TaxTMI Updates e-Newsletter
Dec 02,2021

Sale of land not a supply under GST - Development of land (common amenities) subsumed in land and not a separate supply - Completion certificate irrelevant for taxability of development of land - Application of Section 7 and Schedule III exclusion to sale of land

Sale of land not a supply under GST - Development of land (common amenities) subsumed in land and not a separate supply - Completion certificate irrelevant for taxability of development of land - GST applicability on sale of a developed plot where development is limited to common amenities and consideration is received before issuance of any completion certificate. - HELD THAT: - The Authority examined whether the sale of a plot, after provision of common amenities (drainage, water line, electricity line, land levelling, roads, street lighting) amounts to a taxable supply. It noted that Entry No.5 of Schedule III excludes sale of land from supply, and that Section 7 must be read with that exclusion. The development works undertaken are common amenities for the parcel as a whole and do not result in transfer of any distinct item separate from the land; such developmental works are subsumed in the land and cease to have separate identity. Reliance on allied definitions of land in other statutes supported that things attached to or forming part of land form part of the land. The concept of a completion certificate applies to construction of buildings/complexes and not to development of land; hence receipt of consideration prior to any completion certificate is immaterial where only development of land (common amenities) is involved. Treating such development as a separate taxable supply would lead to an absurd result whereby successive sales of plots would become taxable. Applying these principles to the facts, where development is limited to the stated common amenities and no advance from buyers for development activities is taken and no further development by the applicant will be done after sale, the sale does not constitute a supply within Section 7 of the GST laws and is not taxable. [Paras 7, 8]

The sale of the developed plot, on the facts furnished (development limited to common amenities and no advance taken for development), does not constitute a supply under Section 7 and GST is not applicable.

Final Conclusion: The Authority ruled that, given the stated facts, sale of the developed plot (where development comprises common amenities and no advance is taken and no further development by the applicant will follow) is not a taxable supply under the GST law; other questions raised become redundant.

Classification of goods - essential character - classification of baby wipes - tariff heading 3307 - tariff heading 9619 - Circular No.52/26/2018-GST - applicable GST rate 18%

Classification of baby wipes - tariff heading 9619 - tariff heading 3307 - essential character - Baby wipes are classifiable under tariff heading 3307 and not under tariff heading 9619. - HELD THAT: - The Authority examined the product description, the Explanatory Notes to Chapter 96 (heading 9619) and the Circular dealing with wipes. Heading 9619 covers sanitary towels, tampons, napkins and similar absorbent articles generally composed of multiple layers with an absorbent core and shaped to fit the human body; such articles are designed to absorb and store fluid. The applicant's baby wipes are not designed to absorb and store fluids nor shaped to fit the body, and therefore do not fall within heading 9619. The Circular and HSN explanatory notes show that wipes which are impregnated with perfumes or cosmetics or otherwise have their essential character imparted by such preparations are classifiable under headings such as 3307 (or 3401 if coated with soap/detergent). Applying the GRI principle of essential character to the product's composition, the Authority concluded the impugned baby wipes merit classification under heading 3307. [Paras 11, 13, 14]

Baby wipes merit classification under heading 3307.

Applicable GST rate 18% - Circular No.52/26/2018-GST - classification of goods - The applicable rate of GST on the baby wipes is 18%. - HELD THAT: - The Authority relied on the Circular which explains that wipes made of or impregnated/coated with preparations such as perfumes or cosmetics (bringing them within heading 3307) attract the GST rate applicable to Chapter/heading 3307. The Circular identifies that such wipes are classifiable under HSN 3307 and are chargeable to 18% GST. Having classified the product under 3307, the Authority applied the rate indicated in the Circular and the HSN explanatory notes to determine that 18% GST is applicable. [Paras 12, 14]

GST at 18% is applicable on baby wipes.

Circular No.52/26/2018-GST - classification of goods - essential character - Circular No.52/26/2018-GST is applicable to the applicant's product and supports classification under heading 3307. - HELD THAT: - The Authority noted that the Circular specifically addresses classification of wipes made using non-woven fabrics and clarifies classification under headings including 3307 and 3401 depending on constituents and essential character. The applicant had adopted a cautious view post-issuance of the Circular and reclassified the product under tariff heading 3307. In light of the Circular's explanatory treatment of wipes and the product composition, the Authority held the Circular to be applicable to the applicant and to support the reclassification and rate determination. [Paras 10, 12, 14]

The Circular dated 09.08.2018 is applicable to the applicant.

Final Conclusion: The Authority ruled that the applicant's baby wipes are classifiable under tariff heading 3307, attract GST at 18%, and that Circular No.52/26/2018-GST dated 09.08.2018 is applicable to the applicant.

Composite supply - principal supply - natural bundling - Electrical signaling, safety or traffic control equipment for railways, tramways, roads, inland waterways, parking facilities, port installations or airfields - rate of tax applicable on principal supply

Composite supply - natural bundling - principal supply - Whether the supplies under the contract for Train Collision Avoidance System (TCAS) constitute a composite supply and, if so, identification of the principal supply. - HELD THAT: - The Authority examined the contract (LOA) and the Ministry of Railways handbook describing the TCAS as a system composed of signalling equipment and RFID tags working in unison to achieve a single purpose of railway safety. Applying the definition of composite supply - a naturally bundled supply of two or more taxable supplies where one is the principal supply - and the illustrative guidance on attributes of natural bundling, the Authority found the elements to be integral, supplied together and functioning as a single bundled system. The description in the handbook showed the goods operate collectively as signalling equipment for safety and control, and removal of components would affect the nature of the supply. Consequently, the contract supplies qualify as a composite supply and the principal supply is the signalling equipment forming the core of the TCAS. [Paras 7]

The supplies under the contract are a composite supply and the principal supply is the electrical signalling equipment forming the TCAS.

Electrical signaling, safety or traffic control equipment for railways, tramways, roads, inland waterways, parking facilities, port installations or airfields - rate of tax applicable on principal supply - Classification (HSN) of the principal supply and the GST rate payable on the supply of TCAS. - HELD THAT: - Having identified the principal supply as signalling equipment, the Authority classified the commodity under the description corresponding to HSN 8530 (electrical signalling, safety or traffic control equipment). The Authority noted that this commodity is taxable at the rate notified vide Notification No. 41/2017 dated 14.11.2017, which rendered the supply taxable at 9% under CGST and 9% under SGST. Therefore, the composite supply is taxable at the rate applicable to the principal supply, namely the HSN 8530 rate. [Paras 7, 8]

The principal supply is classifiable under HSN 8530 and the supply of the TCAS is taxable at 9% CGST and 9% SGST (rate of the principal supply).

Final Conclusion: The Authority ruled that the contract supplies of the Train Collision Avoidance System constitute a composite supply whose principal supply is electrical signalling equipment classifiable under HSN 8530, and the composite supply is taxable at the rate applicable to that principal supply - 9% CGST and 9% SGST.

Input Tax Credit - Section 17(5)(d) CGST Act - Plant and machinery exclusion - Leasing of land as supply of service - Non-obstante provision - Interpretation of 'for' vis-a -vis 'used' - GST Council position

Input Tax Credit - Section 17(5)(d) CGST Act - Plant and machinery exclusion - GST paid by GNAL on consideration to GACL for transfer/surrender of leasehold rights is not admissible as input tax credit. - HELD THAT: - The Authority held that Section 17(5) is a non-obstante provision overriding Section 16(1), and that the statutory exclusion of 'land' from the expression 'plant and machinery' means services pertaining to land for construction of immovable property are blocklisted from ITC. The Authority rejected the applicant's submission that the payment relates to plant and machinery because (a) the Explanation expressly excludes land, building or other civil structures from 'plant and machinery', (b) the wordology of clause (d) employs 'for' construction of immovable property - indicating purpose to construct buildings/civil structures on the leased land - and (c) capitalization of subsequent plant and machinery in accounts does not alter the statutory blocking. The Authority also referred to precedents and reasoning permitting contextual reading of 'or' as 'and' where necessary, but concluded that legislative intent to exclude land is explicit and that no mechanism exists under the Act or Rules to permit proportionate credit for portions of land used for open installation versus constructed civil structures. Finally, the Authority noted that the GST Council is seized of and aware of the issue and that its position supports the conclusion that ITC on such leasing is not available. The determinative reasoning is summarized at paras 13, 14, 15 and 16 and applied in the ruling at para 19. [Paras 13, 14, 15, 16, 19]

GST borne by GNAL on the leasehold transfer from GACL is blocked from ITC under Section 17(5)(d) CGST Act and is ineligible for availment.

Final Conclusion: The Advance Ruling holds that the GST paid on the transfer/surrender of leasehold rights in the subject land is ineligible for input tax credit under Section 17(5)(d) of the CGST Act, for the reasons summarized in paras 13-16 and applied at para 19.

Definition of composite supply under Section 2(30) - principal supply in a composite transaction - segregability of charges for determining composite supply - exemption for healthcare services under Notification No.12/2017 - hospital-owned pharmacy versus third-party pharmacy - package treatment versus separately charged supplies

Definition of composite supply under Section 2(30) - principal supply in a composite transaction - segregability of charges for determining composite supply - hospital-owned pharmacy versus third-party pharmacy - package treatment versus separately charged supplies - Whether medicines, consumables and surgical items supplied to an admitted patient are a composite supply of health care services - HELD THAT: - The Authority held that the question is to be decided by applying the definition of composite supply. Where a composite amount is charged to an admitted patient for treatment, surgery or diagnosis and the cost of medicines, consumables and other goods and services is not separable from that composite amount (i.e., forms part of a package), the supplies constitute a composite supply in which the principal supply is the health care service rendered by the clinical establishment. Conversely, if no composite/package amount is charged and the cost of medicines and other items is segregable (charged separately at actuals, or by type/brand/quantity with choice offered), those supplies do not form part of a composite supply of healthcare. Further, where the pharmacy on hospital premises is owned by a separate person, supplies made by such pharmacy to in-patients for use in the course of hospital treatment cannot be treated as the hospital's composite supply. [Paras 7, 8]

Medicines, consumables and surgical items supplied to an admitted patient are a composite supply of healthcare services only when they are inseparable from a composite/package charge for treatment; otherwise they are not; supplies from a separately owned hospital pharmacy are not the hospital's composite supply.

Exemption for healthcare services under Notification No.12/2017 - definition of composite supply under Section 2(30) - segregability of charges for determining composite supply - Whether supply of medicines, consumables etc. to in-patients is exempt under Notification No.12/2017 read with Section 8(a) - HELD THAT: - The Authority ruled that exemption under the Notification is available only when the supply of medicines and allied items to an admitted patient qualifies as a composite supply where the principal supply is healthcare by a clinical establishment and when the conditions of the Notification are otherwise satisfied. If the supplies do not qualify as part of a composite/package (i.e., charges are separable or items are supplied by a separate pharmacy), the supplies will not enjoy the exemption and will be taxable at the rates applicable to those goods or services. [Paras 7, 8]

Exemption under Notification No.12/2017 applies to in-patient supplies only when they meet the composite-supply test (with healthcare as principal supply) and satisfy the notification's conditions; otherwise such supplies are taxable.

Final Conclusion: The Authority ruled that medicines and allied items supplied to admitted patients are treated as composite supply of healthcare (and thus eligible for the notification exemption) only when they are inseparable from a package/composite charge with healthcare as the principal supply; separable or separately charged supplies, including those from a pharmacy owned by a different person, do not form part of the hospital's composite supply and are not covered by the exemption.

Classification of goods for GST - Tariff item 1518 - Levy of GST at 5% under Schedule-I entry no.90 of Notification No. 1/2017 (Rate) - Rectification of clerical/typographical errors under section 102 of the GST Act

Classification of goods for GST - Tariff item 1518 - Levy of GST at 5% under Schedule-I entry no.90 of Notification No. 1/2017 (Rate) - Epoxidised Soyabean Oil is classifiable under tariff item 1518 and taxable at 5% GST as covered by entry no.90 of Schedule I of Notification No. 1/2017-Central Tax (Rate). - HELD THAT: - The Authority examined the product description and found that Epoxidised Soyabean Oil falls within the specific coverage of entry no.90 of Schedule I to Notification No. 1/2017 Central Tax (Rate). On that basis the product is correctly classifiable under tariff item 1518 and attracts GST at the rate of 5%. The ruling was recorded subject to the provisos concerning validity under the statutory scheme (noting the ruling's status under the provisions dealing with validity and voidance). [Paras 8]

Epoxidised Soyabean Oil is held classifiable under tariff item 1518 and liable to GST at 5%.

Rectification of clerical/typographical errors under section 102 of the GST Act - Typographical errors in the original advance ruling (incorrect GSTIN on first page and incorrect order number) were rectified. - HELD THAT: - The applicant pointed out typographical errors in the original order: an incorrect GSTIN on page one and an incorrect order number. Upon perusal the Authority found these to be accidental and apparent on the record and rectified them accordingly, replacing the incorrect GSTIN with the correct one and amending the order number from 04/2020 to 04/2021. The remainder of the original ruling was left intact. [Paras 6]

The original ruling is rectified to correct the GSTIN and the order number; remaining aspects of the ruling remain unchanged.

Final Conclusion: The Advance Ruling is affirmed to the extent that Epoxidised Soyabean Oil is classifiable under tariff item 1518 and taxable at 5% (as per entry no.90 of Schedule I to Notification No. 1/2017), and the impugned order is rectified to correct typographical errors in the GSTIN and the order number; the original ruling otherwise remains in force.

Composition scheme under Section 10 - Supply of goods not leviable to tax - Exclusion of manufacturers from composition - Interpretation of Pan Masala and Gutka as goods attracting exclusion - Second proviso to Notification No. 14/2019-CT - goods excluded from composition

Composition scheme under Section 10 - Supply of goods not leviable to tax - Exclusion of manufacturers from composition - Interpretation of Pan Masala and Gutka as goods attracting exclusion - Second proviso to Notification No. 14/2019-CT - goods excluded from composition - Whether the applicant, a trader proposing to sell betel leaves, pan shop products and Gutka, is eligible for the Composition Scheme under Section 10 of the GST Act. - HELD THAT: - The authority examined the applicant's declared business of operating a Pan Shop and the list of goods intended to be sold. Betel leaves (Pan) are taxed at nil rate by Entry No. 93 in Notification No. 02/2017-Central Tax (Rate). The definition of Pan Masala (and the typical composition of Gutka) in the Chapter Notes shows that Gutka and Pan Masala are preparations involving betel nut with lime, katha and possibly tobacco. The Authority found that sale and also in shop preparation of Gutka (mixing bought ingredients to produce a distinct product) amounts to manufacture for the purpose of the Notifications. Notification No. 14/2019-CT and its table list Pan Masala and goods under Chapter 24 (tobacco and manufactured tobacco substitutes) among goods for which composition is not available. Section 10(2)(b) excludes persons engaged in the supply of goods that are not leviable to tax from the scheme, and other provisos and entries exclude manufacturers and specified goods. Applying these provisions and entries to the applicant's declared activities, the Authority concluded that the applicant's case is covered by the restrictive conditions in Section 10(2)(b) and 10(2)(e) and by the exclusions in Notification No. 14/2019-CT, so the applicant cannot avail composition. [Paras 7, 8]

The applicant is not eligible for the Composition Scheme under Section 10 of the GST Act in respect of the declared Pan Shop activities.

Final Conclusion: Ruling: Benefit of the Composition Scheme under Section 10 is not available to the applicant for the declared Pan Shop business; other questions withdrawn by the applicant are not adjudicated.

Classification under HSN 8424 - applicability of GST rate 12% (6% CGST + 6% SGST) - parts suitable for use solely or principally with sprinklers/drip irrigation systems - parts of general use to be classified under their respective headings - rectification of an advance ruling to correct a typographical error - validity of ruling subject to section 103(2) and section 104(1) of the GST Act

Classification under HSN 8424 - applicability of GST rate 12% (6% CGST + 6% SGST) - parts suitable for use solely or principally with sprinklers/drip irrigation systems - parts of general use to be classified under their respective headings - Sprinklers, drip irrigation systems including laterals (pipes to be used solely with sprinklers/drip irrigation systems) and parts suitable for use solely or principally with such systems are classifiable under HSN 8424 and attract GST at 12%; parts of general use are to be classified and taxed according to their appropriate headings. - HELD THAT: - Having regard to the clarification in Circular No.155/11/2021-GST dated 17.06.2021, the Authority held that items described as sprinklers and drip irrigation systems, including laterals which are pipes to be used solely with sprinklers or drip irrigation systems, and parts suitable for use solely or principally with those systems, fall within chapter heading/tariff item No. 8424 and entry No.195B of Schedule II to Notification No.01/2017-Central Tax (Rate). Those goods therefore attract GST at the rate of 12% (6% CGST and 6% SGST), even when supplied separately. The Authority expressly excluded parts of general use from this classification: such parts, if classifiable in headings other than 8424 in accordance with Section and Chapter Notes to the HSN, shall attract the GST applicable to their respective headings.

Goods as described are classifiable under HSN 8424 and taxable at 12%; general use parts are taxed as per their respective headings.

Rectification of an advance ruling to correct a typographical error - validity of ruling subject to section 103(2) and section 104(1) of the GST Act - The earlier advance ruling was rectified to correct a typographical error clarifying that 'laterals' refers to pipes to be used solely with sprinklers/drip irrigation systems; the rectified ruling is issued and remains subject to statutory provisions on validity and voidance. - HELD THAT: - On review, the Authority found a typographical error in the phrasing of paragraph 8.1 of the original ruling which could be read to imperfectly describe the intended scope. The rectification replaces the earlier language with wording that specifies laterals as pipes to be used solely with sprinklers/drip irrigation systems and confirms that parts solely or principally for such systems are covered. The remainder of the original ruling is unaffected. The Authority reiterated that the ruling's operation remains subject to the conditions in section 103(2) and to being declared void under section 104(1) of the GST Act.

Original ruling rectified to correct typographical error; rectified ruling issued and remains subject to statutory provisions regarding validity and voidance.

Final Conclusion: The Authority ruled that sprinklers, drip irrigation systems and laterals that are pipes to be used solely with those systems, and parts suitable for use solely or principally with them, are classified under HSN 8424 and attract GST at 12% (6% CGST + 6% SGST); parts of general use are to be classified and taxed under their appropriate headings. The earlier ruling was rectified to correct a typographical error, and the rectified ruling stands subject to the statutory provisions on validity and voidance.

Summary order. Application for advance ruling withdrawn at applicant's request; Authority accepted withdrawal and dismissed the application without adjudication on merits.

Classification under Heading 8424 - entry 195B of Schedule II to Notification No. 1/2017-Central Tax (Rate) - applicability of 12% GST (6% CGST + 6% SGST) to micro irrigation systems - laterals and parts "solely or principally" for sprinklers/drip irrigation - distinction between parts classifiable under 8424 and parts of general use

Classification under Heading 8424 - entry 195B of Schedule II to Notification No. 1/2017-Central Tax (Rate) - applicability of 12% GST (6% CGST + 6% SGST) to micro irrigation systems - Whether sprinklers, drip irrigation system including laterals, P.V.C. pipes and other components and accessories are classifiable under chapter heading 8424 and covered by entry 195B thereby attracting GST at 12% (6% CGST and 6% SGST). - HELD THAT: - The Authority examined the wording and legislative history of entry 195B (inserted by Notification No.06/2018) and relevant CBIC clarifications. CBIC Circular No.81/55/2018 clarified that the term "sprinklers" in entry 195B was intended to cover sprinkler irrigation systems and that the GST Council recommended a 12% rate on micro irrigation systems including laterals. Further, CBIC Circular No.155/11/2021 clarified that laterals (pipes to be used solely with sprinklers/drip irrigation) and parts suitable for use solely or principally with sprinklers or drip irrigation system, classifiable under heading 8424, attract 12% GST even when supplied separately. The Authority applied these administrative clarifications and the chapter classification rule to hold that the item description in entry 195B embraces sprinklers, drip irrigation systems including laterals and related components when classifiable under heading 8424, and that such goods therefore attract GST at 12% (6% CGST + 6% SGST). The Authority also recorded the corollary that parts of general use which are classifiable in headings other than 8424 will attract the GST rate applicable to their respective headings. [Paras 7, 8]

Sprinklers; drip irrigation system including laterals, PVC pipes and other components and accessories classifiable under chapter heading 8424 and covered by entry 195B shall attract GST at 12% (6% CGST and 6% SGST); laterals/parts used solely or principally with such systems and classifiable under 8424 attract 12% even if supplied separately, while parts of general use classified outside 8424 attract rates applicable to their headings.

Final Conclusion: The Authority holds that the applicant's goods, if classifiable under chapter heading 8424 and falling within entry 195B, are liable to GST at 12% (6% CGST + 6% SGST); parts and laterals solely or principally for such systems classifiable under 8424 likewise attract 12%, whereas parts of general use classified elsewhere attract the rate applicable to those headings.

Refund under Section 54(1) - limitation period - relevant date for refund claims - classification of payment as tax or deposit - refiling after deficiency under Rule 90

Refund under Section 54(1) - limitation period - relevant date for refund claims - refiling after deficiency under Rule 90 - Refund claim is barred by limitation under Section 54(1) and the fresh refund filed on 21.09.2020 is beyond the prescribed period. - HELD THAT: - The Appellate Authority examined whether the refund application fell within the two-year period from the relevant date as defined in the Act. The jurisdictional officer took the relevant date as the date of payment/entry in GSTR-3B (19.04.2018) and determined that the two-year period expired before the claimant's re-filed application dated 21.09.2020. Although the appellant had earlier filed refund applications and received deficiency memos, the fresh claim filed under sub rule (3) of Rule 90 on 21.09.2020 did not cure the delay for purposes of the limitation prescribed by Section 54(1). The Authority also noted that extensions by notifications (cited in the order) extended the last date to 31.08.2020, but the re-filed claim remained after that date. Having considered the statutory scheme and the chronology of filings and deficiency communications, the Authority concluded there was no legal ground to treat the claim as within time. [Paras 7, 10, 11]

The appeal is rejected insofar as the refund claim is barred by limitation and the re-filed application dated 21.09.2020 is time barred.

Classification of payment as tax or deposit - refund under Section 54(1) - limitation period - The excess amounts paid by the appellant are payments made under the GST tax head and cannot be characterised as deposits; therefore the refund claim is examinable only under Section 54 and the Rules. - HELD THAT: - The appellant contended the amounts were collected without authority and were in the nature of deposits, not tax, and relied on pre GST precedents. The Authority found that the excess payments were made in the GST tax head, credit notes were issued and reflected in GSTR 01 returns, and no specific post GST provision other than Section 54 and the accompanying Rules provides for refund of such excess. Consequently, pre GST decisions cited by the appellant were held inapplicable. The Authority concluded that the claim must be considered under the statutory framework of Section 54 and related rules, and thus the limitation under Section 54(1) applies. [Paras 8, 9]

The appellant's contention that the payments were deposits rather than tax is rejected; the refund claim falls to be considered under Section 54 and Rules, and is subject to its limitation.

Final Conclusion: The Appellate Authority condoned the delay in filing the appeal but rejected the refund claim on merits: the excess payments are taxable receipts (not deposits) and the re filed refund application dated 21.09.2020 is time barred under Section 54(1) of the CGST Act, 2017, accordingly the appeal is dismissed.

Power under Section 263 to revise assessments - erroneous and prejudicial to the interest of revenue test - carry forward and set off of unabsorbed depreciation beyond eight years - effect of amendment to Section 32(2) and CBDT Circular No.14/2001 - precedential applicability of Peerless General Finance decision

Power under Section 263 to revise assessments - erroneous and prejudicial to the interest of revenue test - Malabar Industrial Co. Ltd. principle - Validity of the Commissioner's exercise of power under Section 263. - HELD THAT: - The Court affirmed the Tribunal's application of the settled two fold test for invoking Section 263 - the impugned assessment order must be shown to be both erroneous and prejudicial to the revenue - following the principle applied in Malabar Industrial Co. Ltd. The Tribunal correctly required simultaneous satisfaction of these conditions before exercising revisionary power, and the High Court found no error in that approach or in the Tribunal's conclusion quashing the Section 263 order.

The exercise of power under Section 263 was improperly invoked and the Tribunal's quashing of the Commissioner's order is affirmed.

Carry forward and set off of unabsorbed depreciation beyond eight years - effect of amendment to Section 32(2) and CBDT Circular No.14/2001 - precedential applicability of Peerless General Finance decision - Whether unabsorbed depreciation from earlier years (including 1997-98) could be carried forward and set off beyond the eight year limit in view of the amendment to Section 32(2) and related CBDT guidance. - HELD THAT: - The Court agreed with the Tribunal that the question is no longer res integra and that the amendment to Section 32(2) (as explained by CBDT Circular No.14/2001) dispensed with the eight year restriction for unabsorbed depreciation insofar as unabsorbed amounts available as on 1 April 2002 (A.Y. 2002-03) would be governed by the amended provision. The decision surveyed precedents (including Gujarat, Bombay, Punjab & Haryana High Courts and subsequent treatments) holding that unabsorbed depreciation carried into A.Y. 2002-03 is to be dealt with under the amended Section 32(2) and is available for carry forward and set off without temporal limit. Reliance on Peerless was held not to assist the revenue in the circumstances; the Tribunal correctly applied the statutory amendment and explanatory circular to allow the carry forward in the assessment under challenge.

The allowance of carry forward and set off of unabsorbed depreciation beyond the eight year period (as applied to the assessment in question) is upheld and the Tribunal's decision in favour of the assessee is affirmed.

Final Conclusion: The appeal is dismissed. The High Court affirms the Tribunal's quashing of the Commissioner's Section 263 order and upholds the Tribunal's conclusion permitting carry forward and set off of unabsorbed depreciation in the circumstances, answering the substantial questions of law against the revenue.

Addition under the provisions of Section 69A - addition on conjectures and surmises - nexus between impounded documents and the assessee - burden on Revenue to establish connection between seized papers and assessee - appellate deletion of additions upheld for lack of evidence

Addition under the provisions of Section 69A - addition on conjectures and surmises - nexus between impounded documents and the assessee - Deletion of the addition of Rs. 2,62,40,000/- made under Section 69A was justified. - HELD THAT: - The impugned paper bearing the entry 'Parvez Sir' was found during survey at the premises of Alliance Hotel and not from the person declared as the assessee, and its contents were not in the assessee's handwriting. A partner of Alliance Hotel disavowed that the entry referred to the assessee, and the assessee also denied being 'Parvez Sir'. The Assessing Officer made the addition based on conjecture, including inference from dates on the documents, without producing concrete evidence linking the impounded papers to the assessee or showing money found with him. In the absence of any evidentiary nexus or effort by the Revenue to establish that the entry referred to the assessee, the appellate authorities were correct to delete the addition. [Paras 5, 6]

Addition of Rs. 2,62,40,000/- deleted was correctly upheld by the appellate authorities for want of evidence linking the documents to the assessee.

Addition under the provisions of Section 69A - burden on Revenue to establish connection between seized papers and assessee - appellate deletion of additions upheld for lack of evidence - Deletion of the addition of Rs. 40,00,000/- made under Section 69A was justified. - HELD THAT: - Loose papers found at Alliance Hotel formed the only basis for the addition; those papers did not identify the assessee conclusively, were not in his handwriting, and were not recovered from him. The Assessing Officer did not bring forward concrete evidence to establish that the impounded entry referred to the assessee, and therefore the addition rested on surmise. Given the absence of any affirmative linkage or money found with the assessee, the CIT(A) and the ITAT were entitled to delete the addition. [Paras 5, 6]

Addition of Rs. 40,00,000/- deleted was correctly upheld by the appellate authorities for lack of evidentiary nexus.

Final Conclusion: The High Court dismisses the Revenue's appeal, holding that the appellate authorities did not err in deleting the additions made under Section 69A where the Assessing Officer failed to establish a factual nexus between the impounded papers and the assessee and the additions rested on conjecture.

Deduction under Section 80IB(10) - commencement of development for housing project - completion of housing project before prescribed date - revisionary jurisdiction under Section 263 - stepping into the shoes of prior developer

Deduction under Section 80IB(10) - commencement of development for housing project - stepping into the shoes of prior developer - Whether the assessee was precluded from claiming deduction under Section 80IB(10) because the housing project had commenced before 1st October 1998. - HELD THAT: - The Tribunal and CIT(A) found on the facts that though an initial plan and commencement certificate were obtained by Bombay Gas Co. Ltd. in 1992, Bombay Gas Co. Ltd. had not incurred development or construction expenditure for the housing project prior to 1st October 1998; the limited expenditure found related only to strengthening a boundary wall. The material plan on which the assessee carried out development was different from the 1992 plan and a revised building plan permitting the development as executed was approved only in 2003. The assessee acquired development rights and took possession in 2003 and is a distinct entity from Bombay Gas Co. Ltd. Applying these factual findings, the court concluded there was no perversity or error of law in the ITAT's conclusion that the condition of commencement on or after 1st October 1998 was satisfied and that the assessee could not be treated as having 'stepped into the shoes' of Bombay Gas Co. Ltd. for the purpose of disallowing the deduction. [Paras 6, 7, 8]

The finding of the Tribunal allowing the deduction on the commencement point is upheld and the appeal on this question is dismissed.

Deduction under Section 80IB(10) - completion of housing project before prescribed date - revisionary jurisdiction under Section 263 - Whether the assessee failed to satisfy the condition of completion of the project on or before 31st March 2008 so as to disentitle it from deduction under Section 80IB(10). - HELD THAT: - The court observed that the question regarding completion before 31st March 2008 has been addressed by an earlier decision of this court in Income Tax Appeal No.1027 of 2016 (order dated 16th January 2019). Relying on that position, the present appeal does not raise a fresh substantial question of law on the completion point and the Revenue's challenge in that regard was not pressed as a distinct legal controversy requiring reversal of the Tribunal's view. [Paras 5]

The completion-point question stands as answered by the earlier order and does not sustain the appeal; no separate interference is warranted.

Final Conclusion: The Tribunal's allowance of the deduction under Section 80IB(10) is affirmed: the commencement condition was satisfied on the facts and the completion-point has been dealt with by an earlier decision; the Revenue's appeals are dismissed.

Reopening of assessment under Section 148 - reason to believe - tangible material - change of opinion - deduction under Section 80P - assessment within four years - proviso to section 147 not attracted

Reopening of assessment under Section 148 - reason to believe - tangible material - change of opinion - deduction under Section 80P - Validity of the notice dated 14/3/2019 under Section 148 and the order rejecting objections dated 31/10/2019 insofar as reopening assessment for Assessment Year 2014-2015. - HELD THAT: - The Court held that exercise of power to reopen under Section 147/148 must rest on a 'reason to believe' supported by tangible material and cannot be a mere change of opinion. Here the Assessing Officer had raised the specific contention regarding eligibility of deduction under Section 80P during the original assessment by issuing notices under Section 142, the petitioner had replied and the assessment under Section 143(3) accepted the deduction. The reasons supplied for reopening merely reasserted the Revenue's view that interest from co-operative banks did not qualify under Section 80P without pointing to any new tangible material that could justify formation of a fresh reason to believe. As the reassessment was within four years, the proviso to Section 147 did not apply, but that does not dispense with the statutory requirement of tangible material. Applying the principle that reopening cannot be used to effect a review or a change of opinion (as explained in Kelvinator and related authorities), the Court found the reopening was without requisite tangible material and therefore impermissible. [Paras 10, 11, 12, 14, 15]

The notice for reopening and the order rejecting objections were quashed and set aside for lack of tangible material and because the action amounted to impermissible change of opinion.

Final Conclusion: The petition is allowed; the notice dated 14/3/2019 under Section 148 and the order dated 31/10/2019 rejecting the objections are quashed and set aside.

Penalty under Section 271(1)(c) for concealment of particulars of income or furnishing inaccurate particulars - requirement of a valid show cause notice under Section 274 specifying the precise charge - distinction between concealment of particulars and furnishing inaccurate particulars - invalidity of standard printed proforma notices issued without striking off irrelevant clauses or application of mind - necessity of assessing officer's satisfaction being clear and communicated to the assessee for levy of penalty

Requirement of a valid show cause notice under Section 274 specifying the precise charge - distinction between concealment of particulars and furnishing inaccurate particulars - invalidity of standard printed proforma notices issued without striking off irrelevant clauses or application of mind - Validity of the penalty imposed under Section 271(1)(c) where the notice under Section 274 was issued in a standard printed form without striking off the irrelevant portion and without clearly specifying whether the charge was concealment of particulars or furnishing inaccurate particulars of income. - HELD THAT: - The Court affirmed the Tribunal's view that penalty under Section 271(1)(c) can be levied only when the Assessing Officer is satisfied that the assessee has either concealed particulars of income or furnished inaccurate particulars of such income, and that the assessee must be informed which charge is being alleged so that he may defend himself. A show cause notice in the standard printed proforma which leaves both alternatives intact and does not indicate which charge is pressed lacks clarity and is liable to be treated as vague. The Tribunal correctly followed earlier decisions, including the High Court decision in Manjunatha Cotton and Ginning Factory and other authorities which hold that a notice issued without application of mind and without striking off irrelevant portions is defective; an order of penalty passed pursuant to such defective notice cannot be sustained. The Court found no ground to interfere with the Tribunal's conclusion that the notice was defective and that the consequent penalty was invalid.

Penalty imposed under Section 271(1)(c) was deleted because the show cause notice under Section 274 was defective for failing to specify the precise charge; the Tribunal's and CIT(A)'s orders cancelling the penalty are upheld.

Necessity of assessing officer's satisfaction being clear and communicated to the assessee for levy of penalty - penalty as a civil consequence and relevance of voluntariness of disclosure/payments - Whether the Tribunal erred in deleting the penalty by relying on the assessee's suo motu declaration to authorities and payment of taxes prior to any action or notice. - HELD THAT: - The Court considered the factual finding recorded by the CIT(A) and accepted by the Tribunal that the notice itself was defective; having regard to the legal requirement that the assessee be informed of the specific charge, the Tribunal's reliance on the assessee's voluntary disclosure and pre notice tax payment did not operate in isolation but formed part of the factual matrix; however, the determinative ground for deletion remained the invalidity of the show cause notice. The Division Bench observed that prior decisions, including the decision of this Court in Principal Commissioner of Income Tax - 19 Kolkata Vs. Dr. Murari Mohan Koley, support cancellation of penalty where the procedural defect in the notice is established. Accordingly, no separate error is found in the Tribunal's approach.

Tribunal's confirmation of CIT(A)'s order deleting the penalty, including where it noted the assessee's voluntary disclosure and tax payment, is sustained; appeal dismissed on this ground.

Necessity of assessing officer's satisfaction being clear and communicated to the assessee for levy of penalty - Whether Section 271(1)(c) requires recording in clear terms the Assessing Officer's satisfaction about concealment or furnishing inaccurate particulars either in the assessment order or in the show cause notice. - HELD THAT: - The Court endorsed the principle that for levy of penalty under Section 271(1)(c) the charge against the assessee must be clear and that the notice must convey to the assessee which of the two distinct charges is being alleged; absence of such clarity in the notice, which results from use of the unmodified printed proforma, renders the notice defective. The Court reasoned that communication of the Assessing Officer's satisfaction as to the specific charge is essential to procedural fairness and to enable effective defence, and therefore an order of penalty founded on a notice lacking that communication cannot be upheld.

Section 271(1)(c) requires that the nature of the charge (concealment or furnishing inaccurate particulars) be clearly communicated; where such communication is absent in the notice or assessment process, penalty cannot be sustained.

Final Conclusion: The appeal is dismissed. The High Court upholds the CIT(A) and the Tribunal in deleting the penalty under Section 271(1)(c) because the show cause notice under Section 274 was defective for not specifying the precise charge and for being issued in a standard proforma without striking off irrelevant clauses; the substantial questions of law are answered against the revenue and the stay application is dismissed.

Exercise of power under Section 263 of the Income Tax Act - enquiry into genuineness of share application money under Section 68 - retrospective operation of the proviso to Section 68 - relevance of the source of source in income-tax enquiries - no substantial question of law

Exercise of power under Section 263 of the Income Tax Act - enquiry into genuineness of share application money under Section 68 - relevance of the source of source in income-tax enquiries - Validity of the Commissioner's invocation of power under Section 263 to direct inquiries into share capital credited as share application money. - HELD THAT: - The Court held that the Tribunal correctly confirmed the Commissioner's order under Section 263 directing inquiries into share capital received at high premium. The decision follows the Coordinate Bench reasoning in Rajmandir Estates Private Ltd. and related precedents which sustain that an assessing authority or the Commissioner may inquire into any sum found credited in the books, including share application money, and that facts such as payment by cheque or corporate status of applicants are neutral and do not dispel the need for enquiry. The Court observed that the factual features in the present appeals-fresh share capital issued at high premium and similar account particulars-were substantially similar to those considered by the Coordinate Bench, and that the Special Leave Petition against that bench's judgment was dismissed by the Supreme Court. Consequently the appeal raising these contentions was dismissed as covered by precedent. [Paras 14, 16]

The Tribunal's confirmation of the Commissioner's exercise of power under Section 263 to direct inquiries into the share application monies is sustained and the appeal is dismissed.

Retrospective operation of the proviso to Section 68 - no substantial question of law - Whether the appeal raises any substantial question of law warranting admission. - HELD THAT: - The Court found the points urged by the appellants-chiefly that the proviso to Section 68 has no retrospective operation and that therefore inquiries would be impermissible-were covered by the Coordinate Bench decision in Rajmandir Estates Private Ltd. The Coordinate Bench did not decide the question of retrospectivity in that case and this Court similarly did not find it necessary to resolve the issue of retrospective operation of the proviso to Section 68 for disposal of these appeals. Having regard to the coverage by precedent and dismissal of the Special Leave Petition, the Court held there was no substantial question of law for consideration in these appeals. [Paras 16]

No substantial question of law arises; appeals are dismissed.

Final Conclusion: Appeals dismissed following the Division Bench precedent in Rajmandir/Pragati line of decisions; the Tribunal's confirmation of the Commissioner's directives for inquiry under Section 263 is sustained and there is held to be no substantial question of law for consideration.

Allowance of depreciation on intangible assets during suspension of business operations - application of Section 40A(2) for disallowance of expenditure as excessive or unreasonable having regard to fair market value and legitimate needs - requirement of Assessing Officer to form an independent opinion supported by material on fair market value - insufficiency of auditors' report alone to justify disallowance under Section 40A(2) - distinction between bona fide commercial transaction and tax evasion motive in applying Section 40A(2) - Tribunal's interference standard - perversity and incorrect application of law

Allowance of depreciation on intangible assets during suspension of business operations - Validity of ITAT's allowance of depreciation on intangible assets despite auditor's report noting suspension of hotel operations. - HELD THAT: - The Court noted that question regarding allowance of depreciation was covered by an earlier order of this Court dated 17th December 2018 in related appeals and did not raise a fresh substantial question of law. The appellant relied on the auditor's report indicating suspension of hotel operations, but the Court treated this matter as squarely governed by the prior decision. No further interference with the Tribunal's allowance of depreciation was warranted in the present appeal. [Paras 2]

Question concerning depreciation allowance is covered by this Court's earlier order and does not sustain a substantial question of law in the present appeal.

Application of Section 40A(2) for disallowance of expenditure as excessive or unreasonable having regard to fair market value and legitimate needs - requirement of Assessing Officer to form an independent opinion supported by material on fair market value - insufficiency of auditors' report alone to justify disallowance under Section 40A(2) - distinction between bona fide commercial transaction and tax evasion motive in applying Section 40A(2) - Tribunal's interference standard - perversity and incorrect application of law - Validity of ITAT's deletion of disallowance of interest paid on fully convertible debentures on the ground that Section 40A(2) was not correctly applied by the Assessing Officer. - HELD THAT: - The Court analysed the Assessing Officer's reliance on the auditors' comment and the familial connection between a director of the creditor and the assessee. It observed that even assuming the creditor falls within the class covered by clause (b) of sub section (2) of Section 40A, the statutory test requires the Assessing Officer to form a personal opinion that the expenditure is excessive or unreasonable having regard to the fair market value or the legitimate needs and benefit to the assessee. The Assessing Officer had not placed any material to determine what the fair market rate of interest would have been nor recorded findings to show that the interest paid was excessive; mere reliance on the auditors' remark was held to be insufficient. The Tribunal correctly emphasised that provisions like Section 40A(2) are intended to curb tax evasion through unreasonable payments and should not be applied so as to penalise bona fide commercial transactions. The factual matrix - roll over of short term debentures at an agreed higher rate, disclosure and taxation of interest by the creditor, and the assessee declaring a loss for the year - supported the Tribunal's conclusion. The Court found no perversity or incorrect principle applied by the Tribunal and held that the question, as presented, did not raise a substantial question of law. [Paras 4, 5, 6, 7, 8]

Deletion of the disallowance of interest by the Tribunal is sustainable; the Assessing Officer's action based on the auditors' comment without independent material on fair market value does not justify disallowance under Section 40A(2).

Final Conclusion: The appeal is dismissed for lack of merit; the Tribunal's allowance of depreciation and deletion of the disallowance of interest are sustained, with no order as to costs.

Bogus purchases - genuineness of purchases - onus of proof and shift of burden - banking evidence as proof of payment - failure of Assessing Officer to conduct independent inquiry/verification - service of notice under Section 133(6) of the Income Tax Act, 1961

Bogus purchases - genuineness of purchases - banking evidence as proof of payment - onus of proof and shift of burden - Deletion of addition made on account of alleged bogus purchases was justified. - HELD THAT: - The Tribunal's conclusion that the assessee discharged its onus was upheld. The assessee produced books of account, item-wise stock registers, photographs of promotional activities, delivery challans, confirmations from retailers and bank statements showing payments by account-payee cheques. On these materials the ITAT found that the assessee had produced sufficient evidence of receipt and distribution of goods, thereby shifting the onus to Revenue to carry out independent verification. The Assessing Officer relied primarily on information from investigation agencies and sales-tax notifications branding certain suppliers as hawala dealers but did not undertake dispassionate consideration of the bank-payment evidence nor conduct further independent enquiries to rebut the assessee's documentary proof. Given that the Tribunal applied the correct test to the primary materials produced by the assessee, its deletion of the addition was not perverse and did not raise a substantial question of law for interference. [Paras 3, 4, 6]

Tribunal's deletion of addition for alleged bogus purchases affirmed and addition struck down.

Service of notice under Section 133(6) of the Income Tax Act, 1961 - failure of Assessing Officer to conduct independent inquiry/verification - AO's reliance on unserved notices and investigation reports without independent verification was inadequate to sustain the addition. - HELD THAT: - The Assessing Officer stated that notices under Section 133(6) remained unserved or that premises were locked/not traceable, but did not explain steps taken or whether addresses were the registered offices obtainable from corporate records. The AO also relied on affidavits and statements attributed to company directors without producing them for cross-examination or showing why personal attendance could not be secured. The court noted that the AO could have sought bank payee details or undertaken further verification; mere reference to sales-tax notifications or investigation office notes, without conducting or recording independent enquiries, was insufficient to negate the documentary evidence produced by the assessee. [Paras 3, 5, 8]

Assessing Officer's procedural and evidential steps were held inadequate; reliance thereon did not justify sustaining the addition.

Final Conclusion: Appeals dismissed; Tribunal's deletion of the addition for alleged bogus purchases upheld on the basis that the assessee discharged its onus by documentary evidence and the Assessing Officer failed to undertake necessary independent verification.

Mercantile system of accounting - accrued liability versus contingent liability - binding announcement/contractual obligation as creating liability in praesenti - deduction under Section 80IA (profits and gains of industrial undertaking) - manufacture/production - commercial transformation test - unit-wise computation of profits for deduction under Section 80IA - allowability of interest under Section 36(1)(iii) - borrowing for the purpose of business

Mercantile system of accounting - accrued liability versus contingent liability - binding announcement/contractual obligation as creating liability in praesenti - Whether the provision made for foreign travel incentives announced during the year was deductible as an accrued liability or was only a contingent liability not allowable as deduction. - HELD THAT: - The Court accepted that respondent followed the mercantile system of accounting and applied the principle that an expense which represents a liability incurred in the accounting year may be debited though payment falls in a later year. Relying on the reasoning in Calcutta Co. Ltd., the Court held that the unconditional announcement of the foreign travel scheme gave rise to an obligation in praesenti (a liability to be discharged in future) and was not a contingent liability. The ITAT's finding that a binding contract/undertaking arose on announcement and that the liability was ascertainable and deductible under mercantile accounting was endorsed. The subsequent actual payments in later years and the possibility of estimating the expenditure did not convert the liability into a contingency. [Paras 6]

Provision for foreign travel incentive expenses announced in the relevant year is an accrued liability deductible in that year under the mercantile system of accounting; the ITAT's allowance was upheld.

Deduction under Section 80IA (profits and gains of industrial undertaking) - manufacture/production - commercial transformation test - unit-wise computation of profits for deduction under Section 80IA - Whether the assessee's seed processing activity qualified as an industrial undertaking eligible for deduction under Section 80IA and whether deduction could be allowed despite an overall loss declared in the business head by the assessee. - HELD THAT: - On the factual matrix the Court agreed with the ITAT that the multi-stage processing of raw seeds (cleaning, chemical treatment, destoning, grading, testing, fungicidal treatment and packing) produced a commercially different commodity used solely for cultivation and not consumption, thus satisfying the commercial transformation/manufacture test required for an industrial undertaking. Consequently the units were eligible undertakings under Section 80IA. The Court further construed Section 80IA as requiring the profits and gains of each eligible business or unit to be determined as if it were the only source of income (including the non-obstante provision in subsection (7)), and hence the entitlement to deduction must be assessed unit-wise. The deduction cannot be denied because the assessee as a whole (or some other unit) made an overall loss; an eligible unit's profits are to be considered independently for computing the deduction. [Paras 10, 15]

Seed processing activity held to be manufacture for Section 80IA purposes; deduction under Section 80IA must be computed unit-wise and cannot be denied merely because the assessee declared an overall business loss.

Allowability of interest under Section 36(1)(iii) - borrowing for the purpose of business - Whether interest claimed by the assessee was allowable under Section 36(1)(iii) despite objections about user of assets or interlacing/affiliation tests. - HELD THAT: - Applying settled law as laid down by the Apex Court, the Court observed that Section 36(1)(iii) requires that money must have been borrowed, that it was borrowed for the purpose of business, and that interest was paid. The provision focuses on the purpose of borrowing (user of capital) rather than immediate user of the asset created. Earlier decisions recognizing interest on borrowed capital as deductible even when the asset is not yet put to use were followed. The Tribunal's allowance of interest was not perverse and did not raise a substantial question of law on the facts presented. [Paras 16, 17]

Interest paid on money borrowed for business purposes is allowable under Section 36(1)(iii); the ITAT's grant of deduction was sustained.

Final Conclusion: The High Court dismissed the Revenue's appeal: (i) the provision for foreign travel incentive expenses was an accrued liability deductible in the relevant year under mercantile accounting; (ii) the assessee's seed processing qualified as manufacture and its eligible units were entitled to unit-wise deduction under Section 80IA despite an overall loss; and (iii) interest on borrowed funds for business purposes was allowable under Section 36(1)(iii).

Computation of deduction under Sections 80HH and 80I - interaction between Section 80AB and deductions under Sections 80IA/80I/80HH - set-off of intra company/divisional losses against profits for deduction eligibility - binding effect of obiter statements of the Supreme Court

Computation of deduction under Sections 80HH and 80I - interaction between Section 80AB and deductions under Sections 80IA/80I/80HH - set-off of intra company/divisional losses against profits for deduction eligibility - Whether the Tribunal was justified in law in holding that the loss of the Generic Division was to be deducted from the profits of the Bulk Drugs Division for the purposes of computing deduction under Sections 80HH and 80I in view of Section 80AB. - HELD THAT: - The Court observed that Sections 80I, 80IA and 80HH employ identical language as to the grant of deductions, the only difference being the class of industrial undertaking to which each applies. Consequently, the Apex Court's reasoning in Reliance Energy Ltd. concerning Section 80-IA is equally applicable to Sections 80I and 80HH. Reliance Energy (supra) held that Section 80AB cannot be read as curtailing the scope of Section 80-IA; that principle, the Court held, applies with equal force to the sections under consideration. Although it was urged that the Apex Court's observation was obiter, the High Court noted that such observations by the Supreme Court are binding on High Courts. Applying that binding precedent, the Court concluded that Section 80AB does not justify treating the Generic Division's loss as deductible against the Bulk Drugs Division's profits for the purpose of computing deductions under Sections 80HH and 80I. [Paras 4, 5, 6]

The Tribunal was not justified in law in directing that the Generic Division's loss be deducted from the Bulk Drugs Division's profits for computing deductions under Sections 80HH and 80I; Reliance Energy (supra) controls and Section 80AB cannot be read to curtail those deductions.

Final Conclusion: The substantial question framed was answered in the negative; the High Court held that Reliance Energy (supra) governs and set aside the Tribunal's conclusion that the Generic Division's loss should be deducted against the Bulk Drugs Division for computing deductions under Sections 80HH and 80I. Appeal disposed of with no order as to costs.

Deduction of tax at source on insurance commission including service tax component - Liability to deduct TDS under Section 194D where payment is made to agents or credited to their account - Characterisation of service payments for hiring of hardware/software as contractual/technical for TDS classification - Applicability of TDS provisions to direct payments made to service providers versus payments to agents

Deduction of tax at source on insurance commission including service tax component - Whether service tax charged on insurance commission formed part of 'income' of the agents for purposes of TDS under Section 194D and required deduction by the payer. - HELD THAT: - CIT(A) found, and the Tribunal upheld, that the service tax component payable on insurance commission was the liability of the insurer and could not be treated as income in the hands of the agents; consequently, TDS under the provision governing payment to agents need not be deducted on the service tax portion. The High Court concurred with the conclusions of the lower authorities and accepted that the service tax component was not taxable income of the agents for the purpose of withholding under the relevant provision concerning payments for soliciting or procuring insurance business. [Paras 4, 13]

Service tax on insurance commission is not income of the agents for TDS purposes and no deduction under the provision governing commission payments was required on the service tax component.

Characterisation of service payments for hiring of hardware/software as contractual/technical for TDS classification - Whether payments made for usage/hiring of hardware and software and related services were taxable as technical/professional services attracting TDS under the provision for fees for professional or technical services, or correctly subject to TDS as contractual payments. - HELD THAT: - The Assessing Officer contended that payments for server management and call support services were technical in nature and therefore subject to TDS under the provision applicable to professional or technical fees. The Commissioner (Appeals) held these payments were not in the nature of professional or technical services as envisaged for that provision and that TDS had correctly been deducted under the provision applicable to contractual payments. The Tribunal affirmed that conclusion and the High Court agreed with the view taken by the CIT(A) and the Tribunal, holding that the payments were not chargeable as technical/professional fees attracting the higher provision. [Paras 5, 13]

Payments for hiring/usage of hardware/software and related services were not payments for professional/technical services and TDS under the contractual payments provision was correctly applied.

Applicability of TDS provisions to direct payments made to service providers versus payments to agents - Liability to deduct TDS under Section 194D where payment is made to agents or credited to their account - Whether foreign travel expenses organized and paid directly by the insurer for agents amounted to 'income' of the agents attracting TDS under the provision covering remuneration or reward for soliciting/procuring insurance business. - HELD THAT: - The provision imposing withholding on payments to agents operates when a payer makes a payment to, or credits income in the account of, a payee. Factually, the insurer arranged and paid for foreign travel services directly to third-party service providers and did not reimburse or pay those amounts to the agents. Because no amount was paid to or credited in the hands of the agents, the statutory obligation to deduct tax at source did not arise. The High Court therefore disagreed with the Assessing Officer's view and upheld the orders of the CIT(A) and the Tribunal (noting its reasons differed) that such direct payments were not liable to TDS as payments to agents. [Paras 12, 13]

Foreign travel expenses paid directly to service providers on behalf of agents do not constitute payments to agents attracting withholding under the provision governing payments to agents; no TDS obligation arose.

Final Conclusion: All appeals dismissed; the orders of the Commissioner (Appeals) and the Tribunal, insofar as they held that (i) service tax on commission is not income of agents for TDS, (ii) payments for hiring hardware/software are not technical/professional fees and were correctly subjected to contractual TDS, and (iii) foreign travel expenses paid directly to service providers do not attract TDS as payments to agents, are upheld.

Allowability of bad debts under Section 36(1)(vii) - provision for bad and doubtful debts under Section 36(1)(viia) - meaning of "rural branch" for the purpose of Section 36(1)(viia) - valuation of unquoted securities as stock-in-trade - valuation of unquoted Government securities based on RBI/FIMMDA yield to maturity guidelines - remand for computation in accordance with law - liberty to raise objections under the ratio in Vijaya Bank

Allowability of bad debts under Section 36(1)(vii) - provision for bad and doubtful debts under Section 36(1)(viia) - remand for computation in accordance with law - Claim for bad debts and claim by way of credit to provision for bad and doubtful debts under Sections 36(1)(vii) and 36(1)(viia). - HELD THAT: - The Court treated the question as governed by the Supreme Court decision in Catholic Syrian Bank v. CIT, which answered the point in favour of the assessee and against the Revenue. Applying that precedent, the Court allowed the assessee's entitlement on the legal question and directed remand to the Assessing Officer for computation in accordance with the law as enunciated by the Supreme Court. The remand is for quantification and computation consistent with the binding ratio laid down by the Apex Court.

Legal entitlement to the deduction on the facts before the Court is accepted in favour of the assessee; matter remitted to the Assessing Officer for computation in accordance with the Catholic Syrian Bank ratio.

Valuation of unquoted securities as stock-in-trade - valuation of unquoted Government securities based on RBI/FIMMDA yield to maturity guidelines - Correctness of the assessee's revaluation of unquoted securities adopted for assessment. - HELD THAT: - Following precedents of this Court in Nedungadi Bank Ltd. and Lord Krishna Bank Ltd., the Court held that securities held by a bank may be treated as stock-in-trade and that valuation of unquoted Government securities on the basis of RBI/FIMMDA YTM guidelines is a rational and acceptable method where market price is not available. The Assessing Officer had offered no alternative rational formula for market valuation and had not impugned the RBI guidelines as irrational. On that basis the Tribunal's acceptance of the assessee's valuation was upheld.

The revaluation of unquoted securities adopted by the assessee is held to be correct and allowable.

Meaning of "rural branch" for the purpose of Section 36(1)(viia) - Whether the word 'place' in the definition of 'rural branch' refers to a ward of a local authority or to a revenue village. - HELD THAT: - Adopting reasoning in Lord Krishna Bank Ltd., the Court interpreted 'place' with reference to Census units and concluded that the basic unit for identifying rural area is the revenue village. The Court rejected the Tribunal's view that 'place' meant the ward of a local authority, holding that rural branches must be located in rural areas and that population has to be reckoned with reference to the village as a unit. Consequently, the earlier finding of the Tribunal was reversed on this point and relevant assessments were restored for reconsideration consistent with this interpretation.

The term 'place' in the definition of 'rural branch' is to be read as revenue village; the Tribunal's contrary finding is reversed and the matter is remitted to the Assessing Officer for fresh consideration in accordance with this interpretation.

Final Conclusion: The appeal is allowed in part: (a) the legal entitlement to bad debt deductions under Sections 36(1)(vii)/36(1)(viia) is accepted in favour of the assessee in light of Catholic Syrian Bank and remitted to the Assessing Officer for computation; (b) the assessee's valuation of unquoted securities is upheld; and (c) the Court construes 'rural branch' to mean a branch located in a revenue village, reverses the Tribunal on that point and remits the assessments for reconsideration. The assessee is permitted to raise objections on remand consistent with the ratio in Vijaya Bank.

Obligation to pass draft assessment order under section 144C(1) of the Act - failure to refer order giving effect to ITAT directions to Dispute Resolution Panel under section 144C - non-curable defect under section 292B of the Act - remand to Assessing Officer pursuant to Tribunal's directions under section 254 of the Act - application of binding precedent of the Delhi High Court

Obligation to pass draft assessment order under section 144C(1) of the Act - remand to Assessing Officer pursuant to Tribunal's directions under section 254 of the Act - Whether the Assessing Officer was required to pass a draft assessment order under section 144C(1) after the ITAT remanded issues to him and whether failure to do so vitiates the subsequent final assessment order. - HELD THAT: - The Tribunal examined the record and the impugned CIT(A) order observing that after the ITAT's remand the AO proceeded to pass a final assessment order without issuing the draft assessment order contemplated by section 144C(1). The Tribunal accepted the view taken by the CIT(A) and the Delhi High Court in the assessee's own earlier year that where matters remanded by the ITAT require fresh consideration, the statutory procedure of issuing a draft assessment order under section 144C(1) is mandatory. The Tribunal found that the AO's omission to follow the mandated procedure was not a mere procedural irregularity but a want of compliance with a statutory scheme prescribed for transfer pricing/DRP matters when directions of the Tribunal require implementation, thereby rendering the final order unsustainable. [Paras 5]

AO's failure to pass the draft assessment order under section 144C(1) after remand rendered the final assessment order not sustainable.

Failure to refer order giving effect to ITAT directions to Dispute Resolution Panel under section 144C - non-curable defect under section 292B of the Act - application of binding precedent of the Delhi High Court - Whether the omission to refer the order giving effect to the ITAT's findings to the Dispute Resolution Panel/ follow DRP procedure under section 144C amounted to a non-curable defect warranting deletion of the additions. - HELD THAT: - Relying on the CIT(A)'s reasoning and the Delhi High Court's decisions (including the assessee's own earlier year and JCB India Ltd. as applied), the Tribunal held that not referring transfer-pricing issues to the DRP or failing to follow the DRP/draft-order procedure under section 144C(1) is a non-curable defect in terms of section 292B. The Tribunal found no perversity or illegality in the CIT(A)'s application of those precedents and accordingly sustained deletion of the additions made by the AO/TPO which were vitiated by the procedural omission. [Paras 5]

Omission to refer and follow DRP/draft-order procedure under section 144C amounted to a non-curable defect; the additions were deleted.

Final Conclusion: The Revenue's appeal is dismissed. The Tribunal upheld the CIT(A)'s findings that the AO's failure to issue the draft assessment order and to refer the matters to the DRP under the statutory scheme was a non-curable defect in light of Delhi High Court precedent, and the additions sustained by the AO/TPO were accordingly set aside.

Revisional jurisdiction under section 263 of the Income Tax Act - Erroneous and prejudicial to the interests of the revenue - Twin conditions for invoking section 263 - Acceptance of a plausible view by the Assessing Officer - Evidence of genuine share purchase through banking channel, SEBI-registered broker and stock exchange - Scope of declaration under the Income Disclosure Scheme (IDS), 2016

Revisional jurisdiction under section 263 of the Income Tax Act - Erroneous and prejudicial to the interests of the revenue - Twin conditions for invoking section 263 - Acceptance of a plausible view by the Assessing Officer - Evidence of genuine share purchase through banking channel, SEBI-registered broker and stock exchange - Scope of declaration under the Income Disclosure Scheme (IDS), 2016 - Validity of the Principal CIT's exercise of jurisdiction under section 263 to set aside the assessment for not adding purchase cost and alleged commission linked to IDS-declared long term capital gain - HELD THAT: - The revisionary jurisdiction under section 263 can be exercised only if the AO's order is both erroneous and prejudicial to the interests of the revenue. The Assessing Officer had examined the transactions, accepted the assessee's IDS declaration and returned income after considering contract notes, bank statements and that the purchase was effected through a SEBI-registered broker on a stock exchange. There is no material to show that the purchase consideration routed back to the assessee or that any commission was paid for accommodation entries. Where the AO takes a plausible view on admissibility of purchase cost supported by documentary evidence, such view cannot be characterised as erroneous merely because the revisional authority prefers a different conclusion. The coordinate-bench decision on identical facts was followed to hold that the twin conditions for invoking section 263 were not satisfied and therefore the PCIT erred in assuming revisional jurisdiction. [Paras 5, 6]

The order under section 263 was set aside and the assessment order was restored as the twin conditions for revision were not satisfied.

Final Conclusion: Appeal allowed: the Principal Commissioner's invocation of section 263 to revise the assessment was held unjustified; the assessment order accepting the IDS-declared long term capital gain and the AO's view on purchase cost is restored.

Best judgment assessment - short-term capital gains - section 50C valuation adjustment - unexplained cash credits - application of section 44AD - burden of proof and documentary evidence - dismissal for non-prosecution

Short-term capital gains - burden of proof and documentary evidence - Whether the addition of the alleged short-term capital gain was correctly sustained in the absence of cogent documentary evidence. - HELD THAT: - The Assessing Officer computed capital gains on sale of multiple properties and made an addition after not accepting the assessee's claim that interest on loan constituted cost of improvement; the Commissioner (Appeals) sustained the addition for lack of supporting documents. The Tribunal recorded that the assessee neither produced evidence before the Tribunal nor was represented at hearing and, given absence of cogent documentary material to substantiate the claim, found no basis to interfere with the impugned addition. [Paras 4, 7]

Addition in respect of short-term capital gain sustained for lack of documentary proof and not disturbed.

Section 50C valuation adjustment - burden of proof and documentary evidence - Whether the addition made under the valuation provisions in respect of difference between document value and government value was rightly sustained. - HELD THAT: - The Assessing Officer invoked the valuation provision to make an addition where there was a discrepancy between document value and government value; the CIT(A) confirmed the addition on the basis that the assessee failed to produce cogent evidence to rebut the valuation. The Tribunal observed the absence of any evidence or representation by the assessee before it and, in that factual matrix, declined to interfere with the addition upheld by the lower authorities. [Paras 4, 7]

Addition under the valuation provision sustained for want of rebuttal evidence.

Unexplained cash credits - burden of proof and documentary evidence - Whether the addition in respect of alleged credit balance in the name of a creditor could be disallowed in absence of details to establish genuineness and creditworthiness. - HELD THAT: - The Assessing Officer added the credit balance shown in the books as unexplained cash credit because the assessee did not furnish details to establish the genuineness of the creditor. The CIT(A) sustained the addition for lack of supporting documents. The Tribunal noted that the assessee did not present evidence or appear before the Tribunal; on that basis and on the record showing absence of cogent documentary support, the Tribunal did not interfere with the addition. [Paras 4, 7]

Addition in respect of the credit balance sustained for absence of proof of genuineness.

Unexplained cash credits - burden of proof and documentary evidence - Whether deposits in bank accounts could be treated as unexplained cash credits and brought to tax where discrepancies existed between books and bank accounts and explanations were not furnished. - HELD THAT: - The Assessing Officer treated certain bank deposits as unexplained and brought them to tax after finding discrepancies and unsatisfactory explanations. The CIT(A) upheld the addition for lack of documentary explanation. The Tribunal recorded the assessee's non-appearance and absence of any material before it, and therefore declined to disturb the findings of the authorities below. [Paras 4, 7]

Bank deposits treated as unexplained cash credits sustained in the absence of explanation or evidence.

Application of section 44AD - burden of proof and documentary evidence - Whether income from sale of prawns not reflected in books could be estimated under the presumptive scheme and an addition on estimate of profit sustained. - HELD THAT: - The Assessing Officer estimated profit at the prescribed presumptive rate under the presumptive taxation provision for undisclosed turnover and made an addition; the CIT(A) sustained this on the basis that the assessee failed to produce books or records to rebut the estimate. The Tribunal noted that no evidence or representation was placed before it by or on behalf of the assessee and therefore saw no reason to interfere with the estimation upheld by the authorities. [Paras 4, 7]

Addition based on presumptive estimation sustained for want of rebuttal material.

Best judgment assessment - dismissal for non-prosecution - Whether the appeal should be entertained where the assessee did not appear before the Tribunal and failed to produce any documentary evidence challenging the orders of the lower authorities. - HELD THAT: - The Tribunal recorded repeated non-appearances by the assessee, observed filing of only an adjournment letter with vague reasons, and found that neither the assessee nor any representative was present to contest the additions or to produce evidence. Considering the factual background that the Assessing Officer and the Commissioner (Appeals) had made and sustained additions in the absence of cogent documentary material, and given the assessee's failure to pursue the appeal or place rebuttal material, the Tribunal declined to interfere and dismissed the appeal. [Paras 7, 8]

Appeal dismissed for non-prosecution and for lack of evidence to challenge the impugned additions.

Final Conclusion: The Tribunal, noting the assessee's repeated non-appearance and failure to produce documentary evidence, declined to interfere with the additions made by the Assessing Officer and sustained by the CIT(A); the appeal is dismissed.

Classification under heading 4810 - Entitlement to concessional rate under CEPA - Burden of proof on Revenue for reclassification - Reliability and sufficiency of laboratory test report - Use of admissions obtained during investigation - Requirement of ascertainment of pulp extraction process for tariff classification

Classification under heading 4810 - Requirement of ascertainment of pulp extraction process for tariff classification - The correctness of reclassification of the imported coated paper by reference to the process by which pulp was obtained (chemical v. mechanical/chemi mechanical) and its effect on entitlement to concessional CEPA rate. - HELD THAT: - The tariff dispute turns solely on whether the pulp used in manufacture of the imported coated paper was obtained by a chemical process (which would exclude concessional treatment) or whether mechanical/chemi mechanical pulp formed more than 10% of the fibre content (which would permit concessional treatment). Classification under the relevant sub headings of heading 4810 requires determination of the pulp extraction process. The Court applied the General Rules for Interpretation of the Harmonized System and held that reclassification can be effected only by establishing that at least 90% of the fibre content is derived from chemical processing. The assessment authorities cannot reclassify merely by discarding the importer's classification; the shift in tariff entry must be supported by adequate evidence establishing the process of pulp extraction. [Paras 7, 18, 25]

Reclassification was not justified because the process of pulp extraction had not been established to the requisite degree; the entitlement to concessional rate under CEPA cannot be denied on the basis of the record before the authorities.

Burden of proof on Revenue for reclassification - Reliability and sufficiency of laboratory test report - Whether the CRCL test report and related proceedings furnished legally sufficient evidence to discharge the Revenue's burden of proof for denial of concessional rate. - HELD THAT: - The Court reiterated that the onus to justify an alternative classification rests squarely on Revenue. The only material relied upon to uphold the revised classification was an unelaborated sentence in the CRCL test report stating the sample was "composed wholly of chemical pulp." The appellate authority did not examine or elicit the methodology or standard tests used to arrive at that conclusion, nor show that a recognized test for determining the source of pulp (or lignin content) had been applied. The Court found that unqualified reliance on that single statement, without explanation of method or standard, was inadequate to discharge the burden imposed on Revenue under section 12 and the General Rules of Interpretation. [Paras 8, 22, 24]

The CRCL test report, as received and applied, was not a legally sufficient basis to sustain the reclassification and denial of concessional rate.

Use of admissions obtained during investigation - Burden of proof on Revenue for reclassification - Whether the proprietor's statements recorded during the DRI investigation could, without more and without prior notice to the importer that such statements would be used for adjudicatory detriment, validate the reclassification. - HELD THAT: - The appellate order treated the proprietor's recorded admission that the paper was manufactured from chemical pulp as corroborative of the laboratory report. The Court observed that the context of that statement is not apparent and the importer was not placed on notice that the admission would be used to their detriment; consequently, the purported admission could not reliably corroborate the test report. Reliance on an investigatory admission, without opportunity to test or explain it in the adjudicatory proceedings, weakens the evidentiary foundation and does not relieve Revenue of its burden to produce independent, admissible proof for reclassification. [Paras 10, 19, 20]

The proprietor's investigatory statements did not constitute adequate corroboration to justify denial of concessional rate.

Entitlement to concessional rate under CEPA - Burden of proof on Revenue for reclassification - Whether the documents and certifications produced by the manufacturer and the designated origin authority were properly rejected by the authorities such that entitlement to CEPA preference could be denied. - HELD THAT: - The importer produced manufacturer documents, production flowcharts and certificates of origin issued by the designated authority under CEPA asserting classification and origin. The first appellate authority discounted those documents for want of a specific fibre analysis certificate and inferred deliberate concealment. The Court held that the rules of origin certification is the threshold qualification for preferential treatment and that partial acceptance of origin while discrediting the classification in the certificate is inconsistent with the treaty mandate. The appellate authority overstepped by effectively assuming investigative functions and designating a particular document as the sole acceptable proof; such approach cannot substitute for Revenue's obligation to produce evidence to disturb the declared classification. [Paras 11, 20, 21]

Rejection of the manufacturer's documents and origin certification without adequate justification was improper; entitlement to CEPA benefit could not be denied on that basis alone.

Final Conclusion: The appellate authority's confirmation of reclassification and denial of concessional duty was unsustainable: the Revenue failed to discharge the burden of proving that the pulp was derived predominantly by chemical processing, the lone CRCL statement was unexplained and therefore insufficient, and investigatory admissions and selective rejection of manufacturer documentation could not lawfully substitute for admissible proof. The impugned order is set aside and the appeal is allowed with consequential relief.

Withdrawal of CIRP under Regulation 30A - status of assignee as a financial creditor and applicant - Section 12A of the Insolvency and Bankruptcy Code, 2016 - role and powers of the Resolution Professional (administrative not adjudicatory) - constitution of Committee of Creditors and timing of constitution - proceedings in rem - remand for fresh consideration

Withdrawal of CIRP under Regulation 30A - status of assignee as a financial creditor and applicant - Section 12A of the Insolvency and Bankruptcy Code, 2016 - Assignee (CFM ARC) is entitled to seek withdrawal under Regulation 30A(1) and is to be regarded as a financial creditor/applicant for that purpose; Regulation 30A(1)(a) can be invoked by the assignee pre-constitution of the COC. - HELD THAT: - The Tribunal held that a person to whom debt has been legally assigned falls within the definition of financial creditor and, for the purposes of the CIRP Regulations, can be treated as an applicant entitled to seek withdrawal under Regulation 30A read with Section 12A of the Code. The Tribunal relied on the statutory definition of financial creditor and the purpose of the 2019 amendment to Regulation 30A, observing that Regulation 30A(1) is not strictly mandatory in all circumstances and that an assignee who has complied with Regulation 28 (by providing terms of assignment and identity) can seek pre-COC withdrawal under Regulation 30A(1)(a). The Tribunal also noted the doctrine that CIRP is a proceeding in rem and that procedural timelines and the role of the RP must conform to the statutory scheme; consequently the assignee was not excluded from invoking the amendment to Regulation 30A merely because the original petition was filed by another creditor. [Paras 52]

The Tribunal held that the assignee had the legal entitlement to seek withdrawal under Regulation 30A and to be treated as applicant/financial creditor for that purpose.

Role and powers of the Resolution Professional (administrative not adjudicatory) - requirement of substitution in CIRP proceedings - constitution of Committee of Creditors and timing of constitution - The Resolution Professional erred in imposing a requirement of prior substitution and in constituting the Committee of Creditors in a manner that defeated the assignee's endeavour to file a pre-COC withdrawal under Regulation 30A(1)(a). - HELD THAT: - The Tribunal found that the RP's insistence on a substitution application as a pre-condition to accept Form FA and the constitution of the COC on 27.08.2020 (after the assignee had submitted Form FA and related material) were not in consonance with the intentions of the amendment to Regulation 30A and the statutory scheme. The RP's function is primarily administrative - to receive, collate and place proposals before the appropriate forum - and he must not assume adjudicatory functions by rejecting a threshold request on maintainability where the assignee had complied with Regulation 28. The Tribunal observed that the RP ought to have acted so as to enable consideration of a pre-COC withdrawal where permissible under the Regulations and relevant precedents. [Paras 51]

The Tribunal concluded that the RP's conduct in demanding substitution and constituting the COC so as to preclude pre-COC withdrawal was improper.

Remand for fresh consideration - The impugned order of the Adjudicating Authority dismissing the IA was unsustainable and is set aside; the IA is to be restored and decided afresh on merits. - HELD THAT: - Having found that the Adjudicating Authority's conclusions were based on the premise that no withdrawal application had been filed by the RP and that the RP had acted fairly, the Tribunal held those conclusions to be unsustainable in law in view of the assignee's entitlement and the RP's improper pre-conditions. Consequently, the Tribunal interfered with the Adjudicating Authority's order, set it aside and directed restoration of IA No.1198/2020 to the file for fresh adjudication on merits with opportunity to parties. The Tribunal emphasised expeditious disposal while permitting all factual pleas to be raised afresh. [Paras 54]

Impugned order is set aside; IA No.1198/2020 is restored and the Adjudicating Authority is directed to decide it afresh on merits after giving opportunity to the parties.

Final Conclusion: The appeal is allowed; the NCLT order is set aside and IA No.1198/2020 is restored for fresh consideration on merits, with directions to the Adjudicating Authority to decide the IA expeditiously after hearing the parties; interim orders previously granted are vacated and pending IAs are closed.

Privity of contract - operational creditor - operational debt - existence of debt and default - prima facie debt - engagement through statutory auditor versus direct engagement by corporate debtor - Section 9 application under the Insolvency and Bankruptcy Code, 2016

Privity of contract - engagement through statutory auditor versus direct engagement by corporate debtor - Whether the appellant had privity of contract with the corporate debtor such that he could be an operational creditor of the corporate debtor - HELD THAT: - The Tribunal examined the documentary record including the appellant's e-mail of 21.4.2018 and the affidavit of the statutory auditor, and found that the appellant was engaged by the statutory auditor in his personal capacity to execute assignments entrusted to the auditor. The auditor's affidavit averred that any invoices were to be raised only after professional fees were agreed between the auditor and the appellant, and that the appellant's alleged direct billing to the corporate debtor was without the auditor's consent or knowledge. In view of the definitions of 'operational creditor' and 'operational debt' under the IBC, a contractual relationship directly between the appellant and the corporate debtor is required to establish the appellant as an operational creditor. The material before the adjudicating authority did not disclose such a contract or direct engagement by the corporate debtor; hence the finding of absence of privity was sustained. [Paras 11]

No privity of contract was established between the appellant and the corporate debtor; the appellant was engaged by the statutory auditor and not directly by the corporate debtor.

Operational debt - existence of debt and default - prima facie debt - Section 9 application under the Insolvency and Bankruptcy Code, 2016 - Whether the invoices claimed by the appellant constituted an operational debt owed by the corporate debtor such as to sustain a Section 9 proceeding - HELD THAT: - Having held that there was no contractual relationship between the appellant and the corporate debtor, the Tribunal applied the statutory definitions to conclude that the claimed invoices could not be treated as an operational debt owed by the corporate debtor. The Tribunal reiterated that invocation of corporate insolvency resolution process under Section 9 requires a prima facie debt owed by the corporate debtor to the applicant; where the claim arises from services rendered pursuant to an engagement by the auditor (and not by the corporate debtor), the debt does not fall within the ambit of operational debt owed by the corporate debtor. On that basis, the adjudicating authority's conclusion that the Section 9 application could not be maintained was upheld. [Paras 12]

The claimed invoices do not constitute an operational debt payable by the corporate debtor; the Section 9 application was rightly dismissed for want of a prima facie operational debt and default.

Final Conclusion: The appeal is dismissed; the impugned order refusing admission of the Section 9 petition for want of privity and operational debt is upheld. No order as to costs.

Existence of debt and default - limitation for filing a Section 7 application - acknowledgment under Section 18 of the Limitation Act - One Time Settlement as acknowledgment - plurality of proceedings does not bar initiation of CIRP - summary nature of proceedings under the Insolvency and Bankruptcy Code

Existence of debt and default - summary nature of proceedings under the Insolvency and Bankruptcy Code - Whether the Financial Creditor established existence of debt and default so as to warrant admission of the Section 7 petition - HELD THAT: - The Tribunal examined the sanction letters, loan agreements, promissory notes and Memorandum of Deposit of Title Deeds and held there was no denial of disbursement and documentation evidencing the loan facilities. The Adjudicating Authority was satisfied that the Financial Creditor had proved disbursement and that the Corporate Debtor had committed default in repayment. The Tribunal reiterated that proceedings under the IBC are summary in nature and not a forum to adjudicate disputed quantification of dues or to determine claims such as alleged excessive or penal interest; those issues are not gone into in an Section 7 admission process. On cumulative consideration of the loan documents, correspondence and the fact of NPA classification, the Tribunal found the Adjudicating Authority rightly admitted the petition and declared moratorium, free from patent illegality. [Paras 25, 26, 27, 36, 37]

The Section 7 petition was properly admitted because existence of debt and default was established and the Adjudicating Authority's admission and moratorium are maintained.

Limitation for filing a Section 7 application - acknowledgment under Section 18 of the Limitation Act - One Time Settlement as acknowledgment - Whether the Section 7 application was barred by limitation or saved by acknowledgment/OTS - HELD THAT: - The Tribunal analysed the timeline: account classified as NPA on 30.05.2016, OTS proposal and related correspondence in December 2018 and January 2019, and the sanction/acceptance of OTS with repayment due by 30.06.2019. It observed that an acknowledgment must admit a present subsisting liability and that writings proposing and accepting a One Time Settlement can amount to acknowledgment under Section 18 of the Limitation Act, thereby giving rise to a fresh period of limitation. Applying these principles to the record, the Tribunal concluded that the date of default to be reckoned was 30.06.2019 and the Section 7 application filed on 10.12.2019 was within the three years' period reckoned from that date (and in any event not barred where acknowledgments revived limitation). [Paras 30, 31, 32, 33, 34]

The Section 7 application is not barred by limitation; the OTS correspondence and related communications operate as acknowledgment and the application filed on 10.12.2019 was within the permissible period.

Plurality of proceedings does not bar initiation of CIRP - Whether the existence of other proceedings (DRT/OA) against the Corporate Debtor precluded admission of the Section 7 petition - HELD THAT: - The Tribunal noted that the Financial Creditor had filed OA No.156/2018 before the DRT but held that filing of proceedings before other fora does not bar initiation of insolvency proceedings under Section 7. The Adjudicating Authority was competent to admit the petition based on the materials before it; plurality of proceedings and concurrent remedies in other forums do not amount to a bar to admission under IBC. [Paras 22, 26, 33]

The presence of other recovery proceedings does not render the Section 7 application incompetent; admission was not barred by plurality of fora.

Summary nature of proceedings under the Insolvency and Bankruptcy Code - Whether the Tribunal would adjudicate allegations of exorbitant or penal interest in the Section 7 admission appeal - HELD THAT: - The Tribunal emphasised that IBC admission proceedings are summary and not a forum for a full adjudication of contested claims such as the validity of interest charges. Such disputes about quantum or legality of interest are not adjudicated at the admission stage and therefore the Tribunal did not consider or decide the Appellant's claims challenging imposition of interest and penal interest; those matters are for appropriate fora or subsequent resolution processes. [Paras 35, 36]

Allegations regarding exorbitant or penal interest were not examined on appeal because they fall outside the scope of summary admission proceedings under the IBC.

Final Conclusion: The appeal is dismissed for lack of merit; the Adjudicating Authority's order admitting the Section 7 petition and declaring moratorium is upheld and the connected interim application for stay is closed.

Misjoinder of causes of action - default and date of default/NPA - default as 'debt payable in fact' - limitation and acknowledgement extending limitation - maintainability of application under Section 7 - temporary bar under Section 10A to filing CIRP applications - duty to defer insolvency proceedings pending out of court restructuring - locus to appeal as an 'aggrieved person' under Section 61(1)

Misjoinder of causes of action - maintainability of application under Section 7 - Different claims and different dates of default alleged by a financial creditor in a Section 7 application do not amount to misjoinder of causes of action. - HELD THAT: - The Tribunal distinguished precedents concerning Section 9 by noting the broader scope of Section 7 and its Explanation which treats default in respect of any financial debt of the corporate debtor as relevant to the applicant financial creditor. The account was declared NPA on 31.03.2019 and, following Gaurav Hargovind Bhai Dave, that date marks the cause of action. Hence, claims arising from multiple facilities with differing earlier instalment dates did not render the Section 7 application defective for misjoinder. [Paras 22, 23, 24, 25, 26]

No misjoinder; Section 7 application maintainable despite different dates/agreements.

Default and date of default/NPA - default as 'debt payable in fact' - Portions of the claim relating to instalments falling due after the date of default do not negate the existence of default on earlier instalments; the corporate debtor had committed default. - HELD THAT: - Section 3(12) defines default as non payment when any instalment has become due and is unpaid. Even though some instalments would become due later (e.g., in 2020), earlier instalments had fallen due and remained unpaid. Therefore the fact that certain future instalments were not yet payable does not mean there was no default in respect of the loans as a whole. [Paras 27, 28]

The debt was payable in fact in respect of instalments that had become due and unpaid; default existed.

Limitation and acknowledgement extending limitation - The Section 7 application was not barred by limitation as the corporate debtor acknowledged the debt by letter dated 26.10.2018 and the application filed on 09.01.2020 was within three years of that acknowledgment. - HELD THAT: - The appellant's reliance on an earlier balance confirmation dated 17.12.2015 was answered by the financial creditor pointing to subsequent acknowledgements, notably the letter of 26.10.2018. The Tribunal found that the 26.10.2018 letter constituted an acknowledgment sufficient to bring the Section 7 filing within the three year period. [Paras 29, 30, 31]

Not barred by limitation; application filed within three years of acknowledgement.

Section 10A temporary bar - maintainability of application under Section 7 - Section 10A does not bar the present Section 7 application because the defaults in question occurred prior to 25.03.2020. - HELD THAT: - Section 10A (inserted by amendment) prevents filing for defaults arising on or after 25.03.2020 for a limited period. Here the defaults for both term loans and cash credit occurred on 31.01.2019 and 28.01.2019 respectively and the account was NPA on 31.03.2019. Therefore Section 10A is inapplicable to the admitted defaults preceding 25.03.2020. [Paras 32]

Section 10A does not apply; Section 7 application not barred by that provision.

Duty to defer insolvency proceedings pending out of court restructuring - maintainability of application under Section 7 - Filing a Section 7 application by one financial creditor during deliberations on an out of court restructuring is not per se unsustainable in law; the Adjudicating Authority is not obliged to defer proceedings merely because restructuring talks are ongoing. - HELD THAT: - The Tribunal noted there was no application by the consortium to defer proceedings and no legal duty on the Adjudicating Authority to stay Section 7 proceedings on the basis that lenders were discussing an alternate restructuring. Section 7(4)-(5) mandates admission where default is ascertained and the application is complete; the Adjudicating Authority acted within those statutory parameters after finding default and completeness. [Paras 36, 37, 38, 39, 40]

The filing during restructuring negotiations was not unsustainable and the Adjudicating Authority was not obliged to defer.

Spirit of the IBC vs out of court restructuring - The Tribunal held that the Adjudicating Authority was not required to give precedence to an out of court restructuring proposal and that admission under Section 7 did not violate the object or spirit of the IBC. - HELD THAT: - Although the corporate debtor and some lenders contended that an out of court resolution would be preferable, no formal deferment request was made. The Adjudicating Authority considered the corporate debtor's contentions but found them vague and insufficient to prevent admission. The Tribunal reiterated that the statutory scheme requires admission if default and completeness are shown. [Paras 36, 37, 38, 39, 40]

Impugned order not contrary to the IBC's purpose; no obligation to prioritise out of court restructuring.

Locus to appeal as 'aggrieved person' under Section 61(1) - Kotak Mahindra Bank was not an 'aggrieved person' within Section 61(1) for purposes of the appeal and therefore lacked locus to maintain the appeal. - HELD THAT: - The Tribunal accepted the financial creditor's contention that Kotak Mahindra Bank failed to point out any legal or factual flaw in the impugned order and had not participated in the adjudication below. On that basis the appellant bank did not fall within the class of persons entitled to prefer the appeal under Section 61(1). [Paras 41, 42]

Kotak Mahindra Bank has no locus and its appeal is not maintainable.

Final Conclusion: The Tribunal dismissed both appeals: there was no misjoinder in the Section 7 application; default existed and the application was not barred by limitation; Section 10A did not apply; filing during pending restructuring negotiations was not impermissible and the Adjudicating Authority was not obliged to defer; and Kotak Mahindra Bank lacked locus to maintain its appeal. No costs were ordered.

Corporate Insolvency Resolution Process - admission under section 7 of the Insolvency and Bankruptcy Code, 2016 - financial debt and default - acknowledgement of debt in books/balance sheet and its effect on limitation - prospective operation of notification enhancing minimum amount of default - appointment of Interim Resolution Professional and duties of IRP - moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016

Admission under section 7 of the Insolvency and Bankruptcy Code, 2016 - financial debt and default - The section 7 application by the financial creditor was admissible and liable to be admitted initiating CIRP against the corporate debtor. - HELD THAT: - The Adjudicating Authority examined the petition, supporting documents and admissions by the corporate debtor in its ledger and in the declaration annexed to the supplementary affidavit. Having found that the corporate debtor had acknowledged the debt and that credible evidence of loan and non-payment was placed on record, the Authority applied the settled test that once default of a financial debt is established and the application is complete, the Authority must admit the petition. No disciplinary proceedings against the proposed IRP were shown to be pending. On these findings the Authority admitted the section 7 petition and directed initiation of CIRP. [Paras 7]

Section 7 petition admitted and CIRP initiated against the corporate debtor.

Acknowledgement of debt in books/balance sheet and its effect on limitation - Acknowledgement(s) by the corporate debtor in its books and the declaration filed by the corporate debtor were sufficient to establish the existence of debt and to resist limitation objections. - HELD THAT: - Relying on the corporate debtor's ledger entry annexed to the petition and the declaration by the corporate debtor in the supplementary affidavit acknowledging the loan from the financial creditor, the Authority treated those entries as sufficient evidence of indebtedness. The Authority also took note of the Apex Court's pronouncement referred to by the financial creditor that entries in balance sheets acknowledging liability operate as acknowledgements for limitation purposes where applicable, and applied that principle to hold the evidence sufficient to maintain the petition. [Paras 5, 6, 7]

Corporate debtor's ledger and declaration qualify as acknowledgement of debt and support the claim; limitation objection is not a bar on the present record.

Prospective operation of notification enhancing minimum amount of default - The Government notification increasing the minimum amount of default to Rs. One crore is not applicable retrospectively to bar the present petition. - HELD THAT: - The Authority noted that the default and the filing of the petition occurred before the notification dated 24.03.2020 which enhanced the minimum threshold. Observing the general principle that such government notifications are prospective unless expressly made retrospective, the Authority held that the notification did not apply to the present case and therefore did not preclude admission of the petition. [Paras 7]

Notification dated 24.03.2020 is not applicable to the present petition filed for defaults occurring prior to its coming into effect.

Appointment of Interim Resolution Professional and duties of IRP - moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016 - Appointment of the proposed IRP was approved and moratorium under the Code was declared with directions to the IRP and others for compliance. - HELD THAT: - The Authority appointed the IRP proposed by the financial creditor after noting absence of any disciplinary proceedings against him, and directed him to take charge immediately, make the public announcement, call for claims and perform duties under the Code. Simultaneously, the Authority declared the moratorium as provided by the Code, specifying the prohibitions on institution or continuation of suits, disposition of assets, enforcement of security interests and recovery of property, and directed continuity of supply of essential goods and services during the moratorium. [Paras 8, 9, 10, 11]

Proposed IRP appointed as Interim Resolution Professional; moratorium under the Code declared and directions issued for compliance.

Final Conclusion: The Adjudicating Authority admitted the insolvency petition under section 7, initiated CIRP against the corporate debtor, appointed the proposed Interim Resolution Professional and declared the moratorium; the corporate debtor's ledger and declaration were held to establish debt and rebut limitation, and the subsequent Government notification raising the minimum default threshold was held not to apply to this petition.

Moratorium under the Insolvency and Bankruptcy Code - Section 32A(2) of the Insolvency and Bankruptcy Code - bar on actions against property of corporate debtor after liquidation commencement - Section 238 of the Insolvency and Bankruptcy Code - code overrides other laws - Invalidity of administrative act for non-compliance with prescribed procedure (Rule 24(1) of RIICO Disposal of Land Rules, 1979) - Restoration of allotment subject to payment of pending dues - Liquidator's obligation in liquidation process - duty to follow applicable rules and protect stakeholders' interests

Invalidity of administrative act for non-compliance with prescribed procedure (Rule 24(1) of RIICO Disposal of Land Rules, 1979) - Moratorium under the Insolvency and Bankruptcy Code - Validity of RIICO's cancellation of allotment and termination of lease deed dated 7.8.2003 and lawfulness of proceedings initiated by RIICO during CIRP / liquidation - HELD THAT: - Tribunal found that the purported cancellation could not be sustained because, as per Rule 24(1) of RIICO Disposal of Land Rules, 1979, cancellation must be signed and issued by the unit head and the document relied upon was not so signed; accordingly the cancellation was not good in law. The Tribunal also recorded that RIICO had repeatedly issued notices and sought restoration until 2017 and had not taken possession or re-allotted the plot for many years. Further, the Tribunal held that proceedings by RIICO, insofar as they proceeded despite the CIRP/liquidation moratorium, were barred by the Code: Section 32A(2) prevents actions on the property of the corporate debtor after commencement of liquidation and Section 238 makes the Code overriding. Applying these principles, the Tribunal concluded that RIICO's action could not be permitted to frustrate the liquidation process and stakeholders' interests where statutory protections under the Code were in force. [Paras 8, 10, 11, 12]

The cancellation/termination as relied upon by RIICO was not sustained; actions in breach of the moratorium and Section 32A(2) could not be allowed to defeat the insolvency/liquidation process.

Restoration of allotment subject to payment of pending dues - Liquidator's obligation in liquidation process - duty to follow applicable rules and protect stakeholders' interests - Relief to be granted in light of findings - obligations of the liquidator and directions to RIICO regarding restoration and transfer - HELD THAT: - Having determined that RIICO's cancellation/order could not be permitted to override the Code, the Tribunal directed that the liquidator must pay all pending dues to RIICO arising from the corporate debtor. The Tribunal clarified that this direction does not exempt the liquidator from complying with RIICO's rules and that RIICO must, upon receipt of the pending dues, restore the allotment in favour of the corporate debtor and facilitate transfer of the property to the successful bidder within a reasonable time after payment. The order balances the overriding effect of the Code with compliance with applicable administrative rules and the protection of stakeholders' interests in liquidation. [Paras 16, 17, 18]

Liquidator to discharge pending dues to RIICO; upon payment RIICO to restore allotment and facilitate transfer to successful bidder, subject to compliance with RIICO rules.

Final Conclusion: IA-1492/2021 and IA-2569/2021 are disposed of: the Tribunal set aside the effect of RIICO's cancellation insofar as it conflicts with the Code and directed the liquidator to pay pending dues, directed RIICO to restore allotment upon receipt of dues and to facilitate transfer to the successful bidder within a reasonable time, while requiring all parties to comply with applicable RIICO rules.

Corporate Insolvency Resolution Process - Operational Creditor's Section 9 petition - existence of debt and default - pre existing dispute - demand notice under section 8 - moratorium - appointment of interim resolution professional

Existence of debt and default - Operational Creditor's Section 9 petition - The petition under section 9 was admissible on the ground of existence of debt and default and was liable to be admitted. - HELD THAT: - The Tribunal examined the invoices and delivery of Pet Bottles and Hope Buckets and found delivery to the corporate debtor and unpaid invoices amounting to the claim. The Operational Creditor issued a demand notice on 15.02.2019 and the corporate debtor's reply denied liability on vague grounds without proving a valid objection antecedent to the demand notice. In the absence of proof of a bona fide pre existing dispute or repayment, the Tribunal concluded there was a clear liability and default, warranting admission of the section 9 petition. [Paras 15, 18]

Section 9 petition admitted for initiation of CIRP as there is proved debt and default.

Pre existing dispute - demand notice under section 8 - The contentions of the corporate debtor that a pre existing dispute existed (excess supply, defective goods, set off) were not established and did not defeat the petition. - HELD THAT: - The corporate debtor alleged excess supply, defective goods and claimed set off, and relied on ledger entries and internal correspondence. The Tribunal observed that no proof was furnished to show that objections to quantity or quality were raised prior to issuance of the section 8 demand notice. The ledger relied upon did not establish payment to the Operational Creditor. Consequently, the alleged disputes were found to be unsubstantiated for the purpose of resisting the claim under the Code. [Paras 16, 17, 18]

Alleged pre existing dispute not established; it does not preclude admission of the petition.

Moratorium - appointment of interim resolution professional - On admission, moratorium was declared and an interim resolution professional was appointed with consequential directions. - HELD THAT: - Having satisfied the requirements for admission under section 9, the Tribunal imposed the statutory moratorium prohibiting institution or continuation of suits, transfer or disposition of assets, and related enforcement actions, with specified exceptions for continued supply of essential goods or services. The Tribunal directed public announcement of the CIRP and appointed an interim resolution professional to carry out functions under the Code. The moratorium's commencement date and the appointment details were recorded in the order. [Paras 19]

Moratorium declared and IRP appointed; directions issued for public announcement and communication of the order.

Final Conclusion: The Tribunal admitted the section 9 petition filed by the Operational Creditor, holding that invoices remained unpaid and no pre existing dispute was substantiated; consequently CIRP was initiated with declaration of moratorium and appointment of an interim resolution professional.

Financial debt - default - admission of application under section 7 of the Insolvency and Bankruptcy Code, 2016 - initiation of Corporate Insolvency Resolution Process - moratorium under the Insolvency and Bankruptcy Code, 2016 - appointment of Interim Resolution Professional - public announcement and claims process - compliance with timelines of the Insolvency and Bankruptcy Code, 2016

Financial debt - default - admission of application under section 7 of the Insolvency and Bankruptcy Code, 2016 - Whether the Financial Creditor proved existence of financial debt and default sufficient to admit the section 7 application and commence CIRP. - HELD THAT: - The Tribunal found that the Financial Creditor placed evidence establishing that sums were due from the Corporate Debtor and that a default in repayment had occurred. The Corporate Debtor conceded the debt and the default, albeit seeking time for repayment and asserting ongoing settlement discussions. The Tribunal applied the principle in Innoventive Industries Ltd. v. ICICI Bank & Anr., that once the adjudicating authority is satisfied that a default has occurred the application must be admitted (subject to completeness), and observed that the Financial Creditor had complied with the statutory stipulations for filing under the Code. The Corporate Debtor's request for additional time and negotiations did not negate the occurrence of default or preclude admission. On these findings the Adjudicating Authority overruled the Corporate Debtor's contentions and admitted the application, ordering commencement of CIRP. [Paras 6, 7, 8]

Application under section 7 admitted and CIRP ordered to commence.

Appointment of Interim Resolution Professional - public announcement and claims process - moratorium under the Insolvency and Bankruptcy Code, 2016 - compliance with timelines of the Insolvency and Bankruptcy Code, 2016 - Consequential directions on appointment of IRP, conduct of CIRP, declaration of moratorium and related statutory compliances. - HELD THAT: - The Tribunal appointed the person proposed by the Financial Creditor as Interim Resolution Professional on the basis of his written consent and directed him to file a fresh Authorization for Assignment where the earlier authorization appeared to have expired. The IRP was directed to take immediate charge of the corporate debtor's management, make the public announcement and invite claims as prescribed, and comply with the relevant provisions of the Code. The Tribunal declared the moratorium with the statutory prohibitions on suits, dispositions of assets, enforcement of security and related actions, and directed continuity of essential supplies subject to payment for current dues. The Financial Creditor was directed to pay an advance toward IRP fees and CIRP expenses to be ratified by the CoC. Registry and parties were directed to communicate the order and update the Registrar of Companies. These directions implement the commencement of CIRP and require compliance with the timelines and duties under the Code. [Paras 13, 14, 15, 16, 17]

Mr. Krishna Komaravolu appointed as Interim Resolution Professional; IRP and parties directed to take statutory steps, moratorium declared and incidental directions given for conduct of CIRP.

Final Conclusion: The Tribunal admitted the section 7 application, ordered commencement of CIRP, appointed the proposed Interim Resolution Professional with directions for statutory compliance, declared the moratorium and issued consequential directions for conduct of the insolvency process.

Job work manufacturing - Manpower recruitment or supply agency service - Taxability of contract manufacturing vis-a -vis manpower supply - Characterisation of service by substance of contract and payment mechanism

Job work manufacturing - Manpower recruitment or supply agency service - Whether the appellants' activity of manufacturing plastic jars and containers in the service recipient's factory is taxable as manpower recruitment or supply agency service or is classifiable as job work manufacturing not liable to service tax under that head. - HELD THAT: - The Tribunal found on the admitted facts that the appellants entered into a contract to manufacture excisable goods in the service recipient's factory, were paid on a per-container basis, did not collect fixed wages or salaries for manpower from the recipient, and retained obligations relating to payment and statutory liabilities for labour. The agreement was silent as to supply, recruitment, number, or remuneration of labour to be provided to the recipient. Applying the statutory concept of manpower recruitment or supply agency service, which requires a service in relation to recruitment or supply of manpower by a manpower agency, the Tribunal held that the service rendered was contract manufacturing (job work) rather than supply of manpower. The Tribunal relied on its precedent in Ramesh Chandra C. Patel where identical facts (manufacture in NKPL premises, payment per container, silence of agreement on labour supply) led to the conclusion that the activity was contract manufacturing and not manpower supply. In view of the factual matrix and the legal test of characterisation by the substance of the contract and payment mechanism, the Tribunal concluded that the services do not fall under the taxable category of manpower recruitment or supply agency service. [Paras 4, 5, 6]

The activity is job work manufacturing and not a manpower recruitment or supply agency service; impugned orders set aside and appeals allowed.

Final Conclusion: On the facts - manufacture in the recipient's premises, payment on per-piece basis, absence of any contractual provision for supply or recruitment of labour and retention of labour-related obligations by the appellants - the Tribunal held the activity to be contract job work and not taxable as manpower recruitment or supply agency service; impugned orders were set aside and appeals allowed.

Renting of immovable property service - support services - negative list of services - forward charge and reverse charge mechanisms - binding nature of Board circulars/instructions

Renting of immovable property service - support services - negative list of services - Whether royalty and dead rent collected under statutory mining leases are exigible to service tax as 'renting of immovable property' falling within the definition of 'support services' for the period 01.07.2012 to 31.03.2016. - HELD THAT: - The Tribunal examined the post 2012 service tax regime which replaced specific taxable service listings with the concept of 'service' under Section 65B and introduced a negative list (Section 66D). 'Support services' are defined to include, inter alia, 'renting of immovable property', but the definition is cabined by the middle clause which confines support services to functions that entities ordinarily perform themselves and may outsource. Grant of mining rights under the Mines and Minerals Act and Rajasthan Rules is an exercise of the State's sovereign power, governed by statute and prescribed modal lease terms and charges. Such statutory grants are not services of the kind that business entities can render themselves and thus do not fall within the class/genus of 'support services' contemplated by the definition. The Board's clarification that grant of mining or licensing rights is not a 'support service' aligns with this statutory scheme. Applying these principles, the Tribunal held that the royalty and dead rent collected under the statutory mining leases do not constitute taxable 'renting of immovable property' as a support service for the disputed period. [Paras 27, 52, 55, 58, 61]

Demand of service tax on royalty and dead rent as 'renting of immovable property'/'support services' for 01.07.2012 to 31.03.2016 is not sustainable; appeals allowed in favour of the assessee on merits.

Binding nature of Board circulars/instructions - Section 37B / Section 83 - Whether the Board's clarifications (Education Guide/Tax Research Unit guidance) that grant of mining rights is not a 'support service' are binding on revenue and preclude demands contrary to such clarification. - HELD THAT: - The Tribunal reviewed statutory provisions empowering the Board to issue instructions to ensure uniformity (Section 37B of the Central Excise Act as applied to service tax by Section 83 of the Finance Act) and precedents recognising the binding effect of Board circulars on the department. The Education Guide's categorical statement that services which are exercises of sovereign power (such as grant of mining rights) are not 'support services' was held to be a binding clarification for departmental officers. A show cause notice or demand contrary to such binding Board instructions is not sustainable. The Tribunal applied this principle to set aside the demand confirmed by the original authority and to uphold the Commissioner (Appeals) order which applied the Board clarification. [Paras 46, 47, 51, 59, 61]

Board clarification that grant of mining rights is not a 'support service' is binding on the Revenue; demands contrary to it cannot be sustained.

Limitation and extended period - Whether the extended period invocation and demand for service tax from the assessee for 01.07.2012 to 31.03.2016 is maintainable. - HELD THAT: - The SCNs invoked the extended period on alleged wilful suppression and non registration. The Tribunal found no cogent evidence of deliberate suppression by the State Department: particulars of leases, royalty and dead rent were recorded in accounts and the Board clarification negated the premise that the activity was taxable support service. Absent specific evidence of wilful concealment, invocation of the extended period is unjustified. Consequently the extended period demand could not be sustained. [Paras 60, 61]

Extended period demand is unsustainable; assessee succeeds on limitation ground.

Final Conclusion: The Tribunal held that the statutory grant of mining rights and the royalty/dead rent collected thereunder do not constitute 'renting of immovable property' as a 'support service' for 01.07.2012 to 31.03.2016; Board clarifications to that effect are binding on Revenue; extended period demands were also found unsustainable. Assessee's appeals allowed; Revenue's appeals dismissed.

Exclusion of export turnover - refund claim - FIRC and banker certificate as evidence of export realisation - rejection for want of documents - verification of foreign inward remittances - remand to Adjudicating Authority

FIRC and banker certificate as evidence of export realisation - rejection for want of documents - verification of foreign inward remittances - remand to Adjudicating Authority - Partial rejection of refund qua export invoices remanded for verification of subsequently filed banker certificates and related documents; impugned order set aside. - HELD THAT: - The Adjudicating Authority had disallowed exclusion of export invoices from turnover and rejected part of the refund claim on the ground that FIRCs were not filed. The appellant produced a banker confirmation and thereafter filed certificates evidencing foreign inward remittances before this forum. The Tribunal found that the newly filed banker certificates and related documents must be verified by the Original Authority. In view of these developments and the Revenue's concession that the documents require verification, the Tribunal set aside the impugned order and directed the Adjudicating Authority to examine the submitted banker certificates and any other supporting documents, hear the parties, and pass an appropriate reasoned order on whether the export turnover pertaining to those invoices is excludable and on the refund claim consequentially. [Paras 3, 4, 5, 6, 7]

Allowed by way of remand; matter sent back to the Adjudicating Authority to verify the banker certificates and other documents and to decide on exclusion of turnover and the refund claim after hearing the parties.

Final Conclusion: The Tribunal allowed the appeal by setting aside the impugned order and remanding the matter to the Adjudicating Authority for verification of the banker certificates and other documents evidencing foreign inward remittances, and for passing an appropriate order on exclusion of the export turnover and the appellant's refund claim after hearing and considering such documents.