TaxTMI Updates e-Newsletter
Nov 29,2019

Composite Supply - Principal Supply - Works Contract - Site Preparation Service - Transfer of property in goods in the course of execution of works contract

Composite Supply - Principal Supply - Works Contract - Site Preparation Service - Transfer of property in goods in the course of execution of works contract - Whether the appellant's contract for supplying silver sand and earth and performing filling, spreading, compacting and related site works is a composite supply with supply of sand as the principal supply or a works contract/site preparation service involving transfer of property in goods. - HELD THAT: - The Authority examined the contractual description which required filling foundations and other areas with silver sand and good earth in layers, breaking clods, spreading, consolidating and water ramming so as to make the land fit for subsequent construction. The definition of Composite Supply requires two or more taxable supplies that are naturally bundled and one of which is a Principal Supply. The Authority found that the activities undertaken amount to improvement and modification of land for future construction and involve transfer of property in goods in the course of site preparation. Consequently the supply is not a mere composite supply with sand as the principal supply, but a Works Contract akin to Site Preparation Service. On that basis the Authority upheld the earlier advance ruling which classified the appellant's supply as works contract/site preparation service and not as supply of goods. [Paras 3, 10]

The West Bengal Authority for Advance Ruling's classification is upheld: the contract is a works contract/site preparation service involving transfer of property in goods and not a composite supply with supply of sand as the principal supply.

Final Conclusion: The appeal is dismissed; the Advance Ruling is affirmed and the supply is held to be a works contract/site preparation service (transfer of property in goods in the course of site preparation) rather than supply of silver sand as the principal supply.

Classification of goods as beverage containing milk - Interpretation of the First Schedule to the Customs Tariff Act, 1975 for GST classification - HSN / tariff item 2202 9930 - Applicability of Notification No.1/2017 - Central (Rate) and Schedule II rates - Determination of GST rate on classified goods

Classification of goods as beverage containing milk - Interpretation of the First Schedule to the Customs Tariff Act, 1975 for GST classification - HSN / tariff item 2202 9930 - Flavoured milk is classifiable as a beverage containing milk under tariff item 2202 9930 of the First Schedule to the Customs Tariff Act, 1975 (HS code 2202). - HELD THAT: - The authority applied the rules for interpretation of the First Schedule to the Customs Tariff Act, 1975 in construing the appropriate heading. Having examined the manufacturing process and ingredients (pasteurisation, homogenisation and addition of sugar and flavours) and having considered consistent judicial and tribunal treatment under the pre-GST excise regime and the deliberations in the GST Council agenda, the authority concluded that flavoured milk is not to be treated as ordinary milk under Chapter 4 but as a beverage containing milk under Chapter 22. The descriptive scope of heading 2202 and the cited precedents support treating flavoured milk as a beverage containing milk and thus classifying it under tariff item 2202 9930.

Flavoured milk is classifiable under tariff item 2202 9930 (HS code 2202) as a beverage containing milk.

Applicability of Notification No.1/2017 - Central (Rate) and Schedule II rates - Determination of GST rate on classified goods - The GST rate applicable on outward supply of flavoured milk (classified under tariff item 2202 9930) is 12% (6% CGST + 6% SGST) as per entry no. 50 of Schedule II to Notification No.1/2017 - Central (Rate) dated 28.06.2017 as amended. - HELD THAT: - On classifying flavoured milk under tariff item 2202 9930, the authority applied the rate schedule notified under the GST Act. Notification No.1/2017 - Central (Rate) prescribes schedule-wise rates and directs application of the interpretation rules of the First Schedule to the Customs Tariff Act, 1975. Entry no. 50 of Schedule II covers goods classifiable under the relevant tariff item at the notified rate. Accordingly, the applicable integrated levy for intra-State supplies translates into combined GST of 12% (split as 6% CGST and 6% SGST).

GST on flavoured milk (tariff item 2202 9930) is 12% (6% CGST + 6% SGST) under entry no. 50 of Schedule II to Notification No.1/2017 - Central (Rate).

Final Conclusion: The Advance Ruling holds that flavoured milk is a beverage containing milk classifiable under tariff item 2202 9930 (HSN 2202) and that the applicable GST on its outward supply is 12% (6% CGST and 6% SGST) under the notified rate schedule.

Classification of tobacco as "tobacco leaves" versus "unmanufactured tobacco (other than tobacco leaves)" - applicability of GST rates 5% and 28% on tobacco products - reverse charge mechanism for supply of tobacco leaves by agriculturists - effect of minimal processes (grading, butting, bundling, re-drying) on character of agricultural produce - effect of threshing/stripping on loss of basic character of tobacco leaves

Classification of tobacco as "tobacco leaves" versus "unmanufactured tobacco (other than tobacco leaves)" - reverse charge mechanism for supply of tobacco leaves by agriculturists - Rate of GST on cured and dried tobacco leaves procured at tobacco auction platforms or directly from farmers. - HELD THAT: - The Authority interpreted the entry in Sl. No. 109, Schedule I, Notification No. 1/2017 (HSN 2401) and the corresponding entry in Notification No. 4/2017 which brings supply of "Tobacco Leaves" under reverse charge where supplier is an agriculturist. Relying on the TRU clarification that "Tobacco Leaves" means leaves as such or broken leaves or tobacco leaf stems, and on the commercial reality that tobacco becomes a marketable commodity only after curing/drying, the Authority held that cured and dried leaves that retain their basic character as leaves fall within the "tobacco leaves" entry and attract the specified rate under Schedule I. Minimal preparatory operations performed by the farmer to render leaves marketable do not alter that classification.

Cured and dried tobacco leaves procured at auction platforms or directly from farmers attract GST at 5% under the reverse charge mechanism.

Classification of tobacco as "tobacco leaves" - applicability of GST rates 5% and 28% on tobacco products - Rate of GST where tobacco leaves are purchased from other dealers (who purchased from farmers) for trading. - HELD THAT: - The Authority observed that the rate applicable depends on the nature of the commodity supplied rather than the identity of the supplier. Where the commodity retains the character of "tobacco leaves" (including broken leaves or stems), it falls under Sl. No. 109, Schedule I and attracts 5% GST. The reverse charge mechanism entry does not alter the rate applicable to the product when traded between dealers.

Tobacco leaves purchased from other dealers for trading attract GST at 5%.

Effect of minimal processes (grading) on character of agricultural produce - classification of tobacco as "tobacco leaves" - Rate of GST on tobacco leaves segregated/graded by size, colour, length, texture and sold as graded leaves. - HELD THAT: - Grading, performed manually to segregate leaves by physical parameters, does not change the basic character of the leaves. The Authority held that such minimal manual processes leave the product as "tobacco leaves" and therefore the graded leaves are taxable at the rate specified for tobacco leaves under Schedule I.

Graded tobacco leaves attract GST at 5%.

Effect of minimal processes (butting) on character of agricultural produce - classification of tobacco as "tobacco leaves" - Rate of GST when tobacco leaves are butted and sold to other dealers. - HELD THAT: - Butting (removal of rough edge) is a limited manual operation affecting a small proportion of leaves and does not alter the essential character of the leaves. The Authority treated butted leaves as still being "tobacco leaves" within Sl. No. 109 and accordingly taxable at the lower rate.

Butted tobacco leaves attract GST at 5%.

Effect of re-drying without threshing on character of tobacco leaves - classification of tobacco as "tobacco leaves" - Rate of GST where tobacco leaves are re-dried without being threshed. - HELD THAT: - Re-drying alone, undertaken to remove moisture and make leaves marketable, does not change the leaves' basic character. The Authority relied on TRU clarification and commercial understanding that such processes are preparatory and the product remains "tobacco leaves" attracting the Schedule I rate.

Tobacco leaves re-dried without threshing attract GST at 5%.

Effect of threshing/stripping on loss of basic character of tobacco leaves - applicability of GST rates 5% and 28% on tobacco products - Rate of GST where tobacco leaves are threshed and re-dried. - HELD THAT: - Threshing involves separation of lamina (cut pieces) and stem (midrib) and produces material that no longer retains the basic character of whole leaves. The Authority concluded that threshed and re-dried tobacco fall outside the "tobacco leaves" entry and fall within the Schedule IV description of unmanufactured tobacco (other than tobacco leaves), attracting the higher rate under Sl. No. 13 of Schedule IV.

Threshed and re-dried tobacco attract GST at 28%.

Effect of threshing/stripping on loss of basic character of tobacco leaves - treatment of job-work processed tobacco - Rate of GST where tobacco is threshed and re-dried on job-work basis at others' premises and then sold. - HELD THAT: - When threshing and re-drying are performed on job-work basis resulting in threshed product that lacks the basic character of leaves, the resulting goods are classifiable with unmanufactured tobacco (other than tobacco leaves) under Schedule IV. The place or mode of processing (own premises or job work at others') does not alter classification; the nature of the resulting goods governs the applicable rate.

Threshed and re-dried tobacco produced on job-work premises and sold thereafter attract GST at 28%.

Effect of bundling on character of agricultural produce - classification of tobacco as "tobacco leaves" - Rate of GST where tobacco leaves are bundled by service providers and then sold. - HELD THAT: - Bundling is a packaging/handling operation that does not change the basic character of leaves. The Authority held bundled leaves remain "tobacco leaves" and therefore attract the rate prescribed for tobacco leaves under Schedule I.

Bundled tobacco leaves attract GST at 5%.

Effect of stripping (removal of midrib) on character of tobacco - applicability of GST rates 5% and 28% on tobacco products - Rate of GST where tobacco leaves are stripped by service providers (without threshing) and such stripped tobacco is sold. - HELD THAT: - Stripping, being removal of the midrib, alters the essential form of the leaf and is akin to threshing activity that removes the midrib; the Authority treated stripped tobacco as losing the basic character of "tobacco leaves" and therefore classifiable under the higher-rate entry in Schedule IV.

Stripped tobacco sold after removal of midrib attracts GST at 28%.

Final Conclusion: The Authority ruled that cured/dried tobacco leaves (including graded, butted, bundled or re-dried leaves that retain the character of leaves) are classifiable as "tobacco leaves" and attract GST at 5% (with reverse charge applicable where supplied by an agriculturist). In contrast, processes that remove the midrib or produce threshed material (stripping/threshing and re-drying), whether on one's premises or on job work, result in loss of the basic character of leaves and such unmanufactured tobacco (other than tobacco leaves) is taxable at 28%.

Classification and rate of GST on tobacco leaves - distinction between "tobacco leaves" and "unmanufactured tobacco (other than tobacco leaves)" - interpretation of tariff entry 2401 in commercial and natural meaning - reverse charge mechanism on supply of tobacco leaves by agriculturist - effect of minimal processes (grading, butting, re-drying) on character of agricultural produce - taxability of threshing and re-drying resulting in "unmanufactured tobacco"

Classification and rate of GST on tobacco leaves - reverse charge mechanism on supply of tobacco leaves by agriculturist - GST rate applicable on cured and dried tobacco leaves procured at tobacco auction platforms or directly from farmers - HELD THAT: - The authority examined the tariff entries and clarifications including Notification No.1/2017 (Schedule I entry for "Tobacco Leaves" at HSN 2401) and TRU clarification that "Tobacco leaves" includes leaves as such, broken leaves or stems. The factual position that leaves are cured by farmers before sale and that curing is an integral agricultural operation was accepted (supported by ICAR/CTRI observations). Reading the tariff entry in its natural and commercial sense, cured/dried leaves that retain the basic character of leaves fall under the entry "Tobacco Leaves" attracting the rate specified therein. The separate reverse charge provision identifying agriculturist supplies of tobacco leaves reinforces that the commodity "tobacco leaves" is distinct for the lower rate entry.

Supply of cured and dried tobacco leaves procured at auction platforms or directly from farmers is taxable at 5% (2.5% CGST + 2.5% SGST).

Classification and rate of GST on tobacco leaves - GST rate where applicant purchases tobacco leaves from other dealers (who purchased from farmers) for trading - HELD THAT: - The authority applied the principle that the applicable rate is determined by the nature of the commodity as described in the tariff entry, not by identity of supplier or recipient. Since the goods purchased from other dealers remain tobacco leaves in commercial character, they fall under the Schedule I entry for "Tobacco Leaves" and attract the same rate irrespective of inter-dealer trade. The reverse charge mechanism in respect of agriculturist supplies does not alter the rate applicable to the commodity when traded between dealers.

Such purchases and subsequent trading are taxable at 5% (2.5% CGST + 2.5% SGST).

Effect of minimal processes (grading) on character of agricultural produce - classification and rate of GST on tobacco leaves - GST rate when tobacco leaves are segregated/graded by size, colour, length, texture and sold as graded leaves - HELD THAT: - The authority accepted that manual grading is a minimal, non-transformative activity which does not alter the basic physical or chemical character of the leaves. Reliance was placed on the commercial understanding of "tobacco leaves" and on the TRU clarification that broken leaves remain within the meaning of tobacco leaves. Consequently, graded leaves retain their character as tobacco leaves and fall under the 5% entry.

Graded tobacco leaves are taxable at 5% (2.5% CGST + 2.5% SGST).

Effect of minimal processes (butting) on character of agricultural produce - classification and rate of GST on tobacco leaves - GST rate when tobacco leaves are butted and sold to other dealers - HELD THAT: - Butting was characterized as an occasional, manual operation that removes rough edges without changing the essential character of the leaves. The authority treated such minimally invasive processing as not altering the commodity's classification as "tobacco leaves" under the tariff. Accordingly, the lower rate entry is applicable.

Butted tobacco leaves when sold are taxable at 5% (2.5% CGST + 2.5% SGST).

Effect of minimal processes (re-drying without threshing) on character of agricultural produce - classification and rate of GST on tobacco leaves - GST rate if applicant gets the tobacco leaves re-dried without threshing - HELD THAT: - Re-drying without threshing was held to be an operation that maintains the basic character of the leaves and serves to make them marketable or storable. Consistent with TRU guidance and tariff interpretation, such re-dried leaves remain within the meaning of "tobacco leaves" and are therefore taxable at the rate specified for that entry.

Re-dried (without threshing) tobacco leaves are taxable at 5% (2.5% CGST + 2.5% SGST).

Taxability of threshing and re-drying resulting in "unmanufactured tobacco" - distinction between "tobacco leaves" and "unmanufactured tobacco (other than tobacco leaves)" - GST rate if the applicant gets the tobacco leaves threshed and re-dried - HELD THAT: - The authority distinguished between minimal operations that preserve the leaf character and threshing combined with re-drying which separates lamina and stem and produces a form treated in trade as different from intact leaves. On that basis, such threshed and re-dried tobacco was placed under the Schedule IV entry for "Unmanufactured Tobacco (other than tobacco leaves)" attracting the higher rate. The ruling reflects an assessment that threshing with re-drying transforms the commercial character to the extent that it falls outside the Schedule I "Tobacco Leaves" entry.

Tobacco subjected to threshing and re-drying is taxable at 28% (14% CGST + 14% SGST).

Taxability of threshing and re-drying resulting in "unmanufactured tobacco" - classification and rate of GST on tobacco leaves - GST rate if the applicant gets the tobacco threshed and re-dried on job work basis at others' premises and then sells such threshed and re-dried tobacco leaves - HELD THAT: - The authority applied the same classificatory principle as for in-house threshing and re-drying: where the process results in separation of lamina and stem and produces a commercially different form, the product falls within the Schedule IV entry for unmanufactured tobacco (other than tobacco leaves). Whether the operation is done on job-work premises or the applicant's premises, the resultant commodity's character controls the classification and rate.

Such threshed and re-dried tobacco obtained through job work and sold thereafter is taxable at 28% (14% CGST + 14% SGST).

Final Conclusion: The Authority rules that cured/dried tobacco leaves (including broken leaves, stems, graded or butted leaves and leaves re-dried without threshing) retain the character of "tobacco leaves" and attract 5% GST (2.5% CGST + 2.5% SGST); however, tobacco that has been threshed and re-dried (including when done by job work) falls outside that entry and is classifiable as unmanufactured tobacco (other than tobacco leaves) attracting 28% GST (14% CGST + 14% SGST).

Transition of input tax credit - Form GST TRAN-1 - inability to file due to technical glitches on the common portal - extension of time for filing TRAN-1 by administrative circular - direction to reopen portal or accept manual filing - processing of transitional credit claim in accordance with law

Transition of input tax credit - Form GST TRAN-1 - inability to file due to technical glitches on the common portal - direction to reopen portal or accept manual filing - Petitioner entitled to file its TRAN-1 claim despite failure to upload by the original deadline on account of technical glitches and respondents directed to enable filing. - HELD THAT: - The Court found that the petitioner, engaged in business and registered under the CGST regime, was entitled to transitional credit for stock held as on 30.6.2017 and had attempted to file Form GST TRAN-1 but was prevented by system errors on the common portal. Citing the decision in M/s Blue Bird Pure Pvt. Ltd (and subsequent similar orders), the Court held that where assessees could not file TRAN-1 due to portal glitches and administrative relief in the form of an extension or remedial measures had been recognised, equitable relief in the form of reopening the portal or accepting the form manually was appropriate. The Court observed that the factual position in this petition was not different from the precedents relied upon and therefore granted identical relief. [Paras 8, 9, 10]

Petition allowed; respondents directed to either reopen the online portal to enable electronic filing of Form TRAN-1 or to accept the form manually, and thereafter to process the claim in accordance with law.

Final Conclusion: Writ petition allowed. Respondents to enable filing of Form GST TRAN-1 (either by reopening the portal or by accepting manual filing) and to process the petitioner's transitional credit claim in accordance with law within the time directed by the Court.

Vires challenge to rule 117 of the Central Goods and Services Tax Rules, 2017 - claim to carry forward transitional input tax credit on stock as on 30th June, 2017 - relief from denial of transitional credit on account of technical failure of portal/system - forensic evidence of failed upload as proof of attempted filing - preservation of accrued credit despite non filing within prescribed period

Relief from denial of transitional credit on account of technical failure of portal/system - forensic evidence of failed upload as proof of attempted filing - claim to carry forward transitional input tax credit on stock as on 30th June, 2017 - Petitioner entitled to file TRAN 1 despite expiry of statutory period because forensic evidence demonstrates attempt to upload before the deadline, and respondents must allow filing to enable carry forward of transitional credit on stock as on 30th June, 2017. - HELD THAT: - Petitioner alleged inability to upload TRAN 1 within the prescribed time due to an internal system crash and produced a forensic report from the State Forensic Laboratory indicating that the TRAN 1 portal download showed a field state which could not be edited and opined that an attempt to furnish TRAN 1 was made before the ultimatum. Though Revenue produced contrary instructions, the Court accepted the forensic evidence as supporting the petitioner's factual claim of attempted filing prior to the deadline. In the circumstances, and having regard to prior High Court decisions dealing with similar grievances, the Court directed the Revenue to permit the petitioner to file TRAN 1 forthwith to secure the transitional input tax credit accrued on stock as on 30th June, 2017. The relief was granted on the facts established by the forensic report rather than by issuing a general declaration striking down rule 117.

Writ allowed; respondents directed to permit filing of TRAN 1 and to allow carry forward of transitional credit on stock as on 30th June, 2017.

Final Conclusion: On the facts, including a forensic report corroborating an attempted TRAN 1 upload before the deadline, the High Court allowed the writ petition and directed Revenue to permit filing of TRAN 1 forthwith so that the petitioner may obtain the transitional input tax credit attributable to stock as on 30th June, 2017.

Transitional credit - Form TRAN-1 filing - technical glitches in the GSTN portal - bona fide inability to file - reopening of portal or manual acceptance of TRAN-1 - processing of claim in accordance with law

Form TRAN-1 filing - technical glitches in the GSTN portal - bona fide inability to file - reopening of portal or manual acceptance of TRAN-1 - transitional credit - Petitioner entitled to an opportunity to file TRAN-1 to claim transitional credit despite inability to file within prescribed timeline due to system-related difficulties. - HELD THAT: - The Court found that the petitioner was unable to complete submission of Form TRAN-1 within the extended time because the common portal failed to accept the details and that this difficulty is of the same character as in earlier decisions of this Court where relief was granted. Relying on precedent which recognised that the GST system was in a 'trial and error phase' and that bona fide, inadvertent errors or portal failures should not deprive taxpayers of their entitlement to transitional credit, the Court held that respondents must provide a remedy. In consequence, and following the reasoning in M/s Blue Bird Pure Pvt. Ltd and subsequent similar decisions, the respondents were directed either to reopen the online portal to enable electronic filing of TRAN-1 or to accept a manually filed TRAN-1, so that the petitioner's claim to transitional credit (in respect of stock held on 30.6.2017) can be considered on merits. [Paras 9, 10]

Respondents shall, on or before 09.12.2019, either open the online portal to enable electronic filing of Form TRAN-1 or accept a manually filed TRAN-1 and thereafter process the petitioner's claim in accordance with law.

Final Conclusion: Petition allowed; respondents directed to facilitate filing of TRAN-1 (electronically by reopening the portal or by accepting manual filing) for the petitioner's claim to transitional credit in respect of stock held on 30.6.2017 and to process the claim according to law.

Transition of credit under Section 140(3) of the CGST Act - transitional input tax credit on closing stock as on 30.06.2017 - technical glitches in the GSTN/portal affecting filing of Form TRAN-1 - reopening of portal or acceptance of manually filed TRAN-1 - processing of claimed input tax credit in accordance with law - bona fide/inadvertent error in filing TRAN-1

Transition of credit under Section 140(3) of the CGST Act - transitional input tax credit on closing stock as on 30.06.2017 - technical glitches in the GSTN/portal affecting filing of Form TRAN-1 - reopening of portal or acceptance of manually filed TRAN-1 - processing of claimed input tax credit in accordance with law - bona fide/inadvertent error in filing TRAN-1 - Relief to enable the petitioner to file its TRAN-1 and claim transitional input tax credit on stock held as on 30.06.2017 despite inability to do so on account of portal glitches. - HELD THAT: - The Court found that the petitioner was entitled to transition of credit and that its difficulty in correctly filing TRAN-1 arose from genuine/technical problems with the GST portal. Relying on earlier decisions which recognised that the GST system experienced implementation-phase glitches and that bona fide errors should not preclude entitlement to transitional credit, the Court concluded that the petitioner's inability to submit TRAN-1 before the prescribed cut-off was not a ground to deny adjudication of its claim. In the circumstances, the appropriate remedy is to direct the respondents to either reopen the online portal to enable electronic filing of TRAN-1 or to accept a manually filed TRAN-1 within the time fixed by the Court, after which the respondents must process the claim in accordance with law. The Court's direction follows the principle that where procedural/systemic failures prevent a taxpayer from availing a statutory transition benefit, the authorities should provide a practical mechanism to have the claim examined on merits rather than deny relief on technical grounds. [Paras 7, 9, 10]

Respondents directed to open the portal or accept a manually filed Form TRAN-1 by 09.12.2019 and thereafter process the petitioner's claim for transitional input tax credit in accordance with law.

Final Conclusion: Petition allowed; respondents directed to enable filing of TRAN-1 (electronically by reopening portal or by accepting manual filing) and to process the claim for transitional input tax credit on the petitioner's stock as on 30.06.2017 in accordance with law.

Transition of credit - Form GST TRAN-1 - rectification/revision of TRAN-1 - reopening of portal or acceptance of manual TRAN-1 - processing of transitional credit claims in accordance with law - technical glitches in GST portal - GST system in a 'trial and error phase'

Transition of credit - Form GST TRAN-1 - rectification/revision of TRAN-1 - reopening of portal or acceptance of manual TRAN-1 - technical glitches in GST portal - GST system in a 'trial and error phase' - processing of transitional credit claims in accordance with law - Entitlement to direction to reopen the online portal or to accept manually filed TRAN-1 so that the petitioner may claim transitional CENVAT credit as on 30.06.2017 and consequent processing of the claim in accordance with law. - HELD THAT: - The Court applied the principle established in earlier decisions including M/s Blue Bird Pure Pvt. Ltd., observing that the GST system was in a 'trial and error phase' and that genuine, inadvertent errors in filing TRAN-1 should not preclude an assessee from having its transitional credit claim examined. Although the respondent contended that the petitioner had entered amounts in an incorrect column and had not pursued rectification before the original deadline, the Court found the factual position comparable to precedents where relief was granted because (a) the error appeared bona fide and inadvertent, and (b) the system's design and the coincidence of the revision deadline with the final filing date rendered the available remedy impractical. Relying on these considerations and the authority of prior orders, the Court directed the respondents to either open the portal to enable electronic refiling of Form TRAN-1 or to accept a manually filed TRAN-1, and to thereafter process the petitioner's claim in accordance with law.

Petition allowed; respondents directed to open the online portal to enable electronic filing of FORM GST TRAN-1 or to accept a manually filed TRAN-1 on or before 09.12.2019, and to process the petitioner's transitional credit claim in accordance with law.

Final Conclusion: The petition is allowed; respondents must permit refiling or manual submission of Form TRAN-1 so the petitioner may claim transitional CENVAT credit as on 30.06.2017 and must process the claim in accordance with law by the date directed.

Transition of input tax credit - filing of Form GST TRAN-1 - technical glitches on GST common portal - mandamus to enable filing or manual acceptance of TRAN-1 - processing of transitional credit claim in accordance with law

Filing of Form GST TRAN-1 - technical glitches on GST common portal - mandamus to enable filing or manual acceptance of TRAN-1 - Petitioner entitled to opportunity to file Form GST TRAN-1 despite inability to do so earlier due to portal failures, and respondents must enable electronic filing or accept manual TRAN-1. - HELD THAT: - The Court found that the petitioner repeatedly attempted to file Form GST TRAN-1 within the extended period but could not do so because the common portal repeatedly displayed errors and logged the petitioner out. Applying the ratio of this Court's earlier decision in M/s Blue Bird Pure Pvt. Ltd. and subsequent similar orders, the Court directed respondents to either re-open the online portal to enable electronic filing or accept the Form TRAN-1 manually. The direction is limited to providing the petitioner the opportunity to file the TRAN-1 on or before the date specified in the order. [Paras 7, 8]

Respondents to open the portal so petitioner can file Form TRAN-1 electronically or accept the Form TRAN-1 manually on or before 09.12.2019.

Transition of input tax credit - processing of transitional credit claim in accordance with law - Respondents to process the petitioner's transitional input tax credit claim in accordance with law once Form GST TRAN-1 is filed. - HELD THAT: - Having directed that the petitioner be permitted to file the TRAN-1, the Court required the respondents to process the claim on its merits and in accordance with applicable law and procedure after receipt of the duly filed Form TRAN-1. The order leaves determination of entitlement and quantification to the statutory process rather than making any substantive adjudication on the credit itself. [Paras 9]

On filing of Form GST TRAN-1 as permitted, respondents shall process the petitioner's claim of transitional input tax credit in accordance with law.

Procedural closure of right to file counter-affidavit - Respondents' right to file counter-affidavits was closed for failure to comply with opportunities to file. - HELD THAT: - The Court observed that despite two opportunities no counter-affidavits were filed and accordingly closed the respondents' right to file such affidavits and proceeded to dispose of the petition on the merits. [Paras 1]

Respondents' right to file counter-affidavits closed and petition disposed of on merits.

Final Conclusion: Writ petition allowed; respondents directed to enable electronic filing of Form GST TRAN-1 or accept it manually by 09.12.2019 and thereafter process the petitioner's transitional input tax credit claim in accordance with law; respondents' right to file counter-affidavits closed.

Public Interest Litigation - maintainability and abuse - Refund of unutilized input tax credit of compensation cess under Section 54(3)(ii) CGST Act - Doctrine against retrospectivity - Doctrine of legitimate expectation - Notification No.3/2019 restricting refund of compensation cess on tobacco and manufactured tobacco substitutes - Accrued rights and prospective operation of delegated legislation

Public Interest Litigation - maintainability and abuse - Maintainability of the petition filed as a Public Interest Litigation challenging refund orders and the bona fides of the petitioner. - HELD THAT: - The petition styled as a PIL sought directions for enquiry and to prevent grant of refunds and to compel statutory appeal by the revenue. The Court examined whether the matter disclosed public interest and whether the petitioner acted bona fide. The Bench noted lack of service of impugned orders on the petitioner, the availability of statutory remedies under the GST law for challenging assessment/refund orders, and unexplained secrecy regarding source of information. Having regard to the settled principles that PIL standing is confined to persons acting bona fide and that PIL jurisdiction must not be used to settle private scores or pursue vested interests, the Court found the petition to be a misuse of process and not maintainable as a PIL. The Court accordingly dismissed the petition on the ground of maintainability and imposed costs as deterrence against frivolous PILs. [Paras 6, 14, 19]

The public interest petition is dismissed as not maintainable and an abuse of PIL jurisdiction; petitioner directed to pay costs.

Refund of unutilized input tax credit of compensation cess under Section 54(3)(ii) CGST Act - Notification No.3/2019 restricting refund of compensation cess on tobacco and manufactured tobacco substitutes - Doctrine against retrospectivity - Doctrine of legitimate expectation - Accrued rights and prospective operation of delegated legislation - Whether Notification No.3/2019 could be applied retrospectively to deny refund of unutilized input tax credit of compensation cess accumulated prior to 30.9.2019. - HELD THAT: - The Court analysed the Notification which, by its terms, notifies certain goods in respect of which no refund of unutilized input tax credit of compensation cess shall be allowed where credit accumulated because compensation cess on inputs was higher than on outputs. Applying the established presumption against retrospectivity and the doctrine of legitimate expectation, and having regard to authority holding that credit once taken gives rise to an accrued, indefeasible right, the Court held that the Notification attaches a new disability and does not evince an express intention to operate retrospectively. Consequently the Notification must be given prospective effect. Therefore refund claims in respect of credit accumulated on account of excess tax paid before 30.9.2019 cannot be denied by applying the Notification retrospectively. The impugned orders dated 04.10.2019 granted refunds in respect of credit taken prior to 30.9.2019 and, being outside the prospective ambit of the Notification, did not call for interference. [Paras 14, 15, 16, 18]

Notification No.3/2019 operates prospectively; refunds of unutilized compensation cess credit accumulated prior to 30.9.2019 cannot be denied on its basis and the impugned refund orders granting such refunds do not warrant interference.

Final Conclusion: The writ petition filed as a Public Interest Litigation is dismissed as not maintainable and costs awarded; on the merits the Court holds that Notification No.3/2019 is prospective in operation and does not extinguish refund claims in respect of unutilized compensation cess credit accumulated before 30.9.2019, hence the impugned refund orders need no interference.

Transitional input tax credit - procedural limitation - technical glitches on GST portal - seamless flow of input tax credit - re-opening of portal / manual filing of TRAN-1 - judicial relief for filing beyond statutory cutoff due to system failure - verification of genuineness of claims

Transitional input tax credit - procedural limitation - technical glitches on GST portal - Petitioners who could not file Form TRAN-1 within the stipulated period due to technical defects in the GST portal are not to be denied an opportunity to claim transitional input tax credit solely on the ground of delay in filing. - HELD THAT: - The Court recognised that the TRAN-1 declaration procedure is procedural in nature and that GST implementation involved a new IT platform which experienced systemic defects. Judicial precedents of several High Courts (including Madras, Delhi and Punjab & Haryana) were held to have accepted that, in the circumstances of portal failures, refusal to accept TRAN-1 only for non-filing by the prescribed date would result in injustice. While the Court did not adjudicate entitlement to the credit on merits, it accepted the petitioner's uncontested contention that genuine efforts to file were frustrated by portal glitches and observed that substantive transitional credits cannot be denied on mere procedural default when caused by system failure. The Court therefore declined to permit denial of the claim solely because the TRAN-1 was not filed by 27.12.2017, leaving factual verification of eligibility to the assessing authorities. [Paras 13, 14, 15, 18]

Delay caused by technical defects in the portal does not justify refusing an opportunity to file TRAN-1; entitlement to credit remains subject to verification by authorities.

Re-opening of portal / manual filing of TRAN-1 - judicial relief for filing beyond statutory cutoff due to system failure - verification of genuineness of claims - Relief in the form of permitting filing of Form TRAN-1 after the prescribed date was granted, and the respondents were directed to accept TRAN-1 electronically or manually and to verify claims on merits. - HELD THAT: - Relying on the reasoning of multiple High Courts that had faced identical issues, the Court directed that the petitioner be permitted to file TRAN-1 either electronically or manually by a specified extended date. The respondents were expressly left free to examine and verify the genuineness and eligibility of the claimed transitional credit; the Court emphasised that its direction relates to allowing the filing opportunity and does not adjudicate the substantive entitlement to credit. [Paras 20]

Respondents directed to permit filing of TRAN-1 electronically or manually on or before 31.12.2019 and to verify the claim; claim shall not be rejected solely for non-filing by 27.12.2017.

Final Conclusion: Writ petition allowed: petitioner permitted to file Form TRAN-1 electronically or manually by 31.12.2019 in view of portal defects; respondents may verify eligibility of claimed transitional input tax credit but shall not deny the claim solely for failure to file by 27.12.2017; parties to bear their own costs.

Jurisdiction under Section 153A in respect of completed assessments - requirement of incriminating material for making additions in completed assessments - reiteration of completed assessment versus fresh additions on basis of search - assessment under Section 153A read with Section 143(3)

Jurisdiction under Section 153A in respect of completed assessments - requirement of incriminating material for making additions in completed assessments - Validity of additions made under assessments completed u/s 153A/143(3) for Assessment Year 2006-07 where no incriminating material was found during the search - HELD THAT: - The Tribunal examined whether the Assessing Officer could make fresh additions in the repeated assessment under Section 153A for a year the assessment of which stood completed on the date of search, when no incriminating material relevant to that year was found during search. Following the reasoning in Kabul Chawla (approved by the Delhi High Court) and the Tribunal's exposition in H.B.N. Dairies & Allied, the Tribunal held that while Section 153A empowers the AO to reassess six years, completed assessments can be interfered with in a repeated assessment only on the basis of incriminating material unearthed during the search or other post-search material relatable to the seized material. In absence of any incriminating material pertaining to the completed assessment year, the AO must adopt the total income determined in the original completed assessment and cannot make arbitrary additions merely because the assessment is being repeated under Section 153A. Applying that principle to the facts, where no incriminating material was found in the search, the additions sustained by the CIT(A) were not tenable and were deleted.

Additions made under the repeated assessment u/s 153A/143(3) for AY 2006-07 were deleted as no incriminating material relating to the completed assessment was found during the search.

Final Conclusion: Following Kabul Chawla and the Tribunal's view in H.B.N. Dairies & Allied, the Tribunal allowed the appeal and deleted the additions made under the assessment completed u/s 153A/143(3) for Assessment Year 2006-07, since no incriminating material pertaining to that year was found during the search.

Period of limitation for completion of assessment of connected person after search - Jurisdictional requirement for initiating proceedings against a connected person under section 153C - Admissibility of additions by estimating agricultural income in search assessments - Unsuitability of reverse indexation for estimating agricultural income

Period of limitation for completion of assessment of connected person after search - Whether the assessments for assessment years 2006-2007 to 2012-2013 were barred by limitation. - HELD THAT: - The Tribunal admitted additional grounds raising limitation as a pure question of law (paras 9.1). Applying the period prescribed under section 153B as it stood at the time of search on 31.10.2011, the applicable limitation for assessments of connected persons was 21 months from the end of the financial year in which the last authorization for search was executed (or, alternatively, nine months from the end of the year in which seized materials were handed over). As the search fell in the financial year ending 31.03.2012, the last date for completion was 31.12.2013. The assessments were completed on 31.03.2014, therefore they were prima facie time barred (para 9.2). [Paras 9]

Assessments for the years 2006-2007 to 2012-2013 were held to be time barred.

Jurisdictional requirement for initiating proceedings against a connected person under section 153C - Admissibility of additions by estimating agricultural income in search assessments - Unsuitability of reverse indexation for estimating agricultural income - Whether the addition of 50% of the agricultural income as 'income from other sources' was sustainable and whether the CIT(A) was justified in directing reverse indexation to estimate agricultural income. - HELD THAT: - On the merits the Tribunal found that ownership of agricultural land and regular cultivation was established by record rights, crop information and sale invoices (para 9.3). The CIT(A)'s direction to estimate present day agricultural income at a figure for 2018 and to apply reverse indexation to determine historical agricultural income was rejected as the concept of inflation indexation is confined to capital gains computation and reverse indexation is not prescribed by law; agricultural yields and prices vary by many unpredictable factors making reverse indexation unsuitable (para 9.3). Further, the Assessing Officer's exercise of jurisdiction under section 153C was examined: proceedings under 153C against a person not searched require that incriminating documents or valuables belonging to that person be found during the search. The assessment orders did not identify any documents or materials belonging to the assessee found in the searched premises, and additions were made merely by estimating and disbelieving 50% of declared agricultural income. In the absence of any incriminating material showing introduction of unaccounted income as agricultural receipts, initiation of 153C proceedings and the resultant additions were unsustainable (para 9.4). Consequently the additions treating 50% of agricultural income as income from other sources were deleted (para 9.5). [Paras 9]

The additions disbelieving 50% of the declared agricultural income and directing reverse indexation were held unsustainable; the additions were deleted.

Final Conclusion: The Tribunal admitted the limitation grounds, held the assessments for AYs 2006-2007 to 2012-2013 to be time barred and, on merits, found the additions disallowing 50% of declared agricultural income to be unsustainable for lack of incriminating material and for improper use of reverse indexation; the appeals were allowed.

Disallowance of expenditure for earning exempt income under Section 14A read with Rule 8D - computation of book profits under Section 115JB and applicability of Section 14A/Rule 8D - condonation of delay in filing appeal to the Tribunal

Disallowance of expenditure for earning exempt income under Section 14A read with Rule 8D - absence of exempt dividend income - Whether disallowance under Section 14A read with Rule 8D can be made where no exempt dividend income was earned in the year. - HELD THAT: - The Tribunal held that where the assessee did not earn any exempt income in the year under consideration and no expenditure relatable to earning exempt income was shown to have been incurred, invocation of Section 14A r.w. Rule 8D to make a disallowance is not warranted. The AO had not recorded any satisfaction or carried out any analysis of the assessee's modus operandi, personnel deployment or books to rebut the assessee's factual claim of no expenditure in relation to exempt income. The Tribunal relied upon the decisions of the jurisdictional High Court and other authorities which have held that absent receipt of exempt income, or any expenditure attributable thereto, no disallowance under Section 14A/Rule 8D can be made: CIT v. Chettinad Logistics (P.) Ltd. (Madras High Court) (SLP dismissed by the Supreme Court), Redington (India) Ltd. (Madras High Court), Cheminvest Ltd. (Delhi High Court) and Ballarpur Industries Ltd. (Bombay High Court). Applying these authorities and the facts on record, the Tribunal concluded that the disallowance made by the AO and confirmed by the CIT(A) was unsustainable. [Paras 7]

The disallowance made under Section 14A read with Rule 8D is deleted.

Computation of book profits under Section 115JB and applicability of Section 14A/Rule 8D - Whether disallowance under Section 14A/Rule 8D can be imported into the computation of book profits under Section 115JB where no expenditure attributable to exempt income is debited to profit and loss account. - HELD THAT: - The Tribunal held that the same principle applies to computation of book profits under Section 115JB: expenses not debited to the profit and loss account and no expenditure shown to be incurred in relation to exempt income cannot be added back by importing Section 14A/Rule 8D computations. The Tribunal noted the view of the Special Bench in ACIT v. Vireet Investment Private Limited that computation under Explanation 1(f) to Section 115JB(2) is to be made without resorting to the computation contemplated under Section 14A read with Rule 8D, and accordingly applied the same reasoning to delete the addition in the computation of book profits. [Paras 7]

No addition under Section 14A/Rule 8D is to be made while computing book profits under Section 115JB in the facts of this case; the impugned adjustment is deleted.

Condonation of delay in filing appeal to the Tribunal - Whether the delay of 133 days in filing the appeal to the Tribunal should be condoned. - HELD THAT: - The Tribunal exercised its discretion under the relevant provision to condone the delay of 133 days. The assessee filed an affidavit explaining the change of officer handling taxation matters, lack of proper handover, discovery of omission during audit review, and absence of mala fide. The Revenue did not produce material to show mala fides and left the matter to the Tribunal's discretion. Applying the principle that technicalities should not prevail over substantial justice, the Tribunal found sufficient cause to condone the delay and admitted the appeal for adjudication on merits. [Paras 3]

The delay of 133 days is condoned and the appeal is admitted for adjudication on merits.

Final Conclusion: The Tribunal condoned the delay and allowed the appeal for AY 2014-15, deleting the disallowance made under Section 14A read with Rule 8D and directing that no such addition be made while computing book profits under Section 115JB in the facts of the case.

Time-bar under section 201(3) - limitation for making deeming order - Applicability of section 194J to payments made by TPAs to hospitals - Levy and computation of interest under section 201(1A) - limited to shortfall where advance tax paid

Time-bar under section 201(3) - limitation for making deeming order - Validity of orders under section 201(1) and consequential orders under section 201(1A) for assessment years 2005-06 to 2009-10 with reference to limitation - HELD THAT: - The Tribunal examined the amended and pre-amendment provisos and explanations governing the limitation for passing orders under section 201(1). Having applied the stay period granted by the High Court and the eight-week period allowed for filing of reply, and further applying Explanation 1(ii) to section 153 which extends the residual period to sixty days where less than sixty days remain after exclusion, the Tribunal found that the Assessing Officer passed the orders on 11.09.2015 beyond the extended limitation period available for the assessment years 2005-06 to 2009-10. Consequently those orders could not be sustained in law. The consequential demands of tax and interest founded on those time-barred orders were therefore deleted. [Paras 5]

Orders under section 201(1) and section 201(1A) for assessment years 2005-06 to 2009-10 are time-barred and are set aside; tax and interest demands for those years deleted.

Applicability of section 194J to payments made by TPAs to hospitals - Whether payments made by the assessee (TPA) to hospitals for settling insured persons' medical claims attract deduction under section 194J - HELD THAT: - After considering the factual role of the assessee as third party administrator disbursing payments to hospitals on behalf of insurers and the precedents relied upon by the authorities below, the Tribunal held that payments made by a TPA to hospitals for medical services rendered to policy-holders fall within the scope of section 194J and therefore attract the obligation to deduct tax at source. The assessee's contentions that such payments are mere reimbursements or indemnity settlements by an agent and hence not subject to section 194J were not accepted. [Paras 7]

Grounds contesting applicability of section 194J dismissed; TPA held liable to deduct TDS on payments to hospitals (for assessment year 2010-11).

Levy and computation of interest under section 201(1A) - limited to shortfall where advance tax paid - Extent and manner of levy of interest under section 201(1A) for assessment year 2010-11 - HELD THAT: - The Tribunal accepted that hospitals as recipients would have paid substantial advance tax on the income received and, following the reasoning in a comparable earlier decision, concluded that interest under section 201(1A) should be levied only on the shortfall remaining after accounting for advance tax already discharged by the deductees. Applying that principle to the facts of the case, the Tribunal directed the Assessing Officer to compute interest only on the shortfall (quantified by the Tribunal as 10% of the TDS amount) up to the date of filing of returns by the deductees. [Paras 7]

Interest under section 201(1A) for assessment year 2010-11 to be levied only on the shortfall (10% of TDS amount) up to the date of filing of returns by the deductees; appeal partly allowed on this point.

Final Conclusion: The appeals are allowed for assessment years 2005-06 to 2009-10 by setting aside time-barred orders under section 201(1) and 201(1A). For assessment year 2010-11 the Tribunal upheld the applicability of section 194J to payments by the TPA to hospitals but restricted interest under section 201(1A) to the shortfall after accounting for advance tax, directing recomputation accordingly; the appeal for 2010-11 is partly allowed.

Condonation of delay - presumptive taxation under section 44AD - assessment of unexplained cash credits as income under section 68/section 69A - scope and effect of deemed income under presumptive taxation

Condonation of delay - Whether the delay of 231 days in filing the appeal before the Tribunal should be condoned. - HELD THAT: - The assessee filed a condonation petition supported by medical certificate and hospital discharge certificate explaining incapacity due to serious illness and subsequent clinical follow-ups which prevented timely filing. The Revenue did not seriously oppose the petition. The Tribunal examined the facts and found the explanation to constitute sufficient cause to excuse the delay and admitted the appeal for adjudication. [Paras 2, 3, 4]

Delay of 231 days in filing the appeal is condoned and the appeal is admitted for adjudication.

Presumptive taxation under section 44AD - assessment of unexplained cash credits as income under section 68/section 69A - scope and effect of deemed income under presumptive taxation - Whether additions treating bank deposits as unexplained income under section 68/69A can be sustained where the assessee's income was accepted under the presumptive scheme of section 44AD. - HELD THAT: - The assessee, a small trader, had been assessed on presumptive basis under section 44AD and declared income accordingly; the Assessing Officer, however, made additions by treating certain bank deposits as unexplained cash credits and assessed them under section 68 (and CIT(A) treated them under section 69A). The Tribunal analysed the scheme of section 44AD which deems a percentage of gross receipts as income and exempts the assessee from maintaining books; the deemed income necessarily carries with it the correlative presumption as to expenditure under the scheme. Consequently, where turnover/gross receipts are accepted and income is assessed under section 44AD, the Assessing Officer cannot, without carving out the case from applicability of section 44AD, treat the accepted receipts as unexplained credits and make additions under sections 68/69A merely because books are not maintained. While section 69A is not per se barred by 44AD, its application presupposes that the assessee has incurred expenditure which is unexplained; in the present facts, that premise was absent and no reason was given to hold that the scheme of 44AD was inapplicable. Applying precedents and the statutory scheme, the Tribunal concluded that making the impugned additions conflicted with the purpose and operation of presumptive taxation. [Paras 9]

The addition of Rs. 27,94,306/- treated as unexplained deposit and assessed under section 68/69A is deleted; the ground of appeal is allowed.

Final Conclusion: The Tribunal condoned the delay in filing the appeal and, on merits, held that once the assessee's income and turnover were accepted under the presumptive taxation scheme of section 44AD, the Assessing Officer could not sustain additions treating accepted receipts as unexplained cash credits under section 68/69A; the addition was deleted and the appeal allowed.

Validity of re-reassessment proceedings u/s 147 - non-issuance of notice u/s 143(2) - scope of section 292BB - Appeal dismissed by HC [2019 (4) TMI 215 - GUJARAT HIGH COURT]. Tribunal and Commissioner (Appeals) were correct in holding the assessment invalid for want of a section 143(2) notice after the return was filed; section 292BB cannot cure non issuance of such mandatory notice. The substantial question of law is answered in favour of the assessee and against the revenue.

HELD THAT:- Special leave petition is dismissed on the ground of low tax effect.

Income received by way of rent - ITAT treated as business income - nature of income - Rental income and the service charges thus were received by the Assessee Company as business income during the course of business carried out by them of operating and running a Mall as a commercial activity - HELD THAT:- The appeal and pending applications are dismissed as withdrawn, leaving question of law open.

Bogus LTCG - exemption claimed u/s 10 (38) denied - No evidence of actual sale - High Court [2019 (9) TMI 1089 - DELHI HIGH COURT] found no merit in the appeal against the Tribunal's factual conclusion that the claimed long term capital gains were bogus; concurrent findings were upheld and the appeal dismissed.

HELD THAT:- SLP dismissed.

Disallowance under section 40A(3) of the Income Tax Act, 1961 - payments made through agent and exceptions to cash-payment disallowance - identifiability and genuineness of recipients as a defence to section 40A(3) - revisional jurisdiction under section 263 of the Income Tax Act, 1961 - applicability of Rule 6DD to cash payments to agriculturists/small farmers

Disallowance under section 40A(3) of the Income Tax Act, 1961 - payments made through agent and exceptions to cash-payment disallowance - identifiability and genuineness of recipients as a defence to section 40A(3) - applicability of Rule 6DD to cash payments to agriculturists/small farmers - Whether addition under section 40A(3) is sustainable where cash payments for land purchases were made through an agent to identifiable agriculturist vendors who lacked bank accounts and furnished affidavits and ryotwari passbooks. - HELD THAT: - The Tribunal examined the material placed on record, including the assessee's affidavit from the agent, endorsements on agreements, affidavits from land owners insisting on cash payments, and ryotwari passbooks evidencing the vendors' identities and holdings. It found that the Assessing Officer reached an adverse conclusion without verifying the agent or the vendors and without conducting necessary enquiries. Endorsements on the reverse of the agreements do not conclusively prove direct payment by the assessee where contemporaneous evidence and affidavits indicate that the agent received cash from the assessee and remitted it to the vendors. The recipients were identifiable, the payments were supported by documentation, and the department did not dispute the genuineness of the transactions. In these circumstances the exceptions (including those reflected in Rule 6DD) and the evidentiary material absolved the assessee from application of the disallowance provision; consequently the addition under section 40A(3) could not be sustained. [Paras 6]

Addition under section 40A(3) deleted; orders of lower authorities set aside and the assessee's appeal allowed.

Final Conclusion: The Tribunal held that cash payments made through the appointed agent to identifiable small farmer vendors, supported by affidavits and ryotwari passbooks and not disproved by the department, negate applicability of section 40A(3); the addition was deleted and the appeal allowed for A.Y. 2005-06.

Treatment of retirement payment as capital receipt or income from other sources - valuation of partner's share on retirement - net asset method versus ready reckoner valuation - deduction under section 80IB(10) - principle of consistency in tax relief across assessment years

Treatment of retirement payment as capital receipt or income from other sources - valuation of partner's share on retirement - net asset method versus ready reckoner valuation - Whether the excess amount received by the assessee on retirement from the partnership was taxable as income from other sources or was part of capital receipt giving rise to long term capital gain/loss. - HELD THAT: - The Assessing Officer treated the amount received over and above the capital contribution as income from other sources after applying a net asset/interest foregone approach. The CIT(A) examined the assessee's submissions, relevant documents and Ready Reckoner value of 2012 and concluded that the amount ought to be treated as pertaining to capital/partnership interest and permitted the capital treatment. The Tribunal found that the CIT(A) had passed a reasoned order, having considered valuation material and documentary evidence, and there was no infirmity warranting interference with the appellate conclusion that the receipt be treated as capital in nature (with the assessee having claimed and paid tax accordingly). [Paras 8, 13, 14]

The Tribunal upheld the CIT(A)'s finding and dismissed the Revenue's challenge; the excess amount was not reopened by the Tribunal as income from other sources.

Deduction under section 80IB(10) - principle of consistency in tax relief across assessment years - Whether the assessee was entitled to deduction under section 80IB(10) for the year under consideration. - HELD THAT: - The Assessing Officer disallowed the claim and treated the amount as business income. The CIT(A) granted the deduction noting that similar claims by the assessee for earlier assessment years had been allowed by the Department and by the Tribunal. Applying the principle of consistency and observing the earlier favourable treatment in multiple assessment years, the CIT(A) admitted the deduction. The Tribunal agreed with the appellate authority's reliance on consistent prior relief and found no reason to reverse that conclusion. [Paras 10, 15, 16]

The Tribunal sustained the CIT(A)'s allowance of the deduction under section 80IB(10) and dismissed the Revenue's appeal on this ground.

Final Conclusion: Both grounds of the Revenue's appeal are dismissed: the Tribunal upheld the CIT(A)'s classification of the retirement receipt as capital in nature and sustained the grant of deduction under section 80IB(10) on the basis of consistent earlier relief.

Unexplained cash credit and additions under section 68 - identity and creditworthiness of shareholders and creditors - genuineness of share capital and loans/advances - reliance on search/seizure material and investigation reports for corroboration - assessment under section 143(3) vis-a -vis reassessment/assessment under section 153C - procedural compliance in adjudication of penalty proceedings

Genuineness of share capital and loans/advances - unexplained cash credit and additions under section 68 - identity and creditworthiness of shareholders and creditors - reliance on search/seizure material and investigation reports for corroboration - Addition of Rs. 1,00,000 as share capital and Rs. 10,00,000 as loans/advances treated as unexplained cash credit under section 68 was upheld. - HELD THAT: - The Tribunal affirmed the findings recorded by the AO and Ld. CIT(A) that the amounts claimed as share capital and unsecured loans/advances were not substantiated by evidence required under section 68. The record showed that information gathered by SFIO and search/seizure operations linked the assessee to accommodation entry transactions and to amounts shown in seized documents. The assessee failed to produce evidence demonstrating identity, genuineness of payment, or the creditworthiness of the alleged shareholders/creditors; documents filed during assessment and appeal were limited to unsigned correspondence, audited balance sheet copies and computer-generated ledger extracts which did not meet the statutory requirement to substantiate cash credits. In these circumstances the AO correctly treated the sums as unaccounted money and made additions under section 68, and the Ld. CIT(A) rightly confirmed those additions. The appellate challenge to those additions was therefore rejected. [Paras 5]

Addition under section 68 in respect of share capital and loans/advances upheld and the grounds challenging those additions rejected.

Assessment under section 143(3) vis-a -vis reassessment/assessment under section 153C - procedural forum and correctness of assessment section invoked - Contention that assessment should have been completed under section 153C instead of section 143(3) was rejected. - HELD THAT: - The assessee contended that receipt of a satisfaction note would render the assessment liable to be done under section 153C. The Tribunal noted the assertion but found no merit in the contention on the material before it and observed that the AO's assessment under section 143(3), as confirmed by the Ld. CIT(A), did not warrant interference. The appellate contention that the assessment provision invoked was incorrect was therefore dismissed. [Paras 5]

Ground urging that assessment ought to have been under section 153C was not accepted.

Procedural compliance in adjudication of penalty proceedings - adjudication of penalty initiation - Ground alleging failure to adjudicate initiation of penalty proceedings under section 271(1)(c) was rejected. - HELD THAT: - The assessee claimed that the Ld. CIT(A) erred by not adjudicating the ground relating to initiation of penalty proceedings. The Tribunal, after considering the appeal and the material on record, found no merit in this contention and rejected the ground as part of the appeal, thereby upholding the view taken by the authorities below. [Paras 5]

Ground complaining of non-adjudication of penalty initiation was dismissed.

Final Conclusion: The appeal is dismissed; the additions under section 68 in respect of share capital and loans/advances were upheld and the other grounds raised by the assessee, including challenge to the section under which assessment was made and the complaint about penalty adjudication, were rejected.

Accrual basis of accounting - mercantile system of accounting - recognition of interest income on accrual - chargeability of income irrespective of inter-party settlement

Recognition of interest income on accrual - mercantile system of accounting - chargeability of income irrespective of inter-party settlement - Whether interest on the loan advanced in December 2004 is assessable in the assessment year 2005-06 despite the assessee not having recognized the interest in its books during that year - HELD THAT: - The Tribunal found on the materials, including the borrower's letter of 01.12.2004, that the loan carried interest at 10.5% per annum and that the interest "shall become due as and when demanded" but was otherwise accruable. The assessee followed the mercantile (accrual) system of accounting. Under that method interest accrues as at the last day of the previous year in which the assessee's accounts are closed and, once accrued, must be charged to tax in the relevant assessment period. A subsequent inter-party arrangement or mutual agreement not to demand or the fact that interest was actually received and offered to tax in a later year does not affect the chargeability of interest which had already accrued under the mercantile system. Applying these principles, interest accruing for the period 01.12.2004 to 31.03.2005 was properly brought to tax in the assessment year 2005-06, and the additions made by the Assessing Officer and sustained by the CIT(A) were held to be in order. [Paras 5]

Appeal dismissed; interest for the period 01.12.2004 to 31.03.2005 assessable in Assessment Year 2005-06.

Final Conclusion: The Tribunal upheld the assessment treatment that interest accrued on the impugned loan for the period ending 31.03.2005 is taxable in Assessment Year 2005-06 under the mercantile system; the assessee's appeal is dismissed.

Advancement of any other object of general public utility - proviso to section 2(15) - exclusion for activities in nature of trade, commerce or business - charitable purpose - exemption under sections 11 and 12 - registration under section 12A - predominant object test - surplus versus profit-making

Advancement of any other object of general public utility - proviso to section 2(15) - exclusion for activities in nature of trade, commerce or business - exemption under sections 11 and 12 - registration under section 12A - predominant object test - Whether invocation of the proviso to section 2(15) to deny exemption under sections 11 and 12 for the assessment year 2012-13 was justified - HELD THAT: - The Tribunal upheld the CIT(A)'s allowance of exemption. It applied precedents in the assessee's own case and other coordinate decisions, finding on the material that the society's activities constitute participatory research and educational work directed to poor and deprived communities and were not commercial in nature. The Assessing Officer's characterisation of the receipts as contractual/commercial income was rejected because grants and fees were paid by charitable organizations and were utilized for charitable objects; no profit was distributed to members; and the society retained registration under section 12A. Applying the predominant object test and the principle distinguishing an incidental surplus from carrying on an institution for profit, the Tribunal held that the activities are charitable (education/research) and do not fall within the proviso to section 2(15) as an activity in the nature of trade, commerce or business. On that basis the Tribunal found the invocation of the proviso unjustified and sustained allowance of exemption under sections 11 and 12 for the year under appeal. [Paras 8, 9]

Invocation of the proviso to section 2(15) was not justified; the exemption under sections 11 and 12 for AY 2012-13 stands allowed and the CIT(A)'s order is upheld.

Final Conclusion: The Revenue's appeal is dismissed; the assessee's activities for AY 2012-13 are charitable (education/research), do not fall within the proviso to section 2(15), and exemption under sections 11 and 12 is to be allowed.

Guideline value - Section 56(2)(vii)(b)(ii) of the Income-tax Act - Treatment of consideration declared in sale deed - Adoption of higher guideline value of adjacent road - Deletion of addition under section 56

Guideline value - Section 56(2)(vii)(b)(ii) of the Income-tax Act - Adoption of higher guideline value of adjacent road - Treatment of consideration declared in sale deed - Whether the Assessing Officer was justified in invoking section 56(2)(vii)(b)(ii) and adopting the higher guideline value of 20th Main Road instead of the specific guideline value fixed for Jayanth colony to determine the value of the property - HELD THAT: - The Tribunal examined the sale deed and the government-prescribed guideline values applicable for the period including the date of purchase (07.01.2016). The sale deed described the property as situated in block 156, Jayanth colony, 20th Main Road, Anna Nagar scheme. The State Government had fixed a specific guideline value for Jayanth colony (Rs. 9,000 per sq.ft. for the relevant period) and a separate, higher guideline value for 20th Main Road (Rs. 12,000 per sq.ft. for the same period). The Tribunal held that where a specific guideline value is prescribed by the Government for a particular colony or flat, that prescribed value governs; the Assessing Officer cannot substitute a higher guideline value applicable to an adjacent road merely because the colony is adjoining that road. The Tribunal further noted there was no revaluation by the Sub-Registrar nor any allegation of undervaluation or short stamp duty that would justify adopting the higher rate. Applying these principles, the Tribunal found the addition under section 56(2)(vii)(b)(ii) based on the higher 20th Main Road rate to be unsustainable when the sale deed was executed at the guideline value fixed for Jayanth colony itself. [Paras 5]

Addition made by the Assessing Officer under section 56(2)(vii)(b)(ii) by applying the higher guideline value of 20th Main Road is deleted; the sale deed value conforming to the guideline value for Jayanth colony is to be accepted.

Final Conclusion: The appeal is allowed: the Tribunal deleted the addition made under section 56(2)(vii)(b)(ii) by the Assessing Officer and confirmed that the specific guideline value fixed for Jayanth colony governs the valuation of the property for AY 2016-17.

Long Term Capital Gain exemption under Section 10(38) - onus of proof on the assessee to establish exemption - natural justice - right to fair opportunity to rebut evidence - inadmissibility of third party statements not subjected to cross examination - re adjudication/remand for fresh enquiry and verification

Long Term Capital Gain exemption under Section 10(38) - onus of proof on the assessee to establish exemption - natural justice - right to fair opportunity to rebut evidence - inadmissibility of third party statements not subjected to cross examination - re adjudication/remand for fresh enquiry and verification - Whether the claim of exemption under Section 10(38) in respect of alleged long term capital gains from sale of shares was adjudicated fairly and can be sustained on the material before the AO and CIT(A), or whether the matter requires remand for fresh adjudication after affording opportunity to the assessee. - HELD THAT: - The Tribunal found that the assessment was primarily founded on evidence gathered during revenue investigations and internal communications, and on statements of third parties which were not put to the assessee for cross examination. Assessments cannot rest on mere suspicion or on such information without giving the assessee an opportunity to rebut adverse material. The onus to establish entitlement to exemption under Section 10(38) lies on the assessee and the AO must require the assessee to furnish proper material to substantiate the claim. Where adverse statements or investigational material exist, they must be disclosed to the assessee and the assessee must be permitted to examine or rebut the persons and material relied upon. Applying the reasoning of the co ordinate Bench in the cited decision, the Tribunal held that, in the absence of adequate opportunity and without the material being tested against the assessee, the question of genuineness of the transactions could not be finally adjudicated on the record before the Tribunal. Accordingly, the matter is fit for remand so that the AO may require production of witnesses (such as brokers, sub brokers or other persons through whom the transactions were effected), documents and explanations, conduct such enquiries as deemed necessary, and decide the issue in accordance with law after affording the assessee adequate opportunity. [Paras 4, 6, 7]

The issue of genuineness of the transactions and the claim of exemption under Section 10(38) is remitted to the file of the Assessing Officer for re adjudication after affording the assessee adequate opportunity to substantiate and rebut the material; appeal treated as partly allowed for statistical purposes.

Final Conclusion: The Tribunal has not decided the merits of the exemption claim; instead it remitted the matter to the Assessing Officer for fresh adjudication in accordance with law after furnishing the assessee adequate opportunity to prove the genuineness of the transactions and to meet any adverse material relied upon by the Revenue.

Power to keep proceedings in abeyance under Section 28(9A)(a) of the Customs Act, 1962 - Abandonment of imported goods under Section 23(2) of the Customs Act, 1962 - Principles of natural justice - Judicial review under Article 226

Power to keep proceedings in abeyance under Section 28(9A)(a) of the Customs Act, 1962 - Judicial review under Article 226 - Validity of the communication dated 4 April 2019 invoking Section 28(9A)(a) of the Customs Act and consequent direction to the Commissioner to reconsider the petitioner's representation - HELD THAT: - The impugned communication dated 4 April 2019 did not state or reflect the basis for exercise of powers under Section 28(9A)(a) of the Act, and the court was therefore unable to ascertain the reasons for keeping the present proceedings in abeyance. The Revenue did not dispute this deficiency. Consequently the communication was set aside. In the peculiar facts of the case the Commissioner of Customs (Import) was directed to consider the petitioner's representation (to be filed within one week from upload of the order) and pass an appropriate order thereafter. [Paras 4, 5, 6]

Impugned communication set aside; Commissioner to consider petitioner's representation filed within one week and pass appropriate order.

Abandonment of imported goods under Section 23(2) of the Customs Act, 1962 - Principles of natural justice - Disposal of the petitioner's applications dated 9 January 2019 and 16 April 2019 seeking relief regarding abandonment of five containers - HELD THAT: - The petitioner's applications under Section 23(2) seeking relief in respect of abandonment of imported goods remained pending. The Court directed that Respondent No.3 shall dispose of those applications expeditiously, observing that the Commissioner of Customs should endeavour to decide them as quickly as possible while adhering to the principles of natural justice. [Paras 7]

Respondent No.3 to dispose of the petitioner's applications within three weeks, following principles of natural justice.

Final Conclusion: The communication dated 4 April 2019 under Section 28(9A)(a) of the Customs Act is set aside and the Commissioner of Customs is directed to consider the petitioner's representation and pass an appropriate order; the petitioner's applications under Section 23(2) are to be disposed of within three weeks in accordance with natural justice. All other contentions are left open.

Provisional release of seized property under Section 110A of the Customs Act, 1962 - seizure of vehicle under Section 115(e) of the Customs Act, 1962 - security and bond for provisional release - quantum - limited judicial interference in executive seizure by directing conditional release

Provisional release of seized property under Section 110A of the Customs Act, 1962 - security and bond for provisional release - quantum - limited judicial interference in executive seizure by directing conditional release - Direction for provisional release of the seized vehicle on modified bond and security and related procedural liberty to the authority - HELD THAT: - The Court declined to adjudicate the merits of the underlying seizure or the applicability of Section 115(e) of the Customs Act, 1962. Instead, exercising limited judicial review, the Court directed that the Principal Commissioner of Customs (P), CC (P), Kolkata, West Bengal shall provisionally release the seized vehicle upon the petitioner furnishing a bond and security equal to 40% of the value of the vehicle. The direction curtailed the earlier requirement (security equal to the insured value) as excessive, while preserving the authority's right to continue investigation and to issue show-cause notices in accordance with law. The vehicle was ordered to be released within ten days of submission of the bond and security, and the authority was left free to pursue enforcement proceedings on merits.

Petition disposed by directing provisional release of the vehicle on bond and security equal to 40% of its value, with release within ten days and liberty to the authority to continue investigation and issue show-cause.

Final Conclusion: Writ petition disposed by modifying the provisional release condition: the seized vehicle to be released on furnishing bond and security equal to 40% of the vehicle's value within ten days; the order does not decide the lawfulness of the seizure and preserves the Customs authority's right to continue investigation and proceed in accordance with law.

Pre-deposit for stay of proceedings - rectification of tribunal order - restoration of appeal - entertainment of appeal upon compliance with pre-deposit

Pre-deposit for stay of proceedings - entertainment of appeal upon compliance with pre-deposit - Whether the respondent complied with the pre-deposit directed by the Tribunal and whether the petitioner's challenge to the Tribunal's rectification/order should succeed on that ground - HELD THAT: - The respondent filed an affidavit dated 22nd October, 2019 stating that the entire pre-deposit payable in terms of the Tribunal's stay orders has been deposited and annexed evidence of payment. The petitioner's counsel did not dispute the facts recorded in that affidavit. In view of the undisputed material showing compliance with the pre-deposit directions, the Court found the petitioner's grievance regarding non-compliance to be incorrect and observed that the appeal is listed on the Tribunal's board for final hearing. [Paras 2, 3, 4]

The Court held that the respondent has complied with the Tribunal's pre-deposit directions and the petitioner's challenge based on non-compliance fails.

Final Conclusion: Petition dismissed as the respondent has deposited the pre-deposit directed by the Tribunal and the petitioner's objection on that ground is rejected.

Finality of assessment where no appeal is filed - reopening of assessment barred by limitation / extended period invocation - inadmissibility of third party statements relied upon without opportunity for cross examination - reassessment to impose anti dumping duty - reliance on voluntary statements without corroboration

Finality of assessment where no appeal is filed - reopening of assessment barred by limitation / extended period invocation - reliance on voluntary statements without corroboration - inadmissibility of third party statements relied upon without opportunity for cross examination - Whether the proceedings reopening earlier assessments and imposing anti dumping duty were maintainable where the original assessments had become final for non appeal and the case relied on third party and voluntary statements not corroborated or subjected to cross examination. - HELD THAT: - The Tribunal applied the principle that an assessment becomes final if no appeal is filed within the statutory period, and such final assessments cannot be reopened by subsequently invoking the extended period of limitation. The factual matrix showed that the bills of entry were assessed during July 2009 to March 2011 and were not challenged within the prescribed appeal period, so those assessments had attained finality. The revenue initiated reassessment relying on statements of third parties and on a voluntary statement of the appellant's director; those witnesses were not produced for cross examination and there was no independent corroboration of the voluntary statement. Following the earlier decision in M/s PG Electroplast Ltd., the Tribunal concluded that (i) all information material to assessment was available at the time of original adjudication, (ii) allegation of suppression after the appeal period was unsustainable, and (iii) reliance on uncorroborated third party or voluntary statements without opportunity for cross examination did not justify reopening final assessments or invoking extended limitation.

Impugned Order in Original setting aside declared assessable values and imposing anti dumping duty, interest and penalties is set aside; appeals allowed.

Final Conclusion: Following and applying the precedent in the co ordinate case, the Tribunal held that the assessments had become final for non appeal, the revenue could not reopen them by invoking extended limitation based on uncorroborated third party and voluntary statements not subjected to cross examination; the impugned order was set aside and the appeals allowed.

Redemption fine in case of re-export - Penalty under Section 112(a) of the Customs Act, 1962 - FSSAI conformity and fitness for human consumption - Absence of mens rea versus duty of care in import transactions

Redemption fine in case of re-export - FSSAI conformity and fitness for human consumption - Whether a redemption fine can be imposed when confiscated imported goods are to be redeemed only for the purpose of re-export. - HELD THAT: - The appellant did not contest the direction to re-export and expressed willingness to comply. The Tribunal followed the binding precedent relied upon by the appellant, wherein the High Court's view that redemption fine cannot be imposed when goods are to be redeemed only for export was affirmed by the Supreme Court. Applying that authority, the Tribunal concluded that imposing a redemption fine in the present circumstances is unjustified and set aside the redemption fine imposed by the authorities. [Paras 5]

Redemption fine set aside.

Penalty under Section 112(a) of the Customs Act, 1962 - Absence of mens rea versus duty of care in import transactions - FSSAI conformity and fitness for human consumption - Whether penalty for violation of FSSAI regulations is sustainable and, if so, its appropriate quantum. - HELD THAT: - While the appellant relied on its contract with the overseas supplier and asserted lack of intention to import non-conforming goods, the Tribunal held that the appellant nevertheless had an obligation to take all necessary steps to ensure import of goods conforming to FSSAI norms. The breach of those regulations therefore attracted penalty under Section 112(a) of the Customs Act, 1962. However, having regard to the facts and in the interest of justice, the Tribunal found the penalty originally imposed to be excessive and reduced it to a lesser quantified amount. [Paras 6]

Penalty sustained under Section 112(a) but reduced to Rs. 50,000.

Final Conclusion: Appeal partly allowed: redemption fine set aside; direction to re-export upheld; penalty under Section 112(a) sustained but reduced to Rs. 50,000.

Confiscation of smuggled goods - smuggling by concealment - goods concealed on person not baggage - penalty under Section 112(a) of the Customs Act, 1962 - penalty for false declaration under Section 77 read with Section 114AA - ignorance of law not a defence

Confiscation of smuggled goods - smuggling by concealment - Validity of absolute confiscation of gold recovered from appellant concealed on her person. - HELD THAT: - The Tribunal found on the evidence and appellant's own statement that 24 carat gold in crude form (chains and bangles) weighing 583.180 grams was secreted under the burka worn by the appellant and was not declared on arrival. The original authority recorded deliberate concealment and intention to evade duty; the Commissioner(Appeals) upheld those findings. The Tribunal concurred with the factual findings and legal conclusion that the goods were smuggled by concealment and were liable to absolute confiscation under the Customs Act and related foreign trade provisions. The appellant's claimed ignorance of the requirement to declare did not mitigate or displace the finding of smuggling by concealment. [Paras 6]

Absolute confiscation of the seized gold upheld.

Goods concealed on person not baggage - penalty for false declaration under Section 77 read with Section 114AA - Sustainability of penalty imposed under Section 114AA (for failure to declare under Section 77) where objectionable goods were found secreted on the person and nothing objectionable was found in baggage. - HELD THAT: - The Tribunal observed that Section 77 applies to the declaration of baggage and is attracted when a passenger fails to declare goods in baggage. In the present case the record showed nothing objectionable in the appellant's accompanied baggage; the gold was secreted on her person. On that basis the Tribunal held that imposition of penalty under Section 114AA (for false declaration under Section 77) was not sustainable and set aside the penalty imposed under Section 114AA. [Paras 6]

Penalty under Section 114AA set aside.

Penalty under Section 112(a) of the Customs Act, 1962 - ignorance of law not a defence - Validity and quantum of penalty under Section 112(a) imposed for acts rendering goods liable for confiscation. - HELD THAT: - The Tribunal accepted the original authority's finding that the appellant's acts rendered the goods liable for confiscation and that penal consequences under Section 112(a) were attracted. While upholding liability for penalty under Section 112(a), the Tribunal exercised its discretion as to quantum and reduced the penalty from the amount imposed by the original authority to Rs. 2,25,000/-. The Tribunal reiterated that the appellant's plea of ignorance of law or quantum did not mitigate the offence. [Paras 6, 7]

Penalty under Section 112(a) upheld but reduced to Rs. 2,25,000.

Final Conclusion: The Tribunal upheld the absolute confiscation of the gold seized from the appellant as smuggled goods concealed on her person; set aside the penalty imposed under Section 114AA (declaring Section 77 inapplicable where nothing objectionable was found in baggage); and upheld but reduced the penalty under Section 112(a) to Rs. 2,25,000. Appeal disposed of; cross objections disposed of.

Strict construction of exemption notifications - post-clearance utilisation under Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 - procedural breaches not vitiating entitlement to exemption - admissibility and consideration of expert opinion - remand for fresh consideration of utilisation and compliance - competence to recover duty foregone

Admissibility and consideration of expert opinion - strict construction of exemption notifications - remand for fresh consideration of utilisation and compliance - Whether the findings of the adjudicating authority rejecting the appellant's claim that the imported parts were utilised in manufacture of assemblies covered by the notification are sustainable. - HELD THAT: - The Tribunal found that the adjudicating authority proceeded to distinguish 'CD Deck mechanism' from the mechanism used in 'DVD players' by relying on technical assertions unsupported by acceptable provenance and by casually dismissing the expert opinion of the Department of Electronics. While exemption notifications require strict construction, the adjudicating authority failed to consider the appellant's evidence (end use certificates, ER 1 returns and registration entries) and did not address the appellant's submissions on technological evolution and the amended description of eligible imports. In view of that absence of considered evaluation and non-dealing with written and oral responses, the impugned findings are unsustainable and cannot stand. [Paras 8, 10, 11]

Findings of the adjudicating authority set aside; matter remanded for fresh consideration of facts and evidence on proper utilisation and conformity with the exemption notification.

Procedural breaches not vitiating entitlement to exemption - post-clearance utilisation under Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 - Whether non intimation of arrival within two days and non maintenance of prescribed records by the appellant constitute irreparable breaches justifying denial of the exemption. - HELD THAT: - The Tribunal observed that failure to intimate arrival and to maintain simple records are procedural breaches. In the absence of any allegation of diversion of goods or persistent dereliction in record keeping, such procedural lapses should not result in complete denial of concession afforded by the notification. The Rules govern post clearance procedure and enforcement but the alleged breaches, as recorded, do not establish irreparable misuse warranting forfeiture of concession without further inquiry. [Paras 9]

Procedural breaches alone, as recorded, do not justify denial of the exemption; matter to be reconsidered on merits and evidence.

Competence to recover duty foregone - post-clearance utilisation under Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 - Whether the Commissioner of Central Excise had competence to initiate proceedings for recovery of duties foregone based on the authority of the Rules. - HELD THAT: - The Tribunal noted that the show cause notice was issued by the Commissioner of Central Excise within whose jurisdiction the appellant's factory is located and that the assessing officer had cleared the imports at concessional duty. The appellant challenged the competence of the Central Excise authority to initiate recovery proceedings relying on the Rules, raising a point as to whether the Rules confer primacy to that authority. The Tribunal did not decide the competence issue on merits but directed that this question would need to be defended and considered during compliance with the remand order. [Paras 11]

Question of competence to initiate recovery proceedings left open for determination by the authority on remand; appellant's objection to be addressed in the fresh adjudication.

Final Conclusion: The impugned adjudication is set aside and the matter is remanded to the original authority for fresh, reasoned consideration of the appellant's evidence on utilisation and conformity with the exemption notification, with the competence-to-recover issue to be addressed while complying with this remand; appeal disposed of accordingly.

Review petition - final adjudication - show cause notice - non-survival of proceedings - liberty to challenge final order

Review petition - final adjudication - non-survival of proceedings - Whether the review petition based on alleged typographical errors in an earlier order survives after the respondent has passed a final adjudication on the show cause notice. - HELD THAT: - The Court recorded that although the applicant applied for review on the ground of typographical errors in paras 3 and 6 of the earlier order, the respondent informed the Court that the show cause notice against the petitioner has since been finally adjudicated. In light of that submission the Court held that the review petition does not survive and accordingly disposed of the review petition. The Court nevertheless preserved the applicant's right to challenge the subsequently passed final adjudication by appropriate proceedings, thereby limiting the present disposal to the non-survival of the review petition once substantive final adjudication has occurred. [Paras 1, 2, 3]

Review petition held not to survive because the show cause notice has been finally adjudicated; review petition disposed of while liberty granted to challenge the final adjudication.

Final Conclusion: The review petition was dismissed as no longer maintainable in view of final adjudication on the show cause notice; the petitioner was granted liberty to challenge the final adjudication in appropriate proceedings.

Maintainability of a Section 7 petition - petition filed solely pursuant to RBI circular - ultra vires effect of RBI circular and consequences for proceedings - existence of debt and default

Petition filed solely pursuant to RBI circular - ultra vires effect of RBI circular and consequences for proceedings - maintainability of a Section 7 petition - existence of debt and default - Whether the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 is maintainable where it was filed solely in pursuance of the RBI circular dated 12.02.2018, which has been declared ultra vires. - HELD THAT: - The Tribunal examined the documentary record, including minutes of consortium meetings and correspondence, and found that the decision to file the Section 7 petition was taken with direct reference to compliance with the RBI circular and its filing deadline. The Minutes of the consortium meetings dated 26.11.2018 and 30.11.2018 expressly record that filing before the grace period expiry and compliance with the RBI circular were discussed and agreed. The petition was filed on 06.12.2018, shortly before the cited deadline. In view of the Hon'ble Supreme Court's decision in DHARANI SUGARS AND CHEMICALS LIMITED v. UNION OF INDIA AND OTHERS, which declared the RBI circular ultra vires and held that proceedings instituted solely because of that circular are non-est, the Tribunal held that proceedings initiated solely in pursuance of that circular cannot be proceeded with. Although the financial creditor produced voluminous evidence of loan sanction and default and there was no substantive dispute on existence of debt or default, the determinative fact was that the petition was instituted exclusively against the backdrop of the RBI circular. The corporate debtor's subsequent affidavit seeking admission did not cure the initial position that the petition had been filed solely pursuant to the circular. [Paras 13, 14, 16]

The petition under Section 7 is dismissed as it was filed solely in pursuance of the RBI circular declared ultra vires; petitioners are liberty to file a fresh petition.

Final Conclusion: The Tribunal found that the Section 7 petition was instituted solely on account of the RBI circular dated 12.02.2018; applying the Supreme Court's ruling that proceedings commenced only by virtue of that circular are non-est, the petition is dismissed, with liberty granted to the financial creditor to file a fresh petition.

Group corporate insolvency - maintainability of separate Section 7 petitions against corporate guarantors where CIRP is admitted against the principal borrower - joint initiation of CIRP against collaborating developer and land-owning corporates - appointment of common resolution professional for consolidated resolution plan - remand for proof of collaboration/developer relationship

Group corporate insolvency - maintainability of separate Section 7 petitions against corporate guarantors where CIRP is admitted against the principal borrower - Whether Section 7 applications filed against certain corporate guarantors are maintainable despite admission of CIRP against the principal borrower, where the project is a consolidated township developed by the principal borrower in collaboration with landholding corporates. - HELD THAT: - The Tribunal found on the material placed that the principal borrower (Adel Landmarks Limited) and several corporate debtors had entered into collaboration/licence arrangements and the township project was to be developed on lands of multiple corporate debtors so as to form a single consolidated development. In those factual circumstances a group insolvency is required to enable a viable consolidated resolution and completion of the township. Relying on documentary records including collaboration agreements, licences and the loan/guarantee/assignment documents, the Tribunal held that simultaneous CIRP proceedings should be instituted against the corporate debtors whose lands form part of the same township so that a consolidated Information Memorandum and a unified resolution plan for total development can be prepared and implemented. Consequently the Adjudicating Authority's dismissal of the Section 7 petitions against those corporates was set aside and those petitions were directed to be admitted, with the Resolution Professional of the principal borrower appointed as the common Resolution Professional to oversee joint proceedings and preparation of a consolidated resolution plan. [Paras 32, 33, 34, 41, 42]

The Section 7 applications against Sachet Infrastructure Pvt. Ltd., Magad Realtors Pvt. Ltd., Mehak Realtech Pvt. Ltd., Sameeksha Estate Pvt. Ltd. and Jamvant Estates Pvt. Ltd. are to be admitted and a group CIRP to be conducted under the common Resolution Professional of the principal borrower, with directions for a consolidated Information Memorandum and resolution plan.

Remand for proof of collaboration/developer relationship - appointment of common resolution professional for consolidated resolution plan - Whether Section 7 petitions filed against four other corporate debtors should be admitted or require further proof of common development relationship with the principal borrower. - HELD THAT: - For Superlative Infrastructure Pvt. Ltd., Bhisham Infrastructure Pvt. Ltd., Neeleshwar Mines & Minerals (India) Pvt. Ltd. and Manogayan Estates Pvt. Ltd., the record did not show their lands or names in the town planning licences relied upon, nor was there evidence on record demonstrating that Adel Landmarks Limited was the common developer for those corporates' lands. The Tribunal observed that if the principal borrower is shown to be the common developer for those corporates, simultaneous CIRP may be warranted; absent such proof, no specific finding could be made at this stage. Accordingly those matters were remitted to the Adjudicating Authority for fresh consideration and admission if the parties produce relevant collaboration/development agreements establishing the requisite relationship with the principal borrower. [Paras 36, 37, 38, 40, 43]

The appeals concerning Superlative Infrastructure Pvt. Ltd., Bhisham Infrastructure Pvt. Ltd., Neeleshwar Mines & Minerals (India) Pvt. Ltd. and Manogayan Estates Pvt. Ltd. are remitted to the Adjudicating Authority to decide on admission after parties produce evidence of a common development relationship with Adel Landmarks Limited; if established, their Section 7 petitions may be admitted and processed jointly.

Final Conclusion: The impugned common order is set aside insofar as five corporate debtors (Sachet, Magad, Mehak, Sameeksha and Jamvant) and those Section 7 petitions are to be admitted with the Adel Landmarks Limited Resolution Professional appointed as common Resolution Professional for a consolidated group CIRP; the appeals relating to four other corporate debtors are remitted to the Adjudicating Authority for fresh consideration upon production of evidence demonstrating a common developer relationship.

Corporate Insolvency Resolution Process - Financial Creditor - default in repayment - admission of application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - jurisdiction of the Adjudicating Authority - matter within the purview of law of limitation - appointment of Interim Resolution Professional - invocation of moratorium under the Insolvency and Bankruptcy Code, 2016 - suspension of management powers and duties of the IRP - collation and invitation of claims from creditors

Default in repayment - Financial Creditor - The Corporate Debtor had defaulted on its loan obligations as claimed by the Applicant and an outstanding amount was shown as on 31.05.2019 with date of default recorded as 30.09.2017. - HELD THAT: - On perusal of the application and the documents filed, including the loan facilities, hypothecation agreement and Part IV of Form I, the Tribunal found that the Corporate Debtor failed to meet repayment obligations. The loan accounts were classified as NPA on 30.09.2017, demand notices under SARFAESI were issued and recovery proceedings were pending, and the Applicant demonstrated default and a specific amount outstanding as on 31.05.2019. The Tribunal therefore accepted that a default in repayment, as contended by the Financial Creditor, had occurred. [Paras 6]

Default established and quantified in the Form I as on 31.05.2019 with date of default 30.09.2017.

Jurisdiction of the Adjudicating Authority - matter within the purview of law of limitation - This Tribunal has territorial jurisdiction to entertain the application and the matter falls within the law of limitation. - HELD THAT: - The Tribunal noted that the registered office of the Corporate Debtor is situated in Ajmer, placing the dispute within the territorial jurisdiction of this Bench. On the materials before it, the Tribunal was satisfied that the application was not barred by limitation and that the proceedings could be entertained by the Adjudicating Authority. [Paras 8]

Jurisdiction of this Tribunal affirmed and the petition held to be within limitation.

Admission of application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Corporate Insolvency Resolution Process - The application under Section 7 of the IBC filed by the Financial Creditor is admitted and CIRP is initiated against the Corporate Debtor. - HELD THAT: - Having found default and satisfied itself as to jurisdiction and limitation, the Tribunal proceeded to admit the Company Petition under the IBC and directed initiation of the Corporate Insolvency Resolution Process. The Tribunal recorded its inclination to initiate CIRP and formally admitted the petition, triggering the statutory consequences of admission under the Code. [Paras 9, 11]

Company Petition admitted and CIRP initiated against the Corporate Debtor.

Appointment of Interim Resolution Professional - collation and invitation of claims from creditors - Mr. Satyendra Prasad Khorania is appointed as Interim Resolution Professional and directed to take over affairs of the Corporate Debtor and invite and collate claims. - HELD THAT: - The Applicant proposed a named insolvency professional and filed the requisite consent. The Tribunal appointed the proposed professional as the Interim Resolution Professional to assume management of the Corporate Debtor's affairs, undertake issuance of publication, call for claims from creditors and collate the same, and to carry out CIRP in accordance with the timelines and requirements of the Code. [Paras 10, 11]

Named IRP appointed to take over affairs and to invite and collate claims of creditors.

Invocation of moratorium under the Insolvency and Bankruptcy Code, 2016 - suspension of management powers and duties of the IRP - On admission, the moratorium under the IBC is invoked and the management of the Corporate Debtor vests in the IRP, with promoters and directors required to cooperate. - HELD THAT: - Consequent to admission, the Tribunal invoked the statutory moratorium, rendering prohibited certain actions against the Corporate Debtor during CIRP. The Tribunal directed that in terms of the Code the powers of the Board and management stand suspended and that all personnel, including promoters and directors, shall extend cooperation to the IRP who will manage the affairs and comply with his duties under the IBC. [Paras 11]

Moratorium invoked; management powers suspended and vested in the IRP who must be cooperated with by promoters and directors.

Final Conclusion: The Tribunal, being satisfied as to default, territorial jurisdiction and limitation, admitted the Section 7 petition, initiated the Corporate Insolvency Resolution Process, appointed the proposed Interim Resolution Professional with directions for his conduct of CIRP (including deposit for expenses), invoked the moratorium and suspended the management's powers while directing cooperation with the IRP.

Admission of an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - existence of operational debt and default - service of demand notice under Section 8 of the IBC - limitation for filing an application under the IBC - appointment of Interim Resolution Professional - commencement of moratorium under Section 14 of the IBC - provision for interim funding of IRP's expenses

Existence of operational debt and default - admission of an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Application under Section 9 of the IBC by the operational creditor was admissible and is admitted. - HELD THAT: - The Tribunal found that the Applicant supplied goods to the Corporate Debtor and raised invoices which remained unpaid. The Applicant filed the Section 9 application accompanied by Part IV of Form 5 showing the principal and claimed interest and stated that default occurred on the date recorded in the form. The Tribunal concluded that the application was complete and that the Applicant had established default in payment of an operational debt and compliance with requirements of Section 9(5) of the Code, entitling admission of the application. [Paras 5, 9, 15]

Section 9 application admitted.

Service of demand notice under Section 8 of the IBC - existence of a notice of dispute - Demand notice under Section 8 was duly served and no notice of dispute was received from the Corporate Debtor. - HELD THAT: - The Tribunal recorded attempts to serve the Section 8 demand notice and accepted the service affidavit and tracking report showing service on 27.06.2018. The Corporate Debtor did not file any reply or notice of dispute and did not appear before the Tribunal, leading to ex parte proceedings. The Applicant also filed the affidavit required under Section 9(3)(b) affirming that no notice of dispute was received. [Paras 8, 10, 11]

Service of Section 8 notice is established and no dispute was raised by the Corporate Debtor.

Limitation for filing an application under the IBC - The Section 9 application was filed within the period of limitation. - HELD THAT: - The Tribunal considered the filing date of the present application and the stated date of default and expressly recorded that the application filed on 21.08.2018 was within the period of limitation, thereby removing a bar to admission on limitation grounds. [Paras 14]

Application is within limitation.

Appointment of Interim Resolution Professional - Interim Resolution Professional was appointed by the Tribunal. - HELD THAT: - As the Applicant had not proposed any IRP, the Tribunal appointed Mr. Harish Goyal (registration no. IBBI/IPA-001/IP-P-01459/2018-2019/12244) and directed him to take steps required under the Code, including duties enumerated in relevant provisions for the IRP. [Paras 16]

Mr. Harish Goyal appointed as IRP.

Commencement of moratorium under Section 14 of the IBC - Moratorium under Section 14(1) of the IBC commenced on admission of the application. - HELD THAT: - By admitting the Section 9 application in terms of Section 9(5), the Tribunal held that the moratorium envisaged under Section 14(1) follows, with the related provisions of Sections 14(2) and 14(3) applying during the moratorium period, thereby prohibiting actions as specified in the Code. [Paras 17, 18]

Moratorium under Section 14 imposed upon admission.

Provision for interim funding of IRP's expenses - Operational Creditor directed to deposit an amount towards immediate expenses of the IRP. - HELD THAT: - The Tribunal directed the Applicant/Operational Creditor to deposit a specified sum in a separate account to meet immediate expenses to be incurred and accounted for by the IRP, with the requirement that such amount shall be reimbursed to the Operational Creditor after approval of the IRP's expenses by the Committee of Creditors prior to appointment of a Resolution Professional. [Paras 19]

Operational Creditor to deposit funds for IRP's immediate expenses.

Final Conclusion: The Tribunal admitted the Section 9 application on proof of operational debt and default, after noting proper service of the Section 8 notice and absence of any dispute, found the application to be within limitation, appointed an Interim Resolution Professional, declared the moratorium under Section 14 on admission, and directed interim funding for IRP's expenses.

Delay in filing statutory appeal - payment of tax, interest and penalty - amnesty scheme - withdrawal of writ petition with liberty to avail scheme

Withdrawal of writ petition with liberty to avail scheme - amnesty scheme - Petition dismissed as withdrawn with liberty to avail the amnesty scheme - HELD THAT: - The petitioner sought permission to withdraw the writ petition in order to avail the benefit of an amnesty scheme notified on 01.09.2019. The Court allowed the prayer for withdrawal and dismissed the petition as withdrawn, while expressly granting liberty to the petitioner to pursue relief under the amnesty scheme. No adjudication was made on the substantive dispute concerning the balance of the penalty in view of the withdrawal and the liberty granted.

Petition dismissed as withdrawn; petitioner granted liberty to avail the amnesty scheme.

Payment of tax, interest and penalty - delay in filing statutory appeal - Court recorded that the petitioner had deposited the tax element with interest and 25% of the penalty; appeal before Commissioner (Appeals) had been dismissed for delay of 109 days - HELD THAT: - The Court noted the concession by the parties that, in compliance with the adjudicating authority's order, the petitioner had deposited the tax demand together with interest and 25% of the penalty. It was also recorded that the Commissioner (Appeals) had dismissed the statutory appeal on account of a 109-day delay in filing. These factual recordings informed the context in which the petitioner sought withdrawal to avail the amnesty scheme, but the Court did not adjudicate the remaining claim concerning the unpaid 75% of the penalty.

Court recorded compliance by the petitioner in depositing tax, interest and 25% penalty and noted the dismissal of the appeal for delay; no substantive determination made on the unpaid portion of the penalty.

Final Conclusion: The writ petition was dismissed as withdrawn, with the petitioner granted liberty to avail the amnesty scheme notified on 01.09.2019; the Court recorded prior deposit of the demand with interest and 25% penalty and made no adjudication on the balance penalty.

Summary order. [STA No.19 of 2015 dismissed as withdrawn on appellant's application under revised CBIC monetary limits]

Real Estate Agent - suppression of facts - extended period of limitation - penalty under Sections 77 and 78 of the Finance Act, 1994 - taxable service

Real Estate Agent - taxable service - Appellant's transactions in 2005-06 and 2006-07 fall within the definition of a "Real Estate Agent" and constitute a taxable service. - HELD THAT: - The Court found that the appellant entered into agreements to purchase land with the express right and intention to sell to third parties and procured execution of sale deeds directly in favour of those third parties without first getting the property registered in its own name. Such conduct was not a mere purchase and subsequent sale as a buyer-seller, but an arrangement where appellant facilitated sale for a consideration. The factual matrix and documentary terms of the agreements demonstrate that appellant acted as a service provider in relation to sale of real estate and thereby rendered a taxable service under the statutory definitions. The Court therefore upheld the conclusion of the authorities that the receipts shown as 'other income' arose from activities covered by the definition of "Real Estate Agent" and were liable to service tax. [Paras 15, 16]

Transaction attracts the definition of "Real Estate Agent" and is a taxable service; demand for service tax sustained.

Suppression of facts - extended period of limitation - Extended period of limitation was rightly invoked because the appellant suppressed the correct nature and source of the income. - HELD THAT: - Although the amounts were recorded in the books as 'other income', the appellant did not disclose the true source or nature of those receipts. The nature of the transactions came to light only on audit and inquiry, amounting to suppression of facts. Relying on authoritative principles that suppression does not get obliterated by subsequent departmental knowledge, the Court held that limitation is to be computed from the relevant date as provided in the statute and that the extended period could be invoked where suppression is established. Consequently, notices issued in 2010 were within time under the extended limitation provisions. [Paras 17, 18, 21]

Extended period of limitation was correctly applied because suppression of facts was established; demand is not time-barred.

Penalty under Sections 77 and 78 of the Finance Act, 1994 - suppression of facts - Imposition of penalty under Sections 77 and 78 of the Finance Act, 1994 was justified on account of suppression of facts. - HELD THAT: - The Assessing Officer found, and the appellate fora affirmed, that the appellant failed to register as a real estate agent, did not file prescribed returns, and suppressed the fact that substantial amounts were received in relation to sale of real estate. The suppression was established through audit and examination of agreements and sale deeds. Given this finding of suppression and non-compliance with registration and return provisions, the Court found no infirmity in the authorities' exercise of their power to impose penalty under the cited provisions. [Paras 22, 23]

Penalties under Sections 77 and 78 were rightly imposed as the appellant suppressed material facts and failed to comply with registration and return obligations.

Final Conclusion: The High Court dismissed the appeal: the transactions for 2005-06 and 2006-07 were held to constitute taxable services as a "Real Estate Agent", the extended period for issuance of notices was correctly invoked because of suppression of facts, and the penalty under Sections 77 and 78 of the Finance Act, 1994 was lawfully imposed.

Territorial jurisdiction - service versus manufacture - suppression of facts for extended limitation - liability of service provider notwithstanding recipient's payment - penalty and reasonable cause under Section 80

Territorial jurisdiction - Whether the Commissioner, Central Excise, Raipur had territorial jurisdiction to initiate and adjudicate proceedings against the Appellant. - HELD THAT: - The Court upheld the Tribunal's finding that the Commissioner, Raipur possessed jurisdiction. The Tribunal's conclusion was founded on undisputed facts that the appellant's head office and proprietor were located at Raipur, work orders were executed from the Raipur address, the appellant had not confined registration to another region, and a related concern of the same proprietor was operating from Raipur. The Court further observed that the appellant did not contest jurisdiction at the stage of the show-cause reply and had thereby submitted to the Adjudicating Authority; territorial jurisdiction in these circumstances does not amount to total lack of jurisdiction to render proceedings void. No reason was found to interfere with the Tribunal's reasoning and conclusion on jurisdiction. [Paras 6]

The territorial jurisdiction of the Commissioner, Raipur is sustained and the objection is rejected.

Service versus manufacture - Whether the appellant's activities of fabrication, erection and commissioning amounted to 'manufacture' or were taxable services. - HELD THAT: - The Court agreed with the Tribunal that the appellant's activities constituted a service. The definition of 'manufacture' is inclusive, but the appellant did not own the raw materials supplied by the service recipient and the output lacked independent marketability, being tailor-made to the recipient's specifications. Reliance on authorities was noted by the Tribunal and the Court found no tenable ground to disturb the conclusion that the activity was a taxable service rather than manufacture. [Paras 7]

The activity is a service subject to service tax and not 'manufacture'.

Liability of service provider notwithstanding recipient's payment - Whether the fact that the service recipient (M/s L&T) had, in some instances, paid or would pay service tax precluded recovery from the appellant or amounted to double taxation. - HELD THAT: - The Court accepted the Tribunal's analysis of the statements on record showing that the responsibility to pay service tax lay on the service provider and that the appellant had not taken registration though aware of the requirement. The appellant's defence that it acted on advice of the service recipient was rejected because the recipient's statement indicated it advised subcontractors to register and would pay tax only when the subcontractor claimed it. The appellant's failure to register and discharge tax could not be excused by reliance on the recipient's instructions; ignorance of law was not a defence. [Paras 8]

Recovery from the appellant is sustainable; the contention of double taxation or discharge by the recipient does not absolve the appellant.

Suppression of facts for extended limitation - Whether the extended five-year limitation under the proviso to Section 73 applied to the assessment period on the ground of suppression of facts. - HELD THAT: - The Court concurred with the Tribunal that non-registration and concealment of taxable activity amounted to suppression of facts under clause (d) of the proviso to Section 73(1). Intelligence led the Department to discover the omission, and therefore the extended period of five years for issuance of show-cause notice was correctly invoked. The Tribunal's reasoning that the facts warranted invocation of the proviso was held to be well supported and not liable to interference. [Paras 10]

The extended limitation of five years under the proviso to Section 73(1) is correctly invoked on the ground of suppression of facts.

Penalty and reasonable cause under Section 80 - Whether penalties under the Act (Sections 76, 77 & 78) were unsustainable because the appellant had reasonable cause under Section 80 to escape penalty. - HELD THAT: - The Court rejected the appellant's plea of bona fide reliance on the service recipient as constituting reasonable cause. The appellant's conduct-having registered a sister concern for identical services to the same recipient while not registering the present concern-did not amount to innocent or reasonable cause. The Tribunal's conclusion that the appellant's conduct did not merit exclusion from penalty under Section 80 was endorsed. Consequently, liability for penalties as upheld by the Tribunal stands. [Paras 12]

The appellant is not entitled to relief under Section 80; imposition of penalties is sustainable.

Final Conclusion: The High Court found no substantial question of law warranting interference with the Tribunal's order: jurisdiction is sustained, the activity is taxable as service (not manufacture), extended limitation applies for suppression of facts, the appellant cannot avoid liability on account of the recipient's conduct, and the plea of reasonable cause for exemption from penalties is rejected. The appeal is dismissed.

Retroactive application of exemption - certification under exemption notification - incidence of tax borne by person - unjust enrichment - capitalisation/amortisation of tax and consequent depreciation benefit - Tariff Authority on Major Ports (TAMP) - cost plus tariff determination

Certification under exemption notification - retroactive application of exemption - Sufficiency of the certificate furnished to comply with the authentication requirement of the exemption notification and entitlement to refund on account of restoration of retrospective exemption. - HELD THAT: - The certificate furnished, though issued on the letterhead of the Port Trust, was attested by the Deputy Secretary in the Ministry of Shipping. The exemption notification did not prescribe a specific form or mode of authentication. Attestation by the competent authority in the Ministry of Shipping therefore satisfied the certification requirement. In view of the statutory restoration of the exemption with retrospective effect and the finding of the lower authorities that the claim was filed within the prescribed time, the respondent was entitled to the refund. This disposes of the challenge to certification and the claim to refund on the ground of retrospective exemption. [Paras 2, 4, 7]

Certificate attestation by the Ministry sufficed and entitlement to refund under the restored retrospective exemption upheld.

Incidence of tax borne by person - unjust enrichment - Whether the allegation that the subcontractors had claimed refund or availed benefit, or that the respondent was unjustly enriched, warranted further enquiry or denial of refund. - HELD THAT: - The appellate concern that subcontractors may have claimed refund or availed benefits was based on vague allegations without factual foundation. The Tribunal cannot direct or conduct an enquiry on mere apprehensions; the Committee should have presented factual material that reasonably supported the concern. The lower authorities had examined unjust enrichment and found the bar did not arise; in absence of concrete facts or demonstration of the nature and extent of any benefit availed by subcontractors, the ground is not tenable and does not justify interference with the refund. [Paras 4, 8, 9]

Allegations regarding subcontractors' claims or unjust enrichment were too vague to sustain denial or remand; no enquiry directed.

Capitalisation/amortisation of tax and consequent depreciation benefit - Tariff Authority on Major Ports (TAMP) - cost plus tariff determination - Whether the apprehension that the respondent capitalised the refunded tax (thereby enabling higher depreciation and passing cost to customers) warranted interference with the refund order. - HELD THAT: - The respondent's clarification, accepted by the first appellate authority, indicated the refund amount was shown as receivable from government and not amortised or capitalised prior to commencement of commercial operations in March 2018. Therefore no downstream benefit via depreciation had been realised at the time of the claim. Moreover, charges at major ports are determined by TAMP on a cost-plus basis with safeguards to exclude non-cost items, which mitigates the appellant's apprehension that the refund would be passed to customers unchecked. On these findings there was no reason to disturb the orders of the lower authorities. [Paras 10, 11]

Apprehension of capitalisation/amortisation and passing on of depreciation benefits is unfounded; no interference with refund order.

Final Conclusion: The Tribunal finds the certification requirement complied with, rejects vague allegations concerning subcontractors' claims and alleged unjust enrichment, and finds no substance in the contention that the refund would be capitalised and improperly passed to customers; the orders granting refund are upheld and the appeal is dismissed.

Service of notice by registered post with acknowledgement due versus speed post - violation of principles of natural justice for non-service of show cause notice - proviso to sub section (1) of Section 73 of Finance Act, 1994 and applicability of sub section (3) - suppression of facts as a prerequisite for invocation of proviso to sub section (1) of Section 73

Service of notice by registered post with acknowledgement due versus speed post - violation of principles of natural justice for non-service of show cause notice - Service of the Show Cause Notice by speed post was not established and therefore the appellants were not properly put on notice for imposition of penalty. - HELD THAT: - The Tribunal examined whether service by speed post satisfied the statutory requirement of sending notice by "registered post with acknowledgement due". The Commissioner (Appeal) had held that speed post incorporates features of registered post and that delivery by speed post falls within the purview of the statutory requirement. The Tribunal, however, found no evidence on record that Revenue possessed an acknowledgement or other proof of actual delivery of the Show Cause Notice to the appellants. In absence of proof that the notice reached the addressee, the appellants were not put on notice and could not be afforded the opportunity to defend against the penalty proposal. Consequently, imposition of penalties violated principles of natural justice and cannot be sustained. [Paras 6]

Penalties set aside as service of the Show Cause Notice by speed post was not proved and principles of natural justice were infringed.

Proviso to sub section (1) of Section 73 of Finance Act, 1994 and applicability of sub section (3) - suppression of facts as a prerequisite for invocation of proviso to sub section (1) of Section 73 - Invocation of the proviso to sub section (1) of Section 73 was not justified on facts; therefore sub section (3) could not be held inapplicable. - HELD THAT: - The Tribunal reviewed the circumstances under which the proviso to Section 73(1) was invoked by Revenue and the Commissioner (Appeal)'s conclusion that subsection (3) was not invokable. The record showed that the appellant had filed ST 3 returns and the transactions were reflected in the balance sheet; Revenue had examined ST 3 returns and the balance sheet in determining tax payable. The Tribunal found no element of suppression of facts to justify invocation of the proviso. Given that information was available from the assessee's own records, invoking the proviso was unjustified and the exclusion of sub section (3) was not sustainable on the facts of the case. [Paras 7]

Invocation of the proviso to Section 73(1) was unjustified; the finding that sub section (3) was inapplicable is not sustainable.

Final Conclusion: The penalty imposed on the appellant is set aside for failure of service and for unjustified invocation of the proviso to Section 73(1); the voluntary deposit of service tax with interest is not interfered with and the appeal is allowed.

Summary order. Appeal dismissed as withdrawn on appellant's application; permission to withdraw granted.

Revision by Central Government under Section 35EE(3) of the Central Excise Act, 1944 - court fee payable on revision applications - rebate claim and court fee exemption - quashing of orders for technical non-compliance - remand for fresh decision on merits

Court fee payable on revision applications - rebate claim and court fee exemption - Liability to pay the fee prescribed by Section 35EE(3) for filing a revision under Section 35EE(1) when the subject-matter is a rebate claim. - HELD THAT: - The Court examined Section 35EE(3) in the context of a revision application filed against an order rejecting rebate claims. The statutory scheme prescribes fees linked to demands of duty, interest, fines or penalties, and contains an exception that no fee is payable for applications under sub-section (1A). Applying the provision to the facts, the Court held that where the applicant seeks revision in relation to rebate claims (and not a demand of duty, interest, fine or penalty), the requirement to pay the court fee as insisted upon by the Revisional Authority did not arise. The Court noted that the petitioner had claimed rebate in respect of the matters before the Revisional Authority and, therefore, was not liable to make the additional payment of Rs. 800/- which the Revisional Authority treated as outstanding. [Paras 4, 5, 6, 7]

The petitioner was not liable to pay the additional court fee held to be demanded by the Revisional Authority in relation to the revision of rebate claims.

Quashing of orders for technical non-compliance - remand for fresh decision on merits - Sustainability of the Revisional Authority's dismissal of the revision application for alleged non-payment of court fee and the appropriate remedy. - HELD THAT: - The Court found that the Revisional Authority dismissed the revision application on the technical ground of non-payment of Rs. 800/-, a payment which the Court held the petitioner was not required to make. Given that the dismissal was founded on a technical defect that should not have arisen, the High Court concluded that the impugned orders (the Revisional Authority's order dated 5th December, 2018 and the subsequent order dated 19th August, 2019) could not stand. Rather than deciding the merits itself, the Court revived the revision application and directed that the Revisional Authority decide the matter afresh on merits in accordance with law, rules and the evidence on record, and expeditiously. [Paras 8]

The orders of the Revisional Authority dismissing the revision for alleged non-payment of court fee are quashed and set aside; the revision application is revived and remitted for fresh decision on merits.

Final Conclusion: Writ petition allowed; the Revisional Authority's orders dated 5th December, 2018 and 19th August, 2019 are quashed and set aside. The revision application is revived with the same number and remanded to the Revisional Authority for fresh consideration on merits in accordance with law, rules and the evidence on record.

Admission of appeal for hearing - scope of consideration at admission stage - department bound by prior acceptance of tribunal decision - estoppel by acceptance of principle - liability to remit excise collected on exempted goods under section 11D

Admission of appeal for hearing - scope of consideration at admission stage - department bound by prior acceptance of tribunal decision - liability to remit excise collected on exempted goods under section 11D - Whether the appeal should be admitted for hearing despite competing contentions regarding departmental acceptance of a tribunal decision and the liability to remit excise collected on exempted goods under section 11D. - HELD THAT: - The Court considered rival contentions: that the respondent had collected sums from customers without indicating any component as central excise and that an earlier Tribunal decision (Mayfair Polymers) - allegedly accepted by the department as evidenced by RTI responses - would preclude application of the provision governing remission liability. Reliance was also placed on the principle in Boving Fouress Ltd. that the department, having accepted a tribunal principle, cannot thereafter take a contrary stand in other cases. The revenue contested the factual assertions and maintained that excise collected on exempted goods attracted liability under section 11D as it stood at the relevant time. In view of these competing legal and factual contentions and the authorities relied upon, the Court found it inappropriate to reject the appeal at the admission stage and concluded that the matters raised merited adjudication on the merits.

Appeal admitted for hearing on the questions based on the parties' contentions; notice requirement dispensed with as respondent is represented; paper books to be filed and the appeal listed for hearing; the pending stay application disposed of.

Final Conclusion: The High Court admitted the appeal for full hearing on the contested questions raised by the parties - including whether the department is precluded from contesting a tribunal principle and whether liability under section 11D arises on the facts pleaded - and directed filing of paper books; the interim stay application was disposed of.

Interest on delayed refund - Entitlement to interest from date of deposit till refund - Parity of provisions (pari materia) between statutes - Interest on delayed refund under Section 35FF of the Central Excise Act - Application of Supreme Court precedent in Sandvik Asia Ltd. to Central Excise refunds - Rate of interest on delayed refund

Interest on delayed refund - Entitlement to interest from date of deposit till refund - Application of Supreme Court precedent in Sandvik Asia Ltd. to Central Excise refunds - Parity of provisions (pari materia) between statutes - Appellants are entitled to interest on amounts deposited pursuant to confirmed demands from the date of deposit until the date of refund. - HELD THAT: - The Tribunal held that the principle laid down by the Supreme Court in Sandvik Asia Ltd., though decided under the Income-tax Act, is applicable because the provisions governing payment of interest on delayed refunds in the Income-tax Act and the Central Excise Act are pari materia. The Tribunal examined section 35FF of the Central Excise Act and noted that, like section 243 of the Income-tax Act, it contemplates payment of interest where refund is not made within the prescribed period. Following the Apex Court's reasoning that an assessee whose funds are retained by the Department is entitled to compensation by way of interest, the Tribunal concluded that the appellants must be allowed interest for the intervening period from the date of deposit until realization of the refunded amount. The Tribunal rejected the Revenue's contention that Sandvik is inapplicable because it arose under the Income-tax Act and because the facts differed, observing that the pari materia character of the provisions mandates following the Supreme Court's decision. [Paras 11, 18, 21]

Allow interest on the refunded amounts from the date of deposit till the date of refund.

Rate of interest on delayed refund - Interest under Section 35FF of the Central Excise Act - Interest on the delayed refund shall be payable at 12% per annum. - HELD THAT: - Having held that appellants are entitled to interest, the Tribunal addressed the rate to be applied. Relying on precedent, including the Kerala High Court decision in Sony Pictures Networks India Pvt. Ltd. and consistent Tribunal and High Court practice, the Tribunal fixed the rate of interest at 12% per annum. The Tribunal observed that the Supreme Court's and subsequent authoritative decisions confine the appropriate rate in these circumstances to 12% and therefore adopted that rate for the appellants' refunds. [Paras 19, 21]

Award interest on the refunds at 12% per annum.

Final Conclusion: Appeals allowed; appellants are entitled to interest on the refunded amounts from the date of deposit until realization, to be paid at 12% per annum, with consequential relief.

Power of appellate court to take additional evidence under section 391 Cr.P.C. - exercise of discretion under section 391 only where failure of justice would otherwise result - scope of 'evidence' under section 391 to include documentary as well as oral evidence - not a licence for retrial or to fill lacunae resulting from party's omission - admissibility of documentary production at appellate stage where fact is admitted to prevent failure of justice

Power of appellate court to take additional evidence under section 391 Cr.P.C. - exercise of discretion under section 391 only where failure of justice would otherwise result - Scope and limits of appellate power under section 391 Cr.P.C. - HELD THAT: - Section 391 confers a wide discretion on the appellate court to take or direct the taking of additional evidence but that discretion is controlled by two imperatives: the court must be satisfied that the additional evidence is necessary for a just decision and must record reasons for admitting it. The power is exceptional and must be exercised sparingly to sub-serve the ends of justice and to prevent a failure of justice; it is not to be used as a means to conduct a retrial or to fill lacunae resulting from a party's omission when the party had a fair opportunity to produce the evidence at trial. The court must consider whether admitting evidence would amount to reopening trial issues in a manner prejudicial to the opposing party, and whether justice requires reception of such evidence. [Paras 11]

Section 391 must be exercised sparingly and only where additional evidence is necessary to avoid failure of justice; the appellate court must record reasons when admitting such evidence.

Not a licence for retrial or to fill lacunae resulting from party's omission - Whether documents (other than the reply to the demand notice) sought to be produced by the accused should be admitted at appellate stage - HELD THAT: - The accused sought to tender various documents said to have existed during trial (police diary, complaints, receipts, purchase bills, quotations and bills) but the application admits these documents were in the accused's possession and were omitted to be tendered before the trial court allegedly due to inadvertence of his trial advocate. The court found that the accused had fair opportunities at trial (including use of section 313 and leading defence evidence) and had elicited admissions during cross-examination but nevertheless failed to place the supporting documents on record. Allowing these documents at the appellate stage would effectively reopen the entire trial and amount to a retrial to dislodge statutory presumptions under the Negotiable Instruments Act. In the facts of the case no resultant failure of justice was shown that would justify reception of these documents under section 391. [Paras 17, 20]

Application to admit those documents (excluding the reply to the demand notice) is rejected; the Sessions Judge rightly declined to permit their production.

Scope of 'evidence' under section 391 to include documentary as well as oral evidence - admissibility of documentary production at appellate stage where fact is admitted to prevent failure of justice - Whether the copy of the reply to the demand notice can be produced at the appellate stage and whether 'evidence' under section 391 includes documentary evidence - HELD THAT: - The court rejected the narrow view that 'evidence' in section 391 is limited to oral evidence, observing that under the Evidence Act 'evidence' includes documentary evidence and that Supreme Court precedents permit reception of any kind of additional evidence (formal or substantial) when justified. The fact that the complainant unequivocally admitted that a reply to the demand notice had been given meant there was no dispute as to the fact of reply; consequently adverse inference could not properly be drawn for non-production at trial. To prevent failure of justice the appellate court may permit the accused to place the copy of the reply on record, but this allowance does not entitle the accused to lead fresh evidence at large to prove the correctness of the contents of the reply. [Paras 21, 23]

The copy of the reply to the demand notice dated 4th January 2013 is to be permitted to be produced on the record under section 391; 'evidence' for the purposes of section 391 includes documentary evidence.

Final Conclusion: The revision is allowed in part: the Sessions Judge's rejection of the application is set aside insofar as it refused permission to produce the reply to the demand notice, which the accused may now place on record under section 391 Cr.P.C.; the remainder of the application seeking to admit other documents is dismissed as impermissible at the appellate stage absent a shown failure of justice.

Abuse of dominant position - relevant market delineation - market for online intermediation services for booking of hotels in India - market for franchising services for budget hotels in India - dominance in platform/online intermediation markets - across platform parity agreements (retail Most Favoured Nation / price and room parity) - denial of market access - predatory pricing - excessive / unfair commission - misrepresentation of availability / fake bookings - investigation under Section 26(1) of the Competition Act, 2002 - collective dominance not recognised under Section 4

Collective dominance not recognised under Section 4 - abuse of dominant position - Collective allegation of abuse of dominant position under Section 4 by more than one entity jointly. - HELD THAT: - The Commission held that Section 4 of the Act prohibits unilateral abusive conduct by a dominant player and does not envisages the concept of two or more entities being treated as collectively dominant for the purposes of Section 4. Reliance was placed on the Commission's earlier reasoning in Fast Track Call Cabs matter to conclude that allegations framed as collective abuse fall outside the statutory framework of Section 4 and are therefore not maintainable as such. [Paras 32]

Allegation of collective dominance under Section 4 is rejected as being beyond the legal framework of the provision.

Relevant market delineation - market for online intermediation services for booking of hotels in India - market for franchising services for budget hotels in India - Relevant product and geographic markets for assessment of the Opposite Parties' conduct. - HELD THAT: - From the perspective of hoteliers (the affected side of the platform), the Commission determined that MMT-Go should be assessed in the 'market for online intermediation services for booking of hotels in India' because online intermediation platforms provide distinct intermediation services and are not interchangeable with offline channels or direct booking for the purposes of market definition. For OYO, on the basis of earlier detailed consideration (Case No. 03 of 2019) and the nature of its franchise model, the relevant product market is the 'market for franchising services for budget hotels in India'. The geographic market for OYO's franchising services was taken to be India. [Paras 37, 38, 39, 40, 41]

Relevant markets delineated as: (a) for MMT-Go - market for online intermediation services for booking of hotels in India; (b) for OYO - market for franchising services for budget hotels in India (geographic market: India).

Dominance in platform/online intermediation markets - abuse of dominant position - Prima facie assessment of dominance of MMT-Go and OYO in their respective relevant markets. - HELD THAT: - Having defined the relevant markets, the Commission examined available market share information and market realities. In the delineated online intermediation market MMT-Go (as a group) prima facie holds a dominant position, including reliance on MMT-Go's own investor presentation showing substantial domestic online market share. By contrast, on the basis of its earlier order in Case No. 03 of 2019 and unchanged market dynamics, OYO was prima facie found to be a significant player but not unambiguously dominant in the franchising market. [Paras 43, 46, 47, 48, 49]

Prima facie MMT-Go is dominant in the market for online intermediation services for booking of hotels in India; OYO is a significant player in the franchising market but not prima facie dominant.

Across platform parity agreements (retail Most Favoured Nation / price and room parity) - denial of market access - predatory pricing - excessive / unfair commission - misrepresentation of availability / fake bookings - hotel service fee - Whether the various factual allegations (APPAs/price and room parity, denial of market access, predatory pricing, excessive commission, misrepresentation/fake bookings, discriminatory service fee) warrant further investigation under the Act. - HELD THAT: - The Commission examined the allegations and the contractual clauses cited. Clause 1.3 in MMT-Go's contracts prima facie reflects broad room and price parity obligations (wide APPAs) that, given MMT Go's prima facie dominance, may have foreclosure and consumer welfare effects and thus merit scrutiny under Sections 3(4) and 4. Allegations of exclusion of competitors (denial of market access) in relation to Treebo and Fab Hotels, and of preferential commercial arrangements between MMT and OYO, appear capable of adversely affecting competition and merit investigation. Claims of deep discounting/predatory pricing, excessive commission structures and additional incentive constructs, manipulation of listings (delisting shown as 'no availability') and allegations of discriminatory service fees were all found to be potentially abusive conduct; absent full information on costs, market structure and practices, the Commission refrained from final findings but concluded these matters should be investigated. The Commission declined to make a prima facie finding of abuse against OYO on the fake booking allegation because OYO was not prima facie dominant in its market. [Paras 59, 60, 61, 62, 63]

A prima facie case is made out that the listed practices of MMT Go (and certain arrangements involving OYO) may contravene Sections 3(4) and 4; these matters are directed to be investigated by the Director General. No prima facie abuse finding is made against OYO on the fake booking allegation given its non dominant prima facie position.

Investigation under Section 26(1) of the Competition Act, 2002 - Direction to initiate detailed investigation and scope of that investigation. - HELD THAT: - On the basis of the prima facie findings on market definition, dominance and potentially abusive/restrictive practices, the Commission directed the Director General to carry out a detailed investigation under Section 26(1) into alleged contraventions of Sections 3(4) and 4 by MMT Go and OYO, and to investigate any other party found to be involved. The Commission emphasised that the observations are prima facie and do not constitute final opinions on merits; the DG is to investigate without being influenced by the Commission's observations and report within 150 days. [Paras 64, 65, 66]

Directed detailed investigation by the DG into the identified matters and permitted expansion of scope to other involved parties; report to be submitted within 150 days.

Final Conclusion: The Commission rejected the concept of collective dominance under Section 4, delineated the relevant markets (MMT Go: online intermediation for hotel booking in India; OYO: franchising services for budget hotels in India), found prima facie dominance of MMT Go and that OYO is a significant but not prima facie dominant player, and held that the pleaded parity clauses, exclusionary and pricing practices, commission arrangements, listing practices and related allegations are prima facie capable of contravening Sections 3(4) and/or 4. The Director General is directed to carry out a detailed investigation into these matters (and into other parties if implicated) and to submit a report within 150 days.