-tax Act - The order passed under section 263 dated 24.3.2022 is invalid and shall be deemed to have never been issued for the assessment years 2014-15 to 2016-17 for non compliance with CBDT Circular No.19/2019. - HELD THAT: - The Tribunal examined CBDT Circular No.19/2019 which mandates that, with effect from 1 October 2019, communications shall quote a computer generated DIN in their body except in specified exceptional circumstances for which the manual communication must record the reason and prior written approval in a prescribed format. Para 4 of the Circular treats any communication not in conformity with Para 2 and Para 3 as invalid and deemed never to have been issued. The impugned section 263 order was issued manually and does not quote a DIN in its body nor does it record, in the prescribed format, that the communication was issued manually with the requisite prior approval. While separate intimations containing DINs were generated on the same and the following date, the Circular permits such regularisation only where the manual order was issued in accordance with Para 3; the generation of a DIN by separate intimation does not cure the defect where the manual order itself fails to comply with the procedural requirements. The Tribunal followed precedents of co ordinate Benches which have held that non compliance with the Circular renders the communication invalid under Para 4, and, applying the Circular and judicial authority, concluded that the revision orders are non conforming and therefore invalid. Having decided the legal issue in favour of the assessee, the Tribunal treated the merits as academic. [Paras 14, 15, 17, 18]

The section 263 orders for AYs 2014-15 to 2016-17 are invalid and deemed never to have been issued for non compliance with CBDT Circular No.19/2019; consequential merits issues are academic.

Final Conclusion: The Tribunal allowed the appeals partly by holding the revisionary orders passed under section 263 (dated 24.3.2022) to be invalid and deemed never to have been issued for AYs 2014-15 to 2016-17 for failure to comply with the procedural requirements of CBDT Circular No.19/2019; the merits were dismissed as academic.

Taxability of payments under Master Franchise Agreement as royalty/FTS/FIS - application of Article 12(4)(a) of India USA DTAA - centralized services not ancillary or subsidiary to licence fee - precedential effect of the assessee's own earlier Tribunal decision

Taxability of payments under Master Franchise Agreement as royalty/FTS/FIS - application of Article 12(4)(a) of India USA DTAA - centralized services not ancillary or subsidiary to licence fee - Whether amounts received under the Master Franchise Agreement are taxable as royalty/fee for technical services/fees for included services (FIS) under domestic law or the India USA DTAA. - HELD THAT: - The Tribunal held that the factual matrix in the assessment year under appeal is identical to its earlier decision in the assessee's own case for assessment year 2016 17. In that earlier decision the Tribunal examined and rejected the applicability of Article 12(4)(a) of the India USA DTAA to the centralized service fee, concluding that centralized services such as marketing, promotion and reservations do not flow from, nor are ancillary or subsidiary to, the grant of a licence to use the brand. The Tribunal applied its reasoning in Starwood Hotels & Resorts Worldwide Inc., observed that the service fee cannot be treated as ancillary to the licence merely because both are contained in a single agreement or by reference to relative quantum, and held that the receipts fit within the illustration in example 2 of the MoU to the DTAA. Respectfully following that precedent, the Tribunal concluded that the amounts received under the Master Franchise Agreement are not royalty, FTS or FIS under domestic law or the DTAA.

Addition treating the disputed receipts as royalty/FTS/FIS deleted; amounts not taxable as royalty/FTS/FIS.

Final Conclusion: Following its earlier decision in the assessee's own case for assessment year 2016 17, the Tribunal held that the payments under the Master Franchise Agreement are not chargeable as royalty, fee for technical services or fees for included services under domestic law or the India USA DTAA, set aside the addition and allowed the appeal.

Fixed place permanent establishment - dependent agent permanent establishment - business connection - profit attribution to PE - arm's length remuneration - tax neutrality of DAPE - application of DTAA over domestic law

Fixed place permanent establishment - place at the disposal - place and control test - No fixed place permanent establishment existed in India on the facts of the case. - HELD THAT: - The Tribunal examined whether operations carried out by the Indian group entity (RGA Services/RGA India) could amount to a fixed place PE of the Irish assessee. Applying the settled tests in Article 5(1) of the treaty as explained in authoritative authorities, the essential requirement is a 'place' which is 'fixed' and 'at the disposal' of the foreign enterprise with a requisite degree of control for carrying on the enterprise's business. The authorities below did not find, nor did the record show, any premises in India that were at the disposal of the assessee. Further, the core reinsurance activity - the assumption of risk - was effected outside India. Activities performed by RGA India were remunerated and accepted as arm's length in the transfer pricing proceedings; those paid-for support activities do not convert into a fixed place PE for the assessee. On these grounds the Tribunal disapproved the conclusion of the Assessing Officer/DRP and held there was no fixed place PE on the facts of this case. [Paras 8, 9, 10]

Held that there was no fixed place permanent establishment in India.

Dependent agent permanent establishment - arm's length remuneration - tax neutrality of DAPE - The question of a dependent agent permanent establishment (DAPE) is academic and tax-neutral given that the Indian agents were paid arm's length remuneration. - HELD THAT: - Relying on binding coordinate-bench and higher-court precedent, the Tribunal recorded that even if a DAPE exists, profit attribution to the DAPE is neutral where the agent's remuneration has been established to be at arm's length. The revenue did not dispute or produce material to show that the remuneration paid to the Indian agents was not arm's length. Consequently, no additional profits could be attributed to the assessee on account of a DAPE, and the existence of a DAPE would have no tax consequence. In view of this tax-neutral position, the Tribunal declined to adjudicate the existence of a DAPE in detail and accepted the assessee's contention that no further tax arises in India. [Paras 10, 15, 16]

Held that existence of a dependent agent PE is tax-neutral where agent's remuneration is at arm's length; accordingly the DAPE issue is academic and gives rise to no tax liability.

Final Conclusion: The appeal is allowed: there was no fixed place permanent establishment in India and, in any event, any dependent agent permanent establishment would be tax-neutral because the Indian agents received arm's length remuneration; accordingly the reinsurance business profits of the assessee have no tax consequence in India and the other grounds are academic.

Deeming fiction of Section 50C for computing full value of consideration for the purpose of section 48 - application of the deeming provision of Section 50C to entitlement of exemption under Section 54B/54F - deduction under Section 54B - investment of capital gain and timing of investment vis-a -vis filing under section 139(1)/139(4) - use of stamp valuation/Stamp Valuation Authority rates as evidence of actual receipt of higher consideration - reopening of assessment - 'reason to believe' threshold for issuing notice under Section 148/Section 147

Deeming fiction of Section 50C for computing full value of consideration for the purpose of section 48 - use of stamp valuation/Stamp Valuation Authority rates as evidence of actual receipt of higher consideration - Whether the long term capital gain addition computed by adopting the value estimated by the Sub Registrar (stamp valuation) could be sustained in absence of evidence that assessee received excess consideration. - HELD THAT: - The Tribunal found that the Assessing Officer proceeded solely on the higher value adopted by the Stamp Valuation Authority without any tangible material to show that the assessee actually received consideration in excess of the amount stated in the registered sale deed. Relying on coordinate decisions and principles that the valuation adopted for stamp duty cannot, by itself and without corroborative evidence, be equated to the actual consideration received, the Bench held that there was no justification for making the addition based only on the stamp authority's estimate. The Tribunal accepted the assessee's DLC rate chart and other material before it and concluded that the AO had not brought on record any evidence of receipt of excess sale consideration; therefore the addition confirmed by the CIT(A) was not sustainable and was deleted.

Addition on account of long term capital gain computed by adopting the Sub Registrar's value is deleted for want of evidence that excess consideration was actually received.

Application of the deeming provision of Section 50C to entitlement of exemption under Section 54B/54F - deduction under Section 54B - investment of capital gain and timing of investment vis-a -vis filing under section 139(1)/139(4) - Whether the assessee was entitled to deduction under Section 54B and whether the amount to be considered for that deduction is the actual sale consideration (sale deed) or the deemed value under Section 50C. - HELD THAT: - The Tribunal followed coordinate bench and High Court authority reasoning that the deeming fiction in Section 50C is enacted for the limited purpose of computation under section 48 and does not, without more, alter the 'net consideration' relevant for claiming exemptions under sections 54B/54F. On the facts, the assessee had invested an amount (supported by purchase deed and stamp duty entries) which exceeded the capital gain computed on the basis of the actual sale consideration in the sale deed. The Tribunal also applied precedents holding that investment made before filing of return under section 139(4) may satisfy the timing requirement where returns are belated. Having found that the assessee actually invested the requisite amount as per the sale deed figures, the Tribunal held that no addition was required and the deduction under Section 54B was allowable.

Assessee entitled to deduction under Section 54B; amount to be considered for that purpose is the actual sale consideration as per the sale deed (not the deemed stamp valuation), and the investment made by the assessee satisfied the statutory requirement.

Reopening of assessment - 'reason to believe' threshold for issuing notice under Section 148/Section 147 - Validity of grounds challenging initiation of reassessment proceedings (grounds 1 and 2 alleging want of jurisdiction, limitation, absence of approval and denial of opportunity). - HELD THAT: - The Tribunal noted that the assessee filed written submissions on these grounds but did not press oral argument nor produced material to counter the findings of the lower authorities; consequently the Tribunal recorded that no contrary material was placed before it. On that basis the Tribunal dismissed grounds 1 and 2, observing that the assessee had not advanced any argument in support of those grounds during hearing and had not rebutted the observations of the lower authorities concerning non filing of return and other procedural steps.

Grounds 1 and 2 are dismissed for lack of contestation and absence of contrary material before the Tribunal.

Final Conclusion: The appeal is partly allowed: the long term capital gain addition computed by reference to the Sub Registrar's valuation is deleted and deduction under Section 54B is allowed on the basis of the actual sale consideration and the investment made; the procedural grounds challenging reassessment (grounds 1 and 2) are dismissed as not pressed before the Tribunal; interest issues are consequential.

Late filing fee under section 234E of the Income Tax Act, 1961 - inadvertent technical error in filing TDS statement in wrong form - no loss to Revenue - mandatory nature of the fee vis-a -vis equitable relief in technical cases

Late filing fee under section 234E of the Income Tax Act, 1961 - inadvertent technical error in filing TDS statement in wrong form - no loss to Revenue - mandatory nature of the fee vis-a -vis equitable relief in technical cases - Whether the levy of late filing fee under section 234E is sustainable where the assessee had deposited TDS and filed a TDS statement in time but in an incorrect form and subsequently rectified the filing, with no loss caused to the Revenue. - HELD THAT: - The Tribunal acknowledged that section 234E imposes a mandatory fee for late filing of TDS statements and that earlier authorities have characterized it as a fixed charge rather than a punitive penalty. However, the Tribunal found those principles inapplicable to the facts where the assessee had, within time, deposited the entire TDS amount and had initially filed a TDS statement albeit in the incorrect form (Form 26QB instead of Form 27Q) due to inadvertence. The assessee sought and obtained refund and re-deposited the TDS, and ultimately filed the correct Form 27Q; the Department had suffered no loss. The Tribunal distinguished decisions where no TDS return was filed at all, observing that those facts do not govern a case of mere technical or inadvertent error. Having regard to the absence of prejudice to Revenue and the technical nature of the lapse, the Tribunal held that imposing the late filing fee under section 234E in the present circumstances was not warranted and accepted the assessee's grievance. [Paras 9, 11, 12, 13, 15]

Levy of late filing fee under section 234E deleted and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal for AY 2016-17, set aside the confirmation of the late filing fee under section 234E in view of the inadvertent filing in the wrong form, the prompt rectification and re-deposit of TDS and the absence of any loss to the Revenue.

Meaning of "pending" for appeals under the VSV Act - competence or validity of an appeal is not a prerequisite for its pendency - interpretation of Section 2(1)(a) and Section 2(1)(n) of the VSV Act - scope of CBDT's power to issue circulars under Section 10 of the VSV Act (analogy to Section 119 of the IT Act) - invalidity of administrative instructions insofar as they are adverse to the assessee - quashing of Forms issued under VSV Scheme and direction to treat an appeal as pending

Meaning of "pending" for appeals under the VSV Act - competence or validity of an appeal is not a prerequisite for its pendency - interpretation of Section 2(1)(a) and Section 2(1)(n) of the VSV Act - The meaning of the word 'pending' in Section 2(1)(a) of the VSV Act and whether an appeal must be valid/competent or admitted to be regarded as pending on the specified date. - HELD THAT: - The Court held that where a statute contemplates the 'pendency' of an appeal, the requirement is only that an appeal has been filed and remains undetermined as on the specified date; there is no statutory qualification that the appeal must be valid, competent or admitted. Reliance was placed on the principle that validity or competence of an appeal is for the appellate forum to decide after hearing, and an appeal which may later be found barred or incompetent nevertheless remains an appeal pending until so adjudicated. The Court cited earlier authority in support of the view that irregularity or incompetence does not expunge the existence of an appeal and therefore cannot be read into the VSV Act as a condition for eligibility. [Paras 13, 15, 16]

An appeal filed and undetermined on the specified date is 'pending' for the purposes of Section 2(1)(a) of the VSV Act even if it is irregular, barred by limitation or not admitted prior to that date.

Scope of CBDT's power to issue circulars under Section 10 of the VSV Act (analogy to Section 119 of the IT Act) - invalidity of administrative instructions insofar as they are adverse to the assessee - FAQ-59 requiring admission of appeal contrary to law - Whether FAQ-59 in CBDT Circular No.21/2020 (requiring admission of an appeal before the date of declaration as a condition for deeming the appeal to be pending) is valid. - HELD THAT: - The Court observed that although the CBDT has power to issue directions under Section 10 of the VSV Act, that power is analogous to the Board's power under Section 119 of the IT Act and does not permit issuance of circulars adverse to assessees. Administrative instructions cannot override or add conditions to statutory provisions. Consequently, to the extent FAQ-59 imposes 'admission' of the appeal before filing the declaration as a pre-condition for treating an appeal as pending on the specified date, it is contrary to law and liable to be set aside. The Court noted authoritative statements that circulars inconsistent with the statute have no legal existence and that judicial declarations of law prevail over executive circulars. [Paras 18, 19, 20, 21]

FAQ-59 of CBDT Circular No.21/2020 is invalid insofar as it treats 'admission' of an appeal prior to filing the declaration as a necessary condition for deeming the appeal pending under the VSV Act.

Quashing of Forms issued under VSV Scheme and direction to treat an appeal as pending - relief under the VSV Act - revision of Forms 3 - Relief to be granted consequential to the statutory interpretation: whether the petitioner's quantum appeal before CIT(A) filed on 24.05.2019 is to be treated as pending on 31.01.2020 and whether the Forms issued should be revised to settle both quantum and penalty appeals under the VSV Act. - HELD THAT: - Applying the interpretation that an appeal filed and undetermined on the specified date is 'pending', and having held that FAQ-59 cannot add an 'admission' requirement, the Court quashed the impugned Forms issued by the designated authority to the extent they refused settlement of the quantum appeal. The Court directed respondent No.1 to treat the appeal filed before the CIT(A) on 24.05.2019 as pending on 31.01.2020 and to issue revised Forms 3 settling both the quantum appeal before CIT(A) and the penalty appeal before the ITAT in accordance with the VSV Act within eight weeks. [Paras 21, 22]

The appeal filed on 24.05.2019 is to be treated as pending as on 31.01.2020; the impugned Forms are quashed to the extent of rejecting settlement of the quantum appeal and respondent No.1 is directed to issue revised Forms 3 settling both appeals under the VSV Act.

Final Conclusion: The High Court held that an appeal filed and undetermined on the specified date qualifies as 'pending' under the VSV Act even if it is irregular or not yet admitted; accordingly, FAQ-59 of CBDT Circular No.21/2020 is invalid to the extent it conditions pendency on prior admission of the appeal, quashed the relevant Forms, and directed respondent No.1 to treat the petitioner's quantum appeal for Assessment Year 2014-15 as pending on 31.01.2020 and to issue revised Forms 3 settling both the quantum and penalty appeals under the VSV Act within the time prescribed.

Classification of urban area for Section 54G - continuity of pre-existing notification under the General Clauses Act - effect of omission and re-enactment of provisions on existing declarations - application of historical notification to newly enacted provision

Classification of urban area for Section 54G - application of 1967 CBDT notification - Whether Bangalore, having been declared urban by the 1967 CBDT notification, continues to be an urban area for the purposes of Section 54G. - HELD THAT: - The Court applied the ratio in Fibre Boards Pvt. Ltd. v. CIT, holding that on omission of the earlier provision and its re-enactment in modified form as Section 54G, Section 24 of the General Clauses Act operates so that the earlier notification declaring the area urban continues for the purposes of the new provision. The Explanation to Section 54G incorporates the definition previously contained in the omitted provision, and the Supreme Court in Fibre Boards concluded that the 1967 notification declaring the area urban would be continued under Section 54G. On that basis the notification dated 22.09.1967, which declared Bengaluru Corporation an urban area, remains applicable for Section 54G. [Paras 12, 13, 14]

Bengaluru continues to be an urban area for the purpose of Section 54G; the 1967 notification is operative for Section 54G.

Effect of omission and re-enactment of provisions on existing declarations - application of historical notification to newly enacted provision - Whether the Tribunal was correct in treating Bangalore as a non-urban area for the period in question and in holding that the later Notification of 27.04.2006 alone governs eligibility under Section 54G. - HELD THAT: - The Court rejected the ITAT's approach which disqualified the earlier notification from applying to Section 54G. Relying on the Supreme Court's reasoning in Fibre Boards, the Court held that omission of Section 280-ZA and re-enactment by Section 54G, together with the Explanation incorporating the earlier definition, means that the earlier declaration survives for the purposes of Section 54G. Consequently, the later Notification of 27.04.2006 need not be the sole basis for determining urban status; the 1967 notification continues to operate and confers eligibility under Section 54G for the assessee. [Paras 12, 13, 14, 15]

The Tribunal's conclusion that Bangalore was non-urban for the purpose of Section 54G is erroneous; the earlier notification continues to apply and the assessee is entitled to the benefit under Section 54G.

Final Conclusion: Appeal allowed; questions of law answered in favour of the assessee and against the Revenue. The 1967 CBDT notification declaring Bengaluru an urban area continues to apply for the purposes of Section 54G and the assessee is entitled to the exemption.

Continuation of assessment proceedings against legal representative - deeming fiction under Section 159(2) of the Income Tax Act, 1961 - construing notices issued between 01 April 2021 and 30 June 2021 as show-cause notices under Section 148A(b) - validity of a notice issued in the name of a deceased assessee where initial notice was issued during lifetime

Continuation of assessment proceedings against legal representative - deeming fiction under Section 159(2) of the Income Tax Act, 1961 - validity of a notice issued in the name of a deceased assessee where initial notice was issued during lifetime - Validity of the notice dated 1st June, 2022 (construed as a show-cause notice under Section 148A(b)) issued in the name of the deceased assessee and the power to continue assessment proceedings against the legal heir for AY 2015-16. - HELD THAT: - The Supreme Court's directive in Union of India v. Ashish Agarwal required notices issued under the erstwhile Section 148 between 01 April 2021 and 30 June 2021 to be treated as show-cause notices under Section 148A(b); the present proceedings are a continuation of the initial notice dated 25 April 2021 which was issued when the assessee was alive. By virtue of the deeming fiction in Section 159(2), any proceeding taken against a deceased before death is deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which it stood on the date of death so as to enable recovery from the estate. The Assessing Officer, upon being apprised of the assessee's death, amended the addressee and issued further notices in the name of the deceased through the legal heir, thereby following the statutory mechanism to continue proceedings. The decision in Sangeeta Vig is distinguishable because in that case the initial notice under the erstwhile Section 148 was issued after the assessee's death; by contrast, here the initial notice was issued during the assessee's lifetime, permitting continuation against the legal representative. [Paras 7, 8, 9]

The notice dated 1st June, 2022 and consequent actions amending the addressee and issuing notice to the legal heir are valid; assessment proceedings may be continued against the legal representative under the deeming fiction of Section 159(2).

Final Conclusion: Writ petition dismissed; the Court upheld continuation of the assessment proceedings for AY 2015-16 against the legal heir pursuant to the initial notice issued during the assessee's lifetime, leaving all other merits open to be decided in the proceedings.

Condonation of delay - reasonable cause for delay - delay in filing appeal - dismissal of appeal for delay - penalty under Section 271(1)(c) - perverse order on facts

Condonation of delay - reasonable cause for delay - delay in filing appeal - whether the delay in filing the appeal before the CIT(A) could be condoned on the ground stated by the assessee - HELD THAT: - Assessment order was passed on 28.11.2011 and the appeal to the CIT(A) was filed after a prolonged delay. The assessee's explanation recorded in the statement of facts stated that the Assessing Officer had insisted on certain additions and had obtained a consent letter from the assessee with the hope that no penalty would be imposed. The CIT(A), relying on authority, dismissed the appeal as time-barred; the ITAT upheld that conclusion. The High Court examined the factual explanation given for the delay and found the said reason not acceptable; having rejected the asserted explanation, the court upheld the denial of condonation of delay. The Court therefore concluded that there was no sufficient or reasonable cause to excuse the delay and that both the CIT(A) and the ITAT were justified in refusing to admit the appeal filed out of time.

The delay was rightly not condoned and the explanation for delay was held unacceptable

Dismissal of appeal for delay - perverse order on facts - penalty under Section 271(1)(c) - whether the Tribunal erred in refusing to condone delay by misunderstanding facts or in failing to adjudicate the appeal on merits - HELD THAT: - The assessee contended that the Tribunal misunderstood facts and therefore should have condoned the delay and proceeded to decide the appeal on merits, including the challenge to penalty imposed under Section 271(1)(c). The High Court, after considering the record and the reasons advanced for the delay, found no misapprehension of facts or perversity in the conclusions of the lower fora. Because the explanation for the delay was rejected as unacceptable, the appellate fora were justified in declining to admit and adjudicate the grounds on merits. Consequently, there was no failure requiring interference on the ground that the Tribunal did not decide the merits.

The Tribunal's and CIT(A)'s dismissal for delay was not perverse and their refusal to adjudicate merits did not warrant interference

Final Conclusion: Appeal dismissed; the explanation for delay was held unacceptable, condonation rightly refused by the lower authorities, and no interference with their orders was warranted.

Unexplained cash credit - Section 68 - burden of proof to establish identity, genuineness and creditworthiness of creditor - Addition under section 68 and accommodation entries - Concurrent findings of fact and scope of interference - Substantial question of law

Unexplained cash credit - Section 68 - burden of proof to establish identity, genuineness and creditworthiness of creditor - Addition under section 68 and accommodation entries - Deletion of addition of Rs. 39,05,50,000/- made under section 68 in respect of funds received from M/s. Rachna Finlease Pvt. Ltd. was justified and must be upheld. - HELD THAT: - The Assessing Officer treated the receipt as unexplained cash credit under section 68, rejecting the assessee's explanation of share application money and the creditworthiness of M/s. Rachna Finlease Pvt. Ltd. The assessee produced PAN, ledger confirmations and bank statements showing receipt through banking channels and the source of funds in the books of the creditor (receipt from identified persons), and also showed repayment. The Commissioner (Appeals) found no rational basis in the Assessing Officer's conclusion and held that the assessee had discharged its onus under section 68 by establishing identity, source and creditworthiness. The Tribunal concurred, observing that once the source of funds in the hands of the creditor was held explained, the amount could not be treated as unexplained in the hands of the assessee in the absence of contrary material and that the same item could not be added in the hands of two persons. The High Court found that the Assessing Officer's finding was without basis and that the concurrent reversal by the Appellate Authority and the Tribunal was justified. [Paras 5, 6]

The deletion of the addition under section 68 is upheld; the Assessing Officer's finding that identity and creditworthiness were not proved is reversed.

Concurrent findings of fact and scope of interference - Substantial question of law - No substantial question of law arises warranting interference with the Tribunal's order dismissing the Revenue's appeal. - HELD THAT: - The High Court reviewed the record and the concurrent factual findings of the Commissioner (Appeals) and the Tribunal that the assessee had discharged its onus under section 68. The Court concluded that the Assessing Officer ignored relevant material and that the Appellate Authority and the Tribunal correctly reversed the addition. There was therefore no substantial question of law on the matter to be entertained by the High Court. [Paras 6, 7]

The Tax Appeal is meritless and is summarily dismissed for lack of any substantial question of law.

Final Conclusion: The concurrent findings of the Commissioner (Appeals) and the Income Tax Appellate Tribunal that the assessee had established identity, source and creditworthiness in respect of the receipts from M/s. Rachna Finlease Pvt. Ltd. are upheld; the addition under section 68 is deleted and the Revenue's Tax Appeal is dismissed as not raising any substantial question of law.

Disallowance of outstanding stale cheques in cash system of accounting - adhoc disallowance for personal element in business expenses - ex parte disposal for non-appearance of appellant

Disallowance of outstanding stale cheques in cash system of accounting - Whether the addition of Rs.27,252 shown as 'Other Creditors' on account of stale cheques was correctly disallowed where the assessee followed cash system of accounting. - HELD THAT: - The Tribunal reviewed the record including the assessing officer's finding that the assessee followed cash system of accounting and the assessee's explanation that the amount represented cheques issued but not presented. The CIT(A)'s reasoning, reproduced in the order, noted that the assessee had reversed some stale cheque entries in the books and, because under cash system the liability is to be recognised only when paid, such amounts could not remain as creditors; therefore the AO's disallowance was sustained. No contrary material or arguable fallacy was placed before the Tribunal to displace the concurrent findings of the authorities below. [Paras 5, 7]

Addition of Rs.27,252 on account of stale cheques disallowance is confirmed and the ground of appeal is dismissed.

Adhoc disallowance for personal element in business expenses - Whether the assessing officer was justified in making 10% disallowance of car repair and communication expenses as personal element in absence of supporting details. - HELD THAT: - The AO made a 10% disallowance of car repair and communication expenses observing that personal element could not be ruled out and that the assessee had not furnished details. The CIT(A) upheld the additions after recording repeated opportunities given to the assessee/appellant representative to produce vehicle registration and telephone details, the repeated adjournments and ultimate failure to avail the opportunity, and the absence of evidence of separate vehicles or telephones exclusively for personal use. The Tribunal found no infirmity in the concurrent findings and noted that the assessee did not place any material before it to challenge those findings. [Paras 9, 12]

Adhoc 10% disallowances in respect of car repair and maintenance and communication expenses are confirmed and the grounds of appeal are dismissed.

Final Conclusion: The appeal is dismissed in its entirety; the disallowance of Rs.27,252 and the adhoc 10% disallowances in car repair and communication expenses are confirmed. The appeal was disposed of ex parte as the assessee did not appear.

Penalty notice invalid for failure to specify limb of section 271(1)(c) of the Income-tax Act - requirement to specify whether penalty is for concealment of particulars or for furnishing inaccurate particulars - deletion of penalty imposed under section 271(1)(c)

Penalty notice invalid for failure to specify limb of section 271(1)(c) of the Income-tax Act - requirement to specify whether penalty is for concealment of particulars or for furnishing inaccurate particulars - Validity of the penalty notice where the Assessing Officer did not specify which limb of section 271(1)(c) the proceedings were initiated under, and consequence for the penalty imposed. - HELD THAT: - The Tribunal, following the decision of the Hon'ble Delhi High Court in Sahara India Life Insurance Co. Ltd., held that a penalty notice which does not specify under which limb of section 271(1)(c) (i.e., whether for concealment of particulars of income or for furnishing inaccurate particulars of income) the penalty proceedings are initiated is vitiated. The Assessing Officer's notice reproduced in the record merely referenced proceedings under section 271(1)(c) without identifying the specific limb; on that basis the notice was found to be legally infirm. As the statutory requirement to inform the assessee of the precise charge was not complied with, the consequential penalty order based on the invalid notice could not be sustained and therefore had to be deleted. [Paras 7, 9]

Penalty sustained by the authorities set aside and penalty deleted as the notice was bad in law for failing to specify the limb of section 271(1)(c).

Final Conclusion: Following the jurisdictional High Court's precedent, the Tribunal held the penalty notice invalid for not specifying which limb of section 271(1)(c) was invoked and deleted the penalty for AY 2009-10; the appeal is allowed.

Unexplained cash credit under Section 68 - onus of proof in respect of cash credits - evidence of identity, genuineness and creditworthiness of creditor - banking channel/account payee cheque as proof of genuineness - non-compliance with summons under Section 131 not decisive

Unexplained cash credit under Section 68 - onus of proof in respect of cash credits - evidence of identity, genuineness and creditworthiness of creditor - banking channel/account payee cheque as proof of genuineness - non-compliance with summons under Section 131 not decisive - Deletion of addition of Rs.10,00,000 treated as unexplained cash credit under Section 68. - HELD THAT: - The assessee produced a confirmation from the alleged lender, the lender's bank statement and identity evidence, showing the amount was advanced by account payee cheque and that the lender had sufficient funds prior to issuance of the cheque. These materials satisfied the assessee's initial onus to establish identity, genuineness and creditworthiness of the creditor and that the transaction was effected through banking channels. The assessing officer relied solely on the lender's non compliance with a summons under Section 131 to sustain the addition. The Tribunal held that non compliance with a summons may occur for various reasons and by itself cannot be the sole criterion to treat a receipt as an unexplained cash credit where the assessee has discharged the initial burden. Once the assessee discharged the initial onus, the burden shifted to the department to prove the transaction was not genuine, which the department failed to do on the materials before it. Consequently the addition was unsustainable and was deleted. [Paras 6, 7]

The addition of Rs.10,00,000 as unexplained cash credit under Section 68 is deleted and the appeal is allowed.

Final Conclusion: Assessee's evidence establishing identity of creditor, bank transaction by account payee cheque and lender's funds discharged initial onus; non compliance with summons under Section 131 alone could not sustain addition under Section 68, hence deletion of the addition and appeal allowed.

Reassessment under section 147 - Notice under section 148 - Time limit and condition under section 149(1)(b) - Reasons recorded requirement for reopening - Nullity of reassessment notice for non compliance with recorded reasons

Reassessment under section 147 - Notice under section 148 - Time limit and condition under section 149(1)(b) - Reasons recorded requirement for reopening - Nullity of reassessment notice for non compliance with recorded reasons - Validity of reassessment proceedings initiated after four years where reasons recorded do not state that escaped income amounts to or is likely to amount to Rs.1,00,000 or more - HELD THAT: - The Assessing Officer issued notice under section 148 after more than four years on the basis of information from CBI/ACB alleging bogus accommodation entries, but the reasons recorded did not state the amount of escaped income or that it amounted to or was likely to amount to Rs.1,00,000 or more as required when reopening after four but within six years. The Tribunal applied the settled principle that reasons must disclose the AO's mind clearly and cannot be supplemented by inference or later material, relying on the decisions cited by it to hold that omission of the material particular required by section 149(1)(b) renders the notice and consequent proceedings unsustainable. Following those authorities and noting that the statutory condition precedent for invoking the extended period was not fulfilled on the face of the recorded reasons, the reassessment was held to be not in conformity with section 149(1)(b) and therefore void. [Paras 14, 15]

Reassessment proceedings set aside as bad in law for non compliance with the requirement in section 149(1)(b); notice under section 148 quashed and consequent order framed under section 143(3) r/w section 147 set aside.

Final Conclusion: Reassessment proceedings initiated by notice under section 148 were quashed for failure to record the statutory condition required by section 149(1)(b); Revenue's appeal on merits rendered academic and dismissed, and the assessee's petition under Rule 27 allowed.

Proof of source of cash as defence to addition - characterisation of receipt as loan: identity, creditworthiness and genuineness of creditors - seizure memo and contemporaneous bank entries as evidence of source - treatment of advances under agreement to sell as notional income - protection against double punishment by tax authorities

Proof of source of cash as defence to addition - seizure memo and contemporaneous bank entries as evidence of source - Deletion of addition of Rs.13 lakh treated as undisclosed income - HELD THAT: - The Tribunal accepted documentary and factual material showing that the assessee had entered into an agreement to sell her property and had received Rs.10 lakh by cheque and Rs.20 lakh in cash, and that CBI seizure memos and bank records established that Rs.13 lakh seized on 03.09.2011 derived from those receipts. The Revenue did not dispute that no case was registered against the assessee and that the seized amounts related to the sale transaction. On this basis the Tribunal found the source of the seized cash discernible and held that the addition confirmed by the authorities below was not sustainable, directing deletion of the addition. [Paras 6]

Addition of Rs.13 lakh deleted.

Characterisation of receipt as loan: identity, creditworthiness and genuineness of creditors - proof of source of cash as defence to addition - Deletion of addition of Rs.11 lakh made under invocation of unexplained credits (purported unsecured loans) - HELD THAT: - The Tribunal examined the documentary evidence and recorded statements of the three contested creditors (confirmations, identity documents, bank passbooks, J-Forms and affidavits) and found them satisfactory. The AO had accepted similar unsecured loans from other creditors but disbelieved these three on hyper-technical grounds; the Tribunal rejected that approach, observing that the creditors' identity, creditworthiness and the contemporaneous circumstances (compulsion due to CBI demand) supported the assessee's explanation that sums were collected and handed over to CBI officials. In view of the material on record and absence of substantive contrary proof by Revenue, the addition under the theory of unexplained cash credited as income was held unsustainable and deleted. [Paras 11]

Addition of Rs.11 lakh under unexplained credits deleted.

Treatment of advances under agreement to sell as notional income - seizure memo and contemporaneous bank entries as evidence of source - Deletion of addition of Rs.10 lakh credited to bank account and treated as income - HELD THAT: - The Tribunal noted undisputed facts that the assessee owned the property, entered into an agreement to sell it, and that Rs.10 lakh was credited to her bank account on 16.08.2011. The authorities below did not controvert these facts. The Tribunal concluded that the credited amount constituted an advance under the agreement to sell and, therefore, the addition of that amount as income lacked any basis and was perverse, warranting deletion. [Paras 15]

Addition of Rs.10 lakh deleted.

Final Conclusion: The appeal is allowed; the Tribunal directed deletion of the additions contested (Rs.13 lakh, Rs.11 lakh and Rs.10 lakh) on the grounds that the assessee satisfactorily proved source/character of the receipts by documentary evidence and creditor confirmations.

Penalty under Section 114A for short levy/non levy caused by collusion or wilful misstatement or suppression - Penalty under Section 112(a) for contravention in relation to imported goods - Proviso excluding levy of penalty under Section 112 or 114 where penalty under Section 114A has been levied - Confiscation of imported goods and redemption on payment of fine - Generalia specialibus non derogant

Penalty under Section 114A for short levy/non levy caused by collusion or wilful misstatement or suppression - Penalty under Section 112(a) for contravention in relation to imported goods - Proviso excluding levy of penalty under Section 112 or 114 where penalty under Section 114A has been levied - Confiscation of imported goods and redemption on payment of fine - Whether penalty under Section 114A could be imposed in addition to penalty under Section 112(a) where the adjudicating authority imposed penalty under Section 112(a) and ordered confiscation with redemption. - HELD THAT: - The adjudicating authority had confiscated imported goods, allowed their release on payment of redemption fines, determined duty liability and imposed penalty under Section 112(a). Section 114A prescribes penalty where duty/interest short levy or non levy results from collusion or wilful misstatement or suppression and contains a proviso which provides that where any penalty has been levied under Section 114A, no penalty shall be levied under Section 112 or Section 114. The reverse effect is that once the adjudicating authority has imposed penalty under Section 112(a), the proviso operates to preclude imposition of penalty under Section 114A in respect of the same determination. Given that the Commissioner imposed penalty under Section 112(a) after confiscation and redemption orders, the adjudicating authority was justified in not imposing penalty under Section 114A. The general principle invoked by Revenue, that generalia specialibus non derogant, does not alter the statutory operation of the proviso which governs exclusion of penalties between these provisions.

Adjudicating authority correctly imposed penalty under Section 112(a) and, in view of the statutory proviso, penalty under Section 114A could not be imposed; the Revenue's appeal lacks merit.

Final Conclusion: The appeal is dismissed and the order of the Commissioner (confirming confiscation with redemption, duty determination and penalties under Section 112(a)) is upheld.

Inherent power of the Tribunal to restore withdrawn petitions - residuary jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code - Rule 11 inherent powers of the NCLT - writ jurisdiction under Article 226 where jurisdiction of the adjudicating forum is challenged despite availability of alternative remedy - effect of a Memorandum of Understanding on a pending insolvency petition

Writ jurisdiction under Article 226 where jurisdiction of the adjudicating forum is challenged despite availability of alternative remedy - Maintainability of the writ petition challenging NCLT's order restoring a withdrawn insolvency petition despite existence of an alternative statutory remedy of appeal to the NCLAT. - HELD THAT: - The High Court held that although an efficacious alternative remedy before the NCLAT exists, the writ petition was maintainable because the challenge raised attacks the jurisdictional competence of the NCLT to recall or restore its earlier orders. The Court applied the principles in Radha Krishan Industries that Article 226 may be exercised notwithstanding an alternate remedy where the jurisdiction of the authority passing the impugned order is in question; accordingly the writ petition could be entertained. [Paras 11, 12]

Writ petition is maintainable as the jurisdiction of the NCLT to recall/restore its earlier order is challenged.

Inherent power of the Tribunal to restore withdrawn petitions - Rule 11 inherent powers of the NCLT - residuary jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code - Whether the NCLT has power to restore a petition previously permitted to be withdrawn. - HELD THAT: - The Court concluded that the Tribunal possesses the inherent power to permit withdrawal of petitions under Rule 11 and, by necessary implication, the power to restore petitions so withdrawn. The Supreme Court's authority in Swiss Ribbons was held to recognise the Tribunal's inherent power to allow withdrawal before constitution of the committee of creditors, and an expansive reading of Rule 11 permits restoration. Further, Section 60(5)(c) supplies a residuary jurisdiction enabling the NCLT to entertain or dispose of proceedings or claims arising in relation to insolvency resolution, subject to the limitation that residuary power cannot contravene mandatory statutory provisions. In consequence, the NCLT's restoration of the petition falls within its inherent and residuary powers. [Paras 18, 19, 21, 22, 23]

NCLT has inherent and residuary power under Rule 11 and Section 60(5) to entertain applications to restore petitions earlier permitted to be withdrawn.

Effect of a Memorandum of Understanding on a pending insolvency petition - Whether the terms and performance of the Memorandum of Understanding (MOU), including alleged payment compliance and absence of an express revival clause, preclude restoration or affect continuation of the company petition. - HELD THAT: - The Court refrained from adjudicating the factual and contractual disputes between the parties regarding the MOU's effect, the scope of settlement, and whether payments were made in full. Those questions require enquiry and determination by the NCLT in the resumed proceedings. The High Court directed that the NCLT should examine whether the MOU affects the pending petition and consider the objections and factual contentions regarding compliance with the MOU. [Paras 25, 26, 27]

Questions regarding the MOU's effect, compliance with its terms, and consequences of any default are remitted to the NCLT for fresh consideration.

Final Conclusion: The writ petition was held maintainable because it challenges the NCLT's jurisdiction to restore a withdrawn petition; the NCLT was held to possess inherent and residuary power under Rule 11 and Section 60(5) to restore such petitions; factual and contractual disputes arising from the MOU (including payment compliance and its effect on the company petition) were left for the NCLT to decide on fresh consideration. The writ petition is disposed of accordingly, leaving the petitioner free to raise those issues before the NCLT.

Availability of an efficacious alternative statutory remedy - rule of self-imposed restraint in exercise of writ jurisdiction under Article 226 - statutory appellate forum under the PMLA (Section 26 and Section 42) - requirement to exhaust alternate remedy before invoking writ jurisdiction

Availability of an efficacious alternative statutory remedy - rule of self-imposed restraint in exercise of writ jurisdiction under Article 226 - requirement to exhaust alternate remedy before invoking writ jurisdiction - Entertainability of the writ petition under Article 226 when an efficacious statutory appellate remedy under the PMLA exists - HELD THAT: - The Court applied settled precedents establishing that where a statute creates an effective appellate mechanism, the High Court should ordinarily refrain from exercising its extraordinary writ jurisdiction to bypass that remedy. Having examined the statutory scheme of the PMLA and earlier authorities, the Court concluded that Section 26 (appeal to the Appellate Tribunal) and Section 42 (further appeal to the High Court) constitute an equally efficacious alternative remedy. No exceptional circumstance was shown to warrant departure from the rule of self-imposed restraint, and therefore the writ petition ought not to be entertained while the statutory appeal route is available and functional. [Paras 12, 22]

The writ petition is not maintainable in view of the efficacious alternative remedy before the Appellate Tribunal and the High Court under the PMLA; the matter should be heard by the statutory appellate forum.

Statutory appellate forum under the PMLA (Section 26 and Section 42) - restoration of withdrawn appeal - Procedural disposition directing transfer of the dispute to the Appellate Tribunal and restoration of any withdrawn appeal - HELD THAT: - The Court noted that the Appellate Tribunal had become functional after earlier orders had been passed and that an appeal was pending at the relevant dates. In consequence, the Court declined to decide the merits and directed that the appeal be heard by the Tribunal at an early date. Where the appeal had been withdrawn after the High Court's earlier direction, the Court directed that it be restored to its original number and decided on merits by the Tribunal. The Court expressly left all contentions and rights of the parties open, declining to adjudicate the substantive issues. [Paras 23, 24, 25]

The Letters Patent Appeal is allowed to the extent of directing that the Appellate Tribunal decide the pending appeal expeditiously; if the appeal was withdrawn, it shall be restored to its original number; the High Court has not expressed any view on the merits.

Final Conclusion: The Letters Patent Appeal is allowed on the ground that the statutory appellate remedy under the PMLA is efficacious and the matter should be adjudicated by the Appellate Tribunal; the Tribunal is directed to decide the appeal at an early date and any withdrawn appeal shall be restored, while all substantive rights and contentions remain open.

Interest on delayed refunds under Section 11BB of the Excise Act - date of receipt/filing of refund application as the trigger for interest - Explanation to Section 11BB deeming appellate/Court order as order under Section 11B(2) - interest payable from expiry of three months from date of application

Interest on delayed refunds under Section 11BB of the Excise Act - date of receipt/filing of refund application as the trigger for interest - interest payable from expiry of three months from date of application - Explanation to Section 11BB deeming appellate/Court order as order under Section 11B(2) - Interest is payable from the expiry of three months from the actual dates of filing the refund applications and not from 29.01.2020 when the appellant sought implementation of the Tribunal s order. - HELD THAT: - Section 11BB provides that interest on a refunded duty becomes payable where the duty ordered to be refunded is not refunded within three months from the date of receipt of the application under Section 11B(1); the operative trigger is the date of receipt/filing of the refund application. The Explanation to Section 11BB merely deems an order of an Appellate Authority or Court to be an order under Section 11B(2) for the limited purpose of that sub-section and does not postpone or alter the date from which interest becomes payable. The Tribunal applied the principle in Ranbaxy Laboratories (Supreme Court) and the subsequent High Court decisions in Dabur India Ltd. and Ballarpur Industries, which hold that interest under Section 11BB relates back to the date of filing the refund application and is not to be computed from the date of a later communication seeking implementation of an appellate order. Here, the Commissioner (Appeals) incorrectly treated the letter of 29.01.2020 as the date of filing of the refund applications; the actual filing dates were 30.03.2017, 20.06.2017, 31.07.2017 and 28.08.2017. Applying the statutory text and the precedents, interest is therefore payable after three months from each of those actual filing dates until the date of refund. [Paras 17, 18, 19, 20, 21]

The Commissioner (Appeals) order is modified: interest is payable from the expiry of three months from the actual dates of filing the four refund applications (30.03.2017, 20.06.2017, 31.07.2017 and 28.08.2017) up to the date of refund (28.09.2021).

Final Conclusion: The appeal is allowed in part: interest on the sanctioned refunds is directed to be computed from the expiry of three months from the actual filing dates of the four refund applications until the date the refund was made; the Commissioner (Appeals) order is modified accordingly.

Taxability of cross-border business exhibition services - Place of provision of service - Import of services - Taxation of Services (Provided from outside India and received in India) Rules, 2006 - Rule 3 Sub rule (II) - part performance in India requirement

Taxability of cross-border business exhibition services - Import of services - Taxation of Services (Provided from outside India and received in India) Rules, 2006 - Rule 3 Sub rule (II) - part performance in India requirement - Whether service tax is leviable on business exhibition services provided by foreign organisers abroad on behalf of the appellant for the periods 2006-07, 2007-08 and 2009-10. - HELD THAT: - The Tribunal found that the organiser service providers were located in foreign countries (Pakistan, Egypt, Bangkok and Ukraine) and that the entire exhibition services were performed and received outside India with no part performance in India. Applying Rule 3 of Sub rule (II) of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, a service provided from outside India is taxable in the hands of the Indian recipient only where a part of the service is performed in India. As there was no part of the service performed in India and the place of supply was outside India, the services do not fall within the taxable import of services and service tax cannot be levied on the appellant.

Impugned order set aside; appeal allowed and service tax held not leviable on the business exhibition services for the specified periods.

Final Conclusion: Appeal allowed. Business exhibition services wholly performed and received outside India are not taxable in India under the Taxation of Services (Provided from outside India and received in India) Rules, 2006, and no service tax is leviable on the appellant for the tax periods 2006-07, 2007-08 and 2009-10.