TaxTMI Updates e-Newsletter
Nov 25,2019

Entertainment tax - Authority of law for levy of tax (Article 265) - Subsumption/annulment/modification of local taxes by State GST enactment - Specific statutory provision prevailing over general provision - Maintainability of challenge to consequential demand without assailing parent provision - Value of supply to include taxes charged separately (PGST Act - value concept)

Maintainability of challenge to consequential demand without assailing parent provision - Writ petition maintainability - The writ petition challenging the consequential collection of entertainment tax by the Municipality is not maintainable insofar as the petitioner has not challenged the primary statutory provisions under which the tax is levied. - HELD THAT: - The Court held that the petitioner proceeded only against consequential proceedings and did not challenge the underlying provisions of the Puducherry Municipalities Act, 1973 (Sections 118 and 161) under which the Municipality exercises power to levy entertainment tax. A challenge confined to consequential demand arising under provisions that are not assailed is not maintainable. The Court therefore found the petition unsustainable on this procedural/maintainability ground in addition to the merits. [Paras 21]

Writ petition is not maintainable in respect of the challenge to the consequential demand since the parent statutory provisions authorising the levy were not challenged.

Entertainment tax - Authority of law for levy of tax (Article 265) - Subsumption/annulment/modification of local taxes by State GST enactment - Specific statutory provision prevailing over general provision - Value of supply to include taxes charged separately (PGST Act - value concept) - The collection of entertainment tax by the 5th respondent Municipality is within legislative and statutory authority and is not annulled by the Puducherry Goods and Services Tax Act, 2017. - HELD THAT: - The Court examined Section 118 and Section 161 of the Puducherry Municipalities Act, 1973 and Section 173 of the PGST Act. Section 173(1)(a) specifically omitted only sub-clause (iii) of clause (a) of Section 118(1) (a provision concerning certain advertisements) while retaining other heads including the tax on entertainments. Section 173(2) contains a saving phrase and authorises annulment, rescission or modification only insofar as local taxes fall within specified entries of the State List; it does not, and cannot, override the specific omission and saving effected by Section 173(1). Consequently, the specific retention of the Municipality's power to levy entertainment tax survives the PGST Act, and the Municipality's collection under Sections 118 and 161 is with authority of law. The Court also noted that GST and entertainment tax operate under different enactments and tax different aspects (supply of service vis-a -vis entertainment) and thus that the argument of double taxation or subsumption did not succeed so long as the Municipal Act remains in force. [Paras 17, 18, 19, 20]

Collection of entertainment tax by the Municipality is lawful and not annulled by the PGST Act; the petitioner's contention of lack of legal authority fails.

Final Conclusion: The writ petition is dismissed: the Municipality lawfully retains power to levy entertainment tax under the Puducherry Municipalities Act, 1973 notwithstanding the PGST Act, and the petition is also not maintainable because the underlying statutory provisions authorising the levy were not challenged.

Input tax credit - Form GST TRAN-1 - input service distributor - rectification of bona fide error - migration of pre-GST credit - technical portal constraints - electronic or manual rectification

Input tax credit - input service distributor - migration of pre-GST credit - Whether the petitioner had validly availed input tax credit during the pre GST period and was entitled to distribute the accumulated credit to its branches under the transitional mechanism. - HELD THAT: - The Court found that the input tax credit accumulated in the petitioner's account was validly taken during the pre GST period and that the returns filed by the petitioner for the relevant period were accepted by the revenue authorities. In the absence of any requirement to migrate under the pre GST regime, the petitioner would have been able to distribute the credit to its branches under the earlier input service distribution mechanism. The non availability of purchase invoice details, while impeding use of the TRAN 1 already filed, did not put in dispute the entitlement to the accumulated credit or the right to distribute it to recipient branches. Consequently the underlying entitlement to transfer the pre GST credit was recognised by the Court. [Paras 5]

The petitioner's availment of pre GST input tax credit and its entitlement to distribute the accumulated credit to its branches was accepted.

Form GST TRAN-1 - rectification of bona fide error - technical portal constraints - electronic or manual rectification - What remedial steps the respondents must take to enable transfer of the accumulated pre GST credit in view of the filing error and alleged technical constraints. - HELD THAT: - Having recognised the petitioner's entitlement, the Court addressed the remedial difficulty arising from the incorrect particulars in the TRAN 1 filed and the respondents' plea of technical inability to permit distribution of pre GST accumulated credit through the input service distributor software. The Court observed that distribution could be effected if the petitioner files individual corrected TRAN 1 forms for each recipient branch. In light of the recognised entitlement and the objective of rendering justice where accrual and entitlement are not disputed, the Court directed the 5th respondent to either permit electronic filing of rectified TRAN 1 forms in favour of each branch or to accept manually filed corrected TRAN 1 forms, subject to a strict deadline. The direction was given to obviate the technical constraint while preserving administrative safeguards. [Paras 5]

Respondents directed to permit electronic rectification of TRAN 1 or accept manually filed corrected TRAN 1 forms for each recipient branch on or before 30.12.2019, to enable distribution of the accumulated credit.

Final Conclusion: Writ petition disposed: court accepted the petitioner's entitlement to distribute pre GST accumulated input tax credit and directed the respondents to permit electronic rectification of TRAN 1 or accept manual corrected TRAN 1 forms for each recipient branch by 30.12.2019 so that the accumulated credit may be distributed.

Benefit of input tax credit - commensurate reduction in prices - profiteering under Section 171 of the CGST Act, 2017 - methodology for computation of profiteering - investigation period 01.07.2017 to 31.12.2018

Benefit of input tax credit - profiteering under Section 171 of the CGST Act, 2017 - Whether the Respondent accrued additional benefit of ITC post GST and contravened Section 171 by not passing the benefit to recipients. - HELD THAT: - The Authority accepted the DGAP's computation (based on the Respondent's own returns and data) that the ratio of ITC to turnover was 4.00% in the pre GST period and 6.61% in the post GST period, thereby showing an additional ITC benefit of 2.61% of turnover. Applying that differential to the turnover for the investigation period produced a profiteered amount of Rs. 1,42,06,267/-, inclusive of applicable GST, which included the amount due to the Applicant. The Authority held that Section 171 requires a registered person to pass on any additional ITC benefit by way of commensurate reduction in prices and that the aggregate profiteered amount is the sum of benefits denied to individual recipients; accordingly the Respondent was found to have contravened Section 171. The finding rests on mathematical reconciliation in Table B and Table C derived from the Respondent's filed returns and project data and is treated as reliable. [Paras 51, 52, 53]

The Respondent benefited from additional ITC of 2.61% of turnover and has contravened Section 171; the profiteered amount for 01.07.2017 to 31.12.2018 is determined as Rs. 1,42,06,267/-.

Methodology for computation of profiteering - commensurate reduction in prices - Whether the DGAP's method and the Authority's methodology for computing profiteering were correct and whether the Respondent's objections to the 'average' method were valid. - HELD THAT: - The Authority rejected the Respondent's contention that computations were arbitrary or averaged. It held that the DGAP computed ratios and turnover from the Respondent's own pre and post GST returns and related data (Table B and Table C), so the result was mathematical and not an ad hoc average. The Authority observed that Rule 126 (procedure) and Section 171 provide the basis for determining the benefit and that DGAP, as investigating agency, was entitled to collect and compute evidence under Rule 129. Consequently the Respondent's objections to methodology and to timing of passing benefit (i.e., only on completion) were repelled; the Authority held benefit must be passed as and when ITC is availed and used to discharge output tax liability. [Paras 38, 40, 43, 44]

DGAP's computation and the Authority's methodology are valid; the Respondent's methodological objections and plea on timing of passing benefit are rejected.

Proof of passing on benefit - adjustment of excess benefit - Whether the Respondent's asserted payments of benefit to buyers could be accepted and set off against the determined profiteering. - HELD THAT: - The Respondent claimed to have passed on a larger amount to buyers and produced selected ledger entries. The Authority found the DGAP had not verified the Respondent's asserted transfers and that ledger entries did not specifically record ITC benefit transfers; further the Respondent failed to appear to substantiate his claims. The Authority held that alleged excess benefits to some buyers cannot be set off against shortfall to other identifiable recipients unless properly evidenced and verified. Consequently the Respondent's claimed benefit transfers were not accepted for adjustment against the determined profiteering. [Paras 22, 45, 50]

Respondent's claimed passing of benefit not accepted for adjustment due to lack of cogent/verifiable evidence; excess payments cannot be set off against shortfall without verification.

Remedies and enforcement under Rule 133 - penalty under Section 171(3A) - What reliefs, directions and further proceedings should follow from the finding of profiteering. - HELD THAT: - Pursuant to Rule 133, the Authority directed the Respondent to reduce prices commensurate with the ITC benefit and to refund the determined profiteered amount to eligible buyers as per Annexure 13, with interest at 18% from the date of collection until payment, within three months, failing which recovery will be effected by the Commissioner CGST/SGST. The Authority also found an offence under Section 171(3A) and ordered issuance of a show cause notice proposing penalty under that provision; prior broader penalty notice was withdrawn to the extent indicated. The Commissioners CGST/SGST Haryana were directed to monitor compliance and report within four months. [Paras 54, 55, 56, 57]

Respondent ordered to reduce prices and refund the profiteered amount with interest within three months; show cause notice for penalty under Section 171(3A) to be issued; compliance to be monitored by Commissioners CGST/SGST Haryana.

Final Conclusion: The Authority, on DGAP's investigation for the period 01.07.2017 to 31.12.2018, found that the Respondent derived an additional ITC benefit of 2.61% of turnover and failed to pass it on, fixed the profiteered amount at Rs. 1,42,06,267/-, directed reduction of prices and refund with 18% interest within three months, and ordered initiation of penalty proceedings under Section 171(3A); DGAP's methodology and computations were upheld and the Respondent's unverified claims of having passed on benefits were rejected.

Commensurate reduction in prices - benefit of input tax credit - anti-profiteering - denial of input tax credit increases base price - methodology for computation of profiteering - deposit in Central/State Consumer Welfare Funds - penalty under Section 171(3A) of the CGST Act, 2017

Commensurate reduction in prices - benefit of input tax credit - denial of input tax credit increases base price - anti-profiteering - Whether Respondent No.1 (manufacturer) failed to pass on to recipients the benefit of GST rate reduction on sanitary napkins w.e.f. 27.07.2018 and thereby indulged in profiteering - HELD THAT: - The Authority accepted the DGAP's computation that the denial of input tax credit effective from 27.07.2018 increased the appropriate pre exemption base price by 9.4%, this ratio having been calculated from the Respondent's own turnover and ITC figures for July, 2017 to 26.07.2018. The DGAP's method recalibrated average pre reduction base prices (separately for CSD and non CSD channels) by loading them with 9.4% and compared these commensurate base prices with actual post exemption selling prices during w.e.f. 27.07.2018 to 30.09.2018. Where actual prices exceeded the recalibrated prices, the excess was treated as profiteering. The Authority found the methodology appropriate for the facts of the case, rejected the Respondent's contentions that entity level or customer wise commercial pricing considerations could justify retaining the tax benefit, and held that increases in base price beyond the ITC ratio amount amounted to profiteering. [Paras 38, 40, 41, 45, 46]

Respondent No.1 has profiteered by not passing the commensurate benefit; profiteered amount determined as Rs. 42,70,18,581/-, and Respondent No.1 is directed to reduce prices and deposit the amount (with 18% interest) into Central/State Consumer Welfare Funds in the prescribed ratio.

Denial of input tax credit increases base price - anti-profiteering - Whether Respondent No.2 (dealer) failed to pass on the benefit of GST rate reduction and indulged in profiteering - HELD THAT: - DGAP examined Respondent No.2's outward supplies and reversal of ITC on closing stock as on 26.07.2018. The reversal of ITC on that closing stock became a cost to the dealer post exemption. The DGAP found that the excess realisation from sale of the closing stock (27.07.2018 to 30.09.2018) was less than the ITC reversal cost. On that basis, the Authority accepted the DGAP's conclusion that anti profiteering provisions were not attracted against Respondent No.2. [Paras 11, 43]

Application in respect of Respondent No.2 is dismissed; anti profiteering provisions do not apply to Respondent No.2.

Methodology for computation of profiteering - commensurate reduction in prices - Whether the methodology adopted by the DGAP (average pre reduction base price, application of ITC ratio and comparison with actual post reduction prices) was impermissible or arbitrary - HELD THAT: - The Authority held that Section 171(1) requires passing on the benefit of tax reduction/ITC by way of commensurate price reduction but does not mandate a single mathematical formula for all cases. Exercising Rule 126 powers, the Authority may determine procedure and methodology based on case facts. Given variability across products, channels and facts, use of average base prices (with separate treatment for distinct channels) and application of the ITC to turnover ratio was a permissible, fact driven approach. The Respondent's reliance on commercial expediency and entity level aggregation was rejected because the statutory focus is on benefit to recipients on the product, not on preserving supplier pricing discretion to the extent of retaining tax benefits. [Paras 19, 36, 40, 41, 42]

DGAP's methodology was valid and correctly applied to the facts; the Respondent's objections to the method are rejected.

Deposit in Central/State Consumer Welfare Funds - penalty under Section 171(3A) of the CGST Act, 2017 - What remedial and consequential measures should be directed against Respondent No.1 for the found profiteering - HELD THAT: - Under Rule 133 the Authority directed reduction of prices by Respondent No.1 and deposit of the determined profiteered amount into Central/State Consumer Welfare Funds in the prescribed proportion, together with interest at 18% until deposit. The Authority also recorded that profiteering is an offence under Section 171(3A) and therefore directed issuance of a show cause notice proposing imposition of penalty under Section 171(3A) read with Rule 133(3)(d); previous penalty notice was withdrawn and a fresh notice is to be issued. [Paras 46, 47]

Directed deposit of Rs. 42,70,18,581/- (with interest) into Central/State CWFs and directed issuance of a show cause notice proposing penalty under Section 171(3A).

Final Conclusion: The Authority accepted the DGAP report: profiteering by Respondent No.1 was established for w.e.f. 27.07.2018 to 30.09.2018 and fixed at Rs. 42,70,18,581/-, to be deposited (with 18% interest) into Central/State Consumer Welfare Funds and orders a show cause on penalty; the complaint against Respondent No.2 was dismissed.

Benefit of input tax credit to be passed on by commensurate reduction in prices - contravention of Section 171(1) of the CGST Act, 2017 requiring passing on of tax/ITC benefit - investigation under Rule 129 of the CGST Rules, 2017 and mandate to submit Report - methodology for determination of profiteered amount under Rule 126/Procedure & Methodology - non-withdrawability of complaint once taken up by Screening/Standing Committee and DGAP's duty to investigate - remedial payment to recipients with interest and recovery by Commissioner under Rule 133(3)(b) - penalty liability under Section 171(3A) of the CGST Act, 2017 for profiteering

Reduction in the rate of tax - applicability of pre-GST and post-GST tax rates to construction service - There was no reduction in the rate of tax for the Respondent's construction service w.e.f. 01.07.2017; the rate increased from 6% to 18%. - HELD THAT: - The Authority examined the tax treatment of the supply and concluded that the applicable tax rate for the construction service increased from 6% (pre-GST service tax incidence on construction component) to 18% post-GST. Consequently, there was no entitlement to a benefit on account of reduction in rate of tax; the determinative question is whether additional ITC, not rate reduction, had accrued and required passing on. The finding that tax rate increased (and thus no reduction-based benefit arose) is recorded in the decision. [Paras 44]

No reduction in rate of tax arose; the change was an increase from 6% to 18% and thus no commensurate reduction on that ground was required.

Benefit of input tax credit - comparison of pre-GST CENVAT/ITC ratio and post-GST ITC ratio - methodology for determination of profiteered amount - The Respondent received a net additional benefit of input tax credit amounting to 5.36% of turnover for the period 01.07.2017 to 31.08.2018 which he was required to pass on to recipients. - HELD THAT: - On examination of returns, home buyer lists and area sold as supplied by the Respondent, DGAP computed the ratio of CENVAT/ITC to turnover as 1.08% for the pre GST period (April 2016-June 2017) and 6.44% for the post GST period (July 2017-Aug 2018). The Authority accepted the DGAP's case specific mathematical methodology as applied to the facts (area sold, instalments received and ITC availed) and held that the additional ITC benefit (6.44% - 1.08% = 5.36%) had accrued to the Respondent. Contentions based on prospective reversal on receipt of Completion Certificate, amendments to Rule 42/43 and alternative computations were rejected as not operative for the investigation period and/or factually unsupported. The Authority relied on figures filed by the Respondent in returns and home buyer lists to uphold DGAP's computation. [Paras 10, 11, 44]

Respondent obtained additional ITC benefit equivalent to 5.36% of turnover for the investigation period and therefore was obliged to pass that benefit to eligible recipients.

Contravention of Section 171(1) of the CGST Act, 2017 - remediation to eligible recipients with interest and recovery mechanism - penalty proceedings under Section 171(3A) - The Respondent contravened Section 171(1) by not passing on the additional ITC benefit; profiteered amount was determined and directions issued for refund with interest and initiation of penalty show cause proceedings. - HELD THAT: - Applying Section 171(1) and the Authority's notified Procedure & Methodology, the Authority held that the Respondent failed to pass on the computed additional ITC benefit and thus violated anti profiteering obligations. The profiteered amount for 01.07.2017-31.08.2018 was fixed at Rs. 1,01,50,590/-, of which Rs. 41,434/- was attributable to the applicant and the balance Rs. 1,01,09,156/- to other eligible buyers. The Respondent was directed to pay these amounts within three months with interest @18% from the date of realisation till payment, failing which recovery shall be effected by the Commissioners. Further, a show cause notice was ordered for penalty under Section 171(3A); earlier show cause notice proposing penalties under other provisions was withdrawn to that extent. [Paras 45, 46, 47]

Contravention established; Respondent directed to remit determined amounts to eligible recipients with interest and to be issued show cause notice for penalty under Section 171(3A).

Final Conclusion: The Authority accepted the DGAP's investigation for the period 01.07.2017 to 31.08.2018, held that the Respondent had received and retained an additional ITC benefit of 5.36% of turnover, determined the profiteered amount as Rs. 1,01,50,590/-, directed refund of Rs. 41,434/- to the applicant and Rs. 1,01,09,156/- to other eligible buyers with interest @18%, authorised recovery if not paid, and ordered issuance of a show cause notice for imposition of penalty under Section 171(3A) of the CGST Act, 2017.

Profiteering under Section 171 of the CGST Act, 2017 - passage of benefit of input tax credit by commensurate reduction in price - apportionment of input tax credit between sold and unsold units - computation of profiteered amount by comparison of ITC-to-turnover ratios - liability to pay interest on profiteered amount - penalty under Section 171(3A) of the CGST Act, 2017

Reduction in effective GST rate on construction service - application of Notification reducing effective rate from 12% to 8% - Reduction in the rate of tax on the construction service rendered by the respondent with effect from 01.07.2017 and subsequent change on 25.01.2018. - HELD THAT: - The Authority accepted that the Central Government, on recommendation of the GST Council, levied GST effective at 12% on construction services from 01.07.2017 and that the effective rate for affordable housing was reduced to 8% by Notification dated 25.01.2018. The profiteering analysis was therefore conducted in two parts corresponding to the periods when the effective rates were 12% and 8% respectively, and the change in applicable tax rate was treated as a determinative factual and legal premise for computation of benefit to recipients. [Paras 46, 47]

The Authority held that the tax rate on the respondent's construction service changed after 01.07.2017 (12% then reduced to 8% w.e.f. 25.01.2018) and proceeded to compute profiteering in two corresponding periods.

Additional benefit of input tax credit - apportionment of ITC relevant to sold area - methodology of comparing ITC-to-turnover ratios - Existence and quantum of additional benefit of input tax credit available to the respondent during the post-GST period which was required to be passed on to buyers. - HELD THAT: - Relying on the respondent's returns and reconciled data, the DGAP computed ITC available and the ratio of ITC to turnover for the pre-GST period (April 2016 to June 2017) and the post-GST period (July 2017 to August 2018). The Authority accepted that the ITC-to-turnover ratio rose from 0.49% (pre-GST) to 7.73% (post-GST), resulting in an additional benefit of 7.24% of turnover. The Authority rejected the respondent's cost-based alternative computation as not supported by verified material and held that only ITC attributable to sold area/payments received in the post-GST period should be considered (unsold units excluded for present computation). [Paras 7, 8, 45, 46]

The Authority found that an additional ITC benefit of 7.24% of turnover accrued to the respondent in the period 01.07.2017 to 31.08.2018 and that the ITC relevant to sold area/payments received post-GST alone was to be considered for passing on benefit.

Contravention of Section 171 and relief to recipients - computation and restitution of profiteered amount with interest - show cause for penalty under Section 171(3A) - Whether the respondent contravened Section 171 by not passing on the additional ITC benefit, the amount of profiteering, and the consequential remedies and administrative directions. - HELD THAT: - On the basis of DGAP's verified computations and the accepted ITC-ratio methodology, the Authority determined the total profiteered amount for the investigation period to be Rs. 5,30,34,074/-, which includes GST on the base profiteered amount of Rs. 4,82,18,816/-. The Authority concluded that the respondent had not passed the additional ITC benefit to buyers and thereby contravened Section 171(1); accordingly, the amount was held to be repayable to eligible house buyers. The Authority ordered repayment of the profiteered amount to Applicants No.1-12 and other eligible buyers along with interest at 18% per annum from the date of realization until payment, to be complied with within three months, failing which recovery by the concerned Commissioner was directed. Further, the Authority found commission of an offence under Section 171(3A) and directed issuance of a show cause notice proposing penalty under that provision. Supervision and compliance reporting by DGAP/Commissioners was also directed. [Paras 47, 48, 49, 50, 51]

The Authority held that the respondent violated Section 171, quantified profiteering at Rs. 5,30,34,074/-, directed refund with interest @18% within three months (failing which recovery by tax authorities), and ordered issuance of show cause notice proposing penalty under Section 171(3A); monitoring and compliance reporting were directed.

Final Conclusion: The Authority accepted the DGAP's investigation and methodology, held that an additional ITC benefit of 7.24% accrued to the respondent for 01.07.2017 to 31.08.2018, determined total profiteering of Rs. 5,30,34,074/-, directed refund of that amount to eligible buyers with interest at 18% within three months (with recovery mechanisms if not complied with), and issued directions to initiate penalty proceedings under Section 171(3A); compliance to be monitored by the DGAP and Commissioners.

Judicial review of administrative auction proceedings - Cancellation of auction without assigning reasons - Reservation of right to reject any bid including highest bid - Public interest and bona fide conduct as limit on interference - Permissible use of subsequent factual materials to support administrative action

Cancellation of auction without assigning reasons - Reservation of right to reject any bid including highest bid - Validity of cancellation of the auction in which the appellant was highest bidder and the decision to hold a fresh auction - HELD THAT: - The Court held that the cancellation of the earlier auction and the decision to conduct a fresh auction were not arbitrary. The brochure expressly reserved to the Chief Commissioner the right to reject any bid including the highest, and the administrative decision to keep the earlier auction in abeyance followed from the report pointing out that the bid then received was lower than an earlier offer made by the same bidder. Valuation reports were obtained at successive stages and informed the fixation of reserve price. In these circumstances, and having regard to the public interest in securing the highest possible price for the property, the record disclosed a sufficient basis for cancelling the earlier process and calling for a fresh auction, notwithstanding that the cancellation letter itself did not set out detailed reasons.

Cancellation of the previous auction and holding of a fresh auction upheld as not arbitrary; no interference with the fresh auction outcome.

Judicial review of administrative auction proceedings - Public interest and bona fide conduct as limit on interference - Permissible use of subsequent factual materials to support administrative action - Scope of judicial intervention in administrative decisions relating to disposal of government property by auction - HELD THAT: - The Court reaffirmed that judicial review is limited where the auction process is conducted bona fide and in public interest. Authorities cited establish that courts should not ordinarily interfere with administrative decisions on disposal if the procedure is bona fide and aimed at securing public interest. Further, subsequent factual material may be looked at to support an administrative order. Applying these principles to the facts - including reports and valuation inputs showing higher realizations in the area and fresh valuer reports - the Court found no ground for judicial interference with the administrative decision to annul the earlier result and proceed afresh.

Judicial interference withheld; administrative action sustained as within permissible limits of review.

Final Conclusion: Appeal dismissed. The order for confirmation of sale in favour of the successful bidder in the fresh auction is sustained; the Court accepted respondent's with prejudice offer and directed payment to the Union treasury within 12 weeks with an adjustment by subtracting interest at 9% on the amount lying with the Union, calculated to date, as ordered.

Accrual of income - income taxable when it becomes due - requirement of corresponding liability on the other party - recognition of income upon fulfilment of contractual conditions - taxation in subsequent assessment year

Accrual of income - income taxable when it becomes due - recognition of income upon fulfilment of contractual conditions - Whether the sum of Rs. 20 crore formed part of the assessee's taxable income in assessment year 2012-13 - HELD THAT: - The Tribunal found as a fact that, under the MOU, the assessee had not completed the conditions entitling it to the additional sum of Rs. 20 crore in the previous year relevant to AY 2012-13 and therefore no enforceable liability arose on the purchaser to pay that amount. The High Court recorded that this factual finding is not shown to be perverse. Applying the settled principle that income is taxable when it accrues (and accrual requires that it becomes due and is accompanied by a corresponding liability on the other party), the court relied on authorities holding that where income does not result no tax can be levied. The court further noted that the said amount was offered and taxed in a subsequent assessment year, and observed that contesting the year of assessment in such circumstances does not raise a substantial question of law warranting interference. [Paras 5, 7, 9]

The Rs. 20 crore was not taxable in AY 2012-13 as it had not accrued in that year; the Tribunal's view is a possible view and the question does not raise a substantial question of law.

Final Conclusion: The appeal is dismissed; the Tribunal's factual and legal conclusion that the Rs. 20 crore did not accrue in AY 2012-13 (and was taxed in a subsequent year) is sustained and no substantial question of law is made out.

Penalty under section 271(1)(c) - Explanation 1 to section 271(1)(c) - deeming fiction - Failure to prove genuineness of share application money under section 68 - Burden of proof on the assessee to substantiate cash share applications

Penalty under section 271(1)(c) - Explanation 1 to section 271(1)(c) - deeming fiction - Failure to prove genuineness of share application money under section 68 - Burden of proof on the assessee to substantiate cash share applications - Whether penalty under section 271(1)(c) was rightly imposed on the assessee for furnishing inaccurate particulars of income by way of alleged share application money - HELD THAT: - The Tribunal found that the assessee received share application money from 273 parties (272 in cash) but produced only names and village details; notices and summons issued under section 133(6) were returned unserved. The Tribunal noted improbabilities such as multiple applicants apparently using the same cheque-book and that alleged applicants (agriculturists) were unlikely to benefit from investments in an unlisted company. On these facts the assessee failed to discharge the initial burden under section 68 to establish identity, genuineness and creditworthiness of the applicants. In consequence, the Assessing Officer's finding that the explanation was false or unsubstantiated fell squarely within Explanation 1 to section 271(1)(c), thereby deeming the addition to income as representing income in respect of which inaccurate particulars were furnished. Reliance placed by the assessee on earlier decisions was rejected as either inapplicable because rendered before Explanation 1 took its present form or distinguishable on facts; the Supreme Court decision relied upon was held irrelevant as it dealt with a different factual and legal scenario. Applying the statutory test and the factual findings, the Tribunal upheld the CIT(A)'s confirmation of penalty. [Paras 6, 8, 9]

Penalty under section 271(1)(c) confirmed and the assessee's appeal dismissed.

Final Conclusion: On the facts, the assessee failed to substantiate the genuineness and identities of cash share applications; Explanation 1 to section 271(1)(c) applies and the penalty imposed was rightly sustained-appeal dismissed.

Classification of income as Income from House Property versus Profits and Gains of Business or Profession - commercial exploitation of property and integrated mall services - letting out simpliciter versus grant of commercial space with attendant services - consistency of treatment across assessment years (precedential application in assessment proceedings) - deductibility of interest on borrowed funds against business income

Classification of income as Income from House Property versus Profits and Gains of Business or Profession - commercial exploitation of property and integrated mall services - consistency of treatment across assessment years (precedential application in assessment proceedings) - Consideration whether amounts received for grant of commercial space and related charges in the mall are taxable under the head Income from House Property or as Profits and Gains of Business or Profession. - HELD THAT: - The Tribunal examined the nature of the assessee's activities in operating a fully equipped retail mall, finding that the receipts arose from a complex web of integrated services (security, electrification, cleanliness, parking, common area maintenance and other amenities) and contractual obligations which go beyond bare letting of property. The Tribunal placed weight on the assessee's continuous business model of commercially exploiting the property, the provision of multiple services integral to mall operation, and earlier Tribunal decisions in the assessee's own cases for prior assessment years where identical treatment as business income was accepted. Applying the principle that where a fundamental factual position has been consistently taken and not altered materially in subsequent years it is inappropriate to change that position, the Tribunal held that the receipts are business income and not income from house property. [Paras 6, 9]

The income in question is to be treated as Profits and Gains of Business or Profession and not as Income from House Property; the action of the authorities below is vacated and the AO is directed to assess the income as business income.

Deductibility of interest on borrowed funds against business income - treatment of expenditure consequent to classification of income - Whether interest on borrowed funds used for construction and acquisition of plant and equipment can be allowed as deduction against the income after treating the receipts as business income. - HELD THAT: - Having determined that the receipts are business income, the Tribunal considered the claim for deduction of interest expenditure incurred for constructing the property and acquiring plant and machinery. The Tribunal held that since the core issue of classification was decided in favour of the assessee, the interest expenditure should be allowed for set-off against business income and not restricted as was done by the assessing authorities. The conclusion follows directly from recharacterisation of the receipts as business income and requires the AO to allow the claimed interest expenditure while computing taxable business income. [Paras 7]

Deduction of the interest on borrowed funds is allowed to be set off against the business income; the ground is allowed and the assessing authority is directed to give effect accordingly.

Final Conclusion: Appeal is partly allowed: the Tribunal directs that the impugned receipts for grant of commercial space and related charges for Asstt.Year 2013-14 be treated as business income (Profits and Gains of Business or Profession) and further directs that the interest on borrowed funds incurred in relation to the property and business be allowed as deduction against such business income, with consequential adjustment by the Assessing Officer.

Computation of book profit under section 115JB - treatment under Rule 8(1) of the Income tax Rules as agricultural income exempt under section 10(1) - applicability of CBDT Circular No.495 to computation of book profit under section 115JB - limitations on the Assessing Officer's power to rework book profits beyond the Explanation to section 115JB (principle in Apollo Tyres)

Computation of book profit under section 115JB - applicability of CBDT Circular No.495 to computation of book profit under section 115JB - Whether 60% of the adjusted (composite) income is to be deducted while computing book profit under section 115JB - HELD THAT: - The Tribunal applied CBDT Circular No.495, which treats 60% of income from sale of tea (grown and manufactured by the seller) as agricultural income exempt under section 10(1), and held that the principles of that Circular apply to computation of book profit under section 115JB. Relying on the reasoning in Apollo Tyres that an Assessing Officer must accept the profit as per books prepared under the Companies Act and can make only the specific adjustments permitted by the Explanation to section 115JB, the Tribunal concluded that the AO could not make an adjustment beyond those permitted. Applying these principles, the Tribunal found that the assessee's method of computing book profit by allowing deduction of 60% of adjusted (composite) income conformed to the Circular and the statutory scheme and therefore was correct. [Paras 5, 6]

The claim of the assessee for deduction of 60% of adjusted (composite) income while computing book profit under section 115JB is allowed; the AO's contrary adjustment is not justified.

Treatment under Rule 8(1) of the Income tax Rules as agricultural income exempt under section 10(1) - limitations on the Assessing Officer's power to rework book profits beyond the Explanation to section 115JB (principle in Apollo Tyres) - Whether income from tea manufactured from purchased leaves must be bifurcated and excluded from the composite income eligible for the 60% deduction under Rule 8(1) - HELD THAT: - The Tribunal examined Rule 8(1) and the CBDT Circular and observed that the Circular contains no provision for bifurcating income between tea grown by the seller and tea manufactured from purchased leaves for the purpose of computing the agricultural component. Reading the Circular together with the Supreme Court's decision in Apollo Tyres, the Tribunal held that the AO could not, in the computation of book profit under section 115JB, undertake a bifurcation or adjustment that is not authorised by the Explanation or the Circular. Consequently, the income was to be treated for book profit computation in the manner adopted by the assessee and directed by the Circular. [Paras 5, 6]

The AO's bifurcation of income and restriction of the 60% deduction in respect of tea manufactured from purchased leaves is not permissible; the assessee's composite treatment is to be accepted.

Final Conclusion: Having applied CBDT Circular No.495 and the principle of Apollo Tyres that book profits must be accepted as per accounts subject only to specified adjustments, the Tribunal upheld the CIT(A)'s allowance of the assessee's 60% deduction of adjusted income for A.Y. 2010-11 and A.Y. 2013-14; the Revenue's appeals are dismissed.

Netting off interest under section 57(iii) - deduction under section 80IA - rule of consistency - power of first appellate authority to enhance income - re-judicata not applicable in income-tax proceedings

Netting off interest under section 57(iii) - rule of consistency - deduction under section 80IA - Assessee entitled to net interest expenditure against interest income and therefore not liable to enhancement of income by disallowing such netting. - HELD THAT: - The Tribunal found that the assessee had shown bifurcation of interest income earned on loans/advances and the corresponding interest expenditure on borrowings, resulting in a clear, direct nexus between interest earned and interest paid. Reliance was placed on coordinate and High Court decisions holding that where such direct nexus exists the interest paid is deductible under section 57(iii) against interest income even if that income is treated as "income from other sources". The Tribunal accepted the assessee's contention that the department had consistently allowed netting in preceding and subsequent years and that, independently, the legal position permits deduction when nexus is established. On these bases the Tribunal held that the CIT(A)'s enhancement by treating the entire interest income as taxable without allowing the corresponding interest expenditure was not sustainable and that the assessee is entitled to netting off the interest expenditure against interest income. The Tribunal therefore set aside the CIT(A)'s order on this issue and allowed the related grounds of appeal except the one left academic. [Paras 18, 19, 20, 21, 23]

Netting of interest expenditure against interest income under section 57(iii) is allowable where a direct nexus exists; the CIT(A)'s enhancement is set aside and the assessee's claim for netting is accepted.

Power of first appellate authority to enhance income - re-judicata not applicable in income-tax proceedings - Whether the ground challenging the CIT(A)'s power to introduce a new source of income is adjudicated. - HELD THAT: - The Tribunal noted that the CIT(A) had issued an enhancement notice alleging that interest income should be treated as "income from other sources" and disallowing corresponding interest expenditure. However, since the Tribunal decided the dispute in favour of the assessee on the alternate ground of netting and consistency, the specific contention (ground No.1.3) challenging the appellate authority's power to introduce a new source of income was not adjudicated on merits and was treated as academic. The Tribunal therefore did not decide that specific question. [Paras 23]

Ground challenging the CIT(A)'s power to introduce a new source of income not adjudicated as it became academic in view of the alternate grounds on which the appeal was allowed.

Final Conclusion: The appeal is partly allowed: the Tribunal set aside the CIT(A)'s enhancement and allowed netting of interest expenditure against interest income (assessee succeeds on that ground), and the challenge to the CIT(A)'s power to introduce a new source of income was not adjudicated as academic.

Comparable Uncontrolled Price (CUP) as the most appropriate method - Transactional Net Margin Method (TNMM) and profit level indicator - Internal CUP in back-to-back charter arrangements - Arm's length price determination under transfer pricing rules - Selection and exclusion of comparables in TNMM - Monetary threshold for admission of appeals under CBDT circulars

Comparable Uncontrolled Price (CUP) as the most appropriate method - Internal CUP in back-to-back charter arrangements - Arm's length price determination under transfer pricing rules - CUP is the most appropriate method to benchmark the international transaction of providing support/broker services in the back-to-back charter of vessels and the internal CUP precludes any transfer pricing upward adjustment. - HELD THAT: - The assessee had taken six vessels on voyage charter from third-party vendors and in turn chartered the same vessels to its overseas AE on back-to-back basis. Although the assessee's transfer pricing report preferred TNMM, it also furnished an alternative internal CUP using the price at which it chartered vessels from third parties. The Tribunal held that where such a valid internal CUP exists for identical back-to-back transactions, CUP-being a more direct method-qualifies as the most appropriate method under the transfer pricing rules. The Revenue did not controvert the factual existence of the internal CUP or the fact that the third-party hire price was lower than the price charged to the AE; hence no further adjustment could be made to the price charged to the AE and the addition must be deleted. The Tribunal also observed that the method chosen in the TPS report is not sacrosanct and may be replaced by a more appropriate method after analysis of the nature of transaction and available data, and noted prior acceptance of CUP in the assessee's earlier assessment year as supporting the conclusion. [Paras 14]

The internal CUP is valid and CUP is the most appropriate method; the transfer pricing addition is deleted.

Selection and exclusion of comparables in TNMM - Transactional Net Margin Method (TNMM) and profit level indicator - Axis Integrated Systems Ltd. is not a valid comparable for TNMM and must be excluded from the set of comparables. - HELD THAT: - On examination of the company's functional profile and available records, the Tribunal found Axis Integrated Systems Ltd. to be engaged in activities (trading in digital certificates and licensing-related services) functionally dissimilar to the assessee's support/brokerage services. The Tribunal relied on the coordinate bench reasoning in a like matter and noted absence of publicly available financials for the company when selected as a comparable. Applying that ratio, Axis Integrated Systems Ltd. was excluded. Since the Tribunal held CUP to be the most appropriate method, further contest on the other two comparables was treated as academic, though the exclusion of Axis rendered the assessee's margin within tolerance on the remaining set. [Paras 19]

Axis Integrated Systems Ltd. excluded as a comparable; ground allowed and remaining comparable issues left academic.

Monetary threshold for admission of appeals under CBDT circulars - Revenue's appeal is not maintainable before the Tribunal as the tax effect is below the revised monetary limit prescribed by CBDT circulars and therefore is dismissed. - HELD THAT: - The Tribunal noted the tax effect of the Revenue's dispute falls below the revised monetary limit of Rs. 50 lakh as set out in CBDT Circular No.17/2019 read with Circular No.3/2018, which applies to pending appeals. The Revenue did not show that any exception to the circulars applied. In view of the monetary threshold and the CBDT clarification that the revised limit applies to pending appeals, the Tribunal held the Revenue's appeal should be dismissed for lack of maintainability on monetary grounds. [Paras 6, 8, 9]

Revenue's appeal dismissed for being below the monetary limit prescribed by CBDT circulars.

Final Conclusion: The Tribunal dismissed the Revenue's appeal as not maintainable under the CBDT monetary threshold, held that CUP is the most appropriate method for the assessee's back-to-back vessel charter transactions thereby deleting the transfer pricing addition, excluded Axis Integrated Systems Ltd. as a comparable (allowing that ground), and partly allowed the assessee's appeal accordingly.

Invocation of section 40(a)(ia) for short deduction of TDS - short deduction under wrong TDS provision-assessee may be an assessee in default under section 201 but disallowance under section 40(a)(ia) not warranted - section 195 applicable only where the sum paid to non-resident is chargeable to tax in India - mercantile system of accounting-timing of recognition of loss on returned goods - deductibility of foreign travel expenses-requirement of being wholly and exclusively for business

Invocation of section 40(a)(ia) for short deduction of TDS - short deduction under wrong TDS provision-assessee may be an assessee in default under section 201 but disallowance under section 40(a)(ia) not warranted - Deletion of disallowance of facility fees of Rs. 64,34,560/- made under section 40(a)(ia) on account of short deduction of TDS. - HELD THAT: - The Tribunal applied the precedent that where tax has been deducted albeit under a bonafide but incorrect provision, section 40(a)(ia) cannot be invoked to disallow the corresponding expenditure; any shortfall arising from difference of opinion as to the correct TDS provision renders the assessee potentially an assessee in default under section 201, but does not justify disallowance under section 40(a)(ia). On that basis the disallowance of the facility fees, which arose from deduction under section 194C instead of section 194I, was deleted. [Paras 5]

Disallowance deleted; 1st ground of appeal allowed.

Section 195 applicable only where the sum paid to non-resident is chargeable to tax in India - invocation of section 40(a)(ia) for short deduction of TDS - Deletion of disallowance of commission to foreign agents of Rs. 9,17,999/- made under section 40(a)(ia) for non-deduction of tax under section 195. - HELD THAT: - Relying on the principle that the obligation to deduct tax under section 195 arises only if the payment to a non-resident is chargeable to tax in India, the Tribunal held that absence of deduction cannot automatically attract disallowance under section 40(a)(ia) where the sums are not chargeable to tax in India. Applying this principle to the payments to foreign agents, the Tribunal deleted the disallowance. [Paras 9]

Disallowance deleted; 2nd ground of appeal allowed.

Invocation of section 40(a)(ia) for short deduction of TDS - short deduction under wrong TDS provision-assessee may be an assessee in default under section 201 but disallowance under section 40(a)(ia) not warranted - Deletion of disallowance of labour charges of Rs. 2,67,803/- made under section 40(a)(ia) for non-deduction of TDS. - HELD THAT: - The Tribunal noted that the amounts in question had been capitalized (not debited to the P&L) and applied the same legal proposition as in S.K. Tekriwal: where tax was deducted though under a bonafide wrong provision, section 40(a)(ia) cannot be invoked to disallow the expenditure; any shortfall may attract default proceedings under section 201 but not disallowance. Accordingly the disallowance of labour charges was deleted. [Paras 13]

Disallowance deleted; 3rd ground of appeal allowed.

Mercantile system of accounting-timing of recognition of loss on returned goods - Confirmation of disallowance of loss on sale of returned goods of Rs. 12,94,653/- for Assessment Year 2010-11; direction to allow the loss in Assessment Year 2011-12. - HELD THAT: - The Tribunal observed that under the mercantile system of accounting the sale and the consequential profit element were booked in the year in which the sale was effected and, since the consignment was rejected and returned within the relevant accounting period, the assessing officer was justified in disallowing the loss claimed in AY 2010-11. However, recognising the consequential effect on the subsequent year, the Tribunal directed that the loss be allowed in AY 2011-12. [Paras 17, 22]

Disallowance confirmed for AY 2010-11; directed to allow the loss in AY 2011-12.

Deductibility of foreign travel expenses-requirement of being wholly and exclusively for business - Confirmation of disallowance of foreign travel expenses of Rs. 7,03,559/- on the ground that they were not shown to be wholly and exclusively for business. - HELD THAT: - The Tribunal found that the assessee failed to produce evidence linking the foreign visits to the business exigency claimed (for example, finalisation of purchase from the Swiss supplier) and noted that the destinations visited did not correspond to locations of the foreign agents who were paid commissions. In absence of documentary proof that the trips were wholly and exclusively for business purposes, the assessing officer's disallowance was upheld. [Paras 21]

Disallowance confirmed; 5th ground of appeal dismissed.

Final Conclusion: The appeals are partly allowed: disallowances under section 40(a)(ia) in respect of facility fees, foreign commission and labour charges are deleted; disallowance for loss on sale of returned goods is confirmed for AY 2010-11 but permitted in AY 2011-12; disallowance of foreign travel expenses is confirmed.

Rejection of books of account - reliance on books of account for assessment - assessment of income by adopting industry norm/comparison - power of Assessing Officer to compute profits when books are not doubted

Reliance on books of account for assessment - power of Assessing Officer to compute profits when books are not doubted - assessment of income by adopting industry norm/comparison - Whether the Assessing Officer was justified in recalculating the assessee's gross profit rate from 4.75% to 6% by reference to industry comparables despite not having doubted or rejected the assessee's books of account - HELD THAT: - The Tribunal found, and this Court agrees, that the Assessing Officer had not doubted or rejected the assessee's books of account. In that factual matrix the Tribunal held it was not open to the Assessing Officer to discard the books and determine net profit by applying an industry/comparative gross profit rate. The High Court accepted the Tribunal's reasoning as sound and saw no substantial question of law arising from the conclusion that, where books are not rejected, assessment should not be made by primarily relying on industry norms to revise the recorded gross profit rate.

Tribunal's conclusion upheld; Assessing Officer's recalculation by adopting a 6% gross profit rate in place of assessee's books was not justified where books were not rejected.

Final Conclusion: The Revenue's appeal is dismissed; the Tribunal's order upholding the assessee's gross profit as per books and rejecting the Assessing Officer's industry-comparison based adjustment is affirmed for Assessment Year 2011-12.

Admission of additional evidence under Rule 29 - classification of land as agricultural v. residential for capital gains - application of Section 50C valuation - remand to Assessing Officer for fresh adjudication

Classification of land as agricultural v. residential for capital gains - application of Section 50C valuation - admission of additional evidence under Rule 29 - remand to Assessing Officer for fresh adjudication - Whether the alleged land sold in the year is agricultural or residential for the purpose of computing capital gains and whether additional evidence should be admitted for fresh consideration by the Assessing Officer. - HELD THAT: - The Tribunal examined the competing contentions: the assessee asserted the land was agricultural on the date of transfer and placed on record agreements (1995, 2004), a revenue diversion order (dated 30.12.2008) and a fresh valuation report assessing the agricultural land's value as on 27.9.2007; the revenue relied on the Stamp Valuation Authority's valuation treating the property as residential and applied the valuation under Section 50C. Given that the classification of the land (agricultural v. residential) is determinative of the fair market value to be adopted for capital gains, the additional documents tendered by the assessee were relevant and went to the root of the controversy. The Tribunal therefore exercised its discretion to admit the additional evidence under Rule 29 and concluded that the matter required fresh examination by the Assessing Officer in light of those documents. The Assessing Officer was directed to reconsider the issue of classification and valuation, to examine the additional evidence (including the diversion order and valuation report), provide the assessee a reasonable opportunity of hearing, and decide in accordance with law. [Paras 7, 8, 9, 10, 11]

Additional evidence admitted and the issue remanded to the Assessing Officer for fresh adjudication on classification and valuation; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal admitted the assessee's additional evidence, remitted the question of whether the land was agricultural or residential (and the consequent valuation under Section 50C) to the Assessing Officer for fresh consideration after affording opportunity of hearing, and allowed the appeal for statistical purposes.

Section 263 revisional jurisdiction - Erroneous and prejudicial to the interest of revenue - Depreciation - book disclosure and computation adjustment - Deductibility of belated employees' provident fund contribution paid before filing of return

Section 263 revisional jurisdiction - Erroneous and prejudicial to the interest of revenue - Depreciation - book disclosure and computation adjustment - Validity of invoking section 263 to revise the assessment on account of depreciation treatment - HELD THAT: - The Tribunal recorded the settled law that jurisdiction under section 263 requires two conjunctive conditions: the assessment must be erroneous and the error must be prejudicial to the revenue. The Principal CIT revised the assessment on the ground that the Assessing Officer had not examined depreciation. The assessee, however, had charged depreciation in the profit and loss account and also shown a substantial portion of that amount reversed as other income, resulting in only a small net book depreciation being claimed in computation of income. The revenue did not controvert the disclosure in the accounts nor did the Principal CIT place contrary material on record. Given the disclosure and the netting in the profit & loss account, the Tribunal found no material showing absence of application of mind by the Assessing Officer that caused prejudice to revenue; accordingly, invoking section 263 on this ground was unjustified. [Paras 6, 7]

Invocation of section 263 on the depreciation ground quashed and not sustained.

Section 263 revisional jurisdiction - Erroneous and prejudicial to the interest of revenue - Deductibility of belated employees' provident fund contribution paid before filing of return - Validity of invoking section 263 to revise the assessment on account of alleged disallowance for belated EPF deposit (employees' contribution) - HELD THAT: - The Principal CIT also revised the assessment on the basis that employees' provident fund contribution was deposited belatedly. The assessee produced evidence that the EPF amounts were deposited into the EPF account before the due date for filing the return of income. The Tribunal referred to settled judicial pronouncements holding that if EPF contributions are deposited before the due date of filing the return, the expenditure is allowable and no disallowance ought to be made. In the absence of any material demonstrating prejudice to revenue, the Tribunal concluded that the prerequisites for exercise of revisional jurisdiction under section 263 were not fulfilled and the revision was not justified on this ground. [Paras 7]

Invocation of section 263 on the EPF ground quashed and not sustained.

Final Conclusion: The order passed by the Principal CIT under section 263 is quashed insofar as it seeks revision on the depreciation and belated EPF deposit grounds; the assessee's appeal is allowed.

Reassessment under section 148 - Reliance on tax audit report/Form No.3CD - Valuation of closing stock and addition for escapement of income - Acceptance of primary documentary evidence (production registers, export invoices, bank stock statements) - Deletion of addition where AO's own verification accepts assessee's figures

Reliance on tax audit report/Form No.3CD - Valuation of closing stock and addition for escapement of income - Whether the addition made by the Assessing Officer on account of alleged undervaluation of closing stock (based on figures in Form No.3CD) was justified. - HELD THAT: - The Tribunal examined the discrepancy between quantities shown in Form No.3CD (closing stock 7,75,398 kg) and the registers and primary documents produced by the assessee (showing closing stock 90,620 kg). The Assessing Officer, while recording a conclusion in the reassessment order that a test-check of registers, purchase bills and export invoices established that the original Form No.3CD quantities were wrong and that correct closing stock was 90,620 kg, proceeded to make an addition of alleged undervaluation because he had not completed verification of all records due to paucity of time. The Tribunal held that where the AO himself accepts on verification of primary records that the Form No.3CD quantity was incorrect and the value of closing stock as returned by the assessee stands accepted, sustaining an addition merely because the tax audit party maintained a query or because complete verification was not finished is not proper. The Tribunal therefore agreed with the CIT(A)'s deletion of the addition, observing that no additional purchases were shown which could substantiate the inflated closing stock and that documentary evidence (production registers, export invoices and bank stock statements) supported the assessee's revised quantitative position and the closing stock valuation adopted by the assessee. [Paras 3, 5, 6, 7]

The addition of Rs. 13,47,71,926 made on account of alleged undervaluation of closing stock is unjustified and is deleted.

Acceptance of primary documentary evidence (production registers, export invoices, bank stock statements) - Deletion of addition where AO's own verification accepts assessee's figures - Whether the assessee's production and export records and bank stock statements could be relied upon to correct the quantitative figures stated in the audit report and negate the need for reassessment addition. - HELD THAT: - The Tribunal analysed the material placed before the AO and the appellate authorities: production registers, daily purchase bills, export invoices and bank stock statements used for packing credit. The AO's assessment order itself records that a test check of these records convinced him that the figures originally furnished were incorrect and that the correct closing stock was 90,620 kg valued at the amount shown by the assessee. Given the AO's admission and the supporting primary evidence, the Tribunal found it impermissible to sustain the addition merely because the AO had not completed exhaustive verification; the primary documentary evidence furnished by the assessee was sufficient to displace the quantitative particulars in Form No.3CD which the AO had accepted as incorrect on test-check. [Paras 5, 6, 7]

The registers, invoices and bank stock statements furnished by the assessee were sufficient to establish the correct quantitative position and to justify deletion of the addition.

Final Conclusion: The appeal by the Revenue is dismissed; the Tribunal upholds the CIT(A)'s deletion of the addition made in reassessment for Assessment year 2011-2012 because the Assessing Officer's own verification of primary records established the assessee's corrected closing stock and value, rendering the addition unsustainable.

Exemption under Section 10(38) for long term capital gains - onus of proof on the assessee for claiming exemption - penny stock/pre-arranged share transactions and lack of commercial purpose - inadmissibility of untested investigation statements as sole basis for assessment - re-adjudication and remand for opportunity to rebut investigation reports

Exemption under Section 10(38) for long term capital gains - penny stock/pre-arranged share transactions and lack of commercial purpose - onus of proof on the assessee for claiming exemption - inadmissibility of untested investigation statements as sole basis for assessment - re-adjudication and remand for opportunity to rebut investigation reports - Whether the claim of exemption under Section 10(38) in respect of alleged penny stock share transactions was to be adjudicated afresh by the Assessing Officer after giving the assessee opportunity to rebut investigation material. - HELD THAT: - The Tribunal found that the Assessing Officer's addition treating the share purchases and sales as fabricated, pre arranged transactions lacked the requisite opportunity given to the assessee to meet and rebut the investigative material relied upon by the Revenue. While the onus to prove entitlement to exemption under Section 10(38) rests on the assessee, any adverse conclusion based primarily on information or statements obtained by the Department must be confronted to the assessee and cannot constitute the sole foundation for assessment without affording a fair chance of rebuttal. The Tribunal, following its earlier coordinate bench precedents, observed that assessments cannot rest on mere suspicion or on untested statements from investigation witnesses which were not furnished to or made available for cross examination by the assessee. In view of the gaps in admissible material and the absence of adequate opportunity to the assessee to establish who, how and in what circumstances the transactions were effected (including demat/possession particulars, role of brokers/sub brokers and any connection with promoters), the Tribunal concluded that the matter required fresh enquiry and adjudication. Directions were given that the AO shall furnish the investigative report relied upon, elicit and record necessary particulars including the assessee's relationship, role in promotion or price inflation (if any), and allow the assessee a reasonable opportunity to produce persons and evidence to substantiate the claim, after which the AO shall decide the issue in accordance with law. [Paras 4, 6]

The issue of entitlement to exemption under Section 10(38) is remitted to the file of the Assessing Officer for re adjudication after furnishing the investigation material and granting the assessee adequate opportunity to rebut and substantiate the transactions.

Final Conclusion: The appeal is treated as partly allowed for statistical purposes and the claim of exemption under Section 10(38) for assessment year 2013-14 is restored to the Assessing Officer for fresh adjudication in accordance with the directions given by the Tribunal.

Allowability of staff welfare, club and related corporate expenses - treatment of inter unit transfer price for captive power for deduction under section 80IA - whether electricity duty forms part of market value for captive supply - apportionment of corporate/head office and directors' expenses to an 80IA eligible unit - ascertained liability versus provision - rebate and claims - classification of payments and applicability of section 40(a)(ia) where TDS deducted under a different provision - allowance of depreciation where the unit claims exemption under section 80IA - reasoned first appellate relief and precedence in assessing allowance of inter unit transfers

Allowability of staff welfare, club and related corporate expenses - Deletion of disallowances made by AO in respect of club expenditure, staff welfare, workers welfare, community development, HRD training and subscription expenses. - HELD THAT: - The AO disallowed these expenditures for lack of business connection. The CIT(A) restricted the disallowance to 10% on an ad hoc basis. The Tribunal examined the nature of the expenses, the fact that detailed entries and separate P&L ledgers were maintained and earlier tribunal decisions in the assessee's own cases. The Tribunal found that the AO had not identified specific items that were non business or personal; many of the heads (staff welfare, club, community development, HRD, subscriptions) related to corporate office functions or were necessary for maintaining industrial relations and operations in a remote/naxal affected locality. Following earlier decisions of coordinate benches, the Tribunal concluded the AO's blanket disallowance was unsustainable and directed deletion of the disallowances confirmed by the CIT(A).

Grounds relating to disallowance of staff welfare, club, community development, HRD and subscription expenses are allowed (deletions directed).

Treatment of inter unit transfer price for captive power for deduction under section 80IA - whether electricity duty forms part of market value for captive supply - reasoned first appellate relief and precedence in assessing allowance of inter unit transfers - Computation of market value of power for deduction under section 80IA: acceptance of State Electricity Board rate as market value and deletion of addition made for electricity duty component. - HELD THAT: - AO assumed a cost plus rate (Rs.2.50/unit + 20%) in absence of cost details and added back the difference. CIT(A) accepted market linked valuation using the Jharkhand State Electricity Board (JSEB) tariff but reduced it by electricity duty of 0.02/unit and sustained a residual addition. The Tribunal examined precedent (Chhattisgarh High Court in Godawari Power & Ispat Ltd, ITAT Kolkata and other authorities) and section 80IA(8) which requires use of market value for inter unit transfers. The Tribunal held that where a market price is available (State Electricity Board rate charged to industrial consumers), that price is the appropriate benchmark; the AO's cost plus assumption was without basis. Further, the Tribunal held that electricity duty embedded in the State Board tariff is not a business connected cost for the assessee and therefore the CIT(A)'s adjustment for duty was not justified; the portion of addition relating to electricity duty was ordered deleted.

Ground relating to reduction of 80IA deduction by substituting AO's cost plus price with a lower figure is reversed in part: SEB rate accepted as market value and the part addition attributable to electricity duty is deleted; AO's cost plus addition set aside.

Apportionment of corporate/head office and directors' expenses to an 80IA eligible unit - Validity of AO's apportionment of directors' sitting fees and business head office expenses to the 80IA eligible captive power unit. - HELD THAT: - The assessee maintained separate audited accounts for the captive power unit and contended that common corporate expenses were not referable to the captive unit. CIT(A) deleted allocations of sales and business promotion expenses but sustained apportionment of directors' sitting fees and business head office expenses on a turnover basis. The Tribunal examined the accounts, the nature of captive generation (no third party sale), prior orders and authorities relied upon by parties. It held that while marketing and promotion expenses were not attributable to the captive unit and thus deleted, the apportionment of directors' sitting fees and head office expenses on a turnover basis was supported by the record and by authority (NIITGIS) and therefore correctly sustained.

Appeal on this point dismissed; the reallocation/addition in respect of directors' sitting fees and business head office expenses is upheld and the deletions in respect of sales/business promotion expenses are sustained.

Ascertained liability versus provision - rebate and claims - Whether the amount debited as 'rebates and claims' constituted an ascertained liability deductible in the year or an unascertained provision to be disallowed. - HELD THAT: - AO treated the amount as an unascertained provision and disallowed it. CIT(A) examined ledger details, customer correspondence and the fact that a credit note was finally issued by a major customer (Hindalco) shortly after year end, demonstrating that the liability related to the year and had crystallised. The Tribunal noted that the revenue did not dispute the ledger and credit note facts relied upon by CIT(A), and found no infirmity in treating the item as an ascertained liability.

Revenue ground dismissed; the addition in respect of rebates and claims is deleted.

Allowability of CSR and community welfare expenses - Whether CSR, community welfare and horticulture expenses are business expenses or applications of income to be disallowed in full. - HELD THAT: - AO treated these expenditures as philanthropic/unrelated to business and disallowed them fully. CIT(A) after remand allowed horticulture expenses and restricted disallowance of CSR/community expenses to modest percentages (5% of CSR, 10% of community development) on facts that the company operated in a remote/naxal affected area where such expenditures bear on smooth functioning and industrial relations. The Tribunal noted consistent tribunal precedent in the assessee's own cases and found the CIT(A)'s fact based proportional approach reasonable; accordingly it upheld the partial relief granted by the CIT(A).

Revenue's challenge to deletion/part relief dismissed; CIT(A)'s partial allowance of CSR, community welfare and horticulture expenses is upheld.

Allowability of similar welfare and miscellaneous expenses in the subsequent year - For assessment year 2007 08, deletion of ad hoc 10% disallowances on club, staff welfare, gifts, community development, education/health care, entertainment and subscription expenses. - HELD THAT: - The Tribunal applied the reasoning adopted for the 2006 07 assessment year (detailed examination of nature of expenses, separate audited divisional accounts and tribunal precedents) and allowed the corresponding grounds for AY 2007 08 in line with the earlier decision.

Assessee's cross appeals for AY 2007 08 allowing deletions are allowed.

Classification of payments and applicability of section 40(a)(ia) where TDS deducted under a different provision - Whether disallowance under section 40(a)(ia) is attracted where TDS was deducted under section 194C though Revenue contended section 194J applied. - HELD THAT: - AO disallowed consultancy payments for shortfall in TDS on the basis that the payments should have attracted section 194J. CIT(A) observed that the impugned bills were capitalised (not claimed as revenue expenditure) and further relied on precedent holding that section 40(a)(ia) cannot be invoked where there is a genuine difference of opinion on the correct TDS provision and the item was not charged as revenue expenditure; any shortfall is to be dealt with under section 201 as an assessee in default. The Tribunal agreed with CIT(A) and followed the cited coordinate bench authority, holding that no disallowance under section 40(a)(ia) was warranted.

Revenue's disallowance under section 40(a)(ia) is dismissed; CIT(A)'s deletion upheld.

Allowance of depreciation where the unit claims exemption under section 80IA - Whether depreciation on power plant (an 80IA eligible unit) should be disallowed because profits of that unit are exempt. - HELD THAT: - AO had disallowed depreciation on the ground that the unit's profits were exempt under section 80IA. CIT(A) observed that depreciation is an allowable deduction under the Income tax Act and consistent allowance in computation should be respected; where depreciation under Companies Act had been added back and income tax depreciation allowed, the AO's disallowance was inappropriate. The Tribunal agreed that the rule of consistency and the factual pattern supported allowing depreciation and upheld the CIT(A)'s deletion of the AO's addition.

Revenue's appeal against allowance of depreciation is dismissed; CIT(A)'s order allowing depreciation is confirmed.

Final Conclusion: The Tribunal partly allowed the assessee's appeals and dismissed the Revenue's appeals. Disallowances of various welfare, CSR and related corporate expenses were deleted; the market value for captive power under section 80IA was held to be the State Electricity Board rate and the electricity duty component was not to be excluded by the assessee's favour; apportionment of directors' sitting fees and head office expenses to the 80IA unit was upheld; the rebate/claim liability was held to be ascertained and allowed; the section 40(a)(ia) disallowance in respect of consultancy payments was dismissed; and depreciation on the power plant was allowed as held by the CIT(A). Cross objections became infructuous.

Interest taxable on receipt basis under DTAA - Accrual versus receipt in treaty interpretation - Transfer pricing provisions applicable only where income is chargeable under the charging provision - Section 90(1) - beneficial DTAA provision overriding domestic law

Interest taxable on receipt basis under DTAA - Transfer pricing provisions applicable only where income is chargeable under the charging provision - Section 90(1) - beneficial DTAA provision overriding domestic law - Accrual versus receipt in treaty interpretation - Whether a transfer pricing adjustment can be made to tax notional/accrued interest on CCDs where no interest has actually been received and the India-Mauritius DTAA (Article 11(1)) taxes interest only when 'arising and paid'. - HELD THAT: - Article 11(1) of the India-Mauritius treaty uses the language 'interest arising in a Contracting State and paid to a resident of the other Contracting State', which requires satisfaction of both accrual and actual payment for taxability. Judicial precedents interpreting identical treaty language have held that such interest is taxable on payment/receipt basis and not merely on accrual. Section 90(1) of the Income tax Act gives effect to the DTAA to the extent beneficial to the assessee, and where an item of income is not chargeable to tax under the charging provision (section 4) by virtue of the treaty, Chapter X (including section 92) - being machinery/anti avoidance provisions - cannot be invoked to bring such non chargeable hypothetical income into tax. The Coordinate Bench's reasoning in similar cases, accepted by the High Court, establishes that a transfer pricing adjustment based on notional or contingent interest which has neither accrued in the sense of being due and acknowledged nor been actually received cannot be sustained. Applying these principles to the facts, where the assessee has not received the interest and relied upon the treaty position, the TP adjustment on hypothetical interest falls outside the charging provision and is thus unsustainable. [Paras 6, 7, 8]

The transfer pricing additions made on account of notional/accrued interest on the CCDs are deleted; appeals are allowed.

Final Conclusion: The Tribunal held that Article 11(1) of the India-Mauritius DTAA permits taxation of interest only on accrual coupled with actual payment; consequently, where no interest was received the item is not chargeable under section 4 and the transfer pricing adjustments under Chapter X cannot be sustained - the additions for AYs 2008-09, 2011-12 and 2012-13 are deleted and the appeals are allowed.

Indefinite retention of perishable stock - permitted domestic use - destruction in an environmentally friendly manner - export prohibition upheld by courts - accumulation at owner's risk of change in governmental policy - supervision by customs authorities

Indefinite retention of perishable stock - export prohibition upheld by courts - accumulation at owner's risk of change in governmental policy - Indefinite retention of the accumulated stock of Shark Fins in India is not permissible. - HELD THAT: - The Court found that while certain permitted domestic uses of Shark Fins may be conceivable, the technology for conversion into high value products (such as collagen) is not presently available to the petitioner and there is no timeline for acquisition of such technology (paras. 4, 8). Export of Shark Fins is prohibited by Government policy, a prohibition that has been upheld by this Court and the Supreme Court; the petitioner accumulated the stock when export was banned in the hope of a policy change and thus did so at its own risk (para. 9). Given the perishable nature of the product, the costs of storage, and administrative concerns to prevent clandestine export or illegal use, indefinite retention was held unjustified (paras. 6, 10). [Paras 4, 6, 8, 9, 10]

Indefinite retention is not allowed and the review petition is dismissed.

Permitted domestic use - destruction in an environmentally friendly manner - supervision by customs authorities - The petitioner must either seek clearance for permissible domestic use within a specified time or the accumulated stock shall be destroyed under customs supervision. - HELD THAT: - The Court recalled its earlier direction permitting either domestic use or destruction within eight weeks from 26-3-2019, and observed that because the petitioner failed to indicate any time frame for utilizing the stock and presently lacks the requisite technology, continued retention cannot be allowed (paras. 5, 8). In consequence, the Court ordered that if the petitioner does not seek clearance of the goods for permissible domestic use within three weeks from the date of the order, the goods shall be destroyed in an environmentally friendly manner under the supervision of the customs authorities immediately thereafter (para. 11). [Paras 5, 8, 11]

Petitioner to seek clearance for permissible domestic use within three weeks; failing which goods to be destroyed in an environmentally friendly manner under customs supervision.

Final Conclusion: The review petition is dismissed; the petitioner must seek clearance for permissible domestic use within three weeks, failing which the accumulated stock of Shark Fins shall be destroyed in an environmentally friendly manner under customs supervision.

Amendment of shipping bill - correction of procedural/clerical error - intention to claim MEIS benefit - no objection certificate for MEIS claim - electronic transmission to DGFT portal - examination norms based on reward declaration - conversion of shipping bill - amendment under Section 149 of the Customs Act, 1962

Amendment of shipping bill - correction of procedural/clerical error - intention to claim MEIS benefit - amendment under Section 149 of the Customs Act, 1962 - Request to amend shipping bills to change the reward-option from 'No' to 'Yes' so as to enable MEIS claim - HELD THAT: - The Commissioner rejected amendment applications on the premise that a 'No' in the reward column affected examination norms and that allowing change would amount to conversion of the shipping bill under the relevant CBIC circular. The Tribunal found that the lapse was a procedural/clerical error (ticking 'N' instead of 'Y') and that, except in one case, the appellants had otherwise declared their intention to claim MEIS on the face of the shipping bills. The Tribunal relied on precedents permitting correction of such mistakes (including the Madras High Court decision upholding amendment under Section 149 and appellate/High Court authorities allowing amendment even where declaration was lacking) and noted that other ports had permitted similar amendments. Having regard to these authorities and the fact that substantive eligibility for MEIS was not in question, the Tribunal held that the Commissioner's refusal was not sustainable and that the shipping bills could be amended to correct the procedural defect.

Impugned orders rejecting the amendment are set aside and Customs authorities are directed to allow the requested amendment of the shipping bills (change reward-option from 'No' to 'Yes') on production of a certified copy of this order.

Final Conclusion: Appeals allowed; Customs directed to permit amendment of shipping bills to reflect the appellants' intention to claim MEIS and to issue the necessary no objection certificate upon production of a certified copy of this order.

Interest under section 28AB of Customs Act, 1962 - Penalty under section 114A of Customs Act, 1962 - Settlement Commission order and its effect on liability - Liability of transferees for duty foregone - Remand for fresh adjudication

Settlement Commission order and its effect on liability - Liability of transferees for duty foregone - Interest under section 28AB of Customs Act, 1962 - Penalty under section 114A of Customs Act, 1962 - Whether the adjudicating authority could sustain imposition of interest and penalties on transferees where duty liability had been settled against the original scrip holder by the Settlement Commission - HELD THAT: - The Tribunal examined the impugned order which noted the Settlement Commission's order that had settled duty liability on the scrip-holder and granted immunity from penalty and prosecution, and observed that the adjudicating authority had not, on the merits, determined the liability of the transferees. The Tribunal held that the Settlement Commission's process and prior judicial observations did not relieve the adjudicating authority of its obligation to decide, in accordance with law, whether liability for interest under section 28AB and penalty under section 114A could be fastened upon transferees when duty had been settled on the transferor. Since the adjudicating authority, constrained by the settlement and prior orders, had not made the requisite legal findings and had effectively attempted to visit detriments upon the transferees without adjudicating their legal liability, the matter required fresh consideration. The Tribunal therefore set aside the impugned order and remanded the matter to the original authority to decide the transferees' liability in accordance with law.

Impugned order set aside and matter remanded to the original adjudicating authority for fresh decision in accordance with law.

Final Conclusion: The Tribunal set aside the impugned adjudication order and remanded the matter to the original authority for fresh adjudication on the transferees' liability for interest under section 28AB and penalties under section 114A, directing that the legal questions be decided in accordance with law.

Admission of insolvency petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - compliance with the procedural requirements of Section 9(1)-(3) - service of demand notice and petition by speed post and by e mail - declaration of moratorium under Section 14 of the Code - appointment and powers of Interim Resolution Professional under Sections 16 and 17 and duties under Section 18 - public announcement and claim submission under Regulation 6 and Section 15

Admission of insolvency petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - compliance with the procedural requirements of Section 9(1)-(3) - The petition under Section 9 was complete and admitted and CIRP directed to be initiated. - HELD THAT: - The Tribunal examined the Form-5 petition and supporting documents and found that the petition was filed after expiry of ten days from service of the demand notice and complied with the requirements of sub sections (1), (2) and the sub clauses of sub section (3) of Section 9. The bank statement and other documentary evidence filed by the petitioner were noted and the proposed Resolution Professional declared not to have disciplinary proceedings pending. On that basis, the Tribunal held that all ingredients of clause (i) of sub section (5) of Section 9 were fulfilled and admitted the petition, directing initiation of the corporate insolvency resolution process. [Paras 12, 13, 14]

Petition admitted and CIRP initiated against M/s Hawk Leathrers Pvt. Ltd.

Service of demand notice and petition by speed post and by e mail - absence of contest/representation from the corporate debtor - Service on the corporate debtor by speed post and by e mail was treated as effected and there being no representation the petition proceeded. - HELD THAT: - The record showed dispatch of the demand notice in Form 3 and subsequent attempts to serve the petition and orders by speed post; tracking reports and affidavits of service were placed on record. The petitioner also relied on sending copies to the e mail address available in the corporate debtor's master data, which did not bounce back. The Tribunal recorded that service by the modes employed had been effected and observed absence of any reply or representation from the respondent, permitting the matter to proceed to admission. [Paras 5, 7, 9, 11]

Service by speed post and by e mail treated as effective; no representation from respondent.

Declaration of moratorium under Section 14 of the Code - appointment and powers of Interim Resolution Professional under Sections 16-18 - public announcement and claim submission under Regulation 6 and Section 15 - Moratorium was declared and an Interim Resolution Professional was appointed with specified duties and directions. - HELD THAT: - Upon admission of the petition the Tribunal declared the statutory moratorium in the terms of Section 14(1), specified the non application carve outs under Section 14(3), and directed that the moratorium shall operate until completion of CIRP or approval of a resolution plan or liquidation. The Tribunal appointed the named Interim Resolution Professional, stated that board powers shall stand suspended and management shall vest in the IRP in terms of Sections 16 and 17, and directed the IRP to act in accordance with the Code, make the public announcement under Regulation 6, collate claims, constitute the Committee of Creditors within the prescribed period and file regular progress reports. [Paras 14, 15, 16, 17, 18]

Moratorium declared; Interim Resolution Professional appointed and directed to take requisite steps under the Code and Regulations.

Final Conclusion: The Tribunal admitted the Section 9 petition, initiated the CIRP against the corporate debtor, declared the moratorium, appointed the Interim Resolution Professional and issued consequential directions for public announcement, claim collation and constitution of the Committee of Creditors; service by speed post and e mail was treated as effective and there was no representation from the respondent.

Delisting of equity shares pursuant to a resolution plan approved under Section 31 of the Insolvency and Bankruptcy Code - SEBI (Delisting of Equity Shares) Regulations - Regulation 3(3) exemption - exit option to existing public shareholders at a price not less than liquidation value determined under IBBI regulations - approval of resolution plan under Section 31 of the IBC as a precondition for applicability of Delisting Regulations' exemption - obligation to approach competent authorities (MCA/SEBI) for statutory compliances in effecting reductions or delisting

Delisting of equity shares pursuant to a resolution plan approved under Section 31 of the Insolvency and Bankruptcy Code - SEBI (Delisting of Equity Shares) Regulations - Regulation 3(3) exemption - exit option to existing public shareholders at a price not less than liquidation value determined under IBBI regulations - Scope and applicability of the SEBI Delisting Regulations exemption claimed by the Resolution Applicant in relation to the approved resolution plan. - HELD THAT: - The Tribunal accepted SEBI's affidavit and adopted its position that Delisting Regulations do not stand wholly ousted; exemption is available only as provided in Regulation 3(3). That provision removes applicability of the Delisting Regulations to delisting made pursuant to a resolution plan approved under Section 31 of the IBC only if the plan (a) lays down a specific procedure to complete delisting or (b) provides an exit option to existing public shareholders at a price specified in the resolution plan, subject to the provisos which require that the exit price shall not be less than the liquidation value determined under regulation 35 of the IBBI Regulations and that disclosure to stock exchanges be made within one day of plan approval. The Tribunal therefore clarified that the Resolution Applicant's entitlement to proceed without compliance with the Delisting Regulations is governed by and contingent upon satisfying the conditions of Regulation 3(3) and its provisos, and that SEBI's stated position on the matter will guide implementation.

Delisting Regulations apply except to the limited extent set out in Regulation 3(3); the Resolution Applicant may avail the exemption only by complying with Regulation 3(3) and its provisos as interpreted by SEBI.

Approval of resolution plan under Section 31 of the IBC as a precondition for applicability of Delisting Regulations' exemption - obligation to approach competent authorities (MCA/SEBI) for statutory compliances in effecting reductions or delisting - Whether any further direction was required from the Tribunal/NCLT to dispense with statutory approvals for actions contemplated in the approved resolution plan and the extent to which the Adjudicating Authority's order required clarification. - HELD THAT: - The Adjudicating Authority in its earlier order had indicated that its approval for Face Value Reduction and Promoter Capital Reduction was dispensed with but directed the applicant to approach competent authorities for necessary compliances. The Appellants contended SEBI's earlier amendment permitted delisting without SEBI permission. Having considered SEBI's affidavit, the Tribunal found no need to grant a blanket dispensation beyond Regulation 3(3). The appellate order therefore clarifies/modifies the NCLT order to the extent that the Resolution Applicant must act in accordance with SEBI's articulated position and otherwise comply with applicable law and obtain necessary statutory compliances from MCA, SEBI or other competent authorities as required.

The NCLT order is clarified/modified: the Resolution Applicant must comply with the approved resolution plan forthwith but must approach and follow directions of the competent authorities (including SEBI/MCA) and comply with the law; no broader dispensation is granted beyond Regulation 3(3).

Final Conclusion: The appeal is disposed of with clarification that SEBI's Regulation 3(3) alone governs any exemption from the Delisting Regulations for delisting pursuant to an approved resolution plan; the Resolution Applicant may proceed only on compliance with that provision and its provisos and after obtaining or following directions of the competent authorities (MCA/SEBI) as applicable, and is directed to implement the approved resolution plan forthwith subject to those requirements.

Condonation of delay - cross-objections under Section 86(4) of the Finance Act, 1994 - sufficient cause - adjournments and representation before the Tribunal - no substantial question of law

Condonation of delay - cross-objections under Section 86(4) of the Finance Act, 1994 - sufficient cause - adjournments and representation before the Tribunal - The Tribunal (CESTAT) correctly refused to condone the delay of 468 days in filing cross-objections by the appellant. - HELD THAT: - The Tribunal's conclusion that the 468-day delay in filing cross-objections under Section 86(4) was not explained by sufficient cause was affirmed. The notice impugned was dated 8 February 2017 and received on 14 February 2017; the 45-day limitation expired on 31 March 2017, whereas the cross-objections were filed on 20 July 2018. The reasons advanced before the Tribunal and this Court - financial difficulties, need to retrieve records from 2005-2006, change of counsel and engagement of fresh counsel in 2018 - were held inadequate to justify the inordinate delay. The Tribunal noted that the matter was listed on multiple occasions in 2017 and that adjournments were sought on behalf of the appellant and that multiple counsel had appeared; that circumstance militated against the contention that earlier counsel had not pursued the matter. The Court observed that nominal court-fee requirements foreclose financial incapacity as a plausible justification for such a prolonged delay, and agreed with the Tribunal's assessment that the appellant failed to satisfy the requirement of showing sufficient cause for extending the prescribed period. [Paras 9, 10, 11, 12, 13]

The refusal by CESTAT to condone the 468-day delay in filing cross-objections is upheld; the appeal is dismissed.

Final Conclusion: The High Court agrees with the CESTAT's reasoning that the appellant failed to show sufficient cause for a 468-day delay in filing cross-objections under Section 86(4), finds no substantial question of law, and dismisses the appeal; connected miscellaneous applications stand disposed of.

Availment of CENVAT credit on the basis of debit notes issued by sister concerns - Validity of inter unit apportionment of input service costs among separate legal entities - Registration as Input Service Distributor (ISD) not mandatory for admissibility of CENVAT credit - Debit note as a document under Rule 9 of the CENVAT Credit Rules for claiming credit - Requirement of proof of tax discharge by the service provider / service recipient

Availment of CENVAT credit on the basis of debit notes issued by sister concerns - Debit note as a document under Rule 9 of the CENVAT Credit Rules for claiming credit - Entitlement to CENVAT credit where shared input services are recouped between group entities by issuing debit notes - HELD THAT: - The Tribunal found that one group entity incurred input service expenses, paid service tax and thereafter recouped respective shares from sister concerns by issuing debit notes which separately charged service tax; the debit notes on record contained the particulars required under the CENVAT Credit Rules. The Tribunal relied on the settled view of earlier decisions that where service tax has been discharged by the entity issuing the debit note and the debit note contains prescribed details, the recipient can avail CENVAT credit. The department produced no evidence to show that no service was rendered by the sister concerns and, in such circumstances, denial of credit at the service recipient end was not justified. The assessee also produced an independent accountant's certificate demonstrating that credits availed matched tax discharged on debit notes and that tax on debit notes issued by the assessee did not exceed credit availed on shared services. [Paras 6]

CENVAT credit availed on the basis of debit notes issued by sister concerns for shared input services is allowable where the debit notes contain requisite details and the tax has been discharged; the impugned denial of credit is set aside.

Registration as Input Service Distributor (ISD) not mandatory for admissibility of CENVAT credit - Validity of inter unit apportionment of input service costs among separate legal entities - Whether absence of ISD registration precludes availment of CENVAT credit on shared services among separate legal entities - HELD THAT: - The Tribunal held that ISD registration is a procedural requirement and is not a precondition to the substantive entitlement to CENVAT credit. Where distinct legal entities enter into agreements to share input service expenses and the mechanism results in discharge of service tax by the entity raising debit notes, the ISD provisions are not applicable to deny credit at the recipient's end. The assessee's inadvertent misclassification in returns, later rectified on internal audit, did not establish mala fide suppression or fraud to warrant denial or penalties in the absence of specific allegations. [Paras 6]

Absence of ISD registration does not bar admissibility of CENVAT credit on shared input services among separate legal entities where tax has been discharged and supporting documents are in order.

Requirement of proof of tax discharge by the service provider / service recipient - Debit note as a document under Rule 9 of the CENVAT Credit Rules for claiming credit - Whether initial availment of entire credit by one entity (on supplier invoices) and subsequent recoupment by debit notes affects admissibility of credit - HELD THAT: - The Tribunal accepted the factual matrix that the assessee initially availed credit on invoices issued by service providers and subsequently recouped the proportionate shares from sister concerns by issuing/receiving debit notes charging service tax. Given that the service tax on the recoupment was discharged and the debit notes contained requisite particulars, this sequence did not vitiate the entitlement to credit. The Tribunal further noted the assessee produced certification confirming parity between credit availed and tax discharged on debit notes. [Paras 6]

Credit initially availed on supplier invoices and later adjusted among group entities by debit notes is admissible where the debit notes reflect service tax discharge and contain required details.

Validity of appellate order allowing CENVAT credit on shared services - Whether the Commissioner(Appeals) was in error in allowing CENVAT credit for the period April 2014 to March 2015 and whether Revenue's appeal in that respect should succeed - HELD THAT: - The Tribunal applied the reasoning adopted in the assessee's appeal - that debit notes containing prescribed particulars and discharge of tax support the claim to credit and that ISD registration is not a precondition - to the subsequent period adjudicated by the Commissioner(Appeals). Finding no infirmity in the appellate order, and no contrary evidence to negate service receipt or tax discharge, the Tribunal concluded that the Revenue's grounds for appeal were without merit. [Paras 7]

The Revenue's appeal is dismissed and the Commissioner(Appeals) order allowing CENVAT credit for April 2014 to March 2015 is upheld.

Final Conclusion: The Tribunal allowed the assessee's appeal setting aside the Commissioner's denial of CENVAT credit on shared input services where debit notes issued by sister concerns contained requisite particulars and tax was discharged, held that ISD registration is not a mandatory precondition for credit, and dismissed the Revenue's appeal against the Commissioner(Appeals) order for April 2014-March 2015.

Input service - nexus between input service and exported output service - CENVAT credit claim on basis of debit notes - remand for verification of documents - refund denial for procedural irregularities

Input service - nexus between input service and exported output service - Denial of refund on the ground of lack of nexus between specified input services and the exported output service is not sustainable. - HELD THAT: - The Tribunal examined the finding of the Commissioner (Appeals) rejecting refund claims on several input services for want of direct nexus with the exported taxable output service. Relying on earlier Tribunal decisions produced by the appellant and on the statutory definition of 'input service', the Tribunal held that those services qualify as input services essential for rendering the exported output service and that denial of refund on the ground of lack of nexus was legally unsustainable. The Tribunal expressly recorded that Commercial and Industrial Construction Service, Company Secretary and Public Relations Management Service are also input services essential for rendering the output service and hence eligible for refund. [Paras 7]

Refunds cannot be denied for lack of nexus; appellants entitled to refund in respect of the input services challenged, including Commercial and Industrial Construction Service, Company Secretary and Public Relations Management Service.

Remand for verification of documents - Claims rejected for non-production of supporting invoices are to be remitted to the original authority for re-examination upon production of documents. - HELD THAT: - The Tribunal noted that certain refund rejections were based on non-production of invoices and other supporting documents. As the appellants have now placed such documents on record or offered to produce them, the Tribunal remitted these aspects to the original authority for verification of the documents submitted in support of the refund claims and for fresh adjudication of eligibility. [Paras 7, 8]

Matter remanded to the original authority for examination and verification of documents produced in support of the refund claims and for passing a fresh order.

CENVAT credit claim on basis of debit notes - Debit notes are valid documents for claiming CENVAT credit under the CENVAT Credit Rules. - HELD THAT: - In respect of denials premised on debit notes allegedly not being proper documents, the Tribunal relied on precedents brought on record and held that credit availed on the basis of debit notes must be allowed under the Rules. The Tribunal therefore found the denial on this ground unsustainable and directed reconsideration consistent with the established position. [Paras 7]

Denial of refund on the ground that debit notes are not proper documents is not sustainable; debit notes are valid for claiming CENVAT credit.

Refund denial for procedural irregularities - Denial of refund on other procedural grounds such as absence of the assessee's address on invoices is not sustainable in the circumstances of exported services. - HELD THAT: - The Tribunal considered the rejection of refund claims on procedural irregularities, including invoices lacking the assessee's address. Observing that the appellant is engaged in export of services and that the services in question are essential for rendering the output service, the Tribunal held that such procedural deficiencies do not justify denial of refund and directed reexamination. [Paras 7]

Refund cannot be denied solely on the cited procedural irregularities; the original authority is to reexamine and determine eligibility.

Final Conclusion: The Tribunal allowed the appeals in part by holding that denial of refund for lack of nexus and for reliance on debit notes or certain procedural irregularities was unsustainable; it remanded the matters to the original authority for verification of the invoices, debit notes and other documents and for passing a fresh order determining the eligible refund for the periods July to September 2009, October to December 2009 and October to December 2008.

Commercial Coaching and Training - exemption under Notification No. 10/2003 (commercial training or coaching forming essential part of course leading to certificate/diploma/degree recognised by law) - definition of "Commercial Training or Coaching Centre" (inclusive and exclusive parts) - requirement that charges not be paid by the service recipient to claim notification benefit - liability for service tax and imposition of interest and penalty under Section 77 and Section 78 of the Finance Act, 1994

Commercial Coaching and Training - definition of "Commercial Training or Coaching Centre" (inclusive and exclusive parts) - Services provided by the appellant qualify as 'Commercial Coaching and Training' and are liable to service tax. - HELD THAT: - The Tribunal found that the appellant (IILM Business School) was not itself a degree granting institution recognised by law but acted as a knowledge hub for EIILM University. Because the appellants did not themselves issue a certificate, diploma or degree recognised by law, their activity falls within the definition of a "Commercial Training or Coaching Centre." The decision follows the reasoning in Sri Chaitanya Educational Committee that the inclusive part of the definition (which expressly includes coaching or tutorial classes) must be given effect and that the exclusion for institutions issuing legally recognised qualifications is limited and must be strictly construed. Applying those principles to the facts, the Tribunal held that the appellant's activities are taxable as commercial coaching and training. [Paras 4, 5, 6]

Demand for service tax on the appellant's services as commercial coaching and training is sustained.

Exemption under Notification No. 10/2003 (commercial training or coaching forming essential part of course leading to certificate/diploma/degree recognised by law) - requirement that charges not be paid by the service recipient to claim notification benefit - Notification No. 10/2003 benefit is not available to the appellant because charges were paid by the students to the appellant. - HELD THAT: - The Tribunal examined Notification No. 10/2003 which exempts taxable services by a commercial training or coaching centre when such coaching forms an essential part of a course of another institute leading to a legally recognised qualification, subject to the proviso that the exemption does not apply if the charges are paid by the person undergoing the course directly to the commercial training or coaching centre. The adjudicating authority and the Commissioner (Appeals) had recorded that payments for the coaching were made to the appellant by the students. On that factual foundation, the Tribunal held that the statutory proviso disqualifies the appellant from claiming the notification exemption. [Paras 4, 5, 6]

Notification No. 10/2003 is not attracted because the charges were paid to the appellant by the service recipients.

Liability for service tax and imposition of interest and penalty under Section 77 and Section 78 of the Finance Act, 1994 - Demand of service tax, interest and penalty under Sections 77 and 78 is upheld and the appeal is dismissed. - HELD THAT: - Having held that the appellant's activities are taxable and that the notification exemption is not available, the Tribunal proceeded to uphold the demand, interest and penalties levied by the original authority and sustained by the Commissioner (Appeals). The Tribunal relied on the precedential reasoning in Sri Chaitanya Educational Committee to support the conclusion that the appellant is not covered by the exclusion and therefore remains liable. No stay or other relief was recorded, and the appeal was dismissed. [Paras 5, 6]

Demand of duty, interest and penalties under Sections 77 and 78 is confirmed; appeal dismissed.

Final Conclusion: The appeal is dismissed. The Tribunal sustained the service tax demand against the appellant for providing commercial coaching and training, held that Notification No. 10/2003 does not apply because charges were paid by the students to the appellant, and upheld the levy of interest and penalties under Sections 77 and 78 of the Finance Act, 1994.

Reverse charge - retrospective operation of an explanatory provision - treatment of book provision as payment of consideration - onus of factual verification of actual payment - limitation and invocation of extended period

Retrospective operation of an explanatory provision - treatment of book provision as payment of consideration - The explanation inserted in Rule 6 by amendment dated 10/05/2008 does not operate retrospectively and an assessment based solely on a book provision being treated as payment for earlier periods is unsustainable. - HELD THAT: - The Tribunal had earlier referred to the decision in Sify Technologies Ltd. holding that the explanation added to Rule 6 is not retrospective despite the prefatory words "for removal of doubts". Applying that view, the adjudicating authorities erred in sustaining demand for the period October 2005 to March 2008 merely because the assessee made a provision in its books. Since the explanatory amendment took effect from 10/05/2008, it cannot be applied to create liability for the earlier period; confirmation of demand on the sole ground of book provision is therefore unsustainable. [Paras 3, 7]

Demand confirmed solely on the basis that a provision existed in the books for services availed prior to 10/05/2008 was set aside.

Onus of factual verification of actual payment - reverse charge - The lower authorities failed to carry out the factual inquiry required to verify the appellant's plea that no actual payment was made to the foreign service provider. - HELD THAT: - The Original Adjudicating Authority recorded inability to examine the plea for lack of documents and the Commissioner (Appeals) declined to admit documents not produced earlier, resulting in no substantive factual adjudication on whether consideration was actually paid. The Tribunal noted that the appellant had produced a Chartered Accountant's certificate in the original proceedings and that the factual claim required verification; failure by both authorities to examine this factual position rendered their confirmations unsustainable. [Paras 5, 6]

Matter remanded in earlier order for verification; in the present disposal the impugned confirmations were set aside for lack of factual examination.

Limitation and invocation of extended period - The demand for the period October 2005 to March 2008, issued by show cause notice dated 20/04/2011 invoking extended limitation, is barred by limitation in the absence of mala fide on the part of the assessee. - HELD THAT: - Admittedly, during the relevant period service tax liability under reverse charge would arise only on actual payment of consideration. The explanatory amendment creating liability on book provisions was effective from May 2008. The show cause notice issued in April 2011 invokes the longer period; however, where there is no allegation or finding of mala fide conduct by the assessee in non-payment during the relevant period, invocation of the extended period cannot be sustained. Accordingly the demand is time-barred. [Paras 8]

Demand is barred by limitation and therefore liable to be set aside.

Final Conclusion: Impugned order set aside; appeal allowed - demands confirmed solely on the basis of book provisions quashed, absence of factual adjudication remedied, and the demand for October, 2005 to March, 2008 held time-barred in the absence of mala fide.

CENVAT credit on inputs and capital goods - admissibility of credit based on Chartered Engineer and Chartered Accountant certificates - credit on welding electrodes as inputs/capital goods - definition of "Input" under Rule 2(k) of the Cenvat Credit Rules, 2004

CENVAT credit on inputs and capital goods - admissibility of credit based on Chartered Engineer and Chartered Accountant certificates - Allowability of CENVAT credit on steel items used in fabrication of plant and machinery relying on the Chartered Engineer's and Chartered Accountant's certificates - HELD THAT: - The Tribunal observed that the Commissioner (Appeals) did not dispute use of the steel items in installation of plant and machinery but declined to act on the Chartered Engineer's consumption certificate solely because tonnage could not be equated with the monetary demand. The assessee produced a Chartered Accountant's certificate certifying the CENVAT credit and confirming excess availment, and the Chartered Engineer had certified detailed use of steel items in fabrication. The correctness of these certificates was not disputed by Revenue at the appeal stage. On that basis the Tribunal accepted the certificates and allowed the admitted CENVAT credit of Rs. 22,66,110, holding there was no need for a separate certificate stating that the steel was not used for foundations or structural supports when the Engineer had detailed fabrication usage. [Paras 6]

CENVAT credit of Rs. 22,66,110 on steel items used in fabrication of plant and machinery allowed relying on the Chartered Engineer's and Chartered Accountant's certificates.

Credit on welding electrodes as inputs/capital goods - Allowability of CENVAT credit on welding electrodes used in fabrication of plant and machinery - HELD THAT: - The Tribunal noted that the question is settled by High Court decisions which have held welding electrodes to be eligible for CENVAT credit as inputs/capital goods when used in fabrication or repair of plant/machinery. Relying on those precedents, the Tribunal held that the appellant was rightly entitled to credit on welding electrodes despite their omission from the Chartered Engineer's certificate. [Paras 7]

CENVAT credit on welding electrodes allowed as inputs/capital goods.

Definition of "Input" under Rule 2(k) of the Cenvat Credit Rules, 2004 - CENVAT credit on inputs and capital goods - Allowability of CENVAT credit on paints and lubricating oil used for upkeep and smooth functioning of plant and machinery - HELD THAT: - The Tribunal observed that paints and lubricating oil were expressly covered by the definition of 'Input' under Rule 2(k) of the Cenvat Credit Rules, 2004 up to 31.03.2011, and that with effect from 01.04.2011 the definition's scope was expanded to allow credit on all goods used in the factory by the manufacturer except those excluded. There was no material to suggest these goods were not used for upkeep and smooth functioning of plant and machinery. On that basis the Tribunal allowed CENVAT credit on paints and lubricating oil. [Paras 7]

CENVAT credit on paints and lubricating oil allowed.

Final Conclusion: The appeal is partly allowed: CENVAT credit of Rs. 22,66,110 on steel items is permitted relying on the Chartered Engineer's and Chartered Accountant's certificates; credit on welding electrodes, paints and lubricating oil is also allowed in the terms stated above.

Classification of goods - essential character test - tariff heading 0404 vs 1901 - effect of added flavouring or stabilizers on classification - HSN Notes interpretation - precedential authority for classification (Nestle/Amrit/Nesley)

Classification of goods - tariff heading 0404 vs 1901 - effect of added flavouring or stabilizers on classification - HSN Notes interpretation - Flavoured milk manufactured by the appellant is classifiable under Heading 0404 and not under Heading 1901. - HELD THAT: - The Tribunal applied the HSN Notes to Chapters 4 and 19 and concluded that a product remains within Chapter 04 where its essential character as a product consisting of natural milk constituents is not altered by the addition of minor secondary ingredients. The decision in the coordinate Bench precedent (Nesley India Ltd.) was followed: HSN Notes indicate that Heading 1901 applies when milk constituents are combined with other substantive ingredients (e.g., cereals, yeast) or milk constituents are replaced by other substances; mere addition of a minuscule quantity of artificial flavouring does not effect such exclusion from Chapter 04. Earlier decisions (Amrit Foods and Nestle) were relied upon to show that additives such as stabilizers or flavouring, which do not change the basic characteristics of the milk product but serve ancillary purposes, do not shift classification to Heading 1901. Applying the essential character test and HSN guidance, the Tribunal held that the impugned flavoured milk retains the character of a milk product classifiable under Tariff Item 0404 90 00.

Appeals allowed; impugned goods classified under Chapter Tariff Item 0404 90 00 and orders charging them under Heading 1901 set aside.

Final Conclusion: The Tribunal allowed the appeals and set aside the impugned orders, holding that the appellant's flavoured milk is classifiable under Heading 0404 (Tariff Item 0404 90 00) because the small quantity of flavouring does not alter the product's essential character and therefore does not attract classification under Heading 1901.

Duty on captively consumed inputs - manufacture of plastic sacks and fabrics - clearance without payment of duty - precedential effect of Tribunal decision

Duty on captively consumed inputs - manufacture of plastic sacks and fabrics - clearance without payment of duty - Demand for duty on polypropylene (PP) bags/strips captively consumed in the manufacture of plastic sacks/fabrics which were cleared without payment of duty - HELD THAT: - The Tribunal examined whether duty could be demanded on PP bags/strips that were captively consumed in manufacture of plastic sacks/fabrics subsequently cleared without payment of duty. The Tribunal applied its earlier decision in Southern Bags and Chemicals Pvt. Ltd. Vs CCE Tirunelveli, 2017 (12) TMI 6 - CESTAT Chennai, and concluded that the demand for duty in the present appeals could not be sustained. Relying on the precedent, the impugned orders sustaining the demand were set aside and the appeals were allowed with consequential reliefs as per law. [Paras 2, 5]

Demand could not be sustained; impugned orders set aside and appeals allowed with consequential reliefs.

Final Conclusion: The Tribunal allowed the appeals, setting aside the demand for duty on PP bags/strips captively consumed in manufacture of plastic sacks/fabrics cleared without payment of duty, following the Tribunal's earlier decision in Southern Bags and Chemicals Pvt. Ltd.

Cenvat credit on outward freight - input service - place of removal - remand for verification of factual aspects - Board Circular No. 1065/4/2018-CX dated 08/06/2018 - effect of Ultratech judgment on eligibility of credit

Cenvat credit on outward freight - place of removal - input service - effect of Ultratech judgment on eligibility of credit - Whether the claim of cenvat credit of service tax on outward freight up to the customers' premises is admissible for the disputed period or requires fresh adjudication - HELD THAT: - The Tribunal considered competing contentions: the appellant's submission that where possession/transfer to the buyer occurs at the buyer's premises the 'place of removal' is that premises and thus outward freight qualifies as an input service, and the revenue's reliance on the Apex Court's Ultratech decision holding that, after the 2008 amendment, the place of removal would be the factory gate. The Board Circular No. 1065/4/2018-CX dated 08/06/2018 permits field authorities to examine cases afresh in light of the law and factual matrix. Having noted that various Benches have remanded matters for factual verification post the Circular and the Ultratech judgment, the Tribunal found that factual aspects material to admissibility-such as whether the sale was on FOR basis, whether freight formed an integral part of the sale price, and whether duty was paid on value inclusive of freight-were to be examined by the original authority. The Tribunal did not decide the substantive question on merits but directed a remand for fresh scrutiny of documents and facts for the disputed period in the light of the law and the Board Circular. [Paras 6]

Matter remanded to the original authority to verify factual aspects (FOR basis, freight as part of sale price, duty treatment) and to pass a fresh order after examining the documents for the disputed period.

Final Conclusion: The appeal is allowed by way of remand: the matter is returned to the original authority for fresh consideration and decision on eligibility of cenvat credit on outward freight in accordance with the Board Circular dated 08/06/2018 and relevant judicial decisions, after verifying specified factual aspects for the disputed period.

Eligibility for cenvat credit on input service - place of removal - interpretation of "up to the place of removal" amendment w.e.f. 01/04/2008 - remand for verification of factual aspects - sale on FOR basis / freight forming part of sale price - application of Board Circular No. 1065/4/2018-CX

Eligibility for cenvat credit on input service - place of removal - interpretation of "up to the place of removal" amendment w.e.f. 01/04/2008 - sale on FOR basis / freight forming part of sale price - remand for verification of factual aspects - Remand to original authority to examine and decide the appellant's entitlement to cenvat credit of service tax on outward freight up to the buyer's premises for the period August 2013 to March 2014. - HELD THAT: - The Tribunal noted the conflict in authorities following the Apex Court's decision in Ultratech and the subsequent Board Circular dated 08/06/2018 which permitted field formations to examine cases afresh. Relying on the approach adopted by various Benches and the Madras High Court in Bata India Ltd., the Tribunal held that the question of entitlement to credit cannot be conclusively resolved on the record before it and requires factual verification. The relevant factual aspects identified for fresh examination include whether the sales were on FOR basis, whether freight formed an integral part of the sale consideration, and whether duty was paid on value inclusive of freight. In view of the Board Circular and the need to apply law to the particular facts of the appellant's case, the Tribunal remanded the matter to the original authority to examine the documents and pass a fresh order for the disputed period.

Appeal allowed by remanding the matter to the original authority to verify specified factual aspects and to pass a fresh order for the period August 2013 to March 2014.

Final Conclusion: The Tribunal allowed the appeal by directing a remand to the original adjudicating authority, under Board Circular No. 1065/4/2018-CX, for fresh examination of factual questions bearing on the appellant's entitlement to cenvat credit of service tax on outward freight for August 2013 to March 2014 and for the original authority to pass a fresh order after considering the relevant documents.

CENVAT credit entitlement - Rule 16 of the Central Excise Rules, 2002 - determination of duty shortfall after admissible credit - remand for de novo adjudication

CENVAT credit entitlement - Rule 16 of the Central Excise Rules, 2002 - Whether the appellant is entitled to CENVAT credit of Rs. 17,02,316/- claimed by them on account of returned goods under Rule 16 of the Central Excise Rules, 2002. - HELD THAT: - The Tribunal found that the Commissioner (Appeals) did not properly appreciate or consider the factual material concerning return of goods, re import/rejection and subsequent book entries relied upon by the appellant. The appellate order therefore does not resolve the central question of admissibility of the credit under Rule 16 and the factual-verification required thereunder. In the interest of justice and because the matter was not decided on the merits by the Commissioner (Appeals), the Tribunal directed that the original adjudicating authority should examine the documentary and factual record, apply the tests and conditions of Rule 16(1) and Rule 16(2) where relevant, and determine afresh whether the claimed credit of Rs. 17,02,316/- is admissible.

Remanded to the original authority for de novo determination of entitlement to the claimed CENVAT credit under Rule 16.

Determination of duty shortfall after admissible credit - remand for de novo adjudication - Whether there is any shortfall of duty for February 2016 after allowing such admissible CENVAT credit. - HELD THAT: - Because the admissibility and quantum of the CENVAT credit were left undecided, the Tribunal held that the question of any residual duty liability for February 2016 cannot be finally answered by the Appellate Commissioner. The original authority is therefore directed, after determining the admissible credit amount, to reassess whether any balance duty remained payable for February 2016 and to pass a de novo order addressing duty liability, interest and any penalty consistent with that factual and legal determination.

Remanded to the original authority to determine, after deciding admissible credit, whether any duty shortfall remains for February 2016 and to pass a de novo order.

Final Conclusion: The Commissioner (Appeals) order is set aside to the extent that it did not consider material facts; the matter is remitted to the original adjudicating authority to determine afresh the appellant's entitlement to the claimed CENVAT credit under Rule 16 and, consequentially, whether any duty shortfall for February 2016 remains, and to pass a de novo order in accordance with the Tribunal's observations.

Service of adjudication order - limitation for filing appeal - service in terms of Section 37C of the Central Excise Act, 1944 - ex parte adjudication - remand for fresh adjudication

Service of adjudication order - service in terms of Section 37C of the Central Excise Act, 1944 - limitation for filing appeal - Adjudication order was not served on the appellant and therefore the appeal could not be dismissed as time barred. - HELD THAT: - The Tribunal examined the service records and observed absence of any acknowledgement receipt from the Revenue and discrepancies in the postal address used for service compared with the appellant's address on appeal papers. The Tribunal noted that during the impugned period service by speed post did not amount to proper service under Section 37C of the Central Excise Act, 1944. On these findings the Tribunal concluded that the adjudication order was not served on the appellant and hence the appeal could not be rejected on the ground of limitation. [Paras 6, 7]

Adjudication order held not served; appeal could not be dismissed as time barred.

Ex parte adjudication - remand for fresh adjudication - Matter remanded for fresh adjudication with directions to afford the appellant an opportunity of hearing. - HELD THAT: - The Tribunal observed that the adjudication order was an ex parte order and, in view of the absence of proper service, set aside the consequence of dismissal for delay. The matter was remitted to the adjudicating authority with a specific direction that the appellant appear before the authority on the date fixed (11.11.2019) to have a hearing fixed; thereafter the adjudicating authority is to afford an opportunity of being heard and pass an order in accordance with law. [Paras 8]

Case remanded to the adjudicating authority for fresh adjudication and hearing as directed.

Final Conclusion: The appeal is disposed of by remanding the matter to the adjudicating authority for fresh adjudication; the appellant is directed to appear on 11.11.2019, after which the adjudicating authority shall afford a hearing and pass an order in accordance with law.

Set off under section 4-BB of the U.P. Trade Tax Act - exemption under section 4-A of the U.P. Trade Tax Act - eligibility certificate and adjustment against entitlement - payment of tax by adjustment treated as payment - exemption granted to dealer and not to goods - assessment and adjustment as equivalent to payment of tax

Set off under section 4-BB of the U.P. Trade Tax Act - exemption under section 4-A of the U.P. Trade Tax Act - payment of tax by adjustment treated as payment - eligibility certificate and adjustment against entitlement - Claim for deduction/set off under section 4-BB where raw material was purchased from a dealer exempt under section 4-A and tax on such sale was adjusted against the dealer's eligibility certificate. - HELD THAT: - The Court held that section 4-BB requires payment/assessment of tax on purchase or sale of raw material or packing material but does not prescribe the mode or manner of such payment. The statutory scheme under section 4-A contemplates issuance of an eligibility certificate which records the limit and period of exemption and provides for periodic assessment and adjustment of tax liability against that certificate. Where tax is assessed on the dealer and the assessed tax is periodically adjusted against the eligibility certificate, such adjustment amounts to payment of tax in the books and to the receipt of tax by the revenue. The entitlement to set off under section 4-BB therefore cannot be defeated merely because no physical tender of tax occurred; assessment followed by adjustment within the eligibility certificate meets the statutory requirement of payment. The Court relied on the principle that exemption is granted to the dealer and that assessment and deduction from the eligibility amount amounts to payment, consistent with the reasoning in the cited precedent dealing with deferment/exemption schemes. Applying this principle to the facts, the Tribunal's refusal to allow the set off was unsustainable and the revisionists are entitled to the benefit.

The claim under section 4-BB was allowed: tax assessed and adjusted from the supplier's eligibility certificate was treated as payment, and the revisionists are entitled to the set off despite the supplier's exemption under section 4-A.

Final Conclusion: Both revisions are allowed; the questions of law are answered in favour of the assessee and against the Department, granting the same benefit as in the earlier inter-partes decision.

Motor bodies - component parts of motor vehicle - taxability under Section 3A of the Act - construction of bodies of motor vehicles - works contract - taxability under Section 3F of the Act - notification interpretation - rule of consistency

Motor bodies - component parts of motor vehicle - taxability under Section 3A of the Act - notification interpretation - rule of consistency - Bus bodies are not taxable as component parts of motor vehicles under Notification No. KA.NI.-2-306 dated 29.01.2001. - HELD THAT: - The Court examined the sequence of taxing notifications. Under the 1968 notification 'motor bodies' were expressly included, but subsequent notifications (notably the amended Entry 43 issued on 01.10.1994 and later) omitted the words 'motor bodies' or 'bodies of motor vehicles'. The 29.01.2001 notification merely added 'and harvester combines' and did not reintroduce motor bodies into the taxable description. Given the deliberate deletion in the later taxing entry, the commodity 'bus-body' could not be treated as a motor vehicle or as a component part of a motor vehicle under the notifications governing taxability under Section 3A. The Court rejected revenue's reliance on earlier precedents applied to the prior scheme, and observed that the assessee had consistently treated bus bodies as unclassified goods in prior years; in absence of convincing reasons to depart from such consistency the Court accepted that approach. [Paras 13, 14, 15, 16, 17]

Answered in favour of the assessee; bus bodies are not taxable as component parts of motor vehicles under the impugned notification.

Works contract - taxability under Section 3F of the Act - belated plea - The assessee's contention that the activity constituted a works contract taxable under Section 3F was raised belatedly and was not adjudicated; the question does not arise. - HELD THAT: - The Court recorded that the plea to treat the activity as a works contract under Notification No. ST-II-2399 dated 27.04.1987 was first advanced belatedly by way of an application under Section 22 and was not pressed or adjudicated before the assessing authorities or the Tribunal. Consequently the Tribunal and revenue rightly did not decide that contention, and the Court declined to entertain it at this stage. [Paras 5, 6]

Assessee's Section 3F contention was belated and not adjudicated; question does not arise.

Final Conclusion: The revisions are disposed of in favour of the assessee: the bus bodies are not taxable as component parts of motor vehicles under the impugned notification for A.Y. 2002-03, and the assessee's alternate contention under Section 3F was belatedly raised and was not adjudicated.

Violation of the rules of natural justice - opportunity of hearing before passing a penalty order - judicial interference under Article 226 - interim stay and its temporal effect - stay of recovery to enable exercise of appellate remedy

Violation of the rules of natural justice - opportunity of hearing before passing a penalty order - Ext.P5 penalty order set aside on ground of failure to afford hearing and remitted for fresh decision. - HELD THAT: - The Court found that the respondents' counter affidavit and Ext.P5 itself were silent as to any hearing having been granted before passing the penalty order. In view of this omission and without examining other contentions, the penalty order was set aside for breach of the rules of natural justice. The matter was remitted to the 4th respondent to pass fresh orders after affording the petitioner a hearing and taking note of the assessment order already passed for the same assessment year. The Court directed the petitioner to appear before the 4th respondent for hearing on the appointed date and required the 4th respondent to pass fresh orders within one month thereafter. [Paras 3]

Penalty order (Ext.P5) quashed for denial of hearing; matter remitted for fresh hearing and decision by the 4th respondent within a month.

Interim stay and its temporal effect - judicial interference under Article 226 - stay of recovery to enable exercise of appellate remedy - Challenge to Ext.P6 assessment order dismissed as order dated prior to the interim restraint and not vitiated by jurisdictional error or breach of natural justice; recovery stayed for one month to enable appeal. - HELD THAT: - The Court noted that the interim order restraining action on the pre-assessment notice was dated 06.08.2019, whereas Ext.P6 assessment order bears the date 27.07.2019, though it may have been communicated later. Absent any jurisdictional error or allegation of denial of natural justice in the assessment order, the Court declined to interfere under Article 226. Recognising the petitioner's need to approach the Appellate Authority, the Court stayed recovery proceedings in respect of amounts confirmed by Ext.P6 for one month to enable the petitioner to file an appeal and to place a copy of the writ petition and this judgment before the respondent. [Paras 4, 5]

Writ petition challenging Ext.P6 dismissed; recovery proceedings kept in abeyance for one month to permit filing of appeal.

Final Conclusion: The penalty order (Ext.P5) was quashed for breach of natural justice and remitted for fresh hearing and decision; the challenge to the assessment order (Ext.P6) was dismissed as it pre-dated the interim restraint and lacked jurisdictional infirmity, with recovery stayed for one month to enable the petitioner to prefer an appeal.

Entitlement to declaration Form C despite migration to GST regime - continuing State levy on specified petroleum products pending GST Council notification - effect of GST migration on CST registration - scope of registration under Section 7(2) of the CST Act - principle that non-cancellation of CST registration preserves entitlement under CST law - precedent value of High Court decisions on C Form issuance (Carpo Power Ltd., Hindustan Zinc Ltd.)

Entitlement to declaration Form C despite migration to GST regime - effect of GST migration on CST registration - principle that non-cancellation of CST registration preserves entitlement under CST law - Whether the assessee, having migrated to GST and without fresh CST registration, is entitled to obtain declaration Form C for purchases of High Speed Diesel used as input. - HELD THAT: - The Court upheld the view taken by the Single Judge that denial of Form C was occasioned by the administrative effect of migration to the GST regime and the consequent cessation of active CST registration, which was inadvertent and beyond the assessee's control. The reasoning relied on earlier High Court precedents (notably Carpo Power Ltd. and Hindustan Zinc Ltd.) which held that certain petroleum products (including HSD) continue to be subject to State levy until a GST Council notification is issued and that a dealer satisfying the conditions of Section 7(2) of the CST Act remains entitled to registration-based benefits. The Court noted that the pre-existing mechanism for levy and collection by the State continues for such specified items and that the registration certificate under the CST Act had not been cancelled, so there was no occasion to deny Form C on the ground of GST migration alone. For these reasons the Court affirmed the direction to issue C Forms as earlier ordered by the Single Judge. [Paras 6, 7]

Direction of the Single Judge to issue C Forms is upheld and the State's appeal is dismissed.

Final Conclusion: The High Court dismissed the State's appeal and upheld the Single Judge's direction that C Forms, which had been refused on account of the assessee's migration to GST and absence of active CST registration, be issued; the denial was held to be inadvertent and not a valid bar to issuance.

Right of appeal as statutory right - Maintainability of first appeal under Section 96(2) CPC despite dismissal of Order IX Rule 13 application - Setting aside ex-parte decree under Order IX Rule 13 CPC - Condonation of delay under Section 5 of the Limitation Act - Bona fides versus dilatory tactics in condonation - Deposit as condition for condonation of delay

Right of appeal as statutory right - Maintainability of first appeal under Section 96(2) CPC despite dismissal of Order IX Rule 13 application - First appeal under Section 96(2) CPC challenging an ex parte decree is maintainable notwithstanding earlier dismissal of an application under Order IX Rule 13 CPC. - HELD THAT: - The Court held that when an ex parte decree is passed the defendant has two distinct remedies - an application under Order IX Rule 13 CPC to set aside the ex parte decree and a regular appeal under Section 96(2) CPC. The right to file a first appeal is a statutory right and cannot be taken away merely because a prior application under Order IX Rule 13 CPC was dismissed. While the scope of inquiry under Order IX Rule 13 CPC (service of summons and sufficient cause for non appearance) differs from the merits oriented inquiry in an appeal under Section 96(2) CPC, dismissal of the former does not ipso facto oust the right to pursue the latter. However, the court may refuse condonation of delay in filing the appeal where facts establish dilatory tactics or lack of bona fides; such determination is fact specific. The Court relied on and applied earlier precedents to emphasize that the two remedies can be pursued and that refusal of the Order IX Rule 13 remedy does not extinguish the statutory right of appeal, subject to scrutiny of bona fides and delay. [Paras 9, 10, 11, 16]

The appeal is maintainable despite earlier dismissal of the Order IX Rule 13 application.

Condonation of delay under Section 5 of the Limitation Act - Bona fides versus dilatory tactics in condonation - Deposit as condition for condonation of delay - Time spent in pursuing proceedings under Order IX Rule 13 CPC can constitute "sufficient cause" under Section 5 of the Limitation Act to condone delay in preferring the first appeal, and on the facts the delay was condoned subject to a deposit condition. - HELD THAT: - The Court observed that time consumed in bona fide pursuit of the remedy under Order IX Rule 13 CPC may qualify as sufficient cause for condoning subsequent delay in filing a first appeal, but whether that is so depends on facts and whether the defendant acted bona fide or adopted dilatory tactics. Applying these principles to the present case, the Court noted that the appellant had pursued the Order IX Rule 13 remedy up to higher forums and had not been found to have acted mala fide; the Court further observed the appellant's deposit of a substantial sum in compliance with an earlier order as indicative of bona fides. Considering the balance of justice between parties, the Court exercised its discretion to condone the total delay of 546 days in filing the first appeal, subject to the appellant depositing the balance amount specified by the Court on or before a stipulated date, failing which the condonation would stand dismissed. The Court directed investment of the deposit and clarified that the deposit and earlier sum are subject to the appeal's outcome, while expressing no opinion on merits and preserving independent criminal proceedings. [Paras 15, 18, 19, 20]

Delay of 546 days in filing the first appeal is condoned on condition that the appellant deposits the specified balance amount by the stipulated date; on such deposit the appeal is to be taken on file.

Final Conclusion: The impugned order refusing condonation of delay is set aside. The first appeal is maintainable and the delay of 546 days is condoned subject to the appellant depositing the prescribed balance amount by the stipulated date; on compliance the High Court shall take the appeal on file and proceed in accordance with law. The Court expressed no opinion on merits and permitted criminal proceedings under Section 138 NI Act to continue independently.

Restrictions on grant of bail under Section 37(1)(b) of the NDPS Act - Requirement of court's satisfaction on "reasonable grounds" that accused is not guilty and is not likely to offend while on bail - Statutory bail under Section 36A(4) of the NDPS Act and the extended period for filing complaint - Admissibility and evidentiary weight of statements recorded under Section 67 of the NDPS Act - Confession of co-accused as weak evidence requiring corroboration

Restrictions on grant of bail under Section 37(1)(b) of the NDPS Act - Requirement of court's satisfaction on "reasonable grounds" that accused is not guilty and is not likely to offend while on bail - Legality of bail orders granted by the Sessions Court to accused 2, 4, 5 and 6 in light of Section 37(1)(b) of the NDPS Act and whether those bails should be cancelled. - HELD THAT: - The Court held that Section 37(1)(b) curtails the court's power to grant bail in offences specified therein and mandates (i) opportunity to the Public Prosecutor to oppose bail and (ii) that when opposed the court must be satisfied on reasonable grounds both that the accused is not guilty and that he is not likely to commit an offence while on bail. These two conditions are cumulative and satisfaction must rest on "reasonable grounds", a standard higher than prima facie satisfaction. Although the Sessions Judge's orders granting bail to accused 2, 4, 5 and 6 did not advert to or record satisfaction of the twin conditions under Section 37(1)(b) (and therefore were legally defective on that ground), the High Court exercised its supervisory jurisdiction to examine merits and materials. Considering the nature of allegations against each of these accused (limited role: booking ticket, contacting/arranging a traveller, providing vehicle or dropping to airport), absence of seizure from their possession, absence of any material showing likelihood to re-offend, the long interval between grant of bail and institution of cancellation petitions, and the absence of any violation of bail conditions while on bail, the Court found reasonable grounds for believing they are not guilty of the offences alleged and that they are not likely to commit offences if released. Consequently, cancellation of the bails already granted to accused 2, 4, 5 and 6 was refused and the bails were allowed to continue. [Paras 34, 36, 37, 38, 39]

Although the Sessions Court's orders did not record the mandatory satisfaction under Section 37(1)(b) and were therefore legally defective in form, the High Court declined to cancel the bails of accused 2, 4, 5 and 6 on the merits, finding reasonable grounds to believe they are not guilty and are not likely to offend while on bail.

Statutory bail under Section 36A(4) of the NDPS Act and the extended period for filing complaint - Validity of statutory bail granted to the first accused and whether that bail should be cancelled. - HELD THAT: - The Court found that the Additional Sessions Judge erred in granting statutory bail to the first accused without considering that 1602 grams of hashish (a commercial quantity) had been seized, and by misstating the seized quantity in the order, thereby failing to apply mind to the requirement in Section 36A(4). That made the order illegal. However, the High Court refused to cancel the bail because the petition for cancellation was filed long after the bail (delay from 20.04.2019 to 26.10.2019), the prosecution did not produce material showing the date on which complaint was filed within 180 days from arrest or that extension under the proviso to Section 36A(4) had been sought, and because even absent the flawed order the first accused might have been entitled to statutory bail on expiry of 180 days. In view of these circumstances and absence of proof to the contrary, the High Court declined to disturb the statutory bail already granted. [Paras 42, 43, 44, 45, 46]

The order granting statutory bail to the first accused was illegal in form (failure to consider commercial quantity/Section 36A(4)), but the High Court refused to cancel that bail in the absence of timely challenge and evidence that complaint was filed within the statutory 180-day period or that extension was sought.

Admissibility and evidentiary weight of statements recorded under Section 67 of the NDPS Act - Confession of co-accused as weak evidence requiring corroboration - The evidentiary value of statements recorded under Section 67 and the weight of co-accused confessions in the prosecution's case against accused 2 and 4 to 6. - HELD THAT: - The Court observed that the question whether an investigating officer under the NDPS Act is a "police officer" and whether statements under Section 67 are admissible has been referred to a larger Bench of the Supreme Court. Pending that decision, statements under Section 67 must be taken as admissible. Nevertheless, the Court reiterated established principles that confession or statement of a co-accused is a weak form of evidence and, without independent materials to corroborate such statements, it may not be possible to convict. Given that the prosecution's case against accused 2 and 4 to 6 largely rests on statements under Section 67 and co-accused disclosures, and in the absence of corroborative material, the High Court found reasonable grounds to believe those accused are not guilty. [Paras 47]

Until authoritative pronouncement by the larger Bench, statements under Section 67 are to be treated as admissible but confessions of co-accused are weak evidence requiring independent corroboration; on the materials available the Court found reasonable grounds to believe accused 2 and 4 to 6 are not guilty.

Final Conclusion: All petitions for cancellation of bail are dismissed. The High Court found defects in the Sessions Court's failure to record mandatory satisfaction under Section 37(1)(b) and in the Additional Sessions Judge's statutory-bail order for the first accused, but declined to cancel the bails already granted having regard to the nature of allegations, absence of corroborative material, delay in seeking cancellation, lack of proof of filing complaint within statutory period and non-violation of bail conditions; nothing in this order shall influence trial or framing of charges.

Criminal liability for dishonour of cheque - Section 138 of Negotiable Instruments Act - liability of a society for transactions effected on behalf of its members - facilitation by society and absence of debt - abuse of process/mala fide prosecution

Criminal liability for dishonour of cheque - Section 138 of Negotiable Instruments Act - liability of a society for transactions effected on behalf of its members - facilitation by society and absence of debt - Whether the complaint under Section 138 (read with Sections 141 and 142) of the Negotiable Instruments Act disclosed the ingredients of the offence against the petitioner society which only facilitated transactions for its members - HELD THAT: - The court found on the record that the petitioner society entered into the MOU only to facilitate individual members purchasing apartments and that each sale would be effected by a separate Agreement to Sell between the respondent and the individual member. The society did not itself become an intending purchaser and had no debt or liability towards the respondent on the date of the MOU. The cheques were issued in the context of facilitating payments for members; even if treated as advance payments, the materials did not establish a legally recoverable debt or other liability on the society such as would constitute the ingredients of an offence under Section 138. Having applied these factual findings to the statutory test, the court concluded that the complaint did not disclose a criminal offence against the petitioner society. [Paras 3, 5, 8, 9, 10]

Complaint and all consequent proceedings under Section 138 read with Sections 141 and 142 against the petitioner society are quashed.

Final Conclusion: The petition is allowed; complaint No. 10764/16 under Section 138 read with Sections 141 and 142 of the Negotiable Instruments Act and all consequential proceedings against the petitioner society are quashed for absence of the ingredients of the offence.

Enforcement under Section 36 as a decree fiction - appealability under Section 37 of the Arbitration and Conciliation Act, 1996 - appeals under the Commercial Courts Act, 2015 proviso to Section 13 - appointment of a court receiver in execution of an arbitral award - limited scope of the legal fiction created by Section 36

Enforcement under Section 36 as a decree fiction - limited scope of the legal fiction created by Section 36 - Whether proceedings for execution of an arbitral award under Section 36 are proceedings under the Code of Civil Procedure or are proceedings under the Arbitration and Conciliation Act, 1996. - HELD THAT: - The Court analysed Section 36 and the authorities considering the legal fiction that an award is to be enforced as if it were a decree. Following the Division Bench decision in Jet Airways and the Supreme Court's articulation in Sundaram Finance, the Court held that Section 36 creates a limited enforcement fiction for execution purposes only and does not convert proceedings under Section 36 into ordinary proceedings under the Code of Civil Procedure. Extending the fiction beyond enforcement to treat Section 36 proceedings as proceedings under the Code would frustrate the legislative intent of a self-contained, speedy arbitration regime. [Paras 15, 17, 21]

Proceedings under Section 36 are proceedings under the Arbitration Act and not proceedings under the Code of Civil Procedure.

Appealability under Section 37 of the Arbitration and Conciliation Act, 1996 - appeals under the Commercial Courts Act, 2015 proviso to Section 13 - Whether appeals from orders made in execution of an arbitral award lie to the Commercial Appellate Division under Section 13 of the Commercial Courts Act, 2015 or otherwise, beyond the appeals specifically provided in Section 37 of the Arbitration Act. - HELD THAT: - Relying on Kandla Export and the proviso to Section 13(1) of the Commercial Courts Act, the Court held that appeals in matters arising from the Arbitration Act are limited to those provided by Section 37 of that Act. The Act of 1996 is a self-contained code on arbitration; the Act of 2015 does not confer additional appeal rights in respect of orders arising under the Arbitration Act except insofar as Section 37 expressly permits. Thus orders in execution under Section 36, not enumerated in Section 37, do not attract a right of appeal to the Commercial Appellate Division. [Paras 22, 24]

Only appeals expressly provided by Section 37 of the Arbitration Act lie to the Commercial Appellate Division; no additional appeal arises under Section 13 of the Commercial Courts Act in respect of Section 36 execution orders.

Appointment of a court receiver in execution of an arbitral award - appealability under Section 37 of the Arbitration and Conciliation Act, 1996 - Whether the learned Single Judge's appointment of a court receiver in execution of the consent arbitral award (and related interim directions) is an order appealable under Order XLIII CPC or under Section 37 of the Arbitration Act. - HELD THAT: - The Court examined the nature of the impugned order appointing a receiver in execution of a consent award and concluded it was made in execution under Section 36. Order XLIII appealability is therefore inapplicable because the proceedings are not proceedings under the Code. Further, Section 37 permits appeals only in the specific matters it enumerates; appointment of receiver in execution (post-award enforcement) does not fall within those categories. Arguments that the receiver appointment falls within Section 9(1)(d) were rejected because Section 9 applications relate to interim reliefs before or during arbitral proceedings or prior to enforcement under Section 36, a stage not present here. [Paras 14, 15, 24, 25]

The order appointing a receiver in execution of the arbitral award is not appealable under Order XLIII CPC or under Section 37 of the Arbitration Act.

Appointment of a court receiver in execution of an arbitral award - Whether a party who was said not to be a party to the award (here, one of the directors) could maintain an appeal on the ground that the order against her is not under the Arbitration Act and thus governed by the Code. - HELD THAT: - The Court noted that arbitration proceedings against the directors were pending and that the consent terms incorporated joint and several liability and made the order and award executable against the directors. The Arbitral Tribunal thereafter terminated the pending arbitration. Given the consent terms and the tribunal's termination, the directors were bound and the order was in execution of the arbitral award; thus the submission that the director was a non-party and so outside the Arbitration Act's regime was unsustainable. [Paras 6, 26]

The contention that the director was not a party to the award and therefore her case is governed by the Code was rejected.

Final Conclusion: The Appeals were held not maintainable because the impugned order was passed in execution of an arbitral award under Section 36 of the Arbitration and Conciliation Act, 1996, and such execution orders are not proceedings under the Code of Civil Procedure nor appealable except to the extent permitted by Section 37 of the Arbitration Act; accordingly the Commercial Appeals are dismissed as not maintainable.